United States District Court,

D. Arizona.

PACIFIC INDEMNITY CO., Plaintiff,

v.

PICKENS KANE MOVING & STORAGE CO.; Atlas Van Lines, Inc., Defendants.

Pickens Kane Moving & Storage Co., Cross-Claimant

v.

Atlas Van Lines, Inc., Cross-Defendant

Atlas Van Lines, Inc., Cross-Claimant

v.

Pickens Kane Moving & Storage Co., Cross-Defendant.

No. CV-08-0466-PHX-FJM.

Sept. 9, 2009.

ORDER

FREDERICK J. MARTONE, District Judge.

This case arises out of the loss of household goods by fire during shipment from Illinois to Arizona and California. Ina and Murray Manasters insured their household goods through plaintiff Pacific Indemnity Company, who paid the loss claim in the amount of $2,493,155.48, and was then subrogated to the Manasters’ interests. Pacific Indemnity then filed this action against Pickens Kane Moving & Storage Company (“Pickens Kane”) and Atlas Van Lines, Inc. (“Atlas”), the motor carriers who handled the Manasters’ shipment, asserting claims under the Carmack Amendment, 49 U.S.C. § 14706, and state law claims of negligence and breach of contract.

The court now has before it Pacific Indemnity’s motion for summary judgment (doc. 106), Atlas’ response (doc. 118), Pickens Kane’s response (doc. 120), and Pacific Indemnity’s respective replies (docs.129, 132). We also have before us Pickens Kane’s motion for summary judgment against Atlas (doc. 109), Atlas’ response (doc. 121), and Pickens Kane’s reply (doc. 136); and Pickens Kane’s motion for summary judgment on Counts II and III of the first amended complaint (doc. 113), Pacific Indemnity’s response (doc. 126), and Pickens Kane’s reply (doc. 137). We also have before us Atlas’ motion for partial summary judgment (doc. 116), Pacific Indemnity’s response (doc. 123), Pickens Kane’s response (doc. 133), and Atlas’ respective replies (docs.134, 138).

Pickens Kane’s motion to expedite ruling on motion for leave to file separate summary judgment motions against Pacific Indemnity and Atlas Van Lines (doc. 105) is rendered moot by virtue of our order granting such leave on May 4, 2009 (doc. 108). Therefore, the motion is denied (doc. 105).

I. Background

In September 2006, the Manasters requested a quote from Pickens Kane for the cost of packing and transporting their household goods, consisting mainly of fine art and antiques, from their residence in Illinois to locations in Arizona and California. Pickens Kane then contacted freight broker Transportation Consultants International, Inc. (“TCI”) to provide a quote to arrange for the transportation of the Manasters’ goods from the Pickens Kane warehouse in Illinois to Arizona and California. TCI, in turn, contacted Atlas Van Lines for a quote on the shipment. Atlas quoted the cost of shipment at $9,645.00. Its quote did not contain a declaration of value, but instead referred to Atlas’ tariff. Relying on Atlas’ quote, TCI submitted a quote to Pickens Kane for $11,575.00. TCI’s quote to Pickens Kane provided, “Quote does not include insurance.”  Atlas SOF ¶ 10. Based on TCI’s quote, Pickens Kane quoted the Manasters $14,121.50 for transportation charges, with no charges included for valuation. Id. ¶ 12.

A tariff is a publication filed with the Safety Transportation Board containing the rates, charges, classifications, rules, regulations, and practices of common carriers.

A liability limit greater than the carrier’s tariff is properly known as “valuation,” but is sometimes referred to as “insurance.” Atlas MSJ at 2.

On October 11, 2006, after the quotes were accepted, the Manasters requested that Pickens Kane obtain $1 million in coverage for transportation of the shipment. Id. ¶ 15. Ina Manaster signed a Pickens Kane bill of lading  releasing the shipment for a declared value of $1 million (the “Manasters’ Bill of Lading”) and Pickens Kane transported the Manasters’ goods from their residence to the Pickens Kane warehouse in Illinois. Id. ¶ 17. Although Pickens Kane knew of the $1 million coverage request, it did not contact TCI to amend its agreement to include the $1 million valuation. Pickens Kane MSJ on Counts II & III at 3.

A bill of lading is a contract between a shipper and carrier for the carriage of goods. Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 18-19, 125 S.Ct. 385, 390, 160 L.Ed.2d 283 (2004).

On November 2, 2006, Atlas picked up the shipment from the Pickens Kane warehouse and issued its bill of lading, identifying “TCI Pickens Kane Fine Art” as the shipper and the Manasters as the “consignee.” (“Atlas bill of lading”). Atlas SOF ¶ 22 & exhibit N. Pickens Kane issued its own bill of lading also showing “PK Fine Art/T.C.I.” as the shipper. Id., exhibit O. Pickens Kane did not declare a valuation for the goods on either the Atlas bill of lading or on its own bill of lading. Id. ¶¶ 25, 28. The shipment was destroyed by fire during transit.

