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Arkansas River Power Authority v. The Babcock & Wilcox Co.

United States District Court, D. Colorado

July 21, 2017

ARKANSAS RIVER POWER AUTHORITY, Plaintiff/Counter Defendant,
v.
THE BABCOCK & WILCOX COMPANY, f/k/a BABCOCK & WILCOX POWER GENERATION GROUP, INC., Defendant/Counter Claimant.

          ORDER ON POST TRIAL MOTIONS ## 302, 303, 324

          CHRISTINE M. ARGUELLO United States District Judge.

         This matter is before the Court on three post trial motions, two filed by Defendant The Babcock & Wilcox Company (“B&W”) - (1) Renewed Motion for Judgment as a Matter of Law (Doc. # 303) and (2) Objection to Taxation of Costs (Doc. # 324) - and one filed by Plaintiff Arkansas River Power Authority (“ARPA”) - Motion to Amend Judgment for Pre- and Post-Judgment Interest (Doc. # 302). The Court addresses each motion in turn.

         I. PROCEDURAL BACKGROUND

         In April 2005, ARPA and B&W entered into a contract pursuant to which B&W was to provide to ARPA a coal-fired steam boiler for an electric generation project owned by ARPA, known as the Lamar Repowering Project (the “LRP”). B&W delivered the boiler in November 2007 but the boiler was unable to meet performance and emissions standards in the contract. B&W implemented modifications in an attempt to rectify the issues with the boiler, but none were successful. As a result of the boiler's deficiencies, ARPA claims to have incurred substantial financial loss.

         In February 2014, ARPA initiated this suit, alleging, among other claims, that B&W breached the parties' contract by supplying a deficient boiler. The Court held a nine-day jury trial on November 7-18, 2016. At the close of ARPA's case, B&W moved for judgment as a matter of law under Federal Rule of Civil Procedure 50(a), which the Court granted in part and denied in part. (Doc. # 300.)[1]

         On November 21, 2016, the jury returned a verdict in favor of ARPA on its breach of contract claim. (Doc. ## 279, 285.) The jury specifically found three separate breaches: (1) B&W failed to engineer and deliver a boiler capable of meeting the blue gas emissions guarantees in Section 40.9 of Exhibit A to the Contract (“First Breach”); (2) B&W failed to prepare and implement a Corrective Action Plan fully addressing the deficiencies with the boiler after receiving a Notice of Non-Achievement pursuant to Section 29.2 of the Contract (“Second Breach”); and (3) B&W failed to meet the auxiliary power guaranty of Section 40.12 of Exhibit A to the Contract (“Third Breach”). (Doc. # 279 at 4.) The jury awarded Plaintiff $2.19 million for the First Breach, $1.0 million for the Second Breach, and $1.0 million for the Third Breach. Id.

         On November 21, 2016, the Court entered final judgment in favor of ARPA and against B&W (Doc. # 285), and on January 12, 2017, the Clerk of Court taxed B&W with $56, 080 in costs (Doc. # 315).

         II. B&W'S RENEWED MOTION FOR JUDGMENT AS A MATTER OF LAW

         The Court first addresses B&W's Renewed Rule 50 Motion for Judgment as a Matter of Law, filed on December 19, 2016, and fully briefed by January 23, 2017. Therein, B&W argues that it is entitled to judgment as a matter of law as to all three bases on which the jury found that it breached the contract. B&W specifically contends (1) ARPA failed to conduct contractually-required performance tests and is thereby prohibited from attributing any breach of contract to B&W; (2) ARPA's auxiliary power guarantee claim fails as a matter of law because ARPA did not prove any recoverable damages; and (3) the jury impermissibly awarded duplicative damages.

         A. LEGAL STANDARD

         Under Rule 50(b), a party may make a renewed motion for judgment as a matter of law within 28 days of the entry of judgment. See Fed. R. Civ. Proc. 50(b). In evaluating a motion brought under Rule 50(b), the Court examines all the evidence admitted at trial, construes that evidence and the inferences from it in the light most favorable to the non-moving party, and refrains from making its own credibility determinations, re-weighing the evidence, or substituting its conclusions for those of the jury. See Tyler v. RE/MAX Mountain States, Inc., 232 F.3d 808, 812 (10th Cir. 2000); see also Thunder Basin Coal Co. v. Sw. Pub. Serv. Co., 104 F.3d 1205, 1212 (10th Cir. 1997) (“The jury . . . has the exclusive function of appraising credibility, determining the weight to be given to the testimony, drawing inferences from the facts established, resolving conflicts in the evidence, and reaching ultimate conclusions of fact.”). Instead, the Court has the very narrow task of determining only whether the jury verdict is supported by substantial evidence when the record is viewed most favorably to the prevailing party. Webco Indus., Inc. v. Thermatool Corp., 278 F.3d 1120, 1128 (10th Cir. 2002). Substantial evidence is “something less than the weight of the evidence, and is defined as such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, even if different conclusions also might be supported by the evidence.” Id. Judgment as a matter of law is appropriate “only if the evidence points but one way and is susceptible to no reasonable inferences which may support the opposing party's position.” Finley v. United States, 82 F.3d 966, 968 (10th Cir. 1996).

