United States District Court,

M.D. Georgia,

Macon Division.

Winfield Kingman BROAD, Jr., Plaintiff,

v.

Jack Lewis HITTS, individually and as Agent for Red Star Express, Inc., and Amerisure Mutual Insurance Company, a/k/a Amerisure Insurance Company, Defendants.

 

Civil Action No. 5:08–cv–366.

Sept. 30, 2011.

 

ORDER ON AMERISURE INSURANCE COMPANY’S MOTION FOR SUMMARY JUDGMENT

C. ASHLEY ROYAL, District Judge.

Plaintiff Winfield Kingman Broad, Jr. brings this personal injury action to recover damages for alleged injuries he sustained in an accident involving two tractor-trailer trucks. Plaintiff, the driver of the first truck, sued the driver of the other truck, Jack Hitts, and Amerisure Mutual Insurance Company (“Amerisure”). Plaintiff originally filed this action in the Superior Court of Peach County, Georgia, and Defendants removed the action to this Court pursuant to the Courts diversity jurisdiction.

 

Plaintiff sued Amerisure directly under the Georgia direct action statute, O.C.G.A. § 46–7–12.

 

Currently before the Court is Amerisure’s Motion for Summary Judgment [Doc. 66] in which Amerisure argues that, as a matter of law, the insurance policy at issue does not provide any liability coverage for Plaintiff’s alleged injuries. Plaintiff, on the other hand, contends that there are genuine issues of material fact for a jury to determine. This Court agrees with Plaintiff. Upon review of the evidentiary materials submitted by the parties, the arguments of counsel, and the relevant legal authorities, the Court finds that there are genuine issues of material fact a jury must resolve in order to determine whether Amerisure’s insurance policy provides coverage for Plaintiff’s injuries. Accordingly, and for the reasons set forth below, Amerisure’s Motion [Doc. 66] is DENIED.

 

BACKGROUND

This case arises out of an accident that occurred on October 24, 2006, involving two tractor-trailer trucks. Plaintiff contends that, while he was parked at a loading dock at the Step 2 facility in Fort Valley, Georgia, Defendant Jack Hitts crashed into Plaintiff’s parked tractor-trailer truck causing him significant injuries. Plaintiff filed the underlying suit against Jack Hitts and Amerisure claiming that at the time of the accident Jack Hitts was working for Amerisure’s insured, Ron Hitts d/b/a/ Ron Hitts Trucking. Therefore, Plaintiff contends that Amerisure has liability coverage under policy number CA2029727010006 issued to Ron Hitts d/b/a Ron Hitts Trucking (the “Policy”), which was in effect at the time of this accident. Amerisure vehemently contests Plaintiff’s position and maintains that Jack Hitts was working for another trucking company at the time of the accident—Mark Mannes Trucking—and thus its Policy issued to Ron Hitts Trucking provides no liability coverage for Plaintiff’s injuries.

 

The following facts are set forth below in the light most favorable to Plaintiff, the nonmoving party.

 

Approximately a month and a half before the accident occurred, on September 5, 2006, Defendant Jack Hitts signed a one-year Equipment Lease Agreement with Mark Mannes Trucking in which Jack Hitts agreed to pay Mannes Trucking 5% of his load fee for the use of Mark Mannes =operating authority. In order for motor carriers to operate legally in interstate commerce, the driver must operate under federal authority from the United States Department of Transportation (“Aoperating authority”). Jack Hitts entered into the Lease Agreement because he did not have his own operating authority, and thus needed to use Mr. Mannes’ operating authority to legally carry loads. Pursuant to the Lease Agreement, if Jack Hitts used Mannes’ operating authority to haul a load, he was obligated to pay Mannes 5% of that load fee. Jack Hitts testified that he understood the Lease Agreement to mean that he worked exclusively for Mannes Trucking. This Lease Agreement was in effect at the time of the accident.

 

Jack Hitts had a nephew, non-party Ron Hitts, who was the principal of his own company, Ron Hitts Trucking, and who also drove for Mannes Trucking. At the time of the accident, Ron , like his uncle Jack, had not yet obtained his own federal motor carrier operating authority and also operated under the authority of Mark Mannes and Mannes Trucking. In addition, Ron Hitts was married to Mark Mannes=daughter, Tonya Hitts. Tonya handled all of the billing and much of the paperwork for both her father’s company, Mannes Trucking, and her husband’s company, Ron Hitts Trucking.

 

To reduce confusion between Jack Hitts and Ron Hitts, the Court will use their first names.

