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United States District Court, Southern District of New York

August 20, 2003


The opinion of the court was delivered by: Gerard E. Lynch, District Judge


This dispute concerns a shipment of cigarettes transported by truck from North Carolina to Montreal, Canada, where it was stolen shortly after being deposited in a bonded warehouse pending inspection and release by the Canadian customs authorities. Plaintiff Security Insurance of Hartford ("Security") is the subrogee of RJ Reynolds, Inc. ("RJR" or "the shipper"), which owned the cigarettes and contracted for their transportation to Canada. Security sues the trucking company that RJR hired to ship the cigarettes, Old Dominion Freight Line, Inc. ("Old Dominion" or "the carrier"), for the full value of the lost cargo. Security originally named Concord [ Page 2]

Transportation, Inc. ("Concord"), a Canadian transportation company that was Old Dominion's subcontractor, as a co-defendant, but later withdrew its complaint against Concord.*fn1 Old Dominion, however, then filed a cross-claim against Concord which remains pending.

Several motions have been filed. Security has moved for summary judgment, arguing that Old Dominion is strictly liable for the loss of the cargo under the law relating to common carrier liability. Both Old Dominion and Concord moved either to dismiss the complaint on the grounds of forum non conveniens, or to stay this action pending resolution of a prior action in a Canadian court involving the same incident (the "Canadian Action"). The parties appeared for oral argument on the motions on June 30, 2003.

For the reasons that follow, the Court finds that Old Dominion is strictly liable for the loss of the cargo en route to its final destination in Canada. Therefore, Old Dominion's motion for dismissal or stay based on forum non conveniens is denied, because there would be no additional convenience in trying a strict liability action between an American shipper and an American carrier in Canada. Moreover, because there are no issues of material fact in dispute, and because Old Dominion fails to raise an adequate defense to the prima facie case for liability, summary judgment is awarded to Security. Finally, because Old Dominion's claim against Concord essentially concerns matters that are more appropriately tried in Canada, Concord's motion to dismiss the cross-claim on grounds of forum non conveniens is granted. [ Page 3]


Carriage from North Carolina to Canada

On March 20, 1996, RJR entered into a Transportation Agreement or contract of carriage ("Contract") with Old Dominion setting forth terms of carriage for shipments undertaken by Old Dominion. The Contract automatically renewed for one year periods unless cancelled in writing. Plaintiff alleges that on July 13, 1999, 604 cases of Camel Light cigarettes and 175 cases of Winston KS cigarettes were loaded into an Old Dominion truck on the premises of RJR in Winston-Salem, North Carolina. The straight bill of lading for that shipment identified the consignee as RJR Macdonald, Inc., in Montreal, Canada, c/o Collector of Customs. (Straight Bill of Lading dated July 13, 1999, Ex. A. to Affirmation of Michael J. Slevin, dated Jan. 21, 2003 ("Slevin Aff.").)

Old Dominion transported the cargo to Greensboro, North Carolina, where it turned the cargo over to its subcontractor, Concord. (Slevin Aff. ¶ 4.) Concord trucked the cargo to Lewiston, New York, and over the border into Canada, on July 14, 1999. (Slevin Aff, Ex. B.) At the direction of the Canadian customs authorities, Concord transported the cigarettes to a [ Page 4]

warehouse owned by Intermediate Terminals Warehousing ("Intermediate") in Montreal on July 20, 1999, to be stored there in the Concord trailer pending customs release at which time they were to be delivered to the consignee, RJR Macdonald in Montreal.

Theft of the Cigarettes

The parties agree that the cargo was subsequently stolen from the Intermediate warehouse by an unknown party. The plaintiff claims that the cigarettes were stolen on the same day they arrived at the warehouse, and that no one noted the theft until the consignee began looking for the missing shipment over a week later, after Canadian customs authorities had officially released the cigarettes.

Old Dominion was apparently unaware of the theft, and did not report it to the shipper in North Carolina or to the consignee in Montreal. When the cargo did not arrive at the final destination in Montreal by August 3, 1999, RJR Macdonald reported the loss to the Montreal police. The plaintiff claims to have learned, in the course of subsequent investigation, that the Concord trailer, missing its cargo, had been discovered by the Montreal police in front of some other warehouse on July 22, 1999. It appears undisputed that the police did not identify the origin of the trailer it found, nor did the bonded customs warehouse notice the theft of the trailer from its premises, until after RJR Macdonald had reported the missing cargo to the police.

Filing of the Claim

RJR filed a claim with Old Dominion for reimbursement for the lost cargo. None of the motion papers before the Court includes a copy of plaintiff's claim letter, nor do the parties refer to the date of the claim, but on May 22, 2000, Old Dominion's Director of Claims sent a letter to RJR referring to a claim in the amount of $133,436.05. The letter stated that because the [ Page 5]

shipment had been transferred to Concord, Old Dominion would transfer the file to Concord, and Concord "would resolve this matter with [RJR] direct [sic]," and that Old Dominion was closing its file on the claim. (Letter from Ernie Benge to S. Appelbe/Frt Claims, Ex. A to Affidavit of Ernie S. Benge, dated Feb. 17, 2003 ("Benge Aff.").)

The parties dispute whether the May 22 letter constituted a disallowance of RJR's claim, sufficient to start the clock on the shipper's time to initiate suit. Old Dominion argues that the letter was a clear rejection of liability for the claim. (Def. Mem. in Opp. to Summ. J. at 12.) Security argues that while the letter referred RJR to Concord for further proceedings on the claim, RJR had no reason to believe that Old Dominion had rejected its responsibility for the loss. The May 22 letter to RJR enclosed a letter from Concord to Old Dominion, wherein Concord advised Old Dominion that RJR had filed a claim against Concord, and that Concord had in turn filed a claim against the warehouse in Canada. (Letter from Jacqueline Craig to Eddie Wooten dated May 5, 2000, Ex. B to Reply Affirmation of Michael J. Slevin, dated Feb. 25, 2003 ("Slevin Reply Aff.").) Concord agreed to advise Old Dominion "upon closure of RJ Reynold's [sic] claim against Concord Transportation Inc. when all pertinent matters have been attended to." (Id.)

There was no further correspondence between the parties concerning the claim until nearly two years later, when counsel for Security, as subrogee to the shipper,*fn3 sent a letter to Old Dominion inquiring into the status of the claim. (Def. Mem. in Opp. to Summ. J. at 14; Letter from Michael J. Slevin to Old Dominion dated March 11, 2002, Slevin Reply Aff. Ex. A). [ Page 6]

The Canadian and U.S. Lawsuits

On June 17, 2002, Security brought suit in the Superior Court of the Province of Quebec, District of Montreal, against Concord, Intermediate, and Le Groupe de Securite— that is, against the Canadian subcontractor, warehouse, and security firm involved in the events surrounding the theft of the cargo ("Canadian Action"). (Declaration of Gregory Azancot dated Oct. 23, 2002 ("Azancot Decl."), ¶ 3.) Old Dominion, a Virginia corporation with headquarters in North Carolina, was not named in the Canadian Action. In the Canadian Action, Security seeks damages equal to the $195,938 (U.S.) it had paid out on the claim, in addition to interest and statutory indemnity available under Canadian law. (Azancot Decl. Ex. A at 3.)

On July 10, 2002, less than a month after filing the Canadian Action, plaintiff filed the instant lawsuit against Old Dominion and Concord, demanding damages in the amount of $195,938, plus interest, costs and attorneys fees. (Compl. at 5-6.) After having withdrawn its claims against Concord, plaintiff is left with two lawsuits in two countries concerning the same theft, with no overlap of defendants between the suits (except to the extent that Concord remains in this action as a defendant on Old Dominion's cross-claim).


The Court is faced with a set of intertwined motions concerning procedural questions (defendant and cross-claim defendant's motions for stay or dismissal based on forum non conveniens), as well as questions on the merits (plaintiff's motion for summary judgment). Essentially, plaintiff argues that the doctrine of strict liability under common carrier law applies to this dispute, and that there is no practical barrier to this Court exercising jurisdiction because the Court is fully capable of interpreting the Contract, which was executed in the United States. [ Page 7]

Furthermore, plaintiff argues that the Court should award summary judgment in its favor and find Old Dominion strictly liable for the lost cargo because plaintiff made a timely loss claim, and because plaintiff has established an unrebutted prima facie case of carrier liability.

Old Dominion, on the other hand, argues that strict liability is not the appropriate standard here because the Contract provides that a negligence standard applies to loss in cases such as this one. Under Old Dominion's negligence theory, there are numerous contested issues of fact concerning the depositing of the cigarettes in the customs warehouse, which would require discovery into the details of the security at the warehouse, and the theft itself. Because the theft occurred in Canada and all witnesses to the depositing of the cargo in the warehouse are in Canada, and because this Court does not have the power to compel testimony or issue discovery orders enforceable in Canada, Old Dominion argues that Canada is the proper forum for this dispute. To the extent that Old Dominion might not otherwise be subject to Canadian jurisdiction, it offers to submit to the jurisdiction of the Quebec court as a condition of the dismissal it seeks here.

