Bits & Pieces

American Home Assurance Co. v. Zim Jamaica

United States District Court,

S.D. New York.

AMERICAN HOME ASSURANCE CO., a/s/o, Liberty Hardware Mfg. Co., Plaintiff,


ZIM JAMAICA, her engines, boilers, etc., and Zim Israel Navigation Company,

Ltd., Defendants.

Dec. 24, 2003.


Plaintiff American Home Assurance Company (“American Home” or “plaintiff”) moves for summary judgment under Rule 56(a) of the Federal Rules of Civil Procedure on the issue of liability against defendants m/v Zim Jamaica, her engines, boilers, etc., and Zim Israel Navigation Company, Ltd. (“Zim” or “defendants”). Defendants oppose the motion, contending that plaintiff has not made out a prima facie case and that several genuine issues of material fact remain for a trial to resolve. For the reasons set forth below, the Court grants in part and denies in part plaintiff’s motion for summary judgment.

Factual Background [FN1]

On or about July 19, 2000, a shipment of 3,571 cartons of bathroom fixtures arrived in Greensboro, North Carolina, wet and damaged from exposure to freshwater. (Declaration of Carolyn Thomas, ¶¶ 2, 3 (“Thomas Decl.”); Defendant’s Rule 56.1 Statement in Response to Plaintiff’s Statement, ¶¶ 7, 8 (“Def’s 56.1 Resp.”); Declaration of Dave Morris, ¶¶ 2-6 (“Morris Decl.”).) Plaintiff is an insurer of the shipper of the cargo, Liberty Hardware Manufacturing Company (“Liberty”). Plaintiff claims that no genuine issue of material fact obscures the conclusion that defendants were responsible for the cargo when it was damaged. [FN2] Defendants are the carrier and ship that delivered the cargo from the port of Huangpu, China, to Greensboro. Defendants claim that disputed issues of material fact remain as to, among other things, (1) when the cargo was damaged, (2) when defendant took responsibility for the cargo, (3) whether defendant inspected the cargo upon receiving it, and (4) who had responsibility for the cargo when it was damaged. [FN3]

I. The Cargo

The cargo began its trip to North Carolina in the Globe Express warehouse in Guangzhou, China, in the custody of plaintiff. (Declaration of Lao Xiji, ¶ 2 (“Xiji Decl.”); Declaration of Assaad Najm, ¶ 2 (“Najm Decl.”).) On June 7, 2000, truck driver Lao Xiji delivered a 40-foot shipping container from the port of Huangpu to the warehouse in Guangzhou. (Xiji Decl. ¶ 2.) Employees for Globe Express loaded the 3,571 cartons into the shipping container. (Xiji Decl. ¶¶ 2, 3; Najm Decl. ¶ 2.) The container was then closed and sealed by Lao Xiji and the warehouse manager, Assaad Najm. (Xiji Decl. ¶ 3; Najm Decl. ¶ 4.) Xiji drove the sealed container to the port of Huangpu. [FN4] (Xiji Decl. ¶ 3.) On or about June 7 or June 8, at the port of Huangpu, defendants inspected the container, confirmed the seal number, and received the container into their custody. (Xiji Decl. ¶ 4; Declaration of U. Furman, ¶ 2 (“Furman Decl.”); Bill of Lading, attached to the Declaration of Joseph W. Hirn, III (“Hirn Decl.”) as Exhibit A.) Defendants did not, however, inspect the cargo inside the container. (Hirn Decl. ¶ 5, Ex. A.) Defendants issued a clean bill of lading that included the phrase “Shipper’s Load Stowage & Count: Said To Contain.”

Once in defendants’ control, the container was loaded onto the barge Change Yong, which left for Hong Kong on June 10. (Furman Decl. ¶ 4.) At Hong Kong on June 11 the container was transshipped to another barge, the Chang Tong, which delivered the container to the port of Shekou on June 12. (Furman Decl. ¶¶ 5, 6.) The container apparently waited at a terminal at Shekou, then was loaded onto the Zim Jamaica on June 15. (Furman Decl. ¶¶ 6, 7.) The Zim Jamaica thereafter left for Savannah, Georgia. At the port in Savannah, on or around July 17 and 18, the container was discharged from the Zim Jamaica and trucked by Panther Trucking to the Liberty Hardware facility in Greensboro, North Carolina, pursuant to the Zim Bill of Lading. (Def’s 56.1 Resp. ¶ 7; Hirn Decl. ¶ 8, Ex. E.) The container remained defendants’ responsibility until Liberty Hardware received it in Greensboro. (Hirn Decl. ¶ 6.) Upon receipt in Greensboro, the container was opened and its contents were found to be wet and damaged by freshwater, with rust forming. (Def’s 56.1 Resp. ¶ 7.)

II. The Water

Neither party offers direct proof of precisely when and how the cargo was exposed to and damaged by freshwater. No one saw, for example, the cargo left exposed on a rainy day. Rather, each side offers evidence that the cargo was not damaged while in its own control, and infers that the cargo must have been damaged while in the other party’s control.

Plaintiff submits declarations of the warehouse manager, Najm, and trucker, Xiji, who observed and had control over the cargo when it was loaded into the container and delivered to defendants at Huangpu. Each declares that the cargo was dry and in good condition when loaded into the container. (Najm Decl. ¶ 3; Xiji Decl. ¶ 2.) Xiji further declares that it did not rain on June 7, the day the cargo was loaded in the container and driven to the port. (Xiji Decl. ¶ 5.) Plaintiff also submits weather data compiled by the United States Department of Commerce suggesting that it did not rain in the area of the cargo on June 7. [FN5] (Declaration of Edward Radzik, Ex. 3 (“Radzik Decl.”).) All witnesses concur that once the cargo was loaded and the container sealed, the container appeared in good condition before and after its delivery to defendants at Huangpu. (Xiji Decl. ¶ 4; Furman Decl. ¶ 2; Transcript of Deposition of Yemini Simantov, at 11-12 (“Simantov Tr .”).) Although it argues that precisely when the cargo was damaged is not a material fact, plaintiff offers weather data for the relevant area and time period suggesting that it rained on one or more days when the container was in defendants’ possession but not yet loaded on the Zim Jamaica. (Radzik Decl. Ex. 3.) Plaintiff theorizes that the cargo was damaged by rain water flooding prior to being loaded on the Zim Jamaica, and submits that it rained on June 12 in the area of the container. (Radzik Decl. Ex. 3.)

Defendants submit declarations of their director of operations in the far east, Furman, of an investigator, Hirn, of a claims adjuster, Morris, and the deposition testimony of the captain of the Zim Jamaica, Simantov, each of whom opine about the possibility of the cargo getting wet at the ports or aboard the barges or Zim Jamaica. Furman declares that it is impossible for fresh water to accumulate on the Chang Yong and Chang Tong barges. (Furman Decl. ¶¶ 4, 5.) He also declares that there was no report of flooding on the terminal at Shekou. (Furman Decl. ¶ 6.) Simantov, at his deposition, explained the position in which the container was stowed on the Zim Jamaica. (Simantov Tr. at 8-9.) Simantov testified that the container was stowed at least nine feet above the bottom of the hold, and that he would know whether there was water in the hold because he could see the loading of the ship and the ship has alarms for such instances. (Simantov Tr. at 10.) Morris declares that as part of his investigation of the cargo in North Carolina he sealed himself in the container and observed no holes or defects that would allow water to enter the container. (Morris Decl. ¶ 4.) Defendants argue that precisely when the cargo was damaged is a material fact, and that this event did not happen while the cargo was in defendants’ custody. Defendants do not theorize about when or how the cargo became damaged while in plaintiff’s custody, but infer merely that this offers the only logical explanation of the condition of the cargo at outturn.


