Case 5:18-cv-01983-LCB Document 246 Filed 08/26/21 Page 1 of 36 FILED

2021 Aug-26 PM 05:33

U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ALABAMA
NORTHEASTERN DIVISION

NUCLEAR DEVELOPMENT, )
LLC, )
)
Plaintiff, )
)
v. ) Case No.: 5:18-cv-1983-LCB
)
TENNESSEE VALLEY )
AUTHORITY, )
)
Defendant. )

FINDINGS OF FACT & CONCLUSIONS OF LAW

Plaintiff Nuclear Development, LLC brought this suit against the Tennessee

Valley Authority (TVA) for specific performance of the Purchase and Sale

Agreement of the Bellefonte1 Nuclear Plant Site. The case was tried before the Court

between May 16 and 19, 2021. In accordance with Rule 52(a)(1) of the Federal Rules

of Civil Procedure, the Court finds the following facts by a preponderance of the

evidence and makes the following conclusions of law. 2

1
“Bel-font,” as it is uniformly and correctly pronounced in the Tennessee Valley region of
Alabama.
2
To the extent that any finding of fact is more aptly characterized as a conclusion of law, or any
conclusion of law is more aptly characterized as a finding of fact, the Court adopts it as such.
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PROCEDURAL BACKGROUND 3

In November of 2016, TVA entered an agreement with Nuclear Development,

LLC, for the purchase and sale of an unfinished nuclear facility in northeastern

Alabama known as the Bellefonte Nuclear Plant. Pl.’s Ex. 1. On the eve of closing,

TVA concluded that consummation of the sale would be illegal and, citing a

condition precedent of non-illegality in the parties’ contract, refused to close on the

transaction. Nuclear Development sued. (Doc. 1). The Complaint, filed November

30, 2018, sought specific performance of the agreement to purchase the Bellefonte

site and a preliminary injunction to maintain the status quo before final judgment.

(Doc. 1). It also raised a third, alternative count for breach of contract seeking over

$30,000,000 in damages. Id.

On April 1, 2021, with the benefit of extensive briefing and oral argument on

the parties’ cross-motions, the Court denied summary judgment and held that TVA

was not obligated to consummate the sale of the Bellefonte Nuclear Plant because

one of the conditions to the Purchase and Sales Agreement (PSA)—that closing be

lawful—remained unsatisfied. Specifically, the Court held that (1) Section 6(a)(v)

of the PSA unambiguously set forth a condition precedent of non-illegality; (2)

3
For additional context on the issues decided by these findings of fact and conclusions of law—a
narrow set of those raised in the Original Complaint—see the Court’s order on summary judgment.
(Doc. 165); Nuclear Dev., LLC v. Tenn. Valley Auth., No. 5:18-CV-1983-LCB, 2021 WL 1248542,
at *1 (N.D. Ala. Apr. 1, 2021). Further context is also provided by the parties’ offers of proof and
proffered exhibits.
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closing on the sale of the Bellefonte property would not have violated the terms of

the Construction Permits; (3) closing on the sale of the Bellefonte property would

have violated Section 101 of the Atomic Energy Act (AEA); and (4) because closing

would have violated Section 101 of the AEA, the condition precedent set forth in

Section 6(a)(v) of the PSA was not satisfied. (Doc. 165); see also Nuclear Dev., LLC

v. Tenn. Valley Auth., No. 5:18-CV-1983-LCB, 2021 WL 1248542, at *1 (N.D. Ala.

Apr. 1, 2021).

In so holding, however, the Court found several genuine disputes of material

fact that remained for trial. Chief among them was whether TVA had made Section

6(a)(v)’s condition of non-illegality impossible to satisfy, either by failing to use its

commercially reasonable best efforts to consummate the sale or by failing to

reasonably cooperate with Nuclear Development to secure approval of the Nuclear

Regulatory Commission (NRC) for the transfer of the Bellefonte Construction

Permits, thereby breaching its duties under Section 9(a) of the PSA. 4 Also in dispute

was whether Nuclear Development was ready, willing, and able to close on

4
Under Section 9(a), each party was obligated to “use its commercially reasonable best efforts to
consummate and make effective as soon as is commercially reasonable, the transactions
contemplated hereby, including the satisfaction of all conditions thereto,” and to “provide
reasonable cooperation to the other Party in obtaining consents, approvals or actions of, making
all filings with and giving all notices to any [Governmental Authority] over the matters specified
as to the Site consistent with Section 1(e).” Pl.’s Ex. 1, at 9-10. Section 1(e), in turn, concerns all
government-issued permits required in connection with the operation of the site. Id. at 3.

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November 30, 2018, and whether it had committed a prior material breach of the

agreement.5

The Court held a four-day bench trial in open court beginning on May 17,

2021, with a fifth day of video testimony held by agreement in chambers outside the

presence of counsel. The following witnesses testified by video deposition: (1)

Franklin Haney, Sr., Nuclear Development’s sole member and manager; (2) William

Johnson, former CEO of TVA; (3) Sherry Quirk, TVA’s Executive Vice President,

General Counsel, and Secretary to the Board of Directors; (4) Clifford Beach,

Associate General Counsel and Senior Counsel for TVA; (5) Franklin Haney, Jr.,

President of Nuclear Development; (5) Marie Gillman, an employee of SNC-Lavalin

and lead consultant for Nuclear Development; and (6) Robert Coward, the principal

officer and president of the engineering–consulting firm MPR Associates. The

following witnesses testified live: (1) Timothy Matthews, Nuclear Development’s

nuclear-licensing counsel; (2) Jim Chardos, a TVA employee and Site Manager of

Bellefonte; (3) Joe Shea, a TVA employee who, at the time of the PSA, served as its

Vice President of Regulatory Affairs and Support Services; (4) Larry Blust, General

5
Nuclear Development indicated after summary judgment that it would seek to relitigate at trial
issues that had already been decided as a matter of law, contending that further argument on these
issues had not been foreclosed by the Court’s order. (Minute Entry dated April 5, 2021; Doc.174).
The Court ruled that though it would not allow further argument on issues that it had already
decided, it would grant Nuclear Development leave to amend its complaint to expressly cite
Section 9 of the PSA. (Doc. 175). Both parties have submitted offers of proof and proffered exhibit
lists addressing the issues that they would have argued at trial had those issues not been precluded
by the Court’s summary-judgment order. (Doc. 221; Doc.224).
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Counsel, Secretary of, and Outside Counsel to Nuclear Development, as well as the

Haneys’ long-time family attorney; (5) William McCollum, Nuclear Development’s

CEO and Chief Nuclear Officer; and (6) Christopher Chandler, TVA’s Senior

Counsel for Nuclear Development.

