The opinion
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
CHEM CARIRERS, L.L.C. CIVIL ACTION NO.
VERSUS 19-436-SDD-SDJ
L. ENERGY INTERNATIONAL, LLC
RULING
This matter is before the Court on the Motion for Partial Summary Judgment1 filed
by Defendant and Counter-Plaintiff, L. Energy International, L.L.C (“LEI”). Plaintiff and
Counter-Defendant, Chem Carriers, L.L.C. (“Chem Carriers”) filed an Opposition,2 to
which LEI filed a Reply.3 Chem Carriers also filed a Motion for Partial Summary
Judgment.4 LEI filed an Opposition,5 to which Chem Carriers filed a Reply.6 For the
following reasons, the Court finds that both parties’ Motions should be granted in part and
denied in part.
I. BACKGROUND
This is a maritime case for breach of charter. The Court’s jurisdiction is pursuant
to Fed. R. Civ. P. 9(h). On December 18, 2018, Chem Carriers and LEI entered into a
charter agreement from January 2019 through May 2019.7 Under the charter agreement,
Chem Carriers supplied a towing vessel, the M/V Miss Danielle, and two steel barges for
1 Rec. Doc. No. 60.
2 Rec. Doc. No. 63.
3 Rec. Doc. No. 68.
4 Rec. Doc. No. 61.
5 Rec. Doc. No. 65.
6 Rec. Doc. No. 66.
7 Rec. Doc. No. 63-1, p. 1.
six months at a rate of $7,850 per day, plus fuel, lubes, and certain taxes and fees.8 The
M/V Miss Danielle and towing barges transported LEI’s ultra-low sulfur diesel between
the ports of Corpus Christi and Brownsville/Harlingen, Texas.9 Under the charter
agreement, Chem Carriers’ equipment “always remain[ed] in the control and custody of
[Chem Carriers]” and Chem Carriers maintained “sole[] responsib[ility] for the operation,
maintenance, and improvement of its [e]quipment.”10 LEI paid the day rate through
January and February 2019; LEI did not pay the day rate from March through May 2019.11
LEI refused to pay Chem Carriers’ invoices for March through May because it alleged
that, due to pilot error and inclement weather, the M/V Miss Danielle spent 23 days dry
docked during that time.12 Chem Carriers asserts that it transported LEI’s cargo through
May 31, 2019, the date specified in the charter agreement, but LEI contends that Chem
Carriers only transported its cargo through May 17.13 The parties dispute which of them,
if either, terminated the charter early. Despite this simple nucleus of operative facts, the
present procedural posture is relatively complex.
After the charter ended, Chem Carriers filed suit for breach of charter. Chem
Carriers seeks a total of $1,143,734.09 plus interest on the unpaid charter hire. This figure
is comprised of $733,301.71 in unpaid charter hire, fuel, lubes, and expenses; $235,500
in lost charter hire caused by the early termination of the charter agreement; $88,045.50
in rudder repair costs; $86,886.88 in reimbursement for invoice credits that were not due
under the charter agreement; and attorneys’ fees under La. R.S. 9:2781 and 28 U.S.C. §
8 Rec. Doc. No. 61-1, p. 1; Rec. Doc. No. 65-1, p. 1.
9 Id.
10 Rec. Doc. No. 60-2, p. 1; Rec. Doc. No. 63-1, p. 2.
11 Rec. Doc. No. 60-2, p. 1–2; Rec. Doc. No. 63-1, p. 2.
12 Rec. Doc. No. 60-2, p. 2; Rec. Doc. No. 63-1, p. 3.
13 Rec. Doc. No. 61-1, p. 2; Rec. Doc. No. 65-1, p. 1.
1927.14 LEI counterclaimed for $1,080,527.00 in profits it allegedly lost due to Chem
Carriers’ allegedly derelict performance.15
Chem Carriers moves for summary judgment on its claims for the unpaid charter
hire and the interest thereon—but not the lost charter hire based on the early termination
of the charter agreement.16 Chem Carriers also moves for summary judgment on LEI’s
claim for lost profits.17 LEI moves for summary judgment on Chem Carriers’ claims for
attorneys’ fees; the rudder repair costs; and the interest on the unpaid charter hire.18 LEI
also moves for summary judgment arguing that Chem Carriers cannot recover the day
rate for the days during the charter when the M/V Miss Danielle was dry docked or
otherwise not in service—but does not move for summary judgment on the remainder of
the unpaid charter hire. The Court will analyze each parties’ Motion separately, except
where indicated.
II. LAW AND ANALYSIS
A. Summary Judgment Standard
In reviewing a party’s motion for summary judgment, the Court will grant the motion
if (1) there is no genuine issue of material fact, and (2) the mover is entitled to judgment
as a matter of law.19 This determination is made “in the light most favorable to the
opposing party.”20 A party moving for summary judgment “‘must “demonstrate the
absence of a genuine issue of material fact,” but need not negate the elements of the
14 Rec. Doc. No. 61-2, p. 3, n. 6.
15 Rec. Doc. No. 61-2, p. 3; Rec. Doc. No. 24, p. 6.
16 Rec. Doc. No. 61-2, p. 3, n. 6.
17 Rec. Doc. No. 61-2, p. 11.
18 Rec. Doc. No. 60-1, p. 1.
19 FED. R. CIV. P. 56(a).
20 Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970) (citing United States v. Diebold, Inc., 369 U.S.
