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Bits & Pieces

American Home Assur. v. A.P. Moller-Maersk

United States District Court,

S.D. New York.

AMERICAN HOME ASSURANCE a/s/o Crown Equipment, Plaintiff,

v.

A.P. MOLLER–MAERSK, Defendant.

 

No. 07 Civ. 10947(PGG).

Signed March 31, 2014.

 

MEMORANDUM OPINION & ORDER

PAUL G. GARDEPHE, District Judge.

*1 This action, formerly before the Honorable Barbara S. Jones,FN1 arises from a 2006 train derailment near Newberry Springs, California. Plaintiff American Home Assurance, the subrogee of Crown Equipment Corporation, seeks to recover damages that the derailment caused to Crown’s cargo, which was in the process of being shipped from Ohio and Indiana to Australia. Defendant A.P. Maersk, an ocean carrier, agreed to transport the goods pursuant to the terms of a “through bill of lading”-essentially a single shipping contract that covered the entire journey. Maersk subcontracted with BNSF Railway Company to complete the domestic rail portion of the trip.

 

As a result of prior rulings in this action by Judge Jones and Chief Judge Preska, the narrow questions before this Court are whether (1) Maersk is liable to American Home under the Carmack Amendment to the Interstate Commerce Act; or (2) whether Maersk agreed that its liability for cargo damage would be determined in accordance with the Carmack Amendment. For the reasons set forth below, this Court concludes that Maersk is not a “rail carrier” under the Carmack Amendment, and that it did not agree that its liability would be determined in accordance with the Carmack Amendment. Accordingly, Maersk’s motion for summary judgment (Dkt. No. 108) will be granted.

 

BACKGROUND

Crown, a manufacturer of forklift machinery and mechanical parts, booked an international shipment of goods with Maersk, and then purchased insurance from American Home to cover the full value of its cargo. (Def. R. 56.1 Stmt. (Dkt. No. 111) ¶ 4, 11; Pltf. R. 56.1 Stmt. (Dkt. No. 114) ¶ 4, 11) Having paid Crown’s insurance claim, American Home now seeks full recovery for the damaged cargo under the Carmack Amendment, a statute that regulates domestic rail carriers and provides for near strict liability. (Cmplt.(Dkt. No. 1) at 1) Because Crown had covenanted not to sue any of Maersk’s subcontractors,FN2 American Home chose to sue Maersk rather than BNSF.

 

In December 2006, Crown shipped three containers of construction equipment from its facilities in Ohio and Indiana to Australia. (Def, R. 56.1 Stmt. (Dkt. No. 111) ¶ 1) FN3 Crown’s freight forwarder, Panalpina, Inc., contracted with Maersk to arrange delivery of the goods from Illinois to their final destination in Australia. (Id. ¶ 3) The contract between Panalpina and Maersk provided that Maersk’s standard form bill of lading would apply. (Id. ¶ 6) “A bill of lading ‘records that a carrier has received goods from the party that wishes to ship them, states the terms of carriage, and serves as evidence of the contract for carriage.’ “ Kawasaki Kisen Kaisha Ltd. v. Regal–Beloit Corp., 561 U.S. 89, ––––, 130 S.Ct. 2433, 2439, 177 L.Ed.2d 424 (2010) (quoting Norfolk Southern R. Co. v. James N. Kirby, 543 U.S. 14, 18–19, 125 S.Ct. 385, 160 L.Ed.2d 283 (2004)). The bill of lading at issue here was intended to be a “through” bill of lading, i.e., a bill of lading that covered both the land-based and ocean segments of the journey. (Def. R. 56.1 Stmt. (Dkt. No. 111) ¶ 9)

 

*2 Although Maersk never issued a physical copy of its standard form bill of lading, it did issue electronic versions, and the parties do not dispute that the standard form bill of lading set forth the contractual terms of their relationship.FN4 (Id. ¶ 8) Maersk’s bill of lading contains several provisions that are relevant to this action.

 

First, the bill of lading provides for different loss calculations depending on where the damage to a shipment occurs. For example, consistent with the Carriage of Goods by Sea Act (COGSA), the bill limits Maersk’s liability to $500 per shipment “where the Carriage is Port–to–Port” or “where the stage of Carriage where loss or damage occurred is not known.” (See Merrick Decl., Ex. G (Dkt. No. 110) ¶¶ 5.1 & 6.1(c)). “[I]f the loss or damage is known to have occurred during Carriage inland in the USA,” however, Maersk’s liability is determined “in accordance with the contract of carriage or tariffs of any inland carrier….” (Id. ¶ 6.2(d)) Second, the bill of lading permits Maersk to subcontract “any part” of the transportation “on any terms whatsoever.” (Id. ¶ 4.1 (“The carriers shall be entitled to subcontract on any terms whatsoever the whole or any part of the carriage.”)) Third, the bill includes a so-called “Himalaya Clause,” which purports to extend the bill’s liability protections to third-party subcontractors.FN5 (Id. ¶ 4.2 (providing that a “subcontractor shall have the benefit of all Terms and Conditions of whatsoever nature herein contained or otherwise benefitting the Carrier”)) Fourth, the bill includes a covenant requiring the “Merchant,” i.e., the shipper, not to sue any entity other than Maersk, including Maersk’s subcontractors. (Id. ¶ 4.2 (“The Merchant undertakes that no claim or allegation whether arising in contract, bailment, tort or otherwise shall be made against any servant, agent or Subcontractor of the Carrier….”))

 

Pursuant to its bill of lading, Maersk arranged transportation for the entire journey and subcontracted with BNSF to provide rail carriage in the United States. (Def. R. 56.1 Stmt. (Dkt. No. 111) ¶ 7) The subcontract was governed by a pre-existing agreement between BNSF and Maersk (“the International Transportation Agreement”), which incorporates BNSF’s Intermodal Rules & Policies Guide by reference.FN6 (BNSF R. 56.1 Stmt. (Dkt. No. 41) ¶¶ 7–8) Item 63(3) of BNSF’s Rules provides that (1) it shall not be liable for any loss or damages to goods absent proof of negligence, and (2) in any event, its liability will be limited to $250,000 per shipment. (Lenck Aff., Ex. F (Dkt. No. 30))

 

BNSF accepted delivery of the shipments at its rail depots in Illinois on December 15, 2006, and December 18, 2006, and issued three separate movement waybills. (BNSF R. 56.1 Smt. (Dkt. No. 41) ¶¶ 14, 18–19) BNSF and American Home dispute whether these waybills constitute additional bills of lading or merely documents similar to shipping receipts. (Compare id. at ¶¶ 17–20 with Pltf. Dec. 4, 2009 R. 56.1 Stmt. (Dkt. No. 45) ¶¶ 17–20) What is not disputed is that the train carrying these shipments derailed near Newberry Springs, California, and that Crown’s cargo was damaged. (Pltf. March 8, 2012 R. 56.1 Stmt. (Dkt. No. 68) ¶¶ 3–4) BNSF’s investigation determined that the derailment was due to a track defect in a rail system side joint bar. (Id. ¶ 5)

