ML19308B657
| ML19308B657 | |
| Person / Time | |
|---|---|
| Site: | Crane  |
| Issue date: | 11/20/1978 |
| From: | Obert H GIBBONS, EUSTACE & OBERT, J.E.LONERGAN CO. |
| To: | U.S. DISTRICT COURT, MIDDLE DISTRICT OF PENNSLYVANIA |
| References | |
| TASK-TF, TASK-TMR NUDOCS 8001160606 | |
| Download: ML19308B657 (25) | |
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a IN THE LNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT i F PENNSYLVANIA J. E. LONERGAN COMPANY CIVIL ACTION 10050 Sandmeyer Lane Philadelphia, Pa.
19115 No, Plaintiff a
vs.
JERSEY CENTRAL PGiER & LIGHT COMPANY 1001 Broad Street Johnstown, Pennsylvania Defendant COMPLA INT 1.
Plaintiff, J. E. LONERGAN COXPANY, is a corporation incorporated v der the laws of the Commonwealth of Pennsylvania having its principal place of business at 10050 Sandmeyer Lane, Philadelphia, Pennsylvania, hereinafter sometimes referred to as "Lonergan".
2.
Defendant, JERSEY CENTRAL POWER & LIGHT COMPANY, is a corporation incorporated under the laws of the State of New Jersey having its principal place of business therein at Madison Avenue at Punch Bowl Road, Morristown, New Jersey, hereinafter sometimes referred to as "JCP&L".
3.
JCP&L is licensed to and doos business in the Common-wealth of Pennsylvania with its registered offAce therein at 1001 Broad Street, Johnstown, Pennsylvania.
4.
Jurisdiction is founded on diversity of citizenship r
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and amount in controversy. The amount in controversy exceeds the sum of Ten Thousand Dollars ( $10,000.00) exclusive of interest and costs.
Jurisdiction exists under U.S.C. Title 28 51332 5.
This action by Lonergan has been brought to enjoin and restrain JCP&L from proceeding with arbitration of a matter arising out of a sale of certain Main Steam Safety Valves by Lonergan to JCP&L as nore fully stated and set forth in Count One, and for a Declaratory Judgment declaring the rights and
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status of the parties relevant to the matter in controversy as more fully stated and set forth in Count Two.
COUNT ONE 6
On or about June 26, 1969 JCP&L invited a proposal from Lonergan for furnishing Main Steam Safety Valves and related accessories as described in certain specifications prepared by Burns & Roe Inc. designated and hereinafter referred to as Specification 2555-76 for installation in a power pla t n
known as Three Mile Island Unit No. 2 Kuclear Statio in Dauphin County, Pennsylvania.
7.
In response to the aforementioned invitation, Loner-gan submitted its bid to JCP&L by writing dated August 8, 1969 for manufacture and delivery of twelve B x 10 x 10 valves for the total price of $35,700.00 or in the alternate for twenty-four 6 x 8 valves for the sum of $33,580.00 having valve capa -
city and set pressures as in said bid more fully set forth and incorporated herein by reference, and for the performance of all work in accordance with contract documents and Specifica-tion 2555-76. '
8.
Thereafter negotiations were conducted for a period of almost one year between Lonergan and JCP&L for procurement by JCP&L of an increase in quantity and certain changes in specifications.
9.
During the period of the aforementioned negotiations and in the interim between submission of bid by Lonergan and issuance of the contract documents in or about August 1970, the r.forementioned Specification 2555-76 was modified by Amendr.ent No.1 thereto dated February 18, 1970.
10.
On or about August 20, 1970, JCP&L issued its Pur-chase Order No. C-0052 for purchase of thirteen Main Steam Safety Valves from Lonergan, incorporating therein changes differing from the terms and conditions of the bid including provisions increasing the quantity for purchase frcu twelve to thirteen valves and incorporating the revised Specifica-tion 2555-76 to conform to the negotiations which had there-tofore been conducted between the parties.