II. Pacific Indemnity’s Motion for Summary Judgment

Pacific Indemnity argues that Pickens Kane, as the receiving carrier, and Atlas Van Lines, as the delivering carrier, are both liable under the Carmack Amendment for damage to the Manasters’ property. It seeks judgment against Pickens Kane in the amount of $1 million, the declared value of the shipment, and/or interlocutory judgment against both Pickens Kane and Atlas as to liability, with the issue of damages to be determined at trial.

A shipper establishes its prima facie case under the Carmack Amendment when it shows delivery of the goods to the carrier in good condition, arrival in damaged condition, and the amount of damages. Missouri Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 138, 84 S.Ct. 1142, 1145, 12 L.Ed.2d 194 (1964). The receiving carrier, the delivering carrier, and the carrier over whose line or route the property is transported when transported under a through bill of lading, have liability under the Act. 49 U.S.C. § 14706(a)(1).

Both Pickens Kane and Atlas acknowledge that they are liable for damage to the Manasters’ goods under the Carmack Amendment. See Pickens Kane Response at 1; Atlas Response at 1. Pickens Kane does not dispute that it received the Manasters goods in good condition, the goods arrived in damaged condition, and that the measure of damages exceeded the declared value of $1 million. Therefore, Pickens Kane is liable to Pacific Indemnity under the Carmack Amendment for $1 million, the full declared value of the shipment.

Because the Carmack Amendment is the exclusive remedy for breach of an interstate shipping contract, preempting common law claims against a carrier, see Hall v. No. Am. Van Lines, Inc., 476 F.3d 683, 689 (9th Cir.2007), Pickens Kane’s motion to dismiss Counts II (negligence) and III (breach of contract) is granted (doc. 113).

The remaining issue is the proper apportionment of liability as between Pickens Kane and Atlas.

III. Apportionment

A.

The Carmack Amendment makes the originating carrier liable for damages to a shipper’s cargo regardless of whether the damage occurred on its line or on the line of a connecting carrier. 49 U.S.C. § 14706(a). This provision was designed to “relieve shippers of the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of goods.” Reider v. Thompson, 339 U.S. 113, 119, 70 S.Ct. 499, 502, 94 L.Ed. 698 (1950). A carrier found strictly liable under subsection (a) is then “entitled to recover from the carrier over whose line or route the loss or injury occurred the amount required to be paid to the owners of the property.” 49 U.S.C. § 14706(b).

Urging a narrow construction of § 14706(b), Pickens Kane argues that because the loss occurred while the property was in Atlas’ custody, it is entitled to indemnification of the full amount of its determined liability ($1 million) regardless of any contractual limitation of liability contained in Atlas’ bill of lading. We disagree.

In Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14, 33, 125 S.Ct. 385, 398, 160 L.Ed.2d 283 (2004), the United States Supreme Court held that when an intermediary contracts with a downstream carrier to transport goods, the cargo owner’s recovery against the downstream carrier is “limited by the liability limitation to which the intermediary and carrier agreed.” The Court reasoned that the downstream carrier “could not be expected to know if the [intermediary] had any outstanding, conflicting obligation to another party.” Id. (citing Great N. Ry. Co. v. O’Connor, 232 U.S. 508, 514, 34 S.Ct. 380, 383, 58 L.Ed. 703 (1914)); see also Werner Enters., Inc. v. Westwind Maritime Int’l, Inc., 554 F.3d 1319, 1325 (11th Cir.2009) (stating that “[c]arriers do not need to investigate upstream contracts”). Instead, the cargo owner’s remedy is against the intermediary, “the only party that definitely knew about and was a party to both of the bills of lading.” Kirby, 543 U.S. at 35, 125 S.Ct. at 400.

Here, Pickens Kane is the only party that knew about the Manasters’ $1 million declared valuation and was a party to both the Manasters and the Atlas bills of lading. Therefore, “it seems logical” that Pickens Kane “should bear responsibility for any gap between the liability limitations in the bills.” See id. We reject Pickens Kane’s argument that a carrier in whose possession the cargo was destroyed is automatically liable under § 14706(b) for the full amount of the receiving carrier’s liability. Instead we consider whether the contract between Pickens Kane and Atlas effectively limited Atlas’ liability.

B.

The Carmack Amendment provides that a carrier is liable to a shipper for the “actual loss or injury to the property.” 49 U.S.C. § 14706(a). While “actual loss” had previously referred to the depreciated value of the goods, § 14706(f)(2) now establishes a higher liability standard for household goods carriers. A carrier’s maximum liability for loss to household goods is the “replacement value of the such goods, subject to a maximum amount equal to the declared value of the shipment and to rules issued by the Surface Transportation Board [“STB”] and applicable tariffs.” 49 U.S.C. § 14706(f)(2). This kind of coverage is referred to under the statute as “full value protection.” Id. In the event a shipper elects “full value protection” but does not declare a value on the bill of lading, the STB has ruled that the “assumed valuation” of the shipment, and therefore a carrier’s maximum liability for the “full value” of the shipment is $4.00 per pound. See Released Rates of Motor Common Carriers of Household Goods, Amendment No. 4 to Released Rates Decision No. MC-999, 2001 WL 1637941 (Dec. 18, 2001); Released Rates of Motor Common Carriers of Household Goods, Amendment No. 5 to Released Rates Decision No. MC-999, 2007 WL 1696990 (June 11, 2007) (“Amendment 5” ).

