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JAB ENERGY SOLUTIONS II, LLC and IN THE DISTRICT COURT
ALLISON OFFSHORE SERVICES II, LLC
VS.
OF HARRIS COUNTY, TEXAS
OFFSHORE SPECIALTY FABRICATORS,
INC. and FAIRWAYS OFFSHORE
JUDICIAL DISTRICT
CASE APPENDIX FOR
GROUP, LLC’S MOTION FOR PARTIAL SUMMARY JUDGMENT
Jab Energy Solutions II, LLC (“JAB”) s
ffshore Domestic Group, LLC’s Motion for Partial
APPENDIX
Cashman Equipment Corporation v. Smith Marine
Cashman Equipment Corporation v. Smith Marine
Towing Corporation
Circuit opinion affirmin trial court)
Respectfully submitted,
/s/ Kenneth P. Green
Kenneth P. Green
State Bar No. 24036677
ken@snow-green.com
Blake Hamm
State Bar No. 24069869
blake@snow-green.com
Carolyn Carollo
State Bar No. 24083437
carolyn@snow-green.com
Hockley, Texas 77447
Telephone: (713) 335-4800
Facsimile: (713) 335-4848
ATTORNEYS FOR JAB ENERGY
SOLUTIONS II, LLC and ALLISON
I certify that on November 25, 2020, the Court’s
Larry Carbo, III
ite, Williams & Aughtry
1200 Smith Street, Suite 1400
Larry.carbo@chamberlainlaw.com
Attorney for Intervenor,
(Summary judgment opinion cited in JAB’s response)
APPENDIX 1
Cashman Equipment Corp. v. Smith Marine Towing Corp., Not Reported in F.Supp.2d...
plaintiff’s barge called the JMC 2508. The charter
2013 WL 654636 established that the fee for the vessel would be “$2,200
Only the Westlaw citation is currently available. per day without set off, beginning on October 11, 2011.”
United States District Court, The charter also stated that afteran irrevocable term of
E.D. Louisiana. thirty days, the agreement would continue until the vessel
was returned to plaintiff. Upon expiration of the initial
CASHMAN EQUIPMENT CORPORATION thirty-day period, plaintiff “reserve[d] the right to adjust
the charter hire rate at [its] sole discretion.”
SMITH MARINE TOWING CORPORATION
Plaintiff issued its first invoice on October 11, 2011 and
Civil Action No. 12–945. three days later demanded the return of the vessel.
Defendant sent plaintiff a check for partial payment, due
to its understanding that defendant’s president, Kirk
Smith, and plaintiff’s president, James Cashman, had
previously agreed that defendant could set off the charter
Attorneys and Law Firms fees against debts owed by plaintiff to defendant for
earlier charter hire.Plaintiff issued a second invoice on
Cecil Byron Berry, Jr. Kenneth Joseph Gelpi, Jr. October 16, 2011, of which defendant again paid a
Montgomery Barnett, New Orleans, LA, Scott D. portion.
Brownell, Scott D. Brownell, APLC, Covington, LA, for
Cashman Equipment Corp. Plaintiff then sent letters informing defendant that the fees
could not be set off and that if the vessel were not
Norman Charles Sullivan, Jr. W. Jacob Gardner, Jr.
returned, the fee would increase to $5,000 per day,
Fowler Rodriguez, New Orleans, LA, for Smith Marine
following the expiration of the initial thirty-day period.
Towing Corporation.
Plaintiff continued to increase the charter rate, informing
defendant that after December 1, 2011, it would increase
by $1,000 each day that the vessel remained in
defendant’s possession. The barge did not return to
plaintiff’spossession until February 2, 2012, and thus
plaintiff claims that defendant owes $2,546,433.53 in
ORDER AND REASONS On April 13, 2012, plaintifffiled suit in this Court to
recover the charter fees owed and other damages resulting
from defendant’s breach of contract. Defendant fileda
, District Judge. counterclaim against plaintiff and a third-party complaint
against Servicio Marina Superior, L.L.C. (“SMS”),
Before the Court are plaintiff’smotion for partial claiming that the two entities owe outstanding charter fees
summary judgment on its claims and defendant’s motion for the hire of defendant’s vessels. Plaintiff filed for
for summary judgment on its counterclaim against partial summary judgment on the issues of whether
plaintiff.For the following reasons, the Court DENIES defendant breached the charter party for the JMC 2508
both motions. and thus owes the amount
Defendant seeks summary judgment on its counterclaim.
