Offshore Marine Contractors, Inc. v. Palm Energy Offshore, L.L.C. et al

Filing 243

ORDER AND REASONS: CMWS owes $249,750.00 to OMC in outstanding charter fees for the L/B Nicole Eymard for the period between July 15 and July 27, 2008 plus 1.5 percent prejudgment interest to each invoice to run from the date 30 days after the i nvoice was issued. HCR in turn owes $249,750.00, also with prejudgment interest, to CMWS. FURTHER: CMWS owes $432,125.00 to OMC in outstanding charter fees for the L/B Nicole Eymard for the period between July 27 and August 18, 2012, with 1 .5 percent prejudgment interest on each invoice to run from the date 30 days after the invoice was issued. PEO in turn owes $432,125.00, also with prejudgment interest, to CMWS. FURTHER: CMWS owes PEO the reasonable attorneys' fees and cos ts that PEO incurred in defending against OMC's claims regarding the West Delta 55 job, repair costs, and downtime charter, as well as the fees it incurred in bringing the crossclaim against CMWS for indemnity. The Court refers the issue of the amount of attorneys' fees and costs that PEO can recover to Magistrate Judge Daniel Knowles for a report and recommendation. Signed by Chief Judge Sarah S. Vance on 10/7/2012. (NEF: Mag (3))(Reference: 10-4151)(mmm)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
OFFSHORE MARINE CONTRACTORS,
INC.

CIVIL ACTION

VERSUS

NO: 10-4151

PALM ENERGY OFFSHORE, LLC AND
CHET MORRISON WELL SERVICES,
LLC

SECTION: R(3)

ORDER AND REASONS
I.

INTRODUCTION
This dispute arises out of outstanding charter fees for and

damages sustained by a vessel when it became lodged in the seabed
while plugging a well in the Gulf of Mexico. Plaintiff Offshore
Marine Contractors, Inc. (OMC) owns a fleet of lift boats used in
oil well operations. On October 29, 2010, OMC sued defendants
Palm Energy Offshore, LLC (PEO) and Chet Morrison Well Services,
LLC (CMWS), for failure to pay for the charter of one of OMC's
vessels, the L/B Nicole Eymard.1 OMC also sued the defendants for
breach of a separate oral agreement that defendants allegedly
formed with plaintiff after one of the legs of the vessel became
stuck.2 Under the terms of this alleged agreement, defendants
promised to pay plaintiff for repair costs and lost charter fees

1

R. Doc. 1.

2

Id.

if plaintiff cut the legs of the vessel to free it.3
CMWS filed a counterclaim against OMC alleging that the crew
of the L/B Nicole Eymard failed to exercise proper care in
manning the vessel during the period in question, and further
alleging that OMC owed indemnity to CMWS for any liability by
virtue of an agreement between OMC and PEO.4 PEO filed a
crossclaim against CMWS asserting that CMWS was responsible for
the charter fees and that CMWS was required to indemnify PEO
against OMC's claims pursuant to an agreement between CMWS and
PEO.5 CMWS in turn filed a counterclaim against PEO asserting
that PEO was responsible for the charter fees and was required to
indemnify CMWS under the agreement between the two companies.6
Finally, CMWS filed a third-party complaint against H.C.
Resources, LLC ("HCR"), contending that any losses suffered by
OMC were the result of HCR's negligence and breach of contract.7
HCR moved for summary judgment on CMWS's claims against it, and
the Court granted the motion and dismissed HCR from this suit on
December 11, 2012.8

3

Id.

4

R. Doc. 10.

5

R. Doc. 26.

6

R. Doc. 27.

7

R. Doc. 30.

8

R. Doc. 113.
2

CMWS also filed a separate suit against HCR and PEO on
December 12, 2012, alleging that if CMWS were found to have
chartered the L/B Nicole Eymard, HCR and PEO were obligated to
pay Chet Morrison the cost of the charter, plus a 15% markup and
interest for untimely payments. The complaint further alleged
that the failure of HCR and PEO to pay the charter fees
constituted a breach of contract. That case, captioned Chet
Morrison Contractors, LLC v. Palm Energy Offshore, LLC and H.C.
Resources, LLC, No. 2:12-cv-02973, was consolidated with this
suit per the Court's February 6, 2013 order.9
On June 24-25, 2013, the Court conducted a bench trial on
the claims of the parties. The Court has original jurisdiction
over the claims pursuant to 28 U.S.C. § 1333, as the actions
arise from maritime contracts. See 28 U.S.C. § 1333 ("The
district courts shall have original jurisdiction, exclusive of
the courts of the States, of [a]ny civil case of admiralty or
maritime jurisdiction . . . ."). After hearing live testimony and
reviewing all the evidence, the Court rules as follows.

II.

BACKGROUND
OMC is a Louisiana company that owns and operates a fleet of

self-elevating liftboats in the Gulf of Mexico.10 The facts

9

See R. Doc. 140.

10

See, e.g., Testimony of Raimy Eymard.
3

giving rise to this suit concern two jobs undertaken by one of
OMC's liftboats, the L/B Nicole Eymard, during the summer of
2008. The first was a plugging and abandonment (P&A) operation at
the Chandeleur 37 wells, which are owned by defendant HCR.11 The
second was a response to a well control event at the West Delta
55 wells,12 which are owned by defendant PEO.13 After performing
the West Delta 55 job, the Nicole Eymard was unable to move off
location because one of its legs had become stuck. Divers cut the
leg in order to free the vessel, and it then returned to port to
undergo repairs. The parties dispute who is responsible for (1)
the charter hire for the two jobs, (2) the charter fees incurred
while the vessel was being repaired ("downtime charter"), and (3)
the cost of the repairs.

III. THE CHANDELEUR 37 JOB
A. Chronology of Events
William Gray, 50% owner of Palm Energy Partners, LLC (which
in turn owns defendant PEO),14 was the court-appointed manager of
the wells owned by HCR during the period in question, including

11

Uncontested Material Fact #1.

