# Mid-Gulf Shipping Company Inc. v. Energy Subsea LLC

> District Court, E.D. Louisiana · July 13, 2020

URL: https://www.frixlaw.com/law-library/cases/10185678

## Case

- **Court:** District Court, E.D. Louisiana
- **Decided:** July 13, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10185678

## How later opinions describe it (automated extraction)

- applying the elements of a common law conversion claim to a conversion claim arising under general maritime law

## Opinion text

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

MID-GULF SHIPPING COMPANY INC. CIVIL ACTION

VERSUS No. 20-390

ENERGY SUBSEA LLC SECTION I

ORDER & REASONS
Before the Court is plaintiff Mid-Gulf Shipping Company Inc.’s (“Mid-Gulf
Shipping”) motion1 for a default judgment against defendant Energy Subsea LLC
(“Energy Subsea”). Mid-Gulf Shipping requests that the Court enter a judgment in
its favor and against Energy Subsea in the amount of $863,950.00.2 Mid-Gulf
Shipping also requests post-judgment interest at the statutory rate until the
judgment is paid in full.3 For the following reasons, the motion is granted.
I.
Mid-Gulf Shipping alleges that on August 1, 2015, it entered into a business
relationship with Energy Subsea whereby Mid-Gulf Shipping would lease remotely-
operated vehicles (“ROVs”) and related equipment to Energy Subsea pursuant to the
parties’ Master Agreement (“MA”).4 The MA provides that the details for any

1 R. Doc. No. 11.
2 Id. at 1.
3 Mid-Gulf Shipping no longer seeks contractual interest on the principal amount
owed by Energy Subsea or attorneys’ fees. Compare R. Doc. No. 1, at 7–8 ¶ 29, with
R. Doc. No. 11-1, at 6; R. Doc. No. 11-2, at 5 ¶ 14.
4 R. Doc. No. 1, at 3 ¶ 9; see R. Doc. No. 11-3.
particular lease are to be set forth in a separate ROV Charter Order, though any such
leases will remain subject to the general terms and conditions of the MA.5
On August 1, 2015, Mid-Gulf Shipping and Energy Subsea also entered into an

ROV Charter Order (“Mohawk Charter Order”) for the lease of Mid-Gulf Shipping’s
Mohawk 10 ROV and associated equipment to Energy Subsea.6 The Mohawk Charter
Order provided that Energy Subsea would pay Mid-Gulf Shipping “$7,000.00 per
month plus $1,000.00 per day when on hire.”7 The Mohawk 10 ROV and associated
equipment were delivered to Energy Subsea on or about August 20, 2015.8
The complaint also alleges, and the affidavit of Eric Toft (“Toft”), the President

of Mid-Gulf Shipping, asserts, that Mid-Gulf Shipping allowed Energy Subsea to
store certain other equipment owned by it at Energy Subsea’s facilities for
deployment readiness purposes, including the Outland 163 ROV system, the Outland
132 ROV system, and the Searay ROV system.9 These ROVs were delivered to
Energy Subsea in 2018.10 The parties agreed that under no circumstances was the
equipment to be utilized or moved by Energy Subsea without specific prior authority
from Mid-Gulf Shipping.11

5 R. Doc. No. 1, at 3 ¶ 9; R. Doc. No. 11-3, at 2.
6 R. Doc. No. 11-4, at 2.
7 Id.
8 R. Doc. No. 1, at 4 ¶ 12; R. Doc. No. 11-2, at 3 ¶ 7.
9 R. Doc. No. 1, at 4 ¶ 13; R. Doc. No. 11-2, at 3 ¶ 8.
10 R. Doc. No. 1, at 4 ¶ 13; R. Doc. No. 11-2, at 3 ¶ 8.
11 R. Doc. No. 1, at 4 ¶ 13; R. Doc. No. 11-2, at 3 ¶ 8. Neither the complaint nor Toft’s
affidavit indicates whether this was a verbal agreement or memorialized in writing.
Since May 2016, Energy Subsea has allegedly failed to make full payments for
the lease of the Mohawk 10 ROV and associated equipment as required by the MA
and Mohawk Charter Order.12 Energy Subsea owes an outstanding principal balance

of $307,950.00 to Mid-Gulf Shipping for the lease period from May 2016 to December
2019, as evidenced by twenty-two invoices issued between July 21, 2016 and
December 31, 2019 for the lease of the Mohawk 10 ROV and associated equipment.13
In addition, Energy Subsea has allegedly failed to pay daily on-hire charges
pursuant to the Mohawk Charter Order for periods during 2019 and 2020 when
Energy Subsea deployed the Mohawk 10 ROV, without providing Mid-Gulf Shipping

with forty-eight hours’ notice as required by the Mohawk Charter Order.14 Energy
Subsea owes an outstanding principal balance of $126,000.00 to Mid-Gulf Shipping
for these unpaid daily on-hire charges, as evidenced by Invoice Nos. I202023-48 and
I202023-52, both dated February 3, 2020.15

