3L Leasing, LLC v. Grillot et al

Filing 43

ORDER AND REASONS denying 23 Motion for Partial Summary Judgment; denying 24 Motion for Partial Summary Judgment. Signed by Judge Stanwood R. Duval, Jr on 10/7/2015. (my)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
UNITED STATES OF AMERICA
FOR THE USE AND BENEFIT OF
3L LEASING

CIVIL ACTION

VERSUS

NO. 14-2539

RUSSEL GRILLOT, ET AL.

SECTION “K”(1)
ORDER AND REASONS

Before the Court is a Motion for Partial Summary Judgment Against Grillot
Construction, LLC (Doc. 23) and a Motion For Summary Judgment Against U.S. Specialty
Insurance Company (Doc. 24). Having reviewed the pleadings, memoranda, exhibits the
relevant law, and having conducted a pretrial conference in this matter, the Court finds that there
are material questions of fact which preclude the granting of these motions. As such, the Court
DENIES both motions.

FACTUAL BACKGROUND
On April 23, 2013, defendant Grillot Construction contracted with the U.S. Army Corps
of Engineers (“USACE”), as general contractor, for a project referred to as “Grand Isle and
Vicinity, Hurricane Protection Project, Dune Repair and Armory” (“Project”). Grillot
Construction and defendant U.S. Specialty Insurance Company (“U.S. Specialty”), as the Miller
Act surety, posted a payment bond in the amount of $2,545,838.00, pursuant to 40 U.S.C. §
3131. Plaintiff 3L was the owner of the spud barge MR. BOB (the “Vessel”). Grillot
Construction bareboat chartered the Vessel at the rate of $50,000.00 a month from 3L for use on
the Project on July 17, 2013. An On Charter Survey was completed by C. Breit Marine Services

LLC ("Breit") on July 17, 2013. (Report No. 1307272). (See Doc. 42, Joint Pre-Trial Order,
Undisputed Facts "a"-"h," at 8-9 of 29 pages).
During Grillot Constructions's charter of the Vessel, it used and/or consumed items
which had been placed onboard the Vessel by 3L. Section 8 of the Charter Party provides as
follows with respect to same:
SECTION 8–INVENTORIES, CONSUMABLE OIL AND STORES
(a)

A complete inventory of Vessel's entire equipment, outfit,
appliances, and of all consumable stores on board the Vessel shall
be made by Charterer in conjunction with Owner on Delivery and
again on Redelivery of the Vessel. Charterer and Owner,
respectively, shall at the time of Delivery and Redelivery take over
and pay for all bunkers, lubricating oil, water and unbroached
provisions, paints, oils, ropes and other consumable stores in the
Vessel at the then current market prices at the ports of delivery and
redelivery, respectively.

(b)

In the event there is a lesser amount of bunkers on board the
Vessel at the time of its Redelivery to Owner from that on board at
the time of the Delivery of the Vessel to Charterer, Charterer shall
then and there pay to Owner an amount equivalent to the gallons of
bunker differential multiplied by the per gallon market price of the
bunkers at the port and time of Redelivery.

(Doc. 23-4 at 161 of 222).
While working on the project, the Vessel sustained damages on about October 28, 2013
which caused the Vessel to break free from its position and sustain damage to one of the Vessel’s
spuds and hull. (See Doc. 42, Joint Pre-Trial Order, Undisputed Facts "i" at 9 of 29 pages). The
Charter provides in relevant part as follows as with respect toresponsibility for damage and
repairs during the course of the contract:
SECTION 6–REPAIRS AND ALTERATIONS

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(a)

During the Term, the Charterer shall at all times maintain and
preserve the Vessel in good running order and repair, in
accordance with good commercial maintenance practices in all
respects which a prudent operator of vessels of similar size, design
and class to the Vessel, except ordinary wear and tear, so that the
Vessel shall be, in so far as due diligence can make it so, tight,
staunch, strong and well and sufficiently tackled, appareled,
furnished, equipped and in every respect seaworthy and in good
operating condition in accordance with all applicable requirements
and all other applicable laws, regulations and directives and able to
perform the functions for which the Vessel was originally
intended, all at Charter's own cost and expense.

