Court Opinion

ID: 9891162
Source: CourtListenerOpinion
Date Created: 2023-10-17 18:00:27.491881+00
Date Added: 2024-06-11T13:39:26.748130
License: Public Domain

Case: 22-30311           Document: 00516933851         Page: 1     Date Filed: 10/17/2023

              United States Court of Appeals
                   for the Fifth Circuit                                United States Court of Appeals
                                                                                 Fifth Circuit

                                     ____________                              FILED
                                                                         October 17, 2023
                                       No. 22-30311                       Lyle W. Cayce
                                     ____________                              Clerk

   Kenai Ironclad Corporation,

                                                                    Plaintiff—Appellee,

                                           versus

   CP Marine Services, LLC; Ten Mile Exchange, LLC,

                                                Defendants—Appellants.
                        ______________________________

                        Appeal from the United States District Court
                           for the Eastern District of Louisiana
                                 USDC No. 2:19-CV-2799
                        ______________________________

   Before Haynes and Engelhardt, Circuit Judges, and deGravelles,
   District Judge. *
                   0F

   John W. deGravelles, District Judge:
          Kenai Ironclad Corporation (“Kenai” or “Plaintiff”) alleged that CP
   Marine Services, LLC, breached its contract to repair and convert Kenai’s
   offshore supply vessel to a salmon fishing tender for use in Alaska. After
   Kenai expressed dissatisfaction with the work, the relationship deteriorated.

          *
             United States District Judge for the Middle District of Louisiana, sitting by
   designation.
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                                      No. 22-30311

   Kenai alleged that, after paying its final invoice, it attempted to remove its
   vessel from CP Marine’s shipyard, but as it did so, CP Marine and co-
   defendant      Ten     Mile    Exchange,     LLC,      (“TME”)      (collectively,
   “Defendants”) rammed, wrongfully seized, detained, and converted Kenai’s
   vessel for five days before finally releasing it.
            After a five-day bench trial, the district court found that CP Marine
   did not breach its contract with Kenai but did wrongfully seize, detain, and
   convert the vessel. The court awarded punitive damages and attorney’s fees
   for Defendants’ bad faith and reckless behavior in ramming, seizing, and
   converting the vessel for five days.
            Defendants appeal, arguing the trial court erred in (1) finding that they
   wrongfully arrested or detained Kenai’s vessel; (2) finding that punitive
   damages were legally and factually justified; and (3) awarding prejudgment
   interest on the punitive damages award. After a careful review of the record,
   we hold that there was sufficient evidence to support the district court’s
   finding that Defendants wrongfully seized, detained, and converted
   Plaintiff’s vessel in a manner that warranted the imposition of attorney’s fees
   and punitive damages. However, because the record is unclear as to certain
   aspects of the district court’s award of punitive damages—namely, whether
   they were also intended, at least in part, to be compensatory and, if so, in
   what amount—we REMAND to the district court for clarification of its
   award.

                  FACTS AND PROCEDURAL HISTORY
            In December 2018, Plaintiff Kenai orally contracted with Defendant
   CP Marine to repair, modify, and paint the M/V IRON DON, an offshore
   supply boat owned by Kenai that it intended to use as a salmon fishing tender
   in Alaska. Work began in January 2019. In January and February, Kenai’s
   representatives repeatedly expressed concerns about the quality of the work

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   being performed and requested a written guarantee regarding the work’s
   quality. CP Marine refused to give a guarantee.
         Thereafter, CP Marine demanded immediate payment of outstanding
   invoices, which Kenai paid immediately. Then, Kenai’s representatives
   decided to “end the working relationship with Defendants as soon as
   possible.” CP Marine next demanded that Kenai’s crew and equipment be
   immediately removed from the vessel and shipyard and threatened to charge
   a $1,000 per day storage fee if Kenai failed to comply. CP Marine further
   threatened to return the vessel from dry dock to the water and charge a
   $5,000 per day storage fee.
         CP Marine had Jefferson Parish deputy sheriffs evict Kenai’s crew
   from the vessel and then completed its work on same. On February 27, 2019,
   CP Marine sent Kenai a final invoice. Kenai’s Austin Adler
         immediately wrote a check for the final invoice and delivered it
         to CP Marine, which CP marine deposited the same day. This
         payment satisfied all outstanding CP Marine invoices to
         Plaintiff. [ ] Adler called Plaintiff’s bank to confirm that the
         check had cleared . . . [and] a representative from Plaintiff’s
         bank confirmed that Defendant had cashed the check and that
         it cleared on February 28, 2019.
         Six days later, on March 5, 2019, the vessel hired by Kenai to remove
   the IRON DON from the CP Marine shipyard (the M/V SUPER T) tied onto
   the IRON DON and began to leave the shipyard. As it was doing so, a vessel
   owned by TME, the M/V AUNT DI, “rammed” the SUPER T, pinned it
   and the IRON DON against the bank, and thus prevented Kenai from
   retrieving its vessel. Joseph Dardar, a part owner of both TME and CP
   Marine, was at the wheel of the AUNT DI. Moreover, during this event,
   Dardar threatened Adler.

