Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca5-14-31192/USCOURTS-ca5-14-31192-0/pdf.json

Parties Involved:
FDT, L.L.C.
Appellee
International Marine, L.L.C.
Appellant
International Offshore Services, L.L.C.
Appellant

Document Text:

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 14-31192

INTERNATIONAL MARINE, L.L.C.; INTERNATIONAL OFFSHORE 

SERVICES, L.L.C., 

 Plaintiffs - Appellants

v.

FDT, L.L.C., formerly known as Delta Towing, L.L.C.,

 Defendant - Appellee

Appeal from the United States District Court 

for the Eastern District of Louisiana 

USDC No. 2:10-CV-44

Before HIGGINBOTHAM, DENNIS, and HAYNES, Circuit Judges.

PER CURIAM:*

International Marine, L.L.C., and International Offshore Services, 

L.L.C. (collectively, “International”) appeal the district court’s October 14, 

2014, Judgment (“2014 Judgment”), which adjudged International liable for 

thirty-three breaches of a Vessel Sales Agreement (“the Agreement”) and 

 

* 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.

United States Court of Appeals

Fifth Circuit

FILED

August 10, 2015

Lyle W. Cayce

Clerk

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assessed liquidated damages of $8.25 million, plus prejudgment interest at the 

rate of 5.5% per annum. For the reasons that follow, we AFFIRM in part, 

VACATE in part, and REMAND for further proceedings.

I. Background

In 2006, International purchased two tugboats (the TEAM and 

SKIPPER) from Delta Towing, L.L.C. (“Delta”) for $4 million, ostensibly for 

use in internal operations. International’s president, Stephen Williams, and 

counsel, Peter Rouse, negotiated for several months preceding the sale with 

the treasurer of Delta’s parent company, Darren Vorst. Delta is in the business 

of chartering tugboats in the Gulf of Mexico and was concerned about 

competition from International. Therefore, even though the tugboats were 

“cold stacked,” or not in use and not likely to be used anytime soon, Delta 

hesitated to sell the tugboats. Delta thus insisted on including a noncompete 

clause in Paragraph 11F of the Agreement, which imposed certain pre-charter 

and post-charter obligations. In particular, Paragraph 11F prohibited 

International from chartering the tugboats to third parties without first giving 

Delta advance notice and a right of first refusal on any proposed charter. If 

Delta accepted the charter, it would operate the charter and pay International 

90% of the fee, or charter hire. If Delta did not accept the charter within a 

reasonable amount of time, International could operate the charter, but would 

be required to remit 10% of the charter hire to Delta within fifteen days of 

receiving payment. 

The parties negotiated a liquidated damages provision, Paragraph 11G,

which would apply $250,000 in liquidated damages to any breach of the 

noncompete clause. In relevant part, Paragraphs 11F and 11G of the 

Agreement state:

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Paragraph 11F (“Noncompete Clause”):

Notwithstanding the foregoing, in the event [International] or its 

affiliated companies wish to Charter Out either or both of the 

Vessels in the Covered Trade during all or part of the Covered 

Term, [International] shall be obligated to time charter the 

applicable Vessels to [Delta] for [Delta] to enter into Charters Out

with customers acceptable to [Delta] . . . . [C]harter hire payable to 

[International] by [Delta] shall be an amount equal to 90% of the 

gross charter hire actually received by [Delta] from the [charters 

of the Vessels] and shall be due and payable to [International] 

within fifteen (15) days after receipt of such charter hire by [Delta]. 

If [Delta] is unable to secure Charters Out for the Vessels within a 

reasonable time of the Vessels becoming available, [International] 

may Charter Out either or both of the Vessels at fair market rates 

directly to Customer Charterers for use in the Covered Trade 

during all or part of the Covered term, but [International] shall 

pay to [Delta] as compensation therefore an amount equal to 10% 

of the gross charter hire actually received by 

[International] . . . [which] shall be due and payable to [Delta] 

within fifteen (15) days after receipt of such charter hire by 

[International]. The charter hire rate charged and duration of all 

Charters Out shall be reasonably agreeable to both [International] 

and [Delta].

