Basin Electric Power Cooperative v. Henry et al

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
WILMINGTON DIVISION
IN RE:
LACY M. HENRY and
JUDY B. HENRY,
Debtors. 	Case 	No. 	05-04620-8-JRL
Chapter 11
______________________________________________________________________________
BASIN ELECTRIC POWER COOPERATIVE,
Plaintiff,
v. 	Adversary Proceeding No.
L-05-00262-8-AP
LACY M. HENRY; JUDY B. HENRY;
MPS GENERATION, INC.; MECHANICAL
PLANT SERVICES, INC.; QUALIFIED PLANT
SERVICES, INC.;
Defendants,
and
LACY M. HENRY and JUDY B. HENRY,
Third-Party Plaintiffs,
v.
ORMAT, INC., and CLIFFORD WADDELL,
Third-Party Defendants.
SO ORDERED.
SIGNED this 19 day of September, 2007.
________________________________________
J. Rich Leonard
United States Bankruptcy Judge
____________________________________________________________
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ORDER
The matter before the court is the motion for summary judgment filed by Basin Electric
Power Cooperative (“Basin”) and the motion for summary judgment filed by Lacy M. Henry, Judy
B. Henry, MPS Generation, Inc. (“MPSG”), Mechanical Plant Services, Inc. (“MPS”), and Qualified
Plant Services, Inc. (“QPS”) (hereinafter “Defendants”). On August 22-23, 2007, the court
conducted a hearing on these motions in Wilmington, North Carolina.
UNDISPUTED FACTS
1. 	Basin is a North Dakota cooperative principally located in Bismarck, North Dakota,
that provides electricity to its member cooperatives.
2. 	MPSG is a North Carolina corporation principally located in Wilmington,
North Carolina, and licensed to do business in the State of North Dakota.
3. 	MPS is an administratively dissolved North Carolina corporation that was primarily
engaged in constructing and repairing turbines.
4. 	QPS is an administratively dissolved North Carolina corporation that was in the
business of refurbishing rail cars.
5. 	Lacy M. Henry is a resident of the State of North Carolina and the sole shareholder
of MPSG and MPS.
6. 	Judy B. Henry, wife of Lacy M. Henry, is a resident of the State of North
Carolina and the sole shareholder of QPS.
7. 	MPSG shared payroll accounts and employees with MPS and QPS.
8. 	On November 3, 2003, MPSG and Northern Border Pipeline Company (“Northern
Border”), a Texas general partnership, entered into a Waste Heat Purchase Agreement.
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9. 	Under the Waste Heat Purchase Agreement, MPSG acquired the rights to purchase
waste heat from four compressor stations on the Northern Border Pipeline. (initial sites 7, 9, 10 and
11).
10. 	The Waste Heat Purchase Agreement also gave MPSG an option to acquire one or
more of nine remaining sites (secondary sites 1, 2, 3, 4, 5, 6, 8, 12 and 13).
11. 	On November 5, 2003, MPSG entered into an Engineering, Procurement and
Construction Contract (“EPC Contract”) with Basin, whereby MPSG agreed to furnish and install
four waste heat recovery systems (“WHRS”) at sites 7, 9, 10 and 11 for the purpose of generating
electric power and energy.
12. 	Mr. Henry formed MPSG for the purpose of performing the EPC Contract and
related contracts with Basin.
13. 	John Stephens, the initial director named in MPSG’s articles of incorporation,
believed that MPSG lacked the money and resources to take on the project with Basin.
14. 	When MPSG was formed, no stock certificates were issued in exchange for capital.
15. 	Aside from the Northern Border heat rights and easement, MPSG had no other
known assets, such as patents or equipment, that Lacy Henry could identify in his deposition.
16. 	MPSG did not file a tax return.
17. 	MPSG never conducted director meetings..
18. 	Grady Windham, accountant for MPSG and related entities, was unaware of
any certified audit, review or bound statement for MPSG during its existence or the related entities
since 1995.
19. 	Mr. Henry had no knowledge of the directors and officers of MPSG.
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20. 	Mr. Henry admitted that he was the decision maker for MPSG, including the decision
maker regarding the allocation of capital.
21. 	Mr. Windham considered Powertec and Light Logix as “probably one and the same.”
22. 	Most of the bookkeeping for Powertec and Light Logix was handled through MPS.
23. 	MPSG had no separate payroll account.
24. 	QPS was the administrative entity for the other corporations, and payroll checks
for the separate entities were made on one account entitled “Plant Services.”
25. 	There is little or no evidence that Judy Henry controlled MPSG.
26. 	At the time that MPSG contracted with Basin, Mr. Henry was aware that MPS owed
$1.4 million for delinquent withholding taxes for 2002 and 2003.
27. 	MPS shared its employees with other related entities, such as MPSG.
28. 	QPS was also delinquent in the approximate amount of $1.6 million for unpaid
withholding taxes for the third quarter of 2000 and for all of 2002.
29. 	The Henrys were delinquent on federal income taxes due from previous
years.
30. 	MPSG assigned Basin the waste heat rights to sites 7, 9, 10 and 11 pursuant to the
Partial Assignment and Assumption Agreement between Basin and MPSG dated November 5, 2003.
31. 	MPSG was required to complete its obligations under the EPC Contract within
fourteen months of the written notice to commence construction.
32. 	On November 5, 2003, MPSG and Basin also entered into an Operating and
Maintenance Agreement, whereby MPSG agreed to operate and maintain the waste heat recovery
systems on behalf of Basin for a period of ten years.
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33. 	The EPC Contract provided that each WHRS would include the ORMAT Energy
Converter (“OEC”) and balance of plant.
34. 	Pursuant to the EPC Contract, each OEC was to be integrated with a Waste Heat Oil
Heater (“WHOH”) to produce electrical power.
35. 	Under the EPC Contract, MPSG guaranteed that each WHRS would produce 5.726
MW of net power.
36. 	Under the Operations and Maintenance Contract, if a WHRS failed to produce the
guaranteed power, MPSG was liable to Basin for liquidated damages for the term of ten years.
37. 	Pursuant to the EPC Contract, Basin agreed to pay MPSG a total of $28,900,000.00
in accordance with a Milestone Payment Schedule.
38. 	The Milestone Payment Schedule describes the work to be completed for each
milestone, the estimated time for each award, the documentation required, and the percentage of the
contract price to be awarded.
