United States District Court, W.D. Kentucky, Owensboro Division
ADA-ES, INC. PLAINTIFF
BIG RIVERS ELECTRIC CORPORATION DEFENDANT
MEMORANDUM OPINION AND ORDER
H. MCKINLEY JR., DISTRICT JUDGE.
matter is before the Court on Plaintiff's Motion for
Partial Summary Judgment [DN 59], Defendant's
Cross-Motion for Partial Summary Judgment [DN 63],
Defendant's Rule 56(d) Motion [DN63], and Plaintiff's
Motion to Strike the Sur-Reply Portions of Defendant's
Reply [DN 66]. Fully briefed, these matters are ripe for
decision. For the following reasons, Plaintiff's Motion
for Partial Summary Judgment is DENIED,
Defendant's Cross-Motion for Partial Summary Judgment is
GRANTED, Defendant's Rule 56(d) Motion
is GRANTED, and Plaintiff's Motion to
Strike is DENIED.
to the Complaint, Plaintiff ADA-ES, Inc.
(“ADA-ES”) contracted with Big Rivers Electric
Corporation (“Big Rivers”) for the engineering,
manufacturing, and delivery of equipment and materials for a
Dry Sorbent Injection System (“DSI System”). [DN
20 ¶ 7]. Pursuant to a requirement of the Request for
Quotes (“RFQ”), ADA-ES posted an irrevocable
standby letter of credit in the amount of $807, 651.00
through CoBiz Bank in Denver, Colorado, to serve as security
for performance under the contract. [Id. ¶ 11].
In accordance with the contract, ADA-ES engineered,
manufactured, and delivered a DSI System, which was
incorporated into a power plant owned by Big Rivers.
[Id. ¶ 13]. The purpose of the system was to
inject a powdered sorbent into the power plant system where
exhaust gas is produced to bind with, capture, and sequester
the pollutant, Sulfur Trioxide gas (“SO3”),
created from the burning of fuel. [Id.]. In other
words, the DSI System was to be used to reduce SO3 emissions
to a specific level. [Id.].
to the contract documents-the RFQ, the contract, and the
purchase order [DN 63-1 ¶ 17]-“Performance
Guarantee Test Procedures” were to be mutually agreed
upon and provided by ADA-ES 75 days after notice to proceed
was granted by Big Rivers. [DN 20 ¶¶ 14- 15]. These
procedures were to provide guidelines for Big Rivers'
testing of the DSI System after delivery and installation. On
or about January 8, 2016, ADA-ES provided Big Rivers with the
DSI Performance Test Procedure. [DN 20-7]. Those guidelines
were incorporated into the final protocol for the test
program, named CleanAir Protocol. [DN 20-8, 9, 10].
March 2016, after the DSI System was installed and the
performance test guidelines were finalized, Big Rivers
conducted its first performance test on the DSI System. [DN
20 ¶ 19]. Big Rivers claimed the system failed the test
by failing to reduce the amount of SO3 emissions to less than
five parts per million (ppm)-the contractually agreed upon
reduction-when a specified amount of sorbent was consumed
under specified conditions. [Id. ¶ 20].
Thereafter, Big Rivers notified ADA-ES of the failed test.
ADA-ES responded that “it disagreed with Big
Rivers' conclusions about the test, and informed Big
Rivers that the way to cure the alleged problem was to use
the High Reactivity Hydrated Lime as called for in the Test
Procedures and the CleanAir Protocol.” [Id.
¶ 22]. Big Rivers conducted a second test in June 2016
using a sorbent it claimed satisfied the contract's
requirement and informed ADA-ES that the system again failed
the performance test. [Id. ¶ 23].
on the failed performance tests, Big Rivers issued a claim
for damages in the amount of $605, 458.78, “which
constituted its quantification of damages and asserted a
right to both actual and liquidated damages for the same
alleged performance breach.” [Id. ¶ 24].
Big Rivers thereafter withheld $563, 382.56 of contract
payments. Additionally, Big Rivers withdrew the entire $807,
651.00 letter of credit funds, using the same basis it used
to justify the withheld contract payments. [Id.
11, 2017, ADA-ES filed an Amended Complaint alleging Fraud
(Count I), Unjust Enrichment (Count II), Breach of UCC
Warranties (Count IV), Breach of Contract (Count V), and
seeking Declaratory Judgment as to seven claims (Count III).
