Opinion
Civil Action No: 98-3746.
November 7, 2001.
MEMORANDUM AND ORDER
Background Procedural History
Tasch, Inc. ("Tasch"), a Louisiana corporation, is the Chapter 11 debtor in Bankruptcy case No. 97-15901. Tasch is also the plaintiff in this adversary proceeding, which is a contract dispute concerning painting and sandblasting services provided by Tasch to a semi-submersible drilling rig operated and owned by Diamond Offshore.
On March 5, 1997, Tasch entered into a sub-contract with Sabine Offshore Services, Inc. ("Sabine"), a Texas corporation principally engaged in marine service activities. This contract provided that Tasch would perform painting and sandblasting services to the underside of the semi-submersible drilling rig OCEAN CENTURY, which was owned and operated by Diamond Offshore Drilling, Inc. ("Diamond"), and was docked at Sabine's facilities in Texas.
On May 5, 1997, Tasch and Sabine entered into a second agreement for painting and sandblasting of the topside of the OCEAN CENTURY. On October 16, 1997, Diamond suspended Tasch's performance. Prior to the suspension of performance, Tasch had completed the work described in the March 5 agreement and approximately 63% of the May 5 agreement, and had received $1,449,229 for these services.
On October 20, 1997, Tasch filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Eastern District of Louisiana. On March 9, 1998, Judge Jerry A. Brown granted Tasch's motion to compel turnover of $53,398.98 by Sabine. This brought the total of Sabine's payments to Tasch to $1,416,549. On August 3, 1998, Bankruptcy Judge Brown signed an Order of Confirmation of plaintiff's Plan of Reorganization.
In the present action, Tasch alleges that Diamond has breached an oral contract for additional work that became necessary because of Diamond's interference during the course of Tasch's performance on the March 5, 1997 contract. Tasch contends that after it began work, Diamond ordered steel replacement work be done by third parties on the OCEAN CENTURY, and that this replacement work interfered with Tasch's performance and profitability. Tasch asserts that it made repeated complaints to Diamond personnel about this interference and resulting delays, and that Diamond orally agreed to compensate Tasch for such delays and such additional work required by the steel replacement work. Additionally, Tasch alleges that Sabine and Diamond did not pay the full amount owed under the original contract price and for agreed upon additions to the original contract. Defendants deny plaintiff's allegations.
On February 8, 1999, this Court found the present action to be a non-core proceeding otherwise related to a case under Chapter 11. See In re Tasch, Inc., Nos. 97-15901 JAB, 98-1174, 1999 WL 64959 (E.D. La. Feb. 8, 1999). This matter was tried before U.S. Bankruptcy Judge Jerry A. Brown on November 27 and 28, and December 5 and 6, 2000. On April 17, 2001, Judge Brown submitted his Proposed Findings of Fact and Conclusions of Law. Judge Brown recommended judgment be entered in favor of Tasch and against Diamond in the amount of $450,000, as a result of an oral contract between Tasch and Diamond. Judge Brown also recommended judgment in favor of Tasch and against Diamond and Sabine in the amount of $95,452, the unpaid balance for work under the original contract with subsequent modifications.
Defendants have submitted objections to Judge Brown's Proposed Findings. Plaintiff argues that the Proposed Findings are well reasoned and supported by the evidence, and requests judgment in accordance with Judge Brown's recommendation.
Standard of Review
This court has jurisdiction to hear an appeal from "final judgments, orders and decrees" of the bankruptcy court under 28 U.S.C. § 158. On appeal, the district court will overturn the bankruptcy court's findings only where those findings are clearly erroneous. See Fed.R.Bankr.P. 8013 and Fed.R.Civ.P. 52(a). The bankruptcy court's findings as to witness credibility are entitled to considerable deference due to its position as fact finder. See e.g., Canal Barge Co., Inc. v. Torco Oil Co., 230 F.3d 370, 375 (5th Cir. 2000); In re LATCL F, Inc., Nos. 3:99-CV-2953-R, 398-35100-HCA, 2001 WL 984912, at *4 (N.D. Tex. Aug. 14, 2001) (citing Ham Marine, Inc. v. Dresser Industries, Inc., 72 F.3d 454, 461 (5th Cir. 1995)). The district court reviews the bankruptcy court's conclusions of law de novo. See In the Matter of Perez, 954 F.2d 1026, 1027 (5th Cir. 1992).
Bankruptcy courts may determine with finality cases under Title 11, core proceedings arising under Title 11, and core proceedings arising in a case under Title 11. 28 U.S.C. § 157(b)(1). Although a bankruptcy judge may hear a non-core proceeding otherwise related to a case under Title 11, he or she may only submit proposed findings of fact and conclusions of law to the district court. 28 U.S.C. § 157(c)(1). The district court reviews the proposed findings and considers de novo those matters to which any party makes a timely objection. Id.
Choice of Law
Judge Brown, in his Proposed Conclusions of Law, did not make a determination of whether Texas or Louisiana law was applicable. Judge Brown cited the jurisprudence of Texas and Louisiana, and held that the states' law appeared to be the same on the issues involved in the present case. However, I note that Article 19 of the March 5, 1997 agreement between Tasch and Sabine states that "[t]his Agreement shall be governed and construed in accordance with the general maritime law of the United States." Thus, an analysis of maritime law, and its applicability to the present case, is required.
Plaintiff's Exhibit 2; Defendants' Exhibit 1.
Any contract for the repair of a vessel is a maritime contract, and therefore is governed by maritime, rather than state, law. See New Bedford Dry Dock Co. v. Purdy, 258 U.S. 96, 99, 42 S.Ct. 243, 66 L.Ed. 482 (1922); North Pacific Steamship Co. v. Hall Brothers Marine Ry. and Shipbuilding Co., 249 U.S. 119, 127-28, 39 S.Ct. 221, 63 L.Ed. 510 (1919); Todd Shipyards Corp. v. Turbine Service, Inc. 674 F.2d 401, 412 (5th Cir. 1982); B B Schiffahrts GMBH Co. v. American Diesel Ship Repairs, Inc., 136 F. Supp.2d 590, 596 (E.D. La. 2001). A "vessel" is defined as a structure designed or utilized for "transportation of passengers, cargo or equipment from place to place across navigable waters." Manuel v. P.A.W. Drilling Well Service, Inc., 135 F.3d 344, 347 (5th Cir. 1998). Courts have held that, for the purposes of maritime law, a submersible oil drilling rig is a vessel. See, e.g., Manuel v. P.A.W. Drilling Well Service, Inc., 135 F.3d 344, 348 (5th Cir. 1998) (holding a workover rig mounted on a barge to be a vessel, and citing cases where a variety of special purpose structures were held to be vessels for the purpose of maritime law, e.g., Colomb v. Texaco, Inc., 736 F.2d 218, 221 (5th Cir. 1984) (inland submersible spud drilling barge held to be a vessel for purposes of maritime law); and Cook v. Belden Concrete Products, Inc., 472 F.2d 999, 1001 (5th Cir. 1973) (submersible drilling barge held to be a vessel for purposes of maritime law)).