39. 	The Milestone Payment Schedule states that the first milestone consists of a direct
payment to MPSG and an amount to be placed in an escrow account.
40. 	Basin, MPSG, and Wells Fargo Bank entered into an Escrow Agreement.
41. 	Basin deposited $2,052,000.00 in the escrow account at Wells Fargo Bank as required
by the EPC Contract.
42. 	On December 29, 2003, MPSG entered into a Supply Contract with Ormat, Inc.,
(“Ormat”) whereby Ormat agreed to supply the process and conceptual design including the WHOH
performance specifications; supply, transport, handle and insure the OECs from the port of origin
to the four sites; and provide other ancillary services.
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43. 	MPSG submitted invoices for work completed pursuant to the Milestone Payment
Schedule.
44. 	Basin made payments to MPSG in excess of four million dollars for milestones one
through four.
45. 	Mr. Henry authorized transfers of funds from MPSG to related entities, such as MPS,
QPS, and Powertec, as well as to himself and Judy Henry.
46. 	There were no loan agreements between MPSG and these related entities and
individuals.
47. 	Basin directed MPSG to acquire and assign to Basin sites 5 through 12 and paid
MPSG $125,000.00 by wire transfer on March 31, 2004.
48. 	On April 2, 2004, Basin made the fourth milestone payment under the EPC Contract
by transferring $1,300,500.00 to MPSG.
49. 	In April 2004, MPSG exercised its option with Northern Border and paid
$437,000.00 to acquire the rights to seven of the remaining nine sites (sites 1, 3, 5, 6, 8, 12 and 13).
50. 	During the spring of 2004, MPSG realized that there would be a power shortfall
under the EPC Contract. While MPSG had guaranteed 5.726 MW of net power under the EPC
Contract, Ormat had guaranteed 5.726 MW of “OEC power” under the Supply Contract.
51. 	During the spring of 2004, Basin expressed dissatisfaction with the design of the
WHOH, asserting that the proposed design far exceeded standard heat exchanger design and created
an acid dew risk.
52. 	By letter dated July 29, 2004, Basin notified MPSG that it would not accept the
WHOH design.
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53. 	Basin, MPSG and Ormat met to consider various assignments, releases, and consents
that would have resulted in Ormat constructing and owning the four waste heat facilities and selling
the electricity to Basin.
54. 	MPSG would not sign such assignments, releases, and consents.
55. 	MPSG did not invoice Basin for the milestone five payment.
56. 	MPSG invoiced Basin for the sixth milestone payment for mobilization.
57. 	Basin refused to make milestone payment six.
58. 	During the course of performing the EPC Contract, MPSG did not pay certain
subcontractors and employees.
59. 	A number of subcontractors filed mechanic’s liens for nonpayment against certain
sites subject to the Waste Heat Purchase Agreement between MPSG and Northern Border.
60. 	Perigon Architectural and Engineering Associates, P.A., obtained a money judgment
against MPSG.
61. 	Northern Border terminated the Waste Heat Purchase Agreement with MPSG.
62. 	In October 2004, the Internal Revenue Service filed a notice of levy against MPS for
unpaid taxes for calendar years 2002 and 2003 in the amount of $1,400,601.54.
63. 	MPSG did not construct any waste heat recovery systems.
64. 	On December 12, 2004, Basin entered into a Power Purchase Agreement with an
Ormat-related company, OREG 1, Inc. (“OREG 1").
65. 	Under the Power Purchase Agreement, Basin assigned OREG 1 the waste heat
rights to sites 7, 9, 10 and 11.
66. 	OREG-1 built the sites and is now selling power to Basin.
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67. 	By letters dated February 8, 2005 and February 9, 2005, Basin formally gave notice
that it was terminating the EPC Contract for its convenience.
68. 	By the letter dated February 9, 2005, Basin demanded to audit MPSG’s records.
69. 	MPSG refused the audit.
70. 	Upon Basin’s cancellation for convenience, MPSG demanded Wells Fargo to
distribute all of the escrow funds to MPSG.
STANDARD OF REVIEW
Rule 56 of the Federal Rules of Civil Procedure is applicable to adversary proceedings. Fed.
R. Bankr. P. 7056. Summary judgment is appropriate when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter
of law.” Fed. R. Civ. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). “When a
motion for summary judgment is made and supported . . . , an adverse party may not rest upon the
mere allegations or denials of the adverse party’s pleading, but the adverse party’s response, by
affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a
genuine issue for trial.” Fed. R. Civ. P. 56(e). “If the adverse party does not so respond, summary
judgment, if appropriate, shall be entered against the adverse party.” Id. The facts must be viewed
in the light most favorable to the non-moving party. Evans v. Tech. Applications & Serv. Co., 80
F.3d 954, 958 (4th Cir. 1996). “Where the record taken as a whole could not lead a rational trier of
fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus.
Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
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PROCEDURAL HISTORY
On February 24, 2005, Basin filed suit against MPSG, MPS, Light Logix, Inc., Lacy Henry,
Judy Henry, and Keith Henry in the United States District Court for the District of North Dakota.
Basin sought a preliminary injunction to enjoin MPSG from obtaining the funds held in escrow by
Wells Fargo Bank. On March 21, 2005, the district court entered an order granting Basin’s motion
for a preliminary injunction and instructing Wells Fargo Bank to retain the funds held in escrow
until further order of the court.
On June 13, 2005, Lacy and Judy Henry filed for relief in this court under Chapter 11 of the
Bankruptcy Code. On September 15, 2005, Basin filed a complaint in this court against the Henrys
claiming that they were the alter egos of MPSG. On November 15, 2005, the Henrys answered the
complaint, asserting counterclaims against Basin and filing a third-party complaint against Ormat.
On January 5, 2006, the court entered an order staying the North Dakota lawsuit filed against the
Henrys and the corporate defendants. Basin was permitted to amend its complaint in the subject case
to include claims against the other defendants.
Basin has amended its complaint twice. Basin’s seconded amended complaint includes
claims against Lacy Henry, Keith Henry, MPSG, MPS, and QPS. MPSG and the Henrys have filed
counterclaims against Basin and third party claims against Ormat and Clifford Waddell. Both Ormat
and Mr. Waddell have filed counterclaims against MPSG and the Henrys.
