IN THE SUP ERIOR COURT OF THE STATE OF DE LAWARE IN AND FOR NEW CASTLE COUNTY DEERE & COMP ANY, a Delaw are ) corporati on, ) C.A. No. N13C-07-33 0 JTV ) Plaintiff, )

) v. ) ) EXELON GENERATION ) ACQUISITIO

NS, LLC, a

Delaware ) limi ted lia bil ity co mpany, ) ) Defenda nt. )

Submitted: July 24, 2 014 Decided : Novem ber 10, 2014
Peter J. Walsh, Jr. , Esq., and Matthew F. Davis, Esq., P otter, A nderson & Corroon, Wilmington, Delaware . Attorneys for Pla intiff. Sean J. Bellew, Esq., Ballard Spahr, Wilm

ington, De laware . Attor

ney fo r Defe ndant.

Upon Consideration of Pl aintiff’s Motion to Dismiss Defen dant’s Co untercla ims

DENIED

VAUGHN, Judg eDeere v

. Exelon C.A. No. N13C-07-3 30 JTV Novem ber 10, 201 4

1 Deere & Co.v. Exe lon Gene

ration Acq uisitions, LL C , 2014 WL 904251 (Del. Super. Mar. 7, 2014). 2 OPINION The plaint iff, D eere & C o., fil ed a com plaint aga inst the def

endant, Exelon Genera tionAcquisitions, LLC, alleging breach of contract, breac h of the im plied covenant of good fai th and fair

dealing, and unjust

enrichm ent. The disput e arises out of an August 3 0, 2010 purc hase agre emen t (the “ Agreem ent”). Previously in th e litigation, Exelon filed

a Motion to D ismiss all three of Deer e’s cla ims und er Super

ior Court Civil Rule 12(b)(6). The Court dismissed Dee re’s breach of the im plied covenant of good fai t h and f

air dealing and unjust enrichment claim s, but allowed Deere’s breach of c ontract cl aim to proceed. In its answe r, Exe lon assert ed two cou nterclai ms; r eco up me nt and unju st enrichment. Deere

has filed a Motion to D ismiss both c ounterclai ms unde r Rule 12(b)(6). FACTS The facts are set f

orth in the C ourt’s o pinion conce rning Exe lon’s Mot ion to Dism is s . 1 In 2010, E xelon purch ased Deere’s in terest in specific wind gene ration project s and

wind genera tion ass ets owned b y Deere through s ubsidia ries. On August 30, 2010, the partie s mem orialize d the term s of their contract in the Agreement. The Agreem ent identi fies t

he Blissfi eld Wind

Projec t as one of the wind ge neration project s that Exel on would acquire. The Blissfield Wind Proje ct was described as “thewind proj ect under

development i n Len awee Co unty, Michigan, by Bli ssfieldDeere v

. Exelon C.A. No. N13C-07-3 30 JTV Novem ber 10, 201 4

2 Agreement, Section 1.1.

3 Specific ally

Section 4. 11(c)( iv) of the Agree ment state s: As of the date hereof [August 30, 2010], except as set forth in Section 4.11(c)(iv) of the Seller Disclosure Schedule, [Deere] reasonably believes that all material Permits ne cessar

y f or the de velopmen t, constr uction, ow

nership, maintena

nce, use and/or op eration

fo the Mic

higan Win

d Project s (includ

ing mate rial Perm its with respect to applicable zoning and land use L aws) can be obtained in the ordinary course. [Exelon] acknowledges that not all such Permits required for the Michiga n Wind Projects are known as of the date of this Ag

reemen t.

4 The Selle

r Disclos ure Sche dule state s: The Riga Township Pl anning

Commission v oted on Au gust 2, 2 010 to recomm end to the Ri ga Town ship Board a 12-mo nth m orato rium o n wind energy project s, which is

schedule d to be con sidered by t he Riga Township B oard at i

ts Septembe r 13, 2010

meeting . The mora

torium, as curren tly p roposed, would automatically expire upon approva l of a wind energy

zoning ordinance. If 15% of the regi stere d vot ers in a Mich igan to wnshi p sign a peti tion reques ting a referendum within 30 day s after a zoning ordinance is enacted in suc h township, the zo ning

ordin ance would beco me sub

ject to a r efer endu m vote at the next scheduled election. Based on the level of re sistance to the Blissfield Wind Project in Riga township there is a possibility that a zoning ordina nce permitting the project would be put to a referendum. 3 Wind Ener gy, LLC, with a nameplate cap acity of 81 megawatts .” 2 Section 2.6 of the Agreem ent provided f

or an ear n-out to be p aid to Deere when the B lissfield W ind Project “ac hieves Com

pletion of D evelopm ent a

nd Comm encem ent of Constructi o n.” In connection with the Bl issfi eld Wind Projec t, Dee re repr esented tha t it reasonabl y believed that the material permits were obtainable in the ordinary course. 3 This representation is expressly qual ifi ed, however, by disclosures that Deer e included in the Seller Disclosure Schedule. 4 In the Seller Disclosure Schedule, DeereDeere v

