Hello Everyone!
Summer sure seems to be moving along quickly! Sooner than expected, the kiddos will be headed back to school. Readers driving to work on a regular basis will need to remember to plan accordingly for the school buses slowing your commute down in the weeks ahead. It’s always a reminder of, “Oh darn, I’m on the bus route.” National School Bus Safety Week isn’t until the end of October but it’s a good refresher to think about as the new school year kicks off.
Have a safe and enjoyable rest of your summer!
Chad Krueger and Pam Jones
CAB Webinars
Tuesday, August 13th | 12p EST
Diving into Analysis Central & New Segment Leader Intro | Mike Sevret and J Slaughter
Join us as we introduce our new Insurance Brokerage portfolio Senior Director, J Slaughter. Our main topic will focus on our Analysis Central section of the CAB platform. We’ll dive into our various reports and historical data.
Tuesday, August 20th | 12p EST
MC Advantage Safety Module | Pam Jones and Jay Weinberg
Motor carriers requested an enhanced, motor carrier specific tool with similar CAB data our insurance clients find so valuable. In typical CAB fashion, we responded. Learn more about our motor carrier focused platform and recent enhancements that fleets will benefit from.
To register for the webinars, click the button below to sign into your CAB account. Then click live training at the top of the page to access the webinar registration.
Explore all of our previously recorded live webinar sessions in our webinar library.
Follow us on the CAB LinkedIn page and Facebook.
CAB’s Tips & Tricks
CAB’s platform has a feature, Chameleon Carrier® detector, that identities interrelationships of motor carriers. Understanding this is imperative to ensuring the fleet is being evaluated accurately. FMCSA pays attention to interrelations between fleets. Sometimes we see this type of activity make headlines as FMCSA identifies a fleet as reincarnated. It’s not every day to hear about these but it does come up. Plus, it is not always nefarious.
Listen to Chad Krueger’s webinars when he talks about the Chameleon Carrier® feature and you will hear about a family operation that swap trucks across their multiple fleets. There is a webinar archive from 6/13/2022 on this topic.
Utilizing roadside activity and motor carrier data, CAB’s Chameleon Carrier® Detector allows the user to see relationships across fleets. If multiple fleets both have the same VIN and share another company detail data point (address, phone, etc.), CAB flags this as a Chameleon Carrier®.
Pay attention to these notices for enhanced motor carrier reviews.
THIS MONTH WE REPORT
New Jersey’s $1.5 Million Truck Insurance Hike Goes into Effect July 1 Starting July 1, 2024, New Jersey requires heavy-duty trucks to carry a minimum of $1.5 million in liability insurance. This increase, signed into law by Governor Phil Murphy, applies to commercial vehicles weighing 26,001 pounds or more. Read more…
Hard Market Conditions Expected to Ease in 2025 as Claims Inflation Softens: Swiss Re Swiss Re forecasts that the global non-life insurance sector will see an easing of hard market conditions in 2025 due to moderating general and claims inflation. Profitability is on the rise, with improved underwriting results and higher investment returns. However, insurers must stay vigilant against new inflation shocks from geopolitical conflicts. Read more…
NTSB Raises Concerns Over Marijuana Rescheduling Proposal The National Transportation Safety Board (NTSB) warned that moving marijuana from Schedule I to Schedule III could jeopardize drug testing for truck drivers, pilots, and others in safety-sensitive roles. The NTSB emphasized the need to maintain marijuana testing within DOT and HHS protocols to avoid safety risks. Read more…
Transportation a Top 10 Target of Cyberattackers, Cases Nearly Triple Last Year A study by SOAX found the transportation industry experienced a 181% increase in data breaches in 2023, with 101 cases compared to 2022. This matches the total breaches from 2020-2022 combined. The surge highlights the urgent need for better cybersecurity measures, as cyberattacks in transportation can significantly impact daily life. Read more…
FMCSA Pleads with Congress for More Power to Punish Brokered-Freight Fraudsters The Federal Motor Carrier Safety Administration (FMCSA) reported to Congress that it lacks the authority to effectively combat brokered-freight fraud. The agency cited the 2019 Riojas decision, which limits its ability to assess civil penalties. FMCSA seeks enhanced legislative authority to address unlawful brokerage activities, emphasizing the need for timely enforcement. Read more…
Trailer Orders Plummet, but Truck Pre-Buy Taking Shape U.S. trailer orders fell 19% year-over-year in June, with 6,300 units ordered, though slightly higher than the previous month. The decline reflects weak fundamentals and high dealer inventories. FTR Intelligence reported a 17% drop from May and a 44% rise from June 2023. Read more…
Senators Look to Empower FMCSA, Other Agencies After Landmark Supreme Court Decision Following the Supreme Court’s decision to overturn the Chevron doctrine, Senators introduced the Stop Corporate Capture Act to maintain agency deference and reform the regulatory process. The bill, led by Sen. Elizabeth Warren, aims to enhance transparency, streamline rulemaking, and increase public participation. Read more…
August 2024 CAB Case Summaries
These case summaries are prepared by Robert “Rocky” C. Rogers, a Partner at Moseley Marcinak Law Group LLP.
