Civil Court, City of New York,
New York County.
Cheryl ELICH-KRUMPLET, Plaintiff,
v.
UNITED PARCEL SERVICE, INC., John Doe and/or Jane Doe, Defendants.
No. 300197TSN06.
Sept. 1, 2006.
CYNTHIA S. KERN, J.
Plaintiff commenced the present action against defendant to recover damages for artwork defendant allegedly discarded while shipping the artwork. She moves for summary judgment on the ground that defendant spoliated crucial evidence essential to the case or alternatively for an adverse presumption at trial based on the doctrine of material deviation. Defendant moves for a protective order and for summary judgment on the ground that plaintiff is barred from bringing this action based on the UPS Tariff and shipping order and the Carmack Amendment. The portion of defendant’s motion seeking a protective order was resolved at oral argument. For the reasons set forth below, both plaintiff and defendant’s motions for summary judgment are denied.
The relevant facts are as follows. Plaintiff contracted with a UPS Authorized Shopping Outlet (“ASO”) on July 19, 2004 to ship commercial artwork from Illinois to New York. The ASO then contracted with UPS to transport the package. Plaintiff entered into a shipping order with the ASO. The shipping order provided that ASO’s “are independently owned and operated businesses and are not agents of UPS. UPS assumes no liability other than to the ASO, as the shipper of the package, for lost, damaged, or delayed packages sent via the ASO. Any such liability to the ASO is subject to the limitations set forth in applicable UPS Tariff and Service Guide.” The shipping order also provided that the shipper “expressly acknowledge[s] that the value of each parcel does not exceed the amount stated by you in the Declared Value section of this form. If no amount is specified in the Declared Value section, you acknowledge that the value of the parcel(s) shall not exceed $100.” Plaintiff did not declare a value for the shipment in the Declared Value section and she did not pay a higher shipping price for additional protection. It is undisputed that the package never reached its destination. UPS claims that the package was lost in transit or considered a “fallout” and that the contents of the package were missing upon arrival and never recovered. Plaintiff alleges that defendant intentionally and willfully discarded the contents of plaintiff’s package and the packaging it was shipped in. Plaintiff commenced the instant action to recover the actual value of her shipment from defendant.
This action is governed by the Carmack Amendment to the Interstate Commerce Act, 49 USC 14706, which governs the liability of common carriers for loss or damage to goods shipped through interstate commerce. (See Adams Express Co. v. Croniger, 226 U.S. 491 [1913] ). The Carmack Amendment is the exclusive remedy for damaged goods shipped in interstate commerce and preempts all state and federal common law claims. (See Id; Missouri Pac. R.R. v. Elmore & Stahl, 377 U.S. 134 [1964]; Starmakers Publ’g Corp.v Acme Fast Freight, Inc., 646 F.Supp 780 [SDNY 1986]; Mayflower Transit, Inc. v. Davenport, 714 N.E.2d 794 [Ind App Ct 1999] ). The Carmack Amendment provides that a carrier shall issue a receipt or bill of lading for property it receives for transportation and imposes liability on the common carrier for loss or damage to the goods to anyone bound by the terms of the bill of lading. (49 USC 14706(a)(1). See Soomekh v. UPS, 7 Misc.3d 1002(A) [NY Dist Ct 2005]; Windows, Inc. v. Jordan Panel Sys. Corp., 177 F3d 114 [2nd Cir1999]; DiPaolo Mach. Works, Ltd. v. Prestige Equipment Corp., 998 F.Supp 229 [EDNY 1998] ).
The first issue the court must address is whether plaintiff has standing to bring the instant action against defendant. The court finds that plaintiff does have standing to bring the instant action against defendant under the Carmack Amendment. The Federal Courts have made it clear that pursuant to the Carmack Amendment an owner of goods who ships through a freight forwarder may bring a direct cause of action against the underlying carrier for loss or damage to the goods. (See Chicago, Milwaukee, St. Paul & Pac. R.R.Co v. Acme Fast freight, Inc., 336 U.S. 465,487 [1949]; Great Northern Ry. Co. v. O’Conner, 232 U.S. 508 [1914]; United Parcel Service, Inc. v. Smith, 645 N.E.2d 1, 4 [Ind App 2nd Dist 1994]; Gulf & Western Industries v. Old Dominion Freight Lines, 633 F.Supp 688 [MDNC 1986] ). “The theory behind these cases is that the shipper is the undisclosed principal of its agent, the forwarder, in the latter’s contract with the carrier.” (United Parcel Service, Inc. v. Smith, 645 N.E.2d at 4). Moreover, several New York State Courts applying the Carmack Amendment have allowed consignees to bring an action directly against a carrier without ever addressing the issue of standing. (E.g., Art Masters Associates, Ltd. v. United Parcel Service, 77 N.Y.2d 200 [1990]; Winward Photos v. United Parcel Service, 230 A.D.2d 648 [1st Dept 1996] ). As there is no reason that a consignee would have any greater rights than the actual shipper of the goods to bring an action against the underlying carrier, it is clear that in New York a shipper such as plaintiff has standing to bring a direct cause of action against the underlying carrier.
