2019 WL 1453082

United States District Court, M.D. Pennsylvania.
PETS GLOBAL, INC., Plaintiff
v.
M2 LOGISTICS, INC., and Habil Transportation LLC, Defendants
CIVIL ACTION NO. 1:18-CV-1256
|
Signed 04/02/2019
Attorneys and Law Firms
Kevin D. Rauch, Summers, McDonnell, Hudock & Guthrie, P.C., Carrie J. McConnell, Harrisburg, PA, Paul J. Kozacky, Pro Hac Vice, Kozacky Weitzel McGrath, PC, Chicago, IL, for Plaintiff.
Joshua M. Koch, Pro Hac Vice, Green Bay, WI, John E. Tyrrell, Ricci Tyrrell Johnson & Grey, PLLC, Philadelphia, PA, for Defendant M2 Logistics, Inc.
George A. Reihner, Wright & Reihner, PC, Scranton, PA, for Defendant Habil Transportation LLC.

MEMORANDUM
Christopher C. Conner, Chief Judge
*1 Plaintiff Pets Global, Inc. (“Pets Global”), asserts a single claim for violation of the Carmack Amendment, 49 U.S.C. § 14706. Before the court is a motion (Doc. 35) filed by defendant Habil Transportation LLC (“Habil”) to set aside the default entered against it pursuant to Federal Rule of Civil Procedure 55(c).

I. Factual Background & Procedural History
Pets Global contracted with defendant M2 Logistics, Inc. (“M2”), to deliver pet food products (the “cargo”) from Minnesota to Pennsylvania. (Doc. 13 ¶ 7). M2 issued a bill of lading for the cargo. (Id. ¶ 9). M2 then subcontracted with Habil to transport the cargo to its destination. (Id. ¶ 11). The cargo was supposed to be delivered on December 22, 2017, but never arrived. (Id. ¶¶ 13-14). Pets Global alleges that the location of the cargo is unknown. (Id. ¶ 14). Based on these events, Pets Global commenced this action asserting a single claim for violation of the Carmack Amendment against both M2 and Habil.

The instant motion concerns Habil’s alleged failure to timely plead or defend in response to Pets Global’s pleadings. On October 1, 2018, Pets Global requested that the Clerk of Court enter default against Habil. (Doc. 30 at 1). In support of its request, Pets Global provided an affidavit of Paul J. Kozacky, Esq. (“Attorney Kozacky”), outlining Pets Global’s efforts to serve Habil. (Doc. 30-1). Attorney Kozacky avers that Habil was served with the original complaint by a licensed process server on June 29, 2018, at its then-principal place of business at 2301 Sixteenth Avenue South, Minneapolis, Minnesota. (Id. ¶ 3; see also Doc. 37-1 at 1). Attorney Kozacky further avers that, on August 3, 2018, Pets Global mailed a copy of its first amended complaint by certified mail to the 2301 Sixteenth Avenue South location. (Doc. 30-1 ¶ 4). Habil failed to appear or to respond to either pleading.

The Clerk of Court entered the requested default against Habil on October 11, 2018. (Doc. 32). Habil now moves to set aside the entry of default pursuant to Federal Rule of Civil Procedure 55(c). (Doc. 35). The motion is fully briefed and ripe for disposition.

II. Legal Standard
*2 A court may set aside an entry of default for “good cause.” FED. R. CIV. P. 55(c). In determining whether good cause exists, the court must consider three factors: “(1) whether the plaintiff will be prejudiced; (2) whether the defendant has a meritorious defense; [and] (3) whether the default was a result of the defendant’s culpable conduct.” Doe v. Hesketh, 828 F.3d 159, 175 (3d Cir. 2016) (alteration in original) (quoting United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195 (3d Cir. 1984) ). The decision whether to set aside default lies within the discretion of the court. $55,518.05 in U.S. Currency, 728 F.2d at 194 (citing Tozer v. Charles A. Krause Milling Co., 189 F.2d 242, 244 (3d Cir. 1951) ). The Third Circuit disfavors defaults and requires doubtful cases to be “resolved in favor of setting aside the default and reaching the merits.” Zawadski de Bueno v. Bueno Castro, 822 F.2d 416, 420 (3d Cir. 1987) (citations omitted). The court may also consider the “effectiveness of alternative sanctions.” See Emasco Ins. Co. v. Sambrick, 834 F.2d 71, 73-74 (3d Cir. 1987) (collecting cases).

