United States District Court,

D. Connecticut.

ENSIGN YACHTS, INC, Plaintiff,

v.

Jon ARRIGONI et al., Defendants.

 

Civil Action No. 3:09–cv–209 (VLB).

Aug. 3, 2011.

 

Frederick A. Lovejoy, Lovejoy & Associates, Easton, CT, for Plaintiff.

 

Michael P. Kenney, Steven H. Malitz, Leclairryan, Hartford, CT, for Defendants.

 

MEMORANDUM OF DECISION DENYING PLAINTIFF AND THIRD PARTY DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANTS JON ARRIGONI AND LLOYDS OF LONDON [Doc. # 224] AND DENYING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AGAINST DEFENDANT JON ARRIGONI [Doc. # 228]

VANESSA L. BRYANT, District Judge.

Before the Court are motions for summary judgment filed by the plaintiff / counter claim defendant Ensign Yachts, Inc. (“Ensign”) and third-party defendant James Ross (“Ross”), president of Ensign. In the first motion, Ensign and Ross seek summary judgment with respect to the fraud claims asserted against them by counter claimant / third party plaintiff Lloyds of London (“Lloyds”) and defendant / counter claimant / cross claimant Jon Arrigoni (“Arrigoni”). [Doc. # 224]. In the second motion, Ensign seeks summary judgment on its claim against Arrigoni pursuant to the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706. For the reasons stated hereafter, both motions are DENIED.

 

I. FACTUAL BACKGROUND

The following facts relevant to the instant motions are undisputed unless otherwise noted. This matter involves the overland transport of a 2008 Model Year 55′ Cigarette Super Yacht (the “Yacht”). The Yacht was designed and manufactured as part of a joint venture between Ensign and Skip Braver (“Braver”) of Cigarette Racing, LLC (“Cigarette”). Ensign’s Local Rule 56(a)(1) Statement of Undisputed Facts [Doc. # 229] (hereinafter “Pl. Rule 56(a)(1) Statement”) ¶ 3. The Yacht was constructed in Turkey and thereafter was imported into the United States in mid–2007 via the port of Miami, Florida, and federally documented with the United States Coast Guard on June 14, 2007. Id. ¶ 5. Ensign claims that the cost of constructing the Yacht and transporting and importing it into the United States was $1 million. Id. ¶ 4. After the Yacht was imported, it was navigated by water from Miami to Stamford, Connecticut so that it could be marketed and sold. Id. ¶ 6.

 

Braver and Cigarette quit the joint venture in November 2007 because of a dispute with Ross regarding the distributor used to produce the Yacht. Ross Depo. [Doc. # 253–1] at 158–59. Braver had wanted the Yacht constructed with a distributor in Italy, rather than the company used in Istanbul, Turkey. Id. As a result of Braver’s withdrawal from the venture, no additional Yachts of the same model were produced. Id.

 

Ensign claims that, in late 2007, it entered into a brokerage agreement with XTreme Games Watersports (“XTreme”), a company in the French West Indies, to attempt to sell the Yacht on Ensign’s behalf. Id. ¶ 8. Ensign further claims that XTreme identified Masterski Pilou Agency (“Masterski”) as a buyer, and that a contract to purchase the Yacht for the price of $1.2 million was entered into by the parties. Id. ¶ 9. Ensign submits as evidence a purchase agreement dated December 15, 2007 bearing the purported signature of Philippe Brun (“Brun”), principal of Masterski. Yacht Purchase Agreement [Doc. # 65], Exh. 2. According to Ensign, Brun emailed XTreme’s principal Fabrice Fontanez (“Fontanez”) on November 27, 2007 indicating that Masterski and its investors were interested in purchasing the Yacht. Ensign and Ross’ Local Rule 56(a)(1) Statement of Undisputed Facts [Doc. # 225] (hereinafter “Pl./Third Party Def. 56(a)(1) Statement) ¶ 11. Ensign claims that negotiations concerning price took place immediately thereafter. Id. ¶ 12. In anticipation of a sale, Ross created a template of the purchase agreement on December 7, 2007. Id. ¶ 13. Ensign claims that, on December 12, 2007, Brun sent an email to Fontanez stating, “Try to contact your friends as soon as possible because they [Masterski’s investors] are in agreement to the purchase of the 55′ Cigarette.” Id. ¶ 14. This email as well as others between Brun and Fontanez were originally written in French; Ensign submits uncertified English-language translations prepared by a translator familiar with French “street slang” and verified by Fontanez. Id. ¶¶ 11, 14, 16. After receiving notification from Fontanez that Masterski had agreed to purchase the Yacht on December 12, 2007, Ross sent Masterski a copy of the purchase agreement for signature, along with specifications for the Yacht, an invoice, and bank wiring instructions. Id. ¶ 15. On December 15, 2007, because Ensign had not received back an executed purchase agreement from Masterski, Ross sent a copy of the purchase agreement to Fontanez so that he could arrange for its execution by Masterski. Id. ¶ 17. Fontanez testified that he in turn transmitted the purchase agreement to Masterski for execution, that he received an executed copy bearing Brun’s signature back within one week, and that he then sent the executed agreement to Ross. Id. ¶¶ 18–20.

 

Lloyds and Arrigoni dispute that Ensign had a contract to sell the Yacht to Masterski, and claim that the purchase agreement submitted by Ensign which contains Brun’s signature is a forgery. In support of this contention, they cite the deposition testimony of Brun, principal of Masterski. Brun testified that he never signed, received, or even saw a contract to purchase the Yacht from Ensign, and that he never told either Ross or Fontanez that he was going to purchase the Yacht. Brun Depo. [Doc. # 253–3] at 41–42. Brun further testified that although he was interested in purchasing the Yacht and wanted to begin negotiations with Ensign, he first needed to obtain a Certificate of European Compliance for the Yacht, which is required in order to register a vessel in the French West Indies. Id. at 35, 43. Brun testified that he emailed Ross directly on December 12, 2007 and requested him to provide a Certificate of European Compliance. Id. at 43. He also spoke to Ross the following day and explained that he needed written proof that the Yacht conformed with European, not just American, safety and other security requirements. Id. at 49. However, Brun never received the Certificate of European Compliance, and had no further communications with Ross. Id. at 50.

 

In addition, Lloyds and Arrigoni contest Fontanez’s translation of the December 12, 2007 email. According to a certified translation obtained by Lloyds, the email actually says that Brun and his investors are “eager to buy” or “hot to buy” the vessel, not that they are “in agreement” to do so. Lloyds’ Exh. J [Doc. # 263–10]; Arrigoni Exh. A [Doc. # 240]. Lloyds and Arrigoni also note that a “computer log” that Ensign has submitted which displays the dates that documents from Ross’s computer were “created” and “last modified” shows that Ross did not create the purchase agreement until December 15, 2007, contradicting Ross’s contention that he drafted the agreement on December 7, 2007 and emailed it to Masterski on December 12, 2007. See Computer Log [Doc. # 201], Exh. A. In addition, Lloyds and Arrigoni point out that in the December 12, 2007 email itself, Ross states that he is attaching three documents—a commercial invoice, specifications for the Yacht, and wire transfer information—but makes no mention whatsoever of the purchase agreement. See [Doc. # 201], Exh. B. Finally, Ross himself testified during his deposition that he created the purchase agreement on December 15, 2007 and that prior to that date he had not sent an agreement for execution by Masterski. Ross Depo. [Doc. # 263–4] at 101–02.

