Court of Appeal, Fourth District,

Division 1.

UNIFIED GLOBAL LOGISTICS, INC., Plaintiff and Appellant,

v.

NABERS SOLUTIONS, LLC, Defendant and Respondent.

 

No. D056004.

(Super.Ct.No. 37-2008-00072107-CU-BC-SC).

Jan. 21, 2011.

 

BENKE, Acting P.J.

This appeal arises out of the in-transit loss of a cargo of 252 LG Electronics brand LCD televisions (the cargo) during their motor transportation from California to Virginia. Appellant Unified Global Logistics, Inc. (UGL), hired respondent Nabers Solutions, LLC (Nabers), to arrange for the transportation of the cargo owned by LG Electronics. Nabers in turn hired a third party motor carrier to transport the cargo, which ostensibly was stolen while in-transit. UGL sued Nabers, among other parties, for the loss of the cargo.

 

The trial court granted Nabers’s motion for summary judgment. We agree summary judgment was proper and thus affirm.

 

FACTS AND PROCEDURAL BACKGROUND

Nabers is a broker with interstate operating authority from the Federal Motor Carrier Safety Administration (the FMCSA). As such, Nabers arranges for its customers the interstate motor transportation of cargo. However, as a broker Nabers never actually performs any motor transportation. Nabers is neither a motor carrier nor a freight forwarder; it also does not own, operate or lease trucks that transport cargoes interstate. Before Nabers brokers the transportation of a cargo load, it requires copies of that carrier’s federal operating authority, a certificate of motor truck legal liability insurance coverage and a W-9 tax form.

 

UGL, like Nabers, is a broker with interstate operating authority from the FMCSA. Unlike Nabers, however, UGL is also a motor carrier regulated by the FMCSA.

 

LG Electronics hired FNS USA, Inc. (FNS), to arrange for the transportation of the cargo from California to Virginia. FNS, in turn, hired UGL, who then hired Nabers. Before the instant transaction, Nabors had brokered the interstate motor transportation of five loads of goods on UGL’s behalf. Also before the instant transaction, consistent with its practice Nabers had provided UGL with copies of Nabers’s broker’s operating authority, an insurance certificate evidencing Nabers’s contingent cargo coverage and its W-9 tax form.

 

Nabers in turn hired CAC American Cargo Corp. (CAC) to transport the cargo. At the request of Nabers and before the transportation of the cargo, CAC provided Nabers with copies of its motor carrier operating authority, a certificate of motor truck cargo legal liability insurance with a limit of $300,000 and its W-9 tax form.

 

The cargo was stolen in Alabama while in transit. UGL sued Nabers, among other defendants, after it paid FNS for the full value of the cargo in accordance with an oral agreement between FNS and UGL. In its complaint, UGL asserted causes of action against Nabers for “loss of freight,” “breach of contract,” “negligence” and “negligent entrustment.”

 

UGL also sued defendant Randy Magee for defamation. This defendant was dismissed from the lawsuit and is not the subject of this appeal.

 

In its complaint for breach of contract, UGL does not state whether the agreement between it and Nabers for transportation of the cargo was oral or written. However, John Yi’s testimony, as discussed post, suggests there was an oral agreement between the parties.

 

The trial court granted Nabers’s motion for summary judgment. In its well-reasoned order, the court ruled as follows:

 

“There is no triable issue of fact regarding the first cause of action for loss of freight. This cause of action is based on the Carmack Amendment (49 USC § 14706) which provides that a carrier is liable for the actual loss or injury to the property. The Carmack Amendment, which preempts state common law claims against a carrier for damage to goods, applies to motor carriers and freight forwarders, not brokers. ( Chubb v. H.A. Transportation (C.D.Cal .2002) 243 F.Supp.2d 1064, 1068-1069). ‘Broker means a person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier. Motor carriers, or persons who are employees or bona fide agents of carriers, are not brokers within the meaning of this section when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they have accepted and legally bound themselves to transport.’ (49[C].F.R. § 371.2(a).) There is no competent evidence that Nabers was a motor carrier. Nabers’s president testified that Nabers is not a motor carrier or freight forwarder and it never actually performs any motor transportation. (Sewell decl., paras. 7, 8.) Prior to the shipment in question[,] Nabers provided [UGL] with documents showing its licensing status as a broker, and a certificate of insurance showing Nabers had contingent cargo coverage. (Sewell decl., para 11, Exhibits 4, 5 and 6 of Yi’s deposition [a director of UGL].) Contingent cargo coverage is for brokers. ( H & H Brokerage v. Vanliner Insur. Company (8th Cir.1999) 168 F.3d 1124, 1125.)