JURISDICTION AND VENUE

The Court has subject-matter jurisdiction over actions against TVA under 28

U.S.C. §§ 1331 and 1337. Venue is proper in this District because it is the judicial

district in which “a substantial part of the property that is the subject of the action is

situated,” 28 U.S.C. § 1391(b), and because the parties agreed that any action arising

out of or based on the PSA would be submitted to the Court. (Pl.’s Ex. 1 at 15).

FINDINGS OF FACT

The Bellefonte Nuclear Plant was inaugurated on December 24, 1974, when

the Atomic Energy Commission issued permits to TVA6 authorizing the

construction of two pressurized water reactors at a site along the Tennessee River in

Hollywood, Alabama. 7 (Doc. 208); see Def.’s Ex. 123. Construction on Bellefonte’s

6
The Atomic Energy Commission was abolished by the Energy Reorganization Act of 1973, and,
a few months after the issuance of the Bellefonte Construction Permits, its licensing and regulatory
functions were transferred to the NRC. Nuclear Dev., LLC v. Tenn. Valley Auth., No. 5:18-CV-
1983-LCB, 2021 WL 1248542, at *1 (N.D. Ala. Apr. 1, 2021) (citing 42 U.S.C. §§ 5814(a)–(f),
5841(±)).
7
The facts contained herein were either stipulated by the parties (see Dkt. 75, Attach. 2) or result
from the Court’s evaluation of documentary evidence and witness testimony. In determining the
credibility of each witness, the Court considered all the circumstances under which the witness
testified, including: the relationship of the witness to the parties; any interest the witness might
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two reactors was begun the next year but never completed. In 1988, TVA halted

construction on the plant indefinitely, Def.’s Ex. 128 at 2, and since 2010, the

Bellefonte units have been frozen in deferred plant status. Id.; (Doc. 165 at 5–8).

As early as 2002, a prominent developer from Tennessee by the name of

Franklin Haney, Sr., first became interested in seeing the Bellefonte Nuclear Plant

brought into service. R. at 18–19. With more than 40 years in project development,

Haney is a highly successful real-estate entrepreneur with extensive experience

orchestrating financial backing for large-scale commercial, residential, and

infrastructural projects. Def.’s Ex. 128 at 10. In 1967, Haney founded the Franklin

L. Haney Company, LLC, a privately held business that has built a nationwide

portfolio with millions of square feet of prime commercial and residential real estate

collectively valued at over $10 billion. Id. Among the projects that Haney’s company

has been responsible for developing are the Dulles Greenway Toll Road project,

which includes a fourteen-mile toll road connecting Leesburg, Virginia with the

Dulles Airport; the Birmingham Social Security Building; and the Portals Office

Buildings I and II, a development in Washington, D.C. comprising nearly two

million square feet of office space (including FCC headquarters), 125,000 square

have in the outcome of the case; the witness’s appearance, demeanor, manner of testifying, and
apparent candor and fairness; the reasonableness of the witness’s testimony; the opportunity of the
witness to acquire knowledge concerning the facts to which he or she testified; the extent to which
the witness was contradicted or supported by other credible evidence; and whether any such
contradiction related to an important factor in the case.
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feet of “highly desirable retail and restaurant space,” and a 400-room Mandarin

Oriental Hotel. Id. Haney has also, in his words, “owned every TVA building” at

one time or another. R. at 17.

In the early 2000s, the Haney Company became involved in the nuclear-power

industry, handling in various respects the financing of several TVA-owned nuclear

projects. R. at 18, 930. According to Haney’s son, Frank Haney, TVA reached out

to the Haneys in 2001 about doing “off-balance sheet financing for the nuclear units

at Browns Ferry and Watts Bar.” Id. Larry Blust, the Haneys’ family attorney, further

testified that the Haneys have “prepared financing proposals for Browns Ferry,

Watts Bar, and Bellefonte.” R. at 411. Frank Haney, however, has never owned,

operated, or overseen the construction of a nuclear plant, and he is not familiar with

the mechanics of nuclear-power generation. R. at 29–30.

The Haneys have thus been “working on” the Bellefonte Nuclear Plant for the

past two decades. R. at 18. Haney’s efforts to bring the site online have involved

meeting with many high-level elected officials across the region. From them, he

secured promises of two-and-a-half billion dollars of tax credits and a billion dollars

in subsidies to complete the Bellefonte units. R. at 19–20. And according to Haney,

the effort to finish Bellefonte has enjoyed regional bipartisan support: “All the

Congressmen in Alabama and Tennessee have worked hard to try to push Bellefonte

to be finished. It’s not Republican and Democrat.” R at 19–20.

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In 2012, four years before the sale of the Bellefonte Nuclear Plant, the Haneys

established Nuclear Development, LLC “for the [sole] purpose of constructing the

Bellefonte Units.” Pl.’s Ex. 82 at 20. Blust elaborated on this point at trial, explaining

that Nuclear Development had been formed principally “to apply for production tax

credits for Bellefonte.” R. at 411. In its application to the NRC for the Construction

Permits’ transfer, Nuclear Development described itself as “a special-purpose entity

owned by Mr. and Mrs. Franklin L. Haney and trusts for members of their family.”

Pl.’s Ex. 83 at 16–17. It’s “a manager managed LLC,” and its sole manager is Haney

himself. Id. at 17. Neither its President, Frank Haney; its CEO and Chief Nuclear

Officer, William R. McCollum, Jr.; nor its General Counsel and Secretary, Larry

Blust, are employees of the organization, and though he is the company’s chief

executive, McCollum contracts for his services at an hourly rate. R. at 947–48.

