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Stone & Webster, Inc. v. Georgia Power Co.

United States District Court, District Circuit

August 30, 2013

STONE & WEBSTER, INC. et al., Plaintiffs,
v.
GEORGIA POWER COMPANY et al., Defendants.

MEMORANDUM OPINION

COLLEEN KOLLAR-KOTELLY, United States District Judge

This contract action comes before the Court following a highly choreographed “race-to-the-courthouse” in which the counterparties to an agreement concerning the design and construction of nuclear electrical generating units in Waynesboro, Georgia sought to file their mirror-image complaints first in the forum of their choice. On November 1, 2012, Plaintiffs Stone & Webster, Inc. and Westinghouse Electric Company LLC (together “Plaintiffs”) filed the instant [1] Complaint against Defendants Georgia Power Company, Oglethorpe Power Corporation, Municipal Electric Authority of Georgia, and the City of Dalton, Georgia (collectively “Defendants”), asserting claims for breach of contract and violation of the Georgia Prompt Payment Act, O.C.G.A. §§ 13-11-1 et. seq, arising from Defendants’ alleged refusal to agree to adjustments to the contract price and project schedule to which Plaintiffs claim they are entitled. That same date, November 1, 2012, Defendants filed their own action in Augusta, Georgia, in the United States District Court for the Southern District of Georgia, seeking a declaratory judgment that Plaintiffs are not entitled to the price and schedule adjustments for which Plaintiffs previously submitted change orders, as well as refunds of amounts paid by Defendants to Plaintiffs pursuant to the parties’ provisional payment agreement governing those change orders. See generally Georgia Power Co. et al. v. Westinghouse Electric Company LLC et al., Civ. A. No. 112-167 (S.D. Ga.) (JRH-WLB).

Presently before the Court are Plaintiffs’ [11] Motion to Enjoin the Prosecution of Defendants’ Duplicative Georgia Action and Defendants’ [13] Motion to Dismiss the Complaint, or in the Alternative, Stay this Action. Upon consideration of the parties’ submissions, [1] the applicable authorities, and the entire record, the Court shall DENY Plaintiffs’ motion to enjoin and GRANT Defendants’ motion to dismiss. Accordingly, this action is hereby dismissed, without prejudice, in its entirety.[2]

I. BACKGROUND

The disputes between the parties arise out of the design and construction of two nuclear electrical generating units at an electric generating plant in Waynesboro, Georgia (the “Project”). Defendants, who are the owners of the Project, and Plaintiffs, who collectively are the contractor on the Project, entered into an Engineering, Procurement and Construction Agreement (“EPC Agreement”), pursuant to which Plaintiffs allegedly agreed to design, engineer, procure, construct, and test the nuclear electrical generating units and related facilities and structures at the plant. Compl. ¶ 10.

The instant Complaint asserts claims for breach of contract and violation of the Georgia Prompt Payment Act, O.C.G.A. §§ 13-11-1 et. seq, arising from Defendants’ alleged failure to agree to adjustments to the contract price and project schedule to which Plaintiffs claim they are entitled. In essence, Plaintiffs claim that, subsequent to the effective date of the EPC Agreement, the United States Nuclear Regulatory Commission (“NRC”) imposed various unforeseen directives, requirements, and regulatory changes that required Plaintiffs to make substantial design changes (hereinafter “Regulatory Changes”), thereby incurring considerable cost and delay. Plaintiffs contend that the NRC-imposed Regulatory Changes they made constitute compensable changes under the terms of the EPC Agreement, entitling them to adjustments to the contract price and project schedule. See generally Compl. For their part, Defendants contend that the EPC Agreement requires them to pay Plaintiffs a fixed price for designing, building, and making the Project operational within a guaranteed time limit and that Plaintiffs’ invoices for amounts greatly exceeding the contractual fixed price are “unjustified.” Defs’ Reply at 3-4. Defendants further argue that Plaintiffs’ prayer for adjustments to the project schedule and contract price is simply a request for judicial modification of the EPC Agreement so that Plaintiffs will be relieved of liability for their delay on the Project and permitted to submit otherwise unjustified invoices associated with such delay. Id.

Prior to commencement of the instant action, Plaintiffs submitted written notices of the Regulatory Changes. Subsequently, the parties undertook mediation pursuant to the EPC Agreement, which requires the parties to first mediate all disputes under the contract and prohibits the commencement of a civil action until such mediation concludes. As both Plaintiffs and Defendants represent in their pleadings and supporting declarations, the parties were aware of the “first-to-file” race to the courthouse that would likely result upon conclusion of an unsuccessful mediation. See Pls’ Mem. at 8; Defs’ Mem. at 1. For this reason, the parties agreed that mediation would conclude at a date and time certain – specifically on November 1, 2012, at 8:00 p.m. – and that no lawsuit could be initiated before that time. Id. The events that ensued are of the kind scarcely encountered outside of the pages of a law school exam.

Plaintiffs filed the instant Complaint by way of this Court’s electronic filing system. Plaintiffs contend that they, through counsel, clicked the “submit” button at precisely 8:00:00 p.m. on November 1, 2012, according to the United States Naval Observatory Master Clock. Pls’ Mem. at 8-9; id, Ex. 9 (Decl. of Shawn Chick), ¶ 4; id., Ex. 10 (Decl. of David C. Smith), ¶ 4. The transaction log generated by the electronic filing system, a copy of which Plaintiffs have submitted with their motion to enjoin, lists “11/01/2012 20:00:01” as the “date” corresponding to the Complaint. Id., Ex. 11.

