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United States District Court, Southern District of New York

August 27, 2003


The opinion of the court was delivered by: John Martin, District Judge


Plaintiff brings this diversity action for breach of contract of carriage and breach of bailment based on non-delivery of goods from Mexico to the United States. The parties cross-move for summary judgment on the issue of liability.


Plaintiff George Weintraub & Sons, Inc. ("Weintraub") is a men's apparel importer and wholesaler. Defendant E.T.A. Transportation, Inc. ("E.T.A.") is a transportation broker and is licensed as a motor carrier in the United States. E.T.A. Logistics Services is an E.T.A. division that makes arrangements for third-party import and export shipments.

On April 15, 2000, Plaintiff sent its vendor, Confecciones Europeas, S.A. de C.V. ("Confecciones"), instructions to have a shipment of men's apparel sent directly by truck from Weintraub's vendor in Mexico to its customer, Men's Warehouse, in Houston, Texas. A copy of these instructions was also sent to Schaefer [ Page 2]

Transportation, Inc. ("Schaefer"), a freight forwarding company that arranges transportation for all of Plaintiff's incoming shipments. Schaefer makes arrangements for Weintraub shipments on its own behalf as explained by George Weintraub, Plaintiff's owner and chairman: "[Schaefer's] rates are quoted to us without their knowledge of what they're paying for shipping. S.o, if they have arrangements with truckers, it's not through us that they have them. They make their own arrangements." Plaintiff does not directly deal with the companies with which Schaefer contracts to carry out Plaintiff's shipping needs.

On April 25, 2000, Schaefer sent a fax to a company called Jefco requesting that it "schedule a truck for hanging garments" for George Weintraub & Son's. Schaefer also faxed this information to Confecciones and E.T.A.

On April 26, 2000, E.T.A.'s Logistics Services Division faxed a "Carta de Instrucciones" to Transportation Especial Autostrada, S.A. de C.V. ("TEA"), a Mexican trucking company, instructing it to pick up Weintraub's garments at Confecciones in Mexico and transport them to E.T.A.'s terminal in Laredo, Texas.

TEA picked up the shipment and issued its talon or bill of lading covering transportation from Mexico to Laredo, Texas to Confecciones. The bill of lading clearly states on its face that "this merchandise travels without insurance . . ." On its reverse side, the bill of lading states: "If the `shipper' requires the [ Page 3]

`carrier' to assume the responsibility of the value of the goods or any other liability or risk, including the cases of accidents, hijacking or force majeure, both of them must have a written agreement outlining this clause and stating the additional charges that will be incurred." Weintraub did not insure the goods with TEA but did purchase inland marine insurance, for the load.

On April 28, 2000, shortly after the truck carrying the goods left the Confecciones facility in Mexico, armed thieves hijacked it and stole the goods.

Plaintiff claims it entered into a contract of carriage with the Defendant to have it transport the shipment as a common carrier. Plaintiff argues that Defendant is liable for the value of the stolen goods even if they were in the possession of TEA at the time of their loss because TEA was Defendant's subcarrier and was hired by ETA to perform a portion of the contract of carriage.

Defendant argues that it only agreed to arrange transportation for the goods from Mexico to the United States and is not liable for their loss because it was not negligent in the selection of a carrier. Moreover, Defendant argues that it is not liable for breach of bailment because it was not in possession of the goods at the time of their loss.

For the reasons stated below, Plaintiff's motion for summary [ Page 4]

judgment is denied and Defendant's motion for summary judgment is granted.


I. Applicable Law

A. Summary Judgment

Summary judgment may be granted only "if the pleadings, depositions, answers to interrogatories, and admissions . . ., together with the affidavits, . . . show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548 (1986). A dispute regarding a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2514 (1986).

B. Contract of Carriage

To determine whether Defendant is liable for the value of the stolen goods, the Court must ascertain whether Defendant agreed to act as a freight forwarder/common carrier or merely as a freight forwarder with respect to the shipment. In Chicago, Milwaukee, St. Paul & Pac. R. Co. v. Acme Fast Freight, Inc., 336 U.S. 465, 484 (1949), the Supreme Court distinguished between the two kinds of "forwarders":

The term was originally applied to persons who arrange for the transportation by common carrier of the shipper's goods. The forwarder [ Page 5]
did not necessarily consolidate the individual consignments into carload lots, and its duties, as agent of the shipper, went no farther than procuring transportation by carrier and handling the details of shipment. Forwarders of this type charged fees for their services, which the shipper paid in addition to the freight charges of the carrier utilized for the actual transportation.
Later, a different type of forwarding service was offered. This forwarder picked up the less than carload shipment at the shipper's place of business and engaged to deliver it safely at its ultimate destination. The freight forwarder charged a rate covering the entire transportation and made its profit by consolidating the shipment with others in carload quantities to take advantage of the spread between carload and 1. c. 1. rates. It held itself out not merely to arrange with common carriers for the transportation of the goods, but rather to deliver them safely to the consignee. The shipper seldom if ever knew which carrier would be utilized in the carriage of his shipment.
A freight forwarder is liable to the shipper for lost or damaged goods "only for its own negligence, including negligence in selecting a carrier." Id. A forwarder/common carrier is liable for lost or damaged goods "whether it or an underlying carrier had been at fault." Id.