654, 655 (1962); 6 V. MOORE, FEDERAL PRACTICE 56.15(3) (2d ed. 1966)).
nonmovant’s case.’”21 If the moving party satisfies its burden, “the non-moving party must
show that summary judgment is inappropriate by setting ‘forth specific facts showing the
existence of a genuine issue concerning every essential component of its case.’”22
However, the non-moving party’s burden “‘is not satisfied with some metaphysical doubt
as to the material facts, by conclusory allegations, by unsubstantiated assertions, or by
only a scintilla of evidence.’”23
Notably, “[a] genuine issue of material fact exists, ‘if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.’”24 All reasonable factual
inferences are drawn in favor of the nonmoving party.25 However, “[t]he 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.”26 “Conclusory allegations unsupported by specific
facts . . . will not prevent the award of summary judgment; ‘the plaintiffs [can]not rest on
his allegations . . . to get to a jury without any “significant probative evidence tending to
support the complaint.”’”27
B. LEI’s Motion for Partial Summary Judgment28
LEI moves for summary judgment on Chem Carriers’ claims for attorneys’ fees;
21 Guerin v. Pointe Coupee Parish Nursing Home, 246 F.Supp.2d 488, 494 (M.D. La. 2003) (quoting Little
v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc)); Celotex Corp. v. Catrett, 477 U.S. 317,
323-25 (1986).
22 Rivera v. Houston Indep. Sch. Dist., 349 F.3d 244, 247 (5th Cir. 2003) (quoting Morris v. Covan World
Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998)).
23 Willis v. Roche Biomedical Lab., Inc., 61 F.3d 313, 315 (5th Cir. 1995) (quoting Little, 37 F.3d at 1075).
24 Pylant v. Hartford Life and Accident Ins. Co., 497 F.3d 536, 538 (5th Cir. 2007) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
25 Galindo v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985).
26 RSR Corp. v. Int’l Ins. Co., 612 F.3d 851, 857 (5th Cir. 2010).
27 Nat’l Ass’n of Gov’t Emps. v. City Pub. Serv. Bd. of San Antonio, Tex., 40 F.3d 698, 713 (5th Cir. 1994)
(quoting Anderson, 477 U.S. at 249).
28 Rec. Doc. No. 60.
the rudder repair costs; the portion of the unpaid charter hire that corresponds to days the
M/V Miss Danielle was not in service; and the interest on the unpaid charter hire.29
1. Chem Carriers’ Claim for Attorneys’ Fees
LEI seeks summary judgment on Chem Carriers’ claims for attorneys’ fees under
Louisiana’s Open Account statute30 and 28 U.S.C. § 1927.31 As LEI argues, the Fifth
Circuit has held 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…to maritime contract disputes.”32 Therefore, summary
judgment is granted as to Chem Carriers’ claim under the Louisiana Open Account
statute.
28 U.S.C. § 1927 provides:
Any attorney or other person admitted to conduct cases in any court of the
United States or any Territory thereof who so multiplies the proceedings in
any case unreasonably and vexatiously may be required by the court to
satisfy personally the excess costs, expenses, and attorneys' fees
reasonably incurred because of such conduct.
The Fifth Circuit has stated:
Conduct is ‘unreasonable and vexatious’ if there is evidence of the
‘persistent prosecution of a meritless claim’ and of a ‘reckless disregard of
the duty owed to the court.’ An attorney acts with ‘reckless disregard’ of his
duty to the court when he, without reasonable inquiry, advances a baseless
claim despite clear evidence undermining his factual contentions.33
LEI argues that Chem Carriers’ claim under § 1927 fails because there is no
evidence counsel for LEI has acted unreasonably or vexatiously. LEI also points out that
29 See Rec. Doc. No. 60-1.
30 La. R.S. 9:2781.
31 Rec. Doc. No. 60-1, p. 2.
32 Texas A&M Rsch. Found. v. Magna Transp., Inc., 338 F.3d 394, 406 (5th Cir. 2003).
33 Morgan v. Walker, 939 F.3d 633, 638 (5th Cir. 2019).
Chem Carriers asserted its § 1927 claim in its Complaint—before LEI’s counsel had even
made an appearance.34 Chem Carriers does not directly address LEI’s argument, and
instead appears to assert that attorneys’ fees are warranted under federal maritime
common law. In any event, LEI is entitled to summary judgment on Chem Carriers’ claims
for attorneys’ fees under § 1927 since Chem Carriers introduced no evidence to create a
genuine issue of material fact as to whether LEI’s counsel has acted unreasonably and
vexatiously.
Chem Carriers asserts that under Reliable Salvage & Towing v. 35’ SEA RAY,35 a
Middle District of Florida case, attorneys’ fees may be awarded where the defendant
“‘deliberately, willfully, and persistently’ fails to pay the plaintiff what is plainly owed to
him.”36 LEI asserts that Reliable Salvage is distinguishable and that LEI legitimately
disputes Chem Carriers’ invoices and charter performance.37
As will become clear throughout this Ruling, LEI has mounted a colorable defense
and asserted colorable counterclaims. There is no summary judgment evidence that LEI
has “deliberately, willfully, and persistently” failed to pay Chem Carriers what it is “plainly
owed.” The Court sees no reason to depart from the general rule of maritime law that
parties bear their own costs, and Chem Carriers has not created a genuine issue of
material fact as to whether LEI failed to pay Chem Carriers what it is plainly owed.
