Mowat Constr. Co. v. Dorena Hydro, LLC, Case No. 6:14-cv-00094-AA
| Decision Date | 23 September 2015 |
| Docket Number | Case No. 6:14-cv-00094-AA |
| Court | U.S. District Court — District of Oregon |
| Parties | MOWAT CONSTRUCTION COMPANY, a Washington corporation, Plaintiff, v. DORENA HYDRO, LLC, an Oregon limited liability company; WESTCHESTER FIRE INSURANCE COMPANY, a Pennsylvania surety company, Defendants. DORENA HYDRO, LLC, an Oregon limited liability company, Third-party plaintiff, v. MOWAT CONSTRUCTION COMPANY, a Washington corporation; LIBERTY MUTUAL INSURANCE COMPANY, a Massachusetts corporation, Third-party defendants. |
John P. Ahlers
Ahlers & Cressman PLLC
999 Third Avenue, Suite 3800
Seattle, Washington 98104
Thomas A. Larkin
John Spencer Stewart
Tyler J. Storti
Stewart Sokol & Gray LLC
2300 SW First Avenue, Suite 200
Portland, Oregon 97201
Attorneys for plaintiff/third-party defendants
John C. Theiss
Davis Wright Tremaine, LLP
1201 Third Avenue, Suite 2200
Seattle, Washington 98101
Marcus W. Eyth
Derek D. Green
Blake J. Robinson
Davis Wright Tremaine, LLP
1300 SW Fifth Avenue, Suite 2400
Portland, Oregon 97201
Attorneys for defendant/third-party plaintiffs
Defendant and third-party plaintiff Dorena Hydro, LLC ("Dorena") seeks leave to interlocutorily appeal the Court's July 16, 2015, order ("Order") pursuant to 28 U.S.C. § 1292(b). In addition, Dorena moves for partial summary judgment, under Fed. R. Civ. P. 56, on its breach of contract counterclaim against plaintiff and third-party defendant Mowat Construction Company ("Mowat"). For the reasons set forth below, Dorena's motions are denied.
This dispute arises out of retrofitting activities that altered an existing flood control dam, located on Dorena Lake in Lane County, Oregon, with electrical generator equipment and facilities to produce hydroelectric power ("Project"). In early2011, Dorena, as Project owner,2 sought proposals for the Project. Dorena initially named the James W. Fowler Company ("Fowler") as contractor. Among the issues negotiated between Dorena and Fowler was a group of work items, designated in the contract as "allowance items," which were not fully priced and would be adjusted at a later date based on the actual costs incurred. As negotiations progressed, Fowler became concerned that Dorena was designating large portions of the contract as allowance items in order to manipulate the Project price downward to meet its lender's funding requirements. Nevertheless, Fowler and Dorena reached an agreement on core terms and, in May 2011, executed a written contract. Notably, that agreement specified the pricing of allowance items was deferred and that an estimated price was used contingent upon renegotiation.3
In September 2011, Dorena proposed an amendment to the contract. This amendment, drafted by Dorena attorney Kirk Retz, declared that the "[c]ontractor used its. best efforts to estimate of [sic] the actual cost of such allowance items," although they would be paid "on an actual cost basis." Stewart Decl. Ex. G, at 1-2. While the "best efforts" language was not incorporated into thefinal iteration of the Dorena/Fowler amended contract, the parties nonetheless agreed on a cost-reimbursable structure for allowance items.
By early 2012, despite the amended agreement, Dorena and Fowler were at odds regarding the Project design, allowance item pricing, and Dorena's ability to assure payment. The relationship continued to deteriorate and, in March or April 2012, Dorena terminated Fowler's contract.
Brent Smith, Dorena's designated representative at all relevant time, contacted Tim Calohan, Mowat's project manager, who was doing preconstruction work on Dorena's other hydroelectric ventures, and asked whether Mowat would be interested in taking over the Project. After conferring with Geno Jorgensen, Mowat's division management, Calohan responded to Smith in the affirmative.
In early April 2012, Smith and Jef Krohn, Dorena's senior project manager, detailed to Calohan and Jorgensen various aspects of the Project. Amongst other topics, Smith and/or Krohn discussed that Dorena risked losing its financing if it did not have a contractor under contract shortly and, as a result, Dorena intended to use cost-reimbursable allowance items. Specifically, Smith clarified that "placeholder" numbers would be used for allowance items until their actual costs could be determined, which "would be what would be paid." Stewart Decl. Ex. J, at 13-19.
