UNDERWRITERS AT LLOYDS SUBSCRIBING TO COVER NOTE B0753PC1308275000 v. EXPEDITORS KOREA LTD., FORWARD AIR, INC.
No. 16-10985
United States Court of Appeals, Eleventh Circuit
February 16, 2018
D.C. Docket No. 1:14-cv-20708-DPG
Appeal from the United States District Court for the Southern District of Florida
Before JORDAN and JILL PRYOR, Circuit Judges, and PROCTOR,* District Judge.
Expeditors Korea Ltd. and Forward Air, Inc. (together, the “transporters“) damaged cargo that they were responsible for transporting internationally. In this case, the Underwriters at Lloyds (“Lloyds“), having compensated its insured—the cargo‘s owner—for the damage to the cargo, seeks to recover from the transporters. The transporters admit their liability; the only question is how much they owe. Lloyds and the transporters disagree over the rules that govern the amount the transporters must pay. There are two possibilities: (1) the Montreal Convention,1 a multinational treaty that provides uniform rules for liability in international air carriage, or (2) the waybill, the contract between the transporters and the company that shipped the cargo. The Convention and the waybill establish nearly identical limitations of liability, in each case capping damages based on the weight of the damaged shipment. The only potential difference, for our purposes, is that when damage to one part of a shipment renders the rest of the shipment less valuable, the Montreal Convention calculates liability based on the weight of the entire shipment, while the waybill is ambiguous about whether the weight of the damaged part alone should be used. Because the transporters damaged one part of a machine that could not operate without the damaged part, the extent of the transporters’ liability may depend on whether the Montreal Convention or the
We hold that the district court erred in ruling that the Montreal Convention governs the transporters’ liability. The Convention does not apply based on the district court‘s factual findings regarding where the cargo was damaged. By default, then, the waybill governs the transporters’ liability. Because the waybill is ambiguous about the weight that should be used to calculate liability, we remand the case for the district court to address the issue in the first instance.
I. BACKGROUND
A. The Montreal Convention
We begin with a brief overview of the relevant provisions of the Montreal Convention. The Convention, which was ratified by both the United States and South Korea, caps a carrier‘s liability for cargo damaged during international air transport. See Eli Lilly & Co. v. Air Express Int‘l USA, Inc., 615 F.3d 1305, 1308 (11th Cir. 2010). The Convention‘s Article 22 limits a carrier‘s potential liability
The Convention, and thus Article 22‘s limitation of liability, applies only to cargo damaged during “carriage by air.” Id. art. 18(1). Article 18 defines carriage by air as “the period during which the cargo is in the charge of the carrier.” Id. art. 18(3). The fourth paragraph of Article 18 expressly excludes from that definition “any carriage by land, by sea or by inland waterway performed outside an airport.” But there are two exceptions to this exclusion that extend the reach of “carriage by air.” First, the Montreal Convention establishes a rebuttable presumption that cargo damaged at an unknown point during a journey that includes at least some carriage by air will be governed by the Convention. See id. art. 18(4). Second, if a
B. The Waybill
In this case, if the Montreal Convention does not apply, then the waybill under which the cargo was shipped governs the transporters’ liability. A waybill is “[a] document acknowledging the receipt of goods by a carrier . . . and the contract for the transportation of those goods.” Waybill, Black‘s Law Dictionary (10th ed. 2014). Here, the waybill Expeditors issued provided for airport-to-airport transportation of the cargo from Incheon, South Korea, to Orlando, Florida.3
The waybill capped the carrier‘s liability for damage to cargo at the same amount as the Montreal Convention, 19 SDRs per kilogram. Like the Convention, the waybill also provided that the weight used to calculate damages was to be the same weight that was used to calculate the shipping charges. The waybill described what would happen if only part of the shipment was damaged:
In any case of loss, damage, to, or delay to part of the cargo, the weight to be taken into account in determining Expeditors’ limit of
liability shall be only the weight of the package or packages concerned.
Air Waybill ¶ 6 (Doc. 78-3).4 The parties disagree about whether the waybill‘s reference to “package or packages concerned” indicates that only the weight of packages actually lost, damaged, or delayed may be considered or whether the weight of packages that diminished in value due to the loss, damage, or delay of related packages may also be included in calculating the carrier‘s liability.
The waybill contained one other term that is relevant here. The waybill gave Expeditors the right to substitute non-air carriage for air carriage, absent specific instructions to the contrary.
C. The Shipment
TriQuint Semiconductor, Inc., a manufacturer of components used in electronics, purchased a machine for coating silicon wafers from Cybortrack Solutions Inc., a South Korean company. The machine consisted of various process stations where the wafers were prepared and a robotic arm that moved the wafers among these process stations. Cybortrack hired Expeditors to transport the machine to TriQuint in ten separate shipping crates from Incheon, South Korea to Orlando, Florida.
Even though the waybill provided for airport-to-airport transportation between the two cities, Expeditors did not fly the ten crates directly from Incheon
Unfortunately, the machine was damaged somewhere between Miami and Orlando. Forward Air employees noted no damage to the crates when they arrived at Forward Air‘s Miami warehouse. And the company‘s policy was to decline shipments of damaged items. When the crates arrived at Forward Air‘s Orlando facility, a Forward Air employee reported that two of the crates were damaged, one of them severely. The severely damaged crate contained the silicon coating machine‘s robotic arm. The Forward Air employee testified that the crate containing the robotic arm had been crushed either while it was being loaded onto the truck at Forward Air‘s Miami facility or while traveling in the truck from Miami to Orlando, as a result of improper loading. Upon picking the crates up from Forward Air‘s Orlando facility, a driver for Crazy Joe‘s observed that one crate had a hole in it and two crates were missing legs. A Forward Air supervisor
By the time it reached TriQuint, the robotic arm was damaged beyond use.6 TriQuint received no replacement arm for approximately five months, and the rest of the machine was inoperable without the arm. The company filed a claim with its insurer, Lloyds, which paid it $918,000 in compensation for the damage.
D. Procedural History
Lloyds then filed this action against Expeditors and Forward Air in federal district court, alleging that in damaging the cargo Expeditors breached its duties under the Montreal Convention, Forward Air was negligent, and both defendants breached the waybill. Lloyds sought $920,000 in damages.7 After discovery, the transporters moved for partial summary judgment, arguing that the Montreal Convention did not apply and that the waybill capped their liability. The district court denied the motion and then held a bench trial.
After trial, the court entered findings of fact and conclusions of law, determining that the Montreal Convention governed the transporters’ liability. The court found that TriQuint‘s machine was damaged either while in the custody of
The transporters filed a motion to alter judgment and for additional findings under
Following a bench trial, we review a district court‘s conclusions of law de novo and its findings of fact for clear error. Wexler v. Anderson, 452 F.3d 1226, 1230 (11th Cir. 2006). With regard to the Montreal Convention, the interpretation of a treaty is a question of law we review de novo. United States v. Duboc, 694 F.3d 1223, 1229 n.7 (11th Cir. 2012). “The goal of treaty interpretation is to determine the actual intention of the parties ‘because it is our responsibility to give the specific words of the treaty a meaning consistent with the shared expectations of the contracting parties.‘” In re Comm‘rs Subpoenas, 325 F.3d 1287, 1294 (11th Cir. 2003) (quoting Air France v. Saks, 470 U.S. 392, 399 (1985)), abrogated in part by In re Clerici, 481 F.3d 1324, 1333 n.12 (11th Cir. 2007).
With regard to the waybill, “[c]ontract interpretation is generally a question of law.” Lawyers Title Ins. Corp. v. JDC (Am.) Corp., 52 F.3d 1575, 1580 (11th Cir. 1995). The question of whether a contract is ambiguous is a question of law that we review de novo. Carneiro Da Cunha v. Standard Fire Ins. Co./Aetna Flood Ins. Program, 129 F.3d 581, 584-85 (11th Cir. 1997). But “[q]uestions of fact arise . . . when an ambiguous contract term forces the court to turn to extrinsic evidence of the parties’ intent . . . to interpret the disputed term.” Lawyers Title, 52 F.3d at 1580.