Paragraph 11G (“Liquidated Damages Clause”):

The consideration for the provisions in paragraph 11F and this 

paragraph 11G is that the above Purchase Price is below the fair 

market price of the Vessels at the time of the sale and other good 

and valuable consideration the receipt and sufficiency of which is 

hereby acknowledged and confessed. In the event 

[International] . . . violates any of the covenants and agreements 

in paragraph 11F, [International] shall pay to [Delta] as liquidated 

damages, and not as a penalty . . . the sum of Two Hundred Fifty 

Thousand and no/100 Dollars ($250,000.00) per incident or 

occurrence . . . . All liquidated damages shall be payable within 30 

days of notice of the violation. It is understood that the resultant 

damages of any such breach . . . would be difficult to ascertain with 

certainty but that the amount stipulated herein is a good faith 

reasonable estimate of the damages [Delta] would suffer. 

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International purchased the tugboats and, beginning in September 2006, 

chartered them out to third parties while awaiting completion of barges on 

which it intended to use the tugboats internally. In September and October 

2006, International sent emails informing Delta’s Chief Operating Officer, 

Barry Matherne, and Delta’s Assistant Operations Manager, Ricky Guy, that 

the TEAM and SKIPPER were available for charter. Delta did not respond 

with a request to charter the tugboats, then or later. Instead, Guy responded 

that International should not “pass up any work,” but should “let [him] know 

a start time” and “rate.” Guy testified that from September 2006 until early

2007, he received periodic post-charter emails from International that

described the start time, duration, and rate for the first five charters 

International undertook.1 Once it received payment, International remitted 

the 10% fee to Delta for charters it conducted in 2006, although it sometimes 

paid late or incompletely. Delta accepted these payments. International

ultimately requested that Delta allow it to pay a 5% commission on charters, 

rather than the 10% fee, and Delta refused. Soon after that, from January

2007 onward, International ceased notifying Delta about new charters

undertaken by the tugboats and ceased submitting the 10% payments. 

In 2008, Delta twice requested to audit International’s books and records 

under the Agreement, suspecting that International was not notifying Delta or 

paying as required. International initially failed to respond, but on November 

20, 2008, International sent a $52,293.33 payment to Delta, without 

documentation of what the payment represented. Delta did not accept the 

check; instead, Delta performed a comprehensive audit of International in 

 

1 Although International emailed Delta to report charters through early 2007 as it 

received payments, the last charters it reported occurred in November and December of 2006.

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early 2009. On February 20, 2009, International submitted another payment 

of $37,657, claiming its internal audit had revealed further money due. Delta 

again refused to accept the check and sent International a letter on February 

20, 2009, claiming International breached the Agreement thirty-six times and 

demanding that International pay liquidated damages. International rejected 

Delta’s demand and filed suit in 2010 seeking a declaration that International 

had not breached the Agreement and that the Liquidated Damages Clause was 

an unenforceable penalty. Delta answered and counterclaimed for $9,000,000 

in liquidated damages, plus prejudgment interest. 

On cross motions for summary judgment, the district court concluded 

that the Liquidated Damages Clause was valid and enforceable.2 On 

International’s motion for reconsideration, the court again held that the 

Liquidated Damages Clause was enforceable and certified the enforceability 

question to this court on a Federal Rule of Civil Procedure 54(b) Judgment

(“2013 Judgment”). Reviewing the 2013 Judgment on appeal, a panel of this 

court held International had failed to prove that the Liquidated Damages 

Clause was an unenforceable penalty, as the Liquidated Damages Clause was 

formed from the parties’ reasonable attempts to anticipate damages that would 

be difficult to quantify in advance. See Int’l Marine, L.L.C. v. Delta Towing, 

L.L.C. (International Marine I), 704 F.3d 350, 355–56 (5th Cir. 2013). 

The case proceeded to a bench trial on the issues of breach and damages. 

