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Kolencik v. Stratford Insurance Co.

United States District Court,

N.D. Georgia, Atlanta Division.

R.J. KOLENCIK, individually and as Administrator of the Estate of Melissa

Kolencik, Plaintiff,

v.

THE STRATFORD INSURANCE COMPANY, Defendant.

No. Civ.A.1:05CV0007-GET.

 

March 31, 2006.

 

TIDWELL, J.

 

The above-styled matter is presently before the court on:

 

(1) defendant’s motion for summary judgment [docket no. 49];

 

(2) plaintiff’s cross-motion for summary judgment [docket 54];

 

(3) defendant’s motion to strike plaintiff’s cross motion for summary judgment [docket no. 58];

 

(4) defendant’s motion to compel discovery and for sanctions [docket no. 25];

 

(5) motion to withdraw as attorney for plaintiff [docket no. 60];

 

(6) defendant’s motion to strike [docket no. 37] plaintiff’s response in opposition to motion to compel [docket no. 35].

 

Plaintiff filed this action to recover on a judgment obtained against defendant’s purported insured in the Superior Court of Cobb County, Georgia, as well as tort and consequential damages for defendant’s alleged failure to comply with Georgia statutory requirements related to motor carriers. On May 23, 2005, plaintiff filed a motion for summary judgment on the grounds that the attempted cancellation of coverage alleged by defendant was legally ineffective and that plaintiff is entitled to extra-contractual damages from defendant. On June 9, 2005, defendant filed a motion to compel discovery and for sanctions, as well as a motion to extend time to respond to plaintiff’s motion for summary judgment until after the court rules on its motion to compel.

 

On June 29, 2005, the court held a hearing on defendant’s motion to compel/motion for sanctions. At the hearing, the court directed the defendant to respond to plaintiff’s motion for summary judgment as to the cancellation issue only and stayed defendant’s motion to compel pending this court’s ruling on the cancellation issue. On November 28, 2005, the court issued an order denying plaintiff’s motion for summary judgment.

 

Defendant now has filed a motion for summary judgment as to all of plaintiff’s claims. Plaintiff also filed a second motion for summary judgment, which defendant has moved to strike.

 

Motion to strike

 

Defendant moves to strike plaintiff’s cross-motion for summary judgment on the grounds that plaintiff’s second motion for summary judgment does not identify any additional material facts or legal theories that might warrant summary judgment in plaintiff’s favor. Local Rule 7.1B requires that “any party opposing a motion shall serve the party’s response … not later than ten (10) days after service of the motion,” and further provides that, “[f]ailure to file a response shall indicate that there is no opposition to the motion.” LR 7.1B, ND Ga. As of the date of this order, plaintiff has not responded to defendant’s motion to strike [docket no. 54] which included a certificate of service. Accordingly, the court GRANTS AS UNOPPOSED defendant’s motion to strike [docket no. 58]. Plaintiff’s cross-motion for summary judgment [docket no. 54] is DISMISSED.

 

Motion for summary judgment

 

Standard

Courts should grant summary judgment when “there is no genuine issue as to any material fact … and the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). The moving party must “always bear the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). That burden is ‘discharged by ‘showing’–that is, pointing out to the district court–that there is an absence of evidence to support the nonmoving party’s case.” Id. at 325; see also U.S. v. Four Parcels of Real Property, 941 F.2d 1428, 1437 (11th Cir.1991).

 

Once the movant has met this burden, the opposing party must then present evidence establishing that there is a genuine issue of material fact. Celotex, 477 U.S. at 325. The nonmoving party must go beyond the pleadings and submit evidence such as affidavits, depositions and admissions that are sufficient to demonstrate that if allowed to proceed to trial, a jury might return a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If he does so, there is a genuine issue of fact that requires a trial. In making a determination of whether there is a material issue of fact, the evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor. Id. at 255; Rollins v. TechSouth, Inc., 833 F.2d 1525, 1529 (11th Cir.1987). However, an issue is not genuine if it is unsupported by evidence or if it is created by evidence that is “merely colorable” or is “not significantly probative.” Anderson, 477 U.S. at 249-50. Similarly, a fact is not material unless it is identified by the controlling substantive law as an essential element of the nonmoving party’s case. Id. at 248. Thus, to create a genuine issue of material fact for trial, the party opposing the summary judgment must come forward with specific evidence of every element essential to his case with respect to which (1) he has the burden of proof, and (2) the summary judgment movant has made a plausible showing of the absence of evidence of the necessary element. Celotex, 477 U.S. at 323.