 

In early December 2007, Ross first contacted Arrigoni regarding possible transport of the Yacht from Stamford to Miami. Pl. Rule 56(a)(1) Statement ¶ 10. Arrigoni is a federally registered motor carrier specializing in the overland transport of marine vessels. Id. ¶ 2. Ensign claims that the reason Ross contacted Arrigoni at this time was to meet Ensign’s obligation under the purchase agreement to deliver the Yacht to Masterski in the French West Indies by midJanuary 2008. Id. ¶ 10. Ensign further claims that Ross advised Arrigoni that he had a contract to sell the Yacht that required immediate delivery to Florida. Id. ¶ 11. Arrigoni testified, however, that Ross never told him whether or not the Yacht had been sold and did not indicate the reason he was moving the Yacht to Florida. Arrigoni Depo. [Doc. # 253–4] at 25. Thereafter, Arrigoni and Ensign entered an agreement whereby Arrigoni agreed to transport the Yacht to Miami for the price of $11,500. Pl. 56(a)(1) Statement ¶ 13. On December 7, 2007, Arrigoni issued an invoice for the transport to Cigarette, and Cigarette sent him a down payment of $4,000. Id. ¶ 19. The balance was to be paid upon Arrigoni’s successful delivery of the Yacht to Florida. Id. ¶ 19.

 

Arrigoni requested that Ensign move the Yacht to New Jersey for pick-up so that he would not have to obtain oversize permits for the State of Connecticut and could avoid transporting the Yacht through the New York metropolitan area. Id. ¶ 15. Pursuant to Arrigoni’s request, Ross and Robert Gardella navigated the Yacht, by water, to Liberty Landing Marina in Jersey City, New Jersey. Id. ¶ 16. On December 12, 2007, Arrigoni accepted the Yacht at Liberty Landing Marina in good order and condition and loaded it onto his trailer for transport. Id. ¶¶ 17–18. The original plan was to deliver the Yacht to Coconut Grove Marina in Miami. Arrigoni Depo. [Doc. # 253–4] at 53. However, while in transit Arrigoni learned that he would be unable to deliver the Yacht to Coconut Grove Marina because of its height, weight, and width. Id . Therefore, he arranged an alternate delivery point at Bill Fish Marina in Fort Lauderdale, Florida. Id.

 

On December 14, 2007, the Yacht was damaged during transport by Arrigoni when it became partially dislodged from his trailer and came into contact with the road surface. Arrigoni Depo. [Doc. # 235] at 165–66. Ensign claims that Arrigoni thereafter called and advised that he had delivered the Yacht to Bill Fish Marina rather than the agreed upon location of Coconut Grove Marina, and that Arrigoni asked if he could go to the Cigarette facility in Miami to obtain the outstanding balance due to him for the transport before he left Florida. Pl. 56(a)(1) Statement ¶ 21. According to Ensign, it learned for the first time that the Yacht had been damaged when it was contacted by Bill Fish Marina. Id. ¶ 22. Arrigoni testified, however, that he notified a Cigarette representative with whom he was dealing at the time that he would be unable to deliver the Yacht to Coconut Grove Marina and obtained his approval to deliver it to Bill Fish Marina instead. Arrigoni Depo. [Doc. # 253–4] at 52–58. Arrigoni further testified that he informed his contact at Cigarette that the Yacht had sustained damaged to its propellor shaft on the date of delivery.

 

After the Yacht was damaged, Ensign contacted Lloyds, Arrigoni’s cargo insurer, in an attempt to obtain the proceeds necessary to repair the Yacht. Pl. 56(a)(1) Statement ¶ 28. Lloyds assigned a surveyor who surveyed the Yacht in Florida in its damaged condition. Id. ¶ 30. A lengthy claims process ensued, during which Ensign dealt directly with The Penobscot Group, Inc., the local affiliate of Lloyds. Lloyds ultimately denied coverage in July 2008.

 

Ensign claims that, in order to avoid losing its sale of the Yacht to Masterski, immediately after learning of the damage it contacted Norseman Shipbuilding Corporation (“Norseman”) to perform the necessary repairs. Id. ¶ 32. According to Ensign, Masterski nevertheless cancelled its contract to purchase the Yacht when Ensign could not provide an estimated date of delivery. Id. ¶ 34. As discussed previously, Lloyds and Arrigoni dispute that Ensign ever had a contract to sell the Yacht to Masterski, and claim that the purchase agreement produced by Ensign in this litigation is a forgery.

 

Norseman completed its initial repairs on March 3, 2008 and billed Ensign for its services. Id. ¶ 35. Ensign did not have the funds to pay Norseman, however, and Norseman commenced an admiralty action in the United States District Court for the Southern District of Florida in which it had the Yacht arrested to secure its maritime lien that arose as a result of its repairs. Id . ¶ 36. Finally, in the summer of 2008, Ensign was able to find a private lender to loan it the funds to pay Norseman, and the Yacht was released from its arrest by the district court on August 8, 2008. Id. ¶¶ 38–39. Final repairs on the Yacht were then completed, and Ensign placed the Yacht on the market for sale. Id . ¶ 44.

 

On October 14, 2008, Ensign entered into a contract with Enpro International, Inc., through broker Monaco Bay, Inc., to sell the Yacht for the sum of $750,000. Id. ¶ 42. The closing took place on December 2, 2008.

 

Ensign calculates its damages under the Carmack Amendment using two different measures. First, under its “diminution in value” measure, Ensign calculates damages based upon the fair market value of the Yacht had Arrigoni delivered it undamaged and the value of the Yacht upon delivery in its damaged condition. See Damages Analysis [Doc. # 232]. Ensign claims that fair market value of the Yacht in its original condition was $1.25 million, and that its damaged/salved value was $450,000, resulting in total damages of $800,000, plus interest. Id. Ensign’s sole support for the market value and salved value figures is the affidavit of Ross. Ross Affidavit [Doc. # 59] ¶¶ 51, 55. Ross does not explain in his affidavit what factors he used to arrive at his assessment of the fair market value of the Yacht. Arrigoni contests Ross’s valuation of the Yacht. Arrigoni contends that the Yacht was the first of its kind and the only one ever built. Arrigoni’s Local Rule 56(a)(3) Statement [Doc. # 253] ¶ 14. Arrigoni further contends that the Yacht was extensively marketed for many months yet not a single purchase offer for the Yacht was ever received. Id. Therefore, according to Arrigoni, Ross has no basis for his assertion that the market value of the Yacht was $1.25 million.

