2019 WL 3082465

United States District Court, W.D. Arkansas, Harrison Division.
CAMP’S PLANT, INC., Plaintiff
v.
SMG TRUCKING, LLC and Joey S. Morgan, Defendants
CASE NO. 3:19-CV-3040
|
Signed 07/15/2019
Attorneys and Law Firms
Jodi G. Carney, Carney Law Firm, Mountain Home, AR, Keith L. Grayson, Grayson & Grayson, P.A., Heber Springs, AR, for Plaintiff.
Mary Buckley, Michael Stephen Bingham, Cross, Gunter, Witherspoon & Galchus, P.C., Little Rock, AR, for Defendants.

OPINION AND ORDER
TIMOTHY L. BROOKS, UNITED STATES DISTRICT JUDGE
*1 Now pending before the Court are separate Defendant SMG Trucking, LLC’s (“SMG”) Motion to Dismiss for Lack of Standing (Doc. 5) and Brief in Support (Doc. 6), Plaintiff Camp’s Plant, Inc.’s (“Camp’s”) Response in Opposition (Doc. 9) and Brief in Support (Doc. 10), and SMG’s Reply (Doc. 16). Camp’s originally filed this lawsuit in the Circuit Court of Baxter County, Arkansas, and SMG removed the case to this Court pursuant to 28 U.S.C. § 1332(a), due to the presence of complete diversity of citizenship and the satisfaction of the minimum amount in controversy needed for federal court jurisdiction. According to the Complaint (Doc. 3), Camp’s is a Missouri corporation doing business in Baxter County, Arkansas, and Defendants SMG and Joey S. Morgan—the latter having yet to appear in the case—are citizens of Texas. The case is a tort action in which Camp’s asserts that SMG’s truck driver, Morgan, negligently caused a tractor-trailer he was driving for SMG to roll across a highway into a greenhouse owned by Camp’s. The Complaint maintains that the accident caused extensive damage to the greenhouse and to Camp’s stock of plants.1

SMG’s motion to dismiss argues that Camp’s, a foreign corporation, has no standing to sue in any court in Arkansas because it did not properly register and obtain a certificate of authority from the Arkansas Secretary of State to operate its business within the state. In support of its argument, SMG points to Ark. Code Ann. § 4-27-1502(a), which provides: “A foreign corporation transacting business in this state without a certificate of authority may not maintain a proceeding in any court in this state until it obtains a certificate of authority.” SMG interprets this statute to mean that Camp’s cannot file suit in any court in the State of Arkansas—not even in a federal court that sits in Arkansas.

Camp’s admits that: (1) it is a Missouri corporation doing business in Arkansas; (2) it was registered in 1995 with the State of Arkansas to do business as a foreign corporation; (3) it allowed its state registration to lapse; (4) its charter was revoked by proclamation on December 31, 1998; and (5) it is not currently registered to do business in the state. See Doc. 9 at 1. Camp’s response to the motion fails to engage substantively with Section 1502(a) or offer an interpretation of the statute that is different from SMG’s. The Court finds that Section 1502(a)’s unambiguous terms prohibit all unregistered foreign corporations from bringing suit in any Arkansas court. But that prohibition is not generally the end of the story: The Arkansas legislature incorporated a “savings provision” into the foreign-corporation registration statute that provides a way for an unregistered foreign corporation to maintain a lawsuit while simultaneously seeking proper certification from the state. Section 4-27-1502(c) states that “[a] court may stay a proceeding commenced by a foreign corporation … until it determines whether the foreign corporation … requires a certificate of authority”; and, if it later becomes clear that the foreign corporation requires such a certificate, “the court may further stay the proceeding until the foreign corporation or its successor obtains the certificate.”

*2 Why, then, has Camp’s failed to move the Court for a stay of these proceedings until it obtains a certificate of authority? The answer appears to be that Camp’s is time-barred from seeking reinstatement of its state charter. Even though Ark. Code Ann. § 26-54-112(a)(1)(A)(i) provides that “[a] corporation whose charter … has been declared forfeited … may be reinstated to all its rights, powers, and property,” subsection (a)(1)(B)(2) cautions that “reinstatement is not allowed after seven (7) years from the date the charter or permit authority to do business in the state was declared forfeited by proclamation of the Governor or the Secretary of State.”

Accordingly, it would appear that Sections 4-27-1502(a) and 26-54-112(a)(1)(B)(2) of the Arkansas Code, taken together, must foreclose Camp’s from ever bringing suit in an Arkansas court. Camp’s argues, however, that the courthouse door-closing provision of Section 1502(a) “does not apply to tort claims brought by an unregistered foreign corporation.” (Doc. 10 at 2). Camp’s only support for this argument comes in the form of a bare citation—without legal analysis—to two cases, C.B. International, Inc. v. Cook, 659 F.2d 862 (8th Cir. 1981), and Dews v. Halliburton Industries, Inc., 288 Ark. 532 (1986). Unfortunately for Camp’s, neither of these cases discusses the relevant sections of the Arkansas Code that are at issue in the instant dispute. Instead, the cases discuss an earlier, now repealed, version of the foreign-corporations statute that was codified at Ark. Code Ann. § 64–1201, et seq. However, in 1987, these sections of the code were replaced by Ark. Code Ann. § 4–27–1501, et seq. The new code sections are the source of the bar here, and the cases cited by Camp’s are therefore useless in the analysis.

Camp’s only remaining argument is that Arkansas’ door-closing statute is unconstitutional. With that said, Camp’s constitutional arguments do not appear unconstitutional. With that said, Camp’s constitutional arguments do not appear anywhere in its brief (Doc. 6). Instead, these arguments are merely outlined in Camp’s response to the motion (Doc. 9). Accordingly, the entirety of Camp’s constitutional objection to the statute is as follows:
9. The Defendant’s argument is that a Missouri corporation is prohibited from bringing a lawsuit in federal court in the state of Arkansas if its charter to do business in Arkansas has been revoked. Plaintiff believes that is an incorrect interpretation of the statute and such prohibition from bringing a cause of action in federal court has several constitutional problems: first, it violates the commerce clause, and second, it impinges on Plaintiff’s due process rights. Furthermore, it is a violation of the separation of powers in that the Arkansas legislature cannot lawfully impair the rights of a Missouri citizen to bring a lawsuit in federal court.
10. Accordingly, the statute Arkansas Code Ann. § 4-27-1502 should be stricken as unconstitutional with respect to its application to out of state corporations to file suit in federal courts within the state of Arkansas. Plaintiff herein is giving notice to Leslie Rutledge, the Attorney General for the state of Arkansas, of its claim that the statute is unconstitutional.
(Doc. 9 at 2).

From the above, the Court surmises that Camp’s constitutional argument is that the enforcement of Section 1502(a) would violate the Commerce Clause, the separation of powers, and Camp’s due process rights. Initially, the Court finds Camp’s arguments too conclusory to engage with on a substantive level, and the Court will not attempt to do so—or to make Camp’s arguments for it. More to the point, the Court is not particularly concerned about the constitutionality of either relevant state statute, especially considering how Arkansas courts have enforced these statutes in the past. For example, the Arkansas Supreme Court in Johnny’s Pizza House, Inc. v. Huntsman, 311 Ark. 346, 349 (1992), considered the legal application of Section 1502(a) and reasoned that the Arkansas legislature amended the rules applying to foreign corporation registration in 1987 in order to mitigate the harsh penalties that had been previously been associated with those rules—including the ban on access to state courts for unregistered foreign corporations. The Court observed that the amended statute stood “in sharp contrast to the former provision that expressly precluded any rehabilitation of the uncertified foreign corporation.” Id. Now, courts had the option of staying a case—rather than dismissing it with prejudice—“to allow the foreign corporation to obtain the certificate if it … [was] needed.” Id.

*3 The Johnny’s Pizza Court also cited with approval to an Arkansas Court of Appeals case called Centennial Valley Ranch Management, Inc. v. Agri-Tech Limited Partnership, 38 Ark. App. 177 (1992). The Centennial Valley Court explicitly upheld the trial court’s decision to dismiss a foreign corporation’s complaint under Section 1502(a), finding that it “was necessary for the appellant to obtain a certificate of authority to transact business in this state before it could maintain this suit in the courts of this state.” Id. at 184. In enforcing the statute, the Court of Appeals expressed no reservations about its constitutionality, explaining that the new sections of code were “based primarily upon the Revised Model Business Corporation Act, which was a product of a committee of the American Bar Association.” Id. at 180. Indeed, all fifty states have now passed door-closing statutes that are comparable to Arkansas’. See Joyce Yeager, Borders and Barriers, Definitions of Authority to Do Business as a Foreign Corporation, 102 Commercial L.J. 398, 409 n.71 (1997) (listing all fifty statutes, as well as the Model Business Corporations Act).

