United States District Court,

N.D. Illinois, Eastern Division.

Sheldon LUSTIG, Plaintiff,

v.

Anna BROWN, individually and d/b/a Stray Cat Transport; Express Boat Transport

Corp., a Florida corporation; and Yanel L. Martin Nurquez, individually,

Defendants.

June 3, 2004.

MEMORANDUM OPINION

KOCORAS, Chief J.

This matter comes before the court on the motions to dismiss of Defendants Anna Brown (“Brown”), Express Boat Transportation Corporation (“Express”), and Yanel L. Martin Nurquez (“Nurquez”). For the reasons set forth below, the motions are granted.

BACKGROUND

Because this is a motion to dismiss, we initially accept all well pleaded facts and allegations in the complaint as true and construe all inferences in favor of the Plaintiff. Thompson v. Illinois Dep’t of Prof’l Regulation, 300 F.3d 750, 753 (7th Cir.2002).

On June 30, 2003, Plaintiff Sheldon Lustig (“Lustig”) of Illinois needed to transport his yacht (the “Yacht”) from Mississippi to the Chicago area in time for the July 4th holiday. Lustig engaged in discussions with Brown, who runs a Florida based trucking company, regarding the transportation of the Yacht. Brown and Lustig entered into a contract (the “Contract”) wherein Brown would load the Yacht for transportation at 10:00 a.m. on July 2, 2003, and deliver the Yacht to either Chicago or Michigan City, Indiana, by noon on July 3, 2003. Lustig informed Brown of the importance of the noon delivery time because marina personnel would be leaving early on July 3 to begin their holiday celebrations. In order to secure delivery in time for the July 4th holiday, Lustig agreed to pay a $2,000 premium over Brown’s normal price of $2,900. Because Brown did not own any trucks capable of performing under the Contract, she sub-contracted with Express to provide a truck to transport the Yacht to a Chicago area marina.

After signing the Contract, Lustig hired a local crane operator to load the Yacht onto Brown’s truck when it arrived in Mississippi. Lustig’s cost for the crane’s services was $250 per hour, which was known to Brown. The crane arrived on site at 9:00 a.m. and, on Brown’s instructions, lifted the Yacht at 10:00 am. When Brown’s truck failed to arrive at the scheduled time, numerous conversations between Lustig and Brown ensued, with Brown assuring Lustig that the truck would be arriving soon and that the Yacht should stay suspended by the crane. The Yacht remained suspended until 6:00 p.m., when a truck belonging to Express arrived. By 7:00 p.m. the Yacht was loaded onto the Express truck. Because the truck did not arrive until 6:00 p.m., Lustig incurred the expenses of eight additional hours of crane time.

When the Express owned truck arrived in Mississippi, it was driven by Nurquez, a Florida resident. Neither Express, Nurquez, nor Brown had obtained certain permits, escort vehicles, or “pole height cars” for the Yacht’s interstate journey. After he departed with the truck from Mississippi, on July 2, 2003, the Arkansas Highway Patrol arrested Nurquez and issued him citations for failing to have a permit for an oversize load and for operating the Express truck in excess of the maximum daily hours allowed under federal and Arkansas law. It seems that Nurquez had already surpassed the allowable hours limit under federal and Arkansas law by the time he arrived in Mississippi to pick up the Yacht earlier that day. Before being allowed to continue his journey, Nurquez was required to obtain an Arkansas oversized load permit and to take the Express truck out of service for at least eight hours so that Nurquez could get some sleep.

When it became apparent that the Yacht could not be delivered by noon on July 3, Express and Brown contacted Lustig and requested an extension of time. Lustig responded that the noon deadline was critical as the marina staffs would be off duty for the remainder of the holiday weekend and that the Express truck would then be required to stay at a marina until the Yacht could be unloaded on July 6. Lustig was able to locate an alternative marina in Winthrop Harbor, Illinois, that could unload the Yacht on the Fourth of July. Lustig granted Express and Brown permission to deviate from the Contract and send the Yacht to Winthrop Harbor for unloading.

