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Exhibit 99.1
[AMERICAN ARBITRATION ASSOCIATION LETTERHEAD]
CONSTRUCTION INDUSTRY ARBITRATION TRIBUNAL
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In the Matter of the Arbitration between
Re: 51 110 00025 95
NL Industries, Inc.
and
Johnson Controls, Battery Group Inc.
and
Gould Electronics, Inc.
and
AT&T Technologies, Inc.
and
Rhone-Poulenc AG Co.
and
Burlington Northern Railroad, Co.
and
Exide Corporation
and
Canonie Environmental Services Corp.
(W.D. Nelson)
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AWARD OF ARBITRATORS
WE, THE UNDERSIGNED ARBITRATORS, having been designated in accordance
with the Arbitration Agreement entered into by the above-named Parties, and
dated May, 1992, and having been duly sworn and having duly heard the proofs and
allegations of the Parties, AWARD AS FOLLOWS:
1. Claimants NL Industries, Inc. et al. are hereby awarded the sum of FOUR
MILLION FIVE HUNDRED THOUSAND DOLLARS ($4,500,000.00) on its claim against
Respondent Canonie Environmental Services Corp.
2. The panel further finds the issues in favor of Counter-Respondents NL
Industries, Inc. et al. and against Respondent Canonie Environmental Services
Corp. on its counterclaim and therefore makes no award on said counterclaim.
3. Pursuant to the agreement of the parties it is ordered that the plant
and equipment on the premises shall be the property of Canonie Environmental
Services Corp. The Claimants NL Industries, Inc. et al. shall use their best
efforts to facilitate the release of said property to Canonie Environmental
Corp.
4. It is further ordered that the respective parties shall bear their own
costs of arbitration including attorney fees and disbursements.
5. The administrative fees and expenses of the American Arbitration
Association totaling SIXTEEN THOUSAND EIGHT HUNDRED EIGHTY FIVE DOLLARS AND
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[AMERICAN ARBITRATION ASSOCIATION LETTERHEAD]
SIXTY CENTS ($16,885.60) shall be borne equally between NL Industries, Inc. et
al. and Canonie Environmental Corp. Therefore, Canonie Environmental Corp.
shall pay to NL Industries, Inc. et al. the sum of ONE HUNDRED FIFTY SEVEN
DOLLARS AND TWENTY CENTS ($157.20).
6. The compensation of the neutral arbitrator totaling FIFTY TWO THOUSAND NINE
HUNDRED THIRTY NINE DOLLARS AND NO CENTS ($52,939.00) shall be borne equally by
NL Industries, Inc. et al. and Canonie Environmental Corp. Therefore, NL
Industries, Inc. et al. shall pay to the American Arbitration Association the
sum of ONE THOUSAND FOUR HUNDRED SIXTY NINE DOLLARS AND FIFTY CENTS
($1,469.50). Canonie Environmental Corp. shall pay to the American Arbitration
Association the sum of TWO HUNDRED NINETEEN DOLLARS AND FIFTY CENTS ($219.50).
7. This Award is in full settlement of all claims submitted to this
arbitration.
DATED: June 27, 1996 SIGNED: /s/ MEL R. JIGANTI
-------------------------------- ------------------------------
Hon. Mel R. Jiganti
DATED: June 27, 1996 SIGNED: /s/ NICHOLAS J. BUA
-------------------------------- ------------------------------
Hon. Nicholas J. Bua
DATED: SIGNED:
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Brad Figley, Esq. (dissenting)
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In the Matter of the Arbitration between
Re: 51 110 00025 95
NL Industries, Inc. et al.
v.
Canonie Environmental Services Corp.
DISSENTING OPINION
I certainly respect my colleagues on this arbitration panel. However, in my
judgment the award they have settled on is so fundamentally unfair that dissent
is required.
This is a complicated case with complicated issues. I will neither rehash the
evidence presented nor repeat the arguments persuasively advanced by counsel
for both sides. But I will briefly highlight the bases for this dissent.
The parties to this dispute worked together on the Gould Superfund site over a
number of years, NL Industries et al. as principal and Canonie as contractor.
During this time, their relationships were defined by three contracts: two
Professional Service Agreements (PSAs) and one Contract for Remediation
Services. This is a contracts case. The parties' respective rights and
obligations were governed by those contracts, taken in the context of their
intentions, their course of dealing and the outcome and practices of the
industry at the time. So should be the award in this case.
Unfortunately, my colleagues' award disregards the agreements made by the
parties, as established by critical elements of the evidence.
Claimants asserted damages totaling $16.9 million in five components: (1) Costs
to Complete, $10.5 million; the panel was unanimous that this claim was
unjustified. This leaves (2) "Defective Design", $3.7 million, (3) "Overhead",
$0.9 million, (4) "Retention", $0.9 million, and (5) "Additional Studies and
Site Management", $0.9 million ---- a total an additional $6.4 million.
The "Defective Design", "Retention" and "Additional Studies" assertions,
totaling $5.5 million, all necessarily are predicated on the position that
Canonie should have known that actual site conditions were dramatically
different than described in all previous investigation and design documents.
(There is no evidence that Canonie actually knew.)
Assuming for the sake of argument that Canonie should have known (a position I
believe to be in serious error), the question then is when and where did this
duty arise? The evidence established that all of Canonie's activities that
could or "should" have led to this knowledge were conducted under the PSAs, as
was substantially all of Canonie's design work.
What necessarily follows if the terms of the PSAs are honored? First, this
arbitration panel has no purview, no jurisdiction, over issues based on the
PSAs, since these agreements contain no provisions for arbitration. Second,
the PSAs contain one-year limits on assertion of claims -- the claims that
Canonie should have known and that the design was defective appear to be
untimely. Third, the PSAs expressly state the parties' agreement, consistent
with customs and practices of
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the industry, that Canonie would rely on prior investigative work -- thus there
was no duty by which they "should have known".
All of which leaves the $0.9 million for "Overhead" as the only damages
remaining that might be assessed against Canonie, a claim that itself was
unsupported by the evidence. How does this become a $4.5 million award?
In fairness, the circumstances of this case should have resulted in an award to
Canonie. An award to Claimants is profoundly unjust, unsupported by the
evidence and inconsistent with the agreements freely bargained by the parties.
At the extreme, the evidence might support a denial of damages to either party.
My colleagues have gone well beyond this extreme. I dissent.
Respectfully submitted,
/s/ BRAD S. FIGLEY 6/27/96
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Brad S. Figley, Arbitrator June 27, 1996