We now turn to the question that brings the parties before us: how much of the money that Lloyds paid TriQuint for the damaged machine can be recovered from the transporters? The amount of the transporters’ liability may depend on whether the Montreal Convention or the waybill controls. Both the Convention and the waybill cap the transporters’ liability at 19 SDRs multiplied by the weight of the damaged cargo, but they may differ as to whether the weight of the undamaged parts of the shipment rendered less valuable by the damage to the robotic arm should be included as cargo.
The district court applied the Montreal Convention, but we conclude, based on the district court‘s own factual findings, that it should have looked to the waybill instead. Below, we interpret the provisions of the Montreal Convention dealing with damage to cargo and apply them to the facts as found by the district court. Because the Convention is inapplicable under these facts, the waybill governs the transporters’ liability. We conclude that the waybill is ambiguous about whether damages must be calculated using only the weight of the one crate containing the robotic arm or using the weight of all the cargo that diminished in value due to the damage to the arm. We thus remand to the district court for further findings of fact to resolve this ambiguity.
The issue is whether, under the facts of this case, the cargo was damaged in such a way that the Montreal Convention applies. This issue turns on our interpretation of Article 18, which defines when the terms of the Montreal Convention govern. In construing Article 18, our “analysis must begin . . . with the text of the treaty and the context in which the written words are used.” Air France, 470 U.S. at 397. If the treaty contains “difficult or ambiguous passages, we may go beyond the text of the treaty to consider general rules of construction as well as “the history of the treaty, the negotiations, and the practical construction adopted by the parties.” E. Airlines, Inc. v. Floyd, 499 U.S. 530, 535 (1991) (internal quotation marks omitted); see Zicherman v. Korean Air Lines Co., Ltd., 516 U.S. 217, 226 (1996) (explaining that “a treaty ratified by the United States is not only the law of this land but also an agreement among sovereign powers” and thus “we have traditionally considered as aids to its interpretation the negotiating and drafting history (travaux préparatoires) and postratification understanding of the contracting parties“). Applying this framework, we conclude that the Montreal Convention does not apply in this case because the district court‘s findings tell us that the cargo was damaged during carriage by land rather than during carriage by air.
1. The carrier is liable for damage sustained in the event of the destruction or loss of, or damage to, cargo upon condition only that the event which caused the damage so sustained took place during carriage by air.
Montreal Convention art. 18(1).
The third and fourth paragraphs then set forth when carriage by air occurs. The third paragraph broadly defines “carriage by air” by creating a default rule that any time when the cargo is in the carrier‘s control qualifies as carriage by air:
3. The carriage by air within the meaning of paragraph 1 of this Article comprises the period during which the cargo is in the charge of the carrier.
Id. art. 18(3). Importantly, this paragraph neither restricts carriage by air to the time when the cargo is actually aboard an airplane nor limits it geographically, such as confining it to within an airport. We note that if the Convention was intended to apply only when the damage occurred aboard an aircraft, this paragraph would be wholly unnecessary.
The fourth paragraph of Article 18 refines the definition of carriage by air by excluding certain periods when the cargo is control of the carrier. Initially, it
4. The period of the carriage by air does not extend to any carriage by land, by sea or by inland waterway performed outside an airport.
Id. art. 18(4). We will refer to this first sentence as “the exclusion.” Under the exclusion, no period of a journey can qualify as both carriage by air and carriage by land. Beyond drawing this distinction, Article 18 does not define “carriage by land.”
After the exclusion, the fourth paragraph establishes two exceptions to the exclusion. If the conditions of either exception are satisfied, the carriage is deemed to have been carriage by air notwithstanding the exclusion. The first exception applies when damage occurs at an unknown point during a journey consisting of both air carriage and non-air carriage that falls within the exclusion. This exception establishes a rebuttable presumption that the cargo was damaged during carriage by air unless there is proof that the damage occurred during carriage by land:
If, however, such carriage9 takes place in the performance of a contract for carriage by air, for the purpose of loading, delivery or transshipment, any damage is presumed, subject to proof to the contrary, to have been the result of an event which took place during the carriage by air.
