Cashman Equipment Corporation v. Rozel Operating C

Case: 13-30788 Document: 00512646232 Page: 1 Date Filed: 05/29/2014
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 13-30788
Summary Calendar
United States Court of Appeals
Fifth Circuit
FILED
May 29, 2014
CASHMAN EQUIPMENT CORPORATION,
Lyle W. Cayce
Clerk
Plaintiff - Appellant
v.
ROZEL OPERATING COMPANY,
Defendant - Appellee
Appeal from the United States District Court
for the Middle District of Louisiana
USDC No. 3:08-CV-363
Before JOLLY, SMITH, and CLEMENT, Circuit Judges.
PER CURIAM: *
I.
Cashman Equipment Corp. (“Cashman”) appeals various decisions by
the district court in its action against Rozel Operating Co. (“Rozel”) arising out
of a contract for Rozel to hire one of Cashman’s barges. For the following
reasons, we affirm the district court’s rulings.
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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Rozel operates a natural gas platform in the Gulf of Mexico. In June
2007, Rozel contracted with Cashman to charter two barges, JMC 107 and
JMC 109, for use as “breaker barges” near the platform. The two barges were
intended to be partially submerged in order to shield the platform from waves.
JMC 107 and JMC 109 were converted wingwall sections of a World War II
Navy drydock. Cashman represented to Rozel and Stokes & Spiehler Offshore,
Inc., (“Stokes”) (Rozel’s engineering and consulting company) that the two
barges would be suitable for use as breaker barges.
On August 15, 2007, Rozel attempted to deballast the two barges to
return them to Cashman. Rozel raised JMC 107 on August 30, and returned
it to Cashman on September 13, 2007. But Rozel could not deballast JMC 109,
and to date has not returned the barge. Rozel stopped paying charter hire for
JMC 109 on August 30, 2007.
Cashman filed suit against Rozel on June 18, 2008, alleging that Rozel
breached the charter parties. It sought to recover the $2,000,000 stipulated
value included in the charter. Cashman later amended its complaint to add
Stokes as a defendant, alleging that Rozel negligently entrusted the barges to
Stokes, and that Stokes was negligent in the barges’ ballasting and
deballasting. Rozel filed a counter-claim against Cashman for fraud and for
fraudulently inducing it into chartering JMC 109.
The parties tried the case before a jury from December 3, 2012 to
December 10, 2012. The jury returned a verdict substantially in Cashman’s
favor, finding that Cashman did not commit fraud or fraudulently induce Rozel
into entering the charter party for JMC 109. It further found that Rozel
breached the charter party by failing to return JMC 109 to Cashman. Finally,
the jury found that Stokes was negligent in its handling of JMC 109, causing
Cashman damages in the amount of $200,000. Of this amount, the jury found
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Rozel to be responsible for 40%, and Stokes responsible for 60%. It did not
award the full $2,000,000 Cashman sought. The jury also did not award
Cashman charter hire for JMC 109 after August 30, 2007, because the barge
became a “constructive total loss” on that date.
On January 18, 2013, the district court entered a judgment awarding
Cashman $200,000 in damages, plus interest, and used the jury’s
apportionment of fault between Rozel and Stokes. Cashman afterwards filed
a motion for a new trial, which the district court denied on July 15, 2013. On
July 19, 2013, the district court entered an order awarding Cashman attorney’s
fees in the amount of $129,669.62, and costs in the amount of $15,471.12. This
amount included a 15% reduction of Cashman’s total fee amount for failure to
exercise billing judgment. Cashman appeals the district court’s judgment and
denial of his motion for a retrial.
II.
When, as here, a party challenges a judgment consistent with a jury
verdict, “the appropriate standard of review to test a jury’s factual findings is
whether there is ‘reasonable evidentiary basis for the jury’s verdict.’” Naquin
v. Elevating Boats, L.L.C., 744 F.3d 927, 931–32 (5th Cir. 2014) (quoting Loehr
v. Offshore Logistics, Inc., 691 F.2d 758, 60 (5th Cir. 1982)). “A trial judge’s
ruling on a motion for new trial is reviewed for an abuse of discretion.” Bailey
v. Daniel, 967 F.2d 178, 179–80 (5th Cir. 1992). “The denial of a motion for a
new trial by the district court ‘will be affirmed unless there is a clear showing
of an absolute absence of evidence to support the jury’s verdict.’” Miller v.
