Keiland Construction v. Weeks Marine
Citation109 F.4th 406
Date Filed2024-07-25
Docket23-30357
Cited21 times
StatusPublished
Full Opinion (html_with_citations)
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United States Court of Appeals
for the Fifth Circuit
____________
United States Court of Appeals
Fifth Circuit
No. 23-30357
____________ FILED
July 25, 2024
Keiland Construction, L.L.C., Lyle W. Cayce
Clerk
PlaintiffâAppellant/Cross-Appellee,
versus
Weeks Marine, Incorporated,
DefendantâAppellee/Cross-Appellant.
______________________________
Appeal from the United States District Court
for the Western District of Louisiana
USDC No. 2:20-CV-827
______________________________
Before Willett, Wilson, and Ramirez, Circuit Judges.
Cory T. Wilson, Circuit Judge:
Keiland Construction sued Weeks Marine Inc. for breach of a
construction contract. The district court held a bench trial and concluded
that the contract was ambiguous, construed it against Keiland as the drafter,
and determined Weeks prevailed. After cross-motions for summary
judgment on damages, the court awarded Keiland damages, but in accord
with Weeksâs interpretation of the contract. The court also awarded Weeks
attorneysâ fees and costs, though less than the amount Weeks requested, and
denied Weeksâs motion for post-offer-of-judgment attorneysâ fees and costs
pursuant to Federal Rule of Civil Procedure 68(d).
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The parties cross-appeal. Keiland contends the district court erred in
holding the contract ambiguous, determining Weeks prevailed on the
contract interpretation issue, and granting partial summary judgment for
Weeks as to damages. Weeks contests the district courtâs attorneysâ fees
calculation, as well as the courtâs award of prejudgment interest to Keiland
and denial of post-offer attorneysâ fees. We affirm in all respects.
I.
A.
In December 2019, Weeks Marine, Inc., as general contractor, entered
a construction subcontract (the Contract) with Keiland Construction for a
project in Cameron Parish, Louisiana. Weeksâs vice-president David Hafner
and Keilandâs president Keith DuRousseau signed the Contract for their
respective companies.
In March 2020, Weeks terminated the Contract âfor convenience,â
invoking Section 9 of the Contract. Traveling under Section 5, Keiland
submitted to Weeks three pay applications, one just prior to termination and
two afterwards, totaling more than $570,000. Keiland also submitted a
request for $25,210.35 in demobilization costs. The parties disputed the total
compensation due.
The partiesâ dispute centered on the interplay between Sections 5 and
9 of the Contract. Section 5, âCOMPENSATION,â outlines how Weeks
was to pay Keiland for the work to be performed:
COMPENSATION: As full consideration for the satisfactory
performance by [Keiland] of this subcontract, [Weeks] shall
pay to [Keiland] compensation in accordance with the prices
set forth below.
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All pricing is firm for the duration of the project. All unit priced
quantities listed above are estimated quantities only. Payment
will be made in accordance with actual quantities performed by
[Keiland] and approved by [Weeks]. Unit pricing shall remain
the same irrespective of final quantities performed.
[Keiland] shall provide monthly invoices for work completed
and payment shall be made within fourteen (14) days of
[Weeksâs] receipt of payment from the OWNER . . . .
The âLSâ moniker in Table 1 means âLump Sumâ; the charged work was
to be compensated by the indicated lump sum amount.
Section 9, âTERMINATION FOR CONVENIENCE,â allowed
Weeks, âat its option, [to] terminate for convenience any of the Work under
this subcontract in whole or in part at any time.â Section 9 also delineated
post-termination compensation:
[Keiland] shall be entitled to the actual and necessary expense
of finishing its Work through the date of termination, the actual
and necessary expenses of withdrawing from the Project site,
and twenty-one percent (21%) for overhead and profit
associated with its Work through the date of termination . . . .
In Keilandâs reading, Section 5 entitled Keiland to payment on a lump-sum
basis for work completed at the time of termination, and Section 9 provided
for cost-plus compensation for all work performed thereafter. Weeks
countered that upon termination, Section 9 converted the Contractâs lump-
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sum payment structure to a cost-plus basis for both pre- and post-termination
work.
In January 2021, Weeks paid Keiland $200,000 âin the spirit of good
faith after being unable to calculate Keiland[âs] actual costs.â Weeks asserts
that this payment was intended to cover all of Keilandâs costs, including
Keilandâs claimed demobilization costs, but Keiland contests what costs
were included. Weeks also made direct payments to some of Keilandâs
vendors.
B.
Meanwhile, Keiland filed suit in Louisiana state court in May 2020,
alleging that Weeks breached the Contract, defamed Keiland, and violated
the Louisiana Unfair Trade Practices and Consumer Protection Law. 1
Weeks removed the action to federal court in June 2020. The parties filed
competing motions for summary judgment in May and June 2021. They
âagree[d] that Section 5 creates a lump sum contract, but disagree[d] as to
when Section 9 might allow termination to convert that contract to a cost-
plus compensation structure.â
The district court denied the partiesâ cross-motions for summary
judgment, concluding that Section 9âs compensation terms were ambiguous.
It found the phrase â[Keiland] shall be entitled to the actual and necessary
expense of finishing its Work through the date of terminationâ supported
Keilandâs interpretation that it was entitled to lump-sum payment for all
work completed through termination. But the court noted that the allowance
of 21% for overhead and profit associated with âWork through the date of
terminationâ supported both partiesâ interpretations. The court found
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1
Keiland moved to dismiss its Louisiana Unfair Trade Practices Act and
defamation claims, which the court granted.