AUTO
Pun v. Jones, 2024 WL 3504553, C.A. No. 3:24-CV-1059-D (N.D. Tex. July 22, 2024). In this personal injury and property damage lawsuit arising from a MVA involving a CMV, the driver of the CMV moved to dismiss various causes of action alleged against him. First, the court held that the driver lacked standing to seek dismissal of the direct liability claims of negligent hiring, training, supervision, retention, and negligent entrustment alleged by plaintiff against the driver’s alleged employer, the motor carrier. As such, the motion to dismiss was denied for the direct liability claims. Turning to the negligence per se claim, for which the driver did have standing to challenge, the court agreed that plaintiff’s complaint failed to allege the necessary elements supporting such a claim and dismissed that claim as against the driver.
Todd v. Capella Logistics, Inc., 2024 WL 3445006, C.A. No. 1:22-cv-108 (N.D. Ga. July 17, 2024). In this personal injury action arising from a chain-reaction MVA, the defendant motor carrier was successful in obtaining summary judgment on claims for negligent hiring, entrustment, training, and supervision, and a claim for punitive damages. However, the court denied summary judgment on plaintiff’s claim for attorneys’ fees under O.C.G.A. § 13-6-11. This case arose from an automobile accident between the parties. Defendant Bula was driving a tractor-trailer on behalf of Defendant Capella Logistics, a motor carrier, when he rear-ended a tractor driven by former Defendant Rodney Chappelle that then spun across the interstate, collided with the Plaintiffs’ vehicle, and ultimately caused injuries to the Plaintiffs. Capella Logistics moved for summary judgment on the direct liability, punitive damages, and attorneys’ fees claim. On the direct negligence claims, the court found that the Plaintiffs failed to present affirmative evidence showing a genuine issue of material fact on any of their negligent hiring, training, or supervision claims. Rather, the evidence suggests that Bula had no driving history indicating a propensity to drive negligently. Instead, Bula’s record shows that prior to his employment with Capella, he had a 2016 citation for driving beyond an eight-hour time limit, a 2016 citation for lacking a current record of duty status, and a 2017 citation for faulty brake hose and tubing. In the court’s view, “none of these citations suggest that Capella knew or should have known that Bula had a propensity to engage in negligent driving. Nor does [Capella’s owner/president’s] alleged lack of knowledge of the motor carrier safety regulations indicate that Bula was improperly trained, much less that such training or lack thereof could have caused the Plaintiffs’ injuries.” The court pointed to law from a sister court holding that when a driver holds a CDL, like Bula did, “[t]he Federal Motor Carrier Safety Regulations generally do not require trucking companies to train their drivers.” Finally, the court found Plaintiffs presented no evidence supporting their negligent supervision claim, nor does Bula’s driving record substantiate any instances of negligent driving similar to that alleged in the Third Amended Complaint. Therefore, it granted summary judgment in favor of the motor carrier on the negligent hiring, training, supervision, and entrustment claims. In light of the dismissal of the direct negligence claims against the motor carrier, the court found the Plaintiffs could not sustain their burden to show “willful or wanton misconduct” on the part of the motor carrier necessary to sustain a punitive damages award. As such, it granted summary judgment in favor of the motor carrier and dismissed the punitive damages claim against it. Last, with respect to the claim for attorneys’ fees under O.C.G.A. § 13-6-11, the court noted “questions concerning bad faith, stubborn litigiousness, and unnecessary trouble and expense under [the statute] are generally questions for the jury to decide.” It therefore denied summary judgment to the motor carrier on the attorneys’ fees claim.
