IN THE TERRITORIAL COURT OF THE VIRGIN ISLANDS

DIVISION OF ST. THOMAS AND ST. JOHN



CARIBBEAN INTER-TRADE CORP.



Plaintiff CIVIL NO. 14/1982



vs. ACTION FOR BREACH OF

CONTRACT



EASTERN AIRLINES, INC.



Defendant



eet Nee eet Sa St eee ee Net Set Se



. JOSEPH BRUCE WM. ARELLANO, ESQUIRE

' Campbell & Arellano



Post Office Box 1705



St. Thomas, Virgin Islands 00801

| --<Attorney for the Plaintiff



. ALEXANDER A. FARRELLY, ESQUIRE



Birch, deJongh & Farrelly



Post Office Box 1197



St. Thomas, Virgin Islands 00801

_c7-Attorney for the Defendant



MEMORANDUM OPINION

(Filed April So , 1984)



MEYERS, J.



) This matter is before the Court on Defendant Eastern

-Airline's motion to disallow prejudgment interest and on Plaintiff

Caribbean Inter-Trade's motion for costs and attorney's fees.

Both parties have filed strenuous objections to the other's

motion. For the reasons set forth below, each of the parties’



motion will be granted.



I. FACTS

The Plaintiff shipped goods consisting of handbags and



leather products in three packages from Milan, Italy, with final

Caribbean Inter~Trade v. Eastern

Civil No. 14/1982 ~2-



destination being St. Thomas, Virgin Islands. The goods arrived

in Boston, Massachusetts, via Swissair on October 14, 1979 and

were subsequently transshipped via Eastern Airlines to St. Thomas.

The packages arrived separately -- one on one trip and the others

on another. Upon arrival in St. Thomas, at least one of the

packages was open and some of the contents were discovered

missing. No value was declared for the goods on the airway bill.

Plaintiff instituted the instant action against the Defendant for

the value of the damaged goods, for consequential damages, and for

restitution. On June 24, 1983, the Court held that the Warsaw

Convention, October 12, 1929, 49 Stat. 3000, TS No. 876, 49 U.S.C.

1502 (entered into force for the United States on October 29,

1934), governed the case because international shipment was

involved. The Court, in granting partial summary judgment in

Plaintiff's favor with respect to the issue of liability,

indicated that this case was covered by Article 18 of the Warsaw

Convention. Therefore, it is subject to the limitations set forth

in Article 22(2), which explicitly limits the carrier's liability

to the sum of 250 francs per kilogram where, as here, no declared



value has been made. See, Wing Hang Bank Ltd. v. Japan Airlines



Co., Ltd., 357 F. Supp. 94 (S.D.N.Y. 1973). The matter was, then,

set down for hearing on the issue of damages. After considering

all the evidence, the Court announced that it will enter judgment



in Plaintiff's favor but will take under advisement certain items

Caribbean Inter-Trade v. Eastern

Civil No. 14/1982 ~3-



of damages claimed by the Plaintiff, for example, excise duties

and shipping costs. Shortly thereafter, the instant motions were



filed.



It. DISCUSSION



A. Prejudgment Interest



Relying on Domangue v. Eastern Air Lines, Inc.,



542 F. Supp. 643 (E.D. La. 1982), the Defendant contends that

"(t]he intent of the parties to [the Warsaw Convention] was to

protect the airline industry from bankruptcy by placing a ceiling

on the carrier's liability for damages." Further, Defendant

contends, interest, being an element of damages, is meant to be

included within the limitation of 250 francs per kilogram where no

declared value has been made. Moreover, Defendant contends that

"[slince the pre-judgment [interest] rule is a local statute, it

is preempted by the Warsaw Convention and judicial interpretation

placed on it." The Court agrees.



Plaintiff, in its opposition, attempts to distinguish



Domangue, supra, from the case at bar by contending that "Domangue



was a wrongful death action, and thus brought into play the

provisions of subsection (1) of Article 22 of the Warsaw

Convention, which concerns the transportation of passengers."