4
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Weeksâs proffered parol evidence to be âself-serving and vague,â and in any
event, â[t]he language of the [C]ontract remain[ed] too ambiguous to be
clarified by this evidence.â
Keiland requested a trial setting and bifurcation of the issues of
contract interpretation and resulting damages. Weeks opposed bifurcation
of the issues as premature. After a status conference with the parties, the
court granted Keilandâs motion in September 2021. On July 1, 2022, prior to
the trial setting, Weeks offered a $100,000 judgment, âinclusive of all costs,
fees, and interest,â under Federal Rule of Civil Procedure 68. Keiland did
not accept.
In November 2022, the district court conducted a bench trial on the
Contractâs interpretation. Considering the partiesâ evidence, the court
found that âthere was no meeting of the minds with respect to [the
Contractâs] interpretation.â The court construed the Contract against
Keiland, which had drafted the relevant language, and held that the entire
Contract converted to a âcost-plusâ arrangement after termination.
Tracking Contract Section 9, the court determined Weeks owed Keiland only
for the âwork completed through the effective date of termination [plus 21%
for overhead and profit,] and [Keiland was] not entitled to payment on the
lump-sum basis for any work completed under the subcontract.â
After trial, both parties moved for summary judgment on damages.
Applying Louisiana law, the district court held that Keiland only needed to
submit the âbest evidence availableâ to support its costs, after which the
burden shifted to Weeks to rebut that evidence. Considering Keilandâs
evidence, as well as an affidavit submitted by Hafner on Weeksâs behalf, the
court made the following determinations: (1) Keiland was not entitled to
payment for services of Keiland employees on the project (i.e., direct
employee costs) because that expense was subsumed within the 21% markup
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for overhead; (2) Keiland was not entitled to a 21% markup on post-
termination work, and it failed to show that Weeks owed demobilization costs
for direct employee labor; (3) Weeks was the prevailing party at trial and was
accordingly entitled to attorneysâ fees âassociated with the bench trial,â
under Section 21 of the Contract; and (4) neither party was entitled to
attorneysâ fees on the damages issue because neither prevailed on that issue. 2
The court later amended its judgment to award Keiland prejudgment interest
of $20,300.34, pursuant to Louisiana law.
C.
As the prevailing party at trial, Weeks sought to recover attorneysâ
fees totaling $207,583.75, and $13,729.05 in costs, pursuant to the Contract.
Weeks also moved under Federal Rule of Civil Procedure 68(d) for
attorneysâ fees and costs accrued after its offer of judgment, contending that
Weeksâs unaccepted offer of judgment for $100,000 was more favorable than
the courtâs final award to Keiland.
The district court, in accord with its earlier opinion, awarded Weeks
attorneysâ fees. But the court found that Weeksâs proffered evidence
âfail[ed] to distinguish between the fees and costs incurred for the one-half
day bench trial and other fees and costs.â To remedy Weeksâs
_____________________
2
The courtâs final calculations were as follows:
Weeks is entitled to reimbursement for demobilization costs plus markup
on those costs paid to Keiland but obligated to pay (1) $22,278.60 for
markup on equipment and materials costs for those vendors paid directly
by Weeks; (2) $8,946.23 for outstanding materials costs plus markup; and
(3) $221,001.17 plus markup of $46,410.25 for labor costs of [a vendor].
These amounts should be adjusted against Weeksâs $200,000 payment to
Keiland as well as any other prior payments.
Finally, Weeks is entitled to costs [and] attorney fees associated with the
bench trial of November 7, 2022 . . . .
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âoverinclusiveâ evidence, the court awarded Weeks what the court
computed as 20% of Weeksâs âreduced liability exposure,â which totaled
$77,316.70, as attorneysâ fees. 3 The court also awarded $342.17 for Weeksâs
costs associated with the trial, ruling that the other costs Weeks sought were
not allowed under 28 U.S.C. § 1920.
Finally, the court concluded that after adjusting for the $200,000
Weeks already paid and adding prejudgment interest, Weeks owed Keiland
$118,936.59, which was greater than Weeksâs $100,000 offer of judgment.
Therefore, the court determined its judgment was more favorable than
Weeksâs unaccepted offer and denied Weeksâs Rule 68(d) motion for post-
offer attorneysâ fees and costs.
II.
The parties cross-appeal. Keiland asserts that the district court erred
by (A) concluding the Contract was ambiguous and then construing it against
Keiland; (B) considering Hafnerâs summary judgment affidavit and denying
Keiland its direct employee and demobilization costs; and (C) determining
that Weeks was the prevailing party on the contract interpretation issue.
Weeks contends that (D) the court abused its discretion by not awarding
Weeks attorneysâ fees and costs pre-bifurcation and that the courtâs
calculations were unreasonable. Weeks also challenges (E) the district
courtâs award of prejudgment interest to Keiland and its denial of attorneysâ
fees and costs.
A.
We begin with Keilandâs contention that the district court erred in
(1) determining the Contract to be ambiguous and (2) construing it against
_____________________
3
The district courtâs calculation of fees will be further detailed infra Part II.D.
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Keiland after determining that there was no meeting of the minds between
the parties when the agreement was formed. The court did not err.
âThe standard of review for a bench trial is well established: findings
of fact are reviewed for clear error and legal issues are reviewed de novo.â
Grilletta v. Lexington Ins. Co., 558 F.3d 359, 364(5th Cir. 2009) (per curiam) (emphasis added). â[W]e review matters of contract interpretation de novo.â Habets v. Waste Mgmt., Inc.,363 F.3d 378, 382
(5th Cir. 2004). âWhen reviewing a district courtâs factual findings, this court may not second-guess the district courtâs resolution of conflicting testimony or its choice of which experts to believe.â Grilletta,558 F.3d at 365
.