12

This area is occasionally misidentified in the parties'
submissions as West Delta 54.
13

Uncontested Material Fact #3.

14

Uncontested Material Fact #6.
4

those at the Chandeleur 37 block.15 Gray asked his partner
Jonathan Garrett, the other co-owner of Palm Energy Partners, to
assist HCR with a P&A operation at the Chandeleur 37 wells.16 In
early July 2008, Garrett informed John Dale Williams, the
president of defendant CMWS,17 that work was needed at the
Chandeleur 37 wells.18
Williams in turn requested a quote for charter of a lift
boat from Avis Bourg III, OMC's vice-president of sales and
marketing, who had previously contacted Williams in an effort to
solicit business for OMC.19 Bourg III gave a price of $19,000 per
day for the L/B Nicole Eymard,20 and Williams agreed to charter
the vessel.21 Williams confirmed the truth of this account in his
deposition: he explicitly stated that after Bourg III gave him a
price, Williams, acting on behalf of CMWS, decided to hire OMC
for the Chandeleur 37 job.22

15

Uncontested Material Fact #8.

16

Testimony of Jonathan Garrett; William Gray.

17

Testimony of John Dale Williams.

18

Testimony of Jonathan Garrett.

19

Testimony of Avis Bourg III; John Dale Williams.

20

OMC Exhibit 1; Testimony of Avis Bourg III.

21

Testimony of John Dale Williams.

22

Id. At trial, Williams recanted this portion of his
deposition testimony. The Court does not find Williams' trial
testimony credible to the extent that it conflicts with his
5

Following the conversation with Williams, Bourg III executed
a work order for the Chandeleur 37 job.23 The work order, dated
July 15, 2008, identified the customer as "Chet Morrison/Well
Division/Palm" and the customer representative as "John Dale
Williams." The dayrate for the vessel was listed as $19,000, and
the duration and offload dock were both designated "TBA."24 An
OMC employee apparently forwarded the work order to Williams.25
Williams in turn forwarded it to Garrett on the morning of July
15 in an e-mail with the subject line "FW: OMC Job Report – Chet
Morrison."26 The e-mail reads, "Jon, I will have them bill you
direct to avoid any markup. Please send me the billing
information for HR and address the way you want it to appear."27
Garrett immediately responded with HCR's address.28 Garrett
testified that his original intent was for HCR to pay CMWS for
the liftboat, but that Williams offered to have OMC bill HCR
directly in order to avoid CMWS's 15% markup.29 Garrett explained

deposition testimony and other evidence in the record.
23

See OMC Exhibit 1.

24

Id.

25

PEO Exhibit 3.

26

Id.

27

Id.

28

Id.

29

Testimony of Jonathan Garrett.
6

that the cost savings associated with this arrangement made it
attractive to HCR, which was in bankruptcy. He also stated,
however, that the direct billing conversation did not change the
party chartering the vessel -- in other words, OMC was still
working for Chet Morrison, not for HCR.30 Garrett never discussed
the direct billing arrangement with anyone from OMC.31
OMC initially billed CMWS for the services of the Nicole
Eymard at the Chandeleur 37 block.32 OMC eventually billed PEO
for this work instead,33 but only after Michele Hammons of CMWS
directed Kim Pitre of OMC to do so on September 25, 2008.34
From July 15 to July 27, 2008, the L/B Nicole Eymard was on
location in the Chandeleur 37 block performing decommissioning
activities.35 CMWS's field supervisor, Randy LaFleur, was the
only individual on board the L/B Nicole Eymard (besides the
vessel's crew) from the date of the charter, July 15, 2008, until
July 17, 2008.36 On July 17, LaFleur was joined by four other

30

Id.

31

Id.

32

See OMC Exhibit 4 (invoice dated July 31, 2008 to Chet
Morrison the "NICOLE EYMARD WORKING AS DIRECTED" from July 15,
2008 through July 31, 2008).
33

OMC Exhibit 5.

34

OMC Exhibit 6.

35

Uncontested Material Fact #5.

36

OMC Exhibit 3.
7

representatives of CMWS.37 The Daily Master's Logs reflect that
LaFleur served as the "Company Representative" for CMWS while on
board the vessel.38
OMC contends that CMWS chartered the vessel from OMC for the
Chandeleur 37 job and hence that CMWS owes it charter fees for
that job. CMWS argues that was acting on behalf of PEO and/or HCR
when it hired the barge, and thus that one of those entities is
responsible for any outstanding charter fees.
B. Applicable Law
Admiralty law principles govern the maritime contract
disputes in this case. Int'l Mar., LLC v. Delta Towing, LLC, 704
F.3d 350, 354 (5th Cir. 2013). State contract law principles may
also be applicable, to the extent they are not inconsistent with
admiralty law. Ham Mar., Inc. v. Dresser Indus., Inc., 72 F.3d
454, 459 (5th Cir. 1995).
A charter is formed when the parties have a meeting of the
minds on the essential terms of the charter. E.A.S.T., Inc. of
Stamford, Conn. v. M/V Alaia, 673 F. Supp. 796, 799 (E.D. La.
1987). Maritime law generally regards oral charters as valid and
enforceable. See, e.g., Kossick v. United Fruit Co., 365 U.S.
731, 734 (1961). An oral charter "may be implied from

37

Id.

