February 2024

HMD America, Inc. v. Q1, LLC,

United States District Court, S.D. Florida.

HMD AMERICA, INC., F/U/B/O CERTAIN FAR EAST UNDERWRITERS WITH FUBON INSURANCE CO., LTD., its lead underwriter, Plaintiffs,

Q1, LLC, and Aldon Mega, Inc., Defendants.

Civil Action No. 23-21865-Civ-Scola

Signed January 12, 2024

Entered January 16, 2024

Attorneys and Law Firms

Michael Charles Black, Michael C. Black, P.A., Miami, FL, for Plaintiffs.

Beata Shapiro, Pro Hac Vice, Wilson Elser Moskowitz Edelman & Dicker LLP, Boston, MA, Mirelis Castilla, Wilson, Elser, Moskowitz, Edelman & Dicker LLP, Miami, FL, for Defendant Q1, LLC.

Kelly L. Kesner, Luks Santaniello Petrillo & Jones, Miami, FL, Spencer Michael Mayer, Lewis Brisbois Bisgaard and Smith, LLP, Coral Gableas, FL, Todd Randall Ehrenreich, Lewis Brisbois Bisgaard & Smith LLP, Coral Gables, FL, for Defendant Aldon Mega, Inc.

Order Granting Motion to Dismiss

Robert N. Scola, Jr., United States District Judge

*1 Plaintiff HMD America, Inc., on behalf of its insurer, Certain Far East Underwriters, seeks to recover from Defendants Q1, LLC and Aldon Mega, Inc. over $3 million in losses it incurred by way of a stolen cargo shipment of 16,000 cellphones belonging to HMD. (Am. Compl., ECF No. 34.) HMD lodges three counts in its complaint: breach of contract and negligence against Q1 (counts one and three, respectively) and breach of contract and/or duties under the Carmack Amendment against Aldon Mega (count two). (Id.) In response, Q1 has filed a motion to dismiss (Def.’s Mot. to Dismiss, ECF No. 39), submitting (1) HMD’s claims against Q1 are preempted under federal law and (2) HMD fails to state a claim for either breach of contract or negligence against Q1. (Pl.’s Resp., ECF No. 46.)¹ HMD has responded to the motion (Pl.’s Resp., ECF No. 46), Q1 has replied (Def.’s Reply, ECF No. 50), and the motion is now ripe for review. Having considered the parties’ briefing, the record, and the relevant legal authorities, the Court, for the following reasons, grants Q1’s motion to dismiss the claims against it (ECF No. 34).

1. Background²

It appears HMD regularly stored a stock of its merchandise at Q1’s distribution warehouse in Orlando, Florida. (Am. Compl. ¶ 4.) In conjunction with that storage, HMD and Q1 also agreed, through a written contract executed in August 2021, that Q1 would perform various logistic-related services for HMD based on certain terms and conditions. (Id. ¶ 15; Agmt., ECF No. 45-3, 2.) In March 2022, HMD asked Q1 to “arrange and transport” a shipment of twenty pallets of HMD’s Nokia cellphones (amounting to 16,000 cellphones) from Q1’s Orlando warehouse to a consignee in Jeffersonville, Indiana. (Am. Compl. ¶¶ 2, 4, 6.) Q1 then, in turn, subcontracted the transportation of the cellphones with its truck broker (and non-party), World Wide Express Corp. (Id. ¶¶ 7, 28.) Thereafter, World Wide contracted with Aldon Mega (now also a third-party plaintiff) to transport the twenty pallets of cellphones. (Id. ¶¶ 8, 28.) Aldon Mega then subcontracted the actual transportation of the shipment to RPM Corp. (now a third-party defendant and counter claimant). (Id. ¶ 29.) Although the shipment was picked up from Q1’s warehouse, on March 11, 2022, apparently by RPM, it was stolen before it reached its destination in Indiana. (Id. ¶¶ 10, 11.) HMD says it was damaged in excess of $3,392,000 based on the loss. (Id. ¶ 12.)

As set forth in the agreement between HMD and Q1, Q1 was obligated “perform all Services with highest degree of care, diligence, skill and judgement.” (Id. ¶ 16; Agmt., Appx. 1, ¶ 7.) The agreement also provides that Q1 was “responsible for the coordination of all HMD shipments from any origin to any destination” and required to “arrange the shipment to the final destination with the best possible carrier.” (Am. Compl. ¶ 17; Agmt., Appx 2, ¶ 5.)

*2 As to count one, the breach-of-contract claim, HMD contends that, based on the theft, Q1 breached the parties’ agreement “by failing to deliver the shipment in accordance with their contract, by failing to adequately arrange for the proper delivery of the shipment, by failing to arrange the shipment with the best possible carrier, and by failing to appoint a well-qualified carrier that had adequate insurance coverage for transporting cell phones.” (Am. Compl. ¶ 18.) HMD also maintains that, “because Q1 was managing the outbound transportation of the shipment, Q1 was responsible for and had the risk of loss of the subject cargo from the moment the goods are received by Q1 into its warehouse until the goods were delivered to the consignee.” (Id. ¶ 16.)