 

PROCEDURAL HISTORY

*3 American Home filed this lawsuit on November 30, 2007, naming Maersk and Panalpina as defendants and alleging claims for breach of contract, bailment and negligence. (Cmplt.(Dkt. No. 1) at 3–5) The case was assigned to Judge Jones. On February 6, 2008, Maersk impleaded BNSF pursuant to Fed.R.Civ.P. 14(c). (Third–Party Cmplt. (Dkt. No. 7) ¶ 16) In its third-party complaint, Maersk sought indemnification from BNSF. (Id. at 5) In a February 13, 2009 stipulation, American Home agreed to the dismissal of Panalpina from this action. (Dkt. No. 22)

 

Maersk and BNSF both moved for partial summary judgment in November 2009. (Dkt, Nos.29, 38) BNSF argued that its liability to American Home, if any, is limited to $500 per package under COGSA. (BNSF Partial Summary Judgment Br. (Dkt. No. 40) at 17–19) Maersk sought, inter alia, summary judgment on its indemnity claim against BNSF. (Def. Partial Summary Judgment Br. (Dkt. No. 28)) American Home, in opposing the motions, argued that the Carmack Amendment, and not COGSA, governs this case and that BNSF and Maersk are both liable under its terms. (Pltf.Opp.Br.(Dkt. No. 43) at 7–9)

 

The primary issue in this round of summary judgment briefing is which of two statutes-the Carmack Amendment or COGSA—applies to the rail portion of an international multi-modal shipping contract such as that at issue here. That issue is critically important, because these statutes impose radically different liability regimes on cargo carriers. The Carmack Amendment, which by its terms applies to rail and motor carriers, “imposes something akin to strict liability on shippers[.]” Mitsui Sumitomo Ins. Co. Ltd. v. Evergreen Marine Corp., 621 F.3d 215, 216 (2d Cir.2010). COGSA, which covers ocean carriers, provides a more carrier-friendly negligence regime that includes a $500 per package damages limitation. Id.FN7

 

On February 11, 2011, Judge Jones issued a memorandum opinion and order denying BNSF’s and Maersk’s motions in their entirety. Am. Home Assur. Co. v. Panalpina, Inc., 07 CV 10947 BSJ, 2011 WL 666388 (S.D.N.Y. Feb.16, 2011) (Dkt. No. 58). Judge Jones accepted American Home’s argument that the Carmack Amendment, and not COGSA, governs this case. According to Judge Jones, Carmack’s “plain language … applies when the first rail carrier in the chain of transportation accept[s] cargo at the shipment’s point of origin.” Id. at *4. Judge Jones likewise rejected BNSF’s alternative argument that it had contracted out of Carmack liability. Id. at *6. She found that “Crown was never offered full Carmack liability by either Maersk or BNSF.” Id. Although Judge Jones concluded that the Carmack Amendment governs this case, she did not address American Home’s contention that Maersk is liable as a “rail carrier” under that statute. (Pltf.Opp.Br.(Dkt. No. 43) at 11–13) Finally, Judge Jones rejected as premature Maersk’s motion for partial summary judgment on its indemnity claim against BNSF, given that liability for the damaged goods had not yet been determined. Am. Home Assur. Co., 2011 WL 666388, at *7.

 

*4 On March 9, 2012, American Home moved for summary judgment on liability and damages, asserting that BNSF and Maersk were both liable pursuant to the Carmack Amendment. (Dkt. No. 69) Before that motion was decided, however, Maersk and BNSF entered into a stipulation of dismissal, in which Maersk agreed to dismiss its third-party complaint against BNSF pursuant to Fed.R.Civ.P. Rule 41(a)(1)(A)(ii). (Dkt. No. 90) American Home objected to the stipulation of dismissal. (Jan. 4, 2013 Order (Dkt. No. 91) at 4) Because BNSF had been impleaded by Maersk pursuant to Fed. R, Civ. P. 14(c), American Home argued that its consent was required before BNSF could be dismissed from the action. (Id.)

 

Rule 14(c) provides that “[i]f a plaintiff asserts an admiralty or maritime claim under Rule 9(h), the defendant … may, as a third-party plaintiff, bring in a third-party defendant who may be wholly or partly liable-either to the plaintiff or to the third party-plaintiff….” Fed.R.Civ.P. 14(c). Courts have held that where ‘ “such a demand is made, the action is treated as if the plaintiff had commenced it against the third-party defendant as well as the third-party plaintiff who is the original defendant in the lawsuit.’ “ (Jan. 4, 2013 Order (Dkt. No. 91) at 3–4) (citing Shipping Corp. v. American Bureau of Shipping, No. 54 Civ.1920, 1989 WL 97821, at *1 (S.D.N.Y. Aug.17, 1989)) Maersk and BNSF contended, however, that Rule 14(c) was no longer applicable, because the Court had determined that the Carmack Amendment applied, and thus American Home’s claims were not maritime in nature. (Id. at 4)

 

On January 4, 2013, Judge Jones issued an order rejecting that argument and the proposed stipulation of dismissal. (Id. at 4–5) Judge Jones held that her “decision regarding the scope of BNSF’s liability under the Carmack Amendment did not alter the maritime nature of American Home’s claims.” (Id. at 5) That same day, Judge Jones retired from the bench, and the case was temporarily transferred to Chief Judge Loretta A. Preska.