Although the STB has sought comment on the continued propriety of a $4.00 per pound assumed valuation, we are not aware that any change has been adopted. See Amendment 5, infra. Moreover, Atlas’ Exceptions Tariff 104-G increases Atlas’ assumed valuation to $5.00 per pound. See infra n. 7.

However, an interstate carrier of household goods may limit its liability “to a value established by written declaration of the shipper or by a written agreement.” 49 U.S.C. § 14706(f)(1). In order to limit its obligation to provide “full value protection,” a carrier must receive a written waiver from the shipper. Id. § 14706(f)(2) and (3).

Although Atlas concedes its liability under § 14706(b), it contends that its liability is limited by the Atlas bill of lading, and its applicable tariffs, which set a maximum liability of $5.00  per pound. The Atlas bill of lading contains the following valuation provision, which was to be completed by the shipper:

The assumed valuation under Tariff 400-N was originally $4.00 per pound but was adjusted to $5.00 per pound by Atlas’ Exceptions Tariff 104-G. We will modify all references to show the current value of $5.00 per pound.

VALUATION: The released rates for shipments moving under this bill of lading vary with the services provided under the tariff and Carrier’s tariff is incorporated into this bill of lading for determination of which released rate applies. Shipper has released the entire shipment to a value not exceeding:

(TO BE COMPLETED BY THE SHIPPER SIGNING BELOW)

[] The maximum released rate set forth in the tariff for shipments on which the specified services are being provided, which may be either $.60 per pound per article or [$5.00] per pound. (This is not insurance but a Limit on Carrier’s Liability.)

[] The declared value for the property of $ _______. If this amount exceeds the maximum released rate in the tariff, Carrier shall obtain insurance in this amount on Shipper’s behalf for the charges set forth in the tariff.

SHIPPER’S SIGNATURE _________________ DATE _____________

IF NO DECLARATION IS MADE, THE SHIPMENT SHALL BE DEEMED RELEASED TO THE VALUE SET FORTH IN THE TARIFF.

Atlas SOF, exhibit N. Although Pickens Kane signed the bill of lading as the shipper, it did not complete or sign the valuation provision. It now argues that because it did not complete the valuation provision, it did not provide a written waiver of liability as required by § 14706(f)(3), and therefore Atlas did not effectively limit its liability to below the declared amount of $1 million. We find this argument unavailing for several reasons.

First, Atlas dealt exclusively with TCI and Pickens Kane; it had no contract with the Manasters. We have already concluded that Atlas had no knowledge of the $1 million valuation, nor was it required to investigate any upstream contract in order to discover that the Manasters had declared a value. See Kirby, 543 U.S. at 33, 125 S.Ct. at 398; Werner Enters., 554 F.3d at 1325. Therefore, Atlas is not bound by Pickens Kane’s agreement with the Manasters.

Second, “TCI Pickens Kane Fine Art” was identified as the “shipper” on both the Atlas bill of lading and the Pickens Kane bill of lading. As an entity experienced in the transportation industry, Pickens Kane is bound by the express terms of its agreement. See Travelers Indem. Co. v. The Vessel Sam Houston, 26 F.3d 895, 899 (9th Cir.1994) (holding that a sophisticated shipper who was familiar with the bill of lading failed to raise a question of material fact as to whether it was denied a fair opportunity to opt out of the liability clause in the bill of lading).

Finally, we construe § 14706(f)(2) and (3), which defines “replacement value” as subject to rules established by the STB and by applicable tariffs, as providing that a written waiver is not required to provide “full value protection” limited to $5.00 per pound. Both the STB decisions and Tariff 400-N provide that, in the absence of a shipper’s declaration of higher value, the assumed value, and therefore the carrier’s maximum liability, is $5.00 per pound.

But even if a written waiver was required, we conclude that the Atlas bill of lading was sufficient to limit Atlas’ liability. A carrier of household goods seeking to limit liability under the Carmack Amendment must (1) maintain a tariff in compliance with Interstate Commerce Commission [now Surface Transportation Board] requirements, (2) give the shipper a reasonable opportunity to choose between two or more levels of liability, (3) obtain the shipper’s agreement as to his choice of carrier liability limits, and (4) issue a bill of lading prior to moving the shipment that reflects such agreement.   Hughes Aircraft Co. v. North Am. Van Lines, Inc., 970 F.2d 609, 611-12 (9th Cir.1992). There is no dispute that Atlas maintained a tariff in compliance with the Surface Transportation Board and that it issued a bill of lading prior to moving the shipment. Therefore, we need only consider factors (2) and (3).