Raytheon Co., 716 F.3d 138, 145 (5th Cir. 2013) (quoting Rivera v. Union Pac.
R.R. Co., 378 F.3d 502, 506 (5th Cir. 2003)). But “when the district court’s
ruling is predicated on its view of a question of law, it is subject to de novo
review.” Munn v. Algee, 924 F.2d 568, 575 (5th Cir. 1991). The interpretation
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of maritime contract terms and whether a limited damages clause is a penalty
are questions of law that we review de novo. Int’l Marine, L.L.C. v. Delta
Towing, L.L.C., 704 F.3d 350, 354 (5th Cir. 2013). “We review the district
court’s award of attorney’s fees for abuse of discretion and its factual findings
for clear error.” Singer v. City of Waco, 324 F.3d 813, 829 (5th Cir. 2003).
Cashman raises three issues on appeal. First, it argues that the district
court failed to enforce the contractual provisions governing the relationship
between Cashman and Rozel. Specifically, the court erred by failing to enforce
the contractually agreed value of JMC 109. Cashman also asserts that the
court erroneously interpreted the “Total Loss” contract provision so as to deny
Cashman charter hire after Rozel “prematurely” abandoned JMC 109. Second,
Cashman argues that the district court erred in its decision to hold Rozel 40%
and Stokes 60% liable for its damages. Cashman contends that this decision
is akin to “allocating tort liability to a defendant who committed no tort and
liability for breach of contract to a defendant that had executed no contract.”
Instead, it argues that the district court should have awarded him $200,000
recovery from each defendant. Finally, Cashman challenges the district court’s
decision as to the reasonableness of the attorney’s fees and costs awarded to
him. We address each issue in turn.
Cashman first argues that the district court erred by failing to enforce
the charter party’s plain language that sets forth the agreed value of JMC 109.
It contends that “[t]he District Court improperly discarded the jointly
stipulated Agreed Value, affixed its own ‘fair and reasonable value’ to the JMC
109 over five years after the contract was executed, and then capped
Cashman’s damages at that arbitrary figure.” Once the jury found that the
charter party was a valid and enforceable contract, Cashman should have been
awarded the full $2,000,000 without any inquiry into the reasonableness of
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that value. We hold that the district court did not err by failing to enforce the
charter party’s plain language because the jury found, and the court agreed,
that the agreed value was “so unreasonably large as to be a penalty.” Int’l
Marine, 704 F.3d at 354.
Whether the agreed value is “so unreasonably large as to be a penalty”
is evaluated using a two-part test.
The amount fixed is reasonable if it approximates the actual loss
that has resulted from a particular breach, even though it may not
approximate the loss that might have been anticipated under other
possible situations, or if the breach approximates the loss
anticipated at the time of making the contract, even though it does
not approximate the actual loss. The second factor is the difficulty
of proof of loss. The greater the difficulty of proof of loss, the more
flexibility is allowed in approximating the anticipated or actual
harm.
Id. (quoting Farmers Exp. Co. v. M/V Georgis Prois, 799 F.2d 159, 162 (5th
Cir. 1986)). At trial, the jury was given instructions consistent with this test.
The jury instruction provided:
Stipulated damages are enforced when they are a fair and
reasonable attempt to fix just compensation for an anticipated loss
caused by a breach of contract. However, stipulated damages are
not enforced when they are not a fair and reasonable attempt to
fix just compensation for an anticipated loss caused by a breach of
contract, or if the stipulation was procured by fraud.
