Court Opinion

ID: 4510697
Source: CourtListenerOpinion
Date Created: 2020-02-27 01:00:22.937044+00
Date Added: 2024-06-11T12:13:40.562594
License: Public Domain

Case: 19-30313   Document: 00515322574     Page: 1   Date Filed: 02/26/2020

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                               United States Court of Appeals
                                                                        Fifth Circuit

                                 No. 19-30313
                                                                      FILED
                                                               February 26, 2020
                                                                 Lyle W. Cayce
GENESIS MARINE, L.L.C. OF DELAWARE,                                   Clerk

             Plaintiff - Appellant Cross-Appellee

v.

HORNBECK OFFSHORE SERVICES, L.L.C.,

             Defendant - Appellee Cross-Appellant

                Appeals from the United States District Court
                    for the Eastern District of Louisiana

Before KING, COSTA, and HO, Circuit Judges.
JAMES C. HO, Circuit Judge:
      Following a bench trial for breach of contract in admiralty, the district
court denied both parties attorney’s fees. Both parties now appeal seeking fees.
We affirm.
                                       I.
      In 2013, Hornbeck Offshore Services sold nine sea vessels to Genesis
Marine, a commercial operator of tugboats and barges. At the time, Hornbeck
already had charter agreements for the vessels in place with third-party
customers. In order to continue providing services to these existing customers
without interruption, Genesis and Hornbeck entered into a series of contracts.
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                                   No. 19-30313
         First, the parties entered into a crew management (“crewman”)
agreement. Under the crewman agreement, Hornbeck would staff all vessels
with appropriate crew, billing Genesis for the costs of personnel.

         A second set of contracts concerned ship management (“shipman”) fees.
Each vessel had its own shipman agreement. Under the terms of the shipman
contracts, Genesis agreed to pay Hornbeck $2,250 per vessel per day for
management services, as well as expenses and fees for certain enumerated
technical services. Each shipman agreement was to last twelve months and
contained a termination clause in case Genesis sought to exit the contract
early.

         The third agreement was a set of “back-to-back” contracts, again
particularized to each vessel. Hornbeck agreed to continue honoring existing
charters for its current customers and to provide services until the charters
could either be assigned to Genesis or Genesis entered into new agreements
altogether. Hornbeck agreed to staff and operate the vessels it had just sold to
Genesis, collect payment for charters, and then remit the funds back to Genesis
within ten days. In this case, the relevant back-to-back agreement concerns
Hornbeck and its preexisting charter customer Anadarko Petroleum
Corporation (“Anadarko”).

         The back-to-back agreement in turn incorporated and was made subject
to provisions of the “Master Time Charter” between Hornbeck and Anadarko.
The Master Time Charter included, in relevant part, a paragraph stating:

         If the Master Agreement is placed in the hands of an attorney on account
         of any dispute under the Master Agreement, or if suit is brought on same,
         or if sums due under the Master Agreement are collected through
         bankruptcy or probate proceedings, then the prevailing party shall be
         entitled to recover reasonable attorneys’ fees and costs from the other
         party.

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                                  No. 19-30313
The Master Time Charter also specified that Genesis would be responsible for
paying Hornbeck costs for fuel, lube, and shorebase (“FLS”) services.

      Genesis sought to terminate all the shipman agreements. A dispute over
the propriety of termination resulted in litigation. Under the back-to-back
agreement, Genesis sued for breach of contract for the unpaid balance on the
Anadarko charter hire, for a total of $722,346.36.          Hornbeck replied with
affirmative defenses of setoff and accord and satisfaction, and argued that
Genesis had an outstanding balance of $117,284.54 for FLS services. Hornbeck
further asserted counterclaims for unpaid management fees totaling nearly $3
million under the various shipman agreements.

      Following a bench trial, the district court dismissed the shipman fees
counterclaims and rendered judgment in favor of Genesis for $722,346.35 for
the unpaid charter hire.     The district court also awarded $117,284.54 to
Hornbeck for FLS services.

      Both parties asked for attorney’s fees as the “prevailing party.” The
district court denied fees, reasoning that: (1) fees were not authorized by the
shipman agreement, which controlled the litigation, and, in the alternative, (2)
both Genesis and Hornbeck were prevailing parties, thus nullifying any award.

                                        II.