 

Facts

In light of the foregoing standard, the court finds the following pertinent facts for the purpose of resolving this motion for summary judgment only. On or about September 25, 2002, defendant issued to Jerry Yarbrough, d/b/a J & J Trucking and Excavation, a trucker’s liability policy with the intended effective dates of September 25, 2002 through September 25, 2003. Mr. Yarbrough financed his insurance premiums for the Stratford policy through AI Credit Corporation (“AI”). Yarbrough and AI entered a premium-finance agreement in which Yarbrough gave AI a power of attorney to unilaterally cancel the Stratford policy in the event of default. Stratford and AI are separate entities, and there is no dispute that Stratford was not a party to the premium-finance agreement.

 

On March 4, 2003, AI mailed to Yarbrough its notice of intent to cancel the Stratford policy. On March 26, 2003, AI mailed notices of cancellation to Yarbrough, Yarbrough’s insurance agent, and Stratford’s underwriting and policy-issuing agent, indicating that it was canceling Yarbrough’s policy the following day, effective March 27, 2003. Apparently, Stratford did not receive the notice of cancellation directly from AI but it did receive a notice of cancellation from its agent. After receiving a copy of AI’s notice of cancellation, Stratford considered the policy cancelled by Yarborugh as of March 27, 2003. The underlying accident occurred on August 27, 2003.

 

At all times relevant to this suit, the Georgia Department of Motor Vehicle Safety (DMVS) would not accept for filing a Form E Certificate of Insurance where a carrier had not applied for or obtained a permit for authority with the DMVS. Had the DMVS received a Form E for a carrier who had not applied for or received a permit, the DMVS would have returned the filing to the insurer with a notation that this carrier was not registered. Furthermore, where a carrier had not applied for or obtained Authority from the DMVS to operate as a motor carrier, the DMVS would not accept or file a certificate of cancellation of insurance.

 

Yarbrough has never applied for or obtained a motor-carrier permit in Georgia. Consequently, had Stratford submitted a certificate of insurance for filing with the DMVS at any time between September 2002 and the present, the DMVS would have rejected the Certificate and returned it to Stratford. Likewise, a Form K notice of cancellation also would have been returned.

 

Discussion

Plaintiff contends that the “attempted cancellation” of the policy was legally ineffective because (1) the premium finance company failed to strictly comply with the requirements for legal cancellation of the policy under the Premium Finance Statute and (2) defendant failed to notify the State of the cancellation. Defendant moves for summary judgment on the ground that AI properly cancelled the policy before the date of the underlying accident and therefore the liability policy was not in effect at the time of the accident.

 

Premium Finance Statute

 

Under Georgia law, a premium finance company canceling an insurance contract pursuant to a power of attorney must adhere to the requirements of the premium finance statute which provides that

[n]ot less than ten days’ written notice shall be delivered to the insured … of the intent of the premium finance company to cancel the insurance contract unless the default is cured within such ten-day period. A copy of said notice shall also be sent to the insurance agent or insurance broker indicated on the premium finance agreement.

O.C.G.A. §  33-22-13(b).

 

After expiration of the ten-day period, the premium finance company may, in the name of the insured, cancel the insurance contract by mailing to the insurer a notice of cancellation. O.C.G.A. §  33-22-13(c)(1). The insurance contract then shall be canceled as if the notice of cancellation had been submitted by the insured. Id. The premium finance company also shall mail notice to the insured notifying him or her of the action taken. Id.

 

The receipt of the notice of cancellation by the insurer creates “a conclusive presumption” that the premium finance company has fully complied with all the requirements of the premium finance statute, that the insurer is entitled to rely on such presumption, and that the cancellation of the insurance contract or contracts is concurred in and authorized by the insured. O.C.G.A. §  33- 22-13(c)(2).

 

It is undisputed that Yarbrough financed his insurance premiums for the policy at issue through AI Credit Corporation. Yarbrough and AI entered a premium-finance agreement in which Yarbrough gave AI a power of attorney to unilaterally cancel the policy in the event Yarbrough failed to make his finance payments to AI.

