AZZ Inc. v. S. Nuclear Operating Co.

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AZZ, INC. and THE CALVERT COMPANY, INC., Plaintiffs, v. SOUTHERN NUCLEAR OPERATING COMPANY, INC.; GEORGIA POWER COMPANY; OGLETHORPE POWER CORPORATION; MUNICIPAL ELECTRIC AUTHORITY OF GEORGIA; THE CITY OF DALTON, GEORGIA; and WECTEC GLOBAL PROJECT SERVICES, INC., n/k/a STONE & WEBSTER, INC., Defendants.

No. CV 119-052

United States District Court, S.D. Georgia, Augusta Division

March 31, 2023

ORDER

J RANDAL HALL, CHIEF JUDGE UNITED STATES DISTRICT COURT

Before the Court are the following motions: (1) AZZ, Inc. ("AZZ") and the Calvert Company, Inc.'s ("Calvert") (collectively, "Plaintiffs") motion for summary judgment (Doc. 104); (2) Plaintiffs' motion to exclude testimony of Eric Guyer (Doc. 106); (3) Plaintiffs' motion to exclude testimony of Alex Kattamis (Doc. 107); (4) Plaintiffs' motion to exclude testimony of Paul Britton (Doc. 108); (5) Plaintiffs' motion to exclude testimony of Christopher Tierney (Doc. 109); (6) Georgia Power Company's, for itself and as agent for Oglethorpe Power Corporation, Municipal Electric Authority of Georgia, and the City of Dalton, Georgia (collectively, the “Owners" and, together with Southern Nuclear Operating Company, Inc. ("SNC") the "Vogtle Defendants") motion for summary judgment and motion for partial summary judgment (Doc. 116); (7) the Vogtle Defendants' motion to exclude testimony of Chathan Cooke (Doc. 111); (8) the Vogtle Defendants' motion to exclude testimony of Javier Cruz (Doc. 112); (9) the Vogtle Defendants' motion to exclude testimony of Patrick Donohoe (Doc. 113); (9) Vogtle Defendants' motion to exclude testimony of Steven Hoisington (Doc. 114); (10) WECTEC Global Project Services, Inc., n/k/a Stone & Webster, Inc.'s ("WECTEC") motion for summary judgment and motion for partial summary judgment (Doc. 119); and (11) WECTECs motion to exclude Chathan Cooke, Javier Cruz, Patrick Donohoe, and Steven Hoisington (Doc. 115). For the following reasons, Plaintiffs' motion for summary judgment is GRANTED IN PART and DENIED IN PART; Plaintiffs' motion to exclude Mr. Britton is DENIED; Plaintiffs' motions to exclude Dr. Guyer and Dr. Kattamis are GRANTED IN PART and DENIED IN PART; Plaintiffs' motion to exclude Mr. Tierney is DENIED WITHOUT PREJDUICE; the Vogtle Defendants' motion for summary judgment is GRANTED and motion for partial summary judgment is GRANTED IN PART and DENIED IN PART; the Vogtle Defendants' motions to exclude Dr. Cruz and Dr. Donohoe are GRANTED; the Vogtle Defendants' motions to exclude Dr. Cooke and Mr. Hoisington are GRANTED IN PART and DENIED IN PART; WECTEC's motions for summary judgment and partial summary judgment are DENIED AS MOOT; and WECTEC's motions to exclude Dr. Cruz and Dr. Donohoe are GRANTED; WECTECs motion to exclude Dr. Cooke and Mr. Hoisington is GRANTED IN PART and DENIED IN PART.

I. BACKGROUND

This case arises out of the engineering, procurement, construction and startup of two nuclear reactors (Unit 3 and Unit 4) at the Alvin W. Vogtle Electric Generating Plant (“Plant Vogtle") near Waynesboro, Georgia (the "Vogtle Project").

A. The Relevant Agreements

In 2008, the Vogtle Defendants entered into an Engineering, Procurement and Construction Agreement (the "EPC Agreement") with Westinghouse Electric Company, LLC ("Westinghouse") and Stone & Webster, Inc. ("S&W"), a Shaw Group Company ("Shaw"), for the Vogtle Project. (Doc. 104-1, at 2; Doc. 116-1; at 2.) In 2011, S&W entered into four purchase orders ("Purchase Orders") with Calvert related to the manufacture of the electrical bus system goods ("Bus System Goods") for the Vogtle Project and certain services, such as providing structural steel support for the installation of those goods.^[1] (Doc. 104-1, at 3; Doc. 116-1 at 3.) Two of the Purchase Orders were for the manufacture of the isophase bus ("IPB") goods ("IPB Purchase Orders"), and the other two were for the manufacture of the non-segregated phase bus ("NSPB") goods ("NSPB Purchase Orders"). (Doc. 104-1, at 3; Doc. 116-1 at 3.) On December 10, 2015, AZZ, a Mississippi corporation, and S&W, as a subsidiary of Chicago Bridge & Iron Company ("CB&I"),^[2]entered into a subcontract under which AZZ agreed to provide certain services as part of the Vogtle Project (the "Vogtle Subcontract"). (Doc. 104-1, at 5; Doc. 116-1, at 5.)