12 R. Doc. No. 1, at 4–5 ¶ 14. Toft’s affidavit asserts that Energy Subsea has failed to
make full payments for the lease of the Mohawk 10 ROV and associated equipment
since October 2017. R. Doc. No. 11-2, at 3 ¶ 9. However, Toft also asserts, consistent
with the complaint, that an outstanding principal balance of $307,950.00 is owed by
Energy Subsea to Mid-Gulf Shipping for the lease period from May 2016 through
December 2019. Id.
13 R. Doc. No. 11-2, at 3 ¶ 9; R. Doc. No. 11-5.
14 R. Doc. No. 1, at 4–5 ¶ 14; R. Doc. No. 11-4, at 3; R. Doc. No. 11-2, at 3–4 ¶ 10. The
Mohawk Charter Order provides that “[s]hould Lessee, in the scope of its operation
of the Leased ROV, require the removal of same from the commerce of the United
States, it shall notify the Lessor thereof . . . no less than forty-eight (48) hours prior
to the proposed movement or transport of the Leased ROV.” R. Doc. No. 11-4, at 3.
The complaint alleges, and Toft asserts, that Energy Subsea deployed the Mohawk
10 ROV on the M/V Farland and at other locations. R. Doc. No. 1, at 4–5 ¶ 14; R. Doc.
No. 11-2, at 3–4 ¶ 10. The Court infers that the M/V Farland and these “other
locations” were outside of the United States.
15 R. Doc. No. 1, at 4–5 ¶ 14; R. Doc. No. 11-2, at 3–4 ¶ 10; R. Doc. No. 11-6.
Mid-Gulf Shipping has also made multiple written demands to Energy Subsea
for the return of its equipment.16 Nonetheless, Energy Subsea, to date, has not
returned the Mohawk 10 ROV system, Outland 163 ROV system, Outland 132 ROV

system, Searay ROV system, or any of the other equipment that Mid-Gulf Shipping
allowed Energy Subsea to store at its facilities.17 The complaint alleges that, upon
information and belief, Energy Subsea has substantially altered the Mohawk 10 ROV
system, and that parts of the Mohawk 10 ROV system are currently in Mobile,
Alabama; Singapore; and aboard the M/V Farland, which Energy Subsea previously
had under charter.18 Energy Subsea has also allegedly represented itself to be the

owner of the Mohawk 10 ROV system, the Outland 163 ROV system, “and perhaps
other equipment owned by [Mid-Gulf Shipping] which remains aboard the M/V
Farland,” in order to illegally collateralize Mid-Gulf Shipping’s property.19 Mid-Gulf
Shipping’s complaint alleges that such actions constitute conversion in violation of
both general maritime law and Louisiana law.20
Mid-Gulf Shipping issued Energy Subsea Invoice No. I2020130-52, dated
January 30, 2020, in the amount of $350,000.00 for the loss and replacement of the

Mohawk 10 ROV system, and Invoice No. I2020130-52/2, dated January 30, 2020, in
the amount of $80,000.00 for the loss and replacement of the Outland 132 ROV

16 R. Doc. No. 1, at 5 ¶ 16; R. Doc. No. 11-2, at 4 ¶ 11.
17 R. Doc. No. 1, at 5 ¶ 16; R. Doc. No. 11-2, at 4 ¶ 11.
18 R. Doc. No. 1, at 5 ¶ 17.
19 R. Doc. No. 1, at 6 ¶ 19.
20 R. Doc. No. 1, at 8 ¶¶ 30–33.
system, the Outland 163 ROV system, and the Searay ROV system.21 Energy Subsea
has failed to pay either of these invoices.22
Mid-Gulf Shipping alleges that Energy Subsea’s failure to pay the lease and

on-hire payments for the Mohawk 10 ROV and associated equipment pursuant to the
MA and Mohawk Charter Order constitutes a breach of contract.23 Mid-Gulf
Shipping further alleges that Energy Subsea breached the MA and Mohawk Charter
Order by failing to return the Mohawk 10 ROV system to Mid-Gulf Shipping “in the
same good and operable condition as when received”;24 by failing to keep the Mohawk
10 ROV system “free and clear of all cargo, mechanics’ and other liens, privileges and

encumbrances of whatever nature”;25 and by representing itself to be the owner of the
Mohawk 10 ROV system and illegally collateralizing Mid-Gulf Shipping’s property
without any authority in one or more financial transactions to which Mid-Gulf
Shipping is not a party.26
As reflected in Mid-Gulf Shipping’s final written demand to Energy Subsea
dated February 3, 2020, Energy Subsea owes Mid-Gulf Shipping a total principal
amount of $863,950.00, which consists of: $307,950.00 for unpaid lease payments for

the Mohawk 10 ROV system for the period from May 2016 to December 2019;

