Indemnity Insurance Company of North America v. UPS Ground Freight, Inc.
SUPPLEMENTAL OPINION. Signed by Judge Kevin McNulty on 6/2/16. (DD, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
INDEMNITY INSURANCE COMPANY OF
NORTH AMERICA, a corporation,
UPS GROUND FREIGHT, INC., d/b/a UPS
FREIGHT, a corporation,
MCNULTY, District Judge
This action under the Carmack Amendment, 49 U.S.C. 14706 et seq.,
arises from damage to two interstate shipments of goods. The Plaintiff,
Indemnity Insurance Company of North America (“Indemnity”), is the
subrogating insurance company for the owner of the freight, G.E. Healthcare.
will refer to the plaintiff as “GE”.) The Defendant, UPS Ground Freight, Inc.
(“UPS”), is a motor carrier.
By Memorandum Opinion and Order filed March 31, 2016 (ECF nos. 69,
70) I denied UPS’s motion pursuant to Fed. R. Civ. P. 56, for partial summary
judgment to limit and cap damages. I found that although many of the
underlying facts were uncontested, certain issues of contractual interpretation
potentially posed genuine, material issues of fact.
On April 21, 2016, UPS filed a motion for partial summary judgment and
relief from my March 31 Order. (ECF no. 73) The same day, counsel jointly filed
a letter stating that they were uncertain as to what factual issues, if any,
remained. (ECF no. 72) I convened a conference call with counsel, in which
both sides stated that they had no further evidence to submit. (ECF no.
the Court’s suggestion, counsel submitted a joint letter in which they
consented to withdraw the April 21, 2016 motion; agreed that there were
issues of fact that they regarded as material still in dispute; and agreed
submit the issue of contractual interpretation to the Court for final decisio
(ECF no. 75)
As a result, I now decide the issue presented by UPS’s motion for partial
summary judgment (ECF no. 57) based on the record as it stands. This
must be read as a supplement to my earlier-filed Opinion, and all of that
Opinion’s abbreviations and terms are adopted here. (ECF no. 69) For
reasons stated herein, the motion for partial summary judgment is again
DENIED. Amplifying my reasoning, I hold that the liability of UPS is not
by the value declared on the bills of lading, but is governed by the GE Contra
The upshot of my earlier opinion denying summary judgment is as
follows. The plaintiff, GE, alleges damages totaling $1,039,484.9 as
of defendant’s mishandling of two shipments in 2010 and 2012. The defend
UPS, contends that damages are contractually limited to the value of goods
declared on the bills of lading: $2.30 per pound, which comes out to a total
GE as “Shipper” and UPS as “Carrier” had an overall contract governing
their relationship. That GE Contract provides at section 7(A):
A. Carrier is liable to Shipper for full invoice value (see paragraph
E) of Shipper’s goods for loss or damage to goods....
§ 7(A) (the “Full Invoice Value” provision). The cross
referenced paragraph 7(E) provides:
E. Except as otherwise provided, Carrier’s maximum liability will
not exceed $250,000 per occurrence.
§ 7(E) (the “$250,000 Limit” provision).
The GE Contract also has an override provision,
E. To the extent that any bills of lading, or other ship
documents used in connection with transportation
provided pursuant to the contract are inconsistent
with the terms
and conditions of this contract (including the term
s and conditions
of Appendices or Exhibits incorporated by reference
), the terms
and conditions of this Contract (and any incorpora
and Exhibits) shall govern.
§ 7(E) (the “Override Provision”). Finally, the GE Contract
contains an “Entire Contract” clause, providing that
its terms cannot be
modified or waived except by a writing signed by both
Contract § 15 ¶7.
Under the Carmack Amendment, the carrier may limit
its liability “to a
value established by written or electronic declaration
of the shipper or by
written agreement between the carrier and shipper if
that value would be
reasonable under the circumstances surrounding the
U.S.C. § 14706(c)(1)(A). UPS says each of the bills of ladin
g, stating a value of
$2.30/lb., is such a “written agreement” or “declaration”
that limits UPS’s
liability. GE replies that the GE Contract (ECF no. 57-3
at 6) is the controlling
“written agreement between the carrier and the ship
per,” and that it renders
UPS liable for the Full Invoice Value of the goods, subj
ect only to the $250,000
The issue, then, comes down a dispute over which shall
control: (a) the
value declared on the bills of lading, or (b) the more gene
ral Full Invoice and
$250,000 Limit provisions of the GE Contract.
