Upchurch Plumbing, Inc. v. Greenwood Utilities Commission, No. 2005-CA-01689-SCT (Miss. 4/19/2007)

• Decision Date: 19 April 2007
• Docket Number: No. 2005-CA-01689-SCT.,2005-CA-01689-SCT.
• Parties: UPCHURCH PLUMBING, INC. AND TRICONEX SYSTEMS, INC. v. GREENWOOD UTILITIES COMMISSION.
• Court: United States State Supreme Court of Mississippi

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UPCHURCH PLUMBING, INC. AND TRICONEX SYSTEMS, INC. v. GREENWOOD UTILITIES COMMISSION.

No. 2005-CA-01689-SCT.

Supreme Court of Mississippi.

April 19, 2007.

COURT FROM WHICH APPEALED: LEFLORE COUNTY CIRCUIT COURT, TRIAL JUDGE: HON. W. ASHLEY HINES, DATE OF JUDGMENT: 07/12/2005.

DISPOSITION: AFFIRMED.

ATTORNEYS FOR APPELLANTS: BRENDA B. BETHANY, C. MICHAEL ELLINGBURG

ATTORNEYS FOR APPELLEE: THOMAS M. FLANAGAN, JR., PHIL B. ABERNETHY

BEFORE SMITH, C.J., CARLSON AND DICKINSON, JJ.

CARLSON, JUSTICE, FOR THE COURT:

¶1. The Leflore County Circuit Court, after conducting a bench trial, entered judgment in favor of Greenwood Utilities Commission and against Upchurch Plumbing, Inc., and Triconex Systems, Inc., in the total amount of $2,622,451.96, plus post-judgment interest. Upchurch Plumbing, Inc., and Triconex Systems, Inc., appeal the trial court's judgment. Finding no error, we affirm.

FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶2. In May, 1993, the Municipal Energy Agency of Mississippi (MEAM) contracted with General Electric Company (GE) for a major upgrade of three generating units at Greenwood, Yazoo City, and Clarksdale. With the written consent of GE, the Greenwood portion of that contract was fully assigned by MEAM to Greenwood Utilities Commission (Greenwood).¹ In January 1995, Greenwood contracted with Upchurch Plumbing, Inc. (Upchurch) for an upgrade of the control system for its General Electric Frame V combustion turbine. Upchurch subcontracted with Triconex Systems, Inc. (Triconex) for the hardware and installation of a digital control system for the turbine, in accordance with what is referred to by the parties as Contract 103.

¶3. Marion Flanagan (Flanagan) was Greenwood's manager of the turbine project, and Kimble Kelly (Kelly) was Greenwood's Plant Superintendent, who had responsibility for daily operations at Greenwood. On November 10, 1995, Hamid Niakian (Niakian), a control systems specialist for Triconex, went to Greenwood for on-site testing of the turbine. An attempt to start the turbine at the rated speed of 4,860 RPM ended when the mechanical overspeed bolt tripped and shut the turbine down at a speed reported as 4,000 RPM on the Triconex controls. Niakian asked that a Greenwood employee assist him with the testing of the turbine using a Strobotac instrument² by pointing the Strobotac instrument at a designated place while Niakian viewed the digital RPM readout in the control room. Greenwood, without objection, provided Jerry Shaw (Shaw), Greenwood's Maintenance Supervisor, who had never conducted that specific type of testing using a Strobotac instrument. Shaw used a Strobotac instrument owned by Greenwood.

¶4. Shaw placed his Strobotac instrument onto some portion of the turbine shaft and called out the speed readings into the control room area to Niakian, Bobby Bennett (Bennett), a Greenwood electrical engineer, and Yu-Gene Chen (Chen), a GE engineer. The readings reported by Shaw confirmed the speed reported by the Triconex controls at each point, which led everyone involved to believe that the readings were correct. Thus, Lane Richard (Richard), a GE engineer in New Orleans, was contacted, and Richard directed Greenwood to adjust the overspeed trip bolt. Pursuant to Chen's instructions, Doug Elmore, a Greenwood employee, constructed a wrench and adjusted the mechanical overspeed bolt. The unit was started again, and when the unit reached normal operations speed, it experienced excessive vibration. Triconex was released from the job site pending resolution of the problem.

¶5. On February 9, 1996, Dean Walters, a GE service engineer, tested the turbine speed using a digital tachometer. The turbine was actually operating at a speed of 6,560 RPM, while the new Triconex control system showed a speed of 4,860 RPM. GE instructed Greenwood not to operate the turbine any longer because the overspeed event had caused damage. Triconex's software for the control system contained a programming defect. Instead of utilizing a 1:1 ratio between the turbine shaft and unit speed, the software utilized a 1:1.35 ratio, which corresponded to the auxiliary shaft rather than the turbine shaft. The result was incorrect speed readouts, which caused an overspeed of the turbine during testing; as a result, the turbine rotor was condemned and had to be replaced.

