ARV Offshore Co., Ltd. v. Con-Dive, L.L.C.
Filing
109
MEMORANDUM OPINION AND ORDER.(Signed by Judge Sim Lake) Parties notified.(jewilliams, )
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
ARV OFFSHORE CO., LTD.,
Plaintiff,
v.
CON-DIVE, L.L.C.,
Defendant.
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CIVIL ACTION NO. H-09-0944
MEMORANDUM OPINION AND ORDER
This breach of contract action was tried to the court from
July 11 to July 13, 2011.
Because of the evolving nature of the
parties’ arguments concerning the plaintiff’s damage claims, the
court
requested
that
the
parties
submit
post-trial
briefing.
Having carefully considered the evidence in light of the parties’
arguments, the court is now prepared to rule.1
The background of this dispute is described in the very
thorough Memorandum and Recommendation of Magistrate Judge Nancy K.
Johnson (Docket Entry No. 32), which the court adopted (Docket
Entry No. 41). Judge Johnson concluded that plaintiff ARV Offshore
1
The court normally endeavors to enter findings and an order
quickly after a bench trial, but given the somewhat confusing
nature of some of the post-trial briefing, including many issues
raised for the first time after trial, the court took additional
time to carefully consider the parties’ many arguments.
Any
argument made by the parties but not addressed in this opinion was
considered by the court to have insufficient merit to warrant
discussion.
Co., Ltd. (“ARV”) and defendant Con-Dive, L.L.C. (“Con-Dive”)
entered
into
a
binding
contract2
for
ARV’s
use
of
the
Orca
saturation diving system (the “Orca”) in order to install a sub-sea
valve structure on the seabed of the Gulf of Thailand,3 and that
Con-Dive anticipatorily repudiated the contract on July 10, 2008,
by notifying ARV that the Orca system would not be available for
use by ARV. Judge Johnson concluded that issues of fact existed as
to ARV’s fraud claim.
At the beginning of the trial ARV abandoned its fraud claim.
(ARV’s promissory estoppel claim was moot since the court granted
ARV summary judgment on the breach of contract claim.)
The issues
that remained for trial were the amount of damages and attorney’s
fees that ARV was entitled to recover from Con-Dive because of its
breach of the contract.
Because evidence relating to damages
substantially overlapped the issues of contract formation and
repudiation, the court allowed the parties to present evidence on
all issues so that the court could fully appreciate the parties’
damage arguments and consider whether it should reconsider its
order adopting Judge Johnson’s Memorandum and Recommendation.
2
Letter of Award (“LOA”), Plaintiff’s Exhibit 1.
3
ARV had entered into a contract with PTT Exploration and
Production Company Limited (“PTTEP”) to do this work. Defendant’s
Exhibit 18. ARV was also involved in projects for PTT, a distinct
entity, during the same period.
Transcript of Proceedings,
July 11, 2011 (“Day 1 Transcript”), Docket Entry No. 83, pp. 21:1922:1.
-2-
Having now heard all of the evidence, the court remains persuaded
that it was correct in adopting Judge Johnson’s Memorandum and
Recommendation and in granting ARV’s motion for summary judgment on
the existence and breach of ARV’s contract with Con-Dive.
The issues to be decided by the court are therefore the amount
of damages and attorney’s fees ARV is entitled to recover.
argues that it incurred damages of $5,426,867.76.
ARV
Con-Dive argues
that ARV is not entitled to recover any damages because ARV
presented no evidence of ARV’s revenues or net profit earned or
loss incurred on the project for which Con-Dive had agreed to
provide the Orca system.
I.
A.
Findings of Fact
ARV’s Claimed Damages
ARV claims that as a result of Con-Dive’s breach, it sustained
damages in finding an alternate saturation diving system and
support vessels to complete the work on the PTTEP project.4
ARV
argues that the amount of money it spent was “necessary to mitigate
the significant potential exposure ARV would have incurred if it
had not found an alternative to the Orca so ARV could fulfill its
obligations to its client, PTT Exploration and Production Public
4
Plaintiff ARV Offshore Co., Ltd’s Trial Brief (“ARV’s PostTrial Brief”), Docket Entry No. 92, pp. 1, 2. The court ruled at
trial that work done for PTT, rather than PTTEP, was outside the
scope of contract and that, therefore, ARV could not recover
damages on the PTT project. Day 1 Transcript, Docket Entry No. 83,
pp. 80:8-13, 101:9-12.
-3-
Company Limited (“PTTEP”).”5
In addition, ARV seeks compensation
for the amount it paid to charter the Antinov, which ARV intended
to use to transport the Orca.6
In total, ARV seeks to recover
$5,426,867.75 in damages for Con-Dive’s breach of the contract.7
B.
Projected Costs on the PTTEP Work
The
middle
horizontal
column
of
Plaintiff’s
Exhibit
37,
prepared by ARV’s expert, summarizes its current damage model. ARV
is not pursuing damages for vessel mobilization or demobilization,
other than the Antinov charge.8
Had Con-Dive performed, ARV would have paid for the Orca at a
day rate of $50,0009 and the support vessel Nor Valiant at a
calculated day rate of $51,697.10
The number of days that the Orca
and the Nor Valiant would have been in use, and therefore paid for
5
ARV’s Post-Trial Brief, Docket Entry No. 92, p. 1 ¶ 2.
6
Id. at 1, 31.
7
Id. at 34 ¶ 85; Transcript of Proceedings, July 12, 2011
(“Day 2 Transcript”), Docket Entry No. 84, p. 39:6-20.
8
Day 2 Transcript, Docket Entry No. 84, pp. 49:18-50:6; ARV’s
Post-Trial Brief, Docket Entry No. 92, p. 24 ¶ 56.
9
LOA, Plaintiff’s Exhibit 1, Section 5.1.
10
Plaintiff’s Exhibit 8.
ARV’s corporate representative
testified that the $51,697 day rate for the Nor Valiant was
calculated “based on what [ARV] actually paid for the Valiant as
per the charter agreement.” Day 1 Trial Transcript, Docket Entry
No. 83, p. 51:3-16. The same rate appears on invoices billed to
ARV for the Nor Valiant included in Plaintiff’s Exhibit 10 (e.g.,
invoice labeled “ARV 00218").
