Lerner v. Karageorgis Lines, Inc.

• Decision Date: 26 December 1985
• Citation: Lerner v. Karageorgis Lines, Inc., 66 N.Y.2d 479, 497 N.Y.S.2d 894, 488 N.E.2d 824 (N.Y. 1985)
• Parties: , 488 N.E.2d 824, 1986 A.M.C. 1041 Evelyn LERNER et al., Appellants, v. KARAGEORGIS LINES, INC., Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 894

497 N.Y.S.2d 894

66 N.Y.2d 479, 488 N.E.2d 824, 1986

A.M.C. 1041

Evelyn LERNER et al., Appellants, v.KARAGEORGIS LINES, INC., Respondent.

Court of Appeals of New York.

Dec. 26, 1985.

Steven R. Lapidus, New York City, for appellants.

Kathleen McQuilling and Steven P. Calkins, New York City, for respondent.

Graydon S. Staring, John C. McHose and Lizabeth L. Burrell, New York City, for Maritime Law Ass'n of the U.S., amicus curiae.

OPINION OF THE COURT

ALEXANDER, Judge.

In April 1981, plaintiffs purchased tickets from a travel agent in the United States for a 14-day Mediterranean cruise on defendant's ship, the S.S. Navarino, departing from Venice on August 1.Clause 13 of the "General Conditions" of the ticket provided, in four-point type, that, inter alia, "[s]uit to recover on any claim shall not be maintainable unless commenced and process served within one (1) year from the date when the death or injury occurred in respect of any claim for loss of life or bodily injury in any case where * * * [46 USC § 183b(a) ]¹ shall apply" and "2.[w]ithin six (6) months after the Passenger shall be landed from the Vessel or the Voyage shall be abandoned or broken up * * * in respect of any claim whatsoever unless such claim is included within category (1) just mentioned."

Plaintiffs flew from New York to Brussels and from there to Venice where they embarked.On August 7, the vessel ran aground near Patmos, Greece, injuring plaintiff, Evelyn Lerner.After they reported the accident to defendant's representative and settlement negotiations proved fruitless, plaintiffs, on November 11, 1982, commenced this action to recover damages for personal injuries, loss of consortium and breach of contract.

After interposing an answer asserting various affirmative defenses, including that "[p]laintiffs are timebarred from maintaining this action by provisions of the contract of carriage, applicable statute of limitations and laches", defendant moved for summary judgment dismissing the complaint.Special Term denied the motion, ² concluding that the passenger ticket constituted a contract or agreement involving a consumer transaction within the meaning of CPLR 4544, ³ and "that the time limitation provisions contained in said contract do not meet the minimum type size requirements of the statute, which bars its enforcement."A divided Appellate Division modified, ⁴ on the law, by granting defendant's motion for summary judgment dismissing the complaint, holding, in essence, that CPLR 4544 had been preempted by Federal maritime law, which specifically authorizes a contractual one-year limitations period for the commencement of actions on bodily injury claims by ship passengers.108 A.D.2d 648, 485 N.Y.S.2d 532.

The Federal Judiciary Act, by virtue of its "saving to suitors" clause (28 USC § 1333[1] ) vests original jurisdiction of all admiralty and maritime cases concurrently in the Federal District and State courts.In maritime cases, State courts must apply Federal law "to secure a single and uniform body of maritime law"(Matter of Rederi [Dow Chem. Co.], 25 N.Y.2d 576, 581, 307 N.Y.S.2d 660, 255 N.E.2d 774, cert. denied398 U.S. 939, 90 S.Ct. 1844, 26 L.Ed.2d 272;see also, Ugarte v. United States Lines, 64 N.Y.2d 836, 486 N.Y.S.2d 934, 476 N.E.2d 333, rearg. denied 64 N.Y.2d 1041, 478 N.E.2d 211;Alvez v. American Export Lines, 46 N.Y.2d 634, 415 N.Y.S.2d 979, 389 N.E.2d 461, affd.446 U.S. 274, 100 S.Ct. 1673, 64 L.Ed.2d 284).A State court may not limit a party's substantive rights by applying its own procedural rules if those rules would "significantly affect the result of the litigation, i.e., would be outcome determinative"(Matter of Rederi [Dow Chem. Co.], supra, 25 N.Y.2d, at p 581, 307 N.Y.S.2d 660, 255 N.E.2d 774).Thus, CPLR 4544, which is a rule of evidence may not be employed to nullify a contractual limitation enforceable under Federal maritime law.

