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Marisco wins case against ASG, close to $812,000

fili@samoanews.com

A federal arbitration in the Marisco Ltd. case against the American Samoa Government has ruled in favor of Marisco with a hearing set for next month at the federal court in Honolulu  to confirm the arbitrator’s decision award, according to federal court records.

According to the proposed judgment, ASG shall pay $811,631.87, plus interest on that amount at the rate of .43% per year from Sept. 1, 2009 until paid.

Additionally, Marisco is entitled to taxable costs in the total amount of $12,439.28 and this stipulation does not waive any potential objection to and/or appeal of the Arbitration decision by the American Samoa Government.

Honolulu-based Marisco filed a civil action suit in March 2010 alleging a breach of contract and claimed that ASG still owes $832,671 in unpaid amount of services, repairs, modifications to the tug boat Sailele as well as services provided to two ASG barges.

ASG denied the allegation but confirmed it already paid Marisco $2.18 million in  "for work which was allegedly performed and equipment/materials which were allegedly provided,” according to ASG’s motion.

ASG filed a countersuit against Marisco and named a third party Terry Conden — who was ASG’s representative working with Marisco.

In March last year, all parties agreed to enter into binding arbitration of the claims, counterclaims, and third party claims. Additionally, the parties agreed that the cost of arbitration shall be borne equally by Marisco and ASG.

The parties also selected Eric Danoff as the arbitrator, who set hearings last August and the witnesses for the hearings were Conden, Wally Thompson, Mike Stewart, John Henderson, Douglas Grainger, Dirk van Guether, Fred Anawati, John Stewart, John Riley, Sapi Mao Ena and Thomas Ueno.

DECISION

In his six-page award decision, Danoff said he found that Marisco was entitled under the doctrine of quantum meriut to recover from ASG for the reasonable value of the repair work that Marisco performed on the tug boat and barges (or vessels).

(Quantum meruit is is a Latin phrase meaning "as much as he has deserved". In the context of contract law, it means something along the lines of "reasonable value of services", according to wikipedia.org, adding that 'quantum meruit' is the measure of damages where an express contract is mutually modified by the implied agreement of the parties, or not completed.)

Mariso rendered the services in response to a request from ASG — acting through Conden,  Henry Ledoux and others, and the services were intended to benefit and did benefit ASG, he said.

“ASG could not reasonably have expected and in fact did not expect that Marisco was providing the services gratuitously,” he said. “ASG would be unjustly enrich if it were allowed to receive the value of those repair services and not pay for them.”

According to the decision, no formal written contract existed for the repair work; however, the terms of a binding agreement between Marisco and the ASG for repair of the vessels are sufficiently clear when all the paperwork, oral statements and conduct of the parties is considered together.

DAMAGES AWARDED TO MARISCO

According to the decision, testimony by one of the witnesses states that Marisco’s remaining unpaid charges comes to $832,671.87. However, the arbitrator said he reduced the amount of damages awarded, by the amount of the expected charges for the remedial work that ASG may have to arrange in American Samoa to correct work that Marisco performed in Hawaii that was not according to repair specifications or standards.

Grainger and Riley testified to some defects in the work on the barges, primarily welding defects and therefore ASG should receive an off-set of $21,040 for these defects, the decision states.

The arbitrator also points out that repair work on the vessels encountered substantial delays, which were caused in whole or in most part, by factors that cannot be attributed to Marisco.

The major cause of delay was a belated request by ASG that the tug boat obtain a loadline certificate, which required a second-haul out, preparation of drawings, substantial additional repair work and testing, said the arbitrator, who noted that these additional repairs were approved by Conden.

According to the decision, some “unorthodox expenses” were added to the project costs, which Mariso paid and then billed to ASG.

“These unorthodox expenditures included Conden’s fees — which normally a vessel owner pays directly to its onsite representative — the cost of certain automobiles, the cost of restaurant equipment, the cost of parts and equipment for other ASG vessels and other expenditures,” according to the arbitrator. “While processing the payment for these expenditures through the vessels’ repair may be unusual, to some extent it conformed to past practice between ASG and Marisco.”

“More importantly, ASG representatives — not Marisco — asked for these expenditures to be processed this way, Marisco did pay for them, and Marisco did not hide them from ASG,” said the arbitrator, who points that he finds “no fraud on Marisco’s part in how these expenditures were processed, and Marisco is entitled to reimbursement for them.”

AWARD DECISION

In  conclusion, Danoff says ASG is to pay Marisco $811,631.87 plus interest on that amount at the rate of .43% per year — not compounded — from Sept. 1, 2009 until paid, plus costs of the suit.

Furthermore, ASG is not entitled to recover from Conden, and Conden is entitled to recover his costs of suit from ASG.

 

 



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