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Case 2:15-cv-00010-DBH Document 1 Filed 01/09/15 Page 1 of 11

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UNITED STATES DISTRICT COURT


DISTRICT OF MAINE
WOODARD & CURRAN, INC., a Maine
corporation; and CONTINENTAL
CASUALTY COMPANY, an Illinois
corporation,
Plaintiffs,
v.
CATE STREET CAPITAL, INC., a
Delaware corporation and
WESTCHESTER SURPLUS LINES
INSURANCE COMPANY, a Georgia
corporation,
Defendants.

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Civil Action No.: ________________

COMPLAINT AND JURY DEMAND


Plaintiffs Woodard & Curran, Inc. (Woodard & Curran) and Continental Casualty
Company (Continental Casualty), by and through undersigned counsel and for their Complaint
against Defendants Cate Street Capital, Inc. (Cate Street) and Westchester Surplus Lines
Insurance Company (ACE), state and allege as follows:
I. NATURE OF THE ACTION
1.

This lawsuit arises from a personal injury action filed in U.S. District Court for the

District of Wyoming against Cate Street and two of its related entities (Clean Runner, LLC and
Red Desert Reclamation, LLC) as well as Woodard & Curran (the Wyoming Action).

Cate

Street essentially owned and operated the Red Desert Water Treatment and Reclamation Facility
(the RDR) in Rawlins, Wyoming, at which the underlying plaintiffs, two operators at the RDR,
were allegedly injured. Cate Street contracted with Woodard & Curran as a technical consultant
to evaluate and advise on how to improve the treatment process at the facility. Pursuant to the

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pertinent contract documents, Cate Street owes defense and indemnity obligations to Woodard &
Curran.
2.

On or about November 18, 2013, Woodard & Curran tendered the defense of the

Wyoming Action to Cate Street and demanded that Woodard & Curran be defended, indemnified
and held harmless by Cate Street. Cate Street refused to accept this tender.
3.

On June 2, 2014, a mediation was held in Portland, Maine between Cate Street and

its insurer, ACE, and Woodard & Curran and its insurer, Continental Casualty, regarding the
defense and indemnity obligations owed by Cate Street to Woodard & Curran. At the mediation,
a settlement was reached in which Cate Street and ACE agreed to: (a) pay 85% of the first $3
million of any settlement or judgment against the defendants in the Wyoming Action (with
Woodard & Curran/Continental Casualty to pay the remaining 15% of the first $3 million); (b)
pay 100% of any additional amount above $3 million of any settlement or judgment against the
defendants in the underlying action; (c) pay all of Woodard & Currans defense costs from the
date of the mediation forward; and (d) Cate Street agreed to pay any punitive damages awarded.
The settlement agreement was later memorialized in writing, and the settlement terms confirmed
in a subsequent telephone conference attended by all parties and their counsel.
4.

Notwithstanding, ACE and Cate Street have now taken the position that no

settlement agreement was reached and have refused to honor their contractual obligations.
Consequently, Woodard & Curran and Continental Casualty have incurred, and are continuing to
incur, damages in the form of defense and indemnity costs above the amounts negotiated and
agreed to on June 2, 2014.

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5.

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Woodard & Curran and Continental Casualty are entitled to a declaratory judgment

that a valid and enforceable settlement agreement was reached, and that Cate Street and ACE
have breached that agreement.
6.

Woodard & Curran and Continental Casualty are entitled to recover damages from

Cate Street and ACE for indemnification of monies paid by Woodard & Curran and/or
Continental Casualty in connection with the Wyoming Action, and for attorney fees and
litigation costs incurred by Woodard & Curran and/or Continental Casualty in the Wyoming
Action and in the present action.
II. PARTIES
7.

Plaintiff Woodard & Curran, Inc. (Woodard & Curran) is a Maine corporation

with its principal place of business located at 41 Hutchins Drive, Portland, ME 04102.
8.

Plaintiff Continental Casualty Company (Continental Casualty) is an Illinois

corporation with its principal place of business located at 333 S. Wabash, Chicago, IL 60604.
9.

Defendant Cate Street Capital, Inc. (Cate Street) is a Delaware corporation with

its principal place of business located at 1 Cate Street, Suite 100, Portsmouth, NH 03801.
10.