38

OMC Exhibits 2-3.
8

circumstances concerning the actual possession and use of a
vessel." St. Paul Fire & Mar. Ins. Co. v. Vest Transp. Co., Inc.,
666 F.2d 932, 939 (5th Cir. 1982). The party seeking to enforce
another party's performance under a contract must prove the
existence of the contract by a preponderance of the evidence.
Kessler v. Popich, 240 F. App'x 618, 621 (5th Cir. 2007).
Moreover, in Louisiana, an oral contract with a value of more
than $500 must be proven by at least one witness and other
corroborating evidence. La Civ. Code art. 1846. "The plaintiff
himself may serve as the witness to establish the existence of
the oral contract. . . . But, the other corroboration must come
from a source other than the plaintiff." Suire v. Lafayette CityParish Consol. Gov't, 907 So.2d 37, 58 (La. 2005) (internal
citations omitted). The corroborating evidence "need only be
general in nature." Id. Whether a contract exists between two
parties is a question to be determined by the trier of fact.
Price Farms, Inc. v. McCurdy, 42 So.3d 1099, 1104 (La. Ct. App.
2010). Thus, the Court must consider the testimony and
documentary evidence and determine whether OMC formed an oral
charter for the L/B Nicole Eymard with CMWS, HCR, or PEO.
C. Analysis
The documentary evidence, as well as testimony of
representatives of OMC, PEO, and HCR, support a finding that CMWS

9

was the charterer of the vessel.39 Although Williams stated at
trial that was acting on behalf of PEO when he negotiated the
charter hire with Avis Bourg III, he explicitly stated in his
deposition that he had hired OMC on behalf of CMWS, not on behalf
of PEO.40 Avis Bourg III's testimony is consistent with the
account Williams gave in his deposition.41 Moreover, OMC prepared
a job report to memorialize the agreement between Bourg III and
Williams that lists the customer as "Chet Morrison/Well
Division/Palm" and the Customer Rep as "John Dale Williams."42
Bourg III testified that his usual practice in filling out job
reports is to put the name of the contractor (that is, the
charterer), followed by a backslash, and then the name of the
operator (that is, the well owner).43 This was done as a
convenience to the contractor, which might have several jobs in
progress simultaneously with the same liftboat company and would
need a way to keep them straight.44 Thus, the job report suggests

39

Testimony of Jonathan Garrett; John Dale Williams; Avis

Bourg III.
40

Testimony of John Dale Williams.

41

Testimony of Avis Bourg III.

42

OMC Exhibit 1.

43

Testimony of Avis Bourg III. OMC mistakenly thought
that PEO owned the Chandeleur 37 wells, which were in fact owned
by HCR. See R. Doc. 1 at 3. OMC did not name HCR as a party to
this suit.
44

Testimony of Avis Bourg III.
10

that OMC was working for CMWS, which was in turn working for HCR,
the owner of the well.
While there were discussions between Williams and Garrett
concerning a direct billing arrangement, Garrett stated that the
arrangement did not alter the contractual relationships among the
parties.45 Even more importantly, the evidence suggests that any
discussions about direct billing never reached OMC until after
the charter had been executed. Bourg III had no contact with PEO
or HCR about hiring a liftboat for the Chandeleur 37 job.46
Furthermore, Williams forwarded the job report to Garrett with
the subject line "OMC Job Report – Chet Morrison" and indicated,
"I will have them bill you direct to avoid any markup,"47 and
Garrett stated that he had intended to have HCR pay CMWS for the
charter hire until he received this offer from Williams. The
timing of this e-mail exchange, combined with Williams' use of
the future tense ("I will have them bill you direct), suggest
that Williams had not discussed direct billing with OMC when he
originally arranged for the charter hire. Indeed, HCR is
mentioned nowhere in OMC's documents concerning the charter of
the vessel for the Chandeleur 37 job.48 And OMC in fact initially

45

Testimony of Jonathan Garrett.

46

Testimony of Jonathan Garrett.

47

PEO Exhibit 3 (emphasis added).

48

Testimony of Jonathan Garrett.
11

billed CMWS for the job.49 OMC redirected the invoice for the
work on the Chandeleur 37 block in September, at CMWS's request,
in what OMC characterized as an accommodation for its customer.50
CMWS relies on the direct billing agreement reached between
Garrett and Williams to argue that it was not the charterer of
the vessel, but to no avail. Under Louisiana law, even if HCR
agreed to assume CMWS's obligation to pay the charter fees, that
agreement does not release CMWS from its obligation to OMC. See
La. Civ. Code art. 1821 ("An obligor and a third person may agree
to an assumption by the latter of an obligation of the former. .
. . The obligee's consent to the agreement does not effect a
release of the third person.").
Accordingly, OMC is entitled to recover charter fees from
CMWS for the period between July 15 and July 27, 2008, when the
L/B Nicole Eymard was on location at the Chandeleur 37 block.
CMWS has argued that, if it is found to have chartered the
L/B Nicole Eymard, it is entitled to pass on the charter fees to
the well owner, along with a 15% markup. Based on the testimony
of Williams and Garrett regarding direct billing, as well as
their July 15 e-mail exchange, the Court finds that HCR agreed to
assume ultimate liability for the charter fees. Williams proposed
a direct billing arrangement whereby HCR would pay OMC directly,

49

OMC Exhibit 4.

50

Testimony of Raimy Eymard.
12

and Garrett responded by sending Williams HCR's address. This is
fairly construed as an agreement by Williams that HCR would pay
OMC for the charter fees. Accordingly, CMWS is entitled to
recover the fees for the Chandeleur 37 job from HCR.
CMWS may not, however, add a markup. While there is
testimony stating that the custom in the industry is for the
contractor to pass along costs for materials to the well owner,
along with a markup,51 the record is devoid of evidence that HCR
and CMWS reached any such arrangement. Indeed, as noted above,
the evidence suggests that Williams told Garrett that he would
have OMC bill HCR directly in order to avoid the markup.52
In sum, the Court holds that CMWS is liable to OMC for the
charter fees incurred between July 15 and July 27, and HCR is in
turn liable to CMWS for the full amount of those fees.
IV. THE WEST DELTA 55 JOB
A. Chronology of Events
On July 27, 2008, Garrett contacted John Dale Williams of
CMWS to request that the L/B Nicole Eymard proceed to the West
Delta 55 block, owned by defendant PEO,53 to pump cement into a

51

Testimony of Jonathan Garrett.