 

Plaintiff argues that Yarbrough was not in default at the time he received a Notice of Intent to Cancel his policy and that the Premium Finance Statute setting forth the procedures for cancellation was not followed. The court previously has found that plaintiff failed to show as a matter of law that Yarbrough’s account was current at the time of the notice of cancellation. However, even assuming that AI erred in sending the notice of cancellation, defendant can not be liable for coverage to the insured. The premium finance statute specifically provides that “[n]o liability of any nature whatsoever shall be imposed upon the insurer as a result of the failure by the insured to receive the notice of the action taken … or as a result of the failure of the insurance premium finance company to comply with any of the requirements of this Code section.” Id. Therefore, plaintiff fails to show that defendant’s reliance on AI’s notice of cancellation was legally ineffective.

 

Notice to the State

 

Plaintiff contends that because defendant failed to give notice of cancellation of the policy to the DMVS, the attempted cancellation was ineffective as to plaintiff and, therefore, defendant is liable for the Cobb County judgment. Defendant argues, however, that notice to the DMVS was not required and would have been impossible to achieve.

 

A motor carrier for hire must register with the State and obtain a permit of authority before being allowed to commercially operate in Georgia. O.C.G.A. §  46-7-3. Before authorization will be given, financial responsibility must be established. O.C.G.A. § §  46-7-7(a)(1) and 46-7-12; Transportation Rules of Georgia Public Service Commission, Rule 7-2.1. Before a permit will be issued, there must be on file with the State a certificate of insurance. O.C .G.A. §  46-7-12. “The insurer shall file such certificate” on Form E. Id. See Transportation Rules of Georgia Public Service Commission, Rules 7- 2.1, 7-2.6(c). “Certificates of insurance evidencing coverage shall be continuous and shall not be canceled or withdrawn until thirty (30) days’ notice in writing by the insurance company” has been given using Form K. Transportation Rules of Georgia Public Service Commission, Rules 7-2.6(b) & (c).

 

Georgia’s direct action statute establishes an independent cause of action against the carrier’s insurer on behalf of a member of the public injured by the carrier’s negligence. O.C.G.A. §  46-7-12. See e.g. Jackson v. Sluder, 256 Ga.App. 812, 81 (2002); Thomas v. Bobby Stevens Hauling Contractors, 165 Ga.App. 710, 302 S.E.2d 585 (1983). When a Form E certificate of insurance filed with the state provides that an insurance company has issued its insured an insurance policy and the policy lapses before the incident giving rise to liability on the part of the insured, and before proper notice of the cancellation is given to the State, the policy remains in effect as to the injured third party. Progressive Preferred Ins. Co. v. Ramirez, 277 Ga. 392, 588 S.E.2d 751 (2003) (answering certified question from the Eleventh Circuit Court of Appeals).

 

It is undisputed that Yarbrough did not register with the DMVS. While  “[t]he failure to file any form required by the commission shall not diminish the rights of any person to pursue an action directly against a motor carrier’s insurer,” O.C.G.A. §  46-7-12(a), it is undisputed that if defendant had attempted to file a certificate of insurance on Yarbrough’s behalf, the certificate would have been rejected and returned to defendant. Because no certificate of insurance was on file, defendant also could not have filed a Form K notice of cancellation.

 

While plaintiff cites testimony that the form would have been returned with a notation that the insured was unregistered, plaintiff fails to cite the court to any legal authority that, under such circumstances, defendant was required to attempt to file the certificate of insurance form. Likewise, plaintiff fails to cite the court to any authority that defendant was subsequently required to attempt to file a Form K notice of cancellation of the certificate of insurance where no registration or certificate of insurance previously had been filed. Cf. DeHart v. Liberty Mutual Ins. Co., 270 Ga. 381, 509 S.E.2d 913 (1998)(applying continuous coverage provision and finding coverage where insurer previously filed certificate of insurance but failed to give proper notice of cancellation prior to plaintiff’s injury). Defendant already was aware that Yarbrough was not registered. This was the reason Stratford did not attempt to file the certificate of insurance. Although the internal procedures of the DMVS regarding the filing of forms seem contrary to the desires and intentions of the legislature in amending the direct action statute, the law can not require an impossible act. See e.g. Giles v. Ireland, 742 F.2d 1366, 1376 (11th Cir.1984).

 

Therefore, having considered the evidence and the arguments of the parties the court hereby GRANTS defendant’s motion for summary judgment [docket no. 49].

