Maro Leather Co. v. Aerolineas Argentinas

• Decision Date: 19 July 1994
• Citation: 161 Misc.2d 920,617 N.Y.S.2d 617
• Parties: MARO LEATHER CO., Plaintiff-Respondent, v. AEROLINEAS ARGENTINAS, Defendant-Appellant and Third-Party Plaintiff, v. TRANS WORLD AIRLINES, INC., Third-Party Defendant.
• Court: New York Supreme Court

Page 617

617 N.Y.S.2d 617

161 Misc.2d 920

MARO LEATHER CO., Plaintiff-Respondent, v. AEROLINEAS ARGENTINAS, Defendant-Appellant and Third-Party Plaintiff, v. TRANS WORLD AIRLINES, INC., Third-Party Defendant.

Supreme Court, Appellate Term,

First Department.

July 19, 1994.

Certiorari Denied May 15, 1995. See 115 S.Ct. 1959.

Bigham Englar Jones & Houston, New York City (Douglas E. Szulman and Paul Ambos of counsel), for appellant.

Donovan Parry Walsh & Repetto, New York City (Paul H. Murphy and John K. McElligot of counsel), for respondent.

Before MILLER, J.P., and McCOOE and GLEN, JJ.

PER CURIAM.

Judgment entered August 26, 1992 (Jane Solomon, J.) affirmed, with $25 costs.

Plaintiff Maro Leather Co., a leather importer/finisher, commenced this breach of contract action against defendant airline in July 1985 to recover damages for the loss of two pallets of unfinished leather goods in February 1984 shipped from Argentina to New York. Following a reversal of our prior grant of summary judgment to defendant and reinstatement of the complaint (Maro Leather Co. v. Aerolineas Argentinas, 142 A.D.2d 265, 535 N.Y.S.2d 982, rearg. denied, N.Y.L.J., March 20, 1989, at 22, col. 1), and the completion of certain discovery by defendant against a nonparty truck carrier concerning the origin of the cargo loss, the trial court awarded plaintiff a total award of $41,182.40, inclusive of prejudgment interest of $17,790 from February 2, 1984, the date of the loss. The principal amount of plaintiff's recovery was $23,024.90 or slightly less than the Warsaw Convention liability limitation of $24,000 (1200 kilograms at $20 per kilogram) [Article 22 of the Convention] [49 U.S.Stat. 3000, TS No. 876, reprinted at 49 USC App. § 1502].

In awarding prejudgment interest in excess of the Warsaw Convention's total damages limitation, the trial court relied upon the reasoning of Eli Lilly Argentina, S.A. v. Aerolineas Argentinas, 133 Misc.2d 858, 508 N.Y.S.2d 865, emphasizing the compensatory nature of prejudgment interest under New York law (see, CPLR 5001) and the goal of speedy resolution of cargo loss claims. We affirm.

We adopt the Fifth Circuit Court of Appeals' position that prejudgment interest, while not specifically mentioned in the Warsaw Convention, is allowable in a cargo loss case since it speeds settlement and recovery and fully compensates the successful plaintiff for the time value of its money that defendant enjoyed from the delay in payment (Domangue v. Eastern Air Lines, 722 F.2d 256, 262-264 [5th Cir.1984] [allowing prejudgment interest under the Warsaw Convention on a wrongful death claim]; Boehringer-Mannheim Diagnostics v. Pan Am. World Airways, 737 F.2d 456, 460 [5th Cir.1984], cert. denied and appeal dismissed 469 U.S. 1186, 105 S.Ct. 951, 83 L.Ed.2d 959 [1985] [citing Domangue in upholding the award of prejudgment interest under the Warsaw Convention in a cargo damage case]; see also, Mahfoud v. Eastern Air Lines, 17 Av. Cas. (CCH) 17,714 [W.D. La.1984], affd. without opinion, 729 F.2d 777 [5th Cir.1984], affd. by an equally divided court, 474 U.S. 213, 106 S.Ct. 586, 88 L.Ed.2d 522 [1985] [affirming a grant of prejudgment interest under the Warsaw Convention]; Eli Lilly Argentina, S.A. v. Aerolineas Argentinas, supra [citing Domangue in awarding prejudgment interest under the Convention in a cargo damage case]; 2 Sorkin, Goods in Transit, § 11.07[4][c].

