An American International Group Inc. affiliate and five other insurance companies claim Siemens Energy Inc. shirked its engineering oversight obligations for a steam turbine owned by policyholder NRG Energy Inc. and caused $20 million in damages, according to a suit removed to Texas federal court on Thursday.
An American International Group Inc. affiliate and five other insurance companies claim Siemens Energy Inc. shirked its engineering oversight obligations for a steam turbine owned by policyholder NRG Energy Inc. and caused $20 million in damages, according to a suit removed to Texas federal court on Thursday.
An American International Group Inc. affiliate and five other insurance companies claim Siemens Energy Inc. shirked its engineering oversight obligations for a steam turbine owned by policyholder NRG Energy Inc. and caused $20 million in damages, according to a suit removed to Texas federal court on Thursday.
Siemens signed a $4.6 million engineering services contract with NRG in connection with the construction, assembly and programming of the turbine. A Siemens engineer approved the positioning of the turbine's rotors and gave NRG the green light to proceed, but the turbine eventually broke down because the rotors were misaligned, according to the suit.
"The failure was caused or contributed to by an error in the initial …
... more [truncated due to possible copyright]An American International Group Inc. affiliate and five other insurance companies claim Siemens Energy Inc. shirked its engineering oversight obligations for a steam turbine owned by policyholder NRG Energy Inc. and caused $20 million in damages, according to a suit removed to Texas federal court on Thursday.
Siemens signed a $4.6 million engineering services contract with NRG in connection with the construction, assembly and programming of the turbine. A Siemens engineer approved the positioning of the turbine's rotors and gave NRG the green light to proceed, but the turbine eventually broke down because the rotors were misaligned, according to the suit.
"The failure was caused or contributed to by an error in the initial programming of the turbine, which prolonged the time during which the turbine was subjected to excessive vibration associated with the misalignment," the complaint says.
The contract requires Siemens to inspect or supervise the rotor alignment, properly program the turbine and advise NRG if there are any problems — all of which it failed to do, according to the complaint.
The insurance companies, which are seeking $20 million to cover NRG's business losses and property damages, are accusing Siemens of breach of contract and professional negligence.
The steam turbine was manufactured by Siemens and is part of a natural gas electrical generating unit that NRG uses at its Cedar Bayou Electrical Generation Facility just outside of Houston. The unit also includes a pair of Siemens gas turbines and heat recovery system generators, according to the suit.
NRG entered into the engineering services contract with Siemens after it bought the unit in May 2008 and Siemens approved the steam turbine for use in April 2009, according to the complaint. The failure occurred in March 2011, when the turbine was in startup mode and tripped off line after reaching 3,750 rotations per minute, the suit says.
The insurance companies, which include Lloyd's of London, Factory Mutual Insurance Co., Zurich American Insurance Co., Associated Gas & Electric Insurance Services Ltd. and Limited Arch Insurance Co. Ltd., in addition to AIG affiliate National Union Fire Insurance Co. of Pittsburgh, Pa., originally filed the complaint in Texas state court last month.
Siemens removed the suit to federal court on Thursday, claiming diversity jurisdiction because the insurance companies are located in several different states and countries.
A representative from Siemens was not immediately available for comment Friday.
The insurance companies are represented by Michael L. Foran, Brian G. Cunningham and Matthew P. Fortin of Foran Glennon Palandech Ponzi & Rudloff PC.
Siemens is represented by C. Thomas Kruse, James N. Nye, Alexander D. Burch and Robert W. Thielhelm Jr. of BakerHostetler.
The case is National Union Fire Insurance Co. of Pittsburgh, Pa. et al. v. Siemens Energy Inc., case number 3:13-cv-00115, in the U.S. District Court for the Southern District of Texas.