Valensi Rose, PLC Wins Two Million Dollar Arbitration Award for AltaRock Energy, Inc.

Feb. 2, 2012 - PRLog -- Los Angeles, CA– Valensi Rose, PLC attorney David Krol successfully obtained an arbitration award of $2,054,310, plus interest, for his client AltaRock Energy, Inc.  AltaRock Energy, Inc., a start-up renewable energy company was involved in a protracted dispute with the Northern California Power Agency ("NCPA").  

“This was a clear case of obstructionism by the Northern California Power Agency,” said Mr. Krol.  “It had no basis to refuse to disburse the funds which AltaRock was ultimately awarded, but dramatically drew out the process, needlessly expending taxpayer dollars.”

In 2009, AltaRock deposited $5 million into an escrow account before engaging in an experimental project to deepen and enhance an existing geothermal well in the Geysers geothermal field in Northern California.  The escrowed funds were to be used to pay AltaRock's subcontractors in the event of nonpayment by AltaRock, among other things.  

Despite various attempts, and through no fault of its own, AltaRock was unable to deepen the well and subsequently terminated the experimental project.  Even though AltaRock paid its subcontractors in full, NCPA refused to return half of the escrowed funds after the project was terminated, claiming that the well drilling efforts had damaged the well.  This was alleged even though NCPA had supervised the entire drilling effort, never instructed AltaRock to stop work on the project, and had never claimed that the well had been "damaged" until after the drilling efforts ceased.

After informal resolution efforts failed and recognizing that time was of the essence, Mr. Krol filed an arbitration demand against NCPA at the end of 2010, seeking the return of the $2.5 million remaining in escrow.  NCPA responded by filing a counterclaim against AltaRock in the arbitration, seeking in excess of $7 million dollars for the projected costs of drilling a replacement well.  The power agency claimed it was necessary because it alleged that AltaRock had been "negligent" and "incompetent" in its drilling efforts and misrepresented the nature and scope of insurance for the project.  

Based on the substantial amount of funds the client had deposited in escrow, Mr. Krol insisted on an expedited but workable discovery and arbitration schedule in the complex dispute.  By the end of June, 2011, the arbitration was over, and AltaRock was completely vindicated.  In a comprehensive, written award, the arbitrator determined that AltaRock had done nothing wrong and that NCPA was not entitled to the replacement well it had requested, or to any money damages associated with alleged "well damage."  Instead, the arbitrator awarded NCPA only a portion of the costs that NCPA had sought to formally "plug and abandon" the well in accordance with Bureau of Land Management guidelines.  AltaRock had initially been prepared to “plug and abandon,” the well but at NCPA's request, it did not do so.  The arbitrator then awarded AltaRock the remaining escrow proceeds, totaling over $2 million, as well as ten percent interest and arbitration costs.  NCPA agreed to release all of those sums from escrow.  

During the arbitration proceedings, NCPA filed a lawsuit in Marin County in an attempt to delay the arbitration, and when that lawsuit was removed to federal court by a co-defendant, NCPA filed yet another lawsuit in state court, attempting to postpone the arbitration again.  Mr. Krol had the second lawsuit removed to federal court, where it was dismissed with prejudice, and with the federal court denying NCPA's request to stay the arbitration.  

After the arbitration award was issued, NCPA, instead of dismissing its complaint, amended it, now alleging that AltaRock was negligent and had engaged in fraudulent activity- claims which NCPA had already raised in the arbitration and which were rejected.  Mr. Krol successfully relied on the arbitration award as a complete defense, with the superior court granting AltaRock's petition to confirm the arbitration award, sustaining AltaRock's separate demurrer without leave to amend and entering judgment in AltaRock's favor at the end of December 2011.  

Case Name:  AltaRock Energy, Inc. v. Northern California Power Agency
Arbitration Forum:  AAA
Case No.: 74 198 Y 0873 010 JMLE
Arbitrator:  Edward B. Lozowicki, Esq.
Date of Award:  June 16, 2011

Case Name:  Northern California Power Agency v. AltaRock Energy, Inc.
Court:  Marin County Superior Court
Case No.: CIV1101102
Judge:  Hon Roy O. Chernus
Date Judgment Entered:  December 30, 2011

About Valensi Rose, PLC
Established in 1952, Valensi Rose, PLC is a full-service business law firm providing its clients with the broad range of legal services needed in a complex business environment. The firm is AV® rated by Martindale Hubbell (its highest rating).  The firm's practice areas include: federal, state and international tax planning and related litigation; trust and estate planning, administration and related litigation; charitable planning; civil litigation, including securities and malpractice litigation; family and domestic relations law and mediation; real estate; debtor-creditor and bankruptcy law; business and corporate law; non-profit law; labor and employment law; and music, entertainment and intellectual property law.  For more information please visit www.vrmlaw.com.