      Case: 14-30059          Document: 00512953783              Page: 1      Date Filed: 03/02/2015




           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                                           United States Court of Appeals
                                                                                                    Fifth Circuit

                                                                                                  FILED
                                            No. 14-30059                                      March 2, 2015
                                                                                             Lyle W. Cayce
OFFSHORE MARINE CONTRACTORS, INCORPORATED,                                                        Clerk


                 Plaintiff - Appellee

v.

PALM ENERGY OFFSHORE, L.L.C.,

                 Defendant - Appellee

v.

CHET MORRISON WELL SERVICES, L.L.C.,

                  Defendant - Appellant
------------------------------------------------------------------------------------------------------------

CHET MORRISON CONTRACTORS, L.L.C.,

                 Plaintiff - Appellant

v.

PALM ENERGY OFFSHORE, L.L.C.; H.C. RESOURCES, L.L.C.,

                 Defendants - Appellees




                      Appeal from the United States District Court
                         for the Eastern District of Louisiana


Before HIGGINBOTHAM, CLEMENT, and HIGGINSON, Circuit Judges.
    Case: 14-30059    Document: 00512953783     Page: 2   Date Filed: 03/02/2015



                                 No. 14-30059
EDITH BROWN CLEMENT, Circuit Judge:
      Appellants Chet Morrison Well Services, L.L.C. and Chet Morrison
Contractors, L.L.C. (collectively, “CM”) appeal the order and reasons,
judgment, and post-trial order entered by the district court on October 7, 2013,
October 17, 2013, and December 30, 2013, respectively. For the reasons
explained below, the district court’s judgment and post-trial order are
AFFIRMED.
                          FACTS AND PROCEEDINGS
      Appellee Palm Energy Offshore, L.L.C. (“Palm”) owned the mineral
rights in an area of the Gulf of Mexico (“Gulf”) called the West Delta 55 block
(“WD55”). Palm also served as the court-appointed manager for appellee H.C.
Resources, L.L.C. (“HCR”) and its mineral holdings at another Gulf location,
the Chandeleur 37 block (“C37”). Acting as HCR’s manager, Palm asked CM to
service one of HCR’s wells at C37. CM agreed and chartered the L/B Nicole
Eymard (the “Nicole Eymard”) from appellee Offshore Marine Contractors, Inc.
(“Offshore”) beginning on July 15, 2008. The Nicole Eymard is a lift boat, a
vessel with extendable legs that allow the ship to stabilize on the ocean floor
to perform maintenance work at sea.
      The ship departed Louisiana on July 18 and worked at C37 until July
27. On July 27, Palm, now acting on its own behalf, asked CM to send the
Nicole Eymard to WD55. CM dispatched the ship to WD55. After completing
the job at WD55, the crew of the Nicole Eymard attempted to retract the ship’s
legs from the ocean floor. The crew discovered that one of the legs was stuck.
The crew worked to free the leg until August 18, when Offshore ordered the
crew to sever the leg and return to port ahead of an approaching storm. In port,
Offshore completed repairs on the ship on October 10. Offshore then sued CM
and Palm for charter fees that accrued from July 15 to August 18, for
“downtime charter” from August 19 to October 10, and for the cost of repairs.
                                       2
    Case: 14-30059         Document: 00512953783             Page: 3   Date Filed: 03/02/2015



                                        No. 14-30059
CM and Palm then filed various counter- and cross-claims against each other
and Offshore. CM and Offshore’s claims against each other are governed in
part by the terms of an oral charter agreement. CM and Palm’s claims against
each other are governed in part by the terms of a Master Service Agreement
(“MSA”), and in part by a specific work order. The MSA contains an indemnity
agreement (“Indemnity Agreement”).
      After a bench trial, the district court held that CM owed Offshore for
charter fees that accrued from July 15 to July 27 while the Nicole Eymard was
at C37, and for charter fees that accrued from July 28 to August 18 while the
ship was at WD55. The court held that CM could recover the same fees from
Palm. The court held that neither CM nor Palm owed Offshore for downtime
charter fees from August 19 to October 10, or for repairs. The court held that
CM and Palm owed prejudgment interest to Offshore and CM, respectively.
The court further held that, under the Indemnity Agreement, CM owed Palm
attorneys’ fees and costs, which Palm incurred while defending against
Offshore’s claims.
      CM, Offshore, and Palm filed motions to alter or amend the judgment
under Fed. R. Civ. P. 59. 1 The court granted these motions to the extent they
sought clarification regarding the court’s order on prejudgment interest. The
court explained that CM was liable to Offshore, and Palm to CM, for
prejudgment interest at the rate of 1.5% per month. The court granted Palm’s
motion in part, holding that Palm did not owe CM for on-site downtime charter
fees that accrued from August 1 to August 18 while the Nicole Eymard was
stuck at WD55. The court determined that the Indemnity Agreement barred
CM from seeking repayment for those fees. The court denied the parties’
motions in all other respects.


