U.S. for Use and Benefit of Eastern Gulf, Inc. v. Metzger Towing, Inc.

Citation910 F.2d 775
Decision Date06 September 1990
Docket NumberNo. 89-7243,89-7243
Parties36 Cont.Cas.Fed. (CCH) 75,938 UNITED STATES of America for Use and Benefit of EASTERN GULF, INC., Plaintiffs-Appellants, v. METZGER TOWING, INC., and The Travelers Indemnity Company, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

Lawrence B. Voit, Wanda J. Cochran, Silver & Voit, Mobile, Ala., for plaintiffs-appellants.

John R. Lockett, Mobile, Ala., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Alabama.

Before JOHNSON, Circuit Judge, HILL * and HENLEY **, Senior Circuit Judges.

HILL, Senior Circuit Judge:

This appeal involves claims for (1) breach of a towage agreement and (2) "sums justly due" under the Miller Act, 40 U.S.C. Secs. 270a-270d (1986), for "labor or material" supplied in connection with a United States Army Corps of Engineers ("Corps") project to build a revetment on the Gailliard Disposal Island ("Gailliard") in Mobile Bay, Alabama. 1 Plaintiff, Eastern Gulf, Inc. ("Eastern"), an Alabama Corporation that owned and operated the tugboat SOUTHERN MISS during 1986 and 1987, brought suit against Metzger Towing, Inc. ("Metzger"), a Mississippi Corporation, for the payment of "standby" expenses Eastern claimed it incurred while towing barges pursuant to a subcontract with Metzger. 2 After a two-day bench trial, the District Court for the Southern District of Alabama entered a judgment that effectively denied Eastern's claims. We affirm.

I. FACTS AND PROCEDURAL HISTORY

On January 2, 1986, the Corps awarded Metzger the prime contract to construct approximately 16,500 feet of revetment 3 on Gailliard. Metzger had already reached an informal agreement with Offshore Company, Inc. ("Offshore"), that Offshore would do the actual construction if Metzger received the contract. 4

Eastern signed a contract with Metzger on January 31, 1987, agreeing to tow barges laden with stone from a quarry in Kentucky down the Tennessee-Tombigbee Waterway to the Theodore Industrial Canal near Gailliard in Alabama, where Metzger or Offshore would unload the barges by WHEREAS, Metzger Towing (herein "Metzger") has a contract with the United States Army Corps of Engineers for the construction of a stone revetment on the Gailliard Disposal Island in Mobile, Alabama; and

crane and truck the stone to the nearby revetment project. In pertinent part, the agreement read as follows:

WHEREAS, it will be necessary to transport the stone used on the project by barge from Smithland, Kentucky to the Theodore Industrial Canal; and

WHEREAS, Metzger has chartered four barges for the purpose of transporting the stone and it is Metzger's desire to hire Eastern Gulf, Inc. (herein "Eastern") to tow the barges until the

Gailliard Island project is completed;

NOW THEREFORE, Metzger and Eastern agree as follows:

1. Eastern agree[s] to furnish the services of the tug, SOUTHERN MISS, to tow the stone in multiple trips from Smithland, Kentucky to the Theodore Industrial Canal in Mobile, Alabama.

2. For the first trip, Eastern will accept delivery of four light barges number RM707, RM710, RM714, and RM716 at the dock of Ideal Basic Industries on February 1, 1986. Eastern shall transport the barges from Mobile to Smithland, Kentucky to be loaded and return the same to Theodore Industrial Canal.

3. For each subsequent trip[,] Eastern shall accept delivery of four light barges upon completion of offloading by Metzger and/or its subcontractors. Metzger agrees to make diligent effort to unload the barges within six days or less after delivery by Eastern. Eastern will make diligent effort to make each subsequent delivery of stone to Metzger within 15 days after the completion of offloading of the prior delivery.

4. (a) Metzger shall pay Eastern $4.50 for each ton of stone delivered to the Theodore Industrial Canal. It is agreed that tonnage shall be measured by the United States Army Corps of Engineers in the manner set forth in Exhibit 1 to this agreement.

(Emphasis added).

The prime contract required Metzger to complete the project by January 1988. In negotiations leading to the Eastern subcontract, Metzger made clear its intention to complete the project in late summer or fall, although the exact date of that projection is disputed. The Eastern subcontract provided that the SOUTHERN MISS would depart for its first load of stone on February 1, 1987, but did not specify a final completion date for its services and only stated that Eastern would provide towage services until the project was completed.

The parties agreed on a contract price based on the tonnage of stone delivered in the barges rather than as a charter of Eastern's tug. Paragraph Eight of the agreement, not quoted above, stated that "[t]his agreement shall likewise be construed as a contract for towage service and shall not be construed as a charter of the tug or give rise to a personal contract." 5

It is undisputed that although the subcontract did not provide for a specific completion date, the $4.50 per ton price was arrived at by considering the number of tons needed for the project (approximately 67,800), the number of trips required to deliver the stone given the capacity of the barges, the number of days needed to make a round-trip, and the number of days it would take for Metzger or Offshore to unload the barges and make them available for a return trip to the quarry. Eastern agreed to "make diligent effort to make each subsequent delivery of stone to Metzger within 15 days after the completion of off loading of (sic) the prior delivery." Metzger in turn agreed to "make diligent The contract did not define "diligent" and made absolutely no provision for what should happen if either party could not carry out its commitment within the agreed upon time period despite "diligent effort."

effort to unload the barges within six days or less after delivery by Eastern." 6

It is also undisputed that while Eastern made each of its deliveries within the fifteen-day period, Metzger required more than six days to unload the stone on several occasions. The district court made numerous factual findings regarding the reasons for the delays. 7 First, the jobsite was unprepared for placement of the first load of stone due to poor weather (fog) and delays in obtaining Corps approval to change the location for dredging due to an unanticipated shell reef. Although the SOUTHERN MISS returned with the first load of stone on February 15, Metzger did not unload the barges for nearly a month since the site was not prepared. Mechanical breakdowns of various equipment used to remove the stone from the barges and move it to the jobsite delayed the offloading on subsequent trips as well.

Eastern complained of the delays and Metzger agreed to rent four additional barges for one trip in April 1986, and two additional barges in June 1986 to rectify the delays. Metzger also "approved extra work which Eastern found during the delay period in order to ease the financial burden." District Court Order at 10. Between April and mid-August there were no delays in excess of six days. 8 However, as a result of malfunctioning equipment and the fact that at one point Metzger/Offshore ran short of filter cloth, 9 Metzger required more than six days to unload the stone on several occasions between mid-August and the project's completion in early November.

In November 1986, the Corps authorized Metzger to construct additional revetment footage not specified in the original prime contract. Despite the delay problems, Eastern agreed to deliver stone for the revetment extension under the same terms as the original subcontract after Metzger pointed out that the additional work would provide an opportunity to offset the earlier delays. During the time Eastern delivered stone for the extension, however, there was a fourteen-day delay in offloading due to crane repairs and three days in which Offshore employees were off, presumably for the Thanksgiving holiday.

Specifically with regard to Eastern's conduct, it is undisputed that Eastern (1) continued to perform despite the delays, 10 (2) accepted additional tow work under Metzger's extension of its contract with the Corps without demanding new terms, (3) and did not bill Metzger for any "standby time" until January 1988, after it had completed work under the original contract and the extension. 11

II. DISCUSSION
A. The Contract Claim.

The district court held that Metzger and Eastern entered into a maritime contract for towage services. See generally, G. Gilmore & C. Black, The Law of Admiralty Sec. 1-10 (2d ed. 1975). With certain exceptions not implicated in this case, the general rules of contract interpretation control when a court construes a towage agreement. A. Parks, The Law of Tug, Tow, & Pilotage 38 (1982) (hereinafter "Parks").

The court also found that the contract unambiguously did not provide for the payment to Eastern for "standby time" in excess of six days. Whether the contract was unambiguous in this regard is a question of law subject to plenary review by this court. Cathbake Inv. Co. v. Fisk Elec. Co., 700 F.2d 654, 656 (11th Cir.1983) (citing Suburban Realty Co. v. United States, 615 F.2d 171 (5th Cir.1980). We agree with the district court that the contract was not ambiguous in this regard.

The agreement between the parties makes absolutely no mention of standby time or standby expenses. Paragraph Eight of the contract, quoted above, explicitly stated that the contract was not to be construed as a charter of the tug or a personal contract. Unless the towage service is elevated to a salvage service, 12 the amount recoverable under a towage agreement is limited to the terms of the contract; "no subsequent circumstances will entitle the tug to recover more than the contract price." 86 C.J.S. Towage Sec. 19 (1954). See Parks, supra at 125. See also 17A C.J.S. Contracts Sec. 361 (1963) (express stipulation for...

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