Judges order $7 million payment in Louisiana tugboat charter disputeNov 30, 2015 02:25 PM
A federal appeals court has ordered two inactive Louisiana maritime companies to pay more than $7 million to another company for breaching a vessel sales agreement.
On Aug. 10, the U.S. 5th Circuit Court of Appeals in New Orleans told International Marine LLC and International Offshore Services LLC to pay FDT LLC for violating the sales accord’s non-compete clauses. FDT was known as Delta Towing LLC when the deal was signed.
The litigation dates to 2009, when Delta Towing, based in Houma, La., sued International Marine and International Offshore Services — together known as International.
In 2006, Delta sold two tugs, Team and Skipper, to Larose, La.-based International for a total of $4 million under a provision that International wouldn’t charter the boats out before giving Delta a chance to charter them first. If Delta didn’t do that, International was required to pay Delta 10 percent of the charter hire. Under the agreement, “liquidated damages” would be assessed for each occurrence. International later hired out the tugs, often without notifying Delta.
“We conclude that the agreement’s non-compete clause unambiguously required International to consult with Delta about each individual charter in advance,” the appeals court said in August.
A dispute ensued when Delta, almost two years after the 2006 accord, learned that International was chartering the tugs without Delta’s knowledge. Delta filed suit in a Texas state court and claimed that International violated the accord’s provisions by failing to pay it 10 percent of charter hires. Delta said it was entitled to liquidated damages of $250,000 for each occurrence in the agreement’s breach. Delta sought penalties for 36 alleged breaches.
International then filed suit in the U.S. District Court for the Eastern District of Louisiana (EDLA) in New Orleans, seeking a judgment stating that it hadn’t breached the accord and that penalty provisions were unenforceable. Delta and International had ceased operating, spawning more litigation via bankruptcy settlement agreements.
The $7 million that International must pay is a reduction from the amount that the EDLA had originally ordered the company to pay. After a trial, the district court on June 30, 2014, awarded Delta $8.25 million in liquidated damages for 33 breaches by International, along with pre-judgment interest. On Oct. 14, 2014, EDLA issued a final judgment, awarding interest from Feb. 20, 2009, to mid-October 2014.
Because International Marine and International Offshore were insolvent by then, they couldn’t pay the final judgment. They appealed.
This past August, the 5th Circuit Court found that International failed to uphold its end of the vessel sales agreement, while also making the decision to “vacate the district court’s order insofar as it granted $1.25 million in liquidated damages for International’s first five breaches of the agreement.” According to the appeal, “This reduces the total liquidated damages award from $8.25 million to $7 million. However, Delta should be awarded interest on the payments from the date on which the payment became overdue until final judgment on Oct. 14, 2014.”
The total owed by International, pending court approval of several settlement agreements, will be greater than $7 million. In September, the U.S. Bankruptcy Court for the District of Delaware was asked to approve settlement agreements entered into by FDT.
A spokeswoman for the Cut Off, La., law office of Peter Rousse, the former legal counsel for International Offshore, said the company sold its assets two years ago. In September, Rousse didn’t respond to a request for comment on the litigation.
Louisiana’s secretary of state lists International Marine LLC as a limited liability company in Baton Rouge, with Eva Kalawski, general counsel for Platinum Equity LLC in California, as the contact. She didn’t respond to requests for comment.
At Hercules Offshore Inc. in Houston, investor relations vice president Craig Muirhead wouldn’t comment on company subsidiary holdings FDT LLC and FDT Holdings LLC. And in Delaware, bankruptcy attorneys at Morris, Nichols, Arsht and Tunnell declined to comment about FDT LLC.