I find that the OCEAN CENTURY, a semi-submersible drilling rig, is a vessel. Accordingly, any contracts between Tasch and Sabine, and/or Diamond, for work on the OCEAN CENTURY will be construed under the general maritime law.
"General maritime law, where not previously developed, is determined by judicial analysis of congressional enactments in the field of maritime law, relevant state legislation and state common law." Miles v. Apex Marine Corp., 498 U.S. 19, 27, 111 S.Ct. 317, 322, 112 L.Ed.2d 275 (1990). Maritime law encompasses relevant federal legislation and common law from all sources, not just the forum state. See Williams v. Carnival Cruise Lines, Inc., 907 F. Supp. 403, 405 (S.D. Fla. 1995). "Drawn from state and federal sources, the general maritime law is an amalgam of traditional common law rules, modifications of those rules, and newly created rules." East River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 864-65, 106 S.Ct. 2295, 2298-99, 90 L.Ed.2d 865 (1986). "Moreover, the Supreme Court [has] recognized that maritime law, in the absence of a statute, is `developed by the judiciary.'" Ellenwood v. Exxon Shipping Co., 795 F. Supp. 31 (D. Me. 1992) (quoting East River, 476 U.S. at 864, 106 S.Ct. at 2298).
In maritime contract disputes, federal courts apply general principles of contract law. See THOMAS J. SCHOENBAUM, ADMIRALTY AND MARITIME LAW § 5-1 (2d ed. 1994) (citing Har-Win, Inc. v. Consolidated Grain Barge Co., 794 F.2d 985 (5th Cir. 1986) and Clem Perrin Marine Towing, Inc. v. Panama Canal Co., 730 F.2d 186 (5th Cir. 1984)). However, to the extent that it is not inconsistent with admiralty principles, state contract law may be applicable to maritime contracts. See Ham Marine, Inc. v. Dresser Industries, Inc., 72 F.3d 454, 459 (5th Cir. 1995) (citing Koninklyke Nederlandsche Stoomboot Maalschappy, N.V. v. Strachan Shipping Co., 301 F.2d 741, 743 (5th Cir. 1962)).
I now review Judge Brown's Proposed Findings of Fact and Conclusions of Law to determine if they are consistent with maritime law and supported by the evidence presented at trial.
Defendants' Objections Proposed Findings of Fact Nos. 13 and 19
Defendants object to Proposed Findings of Fact Nos. 13 and 19. In Finding No. 13, Judge Brown stated:
13. Randy Allen [president of Tasch] and Jack Allen [a Tasch supervisor] both testified that they were told that the drain pipes had to be replaced under the rig, but that the drain pipe replacement would not delay Tasch's work. They testified unequivocally that there was no mention to them that steel work was going to be done underneath the rig [the OCEAN CENTURY].
In Finding No. 19, Judge Brown stated:
19. The letter of February 17, 1997 provided that Diamond personnel and Sabine personnel could use Tasch's staging to install piping under the rig. This letter of February 17, 1997 was included as Exhibit "B" to the paint contract between Sabine and Diamond. Thus, Tasch agreed to let Diamond use its dance floor [staging] for the 6 day drainpipe work, but Diamond had to coordinate its use with Tasch.
Defendants' Exhibit 13.
Plaintiff's Exhibit 4 at 1.
Defendants' Exhibit 13.
Plaintiff's Exhibit 4 at 1.
Defendants contend that the February 17 letter from Tasch to Sabine contained no set duration or restriction on the use of Tasch's staging, and that Randy Allen admitted this fact in his testimony at trial. Defendants imply that this concession by Tasch means that any use of Tasch's staging by Diamond or Sabine should not be considered a delay of Tasch's performance.
In considering defendants' objections, I first note that the bankruptcy court's findings as to witness credibility are entitled to considerable deference due to its position as factfinder. See e.g., Canal Barge Co., Inc., 230 F.3d at 375. After reviewing the trial transcript and the relevant exhibits of defendants and plaintiff, I note that the February 17 letter required "close coordination" by either Sabine or Diamond with Tasch in order for Tasch's staging to be used for piping work. Read in this limiting context, I find that the February 17 letter is not as open to interpretation as defendants contend. Judge Brown, as the fact-finder, found the testimony of both Randy Allen and Jack Allen to be credible, and I find nothing in the record to suggest to the contrary. Accordingly, Defendants objections to Proposed Findings of Fact Nos. 13 and 19 is DENIED.
Proposed Finding of Fact No. 32
Defendants object to Proposed Finding of Fact No. 32. In Proposed Finding of Fact No. 32, Judge Brown stated:
32. Diamond had tests performed on the steel of the rig to determine whether the steel was thick enough or needed to be replaced. The results were reported in the "NDT reports." Mr. Garcin [Diamond's operation manager on the OCEAN CENTURY project] admitted that the NDT reports were 95% completed by mid-March 1997. Therefore, by at least mid-March of 1997 when the NDT reports were almost complete, Mr. Garcin knew that an extensive amount of steel would have to be replaced on the underside of the rig. Although Mr. Garcin knew this, he did not disclose it to Tasch, and allowed Tasch to mobilize knowing that the steel work that had to be done would interfere with the blasting and painting. By a memorandum dated April 20, 1997, Mr. Garcin received a recommendation for the steel repair, blasting, and coating of the underside of the rig, which showed that additional steel repair would be necessary after Tasch's sandblasting that would have to be completed before Tasch applied the coating system. There is no evidence that this report was made know to Tasch.
Citing Proposed Finding of Fact No. 12; Plaintiff's Exhibit 19.
See Plaintiff's Exhibit 42.
Citing Proposed Finding of Fact No. 12; Plaintiff's Exhibit 19.
See Plaintiff's Exhibit 42.
Defendants contend that the need for steel replacement on the OCEAN CENTURY was not apparent until after Tasch had begun sandblasting work, which then exposed the extent of steel wastage. Defendants further contend that Randy Allen, president of Tasch, admitted on cross-examination that there was a change of condition clause in the March 5 contract between Tasch and Sabine which required that all changes to work be fully documented in writing. Defendants argue that this change of condition clause addressed unforeseeable conditions such as steel wastage.
After reviewing the relevant trial transcript and the exhibits of defendants and plaintiff, I find Judge Brown's Proposed Finding of Fact No. 32 is supported by the evidence. Robert Garcin, Diamond's operations manager of the OCEAN CENTURY project, knew by at least mid-March 1997 about the need for steel replacement on the rig, and did not inform Tasch of this fact. Plaintiff's Exhibit 1.9 shows that more than one-half of International and Inspection, Inc.'s steel thickness survey for Diamond was complete at the time of the March 5, 1997 Tasch-Sabine agreement. This evidence shows Diamond had knowledge that steel replacement work would likely be needed. As Judge Brown noted and the testimony at trial illustrated, Diamond did not disclose this fact to Tasch.