-4-
by ARV, was not fixed in the contract. In constructing the damages
model, ARV’s expert used the actual number of 58 vessel days that
ARV required to complete the work with the alternate vessels (the
Stephaniturm, Mermaid Commander, and Geosea) to conclude how many
days the Orca, onboard the Nor Valiant, would have been in use had
Con-Dive performed.11
ARV’s expert testified that because he had
no information indicating otherwise, he assumed that the OrcaNor Valiant combination would have taken the same number of days to
complete the work as the Stephaniturm-Mermaid-Geosea combination
actually took to complete the work.12
ARV’s expert calculated that had Con-Dive performed, the Orca
would have been in use for 58 days at a rate of $50,000 for a total
11
Day 2 Trial Transcript, Docket Entry No. 84, pp. 52:24-53:10.
12
Id. at 54:12-55:4. Con-Dive disputes the assumption that the
Nor Valiant-Orca combination would have taken the same number of
days as the Stephaniturm, Mermaid, and Geosea. Con-Dive argues
that the Nor Valiant “experienced frequent breakdowns” while the
other three vessels “performed quite well” and did not
“experience[] any mechanical downtime over the 58 days.”
Con-Dive’s Post-Trial Reply Brief (“Con-Dive’s Reply”), Docket
Entry No. 104, pp. 6-11. Because of the Nor Valiant’s propensity
to break down, Con-Dive argues that the Nor Valiant-Orca
combination would have taken longer than the replacement vessels to
complete the work and ARV’s projected costs are, therefore, lower
than those that could possibly have been incurred. Id. Con-Dive
further argues that even if ARV would not have had to pay for the
Nor Valiant on days when the Nor Valiant was not working, ARV would
have had to pay for the Orca on days when the Nor Valiant was not
working, resulting in a total of $7,032,326 of projected Orca costs
rather than $3,606,959.04. Id. at 10-11. The parties can only
speculate, however, what extra costs associated with the Orca would
have been incurred in the event that the Nor Valiant broke down in
a scenario where Con-Dive performed.
The argument that the
Nor Valiant’s breakdowns themselves invalidate ARV’s damage model
is addressed in Section II(D).
-5-
day rate cost of $2,900,000.13 With the addition of operating costs
of $356,959.04,14 the credible evidence establishes that had ConDive performed, ARV would have spent $3,256,959.04 on the Orca to
complete the PTTEP project.15
ARV had planned to use the Nor Valiant not only to support the
Orca, but also for eight days of remote operated vehicle work and
one and a half to two days of crane lift work.16
ARV’s expert
therefore concluded that had Con-Dive provided the Orca, ARV would
have used and paid for 68 vessel days for the Nor Valiant.17
At the
calculated day rate of $51,697, ARV would have incurred a total day
rate cost of $3,515,396 for the Nor Valiant.
With the addition of
$3,186,916.36 of projected operating costs,18 the credible evidence
13
Plaintiff’s Exhibit 37.
14
Id. In calculating the projected operating costs for the
Orca and the Nor Valiant, ARV’s expert testified that he based
these figures on the actual operating costs incurred by ARV in
using the alternative vessels.
Day 2 Transcript, Docket Entry
No. 84, p. 59:5-6.
15
Plaintiff’s Exhibit 37.
The total amounts reflected on
Plaintiff’s Exhibit 37 differ from the court’s calculations because
all totals appearing in the exhibit include the mobilization and
demobilization costs, with the exception of totals that specifically indicate that those costs are excluded (appearing in italics
below the main total for each of the six subcharts and the excess
cost calculations). Because ARV is not seeking damages based on
the increased cost to it of mobilizing and demobilizing the three
replacement vessels, the mobilization and demobilization costs of
the Orca and the Nor Valiant are excluded from the damages
calculation. ARV’s Post-Trial Brief, Docket Entry No. 92, pp. 2425.
16
Day 2 Transcript, Docket Entry No. 84, p. 55:6-16.
17
Id.
18
Plaintiff’s Exhibit 37.
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establishes that had Con-Dive performed, ARV would have spent
$6,702,312.36 for the use of the Nor Valiant to complete the
project.
The credible evidence shows, therefore, that had Con-Dive
performed, ARV would have spent $9,959,271.40 on the Orca and the
Nor Valiant, excluding mobilization and demobilization.
ARV entered into an Aircraft Charter Agreement with Air
Charter Service to provide an AN124 aircraft (the Antinov) to
transport the Orca for $1,375,450.19
Under the contract, ARV had
contracted to pay half of the air freight charge, with Con-Dive
paying the other half.20
Since the charge for the Antinov was
$1,375,450,21 ARV would have paid $687,725 for the Antinov had ConDive not breached.
Adding this projected Antinov cost to the combined cost for
the Orca and Nor Valiant yields the cost that ARV would have
incurred
had
Con-Dive
performed
the
contract
with
ARV:
$10,646,996.40.
C.
ARV’s Actual Costs
Because of Con-Dive’s breach, ARV was forced to go out into
the market to acquire substitute systems to complete the work.
19
Plaintiff’s Exhibit 3. The court notes that the version of
the Agreement admitted into evidence is signed by ARV, but not by
Air Charter Service.
20
LOA, Plaintiff’s Exhibit 1, Attachment 2, Section 1.1.
21
Plaintiff’s Exhibit 4 (Air Charter Service Invoice).
-7-
Because of market conditions it cost ARV substantially more to
complete the work with the alternate systems it was able to acquire
than it would have cost had Con-Dive performed.22
In total, the
credible evidence shows that ARV paid $16,072,036.80 in order to
complete the work.23
Plaintiff’s
Exhibit
37.
Plaintiff’s
Exhibit
37
(the
spreadsheet summarizing ARV’s damages model) is a summary of
Plaintiff’s Exhibit 38 (the vessel chronologies), Plaintiff’s
Exhibit 10 (the invoices), and the vessel logs.24 ARV’s expert took
the day rate for the vessels from the invoices submitted under
Plaintiff’s Exhibit 10.25
ARV’s expert calculated the number of
days worked on the PTTEP project from the daily logs of the
vessels.26
While the daily logs of the vessels were not admitted
into evidence, Plaintiff’s Exhibit 38 contains a chronology of
vessel activity that was based on the logs and which forms the
basis for the number of charter days spent by each vessel on the
PTTEP project reflected in Plaintiff’s Exhibit 37.27 In calculating
the operating costs actually paid on the PTTEP project, separated
from those paid on the PTT project, ARV’s expert “looked at the
22
Day 2 Transcript, Docket Entry No. 84, pp. 56:24-57:14.
23
Plaintiff’s Exhibit 37.
24
Day 2 Transcript, Docket Entry No. 84, pp. 40:12-15, 32:6-20.
25
Id. at 50:22-24.
26
Id. at 32:6-20.
27
Id.
