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Knights Marine & Industrial Services, Inc. v. Gulfstream Enterprises, Inc.

Court of Appeals of Mississippi

April 18, 2017

KNIGHTS MARINE & INDUSTRIAL SERVICES, INC. APPELLANT/CROSS-APPELLEE
v.
GULFSTREAM ENTERPRISES, INC. APPELLEE/CROSS-APPELLANT

          DATE OF JUDGMENT: 12/15/2015

         JACKSON COUNTY CIRCUIT COURT, HON. ROBERT P. KREBS.

          ATTORNEYS FOR APPELLANT: KEVIN M. MELCHI JOHN MAJOR KINARD ANDY LOWRY.

          ATTORNEY FOR APPELLEE: STEPHEN WALKER BURROW.

          BEFORE LEE, C.J., BARNES AND FAIR, JJ.

          BARNES, J.

         ¶1. This dispute stems from the clean-up efforts on the Mississippi Gulf Coast due to the Deep Water Horizon BP oil spill in 2010. Gulfstream Enterprises Inc. (Gulfstream) sued Knights Marine & Industrial Services Inc. (Knights) under the open-account statute in the County Court of Jackson County, alleging Knights failed to pay the full balance owed to Gulfstream for providing a crew-transport vessel with a captain and crew. Gulfstream later amended its complaint to add a breach-of-contract claim. After a bench trial, the county court entered: (1) a judgment in favor of Gulfstream for $143, 881.01 in compensatory damages; (2) pre-judgment interest of eight percent per annum from the date Gulfstream filed its original complaint through the entry of judgment, totaling $10, 122.92; (3) post-judgment interest of eight percent per annum; and (4) attorney's fees and expenses totaling $9, 274.74; for a total judgment of $163, 278.67. Gulfstream's request for punitive damages was denied.

         ¶2. Knights appealed to the Jackson County Circuit Court, and Gulfstream cross- appealed on the issues of pre-judgment interest, punitive damages, and Knights's garnished funds to secure judgment. The circuit court affirmed the county court's judgment in all respects.

         ¶3. Knights now appeals to this Court, and Gulfstream cross-appeals. Gulfstream claims the county court should have awarded pre-judgment interest starting on the date Knights failed to pay Gulfstream's outstanding invoices, not the date Gulfstream filed suit. Gulfstream also argues the county court erred in not awarding punitive damages, and in ordering Knights's funds, which had been successfully garnished by Gulfstream, to be deposited in the court registry instead of immediately disbursed to Gulfstream. A request for attorney's fees for the appeal and post-judgment collection efforts was made by Gulfstream as well.

         ¶4. On direct appeal, we affirm the $143, 881.01 award to Gulfstream under the open- account statute. On cross-appeal, we affirm the denial of punitive damages to Gulfstream, but reverse and remand for the circuit court to determine the amount of pre-judgment interest and Gulfstream's fees related to post-judgment-collection efforts and defending this appeal.

         STATEMENT OF FACTS AND PROCEDURAL HISTORY

         ¶5. As part of the clean-up efforts from the Deep Water Horizon oil spill, BP retained the services of numerous contractors, including United States Environmental Services LLC (USES). On May 31, 2010, USES contracted with Knights[1] to "provide barges and tugboats, per the direction of USES, " and "[s]upply, install and maintain ocean barrier fencing as directed by USES." In late June or early July 2010, Knights contacted Gulfstream about hiring a crew-transport vessel with a captain and crew, in order to fulfill its contract with USES. An agreement was reached between Gulfstream and Knights, and on July 8, 2010, Knights issued a purchase order stating Gulfstream would "provide a 42-foot crew transport vessel jet boat with captain and deckhand not including fuel" in order to "transport personnel [and supplies] from Biloxi to any of the barrier islands" at the rate of $2, 400 per day.

         ¶6. From July 8, 2010, until December 4, 2010, Gulfstream claimed the vessel was available to provide whatever support or services USES needed. Gulfstream admitted that sometimes the vessel was on standby and not working, as either it was awaiting directions from USES or there were unsafe marine conditions. The vessel's activity was recorded daily in the captain's logs. However, starting on September 30, 2010, Knights claimed Gulfstream's vessel was not in operation at all but had been removed to a staging area for repairs and maintenance. The captain's logs do not provide any details about the vessel's activities from September 30 through December 5, 2010. Yet it is undisputed that Gulfstream invoiced Knights weekly for services, fuel, and other charges, whether the vessel was on standby or working. Knights, in turn, submitted a weekly invoice to USES for payment, charging USES $2, 900 per day for the vessel, or a $500 markup from the amount Gulfstream billed Knights.[2]

         ¶7. Gulfstream pointed out that during this time, the vessel could not be used for any other job or purpose, and it never was. Ultimately, Gulfstream contended Knights owed an outstanding balance of $143, 881.01[3] for services provided. Gulfstream made several requests to Knights for payment both verbally and in writing, but the balance remained unpaid. Knights contended that it only owed payment for those days where service was requested by Knights or USES, and actually performed by Gulfstream.

         ¶8. On July 23, 2013, Gulfstream sued Knights under the open-account statute of Mississippi Code Annotated section 11-53-81 (Rev. 2012), and later amended the complaint to include a breach-of-contract claim. The parties waived their right to a jury trial. Testifying at the one-day bench trial in the Jackson County County Court were Greg Ladnier, president of Gulfstream; Will Ladnier, Greg's brother and boat captain; David Knight, Knights's chief financial officer and fifty-percent shareholder; and Eric Hoffman, chief financial officer of USES.[4] The court entered judgment for Gulfstream on compensatory damages of $143, 881.01 under the open-account statute. Pre-judgment interest and attorney's fees were also awarded to Gulfstream, but punitive damages were denied.

         ¶9. After the judgment was entered, Gulfstream tried to collect its judgment. An agreed order allowed Knights additional time to appeal to the circuit court and post a supersedeas bond. A stay was entered upon execution of the judgment, and bond was set at 125% of the total judgment, or $204, 098.34. After the stay expired, Gulfstream filed petitions for writ of garnishment to several financial institutions in Jackson County to secure the judgment. All funds garnished from Knights's bank accounts were tendered to the registry of the Jackson County Circuit Court. The court ordered that once cash reached 125% of the judgment, the funds served as a supersedeas bond and stayed the judgment. Gulfstream filed a motion to disburse these funds, but it was denied.

         ¶10. Knights appealed, and Gulfstream cross-appealed to the Jackson County Circuit Court, which affirmed the county court's rulings. Appeal and cross-appeal were then taken to this Court.

         ANALYSIS

         I. Damages Under the Open-Account Statute

         ¶11. Knights argues that the county court erred in awarding $143, 881.01 in compensatory damages to Gulfstream under the open-account statute because there were no services rendered for some of the invoices submitted, and Gulfstream was never entitled to a "standby rate" for the vessel. We disagree, and ...


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