US Gold Corp. v. Federal Exp. Corp., 88 Civ. 5692 (PKL).

• Citation: 719 F. Supp. 1217
• Decision Date: 31 August 1989
• Docket Number: No. 88 Civ. 5692 (PKL).,88 Civ. 5692 (PKL).
• Parties: UNITED STATES GOLD CORPORATION, Plaintiff, v. FEDERAL EXPRESS CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of New York

719 F. Supp. 1217

UNITED STATES GOLD CORPORATION, Plaintiff, v. FEDERAL EXPRESS CORPORATION, Defendant.

No. 88 Civ. 5692 (PKL).

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

August 31, 1989.

Jerrold E. Hyams, New York City, Andrew R. Colmant, of counsel, for plaintiff.

Graham & James, New York City, Maureen R. Green, of counsel, for defendant.

OPINION AND ORDER

LEISURE, District Judge.

This suit arises out of the failure of defendant Federal Express Corporation ("Federal Express") to deliver a package containing gold grain, as more particularly described below. See p. 1220, infra. Federal Express accepted the package on or about June 18, 1988 from the office of plaintiff United States Gold Corporation ("U.S. Gold") in St. Petersburg, Florida, for shipment to Rapid City, South Dakota (the "shipment"). Defendant has moved, pursuant to Fed.R.Civ.P. 56, for partial summary judgment on the basis that its liability, if any, is limited to One Hundred Dollars ($100).

For the following reasons, the Court finds the liability limitation enforceable and, therefore, grants defendant's motion for partial summary judgment.

BACKGROUND

It is worth noting at the outset that, in opposing defendant's summary judgment motion, plaintiff has admitted that "the facts of this case are not in dispute." Affidavit of Andrew R. Colmant, Esq., sworn to on January 16, 1989 ("Colmant Aff."), at p. 1. The following factual discussion is drawn from the submissions of the parties.

Federal Express is an all cargo air carrier certified by the Civil Aeronautics Board and the Federal Aviation Administration to provide interstate cargo transportation services to the public. Federal Express provides such cargo transportation services on the terms contained in its contracts of carriage and service guides. Generally, these terms include a provision limiting the liability of Federal Express for any claim resulting from loss or damage of the cargo shipped with Federal Express to $100, or to a higher value for the cargo if declared by the shipper. See, Exhibits E, F, and G, attached to Affidavit of J. Diane Blount, sworn to on November 4, 1988 ("Blount Aff."). If the shipper declares a value higher than $100, the freight rate charged by Federal Express is increased accordingly. With respect to items of extraordinary value, the highest value which may be declared is $500.

1. Limitation of Liability Agreement.

The specific agreement between Federal Express and U.S. Gold regarding the shipment in this case was contained in the Federal Express Manifest containing package tracking number XXXXXXXXX (the "Manifest"). The Manifest incorporated, by reference, the then current Federal Express Service Guide (the "Service Guide"). See, Exhibits F and G, attached to Blount Aff.

The front of the Manifest contained the following language:

By signing, shipper acknowledges and accepts the terms and conditions of shipment and agrees to be bound thereby.

Shipper signature ______

Exhibit F, attached to Blount Aff. An agent of U.S. Gold named Nancy Visonmanno prepared and signed the Manifest, on behalf of plaintiff.

The bottom of the front page of the Manifest contained the following language concerning the potential liability of Federal Express for failure to deliver the shipment in an undamaged condition or in an untimely manner:

In tendering these shipments, shipper agrees that Federal Express shall not be liable for special, incidental or consequential damages arising from carriage thereof. Federal Express shall not be deemed to have made, and shipper disclaims all warranties, express or implied, with respect to these shipments. This is a non-negotiable manifest subject to conditions of contract set forth on reverse side of shipper's copy. Unless shipper declares a higher value, the liability of Federal Express Corporation is limited to $100.00 per shipment.

Exhibit F, attached to Blount Aff. Above this language on the Manifest, a space is provided to permit the declaration of a higher value for shipments, and for the resulting adjustment of freight rates. These spaces on the Manifest are blank, as U.S. Gold declared no value in addition to $100 for the shipment.