On April 25, 2016, TVA’s then-CEO William Johnson and its General

Counsel Sherry Quirk issued a memorandum to the agency’s board of directors

requesting that TVA declare a surplus and authorize the sale of the Bellefonte

Nuclear Plant. Pl.’s Ex. 2; R. at 49. TVA’s largest customer at the time was the City

of Memphis, R. at 51, and the joint memo expressly acknowledged the “competitive

risk” that “[s]elling the site to an entity that completes the nuclear units would put a

merchant nuclear plant in TVA’s service territory that could compete to serve TVA

customers.” Pl.’s Ex. 2 at 2. The board nevertheless adopted the recommendation by

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resolution and authorized the sale of the site at a public auction to be held later that

year. See Pl.’s Exs. 3 & 4; R. at 53.

After a six-month competitive process, the auction concluded on November

14, 2016, when the winning bidder, Nuclear Development, entered into an

agreement with TVA for the purchase and sale of the Bellefonte Nuclear Plant Site.

See Pl.’s Exs. 1 & 5. Upon signing, Nuclear Development paid TVA a $22,200,000

“Down Payment” and $750,000 in “Compensated Costs” in compliance with Section

5 of the PSA. Pl.’s Ex. 1 at 5–6. The closing date set by the PSA was to be November

14, 2018, id., though by an amendment executed six days before the scheduled

closing, that date was extended to November 30th. See Pl.’s Ex. 18.

In March of 2018, Nuclear Development began to draft its application to the

NRC for transfer of the Bellefonte Construction Permits from TVA to Nuclear

Development. R. at 191. The nuclear-licensing attorney charged with preparing the

application, Timothy Matthews, expected at the time that Nuclear Development

would be ready to submit the application by October and that the NRC would

approve the transfer about six months later. Id. At a March 2018 meeting of the

Nuclear Energy Institute in Washington, D.C., Matthews met with Christopher

Chandler, TVA’s Senior Counsel for Nuclear, to discuss the prospect of TVA

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submitting a letter consistent with 10 C.F.R. § 50.80(b)(2)8 indicating that TVA

consented to the permits’ transfer. Id. at 164. Chandler “didn’t think that would be a

problem.” Id.

This expectation notwithstanding, sometime in the summer of that year

Chandler was struck with a “fairly generalized concern that there was going to be a

problem with closing if the NRC hadn’t . . . approved the license transfer.” R. at 793.

The concern was rooted neither in the text of the Construction Permits nor the

governing statute; it was simply “one of those thoughts that you have.” Id. In

testifying to the substance of his inchoate concern, Chandler explained that it had

“simply occurred to [him] that there was going to be a problem with selling a nuclear

plant without the NRC’s authority,” id. at 799, and that “if [the] closing date arrives

and Nuclear Development hasn’t received [the] NRC’s approval,” there “may be a

problem.” Id. at 793. Chandler shared this concern with TVA’s Senior Counsel,

Clifford Beach, but as of then Chandler did not consider the issue to be “significant.”

Id. at 795, 797. Because “the closing date was still far enough away that there were

any number of things that could have changed” to obviate whatever potential

regulatory problems might surround his concern, Chandler considered the issue too

minor to raise with Nuclear Development. Id. at 797.

8
Under 10 C.F.R. § 50.80(b)(2), the NRC “may require” an applicant for the transfer of a
construction permit “to file a written consent from the existing licensee . . . attesting to the person's
right ; . . to possession of the facility or site involved.”

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Matthews next spoke with Chandler on October 18, 2018. That morning he

called to say that he would be sending over a draft letter of the kind the two had

discussed in March—one for TVA to submit to the NRC consenting to the transfer

of the Construction Permits. Id. at 766–67. TVA would “certainly be happy to look

at it,” Chandler told him, but “if [Matthews] was going to formally ask [them] to

submit the letter,” TVA would “need several weeks’ notice” to make edits and

subject the letter to an “internal concurrence and review process.” R. at 766–67.

Matthews made no indication that he needed the letter signed by TVA, that he

needed the letter to submit the transfer application, or that Nuclear Development

needed the letter to close on the Bellefonte sale. Id. Shortly after the call, Matthews

emailed the draft letter to Chandler with the following note:

Chris,

We previously discussed the possibility of TVA submitting a letter to

the NRC consenting to the plant sale and CP transfer (consistent with
50.80(b)(2)) rather than TVA submitting a CP transfer application on
behalf of Nuclear Development. I have prepared a draft of that consent
letter for your consideration. Please let me know if you have any
comments and please let me know when might be convenient to discuss
the process going forward.

Pl.’s Ex. 14. Chandler confirmed that he’d received the email later the same day. Id.

In a phone call on November 5, Matthews discussed the progression of

Nuclear Development’s transfer application with Chandler and opined that there was

“nothing about [the arrangement]” that made him comfortable. R. at 772–73. It was

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“not the usual utility arrangement” that Matthews was used to, and “the normal

communication channels . . . were not there.” Id. Even so, Matthews believed that

the application was of “sufficiently high quality that [it] would be accepted by the

NRC.” Id. At no time on the call did Matthews ask TVA to send the consent letter

to the NRC. Id. at 774.

By the end of that week, TVA had informed Nuclear Development in writing

that it had a concern pertaining to the legality of closing on the Bellefonte sale under

the terms of the Construction Permits. Pl.’s Ex. 17. Though this concern had first

been shared with Nuclear Development in discussions that October, the email

constituted the first time that TVA had felt “educated enough” on the topic to reduce

the issues to writing. R. at 995. Blust responded on November 12 in a follow-up

email to Chandler, relaying a memo that Matthews had written addressing the

parties’ “regulatory path forward.” Pl.’s Ex. 19. A note in this email announced that

Nuclear Development “would still like to get . . . that letter Tim requested some time

ago.” Pl.’s Ex. 19.

The next day, Matthews met with Chandler in Washington, D.C. and

mentioned that Nuclear Development would submit its application later in the day.

R. at 778. Chandler returned home after the meeting and, for the first time, began to

research “the legality of transferring ownership of the . . . site without the NRC’s

approval.” Id. at 781–82. At trial, Chandler testified that the mention of a “regulatory

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path forward” in Nuclear Development’s recent email had “got [him] wondering

whether there was . . . anything [he] could find within the Atomic Energy Act itself

that would be relevant to this question of whether [TVA] could close.” Id. at 781–

82. Just two days later, TVA’s General Counsel Sherry Quirk shared with Nuclear

Development the emerging concern that closing on the Bellefonte sale might violate

the Atomic Energy Act. Id. at 783.

