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THE CITY OF SAN ANTONIO, TEXAS, ACTING BY AND THROUGH THE CITY PUBLIC SERVICE BOARD OF SAN ANTONIO, A TEXAS MUNICIPAL UTILITY,
§ § § § § § Plaintiff, § § § V. § TOSHIBA CORPORATION; § NRG ENERGY, INC.; NUCLEAR § INNOVATION NORTH AMERICA, LLC; § NINA TEXAS 3 LLC; and NINA TEXAS 4 LLC, § § Defendants. §
IN THE DISTRICT COURT
OF BEXAR COUNTY, TEXAS
37 TH JUDICIAL DISTRICT
FIRST AMENDED ORIGINAL PETITION FOR DAMAGES, DECLARATORY JUDGMENT, AND EXPEDITED INJUNCTIVE RELIEF
The City of San Antonio, Texas acting by and through the City Public Service Board of San Antonio, a Texas municipal utility ("CPS Energy") requests the Court to award actual damages in excess of $2 Billion and exemplary damages in excess of $30 Billion from Toshiba Corporation, NRG Energy, Inc. and Nuclear Innovation North America arising from their fraudulent, defamatory, and illegal conduct and that of their affiliates, parents, partners and coconspirators. CPS Energy also asks the Court to declare the rights, status, and other legal
relations among CPS Energy, NINA Texas 3 LLC, and NINA Texas 4 LLC as tenants in common with an undivided interest in the South Texas Nuclear Project Units 3 and 4. In
addition, CPS Energy requests the Court for a temporary restraining order and other expedited injunctive relief to preserve and protect from imminent irreparable injury the rights and interests of CPS Energy.
AMENDED PETITION FOR DECLARATORY JUDGMENT, EXPEDITED RELIEF, OR, ALTERNATIVELY FOR INJUNCTIVE RELIEF
Plaintiff intends for discovery to proceed under Level 3 pursuant to Rule 190.4 of
the Texas Rules of Civil Procedure.
Jurisdiction and Venue
This Court has jurisdiction over the subject matter of this action and the parties
because the amount in controversy exceeds this court's minimum jurisdictional requirements. 3. Venue is proper in Bexar County, Texas, under Tex. Civ. Prac. & Rem. Code §
15.002 because a substantial part of the events or omissions giving rise to CPS Energy's claims occurred here and because CPS Energy is located in Bexar County, Texas.
CPS Energy has its principal office in Bexar County, Texas. Defendant NINA Texas 3 LLC ("NINA 3") is a Delaware limited liability
company registered to do business in Texas, with its principal place of business in Texas, doing business in Texas, has been properly served and has answered. 6. Defendant NINA Texas 4 LLC ("NINA 4")
a Delaware limited liability
company registered to do business in Texas, with its principal place of business in Texas, doing business in Texas, has been properly served and has answered. 7. Defendant Toshiba Corporation ("Toshiba") is a Japanese corporation conducting
substantial business in the State of Texas and may be served through the Texas Secretary of State pursuant to §17.044 of the Texas Civil Practice and Remedies Code because Toshiba does not maintain a regular place of business in the State of Texas and this action arose from Toshiba's business activities in the State of Texas.
FIRST AMENDED ORIGINAL PETITION FOR DECLARATORY nJDGMENT, EXPEDITED RELIEF, OR, ALTERNATIVELY FOR INnJNCTIVE RELIEF
Defendant NRG Energy, Inc. ("NRG") is a Delaware corporation conducting
substantial business in the State of Texas and may be served through the Texas Secretary of State pursuant to § 17.044 of the Texas Civil Practice and Remedies Code because NRG does not maintain a regular place of business in the State of Texas and this action arose from NRG's business activities in the State of Texas. 9. Defendant Nuclear Innovation North America, LLC ("NINA") is a Delaware
limited liability company conducting substantial business in the State of Texas and may be served through the Texas Secretary of State pursuant to §17.044 of the Texas Civil Practice and Remedies Code because NINA does not maintain a regular place of business in the State of Texas and this action arose from NINA's business activities in the State of Texas.