After the trial, the district court issued Findings of Fact and Conclusions of 

Law, determining that International breached the Agreement’s pre- and post-

 

2 The case was reassigned after the original district judge retired, and International 

filed a motion for reconsideration based in part on the changed deposition testimony of 

Matherne, Delta’s Assistant Operations Manager. The court did not reconsider the order 

granting Delta summary judgment except to analyze the effect of Matherne’s new testimony. 

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charter obligations thirty-three times. It awarded Delta $250,000 in liquidated 

damages for each breach, for a total of $8.25 million, plus prejudgment interest 

at 5.5% per annum starting thirty days after February 20, 2009. On October 

14, 2014, the district court issued its 2014 Judgment. It separated the issues 

of breach and damages from issues of attorney’s fees and costs and third-party 

liability that remained pending before the district court. International timely 

appealed the 2014 Judgment to this court, and the issues of breach and 

damages are now before us.

II. Discussion

On appeal from a bench trial, we review findings of fact for clear error 

and legal issues de novo. See One Beacon Ins. Co. v. Crowley Marine Servs., 

Inc., 648 F.3d 258, 262 (5th Cir. 2011). Interpreting the terms of a maritime 

contract is an issue of law that we review de novo. Id. Finally, we review for 

clear error “the district court’s factual findings as to whether the parties 

fulfilled their duties under the [Agreement].” See Ergon-W. Va., Inc. v. Dynegy 

Mktg. & Trade, 706 F.3d 419, 424 (5th Cir. 2013); cf. Automated Med. Labs., 

Inc. v. Armour Pharm. Co., 629 F.2d 1118, 1123–24 (5th Cir. 1980). 

Appealing from the 2014 Judgment, International claims the district 

court erred by: (1) misinterpreting International’s obligations under the 

Noncompete Clause of the Agreement, because properly interpreted, 

International complied with that Clause; (2) failing to conclude that the 

“extreme case” doctrine bars the award of liquidated damages because Delta 

suffered no actual damages; (3) improperly awarding liquidated damages for 

payments made by International to Delta that were solely late or for less than

the agreed amount; (4) inflating the number of “incidents or occurrences” under 

the Agreement and thus over-counting the number of times International 

breached the Agreement; and (5) improperly awarding prejudgment interest 

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on the liquidated damages award. In addition to defending the district court’s 

determinations, Delta argues that many of International’s arguments are 

foreclosed by the law of the case doctrine due to their resolution on the 

interlocutory appeal in International Marine I. 

“Under the law of the case doctrine, an issue of fact or law decided on 

appeal may not be reexamined either by the district court on remand or by the 

appellate court on a subsequent appeal.” United States v. Matthews, 312 F.3d 

652, 657 (5th Cir. 2002) (citation and internal quotation marks omitted). “The 

law of the case doctrine applies to matters decided on interlocutory appeals,” 

Gene & Gene, L.L.C. v. BioPay, L.L.C., 624 F.3d 698, 702 (5th Cir. 2010)

(citation omitted), and “applies regardless of whether the issue was decided 

explicitly or by necessary implication,” Crowe v. Smith, 261 F.3d 558, 562 (5th 

Cir. 2001). Delta raised law-of-the-case arguments on nearly every issue before 

us, which we address as we consider each issue raised by International.

A. Breach of the Agreement

International first argues the district court misinterpreted the 

Agreement, and that International was not obligated to give Delta advance 

notice or a right of first refusal before each charter of the tugboats. We 

conclude that the district court correctly interpreted the Agreement in 

accordance with binding law of the case.3 Under this interpretation, the 

 

3 International Marine I interpreted the precise obligations imposed by the 

Agreement, and the intent behind those obligations, to determine whether The Liquidated 

Damages Clause was a reasonable, enforceable provision. See generally In re Felt, 255 F.3d 

220, 225–26 (5th Cir. 2001) (“[T]hough not expressly addressed in an initial appeal, those 

matters that were fully briefed to the appellate court and were necessary predicates to the 

ability to address the issue or issues specifically discussed are deemed to have been decided 

tacitly or implicitly, and their disposition is law of the case.”). Thus, when International 

Marine I found that “[International] was first obligated to notify Delta and give [Delta] the 

option of operating charters itself” before chartering out the tugboats, Int’l Marine I, 704 F.3d 

at 352, that decision bound the district court and now binds this court. 

