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Comar Marine, Corp. v. Raider Marine Logistics, L.L.C.

United States Court of Appeals, Fifth Circuit

July 6, 2015

COMAR MARINE, CORPORATION, Plaintiff,
v.
RAIDER MARINE LOGISTICS, L.L.C., ETC., Defendant. CONQUEROR MARINE LOGISTICS, L.L.C., Plaintiff, JP MORGAN CHASE BANK, N.A., Intervenor Plaintiff--Appellee,
v.
COMAR MARINE, L.L.C., formerly known as Comar Marine, Corporation, formerly known as Nautical Offshore Corporation, Defendant--Intervenor Defendant--Appellant. COMAR MARINE, CORPORATION, formerly known as Nautical Offshore Corporation, Plaintiff Intervenor Defendant--Appellee Cross-Appellant,
v.
RAIDER MARINE LOGISTICS, L.L.C., in personam; CONQUEROR MARINE LOGISTICS, L.L.C., in personam; ENFORCER MARINE LOGISTICS, L.L.C., in personam, Defendants--Appellees, MARAUDER MARINE LOGISTICS, L.L.C., in personam; TRACY P. LIRETTE, in personam; CHRIS ST. AMAND, in personam, Defendants--Appellants Cross-Appellees, JP MORGAN CHASE BANK, N.A.; ALLEGIANCE BANK TEXAS, Intervenor Plaintiffs--Appellees. CONQUEROR MARINE LOGISTICS, L.L.C.; RAIDER MARINE LOGISTICS, L.L.C.; ENFORCER MARINE LOGISTICS, L.L.C., Plaintiffs--Appellants Cross-Appellees, JP MORGAN CHASE BANK, N.A., Intervenor Plaintiff--Appellee,
v.
COMAR MARINE, L.L.C., formerly known as Comar Marine, Corporation, formerly known as Nautical Offshore Corporation, Defendant Intervenor Defendant--Appellee Cross-Appellant

Appeals from the United States District Court for the Western District of Louisiana.

For Jp Morgan Chase Bank, N.A., Intervenor Plaintiff - Appellee (13-30156): Wayne A. Shullaw, Lafayette, LA; Robert A. Mathis, Newman, Mathis, Brady & Spedale, P.L.C., Metairie, LA.

For Comar Marine, L.L.C., formerly known as: Comar Marine Corporation, formerly known as: Nautical Offshore Corporation, Defendant - Appellant (13-30156): Robert J. Stefani, Trial Attorney, Henry A. King, Esq., King, Krebs & Jurgens, P.L.L.C., New Orleans, LA.

For Conqueror Marine Logistics, L.L.C., Raider Marine Logistics, L.L.C., Enforcer Marine Logistics, L.L.C., Plaintiffs - Appellants Cross-Appellees (13-30819): Edward Hank Arnold III, Esq., Christopher Matthew Hannan, Esq., James H. Roussel, Esq., Anne Derbes Wittmann, Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., New Orleans, LA.

For Jp Morgan Chase Bank, N.A., Intervenor Plaintiff - Appellee (13-30819): Wayne A. Shullaw, Lafayette, LA.

For Allegiance Bank Texas, Intervenor Plaintiff - Appellee (13-30819): Arthur Gregory Grimsal, Meredith Sue Grabill, Esq., Gordon, Arata, McCollam, Duplantis & Eagan, L.L.C., New Orleans, LA.

For MARAUDER MARINE LOGISTICS, L.L.C., in personam, TRACY P. LIRETTE, in personam, CHRIS ST. AMAND, in personam, Defendants - Appellants (13-30819): Edward Hank Arnold III, Esq., Christopher Matthew Hannan, Esq., James H. Roussel, Esq., Anne Derbes Wittmann, Baker, Donelson, Bearman, Caldwell & Berkowitz, P.C., New Orleans, LA.

For Comar Marine, L.L.C., formerly known as: Comar Marine Corporation, formerly known as: Nautical Offshore Corporation, Defendant-Intervenor Defendant - Appellee Cross-Appellant (13-30819): Robert J. Stefani, Trial Attorney, Henry A. King, Esq., King, Krebs & Jurgens, P.L.L.C., New Orleans, LA.

For Comar Marine Corporation, formerly known as: Nautical Offshore Corporation, Plaintiff-Intervenor Defendant - Appellee Cross-Appellant (13-30819): Robert J. Stefani, Trial Attorney, Henry A. King, Esq., King, Krebs & Jurgens, P.L.L.C., New Orleans, LA.