52

Testimony of Jonathan Garrett; John Dale Williams.

53

Uncontested Material Fact #3.
13

well that had experienced a well control event.54 Williams
admitted that he gave the new location to his crew on the barge
and that the ship then set out for West Delta 55 to perform the
work.55 Williams also testified that he passed along the
information about the new job to Bourg III, who agreed to keep
the vessel out working in the Gulf.56 Williams maintained that
the West Delta 55 project was supposed to be another direct
billing arrangement,57 but Garrett testified that direct billing
was never discussed.58 Bourg III did not remember the specifics
of his conversations with Williams.59
The parties dispute who chartered the Nicole Eymard for the
West Delta 55 job. CMWS maintains that Williams was acting on
behalf of Palm when he arranged for the vessel to proceed to the
West Delta block, while PEO and OMC contend that CMWS remained
the charterer throughout the barge's voyage.
B. Analysis
The Court finds, based on the testimony and documentary

54

Testimony of Jonathan Garrett; John Dale Williams.

55

Testimony of John Dale Williams.

56

Id.

57

Id.

58

Testimony of Jonathan Garrett.

59

Testimony of Avis Bourg III.
14

evidence, that CMWS chartered the Nicole Eymard for the West
Delta 55 job. Garrett testified that he understood CMWS to be
PEO's contractor and OMC in turn to be CMWS's subcontractor.60 He
noted that he made all arrangements for the West Delta 55 job
through Williams and never spoke with anyone from OMC.61
Garrett's testimony is corroborated by an e-mail in which Garrett
refers to OMC as CMWS's "sub" and a reply from Williams that does
not dispute that characterization.62 Further supporting this view
is that at all relevant times PEO had no representatives aboard
the L/B Nicole Eymard,63 while CMWS, in contrast, had several
representatives on the vessel.64
Avis Bourg III's testimony also supports a finding that CMWS
chartered the vessel. He stated that the reason there was no
duration or offload dock specified in the July 15, 2008 job
report was that sometimes OMC's vessels went on to other
locations after the initial job for which they were dispatched.65
Indeed, he testified that his intention was to keep the Nicole
Eymard working in the Gulf as long as possible before

60

Testimony of Jonathan Garrett.

61

Id.

62

OMC Exhibit 15.

63

Testimony of Jonathan Garrett.

64

OMC Exhibit 3.

65

Testimony of Avis Bourg III.
15

demobilizing.66 He further stated that the chartering party
remained the same throughout the duration of any one voyage.67 If
OMC were going to work for a different contractor, the vessel
would return to port, offload the equipment on deck, take on fuel
and water, renegotiate the terms of the new job, and fill out
another job report memorializing those terms.68 Here, that was
not done, strongly suggesting that the vessel remained on charter
with CMWS, under the terms set forth in the July 15 job report,
throughout the West Delta 55 job.69 And, as with the Chandeleur
37 job, OMC submitted its first bill for the West Delta 55 job to
CMWS,70 and only billed PEO after CMWS told it to do so in
September.71
It is simply implausible that PEO, despite having no direct
contact with OMC and no representatives on board the L/B Nicole

66

Id.

67

Id.

68

Id.

69

Id.

70

Testimony of Michele Hammons; Kim Pitre; OMC Exhibit 4.

71

Testimony of Michele Hammons; Kim Pitre; see also OMC
Exhibit 6. The Court finds evidence that is nearly
contemporaneous with the charter of the boat -- such as OMC's
initial billing of CMWS for the West Delta 55 job -- to be much
more probative on the issue of who chartered the vessel than the
myriad after-the-fact machinations that the parties engaged in
after they knew that the vessel repairs and downtime charter
would present a major expense.
16

Eymard, suddenly contracted with OMC to charter the vessel while
it was in the middle of the Gulf of Mexico. It is far more
plausible that CMWS already had the vessel under charter, and
simply extended that charter in order to complete the West Delta
55 job. Indeed, as noted above, Bourg III testified that this
possibility was explicitly contemplated when he left blank the
"demobilization" and "offload dock" portions of the job report.72
CMWS's contends that Williams was acting as a
"representative" of PEO when he arranged for the West Delta 55
charter, but the Court finds this argument baseless. There is no
evidence that Williams was subject to PEO's control, and
furthermore, a Master Service Agreement between PEO and CMWS
explicitly provides that CMWS shall not "be deemed for any
purposes to be the employee, agent, servant, or representative of
P[EO]."73 Williams was acting on behalf of his own company, CMWS,
when he negotiated the terms of the charter with Bourg III and
chartered the vessel.
C. CMWS's Remaining Arguments
CMWS makes three other specific arguments in support of its
contention that PEO chartered the vessel. The Court finds each
argument without merit.

72

Testimony of Avis Bourg III; OMC Exhibit 1.

73

PEO Exhibit 11.
17

First, CMWS notes that it did not obtain PEO's written
authorization to use a subcontractor on the West Delta 55 job, as
it was technically required to under the MSA between PEO and
CMWS. That MSA provides that "Contractor [CMWS] may not assign
this Agreement in whole or in part, or subcontract any portion of
the work, without the prior written consent of P[EO]."74 But that
provision is for the benefit of PEO and so can be waived by PEO
if it so chooses.75 See Lillis v. Owens, 21 So.2d 185, 188 (La.
Ct. App. 1945). Accordingly, CMWS cannot rely on PEO's failure to
give consent to argue that PEO bears responsibility for the
charter fees.
Second, CMWS claims that the charterer of the vessel has
been conclusively established by judicial admission, because OMC
contended in the bankruptcy proceedings of Palm Energy Partners
that the debt for the charter of the L/B Nicole Eymard was owed
by PEO under its MSA with OMC.76 This is incorrect. "[J]udicial
admissions are not conclusive and binding in a separate case from
the one in which the admissions are made." Heritage Bank v.
Redcom Labs., Inc., 250 F.3d 319, 329 (5th Cir. 2001) (quoting
Universal Am. Barge Corp. v. J-Chem., 946 F.2d 1131, 1142 (5th
Cir. 1991)). The Court may consider OMC's proof of claim in the

74

PEO Exhibit 11.

