Rowan Companies, Inc. v. Wilmington Trust

305 S.W.3d 698, 2009 WL 3210936

• Court: Court of Appeals of Texas
• Decided: February 4, 2010
• Docket: 14-07-00465-CV
• Status: Published

Opinions

SUBSTITUTE MAJORITY OPINION

EVA M. GUZMAN, Justice.

We deny the appellees’ motion for rehearing, but to clarify the scope of remand, our majority and dissenting opinions of March 31, 2009 are withdrawn and these substitute majority and substitute dissenting opinions issued in their respective places.

In this summary-judgment appeal, bare-boat charterer Rowan Companies, Inc. challenges the trial court’s judgment in favor of the Wilmington Trust Company, the Owner Trustee of the oil rig Rowan-Halifax. Rowan argues that the Owners improperly invoked an appraisal provision in their contract with Rowan after the oil rig was destroyed by a hurricane, thereby impermissibly increasing the rig’s estimated residual value, and hence, the amount Rowan was contractually required to pay for loss of the rig. We agree, and therefore, reverse and remand.

I. Factual and PROCEDURAL Background

Rowan Companies, Inc. (“Rowan”) is an international offshore and land drilling contractor. In 1984, Rowan entered into a sale/leaseback transaction involving the Rowan-Halifax 166-C jack-up drilling rig (the “Halifax”). The transaction was accomplished through a Participation Agreement and a bareboat charter (the “Charter”), both dated December 1, 1984 (collectively, the “Operative Documents”). The parties to the Participation Agreement included Rowan as Charterer, Tex-tron Financial Corporation (“Textron”) as Owner Participant, and Wilmington Trust Company (“Wilmington”) as Owner Trustee.¹ The Charter provided that “so long as the Charterer’s Stockholders’ Equity is at least $400,000,000, the Charterer may self-insure up to the excess of the SLV [i.e., Stipulated Loss Value] Amount over $55,000,000....”

A. Initial Appraisal

The Participation Agreement required, as a condition precedent, that Textron receive appraisals of the Halifax by Rush Johnson Associates and Lowell Johnston & Associates, Inc. Both appraisals were to be dated as of the Closing Date of the contract, contractually defined to mean December 28, 1984. Each appraisal was required to contain the appraiser’s estimates that, as of that date, (1) the Halifax’s fair market value was $66.5 million, (2) the remaining useful life of the vessel at the end of the Basic Term was at least 22 years, and (3) the Halifax’s residual value at the end of the Basic Term was not less than twenty percent of the owner’s cost for the Vessel, defined to be $66.5 million.² In section 18 of the Charter, the parties also provided for a Renewal Option, the terms of which are discussed further infra and set forth in full in the appendix to this opinion.

On December 26, 1984, Larry Hasty of Rush Johnson Associates appraised the Halifax and opined that:

• The expected useful life of the rig in December 1984 was “at least” twenty years.

• The Estimated Residual Value at the end of a sixteen-year lease period was “estimated to be twenty (20) percent of the current fair market value, determined without including in such value any increase or decrease for inflation or deflation during the lease and after subtracting any costs to the rig’s owner for redelivery of the rig.” [³]

• A remaining useful life of five years was “a reasonable estimate of what the remaining useful life of the rig” would be at the end of the original sixteen-year lease term.

• It was “reasonable to assume” that it would be commercially feasible that the rig would be usable by someone other than the lessee or an affiliate of the lessee at the end of the original sixteen-year lease term, and it could be expected that the twenty percent residual value would be realized at that time.

• The current fair market value of the rig was $66.5 million.

There is no evidence in the record that Textron obtained an appraisal from Lowell Johnston & Associates, Inc., and the parties do not state if this condition was performed or whether any party objected to its non-performance.

B. Contract Performance

The Basic Term of the Charter passed uneventfully and expired in September 2000. Rowan exercised its option to renew the Charter, and the parties agreed to a Renewal Term of seven-and-one-half years. On August 15, 2005, Jane M. La-voie, Textron’s vice president of operations, wrote to Bill Wells, Rowan’s treasurer and vice president of finance, questioning the adequacy of Rowan’s insurance coverage of the Halifax:

The insurance certificates provided to us for the current year indicate that the hull insurance ... on the Halifax is for $48.35 million. While we do not claim to be experts on the current market value of these assets, we note that a recent Jefferies & Company report estimates the fair market value of 116C rigs to be $75 million and the replacement cost to be $125 million. We understand that the Jefferies reports include information provided by Rowan. If this information is correct, it appears that the hull insurance on these rigs needs to be substantially increased.

In late September 2005, Hurricane Rita struck the Gulf Coast, leaving no trace of the Halifax. The vessel was presumed sunk, and Rowan gave notice to Wilmington on October 5, 2005 that the rig had been destroyed. Rowan’s hull insurer paid policy limits exceeding $43.35 million on the claim, and in February 2006, the parties agreed to place the insurance proceeds in an escrow account until their dispute over ownership of the proceeds could be resolved.

C. The Declaratory Judgment Action

On November 3, 2005, Rowan filed a petition for declaratory relief against Tex-tron and Wilmington, in Wilmington’s capacity as Owner Trustee of the Halifax.⁴ On November 29, 2005, Wilmington notified Rowan that it was invoking the Appraisal Procedure as that term is defined in the Operative Documents. Textron and Wilmington (collectively, the “Owners”) asserted counterclaims for breach of contract, declaratory judgment, and attorneys’ fees.

On or about March 13, 2006, Rowan informed Wilmington that it calculated the Stipulated Loss Value of the Halifax to be $22,840,898.93, plus accrued interest. Rowan eventually paid Wilmington this amount, which included the Basic Hire of $2,617,489.13 payable on March 15, 2006.

On March 15, 2006, Wilmington wrote to advise Rowan that it had not received payment of the Stipulated Loss Value, which, according to its calculations, was $80,235,317.37; this amount was based on the post-loss appraisal which Wilmington organized. In addition, Wilmington stated that the Basic Hire payment of $2,617,489.13 due on March 15, 2006 had not been paid,⁵ and notified Rowan pursuant to Section 15(a) of the Charter that if the full Stipulated Loss Value was not paid by close of business on March 17, 2006, a contractual “Event of Default” would occur.⁶

D. Cross-Motions for Summary Judgment

The Owners moved for traditional summary judgment, asserting that Rowan owed Wilmington $59,882,522.06 plus interest under the terms of the Charter.⁷ In addition, they asked the trial court to declare their rights under the insurance provisions of them contracts with Rowan⁸ and award attorneys’ fees incurred in prosecuting their contract claim. According to the Owners, Rowan failed to make payments that were due on March 15, 2006 resulting from the loss and failed to maintain adequate insurance. In its cross-motion for traditional summary judgment, Rowan asked the trial court to declare that it had paid all amounts due under the Charter provision governing payments due in the event of a loss. In addition, Rowan asked the trial court to direct the escrow agent to pay Rowan all remaining hull insurance proceeds.⁹

On March 7, 2007, the trial court denied Rowan’s motion for summary judgment and granted in part the Owners’ motion for summary judgment. Although the trial court did not state the grounds for its judgment, it ruled that the Owners’ motion was “granted as set out [in the trial court’s final judgment] and otherwise denied.” Specifically, the court ordered Rowan to pay Wilmington (1) $59,882,522.06; (2) interest on that sum in the amount of $8,467,364.37 through October 31, 2006; (3) interest from and including November 1, 2006 through and including March 6, 2007 at the rate of $15,386.48 per day; (4) $500,000 for reasonable and necessary attorneys’ fees; and (5) post-judgment interest on the sum of all of these amounts. In addition, the trial court declared that Wilmington “is entitled to recover all proceeds paid from any hull and machinery policies on the Halifax which were in effect at the time of its loss, including specifically those proceeds deposited in the escrow account which the parties jointly established.... ” Finally, the trial court explained that all proceeds previously paid to Wilmington had been credited in calculating the judgment. Rowan’s motion for new trial was overruled by operation of law, and this appeal timely ensued.