And while the attorneys were navigating these regulatory obstacles, the

parties’ executives became embroiled in a conflict of their own. Early in October of

2018, Nuclear Development’s CEO, William McCollum, made a presentation to the

City of Memphis in which he discussed the viability of construction, options for

power transmission, and the savings that would accrue to the City were it to leave

TVA in favor of power from Bellefonte under Nuclear Development’s ownership.

See id. at 64, 923. Marie Gillman, who attended the meeting as a representative of

Nuclear Development’s prospective Engineering, Procurement, and Construction

Management firm SNC–Lavalin, testified that Nuclear Development promised the

City of Memphis an annual savings “in the neighborhood of $300 million” for

switching from TVA to Bellefonte. Id. at 923. When TVA’s CEO, William Johnson,

learned the day after this presentation of the comments that McCollum had made to

TVA’s largest customer, he became “upset.” Id. at 60. Johnson called a meeting with

Haney and Blust on October 23rd, where he “expressed displeasure about how issues

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had been presented in Memphis” because Nuclear Development’s “negative”

statements were, in his view, “untrue.” Id. at 127. Specifically, Johnson resented

McCollum’s comment that Memphis “should leave TVA and not go to Nuclear

Development, but go to MISO 9 or somewhere else, because any deal is better than a

deal they’re getting from TVA.” Id. at 60. In Johnson’s view, it was simply untrue

that Memphis could get a better deal from MISO or somewhere else than from TVA,

except “maybe in one hour, in one year.” Id. at 94. After further questioning, Johnson

admitted that his “real concern” and self-described “irritation” was that a retired

TVA executive—McCollum, TVA’s former COO, was a five-year veteran of the

agency—was “trying to harm the organization for no benefit to the organization he

worked for.” Johnson thus met with Memphis on November 6 “to make the pitch for

staying with TVA.” Id. at 70.

As closing drew near, TVA granted Nuclear Development a short extension

on the closing date. R. at 438. The parties executed the First Amendment to the

Bellefonte Purchase & Sale Agreement on November 9, and closing was pushed

from the 14th to November 30, 2018. Pl.’s Ex. 18. Months before, on August 29,

Nuclear Development had sought a six-month extension of the closing date to May

14, 2019 so that it could “put in place the financing” and “complete certain activities

9
The Midwest Independent Systems Operator (MISO) is a member-based power-transmission
organization with territory extending across the Central and Southern United States. R. at 435.
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necessary for an orderly closing” to the transaction. R. at 431–32; Pl.’s Ex. 13.

Johnson decided not to consent to six months, but because he had “[eaten] into some

of their time,” he agreed to this short extension. Id. at 73.

Johnson participated in a townhall-style forum on November 26 at TVA’s

Knoxville office, during which he spoke to rank-and-file employees and answered

their questions about the Bellefonte transaction. Id. at 71. He told the audience that

McCollum’s comments in Memphis had “ticked [him] off” and that their former

colleague’s behavior had “crossed the line.” Id. at 73. Johnson then noted that TVA

had granted Nuclear Development a short extension and, after a perfunctory poll of

how many people thought he should give another, declared that there would be no

further extensions. Id. Though he would testify that as of the forum he had not yet

decided not to close, Johnson told the audience he was “sure we’ll be a defendant by

Monday.” Id. at 74.

At 9:09 p.m. the night before closing, TVA notified Nuclear Development by

email that it would not close on the transaction. (Doc. 165 at 20). November 30,

2018 came, and TVA did not close on the sale. Id. TVA had not by then advised the

NRC that it consented to the application, and the NRC had not approved Nuclear

Development’s application for approval of transfer of the Construction Permits.

(Doc. 208 at 6).

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CONCLUSIONS OF LAW

For a plaintiff to prevail on a breach-of-contract claim, he “must establish (1)

a valid contract between the parties; (2) an obligation or duty arising from that

contract; (3) a breach of that duty; and (4) damages caused by the breach.” LaBatte

v. United States, 142 Fed. Cl. 425, 432 (2019) (citing Century Expl. New Orleans,

LLC v. United States, 110 Fed. Cl. 148, 163 (2013)). Here, only the third and fourth

elements—breach and damages—are in dispute. (Doc. 208). Nuclear Development

alleges that TVA violated its duties under Section 9(a) of the PSA and that Nuclear

Development is therefore entitled to specific performance or, in the alternative,

damages. TVA contends that Nuclear Development committed a prior material

breach and was not ready, willing, and able to close.

Under Section 9(a)(i) of the PSA, the parties agreed to use their

“commercially reasonable best efforts to consummate and make effective as soon as

is commercially reasonable[] the transactions contemplated hereby, including the

satisfaction of all conditions thereto set forth” in the PSA. Pl.’s Ex. 1 at 10. Under

Section 9(a)(ii), the parties also agreed to

provide reasonable cooperation to the other Party in obtaining consents,

approvals or actions of, making all filings with and giving all notices to
any federal . . . governmental subdivision, regulatory or administrative
agency [or] commission . . . exercising or entitled to exercise any
administrative, executive, judicial, legislative, police, regulatory, tax,
or other authority or power . . . over the matters specified as to the Site
consistent with Section 1(e).

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Id. at 10–11.

“Best efforts” are “[d]iligent attempts to carry out an obligation,” especially

“all actions rationally calculated to achieve a [usually] stated objective, to the point

of leaving no possible route to success untried.” Best efforts, Black’s Law Dictionary

(11th ed. 2019). When invoked “[a]s a standard, a best-efforts obligation is stronger

than a good-faith obligation” and is gauged “by the measures that a reasonable

person in the same circumstances and of the same nature as the acting party would

take.” Id.

“Commercially reasonable efforts” are “[r]easonable efforts that a business

person, exercising sound judgment, would expect to have carried out in a given

situation.” Reasonable efforts, Black’s Law Dictionary, (8th ed. 2004); see also

Metavante Corp. v. Emigrant Sav. Bank, 619 F.3d 748, 763 (7th Cir. 2010)

(approving Black’s Law Dictionary definition of “commercially reasonable efforts”

for contractual interpretation).

