United States District Court,

N.D. California.

TRAVELERS INDEMNITY COMPANY OF CONNECTICUT; Marinpak MPK Sonoma, Inc., Plaintiffs,

v.

COLMA DRAYAGE, INC.; Devincenzi Trucking, Inc.; Fredrick Shumate dba Shumate Enterprises, LLC; and Does 1-20, inclusive, Defendants.

Devincenzi Trucking, Inc., Third-Party Plaintiff,

v.

Carrix, Inc., and its subsidiary, SSA Marine International, Third-Party Defendants.

No. 09-3118 SC.

 

March 15, 2010.

 

ORDER DENYING MOTION TO DISMISS THIRD-PARTY COMPLAINT

 

SAMUEL CONTI, District Judge.

 

I. INTRODUCTION

 

Now before the Court is the Motion to Dismiss Third-Party Complaint (“Motion”) filed by third-party defendants Carrix, Inc., and SSA Marine International (collectively, “Carrix”). Docket No. 48. Carrix seeks to dismiss the Third-Party Complaint filed against them by defendant and third-party plaintiff Devincenzi Trucking, Inc. (“Devincenzi”). Docket No. 36 (“Devincenzi Compl.”). The Motion is fully briefed. Docket Nos. 62 (“Opp ‘n”), 65 (“Reply”). Having considered the papers submitted by each party, the Court concludes that this matter is appropriate for determination without oral argument. For the reasons stated below, the Court DENIES Carrix’s Motion.

 

II. BACKGROUND

 

This suit began with a Complaint in Subrogation filed by Plaintiff Travelers Indemnity Company of Connecticut (“Travelers”), which is the insurer for Marinpak MPK Sonoma, Inc. (“Marinpak”), a food processor located in Sonoma, California. Docket No. 1 (“Travelers Compl.”) at 3. According to Travelers, Marinpak ordered a particular piece of machinery from a French manufacturer that was designed and built to specifications for Marinpak’s Sonoma facility. Id. The machinery was shipped from France to Oakland as cargo that “consisted of one standard container holding three packed crates and another flat rack container holding two packed crates.” Id. Travelers states that it successfully arrived in Oakland, California. Id.

 

After the cargo arrived in Oakland, Marinpak contacted Colma Drayage, Inc. (“Colma”), to secure transportation for the machinery from Oakland to its Sonoma facility. Id. According to Travelers, Colma arranged for Devincenzi to pick up and transport the machinery, and Devincenzi in turn arranged for Shumate Enterprises, LLC (“Shumate”) to pick up and transport the machinery. Id. The machinery was loaded onto a truck. Id. While the machinery was being transported by truck from Oakland to Sonoma, one of the crates struck a highway overpass and damaged critical components of the machinery. Id. According to the Complaint, Travelers had to pay a total of $764,059.28 to Marinpak to replace the machinery, and Marinpak sustained uninsured business losses totaling $465,276.63. Id. at 4. Travelers and Marinpak filed this action against Colma, Devincenzi, and Shumate, alleging violation of the Carmack Amendment, 49 U.S.C. § 14706.

 

Devincenzi thereafter filed a third-party complaint against Carrix and its wholly-owned subsidiary, SSA Marine International. See Devincenzi Compl. ¶¶ 1-2. Devincenzi alleges that Carrix provides “marine terminal and transportation services, including such services to some or all of the parties to the [Travelers] Complaint In Subrogation,” and that any liability that Devincenzi incurs in the underlying suit is the result of “the active and primary negligence or otherwise wrongful conduct of [Carrix] in connection with the handling of the freight ….” Id. ¶¶ 6, 8. As Devincenzi explains more clearly in its Opposition to Carrix’s Motion, Carrix “got the load, including its flat rack, ready to be hooked up to the truck-tractor that was to haul the cargo to Sonoma County. Once the load was ready to be hauled, Shumate hooked up its truck-tractor and hauled the load away from the Port of Oakland,” only to strike a freeway overpass before reaching its destination. Opp’n at 1-2.

 

Although this Court clearly has subject matter jurisdiction over Travelers’ claim under the Carmack Amendment, Carrix argues that this Court lacks jurisdiction over Devincenzi’s third-party complaint for indemnification, on the basis that the complaint involves a separate “occurrence” from the facts that constitute Travelers’ Carmack claim. Mot. at 6-9. Carrix filed the Motion that is now before the Court to challenge this Court’s subject matter jurisdiction over the Devincenzi Complaint.