 

While working with Mannes Trucking, Jack testified that his nephew Ron dispatched, coordinated, and procured all of the loads Jack picked up. Although Mr. Mannes testified that the dispatcher for Mannes Trucking was Jim Esser, it was Jack’s understanding that his nephew Ron was the dispatcher for Mannes Trucking, as Ron dispatched all of Jack’s loads. Indeed, Jack testified that all of his interactions with Mannes Trucking were through his nephew Ron. Jack stated he received his 1099 tax returns directly from Mannes Trucking but that he never got a check from Mannes Trucking and received all of his settlements and payments directly through communications with his nephew Ron.

 

The accident which is the subject of this lawsuit occurred at the loading dock of the Step 2 Facility in Fort Valley, Georgia, where Jack had driven to pick up a load (the “Fort Valley Load”). Jack was driving a tractor that was owned by a third party and was being leased by Mannes Trucking; he was using a trailer he was purchasing from his nephew Ron. “Mannes Trucking” was printed on the side of the tractor. Jack had learned of the load through his nephew Ron who had dispatched, coordinated, and procured the Fort Valley Load with a broker, C.H. Robinson. According to the testimony of Ron, when a driver carried a load under Mannes’ operating authority that was not coordinated by Mannes Trucking dispatcher Jim Esser, the driver was supposed to notify Mark Mannes or Jim Esser so that the billing could be handled appropriately.

 

Although the Fort Valley Load was authorized under Mannes’ operating authority, Mark Mannes testified he neither knew nor approved of the Load until after the accident. Mr. Mannes also testified that he became suspicious of his relationship with Jack Hitts and Ron Hitts when he began to see dispatch confirmation sheets being faxed that had the name of Mark Mannes Trucking from broker C.H. Robinson. Mr. Mannes did not work with C.H. Robinson because in his opinion they did not pay appropriately for the size of loads dispatched. After the accident, Mr. Mannes inspected his financial records and bank statements and determined that he had not been paid for many loads run by Jack and Ron. Indeed, Mannes testified he found no record of payment with respect to the Fort Valley Load.

 

After the collision, Jack Hitts gave the police officer an Amerisure insurance card he had taken from inside the tractor. It was Jack’s understanding that the insurance card represented the trucking company for whom he was driving. The insurance card listed the Policy Amerisure issued in this case to Ron Hitts d/b/a Ron Hitts Trucking. Jack did not have the insurance card listing the policy issued to Mark Mannes d/b/a Mark Mannes Trucking. However, Jack testified that he believed at the time of the accident he was working for Mannes Trucking and that the accident occurred while he was picking up a load for Mannes Trucking.

 

STANDARD OF REVIEW

Amerisure has now moved for summary judgment. On a motion for summary judgment, where the non-moving party bears the burden of proof at trial, the moving party has the initial burden to demonstrate by reference to rpleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, that there is an absence of evidence to support the essential elements of Plaintiffs claims. Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256, 1260 (11th Cir.2004). Where the moving party bears the burden of proof, it must demonstrate that Con all the essential elements of its case on which it bears the burden of proof at trial, no reasonable jury could find for the non-moving party. Irby v. Bittick, 44 F.3d 949, 953 (11th Cir.1995). Even if a motion for summary judgment is unopposed, the district court cannot base its decision on the mere fact that the motion is unopposed, but must consider the merits of the motion and review the evidentiary materials submitted by the parties to determine whether there are any genuine issues of material fact that preclude judgment as a matter of law. United States v. One Piece of Real Prop. Located at 5800 SW 74th Ave., Miami, Fla., 363 F.3d 1099, 1101 (11th Cir.2004).

 

ANALYSIS

Choice of Law

This action is based on diversity of citizenship and thus, the Court is required to apply the choice of law rules of the forum state—Georgia. See Klazon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Under Georgia law, the insurance contract at issue here is governed by the law of the state where the contract was made unless the application of the foreign law would be contrary to Georgia public policy.   General Tel. Co. of the Se. v. Trimm, 252 Ga. 95, 311 S.E.2d 460 (1984); O.C.G.A. § 1–3–9. Because the Amerisure Policy was issued in Michigan, and there is no indication or argument that the application of Michigan law would be contrary to Georgia public policy, Michigan law governs the interpretation of the Amerisure Policy at issue here.

 

Under Michigan law, insurance interpretation requires a two-step analysis: first, a determination of coverage according to the insurance agreement and second, a decision regarding whether any exclusion applies to negate coverage.   Auto–Owners, Inc. v. Harrington, 455 Mich. 377, 382, 565 N.W.2d 839 (1997). Because Amerisure does not assert that any exclusion applies, instead only asserting lack of coverage, only the first step of the analysis is involved in this case.

