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7th Circuit: Two years too late for manufacturer’s damages claim

December 7, 2018

The 7th Circuit Court of Appeals affirmed dismissal of a manufacturer’s damages suit against a barge company when it found the claims were brought after the parties’ four-month limitations provision.

In 2014, Vesuvius USA Corporation and American Commercial Lines LLC entered into a shipping contract to transport olivine sand from New Orleans to Vesuvius’s facility in Wurtland, Kentucky by river barge. Upon delivery, Vesuvius employees found the shipped cargo to have excess moisture damage. An ACL surveyor contended that the delivered sand was already wet when it was loaded onto the barge, and ACL promptly contacted Vesuvius to disclaim liability.

After two years passed with no argument, Vesuvius sued to recover damages for its loss, alleging that American Commercial had breached the contract by providing an unseaworthy vessel. The barge line moved to dismiss the complaint, and the district court granted the motion when it determined the action to be untimely based on the contract’s clear limitations provision requiring the parties to bring disputes within four months of an incident.

On appeal, Vesuvius specifically argued the interpretation of the word “disputes” within the limitations provision of the contract, contending that a “dispute” is not necessarily a lawsuit.

Vesuvius also argued that the language in the contract was ambiguous, and because its reading was just as plausible as any other reading, Vesuvius should get the benefit of the doubt at this stage in the litigation.

American Commercial argued that the provision required the parties to bring lawsuits within four months and insisted that other language in the contract provided context, demonstrating that the parties intended to contract for a short limitations period for any potential legal actions.

The 7th Circuit Court of Appeals agreed with ACBL in Vesuvius USA, Corporation v.  American Commercial Lines, LLC, 18-1881 finding that Vesuvius failed to comply with its unambiguous contractual obligation and filed its suit in an untimely manner.

Noting that it may be easy to be bogged down by dictionary definitions of the term, the 7th Circuit Court decided to construe the contract as a whole.

“As the district court correctly noted, the other provisions contained in (Paragraph) 22 relate to choice of law, choice of forum and venue, and consent to personal jurisdiction. Viewed in that context, an obligation to bring ‘disputes’ seems more likely to refer to the lawsuits to be brought under the other rules established in the same paragraph,” Circuit Judge Michael S. Kanne wrote for the court.

“Standing on its own, perhaps the limitations provision of the contract might be ambiguous,” Kanne continued. “But read in context with the rest of the contract, there is no question that Vesuvius was required to file suit no later than four months after it discovered the damage. Because Vesuvius waited two years to bring its claim, the district court properly dismissed it as untimely.”

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