Statement Of The Case
This case involves the construction of two nuclear reactors, known as Units 3 and
4, at the South Texas Project in Bay City, Texas (the "Project"). Defendants Toshiba, NRG, and NINA have engaged in a course of action designed to deprive CPS Energy of its valuable rights in the Project and to enhance their interest in and benefit from the Project at the expense of CPS Energy. These Defendants made misrepresentations and also failed to disclose Project critical information to induce CPS Energy to participate in the Project. They also conspired to and did disparage CPS Energy and conspired to and did interfere with CPS Energy's business and contractual relationships. This unlawful conduct includes a well-orchestrated public campaign to harm the ability of CPS Energy to enjoy the benefits of its substantial investment in the Project. 11. Defendants Toshiba, NRG, and NINA have undertaken a campaign of media
misinformation, public threats and disclosure of confidential Project information, all designed to harm CPS Energy. Defendants Toshiba, NRG, and NINA knew and intended that their actions
FIRST AMENDED ORIGINAL PETITION FOR DECLARATORY JUDGMENT, EXPEDITED RELIEF, OR, ALTERNATIVELY FOR INJUNCTIVE RELIEF
would endanger CPS Energy's ability to continue in the Project and would undermine support from the ratepayers and the San Antonio City Council necessary for CPS Energy to continue in the Project. The conduct of these Defendants is outrageous and entitles CPS Energy to recover actual and punitive damages in excess of $30 Billion or a higher amount as may be determined by the Jury. 12. The request for declaratory relief involves CPS Energy's undivided ownership
interest in the Project. CPS Energy, NINA 3 and NINA 4 entered into certain agreements to define their participation in and ownership of the Project as tenants in common. Those
agreements also reflected their intention to enter into a future final agreement to set the terms of their relationship with respect to ownership of the Project. 13. Since 2007, CPS Energy has invested approximately $300 million in the Project.
This work has resulted in considerable enhanced value in and to the Project site. Preliminary assessments of the enhanced value of the Project are in excess of $2 Billion. But, the executed participation agreements are either silent or ambiguous with respect to ownership rights in the Project if one co-tenant exercises its contractual right to withdraw from the Project. 14. CPS Energy has not withdrawn from the Project and cannot make a decision
whether to proceed or withdraw until it receives the revised cost estimate on December 31, 2009. Although CPS Energy continues to honor its obligations as an owner in the Project, it faces extreme uncertainty and potential harm due to the lack of definition in the agreements as to a withdrawing owner's rights in the Project, especially in light of its considerable investment in the Project to date. 15. The Texas Declaratory Judgments Act, Texas Civil Practice & Remedies Code
§37.001 et seq, allows CPS Energy to bring this action to obtain relief and certainty with respect
FIRST AMENDED ORIGINAL PETITION FOR DECLARATORY JUDGMENT, EXPEDITED RELIEF, OR, ALTERNATIVELY FOR INJUNCTIVE RELIEF
to its rights and the rights of its co-tenants with an undivided interest in the Project. A real and substantial controversy exists because the participation agreements are silent or ambiguous with respect to the rights of these co-tenants in the event an owner opts to unilaterally withdraw. Thus, this action involves a genuine conflict of tangible interest and is not merely theoretical. 16. Pursuant to the Texas Declaratory Judgments Act, CPS Energy respectfully asks
the Court to declare the rights, obligations, and legal relations of the parties under applicable law and the agreements in the event of a unilateral withdrawal. Nothing in this request is intended or should be construed as a withdrawal by CPS Energy from the Project, and CPS Energy specifically reserves its right to exercise the full range of rights given under the controlling agreements, including the unilateral right to withdraw, when and ifit chooses to do so.
The 1997 Participation Agreement
In November 1997, CPS Energy entered into an agreement that, among other
things, gave the owners of Units 1 and 2 of the South Texas Project the option to participate in building additional generating units at the site. This agreement, named the Amended and
Restated South Texas Project Participation Agreement, is an agreement between CPS Energy, the City of Austin, and NRG South Texas LP, the predecessor entity to NINA 3 and NINA 4 ("Participation Agreement"). 18. The Participation Agreement provides that each owner had an undivided
percentage ownership interest as tenants in common in Units 1 and 2, the 11,000 acre plant site, the transmission corridor, the railroad strip, the pumping facility, the cooling reservoir discharge station, and the switchyard, among other items.