Summary judgment in favor of LEI is therefore appropriate on Chem Carriers’ claim for
attorneys’ fees.
34 Rec. Doc. No. 60-1, p. 6; Rec. Doc. No. 1, p. 4.
35 2011 WL 2418891, at *2 (M.D. Fla. June 13, 2011).
36 Rec. Doc. No. 63, p. 2.
37 Rec. Doc. No. 68, p. 3.
2. Chem Carriers’ Claim for the Rudder Repair Costs
LEI seeks summary judgment on Chem Carriers’ claim for the cost to repair the
rudder of the M/V Miss Danielle. The damage occurred on April 13 in part due to high
winds. LEI argues that the language of the charter agreement forecloses that claim,38
specifically paragraph 19, which provides:
[Chem Carriers] shall exercise complete navigational control of its
Equipment to promptly execute such transportation requests and shall have
the exclusive right to determine whether the ports and waterways, which
must be navigated by [Chem Carriers] to execute [LEI’s] transportation
requests, are safe for navigation of [Chem Carriers’] tow at the time and
within the navigation endorsements of applicable Coast Guard documents
and navigation warranties of applicable insurance.39
LEI also cites the deposition testimony of several Chem Carriers employees.
Captain Daniel McCants, who was piloting the M/V Miss Danielle when the rudder
damage occurred, admitted in his deposition that “[he] backed up too far…into the side of
the channel” which caused the rudder damage.40 Andrew Pritchard, whose role with
Chem Carriers is not explained, testified in his deposition that it was Chem Carriers’
decision to attempt the maneuver that led to the rudder damage, but he clarified that
statement with the assertion that LEI’s pressure on Chem Carriers forced it to attempt the
maneuver.41 Another Chem Carriers employee, Captain Rockie Pulse, who captained the
M/V Miss Danielle at other times during the charter, testified in his deposition that he did
not feel that anyone at Chem Carriers was pressuring him to move swiftly and that it is
38 Rec. Doc. No. 60-1, p. 7.
39 Rec. Doc. No. 1-2, p. 4–5.
40 Rec. Doc. No. 60-7, p. 3–4.
41 Rec. Doc. No. 60-8, p. 2–3.
ultimately the captain’s call whether or not to move the tow.42 Based on the charter
agreement and deposition testimony of Chem Carriers’ employees, LEI asserts that
Chem Carriers was at fault for the rudder damage.
Chem Carriers rebuts that LEI is liable for the rudder damage because LEI was
rushing it to make a delivery window. Specifically, Chem Carriers cites the deposition
testimony of Chem Carriers’ owner, Frank Banta, who testified that: “[LEI was] the one[]
rushing us. And the crew was moving for [LEI]. And because they were trying to move for
[LEI] and that’s how it went, that’s why they bent this rudder.”43 In other words, because
LEI was rushing Chem Carriers, Chem Carriers acted imprudently and damaged the
rudder. Notably, the record also supports a finding that by April 13, LEI had begun
withholding payments for invoices, which may have had a coercive effect on Chem
Carriers’ decision to attempt the maneuver in high winds.
In Matter of P & E Boat Rentals, Inc.,44 the Fifth Circuit provided the general rule
that “a time charterer who has no control over the vessel, assumes no liability for
negligence of the crew or unseaworthiness of the vessel absent a showing that the parties
to the charter intended otherwise.”45 The court also noted an exception to that rule: this
general rule does not exempt a time charterer from liability if it is negligent in conducting
its activities as a time charterer.”46 The court then affirmed a judgment of negligence
against Chevron, as time charterer, because Chevron had demanded that the owner of
the vessel operate it at high speeds and in heavy fog.47
42 Rec. Doc. No. 60-9, p. 2–3.
43 Rec. Doc. No. 63-3, p. 4.
44 872 F.2d 642 (5th Cir. 1989).
45 Id. at 647. (internal citations omitted).
46 Id. (internal citations omitted).
47 Id.
Matter of P & E Boat Rentals, Inc. controls, and summary judgment is inappropriate
on this issue. Paragraph 19 provides Chem Carriers with “complete navigational control”
of the vessel and does not limit LEI’s liability, and the general rule is that LEI, as time
charterer, would not be liable for damage to the vessel caused by Chem Carriers.
However, Matter of P & E Boat Rentals, Inc. stands for the proposition that LEI may be
liable if its actions as time charterer contributed to the damage to the rudder. Because
Chem Carriers has proffered evidence that LEI may have pressured Chem Carriers into
operating imprudently, Chem Carriers has demonstrated a genuine issue of material fact
as to whether LEI may be liable for the damage to the rudder, and summary judgment is
not appropriate on this claim.
