Page 1 INDEX NO. 654765/2019
FILED: NEW YORK COUNTY CLERK 09/04/2019 05:59 PM
NYSCEF DOC. NO. 68
RECEIVED NYSCEF: 09/04/2019
New York
Northern California
Washington DC
São Paulo
London
Paris
Madrid
Hong Kong
Beijing
Tokyo
James P. Rouhandeh
Davis Polk & Wardwell LLP Lexington Avenue
New York, NY 10017
450 4835 tel
rouhandeh@davispolk.com
September 4, 2019
Re:
Walmart Inc. (f/k/a Wal-Mart Stores, Inc.) v. Tesla Energy Operations, Inc. (f/k/a SolarCity
Corporation), Index No. 654765/2019
Hon. Deborah A. Kaplan
Administrative Justice
Supreme Court, Civil Branch, New York County Centre Street, Room 609
New York, NY 10007
Dear Judge Kaplan:
We represent Plaintiff Walmart Inc. (“Walmart”) (f/k/a Wal-Mart Stores, Inc.) in the abovecaptioned matter. We write under Section 202.70(f)(2) of the Uniform Civil Rules for the
Supreme Court and the County Court (“Uniform Rules”) to request that this case be transferred
to the Commercial Division of New York Supreme Court. This action meets the criteria for
assignment to the Commercial Division because it is a breach of contract action that arises out of
business dealings and seeks damages over $500,000, as well as declaratory relief. See Uniform
Rules § 202.70(a)–(b).
For Your Honor’s reference, we have attached a copy of the Summons and Complaint as
Exhibit A.
I.
Walmart’s Allegations
As set forth in the Complaint, this is a breach of contract action alleging that Defendant
Tesla Energy Operations, Inc. (f/k/a SolarCity Corporation) (“Tesla”) violated contractual
provisions requiring Tesla to install, maintain, and operate solar panels—known as photovoltaic
systems (“PV Systems”)—at Walmart stores. (Complaint, ¶ 1.) The lawsuit is based on 244
contracts between Walmart and Tesla (the “Agreements”), each pertaining to a different Walmart
store, entered into between February 2010 and February 2016. (Id., ¶ 46.) The Complaint
asserts 244 counts for breach of contract and 244 counts for declaratory judgment (seeking a
declaration of Walmart’s rights under the applicable contracts). The Complaint also asserts four
counts for negligence relating to fires at four Walmart stores. (Id., ¶¶ 123–35.) As to the
remaining 240 store locations, the claims are entirely contractual in nature.
of 141Page 2 FILED: NEW YORK COUNTY CLERK 09/04/2019 05:59 PM
NYSCEF DOC. NO. 68
Hon. Deborah A. Kaplan
II.
INDEX NO. 654765/2019
RECEIVED NYSCEF: 09/04/2019
September 4, 2019
This Case Meets the Criteria for Transfer
Section 202.70(b) of the Uniform Rules provides, “Actions in which the principal claims
involve or consist of the following will be heard in the Commercial Division provided that the
monetary threshold [$500,000] is met or equitable or declaratory relief is sought: . . . Breach of
contract . . . where the breach or violation is alleged to arise out of business dealings” (emphasis
added). Walmart satisfies each of the criteria for bringing its claims in the Commercial Division.
First, Walmart’s “principal claims,” comprising 488 of the 492 counts in its Complaint, are
contract-based—specifically, breach of contract claims and requests for declaratory relief
regarding the parties’ rights and obligations under the Agreements. And all of the claims are
grounded in the parties’ longstanding “business dealings” pursuant to the Agreements, many of
which date back to 2010. Second, Walmart meets the monetary threshold and is seeking
equitable or declaratory relief against Tesla. While Walmart has not fully quantified its total
damages, the amount alleged substantially exceeds $500,000. (E.g., id., ¶¶ 64, 67, 71, 83.)
Moreover, Walmart is seeking a declaration that Tesla has breached all of the Agreements and
an injunction requiring Tesla to remove the PV Systems from Walmart’s stores. (Id. at p. 60
(Prayer for Relief).) Thus, this action falls squarely within the category of cases to be heard in
the Commercial Division.
III.
Precedent Supports Transfer to the Commercial Division
Even where contract claims do not predominate to the same extent as they do here,
cases alleging negligence alongside breach of contract are routinely heard in the Commercial
Division. See, e.g., Framan Mech., Inc. v. Dormitory Auth. of the State of New York, 2019 NY
Slip Op. 50583(U) (63 Misc. 3d 1218(A)) (Sup. Ct. Albany Cty. Mar. 7, 2019) (involving both
contract and negligence claims); Barkany Asset Recovery & Mgmt. v. Sw. Sec. Inc., 2013 NY
Slip Op. 23300 (41 Misc. 3d 673) (Sup. Ct. Kings Cty. Sept. 9, 2013) (same); Structural
Contracting Servs., Inc. v. URS Corp., 2011 NY Slip Op 50532(U) (31 Misc. 3d 1208(A)) (Sup.
Ct. Westchester Cty. April 4, 2011) (same). The same approach should be followed here.
Relying on the Administrative Order in Singapore Airlines, Ltd. v. General Electric Co.
(Index No. 652683/2018) (NYSCEF Doc. No. 18), the Clerk assigned this case to a noncommercial part because it “[c]oncerns [a] question of negligence.” (NYSCEF Dkt. Entry,/21/19 11:52 a.m.) But that is not the test for assigning a case to a non-commercial part, nor is
it the test that was applied in Singapore Airlines. Regardless of whether some portion of an
action “concerns negligence”—such as here, for example, where only four of 492 claims are for
negligence—the question is whether the “principal claims” asserted are contractual and whether
the alleged breach “arise[s] out of business dealings” between the parties. As explained above,
that test is satisfied here.
Singapore Airlines is not to the contrary. In that case, Your Honor denied a request to
transfer a case to the Commercial Division where “[t]he principal claim in th[e] case is
[defendant]’s alleged negligence” and “[a]ny breach of contract or UCC claims at issue are
ancillary to the tort claims.” See Singapore Airlines, Ltd. v. Gen. Elec. Co. (Index No./2018) (NYSCEF Doc. No. 18), at 2 (attached hereto as Exhibit B). Indeed, the complaint
in Singapore Airlines included no express cause of action for breach of contract at all. Id.
(NYSCEF Doc. No. 17), at 10–19 (¶¶ 51–92) (attached hereto as Exhibit C). Here, the situation
is reversed: The principal claims relate to Tesla’s breaches of contract, while Walmart’s tort
of 141Page 3 INDEX NO. 654765/2019
FILED: NEW YORK COUNTY CLERK 09/04/2019 05:59 PM
NYSCEF DOC. NO. 68
RECEIVED NYSCEF: 09/04/2019
Hon. Deborah A. Kaplan
September 4, 2019
claims are ancillary because they do not form the gravamen of this lawsuit and constitute only a
small portion of the claims asserted.
Nor does this case involve—let alone principally relate to—a question of products liability
such that assignment to anon-commercial part might be appropriate. Walmart does not own any
of the PV Systems (Complaint, ¶ 47) and therefore is not suing on the ground that it was sold a
defective product. None of its causes of action is aproducts-liability claim or rests on a productsliability theory. Walmart's allegations rest on Tesla's obligations to provide installation,
maintenance, and operational services under the Agreements. Those breach of contract
allegations fall within the Commercial Division's purview.
For the foregoing reasons, we respectfully request that Your Honor transfer this matter to
the Commercial Division of this Court.
spectfully submitted,
es P. Rouhandeh
Enclosures
cc w/ enc:
Fred Norton (fnorton@nortonlaw.com)
Bree Hann (bhann@nortonlaw.com)
Catherine Duong (cduong@nortonlaw.com)
Hand Delivery
of 141Page 4 INDEX NO. 654765/2019
FILED: NEW YORK COUNTY CLERK 09/04/2019 05:59 PM
NYSCEF DOC. NO. 68
RECEIVED NYSCEF: 09/04/2019
EXHIBIT A
of 141Page 5 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK: COMMERCIAL DIVISION
WALMART INC. (f/k/a WAL-MART STORES,
INC.,
Plaintiff,
New York County
Index No.: - - - - -/2019
- against TESLA ENERGY OPERATIONS, INC. (f/k/a
SOLARCITY CORPORATION),
SUMMONS
Defendant.
TO THE ABOVE NAMED DEFENDANT:
YOU ARE HEREBY SUMMONED to answer the complaint in this action and to serve a
copy of your answer upon the undersigned within twenty (20) days after the service of this
summons, exclusive of the day of service, or within thirty (30) days after service is complete, if
this summons is not personally delivered to you within the State of New York. In case of your
failure to answer, judgment will be taken against you by default for the relief demanded in the
complaint.
Plaintiff designates New York County as the place of trial. The basis of the venue
designated is New York Civil Practice Law and Rules 501 and 503(a). Venue is proper because
Defendant agreed to designate New York County as the venue for disputes relating to, arising out
of, or in connection with certain of the Solar Power & Services Agreements, Solar Power Lease
and License Agreements, and Solar Power and Energy Storage Services Agreements between
Plaintiff and Defendant, and because none of the parties reside in the state ofNew York.
of
of 141Page 6 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
To:
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Tesla Energy Operations, Inc.
f/k/a SolarCity Corporation Dumbarton Circle
Freemont, CA 94555
SolarCity Corporation Clearview Way
San Mateo, CA 94402
The Norton Law Firm PC Third Street, Suite 106
Oakland, California 94607
Attention: Fred Norton
Dated: New York, New York
August 20, 2019
DAVIS POLK & WARDWELL LLP
By:
Isl James P. Rouhandeh
James P. Rouhandeh
James P. Rouhandeh
Paul S. Mishkin Lexington Avenue
New York, New York 10017
(212) 450-4000
rouhandeh@davispolk.com
paul.mishkin@davispolk.com
Attorneys for Plaintiff
of
of 141Page 7 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK: COMMERCIAL DIVISION
WALMART INC. (f/k/a WAL-MART STORES,
INC.),
Plaintiff,
Index No.: - - - - -/2019
- against TESLA ENERGY OPERATIONS, INC. (f/k/a
SOLARCITY CORPORATION),
COMPLAINT
Defendant.
Plaintiff Walmart Inc. ("Walmart") (f/k/a Wal-Mart Stores, Inc. ("Wal-Mart Stores")), by
its attorneys Davis Polk & Wardwell LLP, for its complaint against Tesla Energy Operations,
Inc. ("Tesla") (f/k/a SolarCity Corporation ("SolarCity" or "Tesla")), alleges as follows, based
on personal knowledge as to itself and upon information and belief as to all other matters:
NATURE OF THE ACTION.
This is a breach of contract action arising from years of gross negligence and
failure to live up to industry standards by Tesla with respect to solar panels that Tesla designed,
installed, and promised to operate and maintain safely on the roofs of hundreds ofWalmart
stores.
Fires Break Out on Walmart's Roofs.
At approximately 4 p.m. on March 7, 2018, a fire broke out on the roof of
Walmart's store in Beavercreek, Ohio. Local news photographs and videos of the store showed
a tremendous plume of black smoke emerging from flames as firefighters arrived at the scene.
As smoke invaded the store, Walmart employees made an announcement over the store's public
address system and instructed shoppers to evacuate. Customers in nearby shops were also
evacuated until firefighters were able to control the blaze. The fire destroyed significant
of
of 141Page 8 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
amounts of store merchandise and required substantial repairs, totaling hundreds of thousands of
dollars in out-of-pocket losses. The store remained closed for eight days. Ominously, the fire
had occurred near gas lines on the store's roof. By stroke of luck, the gas lines remained intact,
and catastrophic damages and injuries were averted..
On May 21, 2018, a fire broke out on the roof of another Walmart store, this one
located in Denton, Maryland. The fire caused significant damage, including punctures of the
membrane of the store's roof. By another stroke ofluck, this fire did not progress further and no
one was injured..
On the opposite side of the country eight days later, fire struck again-this time
on the roof of a Walmart store in Indio, California. Local news coverage on May 29, 2018
described a scene of "[t]hick black smoke billow[ing]" from the store's roof, substantial portions
of which were "engulfed in flames, which spread into the store." "[C]ustomers and employees
were evacuated to the parking lot." A firefighter was treated for smoke inhalation but, by yet
another stroke ofluck, was not grievously injured. This fire resulted in millions of dollars' worth
of losses..
Why were multiple Walmart stores located all over the country suddenly catching
fire? The answer was obvious and startling: the stores all had Tesla solar panels installed by
Tesla on their roofs. At each location, the fire had originated in the Tesla solar panels..
The stores in Beavercreek, Denton, and Indio were three of more than 240 stores
where Walmart had leased or licensed its roof space to Tesla for the installation, operation, and
maintenance by Tesla of "photovoltaic" (i.e., solar) systems. Tesla designed these systems and
represented them as safe, reliable, and an environmentally conscious way for Walmart to reduce
its energy costs. In the contracts between Walmart and Tesla governing the solar systems, Tesla
of
of 141Page 9 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
retained ownership of the solar systems, promised to design, install, inspect, and maintain them
non-negligently and in accordance with prudent industry practices, and agreed to handle every
aspect of the solar panels' operation on Walmart's roofs in a non-negligent manner. Walmart
thus bargained for and obtained-not the right to have a particular system installed on its roofsbut rather the right to enjoy perpetually safe and reliable solar panel systems free of any
operation or maintenance responsibilities, which fell entirely to Tesla.
Tesla Agrees to De-Energize the Solar Systems.
By May 2018, it was clear that Tesla had breached its contractual obligations. To
state the obvious, properly designed, installed, inspected, and maintained solar systems do not
spontaneously combust, and the occurrence of multiple fires involving Tesla's solar systems is
but one unmistakable sign of negligence by Tesla. To this day, Tesla has not provided Walmart
with the complete set of final "root cause" analyses needed to identify the precise defects in its
systems that caused all of the fires described above. The number of defects, however, is
overwhelming and plainly indicative of systemic, widespread failures by Tesla to meet the
standard of care, as set forth in the governing contracts, as to the solar systems installed at
Walmart's stores..
Fearing for the safety of its customers, its employees, and the general public, and
wishing to avoid further damages and store closures, W almart demanded on May 31, 2018 that
Tesla "de-energize" (i.e., disconnect) all of the solar panel systems that Tesla had installed at
Walmart sites. Tesla complied, conceding that de-energization of all the sites was "prudent" and
recognizing that it could provide no assurances that the deficiencies causing its systems to catch
fire were confined to particular sites or particular components.
of
of 141Page 10 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Unfortunately, even de-energization was not enough to prevent an additional fire.
In November 2018, Walmart discovered that yet another fire had occurred at a Walmart store in
Yuba City, California-even though the solar panels at this store had been de-energized since
June 2018. Wires on the store's rooftop were still sparking at the time that Walmart discovered
the fire and could have ignited more extensive flames, with potentially devastating
consequences. Equally troubling, after Tesla technicians visited the rooftop, one of the
technicians failed to close the cover to a combiner box, exposing this important piece of
equipment to the elements and thereby creating a fire hazard. Still more troubling, W almart
subsequently learned (independent of Tesla) that a potentially dangerous ground fault alert had
occurred at the Yuba City site during the summer of 2018. Tesla either ignored the alert or
deliberately failed to disclose it to Walmart. The issues that caused that ground fault alert likely
caused or contributed to the subsequent fire in the fall of 2018, revealing Tesla's utter
incompetence or callousness, or both..
As ofNovember 2018, no fewer than seven Walmart stores had experienced fires
due to Tesla's solar systems-including the four fires described above and three others that had
occurred earlier (one in Long Beach, California, in August 2012; one in Milpitas, California, in; and one in Lakeside, California, in 2017). The Long Beach fire resulted in the evacuation
of the store and caused damage to merchandise as water leaked into the store through the roof
and skylights. As a result of the fire, Walmart incurred over $25,000 in repair costs, along with
other expenses and damage to merchandise totaling nearly $65,000. Tesla ultimately agreed to
pay for a portion of these losses. The Milpitas fire also caused extensive damage, resulting in
over $500,000 in losses to Walmart, a portion of which Walmart ultimately recovered from
of
of 114Page 11 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Tesla. Both the Milpitas and Lakeside fires were caused by faulty connectors in Tesla's solar
panel systems..
In addition to those fires, a Sam's Club store owned by Walmart experienced a
power outage in January 2017, forcing the store to close. An electrical contractor called to the
site found that the outage was caused by water intrusion into the breaker-which in turn resulted
from "a bad installa[tio]n of the conduits" on the Sam's Club's solar panel system, which had
recently been installed by Tesla. Walmart experienced over $55,000 in losses as a result of the
outage, for which Tesla eventually compensated Walmart.
Walmart Finds Gross Negligence.
Beginning after the Beavercreek fire and continuing through December 2018,
Walmart's consultants accompanied Tesla personnel on inspections of various solar system sites,
including both those that had experienced fires and those that had not. These visits revealed that
Tesla had engaged in widespread, systemic negligence and had failed to abide by prudent
industry practices in installing, operating, and maintaining its solar systems---conduct that
greatly increased the risk of fire at Walmart sites..
For example, solar panels across the inspected sites contained numerous
hotspots---or localized areas of increased and excessive temperature-as well as yellowed
encapsulant and micro-cracks, which are precursors to hotspots. Many of these defects were
either visible to the naked eye or readily identifiable with the proper use of standard equipment,
indicating either that Tesla had not been inspecting the sites or that its inspection protocols were
woefully deficient. Indeed, Walmart quickly discovered that Tesla routinely deployed
individuals to inspect the solar systems who lacked basic solar training and knowledge. Tesla's
personnel did not know, for example, how to conduct inspections or how to use simple tools,
of
of 114Page 12 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
such as temperature-measuring "guns" used to detect hotspots, and a Tesla employee failed to
identify multiple hotspots that Walmart's consultants observed..
Walmart's inspectors observed negligent and dangerous wire connection
practices, which were readily apparent at many of the sites visited and are a critical risk factor in
contributing to fires. Tesla personnel had made numerous on-site cable connections using
connectors that were not compatible with one another, and they had often failed to "torque" (i.e.,
tighten) the connectors adequately, due at least in part to their failure to use proper tools for that
purpose..
Moreover, Tesla's wire management practices were negligent and inconsistent
with prudent industry practices. Loose and hanging wires were present at multiple Walmart
locations, resulting in abraded and exposed wires, decreased insulation, and a phenomenon
known as arcing that substantially increases the risk of fire by causing electricity to travel
through an unintended path. Tesla also failed to "ground" its systems properly, violating basic
practices for the installation and operation of electrical systems in a way that increased the risk of
electrical fire..
Many of the problems stemmed from a rushed, negligent approach to the systems'
installation. On information and belief, Tesla's predecessor-in-interest-SolarCity-had
adopted an ill-considered business model that required it to install solar panel systems
haphazardly and as quickly as possible in order to turn a profit, and the contractors and
subcontractors who performed the original installation work had not been properly hired, trained,
and supervised. For example, the solar panel systems were installed at about 40% of the
Walmart sites (approximately 80 to 100 locations) in a one-year period-far exceeding the
appropriate rate of installations had adequate quality-control checks or supervision protocols
of
of 114Page 13 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
been in place. On information and belief, when Tesla purchased SolarCity to bail out the flailing
company (whose executives included two of Tesla CEO Elon Musk's first cousins), Tesla failed
to correct SolarCity' s chaotic installation practices or to adopt adequate maintenance protocols,
which would have been particularly important in light of the improper installation practices..
Tesla also had not kept proper documentation related to the systems. For
example, supposedly "as-built" system drawings, which should reflect the actual design, layout,
and installation locations of system components as they were actually installed, were anything
but "as-built." They often reflected, at best, potential or proposed versions of the system
installations, or otherwise erroneous depictions, which deviated substantially from how the
systems were actually installed. That meant that system components, including safety switches
and other critical portions of the systems, could not be readily located at the sites in the event of
a fire or other emergency. The absence of reliable as-built drawings is a basic failing that
adversely affects the safety, reliability, and maintenance of the systems. Tesla also lacked
maintenance records indicating how (or whether) the solar panels had been inspected and
maintained over time..
The more Walmart looked into the details, the more deficiencies it identified. Site
after site displayed troubling problems that were indicative of widespread negligence and were
inconsistent with any suggestion that discrete or isolated problems had caused the seven fires.
Based on the fact of the fires, Tesla's failure to provide any final root cause analyses for over a
year, and the inspections that W almart conducted in mid- to late 2018, re-energization of any of
the solar systems at that time posed an unacceptable risk to Walmart's employees, its customers,
and the general public.
of
of 114Page 14 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Walmart nevertheless worked closely with Tesla to explore a potential path
toward re-energization of the systems. Walmart discussed with Tesla in detail the concerns it
had about the conditions it discovered at the sites, and Walmart's consultants helped educate
Tesla's personnel on how to conduct solar system inspections properly, including the types of
conditions that can contribute to the risk of fire, how to use equipment and tools properly to look
for and correct such conditions, and how to follow site safety and inspection protocols. Of
course, Tesla was contractually obligated to know all of this already and Walmart had no
obligation whatsoever in this regard, but Walmart nonetheless opted to work cooperatively with
Tesla employees. By January 2019, Tesla purported to have significantly enhanced its
inspection protocols and began a renewed series of site inspections, which it claimed would
provide sufficient assurances to Walmart to permit re-energization of the systems that passed the
inspections..
Far from providing assurances that re-energization was safe, Tesla's inspections
carried out in 2019 confirmed and amplified Walmart' s profound concerns with the solar
systems. Tesla's inspection reports identified numerous action items for each of the sites
inspected, many of which (according to Tesla's own inspectors) reflected unsafe or potentially
unsafe conditions at the inspected sites. For example, across the 29 inspection reports delivered
to Walmart as of August 16, 2019, Tesla identified a total of 157 action items requiring repairs or
replacement of system components, 48 of which Tesla itself characterized as reflecting
conditions that rendered the sites unsafe or potentially unsafe. Based on the reports' descriptions
of other troubling conditions (that Tesla inexplicably and incorrectly did not designate as posing
potential safety concerns), even these numbers understate substantially the safety of the site
conditions.
of
of 141Page 15 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Tesla's inspection reports have revealed, among other things:
•
improper wire management, including abraded and hanging wires;
•
inadequate wire connecting practices and poor grounding;
•
inaccurate as-built drawings; and
•
solar panel modules that were broken or contained dangerous hotspots.
