United States District Court, W.D. Kentucky,

at Louisiville.

MAFCOTE INDUSTRIES, INC., d/b/a Miami Wabash Paper, LLC, d/b/a Royal Consumer Products, LLC, Plaintiffs

v.

ESTES EXPRESS LINES, INC., Defendant.

Civil Action No. 3:07-CV-419-S.

 

March 8, 2010.

 

MEMORANDUM OPINION

 

CHARLES R. SIMPSON, III, District Judge.

 

Miami Wabash Paper and Royal Consumer Products (wholly owned subsidiaries of Mafcote Industries) hired Estes Express Lines to transport products to their customers. On a number of occasions Estes did not effectuate delivery until after deadlines to which the plaintiffs and their customers had agreed, resulting in the plaintiffs being assessed tens of thousands of dollars in late fees. Thus Mafcote and its subsidiaries instituted this suit in state court, in which they blame Estes for the delays and seek to hold it legally responsible for the consequences thereof. Estes removed the case to this court, asserting both diversity of citizenship and that the case presents a federal question because it is allegedly governed in part by the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706, et seq. Estes disclaims liability on various grounds, and has counterclaimed for something north of $225,000 in unpaid fees for its transportation services. It has now moved for summary judgment both as to Mafcote’s claims against it and as to its own counterclaim.

 

A party moving for summary judgment has the burden of showing that there are no genuine issues of material fact and that the movant is therefore entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Adickes v. S.H. Kress & Co., 398 U.S. 144, 151-60 (1970); Felix v. Young, 536 F.2d 1126, 1134 (6th Cir.1976). Not every factual dispute between the parties will prevent summary judgment. The disputed facts must be material. They must be facts which, under the substantive law governing the issue, might affect the outcome of the suit.   Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). The dispute must also be genuine. The facts must be such that if they were proven at trial, a reasonable jury could return a verdict for the non-moving party. Id. The disputed issue need not be resolved conclusively in favor of the non-moving party, but that party is required to present some significant probative evidence which makes it necessary to resolve the parties’ differing versions of the dispute at trial. First National Bank of Arizona v. Cities Service Co., 391 U.S. 253, 288-89 (1968). The evidence must be construed in the light most favorable to the party opposing the motion. Bohn Aluminum & Brass Corp. v. Storm King Corp., 303 F.2d 425 (6th Cir.1962). We address Estes’s two summary judgment motions in turn.

 

I

 

Estes argues that its shipping contracts with Mafcote were governed by its EXLA 105-L Rules Tariff, which sets out the conditions it places upon its various services. Specifically, Item 490 of Estes’s tariff provides (in pertinent part) as follows:

 

In no event will carrier be liable for any special or consequential damages arising from delay in delivery. Carrier makes no guarantees or warranties concerning delivery time. Any prior or contemporaneous representations regarding delivery schedules are acknowledged not to be binding on either party.

 

(Ex. A to Wilder Aff.) If this provision controls the parties’ relationship, plaintiffs cannot recover. The products themselves were not damaged or made less valuable by the delay in delivery. Plaintiffs have not claimed any actual damages; they seek only consequential damages in the form of a third-party late fees. So we must decide whether the Rules Tariff binds the parties. It does.

 

We note that carriers are free to limit or exclude liability for consequential damages unless some statute stands in their way. See, e.g., Kesel v. UPS, 2002 U.S. Dist. LEXIS 12350, at * 19 (N.D.Cal. Jan. 16, 2002) (enforcing a clause reading, “UPS shall not be liable for any special, incidental or consequential damages”).

 

Compare Paper Magic Group, Inc. v. J.B. Hunt Transp., Inc., 2001 U.S. Dist. LEXIS 13494 (E.D.Pa. Aug. 29, 2001), aff’d,318 F.3d 458 (3d Cir.2003) (concluding that a shipment of 1998 Christmas cards was actually damaged when delivery was delayed until February 1999, at which point they could no longer be profitably sold).

 

Mafcote’s statement that it “believes damages caused by failure to deliver with reasonable dispatch to be freight losses, and actual damage” (Resp.12) is conclusory, unsupported, and unpersuasive.

 

Plaintiffs’ shipments with Estes are governed collectively by an “Agreement for Transportation”  and individually by bills of lading. The overarching contract makes no mention of the tariff, but the bills of lading (each of which was apparently drafted and provided by the plaintiff-shipper) do. Specifically, the two sample bills (Ex. C, D to Wilder Aff.) both contain the following paragraphs (emphasis added):

 

The Agreement for Transportation is dated September 1, 2000, but neither side disputes that it applies here; indeed, both parties have submitted it as an exhibit. We suppose that it automatically renewed in accordance with its terms and remained in effect at the relevant times.