The Atlas bill of lading adequately provided TCI/Pickens Kane Fine Art with a reasonable opportunity to choose between different levels of liability. The bill provided that Pickens Kane could chose either “the maximum released rate set forth in the tariff … which may be either $.60 per pound per article, or $5.00 per pound,” or the “declared value for the property.” Atlas SOF, exhibit N. Pickens Kane was further advised that “IF NO DECLARATION IS MADE, THE SHIPMENT SHALL BE DEEMED RELEASED TO THE VALUE SET FORTH IN THE TARIFF.” Id. (emphasis in original). Therefore, Pickens Kane had the requisite notice of available options and a reasonable opportunity to make a deliberate, informed selection of Atlas’ liability limit.

Pickens Kane neither declared a valuation, nor signed the valuation provision. Nevertheless, the bill clearly stated that “IF NO DECLARATION IS MADE, THE SHIPMENT SHALL BE DEEMED RELEASED TO THE VALUE SET FORTH IN THE TARIFF.” By not completing the valuation provision, Pickens Kane, a sophisticated shipper familiar with the transportation industry, indicated its choice to release the value of the shipment to the amount set forth in the tariff. Therefore, each element of the Hughes test is satisfied.

We now look to the applicable tariff to determine the released value.

C.

The Atlas bill of lading expressly incorporated the provisions of Tariff 400-N, which provides:

Unless the shipper expressly waives carrier’s maximum liability as set forth in Part (1) above [i.e., “the lump sum value declared by the shipper, which may not be less than $5,000 or ($5.00) per pound”] and releases the shipment to a value not exceeding 60 cents per pound per article, the carrier’s maximum liability for loss or damage shall be either the lump sum value declared by the shipper or an amount equal to not less than [$5.00] for each pound of weight in the shipment, whichever is greater.”

Atlas SOF, exhibit P. In other words, if the shipper does not expressly release the shipment to a value of $.60 per pound per article, the carrier’s maximum liability is the greater of the declared value or $5.00 per pound.

It is undisputed that Pickens Kane did not expressly release the shipment to a value of $.60 per pound per article. It is also undisputed that Pickens Kane did not declare a higher value for the shipment on either the Atlas bill of lading or the Pickens Kane bill of lading. Therefore, according to the terms of the Atlas bill of lading and Tariff 400-N, Pickens Kane agreed to Atlas’ maximum liability of $5.00 per pound.

We reject Pacific Indemnity and Pickens Kane’s argument that Atlas is not entitled to a limitation of liability because the Atlas bill of lading failed to include specific notice and waiver language contained in Tariff 400-N. It is true that Tariff 400-N requires specific language in a bill of lading to obtain a shipper’s waiver of “full value protection,” in other words to reduce a carrier’s maximum liability to “60 cents per pound.” Without this language, Pickens Kane could not have effectively elected the “60 cents per pound” option. However, the Tariff’s language relating to the $5.00 per pound maximum liability was sufficiently incorporated into the bill of lading. The failure to include verbatim language does not deprive Atlas of its otherwise effective liability limitation.

IV. Weight of Shipment

Pacific Indemnity argues that an issue of fact exists with respect to the weight of the Manasters’ shipment. It argues that because the Manasters were shipping property to locations in both Arizona and California, Atlas’s driver, Thomas Szalga, issued two bills of lading for the shipment-each indicating a shipment weight of 10,500 pounds. Mr. Szalga testified that the total weight of the Manaster shipment was 21,000 pounds, and that he attributed 10,500 pounds of the shipment on the Arizona bill of lading, and 10,500 pounds on the La Jolla, California bill of lading. Plaintiff’s Statement of Add’l Facts ¶ 46. Therefore, according to Pacific Indemnity the total weight of the shipment was 21,000 pounds.

Atlas contends, on the other hand, that there was only one shipment with a total weight of 10,500 pounds. Although there were two bills of lading, each referenced the same shipment number and the same registered weight-10,500 pounds. It contends that the four separate inventories which itemized the total cubic feet for each of the four deliveries (one in California, three in Arizona) establish that the shipment was a total of 1,382 cubic feet, or 9,674 pounds. Atlas’ SSOF ¶¶ 4-5.

On a motion for summary judgment, we must examine the evidence in the light most favorable to the non-moving party and may not weigh conflicting evidence. Because a genuine issue of material fact exists with respect to the weight of the Manasters’ shipment, we deny summary judgment as to the amount of damages.

V. Conclusion

IT IS ORDERED GRANTING Pacific Indemnity’s motion for summary judgment on Count I against Pickens Kane and Atlas with respect to liability under 49 U.S.C. § 14706(a)(1). We conclude that Pickens Kane is liable to Pacific Indemnity in the amount of $1 million (doc. 106).

IT IS ORDERED GRANTING Pickens Kane’s motion for summary judgment on Counts II and III of the first amended complaint (doc. 113).

IT IS ORDERED GRANTING IN PART AND DENYING IN PART Pickens Kane’s motion for summary judgment against Atlas Van Lines, (doc. 109), and concluding that Atlas is liable to Pickens Kane under 49 U.S.C. § 14706(b) in the amount of $5.00 per pound of the shipment. An issue of fact remains as to the total weight of the shipment.

