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STATE OF MINNESOTA DISTRICT COURT
COUNTY OF HENNEPIN FOURTH JUDICIAL DISTRICT
Case Type: Other Civil (Consumer Protection)
State of Minnesota, by its Attorney General, Court File No.
Lori Swanson, Hon.
Plaintiff,
vs.
Renewable Energy SD, LLC, and SUMMONS Shawn R. Dooling, individually,
Defendants,
THIS SUMMONS IS DIRECTED TO: SHAWN R. DOOLING, INDIVIDUALLY.
1. YOU ARE BEING SUED. The Plaintiff has started a lawsuit against you. The
Plaintiffs Complaint against you is attached to this summons. Do not throw these papers away.
They are official papers that affect your rights. You must respond to this lawsuit even though it
may not yet be filed with the Court and there may be no court file number on this summons.
2. YOU MUST REPLY WITHIN 20 DAYS TO PROTECT YOUR RIGHTS.
You must give or mail to the person who signed this summons a written response called an
Answer within 20 days of the date on which you received this Summons pursuant to Minnesota
Rule of Civil Procedure 12.01. You must send a copy of your Answer to the person who signed
this summons located at: James W. Canaday, Assistant Attorney General, Minnesota Attorney
General's Office, 445 Minnesota Street, Suite 1400, St. Paul, Minnesota 55101-2131
3. YOU MUST RESPOND TO EACH CLAIM. The Answer is your written
response to the Plaintiffs Complaint. In your Answer you must state whether you agree or
disagree with each paragraph of the Complaint. If you believe the Plaintiff should not be given
everything asked for in the Complaint, you must say so in your Answer.
4. YOU WILL LOSE YOUR CASE IF YOU DO NOT SEND A WRITTEN
RESPONSE TO THE COMPLAINT TO THE PERSON WHO SIGNED THIS
SUMMONS. If you do not Answer within 20 days, you will lose this case. You will not get to
tell your side of the story, and the Court may decide against you and award the Plaintiff
everything asked for in the complaint. If you do not want to contest the claims stated in the
complaint, you do not need to respond. A default judgment can then be entered against you for
the relief requested in the complaint.
5. LEGAL ASSISTANCE. You may wish to get legal help from a lawyer. If you
do not have a lawyer, the Court Administrator may have information about places where you can
get legal assistance. Even if you cannot get legal help, you must still provide a written Answer to
protect your rights or you may lose the case.
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6. ALTERNATIVE DISPUTE RESOLUTION. The parties may agree to or be
ordered to participate in an alternative dispute resolution process under Rule 114 of the
Minnesota General Rules of Practice. You must still send your written response to the
Complaint even if you expect to use alternative means of resolving this dispute.
Dated: January 25, 2013 LORI SWANSON Attorney General State of Minnesota
s/James W. Canaday JAMES W. CANADAY Assistant Attorney General Atty.Reg.No. 030234X
CHRISTOPHER SHAW Assistant Attorney General Atty.Reg.No. 0392862
445 Minnesota Street, Suite 1400 St. Paul, MN 55101-2131 (651)757-1421 (Voice) (651) 296-9663 (Fax) (651) 297-7206 (TTY) [email protected]
ATTORNEYS FOR THE STATE OF MINNESOTA
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STATE OF MINNESOTA DISTRICT COURT
COUNTY OF HENNEPIN FOURTH JUDICIAL DISTRICT
Case Type: Other Civil (Consumer Protection)
State of Minnesota, by its Attorney General, Court File No.
Lori Swanson, Hon.
Plaintiff,
vs.
Renewable Energy SD, LLC, and COMPLAINT Shawn R. Dooling, individually,
Defendants.
The State of Minnesota, by its Attorney General, Lori Swanson, for its Complaint against
Defendants Renewable Energy SD, LLC, and Shawn R. Dooling (collectively "Defendants")
alleges as follows:
INTRODUCTION
1. Defendant Renewable Energy SD, LLC ("RESD") was formed in 2009 by
Defendant Shawn R. Dooling ("Dooling"). RESD is marketed to Minnesota farmers as a wind
energy developer that utilizes federal and state laws and grants to subsidize, purportedly at little
or no cost to the farmers, the development of wind turbine energy systems. RESD represents to
farmers that it is a comprehensive "turn-key" developer that utilizes federal "1603 Grants" under
which the federal government pays farmers 30 percent of the cost of new and functional turbines.
RESD offers to arrange for bank financing of the remaining cost. Noting that Minnesota's "net
metering" law requires local utility companies to pay farmers for energy transmitted from the
turbine energy system to the power grid, RESD represents that the revenue received by farmers
will pay for most if not all of the amortization of the farmer's bank loan. RESD contractually
guarantees the installation and workmanship of the turbine energy project for the first year and
elsewhere represents that it will maintain the turbine energy system throughout its life span.
2. Thus, marketed as a "win-win" proposition to farmers, Defendants receive
hundreds of thousands of dollars from farmers who, in exchange, are supposed to pay little or
nothing for a wind turbine energy system that is promised to provide electricity to the farm and
income to the farmer.
3. As set forth below, Defendants have misrepresented the following facts to some
farmers: (1) that Defendants will timely install a functional turbine energy system; (2) that
Defendants will maintain the operability of the wind turbine energy system during its lifetime;
(3) that the turbine energy system will produce sufficient revenue under Minnesota's net
metering law to pay for the farmers' bank loans; (4) that, in some cases, Defendants will directly
pay the interest on farmers' bank loans; and (5) that the turbine energy system will meet the
requirements to qualify for federal "1603 Grants."
4. In fact, on some occasions, Defendants have failed to complete the turbine energy
system. On other occasions, a turbine energy system was installed but soon failed to function
(and therefore became ineligible for the "1603 Grant"). On other occasions, RESD failed to
make any attempt to maintain or service the turbine energy system. On other occasions, where a
turbine energy system was installed and operational, it failed to produce the promised level of
energy and therefore did not generate the revenue promised to the farmer under the net-metering
law.
5. The cost of the energy projects varied, from a low of about $119,000 to a high of
about $530,000. Rather than use revenue to pay back farmers who were aggrieved by the
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practices described in this lawsuit, Defendants appear to have spent hundreds of thousands of
dollars to acquire and maintain an array of exotic cars, including a 2011 Audi (estimated payment
$183,700), a 2010 Ferrari (estimated payment: $219,000), a 2011 Bentley (estimated payment:
$180,000), a 2009 Lamborghini (estimated payment: $297,694), another 2011 Audi (estimated
payment: $72,900), and another 2011 Bentley (estimated payment: $183,000).
PARTIES
6. Lori Swanson, the Attorney General of the State of Minnesota, is authorized under
Minnesota Statutes chapter 8, including sections 8.01 and 8.31, and under section 322B.95, and
has common law authority to bring this action.
7. Renewable Energy SD, LLC, is a South Dakota limited liability company. It was
formed under South Dakota law on or about April 16, 2009. As of January 24, 2013, its
corporate registration in South Dakota was delinquent. Its main business office is located at 810
Excelsior Boulevard, Excelsior, Minnesota 55331. RESD filed an application for a Certificate of
Authority to transact business in Minnesota as a foreign limited liability company on or about
November 5, 2010. Its Registered Agent in Minnesota was Shawn R. Dooling. On November 5,
2010, the Minnesota Secretary of State issued a Certificate of Authority to RESD to transact
business in Minnesota as a foreign limited liability company. On August 7, 2012, the Minnesota
Secretary of State revoked RESD's certificate to do business in Minnesota because it failed to
file an annual renewal. RESD transacted business in Minnesota both before it registered as a
foreign limited liability company and after its registration lapsed.
