Opinion
Case No. 01-16034 (AJG) Jointly Administered.
October 12, 2005
Martin J. Bienenstock (MB 3001), Brian S. Rosen (BR 0571), Martin A. Sosland (Pro Hac Vice), Vance L. Beagles (Pro Hac Vice), WEIL, GOTSHAL MANGES LLP, New York, NY, Attorneys for Enron Wind Systems, LLC.
Jonathan L. Flaxer, Douglas L. Furth, GOLENBOCK, EISEMAN, ASSOR, BELL PESKOE LLP, New York, NY, Attorneys for James I. Lerner, Barry I. Saitman and Alexander Jenkins.
Donna T. Parkinson, Thomas R. Phinney, PARKINSON PHINNEY, Sacramento, CA, Attorneys for James I. Lerner, Barry I. Saitman and Alexander Jenkins.
RECITALS:
Procedural Background:
A. On December 2, 2001, and from time to time thereafter, Enron Corp. and certain of its direct and indirect subsidiaries (collectively, the "Debtors") filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101 et seq. (the "Bankruptcy Code").
References to the Debtors include the Reorganized Debtors (as defined in the Plan (defined hereafter)), where appropriate.
B. Enron Wind Systems, LLC (f/k/a EREC Subsidiary I, LLC), as reorganized debtor (the "EWS" or the "Debtor"), is a California limited liability company with its principal place of business in Houston, Texas. EWS filed a petition for relief under chapter 11 of the Bankruptcy Code on February 20, 2002.
C. On July 15, 2004, the Court entered an order confirming the Debtors' Supplemental Modified Fifth Amended Joint Plan of Affiliated Debtors Pursuant to Chapter 11 of the United States Bankruptcy Code, dated as of July 2, 2004 (the "Plan"). On November 17, 2004, the Plan became effective.
Factual Background
D. On October 5, 1985, Zond Systems, Inc. ("Zond"), as predecessor to EWS, and Santa Clara Wind Leasing, Inc., as predecessor to Defendants, James I. Lerner, Barry Saitman, and Alexander Jenkins, individually and collectively, doing business as Wind Developers or WD (collectively, "Defendants"), executed that certain Installation and Production Payment Agreement (the "Installation Agreement"), dated as of October 5, 1985. A copy of the Installation Agreement is attached to the Complaint (as hereafter defined) as Exhibit "A."
E. Pursuant to the Installation Agreement, EWS was to make certain payments to Defendants based upon any reduction in royalties payable to the City of Santa Clara under that certain lease agreement dated March 6, 1984 (the "1984 Lease") between the City of Santa Clara and Zond (as successor in interest) as compared with those royalties payable to the City of Santa Clara under that certain Amended and Restated Leased Agreement dated October 29, 1985 (the "1985 Lease") (collectively, the 1984 Lease and the 1985 Lease are referred to as the "Leases") between the City of Santa Clara and Zond with regard to certain property located in Alameda County, California (the "Property"). The Parties (as hereafter defined) disagree as to the application of the formula for calculating the royalty payments.
F. Both Leases provided for two tiers of payments to the City of Santa Clara. First, the Leases provide for a fixed Minimum Rent Payment. Second, in certain situations, the Leases also provide for a "Percentage Rent," or royalty from the sale of energy generated on the Property, in addition to the Minimum Rent Payment. From February 2, 1996 to September 17, 2003, Minimum Rent Payments were made.
G. On or about July 18, 2002, the Defendants filed a Proof of Claim in the amount of $37,044.69 for amounts due under the Installation Agreement, which was assigned Claim No. 2498 (the "Original Claim"). On or about June 3 and 4, 2004, the Defendants filed two proofs of claims each in the amount of $229,389 amending the Original Claim, which were assigned Claim Nos. 24852 and 24846 (the "Amended Claims," and collectively with the Original Claim, the "Claims"). Each of the Amended Claims seeks damages resulting from the purported rejection of the Installment Agreement.
