Axiall Corp. v. AllTranstek LLC

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AXIALL CORPORATION v. ALLTRANSTEK LLC, RESCAR, INC. T/B/D/A RESCAR COMPANIES AND SUPERHEAT FGH SERVICES, INC.

APPEAL OF: ALLTRANSTEK LLC AND RESCAR, INC., T/B/D/A RESCAR COMPANIES

AXIALL CORPORATION Appellant v. ALLTRANSTEK LLC; RESCAR, INC., T/B/D/A RESCAR COMPANIES; SUPERHEAT FGH SERVICES, INC

Nos. 966 WDA 2022, 1016 WDA 2022

Nos. J-A22025-23, J-A22026-23

Superior Court of Pennsylvania

June 3, 2024

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT O.P. 65.37

Appeal from the Judgment Entered August 10, 2022 In the Court of Common Pleas of Allegheny County Civil Division at No(s) GD-18-010944

Benjamin D. Kohler, Esq.

BEFORE: BOWES, J., OLSON, J., and KING, J.

MEMORANDUM

OLSON J.

In this cross-appeal,^[1] AllTranstek LLC ("AllTranstek") and Rescar, Inc. t/b/d/a Rescar Companies ("Rescar") appeal from the August 10, 2022 judgment entered in the Court of Common Pleas of Allegheny County upon a jury verdict in favor of Axiall Corporation ("Axiall"), and against AllTranstek and Rescar. On cross-appeal, Axiall also appeals from the August 10, 2022 judgment, challenging the jury verdict in favor of Superheat FGH Services, Inc. ("Superheat"). In the appeal filed by AllTranstek and Rescar (966 WDA 2022), we affirm the judgment, in part, and vacate the portion of the judgment awarding attorney's fees in the amount of $8,324,073.25, and we remand this case for further proceedings in accordance with this memorandum. In the cross-appeal (1016 WDA 2022), we dismiss Axiall's cross-appeal as moot.

The trial court summarized the factual history as follows:

Axiall owns and operates [a] 564-acre facility [] in Natrium West Virginia ("the Natrium Plant"), where it manufactures chlorine and other products. The chlorine manufactured at the Natrium Plant is transported exclusively by railroad [tank] car and barge, for which purpose Axiall owns and operates a fleet of railroad tank cars. The Natrium Plant was previously owned and operated by PPG Industries, Inc. ("PPG"), until [a business unit of] PPG merged with Georgia Gulf Corporation [("Georgia Gulf")] in 2013 to create Axiall. AllTranstek and Rescar [] performed work for PPG prior to the formation of Axiall. In late August [] 2016, Axiall was acquired by Westlake [Corporation].

AllTranstek provides railroad tank car fleet management services, including the monitoring of fleet movement, ensuring equipment condition, managing regulatory requirements, and auditing repair and mileage activity. AllTranstek provided these services to PPG and continued to do so under year-to-year "contracts" with Axiall. These contracts came in the form of purchase orders, which the jury found to incorporate by reference Axiall's Purchase Order General Conditions ("Terms and Conditions"). Under these contracts, Axiall retained AllTranstek to manage the inspection and maintenance of Axiall's fleet of [railroad tank cars]. Axiall relied upon AllTranstek's expertise and knowledge of the regulatory landscape that governed [railroad tank car] maintenance. Rescar provides railroad tank car maintenance services including, among other things, mechanical repair, exterior painting, interior coating, and cleaning. As with AllTranstek, Axiall contracted with Rescar to provide these maintenance services using similar purchase orders that incorporated Axiall's Terms [and] Conditions.

The railroad tank car at issue in this case, AXLX 1702, was built [] in June 1979, [] and is a DOT 105A500W pressure [railroad] tank car[.^[2] AXLX 1702, in this case,] was constructed of non-normalized steel and equipped with an ACF200 stub sill underframe. Non-normalized steel was commonly used in constructing [railroad] tank cars, such as AXLX 1702, prior to 1982. Axiall and PPG used AXLX 1702 to transport chlorine from 1979 until 2013 when a division of PPG was "spun off" and merged with Georgia Gulf to form Axiall. AXLX 1702 was requalified per federal regulations for the first time in 2000 by Millennium Rail[, Inc.]