8. Shawn R. Dooling is the founder, owner, manager, and president of RESD, and
the Registered Agent for RESD in Minnesota. He resides at 26980 Edgewood Road,
Shorewood, Minnesota 55331. Upon information and belief, starting in about 1993 and
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continuing to at least about 2006, Dooling owned and/or operated a series of security alarm
companies. As set forth herein, Dooling has engaged in individual dealings with people in
Minnesota that subject him to individual liability under the Minnesota consumer protection laws.
JURISDICTION AND VENUE
9. Pursuant to Minnesota Statutes section 8.31, this Court has jurisdiction over the
subject matter of this action.
10. This Court has personal jurisdiction over RESD and Dooling as a result of their
sales to and dealings with persons in Minnesota. Defendants do business in Minnesota and have
committed acts causing injury to persons in Minnesota.
11. Venue in Hennepin County is proper under Minnesota Statutes section 542.09
because the cause of action arose, in part, in Hennepin County. RESD has its main business
office, and Dooling resides, in Hennepin County. RESD and Dooling have engaged in conduct
in Hennepin County causing injury to Minnesota residents.
FACTUAL BACKGROUND
I. THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009 SETS
THE STAGE FOR RESD'S FORMATION AND SALES PROMOTIONS.
12. In 2008 and 2009, the American economy was in a recession. Congress passed
the American Recovery and Reinvestment Act of 2009 ("ARRA"), which became law on
February 17, 2009. Section 1603 of ARRA created a program to provide cash grants to
individuals who purchase certain renewable energy projects (called "1603 Grants"). The 1603
Grant program is administered by the United States Department of the Treasury.
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13. A 1603 Grant was made available to people who purchase small wind turbines
with a capacity of not more than 100 kilowatts.1 The grant is 30 percent of the cost of the
property, with no dollar limit. Id. Grants are to be paid only after the qualifying properly is
"placed in service." Id. A property is "placed in service" when it is "ready and available for its
specific use." Id. To demonstrate that a property has been placed in service, the applicant must
submit a "commissioning report" to the Treasury Department. The commissioning report must
be provided by the project engineer, equipment vendor, or independent third party and certify that
the equipment has been "installed, tested, and is ready and capable of being used for its intended
purpose." Id. A grant recipient must thereafter provide the Treasury Department with an annual
project performance report for the next five years.2 The annual report must identify the annual
energy production from the wind turbine. Id. Grant money can be recaptured by the federal
government if energy production permanently ceases or the facility otherwise ceases to qualify
for the grant during the first five years. Id.
14. An applicant must also demonstrate that the project is otherwise eligible for a
grant. Id. at n. 1. To be eligible, the "original use" of the property must begin with the applicant.
Id. The "original use" requirement is met if used parts are not more than 20 percent of the cost of
the property. Id. Recipients must also begin construction during 2009, 2010, or 2011 and place
the turbine in service by December 31, 2016. An applicant may assign a 1603 Grant to a
financial institution, but it may not then be reassigned. Id.
1 See, generally, Program Guidance, Payments for Specified Energy Property in Lieu of Tax Credits under the American Recovery and Reinvestment Act of 2009 (revised April, 2011). 2 See, generally, Terms and Conditions, Payments for Specified Energy Property in Lieu of Tax Credits under the American Recovery and Reinvestment Act of 2009.
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15. ARRA also made block grants to states to in turn make grants to their residents.
In Minnesota, the ARRA block grants were administered by the Minnesota Department of
Commerce. Grants of up to $10,000 were available on a first-come, first-served basis to
Minnesota residents who installed wind turbines with capacity of up to 35 kilowatts. The
turbines must have been installed at a person's primary residence between July 1, 2009 and April
30, 2010, and have a five year warranty on major components and installation. The program
expired in 2010.
n. RESD IS FORMED ON THE HEELS OF THE ARRA AND THE SECTION 1603 FEDERAL WIND ENERGY GRANT PROGRAM.
16. On April 16, 2009—two months after the federal wind energy grant program was
signed into law—Dooling organized RESD as a South Dakota limited liability company and
became its President. RESD did not register to conduct business in Minnesota until November 5,
2010, even though it and Dooling transacted business in Minnesota many months prior to that
date. RESD's certificate of authority to transact business in Minnesota lapsed on August 12,
2012, but the company and Dooling have continued to transact business in Minnesota after that
date. RESD has a "D-" rating from the Better Business Bureau. At least four farmers have filed
individual lawsuits against RESD in state and federal courts in Minnesota. These include:
• Mark Mueller filed a lawsuit against RESD in the United States District Court for the District of Minnesota in December, 2011. The lawsuit alleges that RESD failed to refund his money for a turbine energy system and then failed to pay interest due him on a subsequent promissory note. See Mueller v. Renewable Energy SD, LLC, case number 2011-CV-03510 (D. Minn.). The lawsuit was settled by confidential settlement agreement.
• Sandra Malecek filed a lawsuit against RESD in Redwood County District Court in October, 2012. The lawsuit alleges that RESD sold her a turbine energy system for $541,474 in February, 2011, which it failed to deliver. See Malecek v. Renewable Energy SD, LLC, case number 64-CV-12-892. The lawsuit was settled by confidential settlement agreement.
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• Daniel and Karen Miller filed a lawsuit against RESD in Wabasha County District Court in April, 2012. The lawsuit alleges that the Millers paid RESD $123,500 in March, 2011, for a wind turbine system that the company failed to deliver. See Miller v. Renewable Energy SD, LLC, case number 79-CV-12-437. The lawsuit was settled by confidential settlement agreement.
• Richard German filed a lawsuit against RESD in Olmstead County Conciliation Court in February, 2012, requesting an order requiring RESD to pay interest on his loan to build a wind turbine system. See German v. Renewable Energy SD, case number 55-CO-ll-899.
17. From the get-go, RESD and Dooling heavily promoted the federal grant program
to Minnesota residents, in letters, at farm shows, in sales presentations, in advertisements, and
elsewhere. For example, in solicitation letters sent to Minnesota residents starting in or about
February, 2010, Dooling wrote:
Did you know the Federal Government has recently set aside millions of dollars of which you are entitled to a portion of in order to install an electricity generating wind turbine on your property. We are finding that most people have no idea, and we want to show you how to take advantage of these funds which never need to be repaid....
.. .If you would decide to take advantage of this offer of Federal funds for wind power, we would handle the entire process for you including permitting, installation and commissioning of the turbine.
18. RESD told Minnesota residents that it would handle all aspects of applying and
qualifying for the federal 1603 grants, as well as amending and supplementing grant applications.
RESD told farmers that they would qualify for these grants if they paid the company money and
that the grants would "never need to be repaid."
19. RESD tailored its sales pitches to many people's natural desire to "invest in
America," "go green," "become energy independent," and be less dependent on "foreign energy
sources." For example, at a time of national economic uncertainty and worldwide unrest,
Dooling's solicitation letters told people that: "It's time to get back to the basics and become
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energy independent." As set forth below, important promises made by Defendants to farmers
were not honored and proved to be false.