H. On September 10, 2004, EWS commenced an adversary proceeding before this Court styled Enron Wind Systems, LLC (f/k/a EREC Subsidiary I, LLC, Plaintiff vs. James I. Lerner, Barry Saitman, and Alexander Jenkins, individually and collectively doing business as Wind Developers and/or WD, Defendants, Adversary No. 04-04267 (AJG) (the "Adversary") by the filing of a complaint (as the same has been amended from time to time, the "Complaint") against the Defendants. In the Complaint, EWS sought (i) a declaration that the Installation Agreement between EWS and Defendants is not an executory contract, (ii) the avoidance and recovery of certain purported unauthorized transfers paid to the Defendants post-petition, and (iii) the disallowance of the Claims filed by the Defendants, inter alia, pursuant to section 502(d) of the Bankruptcy Code.
I. The Parties now desire to resolve the Adversary and the Claims on the terms and conditions provided herein.
AGREEMENT
NOW, THEREFORE, IT IS HEREBY AGREED BY THE PARTIES, BY AND THROUGH THEIR RESPECTIVE COUNSEL, AS FOLLOWS:
1. Claim No. 24852 will be reduced and allowed as a General Unsecured Claim (as defined in the Plan) in the amount of $100,000 against EWS (the "Allowed EWS Claim") and is to be included in and to receive distributions as a Class 46 claim in accordance with the terms of the Plan.
2. All scheduled liabilities that relate to the Allowed EWS Claim as set forth in the Schedules (as defined in the Plan), as well as Claim Nos. 2498 and 24846, are hereby disallowed in their entirety and expunged in favor of the Allowed EWS Claim.
3. If the Installation Agreement has not terminated prior to the date hereof, it is expressly terminated hereunder with no other or further liabilities accruing by any party with respect thereto.
4. EWS hereby waives, releases, and forever discharges the Defendants and each of their past, present, and future officers, directors, partners, members, employees, agents, and servants from any and all claims, obligations, damages, actions, causes of action, and liabilities of whatsoever kind, nature, character, and description, whether in law or equity, whether sounding in tort, contract, or under other applicable law, whether known or unknown, and whether anticipated or unanticipated, that EWS and its successors and assigns ever had, now have, or may ever have arising from any event, transaction, matter, circumstance, or fact in any way arising out of, arising as a result of, related to, with respect to, in connection with, or based in whole or in part on the agreements described in the Claims and under the agreements giving rise to the Claims (the "Agreements"); provided, however, that EWS does not waive or release the Defendants from their obligations under this Stipulation and Order.
5. The Defendants waive, release, and forever discharge EWS and its affiliates and each of their past, present, and future officers, directors, partners, members, employees, agents, and servants from any and all claims, obligations, damages, actions, causes of action, and liabilities of whatsoever kind, nature, character, and description, whether in law or equity, whether sounding in tort, contract, or under other applicable law, whether known or unknown, and whether anticipated or unanticipated, that the Defendants and their successors and assigns ever had, now have, or may ever have arising from any event, transaction, matter, circumstance, or fact in any way arising out of, arising as a result of, related to, with respect to, in connection with, or based in whole or in part on the Agreements; provided, however, that the Defendants do not waive or release EWS from its obligations under this Stipulation and Order.
6. EWS and the Defendants (collectively, the "Parties") agree that this Stipulation and Order is the entire understanding of the Parties and is intended to be the complete and exclusive statement of the terms thereof and may not be modified or amended except by a writing signed by all the Parties hereto, which shall be so ordered by the Court.
7. The Stipulation and Order shall become effective and binding as of entry of the Stipulation and Order on the docket as "so ordered" by the Court. In the event that this Stipulation and Order is not approved by the Court, it shall be null and void and have no force and effect.
8. Upon the entry of the Stipulation and Order by the Court, as soon as practicable, EWS shall dismiss the Adversary with prejudice.
9. This Court shall retain exclusive jurisdiction with respect to any and all issues or disputes that may arise in connection with this Stipulation and Order.
10. This Stipulation and Order shall be binding on the Parties hereto and their respective successors and assigns.
11. This Stipulation and Order may be executed in any number of counterparts and shall constitute one agreement, binding upon all Parties thereto as if all Parties signed the same document; all facsimile signatures shall be treated as originals for all purposes.
SO ORDERED: