Downeast Energy Wins Lawsuit Against Law Firm for Breach of an Oil Contract

December 10, 2009

Brunswick office duo Judy Metcalf and Noreen Patient teamed up to bring home a win for longtime client, Downeast Energy, against a local law firm over contract breach. Patient prepared the briefs that set forth the reasons why Eaton Peabody’s client was entitled to the full benefits of its contract. Metcalf presented the oral argument to the Court in November and the Court issued its decision in favor of Downeast Energy on all elements of the matter on December 1, 2009.

AUBURN, MAINE - Androscoggin County Superior Court Justice Thomas E. Delahanty II has ruled in favor of Downeast Energy in its lawsuit against the law firm, Linnell, Choate and Webber for breach of contract. The law firm signed an oil contract in June 2008 with Downeast Energy to supply the law office with 4,055 gallons of heating oil at a fixed price per gallon.

The price of heating oil dropped unexpectedly after the law firm signed the contract. The lawsuit states that the law firm had taken delivery of 1,119 gallons of oil by Nov. 6, about one-quarter of the contracted amount for the season. In a letter to Downeast Energy, a lawyer at the firm wrote that his office expected to pay only for the oil that was delivered.

Downeast sued for breach of contract and is seeking compensation for its damages equal to the difference in sale price of the remaining 2,936 gallons.

Downeast attorney Judy Metcalf explained, “Downeast sued for breach of contract and Justice Delahanty expressly found that the agreement is a binding contract and that the defendants breached it. Downeast Energy is also seeking compensation for its damages arising from the defendants’ breach, but the part of the case where the court will determine the amount of damages has yet to be presented to the court.”

In the decision, Justice Delahanty wrote that he found that there is an enforceable contract and that LCW breached it, stating, “LCW’s commitment to purchase is far from ambiguous.” The judge added, “The Supply Agreement is clearly more than a proposal and became a binding contract on Conway’s acceptance. There is no question that the defendant breached the contract by unilaterally canceling the agreement prior to May 31, 2009.”

A state law enacted in 2005 requires Maine oil dealers to do one of the following: 1) buy at least three-quarters of the oil prepaid for by customers; 2) post a bond; or 3) provide a letter of credit for the early sales. That law was passed to protect consumers. Justice Delahanty referred to that law and found it “…helpful in discerning the terms of the contract between the parties.”

Delahanty continued, “The court also notes that the fixed oil prices are not something of a nature that a consumer, let alone a law practice, can claim to be unfamiliar with.”

“You never know what the market's going to do or how world events or extreme weather may affect energy prices of all kinds, unfortunately 2 years ago speculators took control of the commodities markets and spiked prices, the ensuing price decline caused angst among those that bought at the high end. We anticipate Congress will act this week to reign in excessive speculation” said Jamie Py, Maine Energy Marketers Association. “Regardless of whether Congress acts, price protection programs with your heating oil dealer can help you plan for the winter ahead and must be taken seriously. Like any contract, both sides have to fulfill their ends of the bargain. The dealer promises to provide the fuel to keep you warm, and the customer promises to pay an agreed upon price. The judge’s ruling validates the industry’s tried and true practices and confirms that a contract is a contract.”

John Peters, president of Downeast Energy, added, “We regret that we had to undertake this lawsuit but are pleased with the ruling. We hope this provides an opportunity to educate consumers on why and how these contracts help us conduct business according to Maine state law while ensuring the customer’s needs are met throughout the heating season.”

Courtesy of the Maine Energy Marketers Association