TRANSPORTATION LAWYERS ASSOCIATION
COMMITTEE ON FREIGHT CLAIMS
TRANSPORTATION CASE SUMMARIES
1By: Wesley S. Chused
1. McLaughlin Transportation Systems, Inc. v. Barbara Rubinstein, 2005 U.S.
Dist. LEXIS 19932 (D. Mass. 2005) (“specified or determinable” claim-filing requirement –
strict interpretation). After delivery of her household goods shipment, shipper claimed loss and damage and the motor carrier sent her a claim form with instructions to file it in writing within the nine month time period prescribed by the Bill of Lading. About 8 ? months after delivery, shipper‟s lawyer wrote to the carrier asserting a claim for “payment of $100,000,” adding, “This is the claim anticipated by your letter to [shipper]. . . . I will provide further
particulars in due course.” The specific claim information was not forthcoming until 11 months after delivery, and the carrier denied the claim as untimely. The carrier then filed a declaratory judgment action in federal court seeking to have shipper‟s claim declared untimely. Shipper
counterclaimed for an assortment of state and common law claims and for punitive damages. In granting the carrier‟s motion for summary judgment, the Court noted that Massachusetts, being part of the First Circuit, is a “strict compliance” jurisdiction in which estimations and
approximations of damage amounts are insufficient to meet the “specified or determinable” claim-filing requirement of the FMCSA (49 C.F.R. ?370.3). The Court noted that the shipper was not excused from the nine month claim filing requirement, ruled the shipper‟s counterclaim for unfair and deceptive practices under Massachusetts state law was preempted by the Carmack Amendment, and denied the shipper‟ motion for judgment on the pleadings.
2. Siemens Power Transmission & Distribution, Inc. v. Norfolk Southern Railway thCompany, 2005 U.S. App. LEXIS 17202 (11 Cir. 2005) (“specified or determinable” claim-
filing requirement – liberal interpretation). An electrical transformer was damaged during
rail transportation from Virginia to Florida. Plaintiff shipped the transformer back to Germany for repairs, notifying the rail carrier it estimated “a total cost of $700,000 - $800,000 [as] the
amount of our claim.” The District Court had granted the railroad‟s motion for summary judgment on the grounds that the shipper had failed to file a claim within nine months of the date of delivery. The Eleventh Circuit reversed. Following an analysis of the history of the claim filing requirements under the Carmack Amendment, and the minimum claim filing rules originally promulgated by the former Interstate Commerce Commission, the Court noted that the circuits have not uniformly applied the “specified or determinable amount of money” claim filing requirement, with some courts holding that the rule applies only to “uncontested” claims. The Court ruled that the claim filing requirement was intended to put the carrier on notice so as to enable the carrier to exactly compute its losses, and that the language of the statute should be interpreted according to its ordinary, contemporary and common meaning. The Court liberally construed the claim filing regulations and held that the plaintiff‟s notice of claim together with its offer to have the carrier inspect the damage were sufficient. The Court rejected numerous
1 By Wesley S. Chused, Chairman, Transportation Lawyers Association Committee on Freight Claims. WSC/TLA/Case Summaries/November 2005
cases cited by the defendant railroad that required actual compliance with the “specified or determinable amount” regulation and rejected the notion that its liberal interpretation of the regulation would allow shippers to bypass the mandated claims process.
th Cir. 2005) (attorneys’ fees 3. Campbell v. Allied Van Lines, Inc., 410 F.3d 618 (9
award to household goods shipper). The Court affirmed a U.S. District Court award of
attorneys‟ fees to household goods shippers even though they had not sought arbitration under 49 U.S.C. ?14708 prior to bringing suit. In a two-to-one decision, the Ninth Circuit construed ?14708‟s attorneys‟ fee provision very narrowly, literally and out of context. The appellant carrier contended that the language of ?14708(d)(3) bars shippers from receiving an award of attorneys‟ fees unless the shippers first participate in the arbitration program described in the preceding sections of ?14708. The majority rejected that argument and ruled that a shipper may obtain an award of attorneys‟ fees under subsection (d)(3)(A) simply by showing there was no arbitration decision, thereby disregarding the other requirements of the statute that called for arbitration. The dissent provides some colorful and interesting reading in which the dissenting judge found that, “The most reasonable interpretation of ?14708(d)(3)(A) is that it makes attorneys‟ fees available if the shipper takes advantage of the opportunity for arbitration that the carrier is statutorily bound to provide and no decision is rendered within the sixty day period 2provided.”