 

BNSF sought reconsideration of Judge Jones’s order. (Dkt. No. 92) On March 12, 2013, Judge Preska granted that motion. (Mar. 12, 2013 Order (Dkt. No. 97)) Although Judge Preska declined to revisit Judge Jones’s earlier summary judgment determination, she concluded that the January 4, 2013 order was erroneous in that “the Carmack Amendment provides the exclusive remedy for a shipper’s compensation for actual loss or injury.” (Id. at 4 (citing Cleveland v. Beltman North Am. Co., Inc., 30 F.3d 373, 380–81 (2d Cir.1994))) In other words, once Judge Jones decided that the Carmack Amendment applies to the loss at issue, any maritime claims were necessarily pre-empted. (Id. at 6 (“[T]he Carmack Amendment governs the entire scope of Plaintiff’s claims and … such claims are non-maritime in nature.”)) To find otherwise “would be to impose two separate and parallel liability regimes for the exact same damage under a bill of lading,” a result that “would appear to be in conflict with” Supreme Court precedent. (Id. at 5 (citing Regal–Beloit, 130 S.Ct. at 2447) (“Applying two different bill of lading regimes to the same through shipment would undermine COGSA and international container-based multimodal transport.”))) Accordingly, Judge Preska vacated Judge Jones’s January 4, 2013 order and “so ordered” the stipulation dismissing BNSF. (Id. at 7)

 

*5 Judge Preska then stayed further briefing regarding American Home’s summary judgment motion, and granted Maersk permission to move for summary judgment. (Apr. 2, 2013 Order (Dkt. No. 107)) In its motion, Maersk argues that it cannot be held liable under the Carmack Amendment because it is not a “rail carrier” within the meaning of that statute. (Def.Br.(Dkt. No. 109) at 4–12) American Home, in response, argues that it is not seeking to hold Maersk liable under the Carmack Amendment; instead, American Home contends that Maersk agreed to be bound by the Carmack Amendment’s liability regime in its standard form bill of lading. (Pltf.Opp.Br.(Dkt. No. 112) at 4–8)

 

This case was transferred to this Court on May 29, 2013. (Dkt. No. 117) On September 26, 2013, this Court denied American Home’s motion for summary judgment without prejudice, finding that Maersk’s summary judgment motion presented a potentially dispositive issue that might obviate the need to rule on American Home’s motion. (Dkt. No. 122) This Court further explained that it would reinstate American Home’s summary judgment motion if it found that Maersk’s liability is governed by the Carmack Amendment, either statutorily or contractually. (Id.)

 

DISCUSSION

I. SUMMARY JUDGMENT STANDARD

Under Federal Rule of Civil Procedure 56(a), summary judgment is warranted where the moving party “shows that there is no genuine dispute as to any material fact” and that it “is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “A dispute about a ‘genuine issue’ exists for summary judgment purposes where the evidence is such that a reasonable jury could decide in the non-movant’s favor.” Beyer v. Cnty. of Nassau, 524 F.3d 160, 163 (2d Cir.2008) (citing Guilbert v. Gardner, 480 F.3d 140, 145 (2d Cir.2007)).

 

A court deciding a summary judgment motion must ‘ “resolve all ambiguities, and credit all factual inferences that could rationally be drawn, in favor of the party opposing summary judgment.’ “ Spinelli v. City of New York, 579 F.3d 160, 166 (2d Cir.2009) (quoting Brown v. Hen derson. 257 F.3d 246, 251 (2d Cir.2001)). However, a “ ‘party may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment…. [M]ere conclusory allegations or denials … cannot by themselves create a genuine issue of material fact where none would otherwise exist.’ “ Hicks v. Baines, 593 F.3d 159, 166 (2d Cir.2010) (alterations in original) (quoting Fletcher v. Atex, Inc., 68 F.3d 1451, 1456 (2d Cir.1995)).

 

II. THE CARMACK AMENDMENT

The Carmack Amendment to the Interstate Commerce Act, enacted in 1906, provides in relevant part:

 

A rail carrier providing transportation or service subject to the jurisdiction of the [Surface Transportation] Board under this part shall issue a receipt or bill of lading for property it receives for transportation under this part. That rail carrier and any other carrier that delivers the property and is providing transportation or service subject to the jurisdiction of the Board under this part are liable to the person entitled to recover under the receipt or bill of lading.

 

*6 49 U.S.C.A. § 11706 (emphasis added). The Interstate Commerce Act defines a “rail carrier” as “a person providing common carrier railroad transportation for compensation[.]” 49 U.S.C. § 10102(5).

 

III. THE PARTIES’ ARGUMENTS

Maersk presents a straightforward argument in support of its summary judgment motion. Pursuant to Judge Preska’s March 12, 2013 order, it is the law of the case that the Carmack Amendment “governs the entire scope of Plaintiff s claim.” (Mar. 12, 2013 Order (Dkt. No. 97) at 6) Accordingly, for American to prevail, it must demonstrate that the Carmack Amendment provides a statutory cause of action against an ocean carrier such as Maersk. Maersk argues, however, that the Carmack Amendment is limited, by its plain terms, to “rail carriers,” and that Supreme Court and Second Circuit cases interpreting the Carmack Amendment mandate this conclusion. (Def.Br.(Dkt. No. 109) at 4–12 (citing Regal–Beloit, 130 S.Ct. at 2439–40; Rexroth B.V. v. Ocean World Lines. Inc., 547 F.3d 351, 359–60 (2d Cir.2008), abrogation on other grounds recognized by Mitsui Sumitomo, 621 F.3d at 219 n. 4)).

 

American Home appears to concede that the Carmack Amendment does not apply directly to ocean carriers such as Maersk. However, American Home argues that Maersk is contractually liable because it “expressly agreed to be bound by the liability regime which would govern the inland carrier in whose custody the loss or damage occurred.” (Opp.Br.(Dkt. No. 112) at 5) In response, Maersk contends that this argument is both procedurally foreclosed by the law of the case and substantively meritless. (Def. Reply Br. (Dkt. No. 115) at 4–7)

 

IV. ANALYSIS

 

A. Maersk is Not Statutorily Liable Under the Carmack Amendment

 

In its own summary judgment motion-the motion that the Court denied without prejudice-American Home had argued that Maersk is statutorily liable under the Carmack Amendment. (Pltf.Br.(Dkt. No. 73) at 8) While American Home appears to have abandoned that argument in opposing Maersk’s summary judgment motion, see Pltf. Br. (Dkt. No. 112), this Court has nonetheless considered whether there is a basis to hold Maersk statutorily liable under the Carmack Amendment.

 

The Supreme Court has explained that the Carmack Amendment is intended to “relieve shippers of the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of the goods.” Reider v. Thompson, 339 U.S. 113, 119, 70 S.Ct. 499, 94 L.Ed. 698 (1950). “In cases where it applies, Carmack imposes upon ‘receiving rail carrier[s]’ and ‘delivering rail carrier[s]’ liability for damage caused during the rail route under the bill of lading, regardless of which carrier caused the damage.” Regal–Beloit, 130 S.Ct. at 2441 (quoting 49 U.S.C. § 11706(a)). Freight forwarders may also be subject to Carmack Amendment liability under certain circumstances. 49 U.S.C. § 14706(a)(2). Accordingly, in deciding whether Maersk may be held liable under the Carmack Amendment, this Court must determine whether Maersk can be considered a receiving or delivering rail carrier or a freight forwarder.

