Neutral As of: June 19, 2020 4:52 PM Z
Underwriters at Interest v. All Logistics Grp., Inc.
United States District Court for the Southern District of Florida
May 25, 2020, Decided; May 25, 2020, Entered on Docket
Case No. 1:19-cv-21889-KMM

Reporter
2020 U.S. Dist. LEXIS 91810 *

UNDERWRITERS AT INTEREST, a/s/o High Liner Foods (USA) Inc., Plaintiff, v. ALL LOGISTICS GROUP, INC., Defendant/Third-Party Plaintiff, v. LAN CHILE, S.A., Third-Party Defendant.

Prior History: Underwriters at Interest v. All Logistics Grp., Inc., 2019 U.S. Dist. LEXIS 160033 (S.D. Fla., Sept. 17, 2019)

ORDER
THIS CAUSE came before the Court upon Plaintiff Underwriters at Interest’s (“Plaintiff’) Motion for Summary Judgment (“Pl.’s Mot.”) (ECF No. 77), Defendant and Third-Party Plaintiff All Logistics Group, Inc.’s (“All Logistics Group”) Motion for Summary Judgment (“All Logistics Group’s Mot.”) (ECF No. 79) and Third-Party Defendant Lan Chile, S.A.’s (“Lan Chile”) Motion for Summary Judgment1 (“Lan Chile’s Mot.”) (ECF No. 82). The Motions are now ripe for review.

I. BACKGROUND 2
This action arises out of an international shipment of salmon (the “Cargo”), that was exposed to elevated temperatures while in transport. Pl.’s 56.1 ¶¶ 5, 20-21. Lan Chile is an air carrier company that was responsible for shipping the Cargo from Chile to the Miami International Airport. All Logistics [*2] Group’s 56.1 ¶¶ 1, 3; Lan Chile’s Resp. to All Logistics Group’s 56.1 ¶¶ 1, 3. All Logistics Group is a motor-carrier transportation business that was responsible for transporting the Cargo from Miami International Airport to the Slade Gorton Warehouse in Fort Lauderdale, Florida. Pl.’s 56.1 ¶¶ 6-9. High Liner Foods was the consignee of the Cargo. See (“Air Waybills”) (ECF No. 79-1). Plaintiff is High Liner Food’s insurer. Pl.’s 56.1 ¶¶ 1, 26. Plaintiff paid High Liner Food’s claim for the loss of the Cargo and High Liner Foods assigned to Plaintiff its right to recover from the party responsible for the damage. Id. ¶ 26.
All Logistics Group agreed to pick up the Cargo on May 10, 2017 from the Miami International Airport and transport it to the Slade Gorton warehouse in Fort Lauderdale, Florida. Id. ¶¶ 6-9. However, due to an internal miscommunication, All Logistics Group did not pick up the Cargo from the Miami International Airport until May 13, 2017. Id. ¶¶ 9-10, 12-15; Lan Chile’s 56.1 ¶¶ 58-59, 64-66. The Cargo remained in the possession of Lan Chile at the Miami International Airport between May 10, 2017 and May 13, 2017. Lan Chile’s 56.1 ¶ 8. After picking up the Cargo on May [*3] 13, 2017, All Logistics Group stored the Cargo overnight and delivered the Cargo to the Slade Gorton warehouse on May 14, 2017. Pl.’s 56.1 ¶¶ 15, 18; All Logistics Group’s Resp. to Pl.’s 56.1 ¶¶ 15-16. Upon arrival at the Slade Gorton warehouse, High Liner Foods determined that the Cargo had been exposed to warm temperatures.3 Pl.’s 56.1 ¶¶ 20-21. High Liner determined that the Cargo was spoiled due to the Cargo’s exposure to warm temperatures.4 Id. ¶ 21.
On May 10, 2019, Plaintiff filed a complaint against All Logistics Group for the loss of the Cargo. See generally Complaint (“Compl.”) (ECF No. 1). In the Complaint, Plaintiff alleges claims for (1) breach of contract and (2) negligence against All Logistics Group. See generally id. On October 15, 2019, All Logistics Group filed a third-party complaint against Lan Chile. Third-Party Complaint (ECF No. 28). Subsequently, on December 6, 2019, All Logistics Group filed an Amended Third-Party Complaint against Lan Chile. (“Am. Third-Party Compl.”) (ECF No. 54). In the Amended Third-Party Complaint, All Logistics Group alleges two claims against Lan Chile: (1) negligence and (2) common law indemnification. See generally id.
Now, Plaintiff [*4] moves for summary judgment on its breach of contract claim against All Logistics Group. See generally Pl.’s Mot. Further, All Logistics Group moves for summary judgment against Lan Chile on the issue of liability. See generally All Logistics Group’s Mot. Finally, Lan Chile moves for summary judgment on All Logistics Group’s claims against Lan Chile for negligence and indemnification. See generally Lan Chile’s Mot.

II. LEGAL STANDARD
Summary judgment is appropriate where there is “no genuine issue as to any material fact [such] that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986) (quoting Fed. R. Civ. P. 56). A genuine issue of material fact exists when “a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248 (citation omitted). “For factual issues to be considered genuine, they must have a real basis in the record.” Mann v. Taser Int’l, Inc., 588 F.3d 1291, 1303 (11th Cir. 2009) (citation omitted). Speculation cannot create a genuine issue of material fact sufficient to defeat a well-supported motion for summary judgment. Cordoba v. Dillard’s, Inc., 419 F.3d 1169, 1181 (11th Cir. 2005).
The moving party has the initial burden of showing the absence of a genuine issue as to any material fact. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). In assessing whether the moving party has met this burden, a court must view the movant’s [*5] evidence and all factual inferences arising from it in the light most favorable to the non-moving party. Denney v. City of Albany, 247 F.3d 1172, 1181 (11th Cir. 2001). Once the moving party satisfies its initial burden, the burden shifts to the non-moving party to present evidence showing a genuine issue of material fact that precludes summary judgment. Bailey v. Allgas, Inc., 284 F.3d 1237, 1243 (11th Cir. 2002); see also Fed. R. Civ. P. 56(e). “If reasonable minds could differ on the inferences arising from undisputed facts, then a court should deny summary judgment.” Miranda v. B & B Cash Grocery Store, Inc., 975 F.2d 1518, 1534 (11th Cir. 1992) (citation omitted). But if the record, taken as a whole, could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial, and summary judgment is proper. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986) (citation omitted).