21 R. Doc. No. 11-2, at 4 ¶ 12; R. Doc. Nos. 11-7 & 11-8.
22 R. Doc. No. 11-2, at 4 ¶ 12.
23 R. Doc. No. 1, at 7 ¶ 25. Mid-Gulf Shipping does not specify in its complaint
whether Louisiana law or general maritime law applies to its breach of contract
claim.
24 Id. at 7 ¶ 26; see R. Doc. No. 11-3, at 2 ¶ 4.
25 R. Doc. No. 1, at 7 ¶ 27; see R. Doc. No. 11-3, at 6 ¶ 7.
26 R. Doc. No. 1, at 7 ¶ 27. The MA provides that “[t]itle to the Leased ROV shall at
all times remain with Lessor.” R. Doc. No. 11-3, at 6 ¶ 7.
$126,000 for unpaid on-hire charges for the Mohawk 10 ROV system for the period
from September 2019 to January 2020; $350,000.00 for the loss and replacement of
the Mohawk 10 ROV system; and $80,000.00 for the loss and replacement of the

Outland 132 ROV system, the Outland 163 ROV system, and the Searay ROV
system.27
II.
Pursuant to Federal Rule of Civil Procedure 55(b), the Court may enter a
default judgment against a party when it fails to plead or otherwise respond to the
plaintiff’s complaint within the required time period. Fed. R. Civ. P. 55(b). A plaintiff

who seeks a default judgment against an unresponsive defendant must proceed with
a two-step process.
First, the plaintiff must petition the clerk for an entry of default, which is
simply “a notation of the party’s default on the clerk’s record of the case.” Trahan v.
PLC Fin., Inc., No. 18-859, 2018 WL 10758657, at *1 (E.D. La. Mar. 29, 2018)
(Barbier, J.) (quoting Dow Chem. Pac. Ltd. v. Rascator Mar. S.A., 782 F.2d 329, 335
(2d Cir. 1986)) (internal quotation marks omitted). Before the clerk may enter the

default, the plaintiff must show “by affidavit or otherwise” that the defendant “has
failed to plead or otherwise defend.” Fed. R. Civ. P. 55(a). Beyond that requirement,
the entry of default is largely mechanical.
After the clerk has entered default, the plaintiff may move for default
judgment under Federal Rule of Civil Procedure 55(b). Meyer v. Bayles, 559 F. App’x

27 R. Doc. No. 11-2, at 4–5 ¶ 13; R. Doc. No. 11-9.
312, 313 (5th Cir. 2014). At this point, “the court must accept the well-pleaded factual
allegations in the plaintiff’s complaint.” Id. (citing Nishimatsu Const. Co., Ltd. v.
Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975) (“In that context, the court

deems the plaintiff’s well-pleaded factual allegations admitted.”)). At the same time,
the court does not hold the defaulting defendant “to [have] admitt[ed] facts that are
not well-pleaded or to [have] admitt[ed] conclusions of law.” Wooten v. McDonald
Transit Assocs., Inc., 788 F.3d 490, 496 (5th Cir. 2015) (internal quotation marks and
citation omitted). The default judgment should not be entered unless the judgment is
“‘supported by well-pleaded allegations’ and . . . ha[s] ‘a sufficient basis in the

pleadings.’” Id. at 498 (quoting Nishimatsu, 515 F.2d at 1206).
If the plaintiff’s claim is for a sum certain and the defendant has not made an
appearance in court, the clerk may enter a default judgment. Fed. R. Civ. P. 55(b)(1).
In all other cases, “the party must apply to the court for a default judgment.” Fed. R.
Civ. P. 55(b)(2).28 No party is entitled to a default judgment as a matter of right.
Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001) (per curiam). “Generally, the entry
of default judgment is committed to the discretion of the district judge.” Ameser v.

Nordstrom, Inc., 442 F. App’x 967, 969 (5th Cir. 2011) (internal quotation marks and
citation omitted).

