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Eagle Valley Clean Energy, LLC v. Wellons, Inc.

United States District Court, D. Colorado

February 4, 2019

EAGLE VALLEY CLEAN ENERGY, LLC, a Utah limited liability company, Plaintiff,
v.
WELLONS, INC., an Oregon corporation, WELLONS GROUP, INC., a Washington corporation, MARTIN NYE, an individual, and JASON JONER, an individual, Defendants.

          ORDER

          R. Brooke Jackson United States District Judge.

         There are two motions to dismiss before the Court. The first is by defendants under Fed.R.Civ.P. 12(b)(6) to dismiss all four of plaintiff's claims. ECF No. 20. The second motion to dismiss is by plaintiff under Fed.R.Civ.P. 41(a)(2) to dismiss its claims for tortious interference with contract (second and third causes of action) and interference with performance of contract (fourth cause of action) without prejudice. ECF No. 25. The first motion to dismiss has been fully briefed, but the second motion to dismiss has not. For the reasons explained in this order I GRANT defendants' motion to dismiss, ECF No. 20, and find that plaintiff's motion to dismiss, ECF No. 25, is now MOOT.

         I. BACKGROUND

         In August 2016, plaintiff Eagle Valley Clean Energy, LLC, (“Eagle Valley”) entered into a Noncompetition Agreement with, among other parties, defendants Wellons, Inc. (“Wellons”), Wellons Group, Inc., Martin Nye and Jason Joner. Compl., ECF No. 1 at ¶8. The parties executed this Noncompetition Agreement to resolve a discovery dispute in a lawsuit between Wellons and Eagle Valley, No. 15-CV-01252-RBJ. In this discovery dispute, Wellons sought records from Holy Cross Energy, a company that purchased electricity produced at Eagle Valley's biomass facility, to evaluate Eagle Valley's lost profit claims. ECF No. 20, Ex 1 at ¶A.[1]Eagle Valley objected to Wellons's discovery of these records, claiming it contained confidential business and trade secret information. Id. at ¶B. To resolve this dispute, plaintiff and defendants executed a Protective Order governing access to confidential information and a Noncompetition Agreement. ECF No.1 at ¶17; ECF No. 20, Ex. 1 at ¶D.

         The purpose of the Noncompetition Agreement was to “enabl[e] Wellons to obtain and utilize the Holy Cross Energy records for the sole purpose of the Litigation, while protecting Eagle Valley's competitive interests as set forth herein, ” by having defendants agree “not to compete, or prepare to compete, with Eagle Valley within the States of Colorado and Wyoming for a three-year period.” ECF No. 20, Ex. 1 at ¶D. More specifically, this agreement restricted defendants from owning, operating, financing or developing “a biomass facility” in this territory. Id. at ¶1.

         This case had a nine-day jury trial before this Court in May and June 2017, and a $10, 840, 000 judgment was rendered against Eagle Valley. See Wellons, Inc. v. Eagle Valley Clean Energy, LLC, No. 15-CV-01252-RBJ, ECF Nos. 368, 369; Wellons, Inc. v. Eagle Valley Clean Energy, LLC, 2017 WL 4337856 (D. Colo. Sept. 29, 2017) (denying motion for a new trial). However, litigation has continued over Wellons's efforts to collect on this judgment. See Wellons, Inc. v. Eagle Valley Clean Energy, LLC, No. 15-CV-01252-RBJ, ECF Nos. 426-540. On June 21, 2018 Eagle Valley filed the present lawsuit bringing four claims against defendants for improper actions they allegedly took in seeking to recover on this judgment. Eagle Valley alleges (1) breach of the Noncompetition Agreement by all defendants; (2) tortious interference with Eagle Valley's contract with the Rural Utilities Service (“RUS”); (3) tortious interference with Eagle Valley's contract with Holy Cross Energy (“HCE”); and (4) interference with performance of the RUS and HCE contracts. See generally Compl., ECF No. 1. Eagle Valley asks for general, compensatory and consequential damages as well as attorney fees and costs. Id.