4. Delta Research Corporation v. EMS, Inc., 2005 U.S. Dist. LEXIS 18353 (S.D.
Mich. 2005) (carrier, freight forwarder or broker?). Plaintiff Delta sought to recover for the
destruction of a $290,000 boring mill destroyed during transportation by motor vehicle from Ohio to Michigan. Delta had hired defendant S.K. Rigging Co. to load and transport the machine, and S. K. in turn hired defendant EMS, Inc. to provide the actual flatbed/truck transportation. Delta filed a two-count complaint against S.K., alleging a claim under the Carmack Amendment and a claim of negligence. On cross-motions for summary judgment, Delta contended that S.K. was liable either as a carrier, freight forwarder or a broker, while S.K. asserted that based on the allegations in the complaint it was neither a carrier nor a freight forwarder, and hence, not subject to Carmack Amendment liability. Following a detailed discussion of the differences between carriers, freight forwarders and brokers, the Court denied Delta‟s motion for summary judgment, finding that there were questions of fact that remained as to exactly what S.K.‟s status was, and therefore also denied S.K.‟s motion for summary on the Carmack Amendment count.
However, the Court granted S.K.‟s motion for summary judgment on Delta‟s negligence count, ruling that in the event the fact finder determined that S.K. was acting as a common carrier, then any state common law negligence claim would be preempted and, conversely, if S.K. was not acting as a motor carrier, it could not be vicariously liable for any negligence of EMS, an independent contractor.
5. Jason York v. Day Transfer Company, et al., Civil Action No. 04-551A (D. R.I.
2005) (broker/carrier liability; “inducement by misrepresentation”). A federal court judge
in Rhode Island granted in part and denied in part the motion of the plaintiff/household goods shippers to amend their complaint to add claims of broker liability, inducement by misrepresentation and negligence in voiding their insurance coverage in connection with a
2 Congress has since amended ?14708 in an effort to clarify that a shipper of household goods may receive an award of attorneys‟ fees only after she has first taken advantage of the arbitration program.
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household goods shipment that, apparently, the defendants transported from a storage warehouse. The Court first denied plaintiffs‟ motion to amend their complaint to add a claim of broker
liability on the part of defendant Day Transfer, on the basis that the amended complaint alleged that Day Transfer was engaged to provide services with respect to the transportation of plaintiffs‟ household goods. The Court recognized the definition of “transportation” at 49 U.S.C. ?13102(21) and Carmack Amendment preemption of claims sounding in negligence, and it therefore ruled that since the plaintiffs did not dispute Day Transfer‟s claim that it was a motor carrier subject to the Carmack Amendment, there could be no state law claim for broker liability. Next, the Court overruled the objections of defendant Apollo to the plaintiffs‟ motion to amend their complaint and add a claim of “inducement by misrepresentation” in connection with the limitation of liability on the bill of lading, because it was unable to conclude from the bill of lading exhibits whether plaintiffs had failed to allege sufficient facts. Finally, the Court denied plaintiffs‟ motion to amend and add a claim of negligence against the defendant warehouseman, Andrews, alleging that Andrews was negligent because it permitted the plaintiff‟s household goods to be damaged by mold during storage in Andrews‟ warehouse, and that Andrews knew or should have known that mold would be excluded under the plaintiffs‟ insurance policy. The Court ruled that Andrews could not be said to have caused the loss of any such insurance.
6. PCI Transportation, Inc. v. Fort Worth & Western Railroad Company, 2005 th Cir. 2005) (rail contract, removal, preemption). The U.S. Court U.S. App. LEXIS 15251 (5
of Appeals for the Fifth Circuit affirmed a decision of the District Court denying the plaintiff‟s motion to remand the case to the state court and plaintiff‟s motion for preliminary injunction.
