MASSACHUSETTS MUNICIPAL WHOLESALE ELECTRIC COMPANY v. (and a companion case  2). (2008)

MEMORANDUM AND ORDER PURSUANT TO RULE 1:28

Massachusetts Municipal Wholesale Electric Company (MMWEC), appeals from a judgment for the defendants, referred to collectively as Masspower, following a twelve-day bench trial on its claims for breach of contract, breach of the implied covenant of good faith and fair dealing, and violation of G.L. c. 93A. Also before us is Masspower's appeal from the allowance of summary judgment for MMWEC in a related case, which we consolidated with this appeal. Both cases involve the interpretation of a power purchase agreement (PPA), executed by the parties in 1990, pursuant to which MMWEC contracted to purchase 7.86 percent of the output from Masspower's energy generating facility for a term of twenty years.

For these appeals, we rely on the facts as found by the Superior Court trial judge in his February 20, 2007, “Findings of Fact, Rulings of Law and Order for Judgment,” and on the undisputed facts set out in a second judge's January 29, 2008, “Memorandum of Decision and Order on Cross–Motions for Summary Judgment,” supplemented where necessary by uncontroverted facts in the trial record and summary judgment materials.

MMWEC's Appeal.

1. Masspower's level of dispatch. MMWEC filed its complaint against Masspower on June 30, 2005, in response to a reduction in the frequency with which Masspower's facility was being selected for dispatch. MMWEC claims that the PPA obligated Masspower to operate the facility so as to deliver energy on a nearly continuous basis. Nothing explicit in the PPA required Masspower to do so, but MMWEC maintains that a nearly continuous level of dispatch was the clear implication of the price structure and terminology used by the parties in fashioning the PPA.

The trial judge found that the PPA was a contract between sophisticated and well-represented parties, and that the integration clause in the agreement's final section prohibited alteration or expansion of matters specifically addressed therein. See, e.g., Roberts Indus., Inc. v. Spence, 362 Mass. 751, 754, 291 N.E.2d 407 (1973). He therefore relied primarily on the language of the PPA itself to determine Masspower's obligations regarding its ability to dispatch electricity. See, e.g., Rogaris v. Albert, 431 Mass. 833, 835, 730 N.E.2d 869 (2000) (“It is not the role of the court to alter the parties' agreement”). Central to the parties' dispute was the interpretation of section 4.3 of the PPA, which stated as follows:

“The Parties agree that the [f]acility will be available for dispatch by NEPEX  ³ in accordance with the NEPOOL  ⁴ Agreement and that the [f]acility will be deemed a dispatchable unit for purposes of economic dispatch by NEPEX, subject to provisions set forth in [a]ppendix C.

“In the event that the [f]acility is dispatched at a capacity factor of less than sixty percent over a two year period, [Masspower] agrees to cooperate with [MMWEC] and the other [p]urchasers if they decide to seek to have the [f]acility declared ‘must-run’ by NEPOOL.”

MMWEC insists that the parties intended the “available for dispatch” language, when considered along with other provisions in the PPA, to mean that the facility would operate nearly continuously, or what is referred to as baseload operation. A baseload unit was described by William Dunn, a former manager of MMWEC's power management division, as a unit operating 75 to 95 percent of the time. (Trial Tr.40). MMWEC points to evidence that the pricing structure imposed by the PPA, consisting of high fixed charges and MMWEC's pro rata share of the actual fuel charges, was typical in the industry of a baseload operation and that an energy purchaser would only agree to high fixed costs if the facility ran frequently, thereby spreading those costs over many hours of operation. Such a pricing arrangement, MMWEC contends, demonstrates that the parties intended the facility to operate as a baseload unit. The unit did in fact run at approximately eighty percent in the first ten years.  ⁵

Nowhere in the PPA, however, is there language that required dispatch at baseload levels. Bonuses and remedies for dispatch levels above or below certain percentages reflect incentives for operating the facility at baseload levels, but the contract and the testimony at trial made clear that dispatch at any particular level was not guaranteed. See Roberts Indus., Inc. v. Spence, 362 Mass. at 755, 291 N.E.2d 407 (“After interpretation has called to its help all those facts which make up the setting in which the words are used, however, the words themselves remain the most important evidence of intention”). Because the judge found that the facility was consistently maintained so as to be available for dispatch at all times, as the PPA required, he concluded, correctly in our view, that Masspower did not breach the PPA when the frequency with which the facility was selected for dispatch fell off dramatically after 2005.