In its verdict, the jury found that the agreed-upon value was unreasonable and
therefore unenforceable, and arrived at $200,000 as a reasonable value for
JMC 109. The district court entered judgment based on this finding, and
explained in its July 15, 2013 order that it treated the jury’s conclusions on
these factual issues “as an advisory verdict.”
In its denial of Cashman’s motion for a new trial, the district court
reviewed the trial evidence that supported its conclusion that “a reasonable
value of the JMC 109 was $200,000.” It noted that Cashman paid only $50,000
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for the wingwall that it converted into JMC 109, and stated that “[t]here [is]
no evidence that the $2,000,000 agreed value of the JMC 109 in the charter
party approximated the actual value of the JMC 109.”
Having reviewed the record and lower court opinions, we hold that there
was sufficient evidence for both the jury and the district court to reach their
independent conclusions that $2,000,000 was an unreasonable amount and
therefore an unenforceable penalty. Cashman had every opportunity at trial
to prove to both the judge and jury that the $2,000,000 dollar amount was a
reasonable estimation of its losses. The district court’s implementation of the
$200,000 figure that the jury found to be reasonable was supported by
sufficient evidence, and was not reversible error.
Cashman also argues that the district court erred by cutting off its
charter hire payments on August 30, 2007. Cashman states that Rozel was
contractually obligated to pay charter hire until (1) Rozel returned JMC 109 to
Cashman or (2) JMC was a total loss. It asserts that Stokes was able to raise
JMC 109 in August 2007, but instead prematurely abandoned it. Cashman
recounts “two separate efforts to raise the barges” that “were en route to
success until Stokes prematurely terminated deballasting operations to direct
all resources to Rozel’s well.” Instead of the August 30, 2007 date, Cashman
argues that charter hire should have been paid on either February 28 or March
1, 2008, when dive surveys showed that the vessel had deteriorated over the
intervening six months. At that time, Cashman was told that it would cost
$3,000,000 to retrieve JMC 109. We hold that the district court did not err in
holding JMC 109 to be a total loss on August 30, 2007.
“When a vessel is damaged in a collision or other marine casualty, the
amount of recovery depends on whether it is deemed a total (or constructive
total) loss or whether its partial damage justifies repair.” Gaines Towing and
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Transp. Inc. v. Atlantia Tanker Corp., 191 F.3d 633, 635 (5th Cir. 1999) (per
curiam). “A vessel is considered a constructive total loss when the cost of
repairs is greater than the fair market value of the vessel immediately before
the casualty,” Ryan Walsh Stevedoring Co. v. James Marine Services, Inc., 792
F.2d 489, 491 (5th Cir. 1986), and charter hire may not be awarded after a
vessel is a constructive total loss, Gaines, 191 F.3d at 635.
We hold that sufficient evidence supported the district court’s
determination that JMC 109 was a constructive total loss as of August 30,
2007. As noted above, the jury and district court weighed competing evidence
and concluded that reasonable damages for the loss of JMC 109 was $200,000,
not $2,000,000. And Cashman bases his February 28, 2008 date for the end of
Rozel’s charter hire obligations on an estimated retrieval cost of $3,000,000.
As the party seeking relief for breach of a contract, Cashman had the burden
of proving that, as of August 30, 2007, Rozel could have raised and returned
JMC 109 for a cost less than $200,000. Although Cashman put on evidence
that Rozel could have raised the barge before February 2008 but for one reason
or another prematurely abandoned those efforts, the jury and judge found that
Cashman failed to show that JMC 109 could have been raised for a price
cheaper than its actual fair market value. Because sufficient evidence
supported these factual findings, we affirm the district court’s decision on this
issue.
Cashman next argues that the district court erred by allocating 60% of
its damages to Stokes and 40% to Rozel. According to Cashman, “[t]he District
Court’s merging of two separate damage awards had the practical effect of
improperly rendering Stokes and Rozel as either solidary obligors or joint
tortfeasors.” It asserts that, in essence, “Rozel was held liable for a percentage
of tort damages it did not cause and Stokes liable for a percentage of
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contractual damages when it had no contract.” Cashman argues that “the only
legally proper designation for these two entities is to classify them as severally
liable,” which would result in Cashman’s being able to recover $200,000 from
Stokes and Rozel each, for a total of $400,000. We reject these arguments as
meritless and affirm the district court’s damages award.