Defendant Westchester Surplus Lines Insurance Company (ACE) is a Georgia

corporation with its principal place of business located at 500 Colonial Center Parkway, Roswell,
GA 30076.
III. JURISDICTION, VENUE, AND JURY DEMAND
11.

Jurisdiction is proper in this Court pursuant to 28 U.S.C. 1332(a), because there is

complete diversity between Plaintiffs and Defendants and the amount in controversy exceeds
$75,000 exclusive of interest and costs.

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12.

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This Court has personal jurisdiction over the Defendants because Defendants have

transacted business within the state of Maine, contracted with a Maine corporation (Woodard &
Curran), attended a mediation in Maine regarding the Defendants defense and indemnity
obligations, and entered into a settlement agreement with Plaintiffs in Maine.
13.

Venue is proper in this district pursuant to 28 U.S.C. 1391(b)(2) because a

substantial part of the events or omissions giving rise to Plaintiffs claims including the
entering into the settlement agreement and the breach thereof incurred in this district. Further,
Defendants entered into contracts with Plaintiffs providing for exclusive venue in this Court.
14.

Plaintiffs demand jury trial of all issues so triable.


III. GENERAL ALLEGATIONS

15.

Cate Street is a venture capital firm that, according to its website, seeks to invest in

sustainable, environmentally friendly innovations that will provide returns for our investors and
real change for our planet.

One of Cate Streets investment opportunities was the RDR

wastewater treatment facility located in Rawlins, Wyoming that was intended to serve the oil and
gas industry needs to treat produced water using green technology.
16.

In August and September, 2011, Cate Street entered into a series of agreements with

Woodard & Curran for engineering consulting services in connection with the RDR. Each of the
proposals included Woodard & Currans standard terms and conditions, which included the
following paragraph (emphasis supplied):
16.1.1 Hazardous Substances. Client acknowledges that Engineer has neither
created nor contributed to the creation of any hazardous waste, hazardous
substance, radioactive material, toxic pollutant, asbestos, or otherwise dangerous
substance (collectively referred to as hazardous substance), or dangerous
condition at the Project site. Consequently, Client agrees to defend, indemnify
and hold Engineer harmless from and against any and all claims, damages,
losses, fines, suits or causes of action (collectively referred to as claims)
relating to personal injury; property damage; non-compliance or liability
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arising under environmental laws including, but not limited to, RCRA,
CERCLA or similar federal or state laws, to the extent the claims are based
on or arise from the existence or release of any hazardous substances.
17.

The standard terms and conditions were incorporated into the agreements between

Cate Street and Woodard & Curran even though they are not signed, a fact that was confirmed by
the deposition testimony of Robert Desrosiers, Cate Street Chief Compliance Officer, in the
Wyoming Action.
18.

In 2013 Kenneth Paul Feliciano and Lynn Lee Kelley, two individual operators

working at the RDR, commenced the Wyoming Action, asserting claims of personal injury
arising out of alleged chemical exposure while working at the RDR. The Wyoming Action
alleged a single claim of negligence against all defendants, including Cate Street, and two of its
related entities, Clean Runner, LLC (the owner of the green technology used at the RDR) and
Red Desert Reclamation, LLC (the purported owner/operator of the land and facility), as well as
Woodard & Curran.
19.

On or about November 18, 2013, Woodard & Curran tendered the defense of the

Wyoming Action to Cate Street and demanded to be indemnified and held harmless by Cate
Street for all losses, costs, damages, and/or expenses incurred as a result of the lawsuit.
20.

On March 12, 2014, Cate Street, through litigation counsel, denied Woodard &

Currans tender for indemnity.


21.

Prior to that date, Cate Street, through its litigation counsel, had acknowledged Cate

Streets duty to pay Woodard & Currans defense costs, and requested that Woodard & Curran
submit its invoices for legal services incurred to date for reimbursement. Woodard & Curran
submitted its first invoice to Cate Streets counsel on March 18, 2014. No reimbursement was
received by Woodard & Curran.

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22.

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On May 2, 2014, Woodard & Curran sent a letter to Cate Street invoking the

Dispute Resolution provisions of the parties agreements, seeking to resolve (a) payment of
outstanding invoices for work Woodard & Curran had performed for Cate Street on the RDR and
Thermogen projects, (b) reimbursement of Woodard & Currans defense costs already incurred
in the Wyoming Action, (c) establishment of a procedure for reimbursement of future defense
costs going forward through the conclusion of the Wyoming Action, and (d) Cate Streets
obligation to indemnify Cate Street.
23.