As to count three, the negligence claim, HMD complains that “Q1 failed to use reasonable care in transporting the subject shipment and/or failing to appoint the best possible carrier for the subject shipment,” and, as a result, “the subject shipment was stolen, and there was no insurance coverage for the carrier to pay for the loss.” (Id. ¶ 30.)

2. Legal Standard

A court considering a motion to dismiss, filed under Rule 12(b)(6), must accept all the complaint’s allegations as true, construing them in the light most favorable to the plaintiff. Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008). Although a pleading need only contain a short and plain statement of the claim showing that the pleader is entitled to relief, a plaintiff must nevertheless articulate “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). “But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not shown—that the pleader is entitled to relief.” Ashcroft v. Iqubal, 556 U.S. 662, 679 (2009) (quoting Fed. R. Civ. P. 8(a)(2)) (internal punctuation omitted). A court must dismiss a plaintiff’s claims if she fails to nudge her “claims across the line from conceivable to plausible.” Twombly, 550 U.S. at 570.

3. Analysis

A. HMD’s negligence claim against Q1 is preempted.

Q1 argues that both HMD’s negligence and breach-of-contract claims against it are preempted under the Federal Aviation Administration Authorization Act. (Def.’s Mot. at 8–9.) In response, HMD submits its claims are not preempted because (1) the FAAAA only applies to intrastate, and not interstate transportation; and (2) the FAAAA does not apply to Q1 because Q1, as the shipper, was not a licensed broker and was not a broker for HMD’s shipment. (Pl.’s Resp. at 4–5.) While the Court is persuaded that preemption applies to HMD’s negligence claim, it finds Q1’s argument as to HMD’s breach-of-contract claim lacking.

As a starting point, Q1 has failed to cite any legal authority, and the Court itself is aware of none, supporting its position that HMD’s breach-of-contract claim is preempted. Indeed, as HMD points out, case law supports the contrary: “Between the narrow reach of the statute and Congress’s intent to only reach state regulation, it is clear that private contractual disputes are not completely preempted by the FAAAA.” Indep. Serv. Provider, LLC v. Aponte, 6:21-CV-558-GAP-GJK, 2021 WL 2828323, at *2 (M.D. Fla. May 24, 2021) (noting that “the Supreme Court has already held that the ADA’s preemption clause—which has broader scope than the FAAAA’s—does not preempt breach of contract claims”) (emphasis in original) (citing Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 228–29 (1995)); Porter Capital Corp. v. Johns Manville, Inc., 2:12-CV-00925-RDP, 2013 WL 3153519, at *5 n. 3 (N.D. Ala. June 14, 2013) (finding common law breach of contract claim not preempted under the FAAAA); Barber Auto Sales, Inc. v. United Parcel Services, Inc., 494 F. Supp. 2d 1290, 1293 (N.D. Ala. 2007) (implicitly acknowledging that “routine breach of contract claims are not preempted by the FAAAA”) (cleaned up); Custom Stud, Inc. v. Meadow Lark Agency, Inc., 566 F. Supp. 3d 950, 954–55 (D. Minn. 2021) (“[T]he FAAAA does not preempt suits alleging breach of a party’s own self-imposed undertakings because these do not constitute a violation of state-imposed obligations.”) (cleaned up). Without further support or analysis then, from Q1, the Court declines to find HMD’s breach-of-contract claim in this case preempted.

*3 Next, in evaluating Q1’s preemption argument with respect to HMD’s negligence claim, the Court begins with the overarching principle that “state law that conflicts with federal law is without effect.” Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992) (cleaned up). This preemption can operate, generally, when either (1) Congress explicitly states an intent to preempt state law; (2) a state law “actually conflicts with federal law”; or (3) a “federal law so thoroughly occupies a legislative field” that one can reasonably infer “that Congress left no room for the States to supplement it.” Id. Regardless of how preemption applies in a given case, any preemption assessment “starts with the assumption that the historic police powers of the States are not to be superseded by Federal Act unless that is the clear and manifest purpose of Congress.” Id. With that backdrop in mind, the Court turns to the FAAAA itself.

The FAAAA’s express preemption provision provides, in relevant part, that a state “may not enact or enforce a law … related to a price, route, or service of any … broker … with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). Under the FAAAA, “transportation” is defined to include “services related to” “the movement of … property.” 49 U.S.C. § 13102(23). And “broker” is defined to mean one who “sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.” 49 U.S.C. § 13102(2). “The phrase ‘related to’ … embraces state laws having a connection with or reference to carrier rates, routes, or services, whether directly or indirectly.” Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 260 (2013) (cleaned up). Despite the breadth of the phrase, however, the Supreme Court has nonetheless cautioned that “that § 14501(c)(1) does not preempt state laws affecting carrier prices, routes, and services in only a tenuous, remote, or peripheral manner.” Id. at 261 (cleaned up).

