United States District Court,

S.D. New York.

THE TRAVELERS INDEMNITY COMPANY OF ILLINOIS a/s/o Quality Carton, Inc.,

Plaintiff,

v.

SCHNEIDER SPECIALIZED CARRIERS, INC., et al., Defendants.

Feb. 10, 2005.

MEMORANDUM OPINION AND ORDER

HOLWELL, J.

This action arises out of the interstate shipment of a printing press owned by Quality Carton Inc. (“Quality Carton”) and delivered from California to Quality Carton’s place of business in New York. Quality Carton’s insurer and subrogee, Travelers Indemnity Company of Illinois (“Travelers Indemnity”), brought this action against Schneider Specialized Carriers, Inc. (“Schneider”) and North American Van Lines, Inc. (“NAVL”) (collectively “defendants”), asserting state statutory and common law claims (“state law claims”) of negligence, recklessness, breach of contract, breach of bailment and breach of Uniform Commercial Code (“UCC”) Section 7.

Defendant NAVL moved to dismiss plaintiff’s complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure on the grounds that all of plaintiff’s state law claims were preempted by the Carmack Amendment to the Interstate Commerce Act (“Carmack Amendment”), 49 U.S.C. § 14706, which creates an exclusive federal remedy for claims arising out of the interstate transportation of goods by a common carrier.

With leave of the Court, plaintiff amended its complaint on September 17, 2004 to add federal claims for breach of contract pursuant to the Carmack Amendment against Schneider and NAVL. NAVL has not sought to dismiss the Carmack Amendment claim asserted against it.

Following full briefing of the motion to dismiss, the Court held a conference on December 3, 2004 and notified the parties at that time that the motion to dismiss would be treated as a motion for summary judgment under Rule 56. By unpublished order dated December 9, 2004, the Court instructed the parties to submit any additional materials in support of or opposition to NAVL’s motion. Both parties have submitted additional affidavits and memoranda in support of and in opposition to the converted Rule 56 motion.

For the reasons set forth below, the Court grants the motion for summary judgment in its entirety, thereby dismissing all state law claims asserted against NAVL.

BACKGROUND

The following facts relevant to this motion are derived from the complaint, affidavits and documents submitted by the parties. [FN1] From December 14, 2003 until December 24, 2003, Travelers Indemnity provided damage-in-transit insurance coverage for Quality Carton, located in New York. Prior to December 23, 2003, Quality Carton engaged Schneider to transport a printing press owned by Quality Carton to Quality Carton’s place of business in New York. Schneider then arranged for NAVL to deliver, by truck, the printing press.

FN1. The facts as herein recited are drawn from defendants’ Rule 56.1 Statement of Material Facts (“Defs.’ 56.1 ¶ __”) and attached exhibits; Defendant’s Memorandum of Points and Authorities in Support of Motion to Dismiss (“Def.’s Mem. in Supp. of Mot. to Dismiss at __”) and attached exhibits; Plaintiff’s Memorandum in Opposition to NAVL’s Motion to Dismiss (Pl.’s Mem. in Opp’n to Mot. to Dismiss at __”); Declaration of Thomas B. Coppola (Coppola Decl. ¶ __”) and attached exhibit; Defendant’s Reply to Declaration of Plaintiff and in Further Support of Motion to Dismiss (“Def.’s Reply Mem. at __”) and attached exhibits; Declaration of James Rodgers (Rodgers Decl. ¶ __”) and attached exhibits.

It is undisputed that Schneider and NAVL entered into a Master Transportation Contract, which governed the rates and charges, as well as the apportionment of loss. (Rodgers Decl., Ex. A.) At the time of the shipping, NAVL issued a comprehensive bill of lading and freight bill on December 17, 2003, which named Quality Carton as the consignee, Mark Container as the shipper and NAVL as the carrier. (Def.’s 56.1 ¶ 5; Def.’s Mem. in Supp. of Mot. to Dismiss, Ex. B; Def.’s Reply Mem., Ex. 2.) Schneider also issued a straight bill of lading on December 17, 2003, naming Quality Carton as the consignee and itself as the carrier. (Rodgers Decl., Ex. F.) NAVL holds a certificate of authority allowing it to operate as either a common carrier or contract carrier. (Def.’s Reply Mem., Ex. 1.)

