Court of Appeal, Second District, Division 2, California.
TOKIO MARINE & FIRE INSURANCE CO., LTD., Plaintiff and Appellant,
v.
MEGATRUX, INC., Defendant and Respondent.
No. B185807.
(Los Angeles County Super. Ct. No. BC315705).
Aug. 9, 2006.
DOI TODD, J.
Under the Interstate Commerce Act, a motor carrier is strictly liable to a shipper whose goods are damaged or lost. On the other hand, a broker of transportation services is not strictly liable for such damage and is responsible for its negligence under common law. Respondent Megatrux, Inc. (Megatrux) arranged for the transportation of a shipment of computer parts for appellant Tokio Marine & Fire Insurance Co., Ltd.’s insured. When the shipment was stolen, Tokio Marine paid the shipper on its insurance claim, acquired subrogation rights and sued Megatrux (and others) as “motor common carriers, freight forwarders and bailees” for nondelivery of the cargo. Megatrux sought summary judgment, and the trial court found as a matter of law that it was a broker rather than a motor carrier or freight forwarder of the shipment. The court further found that no negligence was established and awarded summary judgment. Tokio Marine appeals contending that there remains a triable issue of material fact as to whether Megatrux acted as a motor carrier, freight forwarder or broker in this transaction.
We affirm.
BACKGROUND
Tokio Marine insured TEAC Corporation (TEAC) against the risk of damage to a trailer-load of computer parts that TEAC was shipping from its premises in Montebello, California to Austin, Texas. TEAC hired Megatrux, a licensed broker and freight forwarder, to arrange for the shipment. Megatrux contracted with P & P Transportation, LLC (P & P) for the transport. Because no trucks were available on the day before Christmas, when TEAC wanted to ship, TEAC requested that the shipment be picked up and temporarily stored in Megatrux’s warehouse in the City of Industry. Megatrux hired Rhino Transportation (Rhino) for the transport to the warehouse where Megatrux employees unloaded the cargo, stored it and reloaded it on December 26, when it was picked up by P & P. Intending to begin the journey to Texas the next day, the P & P driver parked the load overnight on the street outside his residence in Los Angeles. The cargo was stolen from that location that night. Tokio Marine paid TEAC on its claim and acquired subrogation rights. Tokio Marine filed a complaint against P & P, Megatrux and Megatrux Transportation, Inc. as “motor common carriers, freight forwarders and bailees” for nondelivery of cargo, negligence/willful misconduct, breach of contract, breach of bailment and breach of warranty, seeking damages in excess of $356,095.49.
Defendant P & P settled with Tokio Marine.
Both Megatrux Transportation, Inc. and Megatrux were granted summary judgment. The trial court held that Megatrux Transportation, Inc., a licensed motor carrier, was a separate corporate entity that played no part in the shipment of the subject cargo. With respect to Megatrux, the court found that it acted solely as a broker as a matter of law and was not negligent.
Tokio Marine did not appeal from the judgment in favor of Megatrux Transportation, Inc.
DISCUSSION
I. Contentions on Appeal and Standard of Review
Tokio Marine contends on appeal that summary judgment was erroneously granted in favor of Megatrux because there remained triable issues of material fact regarding Megatrux’s status as a motor carrier or freight forwarder rather than a broker. These factual issues were that: (1) Megatrux generally held itself out to be a carrier and freight forwarder; and (2) Megatrux acted as a carrier and freight forwarder in this case by unloading, storing and reloading the cargo and by allowing itself to be identified as the carrier on the bill of lading.
“We review the trial court’s decision de novo….” (Johnson v. City of Loma Linda (2000) 24 Cal.4th 61, 65.) In exercising de novo review, we “must ‘consider all of the evidence’ and ‘all’ of the ‘inferences’ reasonably drawn therefrom ( [Code Civ. Proc.,] § 437c, subd. (c)), and must view such evidence [citations] and such inferences [citations], in the light most favorable to the opposing party.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 843 (Aguilar ).)
