Court of Appeals
For the First
FEDERAL MARINE TERMINALS,
WORCESTER PEAT COMPANY,
APPEAL FROM THE UNITED STATES
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, Chief
U.S. District Judge]
Boudin, Chief Circuit
Lynch and Lipez, Circuit
Michael X. Savasuk for appellee.
Charles E. Gilbert, III, Christopher L. Dalton, Gilbert
& Greif, P.A., William H. Welte, and Welte
& Welte, P.A. for appellant.
LIPEZ, Circuit Judge. This appeal arises from a payment dispute
between Worcester Peat Company (Worcester Peat) and Federal Marine
Terminals (FMT) over a stevedoring contract. FMT contracted to
load peat for Worcester Peat onto a vessel for shipment to Europe.
After the loading was completed, the parties disagreed about
the contract's provision regarding the calculation of FMT's fee.
FMT charged Worcester Peat for the volume of peat it handled
through the port based on the number of truckloads Worcester
Peat had delivered and the volume of peat in each truck. However,
Worcester Peat based its payment on the quantity of peat calculated
by reference to the box volume, or total cubic capacity, of the
vessel, a sum significantly less than the amount of FMT's invoice.
The district court found that the contract unambiguously stated
that FMT was to be paid by the volume of peat handled, and not
by the box volume of the shipping vessel, and entered judgment
against Worcester Peat for nearly $80,000. The court also rejected
Worcester Peat's counterclaim for peat it alleges was lost during
the loading process.
On appeal, Worcester Peat challenges
the district court's determination that the contract was unambiguous
and argues that the court also erred in not charging FMT for
demurrage and for peat Worcester Peat claims was lost due to
FMT's negligence in the loading process. Finding no error in
the district court's rulings, we affirm.
Worcester Peat, a company located
in Deblois, Maine, grows and sells peat moss. In September 1998,
Worcester Peat began exploring the possibility of selling peat
to buyers in Europe. With the assistance of a Finnish broker,
Mikko Valli, affiliated with an Estonian company called BioMix,
Ltd., Worcester Peat agreed to sell peat to Blumenerdenwerk Stender
GmbH (Stender), a German company. The contract provided that
Stender would be responsible for chartering a ship to load the
peat in Maine and transport it to Europe. Stender contracted
with another German company, Schulte & Bruns, to secure a
vessel. The contract between Worcester Peat and Stender established
an anticipated loading time of five days for the shipment of
peat. Worcester Peat's contracts with both BioMix and Stender
provided that the cost of the peat would be calculated by reference
to "box volume" of the ship, or its total capacity
in cubic meters.
Worcester Peat then entered negotiations
with FMT, the owner and operator of a cargo terminal in Eastport,
Maine, to load the peat onto the vessel chartered by Stender
from Schulte & Bruns. Roland Rogers, general manager of FMT,
testified that FMT had never worked with peat and was unfamiliar
with its properties. The parties exchanged a series of communications
in the fall of 1998 regarding FMT's prices and the plans for
loading the vessel. FMT and Worcester Peat agree that their understanding
during this negotiating process was that Stender would provide
a "geared" vessel, meaning one equipped with cranes
and other machinery for loading the peat.
On December 10, FMT was informed
that the vessel involved would not be a geared vessel as expected,
but rather a non-geared vessel that would not be carrying the
equipment needed to load the peat from the dock onto the ship.
FMT attempted to locate cranes and other equipment to load the
vessel. After a conversation between Rogers and Morrill Worcester,
president of Worcester Peat, Worcester Peat agreed to share in
the cost of renting a crane up to the amount of $2100.
