(CN) - Hurricane damage canceled a $5.2 million contract to restore a coral reef off the Florida coast, the 11th Circuit ruled, adding that damages should be assessed according to how much work the restoration company had completed before the storms.
Thomas Miller, who manages an insurance association of ship owners, hired Hudson Marine Management Services to restore part of a reef damaged when the M/V Eastwind ran aground on an underwater coral reef just off the Ft. Lauderdale coast. Miller agreed to pay Hudson $5.2 million for the full restoration project, including $1.8 million already paid to Hudson.
While the restoration work was under way, a series of hurricanes further damaged the reef, including Hurricane Frances on Sept. 2, 2004. Work effectively stopped, although Hudson received a few more payments, for a total of about $2.7 million. Hudson asked for an additional $2.1 million to finish the project, an amount Miller resisted. When negotiations failed, the parties swapped lawsuits accusing each other of breaching the contract.
The district court held that neither party breached the contract, but the contract had been terminated by severe weather conditions. The court declined to award contractual damages, but awarded Hudson damages based on the work it performed before the hurricanes.
The federal appeals court in Atlanta agreed that the hurricanes had terminated the contract, but said the lower court's damage ruling ignored the total value of the restoration project.
"In our view, there is only one fair and logical way to give effect to that agreement: to determine what percentage of the project's value Hudson provided under the contract as of September 2, and multiply that percentage by the contract price of $5.2 million," Judge Fay wrote.
"This will tell us whether, considering the $2,698,000 Miller already remitted, Hudson has been overpaid or underpaid."
The court reversed in part and remanded.
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