 

Defendant’s motion to compel

 

The court has granted defendant’s motion for summary judgment. Therefore Defendant’s motion to compel [docket no. 25] is DENIED AS MOOT. Defendant’s motion to strike plaintiff’s response in opposition to motion to compel [docket no. 37] also is DENIED AS MOOT.

 

Motion to withdraw

 

Audrey E. Mitchell moves to withdraw as counsel for plaintiff. No objection to the motion has been filed. Richard W. Hendrix will remain as plaintiff’s counsel of record.

 

Having considered the motion, the court hereby GRANTS the motion to withdraw as counsel for plaintiff by Audrey E. Mitchell.

 

Summary

(1) defendant’s motion for summary judgment [docket no. 49] is GRANTED;

 

(2) plaintiff’s cross-motion for summary judgment [docket 54] is DISMISSED;

 

(3) defendant’s motion to strike plaintiff’s cross motion for summary judgment [docket no. 58] is GRANTED AS UNOPPOSED;

 

(4) defendant’s motion to compel discovery and for sanctions [docket no. 25] is DENIED AS MOOT;

 

(5) Audrey E. Mitchell’s motion to withdraw as attorney for plaintiff  [docket no. 60] is GRANTED;

 

(6) defendant’s motion to strike plaintiff’s response in opposition to motion to compel [docket no. 37] is DENIED AS MOOT.

 

SO ORDERED.

 

Slip Copy, 2006 WL 870377 (N.D.Ga.)

BDM v. Federal Express

United States District Court,

W.D. Washington.

BDM, LLC, Plaintiff,

v.

FEDERAL EXPRESS CORPORATION, et al., Defendants.

No. C05-1347-MJB.

 

March 31, 2006.

 

 

MEMORANDUM OPINION AND ORDER

 

This matter proceeds before the undersigned Magistrate Judge by consent of the parties.

 

BENTON, Magistrate J.

 

I. INTRODUCTION AND SUMMARY CONCLUSION

This breach of contract action involving an international shipment of goods was initially filed in King County Superior Court by Plaintiff and removed to this Court by Defendant. Now before the Court is Defendant’s motion for summary judgment dismissing Plaintiff’s complaint. Plaintiff has filed a response in opposition to the motion and Defendant has filed a reply. Having reviewed the motion, all pleadings and documents in support and in opposition, and the remaining record, the Court GRANTS the summary judgment motion and dismisses all of Plaintiff’s claims against Defendant.

 

II. BACKGROUND FACTS

On August 16, 2004, plaintiff Beads Du Monde, LLC (“BDM”) and defendant FedEx    entered into a FedEx Pricing Agreement (the “Agreement”). Decl. of Bonnie Bridwell, Dkt. # 14 at Ex. F. The Agreement sets out terms and conditions of their contract of carriage, which includes the terms of the applicable FedEx Service Guide incorporated by reference. Id. On or around September 30, 2004, BDM contacted FedEx to arrange for pickup and shipment of twenty-one (21) export-grade cartons of gems from Washington to China. When the FedEx courier arrived, he explained to BDM that freight shipments must be palletized and arranged to come back the next day. BDM used a wood pallet that accompanied an earlier FedEx shipment to BDM.

 

Plaintiff’s complaint names as defendants Federal Express Corporation, FedEx Ground Package System, Inc, and FedEx Corporate Services, Inc., and collectively refers to these entities as “FedEx .” This Court uses the collective reference in this memorandum opinion.

 

FedEx concedes the facts in the latter two sentences of this paragraph for purposes of this motion only. Dkt. # 19 at 2.

 

On October 1, 2004, a FedEx courier picked up the palletized shipment for delivery from Redmond, Washington to Changzhou, China, traveling under FedEx international air waybill number 6888630031481. Dkt. # 14, Ex. B. All documentation and the air waybill for the shipment was prepared by BDM. The Commercial Invoice that accompanied the shipment described its contents as “synthetic cat’s eye, cut but not set for use in manufacture or jewelry” that was being “return[ed] for repair”. Dkt # 14, Ex. G. This invoice listed the total weight of the shipment as 757 pounds, the total commodity value as $210.00, and the total invoice value as $1648.35. Id.

 

The shipment arrived in China on or about October 5, 2004, but was unable to clear Customs. Dkt. # 1 at 19. From October 6 through December 31, 2004, FedEx placed more than 90 telephone calls, mostly to the consignee but also to the shipper, in efforts to have the shipment clear Chinese Customs. Dkt. # 14, Ex D. On January 10, 2005, the shipment was destroyed by Chinese Customs.

