IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-20098

ARV OFFSHORE COMPANY, LIMITED,

Plaintiff-Appellee

v.

CON-DIVE, L.L.C.,

Defendant-Appellant

Appeal from the United States District Court

for the Southern District of Texas

USDC No. 4:09-CV-944

Before REAVLEY, PRADO, and ELROD, Circuit Judges.

PER CURIAM:*

This is a breach of contract case. Appellant Con-Dive, L.L.C. was held

liable for breaching a subcontract with ARV Offshore Company to provide a

saturation dive system, known as the Orca, to be used by ARV on a subsea

project in the Gulf of Thailand. As a result of Con-Dive’s breach, ARV had to

procure substitute vessels to complete the work and incurred increased costs. 

Con-Dive appeals both the district court’s determination on summary judgment

United States Court of Appeals

Fifth Circuit

F I L E D

February 22, 2013

Lyle W. Cayce

Clerk

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

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that the parties entered into a binding contract and the court’s award of

damages after a bench trial. For the following reasons, we AFFIRM.

In June 2008, ARV and Con-Dive signed a Letter of Award confirming an

intent to contract for the Orca to be used on ARV’s project in the Gulf of

Thailand. The district court held that the Letter of Award, along with two

attachments, constituted a binding agreement that contained all the essential

elements of a contract. Con-Dive disputes this finding, arguing that the parties

were still negotiating and that the Letter of Award lacked the essential element

of a payment guarantee.

We review the district court’s grant of summary judgment de novo,

applying the same standards as the district court. ACE Am. Ins. Co. v. M-I,

L.L.C., 699 F.3d 826, 830 (5th Cir. 2012). A valid contract under Texas law

requires “(1) an offer; (2) an acceptance in strict compliance with terms of [the]

offer; (3) a meeting of the minds; (4) a communication that each party consented

to the terms of the contract; (5) execution and delivery of the contract with an

intent it become mutual and binding on both parties; and [6] consideration.” 

Advantage Physical Therapy, Inc. v. Cruse, 165 S.W.3d 21, 24 (Tex.

App.–Houston [14th Dist.] 2005, no pet.). To be legally binding, the contract

“must be sufficiently definite in its terms so that a court can understand what

the promisor undertook.” T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847

S.W.2d 218, 221 (Tex. 1992).

Here, the Letter of Award and its attachments contained all essential

elements and was sufficiently definite to be understood by the parties as a

binding contractual agreement. The Letter of Award provided that Con-Dive

would mobilize its Orca dive system and deliver it to Bush Intercontinental

Airport for transport to Singapore. It included terms for the mobilization fee to

be paid by ARV, the subsequent day rate that ARV would pay for each day that

the system was in use, the time that the day rate would commence, the scope of

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the work, and the expected duration of the contract. Although the parties

intended for a formal subcontract to replace the Letter of Award, which never

occurred, the agreement provided that the Letter of Award would govern the

parties’ relationship until the subcontract was executed. The fact that the Letter

of Award did not mention a payment guarantee does not preclude the existence

of a valid contract because the record shows that ARV agreed to obtain the

guarantee, and ARV’s director testified without contradiction that ARV did get

a guarantee from its bank before Con-Dive breached the agreement.

The parties’ conduct after the Letter of Award was signed also reflected a

belief that there was a valid contract. ARV chartered and paid for a cargo plane

to transport the Orca to Singapore, and Con-Dive thereafter acknowledged in an

email that it would continue with plans to ship the Orca on the plane obtained

by ARV. We conclude from the plain language of the Letter of Award, from what

the parties said in their emails, and from the parties’ conduct in arranging

transport for the Orca, that there was a meeting of the minds on all essential

terms of a contract. See Copeland v. Alsobrook, 3 S.W.3d 598, 604 (Tex.

App.–San Antonio 1999, pet. denied) (“The determination of a meeting of the

minds, and thus offer and acceptance, is based on the objective standard of what

the parties said and did and not on their subjective state of mind.”).

Con-Dive argues in the alternative that even if a contract was formed, it

did not breach the agreement because it attempted to provide a substitute dive

system. This argument is unavailing because Con-Dive’s terms for the

substitute system were contrary to the original agreement, and included a

higher mobilization fee, a higher day rate, and an increase in the portion of

transportation costs to be borne by ARV. The district court did not err by

concluding that the parties entered into a valid contract and that Con-Dive

breached the agreement by failing to provide the Orca, or a reasonable

substitute, on terms equivalent to the original agreement.

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Con-Dive next challenges the district court’s calculation of damages. ARV

presented expert testimony showing that had Con-Dive provided the Orca, it

would have used the Orca on a vessel called the NOR VALIANT and would have

incurred costs of $10,646,996.40 to complete its project. Its expert further

established that ARV actually incurred costs of $16,072,036.80 as a result of

having to procure three substitute vessels on the open market at a higher price

than ARV would have paid for the Orca/NOR VALIANT combination. In an

effort to place ARV in as good an economic position as it would have been in had

Con-Dive not breached the contract, the district court awarded ARV the

difference between its actual costs and its expected costs, or $5,425,040.40.

Con-Dive’s primary argument is that ARV failed to prove its damages

because ARV’s expert did not account for revenue that ARV received from

chartering the three substitute vessels, and therefore ARV failed to show that

it suffered a financial loss. It argues that ARV’s managing director, Alan

Stewart, testified that ARV was reimbursed by its own customer for the

increased vessel costs, and it argues that ARV may also have made a profit.1

The district court’s calculation of damages in a bench trial is a question of fact

that, absent an error of law, is reviewed for clear error. Ergon-West Virginia,

Inc. v. Dynegy Mktg. & Trade, 2013 WL 237567, at *3 (5th Cir. 2013); Kona

Tech. Corp. v. S. Pac. Transp. Co., 225 F.3d 595, 601 (5th Cir. 2000).

Damages in a breach of contract case are generally measured as just

compensation for losses actually sustained as a result of the breach and are

meant to restore the injured party to the position he would have occupied had

the breaching party performed the contract. See Lafarge Corp. v. Wolff, Inc., 977

1 We note that Con-Dive focuses only on the costs associated with the substitute vessels

and does not address approximately $1.3 million that ARV paid to charter the cargo plane to

transport the Orca. Because Con-Dive does not address the transportation costs included in

the district court’s damages award, the issue is deemed abandoned. See Tewari De–Ox Sys.,

Inc. v. Mountain States/Rosen, L.L.C., 637 F.3d 604, 609–10 (5th Cir. 2011).

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S.W.2d 181, 187 (Tex. App.—Austin 1998, pet. denied); see also Restatement

(Second) of Contracts § 347. “[W]here the injured party has simply had to pay

an additional amount to arrange a substitute transaction and can be adequately

compensated by damages based on that amount,” the increased amount paid by

the injured party may be adequate to restore the injured party to the position he

would have been in had the breach not occurred. Restatement (Second) of

Contracts § 347 cmt. a.

In the instant case, ARV proved that it had to secure replacement vessels

on the open market in order to complete its project after Con-Dive’s breach and

that it actually paid the costs for those vessels. ARV proved through its expert

that the increased expenses were reasonable and necessary. The district court,

which was in the best position to assess the matter, found ARV’s expert to be

credible and reliable. See, e.g., French v. Allstate Indem. Co., 637 F.3d 571, 581

& n.9 (5th Cir. 2011) (holding that the district court was best positioned to

assess witness credibility when determining the plaintiff’s actual loss). We

perceive no error in the district court’s award of damages based on ARV’s

increased costs to complete the same work that would have been performed had

Con-Dive provided the Orca. ARV therefore sufficiently proved that it suffered

actual damages as a result of the breach of contract by Con-Dive. See

Restatement (Second) of Contracts § 347.

To the extent that Con-Dive argues ARV was reimbursed for any of its

costs, Con-Dive is essentially seeking an offset. Con-Dive conceded at oral

argument that it did not plead offset as an affirmative defense, and the issue

could be considered waived. See Woodfield v. Bowman, 193 F.3d 354, 362 (5th

Cir. 1999); Geis v. Colina Del Rio, LP, 362 S.W.3d 100, 113 (Tex. App.—San

Antonio 2011, pet. denied). Even if the issue is not waived, however, Con-Dive

bore the burden of proving facts necessary to support an offset. See Brown v.

Am. Transfer & Storage Co., 601 S.W.2d 931, 936 (Tex. 1980). Stewart’s

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testimony about reimbursements, upon which Con-Dive relies, was non-specific

and did not establish a basis for the district court to recompute the damage

amount. Indeed, Stewart also testified that there were a number of vessel days

that were not reimbursed by its client and that ARV’s claim for damages

included only vessel days for which ARV was invoiced and for which it actually

paid. As noted by the district court, Con-Dive presented no additional evidence

from which the district court could reasonably determine the amounts, if any, to

be credited against ARV’s damages. The district court did not clearly err in its

damages award.

Con-Dive further argues that ARV would have incurred additional

expenses even if it had supplied the Orca, and therefore ARV’s damages model

was unreliable, because (1) ARV could not have completed the project within the

limited time frame set by the Letter of Award, and (2) the NOR VALIANT

experienced mechanical breakdowns that would have occurred regardless of ConDive’s breach. The district court carefully considered Con-Dive’s arguments, and

we conclude that its finding of fact that the project could have been completed

as contemplated in the contract was not clearly erroneous. See Coe v.

Chesapeake Exploration, L.L.C., 695 F.3d 311, 316 (5th Cir. 2012) (district

court’s findings of fact in a bench trial are reviewed for clear error).

AFFIRMED.

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