As this is a diversity case from Louisiana, we apply the substantive law
of that state. See Dickerson v. Lexington Ins. Co., 556 F.3d 290, 294(5th Cir. 2009). Interpreting a contract under Louisiana law âis the determination of the common intent of the parties.â La. Civ. Code Ann. art. 2045. âEach provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole.âId.
art. 2050 (2024). â[W]hen a contract is ambiguous, the trier of fact must resolve the factual issue of intent . . . .â Guidry v. Am. Pub. Life Ins. Co.,512 F.3d 177, 181
(5th Cir. 2007). âA doubtful provision must be interpreted in light of the nature of the contract, equity, usages, [and] the conduct of the parties before and after the formation of the contract . . . .â Greenwood 950, L.L.C. v. Chesapeake La., L.P.,683 F.3d 666, 669
(5th Cir.
2012) (internal quotations omitted). âIf the contract remains ambiguous,
and if there are two or more reasonable interpretations, the contract is
construed against its drafter.â Id.
1.
Whether the Contract is ambiguous turns on the interplay between
the text of Sections 5 and 9 of the Contract. Keiland asserts that Section 5
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unambiguously âcontemplated lump-sum compensation for any and all pre-
termination work,â and Section 9 only âprovides additional compensation
terms for any post-termination work.â Weeks counters that Section 9âs text
converted the Contractâs lump-sum payment structure to a cost-plus basis
for both pre- and post-termination work, such that after termination,
Section 5 no longer controls compensation terms. Weeksâs proffered
interpretation notwithstanding, Weeks effectively concedes that the
Contract is ambiguous because it accepts that both parties advance
reasonable interpretations.
We agree with the district court that the relationship between
Sections 5 and 9 of the Contract is ambiguous because we cannot
âdetermin[e] . . . the common intent of the parties.â La. Civ. Code Ann.
art. 2045. The Contractâs text is susceptible to âtwo . . . reasonable
interpretations.â See Greenwood 950, 683 F.3d at 669. Keilandâs reading,
that the sections required compensation for pre-termination work on a lump-
sum basis and post-termination work on a cost-plus basis, is plausible. But so
is Weeksâs, namely that Section 9 operated to convert all compensation due
Keiland to cost-plus upon terminationâparticularly given that Section 9
specifies payment for 21% of costs âfor overhead and profit associated with
Work through the date of termination.â
Keilandâs argument that Section 9 is unambiguous is unpersuasive.
For instance, Keiland contends that Weeksâs reading renders Section 5
meaningless. Not so. As Weeks advances, it is also plausible that Section 5
controlled compensation under the Contract until Weeks terminated the
Contract, after which Section 9 became the salient provision. Under this
reading, post-termination, Section 9 governed compensation under the
Contract, and Section 5 no longer delineated the partiesâ relationship, as the
Contract had ended.
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Keiland attempts to bolster its position by stating that it assumed risk
in agreeing to pricing (under Section 5) that was âfirm for the duration of the
Project.â Keiland reasons that this evidences the partiesâ intent to create a
lump-sum compensation structure for pre-termination work. But this misses
the mark: Whether Keiland assumed risk by signing a lump-sum contract, or
whether Weeks knew Keilandâs reasoning, is beside the point. Neither
contention defeatsâor is even inconsistent withâWeeksâs proffered
interpretation that compensation shifted from lump-sum to cost-plus after
termination. Under Weeksâs interpretation, Keiland would be entitled to a
21% markup for âoverhead and profitâ in the eventuality of termination.
While Keiland may have assumed risk under Section 5 that its costs would be
greater than its lump-sum compensation âfor the duration of the Project,â
Section 9 protected Keiland in case of termination for convenienceâwhich
is precisely what happened.
All considered, while Keilandâs interpretation of the Contract is
reasonable, Weeksâs interpretation is equally plausibleâif not more soâ
under the text of the Contract. Faced with the impasse between the partiesâ
competing, and reasonable, interpretations, the district court correctly held
the Contract to be ambiguous.
2.
Given the Contractâs ambiguity, the district court, as trier of fact
during the bench trial, had to âresolve the factual issue of intent,â Guidry,
512 F.3d at 181. The court concluded, as to the interpretation of Sections 5
and 9, there was no mutual intent of the parties when they signed the
Contract. So the district court construed the Contract against Keiland, as
drafter of the disputed language.
Keiland does not contest that it drafted the disputed language, or that
under Louisiana law the disputed language must be construed against the
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drafter. Instead, Keiland attacks the district courtâs finding that the parties
lacked mutual intent. Reprising its reading of the Contract, Keiland contends
the partiesâ intent was clear: They contemplated that work completed under
Section 5 would be compensated on a lump sum basis, and, if Weeks
terminated the Contract, then Section 9 required post-termination work to
be compensated cost-plus. Weeks responds that the district court correctly
concluded that there was no meeting of the minds, and thus no mutual intent.
Keiland fails to show clear error in the district courtâs finding that the
parties lacked mutual intent. See Grilleta, 558 F.3d at 364(outlining that âfindings of fact [at a bench trial] are reviewed for clear errorâ). Testimony from trial indicates the parties held differing views as to Section 5 and 9âs interpretation. DuRousseau testified that he and Keilandâs attorney altered Section 9âs language to convert the Contract to cost-plus compensation for work completed after termination. But Hafner, on Weeksâs behalf, testified that he interpreted DuRousseauâs changes to Section 9 to convert all compensation from lump-sum to cost-plus post-termination. This testimony, coupled with post-termination email exchanges in which the parties adhered to these interpretations, supports the district courtâs conclusion that the parties did not have the same intent regarding these provisions. Cf. Greenwood 950,683 F.3d at 669
(instructing that in
interpreting contracts a court may look to âthe conduct of the
parties . . . after the formation of the contractâ).
