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FIREMAN'S FUND INS. CO. v. WAGNER FUR

April 15, 1991

FIREMAN'S FUND INSURANCE CO., AS SUBROGEE OF LEWIS B. CULLMAN AND DOROTHY CULLMAN, PLAINTIFF,
v.
WAGNER FUR, INC., UNITED PARCEL SERVICE, INC., 785 PARK AVENUE OWNERS, INC., AND DOUGLAS, ELLIMAN-GIBBONS & IVES, INC., DEFENDANTS.



The opinion of the court was delivered by: Lowe, District Judge.

OPINION AND ORDER

Before this Court are motions by each of the defendants for summary judgment under Fed.R.Civ.P. 56. A Report and Recommendation was issued in this case by United States Magistrate James C. Francis IV on December 28, 1989, recommending that (1) motions for summary judgment filed by defendants Wagner Fur, Inc., ("Wagner") and United Parcel Service, Inc., ("UPS") be granted in part and denied in part, and that (2) a motion for summary judgment filed by defendants 785 Park Avenue Owners, Inc., and Douglas, Elliman-Gibbons & Ives, Inc., (together, "Owners"*fn1) be denied in its entirety.

Pursuant to Fed.R.Civ.P. 72, Wagner and UPS have filed objections to the portions of Magistrate Francis's Report and Recommendation ("Report") recommending partial denial of their motions. The plaintiff, Fireman's Fund Insurance Co. ("Fireman's Fund"), has filed objections to the portions of the Report recommending that the motions of Wagner and UPS be granted in part. Owners have indicated that they do not object to any portion of the Report.*fn2 For the reasons given below, the Magistrate's Report is accepted with modifications. Wagner's motion is denied in its entirety, UPS's motion is granted in part and denied in part, and Owners' motion is denied in its entirety.

BACKGROUND

This case involves the disappearance of three furs from an apartment building at 785 Park Avenue in New York City, in November 1987.*fn3 In the spring of 1987, Lewis and Dorothy Cullman, who owned the furs, sent them for storage to a facility operated by Wagner. Wagner in turn sent the Cullmans a "storage receipt", which contained a description of the furs, an assignment of value to each, and the terms and conditions of Wagner's standard storage agreement. As was its usual practice, Wagner automatically assigned a value of $100 to each of the Cullmans' furs. The text of the storage agreement included a clause purporting to limit Wagner's liability for loss of or damage to the furs, even if caused by Wagner's negligence, to the assigned value on the receipt. The Cullmans were asked to sign and return the agreement, which they did.

In November, Wagner arranged to have the furs returned to the Cullmans via UPS. For reasons that are unclear, the furs were delivered from Wagner's facility by UPS not to 784 Park Avenue, where the Cullmans resided, but to Number 785.*fn4 There they were accepted by the porter and placed in a service elevator, from which they subsequently vanished. Following the disappearance of the furs, the Cullmans submitted a claim to Fireman's Fund, their insuror, for the loss. Fireman's Fund paid the claim and filed suit against Wagner, UPS, and Owners, asserting theories of negligence and conversion. Each of the named defendants then cross-claimed against the others under the same theories; each defendant now moves for summary judgment as to the claims and cross-claims asserted against it.

Magistrate Francis's Report recommends that summary judgment for Wagner and UPS be granted on the claims of conversion and denied on the claims of negligence. Report at 10-18. The Report further recommends that Owners' motion for summary judgment be denied in its entirety. Report at 18-21. As discussed below, we disagree with the Magistrate's conclusions as to the conversion claims against Wagner and UPS, and as to the enforceability of UPS's limitation of liability. We agree with his conclusions as to the negligence claim against Wagner and as to both claims against Owners.

DISCUSSION

A. Wagner's Motion for Summary Judgment

(1) Negligence

Wagner contends that it is entitled to summary judgment as to the negligence claims on the ground that the storage agreement between it and the Cullmans limits its liability to the $100 assigned value of each fur. Magistrate Francis found that, under New York law, Wagner could only rely on this limitation of liability if it gave the Cullmans an opportunity to obtain an increased valuation by paying increased storage rates. Report at 11-12.*fn5 He concluded that there was a genuine issue of material fact, precluding summary judgment, as to whether such an opportunity had been afforded, because while the language of the storage agreement would seem to permit a customer to obtain an increased assigned value,*fn6 there was evidence that Wagner's policy was to assign a value of $100 per article and to decline any requests for increases. Report at 12.*fn7

Wagner objects that the parol evidence rule prevents our consideration of its valuation policy as contradicting the terms of the storage agreement. We disagree. The testimony as to Wagner's policy is not evidence of a "prior oral or written agreement or of [a] contemporaneous oral agreement" between Wagner and the Cullmans. Richardson on Evidence, § 601 (J. Prince 10th ed. 1973). Rather, it goes to the claim that the language of Wagner's storage agreement concerning increased valuations was a mere recital, which was insufficient to satisfy the extracontractual duty imposed upon Wagner by New York law.*fn8 See I.C.C. Metals, Inc., supra n. 5. Since we agree with Magistrate Francis's conclusion that the evidence raises a genuine issue of fact as to whether Wagner afforded the Cullmans an opportunity to obtain increased "coverage" against the loss of their furs, summary judgment for Wagner as to the negligence claim is denied.

(2) Conversion

On the claims of conversion against Wagner, Magistrate Francis found that the record revealed "no evidence that [Wagner] converted the furs for its own use," and thus that it was entitled to summary judgment. Report at 13. Plaintiff objects that Magistrate Francis improperly applied the law of conversion in considering whether ...


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