The last argument the Court must address is whether the sections of Arkansas law cited herein also operate to bind federal courts sitting in diversity in Arkansas. Though SMG frames this issue in terms of Camp’s lack of standing to sue, the Court believes the matter is more properly viewed in terms of Camp’s lack of capacity to bring suit. Section 1502(a) provides that a foreign corporation that does not have a certificate of authorization from the Secretary of State lacks the capacity to sue in an Arkansas court. The law is clear that a federal court sitting in diversity must apply state substantive law and federal procedural law. Hanna v. Plumer, 380 U.S. 460, 465 (1965); see also Angel v. Bullington, 330 U.S. 183, 191 (1947) (“The essence of diversity jurisdiction is that a federal court enforces State law and State policy.”). A corporation’s capacity to sue is a question of substantive law, and, therefore, state law would apply to the dispute. See Okla. Natural Gas Co. v. Oklahoma, 273 U.S. 257, 259–60 (1929).2 It is also well established that a state’s door-closing statute may bar a lawsuit from proceeding in federal court, when the sole basis for federal jurisdiction is diversity of citizenship and the lawsuit is based only on a state-law cause of action. Woods v. Interstate Realty Co., 337 U.S. 535, 538 (1949) (noting that in a diversity case premised on state law, when “one is barred from recovery in the state court, he should likewise be barred in the federal court”). Under that narrow set of circumstances, the federal court is “in effect, only another court of the State.” Id. (quotation and citation omitted).

The Court concludes from the above discussion that Section 4-27-1502(a), in combination with Section 26-54-112(a)(1)(B)(2), operates to bar Camp’s from bringing its state-law claims in this Court or in any other Arkansas court. There is no dispute of fact that Camp’s is a foreign corporation that was once registered with the State of Arkansas to do business here, and that Camp’s allowed its state registration to lapse and its charter to be revoked in 1998—more than twenty years ago. There is also no dispute of fact that Camp’s never re-registered to do business in this state and was not registered at the time the alleged tort in this case occurred.

IT IS THEREFORE ORDERED that Separate Defendant SMG Trucking, LLC’s Motion to Dismiss for Lack of Standing (Doc. 5) is GRANTED. Plaintiff Camp’s Plant, Inc., lacks the capacity under Arkansas law to proceed with this lawsuit, and the case is therefore DISMISSED WITHOUT PREJUDICE for the reasons set forth above.

*4 IT IS SO ORDERED on this 15th day of July, 2019.

All Citations
Slip Copy, 2019 WL 3082465

Footnotes

1
The total damages are claimed to be “larger than that required for jurisdiction in diversity of citizenship cases….” Id. at 2.

2
The rule is the same if viewed in terms of standing, rather than capacity to sue: “In a diversity case, a court will not address the plaintiff’s claims unless the plaintiff has standing to sue under state law.” Metro. Express Servs., Inc. v. City of Kansas City, 23 F.3d 1367, 1369 (8th Cir. 1994) (emphasis added).

2019 WL 3206916

United States District Court, N.D. Texas, Dallas Division.
Benny BARTON
v.
NORTH AMERICAN VAN LINES, INC., et al.
CASE NO. 3:18-CV-3074-S
|
Signed 07/16/2019
Attorneys and Law Firms
Connor Gordan Sheehan, Blake Jordan Brownshadel, Dunn Sheehan LLP, Dallas, TX, for Benny Barton.
Ryan Thomas Hand, Daniel L. Fulkerson, Lorance & Thompson, Houston, TX, for North American Van Lines Inc, Burgess North American.

MEMORANDUM OPINION AND ORDER
KAREN GREN SCHOLER, UNITED STATES DISTRICT JUDGE
*1 This Order addresses the Second Motion to Dismiss filed by Defendants North American Van Lines, Inc. (“NAVL”), and Burgess North American (“Burgess”) (collectively, “Defendants”) [ECF No. 11]. For the following reasons, the Motion is granted in part and denied in part.

I. BACKGROUND
On or about June 4, 2015, Defendants provided Plaintiff Benny Barton (“Plaintiff”) with an Estimate and Order for Service form (“Estimate”) for the shipment of more than eighty antique items and home furnishings (“Goods”). Am. Compl. ¶ 11. Defendants estimated that it would cost $53,882.61 to ship the Goods from Indian Wells, California, to Dallas, Texas. Id. The Estimate included maximum value protection of the Goods at $800,000 and stated, “You will select the liability level later, on the bill of lading (contract) for your move.” Id.

On or about June 5, 2015, Defendants moved the Goods to their local storage facility in or around Indian Wells. Id. ¶ 12. On January 22, 2016, a Burgess representative told Plaintiff that it would ship the Goods to All Points Pioneer1 in Grand Prairie, Texas. Id. ¶ 13. On March 1, 2016, Defendants sent Plaintiff an invoice requesting payments for transportation services, insurance, packing services, crating services, and storage services. Id. ¶ 14. Plaintiff allegedly did not receive a bill of lading at this time, Id. ¶ 15. On or about March 2, 2016, the Goods were shipped and temporarily stored at All Points Pioneer’s warehouse in Grand Prairie. Id. ¶ 16. According to Plaintiff, the Goods were kept in storage as “storage-in-transit or temporary storage.” Id. ¶ 17.