In rejecting Q1’s preemption arguments, HMD argues that the FAAAA simply doesn’t apply to its claims. First, HMD says, the FAAAA, based on its title—“Federal authority over intrastate transportation”—doesn’t apply here because the goods were to be transported interstate, from Florida to Indiana. (Pl.’s Resp. at 4 (emphasis added) (quoting 49 U.S.C. § 14051’s title).) HMD’s position, however, is contrary to the very reason the FAAAA was enacted: Congress’s concern “that state regulation impeded the free flow of trade, traffic, and transportation of interstate commerce.” Dan’s City, 569 U.S. at 263 (cleaned up) (emphasis added). Indeed, as Q1 points out, the FAAAA has been broadly and repeatedly applied to preempt state-law claims related to interstate transportation of property. See, e.g., Aspen Am. Ins. Co. v. Landstar Ranger, Inc., 65 F.4th 1261, 1268 (11th Cir. 2023) (affirming dismissal of state tort claims based on “allegations of negligence and gross negligence against a transportation broker for its selection of a motor carrier to transport property in interstate commerce,” from Colorado to Maryland); Luccio v. UPS, Co., 9:16-CV-81703-RLR, 2017 WL 412126, at *2 (S.D. Fla. Jan. 31, 2017) (Rosenberg, J.) (“[C]ase law and statutory interpretation support the conclusion that the FAAAA was intended to apply to intrastate as well as interstate shipping unless otherwise exempted.”).

Second, HMD argues that the FAAAA doesn’t apply to Q1 because Q1 is a shipper and not a licensed broker or broker for the cellphone shipment in this case. (Pl.’s Resp. at 4–5.) The Court is not persuaded. Instead, the Court agrees with Q1 that FAAAA preemption applies to HMD’s tort claim against Q1 because that claim relates to Q1’s alleged negligence in arranging for the transportation of cargo and Q1’s alleged negligent selection of a motor carrier. In short, the Court finds HMD’s claim against Q1 is an attempt, whether directly or indirectly, to regulate broker and carrier services. See, e.g., Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 372 (2008) (preempting state law that requires a shipper to choose a certain kind of delivery service because although the state regulation “tells shippers what to choose rather than carriers what to do,” the effect of the regulation is to regulate carrier delivery services); Lee v. Werner Enterprises, Inc., 3:22 CV 91, 2022 WL 16695207, at *4 (N.D. Ohio Nov. 3, 2022) (“[N]egligence claims brought against a shipper and broker fall squarely within the preemption of the FAAAA.”); Creagan v. Wal-Mart Transp., LLC, 354 F. Supp. 3d 808, 813 n. 6 (N.D. Ohio 2018) (finding a negligent hiring claim against a defendant shipper preempted because “the negligent hiring claim against [the shipper] stem[med] entirely from [the defendant] broker[’s] services”). Accordingly, the Court finds HMD’s negligence claim against Q1, based on Q1’s alleged failure “to use reasonable care in transporting the subject shipment and/or by failing to appoint the best possible carrier for the subject shipment,” preempted by the FAAAA.

B. HMD fails to state a breach-of-contract claim against Q1.

*4 With the Court’s finding that HMD’s negligence claim is preempted, remaining for resolution is only whether HMD has stated a plausible claim for breach of contract. Q1 does not dispute the existence of an agreement, but maintains that HMD’s allegations of breach are far too conclusory and vague to support a claim for breach of contract. (Def.’s Mot. at 9–11.) In response, HMD stands on its pleading, insisting, without elaboration, that it “sufficiently alleges the existence of a valid contract[,] several of the material provisions of the contract, that Q1 breached the material terms of that contract, and that [it] suffered damages as a result.” (Pl.’s Resp. at 5.) After careful review, the Court agrees with Q1: the complaint fails to sufficiently articulate enough facts to state a plausible claim for breach of contract.

“For a breach of contract claim, Florida law requires the plaintiff to plead and establish: (1) the existence of a contract; (2) a material breach of that contract; and (3) damages resulting from the breach.” Vega v. T-Mobile USA, Inc., 564 F.3d 1256, 1272 (11th Cir. 2009). Because the parties do not dispute the first element, the Court’s analysis is trained on whether HMD has sufficiently alleged a material breach that resulted in HMD’s damages.

Within its breach-of-contract count, HMD specifically identifies two provisions of its contract with Q1: paragraph seven (labeled “Liability”) from appendix one; and paragraph five (labeled “Transport Concept”) of appendix two.³ (Am. Compl. ¶¶ 16, 17.) In its complaint, HMD describes paragraph seven as obligating Q1 “to perform all of its services with the highest degree of care, diligence, skill and judgment.” (Am. Compl. ¶ 16.) And it describes paragraph five as rendering Q1 “responsible for the coordination of all HMD shipments from any origin to any destination” and for the arrangement of “the shipment to the final destination with the best possible carrier.” (Id. ¶ 17.) Additionally, without referencing a particular provision of the contract, HMD also alleges, in its complaint, that “because Q1 was managing the outbound transportation of the shipment, Q1 was responsible for and had the risk of loss of the subject cargo from the moment the goods are received by Q1 into its warehouse until the goods were delivered to the consignee.” (Id. ¶ 16.) HMD then presents the entirety of its breach allegations in one short paragraph, alleging that Q1 failed to (1) “deliver the shipment in accordance with [the] contract”; (2) “adequately arrange for the proper delivery of the shipment”; (3) “arrange the shipment with the best possible carrier”; and (4) “appoint a well-qualified carrier that had adequate insurance coverage for transporting cell phones.” (Id. ¶ 18.)