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Noncompete Clause of the Agreement requires International to consult with 

Delta before chartering out the TEAM or SKIPPER to third parties and to give 

Delta a right of first refusal. See Int’l Marine I, 704 F.3d at 352. The 

Noncompete Clause additionally imposes post-charter obligations requiring 

International to pay Delta a 10% fee within fifteen days of a charter hire’s 

payment. 

1. Number of Breaches

The district court explicitly found that International entered into thirtythree separate time charters with third parties by the Agreement’s terms, each 

of which constituted a breach of the Agreement. International does not contest 

that it failed to notify Delta in advance of almost all of the charters, nor that it 

failed to pay the 10% fees due to Delta for every breach found by the district 

court, whether it wholly failed to pay the fees in advance of Delta’s audit or

simply failed to pay the fees on time or in the correct amount. Instead, 

International asserts that the district court over-counted the number of 

breaches by counting each invoice International issued as a separate time 

charter and breach. Contrary to the district court’s findings, International 

contends that it sometimes issued multiple invoices for singular charters. 

Therefore, it argues that each invoice should not count as an “incident or 

occurrence,” or separate breach, under the contract. 

The district court did not clearly err in parsing how many times 

International chartered out the vessels in breach of the Agreement, sometimes 

equating singular invoices with singular charters and sometimes aggregating 

multiple invoices into just one charter and one breach. Although International

contests several of the charters counted by the district court as separate 

breaches, it provided no direct evidence that those specific invoices represented 

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only one charter.4 Evidence from the bench trial supports the district court’s 

determinations. Accordingly, we find no clear error in the district court’s 

conclusion that Delta breached the Agreement thirty-three times.5 See Ergon, 

706 F.3d at 424.

2. Course of Conduct

International argues that the course of conduct between International 

and Delta proves the Agreement did not require International to give Delta 

advance notice and a right of first refusal. This course of conduct involved 

Ricky Guy’s email to International and International’s unchallenged practice, 

from September 2006 until early 2007, of informing Delta about the details of 

charters after they occurred. Accordingly, this court must determine the 

import, if any, of the parties’ conduct while International communicated with 

Delta about charters of the TEAM and SKIPPER from September 2006 until 

early 2007. This period of communication coincides with the first five breaches 

 

4 International contests breaches for which United Tugs leased the SKIPPER from 

11 a.m. on June 15, 2007, through 10:30 p.m. on June 16, 2007, continuously, for three 

separate time periods. Each incident was denoted by a unique job number and invoice. 

International offers no evidence to prove that these three trips were a single charter, and we 

find no clear error in the district court’s conclusion that these were each separate charters. 

International also attempts to aggregate Smith Marine’s charters of the SKIPPER from 4:30 

a.m. on December 31, 2006, until January 8, 2007, plus a charter on January 10, 2007. 

International does not explain why distinct job numbers and invoices were issued for each 

time period of this job or why that does not suggest these were separate, hourly charters. 

Also, nothing supports International’s claim that Smith Marine’s charter ending on January 

8 actually continued on January 10, despite the gap, because the crew “took a day off.” 

Finally, International argues the district court erroneously double-counted three invoices for 

charters that took place while United Tugs had hired “both vessels.” But Matherne testified 

that despite having a master charter agreement with a company, a charterer would also have 

individual time charter agreements for specific tasks and time periods. It is not erroneous to 

count separate voyages from December 5–6, 2006, December 8–18, 2006, and December 16–

29, 2006, as separate time charters and breaches of the Agreement. 

5 Delta argues it is law of the case that International breached the Agreement twentyseven times. See, e.g., Int’l Marine I, 704 F.3d at 356 n.6. We need not decide this issue 

because we find no clear error in the district court’s conclusion, based on the evidence 

submitted at the bench trial, that International breached the Agreement thirty-three times. 