SECTION 11- LOSS AND DAMAGE
Until the Vessel is returned to Owner as provided in this Charter, all risks
of physical damage to or loss, destruction or interference with the use, seizure or
confiscation shall impair Charterer's obligation under this Charter.
If any item of the Vessel is rendered unusable as a result of any physical
damage to, or loss or destruction of, the Vessel, Charterer shall give to Owner
immediate notice thereof and this Charter shall continue in full force and effect
without any abatement of Charter Hire. Charterer shall determine, within three
(3) days after the date of occurrence of such damage or destruction, whether such
item of the Vessel can be repaired. In the event Charterer determines that such
item of the Vessel can be repaired, Charterer shall cause such item of the Vessel
to be promptly repaired. In the event Charterer determines such item cannot be
repaired, Charterer shall promptly replace such item of Vessel with items of at
least equal value and utility, and convey title to such replacement to Owner free
and clear of all liens and encumbrances, and this Charter shall continue in full
force and effect, including such replacement, as though such damage or
destruction has not occurred. In the event Charterer determines that the Vessel
cannot be repaired or replaced, the Charter shall pay to Owner, on the next
Charter Hire Payment date, the full replacement value of the Vessel on such
Charter Hire payment care, together with any Charter Hire then due and upon
such payment, Charterer's obligation to Pay Charter Hire hereunder shall cease.
(Doc. 23-4 at 160 and 165 of 222). Despite the damage, the Vessel was able to complete the
charterer's mission, with substantial completion of the Project ((See Doc. 42, Joint Pre-Trial
Order, Undisputed Facts "j", at 9 of 29 pages) apparently occurring on November 25, 2013.

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The Vessel was moved from the Project site to various docks where the spud and hull
repairs were performed. The timing of the movement of the vessel to these docks and the efforts
made for the repair thereof are somewhat unclear. What is clear is that:
(1)

in December of 2013, Grillot Construction arranged for the vessel to be towed
from the Project site to Crown Point Shipyard ("Crown Point"); (See Doc. 42,
Joint Pre-Trial Order, Undisputed Facts "l", at 9 of 29 pages).

(2)

at Crown Point one of the vessel's spuds was removed to be repaired; (See Doc.
42, Joint Pre-Trial Order, Undisputed Facts "m", at 9 of 29 pages).

(3)

Grillot Construction arranged for the damaged spud to be transported to and
repaired at Hardrock Marine Services, LLC ("HMS"); (See Doc. 42, Joint PreTrial Order, Undisputed Facts "n", at 9 of 29 pages).

(4)

the spud was repaired at HMS and returned to the vessel; (See Doc. 42, Joint PreTrial Order, Undisputed Facts "o", at 9 of 29 pages).

(5)

thereafter the vessel was towed to a dock near American Tugs, Inc. for an OffCharter Survey sometime in April of 2014; (See Doc. 42, Joint Pre-Trial Order,
Undisputed Facts "p", at 9 of 29 pages).

(6)

extensive structural damage was found that had not been present at the time of the
charter; (See Doc. 42, Joint Pre-Trial Order, Undisputed Facts "q", at 10 of 29
pages).

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(7)

Grillot Construction notified its insurance carrier to file a claim and to effect these
repairs; (See Doc. 42, Joint Pre-Trial Order, Undisputed Facts "r", at 10 of 29
pages).

(8)

there were issues with timely the provision of a docking plan by 3L; (See Doc. 42,
Joint Pre-Trial Order, Undisputed Facts "s"-"v", at 10 of 29 pages).

(9)

the ship was moved to FMT Shipyard & Repair, L.L.C.; (See Doc. 42, Joint PreTrial Order, Undisputed Facts "w", at 10 of 29 pages).

(10)

another survey was conducted on the vessel resulting in a "Damage Survey"
prepared by Breit on May 22, 2014 (Report No. 1405115); (See Doc. 42, Joint
Pre-Trial Order, Undisputed Facts "x", at 10 of 29 pages).