I. BACKGROUND
This dispute concerns the charter hire agreements II. STANDARD
between the parties. For years, plaintiff Cashman Summary judgment is appropriate when “the movant
Equipment Corporation has chartered tugs from defendant shows that there is no genuine dispute as to any material
Smith Marine Towing Corporation, and defendant has fact and the movant is entitled to judgment as a matter of
chartered barges from plaintiff.In October 2011, the
parties executed a bareboat charter agreement for Fed.R.Civ.P. 56(a) see also Celotex Corp. v.
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APPENDIX 2
Cashman Equipment Corp. v. Smith Marine Towing Corp., Not Reported in F.Supp.2d...
Catrett, 477 U.S. 317, 322–23, 106 S.Ct. 2548, 91
L.Ed.2d 265 (1986) Little v. Liquid Air Corp., 37 F.3d Plaintiff contends that no factual questions remain as to
1069, 1075 (5th Cir.1994). When assessing whether a whether defendant violated the terms of the bareboat
dispute as to any material fact exists, the Court consid charter and thus owes outstanding fees. The charter states
f the evidence in the record but refrains from making that controversies that arise shall be governed by general
credibility determinations or weighing the eviden maritime law, insofar as applicable, and otherwise by
Louisiana law. Both parties rely primarily on cases
Delta & Pine Land Co. v. Nationwide Agribusiness involving Louisiana law, which states that if the words of
Ins. Co., 530 F.3d 395, 398 (5th Cir.2008). All reasonable a contract are clear, explicit,and lead to no absurd
inferences are drawn in favor of the nonmoving party, but consequences, the Court must determine the intent of the
“unsupported allegations or affidavits setting forth parties based on the words of the contract. La. Civ.Code
‘ultimate or conclusory facts and conclusions of law’ are Ann. art 2046
insufficient to either support or defeat a motion for
summary judgment.” Galindo v. Precision Am. Corp., The parties dispute the amount owed for the charter of the
754 F.2d 1212, 1216 (5th Cir.1985) 37 F.3d at JMC 2508 and the payment arrangement. The charter
1075 party set the rate of hire at $2,200 per day and states that
“[u]pon expiration of the initialterms of the contract,
Ifthe dispositive issue is one on which the moving [Cashman] reserves the right to adjust the charter hire rate
party will bear the burden of proof at trial,the movi at [Cashman’s] sole discretion.” Defendant asserts that
y “must come forward with evidence which would the clause is ambiguous, because to allow plaintiff to raise
‘entitle it to a directed verdict if the evidence went the rates without limits leads to absurd results such as
plaintiff’sincrease of the charter rate from $2,200 to
uncontroverted at trial.”’ Int’l Shortstop, Inc. v.
$69,000 per day during a period of time in which
Rally’s, Inc., 939 F.2d 1257, 1263–64 (5th Cir.1991). The
defendant had already committed to a job involving the
nonmoving party can then defeat the motion by either
countering with sufficient evidence of its own, or
“showing that the moving party’s evidence is so sheer that
In interpreting the language at issue, the Court reads the
it may not persuade the reasonable fact-finder to return a
contract as a whole. See, e.g., Louisiana Land &
verdict in favor of the moving party.” Id. at 1265. Exploration Co. v. Offshore Tugs Inc., 23 F.3d 967, 969
(5th Cir.1994). The Court finds that the charter’s language
If the dispositive issue is one on which the nonmoving discussing the initialirrevocable term and the ensuing
party will bear the burden of proof at trial,the moving indefinite period reflects the parties’understanding that
party may satisfy its burden by merely pointing out that the vessel would likely remain with defendant longer than
the evidence in the record is insufficient with respect to an thirty days. Thus, to interpret as limitless plaintiff’s ability
essential element of the nonmoving party’s claim. to raise the charter rate after this initial period renders the
Celotex, 477 U.S. at 325. The burden then shifts to the provision incongruous with the rest of the paragraph.
