     Case: 12-20098       Document: 00512152973         Page: 1     Date Filed: 02/22/2013




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

                                                                            FILED
                                                                         February 22, 2013

                                       No. 12-20098                        Lyle W. Cayce
                                                                                Clerk

ARV OFFSHORE COMPANY, LIMITED,

                                                  Plaintiff-Appellee
v.

CON-DIVE, L.L.C.,

                                                  Defendant-Appellant



                   Appeal from the United States District Court
                        for the Southern District of Texas
                              USDC No. 4:09-CV-944


Before REAVLEY, PRADO, and ELROD, Circuit Judges.
PER CURIAM:*
       This is a breach of contract case. Appellant Con-Dive, L.L.C. was held
liable for breaching a subcontract with ARV Offshore Company to provide a
saturation dive system, known as the Orca, to be used by ARV on a subsea
project in the Gulf of Thailand. As a result of Con-Dive’s breach, ARV had to
procure substitute vessels to complete the work and incurred increased costs.
Con-Dive appeals both the district court’s determination on summary judgment



       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
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                                  No. 12-20098

that the parties entered into a binding contract and the court’s award of
damages after a bench trial. For the following reasons, we AFFIRM.
      In June 2008, ARV and Con-Dive signed a Letter of Award confirming an
intent to contract for the Orca to be used on ARV’s project in the Gulf of
Thailand. The district court held that the Letter of Award, along with two
attachments, constituted a binding agreement that contained all the essential
elements of a contract. Con-Dive disputes this finding, arguing that the parties
were still negotiating and that the Letter of Award lacked the essential element
of a payment guarantee.
      We review the district court’s grant of summary judgment de novo,
applying the same standards as the district court. ACE Am. Ins. Co. v. M-I,
L.L.C., 699 F.3d 826, 830 (5th Cir. 2012). A valid contract under Texas law
requires “(1) an offer; (2) an acceptance in strict compliance with terms of [the]
offer; (3) a meeting of the minds; (4) a communication that each party consented
to the terms of the contract; (5) execution and delivery of the contract with an
intent it become mutual and binding on both parties; and [6] consideration.”
Advantage Physical Therapy, Inc. v. Cruse, 165 S.W.3d 21, 24 (Tex.
App.–Houston [14th Dist.] 2005, no pet.). To be legally binding, the contract
“must be sufficiently definite in its terms so that a court can understand what
the promisor undertook.” T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847
S.W.2d 218, 221 (Tex. 1992).
      Here, the Letter of Award and its attachments contained all essential
elements and was sufficiently definite to be understood by the parties as a
binding contractual agreement. The Letter of Award provided that Con-Dive
would mobilize its Orca dive system and deliver it to Bush Intercontinental
Airport for transport to Singapore. It included terms for the mobilization fee to
be paid by ARV, the subsequent day rate that ARV would pay for each day that
the system was in use, the time that the day rate would commence, the scope of

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                                  No. 12-20098

the work, and the expected duration of the contract. Although the parties
intended for a formal subcontract to replace the Letter of Award, which never
occurred, the agreement provided that the Letter of Award would govern the
parties’ relationship until the subcontract was executed. The fact that the Letter
of Award did not mention a payment guarantee does not preclude the existence
of a valid contract because the record shows that ARV agreed to obtain the
guarantee, and ARV’s director testified without contradiction that ARV did get
a guarantee from its bank before Con-Dive breached the agreement.
      The parties’ conduct after the Letter of Award was signed also reflected a
belief that there was a valid contract. ARV chartered and paid for a cargo plane
to transport the Orca to Singapore, and Con-Dive thereafter acknowledged in an
email that it would continue with plans to ship the Orca on the plane obtained
by ARV. We conclude from the plain language of the Letter of Award, from what
the parties said in their emails, and from the parties’ conduct in arranging
transport for the Orca, that there was a meeting of the minds on all essential
terms of a contract.    See Copeland v. Alsobrook, 3 S.W.3d 598, 604 (Tex.
App.–San Antonio 1999, pet. denied) (“The determination of a meeting of the
minds, and thus offer and acceptance, is based on the objective standard of what
the parties said and did and not on their subjective state of mind.”).
      Con-Dive argues in the alternative that even if a contract was formed, it
did not breach the agreement because it attempted to provide a substitute dive
system.   This argument is unavailing because Con-Dive’s terms for the
substitute system were contrary to the original agreement, and included a
higher mobilization fee, a higher day rate, and an increase in the portion of
transportation costs to be borne by ARV. The district court did not err by
concluding that the parties entered into a valid contract and that Con-Dive
breached the agreement by failing to provide the Orca, or a reasonable
substitute, on terms equivalent to the original agreement.