On the night of July 3, 2003, the Express truck was traveling northbound on Interstate 94 (“I-94”) when it passed under a bridge near Chicago’s Loop. As the Yacht passed under the bridge, whose underside is approximately thirteen-and-one-half feet from the road’s surface, the uppermost portion of the Yacht struck the bridge. The collision damaged the Yacht, scattering pieces of it onto the highway. It appears that Nurquez violated numerous provisions of Illinois law by driving the Express truck with its oversize load on I-94 after sundown and by failing to report the incident to the authorities.

On March 17, 2004, Lustig filed a complaint in the Circuit Court of Cook County containing the following allegations: (1) Breach of contract for Brown’s failure to load the Yacht at 10:00 a.m. on July 2, 2003, and for charging Lustig for permits and escort vehicles that were never obtained; (2) common law fraud and Illinois statutory consumer fraud for Brown’s representations as to the Yacht’s pick up time, safety, and delivery, as well as its transportation’s compliance with applicable laws and regulations; (3) violations of four federal transportation regulations by all defendants; (4) negligence by all defendants; and (5) loss of use of the Yacht. On April 6, 2004, Express and Nurquez filed a petition for removal, claiming that federal question jurisdiction exists under 28 U.S.C. § 1137 and 49 U.S.C. § 14706(a)(1). Brown, Express and Nurquez now move to dismiss Lustig’s complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

LEGAL STANDARD

“The purpose of a motion to dismiss is to test the sufficiency of the complaint, not to decide the merits.” Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir.1990) (quoting Triad Assocs., Inc. v. Chicago Hous. Auth., 892 F.2d 583, 586 (7th Cir.1989)). A complaint need only specify “the bare minimum facts necessary to put the defendant on notice of the claim so that he can file an answer.” Higgs v. Carver, 286 F.3d 437, 439 (7th Cir.2002) (citing Beanstalk Group, Inc. v. AM General Corp., 283 F.3d 856, 863 (7th Cir.2002)). Dismissal is proper only when “it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v.. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). With these principles in mind, we now address the motion before us.

DISCUSSION

Defendants argue that Lustig’s complaint should be dismissed because the exclusive remedy against common carriers for damages to goods shipped in interstate commerce is the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706. The Carmack Amendment “provides shippers with the statutory right to recover for actual losses or injury to their property caused by carriers involved in the shipment” of goods in interstate commerce. Gordon v. United Van Lines, Inc., 130 F.3d 282, 286 (7th Cir.1997). Finding that the Carmack Amendment is the exclusive remedy for the loss of or damage to goods shipped in interstate commerce, the Seventh Circuit holds that state law claims for such loss or damage (be they under a tort, contract, or statutory theory) are barred as preempted by the Carmack Amendment. Id. at 289. While claims of negligence causing damage to cargo are clearly preempted, so to are state claims alleging fraud, breach of contract, and violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, 815 ILCS 505 et seq., if the measure of damages is likely to be the loss or damage to the shipped goods. Gordon at 289. As such, we find that Counts II, III, VIII, and IX [FN1] are preempted under the Carmack Amendment and should accordingly be dismissed.

FN1. Lustig incorrectly labels his ninth count on the complaint as “Count IV.”

Counts IV-VII of the complaint allege various violations of the Code of Federal Regulations relating to highway transportation. However, Lustig does not rely on, nor has our own research uncovered, any authority indicating that a private cause of action exists for violations of the federal regulations at issue. These counts are thus dismissed.

The remaining count in Lustig’s complaint is Count I, which alleges breach of contract for Brown’s failure to timely load the Yacht in Mississippi (resulting in Lustig being charged with excessive crane rental fees) and for Brown charging Lustig for permits and escort vehicles that were never obtained. This claim alleges damages of only $6,400, far less than the requisite $75,000 needed to establish diversity jurisdiction over the claim. 28 U.S.C. § 1332. Because all the other counts in Lustig’s complaint have been dismissed, we decline to exercise supplemental jurisdiction over the lone state law claim of Count I pursuant to 28 U.S.C. § 1367(c)(3). Kennedy v. Schoenberg, Fisher & Newman, Ltd. 140 F.3d 716, 728 (7th Cir.1998).