Plaintiff PCI Transportation operated a distribution warehouse in Fort Worth, Texas that was served by the defendant railroad‟s spur. Although the parties had entered into a one-page letter
agreement specifying the number of demurrage-free days and the number of switches per day to which PCI would be entitled, a dispute evolved nonetheless, and PCI filed suit in state court alleging that the railroad had violated their agreement and engaged in various practices that resulted in improper demurrage fees being charged to PCI. After the railroad removed the case to federal court, PCI moved to remand the case to state court, claiming that its dispute with the railroad was exclusively within the scope of the one-page contract and that the contract was not subject to STB jurisdiction under 49 U.S.C. ?10709. The Court rejected this argument, finding that the contract‟s coverage was not exclusively within the scope of ?10709 and that the injunctive relief PCI sought was broader than that which the contract contemplated. The Court also denied the plaintiff‟s motion to remand, citing its own prior decision in Hoskins v. Bekins
Van Lines, which applied the complete preemption test in response to the Supreme Court‟s 2003 decision in Beneficial National Bank v. Anderson. Finally, the Court denied PCI‟s request for a
preliminary injunction because PCI had failed to establish a substantial likelihood that it would prevail on the merits, as it had never submitted the contract to the District Court for review.
7. Royal Air, Inc. v. AAA Cooper Transportation, Inc., 2005 U.S. Dist. LEXIS
14880 (W.D. La. 2005) (unsigned bill of lading; released rate). Plaintiff sued the defendant
motor carrier, AAA Cooper, for damage to a used airplane engine transported from Louisiana to Oklahoma. The carrier obtained a clear delivery receipt at destination, and about one month later the shipper filed a claim for concealed damage. AAA Cooper denied the claim due to the clear delivery receipt but later offered to settle for $400 based on the $0.50 per pound (for used equipment) limitation of liability in its tariff. Significantly, the bill of lading issued by the carrier WSC/TLA/Case Summaries/November 2005 3
at origin was not signed by the shipper but contained the now-standard “Note 2” which referred
to the possible application of a limitation of liability. The defendant removed the case from state to federal court and filed a motion for partial summary judgment on the released rate limitation. In granting the defendant‟s motion, the District Court noted that the signing of the bill of lading
by the shipper was not required so long as the bill of lading was accepted by the shipper, and that acceptance constitutes the shipper‟s agreement to its terms. The Court concluded that plaintiff‟s mere failure to sign the carrier‟s straight bill of lading did not in and of itself preclude defendant from limiting its liability in accordance with its tariff. The Court also ruled that the Carmack Amendment preempted plaintiff‟s request for attorneys‟ fees.
th Cir. 8. The National Hispanic Circus, Inc. v. Rex Trucking Inc., 414 F.3d 546 (5
2005) (special damages). The defendant motor carrier lost a set of the plaintiff‟s circus
bleachers, as a result of which the plaintiff circus had to rent replacement bleachers and ultimately order a new set of bleachers costing $87,500, plus shipping of $36,000. Three months 3later the defendant located the trailer containing the original lost bleachers. At trial the jury
awarded the circus $123,000 in damages for its purchase and shipping of the new bleachers. The defendant appealed the District Court‟s denial of its motion for judgment as a matter of law, in which it argued that the Court erred by permitting the jury to decide the question of foreseeablility. The Fifth Circuit Court of Appeals affirmed the District Court‟s denial of the defendant‟s motion and ruled that the District Court had properly submitted the issue of foreseeability to the jury for determination. The Court also rejected the defendant‟s argument that the District Court erred in excluding from evidence the opinion testimony of its claims manager as to the resale value of the original “found” bleachers because he had no first-hand
knowledge or experience with respect to the resale value of used, custom made bleachers. The Court rejected the defendant‟s argument that it did not actually “lose” the bleachers but only “misplaced” them for several months and therefore it should be liable only for damages resulting from the rental value of the temporary bleachers. The Court observed that although, ordinarily, the measure of damages is the difference between the market value of the goods at the time of delivery and the time when they should have been delivered, this case was one in which awarding such “market value” diminution would not be appropriate because the award would not fairly compensate the plaintiff for its actual loss. Since the plaintiff circus required custom made bleachers to fit its tent, the cost of the new bleachers was a proper basis for calculation of damages.