In other words, Tesla itself has now documented the same--or worse-symptoms of gross
negligence at not fewer than 29 sites that Walmart's earlier analysis (and the fact of the seven
fires) had already made clear. On information and belief, the actual conditions are worse than as
documented by Tesla, based on Tesla's history of deficient and incompetent inspections,
including Tesla's reliance on untrained, unqualified, and unsupervised personnel to install and
maintain the systems..
Tesla has also demonstrated an inability or unwillingness to remediate the
dangerous conditions documented in its inspection reports. On information and belief, at least
one report stated that Tesla had replaced all field-made connectors at a site even though site
conditions indicated otherwise. Connectors also remained under-torqued even after Tesla had
conducted a site inspection, and some were so loose that they could be unscrewed by hand. At
best, the inspection reports overstate Tesla's efforts to repair solar system defects; at worst, they
contain misrepresentations about Tesla's remediation efforts. Either way, the reports are not
reliable indicators of site safety..
Even assuming that Tesla could remediate every site and achieve the outward
appearance of safe solar systems as of a particular point in time-something Tesla has failed to
do for more than a year and has shown no capacity to do-that would not address the more
fundamental problem that Tesla is incapable of maintaining solar systems in a safe condition and
of
of 141Page 16 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
consistent with the standard of care. Remediating that fundamental deficiency would require,
among other things, that Tesla overhaul, expand, and upgrade its internal resources for providing
solar system maintenance services (including through proper hiring, training, and supervision of
a sufficient number of qualified solar professionals), or that Tesla contract with a qualified thirdparty provider of those services at Tesla's expense. Tesla has neglected to do either..
For all of the foregoing reasons, Tesla has breached all of the solar panel system
contracts with Walmart, and operation of the systems at present would create an immediate and
imminent risk of injury and harm to Walmart, its customers, its employees, and its property.
*.
*
*
Based on Tesla's history of failures with respect to the solar panel systems and its
unwillingness and/or inability to correct those failures, Walmart brings suit for breach of 244 of
its currently operative solar panel contracts with Tesla. Each of those contracts contains
provisions requiring Tesla to install, operate, and maintain the solar panel systems safely, nonnegligently, and in accordance with prudent industry practices. Tesla has failed to live up to
those obligations and, despite extensive opportunities to cure, has failed to correct its prior
breaches (some of which are not curable in any event). In light of Tesla's breaches of the
contracts, Walmart now seeks a declaration that Tesla has breached its contractual obligations
and recovery of the out-of-pocket costs and other contractual payments that Tesla has refused to
pay, along with any other damages and relief that this Court deems just and proper.
PARTIES
.
PlaintiffWalmart is a corporation organized under the laws of Delaware with its
principal place of business in Bentonville, Arkansas. Walmart operates over 5,000 retail stores
of
of 141Page 17 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
across the United States that sell food and household products, among other items. Before
February 1, 2018, Walmart was known as Wal-Mart Stores, Inc..
On information and belief, Defendant Tesla is a corporation organized under the
laws of Delaware with its principal place of business in San Mateo, California, and is a wholly
owned subsidiary of Tesla, Inc.
JURISDICTION AND VENUE
.
Jurisdiction and venue in this Court are proper under the Solar Power & Services
Agreements ("SPSAs"), Solar Power Lease and License Agreements ("SPLLAs"), and Solar
Power and Energy Storage Services Agreements ("SPESSAs") between Walmart (or related
entities) and Tesla, and under CPLR 301, 302(a), 501, and 503(a)..
The parties to the SPSAs, SPLLAs, and SPESSAs either agreed, accepted, and
submitted themselves to the jurisdiction of the courts of the State of New York in the city and
county of New York or, on information and belief, transacted business within the state and
contracted to supply goods or services in the state in such a manner that their acts gave rise to the
causes of action enumerated in this complaint. See Appendix Z..
This Court has jurisdiction over Tesla pursuant to CPLR 302(a) because it
transacts business within New York and contracts to supply goods or services in New York
(including some of the business and services at issue in this dispute), regularly does business in
New York, and derives substantial revenue from interstate and international commerce..
Venue in this Court is proper pursuant to CPLR 501 to the extent that the parties
to the SPSAs, SPLLAs, and SPESSAs designated New York County as the venue for disputes
relating to, arising out of, or in connection with the SPSAs, SPLLAs, and SPESSAs. Venue in
this Court is also proper pursuant to CPLR 503(a) because none of the parties reside in the state,
permitting W almart to designate New York County as the venue for this dispute. of
of 141Page 18 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
SUBSTANTIVE ALLEGATIONS
I.
Tesla, Inc. Acquires-and Bails Out-the Struggling SolarCity.
On information and belief, Tesla, Inc. acquired SolarCity on November 21, 2016.
Long before the acquisition, the ties between Tesla, Inc. and SolarCity were close ones: as
multiple news outlets have reported, Tesla, Inc.'s CEO Elon Musk developed the idea for a solarpower company in 2004 while on a road trip with his cousin, who co-founded SolarCity and
became its Chief Executive Officer. The other co-founder-another of Mr. Musk's first
cousins-was named the company's Chief Technology Officer, and Musk was the chairman of
SolarCity's board and its largest stockholder. 1.
On information and belief, SolarCity's business model was to design, install, and
lease rooftop solar systems and to sell the energy produced by those solar systems to consumers.
Banks and other financial institutions funded the installation process and earned a return over the
life of the solar energy contract. 2 On information and belief, SolarCity's goal was to install as
many solar systems as quickly as possible, generating the contracts that provided the foundation
for SolarCity's revenue stream. As SolarCity's CEO stated in a conference call in October 2015,
''the strategy of the company has all been about growth ... to achieve scale."3.
On information and belief, SolarCity's business model was ultimately a bust.
Unbeknownst to its customers until public reports later exposed its shoddy practices, SolarCity Martin LaMonica, SolarCity CEO Lyndon Rive: From Burning Man to the NASDAQ, GREENBIZ (Oct. 9, ), available at https://www.greenbiz.com/blog/2013/10/09/solarcity-lyndon-rive-future-distributed-solar; Musk
Cousin Lyndon Rive, Former SolarCity CEO, to Leave Tesla, BLOOMBERGNEF (May 16, 2017), available at
https://about. bnef.com/blog/musk-cousin-lyndon-rive-former-solarcity-ceo-to-leave-tesla/.
LaMonica, supra note 1.
Austin Carr, The Real Story Behind Elon Musk's $2.6 Billion Acquisition ofSolarCity and What It Means
for Tesla's Future-Not to Mention the Planet's, FAST COMPANY (June 7, 2017), available at
https://www.fastcompany.com/40422076/the-real-story-behind-elon-musks-2-6-billion-acquisition-of-solarcity-andwhat-it-me
of
of 141Page 19 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
suffered from "a quality assurance problem."4 Consumers began to complain about "installers
failing miserably," equipment that "just isn't installed correctly," and SolarCity's failure to
respond for months to "faulty installation" issues-a problem that "is more than just a few
poorly trained technicians" and "le[ft] customer[s] hanging for weeks on end with serious
issues."5 On information and belief, as SolarCity's problems accumulated, its stock plummeted% from its summit in February 2014, 6 and its debt increased thirteen-fold over a three-year
period, rising to $3.3 billion in June 2016. 7.
On information and belief, in a heavily criticized deal entered into on August 1,
, Tesla, Inc. acquired SolarCity for approximately $2.6 billion in stock, converting it into its
wholly owned subsidiary Tesla, and assumed nearly $3 billion in SolarCity's net debt, nearly
doubling Tesla, Inc.'s debt load. 8 A Wall Street Journal columnist, referring to the financial
difficulties plaguing both companies, wrote, "Tesla latching on to SolarCity is the equivalent of a
shipwrecked man clinging to a piece of driftwood grabbing on to another man without one." 9.
That diagnosis turned out to be accurate, if not charitable. Although Tesla, Inc.
prided itself on the fact that its "experience in design, engineering, and manufacturing should Sarah Hancock, The 6 Most Common Problems with SolarCity, BEST COMPANY (June 26, 2019),
available at https://bestcompany.com/news/problems-with-solarcity.
Carr, supra note 3.
Joe Ryan, Musk Touts SolarCity Deal Synergy, But It May Be About Debt, BLOOMBERG (June 22, 2016),
available at https://www.bloomberg.com/news/articles/2016-06-22/musk-says-solarcity-deal-about-synergy-but-itmay-be-about-debt.
Tesla's Trumpeted Solar Shingles Are a Flop, MIT TECHNOLOGY REVIEW, available at
https://www.technologyreview.com/f/613541/teslas-trumpeted-solar-shingles-are-a-flop/; Bob Bryan, Tesla s
Buying SolarCity for $2.6 Billion, BUSINESS INSIDER (Aug. 1, 2016), available at
https://www.businessinsider.com/tesla-is-buying-solarcity-for-26-billion-2016-8.
Spencer Jakab, A Double Dose ofRisk for Tesla in SolarCity Deal, WALL STREET JOURNAL (Aug. 1,), available athttps://www.wsj.com/articles/a-double-dose-of-risk-for-tesla-in-solarcity-deal-1470067165.
of
of 141Page 20 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
help continue to advance solar panel technology," 10 on information and belief, Tesla and Tesla,
Inc. proved unable to manage the solar panel systems that they had inherited from SolarCity, to
correct the problems that SolarCity's grow-fast business model had created, and to maintain the
already faulty solar systems that Tesla was under a contractual obligation to operate. As
elaborated below, Walmart's experience bears out Tesla, Inc.'s and Tesla's inability to turn
around and bail out the solar panel operations acquired from SolarCity.
II.
How Tesla's Solar Panel Systems Function.
The purpose of Tesla's solar panel systems-in technical terms, solar
photovoltaic systems-is to convert sunlight into electricity. Solar photovoltaic systems consist
of solar modules-i.e., the solar panels visible on the tops of roofs around the world-which
consist of a string of photovoltaic solar cells..
The process of converting sunlight into electricity is made possible by the fact
that the sun generates massive amounts of power and radiates light particles-known as
photons-into space in all directions..
When the photons strike a solar cell, they excite electrons in the surrounding
material, generating both electrical potential (or voltage) and electrical current. This process of
generating electrical potential and electrical current is known as the photovoltaic effect..
Like water building up behind a dam, voltage can be thought of as electrical
pressure-the force that pushes current to flow through an electrical circuit. Electrical current
refers to the rate at which electric charges flow.
Tesla Makes Offer to Acquire SolarCity, TESLA (June 21, 2016), available at
https://www.tesla.com/blog/tesla-makes-offer-to-acquire-solarcity.
of
of 141Page 21 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
The photovoltaic effect results in a type of current known as direct current
("DC"), which consists of an electric current that flows in only one direction..
Because the electrical grid uses alternating current ("AC") power, and because the
solar panel systems are connected to the electrical grid, the systems must convert DC power into
AC power. (AC power consists of an electric current that switches direction many times per
second.).
A device known as an inverter performs this conversion from AC to DC power in
solar panel systems. The inverter than sends the AC power to the electrical grid, where it can be
metered..
Devices known as connectors connect each solar module to the next, forming an
electrical "string." Multiple strings are connected to each other in a combiner box. Connectors
must be capable of enduring extreme temperatures and weather conditions, as well as shifts in
temperature, and resisting mechanical deterioration or other events that might result in
disconnection..
At the back of each solar module is a junction box, which holds cables and
connectors. Each junction box contains bypass diodes, which prevent current from flowing
backwards and bypass currents when a row of solar cells is shaded or obstructed. If a portion of
a solar module becomes covered (such that photons no longer reach the module's surface),
bypass diodes-when functioning properly-allow electric current to bypass the blocked parts of
the obstructed module or, if necessary, the entire module, which prevents solar cells from
overheating and ensures that current can still flow to the end user. When a portion of a module
overheats, the area of concentrated temperature increase is known as a hotspot.
of
of 141Page 22 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
III.
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Walmart Enters into Solar Panel Agreements with Tesla.
Between February 2010 and February 2016, Walmart and/or related entities
entered into at least 244 contracts, known as Solar Power & Services Agreements, Solar Power
Lease and License Agreements, or Solar Power and Energy Storage Services Agreements, with
Tesla. The SPSAs, SPLLAs, and SPESSAs at issue in this lawsuit are attached as Exhibits 1244 and are collectively referred to as the "Agreements." The Agreements require Tesla to
install, maintain, and operate solar photovoltaic systems at Walmart stores..
.
The Agreements broadly fall into two categories: (1) those that are structured as
leases and (2) those that are structured as solar power purchase agreements.
-
.
of
of 141Page 23 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
As owner and operator of the solar photovoltaic systems, Tesla took on specified
obligations.
.
Tesla's covenants and warranties to Walmart under the Agreements generally
provide that Tesla will, among other things:
•
of
of 141Page 24 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
I
I
I
I
I
I
• of
of 141Page 25 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
I
I
.
•
The Agreements also impose obligations on Tesla in the event of system
malfunctions or emergencies.
.
•
of
of 141Page 26 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
•
•
.
The Agreements outline certain procedures regarding Tesla's assignment of rights
under the Agreements. See Appendices AA, BB.
of
of 141Page 27 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
•
•
•
•.
Tesla has breached multiple provisions of the Agreements with respect to all of
the solar panel system sites that it operates for Walmart-most prominently, Tesla's promise to
construct, install, and maintain the solar panel systems with due care and to handle the solar
panel systems in accordance with Prudent Industry Practices. Tesla's conduct falls far short of
satisfying those baseline standards and reflects gross negligence.
IV.
Walmart Roofs Catch on Fire Due to Tesla's Solar Panels.
Between March and May 2018, three W almart properties in three different
states-all with solar panel systems owned, operated, and maintained by Tesla-experienced
of
of 141Page 28 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
fires that originated with Tesla's solar panels, resulting in significant damage and endangering
the safety of Walmart customers, employees, and the public..
On March 7, 2018, Walmart store 2124 in Beavercreek, Ohio, experienced a roof
fire caused by the Tesla-installed solar panel system at that site. Local news coverage depicted a
massive plume of black smoke emerging from the Walmart roof and stated that "[a] light smoke
haze was reported inside the store" as shoppers were evacuated. 13 On March 8, 2018, Tesla
representatives arrived at the store, without providing Walmart any notice, removed materials
from the site, and conducted an investigation of site conditions..
The fire apparently originated in a portion of a solar module identified as inverter
"D." On information and belief, various installation, inspection, and maintenance problems
contributed to the generation and build-up of heat in the inverter, eventually causing the fire that
erupted on the roof. One of the problems identified by subsequent inspections was that inverter
housing-which had been improperly sealed during installation-permitted water intrusion into
the inverter, likely contributing to the fire's ignition. Another problem was that the inverter fuse
box contained brass/metal bolts, rather than the types of fuses required by both the
manufacturer's installation manual and the National Electrical Code-an industry-wide set of
safety standards regarding electric wiring and installation. During the fire, the brass/metal bolts
had melted, permitting the fire to spread to other areas of the inverter and the solar panel system.
Had the solar panel system been properly installed and maintained, the likelihood that such a fire
would have occurred at all, or that it would have spread to the same degree, would have been
significantly reduced.
Beavercreek Walmart Reopens After Solar Panel Fire (Mar. 7, 2018), available at
https://www.whio.com/news/local/beavercreek-walmart-reported-fire/2bbIQsfcblwva2oPxoCVGM/.
of
of 141Page 29 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
The fire caused significant damage to the Walmart store and its merchandise,
resulting in the store's closure for eight days. Repair costs totaled approximately $557,988, and
merchandise with a retail value of approximately $194,478 was destroyed. Walmart also
incurred approximately $50,000 in consultant's and attorneys' fees in connection with
investigating the fire. The total amount of out-of-pocket damages incurred as a result of the fire
was approximately $784,293. Tesla paid a portion of those damages, but expenses for
consultant's and attorneys' fees remain outstanding..
On May 21, 2018, a second Walmart site-store 3843, located in Denton,
Maryland-experienced a roof fire that originated in the Tesla-installed solar panel system at
that site..
Although the cause of the fire is unknown due to Tesla's failure to provide a final
root cause analysis, on information and belief, the fire involved the solar panel system's inverter
and was likely attributable to one or more of various installation, inspection, and maintenance
issues affecting the site..
The fire caused significant damage, including punctures of the membrane of the
store's roof. Walmart also incurred approximately $100,000 in consultant's and attorneys' fees
in connection with investigating the fire..
Tesla did not provide Walmart with notice of this fire until November 2018, well
beyond the 24-hour period within which the applicable Agreement required Tesla to notify
Walmart of any malfunction or emergency..
At or about 10:26 a.m. on May 29, 2018, a third Walmart site-store 2181,
located in Indio, California-experienced a roof fire originating within one of the modules of the
Tesla-installed system. Walmart employees discovered the fire upon observing smoke drifting
of
of 141Page 30 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
through a skylight and contacted the fire department. Local news coverage described a scene of
"[t]hick black smoke billow[ing] from the roof' with the solar panels "engulfed in flames, which
spread into the store," "while customers and employees were evacuated to the parking lot." 14 A
firefighter who responded to the scene was treated for smoke inhalation. Just hours before the
fire started, Tesla personnel had been dispatched to the store, likely because Tesla observed
irregularities in the solar panel system's functioning or received an error message related to the
system's inverters. These personnel were evidently unable to correct the issues that led to their
site visit, further demonstrating the incompetence and gross negligence of Tesla personnel and
their inability to act in conformity with Prudent Industry Practices.
Images of Indio Fire Damage
Lauren Coronado, Fire at Indio Walmart Store Blamed on Solar Panels: Solar Panel Fires Are
"Uncommon, " Experts Say (May 29, 2018), available at https://www.kesq.com/news/fires-caused-by-solar-panelsare-uncommon-experts-say/7 4 7 502440.
of
of 141Page 31 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Inspection Team at Site of Indio Fire
of
of 141Page 32 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Module Junction Box at Indio Site (Likely Source of Fire)
.
Investigation of the Indio fire revealed a number of installation and maintenance
issues indicative of pervasive, systemic negligence and conduct that fell far below the standard
of Prudent Industry Practices. As described in greater detail below, among the issues identified
were module hotspots, improper grounding and wiring methods, improper connector torqueing,
and erroneous as-built drawings..
The fire caused significant damage to the W almart store and its merchandise.
Repair costs totaled approximately $3,134,122, while merchandise with a retail value of
approximately $6,048,496 was destroyed. To date, Walmart has incurred approximately
$350,000 in consultant's and attorneys' fees-and expects to incur at least an additional
$100,000 in consultant's and attorneys' fees-in connection with investigating the fire. The total
amount of out-of-pocket damages incurred as a result of the frre is anticipated to be
approximately $8,229,516. of
of 141Page 33 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
While the fires at Walmart's Beavercreek, Denton, and Indio stores were
particularly notable because they occurred within such a compressed period of time, they were
not the first fires that occurred at Walmart stores due to Tesla's negligence. In August 2012,
Tesla's solar panels caused an electrical fire on the roof of a Walmart store in Long Beach,
California, resulting in the store's evacuation and causing nearly $90,000 in damages. Faulty
connectors caused fires at stores in Milpitas, California, in 2016, resulting in over $500,000 in
damages, and Lakeside, Colorado, in 2017. And in January 2017, Tesla's faulty installation of
conduits at a Walmart-owned store caused a power outage that resulted in over $55,000 in
damages for Walmart. Only years later-upon the occurrence of the multiple fires in 2018---did
Walmart learn that these incidents were not one-off errors on Tesla's part but were just one
symptom of a widespread pattern of negligence and unprofessionalism..
Because Tesla has never provided final root cause analyses for five of these six
fires, it is possible that other risk factors contributing to the fires remain unknown, and Walmart
lacks any basis to conclude that the risks that caused these fires are absent. To the contrary, as
Walmart's subsequent analyses and investigations revealed, these fires were plainly not the result
of isolated failures, such as discrete equipment malfunctions or other narrow issues that can be
isolated to particular sites or addressed through one-off, site-specific remediation. The fires are
symptoms of broad, systemic issues arising from Tesla's failure to abide by Prudent Industry
Practices and widespread negligent or grossly negligent installation, inspection, operation, and
maintenance of all of the solar panel systems, as subsequent analyses and investigations made
clear.
V.
Tesla De-Energizes the Solar Panels, and Two More Fires Occur.
Aware of at least two fires that had caused significant damage due to systemic
negligence in the installation and maintenance of the solar panel systems, Walmart provided of
of 141Page 34 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Tesla with written notice on May 31, 2018, that Tesla had materially breached the parties'
Agreements by failing "to properly maintain and inspect the solar energy generation systems."
Walmart noted that, "given the fact that the causes of the fires remain under investigation and in
light of the inadequacy of Tesla's solar system inspection regimen, Tesla's breach has resulted in
the creation of a significant safety hazard ... , putting Walmart's customers, employees,
facilities and merchandise all at risk. Indeed, Walmart emphasizes the extr[aord]inary health and
safety concerns that have been created by the Tesla solar generation systems and the resultant
need to act immediately." Referring to the implicated Walmart sites as the "Affected Sites,"
Walmart elaborated:
Since the root causes of these fires [are] unknown, there is no way for Walmart to
reasonably conclude that the solar systems at other Affected Sites [do] not pose a
hazard with regard to the potential for additional roof fires, especially since
Tesla's current inspection procedures appear to have been inadequate to prevent
the roof fires at Indio and Beavercreek. Walmart will not jeopardize the health
and safety of its employees and customers by assuming the safety of the Tesla
systems at the Affected Sites.
Walmart also demanded that Tesla take several "mitigation measures" "until Tesla has
demonstrated to Walmart's satisfaction [that] the solar system at each Affected Site no longer
represents a potential fire hazard." Among those mitigation measures was immediate deenergization of all solar panel systems and suspension of all solar operations at each of the
Affected Sites. Walmart also demanded that Tesla investigate and analyze the two roof fires of
which Walmart was aware and that it develop a comprehensive inspection and remediation plan.
Walmart's May 31, 2018 notice of breach is attached as Exhibit 245..
On June 1, 2018, Tesla responded to Walmart's letter, denying that it had
breached any of the Agreements but "agree[ing] it would be prudent to de-energize, inspect and
of
of 141Page 35 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
remediate (as may be needed as Tesla and Walmart mutually agree) all of the" sites referenced in
Walmart's letter. (Emphasis added.) Tesla's June 1, 2018 letter is attached as Exhibit 246..
