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Mmr International Limited v. Waller Marine, Inc.

United States District Court, Fifth Circuit

December 10, 2013



GRAY H. MILLER, District Judge.

Beginning on October 28, 2013, a trial on the merits was heard without a jury before this court. Having considered the evidence and the arguments of the parties, the court makes the following Findings of Fact and Conclusions of Law:


1. In early 2010 Waller Marine, Inc. ("Waller") entered into a contract with Citgo Petroleum Corporation ("Citgo"), whereby Waller agreed to build and deliver two power barges to Citgo for use in Venezuela (the "Barges").

2. Originally, Waller was to build the Barges entirely in Orange, Texas, and deliver the completed Barges to a prepared basin in Tacoa, Venezuela. Once in Tacoa, the Barges were to be connected to the Venezuelan power grid in order to provide electricity to the nation's capital.

3. Due to circumstances beyond Waller's control, Waller was required to ship the Barges to Venezuela before they were complete. Additionally, at the time of shipment, the Tacoa basin was not ready to accept the Barges, so Waller had to find a temporary location in Venezuela to dock the Barges and finalize their construction. Waller found a dock owned by Halliburton in Guanta, Venezuela.

4. The Barges were between 70%-90% complete when they were transported to Venezuela for their completion. Upon arrival in Venezuela, the Barges required certain additional electrical, welding, instrumentation, and millwright work before final commissioning.

5. Waller engaged several subcontractors on the project, including IEC Systems, Inc. ("IEC"). IEC was responsible for overseeing the completion of the electrical instrumentation work on the Barges. Charles Gilbrech ("Gilbrech") acted as IEC's project manager on the Barges, and Dennis Lawrence ("Lawrence") was the assistant project manager.

6. In August 2010, Waller and IEC began looking for subcontractors who could provide electrical instrumentation labor and equipment in Venezuela. MMR International Limited ("MMR") was one of the companies Waller considered to perform the work.

7. Gilbrech contacted John Courville ("Courville"), Vice President of MMR, and requested MMR's rates and a list of its experience.

8. On or around August 25, 2010, a meeting was held at the shipyard where the Barges were being constructed in Orange, Texas to discuss the scope of the project and MMR's experience in Venezuela. Courville, Barry Bastin, and Dante Osteicoechea attended the meeting on behalf of MMR. Bastin and Osteicoechea both had previous experience working in Venezuela and were brought to the meeting in order to inform Waller regarding specific labor requirements in Venezuela. Anthony Waller (Vice President and project manager), Steve Trevelino (site project manager), and Brad Wolverton (assistant project manager) attended the meeting on behalf of Waller. Gilbrech was also present at the meeting.

9. MMR did not guarantee that it could provide American-quality labor in Venezuela. Anthony Waller assumed Wall would be provided American-quality labor based on MMR's previous experience and clients in Venezuela and its rates.

10. During the meeting, MMR representatives recommended that Waller allow it to hire an experienced local bilingual superintendent to use as an interface between the Venezuelan workers, Waller, and Waller's other subcontractors. Waller rejected this recommendation.

11. MMR also recommended that Waller allow it to hire a labor relations attorney to coordinate and interface with labor union workers and union representatives. After initial resistance, Waller agreed to allow MMR to retain a labor relations attorney. Alba Gomez was hired for this position.

12. Waller's representatives also emphasized that they did not want MMR to provide any supervisory personnel to coordinate between Waller, Waller's subcontractors, and the Venezuelan workers, but that IEC would maintain direct supervision and control over the subcontractors and their employees. Instead, Waller only expected MMR to supply certain personnel and equipment.

13. Following the meeting, Gilbrech sent Courville an email stating the project would require between 40-60 workers, and they would need to work twelve hours a day, seven days a week. Due to transportation issues, the parties later agreed that the workers would be required to work ten hours a day, seven days a week. Courville also testified that, based on discussions with Gilbrech, he was aware that the project was expected to last two to three months and that the Barges would be completed in Guanta, Puerto La Cruz, Venezuela.

