Cause No. 2009 Ci 19492

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CAUSE NO. 2009-CI-19492

THE CITY OF SAN ANTONIO, TEXAS,ACTING BY AND THROUGH THECITY PUBLIC SERVICE BOARD OFSANANTONIO, A TEXAS MUNICIPALUTILITY,

IN THE DISTRICT COURT

OF BEXAR COUNTY, TEXAS

37TH JUDICIAL DISTRICT

Plaintiff,

Defendants.

V.

TOSHIBA CORPORATION; NRG ENERGY, INC.; NUCLEAR INNOVATION NORTH AMERICA, LLC; NINA TEXAS 3 LLC; and NINA TEXAS 4 LLC,

FIRST AMENDED ORIGINAL PETITION FOR DAMAGES,DECLARATORY JUDGMENT, AND EXPEDITED INJUNCTIVE RELIEFThe City of San Antonio, Texas acting by and through the City Public Service Board of

San Antonio, a Texas municipal utility ("CPS Energy") requests the Court to award actualdamages in excess of $2 Billion and exemplary damages in excess of $30 Billion from ToshibaCorporation, NRG Energy, Inc. and Nuclear Innovation North America arising from theirfraudulent, defamatory, and illegal conduct and that of their affiliates, parents, partners and co-conspirators. CPS Energy also asks the Court to declare the rights, status, and other legalrelations among CPS Energy, NINA Texas 3 LLC, and NINA Texas 4 LLC as tenants incommon with an undivided interest in the South Texas Nuclear Project Units 3 and 4. Inaddition, CPS Energy requests the Court for a temporary restraining order and other expeditedinjunctive relief to preserve and protect from imminent irreparable injury the rights and interestsofCPS Energy.

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Discovery Level1. Plaintiffintends for discovery to proceed under Level 3 pursuant to Rule 190.4 of

the Texas Rules ofCivil Procedure.Jurisdiction and Venue

2. This Court has jurisdiction over the subject matter of this action and the partiesbecause the amount in controversy exceeds this court's minimum jurisdictional requirements.

3. Venue is proper in Bexar County, Texas, under Tex. Civ. Prac. & Rem. Code 15.002 because a substantial part of the events or omissions giving rise to CPS Energy's claimsoccurred here and because CPS Energy is located in Bexar County, Texas.

Parties4. CPS Energy has its principal office in Bexar County, Texas.5. Defendant NINA Texas 3 LLC ("NINA 3") is a Delaware limited liability

company registered to do business in Texas, with its principal place of business in Texas, doingbusiness in Texas, has been properly served and has answered.

6. Defendant NINA Texas 4 LLC ("NINA 4") IS a Delaware limited liabilitycompany registered to do business in Texas, with its principal place of business in Texas, doingbusiness in Texas, has been properly served and has answered.

7. Defendant Toshiba Corporation ("Toshiba") is a Japanese corporation conductingsubstantial business in the State of Texas and may be served through the Texas Secretary of Statepursuant to 17.044 of the Texas Civil Practice and Remedies Code because Toshiba does notmaintain a regular place of business in the State of Texas and this action arose from Toshiba'sbusiness activities in the State ofTexas.

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8. Defendant NRG Energy, Inc. ("NRG") is a Delaware corporation conductingsubstantial business in the State ofTexas and may be served through the Texas Secretary of Statepursuant to 17.044 of the Texas Civil Practice and Remedies Code because NRG does notmaintain a regular place of business in the State of Texas and this action arose from NRG'sbusiness activities in the State ofTexas.

9. Defendant Nuclear Innovation North America, LLC ("NINA") is a Delawarelimited liability company conducting substantial business in the State of Texas and may beserved through the Texas Secretary of State pursuant to 17.044 of the Texas Civil Practice andRemedies Code because NINA does not maintain a regular place of business in the State ofTexas and this action arose from NINA's business activities in the State ofTexas.