 

III. LEGAL STANDARD

 

As a court of limited jurisdiction, “[a] federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears.”   Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir.1989). When a defendant submits a motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure, the Plaintiff bears the burden of establishing the propriety of the court’s jurisdiction. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994). “A Rule 12(b)(1) jurisdictional attack may be facial or factual.” Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir.2004). In a facial attack on subject matter jurisdiction, the defendant challenges the basis of jurisdiction as alleged in the complaint. Id. In such a case, the court may assume that the factual allegations in the complaint are true, and draw all reasonable inferences in the plaintiff’s favor. See Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir.2004).

 

IV. DISCUSSION

 

By its Opposition, Devincenzi effectively concedes that there is no basis for subject matter jurisdiction over its third-party Complaint, except through supplemental jurisdiction obtained under 28 U.S.C. § 1367(a). Opp’n at 3. This Court agrees that Devincenzi’s allegations are insufficient to establish diversity jurisdiction, and that the claim does not give rise to a significant federal question. The Court therefore has jurisdiction over Devincenzi’s claim only if it is “so related” to claims that are within the original jurisdiction of this Court “that they form part of the same case or controversy under Article III of the United States Constitution.” 28 U.S.C. § 1367(a).

 

There is no question that this Court has original jurisdiction over Travelers’ claim against Devincenzi and the other primary defendants. This is a claim brought under the Carmack Amendment, 49 U.S.C. § 14706, which “is the exclusive cause of action for interstate shipping contract claims, and it completely preempts state law claims alleging delay, loss, failure to deliver and damage to property.” White v. Mayflower Transit, L.L.C., 543 F.3d 581, 584 (9th Cir.2008). This statute holds any carrier or freight forwarder liable “for the actual loss or injury to the property” caused by any carrier “whose line or route the property is transported in,” or who received or delivered the property. 49 U .S.C. § 14706(a).

 

Although the accident occurred during transportation between Oakland, California, and Sonoma County, California, “the Carmack Amendment applies to the inland leg of a [foreign] shipment even if that leg is fully intrastate.” Chubb Group of Ins. Cos. v. H.A. Transp. Sys., 243 F.Supp.2d 1064, 1068 n. 3 (C.D.Cal.2002) (citing Project Hope v. M/V IBN Sina, 250 F.3d 67, 70-71, 73 (2nd Cir.2001)). In addition, the Court notes that Travelers’ claim is well over the $10,000 jurisdictional minimum set by 28 U.S.C. § 1337(a).

 

*3Carmack effectively codified the strict liability rule that governed the liability of common carriers at common law. Once the shipper establishes a prima facie case of Carmack liability by showing delivery in good condition, arrival in damaged condition, and the amount of damages, the carrier is liable for the actual loss or injury to the property it transports, unless there is an available defense.

Sompo Japan Ins. Co. of Am. v. Union Pac. R.R., 456 F.3d 54, 59 (2nd Cir.2006) (citations and internal quotation marks omitted).

 

The question now before the Court is whether Travelers’ Carmack claim against Devincenzi and the other defendants “form part of the same case or controversy” as Devincenzi’s indemnity claim, which is “predicated on the active and primary negligence or other wrongful conduct” of Carrix. Put otherwise, this Court will have jurisdiction only if the two claims “derive from a common nucleus of operative fact.” See Carpenters Health & Welfare Trust Fund v. Tri Capital Corp., 25 F.3d 849, 852-53 (9th Cir.1994) overruled on other grounds by S. Cal. IBEW-NECA Trust Funds v. Std. Indus. Elec. Co., 247 F.3d 920, 928-29 (9th Cir.2001) (equating standard in 28 U.S.C. § 1367(a) with “common nucleus” standard articulated in United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966)).

 

Carrix rests its argument primarily on one case, that of Galt G/S v. Hapag-Lloyd AG, 60 F.3d 1370 (9th Cir.1995). Galt was an admiralty action in which Galt, the insurer for Safeway Stores, sued carrier Hapag-Lloyd for damage to 2160 tins of ham that had been transported from Denmark to California. Id. ¶ 1372. Safeway did not discover that the ham was frozen and spoiled until well after delivery, and after it had been stored in Safeway’s own facilities for more than a week. Id. Hapag-Lloyd claimed that none of the carriers could have frozen the ham, and the district court allowed Hapag-Lloyd to bring a third-party claim against Safeway. Id. After a bench trial, the district court awarded judgment to Hapag-Lloyd, and the Ninth Circuit reversed, citing the lack of supplemental jurisdiction over Hapag-Lloyd’s claim:

 

We conclude that the cargo damage claim and the ancillary claims arise from different occurrences. The alleged occurrence in the cargo damage claim is whether Hapag-Lloyd or one of the carriers mishandled the ham during shipment; the alleged occurrence in the indemnification claim is whether Safeway stored the ham improperly. The two occurrences are separated by the carriers’ relinquishing control over the hams. They are also separated in time. Accordingly, the district court erred in exercising ancillary jurisdiction over the California indemnification claims against Safeway.

