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Aker Solutions Inc. v. Shamrock Energy Solutions, LLC

United States District Court, E.D. Louisiana

December 30, 2019

AKER SOLUTIONS, INC.
v.
SHAMROCK ENERGY SOLUTIONS, LLC; AND SAMURAI INTERNATIONAL PETROLEUM, LLC

         SECTION M (4)

          ORDER & REASONS

          BARRY W. ASHE UNITED STATES DISTRICT JUDGE.

         Before the Court are two post-trial motions. One is a motion by defendants Shamrock Energy Solutions, LLC and Shamrock Management, LLC (collectively, “Shamrock Defendants”) brought under Rules 52(b), 59(a)(2), and 59(e) of the Federal Rules of Civil Procedure to amend the findings of fact and for a new trial, [1] to which plaintiff Aker Solutions, Inc. (“Aker”) responds in opposition.[2] The other is a motion by Aker for attorney's fees, [3] to which the Shamrock Defendants and defendant Samurai International Petroleum, LLC (“SIPCO”) (collectively with the Shamrock Defendants, “Defendants”) respond in opposition, [4] and in further support of which Aker replies.[5]

         Having considered the parties memoranda, the record, and the applicable law, the Court issues this Order & Reasons denying the Shamrock Defendants' motion for new trial, but amending the Findings of Fact and Conclusions of Law to clarify that the Court employed the clear-and-convincing evidentiary standard in analyzing Aker's single-business-enterprise claim, and also to clarify that the attorney's fee award was based on a clause in the contract between Aker and SIPCO. The Court also grants Aker's motion for attorney's fees, awarding to Aker $474, 848.50 in attorney's fees.

         I. BACKGROUND[6]

         This matter involves unpaid invoices for services rendered where the obligation and the obligor were disputed. Aker filed this suit against the Shamrock Defendants and SIPCO, [7]alleging that SIPCO is obligated by contract to pay Aker $1, 780, 144.19 for work Aker performed, and SIPCO breached the contract by its failure to pay. Aker alleged that the Shamrock Defendants were jointly and severally liable with SIPCO for SIPCO's debt under the single-business-enterprise theory.

         The matter was tried before the Court, sitting without a jury, over two days. After considering the evidence admitted at trial, the arguments of counsel, and the applicable law, the Court issued its Findings of Fact and Conclusions of Law pursuant to Rule 52 of the Federal Rules of Civil Procedure. The Court held that Aker and SIPCO had a valid and enforceable contract consisting of a master service contract (“MSC”), work order, and change order under which SIPCO was obligated to pay Aker for performing a feasibility study related to a potential oil-and-gas exploration-and-production (“E&P”) opportunity.[8] Aker fully performed all work in a timely manner in accordance with the contract and SIPCO breached the contract by failing to pay Aker's invoices in the total amount of $1, 780, 144.19.[9] Further, applying the controlling law, the Court held that, under the totality of the circumstances, SIPCO and the Shamrock Defendants constituted a single-business enterprise because there was overwhelming evidence that the Shamrock Defendants and SIPCO were so intimately affiliated that the legal fiction of their corporate distinctiveness should be disregarded, and they could be treated as a single entity, liable for each other's actions and debts.[10] Thus, the Shamrock Defendants were held to be jointly and solidarily liable with SIPCO for SIPCO's liabilities to Aker.[11] The judgment was entered on October 15, 2019, and these post-trial motions followed.

         II. LAW & ANALYSIS

         A. Shamrock Defendants' Motion for New Trial

         Rule 52(b) of the Federal Rules of Civil Procedure provides that, after a bench trial, “[o]n a party's motion filed no later than 28 days after the entry of judgment, the court may amend its findings - or make additional findings - and may amend the judgment accordingly.” Fed.R.Civ.P. 52(b). A Rule 52(b) motion “may accompany a motion for a new trial under Rule 59.” Id. Similarly, Rule 59(a)(2) states that “[a]fter a nonjury trial, the court may, on motion for a new trial, open the judgment if one has been entered, take additional testimony, amend findings of fact and conclusions of law or make new ones, and direct the entry of a new judgment.” Rule 59(e) specifies that “[a] motion to alter or amend a judgment must be filed no later than 28 days after the entry of the judgment.” Courts apply the same standard to both Rule 52(b) and Rule 59 motions. Interstate Fire & Cas. Co. v. Catholic Diocese of El Paso, 622 Fed.Appx. 418, 420 (5th Cir. 2015).