ANALYSIS
Basin and the Defendants are moving for summary judgment on certain claims and
counterclaims pending before the court. Specifically, Basin seeks summary judgment on its breach
of contract claim against MPSG, its conversion claim against all Defendants, its claim for
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1The Defendants’ motion for summary judgment as to Ormat’s counterclaims against
Judy Henry will be addressed in a separate order along with Ormat’s motion for summary
judgment.
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declaratory relief, its claim to pierce the corporate veil of MPSG against Lacy and Judy Henry, and
all counterclaims by MPSG and the Henrys against Basin.
The Defendants seek summary judgment on Basin’s claim for breach of contract ( including
specifically the issues of whether Basin is entitled to recoup the milestone payments and whether
Basin is entitled to the escrow funds plus earnings on interest), Basin’s claim for declaratory relief,
MPSG/Henrys’ counterclaim against Basin for breach of contract (including specifically the issues
of whether MPSG is entitled to the escrow funds plus interest, the amount of milestone payment six,
and the ten percent retainage held by Basin), Basin’s claim of conversion, Basin’s claim of piercing
the corporate veil, Basin’s dischargeability claims against Judy Henry, and whether MPSG/Henrys’
counterclaims are meritorious or fail as a matter of law. The Defendants also move for summary
judgment on Ormat’s counterclaims against Judy Henry.1
The court first addresses the choice of law rules to be applied in this case. A federal court
applies the choice of law rules of the forum state. Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S.
487, 496 (1941); New England Leather Co. v. Feuer Leather Corp., 942 F.2d 253, 255 (4th Cir.
1991). However, when a lawsuit is transferred from one federal court to another pursuant to 18
U.S.C. § 1404(a) for convenience of the witnesses, the transferee court applies the choice of law
rules that the transferor court would have applied. Van Dusen v. Barrack, 376 U.S. 612, 632-37
(1964). Here, there was no convenience-of-the witness transfer; rather, this court stayed the action
in North Dakota against the Henrys and the co-defendant corporations, finding that the claims could
substantially deplete the Henrys’ bankruptcy estate for other creditors. In re Henry, Case. No. 05-
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04620-8-JRL (Bankr. E.D.N.C. Jan. 5, 2006). The court then allowed Basin to amend its complaint
to add additional defendants to the pending case. Id. Both Basin and the Defendants have cited
choice of law rules of North Carolina in addressing the counterclaim for unfair or deceptive trade
practices. The court will apply the choice of law rules of the forum state of North Carolina to this
case.
A. 	Basin’s Breach of Contract Claim Against MPSG
In its breach of contract claim, Basin asserts that it is entitled to recoup $3,795,916.59,
representing the majority of the four milestone payments made to MPSG under the EPC Contract.
In addition, Basin asserts that it is entitled to all funds in the escrow account. Both Basin and the
Defendants have moved for summary judgment on these issues.
Under North Carolina law, “[t]he parties choice of law is generally binding on the
interpreting court as long as they had a reasonable basis for their choice and the law of the chosen
State does not violate a fundamental public policy of the state or otherwise applicable law.” Torres
v. McClain, 535 S.E.2d 623, 625 (N.C. Ct. App. 2000). MPSG, a North Carolina corporation
licenced to do business in North Dakota, contracted with Basin, a North Dakota cooperative
principally located in Bismarck, North Dakota. The choice of law provision in the EPC Contract
identifies North Dakota law as governing the agreement. The EPC Contract addresses the funds that
were placed into escrow, and the escrow agreement was made in conjunction with the EPC Contract.
The court will apply North Dakota law to Basin’s breach of contract claim.
Under North Dakota law, “[t]he construction of a written contract to determine its legal effect
is a question of law.” Lenthe Investments, Inc. v. Service Oil, Inc., 636 N.W.2d 189, 193 (N.D.
2001). “Contracts are construed to give effect to the mutual intention of the parties at the time of
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contracting.” Id. at 194. “The parties’ intention must be ascertained from the writing alone if
possible.” Id. “The words of a contract are to be understood in their ordinary and popular sense
rather than according to their strict legal meaning, unless by the parties in a technical sense, or
unless a special meaning is given them by usage, in which case the latter must be followed.” N.D.
Cent. Code § 9-07-09. “[S]everal contracts relating to the same matters between the same parties and
made as parts of substantially one transaction are to be taken together.” N.D. Cent. Code 9-07-07.
1. 	Milestone Payments One through Four
It is undisputed that, by letters dated February 8, 2005 and February 9, 2005, Basin elected
to terminate the EPC Contract under the cancellation for convenience provision. Specifically, the
cancellation for convenience provision of the EPC Contract states the following:
Owner shall have the right to cancel this Contract for its convenience at any time by
written notice to Contractor. On the date of such cancellation stated in said notice,
Contractor shall discontinue all Work pertaining to this Contract, shall place no
additional orders and shall preserve and protect materials on hand purchased for or
committed to this Contract. Upon such cancellation, Contractor shall be paid the
earned portion of the total cost of all Work completed as of the date of cancellation,
including the cancellation costs identified in any subcontract. Owner may, at its
option, have those costs, which are reimbursable under this Section audited by either
Owner’s auditing staff or by independent certified public accountants selected by
Owner.
EPC Contract, art. II, § 3, pt. C. Basin focuses on the terms “earned” and “work” and asserts that
MPSG did not earn the ninety percent of milestone payments for work completed. “Work” is
specifically defined in the EPC Contract as “the labor, equipment, supplies or materials and related
services necessary to provide the Construction required by or reasonably inferable from the
Contract.” EPC Contract, art. II., § 3, pt. C. Basin asserts that, as a result of MPSG diverting
milestone payments to other entities and individuals, MPSG only expended $639,433.31 towards
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“work” under the EPC Contract and is only entitled to retain that amount. The Defendants dispute
the amount that Basin alleges MPSG expended on work.
The court finds that the plain language of the EPC Contract resolves who is entitled to the
ninety percent of the four milestone payments. MSPG contracted with Basin for a fixed contract
price of $28,900,000.00 to be awarded pursuant to a Milestone Payment Schedule set forth at
Appendix B of the EPC Contract. The Milestone Payment Schedule describes the work to be
completed for each milestone, the estimated time for each award, the documentation required, and
the percentage of the contract price to be awarded. It is undisputed that Basin paid ninety percent
of the first four milestone payments to MPSG under the EPC Contract. The EPC Contract plainly
states that MPSG will receive ninety percent of each milestone payment based upon the parties’
mutual agreement of MPSG’s progress. The pertinent language states as follows:
The owner shall pay the Contractor for the Work performed based upon mutual
agreement of the Contractor’s progress. See Appendix B for Milestone Payment
Schedule for conditions for payment of invoices (including retainage, escrowed
funds and letter of credit). Invoices will be honored Net 15 days from invoice date
if all conditions of payment have been met. Contractor shall submit to the Owner an
invoice with appropriate documentation, of compensation due. Provided, however,
that such approval shall not be deemed approval of the workmanship or materials;
and provided further, that in estimating the amount of construction accomplished,
consideration shall be given only to equipment and materials incorporated into the
Project and equipment consideration shall be given only to equipment and materials
incorporated into the Project and equipment and materials delivered to the site in
accordance with approved shipping schedule. Only ninety percent (90%) of each
such estimate approved during the construction of the Project shall be paid by the
Owner to the Bidder prior to Completion of the Project. Upon completion by the
Bidder of the construction of the Project, Owner shall inspect the Work performed
hereunder and if he shall find the Work acceptable and all provisions hereunder fully
performed, the Owner shall certify the balance found to be due the Bidder.
EPC Contract, art. III, § 1, ¶ (a). This provision of the EPC Contract makes clear that Basin had
discretion in awarding milestone payments and that Basin was to consider whether the conditions
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for payment had been met before honoring invoices under the Milestone Payment Schedule. It is
implicit that, by approving milestone payments one through four under the EPC Contract, Basin was
agreeing that the subject milestones had been achieved. Any other interpretation would render the
Milestone Payment Schedule meaningless.
While the honoring of invoices does not constitute approval of MPSG’s workmanship or
materials under the EPC Contract, there are separate provisions of the contract for the removal and
replacement of defective workmanship and materials and for remedying defaults. EPC Contract, art.
II, § 6; art. V, § 1. Basin, however, elected to terminate the EPC Contract for convenience rather
than for default.
There appears to be no North Dakota law specifically addressing how to interpret
cancellation for convenience clauses. The court, therefore, will consider the decisions of other
federal and state courts that have specifically addressed this type of contractual termination.
Cancellation for convenience permits termination without cause. Harris Corp. v. Giesting & Assoc.,
297 F.3d 1270, 1273 (11 th Cir. 2002). “The general rule is that ‘termination for convenience’ clauses
permit one party to terminate a contract, even in the absence of fault or breach by the other party,
without suffering the usual financial consequences of breach of contract.” Id. at 1272. That is the
benefit of electing to terminate for convenience—the limitation of the contractor’s rights against the
owner.
Basin cites the case of Hydrothermal Energy Corp. v. United States, 26 Cl. Ct. 1091 (Cl. Ct.
1992) in support of its argument that reclamation of milestone payments is warranted following the
termination for convenience. In the Hydrothermal Energy case, however, the applicable termination
clause specifically stated that “if the total amount of allowable costs ‘is less than the total payment
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theretofore made to the Contractor, the Contractor shall repay to the Government the excess
amount.’” Id. at 1105. There is no such provision here. Moreover, any audit that Basin is entitled
to under the cancellation for convenience clause of the EPC Contract relates only to reimbursable
costs of MPSG; whereas, ninety percent of the first four milestone payments had already been paid
to MPSG and were subject to documentation upon invoice. EPC Contract, Art. II, § 3, Part C.
Where there is a termination for convenience, the owner is not entitled to liquidated damages
and reimbursement for payments made to third parties. Fruin-Colnon Corp., 	et 	al v. Niagara
Frontier Transp. Authority, 180 A.D.2d 222, 233 (N.Y.A.D.1992). In a case where the City of New
York elected to terminate a contract for convenience, the court stated that the City could not
counterclaim for expenses incurred as a result of the plaintiff’s alleged default. Tishman Const.
Corp., Inc. v. City of New York, 228 A.D.2d 292, 293 (N.Y.A.D. 1996). While the City was bound
by the contractual provision that it had elected, the court stated that the City of New York could
show that overpayments were made on a theory of fraud. Id.
Based on the foregoing, the court finds that Basin is bound by the termination for
convenience provision of the EPC Contract and cannot seek reclamation of the four milestone
payments under a breach of contract theory. Rather, any alleged overpayment can be argued under
the separate count of fraud.
2. 	Escrow Funds
The Milestone Payment Schedule states that milestone payment one consists of two
components, including funds to be paid directly to MPSG and funds to be deposited into the EPC
Escrow account. It is undisputed that Basin placed $2,052,000 into an escrow account with Wells
Fargo Bank.
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Basin urges the court to consider the full language of the Escrow Agreement and the EPC
Contract in unison. Specifically, Basin points to the language of the paragraph entitled
“Administration of the Escrow Account” and states that there was an intended plan for how the
escrow account would operate. EPC Contract, p. 2, ¶3. The subject paragraph states that MPSG
would be entitled to all funds in the escrow account if the four waste heat recovery systems passed
the performance test by the deadline specified in the EPC Contract. Id. In the event one or more of
the facilities passed the performance test, MPSG would receive a pro rata portion of the escrow
funds based on the percentage of the four facilities meeting the performance test. Id. For those
facilities that did not meet the performance test, Basin would receive reimbursement from the
escrow account for amounts expended in enabling all facilities to meet the performance test. Id.
Thereafter, MPSG would receive anything remaining in the account. Id. At the end of the
paragraph, the Escrow Agreement specifically states:
If Basin elects to terminate the EPC Contract for its convenience pursuant to Article
II, Section 3 of Contractor’s Proposal, Basin shall provide written notice of such fact
to the Escrow Agent by United States Certified Mail return receipt requested. Upon
receipt of such notice, the Escrow Agent shall wire transfer funds in the Escrow
Account to MPSG in conformance with written instructions provided by MPSG.
Escrow Agreement, p. 3, ¶ 3. “A contract must be construed as a whole to give effect to each
provision.” Lenthe Investments, Inc. v. Service Oil, Inc., 636 N.W.2d 189, 194 (N.D. 2001). Taking
the Escrow Agreement as a whole, it is clear that the above provision clearly applies in the event
Basin elects to terminate the EPC Contract for convenience. It is undisputed that Basin elected to
terminate the EPC Contract for its convenience. Failing to apply such provision in the specific
situation that it was designed to address would render it meaningless.
