NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
CITGO ASPHALT REFINING COMPANY, et al., PETITIONERS v.
FRESCATI SHIPPING COMPANY, LTD., et al.
on writ of certiorari to the united states court of appeals for the third circuit
[March 30, 2020]
Justice Sotomayor delivered the opinion of the Court.
In 2004, the M/T Athos I
, a 748-foot oil tanker, allided[1
] with a nine-ton anchor abandoned on the bed of the Delaware River. The anchor punctured the tanker’s hull, causing 264,000 gallons of heavy crude oil to spill into the river. As required by federal statute, respondents Frescati Shipping Company—the Athos I
’s owner—and the United States covered the costs of cleanup. They then sought to reclaim those costs from petitioners CITGO Asphalt Refining Company and others (collectively CARCO), which had chartered the Athos I
for the voyage that occasioned the oil spill. According to Frescati and the United States, CARCO had breached a contractual “safe-berth clause” obligating CARCO to select a “safe” berth that would allow the Athos I
to come and go “always safely afloat.”
The question before us is whether the safe-berth clause is a warranty of safety, imposing liability for an unsafe berth regardless of CARCO’s diligence in selecting the berth. We hold that it is.
During the relevant period, the Athos I
was the subject of a series of contracts involving three parties: Frescati, Star Tankers, and CARCO. Frescati owned the Athos I
. Star Tankers, an operator of tanker vessels, contracted with Frescati to charter the Athos I
for a period of time. CARCO then contracted with Star Tankers to subcharter the Athos I
for the inauspicious voyage resulting in the oil spill.
Pertinent here is the subcharter agreement between Star Tankers and CARCO. In admiralty, such contracts to charter a vessel are termed “charter parties.” Like many modern charter parties, the agreement between Star Tankers and CARCO was based on a standard industry form contract. It drew essentially verbatim from a widely used template known as the ASBATANKVOY form, named after the Association of Ship Brokers & Agents (USA) Inc. (ASBA) trade association that publishes it.
At the core of the parties’ dispute is a clause in the charter party requiring the charterer, CARCO, to designate a safe berth at which the vessel may load and discharge cargo. This provision, a standard feature of many charter parties, is customarily known as a safe-berth clause. The safe-berth clause here provides, as relevant, that “[t]he vessel shall load and discharge at any safe place or wharf, . . . which shall be designated and procured by the Charterer, provided the Vessel can proceed thereto, lie at, and depart therefrom always safely afloat, any lighterage being at the expense, risk and peril of the Charterer.” Addendum to Brief for Petitioners 8a.[2
] The charter party separately requires CARCO to direct the Athos I
to a “safe por[t ]” along the Atlantic seaboard of the United States. Id.
, at 24a.
Pursuant to the charter party, CARCO designated as the berth of discharge its asphalt refinery in Paulsboro, New Jersey, on the shore of the Delaware River. In November 2004, the Athos I
set out on a 1,900-mile journey from Puerto Miranda, Venezuela, to Paulsboro, New Jersey, carrying a load of heavy crude oil. The vessel was in the final 900-foot stretch of its journey when an abandoned ship anchor in the Delaware River pierced two holes in the vessel’s hull. Much of the Athos I
’s freight drained into the river.
After the Exxon-Valdez oil spill in 1989, Congress passed the Oil Pollution Act of 1990 (OPA),
33 U. S. C. §2701 et seq.
, to promote the prompt cleanup of oil spills. To that end, OPA deems certain entities responsible for the costs of oil-spill cleanups, regardless of fault. §2702(a). It then limits the liability of such “responsible part[ies]” if they (among other things) timely assist with cleanup efforts. §2704. Responsible parties that comply with the statutory conditions receive a reimbursement from the Oil Spill Liability Trust Fund (Fund), operated by the Federal Government, for any cleanup costs exceeding a statutory limit. §2708; see also §2704.
Although a statutorily responsible party must pay cleanup costs without regard to fault, it may pursue legal claims against any entity allegedly at fault for an oil spill. §§2710, 2751(e). So may the Fund: By reimbursing a responsible party, the Fund becomes subrogated to the responsible party’s rights (up to the amount reimbursed to the responsible party) against any third party allegedly at fault for the incident. §§2712(f ), 2715(a).
As owner of the Athos I
, Frescati was deemed a “responsible party” for the oil spill under OPA. Frescati worked with the U. S. Coast Guard in cleanup efforts and covered the costs of the cleanup. As a result, Frescati’s liability was statutorily limited to $45 million, and the Fund reimbursed Frescati for an additional $88 million that Frescati paid in cleanup costs.