B. The Electrical Bus System

The Bus System Goods that Plaintiffs were to provide under the Purchase Orders would be used for the construction of the two nuclear power generation units, Unit 3 and Unit 4, at Plant Vogtle. (Doc. 116-1, at 7; Doc. 135, at 11-12.) Unit 3 and Unit 4 "require[] a local, high-current, power distribution system which includes an electrical bus system." (Doc. 116-1, at 7; Doc. 135, at 12.) "This bus system contained three components: a [NSPB] system, an [IPB] system, and a forced air cooling system." (Doc. 116-1, at 7; Doc. 135, at 12.) "The forced air cooling system forces air through the [IPB] system which is connected to the [NSPB] system thus allowing it to also supply air to the [NSPB] system." (Doc. 116-1, at 7; Doc. 135, at 12.) The NSPB system is an assembly of the NSPB goods, or NSPB bars, that carry electric current when in operation. (Doc. 116-1, at 7-8; Doc. 135, at 12.) Because of this function, the NSPB bars were to be insulated with epoxy coating. (Doc. 116-1, at 10; Doc. 135, at 14.)

Plaintiffs had three "recipes" (or as the Vogtle Defendants refer to them, "Generations") for their coating process. (Doc. 116-1, at 12; Doc. 135, at 17.) According to Plaintiffs, "'Pre-Generation 1[]' was a production 'recipe' used in an early initial run of aluminum bus bars[, but t]hese bus bars were never shipped to Shaw." (Doc. 135, at 17.) Second, "'Generation 1' was a modified production 'recipe' that was used for part of the Unit 3 [NSPB bars] . . . in or around February of 2013." (Id.) Third, "'Generation 2' generally was a 'recipe' used thereafter for the balance of the Unit 3 [NSPB bars] and Unit 4 [NSPB bars]." (Id.)

The Parties dispute whether the epoxy coating was supposed to adhere to the surface of the NSPB bars and whether any delamination or cracking rendered the bus bars defective. (Doc. 105, at 3-6; Doc. 122, at 5-6.) According to Plaintiffs, the NSPB bars complied with the "codes, standards and specifications" required by the Purchase Orders and the epoxy coating did not have to adhere to the NSPB bars, rather the NSPB bars only had to be "encased" with epoxy. (Doc. 105, at 4; Doc. 139, at 10.) Plaintiffs also contend that any delamination was not a defect. (Doc. 139, at 9.) According to the Vogtle Defendants, the NSPB bars with delaminated and/or crack epoxy coatings were defective because the epoxy coating was intended to adhere to the bus bars and “act[] as an electrical insulator preventing electric discharge between bus bars and between the bus bars and metal enclosure." (Doc. 116-1, at 10.)

C. Bankruptcy Court Proceedings and Commencement of Lawsuit

On March 29, 2017, Westinghouse and its affiliates, including WECTEC (collectively, the "Debtors") filed voluntary petitions in the United States Bankruptcy Court for the Southern District of New York (the "Bankruptcy Court") for relief under Chapter 11 of the Bankruptcy Code. See In re Westinghouse Elec. Co., No. 17-10751 (Bankr. S.D.N.Y.); (Doc. 104-1, at 6; Doc. 116-1, at 5.) On March 29, 2017, the Bankruptcy Court entered an Interim Assessment Agreement ("IAA") between the Debtors and the Owners, under which the Owners agreed to pay all costs accrued by the Debtors for services performed and goods provided by subcontractors to the Vogtle Project during the Interim Assessment Period. (Doc. 104-1, at 6-7; Doc. 116-1, at 5-6.) The Interim Assessment Period began on March 29, 2017 and was extended eight times before terminating on July 27, 2017. (Doc. 104-1, at 8; Doc. 116-1, at 6.) By virtue of the IAA, Defendant WECTEC is not responsible for any costs relating to Plaintiffs' work on the Vogtle Project that accrued during the Interim Assessment Period. (Doc. 104-1, at 6-7; DOC. 116-1, at 5-6.)

On June 9, 2017, the Owners, WECTEC, and Westinghouse entered into a services agreement, pursuant to which WECTEC and Westinghouse transferred control of the construction of the Vogtle Project to the Owners. (Doc. 135, at 8.) On July 27, 2017, the Debtors rejected the Vogtle Subcontract as part of the bankruptcy proceeding. (Doc. 104-1, at 8; Doc. 116-1, at 6.) On the same day, SNC, acting for itself and as agent for the Owners, entered into a Subcontractor Bridge Agreement (the "Bridge Agreement") with Calvert, pursuant to which Calvert agreed to provide all labor, materials, equipment, and services for the Vogtle Project to the same extent contemplated by the Vogtle Subcontract. (Doc. 104-1, at 8-9; Doc. 116-1, at 6.) SNC and the Owners agreed to pay Calvert for that work. (Doc. 104-1, at 8-9; Doc. 116-1, at 6.) According to Plaintiffs, Calvert performed its duties under the Vogtle Subcontract and Bridge Agreement. (Doc. 104-1, at 9-10.) On October 6, 2017, SNC provided notice of its intent to terminate the Bridge Agreement, effective November 6, 2017. (Doc. 145, at 18-19.) By virtue of the Bridge Agreement, Defendant WECTEC is not responsible for any costs relating to Plaintiffs' work on the Vogtle Project that accrued between July 27, 2017 and November 6, 2017. (Doc. 104-1, at 8-9; Doc. 116-1, at 6.)

According to Plaintiffs, a total of eight invoices (Invoices 7521 7581, 7582, 7615, 7630, 7631, 7661, and 7713) for work performed under the IAA, the Vogtle Subcontract, and the Bridge Agreement remains unpaid. (Doc. 104-1, at 12-13; Doc. 105, at 15-16.) On February 16, 2018, Plaintiffs filed a lawsuit as an Adversary Complaint in the Bankruptcy Court, alleging six claims arising from the failure to...