United States District Court, N.D. Illinois
February 27, 2004.
HOWDEN BUFFALO, Inc., Plaintiff,
BLAC, Inc., Defendant
The opinion of the court was delivered by: AMY J. ST. EVE, District Judge
MEMORANDUM OPINION AND ORDER
Howden Buffalo, Inc., ("Howden") sued Blac, Inc., ("Blac") for breach
of contract in connection with the equipment upgrade of a Maryland power
plant. Howden claims that the general contractor, Bechtel Corporation
("Bechtel"), withheld certain payments from Howden because of
deficiencies in equipment provided by Blac. Howden further alleges that
these deficiencies amount to a breach of contract by Blac. Following a
bench trial, the Court finds for Plaintiff, awarding Howden $95,481.58.
"In order to state a breach of contract claim under Illinois law, a
plaintiff must allege (1) the existence of a valid and enforceable
contract, (2) performance by the plaintiff, (3) breach of the contract by
the defendant, and (4) injury to the plaintiff as a result of the
defendant's breach." S. Indus, Leasing, LLC v. Ingersoll-Rand
Co., No. 02 C 4528, 2003 WL 223436, *7 (N.D. Ill. Jan. 31, 2003)
(citing Gonzales v. Am. Express Credit Corp.,
315 Ill. App.3d 199, 206 (2000)).
In this case, there are no contested issues of law. The question of
fact presented to the Court is whether Bloc's hydraulic actuators*fn1
met the technical performance specifications prepared by Bechtel. Howden
contends that the actuators did not meet the requirements of the
specifications. The deficiency of the actuators, Howden claims, caused
Bechtel to "back charge" Howden for the costs of bringing the actuators
into compliance with the specifications. Blac contends that the actuators
met the requirements of the specifications. Accordingly, Blac denies that
any charges from Bechtel to Howden were the result of the alleged failure
of the actuators to meet the specifications.
At trial, the Court heard the testimony of John Magill, Director of
Engineering at Howden; Lenz Counsil, Engineering Manager at Blac; and
Phil Blac, owner of Blac, Inc. Additionally, the Court considered the
deposition testimony of Sheila Thurston, Control Systems Engineer at
Bechtel; Mark Voorhis, Project Engineer at Bechtel; Edward Perko, Manager
of Retrofit Projects at Bechtel; and John Hayden, Supervisor of Plant
Engineering at Brandon Shores for Constellation Energy. Finally, the
Court considered the documents entered into evidence. Based on the
evidence and the credibility of the witnesses, the Court finds for the
Plaintiff. Plaintiff has proven by a preponderance of the evidence that
Blac breached its contract with Howden.
FINDINGS OF FACT
In 2000, Constellation Power undertook a retrofit project at its
Brandon Shores, Maryland, Power plant. The general contractor for the
project was Bechtel. The primary scope of the retrofit project was to add
a selective catalytic recovery converter which would filter emissions
from the power plant. Because of the addition of this filtering device,
the power plant required stronger fans
to force air through the system. Plaintiff Howden provided large
industrial fans, known as induced draft fans, for installation as part of
the retrofit project. The fans draw flue gas from the power plant's
coal-burning boilers and through the filtering system.
Howden also provided electro-hydraulic actuators to open and close the
inlet control vanes on its induced draft fans. These actuators use
hydraulic fluid to pressurize nitrogen and thus store the energy used to
change the position of the draft vanes. Through the use of lever arms,
the actuators convert stored energy into torque, driving the linkage that
opens and closes the vanes at the front of the induced draft fan. Similar
in form to Venetian blinds, the inlet control vanes control the flow of
gases through the system according to the loads being placed upon the
plant's boilers at any given time. Howden procured the electro-hydraulic
actuators from Defendant Blac.
Bechtel prepared technical specifications for the actuators and gave
those specifications to Howden. Howden, in turn, provided those
specifications to Blac. Howden and Blac entered into a purchase agreement
under which Blac would provide such actuators to Howden in accordance
with the pertinent portions of the Bechtel specifications. Blac agreed
that the actuators would meet the technical specifications provided to
it. Blac delivered the actuators to Howden, and the actuators were
installed at the Brandon Shores power plant along with the Howden induced
draft fans. Howden paid Blac for the actuators.
Shortly after the installation of the new equipment, Constellation
Power had problems with the operation of the Blac actuators. The
actuators were able to open or close the inlet control vanes upon an
initial command by the plant computer. During plant operation, however,
the actuators became hydraulically depleted and would lock in place until
they could hydraulically recharge a process that took one minute.
As a consequence of the hydraulic depletion of the actuators,
Constellation Power was forced to adjust the loads on the power
plant's boilers, disrupting the power plant's normal operations and
reducing the plant's electricity output.
Blac's actuators failed to meet the technical specifications prepared
by Bechtel. Bechtel's specification 22.214.171.124 required that the actuators
have a "continuous duty cycle rating." For an actuator to have a
continuous duty cycle rating, the weight of the evidence, including the
testimony of Mark Voorhis and Phil Blac, showed that the actuator must be
able to maintain a set point of pressure within the boiler while
retaining enough hydraulic energy to complete a full stroke. In other
words, rather than requiring an indefinite number of back-to-back full
strokes, the continuous-duty specification mandates that the actuator
must be able to handle fluctuations within the boiler while still
maintaining enough energy to perform a full stroke as would be required
in an emergency trip.
Based on the testimony of John Hayden, Mark Voorhis, Sheila Thurston,
and John Magill, the Blac actuators failed to provide "continuous duty"
as required by the specifications. As John Magill and John Hayden
testified, Blac's actuators could not perform a full stroke, i.e.,
opening and/or closing the inlet control vanes, whenever called upon to
do so during the operation of the boiler. Thus, they did not meet the
requirements of the specifications. As a consequence, the Blac actuators
became hydraulically depleted during boiler operation, which included
pressure fluctuations caused by bringing coal pulverizers online. The
failure of the actuators caused a risk of implosion or explosion of the
plant boilers, and forced the plant to disrupt its normal operation in
order to prevent that from happening.
In early 2001, Bechtel hired Blac to modify and upgrade the
originally-installed Blac actuators so that they could open or close the
inlet control vanes whenever called upon to do so, and
not become hydraulically depleted and lock up, Blac upgraded the
actuators by increasing the hydraulic reservoir capacity and adding
larger, more powerful pumps.
Bechtel paid Blac $72,200.00 for additional equipment to upgrade the
actuators.*fn2 Bechtel also paid Blac $15,121.58 for installing the
additional equipment. Bechtel then reduced the amount that it paid Howden
on Bechtel's contract with Howden by those amounts. Bechtel also reduced
the amount it would have otherwise paid Howden by $8,160.00, reflecting
hours expended by Bechtel engineers working with Blac and Constellation
power to correct the failure of the original Blac actuators to meet the
The Court finds that the original Blac actuators failed to meet the
requirements of the agreed specifications, that the failure of those
actuators to meet the specifications constituted a breach of contract by
Blac, and that Howden was damaged in the amount of $95,481.58 as a
consequence of that breach. The Court therefore finds in favor of Howden
and awards judgment in the amount of $95,481.58.
For the reasons stated above, the Court finds for the Plaintiff, and
awards Howden damages in the amount of $95,481.58.