Consolidated Edison Co. of New York, Inc. v. United States

83 Fed. Cl. 455, 2008 U.S. Claims LEXIS 251, 2008 WL 4183906
CourtUnited States Court of Federal Claims
DecidedSeptember 3, 2008
DocketNos. 03-2622C, 04-33C
StatusPublished
Cited by1 cases

This text of 83 Fed. Cl. 455 (Consolidated Edison Co. of New York, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Consolidated Edison Co. of New York, Inc. v. United States, 83 Fed. Cl. 455, 2008 U.S. Claims LEXIS 251, 2008 WL 4183906 (uscfc 2008).

Opinion

OPINION AND ORDER ON DEFENDANT’S MOTION FOR JOINDER

WHEELER, Judge.

In these spent nuclear fuel cases, Consolidated Edison Company of New York, Inc. (“ConEd”) and Entergy Nuclear Indian Point 2, LLC (“Entergy”) have claims arising from the Department of Energy’s breach of contract at the Indian Point 2 Nuclear Power Station (“Indian Point 2”) in Buchanan, New York. ConEd sold Indian Point 2 to Entergy on September 6, 2001. Before the Court is Defendant’s June 2, 2008 motion under Rule 19(a) of the Court of Federal Claims (“RCFC”) to join the claims of ConEd and Entergy for trial and decision. Defendant asserts that the claims of ConEd and Entergy overlap, and that if ConEd and Entergy both prevail, Defendant will be required to [456]*456pay twice for the same damages. ConEd and Entergy oppose Defendant’s motion. Both of these cases are before the undersigned.

For the reasons explained below, the Court finds that ConEd’s and Entergy’s claims present “a substantial risk” to Defendant of “incurring double, multiple, or otherwise inconsistent obligations.” RCFC 19(a)(2)(ii). Accordingly, Defendant’s motion for joinder is GRANTED, and these matters shall be joined for trial and decision.

Background

The ConEd and Entergy claims arise from the failure of the Department of Energy (“DOE”) to fulfill its contractual obligations to collect and dispose of spent nuclear fuel from Indian Point 2. From the 1960s through September 6, 2001, ConEd owned the Indian Point nuclear electric generating facilities, which included Indian Point 2. Pursuant to the Nuclear Waste Policy Act of 1982, 42 U.S.C. §§ 10101-10270 (2006), DOE entered into a Standard Contract with ConEd requiring DOE to begin accepting and disposing of spent nuclear fuel from the facilities by January 31, 1998, in return for ConEd’s payment of fees into a Nuclear Waste Fund. On September 6, 2001, ConEd sold Indian Point 2 to Entergy and assigned its DOE Standard Contract to Entergy as part of the transaction. Both ConEd and Entergy have paid, and Entergy continues to pay, substantial fees in return for DOE’s promise to remove and dispose of spent nuclear fuel. However, DOE breached its obligations under the Standard Contract and has not commenced removal of any spent nuclear fuel at Indian Point 2 to this day.

On November 5, 2003, Entergy brought suit in this Court to recover damages against the United States for DOE’s breach of contract, and the case was assigned randomly to Judge Charles F. Lettow pursuant to RCFC 40.1. ConEd brought its suit in this Court on January 13, 2004, and the case was assigned to Senior Judge Eric G. Bruggink. After the filing of Defendant’s Notice of Directly Related Cases on August 5, 2004, Judge Bruggink transferred the ConEd case to Judge Lettow. On December 7, 2005, Judge Lettow transferred the ConEd and Entergy cases to the undersigned.