11.
Lonergan acknowledged acceptance of the order from JCP&L by issuance to JCP&L of Lonergan Invoice No. 008527 dated August 26, 1970, a true and correct copy of the face thereof (exclusive of the hand written notations appearing thereon) is attached and marked Exhibit "A" hereto, containing on the reverse side thereof the provisions set forth in attached Exhibit "B",
thereby undertaking to sell and deliver the aforementioned quantity of valves in accordance with terms and conditions of its said Invoice.
12.
The aforementit.aed Lonergan Invoice No. 008527 for sale and delivery of the v.ves to JCP&L provides, inter alia, nm
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i "This Order covers the engineering, design, manufacture, delivery and testing of thirteen main steam safety valves, all complete with accessories and appurtenances * * *
- in accordance with the original bid form document proposa'. BF-1 dated 8/8/69 & JEL's letters of 10/1/69 and 7/8/70 quotations 9023-H * * *" for the lump sus price of $53,950.00 plus certain additional specified charges for meeting the requirements of the AEXE Code as well as for field supervision and travel expense, and further provided therein "EAIN STEAM SAFETY VALVES IN ACCORDANCE WITH BURNS & ROE, INC. SPECIFICATION 2555-76 AFINDXEST NO. 1 DATED FEBRUARY 18, 1970 AND AMEND.v2NT NO. 2 LATED AUGUST 3, 1970" as in said Invoice more fully stated,
and set forth.
- 13. Under the provisions of the aforementioned Lonergan Invoice No. 008527, Lonergan undertook to sell and deliver the aforementioned valves in accordance with the provisions of the terms, warranty and conditions on the reverse side of said Invoice No. 008527, as set forth in Exhibit "B" which are in-corporated herein by reference thereto, and which provides inter alla as follows:
" WARRANTY "The Company warrants all equipment manufactured by it and bearing its name plate, and all repairs made by it, to be free from defects in material or wurkmanship un!.er normal use or service. If any part of t e equipment herein described, and sold by the Company, proves to be defective in workmanship or material and if such part is within twelve months from date of shipment from the Company's Factory, returned to such factory, transportation charges prepaid, and if the same is found by the Company to be defective in work-manship or material, it will be replaced or re-
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paired, free of charge, f.o.b. Company's Factory.
The Corpany assumes no liability for the conse-quence of its use or misuse by the purchaser, his employees or others; nor does the Company assumo any..iability for repairs, adjustments, or replaco-monts made by the purchaser on his cwn initiative and without express authorization by the Company in ariting. A defect in zhe meaning of this war-rasty in connectio.1 with any part of said equip-ment shall not, when such part is capablo of boing renewed, repaired or replaced, operate to condemn such equipment. This warranty is expressly in licu of all other warranties, guaranties, obligations or liabilities or implied by the Company or its repre-sentatives. All statutory or b: plied warranties, other than title, arc hereby expressly negatived and excluded."
14.
The aforementioned Lonorgan Invoico No. 008527 referencing JCP&L Purchaso Order No. C-0052 further provided for delivery to JCP&L of said valvos in accordance with the aforementioned Spccification 2555-76 and Lonorgan's accept-ance of the order under and subject to all terms and condi-tions of Lonergan's Invoico No. 008527, which wero incorporat:1 therein, including inter alia the following:
" CONDITIONS
" Orders submitted on customer's own purchase order forms, which forms may contain statements, clausos, or conditions modifying, adding to, repugnant to, or inconsistent with the terms or provisions of the Seller heroin contained, will be accepted by the Seller only upon condition and with the express understanding that notwithstanding any such state-ments, clauses, or conditions contained in any order forms of the customer, the liabilities of the Seller shall be determined solely by its own terms and con-ditions of sale, and in accepting and consummating any such order the Seller shall be deemed not in any way to have changed, enlarged, or modified its liability of obligations as fixed by such terms and conditions of sale as stated by the soller herein."
- 15. Lonergan avers that the acknowledgment copy of JCP&L Purchase Order No. C-0052 was received by JCP&L from Lonergan O
on or about November 11, 1971.
16.
Between on or about July 31, 1975 and October 14, 1975, Lonergan delivered said valves to JCP&L at the construc-tion site of the' Three Mile Island Nuclear Station - Unit 2.
On various dates following delivery of said valves 17.
to JcP&L they were all tested and adjusted and rotested at its specification and tolerances on the the job site to meet Opera-spring set pressure of plus or minus one (1) percent.
tion of the valves was checked and recorded by the JCP&L staff and found satisfactory and acceptable. The Authorized Inspector Moreover, said, valves were paid for was a witnessing party.
by JCP&L in accordance with the contract price.
Subsequent thereto JCP&L caused the said valves to 18.
be subjected to various uses and conditions in the course of construction of the system of which they were a part and, after so doing, thereafter wrote Lonergan advising it had first noted on or about April 23, 1978, conditions which induced it to con-clude that the subject valves failed to meet performance require-ments of the applicable Specifications.
Following its aforementioned observation, JCP&L 19.
concluded the problem was attri-without justifiable cause, butable to faul't of Lonergan and of a nature which could not be corrected to meet requirements of JCP&L, whereupon it made a decision to replace said valves with valves of a different kind from another manufacturer, as more fully explained and 1978, a true and set forth by JCP&L in a letter dated June 27, correct copy of which is hereto attached, made part hereof, and marked Exhibit "C". -
20.
By said letter dated June 27, 1978, JCP&L gave Lonergan formal notification of its intention to proceed with " rectification" in a manner contrary to the terms and conditions of the aforemen-tioned warranty clause in Janergan Invoice No. 008527 21.
The aforementioned valves furnished by Lonergan conplied with all terms and conditions of the sale contract and Lonergan was at all times ready, willing and able to mske and accomplish any and all adjustments in accordance with both its warranty and guarantee to assure proper performance of the valves in the operatingsystem.
The decision of JCP&L to replace said valves with those of a different kind and from another manufacturer, at the expense of Lonergan is contrary to and in contravention of the provisions of the Warranty set forth in Lonergan Invoice No. 008527 and, independently thereof is also in contravention of Lonergan's rights under Specification 2555-76.
22.
The terms and conditions of the JCP&L Purchase Ord No. C-0052 and of Specification 2555-76 are subject to all terms and conditions set forth in Lonergan Invoice No. 008527 by which the contract between the parties cas accepted and concluded
, includ-ing but without limitation, the "Ccnditions" and the " Warranty" pro-visions of the latter defining and limiting the rights and liabilities of the parties with regard to the sale of the aforementioned valves e
which are alleged by JCP&L to be defective.
23 Except for three valves which had been returned by I
JCP&L to Lonergan in damaged condition for which JCP&L kas alone responsible, all of which were returned to JCP&L after repairs as directed by 'JCP&L within the time required by it, JCP&L has not returned any other of said valves to Lonergan's factory f -
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-m for inspection and repair as provided by the aforesaid Warranty, and has otherwise hindered and prevented Lonergan from comply-ing and performing in accordance with the terms of Specification 2555-76, and also with its aforesaid Warranty, in regard to the valves about which JCPC is complaining.
24.
JCPC has not afforded Lonergan an opportunity to perform such obligation, if any, under Specification 2555-76, as well as such obligation, if any, under said Warranty with regard to insta.: ion and repair. By reason thereof, and by further reason that Lonergan has been and continues to be l
ready, willing and able to fulfill the terms of its guarantee under Specification 2555-76 and its Warranty under said Invoice No. 008527, there exists no dispute or difference between the parties arising out of the contract, order or specification, the settlement of which is not otherwise provided for in the contaet, order or specification, and hence no basis for arbi-i k
l tration exists under Section 8 of the General Requirements of Specification 2555-76 which provides as follows:
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"8.
ARBITRATION O
,K TJ "Any dispute or difference arising out of the
.M Contract, order or specification which cannot
- ?W T be settled or adjusted by mutual agreement, or b-the settlement of which is not otherwise provided for in the Contract, order or specification, 71 shall be settled and finally determined by arbi-S, tration in the following manner:
nD, "Each of the two parties concerned shall appoint fQ-an arbitrator. If the two arbitrators so appointed
- 14m cannot agree within two weeks of the date of their
$fm-appointment, they shall select a third arbitrator.
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The three arbitrators shall then meet and give an
%Q' opportunity to each party to present its case and
??f-E witnesses (if any) in the presence of the othat g.
party. The arbitrators shall then make their 3;; u g a e;.
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award. A decision in writing of the three arbi-trators, or any two of them, shall be final and binding upon the parties, and judgment may be entered thereon in any court having jurisdiction.
The decision of the arbitrators shall include the fixing of the expenses of the arbitration and the assessment of the same against either or both par-ties.
"If either party shall fail to appoint its arbi-trator within thirty (30) days af ter notico in writ-ing from the other party requiring it to do so, the i
arbitrator appointed by the other party shall act for both, and his decision chall be final and bind-ing upon both parties, as if he had been appointed by consent.
"If, in an appropriate case, the arbitrators appointed by the parties shall fail to select a third arbitrator, a third arbitrator shall bo selected in accordance with the then current rules and regulations of the American Arbitration Association."
25.
Demand by JCP&L for arbitration of the matter of complaint to which reference is made in its aforementioned letter dated June 27, 1978, and subsequent letters dated July 19, 1978 and August 24, 1978, copies of which are hereto f
attached and marked Exhibits "D" and "E" respectively, the latter of which was in response to letter from counsel for Lonergan dated August 18, 1978, of which a copy is hereto attached and marked Exhibit "F", is a matter governed by the terms not only of Specification 2555-76 but also of the afore-mentioned Warranty set forth in Lonergan's Invoice No. 008527; and under the provisions of either or both of said documente i
does not constitute the subject matter of any dispute or dif-forence which may be made subSct to the provisions of the aforementioned arbitration clauso in Section 8 of the General Requirements of Specification 2555-76. ~ avuny\\th
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26.
Invocation by JCP&L of arbitration for detemnina-tion of the matters about which JCP&L complains in its afore-mentioned letters is in conflict both with the terms of the aforementioned " Warranty" and "Condiuions" clauses in Lonergan Invoice No. 00827, and with the guarantee Article 21 of Spoci-fication 2555-76.
JCP&L, by socking to invoko arbitration of the aforementier ed alleged controversy is disregarding the pro-visions of Lonergan's Warranty under said invoice, as well as the limitations of its guaranteo in Specification 2555-76 it-self and is demanding recovery of r cr.etary damages which not only are unfounded but also add ropugnanu and inconsistant provisions to the " Warranty" and " Conditions" clauses of Loner-gan's Invoico No. 008527, and in addition theroto contraveno Article 21 of Specification 2555-76 By reason thereof, said arbitration clause is therefore without forco or effset hetween the parties in tha present instanca.
27.
The guarantee by Lonergan ander the provisions of Art-icle 21 of Specification 2555-76 provides intar alla r.s follows:
"21.
GUARANTEES AND FL'AL ACCEPTANCE OF WORK In addition to any guarantees specified in tho engineering details the Vendor shall guarantee s a.
All apparatus, devices, workmanship and materials furnished, delivered and installed hereunder for a period of one (1) year from date of acceptance or one (1) year after com-mencement of co=morcial operation, whichever is the later against:
(1) Defects due to poor selection of material.
(2) Defects due to poor material.
(3) Defects due to poor workmanship, b.