The second exception to the exclusion applies when a carrier substitutes carriage by another mode of transportation for carriage by air without the consent of the customer (the “consignor“)12:
If a carrier, without the consent of the consignor, substitutes carriage by another mode of transport for the whole or part of a carriage intended by the agreement between the parties to be carriage by air, such carriage by another mode of transport is deemed to be within the period of carriage by air.
Id. We will refer to this as second exception as “the substitution exception.”
Article 18‘s definition, exclusion, and exceptions can be represented by the following decision tree:13
To summarize, the Convention creates a default rule that when cargo is damaged during a journey that involves both carriage by air and carriage by land, the Convention‘s limitations of liability will apply unless it is proven that the damage to the cargo occurred during a period of carriage by land. And even if it is shown that the damage occurred during carriage by land, the Convention will still
1. We Assume for Purposes of Our Analysis That the Robotic Arm Was Damaged in the “Charge of the Carrier.”
In analyzing whether the Montreal Convention governs liability, we assume (but need not decide) that TriQuint‘s machine was damaged while in the charge of the carrier, Expeditors. As explained above, the Montreal Convention applies only when cargo is damaged during “carriage by air,” Montreal Convention art. 18(1), which is defined as “the period during which the cargo is in the charge of the carrier.” Id. art. 18(3). The transporters argue on appeal that the cargo was in the charge of Forward Air, not Expeditors, the carrier, when the cargo was damaged. The district court determined, however, that Forward Air was an agent of Expeditors acting pursuant to Expeditors’ contract of carriage. The transporters challenge the district court‘s agency finding, arguing that Forward Air was an independent contractor. We doubt that the agent/independent contractor distinction is a salient one under the Convention.14 But we need not resolve this
2. The Cargo Was Damaged During Carriage by Land.
Having assumed that the cargo was in the charge of the carrier, we next consider whether the exclusion applies. Paragraph four of Article 18 excludes from the definition of carriage by air all carriage by land, sea, or inland waterway outside an airport. The district court found that TriQuint‘s cargo was damaged outside Miami International Airport, either in Forward Air‘s Miami warehouse or on Forward Air‘s truck while traveling between Miami and Orlando.15 To determine whether the exclusion applies, we must decide whether these periods qualify as carriage by land.
We readily conclude that the cargo was in carriage by land when it was on Forward Air‘s truck traveling from Miami to Orlando—an intercity, multi-hour journey over land. Although Article 18 does not define “carriage by land,” we
The more difficult question is whether the cargo was in carriage by land when it was stored at Forward Air‘s Miami warehouse before the journey to Orlando. We can discern from the text and structure of Article 18—with its broad definition of carriage by air, its exclusion, and its exceptions—as well as from our own experience, that a single contract for international transport may involve both carriage by air and carriage by land. So the fact that the cargo later was in carriage by land does not necessarily tell us that the cargo was in carriage by land when it was stored in the warehouse. Lacking a definition of the term, the plain text of the treaty does not tell us whether “carriage by land” includes the time when the cargo is in storage before or after being loaded on the truck—that is, when the cargo is not literally being carried over land. We therefore conclude that the treaty is ambiguous with respect to this question.
To resolve this ambiguity, we begin by considering the parties’ arguments about whether the period of storage qualifies as carriage by land or carriage by air. Each party urges us to construe the Montreal Convention as establishing a bright line rule governing the storage of cargo in a warehouse. The transporters urge us to read carriage by air as ceasing at the airport‘s boundary, meaning that any time
We are unpersuaded by the parties’ approaches. After considering the negotiating history of the Convention, the conduct of the parties to the Convention, and the weight of precedent in foreign and American courts, see Air France, 470 U.S. at 400, we conclude that to determine whether a period of storage in a warehouse qualifies as carriage by land we must consider the specific facts and circumstances of the storage to determine whether it was more closely related to the cargo‘s transportation by air or by truck. Here, the facts and circumstances of Forward Air‘s storage of the cargo in Miami reflect that the storage was incident to the cargo‘s transportation by truck. Thus, the robotic arm was damaged during carriage by land, and the Convention does not apply.
a. We Reject the Transporters’ Approach, Which Ends Carriage by Air at an Airport‘s Boundary.