Factors to be considered in determining whether a party acted as a forwarder or as a forwarder/carrier include: "(1) the way the party's obligation is expressed in documents pertaining to the agreement, although the party's self description is not always controlling; (2) the history of dealings between the [ Page 6]

parties; (3) issuance of a bill of lading, although the fact that a party issues a document entitled `bill of lading' is not in itself determinative; (4) how the party made its profit . . ." Zima Corp. v. M.V. Roman Pazinski, 493 F. Supp. 268, 273 (S.D.N.Y. 1980).

Weintraub does not have a written transportation agreement with E.T.A. and did not directly communicate with E.T.A. regarding this shipment. There was no invoice issued for this shipment, but on prior Weintraub shipments during the period from December 20, 1999 to March 4, 2000, E.T.A.'s Logistics Division issued invoices for shipments and sent them directly to Jefco which then paid E.T.A. E.T.A. did not physically transport Weintraub's goods on any of these prior shipments. In each instance, a Mexican carrier transported the goods to the United States border where the customer's agent handled customs clearance, after which a United States carrier, other than E.T.A., carried the goods to their final destination in the United States.

E.T.A. did not issue a bill of lading for the shipment of the goods from Mexico to its terminal in Laredo, Texas. See Prima U.S. Inc. v. Panalpina, Inc., 223 F.3d 126, 129 (2d Cir. 2000) ("Unlike a carrier, a freight forwarder does not issue a bill of lading, and is therefore not liable to a shipper for anything that occurs to the goods being shipped"). Instead, TEA [ Page 7]

issued a bill of lading to Plaintiff's vendor, Confecciones, when it picked up the goods in Mexico.

Plaintiff points to E.T.A.'s prior invoices for Weintraub shipments which "charge a rate covering the entire transportation,' from Mexico to the United States as proof that E.T.A. operated as a common carrier on those shipments. Defendant counters that "[i]t is common practice throughout the industry for third party logistics providers and transportation brokers to invoice this way for the various services that they have arranged on behalf of the customer." As noted above, these invoices were issued by E.T.A.'s Logistics Division and were sent to Jefco who then billed Schaefer who in turn billed Weintraub. These invoices, which are not bills of lading or contracts of carriage, naturally charged Jefco for the entire transportation that E.T.A. arranged for Weintraub shipments, which in each instance included transportation from Mexico to the United States.

Furthermore, with respect to the course of dealing of the parties, it is significant that Plaintiff received a separate bill of lading from the Mexican carrier TEA and rather than insure the shipment with the carrier, purchased inland marine insurance for the load. Weintraub obviously treated TEA'S talon as the governing bill of lading for the shipment and was on notice about the limitation of liability contained therein. See [ Page 8]

Ingram Micro, Inc. v. Airoute Cargo Exp., Inc., 154 F. Supp.2d 834, 843 (S.D.N.Y. 2001) ("Ingram Micro's purchase of separate insurance from Chubb demonstrates that Ingram Micro was on notice and understood the limitation of liability . . .").

Plaintiff argues that Defendant held itself out as a common carrier, but fails to set forth evidence of such a representation. Plaintiff had no direct dealings with Defendant and has not provided evidence showing that Defendant held itself out as a common carrier to Schaefer or Jefco. On the contrary, the facts here clearly show that E.T.A. contracted as a freight forwarder and not a common carrier, to arrange for the transportation of Plaintiff's goods. E.T.A. "was hired to act as a `travel agent' for [Weintraub]: it set things up and made reservations, but did not engage in any hands-on heavy lifting." Prima at 129. As such, E.T.A. is not liable as a common carrier for the loss of Plaintiff's goods.

C. Bailment

The elements of a bailment are "the intent to create a bailment, delivery of possession of the bailed items, and acceptance of the items by the bailee." Chilewich Partners v. M.V. Alligator Fortune, 853 F. Supp. 744, 756 (S.D.N.Y. 1994). Defendant was not a bailee of Plaintiff's goods because it was not in possession of the goods at the time they were stolen. The goods were in TEA's possession at the time of their loss and [ Page 9]

TEA was not Defendant's subcarrier.


For the foregoing reasons, Plaintiff's motion for summary judgment is denied. Defendant's motion for summary judgment is granted. SO ORDERED. [ Page 1]


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