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          The following day, while the IRON DON was still being detained in
   the CP Marine shipyard, TME “threatened Plaintiff by sending a $20,750
   invoice from TME for ramming and detaining the IRON DON” and
   demanded payment within two days. At this point, Kenai had “no formal
   business relationship” with TME, and the invoice was sent “for the sole
   purpose of intimidating and threatening Plaintiff.” Dardar admitted at trial
   that “he never intended to collect on this invoice and ‘should never have sent
   it.’” “Plaintiff ultimately retrieved the IRON DON and left the CP Marine
   shipyard on March 11, 2019.”
          Kenai sued CP Marine and TME for breach of contract, wrongful
   vessel seizure, conversion, and tortious interference with contractual
   relations. After a five-day bench trial, the district court held that defendant
   CP Marine did not breach its oral contract and implied breach of warranty of
   workmanlike performance in connection with CP Marine’s painting, repair,
   and modifications to the M/V IRON DON. The trial court held in part that
   “Plaintiff has not met its burden to show that Defendants’ allegedly dilatory
   performance caused [the IRON DON’s] late arrival in Alaska.”
          However, the district court also found that “Defendants acted with
   bad faith . . . [and] detained the [IRON DON] pursuant to an invalid maritime
   lien.” The court awarded punitive damages measured by “the value of [the
   vessel’s] missed contract days for the days that Defendants wrongfully
   detained the vessel.” Specifically, the court stated it was awarding punitive
   damages in the amount of $17,580.50, measured by the vessel’s daily rate of
   $3,516.10 times the five days the vessel was wrongfully detained, plus
   attorney fees, expenses, and court costs.
          In addition, the court awarded “pre-judgment interest in accordance
   with La. R.S. § 9:3500 from March 5, 2019, to the date of judgment, and post-
   judgment interest in accordance with 28 U.S.C. § 1961(a).” Judgment was

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   entered on May 17, 2022, and Defendants timely appealed on May 25, 2022.
   Kenai did not.
          The matter of the amount of attorney’s fees to be awarded was
   referred to the magistrate judge. Although Kenai submitted attorney’s fees
   totaling $78,017.68, the magistrate judge only recommended payment of
   $38,831.40, reflecting a downward adjustment due in part to Kenai’s loss of
   its breach of contract claim.1 On August 9, 2022, the district court adopted
   the magistrate judge’s recommendation. Defendants separately appealed the
   district judge’s adoption of the report and recommendation, but that appeal
   was dismissed for want of prosecution because Defendants failed to timely
   file a brief and record excerpts. Kenai Ironclad Corp. v. CP Marine Servs.,
   L.L.C., No. 22-30492, 2022 WL 18776210, at *1 (5th Cir. Dec. 7, 2022). The
   award of Kenai’s attorney’s fees is therefore final.

                               ISSUES ON APPEAL
          Defendants’ appeal raises the following issues: did the district court
   err (1) in finding that Defendants wrongfully seized, detained, and converted
   Kenai’s vessel; (2) in awarding punitive damages; or (3) in awarding
   prejudgment interest on the punitive damages award?
          Resolution of the second issue turns on the proper relationship
   between punitive damages and compensatory damages, both generally under
   maritime law and in this case specifically. Sub-issues include: (a) whether the
   district court erred in awarding punitive damages exceeding the 1:1 punitive
   damage to compensatory damage ratio set by Exxon Shipping Co. v. Baker, 554
   U.S. 471 (2008); (b) whether the district court erred as a matter of law in

          1
            The magistrate judge’s report and recommendation and the district court’s order
   adopting same were not made a part of the ROA. The ROA goes only to E.D. La. ECF No.
   113, whereas these orders are E.D. La. ECF Nos. 116, 122.

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   awarding punitive damages in the absence of an explicit award of
   compensatory damages; and (c) if so, whether the district court’s award
   nevertheless should be affirmed because it had a compensatory component,
   either because the award of attorney’s fees was compensatory or because the
   punitive damage award itself was in part compensatory.

                                 DISCUSSION
      I. Did the district court err in finding Defendants wrongfully
          arrested and converted Kenai’s vessel?
          “To recover for wrongful arrest of a vessel, there must be (1) no bona
   fide claim of a maritime lien on the vessel and [(2)] a showing of bad faith,
   malice, or gross negligence [on the part] of the offending party.” Comar
   Marine, Corp. v. Raider Marine Logistics, L.L.C., 792 F.3d 564, 574–75 (5th
   Cir. 2015) (citations and internal quotations omitted). “Whether a maritime
   lien exists is a question of law, reviewed de novo.” Id. at 575 (citations
   omitted). A district court’s determination of bad faith, on the other hand, is
   “a conclusion of fact, which we review under the deferential clear error
   standard.” Id. (citation omitted).
          “[F]or a bench trial, . . . we will upset the district court’s findings of
   fact only if we are ‘left with the definite and firm conviction that a mistake
   has been committed.’” Luwisch v. Am. Marine Corp., 956 F.3d 320, 326 (5th
   Cir. 2020) (quoting Barto v. Shore Constr., LLC, 801 F.3d 465, 471 (5th Cir.
   2015)). “Moreover, and of particular relevance here, the clearly erroneous
   standard of review following a bench trial requires even ‘greater deference to
   the trial court’s findings when they are based on determinations of
   credibility.’” Id. (quoting Guzman v. Hacienda Records & Recording Studio,
   Inc., 808 F.3d 1031, 1036 (5th Cir. 2015)). “Accordingly, ‘[w]e entertain a
   strong presumption that the court’s findings must be sustained even though