. Exelon C.A. No. N13C-07-3 30 JTV Novem ber 10, 201 4

5 Agreement, Section 7.2.

6 Agreement, Section 10.4. 4 informed Exelon of the Riga Township Planning Comm ittee’s decision to impose a
mora torium on wind ener

gy proj ects and th e potentia l obstacle that the mora

torium could present in

obtaining the

necessar y zonin g approval. In Secti on 6.3 of th e Agreem ent, Deere promised that

before c losing it wo uld

cause De ere Renewables to “conduct its bus iness and

operations in the ordin ary c ourse of bus iness consis tent with past practices and consistent with Prudent Industry Practices.” Deere’s covenants and representations and warranties were subject to lim iting provisi ons in th e Agreement. Section 7.2 of the Agr eement sets forth cond

itions to Exelo n’s obligations t o close and states that the obligations of Exe lon to “ effect the Closing shall be subject

to the satisfaction (or waiver, in whole or in part). . . of each of the following co n ditions.” One of the conditions of the closing was that Deere preformed

or complied with all obligations under the covena

nts, represe ntations and
warran ties. 5 Additionally, the Agreement includes a survival clause which terminates the represe ntations and

warra nties fif teen m onths afte r the closing date

. 6 The transacti on closed on December 9, 201 0. F ollowi ng the close of the transaction, the Riga Township Board adopted changes to its zoning re gulations tha t preclude d the devel opment of the Bli ssfield Wind Project. Ultim ately, Exelon notified Deere that it w as not commer cial l y reasonabl e to continue development on the Blissfield Wind Project. E xelon acquired
a differe nt location and develop ed a wind p roject in Gra tiot Cou nty, Michigan . ADeere v

. Exelon C.A. No. N13C-07-3 30 JTV Novem ber 10, 201 4

7 Cent. Mort

g. Co. v. M

organ Stan ley Mortg

. Capital Hld

gs, LLC , 27 A.3d 531, 537 (Del. 2011).

8 Doe v. Ca hill , 884 A.2d 451, 458 (Del. 2005). 5 power purchase agreem

ent that w as used in c onne ct ion with the Blissfiel d Wind Project was amended and us ed in connec tion with th e wind proj ect in Gr atiot Cou nty. In its compl aint, D eere ass erted tha t the Blissf

ield Wi nd Proje ct had si mpl y been relocated to Gratiot County, and that Exelon was re quired t o pay th e earn-o ut for the Blis sfield Wind P roject. In support of i ts rec ou pmen t co un ter cla im, Exelon alleges that Deere breached two represe ntations, Section 4. 11(c)(iv ) and Section 6. 3, in the Agreement and, that
as a result o f the bre ach, Ex elon should be abl e to reduce any recovery by Deere. In its unjust enr

ichment counterc laim, Exelon cl aims that Dee re will b e unjus tl y enrichedif it is per

mitte d to recove r the entir e earn-o utamount without an offset for
s ubstantial co sts that Exelon allegedly incurred to relocate the Blissfield Wind Proj ect to Gr ati ot C oun ty. STANDARD OF REVIEW “[T ]he governing pleading standard in Delaw are to sur vive a motion to dism

iss is reasonabl e ‘conc eiv ability .’” 7 The cour t will lim it its revi ew of the

motion to dismis s to the we ll-pleade d allegati ons in the compl aint, but w ill draw all reasonab le factual inf

eren ces in f

avo r of t he n on- movi ng p arty. 8 In conside ring the de fenda nt’s motion to dism iss, the c ourt m

ust deny th e moti on unless the plaintiff could notDeere v

. Exelon C.A. No. N13C-07-3 30 JTV Novem ber 10, 201 4

9 Cent. Mortg. Co. , 27 A.3d at 536.

10 Id . at 537.

11 Superior Court Rule 8(a).

12 Sult v. Am. Sleep Medicine, Inc. , 2011 WL 4688730, at *1 (Del. Super 2011). 6 recover under any

reason abl y conc eivable se t of circ umsta nces. 9 This “conc eiv abi lit y” pleading standard asks whetherthere i s any, even a rem ote, pos sib ili ty of