III. Discussion
Habil requests that the court set aside the default entered against it. Pets Global opposes Habil’s motion, arguing that the relevant factors weigh against setting aside entry of default. We will address each factor seriatim.

A. Prejudice
A party is prejudiced when “circumstances have changed since entry of the default such that plaintiff’s ability to litigate its claim is now impaired in some material way or if relevant evidence becomes lost or unavailable.” Accu-Weather, Inc. v. Reuters Ltd., 779 F. Supp. 801, 802 (M.D. Pa. 1991) (citation omitted); accord Feliciano v. Reliant Tooling Co., Ltd., 691 F.2d 653, 657 (3d Cir. 1982). The mere fact that a party will have to litigate its claims on the merits if default is set aside does not constitute prejudice. Griffin v. Lockett, No. 1:08-CV-1120, 2009 WL 179780, at *2 (M.D. Pa. Jan. 26, 2009) (citing Accu-Weather, Inc., 779 F. Supp. at 802). Financial costs incurred in the setting aside of default will rarely constitute prejudice at an early stage of litigation. See Feliciano, 691 F.2d at 656-57.

The court finds that Pets Global will not suffer material prejudice if entry of default is set aside. The parties have not commenced discovery, (Doc. 37 at 7; Doc. 38 at 8), and thus no further delay will result if Habil is permitted to defend this suit on its merits. Pets Global does not contend that it has been prejudiced by loss of evidence. (See Doc. 37 at 7-8). Pets Global’s only claims of prejudice involve the fees and costs incurred to procure the entry of default, as well as a delay in efforts to settle this matter amicably. (Id.) As this case is in its infancy, the fees and costs Pets Global incurred, without more, are not enough to constitute material prejudice. Therefore, the court concludes that this factor favors setting aside default.

B. Meritorious Defense
A defendant possesses a meritorious defense when the “allegations of the defendant’s answer, if established [at] trial, would constitute a complete defense to the action.” $55,518.05 in U.S. Currency, 728 F.2d at 195 (quoting Tozer, 189 F.2d at 244). The defendant need not prove its defense at this juncture, see Hritz v. Woma Corp., 732 F.2d 1178, 1181 (3d Cir. 1984), but general denials of liability will not suffice, see $55,518.05 in U.S. Currency, 728 F.2d at 195. To determine whether a defendant has alleged a complete defense, the court must look to the cause of action and what the defendant is required to prove to successfully defend against that action. See id. When deciding a motion to set aside entry of default, the lack of a meritorious defense alone may not be enough to deny the motion. See Mike Rosen & Assoc., P.C. v. Omega Builders, Ltd., 940 F. Supp. 115, 121 (E.D. Pa. 1996).

The Carmack Amendment governs liability of common carriers on bills of lading. 49 U.S.C. § 14706. To establish a prima facie case against Habil under the Carmack Amendment, Pets Global must prove: “(1) delivery of the goods to the initial carrier in good condition, (2) damage of the goods before delivery to their final destination, and (3) [the] amount of damages.” Paper Magic Grp., Inc. v. J.B. Hunt Transp., Inc., 318 F.3d 458, 461 (3d Cir. 2003) (quoting Beta Spawn, Inc. v. FFE Transp. Servs., Inc., 250 F.3d 218, 223 (3d Cir. 2001) ). If Pets Global meets its burden, Habil can avoid liability by showing an absence of negligence and that the damage was caused entirely by an “act of God,” “the public enemy,” the conduct of the shipper itself, a “public authority,” or “the inherent vice or nature of the goods.” Id. (quoting Beta Spawn, 250 F.3d at 226).

