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Construction Lien Dispute an HPIB Process Unit

Accumyn project management specialist Robert James and chemical engineer Carl Bradow were hired by counsel for a major surety to provide an expert opinion of its position in a matter involving contractor liens on materials and equipment.  After the bankruptcy of the owner of a High Purity Isobutylene (“HPIB”) unit constructed in Pasadena, Texas, several contractors had claimed removal of their installed improvements. .  Accumyn’s research, analysis, and testimony in deposition and at court, resulted in denial of more than 80% of the contractors’ claims.

As background, counsel made the Accumyn’s experts aware of unique statutes governing the issues in the case.   Specifically, under certain circumstances, Texas law on liens and removables allows contractors to remove materials and equipment from a facility as compensation for non-payment.  The law requires that removal operations will not result in material injury to (i) the land, (ii) the pre-existing improvements, or (iii) the improvements themselves.

Accumyn was charged with provision of expert opinions in reports and testimony on construction and process technology issues that may arise in the case.  James addressed aspects of physical removal; Bradow addressed impact to plant operations.  A third party expert was engaged to opine on the value of removed material.

The three parties claiming removal of materials and equipment were the boiler supplier, the piping supply and install contractor, and the instrumentation and electrical (“I&E”) contractor.  More than $3.08 million was at stake.

Two site visits were made the experts, counsel, and   representatives of past and present owners of the HPIB unit.  Interviews were conducted and photos were taken.   Expert reports opined on (i) the ability of materials and equipment to be removed without damage to itself or to pre-existing improvements, and (ii) the market value of materials at installation and once removed.

As the trial date approached the I&E contractor relinquished its $1.45 million claim, evidently realizing upon review of expert reports and deposition transcripts that removal of instrument tubing, conduit and wire could not be removed without material self-damage and damage to pre-existing improvements. The boiler and piping fabricator maintained their positions and the matter went to trial in the United States Bankruptcy Court, Southern District of Texas, Houston Division.   The piping fabricator’s $1.10 million claim was denied.  In addition to a negative finding on the validity of that contractors’ lien, the Court found Accumyn’s expert to be a credible witness and gave “substantial weight” to his testimony.

The Court discounted the testimony of the pipe contractor’s expert witness to a certain extent, giving only “some weight” to his testimony.  Credibility had been reduced by the expert’s failure to conduct more than a five-minute drive-by at the plant.

The Court found the boiler equipment in question was situated in a manner that allowed removal under the statute and ruled a claim of $533,000 unpaid billings be awarded to the boiler supplier.  In sum, the sureties liability in the bankruptcy matter was reduced by $2.55 million.