Travelers Indemnity alleges that on December 23, 2003, the tractor-trailer engaged and operated by NAVL struck a bridge pier and guardrail in Virginia, thereby damaging the printing press. Pursuant to the terms of the insurance policy issued to Quality Carton, Travelers Indemnity paid $153,329.35 to Quality Carton and was assigned Quality Carton’s right to recover against defendants by written agreement. On January 29, 2004, NAVL inspected the damages from the incident and completed a report. (Rodgers Decl., Ex. B.) Travelers Indemnity wrote letters to both Schneider and NAVL notifying them of the loss. (Id., Exs. D and E.) To date, neither party has issued any payment to Travelers Indemnity.

DISCUSSION

I. Conversion of NAVL’s Motion to Dismiss into a Motion for Summary Judgment

When matters outside the pleadings are presented in response to a 12(b)(6) motion, a district court must either “exclude the additional material and decide the motion on the complaint alone” or “convert the motion to one for summary judgment under [Rule 56] and afford all parties the opportunity to present supporting material.” Friedl v. City of New York, 210 F.3d 79, 83 (2d Cir.2000) (internal citations and quotations omitted); see Fed.R.Civ.P. 12(b). [FN2] Generally, the Court has discretion in converting the motion to dismiss into a motion for summary judgment, and “should give the parties explicit notice of its intention to convert such a motion.” Garcha v. City of Beacon, No. 04 Civ. 5981(CMM), 2005 WL 39749, at *3 (S.D.N.Y. Jan. 3, 2005) (citing In re G. & A. Books, Inc., 770 F.2d 288, 294-95 (2d Cir.1985)). There is no question that the parties were aware that NAVL’s motion to dismiss would be treated as a motion for summary judgment. See Gurary v. Winehouse, 190 F.3d 37, 43 (2d Cir.1997) (the essential inquiry is whether a party “recognized the possibility that the motion might be converted into one for summary judgment or was not taken by surprise and deprived of reasonable opportunity to meet facts outside the pleadings.”)

FN2. Rule 12(b) provides: “If on a motion asserting the defense numbered (6) to dismiss for a failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.”

In converting defendant’s 12(b)(6) motion into a Rule 56 motion, the Court is required to draw all reasonable inferences and resolve all genuine disputes in favor of plaintiff. Goldman v. Belden, 754 F.2d 1059, 1071 (2d Cir.1985). Moreover, the Court must assess the evidence in “the light most favorable to the non-moving party.” Am. Cas. Co. v. Nordic Leasing, Inc., 42 F.3d 725, 728 (2d Cir.1994); see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” R.B. Ventures, Ltd. v. Shane, 112 F.3d 54, 57 (2d Cir.1997) (quoting Fed.R.Civ.P. 56(c)).

II. Travelers Indemnity’s Remedies Against NAVL

The central issue before this Court is whether the Carmack Amendment preempts Traveler Indemnity’s state law claims asserted against NAVL. NAVL argues that as a contract carrier, all of its activities and operations regarding the shipment of the printing press are governed by the Carmack Amendment, which preempts state law remedies. (Def.’s Mem. in Supp. of Mot. to Dismiss at 7.) In response, Travelers Indemnity generally asserts that discovery is necessary prior to dismissing any claims asserted against NAVL. (Pl.’s Mem. in Opp’n to Mot. to Dismiss at 5.)

