Sotheby's v. Federal Exp. Corp.

• Court: U.S. District Court — Southern District of New York
• Writing for the Court: Chin
• Citation: Sotheby's v. Federal Exp. Corp., 97 F.Supp.2d 491 (S.D. N.Y. 2000)
• Decision Date: 15 May 2000
• Docket Number: No. 99 CIV. 1610(DC).,99 CIV. 1610(DC).
• Parties: SOTHEBY'S, Plaintiff, v. FEDERAL EXPRESS CORPORATION, Defendant.

97 F.Supp.2d 491

SOTHEBY'S, Plaintiff, v. FEDERAL EXPRESS CORPORATION, Defendant.

No. 99 CIV. 1610(DC).

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

May 15, 2000.

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Kennedy Lillis Schmidt & English, by Charles E. Schmidt, Matthew T. Loesberg, Craig S. English, New York City, for Plaintiff.

Condon & Forsyth LLP, by Christopher Carlsen, New York City, R. Jeffrey Kelsey, Federal Express Corporation, Memphis, TN, Newman, Fitch, Altheim, Myers, P.C., by Olivia M. Gross, New York City, for Defendant.

MEMORANDUM DECISION

CHIN, District Judge.

In this cargo case, Sotheby's, through an agent, hired Federal Express Corporation ("FedEx") to transport three pieces of artwork (the "Artwork") from London, England to Newark, New Jersey. The air waybill provided that the Artwork was to be flown on FedEx Flight 005 from London, England to Newark, New Jersey. FedEx in fact transported the Artwork to Newark on Flight 005, but then, due to its own weekend staffing needs, transported the Artwork on FedEx Flight 007 from Newark to Memphis, Tennessee and then from Memphis back to Newark the next day on FedEx Flight 3501. While in Memphis, one of the three pieces of Artwork, a painting, was damaged by a forklift.

Sotheby's moves for partial summary judgment holding FedEx liable for the full value of the damage to the painting and striking the limitation of liability affirmative defenses asserted by FedEx in its answer. FedEx cross-moves for partial summary judgment limiting its liability, if any, to twenty dollars per kilogram of the weight of the damaged painting, pursuant to Article 22 of the Convention for the Unification of Certain Rules Relating to International Transportation by Air, 49 Stat. 3000, T.S. 876 (1934), reprinted in 49 U.S.C. § 40105, commonly known as the Warsaw Convention. The issue before the Court is whether, under these circumstances, FedEx can take advantage of the limitation of liability provided by the Warsaw Convention. For the reasons that follow, Sotheby's motion is granted and FedEx's cross-motion is denied.

BACKGROUND

A. The Undisputed Facts

The undisputed facts, taken from the parties' Local Civil Rule 56.1 Statements and exhibits thereto, are as follow.

On October 10, 1997, Air Express International Limited ("AEI") booked transportation of Sotheby's Artwork for carriage by FedEx the following day from London, England to Newark, New Jersey. The Artwork had a total gross weight of 478 kilograms and a chargeable weight of 669 kilograms. AEI completed an air waybill, numbered 023-90756002, for the shipment. The air waybill specified London as the departure airport and Newark, New Jersey as the destination airport. It also included on its face both the date of the flight, October 11, and the flight number, 005. The designated spaces on the air waybill for listing stopping places between London and Newark were left blank and no other flight numbers appeared on the waybill. AEI did not make a special declaration of value or pay a supplementary sum for the shipment.

FedEx received the Artwork without taking exception to its condition or packaging, and stamped the air waybill as prepared by AEI. On October 11, 1997 FedEx Flight 005 carried the Artwork from London to Newark as scheduled. That same day, however, the Artwork was placed on FedEx Flight 007 and transported from Newark to Memphis, Tennessee where it was stored overnight. While in Memphis, one of the three pieces of Artwork, a painting by Sir Anthony Van Dyck entitled "Portrait of Prince Charles Louis, The Elector Palatine," was damaged. The following day, FedEx transported the Artwork, including the damaged painting, back from Memphis to Newark on FedEx Flight 3501. Upon the shipment's arrival in Newark, damage to the outer packaging of the painting was noted.

B. Additional Facts

Sotheby's contends that AEI specifically selected FedEx Flight 005 because it was a non-stop flight, that AEI advised FedEx that the Artwork had to be transported non-stop, and that FedEx contracted to carry the Artwork on Flight 005. (Pl. Local Civ. R. 56.1 St.). FedEx argues that it never agreed to ship the Artwork directly from Newark to London without stops, and asserts that it expressly reserved its right to route the shipment any way it saw fit. (Def. Opp. Local Civ. R. 56.1 St.). At oral argument, counsel for FedEx explained that the Artwork was taken from Newark to Memphis because weekend staffing shortages left FedEx without personnel to unload the cargo from the storage containers in Newark. (Tr. at 9).

