Tai Ping Ins. Co. Ltd. v. Expeditors Intern.

• Court: U.S. District Court — Southern District of New York
• Writing for the Court: Kimba M. Wood
• Citation: Tai Ping Ins. Co. Ltd. v. Expeditors Intern., 34 F.Supp.2d 169 (S.D. N.Y. 1998)
• Decision Date: 23 November 1998
• Docket Number: No. 96 Civ. 7481 (KMW).,96 Civ. 7481 (KMW).
• Parties: The TAI PING INSURANCE CO. LTD. a/s/o Join Mark Industrial Ltd. and as assignee of Transat Corp., Plaintiff, v. EXPEDITORS INTERNATIONAL, E.I. Freight (H.K.) Ltd. and Expeditors International of Washington, Inc., Defendants.

34 F.Supp.2d 169

The TAI PING INSURANCE CO. LTD. a/s/o Join Mark Industrial Ltd. and as assignee of Transat Corp., Plaintiff, v. EXPEDITORS INTERNATIONAL, E.I. Freight (H.K.) Ltd. and Expeditors International of Washington, Inc., Defendants.

No. 96 Civ. 7481 (KMW).

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

November 23, 1998.

David L. Mazaroli, Law Offices of David L. Mazaroli, New York City.

David H. Pikus, Bressler, Amery & Rose PC, New York City.

Michael J. Holland, Maureen Moran, Condon & Forsyth, New York City.

ORDER

KIMBA M. WOOD, District Judge.

Plaintiff has moved for partial summary judgment arguing that: (1) this case is governed by the Warsaw Convention (the "Convention"), and (2) the air waybill in question did not comply with Articles 8(c) and 9 of the Convention, and therefore defendants are not entitled to the limitation of liability provided by the Convention. Defendants have also moved for partial summary judgment arguing that their liability is limited either under the Convention or, if the Court finds the Convention not to apply, pursuant to contract. Individual defendant E.I. Freight also moved for summary judgment arguing that it enjoys the same limitation of liability protection as Expeditors because it acted as Expeditors' agent.

In a Report and Recommendation dated September 3, 1998, (the "Report") Magistrate Judge James C. Francis IV recommended that I grant plaintiff's motion for partial summary judgment to the extent of dismissing defendants' affirmative defenses based on limitation of liability under the Convention and that plaintiff's motion otherwise be denied. The Magistrate Judge further recommended that defendants' motions for partial summary judgment be denied in their entirety. Plaintiff does not object to the Report and requests that it be adopted in its entirety; defendants filed objections to the Report on September 15, 1998 and again on September 23, 1998. After a de novo review, and for the reasons stated below, I adopt Magistrate Judge Francis' Report in its entirety.

Analysis

This case arises out of a lost shipment of crystal platters sent from Cleveland, Ohio to Hong Kong. Plaintiff sued defendants for the value of its lost shipment and defendants have asserted a defense of limited liability. The relevant facts of this case are set out in detail in the Magistrate Judge's Report, familiarity with which is assumed.

Magistrate Judge Francis recommended that I grant plaintiff's partial summary judgment motion. Magistrate Judge Francis noted that defendants' air waybill did not contain any information about the flight's stopping points, as required by Article 8(c).¹ He also concluded that defendants did not effectively incorporate this information into the air waybill by reference to another document in a way that satisfied the standard set out by the Second Circuit in Brink's Ltd. v. South African Airways, 93 F.3d 1022 (2d Cir.1996) and Tai Ping Insurance Co. v. Northwest Airlines, Inc., 94 F.3d 29 (2d Cir. 1996) ("Northwest Airlines"). The Magistrate Judge therefore reasoned that defendants don't qualify for the limited liability protection of the Convention, even if the Conference were to govern this case. In its objection to this conclusion, defendants simply refer the Court to their Memorandum of Law in Opposition to Plaintiff's Motion for Summary Judgment and explicitly indicate that they have nothing further to add beyond what Magistrate Judge Francis has already considered. Defendants reiterate their argument that the flight in question always stopped in Fairbanks, Alaska, and therefore defendants properly incorporated the stopping place in the air carrier's timetables into the air waybill provided to plaintiff. (See Def.Obj. Sept. 23, 1998)

The facts of Northwest Airlines are essentially identical to those here: the disputed air waybills in both cases indicated the wrong departure date of the flight and also failed to include the regularly scheduled stopping points of the flights. In Northwest Airlines, the flight route always included the same regularly scheduled stops, however, the Court ruled that this was not sufficient to constitute a proper incorporation of the stopping places into the air waybill in light of the incorrect departure date on the waybill. See Northwest Airlines, 94 F.3d at 30. The Court was clear that "effective incorporation depends on the accuracy of other information in the waybill" and because defendants' waybill included incorrect information regarding the departure date, "the shipper could not refer to the timetables to ascertain the stopping places." Northwest Airlines, 94 F.3d at 32. I therefore reject defendants' argument that they effectively incorporated information about the stopping points into the waybill.