*3 Habil asserts that the driver of the vehicle delivering the cargo was involved in an accident through no fault of his own. (Doc. 38 at 6). The driver allegedly encountered “poor weather conditions [amounting] to an act of [G]od.” (Id.) The cargo was then placed in a warehouse for storage, and Habil purportedly notified M2 of the accident as well as the cargo’s location. (Id.) Pets Global responds with evidence to the contrary, claiming that weather conditions were not poor the day of the accident. (See Doc. 42-1). Pets Global further contends that Habil has not stated with sufficient specificity what weather conditions the driver purportedly encountered and whether these conditions qualify as an “act of God.” (Doc. 42 at 1-2). Consideration of Pets Global’s evidence is inappropriate at this juncture. Nonetheless, we find that Habil has alleged sufficient facts which, if proven, would constitute a complete defense. Therefore, this factor also weighs in favor of setting aside the entry of default.

C. Culpable Conduct
A party’s conduct is culpable when it is “taken willfully or in bad faith.” Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000) (quoting Gross v. Stereo Component Sys., Inc., 700 F.2d 120, 124 (3d Cir. 1983) ). Mere negligence does not constitute culpable conduct. Hritz, 732 F.2d at 1183. A “serious breakdown in communication” among counsel supports a finding of excusable neglect. Zawadski de Bueno, 822 F.2d at 421 (quoting Gross, 700 F.2d at 124). However, a “reckless disregard for repeated communications from [opposing counsel] and the court, combined with [a] failure to investigate the source of a serious injury,” may constitute culpable conduct. Hritz, 732 F.2d at 1183.

Habil claims that its conduct was not culpable because it was never served with either the original complaint or the amended complaint. (Doc. 36 at 4). The parties submit competing evidence on this point. Pets Global provides an affidavit by the process server to support its claim. (Doc. 37 at 4; see Doc. 8). Some courts have held that such an affidavit creates a rebuttable presumption that service did in fact occur. See, e.g., The Closeout Grp!, Inc. v. Venator Elec. Sales & Serv., Ltd., No. 07-5292, 2009 WL 2431448, at *3 (E.D. Pa. Aug. 6, 2009) (quoting FROF, Inc. v. Harris, F. Supp. 827, 828-29 (E.D. Pa. 1988) ). Habil responds with the affidavit of Billie Hashi (“Hashi”), Habil’s manager, who states that no individual authorized to accept service on Habil’s behalf was served with a copy of either pleading. (Doc. 38-1 ¶¶ 5, 7-8). Habil further notes that it was in the process of moving its corporate headquarters at the time Pets Global attempted to effect service. (Doc. 38 at 4; see Doc. 38-1 ¶¶ 2-3). On this record, we cannot conclusively determine whether Habil was properly served.

Pets Global informed Habil’s insurer of the instant action which Pets Global intimates was sufficient to place Habil on notice of this suit. (Doc. 37 at 5). Pets Global provides no indication as to whether the insurer ever notified Habil during the relevant period. (See Docs. 37, 42). We decline to impute any failure of communication by the insurer to Habil.

Habil was clearly negligent. Habil failed to report its new location for its principal place of business to the proper state authority. (See Doc. 37-1). In addition, as a sophisticated shipping company, Habil should have known its obligations, and those of its insurer, with respect to damaged or undelivered cargo. However, Habil’s actions do not rise to the level of willfulness or bad faith, nor can we find that Habil’s conduct was a matter of trial strategy. See Wells v. Rockefeller, 728 F.2d 209, 214 (3d Cir. 1984). Moreover, Habil made arrangements for the cargo’s safekeeping and notified its insurer following the accident, (Doc. 36 at 5; Doc. 38 at 4, 6), evincing Habil’s good faith in the period preceding litigation. Therefore, this factor weighs in favor of setting aside the entry of default.

In close cases, courts should resolve disputes in favor of setting aside the entry of default. Gross, 700 F.2d at 122. This is not a close case. The lack of material prejudice to Pets Global, the potential defense asserted, and the absence of culpable conduct by Habil warrant setting aside the entry of default. Moreover, as explained infra, imposition of lesser sanctions is more appropriate in this case. Accordingly, we hold that “good cause” exists to set aside the entry of default against Habil.