Like the standard of good faith, a contractual best-efforts standard “cannot be

defined in terms of a fixed formula; it varies with the facts and the field of law

involved.” Pinpoint Consumer Targeting Servs., Inc. v. United States, 59 Fed. Cl.

74, 82 (2003) (citing Triple–A Baseball Club Assocs. v. Northeastern Baseball, Inc.,

832 F.2d 214, 225 (1st Cir.1987)). Typically, it requires “some affirmative action

made in good faith.” Northrop Grumman Computing Sys., Inc. v. United States, 93

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Fed. Cl. 144, 151 n.7 (2010) (citing In re Cambridge Biotech Corp., 186 F.3d 1356,

1375 (Fed. Cir. 1999)). A party obligated by contract to use its best efforts must “put

its muscles to work to perform with full energy and fairness the relevant express

promises and reasonable implications therefrom.” Id.

The transfer of licenses for utilization facilities is governed by 10 C.F.R.

§ 50.80, subsection (b) of which sets forth the items that “shall” or “may” be

included with all license-transfer applications. Among those items that the NRC

“may” require is a statement of “written consent from the existing licensee or a

certified copy of an order or judgment of a court of competent jurisdiction attesting

to the person’s right . . . to possession of the facility or site involved.” 10 C.F.R.

§ 50.80(b)(2).

Through its Office of Nuclear Reactor Regulation (NRR), the NRC has issued

an Office Instruction on “Procedures for Handling License Transfers” (LIC–107,

Revision 2), which describes the NRC’s internal procedures for processing the

transfer of licenses from a current licensee to a prospective licensee. See Pl.’s Ex.

81. According to the Office Instruction, license-transfer requests are “typically filed

by licensees,” but “may also be filed by a non-licensee” such as “the intended buyer

of the plant.” Id. at 11. The Instruction explains that “applicants (current and

proposed licensees)” submit their applications to the NRC “under oath and

affirmation,” but

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[i]f the application is not being made by the current licensee, the
applicant should clearly state that the application is being made on
behalf of the current licensee, unless there is a hostile acquisition
involved, which would be extremely rare and in which case the NRC
must give appropriate notice to the current licensee.

Pl.’s Ex. 81 at 6. A further gloss on an applicant’s responsibilities under the

regulations is contained in the project manager’s checklist attached to the Instruction

as Appendix B. The Appendix explains that

[a]ny person may submit an application for license transfer, provided

that the application can be supported by a written consent from the
existing licensee, or a certified copy of an order or judgment of a court
of competent jurisdiction attesting to the person’s right . . . to
possession of the facility or site involved.

Id. at 19.

Having considered the case law, the record evidence, and the witnesses’

testimony at trial, the Court concludes for the following reasons that TVA did not

breach its duties under the PSA:

I. Nuclear Development was ready, willing, and able to close.

Nuclear Development was ready, willing, and able to close on November 30,

2018. Franklin Haney, Sr. testified that he had deposited the money for the closing

and that he planned to close on November 30, 2018, whether TVA granted an

extension or not. R. at 24–25. Moreover, Blust credibly testified that Nuclear

Development had in its account funds in excess of $91,643,130 available to wire to

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TVA on the day of closing, November 30, 2018, id. at 447-48, enough to cover the

funds due on closing, id. at 445.

II. Nuclear Development did not commit a prior material breach of the PSA.

TVA asserts that two alleged failures of Nuclear Development’s—its

allegedly untimely filing of the application for the Construction Permits’ transfer,

and its omission of a final maintenance payment—amounted to prior material

breaches of the PSA, excusing TVA from performing its own duties under the

contract. A “[p]rior material breach is a federal common law defense asserted when

a party breaches a contract after another party has already breached the same

contract.” Laguna Constr. Co. v. Carter, 828 F.3d 1364, 1369 (Fed. Cir. 2016)

(citation omitted).

But neither of these alleged failures amounted to a prior material breach. As

discussed below, the timing of the filing of Nuclear Development’s transfer

application proves relevant to whether TVA breached Section 9(a) of the PSA, but

it did not itself constitute an independent breach. And even if the alleged

untimeliness of the filing had constituted a prior material breach, TVA waived its

right to contest it by continuing to accept payments for the maintenance and security

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of the Site and by signaling its intention to close on the sale by signing the First

Amendment to the Contract.

Nor did Nuclear Development’s alleged failure to pay the last $875,000

payment due under Section 12(e) of the PSA constitute a prior material breach. That

section obligated Nuclear Development to pay TVA $875,000 per quarter in arrears,

with the final payment to be made at Closing. Pl.’s Ex. 1 at 13. But while Nuclear

Development’s CEO conceded that the final payment was short about $700,000, see

R. at 649–52, TVA made no objection to the deficiency of the payment until long

after the amended closing date. Indeed, by the time that final payment was due, TVA

had already raised its concerns that it would not be able to perform its duties under

the PSA. Moreover, Section 11(a)(iii) of the PSA, which contemplates pre-closing

breach, requires the party that would raise it to provide reasonable notice and an

opportunity to cure, Pl.’s Ex. 1 at 12, and TVA provided neither. The failure, then,

was either not a breach, not material, or was waived by TVA.

III. TVA did not breach Section 9(a) of the PSA.

a. TVA neither concealed its concerns about the legality of

closing nor unreasonably delayed in sharing those concerns
with Nuclear Development.

Nuclear Development’s theory of concealment and delay is not supported by

the evidence. According to Nuclear Development, TVA first identified its concerns

about the legality of closing in the summer of 2018 but concealed them until Nuclear

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Development had too little time to address them because TVA “fear[ed] . . . losing

Memphis as a customer.” (Doc. 227 at 1). But under Nuclear Development’s theory

of retributive non-cooperation, TVA’s legal department would have identified its

concerns about the legality of closing in the summer and withheld them for

months—without motive—before the alleged onset of ill-will between the parties.

That TVA’s legal department would conceal its concerns long before any alleged

degradation in the parties’ relationship simply does not make sense. Moreover, the

evidence suggests otherwise.