75

See id.

76

See OMC Exhibit 10.
18

bankruptcy proceedings as evidence, but OMC is entitled to
controvert or explain it. See id.; 30B Charles Alan Wright et
al., Federal Practice & Procedure Evidence § 7026 (2d ed. 2013).
As explained above, the other evidence in this case compels a
finding that CMWS, not PEO, chartered the vessel.
Finally, CMWS argues that OMC's actions in the bankruptcy
proceedings judicially estop it from claiming that CMWS is
responsible for the charter fees. This argument is also
meritless. Where (1) a party was unsuccessful in convincing the
first court of the proposition in question, (2) the earlier
position was based on a mistake, and (3) the allegedly
inconsistent position will not allow the party asserting it to
gain an unfair advantage, application of the doctrine of judicial
estoppel is generally not warranted. See In re Ark-La-Tex Timber
Co., 482 F.3d 319, 332-33 (5th Cir. 2007). Here, OMC did not
succeed in obtaining charter fees from Palm Energy Partners, and
in fact withdrew the claim when it determined that it was based
on a mistake -- Palm Energy Partners did not owe any debt to OMC.
Moreover, failure to apply the doctrine would not be unfair to
CMWS, for two reasons. First, CMWS likely prompted OMC to submit
a claim in the bankruptcy by telling OMC to bill PEO directly for
the liftboat after OMC originally sent invoices to CMWS.77
Second, as is discussed elsewhere in this opinion, CMWS will not

77

See Testimony of Michele Hammons.
19

bear ultimate responsibility for the charter fees, and so failure
to apply the doctrine here will not work to its detriment.
D. Summary
Based on the foregoing analysis of the evidence, the Court
concludes that OMC is entitled to recover charter fees from CMWS
for the period between July 28 and August 18, 2008, when the L/B
Nicole Eymard was on location at the West Delta 55 block.78 It is
true that the vessel performed well control work for only a few
days within this period. But the Court finds credible the trial
testimony suggesting that usual practice in the industry is for
charter fees to be incurred as long as the vessel is on site.79
CMWS has claimed that, if it is found to be the charterer of
the vessel for the West Delta 55 job, it is entitled to pass that
expense through to PEO, along with a 15% markup. As was true with
the Chandeleur 37 job, the Court finds that the well owner (here,
PEO) agreed to assume ultimate liability for the charter fees.
Williams testified that PEO had agreed to pay OMC directly for

78

CMWS has argued that it would not have formed an oral
charter with OMC because it had a Blanket Time Charter with OMC
during this period and would have adhered to its provisions
rather than forming a separate oral contract with plaintiff.
However, this argument fails, because OMC signed the Blanket Time
Charter with Chet Morrison Contractors, Inc. (CMC), which was a
separate entity from CMWS at the time of the events giving rise
to this suit. See R. Doc. 52-19.
79

See, e.g., Testimony of Jonathan Garrett; Avis Bourg
III; Raimy Eymard; Michael Eymard.
20

the liftboat for the West Delta 55 job.80 Garrett disputed
Williams' statement that PEO had agreed to pay OMC directly,81
but he agreed that the job was for PEO and consequently that PEO
would ultimately pay for the liftboat.82 There is virtually no
evidence, however, that any representative of PEO agreed to pay
CMWS a 15% markup on the liftboat.
PEO nevertheless argues that CMWS compromised any claim for
charter fees pursuant to a January 26, 2011 agreement between
CMWS and PEO.83 But William Gray's trial testimony makes clear
that the compromise in question concerned invoices for a job at
the West Delta 52 block -- a job completely unrelated to this
lawsuit.84 Consequently, PEO's argument that it has already paid
CMWS for the charter hire for the West Delta 55 job must fail.
CMWS's CFO, Leroy Guidry, confirmed at trial that PEO has not
paid CMWS for liftboat services related to the West Delta 55
job.85
In sum, the Court concludes that CMWS chartered the Nicole
Eymard for the West Delta 55 job. CMWS must pay OMC charter fees

80

Testimony of John Dale Williams.

81

Testimony of Jonathan Garrett.

82

Id.; OMC Exhibit 15.

83

See PEO Exhibit 6.

84

See Testimony of William Gray.

85

Testimony of Leroy Guidry.
21

for the period between July 28 and August 18, 2008. PEO, in turn,
must reimburse CMWS for the full amount of those charter fees.
V. THE DAMAGES AND SUBSEQUENT REPAIRS TO THE VESSEL
A. Chronology of Events
On July 29, 2008, the L/B Nicole Eymard jacked down and
attempted to break bottom, and one leg of the vessel became
stuck.86 For over two weeks, the OMC crew, as well as divers from
Offshore Construction and Diving, Inc., unsuccessfully attempted
to free the vessel.87 By August 15, OMC had become concerned
about the safety of its vessel and crew because of the impending
Tropical Storm Fay, which was projected to (and eventually did)
enter the Gulf of Mexico where the L/B Nicole Eymard was
lodged.88
OMC maintains that it then reached an agreement with CMWS
and PEO whereby OMC would cut the leg of the vessel in order to
free it, and defendants would compensate OMC for the cost of
repairs and charter fees for the time during which the barge was
being repaired.89 CMWS denies that any of its representatives

86

OMC Exhibit 2; Testimony of Kurt Luwisch.

87

OMC Exhibit 2; Testimony of Michael Eymard; Kurt

Luwisch.
88

Testimony of Jonathan Garrett; Michael Eymard.

