Arkansas SC affirms $9.8 million damage award to El Dorado Chemical Co.

By Chris Rizo | Apr 18, 2008

Arkansas Supreme Court

LITTLE ROCK, Ark. (Legal Newsline)-The Arkansas Supreme Court has upheld a $9.8 million jury award to El Dorado Chemical Co. for damages the Oklahoma-based company sustained in a fire caused by a faulty piece of equipment.

The Ingersol-Rand Co. and Dresser-Rand were found by a lower court to be negligent in rebuilding a hot gas expander at the plant, located in El Dorado, Ark.

On Oct. 8, 2004, the rebuilt expander failed and leaked oil onto hot equipment and started a fire that destroyed the plant, where El Dorado produces ammonium nitrate fertilizers, industrial grade explosives and industrial acids.

The only issue on appeal was whether Circuit Judge Carol Crafton Anthony erred in refusing to enforce a limitation-of-liability clause allegedly contained in the contract between the companies.

Before the work began, Dresser-Rand said it faxed El Dorado a letter explaining it must agree to its "Terms of Sale and Conditions for Parts and Equipment," which was on the back of the letter.

El Dorado Chemical received and signed the letter, but the back page was blank.

At trial, Ingersol-Rand Co. and Dresser-Rand argued the limitation-of-liability clause in the contract with El Dorado limited the company's award to the amount of the contract price, which was $119,854.

However, the high court disagreed in a unanimous decision Thursday written by Associate Justice Robert Brown.

"Because the limitation-of-liability clause was not clearly and specifically made part of the parties' contract, the circuit court did not err by refusing to enforce it as a matter of law," Brown wrote.

From Legal Newsline: Reach reporter Chris Rizo by e-mail at chrisrizo@legalnewsline.com.

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