Lawsuit seeks $12M in liens on six Cape solar projects

BARNSTABLE — A company that built six solar farms at capped landfills on Cape Cod has filed a lawsuit seeking to have more than $12 million in liens placed on revenue generated from the projects.

The Cape and Vineyard Electric Cooperative, along with the towns of Barnstable, Brewster, Chatham, Dennis, Eastham, and Harwich, have been named as defendants in the lawsuit. A lawyer for the cooperative said it will participate in the lawsuit as necessary to protect its interests and the interests of its member towns in the solar projects.

The cooperative was formed in 2007 to pursue renewable energy projects on the Cape and Martha's Vineyard. The organization, which supporters say is a benefit to towns and the environment, has drawn fire from critics who argue that ratepayer funds have been funneled through the Cape Light Compact to pay for the cooperative's projects without proper oversight. The compact was formed in 1997 to buy power for electricity customers on the Cape and Vineyard, provide energy efficiency programs and advocate for ratepayers.

Late last month, Lowell-based American Capital Energy Inc. filed a 27-page complaint in Barnstable Superior Court claiming that Redwood Solar Development and Clean Focus Development, affiliated companies that financed and hold leases on the projects, owe it more than $12 million in payments due on engineering, procurement and construction agreements.

American Capital is asking that the court allow it to implement a lien on payments currently being made by the cooperative to Redwood and Clean Focus. The cooperative receives the payments from each of the towns named in the suit except Dennis, which makes payments directly to Redwood and Clean Focus.

A hearing on a motion by American Capital for a preliminary injunction is scheduled for 2 p.m. Thursday in Barnstable Superior Court, said Charles McLaughlin, assistant town attorney in Barnstable.

If the injunction is granted, the cooperative would be ordered to make its payments to an escrow account until the matter is settled, McLaughlin said. But the escrow account may not be necessary because Redwood and Clean Focus have filed insurance bonds for the six properties at the Registry of Deeds, he said. The bonds would likely cover any judgment that would be rendered against the two companies.

“There is a lot in play in terms of moving parts with this case,” McLaughlin said. The lawsuit isn't likely to impact the town or the operation of its solar array at the landfill, he said.

Dennis Town Administrator Richard White called the case “not terribly threatening" and said that he expects legal costs associated with the case will be minimal for the town.

American Capital completed all six solar power plant projects but Redwood refused to pay for the services provided, imperiling American Capital's business and employees, according to the complaint. Redwood asserted it would not pay American Capital, since the projects were not completed in a timely fashion, delays American Capital attributed to Redwood not entering the necessary interconnection agreements with NStar, now known as Eversource Energy.

Barnstable County Commissioner Leo Cakounes, who represents the county on the cooperative board of directors, declined to address the lawsuit other than to say it was discussed in executive session at the cooperative's meeting last Friday.

This latest complication is not the first time the cooperative has experienced problems with a vendor. In 2014, Broadway Electrical Co. Inc., a vendor it contracted with to build 20 megawatts worth of solar projects, went out of business. John Checklick, president of the cooperative, referred questions to the organization's legal counsel at Newton-based BCK Law.

In a statement emailed to the Times, BCK attorney Audrey Eidelman characterized the cooperative and its member towns as "nominal defendants" in the case.

"It is unfortunate that CVEC and certain of its members have been involved in a dispute which is truly between private parties and which does not involve any actions or obligations of these public entities," she wrote. "There are no direct claims being made against CVEC and the towns under the lawsuit."

Since the solar projects are located on town land and the payments the cooperative makes to American Capital's financial partners for the purchase of energy from the projects are the subject of relief in the lawsuit, the cooperative and some of its member towns were named as parties, she wrote.

The complaint filed by American Capital references a similar civil action being initiated in Dukes County on Martha's Vineyard where the company has constructed three solar projects in the towns of Edgartown and Tisbury. Dukes County Commissioner Tristan Israel, who is also a member of the Tisbury Board of Selectmen, said that he is unaware of any related lawsuit filed on the island.

Representatives for American Capital, Clean Focus and Redwood did not return calls seeking comment for this story.