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   this court might have weighed the evidence differently.’” Id. (quoting
   Johnson v. Cenac Towing, Inc., 544 F.3d 296, 303 (5th Cir. 2008)).
           The Federal Maritime Lien Act, 46 U.S.C. §§ 31341–31343, grants
   maritime liens to parties “providing necessaries to a vessel” and allows such
   parties to bring a civil action in rem to enforce the lien. Id. § 31342(a)(1)–(2).
   “‘Necessaries’ includes repairs, supplies, towage, and the use of a dry dock
   or maritime railway . . . .” Id. § 31301(4). Prior to Kenai’s payment of its final
   invoice, CP Marine had a valid lien on the IRON DON. See World Fuel Servs.,
   Inc. v. MAGDALENA GREEN M/V, 464 F. App’x 339, 341 (5th Cir. 2012)
   (quoting, inter alia, Equilease Corp. v. M/V Sampson, 793 F.2d 598, 602 (5th
   Cir. 1986) (en banc) (A maritime lien “arises when the debt arises . . . .”)).
           Because all amounts due had been paid with funds deposited in CP
   Marine’s account six days prior, the district court did not clearly err in
   finding that no valid lien existed at the time the IRON DON was seized. Once
   the debt giving rise to the lien was paid, the lien ceased to exist. World Fuel
   Servs., 464 F. App’x at 341 (“Where, as here, the debt is repaid and
   satisfaction is acknowledged, the lien ceases to exist.” (citing Mullane v.
   Chambers, 438 F.3d 132, 138 (1st Cir. 2006))). See also Argos Ports (Hous.)
   LLC v. Kirby Inland Marine, LP, 598 F. Supp. 3d 512, 519 (S.D. Tex. 2022)
   (“[A]ny claim T&T might have had would have been extinguished by
   payment.”).2
           Defendants argue that they seized the vessel because (a) Kenai’s
   check had not cleared and (b) Dardar was concerned that Plaintiff might

           2
             See also Bunkers Int’l Corp. v. M/V Wuchow, No. 15-5221, 2016 WL 1161288, at *3
   n.1 (E.D. La. Mar. 23, 2016) (“BIC’s purported maritime lien would be extinguished if BIC
   received payment from China Navigation pursuant to its invoice.”); Maritrend, Inc. v. M/V
   SEBES, No. 96–3140, 1997 WL 660614, at *2 (E.D. La. Oct. 23, 1997) (“the contractor
   acquires a maritime lien against the vessel until payment is satisfied”).

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   cancel the check and remove the funds from CP Marine’s account. The
   district court rejected this explanation because (a) Defendants had
   “produced no evidence that these check payments did not clear or were
   cancelled;” (b) Dardar’s testimony lacked credibility; (c) the check had
   cleared on February 28, 2019; and (d) the funds had been in CP Marine’s
   account for six days at the time the IRON DON was seized. On this record,
   ample evidence supports the district court’s conclusion that well before the
   seizure, CP Marine’s bill was paid in full, so there was no longer a valid lien.
          Defendants also argue that the IRON DON was never arrested and
   thus could not have been arrested wrongfully. Contrary to the district court’s
   finding that the AUNT DI “rammed” the SUPER T and endangered lives,
   “the evidence overwhelmingly shows that the bumping was controlled, safe
   and appropriate under the circumstances.” According to Defendants, the
   bumping of the SUPER T was “initiated for a proper purpose,” i.e., “to
   create a pause in the unfolding events so they could be rationally
   discussed . . . .” Furthermore, there is no evidence that Defendants ever
   refused a request to return the IRON DON, and once the request was made
   on March 10, it was returned the next day.
          Next, Defendants contend that Kenai did not prove that any arrest or
   detention was in bad faith: “the ‘gravamen of the right to recover damages
   for wrongful [arrest] or detention of vessels.’” Defendants were “fully
   justified in the name of safety in stopping Kenai’s effort to unilaterally
   remove the vessel from the shipyard . . . .” According to Defendants, the
   manner in which the SUPER T was removing the IRON DON was unsafe in
   that (a) it was being moved through a narrow channel, which imperiled CP
   Marine’s hopper barge and dry dock, and (b) the removal attempt was
   reckless in that the attempt was being made with only a single vessel.

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           Contrary to Defendants’ argument, the record contains ample
   evidence that the IRON DON was wrongfully arrested and, indeed, rammed
   and pinned against the bank. This evidence includes the testimony of
   Jonathan Tingley, video evidence of the ramming, the testimony of Austin
   Adler, and even that of Joseph Dardar.3 Defendants’ bad faith detention and
   conversion of the vessel is also supported by Defendants’ intentional
   blocking of the canal for five days following the ramming.
           Kenai presented sufficient evidence and testimony to support the trial
   court’s finding that Defendants acted “in bad faith and with wanton
   disregard of the legal rights of Plaintiff.” This evidence includes the backdrop
   against which the seizure occurred: the deterioration of the parties’
   relationship following Plaintiff’s request for a written guarantee on the
   quality of the work and Defendants’ refusal to provide same. It also includes
   (a) Defendants’ demand that Plaintiff remove its personnel from the vessel
   and equipment from the shipyard although their presence had been a part of
   the original agreement; (b) Defendants’ threat to charge Plaintiff a storage
   fee of $1,000 per day if the equipment wasn’t removed; (c) Defendants’
   threat to move the IRON DON from the dry dock to the water and thereafter
   charge $5,000 per day until it was removed because “[Dardar] wanted them
   off [his] property . . . to motivate them to get off [his] property”; (d) the
   AUNT DI’s ramming of the SUPER T and the IRON DON, which the trial
   court found to be in “callous disregard for the safety of the people aboard the

           3
             Although Defendants portray the contact as “the bumping of one tug into the
   other,” Dardar admitted that he “laid up against him hard, and [Dardar] had a hold against
   him.” Tingley described it as “extreme acceleration.” After viewing the video, the district
   judge said, “[W]hat I’m seeing here is very troubling. The behavior here is very troubling.”
   The court also stated, “[H]ow somebody goes to that extreme and puts life at stake because
   they think somebody owes them money is a very hard hurdle for me to overcome in my fact
   finding.” We conclude that there was no clear error in the district court’s assessment.

