Siemens Westinghouse Power Corp. v. Dick Corp., 03 Civ. 364(VM).

Citation293 F.Supp.2d 336
Decision Date14 October 2003
Docket NumberNo. 03 Civ. 364(VM).,03 Civ. 364(VM).
PartiesSIEMENS WESTINGHOUSE POWER CORPORATION, Plaintiff, v. DICK CORPORATION, Defendant/Counterclaim Plaintiff, Continental Casualty Company and National Fire Insurance Company of Hartford, Defendants. Dick Corporation, On Behalf of the Consortium of Dick Corporation and Siemens Westinghouse Power Corporation, and Individually, Third-Party Plaintiff, v. AES Londonderry, L.L.C., Sycamore Ridge, L.L.C., Stone & Webster, Inc., Limbach Company and Sachs Electric Company, Third-Party Defendants.
CourtU.S. District Court — Southern District of New York

Charles F. Kenny, Gregory N. Chertoff, Peckar & Abramson, P.C., New York City, for plaintiff.

John C. Sabetta, Seyfarth Shaw, New York City, John T. Bergin, Richard M. Preston, Seyfarth Shaw, Washington, DC, for defendants.

DECISION AND ORDER

MARRERO, District Judge.

Plaintiff Siemens Westinghouse Power Corporation ("SWPC") and defendant Dick Corporation ("Dick") formed a Consortium for the purpose of constructing a power plant in New Hampshire on behalf of global power company AES Corporation ("AES"). Because of delays in the project, SWPC has allegedly paid over $18 million in liquidated damages to AES. SWPC filed a complaint seeking reimbursement for those payments from Dick and from Dick's sureties, defendants Continental Casualty Company and National Fire Insurance Company of Hartford (collectively, the "Sureties"). There are several parties, and numerous motions, still pending in this case. This Decision and Order addresses only SWPC's motion for summary judgment against Dick and the Sureties, which was filed together with SWPC's motion to dismiss Dick's counterclaims. The motion for summary judgment is granted in part and denied in part.

I. BACKGROUND

In September 2000, Dick and SWPC entered into a Consortium Agreement (the "Consortium") to build a power plant for AES in Londonderry, New Hampshire. (Compl. ¶ 12.) The Consortium signed one contract with AES subsidiary AES Londonderry, LLC ("AES Londonderry") and a second contract with AES subsidiary Sycamore Ridge Co., LLC ("Sycamore Ridge") (collectively, the "Owner"). (Compl. ¶ 13.) Under those contracts, the Owner assessed liquidated damages against the Consortium in the amount of $85,000 per day beginning June 1, 2002 because the project did not timely achieve what the contract termed "Provisional Acceptance." (Compl. ¶¶ 18, 20.) Dick made the initial liquidated damages payments, totaling around $3.6 million. (Affidavit of Howard F. Jenkins in Support of Plaintiff Siemens Westinghouse Power Corporation's Motion for Summary Judgment, dated July 17, 2003 ("Jenkins Aff.") ¶ 5; Statement of Material Facts in Dispute Submitted Pursuant to Local Rule 56.1 in Support of Dick's and Dick's Sureties Opposition to SWPC's Motion for Summary Judgment ("Dick 56.1") ¶ 7.) For reasons that are disputed, in October 2002 the Owner began drawing its liquidated damages from letters of credit SWPC had posted; those draws totaled about $12 million through March 2003. (Jenkins Aff. ¶ 7, Ex. C.) In April 2003, the Owner and the Consortium entered into two Provisional Acceptance Agreements (one with each Owner), which deemed the project as having achieved Provisional Acceptance and which required the Consortium to pay approximately $6 million in additional liquidated damages. (Id. at ¶ 8.) SWPC paid those damages as well, for a total sum in excess of $18 million. (Id. at ¶ 9.)

SWPC argues that, under the Consortium Agreement, Dick is responsible for paying all the liquidated damages in the first instance. (Compl. ¶ 30.) The ultimate apportionment of those damages, according to SWPC, is to be determined according to certain procedures set forth in the Consortium Agreement. (See Plaintiff Siemens Westinghouse Power Corporation's Memorandum of Law in Support of Its Motions to Dismiss and for Summary Judgment ("SWPC Mem.") 24.) The Sureties have posted a performance bond on behalf of Dick in connection with the project. (Compl. ¶ 36.) SWPC alleges that the bond incorporates the Consortium Agreement by reference; accordingly, SWPC seeks to hold the Sureties jointly and severally liable for the liquidated damages. (Compl. ¶¶ 35-39.)

Dick reads the Consortium Agreement to require Dick to pay the liquidated damages only to the extent of Dick's fault. (See Memorandum of Law In Support of Defendant/Counter-Plaintiff, Third-Party Plaintiff Dick Corporation's and Defendants, Continental Casualty Company's and National Fire Insurance Co. of Hartford's Opposition to Siemens Westinghouse Power Corporation's Motion to Dismiss and for Summary Judgment ("Def.Mem.") 5-12). Dick claims there is at least a genuine issue of material fact as to this point. (Id.) In any event, Dick claims that SWPC made negligent misrepresentations and fraudulently induced Dick into the Consortium, thereby negating Dick's obligation to pay liquidated damages. (Id. at 13-15.) Dick seeks, in the alternative, discovery under Federal Rule of Civil Procedure 56(f). (Id. at 18-20.) Finally, the Sureties argue that they are not obligated to pay on their bonds until SWPC performs its duties under the Consortium Agreement. (Id. at 20-21.)