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of the Agreement.6 As we addressed earlier, the fact that the Agreement 

required International to provide advance notice and a right of first refusal 

was determined by the panel in International Marine I and binds this court. 

704 F.3d at 352. In International Marine I, the panel found that the 

Noncompete Clause and pre-charter obligations were pivotal to the Agreement, 

but did not explicitly determine whether the Agreement required International 

to “notify Delta and give it the option of operating charters itself” before each

charter, or only one time at the beginning of the chartering process. Id. 

We review the interpretation of a maritime contract de novo. One 

Beacon, 648 F.3d at 262; see also Int’l Marine I, 704 F.3d at 354. When 

interpreting a maritime contract, general principles of contract law apply from 

federal admiralty law, rather than from state law. See Har-Win, Inc. v. Consol. 

Grain & Barge Co., 794 F.2d 985, 986–87 (5th Cir. 1986); Int’l Marine I, 704 

F.3d at 354. Federal maritime law “stems from the maritime jurisprudence of 

the federal courts, and is an amalgam of traditional common law rules, 

modifications of those rules, and newly created rules drawn from state and 

federal sources.” One Beacon, 648 F.3d at 262 (citations and internal quotation 

marks omitted). “Applying federal law in the contract context includes looking 

to ‘principles of general contract law’ that can be found in treatises or 

restatements of the law.” Univ. of Tex. Sys. v. United States, 759 F.3d 437, 443

(5th Cir. 2014) (quoting Franconia Assocs. v. United States, 536 U.S. 129, 141–

42 (2002)), cert. denied, 135 S. Ct. 1894 (2015). 

Under federal maritime law, “a court may not look beyond the written 

language of [a contract] to determine the intent of the parties unless the 

 

6 There is no dispute that International failed to pay Delta the 10% fee on time or in 

the correct amount for these first five instances. These constitute breaches of the Agreement 

in any case. 

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disputed contract provision is ambiguous.” Corbitt v. Diamond M. Drilling Co., 

654 F.2d 329, 332–33 (5th Cir. Unit A Aug. 1981). The district court concluded

that the Noncompete and Liquidated Damages Clauses are unambiguous. It 

interpreted the Noncompete Clause to require that Delta receive advance 

notification and the option of first refusal before each charter and determined

that any violation of the Noncompete Clause triggered an award of liquidated 

damages. 

We conclude that the Noncompete Clause unambiguously required 

International to consult with Delta about each individual charter in advance. 

As the panel in International Marine I implicitly concluded, preventing and 

anticipating harm from competition formed the core purposes behind the 

Noncompete and Liquidated Damages Clauses. Int’l Marine I, 704 F.3d at 352, 

355–56. Many of the provisions meant to protect Delta from competition would 

be ineffective if the Agreement did not require International to consult with 

Delta before each individual charter. For example, the parties could not easily 

determine whether Delta would be able to secure charters out for the tugboats 

within a reasonable time of their availability if Delta was not apprised of the 

tugboats’ availability. Neither could the parties easily come to a “reasonabl[e] 

agree[ment]” about “[t]he charter hire rate charged and duration of all 

Charters Out” if they did not consult before each charter or have a larger, 

overarching agreement. If Delta was not informed in advance of each proposed 

charter, Delta could not prevent International from endearing itself and its

tugboat crew to one of Delta’s customers or potential customers. By contrast,

if Delta was informed in advance, it could head off this competition by 

exercising its right to operate the charter itself. 

According to the plain language of the Agreement and the binding import 

attributed to it by a prior panel of this court, International was required to give 

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advance notice and the option of first refusal to Delta before each charter. See 

generally Int’l Marine I, 704 F.3d at 355–56 (holding the most important 

damage anticipated from a breach of the Noncompete Clause “was Delta’s 

inability to prevent competition, leading to the potential loss of customers, 

business opportunities and market share due to International’s failure to 

notify Delta of its intent to compete”). Therefore, we need not assess the 

extrinsic conduct of the parties to attempt to determine the meaning they 

attributed to these provisions. See Corbitt, 654 F.2d at 332–33. 

