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TAJ Al Khairat, Ltd. v. Swiftships Shipbuilders, L.L.C

United States District Court, W.D. Louisiana, Lafayette Division

February 3, 2015

Taj Al Khairat, Ltd
Swiftships Shipbuilders, L.L.C


RICHARD T. HAIK, Sr. District Judge.

Before the Court is a Motion For Summary Judgment filed by plaintiff, Taj Al Khairat, Ltd ("Taj") [Rec. Doc. 24], defendant, Swiftships Shipbuilders, L.L.C.'s ("Swiftships") Opposition thereto [Rec. Doc. 29], and Taj's Reply thereto [Rec. Doc. 33]. For the reasons that follow, the Court will grant Taj's motion.

I. Background

Taj is an Iraqi limited partnership involved in investment in, management of and consulting on projects in various industries in Iraq and the broader Middle East. On or about August 16, 2011, Taj entered into a Settlement Agreement with Swiftships to resolve disputes arising under a Master Pledge Agreement ("MPA") entered into between affiliates of Taj and Swiftships in March 2010. The Settlement Agreement was executed by Calvin Leleux, the owner of Swiftships at that time, and Saifaldin D. Rahman ("Rahman"), the U.S. representative of Taj through it's U.S. subsidiary, Crown Contracting, Inc. Rahman, as a director of Taj, was authorized to execute agreements on behalf of Taj, but had no ownership interest in Taj.

The Settlement Agreement contained a choice-of-law provision providing that the Settlement Agreement "shall be governed by the laws of the State of Texas." Under the Settlement Agreement, Swiftships was obligated to pay Taj a lump sum in the amount of $5, 250, 000 by December 1, 2011, or to pay a series of monthly installments beginning on March 1, 2012, ending on October 1, 2013, and totaling $6, 800, 000 according to a payment schedule attached to the Settlement Agreement. Swiftships made only one payment of $100, 000 to Taj under the Settlement Agreement, and failed to make any other monthly installment payments totaling $6, 700, 000 due between April 1, 2012 and October 1, 2013. Under the Settlement Agreement, Taj was entitled to a default judgment against Swiftships for failure to make timely payments under the agreed schedule. Swiftships expressly waived the right to contest entry of such a default judgment in the Settlement Agreement.

In October 2012, Swiftships entered into a contract with the South Oil Company in Iraq to build and supply two maintenance vessels to the South Oil Company (the "SOC Contract"). Rahman, who is an officer of IWG, Inc. ("IWG"), assisted Swiftships in winning the SOC Contract. IWC provides consulting, logistics and construction services to non-Iraqi companies which do business in Iraq. IWG and Taj are not affiliated. In February 2013, Swiftships and IWG entered into a Master Service Agreement ("MSA") pursuant to which Swiftships agreed to pay IWG to advise and support Swiftships in the performance of its obligations under the SOC Contract. A choice-of-law provision in the MSA provides that New York law governs the agreement. The MSA contains a merger clause which states:

this Agreement, together with all Statements of Work, Exhibits, and attachments hereto constitutes the entire agreement between the parties and supersedes any oral promises, proposals, representations, understandings and negotiations between the parties respecting the subject matter hereof.

R. 24, Ex. 7, MSA § 15.11.

ICS Marine, Inc. ("ICS Marine"), acquired a 51% interest in the parent company of Swiftships in August of 2012. Shehraze Shah ("Shehraze") and Khurram Shah ("Khurram") are the principals of ICS Marine. In performing "due diligence" prior to finalizing their 51% acquisition in Swiftships, Shehraze and Khurram, with their attorney, Ashraf Nubani, met with Rahman in July of 2012 - after the Settlement Agreement between Swiftships and Taj was signed but before the MSA between Swiftships and IWG was executed.[1] Only one meeting occurred between all of these parties prior to the signing of the MSA between Swiftships and IWG and the parties agree that this was the only meeting prior to the execution of the MSA at which both the SOC Contract and Settlement Agreement between Swiftships and Taj were discussed ("the Meeting").

Taj filed this lawsuit for breach of contract on September 5, 2013, asserting that it is entitled to a default judgment against Swiftships for the remaining amount owed of $6, 700, 000 and that it is owed reasonable attorneys' fees as authorized by § 38.001(8) of the Texas Civil Practice and Remedies Code. In its motion for summary judgment, Taj moves the Court to grant its motion for summary judgment finding that Swiftships is in breach of the obligations under the Settlement Agreement.

II. Summary Judgment Standard

Summary judgment is appropriate when there is no genuine issue as to any material facts, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). Factual controversies are resolved in favor of the non-moving party only if there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) ( en banc ). The court must determine whether there are any genuine issues of material fact which preclude judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).

III. Analysis

Swiftships does not dispute that it signed the Settlement Agreement, or that it only made one payment pursuant to the Settlement Agreement - defaulting on the additional payments totaling $6, 700, 000 required between March 1, 2012 and October 1, 2013. Instead, Swiftships contends that it contracted for IWG's services under the MSA with the parties' understanding that amounts paid to IWG under the MSA would satisfy Swiftships' obligations to Taj under the Settlement Agreement and release Swiftships of any further obligation to make payments to Taj under the Settlement Agreement. Hence, Swiftships asserts, "a novation of the Settlement Agreement occurred between the parties that extinguished the old obligations and created a new agreement." R. 29. In its opposition memorandum, Swiftships argues that the "understanding" was a separate and distinct ...

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