I. Summary Judgment Standard

A moving party is entitled to summary judgment if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Holt v. KMI-Continental Inc., 95 F.3d 123, 128 (2d Cir.1996). The substantive law underlying a claim determines if a fact is material and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). When considering the motion, the Court’s responsibility is not “to resolve disputed issues of fact but to assess whether there are any factual issues to be tried.” Knight v. U.S. Fire Ins. Co., 804 F.2d 9, 11 (2d Cir.1986).

In determining whether genuine issues of material fact exist, the Court must resolve all ambiguities and draw all justifiable inferences in favor of the nonmoving party. See Anderson, 477 U.S. at 255; Holt, 95 F.3d at 129. The moving party bears the burden of demonstrating that no genuine issue of material fact exists. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970); Gallo v. Prudential Residential Serv. L.P., 22 F.3d 1219, 1223-24 (2d Cir.1994). “[T]he movant’s burden will be satisfied if he can point to an absence of evidence to support an essential element of the nonmoving party’s claim.” Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir.1995). Once the moving party discharges its burden of demonstrating that no genuine issue of material fact exists, the burden shifts to the nonmoving party to offer specific evidence showing that a genuine issue for trial exists. See Celotex, 477 U.S. at 324. The nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). “A ‘genuine’ dispute over a material fact only arises if the evidence would allow a reasonable jury to return a verdict for the nonmoving party.” Dister v. Cont’l Group, 859 F.2d 1108, 1114 (2d Cir.1988) (citing Anderson, 477 U.S. at 248).

“[T]he treatment of a summary judgment motion under COGSA is no different from the way similar motions are dealt with in any other litigation.” Transatlantic Marine Claims Agency, Inc. v. M/V OOCL Inspiration, 137 F.3d 94, 101 (2d Cir.1998). “[I]f the defendant can show that plaintiff’s prima facie case depends on resolution of disputed facts, then the court will set the matter for trial.” Id . “On the other hand, if the defendant’s evidence is so weak that it inflicts no meaningful damage to the plaintiff’s prima facie case, the defendant will have judgment entered against it.” Id.

II. Immaterial and Non-disputed Issues

As an initial matter, the Court dispenses with several issues that either are immaterial for the purposes of plaintiff’s motion or are not in dispute.

First, defendants argue that the Court must deny summary judgment because at least three disputed issues remain as to the amount of any potential damages in this case. Plaintiff, however, has moved for summary judgment only on the issue of liability. Issues about damages, therefore, are immaterial at this phase, and do not preclude summary judgment in plaintiff’s favor.

Second, defendants argue that the declaration of Lao Xiji should be disregarded because it is arguably unsigned. Without the Xiji declaration, presumably disputed issues of material fact would remain as to the status of the cargo while it was loaded at Guangzhou and trucked to Huangpu. With its motion for summary judgment, plaintiff submitted the declaration of Lao Xiji, dated April 22, 2002. Beside Xiji’s typrewritten name at the bottom of the document is not Xiji’s signature, but apparently a Chinese character “chop” or seal that does not refer to Xiji. (Declaration of Todd L. Platek, ¶ 3 (“Platek Decl.”).) Plaintiff thereafter submitted a second declaration, dated July 26, 2002, signed by Xiji, that adopts the statements in the unsigned, April 22 declaration. (Declaration of Lao Xiji, attached to the Declaration of Edward C. Radzik as Exhibit 1.) Whether the first declaration should be disregarded because it is unsigned, therefore, is immaterial, because the supplemental declaration conforms with 28 U.S.C. § 1746, as it is signed by Xiji under penalty of perjury. See id.; In re Adams, 229 B.R. 312, 315-16 (S.D.N.Y.1999). The Court finds that there is no genuine issue of material fact as to whether Xiji subscribed to the declaration.

Third, defendants assert that summary judgment is inappropriate because two other issues remain in dispute. Defendants characterize these issues in the form of questions, namely, “Whose trucker was it?” and “Where did the cargo get wet?” These questions, however, only preclude summary judgment if their answers are material according to the substantive law underlying the claim. See Anderson, 477 U.S. at 248. The Second Circuit has specifically denounced mere reference to “mysteries” and “questions designed to cast doubt on plaintiff’s prima facie case” in opposition to a motion for summary judgment under COGSA, when such references fail to raise a disputed issue of material fact. See Transatlantic, 137 F.3d at 101-02; see also 1185 Avenue of the Americas Associates v. RTC, 22 F.3d 494, 498 (2d Cir.1994) (granting summary judgment because non-movant merely “lists a series of unanswered factual questions”). Defendants’ bare assertions in this case that summary judgment is precluded because factual issues remain in dispute therefore lack merit. The factual disputes highlighted by defendant must be material for the court to deny plaintiff’s summary judgment motion. Western World Insurance Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir.1990) (“The existence of disputed facts that are immaterial to the issues at hand is no impediment to summary judgment.”). The Court thus rejects defendants’ argument that summary judgment is inappropriate merely because any factual issues remain in dispute.

As the Court discusses below, defendants’ sole challenge to plaintiff’s motion under COGSA is that plaintiff fails to make out a prima facie case, because, defendants argue, plaintiff does not show that it delivered the cargo to defendants in good condition. The unanswered questions “Whose trucker was it?” and “Where did the cargo get wet?” must therefore be material to the issue of whether plaintiff delivered the cargo to defendants in good condition for the Court to deny plaintiff’s motion for summary judgment.

III. A Genuine Issue of Material Fact Remains


The parties agree that the Carriage of Goods by Sea Act (“COGSA”), 46 U.S.C. §§ 1300-1315, applies in this case. The Court determines liability under COGSA according to a burden-shifting procedure. First, plaintiff “establishes a prima facie case for recovery under COGSA by demonstrating that the goods were damaged while in the defendant-carrier’s custody.” Bally, Inc. v. M.V. Zim America, 22 F.3d 65, 68 (2d Cir.1994); Caemint Food, Inc. v.. Brasileiro, 647 F.2d 347, 351-52 (2d Cir.1981) (Friendly, J.). Plaintiff can meet this burden by proving “(1) delivery of the goods to the carrier in good condition and (2) outturn by the carrier in damaged condition.” Bally, Inc., 22 F.3d at 69; Caemint Food, 647 F.2d at 352.