A. RESD AND DOOLTNG PROMISE FARMERS A "TURN-KEY" OPERATION.
"Turn-key": built, supplied, or installed complete and ready to operate.
Merriam-Webster Dictionary.com
20. Dooling and RESD hold the company out as a comprehensive "turn-key" wind
energy development company. They represent to Minnesota residents that ".. .we would handle
the entire process for you including permitting, installation and commissioning of the turbine."
On its Linkedin page, RESD states that it is a "turn-key provider of cogeneration electricity
generating wind turbines.... We handle everything from permits to interconnection agreements
to construction to maintenance, providing our clients a complete turn-key wind energy solution."
In a video advertisement, RESD emphasizes its "turn-key" approach and states: "[W]e cover all
aspects of a wind turbine project, from the initial performance report, which gives our clients
exactly what they can expect month to month and year to year out of their new turbine, all the
way through to maintenance for the life of the turbine."
21. Minnesota residents were promised that RESD was a comprehensive wind energy
developer that would provide expert, comprehensive "turn-key" services on farmers' wind
turbine energy investment projects, including expert consultation, feasibility analyses, return on
investment analyses, financial forecasting, energy output forecasting, energy pricing analyses,
financing advice and assistance, grant application and qualification, planning, site review, soil
testing, engineering, foundation design, permitting, zoning, shipping, foundation installation,
tower erection, blade installation, turbine erection, electrical construction and inspection,
operational assurance review, commissioning, electricity purchase negotiation with the farmer's
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local utility company, and utility grid interconnection. RESD contractually guaranteed the
maintenance-free workmanship of the turbine for a period of at least one year, and the company
aggressively promoted five year warranties. Elsewhere, it claims to provide "maintenance for the
life of the turbine."
22. RESD and Dooling repeat these statements in public news articles. In one,
Dooling states: "We handle everything from the feasibility study and permits to agreements with
the co-op and installation, then service after the sale." In another, RESD states: "We handle all
parts of a wind turbine project from financing to permitting, all the way through construction and
maintenance for the life of the turbine."
B. RESD AND DOOLING PROMISE LONGEVITY OF THEIR WIND ENERGY SYSTEMS AND REVENUE "FOR THE NEXT 30 YEARS."
23. Minnesota has a "net metering law." See Minn. Stat. § 216B.164 (2012). Under
this law, the local utility company must pay a consumer at retail rates for electricity generated by
small wind projects of less than 40 kilowatts that exceeds the consumer's utilization. RESD and
Dooling aggressively incorporate the Minnesota net metering policy as part of their sales pitch in
advertisements and one-on-one sales presentations. They promise Minnesota residents that the
federal 1603 Grant will pay 30 percent of the cost of the turbine energy system and that much of
the rest of the cost can be offset by revenue generated under the net metering law. They tout the
net metering policy as providing a significant return on the farmer's investment. For example, in
his initial solicitation letter, Dooling tells potential customers:
If you would choose to install an electricity generating wind turbine, for years to come your local utility company would pay you monthly for any excess energy your wind turbine would generate under Minnesota state net metering law.
(Emphasis added.)
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24. He similarly tells potential customers that:
We would like an opportunity to give you a wind analysis specific to your property and explain exactly how wind energy production could work for you. We can give you a detailed estimate for the project showing you exactly how much the initial investment would be and how long it would take you to get a total return on your investment and what you can expect in income for the next thirty years with a wind turbine.
(Emphasis added.)
25. To buttress these promises, Defendants state that the company's turbine energy
systems have a lifespan of 20 to 30 years and calculate customers' returns on investment using
project lives of 20 to 25 years. The company distributes a service and maintenance policy stating
that all products are of the "highest quality, standards and tolerances." It gives Minnesota
residents projections stating how much money they will generate from a turbine energy system
and when their investment will pay for itself, which is generally within ten years. Some people
paid over $100,000 to RESD for a wind turbine energy system that failed to generate any income.
C. R E S D AND DOOLING PROMISE THEIR WIND ENERGY SYSTEMS WILL MEET
THE REQUIREMENTS OF THE FEDERAL "1603 GRANT."
26. The Defendants emphasize that 30 percent of the cost of the project is subsidized
by the federal government through 1603 Grants. After the 1603 Grant application is approved by
the U.S. Department of Treasury and the turbine is placed into service, the farmer receives full
payment of the grant. The eligibility criteria for a 1603 Grant requires that 80 percent of the
turbine be composed of new parts and that the turbine system be operational for at least the first
five years. In some cases, RESD has not installed the turbine energy system, or has failed to
install and maintain the system so as to make it functional, putting farmers at risk of not
complying with the terms of the 1603 Grant.
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D. RESD AND DOOLMG PROMISE THAT THEIR WIND ENERGY SYSTEMS WILL GENERATE ENOUGH EXCESS ELECTRICITY THROUGH NET METERING TO PAY FOR ALL OR A LARGE PORTION OF THE PROJECT'S COSTS.
27. As set forth above, Defendants emphasize utilization of the Minnesota "net
metering law." Under this law, a local utility company must pay the owner of a wind turbine for
any net electricity (e.g., energy in excess of the farmer's personal utilization) that is produced and
transmitted to the local power grid. Defendants also offer to arrange for bank financing for the
farmer. Defendants then promise and represent that the revenue paid by the local utility under
the "net metering law" will be sufficient to pay for all or most of the monthly payments required
under the terms of the farmer's bank loan.
28. The stories set forth below are illustrative, non-exclusive examples of Defendants'
unlawful conduct.
III. RESD HAS MADE FALSE STATEMENTS AND EMPTY PROMISES TO FARMERS.
A. RESD FAILS TO TIMELY INSTALL FUNCTIONAL WIND ENERGY SYSTEMS FOR FARMERS WHO PAID FOR THEM, FAILS TO MAKE REFUNDS, AND FAILS TO MEET THE TIMELINES IT PROMISES.
1. RESD Fails to Install Functional Wind Energy Systems.
29. RESD's customer contract generally states the foundation for the turbine energy
system will be poured within one or two weeks of permit approval (which is supposed to occur
almost immediately) and that the tower and turbine will be installed 12 to 14 weeks later. The
company generally promises that a turbine energy system will be operational in about four to six
months. The company's contract further states that RESD will warrant proper installation and
workmanship for one year. The company gives consumers specifications stating that the turbine
has a "design life" of 20 to 25 years and that its turbine energy systems have the "highest quality,
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standards, and tolerance." The company has told people that it will maintain the system
throughout its life span.
30. For a number of people, this was not the case,
31. Marv and Marlys Jensen live in Kensington, Minnesota. They were born one
mile apart from each other and have been married 46 years. They farm corn and soybeans on the
farm where Marv grew up. As a U.S. Army veteran, Marv liked the idea of helping our nation
become more energy independent. The RESD salesman told the Jensens that the company
offered a "turn-key" product and would handle all aspects of the wind turbine energy system
from beginning to end. The salesman told the Jensens that the turbine energy system would
generate $732 per month in revenue, which would cover the cost of the loan to finance the
turbine energy system and would mean the turbine energy system would pay for itself in eight
years. The salesman told the Jensens that the turbine energy system would last for at least 20
years and that the federal grant would cover 30 percent of the cost.
32. Based on these promises, in April, 2010, the Jensens purchased a wind turbine
energy system from RESD for $126,000. They were told it would be up and running by August.