 

Under Michigan law, an insurance policy is an agreement between the parties in which a court will determine what the agreement was and effectuate the intent of the parties. Heath v. State Farm Mut. Auto Ins. Co., 255 Mich.App. 217,218 (2002). When determining what the parties’ agreement is, the court should read the contract as a whole and give meaning to all the terms contained in the policy. Id. If the terms of the contract are clear and precise, a court cannot read ambiguities into the policy. Jervis Webb Co. v. Everest Nat. Ins. Co., 251 Mich.App. 692, 697, 650 N.W.2d 722 (2002) (citation omitted). Where an insurance policy does not specifically define a word or phrase, the commonly used meaning of the word or phrase is to be used, and the omission of a definition that has a common usage does not create ambiguity. Id. (citation omitted). “Clear and specific provisions that limit coverage must be given effect because an insurance company cannot be held liable for a risk that it did not assume.” Id. (citation omitted).

 

Coverage under the Policy

Amerisure asserts that as a matter of law, the Policy does not provide any liability insurance for Plaintiff’s injuries because neither the tractor nor the trailer are “covered autos” under the Policy, and none of the defendants qualifies as insureds. Plaintiff, on the other hand, argues there are genuine issues of material fact that must be resolved in order to determine whether the tractor is a “covered auto” and, thus, whether Jack Hitts qualifies as an “insured.” For the following reasons, the Court finds there are genuine issues of material fact that a jury must resolve in order to determine both of these issues, and thus, ultimately, whether the Amerisure Policy provides liability insurance for Plaintiff’s injuries.

 

The Amerisure Policy defines as an “insured” anyone “using with your permission a covered ‘auto’ you own, hire or borrow” subject to exclusions not applicable to this case. Amerisure Ins. Policy, § II(A)(1)(b), AMER0133, Doc. 68–1. The Policy clearly provides coverage to permissive users of “covered autos.” Thus, the relevant legal inquiries are: (1) Is Jack Hitts a permissive user under the Policy at the time of the accident, and (2) Is Jack Hitts utilizing a “covered auto” at the time of the accident.

 

Permissive Use

Under Michigan law, the standard for permissive use requires the insured’s permission to use the vehicle and that the use be within the scope of permission at the time of the collision. See, e.g., Amerisure, Inc. v. Brennan, 2006 WL 3733283,(Mich.App.2006).

 

The Court finds there are genuine issues of material fact a jury must find in order to determine to whether Jack Hitts is a permissive user under the Policy. There is evidence upon which a reasonable jury could find that Jack Hitts was working for Ron Hitts Trucking at the time of the accident. The record contains evidence that Ron coordinated, directed, and dispatched Jack to pick up the Fort Valley Load. Ron testified he knew that Jack was using the tractor for loads Ron directed him to and that he gave Jack permission to use the tractor-trailer combination for those loads. Mark Mannes testified that, although his name was listed on the “load confirmation” for the Fort Valley Load involved in this accident, he did not dispatch, authorize, or get any payment from that load. Moreover, the insurance card Jack provided to the investigating officer was the Amerisure Policy. Thus, issues of fact must be resolved regarding whether Ron Hitts d/b/a/ Ron Hitts Trucking, the insured, gave Jack Hitts permission to operate the tractor to pick up the Fort Valley Load and whether Jack was operating within that scope of permission at the time of the accident.

 

Covered Auto

The Amerisure Policy is a Symbol 46, 47, and 50 policy, which means that only those vehicles that are “specifically described,” “hired,” or “nonowned” are “covered autos” under the policy. The parties agree that the tractor-trailer Jack Hitts was driving is not a “specifically described” auto under the Policy. The question therefore is whether the tractor-trailer is covered under the “hired” or “nonowned” auto provisions.

 

The Amerisure Policy defines Symbols 47—“Hired Autos” as follows:

 

47—Hired “Autos” Only

Only those “autos” you lease, hire, rent or borrow. This does not include any “private passenger type auto” you lease, hire, rent or borrow from any member of your household, any of your “employee”, partners (if you are a partnership), members (if you are a limited liability company), or agents or members of their household.

Amerisure Ins. Policy, § 1(A), AMER0131, Doc. 68–1. The Policy specifically states that “[t]hroughout this policy the words ‘you’ and ‘your’ refer to the Named Insured shown in the Declarations.” Id. The “Named Insured” is Ron Hitts Trucking.