II. Issues Presented

In a single issue, Rowan contends the trial court erred in denying its motion for summary judgment and granting summary judgment in favor of the Owners.

III. Standard of Review

We review summary judgments de novo, Valence Operating Co. v. Dorsett,10 and if the trial court grants the judgment without specifying the grounds, we must affirm if any of the grounds presented are meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872-73 (Tex.2000). We consider all grounds preserved for review that are necessary for final disposition of the appeal. See Cincinnati Life Ins. Co. v. Cates, 927 S.W.2d 623, 626 (Tex.1996). In a traditional motion for summary judgment, the movant has the burden of showing that there is no genuine issue of material fact and it is entitled to judgment as a matter of law. Tex.R. Civ. P. 166a(c); Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex.1997). To be entitled to a final traditional summary judgment, a defendant must conclusively negate at least one essential element of each of the plaintiffs causes of action or conclusively establish each element of an affirmative defense. Sci Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997). Evidence is conclusive only if reasonable people could not differ in their conclusions. City of Keller v. Wilson, 168 S.W.3d 802, 816 (Tex.2005). Once the defendant establishes its right to summary judgment as a matter of law, the burden shifts to the plaintiff to present evidence raising a genuine issue of material fact. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678-79 (Tex.1979).

When, as here, both sides move for summary judgment, each bears the burden of establishing that it is entitled to judgment as a matter of law; neither side can prevail because of the other’s failure to discharge its burden. City of Garland v. Dallas Morning News, 969 S.W.2d 548, 552 (Tex.App.-Dallas 1998) (en banc), aff'd, 22 S.W.3d 351 (Tex.2000). On appeal, we review all summary-judgment evidence, determine all questions presented, and render the judgment the trial court should have rendered. Valence Operating Co., 164 S.W.3d at 661. We may affirm the judgment, reverse and render a judgment for the other side if appropriate, or reverse and remand if neither party has met its summary-judgment burden. Hackberry Creek Country Club, Inc. v. Hackberry Creek Home Owners Ass’n, 205 S.W.3d 46, 50 (Tex.App.-Dallas 2006, pet. denied).

IY. Choice of Law

The resolution of this dispute is determined by the meaning of the contract term “estimated residual value.” Before we can analyze this phrase under the correct rules of contract construction, we must determine which law applies to the various documents governing the transactions between the parties.

A. The Charter

The parties agreed that the “Charter shall in all respects be governed by, and construed in accordance with, the general maritime laws of the United States of America and otherwise by the laws of the State of New York.” When a dispute is not inherently local, federal law controls the interpretation of a maritime contract. Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 22-23, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004) (citing Kossick v. United Fruit Co., 365 U.S. 731, 735, 81 S.Ct. 886, 6 L.Ed.2d 56 (1961)). The determination of whether an agreement constitutes a maritime contract subject to federal maritime law depends upon “the nature and character of the contract” and whether it has “reference to maritime service or maritime transactions.” Id. at 23-24, 125 S.Ct. 385 (quoting N. Pac. S.S. Co. v. Hall Bros. Marine Ry. & Shipbuilding Co., 249 U.S. 119, 125, 39 S.Ct. 221, 63 L.Ed. 510 (1919)). Because “a charter party is a classic example of a maritime contract,” federal law governs its interpretation. See Fontenot v. Mesa Petroleum Co., 791 F.2d 1207, 1214 (5th Cir.1986); Novoship (UK) Ltd. v. Ruperti, 545 F.Supp.2d 328, 332 (S.D.N.Y.2008) (“There can be no dispute that the contracts at issue here — charter party contracts — should be considered maritime contracts.”).

Federal maritime law “is an amalgam of traditional common-law rules, modifications of those rules, and newly created rules.” E. River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 865, 106 S.Ct. 2295, 90 L.Ed.2d 865 (1986). When interpreting a maritime contract, the general rules of contract construction and interpretation apply. See Marine Overseas Servs., Inc. v. Crossocean Shipping Co., Inc., 791 F.2d 1227, 1234 (5th Cir.1986).

B. The Participation Agreement

Although the Halifax Charter and the Participation Agreement are part of the same transaction and therefore are interpreted together,¹¹ the rules of construction applicable to each are not necessarily the same.¹² The Participation Agreement is the contract by which Rowan committed to sell the Halifax to the Owners; unlike a charter party, contracts for the sale of a vessel are not maritime in nature. See, e.g., Herman, Family Revocable Trust v. Teddy Bear, 254 F.3d 802, 804 (9th Cir.2001) (stating that contracts for the sale of a vessel are not maritime in nature); Vrita Marine Co. Ltd. v. Seagulf Trading LLC, 572 F.Supp.2d 411, 411 (S.D.N.Y.2008) (same). The parties agreed that the Participation Agreement “shall in all respects be governed by, and construed in accordance with, the laws of the State of New York ápplicable to agreements made and to be performed entirely within such State, including all matters of construction, validity and performance.” Although the Owners cite New York law as well as the law of other jurisdictions in their motion for summary judgment, the extent to which the parties urge the application of New York law rather than federal maritime law to various contract provisions is unclear.¹³ Thus, we apply the rules of contract construction set forth in federal maritime law to the Charter’s provisions, and we interpret provisions of the Participation Agreement in accordance with Texas contract law except to the extent that the parties have provided sufficient briefing of New York law to allow us to apply the substantive law of that state. See Coca-Cola Co. v. Harmar Bottling Co., 218 S.W.3d 671, 685 (Tex.2006) (noting that, absent proof or argument to the contrary, Texas courts generally may presume that the determinative law of another state is the same as Texas law).

V. Analysis

A. “Estimated Residual Value”

It is uncontroverted that the Halifax disappeared when Hurricane Rita struck the Gulf Coast during the Renewal Term of the Charter. Under Section 12 of the Charter, the loss triggered Rowan’s obligation to pay the Owners as follows:

SECTION 12. Loss, Destruction, Condemnation or Damage, (a) Payment of Stipulated Loss Value. Upon the occurrence of an Event of Loss with respect to the Vessel, the Charterer shall forthwith ... give the Owner Trustee and the Indenture Trustee notice of such Event of Loss and, on the next succeeding Hire Payment Date 60 days after such occurrence (or, if earlier, the final scheduled Hire Payment Date) pay to the ... Owner Trustee an amount equal to the sum of (i) Stipulated Loss Value calculated as of such Hire Payment Date, (ii) ... Basic Hire due and payable on such Hire Payment Date and (iii) any other Hire then due and payable.