See Plaintiff's Exhibit 19.
The evidence at trial showed that neither Sabine nor Diamond ever insisted upon adherence to the change of condition clause before any additional work on the OCEAN CENTURY commenced. For example, Tasch repaired parts of the OCEAN CENTURY damaged by welders during the necessary steel replacement. This repair work took 1,150 hours over a period of 17 days. Sabine sent an invoice for this work to Diamond, and Tasch was paid over $43,000 on a time and materials basis for this work. Tasch did prepare a bid proposal for this work, but no change work order was ever issued. This course of performance illustrates that neither Sabine nor Diamond ever insisted on strict compliance with the change of condition clause in the March 5 agreement.
Proposed Finding of Fact No. 48; see also Defendants' Exhibit 30; Defendants' Exhibit 44.
Id.
Id.
Parties to a written contract may, after the effective date of the contract, modify its terms orally or by writing. See J. CALAMARI J. PERILLO, CONTRACTS § 3-6 (2d ed. 1977). Section 90 of the Restatement (Second) of Contracts states, in part, that "a promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise." RESTATEMENT (SECOND) OF CONTRACTS § 90 (1981). Under this theory of estoppel, the. promisor is affected only by reliance which he does or should foresee. See id., cmt. a, illus. 1. Thus, if Diamond orally modified the March 5, 1997 agreement such that additional work was requested by Diamond and performed by Tasch without compliance with the "change of condition" provision, then Diamond will be liable to. Tasch on the basis of an oral contract and the "change of condition" provision is irrelevant. Alternatively, if Diamond induced Tasch to do additional work without asking for formal documentation, then Diamond will be estopped from asserting the "change of condition" provision, and will be liable for any resulting damages.
Accordingly, Defendants objections to Proposed Finding of Fact No. 32 is DENIED.
Proposed Finding of Fact No. 48
Defendants object to Proposed Finding of Fact No. 48. In Proposed Finding of Fact No. 48, Judge Brown stated:
48. In fact, Tasch had to rework its blasting and painting that had been done towards the completion of the first half as a result of the welder's work. This paint repair took 1,150 hours over a period of 17 days. Tasch was paid a little over $43,000 on a time and materials ("TM") basis for this corrective work. Although Tasch prepared a bid proposal for this work, and Sabine sent an invoice for this work to Diamond, no change order was issued for this work.
See Defendants' Exhibit 30 — Tasch's Bid Proposal; Defendants' Exhibit 44 — Sabine's invoice to Diamond.
See Defendants' Exhibit 30 — Tasch's Bid Proposal; Defendants' Exhibit 44 — Sabine's invoice to Diamond.
Defendants contend that this time and materials work was the only additional work ever authorized by Diamond and Sabine. Defendants further argue that Tasch was paid $41,000 for this work, not over $43,000. Defendants note that Randy Allen testified that the payment from Sabine to Tasch was for $41,000.
After reviewing the relevant trial transcript and the exhibits of defendants and plaintiff, I find that defendants are correct in noting that Randy Allen testified at trial that the payment from Sabine to Tasch was for $41,000. However, Judge Brown's citation of Defendant's Exhibit 44 — Sabine's invoice to Diamond — is accurate. While that invoice was from Sabine to Diamond, Tasch's bid for this corrective work stated that Tasch would charge $35 per hour for each painter/blaster, $27 per hour for each painter/helper, overtime pay at time and a half, with materials and equipment charged at cost plus 15%. Sabine's invoice to Diamond was for labor and materials in the amount of $43,169.25, and followed the formula set out in Tasch's bid. Because this documentary evidence is more precise than Randy Allen's ballpark estimate, I find that Judge Brown was correct in finding that Tasch was paid over $43,000 on a time and materials basis.
Defendants' Exhibit 30 — Tasch's bid.
Defendants' Exhibit 44 — Sabine's Invoice to Diamond.
However, I find that the relevance of Proposed Finding No. 48 is that Tasch performed and was paid for time and materials work without the use of a change work order. This is crucial evidence that it was the parties' course of performance to have additional work done without the use of a change work order. Also, I find that the evidence at trial showed that Tasch performed other work on the OCEAN CENTURY at the request of Diamond, for which Tasch was not paid. Accordingly, defendants' objections to Proposed Finding of Fact No. 48 are DENIED.
Proposed Findings of Fact Nos. 49, 52, 63 and 65
Defendants object to Proposed Findings of Fact Nos. 49, 52, 63 and 65. In Proposed Finding No. 49, Judge Brown stated:
49. Randy Allen and Jack Allen testified that Tasch basically could not get back to the underside of the rig for some 50 days, from May 13 to June 29. Randy Allen testified that from June 21 through July 8, the Tasch crew worked to correct the damages done by welders. Tasch was paid for this work. He said that Diamond would orally order Tasch to do repairs resulting from the welding damage. Tasch would do the repairs, and then invoice Sabine, but it was Diamond that orally ordered Tasch to do the repairs.
Plaintiff's Exhibits 14 and 105. Although the period from May 13 to June 29 is actually 48 days, the parties sometimes referred to this as the "50 day" period.
Plaintiff's Exhibits 14 and 105. Although the period from May 13 to June 29 is actually 48 days, the parties sometimes referred to this as the "50 day" period.
In Proposed Finding No. 52, Judge Brown stated:
52. Randy Allen, Jack Allen, and Mr. [Johnny Ray] Cates [Tasch's paint foreman on the OCEAN CENTURY job] testified that by ordering Tasch to alter its method of performance, Diamond caused inefficiencies in performance and delays. Representatives of Tasch complained about this, and Diamond promised that Tasch would be compensated.
In Proposed Finding No. 63, Judge Brown stated:
63. Randy Allen testified that the delay to Tasch was discussed and complained about on a regular basis. He said he discussed it with the welders on the rig, with the Diamond employees, and several times with Mr. Garcin. He said Tasch was continually told that it would only be a few more days, and that Mr. Garcin told him on several occasions that Diamond would "take care of" Tasch or "make it up to" Tasch when it was over. Randy Allen further stated that he talked to Mr. Osborne about the delays, and that Mr. Osborne assured him that the rig was tied up to his dock and it was not going anywhere until Tasch was taken care of. The court finds Randy Allen's testimony to be credible.
In Proposed Finding No. 65, Judge Brown stated:
65. Jack Allen testified that he discussed the problems of delays with Mr. Garcin on several occasions, and that Mr. Garcin told him that Diamond would make it up to Tasch at the end.
Defendants contend that there was no oral contract between Diamond and Tasch, and argue that Randy Allen was unable to provide a date, time or place of this alleged oral contract. Further, defendants contend that plaintiff did not provide any evidence documenting the alleged oral contract.
