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Enron Mail |
Can we talk about this today?
-----Original Message----- From: Brownfeld, Gail Sent: Thursday, August 30, 2001 1:45 PM To: Sanders, Richard B. Cc: Schwartzenburg, John Subject: FW: Foster Wheeler suggested language for delay damages How do we handle something like this? In my old world, it used to be that a litigation manager at corporate would have to be involved in something like this pretty much regardless of whether the local guy thought it was under control or not. Is that the case still? Should I tell Dave to send the file? -----Original Message----- From: Lund, David Sent: Thursday, August 30, 2001 12:30 PM To: Schwartzenburg, John Cc: Brownfeld, Gail Subject: FW: Foster Wheeler suggested language for delay damages This is a heads up to a mounting dispute with a major equipment supplier, Foster Wheeler Limited (HRSG supplier). Currently they have initiated an arbitration action before the AAA here in Seattle for a payment claim ($1.2 M) on the Linden, NJ project of which we have held back payment to satisfy our claim for delay LDs and re-work ($3.8 M). While this action is pending, FWL has initiated some unlawful bargaining tactics on our Lakeworth, FL project. More of the drama is outlined below. No need for action here. David H. Lund, Jr. Assistant General Counsel National Energy Production Corporation 11831 North Creek Parkway N. Bothell, WA 98011 425-415-3138 Fax: 425-415-3032 David.Lund@nepco.com or davidlu@nepco.com -----Original Message----- From: B-David Lund Sent: Wednesday, August 29, 2001 7:03 PM To: B-Galen Torneby Cc: B-Bob Black; B-Don Campbell; B-Greg Tardanico; B-Mike Ranz; B-Daniel Haas; B-David Hattery; 'Seth Price' Subject: RE: Foster Wheeler suggested language for delay damages ATTORNEY-CLIENT COMMUNICATION; PRIVELEGED AND CONFIDENTIAL Galen, I don't have the full history of dealing on this purchase order with FWL, but my instincts say we don't have to accept "material" changes to the terms on the eve of signing a PO. FWL's attempt to adjust significant delay risk at the eleventh hour constitutes a breach of good faith and fair dealing. It is as if we were to sign the PO based on weeks of review of a firm and final price but mark down the price a few million on the final draft because we felt we were taken to the cleaners on a previous job they sold to us. FWL needs to be instructed to accept the PO without the proposed changes. If they refuse, we have (and we must tell them) the choice to contract with another party and hold them liable for the extra cost of another supplier to make the schedule required. This liability is based on breach of an implied contract and FWL faces damages for detrimental reliance (that would be the incremental cost above FWL's firm price charged by the replacement vendor). The reliance argument is that we excused other bidders weeks ago and chose to exclusively deal with FWL based on agreement (reliance) of terms and conditions presented in earlier drafts of the PO or referred to in previous PO documents. The detriment argument is FWL knew they had us captive to them on this deal. By going forward without other bidders, we lost price protection and commitment for schedule by other bidders, therefore we are at a detriment without market forces. In the best world, our purchasing activities need to keep proposals competitive by not dropping back to one supplier for critical path equipment. I mentioned a choice here, the other choice is to continue to deal with FWL and accept their additional terms because the risk of changing horses and being successful on a lawsuit based on implied contract and detrimental reliance outweighs the risk and cost of having to "mitigate" the effect of LDs on FWL if critical path work is not impacted or hard to document and prove it was impacted, and whether our obligations were fulfilled in this respect. Since FWL has now opened the door to change "material" terms on the eve of signing, we have the opportunity to do the same with them, but that doesn't help if the parties continue to go in opposite directions while your end date stays the same. I would say they know this is a dilemma to us and are betting we will deal with them on these new first-time "material" changes to the PO terms. If we go with the second choice, I would encourage NEPCO and Enron to take FWL off any preferred bidders list. In addition, I thought I heard from the folks who attended the Linden 6 settlement meeting a week ago that the parties said they would not let the litigation on Linden 6 effect our other on-going deals. Apparently FWL is taking their issues on Linden 6 over to other deals. We may want to do the same. Stepping back a bit, unless our documents and witnesses are crystal clear on the implied contract theory and we have a clear fact pattern for detrimental reliance, I wouldn't lick our chops and be confident that we got them on this liability. I am willing to advance an argument for posture purposes in order to force some conclusion on the PO terms that they have attempted to open up. And with what little I know thus far, I would encourage we try to strike a deal in lieu of another lawsuit. David H. Lund, Jr. Assistant General Counsel National Energy Production Corporation 11831 North Creek Parkway N. Bothell, WA 98011 425-415-3138 Fax: 425-415-3032 David.Lund@nepco.com or davidlu@nepco.com -----Original Message----- From: B-Galen Torneby Sent: Wednesday, August 29, 2001 1:22 PM To: B-David Lund Cc: B-Bob Black; B-Don Campbell; B-Greg Tardanico; B-Mike Ranz Subject: Foster Wheeler suggested language for delay damages << File: mom-0822.doc << << File: 8&13.doc << David, I am forwarding an email from Mr. Garry Greatrix, Project Manager, Foster Wheeler Ltd. Please read the document attached entitled 8&13.doc. This has been presented as revised language to "all NEPCO contracts" from Foster Wheeler. This suggested language has been presented as endorsed by Foster Wheeler legal and executive management. The FW team explained that this language resulted from what they have experienced with NEPCO on recent projects, specifically Linden 6 and Kendall and that they cannot sign the purchase contract without it. Since this affects more than the Lake Worth Project I felt any acceptance or dialog regarding FW's suggested language would need to be reviewed and approved by NEPCO legal and executive team. Galen J. Torneby Project Manager National Energy Production Corporation (NEPCO) 11831 North Creek Parkway North Bothell, WA 98011 USA Tel: 425-415-3052 Cell: 425-922-0475 Fax: 425-415-3098 email: mailto:galen.torneby@nepco.com <mailto:galen.torneby@nepco.com< -----Original Message----- From: Greatrix, Garry [mailto:Garry_Greatrix@fwc.com] <mailto:[mailto:Garry_Greatrix@fwc.com]< Sent: Wednesday, August 29, 2001 6:47 AM To: Galen.Torneby@nepco.com <mailto:Galen.Torneby@nepco.com< ; Richard.Skibinski@nepco.com <mailto:Richard.Skibinski@nepco.com< ; Martin.Tollefson@nepco.com <mailto:Martin.Tollefson@nepco.com< ; dlabine@nepcan.com <mailto:dlabine@nepcan.com< ; sketler@nepcan.com <mailto:sketler@nepcan.com< ; ltoth@nepcan <mailto:ltoth@nepcan< .com; Don.Campbell@nepco.com <mailto:Don.Campbell@nepco.com< ; Braid, Alan; Kirk, Bob; Baiton, Darren; Hildebrandt, Bob; McKenna, Richard; Jonker, Chris; Ratelle, Leo; Rajhans, Shekhar; Dueck, Rob; Shaffer, Edward; McNinch, Bob; Jansen, Bruna; McDonald, Robin; Copsey, Dick Subject: NEPCO Lake Worth - Minutes of Meeting - August 22, 2001 Please find attached Minutes of our Project Design Review Meeting at NEPCAN offices Wednesday August 22, 2001. Discussion and Action items are as noted for followup by NEPCO/NEPCAN/FW accordingly. Best regards, Garry Greatrix FW Project Manager
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