Defendants, to the contrary, opted to file their own complaint – which both parties describe as a “mirror image” of Plaintiffs’ Complaint in this Court, see Pls’ Mem. at 1; Defs’ Mem. at 1 – in person and manually in the United States District Court for the Southern District of Georgia (the “Georgia action”). According to the declaration of Defendants’ counsel, when both the minute hand and second hand on an iPhone clock indicated the time to be 8:00:00 p.m., counsel filed the Georgia action by simultaneously transferring possession of the original complaint and all requisite accompanying filings to the deputy clerk, whom noted the date (“November 1, 2012”) and filing time (“8:00 p.m.”) on the documents. Defs’ Mem., Ex B. (Decl. of Benjamin H. Brewton); see also Pls’ Mem., Ex. 1 (copy of original complaint in Georgia action).

In view of this duplicative litigation, Plaintiffs have filed a [11] motion requesting that the Court enjoin Defendants from prosecuting the Georgia action. In brief, Plaintiffs argue that this Court is the proper Court to hear the parties’ disputes regarding the Regulatory Changes because it is the court of the first-filed action and because, in any event, equitable considerations weigh in favor of this Court’s retaining jurisdiction over the dispute. Defendants, on the other hand, have filed a [13] motion to dismiss, arguing the inverse: that the Georgia action was filed first and that equitable considerations call for resolution of the dispute in the Southern District of Georgia. Alternatively, Defendants request that the Court stay the present action to permit the Southern District of Georgia to determine which court should hear the parties’ dispute.

II. LEGAL STANDARD

District courts have the discretion to dismiss a pending action when faced with parallel litigation of factually related actions filed in two separate forums. Handy v. Shaw, 325 F.3d 346, 349 (D.C. Cir. 2003). Indeed, as the Supreme Court has observed, “though no precise rule has evolved, the general principle is to avoid duplicative litigation” between federal district courts. Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976) (citations omitted). “The usual rule in this circuit has been that where two cases between the same parties on the same cause of action are commenced in two different Federal courts, the one which is commenced first is to be allowed to proceed to its conclusion first.” UtahAmerican Energy, Inc. v. Dep’t of Labor, 685 F.3d 1118, 1124 (D.C. Cir. 2012) (internal editing and citations omitted). However, the Court of Appeals has also warned against rigid application of the first-filed rule in cases where the second-filed action deserves priority. See Columbia Plaza Corp. v. Sec. Nat’l Bank, 525 F.2d 620, 627 (D.C. Cir. 1975). Stated differently, “the decisions recognizing the first-in-time rule note that ‘equitable considerations’ may weigh against applying it in particular cases.” UtahAmerican Energy, Inc., 685 F.3d at 1124 (citations omitted); see also Handy, 325 F.3d at 350 (“Although some courts make the determination [as to which district court should adjudicate the case] by using the so-called ‘first-to-file’ rule, we have emphasized that the district court must balance equitable considerations rather than using ‘a mechanical rule of thumb.’”).

One factor weighing against mechanical operation of the first-to-file rule and in favor of consideration of the equities of a particular case is where, as here, “the two suits were filed closely together in time.” Int’l Painters & Allied Trades Indus. Pension Fund v. Painting Co., 569 F.Supp.2d 113, 116 (D.D.C. 2008) (quoting Fed’n Internationale de Football Ass’n v. Nike, Inc., 285 F.Supp.2d 64, 67-68 (D.D.C. 2003)). Another important consideration in this balancing analysis is whether “the first-filing plaintiff has launched a ‘preemptive strike’ or declaratory judgment action in the face of an impending ... suit.” Nike, 285 F.Supp.2d at 67; accord Thayer/Patricolf Educ. Funding, LLC v. Pryor Res. Inc., 196 F.Supp.2d 21, 30 (D.D.C. 2002). Other equitable considerations may include whether “the first action was filed in the midst of good faith settlement discussions”; “whether the cases have progressed very far”; and “whether full, fair, and complete adjudication of all issues may be had before the present court[.]” Int’l Painters, 569 F.Supp.2d at 116 (internal citations and marks omitted). Courts also tend to consider the convenience and efficiency of proceeding in each forum. See e.g., Columbia Plaza, 525 F.3d at 627 (considering whether all parties are present in both cases; the location of witnesses; and the stage of the respective proceedings); Furniture Brands Int’l, Inc. v. United States Int’l Trade Comm’n, 804 F.Supp.2d 1, 7 (D.D.C. 2011) (deferring to parallel litigation in the Court of International Trade (“CIT”) because, inter alia, the CIT was far more familiar with the statutes at issue); Thayer, 196 F.Supp.2d at 32 (considering statement from the plaintiff that a third party witness willingly volunteered to participate in the inconvenient forum); Nike, 285 F.Supp.2d at 68 (“[T]he fact that a motion requiring expedited consideration has been filed only in the infringement action, and that precious time would be lost if that motion had to be refiled in the other court, argues in favor of allowing the second-filed action to proceed.”). Finally, at least one ...


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