         Motions under Rules 52(b) and 59 call into question the correctness of a judgment. In re Transtexas Gas Corp., 303 F.3d 571, 581 (5th Cir. 2002). Such rules are “properly invoked to correct manifest errors of law or fact or to present newly discovered evidence.” Id. at 581 (internal quotation marks and citation omitted). When the motion is not based on newly discovery evidence, the movant “must clearly establish a manifest error of law or fact.” Interstate Fire, 622 Fed.Appx. at 420 (internal quotation marks and citations omitted). “Manifest error is one that is plain and indisputable, and that amounts to a complete disregard of the controlling law.” Guy v. Crown Equip. Corp., 394 F.3d 320, 325 (5th Cir. 2004) (internal quotation marks and citations omitted). Consequently, “[a] Rule 59(e) motion should not be used to relitigate prior matters that should have been urged earlier or that simply have been resolved to the movant's dissatisfaction.” In re Self, 172 F.Supp.2d 813, 816 (W.D. La. 2001). The grant of such a motion is an “extraordinary remedy that should be used sparingly.” Indep. Coca-Cola Emps. Union of Lake Charles, No. 1060 v. Coca-Cola Bottling Co. United, Inc., 114 Fed.Appx. 137, 143 (5th Cir. 2004) (citation omitted). A district court has considerable discretion to grant or deny a Rule 59(e) motion. See Edward H. Bohlin Co. v. Banning Co., 6 F.3d 350, 353 (5th Cir. 1990).

         1. Single Business Enterprise

         The Shamrock Defendants raise four issues in their motion.[12] The first two relate to the Court's findings regarding the applicability of the single-business-enterprise theory.[13] First, the Shamrock Defendants argue that the Court did not specify the burden of proof that it applied in analyzing Aker's single-business-enterprise claim, but must have incorrectly applied a preponderance of the evidence standard because, in their view, when the evidence is examined under a clear-and-convincing standard, “no one could find that SIPCO and Shamrock Management were a single business enterprise.”[14] The Shamrock Defendants also argue that the Court did not consider equity in disregarding the corporate separateness of the Shamrock Defendants and SIPCO because Aker knew that those entities were related, but separate, and because Defendants never received Aker's final product.[15]

         In opposition, Aker argues that, although the Court did not clearly state that it applied the clear-and-convincing standard, it is evident that it did so because “the Court found that ‘at least' fourteen of the eighteen single business enterprise factors were unequivocally satisfied.”[16]Further, Aker also argues that the Court considered equity in applying the single-business-enterprise theory to hold the Shamrock Defendants jointly and solidarily liable with SIPCO for its debt to Aker because, when the contract was formed, Aker did not know the true extent of SIPCO's dependence on, and lack of separateness from, the Shamrock Defendants.[17] Further, Aker points out that SIPCO received the benefit of its work though bi-weekly meetings where Aker displayed and discussed its work.[18]

         The single-business-enterprise doctrine is “a theory for imposing liability where two or more business entities act as one.” Brown v. ANA Ins. Grp., 994 So.2d 1265, 1266 n.2 (La. 2008) (citing Green v. Champion Ins. Co., 577 So.2d 249 (La.App. 1991)). Generally, under this doctrine, “[w]hen corporations integrate their resources in operations to achieve a common business purpose, each business may be held liable for wrongful acts done in pursuit of that purpose.” Id. To determine whether corporations are a single enterprise, Louisiana courts consider the totality of the circumstances in light of eighteen non-exhaustive factors laid out in Green v. Champion Insurance Co.[19] Green, 577 So.2d at 257-58; Coleman v. Burgundy Oaks, L.L.C., 71 So.3d 352, 355 (La.App. 2011). “The party seeking to impose liability based on the single business enterprise theory must show by clear and convincing evidence that the corporations were a single business enterprise.” Alack v. Jaybar, LLC, 2012 WL 13005346, at *3 (E.D. La. Aug. 21, 2012) (citing Miller v. Entergy Servs., Inc., 913 So.2d 143, 148 (La.App. 2005)). “Upon finding that a group of corporations constitute a ‘single business enterprise,' the court may disregard the concept of corporate separateness to extend liability to each of the affiliated corporations to prevent fraud or to achieve equity.” Green, 577 So.2d at 259.