(emphasis added). The next succeeding Hire Payment Date sixty days after the loss fell on March 15, 2006, and, with the exception of the Hire Payment regularly scheduled for that date and the Stipulated Loss Value payable as a result of the loss, the parties do not contend that “any other Hire [was] then due and payable.” Thus, on March 15, 2006, Rowan was required to pay (1) the Stipulated Loss Value calculated as of that date; and (2) the Basic Hire due on March 15, 2006. Rowan does not dispute that the Basic Hire due on that date was $2,617,489.13. The parties’ disagreement arises from their differing interpretations of one of the components of “Stipulated Loss Value.”

The Participation Agreement provides that, “ ‘Stipulated Loss Value’ as of any date during any Renewal Term shall mean the amount determined pursuant to Section 18 of the Charter.” Under section 18 of the Charter, Stipulated Loss Value on a given Hire Payment Date is defined to equal the sum of (1) the Basic Hire due on that date, (2) the present value on the Hire Payment Date of all remaining payments, and (3) the present value on the Hire Payment Date of the “estimated residual value.”¹⁴ The central dispute in this appeal concerns the meaning of the phrase “estimated residual value” as used in section 18(a)(B)(ii)(b) of the Halifax Charter.

Section 18(a) provides in pertinent part: SECTION 18(a) Fixed Rental Renewal Option.

Such Renewal Term shall be for a period that, when added to the Interim Term and the Basic Term, shall not exceed 80% of the total estimated remaining economic useful life of the Vessel (measured from the Closing Date) as determined by the Appraisal Procedure ...; provided, however, that

(A) at the end, of such Renewal Term the Vessel will have an estimated residtial value ... as determined in such Appraisal Procedure of not less than 20% of the Owner’s Cost for the Vessel and

(B) the use of the Vessel will, as of the beginning of stich Renewal Tern and as determined in such Appraisal Procedure, be reasonably expected to be commercially feasible (in a manner that would permit the Owner Trustee to realize the residual value described in the foregoing clause (A)) by some Person other than the Charterer who could charter or purchase the Vessel from the Owner Trustee at the end of such Renewal Term. In addition to the limitation set forth in the next preceding sentence, no Renewal Term pursuant to this paragraph (a) shall be entered into if it would end before one year after the commencement thereof. During such Renewal Term, all of the provisions of this Charter shall continue in full force and effect, except that

(ii) Stipulated Loss Value on each Hire Payment Date during such Renewal Term shall be equal to the sum of Basic Hire payable on such Date and the present value as of such Date of (a) Basic Hire that would have been payable over the balance of such Renewal Term and

(b) the estimated residual value as of the end of such Renewal Term (present value to be determined by using a discount rate of 10% compounded semiannually) as determined by the Appraisal Procedure.

(emphasis added).

Rowan contends that the phrase “estimated residual value” is a term of art with a recognized usage in the tax, accounting, and financial fields and is the estimate made at the beginning of the lease of the value of the vessel at the end of the lease. The Owners contend that “estimated residual value” is equal to the fair mai’ket value that the vessel would have commanded at the end of the Renewal Term if the loss had not occurred. After analyzing the agreements under the applicable rules of contract interpretation, we conclude that the interpretation advanced by Rowan is reasonable, and the interpretation described by the Owners is not. We therefore hold that the Halifax Charter is unambiguous and must be interpreted in the manner described by Rowan.

1. Intent of the Parties

Charter party agreements are a species of contract, and as such, they are subject to the general rules of contract law. Marine Overseas Servs., Inc., 791 F.2d at 1234. Like other contracts, maritime contracts must be interpreted to give effect to each of the contract’s provisions. Am. Roll-On Roll-Off Carrier, LLC v. P & O Ports Baltimore, Inc., 479 F.3d 288, 293 (4th Cir.2007); see also Restatement (Second) op Contracts: Rules in Aid of Interpretation § 202(2) (1979) (“A writing is interpreted as a whole, and all writings that are part of the same transaction are interpreted together.”). Our primary purpose in interpreting a maritime contract is to ascertain the intent of the parties. F.W.F., Inc. v. Detroit Diesel Corp., 494 F.Supp.2d 1342, 1357 (S.D.Fla.2007). Thus, we construe a charter “according to the intent of the parties as manifested by the whole instrument rather than by the literal meaning of any particular clause taken by itself.” The Rice Co. (Suisse), S.A. v. Precious Flowers Ltd., 523 F.3d 528, 534 (5th Cir.2008) (quoting The Framlington Court, 69 F.2d 300, 303 (5th Cir. 1934)); see also F.W.F., Inc., 494 F.Supp.2d at 1357 (“The elementary canon of interpretation is, not that particular words may be isolatedly considered, but that the whole contract must be brought into view and interpreted with reference to the nature of the obligations between the parties, and the intention which they have manifested in forming them.” (quoting O’Brien v. Miller, 168 U.S. 287, 297-300, 18 S.Ct. 140, 42 L.Ed. 469 (1897))); Restatement (Second) of Contracts: Rules in Aid of Interpretation § 202(1) (1979) (“Words and other conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight.”). Contractual provisions are read in a manner that effectuates the contract’s spirit and purpose, considered as a whole and interpreted so as to harmonize and give meaning to all of its provisions. Arizona v. United States, 575 F.2d 855, 863 (Ct.Cl.1978). An interpretation that affords “a reasonable meaning to all parts will be preferred to one which leaves a portion of it useless, inexplicable, inoperative, void, insignificant, meaningless, superfluous, or achieves a weird and whimsical result.” Id.

2. Plain Language

Whenever possible, we consider the plain language of the contract first. Flores v. Am. Seafoods Co., 335 F.3d 904, 910 (9th Cir.2003). Unless a different intention is manifested, we interpret language according to its generally prevailing meaning. Restatement (Second) of ConTRACTS: RULES IN AlD OF INTERPRETATION § 202(3)(a) (1979).

In the phrase, “estimated residual value,” to “estimate” means “[t]o set a value on or appraise,” “[t]o form an approximate judgment or opinion regarding the value,’ ” or to “ ‘[calculate approximately.’ ” United States v. Foster, 131 F.2d 3, 7 (8th Cir.1942). “Value,” as used in the context presented here, refers to monetary worth. See Webster’s Third New Int’l Dictionary, 2530 (Philip Babcock Gove, ed., 3d ed., 1993). More specifically, “residual value” is defined as the “[a]mount expected to be obtained when a fixed asset is disposed of at the end of its useful life (also called scrap or salvage value).” Black’s Law Dictionary 1552 (6th ed. 1990).¹⁵ Thus, the generally prevailing meaning of the words comprising the phrase “estimated residual value” as used in the Operative Documents suggests an approximate calculation of the monetary value of the vessel at the end of the lease term under discussion. This meaning is consistent with Rowan’s argument that “estimated residual value” was required to be calculated before the loss, because after the vessel vanished, its approximate value at the end of the lease term would be nothing.

3. Terms Used Elsewhere in the Operative Documents

It is the Owners’ position, however, that “estimated residual value” is calculated after an event of loss and is equal to the fair market value that the vessel would have had if the loss had not occurred. But every provision of a maritime contract must be read in light of the others so as to give each the meaning reflected by the contract as a whole. Am. River Transp. Co. v. Morton Int’l, Inc., No. 06-6103, 2008 WL 2436176, at *1 (E.D.La. June 13, 2008). We therefore cannot ignore the fact that the parties have actually used the terms “fair market value” and “residual value” elsewhere in the contract to refer to non-equivalent valuations.¹⁶ For example, section 3.01(j) of the Participation Agreement describes the following conditions precedent:

The Owner Participant shall have received ... appraisals by Rush Johnson Associates and [L]owell [J]ohnston & [Associates, [I]ne., in form and substance satisfactory to the Owner Participant ... and dated the Closing Date, stating in each case:

(i) such appraiser’s estimate of the fair market value of the Vessel on the Closing Date, which fair market value shall be equal to $66,500,000;

(ii) such appraiser’s estimate as of the Closing Date of the remaining useful life of the Vessel and the residual value thereof at the end of the Basic Term (without taking into account the effects of inflation or deflation and costs of removal to the Owner Participant or the Owner Trustee), which estimates shall be not less than 22 years and not less than 20% of Owner’s Cost for the Vessel, respectively....

(emphasis added). Thus, the Participation Agreement required an initial appraisal of two different values. The first figure represented the vessel’s then-current fair market value. The second figure was a prediction, made before the lease term began, of the vessel’s residual value when the lease term ended sixteen years later. This section of the Participation Agreement is noteworthy in that it illustrates that the parties did not use the terms “estimated residual value” and “fair market value” to refer to the same thing. Rowan’s interpretation of “estimated residual value” is consistent with the parties’ use of these words elsewhere in the contract to require an approximate calculation of the vessel’s residual value in the future. In contrast, the Owners’ interpretation of “estimated residual value” requires speculation regarding the fair market value the vessel would have had if it had survived.

Further, the Owners’ interpretation requires the terms “residual value” and “fair market value” to be used in ways that not only are inconsistent with the use of these terms elsewhere in the contract, but which also render some contract provisions meaningless. For example, in section 16(b) of the Halifax Charter, the parties agreed that in the event of default,

[T]he Owner Trustee may, within 30 days after the Charterer shall make the full payment of Basic Hire and Stipulated Loss Value as aforesaid, give the Charterer written notice requesting that the Fair Market Sales Value of the Vessel as of the date as of which Stipulated Loss Value was determined pursuant to clause (ii) of this Section 16(b) be determined. If the Fair Market Sales Value of the Vessel as of such date shall be determined to exceed the Stipulated Loss Value paid pursuant to the first sentence of this Section 16(b), the Charterer shall, within 60 days after such determination, pay the amount of such excess to the Owner Trustee.

If, as the Owners imply, estimated residual value is the same as fair market value, then this provision is meaningless. As previously discussed, Stipulated Loss Value is the sum of estimated residual value plus the present value of remaining Basic Hire payments. If estimated residual value and fair market value are the same, then Stipulated Loss Value is the sum of fair market value plus the present value of remaining Basic Hire payments. Under this interpretation, it is mathematically impossible for fair market value ever to exceed Stipulated Loss Value, and this provision of the Charter is superfluous.

The Owners’ interpretation also uses the word “estimate” in a manner inconsistent with its usage elsewhere in the contract. Although “estimate” is used in other provisions to refer to an approximate calculation based on known information, the Owners’ use of the word “estimated” in its interpretation of the phrase “estimated residual value” requires an appraiser to calculate the fair market value of the vessel at the end of the lease term based on an assumption- — the continued existence of the vessel — that is known to be false.

4. Rule of the Last Antecedent

Under the grammatical “rule of the last antecedent,” “qualifying words, phrases, and clauses” are to be applied only to the immediately preceding words or phrase¹⁷ and “are not to be construed as extending to and including others more remote.” Elliot Coal Mining Co., Inc. v. Dir., Office of Workers’ Comp. Programs, 17 F.3d 616, 629-30 (3d Cir.1994) (quoting Azure v. Morton, 514 F.2d 897, 900 (9th Cir.1975)). Pursuant to section 18(a)(B)(ii)(b) of the Charter, one component of Stipulated Loss Value is “the estimated residual value as of the end of such Renewal Term (present value to be determined by using a discount rate of 10% compounded semiannually) as determined by the Appraisal Procedure.” Applying the rule of the last antecedent to this language, the phrase “as determined by the Appraisal Procedure” does not modify “estimated residual value” as the Owners contend, but instead modifies “such Renewal Term.”¹⁸

5. Absurd Result

The unreasonableness of the Owners’ interpretation is further illustrated by the inconsistent ways in which it deals with the effect of the hurricane on supply, demand, and value. The destruction of the Halifax and similar rigs decreased the supply of such vessels. Consequently — and as stated by the Owners’ own appraisers — demand for such vessels after the hurricane exceeded supply.¹⁹ Because demand exceeded supply, the market price for such vessels increased. See United States v. Cars, 337 U.S. 325, 333-34, 69 S.Ct. 1086, 93 L.Ed. 1392 (1949) (discussing analogous situation in which government demand for vessels in a time of national emergency outstrips supply, resulting in inflated prices for vessels and causing the market to be an unfair indication of value). Thus, when estimating the fair market value that a vessel such as the Halifax would have had at the end of the Renewal Term had it survived, the appraisers used market prices that were based in part on the destruction of the Halifax, among others. In effect, the Owners urge an interpretation that accounts for the effect of the hurricane on the market but ignores its effect on the rig. Instead of acknowledging the destruction of the vessel as a cause of decreased supply, the Owners treat the Halifax as the beneficiary of increased demand. This interpretation reaches an absurd result in which the destruction of the Halifax increased its value. In addition, it highlights another barrier to this interpretation: the absence of shared assumptions.

6. No Shared Assumptions for a Post-Loss Appraisal

The Operative Documents provide no set of shared assumptions on which a post-loss appraisal could be based. For example, Section 7(a)(ii) of the Charter requires the Charterer to “keep the Vessel in such condition as will entitle her to the highest classification and rating by the American Bureau of Shipping for vessels of the same age, type and use.... ” This obligation does not apply “during such period as ... an Event of Loss shall have occurred and be continuing....” Charter, § 7(a)(y). Thus, there is no agreement concerning the hypothetical condition of the vessel at the time of a post-loss appraisal. Nevertheless, the appraisers retained by the Owners used the assumption that the vessel was in the highest classification rating, despite the explicit contract provision that this assumption does not apply to an Event of Loss. As a result, their opinions concern a hypothetical rig that not only survived the hurricane, but did so without significant damage. The absurdity of this result further illustrates that if the parties intended to permit the Appraisal Procedure to be invoked after a loss, they would have eliminated the exception in section 7(a)(y) of the Charter or otherwise agreed upon the assumptions they would apply regarding the vessel’s hypothetical condition after its loss.²⁰

B. Timing of Appraisal Procedure

As the foregoing discussion demonstrates, the Operative Documents do not support an interpretation that the parties intended estimated residual value to be based on a post-loss appraisal. A close reading of these documents also demonstrates that the parties did not intend for the Appraisal Procedure to be invoked after the Renewal Term began.