This did not occur. When the turbine energy system was constructed almost six months later, it
operated for less than a month. RESD then shut the turbine down, telling the Jensens that the
blades were cracked and that the turbine was not functional.
33. RESD told the Jensens it would not give their money back. Rather, RESD told
them they could purchase a more expensive turbine energy system for an additional $119,000, or
a total purchase price of $245,000. RESD would then credit their previous payment of $126,000
to the new, more-expensive turbine energy system. Having already sunk $126,000 into a
worthless turbine project, the Jensens felt they had no choice. Starting in the spring, 2011, they
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were repeatedly assured that the new turbine energy system would be delivered in a matter of
weeks. It was not.
34. In December, 2011, over a year-and-a-half after the Jensen's made their first
payment, RESD emailed the Jensens and told them that their turbine energy system would be
installed in January if they paid the final installment payment of $74,400 "to protect the federal
grant." The Jensens paid the final payment, bringing their total payments to RESD to $245,000.
35. They still have no turbine.
36. In November, 2012, two-and-one-half years after he paid RESD for the turbines,
Marv saw Dooling at a trade seminar where he was pitching his energy development program to
new farmers. Dooling told Marv he was now "number 16" on the list. Marv responded that he
had previously been told he was "number six" and "one of the first ones" on the list and had been
given dates for when the project would be completed. Marv asked Dooling to put his promises in
writing and send a letter with the installation date for his turbine system. The letter never
arrived.
37. Like the Jensens, Kerry and Linda Nelson have also been married 46 years.
They farm corn, soybeans, and beef cattle on their family farm in Carlos, Minnesota. In March,
2010, Dooling sent them a solicitation letter offering to give them a "wind analysis," telling them
how much they could earn from a wind turbine energy system "for the next thirty years." The
letter stated that federal 1603 Grant funds would pay for a portion of the turbine. As an Army
veteran who served the nation in Vietnam, Kerry liked the idea of helping the country develop
renewable energy sources. An RESD salesman told the Nelsons that RESD "would take care of
everything," including construction, installation, permits, service, and maintenance. The
salesman gave the couple projections showing that they would recoup their investment in seven
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to ten years and that the 39.9 kW turbine energy system would conservatively generate $731 in
monthly revenue.
38. The Nelsons purchased the turbine energy system in April, 2010, for $126,000,
minus an "early buy in" incentive of $7,000. They were told that the turbine energy system
would be up and running by July 4. In May, RESD had the Nelsons sign an addendum stating
that the company would pay them the $7,000 incentive when the Nelson's final installment
payment was due, effectively bringing their purchase price to $119,000. By May, the Nelsons
had paid RESD $81,200. RESD told them that the federal 1603 Grant would pay the remaining
$37,800 (or 30 percent of $126,000). RESD then had the Nelsons assign the 1603 Grant
proceeds to Bridgewater Bank, a Minnesota state-chartered bank located in Excelsior, Minnesota.
The Nelsons had not taken out a loan from Bridgewater Bank. The 1603 Grant Program
prohibits funds from being reassigned to a third party from the financial institution.
39. Douglas County issued the Nelsons' permit on May 10, 2010. RESD promised to
pour the foundation within two weeks of permit issuance. In fact, the foundation was not poured
until October of 2010, almost six months after the Nelsons paid for the turbine. In March, 2011,
nine months after the Nelsons paid their money, Dooling came to the Nelsons' farm and told
them that RESD wanted them to buy a different turbine energy system at an additional cost of
$142,000. The Nelsons told Dooling that they wanted RESD to honor the original contract.
RESD thereafter dropped a turbine off in a crate on the Nelsons' farm. The Nelsons discovered
that the turbine was refurbished, not new. The turbine still sits in a crate, and RESD has made no
effort to start the energy project. Before dropping off the crate, Dooling tried to get the Nelsons
to sign a contract stating that RESD did not need to fix the turbine. They refused.
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40. Since then, the only communication the Nelsons have seen from RESD was an
advertisement in the Fergus Falls Daily Journal on November 15, 2012, where RESD was
marketing its "turn-key" solutions to new farmers.
2. RESD Fails to Make Refunds.
41. As set forth above, RESD has refused to make refunds when it fails to complete
the income-generating turbine project; instead, it tells farmers that the only way to recoup their
funds is to pay RESD for a new, more expensive turbine system at about double the cost of the
first.
42. For example, Warren and Kristine Netherton are in their late 50s. They own a
small farm in Spring Valley, Minnesota. In April, 2010, Dooling sent them a letter about the
federal 1603 Grant for wind turbines. An RESD salesman represented to the Nethertons that
they "could not lose" if they purchased a turbine energy system from RESD. He told them the
turbine energy system would pay for itself in less than ten years, that the turbine energy system
was "proven technology," and that RESD guarantees the successful performance of the turbine
energy project for one year. The salesman told them that the turbine energy system would
generate $898 per month revenue. In October, 2010, the Nethertons agreed to buy a 34 kW
turbine energy system from RESD for $155,000. They paid RESD $76,000, and the company
arranged a loan through Bridgewater Bank for the rest of the cost. The loan was to require
interest-only payments for six months, and the Nethertons were assured the turbine energy
system would be up and running by the time the principal on the loan became due.
43. In April, 2011, Dooling advised the Nethertons that RESD had changed its
development model and they could either accept a much smaller 20 kW turbine energy system
(which, at one-half the size, would not generate nearly as much revenue under the net metering
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law), or a different 39.9 kW turbine energy system for an additional $95,000. The Defendants
promised the couple that the 39.9 kW turbine energy system would generate $1,353 in monthly
revenue. RESD further promised the Nethertons that if they acquired the different 39.9 kW
turbine energy system, the company would pay the interest on their loan from the time it accrued
until the new turbine energy system was fully functional. Because they had already sunk
$155,000 into the first 34 kW turbine energy system, they felt compelled in April, 2011 to switch
to the second 39.9 kW turbine energy system for another $95,000 in order to recoup their initial
investment. In June, 2011, they paid RESD another $53,000. About 21 months later, that
turbine still has not been delivered. About a year ago, RESD stopped paying the interest on the
Nethertons' Bridgewater Bank loan. Since then, the Nethertons have been paying $1,500 a
month to pay back a bank loan for a turbine system they do not have.
44. Michael and Gretchen Supalla grow corn and soybeans on the New Richland,
Minnesota farm where Michael grew up. They have been married 43 years. In April, 2010,
Dooling sent them a solicitation letter. In May, they met with an RESD salesman on their farm.
The salesman told the Supallas that RESD would "take care of everything," including
construction and maintenance, that the turbine would operate for 20 years, and that RESD would
maintain the turbine for five years. He told them that the 35 kW turbine energy system would
generate about $1,200 in monthly income.
45. That month, they signed a contract to construct two 35 kW turbine energy systems
for $252,000 from RESD. RESD promised that the projects would be operational by the
September grain drying season. In fact, the turbines were not commissioned until April, 2011, or
eight months later. The turbines soon failed.
16
46. Although the turbines were no longer operational, Defendants would not refund
their money. Rather, Defendants told them that they could apply the proceeds from the first
purchase ($252,000) to the acquisition of two different turbine systems for a total purchase price
of $536,000.