However, the course of conduct between the parties makes liquidated 

damages inapplicable to the first five breaches of the agreement. International 

paid Delta late or in an incomplete amount for each of these breaches and 

emailed Delta details about each charter only after the fact. Yet, Delta 

accepted each check and correspondence and did not provide International 

with notice that International had breached the contract or that it would 

enforce the Liquidated Damages Clause for the late or incomplete payments. 

RESTATEMENT (SECOND) OF CONTRACTS § 278 & cmt. a & illus. 1 (1981) (“If an 

obligee accepts in satisfaction of the obligor’s duty a performance offered by the 

obligor that differs from what is due, the duty is discharged.”); see also id. cmt. 

c & illus. 3 (“[P]art performance by an obligor of a duty that is liquidated and 

undisputed is not consideration for a discharge of that duty in full, even if the 

obligee so accepts it.” (emphasis added)). This contrasts with Delta’s conduct 

for the other twenty-eight breaches. In mid-January 2007, International 

stopped informing Delta about charters, and the district court found that in 

February 2007, International falsely represented to Delta that it had chartered 

neither tugboat during early January. In November 2008, Delta did not accept 

the check when International attempted to submit late payment of the 10% 

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fees it had failed to pay Delta since January 2007. Neither did Delta accept 

the second check International sent for overdue payments in February 2009. 

Accordingly the parties’ course of conduct shows that liquidated damages 

cannot result from International’s first five breaches. The parties 

corresponded about these charters via email and Delta accepted the 

nonconforming payments. From this, we know the extent of the damage Delta 

suffered from each of these breaches—namely, the amount of the 10% fee Delta 

failed to receive when it was due. See generally RESTATEMENT (SECOND) OF 

CONTRACTS § 278 cmt. a & illus. 1 (1981) (noting that if an obligor chooses to 

accept “a performance that differs from what is due,” “the obligor is discharged 

in accordance with the terms of the offer”); see also id. cmt. c & illus. 3. As 

explained below, liquidated damages cannot issue when we can measure the 

extent of damages Delta suffered from these first five breaches using interest.

B. Liquidated Damages for Late or Incomplete Payments

The district court awarded liquidated damages for each breach of the 

Noncompete Clause’s requirements. International argues the district court 

erred when it granted Delta liquidated damages for breaches that it contends 

involved only late or incomplete payments, because liquidated damages 

generally may not be assessed for defaulting on an obligation to pay money.7 

 

7 Delta contends that law of the case governs this issue, but the panel in International 

Marine I did not decide this issue. International Marine I resulted from the appeal of the 

district court’s 2013 Federal Rule of Civil Procedure 54(b) Judgment and addressed the 

certified issue of whether the Liquidated Damages Clause was enforceable on its face. Int’l 

Marine I, 704 F.3d at 351, 353, 356. The record indicates the parties, district court, and panel 

in International Marine I understood that the issues of breach and damages remained 

pending before the district court and were not before this court in International Marine I. 

Accordingly, the issue of whether Delta accepted International’s deficient performance for 

the first five breaches and the propriety of awarding liquidated damages for those breaches 

was not decided by the panel in International Marine I. Cf. Gochicoa v. Johnson, 238 F.3d 

278, 291–92 (5th Cir. 2000); Liberty Mut. Ins. Co. v. Gunderson, 387 F. App’x 480, 484–85 

(5th Cir. 2010) (unpublished); FED. R. CIV. P. 54(b).

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See generally 11 JOSEPH M. PERILLO, CORBIN ON CONTRACTS § 58.13 at 477–82

& n.1 (rev. ed. 2005) (collecting cases). 

