Certified Power Systems, Inc. v. Dominion Energy Brayton Point, LLC

Decision Date03 January 2012
Docket NumberBRCV2009-292.,BRCV2008-1198,BRCV2008-01114,BRCV2008-1217
CourtSuperior Court of Massachusetts
PartiesCERTIFIED POWER SYSTEMS, INC., Plaintiff v. DOMINION ENERGY BRAYTON POINT, LLC, Nicholson & Hall Corp. and The Hanover Insurance Company, Defendants and Consolidated Actions.

CERTIFIED POWER SYSTEMS, INC., Plaintiff
v.

DOMINION ENERGY BRAYTON POINT, LLC, Nicholson & Hall Corp. and The Hanover Insurance Company, Defendants

and Consolidated Actions.

Nos. BRCV2008-1217, BRCV2008-01114, BRCV2008-1198, BRCV2009-292.

Superior Court of Massachusetts, Bristol County.

January 3, 2012


MEMORANDUM OF DECISION AFTER NON-JURY TRIAL

D. LLOYD MacDONALD, Justice.

The above-consolidated actions arose from a construction dispute at the Brayton Point power plant in Somerset, Massachusetts. The plaintiff, Certified Power Systems, Inc. (" CPS" ), was the piping subcontractor on a project to install certain mercury and sulfur dioxide reduction systems at the plant. The defendant, Nicholson & Hall Corp. (" Nicholson & Hall" ), was the general contractor. The defendant, Dominion Energy Brayton Point, LLC (" Dominion" ), was, and is, the owner of the power plant. The defendant, Hanover Insurance Company (" Hanover" ), issued to Nicholson & Hall the surety bond that was necessary to dissolve CPS's mechanics lien on the power plant.

CPS's complaint, described more fully below, sounds in contract, equity, tort and G.L. c. 93A liability. Nicholson & Hall counterclaimed with similar causes of action and for indemnification. Dominion brought a third party claim against CPS for indemnification in a consolidated action, which was treated as a counterclaim here. The cross-claims between Nicholson & Hall and Dominion were stayed pending the outcome of the CPS trial.

The undersigned justice was specially assigned to the consolidated actions by order of the Superior Court Chief Justice.

The case was tried to the Court over a period of 14 trial days in March 2011. (CPS had asserted a jury claim, but the Court ruled that CPS's entitlement to a jury had been waived pursuant to its contract with Nicholson & Hall.)

Before the evidence opened, the Court took a view of the project site. 262 exhibits were entered. Final arguments were heard in late June 2011, and supplementary briefing concluded in early July.[1]

The Court finds for the defendant Dominion on all counts of CPS's complaint. The Court finds that while CPS breached its contract with Nicholson & Hall, the breach was not material. The Court further finds that Nicholson & Hall materially breached its contract with CPS and that its conduct violated G.L. c. 93A. The Court awards CPS net damages against Nicholson & Hall in the amount of $5,036,462. Because the Court concludes that while Nicholson & Hall's conduct was unfair and deceptive under G.L. c. 93A, §§ 2 and 11, the conduct was not willful and knowing, and, thus, multiple damages are not awarded. Pursuant to the statute, however, CPS is awarded its attorneys fees. The Court also finds for CPS against Hanover on the surety bond. The Court finds for Dominion on its third party claim against CPS but discounts Dominion's damages by 55% due to its substantial failure to mitigate. Net damages due Dominion are $100,000. Dominion is awarded its attorneys fees, but at a similar discount.

THE PARTIES

CPS is a Massachusetts corporation founded in 1985 with offices located at 612 Wareham Street in Middleboro. CPS is a piping installation contractor to the utility industry. Testimony of Mark Rotunno (" Rotunno" ) at trial transcript volume 6, page 148.[2] Rotunno has been the president, treasurer, and sole owner of CPS since its inception. Tr. 6:149 (Rotunno). Ex. 155.

Nicholson & Hall is a New York corporation founded in 1922 and headquartered at 41 Columbia Street, Buffalo, New York. Tr. 7:176 (Giarve). Most of its business involves the erection and maintenance of boilers and related equipment for the power generation and utility industries. Tr. 7:176-177 (Giarve). Nicholson & Hall employs approximately 24 persons at its headquarters. Tr. 7:174 (Giarve). Senior management is comprised of President Michael R. Madia (" Madia" ), Vice-President/General Manager John Housel (" Housel" ) and Treasurer Mark Giarve (" Giarve" ). Housel oversees five project managers, as well as quality control, safety, warehouse and tool and equipment managers. Tr. 11:179 (Housel). Giarve supervises a staff of approximately seven employees. Tr. 7:174 (Giarve). In the field, Nicholson & Hall employs between 150-300 union tradecraft and supervisory personnel, depending upon the number and size of projects underway. Tr. 7:176 (Giarve) and Tr. 11:183 (Housel).

Dominion is a Virginia limited liability company with a principal place of business in Massachusetts located at 1 Brayton Point Road in Somerset. It is part of the national energy company, Dominion Resources, Inc., which is headquartered in Richmond, Virginia.

