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United States District Court, S.D. New York

October 1, 2004.

TAMPA AIRLINES, S.A., Defendant. TAMPA AIRLINES, S.A., Third-Party Plaintiff, v. DYNAMIC EXPRESS, INC., Third-Party Defendant.

The opinion of the court was delivered by: MICHAEL MUKASEY, Chief Judge, District


Plaintiff, the Watkins Syndicate of Lloyd's of London ("Watkins"), sues defendant Tampa Airlines under the Warsaw Convention*fn1 for damage to a shipment owned by Watkins's subrogor, Apparel Contractors Association ("Apparel"). Tampa in turn sues third-party defendant Dynamic Express for damages. Watkins moves for partial summary judgment under Fed.R. Civ. P. 56(c), and Tampa cross-moves for summary judgment on the same grounds. For the reasons discussed below, both motions are denied.


  The facts in this case are as follows, and are undisputed except as otherwise noted. Defendant Tampa shipped 123 cartons of garment cutwork and trim owned by Apparel from Cali, Colombia to Miami, Florida. When the shipment arrived in Miami, Allen Klinger, president and principal owner of Apparel, contracted Dynamic to transport the cargo by truck to Dynamic's warehouse in New Jersey. Klinger had been told that the cargo had been "sitting outside" at the airport. (Klinger Dep. at 9) Because he feared the boxes might have been damaged by the elements while sitting outside, Klinger instructed Dynamic to "make sure everything [was] okay" when shipment was picked up.*fn2 (Klinger Dep. at 9, 33) On September 6, 2002, Dynamic sent one of its drivers, Carlos Hernandez, to pick up the shipment at Miami International Airport.

  At the airport, Hernandez met Benjie Rios, who was responsible for signing over the Apparel shipment from Tampa to Dynamic. (Rios Dep. at 17) Rios was an employee of Worldwide Flight Service,*fn3 a company that breaks down and distributes cargo for Tampa and other airlines. (Rios Dep. at 6) When he saw the shipment, Hernandez noted that the boxes were "swollen up and . . . wet with spots." (Hernandez Dep. at 11) Rios and Hernandez, both native Spanish speakers, conversed in Spanish and agreed that the shipment was damaged. Rios later testified that the boxes looked as if "there was too much weight inside" and that they were "exploding [open] inside" (Rios Dep. at 20-21).*fn4 Hernandez radioed his supervisor Levine to tell him about the damage, and Levine instructed Hernandez "to make the proper notations." (Levine Dep. at 30)

  Rios signed the pickup form under the notation "cargo came with improper package," (Hernandez Dep. Exh. 1), although Rios and Hernandez dispute who wrote the notation itself.*fn5 (Hernandez Dep. at 14; Rios Dep. at 25) Hernandez testified that Rios told him that the notation on the pickup form was "complete," and that Hernandez could not make any exceptions to the shipment "other than what was obvious." (Hernandez Dep. at 24; Levine Dep. at 38)

  After the damage notation was made and Rios had signed the form, Hernandez took the top copy of the pickup form with him and left Rios with the bottom two copies. Rios's copies did not have any notation of damage on them, because the notation had been made only on the top copy, and the pickup order did not have carbon paper between its sheets. Both Hernandez and Rios knew that Hernandez had the only annotated copy of the form. (Hernandez Dep. at 29-30; Rios Dep. at 29-30) Hernandez and Rios agreed that Hernandez needed the notation of damage to show the trucking company he worked for, Dynamic, and that the annotated pickup form was for Dynamic, not for Rios's company, Worldwide. (Hernandez Dep. at 29; Rios Dep. at 25, 29, 32)

  Hernandez drove the damaged cargo to the Dynamic facility in Miami. (Hernandez Dep. at 19) At that point, Dynamic employee Jeffry Levine told Klinger about the poor condition of the boxes, and Klinger instructed Levine to transport the shipment to the Dynamic warehouse in New Jersey so that he could examine it. (Klinger Dep. at 10-11) When Klinger inspected the shipment upon its arrival in New Jersey, he determined it to be a "disaster;" the boxes were "broken open, smelly, [and] wet." (Id. at 13; see also plaintiff's Exh. 6, (survey report describing extensive damage to the shipment)) Klinger and his insurers independently determined that the goods were unsalvageable. Apparel then shipped all 123 boxes to Mexico, where the cutwork and trim was either "given away or put in the garbage." (Klinger Dep. at 53; see also id. at 27)

  On October 1, 2002, Apparel sent Tampa a letter noting the damage and stating that it would hold Tampa fully responsible for its monetary losses. (Furman Decl., Exh. C) In February 2003, plaintiff insurers paid Apparel $96,286.11 as compensation for its losses (plaintiff's Exh. 7), and subsequently brought this action for damages against Tampa.