Basin points to the EPC Contract where it states that no payment shall be due while MPSG
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is in default. EPC Contract, Art. III, § 3. While it is undisputed that MPSG did not construct waste
heat converter systems in the applicable time frame as contemplated by the EPC Contract, Basin did
not pursue default remedies under the EPC Contract. EPC Contract, Art. V, § 1. Even if Basin had
terminated the EPC Contract for default, Basin would have been obligated “to make a good faith
effort to determine the underlying cause of the default.” EPC Contract, Art. V, § 4. Specifically, the
EPC Contract states that, if by making that good faith effort, “[Basin] believes that the primary cause
of [MPSG’s] default is the nonperformance of [MPSG’s] prime vendor, [Basin] agrees that it will
first exercise its rights under the letter of credit, prior to exercising the rights granted to it to utilize
the retained funds and the escrowed funds.” EPC Contract, Art. V, § 4 (emphasis added).
Basin must deal with the consequences of choosing to elect termination for convenience.
Pursuant to the clear language of the Escrow Agreement, MPSG is entitled to the escrow funds plus
earnings from interest. Accordingly, Basin’s motion for summary judgment is denied, and the
Defendant’s motion for summary judgment is granted as to Basin’s breach of contract claim. The
court, however, instructs Wells Fargo Bank to hold the escrow funds plus earnings from interest
until further order of the court after all claims have been adjudicated.
B. 	Basin’s Claim of Conversion Against All Defendants
Basin alleges the claim of conversion under North Dakota law against all of the Defendants.
The application of North Dakota law is consistent with the North Carolina choice of law rule
governing tort claims, which says that the state where the injury occurs is the situs of the claim.
Boudreau v. Baughman, 322 N.C. 331, 335, 368 S.E.2d, 849, 853-54 (N.C. 1988). Under this
traditional rule of lex loci delicti, the place of injury is “the state where the last event necessary to
make an actor liable for an alleged tort takes place.” Brendle v. General Tile & Rubber Co., 408 F.2d
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116, 117 n. 3 (4th Cir. 1969) (quoting Restatement of Conflict of Laws § 377 (1934)). Any financial
injury sustained from the alleged conversion would have occurred in North Dakota where Basin is
principally located. See Hill-Rom Services, Inc. v. Verses Technology, Inc., No. 1:03CV12227,
2006 WL 1540851 at *12 (M.D.N.C. 	Jun. 2, 2006) (Michigan substantive law applied to
misrepresentation claim, as financial injury occurred in Michigan where defendant was based).
Both Basin and the defendants seek summary judgment on the claim of conversion. Basin
asserts that, because MPSG transferred funds that it had received under the Milestone Payment
Schedule to other entities and the individual defendants, Basin was wrongfully deprived of its
property. Under North Dakota law, conversion is defined as “a tortious detention or destruction of
personal property, or a wrongful exercise of dominion or control over the property inconsistent with
or in defiance of the rights of the owner.” Ritter Laber & Assoc., Inc. v. Koch Oil, Inc., 680 N.W.2d
634, 638 (N.D. 2004). “Claims for conversion may arise under the same facts as claims for breach
of contract.” Id. at 639. “Conversion requires an intent to exercise control or interfere with the use
of property to such a degree as to require a forced sale of the plaintiff’s interest in the goods to the
defendant.” Id. at 638-39. “The gist of conversion is not in acquiring the complainant’s property,
but in wrongfully depriving the complainant of the property.” Id. at 639.
Conversion would only work if the Defendants intentionally deprived Basin of its use of
property; however, it was a mutual decision for Basin to make milestone payments to MSPG under
the EPC Contract. The plain language of the EPC Contract states: “The owner shall pay the
Contractor for the Work performed based upon mutual agreement of the Contractor’s progress . .
. Invoices will be honored Net 15 days from invoice date if all conditions of payment have been
met.” EPC Contract, Art. III, §1, ¶a (emphasis added). Thus, by honoring the invoices for milestone
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payments one through four, Basin agreed that the conditions had been met for payment. Basin points
to no provision in the contract that preserved Basin’s interest in the milestone payments once
payment was made. Because the milestone payments were no longer the property of Basin, the claim
of conversion fails.
Based on the foregoing, the court denies Basin’s motion for summary judgment and grants
the Defendants’ motions for summary judgment on Basin’s claim of conversion.
C. 	Basin’s Claim for Declaratory Relief
Basin seeks a judicial declaration that it is entitled to the funds in the escrow account. Basin
and the Defendants have moved for summary judgment on this issue. 	As noted in the court’s
analysis of Basin’s breach of contract claim, the Escrow Agreement specifically addresses what
would happen in the event Basin terminated the EPC Contract for convenience–MPSG would be
entitled to the funds in the escrow account. Escrow Agreement, p.3, ¶ 3. It is undisputed that Basin
elected to terminate the EPC Contract for convenience.
Based on the foregoing, the court denies Basin’s motion for summary judgment on its claim
for declaratory relief and grants the Defendant’s motion for summary judgment. MPSG is entitled
to the escrow funds plus earnings from interest. Wells Fargo Bank is instructed to hold these funds
until further order of the court after all claims have been adjudicated.
D. 	Basin’s Claim Against the Henrys for Piercing the Corporate Veil of MPSG
Basin alleges a claim against the individual defendants, Lacy and Judy Henry, asserting that
the corporate veil of MPSG should be pierced and the Henrys should be jointly and severally liable
for all direct and consequential damages suffered by Basin. Basin’s motion states that it is seeking
summary judgment on this count against both individual defendants; however, Basin’s memorandum
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in support of summary judgment focuses on Lacy Henry only. The Defendants also move for
summary judgment on Basin’s claim of piercing the corporate veil.
MPSG is a North Carolina corporation. While North Carolina has not ruled definitively on
the issue, federal courts considering the choice of law rules of North Carolina in the context of a
piercing the corporate veil claim have concluded that “the North Carolina Supreme Court . . . would
adopt the internal affairs doctrine and apply the law of the state of incorporation.” Speedway
Promoters, Inc. V. Hooter’s of America, Inc., 123 F. Supp. 2d 956 (W.D.N.C. 2000); Dassault
Falcon Jet Corp. v. Oberflex, Inc., 909 F. Supp. 345, 349 (M.D.N.C. 1995). This is not disputed by
the parties.