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       Con-Dive next challenges the district court’s calculation of damages. ARV
presented expert testimony showing that had Con-Dive provided the Orca, it
would have used the Orca on a vessel called the NOR VALIANT and would have
incurred costs of $10,646,996.40 to complete its project. Its expert further
established that ARV actually incurred costs of $16,072,036.80 as a result of
having to procure three substitute vessels on the open market at a higher price
than ARV would have paid for the Orca/NOR VALIANT combination. In an
effort to place ARV in as good an economic position as it would have been in had
Con-Dive not breached the contract, the district court awarded ARV the
difference between its actual costs and its expected costs, or $5,425,040.40.
       Con-Dive’s primary argument is that ARV failed to prove its damages
because ARV’s expert did not account for revenue that ARV received from
chartering the three substitute vessels, and therefore ARV failed to show that
it suffered a financial loss. It argues that ARV’s managing director, Alan
Stewart, testified that ARV was reimbursed by its own customer for the
increased vessel costs, and it argues that ARV may also have made a profit.1
The district court’s calculation of damages in a bench trial is a question of fact
that, absent an error of law, is reviewed for clear error. Ergon-West Virginia,
Inc. v. Dynegy Mktg. & Trade, 2013 WL 237567, at *3 (5th Cir. 2013); Kona
Tech. Corp. v. S. Pac. Transp. Co., 225 F.3d 595, 601 (5th Cir. 2000).
       Damages in a breach of contract case are generally measured as just
compensation for losses actually sustained as a result of the breach and are
meant to restore the injured party to the position he would have occupied had
the breaching party performed the contract. See Lafarge Corp. v. Wolff, Inc., 977


       1
         We note that Con-Dive focuses only on the costs associated with the substitute vessels
and does not address approximately $1.3 million that ARV paid to charter the cargo plane to
transport the Orca. Because Con-Dive does not address the transportation costs included in
the district court’s damages award, the issue is deemed abandoned. See Tewari De–Ox Sys.,
Inc. v. Mountain States/Rosen, L.L.C., 637 F.3d 604, 609–10 (5th Cir. 2011).

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S.W.2d 181, 187 (Tex. App.—Austin 1998, pet. denied); see also Restatement
(Second) of Contracts § 347. “[W]here the injured party has simply had to pay
an additional amount to arrange a substitute transaction and can be adequately
compensated by damages based on that amount,” the increased amount paid by
the injured party may be adequate to restore the injured party to the position he
would have been in had the breach not occurred. Restatement (Second) of
Contracts § 347 cmt. a.
      In the instant case, ARV proved that it had to secure replacement vessels
on the open market in order to complete its project after Con-Dive’s breach and
that it actually paid the costs for those vessels. ARV proved through its expert
that the increased expenses were reasonable and necessary. The district court,
which was in the best position to assess the matter, found ARV’s expert to be
credible and reliable. See, e.g., French v. Allstate Indem. Co., 637 F.3d 571, 581
& n.9 (5th Cir. 2011) (holding that the district court was best positioned to
assess witness credibility when determining the plaintiff’s actual loss). We
perceive no error in the district court’s award of damages based on ARV’s
increased costs to complete the same work that would have been performed had
Con-Dive provided the Orca. ARV therefore sufficiently proved that it suffered
actual damages as a result of the breach of contract by Con-Dive.             See
Restatement (Second) of Contracts § 347.
      To the extent that Con-Dive argues ARV was reimbursed for any of its
costs, Con-Dive is essentially seeking an offset. Con-Dive conceded at oral
argument that it did not plead offset as an affirmative defense, and the issue
could be considered waived. See Woodfield v. Bowman, 193 F.3d 354, 362 (5th
Cir. 1999); Geis v. Colina Del Rio, LP, 362 S.W.3d 100, 113 (Tex. App.—San
Antonio 2011, pet. denied). Even if the issue is not waived, however, Con-Dive
bore the burden of proving facts necessary to support an offset. See Brown v.
Am. Transfer & Storage Co., 601 S.W.2d 931, 936 (Tex. 1980). Stewart’s

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testimony about reimbursements, upon which Con-Dive relies, was non-specific
and did not establish a basis for the district court to recompute the damage
amount. Indeed, Stewart also testified that there were a number of vessel days
that were not reimbursed by its client and that ARV’s claim for damages
included only vessel days for which ARV was invoiced and for which it actually
paid. As noted by the district court, Con-Dive presented no additional evidence
from which the district court could reasonably determine the amounts, if any, to
be credited against ARV’s damages. The district court did not clearly err in its
damages award.
      Con-Dive further argues that ARV would have incurred additional
expenses even if it had supplied the Orca, and therefore ARV’s damages model
was unreliable, because (1) ARV could not have completed the project within the
limited time frame set by the Letter of Award, and (2) the NOR VALIANT
experienced mechanical breakdowns that would have occurred regardless of Con-
Dive’s breach. The district court carefully considered Con-Dive’s arguments, and
we conclude that its finding of fact that the project could have been completed
as contemplated in the contract was not clearly erroneous.             See Coe v.
Chesapeake Exploration, L.L.C., 695 F.3d 311, 316 (5th Cir. 2012) (district
court’s findings of fact in a bench trial are reviewed for clear error).
      AFFIRMED.




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