5 Fla. L. Weekly Supp. 337b

Insurance — Contracts — Shipping — Limitation of liability — Motion for summary judgment by express air carrier in action by insurer, as subrogee of company that shipped package allegedly containing jewelry valued at $29,000, where shipping contract contained $100 liability limit if no value was declared — Liability of federally certificated air carriers for loss attendant to goods in transit is controlled by federal law — Where insured company did not declare value on shipment, and contract gave insured a fair opportunity to chose between higher or lower liability by paying a greater or lesser shipping charge, it cannot recover more than $100 — Plaintiff, as subrogee of insured’s contractual rights, cannot recover more than $100 — No merit to claim that action is governed by Carmack Amendment to Interstate Commerce Act, where unambiguous language of statute and legislative history make clear that Interstate Commerce Commission does not have jurisdiction over transportation by motor vehicle where that transportation is preceded or followed by transportation by an air carrier — Motion for summary judgment granted

TRAVELERS INSURANCE COMPANY, Plaintiff, v. FEDERAL EXPRESS CORPORATION, Defendant. County Court in and for Dade County, Civil Division. Case No. 95-13873. April 15, 1997. Celeste Hardee Muir, Judge. Counsel: Gregg M. Goldfarb, Miami, for Plaintiff. James M. Walker, Walker & York, P.A., Miami, and Cynthia Collins, Memphis, TN, for Defendant.

This matter came before this Court on the motion of defendant Federal Express Corporation for summary judgment or, in the alternative, for partial summary judgment against Plaintiff, Travelers Insurance Company (“Travelers”). Having heard and considered the pleadings, supporting affidavits and relevant evidence, the Court is of the opinion that said Motion should be granted.

It is therefore ORDERED, ADJUDGED, and DECREED that summary judgment is hereby granted in favor of Federal Express Corporation (“Federal Express”). The Court finds as follows:

FINDINGS OF FACT

Federal Express is a federally certificated all-cargo air carrier operating under authority granted to it by the Federal Aviation Administration. On or about July 21, 1994, One Service Company (“One Service”) and Federal Express entered into a contract of carriage whereby Federal Express agreed to ship a package from New York, NY to Miami, Florida (the “Shipment”). The contract of carriage was embodied in the February 23, 1994 Powership Placement Agreement between One Service and Federal Express and the Federal Express Service Guide incorporated therein by reference. Under the terms of the contract, FedEx’s liability for any loss in connection with the Shipment was limited to the declared value or, in the absence of a declared value, to $100. The Shipment allegedly contained jewelry valued at $29,000, however, One Service did not declare a value for the Shipment.

The contents of the Shipment, which was transported from New York to Miami by air, were lost during transit. As a result of the loss, Plaintiff, Travelers Insurance Company (“Travelers”) paid One Service $29,900 under a policy of insurance issued in connection therewith.

Subsequent to the loss of the Shipment, One Service filed a claim with Federal Express. In accordance with the terms of the contract of carriage, Federal Express paid the claim by issuing One Service a check in the amount of $111 ($100 limit of liability and $11 in shipping charges).

SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate where there are no genuine issues of material fact and Federal Express, the moving party, is entitled to judgment as a matter of law. Landers v. Milton, 370 So.2d 368, 370 (Fla. 1979). In the instant case, there are no material facts in controversy and summary judgment in favor of Federal Express is appropriate.

ANALYSIS

Federal Express’ Liability is Limited To $100.

The liability of FedEx and other federally certificated air carriers for loss attendant to goods in transit is controlled by federal law. Arkwright v. Boston Mfg. v. Great Western Airlines, 767 F.2d 425, 427 (8th Cir. 1985); First Pennsylvania Bank N.A. v. Eastern Airlines, 731 F.2d 1113 (3rd Cir. 1984); American Phillips Corp. v. Emery Air Freight Corp., 579 F.2d 229, at 233-34 (2nd Cir. 1978); Apartment Specialists, Inc. v. Purolator Courier Corp., 628 F.Supp. 55 (D.C. 1986). The airbills such as that used by FedEx form the basic contract between the shipper and the carrier. Southeastern Pacific Transport Co. v. Commercial Metals Co., 456 U.S. 336, 102 S.Ct. 1815, 72 L.Ed.2d 114 (1982). The terms of the airbills, however, may be validly supplemented by incorporating the carriers’ service guides by reference. Hopper Furs, Inc. v. Emery Air Freight Corp., 756 F.Supp. 210, 212 (D.N.J. 1991); Kansas State Bank & Trust Co. v. Emery Air Freight Corp., 656 F.Supp. 200, 205 (D. Kan. 1987). FedEx’s July 1993 Service Guide (“Service Guide”) was in effect on the date of the Shipment and FedEx expressly incorporated the terms of this service guide into its airbills. Accordingly, the language found on the Airbill and in the July 1993 Service Guide constitute the contractual agreement between One Service and FedEx.