 

The record contains copies of only two bills of lading (one each in the name of Royal and Miami Wabash), but no one disputes that they are representative of the whole set.

 

It is mutually agreed, as to each carrier … that every service to be performed hereunder shall be subject to all the terms and conditions of the Uniform Domestic Straight Bill of Lading set forth … in the applicable motorcarrier classification or tarif if this is a motorcarrier shipment.

 

Shipper hereby certifies that he is familiar with all the terms and conditions of the said bill of lading, including those written on the back thereof, set forth in the classification or tariff which governs the transportation of this shipment, and the said terms and conditions are hereby agreed to by the shipper and accepted for himself and his assigns. This language unambiguously incorporates the carrier’s tariff into the agreement,  so to survive summary judgment the plaintiffs must attempt to get out from under it.

 

Additionally, when picking up a shipment, an Estes agent would typically affix to the bill of lading a “PRO sticker,” which bore the statement: “Driver’s signature ONLY acknowledges receipt of freight. Shipment is subject to applicable terms and conditions of the Uniform Straight Bill of Lading and the EXLA-105 series rules tariff.” (See Ex. C. to Wilder Aff.) While are not convinced that this sticker on its own would be sufficient to incorporate the tariff, it is further evidence that the plaintiffs and their agents ought to have been aware of the tariff’s existence and effects.

 

They cannot do so. First they observe that the bills of lading contain, in addition to the above-quoted language, statements that “the delivery dates herein specified shall be deemed of the essence and the carrier shall be liable for consequential damages to the shipper or consignee for late delivery.” This provision would have some force, and would create a tricky question of contract interpretation (what to do when a contract and an incorporated document contradict one another?), but as it happens the bills of lading do not articulate any delivery date. To be sure, they contain shipping dates, but neither one indicates a date on which delivery was required. The “of the essence” terms are without enforceable meaning.

 

Second, plaintiffs cite Hillenbrand Indus., Inc. v. Con-Way Transp. Servs., Inc., 2002 U.S. Dist. LEXIS 12417, at *20-21 (S.D. Ind. June 19, 2002) for the idea that a reference to “the applicable tariff” in a shipping order (tendered in lieu of a bill of lading) is merely “a vague statement, obviously used formulaically on every Hillenbrand shipping order no matter the carrier[, that] does not show that Hillenbrand had actual notice of the liability limitation at issue.” But the plaintiffs need not have had actual knowledge to be bound by a tariff expressly incorporated by their own bills of lading. Hillenbrand was a case in which a part of a shipment never reached its intended destination. The shipper sought to recover the value of the lost products, in accordance with the Carmack Amendment’s general rule that a carrier is absolutely liable for the “actual loss or injury to the property caused by” the carrier. 49 U.S.C. § 14706(a)(1); Opp v. Wheaton Van Lines, Inc., 231 F.3d 1060, 1063 (7th Cir.2000). A carrier can limit its liability for actual damage to a product if it meets certain requirements, which include “obtain[ing] the shipper’s agreement as to [the shipper’s] choice of liability” and “giv[ing] the shipper a reasonable opportunity to choose between two or more levels of liability.”   Emerson Elec. Supply Co. v. Estes Express Lines Corp., 451 F.3d 179, 186 (3d Cir.2006) (citations omitted). Hillenbrand held only that a reference to the tariff in the shipping order was insufficient to establish that the shipper had agreed to a level of liability after being given a reasonable opportunity to choose between several. We are not in the same situation here, because the Carmack Amendment rules apply only where the goods being shipped are lost or damaged. The plaintiffs’ goods were not lost, and the only damages alleged in the complaint accrued as the result of fees assessed by a third party. There is no evidence that the goods were made less saleable or valuable in and of themselves as a result of the delay; the fees were apparently assessed only in order to encourage prompt delivery. Consequently the Carmack Amendment does not cover the damages alleged here, and Estes has no need to fulfill the elements spelled out in Emerson to claim protection under its tariff. The tariff controls, and bars the plaintiffs from recovering the damages alleged in the complaint. Summary judgment for the defense is warranted.