Under North Carolina law, “when . . . the corporation is so operated that it is a mere
instrumentality or alter ego of the sole or dominant shareholder and a shield for his activities in
violation of the declared public policy or statute of the State, the corporate entity will be disregarded
and the corporation and the shareholder treated as one and the same person . . . .” Henderson v.
Security Mortg. & Finance Co., 273 N.C. 253, 260, 160 SE.2d 39, 44 (1968). To disregard the
corporate entity under the instrumentality rule, the following elements must be met:
(1) Control, not mere majority or complete stock control, but complete domination,
not only of finances, but of policy and business practice in respect to the transaction
attacked so that the corporate entity as to this transaction had at the time no separate
mind, will or existence of its own; and
(2) Such control must have been used by the defendant to commit fraud or wrong,
to perpetrate the violation of a statutory or other positive legal duty, or a dishonest
and unjust act in contravention of plaintiff’s legal rights; and
(3) The aforesaid control and breach of duty must proximately cause the injury or
unjust loss complained of.
B-W Acceptance Corp. v. Spencer, 268 N.C. 1, 9, 149 S.E.2d 570, 576 (1966). Factors that are
considered in determining whether an individual exercises complete domination over a corporation
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include: “(1) inadequate capitalization (‘thin incorporation’); (2) non-compliance with corporate
formalities; (3) complete domination and control of the corporation so that it has no independent
identity; and (4) excessive fragmentation of a single enterprise into separate corporations.” Glenn
v. Wagner, 313 N.C. 450, 455, 329 S.E.2d 326, 330-31 (1985).
The court finds that Mr. Henry’s own deposition testimony, deposition testimony of MPSG
employees, and the Defendants’ discovery responses demonstrate that Mr. Henry completely
dominated MPSG. First, the court considers inadequate capitalization. MPSG was created in May
2003 for the Basin Project. Lacy Henry Deposition, p. 169. Lacy Henry was the sole shareholder,
and 	no stock certificates were issued in exchange for capital. Defendants’ Answer to Basin’s
Interrogatory 1. While MPSG had the Northern Border heat rights and easement, MPSG had no
other known assets, such as patents or equipment. Lacy Henry Deposition, p. 170. At the time that
MPSG contracted with Basin, Mr. Henry was aware that MPS owed $1.4 million for delinquent
withholding taxes for 2002 and 2003. Id. at 190-192. QPS was also delinquent in the approximate
amount of $1.6 million for unpaid withholding taxes for the third quarter of 2000 and for all of 2002.
Id. at 212. Moreover, the Henrys were delinquent on their federal income taxes. Id. at 203. Basin
paid over four million dollars in milestone payments to MPSG. Id. at 195-97. Mr. Henry authorized
substantial transfers of these funds to related entities, such as MPS, QPS, and Powertec, as well as
to himself and Judy Henry. Id. There were never any loan agreements between MPSG and the
related entities and individuals. Id. at 172. John Stephens, the initial director named in MPSG’s
articles of corporation, testified at deposition that MPSG lacked the money and resources to take on
the project with Basin. John Stephens Deposition, p. 115.
Mr. Henry’s own deposition testimony and the deposition testimony of Mr. Windham
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demonstrate that MPSG lacked corporate formalities. Henry had no knowledge of the directors or
officer of the corporation. Lacy Henry Deposition, p. 169. MPSG did not file a tax return. Id. at 171.
There were never any formal shareholder meetings or minutes from such meetings. Id. at 172. There
were never any director meetings. Id. MPSG did not have a separate payroll account. Id. at 173.
MPSG’s accountant, Grady Windham, testified at deposition that no certified audit, review or
bound statement had been prepared for the related entities since 1995. Grady Windham Deposition,
p. 84.
Mr. Henry’s own deposition testimony supports that he exercised control over MPSG so that
it had no independent identity. While Mr. Henry had no knowledge of the directors and officers of
MPSG, he testified that he was the decision maker for MPSG, including the decision maker
regarding the allocation of capital. Lacy Henry Deposition p. 169-170. As noted above, Mr. Henry
testified that he authorized the transfer of funds from MPSG to other entities and to himself and his
wife. Id. at 195-197.
Finally, Mr. Windham’s testimony supports that there was excessive fragmentation of the
corporation. Mr. Windham, accountant for the related entities, testified that he considered Powertec
and Light Logix as “probably one and the same.” Grady Windham Deposition, p. 55. MPS shared
its employees with the other related entities, such as MPSG. Id. at 65. Most of the bookkeeping
for Powertec and Light Logix went through MPS. Id. at 54-55. QPS was the administrative entity
for the other related corporations, and payroll checks for these entities were made on one account
entitled “Plant Services.”. Id. at 60-61.
Considering the record as a whole and in the light most favorable to Mr. Henry, the court
grants summary judgment in favor of Basin on the first element of the instrumentality rule. Mr.
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Henry completely dominated MPSG, and there is no genuine issue of fact for trial regarding this
issue. The remaining two elements regarding whether Mr. Henry used his control to commit fraud
or wrong and whether the control caused injury to Basin are reserved for trial.
The court grants summary judgment for Judy Henry on the claim of piercing the corporate
veil of MPSG. The record reflects that there is little or no evidence to support a claim of piercing
the corporate veil against Judy Henry. Accordingly, the claim against her is dismissed.
E. 	Basin’s Claims Against Judy Henry for Exception to Discharge
The Defendants seek summary judgment on Basin’s claims against Judy Henry for exception
to discharge, pursuant 	to 11 U.S.C. §§ 523(a)(2)(A), 523(a)(4), 523(a)(6), and 727(a)(2)-(3).
Because there are genuine issues of fact regarding Ms. Henry’s intent and conduct, the court denies
summary judgment as to these claims.
F. 	MPSG/Henrys’ Counterclaim for Breach of Contract Against Basin
MPSG alleges a counterclaim for breach of contract against Basin, asserting that Basin
terminated the EPC Contract in bad faith and is therefore liable for MPSG’s damages beyond the
bounds of the cancellation for convenience provision. The Henrys allege an identical claim in the
event that they are determined to be the alter ego of MPSG. As noted above, the contract 	is
governed by North Dakota law. EPC Contract, Art. VI, § 12. Specifically, MPSG asserts that it is
entitled to: (1) $2,052,000 held in escrow by Wells Fargo Bank plus earnings from interest; (2)
milestone payment six in the amount of $1,445,000.00; and (3) $679,150, representing the 10%
unpaid retainage held by Basin under the EPC Contract.