Tesla subsequently de-energized the solar panel systems at all of the Affected
Sites, but it has undertaken no meaningful steps to cure the material breaches described in
Walmart's notice of breach. For instance, for over a year, Tesla refused to provide final root
cause analyses for any of the fires that occurred at Walmart stores. Tesla finally provided a
purported final root cause analysis for the Beavercreek site on August 8, 2019, but the other final
root cause analyses remain outstanding. All of the information received by Walmart to date
indicates that there are widespread, systemic issues rendering the solar panel systems deficient
and dangerous and that Tesla is unable or unwilling to inspect, maintain, and operate the systems
in a safe manner consistent with industry standards. Given Tesla's failure to cure its breaches,
Walmart submitted a notice of continued breach to Tesla on September 11, 2018, asking Tesla to
provide its complete analysis of the Beavercreek and Indio fires and to explain the remediation
and repair efforts that it had undertaken at any sites. Walmart's September 11, 2018 notice of
continued breach is attached as Exhibit 24 7..
Indeed, de-energization has proven insufficient even to prevent frres caused by
Tesla's negligence at de-energized sites. On November 29, 2018, Walmart discovered yet
another solar-related fire, this time at Walmart store 1903 in Yuba City, California, originating in
a solar panel system that had been de-energized in June 2018 (and had not been thereafter reenergized). The discovery of this fire brought the total number of fires at W almart stores to
seven..
A Walmart contractor (not Tesla) called the Yuba City fire to Walmart's attention
after observing signs of a recent fire on the store's roof. The contractor took photos showing that
of
of 141Page 36 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
wires were still sparking at the time of discovery, indicating that the fire had occurred recently.
Photographs also revealed that arcing had affected numerous wires at the Yuba City site over an
extended period of time, degrading the wires' insulation and resulting in the incineration of a
substantial section of the store's roof. The extent of the damage to the wires indicated that the
fire was sufficiently severe that it could have burned the entire store to the ground. Because of
Tesla's failure to provide a final root cause analysis, Walmart has no assurance that the next
store to experience a Tesla-caused fire will be so fortunate.
Images of Yuba City Roof, Evidencing Fire and Arcing
of
of 141Page 37 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Walmart communicated its findings regarding the Yuba City frre to Tesla, which,
despite its duty to monitor and maintain the systems in a safe operating condition, was either
unaware of the fire until notified by Walmart or hid its knowledge of the fire from Walmart..
Equally or more troubling, on information and belief, Tesla received notification
of, and did not disclose to Walmart, a ground fault alert that occurred at the Yuba City site
between June 5, 2018, and September 11, 2018-a significant red flag that should have alerted
Tesla to the presence of dangerous conditions at the site. Tesla either failed entirely to respond
to that alert or sent personnel to the site who were insufficiently trained (or otherwise negligently
failed) to identify and remediate the issues that caused the ground fault and likely caused or
of
of 141Page 38 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
contributed to the fire. Tesla did not inform Walmart of the ground fault at any time before
November 29, 2018, when Walmart learned of the fire from another contractor..
Consistent with its failure to monitor and maintain the site, Tesla failed to inspect
the site properly after the fire. For example, instead of closing a combiner box door at the end of
the inspection, a Tesla technician left it wide open, exposing it to the elements and resulting in
further risks to the Walmart site..
Tesla's actions and/or omissions with respect to the Yuba City store fell well
below accepted industry standards and are reflective of Tesla's widespread negligence or gross
negligence in the operation and maintenance of the solar panel systems..
The fire at Walmart's Yuba City store has resulted in substantial damages,
including property damages and consultant's and attorneys' fees. Repair costs totaled
approximately $50,000 and, to date, Walmart has incurred approximately $75,000 in consultant's
and attorneys' fees in connection with investigating the fire.
VI.
Walmart's Investigations Reveal that Tesla Was Grossly Negligent.
Following the initial fires, Walmart began reviewing the conditions at the sites
where the fires had occurred, as well as other sites. Walmart and its consultants quickly
identified a troubling pattern of deficiencies, negligence, and failure to satisfy Prudent Industry
Practices. Indeed, the conditions observed at the Indio location-including melted glass, charred
debris, and cracked modules-were among the worst observed by Walmart's consultants over
the course of their entire careers. Just as concerning, this review confirmed that Tesla's
inspection protocol was sub-industry standard and was poorly suited to addressing or
remediating the problems that had endangered Walmart employees and customers. The
conclusion of these investigations was that Tesla had repeatedly failed to exercise due care,
failed to follow standard Prudent Industry Practices, and failed to follow manufacturing of
of 141Page 39 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
requirements, as mandated by the Agreements, at all of the sites at which its solar panels were
installed. Due to the poor condition of the solar panels and Tesla's demonstrated inability to
maintain them, their continued operation posed-and to this day poses-an imminent risk of
damage or injury to individuals at Walmart sites and to Walmart property..
The evidence uncovered by Walmart revealed that the solar panel systems had
been installed rapidly and that basic quality-control checks had not been undertaken. On
information and belief, approximately 80 to 100 installations had occurred within a one-year
period, far exceeding a responsible or safe number of installations over that time span. The
excessively rapid installation process resulted in a number of quality control oversights that
almost certainly would have been corrected had installation and maintenance procedures been
followed more rigorously or undertaken more carefully..
The evidence from Walmart's inspections also revealed that Tesla had failed
properly to hire, train, and supervise its contractors and subcontractors to ensure that they
exercised due care-including use of proper methods and tools-in installing solar panel
systems..
Many of the Tesla solar panels inspected by Walmart were suffering from
hotspots, resulting in cracking of the back sheets on solar modules and compromising electrical
insulation. This condition compounded the danger and substantially heightened the risk of fire:
the hotspots reflected an excessive build-up of heat in the solar modules, which in turn wore
down the insulation that was designed to keep electrical currents flowing within their proper
paths and to separate electric conductors from their surrounding materials. These conditions can
readily lead to electrical fires capable of spreading across an entire rooftop.
of
of 141Page 40 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
.
Making matters worse, Tesla had flagged or identified hotspots by placing pieces
of tape over the affected areas. Because this tape prevented sunlight from reaching the solar
panel, it exacerbated the problem by further concentrating heat in certain areas of the solar
module-an extremely basic error that a competent inspection team would never have
committed.
Images of Tape Used {Improperly) to Flag Hotspots on Walmart Roofs
of
of 141Page 41 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Tesla's inspectors also had not implemented proper means of locating and
remediating hotspots. They had not adopted uniform standards or directives for identifying
hotspots and had not developed criteria to identify when heat differentials between different parts
of a module (or different modules) qualified as a hotspot. To locate hotspots, Tesla's inspectors
sometimes relied on drones, which generated images of the roofs that lacked sufficient resolution
to identify hotspots; as a result, the inspectors missed hotspots that Walmart's consultants found
using more reliable methods. On other occasions, Tesla inspectors performed cursory infrared
scans from a comer of the roof, but this process did not indicate and would not necessarily have
indicated all hotspots across an entire photovoltaic system. Using a thermal gun, a Walmart
consultant identified four to six hotspots that Tesla employees had overlooked on just one section
of a W almart roof; one of these hotspots had reached a temperature of over 200 degrees
Fahrenheit, as compared to surrounding cells that remained at temperatures of only about 85
degrees Fahrenheit. (The standard temperature differential used to identify a hotspot is a
difference of about 60 to 70 degrees Fahrenheit between a solar cell and its surrounding cells.
Notably, the solar panels contain plastic components, which begin to degrade at about 160
degrees Fahrenheit.) The hotspots observed during these inspections reflected some of the worst
conditions that Walmart's consultants had seen on solar panels over the course of their careers.
Some hotspots had resulted in the browning or yellowing of the solar modules and were visible
to the naked eye---or should have been, had Tesla's inspectors taken the time to look for them.
The conditions were particularly appalling given that hotspots do not develop over the course of
one or two days, but rather form over extended periods of time. The prevalence of hotspots on
the Tesla systems reflected a long-term pattern of negligence that had gone ignored for years and
had not been addressed by proper maintenance procedures.
of
of 141Page 42 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Image of Drone Scan Showing Inadequate Resolution
Images of Hotspots on Solar Modules and Associated Module Cracking
-~-
I
'
I
-
- - - ~-
of
of 141Page 43 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
The poor condition of Tesla's solar modules revealed likely explanations for the
hotspots that were plaguing Walmart's roofs. Those modules suffered from numerous defects
of
of 141Page 44 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
that are precursors to hotspots, including the yellowing of encapsulant (the adhesive material
used to connect components of a solar panel module) and the presence of micro-cracks in the
solar modules. Both of those conditions reflect degradation of the solar modules in a manner
that might affect bypass diodes and thus contribute to significant heat increases in segments of
the solar panel systems..
The inspections also disclosed evidence that Tesla had negligently installed and
maintained connectors, especially field-made connectors, across the inspected sites. For
example, some connectors had been "cross-matched," meaning that incompatible connectors had
been used with one another. When connectors are not matched properly, electric current flowing
between the connectors is more likely to encounter resistance-and resistance generates heat,
which generates fires. In addition, the Tesla teams consistently failed to torque (or tighten) fieldmade connectors-another basic requirement of the duty of care, Prudent Industry Practices, and
manufacturer specifications. To ensure proper torqueing, inspectors should have used a special
tool known as an MC4 torque tool. However, some inspectors were using a plastic MC4 tool,
which is insufficient to ensure proper torque. Indeed, a Tesla inspector admitted that Tesla was
using a plumbing tool (rather than an electrical tool) to tighten connectors, and the standards that
this inspector used to determine when a connector was properly torqued did not meet industry
threshold requirements. The lack of torqueing leads to moisture and water intrusion. Once these
or other substances enter the space where electricity is intended to flow, they may cause the
electricity to deviate from its intended path-and, as excessive current is channeled through
certain routes, overheating and, eventually, fire are more likely to occur.
of
of 141Page 45 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Image of Improperly Threaded Connector
(J'hreads at Bottom ofImage Should Not Be Visible)
.
Poor wire management practices were also evident at multiple Walmart sites. In
some cases, sharp points-from, among other items, rough concrete or metal edges-were
cutting into or abrading wires. In other cases, temperature changes resulted in the expansion and
contraction of wires over time, moving the wires and resulting in their abrasion or exposure. In
still other cases, conduits were overstuffed, containing too many wires to be safely used. And
wire insulation failures resulted in the exposure of current-carrying electrical conductors to the
elements, creating a substantial safety and fire hazard. By degrading the insulation of the solar
panels' wiring, these factors increased the risk that an electric current would deviate from its
intended path and cause a fire that would spread to surrounding panels. Many of these issues
could have been-but were not-addressed through industry standard maintenance procedures,
including resealing or reinsulating exposed wires.
of
of 141Page 46 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Image of Wires Exposed to Sharp Edges
Images of Abraded Wires
of
of 141Page 47 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Image of Improper Module Grounding
(Washer Should be Between Lug and Module Frame)
of
of 141Page 48 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Image of Wire Improperly in Contact with Roof
.
Walmart's inspections also disclosed evidence of improper grounding at multiple
sites. In the context of electrical systems, "grounding" is critical because it provides a reference
(or equilibrium) point that ensures the safe production of electric energy. Electricity generally
flows from areas with a high amount of potential energy (typically referred to as a "positive
terminal") to areas with a lower amount of potential energy (typically referred to as a "negative
terminal")-just as gravity causes water to flow from higher to lower places. "Ground" refers to
an electrical reference point for a circuit; proper grounding ensures that electric currents do not
jump to or interact with metallic items or other conductors that reside near an electric charge.
Improper grounding can cause an electric system to trip (i.e., to stop conducting electricity) or to
arc (i.e., to experience the flow of electricity through an unintended path); arcing, in turn, may
cause insulation to fail and result in fires.
of
of 141Page 49 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
With respect to solar photovoltaic systems installed at Walmart stores, proper
grounding means that materials conducting electric charges must connect to a grounding
electrode outside of the Walmart store. Upon reviewing Tesla's inspections ofWalmart stores,
however, it became clear that multiple conductors were not properly grounded according to
standard principles of electrical systems as outlined in the National Electrical Code. This fact, in
conjunction with Tesla's poor wire management practices, demonstrated that Tesla had run afoul
of basic industry conventions in the installation, operation, and maintenance of its solar panel
systems-and had done so in a way that exposed Walmart stores, customers, and employees to
fires..
Tesla's maintenance efforts at Walmart sites fell dramatically short of addressing
the problems that Walmart's inspections had uncovered. For instance, industry practice is to
conduct insulation resistance testing (also known as Megger testing) at least once per year to
ensure that insulation has not degraded to a dangerous degree. But Tesla had never conducted
insulation resistance testing on certain conductors, plainly violating these standards..
Tesla inspection personnel frequently missed or improperly identified obvious
and visible risks with the solar panel systems and were often negligent in performing inspections.
Most glaringly, Tesla inspection personnel violated elementary safety standards by negligently
stepping on modules (potentially contributing to micro-cracks), using the wrong equipment for
basic tasks, and-in one instance-leaving a combiner box enclosure open and exposed to the
elements after an inspection. Tesla also relied on drone fly-overs and other shortcuts when
inspecting sites, rather than sending qualified and properly trained solar inspectors to physically
inspect solar panel systems with appropriate equipment-the established industry method for
conducting thorough inspections.
of
of 141Page 50 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Image of Tesla Inspector Stepping on Solar Modules
(Inspector's Foot Visible in Bottom Right ofImage)
.
Tesla's failure to document the conditions at numerous sites made the inspection
process much more difficult than it should have been. When an engineering team designs a solar
panel system or outlines the processes for installing it, the team maps out a blueprint. During the
installation process, deviations from that blueprint inevitably occur. As a result, when
construction concludes, the National Electrical Code indicates that the installation team must
prepare what are known as "as-built" drawings, which are supposed to accurately reflect the
locations and characteristics of the solar panel system and its components, exactly as they were
installed at the site in question. Accurate as-built drawings are critical to proper inspection,
maintenance, and operation, in no small part because technicians, firefighters, and other
individuals interacting with the solar panels must be able to rely on the drawings to locate
specific equipment, safety switches, and other components. However, discrepancies existed
of
of 141Page 51 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
between the solar panel systems installed at various sites and the so-called "as-built" drawings
that were supposed to accurately depict and reflect those solar panel systems..
Tesla's poor record-keeping and documentation efforts extended beyond the
purported "as-built" drawings. Tesla's records were unusable to non-Tesla employees who tried
to review them-and even to Tesla's employees themselves: one of Tesla's own field support
managers admitted that he could not understand Tesla's reports. Despite multiple requests for
records regarding installation dates and subcontractors who worked on the solar photovoltaic
systems, Tesla failed to provide the requested records. These documents would have proven
critical to Walmart's assessment of proper remediation methods, but Walmart and its consultants
have yet to see them. If these records existed, they would undoubtedly have confirmed the
widespread deficiencies in Tesla's performance that Walmart's inspections already revealed..
The mountain of disturbing evidence collected during the inspections of solar
panel sites made clear that system-wide risks affected Tesla's solar panel systems, all of which
helped to explain why the solar panels were causing fires on Walmart's roofs. The installation
problems with Tesla's solar panels spanned multiple locations, demonstrating that systemic Tesla
malfeasance was the cause of the solar panel systems' problems. Moreover, on information and
belief, Tesla itself handled all operational and maintenance work in-house, demonstrating that
the widespread failures were, once again, attributable to Tesla..
The inspections made clear that: (1) installation, operation, maintenance, and
inspection issues had caused the solar panel fires; (2) these issues resulted from grossly negligent
conduct on Tesla's part that did not accord with Prudent Industry Practices; (3) Tesla failed to
live up to standards of reasonable care and to industry standards with respect to solar panel
installation, operation, maintenance, and inspection practices; and (4) the fires could have been
of
of 141Page 52 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
prevented had Tesla abided by its obligations under the contracts. Tesla has never provided
Walmart with any information indicating an alternative cause for any of the fires that occurred at
Walmart's stores..
The inspections also made crystal clear that the fires had not been caused by one-
off problems at specified Walmart sites. They resulted from system-wide deficiencies related to
the installation, operation, maintenance, and inspection procedures that Tesla had employed, and
the fires could have been prevented had Tesla acted consistent with the standard of care and
adopted the industry-standard procedures that it had contractually agreed to employ..
No later than early 2019, by the time Walmart's consultants had completed an
initial round of inspections, they concluded that Walmart stores with Tesla solar panels were
unsafe for shoppers and employees. The consultants themselves would not have wanted to step
foot inside the stores or allowed their families to do so if the sites were energized. In light of the
extensive problems with Tesla's solar panel systems and its negligent maintenance and
inspection procedures, re-energizing the solar panel systems at any W almart locations would
have posed-and, to this day, continues to pose-an imminent risk of harm to Walmart, its
customers, its employees, and its property.
VII.
Tesla's Inspections Confirm Walmart's Conclusions.
The results of Tesla's own inspections, conducted by its own personnel, confirm
Walmart's findings..
Despite the severity of the safety threat posed by Tesla's solar panels and the
widespread nature of the deficiencies, Tesla has not reacted with the urgency that one would
expect from a company that had installed solar panels that were catching on fire. Far from it:
Tesla's cavalier responses have only confirmed Walmart's worries that its contractual
of
of 141Page 53 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
counterparty is incapable of providing maintenance and inspection services sufficient to ensure
the safety ofWalmart's customers, employees, and property..
Despite Walmart's repeated requests over a 14-month period, Tesla refused to
provide a single final root cause analysis until August 8, 2019, when it produced a purported
final root cause analysis for the Beavercreek site. Tesla has yet to produce final root cause
analyses for any of the other sites that experienced fires..
Tesla's conduct in investigating the Walmart sites and developing a remediation
protocol has done nothing to allay Walmart's concerns. In fact, it has enhanced those concerns.
Tesla's initial remediation protocol, offered in response to Walmart's May 31, 2018, request for
such a protocol, fell far below industry standards and was unacceptable to address the problems
that had caused fires at Walmart locations. One of Tesla's own employees admitted that Tesla's
inspection protocol was inadequate, and Tesla team members conceded that they were neither
trained in nor capable of performing the inspections. In one instance, they were unable to locate
a basic component of a solar panel system. Nonetheless, Tesla ignored these deficiencies,
plowing ahead with a series of cursory and improper inspections. Among other flaws, these
inspections suffered due to the absence of accurate as-built drawings, which made it nearly
impossible to identify the precise locations that required inspection or that might be prone to
problems..
When Walmart demanded that Tesla revise its inspection procedures, the new
protocols continued to suffer from deficiencies. For instance, Tesla used infrared imaging to
identify hotspots. But, using a handheld device, a Walmart consultant identified hotspots on the
roof of a Walmart site and compared the hotspots that he had identified to those identified by the
Tesla subcontractor. The subcontractor had missed a number of hotspots.
of
of 141Page 54 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
As Tesla began preparing inspection reports for Walmart locations, the reports
confirmed the presence of widespread, systemic flaws in the solar panel systems. To date, Tesla
has inspected and provided Walmart with inspection reports for 29 sites; those reports have
identified a total of at least 157 action items requiring repairs or replacement of solar panel
system components--48 of which Tesla characterized as reaching "level 2" or "level 3" severity,
reflecting conditions that Tesla believed rendered the affected sites unsafe or potentially unsafe.
Those figures understate the severity of the problems that Tesla's own inspectors have
uncovered, because numerous deficiencies that Tesla classified as "level 1" raise serious safety
concerns, and other issues were wrongly or erroneously omitted from Tesla's lists of action
items. For example, many of the reports did not include photos of damaged or defective
modules, making it impossible to evaluate the severity of any problems. The reports were also
difficult to evaluate given the references to extremely indeterminate action items (e.g., "DC
Power Supply failure in Solectria inverter") and vagueness in explaining how remediation plans
were (or would be) implemented. These problems were compounded by inconsistencies in the
methods and techniques used to inspect different sites-once again making it nearly impossible
for Walmart to determine whether Tesla was fixing any of the problems that had contributed to
the fires..
Recognizing that Tesla's inspection reports omit or understate the deficiencies of
the solar panel systems, those reports reveal, at a minimum, that:
•
at least 28 of the 29 inspected sites presented issues with wire management,
ranging from the presence of hanging or unorderly wires, wires that were
exposed to sharp edges, the presence of unnecessary jumpers, problems
of
of 141Page 55 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
relating to conduits, and instances in which wires with degraded insulation
were found lying directly in puddles of water;
•
all 29 of the inspected sites had incorrect as-built or site drawings that
misidentified the locations of various solar panel system components and
misidentified the type and number of sub-parts within those components;
•
at least 25 of the 29 inspected sites had solar panel modules (which came from
several different manufacturers) that were broken, damaged, or presented hot
spots, causing Tesla's own technicians to recommend replacing those
modules;
•
more than half of the 29 inspected sites had issues with connectors-due to
overheating, mismatching of connectors, use ofnon-MC4 connectors in
violation of manufacturer specifications, improperly sized connectors,
improper crimps and damaged connector pins, overheated connections, rust,
or generally poor installation work;
•
all 29 of the inspected sites had missing or incorrect slipsheets, placards, or
labels for certain components; and
•
almost two-thirds of the 29 inspected sites presented issues with improper
system grounding.
.
Based on these findings, the reports reveal numerous safety hazards reflecting
systemic breaches of the Agreements-all of which were caused initially by Tesla's faulty
installation practices or were allowed to occur over time by Tesla through faulty operation,
maintenance, and inspection processes.
of
of 141Page 56 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Tesla has also proven that, consistent with its failure to maintain the systems
adequately over a multi-year period, it is incapable of addressing and remediating the problems
identified in its inspection reports. On information and belief, Tesla did not perform all of the
corrective measures that it claimed to have performed in those inspection reports, including
replacement of all field-made connectors at certain sites. In addition, even after Tesla's
purported inspection and repair efforts, many connectors remained under-torqued, and some
could be unscrewed with one's bare hands. Tesla's inspections, much like its installation and
maintenance practices generally, were conducted carelessly and superficially and were
inadequate to ensure site safety; similarly, its inspection reports-much like its record-keeping
generally---contain inaccuracies that render the reports wholly unreliable..
Tesla's recalcitrance extends beyond its unwillingness to adopt appropriate safety
procedures and maintenance protocols. Despite months of back-and-forth with Walmart, Tesla
has yet to pay one cent of the out-of-pocket damages and consulting/inspection fees that Walmart
incurred as a result of the fires at Denton, Indio, and Yuba City, as well as consultant and
attorneys' fees related to the Beavercreek fire. Tesla has been on notice ofWalmart's claims
since January 2019 at the latest and, as to the Beavercreek, Denton, and Yuba City frres, has
never disputed Walmart's documentation of its damages. Nonetheless, Tesla did not compensate
Walmart for any losses from Beavercreek until August 7, 2019---one day before the cure period
was set to expire-and has not compensated Walmart for any losses related to the fires at the
other three sites. Nor has Walmart received any indication that Tesla named Walmart as an
additional insured on Tesla's insurance policy, further jeopardizing Walmart's ability to obtain
payment.
of
of 141Page 57 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
.