 

Id. at 1374.

 

According to Carrix, Galt controls the outcome of this Motion because “there can be no legal connection or relationship between [Carrix] ‘handling’ the cargo, and a motorcarrier driving the cargo into a bridge” because “these two discrete occurrences are so far removed in time and in location that they cannot be said to form ‘part of the same case or controversy ….’ ” This Court disagrees.

 

*4Galt does prevent this Court from finding that the two claims “form the same case or controversy” on the sole basis that they involve two theories as to the factual cause of a single injury. See 16 James Wm. Moore et al., Moore’s Federal Practice § 106.24(3rd ed.1999) (noting that Galt “seem [s] to reject, or at least ignore, a single-injury approach with regard to multiple causation”). However, Galt does not stand for the proposition that a carrier’s claims against a third party will always form a separate case or controversy. The relationship apparent here, between Devincenzi’s claim and Travelers’ claim, is stronger than the relationship that existed in Galt, between Hapag-Lloyd’s allegations and Galt’s allegations. In Galt, Hapag-Lloyd and Galt each expounded an independent theory as to how the ham was, in fact, damaged. The facts necessary to prove one theory (damage in transit) were separate from the facts needed to prove the competing theory (damage in Safeway’s storage). Damage that was caused in storage bore no causal relationship to damage that occurred in transit. In contrast, both Travelers and Devincenzi allege that Marinpak’s machinery was damaged when it hit the overpass. There is a direct causal link between Carrix’s alleged negligence and the event that, all parties agree, caused the injury. Devincenzi merely alleges an additional link in the causal chain that lead to that injury (i.e., Carrix’s negligence), and not an independent chain that preludes Devincenzi’s own involvement or liability. This is a claim that a third party’s negligence contributed to an injury that clearly occurred during carriage, rather than a claim that a third party’s acts independently caused that injury after carriage. The Court finds that Devincenzi’s claim bears “a common nucleus of operative fact” with Travelers’ claim, and is related enough to support supplemental jurisdiction over Devincenzi’s Complaint.

 

The Court also notes that Carrix’s Reply contains a number of arguments that go to the merits of Devincenzi’s claim, to show that “Devincenzi has no legal basis to assert a state law indemnity claim against Carrix/SSA for this loss.” Reply at 4-5. These arguments include citations to the California Vehicle Code and cases applying indemnity principles in similar situations. Id. These arguments go well beyond the jurisdictional arguments set out in Carrix’s initial Motion. Devincenzi may not, in its Reply, present new arguments that have the effect of converting its 12(b)(1) motion into a 12(b)(6) motion. Devincenzi has had no opportunity to respond to these arguments, and this Court therefore does not consider Carrix’s arguments on the merits.

 

Devincenzi has also indicated that it has discovered that “the actual entity in charge of the terminal and dock at the Port of Oakland was a California entity, SSA Terminals (Oakland), LLC,” and it has requested leave to file an amended third-party complaint that also names this party as a defendant. This Court should freely give such leave when justice requires. Fed.R.Civ.P. 15(a)(2). Carrix’s only objection is that amendment would be futile because this Court lacks subject matter jurisdiction over Devincenzi’s claim-an argument that the Court rejects for the reasons stated above. Devincenzi is therefore granted leave to amend its third-party complaint.

 

V. CONCLUSION

 

Carrix’s Motion to Dismiss is DENIED. In addition, Devincenzi’s request for leave to amend its third-party complaint is GRANTED. Devincenzi must file the amended third-party complaint within seven (7) days of the date of this Order.

 

IT IS SO ORDERED.

United States District Court,

S.D. Ohio,

Eastern Division.

ARCTIC EXPRESS, INC., Plaintiff-Appellant,

v.

DEL MONTE FRESH PRODUCE NA, INC., Defendant-Appellee.

No. 2:09-CV-00403.

 

March 15, 2010.

 

OPINION AND ORDER

 

ALGENON L. MARBLEY, District Judge.

 

I. INTRODUCTION

 

Pending before this Court is an appeal of a Final Judgment and Agreed Final Judgment by the United States Bankruptcy Court for the Southern District of Ohio, dated September 6, 2008 and April 27, 2009 respectively, in a dispute between Plaintiff-Appellee Arctic Express, Inc, (“Arctic Express”) a carrier of goods, and Defendant-Appellant Del Monte Fresh Produce NA, Inc., (“Del Monte”) a shipper of goods. The Bankruptcy Court, consistent with this Court’s March 30, 2007 Opinion and Order, entered a final judgment in favor of Del Monte. For the reasons set forth below, the Bankruptcy Court’s decision is AFFIRMED.

