ABN AMRO VERZEKERINGEN BV, Plaintiff-Appellant, v. GEOLOGISTICS AMERICAS, INC. and Alfred James doing business as Art Messenger and Delivery Service, Defendant-Appellees, DHL Airways Inc., Third-Party-Defendant, Hartford Fire Insurance Company, Consolidated-Plaintiff.
Docket No. 05-1917-cv
United States Court of Appeals, Second Circuit.
Decided: April 23, 2007.
485 F.3d 85
Can the goals of a government policy possibly outweigh a known risk of loss of life or bodily harm? The EPA and other federal agencies often must decide whether to regulate particular conduct by taking into account whether the risk to the potentially affected population will be acceptable. Such decisions require an exercise of the conscience, but such decisions cannot be deemed egregious, conscience-shocking, and “arbitrary in the constitutional sense,” Collins, 503 U.S. at 129, 112 S.Ct. 1061, merely because they contemplate some likelihood of bodily harm.
Moreover, mass displacement, civil disorder and economic chaos in an urban area also can result in bodily harm and loss of life. The relative magnitude of such risks cannot be reliably computed, and they are in any event incommensurable. Accepting as we must the allegation that the defendants made the wrong decision by disclosing information they knew to be inaccurate, and that this had tragic consequences for the plaintiffs, we conclude that a poor choice made by an executive official between or among the harms risked by the available options is not conscience-shocking merely because for some persons it resulted in grave consequences that a correct decision could have avoided. “[T]he touchstone of due process is protection of the individual against arbitrary action of government,” which in the substantive manifestation of due process is exhibited by “the exercise of power without any reasonable justification in the service of a legitimate governmental objective.” Lewis, 523 U.S. at 845-46, 118 S.Ct. 1708 (internal quotation omitted). When great harm is likely to befall someone no matter what a government official does, the allocation of risk may be a burden on the conscience of the one who must make such decisions, but does not shock the contemporary conscience.
These principles apply notwithstanding the great service rendered by those who repaired New York, the heroism of those who entered the site when it was unstable and on fire, and the serious health consequences that are plausibly alleged in the complaint.
* * *
Because the conduct at issue here does not shock the conscience, there was no constitutional violation. We therefore need not decide whether the conduct alleged violated law that was then clearly established, or whether any special factors counsel hesitation in the recognition of a Bivens action against the defendants. For the foregoing reasons, we affirm.
Andrew R. Spector, Hyman, Kaplan, Ganguzza, Spector & Mars, P.A., Miami, FL; Nicholas E. Pantelopoulos, Kaplan, von Ohlen & Massamillo, LLC, New York, NY, for Defendant-Appellee Geologistics Americas, Inc.
John J. Sullivan, Hill Rivkins & Hayden LLP, New York, N.Y. (Laura R. Landau and Kipp C. Leland, on the brief), for Defendant-Appellee Alfred James d/b/a Art Messenger and Delivery Service.
Before LEVAL and SOTOMAYOR, Circuit Judges, and KRAVITZ, District Judge.*
LEVAL, Circuit Judge.
In this appeal we consider whether in an action for money damages the court may, over plaintiff‘s objection, enter final judgment in the plaintiff‘s favor for all the money that plaintiff may lawfully recover, when the defendants, without conceding liability, tender that amount. Plaintiff ABN Amro Verzekeringen BV (“ABN“) brought suit in the United States District Court for the Southern District of New York (Chin, J.) alleging damage to cargo being shipped from Europe to the United States. The court found as a matter of law that the liability of defendants Geologistics Americas, Inc. (“Geologistics“) and Alfred James d/b/а Art Messenger and Delivery Service (“Art Messenger“) was limited by contract to $50 each. When the defendants tendered $50 without conceding liability, the court entered judgment in ABN‘s favor in that amount. Plaintiff appeals.