3. Chem Carriers’ Claim for Unpaid Charter Hire for the Days the M/V Miss
Danielle was not in Service
LEI seeks summary judgment on Chem Carriers’ claim for unpaid charter hire as
to the days that the M/V Miss Danielle was not in service. LEI asserts that it contracted
with Chem Carriers for Chem Carriers to transport LEI’s cargo, and since Chem Carriers
failed to do so on 23 days throughout the charter, LEI should not have to pay for those
days.48 LEI points to the absence of a “hell or high water” clause in the charter agreement,
which, if it was included in the charter agreement, would require LEI to pay the day rate
for days that the M/V Miss Danielle was not in service.49
Chem Carriers rebuts that the charter agreement was per day and did not contain
a per barrel or per gallon performance metric by which its conduct during the charter can
48 Rec. Doc. No. 60-1, p. 7–10.
49 Id. at 9.
be judged.50 Chem Carriers also cites a 2007 “English Maritime Law Update” which
describes an English case wherein the judge stated that “[t]he normal rule in respect of
payment of hire under time charters is that the risk of delay is on the charterer, who
remains liable to pay hire in all circumstances unless he can bring himself within the plain
words of an off-hire provision.”51 Based on this and other favorable citations, Chem
Carriers argues that the lack of a hell or high water clause is not fatal to its claims; rather,
the lack of an “off-hire” clause, which would have allowed LEI to place the M/V Miss
Danielle “off-hire” and not pay Chem Carriers for days it was dry-docked, is fatal to LEI’s
claims.52
A recent Eastern District of Louisiana case, Drinnon Marine, L.L.C. v. Four Rivers
Towing Alabama, L.L.C.53 is factually similar. In Drinnon Marine, L.L.C., the plaintiff sued
the defendant for unpaid charter hire.54 As in this case, the charter agreement only
specified a day rate.55 The defendant asserted that the vessel was inoperable due to
mechanical issues for much of the charter, so it should not have to pay for those days.56
After a bench trial, the court found that “reductions from charter hire for an inoperable
vessel are customary in the industry” and made commensurate deductions to the amount
50 Rec. Doc. No. 63, p. 7.
51 Jane Andrewartha, English Maritime Law Update: 2006, 38 J. Mar. L. & Com. 379, 384 (2007).
52 Rec. Doc. No. 63, p. 6. Notably, English and American charter party law “are generally interchangeable.”
2 Schoenbaum, Admiralty & Mar. Law § 11:1 (6th ed.). Schoenbaum, quoting Martin Davies, continues:
While English law of charter parties is ‘complex and sophisticated,’ American law is
‘stagnant but still interesting in places.’ The rather ‘moribund’ nature of American charter
party law, Davies points out, is due to the fact that most charter party disputes are resolved
by arbitration and because it is generally difficult to obtain judicial review of arbitral awards
in the United States. As a result, Davies perceptibly states, ‘[p]ropositions that have been
refined in English law by a long series of cases are often established in US law by single
decisions from over a hundred years ago.’” Id.
53 2021 WL 3048351 (E.D. La. 07/19/2021).
54 Id. at *1.
55 Id. at *4.
56 Id. at *3–5.
of the charter hire that the defendant had to pay.57
The Court finds that summary judgment is inappropriate on this claim. Notably,
there is no evidence of industry custom before this Court. Moreover, as noted above, fact
issues remain as to which party is liable for at least some of the delays, such as those
caused by the rudder damage. It would be fundamentally unjust if Chem Carriers could
not recover the day rate for days the M/V Miss Danielle spent dry-docked if LEI negligently
caused the damages that necessitated the repairs. Most importantly, there is a factual
dispute as to whether 23 days in dry-dock is unreasonable and whether the delay
constitutes a breach of Chem Carriers’ duty to deliver the diesel within a reasonable time.
These issues are considered in full below.58 LEI’s Motion is denied as to Chem Carriers’
claims for unpaid charter hire on the days the M/V Miss Danielle was inoperable.
4. Chem Carriers’ Claim for Interest on the Unpaid Charter Hire
LEI also moves for summary judgment on Chem Carriers’ claim for interest on all
of the unpaid charter. Chem Carriers also moves for summary judgment on this issue, so
the Court will analyze the Motions simultaneously. The charter agreement provides in
relevant part, “[LEI] shall pay all of [Chem Carriers’] properly prepared and undisputed
invoices within 30 days of [LEI’s] receipt thereof. Any amounts due and not paid by [LEI]
after 30 days shall be subject to a 1.5% per month interest charge…”59 LEI argues that it
has always disputed the invoices as evidenced by this case and cites the deposition
testimony of Frank Banta, Chem Carriers’ owner, wherein Banta agreed that the invoices
57 Id. at * 6.
58 See infra, B. 2.
59 Rec. Doc. No. 1-2, p. 2.
were disputed.60 LEI has therefore met its burden of producing evidence that there is no
genuine issue of material fact as to whether the invoices were disputed. The burden shifts
to Chem Carriers to produce evidence that there is a genuine issue of material fact as to
whether LEI disputed the invoices.
Chem Carriers argues that LEI implicitly concedes that Chem Carriers is due some
portion of the charter hire because LEI only seeks summary judgment on the portion of
the unpaid charter hire attributable to days that the M/V Miss Danielle was dry-docked.61
This argument ignores that LEI opposes Chem Carriers’ Motion wherein Chem Carriers
seeks summary judgment on its claim for all of the unpaid charter hire.62 Chem Carriers
cites to no evidence on this point besides LEI’s Motion.63
Chem Carriers’ argument based on LEI’s Motion is insufficient. Moreover, the
charter agreement contains no requirement that the invoices must be reasonably
disputed. Therefore, even if LEI unreasonably disputed the invoices, Chem Carriers’ claim
for interest would still fail. For these reasons, Chem Carriers’ claim for interest on the
unpaid charter must be dismissed. LEI’s Motion64 is granted as to this claim, and Chem
Carriers’ Motion65 is denied as to this claim.