The simplest reading of the exclusion ends carriage by air at the airport‘s boundary. Under this interpretation, favored by the transporters, carriage by air is restricted to when the cargo is on board an aircraft or being transported under the contract of carriage within the confines of an airport. This essentially geographical approach was the dominant interpretation of the analogous Article 18 in the
This interpretation suffers from two serious flaws, however. First, it ignores the Montreal Convention‘s drafting history. Article 18‘s definition of carriage by air—“the period during which the cargo is in charge of the carrier,”
The State Department Explanatory Note that accompanied the Montreal Convention to the United States Senate for ratification explained that the Convention‘s drafters intentionally omitted this phrase “to make clear that the Convention applies whenever and wherever the cargo is in the possession custody or charge of the carrier, whether on or off airport premises.”16 See S. Treaty Doc. No. 106-45 art. 18(3) (internal quotation marks omitted) (emphasis added).
Defining carriage by land in strictly geographical terms (on versus off airport premises) thus requires us to ignore the Montreal Convention‘s drafting history. And we should not do so lightly. As the Senate Committee on Foreign Relations report recommending the treaty for ratification noted, the drafters of the Montreal Convention sought to retain as much of the existing language of the Warsaw
While the Montreal Convention provides essential improvements upon the Warsaw Convention and its related protocols, efforts were made in the negotiations and drafting to retain existing language and substance of other provisions to preserve judicial precedent relating to other aspects of the Warsaw Convention, in order to avoid unnecessary litigation over issues already decided by the courts under the Warsaw Convention and its related protocols.
S. Exec. Rpt. No. 108-8, at 3 (2003) (internal quotation marks omitted). Given the importance the drafters placed on retaining language that did not need to be changed, we must resist ignoring the revisions they felt it necessary to make.
The second problem with interpreting carriage by land in strictly geographical terms is that it ignores the reality of modern air cargo transit. The State Department Explanatory Note advised that courts applying Article 18 “are expected to take into consideration the facts associated with modern methods of cargo air transport.” S. Treaty Doc. No. 106-45 art. 18(4). Taking such facts into account, the dissent to an American case interpreting the Warsaw Convention explained why a focus on the airport‘s boundary is misplaced.17 In Victoria Sales
b. We Reject Lloyds‘s Approach, Which Limits Carriage by Land to When the Cargo Is on a Truck.
A second interpretation, proposed by Lloyds, seems faithful to the text of the Convention but cuts against the purposes animating it. Under this interpretation, cargo is covered by the Montreal Convention off airport grounds whenever it is in
Lloyds points to two international cases that appear to have adopted this interpretation.18 In the first case, the Austrian Supreme Court considered an insurer‘s claim that its insured‘s cargo was damaged by improper storage in Philadelphia on the way from Austria to a customer in the United States. Oberster Gerichtshof [OGH] [Supreme Court] Jan. 19, 2011, 7 Ob 147/10h, TranspR 2011, 264, 265 (Austria) [https://perma.cc/64R9-5X4Q]. The cargo was driven by truck to Germany, flown from an airport there to Philadelphia, and then transported by truck to a warehouse outside the Philadelphia airport where it was to clear customs before being delivered to the recipient. Id. The cargo suffered damage while in that warehouse. Id. Reversing a lower court decision, the Austrian Supreme Court determined that the Montreal Convention applied to the stored cargo “even if it is situated outside the airport” because such storage was still part of carriage by air “when the air carrier was ‘in charge’ of the transported goods” under paragraph three of Article 18. Id. at 267. The court conceded, however, that in light of the
In the second case, a transporter flew cargo from Germany to Miami, Florida. When the cargo arrived in Miami, it was stored in a warehouse near the airport before being delivered by land to its final destination in Miami. The cargo was lost either during storage in the Miami warehouse or while on the truck for delivery. A German court held that the Montreal Convention applied because the cargo remained in the charge of the carrier. See Bundesgerichtshof [BGH] [Federal Court of Justice] Feb. 24, 2011, I ZR 91/10, TranspR 2011, 436, 436 (Ger.) [https://perma.cc/8WNB-JB99].