StatementOfThe Case10. This case involves the construction of two nuclear reactors, known as Units 3 and

4, at the South Texas Project in Bay City, Texas (the "Project"). Defendants Toshiba, NRG, andNINA have engaged in a course of action designed to deprive CPS Energy of its valuable rightsin the Project and to enhance their interest in and benefit from the Project at the expense ofCPSEnergy. These Defendants made misrepresentations and also failed to disclose Project criticalinformation to induce CPS Energy to participate in the Project. They also conspired to and diddisparage CPS Energy and conspired to and did interfere with CPS Energy's business andcontractual relationships. This unlawful conduct includes a well-orchestrated public campaign toharm the ability ofCPS Energy to enjoy the benefits of its substantial investment in the Project.

11. Defendants Toshiba, NRG, and NINA have undertaken a campaign of mediamisinformation, public threats and disclosure of confidential Project information, all designed toharm CPS Energy. Defendants Toshiba, NRG, and NINA knew and intended that their actions

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would endanger CPS Energy's ability to continue in the Project and would undermine supportfrom the ratepayers and the San Antonio City Council necessary for CPS Energy to continue inthe Project. The conduct of these Defendants is outrageous and entitles CPS Energy to recoveractual and punitive damages in excess of $30 Billion or a higher amount as may be determinedby the Jury.

12. The request for declaratory relief involves CPS Energy's undivided ownershipinterest in the Project. CPS Energy, NINA 3 and NINA 4 entered into certain agreements todefine their participation in and ownership of the Project as tenants in common. Thoseagreements also reflected their intention to enter into a future final agreement to set the terms oftheir relationship with respect to ownership of the Project.

13. Since 2007, CPS Energy has invested approximately $300 million in the Project.This work has resulted in considerable enhanced value in and to the Project site. Preliminaryassessments of the enhanced value of the Project are in excess of $2 Billion. But, the executedparticipation agreements are either silent or ambiguous with respect to ownership rights in theProject if one co-tenant exercises its contractual right to withdraw from the Project.

14. CPS Energy has not withdrawn from the Project and cannot make a decisionwhether to proceed or withdraw until it receives the revised cost estimate on December 31, 2009.Although CPS Energy continues to honor its obligations as an owner in the Project, it facesextreme uncertainty and potential harm due to the lack of definition in the agreements as to awithdrawing owner's rights in the Project, especially in light of its considerable investment in theProject to date.

15. The Texas Declaratory Judgments Act, Texas Civil Practice & Remedies Code37.001 et seq, allows CPS Energy to bring this action to obtain relief and certainty with respect

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to its rights and the rights of its co-tenants with an undivided interest in the Project. A real andsubstantial controversy exists because the participation agreements are silent or ambiguous withrespect to the rights of these co-tenants in the event an owner opts to unilaterally withdraw.Thus, this action involves a genuine conflict of tangible interest and is not merely theoretical.

16. Pursuant to the Texas Declaratory Judgments Act, CPS Energy respectfully asksthe Court to declare the rights, obligations, and legal relations of the parties under applicable lawand the agreements in the event of a unilateral withdrawal. Nothing in this request is intended orshould be construed as a withdrawal by CPS Energy from the Project, and CPS Energyspecifically reserves its right to exercise the full range of rights given under the controllingagreements, including the unilateral right to withdraw, when and ifit chooses to do so.

A. The 1997 Participation Agreement17. In November 1997, CPS Energy entered into an agreement that, among other

things, gave the owners ofUnits 1 and 2 of the South Texas Project the option to participate inbuilding additional generating units at the site. This agreement, named the Amended andRestated South Texas Project Participation Agreement, is an agreement between CPS Energy,the City of Austin, and NRG South Texas LP, the predecessor entity to NINA 3 and NINA 4("Participation Agreement").

18. The Participation Agreement provides that each owner had an undividedpercentage ownership interest as tenants in common in Units 1 and 2, the 11,000 acre plant site,the transmission corridor, the railroad strip, the pumping facility, the cooling reservoir dischargestation, and the switchyard, among other items.


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19. The Participation Agreement further provides that any owner may propose theconstruction of additional generating units by written notice to all other owners. Each ownermay then elect to participate in the construction of additional generating units on the site.B. The 2007 Supplemental Participation Agreement

20. In or around June 2006, CPS Energy and Defendants agreed to participate in thedesign and construction ofUnits 3 and 4.