A. Preemption

The Carmack Amendment, enacted in 1906, “governs the liability of common carriers for loss or damage to goods shipped or transported in interstate commerce.” Calka v. North American Van Lines, Inc., No. 00 Civ. 2733(AGS), 2001 WL 434871, at *2 (S.D.N.Y. Apr. 27, 2001) (internal citations and quotations omitted). Specifically, the Carmack Amendment “subjects a motor carrier transporting cargo in interstate commerce to absolute liability for loss to the cargo unless the carrier limits its liability by meeting certain requirements.” Wayne v. DHL Worldwide Express, 294 F.3d 1179, 1185 (9th Cir.2002) (citing 49 U.S.C. § 14706(c)(1)(a)). The purpose of the Carmack Amendment is to “provide interstate carriers with reasonable certainty and uniformity in assessing their risks and predicting their potential liability.” Project Hope v. M/V IBN SINA, 250 F.3d 67, 73 n. 6 (2d Cir.2001) (citing Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 381 (5th Cir.1998)). As such, the Carmack Amendment establishes a “single uniform regime for recovery by shippers directly from [the] interstate common carrier in whose care their [items] are damaged … and by preempt[ing][the] shipper’s state and common law claims against a carrier for loss or damage to goods during shipment.” Id. (internal citations and quotations omitted).

It is thus well settled that Congress clearly intended the Carmack Amendment to preempt all state law claims against interstate carriers for loss or damage to goods during shipping. See Adams Express Co. v. Croninger, 226 U.S. 491, 505-07 (1913) (“Almost every detail of the subject is covered so completely that there can be no rational doubt that Congress intended to take possession of the subject, and supersede all state regulation with reference to it .”); Hoskins v. Bekins Van Lines, 343 F.3d 769, 778 (5th Cir.2003) (“Congress intended for the Carmack Amendment to provide the exclusive cause of action for loss or damages to goods arising from the interstate transportation of those goods by a common carrier.” ); Sorrentino v. Allied Van Lines, Inc., No. 01 Civ. 1449(AHN), 2002 WL 32107610, at *2 (D.Conn. March 22, 2002); Orlick v. J.D. Carton & Son, Inc., 144 F.Supp.2d 337, 345 (D.N .J.2001). Based on this interpretation, several courts have construed the Carmack Amendment to preempt completely state law causes of action. Hoskins, 343 F.3d at 778 (applying “complete preemption doctrine” and concluding that Carmack Amendment preempted claims of negligence, breach of contract and Texas Deceptive Trade Practices Act); Smith v. United Parcel Service, 296 F.3d 1244, 1246 (11th Cir.2002) (claims of fraud, negligence, wantonness or outrage preempted by Carmack Amendment); Ash v. Artpack Int’l, Inc., No. 96 Civ. 8440(MBM), 1998 WL 132932, at *4 (S.D.N.Y. March 23, 1998) (“The Carmack Amendment is an example of a statute that completely preempts the field it occupies.”).

B. Contract Carriers and the Carmack Amendment

Defendant NAVL thus seeks to avail itself of provisions of the Carmack Amendment, thereby dismissing plaintiff’s state law claims arising out of the allegedly negligent shipment of the printing press. While plaintiff begrudgingly acknowledges the preemptive scope of the Carmack Amendment, plaintiff asserts that NAVL has not established that it is a contract carrier, and that in any event, the Carmack Amendment only applies to common carriers. (Rodgers Decl. ¶ 8.)

1. NAVL’s Status as Contract Carrier

Travelers Indemnity first argues that because Schneider allegedly acted as a carrier alongside NAVL, the status of Schneider and the status of NAVL are both “in question.” (Id. ¶ 7.) In support, Travelers Indemnity asserts that Schneider listed itself as a “carrier” on the straight bill of lading and set forth agreed rates for transportation and liability. (Id., Exs. F and G.) Ultimately, the import of plaintiff’s contention is that if NAVL can be considered a broker by virtue of Schneider’s participation as a carrier, the Carmack Amendment will not apply to preempt state and common claims against NAVL. Chubb Group of Ins. Companies v. H.A. Transp. Systems, Inc., 243 F.Supp.2d 1064, 1068-69 (C.D.Cal.2002) (stating that “the Carmack Amendment does not apply to brokers.”).

49 U.S.C. § 13102 defines the term “carrier” as including “motor carrier,” which means “a person providing motor vehicle transportation for compensation.” 49 U.S.C. § 13102. A “broker” is defined as “a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent 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.” Id. The complaint unequivocally alleges that “Schneider arranged for NAVL to deliver, by truck, the printing press to Quality Carton.” (Pl.’s Compl. ¶ 11.) [FN3] On its face, the complaint clearly alleges that NAVL acted as a carrier.

FN3. Plaintiff’s Amended Complaint contains the same allegation. (Pl .’s Am. Compl. ¶ 11.)

Additionally, plaintiff has failed to present any evidence suggesting that NAVL operated as a broker or otherwise. Instead, Travelers Indemnity simply argues that certain documents render Schneider’ s involvement in the transaction ambiguous. Despite the fact that Schneider listed itself as a carrier in the straight bill of lading, “what a party labels itself and what a party is registered as [are] not controlling.” Custom Cartage, No 98 Civ. 5182, 1999 WL 965686, at *12; Schramm v. Foster, 341 F.Supp.2d 536, 549 (fact that entity was listed as “carrier” on bill of lading did not establish that it was a carrier). Indeed, “[w]hether a company is a broker or a carrier/freight forwarder is not determined by how it labels itself, but by how it holds itself out to the world and its relationship to the shipper.” Lumbermans Mut. Cas. Co. v. GES Exposition Servcs., Inc., 303 F.Supp.2d 920, 921 (N.D.Ill.2003) (internal citations and quotations omitted).

In any event, that Schneider may have acted as a carrier “alongside NAVL” does not undermine a finding that NAVL acted as a carrier for the purposes of the Carmack Amendment. The allegations in plaintiff’s complaint, the bill of lading issued by NAVL and the Master Transportation Contract setting the rates and charges between NAVL and Schneider all support the conclusion that NAVL acted as a contract carrier for this shipment. (Def.’s 56.1 ¶ 5; Def.’s Mem. in Supp. of Mot. to Dismiss, Ex. B; Def.’s Reply Mem., Ex. 2; Rodgers Decl., Ex. A.) Plaintiff has failed to present any evidence refuting NAVL’s showing or raising an issue of material fact as to NAVL’s status as a contract carrier. Accordingly, the Court finds that NAVL acted as a contract carrier for the purposes of this motion.

2. The Carmack Amendment’s Applicability to NAVL

Plaintiff contends that, even assuming that NAVL is a contract carrier, the Carmack Amendment does not apply to contract carriers. (Rodgers Decl. ¶ 8.) On its face, the statutory language of the Carmack Amendment is “not limited to common carriers and does not exclude contract carriers from its purview. Custom Cartage, Inc. v.. Motorola, 1999 WL 965686, at *12 (N.D.Ill. Oct. 15, 1999). Significantly, Section 11707 of the Carmack Amendment was originally “entitled ‘Liability of Common Carriers …’ and specifically discussed the liabilities of common carriers.” William Wrigley, Jr. Co. v. Stanley Transportation, Inc., No. 98 Civ. 2988, 1999 WL 608710, at *1 (Aug. 4, 1999). In 1996, Congress “substantially amended the statute, deleting the word ‘common’ as a limitation on ‘carrier.” ‘ Custom Cartage, Inc., 1999 WL 965686, at *12. As the Supreme Court has instructed, “[f]ew principles of statutory construction are more compelling than the proposition that Congress does not intend sub silentio to enact statutory language that it has earlier discarded in favor of other language.” Benjamin v. Fraser, 343 F.3d 35, 46- 47 (2d Cir.2003) (quoting INS v. Carodza-Fonseca, 480 U.S. 421, 442-43 (1987)) (stating that where Congress “includes limiting language in an earlier version of a bill but deletes it prior to enactment, it may be presumed that the limitation was not intended.”) Congress in this instance expressly deleted the limiting term “common” from the previously enacted version of the Carmack Amendment and effectively broadened the scope to apply to all carriers. See Custom Cartage, 1999 WL 965686, at *12. Plaintiff’s request that this Court reinsert “common” as a limiting term would render meaningless Congress’ deliberate act of deleting that very word from the Carmack Amendment. Accordingly, the Court concludes that Carmack Amendment applies with equal force to contract carriers and common carriers.