 

Ensign also submitted the affidavit of Ronald A. Bethel (“Bethel”) in support of its diminution in market value measure of damages. [Doc. # 233]. However, on June 25, 2011, the Court ordered Bethel’s affidavit stricken from the record because it had been submitted in violation of a previous order prohibiting Ensign from substituting a new expert witness for Ross. [Doc. # 308]. Therefore, the Court will not consider Bethel’s affidavit in deciding this motion.

 

Second, under its “loss of sale/lost profits” measure, Ensign calculates damages based upon the purported lost sale to Masterski along with the cost of repairs, storage, surveying, detailing, obtaining a public adjuster, borrowing money to recover the Yacht from arrest, and related expenses. See Damages Analysis [Doc. # 232]. Based upon this measure, Ensign claims damages in the total amount of $659,063.71, plus interest. Id. Arrigoni disputes the largest element of Ensign’s damages calculation under this theory, i.e., loss of sale damages in the amount of $450,000. As noted above, Arrigoni contends that Ensign never had a contract to sell the Yacht to Masterski, and claims that the purchase agreement produced by Ensign in this litigation in support of its loss of sale damages is a forgery.

 

II. RELEVANT PROCEDURAL BACKGROUND

Ensign initiated suit against Arrigoni, Lloyds, and the Saperstein Agency, Inc. (“Saperstein”)  on February 4, 2009. On March 16, 2009, Ensign filed an amended complaint as a matter of course. [Doc. # 11]. In the amended complaint, Ensign asserted causes of action against Arrigoni for breach of contract, violation of the Carmack Amendment, breach of implied contract, negligence, breach of the covenant of good faith and fair dealing, loss of sale, and violation of the Connecticut Unfair Trade Practices Act (“CUTPA”), and against Lloyds for breach of contract, bad faith, breach of the covenant of good faith and fair dealing, fraud, and breach of the Connecticut Unfair Insurance Practices Act (“CUIPA”) and CUTPA (a so-called “CUIPA through CUTPA” claim). Id. On March 11, 2010, the Court dismissed all claims against Arrigoni other than the Carmack Amendment claim on the basis of Carmack preemption. [Doc. # 110]. The Court also dismissed the fraud and loss of sale claims against Lloyds. Id.

 

All claims against Saperstein were dismissed with prejudice pursuant to stipulation of the parties on July 2, 2010. [Doc. # 156].

 

On June 18, 2010, Lloyds filed its answer to Ensign’s amended complaint, along with a counterclaim against Ensign for fraud. [Doc. # 146]. Lloyds’s basis for asserting the fraud claim was that the purported contract for sale of the Yacht between Ensign and Masterski that Ensign relies upon to support a portion of its damages is fraudulent. Id. On July 7, 2010, Lloyds filed a third party complaint asserting a fraud claim against Ross based upon the same allegedly fraudulent contract. [Doc. # 158]. On July 9, 2010, Arrigoni filed his answer to Ensign’s amended complaint, along with counterclaims against Ensign sounding in fraud as well as breach of contract and tortious interference. [Doc. # 159]. On August 11, 2010, Arrigoni also filed a cross-claim for fraud against Ross. [Doc. # 178].

 

Ensign filed the present motion for summary judgment on its Carmack Amendment claim against Arrigoni on November 10, 2010. [Doc. # 224]. On the same day, Ensign and Ross filed their motion for summary judgment with respect to the fraud claims asserted by Arrigoni and Lloyds. [Doc. # 228]. Lloyds also filed a motion for summary judgment as to all remaining claims asserted against it by Ensign. [Doc. # 210]. On July 15, 2011, the Court granted Lloyds’s motion and thereby dismissed all of Ensign’s remaining claims against Lloyds. [Doc. # 319]. Accordingly, Lloyds remains in this case only as a counter claimant against Ensign and a third party plaintiff against Ross.

 

III. STANDARD OF REVIEW

Summary judgment should be granted “if the movant shows that there is no genuine dispute as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The Court “construe[s] the evidence in the light most favorable to the non-moving party and … draw[s] all reasonable inferences in its favor.” Huminski v. Corsones, 396 F.3d 53, 69–70 (2d Cir.2004). “[I]f there is any evidence in the record that could reasonably support a jury’s verdict for the non-moving party, summary judgment must be denied.” Am. Home Assurance Co. v. Hapag Lloyd Container Linie, GmbH, 446 F.3d 313, 315 (2d Cir.2006) (internal quotation marks omitted). “The moving party bears the burden of showing that he or she is entitled to summary judgment.” Huminski, 396 F.3d at 69. “[T]he burden on the moving party may be discharged by ‘showing’—that is pointing out to the district court—that there is an absence of evidence to support the nonmoving party’s case.”   PepsiCo, Inc. v. Coca–Cola Co., 315 F.3d 101, 105 (2d Cir.2002). “If the party moving for summary judgment demonstrates the absence of any genuine issue as to all material facts, the nonmoving party must, to defeat summary judgment, come forward with evidence that would be sufficient to support a jury verdict in its favor.” Burt Rigid Box, Inc. v. Travelers Prop. Cas. Corp., 302 F.3d 83, 91 (2d Cir.2002).

 

IV. DISCUSSION

A. Arrigoni and Lloyds’ fraud claims

Arrigoni and Lloyds assert fraud claims against Ensign and Ross based upon the purchase agreement between Ensign and Masterski which Ensign produced during the course of this litigation in support of its claim for lost sale damages. Ensign and Ross move for summary judgment with respect to the fraud claims, arguing that there is insufficient evidence in the record to prove that they committed fraud.

 

A party asserting a claim for fraud must prove the following four elements: “(1) a false representation was made as a statement of fact; (2) the statement was untrue and known to be so by its maker; (3) the statement was made with the intent of inducing reliance thereon; and (4) the party relied on the statement to his detriment.” Muller v. Muller, 43 Conn.App. 327, 337–38 (1996).

 

There are clearly genuine issues of material fact that preclude summary judgment on Arrigoni and Lloyds’ fraud claims. The parties present conflicting evidence regarding the existence of a contract between Ensign and Masterski for sale of the Yacht. According to Ensign’s version of the events, Fontanez discovered Masterski as a potential buyer for the Yacht and, following correspondence between the parties, Masterski agreed to purchase the Yacht for the sum of $1.2 million on December 12, 2007. Ensign claims that Ross then sent a copy of the purchase agreement which he had previously drafted to Masterski for execution. Having not received an executed copy back as expected, on December 15, 2007, he transmitted another copy to Fontanez so that he could arrange for its execution by Masterski. Fontanez testified that he sent the purchase agreement to Masterski and received an executed copy bearing Brun’s signature back within one week, which he in turn transmitted to Ross.