 

“[UGL] argues that it was led to believe that Nabers was a carrier, as evidenced by the fact that plaintiff did not discover that Nabers was not transporting the goods until after the loss occurred. However, plaintiffs cite to no facts warranting such a belief. Yi testified he believed the salesperson [from Nabers] could ‘move freight with their trucks or they could broker out the load.’ ( [Yi] Depo, p. 46.) Yi admitted he never asked Nabers'[s] agent if it had motor carrier authority and says there was no reason for him to ask such a question ‘in a real world setting.’ Yi provides no details of the conversation from which a trier of fact could conclude that Nebors held itself out as a motor carrier. As noted above, the written documentation that Nabers provided all point to Nabers'[s] status as a broker.

 

“Additionally, a claim for negligence under the Carnack Amendment requires the shipper to show, inter alia, [that] the goods were delivered to the carrier in good condition. ( Chubb v. H.A. Transportation (C.D.Cal.2002) 243 F.Supp.2d 1064, 1068.) In this case the goods were never delivered to Nabers. Instead, Nabers arranged for a third party, CAC, to pick up the goods from LG Electronics’ facility in Calexico.

 

“The second cause of action alleges Nabers ‘breached the agreement by failing to transport the goods from Calexico to Staunton, Virginia.’ [UGL] argues that at the time it entered into the agreement it believed it was hiring Nabers as the motor carrier to transport the goods. For the reasons explained above, there is no competent evidence that Nabers agreed to physically transport the goods.

 

“There is no triable issue of fact as the third cause of action for negligence. Plaintiff alleges, inter alia, Nabers failed to arrange for a competent carrier to transport the goods and failed to verify that the selected carrier had adequate insurance coverage. Nabers argues that it obtained documentation regarding CAC’s motor carrier status and insurance coverage prior to hiring CAC to transport the goods, which is the same procedure that [UGL] used to hire Nabers. (Exhibits D, E, F to Sewell’s decl.)

 

“[ ]UGL concedes ‘there is no definite case on point which sets forth a bright line rule as to a broker’s duty.’ In general, a broker has no duty to hire a carrier with adequate insurance. ( Chubb v. H.A. Transportation (C.D.Cal.2002) 243 F.Supp.2d 1064 .) However, there may be instances in which such an obligation may arise by agreement. See, e.g., KLS Air Express, Inc. v. Cheetah Transp. LLC (E.D.Cal. Aug. 23, 2007) 2007 U.S. Dist. LEXIS 62161 wherein the court stated, ‘In Chubb [ ], the court recognized that to the extent courts have imposed this duty on brokers, the obligation arose from a contract; courts have not recognized a general tort duty to hire carriers with specified insurance coverage .’ Here, there is evidence that [UGL] required Nabers to have cargo insurance. (Yi depo, p. 52.) Nabers did have contingent cargo liability insurance. (Sewell decl., Exhibit B.) Even if one interprets the agreement as requiring Nabers to arrange transportation with a carrier who had cargo insurance, Nabers did so. (Sewell decl., Exhibit C.) [UGL] faults Nabers for not ensuring that the truck transporting the goods was a listed vehicle on CAC’s insurance certificate, however there is no evidence that Nabers knew or should have known that CAC would use a truck that was not covered by the policy. Nabers acted as a reasonably prudent broker under the circumstances.

 

“The fourth cause of action for negligent entrustment alleges Nabers carelessly and recklessly hired CAC without adequate insurance. This cause of action is duplicative of the third cause of action for negligence and may be dismissed as it adds nothing by fact or theory to the complaint. ( Award Metals, Inc. v. Superior Court (1991) 228 Cal.App.3d 1128, 1135.)”

 

DISCUSSION

A. Standard of Review

“On review of a summary judgment, we ‘examine the record de novo and independently determine whether [the] decision is correct. [Citation.]’ [Citation.] In undertaking our independent review of the evidence submitted, we apply ‘ “the same three-step process required of the trial court: First, we identify the issues raised by the pleadings, since it is these allegations to which the motion must respond; second[ ], we determine whether the moving party’s showing has established facts which negate the opponent’s claims and justify a judgment in movant’s favor; when a summary judgment motion prima facie justifies a judgment, the third and final step is to determine whether the opposition demonstrates the existence of a triable, material factual issue. [Citations.]” ‘ [Citation.]” ( Dawson v. Toledano (2003) 109 Cal.App.4th 387, 392.)

 

The trial court’s evidentiary rulings on summary judgment are reviewed for abuse of discretion. ( Alexander v.Codemasters Group Limited (2002) 104 Cal.App.4th 129, 139-140, fn. 3; Mann v. Cracchiolo (1985) 38 Cal.3d 18, 39.)

 

B. Causes of Action for Loss of Freight and Breach of Contract

Here, as noted, the trial court ruled Nabers proffered sufficient facts negating UGL’s causes of action against Nabers for loss of freight and breach of contract, which are based on the theory that Nabers acted as a motor carrier and not as a broker in the transportation of the cargo. The burden then shifted to UGL to demonstrate the existence of a triable issue of material fact to show Nabers was in fact a motor carrier in the transaction at issue.

 

As noted by the trial court, the term “motor carrier” means “a person providing motor vehicle transportation for compensation.” (49 U.S.C. § 13102, subd. (14).) Conversely, a “broker” is “a person, other than a motor carrier … that as a principal or agent sells, offer for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.” (49 U.S.C. § 13102, subd. (2); see also Chubb Group of Ins. Companies v. H.A. Transp. Systems, Inc. (C.D.Cal.2002) 243 F.Supp.2d 1064, 1069, fn. 4 (Chubb ).)

 

On appeal, to create a triable issue of material fact UGL first cites to the deposition testimony of Yi that before the instant transaction involving the cargo, a salesperson named Brian Martin ostensibly from Nabers approached UGL as a “motor-as a trucking company, and [UGL] decided to try them out.”  Because Yi used the word “motor,” which he then changed to “trucking,” UGL claims this evidence creates a triable issue of fact to support its contention that UGL believed at the time it entered into the contract with Nabers to arrange for the transportation of the cargo that Nabers was acting as a motor carrier.

 

This court on May 3, 2010, granted UGL’s opposed request to augment the record on appeal, which included, among other documents, UGL’s opposition to Nabers’s motion for summary judgment/adjudication.

 

We note that Nabers made various evidentiary objections to Yi’s declaration, which the trial court sustained except as to paragraphs 3 and 4. However, even if we consider all the evidence proffered by UGL, including the evidence excluded by the trial court, our decision would not change.

 

We note, however, that a triable issue of material fact exists only when the evidence “allow[s] a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof.” ( Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850, fn. omitted.) In the instant case, we conclude the evidence that a salesperson from Nabers approached Yi before the instant transaction, spoke of starting a business relationship between the two parties and used the words “motor” or “trucking” company, to be wholly insufficient to allow a reasonable trier of fact to find that UGL believed at the time it hired Nabers to transport the cargo that Nabers was acting as a motor carrier regulated by the FMCSA.

 

UGL next cites to Yi’s deposition where he testified that UGL and Nabers entered into an oral agreement for Nabers to “transport” the cargo. UGL claims that use of the word “transport” suggests Nabers was a motor carrier. We disagree.

