Key Points

  • The Fifth Circuit reversed summary judgment for broker GOL and remanded Seacor Marine's breach-of-contract and fiduciary-duty claims to the Eastern District of Louisiana.
  • The panel held that a genuine factual dispute exists over whether Cox Operating's $13 million prepetition payment to GOL covered part of the $2.7 million Cox owed for Seacor's vessels.
  • The panel held that the Trade Agreement's plain text did not bar GOL from paying Seacor, and that the district court erred by relying on the agreement's purpose rather than its unambiguous language.
  • Because GOL conceded it was Seacor's agent, the panel held that whether GOL owed Seacor payment as a fiduciary raises genuine disputes of material fact and law.
  • Judge Haynes, in a footnote, would cap any Seacor recovery at about 52 percent of its claim, roughly $1.4 million, because GOL received $13 million on a $24.8 million claim.

A federal appeals court on Thursday revived a vessel owner's lawsuit against the broker that chartered its boats to an offshore oil and gas producer, holding that a trial court must decide whether the broker kept money owed to the vessel owner out of a $13 million payment the producer made during its bankruptcy.

In a per curiam opinion, a U.S. Court of Appeals for the Fifth Circuit panel of Judges Smith, Haynes and Engelhardt reversed a summary judgment for GOL, L.L.C. The panel sent the claims of Seacor Marine, L.L.C. back to the U.S. District Court for the Eastern District of Louisiana.

The decision rejects the district court's reading of the bankruptcy payment agreement as permitting payment only to vessel owners that kept working for the producer, Cox Operating, LLC. The panel held that the agreement's text imposed no such limit on GOL, and that GOL's admitted role as Seacor's agent raises a triable question whether GOL owed the money to Seacor as a fiduciary.

Under a 2018 Brokerage Agreement, Seacor appointed GOL as its agent to obtain charters for its vessels. GOL was required to "remit net charter hire (charter hire less Broker's fee)" within 15 business days when a charterer paid GOL instead of Seacor. GOL brokered Seacor's vessels to Cox, Seacor invoiced GOL $2.7 million, and GOL billed Cox that amount plus a brokerage fee of about $90,000.

Cox never paid and filed for Chapter 11 bankruptcy. GOL estimated that Cox owed it about $24.8 million, and GOL admitted that the sum included the $2.7 million owed for Seacor's work. Cox then asked the bankruptcy court for leave to pay certain debts that predated its filing, known as prepetition claims. "In plain English, Cox sought permission to pay certain vendors out of its bankruptcy estate on the condition that those vendors continue to work with Cox during its Chapter 11 proceedings," the panel wrote.

The bankruptcy court granted that request. Cox and GOL then signed a Trade Agreement under which Cox paid $13 million toward GOL's $24.8 million claim in exchange for GOL's continued services. The Trade Agreement required GOL to apply the money to, among other things, "any amount secured by a lien," and GOL conceded that a lien secured Seacor's balance.

GOL paid Seacor nothing. Discovery showed that GOL "paid itself more than triple its own alleged claim" and paid "roughly $9 million more to entities owned by GOL's three co-owners," the panel wrote. REC Marine, wholly owned by GOL's then-president, Ronald Chaddock, received $7.8 million against a claim of about $6.29 million. GOL received about $1.64 million against a claim that Seacor estimated at $520,000. Two independent vessel owners received about $2.32 million against claims of nearly $5.7 million.

The district court found that GOL was never paid for Seacor's invoices, that the Trade Agreement barred payments to Seacor because Seacor did not keep serving Cox, and that GOL was not required to pay Seacor in any event. It also held that GOL had met its duty to make "all reasonable efforts" to collect from Cox, and it dismissed Seacor's claims.

The panel held that the first two conclusions were erroneous. The Trade Agreement's plain text applied the $13 million to a claim that included Seacor's invoices, the panel reasoned, and that text furnished at least some evidence that Cox paid part of Seacor's bill. The panel also rejected GOL's argument that Seacor's bankruptcy proof of claim contradicted Seacor's position. "Faced with the prospect of recovering nothing at all, SEACOR is sensibly pursuing repayment in the bankruptcy court in addition to this court," the panel wrote.

The district court had relied on the agreement's "purpose" and "aim" of keeping essential services flowing to Cox. The panel held that the promise to keep supplying services bound GOL alone, and it pointed to the agreement's provision that the inability of third-party vessel owners to provide services "shall not be a default by GOL." The panel added, "Any hardship from requiring GOL to use some of the prepetition payment to pay off Cox's debt to SEACOR would fall on GOL."

The panel then turned to the Brokerage Agreement. If any of the $13 million was for Seacor's invoices, the panel wrote, GOL breached its duty to remit the money within 15 days. The panel also applied agency law, which in the Restatement (Third) of Agency's formulation obliges an agent "not to use property of the principal for the agent's own purposes or those of a third party." GOL had conceded that it acted as Seacor's agent for the limited purpose of obtaining charter hire.

"Either way, nothing in the Trade Agreement prevented GOL from remitting a portion of the payment to SEACOR," the panel wrote, concluding that whether GOL had to pay Seacor as its fiduciary "raises genuine disputes of material fact and law."

Judge Haynes, in a separate statement in a footnote, joined the reversal and remand "to conduct a trial" on whether Seacor's claims "were at all part of the money GOL received." Judge Haynes would have gone further and capped any recovery. "SEACOR is not entitled to the entire amount it gave because GOL lost 24.8 million dollars and received only 13 million dollars from Cox," Judge Haynes wrote, putting Seacor's maximum at "about 52 percent (about 1.4 million dollars)."

In a parallel case in the same district court, Judge Fallon found that GOL breached its implied duties as agent to another vessel owner, R&R Boats, Inc., and awarded R&R $1,430,000, or 11% of the $13 million, matching R&R's share of GOL's total claim. The Fifth Circuit noted that GOL has appealed that ruling.

The panel remanded Seacor's case, No. 2:24-CV-2409, to the Eastern District of Louisiana for further proceedings consistent with its opinion.