Courts have consistently held that maritime law generally regards oral contracts as valid. See, e.g., Kossick v. United Fruit Co., 365 U.S. 731, 734, 81 S.Ct. 886, 6 L.Ed.2d 56 (1961); Marine Office of America Corp. v. M/V Vulcan, 891 F. Supp. 278, 287 (E.D. La. 1995) (citing Kossick); and Tarstar Shipping Co. v. Century Shipline, Ltd., 451 F. Supp. 317, 322 (S.D.N.Y. 1978) (citing Kossick). It is well settled that a plaintiff suing on a contract, whether written or oral, is required to establish the basic elements of a contract, i.e., offer, acceptance, and consideration. See J. CALAMARI J. PERILLO, CONTRACTS § 4-1 (2d ed. 1977). The critical issue is "whether there was a meeting of the minds as to the essential terms of the agreement." Tarstar Shipping Co., 451 F. Supp. at 323.
In the present case, I find that there is sufficient evidence that Tasch has established the basic elements of an oral contract with Diamond. As illustrated in Judge Brown's Proposed Findings, Tasch offered the testimony of several witnesses who stated that representatives of Diamond verbally told them to do additional work and that Tasch "would be taken care of" at the end of the job. This evidence is sufficient to show that Diamond made Tasch an offer, which Tasch accepted by performing such additional work. The consideration for this oral contract is that Tasch agreed to do additional work in exchange for the promise of additional compensation. I find that the evidence at trial showed there was a "meeting of the minds" between Diamond and Tasch — Diamond wanted the delays handled and asked for additional work to be done by Tasch, and Tasch handled the delays and did additional work.
While defendants argue that Tasch offered no documentation of this oral contract, oral contracts are by their very nature not documented. The Random House College Dictionary defines "oral" as "uttered by the mouth; spoken," while "document" is defined as "a written or printed paper furnishing information or evidence." Thus, a documented oral contract is by definition a written contract; as discussed previously, an oral contract simply requires proof of offer, acceptance and consideration.
Random House College Dictionary 934 (1980).
Id. at 390.
After reviewing the trial transcript and Judge Brown's Proposed Findings of Fact Nos. 49, 52, 63 and 65, I find that there is sufficient evidence to show that an oral contract existed between Diamond and Tasch. I find that Judge Brown was in the best position to determine the credibility of witnesses, and that the testimony of Tasch's witnesses established the existence of such an oral contract. Accordingly, defendants' objections to Proposed Findings of Fact Nos. 49, 52, 63 and 65 are DENIED.
Proposed Findings of Fact No. 55
Defendants object to Proposed Finding of Fact Number 55. In Proposed Finding of Fact No. 55, Judge Brown stated:
55. Mr. Garcin testified that Diamond compensated Tasch for the interruption caused by the welders on the underside by awarding Tasch the topside work. The court does not find this testimony to be credible because Diamond made the request via Sabine approximately 6 days before April 29 or 30, 1997. At this time, Tasch was experiencing no delay at all, and all witnesses testified that at this time, Tasch was "blowing and going." In other words, the request for a bid for the topside work was made approximately two weeks before the work stoppage and could not have been as a result of the stoppage. In addition, at the time of the topside bid on May 1, 1997, no one knew how long the interruption would take. Accordingly, granting Tasch the topside work could not have been intended as the sole compensation to Tasch for the interruptions on the underside.
Defendants argue that Tasch had experienced delays as early as April 28, 1997, and that the topside work [the May 5 contract] was given to Tasch as compensation for such delays. Defendants cite the testimony of Jack Allen, Jr., and maintain that Allen was unable to refute the connection between the work stoppage and the agreement for the topside work.
As noted previously, the Bankruptcy Court's findings as to witness credibility are entitled to considerable deference due to its position as fact finder. See, e.g., Canal Barge Co., Inc., 230 F.3d at 375. Thus, after reviewing the relevant testimony and exhibits I find that Judge Brown's determination of Mr. Garcin's credibility and assessment of the relevant chronology are supported by the evidence. Therefore, defendants' objections to Proposed Finding of Fact Number 55 are DENIED.
Proposed Findings of Fact Nos. 57 through 63
Defendants object to Proposed Findings of Fact Nos. 57 through 63. Each of these Proposed Findings relate to the credibility of Tasch's description of interruptions caused by welders doing steel replacement on the OCEAN CENTURY.
In Proposed Finding of Fact No. 57, Judge Brown stated:
57. Randy Allen and Jack Allen testified that notwithstanding the award of the topside work, Tasch was only allowed to work on the topside for 17 days of the 50 day delay underneath the rig. The rest of the delay was spent on the "out of plan sequence" work on the legs and diagonals [of the rig]. In fact, one leg on the aft end that Tasch had intended to do first was left until last, and involved moving all of the necessary rigging from one, end of the rig to the other at Diamond's direction.
See Proposed Finding of Fact No. 38.
See Proposed Finding of Fact No. 38.
In Proposed Finding of Fact No. 58, Judge Brown stated:
58. Welders were working in Tasch's way both when Tasch was working underneath and on the topside of the rig. Randy Allen testified that there was enough welding and repairs going on during this 50 day delay period that Tasch was unable to blast and paint. There were 30 to 40 people working there, and it looked like a "war zone." In addition, the workers were worried that because of all the welding going on, if large portions of steel dropped, the rigging/dance floor would not hold.
See Plaintiff's Exhibit 17, 18, and 20.
See Plaintiff's Exhibit 17, 18, and 20.
In Proposed Finding of Fact No. 59, Judge Brown stated:
59. Sabine had nothing to do with the blasting and painting. In fact, Mr. Osborne only went on the dance floor [Tasch's staging] once during the entire project. The Diamond employees, agents and subcontractors directly controlled, altered, and interfered with Tasch's work.
In Proposed Finding of Fact No. 60, Judge Brown stated:
60. In addition, the welding work on the heliport continuously interfered with Tasch's work on the topside.
In Proposed Finding of Fact No. 61, Judge Brown stated:
61. Diamond, as owner/general contractor, directly interrupted Tasch's method of performance, causing loss to Tasch. As a result of the interruptions, Tasch's performance was seriously delayed, work had to be redone, and the welders tore leaks in the shrink-wrap, which necessitated repairs to the containment process. In addition, when Diamond changed the choreographed scheme of production, Tasch lost its efficiency — economically and physically.
In Proposed Finding of Fact No. 62, Judge Brown stated:
62. Furnishing the dance floor for welding repairs was outside the [scope] of the subcontract [March 5, 1997 agreement between Tasch and Sabine]. The subcontract provided for Diamond to use the dance floor only to replace the drainpipe, which was projected to take 6 days. The dance floor ended up being supplied for Diamond's use for 50 days.
In Proposed Finding No. 63, Judge Brown stated:
63. Randy Allen testified that the delay to Tasch was discussed and complained about on a regular basis. He said he discussed it with the welders on the rig, with the Diamond employees, and several times with Mr. Garcin. He said Tasch was continually told that it would only be a few more days, and that Mr. Garcin told him on several occasions that Diamond would "take care of" Tasch or "make it up to" Tasch when it was over. Randy Allen further stated that he talked to Mr. Osborne about the delays, and that Mr. Osborne assured him that the rig was tied up to his dock and it was not going anywhere until Tasch was taken care of. The court finds Randy Allen's testimony to be credible.