 

*7 Maersk is plainly not a receiving rail carrier. “A receiving rail carrier is the initial carrier, which ‘receives’ the property for domestic rail transportation at the journey’s point of origin.” Regal–Beloit, 130 S.Ct. at 2443. It is undisputed that BNSF, and not Maersk, received Crown’s cargo “at the journey’s point of origin [in Illinois].” (See Pltf. Br. (Dkt. No. 73) at 7) Moreover, “[a] carrier does not become a receiving carrier simply by accepting goods for further transport from another carrier in the middle of an international shipment under a through bill.” Id. at 2445.

 

Maersk is also not a delivering carrier. Under the Carmack Amendment, a delivering carrier “is deemed to be the rail carrier performing the line-haul transportation nearest the destination.” 49 U.S.C. § 11706(a) (emphasis added). Such a carrier must also “provid[e] transportation or service subject to the jurisdiction of the [Surface Transportation] Board under this part.” Id. Under 49 U.S.C. § 10501(b), the STB’s jurisdiction over railroad carriers is “exclusive.” Ocean carriers, by contrast, are subject to the jurisdiction of the Federal Maritime Commission (“FMC”) under 46 U.S.C. § 40102. See Regal–Beloit, 130 S.Ct. at 2448 (noting that “ocean vessels … are overseen by the Federal Maritime Commission” while “[r]ail carriers … remain subject to the STB’s regulation to the extent they operate within the United States”); Rexroth, 547 F.3d at 356–57 (explaining that ocean carriers “are subject to the jurisdiction of the FMC, not the STB,” and do not “qualify under Carmack as ‘rail carriers’ subject to STB jurisdiction”). Here, it is undisputed that Maersk is an ocean carrier, not a rail carrier. American Home has, in fact, conceded that BNSF—not Maersk—was both the receiving and delivering rail carrier here for purposes of the Carmack Amendment. (See Pltf. Br. (Dkt. No. 73) at 7) Because Maersk is not a rail carrier subject to the jurisdiction of the STB, it does not qualify as a delivering carrier.

 

Finally, contrary to American Home’s prior assertions, see (Dkt. No. 80) at 4–5, Maersk is not a freight forwarder under the Carmack Amendment, The Second Circuit has explained that “[a] freight forwarder … simply facilitates the movement of cargo to the ocean vessel…. Freight forwarders generally make arrangement for the movement of cargo at the request of clients and are vitally different from carriers, such as vessels, truckers, stevedores or warehouses, which are directly involved in transporting the cargo.” Prima U.S. Inc. v. Panalpina, Inc., 223 F.3d 126, 129 (2d Cir.2000) (emphasis added). Under the Interstate Commerce Act, “freight forwarder means a person holding itself out to the general public (other than as a … water carrier) to provide transportation of property for compensation….” 49 U.S.C. § 13102(8). Here, Maersk is necessarily excluded as a freight forwarder under both the Interstate Commerce Act’s definition and the Second Circuit’s interpretation of the Carmack Amendment. Under these authorities, it is clear that Panalpina, not Maersk, acted as Crown’s freight forwarder in this case.

 

*8 This Court’s conclusion that Maersk is not statutorily liable under the Carmack Amendment is also dictated by Supreme Court and Second Circuit precedent. In Regal–Beloit, the Supreme Court held that an ocean carrier was not a receiving rail carrier, and hence was not required to issue a bill of lading under the Carmack Amendment, where it arranged for transportation of goods from China to the United States. According to the Regal–Beloit court, “[t]hat [the ocean carrier] chose to use rail transport to complete one segment of the journey under these essentially maritime contracts, does not put ‘[the ocean carrier] within Carmack’s reach and thus does not require it to issue Carmack bills of lading.’ “ Regal–Beloit, 130 S.Ct. at 2444 (internal citation and quotation marks omitted).

 

Likewise, in Rexroth, the Second Circuit noted that there is “no appellate authority to support the conclusion that providing rail transportation may also include the activity of arranging for—but not actually performing—rail transportation.” Rexroth. 547 F.3d at 364. The Rexroth court also noted that the STB has itself limited the definition of “rail carriers” to direct participants in the industry. Id. The court went on to reject the notion “that an entity that merely arranges for rail transportation by a third party rail carrier is itself a ‘rail carrier’ subject to the Carmack Amendment.” Id. The Rexroth court further explained that it would “not construe ‘[a] rail carrier providing transportation’ to include another, separate class of common carriers that do not own or operate rail lines or other equipment used in connection with a railroad.” Id .

 

For all of these reasons, the Court finds that Maersk is not statutorily liable under the Carmack Amendment.

 

B. Maersk Did Not Contract Into Carmack Liability

While appearing to concede that Maersk cannot be held statutorily liable under the Carmack Amendment, American Home argues that Maersk-through its bill of lading -nevertheless bound itself contractually to Carmack’s terms. Before considering the merits of American Home’s current argument, it is worth noting that both sides have directly contradicted earlier interpretations they offered of the key provisions in the bill of lading.

 

Maersk initially argued that its liability to American Home, if any, was capped at $250,000 per shipment, as a result of Section 6.2(d) of the bill of lading. (Def.Br.(Dkt. No. 31) at 12–13) Section 6.2(d) provides, in relevant part;

 

Where the stage of Carriage where the loss or damage occurred is known … the liability of the Carrier … shall be determined….

 

(d) if the loss or damage is known to have occurred during Carriage inland in the USA, in accordance with the contract of carriage or tariffs of any inland carrier in whose custody the loss or damage occurred or, in the absence of such contract or tariff by the provisions of Clause 6.1, and in either case the law of the State of New York will apply….

 

*9 (Radzik Decl., Ex. 1 (Dkt. No. 113) § 6.2(d)). Since Maersk’s contract with BSNF incorporated BNSF’s Rules, which in turn provided for a maximum recovery of $250,000 per shipment, Maersk reasoned that its liability, if any, was limited to that amount. (Def.Br.(Dkt. No. 31) at 13)

 

American Home argued, however, that Maersk had contracted into Carmack liability by virtue of Section 6.2(a) of the bill of lading. Section 6.2(a) provides that the carrier’s liability is to be determined as follows:

 

Where the stage of Carriage where the loss or damage occurred is known … the liability of the Carrier … shall be determined:

 

(a) by the provisions contained in any international convention or national law which provisions: (i) cannot be departed from by private contract to the detriment of the Merchant, and (ii) would have applied if the Merchant had made a separate and direct contract with the Carrier in respect of the particular stage of Carriage during which the loss or damage occurred….

