Company wants Steel of W.Va. suit moved to federal court

HUNTINGTON -– AMI G.E. has removed to federal court a suit Steel of West Virginia filed against it in which Steel of West Virginia claims it lost more than $500,000 in profits and in costs for repairs after a transformer at its plant failed.

Steel of West Virginia filed suit against AMI G.E., the company that made the transformer, on Nov. 25 in Cabell Circuit Court.

The problems began after AMI upgraded the transformer and restarted in on Nov. 29, 2006, according to the complaint.

The following day, on Nov. 30, the transformer experienced a tap changer failure because electrical arcing occurred between the tap changer electrical currents, the suit states.

"Although the tap changer gearbox indicated that the tap changer was appropriately contacted with the tap, it was assumed that, rather than the new PLC having failed, the tap changer had failed because, after the November 30 tap changer failure, AMI reported that the PLC was properly functioning and was fit for continued use," the suit states.

After AMI declared the PLC was properly functioning, Steel of West Virginia tested the tap changer's mechanical functions multiple times and put the transformer back in service on Dec. 9, 2006, the company claims.

However, after eight hours, "a catastrophic failure occurred severely damaging the tap changer and requiring the Transformer to be removed from Plaintiff's facility and shipped to GE Energy's service center in Buffalo, N.Y., for repairs," the suit states.

There are two transformers at the plant, each of which supply electric power to the plant's two furnaces.

That electricity heats up scrap metal, Steel of West Virginia claims.

Copper coils that are wound around a laminated iron core power the transformers, according to the complaint.

"The current flows from the source to the primary input coil windings and is converted to magnetic energy which is conducted by the core to the secondary output coil windings," the suit states. "The magnetic energy generates a voltage in the secondary coil windings which is output to the electrodes."

There are points in Steel of West Virginia's transformer called taps that allow the current to flow through less than the full number of turns before the current passes to the electrodes.

That results in lower voltage to the electrodes, Steel of West Virginia claims.

When voltage needs to be increase, a tap is connected along a point in the winding containing more turns, according to the complaint.

The upgraded transformer had a no-load tap changer, the suit states.

"The tap changer is designed such that it can make tap connections only when the Transformer is not subject to an electrical load," the suit states.

The previous tap changer attempted to change taps while the transformer was electrically loaded, Steel of West Virginia claims.

The Dec. 9 transformer failure occurred because the new PLC system AMI designed and installed caused the tap changer to attempt to change tap contact while the transformer was under electric load, according to the complaint.

After sending the transformer to GE in Buffalo, Steel of West Virginia was told the transformer would be returned to the company by May 2007, so it authorized the repairs, the suit states.

However, because of further damage, the transformer was not repaired and returned to Steel of West Virginia until April, the company claims.

AMI breached its contract by failing to design, manufacture and deliver a PLC that would function properly when installed, by failing to adequately and completely investigate the requirement for the design of the PLC, by failing to inform Steel of West Virginia that the PLC would not perform as promised and by failing to provide the necessary labor, materials, equipment or services necessary for proper execution of the company's contract order, according to the complaint.

AMI breached its warranty that the PLC was reasonably fit for its intended use when it was not, the suit states.

AMI was negligent in its performance of engineering services by failing to meet the degree of skill and learning reasonably expected of an engineer who specialized in transformer voltage regulation, according to the complaint.

AMI also negligently failed to determine that the PLC was causing the tap changer to make contact changes while under electrical load, reported the PLC properly functioning after the Nov. 30 tap changer failure when it was not and allowed Steel of West Virginia to continue using the PLC to control the tap changer after the Nov. 30 failure, the suit states.

In the five-count suit, Steel of West Virginia is seeking a judgment in its favor and against AMI.

In its notice of removal, AMI G.E. claims the suit should be removed to federal court because the parties in the suit are residents of two different states and because Steel of West Virginia is seeking damages in excess of $500,000.

Steel of West Virginia is represented by Michael E. Lang and Ray F. Middleman of Malone, Middleman.

AMI G.E. is represented by James F. Neale of McGuireWoods in Charlottesville, Va.

U.S. District Court case number: 3:09-0005