1. Plain Language

As previously indicated, the parties agreed that the length of the Renewal Term would be determined by the Appraisal Procedure. In section 18(a)(A) and 18(a)(B) of the Charter, the parties agreed that “at the end of such Renewal Term the Vessel will have an estimated residual value ... as determined in such Appraisal Procedure of not less than 20% of the Owner’s Cost for the Vessel and ... the use of the Vessel will, as of the beginning of such Renewal Term and as determined in such Appraisal Procedure, be reasonably expected to be commercially feasible .... ” (emphasis added). The use of the word “such” indicates that the length of the Renewal Term and the minimum estimated residual value are determined from the same Appraisal Procedure.²¹ Similarly, in section 18(a)(B)(ii)(b), the Stipulated Loss Value on each Payment Hire Date during the Renewal Term includes “the estimated residual value as of the end of such Renewal Term ... as determined by the Appraisal Procedure.” (emphasis added). This is the same Appraisal Procedure referred to earlier in section 18, i.e., the Appraisal Procedure utilized to determine both the length of the Renewal Term and to ascertain whether the minimum estimated residual value is at least twenty percent of the Owners’ Cost.

As expressed in the language of section 18(a), the parties contemplated the use of a single Appraisal Procedure, which would determine (1) the vessel’s remaining useful life measured from the Closing Date (i.e., the period used to determine the length of the Renewal Term), and (2) whether the estimated residual value was at least twenty percent of the Owners’ Cost of $66.5 million — i.e., $13.3 million. Specifically, the Appraisal Procedure was to be used to calculate the Renewal Term within a range of one to seven-and-one-half years. The parties intended that the Renewal Term be determined before it began, and there is no indication in the Operative Documents that the length of the Renewal Term could be varied during the term as initially agreed upon by the parties. Thus, unless “Appraisal Procedure” means different things in different sentences of the same contract provision, then the Appraisal Procedure was intended to be used before the start of the Renewal Term to determine its length. Moreover, section 18(a) requires an appraiser to certify that the estimated residual value at the end of the Renewal Term will be at least $13.3 million. Significantly, this section contains no language requiring or permitting the adjustment of the estimated residual value.

The Owners’ interpretation, however, requires us to ignore the word “such” and disconnect the determination of the Vessel’s remaining useful life from the determination that the minimum estimated residual value is at least $13.3 million. Because this interpretation would render the word “such” meaningless, we cannot adopt this view.

2. “Appraisal Procedure” Defined

The contractual definition of “Appraisal Procedure” also supports Rowan’s interpretation. In Appendix A of the Participation Agreement, “Appraisal Procedure” is defined as follows:

“Appraisal Procedure” shall mean the procedure specified in the succeeding sentences for determining an amount, value or period. If the Owner Trustee and the Charterer shall have been unable to agree on such amount, value or period, and if either the Owner Trustee or the Charterer shall give written notice to the other requesting determination of such amount, value or period by appraisal, the Owner Trustee and the Charterer shall consult for the purpose of appointing a mutually acceptable qualified independent appraiser, who shall be a marine surveyor. If such parties shall be unable to agree on an appraiser within 20 clays of the giving of such notice, such amount or value shall be determined by a panel of three independent appraisers, each of whom shall be a marine surveyor.

The parties’ rights to request appraisal is subject to the condition precedent that the parties “shall have been” unable to agree. In determining the meaning of this phrase, we apply normal grammatical rules. “Shall have been” is the future perfect continuous tense, “used to express a continuous, ongoing action which will be completed by a certain time in the future.” ²² Here, it cannot be said that there was a continuous, ongoing failure to agree. To the contrary, the parties entered the contract and performed for 21 years— throughout the remaining existence of the rig — without any expression of disagreement regarding the variables required to be determined pursuant to section 18(a). Although the Owners essentially contend that they may require a formal appraisal if the parties become unable to agree, this is not what is stated in the definition provided by the Operative Documents.²³

3. Adjustment of Stipulated Loss Value

The Operative Documents also provide that Stipulated Loss Value “shall be adjusted as required in Article IX of the Participation Agreement.” Article IX of the Participation Agreement sets forth conditions under which Basic Hire, Stipulated Loss Value, and Termination Value are to be recalculated. These conditions consist of (i) a change in the Closing Date, (ii) an increase in the Owner’s transaction costs, and (iii) changes in the tax law. Notably, the occurrence of an “Event of Loss” or changes in the market are not listed among those conditions that necessitate or permit a mid-term adjustment to Stipulated Loss Value.

4. Generally Accepted Accounting Principles

It has been said that, under general maritime law, a court may not look beyond the written language of the document to determine the intent of the parties unless the disputed contract provision is ambiguous. Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 332-33 (5th Cir.1981). ²⁴ Although this is essentially a statement regarding the parol evidence rule, it excludes “only evidence of prior undei'standings and negotiations which contradicts the unambiguous meaning of a writing which completely and accurately integrates the agreement of the parties.” Battery S.S. Corp. v. Refineria Panama, S.A., 513 F.2d 735, 739-40 (2d Cir.1975). Conversely, when extrinsic evidence is considered for the purpose of interpretation, the parol evidence rule is inoperative. Garza v. Marine Transp. Lines, Inc., 861 F.2d 23, 27 (2d Cir.1988). Having concluded that the unambiguous language of the Operative Documents demonstrates the intent of the parties to use the Appraisal Procedure not later than the start of the Renewal Term — -and only if they have been unable to agree on an amount, value, or period — we further note that this conclusion is consistent with, but not dictated by, generally accepted accounting principles (“GAAP”).

GAAP “ ‘encompass[ ] the conventions, rules, and procedures that define accepted accounting practice at a particular point in time.’ ” Shalala v. Guernsey Mem’l Hosp., 514 U.S. 87, 101, 115 S.Ct. 1232, 131 L.Ed.2d 106 (1995). Foremost among the sources informing GAAP is the Financial Accounting Standards Board (“FASB”), a private organization founded at the recommendation of the American Institute of Certified Public Accountants to establish accounting principles. Statement of Policy on the Establishment and Improvement of Accounting Principles, SEC Release No. AS-150, 1973 WL 149263, at *1 (Dec. 20, 1973). The “principles, standards and practices promulgated by the FASB in its Statements and Interpretations” are considered by the Securities & Exchange Commission “as having substantial authoritative support, and those contrary to such FASB promulgations [are] considered to have no such support.” Id.

FASB Statement No. 13 addresses the accounting treatment of estimated residual value in leasing transactions and provides that estimated residual value is determined at the inception of the lease (or in some instances, at the renewal of the lease). Fin. Accounting Standards Bd., Statement of Fin. Accounting Standards No. 13 (“FASB 13”), ¶17 (2008). This accounting standard further provides that “[a]n upward adjustment of the estimated residual value shall not be made.” Id.

The Owners argue that the provisions of FASB 13 are applicable only to accounting. For example, paragraph 43 of FASB 13 describes generally accepted accounting principles concerning the method by which a lessor in a leveraged lease accounts for that investment. The calculation of the lessor’s investment includes the estimated residual value of the leased asset. FASB 13 ¶ 43(c). Except in circumstances not presented here, however, “[t]he estimated residual value shall not exceed the amount estimated at the inception of the lease.” Id. The same restriction applies to the accounting of a lessor’s investment in a “sales-type lease” and a “direct financing lease.” See FASB 13 ¶¶ 17(a), (d); 18(a), (d). According to the Owners, these restrictions imply that the estimated residual value can increase, but simply prevent the lessor from recognizing a gain on the investment before it actually receives the money.