 

On July 12, 2005, BDM filed this breach of contract action against FedEx, seeking damages in the amount of $51,000 in lost profits it had expected to make in selling the gemstone beads, or in the alternative the value of the gemstone beads, $24,469.19, plus prejudgment interest. Dkt. # 1 at 10. BDM also seeks damages of $1,437.35, representing charges paid to FedEx to deliver the shipment. Id. FedEx filed the current summary judgment motion on January 9, 2006. Dkt. # 13.

 

III. THE PARTIES’ POSITIONS

FedEx moves for summary judgment dismissing BDM’s complaint on grounds that: 1) FedEx did not breach the contract, and 2) BDM failed to give proper, timely written notice of claim. In the alternative, FedEx moves for partial summary judgment limiting Plaintiff’s recovery to 17 SDR’s per kilogram pursuant to Article 22(2)(a) of the Warsaw Convention, 1929, as amended at the Hague, 1995. BDM responds that the summary judgment motion should be denied because: 1) FedEx breached the contract by insisting that BDM use a wood pallet for the shipment and providing a wood pallet that would not clear Chinese customs; 2) the notice provisions do not apply when the shipment is destroyed; 3) if the notice provisions apply, BDM complied with them; and 4) the Warsaw Convention’s limitation of liability cannot be decided on summary judgment since there is a genuine issue of material fact as to whether FedEx engaged in willful misconduct.

 

IV. STANDARD OF REVIEW

Summary judgment is appropriate if the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there are no genuine issues as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed R. Civ. P. 56(c). In deciding a summary judgment motion, the court views the evidence in the light most favorable to the non-moving party, and draws all reasonable inferences in that party’s favor. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass’n, 809 F.2d 626, 630-31 (9th Cir.1987). The moving party has the burden of demonstrating the absence of genuine issues of material fact. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If the movant meets this burden, then summary judgment will be granted unless there is significant probative evidence tending to support the opponent’s legal theory. See First Nat’l Bank v. Cities Serv. Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968).

 

In response to a summary judgment motion, the nonmoving party may not rest upon mere allegations or denials in the pleadings, but must set forth specific facts demonstrating a genuine issue of fact for trial and produce evidence sufficient to establish the existence of the elements essential to his case. Fed.R.Civ.P. 56(e). A mere scintilla of evidence is insufficient to create a factual dispute. Anderson, 477 U.S. at 252.

 

V. DISCUSSION

A. Applicability of the Warsaw Convention

 

The Warsaw Convention is an international treaty governing liability that arises from the “international transportation of persons, baggage or goods performed by an aircraft for hire.” Convention for the Unification of Certain Rules Relating to International Transportation by Air, October 12, 1929, art. 1, 49 Stat. 3000, T.S. No. 876 (1934), reprinted in note following 49 U.S.C. §  40105. When the Warsaw Convention applies, it is the exclusive remedy for actions against air carriers. Onyeanusi v. Pan AM, 952 F.2d 788, 793 (3rd Cir.1992) (citations omitted). The Warsaw Convention only applies to shipments between territories of signatories, otherwise known as “High Contracting Parties.” Mingtai Fire & Marine Ins. Co., v. United Parcel Service, 177 F.3d 1142, 1144 (9th Cir.1999) (citing Warsaw Convention, art. 1(2)).

 

Here, the January 5, 2004 FedEx Service Guide, which was in effect at the time of the shipment, clearly states that “[w]hen the carriage involves an ultimate destination or stop in a country other than the country of departure, the Warsaw Convention  [] may be applicable.” Dkt. # 14, Ex. E at 27. Moreover, neither party disputes that China and the United States are High Contracting Parties to the Warsaw Convention as amended by the Hague Protocol of 1955. Thus, the present action falls within the parameters of the Warsaw Convention as amended by the Hague Protocol of 1955 (the “Convention”).

 

The FedEx Service Guide provides that “Warsaw Convention” or “Convention” as used in the FedEx Express terms and conditions, means the original Warsaw Convention or that convention as amended, including the Montreal Protocol No. 4 and the Montreal Convention.” Dkt. # 14, Ex. E at 27).