21. In October 2007, ten years after entering into the Participation Agreement, CPSEnergy entered into the South Texas Project Supplemental Agreement ("SupplementalAgreement"). The Supplemental Agreement was between CPS Energy and NRG South TexasLP, the predecessor entity to Defendants NINA 3 and NINA 4.

22. The Supplemental Agreement did not restate or replace the 1997 ParticipationAgreement. Rather, the Supplemental Agreement provides that all of the provisions of theParticipation Agreement remain in effect, except those provisions of the Participation Agreementthat are "affected" by the Supplemental Agreement. The Supplemental Agreement governs as tothose "affected" provisions. (Supp. Agreement, 12.1). However, the Supplemental Agreementdoes not identify specifically which provisions of the Participation Agreement survIve theSupplemental Agreement or which prOVISIons of the Supplemental Agreement replace theParticipation Agreement.

23. Paragraph 5.1 of the Supplemental Agreement provides that CPS Energy andDefendants will own an undivided interest in Units 3 and 4 as tenants in common. CPS Energyand NINA 3 each own an undivided 50 percent interest in Unit 3 as tenants in common. CPSEnergy and NINA 4 each own an undivided 50 percent interest in Unit 4 as tenants in common.


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24. Unlike the 1997 Participation Agreement, the Supplemental Agreement gives theparties the right to cease participating in the development of the Project by unilaterallywithdrawing. The parties further agreed that the withdrawing party "shall cease having anyfurther obligations for the Project," except to the extent of obligations already incurred by the31 51 day after the date ofwithdrawal. (Supp. Agreement, 5.3).

25. While the Supplemental Agreement permits an owner to unilaterally withdrawfrom the Project and expressly relieves the withdrawing party of any further obligations for theProject, the Supplemental Agreement does not determine how the withdrawing party's undividedownership interest in the Project is treated, or how the withdrawing party recovers its investmentin the Project, or what rights the remaining tenants in common have regarding the withdrawingowner's share of the Project.

26. In the Supplemental Agreement, the parties agreed to execute a final agreement("which the Parties anticipate will occur on or after February 1, 2008") with respect to ownershipof the Project, including, presumably, disposition of the withdrawing party's ownership interest.(Supp. Agreement, 5.1.3.)

27. The parties were unable to agree on the terms of an owner's agreement and neverexecuted the final owner's agreement contemplated by the Supplemental Agreement.C. The Value of CPS Energy's Participation in the Project

28. Since agreeing to participate in building Units 3 and 4, CPS Energy has spentapproximately $300 million on preliminary design and engineering for the Project andimprovements to the Project site. Preliminary assessments of the value of the participation andrelated rights in the Project site are in excess of$2 Billion.


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D. Defendants' Illegal Conduct To Defraud CPS Energy And To Drive CPS EnergyFrom the Project29. CPS Energy's decision to continue to invest in two new nuclear power plants was

based on representations by Toshiba, NRG, and NINA about their particular expertise andexperience in nuclear development. Specifically, these Defendants represented that they hadfinancial and licensing expertise in developing large nuclear generation projects across theUnited States. These Defendants represented that they would employ the disciplined approach ofNRG and Toshiba in the Project and touted that their approach "aligns the interests of bothdeveloper and prime contractor to optimize the schedule, performance and costs of its projects."NRG and NINA also represented that they would collaborate with Toshiba to develop accurateProject costs and that such collaboration and Toshiba's proven design would bring a higherprobability of success and certainty to the Project. Toshiba, NRG, and NINA further representedthat their expertise was key to this nuclear development because, they acknowledged, "the costsand commercial terms associated with the construction of new nuclear units have emerged ... asperhaps the biggest remaining obstacles to the nuclear renaissance in the United States." Thus,Defendants knew or should have known that accurate Project costs were critical to the success ofthe Project.

30. Toshiba, NRG, and NINA prepared Project cost estimates and were responsiblefor bringing the Project in on-time and on-budget as they had represented they would and coulddo. CPS Energy relied upon these representations in entering into the Project, continuing toinvest, and in performing its contract obligations.

