Winn Dixie Stores, Inc. v. Aspen Transportation , et al., 2013 WL 4780125 (M.D. Fla. 2013)
Shipper Winn Dixie hired Aspen Transportation to transport a load of grapes from Bakersfield, California to Phoenix, Arizona. Aspen, claiming to be a freight broker, engaged Victoria Logistics, which in turn booked the load with carrier HGL Transport to be hauled by its driver Gurdeep Singh. Victoria sent a bill of lading documenting the route, but later prepared a second bill of lading directing delivery to Orlando, Florida. When HGL inquired, Victoria advised it that the second bill of lading was a mistake, and then issued a third bill of lading contemplating delivery in Phoenix. Apparently, the shipment was never delivered, and Winn Dixie sued Aspen, HGL and Mr. Singh in the U.S. District Court for the Middle District of Florida. Why there, we don’t know.
HGL and Mr. Singh moved to dismiss based on lack of personal jurisdiction. They had no connection with the Sunshine State, and while authorized to transport freight there by virtue of their interstate licensing, never transacted any business there. The issuance of a retracted bill of lading alone certainly isn’t enough. That motion was granted.
Aspen moved on substantive grounds, claiming that as a broker, it couldn’t be liable for the lost freight. While it might be true that Carmack doesn’t apply to Aspen if it proves it acted as a broker, that doesn’t mean there can be no basis for it to be liable at all. Aspen’s motion was denied.
Hargrove v. Universe Express Inc. Moving and Storage [sic], 2013 WL 5218104 (E.D.N.C. 2013)
You can almost see smoke rising from the paper of this opinion. The U.S. District Court for the Eastern District of North Carolina recently dressed down a household goods carrier, and its lawyer not admitted to practice in the Tar Heel State, for threatening to sell a shipper’s stuff at auction after the shipper refused to pay charges above a firm quote.
Universe Express issued to shipper Cherry Hargrove an estimate to transport her belongings from New Jersey to North Carolina. A dispute arose as to a modified (increased) freight charge, with Universe Express believing Ms. Hargrove’s son had agreed to a higher charge. When the shipper refused to pay anything above the estimate, the carrier sent her a letter refusing to release the cargo and threatening to sell it. Ms. Hargrove, now a plaintiff, promptly moved the court for a temporary restraining order, which was granted per procedure without input from the defendant carrier. But when the sheriff tried to serve the order on Universe Express’s North Carolina agent, the named individual claimed she wasn’t its agent. And adding insult to injury, the carrier then sent another letter to the shipper threatening to sell the freight at auction.
The shipper went back to court seeking a preliminary injunction, which is a longer-term and more detailed bar of the prohibited activity. Defendants typically have an opportunity to oppose a motion for preliminary injunction. Only at the hearing did an unadmitted attorney for Universe Express call the court and seek to oppose the motion. The judge wasn’t amused.
Preliminary injunctions are granted only upon showing of specified factors, including the plaintiff’s likelihood of success on the merits; irreparable harm to the plaintiff if the injunction is not issued; and a balance of equities and the public interest. Pointing to provisions of 49 CFR §375 regarding binding estimates, as well as a motor carrier’s liability under Carmack, the court found adequate likelihood that Ms. Hargrove would prevail. Her stuff was irreplaceable and included some medical items, so irreparable harm would result from the sale. And given how naughty this carrier had been, the equities balanced in favor of the shipper. Preliminary injunction granted.
Tokio Marine & Nichido Fire Ins. Co., Ltd. v. Flash Expedited Services, Inc., 2013 WL 4010312 (S.D. Ohio 2013)
Nikon booked transit of a cargo of digital cameras from Louisville, Kentucky to Jamesburg, New Jersey through its broker Ground Freight, which placed the transit with Forward Air. The Ground Freight-Nikon agreement contained a 50¢/pound limitation of liability clause. The Ground Freight-Forward Air agreement included an “Asset Protection Plan” that prohibited drivers from leaving cargo unattended, or stopping within 200 miles of origination.
Forward Air subbed the load to motor carrier Flash Expedited Services, which sent a load confirmation subject to its agreement with Forward Air that included a $100,000 limitation of liability clause. Nikon didn’t declare a value for the cargo in the space on Flash’s bill of lading.
The Flash drivers pulled off at a truck stop 170 miles outside of Louisville for a bite and a shower, only to return to an empty parking lot. The load, worth some 361 grand, was never recovered. Nikon’s subrogated insurer sued Flash to recover its payout to Nikon in a case that found its way to the Southern District of Ohio.
Ground Freight argued it was entitled to the benefit of Ground Freight’s 50¢/pound limitation of liability. It had no notice of the cargo’s value, and based on the low freight charge, rightfully assumed Nikon intended to cover its own risk. Nikon’s insurer responded that it didn’t enter into any limitation of liability agreement with Flash, and that if any such limitation applied, it would have to be the $100,000 cap in Flash’s contract with Forward Air. The court rejected these arguments, ruling that the carrier’s exposure maxed out at four bits a pound. Nikon wasn’t a party to the Ground Freight-Forward Air agreement, and as Ground Freight (per the court) was a freight forwarder, it was its shipper’s initial carrier.
The insurer also tried to bust the limitation of liability agreement by pointing to the “material deviation doctrine” under which carriers have been held to full liability when shippers pay additional charges for compliance with specialized security (or other) instructions. Those circumstances weren’t present here, as the boiler plate asset protection term wasn’t negotiated or paid for.
