United States District Court,

D. South Carolina,

Greenville Division.

CAMPBELL, INC., Plaintiff,

v.

NORTHERN INSURANCE COMPANY OF NEW YORK, Defendant.

Sept. 27, 2004.

MEMORANDUM OPINION AND ORDER

FLOYD, District J.

I. INTRODUCTION

This is an insurance contract case. The Court is called upon at this juncture to determine whether Defendant is obligated to provide coverage pursuant to Commercial General Liability Insurance Policy No. CON 98600977 (policy) for a third party’s loss of use of a crane after Plaintiff incurred liability for damage to that crane. This policy provides coverage for goods and materials in transit. The Court’s jurisdiction in the matter rests on 28 U.S.C. § 1332.

Pending before the Court are Plaintiff’s motion for partial summary judgment (Document 17), Defendant’s motion for summary judgment (Document 22), and Defendant’s supplemental motion for summary judgment (Document 24). Having carefully considered the motions, the responses, the record and the applicable law, it is the judgment of this Court that Plaintiff’s motion for partial summary judgment (Document 17) shall be denied, Defendant’s motion for summary judgment (Document 22) shall be granted, and Defendant’s supplemental motion for summary judgment (Document 24) shall be granted.

II. FACTUAL AND PROCEDURAL HISTORY

Plaintiff filed this action in the Greenville County Court of Common Pleas on July 31, 2003. Subsequently, on August 6, 2003, Defendant removed the matter to this Court.

The accident giving rise to this dispute occurred on Interstate 85 in Commerce, Georgia on February 23, 2002. As already noted, Plaintiff seeks a determination that the policy provides coverage for liability that it incurred when one of its trucks was involved in an accident while hauling a crane belonging to a third party. In the instant case, the crane fell from the truck and was damaged during the accident.

The third party made a claim against Plaintiff for both the physical damage to the crane and the costs of leasing a substitute crane while the repairs were ongoing. Although Defendant tendered payment for the costs of the repairs to the crane, it denied Plaintiff’s claim concerning the rental charges. Defendant also declined to provide a defense in the lawsuit brought by the third party.

III. STANDARD OF REVIEW

A. Summary Judgment

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment “shall be rendered forthwith if the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, 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.” The moving party bears this initial burden of informing the Court of the basis for its motions, and identifying those portions of the record “which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The Court reviews the record by drawing all inferences most favorable to the party opposing the motion. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962)).

“Once the moving party carries its burden, the adverse party may not rest upon the mere allegations or denials of the adverse party’s pleadings, but the adverse party’s response … must set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e). The adverse party must show more than “some metaphysical doubt as to the material facts.” Matsushita, 475 U.S. at 586. If an adverse party completely fails to make an offer of proof concerning an essential element of that party’s case on which that party will bear the burden of proof, then all other facts are necessarily rendered immaterial and the moving party is entitled to summary judgment. Celotex, 477 U.S. at 322-23. Hence, the granting of summary judgment involves a three-tier analysis. First, the Court determines whether a genuine issue actually exists so as to necessitate a trial. FED. R. CIV. P. 56(e). An issue is genuine “if the evidence is such that a reasonable [trier of fact] could return a verdict for the non-moving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Second, the Court must ascertain whether that genuine issue pertains to material facts. FED. R. CIV. P. 56(e). The substantial law of the case identifies the material facts, that is, those facts that potentially affect the outcome of the suit. Anderson, 477 U.S. at 248. Third, assuming no genuine issue exists as to the material facts, the Court will decide whether the moving party shall prevail solely as a matter of law. FED. R. CIV. P. 56(e).

Summary judgment is “properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy and inexpensive determination of every action.” Celotex, 477 U.S. at 327. The primary issue is whether the material facts present a sufficient disagreement as to require a trial, or whether the facts are sufficiently one-sided that one party should prevail as a matter of law. Anderson, 477 U.S. at 251-52. The substantive law of the case identifies which facts are material. Id. at 248. Only disputed facts potentially affecting the outcome of the suit under the substantive law preclude the entry of summary judgment.

B. Policy Interpretation

Under the law of this state, insurance policies are subject to the general rules of contract construction. Nationwide Mut. Ins. Co. v. Commercial Bank, 325 S.C. 357, 360, 479 S.E.2d 524, 526 (1996) (citation omitted). The Court must afford policy language its plain, ordinary, and popular meaning. Diamond State Ins. Co. v. Homestead Indus. Inc., 318 S.C. 231, 236, 456 S.E.2d 912, 915 (1995).