C. Chem Carriers’ Motion for Partial Summary Judgment66
1. Chem Carriers’ Claim for the Unpaid Charter Hire
Chem Carriers seeks summary judgment on its claim for the balance of the unpaid
60 Rec. Doc. No. 60-1, p. 10; Rec. Doc. No. 60-11, p. 3.
61 Rec. Doc. No. 63, p. 8–9.
62 Rec. Doc. No. 65, p. 5–17.
63 To the extent LEI’s Motion can be considered evidence.
64 Rec. Doc. No. 60.
65 Rec. Doc. No. 61.
66 Rec. Doc. No. 61.
charter hire. Chem Carriers argues that the charter agreement set a per day rate—not a
per barrel or per gallon performance metric.67 Further, Chem Carriers points to paragraph
19 of the charter agreement which grants Chem Carriers “complete navigational control
of its Equipment to promptly execute [LEI’s] transportation requests” and grants Chem
Carriers “the exclusive right to determine whether the ports and waterways…are safe for
navigation of [the M/V Miss Danielle]….” Therefore, argues Chem Carriers, based on
paragraph 19, LEI assumed the risk for delays and must pay the charter hire.68 Finally,
Chem Carriers asserts that paragraph 17 contains a broad waiver of Chem Carriers’
liability.
LEI argues that Chem Carriers breached various duties and warranties, so LEI did
not and does not have to perform under the charter agreement. LEI asserts that Chem
Carriers breached: its implied and contractual duty of seaworthiness, implied warranty of
workmanlike service, and obligation of good faith and fair dealing.69 LEI asserts that
paragraph 19 does contain a performance metric in that Chem Carriers must “promptly
execute” LEI’s transportation requests and that paragraph 19 imposes an obligation on
Chem Carriers to control the M/V Miss Danielle.70 Relatedly, LEI argues that Chem
Carriers breached an implied duty to make delivery within a reasonable time.71 LEI
asserts that Chem Carriers’ actions fall within exclusions to any waiver of liability in the
paragraph 17.72
67 Rec. Doc. No. 61-2, p. 10.
68 Id. at 7; Rec. Doc. No. 1-2, p. 4.
69 Rec. Doc. No. 65, p. 10–15.
70 Rec. Doc. No. 65, p. 5.
71 Id. at 6.
72 Id. at 8.
Courts typically employ federal common law to resolve maritime disputes.73 The
Fifth Circuit has looked to “general rules of contract law” when interpreting charter
agreements.74 In Marine Overseas the Fifth Circuit noted that “since most points of charter
law involve construction of the charter, the principles are much the same as those of
ordinary contract law.”75 The Court looked to the Restatement (Second) of Contracts for
general principles of contract law.76
“[I]f a party in default under a contract is allowed to continue to perform, this
precludes any right of the other party to rescind the contract or declare a material breach
and refuse to perform further because of any known default that has already taken
place.”77 However, “neither the obligation of the party in default nor its liability to pay
damages for the defective performance is terminated.”78 These basic contract principles
have been applied to maritime charters.79
LEI’s argument that Chem Carriers breached and therefore LEI is excused from
paying is fatally flawed. Applying the contract principles above, LEI would only be excused
from payment if Chem Carriers breached and LEI did not allow Chem Carriers to continue
performance. However, LEI claims that Chem Carriers’ breach began in March 2019 and
continued through April into May.80 There is a factual dispute as to when Chem Carriers
ceased performing. Chem Carriers argues that it performed through May, while LEI
73 Albany Ins. Co. v. Anh Thi Kieu, 927 F.2d 882, 886 (5th Cir.1991).
74 Marine Overseas Services, Inc. v. Crossocean Shipping Co., Inc., 791 F.2d 1227, 1234 (5th Cir.1986).
75 Id. (quoting G. Gilmore & C. Black, The Law of Admiralty § 4-1 at 196 (2d ed.1975)).
76 Id.
77 14 Williston on Contracts § 40:1 (4th ed.) (citing Restatement (Second) Contracts § 246).
78 Id. (citing Louisiana Highway Commission v. Farnsworth, 74 F.2d 910 (5th Cir. 1935)).
79 Natures Way Marine, LLC v. Everclear of Ohio, Ltd., 37 F. Supp. 3d 1232, 1243 (S.D. Ala. Aug. 12,
2014), amended, 2014 WL 5465885 (S.D. Ala. Oct. 28, 2014).
80 Rec. Doc. No. 60-2, p. 2; Rec. Doc. No. 63-1, p. 3.
asserts that Chem Carriers ceased performance on May 17.81 Regardless of exactly when
in May Chem Carriers ceased performance, it is undisputed that it continued to perform
well after it allegedly breached. Indeed, Chem Carriers’ owner Frank Banta testified that
when LEI complained about the performance of the charter, he offered to “release the tow
early” so that LEI could bring in another tow.” According to Banta, “‘he,’ either the broker
or Steve McNear, the owner of LEI, replied, “‘do the best you can.’”82
Chem Carriers has introduced summary judgment evidence that it continued to
perform, at LEI’s behest, after LEI asserts that Chem Carriers breached. LEI has failed to
proffer summary judgment evidence that Chem Carriers did not continue to perform after
the alleged breach. Therefore, LEI has failed to create a genuine issue of material fact as
to this point, so Chem Carriers’ Motion shall be partially granted as to its claim for the
unpaid charter hire from March till May 17. Because the parties dispute when Chem
Carriers’ ceased performance, Chem Carriers’ Motion is denied as to the charter hire for
May 17 to May 31.
