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OWENS-CORNING FIBERGLAS CORP. v. U.S. AIR

June 1, 1994

OWENS-CORNING FIBERGLAS CORPORATION, Plaintiff,
v.
U.S. AIR and U.S. AIR, INC. and U.S. EXPRESS, INC., Defendants. U.S. AIR and U.S. AIR, INC., Third-Party Plaintiffs, v. HUDSON GENERAL CORPORATION, Third-Party Defendant.



The opinion of the court was delivered by: I. LEO GLASSER

 GLASSER, United States District Judge:

 Plaintiff Owens-Corning Fiberglas Corporation ("Owens-Corning") commenced this action against defendants U.S. Air, U.S. Air, Inc. (together "USAir") *fn1" and U.S. Express, Inc. ("U.S. Express") *fn2" by Complaint filed July 9, 1993; jurisdiction is alleged pursuant to 28 U.S.C. ยงยง 1331 and 1337.

 Plaintiff alleges that on June 18, 1992, it caused to be shipped and delivered into the custody of defendants at LaGuardia Airport, Queens, New York a shipment of three packages of production bushings (the "bushings"), which were to be transported by defendants to Greenville and Anderson, South Carolina, for delivery to plaintiff. Compl. PP 7-8. Plaintiff alleges that defendants failed to deliver the bushings "in violation of the applicable Interstate Commerce Commission regulations; in breach of the applicable contracts of carriage as evidenced by the air waybills; and in breach of their duties as common carriers of goods for hire and as bailees of the goods," and that as a result, it has sustained damages in the amount of $ 817,318.73. Compl. PP 9, 11.

 On October 7, 1993, USAir filed an Answer to the Complaint and asserted a counterclaim against plaintiff and a cross-claim against U.S. Express. In its Answer filed November 9, 1993, U.S. Express asserted a cross-claim against USAir. On October 14, 1993, USAir filed a third-party complaint against Hudson General Corporation ("Hudson"), claiming that if plaintiff suffered the damage alleged in the Complaint, then such damage was caused by the negligence of Hudson, with whom USAir had entered into an indemnification agreement. Third-Party Compl. PP 4-7. Hudson has not yet answered the third-party complaint.

 U.S. Express now moves for partial summary judgment against Owens-Corning, while USAir moves for summary judgment, or, alternatively, for partial summary judgment. Both defendants allege that the terms of their respective contracts limit or preclude their liability to plaintiff. Owens-Corning, in turn, has cross-moved to strike the affidavits submitted by U.S. Express and USAir in support of their respective motions. For the reasons set forth below, U.S. Express's motion for partial summary judgment is granted, USAir's motion for summary judgment is granted and plaintiff's motions to strike are denied.

 A. Terms of U.S. Express Contract

 On June 18, 1992, Owens-Corning and U.S. Express entered into an agreement for the transport of the bushings from Jamaica, New York to Owens-Corning's Corporate Alloy Facility in Anderson, South Carolina. U.S. Express's 3(g) Statement PP 1-2; Plaintiff's Opposition to Defendant U.S. Express, Inc.'s Rule 3(G) Statement ("Pl.'s 3(g) Statement") P 1. U.S. Express subcontracted part of the transportation to USAir; specifically, USAir agreed to fly the bushings from LaGuardia to Greenville, South Carolina, and from there, U.S. Express's agent Acme Delivery was to transport the bushings to Anderson, South Carolina. U.S. Express's 3(g) Statement P 2.

 U.S. Express alleges that the agreement with Owens-Corning was in the form of three separate U.S. Express airbills -- numbers 623601, 623602 and 623603 -- each addressing one of the packages of bushings and containing identical terms and conditions. Affidavit of John N. Romans, Executed Jan. 25, 1994 ("Romans Aff.") PP 1-2 & Ex. A. *fn3" While Owens-Corning does not dispute that the airbills comprised at least part of the agreement between the parties, it alleges that the copies of the documents annexed to the Romans Affidavit are "textually erroneous," *fn4" and further claims that the documents are incomplete "since they failed to include tariffs and rate memos which U.S. Express attempted to incorporate by reference." Pl.'s 3(g) Statement P 4. However, condition 2 on the back side of the airbill clearly stated that such documents were "available for inspection by the parties at U.S. Express Inc. [sic] offices and [were] hereby incorporated into and made part of this contract." Fenzel Aff. Ex. A1-A3.