III. DISCUSSION

A. Plaintiff’s Motion for Summary Judgment Against All Logistics Group
Plaintiff moves summary judgment on its claim for breach of contract against All Logistics Group. See generally Pl.’s Mot. Specifically, Plaintiff argues that All Logistics Group failed to pick up the Cargo on the date it contracted to do so, resulting in damage to the Cargo. Id. at 4-5. In response, All Logistics Group argues that (1) motor carriers are not liable for damage which occurred prior to the motor carrier’s receipt of the cargo; and (2) Plaintiff did not [*6] present evidence that the Cargo was actually damaged. All Logistics Group’s Resp. to Pl.’s Mot. at 4-7. For the reasons set forth below, the Court finds that Plaintiff has met its burden establishing that Plaintiff and All Logistics Group had a contract and All Logistics Group breached the contract. However, the Court fmds that Plaintiff has not met its burden establishing that (1) the breach damaged Plaintiff; and (2) that the damage award includes the full value of the Cargo.
Under Florida law, “[t]he elements of an action for breach of contract are: (1) the existence of a contract, (2) a breach of the contract, and (3) damages resulting from the breach.” Rollins, Inc. v. Butland, 951 So.2d 860, 876 (Fla. Dist. Ct. App. 2006) (citation omitted). “A party cannot recover damages for breach of contract unless it can prove that the damages were proximately caused by the breach.” Crowley Am. Transp., Inc. v. Richard Sewing Mach. Co., 172 F.3d 781, 784 (11th Cir. 1999) (citation omitted). “Damages recoverable by a party injured by a breach of contract are those that naturally flow from the breach and can reasonably be said to have been contemplated by the parties at the time the contract was entered into.” Mnemonics, Inc. v. Max Davis Assocs., Inc., 808 So.2d 1278, 1280 (Fla. Dist. Ct. App. 2002) (citation omitted). For damages to be foreseeable, the parties need not contemplate the precise injury which occurred so long as the actual [*7] consequences could have reasonably been expected to flow from the breach. Nat. Kitchen, Inc. v. Am. Transworld Corp., 449 So.2d 855, 860 (Fla. Dist. Ct. App. 1984) (citation omitted).
Here, Plaintiff has met its burden establishing that the Parties had a contract and All Logistics Group breached that contract. Namely, Plaintiff presented evidence establishing that the parties reached an agreement, through a broker, which included a date for performance. Pl.’s 56.1 ¶¶ 6-7, 9-10. And, it is undisputed that All Logistics Group failed to pick up the Cargo on the agreed upon date, which is a breach of the contract. Id. ¶¶ 10-15; Franconia Assocs. v. United States, 536 U.S. 129, 142-43, 122 S. Ct. 1993, 153 L. Ed. 2d 132 (2002) (“Failure by the promisor to perform at the time indicated for performance in the contract establishes an immediate breach.”) (citation omitted). Moreover, All Logistics Group does not dispute that the Parties had an agreement and All Logistics Group failed to perform. See generally All Logistics Group’s Resp. to Pl’s 56.1; All Logistics Group’s Resp. to Pl.’s Mot.; see Fed. R. Civ. P. 56(e) (“If a party . . . fails to properly address another party’s assertion of fact . . . the court may . . . consider the fact undisputed for purposes of the motion.”). Because Plaintiff has satisfied its initial burden, the burden shifts to All Logistics Group to present evidence showing [*8] a genuine issue of material fact that precludes summary judgment. Bailey, 284 F.3d at 1243; see also Fed. R. Civ. P. 56(e).
All Logistics Group has not shown that there is a genuine issue of material fact as to All Logistics Group’s breach of the contract. All Logistics Group argues that as a motor carrier, its liability is limited to damage which occurs to cargo in its possession. All Logistic Group Resp. to Pl. Mot. at 4. Specifically, All Logistics Group argues that Plaintiff is required to show that All Logistics Group received the Cargo in good condition for All Logistics Group to be liable for any damage to the Cargo. Id. However, All Logistics Group has not established that Florida state law limits the liability of motor carriers to damage to cargo which occurs in their possession.5
Specifically, the cases that All Logistics Groups relies upon do not establish that the liability of a motor carrier is limited to damage which occurs to cargo in its possession. The court in J & J Logistics, LLC v. Reilly Transp., Inc. held that a broker is not liable for damage to cargo which occurs after the broker successfully delivers the cargo to a motor carrier because the motor carrier [*9] assumes full responsibility for the cargo once it is in its possession. See No. 09-8069, 2009 U.S. Dist. LEXIS 139019, 2009 WL 10668955, at *4 (S.D. Fla. Dec. 30, 2009). Further, the court in Housel v. Ryder Truck Lines, Inc. held that a rebuttable presumption of negligence on the part of the motor carrier arises when the shipper shows that the goods were delivered to the carrier in good condition and delivered thereafter in bad condition. 233 So.2d 424 (Fla. Dist. Ct. App. 1970). As such, these cases do not establish that a motor carrier’s liability is limited to damage which occurs while the cargo is in the motor carrier’s possession. Therefore, All Logistics Group has not presented any evidence establishing that there is a genuine issue of material fact as to All Logistics Group’s liability for its breach of the contract.
Nevertheless, Plaintiff has not met its burden establishing what, if any, damages flowed from the breach. See Avante at Boca Raton, Inc. v. Senior Care Pharm. of Fla., LLC, 113 So. 3d 874, 879 (Fla. Dist. Ct. App. 2012) (“It is . . . the plaintiffs burden in a case to establish proof of damages by competent evidence.”) (citation omitted). Plaintiff argues that it is entitled to the full value of the Cargo as a result of All Logistics Group’s breach. Pl.’s Mot. at 6-7. In response, All Logistics Group argues that Plaintiff hasn’t established that the Cargo was actually damaged or needed to be discarded [*10] as a result of the Cargo’s exposure to warm temperatures. All Logistics Group’s Resp. to Pl.’s Mot. at 6-8. As set forth more fully below, the Court finds that there is a genuine issue as to whether (1) the Cargo was damaged as a result of its exposure to warm temperatures; and (2) if the Cargo was damaged, whether Plaintiff is entitled to the full value of the Cargo.
First, Plaintiff has not met its burden establishing that there is no genuine issue whether the Cargo was damaged as a result of the exposure to warm temperatures. See Avante at Boca Raton, Inc., 113 So. 3d at 879 (citation omitted). Plaintiff does not provide any direct evidence establishing that the Cargo was spoiled. For example, Plaintiff does not provide evidence that a test of the Cargo found bacterial growth or other indicators of spoilage. Rather, Plaintiff argues that the evidence that the Cargo was exposed to elevated temperatures conclusively establishes that the Cargo was unmarketable. Pl.’s Mot. at 6-7; Pl.’s Reply at 3-4. Plaintiff relies on guidance from the United States Food and Drug Administration (“FDA”) and Hazard Analysis Critical Control Point systems to establish that the exposure to warm temperatures rendered the Cargo unmarketable. Pl.’s [*11] Reply at 4. The FDA guidance provides a chart with recommended maximum cumulative time that seafood can be exposed to certain temperatures in order to limit the risk that a potentially hazardous condition develops, such as bacterial growth. See U.S. Food and Drug Admin., Fish and Fishery Products Hazards and Controls 421. As such, Plaintiff argues that the FDA guidance provides conclusive evidence that the Cargo had to be discarded as it was exposed to elevated temperatures which exceeded the recommended maximum time limit Pl.’s Reply at 4.
Although the FDA guidance is persuasive, it is not conclusive evidence that the Cargo was damaged. First, the guidance is not a mandatory regulation. See U.S. Food and Drug Admin., Fish and Fishery Products Hazards and Controls 417 (“This guidance represents the [FDA]’s current thinking on this topic. It does not create or confer any rights for or on any person and does not operate to bind the FDA or the public.”). If the guidance provided mandatory restrictions on selling seafood that had been exposed to elevated temperatures, then the FDA guidance would be conclusive evidence because Plaintiff would have been unable to sell the Cargo as a matter [*12] of law. Second, the guidance only provides that exposure to elevated temperatures creates a potential risk of hazardous conditions. Namely, the FDA guidance notes that “the food matrix effects bacterial growth . . . Consideration of such attributes is needed when using the table” that sets forth the recommended maximum exposure to elevated temperatures. Id. Therefore, although the guidance may establish a likelihood that the Cargo was at risk of bacterial growth, the guidance is not conclusive that the Cargo was spoiled. As such, taking all inferences in favor of All Logistics Group, there is a genuine issue whether the Cargo was damaged as a result of its exposure to warm temperatures.
Second, Plaintiff has not established that the damage to the Cargo was a result of the breach and, thus, that Plaintiff is entitled to the full value of the Cargo. See Prestige Dev. Group, Inc. v. Russell, 612 So.2d 691, 692 (Fla. Dist. Ct. App. 1993) (“The burden is on the plaintiff in a contract dispute to prove that his damages were caused by a breach of contract.”) (citation omitted). Specifically, Plaintiff has not established that an award of either general or special damages would include the full value of the Cargo. General damages are the damages which may fairly and reasonably [*13] be considered as arising in the usual course of events from the breach of contract itself. Keystone Airpark Auth. v. Pipeline Contractors, Inc., 266 So.3d 1219, 1222 (Fla. Dist. Ct. App. 2019) (citation omitted). “In contrast, special damages are those that do not necessarily result from the wrong or breach of contract complained of, or which the law does not imply as a result of that injury, even though they might naturally and proximately result from the injury. JP Morgan Chase Bank Nat. Ass ‘n v. Colletti Invs., LLC, 199 So. 3d 395 (Fla. Dist. Ct. App. 2016). To recover special damages, a plaintiff must establish that the damage “may reasonably be supposed to have been in contemplation of the parties at the time they made the contract.” Hardwick Props., Inc. v. Newbern, 711 So. 2d 35, 40 (citation omitted). Special damages require that the carrier has actual notice of the possibility of injury. Keystone Airpark Auth., 266 So.3d at 1222 (citation omitted).
Plaintiff has not established that an award of general damages includes the damage to the Cargo. Namely, there is dispute of fact whether the damage to the Cargo was the direct and necessary result of the breach. Id. (“General damages are ‘those damages which naturally or necessarily flow or result from the injuries alleged.’) (citation omitted). All Logistic Group’s breach was the failure to pick up the Cargo on the agreed upon date. A direct and necessary injury as a result of a delay in [*14] picking up cargo is, for example, if the delay results in perishable goods being delivered passed their expiration date. However, the damage to the Cargo was not clearly a direct result of the delay, rather, it was the result of the improper storage of the Cargo by a third party, Lan Chile. And, Plaintiff has not established that a third party’s improper storage of cargo is a direct and necessary result of a party’s delay in picking up the cargo. Therefore, there is a genuine issue whether the damages were a direct and necessary result of the breach such that an award of general damages includes the resulting damage to the Cargo.
Further, Plaintiff has not established that it is entitled to the full value of the Cargo as an award of special damages. See Prestige Dev. Group, Inc., 612 So.2d at 692. Plaintiff established that All Logistics Group had notice of the perishable nature of the Cargo and, thus, All Logistics Group was on notice that improper care of the Cargo may result in damage. See Keystone Airpark Auth., 266 So.3d at 1222 (citation omitted) (“[S]pecial damages are awarded only if actual notice were given to the carrier of the possibility of injury.”). However, Plaintiff has not established that notice of the perishable condition makes it foreseeable that [*15] a delay in picking up the Cargo would result in damage to the Cargo due to improper care by a third party. Nat. Kitchen, Inc., 449 So.2d at 860 (“For damages to be foreseeable, the parties need not contemplate the precise injury which occurred so long as the actual consequences could have reasonably been expected to flow from the breach.”) (citation omitted). Therefore, Plaintiff has not established that there is no genuine issue of fact as to the damage award resulting from the breach.
In conclusion, Plaintiff has met its burden establishing that there is no genuine dispute that All Logistics Group breached their contract. However, Plaintiff has not established what, if any, damages resulted from the breach of contract. Therefore, pursuant to Rule 56(g) of the Federal Rules of Civil Procedure, the Court finds that Plaintiff has established that All Logistics Group had a contract for All Logistics Group to pick up the Cargo on May 10, 2017 and All Logistics Group breached the contract by failing to pick up the Cargo. See Fed. R. Civ. P. 56(g) (“If the court does not grant all the relief requested by the motion, it may enter an order stating any material fact . . . that is not genuinely in dispute and treating the fact as established in the case.”). Accordingly, Plaintiffs Motion for Summary [*16] Judgment is GRANTED IN PART and DENIED IN PART.

B. Lan Chile and All Logistics Group’s Cross-Motions for Summary Judgment
Next, Lan Chile moves for summary judgment on All Logistics Group’s claims for negligence and indemnification. Additionally, All Logistics Group moves for summary judgment on the issue of Lan Chile’s liability. For the reasons set forth below, Lan Chile’s Motion is GRANTED and All Logistics Group’s Motion is DENIED.
L All Logistics Group’s Claim for Indemnification
Lan Chile moves for summary judgment on All Logistics Group’s claim for indemnification because All Logistics Group cannot prove that it was wholly without fault. Lan Chile’s Mot. at 14-15. In response, All Logistics Group argues that it is wholly without fault because the Cargo was damaged before All Logistics Group took possession of the Cargo. All Logistics Group Resp. to Lan Chile’s Mot. at 11-13.
To establish common law indemnity a plaintiff must establish that (1) the party seeking indemnity must be without fault; (2) the party from whom he is seeking indemnity is wholly at fault; and (3) the party seeking indemnity is liable to the injured party only because it is vicariously, constructively, derivatively, [*17] or technically liable for the wrongful acts of the party from whom he is seeking indemnity See Heapy Eng’g, LLP v. Pure Lodging, Ltd., 849 So. 2d 424, 425 (Fla. Dist. Ct. App. 2003) (citation omitted); Fla. Farm Bureau Gen. Ins. Co. v. Ins. Co. of N Am., 763 So.2d 429, 435 (Fla. Dist. Ct. App. 2000) (citation omitted).
Moreover, recovery for common law indemnity is precluded if both parties are at fault, no matter how slight the fault of the party seeking indemnity See Am. Home Assur. Co. v. Weaver Aggregate Transp., Inc., 990 F. Supp. 2d 1254, 1270 (M.D. Fla. 2013) (citation omitted). As such, a court will not weigh the relative fault of the parties, but rather will look to the party seeking indemnity to see if it is without fault. See Houdaille Indus., Inc. v. Edwards, 374 So.2d 490, 493 (Fla. 1979) (citation omitted). Therefore, it is immaterial whether the party against whom indemnification is sought is also with fault. See id. To be wholly without fault means that the basis of the claim for indemnification does not arise out of any conduct or act of the party seeking indemnification. See Auto-Owners Ins. Co. v. Ace Elec. Serv. Inc., 648 F. Supp. 2d 1371, 1379 (M.D. Fla. 2009).
Here, Lan Chile has met its burden establishing that there is no genuine dispute that All Logistics Group cannot prove that it is wholly without fault because All Logistics Group failed to pick up the Cargo on the agreed upon date. Lan Chile’s Mot. at 15; Lan Chile’s 56.1 ¶¶ 58-59. All Logistics Group argues that it is wholly without fault because the damage occurred prior to when it took possession of the Cargo, which is [*18] when its duty under the law to care for the Cargo arose. All Logistics Group Resp. to Lan Chile’s Mot. at 11-13. However, to be wholly without fault does not mean that the party seeking indemnity did not violate a legal duty. Rather, to be wholly without fault, the basis of the claim for indemnity must not arise out of any conduct or act of the party seeking indemnity See Auto-Owners Ins. Co., 648 F. Supp. 2d at 1379; Am. Home Assur. Co., 990 F. Supp. 2d at 1270 (citation omitted). And, it is undisputed that All Logistics Group’s conduct at least partially forms the basis of the indemnity claim. Namely, All Logistics Group failed to pick up the Cargo on the date that it agreed to do so, resulting in the Cargo being improperly stored. Pl.’s 56.1 ¶¶ 9-10, 12-15; Lan Chile’s 56.1 ¶¶ 58-59, 64-66. Therefore, taking all inferences in favor of All Logistics Group, there is no dispute that All Logistics Group is unable to establish an essential element of its claim for indemnification. See Denney, 247 F.3d at 1181. As such, summary judgment in favor of Lan Chile is warranted on All Logistics Group’s claim for indemnification.

ii. All Logistic Group’s Claim for Negligence
Next, Lan Chile moves for summary judgment on All Logistics Group’s claim for negligence because (1) if the Montreal Convention6 preempts [*19] All Logistics Group’s negligence claim, the claim is time-barred; and (2) alternatively, if Florida state law applies, All Logistics Group’s negligence claim fails as a matter of law because All Logistics Group only seeks economic damages. Lan Chile’s Mot. at 10-14. In response, All Logistics Group argues that the (1) Montreal Convention does not preempt its negligence claim; and (2) its negligence claim is permissible claim under Florida law. All Logistics Group’s Resp. to Lan Chile’s Mot. at 2, 5-6, 9. The Court addresses each argument in turn.

1. The Montreal Convention Does Not Preempt All Logistics Group’s Negligence Claim
Lan Chile argues that the Montreal Convention applies and preempts All Logistics Group’s negligence claim. Lan Chile’s Mot. at 3-5. Specifically, Lan Chile argues that the Montreal Convention preempts All Logistics Group’s negligence claim because it is a claim for damages. Id. In response, All Logistics Group argues that the Montreal Convention does not preempt its negligence claim because (1) All Logistics Group was not a party to the air waybills between High Liner Foods and Lan Chile; and (2) its negligence claim is not a claim for damages but a claim for [*20] a right of recourse. 7 All Logistics Group’s Resp. to Lan Chile’s Mot. at 2, 5-6. The Montreal Convention is “a multinational treaty that provides uniform rules for liability in international air carriage.” Underwriters at Lloyds Subscribing to Cover Note B0753PC1308275000 v. Expeditors Korea Ltd., 882 F.3d 1033, 1035 (11th Cir. 2018). The Montreal Convention governs the liability of air carriers in the “international carriage of persons, baggage, or cargo performed by aircraft for reward.” Montreal Convention art. 1. “For all air transportation to which the Montreal Convention applies, if an action for damages falls within one of the treaty’s damage provisions, then the treaty provides the sole cause of action under which a claimant may seek redress for his injuries.” Ugaz v. Am. Airlines, Inc., 576 F. Supp. 2d 1354, 1360 (S.D. Fla. 2008) (citing El Al Isr. Airlines, Ltd. v. Tsui Yuan Tseng, 525 U.S. 155, 176, 119 S. Ct. 662, 142 L. Ed. 2d 576 (1999)).
Article 35 of the Montreal Convention provides that “[t]he right to damages shall be extinguished if an action is not brought within a period of two years[.]” Montreal Convention art. 35. However, courts have held that the statute of limitation in Article 35 only applies to claims for damages and it does not apply to claims for a right of recourse. See, e.g., Chubb Ins. Co. of Europe S.A. v. Menlo Worldwide Forwarding, Inc., 634 F.3d 1023, 1026-1027 (9th Cir. 2011); Tokio Marine & Nichido Fire Ins. Co., Ltd. v. Danzas Corp., No. 17 C 7228, 2018 U.S. Dist. LEXIS 81803, 2018 WL 2214093, at *2-3 (N.D. Ill. May 15, 2018); AGCS Marine Ins. Co. v. Geodis Calberson Hungaria Logisztikai KFT, Case No. 16—CV-9710 (JMF), 2017 U.S. Dist. LEXIS 195270, 2017 WL 5891818, at *3 (S.D.N.Y. Nov. 28, 2017).
Neither Article [*21] 35 nor the remainder of the Montreal Convention expressly defines a “right to damages.” Tokio Marine & Nichido Fire Ins. Co., Ltd., 2018 U.S. Dist. LEXIS 81803, 2018 WL 2214093, at *2. (citation omitted). In Chubb, the United States Court of Appeals for the Ninth Circuit “engaged in a textual analysis and determined that when the Montreal Convention is read as a whole” then what a right for damages is becomes clear. Id. (quoting Chubb Ins. Co. of Europe S.A., 634 F.3d at 1026). The Ninth Circuit held that a claim for damages in Article 35 “is the cause of action under the Montreal Convention by which a passenger or consignor may hold a carrier liable for damages sustained to passengers, baggage, or cargo.” Chubb Ins. Co. of Europe S.A., 634 F.3d at 1026-27. Moreover, the Ninth Circuit noted that the Montreal Convention distinguishes between claims for damages and rights of recourse. Id. And, the Ninth Circuit held that because the Montreal Convention distinguishes between claims for damages and rights of recourse, the two-year statute of limitations in Article 35 only applies to claims for damages and does not apply to rights of recourse. Id. at 1027.
Further, the Ninth Circuit provided a broad definition of a right of recourse. Although in Chubb, the causes of action at issue were contribution and indemnification, the Ninth Circuit did not limit a right of recourse to be specific [*22] causes of action. Id. at 1027. Rather, the Ninth Circuit broadly defined rights of recourse as claims seeking secondary liability. Id. at 1026-27. That is, a claim seeking reimbursement for claims or liability that it has paid, rather than “damage sustained to passengers, baggage, or cargo.” Id. Therefore, claims for secondary liability, regardless of the specific type of cause of action, are not subject to the two-year statute of limitations in Article 35 of the Montreal Convention.
Here, All Logistics Group’s claim for negligence is not preempted by the Montreal Convention. Although a negligence claim is traditionally a claim for damages, All Logistics Group’s negligence claim is a not claim for the damage to the Cargo itself. Rather, All Logistics Group argues that Lan Chile is secondarily liable and should compensate All Logistics Group if All Logistics Group is found liable to Plaintiff, which is the functional equivalent of a claim for contribution.8 See Env. Progress, Inc. v. Met. Life Ins. Co., No. 12-cv-80907, 2013 U.S. Dist. LEXIS 191834, 2013 WL 12084488, at *3 (S.D. Fla. Apr. 1, 2013) (“While [the defendant] claims that it is pursuing relief in the form of negligence, it is ultimately seeking to have [the cross-claim defendant] pay for some or all of the costs associated with [*23] this case if it is found liable . . ., which is the functional equivalent [of] a claim for contribution.”) (citation omitted). Therefore, because All Logistics Group’s claim for negligence is seeking reimbursement for any damages All Logistics Group may have to pay if found liable, it is a claim for a right of recourse rather than a claim for damages. See Chubb Ins. Co. of Europe S.A., 634 F.3d at 1026-27. Thus, the Montreal Convention does not preempt All Logistics Group’s claim for negligence. Id.

