Annette Holding, Inc. v. A1 Trucking Service, LLC, 2015 WL 5037214 (D. S.C. 2015)
We’ve seen all kinds of spins put on transportation statutes like the Carmack Amendment in opposition to their application. Oftentimes, counsel take stabs at derailing judges and adverse parties inexperienced in this esoteric legal field, and sometimes well-meaning lawyers just don’t get it. This case out of the U.S. District Court for the District of South Carolina cleared up any confusion about whether Carmack’s use of the clause “actual loss” of cargo encompasses theft in governing shipper claims to evoke Carmack’s exclusive and preemptive dominion over instate cargo claims. Yes, it does.
Shipper Okonite Company hired TMC Logistics to arrange transit from South Carolina to North Carolina of a load of cable reels, and TMC booked the shipment with motor carrier A1 Trucking Service. A1’s driver left the cargo in an unsecured yard while his rig was being repaired. It was stolen; TMC paid Okonite the cargo’s value (110 grand); and as the shipper’s assignee, TMC sued A1 alleging various causes of action including Carmack liability.
A1 defended the Carmack claim by urging the statute doesn’t say anything about stolen freight, such that it didn’t apply here. Come one. Carmack has been interpreted that way for many decades, the term “actual loss” including all forms of, well, loss. Any other interpretation would defeat the statute’s clear purpose. A1 also argued it wasn’t negligent in causing the loss, a factual contention, but one that’s only at issue if the carrier asserts a Carmack defense. A1 hadn’t. A1 is liable under Carmack, and TMC’s other causes of action are preempted.
LIG Insurance Co. v. ZP Transport, Inc., et al., 2015 WL 4725004 (N.D. Ill. 2015)
A complex, intermodal shipment from Korea to Argentina through the U.S., replete with a daisy chain of intermediaries and carriers, never made it from Chicago to Miami. Korean intermediary, ZP Transport, through its Chicago branch went to the web-based Interstate TruckStop load board to find a motor carrier to transport a cargo of cell phone parts from O’Hare Airport to Miami for onward carriage. Through Internet TruckStop, ZP got in contact with someone purporting to be with J&T Trucking of Tampa Bay, although the communications and differing phone numbers might have raised a red flag as to J&T’s legitimacy.
Of course, the load disappeared, LIG Insurance Company paid its insured shipper 796 grand, and the insurer sued all concerned in subrogation in the U.S. District Court for the Northern District of Illinois. In its motion for summary judgment seeking to dismiss LIG’s claim, J&T claimed it knew nothing about the shipment whatsoever. It argued its trucks were a different color than the one a photograph showed picking up the cargo, and that it only employed one driver, who was in Kentucky at the time the subject shipment was fetched.
But the truck which hauled off the ill-fated cargo did bear a J&T placard, and documentation did identify J&T as the carrier of record. Thus, the court ruled, sufficient evidence demonstrated a triable issue of fact as to J&T’s “identity theft” defense that summary judgment would be improper. Not the first glitch we’ve seen with internet load boards that allow any nogoodnik with industry familiarity to rip off shippers and leave innocent motor carriers stuck with legal headaches. True, they’re convenient. However, in the current MAP-21 era of increased intermediary responsibility, and especially in light of high-dollar jury verdicts against brokers connected with truckers who get into accidents, they should be used with great care and scrutiny.
Nor did ZP escape full liability on summary judgment. The intermediary argued its liability should be limited to 98 grand based on a through air waybill governing transit from Korea to Argentina. ZP argued that, while it wasn’t a party to the air waybill, it was an agent of the air carrier. LIG responded that ZP had issued its own bill of lading – sans limitation of liability clause – for the surface leg, such that Carmack governed its potential liability, and not the terms of an international air waybill. The court agreed that the ZP bill of lading separates the surface leg out of the air waybill’s coverage, and evokes Carmack.
CSX Transportation, Inc. v. Taylor, et al., 2015 WL 4730280 (N.D. Ohio 2015)
Last issue we reported on Glenn Taylor’s attempts to avoid personal liability for freight charges his corporation, Intermodal USA, collected from shipper Macy’s and failed to remit to carrier CSX. Taking advantage of Ohio law, he argued in response to CSX’s motion for summary judgment that he didn’t know Ohio had revoked the corporate charter, which can be a defense to otherwise personal liability for the debts of the non-existent corporation. Recently, Taylor went on the offensive, and sought to have CSX’s $117,263 freight charge claim dismissed based on justifiable reliance and statute of limitations grounds.
As CSX’s claim against him is based on fraud, CSX would have to show it justifiably relied on Intermodal USA being a corporation in good standing to get to Taylor personally. Taylor argued it would be an easy matter for CSX to check the Ohio Secretary of State’s webpage to see that Intermodal USA had been dissolved and, in fact, CSX should be held constructively aware of that given that the dissolution was a matter of public record. CSX also would have seen that Taylor was conducting business through a new entity. The Northern District of Ohio found this to be a question of fact not properly decided on summary judgment, as Taylor had submitted to CSX an application containing a Dunn & Bradstreet credit report which specifically required him to advise CSX of any business ownership issues.
The court also refused to consider Taylor’s time bar defense on summary judgment. While 49 USC §14705 provides an 18-month statute of limitations for carriers to bring freight charge claims against shippers, CSX argued issuance of invoices, and not completion of shipments, starts the clock ticking. As the invoice dates were within 18 months of CSX’s filing suit, the claim shouldn’t be time barred. The court saw a number of different dates on those invoices, and kicked the statute of limitations can down the road for consideration at trial.
Royal & Sun Alliance Insurance, PLC v. ECM Transport, Inc., 2015 WL 5098119 (S.D.N.Y. 2015)
Shipper Ingram Micro and carrier ECM Transport executed a service agreement in 2007 that set forth general shipping terms and contemplated new rate agreements being issued and incorporated into the service agreement on a periodic basis as addenda. It limited ECM’s liability to $250,000, but provided that “[b]reach of security, willful misconduct, and/or employee theft [would] be subject to the full replacement of the product.” Each addendum contained a merger agreement providing that the new package supersedes previous agreements. The last issued addendum contained a “Released Value” clause stating that ECM’s liability would be limited to $100,000.
When Ingram Micro’s load of computer parts, worth some 561 grand, disappeared en route from Pennsylvania to Illinois, cargo insurer Royal & Sun Alliance paid its shipper and sued ECM in subrogation in the U.S. District Court for the Southern District of New York. A gate to ECM’s yard had been left open, and the unattended trailer was stolen.
On cross motions for summary judgment, the parties focused on limitation of liability. ECM argued that the last addendum encompassed more than just revised pricing terms, i.e., the merger clause rendered it an entirely new agreement with a lower limitation of liability amount. Because the service agreement referred to it as “an attachment,” the court rejected that argument, but nonetheless found that newer terms addressing the same subject matter as older ones generally supersede them. That might activate the lower limitation of liability amount.
None of that ultimately made any difference, as the court applied the material deviation doctrine to nix ECM’s limitation of liability altogether. Material deviation as a defense to limitation of liability is a maritime law concept, one that courts applying Carmack have largely rejected. It holds that when a carrier deviates from a pre-agreed route, service provision or other term, it may lose its right to limited liability. While the court doesn’t get into why it went the other way here, it’s pretty apparent that the specific security terms Ingram Micro bargained and paid for were on its mind. The “breach of security” clause wasn’t superseded by any addendum, and as ECM apparently failed to follow its own security protocols by leaving the gate open, a breach was readily apparent. The addendum’s released value clause doesn’t apply, and the insurer gets its full money back.
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