         Although the Court did not expressly state that it applied the clear-and-convincing standard or that it applied the single-business-enterprise theory to achieve equity, both concepts are implied in its Findings of Fact and Conclusions of Law. The Court stated that it examined the facts under the totality of the circumstances and “the controlling law and jurisprudence.”[20]The Court found that most of the eighteen Green factors were satisfied, clearly and convincingly proving SIPCO's co-dependent relationship with the Shamrock Defendants: SIPCO and the Shamrock Defendants shared common ownership, officers, property, employees, offices, and centralized accounting; SIPCO was undercapitalized; unified administrative control existed between the companies and their business functions were similar and supplementary; the Shamrock Defendants paid SIPCO's expenses; and SIPCO lacked any business independent from that provided to it by the Shamrock Defendants.[21] The evidence adduced in support of these facts easily satisfies the clear-and-convincing standard and Aker thus carried its burden of proof.

         The Court further finds that equity is served by imposing joint and solidary liability on the Shamrock Defendants because SIPCO acted to aid only them in vetting oil-and-gas E&P opportunities, which they were contractually forbidden to do themselves.[22] Moreover, in its Findings of Fact and Conclusions of Law, the Court explained in detail every way in which SIPCO and the Shamrock Defendants received and benefited from Aker's work. It is simply disingenuous for the Shamrock Defendants to argue that they never received the benefit of Aker's work product.[23]

         2. Mitigation

         Next, the Shamrock Defendants argue that the Court failed to consider mitigation of damages and that Aker's damages should be cut-off as of January 2015 when SIPCO sought bridge financing from Aker, which should have alerted Aker to SIPCO's poor financial condition.[24] Aker argues that it had no reason to stop work in January 2015 because SIPCO repeatedly assured Aker that the invoices would be paid.[25]

         As Aker points out, the Court did in fact consider the Shamrock Defendants' mitigation argument and rejected it. Specifically, the Court found that when Aker was helping SIPCO find financing, SPICO's representatives were assuring Aker that the invoices would eventually be paid, and thus, Aker had no reason to believe otherwise or to stop work to mitigate its damages.[26]In this way, the Shamrock Defendants' argument on mitigation is without merit.

         3. Attorney's Fees

         Lastly, Defendants argue that Aker waived its claim for attorney's fees by failing to include it in the pretrial order.[27] Aker argues that it did not waive its attorney's fee claim and has asserted it throughout the pendency of the litigation.[28]

         Generally, “a joint pretrial order signed by both parties supersedes all pleadings and governs the issues and evidence to be presented at trial.” McGehee v. Certainteed Corp., 101 F.3d 1078, 1080 (5th Cir. 1996). However, “[t]he decision to bind the parties to the order is viewed as a matter of judicial discretion.” 6A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice and Procedure § 1527 (3d ed. 2010 & Supp. 2018). In appropriate cases, the trial judge can allow matters outside of the pretrial order to be introduced. Id. Indeed, “courts have held that the order should be construed liberally so that it covers any of the possible legal or factual theories that might be embraced by its language.” Id. Moreover, Rule 16(e) of the Federal Rules of Civil Procedure authorizes a court to modify the pretrial order to “prevent manifest injustice.” Id.

         Here, Aker has not waived its claim for attorney's fees by failing to specifically include any reference to it in the pretrial order. In the pretrial order, Aker identified as a contested issue of law “[w]hether Aker is entitled to pre and post judgment interest and costs as a matter of law.”[29] Just one day after the pretrial conference, Aker filed its proposed conclusions of law in which it asked for damages, including “costs, pre- and post-judgment interest and attorney's fees.”[30] When the pretrial order is read broadly together with Aker's pretrial filing of its proposed conclusions of law, it is evident that Aker did not waive the claim and that Defendants were on notice of it. Cf. Chaney v. New Orleans Pub. Facility Mgmt., Inc., 1997 WL 767685, at *2 (E.D. La. Dec. 10, 1997) (Clement, ...


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