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MidAmerica C2L Inc. v. Siemens Energy, Inc.

United States District Court, M.D. Florida, Orlando Division

April 7, 2017

MIDAMERICA C2L, INC. and SECURE ENERGY, INC., Plaintiffs,
v.
SIEMENS ENERGY, INC., Defendant.

          ORDER

          Paul G. Byron United States District Judge

         This cause comes before the Court on Defendant's Motion to Dismiss Pursuant to Rule 12(b)(6) and Memorandum of Law in Support Thereof (Doc. 16), filed September 20, 2016. Plaintiffs responded in opposition on November 4, 2016. (Doc. 24). Upon consideration, the Court will grant in part and deny in part Defendant's Motion to Dismiss.

         I. BACKGROUND [1]

         This lawsuit arises out of a contract dispute between Plaintiffs, Secure Energy, Inc. (“Secure”) and its subsidiary, MidAmerica C2L, Inc. (“C2L”), and Defendant, Siemens Energy, Inc. (“Siemens”). On December 21, 2007, Secure and Siemens executed a contract (the “2007 Contract”) wherein Siemens agreed to sell certain equipment to Secure for use at a coal gasification plant located in Decatur, Illinois, where Secure would convert coal into natural gas. (Compl. ¶¶ 5-7). Secure paid Siemens approximately $40 million for the equipment. (Id. ¶ 9). Secure and Siemens later executed an agreement terminating the 2007 Contract, acknowledging that both had fulfilled their contractual obligations to each other thereunder. (Id. ¶ 10).

         On July 18, 2012, C2L and Siemens executed a License and Service Agreement (the “2012 License Agreement”) whereby Siemens granted C2L a license to use certain of its patented technologies for the development, construction, and operation of a coal gasification plant located in West Paducah, Kentucky, where C2L would convert coal into methanol. (Id. ¶ 14). In exchange, C2L agreed to pay a license fee to Siemens. (Id.). The 2012 License Agreement also required Siemens to supply C2L with the patented technologies and provide C2L with all necessary engineering services, technical field assistance, and training. (Id. ¶ 15). Siemens further agreed to guarantee the performance of the equipment C2L would use at the West Paducah plant, which would be the same equipment Secure previously purchased from Siemens under the 2007 Contract. (Id. ¶¶ 15, 16). At all relevant times, Siemens promised to honor its obligations and guarantees contained within the 2012 License Agreement. (Id. ¶ 18). Due to Siemens' promises, Secure and C2L entered into contracts with third parties to purchase coal to use at the West Paducah plant. (Id. ¶ 17).

         At some point in 2014, Secure and C2L claim that Siemens made the decision to begin winding down its coal gasification division with the intent to eventually withdraw from the coal gasification market entirely, but that Siemens did not disclose this decision to either Secure or C2L. (Id. ¶¶ 19, 21). In fact, in July 2015, Siemens assured Secure and C2L that it would continue to provide support for the equipment to be used at the West Paducah plant and would continue to abide by the terms of the 2012 License Agreement. (Id. ¶ 33).

         Then, on February 2, 2016, Siemens notified Secure and C2L that it was indeed closing its coal gasification division. (Id. ¶ 20). Siemens further advised that it would no longer provide the support promised in the 2012 License Agreement and would no longer guarantee the performance of the equipment purchased under the 2007 Contract. (Id.). Secure and C2L believe that Siemens knew all along that it would be withdrawing from the coal gasification market, but concealed that information. (Id. ¶¶ 21, 34). This lawsuit ensued.

         In their Complaint, Secure and C2L allege four claims against Siemens. In Count I, Plaintiffs allege that Siemens breached the 2012 License Agreement by repudiating its obligations. In Count II, Plaintiffs allege that Siemens breached the warranty of fitness for particular purpose by selling equipment and licensing technologies which were unfit for building and operating the coal gasification plant in West Paducah. In Count III, Plaintiffs allege that Siemens fraudulently misrepresented that it would honor its obligations under the 2012 License Agreement. And in Count IV, Plaintiffs allege that Siemens fraudulently misrepresented that its coal gasification equipment and technologies were suitable for use at the West Paducah plant. Siemens now moves to dismiss the Complaint in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6).

         II. STANDARD OF REVIEW

         A Rule 12(b)(6) motion to dismiss tests the legal sufficiency of the plaintiff's complaint. In order to survive the motion, the complaint must “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face when the plaintiff alleges enough facts to “allow[] 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). The mere recitation of the elements of a claim is not enough, and the district court need not give any credence to legal conclusions that are unsupported by sufficient factual material. Id. District courts must accept all well-pleaded allegations within the complaint and any documents attached thereto as true and must read the complaint in the light most favorable to the plaintiff. Hunnings v. Texaco, Inc., 29 F.3d 1480, 1484 (11th Cir. 1994) (per curiam).

         III. DISCUSSION

         A. Count I: Breach of Contract

         Siemens moves to dismiss Plaintiffs' breach of contract claim on the ground that Plaintiffs fail to sufficiently allege recoverable damages. Specifically, Siemens contends that the damages Secure and C2L seek in their Complaint are barred by a limitation of liability provision contained within the 2012 License Agreement. Plaintiffs dispute that the limitation of liability provision acts in the way Siemens suggests.

         In order to state a claim for breach of contract under New York law, [2] a plaintiff must allege sufficient facts demonstrating (1) the existence of a contract, (2) performance of the contract, (3) the defendant's breach of the contract, and (4) damages resulting from the defendant's breach. Int'l Gateway Exch., LLC v. W. Union Fin. Servs., Inc., 333 F.Supp.2d 131, 141 (S.D.N.Y. 2004). With respect to damages, a breach of contract claim must be dismissed if the contract on which the claim is ...


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