Logan Generating Co., L.P. v. Dann Marine Towing, LC

669 F.Supp.3d 321

LOGAN GENERATING COMPANY, L.P., Plaintiff, v. DANN MARINE TOWING, LC, Defendant.

Civil No. 22-2815 (RMB/MJS)

United States District Court, D. New Jersey, Camden Vicinage

Signed April 18, 2023

[Docket Nos. 20, 22]

EVERSHEDS SUTHERLAND (US) LLP, By: Francis Xavier Nolan, IV, Esq., 1114 Avenue of the Americas, 40th Floor, New York, New York 10036, On behalf of Plaintiff Logan Generating Company, L.P.

PALMER BIEZUP & HENDERSON LLP, By: Daniel Harold Wooster, Esq., 923 Haddonfield Road, Suite 300, Cherry

Hill, New Jersey 08002, On behalf of Defendant Dann Marine Towing, LC.

OPINION

RENÉE MARIE BUMB, Chief United States District Judge

This matter comes before the Court upon the Motion to Dismiss and Motion for Summary Judgment filed by Plaintiff Logan Generating Company, L.P. ("Logan") on September 7, 2022. [Docket Nos. 20, 22.¹] Thereafter, Defendant Dann Marine Towing, LC ("Dann Marine") filed a consolidated Opposition, [Docket No. 27 ("Def.'s Opp'n")], and Logan submitted a consolidated Reply Brief, [Docket No. 29 ("Pl.'s Reply Br.")].² As these Motions have been fully briefed, they are ripe for adjudication. For the reasons that follow, the Court will GRANT, in part, and DENY, in part, Logan's Motion to Dismiss. It will further GRANT, in part, and DENY, in part, Logan's Motion for Summary Judgment.

I. BACKGROUND

This action involves a dispute arising out of a maritime contract for the transportation of coal from Baltimore, Maryland to a New Jersey power plant situated on the Delaware River. The parties appear to agree on the facts underlying their dispute, but they maintain different interpretations of the agreement's termination provision—and each other's motives. The Court begins by summarizing the parties' relationship and contractual arrangement before turning to the provisions material to this litigation. Unless otherwise noted, the Court understands the following facts to be either undisputed or true for the purposes of resolving Logan's Motion to Dismiss.

Logan is the owner and operator of a coal-fired electric generation facility in Logan Township, New Jersey. [Pl.'s Statement of Material Facts ¶ 1, Docket No. 24 ("SOMF").] In 2008, Logan entered into a Coal Transportation Agreement (the "2008 Agreement") with Express Marine, Inc. ("Express Marine"). [Countercl. ¶ 4, Docket No. 13.] The 2008 Agreement became effective on April 7, 2008 and continued through December 31, 2015. [Countercl. ¶ 6.] In 2012, during the term of the 2008 Agreement, Dann Marine—another marine transportation services company—purchased the barge that Express Marine used to transport coal for Logan and, pursuant to an unrelated agreement, assumed Express Marine's interest in the 2008 Agreement. [Id. ¶¶ 7, 10.] Dann Marine continued performing its obligations thereunder, and after the term expired, Logan presented Dann Marine with an amended and restated agreement to represent a "continuation of, and not a novation of," the 2008 Agreement. [Id. ¶¶ 11, 12, 14.]

On May 25, 2016, Logan and Dann Marine entered into the Amended and Restated Coal Transportation Agreement (the "Transportation Agreement") for the transport of coal from Baltimore, Maryland to Logan's facility in Logan Township. [SOMF ¶ 3.] The Transportation Agreement became effective on May 25, 2016 and was scheduled to continue through December 31, 2024, unless terminated pursuant to the agreement. [Transportation Agreement § 2.1, Docket No. 2-1.] The Transportation Agreement includes the customary recitals regarding consideration, and it provides for the application of maritime law, to be supplemented, where required, by the laws of the State of New York. [Id. § 17.4.] It also specifically disclaims application of the principle of contra proferentem. [Id. § 17.5 ("The Parties acknowledge that each Party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting Party shall not be used in interpretation of this Agreement.").]

The Agreement contains other idiosyncratic provisions. For instance, it provides that Dann Marine's right of demurrage³ shall only apply when certain circumstances obtain, specifically:

6.3 Demurrage . . . . The Parties agree that demurrage at the Facility will only apply when [Dann Marine] has scheduled the Barge for other work between deliveries to the Facility. [Dann Marine] shall provide notice of alternative use to [Logan] at least seventy-two (72) hours prior to the arrival of the Barge to the Facility.

[Id. § 6.3.] Furthermore, the Transportation Agreement provides that Logan will be responsible for reimbursing Dann Marine for costs associated with repairs for any damage Logan causes to Dann Marine's barge during the course of unloading or loading cargo. [Id. § 5.4.] Finally, unlike the 2008 Agreement, the Transportation Agreement includes the following termination provision:

2.2 Termination. [Logan] may terminate this Agreement immediately upon written notice to [Dann Marine] in the event that [Logan] intends to permanently cease burning coal at the Facility for any reason, including, without limitation, because of voluntary or discretionary business decision or as a result of any statute, rule, regulation, Legal Proceeding, Governmental Imposition, or otherwise.

