Celtic Marine Corporation v. James C. Justice Companies, Inc.
Filing
176
ORDER & REASONS: ORDERED that Celtic Marine, Corporation's Motion for Summary Judgment (Rec. Doc. 152) is GRANTED IN PART & DENIED IN PART. The Court will enter a partial final judgment in this matter awarding the following: (1) demurrage and co ver/cleaning fees in the requested amount of $682,554.74; (2) interest on all invoiced sums arising from the February Service Agreement, the 2012 Service Agreement, both 2012 Spot Contracts, and the October Settlement Agreement, less the $3 4,263.50 in interest that was previously awarded in the March 6, 2014 partial final judgment. Interest will be awarded at the contractual rate of 1.5 percent & will continue to accrue until paid; & (3) prejudgment interest at a rate of 4 percent per year on all demurrage and cover charges owed by Justice to Celtic starting from the day that such sums became due & ending on the date that the debt is satisfied. Seeing no just reason for delay, the Court will certify the judgment as a partial final judgment under Federal Rule of Civil Procedure 54(b). IT IS FURTHER ORDERED that Celtic Marine Corporation's right to file a renewed motion for attorney's fees is extended until fourteen (14) days following the resolution of any appeals in this matter. IT IS FURTHER ORDERED that Celtic's Motion to Strike Memorandum in Opposition (Rec. Doc. 158) is DENIED AS MOOT. Signed by Judge Carl Barbier on 5/28/14. (sek)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CELTIC MARINE CORPORATION
CIVIL ACTION
VERSUS
NO: 11-3005
JAMES C. JUSTICE COMPANIES,
INC.
SECTION: “J”(2)
ORDER & REASONS
Before the Court is Celtic Marine Corporation ("Celtic")'s
Motion for Summary Judgment and Certification as Final Judgment
(Rec. Doc. 152), James C. Justice Companies, Inc. ("Justice")'s
opposition to the motion (Rec. Doc. 155), Celtic's reply memorandum
(Rec. Doc. 160), and KFC's sur-reply memorandum. (Rec. Doc. 173)
The motion was set for hearing on May 7, 2014, on the briefs. Also
before the Court, on an expedited basis, is Celtic's Motion to
Strike
Memorandum
in
Opposition
(Rec.
Doc.
158)
and
KFC's
opposition thereto. (Rec. Doc. 170) Having considered the motion
and memoranda of counsel, the record, and the applicable law, the
Court finds that the motion for summary judgment should be GRANTED
IN PART and DENIED IN PART and that the motion to strike should be
DENIED AS MOOT for the reasons set forth more fully below.
FACTS AND PROCEDURAL BACKGROUND
This litigation commenced when Celtic filed suit against
Justice for breach of contract in 2011. The matter was resolved in
February 2012 via a settlement agreement (the "FSA"). ( Rec. Doc.
9)
Then,
in
October
2012,
another
settlement
agreement
was
confected (the "OSA"). In January 2013, alleging that Justice had
breached the settlements, Celtic successfully moved the Court to
re-open the matter to enforce the settlement agreements.
(Rec.
Docs. 11, 46) Once the Court re-opened litigation, Celtic filed a
motion for entry of judgment wherein it demanded certain sums that
can divided into seven categories: demurrage, freight, shortfall,
cover and cleaning charges, the "February discount," interest on
past due invoices, and attorney's fees. In a prior partial final
judgment, dated March 6, 2014, the Court entered a partial final
judgment against Justice that resolved entirely the issues of
freight and shortfall damages and partially resolved the issues of
interest and attorney's fees. The Court did not enter a judgment
for demurrage, the February discount, interest incurred on or after
October 1, 2013, and further attorney's fees. Those remaining
issues are the subject of the instant motion for summary judgment.1
LEGAL STANDARD
Summary judgment is appropriate when “the pleadings, the
discovery and disclosure materials on file, and any affidavits show
that there is no genuine issue as to any material fact and that the
movant is entitled to judgment as a matter of law.”
Celotex Corp.
v. Catrett, 477 U.S. 317, 322 (1986) (citing FED. R. CIV. P. 56(c));
Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
1
The Court is well-acquainted with the facts of this matter, thus only
the pertinent facts are summarized. For a more thorough recitation of the
facts, see the Court's Order and Reasons dated September 18, 2013. (Justice
Rec. Doc. 104)
When assessing whether a dispute as to any material fact exists,
the Court considers “all of the evidence in the record but refrains
from making credibility determinations or weighing the evidence.”