To reach its conclusion, the German court considered whether the periods when the cargo was being stored in the warehouse and loaded on the truck qualified as carriage by air or carriage by land and then applied the rebuttable presumption. The court determined that the period when the cargo was stored in the warehouse qualified as carriage by air because the cargo remained in the custody or control of the air carrier. Id. at 438. But the court failed to consider whether the exclusion applied, that is, whether the period of storage nonetheless qualified as carriage by land. It appears the court implicitly assumed that because
We are no more persuaded by Lloyds‘s interpretation (and that of the German and Austrian courts) limiting the period of carriage by land to the cargo‘s travel on a truck than we are by the transporters’ interpretation limiting carriage by air to the time when the cargo is on an airport‘s premises. Based on our earlier observation that the Montreal Convention‘s drafters accepted that the period of carriage by air includes more than actual transport on an airplane, it seems likely
Indeed, strictly limiting carriage by land to the period when cargo is actually aboard a truck seems inconsistent with the realities of modern cargo transport, which may require that cargo be stored in a warehouse as part and parcel of transit over land. It is not hard to imagine that if a lengthy journey by truck is needed to transport the cargo to its final destination, a trucking company may need to drive the cargo part of the way, store it in a warehouse, and load it onto another truck to be taken to another city for its final destination. We see no good reason why storage between two legs of such a journey by truck should be treated as carriage by air. Lloyds‘s interpretation seems to fly in the face of the Montreal Convention‘s preamble recognizing “the need to modernize and consolidate the Warsaw Convention” to reflect the realities of modern cargo air transport. See Montreal Convention pmbl. Honoring this purpose, we decline to adopt a view of the interplay of paragraphs three and four of Article 18 that one commentator—
c. We Conclude That Carriage by Land May Include Periods of Storage and That the Storage at Forward Air‘s Miami Warehouse Qualifies as Carriage by Land.
As we explained above, given the realities of modern air transport of cargo, when a shipment of cargo involves transportation both by air and by truck, it is likely that the cargo will need to be stored after being unloaded from the airplane but before being loaded onto the truck. Whether that period of storage constitutes carriage by air or carriage by land will depend on the facts of each case. Adopting a bright line test like the parties urge us to do would be inconsistent with the intent and purpose of the Convention.
We hold today that the cargo at issue, which was flown internationally on an airplane, offloaded from the airplane, transported to a carrier‘s off-airport warehouse, delivered to a trucking company, and stored by the trucking company in a separate warehouse before being loaded onto a truck for a multi-hour journey to its final destination, was in carriage by land when it was stored at the trucking company‘s warehouse. These facts establish that the warehouse storage at issue occurred as part and parcel of the last step of the cargo‘s journey, which was plainly carriage by land.
3. The Presumption that the Damage Occurred During Carriage by Air Is Rebutted Based on the District Court‘s Factual Findings about When the Damage Occurred.
Because the cargo here moved in both carriage by air and carriage by land in the performance of a contract for air transport, we must decide whether the presumption applies. The Convention instructs that we must presume that the damage occurred during carriage by air unless it was proven that the damaged
We disagree with the district court‘s analysis. Under the district court‘s findings of fact, the cargo was damaged in either in Forward Air‘s Miami warehouse or on its truck while traveling between Miami and Orlando, both of which we have determined qualify as carriage by land. To review, Expeditors hired Forward Air to move the cargo by truck from Miami to Orlando. Forward Air took custody of the cargo at Expeditors’ warehouse near Miami International Airport and transported it to Forward Air‘s Miami warehouse. The cargo was undamaged when it arrived at Forward Air‘s warehouse. Forward Air then transported the cargo by truck between its facilities in Miami and Orlando. The cargo had been damaged by the time it arrived in Orlando. The district court‘s finding that the cargo was damaged in Forward Air‘s custody—either in Miami or
Because the transporters proved that the cargo was damaged during carriage by land, the presumption does not dictate the outcome of this case. To be sure, the court did not pinpoint the precise location where the cargo was damaged. But it limited the occurrence of that damage to two possible locations: Forward Air‘s Miami warehouse or Forward Air‘s truck traveling between Miami and Orlando. The district court‘s unchallenged findings established “proof to the contrary” that the machine was damaged during carriage by air as that term is defined in Article 18.
Lloyds does not dispute that paragraph four creates a presumption that damage occurred during carriage by air absent proof to the contrary, but it argues that the district court found no such proof in this case. The insurer contends that the district court‘s analysis of where the damage occurred demonstrates that the court lacked proof sufficient to rebut the presumption. The court acknowledged that it lacked “direct evidence of how exactly the damage occurred,” but it nevertheless determined that “the logical conclusion, based on the circumstantial evidence, is that the damage occurred while in the custody of Forward Air in Miami or in transit to Forward Air‘s Orlando facility.” Am. Final J. 6 (Doc. 143).
Here, the transporters proved that the damage occurred during carriage by land. We thus conclude that the presumption is rebutted.
4. The Substitution Exception Does Not Apply Because the Consignor Consented to an Alternative Mode of Transportation.
The district court did not consider the substitution exception, though in denying a post-trial motion filed by the transporters, the court reached a conclusion that arguably supports the application of the exception.22 On appeal, Lloyds urges us to rely on the substitution exception as an alternative basis for upholding the district court‘s ruling that the Montreal Convention applies. We decline to do so because under the waybill the substitute carriage was consensual.
As we explained above, the substitution exception, contained in the third sentence of paragraph 4, extends the Montreal Convention‘s coverage to carriage by land substituted for carriage by air without the consent of the sender.
To answer this question, we turn to the waybill and interpret it like any other contract.24 Under general principles of contract interpretation,25 “[t]he plain meaning of a contract‘s language governs its interpretation.” In re FFS Data, Inc., 776 F.3d 1299, 1305 (11th Cir. 2015) (internal quotation marks omitted). “[A] document should be read to give effect to all its provisions and to render them consistent with each other.” Id. (internal quotation marks omitted) (citing Restatement (Second) of Contracts § 203(a) (Am. Law. Inst. 1981)).
ALL GOODS MAY BE CARRIED BY ANY OTHER MEANS INCLUDING ROAD OR ANY OTHER CARRIER UNLESS SPECIFIC CONTRARY INSTRUCTIONS ARE GIVEN HEREON BY THE SHIPPER . . . .
Air Waybill (Doc. 78-3). “ANY OTHER MEANS INCLUDING ROAD” expressly allowed Expeditors to substitute carriage by truck. Any other interpretation would render this term meaningless.26
In its order denying the transporters’ post-trial motion, the district court suggested that substituting carriage by truck for the journey‘s final leg amounted to a unilateral modification of the airport-to-airport waybill done without notice to the shipper. We disagree because in the waybill Expeditors expressly reserved the right to substitute carriage by other means. Because the shipper consented to substitute carriage in the waybill, and there was no evidence of “contrary instructions,” Air Waybill (Doc. 78-3), the substitution exception does not affect our conclusion that the Montreal Convention does not apply.
* * *
B. The Waybill‘s Damages Provision Is Ambiguous as to How to Calculate Liability.
Because the Montreal Convention does not apply, the waybill governs the calculation of damages in this case. The waybill limits damages to 19 SDRs multiplied by the weight (in kilograms) of the damaged shipment:
4. Except as otherwise provided in Expeditors’ tariffs or conditions of carriage, in carriage to which the Montreal Convention does not apply Expeditors’ liability limitations for cargo lost, damaged or delayed shall be 19 SDRs per kilogram . . . .
Air Waybill (Doc. 78-3). The waybill specifies that the weight used to calculate damages is the weight that was used to determine shipping charges:
6. In any case of loss of, damage to, or delay to a shipment, the weight to be used in determining Expeditors’ limit of liability shall be the weight that is used to determine the charge for carriage of such shipment.
In any case of loss of, damage to, or delay to part of the cargo, the weight to be taken into account in determining Expeditors’ limit of liability shall be only the weight of the package or packages concerned.
Id. The scope of the transporters’ liability under the waybill turns on whether “package or packages concerned” refers only to packages actually lost, damaged, or delayed or includes packages that diminished in value due to the loss, damage, or delay of related packages.
Lloyds argues that the weight of all the packages should be used to calculate damages because the district court found that the entire machine was useless without the damaged robotic arm.27 Lloyds contends that the damage to the arm unambiguously “concerned” the contents of all ten packages. The transporters argue that the weight of only the damaged packages should be used because the term “package or packages concerned” unambiguously refers only to the package that was actually lost, damaged, or delayed.