      1   CM also cited Rule 60 as a basis for its motion.
                                               3
    Case: 14-30059     Document: 00512953783      Page: 4    Date Filed: 03/02/2015



                                  No. 14-30059
      CM appeals from the district court’s judgment and its post-trial order.
                             STANDARD OF REVIEW
      In admiralty cases tried without a jury, we review the district court’s
legal conclusions de novo and its factual findings under the clearly erroneous
standard. Stevens Shipping & Terminal Co. v. Japan Rainbow II MV, 334 F.3d
439, 443 (5th Cir. 2003). “A finding is clearly erroneous when, although there
is evidence to support it, the reviewing court, based on all of the evidence, is
left with the definite and firm conviction that a mistake has been made.” Stolt
Achievement, Ltd. v. Dredge B.E. LINDHOLM, 447 F.3d 360, 363 (5th Cir.
2006). “If the district court’s account of the evidence is plausible in light of the
record, this Court may not reverse, even though convinced that had it been
sitting as the trier of fact, it would have weighed the evidence differently.” Id.
at 363-64.
      “If a finding is based on a mixed question of law and fact, this court
should only reverse ‘if the findings are based on a misunderstanding of the law
or a clearly erroneous view of the facts.’” Bertucci Contracting Corp. v. M/V
ANTWERPEN, 465 F.3d 254, 259 (5th Cir. 2006) (quoting Tokio Marine & Fire
Ins. Co. v. FLORA MV, 235 F.3d 963, 966 (5th Cir. 2001)).
      “Interpretation of the terms of a contract, including an indemnity clause,
is a matter of law, reviewable de novo on appeal.” Duval v. N. Assur. Co. of
Am., 722 F.3d 300, 303 (5th Cir. 2013) (internal quotation marks omitted).
Because the MSA and relevant work orders are “directly and proximately
linked to a vessel involved in a maritime activity,” general maritime law
controls our interpretation of those agreements. See Theriot v. Bay Drilling
Corp., 783 F.2d 527, 539 (5th Cir. 1986); cf. Reynaud v. Rowan Co., No. Civ. A.
98-1326, 1999 WL 65022, at *2 & n.3 (E.D. La. Feb. 5, 1999) (Clement, J.)
(holding that contract to supply jackup rig was maritime in nature). Because
the MSA contains a Louisiana choice of law provision, and the work in this case
                                         4
    Case: 14-30059         Document: 00512953783        Page: 5   Date Filed: 03/02/2015



                                       No. 14-30059
was performed in Louisiana territorial waters, we apply Louisiana law when
interpreting the MSA. See Great Lakes Reinsurance (UK) PLC v. Durham
Auctions, Inc., 585 F.3d 236, 243-44 (5th Cir. 2009) (holding that choice of law
provision in maritime contract applies unless party opposing provision shows
chosen state has “no substantial relationship to the parties or the transaction,”
or “state’s law conflicts with the fundamental purposes of maritime law”). 2
                                       DISCUSSION
                                              I.
      CM argues that the district court erred by finding that it was barred
under the Indemnity Agreement from seeking repayment from Palm for
charter fees that accrued from August 1 to August 18 while the Nicole Eymard
was stuck at WD55.
      As explained above, the Indemnity Agreement is part of the MSA. Thus
our interpretation of the Indemnity Agreement is governed by Louisiana law.
Under Louisiana law, “[t]he starting point for interpreting an indemnity
provision is the language of the contractual provision.” Scarberry v. Entergy
Corp., 136 So. 3d 194, 218 (La. Ct. App. 2014). “If the words of the contract are
clear, unambiguous, and lead to no absurd consequences, the court need not
look beyond the contract language to determine the true intent of the parties.”
Boykin v. PPG Indus., Inc., 987 So. 2d 838, 842 (La. Ct. App. 2008) (citing and
summarizing La. Civ. Code art. 2046). The Indemnity Agreement provides that
CM “shall release, defend, protect, indemnify, and hold [Palm] harmless
. . . from and against all suits, actions, claims, liabilities, damages, and
demands based upon personal injury or death or property damage or loss
. . . suffered by” CM or its subcontractors.




