QUANTUM CLEAN ENERGY SOLUTIONS, LLC v. MERCURY SOLAR SYSTEMS, INC.

Filing 56

OPINION fld. Signed by Judge Stanley R. Chesler on 8/27/15. (sr, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
:
QUANTUM CLEAN ENERGY
:
SOLUTIONS, LLC,
:
:
Plaintiff, :
:
v.
:
:
:
MERCURY SOLAR SYSTEMS, INC.,
:
Defendants. :
:

Civil Action No. 12-2820 (SRC)

OPINION

CHESLER, District Judge
This matter comes before the Court on two motions: 1) the motion for summary judgment
by Defendant Mercury Solar Systems, Inc. (“Mercury”); and 2) the cross-motion for summary
judgment by Plaintiffs John Cafaro, Michael Cabrizio, Mark Horan, and Quantum Energy
Partners, LLC (collectively, “Quantum”). For the reasons stated below, Plaintiffs’ motion for
summary judgment will be granted, and Defendant’s motion for summary judgment will be
denied.
This case arises from a contract dispute between the parties. There is no dispute that
Mercury entered into a contract with a now-dissolved entity, Quantum Clean Energy Solutions,
LLC (“QCES”). The principals of QCES were John Cafaro, Michael Cabrizio, Mark Horan and
Chris Miller, now deceased. Mercury owes QCES money, pursuant to the contract. QCES has
since dissolved. The first phase of this litigation has turned on a dispute over whether Plaintiffs
are entitled to enforce the contract and collect the payments due QCES under the contract.
Plaintiffs contend that QCES assigned those rights to them orally before dissolving; Mercury

contends that there was no assignment and, consequently, Plaintiffs have no right to collect.
Defendant now moves for summary judgment on the existence of a valid assignment.
Plaintiffs bear the burden of proof of the assignment. “[W]ith respect to an issue on
which the nonmoving party bears the burden of proof . . . the burden on the moving party may be
discharged by ‘showing’ – that is, pointing out to the district court – that there is an absence of
evidence to support the nonmoving party’s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325
(1986). Mercury, as the movant without the burden of proof at trial, satisfies its initial summary
judgment burden by pointing to the absence of evidence of the assignment.
Once the moving party has satisfied its initial burden, the party opposing the motion must
establish that a genuine issue as to a material fact exists. Jersey Cent. Power & Light Co. v.
Lacey Township, 772 F.2d 1103, 1109 (3d Cir. 1985). “A nonmoving party has created a
genuine issue of material fact if it has provided sufficient evidence to allow a jury to find in its
favor at trial.” Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001). Plaintiffs
point to the affidavit of Michael Fabrizio, which states: “Prior to dissolving QCES, the
remaining principals of QCES assigned the rights to QCES’s receivables to themselves and to
QEP.” (Fabrizio 7/3/15 Cert. ¶ 18.) As to the existence of the assignment, this evidence is
sufficient to allow a jury to find in favor of Plaintiffs at trial.
In moving for summary judgment, Mercury also argues that the assignment is invalid
because one member of the LLC, Chris Miller, did not consent to it.1 Mercury points to the
former N.J. Stat. Ann. § 42:2B-44, since repealed, which states:

1

In Mercury’s reply brief, however, Mercury states that it does not contest the validity of
the assignment but, rather, its existence. It seems that Mercury abandoned this argument in
challenging the validity of the assignment.
2

