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RTW Refractory, Inc. v. Ameren Services Co.

March 1, 2007

RTW REFRACTORY, INC., PLAINTIFF,
v.
AMEREN SERVICES COMPANY, AND AMEREN ENERGY GENERATING COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Jeanne E. Scott, U.S. District Judge

OPINION

This matter comes before the Court on four Motions: Plaintiff RTW Refractory, Inc.'s (RTW) Motion for Summary Judgment (d/e 31) (RTW Motion); Defendants Ameren Services Company (Ameren Services) and Ameren Energy Generating Company's (Ameren Energy) (collectively Ameren or the Defendants) Motion for Partial Summary Judgment (d/e 32) (Ameren Summary Judgment Motion); Ameren's Motion to Bar Plaintiff's Expert Witness--Donald McIntyre (d/e 33) (McIntyre Motion); and Ameren's Motion to Bar Plaintiff's Expert Witness--Michael O. Moseley (d/e 35) (Moseley Motion). In March and April 2005, RTW twice installed refractory in the cyclone burners in Unit No. 2 (Unit) at Ameren Energy's Power Plant in Coffeen, Illinois (Power Plant). RTW seeks summary judgment for amounts it claims are due and owing, plus eighteen percent interest and attorney fees. The Defendants oppose the Motion. The Defendants further seek partial summary judgment on their position that RTW is not entitled to eighteen percent interest and attorney fees in any event. Finally, the Defendants seek to bar two of RTW's expert witnesses, Donald McIntyre and Michael O. Moseley.

For the reasons set forth below, the Moseley Motion is allowed because Moseley's opinion is speculative. The McIntyre Motion is allowed in part. RTW may present McIntyre's opinions about the quality of the raw materials used to manufacture the refractory. McIntyre may also explain the impact of the presence of excess water or steam during the installation and cure of the refractory at issue, and during subsequent use, but only if other evidence first establishes that water or steam was present during these times. McIntyre has stated no opinions about other matters, including whether excessive water or steam was present during either installation or thereafter.

Both Motions for Summary Judgment are denied. Issues of fact exist regarding whether RTW properly performed under the agreement (or agreements) between the parties. In addition, ambiguities exist in the parties' agreement (or agreements) that preclude summary judgment on the issue of whether RTW may be contractually entitled to eighteen percent interest and attorney fees, in the event it proves that it properly performed its obligations to Ameren.

STATEMENT OF FACTS

RTW installs refractory. Refractory is high temperature furnace linings, usually made of clay alumina products. RTW Motion, attached Deposition Excerpts of Jeffrey Redmon (RTW Redmon Deposition Excerpts), at 21. In late December 2003 or early January 2004, a representative of Ameren Services named Steve Nelson telephoned RTW's president Jeffrey Redmon and requested a quote for a blanket order for refractory for the years 2004-06. RTW Redmon Deposition Excerpts, at 158. In response, Redmon wrote a letter to Nelson at Ameren Services dated January 20, 2004 (January 20, 2004, Letter). The letter states, in part:

We are pleased to submit our proposal to furnish all necessary supervision, labor, equipment, (including air compressors) wages, applicable taxes, withholding, fringes, materials and freight to install the refractory for a "per ton price" for the 2004-2006 Refractory Installation Contract at the Coffeen Power Station, located in Coffeen, Illinois. . . . .

Payment terms: All RTW invoices will be Lump Sum and final.

No partial invoices will be submitted under this contract. Acceptance of all work will be upon completion. Ameren Services Company shall issue an individual purchase order number or release number for each installation, on each unit, for each outage and shall be considered separately. Once Ameren Services Company has received RTW's invoice along with a waiver of lien for materials, Ameren Services Company shall make payment in 15 days or less . . . .

Any invoice more than 15 days past the receivership date shall be subject to interest charges accrued at the rate of 18% annually (1.5% monthly, .05% daily). No retention. No liquidated damages.

Once the contract is awarded to RTW Refractory, Inc., this letter shall be attached to the contract and shall become part of the working contract. Any exceptions to this letter shall be submitted in writing to this office within 20 days from the date of this letter. Any exceptions will be reviewed and considered. Acceptance of Ameren Services Company exceptions will be submitted within 20 days. This price is valid for 30 days.

In the event it shall become necessary for RTW Refractory, Inc. to retain the services of an attorney for the purposes of enforcing any provisions of this contract, Ameren Services Company shall pay the costs of the court and reasonable attorneys' fees incurred.

RTW Motion, Exhibit A, January 20, 2004, Letter. Ameren admits that this proposal was accepted. Defendants' Answer to First Amended Complaint and Counterclaim of Defendant Ameren Energy Generating Company (d/e 19) (Answer), ¶ 9.

On February 12, 2004, Ameren Services faxed to RTW a document entitled Contract Purchase Agreement Change (2004 Purchase Agreement Change). RTW Refractory, Inc.'s Response to the Motion for Summary Judgment Filed by the Defendants (d/e 39), attached Affidavit of Jeffrey A. Redmon (Redmon Affidavit), Exhibit D, 2004 Purchase Agreement Change. The 2004 Purchase Agreement Change was on a purchase order form. Ameren Services assigned Contract Number 105457 to the 2004 Purchase Agreement Change. The information typed on the form stated, "LABOR -FURNISH / INSTALL REFRACTORY IN 2 CYCLONE BOILERS -COFFEEN PLANT." Id. The pre-printed form stated, in part:

ORDER INSTRUCTIONS SEE ATTACHED TERMS & CONDITIONS WHICH ARE INCORPORATED HEREIN BY REFERENCE & MADE A PART HEREOF.