¶6. Greenwood originally filed suit against GE, Upchurch and Triconex in the Chancery Court of Leflore County on June 24, 1996. Greenwood's complaint requested that the chancery court grant, inter alia: (1) a declaratory judgment adjudicating which defendants were liable for the damage and repair to the unit; (2) an injunction mandating that the liable defendants repair the unit and specifically perform their contracts; (3) actual damages; (4) punitive damages; (5) prejudgment interest; (6) costs; (7) attorneys' fees; and (8) any other damages or relief as the court might find just. Subsequently, on September 17, 1996, GE filed its Motion to Transfer to Circuit Court, and Motion to Transfer Venue to Hinds County, pursuant to Miss. R. Civ. P. 12. GE argued that the chancery court did not have subject matter jurisdiction over a breach of contract claim where monetary damages, rather than an injunction, is the appropriate remedy. Additionally, GE argued that it could not get a fair trial in Leflore County because of press coverage concerning the incident with the unit.

¶7. On February 4, 1997, Chancellor Jon Barnwell entered an order finding that the chancery court did have subject matter jurisdiction, and further ordered GE to investigate the damage to the unit, identify repairs necessary to correct the damage, and provide an estimate of the cost of the necessary repairs. Chancellor Barnwell also ordered Greenwood, within ten days of receiving the quote from GE, to issue a purchase order to allow GE to proceed with the work pursuant to the quote, and directed Greenwood to pay GE for the completed repairs. On December 11, 1997, Chancellor Barnwell entered an agreed amended order by the parties allowing Greenwood to contract with GE for the actual repairs. On March 1, 2000, Chancellor Barnwell entered another order granting Defendant's Motion to Transfer to the Circuit Court of Leflore County.

¶8. After years of discovery, the case sub judice was eventually scheduled to be conducted as a circuit court jury trial with Judge Ashley Hines presiding, on May 5, 2003, but it was rescheduled for September 8, 2003. However, on September 3, 2003, Judge Hines entered an Agreed Order Continuing Trial Setting and Resetting for Bench Trial. Judge Hines ultimately conducted a bench trial October 7-9, 2003, and issued his Findings of Fact and Conclusions of Law on October 18, 2004, which we quote verbatim:

1. In the 1990s the Plaintiff, Greenwood Utilities Commission ("Greenwood Utilities"), began an upgrade project on its Frame V Gas Turbine ("the turbine") at its Henderson Generating Station.

2. In order to upgrade the turbine, Greenwood Utilities entered into a contract with Upchurch Plumbing, Inc. ("Upchurch"). Pursuant to this contract Upchurch was to design and install a digital control system for the turbine. Upchurch then subcontracted with Triconex Systems, Inc. ("Triconex") for both the design and installation of the control system.

3. Greenwood Utilities entered into a separate contract with General Electric Company ("GE") to produce the mechanical upgrade of the turbine and to complete its reinstallation at the Henderson Generating Station.

4. The control system designed by Triconex was defective. The system required the input of data by which the controls determined the turbine shaft speed. Triconex chose to place the data sensors on an auxiliary shaft without ascertaining the speed of the auxiliary shaft. Since the auxiliary shaft turned at a different speed than the turbine shaft speed the data sensors caused the control system to indicate a lower operating speed for the turbine than the actual operating speed.

5. The turbine featured an overspeed trip device which would stop the turbine if it exceeded a designated speed. During the installation and start up of the control system, the overspeed bolt tripped at the reported speed of 4,000 RPM. This was considerably below the designated trip speed of 5,346 RPM. Triconex engineer Hamid Niakian sought to confirm the actual turbine speed by independent testing. Greenwood Utilities employee Jerry Shaw assisted in this testing. Mr. Shaw entered the small confined area of the turbine with a strobotac instrument. Mr. Shaw, using the strobotac instrument, checked the speed of the turbine and called out the speed to Mr. Niakian who was in the control room. The speeds confirmed by Mr. Shaw matched those indicated by the Triconex controls.

6. Mr. Shaw's competence was called into question by the defendants at trial. However, no party ever offered any evidence to prove that Mr. Shaw was not competent or that his readings were incorrect. Mr. Shaw testified that he took speed readings from the shaft pursuant to the instructions of Mr. Niakian. Since the speeds obtained by Mr. Shaw were the same as those indicated by the Triconex control device, the Court is led to the only logical conclusion; that Mr. Shaw correctly took readings from the auxiliary shaft just as he was directed by Mr. Niakian. It is logical that Mr. Niakian would direct Mr. Shaw to the auxiliary shaft, since that is where Triconex placed the data sensors.

7. After confirmation of the speed by independent means, Greenwood Utilities adjusted the overspeed bolt in reliance on Triconex's faulty design. This led to the operation of the Turbine at a speed of at least 6,932 RPM, causing irreparable damage to the turbine.

8. The Court finds that the Triconex controls, if properly designed, should have prevented the overspeed incident regardless of the operation of the overspeed bolt.

9. Under its contract Triconex was obligated to...