Given the Contractâs ambiguous text, and the record that supports the
district courtâs finding that the parties had no meeting of the minds as to the
proper interpretation of the Contract, the district court properly applied
Louisiana law and construed the disputed language against the drafterâhere,
Keiland. It follows that the district court correctly held that âKeilandâs
compensation terms switched to the 21 percent cost-plus basis for all work
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completed through the effective date of termination and it is not entitled to
payment on the lump-sum basis for any work[.]â
B.
Keiland contends the district court made several errors in entering its
summary judgment awarding damages, namely by: (1) considering the
affidavit Weeksâs vice-president Hafner provided to counter Keilandâs
payment calculations, (2) holding Keiland was not entitled to its direct
employee costs, and (3) determining that Keiland was not entitled to
demobilization costs.
âWe review grants of summary judgment de novo, applying the same
standard as the district court.â In re La. Crawfish Producers, 852 F.3d 456,
462(5th Cir. 2017). âThe court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.â Fed. R. Civ. P. 56(a). âAll reasonable inferences must be viewed in the light most favorable to the party opposing summary judgment, and any doubt must be resolved in favor of the non-moving party.â In re La. Crawfish,852 F.3d at 462
. Notwithstanding, â[i]f a movant alleges an absence of specific facts necessary for a nonmovant to establish an essential element of its case, then the nonmovant must respond by setting forth specific facts showing that there is a genuine [dispute] for trial.â DIRECTV, Inc. v. Minor,420 F.3d 546, 549
(5th Cir. 2005) (citations and internal quotation marks omitted). Thereafter, âif no reasonable juror could find for the nonmovant, summary judgment will be granted.âId.
(citation omitted). This court âreview[s] the district courtâs evidentiary rulings for abuse of discretion.â King v. Ill. Cent. R.R.,337 F.3d 550, 553
(5th Cir. 2003).
A federal court sitting in diversity must evaluate issues of state law by
looking to the decisions of the stateâs highest court. Meador v. Apple, Inc.,
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911 F.3d 260, 264(5th Cir. 2018). If we lack case law from that court, we may look to decisions of the intermediate appellate courts, barring a reason to think the highest court would decide otherwise.Id.
We may not âexpand state law beyond its presently existing boundaries.â Barfield v. Madison Cnty., Miss.,212 F.3d 269, 272
(5th Cir. 2000).
1.
Keiland challenges the admission of Hafnerâs affidavit on several
grounds but ultimately fails to show that the district court abused its
discretion in considering the affidavit. See King, 337 F.3d at 553. First, Keiland contends that the affidavit is âunswornâ and therefore âincompetentâ under28 U.S.C. § 1746
and our precedent. But § 1746 âpermits unsworn declarations to substitute for an affiantâs oath if the statement contained therein is made âunder penalty of perjuryâ and verified as âtrue and correct.ââ DIRECTV, Inc. v. Budden,420 F.3d 521, 530
(5th Cir. 2005) (quoting Nissho-Iwai Am. Corp. v. Kline,845 F.2d 1300, 1306
(5th Cir.
1988)). And the very first line of Hafnerâs affidavit states, âI, David P.
Hafner . . . do swear and state the following under penalty of perjury that the
following is true and correct.â Hafnerâs affidavit thus clearly passes muster
under § 1746.
Next, Keiland attacks the affidavit as contradictory to other testimony
offered by Weeks. For example, Keiland contends that Hafnerâs affidavit
avers that the $200,000 payment Weeks made to Keiland early in the partiesâ
dispute was only for âactual costs,â while Weeksâs corporate testimony
indicates that the payment included actual costs plus the contractual 21%
markup. Similarly, Keiland contends that Hafnerâs affidavit states the 21%
markup covered costs for Keilandâs project manager, superintendent, and
estimator, but that Weeksâs prior testimony excludes âthe project manager
and superintendentâ from the markup. And Keiland contends that Hafner
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âwrongly state[s]â Weeks could not calculate Keilandâs costs, asserting that
it proffered adequate support for its costs and that Weeks merely âchoseâ
not to calculate them. Weeks responds to all this that Hafnerâs affidavit
clarifies, not contradicts, prior testimony and that such clarifications are
permissible under Louisiana law.
The district court did not abuse its discretion in considering Hafnerâs
affidavit. Summary judgment affidavits may âsupplementâ or âexplain
certain aspects of . . . deposition testimony.â S.W.S. Erectors, Inc. v. Infax,
Inc., 72 F.3d 489, 495â96 (5th Cir. 1996). Hafnerâs affidavit does this and
does not contradict Weeksâs prior testimony. For instance, Weeks stated in
its certified discovery responses that it found Keilandâs rates for its project
manager and superintendent to be âexcessive.â 4 Moreover, Hafner testified
that âthe project manager, superintendent, and estimator are overhead
people and shouldnât be included in the [actual] cost at all.â And Hafnerâ
at trial and in his affidavitâtestified that he could not calculate the costs
because of âdiscrepanciesâ in the claimed costs. 5 So he simply hypothesized
an âhourly rate . . . that [he] believed could be justified.â
Keiland fails to show how, in any of these particulars, Hafnerâs
affidavit âimpeaches,â rather than âsupplementsâ or âexplains,â the
previous testimony. S.W.S. Erectors, Inc., 72 F.3d at 495â96. Accordingly,
_____________________
4
Weeks argues that because the discovery responses were not admitted into
evidence, this court should not consider Keilandâs arguments regarding the purportedly
contradictory evidence. We pretermit whether this evidence is properly before us because
Keiland has failed to show that the district court erred in its decision to consider Hafnerâs
affidavit regardless. Cf. Davis v. Scott, 157 F.3d 1003, 1005 (5th Cir. 1998) (â[W]e may
affirm a judgment upon any basis supported by the record.â).