 

This treaty is formally known as the Protocol to Amend the Convention for the Unification of Certain Rules Relating to International Carriage by Air signed at Warsaw on 12 October 1929, Sept. 28, 1955, 478 U.N.T.S. 371. The Hague Protocol to the Warsaw Convention entered into force in China on November 18, 1975. The United States Senate approved the Hague Protocol on July 31, 2003, and it was ratified by President George W. Bush effective December 14, 2003. See Avero Belg. Ins. v. Am. Airlines, Inc., 423 F.3d 73, 83 (2nd Cir.2005) (holding that the United States did not consent to be bound to the Hague Protocol by virtue of its ratification of Montreal Protocol No. 4 in 1998).

 

B. Breach of Contract Claim

 

FedEx argues that BDM’s breach of contract action is barred because although the shipment was not delivered to the consignee, the basis was not due to a FedEx breach. Rather, FedEx asserts that nondelivery of the shipment was solely due to the requirements of Chinese customs, and the burden of compliance with customs is strictly on the shipper under the Convention and the contract. BDM responds that FedEx can be held liable to BDM because FedEx insisted that BDM use a wood pallet that would not clear Chinese customs since it was not heat treated. BDM contends that it did not intend for the pallet to be used all the way to China, and that by overruling BDM’s chosen form of packaging, FedEx took it upon itself to ensure that its chosen form of packaging complied with Chinese and international law.

 

These arguments highlight the preliminary issue of why the shipment failed to clear customs that must be addressed in order to determine whether FedEx is entitled to summary judgment dismissing BDM’s breach of contract claim. Thus, the Court first considers whether the record reflects a genuine issue of material fact regarding the reason the shipment was held in Chinese customs and eventually destroyed.

 

The only evidence in the record concerning the reason the shipment was held by Chinese customs appears in the Customer Exception Request, attached as Exhibit “D” to the Declaration of Bonnie Bridwell in support of FedEx’s summary judgment motion. Dkt. # 14. This exhibit contains entries tracking telephone communications between FedEx and the consignee and/or the shipper after the shipment failed to clear customs. Careful review of this exhibit reveals a number of entries that flesh out the reasons the shipment failed to clear customs. Those entries are charted in the following table:

 

The consignee Mr. Zheng named as Ms. Gao as the person that he would ask to contact FedEx regarding the shipment after it failed to clear Chinese Customs. See Dkt. 14, Ex. G at 11.

 

 

 

——————————————————————————-

DATE        TEXT ENTRY

——————————————————————————-

10/5/2004   Notify: Ship and Cnee of required clearance documentation and info

Reason: CPW–Call Shp/Cnee; Nd ppwk/info

——————————————————————————-

10/6/2004   Shpt has been caged by SZX customs due to need formal entry

——————————————————————————-

11/9/2004   Origin, Pls note Shpr the shpt has been in Shenzhen Customs cage

for

such a long time and Cnee isn’t working in clearing the shpt … By

the way the value is too low to be accepted by China customs …

 

 

 

and

if the shpt stay in customs cage more longer, it wl be destroyed by

customs.

——————————————————————————-

11/15/2004  Cld Ms. Gao [] …, she has asked the factory to enhance the

value

The consignee Mr. Zheng named as Ms. Gao as the person that he would ask

to contact FedEx regarding the shipment after it failed to clear Chinese

Customs. See Dkt. 14, Ex. G at 11.

——————————————————————————-

11/15/2004  Cld Ms. Gao …, Ms. Gao tld me there are two way to resolve the

problem / / / /one is maybe she wl destroy the shpt; another is she

wl

enhance the value to clear the shpt, but she has to consult with

the

boss of the factory….She won’t rtn the shpt to shpr

——————————————————————————-

11/17/2004  Cld Ms. Gao …, she tld me she has try her best to descuss the

price

with the factory … when there is a result she wl cb

——————————————————————————-

 

 

 

11/18/2004  Cld Ms. Gao …, she tld me she wl still want Tianyichengcin to

handle this case, she wl let them to check the shpt and enhance the

value to a relative reasonable price

——————————————————————————-

11/19/2004  Cld Ms. Gao …, asked how about the process//

1. Tianyichengxin asked their shpr to provide a suffocating testify

Ms. Go has sent e-mail to their shpr

——————————————————————————-

11/22/2004  Origin, Pls help cnee to etc shpr to provide the above ppwk

——————————————————————————-

11/23/2004  Origin Pls help etc shpr that Cn Customs required certificate of

heat

treatment of wood pallet first, or it could not be clred. We had

informed Cnee Ms. Gao on the above. She tld me she wl also etc

Shpr when he was on duty for it

——————————————————————————-

11/24/2004  Cld Ms. Gao …, tld her the heat treatment on wood pallet shoul[d]

be provided by Shpr, she noted and she wl send e-mail to Shpr and

urge them to provide the approval

——————————————————————————-

11/25/2004  Cld Ms. Gao …, she tld me T/Y has contacted her yesterday and she

 