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   vessels”; (e) Joseph Dardar’s threat made during the course of the vessel’s
   arrest that “[i]f I had my shotgun, you’d be dead”; (f) Defendants blocking
   the canal for five days following the seizure; (g) the district court’s disbelief
   of Dardar’s purported reason for holding the vessel (waiting for the check to
   clear); and (h) TME’s billing Plaintiff for TME’s wrongful seizure of the
   IRON DON on March 5, which the court found was “for the sole purpose of
   intimidating and threatening Plaintiff” and which Dardar later admitted was
   “inappropriate” and should never have been sent.
           In conclusion, the district court did not clearly err in finding that
   Kenai’s vessel was wrongfully seized and converted in bad faith and in
   reckless disregard of Kenai’s rights.
       II. Did the district court err in awarding punitive damages?
               A. Did the facts support such an award?
           General maritime law has long recognized the availability of punitive
   damages in the appropriate case. Atl. Sounding Co. v. Townsend, 557 U.S. 404,
   414–15 (2009). As the Court in Townsend stated, “[P]unitive damages have
   long been available at common law[,] [and] . . . the common-law tradition of
   punitive damages extends to maritime claims.” Id. at 414. See also Exxon, 554
   U.S. 471.4 “Punitive damages have long been an available remedy at common
   law for wanton, willful, or outrageous conduct,” Townsend, 557 U.S. at 409,
   but have also been awarded when a defendant engaged in “reckless action,”

           4
              “[Exxon] and Townsend affirm that, as a general rule, punitive damages are
   available in appropriate cases under the general maritime law. Thus, punitive damage
   awards are generally proper in cases in admiralty jurisdiction.” 1 Thomas J. Schoenbaum,
   Admiralty & Maritime Law § 5:10 (6th ed. 2022).

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   that was “worse than negligent but less than malicious,” Exxon, 554 U.S. at
   510–11.5
            As summarized in the preceding section, Kenai presented sufficient
   evidence and testimony to support the district court’s finding that
   Defendants’ conduct was in bad faith, in callous disregard for the safety of
   the people aboard the vessels, and in reckless disregard of Kenai’s rights.
   Hence, the district court did not clearly err in finding facts sufficient to
   support an award of punitive damages.

            5
             The Court in Townsend noted that maritime punitive damages are available in a
   wide variety of circumstances as exemplified in maritime law’s earliest cases, citing, for
   example, Boston Manufacturing Co. v. Fiske, 3 F. Cas. 957, 957 (Story, Circuit Justice, C.C.
   Mass. 1820) (No. 1,681) (“In cases of marine torts, or illegal captures, it is far from being
   uncommon in the admiralty to allow costs and expences, and to mulct the offending parties,
   even in exemplary damages, where the nature of the case requires it[.]”). Townsend, 557
   U.S. at 411–12.
            In short, prior to enactment of the Jones Act in 1920, “maritime
            jurisprudence was replete with judicial statements approving punitive
            damages, especially on behalf of passengers and seamen.” Robertson,
            Punitive Damages in American Maritime Law, 28 J. Mar. L. & Comm. 73,
            115 (1997) (hereinafter Robertson); see also 2 Sedgwick § 599b, at 1156
            (“Exemplary damages are awarded in Admiralty, as in other
            jurisdictions”); 2 J. Sutherland, Law of Damages § 392, p. 1272 (4th ed.
            1916) (“As a rule a court of equity will not award [punitive] damages, but
            courts of admiralty will . . .” (footnote omitted)).
   Id. at 412.
           Townsend cited with approval Professor Robertson’s article which discussed the
   general availability of punitive damages in admiralty. Id. Professor Robertson’s article
   surveyed a variety of early maritime cases recognizing such awards. 28 J. Mar. L. & Com.
   at 88–115. Two such cases involved conversion, id. at 114–15, and one dealt with a
   steamboat that “deliberately rammed its rival, causing relatively slight property damage
   and no personal injuries,” id. at 90.

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               B. Was there legal error?
                   1. Is Exxon v. Baker’s ratio absolute?
            “A district court’s damages award is a finding of fact, which this court
   reviews for clear error.” Comar Marine, 792 F.3d at 574 (quoting Jauch v.
   Nautical Servs., Inc., 470 F.3d 207, 213 (5th Cir. 2006) (per curiam)). But,
   “[d]espite this court’s typical deference to a district court’s factual findings,
   ‘a judgment based on a factual finding derived from an incorrect
   understanding of substantive law must be reversed.’” Barto, 801 F.3d at 471
   (quoting Mobil Expl. and Producing U.S., Inc. v. Cajun Const. Servs., Inc., 45
   F.3d 96, 99 (5th Cir. 1995)). Thus, this court reviews de novo the legal
   questions of whether Exxon’s 1:1 ratio applies in all maritime cases, and
   whether that ratio should have been applied by the district court, regardless
   of its specific factual findings as to Defendants’ level of culpability and the
   amount of harm done to Kenai.
            According to Defendants, Exxon held that “a 1:1 [punitive damage to
   compensatory damage] ratio . . . is a fair upper limit in such maritime cases.”
   554 U.S. at 513. Thus, Defendants argue, since no compensatory damages
   were awarded here, any punitive damage award impermissibly exceeds the
   ratio.
            Plaintiff offers three reasons why Defendants’ position is wrong. First,
   Exxon’s 1:1 ratio does not apply in this case because it only applies in cases
   involving gross negligence and only where the compensatory damages are
   significant. Here, Defendants’ conduct was intentional and malicious, and
   the district court “limited [compensatory damages] to attorney’s fees.”
   Second, Plaintiff maintains that if Exxon does require compensatory damages
   as a prerequisite to an award of punitive damages, the attorney’s fees
   awarded by the district court were compensatory. Finally, even if attorney’s
   fees cannot be considered compensatory, the district court’s punitive

