Summary
interpreting maritime contract to avoid absurd result
Summary of this case from Angelette, LLC v. BradleyOpinion
CASE NO. C20-1085JLR
2022-03-07
DEFORGE MARITIME TOWING, LLC, et al., Plaintiffs, v. ALASKA LOGISTICS, LLC, et al., Defendants.
Lafcadio H. Darling, Holmes Weddle & Barcott, Seattle, WA, for Plaintiffs. Daniel J. Park, Dustin Hamilton, Legros Buchanan & Paul, Seattle, WA, for Defendants.
Lafcadio H. Darling, Holmes Weddle & Barcott, Seattle, WA, for Plaintiffs.
Daniel J. Park, Dustin Hamilton, Legros Buchanan & Paul, Seattle, WA, for Defendants.
ORDER
JAMES L. ROBART, United States District Judge I. INTRODUCTION
Before the court are: (1) Defendant Alaska Logistics, LLC ("AL") and Allyn G. Long's (collectively, "Defendants") motion for partial summary judgment (Defs. MSJ (Dkt. # 27); Defs. Reply (Dkt. # 38)); and (2) Plaintiffs DeForge Maritime Towing, LLC ("DMT") and Double EMC Marine, LLC's ("Double EMC") motion for partial summary judgment (Pls. MSJ (Dkt. # 30); Pls. Reply (Dkt. # 39)). Each party opposes the other's motion. (Defs. Resp (Dkt. # 34); Pls. Resp. (Dkt. # 35).) The court has considered the motions, the parties’ submissions in support of and in opposition to the motions, the relevant portions of the record, and the applicable law. Being fully advised, the court DENIES DMT's motion for partial summary judgment and GRANTS in part and DENIES in part Defendants’ motion for partial summary judgment.
Although DMT and Double EMC jointly filed a motion for partial summary judgment, Double EMC was dismissed from this case shortly after the parties filed their motions. (See generally Pls. MSJ; Dkt.; 2/12/22 Order (Dkt. # 33); Stip. (Dkt. # 32).) Because Double EMC is no longer a party to this case, the court refers to the pleadings submitted by both Double EMC and DMT, as well as the claims contained in the amended complaint, as DMT's alone.
Neither party has requested oral argument (see Defs. MSJ at 1; Pls. MSJ at 1), and the court has determined that oral argument would not be helpful to its disposition of the motions, see Local Rules W.D. Wash. LCR 7(b)(4).
II. BACKGROUND
This admiralty action arises out of a contract dispute between DMT and AL regarding the parties’ 2018 and 2019 "Time Charter Agreements" (collectively, the "Time Charter Agreements" or the "Agreements"). (See generally Am. Compl. (Dkt. # 17); DeForge Decl. (Dkt. # 31) ¶ 5, Ex. 1 ("2018 Time Charter Agreement"); id. ¶ 8, Ex. 4 ("2019 Time Charter Agreement"). ) DMT is a tug and barge company that provides services in the western United States, including carriage, transportation, chartering, and vessel transport. (See DeForge Decl. ¶ 2.) AL is a marine transportation company that provides services in Western Alaska and the Arctic. (See Park Decl. (Dkt. # 29) ¶ 2, Ex. A ("Long Dep.") at 9:10-18.)
Unless otherwise indicated, the court uses the CM/ECF page numbers when citing to the parties’ pleadings and exhibits.
A. The 2018 Time Charter Agreement
In 2018, DMT and AL began discussing the possibility of AL chartering tugs and barges from DMT for use in AL's Alaska transport operations. (See DeForge Decl. ¶ 3.) AL and DMT ultimately entered into a time charter agreement (the "2018 Time Charter Agreement") for the charter of the barge THELMA 302 (the "THELMA") and two DMT tugs (collectively, the "vessels") on May 9, 2018. (See 2018 Time Charter Agreement; DeForge Decl. ¶ 5; see also Long Dep. at 11:10-17 (stating that the THELMA was larger than the barges owned by AL and thus more useful for longer journeys).)
Double EMC, a Washington barge company, is the registered owner of the THELMA. (See Park Decl. ¶ 3, Ex. B ("Edwards Dep.") at 14:4-9, 20:24-25:1.) During the times relevant to this case, DMT "[b]areboat chartered" the THELMA from Double EMC for the purposes of using and chartering the barge for its business. (See id. at 24:7-18.)
The 2018 Time Charter Agreement described the vessels to be chartered, the on-hire and off-hire dates for the vessels, and the price terms. (See, e.g. , 2018 Time Charter Agreement ¶ 1.1.) In addition, the agreement provided that, "subject to [AL]’s general direction, [DMT] shall have exclusive control and command of the Vessels’ operation and navigation," while AL would be in control of loading and unloading cargo and similar operations. (See id. ¶¶ 1.1, 2.8.) The parties also agreed that the agreement would be governed "first by the General Maritime Law of the United States and second by the laws of the State of Washington, insofar as applicable." (See id. ¶ 12.4.)
Under the terms of the 2018 Time Charter Agreement, AL, with the permission of DMT, was permitted to install additional equipment on and make alterations to the chartered vessels. (Id. ¶ 3.1.) The agreement provided, however, that "[t]he On-Hire Period for each Vessel shall not end until [AL], at its sole cost and expense, removes all such equipment, materials and gear, and restores each Vessel to its condition prior to making such changes, ordinary wear and tear excepted." (Id. ) The agreement also addressed redelivery of the vessels and defined the end of the charter period, stating that "[t]he Vessels shall be redelivered to [DMT] upon termination of the On-Hire Periods applicable thereto at [DMT's] home port in Seattle, Washington, or other such other location as agreed between the parties, in the same order and condition, ordinary wear and tear excepted, as when accepted by [AL]." (Id. art. 5.)
The 2018 Time Charter Agreement also imposed specific duties and liabilities on AL regarding its handling of the chartered vessels. For example, DMT and AL agreed to the following:
2.7 [AL] shall not at any time ground the THELMA. Any damage to the THELMA caused by grounding while in the sole control of [AL] will be at the sole expense of and for the sole account of [AL].
....
2.9 [AL] will ensure that there is adequate fendering at all moorage facilities. Any damage resulting to any of the Vessels arising from [AL's] failure to do so will be for the sole account of [AL].
(Id. ¶¶ 2.7, 2.9.) The parties also executed an addendum to the 2018 Time Charter Agreement, which transferred liability for damage to the THELMA as a result of the condition of the berth or loading or unloading cargo to AL:
1. [AL] shall direct the Vessels to and between safe ports. [AL] shall be responsible for any loss or damage sustained by any of the Vessels by reason of the condition of berth or offshore unit.
2. Notwithstanding the provisions of Article 8, [AL] shall be responsible for loss or damage to any Vessel caused by the loading or unloading of any cargo.
The addendum also provided for AL to obtain insurance at a certain amount. (See 2018 Time Charter Agreement at 12.)
The parties also agreed to a system for determining the condition of the chartered vessels at the time of "on-hire" and "off-hire." (Id. ¶ 4.1.) The agreement called for an agreed-upon qualified surveyor to conduct an on-hire survey prior to the charter period, as well as an off-hire survey, which is "an equivalent survey by the same surveyor," at the termination of the charter hire. (Id. ) The agreement further provided that the on-hire survey "shall be conclusive evidence of the condition of the Vessel as of the date of commencement of the period of hire" and the off-hire survey "shall likewise be conclusive evidence of the condition of the Vessel as of the termination of the applicable On-Hire Period." (Id. )
The parties’ relevant liability and indemnity obligations were set forth in paragraphs 8.1 through 8.4 of the 2018 Time Charter Agreement. Regarding loss or damage to DMT's property, including the THELMA, paragraph 8.1 provided as follows:
In addition to these four paragraphs, article 8 of the 2018 Time Charter Agreement included other liability and indemnity obligations that do not affect the court's disposition of the instant motions. (See generally 2018 Time Charter Agreement art. 8.)
8.1 [DMT] shall defend, protect, indemnify, and hold harmless [AL] from and against any loss, cost, claim, obligation to indemnify another, suit, judgment, award, or damage (including reasonable attorneys’ fees), including, but not limited to, wreck removal, on account of loss or damage to any of the Vessels, [DMT's] equipment and vessels, either owned, rented and operated by [DMT] or its agents, subcontractors, and invitees, arising out of or relating to the performance of the work or services under this Charter, whether caused or brought about by [AL's] negligence or any other theory of legal liability, including strict liability or the unseaworthiness of any vessel.
(Id. ¶ 8.1.) Similarly, paragraph 8.2 provided that "[DMT] shall defend, protect, indemnify, and hold harmless [AL]" from any loss, cost, claim or damage "on account of any illness, injury, or death, suffered by [DMT]’s employees ... arising out of or relating to the performance of the work or services under this Charter." (Id. ¶ 8.2.) Regarding loss or damage to AL's property, paragraph 8.3 provided as follows:
8.3 [AL] shall defend, protect, indemnify and hold harmless [DMT] from and against any loss, cost, claim, obligation to indemnify another, suit, judgment, award, or damage (including reasonable attorneys’ fees), on account of loss or damage to any of [AL's] equipment and vessels, either owned, rented and operated by [AL] or its agents, subcontractors, and invitees, arising out of or relating to the performance of the work or services under this Charter, whether caused or brought about by [DMT's] negligence or any other theory of legal liability, including strict liability or the unseaworthiness of any vessel.
(Id. ¶ 8.3.) Similarly, paragraph 8.4 provided that "[AL] shall defend, protect, indemnify, and hold harmless [DMT]" from any loss, cost, claim or damage "on account of any illness, injury, or death, suffered by [AL]’s employees ... arising out of or relating to the performance of the work or services under this Charter." (Id. ¶ 8.4.) Notwithstanding the parties’ liability and indemnity obligations, the 2018 Time Charter Agreement stated that neither party is entitled to recover from the other party any indirect, consequential, or special damages, including "loss of profits, loss of use, loss of hire, or loss of production." (Id. ¶ 8.9.)
B. The 2019 Time Charter Agreement
In May 2019, DMT and AL entered into a second time charter agreement (the "2019 Time Charter Agreement") for the charter of the THELMA and three DMT tugs (collectively, the "vessels"). (See 2019 Time Charter Agreement; see also DeForge Decl. ¶ 8.) The 2019 Time Charter Agreement contained many of the same provisions as the 2018 Time Charter Agreement. For example, it included the same liability and indemnity provisions (compare 2019 Time Charter Agreement ¶¶ 8.1-8.4, with 2018 Time Charter Agreement ¶¶ 8.1-8.4); additional equipment/alterations and end of charter provisions (compare 2019 Time Charter Agreement ¶ 3.1 & art. 5, with 2018 Time Charter Agreement ¶ 3.1 & art. 5); disclaimer of special, indirect, or consequential damages (compare 2019 Time Charter Agreement ¶ 8.9, with 2018 Time Charter Agreement ¶ 8.9); choice of law provision (compare 2019 Time Charter Agreement ¶ 12.4, with 2018 Time Charter Agreement ¶ 12.4); and system for determining the condition of the chartered vessels at the time of "on-hire" and "off-hire" (compare 2019 Time Charter Agreement art. 4, with 2018 Time Charter Agreement ¶ 4.1).
The language in paragraph 8.3 differs slightly between the two Time Charter Agreements because paragraph 8.3 in the 2019 Time Charter Agreement included this additional language:
8.3 ... Further, notwithstanding anything to the contrary in Article 8, [AL] shall additionally defend, protect, indemnify and hold harmless [DMT] from and against any loss, cost, claim, obligation to indemnify another, suit, judgment, award, or damage (including reasonable attorneys’ fees), on account of loss or damage to any Vessel caused by the loading or unloading of any cargo.
(2019 Time Charter Agreement ¶ 8.3. Compare id. , with 2018 Time Charter Agreement ¶ 8.3.)
The 2019 Time Charter Agreement described the vessels to be chartered, the on-hire and off-hire dates for the vessels, and the price terms. (See, e.g. , 2019 Time Charter Agreement ¶¶ 1.1-1.3.) The agreement maintained the same description of AL and DMT's respective roles as the 2018 Time Charter Agreement, stating that, "subject to [AL's] general direction, [DMT] shall have exclusive control and command of each Vessel's operation and navigation," while AL would be in control of loading and unloading cargo and similar operations. (See id. ¶¶ 1.4, 2.7.)
As with the 2018 Time Charter Agreement, the 2019 Time Charter Agreement imposed specific duties and liabilities on AL related to its handling of the vessels:
1.5 [AL] shall direct the Vessels to and between safe ports. [AL] shall be responsible for any loss or damages sustained by any of the Vessels by reason of the condition ofport orberth.
....
2.7 ... Notwithstanding the insurance and indemnity provisions of this Charter, [AL] shall be responsible for loss or damage to the THELMA caused by the loading or unloading of any cargo performed by [AL's] personnel, agents, or parties in contract with [AL] without the right to make claim against [DMT] except in cases of gross negligence or willful misconduct.
....
3.2 [AL] will ensure that there is adequate fendering at all moorage facilities. Any damage resulting to any of the Vessels arising from [AL's] failure to do so will be for the sole account of [AL].
3.3 Notwithstanding the insurance and indemnity provisions of this Charter, all deductibles damages, loss, risk, cost, liability, and expense (collectively ‘Damages’) arising from or related to any grounding of the THELMA, regardless of fault, shall be for [AL's] account ....
(2019 Time Charter Agreement ¶¶ 1.5, 2.7, 3.2, 3.3 (strikethrough in original).)
C. Alleged Damage to the THELMA During the 2018 and 2019 Charters
The parties agreed to use marine surveyor Mark McElwaine to conduct the 2018 and 2019 on- and off-hire surveys of the THELMA, as provided for in the Time Charter Agreements. (See DeForge Decl. ¶¶ 6-7, 9-10, Exs. 2-3, 5-6; see also 2018 Time Charter Agreement ¶ 4.1; 2019 Time Charter Agreement art. 4.) When Mr. McElwaine performed the 2018 and 2019 on-hire surveys, he noted that the THELMA had extensive preexisting damage to certain structures. (See DeForge Decl., Exs. 2, 5.) Despite the preexisting damage to the THELMA, Mr. McElwaine's 2018 and 2019 off-hire surveys identified several areas of "new" damage that the THELMA allegedly sustained during the respective charter periods. (See id. , Exs. 3, 6.) His off-hire surveys, however, did not identify the cause(s) of the "new" damage. (See generally id. )
Defendants dispute the reliability of Mr. McElwaine's findings, but do not dispute, for the purposes of these motions, that the "items identified on the off-hire surveys were ‘new damage.’ " (See Defs. MSJ at 7 n.5, 18; Defs. Resp. at 1 n.1.)
Because the parties disputed who was liable for the alleged 2018 and 2019 damage to the THELMA under the terms of the Time Charter Agreements (see generally Am. Compl.; Pls. MSJ at 7; Defs. MSJ at 12), DMT commenced this action in July 2020, asserting claims for breach of contract, account stated, and negligence against Defendants (see generally Compl. (Dkt. # 1); Am. Compl. (adding Double EMC as a Plaintiff)). In its negligence claim and a portion of its breach of contract claim, DMT seeks to recover a monetary sum for the damage that the THELMA sustained during the charter periods. (See Am. Compl. at 3-5.) In calculating the sum owed for the damage, DMT included the costs of repairs and daily charter hire for the days required to repair the THELMA. (See id. ; Edwards Decl. (Dkt. # 36) ¶¶ 13-14 (describing the costs DMT is claiming for damage to the THELMA and charter hire); Park Decl. ¶ 11, Ex. J (setting forth DMT's barge damage calculations).)
In its breach of contract claim, DMT also requests a monetary sum, seemingly unrelated to the costs associated with the barge damage, for the "principal, interest and late fees" owed on two unpaid invoices for services that DMT provided under the Time Charter Agreements and for reimbursement of expenses for such services. (See Am. Compl. at 2-5.)
III. ANALYSIS
Defendants move for partial summary judgment in their favor on DMT's barge damage claims, which they characterize as DMT's claims for negligence and/or breach of contract insofar as the claims request relief related to the damage to the THELMA. (See Defs. MSJ at 2, 13, 17.) They ask the court to dismiss the barge damage claims in their entirety or, alternatively, dismiss the portions of them in which DMT seeks to recover charter hire. (See id. ) Defendants also ask the court to dismiss the claims asserted against them by Double EMC because it is not a proper party to this dispute. (See id. at 18-19.) DMT opposes Defendants’ motion (see generally Pls. Resp.) and cross-moves for partial summary judgment in its own favor on its barge damage claims with respect to the issue of liability for the damage to the THELMA. (See Pls. MSJ at 1-2, 7-12.) Below, the court sets out the relevant legal standards before turning to consider the parties’ arguments in favor of their respective motions for partial summary judgment.
A. Legal Standards
The court sets out the standard of review that applies to its consideration of cross-motions for summary judgment before discussing the legal standards governing the interpretation of maritime contracts.
1. Summary Judgment
Summary judgment is appropriate if the evidence viewed in the light most favorable to the non-moving party shows "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see Celotex Corp. v. Catrett , 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A fact is "material" if it might affect the outcome of the case. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A factual dispute is " ‘genuine’ only if there is sufficient evidence for a reasonable fact finder to find for the non-moving party." Far Out Prods., Inc. v. Oskar , 247 F.3d 986, 992 (9th Cir. 2001) (citing Anderson , 477 U.S. at 248-49, 106 S.Ct. 2505 ).
The moving party bears the initial burden of showing there is no genuine dispute of material fact and that it is entitled to prevail as a matter of law. Celotex , 477 U.S. at 323, 106 S.Ct. 2548. If the moving party does not bear the ultimate burden of persuasion at trial, it can show the absence of such a dispute in two ways: (1) by producing evidence negating an essential element of the nonmoving party's case, or (2) by showing that the nonmoving party lacks evidence of an essential element of its claim or defense. Nissan Fire & Marine Ins. Co. v. Fritz Cos. , 210 F.3d 1099, 1106 (9th Cir. 2000). If the moving party meets its burden of production, the burden then shifts to the nonmoving party to identify specific facts from which a factfinder could reasonably find in the nonmoving party's favor. Celotex , 477 U.S. at 324, 106 S.Ct. 2548 ; Anderson , 477 U.S. at 250, 106 S.Ct. 2505. Where cross motions are at issue, the court must "evaluate each motion separately, giving the nonmoving party in each instance the benefit of all reasonable inferences." ACLU of Nev. v. City of Las Vegas , 466 F.3d 784, 790-91 (9th Cir. 2006) ; Tulalip Tribes of Wash. v. Washington , 783 F.3d 1151, 1156 (9th Cir. 2015) ("[W]hen simultaneous cross-motions for summary judgment on the same claim are before the court, the court must consider the appropriate evidentiary material identified and submitted in support of both motions, and in opposition to both motions, before ruling on each of them." (quoting Fair Hous. Council of Riverside Cty., Inc. v. Riverside Two , 249 F.3d 1132, 1134 (9th Cir. 2001) )).
2. Interpretation of Maritime Contracts
A contract that relates to a ship, to commerce or navigation on navigable waters, or to maritime employment is a maritime contract. Brusco Tug & Barge, Inc. v. St. Paul Fire & Marine Ins. Co. , 897 F. Supp. 2d 1048, 1052 (W.D. Wash. 2012) (citing Sundance Cruises Corp. v. American Bureau of Shipping , 7 F.3d 1077, 1080 (2d Cir. 1993) ). The Time Charter Agreements qualify as maritime contracts because they relate to ships and navigation on navigable waters. See Aqua-Marine Constructors, Inc. v. Banks , 110 F.3d 663, 671 (9th Cir. 1997) ("A charter party is clearly a maritime contract.").
Courts "interpret and resolve disputes concerning maritime contracts according to federal law." Heko Servs., Inc. v. ChemTrack Alaska, Inc. , 418 F. Supp. 3d 656, 660 (W.D. Wash. 2019) (first citing Norfolk S. Ry. Co. v. Kirby , 543 U.S. 14, 23, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004) ; and then citing Starrag v. Maersk, Inc. , 486 F.3d 607, 616 (9th Cir. 2007) ). Courts, however, may use state law to interpret maritime contracts, provided that it does not clearly conflict with federal maritime law. Aqua-Marine Constructors , 110 F.3d at 667-68 (citing Wilburn Boat Co. v. Fireman's Fund Ins. Co. , 348 U.S. 310, 75 S.Ct. 368, 99 L.Ed. 337 (1955) ). "Basic principles in the common law of contracts readily apply in the maritime context." Clevo Co. v. Hecny Transp., Inc. , 715 F.3d 1189, 1194 (9th Cir. 2013) (noting that the Ninth Circuit looks to the Restatement (Second) of Contracts to determine the basic elements of contract law); see also CITGO Asphalt Ref. Co. v. Frescati Shipping Co. , ––– U.S. ––––, 140 S. Ct. 1081, 1087-88, 206 L.Ed.2d 391 (2020) ("Maritime contracts must be construed like any other contracts: by their terms and consistent with the intent of the parties.").
Under federal maritime law, "[c]ontract terms are to be given their ordinary meaning, and whenever possible, the plain language of the contract should be considered first." Anderson v. City of Seward , 475 F. Supp. 3d 986, 991 (D. Alaska 2020) (quoting Starrag , 486 F.3d at 616 ); Fontenot v. Mesa Petroleum Co. , 791 F.2d 1207, 1214, 1217 (5th Cir. 1986) (noting that courts should read maritime contracts as a whole and look first to the intent of the parties as expressed by the terms of the agreement). "Only if the language is ambiguous—reasonably susceptible to more than one interpretation—should a court examine extrinsic evidence and look beyond the written language of the contract" to determine the intent of the parties. Anderson , 475 F. Supp. 3d at 991 (citing Fontenot , 791 F.2d at 1214 ); see also In re Fitzgerald Marine & Repair, Inc. , 619 F.3d 851, 859 (8th Cir. 2010) ("Disagreement as to the meaning of a maritime contract does not make it ambiguous, nor does uncertainty or lack of clarity in the language chosen by the parties." (quoting Breaux v. Halliburton Energy Servs. , 562 F.3d 358, 364 (5th Cir. 2009) )). The introduction of extrinsic evidence, however, injects a fact issue concerning the parties’ intent that generally precludes summary judgment. Teras Chartering, LLC v. Hyupjin Shipping Co. , No. C16-0188RSM, 2017 WL 2363632, at *7 (W.D. Wash. May 31, 2017) (citing Thibodeaux v. Vamos Oil & Gas Co. , 487 F.3d 288, 294 (5th Cir. 2007) ). "When the district court's decision is based on analysis of the contractual language and an application of the principles of contract interpretation, that decision is a matter of law." W. Towboat Co. v. Vigor Marine, LLC , 544 F. Supp. 3d 1100, 1116 (W.D. Wash. 2021) (quoting Miller v. Safeco Title Ins. Co. , 758 F.2d 364, 367 (9th Cir. 1985) ); see also Breaux , 562 F.3d at 364.
B. Defendants’ Liability for DMT's Barge Damage Claims
Defendants ask the court to dismiss DMT's barge damage claims—i.e., its claims for breach of contract and/or negligence—because, they assert, they are not liable for such damage in light of DMT's "lack [of] evidence that the alleged damage [to the THELMA] occurred as a result of a specifically delineated exception" to the Time Charter Agreements’ indemnity clauses. (See Defs. MSJ at 13-17.) DMT cross-moves for partial summary judgment on these claims, arguing that AL is liable under the Time Charter Agreements for the damage that the THELMA sustained during the 2018 and 2019 charter periods. (See Pls. MSJ at 7-12 (noting that its motion solely focuses on liability and does not address the parties’ disputes regarding "the extent and severity of those damages and the reasonable costs to repair").) The court considers the parties’ arguments regarding the proper interpretation of the Agreements with respect to AL's liability for damage to the chartered vessels before turning to Defendants’ arguments regarding DMT's lack of evidence as to the cause of the damage to the THELMA.
1. Interpretation of the Time Charter Agreements
The parties agree that the Time Charter Agreements imposed liability on AL for barge damage resulting from grounding, inadequate fendering, unsafe berth, or loading/unloading. (See Pls. MSJ at 9-10; Defs. MSJ at 15.) The parties’ disagreement, however, revolves around whether the Agreements imposed liability on AL for barge damage caused only by those specific events, or whether AL is strictly liable for any damage that the THELMA sustained during the charter periods. (See Defs. Reply at 2-6; Pls. Reply at 2-4.) Both parties maintain that the Time Charter Agreements’ language is unambiguous and can be interpreted in their favor on summary judgment without considering extrinsic evidence. (See Pls. Reply at 7; Defs. Reply at 6.)
DMT argues that the Time Charter Agreements required AL to "restore the chartered vessels to their pre-hire condition" and "imposed responsibility on AL" for any damage to the vessels during the charter periods beyond ordinary wear and tear. (See Pls. MSJ at 9-10.) Its interpretation relies on the Agreements’ additional equipment/alterations and end of charter provisions, which provided that: AL shall "remove[ ] all such equipment, materials and gear, and restore[ ] each Vessel to its condition prior to making such changes, ordinary wear and tear excepted" (2018 Time Charter Agreement ¶ 3.1; 2019 Time Charter Agreement ¶ 3.1); and "[t]he Vessels shall be redelivered to [DMT] ... in the same order and condition, ordinary wear and tear excepted, as when accepted by [AL]" (2018 Time Charter Agreement art. 5; 2019 Time Charter Agreement art. 5). DMT contends that its interpretation of those clauses as imposing strict liability on AL for any damage to the chartered vessels is "is reinforced by the clauses requiring on-hire and off-hire surveys to ‘conclusively’ document the THELMA's condition at the start and end of the hire periods." (See Pls. Reply at 2 (first citing 2018 Time Charter Agreement ¶ 4.1; and then citing 2019 Time Charter Agreement art. 4).) It attempts to discount the indemnity clause contained in paragraph 8.1 of the Agreements, the plain text of which requires DMT to indemnify AL for damage to the chartered vessels, by arguing that the clause: (1) is merely a "general provision about liability and a duty to indemnify/defend"; (2) "is clearly intended to address third party suits, casualties, and related claims or costs rather than the parties’ liability to each other for damage caused"; and (3) "does not purport to immunize AL from liability even when AL causes damage to the hired vessels during its charter." (See Pls. MSJ at 9-10; Pls. Resp. at 6.)
In contrast, Defendants characterize paragraphs 8.1-8.4 of the Time Charter Agreements as containing "clear and unambiguous knock for knock indemnity clauses" because they "require each party to contractually assume responsibility for injuries to its own employees and damage to its own property, without regard to who caused the injury or how such damage occurred." (See Defs. MSJ at 14-15 (citing Daniel B. Shilliday et al., Contractual Risk-Shifting in Offshore Energy Operations , 81 Tul. L. Rev. 1579, 1599 (2007) ).) They also contend that the Time Charter Agreements contain several express exceptions to knock for knock indemnity under which AL could only "be liable for barge damage resulting from specific causes" such as grounding, loading/unloading, inadequate fendering, or unsafe berth. (See id. ) Moreover, Defendants claim that the Agreements cannot be interpreted as imposing strict liability on AL for any damage to the THELMA because such an interpretation is not supported by the Agreements’ language and would render the indemnification clauses, and the specific exceptions to those clauses, meaningless. (See Defs. Resp. at 5-8; Defs. Reply at 5-6.)
The court agrees that the terms of the Time Charter Agreements are not ambiguous and concludes that Defendants’ interpretation of AL's obligations under the Agreements in relation to vessel damage is the only reasonable interpretation. Starting with the Agreements’ liability and indemnity provisions, the court notes that federal maritime law requires it to construe indemnity clauses "to cover all losses, damages, or liabilities which reasonably appear to have been within the contemplation of the parties," but not those "which are neither expressly within its terms nor of such a character that it can be reasonably inferred that the parties intended to include them within the indemnity coverage." Corbitt v. Diamond M. Drilling Co. , 654 F.2d 329, 333 (5th Cir. 1981).
Paragraph 8.1 of the Time Charter Agreements provided that "[DMT] shall defend, protect, indemnify, and hold harmless [AL] from and against any loss, cost, claim, obligation to indemnify another, suit, judgment, award, or damage ... on account of loss or damage to any of the Vessels, [DMT's] equipment and vessels ... whether caused or brought about by [AL's] negligence or any other theory of legal liability." (See 2018 Time Charter Agreement ¶ 8.1; 2019 Time Charter Agreement ¶ 8.1.) Similarly, paragraph 8.3 provided that "[AL] shall defend, protect, indemnify and hold harmless [DMT] from and against any loss, cost, claim, obligation to indemnify another, suit, judgment, award, or damage ... on account of loss or damage to any of [AL's] equipment and vessels ... whether caused or brought about by [DMT's] negligence or any other theory of legal liability." (See 2018 Time Charter Agreement ¶ 8.3; 2019 Time Charter Agreement ¶ 8.3.) The plain language of these provisions supports Defendants’ interpretation of the Time Charter Agreements’ indemnity clauses as establishing knock for knock indemnity (see Defs. MSJ at 14; Defs. Reply at 2-3), meaning that each party is responsible for claims arising out of or relating to its own property such that DMT is barred from recouping costs from AL related to barge damage unless the damage arises from an exception to the knock for knock indemnity clauses. See, e.g. , W. Towboat Co. , 544 F. Supp. 3d at 1120-21 (describing the indemnity clauses in the parties’ agreement as knock for knock indemnity clauses and discussing their scope); Heko Servs. , 418 F. Supp. 3d at 659, 664 (discussing the parties reciprocal indemnification clauses in which plaintiff "agreed to be responsible for all loss, damage, expense, liability or claims applicable to the barge, even if resulting from the negligence of [the defendant], and [the defendant] agreed to the same with respect to its cargo").
To adopt DMT's interpretation and conclude that the indemnity clause in paragraph 8.1, which addresses damage to DMT's property, only applied to "third party suits ... rather than the parties’ liability to each other for damage caused" (see Pls. Resp. at 6) would require the court to ignore the clause's broad application to "any loss, cost, claim, obligation to indemnify another, suit, judgment, award, or damage" (see, e.g. , 2018 Time Charter Agreement ¶ 8.1; 2019 Time Charter Agreement ¶ 8.1). Further, it would be unreasonable to read paragraph 8.1 as not requiring DMT to indemnify AL "from and against" claims of damage to the THELMA, even when the damage is caused by AL, when the clause explicitly provided that DMT would indemnity AL "on account of loss or damage to any of the Vessels, [DMT's] equipment and vessels ... whether caused or brought about by [AL's] negligence or any other theory of legal liability." (See 2018 Time Charter Agreement ¶ 8.1; 2019 Time Charter Agreement ¶ 8.1.) However, the court's analysis does not end here.
As discussed above, the Time Charter Agreements unambiguously described four circumstances under which AL could be liable for damage to the THELMA, including damage resulting from grounding, inadequate fendering, unsafe berth, or loading/unloading. (See 2018 Time Charter Agreement ¶¶ 2.7, 2.9 & Addendum ¶¶ 1-2; 2019 Time Charter Agreement ¶¶ 1.5, 2.7, 3.2-3.3.) "Well-founded principles of contract law establish that ‘specific terms and exact terms are given greater weight than general language’ and that ‘separately negotiated or added terms are given greater weight than standardized terms ....’ " Royal Ins. Co. of Am. v. Orient Overseas Container Line Ltd. , 525 F.3d 409, 420 (6th Cir. 2008) (quoting Restatement (Second) of Contracts § 203 (1981) ). Applying this principle and construing the Agreements’ indemnity clauses "to cover all losses, damages, or liabilities which reasonably appear to have been within the contemplation of the parties," the court concludes that the only reasonable interpretation of the Agreements is that the parties intended for those four specific circumstances to be exceptions to DMT's agreement to indemnify AL for any loss or damage to the chartered vessels. (Compare 2018 Time Charter Agreement 8.1, and 2019 Time Charter Agreement 8.1, with 2018 Time Charter Agreement ¶¶ 2.7, 2.9 & Addendum ¶¶ 1-2, and 2019 Time Charter Agreement ¶¶ 1.5, 2.7, 3.2-3.3.)
This conclusion holds true notwithstanding DMT's proffered interpretation of the Time Charter Agreements’ additional equipment/alterations and end of charter clauses as imposing strict liability on AL for any damage to the vessels beyond ordinary wear and tear. Addressing the end of the charter period, the Agreements’ additional equipment/alterations and end of charter clauses provided as follows:
3.1 [AL] may ... load and install any equipment, materials and gear and make alterations and additions to each Vessel incident to the service in which it is to be used ... The On-Hire Period for each Vessel shall not end until [AL], at its sole cost and expense, removes all such equipment, materials and gear, and restores each Vessel to its condition prior to making such changes, ordinary wear and tear excepted.
....
Article 5 ... The Vessels shall be redelivered to [DMT] upon termination of the On-Hire Periods applicable thereto at [DMT's] home port in Seattle, Washington, or other such other location as agreed between the parties, in the same order and condition, ordinary wear and tear excepted, as when accepted by [AL] ....
While DMT's arguments mainly rely on the term "same order and condition" in article 5 and do not substantially address the "restore" language in paragraph 3.1, the court will address the language in both provisions together. (See Pls. MSJ at 9-10; Pls. Reply at 2.)
(2018 Time Charter Agreement ¶ 3.1 & art. 5; 2019 Time Charter Agreement ¶ 3.1 & art. 5.)
The court concludes that DMT's proposed interpretation of the terms "same order and good condition" and "restore[ ] each Vessel" as imposing strict liability on AL for any damage to the vessels beyond ordinary wear and tear is unreasonable for a number of reasons. (See Pls. MSJ at 9-10; Pls. Reply at 2-4.) First, DMT's interpretation would render meaningless paragraph 8.1 and the specific exceptions making AL responsible for damages caused by inadequate fendering, unsafe berth, loading/unloading, or grounding because if AL was strictly liable for any damage to the vessels, paragraph 8.1 would have no effect and there would be no reason to carve out exceptions to the knock-for-knock indemnity clauses. "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." Starrag , 486 F.3d at 616 (quoting Chembulk Trading LLC v. Chemex Ltd. , 393 F.3d 550, 555 (5th Cir. 2004) ). DMT tries to explain why its interpretation would not render the clauses relating to loading/unloading, grounding, fendering, and safe berth meaningless, arguing that those clauses address the "proper agreed treatment of the vessels" while paragraph 3.1 and article 5 address "AL's responsibly for safe return at the end of the charter period." (See Pls. Reply at 4.) The court disagrees. Consider, for example, paragraph 2.7 of the 2018 Time Charter Agreement, which provided that "[AL] shall not at any time ground the THELMA. Any damage to the THELMA caused by grounding while in the sole control of [AL] will be at the sole expense of and for the sole account of [AL]." If the parties had intended AL to be strictly liable for any damage to the vessels but wanted to also address the "proper agreed treatment of the vessels" (Pls. Reply at 4), paragraph 2.7 could have simply read "[AL] shall not at any time ground the THELMA."
Second, it would be unreasonable to interpret those terms as imposing strict liability within the context of the entire clauses in which they appear. See F.W.F., Inc. v. Detroit Diesel Corp. , 494 F. Supp. 2d 1342, 1358 (S.D. Fla. 2007), aff'd , 308 F. App'x 389 (11th Cir. 2009) ("[T]he meaning of an unclear word or phrase should be determined by the words immediately surrounding it."). The language in paragraph 3.1 of the Agreements regarding restoration of the vessels clearly relates to AL's obligation to return the vessels to their initial configuration and condition at the end of the charter period by removing any modifications and installed equipment, materials, and gear; it does not mention any obligation for AL to repair any damage that the vessels sustained during the charter period. (See 2018 Time Charter Agreement ¶ 3.1; 2019 Time Charter Agreement ¶ 3.1.) The "same order and condition" clause in article 5 relates to how the parties would determine the end of the charter period. (See 2018 Time Charter Agreement art. 5; 2019 Time Charter Agreement art. 5.)
The parties agree that this case does not involve damages relating to modifications or installed equipment. (See generally Defs. Reply at 7 (stating the same); Pls. MSJ (lacking any allegations that its claims relate to modifications or installed equipment); Pls. Reply (same).)
Third, DMT's interpretation would lead to an absurd result because it would hold AL responsible for damage to the THELMA, even if DMT, who retained "exclusive control and command" of the vessels’ operation and navigation (see 2018 Time Charter Agreement ¶ 1.1; 2019 Time Charter Agreement ¶ 1.4), intentionally caused the damage. See In re Fitzgerald Marine & Repair, Inc. , 619 F.3d at 861-62 (stating that "maritime law provides that construction of a maritime contract should not "lead [ ] to ... absurd consequences" (quoting Chembulk Trading , 393 F.3d at 555 n.6 )). Finally, as noted by Defendants, courts have only treated language like "same condition" or "good condition" as imposing strict liability on the charterer for any damage to the vessel when the charter agreements also contained additional language making that obligation clear. For example, courts have imposed strict liability where the charter agreements provided that: the charterer "shall be solely responsible for all loss, damage, liability ... of any type or nature whatsoever and howsoever caused arising out of or related to the [Barge] and/or its use or operation during the charter term or otherwise as a result of this agreement," Channel Constr., Inc. v. Northland Servs., Inc. , No. C14-1231JCC, 2015 WL 9259845, at *2 (W.D. Wash. Dec. 18, 2015) ; the charterer "assumes all risk of loss of and damage to the vessel from any cause," KAI Enters., L.L.C. v. Boh Bros. Constr. Co., L.L.C. , 731 F. Supp. 2d 568, 576 (E.D. La. 2010) ; and the charterer "shall be liable and responsible for any and all loss and damage" to the vessel, Sun Printing & Publ'g Ass'n v. Moore , 183 U.S. 642, 655, 22 S.Ct. 240, 46 L.Ed. 366 (1902). The Agreements here lack such language. (See generally 2018 Time Charter Agreement; 2019 Time Charter Agreement.) Thus, the court is unable to conclude that the Agreements’ "same order and condition" or "restore[ ] each Vessel" language can be reasonably interpreted as imposing strict liability on AL for any damage to the chartered vessels.
While DMT also relies on the Agreements’ system for determining the condition of the vessels before and after the charter period (see 2019 Time Charter Agreement art. 4, with 2018 Time Charter Agreement ¶ 4.1) to support its strict liability interpretation (see Pls. MSJ at 9; Pls. Reply at 2), that system does not alter the court's interpretation of the Agreements. Rather, the on- and off-hire survey system is relevant to the determinations of whether the vessels were damaged in a manner that imposes liability on AL under the four exceptions to the knock for knock indemnity clauses, and whether AL properly removed all additional equipment and restored the vessels to their pre-alteration condition.
Accordingly, reading each provision of the Time Charter Agreements in light of all others so as to give meaning to each clause, the court concludes that the Agreements unambiguously provided for knock for knock indemnification regarding damage to each party's property, aside from the four specifically delineated exceptions set forth therein, and did not impose strict liability upon AL for damage to the vessels.
2. DMT's Evidence Regarding the Cause of the Damage to the THELMA
Having adopted Defendants’ interpretation of the Time Charter Agreements’ liability and indemnity provisions, the court turns to Defendants’ contention that the court should dismiss Plaintiffs’ barge damage claims in their entirety. Defendants argue that dismissal is appropriate because DMT lacks evidence that the damage to the THELMA was caused by one of the exceptions to the Time Charter Agreements’ indemnity clauses. (Defs. MSJ at 15-17.) To establish that there is no genuine dispute of material fact that the damage to the THELMA was not caused by inadequate fendering, unsafe berth, loading/unloading, or grounding, they cite to DMT's interrogatory response and the deposition of Eric Edwards, DMT's Federal Rule of Civil Procedure 30(b)(6) designee. (Id. ) During his deposition, Mr. Edwards speculated about the cause of the damage to the THELMA, but stated that he "do[es] not" know what actually caused the damage that the THELMA sustained during the 2018 or 2019 charter periods. (See Edwards Dep. at 37:11-38:4, 38:10-12, 45:3-15; see also id. at 38:7-8, 38:13-19 (stating that his "speculation" as to the cause of the damage is "lack of safe berth").) Similarly, DMT's interrogatory response provided that it was "unaware of what specific acts or omissions of AL might have caused the damage to the THELMA during the charter hire periods, though the damage appears to have been sustained while the vessel was berthed or docked." (See id. ¶ 9, Ex. H ("DMT Rog. No. 8 Resp.").) Defendants also rely on the lack of expert testimony regarding the cause of the damage, noting that DMT has not retained an expert witness and that its failure to do so means that it cannot carry its burden to establish causation in this case. (See Defs. MSJ at 17; Defs. Reply at 4-5.)
In response, DMT argues that the issue of causation is irrelevant to the question of liability for barge damage under the Time Charter Agreements because Defendants are strictly liable for any damage that the THELMA sustained during the time charter periods. (See Pls. Resp. at 3-4.) It also cites the declaration of Mr. Daniel DeForge, the manager of DMT (see DeForge Decl. ¶ 2), in which Mr. DeForge states that AL grounded the THELMA during the charter periods. (See id. at 2 (citing DeForge Decl. ¶ 4).) Further, DMT submitted a declaration from Mr. Edwards in support of its response, in which he addressed the cause of the damage to the THELMA as follows:
Based on my knowledge of the THELMA, and of tug and barge operations generally, the damage sustained during the AL charters was of a type that would be sustained while in port or during loading/unloading. Specifically, the crushing of the side shell and internal framing can only be sustained while the vessel is against or impacts another large and heavy object, and the damage to the bottom is consistent with grounding of the vessel.
(Edwards Decl. ¶ 12.) Defendants characterize Mr. Edward's declaration as a "sham declaration" because he already testified during his Rule 30(b)(6) deposition "that DMT did not know how or when the damage occurred." (See Defs. Reply at 4 (citing Kennedy v. Allied Mut. Ins. Co. , 952 F.2d 262, 266 (9th Cir. 1991) ).)
In a maritime action for negligence or breach of contract, "the plaintiff must prove that the defendant caused the resulting harm by a preponderance of the evidence." Mullin v. Bayline, Inc. , No. CV 19-11028-MBB, 2021 WL 5817922, at *4-5 (D. Mass. Dec. 7, 2021) (citing Pariseau v. Capt. John Boats, Inc. , No. CIV.A. 09-10624-JGD, 2012 WL 527652, at *14 (D. Mass. Feb. 16, 2012) ). Here, to hold Defendants liable for the damage to the THELMA under its negligence and breach of contract claims, DMT must establish not only that AL caused the damage to the THELMA but also that the damage was caused by one of the exceptions to the Time Charter Agreements’ indemnity clauses. See id. ; supra Section III.B.1.
As the moving party, Defendants met their burden to show that there is no genuine dispute of material fact and that they entitled to prevail as a matter of law on DMT's barge damage claims by pointing to DMT's lack of evidence regarding an essential element of those claims—namely, the cause of the damage. (See Defs. MSJ at 15-17; Defs. Reply at 3-5); see also Nissan Fire & Marine Ins. Co. , 210 F.3d at 1106. DMT, however, failed to carry its burden to produce evidence or identify specific facts that would establish a genuine dispute of material fact regarding the cause of the damage to the THELMA. See Celotex , 477 U.S. at 324, 106 S.Ct. 2548 ; Anderson , 477 U.S. at 250, 106 S.Ct. 2505. The statements in the record make clear that DMT does not know the actual cause of the damage to the THELMA (see, e.g. , DMT Rog. No. 8 Resp.; Edwards Dep. at 37:11-38:4, 45:3-15), nor have they offered any expert testimony or competent evidence to establish causation. DMT's reliance on Mr. DeForge's declaration for the proposition that the THELMA was grounded during the charter periods is misplaced because that declaration does not offer any evidence to support that allegation, nor does it attribute any of the damage identified on the off-hire surveys to grounding. (See generally DeForge Decl. ¶ 4.) Moreover, to the extent that Mr. Edwards's declaration can be read as offering more than speculation regarding the cause of the damage to the THELMA, it is inconsistent with his deposition testimony in which he stated that he did not know the cause of the damage and conceded that he could only "speculate as what it was." (Compare Edwards Decl. ¶ 12, with Edwards Dep. at 37:11-38:19, 45:3-15.) These declarations are insufficient to create a triable issue of fact. See Kennedy , 952 F.2d at 266 ("The general rule in the Ninth Circuit is that a party cannot create an issue of fact by an affidavit contradicting his prior deposition testimony."); see also Nelson v. Pima Cmty. Coll. , 83 F.3d 1075, 1081-82 (9th Cir. 1996) ("[M]ere allegation and speculation do not create a factual dispute for purposes of summary judgment."); Soremekun v. Thrifty Payless, Inc. , 509 F.3d 978, 984 (9th Cir. 2007) ("Conclusory, speculative testimony in affidavits and moving papers is insufficient to raise genuine issues of fact and defeat summary judgment."); Villiarimo v. Aloha Island Air, Inc. , 281 F.3d 1054, 1061 (9th Cir. 2002) (explaining that "uncorroborated and self-serving" testimony without other evidence may not create a genuine issue of material fact).
Because DMT has failed to produce any competent evidence regarding the cause of the THELMA's damage, the court will not address the issue of whether DMT is required to produce expert testimony in order to establish that the damage to the THELMA was caused by inadequate fendering, unsafe berth, loading/unloading, or grounding.
Because DMT failed to introduce sufficient evidence to raise a material dispute of fact as to whether the damage to the THELMA was caused by inadequate fendering, unsafe berth, loading/unloading, or grounding, the court concludes that dismissal of DMT's barge damage claims in their entirety is appropriate. See Celotex , 477 U.S. at 322, 106 S.Ct. 2548 ("[A] complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial."). In sum, the court DENIES DMT's motion for partial summary judgment and GRANTS the portion of Defendants’ motion for partial summary judgment that requests dismissal of DMT's barge damage claims in their entirety.
C. The Portions of DMT's Barge Damage Claims in Which DMT Seeks to Recover Charter Hire
Alternatively, Defendants’ motion asks the court to dismiss the portions of DMT's barge damage claims in which DMT seeks to recover charter hire for the time it took to repair the damage that the THELMA suffered during the charter periods because charter hire "is not recoverable" under the Time Charter Agreements. (See Defs. MSJ at 18-19; Defs. Reply at 6-8.) Because the court has granted the portion of Defendants’ motion that requests dismissal of DMT's barge claims in their entirety, see supra Section III.B, the court finds it unnecessary to address Defendants’ alternative argument.
D. Dismissal of Double EMC's Claims
The final portion of Defendants’ motion asks the court to dismiss the claims asserted by Double EMC. (See Defs. MSJ at 18-19.) Defendants contend that "Double EMC is not a proper party to this lawsuit because it was not a party to the contracts and has no standing to claim damages relating to the THELMA as the vessel had been bareboat chartered to DeForge at the times relevant to this dispute." (See id. at 19.) The court agrees with DMT's contention that this issue is moot because the parties stipulated to the dismissal of Double EMC from this action after Defendants filed their motion. (See Stip.; 2/12/22 Order; see also Pls. Resp. at 12 (discussing why this issue is moot).) Defendants do not dispute that this aspect of their motion is moot. (See generally Defs. Reply.) Accordingly, the court DENIES as moot the portion of Defendants’ motion that requests dismissal of the claims asserted against them by Double EMC.
IV. CONCLUSION
For the foregoing reasons, the court DENIES DMT's motion for partial summary judgment (Dkt. # 30) and GRANTS in part and DENIES in part Defendants’ motion for partial summary judgment (Dkt. # 27). Specifically, the court GRANTS Defendants’ request that the court dismiss DMT's barge damage claims and DENIES as moot Defendants’ request that the court dismiss the claims asserted by Double EMC.