For over a century, courts have refused to award liquidated damages for

contractual breaches solely involving default on payment obligations. See 

generally Wrenn v. Univ. Land Co., 133 P. 627, 629 (Or. 1913). This follows 

logically from the fact that the damage caused by late or incomplete payment 

may be easily measured and remedied through an award of interest, meaning 

that any higher liquidated damages award would likely be punitive. See, e.g., 

Checkers Eight Ltd. P’ship v. Hawkins, 241 F.3d 558, 562 (7th Cir. 2001) 

(interpreting Illinois law, holding that liquidated damages of $150,000 

assessed for late installment payments were “unreasonable and excessive,” 

especially since interest rates could estimate the actual damage incurred); 

Semico, Inc. v. Pipefitters Local No. 195, 538 S.W.2d 273, 274 (Tex. App.—

Beaumont 1976, writ refused n.r.e.) (holding a clause imposing liquidated 

damages of 15% per month on overdue labor union fees was an unenforceable 

penalty (quoting 5 ARTHUR L. CORBIN, CORBIN ON CONTRACTS § 1065 at 373

(1964)).8 

As applied to the first five breaches, the Liquidated Damages Clause 

would impose an unreasonable penalty, because due to the parties’ conduct, we 

know the extent of damages Delta suffered from each of these breaches.

Therefore, we VACATE the district court’s order insofar as it granted $1.25 

million in liquidated damages for International’s first five breaches of the 

Agreement. This reduces the total liquidated damages award from $8.25 

million to $7 million. However, on remand, Delta should be awarded interest 

 

8See also Fellows v. Nat’l Can Co., 257 F. 970, 971–72 (6th Cir. 1919); Bilz v. Powell, 

117 P. 344, 345–46 (Colo. 1911); Condon v. Kemper, 27 P. 829, 831 (Kan. 1891).

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on the amount of the payments International failed to timely make related to 

its first five breaches, accruing for each payment from the date on which the 

payment became overdue until final judgment on October 14, 2014. See Probo 

II London v. Isla Santay MV, 92 F.3d 361, 363 (5th Cir. 1996) (observing that

courts award prejudgment interest in admiralty beginning on the date on 

which the claim accrues and extending until the date of judgment). 

C. Extreme Case

International argues that the district court erred by assessing liquidated

damages for each breach of the Agreement, because the “extreme case” 

doctrine9 should apply to preclude an assessment of liquidated damages in 

these circumstances. Delta contends that the panel in International Marine I 

foreclosed the application of the “extreme case” doctrine here, providing 

binding law of the case. This court has not explicitly adopted the “extreme 

case” doctrine and need not address whether to do so here because we agree 

with Delta that this argument is governed by law of the case. See Matthews, 

312 F.3d at 657. 

In International Marine I, both parties briefed the “extreme case” issue,

and a different panel of this court determined that the record contained 

insufficient evidence for the court to determine whether the “extreme case” 

doctrine applied. Int’l Marine I, 704 F.3d at 356 n.6 (citation omitted); cf. 

Massman Constr. Co. v. City Council of Greenville, Miss., 147 F.2d 925, 927

 

9 The “extreme case” doctrine posits that a liquidated damages clause “fixing a 

substantial sum as damages is unenforceable” as a penalty “[i]f, to take an extreme case, it 

is clear that no loss at all has occurred.” RESTATEMENT (SECOND) OF CONTRACTS § 356 

cmt. b (1981). To illustrate an “extreme case” involving a clear lack of loss, the Restatement 

includes the following example: a liquidated damages clause fixed damages at $1000 per day 

for each day’s delay in completing a race track; the race track’s completion was delayed by 10 

days, but the permit for opening the race track was delayed for one month; thus, the delay in 

construction did not delay the race track’s opening and caused no loss. Id. at cmt. b. illus. 4.

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(5th Cir. 1945) (refusing to award liquidated damages that were to accrue for 

delay in the completion of a bridge because sufficient evidence showed “[t]here 

were no losses caused to the City by the delay . . .[;] the bridge was completed 

in its entirety 30 or more days before there was a road to the bridge on the 

Arkansas side”). The panel ultimately found that the Liquidated Damages 

Clause reasonably estimated damages that would be difficult to anticipate and 

did not operate as an unenforceable penalty. Int’l Marine I, 704 F.3d at 355–

56. This conclusion is binding law of the case absent any “substantially 

different” evidence presented at the bench trial. See Matthews, 312 F.3d at

657 (noting the law of the case doctrine does not apply if “[t]he evidence at a 

subsequent trial is substantially different”). The evidence presented before the 

district court at the bench trial was substantially the same as the evidence 

presented before the International Marine I panel; therefore, the decision in 

International Marine I binds us to decline to determine whether the “extreme 

case” doctrine applies here.