-8-
operating costs of the vessel during the charter period . . . [and]
allocated the operating costs equally based on the number of
days.”28
In calculating operating costs ARV’s expert acknowledged that
there is “a little inconsistency between the vessels.”29
[F]or the most part, when you are renting a diving
vessel, your day rate includes the vessel and the cost of
the diving crew. Okay.
Your operating costs are going to include the fuel
and some of the food and catering, okay, related to
feeding that crew, as well as perhaps moving them and
cycling them and replacing them with crews after 21 days
or 30. So, you have logistics costs in the operations.
Now, the problem with some of these contracts is not
everyone will treat the same items in the day rate as
they do -- as what I’ll call an extra cost, an operating
cost.
So, one company might say:
Hey, my crews are
extra costs; and the day rate is just the boat. Another
might come in and say: Well, my day rate is the boat and
the crew; but the extra costs are the food and the fuel.
So, you have to look at both of them. And I tried to do
that uniformly on the same vessel-to-vessel basis and on
a per day basis.30
The
court
finds
the
testimony
of
ARV’s
expert
and
the
spreadsheet calculation of ARV’s actual costs on the PTTEP project
prepared by ARV’s expert to be credible and persuasive.
More
specifically, except for the two charges discussed in the next two
paragraphs, the court finds that Plaintiff’s Exhibit 37, in the
left side of the middle horizontal column (titled “PTT-E&P Project
28
Id. at 51:4-6.
29
Id. at 58:2-3.
30
Id. at 58:3-20.
-9-
Costs”), provides an accurate summary of the amounts paid on the
PTTEP project by ARV, as supported by the invoices admitted in
Plaintiff’s Exhibit 10 and the testimony of ARV’s expert.
ARV
entered
into
a
contract
with
Air
Charter
Service31
requiring it to pay for the Antinov before Con-Dive breached its
contract with ARV.32 ARV paid the full air freight charge of
$1,375,450.00 for the Antinov33 (the amount reflected in the invoice
included in Plaintiff’s Exhibit 4) and not $1,375,464.85 (the
amount reflected in Plaintiff’s Exhibit 37).
The court also finds that there is insufficient evidence to
support an award on the basis of any amount paid for the tug Erna.
Plaintiff’s Exhibit 37 reflects a charge of $1,812.50.
payment
is
Exhibit 10.
supported
by
invoices
contained
in
This
Plaintiff’s
Nevertheless, it was not established that this tug
would not have been used had Con-Dive performed under the contract,
and therefore it was not established that the tug cost is an extra
cost incurred as a result of Con-Dive’s breach.
The court has
identified only two places in the evidence where the Erna is
referenced (the aforementioned entry in Plaintiff’s Exhibit 37 and
the invoices in Plaintiff’s Exhibit 10), and the court finds that
this evidence is insufficient to support an award of this cost.
31
Plaintiff’s Exhibit 3.
32
LOA, Plaintiff’s Exhibit 1.
33
Plaintiff’s Exhibit 4.
-10-
ARV’s corporate representative (Mr. Stewart) testified that
after Con-Dive’s breach and after subsequent negotiations with ConDive
broke
alternatives.
down,
“[ARV]
had
immediately
started
sourcing
And we went into the marketplace looking for SAT
systems. Individual portable SAT systems similar to the Orca or to
the Global Divers system were not available, but we were able to
find a DSV on a vessel-of-opportunity basis.”34 While a stand-alone
system would have been preferable because it would have worked with
the already-chartered Nor Valiant, ARV was forced to use instead a
“built-in” diving system.35
Because the “offshore oil and gas
industry was starting to overheat” at the time and “the market was
very, very tight,” the best that ARV was able to do was to charter
three diving support vessels on a window-of-opportunity basis to
complete the work: the Stephaniturm, the Mermaid, and the Geosea.36
The court finds that the Geosea worked on the PTTEP project
for 5.20 days37 at a rate of $148,000 per day38 for a total day rate
cost of $769,600.39
The court accepts the calculation of Geosea’s
operating costs by ARV’s expert of $29,049.29.40
34
Day 1 Transcript, Docket Entry No. 83, pp. 42:21-43:1.
35
Id. at 43:4-25.
36
Id. at 44:4-23, 46:3-13.
37
Plaintiff’s Exhibit 37.
38
Id.; Plaintiff’s Exhibit 10 (Geosea invoices).
39
Plaintiff’s Exhibit 37.
40
Id.
-11-
The court finds that the Mermaid worked on the PTTEP project
for
a
total
of
33.80
days
for
a
total
day
rate
cost
of
$6,055,477.22.41 The court accepts the calculation of the Mermaid’s
operating costs of $35,807.33.42
ARV chartered the Nor Valiant in anticipation of using it with
a saturation diving system before Con-Dive breached.43 The court
finds credible ARV’s expert’s calculation that the Nor Valiant
worked a total of 39.90 days44 on the PTTEP project for a total day
rate of $2,207,100.02,45 with $1,869,970.04 in operating costs.46
ARV did not pay the full rate for the Nor Valiant on days when “the
crane wasn’t working at a 100% capacity,”47 and the court accepts
ARV’s expert’s testimony that these deductions are accurately
reflected
in
the
day
rate
costs
contained
in
Plaintiff’s
Exhibit 37.
41
Id.
42
Id.
43
Transcript
of
Proceedings,
July
13,
2011
(“Day
3
Transcript”), Docket Entry No. 85, pp. 41:12-42:17. Note that the
Nor Valiant was chartered before ARV and Con-Dive entered into the
contract, but for the purpose of putting a system such as the Orca
on it. Id.
44
Plaintiff’s Exhibit 37.
45
Id.
46
Id.
47
Day 1 Transcript, Docket Entry No. 83, pp. 107:21-108:4,
92:7-13, 110:1-12.
-12-
The court finds that Stephaniturm worked for 19.30 days on the
PTTEP project48 at a rate of $192,000 per day49 for a total day rate
cost of $3,705,600,50 with $23,982.90 in operating costs.51
In sum, based on the court’s review of Plaintiff’s Exhibit 37
(the spreadsheet containing the damages model) in conjunction with
Plaintiff’s Exhibit 10 (the invoices that provide the basis for
that model) and the testimony of ARV’s expert, the court finds that
ARV actually paid out $16,072,036.80 in order to complete PTTEP
work after Con-Dive breached the contract.
This $16,072,036.80 is
the sum of the following costs:
Full charge for the Antinov
Geosea day rate cost
Geosea operating costs
Mermaid day rate cost
Mermaid operating costs
Nor Valiant day rate cost
Nor Valiant operating costs
Stephaniturm day rate cost
Stephaniturm operating costs
=
=
=
=
=
=
=
=
=
TOTAL ACTUAL COSTS PAID BY ARV
D.
