Opinion ID: 714969
Heading Depth: 3
Heading Rank: 2

Heading: The Amount Owed to USA Prior to Recoupment

Text: 18 On appeal to us, both parties dispute the bankruptcy court's calculation of the gross amount owed to USA on the contract, i.e. the amount earned without considering recoupment. The parties stipulated to the price for the platforms that were completed prior to termination; the only issue in contention is the amount due for the four uncompleted platforms. 19
20 Mobil challenges the bankruptcy court's calculations of the following amounts owed on the uncompleted platforms: (1) direct costs; (2) indirect, general, and administrative costs; and (3) projected profits. Mobil argues first that the bankruptcy court erred by adding $3,867 to the amount of direct costs to which the parties had stipulated in the pretrial order. The bankruptcy court added that amount after noting a discrepancy between the sum stipulated to by the parties and a calculation in one of USA's exhibits. 21 We have stated that [i]t is well settled that stipulations of fact fairly entered into are controlling and conclusive and courts are bound to enforce them. 23 Accordingly, we hold that the bankruptcy court erred by adding the $3,867 and thereby altering the stipulation of the parties. 22 Mobil next argues that the bankruptcy court should not have included indirect, general, and administrative costs in its calculation of the amounts owed to USA on the uncompleted platforms. The relevant portion of the Termination Clause provides that 23 [USA] shall receive as full compensation that portion of the lump sum amount due for the work performed up to the date of termination, which shall equal the amount which [USA] can demonstrate to [Mobil] [USA] has spent in the ordinary course of business for the work performed to the date of termination. 24 Mobil urges that indirect, general, and administrative costs are not amounts USA has spent for work performed. 25 The bankruptcy court held that the Termination Clause could be interpreted either as requiring direct costs only or as requiring direct and indirect costs. The court also found that the intent of the parties with regard to the meaning of the clause could not be determined. Accordingly, the bankruptcy court construed [the] ambiguous claus[e] against the preparer of the contract, Mobil. 26 We agree that the Termination Clause is ambiguous. It could be read either to exclude or include indirect, general, and administrative costs. Moreover, the bankruptcy court's finding with respect to the intent of the parties on this issue is not clearly erroneous. Under Louisiana law, ambiguous clauses are construed against the drafter of the contract, 24 so we affirm the bankruptcy court's inclusion of indirect, general, and administrative costs in the amount owed to USA. 27 Mobil's final challenge contests the bankruptcy court's inclusion of a 1.5% profit for USA in calculating the amount due to USA on the uncompleted platforms. Mobil insists that USA is not entitled to profit on the uncompleted platforms, as profit is not spent in the ordinary course of business. The bankruptcy court rejected this argument; and, citing evidence in the record establishing that offshore contractors' typical profit margins are 1.5%, found that USA is entitled to a profit of 1.5% on the uncompleted structures. Given the ambiguity of the contract on this issue and the fact that Mobil drafted the contract, we find no error by the bankruptcy court in including a 1.5% profit margin when calculating the post-termination amounts owed by Mobil. 28
29 Predictably, USA does not object to the inclusion of profit in the calculation of the amount it is owed; it argues instead that the bankruptcy court should have used a profit margin of 20%, not 1.5%. The bankruptcy court found that USA adduced no evidentiary basis for concluding that 20% was a realistic margin. This finding is supported by the record, and is not clearly erroneous.