9. Hewlett-Packard Co. v. Brother’s Trucking Enterprises, Inc., 373 F. Supp. 2d
1349 (S.D. Fla. 2005) (broker liability). Plaintiff contracted with defendant Salem Logistics,
Inc. to transport a shipment of electronic equipment from California to Florida. Through an 4Internet freight matching website, Salem hired defendant Brothers Trucking Enterprises, Inc. to
perform the transportation, but the shipment was stolen when the vehicle was left unattended in Hialeah, Florida. Salem moved for summary judgment on the plaintiff‟s claims of carrier
liability under the Carmack Amendment and in negligence, claiming it was not the carrier. The Court denied Salem‟s motion, ruling that there remained genuine issues of fact for trial as to
3 Curiously, the carrier did not tender delivery of the “found” shipment, but merely told the circus where it was located, requiring the circus to send a tow truck to pick it up. 4 Brothers defaulted in the case.
WSC/TLA/Case Summaries/November 2005 4
5 it had made to whether Salem was acting as a motor carrier because of various representationsthe shipper concerning the transportation services and savings the shipper would enjoy by using Salem. The Court found that Salem‟s representations suggested that its actions were not limited
to arranging transport, and that a fact finder could find that it was acting as a motor carrier. The court also denied Salem‟s motion on the negligence claim, ruling that although the Carmack Amendment applies only to carriers, if Salem were found to be a broker, it could be liable in negligence based on the facts of the case.
10. Roadmaster (USA) Corp. v. Calmodal Freight Systems, Inc., 2005 U.S. App. rdLEXIS 23203 (3 Cir. 2005) (broker liability). Roadmaster sued defendant Calmodal for
breach of an oral agreement dealing with the interstate transportation of goods, contending that Calmodal acted as an interstate motor carrier, rather than as a broker, as defined by the Carmack Amendment. Calmodal denied liability, claiming it acted only as broker in arranging for the transportation of the goods, and counterclaimed for $238,000 in unpaid invoices it had submitted to Roadmaster. The U.S. Court of Appeals affirmed the judgment of the district court that Calmodal was not liable for the value of the goods transported because its status was that of a broker, not a carrier. The Court rejected Roadmaster‟s argument that its contract with Calmodal was invalid because Calmodal was unlicensed, because Roadmaster had not raised that argument in the district court. Interestingly, the Court also held that even if Roadmaster‟s argument had been timely made, and if Calmodal had operated illegally without a broker‟s license, the civil penalty for such illegal operation is prescribed by 49 U.S.C. ? 14901(a) and it would be inappropriate for the Court to “add judicially to the remedies” by rendering a private contract void when a Congressional statute provides specific penalties for violation. The Court also affirmed the district court‟s damage award of $129,269 to Calmodal on its counterclaim on the
basis that the reliable evidence at trial did not support the higher amount it had claimed.
11. AIG Aviation, Inc. v. On Time Express, Inc., 2005 U.S. Dist. LEXIS 22303 (D.
Ariz. 2005) (preemption). Plaintiff sued the defendant motor carrier on claims of negligence and breach of bailment contract, seeking damages of $211,000 for shipment for goods lost or damaged during interstate transportation. In granting the defendant carrier‟s motion to dismiss
the negligence and breach of contract claims, this decision provides a concise summary of Carmack Amendment preemption law. The decision also explains that the savings clause does not preserve state common law claims (as so often argued by plaintiffs) that are not separate and apart from the loss or damage to the shipment. “Allowing a Plaintiff‟s state law claims to impose greater liability than under the Carmack Amendment would undermine the certainty that the legislature intended to provide.” The Court also ruled that plaintiff‟s claims for loss of use, diminution in value and consequential damages, which may include business interruption, lost profits or other matters, are not separate and apart from Carmack damage to the goods.
