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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

Tobacco Shipment Damage Leads Indemnity Insurance to Court

June 14, 2011 - An international air shipment of tobacco has led Indemnity Insurance Co. of North America to court in New York to try to recover damages allegedly sustained by the load.

The Pennsylvania insurer filed suit in U.S. District Court for the Southern District of New York, against American Airlines, American Airlines Inc. and American Airlines Cargo. In doing so the ACE USA-licensed insurer invoked two treaties - the Warsaw Convention and the Montreal Convention - that it claims apply to international air transportation of merchandise.

Indemnity said it was suing the airline as a subrogated insurer of Universal Leaf Tobacco Co. It also said the complaint was lodged for and on behalf of the shipper, consignee and owner of the cargo.

According to the complaint, the lawsuit involved a shipment of tobacco bobbins that were transported from Dominican Republic to the United States on Aug. 3, 2010.  There was no indication in the suit as to how much tobacco was involved.

The merchandise was allegedly damaged en route, and Indemnity contends this was a result of recklessness or misconduct by American or firms or individuals under its control. The complaint alleges that the defendants allegedly failed to properly handle or care for the shipment, and had no proper procedure to receive carry, transfer or care for the cargo.

The tobacco was in good condition when it was delivered to American, said Indemnity, but was in a “depreciated condition” at the time of delivery. As a common carrier or bailee, the suit said American is therefore liable for the claimed damage.

Indemnity estimated the damages to be at $79,237, and asked the court to compensate it that amount plus incidental expenses, including survey fees. It also asked for prejudgment interest at the rate of 9 percent.

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