Gramercy Holdings I, LLC v. Matec S.R.L.

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GRAMERCY HOLDINGS I, LLC d/b/a NORANDA ALUMINA, Plaintiff, v. MATEC S.R.L. et al., Defendants.

MATEC SRL et al., Plaintiffs, v. GRAMERCY HOLDINGS I, LLC d/b/a NORANDA ALUMINA, Defendant

Nos. 20 Civ. 3937 (JPC), 20 Civ. 4136 (JPC)

United States District Court, S.D. New York

September 11, 2023

OPINION AND ORDER

JOHN P. CRONAN, UNITED STATES DISTRICT JUDGE

In 2017 and 2019, Gramercy Holdings I, LLC d/b/a Noranda Alumina (“Noranda”), which operates an alumina refinery in Gramercy, Louisiana, entered into three contracts with Matec SRL and Matec America, Inc. (“Matec America”, and together with Matec SRL “Matec”) to purchase five industrial filter presses to be used to process refinery waste. In these consolidated cases,^[1] Matec and Noranda sue each other for breach of contract. In addition, Noranda sues Matec for breach of implied warranty fraudulent inducement, negligent misrepresentation, and unjust enrichment, and Matec sues Noranda for breach of the implied covenant of good faith and fair dealing.^[2] Now before the Court are each party's Daubert motion to exclude certain opinions of the expert witness retained by its adversary, Dkts. 86, 95, and each party's motion for partial summary judgment, Dkts 90, 98.

First, Noranda's Daubert motion seeks to exclude two opinions expressed by Matec's expert, Dr. Gerald Fuller: his opinion as to what caused the filter presses Noranda purchased to operate slower than expected, and his opinion as to what information Matec relied upon in designing the filter presses. That motion is granted in part and denied in part. Fuller may testify that the presence of entrained air in the bauxite residue actually generated at Noranda's refinery caused longer cycle times than expected based on the samples provided by Noranda prior to entering into the first contract, although Fuller may not testify that entrained air was the only reason for the slower-than-expected cycle times. As to the latter opinion, Fuller may not testify to the mental states of Matec's employees, though he may opine on the sort of information a chemical engineer should rely on, or typically relies on, when designing filtration equipment. Second, Matec's Daubert motion seeks the exclusion of two opinions of Noranda's expert, Dr. John Spevacek: his opinion that Matec overstated its experience and capacities in negotiating its deal with Noranda, and his opinion that Matec was to blame for the unknown cause of the slower-than-expected operation of the filter presses. That motion is granted, and those two opinions of Spevacek are excluded. Third, Noranda seeks summary judgment that Matec is liable for negligent misrepresentation and breach of each of the three contracts between the parties, that Noranda is not liable for breach of any of those contracts or for breach of the implied covenant of good faith and fair dealing, and that certain categories of damages sought by Matec are unavailable. That motion is granted in part. Matec cannot recover certain types of damages as discussed below. Noranda's motion for summary judgment is denied in all other respects. Lastly, Matec seeks summary judgment dismissing Noranda's claims for negligent misrepresentation, fraudulent inducement, and unjust enrichment, and further denying certain categories of damages sought by Noranda. That motion also is granted in part. Noranda's claims for negligent misrepresentation and unjust enrichment are dismissed, its claim for fraudulent inducement is dismissed except with respect to two specific alleged misrepresentations, and it cannot recover punitive damages, attorneys' fees, or certain types of compensatory damages.

I. Background

A. Facts^[3]

Noranda operates an alumina refinery. Matec 56.1 Stmt. ¶ 1. The process of refining alumina generates “a slurry-like residue referred to as bauxite residue,” id. ¶ 2, and “[a]n alumina refinery's life is linked to the available space to store bauxite residue,” Noranda 56.1 Stmt. ¶ 1. Prior to the events giving rise to this litigation, Noranda stored the residue its refinery generated in “mud lakes.” Matec Counter 56.1 Stmt. ¶ 268. But because it was running out of space to store the residue in that manner, Noranda sought a more space-efficient method of processing and storing it. Noranda 56.1 Stmt. ¶ 2. Consequently, Noranda decided to purchase filter presses that would remove water from the residue, thereby reducing its volume and permitting more space-efficient storage. Id.; Matec 56.1 Stmt. ¶¶ 3-4. Noranda selected Matec to provide those filter presses. Noranda 56.1 Stmt. ¶ 4. In connection with its preparation for the sale of filter presses to Noranda, Matec tested samples of bauxite residue, which were either taken by Matec during an on-site visit to Noranda's refinery or shipped by Noranda to Matec for the purpose of testing. Id. ¶¶ 41-42; Matec Counter 56.1 Stmt. ¶¶ 42, 273-74.

