In re Raymond Professional Group, Inc.
| Citation | 397 B.R. 414 |
| Decision Date | 19 November 2008 |
| Docket Number | Bankruptcy No. 06 B 16748.,Adversary No. 07 A 00137. |
| Parties | In re RAYMOND PROFESSIONAL GROUP, INC. Debtor. Raymond Management Services, Incorporated n/k/a Raymond Professional Group-Design/Build, Inc., Plaintiff, v. William A. Pope Company, Defendant. |
| Court | United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Illinois |
Jason M. Torf, Esq., Eugene J. Geekie, Jr., Esq., David A. Howard, Esq., Schiff Hardin LLP, Chicago, IL, for Debtors/Plaintiff.
Susan K. Gummow, Esq., John F. O'Brien, Esq., Clausen Miller, P.C., Chicago, IL, for William A. Pope Company.
Harley J. Goldstein, Esq., Sven T. Nylen, Esq., Bell, Boyd & Lloyd LLP, Chicago, IL, Official Committee of Unsecured Creditors.
Gretchen Silver, Esq., Office of the U.S. Trustee, Chicago, IL.
This proceeding was filed by the Plaintiff to vacate an arbitration award in favor of Defendant. It is related to the filing by Raymond Professional Group, Inc. under Chapter 11 of the Bankruptcy Code. The background of this litigation follows:
Raymond Professional Group, Inc. ("Debtor" or "RPG") is the 100% shareholder of the Adversary Plaintiff Raymond Professional Group—Design/Build, Inc. f/k/a Raymond Management Services, Inc. ("Plaintiff or "RPG—Design/Build").1 Debtor provided shared corporate services to each of its subsidiaries, including Plaintiff. The subsidiaries provided engineering, architectural, design/build and other technical services to private and government clients, primarily in the power, industrial and process market sectors.
Debtor filed its voluntary petition for relief under chapter 11 of the Bankruptcy Code in Case No. 06-16748. Plaintiff, RPG—Design/Build, also filed for voluntary Chapter 11 relief, in Case No. 06-16753, as did other related entities.2 An Order was entered for procedural consolidation and joint administration.
During the year 2000, Plaintiff entered into a contract with AES Medina Valley Cogen, LLC ("AES") to construct a cogeneration power plant facility in Mossville, Illinois. Plaintiff was to perform all engineering, procurement, and construction services necessary to satisfy certain specified performance criteria for the lump sum price of approximately $34 million (the "EPC Contract"). On September 12, 2000, Plaintiff entered into a subcontract with William A. Pope Co. ("Pope") whereby Pope became responsible for performing all construction services and certain other services in the EPC Contract (the "Subcontract"). Plaintiff and Pope each agreed to perform tasks within their respective scope of work, and thereafter equally share any resulting profits or losses on the project. The parties agreed to establish a bank account (the "Initial Account") into which Plaintiff would deposit any amount collected from AES above the parties' expenses. Plaintiff funded the Initial Account with more than $2 million of project receipts from AES incurred as of February 2001.
After the Initial Account was funded, certain disputes arose regarding expenses the parties claimed to have incurred, as well as performance-based claims concerning certain pipe welds constructed by Pope. The parties entered into an Interim Settlement Agreement dated September 26, 2001, pursuant to which Plaintiff deposited additional funds into the Initial Account.
On March 12, 2003, the funds were transferred, with the permission of Pope, to an account (the "Account") with JP Morgan Chase Bank, N.A. ("Chase"). The Account documents required the dual signatures of Douglas J. Chidley ("Chidley"), Debtors' President, and Paul L. Troyke ("Troyke"), Pope's President, to withdraw funds. The Account was originally titled "Raymond Professional Group—Pope Joint Account", but after the bankruptcy filing was changed to "Raymond Professional Group, Inc. DIP."
The cost and performance-based disputes between these parties were arbitrated under American Arbitration Association procedures as required by an arbitration clause referenced in the Subcontract Agreement. On November 30, 2006, the Arbitration Panel ("Panel") entered an award requiring Plaintiff to pay Pope $3,634,714 ("Award"). Plaintiff defeated all of Pope's performance-based claims; the Award was based on "Audit Issues." This Adversary proceeding was brought by RPG—Design/Build against Pope seeking vacatur of the Award, now pending as Plaintiff's Amended Petition to Vacate Arbitration Award.
Debtor has filed a separate Adversary Complaint against Pope (No. 07 A 00639) to determine ownership of the Account as between Debtor and Pope. Pope's defense of this Adversary is one step in its asserted bankruptcy claim. In this proceeding, it seeks to defend the Award in its favor. In the other proceeding, No. 07 A 00639, it seeks to obtain the Account monies now held by Debtor to apply on its Award.
Plaintiff's Adversary attacks the Arbitration Award on five grounds:
Count I That the arbitration panel improperly included in the award $1 million recovered as insurance defense benefits as "project revenue" to be shared equally by the parties Count II That the panel improperly attributed $579,752 to Pope for "project costs" for owned equipment and tool costs;
Count III That the panel improperly considered the opinions of two auditors (one retained by each party) although the Subcontract Agreement said the parties would employ "a firm" (argued to mean only one firm) to conduct an audit in the case of a dispute. (Emphasis added).
Count IV That the Award was not well reasoned.