FIRST AMENDED ORIGINAL PETITION FOR DECLARATORY JUDGMENT, EXPEDITED RELIEF, OR, ALTERNATIVELY FOR INJUNCTIVE RELIEF
The Participation Agreement further provides that any owner may propose the
construction of additional generating units by written notice to all other owners. Each owner may then elect to participate in the construction of additional generating units on the site. B. The 2007 Supplemental Participation Agreement 20. In or around June 2006, CPS Energy and Defendants agreed to participate in the
design and construction of Units 3 and 4. 21. In October 2007, ten years after entering into the Participation Agreement, CPS
Energy entered into the South Texas Project Supplemental Agreement ("Supplemental Agreement"). The Supplemental Agreement was between CPS Energy and NRG South Texas LP, the predecessor entity to Defendants NINA 3 and NINA 4. 22. The Supplemental Agreement did not restate or replace the 1997 Participation
Agreement. Rather, the Supplemental Agreement provides that all of the provisions of the Participation Agreement remain in effect, except those provisions of the Participation Agreement that are "affected" by the Supplemental Agreement. The Supplemental Agreement governs as to those "affected" provisions. (Supp. Agreement, ~ 12.1). However, the Supplemental Agreement does not identify specifically which provisions of the Participation Agreement survIve the Supplemental Agreement or which prOVISIons of the Supplemental Agreement replace the Participation Agreement. 23. Paragraph 5.1 of the Supplemental Agreement provides that CPS Energy and
Defendants will own an undivided interest in Units 3 and 4 as tenants in common. CPS Energy and NINA 3 each own an undivided 50 percent interest in Unit 3 as tenants in common. CPS Energy and NINA 4 each own an undivided 50 percent interest in Unit 4 as tenants in common.
Unlike the 1997 Participation Agreement, the Supplemental Agreement gives the
parties the right to cease participating in the development of the Project by unilaterally withdrawing. The parties further agreed that the withdrawing party "shall cease having any
further obligations for the Project," except to the extent of obligations already incurred by the
31 51 day after the date of withdrawal. (Supp. Agreement, ~ 5.3). 25. While the Supplemental Agreement permits an owner to unilaterally withdraw
from the Project and expressly relieves the withdrawing party of any further obligations for the Project, the Supplemental Agreement does not determine how the withdrawing party's undivided ownership interest in the Project is treated, or how the withdrawing party recovers its investment in the Project, or what rights the remaining tenants in common have regarding the withdrawing owner's share of the Project. 26. In the Supplemental Agreement, the parties agreed to execute a final agreement
("which the Parties anticipate will occur on or after February 1, 2008") with respect to ownership of the Proj ect, including, presumably, disposition of the withdrawing party's ownership interest. (Supp. Agreement, ~ 5.1.3.) 27. The parties were unable to agree on the terms of an owner's agreement and never
executed the final owner's agreement contemplated by the Supplemental Agreement. C. The Value of CPS Energy's Participation in the Project 28. Since agreeing to participate in building Units 3 and 4, CPS Energy has spent
approximately $300 million on preliminary design and engineering for the Project and improvements to the Project site. Preliminary assessments of the value of the participation and related rights in the Project site are in excess of$2 Billion.
Defendants' Illegal Conduct To Defraud CPS Energy And To Drive CPS Energy From the Project
29. CPS Energy's decision to continue to invest in two new nuclear power plants was
based on representations by Toshiba, NRG, and NINA about their particular expertise and experience in nuclear development. Specifically, these Defendants represented that they had financial and licensing expertise in developing large nuclear generation projects across the United States. These Defendants represented that they would employ the disciplined approach of NRG and Toshiba in the Project and touted that their approach "aligns the interests of both developer and prime contractor to optimize the schedule, performance and costs of its projects." NRG and NINA also represented that they would collaborate with Toshiba to develop accurate Project costs and that such collaboration and Toshiba's proven design would bring a higher probability of success and certainty to the Project. Toshiba, NRG, and NINA further represented that their expertise was key to this nuclear development because, they acknowledged, "the costs and commercial terms associated with the construction of new nuclear units have emerged ... as perhaps the biggest remaining obstacles to the nuclear renaissance in the United States." Thus, Defendants knew or should have known that accurate Project costs were critical to the success of the Project. 30. Toshiba, NRG, and NINA prepared Project cost estimates and were responsible
for bringing the Project in on-time and on-budget as they had represented they would and could do. CPS Energy relied upon these representations in entering into the Project, continuing to invest, and in performing its contract obligations. 31.