“Summary judgment is properly granted when the papers show there is no triable issue of material fact, and the moving party is entitled to judgment as a matter of law. (Code Civ. Proc., § 437c, subd. (o)(2).)” (Hill Brothers Chemical Co. v. Superior Court (2004) 123 Cal.App.4th 1001, 1005.) “A defendant seeking summary judgment bears the initial burden of proving the ‘cause of action has no merit’ by showing that one or more elements of plaintiff’s cause of action cannot be established or there is a complete defense. [Citations.]” (Spitzer v. Good Guys, Inc. (2000) 80 Cal.App.4th 1376, 1385.) “ ‘Once the defendant … has met [his burden of showing that a cause of action has no merit], the burden shifts to the plaintiff … to show that a triable issue of one or more material facts exists as to that cause of action or a defense thereto….’ “ (Aguilar, supra, 25 Cal.4th at p. 849 .)
II. Liability Under the Carmack Amendment
Claims for the nondelivery of cargo in interstate commerce are governed by the Carmack Amendment (the Amendment) to the Revised Interstate Commerce Act (ICA). (49 U.S.C. § 14706.) Under the Amendment, motor carriers and freight forwarders are strictly liable to a shipper of damaged or lost cargo regardless of where in the chain of carriage the damage occurred. (§ 14706, subd (a)(1)(2); PNH Corp. v. Hullquist Corp. (1st Cir.1988) 843 F.2d 586, 588 (PNH ).) A “motor carrier” is “a person providing commercial motor vehicle transportation for compensation.” (§ 13102(14).) “The statue absolutely preempts all state common law claims against such carriers and freight forwarders.” (Chubb Group of Ins. Companies v. H.A. Transp. Sys. (C.D.Cal.2002) 243 F .Supp.2d 1064, 1068 (Chubb ); see also Power Standards Lab, Inc. v. Federal Express Corp. (2005) 127 Cal.App.4th 1039, 1048.) The Amendment applies even if the damaged or lost cargo did not cross a state line so long as the shipper’s initial intent was to ship interstate. (Bilyou v. Dutchess Beer Distributors, Inc. (2d Cir .2002) 300 F.3d 217, 223 [applicability of Amendment determined by “ ‘the essential character of the commerce, reflected by the intention formed prior to shipment ….“ ‘]; see § 13501(1)(A).)
All further statutory references are to title 49 of the United States Code unless otherwise specified.
A shipper proves its prima facie case by showing: Cargo delivered to carrier in good condition; cargo arrived at destination in damaged condition; amount of actual losses. Negligence is then presumed and can be rebutted only by proving that the damage was caused by an act of God, a public enemy, an act of the shipper, a public authority or an inherent vice or the nature of the goods. (Vacco Industries v. Navajo Freight Lines, Inc. (1976) 63 Cal.App.3d 262, 270; Bauer v. Jackson (1971) 15 Cal.App.3d 358, 365.)
A “broker” is defined as “a person, other than a motor carrier … that … sells, offers 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.” (§ 13102(2).) Brokers are not covered by the Amendment and remain subject to common law claims. (Chubb, supra, 243 F.Supp.2d at p. 1069.)
The distinction between a motor carrier who provides motor vehicle transportation and a broker who arranges transportation by a motor carrier can be blurred in practice because a motor carrier may perform ancillary tasks that are principally identified with a broker, and vice versa.
Recognizing that Megatrux is licensed as a broker, it is Tokio Marine’s position that Megatrux acted as a motor carrier by providing “transportation” as defined by section 13102(23)(A) and (B). Those sections provide as follows: “The term ‘transportation’ includes-[¶ ] (A) a motor vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both, regardless of ownership or an agreement concerning use; and [¶ ] (B) 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.” Tokio Marine argues that by unloading, storing and reloading the cargo as it did here, Megatrux acted as a motor carrier providing transportation services rather than as a broker of transportation services.