 

Again, like the trial court we note the absence of competent evidence to support a finding by a rational trier of fact that merely because some one or some persons at Nebors agreed to “transport” the cargo, that Nabers held itself out to be a motor carrier as defined under federal law. We note also there is overwhelming, uncontradicted evidence in the record showing that Nabers was licensed only to act as a broker, that in the earlier transactions between Nabers and UGL, Nabers had in fact only acted as a broker and that Nabers did not own, operate or lease any trucks that would allow it to act as a motor carrier

 

In addition, the uncontradicted evidence in the record shows that UGL was unconcerned about Nabers’s status as a motor carrier until the cargo was stolen and UGL paid FNS under a separate oral agreement. That is, there is no evidence that at the time UGL hired Nabers to arrange for the transportation of the cargo, it believed Nabers was acting as a motor carrier. We thus conclude the statement, as testified to by Yi, that Nabers was contracted to “transport” the cargo insufficient to allow a rational trier of fact to find the underlying facts-that Nabers was in fact a motor carrier, or that UGL reasonably believed that Nabers was a motor carrier-in favor of UGL. (See Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th 826 at p. 850.)

 

UGL next relies on another portion of Yi’s testimony that during this same meeting with Nabers’s salesperson, which took place at some point in time before UGL hired Nabers to arrange for the transportation of the cargo, the salesperson approached UGL as a “trucking company” and represented that Nabers “could move freight with their [sic] trucks or they [sic] could broker out the load.” As the trial court correctly noted, however, Yi also testified under penalty of perjury that the salesperson did not tell Yi that Nabers had “motor carrier authority.” Nonetheless, UGL argues such evidence is sufficient to show that Nabers led Yi (whose duties never included the brokering of loads), and thus UGL, to believe that Nabers was in fact a motor carrier.

 

Even accepting such evidence is admissible, we conclude it is wholly insufficient to allow a reasonable trier of fact to find that Nabers was a motor carrier, or that UGL could reasonably rely on that purported fact, at the time UGL hired Nabers to arrange for the transportation of the cargo. (See Aguilar v. Atlantic Richfield Co., supra, 25 Cal.4th at p. 850.)

 

See footnote No. 5, ante.

 

UGL also argues the fact that it required Nabers to carry what UGL refers to as “motor carrier insurance” is sufficient to create a triable issue of material fact that Nabers was in fact a motor carrier, or that at a minimum UGL reasonably believed that Nabers was a motor carrier, in connection with the cargo. We reject this contention.

 

We note that the certificate of liability insurance refers to “contingent cargo,” not motor carrier insurance, that this certificate of insurance came from UGL’s files and that when asked whether Nabers had the wrong coverage, Yi testified, “[He] d[id] not know, honestly.” Even assuming this “evidence” showed Nabers was a “motor carrier” (which it does not), we conclude it is insufficient to establish a triable issue of material fact on this issue.

 

For the same reasons, we reject UGL’s contention that Yi’s supplemental declaration in support of UGL’s opposition to Nabers’s motion for summary judgment/adjudication, or its separate statement in support of its opposition, creates a triable issue of material fact on the issue of whether Nabers acted as a motor carrier, or UGL reasonably believed it acted as a motor carrier, at the time UGL contracted with Nabers for transportation of the cargo. We note Yi’s supplemental declaration and UGL’s separate statement merely reiterate much if not all of the same evidence already considered by this court in determining UGL did not satisfy its burden to create a triable issue of material fact.

 

Because we independently conclude UGL was unable to proffer facts, much less sufficient facts, to establish a triable issue that Nabers was, or that UGL reasonably believed Nabers to be, a motor carrier in connection with the transportation of the cargo, we further conclude the trial court properly granted Nabers’s motion for summary judgment/adjudication with respect to UGL’s loss of freight and breach of contract causes of action. (See Chubb, supra, 243 F.Supp.2d at pp. 1068-1069 [the Carmack Amendment, 49 U .S.C. § 14706, which “absolutely preempts all state common law claims” against a carrier for damage to goods, applies to motor carriers and freight forwarders, but not brokers].)