In June 2009, Defendants provided a cost estimate of $9.9 Billion (excluding
financing costs) to build the two new reactors. Although this was a non-binding estimate, the
validity of that number was confirmed by independent reports from consultants Sargent and Lundy and the Brattle Group that concluded the Project cost estimate was reasonable. Defendants knew that CPS Energy relied upon and used the estimate of $9.9 Billion as the basis for comparing alternative resource plans, for arranging financing, and for obtaining the necessary approvals from the San Antonio City Council and the ratepayers to proceed. 32. On October 13,2009, CPS Energy decided to reduce its interest in the Project to a CPS Energy then entered into discussions with various Texas
total of 20 to 25 percent.
cooperatives and municipalities for the purchase of CPS Energy's equity interest in the Project to reduce its ownership level. CPS Energy planned to sell a portion of the energy it produced as a 50 percent owner to other users outside of San Antonio, thereby creating an income stream for CPS Energy and the City of San Antonio. The City of San Antonio collects 14 percent of the revenue from CPS Energy. Or, alternatively, CPS Energy planned to sell a portion of its 50 percent interest and reap a substantial return on its investment by selling an equity share in the Project. 33. Approximately two weeks later, Defendants NRG, NINA and Toshiba made
comments in the press about the dramatic increases in the cost of the Project. These new cost estimates were significantly higher than had been previously represented to CPS Energy. On or around October 26, 2009, news articles reported that the estimated cost of the Project could increase by as much as $4 Billion, a 40 percent increase over Defendants' original cost estimate. 34. Defendants knew that for CPS Energy to proceed with the Project, it must have
support from the San Antonio City Council and the consent of the ratepayers and that inflated and inaccurate cost estimates recklessly released to the public would seriously harm, if not destroy, CPS Energy's ability to continue with the Project.
FIRST AMENDED ORIGINAL PETITION FOR DECLARATORY nJDGMENT, EXPEDITED RELIEF, OR, ALTERNATIVELY FOR INJUNCTIVE RELIEF
Defendants knew that if CPS Energy lost public approval for the Project, then
CPS Energy would be unable to continue with the Project and would be placed in a weakened negotiating position. Defendants knew that by manipulating the estimated Project costs and letting that play out in the public arena, they would deprive CPS Energy of the benefit of its bargain of affordable nuclear power, thereby threatening or depriving CPS Energy of the healthy return on its investment when it sold equity in the Project or entered into long-term power contracts for the sale of the excess electricity produced. Defendants also knew that the political fallout resulting from a significantly more expensive price tag than anticipated by the San Antonio City Counsel would cause a loss of public support and deprive CPS Energy of the time it would need to search for a buyer and sell its equity share, which could take more than a year. 36. In November 2009, right after the news hit that Defendants expected construction
costs to run $4 Billion over the cost estimates provided to CPS Energy earlier this year, officials from NRG, NINA, and CPS Energy flew to Japan for meetings held by executive management of Toshiba to evaluate Project costs and potential cost reductions. CPS Energy returned from its meeting with Defendants in Japan with no guaranty or assurances regarding the cost of the Project or the methodology Defendants would use to arrive at these ever-changing cost estimates. 37. Over the days and weeks that followed, Defendants took full advantage of this
situation by reporting to the press about the status of contract negotiations and by publicly speculating about CPS Energy's willingness and ability to continue the Project. This was done to enhance Defendants' own position to the detriment of CPS Energy. For example, Steve Winn, the chief executive officer of Defendant NINA, told an NRG investor meeting on Thursday, November 19, 2009, that a higher cost estimate to build the two new reactors may force its
partner, CPS Energy, to cut its ownership interest in the project below 20 percent. He speculated that an updated cost estimate for two new reactors may exceed the target rate increases that CPS Energy had promised its customers. "It's probable that the estimate may come outside of their range," Mr. Winn was reported to say. Mr. Winn also said that he expected CPS Energy's final equity stake to fall to between zero and 20 percent. Mr. Winn admitted that CPS Energy, as a municipal utility, had to consider not only the long-term economics of its investment, but the impact on its customers. Mr. Winn intended that his public speculation about the rising cost of the project would produce "near-term rate shock," as Mr. Winn himself called it, for CPS Energy's ratepayers. 38. Defendants' public speculation about CPS Energy's ability to perform the
contract and realize on its significant investment not only disclosed confidential information about the Project but also invited confusion and public outcry by the citizens of San Antonio that jeopardized CPS Energy's position on the Project. Mr. Winn's actions put Defendants in a position to assume control over CPS Energy's ownership for their own benefit and enjoy the investment that CPS Energy had made in the Project without just compensation. 39. Defendants jeopardized CPS Energy's position on the Project by releasing
preliminary cost estimates to the press and by manipulating the numbers for their benefit. Defendants' actions caused CPS Energy to lose public support and the confidence of San Antonio's City Council and endangered CPS Energy's ultimate ownership position. 40. Within a matter of a few weeks after the $4 Billion cost increase was reported in
the newspapers, NINA's chief operating officer was quoted in the press as saying that NINA was working to reduce the cost of the two new units to less than $10 Billion, the very number that CPS Energy had been relying on previously to move forward with the Project. In another press
FIRST AMENDED ORIGINAL PETITION FOR DECLARATORY nJDGMENT, EXPEDITED RELIEF, OR, ALTERNATIVELY FOR INmNCTIVE RELIEF
release, Bloomberg reported that Toshiba was "confident" that costs of less than $10 Billion are achievable. On November 19, NINA presented an updated cost estimate at its analyst's meeting that targeted the final project cost estimates at between $9.2 Billion and $10 Billion. 41. On November 19, 2009, Bloomberg reported that NRG had disclosed
analyst's meeting that it had identified a new partner for the Project and had "a contingency plan for every foreseeable CPS ownership outcome," including no ownership interest. 42. After Toshiba was selected as the contractor, CPS learned that Toshiba purchased
its 12 percent interest in NINA by paying $300 million to NRG. Half of that amount, or $150 million, now appears to be related, in part, to Toshiba's right to be general contractor on the Project. Thus, Toshiba, NRG, and NINA were aligned in interest to and did manipulate Project costs for their collective benefit. Defendants failed to disclose these facts to CPS Energy at the time CPS Energy entered into its relationships with Defendants. 43. Moreover, upon information and belief, CPS Energy would show that the
Defendants have taken other unilateral actions with respect to the development of the Project that are favorable to Toshiba (its partner in NINA) and detrimental to CPS Energy. 44. CPS Energy has learned that NRG and NINA representatives have threatened to
"hit CPS Energy with a two by four" through some sort of "countersuit." As recently as December 16, 2009, Steve Winn has been quoted that "San Antonio's indecision could risk federal loan guarantees needed to build two reactors." For example, in the same article, Mr. Winn was also quoted that "if either party quits making payments for 90 days, they lose their share in the Project."
Defendants' threats are part of their scheme to interfere with CPS Energy's ability
to continue with the Project. These statements are false and are part of Defendants' plan to harm CPS Energy, its ratepayers and the citizens of San Antonio. 46. Mr. Winn's speculation about the ramifications of withdrawal from the Project are
particularly irresponsible and damaging in light of the fact that the parties have never come to final terms on withdrawal rights, and those very issues are pending before this Court. 47. NRG made clear its course of dealing with CPS Energy in a Forbes.com article
dated December 14, 2009. The article states that David Crane, the chief executive officer of NRG Energy, plans to develop a nuclear project "with a time honored strategy: use other
people's money." The article describes NRG's plan as "finding a series of suckers to take the risk off his hands." NRG's reckless statements aside, CPS Energy cannot and will not allow it and its ratepayers to become one of NRG's "suckers." CPS Energy is entitled to full and adequate relief to protect its valuable investment and rights in the Project.
COUNT 1 - Suit For Declaratory Relief
48. below. 49.
