Co-authored by Jason F. Clouser.

The Delaware Supreme Court recently reversed a Superior Court’s grant of summary judgment in a case involving the sale of a renewable energy business.

BLGH Holdings LLC (BLGH), entered into an agreement to sell its renewable energy business, Beacon Landfill Gas Holdings, LLC (Beacon) to enXco, LFG, Holding, LLC (enXco) pursuant to a Unit Purchase Agreement (UPA). The UPA required enXco to pay to BLGH a purchase price of $12 million, plus a bonus payment if certain conditions were met. The Beacon sale was consummated and enXco paid the $12 million purchase price. enXco refused to pay the bonus payment, however, asserting that the conditions for its payment had not been met. BLGH then sued enXco for breach of contract and, on summary judgment, the lower court dismissed its claim.

The UPA predicated the bonus payment, in relevant part, on the consummation of a transaction between Shell Energy North America, L.P. (Shell) and enXco pursuant to which Shell would purchase Beacon’s gas production. There was no dispute that a transaction with Shell was consummated, but the parties could not agree on whether the transaction was “as outlined in Section 6.1(f) of the UPA,” as required under the UPA in order to trigger the obligation to make the bonus payment. Section 6.1(f) did not set forth any specific terms for the transaction, but rather merely referred to a letter of intent between Beacon and Shell, which recited a number of “indicative” terms.

The lower court ruled that BLGH was not entitled to the bonus payment because the terms of the Beacon-Shell transaction were materially different than the terms set forth in the letter of intent. The Supreme Court reversed, finding that the UPA only required completion of the transaction “outlined” in the UPA, which merely referred to the Beacon-Shell transaction without any specific transaction terms, not the more detailed letter of intent. Moreover, the letter of intent expressly stated that its terms could be modified. The Supreme Court held that in the face of the provision permitting modification, enXco could not, as a matter of law, demonstrate that the changes to the Beacon-Shell transaction were so material that the transaction was not one in accordance with the UPA’s bonus provision. Accordingly, it reversed the lower court’s decision.

BLGH Holdings LLC v. EnXco LFG Holding, LLC, C.A. No. N10C-10-116 (Del. Mar. 27, 2012).