## Facts

- Mark Kesel sponsored a foundation distributing and selling fine art from Russia and Ukraine.
- While in Odessa, Ukraine, Kesel and artist Sergei Belik selected seven paintings for exhibition and sale in San Francisco.
- Kesel instructed Belik to ship the paintings to California via UPS, to declare a customs value of $13,500, and to obtain $60,000 in shipping insurance.
- Under Ukrainian procedures, a customs commission valued the paintings at $558 based on materials cost and issued a permit reflecting that amount; Belik paid duties on that valuation.
- At the UPS office in Odessa, Belik requested $60,000 in insurance; UPS refused to insure the shipment above the customs valuation and offered coverage up to $558.
- The UPS waybill set default carrier liability at $100 per shipment and permitted purchase of higher declared value coverage; Belik accepted coverage at $558 and signed the airbill, which was in English (a language he could not read) and partially smudged.
- Belik later stated he was confused whether coverage was $558 or $13,500, but admitted he knew UPS had refused the $60,000 request when he signed.
- The shipment reached a UPS facility in Kentucky and was lost; UPS conceded the loss but asserted liability was limited to $558.
- The district court granted summary judgment to UPS, limiting liability to $558 under the released valuation doctrine; Kesel appealed.

## Issues

1. Whether UPS could enforce a contractual limitation of liability to $558 under the released valuation doctrine for an interstate shipment that was lost.
2. Whether UPS provided reasonable notice of limited liability through its shipping documents when the shipper’s agent could not read English and the airbill was partially illegible.
3. Whether the shipper had a fair opportunity to obtain higher coverage when UPS would not insure above the $558 customs valuation.

## Decision

- The Ninth Circuit affirmed summary judgment for UPS.
- The court held UPS gave reasonable notice of its default limitation and valuation terms through the shipping contract documents.
- The court held Kesel, acting through Belik as agent, had a fair opportunity to purchase higher liability than the $100 default and did so by obtaining $558 in coverage.
- UPS’s liability was limited to $558, the declared/insured value accepted on the waybill.

## Legal Principles

- Under the released valuation doctrine, a carrier may limit liability if it (1) provides reasonable notice of the limitation and (2) offers the shipper a fair opportunity to purchase greater liability for a higher charge.
- A shipper who accepts a stated declared value as part of the shipping contract, in exchange for the applicable rate, is bound by that valuation as the cap on recovery.
- A principal is generally bound by an agent’s acceptance of shipping terms and declared value when the agent is authorized to arrange shipment.
- Actual knowledge that higher insurance was refused, combined with acceptance of available additional coverage above the default amount, can satisfy the “fair opportunity” requirement even if the shipper does not read the contract language.

## Conclusion

The Ninth Circuit enforced UPS’s limitation of liability to the $558 declared value because the shipping documents provided notice of limited liability and the shipper’s agent had, and exercised, an opportunity to buy coverage above the default amount, thereby agreeing to a released valuation that capped UPS’s responsibility for the lost shipment.


Kesel v. United Parcel Serv., Inc., 339 F.3d 849 (9th Cir. 2003)