Commercial Union Ins. v. Alitalia Airlines

• Decision Date: 23 October 2003
• Docket Number: Docket No. 02-7272CON.,Docket No. 02-7202L.
• Citation: 347 F.3d 448
• Parties: COMMERCIAL UNION INSURANCE COMPANY, a/s/o Ilapak Inc., Plaintiff-Cross-Defendant-Appellee, v. ALITALIA AIRLINES, S.p.A., Defendant-Cross-Claimant-Cross-Defendant-Appellant, Gava International Freight Consolidators (USA), Inc., Gava International Freight Consolidators, S.p.A., Defendants-Cross-Defendant-Cross-Claimant-Appellants.
• Court: U.S. Court of Appeals — Second Circuit

347 F.3d 448

COMMERCIAL UNION INSURANCE COMPANY, a/s/o Ilapak Inc., Plaintiff-Cross-Defendant-Appellee, v. ALITALIA AIRLINES, S.p.A., Defendant-Cross-Claimant-Cross-Defendant-Appellant, Gava International Freight Consolidators (USA), Inc., Gava International Freight Consolidators, S.p.A., Defendants-Cross-Defendant-Cross-Claimant-Appellants.

Docket No. 02-7202L.

Docket No. 02-7272CON.

United States Court of Appeals, Second Circuit.

Argued December 5, 2002.

Decided: October 23, 2003.

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Nicholas E. Pantelopoulos, New York, New York (Lawrence Mentz, Biedermann, Hoenig, Massamillo & Ruff, P.C., New York, New York, of counsel), for Defendant Alitalia Airlines, S.p.A.

Walter Barthold, Law Office of Walter Barthold, New York, New York, for Defendants Gava International Freight Consolidators (USA), Inc. and Gava International Freight Consolidators, S.p.A.

Lawrence C. Glynn, New York, New York (Nicoletti, Hornig, Campise & Sweeney, New York, New York, of counsel), for Plaintiff Commercial Union Insurance Co.

Before: WALKER, Chief Judge, OAKES, and CARDAMONE, Circuit Judges.

CARDAMONE, Circuit Judge.

This case is brought under the Warsaw Convention for damages to cargo. A pasta packaging machine called the Vegatronic, made in Italy, was shipped by an Italian supply company called Ilapak S.p.A. to its warehouse in the United States. Ilapak's insurer, plaintiff Commercial Union Insurance Company (Commercial Union), seeks compensation in this litigation for damage caused to the Vegatronic during transport by three carriers, all named as defendants: Gava International Freight Consolidators, S.p.A. (Gava S.p.A.), an Italian freight forwarder, took the cargo from the supplier's plant to the airport in Florence, Italy; Alitalia Airlines, S.p.A. (Alitalia), carried it by air to JFK in New York; Gava International Freight Consolidators (USA), Inc. (Gava USA), an American freight forwarder, trucked the Vegatronic to Ilapak, Inc.'s warehouse in Newtown, Pennsylvania.

The machine was packaged in a wooden crate that appeared to be in good condition at all times during the journey. Upon opening the crate, the cargo was found badly damaged. Because the carriage began in Italy and ended in the United States, this action for damages is subject to the Warsaw Convention. See Convention for the Unification of Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, art. 1, 49 Stat. 3000, 3014, 137 L.N.T.S. 11, 16 (1934), reprinted in note following 49 U.S.C. § 40105 (hereafter Warsaw Convention).

Plaintiff Commercial Union paid Ilapak's loss and then brought this suit as subrogee of Ilapak (which is not a party to the litigation) in the United States District Court for the Eastern District of New York (Glasser, J.) against the three defendant carriers that transported the Vegatronic. All three defendants disclaimed any liability for damaging the cargo, and the record furnishes no proof as to how and when the damages, amounting to $62,357.71, occurred. Defendants jointly moved for summary judgment dismissing plaintiff's complaint and plaintiff cross-moved for the same relief. The district court granted plaintiff's motion and denied defendants' motion in an order entered October 12, 2001, see Commercial Union Ins. Co. v. Alitalia Airlines, S.p.A., No. 00 CV 1383, 2002 WL 398808, at *1 (E.D.N.Y. Jan. 16, 2002), and entered a judgment against defendants in the amount of $28,000 on February 6, 2002. Defendants appeal from the October 12, 2001 order and the February 6, 2002 judgment. Plaintiff cross-appeals from the district court's denial, in a memorandum and order entered January 18, 2002, of its request for prejudgment interest.

We must decide, among other matters, which, if any, of the named defendants are liable for the damage to the Vegatronic. This is a task not unlike that faced by Theseus upon entering the labyrinth of Crete, a place laced with intricate passageways and blind alleys. Theseus had Ariadne's thread to serve as his guide. It unrolled as he entered the maze enabling him to retrace his steps by following it upon leaving. Charles Mills Gayley, The Classic Myths in English Literature and in Art 252-53 (Athenæum Press 1911). Similarly, the Warsaw Convention serves as a thread to guide our labyrinthian legal journey. At its end, we affirm the judgment of the district court, excepting the grant of summary judgment against defendant Gava S.p.A. Because further factual findings are required to determine whether service of process on that entity was proper, we remand that issue to the district court.

BACKGROUND

We set out the facts. In December 1998 Ilapak S.p.A. contracted with defendant Gava S.p.A. to transport the Vegatronic from Italy to the United States. Gava S.p.A. issued Ilapak an air waybill for the cargo dated December 11, 1998. The air waybill named Ilapak S.p.A. as consignor shipper, and Ilapak USA in Newtown, Pennsylvania as consignee. The waybill bore the statement, "GOODS HAVE BEEN ACCEPTED FOR CARRIAGE[,] GAVA IFC AS CARRIER'S AGENT OF ALITALIA," and the words "GAVA IFC AS CARRIER[']S AG OF ALITALIA" were printed above the blank labeled "Signature of Issuing Carrier or its Agent." Florence was specified as the airport of departure and New York as the airport of destination. Alitalia was listed as the "first [c]arrier."

On the same day, Alitalia issued its own air waybill for shipment of the Vegatronic from Florence, Italy to New York. Alitalia's air waybill named Gava S.p.A as shipper and consignor, and Gava USA as consignee. This waybill included in the space designated for "Issuing Carrier's Agent Name and City" the statement "GAVA IFC SPA FIRENZE GAVA IFC AS CARRIER[']S AGENT." Ilapak was not named on Alitalia's air waybill.

On December 22, 1998 Gava S.p.A. picked up the Vegatronic at the Ilapak plant in Italy and transported it to Alitalia's terminal in Florence where it was loaded and shipped. Upon arrival at JFK airport in New York, Alitalia unloaded the machine and placed it in its warehouse there. On December 23, 1998 Gava USA picked it up and — pursuant to standard practice — a Gava USA representative signed the delivery documents. Although the Gava representative did not uncrate or inspect the Vegatronic, he signed the delivery document in a blank next to the words "Received in Good Order & Condition."

Gava USA transported the crated Vegatronic on December 23 by truck to Ilapak's warehouse in Newtown, Pennsylvania, where it arrived the same day at 5:00 p.m. Because of the hour, the Ilapak employee who took delivery did not inspect the contents of the crate, but signed a receipt under the legend "Received in Good Order." When Ilapak employees opened the crate and inspected the cargo the next morning they found significant damage and promptly notified Gava USA. On December 29, 1998 Gava USA, in turn, sent Alitalia a "Preliminary Claim of Cargo Discrepancy and Irregularity," which contained the statement: "DAMAGED [sic] FOUND AT CONSIGNEE'S WAREHOUSE." The total damage alleged was $62,357.71.¹

With this recitation of the facts, we turn to the issues raised on appeal. Alitalia challenges the grant of summary judgment to Commercial Union on the ground that Ilapak's subrogee, Commercial Union, lacks standing to sue the airline under the Warsaw Convention. Further, Alitalia contends it cannot be held liable under the Convention's rules because plaintiff has failed to prove the cargo was damaged during the air carriage portion of the journey. The Gava defendants maintain that plaintiff's claims should have been dismissed due to lack of proof of service of process on Gava S.p.A. and because there was no proof of any connection between Gava S.p.A. and Gava USA. They jointly argue, in addition, that plaintiff's subrogor's representations as to the good condition of the cargo when delivered in Newtown, Pennsylvania preclude plaintiff from successfully presenting a claim for damages.

STANDARD OF REVIEW

Because we have before us an appeal from the grant of summary judgment, we conduct de novo review to determine whether the record reveals the existence of any material issue of fact that would bar such relief. See Podell v. Citicorp Diners Club, Inc., 112 F.3d 98, 100 (2d Cir.1997); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In so doing, we stand in the place of the district court and are guided by the same principles. See Podell, 112 F.3d at 100.

DISCUSSION

I Warsaw Convention

Liability for personal injury and damage to goods during international flight is governed by the provisions of the Warsaw Convention. As a treaty adhered to by the United States, it is the supreme law of the land and trumps local law when it applies. See U.S. Const. art. II, § 2 and art. VI. The Convention governs "all international transportation of persons, baggage, or goods performed by aircraft for hire." Warsaw Convention, art. 1(1). Where applicable, its terms provide the exclusive basis for recovery. See id. art. 24 ("In cases [involving damage to cargo], any action for damages, however founded, can only be brought subject to the conditions and limits set out in this convention."); cf. El Al Israel Airlines, Ltd. v. Tseng, 525 U.S. 155, 160-61, 119 S.Ct. 662, 142 L.Ed.2d 576 (1999) (holding that if recovery for personal injury aboard aircraft or during embarking or disembarking not allowed under Convention, it is not available at all).

Certain general principles guide interpretation of the Warsaw Convention. Where the language of such an international treaty is plain, a court must refrain from amending it because to do so would be to make, not construe, a treaty. Chan v. Korean Air Lines, Ltd., 490 U.S. 122, 134-35, 109 S.Ct. 1676, 104 L.Ed.2d 113 (1989) (quoting The Amiable Isabella, 19 U.S. (6 Wheat.) 1, 71, 5 L.Ed. 191 (1821) ...