Message
×
loading..

Wheeling Pittsburgh v. CSX Transportation ( 1997 )


Menu:
  • UNPUBLISHED
    UNITED STATES COURT OF APPEALS
    FOR THE FOURTH CIRCUIT
    WHEELING-PITTSBURGH STEEL
    CORPORATION,
    Plaintiff-Appellant,
    v.                                     No. 96-1499
    CSX TRANSPORTATION,
    INCORPORATED; CSX CORPORATION,
    Defendants-Appellees.
    Appeal from the United States District Court
    for the Northern District of West Virginia, at Wheeling.
    Frederick P. Stamp, Jr., Chief District Judge.
    (CA-94-45-5, CA-94-66-5)
    Argued: March 3, 1997
    Decided: April 24, 1997
    Before MURNAGHAN and ERVIN, Circuit Judges, and
    MICHAEL, Senior United States District Judge for the Western
    District of Virginia, sitting by designation.
    _________________________________________________________________
    Reversed and remanded by unpublished per curiam opinion.
    _________________________________________________________________
    COUNSEL
    ARGUED: Basil Carl Culyba, HOWREY & SIMON, Washington,
    D.C., for Appellant. Richard McMillan, Jr., CROWELL & MORING,
    L.L.P., Washington, D.C., for Appellees. ON BRIEF: Andrew E.
    Thomas, HOWREY & SIMON, Washington, D.C., for Appellant.
    Javier M. Guzman, CROWELL & MORING, L.L.P., Washington,
    D.C., for Appellees.
    _________________________________________________________________
    Unpublished opinions are not binding precedent in this circuit. See
    Local Rule 36(c).
    _________________________________________________________________
    OPINION
    PER CURIAM:
    The instant case involves a contract dispute between Wheeling-
    Pittsburgh Steel Corporation ("Wheeling-Pitt") and CSX Transporta-
    tion, Inc. ("CSX") regarding the terms of a contract which imple-
    mented a settlement agreement. Both parties moved for summary
    judgment. The district court found the contract unambiguous in
    favor
    of CSX's interpretation and Wheeling-Pitt appeals. Since we find
    that
    the language of the contract was unambiguous as to Wheeling-Pitt's
    interpretation, we reverse the district court's grant of summary
    judg-
    ment and grant summary judgment in favor of Wheeling-Pitt.
    I. FACTS
    In 1983, Wheeling-Pitt and other steel companies sued CSX and
    other railroads alleging anti-trust violations. In order to resolve
    the
    pending litigation, CSX entered into a settlement agreement with
    Wheeling-Pitt. The parties used an existing contract, Contract CSXT
    2067 ("Contract 2067"), as the implementation device for the
    settle-
    ment agreement. Contract 2067 governed CSX's transportation of
    coal from Wheeling-Pitt's Omar Mine.
    Prior to the settlement agreement, paragraph 3 of Contract 2067 set
    out the transportation rates which CSX would charge to transport
    coal
    for Wheeling-Pitt. As part of the settlement agreement, CSX agreed
    to provide a $.65 per net ton rate reduction on coal shipped from
    the
    Omar Mine. The parties then amended paragraph 3 of Contract 2067
    2
    to implement the settlement agreement. Amendment 2 to Contract
    2067 provided in part:
    Paragraph 3, TRANSPORTATION RATES, is amended to
    reduce the present contract rate on coal transported from the
    Omar Mine . . . by sixty-five cents ($.65) per net ton for the
    period beginning April 4, 1989 and terminating April 3,
    1996. The reduction shall become effective April 4, 1989
    and shall continue during the term of this Contract as
    extended. Provided, however, that if Wheeling-Pitt is unable
    to ship by rail an aggregate of 10.5 million tons from the
    Omar Mine during the period April 4, 1989 to April 3, 1996,
    inclusive, the $.65 per net ton reduction described herein
    will continue in effect until the total tonnage shipped from
    the Omar Mine reaches 10.5 million tons; or, alternatively,
    if, during the period through April 3, 1996 Wheeling-Pitt
    shall sell or otherwise divest itself of its interest in the
    Omar
    Mine and obtain high-volatile coal from other sources, the
    $.65 per net ton rate reduction described herein will be
    applied to the net rate currently in effect, including all
    reductions, for such other high-volatile coal transportation
    as may be designated by Wheeling-Pitt, and, in such case a
    reduction of $.65 per net ton shall continue in effect until
    the
    total tonnage shipped from all mines, including Omar,
    beginning April 4, 1989, reaches 10.5 million tons. Provided
    further that the rates reduced herein will be subject to all
    future RCCR adjustments,1 beginning with the April 1, 1989
    adjustment, but will at no time be reduced below the rates
    established by Contract CSXT 2067, as amended. 2
    _________________________________________________________________
    1 The RCCR is the Railroad Cost Recovery Index published by the
    Association of American Railroads. The RCCR is a contract rate
    adjust-
    ment and allows the rates in the contract to be adjusted for
    various costs
    such as wage rates and fuel costs. In Contract 2067, the RCCR
    adjust-
    ments are subject to a contract floor and therefore can only lead
    to an
    upward adjustment.