 

The Court finds the tractor is not a “covered auto” under the “Hired Auto” provision of the Policy. Even if the jury were to resolve the facts in favor of Plaintiff, there is no evidence that Ron Hitts Trucking, the insured, “hired” or “borrowed” the tractor. Neither “hire” nor “borrow” are specifically defined in the Policy, but, as stated above, “[w]here an insurance policy does not specifically define a word or phrase, the commonly used meaning of the word or phrase is to be used.” Jervis B. Webb Co., 251 Mich.App. at 698, 650 N.W.2d 722. “Hire,” as applicable in these circumstances, means “to engage the temporary use of for a fixed sum.” Merriam–Webster’s Collegiate Dictionary, 589, 11th ed. (2008). “Borrow,” as applicable in these circumstances, means “to receive with the implied or expressed intention of returning the same or an equivalent.” Id. at 144, 650 N.W.2d 722. Even accepting all of the evidence taken in the light most favorable to Plaintiff as true, none of it supports an interpretation that Ron Hitts Trucking paid any money to “hire” the tractor from Mannes (who was leasing the tractor) or that Ron Hitts Trucking “received” the tractor from Mannes.

 

The Court does find, however, that issues of fact must be resolved in order to determine whether the tractor is covered under the “Nonowned Auto” provision of the Policy. The Amerisure Policy defines Symbol 50—“Nonowned Autos” as follows:

 

50—Nonowned “Autos” Only

Only those “autos” you do not own, lease, hire, rent or borrow that are used in connection with your business. This includes “private passenger type “autos” owned by your “employees”, partners (if you are a partnership), members (if you are a limited liability company), members of their households but only while used in your business or your personal affairs.

Amerisure Ins. Policy, § 1, AMER0132, Doc. 68–1.

 

There is evidence in this case from which a reasonable jury could find that Defendant driver Jack Hitts was using the tractor “in connection with” Ron Hitts Trucking’s business at the time of the collision. As discussed above, genuine factual disputes regarding which company Jack Hitts was driving for at the time of the accident must be resolved to determine this issue. Evidence exists to support a finding that Jack Hitts was working for Mannes Trucking at the time of the accident: Jack was driving for Mannes Trucking pursuant to a Lease Agreement which Jack believed meant he worked exclusively for Mannes Trucking; the tractor had “Mannes Trucking” printed on its side; Jack himself believed he was working for Mannes Trucking at the time of the accident and that the accident occurred while he was picking up a load for Mannes Trucking; and the Fort Valley Load was procured under Mark Mannes’ federal motor carrier operating authority. However, evidence also exists from which a jury could determine that Jack was working for Ron Hitts Trucking at the time of the accident: Ron Hitts dispatched Jack to the Fort Valley Load; Mr. Mannes knew nothing about the Load and stated he did not do business with C.H. Robinson; Mr. Mannes did not receive any payment for the Fort Valley Load and many other loads related to C.H. Robinson; and Jack was driving the tractor with the Amerisure insurance card listing the Policy issued to Ron Hitts Trucking. Based on the evidence that Ron Hitts directed Jack Hitts to the Fort Valley load, that Ron Hitts handled all payments and all of Jack Hitts’s settlements, that Mark Mannes neither had knowledge of the Load nor received payment, and that Ron Hitts provided Jack with an insurance card listing the Amerisure Policy, a reasonable jury could find that Jack Hitts was using the tractor, which Ron Hitts Trucking did not own, lease, hire, rent or borrow, in connection with his business.

 

Despite Defendant’s arguments to the contrary, the Policy does not limit the “non-owned autos” provision to passenger type autos. Rather, the provision applies to all non-owned autos used in connection with the insured’s business. If it only applied to passenger vehicles and not commercial trucks, the word “includes” in the phrase “[t]his includes ‘private passenger type autos’ “ would be surplusage. If Amerisure intended to limit coverage only to passenger autos, it could have included language in the definition stating “this only applies to passenger type autos.” Amerisure, however, did not, and thus the coverage applies to all vehicles.

 

Material Misrepresentation

In its Reply brief, Defendant Amerisure argues for the first time that, even if the facts alleged by Plaintiff are true, the Amerisure Policy still does not provide coverage for Plaintiff’s injuries because the Policy would, as a matter of law, become void. Nowhere in Defendant’s principal brief did it request summary judgment on this basis, and Plaintiff has not had an opportunity to address this argument. Because it is improper for Defendant to raise this new argument in its reply brief, the Court will not rule on this issue. See, e.g., United States v. Coy, 19 F.3d 629, 632 n. 7 (11th Cir.1994) (“[a]rguments raised for the first time in a reply brief are not properly before a reviewing court”) (citation omitted).

 

If the Court were to further consider this argument, however, it appears as if this issue would also be a jury question. The Amerisure Policy states:

 

Concealment, Misrepresentation or Fraud

This Coverage Form is void in any case of fraud by you at any time as it relates to this Coverage Form. It is also void if you or any other “insured”, at any time, intentionally conceal or misrepresent a material fact concerning:

 

a. This Coverage Form;

 

b. The covered “auto”;

 

c. Your interest in the covered “auto”; or

 

d. A claim under this Coverage Form.

