Complaint Claims Contract Breach in Manure to Biogas Conversion Agreement

Organic Solution Management LLC claimed in a Southern District of California complaint that Quantitative Biosciences Inc. broke a contract between the parties as part of a project exploring the possibilities of converting animal waste on a farm to fuel for farm vehicles. 

According to the complaint, the defendant received a grant for the project from the California Energy Commission and asked the plaintiff to help because of its experience with the systems and equipment which would be used for the project.  Organic Solution Management explained that it would “repair and rehabilitate an anaerobic digester system – a piece of equipment in which animal manure is broken down into biogas and biofertilizer – and operate the digester to provide raw biogas for use in the project.”

The plaintiff, an engineering firm which focuses on anaerobic digestion systems to break down organic waste, alleged in the complaint that it fulfilled the terms of the contract as it agreed, but was not paid.  Additionally, the party alleged that Quantitative Biosciences breached both express terms and implied terms of the contract by not obtaining the plaintiffs approval before installing equipment, leading to dangerous conditions, and not purchasing biogas from the plaintiff.

The complaint explained that biogas produced by the plaintiff through anaerobic digestion is primarily methane and can be purified to create a renewable natural gas. The plaintiff began its anaerobic digester project around 2009 at Fiscalini Farms.

Reportedly, under the parties’ agreement, the defendant would pay up to $200,000 to the plaintiff for labor, equipment, and other costs. Half of those funds were due before the repairs were made, and the rest after it was completed. After the system is operational, the defendant would pay the plaintiff monthly at a rate of $13 per million British thermal units of biogas, which would increase after three years.

According to Organic Solution Management, it received $150,000 from the defendant but never received the final $50,000 despite repeated requests. It also did not pay for the biogas as agreed, which the plaintiff said would have been a significant source of revenue for it. Instead, Organic Solution Management “was forced to squander considerable amounts of biogas through flaring, venting, and other means.”

Organic Solution Management asked the court for damages it received because the defendant did not follow the parties agreement and breached “the implied covenant of good faith and fair dealing.” The plaintiff is represented by Franklin Soto LLP