 

(Radzik DecL, Ex. 1 (Dkt. No. 113) § 6.2(a)) American Home “construe[d] § 6.2 Subsection (a)(i)(ii) to mean that Maersk’s liability is determined by the Carmack Amendment, the national law which cannot be departed from without independent notice to the shipper required under the Staggers Act, and which would have applied if [American Home] had made a separate contract with BNSF for the rail portion of the carriage from Chicago to Long Beach.” (Pltf. Reply Br. (Dkt. No. 80) at 4)

 

American Home now argues, however, that § 6.2(d)-and not § 6.2(a)-is the governing provision in the bill of lading. (Pltf.Opp.Br.(Dkt. No. 112) at 4–5) This shift appears to evince American Home’s belated recognition that the Second Circuit previously determined-in Royal & Sun Alliance Ins., PLC v. Ocean World Lines, Inc., 612 F.3d 138, 146–47 (2d Cir.2010)-that the language from § 6.2(a) that American Home was relying on does not demonstrate an intent to contract into Carmack liability.

 

In Royal & Sun Alliance, the insurer made arguments similar to those of American Home based on nearly identical language in a bill of lading. The relevant bill of lading language in Royal & Sun provided that the ocean carrier’s

 

liability for loss or damage to the cargo shall be determined by the provisions contained in any national law, which provisions cannot be departed from by private contract to the detriment of the Merchant, and would have applied if the Merchant had made a separate and direct contract with the Carrier in respect of the particular stage of the carriage where the loss or damage occurred and received as evidence thereof any particular document which must be issued in order to make such national law applicable.

 

612 F.3d at 146. The Second Circuit rejected the insurer’s argument that the ocean carrier had contracted into Carmack liability via this term. The court explained that, “[b]ecause its provisions can be departed from by private contract, the Carmack Amendment … is not such a national law.” Id.

 

*10 American Home has abandoned its argument under Section 6.2(a), and after six years of litigation now asserts-for the first time-that Section 6.2(d) is the governing clause.

 

Maersk, however, has also reversed course. Having previously argued that Section 6.2(d) of the bill of lading defines its scope of liability, Maersk now argues that Section 6.2(d) has been rendered irrelevant by Judge Preska’s finding that “the Carmack Amendment governs the entire scope of Plaintiff s claims and … such claims are non-maritime in nature.” (Mar. 12, 2013 Order (Dkt. No. 97) at 6) Judge Preska also found that “Carmack’s liability regime is inapposite to maritime contracts.” (Id. at 5 (citing Regal–Beloit, 130 S.Ct. at 2449 (“[Congress] has not imposed Carmack’s regime, textually and historically limited to the carriage of goods received for domestic rail transport, onto what are ‘essentially maritime’ contracts.”))) Hence, according to Maersk, American Home’s contract claim under the bill of lading is now pre-empted. (Def. Reply Br. (Dkt. No. 115) at 4)

 

Maersk also argues that Section 6.2(d) does not support American Home’s assertion that Maersk contracted into Carmack liability. According to Maersk, Section 6.2(d) is merely a choice of law provision that reflects the parties’ agreement that New York law would govern any contract disputes between them. (Id. at 6) Given Judge Preska’s finding that the Carmack Amendment—a federal law—“governs the entire scope of Plaintiff s claims,” the choice of law provision in the bill of lading is-according to Maersk—no longer relevant. (Id.) Maersk also points out that, to the extent that the parties intended for New York law to govern this dispute, that would support a finding that Maersk intended to contract out of Carmack liability, not contract into it. (Id.)

 

In response, American Home argues that (1) Royal & Sun is distinguishable, because it involved an import rather than an export shipment; and (2) under Section 6.2(d), “Maersk’s liability to Plaintiff is governed by the liability regime that governs BNSF, an interstate rail carrier.” (Pltf.Opp.(Dkt. No. 112) at 5–7)

 

Neither argument is persuasive. As to Royal & Sun, while that case involves an import shipment rather than an export shipment, there is no evidence that that fact had any bearing on the Second Circuit’s holding that the relevant bill of lading provision-nearly identical to that at issue here-does not serve to bind an ocean carrier to the Carmack Amendment’s strict liability regime. The holding in Royal Sun flows from the Second Circuit’s conclusion that the Carmack Amendment is not a “national law” that “cannot be departed from.”   Royal Sun, 612 F.3d at 146. There is no evidence that the import nature of the shipment played any role in the decision.

 

As for American Home’s argument that Maersk contracted into Carmack liability through Section 6.2(d) of the bill of lading, that contention finds no support in the bill of lading’s text. Maersk did not agree, as American Home suggests, to be “governed by the liability regime that governs BNSF.” (Pltf.Opp.Br. (Dkt. No. 112) at 7) Rather, Section 6.2(d) is a choice of law provision providing that, in the event a shipment of goods is damaged during carriage in the inland United States, Maersk’s liability is to be adjudged according to its contract with BNSF and in accordance with New York law. There is no evidence that, in agreeing to this provision, the parties intended that Maersk would be bound by the liability rules set forth in the Carmack Amendment.

 

*11 Having prevailed on its argument that the Carmack Amendment governs this case, American Home must live with the consequences. The applicability of the Carmack Amendment here is the law of the case, as is Judge Preska’s ruling that “the Carmack Amendment provides the exclusive remedy for a shipper’s compensation for actual loss or injury.” See Am. Home Assur. Co., 2011 WL 666388, at *5; March 12, 2013 Order (Dkt. No. 97) at 4) Given that the Carmack Amendment does not apply to an ocean carrier such as Maersk, and given that Maersk did not contractually agree to be bound by the liability regime set forth in the Carmack Amendment, American Home has no claim under the Carmack Amendment against Maersk.

 

CONCLUSION

For the reasons stated above, Maersk’s motion for summary judgment is granted. The Clerk of the Court is directed to terminate the motion (Dkt. No. 108) and to close this case.

 

SO ORDERED.

 

FN1. This matter was reassigned to this Court on May 29, 2013 (Dkt. No. 117).

 

FN2. See Maersk Bill of Lading § 4.2, Merrick Decl., Ex. G (Dkt. No. 110); see also and Pltf. Opp. Br. (Dkt. No. 112) at 2 n. 1 (“Subsection 4.2 of Maersk’s Multimodal Bill of Lading terms and conditions purportedly prohibited plaintiff from suing BNSF directly .”),

 

FN3. Unless otherwise noted, citations to the parties’ Local Rule 56 .1 statements, including those submitted in connection with prior motions, concern factual assertions that are admitted or are deemed admitted because they were not contradicted by citations to admissible evidence. See Giannullo v. City of New York. 322 F.3d 139, 140 (2d Cir.2003) (“If the opposing party … fails to controvert a fact so set forth in the moving party’s Rule 56.1 statement, that fact will be deemed admitted.”).