      2   Neither party argues that these exceptions apply.
                                              5
      Case: 14-30059      Document: 00512953783         Page: 6    Date Filed: 03/02/2015



                                      No. 14-30059
       In its October 7 order, the district court held that CM owed Offshore for
charter fees that accrued from July 28 to August 18 while the Nicole Eymard
was at WD55. See Offshore Marine Contractors, Inc. v. Palm Energy Offshore,
LLC (Offshore I), No. 10-CV-4151, 2013 WL 5530273, at *7 (E.D. La. Oct. 7,
2013). The court further held that Palm had agreed to pay CM for those fees.
See id. at *7-8. In its post-trial order, the district court affirmed its earlier
holding to the extent that Palm still owes CM for charter fees that accrued
while the Nicole Eymard was working at WD55. But the court held that the
on-site downtime charter fees that accrued only because the Nicole Eymard
was stuck on location were based on “property damage or loss,” and thus “f[e]ll
within the terms of the release” in the Indemnity Agreement. Offshore Marine
Contractors, Inc. v. Palm Energy Offshore, LLC (Offshore II), No. 10-CV-4151,
2013 WL 6858911, at *6 (E.D. La. Dec. 30, 2013). Accordingly, the court held
that Palm “[wa]s not liable to [CM] for charter fees during the period in which
the Nicole Eymard was stuck [at WD55] (August 1, 2008 to August 18, 2008).”
Id.
       CM’s argument turns on the meaning of the phrase “based upon
. . . property damage or loss.” In CM’s view, the fact that its claim against Palm
is for charter fees means that the claim cannot be based on property damage.
But CM fails to recognize that the Indemnity Agreement covers not only claims
based on “property damage” but also those based on “loss.” Indemnification is
required for claims “based upon personal injury or death or property damage
or loss.” Only damage is modified by “property.” As used in the Indemnity
Agreement, “loss” is general and not modified by “property.” 3 The on-site


       3 Where “property” is intended to modify both “damage” and “loss,” the Indemnity
Agreement makes the modification explicit. For example, the Indemnity Agreement provides
that CM must provide comprehensive general liability insurance that covers “personal injury,
sickness or death, and loss or damage to property.” Elsewhere, it provides that Palm will pay
CM for “damage to or loss of [CM’s] downhole property or equipment.”
                                             6
     Case: 14-30059        Document: 00512953783          Page: 7     Date Filed: 03/02/2015



                                        No. 14-30059
downtime charter fees were a “loss,” which is covered by the Indemnity
Agreement.
       We agree with the district court’s interpretation of the Indemnity
Agreement, and we discern no error in the district court’s understanding of the
relevant facts.
                                              II.
       CM argues that Palm breached its agreement to pay charter fees directly
to Offshore, and that this breach precludes Palm from collecting attorneys’ fees
and costs from CM under the Indemnity Agreement. 4
       In Offshore II, the district court held that Palm never agreed to pay
Offshore directly for the charter fees that accrued at WD55. Id., 2013 WL
6858911, at *5. If Palm never agreed to pay Offshore directly, then no breach
could have occurred. CM cites evidence that suggests that Palm agreed to pay
Offshore directly. But the district court credited conflicting evidence that Palm
never agreed to pay directly for the WD55 job. See Offshore I, 2013 WL
5530273, at *5 (“Williams [of CM] maintained that the [WD]55 project was
supposed to be another direct billing arrangement, but Garrett [of Palm]
testified that direct billing was never discussed.” (footnote omitted)). CM fails
to point to any evidence showing that the district court’s balancing of the
conflicting evidence was unreasonable.
       Accordingly, CM fails to show that the district court clearly erred by
crediting the evidence showing that there was no direct billing agreement.
                                              III.




       4 Palm moves the court to strike portions of CM’s reply brief suggesting that Palm
never paid for the charter hire of the Nicole Eymard. Because, even considering those
portions of CM’s brief, CM fails to show that the district court clearly erred, we dismiss Palm’s
motion as moot.
                                               7
    Case: 14-30059      Document: 00512953783      Page: 8   Date Filed: 03/02/2015



