DALLAS -- An appellate court has overturned a lower court ruling and opened the way for Luminant Energy Company LLC (f/k/a TXU Portfolio Management Company, L.P.) ("Luminant") to recover millions of dollars in damages from wind farms owned by NextEra Energy (f/k/a FPL Energy) that promised but did not deliver the required amount of wind-generated electric energy and renewable energy credits. The Dallas Court of Appeals also affirmed the lower court's ruling rejecting NextEra's claims against Luminant in the case.
"This decision holds the defendants accountable for their failure to live up to their contractual obligations, just as the jury originally intended," said James W. Walker, who was lead counsel in the case with partners Dan Gus and Mike Watson and Melanie Okon, currently a partner with Taber Estes Thorne & Carr. "The appellate court also confirmed that the defendants will receive nothing from the extensive counterclaims they filed in the case."
Luminant filed the lawsuit in 2004 and asserted that the wind farms breached their contractual obligations to deliver energy and related renewable energy credits over a five-year period under the terms of three power purchase agreements. The wind farms claimed they were unable to provide wind-generated power due to a lack of transmission capacity and argued that Luminant was required to provide that capacity. Luminant sought liquidated damages of $50 per megawatt hour for the megawatt hours the wind farms failed to deliver. Before trial, however, the 116th Judicial District Court in Dallas County ruled that the liquidated damages provisions in the power purchase agreements were unenforceable. Faced with this ruling, Luminant sought actual damages at trial instead.
On June 29, 2007, Walker Sewell secured a jury verdict after two weeks of trial on Luminant's breach of contract claim. The jury awarded Luminant a total of $8.9 Million in damages and rejected the wind farms' counterclaims against Luminant. The trial court ultimately threw out the jury verdict and ruled that neither party could recover on its damages claims. The court also ruled that Luminant should return more than $3 million in security the company had accessed in partial satisfaction of the wind farms' failure to deliver energy. Both sides appealed the trial court's rulings.
The Court of Appeals reversed the trial court's judgment against Luminant. The appellate court held that Luminant was not required to provide transmission capacity for the wind farms to generate power and that the liquidated damages provision requiring the wind farms to pay $50 per megawatt hour for the renewable energy and credits they failed to deliver is enforceable. The Court of Appeals also rejected the trial court's ruling that Luminant should return the security funds it received. The case has been remanded to the trial court for a determination of the amount of liquidated damages Luminant will receive.