CONCLUSION

Based on the foregoing analysis, the motions to dismiss of Brown, Express, and Nurquez are granted.

END OF DOCUMENT

Court of Appeals of Georgia.

HARTFORD CASUALTY INSURANCE CO.

v.

SMITH et al.

June 14, 2004.

BARNES, Judge.

Hartford Casualty Insurance Company appeals the trial court’s grant of summary judgment to James E. Nathaniel, 3N Enterprises, Inc. d/b/a JRJ Limousine Services, Arnel Smith, and Roberta Smith. The court found that Hartford was required to provide coverage for an automobile collision on July 4, 2000, between Nathaniel and the Smiths, under an insurance liability policy issued to the limousine service. Hartford contends that the trial court erred because the pickup truck Nathaniel was driving was not covered under the policy, and because Nathaniel failed to fulfill a contractual condition precedent by not giving prompt notice of the collision. [FN1] For the reasons that follow, we affirm the trial court’s decision.

Nathaniel started a limousine business in 1999. After he negotiated the purchase of a 1997 Lincoln limousine, he called his insurance agent in April 1999 and told the agent he was in the process of buying the car, and that JRJ Limousine Services would be the name of the service, which would be a “subsidiary of 3N Enterprises.” He and his wife would be stockholders in the company, which was in the process of being incorporated. (Nathaniel, who is not an attorney, incorporated the business himself.) The agent filled out the insurance application and issued a binder to JRJ Limousine Services on April 26, 1999, which included general liability and property coverage for the business as well as comprehensive automobile coverage. Hartford then issued the policy to JRJ Limousine Services, providing coverage from April 26, 1999, to April 26, 2000.

Nathaniel incorporated his business as 3N Enterprises, Inc., on May 10, 1999. The limousine sale was finalized on May 12, 1999, and title was transferred to James and Rosalind Nathaniel, with Nationsbank as the lienholder. Nathaniel explained in his deposition that the bank would not make the car loan to the corporation because he had no past business history and the business did not yet exist.

On January 24, 2000, Hartford sent a Damage Liability Certificate of Insurance form (“Form E”) to the Secretary of State, certifying that Hartford had issued a policy to “3N Enterprises, Inc. DBA JRJ Limousine Services” on April 26, 1999, covering the obligations imposed by the motor carrier law. The State then issued a Certificate of Public Convenience and Necessity to 3N Enterprises, Inc., d/b/a JRJ Limousine Services on March 16, 2000. Hartford renewed the insurance policy on April 26, 2000, and again on April 26, 2001, naming the insured as James Nathaniel d/b/a JRJ Limousine Services, although it subsequently declined to renew the insurance in February 2002 because of claims from the collision at issue here.

On July 4, 2000, Nathaniel was driving a pickup truck when he collided with the Smiths’ car. The truck was titled in his name and was insured by Allstate Insurance Company. The Smiths sued Nathaniel in Chatham County State Court, then filed a declaratory judgment action against Nathaniel, Allstate, and Hartford in Chatham County Superior Court seeking to authorize the stacking of two Allstate policies and to determine coverage under the Hartford policy. Nathaniel cross-claimed against Allstate and Hartford. Hartford cross-claimed for declaratory judgment against Nathaniel and the Smiths, but then dismissed the cross-claim and filed an amended declaratory judgment action in Chatham County Superior Court against Nathaniel, 3N Enterprises, and the Smiths. After the parties conducted discovery, both the Smiths and Hartford moved for summary judgment in the case the Smiths brought, and Hartford moved for summary judgment in the case it brought. Regarding the Hartford coverage, the trial court granted the Smiths’ motion and denied Hartford’s motions in both cases, finding that:

The record of the instant case demonstrates that Hartford filed a Form E Certificate of Insurance with the Public Service Commission listing the name of the insured as 3N Enterprises Inc. d/b/a/ JRJ Limousine. Although the actual policy, which the Court notes is not required to accompany the Form E filing with the PSC, lists the named insured as James E. Nathaniel d/b/a JRJ Limousine, the Court finds that the named insured as listed on the Form E is controlling. The automobile involved in the instant action is a 1978 pickup truck owned by Mr. Nathaniel individually…. The Court finds that the 1978 pickup falls under at least one of [the enumerated] categories of automobiles covered by the Hartford policy.

Hartford contends that the trial court erred in granting summary judgment against it for two reasons: (1) The Hartford policy does not cover the pickup truck driven by Nathaniel; and (2) Nathaniel failed to give timely notice of the claim, as required by the policy.

1. a. Hartford argues that Nathaniel’s pickup truck was not an insured vehicle under its policy because Nathaniel was the named insured, d/b/a JRJ Limousine Services. The policy excluded coverage for any vehicles owned by the insured that were not listed on the policy, which only listed the Lincoln limousine. Because the insured was Nathaniel, and he owned the truck which was not listed on the policy, Hartford asserts that the truck was not covered. Nathaniel responds that the insurer covered the business, not him personally, as confirmed by the Damage Liability Certificate of Insurance form that Hartford sent to the Secretary of State. The Hartford policy extended coverage to

only those autos you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes autos owned by your employees, partners (if you are a partnership), members (if you are a limited liability company), or members of their households but only while used in your business or your personal affairs. The business, 3N Enterprises, Inc., did not own the pickup truck involved in this collision, and therefore it was covered, he argues.

The first issue in this case is to identify which entity the policy insured: Nathaniel personally or the corporation. If the policy insured the corporation, then the pickup truck was a “non-owned” vehicle covered by the policy. Compare Samples v. Ga. Mutual Ins., 110 Ga.App. 297, 138 S.E.2d 463 (1964) (the car plaintiff was driving was not covered as a temporary substitute because it was titled to her husband’s trade name, which was as if he owned it individually). Hartford argues that it simply made a mistake in naming 3N Enterprises, Inc., DBA JRJ Limousine Services on the Form E it sent to the insurance commissioner, and that the name on the policy itself, James E. Nathaniel, DBA JRJ Limousine Service, was correct.

“Policies of insurance will be liberally construed in favor of the object to be accomplished, and the conditions and provisions of contracts of insurance will be strictly construed against the insurer who prepares such contracts.” U.S. Fire Ins. Co. v. Welch, 163 Ga.App. 480, 481, 294 S.E.2d 713 (1982). In a somewhat different context, considering whether a certificate of insurance naming a company as a named insured, we held that the insurer was

estopped by … its certificate of insurance to contend that [the named insured on the certificate] is not a named insured, or not insured, under the policy, as against the insurer’s contention that the certificate of insurance was not binding because it was not attached to the policy as an endorsement thereon. Insofar as [the named insured on the certificate] is concerned, the contract consists of the certificate and the policy.

(Citations omitted.) Strain Poultry Farms v. Am. Southern Ins. Co., 128 Ga.App. 600, 602(1), 197 S.E.2d 498 (1973). In that case, the certificate of insurance had been issued to a poultry company to show that it was also a named insured on its employee’s insurance policy, as the employee was hauling goods for the company in his own trucks and trailers.

The situation is not so different here. Hartford issued a certificate of insurance verifying that it provided insurance for the corporation that was operating JRJ Limousine Services. OCGA § 46-7-12(a) provides that, before a common carrier can obtain a Certificate of Public Necessity and Convenience, its insurer must file a certificate of insurance with the insurance commissioner,

evidencing a policy of indemnity insurance in some indemnity insurance company authorized to do business in this state, which policy must provide for the protection, in case of passenger vehicles, of passengers and baggage carried and of the public against injury proximately caused by the negligence of such motor common carrier or motor contract carrier, its servants, or its agents….

