pistons of the number two generator were replaced while the Vessel was sailing with cargo. The other two generators were used to power the Vessel and maintain the correct temperature for the cargo while repairs were effected. Trial Tr. at 135-36, 183-87.
The Vessel stopped for approximately two hours on June 15, 1992 while travelling from Antwerp to Honduras to load cargo when the main engine shut down. The main engine cylinder exhaust valve was replaced, and the resulting delay may have affected the Vessel's estimated time of arrival in the next port. Id. at 136-37, 194-97; DX 383(b) at 27. Such a stoppage at sea should have been recorded in the deck log, but was not. Trial Tr. at 196. On July 13 through July 15, 1992, the number six cylinder of the main engine was replaced while the Vessel was in port discharging cargo. Id. at 137, 197-98; DX 383(b) at 55-57.
On September 18 and 19, 1992, while en route from Gibraltar to Panama on a ballast voyage, the main engine stopped for 11.5 hours. Trial Tr. at 137-38. No entries were made in the deck logs about this stoppage, and distance run entries were falsified or altered at some point.
Id. at 199-206; DX 383(c) at 23-24; PX 5(b) at 30-31; PX 6(b); PX 7(b). Similarly, on September 25, 1992, while in the Sargasso Sea en route to Honduras, the main engine shut down for unknown reasons for approximately eleven hours. This stoppage was also not recorded in the deck logs. Trial Tr. at 201; DX 383(c) at 30; PX 5(b) at 37; PX 6(b); PX 7(b).
On October 15, 1992, while travelling to Italy with a full load of bananas, two of the Vessel's three generators simultaneously failed for approximately 39.5 hours. DX 395(c). During this period the refrigeration machinery did not operate for several hours, but the banana cargo suffered no damage. Trial Tr. at 139, 141; Webber Dep. at 39, 43; PX 13. The Vessel was able to divert into port in Cartagena, Spain with one generator in order to repair one of the two failed generators. Trial Tr. at 139. The Vessel was placed off-hire under paragraph 68 of the Charter.
Id. at 35-36, 266-67; DX 383(c) at 50; PX 6(b); PX 7(b). The Vessel resumed its voyage the next day with two working generators. Trial Tr. at 138-39, 267. The Vessel's class surveyor inspected the Vessel, and on October 20, 1992, certified that the Vessel was in satisfactory condition, subject to the recommendation that the number one engine be repaired. Id. at 140; PX 14.
The Vessel left Morocco on November 27, 1992, and arrived in New Bedford, Massachusetts on December 7. On December 16, while in port, all three engines failed, causing a complete blackout, including the shutdown of all refrigeration machinery for approximately twelve hours. Trial Tr. at 150, 269-70; DX 383(5) at 12; PX 6(b); PX 7(b). No cargo claims resulted from the blackout. Webber Dep. at 136, 138.
On December 29, 1992, the United States Coast Guard Marine Safety Office in New Bedford received an anonymous complaint stating that the Vessel was unseaworthy. DX 423. Between December 30, 1992 and January 14, 1993, Coast Guard officers boarded the Vessel seven times to investigate the Vessel's safety and seaworthiness. Id. The Coast Guard reported that "the status of the generators was . . . deemed adequate (although one [the number three generator] was being repaired) since either [of] the two operable generators could easily handle the ship's propulsion and navigation systems." Id. The master had the bilges cleaned of excessive oil and had fuel tank vent flame screens replaced. Id.
The second crankpin of the Vessel's number three generator failed on January 3, 1993 in New Bedford. Trial Tr. at 168, 273-74; PX 21. Reefer replaced the number three generator with a portable auxiliary engine, PX 22; Webber Dep. at 323; Joint Pre-Trial Order Fact 38, but the incident was not reported in any of the Vessel's logs. Trial Tr. at 272-73; DX 383(5) at 30; PX 6(b); PX 7(b). Axentios testified that the inability to refrigerate at this time would constitute a breakdown under the Refrigeration Clause of the Charter. Trial Tr. at 95.
A GWF superintendent, Graham Anderson, boarded the Vessel on January 7, 1993 and delivered a note to the ship's master insisting that Nippon Kaiji Kyokai ("NKK"), the class surveyor of the Vessel, inspect the Vessel. PX 19. That same day, the Coast Guard informed the NKK representative that the Vessel should be inspected to determine its seaworthiness before allowing it to continue to Panama on its next scheduled voyage. Trial Tr. at 554; DX 423. On January 8, while NKK and the Coast Guard were aboard the Vessel, they also investigated an oil leak between the number one fuel tank and the forepeak tank. DX 423. GWF notified Reefer by facsimile on January 8, 1993 that it was terminating the Charter and redelivering the Vessel.
On January 9, 1993, NKK certified that the Vessel was sufficiently seaworthy to proceed from New Bedford to Panama, recommending that the number three generator be repaired, or equivalent measure taken, before loading cargo and that the oil leak be checked and ultimately repaired. PX 21.