 

Lloyds and Arrigoni present countervailing evidence that Masterski never actually agreed to purchase the Yacht. Brun testified that he never signed, received, or even saw a contract to purchase the Yacht from Ensign, and that he never told either Ross or Fontanez that he was going to purchase the Yacht. Brun explained that he needed to obtain a Certificate of European Compliance verifying that the Yacht could be registered in the French West Indies before commencing negotiations with Ensign to purchase the Yacht. Based upon the conflicting testimony of Ross and Fontanez on the one hand, and Brun on the other, there is a genuine dispute regarding the authenticity of the purchase agreement submitted by Ensign. If the trier of fact were to credit Lloyds and Arrigoni’s version of the events and find the purchase agreement to be a forgery, this would certainly qualify as a false representation.

 

In support of its claim that it had a valid contract with Masterski, Ensign also points to the December 12, 2007 email from Brun to Fontanez, originally written in French, in which Brun purportedly stated that Masterski and its investors were “in agreement” to purchase the Yacht. However, Lloyds and Arrigoni have called the validity of Ensign’s uncertified translation of this email into doubt. According to certified translations submitted by Lloyds and Arrigoni, the email in question actually says that Brun and his investors were “eager to buy” or “hot to buy” the Yacht, not that they were “in agreement” to do so. Thus, the true import of Brun’s words is in question.

 

Ensign argues, however, that even if the purchase agreement was forged, Lloyds and Arrigoni cannot sustain their fraud claims because there is insufficient evidence that Ensign and Ross had anything to do with the forgery. The Court disagrees. There is sufficient evidence from which a trier of fact could find that Ensign and Ross were responsible for creating the allegedly fraudulent purchase agreement, and that they did so knowingly and with the intent to induce reliance by Lloyds and Arrigoni. Although Ross maintains that Masterski agreed to purchase the Yacht on December 12, 2007, Lloyds and Arrigoni have presented evidence that Brun emailed Ross on that same date and requested that he provide a Certificate of European Compliance. Brun also testified that he spoke directly to Ross the following day and explained that he needed proof that the Yacht conformed to European safety and security requirements so that it could be registered in the French West Indies. Therefore, there is evidence that on both December 12 and 13, 2007, Brun communicated to Ross directly his inability to commit to purchase the Yacht until he obtained the necessary certificate.

 

In addition, documentary evidence in the record contradicts Ensign’s versions of the relevant events. Ensign claims that Ross created the purchase agreement using his computer on December 7, and emailed it to Brun on December 12, 2007. However, the “computer log” submitted by Ensign which displays the dates that documents from Ross’s computer were “created” and “last modified” clearly shows that Ross did not create the purchase agreement until December 15, 2007. Therefore, Ross could not have emailed the purchase agreement to Masterski on December 12, 2007, as he claims he did. Furthermore, in the December 12, 2007 email itself, Ross states that he is sending three attachments-a commercial invoice, specifications for the Yacht, and wire transfer information. There is no mention, however, of the purchase agreement. Finally, Ross himself testified during his deposition that he created the purchase agreement on December 15, 2007 and that prior to that date he had not sent an agreement for Masterski’s execution. The discrepancies between Ross’s current assertions and the documentary evidence contained in the record gives rise to an inference of fraudulent intent on the part of Ross himself that precludes the entry of summary judgment in his and Ensign’s favor.

 

Finally, Ensign argues that Lloyds and Arrigoni did not rely upon the purchase agreement in any manner. This is patently false. Lloyds and Arrigoni have relied upon the purchase agreement to their detriment by, among other things, expending the time and effort necessary to litigate this case. This includes the legal fees and costs incurred in securing Brun’s deposition testimony and preparing for and attending Fontanez’s deposition, the costs associated with defending against Ensign’s claim for lost sale damages, and the continuing cost of pursuing their fraud claims against Ensign and Ross. Furthermore, the Court entered a prejudgment remedy against Arrigoni in the amount of $728,726.72 based upon the damages Ensign allegedly incurred due to his negligence, the most substantial component of which was lost profits based upon Masterski’s purported cancellation of the purchase agreement. [Doc. # 97].

 

B. Ensign’s Carmack Amendment claim

Ensign’s sole remaining claim in this case is a Carmack Amendment claim against Arrigoni for damages to the Yacht sustained while in Arrigoni’s custody during transport. Ensign moves for summary judgment with respect to its Carmack Amendment claim, arguing that it has established all of the elements of this claim as a matter of law.

 

“The Carmack Amendment governs the liability of common carriers on bills of lading. A bill of lading is a transportation contract between a shipper/consignor (i.e., a seller of goods) and a carrier. The person named in the bill of lading as the person ‘to whom or to whose order the bill promises delivery’ is the consignee.” Paper Magic Group, Inc. v. J.B. Hunt Transp., Inc. 318 F.3d 458, 461 (3rd Cir.2003) (citations omitted). “To make a prima facie case under the Carmack Amendment, a plaintiff must show 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). “If the plaintiff establishes the prima facie case, the burden shifts to the defendant to show both that it was free from negligence and that the damage to the cargo was due to one of the excepted causes relieving the carrier of liability.” REI Transp., Inc. v. C.H. Robinson Worldwide, Inc., 519 F.3d 693, 699 (7th Cir.2008). The “excepted causes” are “acts of God, the public enemy, the act of the shipper himself, public authority, or the inherent vice or nature of the goods.” Project Hope, 250 F.3d at 74 n. 6.

 

Arrigoni does not dispute that he received the Yacht in good condition or that it arrived at its destination in damaged condition. Therefore, the first two elements of the prima facie case are established. Arrigoni argues, however, that there are genuine issues of material fact regarding the third element, the amount of damages caused by the loss. Liability having been conceded, the only issue remaining on the Carmack claim is damages.

 

Arrigoni also asserts a Carmack affirmative defense, arguing that the damage was caused by the “inherent nature” of the Yacht. However, on June 27, 2011, the Court granted Ensign’s motion to strike Arrigoni’s inherent nature defense on the bases that Arrigoni waived the defense by failing to timely plead it in his answer, that the defense is inapplicable on the facts of this case, and that Arrigoni spoliated evidence relevant to the defense by discarding the wooden blocks and damaged cross-member used in transporting the Yacht. [Doc. # 310]. Therefore, the inherent nature defense is no longer at issue in this case.

