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March 31, 2003


The opinion of the court was delivered by: Denny Chin, United States District Judge


Plaintiffs bring this diversity action to recover for damage during transport to a large, prototype envelope-printing press. The 7,000-pound machine was damaged on its return home to Glen Head, New York from a trade show in Europe. Plaintiffs, subrogated insurers ABN AMRO Verzekeringen BV ("ABN") and Hartford Fire Insurance Company ("Hartford"), have sued the freight forwarder and customs broker, Geologistics Americas, Inc. ("Geologistics"), as well as the trucker they contend is responsible for the damage on the ground in New York, Alfred James d/b/a Art Messenger and Delivery Service ("Art Messenger") Art Messenger has impleaded DHL Airways ("DHL"), who shipped the machine by air from Amsterdam to JFK Airport in New York.

The parties cross-move for summary judgment.*fn1 For the reasons stated below, plaintiffs' motions are denied in all respects, the motion of defendant Geologistics for summary judgment on liability is denied, and the motions of Geologistics and Art Messenger for partial summary judgment are granted, limiting any liability to $50.


I. The Facts

The following facts are not disputed unless otherwise noted.

A. The Parties

ABN sues as a subrogee of its insured, Halm Industries International, Co. of the Netherlands ("Halm Holland"); Hartford does so as subrogee of Halm Industries, Co. ("Halm U.S.").*fn2 Plaintiffs assert the loss to Halm U.S. exceeds $668,623. (See Pl. R. 56.1 Statement Ex. B (Halm cost analysis); Puma Dep. at 68). The two insurers paid out a total of $648,341; ABN paid Halm Holland $478,341 and Hartford paid Halm U.S. $170,000. (Puma Dep. at 38)

The corporate headquarters of Halm U.S. are located in Glen Head, New York; the company does business in the Netherlands as Halm Holland. Geologistics, a company with offices worldwide, provides a variety of transportation management services, including freight-forwarding and customs brokerage. (See Kelly Aff. ¶ 5). Art Messenger is a small trucking operation owned by Alfred James; it had between four and five trucks in June 2000. (James Dep. at 9)

B. The Shipment

In June 2000, after displaying a prototype of Halm's printing press — the EM5315 Envelope Master — at an industry trade show in Germany, Halm hired Geologistics to arrange to transport the machine back to corporate headquarters in New York. (Puma Dep. at 13, 20-22, 34-35, 38; Schifano Dep. at 49, 94) Halm had used Geologistics for a number of shipments — at least twenty-five — in the past; Halm had given Geologistics a customs power of attorney form in January 1997. (Schifano Dep. at 6-7; Schifano Aff. ¶ 8). Halm provided Geologistics with a pro forma invoice for the machine for customs clearance, showing a value of $600,000.

1. The Geologistics Waybill and Sales Invoice

On June 13, 2000, Geologistics issued House Air Waybill No. AMS-0269225 from its Amsterdam office for a shipment of the machine and its parts. The shipment contained four crates, weighing about 7,000 pounds in total; the largest crate contained the press itself, and measured 8' × 6' × 7'.

The waybill listed Geologistics (Holland) as the forwarder, Halm Holland as the principal, and Halm U.S. as the consignee, and reflected shipment from the Amsterdam airport through Brussels to JFK. Boxes labeled "Declared Value for Carriage" and "Declared Value for Customs" were marked NVD and NCV, or no value declared and no customs value, respectively.

After the shipment, on June 27, 2000, Geologistics also issued Halm a sales invoice, No. 0029201067, for $2,276.68. The invoice reflected details of the shipment, which departed Amsterdam for New York on June 14, 2000. The invoice lists Halm Holland as the shipper, Halm U.S. the consignee, and DHL Airways as the carrier. As for insured value, the invoice lists "Not Insured" with Geologistics.

The reverse of the invoice contained standard "Terms & Conditions of Service" (the "Terms & Conditions") approved by the National Customs Brokers and Forwarders Association of America (Rev. 9/87). (Schifano Aff. ¶¶ 6, 8). In pertinent part, the Terms & Conditions provide:

