Merhi v. Bullion Exchanges, LLC

Background

Zaher Merhi sued Bullion Exchanges, LLC, Bullion Exchange, LLC, FedEx Corporation, and John Doe, an unnamed employee and delivery driver for defendants. Bullion asserted cross-claims against FedEx. Merhi alleged that FedEx negligently hired or retained employees, lost or misplaced his package, breached an agreement, converted the gold by intentionally taking it, acted with gross negligence, and violated unspecified statutes.

Merhi had purchased $86,563.20 in gold coins from Bullion Exchange, LLC. Bullion shipped the package through FedEx. FedEx’s records showed a delivery, a signature, and a delivery scan near Merhi’s address. Merhi said he did not receive the gold and disputed parts of FedEx’s account, but the court treated FedEx’s statements about the signature and GPS records as admitted because Merhi did not support his denials with citations to admissible evidence.

FedEx’s transportation agreement incorporated its Service Guide. The guide limited liability for precious metals to $1,000 unless a higher value was declared and paid for, and stated that FedEx did not provide insurance. Bullion paid an additional $12.50 to increase the ordinary $100 limit to $1,000 and purchased third-party insurance for losses beyond that amount.

Summary-judgment ruling

Summary judgment is a decision without a trial when the evidence shows no real dispute over facts that could affect the result and the moving party is entitled to judgment under the law. FedEx moved for partial summary judgment. Although Merhi did not file the required legal memorandum opposing the motion, the court considered his opposition on the merits.

Merhi’s tort claims. The court held that the Airline Deregulation Act preempts state-law tort claims based on an air carrier’s shipping services. It therefore dismissed Merhi’s state-law negligence, gross-negligence, and other state-law tort claims. The court read a federal common-law negligence claim into Merhi’s allegations about the lost shipment and declined to grant summary judgment dismissing that claim.

The court held that the contractual liability limit was enforceable against Bullion and therefore also applied to Merhi. It limited FedEx’s liability on Merhi’s three negligence claims to $1,000. The court treated Merhi’s conversion claim under federal common law. Although a limitation clause generally applies to ordinary conversion claims, an intentional or willful conversion could avoid the limit. The court found that Merhi supplied no facts or evidence from which a reasonable jury could find that FedEx intentionally or willfully stole the shipment for its own use. Merhi could therefore recover no more than $1,000 on the conversion claim.

Merhi’s contract and statutory claims. FedEx acknowledged that the Airline Deregulation Act did not preempt Merhi’s contract claim and that Merhi could recover as a third-party beneficiary. Because a third-party beneficiary has no greater rights than the contracting party, the court limited any recovery on Merhi’s breach-of-contract claim to $1,000. The court construed Merhi’s unspecified statutory claims as state-law claims and granted summary judgment on them to the extent he intended to assert them, because the Airline Deregulation Act preempts state statutes regulating air shipping.

Bullion’s cross-claims. The court granted summary judgment for FedEx on Bullion’s cross-claims except to the extent they asserted contractual indemnification or breach of contract. The court then dismissed Bullion’s contractual indemnification cross-claim because the agreements submitted to the court contained no indemnification or hold-harmless provision, and Bullion did not contest that point.

Bullion’s remaining contract theory alleged that FedEx breached its agreement by having its delivery agent sign personally for the package and fail to verify the recipient’s age with identification. The court rejected Bullion’s argument that the liability limit lacked reasonable notice. It found that Bullion knew about the limit, paid for the higher $1,000 level, purchased outside insurance for losses beyond that limit, and was a sophisticated, high-volume shipper. The court granted FedEx’s request for summary judgment limiting its contractual liability to Bullion to $1,000.

Disposition

The court held that FedEx’s motion for summary judgment was granted in part and denied in part. Merhi’s state-law tort claims were dismissed. His federal common-law tort claims and breach-of-contract claim were not dismissed, but FedEx’s liability on those claims was limited to $1,000. Bullion’s state-law tort and indemnification claims, including its contractual indemnification claim, were dismissed, while its breach-of-contract claim remained subject to the $1,000 limit.