nonmoving party, who must, by submitting or referring to Such an interpretation would give plaintiff the ability to
evidence, set out specific facts showing that a genuine charge any charter hire, with defendant unable to return
issue exists. id. at 324. The nonmovant may not the vessel immediately to avoid the higher rates given the
rest upon the pleadings, but must identify specific facts nature of itsbusiness. La. Civ.Code Ann. art2046
(identifying “absurd consequences” as a reason for which
that establish a genuine issue for trial. See, e.g., id. interpretation may be made beyond the words of a
325; 37 F.3d at 1075; Isquith ex rel. Isquith contract).
v. Middle South Utils.,Inc., 847 F.2d 186, 198 (5th
Cir.1988) cert. denied, 488 U.S. 926, 109 S.Ct. 310, Moreover, the Court finds that the word “adjus
329 (1988) Plaintiff insists that the phrase “reserves the
right to adjust the charter hire rate at [Cashman’s] so
iscretion” bestows upon it the ability to select an
But, the word “adjust” is defined as “to change so as to
make suitable” and “to ma
lating.” Webster’s New World College Dictionary
USSI (4th ed.). This definition suggests a modification to
account for changing circumstances, which implies a limit
on plaintiff’s ability to raise the rate. Defendan
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APPENDIX 3
Cashman Equipment Corp. v. Smith Marine Towing Corp., Not Reported in F.Supp.2d...
argument that the provision was meant to allow plaintiff
to account for market conditions rather than to raise the
charter hire fee to any amount is a reasonable reading of
the language. Am. Druggists Ins. Co. v. Henry Smith Marine’s Motion for Summ
Contracting, Inc., 505 So.2d 734, 737 (La.Ct.App.1987) efendant moved for summary judgment on its
(contract is ambiguous “when it isuncertain as to the counterclaim, which states that plaintiffand itspartner
parties’ intentions and susceptible to more than one SMS owe fees for the charter of defendant’s tugs.
reasonable meaning under the circumstances”). Therefore, Defendant assertsthat it entered into oral contracts for
it is not at all clear that the provision bestowed upon charter hire with plaintiffbetween May 2007 and July
plaintiffthe discretion to increase by any amount the 2009. In his affidavit, Kirk Smith stated that according
to the parties’ agreement, SMS, plaintiff’s affiliate
company, was to be invoiced for the hire. He identified
The Court also finds the payment arrangement between the total amount owed to defendant as $815,873.45.
the parties to be ambiguous. The charter states thatthe Defendant contends that after applying the set offs
charter hire rate was “$2,200 per day without set off” discussed above, including the payments made on the
and includes an integration October 2011 invoices for the JMC 2508, plaintiffnow
arrangements made between the parties before the owes defendant $568,292.47, in addition to interest.
charter’s execution were superseded. But, defendant
argues that this language conflicts with the parties’ earlier Plaintiff presents affidav itsfrom its employees that
course of dealings, in which the companies’ presidents dispute all of these contentions by defendant, including
agreed to set offs despite the prohibition of such the assertion that plaintiffbears any responsibility
arrangements in their charter party forms. Plaintiff s incurred by SMS. In light of the differing
denies that this payment structure extended to the charter accounts, the Court finds that
of the JMC 2508. ral issues at stake, namely the
agreements executed by the parties for the charter
course of dealing generally supplies terms for efendant’s tugs, the repayment structure for outstand
ambiguous, silent, or incomplete contracts.” Safeco Ins. v. s set up by the parties,and any amount owed to
Rehab. Spec., 20 F.3d 1170 (5th Cir.1994). Although set defendant by plaintiff.
offs are addressed in the charter party, defendant presents
evidence that the parties routinely ignored the terms of
their written contracts throughout their extensive dealings.