47. Dooling represented to the Supallas that RESD would pay all interest on the loans
used to finance the turbine energy systems. It did not. Dooling also promised that the new
turbines would be up by the September, 2011 grain drying season. With so much money tied up
with RESD, they reluctantly agreed in July, 2011, to pay $536,000 for the two turbines. As of
January 24, 2013—almost three years after the contract was signed—the Supallas had one
turbine sitting on their property (but not operational) and the other turbine had not been
delivered.
3. RESD Fails To Meet Promised System Completion Dates, and Farmers Pay Money Based On Promised System Completion Dates That Are Not Met.
48. Eugene and Rita Dorn live in Nicollet, Minnesota on a 120 acre farm, where
they grow corn and soybeans and raise hogs. Dooling promised them "state of the art"
performance and a "turn-key" operation. Dooling told them they could expect to receive $1,100
to $1,300 in monthly gross revenue from a 39.9 kW turbine energy system. In March, 2010, the
Dorns learned that the family might be eligible for a U.S. Department of Agriculture grant to help
offset their turbine costs. They were advised that, to qualify, they must apply for the grant before
signing a contract with RESD. When the Dorns told this to Dooling, he said RESD could get
around this government grant restriction if they "loaned" Dooling $100,000, which he would
"pay back" from the purchase price after the grant application was made.
17
49. In the spring of 2010, Dooling accepted their $100,000 "loan." After the USDA
grant application was submitted, the Dorns signed a contract to purchase two 39.9 kW turbine
energy systems from RESD. Thereafter, the USDA denied the grant, stating that the turbines
used by RESD on the project were not proven technology.
50. As of January, 2013, turbines that were supposed to be installed almost three years
earlier had not arrived. Defendant RESD has repeatedly promised the Dorns that the turbines
would be delivered "soon." For the last several years, the Dorns have been paying interest to the
bank for a turbine energy system they do not have. Dooling and RESD stopped returning their
calls months ago.
51. Randall Reinhart is a third-generation farmer, also from Nicollet County. He
and his wife Marsha farm corn and soybeans on their 160 acre family farm, which has been in the
Reinhart family for over a century. RESD told Randall that it offered a "turn-key" package and
that he could expect to receive $ 1,175 in monthly gross revenue from a turbine energy system. In
July, 2010, he and Marsha purchased an energy project which involved the installation of two
39.9 kW turbine energy systems for which they paid RESD about $206,000. RESD told them the
turbines would be operational in six months. RESD has repeatedly told the Reinharts that the
system would be completed "next month." Two-and-one-half years have passed, and the project
has not been completed. Meanwhile, the Reinharts have paid interest on the loan used to pay the
Defendants.
52. The RESD contract requires the final installment payment to be paid ten days
prior to the turbine's shipment from the factory. RESD induced farmers to pay final installment
payments by falsely telling them the turbine was ready to ship. For example, on December 27,
2011, RESD sent Marv Jensen an email stating that he needed to pay his final installment of
18
$74,000 because the turbine would be ready to install in January. Thirteen months later, it still
has not been installed.
B. RESD FAILS TO HONOR ITS PROMISES TO CREATE, SERVICE, AND MAINTAIN A FUNCTIONAL WIND ENERGY SYSTEM.
53. Dooling aggressively touts his energy development company and his company's
ability to service and maintain the wind energy systems he sells. He promises:
You need products to be dependable and you need to be able to get service quickly and get a machine operating again.
54. As part of its "turn-key" operations, RESD has promised to service and maintain
the turbines it sells to farmers. The company's contract guarantees installation and workmanship
for one year. Its service and maintenance policy states that it is "committed to providing superior
service and support to all clients," "guarantees to have a certified turbine technician on site to
troubleshoot and diagnose the issue within 72 hours of notification," and that, with respect to any
problems, "a return trip to the turbine will occur within 7 days of the part being ordered from the
manufacturer." The company convinces farmers that it is a "local company" that will be there for
them to keep their turbine energy system in good working order, throughout the life of the
system.
55. RESD has not kept these promises.
56. Mark and Bonnie Schroeder grow corn, soybeans, and peas on their farm in
Elgin, which belonged to Mark's parents. In February, 2010, Defendants solicited the Schroeders
to develop a turbine energy project on their farm. An RESD salesman came to their farm in
April, 2010. The Schroeders use a lot of energy to dry their crops. The salesman told them that a
39.9 kW turbine energy system would generate $1,235 in monthly revenue. The salesman told
19
them RESD offered a "turn-key" operation, which meant the company would take care of all
aspects of the project, including construction and maintenance.
57. That month, the Schroeders agreed to buy a 39.9 kW turbine energy system from
RESD for $200,000. The salesman told them their turbine would be operational in 30 to 90 days.
In fact, it was not put into service until May, 2011—about a year later than promised. It
immediately began to malfunction. RESD told the Schroeders that it had mixed up the blades
from other turbines, and it shut the turbine down. After a month, the turbine's shaft broke, and
the blades would not turn. RESD took the turbine down. After a few months, RESD reinstalled
the turbine. In February, 2012, the Schroeders heard a loud noise that sounded like an Apache
helicopter. The turbine and tower shook and bellowed smoke. A 25 foot long, 500 pound blade
flew off the turbine 300 feet into the field, creating a safety menace.
58. RESD told the Schroeders it would replace the turbine right away with a new
machine that would arrive in two or three weeks. Almost one year later, nothing has happened.
The Schroeders are paying over $700 per month in interest on a loan for a turbine energy system
they do not have. RESD has not returned Mark's calls in months.
59. Harlan Jacobson is 75 years old. He and his wife Judy live on 100 acres in
Ashby, Minnesota. They contacted RESD in March, 2010, in response to a solicitation letter
from Dooling. The salesman promised the Jacobsons a "turn-key" wind turbine energy system
and that the company would handle all construction and maintenance. RESD told the Jacobsons
that it would "take care of everything" and that the turbine energy system would be so trouble-
free they "could go south in the winter and never have to worry about the turbine's operation."
The salesman told them to conservatively expect about $800 per month in revenue from the
energy project.
20
60. Based on these promises, the Jacobsons bought a 39.9 kW turbine energy system
from RESD for $126,000 (less a $7,000 rebate, bringing their effective purchase price to
$119,000) in March, 2010, They were told the turbine energy system would be up and running
by August or September, 2010. The Jacobsons paid $81,200 and were told that a $37,800 federal
1603 Grant would cover the remainder owed. Later, RESD told the Jacobsons that it had
arranged for the family to take out a $37,800 loan from Bridgewater Bank. RESD represented
that the Jacobsons would not be responsible for paying interest on the note or paying it back;
rather, they were told that the federal 1603 Grant would pay the principal and that RESD would
pay the interest until the federal grant arrived. They never met anyone from Bridgewater Bank;
rather, RESD handled all the paperwork. Based on RESD's representations, the Jacobsons
signed the paperwork.
61. At one point, the bank advised the Jacobsons that RESD failed to pay the
promised interest.
62. Finally, RESD installed the turbine energy project in late December, 2010. It did
not work. In January, 2011, RESD told the Jacobsons that the turbine needed a new generator.
RESD then replaced the generator, but the turbine still did not work. The Jacobsons were then
told that the blades on the turbine were cracked, and RESD shut down the turbine.