The Court agrees with Q1 that these allegations are inadequate. The specific breach allegations, confined to paragraph eighteen of HMD’s complaint, are purely conclusory and devoid of any concrete facts. HMD’s position seems to be that, simply because the cargo was stolen, Q1 must have somehow failed to uphold its end of the bargain. But, HMD fails to actually connect these dots—the theft and the contract—and ultimately its allegations leave the Court with more questions than answers: Which provision of the contract did Q1 breach when the cell phones were not delivered because they were stolen from the motor carrier? What was inadequate about the way Q1 coordinated the shipment? What facts support HMD’s claim that Q1 failed to arrange the shipment with the “best possible carrier”? Is it HMD’s position that the best possible carrier would be wholly impervious to all thefts? What facts show that the carrier Q1 appointed was not “well-qualified”? Which contract provision required Q1 to appoint a carrier that had adequate insurance coverage for transporting cell phones?

*5 Notably, HMD has not presented any factual allegations supporting its claim that Q1 breached either of the provisions it specifically references. As to the liability provision (paragraph seven of appendix one), HMD proffers no facts showing that Q1 failed to perform its duties “with [the] highest degree of care, diligence, skill and judgment,” as required by the contract. (Agmt., Appx. 1, ¶ 7.) Similarly, the complaint fails to set forth any facts that would support a claim that Q1 breached the transport provision (paragraph five of appendix two) as well. As applicable here, the transport provision renders Q1 “responsible for the coordination of all HMD shipments” and requires Q1 to “arrange the shipment to the final destination with the best possible carrier and routing within agreed lead[ ]time.” (Id. Appx. 2, ¶ 5.) But none of HMD’s allegations supply any facts showing that the theft of the cargo from the carrier resulted from Q1’s failure to comply with these duties under the contract.

Further undermining the viability of HMD’s breach-of-contract claim, as Q1 points out, HMD’s allegations also mischaracterize the parties’ agreement. HMD’s position appears to be that the contract provides for absolute liability against Q1 for cargo that failed to reach its destination in Indiana after leaving Q1’s warehouse in Florida—regardless of whether Q1 was at fault. That is, according to HMD’s reading of the agreement, even without any showing that the in-transit loss was within Q1’s control, Q1, despite not being the actual carrier of the goods, nonetheless bore all the risk of that loss, whatever the cause. HMD fails, however, as Q1 points out, to reference any actual contract language that warrants HMD’s interpretation. Accordingly, the Court finds HMD’s unsupported speculation, that “Q1 was responsible for and had the risk of loss of the subject cargo from the moment the goods are received by Q1 into its warehouse until the goods were delivered to the consignee,” unavailing. (Id. ¶ 16.)

Indeed, other provisions in the contract appear to indicate the contrary: that Q1 was in fact not absolutely liable for any such loss during transport by the carrier. For example, the contract explicitly holds each party “fully liable” to the other for damages arising out of any “gross negligence or willful act or omission.” (Agmt., Appx. 1, ¶ 7.) The agreement further specifies that Q1 is “responsible for” and bears “the risk of the Goods from the moment the Goods are taken in charge of [Q1] until such Goods are released to HMD’s carrier if HMD is managing the outbound transportation”; and, if Q1 “is managing the outbound transportation, the outbound goods will be insured under HMD Global’s insurance freight carrier.” (Id.) These provisions would not make sense if the parties’ agreement was that Q1 was to remain fully liable for any loss of the shipment, regardless of Q1’s fault or ability to prevent the loss. The same logic applies to the agreement’s force majeure clause, absolving Q1 for any liability for “events beyond the control of the Party which occur after entering into agreement for Services and which were not reasonably foreseeable at that time and whose effects are not capable of being overcome without unreasonable expense and/or loss of time.” (Amgt., Appx. 1, ¶ 15.) HMD’s contention that, under the contract, Q1 had the full “risk of loss of the subject cargo” until it was delivered to the consignee (Am. Compl. ¶ 16) is irreconcilable with this force majeure provision. This is especially so where the complaint is devoid of facts from which the Court could conclude or even infer that the theft of the cargo was the result of Q1’s own actions or inactions.

Lastly, HMD’s efforts to insert new allegations, in opposition to Q1’s motion to dismiss are also unavailing. In its response, HMD points to a contract provision that renders Q1 “fully responsible and liable for the actions of its subcontractors.” (Pl.’s Resp. at 5–6 (referencing Agmt., Appx. 1, ¶ 3).) HMD then argues that World Wide’s failure “to appoint the best possible carrier that had sufficient insurance to cover the loss is directly attributable to Q1.” (Pl.’s Resp. at 6.) HMD’s position here suffers from several defects. First, HMD did not set forth this basis for Q1’s liability in its complaint and therefore it is not properly raised. Huls v. Llabona, 437 F. App’x 830, 832 n. 5 (11th Cir. 2011) (noting that a plaintiff may not amend his complaint through argument raised in a response to a motion to dismiss). Second, even if HMD had included these allegations in its complaint, they would be unavailing: HMD supplies no facts showing that World Wide failed to appoint the best possible carrier, that the appointed carrier was required to have insurance sufficient to cover the theft of the cargo, or that World Wide’s actions or inactions otherwise resulted in the theft.