I. Forum Non Conveniens

Since the most fundamental issue is whether the Court should exercise jurisdiction, we turn first to the forum non conveniens analysis. Under the doctrine of forum non conveniens, a district court has broad discretion to dismiss an action, over which jurisdiction is otherwise proper, based on the convenience of the parties and the interests of justice. See Koster v. (American) Lumbermens Mut. Cas. Co., 330 U.S. 518, 527 (1947); R. Maganlal & Co. v. M.G. Chem. Co., Inc., 942 F.2d 164, 167 (2d Cir. 1991) ("A district court has broad discretion in deciding whether to dismiss an action on grounds of forum non conveniens."); Guidi v. Inter-Continental Hotels Corp., [ Page 8]

224 F.3d 142, 145 (2d Cir. 2000) ("We have recognized that our review of a forum non conveniens dismissal is limited to whether a district court abused its broad discretion to dismiss on such grounds.").

District courts apply a two-part test in determining whether to grant a motion to dismiss based on forum non conveniens. Specifically, "[t]o prevail on a motion to dismiss based on forum non conveniens, a defendant must demonstrate that an adequate alternative forum exists and that, considering the relevant private and public interest factors set forth in [Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09 (1947)], the balance of convenience tilts strongly in favor of trial in the foreign forum." Maganlal, 942 F.2d at 167.

In this case, the Court need not decide the adequacy of Canada as a forum because the second prong of the Gulf Oil test is dispositive of the forum non conveniens analysis. The key to the weighing of public and private interest factors here is the location of the sources of proof, which would dictate the convenience, and indeed, the practicability, of discovery and trial. Therefore, the linchpin to the forum non conveniens analysis is the applicable standard of liability. If plaintiff is correct that this is a strict liability case, then the circumstances surrounding the theft of the cargo in Canada are irrelevant to the resolution of the claim. No additional convenience would be gained from pursuing Security's claim in Canada, because no Canadian discovery would be required to determine the merits of a strict liability action based on the United States-executed contract of carriage. However, if defendant is correct that a negligence standard applies, then discovery into the security at the warehouse and the circumstances of the theft would be necessary to determine liability. In that event, the balance of convenience might very well tip in favor of the Canadian forum (assuming it were found to be [ Page 9]

adequate) because the sources of proof concerning the theft, and the care taken to prevent it, lie for the most part in Canada, easily accessible to the Canadian court but beyond the reach of this one. Because the Court finds that strict liability applies, there is no need for discovery in Canada, and therefore Old Dominion's motion to dismiss or stay based on forum non conveniens is denied.

A. Standard of Liability

At common law, a common carrier is liable as a virtual insurer for cargo it transports, with some significant exceptions. See Shippers Nat'l Freight Claim Council, Inc. v. ICC, 712 F.2d 740, 745 (2d Cir. 1983). The Interstate Commerce Act of 1887 ("ICA") codified this common law rule. Under the Carmack Amendment to the ICA (enacted as part of the Hepburn Act of 1906, ch. 3591, sec. 7, 34 Stat. 584, 593-95 (1906)), a common carrier transporting goods interstate or from the United States to an adjacent country under a through bill of lading is liable to the person entitled to recover under the bill of lading for actual loss of property. If the carrier can establish a common law exception, then the carrier is held to a negligence standard. The Carmack Amendment's strict liability provisions were carried over into the ICC Termination Act of 1995 ("ICCTA"), effective January 1, 1996. See 49 U.S.C. § 14706(a)(1). Significantly, under the ICCTA, registered motor carriers may also enter a contract with the shipper, and may waive rights and remedies under the statute. 49 U.S.C. § 14101(b). In effect, this allows parties to contract around the strict liability rule. See Saul Sorkin, Goods In Transit § 6.01 [7][c] (2003).

While, as a general rule, common carriers are strictly liable for loss that occurs during shipment, a different liability standard applies after delivery has been tendered if the cargo remains in the carrier's possession. In the absence of a valid agreement to the contrary, the [ Page 10]

liability of a common carrier for possession of a shipper's goods after completion of transportation and tender of delivery is the negligence standard applicable to a warehouseman or bailee. In other words, if a carrier transports the goods and tenders delivery, but the consignee does not accept delivery, then the carrier is only liable for losses resulting from its negligence during the time it stores the cargo subsequent to consignee's rejection. See e.g., General Am. Transp. Corp. v. Indiana Harbor Belt R. Co., 191 F.2d 865, 870 (7th Cir. 1951).

Here, the Contract between Old Dominion and RJR provided that Old Dominion would assume "liability at the full actual value (wholesale selling price of the property in the quantity shipped), such liability to exist from the time of the receipt of any of said goods by [Old Dominion] until proper delivery has been made." (Contract ¶ 6(a). Ex. C. to Slevin Aff.) The Contract thus creates a general rule essentially the same as the common law rule that Old Dominion is liable as an insurer for the cargo. The Contract further specifies that under certain circumstances, Old Dominion's liability will be reduced to the negligence standard applicable to a warehouseman: "If a shipment is refused by the consignee, or [Old Dominion] is unable to deliver it for any reason, [Old Dominion's] liability as a warehouseman shall not begin until it has placed the goods in a public warehouse or other storage facility under reasonable security." (Contract ¶ 6(c), Ex. C to Slevin Aff.)

Old Dominion argues that when Canadian customs halted the cargo for further inspection, Old Dominion became "unable to deliver" the cargo to the consignee, and when the cargo was then deposited in a bonded customs warehouse pending further action, Old Dominion's liability was reduced to that of a warehouseman by operation of Paragraph 6(c) of the Contract. At a minimum, it contends, discovery is required into conditions at the warehouse to determine [ Page 11]

whether the "reasonable security" requirement of Paragraph 6(c) was met, thus satisfying the requirements triggering the negligence standard under the Contract.

By its own plain terms, however, and as a matter of law, Paragraph 6(c) does not apply to this situation. The paragraph, properly read, does not extend the conditions under which the shipper's liability is limited to negligence; rather, it restricts those conditions, providing that if the conditions arise that under common law would trigger a shift from strict liability to liability for negligence, the shift is delayed "until [Old Dominion] has placed the goods in a public warehouse or other storage facility under reasonable security." Before the question of "reasonable security" even arises, it must be determined whether those triggering conditions have occurred, since Paragraph 6(c) only applies (1) "[i]f a shipment is refused by the consignee," or (2) if Old Dominion "is unable to deliver it for any reason."

The first triggering event, if the "shipment is refused by the consignee," is clearly inapplicable. This condition would involve a tender of delivery to the consignee, who refused to accept. That did not happen in this case, as delivery was never tendered.

The second event that could trigger negligence liability is if the carrier is "unable to deliver for any reason." This condition encompasses situations where the carrier has not tendered delivery to the consignee because delivery is impossible. The question here is whether the halting of the cargo by Canadian customs constituted an action which made delivery to the consignee impossible, or merely a temporary interruption of transportation leading to incidental storage of the cargo by the carrier (or in this case, by its subcontractor).

The detention of the cargo by Canadian customs authorities has the hallmarks of a mere interruption in transportation, and in fact, an interruption that the parties could easily have [ Page 12]

foreseen. The detention of cargo did not make delivery impossible — it was the theft that made delivery impossible. Barring the theft, Canadian customs would have cleared the cargo for entry into Canada (as, in fact, it did, at which point the consignee discovered that the cargo was missing), and the carrier would have been able to deliver the cargo to the consignee. Parties contracting to ship goods across an international border necessarily contemplate that the goods will have to clear customs, a process that might entail some delay. The possibility that the goods will be so delayed, requiring storage by the carrier, like the possibility that progress will be interrupted by weather or traffic conditions, does not constitute a condition that renders the carrier "unable to deliver" the shipment, but simply an anticipated interruption in the course of carriage and delivery. Under common carrier law, storage incidental to carriage is insufficient to convert a carrier into a warehouseman. See Baloise Ins. Co. v. United Airlines, Inc., 723 F. Supp. 195, 199(S.D.N.Y. 1989). See also Nippon Fire & Marine Insurance Co., v. Skyway Freight Systems, Inc., 45 F. Supp.2d 288, 292 (S.D.N.Y. 1999) (noting that courts have rejected theories of warehouseman's duty under state law where storage was only incidental to transport).

