Lead Opinion
The district court granted Defendant-Appellee Chembulk’s motion for summary judgment, and Plaintiff-Appellant Novo-rossiysk appeals. For the following reasons, we REVERSE.
I. BACKGROUND
On May 80, 2001, Novorossiysk Shipping Co. (Novorossiysk) entered into a time-charter party
On October 1, 2002, Novorossiysk faxed a notice to Westway stating that it was exercising its right to a lien on “all freight and sub-freights” pursuant to the Novoros-siysk-Chemex time-charter party. Novo-rossiysk requested that Westway remit the remaining ten-percent balance of freight (the “Westway Freight”), which Westway had not yet paid to Chemex, directly to Novorossiysk. On October 2, 2002, Chem
Both the Chembulk and Novorossiysk attachment suits were consolidated. Westway then filed a complaint for inter-pleader, whereupon the district court consolidated all three suits. The district court granted Westway leave to deposit $31,533.55 (the full amount of the Westway Freight) into the court’s registry, discharged it from the lawsuit, and relieved it of all claims regarding that amount.
On January 21, 2003, Chembulk moved to stay the consolidated proceedings pending arbitration of its claim against Chemex in accordance with an arbitration clause in the Chembulk-Chemex voyage charter. Novorossiysk opposed Chembulk’s motion and cross-motioned for summary judgment, alleging that its hen-claimant status gave it priority over Chembulk’s Rule B attachment. In response, Chembulk also moved for summary judgment, arguing that Novorossiysk did not have a maritime
On February 18, 2003, Chemex (and its managing agent, Brookwater) relinquished all rights to the Westway Freight. Based on that, the district court dismissed as moot Chembulk’s motion to stay pending arbitration. Therefore, the sole issue before the court was whether Novorossiysk or Chembulk was entitled to the Westway Freight — i.e., whether Novorossiysk had a maritime lien on the Westway Freight giving it priority over Chembulk’s Rule B attachment. On March 81, 2003, the district court initially denied both parties’ motions for summary judgment so that Chembulk could respond to Novorossiysk’s in rem claim. However, the parties asked the court to decide the motion on the existing record.
On May 27, 2003, the district court granted Chembulk’s motion for summary judgment. The district court found as a matter of law that the Westway Freight was properly characterized as “sub-freights” rather than “freights” because it represented the amount that “Westway (a third party payor/subcharterer of the M/V TUAPSE) agreed to pay Chemex for the shipment of cargo.” Chembulk Trading L.L.C. v. Chemex Ltd.,
On June 11, 2003, the district court stayed the disbursement of the Westway Freight pending appeal. The issue before us on appeal is whether the language in the Novorossiysk-Chemex time charter provided Novorossiysk with a valid maritime lien over the Westway Freight defeating Chembulk’s Rule B attachment.
II. DISCUSSION
A. Introduction
The district court’s holding would certainly encourage precision in drafting charter parties. Indeed, had the charter at hand specifically used the term “sub-freights,” this whole litigation could have been avoided. However, while the district court’s reasoning seems logical, in the absence of any meaningful evidence that the terms “freights” and “subfreights” are legally, or by custom and usage, mutually exclusive, we are bound by principles of contract interpretation under federal maritime law. We therefore hold that the district court’s interpretation of the “all freights” language in the Novorossiysk-Chemex time charter was erroneous as a matter of law.
B. Standard of Review
We review the district court’s grant of summary judgment de novo, applying the same standards used by the district court. Vulcan Materials Co. v. City of Tehuacana,
We also review the district court’s legal conclusions de novo. Triad Elec. & Controls, Inc. v. Power Sys. Eng’g, Inc.,
C. Analysis
Under general principles of maritime law, claimants with maritime liens are entitled to preference and priority over attaching creditors. Triton Container Int’l, Ltd. v. Baltic Shipping Co.,
Shipowners, as a general rule, have a lien upon the cargo owned by the charterer for compensation not yet paid. See Bird of Paradise,
A shipowner’s contractual right to assert a lien against freight owed by a third party arises by an express provision in the charter party granting the shipowner a hen on such freight. Marine Traders, Inc. v. Seasons Navigation Corp.,
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. Foster Wheeler Energy Corp. v. An Ning Jiang MV,
The alternative, and more viable interpretation, is that the term “all freights” provides Novorossiysk with a lien on the
Moreover, the definition of “sub-freights” leads us to the conclusion that the phrase “all freights” could properly include “subfreights.” “Subfreights” has been defined in many different ways, but essentially it is the compensation paid to someone other than a shipowner for the carriage of goods or' the hire of a ship: Cornish Shipping Ltd.,
We acknowledge that the term “sub-freights” is commonly, used in .charters to provide a lien over freights owed by a third party (subfreight). See generally Freights, Etc., of S.S.. Mount Shasta,
In addition to the' charter at hand, there are other charters which use the term “all freights” in their lien 'clauses. See 2C Benedict on Admiralty 17-66.10, 17-80.15 (7th ed., rev.1974) (displaying the Gastime and Intertanktime 80 form time charters, ' both of which provide a lien upon cargoes “and all freights for any amounts due under this Charter”). Moreover, many courts, in ’ this circuit and others, have regularly used the terms “freight” and “subfreight” interchangeably. Toro Shipping Corp.,
We therefore hold, as a matter of interpretation of the Novorossiysk-Chemex time-charter party, that a lien on “all freights” is sufficiently explicit to provide a lien on subfreights. That interpretation of the charter party is compelled by the fact that it provides the only way to give meaning to the term “all freights” in the charter party. Accordingly, Novorossiysk has a valid maritime lien over the Westway Freight pursuant to the “all freights” language in the Novorossiysk-Chemex time charter. Novorossiysk’s lien therefore takes priority over Chembulk’s Rule B attachment.