Plaintiff ABN is the insurer, assignee, and subrogee of the shipper Halm International Co., Inc. (“Halm“), which suffered a loss of approximately $500,000 as the result of damage to a printing press, which was being transported from Europe to the
The defendants then offered to acquiesce in a judgment against themselves, without conceding liability, each tendering $50. ABN rejected the tenders. The defendants thereupon moved to dismiss the complaint pursuant to
We affirm the district court‘s ruling that the contracts limited the defendants’ liability to $50, as well as the court‘s entry of judgment against each defendant for $50 based on their tenders, and its dismissal of the claim for damages in excess of $50. Moreover, we find that the judgments in ABN‘s favor constituted final, appealable orders under
I. Background
Viewed in the light most favorable to ABN, the evidence showed the following. Halm was a shipper insured by plaintiff ABN. In the years preceding 2000, Halm had developed an ongoing business relationship with Geologistics, a freight forwarder. Halm had hired Geologistics at least twenty-five times to handle its shipments. On June 13, 2000, Geologistics issued a “House Air Waybill” to indicate that it would forward a printing press for Halm from Holland to Huntington Station, New York. When the printing press reached JFK Airport in New York, Geologistics was contractually obligated to arrange for its delivery to Huntington Station. Halm gave certain instructions to Geologistics, concerning, inter alia, the need to “rig” the unit.
On June 20, 2000, Geologistics retained Art Messenger, a trucker, to transport the press from JFK Airport to Huntington Station. Geologistics had retained Art Messenger for “thousands” of prior shipments. The invoice Art Messenger later sent to Geologistics contained neither terms and conditions, nor limitation of liability. However, Art Messenger and Geologistics had previously entered into a written umbrella agreement dating from 1994, which limited Art Messenger‘s liability to $50 per shipment unless Geologistics made specific written arrangements indicating otherwise. In June 2000, at the time of the shipment (which was between points in the State of New York), Art Messenger was authorized to carry cargo
On June 20, an agent for Art Messenger picked up the crates containing the cargo at JFK. The agent did not note any damage. He transported the crates by truck to Huntington Station. In doing so, he failed to tie the crates down with “load locks.” The next morning, during the unloading at Huntington Station, the crate carrying the press was found to be severely damaged. Upon a survey, the printing press was declared to be a total loss, apart from its salvage value. As Halm‘s insurer, ABN was responsible to Halm for approximately $500,000 in loss, which ABN paid.
On June 27, 2000, Geologistics issued an invoice to Halm for $2,276.68. On the back of the invoice werе the standard “Terms & Conditions of Service” approved by the National Customs Brokers and Forwarders Association of America. These Terms & Conditions provided:
[T]he Customer [Halm] agrees that the Company [Geologistics] shall in no event be liable for any ... damage ... to the goods resulting from the negligence or other fault of the Company for any amount in excess of $50 per shipment (or the invoice value, if less).... The Customer has the option of paying a special compensation to increase the liability of the Company in excess of $50 per shipment in case of any ... damage ... from causes which would make the Company liable, but such option can be exercised only by specific written agreement made with the Company prior to shipment which agreement shall indicate the limit of the Company‘s liability and the special compensation for the added liability by it to be assumed.
These were the same Terms & Conditions as appeared in the approximately twenty-five prior Geologistics invoices to Halm dаting from 1997. Halm had neither requested additional coverage nor paid special compensation to increase the level of liability.
In June 2001, as Halm‘s subrogee, ABN (along with another insurer) brought this suit against Geologistics and Art Messenger, claiming (1) breach of contract, (2) breach of bailment obligations, and (3) negligence.3
A. The Liability-Limitation Ruling
The parties cross-moved for summary judgment. On April 1, 2003, the district court denied ABN‘s motion and granted the defendants’ motions in part, ruling that the liability of each defendant was limited to $50. ABN Amro Verzekeringen BV v. Geologistics Ams., Inc., 253 F.Supp.2d 757 (S.D.N.Y.2003) (”ABN Amro I“).