The delay at Canadian customs did not make delivery impossible. Old Dominion does not even allege that the stop by Canadian customs was anything other than a routine customs inspection. The cargo was not impounded by Canadian customs, and no one contends that the cargo would have been permanently refused entry, rendering the carrier "unable to deliver" the goods to the consignee.*fn4 Under the terms of the Contract, deposit of the cargo in a warehouse [ Page 13]

alone does not trigger the warehouseman's standard. For instance, if the carrier temporarily deposits the goods in a warehouse en route to the destination because of a brief delay due to inclement weather or because of a sick truck driver, its liability does not change. Under the Contract, the shift to negligence liability occurs only if the carrier is unable to make delivery, and then deposits the cargo in an appropriately secured warehouse. The detention by Canadian customs merely delayed delivery, but would not have precluded it, had the cargo not been stolen.*fn5

That the parties to the Contract could have foreseen the eventual detention of cigarettes for customs inspection is apparent from the nature of the shipment (international transportation of highly-taxed tobacco products). Moreover, the bill of lading itself, which indicates that the shipment is to "RJR Macdonald Inc. c/o Collector of Customs" and that "[t]his shipment will clear customs in Lacolle, Quebec," demonstrates that they did foresee that possibility. (Through Bill of Lading, Slevin Aff. Ex. A.) Had the parties intended to hold the carrier only to a negligence standard for cargo held in the carrier's possession during customs inspection, they could have so contracted. Indeed, that is precisely what occurred in H.P.I. Int'l Corp. v. Yellow Freight System, Inc., No. 84 Civ. 3800, 1987 WL 8069 (E.D.N.Y. Feb. 24, 1987), a case cited by Old Dominion. In H.P.I., unlike this case, the tariff specifically stated that "[f]reight held in [ Page 14]

carrier's possession . . . for customs clearance or inspection . . . will be considered stored immediately." H.P.I., 1987 WL 8069, at *1. Thus, far from supporting Old Dominion's position, H.P.I. highlights the fact that the Contract here failed to provide that the carrier is held to warehouseman's liability for goods stopped for customs inspection.

Because the Court finds that as a matter of law, the depositing of the cargo in the bonded customs warehouse to facilitate Canadian customs inspection was incidental to the carriage, and because the detention for routine customs inspection did not imply an inability to finally deliver the cargo, it follows that Paragraph 6(c) of the Contract was not triggered and Old Dominion's liability remained that of an insurer.

B. Forum Non Conveniens Analvsis

Courts in this circuit follow the Gulf Oil analysis of public and private factors when weighing the relative convenience of different potential fora. See Murray v. British Broadcasting Corp., 81 F.3d 287, 292 (2d Cir. 1996). Under the Gulf Oil test. the requisite private factors include:

[1] the relative ease of access to sources of proof; [2] the availability of compulsory process for attendance of unwilling witnesses; [3] the cost of obtaining attendance of willing witnesses; [4] . . . all other practical problems that make trial of a case easy, expeditious, and inexpensive — or the opposite; [and] [5] [i]ssues concerning the enforceability of a judgment.
Murray, 81 F.3d at 294. Public factors include:

[1] the administrative difficulties flowing from court congestion; [2] the local interest in having controversies decided at home; [3] the interest in having a trial in a forum that is familiar with the law governing the action; [4] the avoidance of unnecessary problems in conflict of laws or in the application of foreign law; and [5] the unfairness of burdening citizens in an unrelated forum with jury duty. [ Page 15]
Murray, 81 F.3d at 293. Here, given the applicability of the strict liability standard, the balance of conveniences weighs in favor of this Court's continuing jurisdiction.

Considering first the private factors, it is clear that New York is a convenient forum for this dispute. Because Old Dominion is held to a strict liability standard, the security conditions at the warehouse in Canada and circumstances of the theft are irrelevant to the liability analysis.*fn6 To the extent that contract interpretation is required, this Court is fully capable of interpreting the Contract, which was executed in the United States. To the extent parole evidence would be required to interpret the Contract, the witnesses to its formation appear to be available in this jurisdiction, as they might not be in Canada. Public factors similarly favor this Court's continuing jurisdiction. United States law applies, the parties are United States corporations, and there is no reason to remove this case from a United States docket only to burden a Canadian court and potentially a Canadian jury with it. Because the balance of convenience factors tips in favor of this Court's jurisdiction, Old Dominion's motion for denial or stay on the grounds of forum non conveniens is denied.

II. Summary Judgment Against Old Dominion

A. Standard for Summary Judgment

Summary judgment is appropriate when there are no genuine issues of material fact in dispute and when, viewing the evidence in the light most favorable to the nonmoving party, no reasonable trier of fact could disagree as to the outcome of the case. See Nabisco, Inc. v. Warner-Lambert Co., 220 F.3d 43, 45 (2d Cir. 2000). While all ambiguities in the evidentiary record [ Page 16]

must be resolved in favor of the nonmoving party, "the nonmoving party may not rely on conclusory allegations or unsubstantiated speculation." Scotto v. Almenas, 143 F.3d 105, 114 (2d Cir. 1998). In addition, "[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The court "is not to weigh the evidence but is instead required to view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party, and to eschew credibility assessments." Wevant v. Qkst, 101 F.3d 845, 854 (2d Cir. 1996). Summary judgment is then appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits . . . show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

