Data

Date:: 06-04-1994
Country:: USA
Number:: 91 Civ. 8484 (LBS)
Court:: U.S. District Court, S.D., New York
Parties:: S.V. Braun Inc. v. Alitalia Linee Aeree Italiane S.p.A.

Keywords

REDUCTION IN PRICE BY BUYER - CAUSED BY ERROR ON SHIPPING DOCUMENT (ART. 50 CISG)

Abstract

A German seller and an Hungarian buyer concluded a contract for the sale of textiles. When, after delivery of the goods, the buyer refused to complete payment of the purchase price, the seller sued the carrier, an Italian company, claiming that it was the carrier's negligence which caused the buyer's refusal. This negligence was a mistake on a shipping document made by the carrier which caused the goods delivered to appear below weight when in fact they were not.

The seller argued that since the goods appeared to be non-conforming the buyer was then entitled to withhold a part of the purchase price under Art. 50 CISG.

The Court observed that Art. 50 CISG may permit a proportionate reduction in price for non conforming goods. However, in the case at hand, it was inconsistent for the seller to argue non conformity of the goods at this point in the dispute as the seller had always claimed that the buyer had received everything to which it was entitled under the contract and was pursuing the buyer for the remaining price. As to the negligence issue, since the seller had failed to give evidence of the causal connection between the carrier's error and the seller's loss, the Court dismissed the seller's claim.

Fulltext

MEMORANDUM OPINION AND ORDER

FRANCIS, United States Magistrate Judge.

This is an action brought by a shipper, S.V. Braun, Inc. ('Braun'), against a carrier, Alitalia-Linee Aeree Italiane, S.p.A. ('Alitalia'). Braun claims that although Alitalia delivered all the cargo assigned to it, the carrier repeatedly misstated the weight of the shipment, leading the buyer to refuse to pay the full purchase price to Braun. The parties consented to my jurisdiction for all purposes pursuant to 28 U.S.C. par. 636(c), and a trial was conducted. This opinion constitutes my findings of fact and conclusions of law under Rule 52 of the Federal Rules of Civil Procedure.

BACKGROUND

In May 1990, Braun entered into an agreement to sell 62,275.5 meters of bathing suit material to Nikex Hungarian Foreign Trading Company ('Nikex') for a total price of $339,401.47. Tr. 9-10; Pl.Exh. 1. Braun, in turn, purchased the material from two manufacturers, Darlington Fabrics Corp. ('Darlington') and Milliken & Company ('Milliken'). Financing for Braun's purchases was provided by Ecoban Finance Limited ('Ecoban'). The fabric was to be delivered to Nikex's agent, Schenker & Co., A.G. ('Schenker') in Vienna, Austria, and then forwarded to Nikex in Budapest, Hungary.

[...]

On July 12, 1990, Alitalia transported the shipment from New York to Milan, Italy. There it divided the shipment into two parts to be trucked overland to Vienna. Tr. 212-13. There is no indication that Alitalia weighed the goods once they had arrived in Milan. Tr. 223, 226. But due to a clerical error, the manifest prepared by Alitalia's Milan office as well as the customs document for transport into Austria misstated the weight of one of the shipments. Tr. 216-23. These documents show shipment of 94 pieces weighing 7,005 kilograms and 111 pieces weighing 9,754 kilograms. Pl.Exh. 32, 33. This results in a correct total of 205 cartons, but a weight of only 16,759 kilograms. These figures were carried over to a notation made on a copy of the original waybill. Tr. 224-29; Pl.Exh. 9.

[...]

The shipment was delivered to Schenker, the named consignee, in Vienna. Schenker then arranged for transport to Nikex in Budapest. The bill of lading for this last leg of the journey shows shipment of 155 cartons weighing 13,033 kilograms and 50 cartons weighing 3,776 kilograms, for a total of 205 cartons weighing 16,809 kilograms. Pl.Exh. 8. This document was stamped by Hungarian customs officials. Tr. 32.

Schenker then identified some discrepancy in the shipment it had received. A series of eleven telexes followed in July, as Alitalia attempted to ascertain why only 205 cartons had been delivered when 209 had been indicated on the waybill. Pl.Exh. 35. Only the first of these telexes noted any weight discrepancy, that being the 819 kilogram difference between the weight of 18,118 kilograms in the waybill and 17,299 kilograms as manifested out of New York. Tr. 232.

[...]

The independent inspection that Mr. Braun had requested was completed in August. In a report dated August 31, the inspection agency indicated that the fabric was of first class quality. The color problems that Nikex had identified were due to an unusual quality of the fabric that caused it to spot when pressure was applied; when the fabric was arranged loosely, the spots disappeared. No weighing or measuring of the entire shipment was undertaken, but it was determined by sampling that because of the elasticity of the fabric, each roll contained an average of 2.3#o less material than was indicated. Pl.Exh. 6.

At some point in late September or early October, Mr. Braun met with Nikex representatives in Budapest. Tr. 33. According to Mr. Braun, Nikex officials continued to argue that the shipment had been short, and for the first time they showed him the Alitalia documents from Milan indicating a shipment weighing less than 17,000 kilograms. Tr. 33-36.

[...]

Braun and Nikex continued to negotiate, and in January 1991, Nikex paid approximately half of the $100,000.00 it had withheld from the purchase price. Pl.Exh. 17. In June, 1991, the parties reached a final settlement and Nikex made an additional payment of approximately $15,000.00, Pl.Exh. 16. This left an outstanding balance of about $35,000.00.

Braun then filed the instant action against Alitalia. Alitalia, in turn, filed a third-party complaint against Nikex and AEL. The claims against Nikex were dismissed for lack of personal jurisdiction, while a default was entered against AEL. Accordingly, only Braun's claims against Alitalia remained to be tried. These claims sound chiefly in tort.

The parties agree that Alitalia delivered to Schenker all the cargo it had received. Nevertheless, Braun contends that Alitalia negligently misstated the weight of the goods in the relevant documents and thereafter failed to exercise due care in investigating and correcting its errors. Plaintiff's Post- Trial Memorandum of Law ('Pl.Memo') at 7 n. 6. Braun also asserts a breach of contract claim based on the theory that the air waybill contained an implied warranty of the accuracy of the information supplied by Alitalia. Pl.Memo at 7 n. 6. Based on these claims, Braun seeks damages consisting of $35,000.00 for the balance due on the purchase price of the goods, $3,881.78 for interest paid to Ecoban while Nikex was withholding payment, $1.500.00 for fees paid to counsel in Hungary, $3,222.00 in incidental damages for travel to Hungary for purposes of negotiation, and $15,400.30 for the freight charges paid to Alitalia. Stipulated Pre-Trial Order at 17.

[...]

DISCUSSION

[...]

In order to prove negligence under New York law, a plaintiff must demonstrate: (1) the existence of a legal duty that the defendant owes to the plaintiff; (2) a breach of that duty; (3) injury, and (4) a reasonably close causal connection between the breach and the resulting harm. [...] Here, Braun has failed to carry its burden of proving the last of these elements.

In order to satisfy the first element, Braun argues that a carrier owes a duty to the shipper to convey an accurate waybill to the consignee. [...] Nevertheless, solely for purposes of this case it will be assumed that such a duty exists, fulfilling the first element of a claim of negligence.

The second and third requirements are likewise satisfied. If such a duty exists, Alitalia breached it. It is undisputed that the waybill prepared in Alitalia's Milan office misstated the weight of the shipment due to a clerical error. And there is no doubt that Braun, having been unable to recover the full purchase price, has suffered injury.

What Braun has failed to demonstrate is that its injury was a foreseeable consequence, proximately caused by Alitalia's negligence. 'Proximate cause, which reflects a judgment regarding the permissible extent of liability for negligence, limits a defendant's liability to those foreseeable consequences that the defendant's negligence was a substantial factor in producing.' Bonsignore v. City of New York, 683 F.2d 635, 637 (2d Cir.1982). Here, several factors serve to break the causal chain.

First, at the time that Nikex withheld payment for the goods, it stated that it was relying on its own measurements; it did not suggest that it was referring to any figures contained in the air waybill. A party seeking to impose liability on a carrier for erroneous shipping documents must demonstrate reliance on those documents. [...]

Furthermore, consistent with the terms of the contract of sale, Nikex complained about the number of yards of fabrics allegedly missing, not about any deviation in weight. There is no evidence that Nikex estimated the yardage allegedly missing by calculating from the weight discrepancy. Thus any negligence by Alitalia in recording the weight of the goods was not causally related to the withholding of payment by Nikex.

Nevertheless, Braun argues that its position is supported by the United Nations Convention on Contracts for the International Sale of Goods done at Vienna on April 11, 1980 (the 'Vienna Convention'). Article 50 of the Vienna Convention provides that '[i]f the goods do not conform to the contract ..., the buyer may reduce the price in the same proportion as the value that the goods actually delivered had at the time of the delivery bears to the value that the conforming goods would have had at that time.' Thus, according to Braun, Nikex was legally warranted in withholding payment.

This argument, however, is wholly inconsistent with Braun's position both in its negotiations with Nikex and in this litigation that Nikex received everything to which it was entitled under the contract. The Vienna Convention may permit a proportionate reduction in price for non-conforming goods, but Braun has stipulated here that the goods delivered to Nikex were conforming. Accordingly, Nikex had no legal justification for withholding payment.

[...]

Because Braun has failed to prove causation, its negligence claims must fail. [...]

Braun is entitled to no reimbursement of freight charges, because Alitalia fulfilled its contract by delivering the goods that it received.

CONCLUSION

For the reasons set forth above, judgment shall be entered in favor of Alitalia dismissing the complaint. The Clerk of Court shall enter judgment accordingly.

SO ORDERED.}}

Source

Published in English:
- 1994 U.S. Dist. LEXIS 4114

Commented on by:
- H.M. Flechtner, More U.S. Decisions on the U.N. Sales Convention: Scope, Parol Evidence, 'Validity', and Reduction of Price Under Article 50, 14 Journal of Law and Commerce 153 - 176 (1995)}}