Here, given the length of time between the cargo loss (1984) and the judgment (1992) [eight years] and the fact that defendant's conduct contributed to the delay in resolving this litigation [Record at 677-678, 1219] (see, Domangue v. Eastern Air Lines, supra, at 264), the award of prejudgment interest in plaintiff's favor was appropriate.

In affirming the determination of the trial court, we decline to follow the contrary holdings of both the Second Circuit in O'Rourke v. Eastern Air Lines, 730 F.2d 842, 851-853 [2d Cir.1984] [upholding District Court's refusal to award prejudgment interest above aggregate damages limitation under Warsaw Convention on a wrongful death claim stemming from the same disaster that generated the Domangue action] and Exim Indus. v. Pan Am. World Airways, 754 F.2d 106, 109 [2d Cir.1985] [citing O'Rourke in upholding a refusal to award prejudgment interest under the Convention in a cargo loss case] and the Seventh Circuit in Deere & Co. v. Deutsche Lufthansa Aktiengesellschaft, 855 F.2d 385 [7th Cir.1988] [citing O'Rourke in reversing an award of prejudgment interest above the aggregate damages limitation of the Convention in a cargo damage case]. We note that our court, as a State court, is not bound under the doctrine of stare decisis by the opinions of these Federal courts (see generally, Pitt v. City of New York, 94 A.D.2d 202, 207, 464 N.Y.S.2d 1009, affd. 63 N.Y.2d 815, 482 N.Y.S.2d 267, 472 N.E.2d 43).

Turning to defendant's remaining contentions, defendant's August 1989 pre-trial motion to dismiss the complaint based upon the lack of capacity of plaintiff (a New Jersey corporation) to maintain this action under Business Corporation Law § 1312(a) was properly denied by the court below, following the Appellate Division's reinstatement of the complaint under the governing tariff. A defendant relying upon BCL § 1312(a) has the burden of proving that the foreign corporate plaintiff was "doing business" in New York without authority (Great White Whale Adv. v. First Festival Prods., 81 A.D.2d 704, 706, 438 N.Y.S.2d 655). Specifically, defendant must prove that plaintiff's business activities here were "so systematic and regular as to manifest continuity of activity in the jurisdiction" (Construction Specialties v. Hartford Ins. Co., 97 A.D.2d 808, 468 N.Y.S.2d 675). A determination of whether regular and systematic intrastate activity has been undertaken must inquire into "the type of business activities being conducted" (Von Arx, AG. v. Breitenstein, 52 A.D.2d 1049, 1050, 384 N.Y.S.2d 895, affd. 41 N.Y.2d 958, 394 N.Y.S.2d 876, 363 N.E.2d 582). Where a foreign corporation's activities within New York are "merely incidental to its business in interstate and international commerce," BCL § 1312(a) is not applicable (Alicanto, S.A. v. Woolverton, 129 A.D.2d 601, 603, 514 N.Y.S.2d 96; see also, Storwal Intl. v. Thom Rock Realty Co., 784 F.Supp. 1141, 1144 [S.D.N.Y.1992].

Significantly, the "doing business" standard under BCL § 1312(a) requires a greater amount of local activity by a foreign corporation than the "doing business" standard applicable under New York's long-arm statute [CPLR 302] relating to personal jurisdiction (Colonial Mtge. Co. v. First Fed. Sav. & Loan Assn., 57 A.D.2d 1046, 1047, 395 N.Y.S.2d 798; Annotation, "Closed Door" Statutes, 88 A.L.R. 4th 466, 485, § 6[a]. In the context of BCL § 1312(a), a foreign corporation bringing suit in New York is presumed to be doing business in its state of incorporation and not in New York (Alicanto, S.A. v. Woolverton, supra, 129 A.D.2d at 602, 514 N.Y.S.2d 96; Great White Whale Adv. v. First Festival Prods., supra, 81 A.D.2d at 706, 438 N.Y.S.2d 655). The statute is a "revenue measure, designed to place foreign corporations on an equal footing with domestic [corporations]" (Siegel, N.Y. Prac., § 30 at 32 [2d ed.]. Its purpose is not to enable a defendant to avoid contractual obligations (Von Arx, AG. v. Breitenstein, 41 N.Y.2d 958, 960, 394 N.Y.S.2d 876, 363 N.E.2d 582). Noncompliance with the registration and taxation requirements of BCL § 1312(a) does not raise a jurisdictional bar and is curable...