There was significant argument and expert testimony at trial surrounding the reasonableness of Axiall's continued use of AXLX 1702 in light of its non[-]normalized steel [construction] and [ACF200] stub sill underframe. In 2006, the Federal Railroad Administration ("FRA") promulgated a Safety Advisory and Corresponding Maintenance Bulletin TC-200 with regard to the use of [railroad tank] cars equipped with ACF200 underframes (the "2006 Safety Advisory"). In April [] 2017, months after the incident in question, the Association of American Railroads ("AAR") promulgated a rule that phased out the use of non-normalized steel [railroad tank] cars for transporting toxic inhalation hazards, such as chlorine gas. [AllTranstek and Rescar] attempted to prove at trial that Axiall was aware, even before the promulgated rule, of the issues with non-normalized steel [railroad tank] cars and that such [railroad tank] cars were no longer manufactured for those reasons. Additionally, evidence presented at trial showed that Axiall was aware of the 2006 Safety Advisory and that many of [its railroad] tank cars may have had cracks around their stub sill [under]frames. Thus, [AllTranstek and Rescar] attempted to show at trial that Axiall's knowledge of these potential defects in a [railroad tank] car like AXLX 1702, [together with Axiall's failure to take remedial action], established Axiall's contributory negligence in the ultimate rupture of the [railroad] tank [car]. The jury ultimately apportioned 40% of fault to Axiall.

In 2010, Rescar performed a federally required ten-year qualification inspection on AXLX 1702. The [railroad tank] car was then shipped straight from [Rescar's inspection facility] to Texana Tank to be re-jacketed in 2010. Texana Tank did other work on AXLX 1702, including post[-]weld heat treatment. In February [] 2016, AXLX 1702 was sent to Rescar's DuBois[, Pennsylvania] facility for a five-year interim inspection required on chlorine tank cars in accordance with Axiall's maintenance manual and Axiall's [shipping] instructions. Rescar's work included cleaning, thickness testing, build-up welding for corrosion repair, post-weld heat treatment, and hardness testing. The interior inspection of AXLX 1702, performed by Rescar[ at its Dubois facility], revealed many corroded areas on the interior of the tank shell that fell below Axiall's minimum tank shell thickness requirements. Due to the extensive nature of the repairs, a repair estimate of approximately $58,000[.00] was provided to Axiall for approval.

After Axiall[ approved] the repairs to AXLX 1702, Rescar employees repaired the corroded areas on the interior of the tank shell by welding in May [] 2016. After weld repairs [were performed], and consistent with the applicable procedures and regulations, local post-weld heat treatment was performed. [Local post-weld heat treatment] is performed after welding is completed on a [railroad tank car] in an effort to reduce and redistribute the residual stresses present in the steel after welding. The process involves placing ceramic fiber heating pads on the areas of the tank shell where weld repairs were performed in order to heat the metal [] to a particular temperature, hold that temperature for three hours, and then control the [cooling] of the metal. Thermocouples must be centered under each heating element to monitor the temperatures reached during [local post-weld heat treatment.] Insulation is placed on the opposite side of the tank shell during the process.

Prior to the [local post-weld heat treatment performed] on AXLX 1702 [] in 2016, Rescar entered into a contract with Superheat whereby Superheat provided certain [local post-weld heat treatment] equipment to Rescar and remotely monitored the temperatures reached during the [local post-weld heat treatment] process from its facility located in Kincardine, Ontario[, Canada]. The [local post-weld heat treatment] of AXLX 1702 in 2016 occurred on six dates in late May and early June. Superheat's function was to monitor the temperatures and [local post-weld heat treatment] equipment power outputs during [local post-weld heat treatment] and advise Rescar['s] technicians of potential issues evident through the monitoring of this data. While Rescar was responsible for most of the maintenance work, Superheat was responsible for monitoring the [local post-weld heat treatment] of the railroad tank car, and AllTranstek was responsible for inspecting the work [upon completion]. While Axiall alleged that Superheat negligently failed to perform a successful [monitoring of the local post-weld heat treatment], the jury found no liability on the part of Superheat. Axiall also alleged that the AllTranstek inspector assigned to [] Rescar['s] DuBois facility[] failed to conduct any in-process inspections in connection with the work performed on AXLX 1702.

On July 20, 2016, [the AllTranstek inspector] performed a final inspection of AXLX 1702 and declared [the railroad tank car] fit for return to chlorine [transport] service. This final inspection included a review of the [railroad tank] car file associated with AXLX 1702 indicating that it is constructed of non-normalized steel and is equipped with an ACF200 stub sill [underframe]. The inspection failed to include an interior inspection [of the tank] and a stub sill [underframe] inspection. [Rescar] argued at trial that the purpose of this five-year inspection was principally to conduct a cleaning inspection of the interior [of the railroad tank car], rather than a federal qualification inspection in which the stub sill [underframe] would have been inspected.

On August 27, 2016, AXLX 1702 was loaded with liquid chlorine at the Natrium [Plant] for the first time after the maintenance work performed by Rescar and Superheat. Shortly

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