2. LEI’s Claim for Lost Profits
Chem Carriers seeks summary judgment on LEI’s claim for lost profits. Lost profits
are available in maritime cases.83 Chem Carriers argues that LEI is not entitled to lost
profits because: (1) Chem Carriers did not breach; and (2) even if Chem Carriers did
breach, paragraph 17 of the charter agreement insulates it from liability.
81 Rec. Doc. No. 61-1, p. 2; Rec. Doc. No. 65-1, p. 1.
82 Rec. Doc. No. 65-16, p. 3.
83 Delta S.S. Lines, Inc. v. Avondale Shipyards, Inc., 747 F.2d 995, 999 (5th Cir. 1984), on reh'g, 753 F.2d
378 (5th Cir. 1985).
a. Interpretation of the Charter Agreement
When interpreting a charter agreement, courts must read the charter as a whole
and give its words their plain meaning.84 Courts interpret charter agreements with the goal
of ascertaining the intent of the parties.85 Courts should interpret charter agreements to
give effect to every word of the charter and avoid conflict between provisions.86 “Clauses
that purport to limit a party's legal responsibility are strictly construed and to be given
effect must clearly express the intent of all parties whose liability is altered by the
agreement.”87
According to Chem Carriers, paragraph 17 limits Chem Carriers’ liability.
Paragraph 17, titled “Force Majeure,” provides in relevant part:
[1] The tug and its tow, its captain and [Chem Carriers] and operator shall
not, unless otherwise in this Transportation Service Agreement especially
provided, be responsible for any loss or damage arising from or resulting
from any act, neglect, default, or barratry of the captain, pilots, mariners or
of the servants of [Chem Carriers] in the navigation or management of the
vessels, fire unless caused by the personal design and neglect of [Chem
Carriers], collision, stranding or peril, danger or accident of navigable
waters; saving or attempting to save life or property; wastage in bulk or any
other loss, including leakage, ullage or jettison, or damage arising from
inherent defect, or quality or vice of the Cargo, contamination of the Cargo,
howsoever caused; any act or omission of the [LEI], [Chem Carriers],
shipper, or consignee of the Cargo, their agents or representatives;
insufficiency or inadequacy of marks, explosion, bursting of boilers,
breakage of shafts or any latent defects in hull equipment or machinery;
unseaworthiness of the tug or tow unless caused by want of due diligence
on the part of [Chem Carriers] to make the tug or tow seaworthy or to have
it properly manned, equipped and supplied at the inception of the voyage;
or from any other cause of whatsoever kind unless caused by the actual
fault and privity of [Chem Carriers]. [2] Neither the tug or tow, its captain
[Chem Carriers] or operator shall, unless otherwise in this agreement
expressly provided, be responsible for any loss, damage, delay or failure in
84 Mays v. C-Dive, L.L.C., 799 F. App'x 232, 234 (5th Cir. 2020).
85 The Rice Company (Suisse), S.A. v. Precious Flowers Ltd., 523 F.3d 528 (5th Cir. 2008).
86 Chembulk Trading LLC v. Chemex Ltd., 393 F.3d 550, 555 (5th Cir. 2004); 22 Williston on Contracts §
58:10 (4th ed.).
87 Bosnor, S.A. de C.V. v. Tug L.A. Barrios, 796 F.2d 776, 781 (5th Cir. 1986).
performing hereunder arising or resulting from: [long list of typical force
majeure causes].88
Paragraph 17 contains two broad limitations of liability. The first is indicated by the
[1] above and limits Chem Carriers’ liability for “any loss or damage arising from or
resulting from…”. The second is indicated by the [2] above and limits Chem Carriers’
liability for “any loss, damage, delay or failure in performing hereunder arising from or
resulting from:…” Since [2] includes the additional words “delay or failure in performing
hereunder” and [1] does not, the Court may infer that [1] does not contain a limitation of
Chem Carriers’ liability for delays or failures to perform.
This conclusion is buttressed by the fact that if [1] did not contain a narrower
limitation of liability than [2], then the catch-all “from any other cause of whatsoever kind
unless caused by the actual fault and privity of [Chem Carriers]” at the end of [1] would
render [2] unnecessary and hence meaningless. Therefore, the Court finds that “loss or
damage” in [1] does not include delays or failures to perform. Because LEI seeks
damages stemming from Chem Carriers’ delay or failure to perform, [1] of paragraph 17
does not limit Chem Carriers’ liability in this case. Additionally, none of the causes in [2]
apply in this case. Therefore, paragraph 17 does not limit Chem Carriers’ liability in this
case.
b. Chem Carriers’ Purported Breaches
LEI asserts that Chem Carriers breached: the warranty of seaworthiness, the
implied warranty of workmanlike service, the obligation of good faith and fair dealing, and
a contractual and common law duty to deliver LEI’s diesel in a reasonable time.