31. In June 2009, Defendants provided a cost estimate of $9.9 Billion (excludingfinancing costs) to build the two new reactors. Although this was a non-binding estimate, the


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validity of that number was confirmed by independent reports from consultants Sargent andLundy and the Brattle Group that concluded the Project cost estimate was reasonable.Defendants knew that CPS Energy relied upon and used the estimate of $9.9 Billion as the basisfor comparing alternative resource plans, for arranging financing, and for obtaining the necessaryapprovals from the San Antonio City Council and the ratepayers to proceed.

32. On October 13,2009, CPS Energy decided to reduce its interest in the Project to atotal of 20 to 25 percent. CPS Energy then entered into discussions with various Texascooperatives and municipalities for the purchase ofCPS Energy's equity interest in the Project toreduce its ownership level. CPS Energy planned to sell a portion of the energy it produced as a50 percent owner to other users outside of San Antonio, thereby creating an income stream forCPS Energy and the City of San Antonio. The City of San Antonio collects 14 percent of therevenue from CPS Energy. Or, alternatively, CPS Energy planned to sell a portion of its 50percent interest and reap a substantial return on its investment by selling an equity share in theProject.

33. Approximately two weeks later, Defendants NRG, NINA and Toshiba madecomments in the press about the dramatic increases in the cost of the Project. These new costestimates were significantly higher than had been previously represented to CPS Energy. On oraround October 26, 2009, news articles reported that the estimated cost of the Project couldincrease by as much as $4 Billion, a 40 percent increase over Defendants' original cost estimate.

34. Defendants knew that for CPS Energy to proceed with the Project, it must havesupport from the San Antonio City Council and the consent of the ratepayers and that inflatedand inaccurate cost estimates recklessly released to the public would seriously harm, if notdestroy, CPS Energy's ability to continue with the Project.

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35. Defendants knew that if CPS Energy lost public approval for the Project, thenCPS Energy would be unable to continue with the Project and would be placed in a weakenednegotiating position. Defendants knew that by manipulating the estimated Project costs andletting that play out in the public arena, they would deprive CPS Energy of the benefit of itsbargain of affordable nuclear power, thereby threatening or depriving CPS Energy of thehealthy return on its investment when it sold equity in the Project or entered into long-termpower contracts for the sale of the excess electricity produced. Defendants also knew that thepolitical fallout resulting from a significantly more expensive price tag than anticipated by theSan Antonio City Counsel would cause a loss of public support and deprive CPS Energy of thetime it would need to search for a buyer and sell its equity share, which could take more than ayear.

36. In November 2009, right after the news hit that Defendants expected constructioncosts to run $4 Billion over the cost estimates provided to CPS Energy earlier this year, officialsfrom NRG, NINA, and CPS Energy flew to Japan for meetings held by executive managementof Toshiba to evaluate Project costs and potential cost reductions. CPS Energy returned from itsmeeting with Defendants in Japan with no guaranty or assurances regarding the cost of theProject or the methodology Defendants would use to arrive at these ever-changing cost estimates.

37. Over the days and weeks that followed, Defendants took full advantage of thissituation by reporting to the press about the status of contract negotiations and by publiclyspeculating about CPS Energy's willingness and ability to continue the Project. This was doneto enhance Defendants' own position to the detriment of CPS Energy. For example, SteveWinn,the chief executive officer of Defendant NINA, told an NRG investor meeting on Thursday,November 19, 2009, that a higher cost estimate to build the two new reactors may force its

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partner, CPS Energy, to cut its ownership interest in the project below 20 percent. He speculatedthat an updated cost estimate for two new reactors may exceed the target rate increases that CPSEnergy had promised its customers. "It's probable that the estimate may come outside of theirrange," Mr. Winn was reported to say. Mr. Winn also said that he expected CPS Energy's finalequity stake to fall to between zero and 20 percent. Mr. Winn admitted that CPS Energy, as amunicipal utility, had to consider not only the long-term economics of its investment, but theimpact on its customers. Mr. Winn intended that his public speculation about the rising cost ofthe project would produce "near-term rate shock," as Mr. Winn himself called it, for CPSEnergy's ratepayers.

38. Defendants' public speculation about CPS Energy's ability to perform thecontract and realize on its significant investment not only disclosed confidential informationabout the Project but also invited confusion and public outcry by the citizens of San Antonio thatjeopardized CPS Energy's position on the Project. Mr. Winn's actions put Defendants in aposition to assume control over CPS Energy's ownership for their own benefit and enjoy theinvestment that CPS Energy had made in the Project without just compensation.