The court noted that under New York law,4 a non-carrier freight forwarder such
The court then turned to ABN‘s claims against Art Messenger and explained its rulings as follows: In the absence of a contract to the contrary, a common carrier (which the district court assumed Art Messenger to be)5 will normally be liable to a shipper for damage caused by its negligence. The court explained further that the carrier may contractually limit its liability for negligent conduct if the common carrier offers the shipper an election to escape the limitation upon payment of а higher fee. See Calvin Klein Ltd. v. Trylon Trucking Corp., 892 F.2d 191, 193-94 (2d Cir.1989) (“A shipper and a common carrier may contract to limit the carrier‘s liability in cases of loss to an amount agreed to by the parties, so long as the language of the limitation is clear, the shipper is aware of the terms of the limitation, and the shipper can change the terms by indicating the true value of the goods being shipped.” (citing
The court found that, because Geologistics acted as Halm‘s agent in retaining Art Messenger to carry Halm‘s cargo, the terms of the contract between Geologistics and Art Messenger specified the conditions under which ABN could sue Art Messenger and limited Art Messenger‘s liability to $50. Art Messenger apparently issued neither an invoice setting the Terms & Conditions of the shipment, nor a bill of lading or a tariff. Nonetheless the longstanding, oral and written umbrella agreement between Geologistics and Art Messenger in effect since 1994 limited the carrier‘s liability. See ABN Amro I, 253 F.Supp.2d at 769.
The court also considered ABN‘s argument that Art Messenger faced liability for illegal or reckless conduct going beyond mere negligence, primarily because Art Messenger transported the shipment within the State of New York without a valid permit for intrastate trucking. However, the court found no justification for a finding of fault more extreme than negligence. Id. at 766, 768.
The district court also rejected ABN‘s contention that the broad scope of the limitation provisions—which ABN argued
B. The Entry of Judgment
On April 15, 2003, the district court denied the plaintiff‘s motion for reconsideration. Under
In late 2004, at Judge Chin‘s suggestion the defendants each tendered $50 to ABN, effectively consenting to judgment in that amount, and moved to dismiss the action insofar as ABN sought any greater damages. Judge Chin entered a judgment in favor of ABN against each of Geologistics and Art Messenger for $50, and dismissed with prejudice ABN‘s claims for damages in excess of $50. ABN Amro Verzekeringen BV v. Geologistics Ams., Inc., 2005 WL 774281 (S.D.N.Y. Apr. 5, 2005). The court further observed that although Geologistics and Art Messenger admitted neither to liability nor fault, the case was moot because the defendants had tendered, and judgment had been entered for, all that ABN “could recover if the case were to be tried.” Id. at *1. The court concluded that no party retained the necessary “legally cognizable interest in the outcome,” id. at *3, and that the court therefore no longer had subject-matter jurisdiction over the litigation, id. at *1.6
II. Discussion
On appeal, ABN argues that the district court erred in entering judgment without requiring the defendants to concede liability. In addition, ABN challenges the court‘s findings limiting the defendants’ liability. While we disagree with part of the court‘s reasoning, we find no fault with the court‘s conclusion that the defendants’ liabilities were limited to $50, or with entry of final judgment for $50 against each defendant concluding thе action.
A. The Entry of Final Judgment
1. Finality
The district court‘s judgment was a final, appealable order. “‘A final decision’ within
2. Judgment Without a Finding of Liability
ABN contends that it was improрer for the district court to enter judgment in its favor without first finding, or requiring the defendants to concede, liability. ABN proffers the argument somewhat apathetically, which is understandable as it makes little sense.7 ABN‘s position would require either that the court refrain from entering judgment although all the issues upon which that judgment depends were settled (either by factual determination or concession), or that, as a prerequisite to judgment, the court conduct a trial of factual issues that could have no effect on the judgment. Having determined that ABN could recover no more than $50 from each defendant, the court would be required, on ABN‘s view, to hold a full trial on liability and damages, notwithstanding defendants’ willingness to offer ABN complete relief on its remaining claims. It would make no sense to impose such requirements. Where a defendant has consented to judgment for all the relief the plaintiff can win at trial (according to the trial court‘s determination), the defendant‘s refusal to admit fault does not justify a trial to settle questions which can have no effect on the judgment. See Abrams, 719 F.2d at 32 (“[T]here is no justification for taking the time of the court and the defendant in the pursuit of minuscule individual claims which defendant has more than satisfied.“).
