More Wind-Generated Litigation and the Continuing Challenge of Handicapping Motions for Temporary Restraining Orders (“TROs”)

Update (“later that same day…”):  

ORDER REGARDING MOTION FOR TEMPORARY RESTRAINING ORDER. IT IS HEREBY ORDERED that: 1. Defendants stipulate and agree that Fagen, Inc. (“Fagen”) has acquired ownership of Exergy Minnesota Holdings, LLC n/k/a Blue Earth Minnesota Holdings, LLC (“Exergy Minnesota”) through transactions it entered into with Defendant Exergy Development Group of Idaho, L.L.C. Accordingly, none of the Defendants assert any present ownership or control of Exergy Minnesota, and they hereby waive and disclaim any right to assert or seek future ownership or control of Exergy Minnesota.

2. The Parties further acknowledge that Fagen has transferred ownership of Exergy Minnesota to Midwest Ethanol Transport, LLC (“Midwest”), and none of the Defendants challenge the validity of that transfer of ownership. 3. The Parties further stipulate and agree that because Exergy Minnesota is the sole member of Minnesota Wind Partners I, LLC (“Minnesota Wind”), and Minnesota Wind is the sole member of Big Blue Wind Farms, LLC (“Big Blue”) and Big Blue owns Big Blue Wind Farm Project being constructed near Blue Earth, Minnesota (“the Project”), Midwest now has sole ownership and control of the Project. 4. The Parties stipulate and agree that, although Defendants are stipulating that Fagen took ownership of the Project and that Midwest currently owns the Project, Defendants reserve their rights to pursue claims against Fagen and Midwest that do not involve contesting ownership of the Project, including claims, for damages only, based on a contention that Fagen’s acquisition of ownership did not comply with applicable law. Nothing in this Stipulation is intended to constitute an admission by any Party that the manner in which the Plaintiffs took ownership of the Project was lawful or unlawful, but no Party will seek to invalidate the transaction.5. Defendants stipulate and agree that they will take no action purporting to be on behalf of the Project, that they will not instruct others to do so, and that they will make no communications to any party that they have ownership of, responsibility for, or are acting on behalf of, the Project, except with advance written authorization from Plaintiffs. Defendants will promptly refer any and all inquiries about the Project to Jennifer Johnson, Chief Financial Officer of Plaintiffs. 6. By stipulation, Plaintiffs’ Motion for Temporary Restraining Order or Preliminary Injunction [7] is withdrawn and is removed from the Court’s calendar. SO ORDERED. (Written Opinion). Signed by Chief Judge Michael J. Davis.

(Translation: Plaintiff Fagen’s mission accomplished (at least for now).  Congratulations to Twin Cities firm Leonard Street, counsel for Fagen (specifically, Leonard lawyers: Keith Moheban, Tim Kelley, and their team.)

Update (November 2, 2012):  Contractor Fagen, Inc.based in Granite Falls, Minnesota (pop. 2,897) is a heavy-hitter in construction contracting.  Exergy Development Group of Idaho retained Fagen to help build a wind farm project, but Fagen ended up owning the project allegedly because Exergy ran out of money to pay for it (and to pay Fagen, presumably).  

Now Fagen faces a 12/31/2012 deadline for millions of dollars of federal grant money for the project, by which time it must meet certain obligations but, Fagen claims, Exergy is complicating matters with demand of an allegedly “dubious and unearned developer’s fee.” Fagen alleges that Exergy is improperly demanding money to help Fagen meet the deadline or at least to keep from interfering with Fagen’s efforts to meet the deadline.

Is “emergency” preliminary injunctive relief in order?  Fagen thinks so.  Stay tuned and we’ll find out whether Exergy has the energy to fight back (or whether it will drop its resistance and drop its demand for a developer’s fee). Or we’ll find out whether U.S. District Court Chief Judge Michael J. Davis (D. Minn.) thinks Fagen has met its burden on the Dahlberg factors.

Update (September 26, 2012): [A post-script to note that "irreparable harm," a prerequisite for preliminary injunctive relief, is emphatically "a term of art," as one can see in a recent filing in which a giant multi-national characterizes an allegedly improper arbitration proceeding as "irreparable harm" (and cites consistent judicial decisions).]

Original Post (September 18, 2012):  No one likes their routine interrupted by a co-worker, a friend, or a family member with a task demanding IMMEDIATE ATTENTION.  The reception that the interloper gets is all the more icy if his presentation is panicked and poorly thought out.  And if “the emergency” is seen as deceptive, a pretext to gain some kind of strategic advantage rather than a matter of real urgency, “the boy who cried wolf” might pay for it dearly.

All experienced Minnesota civil litigators can paraphrase the so-called Dahlberg factors, the recipe for a showing of prejudgment injunctive relief (such as TRO’s).  All discerning readers will note that this recipe is vague by necessity.  By definition, one cannot create a detailed rule in advance for trial courts to apply to future emergency motions.

This is where a civil litigator’s exercise of sound judgment and experience is vital to client success.

We can all agree that stopping the wrecking ball from destroying a landmark can present an urgent threat requiring immediate attention (call it “Extreme Scenario”) and, on the other hand, that being compensated for a past financial harm would seem to be the kind of dispute for which normal court scheduling is appropriate (call it “Normal Scenario”).

But sometimes a client who feels wronged is impatient. Sometimes emotions run high. Sometimes a harm seems to be on-going or threatening to repeat itself.  And lawyers sometimes seek to portray Normal Scenario as Extreme Scenario.

This tactic can back-fire in many ways.  First, it can be expensive to “prove up” the standards needed for “emergency” pre-judgment relief.  A court is not going to “take your word for it” on any aspect of your motion and you must have persuasive and admissible evidence on each ingredient of the TRO recipe.  Therefore, clients need to be informed not only of the significant possibility of failure on such a motion but also the significant expense.

Second, the TRO will not only be disruptive and unwelcome to the court by definition, it will also most often be the court’s first “taste” of the dispute — the introduction to counsel, the parties, and the dispute.  If your TRO gambit is rejected, you have weakened your side at the earliest stage of litigation and the taint might persist and might even doom your client’s prospects.

Finally, and perhaps most importantly, when lawyers act quickly, their work product tends to suffer.  They make mistakes.  Most often, these mistakes are minro (that is, typographical erros and the like), but sometimes they are major blunders with far reaching consequences for attorney and client alike.

Seth Leventhal is a Minnesota civil litigator who appreciates that some cases require prompt judicial attention at the outset to address potentially irreparable harm but most call for a more measured long-term approach.

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