In a “Commercial Offer” labelled “20150510/2015 - Noranda Alumina” and dated May 2, 2017, Noranda agreed to purchase two filter presses and additional components (the “Initial Presses”) from Matec for a total price of $2,808,175. Noranda 56.1 Stmt. ¶¶ 15, 63; Matec 56.1 Stmt. ¶ 4; see Dkt. 99-1 (“First Contract”) at 1-3. The Initial Presses would be installed and assembled at the alumina refinery. Noranda 56.1 Stmt. ¶ 64. Certain costs of installation were included in the price for the Initial Presses, id. ¶ 65, and the First Contract explicitly identified the installation expenses that would be covered by Matec and those that would be covered by Noranda, Matec Counter 56.1 Stmt. ¶ 65; see First Contract at 3. The First Contract further contained technical specifications relating to the performance of the Initial Presses. Matec Counter 56.1 Stmt. ¶ 71. Those technical specifications provided that “Filtrations per hour (average)” would be “2/3 (Depending on treated material).” Id.; First Contract at 11.

The First Contract contemplated that delivery of the Initial Presses would take approximately four months and that installation would take six weeks, followed by six weeks of commissioning, the process of confirming that the newly installed machines were functioning properly. Noranda 56.1 Stmt. ¶ 66; First Contract at 3. However, due to delays during installation, commissioning did not begin until January 2019. Noranda 56.1 Stmt. ¶ 79; Matec Counter 56.1 Stmt. ¶ 79. And once the commissioning of the Initial Presses began, they failed to complete the two to three cycles per hour specified in the First Contract, instead completing roughly one cycle per hour. Noranda 56.1 Stmt. ¶¶ 80-81; Matec Counter 56.1 Stmt. ¶ 81. Matec claimed that the Initial Presses operated with longer-than-expected cycle times once they were installed in the refinery because the bauxite residue contained “air entrainment,” Noranda 56.1 Stmt. ¶ 89; Matec Counter 56.1 Stmt. ¶ 89, a technical term for “gas bubbles in the slurry,” Noranda 56.1 Stmt. ¶ 93. Matec had not previously raised air entrainment in the residue as a potential issue during its testing of the residue, during the installation of the Initial Presses, or during any other stage prior to the execution of the First Contract or the commissioning of the Initial Presses. Id. ¶ 98. While Noranda complained that the performance of the Initial Presses failed to comply with the requirements of the First Contract, Matec, in turn, complained that Noranda had failed to pay the full amount due under the First Contract. Matec 56.1 Stmt. ¶ 7.

In order to resolve these outstanding disputes, see Noranda 56.1 Stmt. ¶ 111; Matec 56.1 Stmt. ¶¶ 8-9, the parties executed two additional agreements with stated effective dates of July 22, 2019, Noranda 56.1 Stmt. ¶¶ 112, 214; see Dkt. 99-2 (“Punch List”) at 1; Dkt. 99-3 (“Second Contract”) at 1. In the Punch List, formally titled the “Agreement on Punch List Items Regarding Commercial Offer Dated May 2, 2017,” Punch List at 1, “Matec agreed to make certain repairs to the filter presses; Noranda agreed to pay a portion of its outstanding balance upon completion of those repairs; and both parties agreed to revised performance specifications and to certain liquidated damages.” Matec 56.1 Stmt. ¶ 10; see generally Punch List. In the Second Contract, Noranda agreed to purchase three additional filter presses from Matec, one of the same type as the Initial Presses (the “Third Press”) and two smaller, mobile presses (the “Cubes”, and together with the Third Press the “Additional Presses”). Noranda 56.1 Stmt. ¶¶ 215, 218-19; Matec 56.1 Stmt. ¶ 11; see generally Second Contract. Payment for the Additional Presses would be contingent on the completion of the repairs agreed to in the Punch List. Second Contract at 36 ¶ 2; Noranda 56.1 Stmt. ¶ 222. The Second Contract further set forth a schedule governing both when Matec would complete its installation of the Additional Presses and when Noranda would pay Matec for those Presses. Second Contract at 38.

Shortly after the Punch List and Second Contract were signed, the parties executed amendments to both agreements, which were effective as of September 24, 2019. Matec Counter 56.1 Stmt ¶ 328; see generally Dkt. 99-2 at 20 (“Punch List Amendment”); Dkt. 99-3 at 41-42 (“Second Contract Amendment”).^[4] The Punch List Amendment extended Matec's deadline to ship various components to be employed in repairing the Initial Presses. Punch List Amendment § 1. The Second Contract Amendment also revised the timeline for Matec to ship and install the Additional Presses and for Noranda to pay for them. Second Contract Amendment §§ 1, 4, 6-7. Matec subsequently shipped both Cubes and the Third Press to Noranda. Matec Counter 56.1 Stmt. ¶¶ 346, 358. However, Matec did not finish installing or commissioning any of the Additional Presses. ...