The court rejected a similar argument in PNH, supra, 843 F.2d 586, 591. Recognizing that services such as those set forth in section 13102(A) are commonly rendered by motor carriers in connection with the transportation of goods, the court discussed the importance of a broad definition of transportation when considering the extent of a motor carrier’s responsibility and liability to its shipper and cargo. (PNH, supra, at pp. 590-591). But the court also recognized that the container interchange facility at issue in PNH was not a motor carrier, and it did not become a carrier simply because it provided transportation services within the parameters of section 13102(23)(B): “The definitions of ‘motor common carrier’ and ‘motor contract carrier’ each specifically include a requirement of providing ‘motor vehicle transportation.’ 49 U.S.C. § § 10102(14) & (15). While [such] activities would constitute ‘transportation’ under the Interstate Commerce Act for a person otherwise defined as a motor carrier, they do not themselves seem to constitute ‘motor vehicle transportation.’…. Thus, although [such] activities would be subject to the Act were [the facility] a ‘motor carrier,’ [it] cannot be a ‘motor carrier’ because it does not engage in ‘motor vehicle transportation.” ’ (PNH, supra, at p. 591.)
The contention similarly fails here because the Megatrux’s activities of which Tokio Marine complains were limited to providing loading and storage services and facilities. Tokio Marine never proffered evidence that Megatrux provided motor vehicle transportation, which is the only basis on which it could be characterized as a motor carrier.
Clearly, there is no rigid test to determine carrier status. (See 13 C.J.S. Carriers § 2 (2006).) It is necessary to examine the expectations of the parties and the circumstances of the specific transaction in each case for indicia of carriage and brokerage services. (See Schramm v. Foster (D.Md.2004) 341 F.Supp.2d 536, 548549 (Schramm ).)
III. No Triable Issues of Material Fact Raised
In support of its motion for summary judgment Megatrux offered the following evidence: it was licensed as a broker; TEAC had hired it as a broker on over 1,000 prior occasions; the transaction in question followed the established procedures between TEAC and Megatrux; Megatrux hired Rhino, a licensed carrier, to transport the cargo from TEAC to the Megatrux warehouse for temporary storage; and it brokered the remainder of the carriage to P & P, also a licensed carrier.
The burden then shifted to Tokio Marine to raise a triable issue of material fact as to Megatrux’s status as a broker. (Aguilar, supra, 25 Cal.4th at p. 849.) We address each item of Tokio Marine’s proffered evidence in turn and conclude that no triable issue was raised.
A.Evidence of Holding Itself Out as a Carrier
Tokio Marine contends that Megatrux’s status as a carrier can be established based solely on the manner in which it portrayed itself in its public advertising. Tokio Marine offered in evidence a copy of Megatrux’s Web site and testimony from various individuals commenting on their understanding of Megatrux’s public image.
Tokio Marine relies on Ensco, Inc. v. Weicker Transfer (10th Cir.1982) 689 F.2d 921, 925 (Ensco ) and its progeny to argue that status as a common carrier is determined not by reference to its actual authority, but rather by reference to what it holds itself out to be. But the statutory underpinnings of common carrier liability have undergone material change since Ensco was decided more than 20 years ago. At that time, the ICA expressly defined a common carrier as one who “holds itself out to the general public to engage in the transportation by motor vehicle….” (Id. at p. 925, italics added.) We note that the current definitions of “carrier” and “motor [vehicle] carrier” do not include the “holding out” language. (§ 13102(3), (14).) We conclude that Megatrux cannot be deemed a “carrier” based solely on the manner in which it portrayed itself to the public without connecting its advertising to the representations and services that Megatrux actually provided to TEAC in this case. (See Syracuse Plastics, Inc. v. Guy M. Turner, Inc. (N.D.N.Y.1997) 959 F.Supp. 147, 150 [regardless of services generally offered, carrier status determined by the contract and services actually provided to the shipper].) No such evidence was presented by Tokio Marine.
At issue in Ensco was the difference between a common carrier and a contract carrier. (Ensco, supra, 689 F.2d at p. 928.)