This argument ignores the distinction between estimated residual value and actual residual value. Significantly, the parties entered the Participation Agreement with the express understanding that estimated residual value and actual residual value are not the same. Moreover, the parties agreed in section 8.03(b) of the Participation Agreement that Rowan did not guarantee the actual residual value of the Vessel.²⁵ Thus, Rowan correctly asserts that the “$13,300,000 figure remains the number that should be used in the formula for calculating what Rowan owes.”

By setting a time limit for invoking the Appraisal Procedure, the parties have allocated the risk of market fluctuations. If the Owners believed that the estimated residual value of the vessel would increase over time, they could have invoked the Appraisal Procedure at the outset of the contract. By failing to do so, they bore the risk that they would lose value if the estimated residual value rose. This is consistent with economic reality: if the vessel remained in existence at the end of the lease so that its actual residual value could be realized, then the Owners would bear the loss if its actual value was less than estimated and would reap the gain if its value increased. Conversely, if Rowan believed that the rig’s estimated residual value would be less than $13.3 million, it could have invoked the Appraisal Procedure. By failing to do so, it bore the risk that it might pay more than the rig’s residual value in the event of a loss, but it obtained the benefit of a locking in a “ceiling” for the vessel’s stipulated loss value.²⁶

We conclude that the previously agreed-upon estimated residual value of $13.3 million was not changed by the Owners’ invalid invocation of the Appraisal Procedure after the loss. Even if the 2000 amendment to the Operative Documents contemplated a second “Appraisal Procedure,” the intention of the parties as expressed in section 18(a) does not encompass a post-casualty appraisal. At most, the parties indicated that the appraisal be performed at the start of the Renewal Term as part of the process of determining the length of the Renewal Term. Nothing in the Operative Documents allows backdating of estimated residual value as the Owners suggest. Although the Owners further argue that they agreed to use the Appraisal Procedure to calculate estimated residual value “if and when there was a need to calculate SLV during the Renewal Term,” the need to calculate Stipulated Loss Value was not a mere contingency; rather, it was necessary to calculate Stipulated Loss Value from the start of each term in order for Rowan to ascertain its insurance obligations. Moreover, under the Owners’ model, it cannot be determined if or when Rowan breached the contract by under-insuring.

C. Calculation of Amount Owed by Rowan

The amount Rowan owed in the Event of Loss is set forth in Section 12(a) of the Charter: on the next succeeding Hire Payment Date 60 days after the Loss, Rowan was required to pay to Wilmington, as the Owner Trustee, an amount equal to the sum of the Basic Hire due on that date and Stipulated Loss Value. Stipulated Loss Value on a given payment date is defined to equal the Basic Hire due on that date plus the present value of all remaining payments, plus the present value of the estimated residual value.

On appeal, Rowan challenged only substitution of the estimated residual value of over $80 million as calculated by the Owners rather than the previously agreed-upon estimated residual value of $13.3. million. We agree that the trial court erred in substituting the post-loss figure suggested by the Owners rather than the previously agreed-upon figure; however, we are unable to simply render judgment. See Tex. RApp. P. 43.3(a) (“When reversing a trial court’s judgment, the court must render the judgment that the trial court should have rendered, except when ... a remand is necessary for further proceedings.... ”). Because the trial court concluded that the insurance proceeds that Rowan deposited in an escrow account were insufficient to meet Rowan’s obligations to the Owners, it did not reach the question of the proper disposition of excess insurance funds.

D. Excess Insurance Proceeds

Insurance proceeds in excess of the amount that Rowan is required to pay pursuant to Section 12(b)(i) of the contract are to be divided between parties “as their interests may appear,” but the Operative Documents provide no description of the means by which the parties’ interests are to be determined. We therefore remand the question of the method intended by the parties to be used in making this determination, for calculation of the total amount Rowan is required to pay to Wilmington, and for determination of the parties’ respective rights to excess insurance proceeds.²⁷

Although the Owners argue on appeal that “Rowan had no evidence of any insurable interest of its own in the Halifax hull and equipment,” the Owners did not pursue a no-evidence summary judgment or argue that there was no such evidence. In their traditional motion for summary judgment, the Owners merely asserted that “Rowan has refused to identify any insurable interest of its own in the Halifax hull and equipment.” The Owners do not contend that Rowan lacked an insurable interest, or even lacked evidence of an insurable interest, and the foregoing is not properly characterized as an express ground for traditional or no-evidence summary judgment

E. Attorneys’ Fees

Attorneys’ fees were awarded pursuant to the parties’ stipulation that appellees’ reasonable and necessary attorney fees for the breach-of-contract action total $500,000. Rowan did not challenge this award in its appellate brief, or assert error regarding the amount of fees at any time prior to its reply brief. Although Rowan reserved the right to challenge appellees’ entitlement to attorneys’ fees, it did not reserve the right to challenge the amount.

On appeal, Rowan cites Barker v. Eckman as authority for reversing and remanding the attorneys’ fee award. 213 S.W.3d 306, 312-15 (Tex.2006). In Barker, the Texas Supreme Court concluded that the appellate court could not conduct a proper factual sufficiency review because the jury’s award of attorneys’ fee was tied to an inflated damage finding. Id. at 314-15. Here, however, the parties have stipulated to the proper amount of the Owners’ attorneys’ fees. Under these circumstances, we are reasonably certain that the trial court’s award of attorneys’ fees was not significantly influenced by the erroneous amount of damages it considered, but was instead a result of the parties’ stipulation. Because we conclude that the Owners correctly asserted that Rowan owed additional funds, albeit in a much lesser amount, we affirm the trial court’s award of attorneys’ fees.

VI. Conclusion

Pursuant to the unambiguous terms of the Operative Documents, the Owners were not entitled to recalculation of the estimated residual value based on a post-loss appraisal. We therefore reverse the trial court’s judgment and remand for determination of (1) the amount owed by Rowan based upon the Halifax’s estimated residual value of $13.3 million, (2) the disposition of excess insurance funds, and (3) applicable pre-judgment and post-judgment interest based upon the corrected amounts. Because the amount of attorneys’ fees to be awarded was based upon the parties’ stipulation, we affirm the award of attorneys’ fees.

1 . Various bond purchasers and an indenture trustee were also parties to the Participation Agreement but are not parties to the underlying suit or to this appeal.

2 . This figure was to be calculated “without taking into account the effects of inflation or deflation and costs of removal” to Textron or Wilmington. In addition, the appraiser was to opine that the Halifax does not constitute "limited use property” as that term is used in Rev. Proc. 76-30.

3 . Note that this estimate does not say “at Least twenty percent.”

4 . Textron subsequently assigned its beneficial interest in the Participation Agreement and the Charter to its subsidiary, North Sea Investments Inc. Rowan later agreed to North Sea Investments Inc.’s substitution as Owner Participant through an Assumption and Assignment of Participation Agreement. On July 31, 2006, North Sea (Connecticut) LP intervened in the suit, alleging that it "owns a right to share in the economic benefits owed to North Sea by Rowan...." We therefore include North Sea Investments and North Sea (Connecticut) LP in our use of the name, "Textron.”

5 . Under the terms of the escrow agreement, this amount was to be paid by the escrow agent on March 15, 2006. The record is not clear regarding the date on which this occurred.

