Professional Divers of New Orleans, Inc. v. William G. Helis Co.
Docket: No. 2003-CA-0332
Court: Louisiana Court of Appeal; November 11, 2003; Louisiana; State Appellate Court
Professional Divers of New Orleans, Inc. (PDNO) sought review of a trial court judgment that granted Helis Company, L.L.C. (Helis) a set off for remediation costs due to PDNO’s allegedly defective contract performance. In 1998, Helis contracted PDNO to bury 20,280 feet of flow lines at a specific depth, paying them on a day rate basis. After PDNO submitted invoices indicating compliance, Helis' survey revealed the lines were not buried at the required depth. Helis requested PDNO to remediate the work, but PDNO allegedly refused, resulting in Helis withholding payment. PDNO filed suit for $140,480.95, the total of their invoices. In turn, Helis filed a reconventional demand for $77,028.00, the cost of hiring another company for remediation. The trial court awarded PDNO $65,480.95, the difference between the invoice total and Helis's remediation cost. PDNO contended the trial court erred by not awarding the full invoice amount. The appellate court's role is to review the trial court's discretion regarding damages, not to determine what it considers appropriate. Relevant case law was cited regarding contractors' obligations to perform workmanlike services and the implications of defective performance as a breach of contract.
The trial court found that Professional Divers (PDNO) failed to perform work as required under the Master Service Agreement, specifically regarding the burial of flow lines, which were to be buried three feet below the mud line. Despite PDNO's divers claiming they attempted to meet this requirement, surveys indicated otherwise. The court ruled in favor of Helis, granting compensation to PDNO that reflected the difference between their invoiced amount and what Helis had to pay to complete the job correctly. The judgment was based on PDNO’s defective performance, which breached the Master Service Agreement that mandated work to be conducted in a good and workmanlike manner consistent with industry standards. PDNO argued that payment was contingent on actual work done rather than completion, but the court clarified that the core issue was PDNO’s failure to adhere to industry standards, not the payment structure. The Master Service Agreement also allowed for the company to withhold payment for defective work and outlined conditions under which disputes could arise regarding invoiced amounts.
The Master Service Agreement allows for termination due to breach, specifying that if the Contractor fails to perform as required or breaches any obligations, the Company may terminate the agreement immediately. Alternatively, the Company can terminate with ten days' written notice at its discretion. PDNO was responsible for burying flow lines three feet below the mud line and providing diving services and necessary equipment. Helis, overseeing the work, agreed to pay only if the work met industry standards. PDNO's claim for payment based on incomplete work was deemed without merit since the work did not conform to good oilfield standards. The agreement permits Helis to withhold payment during disputes and specifically allows for termination due to defective performance. A survey confirmed that the flow lines were improperly buried, justifying Helis's decision to withhold payment. The trial court upheld that PDNO did not meet the contractual and industry standards, awarding PDNO $65,480.95, reflecting the difference between the total compensation sought and what Helis paid to address the defective work. The ruling was affirmed, with one judge dissenting.
