Subject: RE: Foster Wheeler suggested language for delay damages
From: [email-masked]
To: [email-masked]
Date: Wed, 5 Sep 2001 06:03:29 -0700 (PDT)

Can we talk about this today?

-----Original Message-----
From: Brownfeld, Gail 
Sent: Thursday, August 30, 2001 1:45 PM
To: Sanders, Richard B.
Cc: Schwartzenburg, John
Subject: FW: Foster Wheeler suggested language for delay damages

	How do we handle something like this?  In my old world, it used to be that a litigation manager at corporate would have to be involved in something like this pretty much regardless of whether the local guy thought it was under control or not.  Is that the case still? Should I tell Dave to send the file?

-----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
[email-masked] or [email-masked]

-----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
[email-masked] or [email-masked]

		-----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:[email-masked]
<mailto:[email-masked]> 

		-----Original Message-----
		From: Greatrix, Garry [mailto:[email-masked]]
<mailto:[mailto:[email-masked]]> 
		Sent: Wednesday, August 29, 2001 6:47 AM
		To: [email-masked] <mailto:[email-masked]>
; [email-masked] <mailto:[email-masked]> ;
[email-masked] <mailto:[email-masked]> ;
[email-masked] <mailto:[email-masked]> ; [email-masked]
<mailto:[email-masked]> ; ltoth@nepcan <mailto:ltoth@nepcan>  .com;
[email-masked] <mailto:[email-masked]> ; 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