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   damage award recognized and was measured by the harm that Plaintiff
   suffered from Defendants’ five-day seizure and detention of its vessel. Thus,
   the punitive damage award “was, in fact, compensatory – or at the very least,
   it had . . . a compensatory flavor[.]”
          Regarding Plaintiff’s first argument, this court has not had occasion to
   consider whether Exxon’s 1:1 ratio applies in all cases or only in cases “like”
   Exxon, involving “reckless action, profitless to the tortfeasor, resulting in
   substantial recovery for substantial injury[,]” and where the conduct was
   “worse than negligent but less than malicious.” Exxon, 554 U.S. at 510–11.
   Nor, to our knowledge, have the other federal courts of appeal or district
   courts. Some state courts, however, have.
          The majority of the cases that have squarely considered whether
   Exxon sets a hard rule applicable to all cases hold that it does not. See, e.g.,
   Clausen v. Icicle Seafoods, Inc., 272 P.3d 827, 835 (Wash. 2012), cert. denied,
   568 U.S. 823 (2012) (“The Exxon case cannot be read as establishing a broad,
   general rule limiting punitive damage awards, primarily because nowhere in
   the opinion can such a rule be found.”); McWilliams v. Exxon Mobil Corp.,
   2012-1288 (La. App. 3 Cir. 4/3/13), 111 So. 3d 564, 579, writ denied, 2013-
   1402 (La. 11/8/13), 125 So. 3d 451 (Exxon “did not establish a general rule
   pertaining to punitive damages, but rather, narrowly tailored that result to
   the unique case before it.”); Colombo v. BRP US Inc., 179 Cal. Rptr. 3d 580,
   606 (Cal. Ct. App. 2014) (“[W]e conclude that the [C]ourt [in Exxon] did not
   intend to create . . . a bright-line rule limiting punitive damages to the amount
   of compensatory damages awarded to a plaintiff.”); Warren v. Shelter Mut.
   Ins. Co., 2016-1647 (La. 10/18/17), 233 So. 3d 568, 590 (“[W]e find the Court
   in Exxon was expressly attempting to set a ‘fair upper limit’ for punitive
   damages ‘in cases with no earmarks of exceptional blameworthiness . . . .’”
   (quoting Exxon, 554 U.S. at 513)). In a Winter 2021 article surveying the

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   jurisprudence on this issue, Professor Thomas C. Galligan, Jr. summarized
   the case law as follows:
           To recap, virtually all of the courts that have meaningfully
           discussed the impact of Exxon’s statement concerning the 1:1
           ratio of punitive to compensatory damages have refused to
           treat it as a per se rule applicable in all admiralty cases. Rather
           than emphasizing the broad scope of Justice Souter’s review of
           the relevant social science data on punitive damages, the lower
           courts have emphasized the limiting language in Justice
           Souter’s opinion. That is, the lower courts have treated the 1:1
           ratio as the precise holding of the Exxon case, a holding
           applicable to the facts before the Court. At most, the courts
           have treated Exxon as a rule for cases “like” Exxon. Those are
           cases where the defendant’s conduct constituted recklessness
           or gross negligence and not worse, such as willful, wanton,
           malicious, arbitrary, capricious, or intentional wrongdoing.
           Additionally, Exxon was a case in which the damage was not
           difficult to detect—it was substantial and overt. It was also a
           case where the compensatory damages, fines and penalties,
           cleanup costs, and settlements of claims were substantial, even
           gargantuan. Moreover, Exxon was a case in which the
           defendant’s behavior—not taking action to relieve a known,
           relapsed alcoholic of command of an oil tanker—was not
           motivated by profit.
   Thomas C. Galligan, Jr., There Are More Things to Punitive Damages in
   Admiralty Than the 1:1 Ratio Set Forth in Exxon’s Legal Philosophy, 81 La. L.
   Rev. 395, 420–21 (2021).6

           6
             Galligan’s article argues that the appropriate reading of Exxon is that it created a
   variable, multi-factor approach to punitive damages in maritime cases, rather than a
   universal 1:1 rule. The variable approach is supported by a careful reading of Exxon itself,

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             Schoenbaum’s treatise, on the other hand, states without elaboration
   that Exxon “ruled that ‘a punitive to compensatory ratio of 1:1 . . . yields
   maximum punitive damages[ ]’” and that “[t]his ratio, the Court held,
   constitutes a ‘fair upper limit’ for maritime punitive damage awards.”
   Schoenbaum, supra, at § 5:10. Schoenbaum cites for this proposition Norfolk
   & Portsmouth Belt Line Railroad Co. v. M/V MARLIN, No. 08-134, 2009 WL
   1974298, at *4 (E.D. Va. Apr. 3, 2009), and Priyanto v. M/S Amsterdam, No.
   07-3811, 2009 WL 1202888 (C.D. Cal. Apr. 30, 2009). But neither cited case
   dealt directly with the issue here: whether Exxon’s 1:1 ratio applies in all
   cases.7
             Notably, Professor Galligan discusses Norfolk & Portsmouth at length.
   81 La. L. Rev. at 407–09. He concludes that Norfolk & Portsmouth
   “essentially stands alone.” Id. at 409.

