Abb Daimler-Benz Transp. v. National R.R. Passenger

• Decision Date: 08 June 1998
• Docket Number: Civil Action No. 96-738(GK).
• Citation: 14 F.Supp.2d 75
• Parties: ABB DAIMLER-BENZ TRANSPORTATION (NORTH AMERICA), INC., Plaintiff, v. NATIONAL RAILROAD PASSENGER CORPORATION and New Jersey Transit Corporation, Defendants. L.K. COMSTOCK & COMPANY, INC., Plaintiff-Intervenor, v. NATIONAL RAILROAD PASSENGER CORPORATION, Defendant.
• Court: U.S. District Court — District of Columbia

14 F.Supp.2d 75

ABB DAIMLER-BENZ TRANSPORTATION (NORTH AMERICA), INC., Plaintiff, v. NATIONAL RAILROAD PASSENGER CORPORATION and New Jersey Transit Corporation, Defendants.

L.K. COMSTOCK & COMPANY, INC., Plaintiff-Intervenor, v. NATIONAL RAILROAD PASSENGER CORPORATION, Defendant.

Civil Action No. 96-738(GK).

United States District Court, District of Columbia.

June 8, 1998.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Alieen Meyer, David Andrew Crichlow, Winthrop, Stimson, Putnam & Roberts, Washington, DC, Philip LeBretoo Douglas, Edward Flanders, Robert E. Bailey, Takemi Ueno, Winthrop, Stimson, Putnam & Roberts, New York City, Mark Seiden, Bernard L. Sacks, Gogick & Seiden, New York City, for ABB Daimler-Benz Transportation-North America, Inc.

Jeffrey Gerald Gilmore, Michael A. Gatje, Wickwire Gavin, P.C., Vienna, VA, for National Railroad Passenger Corp.

John Hamilton Korns, II, Oppenheimer, Wolff, Donnelly & Bayh, L.L.P., Washington, DC, Eldad Philip Isaac, State of New Jersey, Division of Law, Dept. of Law & Public Safety, Newark, NJ, for New Jersey Transit Corp.

David Taylor Case, Kirkpatrick & Lockhart, L.L.P., Washington, DC, George B. Foster, John R. Dingess, Kirkpatrick & Lockhart, L.L.P., Pittsburg, PA, for L.K. Comstock and Co., Inc.

Philip LeBretoo Douglas, Winthrop, Stimson, Putnam & Roberts, New York City, for Fed. Ins. Co.

Michael A. Gatje, Wickwire Gavin, P.C., Vienna, VI, for Alison Conway Smith.

Andrew Lewis Shapiro, Ross, Dixon, Masback, L.L.P., Washington, DC, for L.S. Transit Systems, Inc.

MEMORANDUM OPINION

KESSLER, District Judge.

This matter is before the Court on Defendant New Jersey Transit Corporation's Motion for Summary Judgment And Partial Summary Judgment On All Claims of Adtranz and Comstock pursuant to Fed. R.Civ.P. 56(b) [# 219], Defendant Amtrak's Motion for Summary Judgment Against Adtranz pursuant to Fed.R.Civ.P. 56(b) [# 217], and Defendant Amtrak's Motion for Summary Judgment Against L.K. Comstock & Co. pursuant to Fed.R.Civ.P. 56(b) [# 218].

Having considered the Motions, Oppositions, Replies, the four and a half hour oral argument, voluminous pleadings, and the entire record, the Court concludes that:

(1) New Jersey Transit's Motion for Summary Judgment is denied in part and granted in part as follows: (a) denied with respect to the fraud claims; (b) granted with respect to the application of New Jersey law to all claims against New Jersey Transit; (c) granted with respect to tort claims and punitive damages claims under the New Jersey Tort Claims Act; (d) granted with respect to unjust enrichment and quantum meruit claims under the New Jersey Contractual Liabilities Act; (e) granted with respect to unjust enrichment and quantum meruit claims under New Jersey common law; and (f) denied with respect to tort claims under New Jersey common law;

(2) Amtrak's Motion for Summary Judgment Against Adtranz is denied in part and granted in part as follows: (a) denied with respect to Rule 17(a); (b) denied with respect to the fraud claims¹; (c) denied with respect to accord and satisfaction; (d) denied with respect to promissory estoppel; (e) granted with respect to damages on high speed train project; and (f) denied with respect to all damages and costs regarding the Sunnyside Project; and

(3) Amtrak's Motion for Summary Judgment Against Comstock is granted.

I. Factual Background²

ABB Daimler-Benz ("Adtranz") is a Delaware corporation with its principal place of business in Pittsburgh, Pennsylvania. Adtranz designs, manufactures, and sells electrical equipment for rail transportation systems. For the purposes relevant to this case, Adtranz is the successor in interest to ABB Traction, Inc. ("ABB"), which signed the original contract with Amtrak. On January 1, 1996, ABB was merged into AEG Transportation Systems, Inc ., and the name of the new entity was changed to Adtranz. For ease of reference, ABB will be referred to as Adtranz.