28 As discussed, infra, Mid-Gulf Shipping requests damages for a sum certain and,
therefore, it could have requested that the clerk, rather than the Court, enter a
default judgment against Energy Subsea. See Fed. R. Civ. P. 55(b)(1). Because the
clerk can only enter a default judgment for a sum certain “on the plaintiff’s request,”
and Mid-Gulf Shipping failed to make such a request, the Court, rather than the
clerk, will enter the default judgment. See id.; R. Doc. No. 11-1, at 7.
The court is entitled to consider several factors when determining whether to
enter a default judgment, including, “whether material issues of fact are at issue,
whether there has been substantial prejudice, whether the grounds for default are

clearly established, whether the default was caused by a good faith mistake or
excusable neglect, the harshness of a default judgment, and whether the court would
think itself obliged to set aside the default on the defendant’s motion.” Lindsey v.
Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998).
III.
Energy Subsea was served with a summons and the complaint on February 6,

2020, and its responsive pleadings were due February 27, 2020.29 As of this date,
Energy Subsea has yet to file responsive pleadings or appear in this case. On April
17, 2020, the Clerk of Court issued an entry of default against Energy Subsea for
failure to plead or otherwise defend itself.30 On May 15, 2020, Mid-Gulf Shipping
moved for a default judgment;31 to date Energy Subsea has not filed a response. The
Court must therefore determine whether, accepting the well-pleaded factual
allegations in the complaint as true, Mid-Gulf Shipping is entitled to a judgment

against Energy Subsea for $863,950.00, in addition to an award of post-judgment
interest at the statutory rate until the judgment is paid in full.
Although there is a basis in the pleadings for Mid-Gulf Shipping’s breach of
contract and conversion claims, Mid-Gulf Shipping did not brief the legal specifics of

29 See R. Doc. No. 4.
30 R. Doc. No. 10.
31 R. Doc. No. 11.
its claims in its motion for default judgment. The Court ordered Mid-Gulf Shipping
to file a brief addressing what law should apply to its claims and explaining how the
complaint’s factual allegations satisfy the essential elements of its claims for relief.32

Mid-Gulf Shipping’s supplemental brief asserts that, pursuant to the MA’s
choice-of-law provision, general maritime law governs the breach of contract claim,
and it outlines how Mid-Gulf Shipping has sufficiently pled the essential elements of
that claim.33 The Court agrees that Mid-Gulf Shipping’s factual allegations establish
a breach of contract claim against Energy Subsea. “Under federal
maritime choice of law rules, contractual choice of law provisions are generally

recognized as valid and enforceable.” Great Lakes Reinsurance (UK) PLC v. Durham
Auctions, Inc., 585 F.3d 236, 242 (5th Cir. 2009). “The elements for breach of contract
in maritime . . . [cases are]: (1) contract; (2) breach of that contract; and (3)
damages.” FEC Heliports, LLC v. Hornbeck Offshore Operators, LLC, No. 15-4827,
2016 WL 5678557, at *5 (E.D. La. Oct. 3, 2016) (Feldman, J.) (citing 17A Am. Jur. 2d
Contracts § 702 (2016)). Taking the complaint’s well-pleaded factual allegations as
true, all of these elements are satisfied with respect to Mid-Gulf Shipping’s breach of

contract claim as set forth above.
Mid-Gulf Shipping also explains in its supplemental brief how it has
sufficiently pled a claim for conversion regardless of whether general maritime law,
Louisiana law, or Alabama law applies, as all three jurisdictions require the same or

32 See R. Doc. No. 12.
33 R. Doc. No. 13, at 2.
similar elements to establish a conversion claim.34 The Court agrees. “In order to
prevail on a claim of conversion under Louisiana law, the plaintiff must prove that
(1) he owned or had the right to possess; (2) the defendant’s use was inconsistent with

the plaintiff’s right of ownership; and (3) the defendant’s use constituted a wrongful
taking.” Richardson v. Cella, 1 F. Supp. 3d 484, 499–500 (E.D. La. 2014) (Fallon, J.);
Goodpasture, Inc. v. M/V Pollux, 602 F.2d 84, 87 (5th Cir. 1979) (applying the
elements of a common law conversion claim to a conversion claim arising under
general maritime law); Kubek v. Jones, No. 04-29, 2011 WL 4542894, at *2 (M.D. Ala.
Sept. 30, 2011) (holding that to prevail on a claim of conversion under Alabama

common law, a plaintiff must establish that there was “(1) a wrongful taking; (2) an
illegal assertion of ownership; (3) an illegal use or misuse of another’s property; or (4)
a wrongful detention or interference with another’s property”).
Mid-Gulf Shipping’s factual allegations satisfy the elements of a claim for
conversion under the laws of all three jurisdictions. The ROV systems were Mid-Gulf
Shipping’s property. Energy Subsea failed to return Mid-Gulf Shipping’s property
upon its demand and altered parts of the Mohawk 10 ROV, which is inconsistent with

Mid-Gulf Shipping’s right of ownership. Energy Subsea also wrongfully interfered

34 R. Doc. No. 13, at 5. Mid-Gulf Shipping notes that the Court could potentially apply
the laws of any three of these jurisdictions, as the MA selects general maritime law,
Mid-Gulf Shipping is based in Louisiana, and Mid-Gulf Shipping’s equipment was
delivered to Energy Subsea in Alabama. Id.