On or about July 3, 2017, the Goods were shipped from the warehouse to Plaintiff’s showroom in Farmers Branch, Texas, Id. ¶ 18. When Plaintiff took delivery of the Goods, Plaintiff allegedly discovered that they were damaged. Id. ¶ 19. Plaintiff took inventory and identified those damages that were readily ascertainable. Id. On August 22, 2017, All Points Pioneer informed Plaintiff that he had ninety days from the date of delivery to submit a claim via the company’s claim form, Id. ¶ 20. On or about September 11, 2017, East Fork Enterprises, Inc., gave Plaintiff a quote to repair the Goods for $84,168,75. Id. ¶ 22, On September 20, 2017, Plaintiff submitted his claims for the damage. Id. ¶ 23. On September 21, 2017, All Points Pioneer confirmed receipt of the claims. Id. ¶ 24. About a month later, All Points Pioneer informed Plaintiff that its policy is to forward claims to NAVL for its portion related to the move and storage. Id. ¶ 25. On October 27, 2017, All Points Pioneer forwarded Plaintiff’s claims to NAVL. Id.

On January 25, 2018, Plaintiff inquired into the status of his claims with All Points Pioneer and NAVL. Id. ¶ 26. On February 2, 2018, Plaintiff received a letter from NAVL stating that the Goods had been converted to “permanent storage.” Id. ¶ 27. The letter was postmarked January 29, 2018. Id. NAVL then denied Plaintiff’s claims, asserting that Plaintiff failed to make a claim within nine months of the date the Goods were converted to permanent storage. Id.

*2 Plaintiff brought suit in state court, alleging various state-law claims. On November 19, 2018, former defendant Burgess North American Palm Springs Corporation2 removed the case to this Court. See ECF No. 1. On November 29, 2018, Burgess and NAVL moved to dismiss the claims against them. See ECF No. 4. On December 20, 2018, Plaintiff filed the Amended Complaint, dropping the state-law claims and instead alleging violations of the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706. On January 2, 2019, Defendants filed the Second Motion to Dismiss.

II. LEGAL STANDARD
To defeat a motion to dismiss filed pursuant to Federal Rule of Civil Procedure 12(b)(6), a plaintiff must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); Reliable Consultants, Inc. v. Earle, 517 F.3d 738, 742 (5th Cir. 2008). To meet this “facial plausibility” standard, a plaintiff must “plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Plausibility does not require probability, but a plaintiff must establish “more than a sheer possibility that a defendant has acted unlawfully.” Id. The court must accept well-pleaded facts as true and view them in the light most favorable to the plaintiff. Sonnier v. State Farm Mut. Auto. Ins. Co., 509 F.3d 673, 675 (5th Cir. 2007). However, the court does not accept as true “conclusory allegations, unwarranted factual inferences, or legal conclusions.” Ferrer v. Chevron Corp., 484 F.3d 776, 780 (5th Cir. 2007) (citation omitted), A plaintiff must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (internal citations omitted). “Factual allegations must be enough to raise a right to relief above the speculative level … on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. (internal citations omitted).

The ultimate question is whether the complaint states a valid claim when viewed in the light most favorable to the plaintiff. Great Plains Tr. Co. v. Morgan Stanley Dean Witter & Co., 313 F.3d 305, 312 (5th Cir. 2002). At the motion to dismiss stage, the court does not evaluate the plaintiff’s likelihood of success. It only determines whether the plaintiff has stated a claim upon which relief can be granted. Mann v. Adams Realty Co., 556 F.2d 288, 293 (5th Cir. 1977).

III. ANALYSIS

A. Timeliness
When property transported by common carriers is damaged, claims arising out of such damage are controlled by the Carmack Amendment and Interstate Commerce Commission regulations. Landess v. N. Am. Van Lines, Inc., 977 F. Supp. 1274, 1278 (E.D. Tex. 1997) (citing, among other things, 49 U.S.C. § 11707; 49 C.F.R. §§ 1005.1-.7). “Carriers may contractually limit the time for filing claims; however, this limit cannot be less than nine months.” Salzstein v. Bekins Van Lines Inc., 993 F.2d 1187, 1189 (5th Cir. 1993) (citing 49 U.S.C. § 11707(e)). This time limit is not a statute of limitations. Landess, 977 F. Supp. at 1278 (citing State Farm Fire & Cas. v. United Van Lines, 825 F. Supp. 896, 901 (N.D. Cal. 1993)). However, “[s]trict compliance with claim filing provisions is a ‘mandatory condition precedent to recovery on a claim.’ ” Fireman’s Fund McGee v. Landstar Ranger, Inc., 250 F. Supp. 2d 684, 687-88 (S.D. Tex. 2003) (quoting Trailblazers Int’l Inc. v. Cent. Freight Lines, 951 F. Supp. 121, 123 (S.D. Tex. 1996)).

