Article

Missing Jewelry - Are You Liable?
By: Ken Piken

Time and time again, our industry has suffered the wrath of missing jewelry, which in some instances takes the form of a claim after the shipment is delivered to the customer's home and, in some instances, revolves around packing at the customer's home.

A review of the bill of lading that is utilized throughout the industry shows that, although most people are of the mind that jewelry is an excluded item, it is not. Similarly, the Household Goods Carriers Bureau 400 tariff does not exclude jewelry as an item for which the carrier can remove itself from liability.

There are instances whereby a high value inventory may be of some benefit, but invariably that customer alleges that the packer either pilfered jewelry upon packing or that the jewelry mysteriously disappeared in transit. All is not lost.

As a common carrier for hire, the general rule is that a motor carrier is an insurer of goods. This, of course, is subject to limitation of liability and valuation declaration that limits the liability rather than excludes liability for missing items. Carriers customarily state, "We did not pack the goods," and, accordingly, "we are not responsible for missing goods, particularly jewelry." There is, however, some law on the subject that must be considered.

In the event the customer alleges that goods were taken during the packing process, a recent case in the United States District Court, Eastern District of New York holds for the proposition that a carrier may not be liable. The reasons are many and this article will hopefully help carriers prevent further losses such as this and minimize their exposure until the time that preventative measures are taken.

The shipper in this real fact pattern had three packers in her home on a Friday for packing a shipment destined for Las Vegas; pickup of the shipment was on Monday. During the course of the packing, the shipper noticed that her jewelry box was packed erroneously, as she instructed the mover not to pack the jewelry (as is alleged). Mysteriously, one of the packers took an extended lunch hour, came back from lunch and finished packing. (Throughout, this packer was the only one of the three packers to take a lunch.) The shipper claimed that she was absolutely convinced that this particular individual stole her jewelry. The action was commenced seeking a variety of remedies, including breach of contract, breach of bailment, conversion and negligence of the employee.

After the packers left the customer's home, the shipper took a shower and was getting dressed to go out for the evening and noticed that her jewelry box was not on her dresser, but rather, had been packed. She immediately called the origin agent who instructed her that she was permitted to open the bow where she believed her jewelry to be located, remove the box and take her jewelry out. Upon doing so, the shipper noticed that four or five pieces of her most valuable jewelry were missing. She immediately contacted the police department, which all movers are encouraged to instruct their shippers to do. The police conducted a perfunctory examination and presumably ascertained that the packer who took the extended lunch may have, in fact, stolen the jewelry.

The jewelry was never returned. The shipper continued the move to Las Vegas and, upon destination, filed a claim for the missing jewelry. The four theories of recovery were all dismissed and, in a rare decision that undoubtedly will not be upheld by appeal, the court awarded attorney's fees to the van line.

The first theory of recovery was that of breach of contract. The court held that there can be no contract for the shipment of jewelry in light of the fact that it was never the intent of the shipper to give the jewelry as part and parcel of the contract; there being no meeting of the minds, there is no meeting of the minds, there is no breach of contract action for the jewelry itself.

The second theory of recovery is a breach of bailment. The court decided this issue by stating that, because the goods were not in the care, custody and control of the van line throughout the weekend, and the goods (jewelry) were never in the care, custody and control of the van line, no bailment of the jewelry could be created. The law of bailment states that care, custody and control must be continual and uninterrupted in order for bailment to exist. Here, the customer's goods were located in her home and not in the warehouse or the truck. Accordingly, there was no continual bailment of the customer's goods.

The third theory of recovery was for conversion, and the plaintiff could not establish that the van line converted the goods to its own use. Rather, if anyone converted the goods, it was the packer. Conversation is often times couched in terms of negligence, as same falls under the generic category of the law called torts.

On that general negligence theory, a person is deemed to be liable if there duty. However, the law protects a party form being held liable in negligence when there exists something called superseding, intervening acts. These are extraordinary events that fall in the chain of events which, in some manner, overrides the negligence of the van line to the customer. Here, the court made a determination that the theft by the packer (as alleged) was, in fact, a superseding, intervening act, as there was no direct negligence on the part of the van line and a theft of jewelry (grand larceny) constitutes a superseding, intervening act. The law states that this criminal act supersedes the negligence of the van line under this fact pattern.

The fourth claim for relief was genuinely not purchased by the plaintiff. It is, however, worthy of discussion. In order to prove a case of negligent hiring, it is incumbent upon the claimant to show that an employer had reason to know or was otherwise negligent in the manner and method in which it hired an individual. This can come up by failure of the van line to do a background to do a background check as to a criminal record of the packer, or hire a packer or any other employee knowing that this individual has either criminal propensities or was incapable of performing work for which the individual was hired.

There is no requirement under the law to do a full background check of an individual before hiring that individual. However, this may change depending upon the degree of discretion the employs has. For example, if the employee is entrusted with valuable antiques and has a criminal record for grand larceny of antiques, the employer may be held liable for failure to do a background check on this individual.

The employment application should have references and these references should be checked. Under this fact pattern, the packer in question came highly recommended to the origin agent, as the packer's father had worked for the origin agent for a number of years and came with "high references."

This case is not necessarily dispositive of all cases for missing jewelry, but it is a good indication of how to successfully defeat claims as this.

By way of preventative measures, bills of lading should consider excluding items of extraordinary value such as jewelry. A promotional brochure should be utilized and incorporate specific directives to the customers that they are not to leave cash, jewelry and other items of extraordinary value around while packers are in their homes, and that they should pack these items themselves and safeguard them.

As stated at the outset, attorney's fees were granted. However, that will undoubtedly be overturned on appeal, and the cost to litigate matters such as this far outweigh the efforts that can and should be utilized by the moving industry to safeguard itself from occurrences such as this.

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