Volume 11, Edition 12 (posted 12/29/2008)

Well here we are at the end of the year.  Time does fly. We are keeping this one extra short as our year in review report will be coming to you shortly.  Hope your holidays were pleasant and we wish you prosperity and peace in the coming year.

NEW DOT LEADER – President Elect Obama has tapped Illinois Representative Raymond Lahood as the next head of the DOT. If confirmed he should be a busy man, as President Elect Obama has called for $500 billion to be invested into roads, bridges and other infrastructure as part of a plan to improve transportation and create 2.5 million jobs by 2011.

ECONOMIC LAYOFFS – Large motor carriers are reporting that they too are cutting jobs as the recession impacts the trucking industry.  A serious drop in freight demand has left little options for many carriers, with freight tonnage at its lowest level since 2003. Even teamster operations are being hit as members vote on a package which would cut wages, but give the members stock ownership.

ATA TRUCKING TRENDS REPORT – The ATA�s American Trucking Trends report was released this month. The report states, among other things, that Class 8 trucks traveled 139.3 billion miles in 2006, up from 130.5 billion in 2005. the transportation industry employed, in 2007, 8.9 million people and in 2006 used 53.9 billion gallons of fuel and paid $37.4 billion in taxes.  In 2007, trucks transported 57.8 percent of the value of trade between the United States and Canada, up 3.4 percent from the previous year, and transported 66.2 percent of the value of trade between the United States and Mexico, up 4.8 percent.

HOURS OF SERVICE – Last month we reported that the rules were finally in place.  This month we can report that a petition to change these rules has already been filed.  A coalition of advocacy groups, including Public Citizen and the Teamsters, has petitioned the FMCSA to reconsider the rules. The petition is based upon a belief that the rulemaking relied on inadequate research and crash data.

TRAILER INTERCHANGE RULES – The FMCSA has issued new rulemaking for intermodal equipment  The rules require intermodal equipment providers to be subject to the Federal Motor Carrier Safety Regulations and provides for joint responsibility among intermodal equipment providers, motor carriers, and drivers.  Owners will have a year to insure regular and systematic inspection, repair, and maintenance programs for intermodal chassis, and will be required to track defects and repair. By 2010 the equipment will be required to have a DOT number on it. The rule can be viewed on the FMCSA website.

VEHICLE FATALITIES – In a partial year report, the DOT states that highway deaths fell 10% for the first 10 months of 2008, and is expected to be lower overall for the year.  31,110 people were killed on the roads between January and October, down from 34,502 in the same period in 2007.  The fatality rate is calculated by dividing the number of fatalities by estimates of the number of miles traveled. It was 1.28 per 100 million miles for the first nine months of the year, down from 1.37 per 100 million miles traveled in 2007. You can view the preliminary fatality statistics on the NHTSA website.

OPERATION COSTS FOR TRUCKING – The American Transportation Research institute has released its report on  the operational costs. Total marginal costs were calculated at $1.73 per mile and $83.68 per hour, with insurance premiums $.06 per mile.  A summary of the report be viewed on the ATRI website.

NEW ENTRANT RULES. – The FMSCA has issued its final rule on the safety regulations for new carriers. Failure to comply with the regulations will result in quick revocation of operating authority. The 16 regulations that have been determined to be critical for basic safety management controls necessary to operate in interstate commerce can be viewed on the FMCSA website.

DRIVER CERTIFICATIONS – The FMCSA has also issued its rules on driver medical certificates. Effective January 30 2009, interstate commercial driver�s license (CDL) holders subject to the physical qualification requirements of the FMCSR must provide the state licensing agency with a copy of their medical certifications.  A copy of the rule can be viewed on the FMSCA website.

Although the rules for intermodal interchange may be changing, there will be cases on existing agreements for years to come. The Court of Appeals in Texas, applying Maryland law, upheld an agreement in which the motor carrier agreed to indemnify the equipment owner, even for the owner�s own negligence.  (CMA-CGM v. Empire Truck Lines, 2008 WL 5102283)

The Court of Appeals in New York addressed the issue of late notice of suit this month.  In this case the secretary of state sent the summons and complaint to the insured�s address on file, which was incorrect. The court held that the late notice precluded coverage, and that the insurer was not required to establish prejudice.  (Briggs Avenue, LLC v. Insurance Corporation of Hannover)

