Free Affidavit - District Court of Connecticut - Connecticut

Case 3:00-cv-00834-SRU

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Filed 01/27/2005

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THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT STEWARDMACHINE CO, INC.

CIVIL ACTION NO. 3 :OOCVOO834(SRU)

Vo

WHITE OAK CORPORATION AND NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH,PA.

JANUARY 25, 2005

AFFIDAVIT OF J. LESTER ALEXANDER, III, IN OPPOSITION TO MOTION FOR SUMMARY JUDGMENT
STATE OF ALABAMA COUNTY OF JEFFERSON) ) )
SS.

BIRMINGHAM

JANUARY 25,2005

J. Lester Alexander, III, being duly sworn, state as follows: I am over the age of eighteen (18) years and believe in and understand the

obligationsof anoath. 2.
At all times relevant, I have been, and still am, a Cf:rtified Public

Accountantandthe President ManagingPrincipalof AEA Group,LLC, a consulting and finn specializingin accounting, economic appraisal and consulting. 3
I have been retained and disclosed as an expert witness f(]lr the Plaintiff

StewardMachine Company("Steward'); and in that capacityprepareda report dated September 2003, and a supplemental 15, report dated September 2004, detailing my 2,

:,

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expert opinion as to the economic costs incurred by Steward as a result 0:[ the storage of

the White Oak machinery.Copiesof the narrativesectionsof both reportsare attached heretoasExhibits A andB.
4,

The methodology I used to determine damagesassociatedvrith the storage

of White Oak machinerywas to establish benchmark normal operatingefficiencies a of of Stewardwhennot affectedby the presence the White Oak machinery. of

5.

This benchmark was used to determine the number of exc(~ss labor hours

required of Steward while storing the White Oak machinery.

6.

Steward's accounting records were used to deteffi1ine the actual cost

associated with the excess laborhours.
7. I investigated the causesof excess labor hours and eliminat(:d or mitigated

the excess labor hours that could be attributable to causes other than White Oak.

Examples of causesthat are not attributable to White Oak are jobs whose scope materially increased (more than 15%)andjobs or portions of jobs that were fabricated elsewhere,Theseitems were removedfrom the damagecalculationbecause they would haveskewedthe results. 8.
Using this method, the total costs incurred by Steward as ;i result of the

storage the White Oak machinery of are: EconomicCostsincurredby the Fabrication MachineShops and
1)

Variablecostsbasedon laborhours Fixed shopcost Overhead cost

~;1,160,202 s: 262,656
~; 300.246

2) 3)

2

A.

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Total EconomicCosts 4) Reasonable Profit margin
Total costs and profit

$1,723,104
$ 172.447

$1,895,551

EconomicCostsfrom Steward'sStorage Record Job
1)

Direct Material Cost Direct Subcontractor Cost
Total Materials & Subcontract

$ 13,580 ;G 6.405
:& 19,985
~& 119,580

2)

3) 4)

Laborcosts
Variable costs based on labor hours

~~ 292.134
~~431,699

Total

report.Copiesof thoseschedules attached are heretoas ExhibitsC andD.
The $1,895,551 of total costs incurred by the fabrication and machine

shops,togetherwith the profit on thosecosts,is whathasbeenreferredto in the courseof
discovery as the "business interruption and inefficiency claim".

10.

The $431,699for the economiccostscapturedby Stewardon its storage

job record is what has been referred to during the course of discovery, a~:the "costs of storage", There are no labor hours recorded in Steward's storagejob recorcl for the entire

yearof 1997or for the first threeandone-halfmonthsof 1998.
11

The total of thesefigures, $2,327,250 the total economiccost incurred is

by Stewardasa resultof the storage the White Oak machinery. of

3

9. B.

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12.
the storage of the White Oak machinery.

Dated at Birmingham, Alabama, this 25th day of January, 2005.

Sqbscribed and sworn to before me this 25th day of January, 2005.

f

':

/"\
Notary Public

NOTARY pUBLIC STATE OF ALABAMA AT LARGE

MY COMMISSION EXPIRES: Mar IS, 200S
BONDED THRU NOTARY pUBUC UNDERWRITERS

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