ABN‘s suit was only for money damages.8 The court had ruled as a matter of law that ABN could not recover more than
3. Mootness and Lack of Subject Matter Jurisdiction
The district court believed that, once the defendants tendered $50, the parties no longer had “a personal stake” or a “legally cognizable interest” in the litigation and that as a consequence the case had become moot, and the court was compelled to dismiss it for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure. See Fox v. Bd. of Trs., 42 F.3d 135, 140 (2d Cir.1994). While the court properly granted final judgment to the plaintiff for $50 and denied the plaintiff‘s claims insofar as they sought a greater recovery, the court was mistaken in believing that the case had become moot and that the court lacked jurisdiction. The court confused the mootness of an issue with mootness of a case or claim in the Constitutional sense. If the case had truly become moot and the court had lacked subject matter jurisdiction, the court would have been without power to enter a judgment in plaintiff‘s favor for $50 and in defendants’ favor as to the balance of the plaintiff‘s claim. It would have been compelled simply to dismiss, leaving the dispute unadjudicated. See Iron Arrow Honor Soc‘y v. Heckler, 464 U.S. 67, 72-73, 104 S.Ct. 373, 78 L.Ed.2d 58 (1983).
Mootness, in the constitutional sense, occurs when the parties have no “legally cognizable interest” or practical “personal stake” in the dispute, and the court is therefore incapable of granting a judgment that will affect the legal rights as between the parties. See Davis v. New York, 316 F.3d 93, 99 (2d Cir.2002) (“Under Article III, section 2 of the Constitution, federal courts lack jurisdiction to decide questions that cannot affect the rights of litigants in the case before them.“). There is no issue of practical importance for the court to adjudicate.
Mootness can arise in many ways during the course of litigation. If, for example, the plaintiff dies or ceases to be subject to the condition that caused his deprivation before his request for prospective injunctive relief is resolved, his claims may in some circumstances become moot. See, e.g., Rhodes v. Stewart, 488 U.S. 1, 4, 109 S.Ct. 202, 102 L.Ed.2d 1 (1988) (where two plaintiff-prisoners sued prison authorities seeking injunction allowing them to subscribe to a magazine, the case was mooted by the death of one plaintiff and the release of the other). In such circumstances, there is no longer a “Case” or “Controversy” within the meaning of Article III. Lacking subject-matter jurisdiction, the court must dismiss the case or claim. See Preiser v. Newkirk, 422 U.S. 395, 401-04, 95 S.Ct. 2330, 45 L.Ed.2d 272 (1975).