  When two parties in a case have cross-moved for summary judgment, both asserting an absence of a genuine issue of material fact, a court must examine each motion separately, and in each instance, draw all inferences against the moving party; the reviewing court need not enter a judgment for either party. Morales v. Quintel Entm't, Inc., 249 F.3d 115, 121 (2d Cir. 2001); Heublein, Inc. v. United States, 996 F.2d 1455, 1461 (2d Cir. 1993); Padberg v. McGrath-McKechnie, 203 F. Supp. 2d 261, 274 (E.D.N.Y. 2002).

  The court has subject matter jurisdiction over this case pursuant to the Warsaw Convention, which provides an exclusive federal remedy for all claims brought against international air carriers for damaged goods. If the Convention applies, it preempts all state law claims arising out of international air transportation. El Al Isr. Airlines, Ltd. v. Tsui Yuan Tseng, 525 U.S. 155, 174-75 (1999); Lokken v. Fed. Express Corp., No. 99-0585, 2000 WL 193121, at *3 (S.D.N.Y. Feb. 16, 2000). Therefore, this court will not consider any supplemental state law claims arising from this incident.

  The Warsaw Convention governs claims arising from "all international transportation of persons, baggage, or goods performed by aircraft for hire." Warsaw Convention, art. 1(1). Article 26 of the Convention provides that receipt of goods without complaint is "prima facie evidence that the same have been delivered in good condition. . . ." Id. art. 26(1). If goods have been damaged in transit, "the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, . . . within 14 days from the date on which the baggage or goods have been placed at his disposal." Id. art. 26(2). The Convention further provides that "[e]very complaint must be made in writing upon the document of transportation or by separate notice in writing dispatched within the times aforesaid." Id. art. 26(3). If the above requirements are not followed, "no action shall lie against the carrier, save in the case of fraud on his part." Id. art. 26(4).

  Plaintiff Watkins moves for partial summary judgment on the ground that the notation "cargo came with improper package" on the Apparel shipment pickup form constituted adequate written notice for the purposes of the Warsaw Convention. Plaintiff alternatively claims that if notice was not adequate, defendant's conduct was sufficiently fraudulent to convince plaintiff that sufficient notice had been provided. Defendant Tampa cross-moves for summary judgment, arguing that notice was not sufficient and that no fraud occurred, requiring dismissal of the entire claim.

  A. Notice

  The Warsaw Convention requirement of formal written notice for complaints is "strictly construed." Denby v. Seaboard World Airlines, 575 F. Supp. 1134, 1144 (E.D.N.Y. 1983), rev'd on other grounds, 737 F.2d 172 (1984); see also Onyeanusi v. Pan Am. World Airways, Inc., No. 88-6967, 1990 U.S. Dist. LEXIS 7368, at *13 (E.D. Pa. June 14, 1990) ("Noncompliance with the written notice requirement produces a harsh result."). Such written notice is important, because "[f]ormal written notice provides the carrier not merely with an indication that a shipment has been damaged, but with an express and definite statement of the shipper's intention to hold the carrier liable. Actual notice gives the carrier nothing to indicate that he, rather than another party, is the object of the shipper's claim." Denby, 575 F. Supp. at 1144 (citations omitted).

  The required notice is "not intended to burden the party bearing the risk of loss with onerous hyper-technical hurdles in order to make a claim for damages," Sony Corp. v. BDP Int'l, Inc., No. 96-8934, 1999 WL 681497, at *9 (S.D.N.Y. Sept. 1, 1999), but "actual notice of the damage may not substitute for formal written notice." Moses v. Air Afrique, No. 99-541, 2000 WL 306853, at *7 (E.D.N.Y. Mar. 21, 2000); see also Stud v. Trans Int'l Airlines, 727 F.2d 880, 883 (9th Cir. 1984) ("If written notice of a consignee's complaint is necessary to preserve the right of recovery, a carrier's actual knowledge of the loss, gleaned from a source other than a written notice of complaint, is necessarily insufficient."); Lokken, 2000 WL 193121, at *6 ("`The clear dictates of Article 26(3) require written notification even if an agent of the air carrier has made some affirmative representation that [he or] she is aware of the damage or delay.'") (citation omitted) (alteration in original).