88 Rec. Doc. No. 1-2, p. 4. (emphasis added).
“Maritime law infers a general warranty of seaworthiness from a charter-party
agreement even where such warranty is not expressly made.”89 The default rule is that
unseaworthiness imposes a form of strict liability on the owner of the vessel, regardless
of fault.90 This may be modified by a “due diligence” clause in the charter.91
Chem Carriers argues that paragraph 17 imposes a due diligence requirement.
Chem Carriers is correct, however, that requirement only applies to [1] of paragraph 17,
which the Court has already concluded does not apply to the instant case. As such, the
Court applies the general maritime law implied warranty of seaworthiness.
Seaworthiness is “a relative term depending upon its application to the type of
vessel and the nature of the voyage. The general rule is that the vessel must be staunch,
strong, and well-equipped for the intended voyage and manned by a competent crew and
skillful master of sound judgment and discretion.”92 A seaworthy vessel is one which is
“reasonably suited for the purpose or use for which [it was] intended.”93 “The implied
warranty of seaworthiness applies when the vessel sails from the loading port and arises
anew at each stage of the voyage.”94
LEI asserts that Chem Carriers breach its warranty of seaworthiness in several
ways. First, LEI asserts that the M/V Miss Danielle was not in good repair, citing the rudder
failure and other unspecified equipment issues.95 Second, LEI argues that the crew that
Chem Carriers supplied was unable to navigate the windy route because of lack of
89 Horn v. Cia de Navegacion Fruco, 404 F.2d 422, 428 (5th Cir.1968).
90 Mitchell v. Trawler Racer, Inc., 362 U.S. 539, 549–50 (1960).
91 Schoenbaum, supra, § 11.8.
92 Id.
93 In re Signal Int’l, LLC, 579 F.3d 478, 489 (5th Cir. 2009).
94 Schoenbaum, supra, § 11.8.
95 Rec. Doc. No. 65, p. 11.
experience and skill.96 LEI asserts that Chem Carriers did nothing to ensure that the crew
was capable of running the route. Third, LEI contends that Chem Carriers’ failure to install
a bow thruster, which apparently would have reduced the effects of the wind, made the
M/V Miss Danielle unseaworthy.97 Fourth, LEI argues that the M/V Miss Danielle had
inadequate horsepower for the route.98
Chem Carriers argues that “‘under a charter agreement, only “want of due
diligence on the part of the owner can impose liability for unseaworthiness,”’’ citing
Natures Way Marine, LLC v. Everclear of Ohio, Ltd.,99 a Southern District of Alabama
case. Natures Way cited a Fourth Circuit case, Hampton Roads Carriers, Inc. v. Allied
Chemical Corp.100 However, the Hampton Roads court actually stated that, “under the
charter [agreement], as we have noted, only want of due diligence on the part of the owner
can impose liability for unseaworthiness.”101 The Fourth Circuit had already concluded
that the charter agreement in that case contained a due diligence clause.102 Therefore,
the court was not providing a statement of general maritime law. As such, the rule
statement in Natures Way is incorrect, and the Court will apply maritime law’s traditional
unseaworthiness doctrine that does not require proof of fault.
Chem Carriers also contends that LEI’s arguments as to unseaworthiness are
illogical because the M/V Miss Danielle successfully ran the route during the first two
96 Id. at 11–12.
97 Id. at 12.
98 Id. at 13.
99 Natures Way Marine, LLC v. Everclear of Ohio, Ltd., 37 F. Supp. 3d 1232, 1241 (S.D. Ala. Aug. 12, 2014),
amended, 2014 WL 5465885 (S.D. Ala. Oct. 28, 2014).
100 Hampton Roads Carriers, Inc. v. Allied Chem. Corp., 329 F.2d 387, 388 (4th Cir. 1964).
101 Id. at 391 (emphasis added).
102 Id. at 388. “The Vessels employed herein, the respective master and Owner shall not be responsible for
any loss or delay arising or resulting from unseaworthiness of the Vessel or Vessels whether existing at the
beginning of the voyage or developing during the voyage unless caused by want of due diligence on the
part of the Owner to make the Vessel seaworthy.” Id.
months of the charter with the same crew and no bow thruster.103 However, because the
warranty of seaworthiness arises anew at each stage of the voyage, the M/V Miss
Danielle could have been seaworthy in January and February but not seaworthy during
other times of the charter.
LEI introduces sufficient summary judgment evidence to create a genuine issue of
material fact as to seaworthiness in the form of the declaration of its purported expert
witness, Captain Sean Hogue. Hogue states that a bow thruster should have been
installed and a vessel with higher horsepower should have been used.104 Seaworthiness
is a question of fact usually considered at trial,105 and the M/V Miss Danielle’s
seaworthiness must be considered at trial. Summary judgment on this theory of breach
is denied.