Chandler, whose testimony evinced competency and professionalism,

credibly accounted for the inception and evolution of TVA’s concerns without

regard to any direction from or communication with TVA executives. As he

explained at trial, his was a “generalized concern” that “selling a nuclear plant

without the NRC’s authority” could pose a “potential regulatory problem.” R. at 799.

The issue may have first been raised internally as early as June of 2018, id. at 798,

but what he then contemplated was merely a preliminary concern that would have

occurred to any lawyer with nuclear-licensing experience. The notion, fledgling at

the time, was simply that “[p]eople who work in the industry know that you can’t

sell nuclear plants without the NRC’s approval.” Id. at 827.

And when that notion eventually developed into the particularized concerns

that TVA believed could jeopardize the closing, TVA used reasonable efforts to

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quickly relay those concerns to Nuclear Development. For instance, TVA shared

with Nuclear Development its concern that closing could be unlawful under Section

101 of Atomic Energy Act—the grounds on which the Court held that closing would

indeed have been unlawful—just two days after it was first raised internally. Id. at

781–82. TVA may have taken more than a few days to share its concern regarding

the legality of closing under the Construction Permits—months10 even—but the

timeline suggests that there too TVA’s efforts to communicate its misgivings with

Nuclear Development were reasonable. When his concern about the legality of

closing first emerged, Chandler did not yet consider the issue to be “significant,”

because “the closing date was still far enough away that there were any number of

things that could have changed” to foreclose it—an extension, for instance, or permit

withdrawal. Id. at 797. At that time the parties still had “a great relationship,” the

testimony of several witnesses suggests that an expectation that the closing date

might be extended would have been reasonable, id. at 39, 797, and indeed an

extension request was then still pending, id. at 812.

But even if TVA had first identified the issue early in the summer, the

testimony of Chandler and Beach suggests that the legal department neither

10
Chandler testified that he first identified the construction-permits issue “sometime in the
summer,” R. at 789, but further details on the timing and development of the issue were withheld
pursuant to attorney-client privilege. The concern was shared with Nuclear Development “in the
October time frame” (“[p]erhaps earlier”), id. at 986, 994–95, and it was first communicated in
writing on November 9, id. at 986–88; see Pl.’s Ex. 17.
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concealed its concerns nor unduly delayed in sharing them. Rather, it appears that

because the issue was “complicated,” “[i]t took time” for the attorneys “to get to

where [they] could reduce it to bullets.” Id. at 996. As closing drew near, TVA’s

legal department “became more educated” and, by early November, the General

Counsel’s Office “had gotten . . . educated enough to where [they] could put some

concepts in writing.” Id. at 995. Even so, TVA’s attorneys did not wait until they

had fully grasped the concern to share it with Nuclear Development, for even before

they were able to put the concern in writing there had been “earlier discussions [with

Nuclear Development] on the topic.” Id. In short, once TVA had formulated a

particularized concern about the text of the Construction Permits, it shared its

concern with Nuclear Development.

Moreover, Nuclear Development was charged with knowledge of the law.

(Doc. 165 at 53). Under Section 101 of the AEA, TVA could not lawfully transfer

Bellefonte to Nuclear Development before the NRC had approved the transfer of the

Construction Permits. Id. Just as it should have been familiar with the full array of

attendant rules and regulations governing the license-transfer application process,

Nuclear Development should have known—and was charged with knowing—that

Section 101 could present a barrier to closing. Id. This is all the more true because

the firm was represented by Matthews, a partner with nearly three decades of

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experience at a leading nuclear-licensing firm, and McCollum, the former COO of

TVA, both of whom are well versed in the nuclear-licensure process.

Note, however, that while Section 9(a)’s best-efforts clause did not compel

TVA to notify Nuclear Development of abstract concerns about potential legal

impediments to closing that the latter was charged with knowing, it did compel TVA

to notify Nuclear Development of those concerns once they moved from the abstract

to the concrete. In other words, as soon as TVA began to have particularized and

expectation-driven internal discussions that closing could be in jeopardy, it was

obligated to inform Nuclear Development of the nature and basis of those concerns.

It did.

b. TVA’s decision not to prepare or join in Nuclear Development’s

application to the NRC for transfer of the Construction Permits
did not constitute a breach of Section 9(a).

Nuclear Development contends that TVA has placed it in a catch-22: to

possess the property it needs the Construction Permits, and to obtain the

Construction Permits it needs to possess the property. Under this theory, it was

“prevented” by TVA from securing the permits in time for closing because TVA

failed to join in the application or submit a letter to the NRC consenting to the

transfer of the Construction Permits. But this is not so.

Neither NRC regulations, NRC guidance, nor the PSA itself required TVA to

prepare the application to transfer the Bellefonte Construction Permits to Nuclear

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Development. And it would not have made sense for TVA to do so. Nearly

everything required under 10 C.F.R. § 50.80(b)(1) for inclusion in a license-transfer

application would need to come from Nuclear Development, including its corporate

information, technical and financial qualifications, resumes of key personnel, and a

host of other information. See 10 C.F.R. § 50.80(b)(1); Pl.’s Ex. 82; R. at 710–13.

Nor was TVA required to join in the application. The NRC’s Office

Instruction on handling license transfers, LIC-107, expressly acknowledges that the

current licensee need not submit an application. See Pl.’s Ex. 82 at 6, 11. And in its

letter dated November 3, 2020, the NRC noted two permissible means of submitting

license-transfer applications: “under oath and affirmation jointly by the current

licensee and the transferee, or alternatively, by the transferee with a statement from

the current licensee that it supports the application.” Pl.’s Ex. 305 at 1.

Here, the first path was not available to TVA. Under Section 1(e) of the PSA,

Nuclear Development agreed that TVA would not have to “certify that [Nuclear

Development] is qualified and fit to complete construction of and operate [the

Bellefonte] reactors,” Pl.’s Ex. 1 at 4, which joinder in the application would have

required it to do. 11 Section 1(e) notwithstanding, the official with executive

11
Such an averment would be required by 10 C.F.R. § 50.30(b), under which construction-permit
applications must be submitted “under oath or affirmation,” and by 10 C.F.R. § 50.34(9) which
requires construction-permit applications to include “[t]he technical qualifications of the applicant
to engage in the proposed activities.”
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leadership over the licensing of TVA’s nuclear plants, Joe Shea, who would also

have been the official charged with swearing to the application, testified that he

could not have sworn under oath or affirmation to Nuclear Development’s technical

or financial qualifications. R. at 379.