(11)

issues concerning the bunkers and whether the fuel compartment was
contaminated arose thereafter; (See Doc. 42, Joint Pre-Trial Order, Undisputed
Facts "y"-"z", at 10-11 of 29 pages).

(12)

Another Off-Charter Survey was conducted on August 17, 2014, which then
resulted in 13 items that were "necessary to repair" that were "not associated with
the damages sustained to the port side shell of the barge or the breaking of the
starboard forward spudwell;" (See Doc. 42, Joint Pre-Trial Order, Undisputed
Facts "bb", at 11 of 29 pages).

(13)

The Vessel was returned to 3L on August 27, 2014; (See Doc. 42, Joint Pre-Trial
Order, Undisputed Facts "aa", at 11 of 29 pages).

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(14)

Another inspection resulting in an Off-Charter Addendum Survey was conducted
by Breit on August 29, 2014, (Report 1408345) which resulted in more specific
findings as to the fuel level and the deck winch for spud operation; (See Doc. 42,
Joint Pre-Trial Order, Undisputed Facts "cc", at 11 of 29 pages).

(14)

An Off Charter Addenedum Survey ("styled C Breit Marine Services, LLC's
Survey Report # 1405182) was brought to American Tugs to estimate the cost to
repair or replace those items (except the cost of fuel); (See Doc. 42, Joint PreTrial Order, Undisputed Facts "ff", at 11 of 29 pages)

(15)

American Tugs prepared an estimate that included (i) the Off Charter Addendum
Survey 12 point list, (ii) an estimate for the cost to remove the remaining 20" of
fuel; and (iii) the cost to repair the clyde deck winch for a total amount of
$31,235.00; (Doc. 23-13). (See Doc. 42, Joint Pre-Trial Order, Undisputed Facts
"gg"-"hh", at 11 of 29 pages)

(16)

Grillot Construction did not pay monthly charter hire from December 18, 2013 to
August 27, 2014 which in accordance to the Bareboat Charter equals an amount
of past due charter hire of $450,000.00.

In addition, 3L contends that because the Vessel was redelivered in an unusable state,
under the terms of the Charter, Grillot owes 3L Charter Hire from the time the Vessel was
returned to the present date (that amount being $550,000.00) or for a reasonable amount of time
after the Vessel was returned. The relevant provisions in the Charter Contract with respect to this
claims are as follows:
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SECTION 2 - DELIVERY AND REDELIVERY
(b)

Redelivery
At the expiration of the Term of this Charter pursuant to Section 3
hereof, or upon termination of this Charter pursuant to Section 19
hereof, Charterer shall at its expense . . ., return the Vessel to
Owner at Belle Chase, Louisiana at a dock designated by Owner,
free of all liens and encumbrances other than any such liens and
encumbrances created by owner. Charter hire . . . shall continue
during the entire period of charter until the Vessel has been
redelivered by Charterer to owner.

(Doc. 23-4 at 158 of 222) However, it must be noted that the Charter Party also contains the
following provision:
SECTION 15 - CONSEQUENTIAL DAMAGES
Neither owner nor Charterer shall be responsible hereunder for
prospective profits or for special, indirect or consequential damages.
(Doc. 23-4 at 167 of 222).
Based on these facts, plaintiff maintains that there are no material questions of fact at
issue and that Grillot Construction is liable to 3L for the following:
a)

charter hire up to the time the Vessel was redelivered in the amount of
$450,000.00;

b)

necessary repairs and replenishment of consumables and inventories used while
chartered in the amount of $57,842.35;

(c)

all fuel consumed or contaminated while under charter ($70,000.00);

(d)

charter hire from the time the vessel was returned to the present date
($550,000.00);

(e)

costs and expense related to enforcing its rights and remeides under the Charter,
including attorney fees and costs and marine surveyor costs and fees ($65,000.00
combined);1 and

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This item of damages is based on the following provision:
SECTION 21- EXPENSES OF OWNER
Charterer shall pay Owner all costs and expenses, including reasonable attorneys' fees

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(f)

pre- and post-judgment interest on all amounts due.