D. Alternative Sanctions
*4 When determining an appropriate sanction, courts may consider, inter alia, the seriousness of the sanctionable conduct, the damage caused by the conduct, the effect of the conduct on the administration of justice, and the sanctioned party’s ability to pay. Agnew v. E*Trade Sec. LLC, 811 F. Supp. 2d 1177, 1185 (E.D. Pa. 2011). The purpose of an alternative sanction in this context is to compensate plaintiff and to deter such conduct in the future. Airtech v. Born Envtl. Servs., Inc., No. 02-8524, 2003 WL 22097489, at *2 (E.D. Pa. May 27, 2003) (citing Foy v. Dicks, 146 F.R.D. 113, 117 (E.D. Pa. 1993) ).

We cannot condone Habil’s failure to respond to this action until more than three months after its answer or an appropriate motion was due on July 20, 2018, despite our finding that the balance of the relevant factors favors setting aside the entry of default. Habil should have timely reported its new address to the appropriate state authority and implemented procedures to ensure it received relevant communications during its corporate relocation. These failures caused delay for both the court and for the remaining parties seeking an amicable resolution of this matter. (See Doc. 37 at 7). Habil’s negligence also required the parties and the court to expend unnecessary resources.

We find that monetary sanctions are appropriate under the circumstances. Habil shall compensate Pets Global for the reasonable costs incurred to effect service on Habil. See Agnew, 811 F. Supp. 2d at 1186. We believe that this sanction effectively addresses Habil’s negligent conduct and is less severe than an entry of default. Habil is admonished to fully comply with its litigation obligations moving forward.

IV. Conclusion
The court will grant Habil’s motion (Doc. 35) to set aside entry of default and impose monetary sanctions on Habil for its negligent conduct. An appropriate order will issue.

All Citations
Slip Copy, 2019 WL 1453082

2019 WL 1531208

Court of Common Pleas of Ohio,
Clermont County, Ohio.
TOTAL QUALITY LOGISTICS, LLC, Plaintiff,
v.
BALANCE TRANSPORTATION, LLC, Defendant
NO. 2017-CVH-000970
|
Filed April 1, 2019
Attorneys and Law Firms
David T. Buies and Alexandra R. Forkosh, Calfee Halter & Griswold LLP, 2800 First Financial Center, 255 East Fifth Street, Cincinnati, Ohio 45202, Attorneys for Plaintiff
John C. Scott and Tracy E. Schwetschenau, Faulker & Tepe, LLP, One West Fourth Street, Ste. 2050, Cincinnati, Ohio 45202, and Robert S. Crowder, Tessler LLP, 1901 Avenue of the Stars, Ste. 450, Los Angeles, California 90067, Attorneys for Defendant

DECISION AND ENTRY
Richard P. Ferenc, Judge
*1 Before the Court for determination, are cross-motions for summary judgment filed by Plaintiff, Total Quality Logistics, LLC (“TQL”) and Defendant, Balance Transportation, LLC. (“Balance”). For the detailed reasons set forth below, the Court grants Balance’s motion as to the three claims asserted against it by TQL, and thereby denies TQL’s motion as to the same claims. The Court grants TQL’s motion as to Balance’s counterclaim and thereby denies Balance’s motion as to its counterclaim.

Factual and Procedural Background
TQL is an interstate freight broker who is in the business of facilitating the transportation of freight It locates motor carriers to pick up and deliver the freight of its customers at times and places specified by them. Balance is an interstate motor carrier. On August 10, 2009, TQL entered into a Broker/Carrier Agreement (the “Agreement”) with Balance for the latter to provide freight services to TQL’s customers. The Agreement, in part, required Balance, as a carrier, to timely and properly deliver each load tendered to it by TQL.

In June, 2016, in accord with the Agreement, TQL arranged with Balance to deliver one truckload of granite for its customer C & C North America, Inc. (“C & C”). TQL claims that Balance breached this Agreement by failing to properly deliver the cargo and/or refusing to pay the amounts due TQL. Specifically, TQL alleges that Balance failed to timely and properly deliver the cargo, a load of granite slabs, to the intended destination in good condition as required by the Agreement.

