Highlands Ins. Co. v. Trinidad and Tobago (BWIA Intern.) Airways Corp.

• Decision Date: 15 August 1984
• Docket Number: No. 82-6033,82-6033
• Citation: 739 F.2d 536
• Parties: HIGHLANDS INSURANCE COMPANY, Plaintiff-Appellant, v. TRINIDAD AND TOBAGO (BWIA INTERNATIONAL) AIRWAYS CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 536

739 F.2d 536

HIGHLANDS INSURANCE COMPANY, Plaintiff-Appellant, v. TRINIDAD AND TOBAGO (BWIA INTERNATIONAL) AIRWAYS CORPORATION, Defendant-Appellee.

No. 82-6033.

United States Court of Appeals Eleventh Circuit.

Aug. 15, 1984.

Hayden & Milliken, John D. Kallen, William Boeringer, Miami, Fla., for Highlands.

Stephen J. Fearon, Condon & Forsyth, Wendy A. Grossman, Lawrence Mentz, New York City, for defendant-appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before TJOFLAT and CLARK, Circuit Judges, and GOLDBERG ^*, Senior Circuit Judge.

PER CURIAM:

Plaintiff Highlands brought this subrogation action against BWIA, an air carrier, claiming money damages for destruction of cargo. ¹ Highlands presented three theories of recovery: bailment, negligence, and breach of a contract of carriage. BWIA answered, asserting various defenses, including the defense that Highlands' claim was barred because its subrogor, Mr. Bajnath Ramgoolam, failed to meet the timely notice requirements contained in Article 26 of the Warsaw Convention, as set out in 49 U.S.C. Sec. 1502 note (1976). ² The court subsequently granted BWIA summary judgment on the basis of that defense. Highlands appeals, contending that material issues of fact remained in dispute. We reject this contention and affirm.

I.

A. The Facts

On March 4, 1980, Ramgoolam received a shipment of "fly back transformers" and "twist locks," which are television parts, transported by BWIA from Miami, Florida, to Port-of-Spain, Trinidad. Ramgoolam came to BWIA's warehouse, where, according to his summary judgment affidavit, he saw employees throwing his goods from a storage rack to the floor approximately 18 feet below. Assuming there was damage to his goods, he discussed the problem with a BWIA employee at the warehouse but left with a clean delivery receipt. Ramgoolam then drove to a BWIA office in downtown Port-of-Spain, where a BWIA employee informed him that no one at that office could make a notation of the damage on the delivery receipt ³ as they had not seen the goods. Ramgoolam says in his affidavit that the employee at the downtown office told him that the only notation that could be made on the delivery receipt was "lift inoperative," indicating that the goods could not be moved by mechanical means to the floor and had to be brought down some other way. The employee apparently could make such a notation because he had personal knowledge that the lift was broken. Such a notation was made.

Three days after Ramgoolam received the goods, he hired a firm of cargo surveyors to conduct an examination of the goods; their survey showed that the entire shipment was severely damaged. Ramgoolam gave BWIA notice of the survey but BWIA did not attend. On March 20, BWIA received an undated letter from Ramgoolam giving notice of his claim. BWIA apparently rejected the claim without stating its reasons. Highlands paid Ramgoolam for its loss and brought this subrogation action.

B. Notice Requirements Under the Warsaw Convention

The Warsaw Convention recognizes that air cargo may be lost, destroyed, or damaged, ⁴ but requires an express notice only for damaged goods. The Convention explicitly states that there is no notice requirement for lost goods; ⁵ it is silent, however, as to a notice requirement for totally destroyed goods. See Maschinenfabrik Kern, A.G. v. Northwest Airlines, Inc., 562 F.Supp. 232, 237 (N.D.Ill.1983); Hughes-Gibb & Co., v. Flying Tiger Line, Inc., 504 F.Supp. 1239, 1242 (N.D.Ill.1981).

The notice requirement for damaged goods, found in article 26(2), requires written notice within seven days. ⁶ Failure to comply with this provision defeats an otherwise valid damage claim; an absence of a timely complaint is prima facie evidence of delivery in good condition.

II. Material Issues of Fact Allegedly Remaining in Dispute

Highlands asserts that the "destroyed goods" exception to article 26 applies, so that Ramgoolam was under no duty to give BWIA notice. This exception to the notice requirement was first addressed in a former Fifth Circuit ⁷ case, Dalton v. Delta Airlines, Inc., 570 F.2d 1244 (5th Cir.1978). Dalton involved greyhounds which were shipped alive on Delta from Ireland to Miami but arrived dead. When Delta unloaded the dog containers, a Delta agent saw the dog carcasses and reported to the owner that they were dead. The owner failed to give Delta notice within seven days, as required by article 26, and the district court entered summary judgment for Delta.