 

II. BACKGROUND

 

As this case has already been before this Court, and the facts have remained the same, this Court incorporates portions of the factual and procedural background from its March 30, 2007 Opinion and Order.

 

A. Facts

 

Arctic Express is a motorcarrier company that transports cargo for interstate shippers; Del Monte is an interstate shipper of produce. All claims comprising the underlying action relate to interstate transportation services provided by Arctic Express for Del Monte during the period of October 2000 through February 2001. Arctic Express claims that it was never paid for these services, and seeks to recover the amount due (the “Freight Charges”). Both parties agree that the reasonable Freight Charges for such services, under normal circumstances, totaled $169,941.68, the amount Arctic Express seeks in damages.

 

On February 28, 2003, Arctic Express filed a complaint in the Franklin county Court of Common Pleas for payment of the outstanding Freight Charges, asserting state-based causes of action for payment of an outstanding account, breach of contract, unjust enrichment, and conversion. Del Monte filed an answer and counterclaim seeking compensation for damages that allegedly occurred by reason of Arctic Express’ failure to deliver Del Monte’s produce in a conforming condition.

 

B. Procedural History

 

On October 31, 2003, Arctic Express filed voluntary petitions pursuant to Chapter 11, Title II of the United States Code in the United States Bankruptcy Court for the Southern District of Ohio, commencing the underlying bankruptcy case. Arctic Express’ bankruptcy stayed the state court proceeding, and by an Agreed Order entered on May 27, 2004, both parties stipulated to attempt resolution of the dispute through mediation, and to continue litigation in the Bankruptcy Court if such effort failed. When the mediation proved unsuccessful, the parties filed pleadings with the Bankruptcy Court as they had done in the state court. Arctic Express filed its Complaint on July 23, 2004 and Del Monte filed its Answer and Counterclaim on August 6, 2004.

 

Following the initial pleadings, on September 15, 2004, the parties entered into a Stipulation Regarding Parties’ Preliminary Pre-Trial Statement in which the parties agreed to present certain legal issues, including the statute of limitations, to the Bankruptcy Court for resolution through cross motions for summary judgment. Thereafter, the parties filed motions for summary judgement with respect to the statute of limitations issues and each party presented its argument during an oral hearing conducted before the Bankruptcy Court on February 8, 2005. On April 18, 2005, the Bankruptcy Court issued its Memorandum of Opinion and Order Ruling on Arctic Express’ and Del Monte’s Motions for Summary Judgment (“Bankruptcy Opinion”). The Bankruptcy Opinion, in pertinent part, stated that Arctic Express’ claims for unpaid Freight Charges are premised in state law and not, therefore, affected by the statute of limitations set forth in 49 U.S.C. § 14705. The Bankruptcy Court also issued a Judgment Entry in favor of Arctic Express on May 30, 2006, awarding Arctic Express damages in the amount of $232,550.91 ($169,941.68 plus prejudgment interest).

 

On April 28, 2006, Del Monte appealed the Bankruptcy Opinion. On March 30, 2007, this Court reversed and remanded the Bankruptcy Court on the issue of statute of limitations, finding that the plain language of 49 U.S.C. § 14705 makes clear that the statute of limitations was intended to apply to Arctic Express’ state law claims. The Bankruptcy Court, consistent with this Court’s decision, entered a Final Judgment on Plaintiff’s Complaint on September 6, 2008, finding against Arctic Express as to its claims against Del Monte because the statute of limitations had expired. On April 27, 2009, the Bankruptcy Court entered its Agreed Final Judgment Entry as to the entirety of all underlying proceedings. On May 7, 2009, Arctic Express timely appealed the Bankruptcy Court’s final judgment as to Arctic Express’ claims against Del Monte for payment of the unpaid freight charges, claiming that the state law claims were not barred by the statute of limitations in 49 U.S.C. § 14705. This Court has jurisdiction over this appeal pursuant to 28 U.S.C. § 158(a)(1). Accordingly, the appeal is ripe for this Court’s review.