2. All Logistics Group’s Negligence Claim is Barred by Florida State Law
Next, Lan Chile argues that, even if Florida law applies, All Logistics Group’s claim fails as a matter of law. Lan Chile’s Mot. at 10-14. Specifically, Lan Chile argues that there is no special relationship nor extraordinary circumstances such that Lan Chile owed All Logistics Group a duty to protect All Logistics Group’s economic interests. Id. In response, All Logistics Group argues that Lan Chile had a duty to properly care for the Cargo. All Logistics Group’s Resp. to Lan Chile’s Mot. at 9.
Under Florida law, plaintiffs are generally not permitted to recover “for purely economic losses when the plaintiff has sustained no bodily injury of property damage.” Curd v. Mosaic Fertilizer, LLC, 39 So.3d 1216, 1223-24 (Fla. 2010) (citation [*24] omitted). “The reasoning because this general rule is that if courts allowed compensation for all losses of economic advantages caused by a defendant’s negligence, a defendant would be subject to claims based on remote and speculative injures that he could not foresee.” Id. at 1224 (citation omitted). In our legal tradition, purely economic risks are normally left to private bargaining, and thus, more appropriately addressed by contractual principles rather than expanding the “social contract” created by negligence law to include a duty to care to protect against losses unconnected to bodily injury or property damage. See Monroe v. Sarasota Cty. Sch. Bd., 746 So.2d 530, 535 (Fla. Dist. Ct. App. 1999).
However, Florida “courts have occasionally expanded the tort of negligence by creating duties to protect plaintiffs in situations that do not result in personal injury or property damage.” Lucarelli Pizza & Deli v. Posen Constr., Inc., 173 So. 3d 1092, 1094 (Fla. Dist. Ct. App. 2015). But Florida courts have only created duties to protect economic interests “when specific circumstances have warranted a more liberal judicial rule and an expanded duty of care.” Id. (citation omitted). Therefore, to proceed on a common law negligence claim based solely on economic damages, there must be some sort of link between the parties or some other extraordinary circumstance which [*25] would justify the imposition of such a duty. Tank Tech Inc. v. Valley Tank Testing, L.L.C., 244 So.3d 383, 393 (Fla. Dist. Ct. App. 2018) (citation omitted). “Difficult economic loss cases all seem to examine the relationship between the parties to determine whether it warrants creating a duty to protect economic interests outside contract and statutory law.” Monroe, 746 So.2d at 534 n.6.
For example, in Curd, the Florida Supreme Court found a fertilizer company owed a duty to protect commercial fisherman’s economic interests where the fertilizer company polluted the body of water in which the commercial fisherman fished. 39 So.3d at 1228. The Florida Supreme Court found that the duty arose from the nature of the fertilizer company’s business and the special interest of the commercial fisherman. Id. First, the Florida Supreme Court noted that that the nature of the fertilizer company’s business involved the storage of pollutants and hazardous containments. Id. Thus, the Florida Supreme Court found that it was foreseeable that if these materials were released into the water, it would cause damage to marine and plant life, as well as human activities. Id. Second, the Florida Supreme Court emphasized that the commercial fisherman had a protectable economic interest. Id. Specifically, the commercial fisherman had a quasi-property [*26] right in the marine life, which was not shared with the general public as a whole. Id. The Florida Supreme Court further noted that the commercial fishermen were licensed to conduct commercial activities in those waters and were dependent on the waters to earn their livelihood. Id. Therefore, the Florida Supreme Court held that the fertilizer company owed the commercial fisherman a duty to protect the commercial fisherman’s economic interests.
In contrast, the court in Tank Tech found that the defendant did not owe a duty to protect the economic interests of the plaintiff. Tank Tech Inc., 244 So.3d at 394. In Tank Tech, the plaintiff had been hired to modify underground petroleum storage tanks and the defendant had been hired to test plaintiffs modifications. Id. at 386-87. The defendant damaged the tanks while testing them, and plaintiff was required to cover the repair costs due to its contract with the owner of the tanks. Id.
The court in Tank Tech found that there was no special relationship between the parties nor extraordinary circumstances which would justify a claim seeking only economic damages. Id. at 394. First, the court noted that there was no contract between the plaintiff and the defendant requiring the defendant to repair [*27] any damage or reimburse the plaintiff for repairing any damage. Id. Second, the court noted that the plaintiff did not have a special or unique interest that would constitute an extraordinary circumstance, similar to the commercial fisherman’s property right in Curd. Id. Third, the court noted that the plaintiff’s damages flowed from its contractual obligation to a third party, rather than from the damage to the tanks. Id. Central to the court’s decision in Tank Tech, the court found that the plaintiff was seeking to relieve itself of a bad bargain by shifting blame to the defendant, which is not permitted under tort law. Id. Thus, the court held that the defendant did not owe the plaintiff a duty to protect the plaintiff’s economic interests.
Here, Lan Chile has met its burden establishing that there is no special relationship nor extraordinary circumstances which warrants imposing a duty on Lan Chile to protect All Logistics Group’s economic interests. First, there is no contract between All Logistics Group and Lan Chile obligating Lan Chile to keep the salmon frozen or for Lan Chile to repay All Logistics Group for any expenses incurred pursuant to All Logistics Group’s contract [*28] with High Liner Foods. Lan Chile’s 56.1 ¶ 74; see also Tank Tech Inc., 244 So.3d at 394. All Logistics Group attempts to establish that Lan Chile had a duty to care for the Cargo due to the Air Waybills between Lan Chile and Plaintiff. All Logistics Group’s Resp. to Lan Chile’s Mot. 9-10. However, even if Lan Chile negligently damaged the Cargo, this does not automatically create a duty to protect against all economic losses which may occur as a result of Lan Chile’s negligence. See Curd, 39 So.3d at 1223-24 (“[I]f courts allowed compensation for all losses of economic advantages caused by a defendant’s negligence, a defendant would be subject to claims based upon remote and speculative injuries that he could not foresee.”). For example, in Tank Tech, the court declined to expand tort liability to include plaintiff’s economic losses, even though the defendant’s actions directly and solely caused the property damage. Tank Tech Inc., 244 So.3d at 394. Moreover, All Logistics Group could have negotiated a contract with the shipper to account for this economic risk and, therefore, this type of economic risk is better addressed by contract law rather than tort law. See Monroe, 746 So.2d at 537 (“[T]he existence of a contractual relationship is a good reason not to create a negligence cause of action [*29] shifting economic risks that the parties could have shifted through bargaining.”) (citations omitted).
Second, All Logistics Group does not have a special nor unique interest that would constitute an extraordinary circumstance warranting the imposition of a duty on Lan Chile. In Curd, the defendant’s duty to protect plaintiff’s economic interest arose from plaintiffs quasi-property right to the waters. 39 So.3d at 1228. However, All Logistics Group does not have a quasi-property right to the Cargo nor did any action by Lan Chile damage an economic expectancy of All Logistics Group. Moreover, All Logistics Group’s economic damages do not flow from the damage to the Cargo itself, but from its contractual obligation with Plaintiff. See Tank Tech, 244 So.3d at 394. Specifically, any damages All Logistics Group may owe to Plaintiff flow from its failure to perform pursuant to its contractual obligation. As such, “[t]his is simply a case of a party attempting to bring a tort claim to recover monies that it spent as a result of a contractual obligation to a third party[,]” which is not a permitted negligence claim under Florida state law. Id. Therefore, taking all inferences in favor of All Logistics Group, there is no genuine dispute [*30] of material fact that Lan Chile did not owe a duty to All Logistics Group to protect All Logistics Group’s economic interest. Thus, summary judgment is warranted in favor of Lan Chile on All Logistics Group’s negligence claim
In conclusion, Lan Chile has met its burden establishing that there is no genuine issue of material fact that All Logistics Group’s indemnification and negligence claims fail as a matter of law. Thus, Lan Chile’s Motion for Summary Judgment is GRANTED.9