5
Keilandâs position that it did not need to provide detailed costs is untenable given
the district courtâs reading, which we share, that the Contract converted upon termination
to a cost-plus compensation scheme.
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Keiland fails to show any abuse of discretion in the district courtâs
consideration of it. See King, 337 F.3d at 553.
2.
Under Louisiana law, contractors seeking to recover their labor costs
under a cost-plus contract are subject to âstrong scrutiny,â and the party
seeking costs must show âan agreement between the partiesâ to do so. Foster
v. Soule, 310 So. 2d 170, 172(La. Ct. App. 1st Cir. 1975); see also Higgins v. Rini,597 So. 2d 1238, 1240
(La. Ct. App. 3d Cir. 1992). Contracting parties must delineate what will be covered in a partyâs claimed âcostsâ when those costs are a part of the âusual and ordinary concept of the supervisory type service rendered by a cost plus contractor.â Higgins,597 So. 2d at 1240
.
Applying these principles, the district court determined that Keiland had to
substantiate that its labor costs for its estimator, project manager, and
superintendent were separately recoverable beyond Section 9âs allowance for
âoverhead and profit.â The court found that Keiland failed to do so, and it
declined to weigh Keilandâs evidence, including DuRousseauâs affidavit, on
the issue of these direct employee costs.6 Keiland contends that this was
error because DuRousseauâs affidavit, documentary evidence, and expert
testimony adequately substantiated Keilandâs entitlement to direct employee
costs. 7
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6
The court did not altogether ignore DuRousseauâs affidavit, as Keiland contends.
The court simply found that DuRousseau did not offer evidence of an agreement that
Keiland could charge direct labor costs, as required under Louisiana law. The court
considered DuRousseauâs affidavit testimony as it pertained to other costs, e.g., for
markups for equipment and materials and for a specific vendorâs costs.
7
For the first time in its reply brief, Keiland contends that the district court
misapplied Louisiana law in requiring Keiland to show an agreement between the parties
for Keiland to recover its direct employee costs. But issues raised for the first time in a
reply brief are forfeited. Hernandez v. United States, 888 F.3d 219, 224 n.1 (5th Cir. 2018).
Regardless, as discussed above the line, we agree that Louisiana requires an agreement
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The thrust of Keilandâs argument is that Keiland provided competent
evidence proving that the parties agreed Keiland could charge for its own
labor and outlining its direct employee costs. Keiland cites to its initial bid
showing costs of its direct employees, âJob Detail Reportsâ recording the
hours employees spent on the project, and a ârate sheetâ showing hourly
rates of project managers, superintendents, etc. But Keilandâs argument fails
at step one, because, as the district court properly determined, none of
Keilandâs evidence shows an agreement between it and Weeks that Keiland
could charge for its labor costs.
Section 5 of the Contract, which Keiland concedes controls
compensation pre-termination, plainly offers Keiland no support, as the
Contractâs lump sum payment structure forecloses the idea of Weeksâs
additionally paying Keilandâs direct labor costs during performance of the
Contract. But Keilandâs contention finds no harbor in Section 9 either. That
provision, which controls compensation in the event of termination, allows
Keiland to recover âthe actual and necessary expense of finishing its work
through the date of termination . . . and twenty-one percent (21%) for
overhead and profitâ for such work. This phrasing makes no mention of
Keilandâs labor costs, and the Contract otherwise gives no hint that the
parties intended Keilandâs labor costs for its estimator, project manager, and
superintendent to be separately recoverable as âactual and necessary
expense[s] of finishing [Keilandâs] work,â rather than as part of the 21%
markup âfor overhead and profit.â If anything, the inference from Section 9
is that Keilandâs supervisory labor costs fall within âoverhead and profit.â
At bottom, Keiland fails to support any intention to the contrary, despite the
_____________________
between contractors if one of them wishes to charge for its own labor. See Higgins, 597 So.
2d at 1240 (â[Louisiana] law is clear that for a contractor to charge for his own labor, there
must be an agreement between the parties.â).
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evidence it proffered. And absent such an agreement between the parties,
Keilandâs direct labor costs are not separately recoverable. See Higgins,
597 So. 2d at 1240; Foster,310 So. 2d at 172
.
3.
Likewise, the district court did not err in ruling that Keiland was not
entitled to additional demobilization costs and in offsetting Keilandâs
damages award against Weeksâs earlier payment to Keiland. In Keilandâs
view, Section 9 entitles it to $25,210.35 in extra demobilization costs,
consisting of $10,635.00 in âlabor costs for its direct employees,â
$10,200.00 in attorneysâ fees, plus the 21% contractual markup. 8 And
because Weeks failed to request a âclawbackâ of funds previously paid for
demobilization, Weeks cannot properly receive an offset now. Weeks
counters that Keiland failed to show entitlement to added costs; that even if
Keiland was entitled to such costs, its evidence was âself-generatedâ and
âconflictingâ; and that Weeks properly requested reimbursement for the
estimated demobilization costs included in its initial $200,000 payment. The
partiesâ arguments as to Keilandâs demobilization costs thus largely mirror
those related to Keilandâs direct employee costs. And Keilandâs position
falters on similar grounds.
In a cost-plus contract, charges for a contractorâs own labor are
subject to âstrong scrutiny,â and the party seeking costs must show âan
agreement between the partiesâ to do so. Foster, 310 So. 2d at 172; see also Higgins,597 So. 2d at 1240
. As with its direct labor costs generally, Keiland
fails to show any agreement with Weeks specifically to allow direct employee
_____________________
8
In determining that Weeks was âentitled to reimbursement for demobilization
costs plus markup on these costs paid to Keiland,â the district court offset these amounts
against the total damages awarded to Keiland. On appeal, Weeks does not question the
district courtâs approach.