Defendant National Railroad Passenger Corporation ("Amtrak") is a private corporation organized and existing under the laws of the United States, with its principal place of business in Washington, D .C. Defendant New Jersey Transit ("NJT") is a State of New Jersey corporation, organized under New Jersey law, with its principal place of business in Newark, New Jersey. NJT was established by the New Jersey Public Transportation Act of 1979 which created NJT as an instrumentality of the state of New Jersey exercising public and essential governmental functions. N.J. Stat. Ann. § 27:54-4 (West 1994). NJT provides commuter passenger rail service through a subsidiary, New Jersey Transit Rail Operations, Inc., within New Jersey and between New Jersey and New York City. Portions of NJT's rail operations in New Jersey and New York City run over the Northeast Corridor (the "NEC") controlled by defendant Amtrak.

This case arises out of a November 1993 contract (the "Contract") between Adtranz and Amtrak, under which Adtranz was to supply equipment and related services for the Static Frequency Converter Station (the "SFCS"), located on Amtrak's property at the Sunnyside Yard in Long Island City, New York ("the Project"). The purpose of the Project is to increase the available power on Amtrak's traction power system along Amtrak's NEC by converting energy from power lines owned and operated by Consolidated Edison Company of New York, Inc. ("Con Edison") into a form suitable for use by railway traction equipment. The SFCS would convert the 60 Hz electric power being supplied by Con Edison to 25 Hz power which would be usable by both NJT and Amtrak.

Although not a signatory to the Contract, NJT, like Amtrak, stands to benefit from the increased power to be generated by the Project. Under an earlier agreement with Amtrak executed in February 1993, called the New Initiatives Agreement (the "NIA"), NJT agreed to seek federal grant funds and, once obtained, to pass them through to Amtrak, along with New Jersey tax revenues, for the design and construction of the SFCS. In return, NJT was granted substantial oversight responsibilities with respect to use of those funds. The NIA provided that the upgrading work to be performed at the Project would be "treated as a joint benefit and joint liability project" by Amtrak and NJT. (NIA, Adtranz' Opp'n to NJT's Mot. to Dismiss, Ex. E, p. 10; NIA, Ex. 3.)

This project would permit NJT to increase its rail service into New York's Pennsylvania Station. Both Amtrak and NJT agreed in the NIA that the SFCS Project would enable them to operate trains more reliably and to provide increased levels of rail service both along Amtrak's NEC in New Jersey and from New Jersey into New York City.

NJT and its technical consultant L.S. Transit Systems Inc. ("LSTS"), headquartered in New Jersey, have been actively involved in all aspects of the Project. For example, NJT and LSTS worked on preparation of the Performance Specifications, the procurement process, contract negotiations and the award of the November 2, 1993 Design/Build Contact between Amtrak and Adtranz. The Project was set up with a joint management structure between Amtrak and NJT. (NIA, p. 24.)

In January 1993, Amtrak issued a Request for Proposals ("RFP") for the Project. In connection with the Project, on April 2, 1993, Adtranz entered into a Consortium Agreement with L.K. Comstock & Co., Inc. ("Comstock") for the purpose of: (1) preparing and submitting a proposal to Amtrak for the project; (2) jointly negotiating and signing in the name of Adtranz a contract with Amtrak based upon the proposal; and (3) jointly performing any contract they were awarded. Pursuant to the Consortium Agreement, Adtranz took responsibility for the design and procurement of equipment and Comstock took responsibility for all construction.³

Adtranz submitted its proposal, and on November 2, 1993, was awarded the Contract to supply equipment and related services. In March 1994, Adtranz submitted to Amtrak, as required by the Contract, its design drawings and specifications at the 60% completion stage ("60% Design Submittal"). Amtrak rejected the 60% Design Submittal, which was based on the provision of cycloconverter equipment by Adtranz. After rejection of the 60% Design Submittal, Amtrak agreed to allow Adtranz to continue the Contract, but required Adtranz to change its cycloconverter technology to dc-link technology at no additional cost to Amtrak. This change in technology significantly increased costs for both Adtranz and Comstock by approximately $10 million.

Adtranz alleges that rejection of the 60% Design Submittal was based on the setting of new and undisclosed performance requirements for the SFCS by Amtrak and NJT, which were inconsistent with those set out in the original RFP and Contract. Adtranz further alleges that the change in performance requirements was part of a conspiracy by NJT and Amtrak to force Adtranz to upgrade the original Project requirements to the more expensive dc-link technology, at no additional cost to Amtrak. Adtranz further claims that the changed design specifications caused Adtranz to incur significant cost increases and other losses as a result of being forced to redesign the project. Adtranz is suing Amtrak for breach of contract, fraud, quantum meruit and unjust enrichment, and seeks both compensatory and declaratory relief. It also brings claims for fraud, quantum meruit and unjust enrichment against NJT, as well as an additional claim for tortious interference with the Contract.

Plaintiff-Intervenor Comstock seeks a declaratory judgment as to liability, and damages for increased construction costs incurred by Comstock in connection with the Project. Comstock alleges that Amtrak's wrongfully imposed change in technology to dc-link, increased Comstock's construction costs. Comstock has not been paid for its increased costs and alleges that it will not be paid by Adtranz until Amtrak pays Adtranz....