 Each airbill specified a fee based on the weight of the package that was the subject of that airbill; in total, the three packages weighed 158 pounds, for a fee of $ 232.82. U.S. Express's 3(g) Statement PP 4-6; Pl.'s 3(g) Statement P 6. It is undisputed that the front side of each airbill contained the following language: "THIS SHIPMENT IS SUBJECT TO CONDITIONS OF CONTRACT LISTED ON BACK OF THIS AIRBILL (PLEASE READ)." Fenzel Aff. Ex. A1. It also is undisputed that the back side of each airbill contained the following provision:

 
Forwarder liability is agreed and understood to be $ .50 per pound multiplied by the number of pounds (or fraction thereof) of each piece(s) of the shipment which may have been lost, damaged or destroyed, (but no less than $ 50.00 per shipment), unless a higher value is declared herein and applicable charges paid hereon, or the actual value of such piece(s), whichever is less, plus the amount of any transportation charges for which the Forwarder may be liable or the amount of any damages actually sustained, whichever is the least amount. . . . Forwarder shall not be liable for special or consequential damages.

 Fenzel Aff. Ex. A1 (emphasis added).

 The front side of each airbill contained a box designated "declared value." U.S. Express alleges that this box was to be completed by the shipper if it wished to pay a higher price for higher limits of liability, U.S. Express's 3(g) Statement P 10; however, Owens-Corning contends that "nothing in the conditions of the contract instructed the shipper to place any information in any of the boxes on the front side of the air waybills." Pl.'s 3(g) Statement P 10. Nevertheless, it is undisputed that in this case, the "declared value" box was left blank. Finally, the back of the airbill contained a provision stating that "any shipment having a declared value of more than $ 25,000 must be reported in writing to U.S. Express Inc. prior to pickup so security measures may be taken." Fenzel Aff. Ex. A1. While plaintiff does not dispute that this provision was included in the airbill, it alleges that U.S. Express had physical custody of the cargo before it issued the airbills. Pl.'s 3(g) Statement P 11.

 U.S. Express acknowledges that the bushings were lost, but alleges that the loss occurred at some point following its tendering of the goods to USAir and preceding USAir's flight to Greenville. U.S. Express's 3(g) Statement P 13.

 B. Terms of USAir Contract

 On June 18, 1992, U.S. Express entered into a contract with USAir pursuant to which USAir agreed to fly the bushings from LaGuardia Airport to Greenville, South Carolina; as stated above, U.S. Express's agent and consignee, Acme Delivery, then was to transport the bushings from Greenville to Anderson, South Carolina. U.S. Express's 3(g) Statement PP 1-2. USAir issued air waybill 037 LGA 6982 4123 for the bushings, which was signed by USAir as carrier and U.S. Express as shipper; USAir avers that "this is the only contract known to exist which reflects USAir's agreement to handle the goods in controversy." Affidavit of Barbara G. Mullaney, Sworn to Jan. 25, 1994 ("Mullaney Aff.") P 3. *fn5" It is undisputed that Owens-Corning was not named in the air waybill.

 Paragraph 9 of the Conditions of Contract printed on the back side of the air waybill, titled "Shipper Certification," stated as follows:

 
By tendering the shipment to Carrier for transportation, the Shipper [identified on the air waybill as U.S. Express], for himself and all other parties having interest in the shipment, agrees to the limitations set forth in Carrier's rules and regulations and affirms the description of the shipment as recited on this Airbill. . . .

 Mullaney Aff. Ex. A (emphasis added). *fn6" Owens-Corning originally tendered a claim to USAir under the air waybill; by letter to Ms. Mullaney dated May 25, 1993, counsel for plaintiff asserted that "both the shipper [U.S. Express] and the consignee [Acme Delivery] on your airway bill were, in effect, acting as agents on behalf of Owens-Corning and Owens-Corning is entitled to enforce the conditions of the contract which you issued." Mullaney Aff. Ex. D. *fn7" However, Owens-Corning now submits that it is not bound by the limitations of the contract. Pl.'s 3(g) Statement 2 P 7. In response to the claim filed by plaintiff, USAir, in turn, notified plaintiff that "since [our] contract is with the shipper and the consignee, we cannot accept a claim from persons not listed on the airbill"; indeed, USAir informed plaintiff that it had accepted a claim from U.S. Express and was in the process of settling that claim. Reply Affidavit of Randall K. Roonan, Sworn to Mar. 8, 1994 ("Roonan Reply Aff.") Ex. B. Nevertheless, USAir now seeks to use the limitation of liability provision contained in the air waybill against Owens-Corning.

 The air waybill reflected that the bushings weighed 158 pounds, and that the total amount prepaid for shipment was $ 41.97. It contained a box for "declared value for carriage," which was left blank. Mullaney Aff. Ex. A. Paragraph 12 of the Conditions of Contract printed on the back of the air waybill -- and specifically referred to on the front of the air waybill -- provided as follows:

 LIMITATIONS OF LIABILITY.

 
(a) For shipments not having a declared value, the total liability of Carrier shall in no event exceed $ 9.07 per pound of each piece of the shipment which may have been delayed, lost, damaged, or destroyed (but not less than $ 50.00 per shipment) or the actual value of such piece, whichever is less, ...

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