*3 Defendants argue that Plaintiff’s claim is untimely because it was made more than nine months after the shipment was placed into permanent storage on March 2, 2016. The Court disagrees. The Goods were delivered to Plaintiff out of storage on or about July 3, 2017. Defendants received notice of Plaintiff’s claims less than four months later, on October 27, 2017. Viewing the well-pleaded facts in the light most favorable to Plaintiff, as it must at this stage, the Court finds that Plaintiff has adequately pleaded that he made his claim within nine months after delivery of the Goods. See Second Mot. to Dismiss Ex. C, at 4 (“[A] claim for any loss or damage, injury, or delay, must be filed in writing with [NAVL] within nine (9) months after delivery to consignee….” (emphasis added)). While Defendant contends that the Goods were placed into permanent storage, and thus delivered, on March 2, 2016, Plaintiff notes that the Bill of Lading has marks next to both “In Transit” and “Permanent.” See Second Mot. to Dismiss Ex. D, at 1. At this stage, the Court cannot properly resolve such a factual dispute, and Plaintiff’s allegations, taken as true, are sufficient to survive a motion to dismiss.

In the alternative, the Court finds that Plaintiff has adequately pleaded that he made his claim within nine months of when the extent of the damage first could be discovered through reasonable diligence. See Salzstein, 993 F.2d at 1191 (recognizing exception to filing requirements when shipper, despite reasonable diligence, is unable to ascertain extent of its loss within filing period). Therefore, the Court denies Defendants’ Motion to Dismiss on timeliness grounds.

B. Agent Liability
Defendants argue that the claims against Burgess must be dismissed because Burgess acted only as the agent of NAVL. 49 U.S.C. § 13907(a) provides that “[e]ach motor carrier providing transportation of household goods shall be responsible for all acts or omissions of any of its agents which relate to the performance of household goods transportation services….” Not only does the statutory language impose liability on a motor carrier for the acts and omissions of the carrier’s agent, but also “the case law holds that the agent of a disclosed principal cannot be held liable pursuant to a duly issued bill of lading contract.” Fox v. Kachina Moving & Storage, No. 3:98-CV-0842-AH, 1998 WL 760268, at *1 (N.D. Tex. Oct. 21, 1998) (collecting cases).

Plaintiff does not dispute that Burgess was NAVL’s agent, nor does he contest that NAVL was a disclosed principal. Rather, Plaintiff argues that the Court could find Burgess independently liable because “a Burgess representative assured Plaintiff that his goods would be delivered, unpacked, and uncrated with exceptional care.” Resp. 9 (citing Am. Compl. ¶ 13). It is unclear how this statement renders it “likely” that Plaintiff “will prevail against … Burgess.” Id. Without more, this single statement does not establish a basis for finding Burgess liable independently of its role as an agent of NAVL. See Marks v. Suddath Relocation Sys., Inc., 319 F. Supp 2d 746, 752 (S.D. Tex. 2004). Therefore, the Court grants Defendants’ Motion to Dismiss as to Burgess.

IV. CONCLUSION
For the reasons discussed above, the Court grants in part and denies in part Defendants’ Motion to Dismiss. The Court denies the Motion on timeliness grounds. The Court grants the Motion as to Burgess on the grounds that Burgess was acting as an agent for a disclosed principal. Plaintiff has not sought leave to amend. If Plaintiff wishes to amend his claims against Burgess, he must seek leave to file an amended complaint by July 31, 2019. If a motion for leave to file, with the proposed amended complaint attached, is not filed by this date, Plaintiff’s claims against Burgess will be dismissed with prejudice.

SO ORDERED.

All Citations
Slip Copy, 2019 WL 3206916

Footnotes

1
Plaintiff dismissed All Points Investments, Inc., from this lawsuit on January 3, 2019. See ECF No, 13, NAVL filed a Third-Party Claim/Cross-Claim against All Points Investments, Inc., on March 19, 2019. See ECF No. 21.

2
When Plaintiff filed his Amended Complaint, he did not name Burgess North American Palm Springs Corporation as a defendant. See Am. Compl.