Atlantic Dry Dock Corp. v. US

Decision Date03 September 1991
Docket NumberNo. 87-974-Civ-J-12.,87-974-Civ-J-12.
PartiesATLANTIC DRY DOCK CORPORATION, Plaintiff, v. UNITED STATES of America, Defendant.
CourtU.S. District Court — Middle District of Florida

Michael D. Whalen and C. Warren Tripp, Jr., Bedell, Dittmar, DeVault & Pillans, Jacksonville, Fla., for plaintiff.

J. Christopher Kohn, Robert M. Hollis, Douglas J. Hughes and Theodore R. Carter, III, U.S. Dept. of Justice, Washington, D.C., for defendant.

OPINION AND ORDER ON MOTION FOR PARTIAL SUMMARY JUDGMENT AND ON MOTION TO DISMISS COUNT THREE

MELTON, Senior District Judge.

This cause is before the Court on two motions filed by defendant: (1) Motion for Partial Summary Judgment, filed on March 20, 1990, and (2) Motion to Dismiss Count Three of Plaintiff's Amended Complaint, filed on May 10, 1990. Plaintiff filed a response to the first motion on April 30, 1990, and defendant filed a reply to the response on May 10, 1990. Plaintiff filed a response to the second motion on May 29, 1990, and defendant filed a reply to that response on July 13, 1990. The Court heard oral argument on both motions on September 19, 1990. Defendant filed a Notice of Supplemental Authority on October 2, 1990, to which plaintiff responded on October 3, 1990. Defendant filed a Second Notice of Supplemental Authority on July 23, 1991, to which no response has been filed.

After careful consideration of the memoranda and oral argument of the parties, and having reviewed the entire file and relevant law, the Court is of the opinion that the motion for partial summary judgment should be granted as to Count One and denied as to Count Two and that the motion to dismiss Count Three should be granted. Below, the Court first reviews the facts of the case which are relevant to its disposition of the motions and then discusses the merits of each motion separately.

I. Facts

In August, 1969, the parties entered into a contract (the "Master Agreement") which authorized plaintiff to bid on future job orders offered by defendant. In September, 1984, pursuant to the Master Agreement and a subsequent bid, plaintiff contracted with defendant to overhaul two Coast Guard ships, the USCGC Ute and the USCGC Lipan. The total price of the contract was set at $5,809,073.00. In the course of the overhaul work, the parties entered into approximately 130 agreements to modify the contract. These modifications encompassed additions to, deletions from, or revisions of the plans and specifications of the work to be performed under the original contract.

Each modification agreement was memorialized on a preprinted government form, Standard Form 30, entitled "Amendment of Solicitation/Modification of Contract". In addition to the preprinted provisions on the form, each modification contained additional provisions specially added to the form. One of the added provisions is a settlement or release provision which reads, in full, as follows:

The change in price and/or delivery date described above, is considered to be fair and reasonable and has been mutually agreed upon in full and final settlement of all claims arising out of this modification including all claims for delays and disruptions resulting from, caused by, or incident to such modifications or change orders.

Each modification was a bilateral agreement, signed by a representative of plaintiff and by a representative of defendant.

The numerous modifications significantly delayed the completion date of the overhaul work and significantly increased the total contract price. The work on the USCGC Lipan originally was scheduled to be performed between October 8, 1984, and March 23, 1985, for a total of about five and one-half (5½) months of work. The many modifications caused the completion date to be pushed back to July 19, 1985, for a total of about nine and one-half (9½) months of work. The USCGC Ute was scheduled to be overhauled between February 8, 1985, and July 23, 1985, for a total of about five and one-half (5½) months of work. The modifications, however, mandated that the overhaul be conducted between June 10, 1985, and June 2, 1986, for a total of almost twelve (12) months of work. The contract price was increased by a total of $4,609,372.00 as a result of the modifications at issue in this action. Adding this amount to the original contract price of $5,809,073.00, defendant paid a total of $10,418,445.00 to plaintiff as compensation for the overhaul work as of the date of the filing of this action.

II. Motion for Partial Summary Judgment on Counts One and Two

In Count One of the amended complaint, plaintiff asserts that "the cumulative effect of the many small changes" engendered by the contract modifications resulted in "cumulative delay and disruption." Plaintiff claims that it was not compensated for this cumulative delay and disruption and thus defendant breached the contract and damaged plaintiff. In Count Two, plaintiff asserts that the numerous modifications resulted in a "cardinal change" of the contract terms because defendant "required plaintiff to perform work not within the general scope of the contract which had the effect of fundamentally altering plaintiff's contractual undertaking." This cardinal change, plaintiff claims, constituted a breach of the contract for which damages are recoverable.

In its motion for partial summary judgment, defendant asserts that plaintiff was fully compensated for each modification and any claims plaintiff may have had for breach of contract arising out of the modifications were extinguished by the above-quoted release provision. Defendant contends that the release provision is either an unqualified release of defendant or an unrebuttable manifestation of an accord and satisfaction between the parties concerning all claims based on the modifications. Defendant's contention is grounded in its view that the provision is unambiguous and should be enforced as a matter of law to bar plaintiff's breach of contract claims.

In opposing defendant's motion, plaintiff argues that the release provision is ambiguous concerning whether the parties intended it to extinguish the claims plaintiff is asserting in this action; therefore, the provision cannot be enforced as a matter of law to bar these claims. Plaintiff maintains that the release provision contained in each modification merely evidences a settlement of discrete claims which are directly and causally connected to that individual modification only. These individual releases, plaintiff contends, were not intended to cover claims which arise from the cumulative impact of all of the modifications taken together. In plaintiff's view, material issues of fact exist concerning the parties' intent and the Court must look beyond the language of the release provision to determine that intent.

The Standard for Ambiguity

Under federal maritime law, "a court may not look beyond the written language of a contract to determine the intent of the parties unless the disputed contract provision is ambiguous." Corbitt v. Diamond M. Drilling Co., 654 F.2d 329, 332-33 (5th Cir.1981) (Unit A). In Orkin Exterminating Co. v. Federal Trade Commission, 849 F.2d 1354, 1360 (11th Cir.1988), cert. denied, 488 U.S. 1041, 109 S.Ct. 865, 102 L.Ed.2d 989 (1989), the United States Court of Appeals for the Eleventh Circuit delineated the legal principles to be applied in determining whether a contract provision is ambiguous:

Under well-established principles of contract law, where the language of a contract is unambiguous, the legal effect of that language is a question of law. Mason Drug Co., Inc. v. Harris, 597 F.2d 886 (5th Cir.1979). Because the question of whether a contractual ambiguity exists is also a question of law, it "may be resolved summarily." C. Wright, A. Miller & M. Kane, 10A Federal Practice and Procedure, § 2730.1 at 279 (1983) (citing Freeman v. Continental Gin Co., 381 F.2d 459 (5th Cir.1967) (other citations omitted). A contract term is ambiguous if "reasonably susceptible to more than one interpretation." Fabrica Italiana Lavorazione Materie Organiche, S.A.S. v. Kaiser Aluminum & Chemical Corp., 684 F.2d 776, 780 (11th Cir.1982). But "an ambiguity in a contract cannot be created by the mere assertion of a party to it." The fact that the meaning of a contract term is disputed likewise reveals no ambiguity. Vreeland v. Federal Power Comm'n, 528 F.2d 1343, 1351 (5th Cir.1976).

In its examination of a disputed contract provision, a court must examine the disputed terms "in the context of the entire agreement, giving the words their plain and ordinary meaning as understood by a reasonable person." International Bhd. of Boilermakers v. Local Lodge D111 of the Cement, Lime, Gypsum and Allied Workers Div. of the Int'l Bhd. of Boiler-makers, 858 F.2d 1559, 1562 (11th Cir. 1988), cert. denied, 490 U.S. 1047, 109 S.Ct. 1955, 104 L.Ed.2d 424 (1989).

Thus, in the present case, to be able to determine the legal effect of the release provision as a matter of law, the Court must find that the release provision is unambiguous, that is, reasonably susceptible to only one interpretation. The Court will examine each of plaintiff's claims independently to determine if the release provision is unambiguous as applied to that claim and, if it is unambiguous, its legal effect on that claim.

Cumulative Delay and Disruption

As discussed above, plaintiff attempts to avoid the application of the release provision to the claim for delay and disruption by asserting that it is not seeking damages for the discrete delay and disruption caused by each modification individually; rather, "all plaintiff is seeking before this Court is that disruption which was caused by the combined effect of all the Modifications taken together." Plaintiff's Memorandum in Opposition to Defendant's Motion for Partial Summary Judgment, at 8 n. 2. The release provision contained in each modification includes a clause which clearly and specifically...

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