Delta & Pine Land Co. v. Nationwide Agribusiness Ins. Co., 530 F.3d
395, 398 (5th Cir. 2008).
All reasonable inferences are drawn in
favor of the nonmoving party, but a party cannot defeat summary
judgment with conclusory allegations or unsubstantiated assertions.
Little, 37 F.3d at 1075. A court ultimately must be satisfied that
“a reasonable jury could not return a verdict for the nonmoving
party.” Delta, 530 F.3d at 399.
If the dispositive issue is one on which the moving party will
bear the burden of proof at trial, the moving party “must come
forward with evidence which would ‘entitle it to a directed verdict
if the evidence went uncontroverted at trial.’” Int’l Shortstop,
Inc. v. Rally’s, Inc., 939 F.2d 1257, 1263-64 (5th Cir. 1991)
(citation omitted). The nonmoving party can then defeat the motion
by either countering with sufficient evidence of its own, or
“showing that the moving party’s evidence is so sheer that it may
not persuade the reasonable fact-finder to return a verdict in
favor of the moving party.” Id. at 1265.
If the dispositive issue is one on which the nonmoving party
will bear the burden of proof at trial, the moving party may
satisfy its burden by merely pointing out that the evidence in the
record is insufficient with respect to an essential element of the
nonmoving party’s claim.
See Celotex, 477 U.S. at 325. The burden
then shifts to the nonmoving party, who must, by submitting or
referring to evidence, set out specific facts showing that a
genuine issue exists. See id. at 324.
The nonmovant may not rest
upon the pleadings, but must identify specific facts that establish
a genuine issue for trial.
See, e.g., id. at 325; Little, 37 F.3d
at 1075.
PARTIES' ARGUMENTS AND DISCUSSION
I. Motion for Summary Judgment
A. Demurrage and Cover/Cleaning Fees
The
Court
previously
declined
to
award
demurrage
and
cover/cleaning fees based on Justice's argument that litigation
between KFC and Celtic that was pending in a Kentucky court had the
potential
to
reduce
the
amount
of
demurrage
owed.
The
KFC
litigation is now before this Court, and KFC's claims were recently
dismissed pursuant to Celtic's motion for summary judgment. (Case
No. 13-6538, Rec. Doc. 57) Therefore, there is no longer any
potential
that
the
demurrage
and
cleaning/cover
fees
may
be
reduced. Accordingly, the Court will enter judgment against Justice
in the amount of $682,554.74, which amount represents the sum that
Justice owes Celtic in connection with demurrage charges and
cleaning/cover fees.
B. February Discount
When Celtic, Justice, and KFC entered into the FSA, Celtic
agreed to accept an amount that was less than the entire amount
that KFC owed in order to settle its claims against Justice.
Pursuant to the FSA, Justice and KFC would be released from the
litigation when three events took place: (1) Justice paid two
installment payments of a certain amount; (2) KFC, guaranteed by
Justice, paid all continuing demurrage incurred; and (3) Celtic
received the executed 2012 Service Agreement and an executed
guaranty in connection thereto. (Rec. Doc. 152-2, p. 58, ¶ 4) Both
the first and last requirements have been fulfilled, however
neither KFC nor Justice has paid the demurrage incurred.
Celtic
contends that, because demurrage has not been paid, KFC and Justice
have not been released from all claims in connection with this
litigation,
and
that
Celtic
has
the
right
to
claw
back
the
discounted amount from the FSA. Justice, on the other hand, argues
that once this Court renders a ruling on demurrage, the last
requirement will be satisfied and Justice and KFC will be released
pursuant to the FSA. Justice contends that it would be inequitable
to allow Celtic to enforce the FSA by seeking demurrage at the same
time that it attempts to essentially nullify the FSA and return to
the beginning of litigation. Justice further points out that the
FSA, unlike the OSA, does not contain a time requirement for
performance or give to Celtic the right to claw back the discounted
amount. Celtic contends in its reply that demurrage is not only
owed in connection with the February Settlement, but also in
connection with the Guaranty, thus Celtic is not only seeking to
enforce the FSA, but is also seeking to enforce the Guaranty that
Justice signed in connection thereto.
In the absence of special provisions governing compromise,
general conventional obligations rules apply to compromises. La.
Civ. Code. Arts. 1916-17. Upon an obligor's failure to perform an
obligation, the obligee may demand performance or he may demand
dissolution of the obligation. La. Civ. Code. Arts. 1994 & 2013.