Thus, whether the provision was meant to be enforced as
written at the time the charter was executed is ambiguous,
IV. CONCLUSION
particularly in light of the different accounts provided by
the foregoing reasons, the motions for summar
the parties as to the oral agreements in place. Moreover,
dgment are
because the Court finds that the charter’s provision
regarding rate increases is ambiguous, the issue of
whether defendant breached the charter party remains in tions
question. The Court thus finds that summary judgment is
not warranted. Not Reported in F.Supp.2d, 2013 WL 654636
R. Doc.
R. Doc.
R. Doc.
R. Doc.
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APPENDIX 4
Cashman Equipment Corp. v. Smith Marine Towing Corp., Not Reported in F.Supp.2d...
Doc.
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Doc. 26,
Doc.
Doc.
Doc.
Doc.
Doc.
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Doc. 20, 26, 30, 39.
Doc.
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Docs.
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APPENDIX 5
Cashman Equipment Corp. v. Smith Marine Towing Corp., Not Reported in F.Supp.2d...
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APPENDIX 6
APPENDIX 7
Cashman Equipment Corp. v. Smith Marine Towing Corp., Not Reported in F.Supp.2d...
2013 WL 1587539
fees owed for the M/V Smith Predator tugboat.
Only the Westlaw citation is currently available. On February 25, 2013, the Court conducted a bench trial
United States District Court, on Cashman’s and Smith Marine’s claims. The Court has
E.D. Louisiana. original jurisdiction over the claims pursuant to 28 U.S.C.
§ 1333, as the actions arise from maritime contracts.
CASHMAN EQUIPMENT CORPORATION 28 U.S.C. § 1333 (“The district courts shall have original
jurisdiction, exclusive of the courts of the States, of [a]ny
SMITH MARINE TOWING CORPORATION civil case of admiralty or maritime jurisdiction, saving to
suitors in allcases all other remedies to which they are
Civil Action No. 12–945. otherwise entitled.”).After hearing live testimony and
reviewing all the evidence, the Court rules as follows. To
April 12, 2013. the extent a finding of fact constitutes a conclusion of
law, the Court adopts it as such. To the extent a
conclusion of law constitutes a finding of fact, the Court
Attorneys and Law Firms adopts it as such.
Cecil Byron Berry, Jr. Kenneth Joseph Gelpi, Jr.
Montgomery Barnett, New Orleans, LA, Scott D.
Brownell, APLC, Covington, LA, for Cashman
Equipment Corporation.
II. FINDINGS OF FACT
Norman Charles Sullivan, Jr. W. Jacob Gardner, Jr. Cashman Equipment Corporation is a Massachusetts
Fowler Rodriguez, New Orleans, LA, for Smith Marine corporation that owns, operates, and charters vessels
Towing Corporation. including barges. Servicio Marine Superior, LLC (SMS)
is a Louisiana limited liabilitycompany specializing in
marine services in Mexico. Smith Marine Towing
Corporation is a Louisian
operates, and charters vessels, primarily tugboats.
Cashman and SMS are separate but related entities. SMS
is a manager-managed company, and Cashman serves as
the manager. SMS has two members, Kim Shaughnessy,
ORDER AND REASONS Cashman’s chief financial officer, and a trust on behalf of
the children of James Cashman, the chief executive
officer of Cashman. SMS and Cashman share a mailing
, District Judge. address, and a number of employees oversee the affairs of
both companies. Cashman’s general counsel Andrew
Saunders and project manager John Williston testified as
to their extensive involvement in SMS’s sales,banking
operations, and insurance underwriting. The two entities
also share a manager for payable and receivable accounts,
Carol Gerry. Cashman and SMS have stipulated for the
This dispute arises out of unpaid charter hire for the purpose of this litigationthat they are jointly liable for
use of barges owned by Cashman Equipment Corporation any obligations owed to Smith Marine and jointly entitled
and a tugboat owned by Smith Marine Towing to recover any obligations owed by Smith Marine.