The insurer’s duty under a policy of insurance is set forth by the terms of the policy and cannot be enlarged by judicial construction. See South Carolina Ins. Co. v. White, 301 S.C. 133, 137, 390 S.E.2d 471, 474 (1990). However, when ambiguous or conflicting terms are found in an insurance policy, those terms must be construed liberally in favor of the insured and strictly against the insurer. Diamond State Ins. Co., 318 S.C. at 236, 456 S.E.2d at 915.

The extent to which courts interpret the language of an insurance policy differently is evidence of ambiguity. See Greenville County v. Insurance Reserve Fund, 313 S.C. 546, 548, 443 S.E.2d 552, 553 (1994). Courts may look to a dictionary to decipher the meaning of ambiguous, undefined terms. See id. Nevertheless, if the intent of the parties is clear, the Court has no authority to torture the meaning of policy language or to extend or defeat coverage that was never intended by the parties. Diamond State Ins. Co., 318 S.C. at 236, 456 S.E.2d at 915.

Where a motion for summary judgment presents a question pertaining to the construction of a written contract, the question is one of law if the language employed by the contract is plain and unambiguous. Moss v. Porter Bros., Inc., 292 S.C. 444, 447, 357 S.E.2d 25, 27 (1987) (citation omitted). Summary judgment is appropriate in such a case where the intention of the parties regarding the legal effect of the contract may be gathered from its four corners. Id.

It is the insured’s burden to establish that a claim falls within the coverage of an insurance contract. Gamble v. Travelers Ins. Co., 251 S.C. 98, 160 S.E.2d 523, 525 (S.C.1968). Alternatively, the insurer shoulders the burden of establishing the exclusions to coverage. Boggs v. Aetna Cas. & Sur. Co., 272 S.C. 460, 252 S.E.2d 565, 568 (1979).

IV. CONTENTIONS OF THE PARTIES

Plaintiff argues that the third party’s loss of use of the subject crane is covered by the policy. Moreover, according to Plaintiff, even if the policy does not provide for loss of use coverage, certain statements allegedly made by Defendant’s adjuster is binding upon Defendant and, thus, coverage is proper, notwithstanding the language of the policy. According to Plaintiff, the adjuster working for Defendant made representations to the third party that rental charges were covered by the policy and, accordingly, the third party could go forward with arrangements to procure a substitute crane. Plaintiff also asserts a claim for bad faith denial of benefits.

Defendant argues that the plain language of the policy does not provide coverage for loss of use. Furthermore, according to Defendant, Plaintiff is unable to establish coverage based on the adjuster’s comments. Defendant contends that Plaintiff’s bad faith claim is without merit.

V. DISCUSSION

A. The policy

Plaintiff argues that coverage for loss of use is clearly provided by the policy. The Court disagrees.

The policy provides, in relevant part,

A. COVERED PROPERTY

1. (Carriers). As indicated on the Declarations, WE cover personal property of others, in transit, for which YOU are liable, as a carrier, bailee, or warehouseman, under tariff, bill of lading or shipping receipt all while loaded for shipment and in due course of transit within a radius as shown on the Declarations.

* * *

F. COVERED CAUSES OF LOSS

Covered Causes of Loss means RISKS OF DIRECT PHYSICAL “LOSS” to Covered Property except those causes of “loss” listed in the Exclusions.

* * *

O. VALUATION

The Valuation Clause–General Condition E in the Commercial Inland Marine Conditions form attached to the policy is replaced by the following:

The value of covered property will be:

(a) Amount of invoice; or

(b) In the absence of an invoice, the value will be its actual cash value at destination.

In the event of loss or damage, WE will not pay more than:

(a) The cost to reasonably restore that property to its condition immediately before the loss or damage; or

(b) The cost of replacing that property with substantially identical property.

The value will include:

(a) YOUR prepaid freight charges; and

(b) Any other shipping costs or charges that are due since the start of transit.

* * *

R. DEFINITIONS

“Loss” means accidental loss or damage.

Commercial Marine Truckmen’s Cargo Insurance Owner’s or Carrier’s Liability Form (emphasis in original). Nothing in the policy expressly excludes loss of use.