 

III. STANDARD OF REVIEW

 

When the Bankruptcy Court acts as the trial court, the Bankruptcy Court makes initial findings of fact and conclusions of law. Thomasville Furniture Indus., Inc. v. Elder-Beerman Stores Corp. 250 B.R. 609, 619 (S.D.Ohio 1998). The District Court, serving as an appellate court, then reviews the Bankruptcy Court’s findings of fact for clear error, and the Bankruptcy Court’s conclusions of law de novo. Wesbanco Bank Barnesville v. Rafoth (In re Baker & Getty Fin. Servs., Inc.), 106 F.3d 1255, 1259 (6th Cir.1997) (citing Fed. R. Bankr.P. 8013), cert. denied,522 U.S. 816, 118 S.Ct. 65, 139 L.Ed.2d 27, (1997). “A factual finding will only be clearly erroneous when, although there is evidence to support it, ‘the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.’ “ U.S. v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 92 L.Ed. 746 (1948); United States v. Ayen, 997 F.2d 1150, 1152 (6th Cir.1993) (citations omitted).

 

IV. LAW & ANALYSIS

 

Artic Express raises on appeal the sole issue of the applicable statute of limitations in this case. This is the same issue raised by Arctic Express in its original summary judgment motion before the bankruptcy court, in Del Monte’s appeal of that decision, and that was addressed in this Court’s Opinion and Order, which reversed the Bankrupcty Court’s initial April 18, 2006 Summary Judgment Order. Under the law-of-the-case doctrine, “[a] decision on an issue made by a Court at one stage of a case should be given effect in successive stages of the same litigation.” U.S. v. Todd, 920 F.2d 399, 403 (6th Cir.1990). There are two purposes to the law of the case doctrine: 1) to prevent the continued litigation of settled issues; and 2) to assure compliance by inferior courts with the decisions of superior courts. Id. (citing to Moore’s Federal Practice, ¶ 0.404, at 118 (1988)). While the law-of-the-case doctrine is not a hard and fast rule, but rather a discretionary tool, “courts should be loathe to do so [reopening an already decided issue] in the absence of extraordinary circumstances.” Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 817, 108 S.Ct. 2166, 100 L.Ed.2d 811 (1988) (internal citations omitted). The Supreme Court has further stated that “it is not improper for a court to depart from a prior holding if convinced that it is clearly erroneous and would work a manifest injustice.” Arizona v. California, 460 U.S. 605, 619 n. 8, 103 S.Ct. 1382, 75 L.Ed.2d 318 (1983); see also E.E. O.C. v. United Ass’n of Journeymen and Apprentices of the Plumbing & Pipefitting Industry of the U.S. and Canada, Local No. 120, 235 F.3d 244 (6th Cir.2000).

 

In this Court’s March 30, 2007 Order and Opinion, it found that the 18-month statute of limitations in 49 U.S.C. § 14705(a) applies to Arctic Express’ claims, and held that the language of the statute “expresses Congress’ intent that the eighteen-month statute of limitations shall apply to all carriers who bring civil actions to recover charges for transportation of interstate goods.” Arctic Exp., Inc. v. Del Monte Fresh Produce NA, Inc., 366 B.R. 786, 793 (S.D.Ohio 2007). Del Monte argues that this Court should defer to its previous ruling under law-of-the-case doctrine, as the statute of limitations issue now raised by Arctic Express on appeal is the same issue dealt with in this Court’s March 30, 2007 order. This Court agrees with Del Monte. While this Court has the discretion to reopen its prior decision, no extraordinary situation exists in the appeal sub judice, nor does this Court find that it was clearly erroneous in its prior order, nor that to use the law-of-the-case doctrine would work manifest injustice. Indeed, since this Court’s decision in 2007, the Sixth Circuit, in an unpublished opinion, has also found that the statute of limitations in 49 U.S.C. § 14705(a) applies to shipments of any goods, with the exception of newspapers and baggage, transported across state lines by a carrier. CGH Transport Inc. v. Quebecor World, Inc., No. 06-6399, 2008 WL 116385, —-3 (6th Cir. Jan.8, 2008). See also Emmert Indus. Corp. v. Artisan Associates, Inc., 497 F.3d 982, 987 (9th Cir.2007) (finding that the statute of limitations in 49 U . S.C. § 14705(a) applies to state law claims). Furthermore, Arctic Express does not point to any cases that address this particular issue, and certainly none that find that the statute of limitations does not apply. This Court, therefore, applies the law-of-the-case doctrine, and affirms the Bankruptcy Court’s Final Judgment and Agreed Final Judgment Entry.

 

In its briefing, Arctic Express does not respond to Del Monte’s arguments under U.S. v. Todd and law-of-the-case, and this Court has been unable to find any case law to suggest that it should not use its discretion to apply the doctrine here.

 

V. CONCLUSION

 

For the foregoing reasons, the Bankruptcy Court’s Final Judgment as to Plaintiff’s Complaint and the Agreed Final Judgment Entry as to all underlying proceedings is AFFIRMED.