CLAIMS AND COUNTERCLAIMS

In its third amended complaint, CPS brings causes of action against Nicholson & Hall for breach of contract, intentional misrepresentation, negligent misrepresentation, rescission, implied contract, quantum meruit and G.L. c. 93A. Its claims against Dominion are for negligent misrepresentation, implied contract, quantum meruit, unjust enrichment and G.L. c. 93A. Its claim against Hanover is exclusively on the mechanics lien bond.

Nicholson & Hall counterclaimed in 93A, contract, fraud, breach of the implied covenant of good faith and fair dealing and indemnity.

Dominion's third party claim rests on claims for indemnification.

FINDINGS OF FACT

THE PLANT

Brayton Point is an approximately 300-acre peninsula in Somerset, Massachusetts, across the mouth of the Taunton River from the City of Fall River. It extends south into Mt. Hope Bay. On it is located the power plant owned by Dominion. The plant is comprised of four coal fired electric generating units. Units 1 and 2 are primarily coal fired generators, each capable of generating 250 Mega-Watts (MW) of electricity and have been operating since 1963 and 1964, respectively. Unit 3 is a 630 MW coal fired unit in operation since 1969. Unit 4 is a 475 MW unit that has been operating since 1974. Trial Exhibit (" Ex." ) 230. The Brayton Point plant (hereinafter, " Brayton Point" or the " Plant" ) is the largest fossil-fueled generating power plant in New England.

THE PROJECT

As noted, the case arises from a project to reduce mercury and sulfur dioxide emissions from the Plant. In December 2005, Dominion submitted a plan to the Massachusetts Department of Environmental Protection (" DEP" ) to comply with 310 CMR 7.29, " Emission Standards for Power Plants" (the " 7.29 Regulations" ). A stepped-up DEP sulfur dioxide (" SO2" ) compliance requirement was also scheduled to come into effect as of October 1, 2008. Ex. 2, p. 11.

As part of Dominion's plan to meet the 2008 compliance deadline for mercury and sulfur dioxide emissions, it proposed the installation of Spray Dryer Absorbers (" SDAs" ) for Units 1 and 2 at Brayton Point. The SDAs are sometimes referred to as " scrubbers." It also proposed the installation of a Powder Activated Carbon (" PAC" ) injection system for Units 1, 2 and 3. Collectively, this scope of work was variously referred to during trial as the " Scrubber Project," the " SDRS/MRS Project"[3]or simply the " Project" . Hereinafter, it will be referred to as the " Project" or the " Scrubber Project" .

On March 29, 2006, the DEP approved Dominion's plan to install the SDAs.

Although not a party to the litigation, an important player in the events leading to the underlying dispute was Wheelabrator Air Pollution Control, Inc. (" WAPC" or " Wheelabrator" ). At some juncture, Wheelabrator was acquired by Siemens Environmental Systems and Services, Inc. (" SESS" ), an affiliate of Siemens Energy, Inc. (collectively referred to as " Siemens" ). Siemens is headquartered in Pittsburgh, Pennsylvania, with its multinational parent located in Germany.

In 2005, Dominion entered into a contract with Siemens to " engineer, design, detail, fabricate, deliver[,] assist in system start-up, test and make ready for operation" the SDAs and the PAC system for Units 1 and 2 at Brayton Point. Ex. 1. Siemens' design for the project was similar to an installation that it had designed and constructed at a power plant in Florida referred to as the " JEA Installation." Tr. 10:57 (Cole). Siemens' contract price for the Scrubber Project was $43,833,400. Ex. 1.

On June 12, 2006, Nicholson & Hall entered into a purchase order with Dominion whereby it became the general contractor to construct the SDRS/MRS on Units 1 and 2. That purchase order, together with the General Terms and Conditions, dated February 27, 2002, and the Specification for the Scrubber Project, dated February 1, 2006, constitutes the agreement between Dominion and Nicholson & Hall (the " Prime Contract" ). Ex. 87. Pursuant to the Prime Contract, Nicholson & Hall was to: (i) unload, store, erect, and make ready for operation, equipment, ductwork, piping, and components provided by Dominion or its suppliers; (ii) supply supplemental materials to be used during the erection specified in the Prime Contract; and (iii) supply and install all piping, duct, and equipment insulation. Id.

The end product of the Scrubber Project was to be the completed and installed SDAs for Units 1 and 2. In addition, the Project entailed equipment for lime storage and handling, lime slurry preparation and injection systems, fabric filters, waste ash removal and storage systems, fans and their associated silencers and ductwork and miscellaneous other equipment. Ex. 230.[4]

Before the Scrubber Project, Dominion completed, or was in the process of completing, other environmental control and related capital improvement projects of an aggregate dollar value of $1.3 billion. Tr. 14:192-93 (Wright). Before entering into the Prime Contract, Nicholson & Hall had experience constructing and installing sulfur and mercury reduction systems similar to that on the Scrubber Project on at least three other power plants. Tr. 8:246 (Cole) and Tr. 11:188-190 (Housel).

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