D. Prejudgment Interest

The district court awarded prejudgment interest at a rate of 5.5% per 

annum on $8.25 million in liquidated damages in accordance with the 

traditional hospitality to prejudgment interest in maritime cases. See Reeled 

Tubing, Inc. v. M/V Chad G, 794 F.2d 1026, 1028 (5th Cir. 1986) (“[A]warding 

prejudgment interest is the rule rather than the exception . . . .”). Prejudgment 

interest on the liquidated damages award began to accrue thirty days after 

February 20, 2009, because the Agreement specified that liquidated damages 

would be payable thirty days after notice of breach.10 Delta notified 

 

10 Because the first breach arose from an incomplete payment, the interest on that

payment will instead begin to accrue from the date on which the payment became overdue 

and will continue to accrue until October 14, 2014. See Probo II, 92 F.3d at 363.

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International on February 20, 2009, that it believed International had 

breached the Agreement and owed liquidated damages.11 International argues 

that the district court erroneously awarded prejudgment interest on the 

liquidated damages award because this court’s case law does not support 

awarding prejudgment interest for awards of liquidated damages, only for 

awards of actual damages. Cf. Montelongo v. Meese, 803 F.2d 1341, 1354 (5th 

Cir. 1986). 

This court has not held that prejudgment interest is barred on all 

liquidated damages awards, and Montelongo is distinguishable. See id. In 

Montelongo, statutory liquidated damages were awarded partially as a 

penalty. Id. at 1350 (holding that liquidated damages under the Farm Labor 

Contractor Registration Act (“FLCRA”) were partially created as a penalty,

and therefore, prejudgment interest was not appropriate). In Calderon v. 

Presidio Valley Farmers Association, this court held that Montelongo does not 

preclude district courts from acting within their discretion to award 

prejudgment interest on statutory, liquidated damages awards that are meant 

to approximate actual damages. 863 F.2d 384, 392–93 (5th Cir. 1989) (finding 

“no bar to an award of prejudgment interest on actual damages based on

FLCRA”).

International Marine I established that the Liquidated Damages Clause 

is enforceable as a reasonable forecast of damages and that International did 

not sustain “its burden to prove that the [Liquidated Damages] Provision was 

a penalty.” 704 F.3d at 355–56. Accordingly, we hold that the district court 

 

11 Neither party disputes the rate of prejudgment interest awarded (5.5% per annum) 

or that the prejudgment interest awarded began 30 days from February 20, 2009. As such, 

the parties abandoned any arguments that prejudgment interest should be awarded in a 

different rate or from a different date. See Webb, 89 F.3d at 257 n.2.

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acted within its discretion in awarding prejudgment interest under 

Montelongo, Calderon, and the maritime presumption favoring prejudgment 

interest. See e.g., Reeled Tubing, 794 F.2d at 1028.

III. Conclusion

Except for the first five breaches of the Agreement, we AFFIRM the 

district court’s 2014 Judgment and Findings and Conclusions in all respects. 

For International’s first five breaches, involving a quantifiable amount of 

damages from late payment or underpayment, we conclude that liquidated 

damages cannot apply. 

Accordingly, we VACATE the liquidated damages awarded for the first 

five breaches of the agreement, reducing the total liquidated damages award 

to $7 million, plus prejudgment interest of 5.5% per annum, beginning thirty 

days after February 20, 2009, and terminating on October 14, 2014, and 

REMAND for entry of a judgment consistent with this opinion. Upon remand, 

the district court should award the same prejudgment interest on the amounts 

International failed to pay Delta in its first five breaches, except interest on 

these breaches shall run from the date on which each payment was overdue 

and terminate on October 14, 2014. 

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