C & C submitted a cargo claim to TQL for the cost of its damaged cargo in the amount of $ 30,641.11. TQL paid that amount to C & C. In exchange, C & C’s released and assigned its claim against Balance to TQL. Under an offset provision of the Agreement, TQL applied an open invoice due Balance, $ 1,900, as partial payment of the C & C claimed loss. This offset reduced TQL’s claim to $ 28,741.11. TQL seeks judgment in this amount, with interest, attorney’s fees, expenses, and costs.

TQL’s complaint, filed August 7, 2017, alleges the following: Count I, recovery in accord with the Carmack Amendment; Count II, Breach of Contract; and Count III, Breach of Bailment Duty. In its counterclaim, filed October 6, 2017, Balance seeks recovery of the $ 1,900 open invoice, alleging it was misappropriated by TQL as partial payment for C & C’s claimed loss.

Both parties now seek summary judgment on their respective claims and counterclaim. (Individually, referred to as “TQL MSJ” and “Balance MSJ” and collectively referred to as “the Motions”).

Summary Judgment Standard
Summary judgment is proper when: (1) no genuine issue of material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law, and (3) reasonable minds can come to but one conclusion, and that conclusion is adverse to the nonmoving party, said party being entitled to have the evidence construed most strongly in its favor. Ward v. Graue, 12th Dist., 2013-Ohio-1107, 987 N.E.2d 760, ¶¶ 10-11.

*2 The party moving for summary judgment bears the burden of showing that there is no genuine issue of material fact and that he is entitled to judgment as a matter of law. Id. at ¶ 11, citing, Dresher v. Burt, 75 Ohio St.3d 280, 293, 662 N.E.2d 264 (1996).

Ohio law further requires that when the moving party has met its burden under Dresher, the nonmoving party may not rest upon the mere allegations of his or her pleadings, but the response, by affidavit or otherwise, must set forth specific facts showing the existence of a genuine triable issue. Mootispaw v. Eckstein, 76 Ohio St.3d 383, 385, 667 N.E.2d 1197 (1996).

The following evidentiary materials are properly before the Court for consideration pursuant to Civ. R. 56(C): i) the affidavit of TQL’s Risk Manager, Marc Bostwick, executed February 13, 2019; ii) Marc Bostwick’s deposition of September 5, 2018; iii) Amber Simons’ deposition of January 28, 2019; iv) Adrian Bernal’s deposition of August 30, 2018; and v) Jose Bernal, Sr.’s deposition of August 30, 2018.

The Motions

A. TQL MSJ
TQL’s first count asserts it is entitled to judgment under the Carmack Amendment, 49 U.S.C. § 14706. The sub-section applicable here is (a)(1), which, in pertinent part reads as follows:
[a] carrier providing transportation or service … shall issue a receipt or bill of lading for property it receives for transportation under this part That carrier and any other carrier that delivers the property and is providing transportation or service … are liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) another carrier over whose line or route the property is transported in the United States ….

In TQL v. Red Chamber Co., 12th Dist., 2017-Ohio-4369, 92 N.E.3d 62, at ¶ 11, the court held:
Accordingly, the Carmack Amendment creates a federal statutory remedy on a bill of lading against both the originating and destination carrier. To assert a prima facie case pursuant to the Carmack Amendment, one must demonstrate (1) delivery to the carrier in good condition, (2) delivery failure or arrival in damaged condition, and (3) the amount of damages caused by the loss. Camar Corp. v. Preston Trucking Co., 221 F.3d 271, 274 (1st Cir. 2000).

Of the evidentiary materials before the Court identified above, it is clear that the only evidence relative to the material events giving rise to this litigation is found in the deposition testimony of Adrian Bernal.1

Adrian was employed as a truck driver for Balance and delivered the cargo at issue on its behalf. He picked up fee cargo at La Porte, Texas and delivered it to Sun City Granite (“Sun City”) in El Paso, Texas. After the shipper loaded the cargo on Balance’s flatbed trailer, Adrian strapped the load and signed the bill of lading acknowledging the carrier’s, Balance, receipt of the cargo in good condition. Balance does not dispute the fact that the cargo was in good condition upon its receipt in La Porte. Adrian T 18-22. Therefore, TQL has satisfied the first factor of Red Chamber.