Stephenson Equipment v. ATS Specialized, Inc., et al., 2013 WL 4508444 (N.D.N.Y. 2013)
Shipper Stephenson Equipment booked with carrier ATS transit of five loads of construction equipment from Baltimore, Maryland to Troy, New York, apparently advising ATS that on-time delivery was essential to Stephenson’s contract, and that it would suffer economic consequences if delivery was late.
The shipper claimed some of the deliveries arrived after the promised time, and that ATS improperly packaged a crane, causing it to sustain damage en route. When Stephenson sued ATS in the Northern District of New York seeking both consequential and repair-cost damages, the carrier asserted its liability was limited based on terms of a rules tariff incorporated into its bills of lading. Both sides moved for summary judgment on the issue. The court denied both motions.
Stephenson first argued the material deviation doctrine, arguing that special arrangements were agreed to regarding the delivery time. The court recognized the (primarily maritime) doctrine’s (infrequent) application when a motor carrier fails to provide additional services its shipper had paid extra for, and that such extra payment can be included as part of a negotiated freight charge. Here, nothing suggested extra costs were paid, so the doctrine wasn’t applicable as a basis to nix limitation of liability.
But ATS’s documentation wasn’t adequately clear to establish limitation of liability either. Considering the “sophistication” of the shipper in transportation, the court found a question of fact as to whether ATS adequately put Stephenson on notice of its limited liability, including whether it received a copy of the rules tariff. The opinion doesn’t explain whether the shipper asked to see the tariff, which generally is required if shipping documentation incorporates it. The court seems to be raising the threshold of reasonable notice based on the shipper’s “sophistication,” i.e., familiarity with the process, which isn’t typically relevant.
Progressive Gulf Ins. Co. v. Estate of George L. Jones, et al., 2013 WL 3967532 (S. D. Miss 2013)
Carrier Three Rivers Transit’s driver George Jones was hauling a mobile home cargo between points in Mississippi when he was involved in an accident. He was operating a rig that wasn’t listed as an insured vehicle under Three Rivers Transit’s insurance policy issued by Progressive Gulf. The carrier and driver’s estate wanted Progressive Gulf to pay for the defense of claims resulting from the accident. The insurer refused, and filed a declaratory judgment action in the Southern District of Mississippi seeking a determination of no coverage.
The carrier and driver didn’t have much of a case regarding covered vehicles, and instead pointed to the MCS-90 Progressive Gulf had filed with the Federal Motor Carrier Safety Administration (FMCSA), which imposes on insurers a coverage obligation regardless of other policy terms. The only problem was that the MCS-90 filings and regulatory law applicable to them kick in only for interstate hauls.
That’s where Three Rivers Transit got creative. The haul in question may have been intrastate, but the mobile home was constructed out of parts that came from multiple locations throughout the country, in accordance with federal regs, and for potential relocation outside of Mississippi (while the shipper would retain responsibility for repairs, warranties, etc.). None of that makes any difference. While an apparently intrastate haul may actually be a leg of interstate transportation which activates the MCS-90 filing, the transport at issue must be part of the shipper’s “fixed and persisting intent” to effect transit between two or more states. Progressive Gulf was granted summary judgment regarding coverage.
Canal Insurance Company v. Great West Casualty Company, 2013 WL 5275789 (D. Minn. 2013)
Motor carrier Douglas Admundson Trucking (“DAT) had both motor carrier –through employed drivers and owner operators – and freight broker operations. Driver Tim Bartness started out as an employed driver, but entered into a lease-to-purchase arrangement with DAT whereby he paid monthly installments on a truck which he eventually would own. Bartness obtained his own FMCSA operating authority and coverage from Canal Insurance Co., but did not enter into an owner-operator lease with DAT, and DAT advised him it would broker loads to him as a separate carrier.
Shipper Tri-Cambell booked a load of potatoes with DAT, naming its in-house traffic department as a freight broker, and DAT as the carrier of record, in shipping documentation. DAT placed the load with Bartness, but it is unclear how DAT documented it with Bartness. Bartness was involved in an accident hauling the load. The truck and cargo weren’t damaged, but third parties were, and they made claims against Bartness and DAT, which was insured by Great West Casualty Co. DAT and Bartness turned the claims over to their respective insurers, who disputed responsibility for the loss.
The insurers brought the mess to the District of Minnesota, and Great West filed a motion for summary judgment. At issue was whether the truck Bartness was operating was encompassed by Great West’s policy. That policy extends coverage to any auto DAT “leased, hired, rented, or borrowed.” The term “hired” isn’t defined, and a reasonable interpretation of it might include a truck subject to DAT’s own lease-to-purchase arrangement. The Eighth Circuit (in which Minnesota sits) has ruled the term “hired auto” is ambiguous, and courts “generally consider the level of control an entity exerts over a truck for purposes of determining whether that truck was ‘hired’ by that entity.” Here, DAT didn’t exert much control over how Bartness operated the truck, and didn’t provider maintenance and repair services for it. However, DAT fronted fuel costs and restricted Bartness’ ability to purchase fuel; selected the trailer Bartness would use; had the right to inspect the truck and driver logs; and required proof of insurance for the truck. Thus, whether or not Great West must cover the loss under the terms of its policy is a jury question not properly decided on summary judgment.
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