Republic Nat. Bank of New York v. Eastern Airlines, Inc., 575

• Decision Date: 30 March 1987
• Docket Number: No. 575,D,575
• Parties: REPUBLIC NATIONAL BANK OF NEW YORK, Plaintiff-Appellant, v. EASTERN AIRLINES, INC., Defendant-Appellee-Third-Party Plaintiff, v. Joseph DELGAIS, Richard Delgais, Paul Cellura, William Adams, Joseph Telfel, Jr., Wells Fargo Armored Service Corp., and Renzo Baronti, Third-Party Defendants. ocket 86-7706.
• Court: U.S. Court of Appeals — Second Circuit

Page 232

815 F.2d 232

REPUBLIC NATIONAL BANK OF NEW YORK, Plaintiff-Appellant, v. EASTERN AIRLINES, INC., Defendant-Appellee-Third-Party Plaintiff, v. Joseph DELGAIS, Richard Delgais, Paul Cellura, William

Adams, Joseph Telfel, Jr., Wells Fargo Armored

Service Corp., and Renzo Baronti,

Third-Party Defendants.

No. 575, Docket 86-7706.

United States Court of Appeals, Second Circuit.

Argued Dec. 15, 1986.

Decided March 30, 1987.

Arnold Stream, New York City (Stanley H. Solomon, Standard, Weisberg, Heckerling & Rosow, New York City, of counsel), for plaintiff-appellant.

Frank B. Gass, Port Washington, N.Y. (Patricia S. Orr, Gass, Gillen & Caliendo, Port Washington, N.Y., of counsel), for defendant-appellee-third-party plaintiff.

Before MESKILL, KEARSE and ALTIMARI, Circuit Judges.

MESKILL, Circuit Judge:

Plaintiff Republic National Bank of New York (Republic) appeals from those portions of a judgment entered in the United States District Court for the Southern District of New York, Conner, J., that granted defendant Eastern Airlines' (Eastern) motion for partial summary judgment permitting Eastern to stipulate to payment of $634.90 in settlement of its liability under the Warsaw Convention. Republic also appeals the denial of its cross-motion for summary judgment, 639 F.Supp. 1410.

Republic brought this action to recover $2 million for United States currency lost during an Eastern international flight from New York to Lima, Peru. Eastern filed a motion for summary judgment alleging that its liability was limited by the Warsaw Convention to $9.07 per pound. Republic opposed summary judgment on grounds that Eastern's failure to comply with the baggage claim check requirements of Article 4 of the Warsaw Convention and Eastern's alleged willful misconduct in handling Republic's baggage vitiated Eastern's claim to limited liability under the Convention. Republic also filed a cross-motion for summary judgment claiming automatic recovery if the district court found the Convention's liability limitations inapplicable. Judge Conner granted Eastern's motion for summary judgment holding that under Exim Industries v. Pan American World Airways, 754 F.2d 106 (2d Cir.1985), Eastern's liability was limited by the Convention. Judge Conner also noted the absence of material issues of fact with respect to Republic's claims of willful misconduct. We affirm.

BACKGROUND

As part of its service to South American customers, Republic operated an in-house courier service for the transportation of currency as checked baggage aboard international passenger flights. In May 1982, representatives of Republic met with Eastern officials to discuss Eastern's flight schedule for its newly acquired South American routes. At this meeting, Republic informed Eastern that couriers would be accompanying large amounts of currency shipped as checked baggage to destinations in South America. Eastern responded that it would not accept liability for high value cargo shipped as checked baggage. However, Eastern agreed to provide Republic with a customer assistance letter to facilitate Republic's use of Eastern's services. ¹ Eastern never expressly refused to permit Republic to ship currency as checked baggage aboard its aircraft.

On December 13, 1982, Republic instructed Renzo Baronti, an international courier, to accompany two bags of currency aboard Eastern Flight 001. One bag, bound for Lima, Peru, contained $2 million. The second Baronti obtained a ticket from an Eastern ticket agent at John F. Kennedy Airport, which bore a notice of the Warsaw Convention's applicability. ² Baronti then proceeded to the Eastern baggage check area and informed an Eastern attendant that he was accompanying a "high value shipment" and required two baggage claim checks. Baronti did not otherwise make a special declaration as to the value of his shipment nor did he reveal its contents. ³ The Eastern attendant made no effort to verify the presence of Baronti's bags which, at the time, were being driven to the aircraft in a Wells Fargo armored truck.

bag contained $4.5 million and was to be delivered in Santiago, Chile. Flight 001 was to stop in Miami, Florida en route to its first South American stop in Lima.

Baronti received two claim checks from the attendant. The claim check for the Santiago bag was a standard claim check containing the destination, baggage identification number, preprinted routing codes and notice of the Warsaw Convention's applicability. Because the attendant could not find a standard Lima claim check for the Lima bag, a limited release form was substituted which did not contain the routing codes or Warsaw Convention notice. ⁴ The attendant wrote Baronti's name on the limited release and handed him both claim checks. Baronti then added "FLT # 1 LIMA" to the limited release and proceeded to the passenger boarding area.

Prior to boarding, Baronti informed Eastern's gate agents that he was a courier accompanying a high value shipment and requested access to the tarmac to meet the armored car. Eastern complied with this request. At planeside, the Wells Fargo armored truck arrived under escort by Eastern. Baronti entered the truck, checked the seals and locks on the bags and affixed the Santiago claim check to the bag containing $4.5 million. He affixed the limited release form to the Lima bag containing $2 million. Although the portion of the limited release form retained by Baronti contains a printed number, it is not clear whether the portion Baronti affixed to the Lima bag contained a matching number. We assume, however, as did Judge Conner for purposes of summary judgment, that no such identification number appeared on the stub attached to Republic's currency bag. Both bags were then loaded aboard the plane. Although Baronti instructed Eastern employees to load Republic's bags last, several carts of late cargo were loaded after Republic's shipment was secured. Neither Baronti nor the Wells Fargo guards registered any objection to this procedure with Eastern employees.

Upon the flight's arrival in Miami, Eastern allowed Baronti to leave the aircraft first. Baronti met armed guards at planeside and observed Eastern personnel unloading cargo and baggage. Baronti then requested an Eastern employee to lift the bags chest high so that their presence could be verified. Both bags were visually inspected to Baronti's satisfaction and were replaced in the cargo bin. Eastern flight 001 then proceeded to Lima, Peru where, for the first time, Baronti discovered that the bag containing $2 million was missing. Six weeks later, in Atlantic City, New Jersey, five suspects were arrested with approximately $150,000 of the missing currency in their possession.

Republic commenced this lawsuit against Eastern claiming recovery for the full amount of its loss. Eastern moved for

summary judgment asserting limited liability under the Warsaw Convention. Republic opposed the motion claiming that Eastern's conduct deprived it of the protection of limited liability and interposed its own motion for summary judgment. The district court ruled in favor of Eastern and approved settlement of $634.90 ($9.07 per pound times the maximum allowable weight of 70 pounds under Eastern's Tariff) under Article 22(2) of the Convention. This appeal followed.

DISCUSSION

The Warsaw Convention ⁵ is a comprehensive international treaty governing the liability of air carriers engaged in the international transportation of passengers whose purpose is to create uniform rules limiting airline liability for damages resulting from personal injury or property damage. As a quid pro quo for limiting recovery, the treaty creates a presumption of airline liability in favor of passengers. Thus, a passenger may hold an airline strictly liable for damages suffered while engaged in international transportation, but recovery of damages is limited by various provisions of the Convention.

With respect to checked baggage, Article 18 provides for the strict liability of carriers for loss or damage sustained while under the control of the carrier. Article 22(2) limits the carrier's liability to $20 per kilogram or $9.07 per pound. The limitation of damages only applies, however, if the carrier has delivered a baggage claim check in conformity with the requirements of Article 4.

Republic asserts two grounds for reversal of the district court on this appeal. First, Republic argues, the failure of Eastern to provide Republic with a claim check as prescribed by Article 4 of the Convention precludes Eastern from claiming the protection of limited liability. Judge Conner ruled that the absence of a proper claim check did not prejudice Republic and, therefore, under Exim Industries v. Pan American World Airways, the amount of recoverable damages was limited by Article 22(2). Republic urges that we eschew a liberal interpretation of Article 4 and require strict adherence to its provisions. Second, Republic claims that Eastern was guilty of willful misconduct in the handling of its baggage and on this basis should not be permitted to avail itself of limited liability. See Warsaw Convention Article 25(1).

A. Article 4

Article 4 of the Warsaw Convention requires a carrier to provide a passenger with a baggage claim check containing certain information. The requirements are as follows:

(1) For the transportation of baggage, other than small personal objects of which the passenger takes charge himself, the carrier must deliver a baggage check.

(2) The baggage check shall be made out in duplicate, one part for the passenger and the other part for the carrier.

(3) The baggage check shall contain the following particulars:

(a ) The place and date of issue;

(b ) The place of departure and of destination;

(c ) The name and address of the carrier or carriers;

(d ) The number of the passenger ticket;

(e ) A statement that delivery of the baggage will be made to the bearer of the baggage check;

(f ) The number...