*3 TQL’s satisfaction of Red Chamber’s second factor, delivery failure or arrival in damaged condition, requires closer scrutiny of the credible evidence before the Court at this juncture.

Adrian transported the cargo from La Porte to Sun City in El Paso. When he arrived, he parked his truck on the street in front of Sun City’s building. He did not immediately unstrap the cargo upon his arrival at Sun City. Rather, he immediately went to Sun City’s office. There, he met a lady employed by Sun City. (the “Sun City lady”). He presented the bill of lading to her, she signed and dated it June 17, 2016, and gave it back to him. The Sun City lady signing fee bill of lading did not write anything else on the bill of lading at that time. Adrian T. at 48-49, 70-71. Adrian then sent a photocopy of this bill of lading to Balance reflecting the acceptance by the Sun City lady. Id. at 80.2 The Sun City lady then instructed Adrian to move his truck forward a short distance from where he had parked and that “they were going to unload me.” Id. at 69.

Adrian returned to his truck, moved it forward a few feet as instructed, parked it and unstrapped the entire load from the flatbed trailer. He placed all of the straps inside his truck. For a while, he observed Sun City’s employees unloading the granite then returned to his truck’s cab. He remained there for a few minutes when he heard a loud noise. He stepped out of the cab and looked back toward his trailer. He saw slabs toward the front of the trailer falling off. These, in turn, caused slabs toward the rear of the trailer to begin falling too. In addition, he also saw a forklift, being used by a Sun City’s employee, backing away from his trailer holding an unbroken slab. Id. At 32-38.

After the dust settled, literally, the Sun City lady asked Adrian to return the bill of lading to her. Adrian testified that the Sun City lady tried to alter the bill of lading she had signed immediately upon his arrival and presentment to her. He was uncertain of the means she used to try to alter this bill. Id. at 72-74.3

After the Sun City lady made those changes to the front of the bill of lading, Adrian made a written statement on the reverse, in Spanish. The Sun City lady then wrote her own statement below his, also in Spanish. [Ex. 8 to Jose Bernal, Sr.’s deposition, sixth page (Bal0028) ]4

There exists a third version of the bill of lading. Jose Bernal, Sr. (“Jose”) is the owner of Balance. He testified that it is his company’s policy to require its drivers to send a picture of the bill of lading to Balance’s office once the consignee of the shipment has signed it, verifying the shipment has been received by them.5 According to Jose, a copy of the bill of lading is then sent to Balance’s factoring company, Sierra Finance, which places the stamp on the bill of lading stating: “Balance Transportation.” The various versions of the bill of lading all contain the signature of the Sun City lady.

*4 The signature of the Sun City lady on the bill of lading is critical to the resolution of the second factor of Red Chamber. There is no credible evidence before the Court to controvert Adrian’s testimony that the Sun City lady signed the bill of lading immediately upon his arrival at its location and his presentment to her. This signature, acknowledging acceptance of the cargo, was executed prior to the unstrapping of the cargo by Adrian and the unloading of it by Sun City.

The receipt of delivery by the consignee, Sun City, is contemplated by the Agreement Paragraph 8 of the Agreement provides, in part:
Unless otherwise agreed in writing, CARRIER shall become fully responsible/liable for the height when it takes/receives possession thereof, and the trailer(s) is loaded, regardless of whether a bill of lading has been issued, and/or signed, and/or delivered to CARRIER, and which responsibility/liability shall continue until delivery of the shipment to the consignee and the consignee signs the bill of lading or delivery receipt. (Emphasis added.)

In TQL v. Dadir, LLC, Case No. 2016-CVH-0705, (Jan. 10, 2018),6 this Court found a similarly worded version of paragraph 8 of the Agreement here, imposed responsibility for a damaged shipment on the carrier up to the time the consignee signs the bill of lading, regardless of the fact that damages to the cargo may have been caused by the consignee. (Emphasis added.)