MMWEC further relies on the phrase “economic dispatch” in section 4.3 as reflecting the parties' intent that Masspower would price its energy cheaply enough to be selected by NEPEX for frequent dispatch, thereby operating as a baseload unit. MMWEC argues that it was within Masspower's ability to be selected for frequent dispatch by keeping its fuel prices low, and that Masspower's fuel contracts with its natural gas suppliers reflected this understanding. According to MMWEC's argument, Masspower breached its contractual obligation to MMWEC when it began submitting higher bids to ISO New England, Inc. (ISO–NE)  ⁶ after Masspower's other long-term power contracts were bought out, a practice that was permitted under NEPOOL rules but that resulted in less frequent dispatch.⁷

On this record, we think the judge reasonably interpreted the significance of the reference to economic dispatch in section 4.3, considering “the contract as a whole, in a reasonable and practical way, consistent with its language, background, and purpose.” Gross v. Prudential Ins. Co. of America, Inc., 48 Mass.App.Ct. 115, 119, 718 N.E.2d 383 (1999). The judge properly interpreted “economic dispatch” to mean that Masspower was obligated to maintain the facility to be available for dispatch in accordance with the NEPOOL rules for economic dispatch. Pursuant to NEPOOL rules, facilities were selected for economic dispatch by a central system operator, according to the price at which they could generate energy, so that facilities offering cheaper prices for energy on a given day would be selected for dispatch before more expensive units. Under the terms of the PPA, Masspower's facility was one that would be selected to operate based on its costs. In this manner, the contract distinguished the mode of the facility's operation from that of a must-run facility, a type of facility that operated at all times regardless of costs. But, again, nothing in the PPA created a binding obligation on Masspower to price its energy low enough to be selected for dispatch with any particular frequency.

MMWEC additionally argues that the fuel agreements between Masspower and its fuel suppliers, when read together with the PPA, reflected the parties' intent that Masspower price its energy low enough to be selected for dispatch at baseload levels. MMWEC relies on the fuel agreements' price-reopener provisions, which, according to correspondence between Masspower and MMWEC, provided “substantial assurance” that the price of gas would support baseload operation. (Trial Ex.177). But, at trial, MMWEC failed to establish that the fuel agreements, to which MMWEC was not a party, were incorporated or somehow merged into the PPA, or that they otherwise imposed an obligation between Masspower and MMWEC to provide baseload operation. Contrary to MMWEC's position, the evidence did not require the judge to read the fuel agreements together with the PPA as constituent parts of a single transaction. Compare Holmes Realty Trust v. Granite City Storage Co., 25 Mass.App.Ct. 272, 275–276, 517 N.E.2d 502 (1988) (question of fact whether separate agreements executed simultaneously among related parties should be read together as a single transaction).

The trial testimony and the documentary evidence of the negotiations between the parties make abundantly clear that Masspower was unwilling to guarantee a specific level of dispatch.⁸ On this record, the judge reasonably found that an obligation to operate Masspower's facility at baseload levels was not intended as part of the PPA, and the evidence did not require that he look beyond the four corners of the agreement to create such rights. We are in full accord with the judge's conclusion that Masspower's failure to price its energy so that it would be selected for dispatch on a nearly continuous basis did not constitute a breach of contract.

2. Termination of the fuel agreements. MMWEC argues that because the PPA provided MMWEC with the right to approve Masspower's fuel agreements prior to construction of the facility in 1991, the PPA also required that Masspower obtain MMWEC's approval before it terminated those contracts in 2005. The judge found that, by its express terms, section 2.5 of the PPA limited MMWEC's rights to approve the fuel agreements to the period “prior to [c]ommencement of [c]onstruction.” The evidence overwhelmingly supports the judge's finding that MMWEC had no contractual right to challenge Masspower's termination of the fuel agreements thereafter.

Even aside from the PPA's express terms, the record shows that MMWEC rejected any such right when it chose not to substitute the Western Massachusetts Electric Company (WMECo) contract under the PPA's most-favored-nations provision. In so doing, MMWEC acknowledged, at the time, that the WMECo contract afforded WMECo the right to object to termination of the fuel agreements, while MMWEC's PPA did not.⁹ The record supports the judge's finding that MMWEC made a deliberate decision to forego the right to prohibit termination of the fuel contracts, under the PPA's most-favored-nations provision, because it preferred certain other advantages it enjoyed under the PPA.

The record also supports the judge's determination that MMWEC failed to prove that it was an intended third-party beneficiary to the fuel agreements. “The usual assumption, it is said, is that contracting parties ‘bargain and agree for themselves and only incidentally for third persons.’ “ Macksey v. Egan, 36 Mass.App.Ct. 463, 468, 633 N.E.2d 408 (1994). See also Miller v. Mooney, 431 Mass. 57, 62, 725 N.E.2d 545 (2000). “We look at the language and circumstances of the contract for indicia of intention. The intent must be clear and definite.” Anderson v. Fox Hill Village Homeowners Corp., 424 Mass. 365, 366–367, 676 N.E.2d 821 (1997) (citation omitted).

In rejecting MMWEC's third-party beneficiary argument, the judge again relied on the PPA's integration clause, which states that the PPA “constitutes the entire [a]greement between the [p]arties relating to the subject matter hereof, and all previous agreements, discussions, communications and correspondences with respect to the subject matter hereof are superseded by the execution of this [a]greement.” With respect to the fuel agreements in particular, the judge found that section 2.5 of the PPA provided MMWEC with approval rights over the fuel agreements only until the commencement of construction, with no remedies beyond that point. The judge also found that MMWEC was no more than an incidental beneficiary of the fuel agreements, and that Masspower had bargained solely for itself in making those agreements.

MMWEC fails to point to evidence that would satisfy the requirement of showing Masspower's clear and definite intent to make MMWEC, the purchaser of only a 7.86 percent share of the facility's output, the beneficiary of the fuel agreements. The PPA's description of the fuel contracts as “related agreements” is not sufficient to render the judge's findings clearly erroneous. MMWEC therefore had no right as an intended beneficiary to challenge the termination of the fuel agreements.

3. Covenant of good faith and fair dealing. MMWEC claims that Masspower's failure to operate the facility as a baseload unit, and Masspower's termination of the fuel contracts, constitute a breach of the implied covenant of good faith and fair dealing. The judge ruled that because Masspower acted in accordance with its contractual obligations, it did not breach the implied covenant.

While it is true that the purpose of the implied covenant “is to ensure that neither party interferes with the ability of the other to enjoy the fruits of the contract,” Eigerman v. Putnam Invs., Inc., 450 Mass. 281, 287, 877 N.E.2d 1258 (2007), “the scope of the covenant is only as broad as the contract that governs the particular relationship.” Id. at 288, 877 N.E.2d 1258, quoting from Ayash v. Dana–Farber Cancer Inst., 443 Mass. 367, 385, 822 N.E.2d 667, cert. denied sub nom. Globe Newspaper Co. v. Ayash, 546 U.S. 927, 126 S.Ct. 397, 163 L.Ed.2d 275 (2005). “The covenant does not supply terms that the parties were free to negotiate, but did not.” Ibid. Because the judge reasonably found that a.) MMWEC knowingly decided to forego a contractual right to prohibit termination of the gas contracts, and b.) also knowingly acknowledged that Masspower would not guarantee dispatch at a particular level by not accepting the must-run provision, those terms cannot be inserted pursuant to the implied covenant of good faith and fair dealing.

4. Violation of G.L. c. 93A. MMWEC maintains that the judge's findings that Masspower acted in accordance with its contractual rights and obligations did not provide sufficient support for his determination that Masspower did not violate G.L. c. 93A. See, e.g., Green v. Blue Cross & Blue Shield of Massachusetts, 47 Mass.App.Ct. 443, 448, 713 N.E.2d 992 (1999). The judge specifically found, however, that Masspower's actions were not undertaken for an ulterior, improper, and unfair purpose. We conclude that his findings adequately dispose of the c. 93A claim.

Masspower's Appeal.

On May 4, 2007, MMWEC demanded that Masspower seek to have the facility declared a must-run operation, pursuant to section 4.3 of the PPA. Masspower refused, and MMWEC terminated the PPA. Masspower filed a complaint against MMWEC on July 25, 2007, alleging that MMWEC's termination was a breach of contract, breach of the implied covenant of good faith and fair dealing, and a violation of G.L. c. 93A. Masspower appeals from summary judgment entered in favor of MMWEC on Masspower's complaint.

To reiterate, the must-run provision, in section 4.3 of the PPA, states: “In the event that the [f]acility is dispatched at a capacity factor of less than [sixty percent] over a two year period, [s]eller agrees to cooperate with [b]uyer and the other [p]urchasers if they decide to seek to have the [f]acility declared ‘must-run’ by NEPOOL.” Termination under the PPA is governed by section 7.1, which gives MMWEC the right to terminate the PPA if Masspower “shall fail in any material respect to comply with, observe, perform or shall default in any material respects upon any obligation under the [a]greement, ․ and such failure materially and adversely [e]ffects” MMWEC.

The judge ruled that because there were no other purchasers, as that term was used in the PPA, as of 2007, MMWEC had the unilateral right to seek Masspower's cooperation in having the facility declared must-run. The judge also ruled that Masspower's failure to do so constituted a material breach of a material obligation, and that such breach satisfied the “materially and adversely [e]ffects” prong of the PPA's termination provision, without further proof of harm. We review the judge's allowance of summary judgment de novo. Maffei v. Roman Catholic Archbishop of Boston, 449 Mass. 235, 242–243, 867 N.E.2d 300 (2007); Air Plum Island, Inc. v. Society for the Preservation of New England Antiquities, 70 Mass.App.Ct. 246, 251, 873 N.E.2d 1159 (2007).

1. Other purchasers. Masspower first argues that MMWEC was not the only purchaser under section 4.3, and therefore had no right, on its own, to seek must-run operation of the facility. But we are satisfied, on this record, that, by 2007, there were no “other purchasers” under the terms of the PPA, and that MMWEC was the sole energy purchaser remaining under contract with Masspower.

The PPA makes clear that MMWEC was obligated to purchase 7.86 percent of Masspower's capacity whenever Masspower's facility was dispatched. At the time the PPA was executed, other power purchase agreements were anticipated that would provide for the purchase of additional shares of the facility's output, at prices determined by those agreements. By 2005, after WMECo and Northern Star Generation, LLC (NSTAR) bought out their respective power purchase agreements, Masspower became a merchant operator for all power it generated that was not sold to MMWEC. Thus, roughly ninety-two percent of Masspower's energy was sold in the open market, rather than sold directly to specific purchasers under contract.

On February 17, 2005, Masspower entered into a contract with FPL Energy Power Marketing, Inc. (FPL) to handle the sale of its energy output other than that under contract to MMWEC. Under the FPL contract, entitled “FPL Lead Participant Services Agreement,” and the “EEI Confirm”  ¹⁰ attached thereto, FPL was to offer the remaining ninety-two percent of Masspower's output for resale to the New England markets. (S.J.App.866;885). FPL's “payment” to Masspower for that output was defined, in relevant part, as “any and all payments or credits received by [FPL] from or through ISO–NE in connection with the resale of power, or otherwise from the offering by [FPL] as [l]ead [p]articipant, of the energy, capacity and other products from the [f]acility in the New England Markets.” (S.J.App.885).

Masspower argues that this arrangement made FPL a purchaser under section 4.3 of the PPA, such that FPL's consent was required to enforce the must-run provision. Section 1.26 of the PPA defines purchaser as one that “entered into agreements with [Masspower] to purchase the [n]et [c]apability and [c]orresponding [e]nergy of the [f]acility.” The judge appropriately observed that the PPA itself is entitled an “Agreement for the Sale of the Net Capability and Corresponding Energy by and between Masspower and MMWEC,” thereby drawing the reasonable inference that “other purchasers” meant those with agreements comparable to the PPA.

We further note that “purchase” is defined in Webster's Third New International Dictionary 1844 (1993) as “to obtain by paying money or its equivalent.” See, e.g., Suffolk Constr. Co., Inc. v. Lanco Scaffolding Co., Inc., 47 Mass.App.Ct. 726, 729, 716 N.E.2d 130 (1999) (“In interpreting a contract, the court must construe all words that are plain and free of ambiguity according to their usual and ordinary sense”); Massachusetts Mun. Wholesale Elec. Co. v. Springfield, 49 Mass.App.Ct. 108, 111, 726 N.E.2d 973 (2000). FPL was required only to remit to Masspower whatever amounts were received from NEPOOL for the resale of Masspower's output. Viewing the PPA as a whole, and applying the ordinary meaning of purchase in the context of the PPA's definition of purchaser, we are hard-pressed to view FPL's contractual obligations to Masspower as comparable to those of “other purchasers” under Section 4.3, that is, purchasers that were contractually obligated to obtain and pay for power. See, e.g., Gross v. Prudential Ins. Co. of America, Inc., 48 Mass.App.Ct. at 118–119, 718 N.E.2d 383.

Masspower points to the use of terms such as “purchase and sale” and “buyer and seller” in the FPL contract to draw a parallel between FPL's role as purchaser and that of MMWEC.¹¹ However, it is apparent from the face of FPL's agreement that FPL was not contractually bound to purchase and pay for ninety-two percent of Masspower's output. FPL's obligation was merely to offer the facility's output into the New England markets for resale, for a fee, and remit whatever amounts were credited by NEPOOL for Masspower's energy.

Therefore, if Masspower were to operate the facility as a must-run, MMWEC would be obligated to pay for 7.86 percent of the output, at whatever price was due under the PPA, while FPL would be obligated only to remit payment to Masspower for any power that was sold in the markets. Under the well-established principle that “an agreement is to be construed so as to give it effect as a rational business instrument,” Kingstown Corp. v. Black Cat Cranberry Corp. ., 65 Mass.App.Ct. 154, 158, 839 N.E.2d 333 (2005), we see no rational basis to include FPL as one of the “other purchasers,” under the PPA's must-run provision, since FPL had no obligations or interests at stake in that decision. As such, FPL's concurrence was not required in order for MMWEC to seek to have the Masspower facility declared must-run.

2. Materially and adversely affected. Section 7.1 of the PPA provides, in relevant part, that: “If [Masspower] shall fail ․ to comply with, observe, perform or shall default in any material respects upon any obligation under this [a]greement, ․ and any such failure materially and adversely [e]ffects [MMWEC] ․, then [MMWEC] may ․ terminate this [a]greement .” The issue on appeal is what is meant by the phrase “adversely [e]ffects.”

A material breach of a contract by one party generally excuses the other party from further performance. Prozinski v. Northeast Real Estate Servs., LLC, 59 Mass.App.Ct. 599, 610, 797 N.E.2d 415 (2003). Nevertheless, parties to a contract may agree to further restrictions on the right to terminate their contract, which we will enforce. See G.M. Abodeely Ins. Agency, Inc. v. Commerce Ins. Co., 41 Mass.App.Ct. 274, 277–278, 669 N.E.2d 787 (1996). See also DiBella v. Fiumara, 63 Mass.App.Ct. 640, 645, 828 N.E.2d 534 (2005); Zielinski v. Connecticut Valley Sanitary Waste Disposal, Inc., 70 Mass.App.Ct. 326, 334–335, 873 N.E.2d 1207 (2007).¹² Accordingly, section 7.1 of the PPA is enforceable as written, and MMWEC was required to show that the breach of the must-run provision had both a material and an adverse effect on MMWEC in order for it to terminate the agreement.

The judge ruled that a material breach of a material provision was sufficient to satisfy the requirement that MMWEC was adversely effected. We think the parties' inclusion of “adversely [e]ffect[ed]” cannot be written out of the contract or otherwise subsumed in such a manner. See, e.g., Kingston Corp. v. Black Cat Cranberry Corp., 65 Mass.App.Ct. at 158–159, 839 N.E.2d 333 (ignoring the word “shall” in first sentence of contract's arbitration election provision would impermissibly render the second sentence superfluous). “An interpretation that gives a reasonable meaning to all of the provisions of a contract is to be preferred to one which leaves a part useless or inexplicable.” Metropolitan Prop. & Cas. Ins. Co. v. Fitchburg Mut. Ins. Co., 58 Mass.App.Ct. 818, 822–823, 793 N.E.2d 1252 (2003), quoting from Sherman v. Employers' Liab. Assur. Corp., 343 Mass. 354, 357, 178 N.E.2d 864 (1961).

In considering what must be shown by way of an adverse effect, we again refer to the rule of construction that the words of a contract, when free of ambiguity, are construed according to their usual and ordinary meaning. “Adverse” is defined in Webster's Third New International Dictionary 31 (1993) as, variously, “in opposition to one's interests,” “detrimental,” or “unfavorable.”  ¹³ This definition suggests something distinct from material. For example, we have defined a material breach as “a breach of ‘an essential and inducing feature of the contract,’ “ or “a ‘substantial breach going to the root of the contract.’ “ Prozinski v. Northeast Real Estate Servs., LLC, supra at 608–610, 797 N.E.2d 415.

We conclude that the PPA permitted termination only upon a showing that Masspower's breach effected MMWEC in a manner that was not only material, but also detrimental, unfavorable, or contrary to its interests. Without proof of both a material and an adverse effect on MMWEC, caused by Masspower's refusal to seek must-run of the facility, termination of the contract is not an available remedy for breach of the must-run provision. See generally DiBella v. Fiumara, 63 Mass.App.Ct. at 645, 828 N.E.2d 534 (“where the breach is not of such a material and substantial nature as to excuse the party suing from proceeding with the contract,” that party is left to “his remedy by way of damages”).

Masspower argued that an adverse effect requires proof of economic harm. But MMWEC points to evidence that operating the facility as a must-run would almost always have been a more costly alternative than economic dispatch. On that basis, MMWEC counters that a showing of economic harm for Masspower's failure to cooperate in declaring the facility a must-run would not be possible, and therefore could not have been intended by the parties.¹⁴

We are not persuaded that an adverse effect in these circumstances necessarily requires proof of economic harm in order to permit termination, but the plain meaning of the phrase does call for proof of some detrimental or unfavorable effect, or an effect contrary to MMWEC's interests, caused by Masspower's breach. We turn to the record to determine whether summary judgment is appropriate on the issue.

Evidence from the trial established that the must-run provision was added to the PPA as a concession to MMWEC's desire for assurance that it would obtain baseload power from the facility in return for its obligation to pay fixed costs. The record suggests that the efficiency of the unit when it was new, combined with the long-term fuel contracts then in place, may have rendered the must-run provision a more attractive alternative to reduced dispatch at the time the PPA was negotiated. (S.J.App.1117). The summary judgment materials indicate that the must-run option had value to MMWEC at the outset, to ensure a reliable source of baseload energy at a predictably low price. (S.J.App.1118).

