Case 1:15-cv-02055 Document 1 Filed 09/18/15 USDC Colorado Page 1 of 7

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO
Civil Action No. _______________
GCUBE INSURANCE SERVICES, INC., a
California corporation;
Plaintiff,
v.
WELLONS, INC., an Oregon corporation,
Defendant.

COMPLAINT AND JURY DEMAND

Plaintiff, by and through its attorneys, Brad W. Breslau and Cheri L. MacArthur of Cozen
OConnor, complains as follows:
PARTIES, JURISDICTION AND VENUE
1.

Plaintiff is a California corporation with its principal place of business located at

3101 West Coast Highway, Suite 100, Newport Beach, CA 92663.

2.

Defendant is an Oregon corporation with its principal place of business located at

2525 West Firestone Lane, Vancouver, WA 98660. At all times relevant, Defendant conducted
business within the State of Colorado.
3.

At all times relevant, Plaintiff was and is an insurance services corporation acting

on behalf of certain Underwriters subscribing to Policy Number BM144333701 ("Policy"). Said

Policy insured Eagle Valley Clean Energy, LLC (EVCE), a Utah corporation, with respect to a
fire and explosion that occurred on or about December 13, 2014 at the EVCE cogeneration

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facility located at 10775 Highway 6, Gypsum, CO 81637 (fire and explosion). Plaintiff is an
assignee of all claims of those certain Underwriters subscribing to the Policy with respect to the
fire and explosion to the extent of payments made and to be made to and on behalf of EVCE
under the Policy.
4.

This Court has jurisdiction pursuant to 28 U.S.C. 1332, since diversity exists

between Plaintiff, on the one hand, and the Defendant, on the other hand, and the amount in
controversy is in excess of $75,000.00.
5.

Venue in this judicial district is proper pursuant to 28 U.S.C. 1391 as it is where

the acts giving rise to this lawsuit occurred.

GENERAL ALLEGATIONS
6.

On or about December 21, 2011, EVCE and Defendant entered into an Engineer,

Procure, and Construct contract for the design and construction of a wood-fired cogeneration
facility to be constructed in Gypsum, Colorado (the Project).
7.

On or about August 8, 2013, EVCE and Defendant entered into an

Amended and Restated Engineer, Procure, and Construct contract for the design and
construction of the wood-fired cogeneration facility to be constructed in Gypsum, Colorado
(EPC contract).
8.

The EPC contract provided, inter alia:

a.

Section I.A. Wellons Work shall be inclusive of and in all material

respects have the quality of, workmanship and materials consistent with
prevailing industry standards and practices for a newly built power system
of the nature contemplated hereunder.

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b.

Section VII.H.Experienced representatives are provided for a period of

up to one hundred and fifty (150) man-days, not including travel time, to
adjust and assist in commissioning and start-up of equipment and to
provide operator training. . . Wellons will provide bi-weekly reports of
man-days used for start-up and training, and will make additional time
available at its published rates upon Eagle Valleys request. . . Training
services are provided on-site, consisting of a combination of classroom
sessions and on-the-job training. Operating personnel will assist with
system commissioning as part of the training provided.

c.

Section XI.A.1. Wellons work shall include . . . (ii) all engineering and
design services in accordance with Eagle Valleys requirements and the
standard of care, skill and diligence as would be provided by a prudent
engineering firm experienced in supplying engineering services nationally
in the United States to power producing entities for projects of the
technology, complexity and size similar to the Project; (iii) commissioning
and testing of the Work; (iv) quality control checks on all aspects of the
Work; . . . and (v) managing (including an on-site construction
management team providing supervision of the Work) and completing all
aspects of the Work, all in accordance with the Contract Documents.

d.

Section XI.A.2. Wellons shall ensure the Work confirms to and is in

accordance with the specifications described in the Agreement, prudent
practices, applicable laws, applicable standards and permits in effect on
the date of the execution of this Contract.

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e.

Section XI.A.3. Wellons shall . . . train personnel to operate the

equipment as provided in the specifications."

f.

Section XI.C.4. Wellons shall be responsible for performing the Work:

(i) in a manner consistent with the obligations contained in Section
XI.A.1.; (ii) in a safe and expeditious and workmanlike manner; . . . (v) in
conformity with the terms of this Contract and consistent with practices,
methods, standards and performance of the Work in accordance with the
degree of judgment and skill that is ordinarily possessed and exercised by
(and generally accepted as being appropriate, for) nationally recognized
design, engineering and construction professionals of good standing and
who are performing work for projects which are of similar scope, nature
and complexity as to the Project. . . .

g.

Section XI.C.4. In the event Wellons does not promptly comply with its
repair and replace obligations described in the immediately preceding
paragraph, and without limitation or other remedies, Eagle Valley may
have: (i) such defective work corrected or repaired; or (ii) rejected work
removed and replaced. . . .

9.

As a result of the fire and explosion, those certain Underwriters subscribing to

Policy Number BM144333701, have made payments to and on behalf of EVCE for property
damage to the cogeneration facility and resultant loss of revenue, in the approximate amount of
$800,000. It is anticipated that additional monies will be paid. As a result of those payments,
Plaintiff, as assignee, is now equitably and contractually subrogated to the rights and claims of
EVCE to the extent of monies it has paid and will pay as a result of the fire and explosion.

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FIRST CLAIM FOR RELIEF

(Negligence)
10.

Plaintiff adopts and incorporates by reference all previous allegations as though

fully set forth herein.

11.

Defendant Wellons owed a duty to EVCE to perform its work in a reasonable and

safe manner.
12.

13.

Defendant breached that duty and was negligent in:

a.

Failing to perform its work properly;

b.

Its design of the Project;

c.

Its construction, assembly and installation of the Project;

d.

Its inspection of the Project;

e.

Failing to properly start-up and commission the Project; and

f.

Failing to supervise ongoing operations.

As a direct and proximate result of such negligence, the fire and explosion

occurred, causing EVCE damages in an amount to be proven at the time of trial.

SECOND CLAIM FOR RELIEF
(Negligence of Subcontractors)
14.

Plaintiff adopts and incorporates by reference its previous allegations and its First

Claim for Relief as though fully set forth herein.

15.

Defendant selected contractors, determined scope of work and supervised and

inspected the work of its subcontractors in connection with the construction, assembly and
installation of the Project.
16.

Defendant was negligent in selecting contractors and inspecting the work of its

subcontractors.

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17.

As a direct and proximate result of such negligence, EVCE was damaged in an

amount to be proven at the time of trial.

THIRD CLAIM FOR RELIEF
(Breach of Contract)
18.

Plaintiff adopts and incorporates by reference its previous allegations and its

claims for relief as though fully set forth herein.

19.

Defendant breached the contractual provisions of the EPC contract set forth

20.

EVCE substantially performed and substantially complied with its obligations

above.

under the EPC contract.

21.

As a result of Defendants breach of contract, EVCE was damaged in an amount

to be proven at the time of trial.

FOURTH CLAIM FOR RELIEF
(Breach of Implied Warranty of Workmanlike Construction)
22.

Plaintiff adopts and incorporates by reference its previous allegations and its

claims for relief as though fully set forth herein.

23.

Defendant impliedly warranted the Project would be constructed in a good and

workmanlike manner.
24.

Defendant breached said implied warranty.

25.

As a result of such breach of warranty, EVCE was damaged by Defendant in an

amount to be proven at the time of trial.

PRAYER FOR RELIEF
WHEREFORE, Plaintiff prays for relief as follows:
1.

For damages in an amount to be proven at trial;

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2.

For interest, costs and attorney fees allowable by law; and

3.

For such other and further relief as this court deems just and proper.
PLAINTIFF DEMANDS TRIAL BY JURY.

Dated this 18th day of September, 2015.

Respectfully submitted,
COZEN OCONNOR
s/ Brad W. Breslau
Brad W. Breslau
Cheri L. MacArthur
707 17th Street, Suite 3100
Denver, CO 80202
(720) 479-3900
(720) 479-3890 (fax)
bbreslau@cozen.com
cmacarthur@cozen.com
Attorneys for Plaintiff
Address of Plaintiff:
3101 West Coast Highway, Suite 100
Newport Beach, CA 92663