United States District Court, E.D. Virginia, Richmond Division
A. Gibney, Jr., Judge
2014, Old Dominion Electric Cooperative ("Old
Dominion") hired White Oak Power Constructors
("White Oak") to build a natural gas power plant in
Rising Sun, Maryland. White Oak and Old Dominion drafted and
signed the Engineer, Procure, and Construct Contract
("EPC Contract") to govern their relationship. Over
the course of construction, multiple disputes arose between
Old Dominion, White Oak, and the suppliers of the power
plant's different components.This lawsuit followed. White
Oak and Old Dominion have both moved for partial summary
judgment on the interpretation of part of the EPC Contract:
Section 126.96.36.199 (the "Risk of Loss Provision").
Contract provides that White Oak owes Old Dominion liquidated
damages if White Oak fails to complete the power plant on
time. The Risk of Loss Provision in the EPC Contract makes
Old Dominion responsible for certain losses or damages to
property at the plant. After delays in construction, Old
Dominion assessed more than $50 million in liquidated damages
against White Oak. White Oak now claims that, under the Risk
of Loss Provision, Old Dominion should be liable for
"delay-related losses, damages, and costs"
attributable to property damage. (Dk. No. 152, at 6.) Old
Dominion says that the Risk of Loss Provision only requires
it to pay for losses to property and does not extend to
liquidated damages for any corresponding delays.
the Risk of Loss Provision is unambiguous and does not
require Old Dominion to pay delay-related liquidated damages,
the Court will grant Old Dominion's motion and deny in
part White Oak's motion.
Relevant EPC Contract Language
9 of the EPC Contract, titled "Indemnities;
Insurance/' lists the various insurance policies that Old
Dominion, White Oak, and White Oak's subcontractors
needed during construction of the power plant. (Dk. No. 44-2,
at 53.) Section 9.2.4 covers "Property Insurance"
and first specifies what type of "All-Risk Builders'
Risk Insurance" that Old Dominion must buy, and what
happens in the case of a major property loss at the
construction site. (Id. at 60-61.) In Section
9.2.43, titled "Risk of Loss," the EPC
[Old Dominion] shall be accountable and responsible for any
loss or damage to any part of the Facility, the Site or
Work, including property of any kind including, but
not limited to, uninsured Losses and deductibles.
(Id. at 62) (emphasis added). The parties'
motions focus on the interpretation of this short paragraph.
Contract gives two separate definitions of "Work."
First, it defines "Work" as "the
responsibilities of [White Oak] hereunder."
(Id. at 19.) Second, it defines "Work" as
"that which is produced, constructed or built pursuant
to this Agreement, where the context so requires."
(Id.) It also defines "Losses" as
"any claims, causes of action, demands, suits,
proceedings, fines, penalties, liabilities, judgments,
awards, losses, damages, interest, costs or expenses
(including attorneys' fees, expert fees, consultant fees,
other litigation costs, and court costs)." (Id.
parties agreed in the EPC Contract that White Oak would reach
"Substantial Completion" of the facility by May 1,
2017. (Id. at 16.) Section 8 of the EPC Contract
created a procedure for both parties to submit and accept
"Change Orders," which could alter the deadlines or
specifications for the construction. (Id. at 50.)
Section 8 notes that White Oak is "entitled" to a
Change Order in circumstances where Old Dominion fails
"to perform its obligations" or where a "Force
Majeure event will materially delay the schedule of the
Work." (Id. at 51.) Section 12 details
liquidated damages that White Oak would pay for failing to
reach Substantial Completion by May 1, 2017.
Delays in Construction
instances of property damage delayed construction of the
power plant. For example, a fire in September, 2016,
destroyed one of the transformers and parts of the building
around it. Freezing water caused damage to concrete
foundations and windstorms destroyed rebar cages. Because of
necessary repairs and cleanup, these incidents contributed to
the delay of the entire construction effort. White Oak did
not reach Substantial Completion by May 1, 2017. In fact, the
power plant was not substantially complete until April 11,
2018. Old Dominion has assessed tens of millions of dollars
in liquidated damages against White Oak because of its delay
in finishing the construction.