 

Amerisure Ins. Policy, § V(B)(2), AMER0141, Doc. 68–1. Amerisure contends that if the jury accepts Plaintiff’s version of the facts and finds that Ron Hitts was running an illegal trucking operation and, with the help of his wife and Mr. Mannes’ daughter Tonya Hitts, stealing from Mr. Mannes—the person whose federal operating authority he was using to carry loads—then as a matter of law Ron Hitts was misrepresenting material facts concerning his interests in covered autos, such as the tractor driven by Jack Hitts on the date of the accident.

 

The Michigan Supreme Court has held that “[w]here an insurance policy provides that an insured’s concealment, misrepresentation, fraud or false swearing voids the policy, the insured must have actually intended to defraud the insurer.”   West v. Farm Bureau Mut. Ins. Co. of Michigan, 402 Mich. 67, 69, 259 N.W.2d 556 (1977). Whether the insured intended to defraud the insurer is a question for the jury. Id. at 70, 259 N.W.2d 556. Thus, it appears that this issue of material misrepresentation would also be an issue for the jury.

 

CONCLUSION

For the foregoing reasons, Defendant Amerisure’s Motion for Summary Judgment [Doc. 66] is DENIED.

 

SO ORDERED.

United States District Court,

N.D. Illinois,

Eastern Division.

BRIGHTSTAR INTERNATIONAL CORP., Plaintiff,

v.

MINUTEMAN INTERNATIONAL and BNSF Railway Company, Defendants.

BNSF Railway Company, Third–Party Plaintiff,

v.

Aztec Products, Inc., Third–Party Defendant.

 

No. 10 C 230.

Oct. 4, 2011.

 

Donald J. O’Meara, Jr., Shauna Maureen Martin, Stephen C. Veltman, Pretzel & Stouffer, Chtd., Chicago, IL, for Plaintiff.

 

John Joseph Meehan, Law Offices of John J. Meehan, Alison L. Helin, John F. Newell, Daley Mohan Groble PC, Claudia B. Diaz, Daniel G. Litchfield, Litchfield Cavo LLP, Chicago, IL, for Defendants.

 

MEMORANDUM OPINION AND ORDER

VIRGINIA M. KENDALL, District Judge.

Plaintiff, Brightstar International Corp. brought suit against Defendants Minuteman International and BNSF Railway Company, seeking damages for the destruction of its goods sustained during interstate shipping. BNSF, as a Third–Party Plaintiff, filed a complaint against Aztec Products, Inc., for indemnity in the event that BNSF is found to be liable to Brightstar. For the reasons set forth below, BNSF’s third-party complaint against Aztec is dismissed.

 

I. Background

The interstate shipment of goods by rail or by truck can be a complicated, and sometimes dangerous, matter. This case arises out of the events that can go wrong when cellular telephones are shipped alongside highly combustible floor scrapers. The Plaintiff, Brightstar International Corp. (“Brightstar”), was the owner of 215 cartons of cell phones. (Complaint at ¶ 6). Brightstar entered into an agreement with BNSF Railway Company (“BNSF”), Defendant and Third–Party Plaintiff, for the shipment of these cell phones by rail from Illinois to California. (Complaints at ¶ 6). The intended destination of Brightstar’s shipment was Wal–Mart Stores, Inc., but due to a series of intervening events the cell phones were destroyed en route. (Complaint at ¶ ¶ 7 and 13). What happened to Brightstar’s cell phones, and who is responsible for bearing the losses, are the issues at the heart of this litigation.

 