Worcester Peat and FMT signed the
stevedoring contract on December 24. That document provides,
in relevant part: "Federal Marine Terminals Inc., Eastport
hereby agrees to handle your cargo of peat moss totaling 27,000
cubic meters, approximately, for $4.95 dollars in U.S. funds
per cubic meter handled through Eastport including the loading
of the vessel." The contract also established a sliding
fee scale such that the price per cubic meter would be lowered
if FMT achieved a specified loading rate. Finally, the contract
provided, as the parties agreed, that Worcester Peat would pay
up to $2100 for the rental cost of the crane.
The vessel charted by Stender, the
M/V BORIS LIANOV, arrived in Eastport on the night of December
30, 1998. FMT began loading the peat early the next morning.
The weather conditions during the loading of the peat were exceptionally
cold and windy. There was also precipitation in the form of both
rain and snow, which caused the top layer of the peat to freeze.
The wind blew so much peat into the air that visibility was limited
at times. The ship's captain ordered the doors of the holds closed
a number of times due to wind and snow. The ship's logs also
indicate that loading was stopped on some occasions at the request
of Worcester Peat.
Two conveyor belts were used to
load the peat into the ship's holds. Rogers testified that the
intense cold created problems with the hydraulics of the conveyors,
making it difficult to raise and lower them to align with the
ship as the tide rose and fell. One conveyor belt became completely
inoperable halfway through the loading process. Some of the peat
also froze, making it necessary to break up large chunks before
the peat was put on the conveyor belts.
After FMT began loading the vessel,
Worcester Peat offered FMT the use of a clamshell bucket, which
FMT attached to a crane. The bucket was used to pick up peat
from the loading area on the dock and dump it directly into the
holds of the ship. FMT experienced fewer weather-related problems
with the use of the clamshell bucket because the peat in the
bucket was not as exposed to the wind as the peat on the conveyor
belts. Worcester Peat also suggested that FMT cover segments
of the conveyor belts with tarps to minimize the amount of peat
blown away by the wind.
The M/V BORIS LIANOV contained seven
cargo holds. FMT loaded peat into them one hold at a time, shutting
the doors for each hold after the hold had been filled with peat.
However, FMT found that the peat "settled," or recompressed,
in the holds after loading, reducing its volume and requiring
FMT to open the holds again and load more peat until the holds
were full, a process that further slowed the loading. The work
was finally completed on January 10, six days later than the
five-day loading period anticipated by Worcester Peat and Stender.
FMT sent Worcester Peat an invoice
for $182,794.59. Rogers testified that he arrived at this figure
by using information Worcester Peat supplied him regarding how
many trucks brought peat to the terminal (425) and the average
volume per truck (115 cubic yards or 86.89 cubic meters). Multiplying
those figures, he concluded that FMT had handled 36,928.2 cubic
meters of peat at the agreed-upon price of $4.95 per cubic meter,
for a total of $182,794.59. However, Worcester Peat paid FMT
only $111,720.89. This figure relied upon the box volume of the
vessel, 26,917.1 cubic meters. Although Worcester Peat added
$2100 as agreed for the rental of the two cranes, it deducted
$2500 as a rental charge for the clamshell bucket it had offered
to FMT, as well as a demurrage charge(1)
of $21,118.75 that it had paid to Stender.
Invoking the district court's admiralty
jurisdiction, see 28 U.S.C. § 1333, FMT filed a complaint
against Worcester Peat on June 17, 1999, seeking recovery for
the difference between the amount FMT charged and the amount
Worcester Peat paid (approximately $70,000). Worcester Peat filed
a counterclaim alleging that FMT was liable for peat lost during
the loading process.
Following a three-day bench trial,
the district court found that the contract between FMT and Worcester
Peat unambiguously stated that payment was to be calculated using
the volume of peat handled and not, as Worcester Peat contended,
the box volume of the vessel. Accordingly, the district court
found that FMT was entitled to a total of $190,935.57.(2) The court further held that Worcester
Peat was not entitled to deductions either for FMT's use of the
clamshell bucket(3) or for the
demurrage charged to Worcester Peat by Stender. Finally, the
district court found that Worcester Peat could not recover on
any of its counterclaims because it had not established by a
preponderance of the evidence either the amount of peat lost
because of wind or the fact that FMT's negligence caused that
loss, or that any such loss exceeded Worcester Peat's expected
loss due to wind in the normal course of handling peat. Subtracting
the amount Worcester Peat had already paid to FMT, the district
court entered judgment in favor of FMT in the amount of $79,214.68.