The next issue which must be addressed is whether plaintiff’s liability is limited to $100 pursuant to the limitation of liability provision in the UPS shipping order and Tariff. As will be explained more fully below, there are disputed issues of fact as to whether the limitation of liability provision is enforceable based on plaintiff’s allegations that the artwork was converted.
The Carmack Amendment provides that a carrier is liable “for the actual loss or injury to the property.” (49 USC 14706; Winward Photos v. United Parcel Service, 230 A.D.2d 648 [1st Dept 1996] ). However, under the Carmack Amendment and New York Transportation Law § 181, a common carrier may limit its liability for loss, damage or injury to goods entrusted to it to an agreed-upon declared or released value of the property. (See Winward Photos v. United Parcel Service, 230 A.D.2d 648; Index Stock Photography, Inc. v. United States Parcel Service Corp., 164 Misc.2d 712 [NY Sup 1995] ). The New York Courts have upheld limitations of liability provisions for common carriers with respect to the undeclared value of merchandise that is shipped. (Id ). Specifically, the Appellate Division, First Department in Winward Photos v. United Parcel Service held that a limitation of liability provision contained in a UPS pick-up-invoice was enforceable to limit UPS’s liability to $100 where the invoice provided that “[u]nless a greater value is declared in writing on ths receipt, the shipper hereby declares and agrees that the released value of each package or article not enclosed in a package covered by this receipt is $100 .00” and the shipper did not declare a value on the receipt. (Id ). The court in Winward Photos v. United Parcel Service, enforced the limitation of liability provision holding that it would not expand UPS’s contractual liability beyond the $100 it provided for in the pick-up invoice. (Id ). In the instant action, the shipping order signed by plaintiff contains a similar provision which provides that if “no amount is specified in the Declared Value section, you acknowledge that the value of the parcel(s) shall not exceed $100.” Plaintiff did not enter any amount in the declared value section of the shipping order. Accordingly, the limitation of liability provision would be enforceable in the absence of proof of conversion of the property.
Plaintiff’s argument that the limitation of liability provision should not apply in this action because she was never made aware of the provision or given an opportunity to purchase more insurance is without merit. The Carmack Amendment provides that a carrier may limit its liability to the declared or released value of goods “so long as that declared value determined the shipping rates charged and an opportunity to declare a higher value was afforded.” (Art Masters Associates v. United Parcel Service, 77 N.Y.2d 200 [1990] ). As previously discussed, in Winward Photos v. United Parcel Service, the Appellate Division, First Department found that the provision in the shipping invoice which limited UPS’s liability to $100 unless the shipper declared a greater value provided the shipper with adequate notice of the limitation of liability provision and a chance to purchase more insurance. (Id ). Similarly, this court finds that the provision in the shipping invoice limiting UPS’s liability to $100 unless the shipper declared a higher value adequately notified plaintiff of the limitation of liability provision and provided her with an opportunity to obtain more insurance.
However, this court finds that there are disputed issues of fact as to whether the limitation of liability provision should apply in this case based on plaintiff’s allegations that defendant willfully and intentionally discarded her property. The New York State Court of Appeals and the Federal Courts have explicitly held that “where there is an agreed-upon limitation of liability in a contract of carriage, the carrier may not be cast in damages, upon a theory of conversion, for the full value of the property it failed to deliver unless there is proof of actual conversion.” (Art Masters Associates v. United Parcel Service, 77 N.Y.2d at 228-229). To establish a true conversion, the shipper must show that defendant’s willful or intentional misconduct caused the non-delivery of the goods. (Id; Wenig Ginsberg Saltiel & Greene, LLP v. Precision Movers, Inc., 9 Misc.3d 1119[a] (N.Y. City Civ Ct 2005] ). Proof of non-delivery alone is insufficient to establish an actual conversion. (Art Masters Associates v. United Parcel Service, 77 N.Y.2d at 229). The shipper must establish that the non-delivery resulted from the carrier’s affirmative wrongdoing. (Id at 229).
In the instant action, the court finds that plaintiff has sufficiently alleged that defendant willfully and intentionally discarded her shipment so as to create a disputed issue of fact for trial. Plaintiff claims that defendant intentionally and willfully discarded her artwork and not just the packaging it was shipped in. In support of her claim, plaintiff relies on a phone message left by an employee of defendant who said that her “merchandise” was discarded as well as a UPS claim detail which also provides that the “merchandise” was discarded. Plaintiff argues that the phone message in conjunction with the claim detail are sufficient evidence to show that defendant intentionally and willfully discarded her actual merchandise and not just the packaging it was shipped in. Defendant claims that it never discarded her merchandise, only the packaging it was shipped in, and that plaintiff misinterpreted the phone message and the UPS claim detail. The court finds that plaintiff’s allegations are sufficient to raise a triable issue of fact as to whether defendant willfully and intentionally discarded plaintiff’s artwork and not just the packaging it was shipped in. Accordingly, defendant’s motion for summary judgment is denied as there are disputed issues of fact as to whether the limitation of liability provision is enforceable.