IV. CONCLUSION
Accordingly, UPON CONSIDERATION of the Motions, the pertinent portions of the record, and being otherwise fully advised in the premises, it is hereby ORDERED AND ADJUDGED that Plaintiff’s Motion for Summary Judgment (ECF No. 77) is GRANTED IN PART and DENIED IN PART, Third-Party Defendant Lan Chile’s Motion for Summary Judgment (ECF NO. 82) is GRANTED, and Defendant/Third-Party Plaintiff All Logistics Group’s Motion for Summary Judgment (ECF No. 84) is DENIED. It is FURTHER ORDERED that the Clerk of Court is INSTRUCTED to TERMINATE Lan Chile as a third-party defendant.
DONE AND ORDERED in Chambers at Miami, Florida, this 25th day of May, 2020.
/s/ K. Michael Moore
K. MICHAEL MOORE
UNITED [*31] STATES CHIEF DISTRICT JUDGE

In re Idaho Workers Comp. Bd.
Supreme Court of Idaho
June 18, 2020, Filed
Docket No. 46840

Reporter
2020 Ida. LEXIS 115 *

In Re Appeal from Decision of the Idaho Workers Compensation Board. TRAVELERS INSURANCE CO. Petitioner-Appellant, v. ULTIMATE LOGISTICS, LLC, Respondent-Respondent on Appeal.

Notice: Decision text below is the first available text from the court; it has not been editorially reviewed by LexisNexis. Publisher’s editorial review, including Headnotes, Case Summary, Shepard’s analysis or any amendments will be added in accordance with LexisNexis editorial guidelines.

[*1] Boise, January 2020 Term
Opinion Filed: June 18, 2020
Melanie Gagnepain, Clerk
)
)
Appeal from the District Court of the Fourth Judicial District, State of Idaho, Ada County. Michael J. Reardon, District Judge.
The decision of the district court is affirmed.
Eberle, Berlin, Kading, Turnbow & McKlveen Chtd., for Appellant. Neil D. McFeeley argued.
Armstrong & Kirkendall, Chtd., for Respondent. Lawrence E. Kirkendall argued.
_____________________________
BURDICK, Chief Justice.
Travelers Insurance Co. (“Travelers”) appeals the decision of the district court, affirming a final order of the Idaho Department of Insurance in favor of Ultimate Logistics, LLC (“Ultimate”). The Department of Insurance’s final order upheld a hearing officer’s determination that two mechanics working for Ultimate were improperly included in a premium-rate calculation made by Travelers. In its petition for judicial review, Travelers argued that the Department of Insurance acted outside the scope of its statutory authority in determining that the mechanics could not be included in the premium-rate calculation. The district court rejected this argument. Because we conclude that the district court’s [*2] ruling was correct, we affirm.
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I. FACTUAL AND PROCEDURAL BACKGROUND
The National Council on Compensation Insurance (“NCCI”) is a rating organization licensed by the State of Idaho pursuant to Idaho Code section 41-1620(1). Every insurer that provides workers’ compensation insurance in Idaho is required to be a member of a rating organization such as NCCI. I.C. § 41-1615.
Insurers that are members of a rating organization must adhere to the rating organization’s manuals of classification, rules, rates, and rating plans. I.C. § 41-1620(3). NCCI provides a number of services to insurance companies, such as analyzing trends, supplying workers’ compensation information, assisting in pricing, analyzing proposed legislation, and preparing insurance rate recommendations. NCCI also publishes several manuals for insurers to follow. One manual, called the “Basic Manual,” contains rules governing workers’ compensation insurance policies and over 600 classification codes used to classify businesses. Another manual, called the “Scopes Manual,” is also used to classify businesses under classification codes. The premium rates for workers’ compensation insurance paid by businesses are determined based on the classification code applicable to the business.
When [*3] a business is unable to secure workers’ compensation insurance on the voluntary market, it can apply to NCCI for an “assigned risk policy.” NCCI, as the plan administrator, then assigns an insurance carrier operating in the state to handle the policy. Once an “assigned risk policy” has been assigned to an insurance carrier, the carrier may conduct an audit to determine whether the business and the individuals on its payroll have been classified correctly. Depending on the results of the audit, the premium may be adjusted by the insurance carrier, both retroactively and prospectively.
Every rating organization licensed in Idaho is required to provide any person aggrieved by the application of its rating system to their workers’ compensation policy the opportunity to be heard. I.C. § 41-1622(2). NCCI designated the Idaho Workers’ Compensation Appeals Board (“Board”) to review the claims of persons aggrieved by the application of its rating system. Despite its name, the Board is not a state agency. Rather, the Board operates in conjunction with NCCI, providing an in-person hearing to aggrieved parties after NCCI makes an initial decision. Any party affected by a decision of the Board may appeal the Board’s [*4] decision to the Idaho Department of Insurance. I.C. § 41-1622(2).
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The Department of Insurance is a state agency. I.C. § 41-201. The Director of the Department of Insurance is tasked with enforcing the Idaho Insurance Code and may delegate his powers and duties to subordinates. I.C. §§ 41-207, -210(1)-(2).
When the Director appoints a hearing officer to hear an appeal, the hearing officer must issue either a recommended order or a preliminary order under the Idaho Administrative Procedure Act. I.C. § 67-5243. Upon the request of a party, a hearing officer’s preliminary decision is reviewable by the Director. I.C. § 67-5245(2)-(3). If an issue is appealed to the Director, he hears the issue and enters a final order. I.C. § 67-5245(6). A final order of the Department of Insurance is, in turn, subject to judicial review. I.C. § 67-5270.
Travelers is a member of NCCI which provides workers’ compensation insurance in Idaho. NCCI assigned Travelers to provide an “assigned risk policy” to Ultimate. Travelers audited Ultimate for the year of 2015 and found that Ultimate had been misclassified. Travelers believed Ultimate should have been classified as a trucking company as defined under Classification Code 7219 of NCCI’s Scopes Manual. Travelers also determined that two mechanics working with Ultimate should have [*5] been included in its premium-rate calculation. Accordingly, Travelers sent an invoice to Ultimate for $39,000 in premiums to make up for the additional risks covered by the policy during the previous coverage periods.
Ultimate disagreed with Travelers’ classification of its business and the inclusion of the two mechanics in the premium-rate calculation. Consequently, Ultimate requested NCCI review both determinations. NCCI advised Ultimate that it could not make a determination as to whether the two mechanics were properly included in Travelers’ premium-rate calculation. It explained: “NCCI has no jurisdiction over coverage related issues; whether certain workers were included for coverage under your policy. The [insurance] carrier determines whether a worker poses a liability to the policy.” As for the classification issue, NCCI explained that Ultimate was appropriately classified as a trucking company and that any mechanics working for the trucking company were correctly classified under Code 7219. NCCI also informed Ultimate of its right to appeal its initial determination to the Board.
Ultimate appealed, requesting a hearing before the Board. After the hearing, the Board agreed with [*6] NCCI that Ultimate was properly classified as a trucking company under Code 7219 and that any mechanics included under Ultimate’s workers’ compensation policy fell under Code
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7219. As to whether the two mechanics were required to be covered under the workers’ compensation policy, the Board noted the following:
NCCI advised [Ultimate] prior to the appeals board meeting that the issue of Travelers including the mechanics under [Ultimate’s] policy is a coverage issue and is not within the authority of NCCI or the Board to act on. The only issue before the Board is the proper classification of workers covered under the policies.
The Board also informed Ultimate of its right to appeal the decision to the Idaho Department of Insurance.
Ultimate appealed to the Idaho Department of Insurance, and the Department appointed a hearing officer to hear the appeal. Ultimate again argued that Travelers had incorrectly classified it as a trucking company under Code 7219. Ultimate also argued again that the mechanics should not have been included in the premium-rate calculations because the mechanics are independent contractors operating as single member LLCs.
Travelers, on the other hand, argued that the [*7] Board correctly determined that Ultimate was properly classified as a trucking company under Code 7219. Travelers also argued the Department of Insurance, like NCCI and the Board, did not have statutory authority to answer the question of whether the mechanics were employees or independent contractors, and by extension, whether they should have been included in the premium-rate calculation.
At the Department hearing, the auditor who conducted the audit for Travelers explained that he included the mechanics in the premium-rate calculation because they were uninsured subcontractors:
Well, to say that they do not have to purchase Workers’ Comp in Idaho is probably a fair statement. But if you refer back to Rule 2-H.2 . . . we are picking them up as uninsured subcontractors. They had no insurance. So they might not have had an obligation to buy Workers’ Comp, but they were still uninsured subcontractors.
The Department’s hearing officer entered a preliminary order upholding the Board’s determination that Ultimate was properly classified as a trucking company under Code 7219. However, the hearing officer determined that the mechanics should not have been included in the premium-rate calculation under [*8] Basic Manual Rule 2.H and entered an order to that effect.
Travelers appealed to the Director of the Department of Insurance, and the Director affirmed the hearing officer’s preliminary order.
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After the Director entered his final order, Travelers sought judicial review in district court. In its petition for review, Travelers argued the Department did not have the statutory authority to determine whether the mechanics were employees or independent contractors. It also argued that the Director’s final order was not supported by substantial, competent evidence. Neither Travelers nor Ultimate sought review of the classification of Ultimate as a trucking company under Code 7219.
Shortly after Travelers filed its appeal, Ultimate’s counsel filed a motion to withdraw, which was granted. After a new attorney did not appear on behalf of Ultimate within 21 days, Travelers filed a motion for entry of default judgment against Ultimate. The district court reasoned that it would be inappropriate to set aside an agency’s final order “based solely on a lack of participation by [Ultimate],” and denied the motion. Consequently, the district court determined it would consider the merits of the appeal based only [*9] on the arguments made by Travelers and set the matter for a hearing.
After the hearing was set, an attorney appeared on behalf of Ultimate. Travelers objected, but the district court allowed the appearance and provided Ultimate with 14 days to submit response briefing on the matter.
The district court ultimately concluded that the question of whether the mechanics were employees or independent contractors was moot. It explained that the dispositive question on appeal was “whether the [Department of Insurance] has the statutory authority to determine the proper application of NCCI Basic Manual Rule 2 . . . .” Determining that the Department had such authority, the district court affirmed the Director’s final order. The district court also awarded attorney’s fees in favor of Ultimate.
The district court entered its final judgment on February 12, 2019, and Travelers timely appealed.
II. ISSUES ON APPEAL

