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MAGNUS ELECTRONICS, v. ROYAL BANK OF CANADA

April 8, 1985

MAGNUS ELECTRONICS, INC., PLAINTIFF,
v.
ROYAL BANK OF CANADA AND AEROLINEAS ARGENTINAS, DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Magnus Electronics, Inc. ("Magnus") has filed a multi-count First Amended Complaint (the "Complaint") against Aerolineas Argentinas ("Aerolineas") and the Royal Bank of Canada ("Bank") to recover the unpaid portion of the purchase price of two shipments of electronics equipment that, Magnus says, were delivered to the buyer in Argentina in breach of Aerolineas' and Bank's obligations to Magnus. Bank has in turn filed a First Amended Cross-claim (the "Cross-claim") against Aerolineas for indemnity or contribution, asserting the loss was attributable to Aerolineas' wrongful conduct.

Aerolineas now has moved under Fed.R. Civ.P. ("Rule") 12(b)(6) to dismiss both the Complaint and the Cross-claim because (1) Aerolineas' liability is governed by the terms of the Warsaw Convention (the "Convention," 49 Stat. 3000 TS 876, reprinted following 49 U.S.C.A. § 1502) and (2) the claims against Aerolineas are barred by the Convention's two-year limitations period. For the reasons stated in this memorandum opinion and order, Aerolineas' motion is granted.

Facts*fn1

In October 1981 Magnus contracted to sell three of its "Magnasync" generators to buyer Alfredo Di Lullo ("Di Lullo")*fn2 in Buenos Aires. Magnus engaged a freight forwarder to arrange for shipment to Di Lullo, and the freight forwarder then engaged Aerolineas to transport the generators from Miami to Buenos Aires. According to the Aerolineas air waybill the generators were to be delivered to Bank (as consignee) in Buenos Aires, with notice to Di Lullo of their arrival. Under the terms of its arrangement with Magnus, Bank was to hold the generators pending Di Lullo's payment of the full purchase price to Bank (for Magnus' account). Only upon payment in full was Di Lullo to take delivery of the goods.

Despite those arrangements, either Aerolineas or Bank (or perhaps the two together in some fashion) permitted delivery of the generators to Di Lullo without Bank's (and hence Magnus') receiving payment. Magnus has yet to collect any portion of the $68,946 purchase price.

In early March 1982 Magnus entered into a second transaction with Di Lullo, this time involving a shipment of transceivers. Again Aerolineas was engaged to carry the goods from Miami to Buenos Aires, where Bank was to take delivery as consignee pending payment in full of the $30,831 purchase price. On March 18 Di Lullo telephoned Magnus and said it had received the transceivers in good condition and would shortly tender payment — this despite the fact Di Lullo was not to get delivery before having paid the purchase price. To date Di Lullo has paid $30,000 on the 1982 shipment, leaving an outstanding balance of $831. Again Magnus claims the loss is attributable to either Aerolineas or Bank or both.

Warsaw Convention

"[A]ll international transportation of persons, baggage, or goods performed by aircraft for hire" (Convention Art. 1(1)) is governed by the Convention, a uniform set of rules drafted at international meetings held in Paris in 1925 and Warsaw in 1929. "International transportation" is defined in relevant part to include (Art. 1(2)):

  any transportation in which, according to the
  contract made by the parties, the place of
  departure and the place of destination, whether
  or not there be a break in the transportation or
  transshipment, are situated . . . within the
  territories of two High Contracting
  Parties. . . .

Both the United States and Argentina are High Contracting Parties to the Convention.

Probably the most frequently invoked provisions of the Convention, in litigation terms, are those limiting the liability of air carriers for loss or damage to passengers or property in the course of air transportation. However, the focus of the present dispute is the limitations period under Convention Art. 29:

  (1) The right to damages shall be extinguished if
  an action is not brought within 2 years, reckoned
  from the date of arrival at the destination, or
  from the date on which the aircraft ought to have
  arrived, or from the date on which the
  transportation stopped.
  (2) The method of calculating the period shall be
  determined by the law of the court to which the
  case is submitted.

Aerolineas claims that provision bars the claims of both Magnus and Bank. They respond with several arguments in an effort to avoid dismissal:

    2. Bank's cross-claim is not subject to the
  Convention in any event.
    3. Even if the Convention does apply to the
  claims, the Complaint's allegations leave open
  the possibility the limitations period has not
  run, at least as to the 1981 shipment.
    4. Magnus' allegations of fraud on Aerolineas'
  part either render the two-year limitations
  period inapplicable or toll it on a fraudulent
  concealment theory.
    5. Because Aerolineas is alleged to have
  engaged in "wilful misconduct," Convention Art.
  25 says Aerolineas cannot avail itself of the
  two-year limitations period.

This opinion will deal successively with those ...


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