CPS Energy incorporates paragraphs 1 through 47 by reference as if fully set forth
Because both the 1997 Participation Agreement and the 2007 Supplemental
Agreement are silent or at least ambiguous as to disposition of the parties' undivided interests in the Project after withdrawal, CPS Energy asks this Court to exercise its equitable powers under the Texas Declaratory Judgments Act to determine the rights of these tenants in common in the event of a voluntary withdrawal from the Project by any party. Due to the sizeable investment that CPS Energy has in the Project to date and the value of its interest in the site improvements,
CPS Energy will suffer extreme harm unless it knows with certainty the risks, benefits, and consequences of a unilateral withdrawal. 50. Accordingly, CPS Energy requests that this Court construe the contracts to
determine the parties' rights upon unilateral withdrawal or, alternatively, declare the legal relations among the parties as tenants in common. 51. CPS Energy also respectfully requests that this Court award its reasonable and
necessary attorney fees under Tex. Civ. Prac. & Rem. Code § 37.009.
COUNT 2 - Tortious Interference with Contracts and Prospective Business Relationships
The allegations set forth in paragraphs 1 through 51 are incorporated by reference
as if set forth fully below. 53. As described above, CPS Energy had (a) an agreement with its ratepayers to
deliver power at an affordable price, (b) prospective business relationships with other municipalities and cooperatives to sell the power produced by the Project, and (c) a contract with NINA 3 and NINA 4 to build the Project. 54. Defendants, in concert and conspiracy with one another, have interfered with CPS
Energy's prospective and actual contracts and business relationships and Defendants' interference was intentional and malicious. 55. As a proximate result of this wrongful conduct, CPS Energy has sustained
damages in excess of $2 billion. 56. Defendants' actions were willful and wanton, and CPS Energy is also entitled to
COUNT 3 - Fraud 57. The allegations set forth in paragraphs 1 through 56 are incorporated by reference
as if set forth fully below. 58. The information that Defendants NRG, NINA, and Toshiba disseminated publicly NRG, NINA, and Toshiba also failed to disclose
was malicious, false and misleading.
information to CPS Energy that was critical to the Project and that it had a duty to disclose. Moreover, the cost estimates they provided to CPS Energy in June 2009 were false and misleading and designed to sabotage the Project for CPS Energy. Finally, Defendants NRG, NINA, and Toshiba failed to disclose that Toshiba had paid NRG to purchase an ownership interest after it had been awarded the construction contract. 59. These Defendants knew and intended that CPS Energy would rely on these
misrepresentations and omissions and that CPS Energy would be - and was - harmed by such misrepresentations. 60. As a consequence of Defendants misleading, false, and malicious representations,
CPS Energy has sustained damages in excess of $2 billion. Defendants' actions were willful and wanton, which entitles CPS Energy to an award of punitive damages. COUNT 4 - Negligent Misrepresentation 61. The allegations set forth in paragraphs 1 through 60 are incorporated by reference
as if set forth fully below. 62. The information disseminated by NRG, NINA, and Toshiba publicly and to CPS
Energy contained inaccurate, false, and misleading information. Specifically, the cost estimates provided to CPS Energy in June 2009 were false and misleading, as were reports about CPS Energy's ability or inability to continue with the Project. In addition, NRG, NINA, and Toshiba
had a duty to infonn CPS Energy that Toshiba, who had been awarded the construction contract, was also going to be participating in the project by paying NRG to participate in the Project as a 12% owner. 63. Defendants failed to exercise reasonable care or competence when making these
misrepresentations. 64. CPS Energy has sustained damages as a result of Defendants' negligent
misrepresentations in excess of $2 billion.
COUNT 5 - Business Disparagement
The allegations set forth in paragraphs 1 through 64 are incorporated by reference
as if set forth fully below. 66. The statements Defendants have made in the press and elsewhere about CPS
Energy's interest in and ability to complete the Project were false and hannful to CPS Energy's economic interests and to the character of its business. 67. Defendants knew or should have known that their statements were false and
would have a detrimental impact on CPS Energy, or Defendants made these false statements with reckless disregard for whether they were true and without verifying the accuracy of their statements. 68. Defendants made these statements with the intent to interfere with CPS Energy's
ability to participate in the Project and with CPS Energy's other economic interests. These statements were made without any privilege to do so. 69. As a proximate result of Defendants' misconduct, CPS Energy has suffered
damages in excess of $2 billion.
Because Defendants' actions were willful and malicious, CPS Energy is also
entitled to punitive damages.
COUNT 6 - Fraudulent Inducement
The allegations set forth in paragraphs 1 through 70 are incorporated by reference
as if set forth fully below. 72. Defendants fraudulently induced CPS Energy to enter into the subject contracts
for participation in and construction of the Project by overstating and misrepresenting their capabilities regarding this type of Project and providing an initial cost estimate that they knew to be inaccurately low. In addition, NRG and NINA permitted Toshiba to join the project as a 12 percent owner. 73. Defendants understood the critical importance of an accurate cost estimate to CPS
Energy's sustained participation in the Project and intended for CPS Energy to rely on its initial ill-conceived cost estimate. Moreover, Defendants concealed the fact that Toshiba had
purchased an ownership interest in the Project. CPS Energy reasonably relied on the fact that NRG and NINA had awarded the construction contract to Toshiba based upon its track record and experience for constructing such facilities on time and on-budget. 74. Defendants made these misrepresentations and omissions in order to induce CPS
Energy to enter the contracts to build the Project and to secure, in NRG's own words, the "suckers" Defendants needed to finance the initial stages of the Project. 75. As a result, CPS Energy was fraudulently induced to enter the Supplemental
Agreement as has sustained significant damages, in excess of $2 billion.
Because Defendants' actions were willful and wanton, CPS Energy is also entitled
to punitive damages.
COUNT 7 - Conspiracy
The allegations set forth in paragraphs 1 through 76 are incorporated by reference
as if set forth fully below. 78. Defendants conspired to defraud CPS Energy by, among other things, acting in
concert to mislead CPS Energy by failing to disclose Project critical information. Defendants also acted in concert to disparage CPS Energy and to interfere with its prospective and other business relationships by engaging in a coordinated public effort to disseminate false information about CPS Energy for the purpose of ousting CPS Energy or making it impossible for CPS Energy to continue with the Project. 79. Defendants executed their plan by commISSIOn and omission to induce CPS
Energy to enter into the Project to initially finance it, and then to eliminate CPS Energy from the Project and take over CPS Energy's valuable investment. 80. Defendants have made misrepresentations to and about CPS Energy or failed to
communicate critical truthful information in furtherance of Defendants' illegal scheme. 81. As a result of Defendants' illegal conduct, CPS Energy has suffered damages in
excess of $2 billion. 82. As a result of Defendants' wanton and willful conduct, CPS Energy is also
entitled to punitive damages.
COUNT 8 - Request For Expedited Relief
The allegations set forth in paragraphs I through 82 are incorporated by reference
as if set forth fully below. 84. Due to the urgency surrounding the issues brought to the Court and the
uncertainty faced by the parties, CPS Energy respectfully urges the Court to expedite CPS Energy's request for relief, including discovery and final adjudication.
COUNT 9 - Request for Temporary Restraining Order and Other Injunctive Relief
85. below. 86.
CPS Energy incorporates paragraphs I through 84 by reference as if fully set forth
In the alternative, CPS Energy requests injunctive relief to prevent Defendants
from taking action to destroy or otherwise damage the value of CPS Energy's interests in the Project. Additionally, CPS Energy fears that Defendants may destroy, remove or secret
documents and other information related to the issues and causes of action in an attempt to conceal crucial evidence of their illegal conduct. If Defendants succeed in these efforts, CPS Energy will suffer immediate and irreparable harm in that (a) this heavily negotiated and valuable Project may be lost; (b) the credibility and goodwill of CPS Energy will be lost; and (c) documentation relating to the claims asserted herein will be destroyed. 87. As set forth above, CPS Energy has shown a probable right of recovery and
likelihood of success on the merits on its claims against Defendants and that CPS Energy will suffer imminent, irreparable harm without Court intervention, for which there is no adequate remedy at law.