On the whole, Judge Brown found Tasch's description of events to be more credible than defendants' description. Defendants contend that Tasch's belated complaints of unanticipated delay or interference with its performance of work are not credible.
As noted previously, the bankruptcy court's findings as to witness credibility are entitled to considerable deference due to its position as fact finder. See, e.g., Canal Barge Co., Inc., 230 F.3d at 375. Judge Brown heard all of the testimony in this action, and thus was in the best position to make determinations of witness credibility. Further, after reviewing the trial transcript as well as defendants' and plaintiff's exhibits, I find that Judge Brown's Proposed Findings of Fact Nos. 57 through 63 are supported by and consistent with the evidence. Accordingly, defendants' objections to Proposed Findings Nos. 57 through 63 are DENIED.
Proposed Findings of Fact Nos. 64 through 68
Defendants object to Proposed Findings of Fact Nos. 64 through 68. These Proposed Findings relate to testimony from Tasch employees stating that complaints about interruptions were made to Diamond, with Diamond promising to "settle up" at the end of the project.
In Proposed Finding No. 64, Judge Brown stated:
64. Mr. Cates, who is no longer employed by Tasch, testified that he made continuous complaints about the interruptions to Tasch's work caused by the welders. He said he complained to David ("Cowboy") Gregory, a Diamond superintendent. Mr. Cates testified that James ("Joby") Rutledge, a former Tasch foreman, also complained to Diamond in his presence. Diamond's response was "We'll take care of it, just keep up with it." Mr. Cates stated that there were occasions when his crew moved the rigging for the welders. His understanding was that Diamond was taking care of Tasch for that. Although counsel for Diamond attempted to impeach Mr. Cates' credibility with respect to his abilities to do the job, the court was not persuaded by this impeachment attempt. There is no issue as to the quality of Tasch's finished product. The court finds Mr. Cates's testimony to be credible.
In Proposed Finding No. 65, Judge Brown stated:
65. Jack Allen testified that he discussed the problems of delays with Mr. Garcin on several occasions, and that Mr. Garcin told him that Diamond would make it up to Tasch at the end.
In Proposed Finding No. 66, Judge Brown stated:
66. Mr. Garcin testified that Diamond did not delay Tasch in its work on the contract. He did, however, agree to pay $20,000 in reimbursement of rent for use of the dance floor. Mr. Garcin stated that Mr. Osborne told him some time in April [1997] that Tasch was complaining that Diamond employees were holding them up. Mr. Garcin testified that Diamond gave Tasch the work of painting the living quarters and machinery houses above (the topside work) to solve the problem. Mr. Garcin denied that Tasch ever made any other complaints about Diamond delaying Tasch, and also denied that Diamond ever agreed to "settle up" with Tasch at the end of the contract.
In Proposed Finding No. 67, Judge Brown stated:
67. The court does not find credible Mr. Garcin's testimony that Diamond did not delay Tasch. Logic dictates that Diamond would not have agreed to pay to use the dance floor if it did not use it for a purpose greater than that originally contemplated by the parties. In addition, the Tasch painters and sandblasters could not work next to the welders. Accordingly, there is no doubt that Diamond caused delays to Tasch.
In Proposed Finding No. 68, Judge Brown stated:
68. Mr. Osborne, president of Sabine, testified that once Tasch was awarded the topside work on about May 6 [1997], Tasch did not make any more complaints about Diamond employees interfering with Tasch's work. Mr. Osborne admitted, however, that Diamond employees did cause some delays to Tasch. Mr. Osborne denied telling Randy Allen that the rig was not going anywhere until Tasch was taken care of.
In objecting to Proposed Findings of Fact Nos. 64 through 68, Defendants note that in his testimony at trial Robert Garcin categorically denied that Diamond promised to "settle up" with Tasch at the end of the project. However, Judge Brown did not find Mr. Garcin's testimony to be credible. As noted previously, the Bankruptcy Court's findings as to witness credibility are entitled to considerable deference due to its position as fact finder. See, e.g., Canal Barge Co., Inc., 230 F.3d at 375. Thus, defendants' objection to the Bankruptcy Court's finding that Mr. Garcin's testimony was not credible is DENIED.
Defendants contend that Johnny Cates, a Tasch employee on the OCEAN CENTURY job, never testified that Diamond employees stated that Tasch would be taken care of at the end of the contract. However, after reviewing the relevant testimony, I find that Mr. Cates did testify that he was present when James Rutledge, a Tasch foreman on the OCEAN CENTURY job, complained about interruptions to a Diamond representative and that Rutledge was told "We'll take care of it. Just keep up with it. Keep up with the time." This testimony supports the existence of an oral contract between Diamond and Tasch.
See Proposed Finding of Fact Number 64; see also Cates Testimony of November 27, 2000, at page 237.
After reviewing the relevant portions of the trial transcript, I find that Judge Brown's Proposed Findings Nos. 64 through 68 are amply supported by the evidence. Therefore, defendants' objections to Proposed Findings Nos. 64 through 68 are DENIED.
Proposed Finding of Fact No. 69
Defendants object to Proposed Finding of Fact Number 69. This Proposed Finding relates to the credibility of Kenneth Osborne, president of Sabine.
In Proposed Finding No. 69, Judge Brown stated:
69. The court does not find Mr. Osborne's testimony to be entirely credible. Mr. Osborne was biased in favor of Diamond.
Defendants dispute this finding, and argue that Tasch's witnesses were biased in favor of Tasch.
As noted previously, the Bankruptcy Court's findings as to witness credibility are entitled to considerable deference due to its position as fact finder. See, e.g., Canal Barge Co., Inc., 230 F.3d at 375. Judge Brown heard all of the witnesses testify, and after thoughtful consideration found Mr. Osborne's testimony not entirely credible. I defer to Judge Brown's conclusion on Mr. Osborne's credibility. Therefore, defendants' objection to Proposed Finding Number 69 is DENIED.
Proposed Finding of Fact No. 75
Defendants object to Proposed Finding of Fact No. 75. In Proposed Finding No. 75, Judge Brown stated:
75. Counsel for defendants suggest that Tasch should have mitigated its damages by laying off laborers. Mr. Garcin and Mr. Osborne, however, testified that Diamond wanted the job done timely. Diamond wanted Tasch to put on a night shift and not to reduce its labor force. The credible evidence is that Tasch did everything it could to continue performance out of sequence, to its detriment, based solely on Diamond's promise to pay.
Defendants argue that Tasch should have mitigated its damages by laying off workers when Tasch was allegedly excluded from the underside of the OCEAN CENTURY.