6 . Five days after the date of Wilmington’s letter, Rowan filed a first amended original petition for damages and declaratory relief, adding Textron subsidiary CP Offshore LLC as a defendant and adding claims concerning the Cecil Provine rig. Rowan alleged that, just as North Sea succeeded to Textron’s interest in the Rowan-Halifax rig, CP succeeded to Textron’s interest in the Cecil Provine rig. Rowan also added a claim in quantum meruit for insurance premiums it incurred to insure the Cecil Provine for its full market value, rather than its Stipulated Loss Value.

7 . This figure represents the sum of the Basic Hire payment and its calculation of the Stipulated Loss Value, reduced by the amount that Rowan already had paid based on its own calculations.

8 . In addition, Textron, North Sea, and Wilmington asked the trial court to dismiss Rowan's claim for increased insurance premiums on a second rig, the Cecil Provine, which was subject to a similar sale and leaseback agreement. Claims regarding the Cecil Provine were severed from the case.

9 . Before ruling on the cross-motions for summary judgment, the trial court signed two severance orders. By agreement of the parties, the trial court severed Rowan’s quantum meruit claims against the Owners. In addition, the trial court granted the Owners' motion to sever their claims against Rowan for (1) breach of contract for failure to pay expenses for the Halifax Appraisal Procedure; (2) breach of contract for failure to indemnify the Owners for the loss of the Halifax; (3) relief sought pursuant to section 16(b) of the Halifax Charter; (4) a declaration of the Owners' right to remedies under section 16(b) of the Halifax Charter; (5) a declaration of the Owners' rights regarding Rowan’s continuing obligation to insure the Cecil Provine rig, including the Owners' rights under sections 9(a) and 12(b)(ii) of the Cecil Provine Charter; (6) a declaration of the Owners’ continuing right to have the Stipulated Loss Value for the Cecil Provine decided by the Appraisal Procedure; and (7) all relief requested in the Owners’ pleadings relating to such claims, including requests for damages, interest, and attorneys' fees. The latter order was "intended to sever and consolidate ... all claims and issues not decided with respect to the motions for summary judgment filed by the parties in this action.”

10 . 164 S.W.3d 656, 661 (Tex.2005).

11 . Restatement (Second) of Contracts: Rules in Aid of Interpretation § 202(2) (1979).

12 . See, e.g., Tetra Applied Techs., LP v. Henry's Marine Serv., No. H-04-2576, 2007 WL 1239240, at *2 (S.D.Tex. April 27, 2007).

13 . We note, however, that if a party asks the court to take judicial notice of the laws of another state, the court must do so if the party provides the court with “sufficient information to enable it properly to comply with the request.” Tex.R. Evid. 202. "A preliminary motion is necessary to assure the application of the law of another jurisdiction, and absent a motion by a party, Texas law may be applied to a dispute.” Burlington N. & Santa Fe Ry. Co. v. Gunderson, Inc., 235 S.W.3d 287, 290 (Tex.App.-Fort Worth 2007, pet. withdrawn) (citing Pittsburgh Corning Corp. v. Walters, 1 S.W.3d 759, 769 (Tex.App.Corpus Christi 1999, pet. denied)).

14 . Although Rowan argued in the trial court that Basic Hire was not a component of Stipulated Loss Value, it has abandoned that argument on appeal.

15 . “Scrap value” is defined as "[t]he value of the constituent materials and components of a thing; not its value for the purpose for which it was made.” Id.

16 . See also Taracorp, Inc. v. NL Indus., Inc., 73 F.3d 738, 744 (7th Cir.1996) (applying general principles of contract law and inferring that parties did not intend for two different phrases to mean the same thing); Hubbell v. United States, 4 Ct.Cl. 37, 1800 WL 608, at *3 (Cl.Ct.1868) (“Neither Congresses nor men are apt to say precisely the same thing over twice in different words....”).

17 . Barnhart v. Thomas, 540 U.S. 20, 26, 124 S.Ct. 376, 157 L.Ed.2d 333 (2003).

18 . In their motion for rehearing, the Owners argue that Rowan did not contend the rule of the last antecedent applies. As a grammatical rule, however, it applies to the contract regardless of whether the parlies point it out. Interpretation of a maritime contract is a matter of law, reviewable de novo on appeal. Foreman v. Exxon Corp. 770 F.2d 490, 496 (5th Cir.1985). General federal maritime law has adopted the general rules of contract construction, which include rules of grammar. See F.T.C. v. Mandel Bros., Inc., 359 U.S. 385, 389-90, 79 S.Ct. 818, 822-23, 3 L.Ed.2d 893 (1959) (applying the rule of the last antecedent without suggesting that its application was urged by any party); Sims’ Lessee v. Inine, 3 U.S. 425, 445, 3 Dall. 425, n.a, 1 L.Ed. 665 (1799) ("The rule is, that 'such' applies to the last antecedent, unless the sense of the passage requires a different construction.” (quoting Ellsworth, C.I.)). The rules of English grammar also apply under New York contract law. See In re Enron Creditors Recovery Corp., 380 B.R. 307, 322 (S.D.N.Y.2008) ("Under ordinary contract construction rules, the rules of English grammar apply. The rule of the last antecedent is such a rule."); id. at 319 ("[I]n line with the maxim that contract language is to be interpreted pursuant to the plain, ordinary and usual meaning of the words used, ... a court should apply settled mies of grammatical construction unless it clearly appears that the parties intended otherwise.”) (citation omitted). The Owners also contend that if we apply the rule of the last antecedent as we have done here, we must also apply it to the parenthetical in section 3.01(j)(ii). This premise, however, is incorrect. See R.W. Burchfield, The New Fowler's Modern English Usage, 571 (rev. 3d ed., Oxford Univ. Press 2000) (describing a parenthesis as an “interruption” of a sentence and stating, "It is important to bear in mind that a parenthesis may or may not have a grammatical relation to the sentence in which it is inserted.”).

19 . One appraiser noted that Rowan Companies lost four offshore rigs as a result of Hurricanes Katrina and Rita. Another notes that "day rates at this time have increased dramatically over a short period of time.” According to the appraiser, such rates were “approximately twice as high now compared to late 2002,” which was the last time prior to the loss that a comparable rig was sold, and “the [fair market value] derived from the Cost Approach is not appropriate given the high day rates presently in the marketplace.” He further stated that "[t]here are presently 43 jackups on order that will be delivered in the next three years” and "day rales will be moderate in 3 to 4 years as supply catches up with demand.” The surveyor from ABS Consulting observed, "Naturally, if equipment is in high demand, the dayrate or earning capacity of any such unit is increased and this tends to have a proportionate increasing effect on value[,]” and, "among drillers, the tightest supply now is for jackup rigs such as the [Halifax].” “Jackup rig utilization has increased from 86% in April 2004 to effectively 100% as of the date of this report [2/22/06]. Also, rig charter dayrales have doubled in some regions since the third quarter of 2004 due to tight supply.” The third appraiser stated, "It is obvious that we are currendy in an extremely strong market, a seller’s market.” The ABS surveyor further observed that as of February 2006, rig demand exceeded supply.