NFI Interactive Logistics, LLC v. Bruski, 2024 WL 3169160, C.A. No. 23A-CT-1969 (Ind. Ct. App. June 26, 2024). In this interlocutory appeal of a trial court’s denial of a motion to dismiss, the Indiana Court of Appeals affirmed the trial court’s ruling, finding that the plaintiff’s complaint alleged sufficient facts to survive a 12(b)(6) motion. The lawsuit arose out of chain-reaction accident. According to the complaint, around 2:50 a.m., an eastbound driver on I-94 lost control of a Mercury vehicle (“the Mercury”) and struck a concrete barrier wall, causing the Mercury to become disabled on a dark, unlit portion of I-94. Terry, a driver under the motor carrier authority of NFI and that was operating a CMV on behalf of NFI, was also driving eastbound on I-94. Terry struck the Mercury around 2:50 a.m. and came to a controlled stop on the right shoulder of I-94. The complaint further alleged that, “from approximately 2:50 a.m. through approximately 3:00 a.m., [Terry] did not activate the hazard warning signal flashers on, nor place any hazard warning triangles … or flares behind, the [CMV] to alert approaching motorists of the hazards in the travel lane and [the] shoulder of [I-94].” Around 3:00 a.m., Plaintiffs who were the driver and passenger in a separate tractor-trailer, struck the Mercury before striking the concrete barrier wall. In their complaint, Plaintiffs alleged Terry and NFI were liable for “failure to warn.” They alleged Defendants were subject to FMCSRs, incorporated by reference into Indiana’s Code, which were violated when Terry did not activate his flashers or place a warning device. The appellate court rejected Defendants’ argument that Terry had no common law duty to warn since he did not create the original danger—the disabled Mercury. The court found it was plausible from the complaint that Terry “increased the hazard” and therefore had a common law duty to warn. Similarly, the court found an alleged violation of the FMCSRs, as incorporated into Indiana’s Code, could be sufficient to support a negligence per se claim. Since the Plaintiffs were found to be within “the class of persons protected” by the FMCSRs and the regulations were designed to protect against the type of collision involved in this instance, the appellate court found the trial court properly denied Defendants’ motion to dismiss the negligence per se cause of action.
Asbie v. Padilla, 2024 WL 3295600, C.A. No. 24-1637 (E.D. Pa. July 3, 2024). In this negligence action arising from a multi-vehicle motor vehicle accident, the motor carrier and its driver successfully moved to dismiss plaintiff’s negligence claim against them. The complaint alleged plaintiff was driving eastbound in the right lane of Interstate 80 when her car “was pushed into the shoulder lane by another vehicle.” Defendant Padilla, who was driving a tractor-trailer for YP Transport, had pulled over into the highway’s shoulder “directly adjacent to the lane” that Plaintiff was driving in after “she heard noises coming from her truck” and had stopped to “inspect for any issues.” Padilla had failed to activate her hazard lights or put out warning triangles or flares. Plaintiff’s car struck Padilla’s tractor-trailer, and Plaintiff alleged she suffered “severe and permanent injuries.” Plaintiff sued Padilla and YP Transport for negligence and negligent entrustment. With respect to the negligence per se claim, premised upon alleged violation of a state regulation prohibiting a vehicle from being stationary adjacent to a roadway, the court noted the regulation provided for an emergency/safety exception. It pointed to the allegations of Plaintiff’s complaint alleging Padilla only pulled over after hearing noises coming from the tractor as necessarily implicating the emergency exception. As such, it dismissed with prejudice the negligence per se cause of action. With respect to the negligence claim, the court agreed with Defendants that the other driver’s action in forcing Plaintiff’s vehicle off the roadway, ultimately leading to the collision with the tractor-trailer, was a superseding cause of Plaintiff’s alleged injuries. As such it dismissed the negligence cause of action with prejudice. Insofar as the other negligence-based causes of action were dismissed, the negligent entrustment cause of action failed as a matter of law and Defendants were granted a dismissal with prejudice as to that cause of action as well.