   the desirability of flexibility in imposing punitive damages for purposes of adequate
   punishment and efficient deterrence, and the jurisprudence since Exxon.
   81 La. L. Rev. at 395. See also Erin L. Brooks, A Rule Old and New, Borrowed and Blue:
   Exxon Adapts State Punitive Liability Law to Craft New Interpretation in Admiralty, 54 St.
   Louis U. L.J. 357, 380 (2009) (“Under Exxon, punitive damages must only be limited in
   precise proportion to actual damages when the conduct is not exceptionally blameworthy
   (intentional, malicious, or driven for gain) or when it is without ‘modest economic harm or
   [low] odds of detection.’”) (citing Exxon, 554 U.S. at 513).
             7
              For example, in Norfolk & Portsmouth, a maritime allision case, the court denied
   plaintiff’s motion to amend its complaint to add a claim for damages pursuant to a Virginia
   punitive damage statute that provided for a “strict and inflexible [3:1] ratio of punitive
   damages to actual or compensatory damages . . . [which] automatically applied . . . .” 2009
   WL 1974298, at *4. The court denied plaintiff’s motion to amend because Virginia’s
   “automatic punitive damage remedy in the form of triple damages is inconsistent with
   Exxon’s 1:1 ratio . . . and therefore conflicts with the general maritime law.” Id. But while
   Norfolk & Portsmouth did not confront the precise issue of whether Exxon created a hard
   cap on all maritime punitive damage awards, it suggested in dicta that it did not. See id. at
   *3 (characterizing Exxon’s holding as, “except for the most extreme cases, the maximum
   permissible ratio is likely 1:1.” (emphasis added) (citing Exxon, 554 U.S. at 514–15)).

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          We hold that the majority position is the correct reading of Exxon for
   the following reasons. First, the language of Exxon itself strongly suggests
   that the 1:1 ratio applies, to use the words of the Court, in “cases like [that]
   one,” 554 U.S. at 513, which was described as “a case of reckless action,
   profitless to the tortfeasor, resulting in substantial recovery for substantial
   injury[,]” id. at 510–11. The court further defined Exxon’s conduct as
   “worse than negligent but less than malicious.” Id. at 510.
          Second, there is nothing in the Supreme Court’s subsequent maritime
   punitive damage cases suggesting that 1:1 is a hard and inflexible rule. In
   Townsend, decided a year later, the Court considered this an open question.
   See Townsend, 557 U.S. at 424 n.11 (“Nor have petitioners argued that the
   size of punitive damages awards in maintenance and cure cases necessitates
   a recovery cap, which the Court has elsewhere imposed. We do not decide
   these issues.” (internally citing Exxon, 554 U.S. at 514–15)).
          Third, where the conduct is intentional and malicious, and the
   compensatory damages are small, imposing the 1:1 ratio would do little to
   serve the twin purposes of punitive damages: to punish the wrongdoer and
   deter his and others’ similar future conduct. Exxon, 554 U.S. at 492 (“[T]he
   consensus today is that punitives are aimed not at compensation but
   principally at retribution and deterring harmful conduct.”).
          Defendants’ conduct here, unlike that in Exxon, was intentional: the
   ramming of the SUPER T and its tow, the IRON DON. It was not done for
   purposes of safety but in anger. (See, e.g., Dardar’s threat that “[i]f I had my
   shotgun, you’d be dead.”). The district court found that Defendants’
   conduct displayed “callous disregard for the safety of the people aboard the
   vessels” and was “in bad faith and with wanton disregard of the legal rights
   of Plaintiff.” As reviewed above, there is no clear error in this finding.
   Furthermore, unlike Exxon, where the compensatory damages were massive,

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                                           No. 22-30311

   the harm suffered by the five-day delay in the return of Kenai’s vessel was
   relatively small.8
                    2. Do punitive damages require compensatory damages?
           We need not resolve this issue now. As explained below, it is unclear
   whether the district court intended her award to be compensatory, at least in
   part. Because we remand to the district court for clarification on that issue,
   we pass on this thornier question.
                    3. Was this attorney’s fee award compensatory?
           Kenai contends that, even if a compensatory damage award is
   necessary in order to obtain punitive damages, the attorney’s fees were
   awarded as compensatory damages. Defendants cite Budinich v. Becton
   Dickinson & Co., 486 U.S. 196, 200 (1988) for the proposition that “[a]s a
   general matter . . . a claim for attorney’s fees is not part of the merits of the
   action to which the fees pertain.” Therefore, contend Defendants, the
   attorney’s fees awarded by the district court were awarded as costs and not
   damages and cannot form a foundation for the award of punitive damages.
   Defendants maintain that The Apollon, 22 U.S. 362 (1824), relied on by Kenai,
   is inapposite in that here, unlike in Apollon, there was no proof of attorney’s
   fees offered at trial.
           While there is some basis for Kenai’s position as a general proposition,
   it ultimately falls short under the law governing wrongful arrest and the facts

           8
             Awards of punitive damages are, of course, constrained by “[t]he Due Process
   Clause of the Fourteenth Amendment [which] prohibits the imposition of grossly excessive
   or arbitrary punishments on a tortfeasor.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538
   U.S. 408, 416 (2003). See also TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 446
   (1993); Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867, 884–85 (5th Cir. 2013), cert denied
   sub nom., Accenture, L.L.P. v. Wellogix, Inc., 573 U.S. 904 (2014); Lincoln v. Case, 340 F.3d
   283, 292 (5th Cir. 2003).