Worcester Peat appeals the judgment
of the district court on three grounds. First, it argues that
the court erred in finding that the contract unambiguously provided
that FMT would be paid according to the volume of peat handled.
Second, Worcester Peat claims that the court should have found
FMT liable for demurrage it was charged by Stender because FMT
did not load the vessel in a timely fashion. Finally, Worcester
Peat says that the district court erred in not holding FMT responsible
for amounts of peat lost in the wind during the loading process.
A. Interpretation of the Contract
A court sitting in admiralty jurisdiction
applies federal maritime rules. See Greenly v.
Mariner Mgmt. Group, Inc., 192 F.3d 22, 25-26 (1st Cir.
1999). See also Har-Win, Inc. v. Consolidated
Grain & Barge Co., 794 F.2d 985, 987 (5th Cir. 1986).
Therefore, we turn to principles of general maritime contract
law to determine whether the contract between FMT and Worcester
Peat was ambiguous. See Garza v. Marine Transport
Lines, Inc., 861 F.2d 23, 26 (2d Cir. 1988). The district
court found that "[t]he language of the contract unambiguously
called for Worcester Peat to pay FMT $4.95 per cubic meter handled."
We review this determination de novo. See ITT Corp.
v. LTX Corp., 926 F.2d 1258, 1261 (1st Cir. 1991).
"A word or phrase is ambiguous
when it is capable of more than a single meaning." Garza,
861 F.2d at 27. The contract between FMT and Worcester Peat provided:
"Federal Marine Terminals Inc., Eastport hereby agrees to
handle your cargo of peat moss totaling 27,000 cubic meters,
approximately, for $4.95 dollars in U.S. funds per cubic meter
handled through Eastport including the loading of the vessel."
(emphasis added.) Notably, the contract does not mention box
volume, or the ship's total capacity, at all, and nothing in
the contract itself suggests that box volume would be the basis
for calculating FMT's fee.
Having concluded correctly that
the "handled" language of the contract was unambiguous,
the district court applied that language to the facts of the
case: "Although the contract clearly calls for Worcester
Peat to pay FMT based on the amount handled, determining the
amount handled requires me to choose between contradictory evidence."
That contradictory evidence related to "the numbers of trucks
that delivered peat to the terminal as well as various estimates
on the amount each truck held." The court resolved those
contradictions and made the appropriate calculations. Worcester
Peat insists, however, that the court's decision to calculate
the amount of peat handled on the basis of truck deliveries overlooks
an ambiguity in the contract because the volume of peat handled
could just as easily be measured by the amount that was actually
placed into the holds of the ship. The district court properly
rejected this attempt to create an ambiguity where none exists.
FMT obviously had to handle the peat that was delivered to its
terminal by Worcester Peat. The district court sensibly viewed
truck deliveries as the most accurate measure of the amount of
peat FMT had to handle pursuant to the contract. Worcester Peat
further claims that the district court's finding that the contract
is unambiguous ignored the clause that established the following
sliding scale for payment:
Should the loading of the vessel
be accomplished at an average gross production scale of greater
than 350 cubic meters per hour we will refer to the sliding scale
that has been provided. This scale would incrementally reduce
the total cost to Worcester industries by up to $0.08 (eight
cents) per cubic meter maximum at 440 cubic meters per hour.
Worcester Peat contends that the
only way to determine whether this production incentive had been
met was to reference the volume of peat loaded onto the vessel.