BROKER
Gauthier v. Hard to Stop, LLC, 2024 WL 3338944, C.A. No. 22-10774 (11th Cir. July 9, 2024). In this appeal from a trial court’s ruling that a tort plaintiff’s negligent selection claim against a freight broker was preempted by FAAAA, the Eleventh Circuit Court of Appeals affirmed the trial court’s ruling. The court applied its reasoning from Aspen American Insurance Company v. Landstar Ranger, Inc., 65 F.4th 1261 (11th Cir. 2023), finding while common law claims such as negligent retention are “generally applicable,” the specific claims of plaintiff were not because “[m]embers of the public do not arrange for the motor transportation of property; brokers do.” The court reasoned that “[b]y regulating that specific activity, [plaintiff’s] common law claim is aimed solely at the performance of brokers’ core transportation-related services[,]” and as such, is preempted by FAAAA. Last, the court rejected the plaintiff’s attempt to distinguish the holding of Aspen from cases involving traffic accidents. The court stressed “[a]ny claim that a broker negligently selected a driver to haul a load of property clearly falls within Section 14501(c)(1) because . . . that claim seeks to regulate the broker’s performance of its core transportation-related services. And such claims do not arise from an exercise of the safety regulatory authority of a State with respect to motor vehicles, 49 U.S.C. § 14501(c)(2)(A), which requires that the relevant state law have a direct relationship to motor vehicles.” As in Aspen, the court stressed that negligent-selection-of-broker claims “necessarily lack a direct relationship because the services a broker provides have no direct connection to motor vehicles.” For each of these reasons, the court affirmed the trial court’s dismissal of the negligent selection claim against the broker.
CARGO
Evergreen Shipping Agency (America) Corp. v. Federal Maritime Commission, 2024 WL 3308236, C.A. No. 23-1052 (D.C. Cir. July 5, 2024). This matter presents an appeal from a ruling by the Federal Maritime Commission that an ocean carrier’s assessment of detention charges against a motor carrier for the late return of an ocean container and vehicle chassis were “unjust and unreasonable.” The appellate court first set forth the basis of its review, noting that a federal agency’s action is arbitrary and capricious if the agency has: “entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.” The appellate court agreed with the ocean carrier that the FMC decision failed to adequately address various arguments raised by the ocean carrier and it failed to explain why those arguments were not relevant to the “just and reasonable” analysis or were outweighed by countervailing considerations. The appellate court further rejected the FMC’s reasoning that “a detention charge necessarily lacks any incentivizing effect because it is levied for a day on which a container cannot be returned to a marine terminal.” In fact, the appellate court found the opposite, noting “on the contrary, being charged for detention during a port closing announced before the carrier picks up the equipment heightens the incentive to return equipment on time.” The appellate court further criticized the FMC decision for being internally inconsistent on the importance of returning equipment on time as it impacts the overall supply chain. Ultimately finding that the FMC decision lacked “a logical explanation” to support its finding, the appellate court vacated the FMC Order and remanded the matter to the FMC for further handling consistent with the written opinion.
