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Supreme Court of New York, New York County
October 15, 2020, Decided
Confidentially agreements are ubiquitous in the business world, greasing the wheels of complex investments where parties are wary of a potential competitor stealing their know-how and doing the deal itself. The failure to enforce such agreements would stifle investment and foreclose potential fruitful partnerships.
This case presents a brazen example of a party flouting a confidentiality agreement and stealing a lucrative investment opportunity. In 2013, the parties entered into a confidentiality agreement to facilitate their negotiations over defendants' potential investment in plaintiff's energy project. That agreement expressly prohibited defendants from using plaintiff's confidential information to independently pursue a similar energy project and prohibited defendants from hiring plaintiff's employees. They did both.
Defendants' motives and actions here, at least at the outset, were understandable, albeit certainly wrongful. Yet, what transpired in the years that followed, and particularly during the latter stages of this litigation, is staggering. It is a tale of highly competent [**2] industry players [*2] seeking to game the legal system, thinking they could either get away with their breaches or be held liable in an amount far less than what they really gained from their illicit actions. While the market was hot, they delayed developing and marketing the investment, thinking they could fool plaintiff and the court into thinking it was really worthless and that there was no demand. They fooled no one. Making matters worse, the market significantly deteriorated while they were stalling, leading to the value of the opportunity they stole materially depreciating.
New York law computes lost profits as of the date of the breach without regard to the benefit of hindsight about how the market in fact behaved. Defendants' litigation strategy was thus destined to fail.
Full case includes Shepard's, Headnotes, Legal Analytics from Lex Machina, and more.
2020 N.Y. Misc. LEXIS 9957 *; 2020 NY Slip Op 33404(U) **
[**1] INDECK ENERGY SERVICES, INC., Plaintiff, - v - MERCED CAPITAL, L.P., MERCED PARTNERS III, L.P., MERCED HALYARD VENTURES, LLC, CARSON BAY ENERGY HOLDINGS IV, LLC, Defendants. INDEX NO. 652171/2014
Notice: THIS OPINION IS UNCORRECTED AND WILL NOT BE PUBLISHED IN THE PRINTED OFFICIAL REPORTS.
Subsequent History: Affirmed by, Appeal dismissed by, in part Indeck Energy Servs., Inc. v. Merced Capital, L.P., 2021 N.Y. App. Div. LEXIS 6842 (N.Y. App. Div. 1st Dep't, Dec. 7, 2021)
Prior History: Indeck Energy Servs., Inc. v. Merced Capital, L.P., 2018 N.Y. Misc. LEXIS 592 (N.Y. Sup. Ct., Feb. 9, 2018)
damages, energy, projections, assumptions, lost profits, valuation, power plant, reliable, parties, peaker, plant, credible, cash flow, employees, ordinary course of business, confidentiality agreement, confidential information, collateral estoppel, time of breach, hindsight, awarding, mitigate, costs, hire, peak, market value, Defendants', speculative, persuasive, investing