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Waterman Steamship Corp. v. United States

decided: March 2, 1979.

WATERMAN STEAMSHIP CORPORATION, PLAINTIFF-APPELLANT,
v.
UNITED STATES OF AMERICA, DEFENDANT-APPELLEE.



Plaintiff-appellant Waterman Steamship Corporation, claiming the Military Sealift Command of the United States had breached its express written contract with plaintiff for the ocean transportation and overseas discharge of U.S. military equipment, brought its action against the United States in U.S. District Court for the Southern District of New York seeking damages in the sum of $113,780.41, plus interest. On cross-motions for summary judgment, Duffy, J., plaintiff's motion for summary judgment was denied and the government's motion was granted. From the judgment dismissing the complaint, plaintiff appealed. The grant of the government's motion for summary judgment is affirmed.

Before Waterman and Oakes, Circuit Judges, and Wyzanski, District Judge.*fn*

Author: Waterman

Plaintiff-appellant Waterman Steamship Corporation ("Waterman") brought suit against the United States in the United States District Court for the Southern District of New York, alleging that the federal government, acting through the Military Sealift Command ("MSC"), had breached a written contract of carriage by wrongfully refusing fully to compensate Waterman for the transportation and unloading of United States military equipment on seven voyages. In its answer the United States categorically denied that it owed Waterman any more money than that which it had already paid for the transportation and discharge of the cargo. On cross-motions for summary judgment, the district court, Duffy, J., denied Waterman's motion for summary judgment and granted the United States's motion for summary judgment dismissing the complaint. We approve the grant of the government's motion for summary judgment and affirm the judgment entered below.

The sole question we must resolve on this appeal concerns the construction of the contract between Waterman and the federal government.

In June 1974 Waterman and the government entered into an ocean carriage contract which incorporated by reference the provisions of MSC's standard Shipping Agreement and Rate Guide ("Agreement"). Pursuant to the terms of the Agreement, Waterman undertook to transport military cargo over specified routes at specified "rates" of reimbursement. The basic "rates" for the Transportation of goods, set forth in Section II of the Agreement, were stated in terms of dollars per measurement ton ("MT"), an MT consisting of 40 cubic feet. These transportation rates varied, however, according to the nature of the cargo being carried. Thus, separate transportation rates were specified for the carriage of regular cargo, light vehicles, heavy vehicles, hazardous cargo, reefer, and so forth, with regular cargo identified as Cargo NOS ("not otherwise specified"). Transportation Charges (I. e., "freights") generally would be computed by multiplying the Rate (which was dependent upon the type of cargo being transported) times the volume (stated in terms of measurement tons of 40 cubic feet each) of the cargo being shipped. It is also important to point out that these rates were "applicable on an FIO (Free In and Out) basis," (Agreement, Section II, P 1A); that is, they were designed to compensate the carrier for transportation services only, and were promulgated on the assumption that the carrier would not be providing any stevedoring services.

The Agreement provided for transportation by bargeships known as LASH (an acronym for "lighter-aboardship") vessels. Carriage on LASH barges involved the stowage of break-bulk cargo in specially constructed vessels which in turn are loaded into special oceangoing ships. The barges are capable of independent inland travel and can be loaded and unloaded expeditiously, thereby avoiding long in-port delays. See Armco Steel Corporation v. Stans, 431 F.2d 779, 783 (2d Cir. 1970).

Generally, no one shipper utilizes the entire carrying capacity of a barge. Thus, to realize maximum revenues from the transportation of cargo, a barge must ordinarily carry, on any one voyage, cargo received from a number of commercial shippers. Under the terms of its contract with Waterman, however, the government expressly reserved the right to demand exclusive use of certain barges, although the government cargo may not have required the use of the barge's full carrying capacity. The Agreement provides that, in the event the government invokes the exclusive use option, the government is to pay a minimum ocean transportation charge designed to compensate Waterman for the transportation revenues it would presumably have obtained from other commercial shippers. The minimum charge was computed on the assumption that, but for the government's invocation of its right to exclusive use of the barge, the barge would have been loaded to at least 75 percent of its carrying capacity. Thus, at the time of the original agreement between Waterman and the government in 1974, Section II, P 1E of the Agreement provided as follows:

E. Barge Exclusive Use Payment: Cargo shipped in a barge required for exclusive use by the Contracting Officer for military cargo shall be freighted at the applicable cargo category rate subject to a minimum charge per barge computed by applying the Cargo NOS rate to seventy five percent (75%) of the inside cubic capacity of the barge.

In 1975 the provision was amended to read:

E. Minimum Per Barge: Vehicles shipped in a barge shall be freighted at the applicable rate subject to a minimum charge per barge computed by applying the lowest of the three commodity rates NOS, light vehicles, heavy vehicles to 300 MT for LASH barges and 600 MT for SEABEE barges. This minimum is applicable only when the barge is loaded exclusively with vehicles booked under the terms of this Agreement.

The parties agree that, inasmuch as 300 MT represents 75 percent of the "inside cubic capacity of the (type of barge)" used to transport the government's cargo, the amendment had no significant effect upon the minimum transportation charges to which Waterman was entitled. Of course, if the government invoked its right to exclusive use and the total tonnage of the cargo transported exceeded 75 percent of the carrying capacity of the barge, the transportation charges would then be calculated by multiplying the applicable transportation rates times the Actual inside cubic capacity utilized.

Ordinary transportation rates are designed to compensate the carrier for transportation services only and not for stevedoring services. The expectation of the parties to the Agreement was that ordinarily "(t)he Government shall perform or arrange for the loading and discharging of cargo . . . ." Agreement, Part I, 1:5(b). Under the terms of the Agreement, however, the government was granted "the option to require (Waterman) to discharge or load cargo at (a) foreign port." Agreement, Section II, P 12A. In the event that this particular option was exercised, P 12C (of Section II) of the Agreement provided that "(w)hen the Government exercises the option set forth in (P 12A), the applicable FIO rates set forth herein shall be increased by the charges set forth in the Table of Charges for Stevedoring and Terminal Services ("Table" or "Table of Charges") to cover cost of discharging or loading between place of rest on the ship and the end of ship's tackle at the overseas port." Agreement, Section II, P 12C. The Table contained "charges" listed in stated dollar rates per MT for the loading and discharging of specified categories of cargo by particular carriers at particular foreign ports, stating that "(t)he following Charge (in $/MT ) shall be added to the (basic) Rates set forth in this section . . . when cargo loading or discharging at the overseas port is performed under the option provided in paragraph 12A of this section." (emphasis supplied).

The seven voyages for which Waterman claims it was not adequately compensated occurred during the period from October of 1974 through June of 1975; all these voyages were between Gulf coast ports of the United States and ports in the Middle East. For each voyage, the government invoked both its right to exclusive use of the barges And its right to have the ocean carrier offload the cargo.

On all seven voyages, Waterman computed the minimum charge for exclusive barge use on the basis of a "composite" rate, a total reached by adding the Cargo NOS*fn1 rate for ocean carriage plus the ...


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