 

II

 

Estes has asserted a counterclaim for a total of $226,450.29 in unpaid transportation charges. Of this sum, $66,344.71 is ascribed to Royal and $160,105.58 to Miami Wabash. (Mot. for Summ. J. 3 & n. 2; Belcher Aff. ¶ 9.) These charges fall under three headings: original freight charges, discount removals, and collection charges. Estes explains that it initially charged the defendants a discounted shipping rate, but that it assesses a 10% ($21 minimum per shipment) service charge if a bill remains unpaid 30 days after issuance of the invoice. Once an invoice is more than 30 days past due, Estes sends written notification of that fact. If the bill remains unpaid 15 days after signed receipt of the late notice or 20 days after Estes sent the notice, the shipper is charged the full, undiscounted shipping rate. So the first category of damages alleged is what Estes originally expected the defendants to pay, and the second is the difference between the discounted rate and the full charge. Finally, if Estes elects to proceed with a legal action or to refer delinquent charges to a collection agency, it adds a 30% fee on top of what is otherwise owed. (Mot. for Summ. J. 6; Ex. B. to Belcher Aff., Rules Tariff Item 720.) As we explained above, Estes’s Rules Tariff was incorporated into each bill of lading through language written by Mafcote itself, so all these charges apply unless contradicted by some other controlling authority.

 

The original complaint sought $228,487.30, but Estes subsequently determined the actual amount to be less. (Mot. for Summ. J. 1, 3 & nn. 1-2.)

 

It’s important here to distinguish between the subsidiary companies and the parent. Estes cannot hold Mafcote liable on its subsidiaries’ debts unless it can “pierce the corporate veil.” See, e.g., Louisville/Jefferson County Metro Gov’t v. Hornblower Marine Servs., No. 3:06-CV-348, 2009 U.S. Dist. LEXIS 92351 (W.D.Ky. Oct. 1, 2009). It has to this point raised no piercing argument.

 

Royal is alleged to owe $23,212.55 in freight charges $27,821.84 in discount removals, and $15,310.32 in collection fees. Miami Wabash is alleged to owe $54,878.56, $68,279.58, and $36,947.44, respectively.

 

Royal does not contest any of the original charges against it. (See Pl.’s Resp. to Interrogs. 4-6.) Miami Wabash, however, claims never to have received 55 of the invoices for which Estes seeks to hold it responsible, and therefore argues that it owes only $29,387.63. (See id.) That denial, backed up only by a copy of an “Account Detail Report” marked up by Steve Gilliland (whose identity is unclear and who was not, so far as we can tell, under oath when he reviewed the report), is not sufficient to create a material question of fact as to the amount of Miami Wabash’s debt. Moreover, the mere fact that an invoice was not on file with Miami Wabash at some later date is not evidence that the money was not due. The record contains no affidavits or other testimony that would establish that the disputed amounts were either improperly billed or not owed at all. Consequently Wendy Belcher’s sworn affidavit, written in her capacity as Estes’s Credit Manager, is sufficient to establish damages as to this portion of Estes’s claim. Miami Wabash has failed to create a genuine question of fact, and summary judgment is warranted against both Royal and Miami Wabash with respect to the whole of the original freight charges.

 

We turn to the discount removals. This issue is dispatched easily. The Agreement for Transportation between the parties -the overarching contract that governed the whole of the relationship-states unambiguously that “CARRIER agrees that no penalties; loss of discount or interest will be assessed to SHIPPER for past due amounts.” (Ex. E to Wilder Aff. (emphasis added).) And while Estes argues that the Rules Tariff controls in the event of conflict, the tariff itself provides that “[t]he Rules, and Charges provided in connection with such rules, published in this tariff will NOT apply[ ] to the extent conflicting provisions have been established either by written agreement or contractual arrangement with specific accounts and are maintained in the Offices of the carrier….” (Pl.’s Ex. 2, Rules Tariff Item 163.) Estes makes no effort to get around this clause. The discount removals are not recoverable by the plain terms of the parties’ contracts. The court will grant summary judgment sua sponte to Royal and Miami Wabash in this respect.

 

Although the Agreement is nominally between Estes and Mafcote, all parties treat it at various times as governing everyone involved. We thus assume that it binds Royal and Miami Wabash.