The provisions of the contract of carriage regarding the limitation of liability and the declared value were restated on the back of the shipper's copy of the Manifest, as follows:

DECLARED VALUE AND LIMITATION OF LIABILITY. THE LIABILITY OF FEDERAL EXPRESS IS LIMITED TO THE SUM OF $100.00 PER PACKAGE unless a higher value is declared for carriage herein and a greater charge paid at the rate of 30 cents per $100.00 value. In the case of P-1 service the maximum higher declared value is $5,000.00. In the case of Courier Pak, or Standard Air Service, the maximum higher declared value is $2,000.00. In the case of Overnight Letter, the maximum higher declared value is $500.00. Shipments containing items of extraordinary value, including, but not limited to drawings, paintings, sculptures, porcelain, ceramics, furs, jewelry, fur trimmed clothing, watches, gems, stones, money, bullion, currency, coins, trading stamps, or other extraordinary valuable items, are limited to a maximum declared value of $500.00. In the case of P-1 service when multiple shipments are placed on a single airbill but the shipper has not specified the declared value for each individual shipment, the declared value for each individual shipment will be determined by dividing the total declared value on the airbill by the number of shipments indicated on the airbill, subject to a $100.00 minimum declared value per individual shipment. In the case of Standard Air Service when the shipment consists of two or more pieces, the declared value for each piece will be determined by dividing the declared value on the airbill by the number of pieces in the shipment. The liability of Federal Express is limited to the declared value of the shipment or the amount of loss or damage actually sustained, whichever is lower.

Exhibit F, attached to Blount Aff.

The Manifest also incorporated the Service Guide by reference. See Exhibit F, attached to Blount Aff. The Service Guide restated and explained the limitation of liability published on the back of the Manifest.

2. The Shipment.

For most of the year, plaintiff is a normal customer of Federal Express; that is, Federal Express makes two deliveries in the morning and two pickups in the afternoon. For approximately three months of the year, namely during the Christmas rush, U.S. Gold is probably Federal Express' biggest customer in the St. Petersburg area. The package at issue here is one of several thousands of packages U.S. Gold has shipped annually via Federal Express.

On or about June 18, 1988, Federal Express accepted the package which is the subject of this action from U.S. Gold in St. Petersburg, Florida for shipment to Rapid City, South Dakota. A representative from Federal Express arrived at the St. Petersburg location a little after 3:00 p.m. The procedure for such pickups is that a security officer of U.S. Gold advises the Shipping Department upon the arrival of the Federal Express driver, and U.S. Gold employees bring the shipment out of the premises, where it is turned over to the Federal Express driver. At this point the Federal Express driver puts his employee number on the manifest, as well as the date, the time, and the number of packages he receives. He also indicates whether it is a regular stop.

Finally, the driver goes over each of the packages with a portable recording device. A communications satellite picks up a notation for each package from the device, and that notation is immediately placed on Federal Express computers.

Nine shipments were reflected on the Manifest, and the Federal Express computer acknowledged receipt of the nine shipments. The particular shipment that is the subject of this case is number 9. That shipment, denominated by U.S. Gold as # 210507, was the largest of the nine by weight, at approximately 17 pounds. The shipment was consigned to a sister company of the plaintiff in South Dakota.

When the shipment did not arrive, U.S. Gold began to trace the shipment through Federal Express. It is clear that Federal Express actually received the package, and that the shipment was initiated pursuant to the terms of the defendant's Manifest and Service Guides. The package was lost, however, while in the custody of Federal Express, and there is no evidence of knowledge by any party as to how the loss occurred. See, e.g., Colmant Aff. at 2. Federal Express acknowledges that it is unable to locate the package, and that plaintiff does therefore have a claim. The particular package of gold had a total weight of 6,999.4 grams, or approximately 17 pounds. Based upon the gold price of June 18, 1987, or $452.20, the value of the package was $101,761.16. Plaintiff paid a premium of $281.25 to obtain the gold, for the net value at issue here of $102,042.41.

On July 10, 1987 Federal Express issued a check to U.S. Gold for $118.50. There was no declared value listed on the airbill, which Federal Express claims limits its liability to $100.00. The remaining $18.50 represents a freight reimbursement. See Exhibit I, attached to Blount Aff.

Plaintiff suffered a prior loss in March, 1987, which also involved a shipment via Federal Express. That delivery was to a firm in New York, and involved a loss of $10,000. See, Exhibit C, attached to Colmant Aff.

Corrective action has been taken since the incident which is the subject of this dispute. Plaintiff has now availed itself of a special Federal Express service where a particular document follows a shipment all the way, with every Federal Express employee who touches the package signing for it. This measure provides added security, and it costs an extra $15.00 per shipment. Plaintiff has additionally altered its practice of sending such large quantities of gold in a single package to its South Dakota affiliate. The...