It is because CPS Energy finds itself in this perilous position that it seeks
extraordinary relief from the Court to immediately restrain Defendants from engaging in the illegal conduct described above. In order to preserve the status quo and to prevent imminent and irreparable harm to CPS Energy's vested rights, CPS respectfully urges the Court to grant an immediate Temporary Restraining Order and Injunctive Relief pursuant to Tex. R. Civ. P. 680 and Tex. Civ. Prac. & Rem. Code § 65.001 et seq. 89. CPS Energy asks the Court to order Defendants and their agents, servants,
employees, independent contractors, attorneys, representatives, affiliates, parents, owners and those persons or entities in active concert or participation with them (collectively, the "Restrained Parties") as follows: a. Enjoin the Restrained Parties from making any public pronouncements about the rights and responsibilities of the parties under their agreements before the Court has an opportunity to decide those issues in this lawsuit; Enjoin the Restrained Parties from declaring any purported "default" under the Project until such time as the Court can declare the legal rights of the parties with respect to the Project; Enjoin the Restrained Parties from interfering with or thwarting the Project by refusing to act in good faith in negotiating a definitive agreement regarding the Defendants interests in the Project; Enjoin the Restrained Parties from manipulating the media to "report" misinformation, threats or confidential Project information; Enjoin the Restrained Parties from further engaging in manipulative business strategies designed to interfere with CPS Energy's business relations, disparage CPS Energy's economic interests, and damage CPS Energy's ability to negotiate a reasonable business solution on behalf of its ratepayers; Enjoin the Restrained Parties from altering the status quo by misleading the Department of Energy ("DOE") about the rights of CPS Energy in the Project and from taking any action that would jeopardize funding currently available from the DOE;
Enjoin the Restrained Parties from taking any action or making any statements that are adverse to CPS Energy's interests as a co-tenant with an undivided interest in the Project; Enjoin the Restrained Parties from depleting funds available for the Project; Enjoin the Restrained Parties from negotiating, entering into, canceling, altering, or modifying any oral or written contracts, understandings, or arrangements, which conduct would operate to modify, compromise, jeopardize, undermine, nullify, terminate, hinder, or obstruct the Project or funding for the Project; Enjoin the Restrained Parties from destroying, removing, or secreting documents, records and other information related to the claims and allegations set forth in this lawsuit. The requested temporary restraining order and request for injunctive relief will
allow the maintenance of the last, actual, peaceable, and uncontested status quo. 91. CPS Energy is exempt from posting a bond pursuant to § 6.002 of the Texas Civil
Practice and Remedies Code.
CPS Energy demands a trial by jury.
93. have occurred.
All conditions precedent to CPS Energy's claim for relief have been performed or
For all the reasons set forth above, CPS Energy respectfully requests the Court to declare the rights and legal relations of the parties in the event of a unilateral withdrawal, award CPS Energy its actual damages in an amount in excess of $2 Billion, as well as exemplary damages pursuant to Texas Civil Practice and Remedies Code § 41.003 in an amount in excess of $30
Billion, enter a Temporary Restraining Order in the form attached hereto, and award CPS Energy its reasonable and necessary attorneys fees in connection with seeking declaratory relief, and for all additional relief as is just. Respectfully submitted, SONNENSCHEIN NATH & ROSENTHAL, LLP
By: __- - ' - - - - - - - - - - - - . - - C. Michael Moore ~ State Bar No. 14323600 Matthew D. Orwig State Bar No. 15325300 Karen C. Corallo State Bar No. 04811490 Gene R. Besen State Bar No. 2404549 2000 McKinney Ave., Suite 1900 Dallas, TX 75201 (214) 259-0900 - telephone (214) 259-0910 - facsimile
DAVIS, CEDILLO & MENDOZA, INC. Ricardo G. Cedillo State Bar No. 4043600 Les 1. Strieber III State Bar No. 19398000 McCombs Plaza, Suite 500 755 E. Mulberry Avenue San Antonio, Texas 78212 (210) 822-6666 - telephone (210) 822-1151 - facsimile ATTORNEYS FOR PLAINTIFF, THE CITY OF SAN ANTONIO, TEXAS, ACTING BY AND THROUGH THE CITY PUBLIC SERVICE BOARD OF SAN ANTONIO, A TEXAS MUNICIPAL UTILITY
FIRST AMENDED ORIGINAL PETITION FOR DECLARATORY JUDGMENT. EXPEDITED RELIEF, OR, ALTERNATIVELY FOR INJUNCTIVE RELIEF
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the foregoing was sent to the following opposing counsel on December 23,2009 via email and certified mail, return receipt requested.: Lamont A. Jefferson Haynes and Boone, LLP 112 East Pecan Street Suite 1200 San Antonio, Texas 78205 email@example.com
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