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Vesuvius USA Corp. v. American Commercial Lines LLC

United States Court of Appeals, Seventh Circuit

December 6, 2018

Vesuvius USA Corporation, Plaintiff-Appellant,
American Commercial Lines LLC, Defendant-Appellee.

          Submitted October 23, 2018 [*]

          Appeal from the United States District Court for the Southern District of Indiana, New Albany Division. No. 17-cv-00022 Sarah Evans Barker, Judge.

          Before Kanne, Hamilton, and St. Eve, Circuit Judges.

          Kanne, Circuit Judge.

         This breach of contract action comes to us in admiralty jurisdiction. Vesuvius USA Corporation contracted with American Commercial Lines LLC (now known as American Commercial Barge Line LLC, or "ACBL") to transport olivine sand by river barge from Louisiana to Kentucky. But when one of those shipments arrived with apparent water damage, a dispute arose between the parties about who was to blame. After some back-and-forth, they seemed to drop the mater. Two years later, however, Vesuvius brought this suit. Because the contract contains a clear limitations provision requiring the parties to bring disputes within four months of an incident, we affirm the district court's dismissal of the case.

         I. Background

         In 2014, Vesuvius and ACBL entered into a shipping contract to transport olivine sand from New Orleans, Louisiana to Vesuvius's facility in Wurtland, Kentucky by river barge. The January 2015 shipment arrived at the discharge port in Wurtland on February 20. Vesuvius's employees inspected the cargo upon arrival and found it damaged by excess moisture. They notified ACBL, and ACBL arranged for a surveyor to perform an inspection that same day. The surveyor found no structural defect in the barge. Instead, he concluded that the sand was wet when it was loaded. In transit, some of that water evaporated, condensed on the overhead portion of the cargo space, and dripped back onto the sand. (R. 14-2 at 2.) The surveyor filed his report with ACBL on February 23, and ACBL promptly contacted Vesuvius to disclaim any liability.

         There the mater sat for two years. But on February 1, 2017, Ve s u v i u s filed suit to recover damages for its loss, alleging that ACBL had breached the contract by providing an unsea-worthy vessel. ACBL moved to dismiss the complaint, pointing to the limitations provision in the contract:

22. MISCELLANEOUS: … This Contract will be interpreted and enforced under the general maritime laws of the United States and, to the extent applicable, the laws of the State of Indiana. The Parties agree that any action or proceeding arising out of or in connection with this Contract will be brought exclusively in a state or federal court in Clark or Floyd County, State of Indiana[, ] and [Vesuvius] consents to personal jurisdiction in such court. … Unless otherwise provided hereunder, all disputes under this Contractmust be brought within four (4) months of the act or occurrence giving rise to the claim.

(R. 9-1 at 8) (emphasis added). Reading the plain language of this provision, the district court determined that the action was untimely and granted the motion to dismiss. This appeal followed.

         II. Analysis

         Original jurisdiction to hear this case stemmed from 28 U.S.C. § 1333, which authorizes federal district courts to hear "[a]ny civil case of admiralty or maritime jurisdiction." Because the alleged breach occurred "on navigable waters," neither party disputes federal jurisdiction. Weaver v. Hollywood Casino-Aurora, Inc., 255 F.3d 379, 382 (7th Cir. 2001). We review a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6) de novo, drawing all reasonable inferences in favor of Vesuvius, the non-moving party. Boucher v. Fin. Sys. of Green Bay, Inc., 880 F.3d 362, 365 (7th Cir. 2018).

         This case turns on the interpretation of the limitations provision of the contract, and in particular on the meaning of the word "disputes." Vesuvius argues that the phrase is no more than a notification requirement: Vesuvius was required to notify ACBL of the problem within four months of its occurrence, and it provided that notification immediately upon discovery of the issue. The provision requires no more, because a "dispute" is not necessarily a lawsuit, and a contractual requirement that the parties sue each other within four months of an incident would force unnecessary litigation of disputes that the parties might work out between themselves given sufficient time. In the alternative, Vesuvius contends that the language in the contract is at least ambiguous, and because its reading is just as plausible as any other reading, Vesuvius should get the benefit of the doubt at this stage in the litigation.

         ACBL, on the other hand, believes that the provision requires the parties to bring lawsuits within four months. While it concedes that the provision might appear ambiguous on its own, it insists that other language in the contract provides context and demonstrates that the parties ...

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