978-1285770178 Case Printout Case CPC-17-07

C.A.2 (N.Y.),2013.

Royal & Sun Alliance Ins., PLC v. International Management Services Co., Inc.

703 F.3d 604, Fed. Carr. Cas. P 84,745

Group, Inc., Defendants.FN*

FN* The Clerk of the Court is directed to amend the official caption in the case to conform to the caption

listed above. TFE has withdrawn its appeal because the case against it was dismissed with prejudice by the

district court below. TFE’s appeal is therefore dismissed.

paying shipper‘s for loss suffered when shipment was damaged in collision. The United States District Court for the

Southern District of New York, Marvin E. Aspen, J., entered judgment holding a subcontractor liable to insurer, and

subcontractor appealed.

Holdings: The Court of Appeals held that:

West Headnotes

[1] Carriers 70 156(1)

shipper and a carrier where the contract does not extend the limitation to third parties. Because we determine that—

under either body of law—liability limitations extend to third-party contractors only if the contract clearly states that

they do, and because we identify no error in the district court’s finding on negligence, we affirm the judgment of the

district court.

ity of third-party carriers would “be governed by the applicable agreement with such carrier[s].”

UPS arranged for its wholly owned subsidiary, defendant Worldwide Dedicated Services, Inc. (“WDS”), to

transport Ethicon’s goods. While WDS provided the trucks, it had previously contracted with defendant-appellant

International Management Services Company, Inc. (“IMSCO”) to provide drivers for various deliveries. This

pursuant to the LSA. UPS/WDS took possession of the shipment in Texas. The truck was driven by two IMSCO

employees provided to WDS under the terms of the SSA. While the shipment was en route near Little Rock, Arkan–

sas, the truck left the roadway, collided with a concrete barrier, and caught fire. The fire damaged several of the par-

cels in the truck, and the driver of the truck later died from injuries he sustained in the accident. The cause of the

accident is disputed and was the primary issue of fact in the bench trial below.

RSA moved for partial summary judgment on three issues: first, whether UPS was liable to it for $250,000 un-

der the LSA; second, whether WDS was not covered by the LSA’s liability limitation; and third, whether IMSCO

and TFE were not covered by the limitation. The district court (Laura Taylor Swain, Judge ) granted RSA’s motion

with respect to UPS and held UPS liable to RSA in the amount of $250,000. The district court denied RSA’s motion

with respect to WDS and held that WDS, as a wholly owned subsidiary of UPS, was covered by the liability limita-

After the court’s decision, RSA and IMSCO entered and filed a written stipulation. The parties stipulated that

“the principal amount of plaintiff’s damages is $750,000” and that “the total recoverable damages by RSA if liability

is found is $500,000.00,” because $250,000 had already been paid by UPS.FN1

FN1. RSA argues that this stipulation waived IMSCO’s right to argue that it is entitled to the benefit of the

question of whether IMSCO’s employee had negligently caused the accident. In deciding that motion, the district

court (Marvin E. Aspen, Judge, by designation) was required to address the merits of the federal common law ques-

tion; it determined that, like the Carmack Amendment, federal common law did not extend contractual liability limi-

tations to third-party contractors absent evidence of contractual intent to so extend them.

denial of its motion to bifurcate the trial, and the district court’s opinion following the bench trial.

DISCUSSION

I. Carmack Amendment

[1] IMSCO challenges the district court’s grant of partial summary judgment striking IMSCO’s defense that it

of the contract of intent to do so. This general principle applies to clauses that limit liability. See Royal & Sun Alli-

ance Ins., PLC v. Ocean World Lines, Inc., 612 F.3d 138, 142 (2d Cir.2010) (describing how parties must use so–

called “Himalaya clauses” to extend liability limitations to third parties that would otherwise not receive their pro-

tection).

ity. We decline to hold that third parties to shipping contracts are automatic beneficiaries of limitations on liability

that by their terms only apply to the parties to the contract. IMSCO’s arguments under the Carmack Amendment are

therefore unavailing.

II. Federal Common Law of Bailment

which IMSCO was one.FN2 This argument fails for the same reasons that IMSCO’s Carmack Amendment argument

does.

FN2. We need not decide whether federal common law extends to non-carrier bailees of carriers otherwise

governed by the Carmack Amendment. The parties assume federal law applies, so we merely determine

the contracts in this case do not extend the limitation on liability to cover sub-bailees. Absent evidence that the par–

ties agreed to such a limitation, we decline to impose one.

B. Negligence

[5] Finally, IMSCO argues that the district court erred by misapplying this Court’s precedent on the burden–

FN3. To the extent IMSCO asks this panel to overturn a prior decision of this court, we lack authority to do

so. See Adams v. Zarnel (In re Zarnel), 619 F.3d 156, 168 (2d Cir.2010) (“This panel is bound by the deci-

sions of prior panels until such time as they are overruled either by an en banc panel of our Court or by the

Supreme Court.” (internal quotation marks omitted)).

ence in RSA’s favor, not that IMSCO had failed to carry a burden it did not have. This type of determination is the

sort reserved for triers of fact. See Commercial Molasses Corp. v. N.Y. Tank Barge Corp., 314 U.S. 104, 111, 62

S.Ct. 156, 86 L.Ed. 89 (1941) (holding that, if the bailee fails to defeat the inference, the trier of fact is entitled to

rely on the presumption created by the prima facie case).

C.A.2 (N.Y.),2013.

Royal & Sun Alliance Ins., PLC v. International Management Services Co., Inc.

703 F.3d 604, Fed. Carr. Cas. P 84,745

END OF DOCUMENT