Federal Maritime Law Preempts Louisiana Open Account Statute in Gulf Coast Bank & Trust Co. v. Talos Energy, Inc.

Gulf Coast Bank & Trust Co. v. Talos Energy, Inc., No. 25-205, 2025 WL 1651095 (E.D. La. 2025).

By Kirsten LaMulle, J.D. Candidate (2028)

In Gulf Coast Bank & Trust Co. v. Talos Energy, Inc., the United States District Court for the Eastern District of Louisiana addressed whether federal maritime law or Louisiana’s Open Account Statute governs a bank’s right to recover payment when the underlying contractual obligations arise from maritime contracts.[1] The Court ultimately held that federal maritime law governed, reaffirming its preemptive effect when the substance of the underlying transaction is maritime in nature.[2]

The dispute arose after Talos Production, Inc. (“Talos”) entered into a Master Service Agreement (“MSA”) with DHD Offshore Services, LLC (“DHD”), which permitted DHD to provide offshore services as an independent contractor.[3] The MSA governed all work orders, required maritime insurance, and expressly provided that disputes would be governed by the general maritime law of the United States.[4] Among these work orders was a bareboat charter agreement allowing Talos to charter a heavy-lift and pipelay vessel.[5]

Subsequently, DHD assigned its accounts receivable from Talos to Gulf Coast Bank & Trust Co. (“Gulf Coast”) under a Receivable Purchase Agreement (“RPA”).[6] When Talos allegedly failed to pay approximately $1.98 million in outstanding invoices, Gulf Coast filed suit in the Orleans Parish Civil District Court, invoking the state’s Open Account Statute (LRS § 9:2781).[7] Talos removed the case to federal court and argued that Gulf Coast’s claims were preempted by federal maritime law because the payment obligations originated in maritime contracts—the MSA and the bareboat charter.[8] Gulf Coast countered that its claim arose solely under the non-maritime RPA and was therefore governed by Louisiana law.[9] Alternatively, it contended that any non-maritime work, totaling approximately $648,000, should remain recoverable under the state’s Open Account Statute.[10]

In resolving the dispute, the Court applied the Fifth Circuit’s two-part test for classifying maritime contracts.[11] A contract is maritime if (1) it facilitates activity on navigable waters, and (2) a vessel plays a substantial role in its execution.[12] The Court found both elements clearly satisfied, concluding that the contracts demonstrated a primary maritime purpose.[13] First, the MSA contemplated offshore services on navigable waters, which required maritime insurance coverage, and expressly required the application of general maritime law.[14] Second, the bareboat charter agreement, which allowed Talos to use a derrick barge and pipelay vessel, centered entirely on maritime operations.[15]

The Court reasoned that a maritime nexus is required for a contract to be deemed maritime in nature.[16] Citing Eleventh Circuit precedent, Judge Jolivette Brown held an assignee “may sue in admiralty to enforce the original contract, even though the assignment contract itself might not be within the federal courts’ admiralty jurisdiction.”[17] Here, the original contracts—the MSA and bareboat charter agreement— are indisputably maritime in nature, and the RPA’s non-maritime character did not alter the maritime nature of the underlying debt.[18]

The Court also rejected Gulf Coast’s claim that Louisiana law should govern non-maritime portions of the invoices, reaffirming under Supreme Court precedent that “incidental non-maritime elements do not alter a contract’s maritime quality” where the substantial purpose is to facilitate maritime commerce.[19] Here, the substantial purpose of the MSA and the charter was to facilitate offshore vessel operations, and the fact that more than $1.3 million of the disputed invoices were for ‘barge days’ further confirmed their maritime nature.[20] Accordingly, the Court concluded that the MSA and bareboat charter were maritime contracts and that Louisiana’s Open Account Statute was preempted by federal maritime law.[21] Talos’s motion for judgment on the pleadings was granted to the extent it sought a ruling that maritime law applied, and the Court allowed Gulf Coast to amend its complaint to assert proper maritime causes of action, such as breach of a maritime contract.[22]

This decision underscores the broad reach of federal maritime law and its preemptive effect over state contract remedies when the substantial purpose of the transaction involves maritime commerce.[23] The Court emphasized that maritime law looks to the substance and commercial reality of a transaction, rather than formal contract distinctions.[24] Gulf Coast Bank & Trust reaffirmed that when payment obligations originate from maritime contracts, any subsequent assignment of those rights remains governed by federal maritime law.[25]

[1] Gulf Coast Bank & Trust Co. v. Talos Energy, Inc., No. 25-205, 2025 WL 1651095 (E.D. La. 2025).

[2] Id. at *4.

[3] Id. at *1.

[4] Id.

[5] Id.

[6] Talos, 2025 WL 1651095 at *1.

[7] Id.

[8] Id.

[9] Id. at *2.

[10] Id.

[11] Talos, 2025 WL 1651095 at *3 (citing Barrios v. Centaur, L.L.C., 942 F.3d 670, 680 (5th Cir. 2019)).

[12] Id.

[13] Id.

[14] Id.

[15] Id.

[16] Talos, 2025 WL 1651095 at *3 (citing Kreatsoulas v. Freights of Levant Pride & Levant Fortune, 838 F. Supp. 147 (S.D. N.Y. 12/2/1993)).

[17] See id. (citing Ambassador Factors v. Rhein-, Maas-, Und See-Schiffahrtskontor GMBH, 105 F.3d 1397, 1400 (11th Cir. 1997)).

[18] Id.

[19] Id. at *4 (citing Norfolk Southern Ry. Co. v. Kirby, 543 U.S. 14, 24 (2004)).

[20] Id.

[21] Talos, 2025 WL 1651095 at *4.

[22] Id.

[23] Id.

[24] See id. (explaining maritime contractual inquiries are conceptual rather than spatial).

[25] Id.