$1,375,450.00
$ 769,600.00
$
29,049.29
$6,055,477.22
$
35,807.33
$2,207,100.02
$1,869,970.04
$3,705,600.00
$
23,982.90
$16,072,036.80
The Reasonableness of the Actual Costs
On the basis of the liability that ARV may have incurred had
it breached its own contractual obligations to PTTEP,52 the court
48
Plaintiff’s Exhibit 37.
49
Plaintiff’s Exhibit 10 (Stephaniturm invoices).
50
Plaintiff’s Exhibit 37.
51
Id.
52
Defendant’s Exhibit 18.
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finds that ARV was reasonable in going into the market to find an
alternative diving system after Con-Dive failed to provide the
Orca.
ARV’s expert testified as follows when asked at trial whether
the actual costs incurred by ARV in the wake of Con-Dive’s breach
were reasonable and necessary:
When vessels are in short supply and you need one at the
last moment, my experience is you pay through the nose.
So, the premiums that were paid for these vessels for
last
second
charters
are
not
unreasonable
or
53
uncharacteristic of what happens in the industry.
ARV’s expert also testified that the actual number of vessel days
used by the replacement vessels was reasonable and necessary to
complete the PTTEP work.54
The court finds that the expert’s
testimony as to the reasonableness of the actual amounts paid is
credible and persuasive, and the court finds that the actual
amounts expended by ARV in completing the PTTEP work was reasonable
under the circumstances.
The court is also persuaded that ARV reasonably mitigated its
damages with regard to the Antinov.
ARV’s agreement with Air
Charter Service for the Antinov contained an escalating penalty for
late cancellation.55
After Con-Dive sent an e-mail stating that it
53
Day 2 Transcript, Docket Entry No. 84, pp. 56:24-57:9.
54
Id. at 57:10-14.
55
Aircraft Charter Agreement, Plaintiff’s Exhibit 3, p. 1
(section entitled “Cancellation”).
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would not deliver the Orca,56 ARV had reason to believe Con-Dive’s
assurances57 that it would locate a substitute SAT diving system to
be transported by the Antinov and had reason to believe that the
substitute SAT diving system would be provided on terms substantially similar to those in the contract. ARV therefore delayed its
cancellation of the Antinov until it was forced to incur the full
cost of the air charter service.58
The court finds that ARV acted
reasonably in delaying its cancellation of the Antinov and that the
full charge it actually paid to Air Charter Service was reasonable
mitigation properly included in the actual costs used to compute
ARV’s damages.
E.
Attorney’s Fees
ARV’s counsel testified at trial that the reasonable and
necessary attorney’s fees incurred by ARV in litigating its breach
56
Plaintiff’s Exhibit 6 (July 10, 2008, e-mail from Joe Parker
stating, “[t]his is to inform you that the Orca saturation system
is no longer available for deployment on the subject project.”).
57
Id. (“Con-Dive intends to fulfill its scope of work on the
project by utilizing another sat diving system that (1) is IMCA
certified, (2) does not require air freighting, and (3) has
availability in line with the project schedule parameters.”). This
e-mail expressed an intent to deliver an alternative system to the
Orca, but one that did not require air freighting. The alternative
system that Con-Dive ultimately offered -- on terms substantially
more expensive than those set out in the contract -- actually did
require air freighting from Houston to the Nor Valiant.
Plaintiff’s Exhibit 40 (July 15, 2008, e-mail from Joe Parker).
ARV therefore acted reasonably in not cancelling the Antinov
earlier than it did.
58
Day 1 Transcript, Docket Entry No. 83, p. 40:18-22.
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of contract claim totaled $80,699.63.59 Con-Dive stated that it did
not object to the reasonableness of this amount of attorney’s
fees.60
The court agrees, and finds that $80,699.63 is the amount
of reasonable and necessary attorney’s fees incurred by ARV in
litigating its breach of contract claim.
ARV requests $25,000.00 in the case of an unsuccessful appeal
by Con-Dive to the Fifth Circuit, $10,000.00 to respond to a writ
of certiorari to the Supreme Court of the United States, and
$5,000.00 in the event that such writ is granted.61
ARV’s counsel
testified at trial as to the reasonableness of these estimates.62
The court finds that these estimates of attorneys fees on appeal
are reasonable.
II.
A.
Conclusions of Law
Texas Law, and Not Admiralty Law, Controls This Case
In its Post-Trial Brief, Con-Dive asserts for the first time
that this case is controlled by admiralty law and not the law of
the state of Texas.63
ARV’s Complaint invokes only this court’s
59
Day 2 Transcript, Docket Entry No. 84, p. 86:17-23.
60
Id. at 86:25-87:1.
61
ARV’s Post-Trial Brief, Docket Entry No. 92, pp. 2, 33-34.
62
Day 2 Transcript, Docket Entry 84, p. 88:6-10.
63
Con-Dive’s Post-Trial Brief, Docket Entry No. 98-4, pp. 7,
30.
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diversity jurisdiction.64
to maritime law.65
Con-Dive’s Answer contains no reference
The Joint Pretrial Order (Docket Entry No. 67)
refers to Texas substantive law.66
ARV argues that Con-Dive has
waived this issue by failing to include it in the Joint Pretrial
Order or any other filing with this court before its post-trial
brief.67
The court concludes that Texas law governs this case because
Con-Dive waived this issue by not including it in the Joint
Pretrial Order.
The joint pretrial order “controls the course of
the action unless the court modifies it.”
Fed. R. Civ. P. 16(d).
Claims or issues omitted from the pretrial order “are waived, even
if [they] appeared in the complaint.”
Kona Tech. Corp. v. S. Pac.
Transp. Co., 225 F.3d 595, 604 (5th Cir. 2000).
issues are waivable.
Choice-of-law
See Fruge v. Amerisure Mut. Ins. Co., 2011
WL 5842821, at *2 (5th Cir. 2011) (finding a choice-of-law question
waived on appeal by virtue of the party’s failure to raise the
issue before the district court).
While a court may raise the
choice of law issue on its own, it does so “where manifest
64
Plaintiff ARV Offshore Co., Inc’s Original Complaint, Docket
Entry No. 1, p. 1.
65
Defendant Con-Dive, L.L.C.’s Original Answer, Docket Entry
No. 5.
66
Joint Pretrial Order, Docket Entry No. 67, pp. 4, 9-10.
67
Plaintiff’s Response to Defendant’s Post-Trial Brief and
Revised Proposed Findings of Fact and Conclusions of Law (“ARV’s
Response”), Docket Entry No. 103, pp. 4-6.
