Preliminary Injunctive Relief Granted To Both Parties To California Energy Project

On October 16, 2024, Justice Andrea Masley granted preliminary injunction applications by participants in a California energy project. The decision was issued under the caption in Viracocha Wind Holdco LLC v. Ignis Energy USA LLC, 652538/2024, and was also entered in a companion action, lgnis Energy USA, LLC v. Salka Wind Development Services Viracocha LLC, Index No. 652587/2024.

A collection of related entities, referred to by the Court as “Salka”, were plaintiffs in the first action and defendants in the companion case. A different collection, sometimes referred to by the Court as “Ignis”, were defendants in the first action and plaintiffs in the companion case. Salka and Ignis entered into a series of contracts, whereby Salka conveyed to Ignis its ownership in, and was to serve as developer of, a wind-powered energy storage system in Alameda, California (the “Project”). Slip op., p. 2.

Complexities in the financing and development of the Project led Salka to declare Ignis in material breach and ultimately commence suit. Ignis filed the companion case, and each sought preliminary injunctive relief, primarily to prevent the other from interfering with, or publicly denying, its role as developer (in case of Salka) or owner (Ignis) of the Project.

Justice Masley found that the relevant “status quo is the positions the parties had prior to” the first declaration of material breach, at which point “lgnis was the owner and Salka was the developer.” Id., p. 11. While there were numerous factual disputes, that “‘will not bar the granting of a preliminary injunction if one is necessary to preserve the status quo.’ (Mr. Natural, Inc. v. Unadulterated Food Prods., Inc., 152 AD2d 729, 730 [2d Dept 1989].)” Id.

“[T]he current situation where vendors, government agencies and others have no idea which party is in charge . . . could destroy the Viracocha Project which would constitute irreparable harm for both parties.” Id. pp. 11-12. Justice Masley therefore ordered that, pending resolution of the matters, the Parties continue to perform their respective obligations, engage in a contractually-mandated dispute resolution process as to Salka’s claim that it had properly exercised a contractual right to reclaim ownership of the Project, and refrain from disputing, but rather expressly reaffirm, each other’s respective roles as developer (Salka) and owner (the Ignis). Id. pp. 14-16.

Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning complex commercial disputes or applications for preliminary relief