 

UGL also claims that even if Nabers acted exclusively as a broker, Nabers breached the agreement with UGL with respect to insurance. We note, however, that we must interpret a contract so as to give effect to the mutual intent of the parties at the time the contract was formed. (Civ.Code, § 1636.)

 

Here, the uncontroverted evidence in the record shows Nabers had provided UGL with a copy of its insurance certificate evidencing Nabers’s contingent cargo coverage, which is consistent with Nabers acting in its capacity as a broker and not as a motor carrier. The uncontroverted evidence also shows that Nabers gave UGL its insurance certificate before the transportation of the cargo at issue, and that Nabers had brokered five loads of goods on behalf of UGL and UGL’s customers before the loss of the cargo, without any complaint or dispute by UGL regarding the type or amount of coverage provided by Nabers (or carriers arranged by Nabers).

 

Finally, there is no dispute in the evidence that UGL first complained of Nabers’s insurance coverage when the cargo was lost in Alabama, after the contract was entered into by the parties. We thus conclude that at the time the parties entered into the contract, it did not include, or require, Nabers to have motor carrier insurance. (See Beard v. Goodrich (2003) 110 Cal.App.4th 1031, 1038 [evidence of the unexpressed subjective intent of the parties is disregarded when interpreting a contract, as the test is what the outward manifestations of consent would lead a reasonable person to believe at the time the contract was made; Oakland-Alameda County Coliseum, Inc. v. Oakland Raiders, Ltd. (1988) 197 Cal.App.3d 1049, 1058 [statements of “unexpressed intent” at the time of contracting are not considered in interpreting a contract].)

 

2. Causes of Action for Negligence and Negligent Entrustment

UGL next argues that the trial court erred when it found no triable issue of material fact in connection with its third cause of action for negligence, and the related fourth cause of action for negligent entrustment. On appeal, UGL argues that Nabers breached its duty of care to UGL by failing to ensure that Nabers had adequate insurance  and by hiring CAC as the motor carrier of the cargo.

 

In its complaint, UGL maintained that Nabers breached its duty of care by failing, among other things, to ensure that the carrier Nabers had selected (e.g., CAC) had adequate insurance to cover the value loss of the cargo.

 

We note, however, that a party “ ‘may not ordinarily recover in tort for the breach of duties that merely restate contractual obligations.’ “ (See Stop Loss Ins. Brokers, Inc. v. Brown & Toland Medical Group (2006) 143 Cal.App.4th 1036, 1041.) Instead, “ ‘ “[c]ourts will generally enforce the breach of a contractual promise through contract law, except when the actions that constitute the breach violate a social policy that merits the imposition of tort remedies.” ‘ [Citation.]” ( Aas v. Superior Court (2000) 24 Cal.4th 627, 643, superseded by statute on another ground as stated in Rosen v. State Farm General Ins. Co. (2003) 30 Cal.4th 1070, 1079-1080.)

 

Here, we conclude the misconduct alleged by UGL against Nabers in its negligence causes of action describe at most a breach of contract, and not a breach of legal duty of care. (See also Chubb, supra, 243 F.Supp.2d at pp. 1071-1072; KLS Air Express, Inc. v. Cheetah Transportation LLC (E.D.Cal. Aug. 23, 2007) 2007 U .S. Dist. LEXIS 62161[“[I]n general, courts have not imposed a legal duty on transportation brokers to hire carriers with specific insurance coverage,” absent a contractual obligation to do so].) We also perceive no social policy that would demand resort to tort remedies in this situation.

 

We thus reject UGL’s attempts to recast a standard contract claim, based on an arms-length business deal between Nabers and UGL, as a tort claim, particularly when the losses suffered by UGL are purely financial (e.g., the loss of the value of the cargo). (See Stop Loss Ins. Brokers, Inc. v. Brown & Toland Medical Group, supra, 143 Cal.App.4th at pp. 1042-1043.)

 

DISPOSITION

The judgment is affirmed. Nabers to recover its costs on appeal.

 

WE CONCUR: HUFFMAN, and McINTYRE, JJ.