Corporation. Cashman and Smith Marine have had a
business relationship for many years, with Smith Marine Between May 2007 and July 2009, SMS chartered Smith
chartering Cashman’s barges and Cashman and/or its Marine’s tugs. Two invoices, dating from May 2007 and
affiliate Servicio Marine Superior, LLC chartering Smith December 2007, have not been paid in full, with $33,450
Marine’s tugboats. In April 2012, Cashman filed suit outstanding. In February 2009, SMS entered into a
against Smith Marine, seeking outstanding charter hire for charter agreement with Smith Marine for the charter of
its barge, the JMC 2508. Smith Marine then filed a Smith Marine’s tugboat, the MT Smith Predator. The
counterclaim against Cashman and a third-party Predator towed a barge for SMS’s client, the Mexican
complaint against Servicio Marine Superior for charter company Condux, S.A., DE C.V. SMS and Smith
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APPENDIX 8
Cashman Equipment Corp. v. Smith Marine Towing Corp., Not Reported in F.Supp.2d...
2013 WL 1587539
Marine negotiated the terms of the Predator charter orally, its tugs and Cashman’s JMC 2508 barge with Permaducto
after which Smith Marine prepared a one-page customer on October 8, 2011. The charter established the day rate
charter agreement that stated that the day rate for the for the barge and tug as $10,500, $5,500 for the tug and
Predator was $6,300.00, in addition to fees for fuel, lube, $5,000 for the barge according to Smith Marine’s
and cordage. The charter began on February 9, 2009 invoices.
without an identified end date. From February to July
2009, Smith Marine sent SMS a series of invoices, which Two days later,Cashman and Smith Marine executed a
stated as the terms “Net 30 Days.” SMS paid bareboat charter agreement under which Smith Marine
$522,400.00 in charter hire and related expenses to Smith hired the JMC 2508. The charter stated that the fee for
for the use of the Predator. the vessel would be “$2,200 per day without set off,
beginning on October 11, 2011.” The charter established
But, SMS encountered payment problems with its an initialirrevocable term of 30 days, after which the
client Condux in May 2009. SMS employees asked the charter would continue until Smith Marine returned the
captain of the Predator to halt operations until Condux JMC 2508 to Cashman. The agreement provided that,
made a payment, a tactic often used to force Condux to upon expiration of the initial period, Cashman “reserve[d]
pay outstanding invoices. Around that time, Condux’s the right to adjust the charter hire rate at [its]sole
own contract was terminated, leading Condux to cancel discretion.” The agreement stated that Cashman would
its contract with SMS. Condux’s replacement Heerema invoice the charter hire and related costs bi-monthly in
then hired SMS. Condux failed to pay its outstanding advance, with payments due upon receipt, and that
invoices and currently owes SMS $3.2 million, which amounts outstanding more than 15 days would accrue
SMS and Cashman have attempted to recover. After interest at the rate of one and one-half percent per
Condux stopped paying SMS, SMS failed to pay all of the month. The parties also agreed that Smith Marine would
outstanding Smith Marine invoices. Invoices issued by pay for the cost of surveys conducted by Cashman before
Smith Marine between February 19, 2009 and July 15, and after the charter to assess the barge’s condition.
2009 for the Predator’s charter hire and expenses have not
been paid in full. With the outstanding fees owed for The charter agreement stated that “Charterer shall not
2007 charter hire, SMS owes Smith Marine $568,292.47 be permitted to assign this charter or to sub-charter the
for the use of its tugs. said Vessel without the written permission of Owner.”
The charter included an integration clause, which stated,
In separate transactions, Smith Marine chartered barges “This Agreement ... encompasses the entire agreement of
from Cashman between November 2008 and September the parties, and supersedes all previous understandings
2010. Under the terms of the written charter agreements, and agreements between the parties,whether oral or
Smith Marine owed payment upon receipt of each written.” The charter also stipulated that Smith Marine
invoice, and after 15 days, interest would accrue at a rate would be responsible for Cashman’s costs and reasonable
of one and one-half percent per month on outstanding attorney’s fees if litigation resulted from Smith Marine’s
invoices. During this period, Cashman issued 25 breach of the charter.