 

The Carmack Amendment imposes liability for “actual loss or injury to the property[.]” 49 U.S.C. § 14706. The ordinary measure of damages under the Carmack Amendment is the difference between the market value of goods at the time of delivery and their market value had they arrived in good order at the time they were meant to be delivered. Jessica Howard Ltd. v. Norfolk Southern Railroad Co., 316 F.3d 165, 168–69 (2d Cir.2003). However, “[t]he market discount theory is not the exclusive measure of damages” under Carmack.   Thyssen, Inc. v. S/S Euronity, 21 F.3d 533, 540 (2d Cir.1994). A different method may be applied “if circumstances suggest a more appropriate alternative.” Jessica Howard, 316 F.3d at 171; see also Great Atlantic & Pacific Tea Co. v. The Atchison, 333 F.2d 705, 707–08 (1964) (“Since the market value rule is merely a method, it is not to be applied in cases where it is demonstrated that another rule will better compute actual damages.”). For instance, the Second Circuit has approved the award of repair or replacement costs as an alternative measure of damages in the absence of an open market from which a fair market value could be set. Project Hope, 250 F.3d at 77. The Carmack Amendment also permits recovery of lost profits unless they are speculative. Camar Corp. v. Preston Trucking Co., Inc., 221 F.3d 271, 277 (1st Cir.2000).

 

Here, Ensign asserts that Arrigoni is liable under the Carmack Amendment for an amount of damages equal to either (1) a “diminution in market value method,” which it describes as the difference between the fair market value of the Yacht, had it been delivered undamaged, and the Yacht’s damaged/salved value, in the amount of $800,000, plus interest; or (2) a “lost sale/profits method,” which includes replacement/repair damages and loss of profit damages, in the sum of $659,063.71, plus interest.

 

The Court holds that there are questions of material fact under either of Ensign’s damages theories. First, Ensign’s diminution in market value measure relies solely upon the affidavit of Ross. In his affidavit, Ross summarily asserts that the fair market value of the Yacht was $1.25 million, and that its damaged/salved value was $450,000. However, Ross’s affidavit contains no analysis whatsoever as to how he arrived at these valuation figures. In addition, Ross’s valuation of the Yacht is contested by Arrigoni, who contends that Ross is unqualified to provide an assessment of the market value of a Yacht for which there was in fact no market. Arrigoni cites evidence that the Yacht was a one-of-a-kind luxury vessel which was extensively marketed for many months and on which not a single purchase offer was ever received. Furthermore, Ross’s credibility has been called into question based upon evidence in the record that Ross may have intentionally misrepresented the existence of a purchase agreement between Ensign and Masterski. Accordingly, there is a genuine factual dispute for trial regarding the market value of the Yacht.

 

Second, Ensign’s repair/replacement costs plus “lost sale/profits” method of calculating damages relies substantially on the contract that Ensign claims it had entered to sell the Yacht to Masterski. The lost profits resulting from the purported sale to Masterski accounts for $450,000 of the $659,063.71 in damages claimed by Ensign under this method. However, as discussed above, there is evidence in the record that the purchase agreement submitted by Ensign in support of its lost sale damages is a forgery and that Ensign never in fact had a contract with Masterski for sale of the Yacht. See supra Section IV.A. Therefore, Ensign cannot establish its damages under the “lost sale/profits” method as a matter of law. Whether or not Ensign had a contract with Masterski is a genuine issue of material fact that must be determined at trial.

 

V. CONCLUSION

Based on the above reasoning, Ensign and Ross’ motion for summary judgment against Arrogoni and Lloyds with respect to their fraud claims [Doc. # 224] is DENIED. Ensign’s motion for summary judgment on its Carmack Amendment claim against Arrigoni [Doc. # 228] is also DENIED. This case will proceed to trial on Ensign’s Carmack Amendment claim against Arrigoni and Arrigoni and Lloyds’ fraud claims in accordance with the Court’s June 30, 2010 Scheduling Order [Doc. # 153].

 

IT IS SO ORDERED.

Supreme Court of Minnesota.

Brian K. MARTIN, Employee,

v.

MORRISON TRUCKING, INC., Respondent,

and

Travelers Insurance Company, Relator,

and

Minnesota Department of Labor and Industry, Special Claims Section, f/k/a Special Compensation Fund, Respondent.

 

No. A10–0446.

Aug. 3, 2011.

 

OPINION

ANDERSON, G. BARRY, Justice.

We review on certiorari a decision of the Workers’ Compensation Court of Appeals (WCCA) reversing a compensation judge’s finding that the employer in this case was not insured for Minnesota workers’ compensation liability. We also review the decision of the WCCA to vacate the compensation judge’s order directing the employer to reimburse and to pay a penalty to the Minnesota Department of Labor and Industry, Special Claims Section. Because the WCCA did not have jurisdiction to declare an unambiguous exclusion in the employer’s insurance policy to be invalid and unenforceable, we reverse and reinstate the compensation judge’s findings and order.

 

Bryan K. Martin is a Minnesota resident who worked as a truck driver for Wisconsin-based Morrison Trucking, Inc. On July 31, 2002, while working for Morrison Trucking, Martin injured his ankle in an on-the-job accident in Minnesota. Martin’s injury resulted in two workers’ compensation benefit claims. Because Morrison Trucking was based in Wisconsin, Martin applied for Wisconsin workers’ compensation benefits under Wisconsin law. Because Martin was hurt in Minnesota, he also applied for Minnesota workers’ compensation benefits.

 

At the time of Martin’s injury, Travelers Insurance Co. (Travelers) insured Morrison Trucking for Wisconsin workers’ compensation liability through the Wisconsin Workers’ Compensation Insurance Pool. Travelers covered the Wisconsin benefits paid to Martin but denied the claim for Minnesota benefits. Travelers based its denial of Minnesota benefits on an exclusion of Minnesota coverage in Morrison Trucking’s workers’ compensation insurance policy. Martin then filed a claim for Minnesota benefits with the Minnesota Department of Labor and Industry, Special Claims Section (SCS), which pays benefits to injured workers on behalf of uninsured employers.

 

The SCS and Martin settled Martin’s claim, and an award for $67,500 was filed on February 7, 2007. The SCS continued to pursue a petition for reimbursement it had filed against Morrison Trucking before the settlement with Martin. Morrison Trucking, for its part, had joined Travelers to the action, also before the SCS settled with Martin. Morrison Trucking asserted that Travelers was obligated to cover any Minnesota liability because the “purported exclusion of [Minnesota] coverage” was neither valid nor effective. On April 25, 2008, the Office of Administrative Hearings, Workers’ Compensation Division, found that Morrison Trucking was uninsured for Minnesota workers’ compensation insurance coverage and ordered Morrison Trucking to reimburse the SCS for the amount paid to Martin, plus a 65% penalty pursuant to Minn.Stat. § 176.183, subd. 2 (2010).

 

In her memorandum supporting the findings and order against Morrison Trucking, the compensation judge discussed the reasonable expectations doctrine, which provides that when a contract for insurance is construed, “[t]he objectively reasonable expectations of applicants and intended beneficiaries regarding the terms of insurance contracts will be honored even though painstaking study of the policy provisions would have negated those expectations.” Atwater Creamery Co. v. W. Nat’l Mut. Ins. Co., 366 N.W.2d 271, 277 (Minn.1985). The compensation judge concluded that the reasonable expectations doctrine did not invalidate the exclusion of Minnesota coverage at issue because the exclusion was “clear, unambiguous, and prominent.”

