Opinion ID: 714969
Heading Depth: 1
Heading Rank: 1

Heading: facts

Text: 3 In June of 1990, USA contracted to sandblast and paint twelve of Mobil's platforms, which are located offshore of Louisiana in the Gulf of Mexico, on the Outer Continental Shelf. The parties entered into two contracts which were identical in their terms except with regard to the designation of the platforms involved. Each contract specified that Mobil could terminate the agreement with or without cause at any time, provided it compensated USA for work completed up to the time of termination (the Termination Clause). 1 The contracts also included a provision requiring USA to indemnify Mobil for payments of any liens or claims placed against Mobil's property by subcontractors or vendors (Indemnification Clause). 2 And the contract contained a retainage clause which authorized Mobil to withhold thirty percent of the money due to USA as retainage to ensure that USA would compensate in full all subcontractors or vendors who might assert lien rights against Mobil's property (Retainage Clause). 3 4 In September of 1990, after USA had been paid the contract price less thirty percent retainage for six completed platforms, and had completed its work on an additional two platforms, Mobil exercised its right to terminate the contracts. Even though Mobil could terminate the agreements without cause, it asserted that USA had violated Mobil's safety provisions. Mobil and USA began negotiations to determine the proper payment due for the four uncompleted platforms. 5 Before the negotiations were completed, however, Mobil received notice that USA had not paid a number of its subcontractors and vendors, who as a result had lien rights against Mobil's property pursuant to the Louisiana Oil, Gas, and Water Well Lien Act. 4 Anxious to ensure that liens would not be placed on its property, Mobil offered to pay the subcontractors and vendors directly, so long as USA would agree to allow Mobil to deduct those payments from the amount ultimately determined to be owed to USA by Mobil. USA rejected any such arrangement and instructed Mobil not to deal directly with the subcontractors and vendors.