Count V That Pope did not disclose a final lien waiver which released a claim for costs, a document that was arguably inconsistent with the costs claimed by Pope at the arbitration; therefore, Pope is said to have obtained the arbitration award by "undue means" under the Illinois Arbitration Act.
Pope has moved herein for Summary Judgment confirming the Award. Pursuant to this Opinion, that Motion will be allowed and by separate Judgment Order the petition by RPG—Design/Build to vacate the Arbitration Award will be denied and the Award will be confirmed.
The parties generally followed Summary Judgment procedures required by Local Bankruptcy Rule 7056-1 and Rule 7056 Fed. R. Bankr.P. However, the determination of Undisputed Facts was made more difficult than usual for three reasons:
a. Pope included a number of exhibits in support of its Motion for Summary Judgment, but it did not always cite the source material in its Amended Statement of Material Facts. Plaintiff objected that Pope is improperly trying to introduce "hearsay" through the affidavit of Ms. Votava when it tried to use the affidavit to describe what was in the exhibits.
b. Pope did not provide a very coherent narrative with its Statement of Material Facts. That statement was not organized chronologically or by topic, and contains many irrelevant facts.
c. In its Response, Plaintiff refused to admit clearly to the content of the documents relied on, denying then "to the extent the averments are inconsistent [with the writing]" without specifying what, if anything, was objected to.
However, the exhibits themselves were not disputed as to authenticity and they were searched in preparation of this Opinion to find the materials relied upon in the following Undisputed Facts. Those Facts were drafted to focus on issues relevant to the Award and Motion for Summary Judgment under applicable legal standards. Many extraneous matters were argued by the parties but were not necessary to this ruling and were therefore not discussed here.
1. On September 12, 2000, Raymond Management Services, Inc. [n/k/a Raymond Professional Group—Design/Build, Inc.] ("RMS") entered into an Agreement for Engineering, Procurement and Construction Services (the "EPC Contract") with AES Medina Valley Cogen, LLC ("AES") for the construction of a cogeneration facility in Mossville, Illinois. The lump sum, fixed price for the Project was $34,600,000.00. (Id. at 30 ¶ 4.1.)
2. William A. Pope Company ("Pope") was not a party to the EPC Contract.
3. (a) The EPC Contract called for RMS to
[C]omplete the project by performing or causing to be performed all work and services required or appropriate in connection with the design, engineering, procurement, site preparation and clearing, civil works, manufacture, construction, store, construction management, start-up, training, commissioning and testing of the Facility, and provide all materials and Equipment, machinery, tools, construction fuels, chemicals and utilities, labor, transportation, administration and other services and items, whether of a temporary or permanent nature, required to complete the Project, and unpack, store, install and erect the Solar Equipment, all on a lump sum, fixed price, turnkey basis and otherwise in accordance with this Agreement (collectively the `Work').
(Def.'s Am. Stmt., Ex A at 14 ¶ 2. 1.)
(b) In addition, the EPC Contract contained the following dispute resolution procedures:
21.1 Dispute Resolution. In the event a dispute arises between Owner and Contractor regarding the application or interpretation of any provision of this Agreement, or the amount of any Contractor's Payment Request, the aggrieved Party shall promptly give notice in writing to the other Party invoking the provisions of this Section 21.1.
(a) The aggrieved Party shall give notice of the nature of the dispute, the disputed amounts, if any, and the reason for the dispute (the "Dispute");
(b) Within fourteen (14) days of the notification, the Parties will meet to discuss and resolve the Dispute;
(c) If the meeting is not successful in resolving the Dispute, the Parties agree to refer the dispute to senior management for discussion and resolution; and
(d)...
To continue reading
Request your trial
-
In re Raymond Professional Group, Inc.
...thereon entered in favor of Pope through an Adversary proceeding in this Court. Raymond Mgmt. Servs. v. William A. Pope Co. (In re Raymond Prof'l Group, Inc.), 397 B.R. 414 (Bankr.N.D.Ill.2008) at Docket Nos. 56, 59 supplemented by 400 B.R. 621 (Bankr.N.D.Ill.2008) at Docket Nos. 62, 63. Th......
-
In re Raymond Professional Group, Inc.
...Award" or the "Award"). Id. at 726. However, the Award did not determine ownership of the Account itself. In re Raymond Prof'l Group, Inc., 397 B.R. 414 (Bankr.N.D.Ill.2008), supplemented by In re Raymond Prof'l Group, Inc., 400 B.R. 621 B. The Debtors' Bankruptcies and Subsequent Litigatio......
-
In re Raymond Professional Group, Inc.
...RMS' performance-based claims. That award has since been confirmed and judgment entered in this court. Raymond Mgmt. Servs. v. William A. Pope Co., 397 B.R. 414 (Bankr. N.D.Ill.2008); (Adversary No. 07-00137, Docket No. Ownership of the Account was not an issue raised by the parties in the ......
-
In re Raymond Professional Group, Inc., Bankruptcy No. 06 B 16748 (Jointly Administered) (Bankr. N.D. Ill. 5/20/2010)
...judgment was entered in favor of Pope through a separate Adversary proceeding in this Court. See generally In re Raymond Prof I Group, Inc., 397 B.R. 414 (Bankr. N.D. Ill. 2008), supplemented by 400 B.R. 621 (Bankr. N.D. Ill. 2008). That judgment was not appealed, and therefore it stands to......