 

 

has noted Shpr very clearly in e-mail to provide the heat treatment

on

wood pallet//Now is just waiting for Shpr to send the information

——————————————————————————-

12/1/2004   Cld Ms Gao …, she tld me that Shpr had mailed certification of

heat

treatment to her. Now it was in Shanghai. After she got it, she wl

mailed it to Tianyi Broker Ms Liu to help do formal entry

——————————————————————————-

12/3/2004   Cld Tianyichengxin Ms Liu Lin, she tld me she didn’t receive the

heat

treatment … she tld me the value of this shpt is still relative

low

according to customs, this shpt’s HS code is 70181000 and the D/T

cage fee, delay charge, plus them together is nearly 12000RMB …

Ms. Liu tld me to note Ms. Gao the above

——————————————————————————-

12/14/2004  Cld Cnee Ms Gao, she asked Tianyi Broker Co to do formal entry

 

——————————————————————————-

12/17/2004  Origin Pls be noted if Cnee could not do formal entry before

 

 

 

1/5/2005, the shpt wl be handed to Cn Customs to dispose. That is

to

say, both Cnee n Shpr wl lose right to handle it.

If Cnee want to do formal entry, she must pay 0.5% of D/V due to

delaying declaration to Cn Customs n fee of renting warehouse

——————————————————————————-

12/20/2004  FedEx China, called Shpr & spk w/ Graham and Arcus Kelley … per

shpr, this is a standard wooden warehouse pallet that was shrink

wrapped becasue FedEx (USA) adv them the only way this shpmnt

would be accepted was to be shrink wrapped on a pallet & shipped to

China … Shpr stated you have their full authority to destroy the

pallet only and delv pkgs.

——————————————————————————-

12/20/2004  According to Cn Customs n CIQ’s Policy … we had no right to

destroy the wood pallet n Cnee/Shpr must provide heat treatment

certificate and other ppwk to clear it.

——————————————————————————-

12/27/2004  Ld Ms Gao …, she tld me she has ctced Shpr for wanting the heat

steam … if Shpr can’t provide the document, she wl not respons

for

the result

 

 

 

——————————————————————————-

1/4/2005    Cld Ms. Gao …, noted her the shpt has been in Customs cage for 3

months … Now Cn Customs wl handle this case … she tld me she

wl send e-mail to note Shpr the above

——————————————————————————-

1/7/2005    Applied to Destroy this Shpt….CN Customs wl handle this case

——————————————————————————-

 

 

 

Dkt. # 14, Ex. G at 11-21.

 

These entries show that the reason the shipment was held by Chinese customs was the absence of certain documentation and information needed for formal entry of the shipment, including both information enhancing the value of the shipment, as well as a certificate of heat treatment of the wood pallet. It further shows that the shipment was destroyed only after three months had lapsed without resolution of these customs clearance issues. Thus, the undersigned concludes that there are no genuine issues of material fact regarding the reason the shipment was held by Chinese Customs.

 

Consequently, in this case, assessment of whether there is a genuine issue of material fact on FedEx’s claim that it did not breach the contract turns on the issue of who bore the responsibility for satisfying the customs requirements. Here, the Court agrees with FedEx that the Convention and the contract place all burden of properly completed paperwork on the shipper.

 

The relevant provisions of the Convention that address this issue are Articles 10 and 16. Article 10 provides:

(1) The consignor shall be responsible for the correctness of the particulars and statements relating to the goods which he inserts in the air waybill.

(2) The consignor shall indemnify the carrier against all damage suffered by him, or by any other person to whom the carrier is liable, by reason of the irregularity, incorrectness or incompleteness of the particulars and statements furnished by the consignor.

Additionally, Article 16 states:

(1) The consignor must furnish such information and attach to the air waybill such documents as are necessary to meet the formalities of customs, octroi, or police before the goods can be delivered to the consignee. The consignor shall be liable to the carrier for any damage occasioned by the absence, insufficiency, or irregularity of any such information or documents unless the damage is due to the fault of the carrier or his agents.