  Plaintiff Watkins, the insurer, claims that the notation "cargo came with improper package" on Dynamic's copy of the pickup form was sufficient written notice to Tampa. Watkins argues that it was Rios's decision not to make a copy of Hernandez's notation, and that it should not suffer as a result of Tampa's failure to properly instruct its agents about the importance of retaining these types of documents. Defendant Tampa counters that this is not a question of retention of notice, but rather of dispatch of notice; Tampa argues that Hernandez never gave written notice to Rios at all. According to defendant, that Rios was aware of the damage and signed off on Hernandez's form constitutes actual notice, but not the required written notice.

  The Warsaw Convention's written notice requirement is applied stringently, and the court cannot accept plaintiff's contention that the communication between Hernandez and Rios constituted adequate notice in this case. Hernandez and Rios discussed the damage to the shipment, and a notation was made on a form that Hernandez took back to his own company. Hernandez testified that it was not his job to give Rios notice of the damage, and that the annotated pickup order was for his employer Dynamic, not for Tampa. (Hernandez Dep. at 29) Rios's actual notice of the damage is insufficient to meet the Convention and the Denby standard, and there is no affirmative duty for a carrier with actual notice of damage to request formal written notice from the complaining party. Thus Rios's failure to make a copy of the pickup order that Hernandez took with him is immaterial, as is the dispute over who made the damage notation on that order. Plaintiff did not proffer written notice of its complaint to defendant until October 1 — more than a week after the Convention's 14-day notice period had expired. There is at least a material issue of fact as to whether plaintiff provided adequate written notice in this case; therefore, plaintiff's motion for partial summary judgment on this ground is denied.

  B. Fraud

  As previously stated, fraud by the carrier can excuse a claimant from the Warsaw Convention's requirement of timely notice. Warsaw Convention, art. 26(4). The Second Circuit has ruled that the fraud exception includes "any intentional acts by the carrier or its agents which significantly decrease the likelihood of the shipper's giving notice during the brief period allowed." Denby v. Seaboard World Airlines, Inc., 737 F.2d 172, 183 (2d Cir. 1984). Courts have interpreted this standard with considerable flexibility, permitting further inquiry even where fraud seems unlikely. See, e.g., Dillon v. United Air Lines, Inc., 162 F. Supp. 2d 380, 386 (E.D. Pa. 2001) (excusing untimely written notice where carrier told plaintiff verbal notice would be sufficient); Tseng v. El Al Isr. Airlines, 919 F. Supp. 155, 159-60 (S.D.N.Y. 1996), rev'd in part on other grounds, 122 F.3d 99 (2d Cir. 1997) (excusing untimely written notice where carrier told plaintiff to raise her claim when she returned to the United States); Locks v. British Airways, 759 F. Supp. 1137, 1140 (E.D. Pa. 1991) (Pollak, J.) (excusing untimely written notice where carrier promised it would respond to oral complaint).

  In Denby, the Court held that "if a preponderance of the evidence were to show that a carrier discouraged a consignee's truckman from making an appropriate entry on a copy of the air waybill retained by the carrier or informed him that written notice was unnecessary because the carrier knew of the damage, the fraud exception would be made out." 737 F.2d at 183. Plaintiff has alleged a very similar situation in its pleadings, and the testimony of both Carlos Hernandez and Jeffry Levine provides further evidence of conduct that might have discouraged Apparel from providing written notice. As detailed above, Hernandez testified that Rios told him that the notation on the pickup form was "complete," and that Hernandez could not make any exceptions to the shipment "other than what was obvious." (Hernandez Dep. at 24) Additionally, on September 18, 2002 Levine wrote Klinger a letter noting that "Tampa Airlines would not allow us to make exception, other than what is obvious;" Levine testified that he had based this statement on his conversation with Hernandez on the date of pickup. (Hernandez Dep. Exh. 2; Levine Dep. at 38) Defendant neither confirms nor denies that Rios made these representations to Hernandez. However, if Rios did indeed prevent Hernandez from making more detailed notations, or if he told him that his notations were "complete," there is a possibility that Apparel was thereby discouraged from giving further written notice.

  At the very least, material issues of fact remain as to exactly what statements Rios made to Hernandez, and what effect they might have had on the conduct of plaintiff's subrogor. Because a jury might determine that Rios's statements satisfy the Denby standard for fraud excusing timely written notice, defendant's summary judgment motion is denied. Plaintiff's motion for partial summary judgment on the issue of notice is also denied, because a jury could likewise decide that Rios's statements are not sufficient to constitute fraud.

  * * *

  For the reasons set forth above, both motions for summary judgment are denied.


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