Stone & Webster Engineering Corp. v. Duquesne Light Co.

79 F. Supp. 2d 1, 2000 U.S. Dist. LEXIS 411, 2000 WL 45567
CourtDistrict Court, D. Massachusetts
DecidedJanuary 7, 2000
DocketCiv.A. 98-10612-PBS
StatusPublished
Cited by2 cases

This text of 79 F. Supp. 2d 1 (Stone & Webster Engineering Corp. v. Duquesne Light Co.) is published on Counsel Stack Legal Research, covering District Court, D. Massachusetts primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Stone & Webster Engineering Corp. v. Duquesne Light Co., 79 F. Supp. 2d 1, 2000 U.S. Dist. LEXIS 411, 2000 WL 45567 (D. Mass. 2000).

Opinion

MEMORANDUM AND ORDER

SARIS, District Judge.

INTRODUCTION

This case involves hotly disputed, multimillion dollar claims surrounding a twenty-three-year-old nuclear power plant in Pennsylvania. Beginning with a series of invoices issued in 1997, defendant Du-quesne Light Company (“Duquesne”) has refused to pay plaintiff Stone & Webster Engineering Corporation (“Stone & Webster”) for engineering services recently performed in connection with the plant, sparking this declaratory judgment action. Duquesne bases its refusal to pay in part on Stone & Webster’s alleged liability for defects in the original design and construction of the plant in the early 1970s. It also presses its own claims, including breach of contract and negligence claims, for damages incurred as a result of the defects.

Plaintiff has moved for summary judgment on its declaratory judgment claim that, as a matter of law, Pennsylvania’s twelve-year statute of repose for construction projects, 42 Pa.Cons.Stat. § 5536, bars any offset or claim by defendants that stems from the plant’s original design or construction.

After hearing and as explained below, the motion is ALLOWED with respect to defendants’ affirmative claims that specifically arise out of their 1971 contract with plaintiff to design and build the plant. The motion is DENIED with respect to any asserted offsets, which are not covered by the statute of repose, and any claims concerning the parties’ agreements and interactions after the plant’s design and construction were completed.

BACKGROUND

The Court treats the following facts as undisputed unless otherwise noted:

A. Ancient History

On February 5, 1971, Stone & Webster, a Massachusetts corporation, entered into an agreement (the “1971 Agreement”) with Duquesne and the other defendants to “act as Engineer-Constructor for the engineering, design, construction and installation” of Beaver Valley Power Station Unit No. 1 (“BVPS 1”), a nuclear power plant in Ship-pingport Borough, Pennsylvania. (1971 Agreement at 1.) 1 Under the terms of the contract, Duquesne, based in Pennsylvania, was to co-own the plant with defendants Pennsylvania Power Company, also a Pennsylvania corporation, and Ohio Edison Company, an Ohio corporation, and was to act as agent for these companies “with respect to all matters concerning the execution, administration and enforcement of [the] Agreement.” (Id.)

Construction of BVPS 1 was substantially completed by January 22, 1976, and Duquesne began commercial operation of the plant later that year. In 1978, the parties entered into a Continuing Services Agreement (the “1978 Agreement”), subsequently extended and amended, pursuant to which Stone & Webster promised to *3 provide additional consulting (“Part A”) and engineering (“Part B”) services during the course of the plant’s operation. (1978 Agreement at 1-6.) With regard to the Part A consulting services, Stone & Webster limited its liability for defects as follows:

In the event such consulting services prove to be faulty or defective for any reason, we agree to redo such services at no charge to you and the foregoing shall constitute our sole liability with respect to the accuracy or completeness of the proposed services or reports or the activities involved in their preparation, and in no event shall we be liable for property damage or personal injury to you, your employees or third parties, or for consequential or special loss or damage, whether attributable to our negligence or otherwise....

(Id. at 1.) 2

In late 1978, Stone & Webster informed Duquesne that overstress conditions existed in at least one of the plant’s large-bore piping systems, 3 the fabrication and installation of which Stone & Webster had supervised. Duquesne reported the problem to the Nuclear Regulatory Commission (“NRC”), which initiated an investigation. After reanalyzing the systems, Stone & Webster concluded that they were not overstressed and that the confusion had resulted from discrepancies between two different computer programs used to analyze the piping. Finding that the original stress analysis program used by Stone & Webster employed an outdated methodology, the NRC, in March 1979, issued an Order To Show Cause why BVPS 1 should not be shut down pending full reanalysis of the affected piping systems with the newer computer program. According to Du-quesne, before issuing the order, the NRC had given Stone & Webster an opportunity to demonstrate the adequacy of the original piping system design, which Stone & Webster was unable to do in part because it could not reproduce accurate as-built records of BVPS l’s piping systems. Du-quesne immediately shut down the plant. Within the year, the NRC also issued three Inspection and Enforcement Bulletins requiring nuclear plant licensees to undertake certain inspections and revisions of their safety-related piping systems.

BVPS 1 remained closed for a number of months while Stone & Webster and other engineers and consultants investigated the piping systems at the plant, forcing Duquesne to purchase replacement power for that time period at a cost in the tens of millions of dollars. Although the plant eventually reopened, the investigation and remedial work on the piping systems took more than two years to complete.

In December 1981, Duquesne presented to Stone & Webster an oral settlement demand in the amount of $40,000,000 for the costs and losses allegedly incurred as a result of Stone & Webster’s faulty design and construction of BVPS 1 and of its conduct thereafter. Anticipating litigation, the parties entered into a Standstill Agreement effective February 9, 1982 (the “1982 Standstill Agreement”), under which “the running of any statute of limitations, which had not already run by [the agreement’s effective date], with respect to any possible claims which [defendants] may have [had] against Stone & Webster relating to BVPS 1 [would] be tolled” until termination of the agreement. (1982 Standstill Agreement ¶ 2.) 4 Stone & Webster also agreed that, “in defending any suit which may [have been] filed by [defendants] based on *4 [defendants’] possible claims, it [would] not plead or rely upon any time-related defense” based upon time that had run during the pendency of the agreement. (Id.) Duquesne listed defendants’ possible claims as including, but not limited to, claims

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Cite This Page — Counsel Stack

Bluebook (online)
79 F. Supp. 2d 1, 2000 U.S. Dist. LEXIS 411, 2000 WL 45567, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stone-webster-engineering-corp-v-duquesne-light-co-mad-2000.