Butterfly Transportation Corp. v. Bertucci Industrial Services LLC , 243 F. App'x 16 ( 2007 )

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
June 26, 2007
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 06-30689
BUTTERFLY TRANSPORTATION
CORPORATION; SAMOS STEAMSHIP CO., S.A.,
Plaintiffs-Appellants,
versus
BERTUCCI INDUSTRIAL SERVICES LLC,
Defendant-Appellee.
Appeal from the United States District Court
for the Eastern District of Louisiana
(04-CV-3533)
Before JOLLY, STEWART, and PRADO, Circuit Judges.
PER CURIAM:*
Butterfly Transportation Corporation and Samos Steamship Company (hereinafter jointly
“Owners”), owners of the vessel M.V. Maya, seek damages from breach of contract pursuant to an
agreement with Bertucci Industrial Services (“Bertucci”) to clean the holds of the Maya. The district
*
Pursuant to 5th Cir. R. 47.5, the Court has determined that this opinion should not be published
and is not precedent except under the limited circumstances set forth in 5th Cir. R. 47.5.4.
court granted summary judgment to Bertucci, and the Owners now appeal. We reverse and remand.
I. FACTUAL AND PROCEDURAL BACKGROUND
The material facts are not in dispute. In December 2003, the Maya was chartered to deliver
agricultural products, including soybeans, from Louisiana to Turkey and Syria. The crew of the Maya
had been unable to fully clean the residues of prior cargos from the eight holds of the ship. Upon
arrival in New Orleans, the ship’s holds were initially inspected and rejected by the United States
Department of Agriculture (“USDA”).1
Captain Katsaros, an employee of Maritime Endeavors, a separate marine services company
hired by the Owners to act as their agent, worked with the Owners to determine what would be
necessary to clean the holds. He recommended obtaining bids for the job and advised that man-lifts
might be necessary to completely clean the holds. Four companies, including Bertucci, submitted bids
for the job after physically inspecting the holds of the ship. Bertucci’s bid was for $145,000, an
amount that Katsaros testified was unusually high in his experience. Bertucci’s bid reads in relevant
part: “We offer a no cure no pay price of $145,000 to obtain passes for loading for USDA and NCB
[National Cargo Bureau].2 We estimate the project will require 5 to 6 days for cleaning, but do not
guarantee the number of days. This rate includes a crane barge to place the manlifts in each cargo
hold as well as the gear and chemicals required during mobilization.” For various reasons, all the
contractors but Bertucci were eliminated.
The Owners had follow-up conversations with Katsaros and asked him to obtain additional
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One of the holds was not inspected because it was filled with sea water acting as ballast.
2
When the NCB initially examined the holds, it approved all of them except the one filled with
ballast. After the cleaning, the NCB again certified all the holds.
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information from Bertucci, including a request for Bertucci to obtain liability insurance coverage,
which Bertucci agreed to do. On January 6, 2004, the Owners sent a “Confirmation of Order” to
Katsaros, who then passed it on to Bertucci. The document reads in part: “Further to our exchanged
emails and telecoms overnight and this morning we hereby confirm our acceptance of Bertucci
Industrial Services LLC, to carry out cleaning and preparing all ship’s cargo holds (8 cargo holds)
for grain loading. Work to commence immediately and to terminate with issuing NCB and USDA
holds acceptance certificate for loading grains. . . .” There were additional emails exchanged between
the Owners and Bertucci after this communication, but these emails do not provide any additional
negotiation related to the main purpose of the contract, but instead are devoted to consideration of
peripheral matters, such as what will be done with the water used to clean the holds and what kind
of chemicals will be used. None of the parties mention any additional communications. All parties
agree that the Confirmation of Order is the contract in this matter.
Bertucci began working the morning of January 7, 2004. The cleaning crew worked from 7
a.m. to about 5:30 p.m. The crew worked similar hours on January 8. On the evening of January 8,
Bertucci informed the Owners that the Maya would be ready for inspection by the USDA the next
day. On the afternoon of January 9, the USDA inspected and approved all the cargo holds.
Loading of the agricultural products began the next morning. Soybeans were placed into
cargo hold 2. The loading was complete and the vessel sailed on January 11. The Maya first sailed
to Turkey where a small portion of the soybeans were delivered from hold 2. No damage was noted
at this time. On February 13, the ship arrived in Syria but due to weather was unable to dock until
March 1. At this time, some of the soybean cargo in hold 2 was found to be water damaged. The
damaged cargo was removed, and the discharge of the remaining soybeans resumed. On March 6,
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soybeans emerged from the cargo hold covered in a sticky, black substance. A local cargo surveyor
indicated that the soybean contamination was caused by oily residues remaining on the surfaces of
the upper parts of hold 2. These were later determined to be prior oil cargo residues that had not
been removed.
The Owners settled with the cargo receivers for $1,750,000 because the soybeans remaining
in the hold were contaminated and unfit for human consumption. After the complete discharge of all
cargo, the Maya’s crew members again tried to clean the holds but were unsuccessful. When the
Maya reached its next job, the cargo holds were again rejected because of the prior cargo residues
that were noted in Louisiana prior to the loading of the agricultural products. Shore labor was again
engaged for additional cleaning, and the Maya was placed off-hire during this time.
The Owners filed suit seeking to recover the damages paid to the cargo receivers as well as
the outlay for the additional cleaning. The Owners asserted several causes of action, including
general contract damages and damages stemming from breach of the implied warranty of
workmanlike performance. Bertucci motioned for summary judgment, and the district court granted
the motion, holding that Bertucci fulfilled its obligation under the contract when the USDA approved
the holds for grain loading. The Owners appeal.
II. DISCUSSION
A. Ambiguity
The Owners argue that the district court erred by finding that Bertucci fulfilled its
contractual obligations by obtaining the loading permits from the USDA and the NCB. The
Owners urge that this was the agreed upon termination point of the contract, not the course of
performance agreed upon. The Owners also urge that the contract is ambiguous and that the
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parties’ intent should be determined by looking at the course of conduct and the amount of money
paid under the contract.
The interpretation of contracts is a question of law that this court reviews de novo. Dell
Computer Corp. v. Rodriguez, 390 F.3d 377, 384 (5th Cir. 2004). “A basic principle of contract
interpretation in admiralty law is to interpret, to the extent possible, all the terms in a contract without
rendering any of them meaningless or superfluous.” Chembulk Trading LLC v. Chemex Ltd., 393
F.3d 550, 555 (5th Cir. 2004) (citing Foster Wheeler Energy Corp. v. An Ning Jiang MV, 383 F.3d
349, 354 (5th Cir. 2004)). The determination of whether a contract is ambiguous is also a question
of law. Hidden Oaks Ltd. v. City of Austin, 138 F.3d 1036, 1048 (5th Cir. 1998). A contract is
unambiguous if “its language as a whole is clear, explicit, and leads to no absurd consequences, and
as such it can be given only one reasonable interpretation.” Chembulk Trading, 393 F.3d at 555 n.6.
Once a contract is found to be ambiguous, the determination of the parties’ intent through extrinsic
evidence is a question of fact, and deference is due the determination of the district court. Hidden
Oaks, 138 F.3d at 1048.
The district court failed to give meaning to the following clause of the agreement: “we [The
Owners] hereby confirm our acceptance of [Bertucci] to carry out cleaning and preparing all ship’s
cargo holds (8 holds) for grain loading.” While the language of the contract doesn’t necessarily
support the Owners’s contention that Bertucci agreed to “remove the residue of prior cargoes so that
there would be no contamination of the cargo to be loaded at New Orleans,” this phrase could be
interpreted to require more than Bertucci’s obtaining a loading pass from the USDA.
Therefore, the contract is ambiguous. It is unclear exactly what is entailed in “cleaning and
preparing all ship’s cargo holds . . . for grain loading.” There are multiple reasonable interpretations
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of this phrase. Because the contract is ambiguous, materials, testimony, and evidence outside the
contract itself may be consulted to determine the contract’s meaning. Corbitt v. Diamond M.
Drilling Co., 654 F.2d 329, 332-33 (5th Cir. Aug. 1981). “[I]f a contract is ambiguous, a fact issue
remains regarding the parties’ intent,” rendering summary judgment inappropriate. Instone Travel
Tech Marine & Offshore v. Int’l Shipping Partners, Inc., 334 F.3d 423, 431 (5th Cir. 2003) (citing
In re El Paso Refinery, LP, 302 F.3d 343, 352 (5th Cir. 2002)); see also Gonzalez v. Denning, 394
F.3d 388, 392 (5th Cir. 2004) (“In the context of contract interpretation, only when there is a choice
of reasonable interpretations of the contract is there a material fact issue concerning the parties’ intent
that would preclude summary judgment.”) (internal citations omitted). Therefore, we remand the
case for further proceedings to determine the parties’ intent.
B. Warranty of Workmanlike Performance
The Owners also complain that the district court completely ignored their claim that Bertucci
breached its warranty of workmanlike performance (“WWLP”). The Owners argue that the district
court erred in granting summary judgment on this claim because there are contested matters of fact
surrounding whether Bertucci’s performance breached this warranty.
Bertucci argues that the warranty of workmanlike performance was abrogated by the 1972
amendments to the Longshore and Harbor Workers’ Compensation Act. Bertucci argues that even
to the extent that this warranty exists, this argument is an attempt by the Owners to hold Bertucci
liable for duties that were not part of the parties’ agreement.
The existence and effect of WWLP in admiralty contracts is a legal issue that this court
reviews de novo. See In re ADM/Growmark River Sys., Inc., 234 F.3d 881, 886 (5th Cir. 2000).
Under the Ryan doctrine, “shore-based contractors who go aboard a vessel by the owner’s
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arrangement or by his consent to perform service for the ship’s benefit impliedly warrant to the
shipowner that they will accomplish their task in a workmanlike manner.” Parfait v. Jahncke Serv.,
Inc., 484 F.2d 296, 301 (5th Cir. 1973). “‘[The] petitioner’s warranty of workmanlike service . . .
is comparable to a manufacturer’s warranty of the soundness of its manufactured product.’” Bosnor,
S.A. de C.V. v. Tug L.A. Barrios, 796 F.2d 776, 784 (5th Cir. 1986) (quoting Ryan Stevedoring Co.
v. Pan Atlantic S.S. Corp., 350 U.S. 124, 133-34 (1956)). Although the doctrine initially applied
only to personal injury cases, later cases allowed vessel owners to recover full indemnity from
contractors for losses in non-personal injury cases as well, even where the ship owner was partially
at fault or contributorily negligent. Id.In 1972, Congress amended the Longshore and Harbor Workers’ Compensation Act
(“LHWCA”) to abrogate the Ryan doctrine as it applied to those covered by the Act. Parfait, 484
F.2d at 302 n.4. These amendments do not apply to workers not covered by the LHWCA’s
provisions. See Stevens v. East-West Towing Co., 649 F.2d 1104, 1109 n.7 (5th Cir. Unit A July
1981). Nonetheless, based on these amendments, the Fifth Circuit began a gradual narrowing of the
Ryan doctrine as it applied to property damage cases that were not covered directly by the LHWCA
amendments. See Bosnor, 796 F.2d at 785-86. Accordingly, while a WWLP still exists for cases
involving damage to cargo, it is now judged by comparative fault principles. Rockwell Int’l Corp.
v. M/V Incotrans Spirit, 998 F.2d 316, 319 (5th Cir. 1993); Bosnor, 796 F.2d at 785-86.
The district court legally erred in not considering whether Bertucci breached its WWLP. This
kind of liability exists under current Fifth Circuit law, although liability is no longer judged by the
strict liability principles of Ryan; instead, fault must be apportioned comparatively. Because the
district court did not consider or address this claim at all, we remand this case for the district court
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to consider the WWLP claim in the first instance.
III. CONCLUSION
We reverse the district court’s grant of summary judgment and remand this case for further
proceedings.
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