Stralia Maritime S.A. v. Praxis Energy Agents DMCC

Background

Stralia Maritime S.A. and Praxis Energy Agents DMCC agreed that Praxis would provide bunkers, or fuel, for Stralia’s vessel, M/V Gema. Praxis arranged for a supplier to provide the bunkers but did not pay the supplier because of an unrelated dispute involving Praxis and the supplier or a related party.

Stralia and Praxis then entered an indemnity agreement. Under that agreement, Stralia paid Praxis for the bunkers, and Praxis agreed to protect Stralia from arrests of the vessel and claims resulting from Praxis’s failure to pay the supplier. The supplier caused the vessel to be arrested. Praxis paid the supplier the principal amount due for the bunkers, but did not pay additional amounts, including costs and attorney’s fees claimed by the supplier. Stralia paid those additional amounts to obtain the vessel’s release.

Stralia sued Praxis for amounts due under the indemnity agreement. Aerio Shipmanagement Ltd. was joined as an additional plaintiff to avoid a dispute over the proper plaintiff, but the record established that Stralia was the proper plaintiff. Shortly before trial, Praxis notified the court that it would no longer defend the case and consented to entry of a default. A default was entered.

Indemnity agreement and damages

Stralia submitted undisputed evidence that the parties intended the indemnity agreement to cover all amounts Stralia incurred because Praxis failed to timely pay the supplier. The court accepted that construction of the agreement. The covered amounts included payments to the supplier, interest, consequential damages, costs and attorney’s fees incurred defending the supplier’s action, and costs and attorney’s fees incurred enforcing the indemnity agreement.

The court found that Stralia established the following damages:

- $18,720.00 paid to the supplier; - $57,520.00 in attorney’s fees incurred in the supplier’s action; - $23,191.68 in expenses incurred to maintain the vessel during its arrest; and - $183,189.00 in lost profits caused by the arrest.

These amounts totaled $282,620.68.

Prejudgment interest

The court awarded prejudgment interest even though the complaint did not expressly demand it by name. The complaint sought all amounts due under relevant statutes, Praxis knew before default that Stralia was seeking prejudgment interest, and denying interest would leave Stralia uncompensated despite the indemnity agreement’s promise to hold it harmless.

The court applied New York’s 9 percent statutory rate. It concluded that interest should run from the dates of loss rather than automatically from the date of the vessel’s arrest. Because the precise loss dates did not need to be established, the court reasonably treated the average loss date as 60 days after the arrest. It calculated simple interest on $282,620.68 at 9 percent from January 7, 2018, through January 23, 2020—746 days—as $51,986.72.

Attorney’s fees in this case and disposition

Stralia also sought $185,690.30 in attorney’s fees incurred in this action. The court held that the evidence submitted—a declaration from Stralia’s owner relaying the amount provided by Stralia’s attorney—was not enough to support an award. Under governing circuit law, contemporaneous time records were required.

The court stated that attorney’s fees could be awarded on a timely post-judgment motion. It retained jurisdiction to award costs and attorney’s fees incurred in this action and stated that a separate judgment for those fees would be entered if Stralia filed a timely, properly supported motion.

Judge Robert L. Hinkle entered a final default judgment requiring Praxis to pay Stralia $282,620.68 in damages and $51,986.72 in prejudgment interest, for a total of $334,607.40. The judgment also stated that all other claims among all parties were dismissed.