Plaintiff’s motion for summary judgment on the ground that UPS spoliated crucial evidence essential to the case is denied. Pursuant to New York law, “spoliation sanctions are appropriate where a litigant, intentionally or negligently, disposes of crucial evidence involved in an accident before the adversary has an opportunity to inspect them.” (Kirkland New York City Housing Authority, 236 A.D.2d 170, 173 [1st Dept 1997] ). The First Department, Appellate Division has refused to impose spoliation sanctions where there is no indication that defendant had disposed of the crucial evidence with knowledge of its potential evidentiary value. (See Herbert v.. City of New York, 12 AD3d 209 [1st Dept 2004]; Balaskonis v. HRH Construction Corp, 1 AD3d 120 [1st Dept 2003]; Smith v. New York City Health & Hospitals Corp., 284 A.D.2d 121 [1st Dept 2001] ). Spoliation sanctions have also not been imposed where the defendant disposed of the evidence in the ordinary course of its business. (See id ).
In the instant action, the court finds that defendant’s disposal of the “packaging” as opposed to the artwork itself is not a proper basis for imposing spoliation sanctions as the packaging is not a crucial piece of evidence essential to plaintiff’s case. Plaintiff claims that UPS is liable for her lost artwork, not the empty packaging it was shipped in. As previously discussed, in order for plaintiff to make out her claim, she must show that defendant intentionally and willfully discarded her artwork. An inspection of the empty packaging will not provide any probative evidence as to the issue of whether UPS employees intentionally and willfully discarded her artwork. The empty packaging is therefore not a crucial piece of evidence. Spoliation sanctions are also inappropriate with respect to the packaging as defendant discarded the packaging prior to plaintiff’s commencement of this action and before it had any notice of the evidentiary value of the packaging. Furthermore, it is part of defendant’s ordinarily business practice to discard empty packaging as it did with plaintiff’s packaging. Accordingly, the defendant’s disposal of the empty packaging cannot be the basis for the imposition of spoliation sanctions.
The court also finds that plaintiff is not entitled to summary judgment granting spoliation sanctions against defendant on the ground that defendant discarded her artwork as that is the ultimate issue to be resolved in the action. Spoliation sanctions can only imposed if defendant actually discarded the evidence. (See Kirkland New York City Housing Authority, 236 A.D.2d 170). Plaintiff’s spoliation argument is based on the position that defendant unilaterally decided to discard plaintiff’s artwork. However, whether defendant discarded plaintiff’s artwork as opposed to losing her artwork is the central issue of the case. Without proving that defendant intentionally destroyed her artwork, plaintiff cannot make out any claim against defendant. Therefore, plaintiff’s claim that defendant discarded her artwork cannot be the basis for summary judgment awarding spoliation sanctions. Furthermore, the cases relied on by plaintiff are inapposite as the spoliation of evidence issue only came into play in those cases after the injury or loss occurred and an action was already commenced thereby impeding the ability of the other side to prove their case. (See Kirkland New York City Housing Authority, 236 A.D.2d 170; Squiteri v. The City of New York, 248 A.D.2d 201 [1st Dept 1998] ). In the instant action, the claim itself is that the artwork was discarded. Accordingly, plaintiff’s motion for summary judgment awarding it spoliation sanctions against defendant is denied.
Plaintiff’s request for an adverse presumption at trial based on the doctrine of material deviation is denied. The material deviation doctrine provides that “a fundamental deviation from a shipping contract may make a limitation unenforceable. (See Nipponkoa Ins. Co., Ltd. v. Watkins Motor Lines, Inc., 431 F.Supp2d 411 [SDNY2005]; Rafaella Gallery, Inc. v. United Parcel Service, Inc., 818 F.Supp 53 [SDNY 1993] ). This doctrine is typically applied in admiralty cases. (Id ). The majority of courts have refused to apply the material deviation to overland or airborne shipping contacts. (See Id ). The courts that have applied the material deviation doctrine to overland or airborne shipping contracts did so only in the limited cases where the carrier made a separate, risk-related promise that was special to the particular shipment. (See Id ). In the instant action, the court finds that the material deviation doctrine does not apply as plaintiff has failed to put forth any evidence that defendant ever made a separate, risk-related promise that was special to plaintiff’s shipment. Accordingly, plaintiff’s request for an adverse presumption at trial based on the doctrine of material deviation is denied as the material deviation doctrine does not apply in this case.
Based on the foregoing, plaintiff’s motion for summary judgment and defendant’s cross-motion for summary judgment are both denied. This constitutes the decision and order of the court.