Ordinarily a clean bill of lading supports a prima facie case that plaintiff delivered goods to defendant in good condition. See 46 U.S.C. § 1303(4); Caemint Food, 647 F.2d at 352. When a shipper, however, “seeks to recover for damage to goods shipped in packages that would have prevented the carrier from observing the damaged condition had it existed when the goods were loaded,” a clean bill does not support a prima facie case. Caemint Food, 647 F.2d at 352 (citing The Niel Maersk, 91 F.2d 932 (2d Cir.1937) (A.Hand, J.)); see 46 U.S.C. § 1303(3)(c); Perugina Chocolates & Confections, Inc. v. S/S Ro Ro Genova, 649 F.Supp. 1235, 1240-41 (S.D.N.Y.1986) (Leisure, J.). In such instances, the shipper “may still satisfy its burden by producing credible evidence that the contents of the packages were in fact in good condition when loaded.” Caemint Food, 647 F.2d at 354; Transatlantic, 137 F.3d at 98 (“[P]laintiff may present direct evidence relating to the healthy condition of the goods at delivery and their damaged condition at outturn.”). A shipper thus may satisfy its burden by, for example, submitting the testimony of one who observed the loading of the goods into a container, see Bally, Inc., 22 F.3d at 69, or by showing “that the goods were prepared and packaged in accordance with proper procedures and were carried to the ship under conditions that should have prevented any damage to the contents en route.” Caemint Food, 647 F.2d at 354 n. 6.

Once plaintiff makes out a prima facie case that the goods were damaged while in defendant’s custody, “the burden shifts to the carrier to show that the loss or damage falls within one of the COGSA exceptions set forth in 46 U.S.C. § 1304(2).” Bally, Inc., 22 F.3d at 69 (internal quotations omitted). The last of these exceptions prevents a carrier from liability for any damage caused “without the fault or neglect of the agents or servants of the carrier.” 46 U.S.C. § 1304(2)(q). The burden of proving that this exception applies rests with the carrier. Id.

B. Plaintiff Does Not Make Out a Prima Facie Case

The parties dispute only the first of the two elements of plaintiff’s burden to make out a prima facie case. Because the parties do not dispute the second element, that the goods arrived wet and damaged in Greensboro, North Carolina, at the moment when defendants returned the cargo to plaintiff’s custody, the Court finds that there is no genuine issue of material fact as to whether the cargo was wet and damaged at outturn.

The pivotal issue before the Court on plaintiff’s summary judgment motion is whether plaintiff satisfies the first element of its burden to establish a prima facie case, namely, whether plaintiff delivered the cargo to defendants in good condition. On this issue, defendants argue that: (1) the clean bill of lading does not support a prima facie case for plaintiff because defendants had no obligation to verify the condition of the cargo inside the container; (2) Lao Xiji’s declaration does not establish the condition of the cargo when delivered to defendants because the declaration is unsigned; and (3) plaintiff does not establish a prima facie case because where the cargo got wet remains unknown, in other words, the loss or damage was as likely to have occurred before delivery to the carrier as when the carrier actually had custody of the cargo. Plaintiff argues that (1) it does not rely on the clean bill of lading to establish its prima facie case, because the declarations of Nasm and Xiji are uncontroverted, and establish that defendants received the cargo in good condition; (2) Lao Xiji’s supplemental declaration resolves the technical defect of the first declaration; [FN6] and (3) where the cargo got wet is not a material fact.

The Court agrees that the clean bill of lading does not establish plaintiff’s prima facie case. The bill of lading states “Shipper’s Load Stowage & Count Said to contain.” (Hirn Decl. Ex. A.) Defendants assert that under shipping agreements like that it made with plaintiff, they only open a shipper’s loaded and sealed container for an extraordinary reason, such as cargo or water leaking out of the container. (Hirn Decl. ¶ 4.) The language “Said to Contain” apparently reflects the statement of the shipper as to the contents of the container, but not that the carrier has inspected the contents. See Transatlantic, 137 F.3d at 97 n. 3. Plaintiff puts forth no evidence, and does not argue, that defendants had an obligation to check all of the cargo inside the container upon receipt at Huangpu. Plaintiff must, and does, rely on some other evidence that it delivered the goods to defendant in good condition to make out a prima facie case.

Only defendants’ third argument remains, namely, that the Court must not grant summary judgment for plaintiff because precisely where the cargo got wet remains unknown. Ultimately, then, the question before the Court is whether defendants’ circumstantial evidence that freshwater could not have wetted the cargo while in defendants’ custody creates a factual dispute as to whether plaintiff delivered the cargo to defendants in good condition.

Under remarkably similar circumstances, with one notable difference, the Court found on summary judgment that plaintiff made out a prima facie case in Transatlantic Marine v. M/V OOCL Inspiration. 961 F.Supp. 55 (S.D.N.Y.1997). In Transatlantic, Judge Sweet found that plaintiff made out a prima facie case even though “Defendants may have raised an issue of fact as to precisely when and where the damage occurred.” Id. at 59; see also M.W. Zack Metal Co. v. S.S. Birmingham City, 311 F.2d 334, 337 (2d Cir.1962) (reiterating that the trial judge can dismiss plaintiff’s case “even if the cause of the damage found at the point of ultimate destination may still remain in nubibus”). The Second Circuit affirmed and elaborated on defendants’ unsuccessful attack on plaintiff’s prima facie case. Transatlantic, 137 F.3d at 98-102 (Calabresi, J.). Judge Calabresi began by stating that “COGSA’s framework … places the risk of non-explanation for mysterious maritime damage squarely on defendants.” Id. at 98. He then outlined three possible responses available to a defendant responding to a summary judgment motion under COGSA, the second of which is pertinent here.

A second response would be to attack the plaintiff’s evidence, and cast enough doubt on it to raise a genuine issue of material fact. For example, the defendant could raise questions about plaintiff’s witnesses’ credibility. Or it could argue that the nature of the damage to the goods was not peculiarly maritime. While, strictly speaking, this would not be “rebutting” the COGSA prima facie case with affirmative evidence showing that defendant fell under one of COGSA’s specific exceptions, it is certainly a tactic that could, if enough of plaintiff’s evidence were called into doubt, raise issues precluding summary judgment.

Id. at 100. Judge Calabresi noted that defendants in Transatlantic partly employed, unsuccessfully, this second response. Choosing this response, defendants “r[an] a heavy risk.” Id. at 101.

Here, defendants have run the same heavy risk, attempting to cast doubt on plaintiff’s direct evidence that it delivered the goods to defendants in good condition. Indeed, defendants’ response would suffer the inadequacies outlined in Transatlantic by Judge Calabresi, but for the pivotal distinction that in this case freshwater damaged the cargo, whereas in Transatlantic seawater damaged the cargo. Evidence of freshwater wetting, unlike seawater wetting, of course does not justify a presumption that the damage occurred at sea. Freshwater wetting is not a uniquely maritime damage. See id. at 99-100. Thus, whereas defendants in Transatlantic merely cast “metaphysical doubt” on plaintiff’s prima facie case, defendants here challenge whether plaintiff has produced credible evidence that the damage more likely than not was caused while defendants’ held responsibility for the cargo. See Matsushita, 475 U.S. at 586; Caemint Food, 647 F.2d at 354. [FN7]

Defendants argue that freshwater damage did not occur after plaintiff transferred the cargo to defendants at the port of Huangpu. To support this argument, defendants offer evidence about the low probability of freshwater accumulating on either of the barges in China or in the hold of the Zim Jamaica. A reasonable jury could find that freshwater wetting was unlikely to occur while the cargo remained in defendants’ custody, and infer that the damage more likely than not occurred while plaintiff held responsibility for the cargo. As plaintiff has offered the statements of Nasm and Xiji about the condition of the cargo before its receipt by defendants, defendants challenge by inference the credibility of these witnesses. See Lendino v. TransUnion Credit Info Co., (noting that summary judgment must not be granted when a “controversy regarding the inferences to be drawn from [evidentiary facts]” remains); Fischl v. Armitage, 128 F.3d 50, 55-56 (2d Cir.1997) (overturning the lower court’s grant of summary judgment because it made credibility determinations). Although unsupported attacks on Nasm and Xiji’s credibility perhaps would not overcome summary judgment, see Celotex, 477 U.S. at 324 (“Once the moving party discharges his burden … the burden shifts to the nonmoving party to offer specific evidence showing that a genuine issue for trial exists.”); see also Crawford-El v. Britton, 523 U.S. 574, 600, 118 S.Ct. 1584, 140 L.Ed.2d 759 (1998) (holding that when defendant moves for summary judgment on a claim against an official under 42 U.S.C. § 1983, “plaintiff may not respond simply with general attacks upon the defendant’s credibility, but rather must identify affirmative evidence”), defendants’ attempt to support their attacks suffices at the summary judgment phase, particularly as Nasm and Xiji’s credibility are crucial to plaintiff’s prima facie case. [FN8] Resolving all ambiguities and drawing all justifiable inferences in defendants’ favor, the Court finds that a genuine issue of material fact remains as to whether plaintiff delivered the cargo to defendants in good condition.

Defendants’ position resembles that taken in United States v. Louisville & Nashville Railroad Company. 389 F.Supp. 250 (M.D.Ala.1975). [FN9] In Louisville & Nashville, not all of the cargo arrived at its final destination and the “evidence [was] silent as to what happened to the … unaccounted for [cargo].” Id. at 251. Plaintiff submitted an affidavit of an employee of the shipper, stating that the proper amount of cargo was loaded into the car shipped by defendant railroad. Id. at 252. The affidavit corroborated the bill of lading, which also included the phrase “Shipper’s load, count, and seal.” Id. at 251. Without affirmative proof that the loss occurred while the cargo remained in plaintiff’s custody, defendant nonetheless prevailed by showing that seals on the car were kept unbroken while the cargo remained under defendant’s control. Id. Defendant essentially prevailed by showing that the “shortage [of cargo] could not have been caused by [it].” Id.

Here defendants likewise suggest that the damage could not have been caused while the cargo remained in their control. Thus, strangely, while an answer to the question “Where did the cargo get wet?” is not necessary for a determination of liability on summary judgment, and therefore is immaterial, such an answer would be sufficient for such a determination. Defendants assert that the answer to “Where did the cargo get wet?” is “not while it remained in defendants’ control,” and have submitted evidence to this end that creates a genuine issue of material fact as to whether plaintiff delivered the goods to defendant in good condition. Although defendants’ argument fits poorly within COGSA’s burden-shifting scheme, it responds to “the whole point of the prima facie requirements in COGSA … to establish that the damage to the goods occurred while under the supervision of the defendant.” Transatlantic, 137 F.3d at 99. Defendants run a “heavy risk,” but persuade the Court that a reasonable jury could find them not liable to plaintiff for the damaged cargo.


For the reasons set forth above, the Court grants in part and denies in part plaintiff’s motion for summary judgment on the issue of liability. The Court finds that the cargo was wet and damaged at outturn, as no genuine issue of material fact remains in dispute on the issue. The Court also finds that a genuine issue of material fact remains as to whether plaintiff delivered the cargo to defendants in good condition.


FN1. Except where indicated, the facts below are undisputed. The Court has found simply by reviewing the evidence submitted with the moving papers that the parties agree on more than they admit in their respective Local Rule 56.1 statements. See Gianullo v. City of New York, 322 F.3d 139, 139 (2d Cir.2003) (” ‘[A] local Rule 56.1 statement is not itself a vehicle for making factual assertions that are otherwise unsupported in the record.” ‘ (quoting Holtz v. Rockefeller & Co., 258 F.3d 62, 74 (2d Cir.2001)). The Court bases the factual background below upon its review of the 56.1 statements of the parties and the affidavits and declarations submitted by each side.

FN2. In support of its motion, plaintiff submits declarations of Assad Najm, the manager of Globe Express Service in Guangzhou, China who supervised the loading of the cargo into the shipping container, of Lao Xiji, the truck driver who delivered the cargo from Guangzhou to the defendants at the port in China, and of Carolyn Thomas, the traffic manager responsible for receiving the cargo from defendants upon arrival in North Carolina.

FN3. In support of their opposition, defendants submit the declarations of Dave Morris, the claims adjuster who inspected the cargo for defendants after its arrival in North Carolina, of Joseph W. Hirn, III, the claims adjuster for defendants who investigated this matter, and of Uri Furman, the Director of Operations for defendants in the far east who is familiar with the cargo’s status from its receipt by defendants until its departure from China. Both parties also reference deposition testimony from Captain Yemini Simantov, the Master of the Zim Jamaica which delivered the cargo, and weather data for the dates and locations at issue.

FN4. Defendants assert that plaintiff was responsible for trucking the container from Guangzhou to Huangpu, and reference the Freight Manifest for the shipment as evidence of this point. Plaintiff has not made clear whether it disputes this fact. Plaintiff responds that it is undisputed that Xiji drove the truck from Guangzhou to Huangpu (Pl’s 56.1 Resp. ¶ 1.), and argues that the identity of the party that hired Xiji is not a material fact.

FN5. Plaintiff states in its moving papers that the weather data reflects the precipitation for the area in China where the cargo was stored. The Court notes that the location at which the weather data was observed is not readily apparent from plaintiff’s submissions. Moreover, although plaintiff argues that the weather data constitutes proof in support of its motion and defendants offer no argument in response on this point, the Court makes no determination at this time as to the admissibility of plaintiff’s weather data. Plaintiff cites to two cases in this District in which the Court admitted weather data as evidence. See Arkwright Mutual Insurance Co. v. MV Oriental Fortune, 745 F.Supp. 920 (S.D.N.Y.1990); Insurance Co. of North America v. SS Italica, 567 F.Supp. 59 (S.D.N.Y.1983). Neither case causes this Court to make an admissibility determination as to plaintiff’s weather data at this time. In Arkwright, the data came in the form of testimony of a meteorologist at a bench trial, 745 F.Supp. at 923, and in SS Italica the Court reserved judgment on the issue of admissibility of weather records until the conclusion of the bench trial, then made a more rigorous scrutiny of the admissibility of the records in a bench opinion. 567 F.Supp. at 60 n. 1.

FN6. The Court addresses this contention above. See supra Section II.

FN7. Defendants’ argument, however, assumes at least one of the “bizarre occurrences” that the Court dismissed in Transatlantic, namely, that if defendants are correct, then plaintiff paid to transport already damaged cargo.

