Abd wrote:
But the lack of the required written agreement to the GPT start date has become a near-certainty. Rossi tried to force it without consent. Fatal error. If he worked hard for a year, he more or less wasted it, and guaranteed, by his behavior, that he would not be paid. Even if the damn plant worked!
I admit to having no confidence I understand the contract law aspects of this case.[/quote]
I have what might be called "reasonable confidence." Until I read the material many times, it was confusing. Admitting a lack of understanding is an excellent beginning. "If you are not confused, you don't understand the situation,:" can sometimes be said. At least at first!
QuoteBut... How could the contract be equitable if IH could avoid paying simply by refusing to consent to the start of a GPT? Something more nuanced is required here or "fair play" rules would come into effect.
I have addressed this to some degree already, so I'll take the opportunity to expand on it. First of all, can parties agree to an "inequitable contract"? What, in fact, defines equity? These are questions that lawyers may spend years learning to understand. So I will just give my relatively simple understanding.
It's necessary here to be precise. Contracts are commonly written with an assumption of good faith. It is impossible to anticipate all situations, the contract would become a tome. This Agreement was primitively written, my opinion.
Now, consider the original Agreement. The GPT was to start immediately upon delivery of the 1 MW E-Cat Plant. The way the contract was written, Penon would be the ERV unless there was some other agreement. Was that equitable?
(It was downright crazy, in fact. Hang $10 million on Rossi's close friend was bad enough, but then a default that the same ERV continues? Formula for conflict. So what was IH thinking? My sense: the test was to be in their facility. They could closely watch it. They could add instrumentation. They would have control of power disspation! They could independently measure both output power and input power. And if they saw fraud, they could refuse to pay. No matter what the contract says. There is a presumption of good faith underlying all agreements. Basically, Rossi could not create more than a bad smell, if he wanted to, in their facility, supplying power to a customer IH chose, who would measure it. Rossi was not ready for such a test. The original test plan was unworkable.
So they punted. They created a failsafe plan. The test was to be postponed to a time they agreed upon. That agreement could cover everything, up to and including a complete change in the requirements. This is the bottom line and this is standard: if everyone agreed, the Agreement could be changed. Otherwise it's the original agreement, or an accepted amendment.
So could IH unreasonably refuse to schedule a GPT? No. That would be actionable, because it would be frustrating the purpose of the agreement, the quid pro quo on which it was founded. Rather, if there was disagreement, they could negotiate, and if that failed, they could ask a court to decide (or, in fact, agree to, say, binding arbitration.) The requirement for all parties to agree was essential to an agreement to postpone until ready. It was not a carte blanche to avoid payment, it would not work that way.
Who wrote the original Agreement? I think there was some negotiation, but much of it seems to me to have come from Rossi. IH's strategy at that point was to give Rossi what he wanted within reason. They were willing to go substantially outside of normal reason. But not to commit suicide. What they wanted was for him to do what he promised to do: show them how to make devices that worked. If we look at the Agreement now, some of it looks unfair to Rossi. Yet he signed it. He complains that they misled him, but did he consult a lawyer before signing a $100 million contract?
My sense is that Rossi believes he is really smart. That can be fatal. Humility is a virtue for strong survival reasons!
There is no sign that Rossi was ready for a GPT before the proposed move to Doral. The IH theory is that this was simple: he knew it could not pass a test with IH fully engaged. He needed to have full control, and he could not get that in North Carolina, so he arranged for a set of circumstances in Florida that could look like a GPT, and was willing to pay IH for this, I assume that the $30,000 per month came out of his pocket. (this is all rebuttable, but by this time, I'm not holding my breath for it.)
In any case, it was not inequitable for the Agreement to be changed to require mutual consent for the start of the test. The one problem would be unreasonable refusal, and that would then be an ordinary contract dispute. The literal meaning of the requirement could be interpreted inequitably, but a court would be unlikely to do that.
For Rossi to clearly attempt to sidestep that requirement for agreement, with deception, was attempted fraud.
Even if the plant worked.
QuoteAnd, if there is something more nuanced Rossi's lawyers have perhaps more to play with. Not that, generally, I think they have much due to the obvious inequity of Rossi claiming 1MW when he clearly is not producing it.
So the layers of this case, from the IH position:
1. No GPT, for three reasons. They asserted the first (unsigned document) and second ("six cylinder unit") in the first MTD, and because of the judge's comment in her rejection of the dismissal of Count 1, they asserted the second in the Motion for Judgment. The have withdrawn that and if they file another motion, I expect them to strongly assert the third reason, the lack of an agreement to the test day. Rossi's claim of that agreement was not explicit, it was implied, and has no substantial evidence behind it, only his conclusory statements that this or that showed acceptance of the GPT, perhaps, if he actually claims estoppel on that, which he did not actually do. Did he hope nobody would notice?
If he claims estoppel, he might "get away with it," but the result will only be a drastic increase in his legal expenses, because unless he actually has some clear agreement, not just a faux, kinda-looks-like agreement, he will lose, and probably before trial, when discovery will be complete, and he has evidence or he doesn't.
2. The test setup was fraudulent, hence unclean hands.
3. The test itself was fraudulent.
Number 1 is far, far easier to establish.
By the way, there are those who express chagrin that Rossi v. Darden may not reveal whether the plant worked or not. The evidence that the plant did not work is mostly at this time circumstantial, though the "informal warehouse calorimeter" issue is pretty strong. However, Darden has filed a countersuit where performance may become an issue.
