/>iA federal judge in Michigan last week rejected a contractor’s efforts to avoid a jury trial this fall in its dispute with the owner of the Ludington Pumped Storage Hydro plant. The case involves a project to overhaul the 50-year-old plant, which uses electricity during periods of low demand (i.e. at night) to pump water into a reservoir. During periods of high demand (i.e. during the day), water is released from the reservoir through hydroelectric turbines that generate over 300 megawatts of electricity. The plant, located on the shores of Lake Michigan, is one of the largest pumped storage projects in the world.
The owner paid Toshiba American Energy Systems (“Toshiba”) over $500M to overhaul and upgrade the plant’s six units, which reopened between 2015 and 2019. The contract provided that Toshiba would return the plant as nearly to new condition as possible and allow the plant to operate with a minimum thirty-year service life with only minimal routine maintenance. Within a few years of reopening, the owner allegedly observed degraded metal in two of the units during a periodic inspection. The owner asked Toshiba and its parent company to repair the units, to no avail. The owner eventually hired another contractor, Voith Hydro, to assess Toshiba’s work and develop a repair plan and estimate. In 2022, the owner filed suit claiming that it could only operate two of the units approximately 50 hours per year due to Toshiba’s allegedly defective work. Among other alleged defects, the owner claims that Toshiba improperly removed certain stainless-steel components, selected unsuitable replacement materials, and used construction methods that caused excessive stress and cracking. The owner seeks to recover over $800M in damages in and prejudgment interest.
Toshiba moved for summary judgment on various grounds earlier this year. For example, Toshiba argued that the owner’s claims were precluded by Toshiba’s achievement of certain interim and final acceptance deadlines in the contract. It also argued that the language of the contractual warranty did not cover the type of damage at issue and did not allow the owner to recover future repair costs not yet incurred. Toshiba further argued that the owner’s claim for prejudgment interest was barred by the contractual waiver of consequential damages, which barred claims for “cost of money” and “loss of capital.” The court rejected all of those arguments. The court did rule in Toshiba’s favor on the limitation of liability clause under the contract, which generally limits Toshiba’s liability to the total price of the contract.
The case is Consumers Energy Co. et al. v. Toshiba America Energy Systems Corp. et al., 2025 WL 2250251, No. 22-10847 (E.D. Mich. Aug. 6, 2025). A copy of the court’s opinion is available here. The trial is set to begin October 28.