 

Next we come to the 30% charge that Estes assessed because it had to bring its complaints to court. Royal and Miami Wabash argue that this is a “penalty” that Estes is not entitled to recover under the Transportation Agreement. Estes asserts that it is something else-a collection fee. We first note that the term “penalty” in the agreement does not appear to carry the same meaning as it does in ordinary contract law. A “penalty” is generally defined as a “term fixing unreasonably large liquidated damages” for breach. Restatement (Second) of Contracts § 356(1). Such a provision is unenforceable on grounds of public policy; no specific contract term is needed to avoid it. But the contract here does not envision a charge assessed for breach. It envisions a surcharge on “past due amounts.” The definition is thus broader than in normal legal usage. Bearing this in mind, the court is of opinion that the “collection fee” is a penalty within the meaning of the transportation agreement provision quoted above. It is assessed only once an account is overdue to the point of Estes having to resort to legal action, and penalizes the shipper for allowing itself to fall so far behind in its accounts. Because Estes contracted away its right to enforce such a clause, the court will also grant summary judgment sua sponte here.

 

Finally, Estes has requested an award of prejudgment interest, which courts normally award in cases of nonpayment of freight charges. See Coliseum Cartage Co. v. Rubbermaid Statesville, Inc., 975 F.2d 1022, 1026 (4th Cir.1992); 2 Saul Sorkin, Goods in Transit § 11.07. Here, however, Estes has bargained away its right to collect interest on past due amounts. It is not entitled to more than the benefit of that bargain. Its recovery will therefore be limited to the discounted freight charges that remain in arrears.

 

The court will issue a separate order in accordance with this opinion.

United States District Court, E.D. Virginia,

Richmond Division.

DOMINION RESOURCE SERVICES, INC., Plaintiff,

v.

5K LOGISTICS, INC., Defendant and Third-Party Plaintiff,

v.

Daily Express, Inc., Third-Party Defendant.

Action No. 3:09-CV-315.

 

March 8, 2010.

 

MEMORANDUM OPINION

 

JAMES R. SPENCER, District Judge.

 

I. INTRODUCTION

 

THIS MATTER is before the Court on plaintiff Dominion Resource Services, Inc.’s (hereinafter “Dominion”) Motion for Summary Judgment on its breach of agreement claim against defendant 5K Logistics, Inc. (hereinafter “5K”). (Doc. No. 84.) Dominion seeks $192,072.50 in damages, plus attorney’s fees and costs. After hearing the parties and giving consideration to the briefs, it is the conclusion of the Court that the Motion should be granted.

 

II. BACKGROUND

 

A. Posture of Case

 

This case arises out of damages to a 20-ton heat exchanger that fell off of a truck while being transported for Dominion by third-party defendant Daily Express Inc. (hereinafter “Daily Express”), a motorcarrier hired by 5K. The accident occurred in 2006 and Dominion filed this suit on April 14, 2009, after failing to receive reimbursement from 5K. 5K has filed a third-party complaint against Daily Express and the heat exchanger’s manufacturer. Dominion’s Amended Complaint also states claims for negligence and breach of bailment duties. This Motion was filed on February 2, 2010, and oral arguments were heard on February 26.

 

All pending counts have been dismissed as to the manufacture, Thermal Engineering (USA) International. See Order Granting TEI’s Mot. Dis. (November 30, 2009).

 

In considering Dominion’s Motion, this Court has reviewed the “pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits” submitted by both parties in order to determine whether there are any genuine issues as to the facts material to Dominion’s claims and 5K’s defenses. SeeFed.R.Civ.P. 56(c). After considering these materials, the Court finds the following facts cannot reasonably be disputed:

 

1. Dominion, a Virginia corporation, entered into a Master Services Contract (hereinafter “the Contract”) with 5K, a Pennsylvania corporation, in January 2004. The Contract provided that 5K would, “from time to time” be requested by Dominion, “through its duly authorized representatives” to “perform certain work.” This work could include “any such [w]ork performed by [5K] in the scope of its usual business” and specifications for this work might be set forth in subsequent “Work Order Agreement[s].” The Contract would “become effective and operative when [5K] first commences the performance of any job or the rendering of any particular service.” The parties agreed that the Contract would be governed by Virginia law. (Pl.’s Mem. Sup. Mot. Sum. J., Lord Decl., Ex. 1 at 1 & 22.)

 

2. The Contract required 5K to perform all work in a “good and workmanlike manner [,] to the full and complete satisfaction of [Dominion]”, “subject to all the terms and conditions of [the] Contract” and “any applicable Governmental Requirements.” 5K also agreed to employ “sound engineering practices and professional standards, with due diligence and without undue delay or interruption.” 5K warranted and guaranteed that all work would comply with the previously mentioned standards, would meet the other terms of the contract, and “be free from defects”. 5K further agreed to correct, or pay for the correction of, “all portions of the work that fail to conform to [these] warranties.” In addition to these commitments, 5K agreed to “comply with all federal, state and local laws, rules, regulations and ordinances applicable to the performance of the work.” (Lord Decl., Ex. 1 at 1, 5 & 14.)