In lieu of a joint submission, TVA told Nuclear Development early in the

process that it would follow the second path and submit a letter stating that it

consented to the application. R. at 353–54. Because TVA informed Nuclear

Development that it would follow the NRC-sanctioned path of submitting a letter of

consent, its decision not to join Nuclear Development’s application did not constitute

a breach of its duties to use its commercially reasonable best efforts or to provide

reasonable cooperation under Section 9(a) of the PSA.

c. TVA’s decision not to consent to the Construction Permits’

transfer did not constitute a breach of Section 9(a).

Although TVA repeatedly expressed its willingness to send a letter of consent

to the NRC, it ultimately did not do so. Nuclear Development contends that this

failure amounted to a breach of its duties under the PSA’s Section 9(a). It did not.

For one, Matthews, who was responsible for preparing the license-transfer

application, never asked TVA to submit a letter consenting to the transfer. Though

he spoke with both Chandler and Shea about Nuclear Development’s desire to have

such a letter submitted, he never affirmatively requested that TVA submit one. In

March of 2018, for instance, during his first conversation with Chandler, Matthews
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spoke only of what Nuclear Development “would want” for its application and asked

whether TVA would be willing to submit a letter consenting to the transfer. R. at

164. And in a meeting with TVA that July, Matthews just “brief[ed]” Shea “on

[Nuclear Development’s] license-transfer application” and told him that Nuclear

Development “would need TVA’s consent letter as an attachment to the

application.” 12 Id. at 165–66.

It was not until October 2018 that Matthews sent a draft of the consent letter

to TVA. And though Chandler had informed him of TVA’s weeks-long review

process, R. at 166, 766–67, even then Matthews only asked that Chandler “let [him]

know if [he has] any comments and . . . when might be convenient to discuss the

process going forward.” Pl.’s Ex. 14. Chandler nevertheless reviewed the proposed

letter and made some modifications to it. R. at 823–24.

The only allusion to an express request for the consent letter was in an email

from Blust sent November 12, stating that “[w]e would still like to get from you the

12
After eliciting this testimony at trial, counsel for Nuclear Development asked whether “Mr. Shea
responded to that request.” R. at 166. Counsel rephrased his question: “Did you request TVA to
provide consent to the application?” Id. Matthews replied: “Yes.” Id. The context of the follow-up
question makes ambiguous whether Matthews meant that he believed his earlier statement that
Nuclear Development “would need a consent letter” to constitute a request (which it did not),
whether he asked Shea later in that meeting to consent to the application, or whether Matthews
simply meant that he asked for a consent letter at some point during the closing period. Given
Matthews’s ambiguous testimony, the absence of any follow-up with Chandler, and Matthews’s
conduct through the remainder of the closing period, it seems most likely that Matthews meant the
first. But even if there had been a separate express request for TVA’s consent, a mere failure to
respond by Shea would not have amounted to a breach.

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letter Tim requested some time ago.” 13 Pl.’s Ex. 19. By that time, however, TVA

had developed serious concerns that the terms of the Construction Permits would

prevent lawfully closing on the PSA, and within two days it would become

concerned about the lawfulness of closing under Section 101 of the AEA as well.

With its legal department’s attention shifted to assessing the lawfulness of closing,

it was commercially reasonable for TVA not to devote its finite legal resources to

finalizing the consent letter. And because closing was to prove unlawful and the

condition set forth in Section 6(a)(v) left unsatisfied, the letter itself became moot.

But even if TVA’s legal department had not decided by mid-November that

the prospective unlawfulness of closing had mooted the letter, TVA had still another

reason not to spend its pre-closing resources preparing it: Nuclear Development told

them that the letter was unnecessary. Matthews said that the application could be

submitted without it, R. at 396, and Blust said that the letter would not be necessary

for closing, id. at 770–71. Given these express representations by Nuclear

Development, TVA could reasonably believe that it need not submit the letter to

meet its obligations under the PSA.

13
Matthews testified that he requested the consent letter from Chandler both the first week of
November and November 13, R. at 171–73, but Chandler, whose vivid recollections of these two
conversations were far clearer and more detailed than Matthews’s own, testified that Matthews did
not ask TVA to submit the consent letter on either occasion. Id. at 774, 777–85.
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IV. TVA did not unreasonably delay Nuclear Development’s efforts to

obtain NRC approval of the Construction Permits’ transfer.

None of the other allegedly unreasonable delays or deficiencies meaningfully

affected Nuclear Development’s ability to submit a timely application to the NRC.

Neither Quirk’s alleged delay in granting environmental clearance to Nuclear

Development, nor any of the other allegedly dilatory or deficient actions of TVA’s

had any bearing on Nuclear Development’s ability to timely file the license-transfer

application.

In fact, Nuclear Development’s failure to secure the NRC’s approval for

transfer of the Construction Permits by closing was attributable entirely to Nuclear

Development’s slow decision-making and casual approach to the transfer-

application process. Marie Gillman, Nuclear Development’s lead consultant,

testified that she knew as early as July 19, 2018 that “there was no way [the

construction-permit transfer] would be approved [by closing]. It wasn’t possible.

The NRC review would take at least six months.” Matthews and Blust also expected

NRC approval to take at least six months from the submission date. R. at 191, 460.

With these expectations, and with an original closing date of November 13, 2018,

Nuclear Development should have filed its application by mid-May of that year. But

not only did Nuclear Development not begin work on the application until March,

R. at 191, it did not file the application until November 13, 2018, Pl.’s Ex. 82.

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What’s more, the six-month timeline held only for the typical case. But the

NRC is an “extremely conservative, regimented organization” for whom the typical

case involves a public utility, not a family concern of real-estate developers. R. at

878. This idiosyncrasy alone was likely to cause the NRC to balk at the application

and prolong the approval process by several months. Id. But these expectations did

not keep Nuclear Development from waiting until a day before the original closing

date to file its application. The seventeen days that remained before closing were not

even enough time for the NRC to complete a “sufficiency review” to determine

whether “the application contain[ed] all of the essential elements . . . for [the NRC]

to begin a formal technical review of the application.” Id. at 779.