Further, it contends that, "the instant case is governed by

subsection (2) of the same Article which concerns the



transportation of goods and baggage." The Plaintiff's attempt at

Caribbean Inter-Trade v. Eastern

Civil No. 14/1982 -4-



distinguishing Domangue is superficial at best. True, Domangue

involves wrongful death while this case involves missing

merchandise; however, that is not the issue. Instead, the issue

is whether prejudgment interest is at all allowable over and above

the specified limitations of Article 22. The Court is of the

opinion that it is not.

The explicit language of Article 24 of the Convention



states:



(1) In the cases covered by articles



18 and 19 any action for damages,



however founded, can only be brought



subject to the conditions and limits



set out in this convention. [Emphasis



added. ]



Plaintiff cites, as authority, Boehririger Mannheim



Diagnostics, Inc. v. Pan Am World Airways, Inc., 531 F. Supp. 344



(S.D. Tex. 1981) for an award of prejudgment interest over and

above the 250 francs per kilogram limitation of Article 22(2).

While that case does stand for Plaintiff's proposition, the Court

is not persuaded by it. First, “it is fundamental that a treaty,

whether construed strictly or liberally, should be interpreted to

effectuate its evident purposes." Reed v. Wiser, 555 F.2d 1079,



1088 (2nd Cir. 1977), cert. denied, 434 U.S. 922.



It is beyond dispute that the purpose

of the liability limitation prescribed

by Article 22 was to fix at a definite

level the cost to airlines of damages

sustained by their passengers and of

insurance to cover such damages. As

Caribbean Inter-Trade v. Eastern

Civil No. 14/1982 ~5-



Secretary of State Cordell Hull wrote

transmitting the Convention to the

Senate in 1934:



"It is believed that the

principle of limitation of liability

will not only be beneficial to

passengers and shippers as affording

a more definite basis of recovery and

as tending to lessen litigation, but

that it will prove to be an aid in the

development of international air

transportation, as such limitation will

afford the carrier a more definite

basis on which to obtain insurance

rates, with the probable result that

there would eventually be a reduction

of operating expenses for the carrier

and advantages to travelers and

shippers in the way of reduced trans-

portation charges." [Emphasis added.]



Id. at 1089. Additionally, "[alnother fundamental purpose of the

signatories to the Warsaw Convention...was their desire to

establish a uniform body of world-wide liability rules to govern

international aviation, which would supersede with respect to

international flights the scores of differing domestic laws...of

each of the countries involved." Id at 1090. It is, therefore,



evident that Boehringer Mannheim Diagnostics, Inc., supra, is at



odds with the purposes of the Convention to the extent that it

holds that prejudgment interest is allowable above and beyond the

limitations of Article 22(2). Accordingly, the Court will grant

Defendant's motion to disallow prejudgment interest as the

application of our local prejudgment interest statute "necessarily



conflicts with the congressional scheme." In Re Aircrash in Bali,

Caribbean Inter-Trade v. Eastern

Civil No. 14/1982 ~6~



Indonesia on April 22, 1974, 684 F.2d 1301, 1308 (9th Cir. 1982).



Needless to say, Plaintiff's claim for excise duties and costs of

shipment, which the Court took under advisement, must also be



disallowed.



2. Attorney's Fees and Costs



With respect to Plaintiff's motion for an award of

attorney's fees, the Court is of the opinion that the Warsaw

Convention does not preempt state law in this regard. See,



Boehringer Mannheim Diagnostics, supra, at 354. Indeed, the



Defendant's opposition to an award of attorney's fees is not

premised on preemption grounds but, rather, on the ground that the

amount of hours claimed are unnecessary and unreasonable. With

this the Court agrees. Accordingly, the Court shall grant

Plaintiff's motion for costs and attorney's fees but shall make

the necessary adjustments and award a figure which it deems



reasonable for prosecution of this case,



Nbreel 2 i



ISHMAEL | A. MEYERS

skage of the Territorial Court of the



Virgin Islands



, VIOLA EY ‘Sar

Administrator/elere - the Court



fd



ce



Dated: April So , 1984



ATT St: