Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Power Rental Asset Co Two, LLC v. Forge Group Power Pty Ltd.

United States District Court, N.D. California

June 29, 2017

POWER RENTAL ASSET CO TWO, LLC, Plaintiff,
v.
FORGE GROUP POWER PTY LTD, et al., Defendants.

          ORDER DENYING APPLICATION FOR TEMPORARY RESTRAINING ORDER AND FOR AN ORDER TO SHOW CAUSE

          RICHARD SEEBORG United States District Judge.

         I. INTRODUCTION

         The application of plaintiff Power Rental Asset Co Two, LLC (“Asset Co”) for a temporary restraining order and for an order to show cause why a preliminary injunction should not issue was heard on June 28, 2017. Asset Co seeks to restrain defendant Forge Group Power Pty Ltd, and its receivers and managers (collectively “Forge”) from drawing on a $44 million letter of credit provided by Asset Co and issued by defendant Bank of America. Asset Co contends that the conditions of the agreement between it and Forge specifying when Forge may draw on the letter of credit have not yet been satisfied. Because Asset Co's reading of the agreement is not tenable, it cannot show the requisite likelihood of success on the merits to warrant preliminary relief, and its application must be denied.

         II. BACKGROUND

         This action grows out of a dispute between Asset Co and Forge as to which of them held “superior right and title to, and interest in” a certain power generation facility, including four GE gas turbine generators (“the Turbines”), located in Australia, at the time Forge commenced insolvency proceedings. Forge had previously been leasing the facility from a party related to Asset Co. The details of the parties' respective claims are irrelevant to the issues they have presented here.[1] After plaintiff initiated litigation in the Middle District of Florida, the parties entered into an “Interim Arrangement Deed” that, among other things, allowed Asset Co to re-lease the facility to a third-party. Under the Interim Arrangement Deed, Asset Co was required to post the $44 million letter of credit as security, and the parties were to resolve their disputes in an “Australian Proceeding.” Forge would be entitled to draw on the letter of credit in the event it prevailed on its claims in the Australian Proceeding that it in fact had a “superior right or title to, or interest in, the Turbines than that (if any) of the [parties related to Asset Co].”

         Apparently proceedings had not yet commenced in Australia at the time of the Interim Arrangement Deed, which therefore contemplated the possibility that litigation might go forward in one of several different courts-or that arbitration might become necessary instead. The document defined “Australian Proceeding” as a proceeding commenced or to be commenced by either side, where:

(a) such proceeding is commenced in the Supreme Court of New South Wales, or if the Supreme Court of New South Wales is unable or unwilling to hear the matter, in the Federal Court of Australia (Sydney Registry) or, if the Federal Court of Australia (Sydney Registry) is unable or unwilling to hear the matter or if the parties agree in writing, in the Supreme Court of Western Australia; or
(b) in the event that the Supreme Court of New South Wales, the Federal Court of Australia (Sydney Registry) or the Supreme Court of Western Australia are each unable or unwilling to hear the matter or decline jurisdiction and the parties do not agree in writing to approach another Australian court to hear the matter, such proceeding will be resolved by arbitration . . . .

         As it turned out, litigation was commenced in the Supreme Court of New South Wales, which ultimately ruled that Forge had superior title to the Turbines under Australian law. Asset Co appealed as a matter of right to the Court of Appeal, Supreme Court New South Wales, which affirmed the trial court's determination. Asset Co then sought “special leave to appeal” to the High Court, which Forge asserts is Australia's functional equivalent of the U.S. Supreme Court. The High Court denied leave to appeal earlier this month, stating “[a]n appeal to the Court would enjoy no prospect of success.”

         Forge then communicated its intent to draw on the letter of credit. Asset Co immediately filed this action in San Francisco Superior Court to prevent Forge from doing so. Forge removed the action to this court, basing jurisdiction on diversity of citizenship.

         Asset Co's contention that Forge is not yet entitled to draw on the letter of credit (or, “the Bond”) rests on the following provisions of the Interim Arrangement Deed.

Forge may make demand under the Bond and is entitled to receive . . . the proceeds of the Bond if . . .
(A) a finding or determination is made in the Australian Proceeding to the substantive effect that any of Forge or the Receivers have a superior right or title to, or interest in, the Turbines than that (if any) of [Asset Co];
(B) any period within which any party to the Australian Proceeding may appeal from a final or summary judgment or order in the Australian Proceeding to the effect referred to in [section (A)] has expired without any party ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.