reco ver y. 10 A compl aint, or countercl aim i s sufficient if it con tains “ a short and

plain statem ent of the cla im show ing that thepleader i s entitled to relief.” 11 This stat emen t is only r equired to give the de fendant f air notice of a clai m and i s to b e liber ally construed. 12 CONTENTIONS Deere cont ends that E xelo n’s recoupment claim cannot be a stand- alone cla im and must be predicat ed on some legal basi s; Exelon’ s recoupm ent claim is untim ely and barred be cause it is brought outsi de the cont ractuall y agre ed fifte en mon

th survival period; tha

t the clos ing date w as December 9, 2010 and thus the survival term expired on March 9, 2012; that e ven if Exelo n’s recoupment claim related back to the time that Deere f

iled its complaint, it would still be u ntime lybecause t he fifteen- month

survival period e xpired before then; that the two underlying alleged breaches of the Agr

eement are con

tradicte d by the

underlying docum ents and ca nnot survive in the fac e of th e p lain term s of the A greem ent; that D eere exp ressly disclosed to Exelon t

he re sistence that the Blissfield Wind Project was facing; thatDeere v

. Exelon C.A. No. N13C-07-3 30 JTV Novem ber 10, 201 4

7 any re presenta tions in Sec tion4.11(c) (iv) are expressly

qualified by the contents of the Seller Disclosure Schedule; that Deere expre ssly carved ou

t possible z oning ordinance issues for the Blissfield Wind Project in the Seller Disclosure Schedule; that Exelon ha s already

conceded t

hat Deer e has satis fied its ob ligati ons under Section 6.3; that Deere has satisfied all of its preclosing affirm ative obligations; that Exelo n’s recoupment claim is duplicat

ive of its affir mativ e defense

for recoupment; and that the Agreem

ent is the pr

oper m easure of

the partie s’ right s and acts to bar any unjust enr ichment claim. Exelon contends tha

t recoupm

ent is a defense aime d at reduc ing the am ount of damages recoverable by

the pla intiff if

the plainti ff has not c omplie d with cro ss obligations arising underthe sam e contrac t; that to prevail on its recoup ment c laim Exelon must sh ow that the

recoupment claim

arises out of the sam

e transac tionas the plai ntif f’s claim, has the sam

e litigants and is purely a defensive s e t-off; th at its
recou pment cl aim m eets the ne cessary

requirem

ents; that a

recoupment defen se survives so long as the plaintiff’s claim, which ar ises under t he sam e contrac t, survives; that the plaintiff’s claim is not tim e barred ; that Exelon ea sily m eets the “re asonable conceivab ility” standard r

equired und er a m otion to dism iss; that the recoupm ent defense is prem ised on two breache s of Dee re’s represent ations reg ardin g the Blissfiel d Wind Project; that De ere’s disclosures in the Sel ler Disc losure Sc hedule acknowledgedonly the possib ili ty o f a m oratorium but did not null ify it s represe ntation

that all material perm

its for Blissfield Wind Project could be obtained; that Deereknew Exe lon could not obtain the m

aterial perm its for

the Blissf ield Wi nd Project in Lenawe e County ; that it did not waive

or acknowledge that Deere com pliedDeere v

. Exelon C.A. No. N13C-07-3 30 JTV Novem ber 10, 201 4

13 TIFD III

-X LLC v. Fr

uehauf Pr oduction C

o., L.L.C. , 883 A.2d 854, 859 (Del. Ch. 2004).

14 Id

.

15 Id . at 860. 8 with Section 6. 3; that rec oupmen t is a type of defensive counterclaim ; that pleading recoupment

as a counterclaim and as an affirm ative defense does not require dismissal of the coun

terclaim ; that De ere woul d be unjustly enriched if it is perm itted to recover the earn-out without co mpens atin g Exelon f or the money it

expended in connection

with the development of the wind project in Gratiot County ; and that the Agr eeme ntdoes not govern Exelon’s right to recoup expenses from Deere i n developi ng a wind pr oject in Grati ot Count y. DISCUSSION The doctrine o f recoupm ent is not

a p recisely defined one and has been minim ally app lie d in Dela ware and in o the r jur isd ict ion s. Ge ner all y, “[r]ecoupm ent is a com mon-l aw equita

ble doctrine that per

mits a defendant

to asse rt a defe nsive claim aime d at reduc ing the am ount of dama ges recov erable by a plaintiff.” 13 In order to assert a