Maritime law provides that, when a limitation is "wrought into the tissue * * * inseparably integrated" into the ticket, which is a contract between the passenger and the carrier (Murray v. Cunard S.S. Co., 235 N.Y. 162, 166, 139 N.E. 226), the passenger is bound by that limitation because "[i]n such circumstances, the act of acceptance [of the ticket] gives rise to an implication of assent"(id.).Whether or not the limitation is "wrought into the tissue" of the ticket so as to result in a binding contract depends on whether "the steamship line ha[s] done all it reasonably could to warn the passenger that the terms and conditions were important matters of contract affecting his legal rights"(Silvestri v. Italia Societa Per Azioni Di Navigazione, 2nd Cir., 388 F.2d 11, 17).

Federal courts examine where the conditions of limitations are placed in respect to the balance of the ticket; whether the passenger is given appropriate notice of the conditions of limitation; the placement of that notice; the size of the type used; and the existence of any other conspicuous lettering or symbols designed to call attention to the conditions and limitations (see, e.g., Shankles v. Costa Armatori, S.P.A., 1st Cir., 722 F.2d 861;DeNicola v. Cunard Line, 1st Cir., 642 F.2d 5;Silvestri v. Italia Societa Per Azioni Di Navigazione, 2nd Cir., 388 F.2d 11, supra;McQuillan v. "Italia" Societa Per Azione Di Navigazione, 386 F.Supp. 462, affd., 2nd Cir., 516 F.2d 896;Lipton v. National Hellenic Am. Lines, 294 F.Supp. 308;Ann., 5 A.L.R.Fed. 394).

Here, the ticket was contained in an oblong booklet measuring eight inches by three and five-eighths inches and bound on the left side.Set out in bold type on the first page are "General Conditions," which alert the passengers that:

"THE CONTRACT TERMS AND CONDITIONS REFERRED IN THIS TICKET AND SET FORTH ON THIS AND THE FOLLOWING PAGES TO WHICH PASSENGER EXPRESSLY AGREES AND WHICH ARE TO APPLY TO AND GOVERN THE RELATIONS WHATEVER THEY MAY BE BETWEEN PASSENGER AND THE CARRIER MASTER VESSEL OWNER OFFICERS, CREW AND AGENTS IN EVERY CONTINGENCY WHATSOEVER AND WHERESOEVER OCCURRING AND EVEN IN THE EVENT OF OR DURING DEVIATION OF UNSEAWORTHINESS OF THE VESSEL AT THE INCEPTION OF THE VOYAGE OR SUBSEQUENTLY AS FOLLOWS: THE TERMS OF THIS PASSAGE CONTRACT SUPERSEDE ALL REPRESENTATIONS, PROMISES AND AGREEMENTS WHATSOEVER THAT MAY HAVE BEEN MADE OR MAY BE CLAIMED TO HAVE BEEN MADE TO OR WITH THE PASSENGERS OR HIS AGENT OR REPRESENTATIVE BY ANYONE ON BEHALF OF THE CARRIER.

"NOTICE: The Passenger's attention is particularly directed to the terms and the limitations of this contract."

The terms and conditions on the following pages are set out in small but legible type, and while it may be difficult to pick out any one of the conditions, no reason is advanced why plaintiffs, one of whom is a lawyer, could not have located the time-bar provisions and timely commenced suit (seeHaroski v. Home Line Cruises, 1983 A.M.C. 1217[App.Term, 1st Dept.] ).

There is a second prong to the "reasonable communicativeness" standard applied by the Federal courts in determining whether a passenger is properly to be bound by limitations on notice and commencement of suit contained in tickets of passage: "That is, that the circumstances surrounding the passenger's purchase and subsequent retention of the ticket/contract may be of equal importance as the prominence of warnings and clarity of conditions * * * the question of whether the passenger is bound by the ticket provisions should also take into account the circumstances of the passenger's possession of and familiarity with the ticket"(Shankles v. Costa Armatori, S.P.A., 1st Cir., 722 F.2d 861, 865,supra).

Here, it is undisputed that plaintiffs possessed their tickets for some four months prior to the cruise, and there is no allegation that they were required to surrender them when they boarded the vessel (cf.McQuillan v. "Italia" Societa Per Azione Di Navigazione, 386 F.Supp. 462, supra[tickets picked up by the defendant just prior to boarding and were never signed or seen again...