 

3. According to the terms of the Contract, any and all provisions that apply to 5K also apply to its “officers, directors, employees, agents and subcontractors”. While 5K could, with the permission of Dominion, “assign any rights or delegate any duties or obligations” under the Contract, this assignment would not “relieve [5K] of responsibility for the due and full performance” of the Contract or absolve it from liability for “all acts and omissions of its assignees or other transferees.” (Lord. Decl., Ex. 1, at 2 & 18.)

 

4. Dominion established three standing purchase orders through which 5K billed it for ongoing work on a variety of projects, including the operation of a warehouse and cranes in Chambersburg, Pennsylvania, where the heat exchangers were stored before being loaded. (Def.’s Mem. Op. Mot. Sum. J., Golden Decl., Ex. 2 at 108-112.) Dominion also ordered specific services, including transportation services, by communicating with 5K via e-mail, phone, or fax. (Lord. Decl., Ex. 2 at 18-20, 34-36 & 113.) While no purchase order was ever issued for transportation services, and transportation services were never provided to Dominion using 5K’s trucks, 5K did own and operate trucks to move loads. (Golden Decl., Ex. 3 at 12-18.)

 

5. On August 21, 2006, Dominion contacted 5K and asked it to obtain quotes for the cost of transporting the heat exchangers from the Chambersburg warehouse to a construction site in Lusby, Maryland. (Lord Decl., Ex. 10.) 5K reported that it would cost $1,450 to move each piece of equipment but did not submit further information regarding the identity of the party that would actually transport the equipment. (Lord Decl., Ex. 3 at 55-56, Exs. 4 & 10.) Dominion agreed to 5K’s quoted price and instructed it to transport the heat exchangers. (Lord Decl., Ex. 3 at 55-56.)

 

6. 5K hired Daily Express to operate the trucks that would move the heat exchangers. On August 24, 2006, 5K loaded the two heat exchangers onto two trucks operated by Daily Express. (Lord Decl., Ex. 2 at 40-57.) The Daily Express drivers charged with securing the loads to the trailer beds did not “overstrap” the two exchangers as required by federal regulations and recommended by industry standards. (Lord Decl., Exs. 13 & 14.) The Daily Express drivers then departed the warehouse facility and began travelling toward Lusby. Enroute, one of the two heat exchangers fell from its trailer, sustaining damage. (Lord Decl., Ex. 14.) The exchanger was remounted and taken to Lusby, where delivery was refused by Dominion. (Lord Decl., Ex. 13.)

 

7. Dominion later had the damaged heat exchanger repaired by its original manufacturer at a cost of $192,072.50. (Lord Decl., Ex. 2. at 59-61; Ex. 7 at 19-22, 39, 44-45, 49-51; Exs. 18, 19, 20 & 21.)

 

8. 5K invoiced Dominion for the cost of transporting the two heat exchangers while Dominion attempted to collect reimbursement from 5K. 5K refused to reimburse Dominion. (Lord Decl., Exs. 2 & 23 .) In April 2009, Dominion sent a demand letter to 5K and on May 14, Dominion filed a Complaint against 5K.

 

III. APPLICABLE LAW

 

A district court has original jurisdiction over all civil actions where the matter in controversy exceeds the sum or value of $75,000 and the dispute is between citizens of different States. See28 U.S.C. § 1332 (2009). Where such diversity jurisdiction exists, a district court is to apply federal procedural rules and determine the substantive merits of each claim based on the law under which it arises. See Hanna v. Plummer, 380 U.S. 460, 465 (1965)(common law claims arise under state law).

 

A. Standard of Review on Summary Judgment

 