Following the cleanup, Frescati and the United States each sought recovery against CARCO: Frescati sought to recover the cleanup costs not reimbursed by the Fund, while the United States sought to recover the amount disbursed by the Fund. As relevant here, both Frescati and the United States claimed that CARCO had breached the safe-berth clause by failing to designate a safe berth, and thus was at fault for the spill.
After a complicated series of proceedings—including a 41-day trial, a subsequent 31-day evidentiary hearing, and two appeals—the Court of Appeals for the Third Circuit found for Frescati and the United States. The court first concluded that Frescati was an implied third-party beneficiary of the safe-berth clause in the charter party between CARCO and Star Tankers, thereby allowing the breach-of-contract claims by Frescati and the United States to proceed against CARCO. In re Frescati Shipping Co.
, 718 F.3d 184, 200 (2013). The court then held that the safe-berth clause embodied an express warranty of safety “made without regard to the amount of diligence taken by the charterer,” and that CARCO was liable to Frescati and the United States for breaching that warranty. Id.
, at 203; In re Frescati Shipping Co.
, 886 F.3d 291, 300, 315 (2018) (case below).
We granted certiorari, 587 U. S. ___ (2019), to resolve whether the safe-berth clause at issue here merely imposes a duty of diligence, as the Fifth Circuit has held in a similar case, or establishes a warranty of safety, as the Second Circuit has held in other analogous cases. Compare Orduna S. A.
v. Zen-Noh Grain Corp.
, 913 F.2d 1149 (CA5 1990), with, e.g.
, Paragon Oil Co.
v. Republic Tankers, S. A.
, 310 F.2d 169 (CA2 1962). The former interpretation allows a charterer to avoid liability by exercising due diligence in selecting a berth; the latter imposes liability for an unsafe berth without regard to the care taken by the charterer. Because we find it plain from the language of the safe-berth clause that CARCO warranted the safety of the berth it designated, we affirm the judgment of the Third Circuit.
Maritime contracts “must be construed like any other contracts: by their terms and consistent with the intent of the parties.” Norfolk Southern R. Co.
v. James N. Kirby, Pty Ltd.
543 U.S. 14
, 31 (2004); see also 2 T. Schoenbaum, Admiralty & Maritime Law §11:2, p. 7 (6th ed. 2018) (“[F]ederal maritime law includes general principles of contract law”). “ ‘Where the words of a contract in writing are clear and unambiguous, its meaning is to be ascertained in accordance with its plainly expressed intent.’ ” M&G Polymers USA, LLC
574 U.S. 427
, 435 (2015) (quoting 11 R. Lord, Williston on Contracts §30:6, p. 108 (4th ed. 2012) (Williston)). In such circumstances, the parties’ intent “can be determined from the face of the agreement” and “the language that they used to memorialize [that] agreement.” 11 Williston §30:6, at 97–98, 112–113. But “[w]hen a written contract is ambiguous, its meaning is a question of fact, requiring a determination of the intent of [the] parties in entering the contract”; that may involve examining “relevant extrinsic evidence of the parties’ intent and the meaning of the words that they used.” Id.
, §30:7, at 116–119, 124 (footnote omitted).
Our analysis starts and ends with the language of the safe-berth clause. That clause provides, as relevant, that the charterer “shall . . . designat[e] and procur[e]” a “safe place or wharf,” “provided [that] the Vessel can proceed thereto, lie at, and depart therefrom always safely afloat.” Addendum to Brief for Petitioners 8a. As even CARCO acknowledges, the clause plainly imposes on the charterer at least some “duty to select a ‘safe’ berth.” Brief for Petitioners 21. Given the unqualified language of the safe-berth clause, it is similarly plain that this acknowledged duty is absolute. The clause requires the charterer to designate a “safe” berth: That means a berth “free from harm or risk.” Webster’s Collegiate Dictionary 1030 (10th ed. 1994); see also New Oxford American Dictionary 1500 (E. Jewell & F. Abate eds. 2001) (“safe” means “protected from or not exposed to danger or risk”). And the berth must allow the vessel to come and go “always” safely afloat: That means afloat “at all times” and “in any event.” Webster’s Collegiate Dictionary, at 35; see also New Oxford American Dictionary, at 47 (“always” means “at all times; on all occasions”). Selecting a berth that does not satisfy those conditions constitutes a breach. The safe-berth clause, in other words, binds the charterer to a warranty of safety.[3
No matter that the safe-berth clause does not expressly invoke the term “warranty.” It is well settled as a matter of maritime contracts that “[s]tatements of fact contained in a charter party agreement relating to some material matter are called warranties,” regardless of the label ascribed in the charter party. 22 Williston §58.11, at 40–41 (2017); see also Davison
v. Von Lingen
113 U.S. 40
, 49–50 (1885) (a stipulation going to “substantive” and “material” parts of a charter party forms “a warranty”); Behn
, 3 B. & S. 751, 122 Eng. Rep. 281 (K. B. 1863) (“With respect to statements in a [charter party] descriptive of . . . some material incident . . . , if the descriptive statement was intended to be a substantive part of the [charter party], it is to be regarded as a warranty”). What matters, then, is that the safe-berth clause contains a statement of material fact regarding the condition of the berth selected by the charterer.