The contract of carriage specifically limited FedEx’s liability to the value declared for the Shipment and, in the absence of a declared value, to $100 per package. The “Declared Value and Limits of Liability” section of the Service Guide states:

A. The declared value of any shipment represents our maximum liability for any loss, damage, delay, misdelivery, nondelivery, misinformation or any failure to provide information. Exposure to and risk of any loss in excess of the declared value is either assumed by you or transferred by you to an insurance carrier through the purchase of an insurance policy. You should contact an insurance agent or broker if you desire insurance coverage. WE DO NOT PROVIDE INSURANCE COVERAGE OF ANY KIND. [Emphasis original.]

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Federal common law permits carriers to limit their liability for loss or destruction of shipments based on “released value” doctrine. Under this doctrine, a common carrier may limit its liability to an amount less than the actual loss sustained by a shipper, provided that the carrier gives its shipper a fair opportunity to choose between a higher or lower liability by paying a greater or lesser shipping charge. The justification for enforcing a limitation on liability clause is that the lower charge takes into account the limited risk to which the carrier is exposed. Deiro v. American Airlines, Inc., 816 F.2d 1360, 1365 (9th Cir. 1987); First Pennsylvania Bank v. Eastern Airlines, Inc., 731 F.2d at 1116; Zubaz Inc. v. Federal Express Corp., 864 F.Supp. 723, 726 (W.D. TN 1994); Wagman v. Federal Express Corp., 844 F.Supp. 247, 250 (D. Md. 1994), aff’d, 47 F.3d 1166 (4th Cir. 1995); United States Gold Corp. v. Federal Express Corp., 719 F.Supp. 1217, 1224-25; and Uniden Corp. of America v. Federal Express Corp., 642 F. Supp. 263, 265-66.

Because One Service did not declare a higher value for its shipment, it cannot recover more than $100. Similarly, Travelers, as subrogee of One Service’s contractual rights, cannot recover more than $100.

FedEx Was Not Required to Permit Declaration of Full Value.

Travelers asserts that FedEx is not entitled to take advantage of the limitations contained in the contract or carriage because it did not provide One Service the option of declaring a higher value for the Shipment. However, the “Declared Value and Limits of Liability” section of the Service Guide, page 155, states:

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F. Packages containing the following items of extraordinary value are limited to a maximum declared value of $500:

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4. Jewelry, including but not limited to watches and their parts, precious and semiprecious gems or stones, whether cut or uncut, industrial diamonds and costume jewelry.

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This provision gave One Service the option of declaring a higher value of $500 for the Shipment. The law does not require that a carrier provide the opportunity to declare the full value of the shipment of items of extraordinary value. See, e.g., First Pennsylvania Bank v. Eastern Airlines, Inc., 731 F. 2d 1113 at 1115, 1122 (3rd Cir. 1984) (limitation of liability upheld even though shipper was not permitted to declare a value higher than $500 for a shipment allegedly worth $364,313.45); Downey v. Federal Express Corporation, No. C-92-4956 MHP, 1993 U.S. Dist. LEXIS 16114 (N.D. Cal. Oct. 29, 1993) (inability to declare a value higher than $500 did not void provision limiting liability to $100 in absence of a declared value); Angela Cummings Inc. v. Purolator Courier Corp., 670 F. Supp. 92 (S.D.N.Y. 1987); North American Phillips Corp. v. Emery Air Freight, 579 F.2d 229 (2d Cir. 1978); Commodities Recovery v. Emery Worldwide, 756 F. Supp. 210 (D.N.J. 1991).

The Carmack Amendment Does Not Apply.

Travelers’ claim that this action is governed by the Carmack Amendment is without merit. The Carmack Amendment is a part of a larger statutory scheme for the regulation of interstate commerce by motor vehicle. This statutory scheme, known as the Interstate Commerce Act, requires a carrier providing transportation or services subject to the jurisdiction of the Interstate Commerce Commission (“the Commission”)¹ to publish and file tariffs setting forth certain specified information. Certain forms of motor vehicle transportation, however, are exempt from the Commission’s jurisdiction. One such exemption is the transportation by motor vehicle where that transportation is preceded or followed by transportation by an air carrier. 49 U.S.C. §13506 states:

(a) In general. — Neither the Secretary nor the Board has jurisdiction under this part over —

8(B) transportation of property (including baggage) by motor vehicle as part of a continuous movement which, prior or subsequent to such part of the continuous movement, has been or will be transported by an air carrier or (to the extent so agreed by the United States and approved by the Secretary by a foreign air carrier; or

The legislative history for this section states:

This section also expands the statute’s current exemption for motor carrier transportation which is incidental to air transportation. … The Committee’s purpose in expanding the existing exemption is to bring it into line with what the Congress has done on air cargo movements. Since the transportation of air cargo now is exempt from Federal; economic regulation, the Committee believes that it makes sense to exempt the entire movement, including the motor carrier transportation portion. …

The unambiguous language of the statute and its legislative history makes it clear that the Commission does not have jurisdiction over transportation by motor vehicle where that transportation is preceded or followed by transportation by an air carrier. It is undisputed that One Service’s package was transported from New York to Florida by air. Accordingly, the ICC does not have jurisdiction over the Shipment and the Carmack Amendment does not apply.

Because Federal Express’ liability is contractually limited to $100 and it appearing that Federal Express has paid that amount to the shipper, Federal Express’ motion for summary judgment is granted and this action is dismissed with prejudice.

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¹Now the Surface Transportation Board.

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