US Nitrogen's Recovery Limited

By Walter F. Roche Jr.

A federal judge has ruled that US Nitrogen can collect no more than $2.2 million and not the more than $30 million claimed from an engineering firm that the Greene County firm hired to design its ammonium nitrate facility.
In a 19-page ruling issued this week, U.S. District Judge Michael L. Brown granted Weatherly Inc.'s motion for partial summary judgment.
In the suit filed in U.S. District Court in Atlanta US Nitrogen claimed that Weatherly's faulty design for the Midway facility forced it to remove and rebuild the concrete foundation holding compressors used in the manufacturing process.
Weatherly responded by citing provisions in the contract between the two firms that set a 15 percent cap on any damages US Nitrogen could recover.
In the ruling Brown noted that US Nitrogen contended that the concrete foundations cracked and could not withstand the dynamic motion of the compressors. In addition the chemical firm charged that certain piping systems designed by Weatherly were "incomplete and erroneous."
Weatherly, however, countered by citing the clause in their contract capping any damages at 15 percent of the original contract or $2.2 million.
Brown ruled that the cap was valid and binding despite US Nitrogen's claim that it was invalid under Georgia law. He concluded that the case cited by US Nitrogen's lawyers did not apply. In that case a third party was involved, but there was no third party involved in the dispute between US Nitrogen and the engineering firm.
"Two sophisticated parties drafted this provision," Brown wrote referring to the damage cap. Nor did it violate public policy, he added.
"The agreement between Weatherly and USN represents a reasonable allocation of risk between these two sophisticated businesses" Brown wrote, adding that the cap was enforceable. "There is no other plausible interpretation of the contract."
Brown also rejected US Nitrogen's claim that the cap should be $3.3 million based on the $20 million ultimately paid to Weatherly. But Brown said the cap provision was based on the original contract price of $14.69 million.
"Both parties scrutinized the language and ultimately approved it," the ruling states. "Weatherly is correct on all accounts," the ruling concludes.
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