Id. No additional terms are attached to the copy of the 2004 Purchase Agreement Change submitted to the Court. Also, the January 20, 2004, Letter, is not attached to the 2004 Purchase Agreement Change.

The 2004 Purchase Agreement Change also was not addressed to RTW and did not include a copy of the January 20, 2004, Letter. Rather, the document was addressed to RTW Industrial Maintenance (RTW Industrial), and referenced a prior agreement between Ameren Services and RTW Industrial. RTW Industrial was a corporation formerly owned by the three individuals who currently own RTW. RTW Industrial also installed refractory. According to Redmon, the owners started RTW as a new corporation for accounting reasons. RTW Redmon Deposition Excerpts, at 15-16. Beginning in 1992, RTW Industrial was slowly dissolved and rolled into RTW. Id. No evidence has been submitted regarding the exact nature of the legal relationship, if any, between RTW and RTW Industrial or the extent to which RTW assumed the rights and obligations of RTW Industrial.

The 2004 Purchase Agreement Change stated that the contract term was from August 6, 1999, to December 31, 2004. RTW Industrial had entered into an agreement with Ameren Services on August 6, 1999, to install refractory in the Power Plant for the three year period from 1999 through 2001 (1999 Contract). Redmon Affidavit, Exhibit B. The 1999 Contract was assigned order number 085227. Redmon states that the 1999 Contract expired after one extension. Redmon Affidavit, ¶ 4. He does not indicate the length of the extension. The 2004 Purchase Agreement Change referenced a contract change date of December 17, 2003, but contained no explanation of this reference. Neither RTW nor RTW Industrial installed any refractory for Ameren in 2003. RTW Redmon Deposition Excerpts, at 158.

The next contact between RTW and Ameren came in early December 2004. Ameren Energy representative Tom Milcic called Redmon to ask for a quote for the cost of installation of refractory in the cyclone burners in the Unit at the Power Plant. The installation would occur in March 2005, when the Unit would be out of service for maintenance, repairs and installation of new equipment (the March 2005, outage). Redmon Affidavit, ¶ 10; Defendants' Memorandum in Opposition to Plaintiff's Motion for Summary Judgment (d/e 41), attached Affidavit of Thomas Milcic (Milcic Affidavit), ¶ 3.

The cyclone burners are horizontal cylinders ten feet in diameter in which crushed coal is burned in pre-heated air that is moving at high velocities, of up to 200 miles per hour. The air and burning coal move through the cylinders and into the main fire box of the boiler. The walls of the cyclone burners contain tubes through which water flows. The water is heated during the burning process to make steam. The interior walls of the cyclone burners are covered with refractory to protect the tubing. The coal burning process also forms a coating of slag on the interior of the refractory which protects the refractory. The refractory normally wears off over time and must be replaced every one to two years. See Memorandum in Support of Defendants' Motion to Bar Plaintiff's Expert Witness--Michael O. Moseley (d/e 36), Exhibit A, Moseley Report dated July 13, 2006 (Moseley Report), at 2-3.

Ameren Services specified that Greengun Eclipse-73P refractory (Greengun) would be used for the job. RTW Redmon Deposition Excerpts, at 48-50. Greengun is manufactured by Harbison-Walker Refractories Company, which is a part of ANH Refractories Company (ANH). Greengun is called gunned refractory or plastic refractory because of its plasticity, or ability to be molded to a desired shape. See RTW Motion, attached Excerpts of Deposition of William Headrick (RTW Headrick Deposition Excerpts), at 102. Other refractory is pre-cast into specific shapes, or is made of bricks. Brief in Response to Motion to Bar Testimony of Donald A. McIntyre (d/e 42), attached Crowley Expert Report (Crowley Report), at 1-2. Greengun is called gunned refractory because it is applied through a process called gunning. This appears to be a process in which the material is sprayed, or gunned, onto surfaces through a nozzle or gun. See e.g., RTW Redmon Deposition Excerpts, at 22. In this case, the Greengun would be gunned onto the interior surfaces of the cyclone burners.

A certain amount of the Greengun bounces off during this process. This material is referred to as "rebound." According to Ameren's expert Michael Crowley, Harbison-Walker recommended mixing new Greengun with the rebound and then using the combined material during the remainder of the application process. Crowley Report, at 1.

After being gunned onto the walls, the Greengun must be dried out, or cured, by heating it to 1,100 degrees Fahrenheit, for four hours. The heating causes the material to bond to the cyclone burner walls. See Defendants' Memorandum in Opposition to Plaintiff's Motion for Summary Judgment (d/e 41) (Defendants' Opposition to Summary Judgment), Exhibit F, Letter from Mike Rzepczynski to Tom Milcic dated January 24, 2005, with enclosures. The bond is called a phosphate bond. Once the Unit is restarted, the heat from the coal fire causes additional chemical changes in the refractory that forms a stronger bond called a ceramic bond. The coal fire also creates the slag coating on the refractory. See RTW Motion, attached Deposition Excerpts of Marla Atterberry, at 41; RTW Redmon Deposition Excerpts, at 67-68. See also Defendants' Opposition to Summary Judgment, Exhibit I, Headrick Report (Headrick Report), at 7.

On December 2, 2004, Redmon sent a letter to Milcic. The letter stated, in pertinent part:

We are pleased to submit our budget proposal to furnish and install approximately 84 tons (12,000 lbs per cyclone) of Harbison and Walker Eclipse 73-P with stainless steel ...


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