Whether the benefit of the must-run provision, and hence the adverse effect of its breach, continued to the time of MMWEC's termination is unclear. The evidence demonstrates that by enforcing the must-run provision, MMWEC would risk paying more for power, when it might be able to purchase the equivalent amount of power at a cheaper price from NEPOOL and receive the corresponding NEPOOL credit. (S.J.App.1131).¹⁵ But the summary judgment record and evidence from the first trial indicated that various MMWEC representatives considered that operating the facility as a must-run, though more costly for the municipalities, was worth the extra expense because of the reliability it offered. (S.J.App.1062–1063). The representatives testified that this predictability also aided them in making other power purchase decisions. (S.J.App.1063). There was also testimony at trial that, as dispatch of the facility declined, certain municipalities were obligated to contract with other providers on a short-term basis, at a premium, to obtain power, especially during the summer months. (Trial Tr.136). Evidence at trial reflected MMWEC's view that operating the facility as a must-run would serve as insurance against the high cost of purchasing peak power from other sources during high-demand periods. (Trial Ex.165).

All told, the record reflects a genuine issue of material fact on the question of whether Masspower's refusal to cooperate in seeking to operate the facility as a must-run had an effect that was detrimental, unfavorable, or contrary to MMWEC's interests. We conclude that whether MMWEC was materially and adversely effected, in the context of this industry and these parties, is a question of fact that requires remand to the Superior Court for trial. See, e.g ., Prozinski v. Northeast Real Estate Servs., LLC, 59 Mass.App.Ct. at 608–609, 797 N.E.2d 415. See also G.M. Abodeely Ins. Agency, Inc. v. Commerce Ins. Co., 41 Mass.App.Ct. at 279, 669 N.E.2d 787.

3. Remaining claims. Masspower claims that MMWEC breached the implied covenant of good faith and fair dealing and violated G.L. c. 93A, when it sought to enforce the must-run provision for the improper motive of coercing a favorable buyout of the PPA. Because we reverse and remand Masspower's breach of contract claim for trial, we remand this claim as well, since the record reveals disputed facts regarding the circumstances that prompted MMWEC's attempt to enforce the must-run provision.

Masspower also alleges that MMWEC breached the implied covenant of good faith and fair dealing and violated G.L. c. 93A by an abuse of process in filing its complaint in the first case. The judge dismissed the claim to the extent it was grounded in abuse of process, reasoning that any such claim should have been filed in the first litigation. We are not persuaded that Masspower was required to bring its claim for abuse of process as a compulsory counterclaim. The factual underpinnings of Masspower's claim, that MMWEC brought the first complaint for the ulterior purpose of interfering with Masspower's sale, do not arise from the same transaction or occurrence that was the subject matter of MMWEC's complaint, which involved Masspower's failure to run the facility at base-load levels and the parties rights and obligations under the PPA. See National Lumber Co. v. Canton Inst. for Sav., The Bank of Canton, 56 Mass.App.Ct. 186, 188–189, 775 N.E.2d 1241 (2002). Moreover, there is no hard and fast rule that an abuse of process claim must be filed as a compulsory counterclaim to the process the defendant seeks to challenge. See, e .g., Ladd v. Polidoro, 424 Mass. 196, 200, 675 N.E.2d 382 (1997) (discussing possibility of an abuse of process filed as a counterclaim or in a subsequent action); American Velodur Metal, Inc. v. Schinabeck, 20 Mass.App.Ct. 460, 468–469 & n. 11, 481 N.E.2d 209 (1985) (evidentiary issue addressed in the context of counterclaim for abuse of process which could have been brought as a separate action).

The summary judgment materials raise a genuine issue of material fact as to whether MMWEC filed its complaint in 2005, alleging breach of the PPA, with the ulterior purpose of disrupting the sale of Masspower's facility. See, e.g., Vittands v. Sudduth, 49 Mass.App.Ct. 401, 407, 730 N.E.2d 325 (2000) (“even process that is obtained with probable cause and for a proper purpose does not necessarily preclude liability”). Therefore, we remand this claim to the Superior Court as well.

Judgment on findings of fact and rulings of law after jury-waived trial affirmed.

Judgment on cross-motions for summary judgment vacated and that case is remanded for further proceedings consistent with the memorandum and order of the Appeals Court.

FOOTNOTES

3.  NEPEX means the New England Power Exchange. NEPEX directed the dispatch of generating facilities.

4.  NEPOOL refers to the New England Power Pool, a group of public and private utilities that utilized a central system operator to select electric generating facilities to meet demand for electricity. In 1990, NEPEX was NEPOOL's central system operator.