14. On September 16, 2010, MMR sent Waller Proposal No. P10-41061 ("Proposal"). The Proposal stated that, pursuant to Waller's request, MMR was submitting proposed Time and Materials ("T&M") rates for labor, equipment, and facilities for the electrical and instrumentation ("E&I") and welding-related activities needed for the Barges in Puerto La Cruz, Venezuela.

15. The Proposal also referenced and incorporated a list of the classifications and types of MMR-supplied E&I and welding-related personnel and equipment that were available for Waller's use on the Barges.

16. Additionally, the Proposal contained the following relevant terms: (1) that MMR would document hours worked on a daily basis, and individual weekly timesheets would be submitted to a designated Waller representative for approval at the end of each week; (2) that billings and payments were to be in U.S. Dollars; and (3) that the number of personnel and equipment required would be discussed and agreed to between Waller Marine project management and MMR project management.

17. On September 22, 2010, Mike Hammonds ("Hammonds"), Waller's Procurement and Logistics Manager, transmitted purchase order D1919-282 ("Purchase Order") to MMR, incorporating MMR's Proposal.

18. The Purchase Order required MMR to "assist in the Electrical Completion of the WMI Power Barges in Venezuela" and "mobilize a crew as directed by WMI to the Venezuelan site" for a price "Not to Exceed" $443, 468.80.

19. No clear evidence was presented as to how the Not to Exceed price was calculated.

20. The Purchase Order did not contain any terms guaranteeing the completion date of the project or the performance of the labor crew.

21. Anthony Waller, on behalf of Waller, and John Courville, on behalf of MMR, executed the Purchase Order on or about September 23, 2010.

22. Thus, MMR agreed to perform the scope of work for not more than $443, 468.80, as expressly set forth in the Purchase Order.

23. At the time of the execution of the Purchase Order, there were no other oral or written agreements between Waller and MMR, and MMR was aware of the nature and scope of the project based on its discussions with Gilbrech and Waller representatives.

24. Once work on the Barges began, MMR did not confront any circumstances that were not anticipated by the parties before the work began.

25. Venezuela is a heavily unionized country. In each region of the country, there are specific unions that a company must use when it has a specific type of project.

26. Generally, in order to become an authorized union, the union must register with the Venezuelan Ministry of Labor. Before arriving in Guanta, MMR performed research of the union registry at the Ministry of Labor. In Guanta, Puerto La Cruz, Venezuela, where the Barges were located, Maisanta was the registered union. MMR believed it was required to hire union workers from Maisanta.

27. There was also a local union known as the Bolivarian Front. The Bolivarian Front was not officially registered with the national government; however, the mayor of Guanta had issued a decree that all construction projects in Guanta must use members of the Bolivarian Front. Therefore, because of the mayor's decree, all of Waller's subcontractors on the Barges were required to use union workers from the Bolivarian Front.

28. MMR did not discover the mayor's decree or realize it was required to hire workers from the Bolivarian Front until it arrived at the job site on September 30, 2010, and witnessed the Bolivarian Front union workers protesting at the front gate.

29. Waller informed MMR that MMR had chosen the wrong union. MMR began the process to screen and hire workers from the Bolivarian Front union that same day. A few of the original Maisanta workers hired by MMR, however, remained on the job. Under Venezuelan labor law, the Maisanta workers could not be terminated from the project until the job was complete or good cause existed for their termination.

30. Subcontractors were also required to hire a certain majority percentage of local labor union workers in order to comply with Venezuelan labor law.

31. Waller was aware that MMR was required to use a certain percentage of local labor union workers.

32. The MMR labor crew, at its peak, consisted of 44% MMR employees, 6% Maisanta union, and 50% Bolivarian Front union. For its MMR employees, MMR was able to screen, interview, and hire or rehire employees used previously on Venezuelan projects. Under Venezuelan law, however, MMR was not allowed to screen, conduct background checks, or drug test the labor union workers. MMR had to ...

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