Case Title: Universal Underwriters Insurance Co. v Allstates Air Cargo, Inc.

Citation: 

Docket Number: 

State: vermont

Court: Vermont Supreme Court

Date: 2003-02-03T00:00:00Z

Document:
Universal Underwriters Insurance Co. v Allstates Air Cargo, Inc. (2001-262);
175 Vt. 475; 820 A.2d 988

2003 VT 8

[Filed 03-Feb-2003]

                                 ENTRY ORDER

                                  2003 VT 8

                      SUPREME COURT DOCKET NO. 2001-262

                               JUNE TERM, 2002

  Universal Underwriters 	       }	APPEALED FROM:
  Insurance Company                    }
                                       }
       v.	                       }	Lamoille Superior Court
                                       }	
  Allstates Air Cargo, Inc.,	       }
  Stoweflake Resort and Conference     }	DOCKET NO. 63-4-00 Lecv
  Center, and Baraw Enterprises, Inc.  }	
                                                Trial Judge: Alan Cook

             In the above-entitled cause, the Clerk will enter:

       ¶  1.  Defendant carrier Allstates Air Cargo, Inc. (Allstates)
  appeals from the decision of the Lamoille Superior Court granting
  plaintiff-shipper Universal Underwriters Insurance Company's (UUIC) motion
  in limine to preclude Allstates from relying upon a limitation of liability
  provision on Allstates' airbill.  The issue arose in litigation between
  them over damage and loss of part of UUIC's computer equipment while being
  shipped by Allstates.  Allstates argues that the limitation of liability
  provision is enforceable under the "released value" doctrine of federal
  common law.  We do not agree, and affirm.

       ¶  2.  Allstates is an interstate freight forwarder based in New
  Jersey.  Allstates has done business with UUIC, an insurance company based
  in Kansas, for at least fourteen years, typically shipping printed material
  for UUIC.  When shipping with Allstates, UUIC utilized preprinted airbills
  that Allstates delivered to UUIC approximately once a month.  The front of
  UUIC's copy of the airbill contained blank spaces for information about the
  shipment, to be filled out by UUIC, including a box for "declared value." 
  The back set forth the "CONDITIONS OF CONTRACT FOR FREIGHT AIRBILLS,"
  printed in relatively small type.  Among these conditions was a limitation
  of liability provision, as well as the statement that "[s]hipper may
  declare a higher value on the entire shipment, in which case an additional
  transportation charge as set forth in the Allstates Air Cargo Rules Tariff
  shall be required."  The front of the airbill contains no reference to the
  printed conditions on the reverse side.
        
       ¶  3.  On August 11, 1999, UUIC contracted with Allstates for the
  shipment of twenty-four cartons containing laptop computers and associated
  software and computer hardware from UUIC's Kansas headquarters to the
  Stoweflake Resort and Conference Center (Stoweflake) in Stowe, Vermont,
  where UUIC was holding a conference.  The shipment was arranged by Rachel
  Oitker, UUIC's customer service manager, who had used Allstates' services
  many times before.  Ms. Oitker completed Allstates' preprinted airbill for
  the shipment, inserting the figure "$250,000" in the box for declared
  value.  The airbill was picked up by an Allstates representative along with
  the shipment.

       ¶  4.  The shipment was transported by air to Boston, Massachusetts,
  then by truck to the Stoweflake, arriving on August 13, 1999.  It was
  placed in a locked conference room overnight.  The following day, UUIC
  discovered that several of the cartons had been damaged and that ten laptop
  computers and one printer were missing.  UUIC informed Allstates of the
  loss and requested that Allstates indemnify it for the value of the lost
  goods, as provided for in the contract.  Allstates refused, and UUIC
  subsequently brought suit against Allstates for breach of contract and
  negligence, and against Stoweflake and its corporate owner, Baraw
  Enterprises, Inc., for negligence.

       ¶  5.  Before to trial, UUIC filed a motion in limine to preclude
  Allstates from relying on the limitation of liability provision set forth
  in Paragraph 7 on the reverse side of the airbill.  Paragraph 7 stated:

         In consideration of Carrier's rate for the transportation of
    any shipment, which rate, in part, is dependent upon the value of
    the shipment, the shipper and all other parties having an interest
    in the shipment agreed that the limit of Carrier's liability shall
    be the lesser of:

         (1)  the amount of any damages actually sustained; or

         (2)  (a)  where no value is declared, 50¢ per pound
                   multiplied by the number of pounds (or fraction 
                   thereof) of those piece(s) of the shipment that 
                   may have been lost, damaged or delayed (or $50.00 
                   whichever is greater), or

              (b)  where a higher value is declared, (i) in the case of
                   loss, damage or delay of the entire shipment, the 
                   declared value of the shipment; (ii) in the case of 
                   the loss, damage or delay of part of the shipment, 
                   the average declared value per pound of the shipment 
                   multiplied by the number of pounds of that portion 
                   of the shipment which may have been lost, damaged or 
                   delayed.  When damage is of a concealed nature payment 
                   will be made at 50% of repair or replacement cost, 
                   not to exceed the declared value.

  (PC 8) Under Paragraph 7(2)(b)(ii), UUIC's damages would be limited to
  $19,682.52, as opposed to the approximately $42,000 that the jury found was
  the actual value of the lost goods.  This reduction occurred because the
  provision required, in a partial loss situation, that the declared value be
  allocated by weight irrespective of the actual value of the damaged or lost
  items.
   
       ¶  6.  At the close of the evidence, the trial court entertained
  argument on UUIC's motion.  The court ruled that the limitation of
  liability provision was unenforceable as a matter of law, and declined to
  instruct the jury on limitation of damages.  The jury exonerated Stoweflake
  and returned a verdict against Allstates for $41,893.09.  Allstates
  subsequently brought this appeal.

       ¶  7.  On review, since construction of a contract is a matter of
  law and not a factual determination, "this Court must make its own inquiry
  into the proper legal effect of the terms of the agreement, employing the
  trial court's valid findings of fact."  Gannon v. Quechee Lakes Corp., 162
  Vt. 465, 469,