Generally around this time of year I like to wish you all a Happy Spring. However my hat and gloves and scarf make it difficult to convey that feeling so I think I will wait another month. I heard that they indicted Puxatawny Phil for misrepresentation. Speaking as a lawyer I think that is one of the most righteous charges I have heard in a long time. But I digress.
This month we report:
FMCSA SHUT DOWN REPORT – The FMCSA went after a number of carriers this month, placing them out of service, and also placed another driver out of service. Highway Star from Oak Park, MI, and its driver, Ibrahim Fetic were both placed out of service as imminent hazards, primarily for log book violations. General Trucking from Atlanta, GA, was also put out of service after the FMCSA found violations of safety regulations, including dispatching unqualified drivers, inadequate compliance with hours of service, and dispatching unsafe, overloaded vehicles.
In the bus arena, Rimrock Stages Inc., of Billings, MT, which also does business as Rimrock Trailways, was declared an imminent hazard to public safety, as well as Oklahoma City-based Heartland Charters & Tours which was shut down for “failing to adhere to operating conditions” the company agreed to follow in July 2012. Ming An Inc., a New York City bus company was shut down for failing to conduct pre-employment drug and alcohol testing; employing drivers without CDLs; allowing drivers who are not medically certified to drive; failure to prepare records of duty status; failure to require drivers to prepare vehicle inspection reports; and failure to annually inspect the vehicles. FMCSA used its recently granted powers to shut down the Fung Wah bus company, the first time the agency revoked a carrier’s operating authority using powers granted in Moving Ahead for Progress in the 21st Century (MAP-21). Finally Santana Busline Inc., of Springfield, MA was found to have failed to ensure that its drivers comply with hours-of-service requirements, allowed unqualified drivers to operate its vehicles in an unsafe manner, failed to conduct periodic vehicle safety inspections, failed to properly maintain and repair vehicles as required by federal regulations, and knowingly dispatched vehicles with safety defects.
ANTI-INDEMNITY CLAUSES – Montana is expected to be the next venue to join the majority of states which prohibit indemnity clauses in transportation contracts. The bill has been sent to the Governor for signature. In neighboring Idaho, a similar statute was signed into law, taking effect July 1st.
FRAUDULENT DOT LICENSES AND PLATES – The FMCSA has issued a warning that licenses plates and CDL’s bearing a false DOT endorsement are appearing throughout the country. The FMCSA does not issue any such plates or licenses and those using them are guilty of criminal activity.
HOURS OF SERVICE – Oral argument on the hours of service regulations went forward this month, with a ruling expected sometime this summer. The FMCSA has announced it won’t delay the July 1 start date for enforcement of the latest version of the hours-of-service rules pending the court’s decision. The ATA claims that driver training, software updates and other preparations for the July implementation date will cost the trucking industry $320 million and would be wasted if the rules are changed by the court decision. At press time various legislators are attempting to intervene and delay the implementation of the new rules.
CROSS-BORDER CARGO TEST – United States and Canadian officials have agreed to implement a pilot program that will allow U.S.-bound trucks to be inspected on the Canadian side of the border at two crossing locations. The agreement is part of the Beyond the Border Action Plan, which is a joint effort to smooth passenger and cargo movement between the countries. The first inspection station will be in Surrey, with the second in Fort Erie, Ontario. U.S. officials are also working to establish facilities to inspect U.S.-bound cargo along the Mexican border. One such facility has been completed in Tijuana, Mexico, at the Otay Mesa Port of Entry, though Customs has not announced an opening date for it.
TRAILER ACCIDENT REPORTS – The Insurance Institute for Highway Safety reports that modern tractor-trailer design generally prevents passenger vehicles from sliding underneath the trailer in an accident. However in crashes involving only a small portion of the truck’s rear, most trailers fail to prevent the under slide The Institute has asked for more stringent requirements for guards which would assist in preventing these incidents, also requesting that the standards be applied to other types of large trucks such as dump trucks.
CASES
As you know, we generally split the cases between auto and cargo, with an extra category for miscellaneous cases. I decided to rename that category the joint cases as they impact the exposure under both policies. Hopefully you will all consider all of the case. If you have a different clever title for the case groupings, let me know. Always willing to change it around.
CARGO
Getting in and out of Federal court was once again a big issue this month with a number of reported decisions on the issue. In the Northern District in Ohio the court denied the plaintiff’s request to remand a Carmack case rejecting the shipper’s argument that the Court was not obligated to accept the case where the defendant had not established an overwhelming reason why it should not be heard in state court. The court also dismissed all state causes of action as preempted. (Acuity v. YRC, 2013 WL 646218) In Kansas the District Court sent the defendant packing because it failed to obtain the consent of all of the defendants who had been served in the suit, forcing that cargo claim back to state court. (McDonald v. BAM, 2013 WL 812150) In the Western District of North Carolina a personal injury and cargo claim against a trailer owner was remanded when there was a failure to allege proper jurisdictional required monetary amounts. (Cargo Logistics v. XTRA Lease, 2013 WL 789744) Pay attention to the technical requirements of the removal if you want to stay in federal court.