Did the Idaho Department of Insurance exceed its statutory authority in determining that the mechanics working for Ultimate could not be included in the premium-rate calculation? Is there substantial, competent evidence to support the Department of Insurance’s determination that the mechanics [*10] were not required to be covered under Ultimate’s workers’ compensation policy? Did the district court abuse its discretion in allowing an attorney to appear on behalf of Ultimate more than 21 days after Ultimate’s original attorney withdrew? 5
Did the district court err in awarding attorney’s fees to Ultimate? III. STANDARD OF REVIEW
The Idaho Administrative Procedures Act (“IDAPA”) governs judicial review of an agency action. I.C. § 67-5270(1). “In an appeal from the decision of a district court acting in its appellate capacity under [IDAPA], this Court reviews the agency record independently of the district court’s decision.” Lane Ranch P’ship v. City of Sun Valley, 144 Idaho 584, 588, 166 P.3d 374, 378 (2007) (citing Friends of Farm to Market v. Valley County, 137 Idaho 192, 196, 46 P.3d 9, 13 (2002)). However, as a matter of procedure, we review the district court’s decision. 917 Lusk, LLC v. City of Boise, 158 Idaho 12, 14, 343 P.3d 41, 43 (2015) (citing
Williams v. Idaho State Bd. of Real Estate Appraisers, 157 Idaho 496, 502, 337 P.3d 655, 661 (2014)).
This Court reviews issues of statutory interpretation de novo. V-1 Oil Co. v. Idaho StateTax Comm’n, 134 Idaho 716, 718, 9 P.3d 519, 521 (2000) (citing Thomas v. Worthington, 132 Idaho 825, 828, 979 P.2d 1183, 1186 (1999)). However, under IDAPA, a reviewing court “shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact.” I.C. § 67-5279(1).
IDAPA lists the circumstances under which a reviewing court may set aside the final action of an agency:
When the agency was required by the provisions of this chapter or by other provisions of law to issue an order, the court shall affirm the agency [*11] action unless the court finds that the agency’s findings, inferences, conclusions, or decisions are:
(a) in violation of constitutional or statutory provisions;
(b) in excess of the statutory authority of the agency;
(c) made upon unlawful procedure;
(d) not supported by substantial evidence on the record as a whole; or
(e) arbitrary, capricious, or an abuse of discretion.
I.C. § 67-5279(3). Additionally, agency actions will be affirmed “unless substantial rights of the appellant have been prejudiced.” I.C. § 67-5279(4).
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IV.ANALYSIS
A. The district court did not err in concluding that it was within the Idaho Department of Insurance’s statutory authority to determine that the mechanics working for Ultimate could not be included in the premium-rate calculation.
The district court determined that the Department’s final order did not exceed its statutory authority because reviewing the application of a rating system to an insured’s policy is within the authority granted to the Department by Idaho Code sections 41-1622 and 41-1623. To determine whether the action of a state agency, such as the Department of Insurance, is in excess of its statutory authority, we must first determine what final action was taken.
1. We need not address whether the mechanics were employees [*12] or independent contractors because the Department’s final order did not rely upon such a distinction.
The Department’s final order affirmed the hearing officer’s decision that the mechanics working for Ultimate could not be included in the premium-rate calculation “by virtue of NCCI Basic Manual Rule 2.H.2.” Travelers argues that the Department, in reaching its decision, made a determination that the mechanics were not employees, but independent contractors. This, Travelers contends, was outside the scope of the Department’s statutory authority. We disagree with Travelers’ characterization of the Department’s final decision.
In its preliminary order, the hearing officer made several findings of fact relevant to the resolution of this case. First, the hearing officer explained that Travelers’ auditor agreed that “the mechanics [were] not employees of Ultimate Logistics and were not required to have workers’ compensation insurance in Idaho.” However, the auditor also testified that he included the mechanics in the premium-rate calculation because they were “uninsured subcontractors” which could be included under NCCI Basic Manual Rule 2.H.2.
Based on this finding, the hearing officer applied Basic Manual Rule 2.H [*13] to determine that the mechanics were improperly included in the premium-rate calculation:
Travelers conceded through the testimony of [its auditor] that the mechanics were not employees and workers compensation was not required for the mechanics, but could be required to cover these uninsured subcontractors’ employees. [The auditor] cited the NCCI Basic Rule 2.H in support of Travelers’ position. There is no evidence that either of the mechanics have [sic] any employees. In addition, pursuant to Rule 2.H.1 each of the mechanics purchased their own workers’ compensation insurance.
The Hearing Officer concludes the two mechanics are not employees of Ultimate Logistics, are not required by Idaho law to be covered by worker’s compensation laws, and they have no
7
employees. Consequently, Travelers cannot require the payment of a worker’s compensation premium for the two mechanics.
In its conclusions of law, the hearing officer determined that the mechanics were independent contractors by applying Idaho Code section 72-102-a statute ordinarily applied in workers’ compensation cases before the Idaho Industrial Commission. See, e.g., Roman v.Horsley, 120 Idaho 136, 814 P.2d 36 (1991) (applying Idaho Code section 72-102 to affirm an Idaho Industrial Commission determination that an individual was an employee for [*14] purposes of a workers’ compensation claim). This determination is the source of much disagreement between the parties and was briefed and argued at length on appeal.
However, in its final order, the Director did not rely on the hearing officer’s employee vs. independent contractor determination. Rather, the Director clarified that the issue before the hearing officer was not whether the mechanics were employees or independent contractors, but whether Travelers, which treated the mechanics as uninsured subcontractors, correctly included them in the premium-rate calculation under Basic Manual Rule 2.H:
Travelers’ admitted through the testimony of [the auditor] that it did not consider the mechanics to be employees. Instead, Travelers asked the Hearing Officer to conclude that the mechanics were “subcontractors” within the scope of Ultimate Logistics’ 7219 classification code by virtue of NCCI Basic Manual Rule 2.H.2. Thus, the Hearing Officer’s analysis was directed to the classification of the mechanics as subcontractors.
The Preliminary Order presents a well-reasoned analysis of the classification codes proffered by both parties for the purpose of setting Ultimate Logistics’ workers’ compensation insurance [*15] rates. The Hearing Officer did not exceed her jurisdiction in determining that the two onsite mechanics could not be included in calculating Ultimate Logistics’ premium rates because they were neither employees nor subcontractors subject to workers’ compensation.
Accordingly, as the district court correctly points out in its review of the Director’s final order, answering the question of whether the mechanics are employees or independent contractors is not necessary to the disposition of this case. The Director’s final order explained that Travelers’ own auditor-the one who conducted the audit of Ultimate’s payroll-testified before the hearing officer that he treated the mechanics as uninsured subcontractors, not employees. The final order also explained that the auditor applied Rule 2.H.2 in determining that the mechanics, as uninsured subcontractors, were required to be included in the premium-rate calculation. In
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concluding the mechanics could not be included in the premium-rate calculation, the Department was interpreting NCCI’s Basic Manual Rule 2.H and reviewing Travelers application thereof.
Therefore, the question before this Court is not whether the mechanics working for Ultimate were employees [*16] or independent contractors, nor is it whether NCCI or the Department of Insurance has the statutory authority to make such a determination. The auditor’s classification of the mechanics as uninsured subcontractors determines those issues for the purposes of this case. Rather, the question before this Court is whether the Department of Insurance has the statutory authority to review an insurance carrier’s application of a rule promulgated by a rating organization for the calculation of premium rates, such as NCCI’s Basic Manual Rule 2.H.2.
2. The Idaho Department of Insurance has the statutory authority to review the application of a rule promulgated by a rating organization.
State agencies in Idaho have no inherent authority. See Idaho Power Co. v. Idaho Pub.Utils. Comm’n, 102 Idaho 744, 750, 639 P.2d 442, 448 (1981); see also Richard Henry Seamon,
Idaho Administrative Law: A Primer for Students and Practitioners, 51 Idaho L. Rev. 421, 439 (2015). As a general rule, administrative agencies “are tribunals of limited jurisdiction.”
Washington Water Power Co. v. Kootenai Envtl. Alliance, 99 Idaho 875, 879, 591 P.2d 122, 126 (1979). Thus, agencies have no authority outside of what the Legislature specifically grants to them. Idaho Retired Firefighters Assoc. v. Pub. Emp. Ret. Bd., 165 Idaho 193, 196, 443 P.3d 207, 210 (2019) (citing Idaho Power Co., 102 Idaho at 750, 639 P.2d at 448).
The Department of Insurance is an agency, created by statute, which has been granted the authority to enforce the Idaho Insurance Code and carry out the duties imposed upon it by the [*17] Insurance Code. I.C. § 41-210(1)-(2). Chapter 16 of the Insurance Code is dedicated to workers’ compensation insurance. I.C. § 41-1601. In drafting Chapter 16, the Legislature found it desirable to provide for the “making of premium rates for [workers’] compensation insurance coverages in concert” and to provide for “review by the states of the rates so made . . . .” I.C. § 41-1602(1). To that end, the purpose of Chapter 16 is:
(a) To authorize such rate-making in concert, and the operation of rating organizations relative thereto;
(b) To establish the general bases and standards for the making of such rates; [and]
(c) To provide for review by the state of such rate-making and the results thereof.
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I.C. § 41-1602(2).
Section 41-1606 of the Insurance Code requires insurance companies or their rating organizations to submit rate filings to the Director, including “every manual of classifications, rules and rates, every rating plan and every modification of any of the foregoing which it proposes to use” in writing workers’ compensation insurance policies within the state. I.C. § 41-1606(1). The Insurance Code also provides that “[a]ny person or organization aggrieved with respect to any filing which is in effect may make written application to the director for a hearing thereon . . . .” [*18] I.C. § 41-1623(1).
Specifically, a party aggrieved by the application of a rating organization’s rating system may seek review, first by the rating organization, and then by the Director of the Department of Insurance:
Every rating organization and every insurer which makes its own rates shall provide within this state reasonable means whereby any person aggrieved by the application of its rating system may be heard, in person or by his authorized representative, on his written request to review the manner in which such rating system has been applied in connection with the insurance afforded him . . . Any party affected by the action of such rating organization or such insurer on such request may, within thirty (30) days after written notice of such action, appeal to the director, who, after a hearing held upon notice to the appellant and to such rating organization or insurer in accordance with chapter 2, title 41, Idaho Code, may affirm or reverse such action.
I.C. § 41-1622(2) (emphasis added).
Travelers argues these statutes only grant the Department authority to determine “whether a ‘filing’ fails to meet the requirements of law.” However, we conclude that a plain reading of Idaho Code section 41-1622(2) demonstrates otherwise.
“The objective [*19] of statutory interpretation is to give effect to legislative intent.” FarmersNat’l Bank v. Green River Dairy, LLC, 155 Idaho 853, 856, 318 P.3d 622, 625 (2014) (quoting State v. Yzaguirre, 144 Idaho 471, 475, 163 P.3d 1183, 1187 (2007)). “Statutory interpretation begins with ‘the literal words of the statute, and this language should be given its plain, obvious, and rational meaning.'” Id. (quoting Seward v. Pac. Hide & Fur Depot, 138 Idaho 509, 511, 65 P.3d 531, 533 (2003)). “If the statutory language is unambiguous, ‘the clearly expressed intent of the legislative body must be given effect, and there is no occasion for a court to consider rules of
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statutory construction.'” Id. (quoting St. Luke’s Reg’l Med. Ctr., Ltd. v. Board of Comm’rs, 146 Idaho 753, 755, 203 P.3d 683, 685 (2009)).
The phrase “aggrieved by the application of its rating system” in Idaho Code section 41-1622(2) plainly provides for the type of review that occurred in this case. When an insurer uses a rating organization’s rating system to determine how much an insured must pay under the terms of its policy, the insurer is “applying” the rating system. The statute expressly provides for review of “the manner in which such rating system has been applied in connection with the insurance afforded . . . .” I.C. § 41-1622(2). Based on the statute’s plain language, we can only conclude that Idaho Code section 41-1622(2) provides for review of an insurer’s application of a rating system to an insured’s policy. To hold otherwise would be to read the words “the application of” out of the statute altogether.
Having come to [*20] the conclusion that Idaho Code section 41-1622(2) gives the Department the authority to review an insurer’s use of a rating system in connection with a specific insured’s workers’ compensation policy, determining whether the Department acted within its authority in this case becomes fairly straightforward.
NCCI’s Basic Manual Rule 2.H is part of a rating system promulgated by NCCI and used by insurance companies in Idaho to write and administer workers’ compensation policies. As such, Basic Manual Rule 2.H is a “rate filing” as described in section 41-1606 and subject to review under sections 41-1622 and 41-1623 of the Insurance Code. Travelers “applied” NCCI’s Basic Manual Rule 2.H to determine whether two mechanics, treated as uninsured subcontractors, could be included in the premium-rate calculation. That calculation had a direct impact on Ultimate’s workers’ compensation policy because it was used to determine the premium rates Ultimate would be charged. Since aggrieved insureds have a right to review “the application of” a rating system in connection with their insurance policy, Ultimate rightfully sought review of Travelers’ “application of” Rule 2.H to its insurance policy. Therefore, the district court did not err in determining that the Department acted within its statutory [*21] authority under sections 41-1622 and 41-1623 of the Insurance Code when it reviewed “the application of” NCCI’s Basic Manual Rule 2.H to Ultimate’s insurance policy.
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B. Substantial, competent evidence supports the Department of Insurance’s determination that the mechanics were not required to be covered under Ultimate’s workers’ compensation policy.
Travelers argues that the Department of Insurance’s determination that the mechanics working for Ultimate were not required to be covered under Ultimate’s workers’ compensation policy is not supported by substantial, competent evidence.
So long as an agency’s determinations are supported by substantial, competent evidence in the record, “the agency’s factual determinations are binding on the Court, even where there is conflicting evidence before the agency. . . .” Barron v. Idaho Dept. of Water Resources, 135 Idaho 414, 417, 18 P.3d 219, 222 (2001) (citation omitted). “Substantial evidence is less than a preponderance of evidence, but more than a mere scintilla.” Chisholm v. Idaho Dept. of WaterResources, 142 Idaho 159, 164, 125 P.3d 515, 520 (2005) (citing Evans v. Hara’s, Inc., 123 Idaho 473, 478, 849 P.2d 934, 939 (1993)). “Substantial and competent evidence is relevant evidence that a reasonable mind might accept to support a conclusion.” Id. (quoting Jarvis v.Rexburg Nursing Ctr., 136 Idaho 579, 583, 38 P.3d 617, 621 (2001)).
The Department came to its determination that the mechanics were not required to be included in the workers’ compensation policy based on Rule 2.H, which was [*22] excerpted from NCCI’s Basic Manual and admitted as an exhibit to the hearing officer. NCCI’s Basic Manual Rule 2.H provides:
1. In those states where workers[‘] compensation laws provide that a contractor is responsible for the payment of compensation benefits to employees of its uninsured subcontractors, the contractor must furnish satisfactory evidence that the subcontractor has workers compensation insurance in force covering the work performed for the contractor. The following documents may be used to provide satisfactory evidence:
• Certificate of insurance for the subcontractor’s workers[‘] compensation policy
• Certificate of exemption
• Copy of the subcontractor’s workers[‘] compensation policy
2. For each subcontractor not providing such evidence of workers[‘] compensation insurance, additional premium must be charged on the contractor’s policy for the uninsured subcontractor’s employees according to Subcontractor Table 1 and 2 below.
In reaching the conclusion that Ultimate was not required to pay any additional premiums for the mechanics under Rule 2.H, the hearing officer relied on two factual findings. First, the
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hearing officer found that both of the mechanics obtained their own workers’ [*23] compensation insurance policies in compliance with Rule 2.H. Second, the hearing officer found that the two mechanics did not have any employees.
Because of the way Rule 2.H operates, either factual finding, if supported by substantial, competent evidence, would be enough to uphold the Department of Insurance’s decision. Rule 2.H.1 and Rule 2.H.2 operate in tandem. Rule 2.H.1 explains what types of proof an insured may provide to satisfy the requirement that its subcontractors be covered by workers’ compensation insurance. Rule 2.H.2 provides the consequence of failing to provide such proof. Specifically, Rule 2.H.2 allows the insurer to charge additional premiums on the insured contractor’s policy “for the uninsured subcontractor’s employees.” Thus, if the mechanics (the subcontractors in this scenario) have their own workers’ compensation insurance, Travelers cannot charge additional premiums on Ultimate’s policy under Rule 2.H. Alternatively, if the mechanics are indeed uninsured, Travelers can charge additional premiums for the mechanics’ employees under Rule 2.H.2. But if the mechanics do not have any employees, Travelers will have nothing to charge additional premiums for. Therefore, if either of the Department’s factual findings are supported by substantial, [*24] competent evidence, Ultimate cannot be charged additional premiums under Rule 2.H.