12. Leprino Foods Company v. Gress Poultry, Inc., 379 F. Supp. 2d 659 (M.D. Penn.
2005) (warehouse liability). The close relationship between loss and damage claims against
motor carriers and those against warehousemen, together with the broad definition of interstate 6“transportation,” should serve as an incentive to all lawyers practicing in the field of cargo loss
5 “[T]he value added portion of what we do is to provide control, the very latest systems, transportation savings and information, all at no direct charge to our customers.” 6 49 U.S.C. ?13102 (19).
WSC/TLA/Case Summaries/November 2005 5
and damage to be familiar with this decision. The decision in Leprino Foods had serious
consequences for the defendant warehouseman. The warehouseman, Gress, undertook to store approximately 8.2 million pounds of cheese for plaintiff Leprino, which Leprino would later sell to its customer, Pizza Hut. In 1988, Gress had made a proposal to Leprino to store the cheese pursuant to Gress‟ “tariff,” which provided for a limitation of the warehouseman‟s liability of $0.50 per pound, with optional “insurance” available at a rate of $0.04 per $100.00 of declared value. That proposal did not result in any business, but in a February 11, 1992 letter Gress made a new proposal to Leprino, whereby Gress proposed to store Leprino‟s cheese at certain rates, adding that it did “not cover everything in detail as standard warehousing procedures are assumed to be followed.” The 1992 proposal did not mention a limitation of liability. However,
the non-negotiable warehouse receipts later issued by Gress for each lot of goods contained a $0.20 per pound limitation of liability. Although Leprino claimed it was unaware of the limitation, by the time of the incident involved in this litigation (2001), Leprino was aware of the limitation of liability in the Gress warehouse receipt but did not object to it, nor did Gress enforce the limitation on at least one prior claim made by Leprino.
The loss in question occurred in 2001, when Leprino began receiving complaints from its customer, Pizza Hut, that shipments of cheese that had passed through Gress‟ Scranton, Pennsylvania warehouse had an off-odor and off-flavor, resulting in the rejection of the cheese. Expert witness testimony for Leprino indicated that the cheese exhibited a “sweet, fruity odor” that was traced to the chemicals limonene, xylene, toluene and alpha-pinene, flavorings related to fruit-based frozen food products also stored in the same warehouse. Leprino‟s experts visited the
warehouses in the chain of custody and concluded that the source of the contamination was Gress‟ warehouse. Leprino filed a claim with Gress for the loss of 8,220,495 pounds of mozzarella cheese. After salvage ($0.4025 per pound) there resulted a net loss of $1.255 per pound.
The defendant warehouseman moved for summary judgment contending (1) that Leprino could not establish a prima facie case and, alternatively, (2) that the limitation of liability in the warehouse receipts limited Gress‟ liability to $0.20 per pound. In denying Gress‟ motion, the Court ruled that the plaintiff had submitted sufficient evidence to show that the cheese was in good condition when received by the warehouse and that the off-odor/flavor occurred while the cheese was stored at Gress‟ Scranton, PA warehouse, as opposed to Leprino‟s Waverly, NY facility. The Court also found sufficient evidence that the cheese was not damaged while it was transported to Gress‟ warehouse, and that it was a question of fact as to whether Gress had acted
negligently in its storage of the cheese. Finally, the Court rejected Gress‟ argument that its liability was limited to $0.20 per pound because the limitation was not referred to in Gress‟ February 11, 1992 letter agreement/proposal that formed the basis of the parties‟ contractual
relationship. The Court ruled that under Pennsylvania law a party cannot unilaterally modify the terms of a contract and expect the Court to enforce the modification without the support of an express term in the contract allowing for such unilateral modification (which it deemed the limitation to be). The Court noted that the February 11, 1992 letter stated that it did “not cover everything in detail as standard warehousing procedures are assumed to be followed.” Plaintiff‟s
witness claimed that, in his experience, “standard warehousing procedures” do not include warehouse receipts or any limitation of liability imposed by the warehouse. The Court also found that on at least one prior claim Gress did not enforce the liability limitation and concluded WSC/TLA/Case Summaries/November 2005 6
that the phrase “standard warehousing procedures” in Gress‟ February 11, 1999 letter was ambiguous. On that basis, the Court denied the defendant warehouseman‟s motion for summary judgment.
13. Thomas & Betts Corp. v. Hosea Project Movers, LLC, 2005 U.S. Dist. LEXIS
22172 (W.D. Tenn. 2005) (preemption denied; U.S. – Mexico shipment). Plaintiff shipper,
Thomas & Betts, entered into a contract with defendant, Hosea Project Movers, for the transportation, rigging, setup and installation of several 420-ton aluminum die-casting machines from the plaintiff‟s Boston, Massachusetts facility to Monterrey, Mexico. The agreement required Hosea to provide transportation insurance and a certificate of insurance to Thomas & Betts confirming that it had obtained insurance on the equipment for its full market value. The agreement also provided that it would be governed by Tennessee law. Hosea transported one of the machines to Mexico, and was instructed to leave it near Thomas & Betts‟s facility in
Monterrey until the plaintiff was ready to have it installed. Subsequently, the machine was damaged as a result of the negligence of by Thomas & Betts‟ employees when they acted attempted to move it. Meanwhile, Hosea was transporting a second machine to Monterrey for Thomas & Betts. After the damage to the first machine, Thomas & Betts asked Hosea to make a claim for the loss with its insurance company, but Hosea refused. Thomas & Betts then advised that it would not make its final payment to Hosea under the agreement, so Hosea withheld delivery of the second machine as security for its payment under the contract. Ultimately, Hosea delivered the second machine after Thomas & Betts posted a $22,000 bond, and Thomas & Betts then sued Hosea alleging claims of breach of contract and breach of good faith arising from the contract related to the damage to the first machine.
In denying Hosea‟s motion for summary judgment based on grounds of Carmack Amendment preemption, the Court ruled that Hosea‟s status as a “carrier” had ended and
therefore Thomas & Betts‟ claims against Hosea fell outside the Carmack Amendment. The Court found that the first machine “was no longer being „shipped‟ when it was destroyed,” and that since the agreement between Thomas & Betts and Hosea provided that it would be governed by Tennessee law, the Court would apply Tennessee law as Mexico “would have little interest in regulating what are allegedly tortious self-help measures taken by an American company to 7 The Court also denied the plaintiff‟s resolve a contract dispute that arose in Tennessee.”
motion for summary judgment because it did not have the full text of the parties‟ written agreement.
14. Wenig, Ginsberg, Saltiel & Greene, LLP v. Precision Movers, Inc., 2005 N.Y.
Misc. LEXIS 2298 (2005) (intrastate prima facie case). This is an interesting state court
decision in which the motor carrier of an intrastate shipment was found not liable for alleged moving damage because the plaintiff failed to prove a prima facie case. The plaintiff, a law firm,
hired the defendant moving company to move its offices from one location in Brooklyn, New York to another. The bill of lading governing the shipment provided that the defendant‟s liability would be limited to $0.30 per pound per article. The move involved the transportation of a copy machine, weighing 300 pounds, that was wrapped in bubble wrap and cardboard by the defendant, then transported and delivered to the new location. The copier remained in a storage
7 Apparently, Hosea did not argue that its contractual obligation to rig, pack, transport, setup and install the machines constituted “transportation” within the meaning of 49 U.S.C. ?13102 (19).
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room at the new location for approximately seven weeks, whereupon it was unpacked and found to be a total loss because the toner cartridge had leaked, allegedly due to the acts or omissions of defendant. The court ruled that under both New York transportation law and the Carmack Amendment governing interstate transportation, plaintiff had failed to establish the allegedly damaged condition of the copy machine at the time of delivery. Moreover, the court found that the plaintiff had produced no evidence, expert or otherwise, to show what caused the toner spill inside the copier or that it had been turned upside down by any of the defendant‟s employees. The court also rejected plaintiff‟s argument, under New York law, that there was a presumption of conversion on the part of the carrier because plaintiff did not show that the carrier had appropriated the machine to its own use.
15. Wolfensberger v. In And Out Moving & Storage, Inc., 2005 U.S. Dist. LEXIS
24141 (removal jurisdiction/remand). The defendant interstate motor carrier removed this
lawsuit, originally filed in state court (Circuit Court of Cook County, Illinois), to federal court, and cited as the basis for removal jurisdiction, the minimum threshold jurisdictional amount of $50,000 required by the State of Illinois for actions filed in the Circuit Court of Cook County. In rejecting the carrier‟s argument and remanding the case to state court, the federal court noted that the $50,000 ad damnum specified by plaintiff‟s lawyer in the complaint was based on his
mistaken and belief that his client could recover on state law claims for relief that defendant claimed to be preempted. That argument, coupled with the fact that defendant further alleged that plaintiff‟s potential recovery was limited to $0.60 per pound under the interstate bill of
lading, which listed the weight of the shipment as 3,640 pounds, was sufficient for the court to conclude that it lacked subject matter jurisdiction under 28 U.S.C. ? 1337(a) and remand the case to state court.
16. Accu-Spec Electronic Services, Inc. v. Central Transport International, 2005
U.S. Dist. LEXIS 23575 (W.D. Penn. 2005) (claim against motor carrier on freight
forwarder shipment). Accu-Spec purchased an x-ray machine from a vendor in Freemont,
California and hired a freight forwarder, Logistics Plus, to transport it to McKean, Pennsylvania. Logistics Plus hired defendant, Central Transport, to perform the underlying transportation. On arrival of the shipment in Pennsylvania, the x-ray machine was found to be damaged. Accu-Spec sued both Logistics Plus and Central Transport. Central Transport moved for summary judgment, arguing that where a freight forwarder is used by a shipper to transport cargo, the shipper‟s only remedy for lost or damaged freight is against the freight forwarder. The Court
rejected that argument and denied Central‟s motion as to the plaintiff‟s Carmack Amendment claim, ruling that the Carmack Amendment is silent as to whether a freight forwarder‟s liability is exclusive. “[T]he few Courts that have confronted this issue have unanimously interpreted
?14706 as creating a cause of action for a shipper against both a freight forwarder and the underlying common carrier.” The Court found no language in the Carmack Amendment to support the proposition argued by Central that freight forwarder liability is exclusive.
17. Kirby v. Krishan Lal Mal and GTI Gursimran Transport, Inc., 2005 U.S. Dist.
LEXIS 23882 (E.D. Penn. 2005) (service on agent; untimely removable). This was a tort
action with procedural importance for loss and damage practitioners. Here, the Court remanded a lawsuit on the basis that defendants had acted untimely in removing the case from state to federal court. Plaintiff sued the defendant trucking company and its driver for injuries she WSC/TLA/Case Summaries/November 2005 8
received in a motor vehicle accident. Plaintiff effected service of process on the defendant motor carrier (a Canadian company) on March 16, 2005 by serving its designated agent for service of process, one James D. Campbell, Jr., in Harrisburg, Pennsylvania. Plaintiff submitted an affidavit executed by the sheriff of Dauphin County, Pennsylvania in which he attested that he had served a complaint on Mr. Campbell. Plaintiff served the defendant truck driver on April 24, 2005. On June 24, 2005, both defendants filed a notice of removal, following which plaintiff moved to remand, arguing that the notice of removal was untimely. In granting the motion to remand, the Court found that the sheriff‟s affidavit is conclusive on the issue (albeit disputed) of
service of process. The Court also rejected defendants‟ contention that, because Campbell was no longer its agent for service of process on March 16, 2005, the process was invalid. The Court 8 providing that a carrier subject to the FMCSA‟s jurisdiction may cited federal regulations
change its designated agent for service of process only by appointing a new agent, unless the company has ceased its operations for one year or longer. Since the defendant trucking company had not cancelled or changed its designation of agent for service of process, Campbell continued to serve as its agent and was so at the time of service upon him on March 16, 2005. Service was good and the removal was untimely.
18. CPCI v. Technical Transportation, Inc., 2005 U.S. Dist. LEXIS 26534 (W.D.
Wa. 2005) (lost profits not speculative). Plaintiff had purchased 184 used plasma screen
television sets for $400 each and pre-sold them to consumers for $2,800 each. The defendant carrier transported the television sets from various locations around the country to Seattle, but 63 of the sets arrived with latent transit damage. Plaintiff sought to recover its retail price for the sets, and defendant carrier moved for partial summary judgment to limit its potential liability to the $400 per set cost paid by plaintiff. Of significance was the fact that the sets were not replaceable. The Court denied defendant‟s motion, citing Neptune Orient Lines v. Burlington thNorthern & Santa Fe Railway, 213 F. 3d 1118 (9 Cir. 2000), finding that plaintiff‟s cost was
not a proper measure of damages because it could not replace the lost property. The Court ruled that Neptune supported plaintiff‟s claim that the price agreed to by plaintiff‟s third-party
purchasers, rather than its invoice price, was stronger evidence of actual value at destination. The Court denied defendant‟s motion and ruled that plaintiff‟s claim of lost profits was “not so speculative as to be illusory” and that the issue of whether the profits are sufficiently definite presented issues of fact for trial.
19. Lexington Insurance Co. v. Daybreak Express, Inc., 2005 W.L. 1515397 (S. D.
Tex. 2005). The defendant motor carrier, Daybreak, agreed to pay a shipper $166,000 to settle claims for damage to shipments of sensitive electrical equipment, but subsequently refused to fund the settlement. The plaintiff, Lexington, reimbursed the shipper for its loss and became subrogated to the shipper‟s breach of contract claim based on Daybreak‟s failure to honor the settlement agreement. Lexington did not allege any other cause of action. After Daybreak filed a notice of removal, alleging federal question jurisdiction and relying on Hoskins v. Bekins Van thLines, 343 F.3d 769 (5 Cir. 2003), the Court granted the plaintiff‟s motion to remand, citing the
fact that Lexington did not seek to impose liability on Daybreak for damages arising from the interstate transportation of property but instead sought only to enforce an agreement. “Resolution of this contract claim does not turn on the rights and responsibilities of Daybreak as
a carrier in interstate commerce.”
8 49 C.F.R. ? 366.6.
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20. East Florida Hauling, Inc. v. Lexington Insurance Co., 2005 Fla. App. LEXIS
14824 (2005) (“right” versus “duty” to defend under motor truck cargo insurance policy).
This case is particularly valuable because it addresses a seldom litigated issue, but one that is present in most motor truck cargo insurance policies: the “right” versus the “duty” to defend. In this case, the carrier, East Florida Hauling (“EFH”) was transporting a container of electronic
equipment (cameras and camcorders) from Miami, Florida to Laredo, Texas when it was stolen. The shipper submitted a claim for $300,000 in damages, which EFH promptly forwarded to Lexington, its motor truck cargo liability insuror. Lexington declined to defend EFH, citing policy language providing that in the event of a loss, Lexington had “the right to” settle the loss
with the owners of the property or provide a defense for legal proceedings brought against EFH. The policy also had a limitation (of 10% of the limit of insurance) on Lexington‟s liability if a loss by theft occurred involving audio and video equipment. Since the limit on EFH‟s policy was $250,000 and EFH had a $5,000 deductible, Lexington calculated its maximum exposure under the policy to be $20,000. Nonetheless, it offered to resolve the claim on behalf of EFH for $25,000, but the shipper refused the offer.
After EFH was sued, it filed a third-party complaint against Lexington seeking declaratory relief, alleging that Lexington had breached its insurance contract by failing to defend EFH. The Court granted Lexington‟s motion for summary judgment and dismissed EFH‟s third-party complaint, ruling that the insurance policy created only a “right” (on the part of Lexington) rather than a “duty” to defend EFH. “Since the contract terms govern the duty, an insurance policy may relieve the insurer of any duty to defend, or give the insurer the right, but not the duty to defend…[A]n insurance policy may relieve the insurer of an obligation to defend
its insured by reserving a right, at the insurer‟s discretion, to defend an action.” The Court ruled that the policy language was clear and unambiguous and did not create a duty on the part of Lexington to defend EFH. On the secondary issue of the limitation of coverage under the policy, the Court agreed with Lexington‟s interpretation that the stolen articles constituted audio and video equipment so as to trigger the 10% limitation clause in the policy.
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