Defendants' argument that the rationale underlying Article 8(c) could be met as long as the international character of the flight was clear is also unavailing in light of Northwest Airlines. That court stated that:

Concededly, the air waybill ... reveals the international character of the flight and the applicability of the Warsaw Convention. Nevertheless, if the air waybill does not incorporate the agreed stopping places effectively, the air waybill does not contain the information required by Article 8(c). It omits the information.

Northwest Airlines, 94 F.3d at 33. The Court therefore rejects defendants' argument here that it is sufficient for a waybill to indicate the international character of the flight in order for the carrier to benefit from the limited liability provision of the Convention.² Accordingly, the Court finds that plaintiff is entitled to summary judgment dismissing defendant's affirmative defenses based on the Convention.

The Magistrate Judge also recommended that I deny the summary judgment motions of both parties to the extent that they hinge on a determination of whether this case is governed by the Warsaw Convention. After reviewing the record, the Magistrate Judge concluded that a factual dispute remains among the parties as to where the loss of the platters occurred and therefore, at this point in discovery, it would be premature to decide whether the Warsaw Convention applies.³ In light of the facts that neither party objects to this aspect of the Report and that the record indicates a remaining factual dispute on the issue of where the shipment was lost,⁴ I agree with the Magistrate Judge that it would be improper to grant a motion for summary judgment on the ground that the Convention applies.

Conclusion

For the reasons stated above, I deny defendants' motions for summary judgment, grant plaintiff's motion for partial summary judgment to the extent of dismissing defendants' claims based on limitation of liability, and otherwise deny plaintiff's motion for summary judgment. The parties are ordered to submit to Magistrate Judge Francis' Chambers by December 1, 1998 a revised Scheduling Order and to contact Magistrate Judge Francis' Chambers to arrange a Scheduling Conference by December 2, 1998.

SO ORDERED.

REPORT AND RECOMMENDATION

FRANCIS, United States Magistrate Judge.

This case arises out of a lost shipment of crystal platers sent from Cleveland, Ohio to Hong Kong. The plaintiff, The Tai Ping Insurance Co., Ltd. ("Tai Ping"), the assignee of Transat Corp. ("Transat") and subrogee of Join Mark Industrial Ltd. ("Join Mark"), moves for partial summary judgment arguing: (1) that this case is governed by the Convention for the Unification of Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, 49 Stat. 3000, 137 L.N.T.S 11, reprinted in 49 U.S.C. § 40105 note (the "Warsaw Convention" or "Convention"), and (2) that the air waybill did not comply with Articles 8(c) and 9 of the Warsaw Convention, and therefore the defendants are not entitled to the limitation of liability provided by the Convention. The defendants, Expeditors International, E.I. Freight (H.K.) Ltd., and Expeditors International of Washington, Inc., also move for partial summary judgment arguing that their liability is limited either under the Warsaw Convention or, if the Convention does not apply, pursuant to contract. Individual defendant E.I. Freight also moves for summary judgment arguing that it enjoys the same limitation on liability protection as Expeditors, because it acted as Expeditor's agent.

Background

In October 1994, Transat contracted with Expeditors to forward a shipment of crystal platers from Ohio to its consignee Join Mark in Hong Kong. Defendant's Rule 56.1 Statement ¶ 2-3. Expeditors issued an air waybill on October 28, 1994. A first air waybill stated that the shipment would be "moved via Air Hong Kong MAWB# 288-12063295 FLIGHT 007 on 10/28/94." Affidavit of David Mazaroli dated April 20, 1998 ("Mazaroli Aff."), Exh. 1.

A second air waybill bears the handwritten notation "changed per L/C" and a flight departure date of October 30, 1994. Declaration of Lance O'Connor dated February 26, 1998 ("O'Connor Decl."), Exh. A. Lance O'Connor, the air export lead agent for Expeditors, explains this notation by stating that it is industry custom to conform the waybill prior to the shipment of goods with the bank letter of credit governing the transaction.¹ O'Connor Decl. ¶¶ 1, 7. According to Mr. O'Connor, this procedure is often necessary when a client has not yet finalized the terms of credit with a bank. O'Connor Decl. ¶ 7. On the reverse side, the air waybill provided that

[e]xcept as otherwise provided in carriers tariffs or conditions of carriage, in carriage to which the Warsaw Convention does not apply carrier's liability shall not exceed USD 20.00 or the equivalent per kilogram of goods lost, damaged or delayed, unless a higher value is declared by the shipper and a supplementary charge paid.

O'Connor Decl., Exh. B.

The shipment departed Cleveland en route to New York on October 28, 1994. Mazaroli Aff., Exh. 17. Air Hong Kong Ltd. ("AHK") was then subcontracted...