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SEAGATE TECHNOLOGY v. DALIAN CHINA EXP. INTERN.

August 13, 2001

SEAGATE TECHNOLOGY LLC, PLAINTIFF,
v.
DALIAN CHINA EXPRESS INTERNATIONAL CORP. LTD, D.B.A. CHINA EXPRESS; U-FREIGHT AMERICA, INC.; GATEWAY CARGO SERVICE CENTER; AND DOES ONE THROUGH TEN, DEFENDANTS. DALIAN CHINA EXPRESS INTERNATIONAL CORP. LTD., D.B.A. CHINA EXPRESS AND U-FREIGHT AMERICA, THIRD-PARTY PLAINTIFFS, V. CHINA EASTERN AIRLINES, THIRD-PARTY DEFENDANT. DALIAN CHINA EXPRESS INTERNATIONAL CORP. LTD., D.B.A. CHINA EXPRESS AND U-FREIGHT AMERICA, CROSS-CLAIMANTS, V. GATEWAY CARGO SERVICES AND DOES ONE THROUGH TEN, CROSS-DEFENDANTS. GATEWAY CARGO SERVICES, CROSS-CLAIMANT, V. CHINA EASTERN AIRLINES, CROSS-DEFENDANT. CHINA EASTERN AIRLINES, COUNTER-CLAIMANT, V. GATEWAY CARGO SERVICES, COUNTER-DEFENDANT.



The opinion of the court was delivered by: Patel, Chief U.S. District Judge.

MEMORANDUM AND ORDER

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.

BACKGROUND

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 the claim.

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.

LEGAL STANDARD

Under Federal Rule of Civil Procedure 56, summary judgment shall be granted "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial . . . since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see also T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987).

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 ...


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