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Matters

Retail Provider Has Property Seized By Vendor; Court Orders Return

December 29, 2014

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Copyright 2010-14 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

A Texas court on December 22 ordered that property averred to belong to retail provider AP Gas & Electric (TX), LLC, which was seized on December 19 by a vendor to fulfill an arbitration judgment against AP Holdings, LLC (the parent of AP Gas & Electric (TX), LLC), shall be returned.

The property had been seized by agents for AP Gas & Electric, LLC (AP Delaware), which had been awarded in arbitration a $2.2 million judgment against AP Holdings, LLC, which was outstanding at the time of the seizure, related to a contract between AP Holdings, LLC and AP Delaware under which AP Delaware provided telesales for AP Holdings, LLC.

Though adopting the name AP Gas & Electric, LLC, based on court filings, as well as filings at FERC related to the ownership of AP Holdings, it is understood that AP Delaware has no direct ownership affiliation with AP Holdings, LLC or any of its subsidiaries, such as AP Gas & Electric (TX), LLC.

During the seizure, AP Gas & Electric (TX), LLC said that it repeatedly informed AP Delaware that the property being seized, which included computers and servers, belongs to AP Gas & Electric (TX), LLC, which was not a party to the arbitration or the judgment. AP Gas & Electric (TX), LLC said that it repeatedly informed AP Delaware that the property did not belong to AP Holdings, LLC.

Also while the seizure was progressing, AP Gas & Electric (TX), LLC successfully obtained a temporary restraining order from Harris County, Texas, District Court prohibiting such seizure. The Court agreed that seizure of such property, "will materially impair AP Texas' ability to conduct business, such as providing electricity services to residents of the State of Texas."

However, AP Delaware claimed that the seizure was already complete by the time the restraining order was presented, and refused to return the property. In any event, it refused to return the property upon production of the restraining order.

Moreover, AP Delaware claims the property is, in fact, owned by AP Holdings. Additionally, AP Delaware argued that the assets were properly seized because AP Gas & Electric (TX), LLC is a subsidiary of AP Holdings, LLC.

"It is obvious that Holdings is playing a shell game and trying to use the court system to protect it from having to pay its debts," AP Delaware said.

In a motion opposing the restraining order, AP Delaware asked that to the extent it is denied the seized property, that the Court instead order the turnover of AP Holdings' membership interests of AP Gas & Electric (TX), LLC and other subsidiary retail suppliers

AP Gas & Electric (TX), LLC sought an order from the Court finding AP Delaware in contempt, and ordering the return of such property. "AP Delaware, its agents, and attorneys, left the office space in complete disarray and it will cost a considerable amount to rebuild the computer network which was ripped apart on December 19, 2014," AP Gas & Electric (TX), LLC said.

On December 22, the Court ordered that AP Delaware shall cause all property seized on December 19, 2014 to be returned to AP Gas & Electric (TX), LLC.

The case is 2014-73347, Harris County District Court

The original arbitration dispute concerned compensation for sales conducted by AP Delaware.

A 2012 agreement between AP Holdings and AP Delaware called for AP Delaware to be paid $60 per sale upon TPV Confirmation and another $40 if the customer stayed with the company for twelve months.

If, however, the utility rejected the customer or the customer dropped before the end of twelve months, the $100 would be prorated according to the number of on-flow months divided by twelve.

This agreement became unsatisfactory to AP Delaware, whose ultimate compensation depended upon successful completion of several steps by others after the TPV and upon AP Holdings' accurate, timely reporting of utility rejects and customer dropouts.

The dispute centered on several amendments to the contract, and compensation thereunder. Specifically, the arbiter found that AP Holdings agreed to pay AP Delaware solely on the basis of a "Good TPV," but the meaning of this term later became disputed, prompting the dissolution of the contract and arbitration of disputed amounts.

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