Nowhere in the Civil Code, however, is it indicated that an obligee
may demand performance and dissolution, and common sense would
indicate that such an option is neither equitable or workable. In
this case, if the Court were to follow the suggestion of Celtic,
Justice would be required to uphold both the FSA and the underlying
obligations that were purportedly settled by that same agreement.
Though the Court recognizes that Justice has failed to perform many
obligations
and
has
not
acted
as
a
model
obligor,
it
seems
inequitable to enforce both the FSA and the underlying obligation.
Further, based on a comparison of the FSA and the OSA, it
appears that the parties did not anticipate the result for which
Celtic now advocates. The OSA provides that, in the event that
Justice did not timely render payment, Celtic had the right to
collect payments owed in connection with several of the underlying
contracts in this litigation.2 In contrast, the FSA does not
include a time for performance, nor does it include a provision
allowing Celtic to revert to the original claims asserted in case
2
Notably, even in this provision, Celtic is not entitled to reach all
the way back to the 2011 Service Agreement and 2011 Spot Contract that were
supposed to be resolved by the FSA. Rather, a breach of the OSA only allowed
Celtic to collect on sums owed on the 2012 Service Agreement, both 2012 Spot
Contracts, and the FSA.
of a breach. Based on these differences, it appears that the FSA
does not allow Celtic to claw back the "February discount."
Accordingly, Celtic's motion will be denied on this issue.
C. Interest on Past Due Sums
The Court previously awarded to Celtic all interest accrued on
invoiced shortfall under the 2012 Service Agreement at a rate of
1.5% through October 1, 2012. Now, based on a review of Celtic's
Exhibit D, it appears that Celtic seeks interest on all invoiced
sums between July 2011 and May 2013.
1. Invoices Under the 2011 Service Agreement and 2011 Spot
Contract
Justice argues that interest is not owed on any invoice
stemming from the 2011 Service Agreement or the 2011 Spot Contract.
Justice argues that, because the Court found that Celtic cannot
"claw back" beyond the FSA to enforce those two contracts, it
should not be allowed to collect interest on those invoices because
those debts were extinguished and/or "written off." Had Celtic
wanted to collect interest, Justice contends that Celtic should
have included interest payments in the FSA.
The Court agrees with Justice. By virtue of the Court's
determination that the FSA resolves all claims arising from the
2011 Service Agreement and 2011 Spot Contract, it is only logical
that interest cannot now be collected on invoiced sums arising from
those
agreements.
Celtic
had
the
opportunity
to
recoup
that
interest in February 2012 and chose not to do so. Further, Celtic
had
the
opportunity
to
include
a
provision
in
the
FSA
that
Justice's breach would permit Celtic to seek sums owed under the
2011 Agreements, and it again chose not to do so. Therefore,
because the Court is enforcing the FSA as written, all claims in
connection thereto will be considered resolved and Celtic cannot
seek interest on those invoices.
2. Interest on Shortfall Invoices No. 125247, 1206286, 1207235
Amongst the interest calculations listed in Celtic's Exhibit
D are three invoices for shortfall
from May, June, and July 2012.
Interest on these invoices was already awarded pursuant to this
Court's March 6, 2014 judgment; therefore, Celtic may not recover
these sums again. Any interest awarded today will therefore reflect
the $34,263.50 judgment that was already entered for interest, up
to October 1, 2012, on the May, June, and July 2012 shortfall
invoices.
3. Interest on Shortfall Written Off Under the OSA
Justice argues that interest cannot be awarded on shortfall
after the date that the OSA was executed because the invoices were
written-off pursuant to the OSA. Justice contends that, even though
the OSA contains the provision allowing Celtic to recover on
certain
contracts
if
Justice
breached
the
OSA,
it
did
not
contemplate that interest would continue to accrue beyond the date
of the agreement.
While this argument was successfully applied to interest
claimed before the FSA, it does not apply in this context. As
Justice admits elsewhere in its opposition to the instant motion,
the FSA and the OSA are two very different contracts. While the FSA
does not allow Celtic to enforce the underlying contracts upon a
breach, the OSA does. In fact, in light of Justice's breach of the
OSA, it is
as if the OSA never existed. Therefore, interest
continued to accrue on invoiced sums that were revitalized by
virtue of Justice's breach. This amount includes all invoices
listed in Exhibit D from February 24, 2012 on.