 

The compensation judge stated that she was “not unmindful of the fact” that Morrison Trucking had a workers’ compensation insurance policy in effect for the date of Martin’s injury, but she noted that while Morrison Trucking president Thomas Morrison testified that he thought he had secured Minnesota coverage, he also testified that he never read the Travelers policy. The compensation judge noted that Morrison’s testimony and that of the agent who sold the Travelers policy indicated a “misunderstanding and/or miscommunication” about the policy, but concluded that she “does not have jurisdiction over a cause of action between Mr. Morrison as president of Morrison Trucking, Inc. and his insurance agent.”

 

Morrison Trucking appealed to the WCCA, which reversed the compensation judge after concluding that Morrison Trucking was entitled to coverage from Travelers under the reasonable expectations doctrine. Martin v. Morrison Trucking, Inc. (Martin I ), No. WC08–168, 2008 WL 4886653, at (Minn. WCCA Oct. 29, 2008). On review on certiorari, we reversed by order and remanded for reconsideration in light of Carlson v. Allstate Ins. Co., 749 N.W.2d 41 (Minn.2008). Martin v. Morrison Trucking, Inc., 765 N.W.2d 639, 639 (Minn.2009). In Carlson, we made clear that while ambiguity is not a “rigid requirement” for the reasonable expectations doctrine, “in no case since Atwater have we used the doctrine to provide coverage in contravention of unambiguous policy terms.” 749 N.W.2d at 48, 49. Moreover, in Carlson, we reaffirmed that the reasonable expectations doctrine “does not excuse an insured from reading the policy…. [T]he insurer must communicate coverage and exclusions accurately and clearly, and the insured’s expectations must be reasonable under the circumstances.” Id. at 48.

 

On remand, the WCCA once again reversed the compensation judge. Martin v. Morrison Trucking, Inc. (Martin II ), No. WC09–4970, 2010 WL 677240, at (Minn. WCCA Feb. 11, 2010). In its decision, the WCCA described our holding in Carlson, including that we expressly declined to “ ‘expand the doctrine of reasonable expectations beyond its current use as a tool for resolving ambiguity and for correcting extreme situations.’ “ Id. at *3–4 (citing Carlson, 749 N.W.2d at 49). Given Carlson, the WCCA declared itself “reluctant to apply” the reasonable expectations doctrine again. Id. at *4. The WCCA stated: “In this case, whether it could be said that the endorsement excluding liability was unreasonably obscure or not, the endorsement exclusion itself is not ambiguous.” Id. (emphasis added). Despite having found the exclusion to be unambiguous and despite our remand to reconsider the case in light of Carlson, the WCCA declared that the “application of the reasonable expectations doctrine, clearly questioned by the [Minnesota] Supreme Court, is unnecessary in determining the validity of the exclusionary endorsement in this case.” Id.

 

The WCCA then fashioned a remedy for this case based on its view of the purpose and policy underlying the Wisconsin Worker’s Compensation Act (Wisconsin Act). Id. at *5–16. First, the WCCA described the “residual market” for employers required by law to have workers’ compensation insurance but who are unable to obtain workers’ compensation coverage through a private insurance plan. Id. at *4–5. The WCCA explained that residual market liability plans are “intended as a last resort.” Id. at *5. The WCCA noted that Wisconsin law mandates that every Wisconsin employer must be insured against workers’ compensation liability, and described the Wisconsin Worker’s Compensation Insurance Pool (Pool) as Wisconsin’s residual-market option for employers unable to find coverage or to self-insure. Id. (citing Wis. Stat. §§ 102.28(2)(a), 619.01 (2009–2010)). And the WCCA discussed the contractual obligations that Travelers purportedly accepted as a servicing carrier to the Pool providing coverage to Morrison Trucking. Id. at *7–8.

 

The WCCA then stated that the purpose of the mandatory coverage requirement of the Wisconsin Act, and the purpose of the Pool in relation to Wisconsin employers unable to obtain insurance through the voluntary market, “is the protection of injured workers and their employers by assuring that the employer is insured to the full extent of its liability.” Id. at (citing Nelson v. Rothering, 174 Wis.2d 296, 496 N.W.2d 87, 90 (Wis.1993)). The WCCA opined that the Wisconsin Act “requires a Wisconsin employer to obtain insurance, and the insurer to provide insurance, for worker’s compensation liability to the full extent of the employer’s liability to its employees.”   Id. at *16, 496 N.W.2d 87. The WCCA then determined that “terms in a policy of insurance that conflict with statutory requirements may be held invalid.”   Id. at *15, 496 N.W.2d 87.

 

Finally, despite its conclusion that the exclusion of Minnesota coverage in the Travelers policy held by Morrison Trucking was not ambiguous, id. at *4, 496 N.W.2d 87, the WCCA declared that

 

we see no legitimate basis for Travelers’ exclusion of Minnesota from coverage…. As a service carrier for the Wisconsin Pool, providing insurance coverage of last resort, Travelers was obligated to provide coverage to the employer necessary to meet its mandated responsibility of obtaining compensation insurance to cover the full extent of its liability to its employees.

 

Id. at *15, 496 N.W.2d 87. The WCCA reasoned that “[t]he exclusion of Minnesota is inconsistent with the mandatory coverage provisions of the [Wisconsin] act and is contrary to public policy. The purported exclusion is arbitrary and invalid and cannot be enforced to prevent coverage of Morrison [ ] Trucking[‘s] liability to the employee in Minnesota.” Id. at *16, 496 N.W.2d 87. The WCCA reversed the finding that Morrison Trucking was not insured for liability for Minnesota workers’ compensation benefits by Travelers, vacated the penalty assessment, and ordered Travelers to reimburse the SCS. Id.

 

The question for us on review is whether the WCCA had authority to decide this case on the theory it articulated. It did not.

 

I.

Jurisdiction is a threshold question that may be raised at any time.   Dead Lake Ass’n, Inc., v. Otter Tail County, 695 N.W.2d 129, 134 (Minn.2005). Because jurisdiction is a question of law, our review is de novo.   Hale v. Viking Trucking Co., 654 N.W.2d 119, 123 (Minn.2002).

 

Minnesota Statutes § 175A.01 governs the jurisdiction of the WCCA. Minn.Stat. § 175A.01, subd. 5. Under section 175A.01, subdivision 5, the jurisdiction of the WCCA is limited to “questions of law and fact arising under the workers’ compensation laws of [Minnesota]” in cases appealed to the WCCA or transferred to the WCCA from the district court. Id. Subdivision 5 expressly states that the WCCA “shall have no jurisdiction in any case that does not arise under the workers’ compensation laws of the state.” Id. The express statutory grant, and corresponding limit, of jurisdiction to the WCCA reflects the fact that the WCCA is not a court of general jurisdiction. See Minn. Const. art. VI, § 3; Minn.Stat. § 484.01, subd. 1 (2010). Rather, the Legislature created the WCCA to be an independent agency within the executive branch, tasked with answering specialized questions arising under the Minnesota Workers’ Compensation Act (Minnesota Act), codified at Minn.Stat. ch. 176 (2010). Minn.Stat. § 175A.01, subd. 1 (2010).