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   of this case. We have stated the following about the award of attorney’s fees
   as damages in wrongful seizure cases:
          The reasons for the award of [such] damages are analogous to
          those in cases of malicious prosecution. The defendant is
          required to respond in damages for causing to be done through
          the process of the court that which would have been wrongful
          for him to do himself, having no legal justification therefor and
          acting in bad faith, with malice, or through a wanton disregard
          of the legal rights of his adversary.
   Frontera Fruit Co. v. Dowling, 91 F.2d 293, 297 (5th Cir. 1937).
          Thus, by way of analogy, for common law malicious prosecution
   actions, “[c]ompensatory damages for tangible losses or harm normally
   include reasonable attorney fees and other expenses incurred in defending
   the wrongful criminal or civil litigation or avoiding or quashing abusive
   process . . . .” Dobbs, Hayden, & Bublick, supra, at § 596; cf. also Hale v. Fish,
   899 F.2d 390, 403–04 (5th Cir. 1990) (reinstating § 1983 plaintiff’s award of
   $25,000 “for the amount expended in his defense of the criminal charges
   against him”).
          Such awards are more properly categorized as compensatory damages
   only when they were incurred as “collateral legal expenses”—defined as
   attorneys’ fee outlays incurred in some way other than the proceeding in
   which the attorneys’ fee award is being sought . . . .” David W. Robertson,
   Court-Awarded Attorneys’ Fees in Maritime Cases: The “American Rule” in
   Admiralty, 27 J. Mar. L. & Com. 507, 511 (1996) (emphasis added).
   However, many courts make such awards without drawing this distinction.
   See id. at 539 (citing, inter alia, State Bank & Tr. Co. of Golden Meadow v. Boat
   D.J. Griffin, 755 F. Supp. 1389 (E.D. La. 1991)).
          Here, since the attorney’s fees awarded were in connection with
   services rendered in this case, there was no other proceeding in which

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   attorney’s fees were incurred and thus, no “collateral legal expenses.” The
   magistrate judge’s recommendation limited the attorney’s fees in large
   measure to that part of the case dealing with the wrongful seizure (excluding
   the fees incurred in connection with the unsuccessful breach of contract
   claim). Still, the fees awarded were earned in this, not a collateral, proceeding
   and, therefore, may not properly be considered compensatory damages.9
                   4. Was the punitive damage award partly compensatory?
           In connection with its argument on prejudgment interest, Kenai
   argues that the language and reasoning of the district court’s award of
   punitive damages shows that the award was intended to be compensatory, at
   least in part. Defendants maintain the award was “entirely punitive” because
   “the district court found that Kenai suffered no damage from delay at CP
   Marine’s shipyard.”
           In this case, the district court’s ruling strongly suggests that the
   punitive damages award was intended, at least in part, to compensate Kenai
   for the five-day loss of its vessel:
           Although the Court finds that Defendants’ performance was
           not dilatory and did not cause Plaintiff’s late arrival in Alaska,
           Defendants’ wrongful detention of Plaintiff’s vessel plainly delayed
           Plaintiff by five days. Therefore, as a measure of punitive
           damages, the Court will award Plaintiff the value of its missed
           contract days for the days that Defendants wrongfully detained
           the vessel.
           Here, the district court found that Defendants converted Plaintiff’s
   vessel for five days. The district court’s discussion of Defendants’ bad faith

           9
             We again note that Defendants’ separate appeal of the attorney’s fees award was
   dismissed for want of prosecution. Kenai Ironclad, 2022 WL 18776210, at *1. Thus, this
   award is final.

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                                     No. 22-30311

   conduct in the court’s Conclusions of Law is entitled “Wrongful Arrest and
   Conversion.”
          “Under the general maritime law, as under the common law of torts,
   a person may be liable for certain intentional wrongs, such as conversion[.]”
   Schoenbaum, supra, at § 5:3 (citing The Lydia (Hugh D. MacKenzie Co. v.
   Steamship Lydia), 1 F.2d 18 (2d Cir. 1924)). The Fifth Circuit looked to the
   “landside context” for this maritime tort to define it as “the unlawful and
   wrongful exercise of dominion, ownership or control over the property of
   another, to the exclusion of the same rights by the owner.” Goodpasture, Inc.
   v. M/V Pollux, 602 F.2d 84, 87 (5th Cir. 1979) (citing Bankers Life Ins. Co. v.
   Scurlock Oil Co., 447 F.2d 997, 1004 (5th Cir. 1971) (applying Texas law)).
   See also 4 H Const. Corp. v. Superior Boat Works, Inc., 659 F. Supp. 2d 774,
   780 (N.D. Miss. 2009), aff’d, 579 F. App’x 278 (5th Cir. 2014) (finding
   Mississippi state law of conversion relevant because its application “would
   not interfere with the uniformity or characteristic features of admiralty and
   maritime law[]”); Restatement (Second) of Torts § 222A (Am. L. Inst.
   1965) (defining “conversion” as “an intentional exercise of dominion or
   control over a chattel which so seriously interferes with the right of another
   to control it that the actor may justly be required to pay the other the full
   value of the chattel.”).
          Some courts have found that maritime law requires a finding of bad
   faith to establish conversion, at least in the context of wrongful attachment.
   See Furness Withy (Chartering), Inc., Panama v. World Energy Sys. Assocs., Inc.,
   854 F.2d 410, 412 & n.6 (11th Cir. 1988). See also Comar Marine, 792 F.3d at
   575 n.32 (citing Furness with approval in describing burden of proving
   wrongful seizure and stating that it requires showing of bad faith). See also
   Restatement (Second) of Torts § 222A (identifying good faith as one of six
   “important” factors “[i]n determining the seriousness of the interference
   and the justice of requiring the actor to pay the full value”). Ultimately, the

