Gulf Marine Fabricators, LP v. The ATP Innovator et al
ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT granting 54 Motion for Partial Summary Judgment.(Signed by Judge Nelva Gonzales Ramos) Parties notified.(mserpa, 2)
United States District Court
Southern District of Texas
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
CORPUS CHRISTI DIVISION
GULF MARINE FABRICATORS, LP,
THE ATP INNOVATOR, et al,
February 12, 2018
David J. Bradley, Clerk
§ CIVIL ACTION NO. 2:16-CV-430
ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT
Plaintiff, Gulf Marine Fabricators, LP (Gulf Marine) brings this action pursuant to
both diversity and maritime jurisdiction, 28 U.S.C. §§ 1332, 1333, against Defendants
Amerindo Services Ltd. (Amerindo) and Blue Sky Langsa, Ltd. (Blue Sky). Gulf Marine
claims, in part, that Amerindo and Blue Sky have breached a Layberth Agreement. D.E.
53. Before the Court is Gulf Marine’s Motion for Partial Summary Judgment (D.E. 54)
seeking to establish the breach of contract and determine its damages. Amerindo and
Blue Sky have responded, contesting only the enforceability of the claims for attorney’s
fees and liquidated damages. For the reasons set out below, the Court GRANTS the
motion (D.E. 54).
A. Contract, Breach, and Layberth Fees, Services, and Costs
Amerindo and Blue Sky, as the ATP INNOVATOR’s (Innovator’s) owner and
operator, respectively, entered into a Layberth Agreement with Gulf Marine dated
December 18, 2015. Pursuant to that agreement, Gulf Marine agreed to provide berthing
and dockage, mooring services, horsepower, utilities, and personnel for the Innovator, a
floating oil production platform.
D.E. 54-1, 54-3.
The agreement specified that
Amerindo and Blue Sky would pay a monthly layberth fee of $55,000 and included a
schedule of fees that would apply to additional services.
Gulf Marine supplied berthing and dockage and other services and equipment to
the Innovator beginning in December 2015. Gulf Marine invoiced Amerindo and Blue
Sky according to their agreement. Almost immediately, Amerindo and Blue Sky failed to
pay the invoiced amounts, in breach of their contract with Gulf Marine. Gulf Marine
continues to provide services to the present date because Amerindo and Blue Sky did not
move the Innovator upon termination of the agreement and because Gulf Marine secured
the arrest of the Innovator, which remains docked at its facility.
As of March 30, 2017, the full amount owed to Gulf Marine for these contract
damages totaled $1,200,323.69, less $165,000 that Amerindo and Blue Sky paid to Gulf
Marine as a security deposit. Amerindo and Blue Sky have failed to pay this outstanding
amount or any part thereof and they have interposed no substantive defense against the
indebtedness. Therefore, Gulf Marine is entitled to recover this amount from Amerindo
and Blue Sky, jointly and severally, together with ten percent (10%) pre-judgment
interest, pursuant to the agreement. D.E. 54-3, p. 10, ¶ 8.5.
The Innovator remains docked at the Gulf Marine facility and continues to accrue
berthing fees and other charges, which Gulf Marine is entitled to recover from Amerindo
and Blue Sky, jointly and severally, upon proper application.
B. Attorney’s Fees
Gulf Marine also seeks its attorney fees for prosecuting this breach of contract
claim. The Layberth Agreement recites that it “shall in all respects be governed by the
General Maritime Law of the United States, without regard to or application of its
conflicts of law provisions that would refer to the application of the laws of another
jurisdiction.” D.E. 54-3, p. 17, ¶ 12.1. “Admiralty follows the American rule that absent
a statutory provision or a contractual right, there is no legal right to attorneys' fees, and
both parties must bear their own costs.” 1 Thomas J. Schoenbaum, Admiralty and
Maritime Law § 5–16 (5th ed. 2011). The statutory right refers to the statute giving rise
to the claim, such that general state law fee-shifting statutes do not apply. Id., § 5-16,
n.48 (citing Misener Marine Const., Inc. v. Norfolk Dredging Co., 594 F.3d 832, 838
(11th Cir. 2010) and Cianbro Corp. v. George H. Dean, Inc., 733 F. Supp. 2d 191, 19495 (D. Me. 2010)).