Dadir involved damage to a load of spinach and arugula caused by its exposure to temperatures outside the range as specified in the bill of lading. When the consignee signed the bill of lading it noted that its receipt was under protest due to warm temperatures. There was evidence that the consignee itself had exposed the load to higher temperatures for approximately four hours before taking temperature readings and signing the bill of lading rejecting the shipment This Court held that paragraph 8 clearly placed the risk of loss upon the carrier until delivery of the shipment to the consignee and the consignee signs the bill of lading or delivery receipt. (Emphasis added.) This last clause requiring the consignee to sign the bill of lading or delivery receipt is a condition precedent to relieving the carrier of its liability under paragraph 8.

The same result occurs here, with paragraph 8 inuring to the benefit of the carrier, Balance. When Sun City signed the bill of lading, delivery was completed and Balance’s responsibility/liability under the Agreement ended. This acceptance of delivery by Sun City is satisfactory proof that there was no failure of delivery and the cargo did not arrive in a damaged condition. Even if TQL was able to prove that some action of Balance was responsible for the damage to the cargo, the risk of loss for any cargo damage had shifted from Balance to the consignee by the unambiguous terms of the Agreement. Therefore, TQL cannot satisfy the second factor required by Red Chamber, supra.

Nevertheless, TQL argues that even though Sun City had signed the bill of lading, its signing did not mark the end of Balance’s responsibility for the cargo loss. TQL asserts that delivery was not completed until after the bill of lading was first signed by the Sun City lady. It argues that when the bill of lading was first signed by the Sun City lady, Adrian still had to move the truck, re-park it, and unstrap the granite. Assuming those tasks had to be completed before delivery was complete, the uncontroverted evidence is those tasks were, in fact, completed before damage occurred to the cargo after Sun City started to unload it More importantly, the unambiguous language of paragraph 8 of the Agreement does not require such an event or series of events, to occur before the risk of loss is shifted to the consignee.

*5 TQL relies upon Merchants Terminal Corp. v. L & O Transport, Inc., U.S. Dist. Ct. D. Maryland, No. SAG-09-cv-2065, 2012 WL 1416631 (Apr. 20, 2012), to support it claim that Balance had not completed its delivery before the damage occurred. In Merchants, the carrier was transporting a truckload of salmon from a customer’s Delaware warehouse to its facility in Baltimore. The shipment arrived after the Baltimore location had closed. The customer permitted the carrier to make after-hours drops. It provided the carrier with a key to a chain lock that secured the gate of a 7′-8′ high chain link fence enclosure. The carrier was to position its trailer against a loading dock so there was no way the trailer doors could be opened. The carrier was also to secure its trailer with a kingpin lock, a devise that prevents another rig from hooking up to the trailer and pulling it away. The kingpin lock was secured and unsecured with a key that remained with the carrier. Id. at *4-5. The carrier followed the directions but, nonetheless, someone cut the lock to the gate and stole the trailer. Id.at *6.

The carrier argued its delivery had been completed before the theft so it was not liable under Carmack. Id.at *7. The district court disagreed. It found the carrier, L & O, had not surrendered the goods to the customer’s possession, custody and control because the trailer was secured by a kingpin lock for which only the carrier had the key. Id. at *10. In addition, the customer accepted delivery of shipments only after breaking the seal on the shipment, inspecting the goods and comparing the driver’s paperwork with its own. Id. at* 11. Just dropping the container at the customer’s loading dock was not enough to constitute delivery because possession, custody and control of the goods were not transferred to the customer. Id.

The facts here are quite different from those in Merchants. Here, Sun City signed the bill of lading accepting delivery of the cargo. Immediately upon signing, Sun City evidenced control of the cargo by directing Adrian where to move his truck, even if it was not a significant distance. There is no evidence to contradict Adrian’s testimony that it is customary for the shipper’s driver to unstrap a delivered load. Adrian T. at 58. This act does not evidence Balance still was in control of the load. Someone had to unstrap the cargo to allow it to be unloaded. Adrian simply followed his customary practice, because Sun City was unquestionably taking control of the cargo to unload it. Sun City further evidences control of its cargo by having its employee begin to unload it without any direction or supervision of Adrian.

Accordingly, as to Count 1, Balance’s MSJ is granted and TQL’s is denied.