Triax, Inc. v. TForce Freight, Inc., 2024 WL 3487892, C.A. No. 1:22-cv-01693 (D. Md. July 19, 2024). In this case involving an alleged lost shipment, the court enforced the motor carrier’s limitation of liability. Triax retained FreightCenter, who brokered the shipment to TForce. FreightCenter generated a bill of lading in connection with the shipment, which identified TForce as the carrier and Triax as the “ship to” location (the “Bill of Lading”). On the Bill of Lading, FreightCenter included a class designation of 77.5 and a shipment weight of 375 pounds. TForce’s representative signed the Bill of Lading the day after it was issued by FreightCenter. The Bill of Lading included a warning that “Liability Limitation for loss or damage in this shipment may be applicable,” cited to the Carmack Amendment, 49 U.S.C. § 14706(c)(1), and advised that the shipment was “RECEIVED, subject to individually determined rates…that have been agreed upon in writing between the carrier and shipper, if applicable, otherwise to the rates, classifications[,] and rules that have been established by the carrier and are available to the shipper, on request.” The signed Bill of Lading included a sticker stating: “LIMITATIONS OF LIABILITY APPLY, SUBJECT TO LIMITS OF LIABILITY OF THE CARRIER’S RULE TARIFF.” TForce maintained a “Rules Tariff” at the time of the shipment in this case (the “TForce Tariff”). The TForce Tariff provides:
In an effort to provide its customers with quality service at competitive rates, certain commodities may be offered to be shipped at less than full value and TForce Freight encourages shippers to review this publication, as some Items may be subject to limitations of liability, released values or other options specific to a shipment or a commodity.
The TForce Tariff was made available to shippers upon request. It included Item 166 that identified its maximum liability per pound according to class designation. According to the TForce Tariff, the maximum liability for a class designation of 77.5 is $8.00 per pound. It further provided that TForce, as the carrier, “will not be liable for any damages in excess of the limitations within Item 166,” and that TForce would not “be liable for any indirect, incidental, consequential, loss of profit, loss of income, special, exemplary, or punitive damages.” Triax’s designated corporate representative testified it never requested a copy of the TForce Tariff, he knew based on the Bill of Lading the transportation was subject to the motor carrier tariff, and that Triax provided the weight to FreightCenter that was listed on the Bill of Lading.
Following non-delivery of the cargo, Triax filed suit against TForce seeking (i) monetary damages in the amount of $1,007,254.32, presumably (although ambiguously) consisting of the cost of the cargo and the cost of purchase orders that it was set to process upon receiving the cargo; (ii) pre-judgment interest and costs; and (iii) “such other, further and different relief as may be just on the premises.” TForce filed a motion seeking to limit available damages to a maximum of $3,000 in accordance with the Bill of Lading and TForce Tariff liability limitations referenced therein.
In addressing the issue, the court set forth the four-part test adopted by the Fourth Circuit to determine whether a motor carrier has properly limited its liability, which holds carriers must: (1) provide the shipper, upon request, a copy of its rate schedule; (2) give the shipper a reasonable opportunity to choose between two or more levels of liability; (3) obtain the shipper’s agreement as to his choice of carrier liability limit; and (4) issue a bill of lading prior to moving the shipment that reflects any such agreement. The court further explained that the foregoing applied irrespective of whether the carrier or shipper prepared the bill of lading. Further, “consistent with Supreme Court precedent, when an intermediary contracts with a carrier to transport goods, the cargo owner’s recovery against the carrier is limited by the liability limitation to which the intermediary and carrier agreed.”
Applying the four-part test, the court first found there was no material dispute that Triax had not requested a copy of the TForce Tariff prior to the shipment, despite knowledge that the shipment would be subject to the TForce Tariff. As for the “reasonable opportunity” to choose between different levels of liability, the court explained “[a] reasonable opportunity to choose between different levels of coverage means that the shipper had both reasonable notice of the liability limitation and the opportunity to obtain information necessary to making a deliberate and well-informed choice.” Insofar as Triax provided the weight and class code to FreightCenter to include on the Bill of Lading; FreightCenter, as agent of Triax, issued the Bill of Lading; Triax knew the Bill of Lading was subject to the TForce Tariff; and the TForce Tariff included multiple class designations with corresponding maximum liability limits, the court found the “reasonable opportunity” element was met. As for the “shipper’s agreement” requirement, Triax agreed the Bill of Lading governed the terms of the shipment and that the Bill of Lading was subject to the TForce Tariff. However, the court found, even barring the foregoing admissions by Triax, the face of the Bill of Lading clearly and unambiguously identified that the shipment was subject to limitations of liability. As such, the agreement component was met. Last, insofar as FreightCenter issued the Bill of Lading and a TForce representative signed the Bill of Lading the day of the shipment, there was no material dispute the fourth requirement was met. As such, the court found the limitation of liability to $8.00 per pound was fully enforceable and capped TForce’s liability at $3,000 (based upon stated 375 pound shipment weight).
