Leaf Invenergy Co. v. Invenergy Renewables LLCAnnotate this Case
In 2008, Invenergy Wind LLC, a wind energy developer, was raising money for a Series B investment round, and Leaf Clean Energy Company (“Leaf Parent”), an investment fund, expressed interest. After extensive negotiations, Leaf Parent invested $30 million in Invenergy Series B notes through a vehicle called Leaf Invenergy Company (“Leaf”). The agreement governing the Series B notes gave noteholders such as Leaf the right to convert to equity and incorporated an LLC agreement that the noteholders and Invenergy would execute upon conversion. The Series B Note Agreement and the Series B LLCA also included provisions that prohibited Invenergy from conducting a “Material Partial Sale” without Leaf’s consent unless Invenergy paid Leaf a premium called a “Target Multiple.” Although the parties renegotiated several aspects of their agreements with one another over the next few years, the consent provisions persisted in substantially similar form into a Third Amended and Restated LLC Agreement, which was the operative agreement in this dispute. Leaf filed suit after Invenergy closed a $1.8 billion asset sale - a transaction that Invenergy conceded was a Material Partial Sale - without first obtaining Leaf’s consent or redeeming Leaf’s interest for the Target Multiple. After a trial, the Court of Chancery concluded that, although Invenergy had breached the Material Partial Sale consent provisions, Leaf was not entitled to the Target Multiple. The court then awarded only nominal damages because, according to the court, Invenergy had engaged in an “efficient breach.” The Court of Chancery directed the parties to complete a buyout of Leaf’s interests pursuant to another LLC Agreement provision that Invenergy had invoked after Leaf had filed suit. The Delaware Supreme Court disagreed with the Court of Chancery’s interpretation of the consent provision and its award of nominal damages and therefore reversed. Because Invenergy conducted a Material Partial Sale without Leaf’s consent and without paying Leaf the Target Multiple, Leaf was entitled to the Target Multiple as contractual damages. The Court awarded Leaf the Target Multiple in damages on condition that it surrenderd its membership interests in Invenergy.