In compliance with Step 1 of the Dispute Resolution process set forth in the parties

agreements, Woodard & Curran and Cate Street representatives met on May 12, 2014. During
that meeting, Cate Street agreed to pay the outstanding invoices on both the RDR and
Thermogen projects. However, an unpaid balance of $18,303.08 still remains as of the date of
filing.
24.

Despite further discussions among the parties informally, the remaining issues

could not be resolved. Accordingly, pursuant to Step 2 of the Dispute Resolution process, a
mediation was held on June 2, 2014. The mediation was conducted by Patrick Coughlan, and
was attended in person by: John Halle (Cate Street CEO), Robert Desrosiers (Cate Street Chief
Compliance Officer), Brian Champion (Cate Street outside counsel), Doug McKeown (Woodard
& Curran CEO), Bruce Nicholson (Woodard & Curran in-house counsel), and Timothy Bryant
(Woodard & Curran outside counsel). Attending by phone were: Stephen Kamaroff (ACE),
Cyndy Ruby (Continental Casualty) and Julie Walker (Woodard & Curran outside counsel).
25.

At the mediation, the parties agreed to the following material terms:


a. For the first $3,000,000 of any settlement or judgment in the Wyoming
Action, Cate Street/ACE would pay 85%, and Woodard &
Curran/Continental Casualty would pay 15%;

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b. Any settlement or judgment above $3,000,000 would be paid by Cate


Street/ACE;
c. Any punitive damages award would be paid by Cate Street;
d. Cate Street/ACE would pay all of Woodard & Currans attorneys fees
and costs arising out of the Wyoming Action incurred after June 2,
2014.
e. Cate Street would pay Woodard & Curran a total of $18,303.08 for
services previously rendered; and
f. The parties would enter into a joint defense agreement in the
Wyoming Action.
26.

Thereafter, the parties agreement was memorialized in a written settlement

agreement and joint defense agreement. All parties were involved in the drafting, review and
approval of these documents.
27.

On June 20, 2014, the parties and their counsel participated in a conference call

during which final comments/changes to the documents memorializing the settlement were
discussed and agreed upon. Participating in that conference call were: Robert Desrosiers, Brian
Champion, and outside counsel Brandon Jensen (on behalf of Cate Street), Stephen Kamaroff
(on behalf of ACE), Bruce Nicholson, Tim Bryant, and Julie Walker (on behalf of Woodard &
Curran), and Cyndy Ruby (on behalf of Continental Casualty).
28.

At the conclusion of the June 20, 2014 conference call, Robert Desrosiers asked if

all parties agreed that there was a deal. Each person on the call, including Stephen Kamaroff on
behalf of ACE, separately and individually indicated yes.
29.

On June 26, 2014, Stephen Kamaroff, in a letter to Robert Desrosiers, denied that

ACE had agreed to certain provisions previously acknowledged by him in the June 20, 2014
phone call, but acknowledging ACE had agreed to certain terms in the mediation. See Exhibit A
attached.

As a result of Kamaroff/ACEs attempt to unilaterally modify the terms of the


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agreement reached at the June 2, 2014 mediation and later reaffirmed during the June 20, 2014
conference call, no joint defense agreement was ever finalized between Cate Street and Woodard
& Curran.
30.

On September 5, 2014, a mediation was held in the Wyoming Action. Participating

in that mediation were: Robert Desrosiers (Cate Street), Michael ODonnell and LaMar Jost
(outside counsel for Cate Street), Nicole Heiser (ACE), Bruce Nicholson (Woodard & Curran),
Michael Franklin (Continental Casualty), and Julie Walker (outside counsel for Woodard &
Curran). During the September 5, 2014 mediation, ACE refused to acknowledge the terms of the
agreement reached on June 2, 2014. As a result, no global settlement was reached.
31.

On September 11, 2014, Woodard & Curran reached a settlement on its own behalf

in the Wyoming Action which requires payment of an amount under $3 million by Continental
Casualty to plaintiffs in the Wyoming Action.1
32.

ACE continues to maintain that no settlement was reached on June 2, 2014. See

September 11, 2014 email from Adam Stein (ACE outside counsel) to Michael Franklin
(Continental Casualty).
33.