McCarthy v. Krupp Moving and Storage II, LLC, 2024 WL 3413255, C.A. No. 1:24-cv-79 (S.D. Ohio July 15, 2024). In this lawsuit arising from a household goods movement from Ohio to Massachusetts allegedly gone wrong, the court granted in part and denied in part the household goods carrier’s motion to dismiss. According to the allegations of the Complaint, Plaintiff signed an Estimate on November 4, 2022 and then a Contract on November 15, 2022 with the HHG carrier for the HHG carrier to provide two trucks and five movers to pack and move Plaintiff’s family’s belongings from Ohio to Massachusetts. The Contract included listed charges for payment amounting to $19,044.48. The HHG carrier allegedly promised Plaintiff it would provide two 26-foot trucks for the move. The HHG carrier’s movers did not follow Plaintiff’s organizational system when it packed up his Ohio residence. Further the HHG carrier provided one 26-foot truck, but the second truck was only 16-feet long, meaning the trucks did not have enough storage space to move all Plaintiff’s belongings. The movers placed Plaintiff’s belongings in the truck without wrapping or protecting them, resulting in multiple items becoming damaged or stained. Last, the HHG carrier charged Plaintiff more than $2,000 in excess of the Contract price. Plaintiff filed suit against the HHG carrier alleging ten causes of action: (1) violation of the Carmack Amendment; (2) Breach of Contract; (3) Unjust Enrichment—In the Alternative; (4) Conversion; (5) Fraud; (6) Negligent Misrepresentation–In the Alternative; (7) Violation of the Ohio Consumer Sales Practices Act (“OCSPA”); (8) Violation of the Ohio Deceptive Trade Practices Act (“ODTPA”); (9) Negligence; and (10) Intentional Infliction of Emotional Distress. The HHG moved to dismiss all but the Carmack cause of action. The court found all but the claim for negligence were preempted by the Carmack Amendment. However, with respect to the negligence cause of action, the court found that the damage alleged was separate and distinct from the alleged loss or damage to the goods. Specifically, Plaintiff alleged that in connection with the move, the HHG carrier’s movers backed a truck into a centuries old tree at his new residence in Massachusetts resulting in damages. Insofar as the alleged damages were wholly unrelated to the goods shipped in interstate commerce, the court found the negligence claim escaped Carmack’s preemptive scope, but only with respect to the damages to the tree. As such, all causes of action but the Carmack and negligence claims were dismissed with prejudice.
Cell Deal, Inc. v. FedEx Freight, Inc., 2024 WL 3401198, C.A. No. 21-cv-00788 (E.D.N.Y. July 12, 2024). The district court overrode a magistrate court’s recommendation against summary judgment in favor of a motor carrier on a limitation of liability. In so holding, the court agreed the motor carrier had validly limited its liability with respect to the at-issue shipment. The issue was whether a freight broker, operating as an agent for the plaintiff shipper, could bind the shipper to a limitation of liability. Citing Kirby, the court explained “[w]hen an intermediary contracts with a carrier to transport goods, the cargo owner’s recovery against the carrier is limited by the liability limitation to which the intermediary and carrier agreed.” The court found there was no genuine issue of material fact that the intermediary freight broker agreed to the motor carrier’s limitation of liability. The contract between the freight broker and motor carrier specifically included a “Liability Notice” referencing the specific Item of the motor carrier’s tariff limiting liability if the consignor or consignee does not declare a higher value. Further, the Bill of Lading for the disputed shipment likewise did not declare the value of the shipment. Based upon this, the court found there was no dispute of material fact that the intermediary had agreed to the carrier’s limitation of liability, which under Kirby, was binding upon the shipper. As such, plaintiff’s damages were limited to $153.00.