Moreover, in the course of discussions between Walmart and Tesla, it also
became clear that Tesla had assigned each of the Agreements to third parties without providing
notice to Walmart of any of the assignments, as was required under the Agreements. See
Appendix AA. Although Walmart has asked for information about the Tesla investors who
purportedly have interests in the Agreements through these assignments (as well as for other
information about the structure of the assignments), Tesla has declined to provide it. Tesla's
invalid assignments have impeded Tesla's compliance with the terms of the contract. For
example, at times Tesla has justified its refusal to take certain steps by claiming that it needs to
gain the consent of its assignees-a needless and illegitimate roadblock that was caused entirely
by Tesla's invalid assignments.
VIII. Walmart (Re-)Notifies Tesla of Its Breaches.
By July 2019, over a year after Walmart learned of the fires that were erupting on
the roofs of its stores, it was startlingly clear that Tesla had no intention of correcting its past
mistakes or doing what is needed to ensure safe conditions for Walmart shoppers and employees.
On July 9, 2019, pursuant to the rights granted to Walmart under the Agreements, Walmart
notified Tesla for a second time of its numerous material breaches of the Agreements, providing
a detailed explanation of the facts that had led Walmart to conclude that these breaches had
occurred and remained uncorrected. Walmart's notice of breach is attached as Exhibit 248..
Walmart gave Tesla one final 30-day period to cure its breaches (to the extent
cure was possible). Walmart requested that Tesla:
•
provide root cause analyses to Walmart for each of the Beavercreek, Denton,
Indio, and Yuba City fires;
of
of 141Page 58 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
•
demonstrate to Walmart's satisfaction that, notwithstanding years of negligent
inspection, maintenance, and operation, Tesla was capable of providing those
services in a prudent, non-negligent manner going forward-including a
demonstration to Walmart's satisfaction that Tesla had fundamentally overhauled,
expanded, and upgraded its internal resources for providing these services
(through proper hiring, training, and supervision of a sufficient number of
qualified solar professionals) or that Tesla was prepared to contract with a
qualified third-party provider of those services at Tesla's expense;
•
formally adopt a substantially enhanced inspection protocol satisfactory to
W almart, which would take into account the conclusions of the root cause
analyses for the Beavercreek, Denton, Indio, and Yuba City fires;
•
provide written certification to Walmart that (i) none of the root causes of the
Beavercreek, Denton, Indio, and/or Yuba City fires were present at any of the
Walmart stores with Tesla solar panels, (ii) a thorough inspection of all potential
sources of human error and equipment defects following the agreed enhanced
inspection protocol had been conducted for all Walmart stores with Tesla solar
panels; and (iii) all of the stores had been fully remediated and did not pose a risk
of a future fire;
•
pay Walmart the Performance Guarantee Payments owed to Walmart under the
Agreements since de-energization; and
•
fully compensate Walmart for its out-of-pocket damages, including consultant and
attorneys' fees, resulting from each of the Beavercreek, Denton, Indio, and Yuba
City fires.
of
of 141Page 59 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
On July 29, 2019, Tesla responded to Walmart's notice of breach with a series of
unsubstantiated allegations. Tesla's response to Walmart's notice of breach is attached as
Exhibit 249..
Describing the Beavercreek, Denton, Indio, and Yuba City fires as "regrettable,"
Tesla expressly noted that it was "not disput[ing] that some of the[] issues" identified in
Walmart's notice of breach "did exist, to varying degrees, at some Walmart rooftop sites." Tesla
also admitted that its site inspections to date "have identified areas for improvement and
opportunities for error correction," and it conceded that "more testing can and may be done" to
identify the causes of the fires at Walmart stores. Despite Tesla's assertion that it was "willing to
satisfy most of the requirements that Walmart has given," Tesla's explanation of how it intended
to do so fell far short of curing its breaches. In particular, although Walmart requested that Tesla
adopt an enhanced inspection protocol that accounted for the findings of any root cause analysis
at the Beavercreek, Denton, Indio, and Yuba City sites, Tesla insisted that its current inspection
protocol was adequate--even though it has never provided Walmart with the root cause analyses
for the Denton, Indio, and Yuba City sites that must inform development of that protocol.
Similarly, in the absence of any formal commitment or concrete steps, Tesla's boilerplate
assertions that it intends to improve its operational and maintenance program going forward is
unsatisfactory to Walmart, which has heard the same assertions from Tesla many times before
but has never seen them successfully implemented..
Walmart responded to Tesla's letter on August 9, 2019, correcting its factual
inaccuracies and confirming that Tesla had made no meaningful progress (and had evinced no
intent) to cure its breaches. Walmart's response is attached as Exhibit 250.
of
of 141Page 60 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
Tesla submitted an additional response on August 11, 2019, which still failed to
dispute the substance ofWalmart's findings with respect to Tesla's negligence. Tesla's August, 2019 correspondence is attached as Exhibit 251..
Walmart replied on August 14, 2019, correcting some of the remaining
inaccuracies in Tesla's understanding of key events. Walmart's August 14, 2019 correspondence
is attached as Exhibit 252..
The 30-day cure period expired on August 8, 2019. As of that date, Tesla had not
made any reasonable steps toward curing its breaches, ensuring that Walmart stores remained
safe from fires, assuring W almart that it could adequately maintain the solar panel systems going
forward, or formally adopting an enhanced inspection and maintenance protocol. As a courtesy,
Walmart agreed to extend the cure period until the close of business on August 15, 2019, but
Tesla still had not taken any reasonable steps toward curing its breaches as of that date..
Given Tesla's extensive delays and the egregiousness of its past breaches,
Walmart now brings suit for recovery of the damages caused by those breaches and for a
declaration of its rights against Tesla.
COUNTS 1-244
AGAINST TESLA
(Breach of Contract)
.
Walmart repeats and realleges the allegations contained in paragraphs 1 through
above..
Walmart (f/k/a Wal-Mart Stores) and Tesla (f/k/a SolarCity) are parties to each of
the Agreements, which are valid and enforceable contracts setting forth the rights and
responsibilities ofWalmart and Tesla..
Walmart has performed all of its obligations under the Agreements.
of
of 141Page 61 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
.
.
Tesla's failure to detect hotspots, correct panel defects, engage in proper
installation and maintenance techniques, adopt proper wire management practices, and otherwise
abide by safety precautions necessary to prevent fires at and ensure the safety of Walmart stores,
among other misconduct, breached the Agreements in numerous ways.
a.
Tesla failed to pay the out-of-pocket costs and the consulting fees that are
due to Walmart for damage caused by the fires at the Indio, Denton, and
Yuba City locations and failed to pay the consulting fees that are due to
Walmart for damage caused by the fire at the Beavercreek location. See
Appendix CC.
b.
Tesla failed to abide by Prudent Industry Practices in operating and
maintaining the solar panel systems, resulting in preventable fires that
occurred at no fewer than seven Walmart locations. See Appendix 0.
c.
Tesla failed to install and maintain the solar panel systems in accordance
with standards of due care. See id
of
of 141Page 62 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
d.
Tesla failed to ensure that the solar panel systems were capable of
operating in accordance with required specifications and the
manufacturer's warranties. See Appendix J.
e.
Tesla failed to maintain the systems in accordance with Prudent Industry
Practices, manufacturer requirements, manufacturer warranty guidelines,
and applicable laws. See id
f.
Tesla failed to perform all maintenance and routine or emergency repairs
that were required under the Agreements. See Appendix K.
g.
Tesla failed to maintain, inspect, service, repair, overhaul, and test the
solar panel systems based on maintenance manuals furnished with the
systems, mandatory or otherwise required service bulletins issued by or
through the manufacturer and/or the manufacturer of any part of the
systems, and all applicable directives used by local electric utilities or
comparable regulatory agencies. See id
h.
Tesla failed to undertake and complete all maintenance procedures
required by the Agreements in accordance with the manufacturer's
recommended procedures, and by properly trained, licensed, and certified
maintenance sources and maintenance personnel, so as to maintain the
systems and their components in as good operating condition as when
delivered to Walmart, ordinary wear and tear excepted. See id.
.
Tesla failed to use and operate the systems in compliance with statutes,
laws, ordinances, regulations, standards, directives, certificates, licenses,
registration permits, or authorizations issued by a relevant governmental
of
of 141Page 63 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
authority or local electric utility, and in a manner that did not modify or
impair any existing warranties on the systems or their parts. See
AppendixM.
J.
Tesla failed to take all necessary and reasonable safety precautions with
respect to installation work and system operations to ensure compliance
with laws and Prudent Industry Practices pertaining to the health and
safety of persons and real and personal property. See Appendix N.
k.
Tesla failed to notify Walmart of at least one fire within 24 hours of the
fire's occurrence, as required by the applicable Agreement. See
Appendix C.
.
Tesla failed to provide Walmart with the notice required under the
Agreements in advance of assigning the Agreements to third parties. See
Appendix AA.
.
As a direct and proximate result of Tesla's breaches, Walmart has suffered
significant damages and other harm, including but not limited to the out-of-pocket damages,
consulting and attorneys' fees, and Performance Guarantee Payments that are owed to it, and is
therefore entitled to relief.
COUNTS 245-488
AGAINST TESLA
(Declaratory Judgment).
Walmart repeats and realleges the allegations contained in paragraphs 1 through
above..
A bona fide, justiciable controversy exists between the parties as to their
respective rights under the Agreements. In particular, there is a bona fide, justiciable, present,
of
of 141Page 64 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
definite, substantial, and sufficiently matured controversy as to whether Tesla has breached its
contractual obligations and whether its default creates an imminent risk of damage or injury to
any person or property or risks a violation of applicable law, such that Walmart can demand
removal of all or a portion of the solar panel systems under § 11.1 (c) of the Agreements..
This controversy is ripe for judicial determination so that the parties can
determine their respective rights under § 11.1 (c) of the Agreements.
COUNTS 489-492
AGAINST TESLA
(Negligence)
.
Walmart repeats and realleges the allegations contained in paragraphs 1 through
above..
Tesla owed Walmart a duty of care as a result of Tesla's provision of professional
services to W almart through the design, construction, installation, testing, maintenance, and
operation of solar panel systems at Walmart stores (and, in some cases, as a result of Tesla's
status as lessor of the solar panel systems to Walmart). Tesla's safe and satisfactory provision of
these services is a matter of significant public interest..
Tesla breached its duty of care by failing to design, construct, install, test,
maintain, and operate its solar panel systems in a non-negligent manner at the Walmart stores in
Beavercreek, Denton, Indio, and Yuba City.
a.
With respect to the Beavercreek store, Tesla's negligent installation and
maintenance resulted in improper sealing of the inverter housing, which
permitted water intrusion into the invertor and likely contributed to the
fire's ignition. Tesla's negligent installation and maintenance also
of
of 141Page 65 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
resulted in the use of brass/metal bolts in the inverter fuse box; those bolts
melted during the fire, permitting the fire to spread.
b.
With respect to the Denton store, Tesla's negligent installation, inspection,
and maintenance led to problems with the solar panel system's inverter,
again contributing to the fire that occurred on the store's roof.
c.
With respect to the Indio store, Tesla personnel were dispatched to the
store just hours before the fire occurred but negligently failed to detect and
correct any problems with the solar panel system. Tesla's negligent
installation, inspection, and maintenance procedures resulted in module
hotspots, improper grounding, poor wire management, improper connector
torqueing, and erroneous as-built drawings, all of which contributed to the
fire's ignition or spreading (and made it more difficult to put out the fire
once detected).
d.
With respect to the Yuba City store, Tesla's negligent installation,
inspection, and maintenance procedures resulted in arcing and damage to
wires at the store, creating dangerous conditions that could easily have
caused Walmart's entire store to burn to the ground.
.
As a direct and proximate result of Tesla's negligence, Walmart has suffered
significant damages and other harm, including but not limited to the out-of-pocket damages and
consulting and attorneys' fees that it incurred as a result of the fires at its Denton, Indio, and
Yuba City sites, as well as consultants' fees incurred as a result of the Beavercreek fire.
of
of 141Page 66 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
PRAYER FOR RELIEF
WHEREFORE, Walmart respectfully requests that this Court enter a judgment:
A.
Declaring that Tesla has breached all of the Agreements;
B.
Enjoining Tesla to require it to remove the solar panel systems from all Walmart
locations;
C.
Awarding Walmart damages in an amount reflecting the outstanding value of out-
of-pocket costs and consulting fees in connection with all the fires caused by Tesla's solar panel
systems, including the fires at its Beavercreek, Indio, Denton, and Yuba City locations, as well as
damages reflecting the value of any contractual payments owed to Walmart under the
Agreements;
D.
Awarding Walmart such other damages to which it is entitled, in an amount to be
determined at trial;
E.
Awarding Walmart all costs and disbursements, including reasonable attorneys'
F.
Awarding pre-judgment and post-judgment interest to the maximum extent
fees;
provided by law; and
G.
Granting such other and further relief as the Court may deem just and proper.
of
of 141Page 67 INDEX NO.
INDEX
NO. 654765/2019/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
Dated:
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
New York, New York
August 20, 2019
Respectfully submitted,
DAVIS POLK & WARDWELL LLP
By: Isl James P. Rouhandeh
James P. Rouhandeh
James P. Rouhandeh
Paul S. Mishkin Lexington A venue
New York, New York 10017
(212) 450-4000
rouhandeh@davispolk.com
paul.mishkin@davispolk.com
Attorneys for Plaintiff
of
of 141Page 68 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
INDEX NO.
INDEX
NO. 654765/2019/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
RELEVANT CONTRACT PROVISIONS 1
APPENDIX A:
Exhibit No.
-162- 244
- 230
Unless otherwise noted, the contract provisions listed in these appendices are excerpted from the Solar Power & Services Agreements ("SPSAs"), Solar Power
Lease & License Agreements ("SPLLAs"), and Solar Power & Energy Storage Services Agreements ("SPESSAs") between Walmrut Inc. (f/k/a Wal-Mart Stores
Inc.) and Tesla Energy Operations, Inc. (f/k/a SolarCity Corporation), which are refell'ed to as the "Agreements" in the Complaint and are attached as Exhibits- 242. For each Wahnart site at which Tesla installed solar panels, the parties entered into: (i) a core agreement (either an SPSA, SPLLA, or SPESSA) and (ii) a
varying number of supplemental agreements and amendments, not all of which are referenced in these appendices. Where an agreement other than the core
agreement is referenced, the title of that agreement is denoted in the caption at the top of the appendix. The text of the relevant contract provisions is copied
verbatim in these appendices, including any typographical or grammatical enors (without the use of "[sic]").
A -1
of
of 141Page 69 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXB:
Exhibit No.
-36
- 55
INDEX NO.
INDEX
NO. 654765/2019/2019
-141- 159-242
- 150- 162
A-2 of
of 141Page 70 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX B (continued):
Exhibit No.
INDEX NO.
INDEX
NO. 654765/2019/2019
- 209
A-3 of
of 141Page 71 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX C:
Exhibit No.
-36
- 55
INDEX NO.
INDEX
NO. 654765/2019/2019
-141- 159- 242
A-4 of
of 141Page 72 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX C (continued) :
Exhibit No.
INDEX NO.
INDEX
NO. 654765/2019/2019
-150-162
A-5 of
of 141Page 73 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXD:
Exhibit No.
INDEX NO.
INDEX
NO. 654765/2019/2019
- 36
- 55
A-6 of
of 141Page 74 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX D (continued):
Exhibit No.
-109
-141-159-230
-144
INDEX NO.
INDEX
NO. 654765/2019/2019
A-7 of
of 141Page 75 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX D (continued):
Exhibit No.
INDEX NO.
INDEX
NO. 654765/2019/2019
~150-162
-209-242
A-8 of
of 141Page 76 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXE:
Exhibit No.
- 36
- 55
-141-159-242
- 145
-150-162
- 209
INDEX NO.
INDEX
NO. 654765/2019/2019
A-9 of
of 141Page 77 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXF:
Exhibit No.
-109
-139-158-230
-141
-209
-242
-55-150-162
INDEX NO.
INDEX
NO. 654765/2019/2019
No Applicable Provision.
A-10 of
of 141Page 78 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXG:
Exhibit No.
-109
- 141
-158-221- 242
INDEX NO.
INDEX
NO. 654765/2019/2019
A-11 of
of 141Page 79 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX G (continued):
Exhibit No.
- 209
- 230
INDEX NO.
INDEX
NO. 654765/2019/2019
A-12 of
of 141Page 80 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX G (continued):
Exhibit No.
INDEX NO.
INDEX
NO. 654765/2019/2019
- 55- 150-162
A-13 of
of 141Page 81 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXH:
Exhibit No.
INDEX NO.
INDEX
NO. 654765/2019/2019
Text of Agnement
lA- lOA
243A
11A- 25A
28A
31A
36A
A-14 of
of 141Page 82 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX H (continued):
Exhibit No.
INDEX NO.
INDEX
NO. 654765/2019/2019
Text of Agreement
26A- 27A
29A- 30A
32A- 35A
142A-145A
A-15 of
of 141Page 83 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX H (continued):
Exhibit No.
146A- 148A
149A- 150A
INDEX NO.
INDEX
NO. 654765/2019/2019
Text of Agreement
A-16 of
of 141Page 84 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX H (continued):
Exhibit No.
160A-162A
-141-159-242
INDEX NO.
INDEX
NO. 654765/2019/2019
Text of Agreement
Not Applicable.
A-17 of
of 141Page 85 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX I :
Exhibit No.
- 36
- 55
--141- 159- 221- 242
INDEX NO.
INDEX
NO. 654765/2019/2019
- 145
A-18 of
of 141Page 86 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX I (continued):
E xhibit No.
-150- 162
- 230
INDEX NO.
INDEX
NO. 654765/2019/2019
A -19 of
of 141Page 87 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXJ:
Exhibit No.
- 36- 145
- 55
-109
- 141-159-230
INDEX NO.
INDEX
NO. 654765/2019/2019
A-20 of
of 141Page 88 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX J (continued):
Exhibit No.
-150-162
- 209
- 242
INDEX NO.
INDEX
NO. 654765/2019/2019
A-21 of
of 141Page 89 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXK:
Exhibit No.
- 36- 145
- 109
INDEX NO.
INDEX
NO. 654765/2019/2019
A-22 of
of 141Page 90 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX K (continued):
Exhibit No.
-141-158-162
-150
INDEX NO.
INDEX
NO. 654765/2019/2019
A-23 of
of 141Page 91 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX K (continued):
Exhibit No.
INDEX NO.
INDEX
NO. 654765/2019/2019
-230
- 242
A-24 of
of 141Page 92 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXL:
Exhibit No.
- 36-150
- 145-1 62-242
- 209
INDEX NO.
INDEX
NO. 654765/2019/2019
A-25 of
of 141Page 93 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX M:
Exhibit No.
-36- 150-158- 162
- 141- 153- 230
- 242
INDEX NO.
INDEX
NO. 654765/2019/2019
A-26 of
of 141Page 94 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX N:
Exhibit No.
- 36- 145
- 141-1 59- 242
-150
-162
INDEX NO.
INDEX
NO. 654765/2019/2019
A-27 of
of 141Page 95 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX 0:
Exhibit No.
-36
- 55
-141- 242
- 150
INDEX NO.
INDEX
NO. 654765/2019/2019
A-28 of
of 141Page 96 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXP:
Exhibit No.
I
1A- 25A
28A
31A
36A
243A
I
1A- 25A
28A
31A
36A
I
1A- 25A
28A
31A
36A
i
-
--
I
s
I
1A- 25A
28A
31A
36A
26A- 27A
29A- 30A
32A- 35A- 242
INDEX NO.
INDEX
NO. 654765/2019/2019
INo alllilicable nrovisions.
A-29 of
of 141Page 97 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXQ:
Exhibit No.
1A- 25A
28A
31A
36A
243A-27-30-35- 242
INDEX NO.
INDEX
NO. 654765/2019/2019
No applicable provisions.
A-30 of
of 141Page 98 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIXR:
Exhibit No.
- 10
-36
- 109
INDEX NO.
INDEX
NO. 654765/2019/2019
A-31 of
of 141Page 99 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX R (continued):
Exhibit No.
-141-159-242
-150-162
-203
INDEX NO.
INDEX
NO. 654765/2019/2019
A-32 of
of 141Page 100 FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019/20/2019 05:59:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019/20/2019
APPENDIX S :
Exhibit
No.
- 36
- 55
-109-141- 159- 242
INDEX NO.
INDEX
NO. 654765/2019/2019
- 150- 162
A-33 of
of 114
To view more than 100 pages of OCRed text, sign up for PlainSite Pro or Pro Se. Solve This Problem
PDF Page 1
PlainSite Cover Page
PDF Page 2
INDEX NO. 654765/2019
FILED: NEW YORK COUNTY CLERK 09/04/2019 05:59 PM
NYSCEF DOC. NO. 68
RECEIVED NYSCEF: 09/04/2019
New York
Northern California
Washington DC
São Paulo
London
Paris
Madrid
Hong Kong
Beijing
Tokyo
James P. Rouhandeh
Davis Polk & Wardwell LLP
450 Lexington Avenue
New York, NY 10017
212 450 4835 tel
rouhandeh@davispolk.com
September 4, 2019
Re:
Walmart Inc. (f/k/a Wal-Mart Stores, Inc.) v. Tesla Energy Operations, Inc. (f/k/a SolarCity
Corporation), Index No. 654765/2019
Hon. Deborah A. Kaplan
Administrative Justice
Supreme Court, Civil Branch, New York County
60 Centre Street, Room 609
New York, NY 10007
Dear Judge Kaplan:
We represent Plaintiff Walmart Inc. (“Walmart”) (f/k/a Wal-Mart Stores, Inc.) in the abovecaptioned matter. We write under Section 202.70(f)(2) of the Uniform Civil Rules for the
Supreme Court and the County Court (“Uniform Rules”) to request that this case be transferred
to the Commercial Division of New York Supreme Court. This action meets the criteria for
assignment to the Commercial Division because it is a breach of contract action that arises out of
business dealings and seeks damages over $500,000, as well as declaratory relief. See Uniform
Rules § 202.70(a)–(b).
For Your Honor’s reference, we have attached a copy of the Summons and Complaint as
Exhibit A.
I.