*6 In sum, the Court finds HMD (1) has not supplied factual allegations in its complaint, as opposed to bare conclusions, showing that Q1 breached any of the contractual provisions HMD explicitly identifies; (2) fails to identify any other contractual provisions that Q1 breached; and (3) improperly proffers allegations in response to Q1’s motion to dismiss that were not included in HMD’s complaint. Accordingly, the Court agrees with Q1 that HMD’s breach-of-contract claim should be dismissed. See, e.g., Stepakoff v. IberiaBank Corp., 637 F. Supp. 3d 1309, 1313 (S.D. Fla. 2022) (Bloom, J.) (“In order to allege a material breach in accordance with the pleading standards required under the Federal Rules of Civil Procedure, the plaintiff must allege which provision of the contract has been breached.”); Siedle v. Nat’l Ass’n of Sec. Dealers, Inc., 248 F. Supp. 2d 1140, 1143 (M.D. Fla. 2002) (“Contract construction is a matter of law, and dismissal is appropriate where the cited language in the contract unambiguously demonstrates that the Plaintiff is not entitled to the relief sought.”).

4. Conclusion

For the reasons set forth above, the Court grants Q1’s motion (ECF No. 39) and dismisses HMD’s claims against Q1 with prejudice: HMD’s state-law negligence claim is barred by § 14501(c)(1) and HMD fails to state a claim for breach of contract.

Additionally, the Court dismisses HMD’s claims against Q1 without leave to amend, denying its cursory request to amend, inserted as an afterthought, at the end of its response to Q1’s motion to dismiss. (Pl.’s Resp. at 6.) The request is both procedurally defective and lacking in substantive support. First, the request is untimely and HMD fails to supply good cause, or even any cause, that would warrant an extension of the deadline to amend the pleadings. And second, the request is improperly presented, introduced perfunctorily and thoroughly devoid of any legal support. See Newton v. Duke Energy Florida, LLC, 895 F.3d 1270, 1277 (11th Cir. 2018) (“[W]here a request for leave to file an amended complaint simply is imbedded within an opposition memorandum, the issue has not been raised properly.”); Avena v. Imperial Salon & Spa, Inc., 740 F. App’x 679, 683 (11th Cir. 2018) (“[W]e’ve rejected the idea that a party can await a ruling on a motion to dismiss before filing a motion for leave to amend.”) (noting also that “a motion for leave to amend should either set forth the substance of the proposed amendment or attach a copy of the proposed amendment”) (cleaned up). Finally, HMD has already amended its complaint once, in response to Q1’s first motion dismiss, and yet still failed to set forth a viable claim against Q1.

Done and ordered in Miami, Florida, on January 12, 2024.

All Citations

Slip Copy, 2024 WL 167374

Footnotes

Aldon Mega has answered the complaint (ECF No. 36) and so count two is not at issue with respect to this order.
The Court accepts the complaint’s factual allegations, as set forth below, as true for the purposes of evaluating the motion to dismiss. Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997).
Although the amended complaint references the agreement as being attached as an exhibit to the complaint, HMD acknowledges having inadvertently neglected to file it. Both parties appear to agree, however, that the Court can consider the contract—central to HMD’s claim and undisputed (later filed by both HMD (Agmt., ECF No. 45-3) and Q1 (Agmt., ECF No. 39, 14–21))—without converting Q1’s motion to dismiss into one for summary judgment.

End of Document

Carrier v. County Hall Ins. Co.

United States District Court, W.D. Louisiana,

Lake Charles Division.

Jermaine CARRIER et al.

COUNTY HALL INSURANCE CO. et al.

CASE NO. 2:22-CV-00937

Signed January 17, 2024

Attorneys and Law Firms

Marcus Anthony Bryant, Marcus A. Bryant Law Firm, Lafayette, LA, for Jermaine Carrier, Kimberly Batiste.

Musa Rahman, Johnson Rahman & Richards, Baton Rouge, LA, for Louisiana Workers Compensation Corp.

Douglas R. Holmes, Chaffe McCall et al., New Orleans, LA, for Covenant Transport Solutions LLC.

Eric D. Burt, Jordan Paul Amedee, Degan Blanchard & Nash, Baton Rouge, LA, Sidney W. Degan, III, Degan Blanchard & Nash, New Orleans, LA, for County Hall Insurance Co., Inc.

Jeffrey Scott Loeb, Robert Edward Guidry, Loeb Law Firm, Mandeville, LA, Kevin M. Melchi, Pandit Law Firm, New Orleans, LA, for TDKD Logistics Corp.

Robert Edward Guidry, Jeffrey Scott Loeb, Loeb Law Firm, Mandeville, LA, for DeDarrius Jackson.