IT IS ORDERED GRANTING IN PART AND DENYING IN PART Atlas Van Lines’ motion for partial summary judgment against Pacific Indemnity and Pickens Kane (doc. 116). Atlas is liable to Pickens Kane in the amount of $5.00 per pound, but an issue of fact remain as to the total weight of the shipment.

IT IS ORDERED DENYING Pickens Kane’s motion to expedite ruling on motion for leave to file separate summary judgment motions as moot (doc. 105).

DATED this 8th day of September, 2009.

United States District Court,

S.D. New York.

SOMPO JAPAN INSURANCE COMPANY OF AMERICA and Sompo Japan Insurance, Inc., Plaintiffs,

v.

NORFOLK SOUTHERN RAILWAY COMPANY et al., Defendants.

Nipponkoa Insurance Company Ltd., Plaintiff,

v.

Norfolk Southern Railway Company et al., Defendants.

Nos. 07 Civ. 2735(DC), 07 Civ. 10498(DC).

Sept. 10, 2009.

MEMORANDUM DECISION

CHIN, District Judge.

These related cases arise out of a train derailment near Dallas, Texas on April 18, 2006. Plaintiffs Sompo Japan Insurance Company of America and Sompo Japan Insurance Inc. (together, “Sompo”) and plaintiff Nipponkoa Insurance Company Limited (“Nipponkoa”) insured various shipments of cargo on the derailed train. Defendants Norfolk Southern Railway Corporation, Norfolk Southern Corporation, and the Kansas City Southern Railway Company (collectively, “defendants”) operated the train that derailed and the track on which it operated.

Sompo sued defendants under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 11706 (“ Carmack”) and various common law theories. Sompo Japan Ins., Inc. et al. v. Norfolk S. Ry. Co. et al., No. 07 Civ. 2735(DC). Nipponkoa, represented by the same attorneys as Sompo, also sued, bringing similar claims, including a Carmack claim. Nipponkoa Ins. Co., Ltd. v. Norfolk S. Ry. Co. et al., No. 07 Civ. 10498(DC).

In this Decision, I refer to Sompo’s case against defendants as Sompo and Nipponkoa’s as Nipponkoa.

I have issued two lengthy opinions relating to this train derailment, one in Sompo and another in a related case. See Sompo Japan Ins. Co. of Am. v. Norfolk S. Ry., 540 F.Supp.2d 486 (S.D.N.Y.2008); Sompo Japan Ins. Co. of Am. v. Yang Ming Marine Transp. Corp., 578 F.Supp.2d 584 (S.D.N.Y.2008), abrogated in part by Rexroth Hydraudyne B.V. v. Ocean World Lines, Inc., 547 F.3d 351, 361-63 (2d Cir.2008). Familiarity with those opinions is assumed, and the facts and procedural history of these cases will not be set forth herein.

The Second Circuit’s decision in Ocean World Lines, Inc., abrogating in part my decision in Sompo’s case against Yang Ming, has no impact on these cases. The only reference the parties make to Ocean World Lines, Inc. is in the context of an argument Nipponkoa advances that I do not consider, as I rule in Nipponkoa’s favor on other grounds.

Currently before me are cross-motions for summary judgment in Sompo, and defendants’ motion for summary judgment in Nipponkoa. For the reasons set forth below, Sompo’s motion for summary judgment is, with one modification, granted in Sompo, and defendants’ motion is denied. Defendants’ motion for summary judgment in Nipponkoa is denied.

DISCUSSION

I address the motions in Sompo and Nipponkoa in turn.

I. Sompo

A. Sompo’s Common Law Claims

Defendants move for summary judgment as to Sompo’s common law claims, on the ground that such claims are preempted by Carmack. Sompo concedes that such claims are preempted, and they are therefore dismissed. Sompo’s only remaining claim is under Carmack.

B. Sompo’s Carmack Claim

Defendants move for summary judgment dismissing Sompo’s Carmack claim, arguing that Sompo has failed to meet two of the required elements for a Carmack claim. Defendants also challenge Sompo’s calculation of damages as to one shipment.

Sompo also moves for summary judgment, arguing that there are no disputed issues of fact for a jury to resolve. Sompo also moves for attorneys’ fees, arguing that defendants’ position in this litigation is frivolous.

For the reasons that follow, I conclude that Sompo has satisfied its burden under Carmack, and that no reasonable jury could disagree. As defendants do not argue that they have a defense under Carmack, judgment is entered in Sompo’s favor, with one modification as to damages.

1. Applicable Law

To establish a prima facie case under Carmack, the plaintiff must show the following by a preponderance of the evidence: “ ‘1) delivery to the carrier in good condition; 2) arrival in damaged condition; and 3) the amount of damages caused by the loss.’ “ Project Hope v. M/V Ibn Sina, 250 F.3d 67, 74 n. 6 (2d Cir.2001) (quoting Camar Corp. v. Preston Trucking Co., 221 F.3d 271, 274 (1st Cir.2000)). In considering a motion for summary judgment under Carmack, the Court considers the totality of the evidence to determine whether the plaintiff has made a prima facie showing. See New York Marine & Gen. Ins. Co. v. S/S Ming Prosperity, 920 F.Supp. 416, 423 (S.D.N.Y.1996).