Therefore, Worcester Peat argues, the phrase "per cubic
meter handled through Eastport" in the clause specifying
FMT's payment is ambiguous because the contract required the
use of box volume to determine whether the sliding fee scale
would apply. We need not decide whether Worcester Peat's interpretation
of the sliding fee scale is correct because that provision -
even under Worcester Peat's reading of it - does not conflict
with the conclusion that the contract unambiguously provided
for payment according to volume of peat handled. Even if, as
Worcester Peat contends, the sliding scale could only be calculated
by reference to box volume of peat in the vessel, the reduced
fee established by the sliding scale could still be applied to
calculate FMT's fee according to the volume of peat handled through
the port. Accordingly, nothing in the sliding fee provision changes
our conclusion that the district court's reading of the contract
Unable to locate language in the
contract to bolster its assertion that the term "handled"
is ambiguous, Worcester Peat identifies other evidence in the
record referring to the vessel's box volume of peat. For example,
Rogers stated in a communication to Valli dated October 21, 1998:
"The difficulty in determining the volume of cargo handled,
I believe, dictates that we calculate using box volume."
Worcester Peat also argues that because its contracts with Biomix
and Stender calculated payment according to the box volume of
peat, the district court reached a "manifestly absurd result"
in finding that FMT's fee would be calculated according to volume
of peat handled. Finally, Worcester Peat claims that documents
signed by Rogers on behalf of FMT, including the bill of lading
and the mate's receipt for the M/V BORIS LIANOV, measured the
cargo by box volume.
However, the district court correctly
decided that these documents were irrelevant to its consideration
of whether the contract between FMT and Worcester Peat was ambiguous:
"[T]he shipping documents refer to box volume, because the
shipping documents necessarily measure what is on the vessel.
They have nothing to do with stevedoring contracts." Moreover,
the district court's consideration of this extrinsic evidence
was precluded by the parol evidence rule:
The purpose and essence of the [parol
evidence] rule is to avoid the possibility that fraud might be
perpetrated if testimony as to subjective intent could be substituted
for the plain meaning of a contract. In the absence of ambiguity,
the effect of admitting extrinsic evidence would be to allow
one party to substitute his view of his obligations for those
861 F.2d at 26-27 (internal quotation marks omitted). Having
concluded that the contract between Worcester Peat and FMT unambiguously
provided that FMT's payment would be calculated by reference
to cubic meters of peat handled through Eastport, the district
court properly refused to consider evidence of any negotiations
or extrinsic documents to alter that language. See Har-Win,
Inc., 794 F.2d at 987 ("[E]vidence, whether parol or
otherwise, of antecedent understandings and negotiations will
not be admitted for the purpose of varying or contradicting the
writing."); Battery S.S. Corp. v. Refineria Panama,
S.A., 513 F.2d 735, 739-40 (2d Cir. 1975) (stating, in interpreting
a contract governed by maritime law, that the parol evidence
rule "renders legally inoperative . . . evidence of prior
understandings and negotiations which contradicts the unambiguous
meaning of a writing which completely and accurately integrates
the agreement of the parties").
The district court concluded that
FMT was not liable for demurrage costs of $21,118.75 that Worcester
Peat paid to Stender. The agreement between Stender and Schulte
& Bruns, the company from whom Stender chartered the M/V
BORIS LIANOV, provided that the vessel would be loaded in five
days. Because the loading of the peat exceeded this period by
several days, Schulte & Bruns charged Stender for demurrage,
and Stender in turn charged Worcester Peat. Worcester Peat and
FMT were not signatories to the contract providing that the loading
would take only five days.
The contract between FMT and Worcester
Peat does not mention demurrage or even provide a time frame
for loading the chartered vessel. As the district court found,
"Worcester Peat has not introduced any evidence showing
that FMT was party to, knew about, or was in possession of a
document referring to demurrage." We have said previously
that "courts have been reluctant to impose demurrage liability
on a party that is neither a signatory, successor nor possessor
of a document that expressly or by incorporation refers to demurrage."