II. The Facts

BNSF consolidated the shipment of Brightstar’s cell phones with battery-powered floor scrapers equipped with butane tanks shipped by the other Defendant in this case, Minuteman International, Inc. (“Minuteman”). (Complaint at ¶ 8). On approximately January 16, 2009, the consolidated shipment arrived in Fontana, California, where it was discovered to be on fire. (Complaint at ¶ 9). Brightstar alleges that the fire was the direct result of the combustion and/or explosion of Minuteman’s floor scrapers. (Complaint at ¶ ¶ 11–12). Brightstar brought suit in this Court against BNSF and Minuteman pursuant to 28 U.S.C. § 1331 and 28 U.S.C. § 1367(a) respectively. As to BNSF, Brightstar claimed losses arising under the Carmack Amendment to the Interstate Commerce Act of 1887 (see 49 U.S.C. § 11706), as well as one count for breach of bailment. (Complaint at ¶ ¶ 18–21; Complaint at ¶ ¶ 22–25, respectively). As to Minuteman, Brightstar claimed that Minuteman was negligent in shipping the floor scrapers. (Complaint at ¶ ¶ 14–17). BNSF turned around and sued Aztec Products, Inc. (“Aztec”), the Third–Party Defendant here, alleging that Aztec manufactured the floor burnishers which are the subject of Brightstar’s suit. (Doc. 68, BNSF Railway Company’s Amended Third–Party Complaint Against Aztec Products, Inc. at ¶ 3 (“Third–Party Complaint”)). BNSF asserts that, should it be determined to be liable to Brightstar, it is entitled to indemnity from Aztec “in any amount BNSF is required to pay Brightstar.” (Third–Party Complaint at ¶ 7). BNSF claims that Aztec warranted, either expressly or by implication, that its floor burnishers were “properly prepared for safe shipment in interstate commerce,” and that this warranty was breached. (Third–Party Complaint at ¶ ¶ 5–6). Aztec asked this Court to dismiss BNSF’s third-party claim again it under Federal Rule of Civil Procedure 12(b)(6). For the reasons set forth below, Aztec’s motion is granted and the claim against it is dismissed.

 

III. The Standard of Review

When considering a Rule 12(b)(6) motion, the Court accepts as true all facts alleged in the complaint and construes all reasonable inferences in favor of the non-moving party. Murphy v. Walker, 51 F.3d 714, 717 (7th Cir.1995). To properly state a valid claim, the complaint must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). “Detailed factual allegations” are not required, but the third-party plaintiff must allege facts that, when “accepted as true … ‘state a claim to relief that is plausible on its face.’ ”   Ashcroft v. Iqbal, ––– U.S. ––––, ––––, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). To determine whether a complaint meets this standard the “reviewing court [must] draw on its judicial experience and common sense.” Iqbal, 129 S.Ct. at 1950. If the factual allegations are well-pleaded, the Court assumes their veracity and then turns to determine whether they plausibly give rise to an entitlement to relief. Id. A claim has facial plausibility when its factual content allows the Court to draw a reasonable inference that the third-party defendant is liable for the misconduct alleged. See Id. at 1949.

 

IV. Discussion

 

A. The Carmack Amendment

 

The Carmack Amendment creates a nationally uniform system of liability for common carriers shipping goods within the stream of interstate commerce. See The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C. § 11706 (known simply as the Carmack Amendment). Specifically, the statutory scheme prescribes the rule of liability for interstate motor carriers to shippers of goods that are lost or damaged during shipment. The statute provides in relevant part:

 

A rail carrier providing transportation or service subject to the jurisdiction of the Board under this part shall issue a receipt or bill of lading for property it receives for transportation under this part. That rail carrier … [is] liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this subsection is for the actual loss or injury to the property caused by (1) the receiving rail carrier; (2) the delivering rail carrier; or (3) another rail carrier over whose line or route the property is transported in the United States … Failure to issue a receipt or bill of lading does not affect the liability of a rail carrier.

 

49 U.S.C. § 11706(a) (1995). The Amendment was implemented in 1906 to address the disuniformity which existed in the law up to that time. Until the Amendment, the liability of common carriers to shippers was a matter of state common law, federal common law (at least until Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)) or state positive law—producing wildly different outcomes in different jurisdictions. The Amendment was made to simplify and unify the law of interstate shipping so that shippers and common carriers alike had predictable default rules around which they could (to some extent) bargain if they so chose. See 49 U.S.C. § 11706(c). The Amendment is essentially “a codification of the common law liability of carriers for damage to shippers’ goods, [and] provides a remedy against [common carriers] responsible for damage to a plaintiff’s goods unless the [common carrier] can prove that he was free from fault.” Pizzo v. Bekin Van Lines Co., 258 F.3d 629, 633 (7th Cir.Ill.2001) (Posner, J.).

 

To unify the law in this area, the Supreme Court has observed that Congress rigorously drafted the Carmack Amendment such that “almost every detail of the subject of liability of a carrier is covered so completely [ ] that there can be no doubt that Congress intended to take possession of the subject and supercede all state regulation with reference to it.” Adams Express Co. v. Croninger, 226 U.S. 491, 505, 33 S.Ct. 148, 57 L.Ed. 314 (1913). The Seventh Circuit has held that “the Carmack Amendment preempts all state law claims based upon the contract of carriage, in which the harm arises out of the loss of or damage to goods.” Gordon v. United Van Lines, 130 F.3d 282, 284 (7th Cir.Ill.1997) (citing North American Van Lines, Inc. v. Pinkerton Security Systems, Inc., 89 F.3d 452 (7th Cir.1996)). The preemptive scope of the Amendment, though extraordinarily broad, is not absolute. According to the Seventh Circuit “the Carmack Amendment does not preempt those state law claims that allege liability on a ground that is separate and distinct from the loss of, or the damage to, the goods that were shipped in interstate commerce.”   Gordon, 130 F.3d at 284.