Those, however, were not the circumstances of this case when the defendants consented to judgment for $50. The parties continued to have a personal stake in a practical dispute, and a legally cognizable interest in the litigation. The court remained capable of granting a judgment
It is true that, as the result of the defendants’ consent to judgment for $50, a different kind of mootness arose. Certain issues that would otherwise have been in dispute became moot, in the sense that the court no longer needed to resolve them. The question of the defendants’ liability to the plaintiff, and all questions subordinate to it, ceased (at least conditionally) to have practical importance. Because the court ruled that the defendants’ liability could not exceed $50 and the defendants consented to judgment in that amount, it no longer mattered whether, as ABN claimed, Geologistics had contracted with Halm to arrange for the transportation of the printing press, Geologistics acted negligently in engaging Art Messenger, Art Messenger acted negligently in trucking the cargo, the printing press was in sound condition when shipped and suffered damage during the carriage, the damage was caused by Art Messenger‘s negligence, or ABN had insured Halm and been subrogated to Halm‘s claim by paying it for the loss. So long as the district court‘s ruling limiting the liability to $50 remained in force, all litigable issues pertaining to the defendants’ liability ceased to have practical importance, because of the defendants’ tender of that amount. The case, however, was not moot, and the court did not lose subject matter jurisdiction.9
Abrams v. Interco Inc., 719 F.2d 23 (2d Cir.1983), upon which the district court relied, is not to the contrary, as the circumstances in that case were quite different from ours. In Abrams, two plaintiffs brought an action alleging that the defendant violated the antitrust laws, and they sought treble damages for themselves, as well as on behalf of a large, similarly situated class. The district court dеnied class certification, based on its finding that common issues did not predominate over individual issues. The defendant then, without conceding liability, tendered to the plaintiffs an amount larger than the amount to which the plaintiffs claimed personal entitlement as damages, which the plaintiffs refused. The district court thereupon granted the defendant‘s motion to dismiss for lack of jurisdiction on the
The difference between our case and Abrams is crucial to the question of constitutional mootness. In Abrams, insofar as concerned the plaintiffs’ individual claims for damages, the defendаnt tendered every cent (and more) to which the plaintiffs claimed entitlement. Accordingly, with respect to the plaintiffs’ individual claims for damages, nothing of practical significance remained to adjudicate. In our case, by contrast, the defendants tendered only a portion—indeed, only a small portion—of the damages plaintiff claimed. The district court‘s ruling that the plaintiff had no entitlement to any amount exceeding what the defendants had tendered resolved the dispute between the parties but did not negate its existence. The parties were in
To the extent that the judgment stated that it “is not based on the merits but is based solely on the issue of subject matter jurisdiction and the doctrinе of mootness,” it was in error. The court‘s judgment, awarding $50 to the plaintiff and denying the plaintiff‘s claim for any further sum, was a binding adjudication of each defendant‘s obligation to pay $50 and no more, notwithstanding that the court‘s justification depended in part on a concession by the defendants, which made it unnecessary to litigate certain potentially disputed issues. We therefore strike from the judgment the assertion in Paragraph 3 that the judgment is “not based on the merits but ... solely on ... mootness.”11
B. The Limitation of Art Messenger‘s Liability
ABN also contends the court erred in ruling that the defendants’ liability was
1. Art Messenger‘s Failure to Issue a Bill of Lading, Receipt, or Tariff
Seeking to invalidate the limitation of Art Messenger‘s liability, ABN notes that Art Messenger did not issue a bill of lading, receipt, or tariff in conjunction with the transport of the printing press. This is relevant, ABN argues, because Halm‘s contract with Geologistics, as set forth in the sales invoice issued by Geologistics, provided that when Geologistics hired carriers to transport Halm‘s cargo, Halm would be subject to limitations specified by such carriers in their bills of lading, receipts, and tariffs. ABN argues that in the absence of a bill of lading, receipt, or tariff, no liability limitation can apply.13
Under the Halm-Geologistics contract, Geologistics became Halm‘s agent for the purpose of engaging a carrier to transport Halm‘s cargo. A shipper in Halm‘s position generally can recover contract-based damages from a secondary carrier, such as Art Messenger, based on the thеory that the freight forwarder (here, Geologistics) acted as agent for the shipper in engaging the carrier. “As agent for [the shipper], [the freight forwarder has] the authority to enter into a usual and customary shipping contract....” St. Laurent v. Air Freight Transp. Corp., 86 A.D.2d 511, 512-13, 445 N.Y.S.2d 745 (N.Y.App.Div.1982) (internal quotation marks omitted); see also Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 34, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004) (holding that “an intermediary binds a cargo owner to the liability limitations it negotiates with downstream carriers“). Halm‘s contract with Geologistics contains Terms & Conditions which authorize Geologistics “to select and engage carriers ... to transport [Halm‘s] goods.” They also provide that such carriers “shall be considered as the agents of” Halm, and that “the goods may be entrusted to such agencies subject to [certain] conditions as to limitation of liability” set forth by those carriers. Thus, Halm‘s contract with Geologistics authorized Geologistics to engage carriers on Halm‘s behalf and expressly authorized Geologistics to accept limitations of liability imposed by the retained carriers.