Summary judgment “provides a procedure with which to bypass a trial when the fact resolution process of trial would prove to be of no use in the disposition of a case.” Mitchell v. Data General Corp., 12 F.3d 1310, 1315 (4th Cir.1993). Thus, the “judgment sought should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). A fact is “material” if it “effects the outcome of the suit under the governing law” irrespective of evidentiary significance, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986), and it is “genuine” if there is “sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Id. at 249 (must be more than a “scintilla”). While a nonmoving party may not resist summary judgment solely by relying on the arguments in its pleadings, a court must credit a nonmovant’s evidence and draw all justifiable inferences in the nonmovant’s favor. Id. 248;see also Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)(“must do more than … show … metaphysical doubt as to … material facts”); but see Barwick v. Celotex Corp., 736 F.2d 946, 959-60 (4th Cir.1984)(nonmoving party cannot manufacture issues of fact by contradicting own prior statements). While the nonmoving party need not produce evidence in a form that would be admissible at trial, see Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986)(non-movant need not depose own witnesses, summary judgment may be opposed by material listed in Rule 56(c), but “not mere pleadings themselves”), the Fourth Circuit and others have concluded that inadmissible hearsay cannot be considered on a motion for summary judgment. Maryland Highway Contractors Ass’n, Inc. v. State of Maryland, 933 F.2d 1246, 1251-52 (4th Cir.1991)(excluding unauthenticated letter and granting judgment in absence of “evidence”).

 

B. Virginia Breach of Contract Law

 

Under Virginia law, a party claiming breach of agreement or contract must establish three elements to prevail: first, there must be a legally enforceable obligation under a contract; second, there must be a breach of that obligation; third, injury or damage to the plaintiff must flow from that breach. See, e.g., Sunrise Cont. Care, LLC. v. Wright, 277 Va. 148, 154 (2009)(reversing summary judgment for plaintiff where damages were not linked to breach asserted).

 

Where two parties have entered into a contract, the terms of their agreement establish a set of duties owed. See, e.g., Pressen v. Ceres Marine Terminals, 5 F.3d 734, 738 (4th Cir.1993)(bill of lading establishes duties in admiralty). The interpretation of a contract to determine the nature and scope of these duties is typically a question of law, see Williams v. Prof’l Transp. Inc., 294 F.3d 607, 613 (4th Cir.2002), although the fulfillment of a condition precedent to performance or the occurrence of a breach is typically a question of fact. See Smith v. McGregor, 237 Va. 66, 75 (Va.1989) (finding that, as a matter of law, presentation of survey of land to be conveyed by contract was a condition precedent to buyer’s obligation to tender purchase price, but that, as a matter of fact, survey had not been presented and performance was excused). Under Virginia law, a court will only look past the four corners of a contract when a particular term is ambiguous in light of the facts and circumstances in which the contract was made. Virginia Elect. and Power Co. v. Northern Virginia Regional Park Authority, 270 Va. 309, 319 (2005) (declining to admit separate parole evidence regarding subjective intent). Language is ambiguous if it may be understood in more than one way or when it refers to two or more things at the same time, and where such ambiguity exists, uncertain rights under a contract may be determined and fixed by the course of dealing of the parties. Video Zone, Inc. v. KF & F Properties, L.C., 267 Va. 621, 627 (2004)(declining to overturn grant of summary judgment where judicial construction of contract was in keeping with party’s course of performance).

 

While a party may delegate the performance of its duties under a contract, it may not assign the ultimate obligation to perform without the other party’s consent. See Rest. (2d) Cont., § 318(3)(1981); cf. Boland v. Rivanna Ptnrs., 69 Va. Cir.208, 311-12 (2005)(landlord may delegate maintenance obligations but not duty to maintain). Thus, under Virginia law, where a party guarantees that “workmanship” will be “first-class” and “satisfactory in every respect”, the guarantor must tender performance in a manner which “would be satisfactory to a reasonable man”, regardless of whether the guarantor actually performs the work. Lambert v. Jenkins, 112 Va. 376, *719-20 (1911)(guarantee protects contracting party from defective materials used by subcontractor). The same principle has long applied where a guarantee has been made for “all acts or omissions of … employees and all subcontractors”, Walker Mfg. Co. v. Dickerson, Inc., 619 F.2d 305, 308 (4th Cir.1980)(general contractor liable for defective roof installed by subcontractor), and is an “unremarkable principle of law”. Carrollton Bank v. Fujitsu Transaction Solutions, Inc., 56 Fed. App’x. 603 (4th Cir., Jan. 23, 2003).

 

The damages claimed by a plaintiff in a breach of contract suit must not only be proven to flow from the breach but must be proven with “reasonable certainty” and not merely based on speculation. Sunrise Cont. Care, LLC, 277 Va. at 148. Further, while a party may only be held liable for the reasonable costs which arise from his breach of an obligation, where a plaintiff presents bills for remedial measures that are reasonable on their face, they constitute at least some evidence of what reasonable damages would be. Walters v. Littleton, 223 Va. 446, 452 (1982)(medical bills sufficient in light of other facts, but not conclusive evidence of reasonable expenses); see also Atlantic Permanent Federal Sav. and Loan Ass’n v. American Cas. Co. of Reading, Pa., 839 F.2d 212, 218 (4th Cir.1988)(surveying cases and finding that such bills likely constitute prima facie evidence).

