TXU Portfolio Management Company, L.P. N/K/A Luninant Energy Company, L.L.C. v. FPL Energy, LLC FPL Energy Pecos Wind I, LP FPL Energy Pecos Wind IIL
05-08-01584-CV
| Tex. App. | Oct 23, 2015Background
- TXU Portfolio Management Co. (TXUPM) and FPL Energy contracted for annual minimum deliveries of electricity and renewable energy credits (RECs); TXUPM alleges FPL failed to meet those annual minimums.
- The contract measures performance based on the "actual amount" of Net Energy and RECs produced during the contract year, suggesting annual accounting of deficiencies.
- At oral argument, a new "impossibility" theory was floated: breach occurs when it becomes mathematically impossible for FPL to meet the annual minimum before year-end (i.e., remaining obligation exceeds maximum producible energy remaining).
- TXUPM contends neither party treated breach as occurring before year-end; both treated obligations as measured after the full contract year, and contract text supports end-of-year calculation.
- TXUPM argues that (1) the facts here do not support declaring breach at the moment of impossibility, (2) adopting impossibility would actually favor market-price damages over cover damages, and (3) FPL never raised the impossibility theory and thus waived it.
Issues
| Issue | Plaintiff's Argument (TXUPM) | Defendant's Argument (FPL) | Held / Court Treatment (as urged by TXUPM) |
|---|---|---|---|
| When does breach occur for annual minimum delivery obligations? | Breach is measured at the end of the contract year based on actual annual quantities. | Breach occurs daily as missed forecasts accumulate; daily shortfalls are effectively breaches. | TXUPM urges the court to hold breach is annual (end-of-year), not daily. |
| Is a pre-year-end "impossibility" moment (when remaining obligation exceeds producible capacity) itself a breach? | Even if legally available, this theory does not fit these facts; parties treated performance as annual and quantities remain unknowable until year-end. | (Not advanced below) FPL has not argued impossibility. | TXUPM urges the court to decline to adopt or apply an impossibility-breach rule here. |
| If impossibility-breach is adopted, does it trigger cover (UCC §2.712) or market damages (UCC §2.713)? | Impossibility, if recognized, undermines FPL’s daily-cover theory and supports market-price damages; cover requires substitute purchases after breach. | FPL contends TXUPM made daily cover purchases through real-time balancing, so cover damages apply. | TXUPM argues court should apply market damages and remand to determine market-price recovery. |
| Was the impossibility-cover theory waived by failure to raise or prove it? | Yes — FPL never advanced or proved an impossibility theory or identified any calculable impossibility moment or post-impossibility cover purchases. | N/A (FPL did not present this theory). | TXUPM urges waiver; court should not consider the theory if FPL failed to raise it. |
Key Cases Cited
- TXU Portfolio Mgmt. Co. v. FPL Energy, LLC, 328 S.W.3d 580 (Tex. App.—Dallas 2010) (trial-court/post-trial factual findings acknowledging failure to provide contractual minimum annual quantities)
- FPL Energy, LLC v. TXU Portfolio Mgmt. Co., 426 S.W.3d 59 (Tex. 2014) (Texas Supreme Court recognizing FPL failed to produce agreed electricity and RECs and that TXUPM could pursue remedies beyond liquidated damages)
- United Corp. v. Reed, Wible & Brown, Inc., 626 F. Supp. 1255 (D.V.I. 1986) (refusing to treat nonfeasance as repudiation absent a voluntary affirmative act)
- Larose v. Porter, 177 A. 297 (N.H. 1935) (permitting repudiation inference from a party’s demonstrated inability to perform)
- Mar-Kay Plastics, Inc. v. Alco Standard Corp., 825 S.W.2d 381 (Mo. Ct. App. 1992) (allowing repudiation-related consequences even where the other party was unaware of the conduct until later)
- Tongish v. Thomas, 840 P.2d 471 (Kan. 1992) (describing market-price damages under UCC §2.713 as the required measure under the majority rule)