We conclude that the phrase “package or packages concerned” is ambiguous because it “is susceptible to two or more reasonable interpretations that can fairly be made.” Dahl-Eimers v. Mut. of Omaha Life Ins. Co., 986 F.2d 1379, 1381 (11th Cir. 1993).
The waybill‘s liability limitation is borrowed from the Warsaw and Montreal Conventions, and the history of the Warsaw Convention highlights the ambiguity of the phrase “package or packages concerned.”28 Indeed, when the 1955 Hague Protocol amended the Warsaw Convention to add the “affected weight standard” sentence (a sentence which was omitted from Expeditors’ waybill), the
We acknowledge that the Ninth Circuit analyzed an identical waybill provision in Read-Rite Corp. v. Burlington Air Express, Ltd., 186 F.3d 1190 (9th Cir. 1999), and held that it was unambiguous. The Ninth Circuit offered only this brief analysis of the phrase at issue: “By referring to the ‘package or packages concerned,’ the [carrier‘s] contract clearly contemplates that shipments may consist of multiple packages, and that only the damaged individual packages are
Given the ambiguity in the waybill, under federal common law, extrinsic evidence, such as industry custom or usage, may be examined to help shed light on its meaning. See United States ex rel. E. Gulf, Inc. v. Metzger Towing, Inc., 910 F.2d 775, 779 (11th Cir. 1990). And because the meaning of a contractual provision in light of extrinsic evidence presents a question of fact, rather than one of law, we remand for the district court to address this issue in the first instance. See In Re Stratford of Tex., Inc., 635 F.2d 365, 368 (5th Cir. 1981). Although we acknowledge that we may “in our discretion resolve questions not addressed by the district court,” Clark v. Coats & Clark, Inc., 929 F.2d 604, 609 (11th Cir. 1991), we conclude that it would be inappropriate for us to exercise such discretion here because of the need for the taking of evidence and fact finding.29
In interpreting the Montreal Convention, we sympathize with the late Justice Scalia‘s remarks about the Warsaw Convention: “How many smart people from how many countries came up with this—with this formulation? You think they . . . could have said it more clearly.” Tr. of Oral Argument at 21, El Al Israel Airlines, Ltd. v. Tseng, 525 U.S. 155 (1999) (No. 97-475), 1998 WL 801059, at *21 (Scalia, J.) (referring to Articles 17 and 24 of the Warsaw Convention). The provisions of the Montreal Convention we interpret in this opinion are as abstruse as they are important. We conclude that the Convention assuredly does not apply, meaning the waybill sets the limitation of the transporters’ liability. Because the waybill‘s limitation of liability provision is ambiguous as to whether the weight of only the packages actually lost, damaged, or delayed may be considered or whether the weight of packages that are diminished in value due to the loss, damage, or delay of related packages also may be considered, we remand to the district court for further fact finding and interpretation of this provision.
VACATED AND REMANDED.
I am thankful for Judge Pryor‘s thoughtful and insightful analysis, and concur in Parts I, II, and III.B of the majority opinion. As to Part III.A, I concur only in the judgment because my approach with respect to the applicability of the Montreal Convention is a bit different (and, some might say, a bit too simplistic).
As the court correctly notes,
Starting with
But the exclusion in
To recap, the term “carriage by air,” despite the broad definition in
Notes
Order at 1 (citations omitted) (Doc. 151).It is undisputed that the parties contracted, pursuant to the Air Waybill, for airport-to-airport trans-shipment of the machine from South Korea to Orlando, Florida. In fact, the air waybill lists “Air Waybill” under the heading “Non Negotiable.” Even though the Air Waybill also provides that “ALL GOODS MAY BE CARRIED BY ANY OTHER MEANS INCLUDING ROAD OR OTHER CARRIER UNLESS SPECIFIC CONTRARY INSTRUCTIONS ARE GIVEN HEREON BY SHIPPER . . . ,” the Defendants have not established that they could unilaterally, and without notice to the shipper, modify the contracted airport-to-airport method of shipment.