Jeffrey Allan Rhoades, Swift & Rhoades, Lafayette, LA, for USAA General Indemnity Co.

MEMORANDUM RULING

JAMES D. CAIN, JR., UNITED STATES DISTRICT JUDGE

*1 Before the Court is a Motion for Summary Judgment (Doc. 57) filed by Defendant Covenant Transport Solutions, LLC (“Covenant”) to dismiss all claims asserted against it by the Plaintiffs with prejudice.¹ Plaintiffs did not file an opposition.²

BACKGROUND INFORMATION

This lawsuit arises from a motor vehicle accident that occurred on June 3, 2021. Doc. 1-2 at ¶ 2. Plaintiff Kimberly Batiste was driving her vehicle while Plaintiff Jermaine Carrier was riding along as a passenger. Id. at ¶ 2. A collision occurred between the Plaintiffs and Defendant Darrius Jackson (“Jackson”), who was allegedly operating a Freightliner truck on behalf of Covenant and Defendant TDKD Logistics Corporation (“TDKD”), which was hauling a trailer owned by Defendant Dollar General Corporation (“Dollar General”).³ Doc. 33 at ¶ 2A. Defendant County Hall Insurance Company is the alleged insurer of TDKD. Doc. 1-2 at ¶ 7. Plaintiffs allege that the collision was caused by negligence on the part of Jackson. Id. at ¶ 5. Plaintiffs claim that the collision caused them to have serious and disabling injuries. Id. at ¶ 2.

Plaintiffs assert that Jackson was an employee and/or agent for Covenant and TDKD, acting within the scope of his agency and/or employment at the time of the accident. Doc. 33 at ¶ 2B. As such, Plaintiffs contend that Covenant and TDKD are vicariously liable for Jackson’s acts and omissions. Id. at ¶ 2D. It is also alleged that TDKD and Covenant are independently negligent in the hiring, training, supervision, and management of Jackson. Id. at ¶ 6A. Plaintiffs also maintain that Covenant is independently negligent in its hiring, training, supervision, and management of its employee and/or agent, TDKD. Id. at ¶ 6B. Alternatively, Plaintiffs allege that Covenant is vicariously liable for the acts and omissions of TDKD, who allowed their employee to drive without proper insurance. Id. at ¶ 6C. Finally, Plaintiffs contend that Covenant is self-insured and provides coverage for TDKD and Jackson. Id. at ¶ 8A.

Covenant has provided a Statement of Undisputed Material Facts, which contains the following information. Covenant is a freight broker licensed by the Federal Motor Carrier Safety Administration (“FMCSA”) to engage in freight brokerage activities and to arrange for the transportation of freight by motor carriers for compensation. Doc. 57-3 at ¶ 1. Covenant exerts no control of any kind over these carriers, who operate as independent contractors. Id. Covenant relies on the FMCSA and Federal Regulations to qualify carriers as having satisfactory safety ratings to operate. Id. at ¶ 2. The carriers hire, select, dispatch, and supervise their own employee/drivers to transport loads; Covenant plays no role in these tasks or activities. Id. at ¶ 3.

*2 With respect to the load at issue, Covenant hired TDKD as a motor carrier on or around June 3, 2021, to transport goods for Dollar General. Id. at ¶ 4. TDKD was first “onboarded” or set up as a new carrier for Covenant on or about March 3, 2021. Id. As part of the onboarding process, Covenant confirmed that TDKD had: (1) active FMCSA operating authority, (2) a W-9 on file, (3) proof of insurance meeting Covenant’s minimum threshold, (4) authorization to haul property, and (5) an executed Motor Carrier Transport Agreement with Covenant. Id. at ¶ 5. Prior to hiring TDKD for the load involved in the accident, Covenant had used TDKD to transport loads twenty-four times without any issues or problems. Id. at ¶ 6. Darius Jackson was not an employee of Covenant, and Covenant did not have control over his actions because he was retained by TDKD. Id. at ¶ 7.

SUMMARY JUDGMENT STANDARD

Under Federal Rule of Civil Procedure 56(a), “[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” The moving party is initially responsible for identifying portions of pleadings and discovery that show the lack of a genuine issue of material fact. Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995). He may meet his burden by pointing out “the absence of evidence supporting the nonmoving party’s case.” Malacara v. Garber, 353 F.3d 393, 404 (5th Cir. 2003). The non-moving party is then required to go beyond the pleadings and show that there is a genuine issue of material fact for trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). To this end he must submit “significant probative evidence” in support of his claim. State Farm Life Ins. Co. v. Gutterman, 896 F.2d 116, 118 (5th Cir. 1990). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at 249 (citations omitted).

A court may not make credibility determinations or weigh the evidence in ruling on a motion for summary judgment. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000). The court is also required to view all evidence in the light most favorable to the non-moving party and draw all reasonable inferences in that party’s favor. Clift v. Clift, 210 F.3d 268, 270 (5th Cir. 2000). Under this standard, a genuine issue of material fact exists if a reasonable trier of fact could render a verdict for the nonmoving party. Brumfield v. Hollins, 551 F.3d 322, 326 (5th Cir. 2008).