89

See Testimony of Michael Eymard.
22

made any such assurances on behalf of CMWS.90 PEO maintains that
it merely told OMC that PEO would submit a claim to its insurer
for the repair costs and the downtime charter, but did not agree
to reimburse OMC for those costs in the event that the insurance
did not cover them.91
OMC cut the leg of the L/B Nicole Eymard and left the West
Delta 55 well during the days of August 17 and 18, 2008.92 OMC
initially paid the costs of repairing the vessel, then submitted
a series of invoices for those costs to CMWS.93 Michele Hammons,
the accounts payable clerk for CMWS, testified that the invoices
did not have a purchase order, which indicated that they should
not be paid.94 On September 25, 2008, CMWS instructed OMC to bill
PEO directly for the charter fees and costs associated with the
repairs and charter fees.95 OMC obliged, cancelling the invoices
issued to CMWS and re-billing PEO for the costs associated with
the repairs of the vessel.96 These invoices totaled $2,163,844.99

90

See, e.g., Testimony of John Dale Williams.

91

Testimony of Jonathan Garrett; John Dale Williams.

92

OMC Exhibit 2.

93

OMC Exhibit 4; Testimony of Raimy Eymard; Kim Pitre;
Michele Hammons.
94

Testimony of Michele Hammons.

95

OMC Exhibit 6; Testimony of Kim Pitre; Michele Hammons.

96

OMC Exhibits 5, 7; Testimony of Raimy Eymard; Kim

Pitre.
23

-- $681,875 for the charter fees between July 15, 2008 and August
18, 2008; $1,007,000.00 for the charter fees between August 19,
2008 and October 10, 2008 (the downtime charter); and $442,991.99
for the costs of repair.97 PEO did in fact submit a claim to its
insurer for OMC's losses, as it had promised, but its insurers
denied the claim.98 OMC was never paid for anything.99
B. Analysis
Once again, the Court must weigh the evidence to determine
whether a contract was made whereby one or both of the defendants
agreed to pay for the repair costs and downtime charter.
OMC representative Michael Eymard testified at trial that
the parties formed an agreement that CMWS and/or PEO would pay
for the repair costs and downtime charter if OMC cut the leg of
vessel.100 As corroboration, OMC points to the invoices for
charter hire (which included the downtime charter) that it sent
to CMWS,101 and CMWS's lack of challenge to the content of the
invoices.102

97

OMC Exhibit 5.

98

PEO Exhibit 7.

99

Testimony of Raimy Eymard; Kim Pitre.

100

Testimony of Michael Eymard.

101

OMC Exhibit 4.

102

Testimony of Michele Hammons.
24

Nevertheless, the Court concludes that OMC has failed to
prove the alleged agreement by a preponderance of the evidence.
While, as noted above, Michael Eymard testified that John Dale
Williams told him that CMWS and/or PEO would reimburse OMC for
the repair costs and downtime charter, Avis Bourg, Jr., partowner of OMC in 2008, testified that he was not aware of any such
arrangement.103 It would be somewhat odd if OMC entered into a
contract with such large financial ramifications without the
knowledge or consent of a part-owner. Williams, for his part, has
flatly denied offering to pay for the repair and downtime
charter.104 OMC's corroborating evidence -- CMWS's lack of
objection to the invoices for downtime charter hire -- is quite
weak; CMWS had no incentive to contest the invoices, since it
simply passed them along to PEO. As for PEO, Garrett has
steadfastly maintained that PEO merely offered to submit a claim
to its insurer (not to reimburse OMC for the loss out of its own
pocket).105 Garrett's offer was not an admission of liability; he
simply stated that all the parties involved agreed that they
would contact their insurers to see if they might pay for the

103

Testimony of Avis Bourg, Jr.; see also Testimony of
Avis Bourg III.
104

Testimony of John Dale Williams.

105

Testimony of Jonathan Garrett.
25

repairs.106 OMC has presented no convincing evidence to contradict
Garrett's account. Indeed, Michael Eymard testified that he never
even spoke with Garrett about the leg being stuck.107
Accordingly, the evidence does not support a finding that
OMC entered into an oral agreement with either CMWS or PEO for
repair costs and downtime charter for the L/B Nicole Eymard.
VI. CLAIMS FOR INDEMNITY AND ATTORNEYS' FEES
The parties also assert various claims against each other
for indemnity and attorneys' fees based on the Master Service
Agreements between them.
A. Legal Standard
"A maritime contract containing an indemnity agreement,
whether governed by federal maritime law or Louisiana law, should
be read as a whole and its words given their plain meaning unless
the provision is ambiguous." Becker v. Tidewater, Inc., 586 F.3d
358, 369 (5th Cir. 2009). An indemnity provision is interpreted
to cover the losses or liability reasonably contemplated by the
parties, Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 333
(5th Cir. 1981), but it "will not afford protection unless its
terms are expressed unequivocally," Hardy v. Gulf Oil Corp., 949
F.2d 826, 834 (5th Cir. 1992). The Court will describe the
106

Id.

107

Testimony of Michael Eymard.
26

relevant provisions of each of the MSAs in question and explain
the legal effect of those provisions on the indemnity obligations
of the parties.
B. The MSA Between PEO and CMWS (PEO Exhibit 11)
In this MSA, CMWS is referred to as "Contractor" and PEO is
referred to as "Palm."108 The "Palm Group" is defined as "Palm,
its employees, subsidiaries, affiliated companies, joint
venturers, partners, contractors and subcontractors (excluding
"Contractor Group" . . .), agents, invitees, and all of their
respective vessels, officers, directors, and employees."109 The
"Contractor Group" is defined as "Contractor, its employees,
subsidiaries, affiliated companies, joint venturers, partners,
contractors, subcontractors, agents, invitees, and all of their
respective vessels, officers, directors, and employees."110 These
provisions, read in combination, indicate that OMC is in the
"Contractor Group," because it is a contractor of CMWS.
CMWS asserts a claim for indemnity against PEO under the MSA
based on the latter's failure to provide a map of the West Delta
55 block showing potentially hazardous obstructions. CMWS argues
that the vessel would not have attempted to jack down, and thus

108

See PEO Exhibit 11 at 1.

