United States District Court,

S.D. Ohio,

Eastern Division.

EXEL, INC., f/u/b/o Sandoz Inc., Plaintiff

v.

SOUTHERN REFRIGERATED TRANSPORT, INC., Defendant.

 

No. 2:10–cv–994.

July 27, 2012.

 

Kendra Lynn Carpenter, Columbus, OH, Timothy P. Roth, Gallagher Sharp, Cleveland, OH, Andrew R. Spector, Marc A. Rubin, Robert M. Borak, Arnall Golden Gregory, LLP, Miami, FL, for Plaintiff.

 

Joseph W. Pappalardo, Jeffrey Stupp, Timothy P. Roth, Gallagher Sharp, Cleveland, OH, for Defendant.

 

OPINION AND ORDER

JAMES L. GRAHAM, District Judge.

*1 This case is before the Court on its sua sponte reconsideration of the Opinion and Order of December 15, 2011 (doc. 24). That order granted defendant Southern Refrigerated Transport, Inc.’s (SRT) motion for judgment on the pleadings as to counts I, II, and IV and held that the Carmack Amendment preempts the plaintiff’s contract and bailment claims. The Court subsequently ordered supplemental briefing on whether the plaintiff’s claim for breach of contract is preempted by federal law. (Doc. 49.) Also before the Court are the parties’ cross motions for summary judgment, on which the Court heard oral argument on May 23, 2012.

 

I. Background

Plaintiff Exel, Inc. (Exel) is a freight broker that arranges for “the transportation of general commodities on behalf of it’s (sic) customers, who are shippers of commodities.” (Complaint, Doc. 2 ¶ 6.) Defendant SRT is a “motor carrier, who provides transportation of cargo in interstate commerce.” (Doc. 2 ¶ 7.) Non-party Sandoz, Inc. (Sandoz) is a manufacturer of pharmaceutical products. Sandoz was one of the customers for whom Exel arranged interstate transportation services.

 

In late 2007, Exel and SRT entered into a “Master Transportation Services Agreement” (“the master agreement”) whereby SRT agreed to act as a motor carrier for the transportation of Exel’s customers’ cargo. The non-exclusive agreement was effective as of January 1, 2008. (Master Agreement, Doc. 31–1, Attachment A.) The master agreement provided that Exel would issue and SRT sign freight receipts for each shipment. Id. ¶ 4, “RECEIPTS AND BILLS OF LADING”:

 

Customer [Exel] shall issue and Carrier shall sign freight receipts for each shipment in the form acceptable to Customer and the Shipper. If a bill of lading is used as a freight receipt, any terms, conditions or provisions thereof shall be subject and subordinate to the terms of this Agreement and, in the event of a conflict, this Agreement shall govern. Carrier’s or Carrier’s agent signature on the receipt or bill of lading shall be prima facie evidence that the Commodities were received in good condition unless otherwise noted on the face of such document.

 

The master agreement also purports to make SRT liable to Exel for any lost shipment, and to establish the measurement of that liability. Id. ¶ 4, “LIABILITIES AND CLAIMS FOR COMMODITIES”:

a) Carrier shall be liable to Customer for loss, damage or injury to the Commodities tendered to Carrier for transportation hereunder while the Commodities are in its, its agent or underlying carrier’s custody, possession or control except to the extent (and only to the extent) such loss, damage or injury results from (i) acts of God, the public enemy or public authority, (ii) inherent vice or nature of the Commodities, or (iii) the negligent acts of Customer or Shipper.

 

b) The measurement of the loss, damage or injury to Commodities shall be the Shipper’s replacement value applicable to the kind and quantity of Commodities so lost, damaged or destroyed. Customer shall deduct from the invoice price the reasonable salvage value of any damaged or injured Commodities not released to Carrier. Carrier acknowledges that some of the Commodities may be disposed of in a manner that will prevent the damaged goods from being sold on the open market.

 

*2 In November, 2008, Exel requested that two SRT trucks be dispatched to transport a shipment of Sandoz’s pharmaceutical products from Mechanicsburg, Pennsylvania to Memphis, Tennessee. (Doc. 2 ¶ 11.) Sandoz’s products were placed on two SRT trucks. Plaintiff alleges that one of these trucks was lost or stolen and the shipment was never recovered. (Doc. 2 ¶ 13.) The alleged loss of that shipment forms the basis for this lawsuit.

