Here we are at the end of another year. I hope Santa was good to those of you who celebrated Christmas last week. Time sure does fly by. I assume that there are not many of you out there this week as it seems to me that everyone in the insurance industry is trying to use those vacation days before they are lost forever. For the rest of you, hopefully this is a quiet end to the year. We wish you all a happy and health New Year.
I hope you will give me a little leeway this month as I take a moment to remember a good friend to CAB and to me personally. We lost Lon McCarty of Canal Insurance Company last week. Lon was a long time cargo adjuster who simply loved this industry and enjoyed the give and take of a good cargo loss. I worked with him for over 20 years and spent many wonderful afternoon discussing life and cargo with him. He will be missed here at CAB and by all of you who enjoyed his banter over the years. As you raise your glass to ring in the New Year give him a nod of remembrance.
This month we report:
INSURANCE LIMITS – In case you did not catch our email blast earlier in the month, the movement is underway to increase required insurance limits for motor carriers. The FMCSA has not made any particular decision on the proposed limits, and instead is seeking comments from interested parties concerning the need to increase the limits. Comments are due by February 26, 2015. The FMCSA is seeking comments on issues related to premium rates, current minimum levels of financial responsibility, the impact of increasing limits, third party compensation, information sources, timeliness of the increase, release of claim information and impact that increases will have on trip insurance, bus brokers, and self-insurance. A complete copy of the questions can be viewed here and a review of any filed comments can be viewed here on the FMCSA web. Any change to the minimum limits will have a profound impact on your book of business and consideration should be given to whether you wish to be heard by the FMCSA by commenting on these questions. We would be happy to discuss with any of our subscribers concerns and questions which they may have. With all of the chatter on the various social media sites, this may be a battle as small carriers and owner operators lament the impact that increased insurance costs will have on their business.
HOURS OF SERVICE CHANGE – The FMCSA has announced that effective December 16th there is a change to the voluntary 34-hour-restart. The Collins amendment suspends two provisions – the 1 a.m. to 5 a.m. overnight provision and the restriction on using the restart once every seven days. The suspension of those two provisions will last while the FMCSA undertakes a study to determine if the changes will be permanent.
TRUCKING JOBS – The transportation industry is on a roll. The Department of Labor reports that the transportation sector gained 16,700 jobs in November. Truck transportation subsectors jobs received a gain of 3,000 jobs, for a total of more than 1.4 million jobs. According to the report, the unemployment rate for transportation and material moving occupations is down to 6.0 percent from 9.0 percent last October. This business is not going anywhere and will continue to need insurers!
TRUCK FATALITIES – The NHTSA reports that U.S. fatalities from crashes involving large trucks increased by 0.5% in 2013, rising to 3,964 from 3,944 people the year before. Although the increase was small, this was the fourth increase in annual large truck-involved fatalities. The number of injuries in large truck-related crashes declined to 95,000 in 2013, from 104,000 in 2012. The number of overall highway deaths declined to 32,719 people, compared with 33,782 traffic deaths in 2012 — a 3.1% drop. The number of large-truck occupants killed in 2013 decreased by 0.9%, to 691 from 697 the prior year. However, the number of non-occupants killed during a large-truck crash increased by 13%, to 439 in 2013 from 390 in 2012; while the number of other occupants killed in a large-truck crash declined by 0.8%.
PAPERWORK REDUCTION – The FMCSA will no longer require property-carrying commercial motor vehicle drivers to submit, and motor carriers to retain, driver vehicle inspection reports when the driver has neither found nor been made aware of any vehicle defects or deficiencies. This new rule is estimated to save an estimated $1.7 billion and will eliminate paperwork for roughly 95% of the driver pre- and post-trip inspections of their vehicles.
CONGESTION IMPACT ANALYSIS – For those of us commuting to New York it was not a surprise that the ATRI found the George Washington Bridge to lead the pack in the top 10 areas the country which most impact congestion. The top ten locations are:
- FORT LEE, NJ: I-95 AT SR 4
- CHICAGO, IL: I-290 AT I-90/I-94
- ATLANTA, GA: I-285 AT I-85 (NORTH)
- CINCINNATI, OH: I-71 AT I-75
- HOUSTON, TX: I-45 AT US 59
- HOUSTON, TX: I-610 AT US 290
- ST. LOUIS, MO: I-70 AT I-64 (WEST)
- LOS ANGELES, CA: SR 60 AT SR 57
- LOUISVILLE, KY: I-65 AT I-64/I-71
- AUSTIN, TX: I-35
AGING INDUSTRY? – The ATRI also released a white paper this month which indicates a shift in the demographics of the industry and the aging of the work force. The average age of the work force is 52 with reportedly fewer young people applying for jobs. A
COMMODITY FLOW SURVEY – The DOT, in the 2012 Commodity Flow Survey concludes that trucking is still the dominant mode of transportation. The nation’s manufacturing and wholesale establishments, mines, and mail-order houses shipped 11.3 billion tons of raw material and finished goods, valued at $13.9 trillion, and accounting for nearly 3.0 trillion ton-miles during 2012. The trucking mode accounts for 73.1 percent of the value and 71.3 percent of the tonnage of the shippers’ cargo. Shipments by truck accounted for 8.1 billion tons of goods valued at about $10.1 trillion. The trucking mode was used to move goods about 1.2 trillion ton-miles. The 2012 CFS results indicate the category of mixed freight, multiple commodities such as supplies, including food, for grocery stores and restaurants, hardware or plumbing supplies, and office supplies, contributed the highest value at $1.4 trillion, followed by gasoline, aviation turbine fuel, and ethanol at $1.2 trillion. Gravel and crushed stone was the top commodity by weight at 1.5 billion tons. Coal was the top commodity by ton-miles in 2012 accounting for 663.7 billion ton-miles. A copy of the survey can be viewed here.
CASES
AUTO
Litigation hold letters are becoming a standard communication from a plaintiff as soon as a loss occurs. That letter however was determined to be the starting point for a “prepared in anticipation of litigation” privilege. A driver’s statement given to an insurer was held privileged in the Eastern District of Michigan when it was given after the litigation hold letter was released. (Wright v. Cam Hiltz Trucking, 2014 WL 6675382)
A judgment notwithstanding the verdict is not something we see often as Courts are not inclined to go against a jury verdict. The Court of Appeals in Texas granted a JNOV removing a jury verdict of gross negligence against a bus company involved in a vehicular accident. The Court held that there was no legally sufficient evidence to support the verdict. (Perez v. Arredondo, 2014 WL 6864817)
A bicycle and a truck generally do not mix well. The obligations of the bicyclist were addressed in the 4th District in California. The Court upheld a jury verdict finding the bicyclist 75% liable for the injuries he suffered when he was struck by a tractor-trailer making a turn. Amongst other problems, the plaintiff failed to have his own expert on the safe turning operation of a truck. (Kelly v. EZ Rider & Company, 2014 WL 7178080)
Simply because a motor carrier operates in the general vicinity of a single vehicle accident is not enough to allow a plaintiff to pursue that carrier for allegedly creating a spill on the road which caused an accident. The Court of Appeals in Kentucky dismissed an action against a trucker where plaintiff had no evidence to support a claim that the motor carrier had spilled water on the road which resulted in the accident. (Miller v. Consol. of Kentucky, 2014 WL 7012879)
A truck broker was awarded summary judgment on a claim for negligent hiring of a motor carrier (see last month’s report). Plaintiff’s subsequent efforts to obtain additional discovery from the broker, to establish negligent hiring were unsuccessful. The Appellate Court in Illinois held that the defendant, who was already awarded judgment in its favor, was done and no longer subject to discovery demands. (Hayward v. CH Robinson, 2014 WL 6900843)
An insurer’s effort to delay a coverage determination pending the resolution of the underlying suit was ineffective. The Middle District in Florida held that the insurer was required to produce witnesses and discovery in an action commenced by the insured claiming that the insurance carrier was not properly representing the insured in the underlying suit. (Maronda Homes, Inc. v. Progressive Express Insurance Co., 2014 WL 6610932)
A defendant’s efforts to have the plaintiff’s expert testimony excluded failed in the Eastern District of Texas. The Court held that while the expert could not reach a 100% conclusion that certain inspections, if undertaken, would have prevented the accident his opinion that it was likely was both sufficiently reliable and relevant, and allowed the expert testimony. (Tang, Inc. v. Thomas Trucking, LLC 2014 WL 6847652)