-17-
injustice would otherwise result,” which requires a showing greater
than that “the application of another state’s law would produce a
different result.”
Triad Elec. & Controls, Inc. v. Fireman’s Fund
Ins. Co., 2005 WL 2647955, at *2 (N.D. Tex. 2005) (citing Am. Int’l
Trading Corp. v. Petroleos Mexicanos, 835 F.2d 536, 540 (5th Cir.
1987)). A choice-of-law issue must be raised to the district court
“in time to be properly considered.”
Kucel v. Heller & Co., 813
F.2d 67, 74 (5th Cir. 1987).
Con-Dive failed to argue the issue of whether maritime or
Texas law governed the contract at any point before its post-trial
briefing.
The court therefore concludes that Con-Dive waived this
issue and that Texas law will govern, in accordance with the Joint
Pretrial Order.68
B.
Breach of Contract Damages Under Texas Common Law
In a breach of contract case under Texas law the “ultimate
goal in measuring damages . . . is to provide just compensation for
68
Joint Pretrial Order, Docket Entry No. 67, pp. 9-10. The
court also concludes that ARV has waived its argument that
Article 2A of the Texas version of the Uniform Commercial Code
applies.
ARV cites to Article 2A in its post-trial briefing.
ARV’s Post-Trial Brief, Docket Entry No. 92, pp. 2, 28-29. It is
at least arguable that Article 2A could apply to this case. See
Frank’s Int’l, Inc. v. Smith Int’l, Inc., 249 S.W.3d 557 (Tex.
App.—Houston [1st Dist.) 2008, no pet.) (holding that Article 2A
applied to a lease of oilfield equipment in a breach of contract
case, even where the lease included a provision for maintenance
services). The Joint Pretrial Order references only Texas common
law in the sections titled “Agreed Applicable Propositions of Law”
and “Contested Issues of Law” insofar as they concern the breach of
contract claim. Joint Pretrial Order, Docket Entry No. 67, pp. 910.
The court therefore concludes that ARV’s argument for the
application of Article 2A is waived.
The court will apply the
Texas common law of contracts to this dispute.
-18-
any loss or damage actually sustained as a result of the breach.”
Clear Lake City Water Auth. v. Friendswood Dev. Co., 344 S.W.3d
514, 523 (Tex. App.–Houston [14th Dist.] 2011, no pet h.) (internal
quotation marks omitted); accord Bowen v. Robinson, 227 S.W.3d 86,
96 (Tex. App.–Houston [1st Dist.] 2006, no pet.).
The purpose of
this measure of damages “is to restore the injured party to the
economic position it would have been in had the contract been fully
performed.”
Clear Lake, 344 S.W.3d at 523.
The Fifth Circuit has
applied this measure of damages to breach of contract cases on
numerous occasions. E.g., DP Solutions, Inc. v. Rollins, Inc., 353
F.3d 421, 428 (5th Cir. 2003) (“Under Texas law, the proper damages
award for a breach of contract is the amount necessary to put the
party ‘in the same economic position in which it would have been
had the contract not been breached.’”); Reynolds Metals Co. v.
Westinghouse Elec. Corp., 758 F.2d 1073, 1079 (5th Cir. 1985) (“The
law of contract, whether under the common law or the Uniform
Commercial Code, generally authorizes damages for breach in the
amount of the expectancy interest of the wronged party.
That is,
the rules for contract damages are intended to place the victim of
the breach in the same position he would have occupied had the
breach not occurred.”).
The court must determine how to put ARV into the same economic
position it would have been had Con-Dive provided the Orca.
A
review of § 347 of the Restatement (Second) of Contracts, cited
with approval by Texas courts, and damage awards by Texas courts in
-19-
construction contract cases provide the basis for a more specific
formulation of the general contract damages rule.
The Restatement (Second) of Contracts states that “where the
injured party has simply had to pay an additional amount to arrange
a substitute transaction and can be adequately compensated by
damages based on that amount,” this sum will be sufficient to put
the nonbreaching party in the position it would have been had the
breach not occurred.
Restatement (Second) Contracts § 347 cmt. a
(1981). The Restatement later notes in the same section that where
“the breach itself results in a saving of some cost that the
injured party would have incurred if he had had to perform,”
“[t]his cost avoided is subtracted from the loss in value caused by
the breach in calculating his damages.”
Id. at § 347 cmt. d.
The
Restatement formulation of the general contract damages rule has
been cited with approval in Texas.
E.g., Lefarge Corp. v. Wolff,
Inc., 977 S.W.2d 181, 187 (Tex. App. -– Austin 1998, pet. denied)
(“A party’s expectation interest is measured by his anticipated
receipts and losses caused by the breach less any cost or other
loss he has avoided by not having to perform.”) (emphasis omitted).
In construction contracts the following calculation has been
used by courts to put the plaintiff in the position it would be in
had the contract been performed:
Damages for breach of contract are the contract price,
less the cost of completion. As applied in construction
cases, the general rule is that the correct measure of
damages resulting from the breach of a building contract
is the reasonable cost of remedying the defects which
constitute the breach.
-20-
Driver Pipeline Co. v. Mustang Pipeline Co., 69 S.W.3d 779, 786
(Tex. App.—Texarkana 2002, rev’d in part on other grounds, 134
S.W.3d 195 (Tex. 2004)) (internal citations omitted).
An earlier
Fifth Circuit opinion put the rule more directly:
By the contract the plaintiff acquired the right to have
a well drilled by defendant on the leased land as
stipulated. A result of defendant’s failure to do what
it contracted to do was to make it liable to the
plaintiff for the amount of the reasonable cost of having
that done which the defendant obligated itself to do.
All-American Oil & Gas Co. v. Connellee, 3 F.2d 107, 107-08 (5th
Cir. 1925).
This rule has been followed by this court as recently
as 2009.
In contracts for the construction or repair of property,
a plaintiff may recover the reasonable cost of remedying
any defects in performance or of getting the whole job
done elsewhere if there has been a complete failure of
performance.
However, the complaining party cannot
recover damages exceeding the amount he would have
received had the contract not been broken.
Dinn v. Hooking Bull Boatyard, Inc., 2009 WL 2161676, at *4 (S.D.
Tex. 2009) (internal citations omitted) (applying Texas substantive
law).
The court concludes that in order to put ARV into the economic
position
it
would
have
occupied
had
Con-Dive
performed
its
obligations under the contract, the court should award damages
equal to the reasonable amount that ARV actually paid to complete
the PTTEP work with alternate vessels (the cost of completion),
less the amount that ARV would have paid to complete the PTTEP work
had Con-Dive provided the Orca (the cost avoided).