    2 In short the amount by which CSX settled the anti-trust
    litigation
    included $6,825,000 (10.5 million times $.65) payable, however,
    only to
    the extent that Wheeling-Pitt through coal shipments to it from the
    Omar
    Mine (or in effect the successor supplier of coal to Wheeling-Pitt)
    received coal up to a maximum of 10.5 million tons. By that proviso
    CSX improved the likelihood that it would continue to carry over
    its
    lines coal shipped to Wheeling-Pitt.
    3
    In 1993, Wheeling-Pitt sold the Omar Mine to A.T. Massey Coal
    Company ("Massey") and entered into a coal supply agreement with
    Massey whereby Massey would supply all of Wheeling-Pitt's coal
    requirements for ten years. Massey then entered into a contract
    with
    CSX to transport 100% of Wheeling-Pitt's coal requirements at an
    initial rate lower than that in Contract 2067.
    Since Wheeling-Pitt was no longer transporting coal, it designated
    another shipment to which it requested that CSX apply the $.65 per
    net ton discount. CSX refused. Wheeling-Pitt argues that it is
    entitled
    to the discount, or at least the value of the remaining unrealized
    dis-
    count. CSX argues that the $.65 per ton discount applied only to
    coal
    shipped under Contract 2067 and the discount could not be applied
    to
    other shipments. At the time Wheeling-Pitt sold the Omar Mine, CSX
    had not applied the discount to 5,051,164 tons of coal.
    II. DISCUSSION
    We review the district court's grant of summary judgment de novo.
    Roe v. Doe, 
    28 F.3d 404
    , 406 (4th Cir. 1994). When considering a
    summary judgment motion in the context of a contract dispute, the
    court must first determine whether the contract is ambiguous or
    unambiguous on its face. World-Wide Rights Limited Partnership v.
    Combe, Inc., 
    955 F.2d 242
    , 245 (4th Cir. 1992). If the contract is
    unambiguous, the court may interpret the contract as a matter of
    law
    and grant summary judgment. 
    Id.
    In interpreting the contract, the court must construe the terms of
    the
    contract so as to give meaning and effect to every part of the
    contract.
    Goodman v. Resolution Trust Corp. , 
    7 F.3d 1123
    , 1127 (4th Cir.
    1993). In addition, contracts containing unambiguous language must
    be construed according to their plain and natural meaning.
    Fraternal
    Order of Police v. City of Fairmont , 
    468 S.E.2d 712
    , 716 (W. Va.
    1996); Marchetti v. Karpowich, 
    667 A.2d 724
    , 727 (Pa. Super. Ct.
    1995).3
    _________________________________________________________________
    3 The parties disagree as to whether West Virginia or Pennsylvania
    law
    applies. The Court declines to reach this issue because the canons
    of con-
    tract interpretation are similar in both jurisdictions.
    4
    The district court held that the contract was unambiguous and that
    the $.65 discount only applied to Contract 2067. The district court
    determined that the language in Contract 2067 which stated that if
    Wheeling-Pitt sold the Omar Mine then the discount would be applied
    "to the net rate currently in effect" referred to the rates
    originally
    listed in paragraph 3 of Contract 2067. The court thus concluded
    that
    the discount could only apply to Contract 2067 and that the "Court
    finds nothing in the amendment to Contract 2067 or in the
    settlement
    agreement which would indicate that the 65 cent per ton discount
    was
    intended to be applied to a contract to which Wheeling-Pitt is not
    a
    party."