In the defense of Basin’s breach of contract claim, MSPG and the Henrys argue that Basin
is bound by the cancellation for convenience provision in the EPC Contract and cannot recover
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damages for any default. In support of their breach of contract claim, MPSG and the Henrys argue
that MPSG is not bound by the cancellation for convenience provision because Basin terminated the
contract for convenience in bad faith. At first blush, it appears that these two arguments are
inconsistent and clash with traditional principles of contract law that one cannot rescind and enforce
the same contract. McKenzie v. Carte, 385 S.W.2d 520, 537 n.18 (Tex. Civ. App. 1965); Knaus
Truck Lines v. Donaldson, 235 Minn. 453, 51 N.W.2d 99 (Minn. 1952); Troitino v. Goodman, 225
N.C. 406,415, 35 S.E.2d 277, 283 (N.C. 1945). Yet, a closer reading of the applicable law
surrounding termination for convenience reveals that it is entirely consistent to hold the owner to
its election of termination for convenience and still seek damages for breach of contract for bad faith
termination. “A termination for convenience provision allows the owner to terminate without regard
to actual fault, but it comes at the price of waiving any claim for damages and instead requires
overhead and profit.” Stephen A. Hess, Assessing Default Termination, Construction Briefings No.
2006-2 (Feb. 2006). Thus, by electing to terminate a contract for convenience, the owner is
intentionally relinquishing its right to collect damages from the contractor. Id. Where the owner
terminates the contract for convenience in bad faith, the actual termination for convenience is a
breach of contract and renders the terminating party liable for common law contract damages rather
than the limited recovery due the contractor under the cancellation provision. Rice Systems, Inc. v.
United States, 62 Fed. Cl. 608, 620 (Fed. Cl. 2004). “Termination for convenience clauses may not
be used to shield the terminating party from liability for bad faith or fraud.” Harris Corp. v. Giesting
& Assoc., Inc., 297 F.3d 1270, 1272-73 (11 th Cir. 2002). MPSG and the Henrys are not attempting
to rescind the termination for convenience provision; rather, they are asserting that the alleged bad
faith act of terminating for convenience constituted a breach of contract to which Basin should be
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held liable.
The court addresses MPSG’s limited damages under the termination for convenience clause
in the event the court concludes that termination was made in good faith. First, the court finds that
MPSG is clearly owed the escrow funds and any earnings from interest pursuant to the Escrow
Agreement, which specifically contemplates the transfer of escrow funds to MPSG in the event
Basin terminates the contract for convenience. Escrow Agreement, p. 	3, ¶3. Second, MSPG is
limited to milestone payments one through four that were already made under the EPC Contract. The
cancellation for convenience clause limits MPSG’s recovery to “the earned portion of the total cost
of all Work completed as of the date of cancellation ” and any reimbursable costs subject to Basin’s
audit. EPC Contract, Art. II, § 3, pt. C. Under the EPC Contract, Basin was obligated to make a
milestone payment if there was mutual agreement of MPSG’s progress. EPC Contract, Art. III, § 1,
¶ (a). This was a condition of payment. While payments one through four met this condition of
mutual assent, payment six did not. In addition, regarding any reimbursable costs under the
termination for convenience provision, Basin had the right to request an audit. It is undisputed that
MPSG denied such audit request. Payment six, therefore, will not be considered an earned portion
of costs if the court finds that the termination for convenience was made in good faith.
In addition, the court finds that the retainage is not an earned portion of the costs or
reimbursable amount under the termination for convenience provision. “Retainage is a portion of
the contract price deliberately withheld to assure that contractor or subcontractor will satisfy its
obligations and complete a project.” C. Kelly Skrabak & Heather A. Jones, The State of Retainage,
Construction Briefings No. 2005-4 (Apr. 2005). Under the plain language of the EPC Contract,
MPSG was not entitled to the ten percent retainage unless MPSG completed the project under the
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EPC Contract and Basin inspected the work to determine if all obligations had been performed. EPC
Contract, Art. III, § 1, ¶ (a). It is undisputed that MPSG did not construct the waste heat recovery
systems under the EPC Contract prior to Basin’s termination for convenience. There was no
completion and inspection of the project entitling MPSG to retainage. Even if the project had been
completed and inspected, the Milestone Payment Schedule states that one million dollars of the
retained amount would be transferred directly to a separate Operating and Maintenance escrow
account to ensure performance under the Operating and Maintenance Agreement.
The court would rule on this counterclaim on summary judgment if the issue of bad faith
was not in dispute. However, based on the record as a whole, the issue of whether Basin terminated
the EPC Contract in bad faith is a genuine issue of material fact for trial. 	If termination for
convenience was in bad faith, then the termination would constitute a breach of contract allowing
MPSG to potentially recover more than it would under the termination for convenience clause. The
court, therefore, denies Basin and the Defendants’ motions for summary judgment as to this claim.
G. 	MPSG/Henrys’ Counterclaim Against Basin for Tortious Interference with Northern
Border Contract and Ownership of Sites
MPSG asserts that Basin tortiously interfered with the Waste Heat Purchase Agreement
between MPSG and Northern Border. The Henrys have brought an identical counterclaim in the
event they are determined to be the alter ego of MPSG. Both Basin and the Defendants have moved
for summary judgment on this counterclaim.
Under the Waste Heat Purchase Agreement, MPSG acquired rights to waste heat produced
at certain compressor stations on the Northern Border Pipeline. The Waste Heat Purchase
Agreement also gave MPSG an option to acquire secondary sites if certain conditions were met.
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Basin denied milestone payment six, and creditors placed liens on a number of sites subject to the
Waste Heat Purchase Agreement. MPSG asserts that, as a result of Basin’s alleged wrongful denial
of payment six, MPSG lost all of its exclusive heat rights, including heat rights to sites that were not
the subject of the EPC Contract.
MPSG has not specified whether it is pursuing this claim under North Carolina or North
Dakota law. As noted above, the state where the injury occurred is the situs of the tort claim.