         In August 2018 defendants filed a motion to dismiss, ECF No. 20, plaintiff filed a response, ECF No. 21, and this motion became ripe upon defendants' filing of a reply, ECF No. 22. On January 27, 2019 plaintiff filed a motion to dismiss claims two, three and four without prejudice. ECF No. 25. This motion has not yet been fully briefed. However, I will discuss the content of this motion for context.

         In plaintiff's motion to dismiss its claims without prejudice, plaintiff calls the Court's attention to two lawsuits currently pending in the Third Judicial District of Utah: Wellons, Inc. v. Eagle Valley Clean Energy, LLC et al, case no. 180901367, and Wellons, Inc. v. Eagle Valley Clean Energy, LLC et al., case no. 186900456. These two cases also concern Wellons's efforts to collect on the judgment rendered against Eagle Valley in a jury trial before this Court. See Wellons, Inc. v. Eagle Valley Clean Energy, LLC, No. 15-CV-01252-RBJ. In the first Utah action, Wellons alleges that Eagle-Valley has made post-judgment fraudulent transfers, and discovery is currently ongoing. ECF No. 25 at 3. Eagle Valley asserts counterclaims in this action that are similar to claims two, three and four raised in the complaint before this court. In the second Utah action, the court granted Wellons a charging order against Eagle Valley, and Wellons has issued writs of execution to execute on debts owed to Eagle Valley. ECF No. 25 at 3-4. Because Eagle Valley prefers to litigate its claims of tortious interference with contract in these two Utah cases, they ask that I dismiss these claims without prejudice here. However, Eagle Valley wishes to continue with its breach of contract claim against Wellons in the lawsuit now before the Court. Defendants do not stipulate to an order dismissing claims two, three and four without prejudice, presumably (as briefing on this issue has not yet occurred), because they think that these claims should be dismissed with prejudice. Based on the parties' briefings for defendants' motion to dismiss, ECF Nos. 20, 21, 22, I find that claim one and four should be dismissed with prejudice and that claims two and three should be dismissed without prejudice. Therefore, plaintiff's motion to dismiss claims two, three, and four without prejudice is now moot.

         II. STANDARD OF REVIEW

         To survive a 12(b)(6) motion to dismiss, the complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Ridge at Red Hawk, L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir. 2007) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A plausible claim is a claim that “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While the Court must accept the well-pleaded allegations of the complaint as true and construe them in the light most favorable to the plaintiff, Robbins v. Wilkie, 300 F.3d 1208, 1210 (10th Cir. 2002), conclusory allegations are not entitled to be presumed true. Iqbal, 556 U.S. at 681. However, so long as the plaintiff offers sufficient factual allegations such that the right to relief is raised above the speculative level, he has met the threshold pleading standard. See, e.g., Twombly, 550 U.S. at 556; Bryson v. Gonzales, 534 F.3d 1282, 1286 (10th Cir. 2008).

         III. ANALYSIS

         1) Claim One: Breach of Contract.

         Plaintiff alleges that defendants breached the Noncompetition Agreement by approaching the Rural Utilities Service (“RUS”), Holy Cross Energy (“HCE”), the United States Forest Service and Eagle Valley's fuel suppliers “concerning matters in preparation or furtherance of their desire to own, operate or finance the Eagle Valley plant.” ECF No. 1 at ¶22. Defendants argue that plaintiff fails to state a breach of contract claim because the Noncompetition Agreement bars defendants from competing with Eagle Valley in owning, operating or developing a different biomass facility in the restricted territory, but that it does not encompass a situation in which defendants obtain ownership of Eagle Valley's own biomass facility. I agree.

         This agreement has a choice of law provision that specifies that the interpretation of this agreement will be governed by Colorado state law. ECF No. 20-1 ¶5. Contract interpretation is a question of law. Ad Two, Inc. v. City & Cty of Denver, 9 P.3d 373, 376 (Colo. 2000). “The primary goal of contract interpretation is to give effect to the intent of the parties.” Id. (citing USI Props. East, Inc. v. Simpson, 938 P.2d 168, 173 (Colo. 1997)). A court determines the intent of the contracting ...


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