a. A limited liability company interest is assignable in whole or in part except as
provided in an operating agreement. The assignee of a member's limited liability
company interest shall have no right to participate in the management of the
business and affairs of a limited liability company except as provided in an
operating agreement and upon:
(1) The approval of all of the non-assigning members of that interest, if any, of
the limited liability company . . .
Mercury has confused the issues. Plaintiffs do not contend that Plaintiffs assigned their
membership interests in the LLC to someone. Rather, Plaintiffs contend that QCES, as a
contracting party, assigned to them its rights to the specific contract in question. Chris Miller’s
membership interest in QCES is not at issue, nor is his consent to any transfer of membership
interest at issue; former N.J. Stat. Ann. § 42:2B-44 does not apply. Rather, it appears that three
out of the four members of QCES, prior to dissolution of the LLC, agreed to assign to Plaintiffs
certain specific contractual rights which belonged to QCES. This would have been an ordinary
business decision authorized by a majority of the members of the LLC. Mercury has provided
no legal basis to find that the three members did not have the authority and power to assign these
specific contractual rights.
In the alternative, Mercury argues that any assignment of rights under the contract is
barred by an anti-assignment provision. The parties do not dispute that the contract contained
this provision barring assignment without the prior consent of the other contracting party:
“Except as expressly indicated otherwise, no Party may assign this Agreement (or any rights or
obligations hereunder) without the prior written consent of the other Party.” (Fabrizio Cert. Ex.
1 § 10.A.) Plaintiffs argue that, under New Jersey law, the anti-assignment provision would not
bar the assignment in question, citing the New Jersey Supreme Court’s decision in Owen v. Cna
Ins./Continental Cas. Co., 167 N.J. 450, 460 (2001). In that case, the Court held that New Jersey
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law follows the Restatement (Second) of Contracts § 322, which states:
(2) A contract term prohibiting assignment of rights under the contract, unless a
different intention is manifested,
(a) does not forbid assignment of a right to damages for breach of the whole
contract or a right arising out of the assignor's due performance of his entire
obligation . . .
Plaintiffs contend that QCES assigned a right arising out of the assignor’s due performance of
his entire obligation. In Owen, the New Jersey Supreme Court held that, to bar such an
assignment, an anti-assignment provision must “manifest an intent to the contrary with
specificity.”
To meet that standard, the non-assignment provision generally must state that
non-conforming assignments (i) shall be “void” or “invalid,” or (ii) that the
assignee shall acquire no rights or the non-assigning party shall not recognize any
such assignment. In the absence of such language, the provision limiting or
prohibiting assignments will be interpreted merely as a covenant not to assign.
167 N.J. at 461. The anti-assignment provision in the contract does not meet this standard.
Pursuant to Restatement (Second) of Contracts § 322(a), the anti-assignment provision did not
operate to bar the assignment of the right to bring the claims in the present action.
Plaintiffs have pointed to evidence that QCES assigned its rights under the contract at
issue to them. Mercury has pointed to no evidence which raises a material factual dispute.
Plaintiffs have defeated Mercury’s motion for summary judgment, which will be denied.
Plaintiffs move for summary judgment on all claims and counterclaims. Plaintiffs have
shown that they are entitled to judgment as a matter of law that, by virtue of the assignment, they
have the right to bring their claims against Mercury. As to the remaining issues, Mercury points
to evidence that, Mercury argues, raises a factual dispute over who breached and the amount of
damages.
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Mercury points to two pieces of evidence: 1) the deposition testimony of Jared Haines;
and 2) an interrogatory answer by Mercury. As to the Haines deposition, Haines states that Chris
Miller told him that Quantum was utilizing Mercury’s information. (Haines Dep. 18:13-19:5.)
This is hearsay and does not fall within any available exception to Federal Rule of Evidence 802.
As to the interrogatory answer, made by Mercury, it states that Miller told the same thing to
Ashlee Branan. (Scrivo Dec. Ex. A ¶ 18.) Mercury does not point to any affidavit or testimony
from Branan but, even if it had, that would appear to be inadmissible hearsay as well.
Mercury has pointed to no admissible evidence that QCES breached the contract. It thus
has nothing to support its contention that QCES breached the contract and that it is entitled to
damages for the breach. Mercury has failed to point to evidence which raises any material
factual dispute in regard to Plaintiffs’ motion for summary judgment on all claims and
counterclaims in this case. Plaintiffs have shown that, pursuant to Federal Rule of Civil
Procedure 56, they are entitled to judgment as a matter of law. Plaintiffs’ motion for summary
judgment is granted in its entirety. Judgment shall be entered in favor of Plaintiffs on all claims
in the Complaint and all counterclaims, and Plaintiffs shall be awarded $80,817.47, plus interest,
attorney’s fees, costs and disbursements.2

s/ Stanley R. Chesler
Stanley R. Chesler, U.S.D.J
Dated: August 27, 2015

2

Mercury concedes that the contract expressly provides for an award of attorney’s fees
and costs to a prevailing party in any legal action. (Def.’s Br. 20.)
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