On January 14, 1993, a second NKK surveyor and the Coast Guard inspected the installation of the portable generator. The NKK surveyor issued a survey record stating, in part: "The undersigned [NKK surveyor] also confirmed that this vessel with three generators, one of which is the portable auxiliary engine on deck can load a full refrigerated cargo." PX 22. Before departing New Bedford, members of the crew complained to GWF's agent about the condition of the ship, alleging that the Vessel was unseaworthy. Joint Pre-Trial Order Fact 40.
CONCLUSIONS OF LAW
I. The Breakdown Clause
It is well-established that a charter agreement is a contract, subject to all of the rules and requirements of contract law. A/S Custodia v. Lessin Int'l, Inc., 503 F.2d 318, 320 (2d Cir. 1974); Pollux Marine Agencies, Inc. v. Louis Dreyfus Corp., 455 F. Supp. 211, 219 n.11 (S.D.N.Y. 1978). In interpreting a contract, a court must inquire whether the term provision in question is ambiguous, i.e., whether it is subject to at least two conflicting reasonable interpretations. Mellon Bank, N.A. v. United Bank Corp., 31 F.3d 113, 116 (2d Cir. 1994); Monaghan v. SZS 33 Assocs., 875 F. Supp. 1037, 1043 (S.D.N.Y. 1995), aff'd, 73 F.3d 1276 (2d Cir. 1996). Where the language is explicit and unambiguous, however, courts must give it its plain meaning. Flair Broadcasting Corp. v. Powers, 733 F. Supp. 179, 184 (S.D.N.Y. 1990) ("If its language is plain, unambiguous, and capable of only one reasonable interpretation, no construction is required and the contract's language determines the instrument's force and effect.") (citation omitted); Omaha Indem. Co. v. Johnson & Towers, Inc., 599 F. Supp. 215, 218 (S.D.N.Y. 1984).
The interpretation of a contract is a mixed question of law and fact, and the court's ultimate objective in interpreting a contract is to determine the intentions of the parties as derived from the language employed in the contract. Antilles S.S. Co. v. American Hull Ins., 733 F.2d 195, 199 (2d Cir. 1984); Tom Doherty Assocs. Inc. v. Saban Entertainment Inc., 869 F. Supp. 1130, 1137 (S.D.N.Y. 1994), aff'd, 60 F.3d 27 (2d Cir. 1995). In addition, a court should interpret a contract in such a way as to ascribe meaning to all of its terms whenever possible. United States Naval Inst. v. Charter Communications, Inc., 875 F.2d 1044, 1049 (2d Cir. 1989); Chase v. Columbia Nat. Corp., 832 F. Supp. 654, 661 (S.D.N.Y. 1993). Absent express provision to the contrary, contractual terms should be construed uniformly throughout the agreement. Shuford Dev. Co. v. Chrysler Corp., 449 F.2d 429, 436 n.8 (5th Cir. 1971) (citing Bakery & Confection Workers' Int'l Union, Local No. 492 v. National Biscuit Co., 177 F.2d 684, 687 (3d Cir. 1949)); Datatab, Inc. v. St. Paul Fire & Marine Ins. Co., 347 F. Supp. 36, 38 (S.D.N.Y. 1972).
As previously noted by this Court in its June 22, 1994 decision, the term "breakdown" as used in the Breakdown Clause of the Charter is susceptible to at least two reasonable interpretations. Reefer and Gen. Shipping Co. v. Great White Fleet, 855 F. Supp. 651, 655-56 (S.D.N.Y. 1994). Reefer asserts that the term refers only to breakdowns that fully frustrate voyages. This view is based primarily on Webber's testimony that frustration of a voyage is required for a contingency to sufficiently hinder the Vessel's performance such that it constitutes a breakdown. GWF, on the other hand, offers a more general "plain meaning" definition of the term. Under this analysis, a breakdown is a failure that hinders or prevents the working of the vessel. Based on the testimony presented at trial and reading the contract as a whole, the Court finds the latter view the more persuasive.
A broad reading of the term "breakdown" is based on giving the term a uniform interpretation throughout the contract, as well as construing the plain meaning of the term. In determining the scope of the term "breakdown," several other clauses in the Charter are implicated. Paragraph 11(A) of the Charter (the "Off-Hire Clause") provides:
In the event of drydocking or other necessary measures to maintain the efficiency of the vessel, deficiency of men or Owner's stores, breakdown of machinery, damage to hull or other accident, either hindering or preventing the working of the vessel and continuing for more than twenty-four (24) consecutive hours, no hire to be paid in respect of any time lost thereby during the period in which the vessel is unable to perform the service immediately required.
PX 1 at P 11(A). The Charter provides several other damage remedies in the event of minor breakdowns of ship machinery and equipment, including: the Refrigeration Clause of paragraph 68 (deduct charter hire in the event of breakdown of the operation of vessel's refrigeration plant); the "Cleaning Main Engine" clause of paragraph 12 (deduct charter hire if cleaning of main engine pistons exceeds 24 hours); the "Time Lost" clause of paragraph 34 (deduct hire for time lost and extra fuel consumed if voyage speed reduced by breakdown); and the "Winch Breakdown" clause of paragraph 60 (reduce charter hire in the event of a winch or crane breakdown in certain cases). See id. at PP 68, 12, 34 and 60.