The meaning of a particular word or phrase is not determined by considering the word or phrase by itself, but by reading the policy as a whole and considering the context and subject matter of the insurance contract. Yarborough v. Phoenix Mut., Life Ins. Co., 266 S.C. 584, 592, 225 S.E.2d 344, 348 (1976). Thus, read as a whole, the policy covers personal property of others, in transit, for which Plaintiff is liable as long as 1) it entails direct physical accidental loss or damage to Covered Property and 2) the loss does not exceed a) the cost to reasonably restore that property to its condition immediately before the loss or damage; or b) the cost of replacing that property with substantially identical property. The use of term “physical” to define property damage negates the possibility that the policy intended to include consequential or intangible damages. Wyoming Sawmills, Inc. v. Transp. Ins. Co., 282 Or. 401, 578 P.2d 1253, 1256 (1978) (cited with approval in Auto-Owners Ins. Co. v. Carl Brazell Builders, Inc., 356 S.C. 156, 164, 588 S.E.2d 112, 116 (2003).

Thus, while the policy does not provide a per se exclusion for loss of use, the policy, when read as a whole, does not provide coverage for loss of use. First, the only covered causes of loss are those which involve direct physical accidental loss or damage. The Court is unable to construe the plain meaning of the policy in such a way as to find that direct physical accidental loss or damage could mean a consequential or intangible damage such as loss of use. Second, the Supreme Court of South Carolina has found that consequential and intangible damages are unavailable in an instance such as this when the term “physical” is employed to define property damage. Id. Third, the valuation clause of the contract makes damages such as loss of use impossible. Under this clause, the policy will not pay more than the cost to reasonably restore or replace the covered property. There can be no dispute that damages for loss of use exceed restoration and/or replacement costs.

Accordingly, for the reasons set forth above, the Court finds that the language of the policy does not provide for loss of use. There is no ambiguity. Hence, Defendant will prevail on this issue.

B. Adjuster’s alleged comments

As already noted, Plaintiff contends that Defendant’s adjuster made certain comments to the third party that there was coverage for rental charges and that the third party should go forward with renting a substitute crane. For purposes of this motion, the Court will assume that the adjuster made the purported statement. Nevertheless, based on the reasons set forth below, this argument must fail.

As a general rule, insurance coverage may not be expanded or created by waiver or estoppel. “The weight of authority is said to support the view that the coverage, or restrictions on the coverage, cannot be extended by the doctrine of waiver or estoppel. To the same effect[,][i]t has been broadly stated that the doctrines of waiver and estoppel cannot be used to extend the coverage of an insurance policy or create a primary liability, but may only affect rights reserved therein…. [U]nder no conditions can the coverage or restrictions on coverage be extended by waiver or estoppel.” Pitts v. New York Life Ins. Co., 247 S.C. 545, 551-52, 148 S.E.2d 369, 371 (1966) (citations and quotation marks omitted).

1. equitable estoppel

The necessary elements of equitable estoppel, as related to the party claiming the estoppel, are: “(1) ignorance of the party invoking it of the truth as to the facts in question; (2) representations or conduct of the party estopped which mislead; (3) reliance upon such representations or conduct; and (4) prejudicial change of position as the result of such reliance.” Id. at 552, 148 S.E.2d at 371.

Applying the facts of this case to these elements, the Court is unconvinced that Plaintiff can establish the appropriateness of this remedy. First, based on the plain meaning of the policy, Plaintiff cannot now argue that it was ignorant of whether coverage for loss of use existed. Second, the alleged statements in question were made to a third party, and not to Plaintiff. Thus, it was the third party, and not Plaintiff, that was arguably misled. Third, Plaintiff has not presented any allegation that it relied, or could have reasonably relied, on the alleged misrepresentation. Fourth, Plaintiff has failed to assert that it changed its position based on the purported statement that the adjuster allegedly made to the third party.

The essential elements of an equitable estoppel, as they relate to the party estopped, are: (1) conduct that amounts to a false representation or concealment of material facts, or, at the least, which is calculated to convey the impression that the facts are other than, and inconsistent with, those that the party subsequently attempts to assert; (2) intention, or at least expectation, that such conduct shall be acted upon by the other party; (3) knowledge, actual or constructive, of the real facts. Southern Dev. Land and Golf Co., Ltd. v. South Carolina Pub. Serv. Author., 311 S.C. 29, 33, 426 S.E.2d 748, 751 (1993).

