United States District Court, W.D. North Carolina, Charlotte Division
MAX O. COGBURN, Jr., District Judge.
THIS MATTER is before the court on the following motions: (1) plaintiff's Motion to Enjoin Defendant from Prosecuting Later-Filed Action (#11); and (2) defendant's Motion to Dismiss or Transfer (#23). After both motions were briefed, oral arguments were heard on June 4, 2014. Having fully considered the briefs and arguments of respective counsel, the court will deny both motions and instruct defendant to answer or otherwise respond to the Complaint within 14 days.
FINDINGS and CONCLUSIONS
A. Nature of the Relationship Between the Parties
Starting in 2006, Duke entered into negotiations with Westinghouse to execute the design, procurement, and construction of the Levy County Nuclear Plant in Levy County, Florida. For purposes of the instant motions, it is undisputed that a number of those meetings occurred in North Carolina and, in particular, within the Western District of North Carolina. Discussions also took place in Massachusetts, Pennsylvania, and Florida. The court has also accepted Westinghouse's assertion that a great deal of the work it undertook for Duke was performed in the Western District of Pennsylvania.
In 2008, the parties executed the "Engineering, Procurement and Construction Agreement" ("EPC") along with non-party Stone & Webster, Inc. Such agreement not only contemplated Westinghouse's assistance in building the plant, but in providing Duke with support in its attempt to obtain from the Nuclear Regulatory Commission (hereinafter "NRC") a combined construction permit and operating license ("COL"). The agreement also provided that either party could terminate the EPC if the COL was not received by January 1, 2014.
Having not received a COL by January 1, 2014, Duke terminated the EPC on January 28, 2014, and the parties exchanged claims for compensation arising under the agreement and implemented the EPC's provision as to amicable resolution of such claims. By late March 2014, Duke determined that it and Westinghouse had exhausted the dispute resolution provisions of the agreement and filed this action, which seeks damages for breach of the EPC as well as declaratory judgment as to Westinghouse's claims.
The application filed by Duke with the NRC relies on a Westinghouse nuclear plant design known as the AP1000, which is apparently a standard "plan book" design Westinghouse has sold and continues to sell to various power companies. According to the Complaint, Duke paid Westinghouse a total of $56 million in fixed milestone payments for "finalization" of the AP1000 design and $9.45 million as an "investment recovery/royalty" payment related to the standard plant design, as provided in the EPC.
Duke alleges that on April 30, 2009, it exercised its right to partially suspend Westinghouse's performance under the EPC Agreement because of a delay in the projected commercial operation date for the Levy Plant. On March 25, 2010, the parties executed Amendment Number Three to the EPC Agreement ("Amendment 3") to reflect changes necessitated by that suspension of performance. Relevant to the instant motions, Amendment Three also revised Article 27 of the EPC, a clause governing the dispute resolution process.
B. Choice of Law and Forum Clause
In pertinent part, the EPC provides a forum and choice of law clause, which provide, as follows:
The validity, construction, and performance of this Agreement shall be governed by and interpreted in accordance with the laws of the State of North Carolina, without giving effect to the principles thereof relating to conflicts of laws. Any litigation between Contractor (or either Consortium Member) and Owner may be commenced in Federal or State Courts in the State of North Carolina having jurisdiction over the subject matter. Each Party hereby consents to being subject to the personal jurisdiction of such Courts.
Conley Decl. at ¶12.
C. Nature of Plaintiff's Claims
Based on an alleged breach of contract, Duke seeks herein the remedy of refund of certain advance payments which it contends it paid, but which Westinghouse never earned. According to the Complaint, Duke paid Westinghouse approximately $54 million pursuant to the EPC Agreemeny, which included a payment of $51, 778, 440 for two turbine generators that were never built and $2, 348, 660 for reactor vessel parts as to which work was suspended before work started. Duke contends that work was halted on those items by means of a Change Order which was agreed to by the parties.
Duke also seeks a declaratory judgment that it owes Westinghouse nothing under the EPC's provision for "termination costs." The EPC Agreement permits Westinghouse to recover from Duke its "Termination Costs." Apparently, Westinghouse claims more than $482 million in direct costs and also seeks an "agreement termination fee" of $30 million, which Duke contends is allowed by the EPC if the agreement is terminated for convenience, but not allowed if a COL was not obtained by January 1, 2014.
D. Timeline of Dispute Resolution and Cross Filings
In accordance with the EPC as amended, the parties exchanged claims and commenced dispute resolution proceedings immediately before as well as after Duke terminated the agreement. While settlement offers were exchanged, it appears that by March 2014 the parties had made no movement from their positions: Duke believed it was owed a refund and Westinghouse believed it was entitled to its Costs and the Termination Fee.
According to Duke, its counsel was advised by Westinghouse's in-house counsel on March 25, 2014, that there was no need for further meetings as he believed that the parties had fulfilled their pre-litigation, dispute-resolution obligations under Article 27 of the EPC and Amendment Three. The next day, March 26, 2014, Duke's counsel contacted Westinghouse's in-house counsel with questions concerning whether Westinghouse intended to challenge the forum-selection clause and whether it intended to further follow the dispute-resolution procedure. While such email was responded to, Westinghouse did not answer the questions posed. On March 27, 2014, Westinghouse sent Duke an invoice for $512 million.
By 4 p.m. the following day, March 28, 2014, Duke filed this lawsuit in this court. The following Monday, March 31, 2014, Westinghouse filed its own lawsuit in the Western District of Pennsylvania. Westinghouse Electric Company, LLC v. Duke Energy ...