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Harvest Group, LLC v. Love’s Travel Stops & Country Stores, Inc.

No. 22-6170. 1/17/2024. W.D.Okla. Judge Hartz. Economic Development Incentives—Agreement to Procure Incentives—Fee for Procuring Incentives—Breach of Contract—Summary Judgment.

January 17, 2024

Harvest Group, LLC (Harvest) helps other businesses acquire economic development incentives offered by federal, state, and local governments as inducements to attract business. Harvest entered into a contract (the agreement) with Love’s Travel Stops & Country Stores, Inc. and Musket Corp. (collectively, Love’s) for Harvest’s help in procuring incentives related to the development of a renewable diesel facility (the project). Harvest was to earn a fee of 10% of the net present value of any incentives or benefits for the project that it helped Love’s acquire and that Love’s chose to use. Harvest met with numerous state and local officials on behalf of Love’s and obtained millions of dollars’ worth of economic development incentives for the project. But Love’s internal tax analysis estimated that property taxes for the project would be too high for the project to be attractive. With approval from Love’s, Harvest then developed a tax strategy whereby it negotiated a reduced property value with the county tax assessor. Harvest later sent an invoice to Love’s for 10% of the value of the benefits, which was over $7 million. Love’s did not pay Harvest, stating that it did not have to pay until it had moved forward on the project and had begun to use the incentives, and at that point Love’s had not yet done so. Harvest then sued Love’s for breach of contract. Love’s subsequently announced a joint venture with a third party to move forward with the project. A year into the litigation, Love’s asserted for the first time that the property tax classification was not an incentive for which it had to pay Harvest a fee. Both parties moved for summary judgment. The district court granted Love’s motion and denied Harvest’s.

On appeal, Harvest argued that the district court erred in granting summary judgment to Love’s because the assessment was an incentive/benefit under the agreement, so it was owed a fee. Here, government officials explicitly offered the property tax classification as an incentive to attract Love’s business; nothing in the agreement would exclude such an incentive or benefit from the fee provision; and the parties clearly understood it to include the assessment as an incentive/benefit. Further, Harvest provided sufficient evidence to create a dispute of material fact about whether the tax assessor’s classification was influenced by Harvest’s efforts, as opposed to being simply an application of the law as argued by Love’s, and thus whether Harvest was owed a fee for obtaining it. Therefore, the district court erred by granting summary judgment for Love’s on the issue of Harvest’s fee for the assessment and ruled correctly in denying Harvest’s motion for summary judgment on the issue.

Harvest also argued that it is due interest on its fee. The Tenth Circuit remanded to the district court to decide the interest accrual matter in the first instance if Love’s prevails on the fee for the assessment issue.

The denial of Harvest’s motion for summary judgment was affirmed. The summary judgment in favor of Love’s was reversed and the case was remanded for further proceedings.

Official US Court of Appeals for the Tenth Circuit proceedings can be found at the US Court of Appeals for the Tenth Circuit website.

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