Is leaving a truck running and unattended an act within the scope of employment?  The issue was considered by the District Court in D.C. A thief stole the vehicle and then crashed it, causing injury to the plaintiff. The court held that since the vehicle was left on private property negligence would not be presumed, and remanded the case to the jury. The court also held open the question of whether the employer could be held liable for the actions of the driver, questioning whether warming up the vehicle was for the benefit of the motor carrier.  (Bailey v. J & B Trucking Services, Inc.,2008 WL 5082978)

Last month we reported on a decision in the Western District of Wisconsin which held that there was no direct action in that state against a cargo insurer on an interstate shipment. This month the court extended the ruling, holding that there is no direct right against the insurer under the Carmack Amendment.  (Land O’ Lakes v. Joslin Trucking, Inc., )2008 WL 5205910

The District of Arizona acknowledged that claims against a national carrier are preempted. However, in this case the shipper sued the parent company of the national carrier. While the opinion sheds doubt on the ability to succeed against the parent company the court held that the state causes of action were not preempted.  (Taylor v. Allied Van Lines, 2008 WL 5225809) For more preemption cases, see  Bishop v. Allied Van Airlines, 2008 WL 5111302 and Montanile v. Botticelli,, 2008 WL 510775)

Defaults judgments can be a horror for insurers and truckers alike.  In the Court of Appeals in South Carolina the court refused to vacate a default judgment against a driver. Plaintiff was in discussions with the insurer of the trucking company while at the same time, unbeknownst to the insurer, he was pursuing a suit directly against the driver.  The plaintiff did not tell the insurer of its actions until after the default was entered and was ultimately successful in getting a large judgment which it could then pursue under the MCS-90 endorsement.  (McClurg v. Deaton, 2008 WL 4963995)

The Southern District of New York considered the package limitation under an ocean bill of lading for a container which was damaged while stuck in New Orleans during Katrina,. The court allowed the steamship line to limit its liability to $500 per package and also upheld the forum selection clause, preventing any suit in another country.  (iA.P. Moller-Maersk v. Ocean Express Miami, 2008 WL 514831)

The District Court in New Jersey considered the effect of contingencies in an inland marine policy.  Although this case involved an equipment policy, the requirements of other parties maintaining insurance for the property is equally applicable to contingent cargo policies utilized by many inland marine transportation departments. The court upheld the provision, noting that the exclusion of the form on the declaration page was sufficient to put the insured on notice of the obligations to be met before his coverage was triggered.  (Interstate Aerials, LLC v. Great American Insurance Co., 2008 WL 510)

One insurer provided us with information on a decision issued by the Court of Appeals of Georgia involving the care, custody and control exclusion.  In this case a crane operator dropped a piece of equipment which it was moving. The court held that the care, custody and control exclusion of the general liability policy did not apply as there was no strict bailment of the equipment, which was being moved on the customer�s property.  This type of decision has potential impact for inland marine and auto liability coverage, as more courts lean toward minimizing the effect of the care, custody and control exclusions present in many liability policies. Thanks to Mike Dempsey at Northland for letting us know about this case. Keep them coming.  (Owners Insurance Company v. Smith Mechanical Contractors, Inc.)

A trucker sued Anheuser-Busch after his vehicle rolled over in transit, alleging that the shipment was improperly loaded.  The driver was the principle expert witness on the improper loading allegations.  The court held that while he could not opine on the cause of the rollover, he could in fact testify as an expert on whether the shipment was properly loaded.  This decision was in the Court of Appeals in Texas.  (Dewbre v. Anheuser-Busch,, 2008 WL 5093385)

A Texas District Court also reaffirmed that a freight forwarder is not entitled to attorney�s fees from a motor carrier who caused a loss to shipment of cargo.  While the forwarder was entitled to collect for the cargo claim, and prejudgment interest, its remedy was capped at that.  (Advantage Transportation, Inc. Freeways Express, LLC, 2008 WL 506672)

In Auto-Owners Ins Co. v. Redland Ins. Co., the Sixth Circuit affirmed the decision of the District Court of the Western District of Michigan  in favor of Redland which had issued a non-trucking policy to a lessor. The driver had completed delivery late in the evening and understood that he would have a load in the morning after he had the requisite number of hours off-duty. He was driving toward the next day�s loading site looking for a place to sleep when apparently dozed off and crashed into a vehicle that had pulled over to the side of the highway. The Court held that at the time of the loss the driver remained in the business of the lessee-motor carrier.

Happy New Year To One And All.