 

IV. DISCUSSION

 

In light of the forgoing findings of fact and the applicable law, it appears that Dominion has shown both the absence of genuine issues of material fact and its own entitlement to judgment as a matter of law on its breach of agreement claim.

 

First, on the record now before the Court, there cannot be any genuine issue as to the fact that the Master Service Contract created a set of obligations which 5K undertook whenever it performed work for Dominion that was “in the scope of its usual business.” The applicability of the Contract thus turns on whether 5K was performing work at the request of Dominion or its “duly authorized representatives”, not on the filing of a Work Order Agreement or purchase order, although such a document could impose additional obligations on 5K. While the Contract does not define 5K’s usual scope of business, it cannot be disputed that 5K owned and operated trucks and that in its dealings with Dominion under the Contract 5K sought to be, and held itself out as, a one stop shop for Dominion’s logistical and transportation needs. Similarly, it cannot be disputed that Dominion, through its representative, asked 5K to transport the heat exchangers. Thus, there can be no real dispute as to the fact that the work was performed under the Contract and that 5K was obligated to perform in a “good and workmanlike manner”, as well as to comply with “professional industry standards” and all “laws, rules, regulations and ordinances applicable” and to perform work “free from defects”. Similarly, there can be no dispute that 5K was obligated to “correct any work or re-perform any work that fails to conform” to 5K’s warranties and to indemnify Dominion against any losses, and that “any assignment of this [Contract] shall not … relieve [5K] of responsibility for the due and full performance thereof” and “[5k] shall be liable to [Dominion] for all acts and omission of its assignees or other transferees.” Such liability is in keeping with long established Virginia law. See e.g., Walker Mfg. Co., 619 F.2d at 308.

 

While 5K has argued that since the term “scope of … usual business” is ambiguous, it should be construed against Dominion in such a way as to exclude services which involve the actual movement of equipment, and not merely the hiring of motorcarriers, 5K mistakes the nature of the inquiry at issue. Defining the term “scope of … usual business” does require the Court to refer to facts and circumstances beyond the four corners of the Contract. However the understanding of any term within a document requires reference to facts and circumstances in the actual world. See, e.g., Virginia Elec. and Power Co., 270 Va. at 319. The mere fact that the phrase “scope of … usual business” is undefined in the contract does not make it susceptible to multiple meanings or ambiguous. 5K had a usual scope of business at the time it signed the Contract and this business including moving loads on trucks, thus, in light of the facts and circumstances in existence at the time of the Contract’s signing, there is no ambiguity as to whether the services at issue here were covered. Further, to the extent that the term is ambiguous, 5K’s hiring of contractors unknown to Dominion and billing of Dominion directly for the services rendered, strongly suggests that 5K was acting as a general contractor and not merely as a broker of services. In any event, 5K has produced no evidence other than the bald assertions of its own employees that such a distinction is appropriate, and this is not enough to create an issue for trial by a jury. See Matsushita Elec. Indus. Co., Ltd ., 475 U.S. at 586;also Barwick, 736 F.2d at 959-60.

 

Second, on the record now before the Court, there cannot be any genuine issue as to the fact that when 5K failed to take proper precautions to secure the heat exchangers and one of them subsequently fell off of a truck, 5K breached a duty it had under the Contract. In the Contract, 5K warranted and guaranteed that the heat exchangers would be transported in a “good and workmanlike” to the “full and complete satisfaction” of Dominion. 5K also agreed to ensure that its work complied with all professional standards and applicable government regulations. 5K has not even bothered to argue that the method by which the heat exchangers were moved would be “satisfactory to a reasonable man”, see Lambert, at *719-20, and Dominion has presented uncontested evidence showing that the failure to overstrap the heat exchangers was a violation of both professionals standards and applicable government regulations. While 5K may have delegated the duty of securing the loads to Daily Express, it could not delegate its ultimate responsibility for ensuring that this job was done properly. See Walker, at 619 F.2d at 308. Thus, 5K was in breach of the Contract with Dominion.

