The opinion of the court was delivered by: Patel, Chief U.S. District Judge.
This action follows the loss of international cargo owned by Seagate
Technology LLC in San Francisco in November 1998. Now before the court is
China Eastern Airlines' motion for partial summary judgment against
Dalian China Express International Corporation, Ltd. ("China Express"),
U-Freight America, Inc. ("U-Freight") and Gateway Cargo Services America
("Gateway"). Having considered the parties' arguments and submissions,
and for the reasons set forth below, the court enters the following
memorandum and order.
This case arises out of a shipment of disc drives transmitted by air on
November 11, 1998, from Shanghai, China to San Francisco on China Eastern
Airlines ("China Eastern"). Air shipment was arranged by China Express
and U-Freight, freight-forwarding companies.*fn1 Two different air
waybills were issued in relation to the shipment. The first is China
Express's air waybill number USH-00450778. The second, and the one at
issue here, is China Eastern's air waybill number 781 1178 0941. See
Declaration of Marc Wang, Exh. E ¶ 3. The China Eastern waybill lists
China Express as the shipper and U-Freight as the consignee. Joint
Statement of Undisputed Facts ("JS") ¶ 5; JS, Exh. B. According to
the air waybill, the original weight of the cargo was 2,850 kilograms.
Wang Dec., Exh. E ¶ 3.
The back of the China Eastern waybill lists the "Conditions of
Carriage." Among them is the following provision:
Except as otherwise provided in carrier's tariffs or
conditions of carriage, in carriage to which the
Warsaw Convention does not apply carrier's liability
shall not exceed USD 20.00 or the equivalent per
kilogram of goods lost, damaged or delayed, unless a
higher value is declared by the shipper and a
supplementary charge paid.
JS, Exh. C*fn2 The Shanghai branch of China Express/U-Freight did not
declare a value for the consignment. China Express is listed as China
Eastern's agent on the waybill. China Eastern provides blank air waybills
to China Express and U-Freight and allows China Express and U-Freight to
issue them. JS ¶ 9.
According to Seagate, when the cargo arrived at San Francisco
International Airport, China Eastern released it to its ground-handling
agent, Gateway. Gateway took the cargo to its warehouse to await its
release to Seagate. See Declaration of Mark T. McClenning, Exh. B ¶
4. Gateway's warehouse is located in South San Francisco, near but not on
the grounds of the airport. Before the cargo's rightful owners could
claim it, it was released to an unknown party who presented a false
warehouse receipt. See JS ¶ 3;*fn3 Wang Dec., Exh. G ¶ 8;
McClenning Dec., Exh. D ¶ 6. Since the incident, 679 units of the
cargo have been recovered by police. McClenning Dec., Exh. C.
In September 1999, Seagate brought suit against China Express,
U-Freight, Gateway and Does One through Ten to recover the value of its
lost cargo. On November 12, 1999, U-Freight and China Express filed a
third-party complaint against China Eastern for damages and equitable
indemnity and contribution, demanding attorneys' fees and costs incurred
in defending against Seagate's complaint and reimbursement for any
judgment or settlement they are forced to pay. China Express and
U-Freight cross-claimed against Gateway and Does One through Ten for
damages and equitable indemnity for breaching the duty of care.
After answering the complaint, Gateway lodged a cross-claim against
China Eastern for contractual indemnity and declaratory relief in which
it claimed that China Eastern is required to defend and indemnify Gateway
for the losses alleged by Seagate. Gateway claims that China Eastern, by
refusing to indemnify it, has effectively breached the ground-handling
agreement, causing Gateway to incur legal costs associated with its own
defense. Gateway demands indemnity for any judgments against it by
Seagate, U-Freight or China Express, as well as declaratory judgment that
it is entitled to be indemnified for fees and legal costs incurred.
On November 27, 2000, China Eastern counter-claimed against Gateway
alleging that Gateway intentionally or recklessly caused the loss in
question, and that in defending this action, China Eastern has incurred
legal costs. China Eastern also seeks a declaratory judgment that Gateway
is not entitled to indemnity from China Eastern for the damages in
Gateway's complaint or for legal costs incurred in Gateway's defense of
On January 22, 2001, China Eastern moved for partial summary judgment
against China Express, U-Freight and Gateway. China Eastern seeks
declaratory judgment that the liability limits found in the waybill's
Conditions of Contract are enforceable against China Express, U-Freight,
and Gateway, and that under these terms, its liability is limited to $20
per kilogram, or $48,360.
The moving party bears the initial burden of identifying those portions
of the record which demonstrate the absence of a genuine issue of
material fact. The burden then shifts to the nonmoving party to "go
beyond the pleadings, and by [its] own affidavits, or by the
`depositions, answers to interrogatories, or admissions on file,'
designate `specific facts showing that there is a genuine issue for
trial.'" Celotex, 477 U.S. at 324, 106 S.Ct. 2548 (citations omitted);
see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct.
2505, 91 L.Ed.2d 202 (1986) (holding a dispute about a material fact is
genuine "if the evidence is such that a reasonable jury could return a
verdict for the nonmoving party"). The moving party discharges its burden
by showing that the nonmoving party ...