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costs as part of its demobilization costs. Similarly, Keiland has not shown
that it is entitled to attorneysâ fees as part of demobilization. And Keiland is
not entitled to a 21% markup on these expenses because, as the district court
found, its demobilization costs arose post-termination, while Section 9 of the
Contract entitles Keiland to the markup for âoverhead and profitâ for work
âthrough the date of termination.â Keiland thus has not shown that the
district court abused its discretion in declining to award these demobilization
costs. See King, 337 F.3d at 553.
Keilandâs contention that Weeks waived its right to âclawbackâ
$25,210.35 Weeks paid toward demobilization by failing to request the funds
prior to the post-trial determination of damages also fails. Keiland contends
that Weeksâs failure to raise the âclawbackâ demand sooner prejudiced
Keiland. But in its answer to Keilandâs complaint, Weeks sought to recoup
â[w]hatever the contract allows,â a demand repeated in Hafnerâs deposition
testimony. In fact, the record shows that Weeks requested an offset of
previously paid demobilization costs multiple times, and that relief was well-
within the district courtâs authority. See Fed. R. Civ. P. 54(c). Given that
Keiland failed to show any entitlement to demobilization costs under the
Contract, summary judgment for Weeks on this point, including an offset for
funds Weeks had previously paid, was proper.
C.
Keilandâs final challenge is that the district court erred in finding
Weeks was the prevailing party on the contract interpretation issue during
the bench trial. As discussed supra, the district court construed the Contract,
specifically Sections 5 and 9, to be ambiguous. The court then entered
judgment against Keiland, the drafter of the disputed language, and adopted
Weeksâs interpretation of the Contract. The court calculated damages based
on that interpretation. From those rulings, the district court determined that
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No. 23-30357
Weeks was the prevailing party on the single issue at trial. Applying the
Contractâs Section 21, which provided for the prevailing party in any dispute
to recover attorneysâ fees, the court ordered Keiland to âpay all costs and
expenses, including expert witness fees and attorneysâ fees,â Weeks
incurred related to trial. The court did not err in concluding that Weeks
prevailed on the contract interpretation issue.
We review legal determinations like the question of prevailing party
status de novo. See HDRE Bus. Partners Ltd. Grp., L.L.C. v. RARE Hosp. Intâl,
Inc., 834 F.3d 537, 540(5th Cir. 2016). âThe district courtâs decision to grant or deny attorney fees is reviewed for abuse of discretion; factual findings are reviewed for clear error.â Alonso v. Westcoast Corp.,920 F.3d 878, 890
(5th Cir. 2019) (quoting McClain v. Lufkin Indus., Inc.,519 F.3d 264, 284
(5th Cir. 2008)); see also Boes Iron Works, Inc. v. Gee Cee Grp., Inc., 2016-0207, pp. 7â 8 (La. App. 4 Cir. 11/16/16),206 So. 3d 938, 946
(âThe trial court is vested
with great discretion in arriving at an award of attorney fees.â (citations
omitted)).
âState law controls both the award of and the reasonableness of fees
awarded where state law supplies the rule of decision.â Mathis v. Exxon
Corp., 302 F.3d 448, 461(5th Cir. 2002). Under Louisiana law, attorneysâ fees are permitted only when authorized by statute or contract. Bamburg v. Air Sys., L.L.C., 53,848, pp. 10â11 (La. App. 2 Cir. 4/14/21),324 So. 3d 213
, 219. Contracts authorizing attorneysâ fees âhave the effect of law between the parties, and the courts are bound to give effect . . . to the true intent of the parties.â Melancon Equip., Inc. v. Natâl Rental Co., 2007-1008, p. 4 (La. App. 3 Cir. 2/27/08),978 So. 2d 1053, 1057
(quotations and citation omitted).
Keiland first argues that Weeks cannot be a prevailing party under
Louisiana law because Weeks materially breached the Contract. Keiland
reasons that the district court held that Weeks breached the Contract by
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No. 23-30357
failing to pay Keiland in a timely manner. But as Weeks correctly argues,
nowhere in any of the courtâs rulings did it find Weeks to have breached the
Contract. Thus, Keilandâs proffered cases standing for the proposition that
a breaching party may not recover damages are inapposite. Cf., e.g., Stuart
Services, L.L.C. v. Nash Heating & Air Conditioning, Inc., 2023-00015, pp. 1â
2 (La. 3/14/23), 357 So. 3d 337, 338 (holding that a defendant cannot be found
in breach but also receive attorneysâ fees).
Second, Keiland asserts that the contract interpretation issue was âde
minimisâ and that prevailing party status cannot hinge on de minimis issues.
However, Keiland, without Weeksâs acquiescence, moved to bifurcate the
issues of contract interpretation and damages, precipitating the bench trial to
determine the Contractâs meaning. As Weeks points out, Keiland stated in
its motion for bifurcation that â[t]his [suit] is a contract claim,â and â[t]he
keystone issue in the suit is the interpretation of the compensation and
termination provisions of that contract.â By Keilandâs own telling, then, the
contract interpretation issue was not âde minimis,â and the winner of the
trial could therefore properly be classed the âprevailing partyâ as to the
caseâs âkeystone issue.â
Lastly, Keiland contends it, not Weeks, was rightly the prevailing
party because the district court awarded it damages. Weeks responds that it
never contested that Keiland was owed some amount of money; Weeks
merely disagreed as to the amount. Therefore, Weeks reasons the damages
award to Keiland does not mean Keiland prevailed because the district court
awarded those damages based on Weeksâs interpretation of the Contract.