(1) SERVICES BY THIRD PARTIES: Unless the Company [Geologistics] carries, stores or otherwise physically handles the shipment, and loss, damage, expense or delay occurs during such activity, the Company assumes no liability as a carrier and is not to be held responsible for any loss, damage, expense or delay to the goods to be forwarded or imported except as provided in paragraph 10 and subject to the limitations of paragraph 8 below, but undertakes only to use reasonable care in the selection of carriers . . . and others to whom it may entrust the goods for transportation. . . . When the Company carries, stores or otherwise physically handles the shipment, it does so subject to the limitation of liability set forth in paragraph 8 below unless a separate bill of lading, air waybill or other contract of carriage is issued by the Company, in which event the terms thereof shall govern.
(2) LIABILITY LIMITATIONS OF THIRD PARTIES: The Company is authorized to select and engage carriers to transport . . . the goods, all of whom shall be considered as the agents of the Customer, and the goods may be entrusted to such agencies subject to all conditions as to limitation of liability for loss, damage, expense or delay and to all rules, regulations, requirements and conditions, whether printed, written or stamped, appearing in bills of lading, receipts or tariffs issued by such carriers. . . . The Company shall under no circumstances be liable for any loss, damage, expense or delay to the goods for any reason whatsoever when said goods are in custody, possession or control of third parties selected by the Company to forward, enter and clear, transport or render other services with respect to such goods.
(6) DECLARING HIGHER VALUATION: Inasmuch as truckers, carriers, warehousemen and others to whom the goods are entrusted usually limited their liability for loss or damage unless a higher value is declared and a charge based on such higher value is agreed to by said truckers, etc., the Company must receive specific written instructions from the Customer to pay such higher charge based on valuation and the trucker, etc. must accept such higher declared value, otherwise the valuation placed by the Customer on the goods shall be considered solely for export or customs purposes and the goods will be delivered to the truckers, etc., subject to the limitations of liability set forth herein in paragraphs 8-10 below with respect to any claim against the Company and subject to the provisions of paragraph 2 above.
(8) LIMITATION OF LIABILITY: . . . [T]he Customer agrees that the Company shall in no event be liable for any loss, damage, expense or delay to the goods resulting from the negligence or other fault of the Company for any amount in excess of $50 per shipment (or the invoice value, if less) and any partial loss or damage for which the Company may be liable shall be adjusted pro rata on the basis of such valuation. The Customer has the option of paying a special compensation to increase the liability of the Company in excess of $50 per shipment in case of any loss, damage, expense or delay from causes which would make the Company liable, but such option can be exercised only by specific written agreement made with the Company prior to shipment which agreement shall indicate the limit of the Company's liability and the special compensation for the added liability by it to be assumed.
(10) LIABILITY OF COMPANY: . . . [I]t is agreed that any claim or demand for loss, damage, expense or delay shall be only against the carriers, truckmen, lightermen, forwarders, customs brokers, agents, warehousemen or others in whose actual custody or control the goods may be at the time of such loss, damage, expense or delay, and that the Company shall not be liable or responsible for any claim or demand from any cause whatsoever, unless in each case the goods were in actual custody or control of the Company and the damages alleged to have been suffered be proven to be caused by the negligence or other fault of the Company, its officers or employees, in which event the limitation of liability set forth in paragraph 8 herein shall apply . . .
(19) CONSTRUCTION OF TERMS AND VENUE: The foregoing terms and conditions shall be construed according to the laws of the State of New York. Unless otherwise consented to in writing by the Company, no legal proceeding against the Company may be instituted by the Customer, its assigns, or subrogee except in the City of New York.
The same Terms & Conditions appeared in the prior Geologistics invoices to Halm, dating from 1997. (Schifano Aff. ¶ 8). Halm did not request additional coverage or pay special compensation to increase the level of liability, nor did it instruct Geologistics to do so. (Puma Dep. at 50).

2. The Shipment Arrives in New York

The machine arrived at JFK on June 16, 2000. Halm U.S. contacted the Geologistics office at JFK to arrange shipment from the airport to Halm's facility in Glen Head, New York. Halm instructed Geologistics to "make sure that the trucking company is prepared to not only unload [the] machine on our dock but they must also be capable of moving it and placing it in our building. We will require a trucking line that is capable of `rigging' the unit in our building." (Letter from Ed Haas to Geologistics dated 6/16/00).

On June 20, Geologistics hired Art Messenger to pick up the machine from DHL's facility at JFK and deliver it the next morning to Halm's designated receiver, Shadow Transportation ("Shadow"), located in Huntington Station, New York. (James Aff. ¶¶ 6, 10; James Dep. at 28-33). The arrangement was made with a phone call; Art Messenger had handled "thousands" of shipments for Geologistics since Art Messenger began operation in 1994. (James Dep. at 35, 63; James Aff. ¶ 1; Kelly Aff. ¶ 6; Schifano Dep. at 17-18 (contacts were by telephone; approximately fifty from her Geologistics office)). Art Messenger later sent an invoice to Geologistics; the invoice contained no terms and conditions or limitation of liability. Art Messenger contends that it had the same agreement with Geologistics throughout this period, an agreement evidenced by a letter dated October 3, 1998 from James to Geologistics, informing them of "liability information" for "company files." (Art Messenger R. 56.1 Statement Ex. K; James Aff. ¶ 1-4). In its papers, Art Messenger refers to this document as a "service contract." (See, e.g., Art Messenger R. 56.1 Statement ¶ 17; James Aff. ¶ 3. But see James Dep. at 62-63 (referring to the document, not as a contract, but as a letter limiting liability)). Below the text of James's letter the following is stamped: "LIMIT OF LIABILITY. THE LIABILITY OF ART MESSENGER & DELIVERY SERVICE SHALL BE LIMITED TO FIFTY DOLLARS (50.00) PER SHIPMENT UNLESS THE CUSTOMER MAKES SPECIFIC WRITTEN ARRANGEMENTS WITH ART MESSENGER & DELIVERY SERVICE TO SPECIFY A HIGHER DECLARED VALUE." (Art Messenger R. 56.1 Statement Ex. K; James Dep. at 63). The "customer" refers to whoever arranges shipment, such as Geologistics. (James Dep. at 64). Geologistics did not declare a higher value with Art Messenger.

3. The EM5315 Is Damaged

After the trade show in Germany, Halm's printing press was packed under the supervision of Halm personnel and loaded onto a truck for transport to Brussels. (See Pl. R. 56.1 Statement Ex. C at 0011). The shipment was signed for on June 14, 2000 as being in apparent good condition when it was delivered to the airport in Brussels. (Id. at 0019). The four pieces arrived in JFK on June 15, 2000 and were cleared through customs on June 17, 2000. DHL Airways released the shipment on June 20, 2000 to Art Messenger. Art Messenger's driver, Armando Vigil, signed for the shipment, which was loaded onto his truck by DHL personnel, and did not note any apparent damage. (Id. at 0020). Vigil, however, could not see ...

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