 

Five individual bills of lading were issued for the shipment. (See Doc. 29–2, Attachments A–1–A–5.) Each bill of lading bears the heading “BILL–OF–LADING—SHORT FORM—Not Negotiable.” Id. The bills of lading were prepared by “Exel’s system based upon the specific shipment being moved.” (Plaintiff’s Answers to Interrogatories, Doc. 29–3 at 3.) The bill of lading states that “every service performed here-under shall be subject to all terms and conditions of the Uniform Domestic Straight Bill of Lading.” (Doc. 29–2, Attachment A–1.) The bill of lading further states: “Shipper hereby certifies that he is familiar with terms and conditions of the said bill of lading set forth in the classification or tariff which governs the transportation of this shipment and the terms and conditions are hereby agreed to by shipper and accepted for himself and his assigns.” Id. Under the description of articles, the bill of lading states: “Item 60000 Class 85, RVNX $2.40.” Id. According to an affidavit submitted by SRT’s employee Jerry E. McEntire, Jr., “RVNX” means “Released Value Not To Exceed” and is used to designate a per pound limit of liability of any claim against the carrier. (McEntire Aff., doc. 29–2 ¶ 10.) Exel disputes that the term “RVNX” was intended to or may be read to limit SRT’s liability. (See Doc. 37 at 5.)

 

On November 5, 2010 Exel filed this action against SRT. The Complaint caption states that the action was filed by “EXEL, INC. f/u/b/o Sandoz INC.” (Doc. 2 at 1.) Exel alleges that Sandoz “has assigned all of its rights to Exel with regard to the recovery against SRT for the lost Shipment.” (Doc. 2 ¶ 14.) The Complaint asserts in Count III that the plaintiff is entitled to relief pursuant to the Carmack Amendment, 49 U.S.C. § 14706, et seq. for the lost shipment. Counts I and II are state-law breach of contract and bailment claims. Count IV seeks a declaratory judgment that the master agreement determines the value of the lost shipment.

 

In a December 15, 2011 Order (doc. 24), the Court granted defendant’s motion for partial judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c). Claims I, II, and IV were dismissed on the grounds that plaintiff’s exclusive remedy is under the Carmack Amendment. (Doc. 24 at 14, 17.) This order was based in part on the court’s belief that plaintiff Exel sought solely to stand in the shoes of the shipper, Sandoz Inc., with rights no greater than those which could be asserted by Sandoz. At the summary judgment stage, Exel asserted its individual rights under the master agreement, which does contain language that may create obligations independent of the shipper-carrier relationship and may fall outside the governance of the Carmack Amendment. The Court concluded that the complaint does articulate a claim of individual rights under the master agreement sufficient to support a state law claim for breach of contract. Based on these findings, the Court engaged in a sua sponte reconsideration of its December 15 Order and ordered supplemental briefs on the issue of whether plaintiff’s state law claims are preempted. This sua sponte reconsideration extends only to the dismissal of Count IV, which asks the court to declare that SRT is liable under the liability clause of the master agreement. (See Doc. 31–1, Attachment A ¶ 4.) Though Count IV requests declaratory judgment, the Court finds that it states a claim for breach of the master agreement and construes it accordingly.

 

II. Legal Standard

*3 The Court’s order granting defendant’s motion to dismiss pursuant to Federal Rule of Civil Procedure 12(c) (doc. 24) is before the court for sua sponte reconsideration of that order. See doc. 49. A motion for judgment on the pleadings pursuant to Rule 12(c) should not be granted “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” Conley v. Gibson, 355 U.S. 41, 45–46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); see also Grindstaff v. Green, 133 F.3d 416, 421 (6th Cir.1998) (“The standard of review applicable to motions for ‘judgment on the pleadings’ under Fed. R. Civ. Pro. 12(c) is the same de novo standard applicable to motions to dismiss under Rule 12(b)(6).”). All well-pleaded allegations must be taken as true and must be construed most favorably toward the non-movant. Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974).

 

A motion for judgment on the pleadings is directed solely to the complaint and any exhibits attached to it. Roth Steel Prods. v. Sharon Steel Corp., 705 F.2d 134, 155 (6th Cir.1983). The merits of the claims set forth in the complaint are not at issue on a motion for judgment on the pleadings. Consequently, a complaint will be dismissed pursuant to Fed.R.Civ.P. 12(c) if there is no law to support the claims made, or if the facts alleged are insufficient to state a claim, or if on the face of the complaint there is an insurmountable bar to relief. See Rauch v. Day & Night Mfg. Corp., 576 F.2d 697, 702 (6th Cir.1978); Westlake v. Lucas, 537 F.2d 857, 858 (6th Cir.1976). However, the court “need not accept as true legal conclusions or unwarranted factual inferences.” Morgan v. Church’s Fried Chicken, 829 F.2d 10, 12 (6th Cir.1987) (citations omitted).

 

When the complaint contains well-pleaded factual allegations, “a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Iqbal, 556 U.S. at 679. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 678. Though “[s]pecific facts are not necessary,” Erickson, 551 U.S. at 93, and though Rule 8 “does not impose a probability requirement at the pleading stage,” Twombly, 550 U.S. at 556, the factual allegations must be enough to raise the claimed right to relief above the speculative level and to create a reasonable expectation that discovery will reveal evidence to support the claim. Iqbal, 556 U.S. at 678–79; Twombly, 550 U.S. at 555–56. This inquiry as to plausibility is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense…. [W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is entitled to relief.’ ” Iqbal, 556 U.S. at 679 (quoting Fed.R.Civ.P. 8(a)(2)).