Defendant has made three previous motions to consolidate the ConEd and Entergy cases under RCFC 40.2(a), all of which were denied. In those motions, Defendant asserted that the cases shared common issues of fact and law and that consolidation would promote judicial economy and eliminate the risk of awarding inconsistent judgments. Judge Lettow twice denied the motion, largely based on the “divergent procedural posture of the cases.” See Order, 62 Fed.Cl. 798, 803, Nov. 4, 2004. As of this November 2004 Order, the parties in the Entergy ease had begun briefing on cross-motions for summary judgment, while the parties in the ConEd case had not progressed beyond the filing of the complaint. Id. The Court denied Defendant’s “renewed suggestion” for consolidation in a January 23, 2006 Scheduling Order. Scheduling Order ¶ 4, Jan. 23, 2006.

Defendant has now filed a motion for joinder under RCFC 19(a), arguing that failure to join the ConEd and Entergy claims in one proceeding subjects the Government to a substantial risk of inconsistent obligations and payment of duplicative damages. Def.’s Mot. for Joinder at 9, June 2, 2008. Defendant contends that expert reports recently submitted by both ConEd and Entergy demonstrate that the parties share overlapping theories of damages, rendering joinder mandatory. Id. at 2. According to Defendant, ConEd previously had represented that its theory of damages was not that “[Entergy] paid less” for Indian Point 2, but that the market for nuclear generation facilities was “depressed.” Id. However, ConEd’s February 11, 2008 expert report by John Reed allegedly discounts the depressed market approach and embraces a theory directly attributing ConEd’s loss to Entergy’s gain. Id.1

[457]*457For its part, Entergy seeks the actual costs incurred in storing spent nuclear fuel beyond the costs that it would have incurred if DOE had begun performance of its contractual obligations in 1998. Id. at 3. Defendant asserts that Entergy recovered these damages in its receipt of a risk assessment payment in the acquisition of Indian Point 2, and has been compensated further through the diminished price it paid for the facility. Id. Absent joinder, Defendant states that it faces a substantial risk of paying duplicative damages and incurring inconsistent obligations because both plaintiffs seek damages for the same costs at Indian Point 2. Id. If both plaintiffs prevail, Defendant asserts that it may pay the same damages twice.

In the alternative to its motion for joinder, Defendant requests the Court to issue notice to Entergy to appear and assert its interest in this action under RCFC 14(b) and 41 U.S.C. § 114(b). Id. at 21. Defendant argues that Entergy has a substantial interest in the outcome of the ConEd case and must appear or be forever barred from raising any related claims. Id. at 19.

ConEd opposes Defendant’s motion. In its response, ConEd rejects Defendant’s argument that it faces a risk of duplicative damages and claims Defendant has misconceived its theory of damages. ConEd Resp. to Def.’s Mot. for Joinder at 1, June 19, 2008.2 ConEd asserts two categories of damages: (1) the diminution in value of the Indian Point 2 facility at the time of sale, and (2) pre-sale storage costs. Id. at 2, 6. According to ConEd, the measurement of its diminished value claim does not stem from Entergy’s gain, but rather from the fair market value ConEd would have received in a fully competitive auction. Id. at 2.

ConEd also refutes Defendant’s contention that the submission of Mr. Reed’s expert report changes ConEd’s theory of damages. Id. at 5. According to ConEd, Mr. Reed found that Entergy did not include in its purchase valuation of Indian Point 2 any post-sale storage costs, and therefore, ConEd does not seek any damages directly stemming from Entergy’s expenditures. Id. at 5-6. Thus, the ConEd storage costs incurred prior to closing do not overlap with Entergy’s claim for post-closing storage costs. Id. at 7. Further, ConEd emphasizes that Defendant ignored other expert opinions establishing that DOE’s breach of contract depressed the market for sale of nuclear power plants rather than simply lowering Entergy’s bid price. Id. at 5, 7.

Entergy opposes Defendant’s motion on similar grounds. See Entergy Resp. to Def.’s Mot. for Joinder at 2, August 5, 2008.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
83 Fed. Cl. 455, 2008 U.S. Claims LEXIS 251, 2008 WL 4183906, Counsel Stack Legal Research, https://law.counselstack.com/opinion/consolidated-edison-co-of-new-york-inc-v-united-states-uscfc-2008.