889 F.3d 461
8th Cir.2018Background
- Smoky Hills Wind Project II, LLC (Smoky II) sold wind energy to the City of Independence, Missouri (Independence) under a 2008 Renewable Energy Purchase Agreement (REPA).
- REPA distinguishes Economic Curtailments (buyer pays for undelivered energy) from Emergency Curtailments (buyer entitled to refund if Seller accepts documentation), and requires monthly invoices and certain invoice content.
- From March 2012 Smoky II began receiving SPP curtailment orders; Smoky II waited and then issued a series of twelve invoices (March 2013–Sept 2014) for prior curtailments, totaling disputed amounts.
- District court found the disputed curtailments were Economic (not Emergency) under the REPA, and that Article 9’s billing scheme applied to curtailment charges.
- The court held REPA required timely billing; under Kansas law an invoice must be issued within a reasonable time and the court treated fifteen business days as reasonable, awarding several of the invoices but denying claims for untimely invoices.
- On appeal the Eighth Circuit affirmed, interpreting REPA as a whole to require monthly billing for all charges (including curtailments), upholding the district court’s Emergency-curtailment definition, and rejecting Independence’s over-allocation and other challenges.
Issues
| Issue | Smoky II (Plaintiff) Argument | Independence (Defendant) Argument | Held |
|---|---|---|---|
| Whether REPA’s 15-business-day billing deadline (Art. 9.1) applies to curtailment invoices | 9.1 applies only to energy actually delivered; curtailment invoices are governed by §8.2 and have no 15-day limit | Article 9’s monthly billing and invoice-content requirements apply to all charges including curtailments; 15-day deadline applies | Court construed REPA as a whole and held Article 9 governs curtailment billing; timely billing required; some invoices untimely under reasonable-time analysis were denied, others allowed |
| Whether delayed billing prejudiced Independence such that invoices are invalid | Smoky II: lack of prejudice; could bill later once it had data under §8.2 | Independence: delay caused prejudice and violated contractual expectation of monthly billing | Court found no reversible error; district court appropriately weighed prejudice and reasonableness; findings not clearly erroneous |
| Whether curtailments at issue were Emergency (TLR Level 6) or Economic | Smoky II: many SPP curtailments were Emergency only if specifically declared TLR Level 6; narrower reading favors Seller | Independence: Emergency-curtailment definition encompasses curtailments identified by certain TLR Level 6 circumstances; broader reading favors Buyer | Court adopted plain-language and industry meaning: Emergency Curtailment means SPP curtailment due to a critical bulk-grid condition (TLR Level 6); disputed curtailments were Economic |
| Whether Smoky II over-allocated energy to Independence (allocation dispute) | Smoky II: allocation adjustments could reduce Independence’s share when others curtailed | Independence: REPA guarantees its ~10.1% allocation and daily operating procedures fill gaps; it paid prior invoices knowing allocations | Court found evidence supported Independence’s allocation control; rejected over-allocation claim |
Key Cases Cited
- Gateway Customer Solutions, LLC v. GC Services Ltd. P’ship, 825 F.3d 502 (8th Cir. 2016) (applies contract choice-of-law provision to interpret governing law)
- Warner Bros. Entertainment, Inc. v. X One X Productions, 644 F.3d 584 (8th Cir. 2011) (appellate courts may affirm on any correct ground disclosed in the record)
- Prairie Land Elec. Co-op v. Kansas Elec. Power Co-op, Inc., 323 P.3d 1270 (Kan. 2014) (Kansas courts exercise unlimited review over written-contract interpretation and emphasize ascertaining parties’ intent)
- Anderson v. Dillard’s, Inc., 153 P.3d 550 (Kan. 2007) (when contract terms are clear, intent is determined from the contract language)