Mendenhall v. FedEx Ground Package System, Inc., 2024 WL 3226580, C.A. No. 23-cv-11025 (N.D. Ill. June 28, 2024). In this lawsuit arising out of an alleged non-delivery of freight, the court denied plaintiff’s motion to remand and granted carrier’s motion to dismiss. Plaintiff alleged he purchased a laptop through an online seller, who contracted with FedEx for the delivery to Plaintiff’s residence. Plaintiff claimed the laptop was never delivered and sought a refund from the online retailer. When the online retailer contacted FedEx, Plaintiff alleged FedEx notified the online retailer that the laptop had, in fact, been delivered. Plaintiff contended that FedEx alleged Plaintiff was “knowingly attempting to obtain by deception insurance reimbursement for the package.” Plaintiff filed a complaint in Illinois state court that included claims for breach of contract and libel. FedEx removed the case to federal court and then moved to dismiss the complaint in its entirety. In response, Plaintiff moved to remand. In first addressing the motion to remand, the court found the shipment was subject to the Carmack Amendment because it was transported in interstate commerce and Plaintiff was a “person entitled to recover under the receipt or bill of lading.” As such, the court had appropriate subject matter jurisdiction and therefore denied the motion to remand. Turning to the motion to dismiss, the court found the breach of contract claim was clearly preempted by the Carmack Amendment since it dealt directly with the alleged failure to deliver the laptop and dismissed that claim with prejudice. As for the libel claim, the court found that it did escape preemption because it alleged “harm separate and distinct from the loss of goods.” Nevertheless, without a “federal anchor claim,” the Court found it lacked supplemental jurisdiction to hear such a claim. As such, it dismissed the libel claim without prejudice.
SLT Imports, Inc. v. SAR Transport Systems Pvt. Ltd., 2024 WL 3289649, C.A. No. 23-cv-184484 (D. N.J. July 3, 2024). In this admiralty action, the ocean carrier successfully moved for judgment on the pleadings and had the operative complaint against it dismissed with prejudice. Plaintiff entered into an agreement whereby it would provide financing to non-party Krishna Food Corp. to allow Krishna to purchase food products from an Indian supplier to be shipped to Krishna in New Jersey. Defendant SAR Transport Systems was the shipping carrier for the cargo. Plaintiff alleged SAR Transport Systems “intentionally delivered” the cargo to Krishna without the required proof of payment by Krishna to SLT in the form of endorsed bills of lading. Plaintiff brought an action against SAR Transport Systems alleging: (1) fraud in the execution of a maritime contract; or (2) alternatively, breach of maritime contract under COGSA and general maritime law. The court found COGSA applied to the first count. It further found Plaintiff did not state a claim for fraud in the execution under the “heightened pleading requirements,” and accordingly, the bills of lading, to which COGSA applied, were not void ab initio. In the court’s view, at most, the complaint alleged a misdelivery of the goods, which would be subject to COGSA’s one year statute of limitation. Since the suit was not brought within that timeframe, the cause of action was time-barred. Further, the court found the entirety of Count II was subject to COGSA’s one year statute of limitation, and accordingly, was likewise time-barred.