-21-
C.
Calculation of ARV’s Damages: The Amount Necessary to Put ARV
into the Same Position it Would Have Been in had Con-Dive
Performed
As the court’s findings above reflect, ARV reasonably spent
$16,072,036.80 in order to complete the PTTEP work that it would
have
completed
using
the
Orca
obligations under the contract.
have spent $10,646,996.40.
had
Con-Dive
performed
its
Had Con-Dive performed, ARV would
The sum required to put ARV into the
economic position it would have been in had Con-Dive not breached
is, therefore, $5,425,040.40.
The court will award this amount to
ARV as damages for Con-Dive’s breach of the contract.
D.
Counter-arguments Made by Con-Dive
Duration of the Contract.
had
a
fixed,
90-day
Con-Dive argues that the contract
duration
that
Section 12.1 of the contract states:
ended
on
September
24.69
“Notwithstanding anything to
the contrary herein, the validity of this LOA shall expire upon the
execution of the formal Subcontract or ninety (90) days from the
date first appearing above, whichever is the earliest, unless and
to the extent otherwise agreed in writing between the Parties.”70
Con-Dive argues that it is impossible that the Nor Valiant-Orca
combination could have finished the work on the PTTEP project in
this 90-day window and that ARV is therefore not entitled to
69
Con-Dive’s Reply, Docket Entry No. 104, pp. 5-11; Con-Dive’s
Post-Trial Brief, Docket Entry No 98-4, p. 25.
70
LOA, Plaintiff’s Exhibit 1, p. ARV 00009.
-22-
recover on a damages model that assumes that the work could have
been completed had Con-Dive performed.71 As evidentiary support for
this argument, Con-Dive points to the alleged propensity of the
Nor Valiant to break down and to the alleged late arrival of the
Nor Valiant to the PTTEP job site.72
Con-Dive’s argument bears on the question of what damage award
would be necessary to put ARV in the same economic position it
would have been had the contract been performed.
If Con-Dive’s
full performance would not have enabled ARV to complete the PTTEP
work, then ARV would not be entitled to damages equivalent to the
cost of completing the PTTEP work less the cost avoided.
The court is not persuaded by Con-Dive’s argument for several
reasons.
First,
calculations.
Con-Dive
uses
incorrect
values
in
its
Con-Dive emphasizes the Nor Valiant’s late arrival
to the PTTEP job-site.
The court finds the date of the Nor
Valiant’s arrival insignificant, however, since given the absence
of the Orca, there was no reason to deploy the Nor Valiant to the
job-site until an alternative diving system was available.
As to
the delay in the project more generally, the court finds credible
the testimony of ARV’s expert that during the period in question
the “market was very tight, and basically everyone was dealing with
71
Con-Dive’s Reply Brief, Docket Entry No. 104, pp. 5-11.
72
Id. at 5, 7-10; Con-Dive’s Post-Trial Brief, Docket Entry
No. 98-4, p. 25.
-23-
windows of opportunities as projects slipped.”73 Moreover, Con-Dive
improperly includes suspension of hire time in its calculations of
the Nor Valiant’s deficiencies.74 ARV mitigated its damages by offhiring the Nor Valiant, thereby reducing its actual costs.75
The
court finds that the suspension of hire periods are not evidence of
the Nor Valiant’s poor performance or propensity to break down.
Con-Dive also notes that the Nor Valiant experienced 19.1 days
of mechanical downtime.76
There was credible evidence, however,
that even on days where the Nor Valiant was working at less than
100% capacity, it was able to do some work.77
If one assumes that
the Nor Valiant was able to perform only 50% of its daily work on
these 19.1 days, the Nor Valiant could have nevertheless performed
the 68 days of work required of it within the 90-day period:
Reducing
the
19.1
ineffective
days
by
50%
(because
of
the
assumption that the Nor Valiant was 50% effective on those days)
yields a result of 9.55 ineffective days (over 48.95 on-hire days78)
73
Day 2 Transcript, Docket Entry No. 84, pp. 46:19-48:12.
74
Con-Dive’s Post-Trial Brief, Docket Entry No. 98-4, p. 25;
Con-Dive’s Reply, Docket Entry No. 104, p. 7.
75
Day 1 Transcript, Docket Entry No. 83, p. 54:4-6.
76
Con-Dive’s Post-Trial Brief, Docket Entry No. 98-4, p. 25.
77
Day 1 Transcript, Docket Entry No. 83, p. 96:10-13.
78
This 48.95 value is taken, for the purposes of evaluating
Con-Dive’s argument, from Con-Dive’s briefing: Con-Dive alleges a
relevant period of 67.25 days and the court subtracts the 18.3
suspension-of-hire days as irrelevant to reach the 48.95 total days
on site value. Con-Dive’s Reply, Docket Entry No. 104, pp. 8-9.
-24-
in which it was completely ineffective.
effective 80.5% of the time.79
The Nor Valiant was thus
Over the 90-day period of the
contract the Nor Valiant would therefore have been effective on at
least 72 days, 4 more days than needed.
analytical
framework,
the
court
Even accepting Con-Dive’s
therefore
concludes
that
the
Nor Valiant, working with the Orca, was sufficiently effective to
complete the work within 90 days.
Second, Con-Dive’s argument overlooks the overall contractual
relationship between ARV and Con-Dive.
The contract agreed to by
ARV and Con-Dive included a plan to replace the contract with
another agreement, the “Subcontract.”
Section 2.1 of the contract
provided that “[t]his LOA shall be replaced by a formal Subcontract
Agreement (hereinafter “Subcontract”) to be entered into by the
Parties as quickly as is practical after the date hereof, but under
no circumstances later than the date upon which the Subcontractor’s
Diving System is placed on Contractor’s Vessel.”
Because of
Con-Dive’s breach, the ultimate deadline for entering into the
Subcontract (and therefore extending Con-Dive’s obligation to
provide the Orca past the 90-day window) never materialized.
The
crux of Con-Dive’s argument is that Con-Dive’s failure to perform
its obligations under the contract saves Con-Dive from having to
compensate ARV for the full amount of the direct and foreseeable
damages that ARV incurred as a result of Con-Dive’s breach.
79
The
The Nor Valiant was effective for 39.4 of the total 48.95
days on-hire, i.e., 80.5% of the time. The 39.4 effective days
figure is calculated by reducing the number of on-hire days (48.95)
by the number of ineffective days (9.55) determined above.