The Supreme Court in Missouri concluded that an insurer’s ultimate settlement for policy limits would not negate the insurer’s earlier bad faith refusal to settle and that an excess judgment was not essential to the a bad faith refusal to settle. The Court also held that an excess insurer does not have a direct claim against the primary insurer, although it could take an assignment or have a subrogation claim against the primary insurer. The Court remanded the case for further findings. (Scottsdale Insurance Co. v. Wells Trucking, 2014 WL 6958157)
The Court of Appeals in Louisiana held that a shipper was not a statutory employer of an injured truck driver employed by an owner operator which had leased a truck and driver to the shipper’s common carrier, concluding that the driver was not limited to worker’s compensation recovery. The Court held that as the owner operator was designated an independent contractor under the motor carrier contract they could not be employees. (Grant v. Sneed, 2014 WL 6464611)
Once the business of a trucking company is sold, it is no longer in the business of transporting cargo for compensation. The District Court in Utah reached such a conclusion when the trucker had ceased its own operations and was only acting as a lessor of trailers to someone else. (Herrod v. Wilshire Insurance Co., 2014 WL 6871259)
CARGO
Once again another Court has held that the Carmack Amendment is not applicable to an indemnity claim by a broker against a motor carrier. The Northern District of Indiana held that there was no basis for federal jurisdiction for that indemnity claim, remanding the case back to state court and allowing for fees to the plaintiff. (Keystone Logistics, Inc. v. Struble Trucking, LLC, 2014 WL 6750052)
A Cross-claim for indemnity between two parties who were involved in the storage of goods in transit was not subject to the preemptive effect of the Carmack Amendment. The District Court in New Jersey held a claim for indemnity which was based on a contract for storage was not a claim on a bill of lading, denying the motion to dismiss. (Starr Indemnity & Liability Co v. Atlantic Drayage & Transport, 2014 WL 6667588)
Broker-carrier agreement cases are really on the rise as you can see from all of these decisions this month. The District Court in Tennessee held that a broker could not assert proper venue based upon the Carmack Amendment when it was filing a breach of contract claim against the motor carrier under the broker-carrier agreement. As that cause of action was subject to state law venue under Carmack was not permitted and the case was transferred. (Medallion Transport & Logistics v. Superior Choice Logistics, 2014 U.S. Dist. Lexis 171927)
Over in the District Court in Arizona, the Court considered the factors which should be considered when determining if an entity was liable as a carrier or a broker. The Court concluded that there were factual questions which must be left to the jury to decide. As to issues which arose with respect to contractual agreements under broker/carrier contracts, the Court also held that there were questions of fact. The Court did conclude, at least, that all negligence claims were preempted. (Asarco V. England Logistics, 201 U.S. Dist. LEXIS 176784)
In an interesting decision, the Western District in Arkansas held that a consignee was not bound by a nine month claim filing requirement in the contract that the shipper had with the motor carrier. The Court did not, at least, allow a claim for consequential damages to stand against the carrier where there was no evidence of knowledge of the potential damages before the shipment. (Architectural Contractors, Inc. v. Schilli Transportation Services, 2014 WL 7014337)
A shipper’s misrepresentation as to the value of goods which were damaged in transit was enough of a defense for a court in the Western District of Kentucky to vacate a default against the motor carrier. That, coupled with the fact that the agent for service of process misunderstood the service, met the grounds to allow the matter to proceed. (Thacker Industrial Service Co. v. AS&E Trucking, Inc., 2014 WL 7212879)
A claim for attorney’s fees against a plaintiff who brought a second action against a transportation intermediary for failure to procure insurance, which was similar to a previously dismissed action, was successful, in part in the Southern District of Florida. While the court held that the intermediary would generally be entitled to the fees as a prevailing party, as the intermediary had failed to comply with procedural requirements necessary to get the fees they were not awarded. (Sodikart USA v. Geodis Wilson USA 2014 WL 6968073)
Once again, we wish you all a Happy New Year! Here’s to a successful 2015.