To establish a genuine issue of material fact, the party opposing summary judgment "`must produce specific facts indicating' that a genuine factual issue exists." Scotto, 143 F.3d at 114 (quoting Wright v. Coughlin, 132 F.3d 133, 137 (2d Cir. 1998); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "If the evidence [produced by the nonmoving party] is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249-50 (internal citations omitted). "The mere existence of a scintilla of evidence in support of the [non-movant's] position will be insufficient; there must be evidence on which the jury could reasonably find for the [non-movant]." Pocchia v. NYNEX Corp., 81 F.3d 275, 277 (2d Cir. 1996) (quoting Liberty Lobby, 477 U.S. at 252). [ Page 17]

B. Timeliness of Claim

Before addressing the merits of Security's claim, it is necessary to consider Old Dominion's argument that Security cannot prevail because this action was commenced too late under a contractual limitations clause. Alternatively, Old Dominion contends that summary judgment may not be granted because at the very least discovery into the facts of the alleged declination of the claim is required in order to determine the merits of this defense.

Under Contract Paragraph 6(h), a provision authorized by 49 U.S.C. § 14706(e)(1),*fn7 the Shipper has two years and one day from the date of a written disallowance of a claim to file suit. Old Dominion argues that it disallowed RJR's claim by letter on May 22, 2000, starting the limitations clock, and that RJR therefore had until May 23, 2002, to file suit. Because RJR's subrogee filed the instant lawsuit on July 8, 2002, Old Dominion argues that the claim is time-barred.

The Second Circuit has specified that in order to trigger a contractual limitations clause of this kind, a written communication must "operate as a clear, final and unequivocal disallowance [of the claim]," and has warned carriers against using "words that are susceptible of more than one meaning, [as] it increases the risk that later it will be found not to have started the time limitations clock ticking." Combustion Engineering, Inc. v. Consolidated Rail Corp., 741 F.2d 533, 537 (2d Cir. 1984). The question here is whether Old Dominion's May 2000 letter was sufficient to trigger the limitations period in the Contract and render this action untimely. [ Page 18]

In the May 2000 letter, Old Dominion's Director of Claims notified RJR that upon receipt of the claim, the file was transmitted to Concord for further handing and therefore Old Dominion was "closing [its] files." (Benge Aff. Ex. 1.) Security argues that the May 2000 letter is at best ambiguous, since it indicated only that the claim was being passed on to the subcontractor, but did not definitively reject the claim. Rather. Security claims, the "clear, final and unequivocal disallowance" of the claim did not occur until an April 2, 2002, letter from Old Dominion's Director of Claims to Security's attorney stated that "[w]e decline liability under completion of contract or authority of law." (Slevin Aff. Ex. D.) As Security points out, the April 2002 letter, which uses unambiguous language denying the claim, does not refer to any prior disallowance of the claim.

The Court agrees with Security that the language of the May 2000 letter is susceptible of multiple interpretations. It could easily mean, as Security contends, that Old Dominion expected the subcontractor to pay the claim, and that Old Dominion therefore need not do so. Old Dominion cited no reason why it was not ultimately responsible for the claim, as it did in the April 2002 letter, and did not indicate that "closing the file" constituted a definitive rejection of the claim. The May 2000 letter thus could be interpreted as a mere deferral of the claim, pending the subcontractor's response. As a sophisticated actor engaged in the business of interstate and international shipping, Old Dominion can be expected to heed the Second Circuit's warning and clearly decline a claim when that is, in fact, what it is doing. The vague language of the May 2000 letter does not meet the legal standard of a disallowance. Because that letter was not a "clear, final and unequivocal disallowance" of the claim as required in this Circuit, the time limit for the shipper to file suit did not begin to run until the definitive disallowance of the claim on [ Page 19]

April 2, 2002. Therefore, Security's suit was timely brought and Old Dominion's defense is rejected.*fn8

C. Prima Facie Case of Carrier Liability

In order to make a prima facie case of carrier liability under the Carmack Amendment, a shipper must show that the cargo was delivered to the carrier in good condition, arrived at the destination in damaged condition (or failed to arrive at all), and damages. See Gordon H. Mooney, Ltd, v. Farrell Lines, Inc., 616 R2d 619, 625 (2d Cir. 1980). Once a prima facie case has been established, the burden is on the carrier to show both that it was not negligent and that the damage or loss was due to one of the excepted causes relieving the carrier from liability. Id. at FN 10. The excepted causes are: act of God, of public enemy, of the shipper, or of public authority, or the inherent vice of the cargo. See Missouri Pacific R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137 (1964). Because the defendant agrees that the cargo was stolen from the Canadian warehouse and thus never arrived at the destination, the second element is met and plaintiff need only present evidence of the first and third elements of the prima facie case. For the reasons that follow, the Court finds that plaintiff has established a prima facie case, which defendant fails to rebut. [ Page 20]