-25-
court rejects this argument because it would not be equitable to
limit ARV’s damages by allowing Con-Dive to exploit the timing of
its own breach.
Because Con-Dive has presented no persuasive arguments or
evidence to the contrary, the court remains persuaded by the
credible testimony of Mr. Stewart, the managing director of ARV
since 2005,80 that had the Orca been provided, it would have taken
90 days to complete the PTTEP work.81
The court therefore finds
that ARV would have completed the PTTEP work within the 90 days set
out in the contract if Con-Dive had provided the Orca.
Alleged Revenues Received by ARV.
Con-Dive argues that ARV
would receive a “windfall recovery” and “be put in a better
position than had the contract been performed” were the court to
award ARV damages in this case.82
Con-Dive alleges that ARV made
a profit from most of the additional vessel costs it sustained.83
Con-Dive cites the testimony of Mr. Stewart in support of this
claim.84
At trial, Mr. Stewart gave the following testimony:
80
Day 1 Transcript, Docket Entry No. 83, p. 21:8-11.
81
Id. at 28:10-29:14.
82
Con-Dive’s Post-Trial Brief, Docket Entry No. 98-4, pp. 1720; Con-Dive’s Reply, Docket Entry No. 104, pp. 1-5.
83
Con-Dive’s Post-Trial Brief, Docket Entry No. 98-4, pp. 18-
84
Con-Dive quotes the following testimony of Mr. Stewart:
20.
Q.
In fact, if we look at all of the expenses that ARV lists
as its actual expenses in this case, which serves as the
basis for its damage calculations -- and those expenses
(continued...)
-26-
Q.
So, to the extent you had extra vessel days, ARV
was, in fact, reimbursed by its customers for all
extra days excepting only eight days for the
Nor Valiant and seven to eight days for the Geosea,
correct?
A.
Correct.
And may I just qualify?
There was, I
believe, another couple of half days or threequarter days that maybe amounted to an extra couple
of days total.
Q.
But essentially that’s right?
A.
Yes.
Con-Dive
Correct.85
argues
that
in
order
to
“assess[]
whether
ARV
suffered a loss, evidence of revenue is essential.”86 Con-Dive then
cites testimony by ARV’s damages expert that “[i]f you want to know
what profit or loss is, you have to study revenue; but that was
outside the scope of my engagement.”87
Con-Dive argues that “ARV
cannot have proven damages when its own expert on damages admits
that ARV has not established a loss -- and may even have profited
84
(...continued)
appear as Plaintiff’s Exhibit 9. If we look at those
expenses, isn’t it true that ARV was reimbursed by its
customer for all vessel days -– . . . except for eight
days for the vessel Nor Valiant and seven to eight days
for the vessel Geosea? It’s true, isn’t it?
A.
Excluding for the -- excluding the base scope, which was
a lump sum, yes.
Day 2 Transcript, Docket Entry No. 84, p. 6:12-25 (quoted in
Con-Dive’s Post-Trial Brief, Docket Entry No. 98-4, p. 19).
85
Day 2 Transcript, Docket Entry No. 84, p. 7:7-15.
86
Con-Dive’s Post-Trial Brief, Docket Entry No. 98-4, p. 19.
87
Day 2 Transcript, Docket Entry No. 84, p. 75:20-22.
-27-
from Con-Dive’s alleged breach.”88
Con-Dive’s argument boils down
to the contention that a “reimbursed cost is not a loss,”89 that the
majority of ARV’s costs were reimbursed, and that “[a] damage award
of a reimbursed cost is a windfall,”90 putting ARV in a better
position than it would have been in had Con-Dive performed.
Con-Dive bears the burden of showing that ARV received a
benefit from its increased expenditures, i.e., that it was paid
back and even made a profit from the increased number of vessel
days associated with its PTTEP project. See Amigo Broadcasting, LP
v. Spanish Broadcasting Sys., Inc., 521 F.3d 472, 486 (5th Cir.
2008) (“[I]t is the burden of [the breaching party], not the
[nonbreaching
party],
to
show
that
[the
nonbreaching
party]
received a benefit from its expenditure that reduce[s] or offset[s]
the amount of reliance damages to which [the nonbreaching party]
claims it is entitled.”). The court finds that Con-Dive has failed
to carry this burden.91
While the testimony quoted above is some
88
Con-Dive’s Post-Trial Brief, Docket Entry No. 98-4, p. 20.
89
Id. at 23 (applying this argument to the Geosea).
90
Con-Dive’s Reply, Docket Entry No. 104, p.3.
91
Con-Dive argues that “ARV has assiduously avoided presenting
any evidence of its revenues or profit. In fact, it improperly
failed to produce such evidence when requested in discovery.”
Con-Dive’s Reply, Docket Entry No. 104, p. 5. Because Con-Dive
bears the burden of proving that ARV was compensated for its costs,
it was not ARV’s responsibility to ensure that this evidence is
submitted to the court. As to the allegations of impropriety in
the discovery process, this is an issue that should have been
raised to the court before trial, not for the first time in the
defendant’s post-trial briefing.
-28-
evidence that ARV was reimbursed for most of the vessel days, the
court finds that this evidence by itself is insufficient. There is
no evidence before the court documenting or substantiating payments
reimbursing ARV, such as invoices issued by ARV or deposition
testimony by ARV’s client indicating that it reimbursed ARV a
certain sum.
For this reason, the court is not persuaded by
Con-Dive’s arguments based on ARV’s alleged reimbursements for
costs.
E.
Interest
Prejudgment Interest. Because this is a diversity case, Texas
law governs the award of prejudgment interest.
Arete Partners,
L.P. v. Gunnerman, 643 F.3d 410, 412 (5th Cir. 2011).
Prejudgment
interest “is intended to compensate a plaintiff for the lost use of
the money due as damages during the lapse of time between the
accrual of the claim and the date of judgment.”
Id. at 412-13
(internal quotation marks and citations omitted).
“[U]nder Texas
law, whether entitlement to prejudgment interest is derived from
statute or . . . equity, prejudgment interest accrues at the rate
for postjudgment interest.”
Id. at 415 (quoting Johnson & Higgins
of Tex., Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 532 (Tex.
1998)) (internal quotation marks omitted).
The Texas Supreme Court has adopted as the common law rule the
statutory
scheme
governing
Higgins, 962 S.W.2d at 531.
prejudgment
interest.
Johnson
&
Section 304.003 of the Texas Finance
-29-
Code sets the post-judgment interest rate, giving it a “‘floor
interest rate’ of five percent.”
Because
the
prime
rate
set
by
Arete Partners, 643 F.3d at 415.
the
Federal
Reserve
Board
of
Governors is currently below 5%, the court must apply the 5% rate
of prejudgment interest.