63. After shutting down the turbine, RESD never attempted to repair it.
64. The Jacobsons retained their own contractor, who rebuilt the turbine's brake
system and did other significant work. Through the Jacobsons' own efforts and at their own
expense, starting in April, 2012, they were able to get the turbine operational, although it
produces less than a quarter of the revenue promised by RESD. Harlan says: "Renewable
Energy SD seems to have abandoned us after taking our money...," leaving them with a turbine
21
energy system "that only operates at a capacity far below the projections used to sell us on the
turbines in the first place."
65. Michele Breza and Ronald Berndt had a small farm in Utica, Minnesota on
which they raised chickens, pork, and cattle. They received a solicitation letter signed by
Dooling in early 2010. In the spring of 2010, an RESD salesman visited their farm. He
represented to Michele and Ronald that RESD was a "one-stop shop" and "turn-key" operation
that would provide all development services from beginning to end, including permitting, grant
application, installation, and service and maintenance of the turbine energy system. The
salesman told them that the turbine energy system would produce $9,000 in revenue in the first
year and pay for itself in about five years. RESD promised to have a certified technician on the
premises within 72 hours and to fix problems in a timely fashion. RESD told them that the
turbine energy system would be up and running by October, 2010.
66. Based on these promises, the couple purchased a 34 kW turbine energy system
from RESD in June, 2010, for $126,000. RESD arranged for the couple to finance the turbine
energy system with a $117,000 loan from Bridgewater Bank. The turbine energy system was
finally installed in January, 2011. The problems began immediately and included: a broken
anemometer, oil leak, unlevel tower, brake-tip deployment, cracked blades, malfunctioning yaw
bearings, malfunctioning software, and unfinished electrical systems. The blades rarely turned
and sometimes even spun in reverse. RESD eventually shut it down.
67. RESD never fixed the turbine and refused to make a refund. In September, 2011,
RESD stopped returning the couple's calls.
68. Their experience is not unique.
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C. RESD MISREPRESENTS THE REVENUE THE WIND ENERGY SYSTEMS WILL GENERATE.
69. Dooling's initial solicitation letters states that a turbine energy system will
generate revenue "for years to come" and promises to provide detailed projections:
showing you exactly how much the initial investment would be and how long it would take you to get a total return on your investment and what you can expect in income for the next thirty years with a wind turbine.
70. The RESD salesmen then provide farmers with detailed projections, often
represented as "conservative," of how much revenue the wind turbine energy system will
generate. The revenue to be generated from the turbine energy system is an important selling
point for farmers. Farmers count on this revenue to offset the cost of the system.
71. For many, the promised income has not materialized, either because the project
was not completed or the projections were inaccurate.
72. For example, Donald and Judy Helgerson live on a 220 acre tree farm in Eyota,
Minnesota. After serving in the U.S. Army, Donald became a firefighter with the Rochester Fire
Department. After being hurt in a blaze, Donald relied on the tree farm for his income. Dooling
sent the Helgersons a solicitation letter in February, 2010, about federal grants available to
purchase a wind turbine energy system. A month later, Donald met with a company salesman at
a Rochester farm show. At the time, America was engaged in two wars, and as a veteran,
American energy independence was important to Donald. The salesman told Donald that a 39.9
kW turbine energy system would generate at least $936 in monthly income and had a lifespan of
25 years.
73. In June, 2010, the Helgersons agreed to purchase a 39.9 kW turbme energy system
from RESD for $126,000. As part of the inducement, Dooling promised the Helgersons that the
23
foundation would be poured within one or two weeks after the building permit was issued. The
Helgersons received the permit in June and thought that the foundation would be poured that
month. It was not poured until November of 2010. The turbine was finally put up in January.
At that time, RESD for the first time advised the Helgersons that the turbine was only a 34 kW
turbine energy system, not the 39.9 kW system they had purchased. By then, the turbine was
already going up.
74. In late February—-just two weeks after the turbine was up—Dooling told Donald
that the blades were cracked. RESD shut the turbine down. In total, the Helgersons have earned
only $150 in revenue from the electricity generated by the turbine project—a far cry from the
$936 per month promised by the company salesman.
75. At this point, Dooling told the Helgersons that the turbine energy system would
have to be replaced and that RESD would pay them $30 a day from the time the first turbine
project became operational until the second (much smaller) turbine project was installed. In
March, 2011, Dooling indicated that the second turbine had been ordered and would be received
and installed in about six weeks. It was installed nine months later, almost one-and-one-half
years after the Helgersons engaged the developer.
76. Almost immediately, the replacement turbine had mechanical problems. The
Helgersons state that RESD is slow to respond or sometimes does not respond to service
problems. The turbine has generated about $92 per month in revenue, far less than the $461 in
monthly revenue that the second 20 kW turbine energy system was projected to generate or the
$900 per month that the 39.9 kW first turbine energy system was supposed to generate.
77. Of course, RESD did not make the $30 per day payments promised, which
amounts to about $ 11,000.
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78. Warren and Rachel Krohn grow corn and soybeans and raise hogs on their
family's Nicollet County farm. Warren is active in the Nicollet County Pork Producers and grew
up on the farm. Warren's hog barns use a lot of electricity, so Warren was interested in a wind
turbine energy system. RESD and Dooling promised him a "turn-key" and "state-of-the-art"
project.
79. Warren applied for a federal grant from the U.S. Department of Agriculture. The
grant writer told Warren that a condition of a USDA grant is that no grant money can be given
for any expenses incurred before the application. Accordingly, Warren did not want to sign a
contract with RESD until the USDA received the application. Warren told this to Dooling, who
told Warren that one way to avoid the government restriction was for Warren to "loan" RESD
$100,000, and Dooling would then go ahead and order the turbines and pay Warren back out of
the purchase price. Accordingly, Warren made the "loan."
80. After the USDA grant was submitted, Warren signed a contract on December 31,
2010, for two 39.9 kW turbine energy systems from RESD. The turbines were installed in April,
2011. In the summer, one began to spin out of control. RESD told Warren it put the wrong
blades on his turbine. In the fall, one of the turbines broke down, and RESD eventually disclosed
that it neglected to put oil in the yaw motor gearboxes. Around this time, one turbine was down
for over four months. All told, Warren estimates that the turbines have been operational only
about fifty to sixty percent of the time.
81. In October, 2011, the USDA rejected Warren's grant application. It indicated
that, in order to qualify for a USDA grant, a turbine needed a minimum of twelve months of
performance history and evidence of its performance and reliability. USDA determined that the
turbines were untested and not proven to be reliable. This is a far cry from the "state-of-the-art"
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project promised by RESD. At the time of sale, Dooling told Warren that a 39.9 kW turbine
energy system would generate $1,200 to $1,300 in gross revenue each month. In fact, according
to Warren's local utility coop, one turbine has produced only about $100 per month in revenue.
The other turbine has no meter, but Warren has seen no drop in his electric bills.
82. Others have experienced the same thing.
D. RESD MISREPRESENTS THAT IT WILL PAY THE INTEREST ON BANK LOANS.
83. Defendants sometimes promise that RESD will pay people's interest on their
loans while awaiting a new turbine but it then fails to do so.