1. Condition of the Cargo

Old Dominion argues that plaintiff has failed to present evidence that the cargo was delivered in good condition to the carrier, because the cigarettes were in sealed packages and the carrier could not inspect the condition or quantity of cargo upon receipt. A clean bill of lading is ordinarily prima facie evidence of delivery to the carrier in good condition. See Caemint Food Inc. v. Lloyd Brasiliero Co., 647 F.2d 347 (2d Cir. 1981). However, "[a] clean bill of lading does not . . . constitute prima facie evidence of the condition of goods shipped in sealed packages where the carrier is prevented from `observing the damaged condition had it existed when the goods were loaded.'" Ballv, Inc. v. M.V. Zim America, 22 F.3d 65, 69 (2d Cir. 1994), quoting Caemint, 647 F.2d at 352. In the case of a sealed container, the shipper must present other evidence to show that the goods were delivered to the carrier in good order. See Bally, 22 F.3d at 69. The question here is whether plaintiff has presented evidence that the cigarettes were provided to Old Dominion in good condition in the amounts specified.

Security has alleged that 175 boxed of Winston cigarettes and 604 boxes of Camel Light cigarettes were loaded onto Old Dominion trucks on July 13, 1999, at RJR's Central Distribution Center. In support of this allegation, plaintiff cites: (1) the Straight Bill of Lading, which indicates the number of boxes and the weight of the cargo and bears what plaintiff claims is the signature of the Old Dominion truck driver who accepted the cargo; (2) an affidavit of the consignee's Director of Taxation and Insurance attaching the invoice for the shipment and customs receipt for the shipment (Affidavit of Robert McMaster, sworn to Dec. 22, 2002 ("McMaster Aff"), attaching invoice as Ex. B and Revenue Canada customs receipt as Ex. C); and (3) the affidavit of Walter F. Nowicki, a Distribution Manager at the RJR Central [ Page 21]

Distribution Center at the time of the shipment (Affidavit of Walter F. Nowicki, sworn to Jan. 22, 2003, ("Nowicki Aff.")).

Old Dominion argues that based on the Nowicki Affidavit, it appears "that the cargo was loaded and sealed by RJ Reynolds" and that therefore the bill of lading does not constitute prima facie evidence of the condition of the cargo because defendant could not inspect it. Because the Nowicki Affidavit is unclear about the nature of the cargo's packaging, the defendant has raised an issue of fact as to the packaging. However, that does not preclude summary judgment if there is other evidence of quality and quantity from which a factfinder could only conclude that plaintiff has established good condition upon delivery to the carrier. Even assuming that the cargo was packaged in such a way that prevented inspection, there is sufficient other evidence of quantity and quality demonstrating delivery in good order to the carrier, and Old Dominion has failed to present any evidence creating a contested issue of material fact concerning the condition of cargo upon receipt.

As to quantity, the Consignee's invoice and the bill of lading state the number of boxes of cigarettes and their weight. Old Dominion does not dispute the weight of the shipment upon delivery or thereafter, or suggest that the cargo weighed less than what that amount of cigarettes should weigh. Since the carrier had a contractual duty to weigh the cargo (Contract ¶ 2(d)), its failure to contest that the weight of the cargo conformed to the purported number of boxes in the shipment confirms that the cargo contained the number of cigarettes indicated on the bill of lading.

As to quality, the Nowicki Affidavit provides detailed information on the retrieval system at the RJR facility. The multiple checks on inventory and the precise system described, in [ Page 22]

addition to the highly regulated nature of the cargo, provide ample basis for a factfinder to infer that the cargo was received in good condition. Once again, Old Dominion presents no evidence from which a factfinder could draw any other conclusion. In any event, the issue of quality is something of a red herring. This is not a case in which goods were delivered to the consignee in poor condition, and the question is whether they were originally shipped that way or the damage occurred during carriage. Here, the goods were never delivered, and there is no dispute that they were stolen during carriage. Under these circumstances, the issue of quality could at most bear on damages, and not on the carrier's liability.