                                   No. 14-30059
      CM argues that the district court erred by failing to award it a 15%
markup on all charter fees owed by Palm.
      CM’s strongest evidence is a corporate deposition of a Palm executive,
Jonathan Garrett (“Garrett”). Opposing counsel asked Garrett:
      Well, let’s just say the Court determines -- you’ve already told us
      that you committed to pay the charter hire, whatever was the
      reasonable charter hire.
            My question to you is: With your relationship with Chet
      Morrison, was your agreement to pay the charter hire plus 15
      percent for this job on West Delta 55?
Garrett responded: “That’s the -- yes, that’s given --.” This testimony suggests
that CM and Palm had a blanket agreement that Palm would pay the markup
whenever CM chartered vessels on its behalf. But at trial, Garrett testified
that Palm never “issue[d] a blanket statement to [CM] that [it] would pay any
and all invoices with a 15 percent markup” and that Palm “reserv[ed] the right
to audit [CM’s] invoice.” A district court does not clearly err merely because it
credits one of two conflicting testimonies. Cf. United States v. Davis, 76 F.3d
82, 85 (5th Cir. 1996) (“We see no error in the district court’s determination
that Wilson’s cross-examination testimony was more worthy of credence than
his direct testimony. . . .”). Moreover, we note that the district court’s resolution
of these conflicting testimonies was especially reasonable in this case, where
the deposition question was convoluted and hypothetical, while the question at
trial was clear and direct.
      CM points to evidence that Palm paid a CM invoice that contained the
markup. But CM concedes that the payment was later refunded, and other
testimony suggests that Palm paid the invoice “accidentally.” CM also points
to testimony that Palm had paid CM the markup in the past. But the trial
testimony cited above suggests that past markup payments were not promises
to pay in the future.

                                         8
    Case: 14-30059    Document: 00512953783     Page: 9   Date Filed: 03/02/2015



                                 No. 14-30059
      Finally, CM adduced evidence that it is customary for its customers to
pay a markup. But “before a custom or usage will be considered binding by
implication, the practice must appear to have been generally applicable as to
the place in question or in reference to the particular trade with which it is
connected.” Richard A. Lord, 12 Williston on Contracts § 34.14 (4th ed. 2014).
Such “binding effect . . . cannot be based on a few isolated instances, or the
practice of a few persons in a business or trade in which numerous persons are
engaged.” Id.
      Accordingly, CM fails to show that the district court clearly erred when
it determined that Palm did not owe the markup payments.
                                      IV.
      CM argues that the district court clearly erred when it awarded
prejudgment interest to Offshore at the rate of 1.5% per month because it never
agreed to pay that rate. CM also contends that this case presents special
circumstances that require an exception to the general rule that prejudgment
interest applies.
      “Under maritime law, the awarding of prejudgment interest is the rule
rather than the exception, and, in practice, is well-nigh automatic.” Reeled
Tubing, Inc. v. M/V Chad G, 794 F.2d 1026, 1028 (5th Cir. 1986). “Admiralty
courts enjoy broad discretion in setting prejudgment interest rates. They may
look to the judgment creditor’s actual cost of borrowing money, to state law, or
to other reasonable guideposts indicating a fair level of compensation.” Gator
Marine Serv. Towing, Inc. v. J. Ray McDermott & Co., 651 F.2d 1096, 1101 (5th
Cir. Unit A July 1981) (internal citations omitted).
      The district court set the interest rate based on Offshore’s invoices. In
doing so, the district court did not abuse its discretion. Courts often look to
invoices when fixing prejudgment interest. L&L Oil Co. v. M/V REBEL, 96
F.3d 1445 (5th Cir. 1996) (unpublished table decision) (noting that district
                                       9
   Case: 14-30059        Document: 00512953783    Page: 10   Date Filed: 03/02/2015



                                   No. 14-30059
court properly awarded interest based on rate called for in invoices); Eagle Eye
Distrib., Inc. v. Ben Parker, Inc., No. 3:09-CV-0095-L, 2009 WL 4251105, at *9
(N.D. Tex. Nov. 25, 2009) (looking to invoices to set 1.5% per month
prejudgment interest rate). Courts award these amounts to “compensate[ ] for
the use of funds to which the plaintiff was entitled, but which the defendant
had use of prior to judgment,” not on the grounds that the parties specifically
agreed to the interest rate. Reeled Tubing, 794 F.2d at 1028. CM’s argument
that it never agreed to the invoice rate is irrelevant.
      CM argues that special circumstances require an exception to the
prejudgment interest rule. More specifically, CM contends that Offshore
delayed litigation from 2008 to 2010. But the record shows that CM caused this
delay, at least in part, by instructing Offshore to bill Palm directly. CM
maintains that the district court should not have ordered payment of any
interest rate higher than the federal interest rate, but it fails to cite any
support for this assertion. CM argues that the prejudgment interest rate leads
to an award that is far higher than Offshore could have earned on the withheld
payments. Once again, CM fails to cite any support for this assertion. Finally,
CM asserts that the district court’s award ignores all of the Reeled Tubing
factors. This general assertion is insufficient to show that the district court
abused its discretion.
      Accordingly, CM fails to show that the district court abused its discretion
when it awarded Offshore prejudgment interest at the rate of 1.5% per month.




                                   CONCLUSION
      For the reasons explained, the district court’s judgment and post-trial
order are AFFIRMED.


                                        10