The principal cause of the application’s delayed submission was Nuclear

Development’s own indecision concerning the Bellefonte quality-assurance (QA)

program. 14 This missing “pacing item”—whether to go with SNC-Lavalin, Exelon,

or some other company with the requisite expertise—required a high-level decision

from the Haneys. Id. at 208. But as late as August 2018, Nuclear Development’s

President, Frank Haney, had made no decision on the QA program. Def.’s Ex. 60;

14
All construction-permit transfer applications must include “[a] description of the quality
assurance program to be applied to the design, fabrication, construction, and testing of the
structures, systems, and components of the facility.” 10 C.F.R. § 50.34(7). These programs must
rigorously comply with the numerous requirements set forth in Appendix B to Part 50, "Quality
Assurance Criteria for Nuclear Power Plants and Fuel Reprocessing Plants.” An application’s
description of the quality assurance program that the prospective licensee intends to use must also
“include a discussion of how the applicable requirements of appendix B will be satisfied.” 10
C.F.R.§ 50.34(7).
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R. at 966–71. In fact, although he knew as early as December 2016 that the

Bellefonte site manager, Jim Chardos, recommended that Nuclear Development

complete the permit-transfer application in the first months of 2017, Def.’s Exs. 46

& 47, Frank Haney did not make the critical QA decision until October 2018, R. at

197–98. A member of the Nuclear Development team pejoratively described Frank

Haney’s understanding of the project as “very high-level,” R. at 873–74, while

another described his view of the technical and quality-assurance information

necessary for the application as “overly simplified,” id. at 760.

In short, it was Nuclear Development’s own actions that prevented the timely

submission of the license-transfer application. Nuclear Development was not

waiting on any information from TVA to file, and nothing that TVA did or did not

do prevented Nuclear Development from filing its license-transfer application

sooner. Id. at 208–09.

V. TVA had no obligation to extend the closing date.

Under Section 5 of the PSA, TVA and Nuclear Development agreed that the

closing would occur on November 14, 2018. Pl.’s Ex. 1 at 6. Any amendments to

the PSA were required to be set forth in a written instrument signed by both parties.

Id. at 19. The parties also agreed that the duty to use “commercially reasonable best

efforts” was “[s]ubject to the terms and conditions” of the PSA. Pl.’s Ex. 1 at 10.

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The closing date was an express term of the PSA, and TVA was under no obligation

to extend it.

Nuclear Development has insisted throughout the proceedings that the

“impetus” of the lawsuit was a belated realization by TVA’s CEO that Nuclear

Development might poach Memphis, TVA’s largest customer. The narrative has it

that comments by Nuclear Development’s CEO made to the City of Memphis in

early October 2018 irritated Johnson enough that he and TVA’s legal department

conspired to find a legal pretext for unwinding the deal. See discussion, supra at 12–

14. Nuclear Development’s assertion certainly has the ring of truth. But because

motive does not matter in a breach-of-contract action, the narrative, even if true,

would be legally irrelevant.

Johnson’s testimony at trial certainly had the tone of a man who feared that

Memphis might abandon TVA in favor of Nuclear Development. And his account,

which often conflicted with the testimony of other witnesses, strained credulity.

Nearly every other witness with nuclear-licensing experience, for instance, testified

that it would take the NRC six months to approve the transfer application, but

Johnson put the figure at two years. R. at 92. Nor could the Court credit his claim

that he denied the six-month closing extension because he was concerned about

“open-ended commitments,” R. at 61, and “just wanted to move on and see if

something else could happen with the site,” R. at 99. Up until the end of the closing

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period, Nuclear Development and TVA had “a great relationship,” and Johnson had

told Haney not “to worry about time” because “[n]obody else wants the project

anyway that can afford it.” R. at 39. Johnson was savvy enough to know that his

refusal to close would tie the site up in litigation and postpone alternative plans for

the site for years. Had he truly been concerned, as he testified, about the “economic

development opportunity in a part of Alabama that really needs it,” and had he truly

“wanted to make sure that things were going to happen quickly,” he would have

granted the extension. It would have been far more expeditious for TVA to grant a

six-month extension—or two, or three, or four—than refuse to close.

But motive, as Nuclear Development has conceded, is not an element in

breach of contract, and TVA had no obligation to extend the closing date. And so

while it seems likely that Johnson’s decision not to grant an extension—a decision

fully within his discretion—was partly, if not entirely, based on frustrations and fears

fomented by McCollum’s comments in Memphis, Johnson’s motives are irrelevant.

Section 101 of the AEA presented a true legal impediment to closing. This obstacle

was not pretextual, but genuine.

Under the Court’s ruling at summary judgment, TVA could not lawfully

proceed to closing under Section 101 of the AEA, and so the condition precedent set

forth in Section 6(a)(v) of the PSA was unsatisfied. Nothing that TVA did prevented

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the satisfaction of this condition, and TVA did not breach its duties under the PSA’s

Section 9(a).

CONCLUSION

For the foregoing reasons, the Court finds that TVA did not breach its

obligations under the PSA. With no breach, Nuclear Development is entitled neither

to specific performance nor to damages, and because Nuclear Development’s claims

fail, its request for a preliminary injunction must be denied.

However, Nuclear Development is entitled to the relief expressly

contemplated by the PSA. In the event that the deal was terminated due to failure to

satisfy all closing conditions, Section 11(b) of the PSA obligated TVA to “return the

Down Payment and any Compensated Costs paid by [Nuclear Development] within

30 days by check or electronically as directed by Buyer.” Pl.’s Ex. 1 at 12. Because

this is the means by which TVA elected to terminate the PSA, TVA is ORDERED

to return by check to Nuclear Development the Down Payment off $22,200,000 and

Compensated Costs of $750,000, plus prejudgment interest at a rate of 7.5% per

annum, running from December 30, 2018 to the date of this order.

All motions that remain pending in this action unaddressed by these findings

of fact and conclusions of law are hereby DENIED.

In accordance with Rule 58(a) of the Federal Rules of Civil Procedure, the

Court will separately enter a final judgment.

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DONE and ORDERED August 26, 2021.

_________________________________
LILES C. BURKE
UNITED STATES DISTRICT JUDGE

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