II. SUMMARY JUDGMENT STANDARD

The Court may only grant summary judgment "if, the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The Court must first look to the substantive law of the action to determine which facts are material; "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Even if the parties dispute material facts, summary judgment will be granted unless the dispute is "genuine," i.e., "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Id. at 249, 106 S.Ct. 2505.

Summary judgment is appropriate in cases involving an unambiguous contract because the contract's interpretation is a matter of law, not fact. Harris Trust and Sav. Bank v. John Hancock Mut. Life Ins. Co., 970 F.2d 1138, 1147-48 (2d Cir. 1992), aff'd, 510 U.S. 86, 114 S.Ct. 517, 126 L.Ed.2d 524 (1993). That one party may offer a different interpretation of the contract's unambiguous language will not defeat summary judgment. Id. Moreover, the mere presence of ambiguous contract language is not, by itself, enough to preclude summary judgment: "in order for the parties' intent to become an issue of fact barring summary judgment, there must also exist relevant extrinsic evidence of the parties' actual intent." Mellon Bank, N.A. v. United Bank Corp. of New York, 31 F.3d 113, 116 (2d Cir.1994). In sum, "[w]hen the provisions of the contract are susceptible to conflicting constructions and when there is also relevant extrinsic evidence of the parties' actual intent, the meaning of the provisions becomes an issue of fact barring summary judgment." Williams and Sons Erectors, Inc. v. South Carolina Steel Corp., 983 F.2d 1176, 1183-84 (2d Cir.1993) (emphasis in original).

Throughout this inquiry, the Court must view the evidence in the light most favorable to the non-moving party and must draw all reasonable inferences in favor of that party. See Hanson v. McCaw Cellular Communications, Inc., 77 F.3d 663, 667 (2d Cir.1996).

III. DISCUSSION
A. LIQUIDATED DAMAGES UNDER THE CONSORTIUM AGREEMENT

The principal dispute between the parties is the meaning of Section 7.6.2 of the Consortium Agreement, which reads as follows:

Liquidated damages or other obligations to the Owner arising from delayed completion of the Project, or any part thereof, shall be the responsibility of and shall be paid by Dick as specified in Section 6.3.2 hereof.

(Jenkins Aff. Ex. A, at 17.) Section 6.3.2 of the Consortium Agreement reads:

Without limiting the generality of Section 6.3.1 above, in the event Siemens Westinghouse is late in performing its obligations under Exhibit G, Siemens Westinghouse will, as its exclusive liability and Dick's sole remedy, be responsible for paying to Dick: the lesser of: (i) the liquidated damages payable in accordance with Article 9, Delay in Delivery, and Article 10, Provisional Acceptance Delay/Bonuses/Final Acceptance, of Exhibit G, provided however, in no event shall Siemens Westinghouse's responsibility for payment of such liquidated damages exceed the sum of $85,000 per day, and (ii) the demonstrated impact costs Dick incurs in working around or accelerating its work to overcome the delay caused by Siemens Westinghouse, subject to the exclusions and limits on recovery of such costs in Section 9. In no event will Siemens Westinghouse be liable to Dick for delay claims hereunder if liquidated damages would not have been payable pursuant to Exhibit G. Dick will be responsible for payment of any scheduled liquidated damages to be paid to Owner. Dick will also be responsible to pay Siemens Westinghouse the bonus referred to in Article 10, Provisional Acceptance Delay/Bonuses/Final Acceptance, of Exhibit G.

(Id. at 13 (first emphasis in original; second emphasis added).) According to SWPC, the meaning and interplay of these provisions is unambiguous: Dick is to pay all the liquidated damages to the Owner in the first instance, and SWPC is to reimburse Dick for SWPC's share, as calculated under Section 6.3.2. SWPC highlights the fact that the contract calls for SWPC to pay liquidated damages to Dick, not the Owner, which is consistent with its reading that Dick is to pay the liquidated damages in the first instance.

SWPC next points out that, according to the contracts with the Owner, liquidated damages are to be paid on a monthly basis. SWPC asserts that it would be...

To continue reading

Request your trial
2 cases
  • Siemens Westinghouse Power Corp. v. Dick Corp., 03 CIV.364 VM.
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • January 14, 2004
    ...the Court for partial summary judgment, and the Court granted, in part, SWPC's motion. See Siemens Westinghouse Power Corp. v. Dick Corp., 293 F.Supp.2d 336, 2003 WL 22383284 (S.D.N.Y. Oct.14, 2003). The Court determined that, under the Consortium Agreement, Dick was responsible for paying ......
  • Siemens Westinghouse Power Corp. v. Dick Corp., 03 CIV.364(VM).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • May 28, 2004

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT