Fednav (USA) Inc. v. United States
Fednav (USA) Inc. v. United States
Opinion of the Court
MEMORANDUM OPINION
Introduction
This is a government maritime contract action. Plaintiff, Fednav (USA) Inc. (“Fed-nav”), contracted with the Navy over a three-year period for the ocean transportation of military cargo between ports of the Great Lakes and East Coast of the United States and various European ports, including Bremerhaven, Germany. At issue under these contracts is whether “Kajege-buhr,” a port charge levied by the Port of Bremerhaven, must be borne by Fednav, as the carrier, or by the Navy, as the shipper. During the relevant period, Fednav paid the Port of Bremerhaven $143,725 in Kaje-gebuhr charges and thereafter sought reimbursement for these charges from the Navy under the contracts. The contracting officer denied the reimbursement claim and Fednav has appealed this decision under the appropriate provisions of the Contract Disputes Act, 41 U.S.C. §§ 603, 609.
Consistent with the Court’s duty to review the matter de novo, a hearing was held at which the parties offered documentary and testimonial evidence. Recorded here are the Court’s findings of fact and conclusions of law as required by Rule 52, Fed.R.Civ.P.
Facts
Fednav is a Delaware corporation. In April 1986, it merged with the succeeded Fednav Lakes Services, Inc., also a Delaware corporation. These entities are collectively referred to hereafter as “Fednav”.
The Military Sealift Command (“MSC”) is the component of the Department of the Navy responsible for the procurement of ocean transportation services for the Department of Defense, the military departments and all of their components. The Military Traffic Management Command (“MTMC”) is the component of the Department of the Army responsible for utilizing transportation services provided by MSC and for loading and unloading defense cargo to and from vessels.
From approximately April 1985 to March 1988, Fednav was a common carrier engaged in the business of transporting cargo in two roll-on/roll-off (“RORO”) type U.S.-flag vessels named FEDERAL LAKES and FEDERAL SEAWAY between the ports of the Great Lakes and East Coast of the United States and the Port of Bremerhaven, Germany, and other ports in Northern Europe and the United Kingdom. During this period, MSC procured ocean transportation services from Fednav and other carriers operating U.S.-flag vessels over many different trading routes by the use of the competitive negotiation procedures set forth in the Federal Acquisition Regulations, 48 C.F.R. § 1501.000, et seq. (1991). Pursuant to these regulations, MSC issued semi-annual requests for pro-
The Agreement provided for what is known as Free In and Out Service. Under this service, Fednav, as carrier, was responsible for transporting the cargo from the port of departure to the destination port. Once the vessel arrived at the destination port, all work relating to loading, discharging and storage of cargo was the responsibility of the Navy, as the shipper. The Navy performed this function by contracting with Bremerhaven’s port operator, Bremen Lagerhaus-Gesellenshaft (“BLG”). As the port operator, BLG was responsible for the port facilities used for loading and unloading cargo. BLG published a tariff under which it charged fees for its services. BLG’s fees, as well as other stevedor-ing fees associated with loading, unloading and storing cargo carried by Fednav, were paid by the Navy under the Agreement.
Bremerhaven’s port authority, Hanses-tadt Bremishes Amt (“HBA”), assessed certain port charges against vessels using the port. Pertinent here are the port charges, unique to Bremerhaven, labeled collectively as “Hafengeld” and individually as “Raungebuhr,” “Kajegebuhr” and “Liegegeld.”
The focus of the instant dispute is the Kajegebuhr. Fednav paid $143,725 in Ka-jegebuhr charges to Bremerhaven over the three year period (1985-1988) the Agreement was in effect. When Fednav’s vice president for Europe learned about the Ka-jegebuhr charge in 1985, he directed a subordinate to contact MSC concerning possible reimbursement. The subordinate was told the charge was for the ship’s account and therefore Fednav’s responsibility and not reimbursable. Fednav, through an agent or related entity, thereafter paid the Kajegebuhr charge without protest. Not until December 1988, well after the completion of contract performance, did Fednav file a formal claim for reimbursement of the $143,725 paid in Kajegebuhr charges. The contracting officer, concurring with MSC, denied the claim and Fednav has appealed this decision.
Far more persuasive on the meaning and nature of Kajegebuhr was the testimony of Ingulf Piorkowski, Head of the Division of Ports
Mr. Piorkowski’s credentials to testify on the meaning, nature and application of Ka-jegebuhr are impeccable. His testimony on these matters was completely convincing, as it was authoritative, credible
Analysis
The genesis of this dispute is the absence of any explicit reference to Kajegebuhr in the Agreement. This absence is hardly surprising in an Agreement intended to cover numerous port cities, each of which might well have its own schedule and terminology for port and cargo charges. In any event, the fact that the Agreement does not explicitly refer to Kajegebuhr does not mean that the Agreement is wholly silent on this subject. The inquiry concerning the parties' intent as to Kajegebuhr does not end with acknowledging the absence of an explicit reference to the charge. Instead, it is axiomatic in these circumstances that it is appropriate and necessary to inquire whether the over
This conclusion finds further support in Article 1:7 of the Agreement, which elaborates on the general scheme for the division of costs set forth in Article 1:5 and Article 1:6. In particular, Article 1:7 notes that the parties, seeking to facilitate the administration of the Agreement, have listed in Appendix B certain specific cost items anticipated to arise during performance of the Agreement and the identity of the party responsible for each of those cost items.
Nor is this conclusion contradicted or undermined by the fact that the Kajege-buhr charge is calculated, in part, on the basis of cargo tonnage loaded and unloaded. This fact reflects nothing more than that the cargo tonnage loaded and unloaded offers a convenient basis for calculating Kajegebuhr. It does not change the central fact that Kajegebuhr is a port charge unrelated to cargo handling that is assessed against the vessel, not the cargo.
The foregoing analysis of the Agreement is sufficient, by itself, to warrant the conclusion reached here that Kajegebuhr is a port charge assessed against the vessel and hence Fednav's responsibility. Beyond this, however, the Navy argues that Fednav’s performance under the Agreement — specifically Fednav’s payment of Kajegebuhr for three years without protest — establishes a course of dealing between the parties that is entitled to great weight in divining the parties’ intent as to who was to bear responsibility for Kajegebuhr under the Agreement. It is, to be sure, well-settled that the interpretation parties place on a contract before a dispute arises is entitled to great weight. See Reconstruction Finance Corp. v. Sherwood Distilling Co., 200 F.2d 672 (4th Cir. 1952); Gurney Indus., Inc. v. St. Paul Fire and Marine Ins. Co., 467 F.2d 588 (4th Cir. 1972); Ocean Transport Line, Inc. v. American Philippine Fiber Indus., Inc., 743 F.2d 85 (2d Cir. 1984).
Fednav’s various contrary arguments are all unavailing. First, Fednav argues that Kajegebuhr is “wharfage” or “top wharf-age” chargeable to military cargo. As one of Fednav’s witnesses conceded, wharfage is typically a charge against the cargo for the use of the pier area needed to land or store the cargo. This is not Kajegebuhr. Unlike wharfage, Kajegebuhr is not chargeable to the cargo and it is not a charge for the use of the pier area to land or store cargo. Instead, it is a port charge against the vessel, a user fee for the privilege of tying up at the port’s quay. Any charge for the use of that portion of the pier on which the cargo is landed or stored is a BLG charge, not a port charge, for it is BLG that is responsible for all facilities related to cargo handling, including the pier area or quay surface on which cargo may be landed or stored.
Next, Fednav argues that regulations of the Federal Maritime Commission (“FMC”) define “wharfage” in a manner that would encompass Kajegebuhr. This argument is infirm in several respects. First, the FMC regulatory definition has nothing to do with this case; it does not apply to foreign
In summary, this Court concludes that Kajegebuhr, as a port charge for the vessel, is chargeable to Fednav, as the carrier, and not to the Navy, as the shipper.
An appropriate Order will enter.