4. Interest on Cleaning/Cover Fees and Demurrage
Justice only argues that interest is not due on these sums
because the sums are not payable due to Celtic's negligence. As the
Court
has
rejected
Justice's
argument
that
it
does
not
owe
demurrage and cover/cleaning fees, this argument must also fail.
Therefore,
interest
is
owed
on
all
invoiced
demurrage
and
cover/cleaning fees arising under the 2012 Service Agreement, both
2012 Spot Contracts, and the FSA, through the present day.
In light of these findings, the Court will enter a judgment
awarding interest on all invoiced sums arising from the FSA, the
2012 Service Agreement, both 2012 Spot Contracts, and the OSA, less
the $34,263.50 in interest that was previously awarded in the March
6, 2014 partial final judgment.
Interest will be awarded at the
contractual rate of 1.5% and will continue to accrue until paid.
Interest on any sums invoiced as a result of the 2011 Service
Agreement or 2011 Spot Contract will not be awarded.
D. Prejudgment Interest
Though Celtic did not make a similar request in its earlier
motion for entry of judgment, it now seeks prejudgment interest
from December 7, 2011, the date that it first filed suit against
Justice for KFC's breach of the 2011 Service Agreement and 2011
Spot Contract. Celtic contends that in maritime cases, the award of
prejudgment interest is the rule rather than the exception. Reeled
Tubing, Inc. v. M/V Chad G, 794 F.2d 1026, 1028 (5th Cir. 1986).
Further, if prejudgment interest is awarded, Celtic avers that the
rate should be based on Louisiana judicial interest rate, which is
4.0% per year.
Justice disputes the propriety of such an award. First,
Justice argues that no such award was made in connection with the
March 6, 2014 partial final judgment, thus no such award may be
retroactively made on those sums. Moreover, as to the new sums
awarded
based
on
the
instant
motion,
Justice
argues
that
prejudgment interest cannot be awarded from the date that Celtic
filed suit in 2011 when the majority of the contracts at issue were
not even in existence at that time. At best, Justice avers that
Celtic would be allowed prejudgment interest starting with the
demurrage claim arising from the FSA, but even that is a stretch
according to Justice. Rather, a proper date on which it is proper
to commence calculating interest is March 26, 2013, which is the
date that this Court re-opened litigation to enforce the OSA.
Finally, Justice argues that the appropriate interest rate is .11%,
which is the federal rate typically applied to maritime matters
brought in federal court.
In maritime cases, the award of prejudgment interest is the
rule rather than the exception. Reeled Tubing, Inc. 794 F.2d at
1028. Consequently, "[p]rejudgment [i]nterest is awarded not as a
penalty or as compensation for loss of property use, but as
compensation for the use of funds to which the plaintiff was
ultimately judged entitled, but which the defendant had the use of
prior to judgment." Pillsbury Co. v. Midland Enterprises, Inc., 715
F. Supp. 738, 769 (E.D. La. 1989) aff'd and remanded, 904 F.2d 317
(5th Cir. 1990). Consequently, in the Fifth Circuit, such interest
is generally awarded from the date of the loss. Reeled Tubing,
Inc., 794 F.2d at 1028. "A trial court has the discretion to deny
prejudgment interest only where peculiar circumstances would make
such an award inequitable." Id. The Fifth Circuit's definition of
"peculiar circumstances" is narrow and only encompasses situations
wherein "plaintiff improperly delayed resolution of the action,
where a genuine dispute over a good faith claim exists in a mutual
fault setting, where some equitable doctrine cautions against the
award, or where the damages award was substantially less than the
amount claimed by plaintiff." Pillsbury Co., 715 F. Supp. at 769.
Once it is determined that prejudgment interest should be awarded,
"[t]he rate [of the award] is within the trial court's broad
discretion. The Fifth Circuit has upheld awards at the Louisiana
legal rate, at the federal legal rate, as well as at, among other
rates, higher rates roughly equal to the plaintiff's actual cost of
borrowing." Id. at 770-71.
Here, there are no peculiar circumstances present that require
the Court to deviate from the general rule of awarding prejudgment
interest in maritime cases. However, because Celtic did not request
prejudgment interest in its prior motions, and consequently the
Court did not include an award of prejudgment interest in the
partial final judgment, Celtic may not go back to those amounts and
demand prejudgment interest. Therefore, prejudgment interest will
only be awarded on those amounts at issue in this motion, which are
awards for demurrage and for cover/cleaning charges. Because these
are specific sums that are owed, it is not necessary to determine
the specific date on which to commence the accrual of prejudgment
interest, rather the interest will apply to all demurrage and
cover/cleaning charges from the date that such amounts became due.