Under Section 304.104 of the Texas
Finance Code, prejudgment interest is computed as simple interest
and
“accrues
on
the
amount
of
a
judgment
during
the
period
beginning on the earlier of the 180th day after the date the
defendant receives written notice of a claim or the date the suit
is filed, and ending on the day preceding the date judgment is
rendered.”
While prejudgment interest is recoverable on ARV’s damage
award
for
Con-Dive’s
breach,
prejudgment
recoverable on ARV’s attorney’s fees.
interest
is
not
Cain v. Pruett, 938 S.W.2d
152, 158 (Tex. App.—Dallas 1996, no pet.).
ARV first presented its claim to Con-Dive on February 27,
2009.92
ARV filed this action on March 30, 2009.93
Prejudgment
interest will run from March 30, 2009, until January 19, 2012, the
day preceding the date the judgment accompanying this Memorandum
and Opinion is entered, for a total of 1,026 days.
92
Plaintiff’s Exhibit 15 (cited in ARV’s Post-Trial Brief,
Docket Entry No. 92, p. 32 ¶ 79).
93
Plaintiff ARV Offshore Co., Inc.’s Original Complaint, Docket
Entry No. 1 (filed in the Southern District of Texas on March 30,
2009).
-30-
Applying the prejudgment interest rate of 5% per annum for
1,026 days to the award of contract damages ($5,425,040.40) yields
an award of prejudgment interest of $762,478.28.
Post-Judgment Interest. Post-judgment interest is governed by
federal law and awarded as a matter of course under 28 U.S.C.
§ 1961(a).
Meaux Surface Protection, Inc. v. Fogleman, 607 F.3d
161, 173 (5th Cir. 2010).
Section 1961 provides that “[i]nterest
shall be allowed on any judgment in a civil case recovered in a
district court. . . .
Such interest shall be calculated from the
date of the entry of the judgment, at a rate equal to the weekly
average 1-year constant maturity Treasury yield, as published by
the Board of Governors of the Federal Reserve System, for the
calendar week preceding[] the date of the judgment.”
rate is 0.11%.
The current
ARV is entitled to post-judgment interest on its
damages award for Con-Dive’s breach, its attorney’s fees, and the
prejudgment interest award.
Totran Transp. Services, Ltd. v.
Fitzley, Inc., 2010 WL 2787659, at *2 (S.D. Tex. 2010); Fuchs v.
Lifetime Doors, Inc., 939 F.2d 1275, 1280 (5th Cir. 1991).
The court will award ARV post-judgment interest at the rate of
0.11%, compounded annually, on the damage award for Con-Dive’s
breach
($5,425,040.40),
its
award
of
prejudgment
interest
($762,478.28), and its award of attorney’s fees ($80,699.63),
beginning from date of entry of the final judgment accompanying
this Memorandum Opinion and Order.
-31-
F.
Attorney’s Fees and Costs
Attorney’s Fees.
Under Section 38.001 of the Texas Civil
Practice and Remedies Code, “[a] person may recover reasonable
attorney’s fees from an individual or corporation, in addition to
the amount of a valid claim and costs, if the claim is for . . .
[8]
an
oral
or
written
contract.”
The
Fifth
Circuit
has
articulated the rule that “an award of reasonable fees is mandatory
if a party prevails in a breach of contract case and there is proof
of reasonable fees.” DP Solutions, Inc. v. Rollins, Inc., 353 F.3d
421, 433 (5th Cir. 2003).94
In
accordance
with
the
court’s
finding
of
fact
above
concerning ARV’s attorney’s fees, the court will enter an order
that Con-Dive compensate ARV for its attorney’s fees in the sum of
$80,699.63.
In cases for breach of contract under Texas law, “a party
entitled to recover attorneys’ fees at trial is also entitled to
recover them for successfully defending the case on appeal.
DP
Solutions, 353 F.3d at 436 (citing Gunter v. Bailey, 808 S.W.2d
163, 166 (Tex. App.—El Paso 1991, no writ.)).
94
Any award of fees on
Because this case is governed by Texas substantive law,
Con-Dive’s contention that the award of attorney’s fees is
precluded by federal maritime law is without merit. Con-Dive’s
Post-Trial Brief, Docket Entry No. 98-4, p. 30 (citing Texas A&M
Research Found. v. Magna Transp., Inc., 338 F.3d 394, 405-06 (5th
Cir. 2003) (concluding that “the general rule of maritime law that
parties bear their own costs, coupled with the need for uniformity
in federal maritime law, precludes the application of state
attorneys’ fees statutes, such as § 38.001, to maritime contract
disputes”)).
-32-
appeal “must be conditioned on the appeal being unsuccessful.”
Gilbert v. City of El Paso, 327 S.W.3d 332, 337 (Tex. App.—El Paso
2010, no pet.).
The court finds that ARV is entitled to $25,000 in the case of
an unsuccessful appeal by Con-Dive to the Fifth Circuit, $10,000 to
respond to a writ of certiorari submitted to but denied by the
Supreme Court, and $5,000 in case the Supreme Court agrees to hear
the case and ARV prevails.
Costs. Federal Rule of Civil Procedure 54(d)(1) provides that
“[u]nless a federal statute, these rules, or a court order provides
otherwise, costs . . . should be allowed to the prevailing party.”
While a district court has “wide discretion whether to award
costs,” the Fifth Circuit has noted that there is a “‘strong
presumption’” that costs will be awarded to the prevailing party.
Energy Mgmt. Corp. v. City of Shreveport, 467 F.3d 471, 483 (5th
Cir. 2006).
The court concludes that ARV as the prevailing party
is entitled to recover costs pursuant to Rule 54(d)(1).
III.
Conclusion
If any finding of fact should more properly be characterized
as a conclusion of law, it is hereby adopted as a conclusion of
law.
If any conclusion of law should more property be character-
ized as a finding of fact, it is hereby adopted as a finding of
fact.
-33-
On the basis of the above findings of fact and conclusions of
law, the court concludes that Con-Dive must compensate ARV in the
amount of $5,425,040.40 for the breach of contract, $762,478.28 for
prejudgment interest, $80,699.63 in attorney’s fees, post-judgment
interest at a rate of 0.11% compounded annually on the sum of these
three awards, and for ARV’s costs allowed under 28 U.S.C. § 1920.
All other relief not expressly granted is DENIED.
SIGNED at Houston, Texas, on this 20th day of January, 2012.
____________________________
SIM LAKE
UNITED STATES DISTRICT JUDGE
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