. Specifically, the six contracts and the corresponding requests for proposals are identified as follows:
RFP CYCLE PERIOD CONTRACT
1900 2nd 04/01/85-09/30/85 N0003385C8006
2000 1st 10/01/85-03/30/86 N0003386C8005
2000 2nd 04/01/86-09/30/86 N0003386C8005
2100 1st 10/01/86-03/30/87 N0003387C8005
2100 2nd 04/01/87-09/30/87 N0003387C8005
2200 1st 10/01/87-03/30/88 N0003388C8005
. Fednav’s Exhibit 7 is an English translation of the portions of the Bremian Port Law defining these charges.
. Another factor used to compute the Kajege-buhr charge is the length of the voyage,
. Mr. Piorkowski’s specific job title is Senatsrat for Ports, Shipping and Transportation for Bremen. The highest authority for Ports, Shipping and Transportation is the Senator who is elected by Bremen’s Parliament. Mr. Piorkowski reports to the Senator’s deputy.
. The State of Bremen consists of two cities, the City of Bremen and The City of Bremerhaven. All of the ports in the State of Bremen, those in the City of Bremen, and those in Bremenhaven, are administered under the Division of Ports.
. In giving this testimony, Mr. Piorkowski noted that he agreed with Dr. Platz, a former Head of the Bremenhaven Port, who, in an article for a technical journal (defendant’s Exhibit 24) had written that Kajegebuhr is chargeable to the vessel, not the cargo and that "it is unimportant that the calculation of the quay dues [Kajege-buhr] is based on the weight of the cargo.” Platz, Wesserlots, No. 24 (1957).
. Significantly, the record reflects no evidence of possible bias on Mr. Piorkowski’s part. He is not retained by either party and has no interest in the outcome of this contract dispute.
. The applicable provisions of the port law, as translated into English, state that the port dues are for the use of the harbors, ports, docks, the river installations and Geeste River. See Defendant's Exhibit 7, Section 9. These provisions further state that port dues consist of tonnage dues, berthage and the quayage (Kajegebuhr). Nowhere in the laws or regulations does it state that Kajegebuhr is related to cargo handling. The law further states that the shipowner is the party liable for the charge. See Defendant’s Exhibit 7, Section 13.
. Article 1:6 of the Agreement states as follows: "The carrier shall pay all port charges, canal tolls and similar charges (properly for the account of the vessel) including such charges assessed at Government installations. (For exceptions see paragraph 7, Section II).”
The parenthetically referenced exceptions in paragraph 7 of Section II are irrelevant here as they relate only to certain St. Lawrence Seaway Authority tolls to be borne by the shipper rather than the carrier.
. Article 1:5 of the Agreement states, in pertinent part:
[T]he Government ... shall bear all expenses of loading, stowing and discharging the cargo, such as lighterage (including loading and discharging costs in connection therewith), steve-doring, checking, tallying, manifesting, winch-men, heavy lifts, dumping and trimming and removal of strong backs with shore equipment when the use of shore equipment is not necessitated by a structural or mechanical defect in the vessel.
.Article 1:7 provides that "[d]eterminations of responsibility for specific items of cost agreed to by the parties under this Article are to consistent with the general language of ARTICLES 1:5 and 1:6, provided, however, in the event of conflict, the specific language of Appendix B shall prevail.”
. The Agreement, it is worth recalling, is actually a series of separate contracts, one for each year, but all containing the same operative provisions. It is also well-settled that the parties’ performance under previous contracts containing the same provisions is strong evidence of the parties’ intent with respect to the meaning and effect of those common provisions. See Allied Paint Mfg. Co. v. United States, 470 F.2d 556, 200 Ct.CI. 313 (1972); Blanchard v. United States, 347 F.2d 268 (Ct.C1. 1965). See also Cresswell v. United States, 173 F.Supp. 805, 811-812 (Ct.Cl. 1959) (plaintiffs performance of an earlier and identical contract according to defendant’s construction of the contract terms was strong evidence of the parties' interpretation of the disputed terms).
. Consistent with this conclusion is Fednav’s concession that in bidding the Agreement, it made no assumption concerning which party would pay Kajegebuhr.
Reference
- Full Case Name
- FEDNAV (USA) INC. for Itself and as Successor in Interest to Fednav Lakes Services, Inc. v. United States
- Status
- Published