Celanese, Ltd., f/k/a Hoeschst Celanese Chemical Group v. Waste Management Industrial Services

Background

Celanese purchased a new, $12 million acrylic acid reactor from DWE, a German designer/manufacturer. Prior to startup, scale, an oily residue and rust were found in the reactor. Celanese tried to bum off the oily residue by heating up the reactor. Next, Celanese tried wire brushing. Celanese then hired Waste Management Industrial Services (“WM”) to water blast.

When none of these methods proved successful, Celanese hired WM to chemically clean the reactor, which has 44,000 vertical tubes and 88,000 welds. The dispute focused on corrosion found after the chemical cleaning and coating (by WM) and the drying (by Celanese). Accounts varied, but estimates of 10% to 25% of the weld surfaces were removed by either atmospheric corrosion (WM argued), chemical cleaning or coating (Celanese argued) or drying (WM argued). The reactor leaked after drying, and Celanese heated the reactor up several more times to identify leaking welds, eventually spending $1.7 million to repair the welds. The reactor was supposed to startup on Dec. 8, 1997, but did not startup until April 8, 1998. The reactor has been operated since the repairs, but accounts vary as to its reliability. Celanese purchased another reactor, which cost $23 million, including installation costs. Celanese argued it was a “replacement” reactor, while WM argued that Celanese planned to add a sixth reactor, as well as a seventh and eighth in the year ahead, according to pre-incident marketing plans.

WM argued that Celanese left the vessel exposed to Gulf air, causing corrosion before cleaning. WM also argued that Celanese subjected the reactor to excessive temperatures and excessive temperature heat-up and cool-down rates before and after cleaning.

Verdict Information

Jury apportioned 50% negligence on Plaintiff and 50% on Defendant. The jury found no breach of contract or fraud. Awarded: $1,700,000 actual damages. ($850,000 after reduction for comparative fault)