As the district court noted, “[p]roportional damages based on degrees of
fault is now the general rule for damages in maritime property damage cases.”
Agrico Chem. Co. v. M/V Ben W. Martin, 664 F.2d 85, 93 (5th Cir. 1981).
Cashman cites no authority in support of its assertion that, because Rozel was
liable under contract law and Stokes was liable under tort law, the district
court’s apportionment of damages was error. To the contrary, both this court’s
prior precedent and Louisiana law suggest the opposite. See id. at 94 (“Brent
was negligent in loading the cargo. As a stevedore, Brent violated its duty of
workmanlike performance.”); La. Civ. Code art. 1797 (“An obligation may be
solidary though it derives from a different source for each obligor.”); La. Civ.
Code art. 2323(B) (“The [comparative fault] provisions . . . shall apply to any
claim for recovery of damages for injury, death, or loss asserted under any law
or legal doctrine or theory of liability, regardless of the basis of liability.”).
Under Cashman’s logic, it is entitled to recover $400,000 for damages that the
judge and jury valued at only $200,000. We hold that Cashman’s arguments
that lead to such a result are meritless.
As its final issue, Cashman challenges the district court’s fee award,
arguing that it erred in applying a 15% reduction for failure to exercise billing
judgment. 1 It also challenges the court’s application of a 75% discount for
1 Cashman does not object to the district court’s application of a separate discount because
“the quantum of attorney’s fees is a function of the amount of time expended, supporting a
rational argument for reduction of a time-based fee in relation to the degree of success.”
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costs, arguing that Cashman’s costs were not flexible and therefore should not
be tied to a “degree of success” analysis. We affirm the district court’s award.
“[A] reduced fee award is appropriate if the relief, however significant, is
limited in comparison to the scope of the litigation as a whole.” Hensley v.
Eckerhart, 461 U.S. 424, 440 (1983). “[W]e have held that [t]he most critical
factor in determining an attorneys’ fee award is the degree of success
obtained.” Ransom v. M. Patel Enters., Inc., 734 F.3d 377, 388 (5th Cir. 2013)
(internal quotation marks omitted). Courts also consider whether the party
seeking fees exercised billing judgment. “To determine the number of hours
reasonably expended on a case, a plaintiff must show that billing judgment
was exercised. Billing judgment is usually shown by the attorney writing off
unproductive, excessive, or redundant hours.” Green v. Adm’rs of Tulane Educ.
Fund, 284 F.3d 642, 662 (5th Cir. 2002) (internal citation omitted). “The
district court may properly reduce or eliminate hours when the supporting
documentation is too vague to permit meaningful review.” La. Power & Light
Co. v. Kellstrom, 50 F.3d 319, 326 (5th Cir. 1995).
The district court reduced Cashman’s attorney’s fees by 15%, accepting
a magistrate judge’s report finding that “Cashman has not submitted its
original time records” or “produced any evidence of billing judgment.” Instead,
Cashman submitted bills that included block billing entries. In its objection to
the magistrate judge’s recommendation, Cashman explained that its original
time sheets “simply do not exist” because they were entered into a billing
software program and then destroyed. But it averred that “undersigned
counsel reviewed a ‘Pre-Bill’ and deducted all time and cost entries that would
have been considered excessive, or duplicative or otherwise should have not
been charged to the client.” It attached to its objections an affidavit that sought
“to establish [that] the requisite billing judgment was exercised.”
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We hold that an attorney’s affidavit, without more, is insufficient to
demonstrate billing judgment, and affirm the district court’s reduction in both
fees and costs. There was no abuse of discretion in the district court’s decision
to reduce Cashman’s fees and costs by 75% due to its limited success and
inability to state with specificity the hours expended on successful claims.
For the foregoing reasons, we AFFIRM the district court’s rulings in all
respects.
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