Weeks is correct. The district court (properly) construed the
Contract against Keiland and awarded damages under Weeksâs
interpretation of the agreement. The award to Keiland notwithstanding, the
court thus correctly determined that Weeks prevailed on the contract
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interpretation issue at trial. Per the Contract, it follows that Weeks was
entitled to attorneysâ fees and costs stemming from successfully trying that
issue. See Trafficware Group, Inc. v. Sun Industries, LLC, 749 F. Appâx 247,
253 (5th Cir. 2018) (holding that â[a]lthough [contractor] had to pay
[subcontractor] the amount remaining under the subcontract, the amount did
not reflect any judgment of liability for breach of contract against [contractor]
and was reduced by the damages award to [contractor]â).
D.
On cross-appeal, Weeks first challenges the district courtâs award of
attorneysâ fees and costs as too low. Weeks concedes that it prevailed only
as to the contract interpretation issue, but it asserts that the court erred in
determining that its pre-trial motions were not related to the contract
interpretation issue and in excluding fees and costs incurred prior to
bifurcation of the issues in September 2021. Narrowing the window for fees
in these respects, Weeks reasons, led to the courtâs improper conclusion that
Weeksâ proffered billing data were overinclusive and vague. In the
alternative, Weeks contends that even if some reduction in its requested fees
and costs was warranted, the courtâs reductions were errant. 9
âThe trial court is vested with great discretion in arriving at an award
of attorney fees.â Boes Iron Works, 2016-0207, pp. 7â8, 206 So. 3d at 946. In
its order awarding damages, the district court framed its analysis by noting
that it was required to make an initial estimate of reasonable attorneysâ fees
based on prevailing billing rates and hours reasonably expended. Then, the
_____________________
9
Other possible interpretations of Section 21 of the Contract notwithstanding, both
parties travel under the premise that the Contract supports an award of reasonable
attorneysâ fees. Even Weeks, who challenges the attorneysâ fees amount, urges the court
towards Hensley v. Eckerhart, 461 U.S. 424, 430 n.3 (1983), as the case that âprovides clear
guidance on determining the hours that were reasonably expended on a case.â
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court was to adjust that estimate by applying the factors articulated in Hensley
v. Eckerhart, 461 U.S. 424, 430 n.3 (1983). 10 But the court stopped before
performing even the initial calculation because it found Weeksâs proffered
evidence to be âoverinclusive[] and vague[]â and ânot sufficiently itemized
and ascertainable to account for only those reasonably recoverable feesâ
incurred in litigating the contract interpretation issue at trial.
To remedy Weeksâs ostensibly insufficient evidence, the district court
made an alternative calculation of Weeksâ attorneysâ fees and costs, finding:
that twenty percent of Weeksâs reduced liability exposure is an
appropriate measure of an award for attorneyâs fees . . . . [T]he
amount recovered by Keiland against Weeks based on the
[c]ourtâs July 11, 2023 Judgment is $318,936.59. Keiland
demanded an award of $705,520.09. The [c]ourtâs July 11,
2023 Judgment . . . is $386,583.50 less than $705,520.09, the
amount that Keiland sought . . . . Thus, Weeks avoided
$386,583.50 in potential liability. Twenty percent of [that
amount] results in an award in the amount of $77,316.70 for
attorneyâs fees payable by Keiland to Weeks.
The district court also reviewed Weeksâs requested costs but determined
_____________________
10
The Hensley factors, which âderive directly from the American Code of
Professional Responsibility,â are:
(1) the time and labor required; (2) the novelty and difficulty of the
questions; (3) the skill requisite to perform the legal service properly;
(4) the preclusion of employment by the attorney due to acceptance of the
case; (5) the customary fee; (6) whether the fee is fixed or contingent;
(7) time limitations imposed by the client or the circumstances; (8) the
amount involved and the results obtained; (9) the experience, reputation,
and ability of the attorneys; (10) the âundesirabilityâ of the case; (11) the
nature and length of the professional relationship with the client; and
(12) awards in similar cases.
461 U.S. at 430n.3 (citing Johnson v. Ga. Highway Exp., Inc.,488 F.2d 714
, 717â19 (5th Cir.
1974)).
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No. 23-30357
most were subsumed within the $77,316.70 total and awarded only an
additional $342.17 for costs.
Tellingly, Weeks cites no cases suggesting the district court abused its
discretion to the extent it excluded Weeksâs pre-bifurcation costs and fees.
And we do not read the district courtâs determination of fees as categorically
excluding all pre-bifurcation expenses. Rather, the court found that it could
not âaccurately determine the hours reasonably expended on the bench trial
and contract interpretation issue,â and pointed to some of Weeksâs pre-
bifurcation fees as examples of Weeksâs overinclusive evidence. Weeks fails
to show the district court erred in its approach or, particularly, in finding that
Weeksâs evidence was vague and overinclusive such that the court was
unable to determine what fees and costs were attributable to the contract
interpretation issue as tried. See Alonso, 920 F.3d at 890.
Alternatively, Weeks asserts that even if a reduction in fees was
appropriate, the district courtâs drastic reduction was an abuse of discretion.
But we discern no reversible error. A trial court may reduce an attorneysâ
fees award âto the highest amount a reasonable factfinder could have
awardedâ if âit would be impossible to relate specific fees to the issues upon
which the [party] did not prevail.â Bamburg, 53,848, p. 11; 324 So. 3d at 219
(describing LHO New Orleans LM, L.P. v. MHI Leasco New Orleans, Inc.,
2006-0489 (La. App. 4 Cir. 4/16/08), 983 So. 2d 217). Here, the district
court arrived at $77,316.70 for attorneysâ fees, grounded upon its findings
that Weeksâs proffered evidence was âoverinclusive[] and vague[]â and
ânot sufficiently itemized and ascertainable to account for only those
reasonably recoverable feesâ related to trial of the contract interpretation
issue. These findings are not clearly erroneous on the record before us, and
Weeks offers no caselaw to support that the district court abused its
discretion as to the fee amount awarded, arguing instead merely that the
district court unreasonably applied the Hensley factors. This argument lacks
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No. 23-30357
merit. We therefore uphold the award of attorneysâ fees and costs to Weeks
in the amount of $77,658.87.