FN8. Nasm and Xiji have submitted declarations in support of plaintiff’s motion, but have not been deposed or otherwise subject to cross-examination. The Court makes no finding here as to either Nasm or Xiji’s credibility, but notes that deposition testimony generally is more reliable than an affidavit. See Hayes v. New York City Dept. of Corrections, 84 F.3d 614, 619 (2d Cir.1996); Perma Research & Development Co. v. Singer Co., 410 F.2d 572, 578 (2d Cir.1969).

FN9. A statutory scheme other than COGSA applied in Louisville & Nashville, but the court employed a burden-shifting analysis similar to that used under COGSA.

Glass v. Crimmins Transfer

United States District Court,

C.D. Illinois.

Milo GLASS and Jerolene Glass, Plaintiffs


CRIMMINS TRANSFER COMPANY, United Van Lines, and Quad City Moving Co.,


Jan. 13, 2004.

Stephen T. Fieweger, Katz Huntoon & Fieweger PC, Rock Island, IL, for Plaintiffs.

Richard J. Trinrud, Brooks & Trinrud, Stuart R. Lefstein, Pappas & Schnell PC, William R. Stengel, Coyle Gilman & Stengel, Rock Island, IL, Ann C. Barron, Thomas E. Wack, Dennis E. O’Connell, Bryan Cave LLP, St Louis, MO, for Defendants.


JOHN A. GORMAN, Magistrate Judge.

The parties have consented to have this case heard to judgment by a United States Magistrate Judge pursuant to 28 U.S.C. § 636(c), and the District Judge has referred the case to me. Now before the court are three motions for summary judgment one by each defendant, as well as a motion to strike the defendants” reply briefs. The motions are fully briefed and the court has carefully considered the matters discussed therein. For the following reasons, two of the motions for summary judgment are allowed and one motion for summary judgment is allowed in part and denied in part. The motion to strike is denied.


In the motion to strike, plaintiffs argue that the reply briefs were untimely. Plaintiffs fail to take into account the exclusion of weekends and other non- business days in calculating the date on which the reply briefs were due. In addition, the Local Rules of this court do solicit reply briefs as part of the briefing schedule in summary judgment motions. There is a purpose for the reply brief, especially in cases such as this one that present rather novel issues of law, replies assist the court in ruling on motions based on the merits. In a hotly disputed case such as this one, the 10 days would, in all likelihood, have been extended by a day or two had the replies actually been late. I see no prejudice to the plaintiffs and the delay in this situation has caused no difficulty for the court. For both of those reasons, the motion to strike is denied.


Summary judgment is appropriate if all evidence submitted shows that there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P .56(c); Cox v. Acme Health Serv., 55 F.3d 1304, 1308 (7th Cir.1995). In ruling on a summary judgment motion, the court may not weigh the evidence or resolve issues of fact; disputed facts must be left for resolution at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986). The court is to examine all admissible facts, viewing the entirety of the record and accepting all facts and drawing all reasonable inferences in favor of the non-movant, Erdman v. City of Ft. Atkinson, 84 F.3d 960, 961 (7th Cir.1996); Vukadinovich v. Bd. of Sch. Trustees, 978 F.2d 403, 408 (7th Cir .1992), cert. denied, 510 U.S. 844 (1993); Lohorn v. Michal, 913 F.2d 327, 331 (7th Cir.1990); DeValk Lincoln-Mercury, Inc. v. Ford Motor Co., 811 F.2d 326, 329 (7th Cir.1987); Bartman v. Allis Chalmers Corp., 799 F.2d 311, 312 (7th Cir.1986), cert. denied, 479 U.S. 1092 (1987), and construing any doubts against the moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970); Trotter v. Anderson, 417 F.2d 1191 (7th Cir.1969).

If the facts indicate that no reasonable jury could find for the party opposing the motion, then summary judgment must be granted. Hedberg v. Indiana Bell Tel. Co., 47 F.3d 928, 931 (7th Cir.1995), citing Anderson, 477 U.S. at 248.1995). If the non-moving party fails to make a showing sufficient to establish the existence of an element essential to that party and on which that party will bear the burden of proof at trial, then summary judgment is proper. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Waldridge v. American Hoechst Corp., 24 F.3d 918, 920 (7th Cir.1994). In other words, a plaintiff may not simply rest on allegations without significant probative evidence tending to support the complaint. First Nat’l Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 290 (1968). See also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986)(when the moving party has met its burden, non-moving party must do more than show some “metaphysical doubt” as to material facts). A scintilla of evidence in support of the non- moving party’s position is not sufficient to oppose successfully a summary judgment motion; “there must be evidence on which the jury could reasonably find for the [non-movant].” Anderson, 477 U.S. at 250.

The purpose of summary judgment is to “pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). On a motion for summary judgment, the moving parties must first identify those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, that the parties believe demonstrate the absence of a genuine issue of material fact. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the moving parties have met the threshold burden of supporting the motion, the opposing party must “set forth specific facts showing that there is a genuine issue for trial.” Fed.R.Civ.P. 56(e).

In determining whether a genuine issue of material fact exists, the court must construe all facts in the light most favorable to and draw all reasonable inferences in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986); Haefling v. United Parcel Serv., Inc., 169 F.3d 494, 497 (7th Cir.1999). The existence of “some alleged factual dispute between the parties,” or “some metaphysical doubt,” however, does not create a genuine issue of fact. Piscione v. Ernst & Young, L.L.P., 171 F.3d 527, 532 (7th Cir.1999). The proper inquiry is whether a rational trier of fact could reasonably find for the party opposing the motion with respect to the particular issue. See, e.g., Jordan v. Summers, 205 F.3d 337, 342 (7th Cir.2000).


The following facts are taken from the parties’ statements of undisputed facts, the responses thereto, and the documentary evidence submitted by the parties, unless otherwise noted.

In 1995, the plaintiffs began preparing for a move from Iowa to Florida. As part of the preparation, they arranged for United Van Lines (“United”) to facilitate the move. United designated Crimmins Transfer Company (“Crimmins”) as its agent for transportation and related moving services. On September 7, 1999, a group of buyers, calling themselves Quad Cities Moving and Storage entered into an asset purchase agreement with Crimmins. Then, on November 5, 1999, Quad Cities Moving and Storage Inc. (“QCMS”) incorporated under the laws of Illinois.

In May and June of 1995, Crimmins packed some of plaintiffs’ personal property and moved it to a storage facility in Illinois. Additional items were packed and stored in October of 1997. This personal property was to be stored at Crimmins’ warehouse until the plaintiffs’ new home in Florida was completed; the property was then to be transported to Florida. In May of 1998, a flood occurred at the warehouse. The stored items became wet and then later developed mold, mildew and fungus.

On about September 16, 1999, United retrieved the stored items and moved them to plaintiffs’ new Florida residence, where the property was delivered on September 24, 1999. Shortly after the movers began unloading the truck in Florida, plaintiff Jerolene Glass noticed the smell and saw water damage on the furniture. Nearly all the furniture and accessories was either damaged or destroyed by the mold and mildew.

A Crimmins/Quad City employee, Tim Tallman, who assisted in loading the property onto the truck in Illinois and off the truck in Florida noticed (and documented on the inventory) a “musty, mildew odor” and mildew damage on some of the items. Jennifer Hagar, a manager for Crimmins and a vice president of QCMS until June of 2001, knew about the Glasses’ claim for damages to their property before closing the purchase of Crimmins by QCMS. In addition to the obvious property damage, plaintiffs allege that numerous health problems have resulted from the molds.