On April 2, 2012, in anticipation of the parties' first in-person meeting, Krohn sent an email to Calohan attaching an SOV. Because the allowance categories did not list any values, Calohanreplied on April 6, 2012: "I need the actual $ value to plug-in for the allowance items [as it] was not on the spreadsheet you sent." First Theiss Decl. Ex. 16, at 1. Krohn eventually sent a completed SOV with "the original engineer [Bingham Engineering's] estimated cost for these items" and remarking "I know you didn't have enough time to price out all of it [so] I'll let you decide what you would like to include as allowance items or not." Id.; Stewart Decl. Ex. J, at 11-12.
Thereafter, Retz drafted and circulated a form agreement for a fixed contract price - i.e. no allowance items. First Theiss Decl. Ex. 11, at 1, 29-30. On April 18, 2013, Retz published a "redline" draft addressing several issues that Jorgensen had raised, as well as inserting the same allowance items provision that Dorena had attempted to use in amending Fowler's contract, including the same typo. Compare Stewart Decl. Ex. G, at 1-2, with First Theiss Decl. Ex. 12, at 1, 29-30; see also Stewart Decl. Ex. J, at 4, 6, 11-14 ().
On April 20, 2012, Calohan emailed Krohn with an updated SOV, wherein Mowat had filled in proposed pricing for the various non-allowance items that had been left blank in the last version provided by Krohn, explaining "I think it would be best if . . . you can work on how we want to show the allowance items." Stewart Decl. Ex. P, at 1. That same day, Calohan, Jorgensen, Smith, and Retz met in Mowat's Woodinville, Washington, office to finalize contract negotiations. Jorgensen, Calohan, and Smith agreed that"best efforts" under the truncated time-frame meant only that Mowat had worked with Dorena to identify potential work items not covered by Dorena's SOV. See, e.g., Eyth Decl. Ex 1, at 2-7, 9-12; First Theiss Decl. Ex. 7, at 7; First Theiss Decl. Ex. 8, at 2-3; First Theiss Decl. Ex. 9, at 3-7; Stewart Decl. Ex. J, at 11-19, 26; Stewart Decl. Ex. K, at 3-7; Stewart Decl. Ex. L, at 8-13; Stewart Decl. Ex. M, at 16-18; see also First Theiss Decl. Ex. 7, at 4 ().
The April 20, 2012, meeting resulted in the SOV that was ultimately used as Attachment A to the final Dorena-Mowat agreement ("Contract"), which was executed on or around April 24, 2012. See generally Eyth Decl. Ex. 4; First Theiss Decl. Ex. 13. With the exception of the bid items Mowat added to complete the SOV, the dollar values for virtually all of the allowance items remained unchanged from the list originally provided by Krohn and, in turn, matched the figures employed in Fowler's agreement.
The parties' relationship began to devolve shortly after the Project was initiated in the summer of 2012. They nevertheless continued their construction efforts, and even renegotiated the Contract to allow for acceleration, because Dorena was to receive a substantial grant if the Project was completed by the end of 2013. In December 2013, Dorena ordered Mowat to replace Calohan as project manager pursuant to the Contact; Mowat refused.
On January 17, 2014, Mowat initiated this lawsuit, asserting several contract-related claims arising out of Dorena's alleged failure to pay millions of dollars due and owing, and significant Project delays. On February 4, 2014, Dorena terminated Mowat's Contract and produced an exit plan that required Mowat to fully vacate the Project site by February 7, 2014. On February 5, 2014, Mowat filed an amended complaint; Dorena timely answered and alleged several affirmative defenses and counterclaims. Mowat subsequently repeatedly requested permission to have an on-site representative present, subject to reasonable terms and restrictions, while the Project was being completed; Dorena denied these requests. On April 4, 2014, the Court granted in part and denied in part Mowat's motion for entry onto the Project site.
On June 11, 2014, Mowat filed a second amended complaint adding a claim under the Miller Act, as well as adding defendant Westchester Fire Insurance Company. Dorena responded by reiterating its affirmative defenses and counterclaims against Mowat, and alleging new counterclaims against third-party defendant Liberty Mutual Insurance Company.
On May 18, 2015, the Court granted non-party EC Company's motion to quash the subpoena duces tecum issued by Dorena to the extent it was premised on Dorena's purported need for five years' worth of EC Company's records relating to other hydroelectric projects. The Court then granted, via the Order, Dorena's motion to add HydroTech Engineering, LLC, Dongfang Electric Company, and Dongfeng Electric Machinery Company, Ltd., manufacturers and/orsuppliers of the underlying turbines, as defendants. The Court further granted Mowat's motion to bifurcate, thereby allowing the case to proceed in two phases - the first phase limited to the issue of whether Dorena or Mowat breached the Contract, and the second phase devoted to any remaining issues. At that time, the parties were ordered to submit within 30 days a stipulated scheduling report setting forth a time-line for trial phases one and two, as well as for discovery related to the new third-party claims.
On July 30, 2015, Dorena moved for partial summary...
To continue reading
Request your trial