The plaintiff can satisfy the first requirement-delivery to the carrier in good condition-through direct or circumstantial evidence. See Transatlantic Marine Claims Agency v. M/V OOCL Inspiration, 137 F.3d 94, 98 (2d Cir.1998).  The most common form of direct evidence is a clean bill of lading, which “creates a presumption of delivery in good condition favorable to the plaintiff .” Id. The clean bill of lading presumption does not apply, however, where, as here, the goods are shipped in sealed shipping containers, because under such circumstances “the carrier is prevented from ‘observing the damaged condition had it existed when the goods were loaded.’ “ Bally Inc. v. M.V. Zim Am., 22 F.3d 65, 69 (2d Cir.1994) (quoting Caemint Food, Inc. v. Brasileiro, 647 F.2d 347, 352 (2d Cir.1981)). Where the goods are shipped in sealed containers, the plaintiff must then adduce circumstantial evidence that the goods were delivered to the carrier in good condition.

Transatlantic Marine Claims Agency was decided under the Carriage of Goods by Sea Act (the “COGSA”), 46 U.S.C. app. §§ 1300 et seq.. Courts regularly cite COGSA cases in Carmack cases, however, because the “prima facie cases for both COGSA and the Carmack Amendment are identical.” Project Hope v. M/V Ibn Sina, 250 F.3d 67, 73 (2d Cir.2001). Accordingly, I cite both COGSA and Carmack cases in this Decision.

The most common form of circumstantial evidence is what is known as the “characteristics of the damage” test. Under this test, the plaintiff can satisfy the first element by showing that “the characteristics of the damage suffered by the goods justify the conclusion that the harm occurred while the goods were in the defendant’s custody.” Transatlantic Marine Claims Agency, 137 F.3d at 99. This test has been applied, for example, where cargo was damaged by seawater after a sea voyage. Id.

Once the plaintiff has made a prima facie showing, the burden then shifts to the defendant to demonstrate that it did not act negligently, and that the damage was caused by one of the following exceptions to carrier liability under Carmack: “(a) the act of God; (b) the public enemy; (c) the act of the shipper himself; (d) public authority; (e) or the inherent vice or nature of the goods.” Mo. Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137 (1964). Thus, once the plaintiff succeeds in making a prima facie showing, the carrier faces a decidedly uphill battle to avoid liability. See Transatlantic Marine Claims Agency v. M/V OOCL Inspiration, 137 F.3d 94, 98 (2d Cir.1998) (noting that it is “ ‘the exceptional case’ “ in which carrier will not be liable) (quoting Associated Metals & Minerals Corp. v. M/V Arktis Sky, 978 F.2d 47, 51 (2d Cir.1992)); Martin Imports v. Courier-Newsom Express, Inc., 580 F.2d 240, 242 (7th Cir.1978) (holding that “once the shipper has made out a prima facie case, the law places upon the carrier a substantial double burden in order to avoid liability”). Perhaps for this reason, Carmack is regarded as essentially a strict liability statute. See Sompo Japan Ins. Co. of Am. v. Union Pac. R.R., 456 F.3d 54, 60 (2d Cir.2006).

Courts decide summary judgment motions in Carmack cases no differently than other cases. See Transatlantic Marine Claims Agency, 137 F.3d at 101 (holding that “the treatment of a summary judgment motion under COGSA is no different from the way similar motions are dealt with in any other litigation”). The Second Circuit has made clear, however, that, where a defendant focuses its summary judgment motion solely on attacking the plaintiff’s prima facie case, the defendant “runs a heavy risk,” because if the Court finds that the prima facie case is met, then judgment must be entered in the plaintiff’s favor. See id.

2. Application

Defendants’ strategy here is not to adduce any “affirmative evidence proving that the damage did not occur while in [defendants’] custody, or [to] indicat [e] that the injury fell under one of [ Carmack’s] exceptions to liability,” but rather to run the “heavy risk” of attacking the adequacy of Sompo’s prima facie case. See id. Because there are no disputed issues of material fact, and because no reasonable jury could conclude that Sompo has failed to establish a prima facie case, judgment in Sompo’s favor is appropriate.

a. Delivery in Good Condition

Sompo has adduced sufficient circumstantial evidence to show that the goods were in good condition when delivered to defendants, and no reasonable jury could disagree.

First, the characteristic of the damage that occurred to the goods is circumstantial evidence that the derailment caused the damage. Sompo has submitted photographs of the damaged goods as exhibits, and the goods look just as one would expect them to look after being on a derailed train. The tractors, sushi cases, ice makers, and copiers are mangled and smashed, and the autopart packages are flattened. Most of the goods had to be scrapped they were so damaged, which similarly belies the notion that Sompo arranged to ship already-damaged goods-unless, of course, defendants should have the Court believe that Sompo engaged in an elaborate fraud to ship damaged goods, and coincidentally those damaged goods were on a train that derailed.