Dalton held that the dogs were clearly destroyed, but the Convention's notice requirements contained a gap; no notice was required for destroyed goods. Destroyed goods, according to Dalton, were more similar to lost goods than damaged goods, because both destroyed and lost goods were without utility and a carrier would usually be on actual notice of loss or destruction. Accordingly, Dalton held that like lost goods--for which there is an explicit no-notice provision ⁸--no notice was required under article 26 for destroyed goods. Id. at 1246-47. In so holding, the Dalton court noted that the greyhounds were openly and obviously dead, Delta had clear actual notice, and Delta certainly knew the changed nature of the shipped goods, which rendered them utterly useless. In such a situation, "[n]otice is not needed since notice would serve no useful purpose to the carrier." Id. at 1247.

The Dalton rationale has been applied only to cases involving the delivery dead of animals shipped live. See, e.g., Hughes-Gibb & Co. v. Flying Tiger Line, Inc., 504 F.Supp. 1239 (N.D.Ill.1981) (breeding swine, no notice needed for those arriving dead but notice needed for those dying shortly after delivery); see also American Breeders Serv. v. KLM Royal Dutch Airlines, 17 Av.Cas. (CCH) 17,103 (N.Y.Sup.Ct.1982). In a recent case in the Eastern District of New York the court declined to apply Dalton where a sealed shipping container was ripped open, ransacked, and most of its contents stolen. Denby v. Seaboard World Airlines, Inc., 575 F.Supp. 1134 (E.D.N.Y.1983).

If Dalton applies at all beyond animal cases, it controls only situations where the destruction is both total and obvious. Cf. Dalton, 570 F.2d at 1247 (dicta: demijohn of rare brandy falling 15 feet onto airport tarmac). Dalton is clearly inapposite to the instant case. The twist locks and transformers were securely packed in crates. BWIA was not on actual notice of their destruction. The district court correctly determined that there was no genuine issue of material fact on this point. Accordingly, Highlands' claim is barred by the failure of its subrogor to give proper article 26 notice.

Highlands also argues that the BWIA's willful misconduct deprives it of the protections of article 26. ⁹ Highlands relies on article 25, which provides "[t]he carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability, if the damage is caused by his willful misconduct...." However, article 25 does not deprive the carrier of the article 26 notice protections. Minutes of the negotiations on the Hague Protocol, an amendment to the Convention, indicate that the delegates understood article 25 as referring only to article 22, which establishes monetary limits for recoveries under the Convention. 1 International Conference on Private Air Law, Minutes at 166, ICAO Doc. 7686-LC/140 (1955). ¹⁰

Case law also supports this interpretation of article 25. The former Fifth Circuit has noted that, "[i]n Warsaw Convention cases, limitation periods imposed by the Convention or by contract have not been held to be provisions limiting or excluding liability." ¹¹ Butler's Shoe Corp. v. Pan American World Airways, Inc., 514 F.2d 1283, 1285 (5th Cir.1975). Similarly, the Tenth Circuit has held that an allegation of willful misconduct does not prevent a grant of summary judgment when the statute of limitations, article 29, has expired. Stone v. Mexicana Airlines, Inc., 610 F.2d 699 (10th Cir.1979). Because article 25 does not affect a carrier's rights to notice under article 26, there is no genuine issue of material fact regarding BWIA's alleged willful misconduct.

Plaintiff further argues that the notation of "lift inoperative" on the delivery receipt was a sufficient written complaint within the meaning of article 26. One purpose of requiring written notice is to inform the carrier adequately of the nature of the damages claimed. See Georgia, Florida & Alabama Railway Co. v. Blish Milling Co., 241 U.S. 190, 36 S.Ct. 541, 60 L.Ed. 948 (1916). As a matter of law "lift inoperative" does not provide adequate written notice that the goods were damaged.

Plaintiff additionally asserts that defendant's conduct constituted either an estoppel or a waiver. To have an estoppel one must show "(1) words, acts, conduct, or acquiescence causing another to believe in the existence of a certain state of things; (2) willfulness or negligence with regard to the acts, conduct, or acquiescence; and (3) detrimental reliance by the other party upon the state of things so indicated." Matter of Garfinkle, 672 F.2d 1340, 1347 (11th Cir.1982). Highlands had the burden of proving all elements of estoppel. Tom W. Carpenter Equipment Co. v. General Electric Credit Corp., 417 F.2d 988, 990 (10th Cir.1969). Highlands failed to show that BWIA's actions caused Ramgoolam to delay processing his claim. The district court correctly concluded there was no genuine issue of material fact on this point.

The facts also do not establish a waiver. "Waiver requires (1) the existence at the time of the waiver [of] a right, privilege, advantage, or benefit which may be waived; (2) the actual or constructive knowledge thereof; and (3) an intention to relinquish such right, privilege, advantage, or benefit." Garfinkle, 672 F.2d at 1347. Nothing in the record indicates an intention by BWIA to waive its right to notice. As...