What does fraudulent bill of lading coverage protect? The District Court in Maine held that it does not apply simply because the consignee concludes that non conforming junk goods were delivered by its vendor. The court addressed what constituted direct physical loss under a cargo policy, concluding that this was not direct physical loss. (Home Fashions v. Hanover Ins Co. 2013 WL 828839)
Can a broker maintain a claim under the Carmack Amendment both for its own losses and the losses of its customer? The Northern District in Texas concluded that the broker lacked prudential standing under the Carmack Amendment for its own claims and without an actual assignment from the cargo owner it had no standing to act for the cargo owner. Of course, if Carmack does not apply, there remain states of action which can be asserted against the broker. (Pyramid Transportation v. Greatwide Dallas Mavis, LLC 2013 WL 840664)
Is a motor carrier liable for damages which occur after the goods arrive at destination? Perhaps. The District Court in Nebraska considered whether a motor carrier was liable for damages to equipment which was delivered to a railroad site and was subsequently hit by a train. The Court held that while the shipper may have waived the specific requirements for delivery under the contract it was not clear whether the carrier had completed all steps necessary to complete delivery before the accident. The court also held that if delivery was not complete the motor carrier should have foreseen that the equipment might be damaged and that personal injury might occur, concluding that the motor carrier might be liable for consequential damages under the Carmack Amendment. Finally the court preempted all state law claims. (Union Pacific Railroad v. Beemac Trucking, 2013 WL886754)
A truck broker’s claim that a truck repair center was obligated to indemnify the broker for a cargo theft failed in the Southern District in Illinois. The Court held that in the absence of a contractual agreement there was no claim for indemnity. A claim for contribution could be alleged, provided it was properly pled. (Zurich American Ins Co. v. LCG Logistics, 2013 WL 675896)
AUTO
A general liability policy does not apply when the plaintiff was injured when a pulley attached to both a vehicle and a piece of heavy equipment snapped and hit the plaintiff. The Second Circuit in Louisiana held that it did in fact arise out of the use of an auto, a self-propelled vehicle or a vehicle subject to mandatory auto insurance and that the relevant exclusion for losses caused by that use was not ambiguous. (Patterson v Stephenson’s Tree Service, 2013 WL 694823)
The Fifth Circuit Court of Appeals upheld the employee exclusion in an auto policy. While the driver was actually the employee of the independent contractor under lease to the motor carrier, the court held that he was also an employee under federal regulations and therefore the exclusion would apply. The court further held that even under the plaintiff’s theory coverage would not exist as the policy also excluded the driver under the omnibus insured definition as he was the agent of the owner of the vehicle. (Canal Indemnity Co. v. Rapid Logistics Inc., 2013 WL 657665)
In the Western District in Arkansas the court granted a motion to stay a declaratory judgment action which was filed to determine the applicability of a commercial auto policy to a personal injury loss as there was a pending state court action which mirrored the suit. The court ruled so even though the plaintiff had non-suited its initial action before the declaratory judgment action was filed and had re-filed at a later date and there was a pending motion to dismiss the state suit because of an absence of a judgment against the motor carrier. (United Financial Casualty Co v. Shelton, 2013 WL 771827)
A supermarket and its trucking company were not permitted to seek indemnity under a contract with a company which supplied drivers when suit was brought against them in New York by a driver who was injured during the unloading process. The court held that the contractual indemnity applied only to losses arising from the use of the auto and the driver’s actions arose outside the scope of the contract. (Lugo v. Purple & White Markets Inc, 2013 WL 828090)
Neither a driver nor its employer where held liable for the actions of a thief who caused personal injuries to a third party. The Court of Appeals in Wisconsin held that there were no exceptional circumstances present to change the standard rule, even when the driver left the keys in the vehicle and the thief was a known transient to the driver’s family. (Whiteaker v. Black, 2013 WL 1110799)
The Northern District in West Virginia held that an injured plaintiff could not re-litigate the employment status of the driver in a declaratory judgment action when the personal injury action had already concluded that they were not employees of the motor carrier. The court also held as the vehicle was not owned hired or borrowed by the motor carrier its liability policy would not apply. On the issue of the application of the MCS-90 to the claims against the driver the court held that it did not apply and provided no protection to the driver as he would not be deemed an insured under the terms of the endorsement. (Lancer Ins. Co. V. VIP Limousine, 2013 WL 937735)
JOINT CASES
The Court of Appeals in Indiana upheld a forum selection clause in a shipper carrier agreement. The shipper, who was the party seeking indemnity from the motor carrier, was barred from preventing the application of a forum election clause which it had in fact bargained for. (Carmeuse Lime & Stone v. Illini State Trucking, 2013 WL 1104885)
A complaint by a motor carrier against the insurance agent for an escort service failed in the Middle District of Florida although the court is allowing the carrier to amend its pleadings. The issue in the case will be whether an insurance agent who provides a certificate of insurance is implicitly agreeing that the services provided by the escort service are covered under the auto liability policy. The court held that the motor carrier must specifically allege facts which show a misrepresentation by the agent. (Fireman’s Fund Ins. Co. v. Landstar Ranger, 2013 WL 764655)
A broker was unable to obtain attorneys fees or treble damages against a trucker for conversion of a trailer. The 9th Circuit held that the contract extended attorneys fees only to claims for cargo losses. (Alliance Shippers v. Always Transport, 2013 WL 1116490)
The Northern District in New York held that the failure to execute a contract is not fatal to the application of the terms of the contract. The Court concluded that the motor carrier was subject to a mandatory arbitration clause even when the shipper had not signed the contract. There was sufficient evidence that the material terms had been agreed to, and followed, by the parties. (Fort Miller Co v. American Transport 2013 WL 773108)
Lawyers beware. The District Court in Nevada imposed sanctions on an attorney for failing to appear at a settlement conference with a representative of a trucking company with adequate authority to settle a case. (Wilson v KRD Trucking west, 2013 WL 836995)
The Court of Appeals in Georgia held that a cargo policy and its insurer, were not subject to Georgia statute requiring affirmative obligations related to adjusting investigating and settling losses. The statute was held applicable to auto liability policies. (Equipco International v, Certain Underwriters at Lloyds 2013 WL 1137044)
See you when it gets warm!