39. Defendants jeopardized CPS Energy's position on the Project by releasingpreliminary cost estimates to the press and by manipulating the numbers for their benefit.Defendants' actions caused CPS Energy to lose public support and the confidence of SanAntonio's City Council and endangered CPS Energy's ultimate ownership position.

40. Within a matter of a few weeks after the $4 Billion cost increase was reported inthe newspapers, NINA's chief operating officer was quoted in the press as saying that NINA wasworking to reduce the cost of the two new units to less than $10 Billion, the very number thatCPS Energy had been relying on previously to move forward with the Project. In another press

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release, Bloomberg reported that Toshiba was "confident" that costs of less than $10 Billion areachievable. On November 19, NINA presented an updated cost estimate at its analyst's meetingthat targeted the final project cost estimates at between $9.2 Billion and $10 Billion.

41. On November 19, 2009, Bloomberg reported that NRG had disclosed I II ananalyst's meeting that it had identified a new partner for the Project and had "a contingency planfor every foreseeable CPS ownership outcome," including no ownership interest.

42. After Toshiba was selected as the contractor, CPS learned that Toshiba purchasedits 12 percent interest in NINA by paying $300 million to NRG. Half of that amount, or $150million, now appears to be related, in part, to Toshiba's right to be general contractor on theProject. Thus, Toshiba, NRG, and NINA were aligned in interest to and did manipulate Projectcosts for their collective benefit. Defendants failed to disclose these facts to CPS Energy at thetime CPS Energy entered into its relationships with Defendants.

43. Moreover, upon information and belief, CPS Energy would show that theDefendants have taken other unilateral actions with respect to the development of the Project thatare favorable to Toshiba (its partner in NINA) and detrimental to CPS Energy.

44. CPS Energy has learned that NRG and NINA representatives have threatened to"hit CPS Energy with a two by four" through some sort of "countersuit." As recently asDecember 16, 2009, Steve Winn has been quoted that "San Antonio's indecision could riskfederal loan guarantees needed to build two reactors." For example, in the same article, Mr.Winn was also quoted that "if either party quits making payments for 90 days, they lose theirshare in the Project."


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45. Defendants' threats are part of their scheme to interfere with CPS Energy's abilityto continue with the Project. These statements are false and are part ofDefendants' plan to harmCPS Energy, its ratepayers and the citizens of San Antonio.

46. Mr. Winn's speculation about the ramifications ofwithdrawal from the Project areparticularly irresponsible and damaging in light of the fact that the parties have never come tofinal terms on withdrawal rights, and those very issues are pending before this Court.

47. NRG made clear its course of dealing with CPS Energy in a Forbes.com articledated December 14, 2009. The article states that David Crane, the chief executive officer ofNRG Energy, plans to develop a nuclear project "with a time honored strategy: use otherpeople's money." The article describes NRG's plan as "finding a series of suckers to take therisk off his hands." NRG's reckless statements aside, CPS Energy cannot and will not allow itand its ratepayers to become one of NRG's "suckers." CPS Energy is entitled to full andadequate relief to protect its valuable investment and rights in the Project.

COUNT 1 - Suit For Declaratory Relief48. CPS Energy incorporates paragraphs 1 through 47 by reference as if fully set forth

below.49. Because both the 1997 Participation Agreement and the 2007 Supplemental

Agreement are silent or at least ambiguous as to disposition of the parties' undivided interests inthe Project after withdrawal, CPS Energy asks this Court to exercise its equitable powers underthe Texas Declaratory Judgments Act to determine the rights of these tenants in common in theevent of a voluntary withdrawal from the Project by any party. Due to the sizeable investmentthat CPS Energy has in the Project to date and the value of its interest in the site improvements,


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CPS Energy will suffer extreme harm unless it knows with certainty the risks, benefits, andconsequences of a unilateral withdrawal.

50. Accordingly, CPS Energy requests that this Court construe the contracts todetermine the parties' rights upon unilateral withdrawal or, alternatively, declare the legalrelations among the parties as tenants in common.