         To preserve issues under Rule 50(b), a party must have moved for judgment as a matter of law under Rule 50(a) at trial. United Int'l Holdings, Inc. v. Wharf (Holdings) Ltd., 210 F.3d 1207, 1228 (10th Cir. 2000). Motions under Rule 50(a) must “specify the judgment sought and the law and the facts on which the moving party is entitled to the judgment.” Fed.R.Civ.P. 50(a)(2). A party may not circumvent Rule 50(a) by raising for the first time in a post-trial motion issues not raised in an earlier motion for directed verdict. United Int'l Holdings, 210 F.3d at 1228.

         B. PERFORMANCE TESTING

         B&W first argues that ARPA's failure to conduct performance tests on the boiler precludes ARPA from now claiming that B&W breached the contract, thereby warranting judgment as a matter of law on ARPA's breach of contract claims. ARPA responds that performance tests were not contractually required and, even if they were, B&W waived its right to enforce that contractual obligation. The Court finds that, viewing the record in the light most favorable to the prevailing party, substantial evidence supports ARPA's position and the jury's verdict. See Webco Indus., Inc., 278 F.3d at 1128.

         The parties' contract provides, in pertinent part:

Performance tests, if required, shall be run by the Owner within 60 days after the Owner shall have received notice from the Seller that the equipment furnished is ready for testing, it being understood that the Seller may require preliminary tests.
The Equipment shall be considered as accepted if tests show that the guarantees have been fulfilled, or if Owner shall fall to have said Equipment tested within the 60 day period referenced above or within 30 months from receipt of the Equipment at the Site as defined in Paragraph 2.2.1 of the General Condition of Purchase, whichever occurs first.
The results of these tests will establish the unit's performance of steam generation, stack emissions, etc. as defined herein and will be used to determine compliance with performance guarantees defined herein. The Supplier may be present during these tests.

(Doc. # 303-2, p. 2.)

         The plain language in the first paragraph does not state that “performance tests are required”; rather, it says, quite clearly, “performance tests, if required” and contains no subsequent language expressly stating that they were required in this instance. Defendant's reference to the final paragraph as definitive proof that performance tests were required is unavailing. Any reasonable juror could read that paragraph, coupled with the first one, and just as readily assume that the final paragraph applied only IF performance tests were required. Although B&W presented testimony that performance tests were required; ARPA presented contrary argument, and the jury merely weighed these competing positions with its own contract interpretation in reaching its conclusion. This Court will not re-weigh the evidence or substitute its conclusions for those of the jury.

         Moreover, even if the jury had concluded that performance tests were required, the evidence also supports a jury finding that B&W waived its right to enforce this contractual requirement. See Venderbeek v. VernonCorp., 25 P.3d 1242, 1248 (Colo.App. 2000) (waiver is the intentional relinquishment of a known right).

         Regarding waiver, the jury was instructed as follows:

In the event that you find that ARPA was obligated under the contract to conduct performance testing, Plaintiff ARPA is not legally responsible to Defendant B&W for substantially performing its obligations under the contract if ARPA proves that B&W waived those obligations. A waiver is proved if you find all of the following:
1. B&W knew that ARPA was required to conduct performance testing under the contract;
2. B&W knew that the failure of ARPA to perform this contractual promise gave B&W the right to insist that ARPA conduct performance testing before submitting its Corrective Action Plan pursuant to section 29.2;
3. B&W intended to give up this right; and
4. B&W voluntarily gave up this right in a document signed by B&W.

(Doc. # 282, p. 28.)

         Section 29.2 of the Contract required B&W to submit a Corrective Action Plan (CAP) to ARPA in the event that the boiler did not meet its performance guarantees.[2] B&W argues that ARPA's performance test obligation preceded and triggered B&W's CAP obligation. Nonetheless, ARPA presented evidence at trial that B&W knowingly declined to enforce the performance test requirement. Specifically, ARPA presented the following evidence of waiver:

• A letter from ARPA's General Manager to B&W detailing various issues with the boiler and requesting B&W bring the boiler into compliance. The letter concluded: “ARPA hereby submits this letter as its notice of non-achievement pursuant to Section 29.2 of its contract with B&W and requests that B&W submit a corrective action plan to bring the LRP into full compliance with its permit and the performance guarantees of the contract.”
• A responsive, signed letter from B&W to ARPA, wherein B&W acknowledged boiler issues and stated, “As requested in your letter, B&W is working on a corrective action plan and we hope to submit this plan within the next couple of weeks once we have vetted some of the suggested solutions.”
• Testimony from a B&W representative that, after receiving ARPA's letter regarding performance guarantee failures, B&W did not require ARPA to submit the boiler to performance tests.
• Testimony from a B&W representative that B&W designed and implemented a CAP, notwithstanding ARPA's failure to submit the boiler to performance tests.

         This evidence is sufficient to support a jury determination that B&W waived its right to enforce any performance test obligation. Judgment as a matter of law on these grounds is therefore unwarranted.

         C. ...


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