Neither party has directly addressed these elements and the Court need not do so in any detail either. Suffice to say that there are not any allegations in the record before this Court that would support a finding that these factors are present in the instant case.

2. waiver

Waiver is the voluntary and intentional relinquishment of a known right. Janasik v. Fairway Oaks Villas, 307 S.C. 339, 344, 415 S.E.2d 384, 387 (1992). “Waiver is an intentional relinquishment of a known right and may be implied from circumstances indicating an intent to waive.” Bonnette v. State, 277 S.C. 17, 18, 282 S.E.2d 597, 598 (1981). Acts that are inconsistent with the continued assertion of a right may also give rise to a waiver. Id. Bonnette, 282 S.E.2d at 598.

Again, the only communication that is at issue here is a statement purportedly made 1) by an adjuster working for Defendant 2) to a third party. The Court cannot rightfully find that the statements allegedly made were either a voluntary or an intentional relinquishment of Defendant’s right to deny coverage. The comment by the adjuster simply does not rise to that level. Thus the waiver argument must also fail.

Simply stated, the Court does not find the case at bar to be one in which it would be proper to set aside the general rule that disallows equitable estoppel and waiver in insurance policy disputes. Plaintiff has failed to allege facts on which this Court could find that either of these remedies is applicable. Thus, the Court will enter judgment accordingly.

C. Bad faith claim

The Court has found that the policy does not provide for coverage. The Court has also found that neither equitable estoppel or waiver are applicable. Moreover, there is nothing in the record to suggest that Defendant acted in an unreasonable manner in denying coverage. As such, the Court is of the opinion that there exist no basis for Plaintiff’s allegation of bad faith. Therefore, Defendant’s motion on the bad faith claim shall be granted.

VI. CONCLUSION

In light of the foregoing discussion, it is the judgment of this Court that Plaintiff’s motion for partial summary judgment (Document 17) must be DENIED, Defendant’s motion for summary judgment (Document 22) must be GRANTED, and Defendant’s supplemental motion for summary judgment (Document 24) must be GRANTED.

IT IS SO ORDERED.

United States District Court,

S.D. New York.

THE WATKINS SYNDICATE AT LLOYD’S OF LONDON, Plaintiff,

v.

TAMPA AIRLINES, S.A., Defendant.

TAMPA AIRLINES, S.A., Third-Party Plaintiff,

v.

DYNAMIC EXPRESS, INC., Third-Party Defendant.

.

Oct. 8, 2004.

OPINION & ORDER

MUKASEY, J.

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.

FN1. Convention for the Unification of Certain Rules Relating to International Transportation by Air, Oct. 12, 1929, art. 26, 49 Stat. 3000, T.S. No. 876, 137 L.N.T.S. 11 (codified at 49 U.S.C. § 40105 note (2000)) [hereinafter Warsaw Convention].

I.

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.

FN2. Both Dynamic Trucking Coordinator Jeffry Levine and Dynamic driver Carlos Hernandez contradict Klinger’s account. Levine testified that Klinger instructed him before pickup “that there was some damage to the shipment, [and] to make sure that we make the necessary notations when we receive the freight from Tampa Airlines.” (Levine Dep. at 16) Hernandez testified that Levine told him that the shipment was “coming with problems” and that it was “wet and broken,” and that Levine instructed him to record the damage at pickup. (Hernandez Dep. at 10-11) Klinger testified that he only guessed that something might be wrong from the knowledge that the packages had been sitting outside, and did not learn of the actual damage until after the shipment was picked up. (Klinger Dep. at 9-10) However, this dispute is not directly relevant to the summary judgment motions.

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)

FN3. When he picked up the shipment, Hernandez was under the impression that Rios was a Tampa Airlines employee. (Hernandez Dep. at 13)

FN4. Rios did not remember any visible spots or other water damage on the cargo, (Rios Dep. at 30), although Hernandez testified that Rios agreed with him that there was water damage. (Hernandez Dep. at 18)

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)

FN5. Hernandez claims that he wrote the notation, which was less specific than he would have desired due to his limited knowledge of English. (Hernandez Dep. at 14, 17, 25) Rios claims that he made the notation at Hernandez’s request, because Hernandez did not know how to describe the damage appropriately in English. (Rios Dep. at 24, 47-48, 55) This dispute is immaterial to the court’s determinations of whether written notice was given and whether fraud occurred.

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.

II.

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.

SO ORDERED