      “Factual determinations underlying the denial of fees are reviewed for
clear error; legal conclusions, including whether a party is ‘prevailing’ . . . are
reviewed de novo.” Grisham v. City of Fort Worth, 837 F.3d 564, 568 (5th Cir.
2016). The actual award of attorney’s fees is reviewed for abuse of discretion.
Mathis v. Exxon Corp., 302 F.3d 448, 461 (5th Cir. 2002).

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                                        III.

      “The general rule in admiralty is that attorneys’ fees are not recoverable
by the prevailing party.” Delta Steamship Lines, Inc. v. Avondale Shipyards,
Inc., 747 F.2d 995, 1011 (5th Cir. 1984). But parties are entitled to contract
for attorney’s fees in the event of a dispute. See Alyeska Pipeline Serv. Co. v.
Wilderness Soc’y, 421 U.S. 240, 257 (1975). This appeal asks us, for the first
time, to determine what constitutes a “prevailing party” in the context of a
maritime contract dispute.

      Neither the Supreme Court nor our circuit has addressed this question
within the specific context of a maritime dispute. But the Court has explained
what constitutes a “prevailing party” in non-maritime contexts. Under 42
U.S.C. § 1988, a “plaintiff ‘prevails’ when actual relief on the merits of his claim
materially alters the legal relationship between the parties by modifying the
defendant’s behavior in a way that directly benefits the plaintiff.” Farrar v.
Hobby, 506 U.S. 103, 111–12 (1992). See also Grisham, 837 F.3d at 568 (“The
‘touchstone’ of the prevailing party analysis is whether there has been ‘a
material alteration of the legal relationship’ between the parties.”) (citations
omitted). And “[a] judgment for damages in any amount . . . modifies the
defendant’s behavior for the plaintiff’s benefit by forcing the defendant to pay
an amount of money he otherwise would not pay.” Farrar, 506 U.S. at 113.

      This understanding of “prevailing party” in the § 1988 context guides our
decision here. We see no reason to apply a different definition in the maritime
context. We therefore adopt the same definition of “prevailing party” here as
in the § 1988 context.

      Under this definition, Genesis has prevailed. It has obtained a judgment
for $722,346.35 that materially alters the relationship between the parties and

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places Hornbeck in Genesis’s debt. But Hornbeck has prevailed as well. It has
obtained a $117,284.54 judgment that “forc[es] [Genesis] to pay an amount of
money [it] otherwise would not pay.”

       Consequently, there are two prevailing parties. See Fox v. Vice, 563 U.S.
826, 835 (2011) (concluding, in the § 1988 context, that “a court could properly
award fees to both parties” when a plaintiff prevailed on one claim and when
a defendant defeated a separate, frivolous claim). And given that fact, the
district court was entitled in its discretion to make an assessment as to the
reasonableness of awarding fees to both parties or, conversely, neither. See
Cable Marine, Inc. v. M/V Trust Me II, 632 F.2d 1344, 1345 (5th Cir. 1980)
(per curiam) (concluding that “a court in its sound discretion may decline to
award attorney’s fees authorized by a contractual provision when it believes
that such an award would be inequitable and unreasonable”); Malin Int’l Ship
Repair & Drydock, Inc. v. M/V SEIM SWORDFISH, 611 F. Supp. 2d 627, 634
(E.D. La. 2009) (noting that the Fifth Circuit “has recognized the discretion of
a maritime court to adjust a contract-based fee award for reasonability”).

       The district court here concluded that, because both parties prevailed,
neither should be awarded attorney’s fees. It did not abuse its considerable
discretion in so deciding. Because we affirm on this basis, we do not consider
the district court’s alternative rationale that the shipman agreements did not
authorize fees. 1

       1  In addition, Hornbeck makes a last-ditch attempt to argue that Genesis is not
entitled to attorney’s fees because it failed to submit to arbitration per the Master Time
Charter. Hornbeck alleges that, by failing to go to an arbitrator first as required under
Paragraph 1312 of the contract, Genesis forfeited its right to fees. But as Hornbeck concedes,
it never invoked arbitration at any point in prior proceedings. It cannot do so for the first
time on appeal. See Miller Brewing Co. v. Fort Worth Distrib. Co., Inc., 781 F.2d 494, 497
(5th Cir. 1986).
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                                 ***

 The denial of attorney’s fees is affirmed.

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