Aker Solutions, Incorporated v. Shamrock Energy So ( 2020 )

Case: 20-30054 Document: 00515474526 Page: 1 Date Filed: 07/01/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
No. 20-30054 July 1, 2020
Summary Calendar
Lyle W. Cayce
Clerk
AKER SOLUTIONS, INCORPORATED,
Plaintiff - Appellee
v.
SHAMROCK ENERGY SOLUTIONS, L.L.C.; SHAMROCK MANAGEMENT,
L.L.C., doing business as Shamrock Energy Solutions,
Defendants – Appellants
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:16-CV-2560
Before STEWART, HIGGINSON, and COSTA, Circuit Judges.
PER CURIAM:*
Shamrock Energy Solutions, LLC and Shamrock Management, LLC
(“the Shamrock entities”) appeal the district court’s post-trial judgment in
favor of Aker Solutions, Inc. (“Aker”). We affirm.
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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No. 20-30054
I. Background
Shamrock Management, LLC (“Shamrock Management”) performs work
for oil and gas companies. In 2008, Jeffrey Trahan purchased Shamrock
Management and became its sole member and manager. In 2012, Trahan
formed Shamrock Energy Solutions, LLC (“Shamrock Energy”) to serve as a
holding company for Shamrock Management. Trahan was the sole member
and manager of Shamrock Energy. In 2015, Shamrock Management began
doing business as “Shamrock Energy Solutions.”
Meanwhile, in 2013, Trahan formed Samurai International Petroleum,
LLC (“SIPCO”). As with the Shamrock entities, Trahan was SIPCO’s sole
member and manager. The reason Trahan created SIPCO was because
Shamrock Management’s financing conditions prohibited it from directly
engaging in oil and gas exploration and production. SIPCO would do what
Shamrock Management could not: pursue oil and gas exploration and
production opportunities.
The relationship among the Shamrock entities and SIPCO was, by any
measure, close. Trahan owned all three companies. 1 All three shared the same
Houma, Louisiana business address. Shamrock Energy’s sole purpose was to
serve as a holding company and re-branding agent of Shamrock Management.
And SIPCO’s sole purpose was to do a certain type of business that Shamrock
Management could not do. The top officers of Shamrock Management and
SIPCO were identical. Those officers and other Shamrock Management
employees who performed work on behalf of SIPCO often used their Shamrock
Management and SIPCO email address interchangeably. Perhaps most
importantly, SIPCO was completely financially dependent on Shamrock
1The Shamrock entities note that it was technically Shamrock Energy, not Trahan,
who owned Shamrock Management. Because Trahan owned Shamrock Energy, which owned
Shamrock Management, it is not misleading to say he also owned Shamrock Management.
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Management. On at least two occasions, Shamrock Management directly paid
SIPCO’s debts and was never reimbursed by SIPCO for the payments. In sum,
Shamrock Energy was a holding company for Shamrock Management, which
SIPCO completely depended on for its existence.
Aker entered the picture in 2014. At the time, SIPCO was considering
acquiring an offshore oil and gas lease in the Gulf of Mexico. Eventually, Aker
and SIPCO entered into a contract in which SIPCO agreed to pay Aker to
perform a study of the offshore area that SIPCO wanted to explore. Aker
performed the study and billed SIPCO roughly $1.7 million for the work.
SIPCO never paid. In February 2016, a petition was filed to liquidate and
dissolve SIPCO.
In March 2016, Aker filed this diversity suit against SIPCO and
Shamrock Energy. Shamrock Management and Trahan were eventually added
as defendants. Aker claimed that SIPCO breached the companies’ contract by
failing to pay for the study. It also alleged that the Shamrock entities were
solidarily liable to Aker under Louisiana’s “single business enterprise” theory.
Additionally, Aker alleged that Trahan was individually liable as SIPCO’s
alter-ego.
Following a two-day bench trial in June 2019, the district court in
October 2019 ruled that SIPCO breached its contract with Aker and that
Shamrock Management was solidarily liable with SIPCO for the breach
because the pair constituted a single business enterprise. The court
nevertheless rejected Aker’s alter-ego theory, absolving Trahan of individual
liability for SIPCO’s breach. The court awarded Aker a money judgment in the
amount of $1,780,144.19 plus pre- and post-judgment interest, attorney’s fees,
and court costs.
The Shamrock entities timely moved for amendment of the findings of
fact and conclusions of law and for a new trial. In December 2019, the district
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court denied the companies’ request for a new trial. Nevertheless, the court
amended its findings of fact and conclusions of law as follows:
to clarify that the Court employed the clear-and-
convincing evidentiary standard in analyzing whether
Aker satisfied its burden of proof on its single-
business-enterprise claim; that equity is served by
imposing joint and several liability against the
Shamrock Defendants under the single-business-
enterprise theory; and also that Aker did not waive its
claim for attorney’s fees, which are awarded pursuant
to the terms of the parties’ contract.