While it is true that maritime law holds that a nonbreaching party to a contract has a duty to take reasonable steps to mitigate its damages, see Yang Ming Marine Transport Corp. v. Okamoto Freighters Ltd., 259 F.3d 1086, 1095 (9th Cir. 2001), it is also true that "the nondefaulting party is not required to make extraordinary expenditures to diminish the harm caused by the act of the party at fault." Id. After reviewing the relevant testimony, I agree with Judge Brown's Proposed Finding of Fact. Considering all of the testimony as a whole, it appears that Tasch was operating in good faith based on representations made by Diamond, and would not have been complying with Diamond's wishes if it had sought to mitigate its damages by laying off laborers. Additionally, if Tasch had laid off laborers as defendants suggest, it is likely that Tasch would have increased its overall expenditures on the job because its performance would have taken even more time to complete. Therefore, defendants' objection to Proposed Finding of Fact No. 75 is DENIED.
Proposed Finding of Fact Nos. 73 through 77 (Tasch's Damages)
Defendants object to Proposed Findings of Fact Nos. 73 through 77. These findings of fact relate to the calculation of Tasch's damages.
In Proposed Finding No. 73, Judge Brown stated:
73. Tasch abandoned its claim for damages stated in Counts 5 6 of the complaint, which alleged Tasch's inability to complete the job before Diamond shut it down, and the loss of Tasch's line of credit at its bank.
In Proposed Finding No. 74, Judge Brown stated:
74. Sabine offered no evidence as to any set off or counterclaim.
In Proposed Finding No. 75, Judge Brown noted, as discussed above, that defendants' counsel suggested that Tasch should have mitigated its damages by laying off laborers. Judge Brown also noted that Mr. Garcin and Mr. Osborne testified that Diamond wanted the job done in a timely fashion. Judge Brown found that Diamond wanted Tasch to put on a night shift and not to reduce its labor force. Judge Brown found that Tasch did everything it could to continue performance out of sequence, to its detriment, based solely on Diamond's promise to pay. As previously noted, the evidence supports Judge Brown's Proposed Finding No. 75, and therefore defendants' objection to it is DENIED.
In Proposed Finding No. 76, Judge Brown stated:
76. Sabine paid Tasch the following amounts:
Citing Defendants' Exhibit 32.
Citing Defendants' Exhibit 40.
Citing Proposed Finding of Fact No. 25 (the March 5, 1997 contract).
Citing Proposed Finding of Fact No. 54, and calculated based upon 64% completion of $225,000 price ($225,000 X .64 = $144,000)
Citing Proposed Finding of Fact No. 66.
Citing Proposed Finding of Fact 48 (which cites Defendants' Exhibit 30 — Tasch's bid proposal and Defendants' Exhibit 44 — Sabine's invoice to Diamond).
Citing Proposed Finding of Fact No. 44.
In proposed Finding No. 77, Judge Brown stated:
77. Tasch introduced four alternative methods to computing the damages it claims from Diamond, as follows:
(a) The "IRS Method," contained in P.Ex. 100, calculated Tasch's damages using the debtor's [Tasch's] financial statements for the six months ended June 30, 1997, and the debtor's 1998 tax returns. This calculation showed a loss to Tasch of $604,618, but included Tasch's loss on an unrelated (concurrent] job — the Allied barge job.
(b) The "Job Cost Method," contained in P.Ex. 101, calculated the loss to Tasch at $731,000, based upon actual costs as reflected in P.Ex. 95. Randy Allen testified that he and another employee of Tasch prepared this calculation of actual costs based upon cancelled checks received from the bank. He stated that this calculation just gets Tasch even, and does not include any profit or overhead.
(c) The "Construction Days Method," contained in P.Ex. 102, calculated the loss to Tasch at $585,002, based upon construction days. This method includes profit and overhead on the days on which Tasch was delayed.
(d) The "Actual Uninterrupted production Method," contained in P.Ex. 103, calculated the loss to Tasch at $798,176 based upon actual uninterrupted work for the first 44 days of the job. Randy Allen testified that this was the best and most accurate calculation method. Because he could not find a job that Tasch had completed that was similar to the Diamond/Sabine job, he took as an example the first 60% of this job, which was uninterrupted and completed in 44 days. He calculated that if Tasch did 60% of the job in 44 days, it could have completed the whole job easily in 102 days. He concluded that the amount of $798,176 was the amount Tasch lost due to interruptions on the job caused by Diamond.
Plaintiff's Exhibit 10.
Plaintiff's Exhibit 11.
Plaintiff's Exhibit 10.
Plaintiff's Exhibit 11.
Defendants argue that Tasch's claim for damages is not supported by the evidence. However, after reviewing Judge Brown's proposed findings, the trial transcript, and exhibits of both plaintiff and defendants, I find that Judge Brown's calculations, as well as Tasch's alternative computations of damages, are well-reasoned and supported by the evidence. Therefore, defendants objections to Proposed Findings of Fact Nos. 73 through 77 are DENIED.
Proposed Conclusion of Law — Diamond's Liability to Tasch
Defendants object to Judge Brown's Proposed Conclusion of Law relating to Diamond's liability to Tasch. Judge Brown concluded that Diamond is liable to Tasch because Tasch and Diamond entered into an oral contract in which Diamond agreed to compensate Tasch on a "reasonable" basis when Tasch was delayed as a result of Diamond's welders doing steel replacement work on the OCEAN CENTURY. Judge Brown found that the contractual setup among the three parties, Tasch, Diamond and Sabine, was set up solely for the benefit of Diamond. Judge Brown further found that the evidence showed that when Diamond wanted something done on the OCEAN CENTURY, Diamond told Tasch what to do, and Tasch did it — without written change orders. Alternatively, Judge Brown found that Diamond is liable to Tasch because it caused delays to Tasch.
Defendants argue that no oral contract was formed between Diamond and Tasch. Diamond argues that Tasch has no cause of action against it because there was never a written or oral contract between Tasch and Diamond, and all of Tasch's services were provided through its relationship with Sabine.
Defendants further maintain that the March 5, 1997 agreement between Tasch and Sabine contains a "changes to work" provision that required changes to the scope of work, rates and prices be approved in writing before any change in work was performed. Defendants argue that Tasch's failure to obtain a written change order prevents Tasch from obtaining any additional compensation above the original contract price and agreed upon changes.
Article 1(b) of March 5, 1997 Agreement; Plaintiff's Exhibit 2, Defendants' Exhibit 1.
Finally, defendants deny that they caused Tasch to be delayed in performance.
A. Agency Relationship Between Diamond Sabine
Diamond argues that Tasch has no cause of action against it because there was never a written or oral contract between Tasch and Diamond. Diamond supports this argument by maintaining that all of Tasch's services were provided through Tasch's relationship with Sabine. However, I find that a principal-agent relationship existed between Diamond and Sabine, and thus all of Tasch's services were provided at the direction of Diamond.
The Restatement (Second) of Agency states that a principal is liable to a third person upon a transaction conducted by an agent, if the agent had authority to conduct that transaction. See RESTATEMENT (SECOND) OF AGENCY § 140 (1958). Authority is the power of the agent to affect the legal relations of the principal by acts done in accordance with the principal's manifestations of consent to him. See id. § 7. Authority may be implied by manifestations of the principal to third persons. See id. § 8 cmt. e. Apparent authority is the power to affect the legal relations of another person by transactions with third persons, professedly as agent for the other, arising from and in accordance with the other's manifestations to such third persons. See id. § 8.
