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ROYAL INS. CO. OF AMERICA v. AIR EXPRESS INTL.

December 6, 1995

ROYAL INSURANCE COMPANY OF AMERICA a/s/o CORNING, INC., Plaintiff, against AIR EXPRESS INTERNATIONAL, Defendant.


The opinion of the court was delivered by: KAPLAN

 LEWIS A. KAPLAN, District Judge

 Plaintiff Royal Insurance Company of America ("Royal") brought this action as subrogee of Corning, Inc., against Air Express International ("AEI") in order to recover damages for goods that Corning hired AEI to ship, and which were lost by AEI while en route to London. There is no genuine dispute that AEI is liable to Royal for the loss; the question is whether AEI is liable to Royal for the full value of the lost goods, or whether limitation of liability provisions under either the Warsaw Convention *fn1" or the parties' contract apply. The parties have cross-moved for summary judgment on these issues.

 Facts

 In September, 1994, Corning contracted with AEI to ship optical equipment by air from Wilmington, North Carolina, to London, England. On September 16, the equipment was picked up from Corning by a carting company acting as AEI's agent. All agree that the carter took the goods from Corning to AEI's warehouse, some two miles from Raleigh Durham International Airport. After reaching AEI's warehouse, however, the goods were never seen again. Indeed, AEI's best efforts have been unable to establish how the goods left its warehouse and where they may have gone. According to plaintiff, the lost goods were worth $ 148,300.90.

 The shipping contract between AEI and Corning was expressed in an air waybill designated "AEI Airbill No. RDU 12WL391." Paragraph 2(a) of the conditions noted on the reverse of the waybill incorporated by reference the provisions of the Warsaw Convention, stating that "carriage hereunder is subject to the rules relating to liability established by the Convention." *fn2" Paragraph 2(b) noted that "to the extent not in conflict with the foregoing [i.e., the Convention incorporated in Paragraph 2(a)], carriage hereunder and other services performed by each Carrier are subject to . . . applicable tariffs, rules, conditions of carriage, . . ." Thus, the waybill provided that AEI's rules and tariffs would apply to the extent that the Warsaw Convention was inapplicable or not inconsistent.

 Both the tariff rules incorporated into the airbill and the Warsaw Convention provide that the shipper may limit its liability in certain circumstances for loss or damage to 250 French gold francs per kilogram, converted to $ 9.07 per pound. The parties' dispute centers on whether the Convention applies and, if so, whether AEI has met all of the necessary conditions in order to qualify for the limitations of liability provided by the Convention.

 Discussion

 The essence of plaintiff's argument is that the Warsaw Convention rather than the tariff applies and that the defendant has failed to comply with the requirements of the limitation of liability provisions of the Convention. Thus, plaintiff argues, it should be awarded the full value of its lost goods. Defendant replies that the tariffs limitation of liability provisions rather than the Convention's apply and, in any case, that defendant has met the requirements necessary to qualify for limitation of liability under the Convention. Defendant concludes that the plaintiff is only entitled to recover $ 9.07 per pound, or $ 1,868.94. *fn3"

 Applicability of the Warsaw Convention

 The Warsaw Convention applies to "all international transportation of persons, baggage, or goods performed by aircraft for hire." Warsaw Convention, Art. 1. To the extent relevant in this case, the Convention defines "international transportation" as "any transportation in which, according to the contract made by the parties, the place of departure and the place of destination. . .are situated. . .within the territories of two High Contracting Parties." Id. Art. 2. *fn4" The Convention further provides that:

 
"the carrier shall be liable for damage sustained in the event of the destruction or loss of, or of damage to, any checked baggage or any goods, if the occurrence which caused the damage so sustained took place during the transportation by air." Id. Art. 18(1).

 The Convention goes on to define "transportation by air" for purposes of Article 18 as:

 
"the period during which the baggage or goods are in charge of the carrier, whether in an airport or on board an aircraft, or in the case of a landing outside an ...

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