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Maui Electric Co., Ltd. v. Chromalloy Gas Turbine, LLC

United States District Court, D. Hawai'i

April 23, 2013

MAUI ELECTRIC COMPANY, LIMITED, a Hawaii corporation, Plaintiff,
v.
CHROMALLOY GAS TURBINE, LLC, a Delaware limited liability company, Defendant

Page 1036

For Maui Electric Company, Limited, a Hawaii corporation, Plaintiff: Diana R. Lotfi, LEAD ATTORNEY, PRO HAC VICE, Foran Glennon Palandech Ponzi & Rudloff PC, Newport Beach, CA; George M. Ferreti, James B. Glennon, LEAD ATTORNEYS, PRO HAC VICE, Frederick Todd Weston, PRO HAC VICE, Foran Glennon Palandech Ponzi & Rudloff PC, Chicago, IL; Max J Kimura, Michiro Iwanaga, Wayne M. Sakai, LEAD ATTORNEYS, Sakai Iwanaga Sutton Law Group, Honolulu, HI.

For Chromalloy Gas Turbine, LLC, a Delaware limited liability company, Defendant: Alan Van Etten, LEAD ATTORNEY, Deeley King Pang & Van Etten, A Limited Liability Law Partnership, Honolulu, HI; Stephen A. Wood, Kelley Drye & Warren LLP, Chicago, IL.

OPINION

Page 1037

ORDER DENYING DEFENDANT'S MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

Susan Oki Mollway, Chief United States District Judge.

I. INTRODUCTION.

This action concerns the destruction of a gas turbine owned and operated by Plaintiff Maui Electric Company, Limited (" MECO" ). MECO alleges that one of the high pressure turbine blades manufactured

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by Defendant Chromalloy Gas Turbine, LLC, was faulty and caused more than $4 million in damages. MECO asserts claims of negligence, strict liability, and negligent misrepresentation. Chromalloy seeks dismissal of this action on the ground that this court lacks personal jurisdiction. The court denies the motion.

II. BACKGROUND.

Chromalloy is incorporated in Delaware and has its principal place of business in Florida. See Declaration of Craig Haines ¶ 6, ECF No. 25-1. In addition to providing repairs and replacement parts for planes, Chromalloy " serves the industrial and marine gas turbine market." Id. ¶ 8. That is, it makes " after-market" parts for General Electric gas turbines, i.e., parts that can be installed after the turbines have already been purchased. Chromalloy indicated at the hearing that it sold turbine parts to companies like Jet Turbine Services, Inc., and TransCanada Turbine. At the time Chromalloy sold the parts, Chromalloy says that it did not know when and where these companies would resell and install them.

Beginning in 2003, MECO began retrofitting its General Electric turbines with Chromalloy parts and components, including Chromalloy's " nickel-based alloy single-crystal High Pressure Turbine blades." See Declaration of John Mauri ¶ ¶ 6-7, ECF No. 46-1. There is no dispute that this technology was used by multiple manufacturers or that Chromalloy only had a small percentage of the market for these parts. At the hearing on this motion, Chromalloy represented that it had up to 10% of the market for these parts.

MECO purchased the Chromalloy parts and components from Jet Turbine Services, Inc., which purchased them from Chromalloy. Id. ¶ 9. Jet Turbine Services then installed the Chromalloy parts and components in MECO's turbines. Id. For example, in May 2003, Chromalloy's high pressure turbine blades and vanes were installed in MECO's M-19 ESN-759 turbine. Similar blades and vanes were installed in MECO's M-16 ESN-481-669 turbine in February 2004. They were again installed on MECO's M--19 ESN-759 turbine in April 2007, when it was time to replace the Chromalloy parts from the 2003 installation. Id. Apparently, Chromalloy's high pressure turbine blades were also installed by Jet Turbine Services in another MECO turbine, ESN 481-677, in 2007. See id. ¶ 22. These are the parts that allegedly failed and caused damage in 2010. See Complaint ¶ 19; Motion to Dismiss at 4, ECF No. 24-4.

In January 2007, MECO sent its M-16 ESN 481-669 turbine to a Canadian company, TransCanada Turbine, for an overhaul. TransCanada discovered several cracks in the high pressure turbine blades of the ESN 481-669 turbine. See Mauri Decl. ¶ 11. TransCanada shipped the blades to Chromalloy's office in Nevada for inspection and repair. See Declaration of David Alan Lee, Jr., ¶ 14, ECF No. 25-3. Chromalloy examined the blades and, in February 2007, issued a preliminary report concerning the cracks. See Ex. 1 to Lee Decl., ECF No. 26-1. The preliminary report concluded that the cracks in the blades were caused by a " deposit of deleterious material onto the uncoated roots" of the blades. Id. The preliminary report noted that the high pressure turbine blade roots do not have a protective coating applied to them because coatings " are very brittle and would crack if in contact with the disk under the engine load. The crack would then propagate into the component and result in premature failure." Id. Lee says that, at a Western Turbine Users Conference in March 2007 in Arizona, Lee gave representatives from TransCanada and MECO a

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copy of the preliminary report. See Lee Decl. ¶ ¶ 17-19.

Chromalloy then asked an independent metallurgical engineer, Dr. Ramesh Kar, to examine the blades that had been sent to Chromalloy by TransCanada. See Lee Decl. ¶ 20. On or about April 11, 2007, Kar issued his report. See Ex. 2 to Lee Decl., ECF No. 27-1. Kar concluded that the cracks in the turbine blades " were caused by exposure of the non-protected dovetail regions of the blades to an aggressive service environment extremely high in sulfur (such as due to a gas leak or inadvertent exposure to hot diesel fumes)." Id. Kar concluded that " the distress cracks were unrelated to any material/manufacturing defects in the blades or improper fabrication/installation." Id.

In April 2007, Jet Turbine Services went to Maui to perform an overhaul of MECO's ECN 481-759 turbine. See Lee Decl. ¶ ¶ 21-22. According to MECO, Chromalloy was very interested in determining whether other blades in MECO's turbines had cracks in them. Chromalloy employees, Lee and Gary Noah, traveled to Maui to observe the overhaul. See Lee Decl. ¶ 22. Lee says the blades of the ESN 481-759 turbine did not have the same cracks as the ESN 481-669. Id. Lee also says that, while on Maui, he gave Jet Turbine Services and MECO a copy of Kar's report. Id. ¶ 23. Mauri says that he talked with Lee during this visit. See Mauri Decl. ¶ 13.

The Complaint alleges that, at some point in time, Chromalloy told MECO that the cracking of the ESN 481-669 high pressure turbine blades " was an isolated event requiring no further preventative measures for the remaining [high pressure turbine] packages on the other MECO GE turbine generators." See Complaint, ¶ 30(d) and ¶ 16 (" Chromalloy investigated the incident and represented to MECO that the failure in the GE turbine 481-669 was an isolated event." ). MECO alleges that, based on those representations, it " took no further preventative measures with its other GE turbines retrofitted with the identical [high pressure turbine] packages." Complaint ¶ 17.

In 2009, Chromalloy sent MECO a proposal to change out the high pressure turbine blades on the M-14 ESN 481-637 turbine. This proposal was accepted, and the work was completed in June 2009. See Mauri Decl. ¶ ¶ 14-15.

In 2010, Chromalloy sent MECO a similar proposal to change out the high pressure turbine blades on the M-14 ESN 481-669 turbine. This proposal was accepted, and the work was ...


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