 

Our precedents have further described the boundaries of WCCA jurisdiction. We have construed section 175A.01, subdivision 5, not to authorize the WCCA to consider questions of law arising under the workers’ compensation statutes of other states. For example, in Hale v. Viking Trucking Co., 654 N.W.2d 119 (Minn.2002), we held that a Minnesota workers’ compensation court lacked subject matter jurisdiction to determine whether an insurer overpaid benefits to an employee because, in order to make the determination, the compensation court needed to examine the Colorado workers’ compensation laws that gave rise to the insurer’s liability in the first instance. Id. at 124. Hale is not directly on point here in that the injury in Hale occurred in Colorado, not in Minnesota. See id. But we noted in Hale that our decision was consistent with the reasoning of the WCCA in Rundberg v. Hirschbach Motor Lines, 51 Minn. Workers’ Comp. Dec. 193, 205–06 (WCCA), aff’d without opinion, 520 N.W.2d 747 (Minn.1994). In Rundberg, the WCCA held that it lacked subject matter jurisdiction to order an uninsured Minnesota employer to reimburse a Nebraska insurer for payments made to a Minnesota employee hurt in California. Id. at 206. The WCCA said that the question before it in Rundberg was “whether an issue requiring the application of Nebraska law can or should be determined by a Minnesota compensation judge or this court.” Id. at 205. The WCCA answered in the negative, stating that it has

 

jurisdiction to determine “all questions of law or fact arising under the workers’ compensation laws of the state.” It is a jurisdiction expressly limited to this, and no more: “The workers’ compensation court of appeals shall have no jurisdiction in any case that does not arise under the workers’ compensation laws of the state.”

 

Id. at 206 (quoting Minn.Stat. § 175A.01, subd. 5).

 

We also have construed 175A.01, subdivision 5, not to authorize the WCCA to construe Minnesota statutes other than the Minnesota Act. For example, in Freeman v. Armour Food Co., 380 N.W.2d 816 (Minn.1986), we evaluated whether the WCCA had jurisdiction to award reimbursement to a no-fault automobile insurance carrier out of a workers’ compensation award. Id. at 819. We held that because Minn.Stat. § 176.191, subd. 3 (1984), specifically provided authority, the WCCA could order a workers’ compensation insurance carrier to reimburse a no-fault insurer that made no-fault payments to a worker that are later determined to be compensable under the Minnesota Act. Freeman, 380 N.W.2d at 819–20. But we clearly distinguished between the authority to order reimbursement to the no-fault carrier and the authority to determine liability of the no-fault carrier to pay no-fault benefits. Id. at 820. In the former instance, the WCCA could order reimbursement because its authority was provided by statute; the no-fault carrier “simply presents proof of its no-fault payments” to the compensation court, which decides whether workers’ compensation coverage existed for the time period at issue. Id. But in the latter instance, the WCCA lacked jurisdiction to determine a no-fault carrier’s liability because a no-fault carrier’s liability does not arise under the Minnesota Act. Id. As we explained: “While the compensation judge may make findings on what no-fault benefits have been paid, she lacks jurisdiction to determine a no-fault carrier’s liability, i.e., what payments should be, but have not been, paid.” Id. at 820 n. 6.

 

We applied the reasoning of Freeman in Botler v. Wagner Greenhouses, 754 N.W.2d 665 (Minn.2008), in which we held that the Minnesota Act provides authority to a compensation judge to award costs and fees for the court appointment of a guardian and conservator but does not provide authority to order payments for services provided by and costs incurred by the guardian and conservator. Id. at 669–71. The determining factor in Botler was the authority—and resulting jurisdiction—expressly provided by the Minnesota Act. Id. at 670.

 

Moreover, we have often evaluated WCCA jurisdiction over claims that implicate both the Minnesota Act and the Minnesota Insurance Guaranty Association Act (MIGA Act), codified at Minn.Stat. ch. 60C (2010), which provides a mechanism for “covered claims” to be paid to claimants or policyholders of insolvent insurers. Minn.Stat. § 60C.02, subd. 2. When liability turns on the interpretation and application of the Minnesota Act, we have concluded that the WCCA and the compensation court have jurisdiction. See, e.g., Seehus v. Bor–Son Constr., Inc., 783 N.W.2d 144, 152 (Minn.2010). But when liability turns on the interpretation and application of the MIGA Act, we have concluded that the WCCA lacks jurisdiction. See, e.g., Wiss v. Advance United Expressway, 488 N.W.2d 802, 804 (Minn.1992); Taft v. Advance United Expressways, 464 N.W.2d 725, 727 (Minn.1991).

 

The Minnesota Act provides authority to a compensation judge to decide certain questions that arise in workers’ liability claims. For example, Minn.Stat. § 176.183, subd. 2, expressly requires compensation judges to “make findings regarding the insurance status of the employer and its liability” in cases that involve the SCS and its obligation to pay benefits to employees who are injured when working for uninsured employers. See Minn.Stat. § 176.183, subds. 1–2. This is consistent with the general rule recognizing that workers’ compensation courts and commissions have jurisdiction over insurance questions. See 9 Arthur Larson & Lex K. Larson, Larson’s Workers’ Compensation § 150.04(2009) (“The general rule appears to be that, when it is ancillary to the determination of the employee’s right, the compensation commission has authority to pass upon a question relating to the insurance policy, including … construction of extent of coverage.” (footnotes omitted)).

 

The WCCA described its jurisdiction in a manner similar to the general rule set out in Larson’s in Smith v. Integrity Plus, Inc., 61 Minn. Workers’ Comp. Dec. 192, 206 (WCCA 2000), aff’d without opinion, 625 N.W.2d 142, 143 (Minn.2001). In Integrity Plus, the WCCA distinguished between its jurisdiction to consider whether an employer was insured against workers’ compensation liability and the authority to determine other rights the employer and insurer may have under a contract that expressly incorporated the workers’ compensation laws of California. Id. The WCCA recognized that its “jurisdiction to review and interpret this contract here goes no further than to determine that it does not provide Minnesota workers’ compensation insurance. We cannot reach the question as to what other rights it affords the parties [between themselves] as our jurisdiction is limited to questions arising under” the Minnesota Act. Id. at 206. The WCCA noted that the contract at issue in Integrity Plus did not provide all-states liability insurance. Id. at 205–06 n. 1.

 

In this case, the compensation judge found that Morrison Trucking was not insured for its liability under the Minnesota Act for Martin’s work-related injury. The compensation judge determined that the Travelers policy that Morrison Trucking held at the time of Martin’s injury unambiguously excluded coverage of accidents in Minnesota. These findings are appropriate, given the mandate of section 176.183, subdivision 2. The compensation judge noted that this case implicated other causes of action, including claims between Morrison Trucking and its insurance agent, but clearly stated that it “does not have jurisdiction” over such causes of action.

