Printer Friendly

LeBlanc Bland P.L.L.C. Announces Important Fifth Circuit Maritime Ruling.

Decision Addresses Enforceability of Liquidated Damages Provision

NEW ORLEANS -- An important Fifth Circuit decision in a dispute over the enforceability of a liquidated damages provision -- here, triggered by breaches of a non-compete clause in the sale of two vessels -- constitutes only the third time the Fifth Circuit has addressed this enforceability issue under maritime law.

The decision was handed down last week in the case of International Marine, L.L.C. and International Offshore Services, L.L.C. versus Delta Towing L.L.C., where the Fifth Circuit found in favor of the seller, Delta, and upheld the enforceability of the liquidated damages provision.

In 2006, Delta sold two tugboats to International under the provision that International would not charter out the vessels without giving Delta the opportunity to charter them first. If Delta declined, International was required to pay Delta 10% of the total charter. The vessel sales agreement also provided that liquidated damages would be assessed per occurrence if the non-compete clause was breached.

Two years later, Delta discovered breaches of the non-compete clause and subsequently made demands for payment of the liquidated damages. Eventually, claims were brought in the Eastern District of Louisiana, where the district court issued a midstream ruling in Delta's favor on the enforceability of the liquidated damages provision. The issue of enforceability was certified for appeal, then an appeal was filed by International. The Fifth Circuit has now ruled in favor of Delta, finding that the liquidated damages provision satisfied the Fifth Circuit test requiring that the liquidated damages amount was reasonably related to the potential damages anticipated by the parties.

The decision is important in maritime law. Actual damages in non-compete agreements are inherently difficult to prove; thus, parties to such agreements typically agree to a liquidated damages provision that they should be able to rely upon being enforced. According to David Bland of LeBlanc Bland PLLC, "This decision signifies the Fifth Circuit's willingness to uphold such provisions, even where the amount is significant, particularly where sophisticated parties expressly negotiated the terms."

LeBlanc Bland P.L.L.C. is a versatile and dynamic law firm committed to serving clients spanning the Gulf Coast, the nation and the world. Through its offices in Houston, Texas and New Orleans, Louisiana, LeBlanc Bland rapidly responds to the needs of clients with resourceful assistance and solutions. They specialize in effectively resolving complex commercial disputes and maritime cases and in providing general counsel to clients, particularly in the marine, offshore, shipbuilding and energy sectors.

LeBlanc Bland P.L.L.C may be reached at www.leblancbland.com or by calling David Bland at (504) 528-3088 or (713) 627-7100 dbland@leblancbland.com .

If you would like any further information on any issue raised in this update please contact:

David S. Bland Beau E. LeBlanc Matthew C. Guy LeBlanc Bland PLLC

909 Poydras St., Ste 1860 New Orleans, LA 70112 Tel: 504 528 3088 Fax: 504 586 3419

1717 St. James Place, Ste 300 Houston, TX 77056 Tel: 713 627 7100 Fax: 713 627 7148

dbland@leblancbland.com bleblanc@leblancbland.com mguy@leblancbland.com www.leblancbland.com
COPYRIGHT 2013 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2013 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Publication:Business Wire
Geographic Code:1U7LA
Date:Jan 14, 2013
Words:588
Previous Article:Kroll Bond Rating Agency Assigns Preliminary Ratings to First Investors Auto Owner Trust 2013-1.
Next Article:Springbrook Software Acquires KVS Information Systems.

Terms of use | Copyright © 2017 Farlex, Inc. | Feedback | For webmasters