QUANTUM CLEAN ENERGY SOLUTIONS, LLC v. MERCURY SOLAR SYSTEMS, INC.
2:12-cv-02820
D.N.J.Aug 27, 2015Background
- Mercury Solar Systems, Inc. contracted with Quantum Clean Energy Solutions, LLC (QCES), an LLC whose principals included Cafaro, Cabrizio, Horan and the late Chris Miller. QCES later dissolved.
- QCES is owed money under the contract; Mercury disputed plaintiffs’ right to collect post-dissolution.
- Plaintiffs (Cafaro, Cabrizio, Horan, and Quantum Energy Partners, LLC) claim that, before dissolution, three remaining QCES principals orally assigned QCES’s contract rights and receivables to themselves and QEP.
- Mercury denied any valid assignment and moved for summary judgment that no assignment existed or was valid.
- Plaintiffs cross-moved for summary judgment asserting they hold the contract rights by assignment and are entitled to recover the contract amount, plus interest, fees, and costs.
- The district court found admissible evidence supporting the assignment, rejected Mercury’s legal challenges (including reliance on an LLC-membership-assignment statute and an anti-assignment clause), and entered judgment for Plaintiffs for $80,817.47 plus interest, attorney’s fees, costs and disbursements.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Existence of an assignment of QCES’s contractual rights | Plaintiffs: oral assignment by three remaining QCES members before dissolution transferred receivables to plaintiffs | Mercury: no assignment occurred; plaintiffs cannot enforce QCES’s rights | Court: genuine issue resolved for plaintiffs — affidavit evidence sufficient; Mercury failed to raise a material dispute; assignment recognized |
| Validity of assignment given an LLC member’s (Miller) lack of consent | Plaintiffs: assignment of contract rights (not transfer of membership interest) authorized by majority of members and thus valid | Mercury: transfer invalid because Miller did not consent; cites LLC assignment statute | Court: statute governing transfer of LLC membership interests inapplicable; assignment of contract rights valid based on majority member action |
| Effect of contractual anti-assignment clause | Plaintiffs: clause is a covenant not to assign and does not bar assignment of rights to damages or rights after full performance; Owen/Restatement controls | Mercury: clause bars assignment without prior written consent | Court: clause did not manifest the specific intent to void assignments required by Owen; anti-assignment provision did not bar the assignment |
| Mercury’s counterclaim that QCES breached the contract | Plaintiffs: no admissible evidence of QCES breach; hearsay proffered by Mercury is inadmissible | Mercury: relies on hearsay statements and interrogatory references asserting Quantum used Mercury’s information | Court: Mercury produced no admissible evidence of breach; summary judgment for plaintiffs on all claims and counterclaims |
Key Cases Cited
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden-shifting framework)
- Jersey Cent. Power & Light Co. v. Lacey Township, 772 F.2d 1103 (3d Cir. 1985) (nonmoving party must show genuine issue for trial)
- Gleason v. Norwest Mortg., Inc., 243 F.3d 130 (3d Cir. 2001) (sufficiency of evidence to create genuine issue at summary judgment)
- Owen v. Cna Ins./Continental Cas. Co., 167 N.J. 450 (N.J. 2001) (New Jersey follows Restatement §322; anti-assignment clause must expressly void assignments to bar certain transfers)