recoupment claim , the def endant m ust sho w that ( 1) the claim ar ises out of th e sa me transaction or occurrence as the pla int iff’ s su it; (2) t he c lai m is pu rely a defensive set-off and does not seek affirmative recovery ; and (3) both the primary dama ge claim

and the recoupment claim involve thesame

litigants. 14 Addi tio nal ly, “to the extent that a valid recoupment claim is asserted defensively, it is not subject to statutes of limitation ,” 15 and will be considered time ly “so lo ng as the m

ain actionDeere v

. Exelon C.A. No. N13C-07-3 30 JTV Novem ber 10, 201 4

16 PNC Bank, Delaware v. Turner, 659 A.2d 222 (Del. Super. 1995).

17 Id

.
18 See TIFD

III-X LLC

, 883 A.2d 854 (describing the doctrine of rec oupment as either a counterclaim or affirmative defense)

. 9 itself is timely.” 16 Exelo n’s recoupment claim and Dee re’ s s ui t ar is e ou t o f th e sa me Agreem ent and the sam e circum stances, i.e., the termination or reloc ation of the

Blissfie ld Wind Projec t, involve the same parties a nd seek only

a defens ive set-o ff. Ba sed on the minimal “conc eivability

” pleading standard, I conclude that Exel on suffici ently alleges a rec oupment coun terclaim. Deere contends tha

t Exelon’ s recoupm

ent claim is tim e barred

by the survival clause in the Ag ree ment. The survival clause lim itation in the Agreement m ay bar Exelon from affirm

atively seeking damages. However, it does not bar Exe lon from asserting a counter

cla im fo r recoupment. The law in Delaware clearly

states that recoupment

is not barredor affected by a lim itations period so long as the m ain action its elf i s ti mely. 17 Deere als o contends th at Exelon cannot ra ise recou

pment as both an a ffir

mativ e defense and a co un ter cla im. I find nothing in the ca se law w hich forbi ds Exelon f

rom raising r ecoupm ent as both a counterc laim and a defe nse. De laware cases ha v e recognizedrecou

pm ent in both r egards, but never h as a court dismis sed the countercl aim

because the same theory was a sserted as an affirmative defense. 18 Exelon has sufficie ntly sa

tisfied the pleading re quirem ents for th e recoupm ent claimDeere v

. Exelon C.A. No. N13C-07-3 30 JTV Novem ber 10, 201 4

19 Kuroda , 971 A.2d at 891.

20 Id

.
21 Deere, 2014 WL 904251, at *5.

22 Id

.
23 Id . at *1. 10 to survive a

motion to dism iss. Deere a ls o mo ves to dismiss Exelon’s claim for unjust enrichment. D eere contends that Exel on’s claim fo r unjust e nrichm ent is barred be cause the Agre emen t governs the partie s’ relations hip and the matter in di spute. U njust enr ichment is “ the unjust retention of a benef

it to the loss of

another, or the re tention of m oney or property of another a gainst the fundam ental prin ciples of j ustice or e quity a nd good conscien ce.” 19 When an express, enforceable contra c t controls t he partie s’ relations hip, a claim

for unjust enrichm ent is not av ailable be cause thecontract itself is the m easure of

the partie s’ right s. 20 Deere relies upo n Deere v . Exel on , this Cour

t’s Mar ch 7, 2014 op inion dismis sing Deere’s unju s t enrichm ent claim because t

he Agree ment g overned the part ies’ relationship and the matter, the pay ment of the earn-out, in dispute. 2 1 Exelo n’s claim for u

njust enrichment is substantially different from Deere’s. In Deere, the ma

tter in disp ute was pa

ym ent of the earn- out for com pletion of t

he Blissfiel d Wind Pr

oject. 22 Paymen t of

the earn -ou t is exp ress ly ad dre sse d by th e parties in Section

2.6(a)( iii) in theAgreem

ent. 23 Here, the m atter in dispute, the offset of any recovery

by the e xpe nse Exelo n allegedl y incur red to com

plete the windDeere v

. Exelon C.A. No. N13C-07-3 30 JTV Novem ber 10, 201 4

11 project in Gratiot

County , is not add

ressed in t

he Agree ment. The Agreement does
no t contain a p rovision add ressing the

parties’ obligations in the event that t h e Blissfiel d Wind Pr

oject c ould not be de velope d in Len awee County. I find that Exelo n’s unjust enrichment claim has sufficient merit to survive a motion to dism iss. CONCLUSION For the f oregoing re asons, D eere’ s Motion to D ismiss is denied

.
IT IS SO ORDERED

.
/s/ James T. Vaughn, Jr

cc: Prothonotary Order D istribution File