109

Id. Ex. A § II.C.

110

Id. Ex. A § II.D.
27

would not have become stuck, had CMWS's representatives had a map
showing obstructions on the ocean floor. The section of the MSA
in question provides:
Before starting work, Contractor shall make a thorough
inspection of the work site to determine the difficulties
and hazards incident to doing the work, and Palm shall
disclose any circumstance or condition which would be
dangerous or hazardous to Contractor or its employees and
subcontractors. Palm shall furnish a map setting forth
the correct locations of all pipelines, platforms, other
facilities, and obstructions in the area of the work, and
shall release, defend, indemnify, and hold harmless
Contractor Group (as defined in Exhibit "A") from third
party claims, demands, or suits to the extent arising out
of errors or omissions contained in said map.111
Yet Jonathan Garrett testified that PEO did provide Chet
Morrison with a "base map," a document showing the location of
the well and the flow lines.112 Garrett also stated that he was
not aware of the existence of any obstructions under the mudline
at the West Delta 55 block.113 The only evidence suggesting that
obstructions were present is the testimony of Kurt Luwisch, who
said that when the crew tried to pull the leg of the vessel free,
it began moving forward. Luwisch admitted that the vessel likely
would not slide if it were stuck in the mud.114 This testimony
tends to suggest that the leg could have been caught on an

111

Id. § 5.1.

112

Testimony of Jonathan Garrett.

113

Id.

114

Testimony of Kurt Luwisch.
28

obstruction, but it is not sufficient to permit a conclusion that
an obstruction was even present, much less that PEO's failure to
provide a map depicting the obstruction caused the vessel to
become stuck and thus rendered PEO liable for indemnity.
CMWS and PEO also assert claims for indemnity against each
other based upon the knock-for-knock indemnity agreement in
Exhibit A of the MSA. The relevant provisions are as follows:
Contractor shall release, defend, protect, indemnify, and
hold harmless [the "Palm Group"] from and against all
suits, actions, claims, liabilities, damages, and demands
based on personal injury or death or property damage or
loss . . ., whenever occurring, suffered by any of the
Contractor Group . . . or by Contractor's subcontractors
or their employees, where the claim or loss arises out
of, is connected with, incident to, or is directly or
indirectly resulting from or relating to the performance
of this Agreement or out of any related or unrelated
activities in the vicinity thereof, whether the claim is
groundless or not, and whether the loss, damage, death or
injury is caused in whole or in part by the negligence or
fault of any of the Palm Group . . . .115
Palm shall release, defend, protect, indemnify, and hold
harmless [the "Contractor Group"] from and against all
suits, actions, claims, liabilities, damages, and demands
based upon personal injury or death or property damage or
loss, whenever occurring, suffered by any of the Palm
Group where the claim or loss arises out of, is connected
with, incident to, or is directly or indirectly resulting
from or relating to the performance of this Agreement,
whether the claim is groundless or not, and whether the
loss, damage, death or injury is caused in whole or in
part by the negligence or fault of any of the Contractor
Group . . . .116
Because OMC is part of the "Contractor Group," OMC's claims

115

PEO Exhibit 11 Ex. A, § II.C.

116

Id. Ex. A, § II.D.
29

for charter fees for the West Delta 55 job and for repair costs
and downtime charter are "based on . . . property damage or loss
. . . suffered by any of the Contractor Group" that "relat[ed] to
the performance of th[e] Agreement." Cf. Energy XXI, GoM, LLC v.
New Tech Eng'g, LP, 787 F. Supp. 2d 590, 605-07 (S.D. Tex. 2011)
(finding that a similarly worded indemnity clause was broad
enough to encompass losses resulting from an alleged breach of
contract). (OMC's claims concerning the Chandeleur 37 job are not
covered by the PEO-CMWS MSA, since that job was done for HCR.)
Accordingly, Contractor (CMWS) must indemnify PEO against OMC's
suit insofar as it concerns the West Delta 55 job and the claims
for repair costs and downtime charter. But, since the Court held
that PEO was not liable to OMC for any damages, there is no
liability that PEO could be indemnified against. Yet CMWS does
have an obligation to pay PEO's attorneys' fees under the
following clause:
The indemnitor shall promptly pay (i) to any indemnitee
all costs and reasonable attorneys' fees incurred by such
indemnitee resulting directly or indirectly from any and
all loss, damage, injury, liability, and claims for which
the indemnitor is obligated to indemnify such indemnitee
pursuant to this Section II, and (ii) to any indemnitee
all costs and reasonable attorneys' fees in any legal
action in which such indemnitee prevails, either in whole
or in part, brought against indemnitor based upon a
breach of any of the provisions of this Exhibit A.117
Under Ex. A § II.E(i), CMWS must pay PEO the costs and

117

Id. Ex. A, § II.E.
30

attorneys' fees PEO incurred defending against OMC's claims for
the West Delta 55 charter fees and for repair costs and downtime
charter. CMWS is also obligated to pay the costs and attorneys'
fees PEO incurred in its crossclaim against CMWS for indemnity
under clause (ii), because PEO "prevail[ed], either in whole or
in part," in that crossclaim.
C. The MSA Between OMC and PEO (PEO Exhibit 9)
The indemnity provisions in this MSA do not apply to any of
OMC's claims. Because Chet Morrison, rather than PEO, contracted
with OMC for the charter of the vessel for the West Delta 55 job,
there was no agreement concerning the vessel executed under the
OMC-PEO MSA. Accordingly, no party owes any other party indemnity
under the OMC-PEO MSA. And, because no indemnity is owed under
the OMC-PEO MSA, no attorneys' fees are owed under the agreement
either.118
D. The MSA Between CMWS and HCR (CMWS Exhibit 6)
In this MSA, CMWS is referred to as "Contractor" and HCR is
referred to as "HC."119 The "HC Group" is defined as "HC, its
employees, subsidiaries, affiliated companies, joint venturers,
partners, contractors and subcontractors (excluding "Contractor
Group" . . .), agents, invitees, and all of their respective
118

See PEO Exhibit 9 Ex. A, § II.E.