COVERAGE
Hudson Ins. Co. v. Townsell, 2024 WL 3186649, C.A. No. 23-CV-316-MTS (N.D. Okla. June 26, 2024). In this insurance coverage declaratory judgment action arising from a MVA involving a CMV, the court granted in part and denied in part the insurer’s motion for summary judgment. Waller, an employee of Arkk Trucking, agreed to drive a “boom truck” owned by Kirby-Smith Machinery, Inc. from Oklahoma to Utah on Kirby-Smith’s behalf. While en route, in Wanship, Utah, Waller, while operating the boom truck, was involved in a single vehicle accident. Townsell was a passenger in the boom truck at the time of the Accident and alleged personal injuries resulting therefrom. Hudson insured Arkk Trucking under a commercial auto liability insurance policy that contained a MCS 90 endorsement. Subsequent to the Accident, Townsell filed suit against Waller and Arkk Trucking in Utah state court. Hudson thereafter filed the instant DJ action against Arkk and Townsell seeking a declaration as to its obligations under the auto liability policy and/or MCS 90 endorsement in response to the underlying tort suit. The court quickly dispatched with potential defense and indemnity obligations under the Hudson Policy, finding the Accident did not involve a “covered auto” as defined under the Hudson Policy insofar as the boom truck was not specifically described on the declarations page to the Hudson Policy at the time of the Accident. As for the MCS 90 endorsement, Hudson argued it had no obligation thereunder because: (1) the boom truck does not fall within the requirements of the Motor Carrier Act because it was not transporting property and Arkk was not a “for-hire” motor carrier; and (2) there is other insurance available within the required federal limits to cover the boom truck and any judgment against Arkk in the Underlying Suit. However, the court refused to consider Hudson’s arguments with respect to the MCS 90, finding those were not yet “ripe” insofar as there was not yet a “final judgment” against Arkk Trucking—the motor carrier named in the MCS 90 endorsement.
Misner v. Tecumseh, 2024 WL 3458084, C.A. No. 1:22-cv-01600 (D. Co. July 18, 2024). This insurance coverage declaratory judgment action focuses upon whether the responsibility to procure an auto liability policy satisfying the requirements of the Motor Carrier Act of 1980 (the “Act”) lies with the insurer or the insured motor carrier. A driver for Asa Griego Deliveries LLC (“Griego”) was making deliveries on behalf of Greigo when he was involved in an accident resulting in fatalities to two of the occupants of the other vehicle. It is undisputed that the Griego delivery truck (the “Subject Vehicle”) was being used in interstate commerce and weighed more than 10,001 pounds. Thus, the Subject Vehicle falls under the purview of the Act. At the time of the Accident, Alpha Property & Casualty Insurance Company (“Alpha”) insured the Subject Vehicle under a commercial vehicle policy with liability limits of $100,000 per person and $300,000 per accident. It is further undisputed that Griego did not seek to purchase a policy from Alpha for more than these amounts. Representatives of the Estates of the decedents settled the underlying tort suit for $100,000 each and an assignment of the right to seek reformation of the Alpha insurance policy against Alpha. Thereafter, the Estates filed the instant declaratory judgment action, arguing the Act requires the Court to reform the Alpha insurance policy and increase the liability limits to $750,000. Alpha thereafter moved for summary judgment.
Alpha contended it was entitled to summary judgment because it had no reason to know the delivery truck was subject to the Act and even if it did, the Act does not provide the remedy the Estates seek. The court agreed with the second contention, and accordingly, did not address the first. While the Estates cited several cases for the proposition that insurance policies must conform to statutory mandatory minimums, and where they do not, Colorado law permits reformation, the court found the statutory schemes in Plaintiffs’ cited cases place the burden directly on the insurance companies to provide certain types or amounts of coverage. In contrast, “[a] plain reading of the Act and its regulations indicates that they place the burden of compliance on the motor carrier not on the insurer.” According to the court, [b]oth state and federal courts are in consensus, and this Court agrees that the Act does not create a duty of compliance for insurance companies.” Additionally, the court found “it would be a perverse outcome to require an insurance company to bear the additional financial responsibility for an accident when it was the insured who was derelict in its duty to maintain proper coverage.” The court stressed “Colorado law recognizes that absent a special relationship between the insured and the insurer’s agent, an insurance company has no affirmative “duty to advise, guide, or direct a client to obtain additional coverage.” Acknowledging the tragic nature of the case, the court nevertheless granted summary judgment in favor of Alpha, holding the Alpha Policy was not subject to reformation to higher limits under the Act.
WORKERS COMPENSATION
No cases of note to report this month.