Performance to be in accordance with the specifications or as otherwise specified in writ-ing.
- 1
"In the event of failure to comply with or reet the guarantees, the Vendor shall at his own expense rectify faulty material or workmanship or faulty performance and in the event of failure to do so the Purchaser may proceed to have such rectification made at the expense of the Vendor.
"In the event that such rectification entails such changes to the work of other contractors, changes shall be mado at the oxpense of the Ven-dor, and in the evont auch changes to other con-the tractors' work invalidates their guarantees, vendor shall provide new guarantees satisfactory to the Purchaser."
28.
Lonergan has been informed by JCP&L, through its duly authorized representatives, that the amount of claim by JCP&L for alleged rectification procedure and replacement of valves by another manufacturer, to which JCP&L makes refere.nce in its aforementioned communications, although not stated defin-itely, will be asserted in a high six digit dollar amount.
29.
Lonergan has also been informed by JCP&L, through its duly authorized representatives, of its intention to assert claim of unspecified amount for onsequential damages in excess of two million dollars which consequential damage JCP&L pur-ports to be subject to arbitration and which Lonergan denies.
30.
Lonergan will suffer immediate and irreparable damage, harm and injury unless arbitration is restrained in that under the provisions of the aforamentioned arbitration clause Lonerga ;
will be subjected not only to a hearing and trial of unportant[l 4
issues without protection of judicial safeguards, including but without limitation, discovery and other judicial procedures and processes, but also to an adjudication of legal rights as well as a determination of alleged liability in a non-judicial forum {
~
- 111
in contravention of the terms and conditions of its contract, and by a decision which the wording of the arbitration clause provides "shall be final and binding". In addition thereto, Lonergan will be compelled to incur substantial expense in oppos-ing the claim of JCP&L in arbitration and exposed to burdensome costs of arbitration as may be assessed against it by the arbi-trators regardless of the outcome of such acitration proceeding.
31.
In furtherance of its demand for initiation of an arbitration proceeding in reliance upon Section 8 of the General Requirements of Specificqtion 2555-76, JCp&L has selected and appointed William F. Hyland, Esq., as an arbitrator notwithstand-ing tlat in other matters in the past he reportedly has been and now is counsel for JCP&L.
32.
Without acknowledgment of any right of JCP&L to demand arbitration for reasons set forth in any of its aforementioned com-munications, including its letter of August 24, 1978, or waiver by Lonetgan of any legal right to oppose that domand by appropriate legal procedure, Lonergan has designated George F. Kugler, Jr., Esq.
as an arbitrator, conditioned however upon such obligation of Loner-gan, if any, to participate in an arbitration proceeding as shall be determined by final judgment of the Court in this proceeding. Such conditional designation has been necessitated as a precaution against default under the provisions of Section 8 of the General Requirements of the aforementioned Specification 2555-76 pursuant to which a single arbitrator designated by JCp&L would become the sole arbitrator in the absence of designation by Lonergan of an arbi-trator of its selection within thirty days after August 24, 1978 and in the event such arbitration is required by final judgment
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entered in this gudicial proceeding.
33.
Lonergan avers that it has no adequate remedy at law and equitable action to enjoin JCP&L from proceeding with, participating in or availing itself of any action or result incidental to the aforementionari arbitration proceeding in-itiated by it, is necessary to prevent irreparable loss, injury and damage to Lonergan.
WHEREFORE, plaintiff Lc aergan prays that:
+
(a) Defendant JCP&L be preliminarily until final hearing and thereafter permanently enjoined and restrained from invoking arbitration under clause 8 of General Require-ments section of Specification 2555-76.
(b) This Court grant Lonergan such other and further
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i relief as may be just and proper.
COUNT TWO Lonergan avers a separate cause of action against JCP&L 1
of which the following is a statement.
34.
Action under this Count Two is filed pursuant to 28 U.S.C.
the provisions of the Federal Declaratory Judgment Act, SS2201 et seq.