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   exact contours of the maritime tort of conversion need not be defined here,
   as the district court correctly found that Defendants wrongfully exercised
   control over Kenai’s vessel to Kenai’s exclusion and that Defendants did so
   in bad faith.10
           Defendants argue that despite the district court’s finding that
   Defendants converted Kenai’s vessel resulting in its loss of use for five days
   and despite the court’s use of the vessel’s daily rate as the measure of
   punitive damages, the court’s award was in no way compensatory. While the
   district court’s reference to the tort of conversion tends to support Kenai’s
   position that the award is in part compensatory, there is some ambiguity in
   the trial court’s decision. As a result, we remand for clarification. If the award
   was intended to be compensatory in part, the court should make clear its
   delineation of compensatory and punitive damages.
       III. Did the district court err in awarding pre-judgment interest?
           Defendants urge that the district court erred in awarding prejudgment
   interest, as it is not allowed under Louisiana law or federal law.11 Kenai
   responds that, while “prejudgment interest is not [generally] applicable to
   punitive damages awards under maritime cases[,]” the award here is actually

           10
               The district court called this an act of conversion, but there is some authority
   that this is perhaps more accurately called trespass to chattel. See Restatement (Second) of
   Torts § 222A cmt. c (distinguishing between two torts and explaining that conversion
   entitled plaintiff to “full value of the chattel” while trespass to chattel allows a plaintiff to
   “recover for the diminished value of his chattel because of any damage to it, or for the
   damage to his interest in its possession or use” (emphasis added)). Again, the exact contours
   of the tort need not be fully explored, as, either way, Kenai is entitled to compensation for
   the loss of use of its property.
           11
              Defendants also argue that the district court’s judgment did not grant
   prejudgment interest on the award of attorney’s fees, but, to the extent that it did so, this
   was inappropriate. This is not before the court since the attorney’s fee award was appealed
   separately and dismissed for want of prosecution.

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   compensatory in nature, at least enough so to justify an award of prejudgment
   interest. Kenai points the panel to Illinois Central Railroad Co. v. Texas
   Eastern Transmission Corp., 551 F.2d 943 (5th Cir. 1977), where the court
   affirmed pretrial interest on demurrage although the demurrage award was
   partly punitive in nature.
            Defendants dispute Kenai’s allegation that the punitive damages
   award was partly compensatory because “the district court found that Kenai
   suffered no damage from delay at CP Marine’s shipyard.” This, argue
   Defendants, is a critical fact that distinguishes Illinois Central.
            “As a general rule, prejudgment interest should be awarded in
            admiralty cases—not as a penalty, but as compensation for the
            use of funds to which the claimant was rightfully entitled.” The
            district court has discretion to deny prejudgment interest
            “only when there are ‘peculiar circumstances’ that would
            make it inequitable for the losing party to be forced to pay
            prejudgment interest.”
   Comar Marine, 792 F.3d at 580 (quoting Noritake, 627 F.2d at 728–29). See
   also In re Signal Int’l, LLC, 579 F.3d 478, 500 (5th Cir. 2009) (citing Corpus
   Christi Oil & Gas Co. v. Zapata Gulf Marine Corp., 71 F.3d 198, 204 (5th
   Cir.1995)).
            As discussed earlier, we are unable to resolve this issue because it is
   unclear whether the district court intended the punitive damages award to be
   in part compensatory. If, as in Illinois Central, it was intended to be partly
   compensatory, the district court’s grant of prejudgment interest was
   appropriate. The case is remanded to the district court for clarification of this
   issue.

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                                     No. 22-30311

                                 CONCLUSION
          In sum: we AFFIRM the district court’s finding that Defendants
   wrongfully seized and converted Kenai’s vessel in bad faith and in a manner
   egregious enough to warrant an award of punitive damages. We VACATE
   the district court’s award of damages and REMAND on the limited basis of
   clarifying the court’s award, specifying whether any part of the award was
   intended as compensatory damages and, if so, in what amount. In doing so,
   the district court should make whatever findings of fact and conclusions of
   law are necessary to arrive at its decision. Additional briefing of the parties is
   strongly encouraged. Whatever the decision of the district court, it will not
   be necessary for the parties to file a new notice of appeal in order to obtain
   appellate review of that decision. The parties need only file certified copies
   of the district court’s ruling plus any supplementary briefs and materials. The
   matter will then be referred to this panel. See United States v. Gaston, 608
   F.2d 607, 614 n.3 (5th Cir. 1979); Chaney v. Schweiker, 659 F.2d 676, 679 n.5
   (5th Cir. 1981); Royal Bank of Canada v. Trentham Corp., 665 F.2d 515, 519
   (5th Cir. 1981).

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