“A motion for summary judgment cannot be granted simply because there is no opposition.” Hibernia Nat. Bank v. Admin. Cent. Sociedad Anonima, 776 F.2d 1277, 1279 (5th Cir. 1985). However, when the nonmoving party does not set forth any material facts as to which there exists a genuine issue to be tried, the uncontested material facts presented by the moving party are deemed admitted. Mitchell v. Jones, No. 17-00687, 2017 WL 3632510, at * 2 (W.D. La. Aug. 23, 2017) (citing Local Rule 56.2); Fed. R. Civ. P. 56(e)(2).

LAW AND ANALYSIS

A. Vicarious liability from Jackson’s actions

Covenant argues that Jackson was not an employee or agent of Covenant, and as such, Covenant has no responsibility for his actions. Doc. 57-1 at 3-4. In support, Covenant relies on LaGrange v. Boone, 21-560 (La. 04/06/22), 337 So.3d 921, a factually similar case involving a freight broker that was sued following a motor vehicle accident. Therein, the Louisiana Third Circuit Court of Appeal affirmed the dismissal of the plaintiff’s vicarious liability claim against the freight broker based on the lack of an employer-employee relationship with the driver involved in the accident underlying the litigation. LaGrange, 337 So.3d at 928.

Employers are answerable for the damage occasioned by their employees in the “exercise of the functions in which they are employed.” La. Civ. Code art. 2320. Two essential elements to a plaintiff’s claim under this theory include: (1) the existence of an employer-employee relationship, and (2) that the tortious act occurred during the course and scope of employment. Id. The most important factor in determining the existence of an employer-employee relationship is the right of an employer to control the work of an employee. Bolden v. Tisdale, 2021-00224 (La. 01/28/22), 347 So.3d 697, 708 (citations omitted). Particularly important is whether the alleged employer has the right or duty concerning: (1) selection and engagement, (2) payment of wages, (3) power of dismissal, and (4) power of control. Hillman v. Comm-Care, Inc., 2001-1140 (La. 01/15/02), 805 So.2d 1157, 1162.

*3 In this instance, Covenant has put forth evidence in the form of an affidavit from Covenant’s Senior Vice President, George Yates, who states: (1) Jackson was not an employee of Covenant, and (2) Covenant had no control over Jackson’s actions because he was retained by TDKD. Doc. 57-2 at ¶ 5. The affidavit also indicates that Covenant only arranges for qualified motor carriers to transport loads for customers and does not play a role in how the carriers hire, select, dispatch, or supervise their own employees/drivers. Id. at ¶ 2. Plaintiffs have provided no evidence to contradict either of these statements or create a genuine issue of material fact as to the existence of an employer-employee relationship between Covenant and Jackson. As such, summary judgment dismissal is warranted for Plaintiffs’ claims of vicarious liability against Covenant for Jackson’s actions due to a lack of an employer-employee relationship. Further, without an employer-employee relationship, Plaintiff’s claims against Covenant based on the alleged negligent hiring, training, supervision, and management of Jackson must also be dismissed.

B. Negligent hiring of TDKD

Covenant also moves for the dismissal of Plaintiffs’ claims related to the alleged negligent hiring of TDKD to perform the job of hauling the Dollar General trailer. Doc. 57-1 at 4. Covenant maintains that under the Motor Safety Act, Congress delegated the determination of the safety and fitness of motor carriers to the Federal Motor Carrier Safety Administration (“FMCSA”). Id. at 4-5. Covenant argues that because FMCSA qualified TDKD as “safe to operate,” Covenant had no reason to believe otherwise. Id. at 5. Further, Covenant argues that its own experience with TDKD of twenty-four prior transports without incident prevents a finding that it was negligent in its hiring of TDKD for the Dollar General job. Id.

“FMCSA, an agency within the Department of Transportation, is responsible for motor carrier safety and registration.” Dep’t of Transp. v. Public Citizen, 541 U.S. 752, 758 (2004) (citing 49 U.S.C. § 113(f)). FMCSA grants registration to “all domestic or foreign motor carriers that are ‘willing and able to comply with’ the applicable safety, fitness, and financial-responsibility requirements.” Id. (citing 49 U.S.C. § 13902(a)(1)). FMCSA issues federal regulations regarding safety, which are known as the Federal Motor Carrier Safety Regulations (“FMCSR”). See 49 C.F.R. pts. 300-399. All commercial motor vehicles that transport property or passengers in interstate commerce are required to comply with these federal regulations. 49 C.F.R. § 390.3.