Here, the safety of the selected berth is the entire root of the safe-berth clause: It is the very reason for the clause’s inclusion in the charter party. And crucially, the charterer’s assurance of safety is not subject to qualifications or conditions. Under any conception of materiality and any view of the parties’ intent, the charterer’s assurance surely counts as material. That leaves no doubt that the safe-berth clause establishes a warranty of safety, on equal footing with any other provision of the charter party that invokes express warranty language.[4
CARCO resists this plain reading of the safe-berth clause, arguing instead that the clause contains an implicit limitation: The clause does not impose “strict liability,” says CARCO, or “liability without regard to fault.” Brief for Petitioners 23, 25. In effect, CARCO interprets the safe-berth clause as imposing a mere duty of due diligence in the selection of the berth. See Tr. of Oral Arg. 19–20 (arguing that “[CARCO] did [its] due diligence” in “selecting the port or the berth”); id.
, at 28 (suggesting that the safe-berth clause is constrained “as a matter of due diligence in tort concepts”); Reply Brief 5, n. 3 (asserting that a charterer’s liability under the safe-berth clause “should be addressed through . . . sources of la[w] such as tort law”). But as a general rule, due diligence and fault-based concepts of tort liability have no place in the contract analysis required here. Under elemental precepts of contract law, an obligor is “liable in damages for breach of contract even if he is without fault.” Restatement (Second) of Contracts, p. 309 (1979) (Restatement (Second)). To put that default contract-law principle in tort-law terms, “Contract liability is
strict liability.” Ibid.
(emphasis added); see also 23 Willis-ton §63:8, at 499 (2018) (“Liability for a breach of contract is, prima facie, strict liability”). What CARCO thus protests is the straightforward application of contract liability to a breach of contract.
Although contract law generally does not, by its own force, limit liability based on tort concepts of fault, parties are of course free to contract for such limitations. See Restatement (Second), at 309 (obligor who wishes to avoid strict liability for breach may “limi[t] his obligation by agreement”). Here, however, the safe-berth clause is clear that the parties contracted for no such thing. CARCO does not identify—nor can we discern—any language in the clause hinting at “due diligence” or related concepts of “fault.” That omission is particularly notable in context: Where the parties intended to limit obligations based on due diligence elsewhere in the charter party, they did so expressly. See Addendum to Brief for Petitioners 4a (providing that the vessel “b[e] seaworthy, and hav[e] all pipes, pumps and heater coils in good working order, . . . so far as the foregoing conditions can be attained by the exercise of due diligence”); id.
, at 13a (relieving vessel owner of responsibility for certain consequences of any “unseaworthiness existing . . . at the inception of the voyage [that] was discoverable by the exercise of due diligence”); id.
, at 41a (requiring vessel owner to “exercise due diligence to ensure that [a drug and alcohol] policy [onboard the vessel] is complied with”).[5
] That the parties did not do so in the safe-berth clause specifically is further proof that they did not intend for such a liability limitation to inhere impliedly.[6
Unable to identify any liability-limiting language in the safe-berth clause, CARCO points to a separate “general exceptions clause” in the charter party that exempts a charterer from liability for losses due to “perils of the seas.” Id.
, at 14a. According to CARCO, the “general exceptions clause” demonstrates that the parties did not intend the safe-berth clause to impose liability for a “peri[l] of the seas” like an abandoned anchor. That argument founders on a critical component of the “general exceptions clause”: By its terms, it does not apply when liability is “otherwise . . . expressly provided” in the charter party. Ibid.
The safe-berth clause, as explained above, expressly provides for liability stemming from the designation of an unsafe berth. The catchall “general exceptions clause” neither supersedes nor overlays it.[7
Likewise immaterial is another clause of the charter party that requires Star Tankers to obtain oil-pollution insurance. According to CARCO, that clause evidences the parties’ intent to relieve CARCO of oil-spill liability under the safe-berth clause. But the oil-pollution insurance that Star Tankers must obtain covers risks beyond simply those attendant to the selection of an unsafe berth. And CARCO’s reading of the insurance clause (as relieving CARCO of oil-spill liability) does not square with its reading of the safe-berth clause (as imposing such liability when CARCO fails to exercise due diligence).
Finally, CARCO offers an alternative interpretation of the safe-berth clause that focuses on the vessel master’s right instead of the charterer’s duty. This alternative interpretation proceeds from the subclause specifying that the selected berth be one that the vessel may “proceed thereto, lie at, and depart therefrom always safely afloat, any lighterage [i.e.
, transfer of goods between vessels] being at the expense, risk and peril of the Charterer.” Id.
, at 8a. On CARCO’s reading, that subclause means that the vessel master has a right to refuse entry into a berth that the master perceives to be unsafe, and the charterer must pay any expenses resulting from the refusal. We have, to be sure, recognized that similarly worded safe-berth clauses may implicitly denote a vessel master’s right to refuse entry and the charterer’s resultant obligation to bear the costs of that refusal. See Mencke
v. Cargo of Java Sugar
187 U.S. 248
(1902); The Gazelle and Cargo
128 U.S. 474
(1888). But that a charterer may be liable for expenses when a vessel master justifiably refuses to enter an unsafe berth in no way abates the scope of the charterer’s liability when a vessel in fact enters an unsafe berth. And a tacit recognition of a vessel master’s right of refusal does not overwrite the safe-berth clause’s express prescription of a warranty of safety.
The dissent, too, offers an alternative interpretation. It claims that if the safe-berth clause binds the charterer to a warranty of safety, the clause must bind the vessel master to effectively the same warranty—due to the clause’s statement that “ ‘[t]he vessel shall load and discharge at [a] safe place or wharf.’ ” Post
, at 6 (quoting Addendum to Brief for Petitioners 8a). Because that would “creat[e] contradictory warranties of safety,” the dissent continues, the safe-berth clause must not bind the charterer to a warranty of safety (or, apparently, impose an obligation on the charterer at all). Post
, at 7. This conclusion does not follow because the conflict diagnosed by the dissent does not exist.
The safe-berth clause says that “[t]he vessel shall load and discharge at any safe place or wharf, . . . which shall be designated and procured by the Charterer.” Addendum to Brief for Petitioners 8a. Plainly, that means that the “safe place or wharf . . . shall be designated and procured by the Charterer.” Ibid.
The vessel master’s duty is only to “load and discharge” at the chosen safe berth. Ibid.
(Not, as the dissent urges, at any safe berth the vessel master so desires regardless of the charterer’s contractually required selection. Post
, at 6, n. 4.) On its face, the vessel master’s duty creates no tension with the charterer’s duty. And it strains common sense to insist (as the dissent does) that the vessel master implicitly has a separate, dueling obligation regarding the safety of the berth, when the clause explicitly assigns that responsibility to the charterer. Post
, at 6–7. Perhaps the dissent says it best: We must “reject [this] interpretation that . . . ‘se[ts] up . . . two clauses in conflict with one another.’ ” Post
, at 6 (quoting Mastrobuono
v. Shearson Lehman Hutton, Inc.
514 U.S. 52
, 64 (1995)).
We instead take the safe-berth clause at face value. It requires the charterer to select a safe berth, and that requirement here amounts to a warranty of safety.
CARCO’s remaining arguments point to authorities that have purportedly construed safe-berth clauses to contain limitations on liability. These arguments find no foothold in the language of the charter party at issue here. And none is otherwise convincing.
CARCO asserts, for instance, that a leading admiralty treatise has urged that safe-berth clauses ought not be interpreted as establishing a warranty. See G. Gilmore & C. Black, Law of Admiralty §4–4, p. 205 (2d ed. 1975) (Gilmore & Black). Gilmore and Black’s position, however, stemmed from their belief that vessel masters or vessel owners are generally better positioned than charterers to bear the liability of an unsafe berth. See ibid.
(reasoning that charterers “may know nothing of the safety of ports and berths, and [are] much less certain to be insured against” liability for losses stemming from an unsafe berth).[8
] Gilmore and Black also acknowledged that, as of 1975, many courts had not interpreted safe-berth clauses in the manner that they proposed. See id.
, at 204, and n. 34a, 206, and n. 36. Whatever Gilmore and Black sought to prevail upon courts to adopt as a prescriptive matter does not alter the plain meaning of the safe-berth clause here.
CARCO next contends that in Atkins
v. Disintegrating Co.
, 18 Wall. 272 (1874), this Court acknowledged that safe-berth clauses do not
embody a warranty of safety. That greatly overreads Atkins
. In that case, this Court affirmed a District Court’s ruling that, although the berth selected by the charterer was not safe, the vessel master had “waived” the protection of the safe-berth clause. Atkins
v. Fibre Disintegrating Co.
, 2 F. Cas. 78, 79 (EDNY 1868); see Atkins
, 18 Wall., at 299. No one posits that the District Court’s waiver holding has any significance in this case. CARCO, however, points to language in the District Court’s opinion observing that the “safe” berth referenced in the charter party “impl[ied one] which th[e] vessel could enter and depart from without legal restraint, and without incurring more than the ordinary perils of the seas.” Atkins
, 2 F. Cas., at 79. But the District Court’s remark—that a berth may be safe even if certain perils lurk within—did not bear on its finding that the berth in question was un
safe or its holding that the vessel master had “waived” the protection of the safe-berth clause. When this Court approved of the District Court’s “views” and “conclusions,” Atkins
, 18 Wall., at 299, it did not adopt as controlling precedent—for all safe-berth clauses going forward—an observation that was not controlling even for the District Court.
Also misplaced is CARCO’s reliance on Orduna S. A.
, 913 F.2d 1149. True, the Fifth Circuit there held that a similarly unqualified safe-berth clause imposed a duty of due diligence. Id.
, at 1157. But in so holding, the court did not purport to interpret the language of the safe-berth clause at issue in that case. Id.
, at 1156–1157. Instead, it looked principally to tort law and policy considerations. See, e.g.
, at 1156 (“requiring negligence as a predicate for the charterer’s liability does not increase the risk that the vessel will be exposed to an unsafe berth”); id.
, at 1157 (“no legitimate legal or social policy is furthered by making the charterer warrant the safety of the berth it selects”). Neither tort principles nor policy objectives, however, override the safe-berth clause’s unambiguous meaning.
More consistent with traditional contract analysis is the Second Circuit’s long line of decisions interpreting the language of unqualified safe-berth clauses to embody an express warranty of safety. See, e.g.
, Paragon Oil Co.
, 310 F. 2d, at 172–173 (“the express terms of [the] contract” established a “warranty” obliging the charterer “to furnish, not only a place which he believes to be safe, but a place where the chartered vessel can discharge ‘always afloat’ ” (some internal quotation marks omitted)); Park S. S. Co.
v. Cities Serv. Oil Co.
, 188 F.2d 804, 805–806 (CA2 1951) (“the natural meaning of ‘safe place’ is a place entirely safe, not an area only part of which is safe,” and “the charter party was an express assurance that the berth was safe”); Cities Serv. Transp. Co.
v. Gulf Refining Co.
, 79 F.2d 521 (CA2 1935) (per curiam
) (the “charter party was itself an express assurance . . . that at the berth ‘indicated’ the ship would be able to lie ‘always afloat’ ”). Those decisions, which focused on the controlling contract language, all point in the same direction: When the language of a safe-berth clause obliges a charterer to select a safe berth without qualifying the charterer’s duty or the assurance of safety that language establishes a warranty. That aligns with our decision today.[9
We conclude that the language of the safe-berth clause here unambiguously establishes a warranty of safety, and that CARCO has identified “no reason to contravene the clause’s obvious meaning.” Kirby
, 543 U. S., at 31–32. We emphasize, however, that our decision today “does no more than provide a legal backdrop against which future [charter parties] will be negotiated.” Id.
, at 36. Charterers remain free to contract around unqualified language that would otherwise establish a warranty of safety, by expressly limiting the extent of their obligations or liability.
* * *
For the foregoing reasons, we conclude that the plain language of the safe-berth clause establishes a warranty of safety and therefore affirm the judgment of the Third Circuit.
It is so ordered.