[DN 20 ¶¶ 35-77]. In July 2018, ADA-ES filed the
instant Motion for Partial Summary Judgment requesting that
this Court grant declaratory judgment in its favor as to two
of the seven claims-the contractually-permissible damages and
the contractually-required sorbent to be used in the DSI
System. [DN 59 at 1]. Big Rivers responded opposing
ADA-ES's Motion as to both claims, filing its own Motion
for Partial Summary Judgment as to the
contractually-permissible damages, and filing a Rule 56(d)
Motion asking the Court to deny or defer ruling on
ADA-ES's Motion as it pertains to the
contractually-required sorbent until further discovery could
be conducted. [DN 63]. ADA-ES filed in a single document its
Reply in support of its initial Motion for Partial Summary
Judgment, a Response to Big Rivers' Cross-Motion for
Partial Summary Judgment, and its Response in opposition to
Big Rivers' Rule 56(d) Motion. [DN 64]. In what would
have been the final filing, Big Rivers filed its Reply in
support of its Cross-Motion for Partial Summary Judgment and
its Rule 56(d) Motion. [DN 65]. However, ADA-ES took issue
with the substantive arguments made by Big Rivers' in its
Reply. Accordingly, ADA-ES filed a Motion to Strike the
portions of Big Rivers' Reply that, in its opinion,
constituted a sur-reply. [DN 66]. Big Rivers responded that
its Reply consisted only of appropriate arguments and, as
such, requested that the Court deny the drastic remedy sought
by ADA-ES in its Motion to Strike. [DN 67]. The final brief
in this long saga was filed November 9, 2018-ADA-ES's
Reply in support of its Motion to Strike. [DN 69].
Standard of Review and Law
the Court may grant a motion for summary judgment, it must
find that there is no genuine dispute as to any material fact
and that the moving party is entitled to judgment as a matter
of law. Fed.R.Civ.P. 56(a). The moving party bears the
initial burden of specifying the basis for its motion and
identifying the portion of the record that demonstrates the
absence of a genuine issue of material fact. Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986). Once the
moving party satisfies this burden, the non-moving party
thereafter must produce specific facts demonstrating a
genuine issue of fact for trial. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 247-48 (1986).
the Court must review the evidence in the light most
favorable to the non-moving party, the non-moving party must
do more than merely show that there is some
“metaphysical doubt as to the material facts.”
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio
Corp., 475 U.S. 574, 586 (1986). Instead, the Federal
Rules of Civil Procedure require the non-moving party to
present specific facts showing that a genuine factual issue
exists by “citing to particular parts of materials in
the record” or by “showing that the materials
cited do not establish the absence . . . of a genuine
dispute[.]” Fed.R.Civ.P. 56(c)(1). “The mere
existence of a scintilla of evidence in support of the
[non-moving party's] position will be insufficient; there
must be evidence on which the jury could reasonably find for
the [non-moving party].” Anderson, 477 U.S. at
Court will address first the Motion to Strike followed by the
motions regarding partial summary judgment.
ADA-ES's Motion to Strike Sur-Reply [DN 66]
Big Rivers' Reply pertaining to its Cross-Motion for
Partial Summary Judgment and its Rule 56(d) Motion, ADA-ES
filed a Motion to Strike the Sur-Reply Portions of that
Reply. [DN 66]. ADA-ES contends that Big Rivers improperly
asserted substantive arguments regarding whether the contract
required high reactivity hydrated lime for performance
testing in its Reply. [Id. at 1]. Specifically,
ADA-ES argues that Big Rivers disguised substantive arguments
as a Rule 56(d) Reply which instead should be used to show
the Court why additional discovery is necessary prior to a
summary judgment ruling-“a blatant effort to get the
last word on ADA-ES's motion that had already been fully
briefed.” [Id. at 3-4]. ADA-ES requests that
the Court strike the sur-reply portions of Big Rivers'
Reply or, in alternative, allow oral argument on ADA-ES's
Motion for Partial Summary Judgment. [Id. at 4]. Big
Rivers responded that its Reply was clearly related to its
Rule 56(d) Motion, specifically discussing the need for
additional discovery on the type of lime sorbent to be used
in the performance tests of the DSI System. [DN 67 at 3-7].
ADA-ES retorts that Big Rivers' Reply argued why it
believed the contract unambiguously warrants a decision in
its favor, an impermissible argument for a Rule 56(d) filing.
[DN 69 at 1].
Rivers correctly notes that Rule 12(f) of the Federal Rules
of Civil Procedure governs motions to strike pleadings. That
Rule provides that “[t]he court may strike from a
pleading any insufficient defense or any redundant,
immaterial, impertinent, or scandalous matter.”
Fed.R.Civ.P. 12(f). “Motions to strike under Rule 12(f)
are addressed within the sound discretion of the Court,
although they are generally disfavored.” Hashemian
v. Louisville Reg'l Airport Auth., No. 3:09-CV-951,
2013 WL 1788473, at *5 (W.D. Ky. Apr. 26, 2013) (citing
Ameriwood Indus. Intern. Corp. v. Arthur Andersen &
Co., 961 F.Supp. 1078, 1083 (W.D. Mich. 1997) (internal
citations omitted)). “Striking a pleading is a drastic
remedy to be resorted to ...