Pursuant to its authorization to retain carriers on Halm‘s behalf, Geоlogistics retained Art Messenger to carry Halm‘s cargo. The terms of Art Messenger‘s employment by Geologistics, which had been in effect since 1994, and were memorialized in a letter dated October 3, 1998, included a limitation of Art Messenger‘s liability to $50 per shipment unless Geolo-
[Geologistics] is authorized to select and engage carriers ... to transport ... the goods, all of whom shall be considered as the agents of [Halm], and the goods may be entrusted to such agencies subject to all conditions as to limitation of liability for [damage] and to all rules, regulations, requirements and conditions, whether printed, written or stamped, appearing in bills of lading, receipts or tariffs issued by such carriers....
We do not аgree that this provision carries the meaning ABN ascribes to it. ABN reads the term “appearing in bills of lading, receipts or tariffs” as a limitation, so that a contractual condition or limitation of liability set forth in a document which is not a bill of lading, receipt, or tariff would not come within Halm‘s authorization of Geologistics to accept. The defendants, in contrast, read this provision as an expansive authorization to Geologistics to accept written limitations of liability embodied in contracts of carriage it made on Halm‘s behalf, rather than as a narrowing limitation giving authorization only as to those limitations appearing on bills of lading, receipts, or tariffs.
Although the matter is not free of ambiguity, we believe the defendants’ understanding is the more reasonable interpretation of the contract. The contractual terms, “subject to all conditions ... whether written, printed or stamped, appearing on bills of lading, receipts or tariffs” appears designed to give Geolоgistics broad authorization to contract with carriers on Halm‘s behalf, accepting the carriers’ written limitations of liability. ABN advances no reasonable argument why the contract should be understood to authorize only those limitations set forth in bills of lading, receipts, and tariffs, but not those set forth in other forms of written contract. Such a reading would defeat legitimate, expressly negotiated contractual expectations, solely because of the meaningless circumstance of the type of document in which the contractual term was stated. Nor does ABN point to evidence which would favor its improbable reading of the ambiguous contract term.
We conclude that Halm‘s contract with Geologistics authorized Geologistics, in engaging Art Messenger on Halm‘s behalf, to bind Halm to the terms of limitation of liability set forth in writing in the umbrella agreement between Geologistics and Art Messenger. We reject ABN‘s contention that such a limitation was authorized only if set forth in a bill of lading, receipt, or tariff.
ABN argues that this court must disregard Art Messenger‘s contractual limitation of liability as contrary to public policy because it purports to limit liability even for illegal conduct. Art Messenger concedes that, in violation of various New York state statutes, it carried the shipment intrastate without having maintained its license to operate as an intrastate carrier. In addition, ABN asserts that Art Messenger violated New York Law by failing to file a tariff schedule, as required by
ABN contends it is “axiomatic” under the New York Transportation Law that to limit liability for damage to goods in intrastate transit, a trucker must be validly licensed by the State of New York, and that the court must treat Art Messenger‘s contractual protections as a nullity by reason of its violations of these New York statutes. It is, however, by no means axiomatic under New York law that a carrier forfeits its rights under its contract of carriage if it operates in violation of these statutes. ABN cites no New York authorities which support its propositiоn. The question is whether, in implementing the statute at issue, the legislature intended that violation result in the carrier‘s loss of its contractually agreed protections. See, e.g., Concord Indus., Inc. v. K.T.I. Holdings, Inc., 711 F.Supp. 728, 729 (E.D.N.Y.1989) (“[W]hen a congressional statute provides specific penalties for violations, a court should not affix the additional sanction of rendering a private contract void unless the legislative history evinces such an intent; it is inappropriate to add judicially to the remedies provided by the statute.“) (citing Kelly v. Kosuga, 358 U.S. 516, 519, 79 S.Ct. 429, 3 L.Ed.2d 475 (1959); Bruce‘s Juices, Inc. v. Am. Can Co., 330 U.S. 743, 755, 67 S.Ct. 1015, 91 L.Ed. 1219 (1947)); accord Land Ocean Logistics, Inc. v. Aqua Gulf Corp., 68 F.Supp.2d 263, 270 (W.D.N.Y.1999); cf. John E. Rosasco Creameries, Inc. v. Cohen, 276 N.Y. 274, 278, 11 N.E.2d 908 (1937) (“If the statute does not provide expressly that its violation will deprive the parties of their right to sue on the contract, and the denial of relief is wholly out of proportion to the requirements of public policy or appropriate individual punishment, the right to recover will not be denied.“).