To date, Defendants continue to deny their obligations pursuant to the June 2, 2014

mediation.
COUNT 1. DECLARATORY JUDGMENT
(Woodard & Curran and Continental Casualty v. Cate Street and ACE)
34.

Plaintiffs repeat and reallege Paragraphs 1 through 33 as though fully set forth

herein.

The terms of the settlement agreement in the Wyoming Action are subject to a confidentiality agreement among
the parties to that settlement. Once the issue of liability is determined here, Woodard & Curran and Continental
Casualty will submit the terms of that settlement agreement to the Court under seal.

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35.

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An actual controversy has arisen between Plaintiffs and Defendants regarding the

existence and enforceability of the agreement entered between Plaintiffs and Defendants on June
2, 2014, and the parties rights, duties, and responsibilities thereunder.
36.

Pursuant to 28 U.S.C. 2201 et. seq., Fed. R. Civ. P. 57, and M.R.S.A. 5951-

5963, Plaintiffs seek a judicial declaration determining the existence and enforceability of the
settlement agreement between Plaintiffs and Defendants and the parties rights, duties, and
responsibilities thereunder.
37.

A declaratory judgment, if entered, will serve a useful purpose and will terminate

the uncertainty or controversy giving rise to this proceeding.


COUNT 2. BREACH OF CONTRACT
(Woodard & Curran and Continental Casualty v. Cate Street and ACE)
38.

Plaintiffs repeat and reallege Paragraphs 1 through 37 as though fully set forth

herein.
39.

The parties reached an agreement at the June 2, 2014 mediation.

40.

Defendants have since breached their duties and obligations to Woodard & Curran

and Continental Casualty pursuant to that agreement.


41.

Woodard & Curran and Continental Casualty have met any precedent obligations

to the extent any exist.


42.

Defendants breach of the agreement has caused Plaintiffs to incur damages in an

amount to be proven at trial.


COUNT 3. CONTRACTUAL INDEMNITY
(Woodard & Curran v. Cate Street)
43.

Plaintiff Woodard & Curran repeats and realleges Paragraphs 1 through 42 as

though fully set forth herein.

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44.

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Cate Street is contractually obligated pursuant to its contracts with Woodard &

Curran to indemnify Woodward & Curran and its insurer, Continental Casualty, for all costs they
incurred in the defense and settlement of the Wyoming Action.
45.

Cate Street failed to defend, indemnify and hold Woodard & Curran harmless in the

Wyoming Action and Woodard & Curran and its insurer, Continental Casualty, have been
damaged thereby.
COUNT 4. BREACH OF CONTRACT
(Woodard & Curran v. Cate Street)
46.

Plaintiff Woodard & Curran repeats and realleges Paragraphs 1 through 45 as

though fully set forth herein.


47.

Cate Streets failure to defend, indemnify and hold Woodard & Curran harmless is

a breach of its contracts with Woodard & Curran and Woodard & Curran has been damaged
thereby.
WHEREFORE, Plaintiffs respectfully request that the Court award them the following
relief:
a.

A declaratory judgment finding and declaring that a valid and enforceable


settlement agreement was entered between Plaintiffs and Defendants on
June 2, 2014 with the terms provided herein;

b.

An award of damages to Plaintiffs for Defendants breach of the


settlement agreement, in an amount to be proven at trial;

c.

An award of damages for Defendant Cate Streets breach of contract to


defend, indemnify and hold Plaintiff Woodard & Curran harmless;

d.

An award of attorneys fees and costs incurred in litigating this action;

e.

An award of prejudgment and post-judgment interest to the fullest extent


allowed by law; and

f.

Such further and other relief as the Court deems just and proper.

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Dated at Portland, Maine this 9th day of January, 2015.

/s/ John S. Whitman


John S. Whitman, Esquire

/s/ Joseph L. Cahoon


Joseph L. Cahoon, Esquire
Richardson, Whitman, Large & Badger
465 Congress Street, PO Box 9545
Portland, Maine 04112-9545
(207) 774-7474
jwhitman@rwlb.com; jcahoon@rwlb.com

/s/ John F. X. Lawler, Esquire


John F. X. Lawler, Esquire
Prince Lobel & Tye, LLP
100 Cambridge Street, Suite 2200
Boston, MA 02114
(617) 456-8000; jlawler@princelobel.com
Attorneys for Plaintiffs,
Woodward & Curran, Inc. and
Continental Casualty Company

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