I reject defendants’ argument that I cannot apply the characteristic of the damage test because it is generally only applied in COGSA cases. As discussed above, courts regularly cite COGSA cases in Carmack cases, and vice versa, and defendants do not offer a single reason why the characteristic of the damage test should not be applied in a Carmack case.

Second, Sompo has adduced unrefuted evidence that the goods were inspected prior to shipment, passed inspection, and were placed in containers designed to withstand the normal rigors of transport. This is circumstantial evidence that the goods were in good condition when delivered to defendants. See Caemint Food, Inc., 647 F.2d at 354 n. 6 (noting that plaintiff could prove cargo in good condition when delivered by showing cargo was “prepared and packaged in accordance with proper procedures and [was] carried to the ship under conditions that should have prevented any damage to the contents en route”).

Third, there is no evidence in the record to even suggest that the damage to the cargo was caused by anything other than the violent derailment of the train in Texas. Sompo has submitted evidence that, at each stage of the cargo’s journey, no irregularities were reported. Defendants devote the majority of their brief to arguing that something other than the derailment could conceivably have caused the damage, but notably absent is any evidence as to what that something could be. At the end of the day defendants’ argument amounts to nothing other than “fanciful assumptions that the harm might possibly have occurred outside the defendants’ control,” Transatlantic Marine Claims Agency, 137 F .3d at 99, and such “fanciful assumptions” are insufficient to defeat summary judgment.

Defendants devote pages and pages of their brief to a hair-splitting argument to the effect that the mere fact that no incidents were reported does not mean that no incidents occurred. This is, of course, true, but the fact that no incidents were reported during shipment is surely circumstantial evidence that no incidents occurred.

The primary argument defendants advance is that Sompo cannot meet its burden as to the first element because Sompo has adduced no evidence that the cargo was stopped at each stage of transport, the seals of the cargo broken, and an inspection performed. Defendants do not, however, point to a single case that requires a shipper to make any such showing to meet its burden. Indeed, the cases are legion holding that a shipper can satisfy its burden under Carmack even without eyewitness testimony as to the condition of the goods. See, e.g., Sec. Ins. Co. v. Old Dominion Freight Line, Inc., 391 F.3d 77, 84 (2d Cir.2004) (shipper can satisfy first Carmack element through direct or circumstantial evidence); A.I.G. Uruguay Compania de Seguros, S.A. v. AAA Cooper Transp., 334 F.3d 997, 1004 (11th Cir.2003) (same); Nat’l Transp., Inc. v. Inn Foods, Inc ., 827 F.2d 351, 354 (8th Cir.1987) (same).

As Sompo points out, the reason no court has so held is that such a requirement would grind international commerce to a halt.

Accordingly, I conclude that a reasonable jury could only find that the goods were delivered to defendants in good condition.

Defendants also argue at length that Sompo has failed to adduce evidence to prove that the derailment caused the damage to the cargo. Defendants cite no case holding that causation is a required element under Carmack, however, because there is no such requirement. A plaintiff need only prove the three elements discussed above to make a prima facie case under Carmack.

b. Arrival in Damaged Condition

Defendants challenge Sompo’s evidence that two of the three containers in which the ice makers and sushi cases were shipped were damaged upon arrival. Defendants’ argument is without merit.

After the derailment, the ice makers and sushi cases were inspected by John Venneman, a marine surveyor. His initial inspection revealed that the majority of the ice makers and sushi cases were damaged beyond repair and were therefore a total loss. (Venneman Report at 5-6). As to the remaining cargo, he stated that his inspection did not reveal any apparent damage, but that, after receiving communications from the manufacturer and the assured, he concluded that all three containers were a total loss. (See id. at 7).

Defendants quibble with this evidence on a number of meritless grounds, and ultimately appear to argue that some of the cargo could have been salvaged. The law is clear, however, that any loss in value that is “more than trivial” is sufficient to meet the damages requirement under Carmack. See Atl. Mut. Ins. Co. v. CSX Lines, L.L.C., 432 F.3d 428, 435 (2d Cir.2005) (holding that “evidence of more than trivial loss in market value-as measured by the difference between (a) the market value of the goods in question in the condition in which they should have arrived at their destination, and (b) the market value of the goods in the condition in which they actually arrived-is sufficient to prove that a plaintiff’s cargo was damaged upon delivery. And, in itself, such evidence meets the ‘damages’ requirement for a prima facie case of liability under COGSA.”). There cannot be any dispute, however, that the loss in value to the ice makers and sushi cases was “more than trivial,” because they were ultimately declared a total loss.

Based on this evidence, no reasonable jury could conclude that the ice makers and sushi cases were not in damaged condition upon delivery.

c. Damages

There is only one dispute as to damages. As to the Kubota tractors, Sompo seeks damages in the amount of $979,393.14. As defendants point out, Sompo states that it paid its assured $955,441 .22 and its adjuster $13,951.92, the total of which is $969,393.14. Sompo explained in its reply, however, that the additional $10,000 represents a $10,000 deductible under Sompo’s insured’s policy. In other words, the insured-and not Sompo-bore the first $10,000 of the loss. Sompo cites one case for the proposition that it is entitled to recover for its insured’s deductible, but the case cited says no such thing. In Amstar Corp. v. M/V Alexandros T., the Court held that “damages must be measured in terms of the economic loss to the plaintiff, not by what may have been paid to the plaintiff under an insurance contract.” 472 F.Supp. 1289, 1296 (D .Md.1979). Here, Sompo’s economic loss is the actual amount it paid to its insured on the policy-$969,393.13-and that is all it is entitled to recover.