51. CPS Energy also respectfully requests that this Court award its reasonable andnecessary attorney fees under Tex. Civ. Prac. & Rem. Code 37.009.

COUNT 2 - Tortious Interference with Contracts andProspective Business Relationships

52. The allegations set forth in paragraphs 1 through 51 are incorporated by referenceas if set forth fully below.

53. As described above, CPS Energy had (a) an agreement with its ratepayers todeliver power at an affordable price, (b) prospective business relationships with othermunicipalities and cooperatives to sell the power produced by the Project, and (c) a contract withNINA 3 and NINA 4 to build the Project.

54. Defendants, in concert and conspiracy with one another, have interfered with CPSEnergy's prospective and actual contracts and business relationships and Defendants'interference was intentional and malicious.

55. As a proximate result of this wrongful conduct, CPS Energy has sustaineddamages in excess of $2 billion.

56. Defendants' actions were willful and wanton, and CPS Energy is also entitled topunitive damages.


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COUNT 3 - Fraud57. The allegations set forth in paragraphs 1 through 56 are incorporated by reference

as if set forth fully below.58. The information that Defendants NRG, NINA, and Toshiba disseminated publicly

was malicious, false and misleading. NRG, NINA, and Toshiba also failed to discloseinformation to CPS Energy that was critical to the Project and that it had a duty to disclose.Moreover, the cost estimates they provided to CPS Energy in June 2009 were false andmisleading and designed to sabotage the Project for CPS Energy. Finally, Defendants NRG,NINA, and Toshiba failed to disclose that Toshiba had paid NRG to purchase an ownershipinterest after it had been awarded the construction contract.

59. These Defendants knew and intended that CPS Energy would rely on thesemisrepresentations and omissions and that CPS Energy would be - and was - harmed by suchmisrepresentations.

60. As a consequence ofDefendants misleading, false, and malicious representations,CPS Energy has sustained damages in excess of $2 billion. Defendants' actions were willful andwanton, which entitles CPS Energy to an award ofpunitive damages.

COUNT 4 - Negligent Misrepresentation61. The allegations set forth in paragraphs 1 through 60 are incorporated by reference

as if set forth fully below.62. The information disseminated by NRG, NINA, and Toshiba publicly and to CPS

Energy contained inaccurate, false, and misleading information. Specifically, the cost estimatesprovided to CPS Energy in June 2009 were false and misleading, as were reports about CPSEnergy's ability or inability to continue with the Project. In addition, NRG, NINA, and Toshiba


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had a duty to infonn CPS Energy that Toshiba, who had been awarded the construction contract,was also going to be participating in the project by paying NRG to participate in the Project as a12% owner.

63. Defendants failed to exercise reasonable care or competence when making thesemisrepresentations.

64. CPS Energy has sustained damages as a result of Defendants' negligentmisrepresentations in excess of $2 billion.

COUNT 5 - Business Disparagement


66. The statements Defendants have made in the press and elsewhere about CPSEnergy's interest in and ability to complete the Project were false and hannful to CPS Energy'seconomic interests and to the character of its business.

67. Defendants knew or should have known that their statements were false andwould have a detrimental impact on CPS Energy, or Defendants made these false statementswith reckless disregard for whether they were true and without verifying the accuracy of theirstatements.

68. Defendants made these statements with the intent to interfere with CPS Energy'sability to participate in the Project and with CPS Energy's other economic interests. Thesestatements were made without any privilege to do so.

69. As a proximate result of Defendants' misconduct, CPS Energy has suffereddamages in excess of $2 billion.


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70. Because Defendants' actions were willful and malicious, CPS Energy is alsoentitled to punitive damages.

COUNT 6 - Fraudulent Inducement


72. Defendants fraudulently induced CPS Energy to enter into the subject contractsfor participation in and construction of the Project by overstating and misrepresenting theircapabilities regarding this type ofProject and providing an initial cost estimate that they knew tobe inaccurately low. In addition, NRG and NINA permitted Toshiba to join the project as a 12percent owner.

