American Home Assur. v. Jacky Maeder (Hong Kong), 96 Civ. 5154(LAK).

• Decision Date: 23 June 1997
• Docket Number: No. 96 Civ. 5154(LAK).,96 Civ. 5154(LAK).
• Citation: 969 F.Supp. 184
• Parties: AMERICAN HOME ASSURANCE COMPANY a/s/o Bulova Corporation, Plaintiff, v. JACKY MAEDER (HONG KONG) LTD., et al., Defendants.
• Court: U.S. District Court — Southern District of New York

969 F.Supp. 184

AMERICAN HOME ASSURANCE COMPANY a/s/o Bulova Corporation, Plaintiff, v. JACKY MAEDER (HONG KONG) LTD., et al., Defendants.

No. 96 Civ. 5154(LAK).

United States District Court, S.D. New York.

June 23, 1997.

COPYRIGHT MATERIAL OMITTED

John K. McElligott, Donovan Parry Carbin Mcdermott & Radzik, for American Home Assur. Co.

Stephen J. Fearon, Condon & Forsyth, for Singapore Airlines, Ltd. and Contact Air Cargo Services.

Robert D. Mercurio, Lane & Mittendorf LLP, for Jacky Maeder (Hong Kong) Ltd.

MEMORANDUM OPINION

KAPLAN, District Judge.

This is an action to recover for the loss of an air cargo as a result of an armed robbery at John F. Kennedy International Airport in New York City. The matter is before the Court on the motion of Singapore Airlines ("Singapore"), the carrier, and Contact Air Cargo Services ("Contact"), from whose facility the goods were stolen, for leave to amend their answers to assert (a) defenses of lack of standing and limitation of liability against the plaintiff, and (b) a cross-claim against the Hong Kong consignor, Jacky Maeder (Hong Kong) Ltd. ("Maeder").

Facts

Suppliers of plaintiff's subrogor, Bulova Corporation ("Bulova"), delivered goods to Maeder in Hong Kong for shipment to New York. Maeder completed the appropriate air waybill for the transport and delivered the cargo to Singapore for shipment. In the space denominated "consignee's name and address" were the name and New York address of Celadon Jacky Maeder Ltd., evidently an affiliate of Maeder. In the space denominated "nature and quantity of goods" appeared the words "consolidated shipment per manifest attached." (McElligott Aff. Ex. 3) It is undisputed that the consolidated manifest attached to the waybill listed Bulova as well as Celadon Jacky Maeder Ltd. as consignee. (Id. Ex. 2)

The waybill space denominated "flight/date — for carrier use only" bore the typewritten entry "SQOO1/04/AUG." The parties agree that this was a reference to Singapore Airlines flight number 1 on August 4, 1995. In fact, however, it is common ground that the shipment left Hong Kong for New York by a different flight some hours later than the departure of flight number 1 and that the itinerary by which it reached New York included a stop in Frankfurt, a city in which flight number 1 did not stop.

Upon arrival of the shipment in New York, Singapore delivered the cargo to Contact to await pickup. While the cargo was in Contact's custody, armed robbers entered the warehouse, tied up the security guard, and stole the goods at issue here. Plaintiff paid Bulova the loss of $304,981.85 and was subrogated to Bulova's rights.

Prior Proceedings

On October 7, 1996, with the consent of counsel, the Court entered a scheduling order which required that any amendment of the pleadings occur by December 1, 1996 and that all discovery be completed by February 1, 1997. Although the discovery period has been extended upon request, no application to extend the period for amendment of the pleadings was granted or, for that matter, sought until the filing of this motion in mid-May 1997.

Discussion

I. Governing Law

A. The Warsaw Convention

All of the amendments sought by Singapore and Contact are based on provisions of the Warsaw Convention¹ ("the Convention"), an international treaty enacted to foster the standardization of the commercial aviation industry. The provisions of the Convention supercede the national laws of the contracting states on the issue of air carrier liability in order to establish a "stable, predictable, and internationally uniform limit that would encourage the growth of a fledgling industry." Trans World Airlines, Inc. v. Franklin Mint Corp., 466 U.S. 243, 256, 104 S.Ct. 1776, 1784, 80 L.Ed.2d 273 (1984).