We do not read these New York statutes as imposing forfeiture of a carrier‘s contractual protections as a con-
C. The Limitation on the Liability of Geologistics
ABN also argues that the district court should not have enforced the liability-limiting provision of the Halm-Geologistics contract, which limits the liability of Geologistics to $50. First, ABN argues that the provision does not limit liability where Geologistics is negligent in its selection of carriers. Second, ABN argues that even if this court finds that Geologistics and Halm did intend their contract to limit liability in the case of negligence, the scope of that limitation was so sweeping as to render the contract contrary to law and public policy.17 We reject both arguments.
1. The Halm-Geologistics Contract
ABN‘s argument against enforcement of the contractual limitation of its liability proceeds as follows. Courts closely scrutinize agreements exculpating negligent parties and construe such agreements against the drafter. See, e.g., Uribe v. Merchants Bank of New York, 91 N.Y.2d 336, 341, 670 N.Y.S.2d 393, 693 N.E.2d 740 (1998). The liability-limitation provisions are ambiguоus and “designed to mislead,” because they appear to limit liability even when Geologistics fails to keep its express promise to “use reasonable care in the selection of carriers.” The court should construe the contract as not providing for limitation of liability, at least where Geologistics was negligent in the selection of a carrier.
At issue are five provisions of the Halm-Geologistics contract: Paragraph 1 (Services by Third Parties); Paragraph 2 (Liability Limitations of Third Parties); Paragraph 6 (Declaring Higher Valuation); Paragraph 8 (Limitation of Liability); and Paragraph 10 (Liability of Company). These provide:
(1) SERVICES BY THIRD PARTIES: Unless the Company [i.e., Geologistics] carries, stores or otherwise physically handles the shipment, and [damage] occurs during such activity, the Company assumes no liability as a carrier and is not to be held responsible for any [damage] to the goods to be forwarded or imported except as provided in paragraph 10 and subject to the limitations of рaragraph 8 below, but undertakes only to use reasonable care in the selection of carriers ... and others to whom it may entrust the goods for transportation.... When the Com-
pany carries, stores or otherwise physically handles the shipment, it does so subject to the limitation of liability set forth in paragraph 8 below unless a separate bill of lading, air waybill or other contract of carriage is issued by the Company, in which event the terms thereof shall govern. (2) LIABILITY LIMITATIONS OF THIRD PARTIES: The Company is authorized to select and engage carriers ... to transport ... the goods, all of whom shall be considered as the agents of the Customer [i.e., ABN-Halm], and the goods may be entrusted to such agencies subject to all conditions as to limitation of liability for [damage] and to all rules, regulations, requirements and conditions, whether printed, written or stamped, appearing in bills of lading, receipts or tariffs issued by such carriers.... The Company shall under no circumstances be liable for any [damage] to the goods for any reason whatsoever when said goods are in custody, possession or control of third parties selected by the Company to ... transport or render other services with respect to such goods.