 

FN4. Maersk’s standard practice was to only issue a hard copy of the bill of lading once the goods were loaded on to its ocean vessels. (Def. R. 56.1 Stmt. (Dkt. No. 111) ¶ 8)

 

FN5. “A Himalaya Clause extends contractual protections that would otherwise apply only to the entity issuing the bill of lading to the subcontractors of the issuing entity as well.” Royal & Sun Alliance Ins., PLC v. Ocean World Lines, Inc., 612 F.3d 138, 142 (2d Cir.2010).

 

FN6. See also Am. Home Assur. Co. v. Panalpina, Inc., 07 CV 10947 BSJ, 2011 WL 666388, at *2 (S.D.N.Y. Feb.16, 2011).

 

FN7. The significant differences between these statutes have led ocean carriers to insert “Himalaya clauses” into their standard-form bills of lading, in an attempt to extend COGSA’s protections to all subcontractors, including domestic rail carriers. In a 2010 decision, the Supreme Court held that the Carmack Amendment does not displace such contract provisions where the contract at issue involves an import shipment. Kawasaki Kisen Kaisha Ltd. v. Regal–Beloit Corp., 561 U.S. 89, ––––, 130 S.Ct. 2433, 2439, 177 L.Ed.2d 424 (2010). Regal–Beloit does not address whether the same rule applies in the export context at issue here. See Regal–Beloit, 130 S.Ct. at 2444 (“Today’s decision need not address the instance where goods are received at a point in the United States for export.”).

APPA Seafood, Inc. v. Obetz Transp., Inc.

United States District Court,

S.D. Ohio,

Eastern Division.

APPA SEAFOOD, INC., Plaintiff,

v.

OBETZ TRANSPORTATION, INC., et al., Defendants.

 

No. 2:12–CV–1095.

Filed April 10, 2014.

 

David Arnold Schaefer, Leslie Erin Wargo, McCarthy, Lebit, Crystal & Liffman Co LPA, Cleveland, OH, for Plaintiff.

 

John Edward Breen, John Lynn Alden, Columbus, OH, for Defendants.

 

OPINION AND ORDER

TERENCE P. KEMP, United States Magistrate Judge.

*1 This matter is before the Court on a motion for summary judgment on all counts filed by Defendant Devinder Singh d/b/a McKee Transport (“McKee”) (Doc. # 42) and a cross-motion for partial summary judgment filed by Plaintiff APPA Seafood, Inc. d/b/a APPA Fine Foods (“APPA”) (Doc. # 50). For the reasons set forth below, McKee’s motion for summary judgment will be granted, and APPA’s cross-motion for partial summary judgment will be denied.

 

I. Background

This is a motor carrier case relating to the shipment of food. APPA, a food distributor, claims that a shipment of chicken was not kept at the proper temperature during transport and, consequently, it had to be destroyed. APPA sued McKee and Obetz Transportation, Inc. (“Obetz”) to recover for the loss of the shipment, claiming that they were responsible for the proper shipment of the goods from Denison, Iowa to Corona, California. More specifically, in an amended complaint filed on November 13, 2013, APPA alleges that it engaged Fire & Ice Transport, Inc. (“Fire & Ice”) as a motor carrier to transport the chicken and that Fire & Ice brokered the load to McKee, as motor carrier or a surface freight forwarder, without its knowledge. APPA alleges that McKee then “re-brokered the load” to Obetz, as a motor carrier, again without its knowledge. (Doc. # 39 at ¶ 18). According to APPA

 

The Goods were picked up in good condition on or about May 25, 2012 in Denison, Iowa, at minus ten degrees (–10°) Fahrenheit. APPA notified the driver that the equipment for his refrigerated trailer, which held the Goods, must be kept at minus ten degrees (–10°) Fahrenheit. In addition, McKee and Fire & Ice had documents, which they shared with Obetz about APPA’s refrigeration requirements. The driver signed the Bill of Lading (the “BOL”) governing the carriage of the Goods on May 25, 2012. On or about May 29, 2012, the Goods arrived at APPA’s facility in Corona, California, at a temperature of 49.1 degrees Fahrenheit. The Goods were rejected at delivery.

 

Id. at ¶¶ 20–23. APPA claims that damages arising from the lost load are in excess of $100,253.90.

 

In its amended complaint, APPA brings one claim against both McKee and Obetz and three claims solely against McKee. APPA does not name Fire & Ice as a defendant in the amended complaint. In count one, APPA alleges that McKee and Obetz are liable under the Carmack Amendment, 49 U.S.C. § 14706, for their failure to deliver the load in good condition. In count two, APPA alleges that McKee entered into a contract to transport and/or to arrange to transport the goods and that McKee breached its obligations under the contract, resulting in damages. In count three, APPA alleges that McKee entered into an implied contract to transport the goods and/or to arrange to transport the goods and that McKee breached the implied contract, resulting in damages. Finally, in count four, APPA asserts a negligence claim against McKee, alleging that it breached its duty to properly transport and/or properly arrange for transport of APPA’s goods, which proximately caused APPA to suffer damages.

 

*2 McKee denies liability and has moved for summary judgment on all of APPA’s claims (Doc. # 42). APPA filed a response in opposition to McKee’s motion for summary judgment (Doc. # 49), in addition to filing a cross-motion for partial summary judgment on its Carmack Amendment claim against McKee (Doc. # 50). McKee filed a combined reply in its support of its motion and memorandum in opposition to the cross-motion for partial summary judgment (Doc. # 54). Finally, APPA filed a reply in support of its cross-motion for partial summary judgment (Doc. # 55). Thus, the motions have been briefed fully, and they are now ripe for review.

 

II. Motion for Summary Judgment Standard

Summary judgment is not a substitute for a trial when facts material to the Court’s ultimate resolution of the case are in dispute. It may be rendered only when appropriate evidentiary materials, as described in Fed.R.Civ.P. 56(c), demonstrate the absence of a material factual dispute and the moving party is entitled to judgment as a matter of law. Poller v. Columbia Broadcasting Systems, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed.2d 458 (1962). The moving party bears the burden of demonstrating that no material facts are in dispute, and the evidence submitted must be viewed in the light most favorable to the nonmoving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Additionally, the Court must draw all reasonable inferences from that evidence in favor of the nonmoving party. United States v. Diebold, Inc., 369 U.S. 654, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). The nonmoving party does have the burden, however, after completion of sufficient discovery, to submit evidence in support of any material element of a claim or defense on which that party would bear the burden of proof at trial, even if the moving party has not submitted evidence to negate the existence of that material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Of course, since “a party seeking summary judgment … bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact,” Celotex, 477 U.S. at 323, the responding party is only required to respond to those issues clearly identified by the moving party as being subject to the motion. It is with these standards in mind that the instant motions must be decided.

