Haulmark Services, Inc. v. Solid Group Trucking, Inc., 2014 WL 5768685 (S.D. Tex. 2014)
Shipper Del Monte engaged freight broker Haulmark Services to arrange transit of freight from Texas to Nebraska. Haulmark booked the load with carrier Solid Group Trucking (SGT) pursuant to a bill of lading SGT issued to Del Monte, as well as a contract between Haulmark and SGT that contained an indemnity clause.
Yes, an indemnity clause, of the variety many states, including Texas, have outlawed when they purport to hold a carrier liable for losses beyond what existing law would. Haulmark paid Del Monte the post-salvage value of its cargo loss, and sued SGT in Texas state court to recover. Its claim was based on the indemnity agreement only.
SGT removed the matter to the U.S. District Court for the Southern District of Texas, asserting that Haulmark's claims are preemptively governed by Carmack, which provides for federal jurisdiction. SGT moved to remand, asserting that, hey, this wasn’t a Carmack claim.
The federal court agreed and sent the matter back to state court. Not only was this not a Carmack claim based on the complaint's four corners, it couldn’t be based on facts before the court. Only a shipper of record, a subrogated broker or an assignee of the shipper's rights can sue under Carmack, and nothing in the record suggested any of those circumstances here. Despite a Texas statute, the indemnity agreement could be a basis for SGT's liability because, on the face of it at least, it didn’t create an indemnity obligation for anything beyond the carrier's negligence or other wrongdoing.
SGT's motion to remand was granted, but because there were reasonably good grounds for the removal, the court denied SGT's request for a fee award (which it is empowered to grant when removal is unreasonable).
Irene J. Kendrick Revocable Living Trust, et al. v. South Hills Movers, Inc., 2014 WL 5685680 (W.D. Pa. 2014)
There are some exceptions to Carmack's exclusive dominion over interstate cargo claims. These generally must be based on "peripheral claims" resulting from the carrier's conduct or harm that are separable from the actual loss. They usually apply only when there's been particularly egregious wrongdoing, such as intentional infliction of emotional distress, or an issue completely separate from the cargo loss.
But a carrier's failure to pay full cargo value despite its shipper's election of full liability on a bill of lading doesn’t rise to that level. Just ask the beneficiaries of a trust who filed suit against carrier South Hills Movers. They recently lost that argument before the U.S. District Court for the Western District of Pennsylvania after some of their stuff was damaged in a household goods move. They believed their carrier's refusal to pay up constituted a post-loss breach of warranty or, worse yet, fraud, that shouldn’t be preempted by Carmack.
The court actually liked the argument, calling it "superficially appealing," The problem was that the shipper's only loss was damage to their cargo, which is "at the heart of Carmack preemption."
Anderson v. Pour, et al., 2014 WL 5699646 (N.D. Cal. 2014)
Shipper Anderson hired freight broker Reindeer Logistics to arrange transit of his 1972 Camaro from New York to California. Reindeer booked the transit with carriers Bristol Global Mobility and Mandana Pour, d/b/a Quality Auto Transport (the opinion doesn’t get into the roles each carrier played). The car arrived late and damaged.
Anderson's agreement with Reindeer provided that Reindeer would process any cargo claims. While the broker made some lowball offers to Logan to settle his $25,000 repair claim, it apparently didn’t do anything else to collect from the carriers. Anderson sued all concerned in the Northern District of California, claiming tortious breach of the implied duty of good faith and fair dealing, as well as emotional distress and other state law causes of action. He asserted the carriers were also liable on these theories because they were acting with Reindeer as part of a "joint venture." Reindeer moved to dismiss the shipper's state law claims based on Carmack preemption.
The court denied the motion. All of Reindeer's alleged wrongdoing occurred after the transit, and related to its brokerage agreement with Anderson that’s not subject to Carmack. The court relied heavily on the U.S. Supreme Court's 2013 decision in Dan's Used Cars, Inc. v. Pelkey, in which the Supremes ruled that preemption applies only to a claim that "relates to … service of any motor carrier … with respect to the transportation of property." Anderson's claim, as pleaded in his complaint, was outside that scope.
Unfortunately, the court didn’t get into the confusing business about the carriers and Reindeer being in a joint venture that renders the carriers proper defendants under Anderson's state law theories …
The Mason and Dixon Lines, Inc. v. Walters Metal Fabrication, Inc., 2014 WL 4627715 (S.D. Ill. 2014)
Shipper Walters Metal Fabrication (Walters) engaged Mason and Dixon Lines (MADL) to deliver an oversize load of pipe spools from Illinois to Texas. MADL obtained the oversize permit from the Illinois Department of Transportation, and apparently brokered the load to carrier AmCan. The load was damaged en route when it hit a bridge.
Walters made a claim against MADL, and ultimately set off some 138 grand in freight charges against the value of the allegedly damaged cargo. This prompted MADL to sue Walters in the U.S. District Court for the Southern District of Illinois, and Walters to counterclaim on the ground MADL negligently damaged its pipes. MADL moved to dismiss the counterclaim based on Carmack preemption, which it urged rendered the offset improper.
Walters responded that it wasn’t clear whether MADL had operated as a broker or a carrier, and only if MADL was a carrier would Carmack apply. It's complaint actually alleged MADL was either one or the other, without saying which.
The court granted MADL's motion. True, whether or not an entity is a broker a carrier is a fact question, typically not properly resolved in a motion for summary judgment. But in addressing such a motion, a court must accept the claimant's pleaded facts as true. Walters itself alleged it had "contracted with MADL to haul cargo from [Walters'] facility to its customer's facility." This is a something only a carrier, and not a broker, would do. Moreover, the complaint alleged that MADL had procured the oversize permit which, again, only carriers undertake as a matter of statute. Thus, Walters had "pleaded itself out of court," a rather harsh result given the role pleadings are intended to serve. Presumably, Walters can refile.
Hayward v. C.H. Robinson Co., Inc., et al, 2014 WL 5487748 (Ill. App. 3 Dist 2014)
Finally, here's some good news for freight brokers in general and C.H. Robinson in particular regarding broker liability for carrier accidents. C.H. Robinson was the broker of a load transported by carrier Pella Carrier Services (Pella). The court refers to Pella as an "independent contractor" of C.H. Robinson, which isn't quite right, but doesn’t alter the analysis. After a Pella driver hit a motorist while undertaking an illegal maneuver, the motorist's estate sued C.H. Robinson and various other entities in an Illinois state court, alleging that Pella was an agent of C.H. Robinson, which should be liable under various negligence and master servant theories.
Both the trial and appellate courts disappeared. Unlike many other scenarios we've seen in which brokers and forwarders have been held liable for accidents (frequently for huge bucks), here, C.H. Robinson had effectively distanced itself from Pella contractually and operationally. C.H. Robinson had verified that everything was in order with the performance history, safety rating, insurance and licensing of Pella and its driver before booking the load. The companies' contract specified that no employment or agency relationship was created; C.H. Robinson didn’t hire, fire, dispatch, pay, incentivize, disincentivize, equip, or otherwise monitor Pella's drivers, and nothing in the opinion suggests C.H. Robinson's relationship with Pella had anything to do with the accident.
The plaintiff submitted an expert report that showed how another company owned by Pella's owner, which shared common employees, had been cited for safety issues, but evidence linking that with Pella's current operations was inadequate. The court wouldn’t go so far as to impose on a broker a duty to research other companies. The plaintiff had tried to obtain additional discovery before the summary judgment hearing, but the court found procedural errors and refused to hold up dismissal on that basis.
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