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$7 million Dismissal Following Arbitration

Minneapolis, MN
Jun 29, 2017

Associated Electric & Gas v. Siemens Energy, Inc.

CASE RESULTS DEPEND UPON A VARIETY OF FACTORS UNIQUE TO EACH CASE. CASE RESULTS DO NOT GUARANTEE OR PREDICT A SIMILAR RESULT IN ANY FUTURE CASE.

The catastrophic failure of a Rolls-Royce “Trent 60” gas turbine at a power plant in Lowell, Massachusetts led to a warranty claim that was ultimately denied by Rolls-Royce. Despite the denial, the owners proceeded to repair the turbine and paid Rolls-Royce $7.09 million to do so. The plant owners’ insurers subsequently made a subrogation demand to Rolls-Royce for the cost of repair. At the time of negotiations over the demand, Siemens Energy acquired Rolls-Royce’s energy service business along with liability for the incident. When negotiations faltered, the insurers filed a complaint against Siemens for two counts of breach express warranty. 

Investigation revealed that the dispute was subject to a mandatory arbitration provision, and the Bowman and Brooke team successfully moved to compel arbitration and stay proceedings. After limited discovery, a motion for summary judgement was made, arguing that the warranty had expired at the time of failure and the Plaintiffs’ claims were time-barred. Arguments over the ambiguity of the warranty language (and specifically its expiration periods) and extrinsic evidence ensued, and following an initial attempt at settlement, the offer was rejected and a hearing with the arbitrator took place. Just one week after the arbitration, the arbitrator issued a ruling granting judgment in Siemens' favor and dismissing the case in its entirety. The arbitrator found that the warranty language was unambiguous and that the warranty lasted only until expiration of any one of the three periods as stated in Plaintiffs’ contract. 

Assoc. Elec. & Gas Ins. Serv. Ltd. v. Siemens Energy, Inc., No. 4:15-cv-01311 (S.D. Tex.) (McGunnigle, Arb.).

Plaintiff was represented by Grotefeld Hoffmann

Defendants were represented by Alana K. Bassin, William G. Childs and Isaac W. Messmore of Bowman and Brooke LLP


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