According to FedEx, the terms and conditions of FedEx's International Express Freight Worldwide Service Guide ("Service Guide") applied to the transportation of the Artwork. (Def. Local Civ. R. 56.1 St.). Sotheby's disputes that these terms and conditions applied to the shipment but also contends, apparently in the alternative, that AEI did not make a special declaration of value or pay a supplementary fee because it was precluded from doing so by the Service Guide. (Pl. Opp. Local Civ. R. 56.1 St.). According to Sotheby's, the damaged painting is worth approximately $1,000,000. (Compl.¶ 10)

DISCUSSION

A. Motion for Summary Judgment

The standards governing motions for summary judgment are well settled. A court may grant summary judgment only where there is no genuine issue of material fact and the moving party is therefore entitled to judgment as a matter of law. See Fed R. Civ. P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Accordingly, the Court's task is not to "weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). To create an issue for trial, there must be sufficient evidence in the record to support a jury verdict in the nonmoving party's favor. See id.

To defeat a motion for summary judgment, however, the nonmoving party "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586, 106 S.Ct. 1348. As the Supreme Court stated in Anderson, "[i]f the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505. The nonmoving party may not rest upon mere conclusory allegations or denials, but must set forth "concrete particulars" showing that a trial is needed. National Union Fire Ins. Co. v. Deloach, 708 F.Supp. 1371, 1379 (S.D.N.Y. 1989) (quoting R. G. Group, Inc. v. Horn & Hardart Co., 751 F.2d 69, 77 (2d Cir.1984) (internal quotations omitted)).

B. The Warsaw Convention

The parties agree that Sotheby's claim is governed by the provisions of the Warsaw Convention.

1. Liability

The first prong of Sotheby's motion seeks partial summary judgment holding FedEx liable for Sotheby's loss. Although FedEx argues that its liability, "if any," is limited in accordance with the Warsaw Convention, it does not otherwise contest this portion of Sotheby's motion, and counsel for FedEx admitted as much at oral argument. (Tr. at 2-3).¹

"In general, Article 18 of the Warsaw Convention presumes an air carrier liable for loss or damage to goods in transit." Tai Ping Ins. Co., Ltd. v. Northwest Airlines, Inc., 94 F.3d 29, 31 (2d Cir.1996). FedEx does not dispute that it received the Artwork without taking exception to its condition or packaging, and that the painting or its packaging was damaged in Memphis. (Pl. Local Civ. R. 56.1 St.; Def. Opp. Local Civ. R. 56.1 St.); see also Local Civ. R. 56.1(c) ("All material facts set forth in the statement required to be served by the moving party will be deemed admitted unless controverted by the statement required to be served by the opposing party.").

Moreover, the record contains uncontroverted evidence that the painting was damaged while in transit. For example, plaintiff has put forth: (1) a letter from FedEx to AEI stating that the shipment was "broken down in Memphis" and that "comments that were taken from the computer do state that the freight was damaged prior to build up at Memphis"; (2) a survey report from Crawford-THG International Loss Adjusters concluding that the blades of a forklift caused the damage to the painting; and (3) FedEx's answer admitting, upon information and belief, that the damage to the packaging was noted prior to delivery in Newark. (Affidavit of Matthew T. Loesberg, dated Nov. 24, 1999, at Exs. 2, 3, and 5). Accordingly, Sotheby's motion for summary judgment on the issue of liability is granted. I now turn to the second prong of Sotheby's motion and FedEx's cross-motion.

2. Limitation of Liability

Sotheby's and FedEx cross-move for partial summary judgment on the issue of whether FedEx is entitled to a limitation of liability for Sotheby's loss pursuant to Article 22 of the Warsaw Convention. Article 22(2) of the Warsaw Convention limits a carrier's liability to twenty dollars per kilogram, unless the shipper makes a special declaration of greater value and pays any required extra fees. See 49 U.S.C. § 40105, Art. 22(2); Federal Ins. Co. v. Yusen Air & Sea Serv. Pte, Ltd., No. 97 Civ. 3830, 1998 WL 477987, at *2 (S.D.N.Y. Aug.14, 1998). Because AEI did not declare a greater value for the damaged painting, FedEx contends that its liability is limited to twenty dollars per kilogram.

Article 9 of the Warsaw Convention, however, provides that the Article 22 limitation of liability shall not apply "if the carrier accepts goods without an air waybill having been made out, or if the air waybill does not contain all the particulars set out in Article 8(a) to (i), inclusive, and (q)." 49 U.S.C. § 40105, Art. 9. Article 8(c), in turn, provides that the air waybill shall contain "[t]he agreed stopping places, provided that the carrier may reserve the right to...