Nor has Tokio Marine provided any persuasive case authority. The cases on which it relies are inapposite. The portion of Mass v. Braswell Motor Freight Lines, Inc. (9th Cir.1978) 577 F.2d 665, 667 cited by Tokio Marine in support of its argument that carrier status is determined by the services offered by an entity rather than its corporate character or declared purpose actually states: “ ‘The law determines common carrier status by what is done rather than by corporate character or declared purposes….’ “ Florida Power & Light Co. v. F.E.R.C. (5th Cir.1981) 660 F.2d 668, 674 considered an issue materially different from that presented here, namely, the determination of common carrier status for the purpose of filing tariffs. Tokio Marine and Fire Ins. v. Amato Motors (N.D.Ill.1991) 770 F.Supp. 426, 429 (Amato Motors I ), reversed on other grounds, Tokio Marine and Fire Ins. v. Amato Motors (7th Cir.1993) 996 F.2d 874 (Amato Motors II ) was decided on the pleadings on a motion to dismiss and was later overturned with the appellate court specifically reserving for later determination the factual issue of carrier status. (Amato Motors II, supra, at p. 876, fn. 4 [“Under the posture of this case, we express no opinion as to whether Raven and API are in fact common carriers”].) And while Amato Motors I recites the rule that carrier status is dependent upon public advertising, the analysis of the court focused on the complaint’s allegations with respect to the specific shipment and whether the advertising may have misled a particular shipper. (Amato Motors I, supra, at p. 429 [“holding out” standard is to protect shippers who are misled by advertising].) We reject the argument that Tokio Marine can be found to have acted as a carrier based solely on its public advertising.
We note that Tokio Marine provided no evidence whatsoever from TEAC. Specifically, it proffered nothing to evidence TEAC’s reliance on Megatrux’s advertising. The complete lack of evidence of TEAC’s reliance on Megatrux’s advertising renders Megatrux advertising irrelevant here and fails to raise a triable issue of material fact.
Tokio Marine attempted at the hearing on the motion to introduce deposition testimony of Megatrux’s most knowledgeable person; a request the trial court properly denied.
During oral argument counsel for Megatrux argued that TEAC’s listing of Megatrux as the carrier on its bills or lading (discussed in section B post ) evidenced TEAC’s reliance on the proffered advertising. But such an inference would require pure speculation without evidence from TEAC that they even saw the advertising.
B. Bills of Lading
Tokio Marine contends it raised a triable issue of material fact as to the status of Megatrux by evidence that Megatrux was identified as the carrier on over 1,000 bills of lading prepared by TEAC, including the bill of lading for the transaction at issue here. But the evidence was undisputed that in the course of dealing between TEAC and Megatrux, TEAC hired Megatrux to broker a shipment by faxing a bill of lading. Because TEAC did not know the name of the carrier at that point, it listed Megatrux as the carrier on the bill of lading. Megatrux would then hire a carrier whose driver was instructed to identify himself or herself as Megatrux when the cargo was picked up from TEAC as TEAC would not know the identity of the carrier in advance.
Appellant has failed to effectively distinguish two cases on which the trial court relied in rejecting this contention: Chubb, supra, 243 F.Supp.2d 1064 and Schramm, supra, 341 F.Supp.2d 536.
The factual circumstances in Chubb are similar to those here. Bills of lading identifying a party as the “carrier” and a driver identifying himself as working for that party were offered as evidence of the party’s status as a carrier. But the evidence also established that the party had not created the bill of lading and the driver was not an employee of the party. As such no link was established to connect the creation of the bill of lading or the driver’s representation to the party, the court found insufficient facts to show a genuine issue of fact as to the status of the party as a carrier. (Chubb, supra, 243 F.Supp.2d at p. 1070.) Schaumm cited Chubb in coming to the same conclusion: that designation of an entity as a carrier on a bill of lading prepared by a third party was insufficient to establish that entity’s carrier status. (Schramm, supra, 341 F.Supp.2d at p. 549).
Appellant argues that Megatrux’s acquiescence in accepting the large number of bills of lading with its designation as carrier was a critical difference from the facts in Chubb involving a single bill of lading. But we do not find this distinction raises a triable issue in the context of this case. Evidence was offered that TEAC’s system of sending bills of lading when ordering carrier services through Megatrux was a long-standing method of its doing business with Megatrux. There was no evidence that TEAC actually believed that Megatrux vehicles were used in the transportation of its goods, or that by listing Megatrux as the carrier it was relying on Megatrux to be strictly liable for any loss to its goods, or that it understood that Megatrux was acting as anything other than its broker.
Another distinction appellant urges is that the parties in Chubb ultimately agreed that the defendant was a broker. Nevertheless, the plaintiff there sought to establish that the defendant had held itself out as a common carrier in the transaction at issue, just as appellant seeks to do here. (Chubb, supra, 243 F.Supp.2d at p. 1069.) As such, we do not find this distinction to support the existence of a triable issue.