2. Damages

The proper measure of damages in a Carmack Amendment case is "actual loss," defined as "the fair market value of the lost or damaged goods at destination." Jessica Howard Ltd. v. Norfolk Southern Railway Co., 316 F.3d 165, 168 (2d Cir. 2003). Security claims damages in the amount of $195,938 (U.S.), the amount that Security paid its insured, the consignee RJR Macdonald, on the claim. Needless to say, an insurer is unlikely to pay an insured more than its actual loss. Moreover, Old Dominion has failed to raise a contested issue of fact concerning the amount of damages. In support of its damages claim, Security submits the affidavit of the Director of Taxation and Insurance at JTI-Macdonald Corp., formerly known as RJR-Macdonald Corp., who testifies that Security paid RJR-Macdonald $195,938 (U.S.) on the claim for the lost cargo. (McMaster Aff. ¶ 11.) Old Dominion does not dispute either the fact or amount of the insurance payment. Plaintiff has thus met the final element of the prima facie test.

Accordingly, Security has established a prima facie case of carrier liability. Absent a genuine issue of material fact about one of the limited defenses available to a carrier, it would be [ Page 23]

entitled to summary judgment. Old Dominion has offered only one defense, that the loss resulted from an act of public authority.

D. Public Authority

Old Dominion argues that it is not strictly liable under the Contract because the loss of the cargo resulted from the actions of the Canadian customs authorities in halting the goods. Old Dominion attempts to invoke the force majeure provision of the contract (¶ 19(c)), which states that "neither shipper nor carrier shall be liable for damages for any . . . failure to perform any of the terms and provisions of this Agreement arising from causes beyond its control, including but not limited to . . . acts of civil or military authority." This provision is consistent with the excepted causes of loss or damage under the Carmack Amendment.

The argument fails, because the force majeure clause on its face only applies when an action of the sovereign caused the loss. Here, the loss was caused not by the detention of the goods, but by the theft. Unlike the situation in which goods are confiscated by governmental authority, the Canadian government itself did not take nor destroy the cargo. That the goods were stolen while the goods were in the carrier's custody pending an entirely foreseeable customs inspection does not make the Canadian government the "cause" of the loss, any more than bad weather could be blamed if the goods were stolen while the driver was parked in a rest stop waiting out a storm. Old Dominion has not cited and research has not revealed any authority that applies the concept of force majeure in such circumstances, to a loss that was the product of a theft that occurred during, rather than because of, the interruption of a journey due to predictable events. [ Page 24]

E. Summary

Security, as subrogee of RJR, is entitled to summary judgment against Old Dominion, because there is no genuine issue of material fact as to its prima facie case of strict liability, and because the only defenses presented by Old Dominion, untimeliness of the lawsuit and the applicability of the force majeure provision of the contract, fail as a matter of law.

III. Old Dominion's Cross-Claim against Concord

It may well be that Old Dominion's cross-claim against Concord is subject to a similarly simple analysis. However, Old Dominion has not moved for summary judgment against Concord, so that the Court does not have a record upon which to assess the ease or difficulty of adjudicating this claim. Moreover, both parties to the cross-claim, Old Dominion and Concord, have consistently argued that it would be more convenient to litigate this claim in Canada, where, in addition, the rights of either or both of them against the warehouse and the security firm that protected it can be adjudicated. (Transcript of June 30, 2002, oral argument (" Tr."), at 24-25.) In furtherance of its forum non conveniens argument, Old Dominion consented to the jurisdiction of the Canadian court (Def. Mem. in Supp. of Mot. to Dismiss at 5) and agreed that United States law will apply to this dispute (Tr. 19) and that Old Dominion would not take advantage of any statute of limitations defense available in Canada but not in the United States (Tr. 29). The same conditions should properly apply to Concord in its defense of the cross-claim brought by Old Dominion.

There is no reason not to grant these parties their wish to proceed in Canada. Accordingly, Concord's motion to dismiss Old Dominion's cross-claim against it is granted on consent on the conditions that Concord (1) agree that United States law will apply to the [ Page 25]

adjudication of the claim in a Canadian forum; and (2) waive any defenses it would have in Canada that are unavailable in the United States.


For the foregoing reasons, Old Dominion's motion to dismiss or stay based on forum non conveniens is denied. Plaintiff's motion for summary judgment for damages in the amount of $195,938 plus interest and costs is granted. Concord's motion to dismiss Old Dominion's cross-claim is granted on consent, on the conditions stated, without prejudice to Old Dominion's right to reinstitute its claim should Concord fail to adhere to the stated conditions or should the Canadian court decline to hear the dispute.


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