(6) DECLARING HIGHER VALUATION: Inasmuch as ... carriers ... usually limit their liability for [damage] unless a higher value is declared and a charge based on such higher value is agreed to by said [carriers], the Company must receive specific written instructions from the Customer to pay such higher charge based on valuation and the [carrier] must accept such higher declared value, otherwise the valuation placed by the Customer on the goods shall be considered solely for export or customs purposes and the goods will be delivered to the [carriers], subject to the limitations of liability set forth herein in paragraphs 8-10 below with respect to any claim against the Company and subject to the provisions of paragraph 2 above.
(8) LIMITATION OF LIABILITY: ... [T]he Customer agrees that the Company shall in no event be liable for аny [damage] to the goods resulting from the negligence or other fault of the Company for any amount in excess of $50 per shipment (or the invoice value, if less).... The Customer has the option of paying a special compensation to increase the liability of the Company in excess of $50 per shipment in case of any [damage] from causes which would make the Company liable, but such option can be exercised only by specific written agreement made with the Company prior to shipment which agreement shall indicate the limit of the Company‘s liability and the special compensation for the added liability by it to be assumed.
(10) LIABILITY OF COMPANY: Subject to the provisions of
19 CFR Section 111.44 [a regulation that formerly restricted the extent to which a freight forwarder could limit its liability, but which has since been revoked], it is agreed that any claim or demand for [damage] shall be only against the carriers ... or others in whose actual custody or control the goods may be at the time of such [damage], and that the Company shall not be liable or responsible for any claim or demand from any cause whatsoever, unless in each case the goods were in actual custody or control of the Company and the damages alleged to have been suffered be proven to be caused by the negligence or other fault of the Company, its officers or employees, in which event the limitation of liability set forth in paragraph 8 herein shall apply....
There is indeed arguable inconsistency between the undertaking of Geologistics in Paragraph (1) to “use reasonable care in
2. The Scope of the Limitation of Liability
Finally, ABN argues that the limitation provisions of the Halm-Geologistics contract were invalid on public policy grounds because they purport to relieve Geologistics of any meaningful responsibility even for gross negligence or intentional wrongdoing.18 See Sommer, 79 N.Y.2d at 554, 583 N.Y.S.2d 957, 593 N.E.2d 1365 (“[W]hile ... exculpatory and limitation of liability clauses are enforceable against claims of ordinary negligence, those clauses cannot restrict ... liability for conduct evincing a reckless disregard for ... customers’ rights.“).
ABN‘s argument has no application to “ordinary” negligence. The doctrine upon which it relies applies only in cases of more egregious misconduct. The district court found that ABN failed to raise a material issue of fact as to whether Geologistics engaged in conduct more culpable than ordinary nеgligence. ABN Amro I, 253 F.Supp.2d at 767. In its initial brief to this court, ABN does not appear to challenge this finding. It makes no citation to the record and does not point to evidence which it contends should support a finding of reckless disregard or intentional misconduct. Even if ABN were correct that the liability-limitation provision is unenforceable as to its exculpation of reckless or intentional misconduct, that conclusion would not vitiate the provision‘s limitation of liability to $50 for ordinary negligence—which is the only wrongdoing at issue here. We have considered all of ABN‘s remain-
III. Conclusion
The judgment of the district court is affirmed.
Notes
PLEASE BE ADVISED THAT THE LIABILITY INFORMATION SUBMITTED TO YOU, IS FOR YOUR COMPANY RECORD, AND SHOULD BE MAINTAIN[ED] IN YOUR COMPANY FILES.
LIMIT OF LIABILITY. THE LIABILITY OF ART MESSENGER & DELIVERY SERVICE SHALL BE LIMITED TO FIFTY DOLLARS (50.00) PER SHIPMENT UNLESS THE CUSTOMER [i.e., Geologistics] MAKES SPECIFIC WRITTEN ARRANGEMENTS WITH ART MESSENGER & DELIVERY SERVICE TO SPECIFY A HIGHER DECLARED VALUE.