The Glasses filed this suit against Crimmins, United and QCMS, seeking compensation for their property damage, emotional distress, and physical injury. Count I alleges breach of contract against Crimmins, and Count II alleges breach of contract by QCMS as successor in interest to Crimmins. Count III alleges fraudulent concealment by Crimmins and QCMS. In Count IV, plaintiffs allege fraudulent concealment against QCMS and Crimmins, seeking punitive damages. Counts V and VI allege negligence resulting in personal injury to the two plaintiffs. Count VII alleges that United violated the Carmack Amendment, while Count VIII alleges the same violation against QCMS and Crimmins. Counts IX and X allege negligence resulting in personal injury to the plaintiffs.

The suit was filed in Rock Island County, Illinois, and was removed to this court on the basis of federal question jurisdiction. Each of the three defendants has moved for summary judgment as to some of the claims alleged against them. Specifically, United moves for judgment as to counts IX and X; QCMS as to counts II, III, IV, V, VI and VIII; and Crimmins as to counts I, III, IV, V and VI.


Congress has defined federal-question jurisdiction as encompassing:

any civil action or proceeding arising under any Act of Congress regulating commerce or protecting trade and commerce against restraints and monopolies: Provided, however, that the district courts shall have original jurisdiction of an action brought under section 11706 or 14706 of title 49, only if the matter in controversy for each receipt or bill of lading exceeds $ 10,000, exclusive of interest and costs.”

28 U.S.C.A. § 1337. Here, the complaint seeks well in excess of that amount, and Counts VII and VIII are expressly brought under section 14706 of Title 49. This court has original subject matter jurisdiction over those two counts and has supplemental jurisdiction over the remaining counts pursuant to 18 U.S.C. § 1367. See, e.g., Linc Equipment Services, Inc. v. Signal Medical Services, Inc., 319 F.3d 288 (7th Cir.2003); Pizzo v. Bekin Van Lines Co., 258 F .3d 629 (7th Cir.2001); Taisho Marine and Fire Ins. v. Maersk Line, Inc., 7 F.3d 238 (Table), text at 1993 WL 406499, Oct 12, 1993 (7th Cir.).


Preemption by the Carmack Amendment

In their motions for summary judgment, each defendant argues that the plaintiffs’ claims under Illinois law, as well certain of their prayers for relief, are preempted by the Carmack Amendment. The Carmack Amendment, enacted in 1906, 49 U.S.C. § 14706(a)(1), formerly 49 U.S.C. § 11707(a)(1), provides in pertinent part:

A carrier providing transportation or service … shall issue a receipt or bill of lading for property it receives for transportation under this part. That carrier and any other carrier that delivers the property and is providing transportation or service … are liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) another carrier over whose line or route the property is transported in the United States. Failure to issue a receipt or bill of lading does not affect the liability of a carrier.”

The purpose of the Carmack Amendment is “to establish uniform federal guidelines designed in part to remove the uncertainty surrounding a carrier’s liability when damage occurs to a shipper’s interstate shipment.” Hughes v. United Van Lines, 829 F.2d 1407, 1415 (7th Cir.1987). The Carmack Amendment contains a comprehensive remedial scheme whereby a shipper whose cargo is lost or damaged by a carrier may recover damages for that loss. The amount of the recovery is limited to actual losses, unless the shipper and carrier negotiate–for lower rates–a lower cap on potential losses. The agreement must be set out in a bill of lading, and the bill of lading becomes the governing contract between the parties; Carmack’s provisions are deemed incorporated into all such contracts.

Claims arising out of the interstate shipment of goods raise two distinct but often intertwined issues: preemption of state law claims by Carmack and the use or creation of federal common law to supplement Carmack. In 1913, the Supreme Court held that an interstate carrier’s liability is limited to the actual loss or damage to the shipped goods, in an amount stipulated in the bill of lading. Adams Express Co. v. Croninger, 226 U.S. 491 (1913). In addition, the Adams Express court held that the savings clause (which saves common law rights and remedies) means only federal common law rights and remedies, not state rights and remedies. Id. at 507. The bottom line of Adams Express and its progeny is that state statutes and common law are preempted by the Carmack Amendment if they “in any way enlarge the responsibility of the carrier” for losses or if they “at all affect the ground of recovery or the measure of recovery.” Charleston & W.C. Ry. Co. v. Varnville, 237 U.S. 597, 604 (U.S.1915).

In Missouri, Kansas & Texas Ry. Co. v. Harris, 234 U.S. 412, 420 (1914), the Supreme Court held that Carmack did not bar a $20 attorney fee award to a shipper under Texas law because it did not increase liability for loss of goods and only “incidentally” affected the remedy for enforcing the carrier’s responsibility. The Court rejected the proposition that this was a prohibited penalty, finding instead that it was a “compensatory allowance” to the shipper resulting in only a “moderate increment” in suit costs. Id. at 421.

The breadth of Carmack’s preemption was reiterated in Southeastern Express Co. v. Pastime Amusement Co., 299 U.S. 28, 29 (1936):

The words of the [Carmack Amendment] are comprehensive enough to embrace all damages resulting from any failure to discharge a carrier’s duty with respect to any part of the transportation to the agreed destination … The underlying principle is that the carrier is entitled to base rates upon value and that its compensation should bear a reasonable relation to the risk and responsibility assumed. The broad purpose of the federal act is to compel the establishment of reasonable rates and to provide for their uniform application.

Since these cases, the Supreme Court has held consistently that federal law excludes all other rights and remedies with respect to interstate transportation agreements, e.g., Thurston Motor Lines, Inc. v. Jordan K. Rand, Ltd., 460 U.S. 533, 535 (1983), and that a carrier’s rights and obligations, as defined by its published tariff, cannot be enlarged by any alleged tort of the carrier. Maislin Indus. U.S. Inc. v. Primary Steel, Inc., 497 U.S. 116, 126 (1990).

In Hughes v. United Van Lines, 829 F.2d 1407 (7th Cir.1987), cert. denied, 485 U.S. 913 (1988), the Seventh Circuit affirmed dismissal of state law claims for negligence, conversion and negligent infliction of emotional distress, arising out of fire damage to household goods. After holding that the “remedy provision of the Carmack Amendment preempts all state and common law remedies inconsistent with the Interstate Commerce Act,” id. at 1415, the Court of Appeals noted:

The purpose of this statute is to establish uniform federal guidelines designed in part to remove the uncertainty surrounding a carrier’s liability when damage occurs to a shipper’s interstate shipment. To permit a shipper to choose among various types of remedies would cause confusion and insurmountable problems and defeat the Act’s purpose of eliminating uncertainty as to a carrier’s liability by injecting uncertainty back into this area of transportation Congress has sought to regulate.

