Rainbow Nav., Inc. v. US

• Decision Date: 13 July 1990
• Docket Number: Civ. A. No. 86-4343.
• Citation: 742 F. Supp. 171
• Parties: RAINBOW NAVIGATION, INC., Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — District of New Jersey

742 F. Supp. 171

RAINBOW NAVIGATION, INC., Plaintiff, v. UNITED STATES of America, Defendant.

Civ. A. No. 86-4343.

United States District Court, D. New Jersey.

July 13, 1990.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

George Koelzer, Ober, Kaler, Grimes & Shriver, Edison, N.J., for plaintiff.

Damon Miller, Trial Atty., Civil Division U.S. Dept. of Justice, Wash., D.C., for defendant.

OPINION

HAROLD A. ACKERMAN, District Judge.

This admiralty suit concerns the carriage of United States government cargo between Norfolk, Virginia and Njardvik, Iceland in September — October 1984. The principal controversy relates to the interpretation of the Bill of Lading which controls this carriage.¹ Plaintiff, Rainbow Navigation, Inc. ("Rainbow"), seeks to recover compensation from defendant, the United States of America, for overhead, loss of freight revenues and expenses incurred by it while its vessel was strikebound in Njardvik, Iceland, for a period of over twenty-two days.

A bench trial was commenced on June 28, 1989. Due to scheduling difficulties, the trial was conducted for eight days over a ten month period. The trial proceeded on November 11, 1989, December 27, 1989, December 28, 1989, December 29, 1989, January 3, 1990, April 3, 1990, and concluded on April 4, 1990.

This court has jurisdiction pursuant to the Suits in Admiralty Act, 46 U.S.C. App. § 741 — 752.

I now make my findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52(a), based on testimony and certain documents which the parties offered into evidence at trial.

FINDINGS OF FACT

I will break down my findings of fact into three parts, describing: (1) the background of this case; (2) occurrences prior to sailing; and (3) the strike in Iceland.

I. The Background of this Case

The Military Sealift Command, (MSC), Department of the Navy is the single manager operating agency for sealift service within the Department of Defense (DOD). As part of that responsibility, MSC arranges ocean transport in the foreign and domestic offshore commerce of the United States for all DOD and DOD sponsored cargoes from commercial U.S. flag ocean carriers (Stipulated fact 1). By delegation, the Commander Military Traffic Management Command, Department of the Army (MTMC), has responsibility for, among other things, all functions related to the bookings of cargo for carriage by commercial ocean carriers. MTMC served as the contracting officer, the paying officer and the legal advisor (Tr. 673). All freight bills for the movement of cargo between the U.S. east coast and Iceland are paid by the MSC subordination area command, MSC, Atlantic (COMSCLANT). The Naval Supply Systems Command (NAVSUP) is responsible for the coordination of the resupply of U.S. Naval Stations worldwide. As part of this responsibility, NAVSUP provides transportation and funding, monitors the funds, and tracks any problems in the resupply transportation pipeline.

In 1984, plaintiff, Rainbow operated as an ocean common carrier in the U.S. east coast/Iceland trade, offering regularly scheduled service between Norfolk, Virginia, and Iceland. At all times pertinent to this matter, Rainbow operated one vessel, The Rainbow Hope, in this trade. This was Rainbow's only vessel involved in ocean carrier transportation. In September of 1984, The Rainbow Hope was the only U.S. flag vessel in the U.S. east coast/Iceland trade. (Tr. 356, 391). At all times relevant, The Rainbow Hope was bareboat chartered² to Rainbow by the Maritime Administration, Department of Transportation. Under the charter, Rainbow agreed that monthly charter payments would be due and payable regardless of whether the vessel was employed (Stipulated fact 8). Virtually all cargo carried by Rainbow in this trade belonged to the U.S. government. On the voyage in question, approximately ninety-eight percent of the cargo carried belonged to the government. (Tr. 391).

In 1984, all cargo booked by MTMC with Rainbow and Icelandic shipping companies was booked on a common carriage basis under government bills of lading pursuant to their commercial tariffs on file with the Federal Maritime Commission. When military cargo is booked under a commercial tariff, MTMC prepares and uses government bills of lading, although it is customary that both a U.S. government bill of lading and a commercial bill of lading be issued (Tr. 419). The parties agree that the contract of carriage in this case was governed by a government bill of lading and a Rainbow bill of lading. (Stipulated facts No. 13, 18). In this case, the government and Rainbow bills of lading designate Njardvik, Iceland as the point of destination, and the terms and conditions of the freight carriage are governed by the government bill of lading and Rainbow Tariff No. 1,³ as duly filed with the Federal Maritime Commission, which incorporated the Rainbow Bill of Lading. Rainbow Tariff No. 1, as duly filed with the Federal Maritime Commission, which incorporated the Rainbow Bill of Lading.

The U.S. government bill of lading states in its terms and conditions that it is governed by the regulations of Title 41, subpart 101-41.3, of the Code of Federal Regulations, ("CFR"). Except as provided in 41 CFR § 101, or as otherwise stated on the government bill of lading, the government bill of lading is also subject to the same rules and conditions as govern commercial shipments made on the usual form provided by the carrier. (Exhibit P-1). The government bill of lading imposed upon Rainbow, the carrier, the obligation to receive the cargo, carry it from Norfolk to Njardvik, and deliver the cargo in good order and condition to the consignee (Exhibit P-1). Under the government bill of lading and applicable regulations and statutes incorporated therein, freight is not earned until delivery of the cargo at the designated destination. 41 C.F.R. § 101-41.302-3.⁴

In addition to the government bill of lading, however, Rainbow's bill of lading applies to the parties' contract of carriage. There are three clauses in the Rainbow bill of lading at issue in this case: clauses 5(a), 5(e) and 4(b). The liberties clause, found in the Rainbow bill of lading, clause 5(a), states:

In any situation whether existing or anticipated before commencement of or during the voyage including strikes and work stoppages, which in the Carrier's judgment may give rise to risk of damage delay or disadvantage to the vessel, her cargo or persons aboard, or make it imprudent to begin to continue the voyage or to enter or discharge at any port or to give rise to delay or difficulty in arriving or discharging or leaving any port or place or in making due disposition or delivery of the goods, the Carrier may decline to receive, keep or load the goods or may discharge the goods into any depot, craft or place or may proceed or return directly or indirectly to such other port or place as the Carrier may select and discharge the goods or any part thereof there, may retain the goods on board until the return trip or such time as the carrier thinks advisable or may forward or transship the goods by any means, but always at the risk and expense of the goods or may require the shipper or consignee to take delivery at port of shipment or elsewhere and if he fails to do so, the Carrier may warehouse, store, sell or hold the goods.

(Exhibit P-3) (emphasis added).

Clause 5(e) found in the Rainbow bill of lading states:

For extra services rendered pursuant to this clause, the Carrier shall be entitled to reasonable extra compensation.

(Exhibit P-3).

Clause 4(b) of the Rainbow bill of lading, also at issue in this case, states:

The Carrier shall deliver the goods at the port of discharge named herein or as near thereto as the vessel may safely get, lie and leave always afloat under all conditions of tide water and weather. Should the vessel be unable for any reason to so discharge it may effect delivery by any means and all extra time and expense shall be at the expense of the goods.

(Exhibit P-3) (emphasis added).

II. Occurrences Prior to Sailing

Beginning on September 4, 1984, Rainbow accepted bookings from the government for items of cargo for carriage on voyage 7E/B of the Rainbow Hope (Exhibit P-4, P-51, Tr. 138). From September 4, 1984, the government continued to routinely book cargo with the Rainbow Hope so long as Rainbow continued to accept bookings. The voyage for this cargo was originally scheduled to sail on September 24, 1984. However, both plaintiff and defendant learned of an impending or anticipated strike in Iceland prior to the subject sailing. Plaintiff learned of the possibility of the strike around September 24, 1984, from its agent in Iceland, Gunnar Gudjosson, Inc. (Tr. 83, 93, 137). On September 26, 1984, Captain Ott, supply officer for the Naval Station, Keflavik, Iceland, advised the government that there was a threat of a general strike against the Icelandic Government by civil service employees scheduled to begin October 4, 1984. This strike would cause the closure of ocean freight operations. (Stipulated fact 26).⁵

On September 24, 1984, Mr. Dennis Ryan, Manager of Sales Traffic for Rainbow, informed Mr. Howard of NAVSUP, that, due to the impending strike, the Rainbow Hope would not set sail until September 28, 1984. Rainbow accepted bookings after it learned of the anticipated strike and the last of the government cargo was booked on September 25, 1984. The cargo was loaded on the Rainbow Hope on September 28, 1984. There was no change in the status of the impending strike between September 24, 1984 (the originally scheduled departure date) and September 28, 1984 (the date on which the vessel actually set sail). (Tr. 98). The government never gave Rainbow any instruction to sail or not to sail. Rainbow was aware of the possibility of the strike and the risk of delay likely to be encountered in discharging cargo at Njardvik, Iceland, prior to sailing on September 28,...