The indemnity insurance policy “is not for the benefit of the insured but for the sole benefit of those who may have a cause of action for damages for the negligence of the motor common carrier. Such a policy is in the nature of a substitute surety bond and creates liability in the insurer regardless of the insured’s breach of the conditions of the policy.” (Citations omitted.) Progressive Cas. Ins. Co. v. Bryant, 205 Ga.App. 164, 165, 421 S.E.2d 329 (1992). Hartford cannot now declare that it made a mistake and unilaterally undo its certificate.

While the insurance company argues in its brief that this collision did not arise from the limousine company’s common carrier operations, that fact does not decide the identity of the named insured. The named insured does not change depending on what sort of claim is made against the policy. While the details surrounding the collision may affect coverage, they do not affect the entity being insured.

Because the Uniform Motor Carrier Bodily Injury and Property Damage Liability Certificate of Insurance (Form E) that Hartford filed with the Georgia Public Service Commission pursuant to OCGA § 46-7-12(a) stated that it had insured 3N Enterprises, Inc., DBA JRJ Limousine Services, the trial court did not err in concluding that the corporation was the named insured. Because the corporation was the named insured, the pickup truck that belonged to Nathaniel was a “non-owned” vehicle under the policy, and was therefore covered if it was being used for a business purpose.

b. Hartford further argues that Nathaniel was not using the pickup truck for a business purpose when the wreck occurred, and thus the damages are not covered under this policy. Nathaniel testified that, on the day of the collision, he was pulling into a seafood store to pick up food for a dinner he was giving for some friends to build good will, and to recognize their contributions and assistance with his limousine business as backup drivers and sources of new customers. Hartford did not submit any evidence in rebuttal, but simply argues that Nathaniel has not sufficiently proved he was using the truck for business. Hartford “was required to show an issue of fact in the evidence of record or to come forward with rebuttal evidence” once Nathaniel established his prima facie case. Thompson v. Phelps Industries, Inc., 215 Ga.App. 128, 129, 449 S.E.2d 677 (1994.) This it did not do, and thus the trial court did not err in holding that the collision was covered under Hartford’s policy.

2. Hartford also argues that the collision is not covered under its policy because Nathaniel failed to give prompt notice, as required by the policy terms. Hartford admits that “the Form E filing creates liability in the company for members of the public injured by the negligence of the common carrier listed on the Form E filing,” regardless of whether the insured breached a condition of the insurance policy. Ross v. Stephens, 269 Ga. 266, 496 S.E.2d 705 (1998). Hartford contends, however, that the people injured in the collision with Nathaniel’s pickup truck were not injured by the common carrier, 3N Enterprises, Inc., but by Nathaniel individually, and therefore the injured parties were not entitled to any benefits conferred to the public because of the Form E filing.

In the first place, as we held in Division 1, the policy insured 3N Enterprises, Inc., and the pickup truck was covered under the policy. In the second place, there is no merit in Hartford’s argument that the Form E endorsement does not provide coverage in this case because Nathaniel was not transporting people for hire at the time of the collision. The common carrier coverage is not limited to incidents occurring only when the limousine service is transporting people for hire; otherwise the clause providing coverage for non-owned vehicles would be mere surplusage. See Driskell v. Empire Fire and Marine Ins. Co., 249 Ga.App. 56, 60(2), 547 S.E.2d 360 (2001). The trial court did not err in granting summary judgment to Nathaniel.

Judgment affirmed.

BLACKBURN, P.J., and MIKELL, J., concur.

FN1. Hartford initially alleged also that the case brought by the Smiths was improper under the Declaratory Judgment Act because no justiciable controversy existed, although it brought a separate, subsequent action under the same Act. The trial court’s order applied to both cases. Hartford specifically abandoned this argument in its reply brief to this court.

END OF DOCUMENT