Defendants raised one other issue, but that was evidently based on a typographical error that Sompo corrected in its reply brief.

d. Defendants’ Burden

As discussed above, Sompo has established a prima facie case under Carmack, and no reasonable jury could disagree. The burden now shifts to defendants to show (1) that they did not act negligently, and (2) that the damage was caused by an exception to carrier liability under Carmack.

Defendants acknowledge that the derailment does not fall within one of the exceptions to carrier liability under Carmack. (Defs. Opp. at 25 n. 8). Because defendants cannot meet their burden without demonstrating that one of the exceptions applies, judgment is entered in Sompo’s favor on its Carmack claim.

C. Pre-Judgment Interest

Sompo moves for pre-judgment interest, and defendants do not appear to contest it. “Although the allowance of prejudgment interest in admiralty is said to be a matter committed to the trial court’s discretion, it should be granted in the absence of exceptional circumstances.” Mitsui & Co. v. Am. Export Lines, Inc., 636 F.2d 807, 823 (2d Cir.1981) (citations omitted). There are no exceptional circumstances present here, and Sompo is therefore entitled to pre-judgment interest, calculated at the rate of 9% per annum.

Sompo requests that the interest begin to run as of April 23, 2006, the date of loss. The law is clear, however, that interest does not begin to run until the date on which the goods should have been delivered by the carrier. Id. at 824 (“The case law is overwhelmingly to the effect that, both in land and in sea carriage, prejudgment interest is ordinarily awarded from the time when destroyed or lost goods should have been delivered by the carrier.”). Sompo does not indicate in its papers when the goods were to be delivered, and thus pre-judgment interest cannot be calculated at this time.

D. Attorneys’ Fees

Sompo moves for attorneys’ fees, arguing that defendants’ opposition to Sompo’s motion is so frivolous as to warrant sanction.

An award of attorneys’ fees is only appropriate where a party acts in bad faith, or with an improper purpose, such as a desire to delay or harass. See generally Revson v. Cinque & Cinque, P.C., 221 F.3d 71 (2d Cir.2000). Here, while defendants’ arguments border on the frivolous, and it is difficult to understand how defendants could make the arguments they have put forth, I cannot conclude that they acted in bad faith in putting forth a defense. Accordingly, Sompo’s motion for attorneys’ fees is denied.

II. Nipponkoa

For the reasons that follow, defendants’ motion for summary judgment is granted as to Nipponkoa’s common law claims, and denied as to Nipponkoa’s Carmack claim.

A. Nipponkoa’s Common Law Claims

Defendants move for summary judgment dismissing Nipponkoa’s common law claims, on the ground that such claims are preempted by Carmack. Nipponkoa concedes that such claims are preempted, and they are therefore dismissed. Nipponkoa’s only remaining claim is under Carmack.

B. Nipponkoa’s Carmack Claim

Defendants move for summary judgment only as to the first element required for a Carmack claim-namely, that the goods were delivered to defendants in good condition. Nipponkoa does not cross move for summary judgment.

For the same reasons discussed above in the context of Sompo, defendants’ motion is denied, as Nipponkoa has adduced sufficient circumstantial evidence that the auto and engine parts were delivered to defendants in good condition. The characteristic of the damage that occurred is consistent with a train derailment, there is evidence that the goods were inspected and properly packed prior to shipment, and there is no evidence of any irregularities during shipment prior to the derailment. Based on this evidence, a reasonable jury could only find that Nipponkoa delivered the goods to defendants in good condition. Accordingly, defendants’ motion for summary judgment dismissing Nipponkoa’s Carmack claim is denied.

Because I conclude that the circumstantial evidence is sufficient to establish that the goods were delivered in good condition, I do not consider Nipponkoa’s alternative argument that the so-called “last carrier rule” compels the same conclusion.

CONCLUSION

For the foregoing reasons, defendants’ motion for summary judgment in Nipponkoa Insurance Co., Ltd. v. Norfolk Southern Railway Co. et al., No. 07 Civ. 10498(DC), is granted in part and denied in part. The parties in Nipponkoa shall appear for a pretrial conference on September 25, 2009 at 2:00 p.m. in Courtroom 11A.

Sompo’s motion for summary judgment in Sompo Japan Insurance, Inc. et al. v. Norfolk Southern Railway Co. et al., No. 07 Civ. 2735(DC), is granted, and defendants’ is denied. Judgment will be entered in favor of Sompo and against defendants in the amount of $1,585,351.26, plus pre-judgment interest as well as costs. Sompo shall submit a proposed judgment that includes a pre-judgment interest calculation, on notice, within five business days hereof.

SO ORDERED.