Chalos & Co. v. Marine Managers, Ltd.
| Decision Date | 23 October 2015 |
| Docket Number | CIVIL ACTION NO: 14-2441 SECTION: R(5) |
| Parties | CHALOS & CO., P.C. v. MARINE MANAGERS, LTD., ET AL. |
| Court | U.S. District Court — Eastern District of Louisiana |
Plaintiff Chalos & Co, P.C. moves for summary judgment on its breach of contract claim against defendants Marine Managers, Ltd. and Homeland Maritime, Ltd.1 Chalos also moves to strike portions of defendants' summary judgment evidence.2 For the following reasons, the Court grants the motion for summary judgment on the issue of liability, but finds that Chalos's motion lacks sufficient information for the Court to determine an appropriate damages award at this time. The Court denies as moot Chalos's motion to strike defendants' summary judgment evidence.
Defendants Marine Managers, Ltd. and Homeland Maritime, Ltd. are foreign corporations organized and existing under the laws of the Marshall Islands, with their principal place of business in Greece.3 At all relevant times, Marine and Homeland managed and operated the M/V TRIDENT NAVIGATOR, a bulk cargo vessel that traveled between international ports.4
Matthaios Fafalios, whom the Court dismissed from this litigation on August 28, 2015, is a native of Greece. Fafalios presently resides in Louisiana.5 On December 3, 2013, Marine and Homeland employed Fafalios as Chief Engineer of the M/V TRIDENT NAVIGATOR.6
Plaintiff Chalos & Co., P.C. is a law firm with offices in New York, Texas, and Florida, as well as offices in Greece.7 Following a United States criminal investigation into allegations that crewmembers aboard the M/V TRIDENTNAVIGATOR illegally discharged oily waste into the ocean, Marine and Homeland hired Chalos as independent legal counsel for Fafalios.8
On October 24, 2014, Chalos filed this breach of contract action against Marine and Homeland.9 Chalos argues that after signing a retainer agreement with the firm on Fafalios's behalf in February 2014, Marine and Homeland unilaterally declared the agreement null and void on June 17, 2014.10 Chalos continued to represent Fafalios during the Government's investigation and eventual criminal prosecution even though Marine and Homeland stopped paying the bills.11 Chalos now seeks to enforce the parties' retainer agreement and to recover the legal fees, costs, and expenses incurred in connection with Chalos's continued representation of Fafalios.12
On February 2, 2015, Marine and Homeland filed a third-party complaint against Fafalios alleging that he fraudulently induced them to enterthe retainer agreement with Chalos.13 Fafalios moved to dismiss the third-party complaint based on the forum selection clause in his employment contract with Marine and Homeland, which required all disputes arising out of the employment contract to be litigated in Greece.14 The Court granted Fafalios's motion to dismiss on forum non conveniens grounds on August 28, 2015.15
On December 3, 2013, Marine and Homeland (defendants) hired Fafalios to serve as Chief Engineer for defendants' vessel, the M/V TRIDENT NAVIGATOR.16 In mid-January 2014, approximately one month into Fafalios's employment, the United States began investigating the M/V TRIDENT NAVIGATOR and its crew after the vessel voyaged from Saudi Arabia to New Orleans, Louisiana. Based on a tip received from one or more of the vessel's crewmembers, the Government suspected that the M/V TRIDENT NAVIGATOR had illegally discharged "oily waste" in violation of theAct to Prevent Pollution from Ships, 33 U.S.C. § 1901, et seq.17 Allegedly, Fafalios instructed certain crewmembers to construct a "magic pipe"18 to bypass the vessel's "Oily Water Separator" and to discharge bilge water and other oily waste directly into the ocean. Fafalios then falsified handwritten entries in the M/V TRIDENT NAVIGATOR 's "Oil Record Book" to conceal the illegal discharge. Fafalios, along with the vessel's Second and Third Engineer, was responsible for maintaining the information in the Oil Record Book.19 Fafalios also deleted photographic evidence of the crime after confiscating one of the Filipino crewmember's personal cell phone.20
There appears to have been much discord between the M/V TRIDENT NAVIGATOR's Greek crewmembers and Filipino crewmembers. The Greeks allegedly believed certain Filipino crewmembers were the Government's whistleblowers. The Greek crewmembers told defendants, companies based in Greece, and their attorney, who is also Greek, that the entire criminalinvestigation amounted to false and malicious accusations by the Filipinos. At his recent deposition, Fafalios testified that he believed the Filipino crewmembers gave perjured testimony at his criminal trial so the Government would prevail and the Filipinos could collect a whistleblower reward.21 Defendants also emphasize that the M/V TRIDENT NAVIGATOR's Second and Third Engineers were both Greek citizens like Fafalios who supported Fafalios's version of events.22
On January 31, 2014, defendants executed an "Agreement on Security" with the United States Coast Guard.23 The Agreement provided that ten M/V TRIDENT NAVIGATOR crewmembers, including Fafalios, would remain within the jurisdiction of the Eastern District of Louisiana and that defendants would provide these crewmembers with, among other things, lodging and transportation to and from all government interviews, appearances, and other matters related to the Government's pending criminal investigation.24 Thoughnot expressly required by the Agreement on Security or the defendants' respective employment contracts with each crew member, defendants hired attorneys to represent the ten crewmembers during the course of the Government's investigation and any eventual criminal proceedings.25 Defendants explain their motivation for hiring independent counsel as follows:
[A]s a shipping company based in Greece, [defendants] felt a duty to support Fafalios, a Greek employee and seafarer whom [defendants] believed had served [them] dutifully and was innocent of any wrongdoing, in what was viewed as a malicious and baseless attack begun by one or more Filipino crewmen interested in personal gain. For similar reasons, [defendants] also appointed independent counsel for the other Greek officers whom the [Government] had placed under suspicion . . . .26
Originally, defendants hired an English-speaking attorney to represent Fafalios.27 Fafalios then requested a different lawyer-specifically, a Greek lawyer named George Gaitas, who worked for Chalos.28 At Fafalios's urging, defendants hired Chalos to be Fafalios's criminal defense counsel, and theparties confirmed Fafalios's legal representation in a retainer agreement executed in full on February 17, 2014.29
Defendants' retainer agreement with Chalos provides in relevant part:
The retainer agreement does not condition the contract on Fafalios's factual innocence, nor does it mention defendants' belief in Fafalios's factual innocence. Nonetheless, defendants argue that they hired independent legal counsel for their Greek crewmembers because they believed, based on statements made by the Greek officers, including Fafalios, that the vessel's crew was innocent of intentional wrongdoing.31 Defendants' attorney submitted an affidavit, which declares that "relying heavily" on Fafalios's assertions of innocence, he, on behalf of defendants, hired independent legalcounsel to represent the vessel's Greek officers.32 Likewise, two of the attorneys hired to represent the other Greek crewmembers submitted affidavits declaring that they "understood that [defendants] believed based on the initial statements that no illegal discharges...
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