Babcock & Wilcox Company v. Hitachi America, Ltd.

406 F.Supp. 2d 819 (2005)

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Nature of the Case

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Facts

P designed and installed at a coal-fired electrical power plant and one of the key components of the SCR system was a catalyst used to convert nitrogen oxide (NO[x]) into nitrogen (N[2]) and water (H[2]O) vapor, thus reducing the nitrogen oxide emissions from the power plant. P subcontracted with D for the design and supply of this catalyst. In its complaint, P asserts claims for: (1) breach of contract; (2) breach of express warranty; (3) breach of implied warranty of fitness for a particular purpose; and (4) breach of the obligation of good faith and fair dealing. Each party claims that the contract arose at a different point during the negotiations. As a result, the parties disagree on the precise terms of the contract, specifically as relates to the applicable performance guarantee, warranty, and remedy provisions. On December 9, 1999, D sent a letter, dated December 9, 1999 ('Hitachi Price Quotation'), and a revised technical specification, dated December 8, 1999 ('BHK Specification'). D maintains that this proposal was an offer that P later accepted with its June 15, 2000 purchase order. In contrast, P claims the proposal was merely one communication in a series of initial negotiations. D's Quotation lists a price for the catalyst, as well as a proposed delivery date and payment terms. D expressly limited the validity of the quote until December 10, 1999. After that time, it was subject to D's confirmation. The document contained clear disclaimers of warranty as well as limitations on liability…being the only recourse for D to repair or replace the equipment free of charge. Responding to the December 9, 1999 proposal, P sent a 'Letter of Intent' to D. P claims this communication 'confirmed the intent of P to enter into a contract with D. The letter identified certain terms that the parties had allegedly agreed upon and other terms that remained open. In the section listing the open terms, P wrote, 'Terms & Conditions: P to provide a response to Hitachi America's comments,' apparently referring to D's proposed warranty and limitation of liability terms. D signed this letter on December 29, 1999, and indicated that it 'agreed to the open issues.' The parties continued to negotiate various terms, including the price of the catalyst. Finally, in May 2000, the parties agreed upon a final price of $ 2,300,000 for the catalyst. P issued a detailed purchase order and contends that this document was an offer rather than an acceptance. The 'Terms and Conditions' section refers to the Purchase Order as an offer and sets forth means of acceptance. D maintains that the 'Terms and Conditions' are merely form language, appearing on the seventh and last page of the Purchase Order. D further claims that the true intent of the parties was that the Purchase Order constitute an acceptance of D's December 9, 1999 proposal. D claims that the terms and conditions relating to warranty and performance guarantee that it proposed in the December 9 letter are controlling. D reviewed the terms of the order and neither objected to nor raised any concern about the terms and conditions stated in the Purchase Order. D points out that it did not sign the acknowledgment form that accompanied the Purchase Order. P experienced trouble allegedly stemming from either a catalyst defect or an insufficient supply of catalyst. When D refused to provide extra catalyst, P had to turn to an outside vendor. B&W now sues D for its alleged failure to provide catalyst conforming to D's proffered performance guarantees. Both parties moved for summary judgment.