In North American Van Lines Inc. v. Pinkerton Sec. Systems, Inc ., 89 F.3d 452 (7th Cir.1996), the Seventh Circuit discussed the Carmack Amendment in a different context, namely in determining whether the Illinois Contribution Act applied to a carrier’s third party claim against the provider of security services. The District Court had rejected preemption arguments and concluded that the Contribution Act barred the claim because the carrier had settled the shipper’s property loss claim without following the procedures mandated by that Act. The Appellate Court reversed, finding that the shipper was not potentially subject to liability “in tort” as the Act requires, so the Act did not apply at all. In reaching that conclusion, the Court commented:

We recognize that carriers may be liable to shippers in tort for incidental harms associated with the loss or damage of cargo. See, e.g., Mesta v. Allied Van Lines Int’l, Inc., 695 F.Supp. 63, 65 (D.Mass.1988) (finding that a carrier may be liable to a shipper under statute prohibiting deceptive trade practices in addition to liability under Carmack Amendment); Sokhos v. Mayflower Transit, Inc., 691 F.Supp. 1578, 1581 (D.Mass.1988) (same); Starmakers Publ. Corp. v. Acme Fast Freight, Inc., 615 F.Supp. 787, 791 (S.D.N.Y.1985) (stating that a bailor can recover from a bailee in tort if claim for relief does not depend upon existence of a contract). However, these cases involved a separate and independently actionable harm to the shipper as distinct from the loss of, or damage to, the goods. In Mesta and Sokhos, the harm was the carrier’s failure to provide the shipper with information required by state law. In Starmaker s, the harm was the carrier’s breach of an extracontractual duty.

North American Van Lines, Inc., 89 F.3d at 458 [emphasis added].

In Gordon v. United Van Lines Inc., 130 F.3d 282 (7th Cir.1997), the Court of Appeals adopted the Second Circuit’s reasoning that federal common law may not be used to create remedies, such as punitive damages, not authorized in Carmack’s comprehensive legislative scheme. Id. at 286, citing Cleveland v. Beltman North American Co., 30 F.3d 373 (2d Cir.1994). See also, Morris v. Covan Worldwide Moving Inc., 144 F.3d 377 (5th Cir.1998)(federal common law remedies can afford “no greater relief” than what Carmack authorizes).

The Gordon court, however, relied on Rini v. United Van Lines, Inc., 104 F.3d 502 (1st Cir.1997), as well as Hughes and Pinkerton, to formulate an exception to preemption of state law claims that “allege liability on a ground that is separate and distinct from the loss of, or damage to, the goods that were shipped .” In Rini, the First Circuit had suggested in dicta that preemption might not extend so far as to bar torts based on injury “independent from the loss or damage to goods,” mentioning as examples assault and intentional infliction of emotional distress.

The Gordon Court held that a carrier “must be sheltered from liability except insofar as it may also engage in conduct that is sufficiently distinct from the contract of carriage that a separate and independent claim arises.” Applying that test, the Court concluded that the plaintiff’s claim for intentional infliction of emotional distress was not preempted by Carmack, while the common law fraud claims (fraud in the inducement and in the claims process) were preempted.

Accord, Smith v. United Parcel Service, 296 F.3d 1244 (11th Cir.2002)(all state law claims are preempted by Carmack unless they are based on “separate and distinct conduct rather than injury”); Hull v. United Van Lines, No. 402CV133 (S.D.Ga. Jan. 6, 2003)(plaintiffs’ claim for intentional infliction of emotional distress preempted because it was based on mishandling of goods and attempts to conceal damage, conduct not “separate and distinct from a failure to properly transport and deliver goods”); See also, Hubbard v. All States Relocation Serv. Inc., 139 F.Supp.2d 1374 (S.D.Ga.2000)(claim for injury personally to shipper, such as emotional distress, not preempted); Lamm v. Bekins Van Lines Co., 139 F.Supp.2d 1300 (D.Ala.2001)(emotional distress and outrage claims not preempted); Rosenthal v. United Van Lines, LLC, 174 F.Supp.2d 1331 (N.D.Ga.2001)(emotional distress and loss of consortium claims not preempted).

Applying this analysis to the claims of the plaintiffs, I conclude that the state law claims for breach of contract and fraudulent concealment of the fact of water damage and mold contamination are preempted by Carmack. These claims arise directly from and are based solely upon loss of and/or damage to the property that the Glasses consigned to the defendants for shipment. The claim for punitive damages is preempted if brought under Illinois common law, and it is not permitted as a matter of federal common law.

The Glasses claims for emotional distress and personal injury, however, are not quite so easily resolved. Although in Gordon the Seventh Circuit allowed a claim for intentional infliction of emotion distress to survive, the emotional distress there arose from overt conduct–blatant and multiple misrepresentations made to the plaintiff about the shipment of her property– and not simply from loss of or damage to her property. Here, however, the emotional distress and physical injuries arose directly from the carrier’s mis- handling of the property and the subsequent claims. Although the plaintiffs have alleged that the defendants’ concealment of the property damage was intentional, the duty to disclose was one that arose from the contractual relationship and from nowhere else. The duty to disclose damage to goods was therefore part and parcel of the shipment, storage and delivery of the furniture, and cannot therefore be considered a “separate” harm. The claims do not fall within the exception carved out by Gordon and Rini. I find that the state law claims are preempted by Carmack.

The Carmack Amendment has not altered the common law rule that special, or consequential, damages are not usually recoverable in an action for breach of contract. See Reed v. Aaacon Auto Transport, Inc., 637 F.2d 1302, 1305-06 (10th Cir.1981); Contempo Metal Furniture Co. of California v. East Texas Motor Freight Lines, Inc., 661 F.2d 761, 765 (9th Cir.1981). The Seventh Circuit has explained that consequential damages are available under Supreme Court rulings:

In the words of the Supreme Court, the Carmack Amendment is “comprehensive enough to embrace all damages resulting from any failure to discharge a carrier’s duty with respect to any part of the transportation to the agreed destination.” Southeastern Express Co. v. Pastime Amusement Co., 299 U.S. 28, 29 (1936) Recoverable damages includes damages for delay, see id., lost profits (unless they are speculative), see Camar Corp. v. Preston Trucking Co., 221 F.3d 271, 277 (1st Cir.2000), and all reasonably foreseeable consequential damages, see Air Prods. & Chems., Inc. v. Illinois Cent. Gulf R.R. Co., 721 F.2d 483, 485 (5th Cir.1983).

American Nat. Fire Ins. Co. ex rel. Tabacalera Contreras Cigar Co. v. Yellow Freight Systems, Inc., 325 F.3d 924, 931 (7th Cir.2003).

Special or consequential damages are those that the carrier did not have reason to foresee as ordinary, natural consequences of a breach when the contract was made. See Reed, 637 F.2d at 1305; Hector Martinez & Co. v. Southern Pacific Transportation Co., 606 F.2d 106, 108-11 (5th Cir.1979), cert. denied, 446 U.S. 982 (1980). To recover special damages, the plaintiff must show that the carrier had notice of the special circumstances from which such damages would flow. See Illinois Central Gulf Railroad v. Southern Rock, Inc., 644 F.2d 1138, 1141 (5th Cir.1981); Reed, 637 F.2d at 1306.