In the maritime context, attorney fee provisions are expressed in terms of
indemnity. Here, the Layberth Agreement provides that the Owner (Amerindo and Blue
Sky) will indemnify the Shipyard (Gulf Marine) for:
any and all demands, claims, losses, costs, suits, or causes of
action (including, but not limited to, any judgments, losses,
liabilities, expenses, interest, legal fees, costs of suit, and
damages, whether in law, equity, or admiralty, and whether in
contract, tort or otherwise) (“Claims”) arising out of or in any
way related to “(a) injuries (or death) of any member of
Owner Group (b) a breach by Owner under the terms of this
Agreement or (c) damage to the property of any member of
the Owner Group.
D.E. 54-3, p. 14, ¶ 10.2 (emphasis added). While this clause plainly appears to provide
for indemnity for attorney’s fees incurred as a result of Amerindo or Blue Sky’s breach of
the agreement, Defendants suggest otherwise.
Amerindo and Blue Sky argue that legal fees incurred to enforce the indemnity
agreement against them are not recoverable, citing cases in which only fees incurred to
defend against indemnified tort claims are recoverable. Weathersby v. Conoco Oil Co.,
752 F.2d 953, 959 (5th Cir. 1984); Peter Fabrics, Inc. v. S.S. Hermes, 765 F.2d 306, 316
(2d Cir. 1985); In re Oil Spill by the Oil Rig Deepwater Horizon in the Gulf of Mexico, on
Apr. 20, 2010, 841 F. Supp. 2d 988, 1008 (E.D. La. 2012). Clause 10.2 provides that
Amerindo and Blue Sky must indemnify Gulf Marine for losses, including attorney’s
fees, for a breach of any of the terms of the Layberth Agreement. The Court holds that
Gulf Marine is entitled to recover from Amerindo and Blue Sky, jointly and severally, its
reasonable and necessary attorney’s fees and expenses, along with costs of court. The
amount of those damages will be determined upon proper application.
C. Liquidated Damages
To address the contingency that Amerindo and Blue Sky might fail to remove the
Innovator from Gulf Marine’s shipyard by the termination date, the agreement provides
for liquidated damages:
11.3 Owner hereby acknowledges that its failure to remove
the Unit from the Shipyard on or before the end of the Term
may result in damages to the Shipyard. In the event this
Agreement is terminated, and Owner fails to remove the Unit
on or before such date stipulated in Section 11.1 or Section
11.4, Owner shall be assessed a liquidated damage in the
amount of one hundred thousand dollars ($100,000.00)
payable in full no later than thirty (30) days after such
termination. The Parties acknowledge and agree that it is
difficult or impossible to determine with precision the amount
of damages that would or might be incurred by Shipyard as a
result of Owner’s failure [to] remove the Unit by the end of
the Term. It is understood and agreed by the Parties that: (i)
Shipyard shall be damaged by failure of Owner to meet such
obligations; (ii) it would be impracticable or extremely
difficult to fix the actual damages resulting there from; (iii)
any sums that would be payable under this Section 11.3 are in
the nature of liquidated damages, and not a penalty, and are
fair and reasonable; and (iv) such payment represents a
reasonable estimate of fair compensation for the losses that
may reasonably be anticipated from such failure.
Additionally, for each day the Unit remains at Shipyard’s
Facility beyond the Term, Owner shall be responsible for
such unit rates and other charges as Shipyard may, in its sole
and absolute discretion, charge.
D.E. 54-3, p. 16. Amerindo and Blue Sky argue that this liquidated damages clause
should not be enforced against them because (1) there is no evidence of the termination
of the agreement; (2) the Innovator has been under arrest since October 2016, such that
Gulf Marine has prevented its removal; and (3) as a matter of law, the liquidated damages
amount is so large as to constitute a penalty. The Court disagrees.