Engaging in a choice-of-law analysis is unnecessary, as the Court “can simply note
that [the laws of all three jurisdictions] dovetail to provide the same outcome.” Graves
v. BP Am., Inc., 568 F.3d 221, 223 (5th Cir. 2009).
with Mid-Gulf Shipping’s use of its property by representing to third parties that it
was the owner of such property and collateralizing it without Mid-Gulf Shipping’s
approval.

In summary, the Court finds that a judgment with respect to Mid-Gulf
Shipping’s breach of contract and conversion claims is supported by the well-pleaded
allegations of the complaint and has a sufficient basis in the pleadings. See Wooten,
788 F.3d at 498. Accordingly, the Court will enter a default judgment in favor of Mid-
Gulf Shipping and against Energy Subsea.
The Court must now “fix the amount which the plaintiff is lawfully entitled to

recover and give judgment accordingly.” M C Bank & Trust Co. v. Suard Barge Serv.,
Inc., 16-14311, 2017 WL 3991076, at *5 (E.D. La. Sept. 11, 2017) (Vance, J.) (quoting
Pope v. United States, 323 U.S. 1, 12 (1944)). “In ruling on such a motion [for a default
judgment], the court may rely on detailed affidavits or documentary evidence to
determine the appropriate sum for the default judgment.” Id. (quoting Int’l Painters
& Allied Trades Indus. Pension Fund v. Brighton Painting Co., 267 F.R.D. 426, 428
(D.D.C. 2010)). With respect to damages, the Court cannot enter a default judgment

without a hearing “unless the amount is liquidated or easily computable.”
Richardson v. Salvation Army S. Territory, USA, No. 98-10151, 1998 WL 723820, at
*1 (5th Cir. 1998); see Duncan v. Tangipahoa Parish Council, No. 08-3840, 2009 WL
2514150, at *1 (E.D. La. Aug. 12, 2009) (Engelhardt, J.) (explaining that “[a] sum is
certain when the amount claimed is a liquidated one or is one that is capable of
mathematical calculation as, for example, an action on a promissory note”).
In support of its motion, Mid-Gulf Shipping submitted twenty-six invoices that
establish the demanded amount and a declaration attesting to the amount owed to
Mid-Gulf Shipping by Energy Subsea.35 The Court concludes that the amount

demanded is a sum certain and that the evidence submitted by Mid-Gulf Shipping
reflects the balance owed by Energy Subsea in connection with its breach of the MA
and Mohawk Charter Order and its conversion of Mid-Gulf Shipping’s property,
namely, the Outland 163 ROV system, Outland 132 ROV system, Searay ROV
system, and Mohawk 10 ROV system. Mid-Gulf Shipping has provided sufficient
evidence to support its claim for $863,950.00 without the need for an evidentiary

hearing.
Mid-Gulf Shipping also requests post-judgment interest. “Federal law governs
post-judgment interest.” Meaux Surface Protection, Inc. v. Fogleman, 607 F.3d 161,
173 (5th Cir. 2010). Mid-Gulf Shipping may recover post-judgment interest pursuant
to 28 U.S.C. § 1961, which provides that post-judgment 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.”

35 See R. Doc. Nos. 11-2, 11-5 to 11-8.
IV.
After considering Mid-Gulf Shipping’s motion and accompanying exhibits, as
as the applicable law, the Court finds that there are no factorsthat weigh against
entering a default judgment against Energy Subsea. Accordingly,
IT IS ORDERED that the motion for a default judgment is GRANTED and
that judgment shall be entered in favor of Mid-Gulf Shipping and against Energy
Subsea in the principal amount of $863,950.00 (the “principal amount’).
IT IS FURTHER ORDERED that Mid-Gulf Shipping shall be awarded post-
judgment interest, at the federal statutory rate pursuant to 28 U.S.C. § 1961, on the
principal amount from the date of entry of this judgment until paid.
New Orleans, Louisiana, July 13, 2020.

fie
UNITED STATESDISTRICT JUDGE

13

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10185678. Public record. Not legal advice.