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Vista Engineering Technologies, LLC v. Premier Technology

September 16, 2010

VISTA ENGINEERING TECHNOLOGIES, LLC, PLAINTIFFS,
v.
PREMIER TECHNOLOGY, INC., DEFENDANT.



The opinion of the court was delivered by: Honorable B. Lynn Winmill Chief U. S. District Judge

MEMORANDUM DECISION AND ORDER

INTRODUCTION

The Court has before it cross-motions for summary judgment. The Court heard oral argument August 26, 2010, and took the motions under advisement. For the reasons expressed below, the Court will deny both motions.

BACKGROUND FACTS

This is a breach of contract action by Vista to recover payments allegedly due from Premier for engineering services. Premier had earlier entered into contracts with AREVA MOX Services LLC to provide two types of tanks -- slab and annular -- to be used at the Savannah River Nuclear Site. Premier then contracted with Vista to have it perform the design engineering for both types of tanks.

More specifically, Premier hired Vista to determine whether the tank designs would withstand seismic stresses, and would satisfy safety criteria -- set forth in the ASME Code -- for vessels that will be subjected to pressure. The MOX specification required that some tanks be analyzed using a Dynamic Analysis, but allowed the use of a less expensive type of test known as Static Analysis if the subcontractor was able to show that it was appropriate.

Vista submitted a bid for $246,439. Vista's bid contained a statement that Vista assumed that the Static Analysis would be used and that any change in that assumption would mean that "both cost and schedule impacts are probable." See Exhibit 1 to Clezie Declaration.

Premier accepted Vista's bid without objection, and incorporated that bid into a Purchase Order that also incorporated certain standard Premier terms and conditions, including Section E, that stated in pertinent part as follows: "Payment can be requested once the completed submittal per [MOX] specification and this Purchase Order have been met and accepted."

Premier argues that this provision requires that Vista obtain MOX's approval before Vista may be paid. However, Premier's Contracts Manager, Barbara Clezie, testified that references in Section E to MOX should be interpreted as references to Premier. See Clezie Deposition at pp. 36-37. Confirming this interpretation are undisputed facts that (1) Vista provided its deliverables to Premier, not MOX, and (2) Vista received the specifications from Premier, not MOX.

The effect of Clezie's interpretation would be that Premier -- not MOX -- would need to judge Vista's work. There is no evidence in this record that Premier ever notified Vista in writing that its work was deficient. Indeed, Premier's Engineering Manager, Jim Lockhart, proffered by Premier as its Rule 30(b)(6) representative, testified that Premier relied entirely on MOX to judge whether Vista's submissions complied with contract specifications. See Lockhart Deposition at pp. 33-34.*fn1 The record is replete with examples of Premier praising Vista for its work. See e.g. Exhibit FF (e-mail from Premier's Raben telling Vista "You are crusin'! Good job to you and your team"); Exhibit BB (Premier thanking Vista "for your hard work & patience"). And there is no documentary evidence in the record that Premier rejected Vista's work based on MOX's dissatisfaction, or that MOX provided any written notice to Vista that its work was deficient.

Premier counters that Vista did not provide any acceptable design material and was told in "many conversations" that its work "was not in compliance with the contract specifications and was unacceptable to Premier and MOX." See Memorandum Decision (docket no. 64) at pp. 3-4. That testimony is countered by Vista's President Philip Ohl who testified that "Premier never provided notice to Vista that its work was unacceptable, or notice of an opportunity to cure alleged defects in its deliverables . . . ." Id. at p. 4.

In November of 2006, Vista submitted its plan to do the less-expensive Static Analysis. MOX delayed its response for about a year, far exceeding the contract deadlines for responses. Premier would later conclude that MOX's delay cost "hundreds of thousands of dollars . . ., untold adverse schedule impacts, and unnecessary harm to the relationships between MOX, Premier and its subsupplier/subcontractors." See Exhibit H to Ohl Affidavit (letter from Douglas Sayer, Premier's President, to MOX dated March 17, 2009).

Ultimately, MOX rejected the Static Analysis, and required that the Dynamic Analysis be used to test the designs on all Slab Tanks. Premier agreed with Vista that MOX had improperly rejected the Static Analysis, and sought an equitable adjustment with MOX to cover the additional work caused by the Dynamic Analysis. See Exhibits GG, HH & JJ. In addition, Premier issued fourteen Purchase Order revisions extending Vista's deadlines due to MOX's design revisions, and increasing the price for Vista's work.

In January of 2008, Vista estimated that it would need an additional $2 million -- and 23 months -- to complete the work, or it could expedite the work in 6 months for $6.5 million. See Exhibit 1. The next month -- February of 2008 -- MOX and Premier entered into an agreement, described by Premier's Contracts Manager Barbara Clezie as follows: "MOX required Premier to agree that it would not be entitled to collect money from MOX for any work done by Vista relating to the Slab Tanks or Annular Tanks, including engineering and design work that had not already been paid by MOX." See Declaration of Clezie at p. 9, ΒΆ 33. That agreement also provided that "MOX would provide ...


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