There is evidence of termination of the agreement. According to the Layberth
Agreement, if not extended, it automatically terminated (a) on June 30, 2016 or (b) within
fifteen (15) days of the notice of non-payment. D.E. 54-3, p. 16 (Layberth Agreement, ¶
There is no evidence that Amerindo and Blue Sky attempted to extend the
Rather, they went into default on their payment obligations almost
immediately. Thus the June 2016 termination date may apply. Alternatively, Gulf
Marine gave Amerindo and Blue Sky notice of their claim for non-payment on June 22,
2016. D.E. 54-3, p. 4, ¶ 16. Fifteen days after the notice would make the termination
date July 7, 2016.
The record contains proof of two possible termination dates, separated by two
weeks. Defendants have failed to controvert this evidence, such that the Court may find
the contract terminated as a matter of law. The termination provision, allowing for two
alternatives in calculating the termination date, does not state whether termination is
effective on the earlier or later of those two dates and the parties did not address this
issue. The Court FINDS, as a matter of law, that the agreement terminated no later than
July 7, 2016.
The arrest of the Innovator does not negate liquidated damages. It is undisputed
that the Innovator was arrested and placed under the jurisdiction of this Court on or about
October 16, 2016. While Amerindo and Blue Sky do not have the authority to remove
the Innovator at this time, they did have that authority for more than three months
between the date of termination and the date of the arrest, not to mention any time after
their default and up to the date of termination. The liquidated damages clause is triggered
by any delay in the removal of the Innovator after termination.
The only remaining reason to reject the claim for liquidated damages is if it is
unenforceable as a penalty. Amerindo and Blue Sky bear the burden of proof on this
issue. Farmers Exp. Co. v. M/V Georgis Prois, Etc., 799 F.2d 159, 162-63 (5th Cir.
1986) (citing Shel-Al Corp. v. Am. Nat. Ins. Co., 492 F.2d 87, 93 (5th Cir. 1974)); see
also, Gator Apple, LLC v. Apple Texas Restaurants, Inc., 442 S.W.3d 521, 535 (Tex.
App.—Dallas 2014, pet. denied). Applying the rubric of the Restatement (Second) of
Contracts § 356 comment b (1979), the matter is determined by looking at (a) whether the
liquidated damages amount either approximates the actual damages sustained or
represents a reasonably anticipated amount of damages that could be sustained; and (b)
whether such damages are capable of ready proof or if flexibility should be granted to the
parties to fix otherwise difficult damages issues. Farmers, 799 F.2d at 162.
Amerindo and Blue Sky have offered no evidence on these issues. They have thus
defaulted on their burden of proof. In support of liquidated damages, Gulf Marine points
out that, contractually, Amerindo and Blue Sky represented that such damages were
impossible to determine with precision, but that such damages exist; it would be difficult
to fix the amount of such damages; the $100,000 liquidated damages amount is fair and
reasonable and not a penalty; and such amount is a reasonable estimation of fair
compensation for losses caused by the failure to remove the Innovator. D.E. 54-3, p. 16
(¶ 11.3 set out in full, above).
Finding no reason to relieve Amerindo and Blue Sky from their contractual
agreement to pay liquidated damages, the Court holds that Gulf Marine may recover from
them, jointly and severally, the amount of $100,000 in liquidated damages, together with
prejudgment interest at the rate of 10% per annum.
For the reasons set out above, the Court GRANTS Gulf Marine’s motion for
partial summary judgment (D.E. 54) in its entirety. The Court HOLDS that Amerindo
and Blue Sky have breached the Layberth Agreement. The Court further ORDERS that
Gulf Marine is entitled to recover from Amerindo and Blue Sky, jointly and severally, the
Damages for unpaid account charges as of March 30, 2017, in the amount of
Damages for charges incurred after March 30, 2017, upon proper application;
Liquidated damages in the amount of $100,000;
Pre-judgment interest on said damages at the rate of ten percent (10%) per
Reasonable and necessary attorney’s fees in an amount to be determined upon
ORDERED this 12th day of February, 2018.
NELVA GONZALES RAMOS
UNITED STATES DISTRICT JUDGE
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