The opinion of the court was delivered by: Lowe, District Judge.
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,
(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.
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
A. Wagner's Motion for Summary Judgment
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
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.
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 ...