invoices totaling $640,513.72 for Smith Marine’s use of
the barges. Smith Marine made no payments on the Cashman issued its first invoice to Smith Marine on
invoices before September 2010. In September 2010, October 11, 2011. After the JMC 2508 left Cashman’s
James Cashman and Kirk Smith, the president of Smith fleet, James Cashman called Kirk Smith to confront him
Marine, agreed orally that Smith Marine would pay 55 about the identity of Smith Marine’s client and to demand
percent of the invoiced amounts. Between September the return of the barge. On October 14, 2011, Andrew
and December 2010, Smith Marine paid $218,766.74 Saunders sent a letter to Smith Marine, stating that Smith
towards six of the invoices issued by Cashman between Marine’s payment was past due and that Smith Marine
November 2008 and September 2010 for the use of its should immediately return the barge. Smith Marine sent
barges. As of February 18, 2013, Smith Marine still Cashman a check on October 18, 2011 for 55 percent of
owed Cashman $421,746.98 in charter hire and related the invoiced amount. Kirk Smith sent a letterwith the
expenses for this period. check, in which he explained that Smith Marine had held
back 45 percent of the owed amount due to his agreement
In September 2011, Smith Marine bid on a job in Mexico with James Cashman that Smith Marine could set off the
for Permaducto SA de CV Av. Preferica, a company charter fees against debts owed by Cashman for earlier
with close ties to Condux, although the precise legal Cashman issued a second invoice on
relationship between Permaducto and Condux is October 16, 2011, of which Smith Marine again paid a
unknown. Smith Marine entered into a charter for one of portion.
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APPENDIX 9
Cashman Equipment Corp. v. Smith Marine Towing Corp., Not Reported in F.Supp.2d...
2013 WL 1587539
of Stamford, Conn. v. M/V Alaia, 673 F.Supp. 796,
On October 27, 2011, Cashman wrote to Smith Marine, 799–800 (E.D.La.1987) aff’d, 876 F.2d 1168 (5th
disagreeing with Smith Marine’s assessment of the set off Cir.1989). An oral charter party is valid and enforceable.
agreement between the parties. Cashman further
demanded the return of the JMC 2508 on the grounds that St. Paul Fire & Marine Ins. Co, 666 F.2d at 939. In
Smith Marine had materially breached the contract and ntract law may be applied to
that Smith Marine’s use of the barge for its particular the extent that it does not conflict with admiralty
client jeopardized Cashman’s ability to recoup payments principles. See Ham Marine, Inc. v. Dresser Indus.,
from that client for the earlier job involving the Predator Inc., 72 F.3d 454, 459 (5th Cir.1995)
tug. Cashman then sent another letter on November 4,
2011, notifying Smith Marine that the barge’s day rate Cashman’s witnesses characterized the type of
would increase to $5,000 per day after the initial 30 day arrangement it had with Smith Marine as “pay if paid” or
period expired. Smith Marine was still in the early part “pay when paid” and testifiedthat this fee structure is
of its job in Mexico and did not return the barge. common for projects done in Mexico, since clients often
do not pay promptly. Cashman and SMS argue that the
On November 17, 2011, Cashman again demanded the payment structure constituted a suspensive condition of a
return of the barge and informed Smith Marine that the contract, and thus payment is not due until the uncertain
rate would increase to $6,000 on December 1, 2011 and event, payment by SMS’s client, occurs.
thereafter would increase by $1,000 each day that the Civ.Code. art. 1767 (“If the obligation may not be
JMC 2508 remained in Smith Marine’s possession. enforced until the uncertain event occurs, the condition is
Smith Marine did not return the barge to Cashman until suspensive.”).
February 2, 2012, 115 days after the charter hire began.