E.
Finally, Weeks contends the district court erred by awarding Keiland
prejudgment interest and denying Weeksâs post-offer attorneysâ fees and
costs. The district court did not err in either respect.
âState law governs the award of prejudgment interest in diversity
cases.â Harris v. Mickel, 15 F.3d 428, 429(5th Cir. 1994). Under Louisiana law, â[w]hen the object of the performance is a sum of money, damages for delay in performance are measured by the interest on that sum from the time it is due.â LA. Civ. Code Ann. art. 2000. â[W]hen a party prays for an award of interest in a pleading seeking a monetary judgment, the court lacks discretion to deny interest on the award.â In re succession of Banks, 11-26 (La. App. 5 Cir. 6/29/11),71 So. 3d 1086, 1099
; see La. Code Civ. Proc. Ann. art. 1921. We review a trial courtâs award of prejudgment interest for an abuse of discretion. Imperial Chemicals Ltd. v. PKB Scania (USA), Inc., 2004-2742, p. 20 (La. App. 1 Cir. 2/22/06),929 So. 2d 84, 98
. The court reviews the district courtâs application of Federal Rule of Civil Procedure 68 de novo, but â[a]ny factual findings concerning the circumstances under which Rule 68 offers are made are reviewed for clear error.â Hobbs v. Alcoa, Inc.,501 F.3d 395, 398
(5th Cir. 2007). Keiland demanded interest in its
petition, and the district court accordingly did not abuse its discretion in
awarding it.
Nonetheless, Weeks argues this case is unusual because Weeks âdid
not know what to pay Keiland until receipt of its cost documents.â In
Weeksâs view, a court should deny interest in âpeculiar circumstancesâ
when equity militates against a defendant paying interest. See Noritake Co. v.
M/V Hellenic Champion, 627 F.2d 724, 728 (5th Cir. 1980) (âDiscretion to
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No. 23-30357
deny prejudgment interest is created only when there are âpeculiar
circumstancesâ that would make it inequitable for the losing party to be
forced to pay prejudgment interest.â); see also Shallow Waters Equip. LLC v.
Pontchartrain Partners, LLC, No. 21-949, 2022 WL3755041, at *13 (E.D. La.
Aug. 30, 2022). But Noritake and Shallow Waters are inapposite because
those cases involved interest awarded under federal admiralty law, not
Louisiana law.
Instead, this case again mimics Trafficware, in which this court
affirmed an award of prejudgment interest, even though the âamount was
unascertainable in light of the disputes about breach of contract and other
damages.â 749 F. Appâx at 254. Weeks fails otherwise to show any error in
the district courtâs awarding prejudgment interest in this case.
Similarly, Weeksâs argument that the court should have awarded its
attorneysâ fees and costs incurred after Weeks made an offer of judgment
lacks merit. In cases where âthe judgment that the offeree finally obtains is
not more favorable than the unaccepted offer, the offeree must pay the costs
incurred after the offer was made.â Fed. R. Civ. Proc. 68(d); cf. Antill
v. State Farm Mut. Ins. Co., 20-131, pp. 9â10 (La. App. 5 Cir. 12/2/20), 308
So. 3d 388, 410 (applying Louisiana Code of Civil Procedure article 970,
which âprovides for the payment of costs when an offer of judgment has been
made and rejectedâ). 11 In interpreting Rule 68 offers of judgment, â[c]ourts
_____________________
11
A threshold question is whether to apply federal law or Louisiana law in
comparing the offers of judgment. Cf. Ashland Chemical Inc. v. Barco Inc., 123 F.3d 261,
264â65 (5th Cir. 1997) (âWe therefore must determine whether the Local Rule is
procedural . . . or substantive.â). â[I]n a diversity case a federal court must apply the
substantive law of the state while following federal procedural rules. Unfortunately, a clear
and obvious distinction between rules of procedure and rules of substance does not always
exist.â Id.; see also 12 Charles Alan Wright & Arthur R. Miller Federal
Practice and Procedure § 3001.2 (3d. ed. 2024) (discussing the complexities of
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No. 23-30357
apply general contract principles.â Basha v. Mitsubishi Motor Credit of Am.,
Inc., 336 F.3d 451, 453 (5th Cir. 2003). As Weeks concedes, the courtâs total
award to Keiland of $118,936.59 exceeds Weeksâs $100,000 offer of
judgment, which was, per the offerâs terms, âinclusive of all costs, fees, and
interest.â Because we affirm the courtâs final award to Keiland, we also
affirm the courtâs denial of Weeksâs motion for attorneysâ fees and costs
accrued after its Rule 68(d) offer of judgment.
III.
The district court correctly determined that the Contract between
Weeks and Keiland was ambiguous and then properly resolved the ambiguity
against Keiland, as the drafter of the disputed contractual language. From its
bench trial determination as to liability under the Contract, the district court
properly entered summary judgment as to the damages owed Keiland by
Weeks. The district courtâs ensuing calculations of attorneysâ fees and
prejudgment interest reveal no reversible error.
For the reasons discussed, the judgment of the district court is
AFFIRMED.
_____________________
applying federal or state law to Rule 68 offers of judgment). But we may pretermit the issue
here because Weeksâs argument fails regardless of whether federal or state law applies.
26