 

On remand, the WCCA agreed that the exclusion of Minnesota coverage in the Travelers policy was unambiguous. Martin II, 2010 WL 677240, at *4. But the WCCA then reached across the border to determine whether Morrison Trucking should have been insured for Minnesota liability, given the principles and policy of the Wisconsin Act, and declared the unambiguous exclusion of Minnesota coverage in the Travelers policy to be invalid and unenforceable in light of the Wisconsin Act. Id. at *13–16. Because the WCCA has no authority to declare unambiguous language of an insurance contract to be invalid and unenforceable because of its view of another state’s laws, we reverse and reinstate the April 25, 2008, findings and order of the compensation court.

 

Reversed.

 

PAGE, J., took no part in the consideration or decision of this case.

 

CONCURRENCEANDERSON, Paul H., Justice (concurring).

I agree with the majority’s reasoning and its conclusion that the WCCA did not have the authority to declare the unambiguous language of Morrison Trucking’s policy invalid and unenforceable. But I write separately to express my concern about the validity under Wisconsin law of Travelers’ policy language excluding Minnesota coverage.

 

In 2001, Thomas Morrison submitted an application to the Wisconsin Worker’s Compensation Insurance Pool (Wisconsin Pool) on behalf of Morrison Trucking. Morrison also requested Wisconsin Limited Other States Coverage, which is intended to provide limited, temporary coverage for Wisconsin employers for injury to an employee who regularly works in Wisconsin, but happens to be in another state at the time of injury. Travelers was assigned by the Wisconsin Pool to provide Morrison Trucking’s workers’ compensation coverage. Travelers issued Morrison Trucking’s workers’ compensation policy, including the requested Other States Coverage; but Morrison Trucking’s Other States Coverage specifically excluded Minnesota coverage. The WCCA concluded that this exclusion was invalid under the law governing the Wisconsin Pool. Martin v. Morrison Trucking, Inc., No. WC09–4970, 2010 WL 677240, at (Minn. WCCA Feb. 11, 2010).

 

Wisconsin law provides that: “A[n insurance] policy that violates a statute or rule is enforceable against the insurer as if it conformed to the statute or rule.” Wis. Stat. § 631.15(3m) (2009–10). The particular insurance at issue—workers’ compensation liability through the Wisconsin Pool—is provided for by Wis. Stat. § 619.01 (2009–10), which states: “[T]he commissioner may by rule … promulgate plans to provide such insurance coverages for [workers’ compensation] that are equitably entitled to, but otherwise unable to obtain that coverage.” Wis. Stat. § 619.01(1)(a). All participating insurers, including Travelers, are required to conform to these plans. Wis. Stats. § 619.01(3) (“Every participating insurer and agent shall provide to any person seeking coverages of kinds available in the plans the services prescribed in the plans….”).

 

Rules enacted pursuant to Wis. Stat. § 619.01 provide that the “servicing carriers shall issue policies and provide service to all Pool risks.” Wis. Comp. Rating Bd., Wisconsin Worker’s Compensation and Employers Liability Insurance Manual, at 83 (2005) [hereinafter Wisconsin Basic Manual ] (emphasis added). The rules also require that the “carrier shall execute a Servicing Carrier Agreement.” Id. The Servicing Carrier Agreement incorporates two publications issued by the Wisconsin Compensation Ratings Bureau, the body responsible for administration of the Wisconsin Pool-the Wisconsin Handbook and the Wisconsin Basic Manual. See Wis. Comp. Rating Bd., Wisconsin Worker’s Compensation Insurance Pool: Information and Procedures (2000) [hereinafter Wisconsin Handbook ]; Wisconsin Basic Manual, supra. Travelers signed a Servicing Carrier Agreement, and is therefore subject to the provisions of the Wisconsin Handbook and the Wisconsin Basic Manual.

 

The Wisconsin Handbook provides that Other States Coverage is available from the Wisconsin Pool. The Wisconsin Handbook only provides for one exception:

 

Wisconsin Limited Other States Coverage, if attached to the Policy, will never apply in … any state where the employer has operations which should be covered under a policy providing worker’s compensation in that state.

 

Wisconsin Handbook, supra, at 30. Nothing before us indicates whether Morrison Trucking had “operations which should be covered under a policy providing worker’s compensation” in Minnesota. Id. All of Morrison Trucking’s trucks, buildings, and offices were located in Hager City, Wisconsin. Morrison Trucking hired employees, issued paychecks, and sent office correspondence from its Hager City office. Morrison Trucking’s activities in Minnesota were limited to picking up and dropping off cargo. Travelers has cited no legal or factual authority which would establish that Morrison Trucking’s Minnesota activity constituted the kind of “operations” which are referred to in the Wisconsin Handbook and which would justify exclusion of Minnesota coverage.

 

The record also suggests that Travelers excluded Minnesota coverage based on the presence of Minnesota residents on Morrison Trucking’s payroll, combined with the fact that Morrison Trucking’s workforce spent 95% of its time outside of Wisconsin. Travelers’ underwriter testified that she performed “no investigation into the actual operations or routes that the employees of Morrison Trucking would have been traveling through.” Therefore, it appears that the validity under Wisconsin law of Travelers’ exclusion of Minnesota coverage in Morrison Trucking’s policy is called into question and may be raised in a cause of action against Travelers in a court of general jurisdiction.

 

Here, the Special Claims Section brought this case in a court that did not have jurisdiction to decide the validity of Travelers’ Minnesota exclusion. Further, the specific issue of the validity of the Minnesota exclusion under Wisconsin law was not raised or argued below. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn.1988) (holding issues not raised or decided below will not be considered on appeal). Therefore, while I have concerns about the validity of Travelers’ exclusion of Minnesota coverage under the law governing the Wisconsin Pool, in the procedural context of this case, I agree with the result reached by the majority.

 

Under Minnesota law, any Minnesota benefits awarded to Martin were subject to being reduced by the amount already paid by Wisconsin, entitling Martin to collect the difference. See Stolpa v. Swanson Heavy Moving Co., 315 N.W.2d 615, 617–18 (Minn.1982).

 

The SCS was known as the Special Compensation Fund when Martin filed his claim.

 

We do not discount legitimate concerns raised by the facts of this case. As the compensation judge noted, Morrison Trucking held a policy from Travelers insuring against workers’ compensation liability. The Travelers policy was in effect the day Martin was injured. The Travelers policy was Morrison Trucking’s only option when it turned to the Wisconsin Pool to secure the insurance coverage apparently required by Wisconsin law. These facts may have given Morrison Trucking a cause of action against Travelers, in a court of general jurisdiction in Minnesota or Wisconsin—but not before an agency of the Minnesota executive branch.