119

CMWS Exhibit 6 at 1.
31

vessels, officers, directors, and employees."120 The "Contractor
Group" is defined as "Contractor, its employees, subsidiaries,
affiliated companies, joint venturers, partners, contractors,
subcontractors, agents, invitees, and all of their respective
vessels, officers, directors, and employees."121 The two foregoing
provisions together indicate that OMC is included in the
"Contractor Group," because it is a contractor of CMWS.
This MSA also contains a knock-for-knock indemnity
provision:
Contractor shall release, defend, protect, indemnify, and
hold harmless [the "HC Group"] from and against all
suits, actions, claims, liabilities, damages, and demands
based on personal injury or death or property damage or
loss . . ., whenever occurring, suffered by any of the
Contractor Group or by Contractor's subcontractors or
their employees, where the claim or loss arises out of,
is connected with, incident to, or is directly or
indirectly resulting from or relating to the performance
of this Agreement or out of any related or unrelated
activities in the vicinity thereof, whether the claim is
groundless or not, and whether the loss, damage, death or
injury is caused in whole or in part by the negligence or
fault of any of the HC Group . . . .122
HC shall release, defend, protect, indemnify, and hold
harmless [the "Contractor Group"] from and against all
suits, actions, claims, liabilities, damages, and demands
based upon personal injury or death or property damage or
loss, whenever occurring, suffered by any of the HC Group
where the claim or loss arises out of, is connected with,
incident to, or is directly or indirectly resulting from
or relating to the performance of this Agreement, whether

120

Id. Ex. A, § II.C.

121

Id. Ex. A, § II.D.

122

Id. Ex. A, § II.C.
32

the claim is groundless or not, and whether the loss,
damage, death or injury is caused in whole or in part by
the negligence or fault of any of the Contractor Group .
. . .123
CMWS and HCR agree that this MSA is applicable to the
Chandeleur 37 job, which involved HC's contracting with CMWS to
perform a P&A operation at those wells.124 But OMC did not sue
HCR, and thus there is no liability on the part of HCR that HCR
could be indemnified against under this agreement. And, because
there is no indemnity obligation on the part of either party,
there is likewise obligation to pay attorneys' fees.125

VII. CONCLUSION
The Court has endeavored to interpret the parties'
agreements in a manner consistent with the arrangements they
reached throughout the interactions that gave rise to this
lawsuit, taking full account of all of the evidence adduced by
the parties and the testimony given at trial. The Court believes
that evidence contemporaneous to the various alleged agreements
is significantly more probative than evidence of the parties'
after-the-fact machinations, and accordingly it has placed
significantly more weight on the former than the latter.

123

Id. Ex. A, § II.D.

124

See CMWS Exhibit 30 (invoice from CMWS to HCR for P&A
work performed at the Chandeleur 37 wells).
125

See CMWS Exhibit 6 Ex. A, § II.E.
33

In summary, the Court holds the following:
(1)

CMWS is liable to OMC for the charter of the L/B
Nicole Eymard for the Chandeleur 37 job, which
took place from July 15 to July 27, 2008. HCR is
in turn liable to CMWS for the full amount of
those charter fees.

(2)

CMWS is liable to OMC for the charter of the
vessel for the West Delta 55 job, which took place
from July 28 to August 18, 2008. PEO is in turn
liable to CMWS for the full amount of those
charter fees.

(3)

Neither CMWS nor PEO is liable for the repair
costs and downtime charter associated with the
decision to cut the leg of the vessel.

(4)

Chet Morrison is obligated under its MSA with PEO
to pay PEO (a) the costs and attorneys' fees PEO
incurred defending against OMC's claims insofar as
they concern the West Delta 55 job and the repair
costs and downtime charter; and (b) the costs and
attorneys' fees PEO incurred in bringing the
crossclaim against Chet Morrison for indemnity.

For the foregoing reasons, it is the judgment of this Court
that CMWS owes $249,750.00 to OMC in outstanding charter fees
for the L/B Nicole Eymard for the period between July 15 and
July 27, 2008. Because the invoices submitted to CMWS provide
that 1.5% interest is added after 30 days,126 CMWS must add one
and one half percent prejudgment interest to each invoice to run
from the date 30 days after the invoice was issued. HCR in turn
owes $249,750.00, also with prejudgment interest, to CMWS. See
Reeled Tubing, Inc. v. M/V Chad G, 794 F.2d 1026, 1028 (5th Cir.
1986) ("Under maritime law, the awarding of prejudgment interest
126

See OMC Exhibit 4.
34

is the rule rather than the exception, and, in practice, is
well-nigh automatic.").
CMWS owes $432,125.00 to OMC in outstanding charter fees
for the L/B Nicole Eymard for the period between July 27 and
August 18, 2012, with one and one half percent prejudgment
interest on each invoice to run from the date 30 days after the
invoice was issued. PEO in turn owes $432,125.00, also with
prejudgment interest, to CMWS. See id.
CMWS owes PEO the reasonable attorneys' fees and costs that
PEO incurred in defending against OMC's claims regarding the
West Delta 55 job, repair costs, and downtime charter, as well
as the fees it incurred in bringing the crossclaim against CMWS
for indemnity. The Court refers the issue of the amount of
attorneys' fees and costs that PEO can recover to Magistrate
Judge Daniel Knowles for a report and recommendation.

New Orleans, Louisiana, this 7th day of October, 2013.
__

_________________________________
SARAH S. VANCE
UNITED STATES DISTRICT JUDGE

35