## Facts

- Admiralty Island Fisheries, Inc. and other seafood companies (including some appearing through subrogated insurers) stored frozen seafood products in cold-storage warehouses operated by Millard Refrigerated Services, Inc.
- For each truckload delivered for storage, Millard issued a warehouse receipt that set out the storage terms and stated that Millard’s liability for loss or damage would be limited to $0.50 per pound unless the depositor declared a higher value and Millard agreed in writing.
- In or around March 2006, Millard discovered that seafood belonging to the plaintiffs was missing from the warehouse.
- Millard investigated and determined that at least some of the missing product had been stolen or converted by Millard employees; Millard terminated five employees in connection with the theft.
- Plaintiffs estimated that more than 94,000 pounds of seafood with a fair market value of about $455,000 was taken.
- Plaintiffs sued Millard seeking full damages for the missing seafood; Millard responded that any damages were capped by the warehouse-receipt limitation (about $47,000 at $0.50 per pound).
- The parties filed cross-motions for partial summary judgment on the enforceability and legal effect of the limitation-of-liability terms in the warehouse receipts.

## Issues

1. Whether the warehouse receipts constituted the parties’ storage contract and validly limited Millard’s monetary liability for loss of the stored seafood to $0.50 per pound.
2. Whether the limitation-of-liability clause was unenforceable, or inapplicable, because the loss was connected to theft or conversion by Millard’s employees.
3. Whether partial summary judgment was appropriate to resolve the legal effect of the limitation-of-liability clause.

## Decision

- The court treated the warehouse receipts as the governing storage agreement for the parties’ relationship and addressed the limitation language on cross-motions for partial summary judgment.
- The court held that the warehouse receipts’ limitation-of-liability clause (limiting liability to $0.50 per pound unless a higher value was declared and agreed to) was enforceable under the applicable warehouse-law framework.
- The court rejected the argument that employee theft, standing alone, made the contractual limitation unenforceable or automatically inapplicable as a matter of law.
- Consistent with that ruling, the court enforced the damages cap set out in the receipts for covered losses, leaving any remaining factual disputes about liability and the amount of loss for later proceedings.

## Legal Principles

- A warehouse receipt issued in the ordinary course of a commercial storage transaction can constitute the parties’ contract terms for warehousing and delivery.
- Under U.C.C.-based warehouse law (including U.C.C. § 7-204), a warehouse is generally liable for loss caused by its failure to exercise reasonable care, and it may limit the amount of damages by a term in the warehouse receipt or storage agreement, subject to statutory and public-policy limits.
- A clear, conspicuous limitation term—especially one paired with an option for the depositor to declare a higher value for greater protection—may be enforced to cap damages in a commercial setting.
- The failure to return bailed goods can create a presumption of the warehouse’s negligence, but a valid contractual damages cap may still limit the amount recoverable if liability is established.
- Whether a contractual limitation is voided by intentional misconduct turns on the governing law and the nature of the conduct; employee theft does not automatically eliminate a warehouse receipt’s damages limitation as a matter of law.
- Courts may decide the enforceability and interpretation of an unambiguous limitation-of-liability clause on summary judgment when the relevant contract terms and course of dealing are not genuinely disputed.

## Conclusion

In Admiralty Island Fisheries, the court held that Millard’s warehouse receipts controlled the storage relationship and enforced the receipts’ $0.50-per-pound limitation-of-liability provision, concluding that the connection between the loss and employee theft did not, by itself, render the contractual damages cap unenforceable as a matter of law.


Admiralty Island Fisheries, Inc. v. Millard Refrigerated Services, Inc., 2007 WL 4051649 (2007)