III. CONCLUSION
We therefore REVERSE the judgment of the district court denying Novoros-siysk’s motion for summary judgment and granting Chembulk’s motion for summary judgment, and we REMAND for further proceedings not inconsistent with this opinion.
Notes
. A “time-charter” is a contract to hire a ship for a fixed period of time under which the shipowner or charterer is compensated with hire. The quantity of cargo carried is usually irrelevant to the hire paid to the shipowner. Atl. Richfield Co. v. Good Hope Refineries, Inc.,
. A “voyage charter” is a contract to hire a ship for a specific voyage or voyages under which the shipowner or charterer is compensated with freight. See Gulfgate Marine Transp. Co. v. Dampskibsselskabet Svendborg,
. Chembulk asserts, and Novorossiysk does not dispute, that the Novorossiysk-Chemex time charter is unambiguous. The fact that Novorossiysk and Chembulk dispute the meaning of the term "all freights” does not by itself make the charter ambiguous. See Broad v. Rockwell Int’l Corp.,
. At oral argument, Chembulk asserted that it argued in its brief that Novorossiysk did not meet the notice element. However, in its brief, Chembulk only disputed the notice requirement as to Novorossiysk’s lien-on-cargo argument, not Novorossiysk’s lien-on-sub-ffeights argument. Specifically, Chembulk argued in its brief that the letter Novorossiysk sent to Westway did not give notice because it did not assert a lien on cargo, but only on "freights” and "subfreights.” Accordingly, the parties are not in dispute as to the notice required to assert a lien on subfreight.
. Moreover, as discussed above, under the terms of the Novorossiysk-Chemex time-charter party, Novorossiysk earned "hire,” not "freight.” Thus, the term "all freights,” in the context of this particular time charter, would not normally be construed to refer to the compensation Novorossiysk was to receive thereunder.
. Chembulk argues that the Novorossiysk-Chemex time charter should be construed against Novorossiysk, and thus since Novo-rossiysk did not include the term "sub-freights,” it should not have a lien on the Westway Freight. That argument, however, is unavailing. A contract is construed against the drafting party only when it is ambiguous. See Empire Fire & Marine Ins. Co. v. Brantley Trucking, Inc., 220 F.3d 679, 681 (5th Cir. 2000). The Novorossiysk-Chemex time charter, however, is not ambiguous because its language as a whole is clear, explicit, and leads to no absurd consequences, and as such it can be given only one reasonable interpretation. See Mobil Exploration & Producing v. A-Z/Grant Int'l Co.,
. Chembulk argues that the clause is not meaningless because it was included to secure a lien on cargo for freight. However, the language in the time charter makes clear that the clause attempts to provide a lien on “all cargoes and all freights for any amounts due under this charter.” (emphasis added). Thus, as this particular clause is structured and worded, it explicitly -provides a lien on all freights payable, not simply a lien on the cargo for the freight owed.
. The term "freight" has many meanings depending on the context in which it is used: "[t]he word freight, when not used in a sense to imply the burden or loading of the ship, or the cargo which she has on board, is the hire agreed upon between the owner or master for the carriage of goods from one port or place to another.” Brittan v. Barnaby,
. Novorossiysk also argued on appeal that it had a lien on the cargo for the Westway Freight pursuant to the "all cargoes" language in the Novorossiysk-Chemex time charter. We do not consider this argument, however, since we find in favor of Novorossiysk based on the "all freights” language.
Dissenting Opinion
dissenting:
The majority opinion holds that the term “all freights” must be construed to include “subfreights” based on the “the principles of contract interpretation under federal maritime law.” However, in doing so, the majority violates the basic “canon of contractual interpretation that requires words and phrases in a contract to be given their plain meanings.” Cleere Drilling Co. v. Dominion Exploration & Production, Inc.,
Nevertheless, the majority seeks to expand the definition, and ultimately redefine, the term “all freights” so that the term is not rendered superfluous. In the process, the majority is rejecting established caselaw from other circuits spanning the past century. See Cornish Shipping Ltd. v. Int’l Nederlanden Bank N.V.,
This is a case involving a simple contractual error for which there is no judicial recourse. Novorossiysk was well aware at the time it entered into the charter with Chemex of the clear distinction between freights and subfreights. If it wanted to exercise a lien over the freight promised by Westway, Novorossiysk could (and arguably should) have expressly stated so in its contract. For whatever reason, it chose not to avail itself of this opportunity and, instead of taking responsibility for its clear error, has sought savior through judicial intervention. Indeed, it is disingenuous for Novorossiysk to argue that the term “all freights” is broad enough to include “subfreights” when it specifically stated in its notice to Westway that it was exercising its right to a lien on “all freight and sub-freights.” Clearly, if Novoros-siysk truly believed that the term “all freights” was broad enough to include “subfreights”, it would not have felt compelled to specify in its notice of its lien on the subfreight owed by Westway.
The majority agrees that the district court’s holding would encourage “precision in drafting charter parties” but then subsequently rejects this contention with its holding. I believe, however, such diligence is not an unreasonable expectation. To rule otherwise would encourage parties to draft their contracts riddled with errors with the knowledge that the court will step in and correct any problems that ensue as result of sloppy drafting. Unfortunately, it is not the responsibility of the courts to save parties from their mistakes and any indication otherwise should be clearly avoided.
Accordingly, I respectfully DISSENT.