During this period, Cashman issued sixteen invoices to In Southern States Masonry, Inc. v. J.A. Jones
Smith Marine for charter hire and expenses, the remaining Construction Company, the Louisiana Supreme Court
balance of which totals $2,546,433.53. The parties heard an appeal in which a contractor claimed that he
stipulated that if Cashman is entitled only to charter hire need not pay the subcontractor until he received payment
for the JMC 2508 at a rate of $2,200 per day and if Smith from the project owner, since the subcontract contained a
Marine is entitled to recover $568,292.47 from Cashman conditional fee arrangement. 507 So.2d 198
and SMS for the charter of the Predator, the net amount (La.1987). The subcontract stated that the “contractor
owed by Smith to Cashman and SMS is $81,888.04, shall pay to subcontractor, upon receipt of payment from
exclusive of attorney’s fees or interest. the owner, an amount equal to the value of
subcontractor’s completed work.” Id. at 200. Italso
stated that final payment would occur within 45 days of
the last of the following to occur: the subcontractor’s
completion of work, the owner’s acceptance of work, or
III. CONCLUSIONS OF LAW “final payment by owner to contractor under the
contract.” Id. The Louisiana Supreme Court held that
because itwas reasonably certain that the owner would
pay the contractor in the manner set forth in their contract,
1. Charter of Smith Marine’s tugboat the fee arrangement between the subcontractor and
The Court first considers Smith Marine’s claims contractor constituted a term rather than a suspensive
against Cashman and SMS for unpaid invoices related to condition. Id. at 203. The court determined that the
the charter of the Predator. Cashman and SMS contract at issue left open the time at which the
acknowledge that Smith Marine has not been paid subcontractor would be paid, not whether the
$568,292.47 in charter fees and expenses that it invoiced. subcontractor would be paid at all. Id. at 204. Further, the
But, Cashman and SMS contend that under the terms of court held that as a contract term, payment needed to be
the charter agreement, the payments are not due to Smith made within a reasonable amount of time. Id. (citing La.
Marine, because SMS has not been paid by itsclient, Civ.Code Ann. art. 1778 (”A term for the performance of
Condux. an obligation ... is uncertain when it is not determinable,
in which case the obligation must be performed within a
A charter is formed when the parties have a meeting of reasonable time)).
the minds on the essentialterms of the charter. St.
Paul Fire & Marine Ins.Co. v. Vest Transp. Co., Inc., The Court finds that the holding of Southern States
666 F.2d 932, 939 (5th Cir.1982) see also E.A.S.T., Inc. establishes an important distinction between “pay if paid”
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APPENDIX 10
Cashman Equipment Corp. v. Smith Marine Towing Corp., Not Reported in F.Supp.2d...
2013 WL 1587539
and “pay when paid” fee structures. Kirk Smith testified based on the uncertainty involved in working in Mexico.
that he never agreed to an arrangement under which he John Williston testified that the usual rate for the tug was
would not be paid if SMS did not receive payment. $5,000—$6,000, which does not demonstrate
Although Smith Marine’s invoices for the Predator stated conclusively that the rate of $6,300 that Smith Marine
as a payment term “Net 30 days,” Smith testified that he received reflectedthe riskof nonpayment rather than a
knew that payment might be delayed due to the clients delay in payment or other unidentified conditions.
involved. Smith insisted, however, that he fully expected
to receive the charter fees from SMS eventually and did Cashman and SMS also point to emails sent by Smith
not intend to assume the risk that he would not be paid. Marine in October 2009 in which Smith Marine asked
Smith’s testimony reveals his understanding of the when SMS expected to be paid by its client.
arrangement to be “pay when paid” as set forth in and SMS argue that Smith Marine acknowledged the “pay
Southern States Masonry, rather than “pay if paid”. if paid” fee arrangement through this correspondence.
But, these emails demonstrate only Smith Marine’s efforts
In defending their interpretation of the payment structure, to be paid and do not establish that the parties agreed to a
Cashman and SMS point to cases in which courts suspensive condition as their payment arrangement in
accepted as valid conditional payment arrangements, the which Smith Marine knowingly assumed the risk that it
“pay if paid” model. Imagine Const., Inc. v. might not be paid at all for the charter of its tug.
Centex Landis Constr. Co., Inc., 707 So.2d 500, 502
(La.Ct.App.1998) C. Bel for Awnings, Inc. v. Accordingly, in considering the testimony and applicable
Blaine–Hays Const. Co., 532 So.2d 830, 831 Louisiana state law, the Court finds that the partiesdid
(La.Ct.App.1988). But, in Imagine Construction, for not agree to a “pay if paid” fee agreement for the charter
example, the contract explicitly stated that the of the Predator. Rather, the parties had an understanding
subcon