Before STEWART, Chief Judge, OWEN, Circuit Judge, and MORGAN, District Judge.[*]

OPINION

PRISCILLA R. OWEN, Circuit Judge.

This case involves a contract dispute between Comar Marine, LLC (Comar) and four vessel-owning LLCs. Under the contracts, Comar managed the vessels on behalf of the vessel-owning LLCs. The vessel-owning LLCs decided to terminate the agreements prematurely, and Comar sued for breach of contract. JPMorgan Chase Bank (JPMorgan) and Allegiance Bank Texas (Allegiance) provided the financing for the vessel purchases and intervened to defend their preferred ship mortgages. The district court granted summary judgment in favor of JPMorgan and Allegiance. After a bench trial, the district court held, inter alia, that (1) the vessel-owning LLCs materially breached the agreements by terminating without cause, (2) the termination fee in the agreements was penal and thus unenforceable, (3) Comar did not have valid maritime liens on the vessels, and (4) Comar wrongfully arrested the vessels. We affirm.

I

Chris St. Amand and Tracy Lirette agreed to purchase three vessels from Comar: the M/V Conqueror, the M/V Raider, and the M/V Enforcer. Subsequently, St. Amand and Lirette agreed to purchase another ship, the M/V Marauder, from Comar. St. Amand and Lirette purchased the vessels through a network of limited liability companies (collectively, with St. Amand and Lirette, the Owners). JPMorgan financed the purchases of the Conqueror, Raider, and Enforcer, while Allegiance provided financing for the Marauder. Both banks secured their loans with preferred ship mortgages. As a condition precedent to the purchases, Comar required the Owners to enter into identical management agreements for each of the vessels. Under the management agreements, the Owners appointed Comar to market, manage, and operate the vessels and to pay Comar a monthly management fee equal to the greater of $3,000 or 10% of the gross income from each vessel that month. All expenses Comar incurred in connection with its provision of services were to be " reimbursed . . . from funds held on account of Owner[s]."

As the Gulf of Mexico charter market deteriorated, Lirette notified Comar by e-mail that the Owners were terminating their agreements effective immediately and had executed management agreements with another company. Shortly thereafter, Comar filed in personam actions against Lirette, St. Amand, and the various LLCs and in rem actions against the four vessels, asserting breach of contract. Comar alleged that it was owed both outstanding expenses as well as termination fees, totaling approximately $1,146,117.47. Comar sought and secured arrests of the four vessels, on the ground that its claims for necessaries and termination fees under the agreements gave rise to maritime liens. The Owners filed counterclaims against Comar, asserting, inter alia, wrongful arrest of the vessels. JPMorgan and Allegiance both intervened in the litigation in order to defend their rights as preferred mortgagees.

The district court set bonds on the four vessels. With a loan from Allegiance, the Owners were able to pay the bond to secure the release of the Marauder. JPMorgan, however, was unwilling to lend further funds to the Owners; as a result, the Owners placed the LLCs owning the Raider, Enforcer, and Conqueror into bankruptcy. The Marauder was under seizure for 35 days, and the three other vessels for 37 days, during which they could not be chartered or otherwise profitably used.

As the litigation proceeded, Comar withdrew its claim for unpaid expenses and necessaries because the funds obtained from collecting outstanding accounts receivable were sufficient to satisfy those expenses. JPMorgan and Allegiance filed motions for summary judgment contending that Comar did not have maritime liens on the vessels. The district court granted the banks' motions. Comar appealed with respect to JPMorgan pursuant to 28 U.S.C. § 1292(a)(3).[1]

The remaining parties proceeded to a bench trial. The district court held that although the Owners breached the agreements by terminating without cause, the termination fee was penal and therefore unenforceable. In lieu of the termination fee, the district court awarded Comar damages of $3,000 per month from the date of termination until the date the agreements were scheduled to expire. The court also held that St. Amand and Lirette were personally liable for these damages as the guarantors of the agreements. Additionally, the court held that Comar had wrongfully arrested the vessels. Nonetheless, it declined to award the Owners damages because it found the Owners had failed to introduce evidence establishing the extent of their damages with reasonable certainty.