84. For example, after Michael and Gretchen Supalla's turbine energy system broke
down in Waseca County, Dooling promised them that RESD would pay interest on the bank loan
used to finance the turbine energy system until a new turbine was delivered. About 18 months
later, the company had paid no interest. After Warren and Kristine Netherton agreed to pay
additional money for a different turbine, Dooling promised them that RESD would pay the
interest on the bank loan that RESD arranged for them to take out to finance the turbine energy
system until a new turbine was delivered. RESD quit paying the interest a year ago, and the
Nethertons have been paying $1,500 on a bank loan for a turbine they do not have. RESD had
Harlan Jacobson sign a loan from Bridgewater Bank, telling him that the loan was simply a
formality so that the federal grant proceeds could be assigned by Harlan to the bank. RESD told
Harlan he was not obligated on the loan and that the company would pay the interest. In August,
2011, the bank told Harlan that RESD stopped paying the interest for a time and wanted Harlan
to pay. He refused. Mark Mueller had to sue RESD in federal court for failing to pay interest
on a promissory note entered into after it failed to return his money.
26
E. RESD MISREPRESENTS THE TERMS OF THE FEDERAL "1603 GRANT" PROGRAM AND PUTS GRANT RECIPIENTS IN A QUESTIONABLE POSITION EVEN THOUGH IT ACTED AS A FIDUCIARY IN HANDLING GRANT APPLICATIONS.
85. In his initial solicitation letter, Dooling tells consumers:
Did you know that the Federal Government has recently set aside millions of dollars of which you are entitled to a portion of in order to install an electricity generating wind turbine on your property? We are finding that most people have no idea, and we want to show you how to take advantage of these funds which never need to be repaid.
86. In sales meetings, RESD heavily promotes the federal grant and tells consumers
that if they hire the company to develop a turbine energy system, they will receive the grant and
that RESD will handle all aspects of the grant application process. RESD has customers sign a
power of attorney authorizing it to act for them in "preparing, filing, amending, and providing
information" in connection with the 1603 Grant application.
87. There are several questions raised with RESD grant applications.
88. First, RESD told at least one customer—Marv Jensen—that he needed to make
his final installment payment of $74,000 in order to "protect" the federal grant. This was not
true.
89. Second, as noted above, a 1603 Grant may only be paid after a turbine energy
system is "placed in service," meaning that it is "ready and available for its specific use." A
grant recipient must provide the Treasury Department with an annual project performance report
for the next five years showing the annual energy production from the wind turbine energy
system. Grant money can be recaptured if energy production permanently ceases or the facility
otherwise ceases to qualify for the grant during the first five years. Despite telling consumers
that the federal grant "will never need to be repaid," the grants of some consumers may be in
jeopardy because grant funds are paid even though they have no working turbine energy system.
27
90. Third, the 1603 Grant is equal to 30 percent of the cost basis of the project. In
some cases, RESD gave "rebates" to consumers but appears to have signed them up for grant
funds for the pre-rebate amount of the contract.
91. Rather than use revenue and assets to compensate aggrieved farmers who have
paid substantial sums of money to RESD only to face broken promises, Defendants appear to
have spent hundreds of thousands of dollars to acquire and maintain an array of exotic cars,
including a 2011 Audi (estimated payment $183,700), a 2010 Ferrari (estimated payment:
$219,000), a 2011 Bentley (estimated payment: $180,000), a 2009 Lamborghini (estimated
payment: $297,694), another 2011 Audi (estimated payment: $72,900), and another 2011 Bentley
(estimated payment: $183,000).
COUNTI CONSUMER FRAUD
92. Plaintiff re-alleges all prior paragraphs of this Complaint.
93. Minnesota Statutes section 325F.69, subdivision 1, provides as follows:
The act, use, or employment by any person of any fraud, false pretense, false promise, misrepresentation, misleading statement or deceptive practice, with the intent that others rely thereon in connection with the sale of any merchandise, whether or not any person has in fact been misled, deceived, or damaged thereby, is enjoinable as provided in section 325F.70.
Minn. Stat. § 325F.69, subd. 1 (2012).
94. Defendants' conduct described above constitutes multiple, separate violations of
Minnesota Statutes section 325F.69, subdivision 1. Defendants have engaged in deceptive and
fraudulent practices, and have made false and misleading statements, with the intent that others
rely thereon in connection with the marketing and sale of wind energy systems and related
components, products, and services. By failing to disclose and omitting material facts,
28
Defendants have further engaged in multiple, separate deceptive and fraudulent practices in
violation of Minnesota Statutes section 325F.69, subdivision 1.
COUNT II DECEPTIVE TRADE PRACTICES
95. Plaintiff re-alleges all prior paragraphs of this Complaint.
96. Minnesota Statutes section 325D.44, subdivision 1, provides, among other things,
as follows:
A person engages in a deceptive trade practice when, in the course of business, vocation, or occupation, the person:
* * *
(5) represents that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities that they do not have or that a person has a sponsorship, approval, status, affiliation, or connection that the person does not have;
(6) represents that goods are original or new if they are deteriorated, altered, reconditioned, reclaimed, used, or secondhand;
(7) represents that goods or services are of a particular standard, quality, or grade, or that goods are of a particular style or model, if they are of another;
* * *
(9) advertises goods or services with intent not to sell them as advertised;
(10) advertises goods or services with intent not to supply reasonably expectable public demand, unless the advertisement discloses a limitation of quantity;
* f * f\f*
(13) engages in any other conduct which similarly creates a likelihood of confusion or of misunderstanding.
Minn. Stat. § 325D.44, subd. 1 (2012).
29
97. Defendants' conduct described above constitutes multiple, separate violations of
Minnesota Statutes section 325D.44, subdivision 1, Defendants have engaged in deceptive
practices by, among other things:
■ misrepresenting the capabilities, characteristics, and condition of the goods and services
they offered for sale;
■ misrepresenting the availability of goods and services they offered for sale;
■ advertising goods and services with intent not to sell them as advertised;
■ failing to timely install functional wind energy systems;
■ failing to make refunds;
H failing to meet the timelines they promised;
■ failing to honor their promises to create, service, and maintain functional wind energy
systems;
■ misrepresenting the revenue the wind energy systems will generate;
■ misrepresenting that they will pay the interest on bank loans;
■ misrepresenting the terms of the federal "1603 Grant" program and putting grant
recipients in a questionable position even though they acted as fiduciaries in handling
grant applications; and,
■ engaging in other conduct which similarly creates a likelihood of confusion or of
misunderstanding.
By failing to disclose and omitting material facts, Defendants have further engaged in
multiple, separate deceptive practices in violation of Minnesota Statutes section 325D.44,
subdivision 1.
30
COUNT ra FALSE ADVERTISEMENT
98. Plaintiff re-alleges all prior paragraphs of this Complaint.
99. The False Statement in Advertising Act, Minnesota Statutes section 325F.67,
provides, in part:
Any person, firm, corporation, or association who, with intent to sell or in anywise dispose of merchandise, securities, service, or anything offered by such person, firm, corporation, or association, directly or indirectly, to the public, for sale or distribution, or with intent to increase the consumption thereof, or to induce the public in any manner to enter into any obligation relating thereto, or to acquire title thereto, or any interest therein, makes, publishes, disseminates, circulates, or places before the public, or causes, directly or indirectly, to be made, published, disseminated, circulated, or placed before the public, in this state, in a newspaper or other publication, or in the form of a book, notice, handbill, poster, bill, label, price tag, circular, pamphlet, program, or letter, or over any radio or television station, or in any other way, an advertisement of any sort regarding merchandise, securities, service, or anything so offered to the public, for use, consumption, purchase, or sale, which advertisement contains any material assertion, representation, or statement of fact which is untrue, deceptive, or misleading, shall, whether or not pecuniary or other specific damage to any person occurs as a direct result thereof, be guilty of a misdemeanor, and any such act is declared to be a public nuisance and may be enjoined as such.