 

Third, on the record before the Court, there can be no genuine issue as to the fact the damage to the heat exchangers arose from 5K’s breach and that $192,072.50 is both a reasonable and certain measure of damages. Dominion has presented both a report detailing the manner in which the heat exchanger was damaged and invoices for the repairs performed upon it. 5K has not bothered to contest the evidence presented by Dominion that the failure to properly secure the heat exchangers was the cause of the accident. While 5K has argued that the amount paid to repair the exchanger has not been proven reasonable, under Virginia law these bills constitute some evidence of the reasonable amount of damages, see Sunrise Cont. Care, LLC, 277 Va. at 148, and, in light of all of the circumstances, this Court is satisfied that the costs are reasonable. See Atlantic Permanent Federal Sav. and Loan Ass’n, 839 F.2d at 218 (finding that a Virginia court would likely accept such uncontroverted evidence as conclusive).

 

Fourth, in light of the foregoing, it is clear that Dominion has shown its entitlement to judgment as a matter of law. Given the size of the damages alleged and the diversity of citizenship between Dominion and 5K, this matter is properly before this Court. See28 U.S.C. § 1332. The parties have stipulated that this contract is governed by Virginia law, and under the law of Virginia a plaintiff in a breach of contract suit must show the existence of a contractual duty, the breach of that duty, and damages flowing from that breach. See Sunrise Cont. Care, LLC, 277 Va. at 154. Based on the pleadings, discovery and disclosure materials, and the affidavits filed by the parties, there is no element of this claim upon which a reasonable jury could find otherwise than for Dominion.

 

To be sure, 5K has raised arguments in which it suggests that even if Dominion has made a prima facie case, summary judgment is inappropriate at this time. However, each of these rests either on an unstable foundation of fact or an infirm construction of the applicable law. 5K has argued that in the absence of a formal work order agreement, it had no obligation to perform under the Contract. However, as the Court has previously explained, the condition precedent to 5K’s duty to perform under the contract was a request from Dominion or its authorized representatives, not the filing of a work order agreement imposing additional requirements on 5K. Further, under Virginia law, where a party commences performance, it waives any right to assert condition precedent as defense to a contract. See, e.g., Ehrlich, at 217 Va. at 116. 5K has also argued, although it appeared to abandon these positions at hearing, that Dominion’s claims might either be preempted by the Carmack Amendment or barred by the doctrine of laches, since they were not filed within the time periods outlined in the bill of lading prepared by Daily Express. Since 5K is not itself a motorcarrier or freight forwarder within the meaning of the Carmack Amendment, see49 U.S.C. § 13102 (defining terms), the Carmack Amendment has no bearing on the contractual relationship between Dominion and 5K. Further, in light of this Court’s recent ruling on Daily Express’s Motion to Dismiss 5K’s Third Party Complaint, 5K has not been unfairly prejudiced by Dominion’s delay in bringing its suit. Moreover, there is authority under Virginia law for the proposition that the doctrine of laches may not be asserted where the statute of limitations on a contract claim has not run, see, e.g., Merrifield Indus. Corp. v. Glaze, 77 Va. Cir. 264, 270 (2008), and under Virginia law, the statute of limitations on a breach of contract claim is five years. SeeVa.Code §§ 8.01-243 & 246.

 

Finally, the Court would like to give special attention to one argument raised by 5K that is particularly troubling. In opposing summary judgment, 5K has advanced the theory that Dominion itself may have given the drivers an instruction not to overstrap the heat exchangers. The basis for this argument is that the unidentified driver of the second Daily Express truck, who was not involved in an accident, overheard a Dominion employee give this instruction. This unidentified employee allegedly repeated this information to the driver of the truck from which the heat exchanger did fall, and this second driver allegedly reported the comment in a report which was read by one of the Daily Express employees who repeated it during a deposition. While it may be true that under Virginia law an injured party cannot recover for a breach of contract when the other party’s failure to perform was a result of the injured party’s own actions, there is no evidence in the record to support such a defense. All that 5K has proffered in support of this theory are arguments based on compound hearsay. This cannot be considered on a motion for summary judgment. See Maryland Highway Contractors Ass’n, Inc., 933 F.2d at 1251-52 (hearsay excluded); see also Celotex, 477 U.S. at 324 (party cannot rely on arguments in briefs alone). The fact that this type of statement would even be proffered as evidence is disappointing and the parties are advised to consider carefully their theories of admissibility before attempting to introduce this material again.

 

IV. CONCLUSION

 

Since the fact resolution process of trial is unnecessary to the disposition of Dominion’s claims and 5K’s defenses, the Court finds that summary judgment should be granted to Dominion on both the question of 5K’s liability under the Contract and the amount of 5K’s liability, which totals $192,072.50 in damages, plus fees and costs.

 

An appropriate Order shall issue.