RE: Foster Wheeler suggested language for delay damages

Yes, please.

-----Original Message-----
From: Brownfeld, Gail
Sent: Monday, September 10, 2001 8:13 PM
To: Sanders, Richard B.
Subject: FW: Foster Wheeler suggested language for delay damages

Let me know if you'd like me to handle the Pain Creek matter. Thanks.

-----Original Message-----
From: Lund, David
Sent: Mon 9/10/2001 4:31 PM
To: Brownfeld, Gail; Millie.Hewes@nepco.com
Cc: Sanders, Richard B.
Subject: RE: Foster Wheeler suggested language for delay damages

Of course Gail. I'm sorry you didn't get a copy sooner.

Millie, Please make a copy of the arbitration demand and our response that
Seth Price submitted on our behalf. This is entitled "Foster Wheeler
Limited vs. NEPCO" Please fax or overnight mail the copy to Gail Brownfeld
at Enron, EWS. Go to the Enron web site (People Finder) to locate her
mailing address. Thanks.

By copy to Richard Sanders, I left a voice message last week with you
describing a new matter we are developing as a claim against Overland
Construction, Inc. (a subsidiary of Black and Veatch) on a project called
"Payne Creek", located in central Florida. Considering the losses suffered
to date ($7 Million) the project is now spelled "Pain Creek". I spoke to
Schwartzenburg about it and he suggested we enlist your group for
assistance. I have also retained Seth Price's firm (with Derrick's
approval) to help evaluate and develop the claim. I would like to schedule
a conference call with Seth, myself and a member of your group to review the
claim. Schwartzenburg and myself are available on Thursday, September 13th
and so is Seth but only in the morning. Given the time zone differences
between Seth and myself, I would like to target 11:00 AM central time. Let
me know if Gail or someone else will be the assigned attorney. The claim
involves construction cost overruns due to errors in the owners
specification.

Thanks.

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: Brownfeld, Gail [ <mailto:Gail.Brownfeld@ENRON.com<]
Sent: Monday, September 10, 2001 10:34 AM
To: Lund, David
Cc: Sanders, Richard B.
Subject: RE: Foster Wheeler suggested language for
delay damages

David,
Sorry for the phone tag of last week. The reason I
was calling
actually related to the attached.Can I get a copy of the
file on this
and also can we schedule a call with outside counsel to
discuss this
matter? Apparently, life at EWS in not that different from
EI and as
the trusty litigation manager, I need to be involved in
this. To the
extent that I have suggested a call on Wednesday to discuss
the Pakistan
case, maybe you and I can arrange something with Seth to
occur before or
after that call. It would be helpful to have what was filed
beforehand,
if it could be arranged. Thanks in advance.

-----Original Message-----
From: Lund, David
Sent: Thursday, August 30, 2001 2:18 PM
To: Brownfeld, Gail
Subject: RE: Foster Wheeler suggested language for delay
damages

Yes, against NEPCO. We have retained Seth Price of Shapiro
Fussell in
Atlanta. I have Derrick's approval. The action was
delivered two weeks
ago
and then put on hold. After the unsuccessful settlement
meeting, it was
ignited again. Seth will issue our response on Tuesday
(9/4). Seth has
worked on NEPCO matters before and is familiar with our
business
practices
and contract terms with suppliers.

This is rather new matter and I didn't have the opportunity
to involve
you
earlier.

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: Brownfeld, Gail
[ <mailto:Gail.Brownfeld@ENRON.com<]
Sent: Thursday, August 30, 2001 11:46 AM
To: Lund, David; Schwartzenburg, John
Subject: RE: Foster Wheeler suggested
language
for
delay damages

Dave,
Was the arbitration initiated
against NEPCO? If
so,
who has
been retained to handle it?

-----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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