 

III. Discussion

The Court first examines APPA’s claim arising under the Carmack Amendment. After doing so, the Court next examines APPA’s state law claims for breach of contract, breach of implied contract, and negligence.

 

A. Carmack Amendment Claim

Count one of APPA’s amended complaint arises under the Carmack Amendment to the Interstate Commerce Commission Act, 49 U.S.C. § 14706, which establishes the obligations of interstate motor carriers. The Supreme Court has described the Carmack Amendment as follows

 

*3 [T]he statute codifies the common-law rule that a carrier, though not an absolute insurer, is liable for damage to goods transported by it unless it can show that the damage was caused by (a) the act of God; (b) the public enemy; (c) the shipper himself; (d) public authority; (e) or the inherent vice or nature of the goods.

 

Missouri Pac. R.R. Co. v. Elmore and Stahl, 377 U.S. 134, 138, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964) (internal quotations omitted). A plaintiff sets forth a prima facie case under the Carmack Amendment when it demonstrates delivery of the cargo to the carrier in good condition, arrival of the cargo in damaged condition, and damages. Plough, Inc. v. Mason and Dixon Lines, 630 F.2d 468, 470 (6th Cir.1980); see also Great West Casualty Co. v. Flandrich, 605 F.Supp.2d 955, 966 (S.D.Ohio 2009) (setting forth the prima facie elements of a Carmack Amendment claim). Once the shipper has set forth a prima facie case, “the burden of proof is upon the carrier to show both that it was free from negligence and that the damage to the cargo was due to one of the excepted causes relieving the carrier of liability.” Id.

 

In its motion for summary judgment, McKee argues that APPA cannot set forth a prima facie case under the Carmack Amendment because it never accepted custody of the cargo. McKee admits that it entered into a contract with Fire & Ice related to the transport captioned “Freight Forwarder—Contract Carrier—Contract,” dated May 25, 2012. However, McKee claims that “shortly later, [it] discovered that its refrigeration equipment was not performing adequately, and it immediately advised … Fire & Ice that would not be able to transport the shipment.” (Doc. # 42 at 5). McKee alleges that it

 

advised Fire & Ice that another company named defendant Obetz might have a truck available in the area of Denison, Iowa. [McKee]’s owner, Devinder Singh, knew the owner of defendant Obetz and he contacted defendant Obetz to see if they had availability. Mr. Singh advised Fire & Ice to contact defendant Obetz directly to make arrangements.

 

Id. at 6. McKee maintains that Devinder Singh did not hire or retain Obetz. Indeed, it claims that “[a]fter putting the two in touch with one another, [Mr. Singh] had no further involvement in the shipment.” Id. Based upon these facts, McKee argues that it cannot be liable to APPA under the Carmack Amendment.

 

In its cross-motion, APPA does not dispute that McKee was unable to transport the load due to a refrigeration unit breakdown. According to APPA, however, liability under the Carmack Amendment extends beyond the motor carrier which actually provides the transportation, and makes any carrier that provides a service related to the transportation liable. In this case, APPA argues that McKee is liable under the Carmack Amendment because it “made the arrangements … by making telephone calls, passing along information, and booking the load” to be transported by Obetz. (Doc. # 49 at 4). Based upon these facts, APPA argues that reasonable minds can find that McKee acted as a motor carrier with respect to APPA’s goods.

 

*4 In response, McKee argues that APPA is “playing fast and loose with the facts” in arguing that McKee arranged for transportation of the cargo. (Doc. # 54 at 2). According to McKee, it advised Fire & Ice “that it must itself directly secure the services of another motor carrier, which it did both verbally and through the issuance of a bill of lading and exchange of a rate confirmation, neither of which reference [McKee] in any manner whatsoever.” Id. (internal citations omitted). McKee further alleges that, consistent with these facts, it did not issue an invoice or receive any compensation. Consequently, McKee argues that “there can be no serious dispute that the original transportation agreement was terminated and substituted with an entirely new transaction between [APPA], through its agent Fire & Ice and defendant Obetz.” Id.

 

In reply, APPA argues that the following is without dispute “(1) Defendant McKee contracted to transport APPA’s Goods; (2) it was provided all documents for such transport, including the Dispatch Rate/Confirmation Agreement; and (3) when it was unable to transport the Goods, Defendant McKee took action right away and told Fire & Ice that Obetz Transportation could do it.” (Doc. # 55 at 1–2) (internal quotations omitted). Consequently, APPA argues that, “[r]eviewing all of the facts and evidence, reasonable minds can only conclude that Defendant McKee provided transportation or service with respect to APPA’s Goods, and therefore, it should be held liable under the Carmack Amendment as a matter of law.” Id. at 2 (internal quotations omitted).

 

Most of the facts relevant to this claim are not in dispute. In particular, there is no dispute that McKee agreed to transport the load but was unable to do so due to a refrigeration equipment failure. There is likewise no dispute that McKee contacted Obetz to inquire as to whether Obetz could transport the load once McKee realized that it was unable to do so. Further, there is no dispute that, thereafter, Fire & Ice issued a written “Dispatch Confirmation/Rate Agreement” to Obetz, and that APPA issued a bill of lading naming Obetz as the motor carrier. The parties do not dispute that Obetz transported the goods, which were rejected upon delivery. The disagreement between APPA and McKee pertains to what involvement, if any, McKee had with the transportation of the goods beyond its initial telephone call to Obetz.

 

APPA is correct that liability under the Carmack Amendment may extend beyond the carrier which physically transported the goods. Pursuant to the statute, a “motor carrier” is a “person providing motor vehicle transportation for compensation.” 49 U.S.C. § 13102(14). “Transportation” is defined to include, inter alia, “services related to that movement, including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.” Id. at § 13102(23)(B). See, e.g., Land O’Lakes, Inc. v. Superior Serv. Transp. of Wis., Inc., 500 F.Supp.2d 1150, 1155 (E.D.Wisc.2007) (finding defendant was a “motor carrier” under the Carmack Amendment despite the fact that defendant did not physically transport and goods and arranged for another entity to broker the transport). Thus, McKee did not need to ship the goods in this case in order to be subject to potential liability under the Carmack Amendment.

 

*5 Merely because McKee may be liable under the Carmack Amendment, however, does not mean that APPA has demonstrated the absence of a genuine issue of material fact as to this claim. Indeed, in this case, the totality of the evidence does not lead to a reasonable inference that McKee could be liable for its actions under the Carmack Amendment. Mr. Singh testified in his deposition that he called Amir Ullah of Obetz to see if that company would be able to make the transport. He testified that he instructed Obetz to engage in negotiations with Fire & Ice independent of him, and that McKee had no further involvement. Consistent with Mr. Singh’s contention that McKee had no further involvement, Fire & Ice issued a written “Dispatch Confirmation/Rate Agreement” to Obetz, and APPA issued a bill of lading naming Obetz as the motor carrier.

 

APPA’s offers little evidence that McKee should be subject to liability. In a footnote in its memorandum in opposition to McKee’s motion for summary judgment, APPA states that, in addition to McKee’s own Dispatch Rate/Confirmation Agreement with Fire & Ice, “McKee had in its possession, and produced in discovery, another Dispatch Rate/Confirmation Agreement” which “had Defendant Obetz’s name instead of defendant McKee.” (Doc. # 49 n. 1). APPA also argues that

 

[a]fter the Goods were rejected by APPA, the evidence supports that Defendant McKee played a role in moving the Goods to a U.S. Cold Storage Facility in Bakersfield, California—the same city where Defendant McKee is located. The individual in charge at U.S. Cold Storage Facility is Frank Garcia. Although Defendant McKee’s owner failed to acknowledge any involvement with Plaintiff’s load after it was rejected, in discovery, Defendant McKee produced a document from its file that contains a handwritten name ‘Frank’ next to Defendant McKee’s fax number.

 

Id. at 5. This evidence alone, in light of all of the other evidence in the record, would not allow a trier of fact reasonably to infer that McKee arranged for the transport of the goods by Obetz and, consequently, that it would be subject to liability under the Carmack Amendment.

 

Further, the Court has considered the authority cited by APPA in support of its position and finds the cases to be factually distinguishable from this case. See, e.g., Land–OLakes, Inc., 500 F.Supp.2d at 1155 (finding Carmack Amendment applicable where, pursuant to a contract, defendant arranged for another party to broker the load to the trucking company which transported the goods); Mach Mold, Inc. v. Clover Assoc. Inc., 383 F.Supp.2d 1015 (N.D.Ill.2005) (holding Carmack Amendment was applicable where plaintiff authorized defendant to ship the machine, and that defendant did so by contracting with another party to help); Advantage Freight Network v. Sanchez, No. CV–F07–827–LJO–SMS, 2008 U.S. Dist. LEXIS 81816 (E.D.Cal. Sept. 10, 2008) (determining that the Carmack Amendment was applicable where defendant agreed to transport the goods and arranged for their transportation through his driver). As McKee argues, “the cases relied upon by plaintiff are misplaced, as they rely on fact patterns where a motor carrier accepted responsibility for a shipment and simply sub contracted its own work responsibilities—an altogether different situation.” (Doc. # 54 at 6). Based on the foregoing, the Court will grant McKee’s motion for summary judgment on the Carmack Amendment claim and will deny APPA’s cross-motion for partial summary judgment on the same claim.

 

B. State Law Claims

*6 The Court now turns to APPA’s state law claims for breach of contract, breach of implied contract, and negligence. In count two of the amended complaint, APPA alleges that “[i]n the event McKee is found not to be a carrier, it should be found to be a broker with respect to the Shipment of Goods.” (Doc. # 39 at ¶ 38). APPA states that it was the intended beneficiary of the contract pertaining to the transport of the goods and, consequently, McKee is liable to it for breaching its obligations as a broker under the contract. McKee argues that it is entitled to summary judgment on this claim because “not only is there (1) no basis in fact or law to suggest McKee Transport was ever a freight broker, but (2) there was never any contractual relationship or proximate causation, in any event.” (Doc. # 42 at 11).

 

In count three of the amended complaint, APPA alleges that McKee is liable to it for breaching its obligations as a broker under an implied contract intended to benefit APPA. In response, McKee argues again that it “clearly never acted in the capacity of a freight broker.” Id. at 14. McKee also contends that “this claim is barred as a matter of law by (1) federal preemption, both implied and express, and (2) even if it were not preempted, there is no basis under Ohio law to sustain a claim for breach of implied contract” under the facts presented in this case. Id.

 

In count four of the amended complaint, APPA alleges that McKee breached its duties as a broker by failing properly to transport and/or arrange for the transportation of the goods. APPA further alleges that McKee’s negligence proximately caused the destruction of APPA’s goods, resulting in damages believed to be in excess of $100,253.90. McKee again argues that this claim is barred by preemption. Alternatively, McKee contends that, even if this claim is not preempted, it “fails on all essential elements as a matter of law.” (Doc. # 42 at 18). More specifically, McKee argues that even if it “acted as a broker, then there is still no factual basis upon which to support a common law claim for negligence because [it] cannot be held liable for the negligence of defendant Obetz in failing to maintain the desired temperature.” Id.

 

In its memorandum in opposition to McKee’s motion for summary judgment, APPA does not dispute that the Carmack Amendment preempts state law claims that fall within the scope of that statute. However, APPA argues that “if Defendant McKee is deemed a broker, APPA’s state law claims fall outside the scope of the Carmack Amendment and, therefore, are not subject to federal preemption.” (Doc. # 49 at 12). APPA also argues that it has enforceable rights under the contract between Fire & Ice and McKee, despite the fact that it is not named in the contract.

 

For purposes of resolving McKee’s motion for summary judgment, even if the Court assumes for the sake of argument, without deciding, that APPA’s claims are not preempted and that APPA had enforceable rights under the contract, McKee would still be entitled to summary judgment on APPA’s claims for breach of contract, implied breach of contract, and negligence. Simply stated, APPA fails to set forth facts to support its state law claims for relief. Although Fire & Ice and McKee had a written contract for McKee to transport APPA’s goods, the evidence permits only one inference—that those parties mutually agreed to terminate that contract when McKee was unable to perform. Thus, the evidence supports a finding of mutual rescission or abandonment, followed by Fire & Ice’s creating a new contract with Obetz. See, e.g., Nebco & Assoc., 23 Cl.Ct. 635, 642 (1991) (observing that parties may mutually agree to rescind a contract by conduct which indicates intent by both parties to abandon the contract) (citing Restatement (Second) of Contracts § 283, comment a). Furthermore, the plain language of the contract between Fire & Ice and McKee placed McKee in the position of a carrier, and it did not allow McKee to arrange for transportation of the goods without prior written consent. (Doc. # 50, Ex. 2 at ¶ 12). APPA fails to set forth any argument or evidence suggesting that Fire & Ice provided such written consent. Because the totality of the evidence does not support a reasonable inference that McKee either had a contract to transport the goods which survived the new arrangement made with Obetz or that it owed any duty to APPA which could lead to tort liability, McKee’s motion for summary judgment on these claims will be granted.

 

IV. Conclusion

*7 For the reasons set forth above, McKee’s motion for summary judgment is granted (Doc. # 42) and APPA’s cross-motion for partial summary judgment is denied (Doc. # 50).

 

IT IS SO ORDERED.

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