Wahlcometroflex, Inc. v. Westar Energy, Inc.

Westar Energy, Inc. (defendant) owned a coal-fired power plant with three units. Wahlcometroflex, Inc. (Wahlco) (plaintiff) sold dampers for power-plant units. Westar needed to upgrade its three units, so it contracted with Wahlco to purchase new dampers for each of the three units. The contract provided that each of the three new dampers was to be delivered and installed on its respective unit by a specific date. The contract also emphasized that time was of the essence, and that any delay in the installation would result in Westar suffering damage and financial loss. In the event Wahlco failed to meet the installation dates, the contract provided that Wahlco would pay Westar 1.5 percent of the total contract price for each week of delay, not to exceed 10 percent of the total contract price, as liquidated damages. The contract made clear that this required payment in the event of delay was a form of liquidated damages instead of a penalty, and that it was added to the contract as a reasonable approximation of Westar’s loss because actual damages would be difficult, if not impossible, to determine. Wahlco delivered the dampers for the first two units two months after the required deadlines, and it delivered the damper for the third unit four months after the required deadline. Westar withheld partial payment to Wahlco on the ground it was entitled to liquidated damages under the contract. Westar sued in federal district court to recover this amount, and Wahlco counterclaimed for the liquidated damages. Wahlco and Westar filed cross-motions for summary judgment on the issue of liquidated damages. Westar argued that Wahlco was not entitled to liquidated damages on the ground that Wahlco had failed to demonstrate it had suffered any actual harm as a result of the delay. The district court agreed with Westar, granted its motion for summary judgment, and denied summary judgment to Wahlco. Wahlco appealed to the Tenth Circuit.