Latham & Watkins Secures Appellate Reversal in New York for Parque Solar Project Companies

Latham & Watkins represented Parque Solar Don Jose S.A. de C.V., Villanueva Solar, S.A. de C.V., and Parque Solar Villanueva Tres, S.A. de C.V. in litigation against Enel S.p.A. The dispute arose from construction and operation contracts for renewable energy facilities in Mexico formerly owned by Enel. At Enel’s behest, the Project Companies contracted with an Enel subcontractor that had little to no assets, and Enel provided a guarantee covering damages “due and payable” under the subcontract. In 2020 the Project Companies determined the subcontractor had failed materially to perform, demanded payment from the subcontractor and notified Enel that they would be entitled to collect under Enel’s guarantee if the subcontractor did not pay. After the subcontractor refused to pay, the Project Companies pursued arbitration and obtained an award of approximately US$77 million plus interest. Enel refused to satisfy the award even after the subcontractor defaulted on payment. The Project Companies then sued Enel in New York Supreme Court for breach of the guarantee and for breach of the implied covenant of good faith and fair dealing. Supreme Court dismissed the action, adopting Enel’s interpretation that the Project Companies had not made a timely demand. On appeal to the Appellate Division, First Department, the Project Companies argued that the parties’ agreements required completion of arbitration before collection could be sought from Enel, rendering their demand timely. The appellate panel expressed skepticism of Enel’s contractual interpretation and, on December 9, unanimously reversed the dismissal, holding the contract claims should not have been dismissed due to contractual ambiguity. The court also rejected Enel’s alternative defenses, clearing the way for the Project Companies on remand to pursue a judgment to hold Enel accountable for the now US$100+ million award. Latham & Watkins represented Parque Solar Don Jose S.A. de C.V., Villanueva Solar, S.A. de C.V., and Parque Solar Villanueva Tres, S.A. de C.V. with a team composed by: Michael Bern, Washington, D.C. partner, who argued the appeal; Nikita Kansra, New York associate, who worked on the appeal; Rob Malionek, New York partner, and Tyler Halloran, New York associate, who provided support on the appeal; and Antonio Del Pino, Santiago Bejarano, and retired partner Fernando Mantilla-Serrano, who handled the contract negotiation and arbitration process.

Latham & Watkins Secures Appellate Reversal in New York for Parque Solar Project Companies

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