Walmart’s Allegations
As set forth in the Complaint, this is a breach of contract action alleging that Defendant
Tesla Energy Operations, Inc. (f/k/a SolarCity Corporation) (“Tesla”) violated contractual
provisions requiring Tesla to install, maintain, and operate solar panels—known as photovoltaic
systems (“PV Systems”)—at Walmart stores. (Complaint, ¶ 1.) The lawsuit is based on 244
contracts between Walmart and Tesla (the “Agreements”), each pertaining to a different Walmart
store, entered into between February 2010 and February 2016. (Id., ¶ 46.) The Complaint
asserts 244 counts for breach of contract and 244 counts for declaratory judgment (seeking a
declaration of Walmart’s rights under the applicable contracts). The Complaint also asserts four
counts for negligence relating to fires at four Walmart stores. (Id., ¶¶ 123–35.) As to the
remaining 240 store locations, the claims are entirely contractual in nature.
1 of 141
PDF Page 3
FILED: NEW YORK COUNTY CLERK 09/04/2019 05:59 PM
NYSCEF DOC. NO. 68
Hon. Deborah A. Kaplan
II.
INDEX NO. 654765/2019
RECEIVED NYSCEF: 09/04/2019
2
September 4, 2019
This Case Meets the Criteria for Transfer
Section 202.70(b) of the Uniform Rules provides, “Actions in which the principal claims
involve or consist of the following will be heard in the Commercial Division provided that the
monetary threshold [$500,000] is met or equitable or declaratory relief is sought: . . . Breach of
contract . . . where the breach or violation is alleged to arise out of business dealings” (emphasis
added). Walmart satisfies each of the criteria for bringing its claims in the Commercial Division.
First, Walmart’s “principal claims,” comprising 488 of the 492 counts in its Complaint, are
contract-based—specifically, breach of contract claims and requests for declaratory relief
regarding the parties’ rights and obligations under the Agreements. And all of the claims are
grounded in the parties’ longstanding “business dealings” pursuant to the Agreements, many of
which date back to 2010. Second, Walmart meets the monetary threshold and is seeking
equitable or declaratory relief against Tesla. While Walmart has not fully quantified its total
damages, the amount alleged substantially exceeds $500,000. (E.g., id., ¶¶ 64, 67, 71, 83.)
Moreover, Walmart is seeking a declaration that Tesla has breached all of the Agreements and
an injunction requiring Tesla to remove the PV Systems from Walmart’s stores. (Id. at p. 60
(Prayer for Relief).) Thus, this action falls squarely within the category of cases to be heard in
the Commercial Division.
III.
Precedent Supports Transfer to the Commercial Division
Even where contract claims do not predominate to the same extent as they do here,
cases alleging negligence alongside breach of contract are routinely heard in the Commercial
Division. See, e.g., Framan Mech., Inc. v. Dormitory Auth. of the State of New York, 2019 NY
Slip Op. 50583(U) (63 Misc. 3d 1218(A)) (Sup. Ct. Albany Cty. Mar. 7, 2019) (involving both
contract and negligence claims); Barkany Asset Recovery & Mgmt. v. Sw. Sec. Inc., 2013 NY
Slip Op. 23300 (41 Misc. 3d 673) (Sup. Ct. Kings Cty. Sept. 9, 2013) (same); Structural
Contracting Servs., Inc. v. URS Corp., 2011 NY Slip Op 50532(U) (31 Misc. 3d 1208(A)) (Sup.
Ct. Westchester Cty. April 4, 2011) (same). The same approach should be followed here.
Relying on the Administrative Order in Singapore Airlines, Ltd. v. General Electric Co.
(Index No. 652683/2018) (NYSCEF Doc. No. 18), the Clerk assigned this case to a noncommercial part because it “[c]oncerns [a] question of negligence.” (NYSCEF Dkt. Entry,
08/21/19 11:52 a.m.) But that is not the test for assigning a case to a non-commercial part, nor is
it the test that was applied in Singapore Airlines. Regardless of whether some portion of an
action “concerns negligence”—such as here, for example, where only four of 492 claims are for
negligence—the question is whether the “principal claims” asserted are contractual and whether
the alleged breach “arise[s] out of business dealings” between the parties. As explained above,
that test is satisfied here.
Singapore Airlines is not to the contrary. In that case, Your Honor denied a request to
transfer a case to the Commercial Division where “[t]he principal claim in th[e] case is
[defendant]’s alleged negligence” and “[a]ny breach of contract or UCC claims at issue are
ancillary to the tort claims.” See Singapore Airlines, Ltd. v. Gen. Elec. Co. (Index No.
652683/2018) (NYSCEF Doc. No. 18), at 2 (attached hereto as Exhibit B). Indeed, the complaint
in Singapore Airlines included no express cause of action for breach of contract at all. Id.
(NYSCEF Doc. No. 17), at 10–19 (¶¶ 51–92) (attached hereto as Exhibit C). Here, the situation
is reversed: The principal claims relate to Tesla’s breaches of contract, while Walmart’s tort
2 of 141
PDF Page 4
INDEX NO. 654765/2019
FILED: NEW YORK COUNTY CLERK 09/04/2019 05:59 PM
NYSCEF DOC. NO. 68
RECEIVED NYSCEF: 09/04/2019
Hon. Deborah A. Kaplan
September 4, 2019
claims are ancillary because they do not form the gravamen of this lawsuit and constitute only a
small portion of the claims asserted.
Nor does this case involve—let alone principally relate to—a question of products liability
such that assignment to anon-commercial part might be appropriate. Walmart does not own any
of the PV Systems (Complaint, ¶ 47) and therefore is not suing on the ground that it was sold a
defective product. None of its causes of action is aproducts-liability claim or rests on a productsliability theory. Walmart's allegations rest on Tesla's obligations to provide installation,
maintenance, and operational services under the Agreements. Those breach of contract
allegations fall within the Commercial Division's purview.
For the foregoing reasons, we respectfully request that Your Honor transfer this matter to
the Commercial Division of this Court.
spectfully submitted,
es P. Rouhandeh
Enclosures
cc w/ enc:
Fred Norton (fnorton@nortonlaw.com)
Bree Hann (bhann@nortonlaw.com)
Catherine Duong (cduong@nortonlaw.com)
Hand Delivery
3 of 141
PDF Page 5
INDEX NO. 654765/2019
FILED: NEW YORK COUNTY CLERK 09/04/2019 05:59 PM
NYSCEF DOC. NO. 68
RECEIVED NYSCEF: 09/04/2019
EXHIBIT A
4 of 141
PDF Page 6
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK: COMMERCIAL DIVISION
WALMART INC. (f/k/a WAL-MART STORES,
INC.,
Plaintiff,
New York County
Index No.: - - - - -/2019
- against TESLA ENERGY OPERATIONS, INC. (f/k/a
SOLARCITY CORPORATION),
SUMMONS
Defendant.
TO THE ABOVE NAMED DEFENDANT:
YOU ARE HEREBY SUMMONED to answer the complaint in this action and to serve a
copy of your answer upon the undersigned within twenty (20) days after the service of this
summons, exclusive of the day of service, or within thirty (30) days after service is complete, if
this summons is not personally delivered to you within the State of New York. In case of your
failure to answer, judgment will be taken against you by default for the relief demanded in the
complaint.
Plaintiff designates New York County as the place of trial. The basis of the venue
designated is New York Civil Practice Law and Rules 501 and 503(a). Venue is proper because
Defendant agreed to designate New York County as the venue for disputes relating to, arising out
of, or in connection with certain of the Solar Power & Services Agreements, Solar Power Lease
and License Agreements, and Solar Power and Energy Storage Services Agreements between
Plaintiff and Defendant, and because none of the parties reside in the state ofNew York.
1 of
5
of 141
114
PDF Page 7
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
To:
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Tesla Energy Operations, Inc.
f/k/a SolarCity Corporation
6900 Dumbarton Circle
Freemont, CA 94555
SolarCity Corporation
3055 Clearview Way
San Mateo, CA 94402
The Norton Law Firm PC
299 Third Street, Suite 106
Oakland, California 94607
Attention: Fred Norton
Dated: New York, New York
August 20, 2019
DAVIS POLK & WARDWELL LLP
By:
Isl James P. Rouhandeh
James P. Rouhandeh
James P. Rouhandeh
Paul S. Mishkin
450 Lexington Avenue
New York, New York 10017
(212) 450-4000
rouhandeh@davispolk.com
paul.mishkin@davispolk.com
Attorneys for Plaintiff
2
2 of
6
of 141
114
PDF Page 8
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK: COMMERCIAL DIVISION
WALMART INC. (f/k/a WAL-MART STORES,
INC.),
Plaintiff,
Index No.: - - - - -/2019
- against TESLA ENERGY OPERATIONS, INC. (f/k/a
SOLARCITY CORPORATION),
COMPLAINT
Defendant.
Plaintiff Walmart Inc. ("Walmart") (f/k/a Wal-Mart Stores, Inc. ("Wal-Mart Stores")), by
its attorneys Davis Polk & Wardwell LLP, for its complaint against Tesla Energy Operations,
Inc. ("Tesla") (f/k/a SolarCity Corporation ("SolarCity" or "Tesla")), alleges as follows, based
on personal knowledge as to itself and upon information and belief as to all other matters:
NATURE OF THE ACTION
1.
This is a breach of contract action arising from years of gross negligence and
failure to live up to industry standards by Tesla with respect to solar panels that Tesla designed,
installed, and promised to operate and maintain safely on the roofs of hundreds ofWalmart
stores.
Fires Break Out on Walmart's Roofs
2.
At approximately 4 p.m. on March 7, 2018, a fire broke out on the roof of
Walmart's store in Beavercreek, Ohio. Local news photographs and videos of the store showed
a tremendous plume of black smoke emerging from flames as firefighters arrived at the scene.
As smoke invaded the store, Walmart employees made an announcement over the store's public
address system and instructed shoppers to evacuate. Customers in nearby shops were also
evacuated until firefighters were able to control the blaze. The fire destroyed significant
3 of
7
of 141
114
PDF Page 9
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
amounts of store merchandise and required substantial repairs, totaling hundreds of thousands of
dollars in out-of-pocket losses. The store remained closed for eight days. Ominously, the fire
had occurred near gas lines on the store's roof. By stroke of luck, the gas lines remained intact,
and catastrophic damages and injuries were averted.
3.
On May 21, 2018, a fire broke out on the roof of another Walmart store, this one
located in Denton, Maryland. The fire caused significant damage, including punctures of the
membrane of the store's roof. By another stroke ofluck, this fire did not progress further and no
one was injured.
4.
On the opposite side of the country eight days later, fire struck again-this time
on the roof of a Walmart store in Indio, California. Local news coverage on May 29, 2018
described a scene of "[t]hick black smoke billow[ing]" from the store's roof, substantial portions
of which were "engulfed in flames, which spread into the store." "[C]ustomers and employees
were evacuated to the parking lot." A firefighter was treated for smoke inhalation but, by yet
another stroke ofluck, was not grievously injured. This fire resulted in millions of dollars' worth
of losses.
5.
Why were multiple Walmart stores located all over the country suddenly catching
fire? The answer was obvious and startling: the stores all had Tesla solar panels installed by
Tesla on their roofs. At each location, the fire had originated in the Tesla solar panels.
6.
The stores in Beavercreek, Denton, and Indio were three of more than 240 stores
where Walmart had leased or licensed its roof space to Tesla for the installation, operation, and
maintenance by Tesla of "photovoltaic" (i.e., solar) systems. Tesla designed these systems and
represented them as safe, reliable, and an environmentally conscious way for Walmart to reduce
its energy costs. In the contracts between Walmart and Tesla governing the solar systems, Tesla
2
4 of
8
of 141
114
PDF Page 10
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
retained ownership of the solar systems, promised to design, install, inspect, and maintain them
non-negligently and in accordance with prudent industry practices, and agreed to handle every
aspect of the solar panels' operation on Walmart's roofs in a non-negligent manner. Walmart
thus bargained for and obtained-not the right to have a particular system installed on its roofsbut rather the right to enjoy perpetually safe and reliable solar panel systems free of any
operation or maintenance responsibilities, which fell entirely to Tesla.
Tesla Agrees to De-Energize the Solar Systems
7.
By May 2018, it was clear that Tesla had breached its contractual obligations. To
state the obvious, properly designed, installed, inspected, and maintained solar systems do not
spontaneously combust, and the occurrence of multiple fires involving Tesla's solar systems is
but one unmistakable sign of negligence by Tesla. To this day, Tesla has not provided Walmart
with the complete set of final "root cause" analyses needed to identify the precise defects in its
systems that caused all of the fires described above. The number of defects, however, is
overwhelming and plainly indicative of systemic, widespread failures by Tesla to meet the
standard of care, as set forth in the governing contracts, as to the solar systems installed at
Walmart's stores.
8.
Fearing for the safety of its customers, its employees, and the general public, and
wishing to avoid further damages and store closures, W almart demanded on May 31, 2018 that
Tesla "de-energize" (i.e., disconnect) all of the solar panel systems that Tesla had installed at
Walmart sites. Tesla complied, conceding that de-energization of all the sites was "prudent" and
recognizing that it could provide no assurances that the deficiencies causing its systems to catch
fire were confined to particular sites or particular components.
3
5 of
9
of 141
114
PDF Page 11
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
9.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Unfortunately, even de-energization was not enough to prevent an additional fire.
In November 2018, Walmart discovered that yet another fire had occurred at a Walmart store in
Yuba City, California-even though the solar panels at this store had been de-energized since
June 2018. Wires on the store's rooftop were still sparking at the time that Walmart discovered
the fire and could have ignited more extensive flames, with potentially devastating
consequences. Equally troubling, after Tesla technicians visited the rooftop, one of the
technicians failed to close the cover to a combiner box, exposing this important piece of
equipment to the elements and thereby creating a fire hazard. Still more troubling, W almart
subsequently learned (independent of Tesla) that a potentially dangerous ground fault alert had
occurred at the Yuba City site during the summer of 2018. Tesla either ignored the alert or
deliberately failed to disclose it to Walmart. The issues that caused that ground fault alert likely
caused or contributed to the subsequent fire in the fall of 2018, revealing Tesla's utter
incompetence or callousness, or both.
10.
As ofNovember 2018, no fewer than seven Walmart stores had experienced fires
due to Tesla's solar systems-including the four fires described above and three others that had
occurred earlier (one in Long Beach, California, in August 2012; one in Milpitas, California, in
2016; and one in Lakeside, California, in 2017). The Long Beach fire resulted in the evacuation
of the store and caused damage to merchandise as water leaked into the store through the roof
and skylights. As a result of the fire, Walmart incurred over $25,000 in repair costs, along with
other expenses and damage to merchandise totaling nearly $65,000. Tesla ultimately agreed to
pay for a portion of these losses. The Milpitas fire also caused extensive damage, resulting in
over $500,000 in losses to Walmart, a portion of which Walmart ultimately recovered from
4
10
6 of
of 114
141
PDF Page 12
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Tesla. Both the Milpitas and Lakeside fires were caused by faulty connectors in Tesla's solar
panel systems.
11.
In addition to those fires, a Sam's Club store owned by Walmart experienced a
power outage in January 2017, forcing the store to close. An electrical contractor called to the
site found that the outage was caused by water intrusion into the breaker-which in turn resulted
from "a bad installa[tio]n of the conduits" on the Sam's Club's solar panel system, which had
recently been installed by Tesla. Walmart experienced over $55,000 in losses as a result of the
outage, for which Tesla eventually compensated Walmart.
Walmart Finds Gross Negligence
12.
Beginning after the Beavercreek fire and continuing through December 2018,
Walmart's consultants accompanied Tesla personnel on inspections of various solar system sites,
including both those that had experienced fires and those that had not. These visits revealed that
Tesla had engaged in widespread, systemic negligence and had failed to abide by prudent
industry practices in installing, operating, and maintaining its solar systems---conduct that
greatly increased the risk of fire at Walmart sites.
13.
For example, solar panels across the inspected sites contained numerous
hotspots---or localized areas of increased and excessive temperature-as well as yellowed
encapsulant and micro-cracks, which are precursors to hotspots. Many of these defects were
either visible to the naked eye or readily identifiable with the proper use of standard equipment,
indicating either that Tesla had not been inspecting the sites or that its inspection protocols were
woefully deficient. Indeed, Walmart quickly discovered that Tesla routinely deployed
individuals to inspect the solar systems who lacked basic solar training and knowledge. Tesla's
personnel did not know, for example, how to conduct inspections or how to use simple tools,
5
11
7 of
of 114
141
PDF Page 13
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
such as temperature-measuring "guns" used to detect hotspots, and a Tesla employee failed to
identify multiple hotspots that Walmart's consultants observed.
14.
Walmart's inspectors observed negligent and dangerous wire connection
practices, which were readily apparent at many of the sites visited and are a critical risk factor in
contributing to fires. Tesla personnel had made numerous on-site cable connections using
connectors that were not compatible with one another, and they had often failed to "torque" (i.e.,
tighten) the connectors adequately, due at least in part to their failure to use proper tools for that
purpose.
15.
Moreover, Tesla's wire management practices were negligent and inconsistent
with prudent industry practices. Loose and hanging wires were present at multiple Walmart
locations, resulting in abraded and exposed wires, decreased insulation, and a phenomenon
known as arcing that substantially increases the risk of fire by causing electricity to travel
through an unintended path. Tesla also failed to "ground" its systems properly, violating basic
practices for the installation and operation of electrical systems in a way that increased the risk of
electrical fire.
16.
Many of the problems stemmed from a rushed, negligent approach to the systems'
installation. On information and belief, Tesla's predecessor-in-interest-SolarCity-had
adopted an ill-considered business model that required it to install solar panel systems
haphazardly and as quickly as possible in order to turn a profit, and the contractors and
subcontractors who performed the original installation work had not been properly hired, trained,
and supervised. For example, the solar panel systems were installed at about 40% of the
Walmart sites (approximately 80 to 100 locations) in a one-year period-far exceeding the
appropriate rate of installations had adequate quality-control checks or supervision protocols
6
12
8 of
of 114
141
PDF Page 14
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
been in place. On information and belief, when Tesla purchased SolarCity to bail out the flailing
company (whose executives included two of Tesla CEO Elon Musk's first cousins), Tesla failed
to correct SolarCity' s chaotic installation practices or to adopt adequate maintenance protocols,
which would have been particularly important in light of the improper installation practices.
17.
Tesla also had not kept proper documentation related to the systems. For
example, supposedly "as-built" system drawings, which should reflect the actual design, layout,
and installation locations of system components as they were actually installed, were anything
but "as-built." They often reflected, at best, potential or proposed versions of the system
installations, or otherwise erroneous depictions, which deviated substantially from how the
systems were actually installed. That meant that system components, including safety switches
and other critical portions of the systems, could not be readily located at the sites in the event of
a fire or other emergency. The absence of reliable as-built drawings is a basic failing that
adversely affects the safety, reliability, and maintenance of the systems. Tesla also lacked
maintenance records indicating how (or whether) the solar panels had been inspected and
maintained over time.
18.
The more Walmart looked into the details, the more deficiencies it identified. Site
after site displayed troubling problems that were indicative of widespread negligence and were
inconsistent with any suggestion that discrete or isolated problems had caused the seven fires.
Based on the fact of the fires, Tesla's failure to provide any final root cause analyses for over a
year, and the inspections that W almart conducted in mid- to late 2018, re-energization of any of
the solar systems at that time posed an unacceptable risk to Walmart's employees, its customers,
and the general public.
7
13
9 of
of 114
141
PDF Page 15
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
19.
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Walmart nevertheless worked closely with Tesla to explore a potential path
toward re-energization of the systems. Walmart discussed with Tesla in detail the concerns it
had about the conditions it discovered at the sites, and Walmart's consultants helped educate
Tesla's personnel on how to conduct solar system inspections properly, including the types of
conditions that can contribute to the risk of fire, how to use equipment and tools properly to look
for and correct such conditions, and how to follow site safety and inspection protocols. Of
course, Tesla was contractually obligated to know all of this already and Walmart had no
obligation whatsoever in this regard, but Walmart nonetheless opted to work cooperatively with
Tesla employees. By January 2019, Tesla purported to have significantly enhanced its
inspection protocols and began a renewed series of site inspections, which it claimed would
provide sufficient assurances to Walmart to permit re-energization of the systems that passed the
inspections.
20.
Far from providing assurances that re-energization was safe, Tesla's inspections
carried out in 2019 confirmed and amplified Walmart' s profound concerns with the solar
systems. Tesla's inspection reports identified numerous action items for each of the sites
inspected, many of which (according to Tesla's own inspectors) reflected unsafe or potentially
unsafe conditions at the inspected sites. For example, across the 29 inspection reports delivered
to Walmart as of August 16, 2019, Tesla identified a total of 157 action items requiring repairs or
replacement of system components, 48 of which Tesla itself characterized as reflecting
conditions that rendered the sites unsafe or potentially unsafe. Based on the reports' descriptions
of other troubling conditions (that Tesla inexplicably and incorrectly did not designate as posing
potential safety concerns), even these numbers understate substantially the safety of the site
conditions.
8
10 of
14
of 141
114
PDF Page 16
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
21.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Tesla's inspection reports have revealed, among other things:
•
improper wire management, including abraded and hanging wires;
•
inadequate wire connecting practices and poor grounding;
•
inaccurate as-built drawings; and
•
solar panel modules that were broken or contained dangerous hotspots.
In other words, Tesla itself has now documented the same--or worse-symptoms of gross
negligence at not fewer than 29 sites that Walmart's earlier analysis (and the fact of the seven
fires) had already made clear. On information and belief, the actual conditions are worse than as
documented by Tesla, based on Tesla's history of deficient and incompetent inspections,
including Tesla's reliance on untrained, unqualified, and unsupervised personnel to install and
maintain the systems.
22.
Tesla has also demonstrated an inability or unwillingness to remediate the
dangerous conditions documented in its inspection reports. On information and belief, at least
one report stated that Tesla had replaced all field-made connectors at a site even though site
conditions indicated otherwise. Connectors also remained under-torqued even after Tesla had
conducted a site inspection, and some were so loose that they could be unscrewed by hand. At
best, the inspection reports overstate Tesla's efforts to repair solar system defects; at worst, they
contain misrepresentations about Tesla's remediation efforts. Either way, the reports are not
reliable indicators of site safety.
23.
Even assuming that Tesla could remediate every site and achieve the outward
appearance of safe solar systems as of a particular point in time-something Tesla has failed to
do for more than a year and has shown no capacity to do-that would not address the more
fundamental problem that Tesla is incapable of maintaining solar systems in a safe condition and
9
11 of
15
of 141
114
PDF Page 17
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
consistent with the standard of care. Remediating that fundamental deficiency would require,
among other things, that Tesla overhaul, expand, and upgrade its internal resources for providing
solar system maintenance services (including through proper hiring, training, and supervision of
a sufficient number of qualified solar professionals), or that Tesla contract with a qualified thirdparty provider of those services at Tesla's expense. Tesla has neglected to do either.
24.
For all of the foregoing reasons, Tesla has breached all of the solar panel system
contracts with Walmart, and operation of the systems at present would create an immediate and
imminent risk of injury and harm to Walmart, its customers, its employees, and its property.
*
25.
*
*
Based on Tesla's history of failures with respect to the solar panel systems and its
unwillingness and/or inability to correct those failures, Walmart brings suit for breach of 244 of
its currently operative solar panel contracts with Tesla. Each of those contracts contains
provisions requiring Tesla to install, operate, and maintain the solar panel systems safely, nonnegligently, and in accordance with prudent industry practices. Tesla has failed to live up to
those obligations and, despite extensive opportunities to cure, has failed to correct its prior
breaches (some of which are not curable in any event). In light of Tesla's breaches of the
contracts, Walmart now seeks a declaration that Tesla has breached its contractual obligations
and recovery of the out-of-pocket costs and other contractual payments that Tesla has refused to
pay, along with any other damages and relief that this Court deems just and proper.
PARTIES
26.
PlaintiffWalmart is a corporation organized under the laws of Delaware with its
principal place of business in Bentonville, Arkansas. Walmart operates over 5,000 retail stores
10
12 of
16
of 141
114
PDF Page 18
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
across the United States that sell food and household products, among other items. Before
February 1, 2018, Walmart was known as Wal-Mart Stores, Inc.
27.
On information and belief, Defendant Tesla is a corporation organized under the
laws of Delaware with its principal place of business in San Mateo, California, and is a wholly
owned subsidiary of Tesla, Inc.
JURISDICTION AND VENUE
28.
Jurisdiction and venue in this Court are proper under the Solar Power & Services
Agreements ("SPSAs"), Solar Power Lease and License Agreements ("SPLLAs"), and Solar
Power and Energy Storage Services Agreements ("SPESSAs") between Walmart (or related
entities) and Tesla, and under CPLR 301, 302(a), 501, and 503(a).
29.
The parties to the SPSAs, SPLLAs, and SPESSAs either agreed, accepted, and
submitted themselves to the jurisdiction of the courts of the State of New York in the city and
county of New York or, on information and belief, transacted business within the state and
contracted to supply goods or services in the state in such a manner that their acts gave rise to the
causes of action enumerated in this complaint. See Appendix Z.
30.
This Court has jurisdiction over Tesla pursuant to CPLR 302(a) because it
transacts business within New York and contracts to supply goods or services in New York
(including some of the business and services at issue in this dispute), regularly does business in
New York, and derives substantial revenue from interstate and international commerce.
31.
Venue in this Court is proper pursuant to CPLR 501 to the extent that the parties
to the SPSAs, SPLLAs, and SPESSAs designated New York County as the venue for disputes
relating to, arising out of, or in connection with the SPSAs, SPLLAs, and SPESSAs. Venue in
this Court is also proper pursuant to CPLR 503(a) because none of the parties reside in the state,
permitting W almart to designate New York County as the venue for this dispute.
11
13 of
17
of 141
114
PDF Page 19
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
SUBSTANTIVE ALLEGATIONS
I.
Tesla, Inc. Acquires-and Bails Out-the Struggling SolarCity
32.
On information and belief, Tesla, Inc. acquired SolarCity on November 21, 2016.
Long before the acquisition, the ties between Tesla, Inc. and SolarCity were close ones: as
multiple news outlets have reported, Tesla, Inc.'s CEO Elon Musk developed the idea for a solarpower company in 2004 while on a road trip with his cousin, who co-founded SolarCity and
became its Chief Executive Officer. The other co-founder-another of Mr. Musk's first
cousins-was named the company's Chief Technology Officer, and Musk was the chairman of
SolarCity's board and its largest stockholder. 1
33.
On information and belief, SolarCity's business model was to design, install, and
lease rooftop solar systems and to sell the energy produced by those solar systems to consumers.
Banks and other financial institutions funded the installation process and earned a return over the
life of the solar energy contract. 2 On information and belief, SolarCity's goal was to install as
many solar systems as quickly as possible, generating the contracts that provided the foundation
for SolarCity's revenue stream. As SolarCity's CEO stated in a conference call in October 2015,
''the strategy of the company has all been about growth ... to achieve scale."3
34.
On information and belief, SolarCity's business model was ultimately a bust.
Unbeknownst to its customers until public reports later exposed its shoddy practices, SolarCity
1 Martin LaMonica, SolarCity CEO Lyndon Rive: From Burning Man to the NASDAQ, GREENBIZ (Oct. 9,
2013 ), available at https://www.greenbiz.com/blog/2013/10/09/solarcity-lyndon-rive-future-distributed-solar; Musk
Cousin Lyndon Rive, Former SolarCity CEO, to Leave Tesla, BLOOMBERGNEF (May 16, 2017), available at
https://about. bnef.com/blog/musk-cousin-lyndon-rive-former-solarcity-ceo-to-leave-tesla/.
2
LaMonica, supra note 1.
3 Austin Carr, The Real Story Behind Elon Musk's $2.6 Billion Acquisition ofSolarCity and What It Means
for Tesla's Future-Not to Mention the Planet's, FAST COMPANY (June 7, 2017), available at
https://www.fastcompany.com/40422076/the-real-story-behind-elon-musks-2-6-billion-acquisition-of-solarcity-andwhat-it-means-for-teslas-future-not-to-mention-the-planets.
12
14 of
18
of 141
114
PDF Page 20
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
suffered from "a quality assurance problem."4 Consumers began to complain about "installers
failing miserably," equipment that "just isn't installed correctly," and SolarCity's failure to
respond for months to "faulty installation" issues-a problem that "is more than just a few
poorly trained technicians" and "le[ft] customer[s] hanging for weeks on end with serious
issues."5 On information and belief, as SolarCity's problems accumulated, its stock plummeted
77% from its summit in February 2014, 6 and its debt increased thirteen-fold over a three-year
period, rising to $3.3 billion in June 2016. 7
35.
On information and belief, in a heavily criticized deal entered into on August 1,
2016, Tesla, Inc. acquired SolarCity for approximately $2.6 billion in stock, converting it into its
wholly owned subsidiary Tesla, and assumed nearly $3 billion in SolarCity's net debt, nearly
doubling Tesla, Inc.'s debt load. 8 A Wall Street Journal columnist, referring to the financial
difficulties plaguing both companies, wrote, "Tesla latching on to SolarCity is the equivalent of a
shipwrecked man clinging to a piece of driftwood grabbing on to another man without one." 9
36.
That diagnosis turned out to be accurate, if not charitable. Although Tesla, Inc.
prided itself on the fact that its "experience in design, engineering, and manufacturing should
4 Sarah Hancock, The 6 Most Common Problems with SolarCity, BEST COMPANY (June 26, 2019),
available at https://bestcompany.com/news/problems-with-solarcity.
6
Carr, supra note 3.
7 Joe Ryan, Musk Touts SolarCity Deal Synergy, But It May Be About Debt, BLOOMBERG (June 22, 2016),
available at https://www.bloomberg.com/news/articles/2016-06-22/musk-says-solarcity-deal-about-synergy-but-itmay-be-about-debt.
Tesla's Trumpeted Solar Shingles Are a Flop, MIT TECHNOLOGY REVIEW, available at
https://www.technologyreview.com/f/613541/teslas-trumpeted-solar-shingles-are-a-flop/; Bob Bryan, Tesla s
Buying SolarCity for $2.6 Billion, BUSINESS INSIDER (Aug. 1, 2016), available at
https://www.businessinsider.com/tesla-is-buying-solarcity-for-26-billion-2016-8.
8
Spencer Jakab, A Double Dose ofRisk for Tesla in SolarCity Deal, WALL STREET JOURNAL (Aug. 1,
2016), available athttps://www.wsj.com/articles/a-double-dose-of-risk-for-tesla-in-solarcity-deal-1470067165.
9
13
15 of
19
of 141
114
PDF Page 21
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
help continue to advance solar panel technology," 10 on information and belief, Tesla and Tesla,
Inc. proved unable to manage the solar panel systems that they had inherited from SolarCity, to
correct the problems that SolarCity's grow-fast business model had created, and to maintain the
already faulty solar systems that Tesla was under a contractual obligation to operate. As
elaborated below, Walmart's experience bears out Tesla, Inc.'s and Tesla's inability to turn
around and bail out the solar panel operations acquired from SolarCity.
II.
How Tesla's Solar Panel Systems Function
37.
The purpose of Tesla's solar panel systems-in technical terms, solar
photovoltaic systems-is to convert sunlight into electricity. Solar photovoltaic systems consist
of solar modules-i.e., the solar panels visible on the tops of roofs around the world-which
consist of a string of photovoltaic solar cells.
38.
The process of converting sunlight into electricity is made possible by the fact
that the sun generates massive amounts of power and radiates light particles-known as
photons-into space in all directions.
39.
When the photons strike a solar cell, they excite electrons in the surrounding
material, generating both electrical potential (or voltage) and electrical current. This process of
generating electrical potential and electrical current is known as the photovoltaic effect.
40.
Like water building up behind a dam, voltage can be thought of as electrical
pressure-the force that pushes current to flow through an electrical circuit. Electrical current
refers to the rate at which electric charges flow.
Tesla Makes Offer to Acquire SolarCity, TESLA (June 21, 2016), available at
https://www.tesla.com/blog/tesla-makes-offer-to-acquire-solarcity.
10
14
16 of
20
of 141
114
PDF Page 22
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
41.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
The photovoltaic effect results in a type of current known as direct current
("DC"), which consists of an electric current that flows in only one direction.
42.
Because the electrical grid uses alternating current ("AC") power, and because the
solar panel systems are connected to the electrical grid, the systems must convert DC power into
AC power. (AC power consists of an electric current that switches direction many times per
second.)
43.
A device known as an inverter performs this conversion from AC to DC power in
solar panel systems. The inverter than sends the AC power to the electrical grid, where it can be
metered.
44.
Devices known as connectors connect each solar module to the next, forming an
electrical "string." Multiple strings are connected to each other in a combiner box. Connectors
must be capable of enduring extreme temperatures and weather conditions, as well as shifts in
temperature, and resisting mechanical deterioration or other events that might result in
disconnection.
45.
At the back of each solar module is a junction box, which holds cables and
connectors. Each junction box contains bypass diodes, which prevent current from flowing
backwards and bypass currents when a row of solar cells is shaded or obstructed. If a portion of
a solar module becomes covered (such that photons no longer reach the module's surface),
bypass diodes-when functioning properly-allow electric current to bypass the blocked parts of
the obstructed module or, if necessary, the entire module, which prevents solar cells from
overheating and ensures that current can still flow to the end user. When a portion of a module
overheats, the area of concentrated temperature increase is known as a hotspot.
15
17 of
21
of 141
114
PDF Page 23
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
III.
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Walmart Enters into Solar Panel Agreements with Tesla
46.
Between February 2010 and February 2016, Walmart and/or related entities
entered into at least 244 contracts, known as Solar Power & Services Agreements, Solar Power
Lease and License Agreements, or Solar Power and Energy Storage Services Agreements, with
Tesla. The SPSAs, SPLLAs, and SPESSAs at issue in this lawsuit are attached as Exhibits 1244 and are collectively referred to as the "Agreements." The Agreements require Tesla to
install, maintain, and operate solar photovoltaic systems at Walmart stores.
47.
48.
The Agreements broadly fall into two categories: (1) those that are structured as
leases and (2) those that are structured as solar power purchase agreements.
-
49.
16
18 of
22
of 141
114
PDF Page 24
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
50.
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
As owner and operator of the solar photovoltaic systems, Tesla took on specified
obligations.
51.
Tesla's covenants and warranties to Walmart under the Agreements generally
provide that Tesla will, among other things:
•
17
19 of
23
of 141
114
PDF Page 25
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
I
I
I
I
I
I
•
18
20 of
24
of 141
114
PDF Page 26
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
I
I
52.
•
The Agreements also impose obligations on Tesla in the event of system
malfunctions or emergencies.
53 .
•
19
21 of
25
of 141
114
PDF Page 27
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
•
•
56.
The Agreements outline certain procedures regarding Tesla's assignment of rights
under the Agreements. See Appendices AA, BB.
20
22 of
26
of 141
114
PDF Page 28
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
•
•
•
•
60.
Tesla has breached multiple provisions of the Agreements with respect to all of
the solar panel system sites that it operates for Walmart-most prominently, Tesla's promise to
construct, install, and maintain the solar panel systems with due care and to handle the solar
panel systems in accordance with Prudent Industry Practices. Tesla's conduct falls far short of
satisfying those baseline standards and reflects gross negligence.
IV.
Walmart Roofs Catch on Fire Due to Tesla's Solar Panels
61.
Between March and May 2018, three W almart properties in three different
states-all with solar panel systems owned, operated, and maintained by Tesla-experienced
21
23 of
27
of 141
114
PDF Page 29
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
fires that originated with Tesla's solar panels, resulting in significant damage and endangering
the safety of Walmart customers, employees, and the public.
62.
On March 7, 2018, Walmart store 2124 in Beavercreek, Ohio, experienced a roof
fire caused by the Tesla-installed solar panel system at that site. Local news coverage depicted a
massive plume of black smoke emerging from the Walmart roof and stated that "[a] light smoke
haze was reported inside the store" as shoppers were evacuated. 13 On March 8, 2018, Tesla
representatives arrived at the store, without providing Walmart any notice, removed materials
from the site, and conducted an investigation of site conditions.
63.
The fire apparently originated in a portion of a solar module identified as inverter
"D." On information and belief, various installation, inspection, and maintenance problems
contributed to the generation and build-up of heat in the inverter, eventually causing the fire that
erupted on the roof. One of the problems identified by subsequent inspections was that inverter
housing-which had been improperly sealed during installation-permitted water intrusion into
the inverter, likely contributing to the fire's ignition. Another problem was that the inverter fuse
box contained brass/metal bolts, rather than the types of fuses required by both the
manufacturer's installation manual and the National Electrical Code-an industry-wide set of
safety standards regarding electric wiring and installation. During the fire, the brass/metal bolts
had melted, permitting the fire to spread to other areas of the inverter and the solar panel system.
Had the solar panel system been properly installed and maintained, the likelihood that such a fire
would have occurred at all, or that it would have spread to the same degree, would have been
significantly reduced.
Beavercreek Walmart Reopens After Solar Panel Fire (Mar. 7, 2018), available at
https://www.whio.com/news/local/beavercreek-walmart-reported-fire/2bbIQsfcblwva2oPxoCVGM/.
13
22
24 of
28
of 141
114
PDF Page 30
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
64.
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
The fire caused significant damage to the Walmart store and its merchandise,
resulting in the store's closure for eight days. Repair costs totaled approximately $557,988, and
merchandise with a retail value of approximately $194,478 was destroyed. Walmart also
incurred approximately $50,000 in consultant's and attorneys' fees in connection with
investigating the fire. The total amount of out-of-pocket damages incurred as a result of the fire
was approximately $784,293. Tesla paid a portion of those damages, but expenses for
consultant's and attorneys' fees remain outstanding.
65.
On May 21, 2018, a second Walmart site-store 3843, located in Denton,
Maryland-experienced a roof fire that originated in the Tesla-installed solar panel system at
that site.
66.
Although the cause of the fire is unknown due to Tesla's failure to provide a final
root cause analysis, on information and belief, the fire involved the solar panel system's inverter
and was likely attributable to one or more of various installation, inspection, and maintenance
issues affecting the site.
67.
The fire caused significant damage, including punctures of the membrane of the
store's roof. Walmart also incurred approximately $100,000 in consultant's and attorneys' fees
in connection with investigating the fire.
68.
Tesla did not provide Walmart with notice of this fire until November 2018, well
beyond the 24-hour period within which the applicable Agreement required Tesla to notify
Walmart of any malfunction or emergency.
69.
At or about 10:26 a.m. on May 29, 2018, a third Walmart site-store 2181,
located in Indio, California-experienced a roof fire originating within one of the modules of the
Tesla-installed system. Walmart employees discovered the fire upon observing smoke drifting
23
25 of
29
of 141
114
PDF Page 31
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
through a skylight and contacted the fire department. Local news coverage described a scene of
"[t]hick black smoke billow[ing] from the roof' with the solar panels "engulfed in flames, which
spread into the store," "while customers and employees were evacuated to the parking lot." 14 A
firefighter who responded to the scene was treated for smoke inhalation. Just hours before the
fire started, Tesla personnel had been dispatched to the store, likely because Tesla observed
irregularities in the solar panel system's functioning or received an error message related to the
system's inverters. These personnel were evidently unable to correct the issues that led to their
site visit, further demonstrating the incompetence and gross negligence of Tesla personnel and
their inability to act in conformity with Prudent Industry Practices.
Images of Indio Fire Damage
Lauren Coronado, Fire at Indio Walmart Store Blamed on Solar Panels: Solar Panel Fires Are
"Uncommon, " Experts Say (May 29, 2018), available at https://www.kesq.com/news/fires-caused-by-solar-panelsare-uncommon-experts-say/7 4 7 502440.
14
24
26 of
30
of 141
114
PDF Page 32
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Inspection Team at Site of Indio Fire
25
27 of
31
of 141
114
PDF Page 33
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Module Junction Box at Indio Site (Likely Source of Fire)
70.
Investigation of the Indio fire revealed a number of installation and maintenance
issues indicative of pervasive, systemic negligence and conduct that fell far below the standard
of Prudent Industry Practices. As described in greater detail below, among the issues identified
were module hotspots, improper grounding and wiring methods, improper connector torqueing,
and erroneous as-built drawings.
71.
The fire caused significant damage to the W almart store and its merchandise.
Repair costs totaled approximately $3,134,122, while merchandise with a retail value of
approximately $6,048,496 was destroyed. To date, Walmart has incurred approximately
$350,000 in consultant's and attorneys' fees-and expects to incur at least an additional
$100,000 in consultant's and attorneys' fees-in connection with investigating the fire. The total
amount of out-of-pocket damages incurred as a result of the frre is anticipated to be
approximately $8,229,516.
26
28 of
32
of 141
114
PDF Page 34
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
72.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
While the fires at Walmart's Beavercreek, Denton, and Indio stores were
particularly notable because they occurred within such a compressed period of time, they were
not the first fires that occurred at Walmart stores due to Tesla's negligence. In August 2012,
Tesla's solar panels caused an electrical fire on the roof of a Walmart store in Long Beach,
California, resulting in the store's evacuation and causing nearly $90,000 in damages. Faulty
connectors caused fires at stores in Milpitas, California, in 2016, resulting in over $500,000 in
damages, and Lakeside, Colorado, in 2017. And in January 2017, Tesla's faulty installation of
conduits at a Walmart-owned store caused a power outage that resulted in over $55,000 in
damages for Walmart. Only years later-upon the occurrence of the multiple fires in 2018---did
Walmart learn that these incidents were not one-off errors on Tesla's part but were just one
symptom of a widespread pattern of negligence and unprofessionalism.
73.
Because Tesla has never provided final root cause analyses for five of these six
fires, it is possible that other risk factors contributing to the fires remain unknown, and Walmart
lacks any basis to conclude that the risks that caused these fires are absent. To the contrary, as
Walmart's subsequent analyses and investigations revealed, these fires were plainly not the result
of isolated failures, such as discrete equipment malfunctions or other narrow issues that can be
isolated to particular sites or addressed through one-off, site-specific remediation. The fires are
symptoms of broad, systemic issues arising from Tesla's failure to abide by Prudent Industry
Practices and widespread negligent or grossly negligent installation, inspection, operation, and
maintenance of all of the solar panel systems, as subsequent analyses and investigations made
clear.
V.
Tesla De-Energizes the Solar Panels, and Two More Fires Occur
74.
Aware of at least two fires that had caused significant damage due to systemic
negligence in the installation and maintenance of the solar panel systems, Walmart provided
27
29 of
33
of 141
114
PDF Page 35
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Tesla with written notice on May 31, 2018, that Tesla had materially breached the parties'
Agreements by failing "to properly maintain and inspect the solar energy generation systems."
Walmart noted that, "given the fact that the causes of the fires remain under investigation and in
light of the inadequacy of Tesla's solar system inspection regimen, Tesla's breach has resulted in
the creation of a significant safety hazard ... , putting Walmart's customers, employees,
facilities and merchandise all at risk. Indeed, Walmart emphasizes the extr[aord]inary health and
safety concerns that have been created by the Tesla solar generation systems and the resultant
need to act immediately." Referring to the implicated Walmart sites as the "Affected Sites,"
Walmart elaborated:
Since the root causes of these fires [are] unknown, there is no way for Walmart to
reasonably conclude that the solar systems at other Affected Sites [do] not pose a
hazard with regard to the potential for additional roof fires, especially since
Tesla's current inspection procedures appear to have been inadequate to prevent
the roof fires at Indio and Beavercreek. Walmart will not jeopardize the health
and safety of its employees and customers by assuming the safety of the Tesla
systems at the Affected Sites.
Walmart also demanded that Tesla take several "mitigation measures" "until Tesla has
demonstrated to Walmart's satisfaction [that] the solar system at each Affected Site no longer
represents a potential fire hazard." Among those mitigation measures was immediate deenergization of all solar panel systems and suspension of all solar operations at each of the
Affected Sites. Walmart also demanded that Tesla investigate and analyze the two roof fires of
which Walmart was aware and that it develop a comprehensive inspection and remediation plan.
Walmart's May 31, 2018 notice of breach is attached as Exhibit 245.
75.
On June 1, 2018, Tesla responded to Walmart's letter, denying that it had
breached any of the Agreements but "agree[ing] it would be prudent to de-energize, inspect and
28
30 of
34
of 141
114
PDF Page 36
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
remediate (as may be needed as Tesla and Walmart mutually agree) all of the" sites referenced in
Walmart's letter. (Emphasis added.) Tesla's June 1, 2018 letter is attached as Exhibit 246.
76.
Tesla subsequently de-energized the solar panel systems at all of the Affected
Sites, but it has undertaken no meaningful steps to cure the material breaches described in
Walmart's notice of breach. For instance, for over a year, Tesla refused to provide final root
cause analyses for any of the fires that occurred at Walmart stores. Tesla finally provided a
purported final root cause analysis for the Beavercreek site on August 8, 2019, but the other final
root cause analyses remain outstanding. All of the information received by Walmart to date
indicates that there are widespread, systemic issues rendering the solar panel systems deficient
and dangerous and that Tesla is unable or unwilling to inspect, maintain, and operate the systems
in a safe manner consistent with industry standards. Given Tesla's failure to cure its breaches,
Walmart submitted a notice of continued breach to Tesla on September 11, 2018, asking Tesla to
provide its complete analysis of the Beavercreek and Indio fires and to explain the remediation
and repair efforts that it had undertaken at any sites. Walmart's September 11, 2018 notice of
continued breach is attached as Exhibit 24 7.
77.
Indeed, de-energization has proven insufficient even to prevent frres caused by
Tesla's negligence at de-energized sites. On November 29, 2018, Walmart discovered yet
another solar-related fire, this time at Walmart store 1903 in Yuba City, California, originating in
a solar panel system that had been de-energized in June 2018 (and had not been thereafter reenergized). The discovery of this fire brought the total number of fires at W almart stores to
seven.
78.
A Walmart contractor (not Tesla) called the Yuba City fire to Walmart's attention
after observing signs of a recent fire on the store's roof. The contractor took photos showing that
29
31 of
35
of 141
114
PDF Page 37
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
wires were still sparking at the time of discovery, indicating that the fire had occurred recently.
Photographs also revealed that arcing had affected numerous wires at the Yuba City site over an
extended period of time, degrading the wires' insulation and resulting in the incineration of a
substantial section of the store's roof. The extent of the damage to the wires indicated that the
fire was sufficiently severe that it could have burned the entire store to the ground. Because of
Tesla's failure to provide a final root cause analysis, Walmart has no assurance that the next
store to experience a Tesla-caused fire will be so fortunate.
Images of Yuba City Roof, Evidencing Fire and Arcing
30
32 of
36
of 141
114
PDF Page 38
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
79.
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Walmart communicated its findings regarding the Yuba City frre to Tesla, which,
despite its duty to monitor and maintain the systems in a safe operating condition, was either
unaware of the fire until notified by Walmart or hid its knowledge of the fire from Walmart.
80.
Equally or more troubling, on information and belief, Tesla received notification
of, and did not disclose to Walmart, a ground fault alert that occurred at the Yuba City site
between June 5, 2018, and September 11, 2018-a significant red flag that should have alerted
Tesla to the presence of dangerous conditions at the site. Tesla either failed entirely to respond
to that alert or sent personnel to the site who were insufficiently trained (or otherwise negligently
failed) to identify and remediate the issues that caused the ground fault and likely caused or
31
33 of
37
of 141
114
PDF Page 39
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
contributed to the fire. Tesla did not inform Walmart of the ground fault at any time before
November 29, 2018, when Walmart learned of the fire from another contractor.
81.
Consistent with its failure to monitor and maintain the site, Tesla failed to inspect
the site properly after the fire. For example, instead of closing a combiner box door at the end of
the inspection, a Tesla technician left it wide open, exposing it to the elements and resulting in
further risks to the Walmart site.
82.
Tesla's actions and/or omissions with respect to the Yuba City store fell well
below accepted industry standards and are reflective of Tesla's widespread negligence or gross
negligence in the operation and maintenance of the solar panel systems.
83.
The fire at Walmart's Yuba City store has resulted in substantial damages,
including property damages and consultant's and attorneys' fees. Repair costs totaled
approximately $50,000 and, to date, Walmart has incurred approximately $75,000 in consultant's
and attorneys' fees in connection with investigating the fire.
VI.
Walmart's Investigations Reveal that Tesla Was Grossly Negligent
84.
Following the initial fires, Walmart began reviewing the conditions at the sites
where the fires had occurred, as well as other sites. Walmart and its consultants quickly
identified a troubling pattern of deficiencies, negligence, and failure to satisfy Prudent Industry
Practices. Indeed, the conditions observed at the Indio location-including melted glass, charred
debris, and cracked modules-were among the worst observed by Walmart's consultants over
the course of their entire careers. Just as concerning, this review confirmed that Tesla's
inspection protocol was sub-industry standard and was poorly suited to addressing or
remediating the problems that had endangered Walmart employees and customers. The
conclusion of these investigations was that Tesla had repeatedly failed to exercise due care,
failed to follow standard Prudent Industry Practices, and failed to follow manufacturing
32
34 of
38
of 141
114
PDF Page 40
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
requirements, as mandated by the Agreements, at all of the sites at which its solar panels were
installed. Due to the poor condition of the solar panels and Tesla's demonstrated inability to
maintain them, their continued operation posed-and to this day poses-an imminent risk of
damage or injury to individuals at Walmart sites and to Walmart property.
85.
The evidence uncovered by Walmart revealed that the solar panel systems had
been installed rapidly and that basic quality-control checks had not been undertaken. On
information and belief, approximately 80 to 100 installations had occurred within a one-year
period, far exceeding a responsible or safe number of installations over that time span. The
excessively rapid installation process resulted in a number of quality control oversights that
almost certainly would have been corrected had installation and maintenance procedures been
followed more rigorously or undertaken more carefully.
86.
The evidence from Walmart's inspections also revealed that Tesla had failed
properly to hire, train, and supervise its contractors and subcontractors to ensure that they
exercised due care-including use of proper methods and tools-in installing solar panel
systems.
87.
Many of the Tesla solar panels inspected by Walmart were suffering from
hotspots, resulting in cracking of the back sheets on solar modules and compromising electrical
insulation. This condition compounded the danger and substantially heightened the risk of fire:
the hotspots reflected an excessive build-up of heat in the solar modules, which in turn wore
down the insulation that was designed to keep electrical currents flowing within their proper
paths and to separate electric conductors from their surrounding materials. These conditions can
readily lead to electrical fires capable of spreading across an entire rooftop.
33
35 of
39
of 141
114
PDF Page 41
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
88.
Making matters worse, Tesla had flagged or identified hotspots by placing pieces
of tape over the affected areas. Because this tape prevented sunlight from reaching the solar
panel, it exacerbated the problem by further concentrating heat in certain areas of the solar
module-an extremely basic error that a competent inspection team would never have
committed.
Images of Tape Used {Improperly) to Flag Hotspots on Walmart Roofs
34
36 of
40
of 141
114
PDF Page 42
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
89.
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Tesla's inspectors also had not implemented proper means of locating and
remediating hotspots. They had not adopted uniform standards or directives for identifying
hotspots and had not developed criteria to identify when heat differentials between different parts
of a module (or different modules) qualified as a hotspot. To locate hotspots, Tesla's inspectors
sometimes relied on drones, which generated images of the roofs that lacked sufficient resolution
to identify hotspots; as a result, the inspectors missed hotspots that Walmart's consultants found
using more reliable methods. On other occasions, Tesla inspectors performed cursory infrared
scans from a comer of the roof, but this process did not indicate and would not necessarily have
indicated all hotspots across an entire photovoltaic system. Using a thermal gun, a Walmart
consultant identified four to six hotspots that Tesla employees had overlooked on just one section
of a W almart roof; one of these hotspots had reached a temperature of over 200 degrees
Fahrenheit, as compared to surrounding cells that remained at temperatures of only about 85
degrees Fahrenheit. (The standard temperature differential used to identify a hotspot is a
difference of about 60 to 70 degrees Fahrenheit between a solar cell and its surrounding cells.
Notably, the solar panels contain plastic components, which begin to degrade at about 160
degrees Fahrenheit.) The hotspots observed during these inspections reflected some of the worst
conditions that Walmart's consultants had seen on solar panels over the course of their careers.
Some hotspots had resulted in the browning or yellowing of the solar modules and were visible
to the naked eye---or should have been, had Tesla's inspectors taken the time to look for them.
The conditions were particularly appalling given that hotspots do not develop over the course of
one or two days, but rather form over extended periods of time. The prevalence of hotspots on
the Tesla systems reflected a long-term pattern of negligence that had gone ignored for years and
had not been addressed by proper maintenance procedures.
35
37 of
41
of 141
114
PDF Page 43
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Image of Drone Scan Showing Inadequate Resolution
Images of Hotspots on Solar Modules and Associated Module Cracking
-~-
I
'
I
-
- - - ~-
36
38 of
42
of 141
114
PDF Page 44
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
90.
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
The poor condition of Tesla's solar modules revealed likely explanations for the
hotspots that were plaguing Walmart's roofs. Those modules suffered from numerous defects
37
39 of
43
of 141
114
PDF Page 45
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
that are precursors to hotspots, including the yellowing of encapsulant (the adhesive material
used to connect components of a solar panel module) and the presence of micro-cracks in the
solar modules. Both of those conditions reflect degradation of the solar modules in a manner
that might affect bypass diodes and thus contribute to significant heat increases in segments of
the solar panel systems.
91.
The inspections also disclosed evidence that Tesla had negligently installed and
maintained connectors, especially field-made connectors, across the inspected sites. For
example, some connectors had been "cross-matched," meaning that incompatible connectors had
been used with one another. When connectors are not matched properly, electric current flowing
between the connectors is more likely to encounter resistance-and resistance generates heat,
which generates fires. In addition, the Tesla teams consistently failed to torque (or tighten) fieldmade connectors-another basic requirement of the duty of care, Prudent Industry Practices, and
manufacturer specifications. To ensure proper torqueing, inspectors should have used a special
tool known as an MC4 torque tool. However, some inspectors were using a plastic MC4 tool,
which is insufficient to ensure proper torque. Indeed, a Tesla inspector admitted that Tesla was
using a plumbing tool (rather than an electrical tool) to tighten connectors, and the standards that
this inspector used to determine when a connector was properly torqued did not meet industry
threshold requirements. The lack of torqueing leads to moisture and water intrusion. Once these
or other substances enter the space where electricity is intended to flow, they may cause the
electricity to deviate from its intended path-and, as excessive current is channeled through
certain routes, overheating and, eventually, fire are more likely to occur.
38
40 of
44
of 141
114
PDF Page 46
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Image of Improperly Threaded Connector
(J'hreads at Bottom ofImage Should Not Be Visible)
92.
Poor wire management practices were also evident at multiple Walmart sites. In
some cases, sharp points-from, among other items, rough concrete or metal edges-were
cutting into or abrading wires. In other cases, temperature changes resulted in the expansion and
contraction of wires over time, moving the wires and resulting in their abrasion or exposure. In
still other cases, conduits were overstuffed, containing too many wires to be safely used. And
wire insulation failures resulted in the exposure of current-carrying electrical conductors to the
elements, creating a substantial safety and fire hazard. By degrading the insulation of the solar
panels' wiring, these factors increased the risk that an electric current would deviate from its
intended path and cause a fire that would spread to surrounding panels. Many of these issues
could have been-but were not-addressed through industry standard maintenance procedures,
including resealing or reinsulating exposed wires.
39
41 of
45
of 141
114
PDF Page 47
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Image of Wires Exposed to Sharp Edges
Images of Abraded Wires
40
42 of
46
of 141
114
PDF Page 48
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Image of Improper Module Grounding
(Washer Should be Between Lug and Module Frame)
41
43 of
47
of 141
114
PDF Page 49
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Image of Wire Improperly in Contact with Roof
93.
Walmart's inspections also disclosed evidence of improper grounding at multiple
sites. In the context of electrical systems, "grounding" is critical because it provides a reference
(or equilibrium) point that ensures the safe production of electric energy. Electricity generally
flows from areas with a high amount of potential energy (typically referred to as a "positive
terminal") to areas with a lower amount of potential energy (typically referred to as a "negative
terminal")-just as gravity causes water to flow from higher to lower places. "Ground" refers to
an electrical reference point for a circuit; proper grounding ensures that electric currents do not
jump to or interact with metallic items or other conductors that reside near an electric charge.
Improper grounding can cause an electric system to trip (i.e., to stop conducting electricity) or to
arc (i.e., to experience the flow of electricity through an unintended path); arcing, in turn, may
cause insulation to fail and result in fires.
42
44 of
48
of 141
114
PDF Page 50
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
94.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
With respect to solar photovoltaic systems installed at Walmart stores, proper
grounding means that materials conducting electric charges must connect to a grounding
electrode outside of the Walmart store. Upon reviewing Tesla's inspections ofWalmart stores,
however, it became clear that multiple conductors were not properly grounded according to
standard principles of electrical systems as outlined in the National Electrical Code. This fact, in
conjunction with Tesla's poor wire management practices, demonstrated that Tesla had run afoul
of basic industry conventions in the installation, operation, and maintenance of its solar panel
systems-and had done so in a way that exposed Walmart stores, customers, and employees to
fires.
95.
Tesla's maintenance efforts at Walmart sites fell dramatically short of addressing
the problems that Walmart's inspections had uncovered. For instance, industry practice is to
conduct insulation resistance testing (also known as Megger testing) at least once per year to
ensure that insulation has not degraded to a dangerous degree. But Tesla had never conducted
insulation resistance testing on certain conductors, plainly violating these standards.
96.
Tesla inspection personnel frequently missed or improperly identified obvious
and visible risks with the solar panel systems and were often negligent in performing inspections.
Most glaringly, Tesla inspection personnel violated elementary safety standards by negligently
stepping on modules (potentially contributing to micro-cracks), using the wrong equipment for
basic tasks, and-in one instance-leaving a combiner box enclosure open and exposed to the
elements after an inspection. Tesla also relied on drone fly-overs and other shortcuts when
inspecting sites, rather than sending qualified and properly trained solar inspectors to physically
inspect solar panel systems with appropriate equipment-the established industry method for
conducting thorough inspections.
43
45 of
49
of 141
114
PDF Page 51
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Image of Tesla Inspector Stepping on Solar Modules
(Inspector's Foot Visible in Bottom Right ofImage)
97.
Tesla's failure to document the conditions at numerous sites made the inspection
process much more difficult than it should have been. When an engineering team designs a solar
panel system or outlines the processes for installing it, the team maps out a blueprint. During the
installation process, deviations from that blueprint inevitably occur. As a result, when
construction concludes, the National Electrical Code indicates that the installation team must
prepare what are known as "as-built" drawings, which are supposed to accurately reflect the
locations and characteristics of the solar panel system and its components, exactly as they were
installed at the site in question. Accurate as-built drawings are critical to proper inspection,
maintenance, and operation, in no small part because technicians, firefighters, and other
individuals interacting with the solar panels must be able to rely on the drawings to locate
specific equipment, safety switches, and other components. However, discrepancies existed
44
46 of
50
of 141
114
PDF Page 52
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
between the solar panel systems installed at various sites and the so-called "as-built" drawings
that were supposed to accurately depict and reflect those solar panel systems.
98.
Tesla's poor record-keeping and documentation efforts extended beyond the
purported "as-built" drawings. Tesla's records were unusable to non-Tesla employees who tried
to review them-and even to Tesla's employees themselves: one of Tesla's own field support
managers admitted that he could not understand Tesla's reports. Despite multiple requests for
records regarding installation dates and subcontractors who worked on the solar photovoltaic
systems, Tesla failed to provide the requested records. These documents would have proven
critical to Walmart's assessment of proper remediation methods, but Walmart and its consultants
have yet to see them. If these records existed, they would undoubtedly have confirmed the
widespread deficiencies in Tesla's performance that Walmart's inspections already revealed.
99.
The mountain of disturbing evidence collected during the inspections of solar
panel sites made clear that system-wide risks affected Tesla's solar panel systems, all of which
helped to explain why the solar panels were causing fires on Walmart's roofs. The installation
problems with Tesla's solar panels spanned multiple locations, demonstrating that systemic Tesla
malfeasance was the cause of the solar panel systems' problems. Moreover, on information and
belief, Tesla itself handled all operational and maintenance work in-house, demonstrating that
the widespread failures were, once again, attributable to Tesla.
100.
The inspections made clear that: (1) installation, operation, maintenance, and
inspection issues had caused the solar panel fires; (2) these issues resulted from grossly negligent
conduct on Tesla's part that did not accord with Prudent Industry Practices; (3) Tesla failed to
live up to standards of reasonable care and to industry standards with respect to solar panel
installation, operation, maintenance, and inspection practices; and (4) the fires could have been
45
47 of
51
of 141
114
PDF Page 53
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
prevented had Tesla abided by its obligations under the contracts. Tesla has never provided
Walmart with any information indicating an alternative cause for any of the fires that occurred at
Walmart's stores.
101.
The inspections also made crystal clear that the fires had not been caused by one-
off problems at specified Walmart sites. They resulted from system-wide deficiencies related to
the installation, operation, maintenance, and inspection procedures that Tesla had employed, and
the fires could have been prevented had Tesla acted consistent with the standard of care and
adopted the industry-standard procedures that it had contractually agreed to employ.
102.
No later than early 2019, by the time Walmart's consultants had completed an
initial round of inspections, they concluded that Walmart stores with Tesla solar panels were
unsafe for shoppers and employees. The consultants themselves would not have wanted to step
foot inside the stores or allowed their families to do so if the sites were energized. In light of the
extensive problems with Tesla's solar panel systems and its negligent maintenance and
inspection procedures, re-energizing the solar panel systems at any W almart locations would
have posed-and, to this day, continues to pose-an imminent risk of harm to Walmart, its
customers, its employees, and its property.
VII.
Tesla's Inspections Confirm Walmart's Conclusions
103.
The results of Tesla's own inspections, conducted by its own personnel, confirm
Walmart's findings.
104.
Despite the severity of the safety threat posed by Tesla's solar panels and the
widespread nature of the deficiencies, Tesla has not reacted with the urgency that one would
expect from a company that had installed solar panels that were catching on fire. Far from it:
Tesla's cavalier responses have only confirmed Walmart's worries that its contractual
46
48 of
52
of 141
114
PDF Page 54
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
counterparty is incapable of providing maintenance and inspection services sufficient to ensure
the safety ofWalmart's customers, employees, and property.
105.
Despite Walmart's repeated requests over a 14-month period, Tesla refused to
provide a single final root cause analysis until August 8, 2019, when it produced a purported
final root cause analysis for the Beavercreek site. Tesla has yet to produce final root cause
analyses for any of the other sites that experienced fires.
106.
Tesla's conduct in investigating the Walmart sites and developing a remediation
protocol has done nothing to allay Walmart's concerns. In fact, it has enhanced those concerns.
Tesla's initial remediation protocol, offered in response to Walmart's May 31, 2018, request for
such a protocol, fell far below industry standards and was unacceptable to address the problems
that had caused fires at Walmart locations. One of Tesla's own employees admitted that Tesla's
inspection protocol was inadequate, and Tesla team members conceded that they were neither
trained in nor capable of performing the inspections. In one instance, they were unable to locate
a basic component of a solar panel system. Nonetheless, Tesla ignored these deficiencies,
plowing ahead with a series of cursory and improper inspections. Among other flaws, these
inspections suffered due to the absence of accurate as-built drawings, which made it nearly
impossible to identify the precise locations that required inspection or that might be prone to
problems.
107.
When Walmart demanded that Tesla revise its inspection procedures, the new
protocols continued to suffer from deficiencies. For instance, Tesla used infrared imaging to
identify hotspots. But, using a handheld device, a Walmart consultant identified hotspots on the
roof of a Walmart site and compared the hotspots that he had identified to those identified by the
Tesla subcontractor. The subcontractor had missed a number of hotspots.
47
49 of
53
of 141
114
PDF Page 55
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
108.
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
As Tesla began preparing inspection reports for Walmart locations, the reports
confirmed the presence of widespread, systemic flaws in the solar panel systems. To date, Tesla
has inspected and provided Walmart with inspection reports for 29 sites; those reports have
identified a total of at least 157 action items requiring repairs or replacement of solar panel
system components--48 of which Tesla characterized as reaching "level 2" or "level 3" severity,
reflecting conditions that Tesla believed rendered the affected sites unsafe or potentially unsafe.
Those figures understate the severity of the problems that Tesla's own inspectors have
uncovered, because numerous deficiencies that Tesla classified as "level 1" raise serious safety
concerns, and other issues were wrongly or erroneously omitted from Tesla's lists of action
items. For example, many of the reports did not include photos of damaged or defective
modules, making it impossible to evaluate the severity of any problems. The reports were also
difficult to evaluate given the references to extremely indeterminate action items (e.g., "DC
Power Supply failure in Solectria inverter") and vagueness in explaining how remediation plans
were (or would be) implemented. These problems were compounded by inconsistencies in the
methods and techniques used to inspect different sites-once again making it nearly impossible
for Walmart to determine whether Tesla was fixing any of the problems that had contributed to
the fires.
109.
Recognizing that Tesla's inspection reports omit or understate the deficiencies of
the solar panel systems, those reports reveal, at a minimum, that:
•
at least 28 of the 29 inspected sites presented issues with wire management,
ranging from the presence of hanging or unorderly wires, wires that were
exposed to sharp edges, the presence of unnecessary jumpers, problems
48
50 of
54
of 141
114
PDF Page 56
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
relating to conduits, and instances in which wires with degraded insulation
were found lying directly in puddles of water;
•
all 29 of the inspected sites had incorrect as-built or site drawings that
misidentified the locations of various solar panel system components and
misidentified the type and number of sub-parts within those components;
•
at least 25 of the 29 inspected sites had solar panel modules (which came from
several different manufacturers) that were broken, damaged, or presented hot
spots, causing Tesla's own technicians to recommend replacing those
modules;
•
more than half of the 29 inspected sites had issues with connectors-due to
overheating, mismatching of connectors, use ofnon-MC4 connectors in
violation of manufacturer specifications, improperly sized connectors,
improper crimps and damaged connector pins, overheated connections, rust,
or generally poor installation work;
•
all 29 of the inspected sites had missing or incorrect slipsheets, placards, or
labels for certain components; and
•
almost two-thirds of the 29 inspected sites presented issues with improper
system grounding.
110.
Based on these findings, the reports reveal numerous safety hazards reflecting
systemic breaches of the Agreements-all of which were caused initially by Tesla's faulty
installation practices or were allowed to occur over time by Tesla through faulty operation,
maintenance, and inspection processes.
49
51 of
55
of 141
114
PDF Page 57
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
111.
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Tesla has also proven that, consistent with its failure to maintain the systems
adequately over a multi-year period, it is incapable of addressing and remediating the problems
identified in its inspection reports. On information and belief, Tesla did not perform all of the
corrective measures that it claimed to have performed in those inspection reports, including
replacement of all field-made connectors at certain sites. In addition, even after Tesla's
purported inspection and repair efforts, many connectors remained under-torqued, and some
could be unscrewed with one's bare hands. Tesla's inspections, much like its installation and
maintenance practices generally, were conducted carelessly and superficially and were
inadequate to ensure site safety; similarly, its inspection reports-much like its record-keeping
generally---contain inaccuracies that render the reports wholly unreliable.
112.
Tesla's recalcitrance extends beyond its unwillingness to adopt appropriate safety
procedures and maintenance protocols. Despite months of back-and-forth with Walmart, Tesla
has yet to pay one cent of the out-of-pocket damages and consulting/inspection fees that Walmart
incurred as a result of the fires at Denton, Indio, and Yuba City, as well as consultant and
attorneys' fees related to the Beavercreek fire. Tesla has been on notice ofWalmart's claims
since January 2019 at the latest and, as to the Beavercreek, Denton, and Yuba City frres, has
never disputed Walmart's documentation of its damages. Nonetheless, Tesla did not compensate
Walmart for any losses from Beavercreek until August 7, 2019---one day before the cure period
was set to expire-and has not compensated Walmart for any losses related to the fires at the
other three sites. Nor has Walmart received any indication that Tesla named Walmart as an
additional insured on Tesla's insurance policy, further jeopardizing Walmart's ability to obtain
payment.
50
52 of
56
of 141
114
PDF Page 58
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
113.
Moreover, in the course of discussions between Walmart and Tesla, it also
became clear that Tesla had assigned each of the Agreements to third parties without providing
notice to Walmart of any of the assignments, as was required under the Agreements. See
Appendix AA. Although Walmart has asked for information about the Tesla investors who
purportedly have interests in the Agreements through these assignments (as well as for other
information about the structure of the assignments), Tesla has declined to provide it. Tesla's
invalid assignments have impeded Tesla's compliance with the terms of the contract. For
example, at times Tesla has justified its refusal to take certain steps by claiming that it needs to
gain the consent of its assignees-a needless and illegitimate roadblock that was caused entirely
by Tesla's invalid assignments.
VIII. Walmart (Re-)Notifies Tesla of Its Breaches
114.
By July 2019, over a year after Walmart learned of the fires that were erupting on
the roofs of its stores, it was startlingly clear that Tesla had no intention of correcting its past
mistakes or doing what is needed to ensure safe conditions for Walmart shoppers and employees.
On July 9, 2019, pursuant to the rights granted to Walmart under the Agreements, Walmart
notified Tesla for a second time of its numerous material breaches of the Agreements, providing
a detailed explanation of the facts that had led Walmart to conclude that these breaches had
occurred and remained uncorrected. Walmart's notice of breach is attached as Exhibit 248.
115.
Walmart gave Tesla one final 30-day period to cure its breaches (to the extent
cure was possible). Walmart requested that Tesla:
•
provide root cause analyses to Walmart for each of the Beavercreek, Denton,
Indio, and Yuba City fires;
51
53 of
57
of 141
114
PDF Page 59
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
•
demonstrate to Walmart's satisfaction that, notwithstanding years of negligent
inspection, maintenance, and operation, Tesla was capable of providing those
services in a prudent, non-negligent manner going forward-including a
demonstration to Walmart's satisfaction that Tesla had fundamentally overhauled,
expanded, and upgraded its internal resources for providing these services
(through proper hiring, training, and supervision of a sufficient number of
qualified solar professionals) or that Tesla was prepared to contract with a
qualified third-party provider of those services at Tesla's expense;
•
formally adopt a substantially enhanced inspection protocol satisfactory to
W almart, which would take into account the conclusions of the root cause
analyses for the Beavercreek, Denton, Indio, and Yuba City fires;
•
provide written certification to Walmart that (i) none of the root causes of the
Beavercreek, Denton, Indio, and/or Yuba City fires were present at any of the
Walmart stores with Tesla solar panels, (ii) a thorough inspection of all potential
sources of human error and equipment defects following the agreed enhanced
inspection protocol had been conducted for all Walmart stores with Tesla solar
panels; and (iii) all of the stores had been fully remediated and did not pose a risk
of a future fire;
•
pay Walmart the Performance Guarantee Payments owed to Walmart under the
Agreements since de-energization; and
•
fully compensate Walmart for its out-of-pocket damages, including consultant and
attorneys' fees, resulting from each of the Beavercreek, Denton, Indio, and Yuba
City fires.
52
54 of
58
of 141
114
PDF Page 60
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
116.
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
On July 29, 2019, Tesla responded to Walmart's notice of breach with a series of
unsubstantiated allegations. Tesla's response to Walmart's notice of breach is attached as
Exhibit 249.
117.
Describing the Beavercreek, Denton, Indio, and Yuba City fires as "regrettable,"
Tesla expressly noted that it was "not disput[ing] that some of the[] issues" identified in
Walmart's notice of breach "did exist, to varying degrees, at some Walmart rooftop sites." Tesla
also admitted that its site inspections to date "have identified areas for improvement and
opportunities for error correction," and it conceded that "more testing can and may be done" to
identify the causes of the fires at Walmart stores. Despite Tesla's assertion that it was "willing to
satisfy most of the requirements that Walmart has given," Tesla's explanation of how it intended
to do so fell far short of curing its breaches. In particular, although Walmart requested that Tesla
adopt an enhanced inspection protocol that accounted for the findings of any root cause analysis
at the Beavercreek, Denton, Indio, and Yuba City sites, Tesla insisted that its current inspection
protocol was adequate--even though it has never provided Walmart with the root cause analyses
for the Denton, Indio, and Yuba City sites that must inform development of that protocol.
Similarly, in the absence of any formal commitment or concrete steps, Tesla's boilerplate
assertions that it intends to improve its operational and maintenance program going forward is
unsatisfactory to Walmart, which has heard the same assertions from Tesla many times before
but has never seen them successfully implemented.
118.
Walmart responded to Tesla's letter on August 9, 2019, correcting its factual
inaccuracies and confirming that Tesla had made no meaningful progress (and had evinced no
intent) to cure its breaches. Walmart's response is attached as Exhibit 250.
53
55 of
59
of 141
114
PDF Page 61
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
119.
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
Tesla submitted an additional response on August 11, 2019, which still failed to
dispute the substance ofWalmart's findings with respect to Tesla's negligence. Tesla's August
11, 2019 correspondence is attached as Exhibit 251.
120.
Walmart replied on August 14, 2019, correcting some of the remaining
inaccuracies in Tesla's understanding of key events. Walmart's August 14, 2019 correspondence
is attached as Exhibit 252.
121.
The 30-day cure period expired on August 8, 2019. As of that date, Tesla had not
made any reasonable steps toward curing its breaches, ensuring that Walmart stores remained
safe from fires, assuring W almart that it could adequately maintain the solar panel systems going
forward, or formally adopting an enhanced inspection and maintenance protocol. As a courtesy,
Walmart agreed to extend the cure period until the close of business on August 15, 2019, but
Tesla still had not taken any reasonable steps toward curing its breaches as of that date.
122.
Given Tesla's extensive delays and the egregiousness of its past breaches,
Walmart now brings suit for recovery of the damages caused by those breaches and for a
declaration of its rights against Tesla.
COUNTS 1-244
AGAINST TESLA
(Breach of Contract)
123.
Walmart repeats and realleges the allegations contained in paragraphs 1 through
122 above.
124.
Walmart (f/k/a Wal-Mart Stores) and Tesla (f/k/a SolarCity) are parties to each of
the Agreements, which are valid and enforceable contracts setting forth the rights and
responsibilities ofWalmart and Tesla.
125.
Walmart has performed all of its obligations under the Agreements.
54
56 of
60
of 141
114
PDF Page 62
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
126.
127.
Tesla's failure to detect hotspots, correct panel defects, engage in proper
installation and maintenance techniques, adopt proper wire management practices, and otherwise
abide by safety precautions necessary to prevent fires at and ensure the safety of Walmart stores,
among other misconduct, breached the Agreements in numerous ways.
a.
Tesla failed to pay the out-of-pocket costs and the consulting fees that are
due to Walmart for damage caused by the fires at the Indio, Denton, and
Yuba City locations and failed to pay the consulting fees that are due to
Walmart for damage caused by the fire at the Beavercreek location. See
Appendix CC.
b.
Tesla failed to abide by Prudent Industry Practices in operating and
maintaining the solar panel systems, resulting in preventable fires that
occurred at no fewer than seven Walmart locations. See Appendix 0.
c.
Tesla failed to install and maintain the solar panel systems in accordance
with standards of due care. See id
55
57 of
61
of 141
114
PDF Page 63
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
d.
Tesla failed to ensure that the solar panel systems were capable of
operating in accordance with required specifications and the
manufacturer's warranties. See Appendix J.
e.
Tesla failed to maintain the systems in accordance with Prudent Industry
Practices, manufacturer requirements, manufacturer warranty guidelines,
and applicable laws. See id
f.
Tesla failed to perform all maintenance and routine or emergency repairs
that were required under the Agreements. See Appendix K.
g.
Tesla failed to maintain, inspect, service, repair, overhaul, and test the
solar panel systems based on maintenance manuals furnished with the
systems, mandatory or otherwise required service bulletins issued by or
through the manufacturer and/or the manufacturer of any part of the
systems, and all applicable directives used by local electric utilities or
comparable regulatory agencies. See id
h.
Tesla failed to undertake and complete all maintenance procedures
required by the Agreements in accordance with the manufacturer's
recommended procedures, and by properly trained, licensed, and certified
maintenance sources and maintenance personnel, so as to maintain the
systems and their components in as good operating condition as when
delivered to Walmart, ordinary wear and tear excepted. See id.
1.
Tesla failed to use and operate the systems in compliance with statutes,
laws, ordinances, regulations, standards, directives, certificates, licenses,
registration permits, or authorizations issued by a relevant governmental
56
58 of
62
of 141
114
PDF Page 64
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
authority or local electric utility, and in a manner that did not modify or
impair any existing warranties on the systems or their parts. See
AppendixM.
J.
Tesla failed to take all necessary and reasonable safety precautions with
respect to installation work and system operations to ensure compliance
with laws and Prudent Industry Practices pertaining to the health and
safety of persons and real and personal property. See Appendix N.
k.
Tesla failed to notify Walmart of at least one fire within 24 hours of the
fire's occurrence, as required by the applicable Agreement. See
Appendix C.
1.
Tesla failed to provide Walmart with the notice required under the
Agreements in advance of assigning the Agreements to third parties. See
Appendix AA.
128.
As a direct and proximate result of Tesla's breaches, Walmart has suffered
significant damages and other harm, including but not limited to the out-of-pocket damages,
consulting and attorneys' fees, and Performance Guarantee Payments that are owed to it, and is
therefore entitled to relief.
COUNTS 245-488
AGAINST TESLA
(Declaratory Judgment)
129.
Walmart repeats and realleges the allegations contained in paragraphs 1 through
128 above.
130.
A bona fide, justiciable controversy exists between the parties as to their
respective rights under the Agreements. In particular, there is a bona fide, justiciable, present,
57
59 of
63
of 141
114
PDF Page 65
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
definite, substantial, and sufficiently matured controversy as to whether Tesla has breached its
contractual obligations and whether its default creates an imminent risk of damage or injury to
any person or property or risks a violation of applicable law, such that Walmart can demand
removal of all or a portion of the solar panel systems under § 11.1 (c) of the Agreements.
131.
This controversy is ripe for judicial determination so that the parties can
determine their respective rights under § 11.1 (c) of the Agreements.
COUNTS 489-492
AGAINST TESLA
(Negligence)
132.
Walmart repeats and realleges the allegations contained in paragraphs 1 through
131 above.
133.
Tesla owed Walmart a duty of care as a result of Tesla's provision of professional
services to W almart through the design, construction, installation, testing, maintenance, and
operation of solar panel systems at Walmart stores (and, in some cases, as a result of Tesla's
status as lessor of the solar panel systems to Walmart). Tesla's safe and satisfactory provision of
these services is a matter of significant public interest.
134.
Tesla breached its duty of care by failing to design, construct, install, test,
maintain, and operate its solar panel systems in a non-negligent manner at the Walmart stores in
Beavercreek, Denton, Indio, and Yuba City.
a.
With respect to the Beavercreek store, Tesla's negligent installation and
maintenance resulted in improper sealing of the inverter housing, which
permitted water intrusion into the invertor and likely contributed to the
fire's ignition. Tesla's negligent installation and maintenance also
58
60 of
64
of 141
114
PDF Page 66
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
resulted in the use of brass/metal bolts in the inverter fuse box; those bolts
melted during the fire, permitting the fire to spread.
b.
With respect to the Denton store, Tesla's negligent installation, inspection,
and maintenance led to problems with the solar panel system's inverter,
again contributing to the fire that occurred on the store's roof.
c.
With respect to the Indio store, Tesla personnel were dispatched to the
store just hours before the fire occurred but negligently failed to detect and
correct any problems with the solar panel system. Tesla's negligent
installation, inspection, and maintenance procedures resulted in module
hotspots, improper grounding, poor wire management, improper connector
torqueing, and erroneous as-built drawings, all of which contributed to the
fire's ignition or spreading (and made it more difficult to put out the fire
once detected).
d.
With respect to the Yuba City store, Tesla's negligent installation,
inspection, and maintenance procedures resulted in arcing and damage to
wires at the store, creating dangerous conditions that could easily have
caused Walmart's entire store to burn to the ground.
135.
As a direct and proximate result of Tesla's negligence, Walmart has suffered
significant damages and other harm, including but not limited to the out-of-pocket damages and
consulting and attorneys' fees that it incurred as a result of the fires at its Denton, Indio, and
Yuba City sites, as well as consultants' fees incurred as a result of the Beavercreek fire.
59
61 of
65
of 141
114
PDF Page 67
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
PRAYER FOR RELIEF
WHEREFORE, Walmart respectfully requests that this Court enter a judgment:
A.
Declaring that Tesla has breached all of the Agreements;
B.
Enjoining Tesla to require it to remove the solar panel systems from all Walmart
locations;
C.
Awarding Walmart damages in an amount reflecting the outstanding value of out-
of-pocket costs and consulting fees in connection with all the fires caused by Tesla's solar panel
systems, including the fires at its Beavercreek, Indio, Denton, and Yuba City locations, as well as
damages reflecting the value of any contractual payments owed to Walmart under the
Agreements;
D.
Awarding Walmart such other damages to which it is entitled, in an amount to be
determined at trial;
E.
Awarding Walmart all costs and disbursements, including reasonable attorneys'
F.
Awarding pre-judgment and post-judgment interest to the maximum extent
fees;
provided by law; and
G.
Granting such other and further relief as the Court may deem just and proper.
60
62 of
66
of 141
114
PDF Page 68
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
Dated:
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
New York, New York
August 20, 2019
Respectfully submitted,
DAVIS POLK & WARDWELL LLP
By: Isl James P. Rouhandeh
James P. Rouhandeh
James P. Rouhandeh
Paul S. Mishkin
450 Lexington A venue
New York, New York 10017
(212) 450-4000
rouhandeh@davispolk.com
paul.mishkin@davispolk.com
Attorneys for Plaintiff
61
63 of
67
of 141
114
PDF Page 69
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
RELEVANT CONTRACT PROVISIONS 1
APPENDIX A:
Exhibit No.
1
1-162
231- 244
2
163- 230
1 Unless otherwise noted, the contract provisions listed in these appendices are excerpted from the Solar Power & Services Agreements ("SPSAs"), Solar Power
Lease & License Agreements ("SPLLAs"), and Solar Power & Energy Storage Services Agreements ("SPESSAs") between Walmrut Inc. (f/k/a Wal-Mart Stores
Inc.) and Tesla Energy Operations, Inc. (f/k/a SolarCity Corporation), which are refell'ed to as the "Agreements" in the Complaint and are attached as Exhibits
1- 242. For each Wahnart site at which Tesla installed solar panels, the parties entered into: (i) a core agreement (either an SPSA, SPLLA, or SPESSA) and (ii) a
varying number of supplemental agreements and amendments, not all of which are referenced in these appendices. Where an agreement other than the core
agreement is referenced, the title of that agreement is denoted in the caption at the top of the appendix. The text of the relevant contract provisions is copied
verbatim in these appendices, including any typographical or grammatical enors (without the use of "[sic]").
A -1
64 of
68
of 141
114
PDF Page 70
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXB:
Exhibit No.
1
1-36
243
2
37- 55
3
4
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
56-141
151- 159
210-242
244
142- 150
160- 162
A-2
65 of
69
of 141
114
PDF Page 71
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX B (continued):
Exhibit No.
5
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
163- 209
A-3
66 of
70
of 141
114
PDF Page 72
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX C:
Exhibit No.
1
1-36
243
2
37- 55
3
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
56-141
151- 159
163- 242
244
A-4
67 of
71
of 141
114
PDF Page 73
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX C (continued) :
Exhibit No.
4
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
142-150
160-162
A-5
68 of
72
of 141
114
PDF Page 74
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXD:
Exhibit No.
1
2
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
1- 36
243
37- 55
A-6
69 of
73
of 141
114
PDF Page 75
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX D (continued):
Exhibit No.
3
56-109
4
110-141
151-159
210-230
244
5
142-144
6
145
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-7
70 of
74
of 141
114
PDF Page 76
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX D (continued):
Exhibit No.
7
8
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
14~150
160-162
163-209
231-242
A-8
71 of
75
of 141
114
PDF Page 77
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXE:
Exhibit No.
1
1- 36
243
2
37- 55
3
56-141
151-159
210-242
244
4
142- 145
5
146-150
160-162
6
163- 209
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-9
72 of
76
of 141
114
PDF Page 78
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXF:
Exhibit No.
1
56-109
2
110-139
151-158
210-230
244
3
140-141
4
159
5
163-209
6
231-242
7
1-55
142-150
160-162
243
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
No Applicable Provision.
A-10
73 of
77
of 141
114
PDF Page 79
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXG:
Exhibit No.
1
56-109
2
110- 141
244
3
151-158
210-221
231- 242
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-11
74 of
78
of 141
114
PDF Page 80
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX G (continued):
Exhibit No.
4
159
5
163- 209
6
222- 230
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-12
75 of
79
of 141
114
PDF Page 81
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX G (continued):
Exhibit No.
7
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
1- 55
142- 150
160-162
243
A-13
76 of
80
of 141
114
PDF Page 82
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXH:
Exhibit No.
1
2
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
Text of Agnement
lA- lOA
243A
11A- 25A
28A
31A
36A
A-14
77 of
81
of 141
114
PDF Page 83
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX H (continued):
Exhibit No.
3
4
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
Text of Agreement
26A- 27A
29A- 30A
32A- 35A
142A-145A
A-15
78 of
82
of 141
114
PDF Page 84
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX H (continued):
Exhibit No.
5
146A- 148A
6
149A- 150A
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
Text of Agreement
A-16
79 of
83
of 141
114
PDF Page 85
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX H (continued):
Exhibit No.
7
160A-162A
8
37-141
151-159
163-242
244
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
Text of Agreement
Not Applicable.
A-17
80 of
84
of 141
114
PDF Page 86
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX I :
Exhibit No.
1
1- 36
243
2
37- 55
3
56--141
151- 159
163- 221
231- 242
244
4
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
142- 145
A-18
81 of
85
of 141
114
PDF Page 87
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX I (continued):
E xhibit No.
5
146-150
160- 162
6
222- 230
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A -19
82 of
86
of 141
114
PDF Page 88
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXJ:
Exhibit No.
1
1- 36
142- 145
243
2
37- 55
3
56-109
4
110- 141
151-159
210-230
244
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-20
83 of
87
of 141
114
PDF Page 89
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX J (continued):
Exhibit No.
5
146-150
160-162
6
163- 209
7
231- 242
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-21
84 of
88
of 141
114
PDF Page 90
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXK:
Exhibit No.
1
1- 36
142- 145
243
2
37- 109
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-22
85 of
89
of 141
114
PDF Page 91
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX K (continued):
Exhibit No.
3
110-141
151-158
160-162
244
4
146-150
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-23
86 of
90
of 141
114
PDF Page 92
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX K (continued):
Exhibit No.
5
6
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
159
163-230
231- 242
A-24
87 of
91
of 141
114
PDF Page 93
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXL:
Exhibit No.
1
1- 36
146-150
243
2
37- 145
151-1 62
210-242
244
3
163- 209
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-25
88 of
92
of 141
114
PDF Page 94
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX M:
Exhibit No.
1
1-36
142- 150
154-158
160- 162
243
2
37- 141
151- 153
159
163- 230
244
3
231- 242
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-26
89 of
93
of 141
114
PDF Page 95
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX N:
Exhibit No.
1
1- 36
142- 145
243
2
37- 141
151-1 59
163- 242
244
3
146-150
4
160-162
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-27
90 of
94
of 141
114
PDF Page 96
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX 0:
Exhibit No.
1
1-36
243
2
37- 55
3
56-141
151- 242
244
4
142- 150
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-28
91 of
95
of 141
114
PDF Page 97
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXP:
Exhibit No.
I
1A- 25A
28A
31A
36A
243A
2 I
1A- 25A
28A
31A
36A
3 I
1A- 25A
28A
31A
36A
i
-
--
4 I
s
I
1A- 25A
28A
31A
36A
26A- 27A
29A- 30A
32A- 35A
37- 242
244
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
INo alllilicable nrovisions.
A-29
92 of
96
of 141
114
PDF Page 98
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXQ:
Exhibit No.
1
2
1A- 25A
28A
31A
36A
243A
26-27
29-30
32-35
37- 242
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
No applicable provisions.
244
A-30
93 of
97
of 141
114
PDF Page 99
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIXR:
Exhibit No.
1
1- 10
243
2
11-36
3
37- 109
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-31
94 of
98
of 141
114
PDF Page 100
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX R (continued):
Exhibit No.
4
110-141
151-159
204-242
244
5
142-150
160-162
6
163-203
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
A-32
95 of
99
of 141
114
PDF Page 101
FILED: NEW
FILED:
NEW YORK
YORK COUNTY
COUNTY CLERK
CLERK 09/04/2019
08/20/2019 05:59
02:46 PM
PM
NYSCEF DOC.
NYSCEF
DOC. NO.
NO. 68
1
RECEIVED NYSCEF:
RECEIVED
NYSCEF: 09/04/2019
08/20/2019
APPENDIX S :
Exhibit
No.
1
1- 36
243
2
37- 55
3
56-109
110-141
151- 159
210- 242
244
4
INDEX NO.
INDEX
NO. 654765/2019
654765/2019
142- 150
160- 162
A-33
100
96 of
of 114
141
To view more than 100 pages of OCRed text, sign up for PlainSite Pro or Pro Se. Solve This Problem
Back to 