C. Loading, Unloading and Storage of Cargo Under Megatrux Work Orders
Tokio Marine also contends that the Megatrux work order to pick up and store the shipment over Christmas for future delivery raises a triable issue of material fact as to its status as a carrier. But here again we note that Megatrux did not do any of the actual transportation. Rather, it hired Rhino to transport the cargo to the warehouse and P & P to provide the remainder of the carriage. As such, this evidence simply did not establish that Megatrux acted as a carrier rather than a broker here.
D. Liability as a Freight Forwarder
Tokio Marine contends that it raised triable issues of material fact as to Megatrux’s status as a freight forwarder. We disagree.
A freight forwarder is one who holds “itself out … to provide transportation … for compensation and in the ordinary course of its business-[¶ ] (A) assembles and consolidates … shipments and performs or provides for break-bulk and distribution operations of the shipments; [¶ ] (B) assumes responsibility for the transportation …; and [¶ ] (C) uses … a carrier subject to jurisdiction under this subtitle.” (§ 13102(8).)
There was no evidence presented that Megatrux performed consolidation or break-bulk services in this case because the shipment at issue was a full trailer-load. But Tokio Marine contends that freight forwarder status is determined by the services proffered rather than by the services actually performed. While this argument finds support in one district court opinion, Phoenix Assur. Co. v. K-Mart Corp. (D.N.J.1997) 977 F.Supp. 319, 325, it appears better reasoned cases hold to the contrary. (See Chemsource, Inc. v. Hub Group, Inc. (7th Cir.1997) 106 F.3d 1358, 1361; Japan Line, Ltd. v. United States (N.D.Cal.1975) 393 F.Supp. 131, 136.)
Tokio Marine cites to two additional cases for this proposition but those cases involved issues materially different from this case. (Metropolitan Shipping Agents of Ill., Inc. v. United Sates (D.N.J.1972) 342 F.Supp. 1266, 1269 [freight forwarder must be licensed if it merely offers to the public all services under the statute]; National Motor Freight Traffic Ass’n v. United States of America (D.C.1962) 205 F.Supp. 592, 597 [freight forwarder need not perform all listed services to charge rates under a particular tariff].)
We agree with the court in Independent Machinery, Inc. v. Kuehne & Nagel, Inc. (N.D.Ill.1994) 867 F.Supp. 752, 759, that “… the question [is] whether a company that provides assemblage and consolidation services ‘in the ordinary course of its business’ but has not done so in the transaction at issue-this time doing nothing more than arranging for the transportation of a single item-is still subject to the strictures of the Carmack Amendment as to that item. That certainly would seem to be a strained reading of the statute, for it would impose strict liability on an entity that was not in fact performing freight forwarding services in the case at issue….”
Because it was undisputed that Megatrux did not satisfy each of the requirements of section 13102(8), the trial court correctly determined that Megatrux did not act as a freight forwarder, but acted as a broker as a matter of law.
IV. Negligence
Although not subject to the Carmack Amendment, a broker can be held liable under common law theories. (Chubb, supra, 243 F.Supp.2d at p. 1069.) Tokio Marine alleged causes of action against Megatrux for nondelivery of cargo, negligence/willful misconduct, breach of contract, breach of bailment and breach of warranty. Megatrux addressed liability under the Amendment and negligence in its motion for summary judgment. Tokio Marine opposed only Megatrux’s arguments with respect to the Amendment and did not address common law negligence, nor any other common law theory raised in its complaint. The trial court noted Tokio Marine’s lack of opposition and found that Megatrux was not negligent as a matter of law. Tokio Marine does not address that ruling in this appeal. Having failed to address any issue of common law liability in the trial court or on appeal, we find that Tokio Marine has waived that issue. (Telles Transport, Inc. v. Workers’ Comp. Appeals Bd. (2001) 92 Cal.App.4th 1159, 1167 [“a party loses the right to appeal an issue caused by affirmative conduct or by failing to take the proper steps at trial to avoid or correct the error”].)
DISPOSITION
The judgment is affirmed. Respondent to recover costs on appeal.
We concur: BOREN, P.J., and CHAVEZ, J.
