Comar Marine, Corp. v. Raider Marine Logistics, L.L.C.
792 F.3d 564
5th Cir.2015Background
- Comar Marine entered vessel-management agreements with four vessel-owning LLCs (Owners) to market, operate, and manage vessels for a fee (greater of $3,000/month or 10% of gross income) and reimbursement of expenses; agreements included a clause asserting a maritime lien for unpaid fees.
- Owners (through principals St. Amand and Lirette and affiliated LLCs) terminated the management agreements early and contracted with another manager; Comar sued for breach and sought arrests of the four vessels asserting maritime liens and termination fees (~$1.15M).
- JPMorgan and Allegiance (preferred mortgagees) intervened; district court granted summary judgment to the banks that Comar had no maritime liens on the vessels; Comar appealed that interlocutory ruling as to JPMorgan.
- After a bench trial the district court found: Owners materially breached; the contract termination-fee provision was an unenforceable penalty; awarded Comar $3,000/month per vessel from termination to contract end; Comar wrongfully arrested the vessels and acted in bad faith; principals personally guaranteed the agreements; court denied prejudgment interest.
- On appeal, the Fifth Circuit affirmed: no maritime lien arising from the management agreements; termination fee penal and unenforceable; $3,000/month damages upheld; wrongful arrests established and Owners’ damage claims insufficiently proven; guaranties and denial of prejudgment interest affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether breach of the management agreements gave rise to maritime liens | Comar: agreements functionally equivalent to bareboat or charter parties and thus create maritime liens | Banks/Owners: management agreements differ materially from charters; liens not historically recognized for such contracts | No maritime lien; management agreements do not give rise to maritime liens; summary judgment for banks affirmed |
| Enforceability of termination-fee (liquidated damages) | Comar: formula (50% of projected management fees) reasonably estimates loss given market volatility and 50% utilization discount | Owners: fee is excessive, does not account for costs saved on termination, and binds multiple contracts—penal | Termination fee is a penalty and unenforceable; court awards alternative damages based on $3,000 monthly minimum |
| Wrongful arrest and good-faith basis for arrest | Comar: arrests were based on advice and asserted outstanding expenses/accounts receivable giving rise to liens | Owners: no bona fide maritime lien existed and Comar acted in bad faith and without probable cause | Comar wrongfully arrested vessels and acted in bad faith; district court’s findings not clearly erroneous |
| Whether principals personally guaranteed obligations; evidentiary sufficiency of Owners’ damages and prejudgment interest | Owners: principals did not sign as guarantors of the LLCs; arrest caused lost profits/equity and merits prejudgment interest | Comar: signatures and contract language show personal guaranties; damages speculative; no peculiar circumstances to award interest | Court correctly found principals personally guaranteed obligations; Owners failed to prove lost-profit/equity damages with reasonable certainty; denial of prejudgment interest upheld as within discretion |
Key Cases Cited
- Walker v. Braus, 995 F.2d 77 (5th Cir. 1993) (definition and characteristics of bareboat/demise charters)
- Int’l Marine Towing, Inc. v. S. Leasing Partners, Ltd., 722 F.2d 126 (5th Cir. 1983) (breach of charter party can give rise to maritime lien)
- Reed v. S.S. Yaka, 373 U.S. 410 (U.S. 1963) (services performed on board primarily for charterer’s benefit in demise charters)
- Piedmont & George’s Creek Coal Co. v. Seaboard Fisheries Co., 254 U.S. 1 (U.S. 1920) (maritime liens stricti juris; rely on historic recognition/statute)
- Louis Dreyfus Corp. v. 27,946 Long Tons of Corn, 830 F.2d 1321 (5th Cir. 1987) (test for when liquidated damages constitute a penalty)
- The Conqueror, 166 U.S. 110 (U.S. 1897) (measure of damages for vessel detention and proving lost profits)
- Noritake Co. v. M/V Hellenic Champion, 627 F.2d 724 (5th Cir. 1980) (prejudgment interest presumptively awarded in admiralty; "peculiar circumstances" exception)