    However, the district court's interpretation of the contract fails
    to
    give meaning and effect to every part of the contract. In addition,
    the
    settlement agreement and the amended version of Contract 2067
    clearly and unambiguously anticipated that the discount would con-
    tinue to apply absent Contract 2067. Furthermore, the contract
    clearly
    and unambiguously intended that the discount would apply to con-
    tracts to which Wheeling-Pitt was not a party.
    The clause "net rates currently in effect" must be read in the con-
    text of the entire paragraph. Earlier in the paragraph, the clause
    pro-
    vides that if Wheeling-Pitt sells the Omar Mine and obtains coal
    from
    other sources the discount will apply to the "net rate currently in
    effect, including all reductions" for such other coal as designated
    by
    Wheeling-Pitt. Since this provision anticipates that Wheeling-Pitt
    might sell the Omar Mine, the reference to obtaining coal from
    other
    sources must apply to coal from a source other than Wheeling-Pitt.
    If
    "other sources" applies to coal provided by third parties, then the
    con-
    tract clearly anticipates that the discount will apply to coal
    supplied
    by other parties and transported by CSX. Otherwise, the anti-trust
    set-
    tlement would be largely scuttled if the Omar Mine was sold by
    Wheeling-Pitt. Yet Amendment 2 to Contract 2067 clearly provides
    that the $.65 per net ton reduction will remain in effect until
    "the total
    tonnage shipped from all mines including Omar . . . reaches 10.5
    mil-
    lion tons" (emphasis added).
    In addition, the language in paragraph 3 clearly states that
    Wheeling-Pitt has the right to designate the other shipments to
    which
    the discount will apply. Since it is clear that if Wheeling-Pitt
    sold the
    5
    Omar Mine it would no longer supply its own coal, its right to
    desig-
    nate other shipments must include its right to designate shipments
    supplied by third parties and transported by CSX.
    Furthermore, the district court's interpretation of"net rates cur-
    rently in effect" does not give each term in the contract meaning.
    First, "net rates" itself would be surplusage. The plain meaning of
    "net rate" is the rate "which remains after all allowable
    deductions"
    have been made. Black's Law Dictionary 1040 (6th ed. 1990). Thus,
    the net rate would be the rate after other deductions and
    allowances
    have been made. However, if the district court's interpretation is
    given to "net rate" then the language which follows "net rates,"
    which
    is "including all reductions," becomes redundant and hence surplus-
    age. If net rates includes all reductions there would be no need to
    specify "including all reductions" after the words "net rate."
    A more logical reading, and one which does not make the reference
    to "net rates" or the reference to "including all reductions"
    surplusage,
    is that the provision applies to coal delivered by other sources.
    The
    reference to net rate would be the net rate per ton including the
    RCCR
    adjustments. The reference to "including all reductions" would
    apply
    to volume discounts or other incentives to which another carrier
    might
    be entitled. Thus, Wheeling-Pitt would be entitled to the net rate
    in
    effect for the other supplier, and would also be entitled to the
    benefit
    of any other reductions which CSX provided to the supplier. 4 How-
    ever, under CSX's interpretation of the contract, the phrase
    "including
    all reductions" would be irrelevant. As part of the amended
    Contract
    2067, the parties canceled the incentive refunds to which Wheeling-
    Pitt was entitled under Contract 2067. Thus, if the phrase only
    applied
    to Contract 2067, the term "net" and the phrase "including all
    reduc-
    tions" would serve no purpose.
    _________________________________________________________________
    4 For example, Massey, as a large supplier of coal, might receive
    incen-
    tive reductions from CSX once it ships a certain amount of coal.
    This
    would not be factored into the "net rate" per ton since it would be
    unknown if the supplier would reach the incentive amount. The
    language
    "including all reductions" allows Wheeling-Pitt to get the benefit
    of fur-
    ther reductions.