3L seeks compensation as well from U.S. Specialty which issued a payment bond which
provides specifically that its obligation is void if Grillot "promptly makes payment to all persons
having aa direct relationship with [Grillot] for furnishing labor, materials or both in the
prosecution of the work provided for in [the subject contract]. Specifically, 3L contends that
U.S. Specialty is liable as a matter of law for:
(a)

fuel and other consumables which have not been replenished;

(b)

all necessary repairs;

(c)

unpaid charter hire;

(d)

loss of profit;

(e)

a penalty in the amount of 50% the amount found to be due from U.S. Specialty;
and

(f)

attorney's fees, court costs, and interest.

Standard for Motion for Summary Judgment
Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment
should be granted "if the movant shows that there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law." The party moving for summary
judgment bears the initial responsibility of informing the district court of the basis for its motion,
and identifying those portions of the record "which it believes demonstrate the absence of a
genuine issue of material fact." Stults v. Conoco, 76 F.3d 651 (5th Cir.1996), citing Skotak v.

and court costs, incurred by owner and exercising any of its rights or remedies hereunder or
enforcing any of the terms, conditions or provisions of this Charter.
See Bareboat Charter, Doc. 23-4 at 171 of 222.

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Tenneco Resins, Inc., 953 F.2d 909, 912-13 (5th Cir.), quoting Celotex Corp. v. Catrett, 477
U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). When the moving party has
carried its burden under Rule 56, its opponent must do more than simply show that there is some
metaphysical doubt as to the material facts. The nonmoving party must come forward with
"specific facts showing that there is a genuine issue for trial." Matsushita Elec. Industrial Co. v.
Zenith Radio Corp., 475 U.S. 574, 588, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986); Tubacex,
Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir.1995).
“A genuine issue of material fact exists ‘if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.’ ” Pylant v. Hartford Life and Accident
Insurance Company, 497 F.3d 536, 538 (5th Cir. 2007) quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment evidence must
be “viewed in the light most favorable to the nonmovant, with all factual inferences made in the
nonmovant’s favor.” Bazan ex rel Bazan v. Hildago County, 246 F.3d 481, 489 (5th Cir. 2001),
citing Anderson v. Liberty Lobby, Inc., 477 U.S. at 255, 106 S.Ct. at 2513.
[C]onclusory statements, speculation, and unsubstantiated assertions cannot
defeat a motion for summary judgment. The Court has no duty to search the
record for material fact issues. Rather, the party opposing the summary judgment
is required to identify specific evidence in the record and to articulate precisely
how this evidence supports his claim.

RSR Corporation v. International Insurance Company, 612 F.3rd 851,857 (5th Cir. 2010).

Analysis

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Clearly, the facts of this case are so contested that it is impossible for summary judgment
to be entered as to either defendant. It is unclear to what extent 3L's actions caused delays in the
repair of the spud and the hull. Its actions could affect the liability that defendants would have
for Charter Hire for the pre-redelivery period. Likewise, the issues surrounding a) the fuel tank,
b) the need for its "repair," and c) whether the fuel was actually contaminated sufficiently to
render the remaining bunkers unusable make that claim incapable of judgment. Moreover, 3L's
failure to mitigate and to take any reasonable actions so as put the Vessel in commerce after
redelivery in a reasonable period of time make unavailable 3L's claim for Charter Hire postredelivery as a subject for summary judgment. Clearly these contentions likewise render 3L's
claims for penalties and attorneys fees not the proper subject for summary judgment. Moreover,
U.S. Specialty's liability is likewise intertwined with these contested facts.
The Court notes that there are several issues of law which have not been addressed by
pretrial motion. This case would have been substantially more streamlined had the issues of law
been presented to the Court prior to trial. Thus, there are not only questions of fact but questions
of law which must now be resolved at trial. Accordingly,

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IT IS ORDERED that the Motion for Partial Summary Judgment Against Grillot
Construction, LLC (Doc. 23) and the Motion For Summary Judgment Against U.S. Specialty
Insurance Company (Doc. 24) are DENIED.
New Orleans, Louisiana, this 7th day of October, 2015.

STANWOOD R. DUVAL, JR.
UNITED STATES DISTRICT COURT JUDGE

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