The cases cited above deal with special damages such as loss of use, lost profits and other business related damages. The issue of whether special damages for personal injury can be recovered under a Carmack claim was considered by the court in Tayloe v. Kachina Moving & Storage Inc., 16 F.Supp.2d 1123 (D.Ariz.1998), a case remarkably similar on its facts to the case before this court. In Tayloe, the carrier temporarily stored plaintiff’s household furnishings while their new house was being completed. While the property was stored, some of it became water damaged and moldy. Upon delivery of the property, plaintiff developed a severe allergic reaction to the mold, requiring several hospitalizations. The Tayloe court applied the principles articulated above, finding that a question of fact existed regarding whether notice of special conditions, required for proof of special damages, had been given to the defendant of the special circumstances.

See also, Alessandra v. Mullen Brothers Inc., No. 98-5967, 1999 WL 959684, Sept. 22, 1999 (Sup.Ct.Mass.)(plaintiffs’ state law claims for physical injuries arising from application of pesticides to stored goods arose out of Carmack claim and therefore were preempted); Strike v. Atlas Van Lines Inc., 102 F.Supp.2d 599, 600 (M.D.Pa.2000)(Carmack preemption extends to claims involving personal injuries resulting from reaction to gasoline negligently spilled on shipped goods).

However, even if one accepts that special damages are recoverable under Carmack, as the Tayloe court did, those special damages would still be governed by the statutory language and clear Supreme Court guidance that damages are limited to and capped by actual loss or damage to the property. In other words, there is no possibility of recovering damages resulting from personal injury in a Carmack claim, absent a tort that is independent from the shipping of goods. Accordingly, I also find that plaintiffs may not seek recovery for their personal injuries in the form of special damages under the Carmack claims.


Defendants’ causation argument arises from their belief that plaintiff’s experts will not be allowed to testify as to causation. As discussed further below, I have held that one of plaintiffs’ experts, Richard Lipsey, may not testify as to causation. However, I reject–as I have on several other occasions–the notion that plaintiffs’ treating physicians cannot testify about causation unless they were both disclosed as testifying experts and produced a report. Treating physicians are fact witnesses qualified to render opinions, and they may therefore testify about causation. Accordingly, to the extent that the motions are based on causation, they are denied.

Successor liability

QCMS also moves for summary judgment on the basis that Illinois law does not recognize a theory of corporate successor liability when the buyer of assets does not also assume the liabilities of the selling corporation. The generally accepted rule in Illinois is that a corporation which merges with another corporation takes on the latter corporation’s obligations and liabilities, while a successor corporation which purchases the business assets of another corporation does not become liable for the debts of the seller in the absence of an express agreement to assume the seller’s debts. See, e.g., Myers v. PUtzmeister, Inc., 596 N.E.2d 754 (Ill.App.1992); Green v. Firestone Tire & Rubber Co., 460 N.E.2d 895 (1984); Gonzalez v. Rock Wool Engineering & Equipment Co., 453 N.E.2d 792 (1983).

Plaintiffs respond, however, that it is federal, not state law that controls this issue. In Moriarty v. Svec, 164 F.3d 323, 327-28 (7th Cir.1999), plaintiffs brought an ERIS claim against a funeral home. The sole proprietor of the funeral home had died, and his son had become the new sole proprietor. He argued that there was no successor liability under Illinois law because there was no identity of ownership. The District Court found that there was a clear Congressional intent to avoid conflict with state law under ERISA, and that federal common law therefore governed. In affirming that holding (other aspects of the case were reversed), the Court of Appeals noted:

The district court did not dispute this interpretation of state law. Instead it held the Illinois successor liability rule had been preempted in the situation by federal common law. Upholsterers Internat’l Pension Fund v. Artistic Furniture, 920 F.2d 1323 (7th Cir.1990). In Artistic Furniture, we stated that in order to further Congressional objectives, successor entities can be liable … if (1) there is sufficient continuity between the two companies and (2) the successor company had notice of the predecessor’s liability … Atherton [v. FDIC, 519 U.S. 213 (1997) ] does not preclude courts from applying appropriate federal rules in areas where Congress manifests a desire to avoid significant conflict.

Like ERISA claims, Carmack claims arise under a federal statute clearly demonstrating Congressional intent to avoid conflicts with the varying state laws that might otherwise apply in individual situations. I therefore find that Carmack preempts Illinois law regarding successor liability, in favor of federal common law on the subject. Any other ruling would thwart the clear intent of Congress.

The Moriarty Court discussed the federal common law doctrine of successor liability:

To hold a successor liable we must find that there exists sufficient indicia of continuity between the two companies and that the successor firm had notice of its predecessor’s liability. Continuity of operations is easily established here. Artistic employs substantially all of [defendant’s] work force and it appears supervisory personnel as well. It used [defendant’s] plant, machinery and equipment and manufactured the same products. Work orders not completed by [defendant] prior to its termination were completed by Artistic. Artistic also agreed to honor warranty claims for good sold by [defendant]. Finally, [two Vice Presidents] stayed on in the same positions under Artistic’s management. These facts establish adequate continuity of operations for purpose of imposing successor liability.

In the case before the court, there was no change in the identity of employees when Crimmins changed to QCMS; Crimmins’ employees simply continued to work. QCMS took over the same physical plant and equipment that Crimmins had used. Two Crimmins employees–Jim LaCamera and Jennifer Hagar–who had been responsible for running Crimmins’ day-to-day operations became president and vice president of QCMS. QCMS continued operating, at least for a time, under Crimmins’ interstate license and advertised in the yellow pages as Crimmins Transfer, “operating for more than 30 years in the Quad Cities.”

The second requirement is that the successor firm had notice of predecessor’s liability. LaCamera and Hagar have admitted knowledge that the Glasses had outstanding claims before the change in corporate structure took place.

The evidence submitted by plaintiff is at least enough to create a question of fact regarding successor liability; in other words, it is enough to defeat the motion for summary judgment filed by QCMS, at least to the extent it is based on a denial of successor liability.


Defendants Crimmins and United have moved to exclude plaintiff’s expert, Richard Lipsey, from testifying at trial, because in their opinion his testimony is unreliable and misleading. I find as follows:

1. Lipsey is sufficiently qualified to testify, except as noted below. The criticisms about his qualifications are criticisms that go to the weight accorded his testimony and to his credibility. The issues raised may be explored on cross examination.

2. Again with the exception noted below, the opinions and report are consistent with Lipsey’s stated expertise and could prove helpful to a jury.

3. However, Lipsey may not testify that the mold and bacteria “caused the adverse health effects to the family members” nor may he opine any other formulation of a causal link between the toxins and the plaintiff’s injuries. He is not a physician and his qualifications regarding toxic materials do not extend to medical causation in specific cases.

The motion is therefore granted in part and denied in part.


For the reasons stated herein, the motion to strike (# 49) is denied. The motion to exclude (# 33) is granted in part and denied in part. The motions for summary judgment (# 29 and # 31) filed by United and Crimmins are allowed, and the motion for summary judgment (# 36) filed by QCMS is allowed in part and denied in part. Judgment is entered in favor of defendants on the following counts: Count I, II, III, IV, V, VI, IX and X, leaving only the Carmack Amendment claims in Counts VII and VIII pending for trial.

This case is set for a telephone status conference on January 27, 2004 at 10:30 a.m. to discuss trial of the Carmack claims. The court will place the call.

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