Minn. Stat. § 325F.67 (2012).
100. Defendants have, with the necessary intent, placed before the public in the state of
Minnesota advertisements which contain material assertions, representations, or statements of
fact which were untrue, deceptive, or misleading.
101. Defendants' conduct described above constitutes multiple, separate violations of
Minnesota Statutes section 325F.67.
COUNT IV UNJUST ENRICHMENT
102. Plaintiff re-alleges all prior paragraphs of this Complaint.
31
103. Consumers conferred multiple benefits on Defendants by, among other things,
making payments to Defendants and authorizing disbursement of loan funds from consumers'
financial institutions to Defendants.
104. Defendants knowingly accepted and retained such benefits.
105. Defendants' acceptance and retention of such benefits under the circumstances
described above would be unjust and inequitable, given that consumers did not receive the
promised merchandise and related components, products, and services from Defendants.
106. Defendants' conduct constitutes unjust enrichment under Minnesota common law,
for which, as a matter of equity, Defendants should not derive any gain and consumers should be
made whole. Illustrative, non-exclusive examples of such unjust enrichment are described
above.
107. Pursuant to the common law pertaining to unjust enrichment and Plaintiffs
inherent parens patriae authority, Plaintiff is entitled to injunctive relief, disgorgement and/or
restitution, and other legal and equitable relief, for Defendants' conduct resulting in unjust
enrichment.
COUNT V FAILURE TO OBTAIN CERTIFICATE OF AUTHORITY FOR
FOREIGN LIMITED LIABILITY COMPANY
108. Plaintiff re-alleges all prior paragraphs of this Complaint.
109. Minnesota Statutes section 322B.91, subdivision 1, requires that a foreign limited
liability company must obtain a certificate of authority before transacting business in this state.
110. RESD failed to lawfully maintain a certificate of authority from the Minnesota
Secretary of State and has conducted, and continues to conduct, business in this state without a
valid certificate of authority, in violation of Minnesota law.
32
111. Pursuant to the authority granted by Minnesota Statutes section 322B.95, RESD
should be enjoined from further violations of Minnesota Statutes chapter 322B.
COUNT VI BREACH OF FIDUCIARY DUTY
112. Plaintiff re-alleges all prior paragraphs of this Complaint.
113. Minnesota Statutes chapter 523 and the common law imposes certain duties on
attorneys-in-fact operating pursuant to a designation of power of attorney. Minnesota Statutes
section 523.21 provides:
The attorney-in-fact shall keep complete records of all transactions entered into by the attorney-in-fact on behalf of the principal. * * * In exercising any power conferred by the power of attorney, the attorney-in-fact shall exercise the power in the same manner as an ordinarily prudent person of discretion and intelligence would exercise in the management of the person's own affairs and shall have the interests of the principal utmost in mind. The attorney-in-fact is personally liable to any person, including the principal, who is injured by an action taken by the attorney-in-fact in bad faith under the power of attorney or by the attorney-in-fact's failure to account when the attorney-in-fact has a duty to account under this section.
Minn. Stat. §523.21(2012).
114. Defendants, as attorneys-in-fact, assumed a fiduciary duty for their principals
because they held a superior position in terms of knowledge and authority regarding various
financial and governmental benefits related to the sale of its products and services, including
government wind energy grant programs and tax provisions. Consumers placed a high level of
trust and confidence in Defendants and their representations.
115. Minnesota law imposes upon a fiduciary the highest obligation of good faith,
loyalty, fidelity, fair dealing, and full disclosure of material terms affecting the client's interests.
116. Defendants breached their fiduciary duty to consumers and acted in bad faith by
making misrepresentations and failing to disclose material information related to various financial
33
and governmental benefits related to the sale of its products and services, including government
wind energy grant programs and tax provisions.
117. Defendants' conduct described above constitutes breach of fiduciary duty under
Minnesota common law, for which, as a matter of equity, Defendants should not derive any gain
and consumers should be made whole. Illustrative, non-exclusive examples of such breach of
fiduciary duty are described above.
118. Pursuant to the common law pertaining to breach of fiduciary duty, statutory
liability of attorneys-in-fact for actions taken in bad faith, and Plaintiffs inherent parens patriae
authority, Plaintiff is entitled to injunctive relief, disgorgement and/or restitution, and other legal
and equitable relief for Defendants' conduct resulting in breach of fiduciary duty.
RELIEF
WHEREFORE, Plaintiff State of Minnesota, by its Attorney General, Lori Swanson,
respectfully asks this Court to enter judgment against Defendants awarding the following relief:
1. Declaring that Defendants' acts described in this Complaint constitute multiple,
separate violations of Minnesota Statutes sections 325F.69, 325D.44, 325F.67, and 322B.91, and
further constitute unjust enrichment of Defendants and breach of a fiduciary duty owed to
Minnesota consumers;
2. Enjoining Defendants and their employees, officers, directors, agents, successors,
assignees, affiliates, merged or acquired predecessors, parent or controlling entities, subsidiaries,
and all other persons acting in concert or participation with them, from violations of Minnesota
Statutes sections 325F.69, 325D.44, and 325F.67, and chapter 322B;
3. Ordering an expedited accounting of Defendants' business activities in the State
of Minnesota;
34
4. Awarding restitution and/or disgorgement under the parens patriae doctrine, the
general equitable powers of this Court, Minnesota Statutes section 8.31, and any other authority
for all persons injured by Defendants' acts described in this Complaint;
5. Awarding civil penalties pursuant to Minnesota Statutes section 8.31, subdivision
3, for each separate violation of Minnesota Statutes sections 325F.69, 325D.44, and 325F.67;
6. Awarding Plaintiff its attorneys' fees, litigation costs, and costs of investigation,
as authorized by Minnesota Statutes section 8.31, subdivision 3a; and
7. Granting such further relief as provided for by law or equity, or as the Court
deems appropriate and just.
Dated: January 25,2013 LORI SWANSON Attorney General State of Minnesota
s/James W. Canaday JAMES W. CANADAY Assistant Attorney General Atty.Reg.No.030234X
CHRISTOPHER SHAW Assistant Attorney General Atty. Reg. No. 0392862
445 Minnesota Street, Suite 1400 St. Paul, MN 55101-2131 (651)757-1421 (Voice) (651) 296-9663 (Fax) (651) 297-7206 (TTY) james. canaday@ag. state, mn. us
ATTORNEYS FOR THE STATE OF MINNESOTA
35
MINNESOTA STATUTES SECTION 549.211
ACKNOWLEDGMENT
The party or parties on whose behalf the attached document is served acknowledge
through their undersigned counsel that sanctions may be imposed pursuant to Minnesota Statutes
section 549.211.
Dated: January 25, 2013
s/James W. Canaday JAMES W. CANADAY Assistant Attorney General Atty. Reg.No. 030234X
445 Minnesota Street, Suite 1400 St. Paul, MN 55101-2131 (651) 757-1421 (Voice) (651) 296-9663 (Fax) (651) 297-7206 (TTY) james. canaday @ag. state, mn. us
ATTORNEYS FOR THE STATE OF MINNESOTA
36