Evidence was presented at trial that establishes a principal-agent relationship existed between Diamond and Sabine. Jack Allen Jr. testified that Tasch was interested in pursuing Diamond as a customer from 1993 to 1996. Allen testified that when Tasch had the opportunity to inspect the OCEAN CENTURY prior to signing any agreement, he met with Robert Garcin of Diamond. Jack Allen, Jr. further testified that he met with both Garcin and Ken Osborne, of Sabine, prior to executing the March 5 contract. Mr. Garcin admitted that he met with Jack Allen, Jr. prior to Tasch's submission of a bid for the underside work. Mr. Garcin also testified that during this meeting he asked Tasch what type of work they had done in the past and if they had done any blasting or painting.
See Trial Transcript for November 27, 2000, at p. 23-24.
See id., at p. 24.
See Trial Transcript for November 27, 2000, at p. 66.
See Trial Transcript for December 5, 2000, at p. 64.
See id., at p. 67.
At Diamond's direction, the March 5 and May 5, 1997 contracts were between Tasch and Sabine. Mr. Garcin testified that the contracts were structured this way because Tasch was not on Diamond's approved vendor list and did not have a master service agreement. Most importantly, Mr. Garcin admitted at trial that a contract was written between Diamond and Sabine directing Sabine to contract the underside work to Tasch. Mr. Garcin further testified that this was done because his technical people [Diamond employees] liked what Tasch had offered.
See Proposed Finding of Fact. No. 23.
See Trial Transcript for December 5, 2000, at p. 80.
See id., at p. 78.
See id.
This testimony establishes that Diamond used Sabine as its agent in contracting with Tasch, and that Sabine had been granted authority to act on behalf of Diamond in contracting with Tasch. The testimony shows that Tasch wanted to do business with Diamond, and Diamond wanted Tasch to do work on the OCEAN CENTURY. The testimony, by Mr. Garcin's own admission, shows that Sabine was used as a conduit of convenience, or agent, for this purpose. The result of this agency relationship is that Diamond is liable as principal for the act of its agent, Sabine, in. contracting with Tasch on Diamond's behalf. Thus, Diamond is liable to Tasch on the March 5, 1997 agreement between Sabine and Tasch. Furthermore, if the evidence shows that Diamond then orally modified the March 5 agreement with Tasch, then Diamond is liable for any resulting damages.
B. Existence of an Oral Contract
The lack of any writing is not dispositive in maritime contracts. Oral contracts are generally regarded as valid by maritime law. See, e.g.,Kossick, 365 U.S. 731, 81 S.Ct. 886, 6 L.Ed2d 56 (1961); Marine Office of America Corp., 891 F. Supp. at 287 (citing Kossick) and Tarstar Shipping Co., 451 F. Supp. at 322 (citing Kossick). The critical issue is "whether there was a meeting of the minds as to the essential terms of the agreement." Tarstar Shipping Co., 451 F. Supp. at 323.
As Judge Brown noted in his Proposed Conclusions of Law, parties to a written contract may, after the effective date of the contract, modify its terms orally or by writing. See J. CALAMARI J. PERILLO, CONTRACTS § 3-6 (2d ed. 1977). Because state contract law may be applicable to maritime contracts, to the extent that it is not inconsistent with admiralty principles, see Ham Marine, Inc. v. Dresser Industries, Inc., 72 F.3d 454, 459 (5th Cir. 1995), I note that the laws of Texas and Louisiana are in accord. See Quitta v. Fossati, 808 S.W.2d 636, 642 (Tex.App. 1991) (parol evidence rule does not apply to agreements made after the written agreement, nor does it prevent the written agreement from being later modified by the parties by oral agreement); Taita Chemical Co., Ltd. v. Westlake Styrene Corp., 246 F.3d 377, 387 (5th Cir. 2001) (applying Louisiana law, "it is well established that even if the written contract contains a provision that all modifications be in writing, either oral agreement or conduct can nonetheless prove modification.").
"A written contract, not otherwise required by law to be in writing, may be modified by subsequent oral agreement, even if it provides that it can be modified only by a written agreement." Hyatt Cheek Builders-Engineers Co. v. Board of Regents of the University of Texas System, 607 S.W.2d 258, 265 (Tex.Civ.App. Texarkana 1980) (citingMorrison v. Insurance Co. of N. America, 69 Tex. 353, 6 S.W. 605 (1887); Adams v. Can-Dee Oil Corp., 357 S.W.2d 808 (Tex.Civ.App. Waco 1962); Apperson v. Shofner, 351 S.W.2d 367 (Tex.Civ.App. Waco 1961)). "Such a written bargain is of no higher legal degree than an oral one, and either may vary or discharge the other." Hyatt Cheek Builders-Engineers Co., 607 S.W.2d at 265 (citing Morrison andApperson). Modifications to a contract may be effected by the parties through implication, silence or inaction. See Society of Roman Catholic Church of Diocese of Lafayette, Inc. v. Interstate Fire Cas. Co., 126 F.3d 727, 738 (5th Cir. 1997) (applying Louisiana law).
After examining the applicable law, as well as the Tasch-Sabine agreements, I agree with Judge Brown's finding that the changes to work provisions in the Tasch-Sabine agreements of March 5 and May 5, 1997 are no bar to Tasch obtaining additional compensation for additional work performed as the result of subsequent oral modifications by Tasch and Diamond.
As Judge Brown illustrated in Proposed Findings of Fact Nos. 49, 52, 63 and 65 (discussed above), ample evidence was presented at trial to show that Diamond orally modified the March 5 agreement with Tasch. A plaintiff suing on a contract, whether written or oral, is only required to establish the basic elements of a contract, i.e., offer, acceptance, and consideration. See J. CALAMARI J. PERILLO, CONTRACTS § 4-1 (2d ed. 1977). I find that Tasch offered sufficient evidence at trial to show that it entered into an oral contract with Diamond. Thus, Diamond is liable to Tasch for damages resulting from breach of this oral contract.
C. Estoppel
While I have found that Diamond is liable to Tasch as the result of an oral contract, I note that there is an alternative ground for liability. If an oral contract between Diamond and Tasch was found not to exist, the doctrine of estoppel would require finding Diamond liable to Tasch.
Section 90 of the Restatement (Second) of Contracts states, in part, that "a promise which the promisor should reasonably expect to induce action or forbearance on the part of the promisee or a third person and which does induce such action or forbearance is binding if injustice can be avoided only by enforcement of the promise. RESTATEMENT (SECOND) OF CONTRACTS § 90 (1981). Under this theory of estoppel, the promisor is affected only by reliance which he does or should foresee. See id., cmt. a, illus. 1.