[Id. § 2.2.] According to Dann Marine, Logan inserted the foregoing termination provision into the Transportation Agreement knowing that it would likely cease burning coal at its facility before December 31, 2024 but without disclosing this information to Dann Marine. [Countercl. ¶¶ 20, 21.]

Several months before March 2022, Logan began negotiating with the Atlantic City Electric Company ("ACE"), which it supplied electrical power, to cease burning coal in exchange for a series of payments. [See SOMF ¶ 10; Countercl. ¶¶ 22, 23.] On March 23, 2022, the New Jersey Board of Public Utilities ("NJBPU") approved a petition filed by ACE to modify its power purchase and sales agreements with Logan and the only other coal-fired electrical generation facility in the State of New Jersey. [SOMF ¶ 10.] Pursuant to NJBPU's approval, Logan agreed to cease burning coal and ACE agreed to remit $120 million to Logan. [Id.] The Court takes judicial notice of the broader context: NJBPU's decision follows a comprehensive effort in the State of New Jersey to reduce greenhouse gas emissions and to transition to clean energy capabilities. Press Release, N.J. Bd. Pub. Utils., NJBPU Approves ACE Modified Power Purchase Agreements Ending the Use of Coal Generation in the State (Mar. 23, 2022), https://nj.gov/bpu/newsroom/2022/approved/20220323.html; see also Jim Walsh, Agreement Will End Coal-Burning at Two South Jersey Power Plants, COURIER POST (Mar. 23, 2022), https://www.courierpostonline.com/story/news/2022/03/23/coal-burning-power-plants-new-jersey-starwood-atlantic-city-electric/7144373001/. NJBPU's approval was necessary for the agreement between ACE and Logan to become effective. [SOMF ¶ 10.]

On March 18, 2022, as Dann Marine's barge was unloading at Logan's berth, Logan informed Dann Marine orally and in writing that its March 18th delivery of coal would be its last. [SOMF ¶ 11; see also Mar. 18, 2022 E-mail from Logan to Dann Marine, Docket No. 23-1.] According to Dann Marine, this was the first time Logan indicated that it was intending to cease burning coal or that it was intending to terminate the Transportation Agreement. [Countercl. ¶ 21.] A month later, on April 13, 2022, Logan sent a formal Notice of Termination via e-mail indicating that, "Pursuant to Section 2.2, Logan hereby terminates the Transportation Agreement effective May 15, 2022." [SOMF ¶ 12; see also Apr. 13, 2022 Ltr. from J. Delgado to Dann Marine, Docket No. 23, Ex. 2.] Shortly thereafter, on or around May 31, 2022, all coal-fired power generation at Logan's facility permanently ceased. [SOMF ¶ 13.]

Following receipt of Logan's Notice of Termination, Dann Marine objected to Logan's right to terminate the Transportation Agreement and demanded at least $4,393,066.20 in damages for lost revenues related to future coal deliveries. [Countercl. ¶¶ 31, 32.] In its Counterclaim, Dann Marine also alleges that Logan damaged its barge during the course of loading and unloading cargo and claims $90,000 in damages for costs to transport the barge to a shipyard for repairs as well as $675,000 in demurrage for time lost. [Id. ¶¶ 35-37.]

Unable to resolve their differences out-of-court, Logan filed the instant action on May 13, 2022 seeking declaratory relief and a pronouncement from this Court that the Transportation Agreement is terminated and Logan owes no further obligations to Dann Marine thereunder. [Compl. ¶ 28, Docket No. 1.] Following an extension, on August 1, 2022, Dann Marine filed (a) an Answer disputing Logan's interpretation and raising affirmative defenses and (b) Counterclaims against Logan for breach of contract, breach of the implied covenant of good faith and fair dealing, fraudulent inducement, and unjust enrichment. [Docket No. 13.]

On September 7, 2022, Logan filed its Motion to Dismiss Dann Marine's Counterclaims and its Motion for Summary Judgment as to its claim for declaratory judgment. [Docket Nos. 20, 22.]

II. JURISDICTION AND VENUE

The Court exercises subject matter jurisdiction over Logan's claim for declaratory judgment pursuant to 28 U.S.C. § 1333, as this action involves a dispute over a maritime transportation contract and the parties agreed to the application of maritime law. Accordingly, the Court invokes its inherent admiralty and maritime jurisdiction to adjudicate Logan's claim. Moreover, the Court finds that venue in this judicial district is proper, as the dispute occurred in New Jersey and the parties do not otherwise contest venue. Furthermore, the Court exercises subject matter jurisdiction over Dann Marine's Counterclaims pursuant to 28 U.S.C. § 1332, as there exists a "complete...