5.  MMWEC complains that the judge appears to have confused the concept of baseload operation with must-run operation. The testimony from various witnesses regarding the frequency with which a baseload unit would be expected to run was inconsistent, overlapping in some instances with descriptions of a must-run operation. Any confusion in the label used by the judge did not affect the outcome here.

6.  In 1997, ISO–NE succeeded NEPEX as NEPOOL's central system operator.

7.  After Masspower finalized the buyouts of its long-term contracts with Western Massachusetts Electric Company, Boston Edison Company, and Commonwealth Electric Company, ninety-two percent of Masspower's dispatch bids consisted of its opportunity costs, such as the resale of its gas supplies, rather than its costs as determined by its various PPAs.

8.  Even MMWEC's own witness, William Dunn, testified that when a unit was turned over to NEPOOL for dispatch, the level of dispatch could not be guaranteed at any particular level. It was for that reason that the parties included the incentives, rather than guarantees, in the PPA. (Trial Tr.68). Indeed, witnesses for both parties confirmed that Masspower offered the must-run remedy if dispatch fell below sixty percent over two years, as a concession to MMWEC's desire for more certainty of frequent dispatch. (Trial Tr.301–302; 543–544; 2145).

9.  In a May 22, 1991, memorandum to the Masspower project participants, Jay Dwyer, an MMWEC attorney who was manager of power contracting, pointed out that among the major advantages of the WMECo agreement over MMWEC's contract was “WMECo's contract prohibits amendment or termination of fuel contracts if the reopener provisions would change.” He went on to explain that “many of the provisions of the WMECo (and [Boston Edison Co.] and Commonwealth [Electric Co.] ) contract act to protect MMWEC even though MMWEC is not a party to the agreement (i.e. prohibition on changes in fuel contracts, limits on transfer of ownership, and insurance requirement).” (Tr. Exh.1953).

10.  Edison Electric Institute and National Energy Marketers Association Confirmation of Purchase and Sale.

11.  Section 3.3 of the Lead Participant Services Agreement provides, in relevant part: “The [p]arties agree that the products and services offered from the [f]acility into the New England Markets pursuant to this [a]greement shall be purchased and sold between the [p]arties under a separate contract (the EEI Confirm, attached as [e]xhibit A to this [a]greement) to be executed by the [p]arties contemporaneously with this [a]greement; except that such products and services shall not include output of the [f]acility that is otherwise sold to [MMWEC], or to any other entity that holds a[g]enerator [a]sset entitlement in the [f]acility.” (S.J.App.871). The EEI Confirm, though also referencing the purchase and sale of power, makes clear that FPL is simply offering energy from the facility for resale, and remitting “any and all payments” received back to Masspower. (S.J.App.884–885).

12.  We acknowledge the assistance of the brief of amicus curiae New England Legal Foundation on this point, as well as on the issue of contract termination for a breach having a material and adverse effect as interpreted in other jurisdictions.

13.  MMWEC conceded in it brief that adverse connotes a detrimental effect.

14.  If, on the other hand, there were no financial benefits to MMWEC to enforcing the must-run provision, other than as an incentive for Masspower to seek economic dispatch as frequently as possible through efficient operation and gas pricing, then it would not be clear whether the parties intended termination as a remedy for a breach of the must-run provision.

15.  By way of background, as members of NEPOOL, MMWEC's participants were obligated to bring to the pool enough capacity to satisfy their respective demands; this was accomplished either by building their own facilities or by contracting for power with other facilities, as they did with Masspower. (S.J.App.820; 843;1098–1099). When energy was available through the pool at a cheaper rate than Masspower's facility, so that Masspower's facility was not dispatched, MMWEC had the benefit of buying the cheaper energy from the pool, as well as receiving a credit for Masspower's contractual availability. (Trial Ex.2250). Thus, MMWEC derived benefits from the PPA whether Masspower's facility was dispatched or not. (S.J.App.918;Trial Ex.2247–2249).