As discussed in the Proposed Findings of Fact, the evidence at trial showed that Diamond made oral representations to Tasch requesting additional work be done, and promised that Diamond "would take care of" Tasch for additional expenses without requiring documentation of this agreement. It is reasonable that Tasch relied on, and was induced by, these representations. Injustice would result if Diamond were allowed to deny its representations and avoid liability by citing the "change of conditions" clause in the Tasch-Sabine agreement. Thus, the doctrine of estoppel demands that Diamond is liable to Tasch for Tasch's reliance on Diamond's promises and representations.
D. Owner Caused Delays Are Compensable
Although Diamond is liable to Tasch on the basis of an oral contract, Judge Brown found in the alternative that Diamond is liable to Tasch because it caused delays that impaired Tasch's performance. owner-caused delays are compensable if they cause damage to the contractor. See, e.g., McCracken Const. Co., Inc. v. Urrutia, 518 S.W.2d 618, 621-22 (Tex.Civ.App. El Paso 1974) (applying Texas law); and Autrey v. Williams and Dunlap, 343 F.2d 730, 740 (5th Cir. 1965) (citing 5 Corbin, Contracts § 1094, at 509 (1964 ed.)). I find that the evidence presented at trial, as summarized in Judge Brown's Proposed Findings and in this decision, support this second alternate basis for Diamond's liability to Tasch for causing delays to Tasch's performance.
Proposed Conclusion of Law — Damages (Liability of Diamond)
Defendants object to Judge Brown's Proposed Conclusion of Law relating to the amount of damages for which Diamond is liable to Tasch. Judge Brown found that the measure of damages to which Tasch is entitled is the same whether based upon a finding that Diamond breached a subsequent oral contract with Tasch or based upon owner-caused delay damages. Judge Brown also found that Tasch is entitled to lost profits as a result of Diamond's actions. After considering "all factors and circumstances in this case," Judge Brown found that Tasch is entitled to $450,000 in damages for the full value of work done for Diamond. Defendants contend that this amount of damages is not supported by the evidence.
See Judge Brown's Proposed Conclusions of Law — Damages — Liability of Diamond.
The proper measure of damages where an owner wrongfully interferes with a contractor and prevents completion of the contract is either the contract price less what would have been the cost to the contractor of completing the work, or recovery under quantum meruit for the full value of the work done. See, e.g., DAN B. DOBBS, LAW OF REMEDIES § 12.20(2), at 849 (2d ed. 1993); and McCracken Construction Co., Inc. v. Urrutia, 518 S.W.2d 618, 621-22 (Tex.App.Ct. 1974). When a plaintiff has partially performed an express contract but is prevented from completion because of the defendant's breach, recovery in quantum meruit, or restitution damages, is allowed. See, e.g., DAN B. DOBBS, LAW OF REMEDIES § 12.20(2), at 849-50; and Truly v. Austin, 744 S.W.2d 934, 936 (Tex. 1988). Restitution is justified to prevent unjust enrichment of the breaching party and is measured by that party's gain rather than by the nonbreaching party's losses. See DAN B. DOBBS, LAW OF REMEDIES § 12.20(2), at 849-50.
A party seeking lost profits in an admiralty case must prove that profits "have actually been, or may be reasonably supposed to have been, lost." Conagra, Inc. v. Inland River Towing Co., 252 F.3d 979, 983 (8th Cir. 2001). "The plaintiff must present proof sufficient to bring the issue outside the realm of conjecture, speculation or opinion unfounded on definite facts." Id. "The sufficiency of the evidence of lost profits is dependent upon whether the financial information contained in the record is such that a just or reasonable estimate can be drawn." Id.
Tasch submitted four methods for calculating its damages as a result of Diamond's breach of their oral contract. Tasch's Construction Days Method totaled damages of $585,002. This was the lesser of the four calculating methods. After considering all testimony and evidence presented, Judge Brown found that this figure included some elements that made it too high a calculation of Tasch's damages. Based on the evidence at trial, Judge Brown noted that not all delays giving rise to losses for Tasch could be attributed to Diamond. After considering all of the factors and circumstances in this case, Judge Brown found that the full value of the work done by Tasch, on a quantum meruit basis, is $450,000.
See Plaintiff's Exhibits 100, 101, 102 and 103.
See Plaintiff's Exhibit 102.
I note that Judge Brown's figure of $450,000 is $135,002 less than Tasch's Construction Days Method total of $585,002, and appears to credit Diamond with approximately twelve days of delay caused by rigging of scaffolding not attributable to Diamond. Tasch's Construction Days Method calculated the daily cost of its work to be approximately $12,700. The $135,002 difference appears to represent the 12 days of delay not caused by Diamond, or $11,250 per day.
See id.
After reviewing the relevant testimony and exhibits, I find that Judge Brown's calculation of $450,000 as Tasch's damages is based on evidence presented by Tasch at trial that is "outside the realm of conjecture, speculation or opinion unfounded on definite facts." Conagra, Inc., 252 F.3d at 983. Further, I find that "the financial information contained in the record is such that a just or reasonable estimate can be drawn." Id. Accordingly, defendants' objections to Judge Brown's calculation of Diamond's damages to Tasch are DENIED, and Diamond is liable to Tasch for $450,000.
Proposed Conclusion of Law — Damages (Liability of Diamond and Sabine)
Finally, defendants object to Judge Brown's determination of Diamond and Sabine's liability to Tasch for payment on the March 5, 1997 contract and subsequent additions to that contract. Judge Brown determined Tasch proved that it was entitled to be paid $1,512,000 in accordance with the original contract. Judge Brown found that Tasch was only paid $1,416,549. Judge Brown noted that while only Sabine was liable for the original $1,300,000 for the March 7, 1997 contract, Sabine and Diamond agreed to pay for additional items in excess of the $1.3 million. Accordingly, Judge Brown found Sabine and Diamond jointly liable for the difference of $95,452. After reviewing the relevant evidence and calculations, I agree with Judge Brown's conclusion. Thus, defendants' objections to Judge Brown's determination of Sabine and Diamond's joint liability to Tasch, and the resulting damages of $95,452, are DENIED.
See Proposed Finding of Fact Number 76.
CONCLUSION
Accordingly,
IT IS ORDERED, that Judge Brown's Proposed Findings of Fact are ADOPTED.
IT IS FURTHER ORDERED that Judge Brown's Proposed Conclusions of Law, consistent with general maritime law as discussed in this order, are ADOPTED.
IT IS FURTHER ORDERED that defendants' objections thereto are DENIED.
IT IS FURTHER ORDERED that judgment be entered in favor of Tasch, Inc. and against defendant Diamond Offshore Drilling, Inc. in the amount of $450,000, together with prejudgment interest from October 21, 1998 to date of entry of the judgment, postjudgment interest at the federal legal rate, and costs.
IT IS FURTHER ORDERED that judgment be entered in favor of Tasch, Inc. and against defendants Diamond Offshore Drilling, Inc. and Sabine Offshore Services, Inc. in the amount of $95,452, in solido, together with prejudgment interest from October 21, 1998 to date of entry of the judgment, prejudgment interest at the federal legal rate, and costs.