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RMF Industrial Contracting, Inc. v. Reliant Energy Seward

February 16, 2006

RMF INDUSTRIAL CONTRACTING, INC. PLAINTIFF,
v.
RELIANT ENERGY SEWARD, LLC, AND SEWARD TRUST, DEFENDANTS.
RMF INDUSTRIAL CONTRACTING, INC. PLAINTIFF,
v.
RELIANT ENERGY SEWARD, LLC, DEFENDANT.



MEMORANDUM OPINION AND ORDER OF COURT

Before the Court for consideration and disposition is DEFENDANTS' MOTION FOR SUMMARY JUDGMENT TO REDUCE THE AMOUNT OF PLAINTIFF'S MECHANIC'S LIEN CLAIM (Document No. 34). The issues have been thoroughly briefed, and the matter is ripe for disposition. See Document Nos. 40 & 49. For the reasons which follow, Defendant's Motion will be granted.

Background

At issue in the instant Motion is the extent of Plaintiff RMF Industrial Contracting, Inc.'s ("RMF") waiver of its right to place a mechanic's lien on power plant property owned by Defendant Reliant Energy Seward, LLC ("Defendant"). In its Motion Defendant seeks to reduce RMF's two liens on its power plant from $35,900,000.00 to $7,244,021.89.*fn1 Defendant contends that RMF, a subcontractor, waived its right to place a lien on the difference between these two amounts when it submitted monthly progress payment requests to Alstom Power, Inc. ("Alstom"), which was the general contractor on the power plant construction project.

Defendant is the owner of a power plant and associated structures on property located in Indiana County, Pennsylvania. Def's Stmt. of Facts at ¶ 1.*fn2 Defendant retained Alstom and Duke/Flour Daniel, LLC ("DFD") to provide engineering, procurement, construction and commissioning services for the construction of a new power plant commonly referred to as the Seward Repowering Project (the "Project"). Id. at ¶ 3. In January of 2002 RMF entered into a Purchase Order with Alstom. Id. at ¶ 4. Pursuant to the Purchase Order, RMF agreed to erect and install certain circulating fluidized bed boilers and associated systems for the Project. Id. at ¶

4. The original amount of the Purchase Order was $46,180,000, which did not contemplate additional expenses due to change orders, quantity scope growth, force majeure events or other factors that may have increased the cost of RMF's performance under the Purchase Order. Pltf's Stmt. of Facts at ¶ 5.

The Purchase Order between RMF and Alstom included, inter alia, a document entitled General Terms and Conditions. Def's Stmt. of Facts at ¶ 6. The General Terms and Conditions included the following provision:

4.10 All Payments Subject to Release of Liens. At the time of each Progress Payment (or portion thereof, Contractor shall certify to Purchaser, and provide to Purchaser an interim lien waiver and release in a form mutually acceptable to the Parties and in accordance with this Agreement to establish that the Facility Site and any and all interests and estates therein, and all improvements and materials placed on the Unit Facility Site, are free from any and all claims, liens, security interests or encumbrances in the nature of mechanics', labor or material men's liens or otherwise, arising out of or in connection with the Agreement or performance by Contractor or any Subcontractor of the Work.

Pltf's Stmt. of Facts at ¶ 7. In accordance with section 4.10 of the General Terms and Conditions, RMF executed lien waivers and provided them to Alstom as part of each Monthly Progress Payment Request submitted by RMF. Def's Stmt. of Facts at ¶ 10. Each Monthly Progress Payment Request contained the following lien waiver language:

Furthermore, in consideration of the payments received and upon receipt of the amount of this request, the undersigned does hereby waive, release and relinquish all claims or right of lien which the undersigned may now have upon the premises described above except for claims or right of lien for contract and/or change order work performed to the extent that payment is being retained or will subsequently become due.

Pltf's Stmt. of Facts at ¶ 10 (emphasis added).

The performance by RMF of its duties under the Purchase Order was allegedly hampered by various problems. Some of the problems were allegedly caused by Alstom (i.e., insufficient laydown area, lack of site maintenance, schedule delay and scope growth), while others (i.e., an extremely harsh winter) were beyond the control of anyone involved with the Project. See Pltf's Mem. in Opp. at 6-10 (describing RMF's difficulties with the Project). These problems allegedly caused RMF to incur additional expenses of approximately $35,900,000.00, which RMF later determined to be approximately $29,235,060.00 and reduced the lien amounts accordingly. See supra n.1.*fn3

On or about March 28, 2003, RMF submitted Progress Payment Request No. 14 to Alstom requesting payment of $417,096.64 for contract and approved change order work performed on the Project through March 2, 2003. Def's Stmt. of Facts at ¶ 16. As part of Progress Payment Request No. 14, RMF submitted a Contractor's Application for Payment. Id. at ¶ 17. The Contractor's Application for Payment was executed on March 18, 2003 and contained the lien waiver language described above. Id.*fn4 On or about April 18, 2003, Alstom paid the full amount of $417,096.04 requested by RMF in Progress Payment Request No. 14. Id. at ¶ 18.

RMF was eventually terminated from the Project by Alstom. RMF then filed two mechanic's liens on the power plant property in an amount equivalent to its alleged additional expenses. See Pltf's Mem. in Opp.at 4 ("The $35,900,000 lien amount is for costs associated with labor and equipment that were expended beyond RMF's additional scope [of work]").

Defendant asserts that "[b]y executing the March 18th Lien Waiver, RMF expressly relinquished any right it may have had to a claim for any and all work it performed on the Project as of March 18, 2003, with the exception of its right to claim a lien for 'contract and/or change order work performed to the extent that payment is being retained or will subsequently become due.'" Def's Stmt. of Facts at ΒΆ 20. RMF contends that the lien waiver language did not apply to the additional, unforeseen expenses that were incurred due to the various problems mentioned above, and ...


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