20 . Because Rowan was required to repair damage costing as much as half of the estimated residual value, substituting a hypothetical fair market value for estimated residual value also skews Rowan's repair obligations: as the fair market value increases, the relative cost of repair decreases. Thus, if the Halifax survived with some damage, and we followed the Owners’ suggestion of substituting fair market value for estimated residual value, then Rowan’s maximum responsibility for repair costs would increase from approximately $6.65 million to more than $40 million— based upon damage sustained by other vessels.

21 . See Lechuga v. Tex. Employers’ Ins. Ass’n, 791 S.W.2d 182, 185 (Tex.App.-Amarillo 1990, writ denied) (explaining the ordinarily understood meaning of the word, “such”); Coker v. Tex. Alcoholic Beverage Comm'n, 524 S.W.2d 570, 574-75 (Tex.Civ.App.-Dallas 1975, writ ref d n.r.e.) (holding that the word “such” refers back to preceding language; thus, in a statute that initially identifies “dry” political subdivisions, a subsequent reference to "such” political subdivisions refers to those same identified subdivisions); Warner Elevator Mfg. Co. v. Houston, 28 S.W. 405, 408 (Tex.Civ.App.1894) ("'Such' refers to what has been specified, and means 'the same as has been mentioned.'"), rev’d on other grounds, 88 Tex. 489, 31 S.W. 353 (1895).

22 . See Ch. 7. The Future Tenses, WordPower, (2002-2009), http://www.wordpower.ws/ grammar/gramch07.html; H. Ramsey Fowler, The Little, Brown Handbook, 155 (Little, Brown & Co. eds. 1980) ("The perfect tenses indicate that an action was or will be completed before another time or action.”); see, e.g., In re Eagle-Picher Indus., Inc., 190 B.R. 557, 562 (Bankr.S.D.Ohio 1995) (discussing lease provision agreeing that "Landlord shall have the right, but not the obligation, to terminate this Lease ... if by August 31, 1989 Landlord shall have been unable to obtain a commitment for both a non-recourse construction loan and a non-recourse permanent loan”); Stabile v. McCarthy, 336 Mass. 399, 403, 145 N.E.2d 821, 823-24 (1957) (holding that contract that was "subject to the right of the buyer in the event that he shall have been unable to obtain the approval of the Wilmington Planning Board of his proposed subdivision of the ... premises prior to the date ... set for performance ... at his option to cancel this agreement” required the buyer to prepare a plan conforming to the planning board regulations, and to try reasonably to obtain planning board approval prior to the date set for the conveyance, before condition precedent for contract cancellation was satisfied); Wilmington United Neighborhoods v. U.S. Dep’t of Health, Educ. & Welfare, 458 F.Supp. 628, 645 (D.C.Del.1978) (discussing contract providing that "[i]If on July 1, 1978, litigation pending against Owner ... shall remain pending or shall have been resolved adversely to Owner, or if prior to such date Owner shall have been unable to obtain or obtain commitments for such financing then from and after July 1, 1978, Owner shall have the right to terminate the Contract by the giving of seven days prior written notice”).

23 . In addition, the rig arguably had already been appraised by "a mutually acceptable qualified independent appraiser” in 1984 pursuant to section 3.01 (j) of the Participation Agreement. As a signatory to the contract, Rowan accepted Rush Johnson Associates as the marine surveying company to provide the Appraiser’s Certificate. Thus, the December 1, 1984 contract can itself be considered "written notice to the other requesting determination of such amount, value or period by appraisal,” and "the Owner Trustee and the Charterer” did appoint "a mutually acceptable qualified independent appraiser, who shall be a marine surveyor." This appraisal is "final and binding.” If the initial agreed use of Rush Johnson Associates is the first use of the Appraisal Procedure, and the Owner is permitted to invoke the Appraisal Procedure again, then the contract language requiring the result of the appraisal procedure to be "final and binding” is rendered meaningless.

24 . Under New York law, ”[a]n ‘ambiguous’ word or phrase is one capable of more than one meaning when viewed objectively by a reasonably intelligent person who has examined the context of the entire integrated agreement and who is cognizant of the customs, practices, usages and terminology as generally understood in the particular trade or business.” Walk-In Med. Ctrs., Inc. v. Brener Capital Corp., 818 F.2d 260, 263 (2d Cir. 1987) (quoting Eskimo Pie Corp. v. Whitelawn Dairies, Inc., 284 F.Supp. 987, 994 (S.D.N.Y.1968)).

25 . We note also that, in a leveraged lease, the lessee does not guarantee the residual value of the property. FASB 13. This is not simply a matter of accounting, but has a real effect on the terms of the agreement that are consistent with its purpose of establishing a leveraged lease.

26 . In their motion for rehearing, the Owners argue that " 'fb]y delaying the implementation of the appraisal procedure, both parlies took the risk that the property would change in value by the time the appraisal finally took place.’ " De Anza Enters. v. Johnson, 104 Cal.App.4th 1307, 128 Cal.Rptr.2d 749, 757 (2002). The Owners further contend that “Texas public policy requires the De Anza approach here to effectuate the parties' agreement to resolve their dispute via the Appraisal Procedure.” We note that the contract at issue here, however, is governed by general federal maritime law, whereas De Anza is a California state law case using California statutes governing contract interpretation. Those statutes differ from the general federal maritime law that govern this action. Moreover, De Anza supports the position that by delaying implementation of the appraisal procedure, the Owners took the risk that the rig would be valueless at the time of the appraisal.

27 . Pursuant to Charter section 12, Rowan sought an award of excess insurance proceeds, but the Owners did not seek judgment on this basis. To the contrary, in their motion for summary judgment, they argued as follows:

With respect to the Halifax, of course, there are no "excess” insurance proceeds subject to Charter § 12(b)(ii) because Rowan’s payment obligation under § 12(a) far exceeded the amount of insurance proceeds received. The owners ask the Court to declare that the Owner Trustee is entitled to all of the Halifax insurance proceeds, pursuant to Charter § 12(b)(i).

The Owners argue that, on remand, it is appropriate to consider the Owners' claim that Rowan breached the contract by failing to maintain adequate insurance. We disagree. In its motion for summary judgment, the Owners asked that the trial court declare “that Rowan was obligated to maintain hull insurance on the Halifax ... in an amount sufficient to pay the full value of Defendants' ownership interest....” With regard to the Halifax, the Owners did not move for damages on this basis. As previously noted, however, the trial court severed a number of claims regarding the Halifax from the case before us, including, inter alia, the Owners' claims for (1) failure to indemnify the Owners for the Halifax’s loss, (2) relief pursuant to pursuant to section 16(b) of the Charter; (3) a declaration of the Owners' right to remedies under section 16(b) of the Charter; and (4) all relief requested in the Owners' pleadings relating to such claims. See ante, n. 9 (emphasis added). Section 16(b) of the Charter sets forlh the contractual remedies available should an “Event of Default” occur, and the Charter specifically defines the failure to maintain insurance in compliance with the Charter as an Event of Default. Thus, the Owners' request for a declaration that they are entitled to the remedies under section 16(b) of the Charter is, in effect, a request that the trial court declare whether an Event of Default occurred. Because we read this request for relief to be encompassed in the trial court's reference to “relief requested in the Owners’ pleadings relating to” the severed claims described above, we consider the Owners' request for declaratory judgment to be severed as well. Thus, remand for litigation of the claim in the present cause number is unnecessary.