Article 22 of the Convention establishes limits on carrier liability for loss or damage of air cargo. Limitation of liability is lost by the carrier, however, if it "accepts goods without an air waybill having been made out, or if the air waybill does not contain" certain "particulars" relating to the goods and shipment which are required by the Convention. (Art. 9) Among the requisite particulars is a statement of any agreed stopping places (Art. 8(c)), a requirement which is deemed satisfied by specification of a scheduled flight number and the specific incorporation in the waybill of the airline's timetables and tariff. See Brink's Ltd. v. South African Airways, 93 F.3d 1022, 1034-36 (2d Cir.1996), cert. denied, ___ U.S. ___, 117 S.Ct. 959, 136 L.Ed.2d 845 (1997); see also Tai Ping Insurance Co. v. Northwest Airlines, 94 F.3d 29, 32-33 (2d Cir.1996) (companion case) (limitation is lost if freight is transferred en route to non-specified flight). The Convention establishes also that the consignor is responsible for the correctness of the required statements in the air waybill and that it is "liable for all damages suffered by the carrier or any other person by reason of the irregularity, incorrectness or incompleteness of the said particulars and statements." (Art. 10).

In this case, plaintiff claims that the defendants are not entitled to limitation because the itinerary of Singapore Airlines flight number 1, the flight referred to in the waybill, did not include a stop in Frankfurt whereas the actual itinerary did. Singapore and Contact seek to amend the answers to assert a cross-claim for indemnification against defendant Maeder which claims that (a) if they lose their limitation on liability, it will be because Maeder incorrectly filled out the air waybill, and (b) Maeder is liable, under Article 10 of the Convention for any damage caused by an error in the air waybill. Singapore and Contact seek also to assert this claim as an affirmative defense to liability for any damages in excess of the limits set in the Convention. Finally, they seek to assert as an affirmative defense a claim that plaintiff's subrogee, Bulova, lacks standing under Article 14 of the Convention because it is not the consignee named on the air waybill.

B. Leave to Amend

The Court starts from the premise that leave to amend should be given freely. Leave may be denied, however, "if the amendment (1) has been delayed unduly, (2) is sought for dilatory purposes or is made in bad faith, (3) the opposing party would be prejudiced, or (4) [the amendment] would be futile." E.g., Lee v. Regal Cruises, Ltd., 916 F.Supp. 300, 303 (S.D.N.Y.1996) (citing Foman v. Davis, 371 U.S. 178, 182, 83 S.Ct. 227, 230, 9 L.Ed.2d 222 (1962)), aff'd, 116 F.3d 465 (2d Cir.1997). Plaintiff and Maeder contend that leave should be denied here both because the proposed amendments would be futile and because the application is untimely.

II. Singapore's Motion

A. Timeliness

The relevant facts giving rise to the proposed amendment were obvious to Singapore from the outset. Certainly it knew that the consignee named in the "consignee" space on the face of the waybill was not Bulova and it thus was in a position to challenge plaintiff's standing. Singapore knew also that the air waybill designated flight number 1 and thus was in a position to focus on the argument now made — that Maeder's actions may have deprived it of a limitation of liability that otherwise would have been available to it under the Convention. Singapore nevertheless has offered no explanation for its delay in filing this application for leave to amend.

While liberality often is appropriate, this is not such a case. The February 1, 1997 deadline for applications for leave to amend was fixed only after counsel indicated that no amendments were likely. Discovery and trial preparation proceeded on that assumption. The amendment is not the product of anything that was not known to Singapore at the outset. In these circumstances, the Court concludes that the application is untimely. See, e.g., John Hancock Mutual Life Insurance Co. v. Amerford International Corp., 22 F.3d 458, 462 (2d Cir.1994) (delay of four months after deadline for amendments justified denial). In any case, however, leave to amend to assert the cross-claim and the first affirmative defense must be denied on the alternate ground of futility.

B. Futility

1. The Cross-Claim

The theory of the cross-claim is that Maeder's alleged insertion in the waybill of the reference to flight number 1 deprived Singapore of limitation of liability. Singapore therefore contends that if is held liable to the plaintiff in an amount exceeding the Convention limit, Maeder is responsible to it, pursuant to Article 10 of the Convention, for the excess.

Article 10 of the provides:

"(1) The consignor shall be responsible for the correctness of the particulars and statements relating to the goods which he inserts in the air waybill.

"(2) The consignor shall be liable for all damages suffered by the carrier or any other person by reason of the irregularity, incorrectness or incompleteness of the said particulars and statements."

The issue therefore is whether the loss that would have been sustained by Singapore should plaintiff prevail against it would have been occasioned "by reason of the irregularity, incorrectness or incompleteness of the said particulars and statements" in the waybill.

Maeder argues that Article 10 cannot be so read. It points out that clause (a) makes the consigner "responsible for the correctness of particulars and statements relating to the goods" and clause (b) renders it liable for damages arising from inaccuracy "of the said particulars and statements." (Emphasis added) As the allegedly inaccurate statement here at issue related only to agreed stopping places, and not to the goods themselves, it contends that Article 10 has no bearing.²

There is a good deal of appeal to Maeder's position. Indeed, this view is espoused by a leading work on the convention, which explains that only statements of the type required by Article 8 (g)-(j), "e.g. specifications relating to the nature, packing, weight and the external condition of...