 

B. Breach of Implied Warranty and Carmack Preemption

BNSF has tried to avoid the straightforward application of the preemptive force of the Carmack Amendment by characterizing its claim against Aztec as one for indemnity due to the negligent breach of warranty. That is, BNSF argues that Aztec is liable to it under a tort theory for the breach of a duty implied either by the Carmack Amendment or the contract (i.e, the bill of landing) between them. But BNSF’s attempt at crafty pleading is to no avail. Although a shipper may be liable to a carrier in tort due to the breach of a duty implied under the Carmack Amendment, such liability must arise from conduct that is separate and distinct from the loss of the goods or be due to incidental harms apart from the harm to the goods shipped. See Gordon, 130 F.3d at 284. This includes all state and federal remedies resulting from the negligent performance of interstate shipping as well as claims based on the contract of carriage in which the harm arises out of the loss or damage to the goods. See Id. Claims for negligence, breach of contract, conversion, intentional and negligent misrepresentation, and negligent infliction of emotional distress are all preempted by the Carmack Amendment. See Id. at 289 (citing Hughes v. United Van Lines Inc., 829 F.2d 1407, 1415 (1987)).

 

A cause of action not within the ambit of the preemptive scope of the Carmack Amendment is the rare exception, and in this Circuit although a shipper may be able to maintain a claim against a carrier for intentional infliction of emotional distress or for assault by the carrier’s employees, few other causes of action are permitted. See Gordon, 130 F.3d at 289 (holding that a claim against a carrier for intentional infliction of emotional distress is not preempted by the Amendment because the harm alleged was independent from the loss or damage to the goods shipped, and citing Rini v. United Van Lines, Inc., 104 F.3d 502 at 506 (1st Cir.1997) (“… liability arising from separate harms-apart from the loss or damage of goods-is not preempted. For example, if an employee of the carrier assaulted and injured the shipper, state law remedies would not be preempted.”)). Thus for liability to flow from Aztec to BNSF, Aztec must be liable to BNSF on separate and distinct grounds from the destruction of Brightstar’s cell phones and for losses other than the loss of the phones. Because BNSF asserts that if it “is determined to be liable as respects the claim of Brightstar, BNSF is entitled to indemnity against Aztec in any amount BNSF is required to pay Brightstar,” it is clear that BNSF’s claim is merely one for the loss of the goods.

 

Breach of an implied warranty—assuming, without deciding, that such an implied warranty even exists under these facts—is not a separate and distinct cause of action such that preemption is not triggered by the Carmack Amendment. Like a claim for negligence or misrepresentation (both of which, as stated above, are preempted), breach of an implied warranty is a run of the mill common law tort action, whether the relevant common law is state or federal.  Distilling the underlying theory of those cases in which courts have found a valid cause of action not preempted, like Gordon and Rini, it is evident that their rationale does not apply here. There, the courts held that the causes of action against common carriers could go forward because the acts of the tortfeasors were not in any way a reasonable part of, or a foreseeable consequence of, interstate shipping. For those acts that are so separate and apart from what is reasonably involved in shipping goods interstate and so unforeseeable that neither party would make arrangements with the other if the acts came to pass, a valid cause of action may exist. In all other circumstances, the Carmack Amendment embodies the common law principle that shippers and carriers are well-suited to make arrangements with each other and so creates default rules of liability around which the parties may make some modifications. When a carrier is transporting the goods of two or more shippers, the statute presumes that it is more efficient to have the carrier bear the liability arising out of any losses, even if those losses are due in part to the negligent acts of one of the shippers. The shippers are poorly situated to communicate and coordinate among themselves, but each is well situated with respect to the carrier. Thus, the carrier is liable to a shipper whose goods are destroyed even if the destruction is due to the negligence of another shipper. That a manufacture of goods may not have properly prepared them for interstate travel is a reasonably foreseeable situation from the point of view of a carrier. BNSF was in a good position to understand the contents of the shipment, evaluate the shipment and take care for the possibility that the goods were poorly suited for interstate shipping. Therefore, BNSF’s cause of action against Aztec for breach of warranty is preempted by the Carmack Amendment.

 

This Court does not venture an opinion on the nature of an implied warranty cause of action under federal common law. Given the rule in Erie, the Court is skeptical that such a cause of action even exists. Erie, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188. Whether such a federal common law cause of action exists, however, is not determinative of the outcome here. The Carmack Amendment preempts a fortiori whatever federal common law causes of action other courts may have found to exist.