Penske Logistics, Inc. v. KLLM, Inc., 285 F. Supp. 2d 468
faced by a similar scenario, enforced the limitation in
the bill of lading. Judge
Wolin cited general principles of contract law that inter
related contracts should
be interpreted as a whole, so that no part is rendered supe
meaningless. Thus, he concluded, the override provision
in the general contract
should not be interpreted to override the bill of lading;
rather the bill of lading
should be regarded as “incorporated” in the general cont
ract, because the
contract required that each individual shipment be “evide
nced by a written
I was less certain:
I cannot so easily read the court’s interpretation of the
Penske contract onto this, the GE Contract. These are not
of simultaneouslyexecuted, interlocking agreements to
rules of contract interpretation cited in Penske most clearly
When the GE Contract was signed, these bills of lading did
exist. One permissible reading of the Contract is that GE protect
itself against the unknown terms of those future bills of lading
telling UPS, in effect, to ignore them to the extent they conflic
with the Agreement. Thus default rules of contract interpretation
may not help us where the very purpose of an Override Provis
may be to render terms of the other contract superfluous. UPS
contends that there is no such inconsistency; but where the
contract requires $1 million, and the bill of lading requires
$15,000, there may well be. Full Invoice Value and the amount on
the bill of lading are not the same thing, and at least one
permissible interpretation of the Agreement is that it overrides
bill of lading.
(ECF no. 69 at 7) I went no farther than to deny the motion of UPS
summary judgment. I believed that the matter should be tried,
evidence regarding the intent of the parties might shed furth
er light on the
meaning of the Agreement.
With the parties’ authorization, however, I now rule more broadl
on the record before me. I adopt the “one permissible interpretation
Agreement” referred to in the quoted passage. I hold that the
overrides the declared value that the warehouse placed on the
bills of lading.
My reasoning is as follows. The terms and conditions of the Contra
state that UPS shall be liable for the full invoice value, subjec
t to the limitation
of $250,000. The bills of lading impose a limit of $15,000 based
declared value. The two are therefore “inconsistent.” The GE
Override Provision addresses the very situation where “bills of
inconsistent with the terms of conditions of this contract,”
providing that in
such a case, “the terms and conditions of this Contract
shall govern.” GE
Contract § 7(E). The Contract, not the bill of lading, controls.
I am confirmed in that conclusion by the integration clause, which
provides that the terms of the GE Contract cannot be altered except by
writing signed by both parties. GE Contract 15 ¶7. The bill of lading
signed by both parties (i.e., by GE and UPS). And it is reasonable to conclu
that GE, in giving primacy to the Contract and requiring a mutual writing
alter it, sought to protect itself against the actions of third parties, such
UPS, in its now-withdrawn Rule 60 motion, argued that I had overlooked
the “dispositive impact” of Penske. (ECF no. 73 at 4) In UPS’s view, when I
stated that the GE Contract and the bills of lading “are not the kind of
simultaneously-executed interlocking agreements to which the rules of contrac
interpretation cited in Penske most clearly apply,” I overlooked the fact that the
contract and bills of lading in Penske itself were not simultaneously executed. I
meant no more than I said: that the “rules of contract” cited in Penske—not the
Penske case itself—applied most clearly to simultaneously executed contracts.
To be clear, I disagree with the holding of Penske, at least as it applies here. As
a decision by a judge of coordinate jurisdiction, it does not control as
The default rules of contract interpretation cited in Penske do not assist
the analysis. Other things being equal, all parts of contracts (or interrelated
contracts) should be given effect. Here, however, the very purpose and intent of
the Override Provision is to render a conflicting bill of lading ineffective.
Indeed, GE’s contract with its warehouse forbade the warehouse to declare the
value of goods on bills of lading. (Warehouse Contract
p. 25 (Attachment D). UPS,
however, was not a party to the Warehouse Contract and had no reason to know that.
For the reasons stated above, the relief sought in the motion of UPS for
partial summary judgment (ECF no. 57) is and remains DENIED. Amplifying
my reasoning, and ruling on the issues of contractual interpretation submitted
to the Court by mutual consent, I hold that the liability of UPS is not limited by
the value declared on the bills of lading, but is subject to the overriding terms
of the GE Contract (ECF no. 57-3 at 6).
An appropriate Order accompanies this opinion.
Dated: June 2, 2016
United States District Ju
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