The first factual finding, that the mechanics had obtained their own workers’ compensation policies, is not supported by substantial, competent evidence. While Ultimate’s general manager testified at the hearing before the Department that the mechanics had obtained their own workers’ compensation insurance policies, he could not remember when. The mechanics each wrote letters to NCCI that were also submitted as exhibits to the hearing officer. Each mechanic stated in their letter that they had purchased individual workers’ compensation policies through Hub International Transportation Insurance “due to the issues Travelers Insurance has created.” Travelers argued below and on appeal that the Department should not have considered the letters because they were inadmissible hearsay evidence. However, the Department of Insurance is “a fact-finding, administrative agency and, as such, is not bound by the strict rules of evidence governing courts of law.” Eastern Idaho Reg’l Med. Ctr. v. Ada Cnty.Bd. of Cnty. Comm’rs, 139 Idaho 882, 885, 88 P.3d 701, 704 (2004) (citations omitted). Therefore, the hearing officer was not prohibited from taking hearsay evidence into consideration. Nevertheless, the letters do not show that [*25] the mechanics had workers’
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compensation insurance policies in place during the coverage period for which Ultimate was audited. If anything, they provide evidence that the mechanics went out and purchased their own workers’ compensation policies after the fact. While the mechanics’ new workers’ compensation policies may be relevant to the calculus going forward, they have no impact on the 2015 audit. Accordingly, the hearing officer’s reliance on the mechanics’ letters as support for the factual finding that the mechanics had purchased their own workers’ compensation policies is misplaced. It is also worth noting that Rule 2.H.1 lists three types of evidence that may be used by an insured to prove that their subcontractors have their own workers’ compensation coverage: “[c]ertificate[s] of insurance for the subcontractors[‘] workers[‘] compensation polic[ies],” “[c]ertificates of exemption,” or “[copies] of the subcontractors[‘] workers[‘] compensation polic[ies].” None of these types of evidence were offered by Ultimate. In sum, the Department of Insurance’s factual finding that the mechanics had purchased their own workers’ compensation insurance policies was not supported by substantial, [*26] competent evidence.
The hearing officer’s second factual finding, that the mechanics did not have any employees is supported by substantial, competent evidence. The letters written by each mechanic explain that they are operating as sole member LLCs. At the hearing, the auditor for Travelers discussed adding the mechanics to the calculation of Ultimate’s policy premiums. The mechanics were referred to by name multiple times throughout direct and cross-examination of the auditor. The auditor never once mentioned adding any individuals working for the mechanics to Ultimate’s policy. No evidence was presented at the hearing, nor appears anywhere in the record that suggests these two mechanics, operating as single member LLCs, had any employees. Other than the general contention on appeal that the Department of Insurance’s decision was not supported by substantial, competent evidence, Travelers has not argued, at any stage, that either mechanic had any employees. Accordingly, we hold that the hearing officer’s factual finding that neither mechanic had any employees was supported by substantial, competent evidence.
In sum, there was not substantial, competent evidence to support the hearing [*27] officer’s finding that the mechanics had their own workers’ compensation policies in place for the coverage period that was audited. Therefore, Travelers was entitled to charge additional premiums on Ultimate’s policy for all of the mechanics’ employees. However, there was substantial, competent evidence to support the hearing officer’s finding that neither of the mechanics had any employees. Thus, the hearing officer’s ultimate conclusion that Ultimate was
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not required to pay additional premiums under Rule 2.H was supported by substantial, competent evidence.
C. The district court did not abuse its discretion by allowing an attorney to appear on behalf of Ultimate more than 21 days after Ultimate’s original attorney withdrew.
Travelers argues that the district court erred in allowing an attorney to appear on behalf of Ultimate after filing an untimely notice of appearance. Ultimate argues that allowing an attorney to appear on its behalf was within the district court’s discretion.
Idaho Rule of Civil Procedure 11.3 governs withdrawal and substitution of attorneys. Under Rule 11.3(c), a party has 21 days from the time his attorney withdraws to find another attorney and file a notice of appearance of the new attorney with the court. I.R.C.P. 11.3(c). If [*28] a notice of appearance is not filed within the 21 days, “the court may dismiss with prejudice any claims of the party or may enter a default judgment against the party.” I.R.C.P. 11.3(c)(3). But Rule 11.3(c) does not mandate the court to do either one. Rather, Rule 11.3(c) provides that a court may dismiss the claims with prejudice or may enter a default judgment, leaving the decision to the sound discretion of the district court.
When this Court reviews an alleged abuse of discretion by a trial court the sequence of inquiry requires consideration of four essentials. Whether the trial court: (1) correctly perceived the issue as one of discretion; (2) acted within the outer boundaries of its discretion; (3) acted consistently with the legal standards applicable to the specific choices available to it; and (4) reached its decision by the exercise of reason.
Lunneborg v. My Fun Life, 163 Idaho 856, 863, 421 P.3d 187, 194 (2018) (emphasis in original) (citation omitted).
Here, the district court recognized its decision was discretionary, stating that it would “exercise its discretion” to allow counsel to appear and file a brief on behalf of Ultimate. As explained above, Rule 11.3(c) gave the district court the option to enter a default judgment against Ultimate, but did not require it to do so. The district court [*29] acted within the outer boundaries of its discretion and consistently with Rule 11.3(c) when it opted not to enter a default judgment. Finally, the district court reached its decision by the exercise of reason. Specifically, the district court reasoned that it had not yet held a hearing on the merits of the appeal, nor had it taken the matter under advisement. The district court explained that its goal was to “ascertain the proper application of the law,” and allowing Ultimate’s new attorney the opportunity to provide briefing and argument on the matter, even if untimely, would be in
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furtherance of that goal. The district court did not abuse its discretion by allowing an attorney to appear and provide argument on behalf of Ultimate.
D. The district court erred in awarding attorney’s fees to Ultimate under Idaho Code section 12-121.
The district court awarded attorney’s fees to Ultimate under Idaho Code section 12-121 on the grounds that Travelers’ appeal was brought without foundation because the only issue raised by Travelers was moot. Idaho Code section 12-121 provides:
In any civil action, the judge may award reasonable attorney’s fees to the prevailing party or parties when the judge finds that the case was brought, pursued or defended frivolously, unreasonably or without [*30] foundation.
I.C. § 12-121 (emphasis added). “Civil actions” are cases commenced by the filing of a complaint. See Goodman Oil Co. v. Scotty’s Duro-Bilt Generator, Inc., 147 Idaho 56, 59, 205 P.3d 1192, 1195 (2009). Attorney’s fees are not available under Idaho Code section 12-121 on petitions for judicial review because they are not commenced by the filing of a complaint. Id. This case came before the district court when Travelers sought judicial review of the Department of Insurance’s final order. No complaint was ever filed in the district court. As such, the district court erred in awarding attorney’s fees to Ultimate under Idaho Code section 12-121.
E. Neither party is entitled to attorney’s fees on appeal.
Ultimate requests an award of attorney’s fees on appeal pursuant to Idaho Code sections 12-121 and 12-120(3). Travelers does not request attorney’s fees on appeal. As discussed above, attorney’s fees are not available under section 12-121 in proceedings that were initiated by a petition for judicial review of an agency’s final order. Idaho Code section 12-120(3) applies to commercial transactions. Section 12-120(3) provides in relevant part:
In any civil action to recover on an open account, account stated, note, bill, negotiable instrument, guaranty, or contract relating to the purchase or sale of goods, wares, merchandise, or services and in any commercial transaction unless otherwise provided by law, the prevailing party shall [*31] be allowed a reasonable attorney’s fee[.]
I.C. § 12-120(3) (emphasis added).
Like section 12-121, section 12-120(3) allows for attorney’s fees in “civil action[s].” Seeid. Civil actions are commenced by the filing of a complaint. See Goodman Oil Co. v. Scotty’s Duro-Bilt Generator, Inc., 147 Idaho 56, 59, 205 P.3d 1192, 1195 (2009). Because Travelers initiated these proceedings by filing a petition for judicial review with the district court,
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attorney’s fees cannot be awarded under Idaho Code section 12-120(3). As such, we decline to award attorney’s fees on appeal.
V. CONCLUSION
In light of the foregoing, we hold that: (1) the Department of Insurance did not exceed its statutory authority in determining that the mechanics could not be included in the premium-rate calculation, (2) the Department of Insurance’s decision was supported by substantial, competent evidence, (3) the district court did not abuse its discretion in allowing an attorney to appear and argue on behalf of Ultimate, and (4) the district court erred in awarding attorney’s fees to Ultimate under Idaho Code section 12-121. Accordingly, the district court’s award of attorney’s fees below is vacated. The remainder of the district court’s decision is affirmed. Neither party is awarded attorney’s fees on appeal. We award costs to Ultimate.
Justices BRODY, BEVAN, STEGNER, AND MOELLER CONCUR.
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