Trans-Asiatic Oil Ltd., S.A. v. Apex Oil Co., 804
F.2d 773, 781 (1st Cir. 1986). As the district court noted, there
is no evidence in the record that FMT was a party to the contract
between Worcester Peat and Stender or to the contract between
Stender and Schulte & Bruns.(4)
Rogers acknowledged at trial that FMT had received a fax from
Dean Worcester indicating that 120 hours were allowed for loading
the vessel. However, there is no evidence that Rogers realized
that demurrage might be charged if the loading exceeded that
time. Under these circumstances, the district court correctly
declined to find FMT responsible for the demurrage that Worcester
Peat paid to Stender.
Worcester Peat also argues that
FMT should be liable for demurrage because FMT breached its duty
of workmanlike performance by not loading the M/V BORIS LIANOV
more quickly. See, e.g., F.J. Walker Ltd. v. Motor
Vessel Lemoncore, 561 F.2d 1138, 1148 (5th Cir. 1977) ("A
stevedore owes a warranty of workmanlike performance to the vessel.").
However, the contract between FMT and Worcester Peat did not
establish a time limit on FMT's loading of the peat onto the
vessel or even provide a suggested guideline. In the absence
of such a provision in the contract, FMT was required to load
the vessel in a reasonable amount of time. The district court
found that the time FMT spent loading the M/V BORIS LIANOV was
reasonable under the circumstances:
At trial none of the evidence or
testimony suggested that the pace at which FMT loaded the vessel
was unreasonable under the circumstances. Rather, all of the
evidence painted a picture of FMT simply doing the best it could
to load the peat under the unexpectedly harsh conditions. Although
FMT may not have foreseen the problems posed by using conveyors
in the weather conditions that existed, FMT attempted to address
the problems as they arose and implemented the suggestions of
Worcester Peat's representatives to the extent possible.
Worcester Peat has not even attempted
to demonstrate that this determination was clearly erroneous.
Indeed, Worcester Peat concedes that the weather conditions were
unusually harsh and that those conditions complicated the loading
of the peat. Moreover, the weather was so harsh that Worcester
Peat itself caused delays in the loading by ordering that loading
be stopped to prevent losses of peat due to wind. Accordingly,
we find no clear error in the district court's conclusion that
FMT's loading time was reasonable under these circumstances.
C. Worcester Peat's Counterclaim
for Lost Peat
Worcester Peat alleged unsuccessfully
in its counterclaim that FMT was liable for amounts of peat lost
during the loading process. On appeal, Worcester Peat first argues
that we should find clearly erroneous the district court's ruling
that Worcester Peat failed to establish how much peat was lost
through FMT's negligence. The district court stated:
Although the evidence established
that some unquantified amount of peat was airborne at the terminal
and that some smaller unquantified amount of peat actually was
blown into the water, Worcester Peat failed to provide any reliable
evidence of how much peat was lost. Moreover, Worcester Peat
expected to lose some peat during the loading process. Worcester
Peat failed to establish that the amount lost was beyond what
it anticipated. This failure makes it impossible to calculate
Witnesses for both Worcester Peat
and FMT testified that some of the peat was blown off the conveyor
belts during the loading process. Morrill Worcester estimated
that twenty to twenty-five percent of the peat brought to the
loading dock did not make its way into the vessel. Another Worcester
Peat employee estimated the loss of peat at twenty percent. However,
both witnesses acknowledged the difficulty of calculating with
certainty the amount of peat lost in the wind. When Morrill Worcester
was asked, "Are you able to estimate based on your observations
an amount of peat that was lost overboard?" he stated:
I really - you know, I think you
have to do it through a process of deduction probably. It's hard
to say. The way I understand it, I think there was 425 trailer
loads of peat, and you'd have to come up with a number of cubic
yards or cubic meters on each trailer, and in the stock pile
that we have, the peat moss is kind of semi-compressed as it
is. And if you - it's just hard to say. I don't know how you
come up with a figure, but it was considerable. Probably 20,
25 percent possibly went overboard or went somewhere. I don't
know. Maybe in the bushes, in the woods, overboard, into the
ocean, and everywhere else.