Reading these provisions together, it is apparent that Reefer's interpretation of a breakdown as an event frustrating an entire voyage would render these provisions meaningless. Reefer did not contest GWF's decision to place the Vessel off-hire under paragraph 68 during the October 15 incident, which lasted approximately 39.5 hours, see Trial Tr. at 80; DX 395(c), contradicting Reefer's assertion that full frustration would be necessary for a breakdown to have occurred. If anything, the term as used in the Breakdown Clause applies to more situations than it would under the Off-Hire Clause since the latter provision contains the qualifying language that such a breakdown must (1) hinder or prevent the working of the vessel and (2) continue for more than twenty-four consecutive hours.
Thus, the Off-Hire Clause is not triggered when breakdowns occur but these additional criteria are not satisfied. The Breakdown Clause contains no such restrictive language other than stating that termination is not appropriate unless three breakdowns occur within a twelve-month period. In addition, Axentios admitted that the December blackout incident and the January 3 crankpin failure constituted breakdowns under the Refrigeration Clause. Trial Tr. at 85, 95.
Requiring that a breakdown be an event that frustrates the purpose of the Charter would actually weaken GWF's position under law. Had the parties not expressly allocated the risk of unexpected contingencies, GWF would have been entitled to terminate the Charter under the doctrine of maritime frustration
if an unforeseen event not taken into account by the Charter occurred. Under Reefer's reading of the Breakdown Clause, three such events would have to occur before termination was allowed. Such a view is inconsistent both with the evidence presented at trial that GWF intended to protect itself in the event of accidents hindering the proper functioning of the Vessel, as well as with Reefer's assertion that the Breakdown Clause operated to the benefit of GWF. The cases cited by Reefer, Dover S.S. Co. v. Summit Indus. Corp., 148 F. Supp. 206 (S.D.N.Y. 1957) and Aaby v. States Marine Corp., 181 F.2d 383 (2d Cir. 1950), for the proposition that only a breach of warranty so substantial as to frustrate the purpose of the Charter would justify repudiation, are inapposite, since neither case involved an express provision similar to the Breakdown Clause allowing termination.
The Court finds that, at the very least, the September 18 and 19 incident, the September 25 incident, the October 15 incident, the December 16 incident,
and the January 3 incident were separate breakdowns under the Breakdown Clause of the Charter.
Reading the Charter as a whole, interpreting "breakdown" to refer to a failure hindering the proper functioning of the Vessel best gives a uniform interpretation to the term throughout the Charter and best captures the intent of the parties at the time of contracting. The Court finds that at least three breakdowns occurred within the meaning of the Breakdown Clause of the Charter within a twelve-month period.
Thus, GWF's redelivery of the Vessel was proper.
GWF counterclaims that it is entitled to damages in the amount of $ 497,857.66. This includes $ 288,581.48, an amount Reefer stipulated at trial it owes GWF, plus $ 209,276.18 in disputed damages. This latter sum includes: 1) $ 17,832.20 worth of fuel oil bunkered at Gibraltar on November 21, 1992, which was not included by the master as part of the fuel inventory; 2) $ 40,750.00 in fuel oil in the forepeak tank; 3) $ 125,646.29 for the balance of off-hire due to additional time required to complete U.S.D.A. "cold treatment" process; 4) $ 7,743.70 in fuel oil and $ 13,974.00 in diesel oil consumed during the off-hire period; and 5) $ 3,329.99 worth of fuel claimed for overconsumption in 1991.
GWF has failed to establish Reefer's liability with respect to the cold treatment process. According to the Charter, the cooling instructions were GWF's responsibility, PX 1 at P 10, and GWF has not established that responsibility for any damages caused by delayed discharge of the fruit in New Bedford does not lie with parties other than Reefer. Trial Tr. at 533-55.
Under paragraph 5 of the Charter, in the event of redelivery, Reefer is obligated to pay for fuel remaining on the Vessel. GWF has established an entitlement to $ 58,582.20 including $ 17,832.20 worth of fuel understated on the Vessel's reported fuel inventory and $ 40,750.00 worth of fuel remaining in the forepeak tank. Id. at 527; DX 395(e)-2; DX 421.
Finally, GWF's entitlement to $ 3,329.99 for an alleged overconsumption of fuel has not been adequately established. This claim apparently arises from a set of facts independent from those implicated in the present action. Such a complaint should have been separately pursued at the time the claim arose, and at any rate, damages and the responsibility for those damages have not been adequately proven.
Thus, GWF is entitled to the stipulated damages of $ 288,581.48 plus $ 58,582.20 for the fuel redelivered with the Vessel, for a total of $ 347,163.68.
GWF properly redelivered the Vessel under the Breakdown Clause of the Charter, and thus the Court finds for GWF on the complaint and on its counterclaims, as described above. Defendant is entitled to damages totalling $ 347,163.68. GWF shall submit an appropriate proposed judgment within thirty days of the date of this Memorandum Opinion and Order. Any objection must be submitted within two weeks of the submission of the proposed judgment.
SHIRLEY WOHL KRAM
UNITED STATES DISTRICT JUDGE
Dated: New York, New York
April 17, 1996