There is limited caselaw in Louisiana on the theory of negligent hiring of an independent contractor. However, the cases that have examined the issue look to the knowledge of the principal at the time of hiring an independent contractor and whether the principal knew or should have known of facts to suggest the independent contractor was irresponsible. See Guillory v. Conoco, Inc., 521 So.2d 1220, 1224-25 (La. App. 3 Cir. 03/02/88); Perkins v. Gregory Mfg. Co., 95-01396 (La. App. 3 Cir. 03/20/96), 671 So.2d 1036, 1040; Hemphill v. State Farm Ins. Co., 472 So.2d 320, 324 (La. App. 3 Cir. 07/26/85). “Louisiana law also looks, in part, to the principal’s previous results with the independent contractor to determine possible negligence.” Dragna v. KLLM Transp. Serv., LLC, 638 F. App’x. 314, 319 (5th Cir. 2016) (two prior uses of carrier without incident sufficient evidence of no negligence in hiring).

In this case, Covenant has provided the affidavit of George Yates who states that at the time Covenant hired TDKD as an independent contractor it verified that TDKD had active FMCSA operating authority and sufficient insurance. Doc. 57-2 at ¶ 3; see also Enbridge Energy, LP v. Imperial Freight Inc., No. 14-2615, 2019 WL 1858881, at *2 (S.D. Tex. Apr. 25, 2019) (summary judgment in favor of broker who confirmed that motor carrier was insured and qualified under the FMCSR). Moreover, Covenant has provided evidence of its past experience of hiring TDKD twenty-four times prior to the accident without incident. Doc. 57-2 at ¶ 4. This evidence combined with a lack of any contradictory evidence in the record to suggest that Covenant knew or should have known of any derogatory information about TDKD supports the dismissal of Plaintiffs’ negligent hiring claims against Covenant. See Dragna, 639 F. App’x at 319.

C. Negligent training, supervision, and management of TDKD

*4 Covenant has provided evidence that TDKD was hired as an independent contractor, and that it exercised no control as to how TDKD selected, managed, or supervised its employees/drivers. Doc. 57-2 at ¶ 2. This evidence supports the dismissal of Plaintiffs’ claims for negligent training, supervision, and management of TDKD. However, Covenant did not specifically address these claims in its motion. Although Plaintiffs did not file an opposition or present evidence to create a genuine issue of material fact regarding these claims, the Court cannot sua sponte dismiss claims that were not raised by Covenant in its motion. Lozano v. Ocwen Fed. Bank, FSB, 489 F.3d 636, 641 (5th Cir. 2007). Nevertheless, the Court may proceed with dismissing a claim sua sponte if it provides ten days of notice to the adverse party. Id. This memorandum ruling shall serve as notice to the Plaintiffs, and these claims will be sua sponte dismissed without further discussion if no opposition is received after ten days have passed.

D. Insurance coverage

The Court notes that Covenant’s Motion for Summary Judgment does not address two of Plaintiffs’ allegations regarding insurance coverage: (1) that Covenant is vicariously liable for TDKD, who allegedly allowed their employee to drive without proper insurance; and (2) that Covenant, who is allegedly self-insured, agreed to provide insurance coverage for TDKD and Jackson. Doc. 33 at ¶¶ 6C, 8A.

The Court notes that Covenant has presented evidence that at the time it hired TDKD as an independent contractor it verified that TDKD had sufficient insurance coverage, and Plaintiffs have not provided any evidence to create a genuine issue of material fact. Doc. 57-2 at ¶ 3. This evidence would be sufficient to dismiss Plaintiffs’ claim that Covenant is vicariously liable for TDKD allowing Jackson to drive without proper insurance. However, as noted above, the Court cannot sua sponte dismiss a claim that was not raised by Covenant in its motion. Lozano, 489 F.3d at 641 (5th Cir. 2007). Again, this memorandum ruling shall serve as notice to the Plaintiffs, and this claim will be sua sponte dismissed without further discussion if no opposition is received after ten days have passed.

Plaintiffs’ claim that Covenant, as a self-insured entity, agreed to provide insurance coverage for TDKD and Jackson remains unresolved. No evidence or argument was presented to the Court on this issue.

CONCLUSION

For the reasons set forth herein, the Motion for Summary Judgment (Doc. 57) filed by Covenant is GRANTED IN PART. All of Plaintiffs’ claims against Covenant based on vicarious liability for Jackson’s actions are DISMISSED WITH PREJUDICE. Plaintiffs’ claims against Covenant for negligent hiring, training, supervision, and management of Jackson are DISMISSED WITH PREJUDICE. Plaintiffs’ claim against Covenant for the alleged negligent hiring of TDKD is DISMISSED WITH PREJUDICE. Covenant’s motion is DENIED IN PART as to the remainder of Plaintiffs’ claims which were not addressed in the motion.

THUS DONE AND SIGNED in Chambers on this 17th day of January, 2024.

All Citations

Slip Copy, 2024 WL 187709

Footnotes

Covenant did not address all of Plaintiffs’ claims in its motion. As such, this ruling does not dismiss all claims.
In an order dated October 25, 2023, the Court granted a 60-day continuance of the deadlines associated with the Motion for Summary Judgment but advised Plaintiffs that no further extensions would be granted without a showing of good cause. Doc. 64. The deadline to file an opposition brief has passed.
Dollar General was voluntarily dismissed from the case by stipulation of the parties. Doc. 37. Plaintiffs settled their claims with Kimberly Batiste’s insurance carrier, USAA General Indemnity Company. Doc. 50.

End of Document