35.
The averments of paragraphs 1-33 inclusive are in-corporated herein by ref erance thereto.
36.
The various acts by JCP&L as aforesaid, including l
in particular invocation of arbitration procedure in contra-vention of both the terms and conditions of Lonergan invoice l
No. 008527 and the guarantee provision set -forth in Article 21,
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of Specification 2555-76 and the asscreion by JCP&L of claims for damage are causing,and except for ir.torvention by this Court restraining such unlawful acts of JCP&L and defining the rights of Lonergan and JCP&L, will cause irreparable in;ury to Lonergan for which it has no adequate remody at law.
WHLaLFGas, plaintiff Loncrgan prays that Lonergan have a judgment and Oecres of this Court declaring its rights and status, and more particularly ad udi-3 cating (a) That JCP&L has failed to afford Lonergan reasonable opportunity to make adjustments, and such repairs to or rectification of the valves purchased by JCP&L from Lonergan to such extent, if any, as Lonergan has any obliga-tion or responsibility frca doing so; (b) That the import of all terms and conditions of Lonergan Invoico No. 0C8527, together with JCP&L Purchase Order No. C-0052 and Specification 2555-76, are to be accorded full consideration and legal effcet in construing the contrac-tual rights and obligatians of JCP&L and Lonergan; (c) The demand by JCP&L for arbitration does not define any precise issue nor designate any precise subject matter for determination or settlement by arbitration or other-wise; (6) That there is no legal basis for JCP&L to invoke or demand arbitration for settlement of any alleged or existing dispute or difference with Lonergan; nor is there any arbi.ra;.le issue; (e) That under the f acts and circumstances of this -
1
case, either in an arbitration proceeding or otherwise, do the provisions of Lonergan Invoice No. 008527 nor of JCP&L Purchase Order No. C-0052 nor of Specification 2555-76 entitle JCF&L to recovery of consequential damages, nor is there any basis in law or fact for JCP&L to claim recovery of any consequential damages against Lonergan:
(f) That the Court adjudicate as a matter of law that the claim for damages i.sserted by JCP&L by virtue of its construc-tion of the terms of its contract is unconscionable, and the damage claim therefore is unenforceable under the provisions of 52-302 of the Uniform Cc=mercial Code.
(g) That JCP&L has no legal right to demand arbitration for reasons stated in communications to Lonergan as set forth in the complaint and such arbitration must therefore be enjoined; (h) That Lonergan complied with all of the terms and conditions of the contract for manufacture and sale of the valves, and at all times was ready, willing and able to make and accom-plish any and all adjustments in accordance with both its warranty and guarantee to assure proper performance of the valves in the JCP&L operating system.
(i) That Lonergan be granted such other and further relief as may be just and proper.
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HER>M J. OB$. 4 Gibbons, EustAce & Obert 1442 Fideli d B'uilding Philadelphia, Pa.
19109 (215) 735-4868 ~2 m-trw
' COMMOh'dEALTH OF 7ENNSYLVANIA :
SS:
COUNTY OF ??JCsSYLVANIA RICHARD X. ANDZRSCN, being duly sworn according to law, 4
deposes and says that he is President of N. E. Lonergan Company, a corporation, plaintiff-in r.he foregoing Complaint; that he is duly authorized to and does ako this affidavit on its behalf; and that the facts set forth in the foregoing Complaint which are within his personal knowledge are true and correct, and that the facts based upon the knowledge and information of others are 4
true and correct to the best of his information and belief.
l4 ' f f.*: 4 '^ s.c w -
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n RICHARD X. ANL;aSCN 3 worn to and subscribed
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before me this day of 6 ff/% dl 1978.