Comar and the Owners each submitted postjudgment motions requesting, among other things, that the court amend the judgment to award prejudgment interest. The court granted the Owners' request to offset the damages owed to Comar by the excess of the accounts receivable and denied the remainder of the motions without discussion, citing " the Court's discretion and the 'peculiar circumstances' of this action." Both Comar and the Owners timely appealed the court's judgment; Comar also appealed the grant of summary judgment in favor of Allegiance. This court consolidated the appeals with Comar's interlocutory appeal of the district court's grant of summary judgment in favor of JPMorgan.

II

We review the district court's grant of summary judgment in favor of Allegiance and JPMorgan de novo, " applying the same legal standard as the district court in the first instance." [2] Under that standard, " [t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." [3]

The district court granted summary judgment in favor of both JPMorgan and Allegiance on two alternative grounds. First, it held that the breach of the management agreements did not give rise to liabilities that created maritime liens, and accordingly, that JPMorgan's and Allegiance's preferred ship mortgages had priority over other claims against the vessels. In the alternative, the district court held that even if the breach did give rise to maritime liens, Comar was precluded from asserting them as a joint venturer. Comar challenges both conclusions.

Assuming the agreements at issue are maritime contracts, as the parties have stipulated, the remaining inquiry is whether breach of these contracts gave rise to maritime liens.[4] Maritime liens are " stricti juris and will not be extended by construction, analogy or inference." [5] " Thus, to determine the validity of a maritime lien, we must normally refer to statutory law or those liens that have been historically recognized in maritime law." [6]

The Fifth Circuit has recognized that the breach of certain types of contracts gives rise to maritime liens.[7] Comar does not contend that the management agreements of the sort it entered into with the Owners are one such historically recognized type. Instead, it claims that the district court erred because the agreements are the functional equivalent, or at the very least analogous, to bareboat charters, contracts recognized as giving rise to maritime liens,[8] and such equivalency is sufficient to confer a maritime lien.

Our decision in Walker v. Braus provides a definition of a charter party:

A " charter" is an arrangement whereby one person (the " charterer" ) becomes entitled to the use of the whole of a vessel belonging to another (the " owner" ). . . . Under a bareboat or demise charter . . . the full possession and control of the vessel is transferred to the charterer. The stated consideration for a demise charter is payable periodically but without regard to whether the charterer uses the vessel gainfully or not. Under a bareboat or demise charter the vessel is transferred without crew, provisions, fuel or supplies, i.e. " bareboat" ; and when, and if, the charterer operates the vessel he must supply also such essential operating expenses. Because the charter's personnel operate and man the vessel during a demise charter, the charterer has liability for any and all casualties resulting from such operation and therefore provides insurance for such liability.[9]

Like a bareboat charter, Comar had full possession and control of the vessels, carried insurance for the vessels, and used its own crew, but unlike such a charter, Comar did not pay for the vessels' expenses, including insurance, and did not owe the Owners a periodic payment independent of whether the vessels were used. Rather, the Owners paid Comar a management fee and reimbursed Comar for expenses, such as equipment, supplies, and repairs. Comar sought charters on behalf of the Owners and then revenue, net of the agreed charges, was remitted to the Owners. Additionally, under a bareboat charter, " [s]ervices performed on board the ship are primarily for [the charterer's] benefit." [10] Here, the services performed by Comar were primarily for the Owners' benefit. The management agreements in the present case are not the functional equivalent of bareboat charters.

Even were the management agreements similar to bareboat charters, the decisions on which Comar relies do not hold that breach of a contract analogous to one historically recognized as giving rise to a maritime lien is sufficient to impose such a lien.[11] At most, the Ninth Circuit has held, and this court has intimated, that a contract may give rise to a maritime lien if it imposes practically identical rights and responsibilities as historically recognized contracts, such as a subcharter.[12] As discussed above, the management agreements in the present case do not impose practically identical responsibilities as charters. Comar's reliance on our unpublished decision in Action Marine is misplaced.[13] While we did state that " breach of a maritime contract gives rise to a maritime lien despite the fact that no damage was sustained to the cargo," the citations supporting this statement were to our decisions in International Marine Towing and Rainbow Line, which stand for the uncontroversial proposition that breach of a charter gives rise to maritime lien.[14] Our decision in Action Marine dealt with a towing contract, not a management agreement.[15]

Finally, while the management agreements stated that Comar " is relying on the credit of the Vessel[s] to secure payment of [the management fees and advanced sums for expenses] and shall have a maritime lien on ...


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