Accordingly, the Court will enter a judgment awarding prejudgment
interest at a rate of 4% per year on all demurrage and cover
charges owed by Justice to Celtic starting from the day that such
sums became due and ending on the date that the debt is satisfied.
E. Attorney's Fees
Celtic demands attorney's fees that cover the fees charged in
connection with this litigation, but also the fees charged in
connection with the KFC litigation that was transferred to this
Court from the Eastern District of Kentucky. Celtic avers that, if
the Court grants the instant motion, it will submit a record of
attorney's fees under seal within fourteen days following the
Court's entry of judgment in accordance with Local Rule 54.2.
Alternatively, Celtic proposes that the final determination of
attorney's fees be deferred pending Justice's appeal. See
Kirmer
v. Goodyear Tire & Rubber Co., No. 11-69, 2012 WL 2564971 (E.D. La.
June 7, 2012) report and recommendation adopted, No. 11-069, 2012
WL 2564955 (E.D. La. July 2, 2012) (where the appeal of a partial
final judgment was pending, the magistrate judge recommended that
a motion for attorney's fees be "dismissed without prejudice,
subject to an accompanying order preserving plaintiff's claims and
extending the time during which plaintiff must file his renewed
motion for attorneys fees to fourteen (14) days after the entry of
a final judgment addressing all claims asserted in this action.")
Justice
attorney's
argues
fees
that
connected
Celtic
to
the
is
not
KFC
entitled
litigation
to
recover
because
the
agreements relied on in this matter only permit recovery of fees
related to the enforcement of the OSA. Additionally, Justice
requests that any documents regarding attorney's fees submitted to
the Court also be submitted to Justice for review.
Here, the Court finds that the fees that Celtic incurred
defending itself in the KFC litigation are not recoverable under
the terms of the contractual provisions relied on herein. The KFC
litigation presents separate claims for negligence that are not
related to Celtic's instant efforts to enforce the OSA. To the
extent that the contracts permit recovery of attorney's fees for
enforcement of the carrier's liability indemnity clause contained
in several of the agreements, that clause is not relevant to the
instant proceeding to enforce the settlement agreements.3 As to all
other attorney's fees due for enforcement of the settlements, the
Court will adopt Celtic's proposal to defer ruling until this
matter has been fully resolved and the pending appeal and/or any
future appeals have been completed.
II.
Motion to Strike Ball Affidavit
Because the Court did not rely on the affidavit of Stephen
Ball in rendering this order, the motion to strike will be denied
as moot.
Accordingly,
IT IS ORDERED that Celtic Marine, Corporation's Motion for
Summary Judgment (Rec. Doc. 152) is GRANTED IN PART AND DENIED IN
PART. The Court will enter a partial final judgment in this matter
awarding the following: (1) demurrage and cover/cleaning fees in
the requested amount of $682,554.74; (2) interest on all invoiced
sums arising from the February Service Agreement, the 2012 Service
Agreement, both 2012 Spot Contracts, and the October Settlement
Agreement, less the $34,263.50 in interest that was previously
awarded in the March 6, 2014 partial final judgment. Interest will
be awarded at the contractual rate of 1.5% and will continue to
accrue until paid; and (3) prejudgment interest at a rate of 4% per
year on all demurrage and cover charges owed by Justice to Celtic
3
The KFC and Justice litigations have not been consolidated and must
retain their separate identities to prevent confusion. Therefore, to the
extent that such a clause is applicable to the KFC litigation, Celtic must
seek attorney's fees related to the KFC litigation in that matter itself.
starting from the day that such sums became due and ending on the
date that the debt is satisfied. Seeing no just reason for delay,
the Court will certify the judgment as a partial final judgment
under Federal Rule of Civil Procedure 54(b).
IT IS FURTHER ORDERED that Celtic Marine Corporation's right
to file a renewed motion for attorney's fees is extended until
fourteen (14) days following the resolution of any appeals in this
matter.
IT
IS
FURTHER
ORDERED
that
Celtic's
Motion
to
Strike
Memorandum in Opposition (Rec. Doc. 158) is DENIED AS MOOT.
New Orleans, Louisiana, this 28th day of May, 2014.
___________________________
CARL J. BARBIER
UNITED STATES DISTRICT JUDGE
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