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UNITED STATES v. PALL CORP.

November 30, 1973

UNITED STATES of America, Plaintiff,
v.
PALL CORPORATION and LFE, Inc., Defendants


Judd, District Judge.


The opinion of the court was delivered by: JUDD

JUDD, District Judge.

This action for breach of contract is before the court on the motion of defendant Pall Corporation, before answer, to dismiss the complaint as barred on its face by the statute of limitations.

 The Complaint

 The complaint was filed on January 9, 1973. It recites that four pumps were purchased in 1965 by Consolidation Coal Company from Integral Motor Pump Corporation, a subsidiary of Pall, for use in the construction and operation of a coal-to-liquid fuel pilot plant. The specifications which preceded the purchase order and were made known to Integral called for the pumps to be designed to handle a hydrogenated coal extract under pressure of 5,000 psig at 875 degrees F. Consolidation was operating under a cost-plus-fixed-fee contract with the Office of Coal Research of the United States Department of Interior. The complaint states that Integral was informed of the fact that all equipment including these pumps would become the property of the United States.

 The purchase order was issued by Consolidation in Pennsylvania, requiring delivery to the pilot plant in West Virginia. The pumps were manufactured in Connecticut and shipped directly to West Virginia.

 The pumps were delivered between November 30, 1965 and March 7, 1966. They failed repeatedly, necessitating substantial expense for repairs and redesign and causing considerable plant downtime.

 The complaint asserts that Integral knew that the pumps did not meet the specifications, but misled Consolidation and the United States and hindered them from discovering the inadequate specifications of the pumps until December 12, 1968.

 The named defendants are sued here because Integral was dissolved on July 29, 1966 and its assets and liabilities were transferred to Pall, which in turn sold certain assets on October 31, 1967 to Laboratory for Electronics, Inc. (sued herein as LFE, Inc.).

 The government reimbursed Consolidation for the cost of the pumps and all other sums claimed in the complaint and received an assignment of the claim of Consolidation on October 1, 1972.

 The second count of the complaint charges that LFE undertook repair of the pumps knowing that they could not meet the required specifications.

 The original cost of the pumps was $34,700. The complaint asks damages of about $659,000 from Pall, and $10,000 from LFE.

 Other Facts

 After a series of extensions, Pall Corporation moved to dismiss the complaint under F.R. Civ. P. 12(b) (6) on the ground that the complaint shows that the right of action did not accrue within four years before the commencement of the action. The time for LFE to answer or move has been extended until after the determination of Pall's motion.

 The United States filed a written opposition to the motion, reciting (1) that the claims had been assigned to the United States less than four years after the discovery of the alleged misrepresentation, and (2) that the United States had contractual claims of its own, governed by a separate federal six-year statute of limitations. An affidavit of William F. Schula, an engineer employed by Continental Oil Company, the parent of Consolidation, was attached to the government's opposition. Mr. Schula stated that he was at the pilot plant from October 1967 to February 1971 and that he first learned on December 12, 1968 from an engineer then working for a division of LFE, that the pumps had been designed for water service at only 2,500 pounds per square inch at 650 degrees F. and that it was very doubtful they could ever meet the specifications of 5,000 pound per square inch and 850 (sic) degrees Fahrenheit.

 Pall asserts in documents attached to its supplemental memorandum, that four pumps were shipped to Integral by Consolidation on August 25, 30, and 31 and September 7, 1967 to be ...


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