 

C. Indemnity

There is yet another reason why BNSF’s Third–Party Complaint fails. Where, as here, there is no cause of action under which one may be a joint tortfeasor, a claim for indemnity cannot lie. Indeed, at least one court in the Northern District has held that contribution claims cannot be brought under the Carmack Amendment. See Fireman’s Fund Insurance Co., v. Werner Enterprises, Inc., No. 03 C 3228, 2004 WL 406981 (N.D.Ill. Feb.6, 2004). In that case, under a similar set of facts, the court held that “a defendant sued under the Carmack Amendment cannot bring an action for contribution under Illinois law.” Id. at *6. The court explained that the Contribution Act requires potential liability sounding in tort and not in contract. The Carmack Amendment, by contrast, is contractual in nature and the liability arising under the Amendment sounds in contract. Therefore, there cannot be any tort liability between a carrier and a shipper, so by operation of law there cannot be joint tortfeasors for the purposes of the Contribution Act. The court therefore concluded that because there is no tort liability, no contribution action could be brought against a third party under the Contribution Act either. Id. In their brief, BNSF argues that their claim for indemnity arises not out of state law, but rather federal common law. Facing the same argument, the court held that there was no reason to treat a contribution action based on federal common law seeking joint tort liability differently from one based on state positive law. Id. at *6–7.

 

Although Fireman’s Fund dealt with a claim for contribution and not indemnity, this Court finds its rationale persuasive. Furthermore, there is no reason here to distinguish claims for contribution from those for indemnification. In tort, the distinction between contribution and indemnification matters only to the manner in which joint tortfeasors apportion their respective shares of liability. See Restatement (Third) of Torts § 7 (2000). Both require tortious conduct by two or more tortfeasors. The rationale of Fireman’s Fund’s holding as to contribution claims applies with equal force to BNSF’s claim for indemnity. Therefore, reading BNSF’s Third–Party Complaint as bringing a claim for indemnity arising out of the negligent breach of a duty implied by the Carmack Amendment, this Court finds that the claim sounds in tort. It is true that Fireman’s Fund did not reach the issue of contribution when the claim is one for negligence on a theory of liability arising out of the breach of a duty implied by the Amendment. See Fireman’s Fund, 2004 WL 406981 at *6. Nevertheless, the case’s holding is still persuasive where, as here, the cause of action is for negligently breaching a duty argued to be implicit in the relationship between the carrier and the shipper. The claim must therefore fail, not only on preemption grounds, but also because there is no legally cognizable tortious conduct on Aztec’s part for which it must indemnify BNSF. Even if the cause of action were not preempted, BNSF could not seek indemnity against Aztec because Aztec was not a party to the bill of landing (i.e., the contract) between BNSF and Brightstar, and thus cannot be jointly liable with Brightstar for the any negligent breach of extracontractual duties arising under it. And even if BNSF’s cause of action is construed as one for indemnity on a purely contractual theory, the same result must follow, again because Aztec was not a party to the contract that is the subject matter of Brightstar’s complaint against BNSF.

 

V. Conclusion

BNSF has cited nothing in its brief which persuades this Court that its breach of warranty claim is not preempted by the Carmack Amendment or that it can maintain a valid indemnity action against Aztec. BNSF cites to Byrton Dairy Products, Inc., v. Harborside Refrigerated Services, Inc., 991 F.Supp. 977 (N.D.Ill.Dec.1, 1997) for the proposition that a defendant is allowed to proceed with a claim under the Carmack Amendment against a co-defendant shipper for indemnity and contribution under federal common law. There are several reasons to question the holding of that case, as well as its application to the instant matter. First, as noted by the court in Fireman’s Fund, that case supplied little reasoning as to why a federal common law indemnity action was available. Fireman’s Fund, 2004 WL 406981 at *7. The court further noted that Byrton Dairy relied on, among other cases, Second Circuit precedent indicating a trend in the law towards a rule allowing contribution among joint tortfeasors. Id. (citing Mooney Ltd. v. Farrell Lines, Inc., 616 F.2d 619 (2d Cir.1980). However, as explained in above, there are no joint tortfeasors in this case. Byrton Dairy concerned contribution actions between maritime shippers and inland carriers, thus distinguishing them from the facts of Fireman’s Fund, where the defendants were not contracted shippers of the goods. Id. The same distinguishing fact appears here, as Aztec was not a contracted shipper of the floor scrapers at issue in Brightstar’s litigation.

 

For the reasons set forth above, Aztec’s motion to dismiss BNSF’s Third–Party Complaint against it is granted and the claim is dismissed.