In its second count, TQL argues that it is proper for parties to expressly adopt the Carmack Amendment into a broker/carrier agreement It contends that the parties have done so by operation of paragraph 8 of the Agreement at its fourth sub-paragraph. Therefore, “TQL can establish Defendant’s liability for breaching the Agreement by establishing a prima facie case under the Carmack Amendment.” (TQL* MSJ, p 12.) The Court disagrees.

This Court has already found, under Count 1, that TQL cannot establish a prima facie case under Carmack because of its inability to prove delivery failure or arrival in a damaged condition. Without a prima facie Carmack case, TQL’s breach of contract claim fails. Accordingly, as to Count 2, TQL’s MSJ is denied and Balance’s MSJ is granted.

TQL’s third count contends, that among the claims assigned to it by C & C by operation of the Release and Assignment if has a claim for bailment against Balance. As TQL properly states, to establish a prima facie case for breach of a bailment duty, one of the elements it must prove is that the bailed property was redelivered in a damaged condition at the termination of the bailment Again, the Court has determined that TQL establish that the cargo was damaged upon delivery. Accordingly, as to Count 3, TQL’s MSJ is denied and Balance’s MSJ is granted.

Balance’s MSJ
*6 In its counterclaim, Balance seeks judgment against TQL for $ 1,900. This is the amount of Balance’s open invoice that TQL applied to the amount it alleged Balance owed it due to the cargo loss. Balance claims the amount was misappropriated by TQL. There exists no genuine issue of material fact regarding TQL’s conduct. In its complaint, TQL concedes that in arriving at the net amount Balance owed it for the damaged cargo, it deducted Balance’s open invoice of $ 1,900 it owed to Balance.

The Agreement, at paragraph 8, subparagraph 4, reads: “BROKER reserves the right to offset any claim(s) with pending invoices.” Therefore, TQL’s actions were not wrongful as Balance alleges. In computing the amount of its alleged claim against Balance, TQL acknowledged that the amount of Balance’s liability was subject to a $ 1,900 credit. Now that TQL’s claim has been dismissed, any issue concerning the credit has become moot. Balance’s $ 1,900 open invoice remains open and due. Accordingly, TQLs MSJ as to Balance’s counterclaim is granted and Balance’s MSJ is denied.

On September 7, 2018, the Court issued a scheduling order establishing a trial date and other deadlines to file a variety of motions. The Parties have also filed a number of motions in limine in accord with this order. As the Court has determined the summary judgment motions, these motions are rendered moot.

Based upon the above analysis;

IT IS HEREBY ORDERED that Balance is granted summary judgment against TQL as to all three claims asserted by TQL and TQL’s motion summary judgment as to its three claims against Balance is denied.

IT IS FURTHER ORDERED that TQL’s motion for summary judgment as to Balance’s counterclaim is granted and Balance’s motion for summary judgment as to its counterclaim is denied.

IT IS FURTHER ORDERED that the pending motions in limine filed by the parties are denied as befog moot.

IT IS FURTHER ORDERED that this Decision and Entry shall constitute the final entry in this matter and, as all issues have been resolved, it is a final appealable order and there is no just cause for delay. Further, as Balance is the prevailing party in this matter, costs are taxed to TQL.

All Citations
— N.E.3d —-, 2019 WL 1531208

Footnotes

1
Adrian Bernal will be referenced hereafter as “Adrian.” References to his deposition will be “Adrian T at 1” etc.

2
This version of the bill of lading appears at Ex. 8, the third page (Bal0025), of the deposition of Jose Bernal, Sr.

3
The alteration of the original bill of lading by the Sun City lady contained the following: “Friday at 3:30 all slabs are broke. Fell of (sic) truck after driver unstrapped.” [Ex. 8 to Jose Bernal’s deposition, fifth page (Bal0027) ]

4
Adrian translated his and the Sun City lady’s handwritten comments on the bill of lading at p. 82-84. Adrian’s comments were defending his actions and the Sun City lady’s were shifting the fault of the cargo falling to Adrian.

5
A copy of the bill of lading sent to Balance by Adrian at 3:05 p.m. on 6/17/2016, is at the fourth page, (Bal0026), of Ex. 8 of Jose’s deposition

6
A copy of this decision is attached.