LEI argues that Chem Carriers breached the implied warranty of workmanlike
service.106 Chem Carriers rebuts that this warranty has never been extended to
arguments over delays in a time charter.107
Courts have applied an implied warranty of workmanlike service to a wide variety
of maritime service contracts including: “repairs, offshore service contracts, contracts to
provide tug assistance, launch service contracts, and stevedoring contracts.”108 The
warranty stems from “the hornbook rule of contract law that one who contracts to provide
services impliedly agrees to perform in a diligent and workmanlike manner.”109 Although
103 Rec. Doc. No. 66, p. 6.
104 Rec. Doc. No. 65-5, p. 3–7.
105 Becker v. Tidewater, Inc., 586 F.3d 358, 368 (5th Cir. 2009).
106 Rec. Doc. No. 65, p. 14.
107 Rec. Doc. No. 66, p. 7.
108 See 1 Schoenbaum, Admiralty & Mar. L. § 5:15 (6th ed.).
109 2 Id. § 12:4.
the parties debate whether the warranty applies to charter agreements, the Court finds
that it need not reach the issue.
If the charter agreement incorporated an implied warranty of workmanlike
performance, that warranty would be co-extensive with the duty to make delivery within a
reasonable time, discussed below. The object of the charter agreement was the
successful delivery of LEI’s diesel. Any implied duty of workmanlike performance would
not impose an additional metric besides reasonable time because that is the only metric
that matters in this case. In other words, the implied warranty of workmanlike service is
redundant in this case—if applicable at all.
LEI argues that Chem Carriers breached its obligation of good faith and fair
dealing. All maritime contracts impose an obligation of good faith and fair dealing between
the parties in its performance and enforcement.110 “‘[T]he obligation of good faith and fair
dealing is not breached merely by the failure to perform a particular obligation. A mere
failure to fulfill an obligation, without a showing of intent or ill will, does not constitute a
breach of good faith.’”111
LEI asserts that Chem Carriers “evaded the spirit of the contract by failing to
diligently transport [LEI’s] product because that was the entire purpose of the
agreement.”112 Chem Carriers points out that LEI has produced no evidence that Chem
Carriers acted in bad faith or with malice. Indeed, there is no such evidence before the
Court. Chem Carriers must prove a negative, so the lack of evidence is fatal to LEI’s claim
110 Comar Marine Corp. v. Raider Marine Logistics, L.L.C., 2013 WL 2181036, at *14 (W.D. La. May 20,
2013), aff'd, 792 F.3d 564 (5th Cir. 2015).
111 Id. (quoting Dufrene v. Browning–Ferris, Inc., 1997 WL 587765, 2 (E.D. La. Sept. 23, 1997).
112 Rec. Doc. No. 65, p. 15.
for breach of the obligation of good faith and fair dealing because LEI has not produced
evidence sufficient to create a genuine issue of material fact as to whether Chem Carriers
acted in bad faith. Therefore, summary judgment is granted as to this theory of breach in
favor of Chem Carriers.
Finally, and most importantly, LEI argues that Chem Carriers had a duty to make
delivery within a reasonable time. Paragraph 19 provides in relevant part, “[Chem
Carriers] shall exercise complete navigational control of its Equipment to promptly
execute such transportation requests….” This clause assumes that Chem Carriers had a
duty to promptly execute LEI’s transportation requests. Moreover, maritime law imposes
upon Chem Carriers a duty to make delivery within a “reasonable time.”113
Whether Chem Carriers made delivery within a reasonable time is a question of
fact. The factfinder must consider all of the circumstances to determine whether Chem
Carriers’ speed was reasonable. Chem Carriers cites Banta’s deposition testimony that
the pilots were “try[ing] to do their best for [LEI].”114 Likewise, Andrew Pritchard, who is
apparently a Chem Carriers employee, testified that there was nothing that Chem Carriers
“could’ve done differently to [] make this go faster or get more trips.”115 LEI rebuts with
the testimony of its proffered expert, Captain Hogue, who asserts that Chem Carriers
could have completed additional trips had it made different decisions.116 Chem Carriers
objects to Captain Hogue’s declaration as replete with legal conclusions, but even
stripped of its legal conclusions, the declaration creates a genuine issue of material fact
113 Lafarge Corp. v. M/V MACEDONIA HELLAS, 2000 WL 687708, at *8 (E.D. La. May 24, 2000); see also
Hall v. Hurlbut, 11 F. Cas. 228, 231 (C.C.D. Md. 1858).
114 Rec. Doc. No. 63-3, p. 4.
115 Rec. Doc. No. 60-8, p. 2.
116 Rec. Doc. No. 65-5, p. 5.
as to whether Chem Carriers made deliveries within a reasonable time. Summary
judgment is denied on this theory of breach.
III. CONCLUSION
LEI’s Motion is granted as to Chem Carriers’ claims for attorneys’ fees and interest
on the unpaid charter hire but denied as to Chem Carriers’ claims for the rudder repair
costs and day rate for days that the M/V Miss Danielle was dry docked or otherwise not
in service. Chem Carriers’ Motion is granted as to its claim for the unpaid charter hire,
excluding the day rate for May 17 to May 31, but denied as to its claim for interest on the
unpaid charter hire and LEI’s claim for lost profits.
For the foregoing reasons, LEI’s Motion117 is GRANTED in part and DENIED in
part. For the foregoing reasons, Chem Carriers’ Motion118 is GRANTED in part and
DENIED in part.
IT IS SO ORDERED.
Signed in Baton Rouge, Louisiana on September 10, 2021.
S
CHIEF JUDGE SHELLY D. DICK
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF LOUISIANA
117 Rec. Doc. No. 60
118 Rec. Doc. No. 61.