Plaintiff alternatively suggests that NAVL waived any protection afforded by the Carmack Amendment through certain provisions contained in the Master Transportation Contract. (Rodgers Decl. ¶ 6.) To escape the reaches of the Carmack Amendment, the parties must “in writing, expressly waive any or all rights and remedies under this part for the transportation covered by the contract.” 49 U.S.C. § 14101(b)(1). The only evidence plaintiff marshals in favor of its argument are two provisions contained in the Master Transportation Contract between Schneider and NAVL setting forth the rates and procedures for handling cargo liability claims. (Rodgers Decl. ¶ 6; id., Ex. A.) Neither of these provisions mentions the Carmack Amendment or indicates any intention to waive the rights and remedies secured under the Carmack Amendment. Absent an express agreement waiving the protections of the Carmack Amendment, the Court finds that NAVL has not opted out of the Carmack Amendment’s scope. Custom Cartage, 1999 WL 965686, at *12 (finding, as matter of law, that Carmack Amendment applied to contract carrier which did not waive its rights or remedies thereunder). [FN4]

FN4. Plaintiff also suggests that the absence of the applicable tariff governing the shipment of the goods precludes summary judgment on the preemption issue. (Rodgers Decl. ¶ 4.) Under the Carmack Amendment, a carrier is liable for the “the actual loss or injury to the property,” 49 U.S.C. § 14706(a)(1), unless it limits its liability by (1) maintaining a tariff in compliance with the requirements of the Interstate Commerce Commission; (2) giving the shipper a reasonable opportunity to choose between two or more levels of liability; (3) obtaining the shipper’s agreement as to his choice of carrier liability limit; and (4) issuing a bill of lading prior to moving the shipment that reflects any such agreement. Rohner Gehrig Co., Inc. v. Tri-State Motor Transit, 950 F.2d 1079, 1081 (5th Cir.1992) (en banc); Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir.1987), cert. denied, 485 U.S. 913. While the production of the tariff may be relevant to whether NAVL has successfully limited its liability under the Carmack Amendment, it is irrelevant to the preliminary issue of whether the transaction fits within the purview of the Carmack Amendment.

C. Consignees and the Carmack Amendment

Travelers Indemnity contends that as subrogee to Quality Carton, the consignee, it is not bound by the Carmack Amendment. According to Travelers Indemnity, the Carmack Amendment only applies to shippers. (Rodgers Decl. ¶ 10.) Under the Carmack Amendment, a carrier must issue a bill of lading for property it receives for transportation. 49 U.S.C. § 14706(a)(1). The bill of lading subjects the carrier to liability to “the person bound by the bill of lading” for any losses arising out of the shipment of the goods. Id.; Calka, 2001 WL 434871, at *2. Indeed, the Supreme Court has specifically stated that “[b]y virtue of the Carmack Amendment, 34 Stat. 584, amended, 38 Stat. 1196, 49 U.S.C.A. s 20(11), [a] bill of lading determines the rights of the consignee.” Mexican Light & Power Co., Ltd. v. Texas Mexican Railway Co., 331 U.S. 731, 733 (1947); Air Products and Chemicals, Inc. v. Illinois Central Gulf R. Co., 721 F.2d 483, 486-87 (5th Cir.1983) (purpose of the Carmack Amendment was to “provide a uniform rule that the carrier issuing the bill of lading would be responsible to the consignee for all loss, damage, or delay arising out of the contract to transport the goods so shipped.” (emphasis added); S & H Hardware & Supply Co. v. Yellow Transp., Inc., No. 02 Civ. 9055, 2004 WL 1551730, at *3 n. 6 (E.D.Pa. July 8, 2004) (remarking that a consignee has “standing to bring an action under the Carmack Amendment to recover the value of goods lost”). Accordingly, the Court concludes that Quality Carton, as consignee, and Travelers Indemnity, as subrogee to Quality Carton, are bound by the Carmack Amendment.

III. Conclusion

The Court grants defendant NAVL’s motion for summary judgment [7] in its entirety, thereby dismissing plaintiff’s claims sounding in negligence, breach of contract, breach of bailment, and breach of UCC Section 7 asserted against NAVL.

SO ORDERED