    6
    The contract contains additional language which unambiguously
    favors Wheeling-Pitt's interpretation that the $.65 reduction
    applies
    outside of the context of Contract 2067. First, the contract states
    that
    if Wheeling-Pitt does not ship 10.5 million tons by April 3, 1996,
    the
    "$.65 per net ton reduction described herein will continue in
    effect
    until the total tonnage shipped from the Omar Mine reaches 10.5
    mil-
    lion tons." However, Contract 2067 by its own terms terminated on
    April 3, 1996, and the contract explicitly provided for a
    continuation
    of the discount even after the contract expired. The contract did
    not
    provide for an automatic extension of the contract, but rather
    provided
    for a continuation of the discount even after the contract expired.
    Thus, the contract cannot be the sole mechanism for the discount
    since the parties clearly intended the discount to apply even in
    the
    absence of the contract.
    Second, when the contract was negotiated, Wheeling-Pitt knew that
    it might sell the Omar Mine. It therefore negotiated language which
    provided that the discount would continue even if Wheeling-Pitt
    sold
    the Omar Mine. That language states:
    alternatively, if, during the period through April 3, 1996,
    Wheeling-Pittsburgh shall sell or otherwise divest itself of
    its interest in the Omar Mine and obtain high-volatile coal
    from other sources, the $.65 per net ton rate reduction
    described herein will be applied to the net rates currently in
    effect . . . for such other high-volatile coal transportation
    as
    may be designated by Wheeling-Pittsburgh, and, in such
    case, the reduction of $.65 per net ton shall continue in
    effect until the total tonnage shipped from all mines, includ-
    ing Omar, beginning April 4, 1989, reaches 10.5 million
    tons.
    Thus, if Wheeling-Pitt sold the Omar Mine, the contract explicitly
    allowed it to designate other shipments to which the discount would
    apply. As discussed previously, since Wheeling-Pitt would no longer
    be a supplier of coal, the provision anticipates that the reduction
    would apply to other shipments by other suppliers. Thus, the clear
    language of the contract allows Wheeling-Pitt to designate another
    contract, to which it is not a party, to which the discount should
    apply.
    7
    CSX still receives a benefit since the $.65 per net ton reduction
    applies only to coal transported by CSX.
    CSX argues that even if it had a duty to provide the discount to
    Wheeling-Pitt it has done so, since the discount was built into the
    rate
    which CSX charges Massey, the current supplier of coal to Wheeling-
    Pitt. Although the rate CSX charges Massey is lower than the rate
    CSX charged Wheeling-Pitt, including the discount, there is no evi-
    dence in the record that the rate CSX charges Massey includes the
    $.65 discount.
    First, the contract between CSX and Massey was a commercially
    negotiated agreement between the two parties. There is no evidence
    that Wheeling-Pitt was involved in the negotiations. In fact, there
    is
    evidence in the record that Wheeling-Pitt continued to assert its
    rights
    to the discount even as CSX was negotiating its agreement with Mas-
    sey.
    Second, the contract between CSX and Massey does not just cover
    rates charged to Wheeling-Pitt. The contract also covers coal
    supplied
    by Massey for U.S. Steel Corporation. Third, Massey was a much
    larger supplier of coal than Wheeling-Pitt and there is evidence in
    the
    record that Massey's lower rate was due to its significant
    bargaining
    leverage and not due to the $.65 per net ton discount.
    Finally, the contract with Massey runs through 2004. There is no
    language in the contract that the rate will go up by the amount of
    the
    discount once the discounted rate has been applied to 10.5 million
    tons of coal under Wheeling-Pitt's original anti-trust settlement
    agree-
    ment. If CSX only gave Massey the discounted rate due to the
    settle-
    ment agreement, the contract should have contained language
    increasing the rate once CSX met its settlement obligation.
    The language at issue unambiguously gives Wheeling-Pitt the right
    to the $.65 per net ton discount on 10.5 million tons of coal. We
    reverse the district court's grant of summary judgment in favor of
    CSX and grant summary judgment as to Wheeling-Pitt. We remand
    the case to the district court for further proceedings consistent
    with
    this opinion.
    REVERSED AND REMANDED
    8