As Morrill Worcester's testimony
indicates, several factors complicated the task of calculating
the exact quantity of peat lost in the wind. Because the volume
of peat changes depending on how much it is handled, Worcester
Peat cannot rely on a comparison of the volume of peat delivered
off the trucks with the volume of peat in the ship's holds.
Additionally, as the district court
noted, Worcester Peat expected to lose some peat even in perfect
loading conditions. Dean Worcester testified that peat is generally
lost due to wind whenever it is handled or moved from one location
to another because it is so light and fluffy. Worcester Peat
did not offer any evidence regarding how the claimed loss of
up to twenty-five percent exceeded the loss of peat the company
expected in the ordinary course of handling it. Given the speculative
testimony about how much peat was lost, and Worcester Peat's
failure to specify how much that loss exceeded its expectations,
the district court was not clearly erroneous in declining to
hold FMT responsible for an unquantified loss of peat.
Worcester Peat also argues that
the district court erred in not shifting the burden to FMT to
prove that it was not negligent in handling the peat. Contending
that FMT was a bailee of the peat, Worcester Peat says that FMT
should account for the peat that was lost in the wind because
FMT, as the party in control of the peat, is in a better position
than Worcester Peat to marshal evidence to explain the loss of
peat. See Goudy & Stevens, Inc. v. Cable
Marine, Inc., 924 F.2d 16, 19 (1st Cir. 1991) ("[S]ince
the bailee is generally in a better position than the bailor
to ascertain the cause of the loss, the law lays on it the duty
to come forward with the information it has available.").
The district court found that even if "the relationship
between Worcester Peat and FMT could be described as a bailment
because FMT stored the peat prior to loading it on the vessel,
Worcester Peat has failed to establish by a preponderance of
the evidence that FMT did not load all of the peat less the amount
Worcester Peat anticipated losing during the loading process."
For the reasons we have explained, the district court was not
clearly erroneous in finding that Worcester Peat failed to establish
how much peat was lost, if any. Therefore, Worcester Peat failed
to establish a prima facie case of negligence against FMT. See
id. at 18 ("[W]hen the bailor shows delivery to a
bailee and the bailee's failure to return the thing bailed, he
makes out a prima facie case of negligence against the bailee.")
(internal quotation marks omitted). Under these circumstances,
the district court did not err in declining to apply a presumption
of negligence for FMT to refute.
is renumeration of a shipowner for the detention of its vessel
beyond the number of days allowed by the charter party."
TAG/ICIB Servs., Inc. v. Pan Am. Grain Co., Inc.,
215 F.3d 172, 174 n.1 (1st Cir. 2000) (citing Black's Law Dictionary
432 (6th ed. 1990)).
2. This figure
is larger than the amount calculated by Rogers for two reasons.
First, the district court found that Worcester Peat had delivered
434 trucks of peat to the terminal, not 425 trucks as Rogers
had thought. Second, the district court found that the conversion
factor Rogers used to convert cubic yards to cubic meters was
incorrect. Accordingly, the court used a conversion of 87.9 cubic
meters of peat per truck instead of 86.89 cubic meters per truck
as Rogers calculated.
Peat has not appealed the district court's determination with
respect to the clamshell bucket.
4. We also note
that, although Worcester Peat paid Stender for demurrage, the
contract between those two parties did not provide for such a
payment in the event that the loading of the peat exceeded the
projected time period. The agreement between Worcester Peat and
Stender only established an accepted loading time of 120 hours
for a vessel the size of the M/V BORIS LIANOV and did not even
raise the possibility that Worcester Peat would be charged for
not meeting that guideline.