Boudreau v. Baughman, 322 N.C. 331, 335, 368 S.E.2d, 849, 853-54 (1988). This court has
considered the place of injury when determining the substantive law applicable to a tortious
interference with contract claim. Southern Produce Distributors, Inc. v. Friedman (In re Southern
Produce Distributors, Inc.), No. 05-00013-8-AP at *9 (Bankr. E.D.N.C. Oct. 6, 2006). In Southern
Produce, the court specifically considered where the alleged financial injury took place. Id. MPSG
is a North Carolina corporation, and any financial injury would have taken place in North Carolina
where the corporation is based. 	See Hill-Rom Services, Inc. v. Verses Technology, Inc., No.
1:03CV12227, 2006 WL 1540851 at *12 (M.D.N.C. Jun. 2, 2006).
To establish a claim of tortious interference with contract under North Carolina law, a
plaintiff must show: “(1) a valid contract between the plaintiff and a third person which confers upon
the plaintiff a contractual right against a third person; (2) the defendant knows of the contract; (3)
the defendant intentionally induces the third person not to perform the contract; (4) and in doing so
acts without justification; (5) resulting in actual damage to plaintiff.” Beck v. City of Durham, 154
N.C. App. 221, 232, 573 S.E.2d 183,191 (N.C. Ct. App. 2002).
Based on the record as a whole, the court finds that MPSG stated a claim for tortious
interference with contract, and there remains genuine issues of material fact regarding the intent and
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conduct of Basin in connection with the denial of milestone payment six. Accordingly, the court
denies motions for summary judgment filed by Basin and the Defendants as to this counterclaim.
H. 	MPSG/Henrys’ Counterclaim Against Basin for Unfair or Deceptive Trade Practices
MPSG alleges a counterclaim against Basin for unfair or deceptive trade practice under
North Carolina law. The Henrys have filed an identical counterclaim in the event they are found to
be the alter ego of MPSG. Both Basin and the Defendants move for summary judgment on this
counterclaim.
Basin asserts that MPSG’s claim fails because North Carolina substantive law does not apply
here. Because an action for unfair or deceptive acts or practices is the creation of statute, it is
“neither wholly tortious nor wholly contractual in nature.” Stetser v. TAP Pharmaceutical Products,
Inc., 165 N.C.App. 1, 15, 598 S.E.2d 570, 580 (N.C. Ct. App. 2004). The North Carolina Court of
Appeals has applied two different approaches for determining which state’s law governs an unfair
or deceptive trade practice claim under Chapter 75 of the North Carolina General Statutes. Id. Under
the traditional approach, the law of the state where the injury is sustained governs the claim. United
Virginia Bank v. Air-Lift Assoc., Inc., 79 N.C. App. 315, 321, 339 S.E.2d 90, 94 (N.C. Ct. App.
1986). Under the modern approach, the law of the state having the most significant relationship to
the occurrence giving rise to the action governs the claim. Andrew Jackson Sales v. Bi-Lo Stores,
Inc., 68 N.C. App. 222, 225, 314 S.E.2d 797, 799 (N.C. Ct. App. 1984). This court has applied the
significant relationship test in determining which law should apply to unfair or deceptive trade
practice claims. Southern Produce Distributors, Inc. v. Friedman (In re Southern Produce
Distributors, Inc.), No. 05-00013-8-AP at *9 (Bankr. E.D.N.C. Oct. 6, 2006). This is consistent with
the approach taken by the Fourth Circuit Court of Appeals and U.S. District Court for the Eastern
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District of North Carolina when considering unfair or deceptive trade practice claims under North
Carolina’s choice of law rules. New England Leather Co. v. Feuer Leather Corp., 942 F.2d 253,
254- 56 (4th Cir. 1991); American Rockwool, Inc. v. Owen-Corning Fiberglass Corp., 640 F. Supp.
1411, 1430-31 (E.D.N.C. 1986).
Under the significant relationship test, the court considers “where the relationship between
the parties was created and where it was centered.” New England Leather Co., 942 F.2d at 256.
MPSG contracted with Basin, a North Dakota corporation, to engineer, procure and construct four
facilities for the purpose of generating electric power and energy. MPSG also contracted with Basin
to operate and maintain the four facilities. The sites of the facilities were located along the Northern
Border Pipeline in North Dakota and South Dakota. While not controlling for purposes of unfair or
deceptive trade practice claims, the EPC Contract stated that it was governed by North Dakota law.
The parties convened for a construction kickoff meeting in Bismarck, North Dakota. MPSG
employees made visits to the four sites during the course of contract performance, and another
meeting was held in Bismarck in the summer of 2004. While MPSG is a North Carolina corporation
with its principal place of business in North Carolina, North Carolina is not where the relationship
between Basin and MPSG was created or centered.
The court grants Basin’s motion for summary judgment and denies the Defendants’ motion
for summary judgment as to MPSG/Henry’s counterclaim for unfair or deceptive trade practices
under North Carolina law. The counterclaim is dismissed because the claim was specifically made
under Chapter 75 of the North Carolina General Statutes, which substantive law is inapplicable
here. Because MPSG has not alleged a comparable claim under North Dakota law, the court will not
entertain that issue.
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CONCLUSION
Based on the foregoing, the court GRANTS IN PART and DENIES IN PART the motions
for summary judgment filed by Basin and the Defendants. Specifically, the court grants summary
judgment in favor of Basin on the first element of control under the instrumentality test against Lacy
Henry for piercing the corporate veil of MPSG. The court also grants summary judgment in favor
of Basin on MPSG and the Henrys’ counterclaim for unfair or deceptive trade practices under
Chapter 75 of the North Carolina General Statutes. The court grants summary judgment in favor of
the Defendants on Basin’s breach of contract claim, Basin’s claim of conversion, Basin’s claim for
declaratory relief, and Basin’s claim against Judy Henry for piercing the corporate veil of MPSG.
The court denies summary judgment against both Basin and the Defendants as to Basin’s claims
against Judy Henry for exception to discharge, the remaining two elements of the instrumentality
test on Basin’s piercing the corporate veil claim against Lacy Henry, MSPG and the Henrys’
counterclaim for breach of contract as a result of the issue of bad faith termination, and MPSG and
the Henrys’ counterclaim for tortious interference with the Northern Border contract and ownership
of sites.
END OF DOCUMENT
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