On appeal, the Shamrock entities raise two issues. They first argue that
the district court erred in finding that Shamrock Management and SIPCO
constituted a single business enterprise. Next, they contend that even if the
district court’s finding was correct, the court nonetheless erred in determining
that it was appropriate to hold Shamrock Management liable for SIPCO’s
breach absent any fraud on Shamrock Management’s part.
II. Standard of Review
We review the district court’s factual findings for clear error and its
conclusions of law de novo. Fraser v. Patrick O’Connor & Assocs., L.P., 954 F.3d
742, 745 (5th Cir. 2020); see FED. R. CIV. P. 52(a)(6) (“Findings of fact, whether
based on oral or other evidence, must not be set aside unless clearly erroneous,
and the reviewing court must give due regard to the trial court’s opportunity
to judge the witnesses’ credibility.”).
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III. Discussion
Although this case obligated the district court to make an Erie guess
regarding an unsettled area of Louisiana law, 2 the Shamrock entities do not
argue on appeal that the court applied the wrong law. Instead, they argue that
the court erred when it found, as a factual matter, that Shamrock Management
and SIPCO constituted a single business enterprise. This error was
compounded, the Shamrock entities contend, when the court found as a matter
of equity that Shamrock Management should be held liable for SIPCO’s breach.
In Green v. Champion Insurance Co., Louisiana’s First Circuit Court of
Appeal listed eighteen factors that courts could consider when determining
whether a single business enterprise had been formed. 577 So. 2d 249, 257–58
(La. Ct. App.), writ denied, 580 So. 2d 668 (La. 1991). We emphasize the word
“could” because the court in Green explained that the “list is illustrative and is
not intended as an exhaustive list of relevant factors.” Id. at 258. As the court
further explained, “[n]o one factor is dispositive of the issue of ‘single business
enterprise.’” Id.
Federal district courts considering the Green factors have found that
single business enterprises existed where some, but far from all, of the factors
were present. E.g., Bona Fide Demolition & Recovery, LLC v. Crosby Const. Co.
of Louisiana, 690 F. Supp. 2d 435, 448 (E.D. La. 2010) (“In sum, many of the
Green factors are present in this case and on the whole, the evidence
demonstrates that [the two companies] are not operated as distinct entities
2Gulf & Miss. River Transp. Co. v. BP Oil Pipeline Co., 730 F.3d 484, 488 (5th Cir.
2013) (explaining that federal courts sitting in diversity should determine as best they can
what the Louisiana Supreme Court would do when deciding issues of unsettled Louisiana
law). The law is “unsettled” because the Louisiana Supreme Court has never affirmatively
endorsed the single business enterprise theory, which “has contributed to a hodgepodge of
views about the doctrine in lower Louisiana courts.” Energy Coal v. CITGO Petroleum Corp.,
836 F.3d 457, 460–61 (5th Cir. 2016) (collecting cases).
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despite their separate incorporation.”); Cargill, Inc. v. Clark, No. 14-00233-
BAJ-SCR, 2015 WL 4715010, at *12 (M.D. La. Aug. 7, 2015) (“The two LLCs,
which share a sole manager and member and a sole employee, farm on
essentially the same land, using farm equipment transferred from one to the
other in a zero-dollar sale. One LLC pays insurance on a truck owned by the
other. And bank records indicate that one was directly responsible for the
incorporation of the other.”).
Here, the district court supported its finding of fact by noting that no
fewer than thirteen of the eighteen Green factors were present: common
ownership, common officers, unified administrative control, officers of each
entity failing to act independently of one another, one entity financing the
other, inadequate capitalization, one entity causing the creation of the other,
one entity receiving all its business from the other, one entity using the
property of the other, sharing common employees, one entity’s employees
rendering services on behalf of the other, sharing common offices, and having
centralized accounting. See Green, 577 So. 2d at 257–58 (listing the eighteen
factors). Considering these factors among the totality of circumstances, the
district court held that Shamrock Management and SIPCO constituted a single
business enterprise. This was not clearly erroneous.
The district court also did not clearly err in finding in equity that
Shamrock Management should be liable for SIPCO’s breach even though Aker
knew the entities were distinct on paper, only contracted with SIPCO, and
continued performing under the contract even though unpaid debts began to
pile up over time. These facts would support an argument that Aker was not
defrauded. But a showing of fraud is not required to succeed under a single
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business enterprise theory claim in Louisiana. 3 See id. at 259 (“Upon finding
that a group of corporations constitute a ‘single business enterprise,’ the court
may disregard the concept of corporate separateness to extend liability to each
of the affiliated corporations to prevent fraud or to achieve equity.”) (emphasis
added). It was enough for the district court to find that “SIPCO acted to aid
only [the Shamrock entities] in vetting . . . opportunities, which they were
contractually forbidden to do themselves,” and the Shamrock entities
benefitted from Aker’s work product.
IV. Conclusion
For the foregoing reasons, we AFFIRM the district court’s judgment.
3 The Shamrock entities ask us for the first time in their reply brief to certify a
question to the Louisiana Supreme Court about whether “some heightened form of
misconduct”—e.g., fraud or bad faith—is required to succeed on a single business enterprise
theory of liability under Louisiana law. We decline the belated invitation.
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