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MARGARCT M. TRACsY
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ITA E UCK ll% VOICE DAId
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we unoct em scone otxruerson Torst J,E. LONt aGAH'S 1.E p'TERS OF 10/1/69 & 7/8/70 QUOTATIONS 9023-H TIM PER 61 Ell RATE AMD TnAVE. EXPENSE IN ACCORDANCE Wisil TliC BID FORM ISOCUMENY.
ORIG illAL
' i 13.
4150;00 8X10X10 V-1019.
SAFETY VALVES k ]T-~
l' 27 u
SET 5 VALVES 1050 PSIG lI SPARE g
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4 VALVES 1102 PSIG x
b, ALL FMTE I ALS TEST s & luSPEy(IG;; WILL BE IN ECCORDAl!CE WITil 53950,00S EURHS & CE AND JE.C0 SPECIAL INSTRUCTIONS FOR T!!!S ORDER.
i MAIM STE 11 SAFETY '/ALVES IN ACCORDANCE WITH BURNS & R0lE,87
-.v-s IMC SPECIFIC. TION 2555:-76 AMENMENT NO. I DATED FECRUARY 18, 1 0 j_J n
AND AMEN MENT N0, 2 DATED A GUST' 3, 1970. -
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Jersey Central Power & Light Company MAossON AVINuE A PUNCH OOWL AcAo
- MeARIsroWN.N.J.C75GC
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July 19, 1978 Mr. R. M. Anderson President Lonergan Conpany P. O. Box 6167 Philadelphia, Pennsylvania 19115
Subject:
Three Mile Island Lhit #2 Main Stean Safety valves (Spec. 2555-76)
JCP&L Purenase Crder C-0052 Re f. :
CPUSC tetter MH-TM1 52-78 Dated June 27, 1978 Centlemen:
At our direction, cur Servics 00mpany previously formally advised you by its letter, dated June 27, 1978, that we hed found it necessary to reject the valves which you had supplied for Three Mile Island Nuclear Gene-cating Station Unit.No. 2 (TMI-2) because these valves did not conform to the specificctions established in the contrcet for such valves. This action was token only after you had been provided with every opportunity to bring the volves into conformity with the specificatiuns during a period of nore thr.n two months following the initial fail
'e of the vnives on April 23, 1970.
You wera also advised at that timo that ue were proceeding with the "rectifi-cation" providad for in the contract by making arrangaaento to replace the valves with those supplied by another ennuf acturer since the interests of our cust'omers require that TM1-2 be placed in commercial service at the earliest practicabic date.
I We judga from your letter, dated June 30, 1978, and telegram, dated July 17, 1976, that, notwithstanding the prior notification to you of i
our decision to replace your valvec, you hcve continued with your efforts l
to modify the valves in order to bring them into conformity with the speci-fications and that you expect that the tests which you are initiating on July 19, 1978 will demonstrate that your noat recent modifications have brought your valves into conformity with the contract. Even if successful, i
such bclated action will not rc=edy your prior breach of your obligations and warranties or relieve you of the consee.uences of such breach.
t EXIIIBIT "D"
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We should like to review with you the cdditional costs and expenses that we have incurred as a consequence of your contract breach and to make arrangements with you for your prompt reinoursement of such additicnol costs and expenses. We suggest that an ectly meeting should be schedulod to dis-cuss these and other matters you doe = relevcnt. For your information, portit me to a,dvise you that the personnel attending that meeting on our behalf would include representstives from the engineering, contrcet administration and legal functions.
If you will call Mr. Fred Clickman at (201) 263 l.900, Extension 262, he will arrange for our participation in such a meeting. I assure you that we shall give top priority to this matter.
Very truly yours, h1-g %wTr,w, C. P. DuFresne Director-Materials Management dea cc:
T. Glickman Vice-President CPUSC e
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o Jersey Car. tral Power & UF.t Capany t -
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Macson Avenwe a:Punca Row l Acao
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. Verr 4:own. New Jersey o,wuo
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(201)455 6200 I
' August 24, 1978 e
't.onorgan Comocny P. G. Box 6167 Philadelphia, PA 19115 Attention:
R. M. Anderson President
Subject:
Purchase C:dar C-CCS2
' Gentlemen:
We refer to Specification 2555-76 to Corsey Central Power &
Light Company's Purchase C: der C-CC52 covering the procurement from your company of main steam safety valves for inree Mile island Nuclear Station,
' Unit No. 2 and to our letter to you dated July 19, 1978.
't We have received a letter dated August 18, 1978, from Herman
.J. Obert, Esq., of the Philadelphia law firm of Gibbons, Eustace & Cbert, which asserts on your behalf that the valves which were furnished by your firm complied with all terms and conditions of the sale contract. We assume that Mr. Cbert's letter is intended by your firm as a reply to our letter. As you know -/;om our letter, and the related as lier cc :espond--
ence, we wholly disag:ce with the pcsitien asserted by Mr. Cbert on your behalf. Thus, there clearly exists between us a " dispute or difference" arising out of the purchasa order.
We reiterate the offer made by our letter of July 19, 1978, to review with you our claim for additional costs and expenses that we have incurred as a result of the failure of your valves to meet contract-ual standards. Since it appears from your communications that this matter will not be settled or adjusted t' cur sat.tsfaction, we hereby invoke the arbitration provision of our pure.ase order (Article 8 of Section IA cf the Specification) and advise you that we have oppointed as our arbitrator:
William F. Hyland, Esq.
Hiker, Danzig, Scherer, Debevoise & Hyland 744 Broad Street Newark, New Jersey C7102 i
JerseyCentralPower&UgkCompanyisa Memberof tneGenera P b:4 U:2es Sys'em
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EXHIBIT "Ea 4
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This le 9r constitutes the thirty-day notice prescribed by Article 6 and regi ;es you to notify us within thirty days after the date of this letter of the name and add css of the arbitrator appcinted by your company. Such notice should be given botn to the undersigned and to Mr. Hy2and.
Very truly yours,
?
A h
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r C. P. DaTresne Directcr-Materials Management da cca Herman J. Cbert, Esq.
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Mr. C. P. DuFresne Director-Materials Manager.3n:
Jersey Cen:ra; Power & Light Company Macison Avenue a: punch 3ow; goac Morristown, N. J.'
07960
Dear Mr. DuFresne:
nas con:, erred with me concerning he sale of certain ste v
uves unc.er terms of i:s ;nvoice 005527 ini:ia:ed by your Com.
Pany s Purchase Order C-0052 w.., al., terms and concitions of Go sa;e cen: act,The va;ves
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'*g' est of mu:ual consideration of the ma::c
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A would be pleased to co-'e w'- y~.
r on an amicah;c basis
,g mem.
e y c..er appropriate oers of your Company withou: PYCludice to or waiver by
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.er your Company or my, c; ion; of any of their respec:ive ;ega; e
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4 Yours very truly,
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l PURCHASE, O.RDER Jersey Central Power & Ught Company No. c-asz
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~l._ Jersey Central Power & Light Compar
_ - _.._.See original P.O..
,. Red Lica sload
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. Zoz 5167
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19115 L
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--c-50 w see original---- 945283' 8
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-PtEASE MAXE THE FOLLOWING CHANGE TO - 3
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~ ^^-3 7
PURCHASE-ORDER. -
-'THE-ABOVE-NUMSERED
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CUliCE NOTICE E0. 8 dated tieven:ber 21,' ~-
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.. n 1975s.Is issued to,P.o. _c-Cc52_in ordar_
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-f to accesaplish the f_olicwing:_.
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To cover the reworic of valve 15-323 as.
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reruired by-Deviation Esport 0493.
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This was recaired as a re.tulti of droppin;;
the valve during Enloading on~J61p 31f.--
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2'revious Total this Turchase..
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Eew Total this P.O.- :
2.__ $_66,700.00 _. _
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