(2) The carrier is under no obligation to enquire into the correctness or sufficiency of such information or documents.

 

In this case, these Articles of the Convention make it clear that to the extent the paperwork and documentation necessary for the shipment to clear Chinese Customs was insufficient or incomplete, the responsibility for preparation and correctness of those documents lay with the consignor, BDM, not the carrier, FedEx.

 

Moreover, several provisions of the applicable FedEx Service Guide also relieve FedEx of responsibility under the circumstances of this case. First, the “Customs Clearance” section of the Service Guide states in pertinent part:

D. When shipments are held by customs or other agencies due to incorrect or missing documentation, we may attempt first to notify the recipient. If local law requires the correct information or documentation to be submitted by a recipient and recipient fails to do so within a reasonable time as we may determine, the shipment may be considered undeliverable…. If the recipient fails to supply the required information or documentation, and local law allows the sender to provide the same, we may attempt to notify the sender. If sender also fails to supply the required information or documentation, and local law allows the sender to provide the same, we may attempt to notify the sender. If sender also fails to provide the information or documentation within a reasonable time as we may determine, the shipment will be considered undeliverable. We assume no responsibility for our inability to complete a delivery due to incorrect or missing documentation, whether or not we attempt to notify the recipient or sender.

Dkt. 14, Ex. E at 29 (emphasis added). The record reflects that FedEx repeatedly contacted the recipient and the sender in efforts to obtain clearance of the shipment through Chinese customs. See Dkt. 14, Ex. G. However, because neither BDM nor its consignee ever resolved the customs issues concerning the missing or incomplete documentation needed for formal entry of the shipment into China, FedEx’s inability to complete delivery falls squarely within the scope of this provision.

 

Furthermore, the “Liabilities Not Assumed” section of the applicable FedEx Service Guide provides:

We will not be liable for, nor will any adjustment, refund, or credit of any kind be given as a result of, any loss, damage, delay, misdelivery, nondelivery, misinformation or failure to provide information caused by or resulting in whole or in part from:

* * *

G. Our inability to complete a delivery, or a dely to any delivery due to acts or omissions of customs or other regulatory agencies.

Dkt. 14, Ex. E at 31-32 (emphasis added). The nondelivery in this case resulted from the acts of Chinese Customs in placing a hold on the shipment and in ultimately destroying the shipment. Thus, under this provision, FedEx was relieved of any liability to BDM resulting from the loss and nondelivery of this shipment.

 

In an effort to avoid FedEx’s relief from liability under these provisions of the Convention and the contract, BDM argues that its gems were destroyed because they were placed on a wood pallet that was not heat treated, and BDM seeks to narrow the focus to who is responsible for the wood pallet being untreated. In that regard, BDM claims that because FedEx required BDM to place its 21 packages on a pallet, FedEx took this case out of its standard contract and took upon itself to ensure that its chosen form of packaging complied with Chinese and international law.

 

However, the Court finds these arguments to be without merit. While it is undisputed that the FedEx courier told BDM the shipment needed to be palletized, BDM itself chose the wood pallet on which the 21 boxes were shipped and it packed the boxes onto the pallet. There are absolutely no facts in the record to suggest that FedEx was involved in selecting the pallet that BDM used for this shipment. Moreover, the “Packaging and Marking” provisions of the FedEx Service Guide, squarely places the burden on the shipper to “comply with all applicable laws (including, but not limited to, local state, federal and international laws), including those governing packing, marking and labeling for all shipments.” See Dkt. # 14, Ex. E at 22. Thus, the Court finds that BDM alone bore responsibility for selection of a wood pallet that was untreated.

 

C. Remaining Claims

 

FedEx’s summary judgment motion also presents arguments that this suit is barred because BDM failed to file a timely written notice of claim with FedEx, and that FedEx’s liability, as a matter of law, is limited to 17 SDRs per kilogram because the shipper failed to declare, or pay for, a value for carriage for the shipment. In light of the Court’s conclusion that FedEx did not breach its contract with BDM, it is unnecessary to address these remaining issues.

 

VI. CONCLUSION AND ORDER

For the reasons stated above, the Court finds that there are no genuine issues of material fact precluding summary judgment on grounds that FedEx did not breach its contract with BDM. Therefore, the Court GRANTS FedEx’s motion for summary judgment (Dkt.# 13) and dismisses all of BDM’s claims against FedEx with prejudice.

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