73. Defendants understood the critical importance of an accurate cost estimate to CPSEnergy's sustained participation in the Project and intended for CPS Energy to rely on its initialill-conceived cost estimate. Moreover, Defendants concealed the fact that Toshiba hadpurchased an ownership interest in the Project. CPS Energy reasonably relied on the fact thatNRG and NINA had awarded the construction contract to Toshiba based upon its track recordand experience for constructing such facilities on time and on-budget.

74. Defendants made these misrepresentations and omissions in order to induce CPSEnergy to enter the contracts to build the Project and to secure, in NRG's own words, the"suckers" Defendants needed to finance the initial stages of the Project.

75. As a result, CPS Energy was fraudulently induced to enter the SupplementalAgreement as has sustained significant damages, in excess of $2 billion.

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76. Because Defendants' actions were willful and wanton, CPS Energy is also entitledto punitive damages.

COUNT 7 - Conspiracy


78. Defendants conspired to defraud CPS Energy by, among other things, acting inconcert to mislead CPS Energy by failing to disclose Project critical information. Defendantsalso acted in concert to disparage CPS Energy and to interfere with its prospective and otherbusiness relationships by engaging in a coordinated public effort to disseminate false informationabout CPS Energy for the purpose of ousting CPS Energy or making it impossible for CPSEnergy to continue with the Project.

79. Defendants executed their plan by commISSIOn and omission to induce CPSEnergy to enter into the Project to initially finance it, and then to eliminate CPS Energy from theProject and take over CPS Energy's valuable investment.

80. Defendants have made misrepresentations to and about CPS Energy or failed tocommunicate critical truthful information in furtherance ofDefendants' illegal scheme.

81. As a result of Defendants' illegal conduct, CPS Energy has suffered damages inexcess of$2 billion.

82. As a result of Defendants' wanton and willful conduct, CPS Energy is alsoentitled to punitive damages.


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COUNT 8 - Request For Expedited Relief83. The allegations set forth in paragraphs I through 82 are incorporated by reference

as if set forth fully below.84. Due to the urgency surrounding the issues brought to the Court and the

uncertainty faced by the parties, CPS Energy respectfully urges the Court to expedite CPSEnergy's request for relief, including discovery and final adjudication.

COUNT 9 - Request for Temporary Restraining Order andOther Injunctive Relief

85. CPS Energy incorporates paragraphs I through 84 by reference as if fully set forthbelow.

86. In the alternative, CPS Energy requests injunctive relief to prevent Defendantsfrom taking action to destroy or otherwise damage the value of CPS Energy's interests in theProject. Additionally, CPS Energy fears that Defendants may destroy, remove or secretdocuments and other information related to the issues and causes of action in an attempt toconceal crucial evidence of their illegal conduct. If Defendants succeed in these efforts, CPSEnergy will suffer immediate and irreparable harm in that (a) this heavily negotiated andvaluable Project may be lost; (b) the credibility and goodwill of CPS Energy will be lost; and (c)documentation relating to the claims asserted herein will be destroyed.

87. As set forth above, CPS Energy has shown a probable right of recovery andlikelihood of success on the merits on its claims against Defendants and that CPS Energy willsuffer imminent, irreparable harm without Court intervention, for which there is no adequateremedy at law.


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88. It is because CPS Energy finds itself in this perilous position that it seeksextraordinary relief from the Court to immediately restrain Defendants from engaging in theillegal conduct described above. In order to preserve the status quo and to prevent imminent andirreparable harm to CPS Energy's vested rights, CPS respectfully urges the Court to grant animmediate Temporary Restraining Order and Injunctive Relief pursuant to Tex. R. Civ. P. 680and Tex. Civ. Prac. & Rem. Code 65.001 et seq.

89. CPS Energy asks the Court to order Defendants and their agents, servants,employees, independent contractors, attorneys, representatives, affiliates, parents, owners andthose persons or entities in active concert or participation with them (collectively, the"Restrained Parties") as follows:

a. Enjoin the Restrained Parties from making any public pronouncements about therights and responsibilities of the parties under their agreements before the Courthas an opportunity to decide those issues in this lawsuit;b. Enjoin the Restrained Parties from declaring any purported "default" under theProject until such time as the Court can declare the legal rights of the parties withrespect to the Project;c. Enjoin the Restrained Parties from interfering with or thwarting the Project byrefusing to act in good faith in negotiating a definitive agreement regarding theDefendants interests in the Project;d. Enjoin the Restrained Parties from manipulating the media to "report"misinformation, threats or confidential Project information;e. Enjoin the Restrained Parties from further engaging in manipulative businessstrategies designed to interfere with CPS Energy's business relations, disparageCPS Energy's economic interests, and damage CPS Energy's ability to negotiate areasonable business solution on behalfof its ratepayers;f. Enjoin the Restrained Parties from altering the status quo by misleading theDepartment ofEnergy ("DOE") about the rights ofCPS Energy in the Project andfrom taking any action that would jeopardize funding currently available from the

DOE;


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g. Enjoin the Restrained Parties from taking any action or making any statementsthat are adverse to CPS Energy's interests as a co-tenant with an undividedinterest in the Project;h. Enjoin the Restrained Parties from depleting funds available for the Project;1. Enjoin the Restrained Parties from negotiating, entering into, canceling, altering,or modifying any oral or written contracts, understandings, or arrangements,which conduct would operate to modify, compromise, jeopardize, undermine,nullify, terminate, hinder, or obstruct the Project or funding for the Project;J. Enjoin the Restrained Parties from destroying, removing, or secreting documents,records and other information related to the claims and allegations set forth in thislawsuit.90. The requested temporary restraining order and request for injunctive relief will

allow themaintenance of the last, actual, peaceable, and uncontested status quo.91. CPS Energy is exempt from posting a bond pursuant to 6.002 of the Texas Civil

Practice and Remedies Code.

Jury Demand92. CPS Energy demands a trial by jury.

Conditions Precedent93. All conditions precedent to CPS Energy's claim for reliefhave been performed or

have occurred.Prayer

For all the reasons set forth above, CPS Energy respectfully requests the Court to declarethe rights and legal relations of the parties in the event of a unilateral withdrawal, award CPSEnergy its actual damages in an amount in excess of $2 Billion, as well as exemplary damagespursuant to Texas Civil Practice and Remedies Code 41.003 in an amount in excess of $30


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Billion, enter a Temporary Restraining Order in the form attached hereto, and award CPS Energyits reasonable and necessary attorneys fees in connection with seeking declaratory relief, and forall additional relief as is just.

Respectfully submitted,SONNENSCHEIN NATH & ROSENTHAL, LLP

By: __-- '------------.---C. Michael Moore .r:State Bar No. 14323600Matthew D. OrwigState BarNo. 15325300Karen C. CoralloState Bar No. 04811490Gene R. BesenState Bar No. 24045492000 McKinney Ave., Suite 1900Dallas, TX 75201(214) 259-0900 - telephone(214) 259-0910 - facsimileandDAVIS, CEDILLO & MENDOZA, INC.Ricardo G. CedilloState Bar No. 4043600Les 1. Strieber IIIState Bar No. 19398000McCombs Plaza, Suite 500755 E. Mulberry AvenueSan Antonio, Texas 78212(210) 822-6666 - telephone(210) 822-1151 - facsimile

ATTORNEYS FOR PLAINTIFF,THE CITY OF SAN ANTONIO, TEXAS,ACTING BY AND THROUGH THE CITYPUBLIC SERVICE BOARD OF SANANTONIO, A TEXAS MUNICIPAL UTILITY

FIRST AMENDED ORIGINAL PETITION FOR DECLARATORY JUDGMENT.EXPEDITED RELIEF, OR, ALTERNATIVELY FOR INJUNCTIVE RELIEF Page 22

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CERTIFICATE OF SERVICEThis is to certify that a true and correct copy of the foregoing was sent to the following

opposing counsel on December 23,2009 via email and certified mail, return receipt requested.:Lamont A. JeffersonHaynes and Boone, LLP112 East Pecan StreetSuite 1200San Antonio, Texas [email protected] / 1 A --+ l - ' "F-- ' ' - - - - i .L- . - - - -Les trieber III

FIRSTAMENDED ORIGINAL PETITION FOR DECLARATORY JUDGMENT,EXPEDITED RELIEF, OR, ALTERNATIVELY FOR INJUNCTIVE RELIEF Page 23

Cause No. 2009 Ci 19492

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