Luminant 2, Alcoa 0

No damages awarded from bench trial
By MIKE BROWN Reporter Editor

Final “score,” Luminant 2, Alcoa 0.

District Judge Ed Magre last Wednesday ruled in Luminant’s favor in a three-day bench (non-jury) trial that ended more than three weeks of high-level litigation.

Previously Luminant had prevailed in a half-billion-dollar jury trial.

Alcoa won’t receive $49.42 million in damages it had sought from Luminant in the bench trial over allegations the energy company failed to mine, or otherwise wasted, lignite at the Three Oaks Mine.

Magre also ruled that Luminant should finally get the Three Oaks mining permit from the Texas Railroad Commission.

Alcoa sold the mine to Luminant in 2007 but the mining permit had never changed hands from Alcoa to Luminant.

Luminant produced documents showing Alcoa contested the permit transfer.

‘No evidence’ of waste

“I find no reliable evidence of wasting usable lignite nor breach of the agency relationship nor any reliable damage estimates on the alleged wastings,” Magre said.

Key to the bench trial was Alcoa’s allegation that Luminant “wasted or destroyed” 2.2 million tons of lignite at Three Oaks between September, 2007, and June, 2009.

Attorneys for the aluminum company charged Luminant “misappropriated lignite from Alcoa-owned stockpiles,” sometimes in the middle of the night.

But Luminant countered that it made no economic sense for the power company to waste Three Oaks Fuel and filed a document containing the following:

“Conspicuously absent from Alcoa’s evidence is any indication of why it would ever be in Luminant’s...interest to trash fuel that could later be delivered to Sandow 5.

“Luminant just spent one billion dollars building Sandow 5, which will need a reliable source of fuel.”

Mine permit

Luminant produced documents showing Alcoa contested the Three Oaks permit transfer before the Texas Railroad Commission.

Luminant attorneys claimed Alcoa breached the sale contract agreement by blocking the mining permit transfer.

Magre ruled that Luminant, which has been mining lignite at Three Oaks for almost three years, is entitled to the permit.

‘Still open’

Alcoa has maintained it was still owed $3.9 million in “net book value” from the 2007 deal which saw t he mine change hands.

Purchase price, from court documents, was listed as $141,544,163.

Magre ruled the contract is “still open” and ordered the two companies into mediation.

Records access

Just as in the jury trial, Alcoa was granted access to Luminant records which the aluminum company said had been denied.

Magre again ruled that Alcoa was entitled to see records dealing with the selective catalytic reduction device (SCR) installed at Sandow Unit 4.

That was also ordered in the jury trial.


Now it’s up to Alcoa to decide whether to appeal one or both verdicts.

In the jury trial Alcoa had asked for $500 million in damages but instead was ordered to pay Luminant $10 million.

Luminant issued the following statement after the trial’s conclusion:

“We’re very pleased with the Court’s ruling that there is no evidence to support Alcoa’s claims related to Luminant Mining’s operation of the Three Oaks Mine,” Luminant Chief Executive Officer David Campbell said.

“Our mining and plant operations employees do outstanding work and as a company we place great importance on adhering to our contractual obligations, “he added.

“We are proud of our record at Three Oaks Mine and are committed to being a world-class operator at each of our facilities. The ruling affirms that,” Campbell said.

“We are pleased to have this litigation behind us and look forward to continuing our core mission of safely helping power Texas and sharing in the success of Milam County,” Allan Koenig, company spokesman, said.

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