Kingsbury, Inc. v. GE Power Conversion UK, Ltd.

78 F. Supp. 3d 611, 2014 U.S. Dist. LEXIS 177014, 2014 WL 7506804
District Court, E.D. Pennsylvania·Decided December 24, 2014·No. Civil Action No. 14-3742·Published·Cited by 2 cases

Opinion

MEMORANDUM

ANITA B. BRODY, District Judge.

This action arises out of the construction of a motor for a nuclear reactor that Defendant GE Power Conversion UK, Limited (“GE”) was building in South Korea. Plaintiff Kingsbury, Inc. (“Kingsbury”) contracted with GE to design, manufacture, and install the bearings for the motor. During construction of the nuclear reactor, the motor experienced a catastrophic failure. Kingsbury brings suit against GE seeking a declaratory judgment that it is not responsible for the catastrophic failure of the motor and alleging four counts of breach of contract.1 I exercise diversity jurisdiction over this action pursuant to 28 U.S.C. § 1332. GE moves to dismiss four counts of the Complaint, and to stay and compel arbitration of the fifth count. For the reasons set forth below, I will grant in part and deny in part GE’s motion.

I. BACKGROUND

In August 2010, GE sent Kingsbury and other companies a Request for Tender for [614] the supply of a top bearing and a bottom bearing to be used in the construction of a motor for a nuclear reactor that GE was building for the KSTAR project in South Korea. Compl. ¶ 12; Def.’s Mot. Ex. 1. The Request for Tender invited companies to submit proposals for the design and manufacture of these bearings in conformance with Version B of GE’s specifications for the bearings that were attached to the request. Def.’s Mot. Ex. 1 ¶ 1. The Request for Tender stated that it was “not an offer to purchase any goods or services.” Id. The Request for Tender also included the “Coverteam’s-Conditions of Purchase,” and stated that to “win the business” any buyer would have to comply with the terms of both. Id. Coverteam’s Conditions of Purchase defined the “Contract” as “the contract between the Buyer and Seller consisting of the Purchase Order, any documents referred to in the Purchase Order and these Conditions of Purchase.” Id. Coverteam’s Conditions of Purchase also specified liquidated damages at 2% of the contract price per week of delay up to a maximum of 8% of the contract price. Id.

On December 9, 2010, after several months of discussions between the parties, Kingsbury sent GE “Quotation # E103184-4.” Compl. ¶13, Ex. A. The top portion of every page of the quotation included the statement, “Kingsbury is pleased to offer the following in reference to your recent inquiry.” Compl. Ex. A. The quotation described plans for the design, manufacture, and testing of the two bearings in conformance with Version B of GE’s specifications for the bearings. Id. It listed a “preliminary design & production schedule” for the bearings. Id. Additionally, the quotation set forth an itemized price quote for the engineering design services; supply of a top bearing, a bottom bearing and other components related to those bearings; and estimated shipping costs. Id. Kingsbury, however, did not guarantee the prices or delivery dates it quoted. Id. As Kingsbury explained in the quotation:

These prices & lead times are valid for acceptance for 6 days and are subject to the final design of the brake. Since the brake is undefined at the time that this proposal was prepared, Kingsbury reserves the right to adjust the pricing and lead time based on the final design configuration of the brake or its interface with the bearing housings.

Id. The quotation concluded with the statement, “Please review this at your convenience and let me know if you have any questions.” Id. The price quotation did not contain a liquidated damages provision. Id.

Over the course of the next month, the parties engaged in further negotiations regarding GE’s purchase of bearings from Kingsbury. On December 13, 2010, the parties exchanged emails about the quotation and GE’s insistence on the inclusion of a liquidated damages provision. Defi’s Mot. Ex. 2. GE reminded Kingsbury that in an earlier statement it had already offered a liquidated damages provision of 0.5% of the contract price per week up to maximum of 3% of the contract price. Id. GE countered by requesting a liquidated damages provision of 0.5% up to 5% of the contract price for delay. Id. Kingsbury responded, “Obviously Kingsbury would prefer to have no [liquidated damages], however, we will agree to 0.5% per week up to a total of 4% of the bearing assembly price if [GE] agrees to the following dates (as shown on the latest revision of the quote.)” Id.

On December 14, 2010, GE informed Kingsbury that it had decided to adopt a new version of the specifications for the bearings. Before it released Version C of the bearings, GE sent Kingsbury a copy of [615] the proposed specifications and invited Kingsbury to send “any questions or comments you may have on the attached specification.” Def.’s Mot. Ex. 3. On January 10, 2011, Kingsbury responded with a “list of questions, exception and comments,” and stated, “I hope this meets with your approval. However, if there are any questions, please feel free to contact [us] at your convenience.” Id.

On December 17, 2010, while Kingsbury was still reviewing the Version C specifications, GE sent Purchase Order 42047591 to cover the engineering design work for the top and bottom bearings. Compl. Ex. C. On January 11, 2011, GE sent two additional purchase orders: Purchase Order 190891 for the purchase of the bottom bearing and Purchase Order 190894 for the purchase of the top bearing.2 Id. Exs. D, E. Both purchase orders for the supply of the bearings set a firm shipment date for the bearings and contained a liquidated damages provision of 0.5% of the contract price per week of delay up to a maximum of 4% of the contract price. Id. Additionally, both purchase orders for the supply of the bearings stated, “This Bearing Assembly is to be designed, manufactured and tested in accordance with KSTAR Bearing Specification [Version] C.” Id. All three purchase orders referred to “quotation ref: E103184-4.” Id. The purchase orders established firm prices for the design work, manufacture, and supply of the bearings. Id. Moreover, all three purchase orders were made subject to Cover-team’s Conditions of Purchase. Id. Cover-team’s Conditions of Purchase included the following forum selection provision: “The Contract shall be governed by and construed in accordance with the Laws of England and shall be subject to the exclusive jurisdiction of the English Courts.” Def.’s Mot. Ex. 1 ¶ 24. In response to the purchase orders, Kingsbury sent “Order Acknowledgements” to GE.3 Compl. ¶26, Ex. F; PL.’s Resp. Ex. 2. Despite their agreement, GE never paid Kingsbury the $17,227.45 in shipping costs for the shipment of the bearings to South Korea. Compl. ¶ 59.

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Kingsbury, Inc. v. GE Power Conversion UK, Ltd., 78 F. Supp. 3d 611, 2014 U.S. Dist. LEXIS 177014, 2014 WL 7506804 (E.D. Pa. 2014).

78 F. Supp. 3d 611 (Kingsbury, Inc. v. GE Power Conversion UK, Ltd.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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