 

III. Legal Analysis

 

A. The Carmack Amendment

 

*4 “The Carmack Amendment was enacted in 1906 as an amendment to the Interstate Commerce Act of 1887 and addresses the liability of common carriers for goods lost or damaged during a shipment ….” Shao v. Link Cargo (Taiwan) Limited, 986 F.2d 700, 704 (4th Cir.1993). The goal of the law “was to facilitate shippers’ recoveries against carriers for damage to transported cargo.” Intransit, Inc. v. Excel North American Road Transport, Inc., 426 F.Supp.2d 1136, 1140 (D.Or.2006).

 

The Carmack Amendment requires carriers to issue a receipt or bill of lading for cargo and establishes carrier liability: “[A]ny … carrier that delivers the property and is providing transportation or service subject to [the Carmack Amendment is] liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property caused by [a carrier.]” 49 U.S.C. § 14706(a)(1).

 

Though the default liability established by the Carmack Amendment is for “actual loss or injury,” shippers and carriers may limit liability in specific situations: [A] carrier providing transportation or service … may … establish rates for the transportation of property … under which the liability of the carrier for such property is limited to a value established by written or electronic declaration of the shipper or by written agreement between the carrier and shipper if that value would be reasonable under the circumstances surrounding the transportation. 49 U.S.C. § 14706(c)(1)(A).

 

B. Federal Preemption

“In general, a federal law may preempt a state law in any of the following three scenarios. First, a federal statute may expressly preempt the state law. Second, a federal law may impliedly preempt a state law. Third, preemption results from an actual conflict between a federal and a state law.” Garcia v. Wyeth–Ayerst Labs., 385 F.3d 961, 965 (6th Cir.2004) (citations omitted). Because the Carmack Amendment does not expressly preempt state-law claims like those at issue here, plaintiff’s contract claims can only be preempted if congress has implied their preemption or if they conflict with federal law.

 

i. Implied Preemption

“Implied preemption occurs ‘if a scheme of federal regulation is so pervasive as to make reasonable the inference that Congress left no room for the states to supplement it ….” Gibson v. Am. Bankers Ins. Co., 289 F.3d 943, 949 (6th Cir.2002) (quoting Pub. Intervenor v. Mortier, 501 U.S. 597, 605, 111 S.Ct. 2476, 115 L.Ed.2d 532 (1991)). The Carmack Amendment broadly regulates the liability of a carrier under a bill of lading. See Adams Express Co. v. E.H. Croninger, 226 U.S. 491, 505–06, 33 S.Ct. 148, 57 L.Ed. 314 (1913). Within a certain field, this regulation is sufficiently pervasive to imply preemption of state regulation and state causes of action. See REI Transp., Inc. v. C.H. Robinson Worldwide, Inc., 519 F.3d 693, 697 (7th Cir.2008) (citing Adams Express, 226 U.S. at 505) (“The Carmack Amendment generally preempts separate state-law causes of action that a shipper might pursue against a carrier for lost or damaged goods.”). The question is whether Exel’s breach of contract claim, arising under the master agreement, falls within the Carmack Amendment’s field of implied preemption. The parties have directed the court to no controlling cases directly on point, and none appear to exist. A small number of courts in other jurisdictions from which the court may draw guidance have considered related issues.

 

*5 A handfull of cases deal with indemnity and liability contracts between brokers and carriers. In Intransit v. Excel North American Road Transport, Inc., the District of Oregon considered a breach of contract claim brought by a broker against a carrier. 426 F.Supp.2d 1136, 1138 (D.Or.2006). The plaintiff, a shipping broker, had arranged for the defendant to deliver merchandise to a Wal–Mart distribution center. Id. When the defendant arrived late with the merchandise, “Wal–Mart rejected the shipment and took a setoff of $28,869.19 against [the broker] for unrelated shipments.” Id. The broker brought suit against the carrier to recover, inter alia, under the indemnity clause of the brokerage agreement. Id. The court held that Congress had not intended to preempt indemnity claims brought by brokers against carriers because the indemnity “action is sufficiently removed from a shipper or some other party who has rights under the bill of lading to sue a carrier for damage to goods shipped.” Id. at 1141. The court interpreted the Carmack Amendment to preempt claims between shippers and carriers, but held that indemnity claims between brokers and carriers stemmed from a different type of relationship that fell outside of Carmack’s preemptive field. See id.

 

The Court of Appeals of Georgia followed similar logic to affirm summary judgment granted on a contract claim brought by a broker. In Edwards Bros. v. Overdrive Logistics, the broker had brought a breach of contract claim against a carrier that had delivered a load of chicken that was rejected because it was not adequately refrigerated. 260 Ga.App. 222, 581 S.E.2d 570, 571 (Ga.App.2003). The shipper sold the chicken to other buyers at a loss. Id. The shipper recovered some of its loss through voluntary payments by the carrier, the rest it withheld from subsequent payments to the broker. Id. The broker filed a breach of contract suit against the carrier. Id. The brokerage agreement, similar to the one at issue in this case, established that “[the carrier] will be liable to [the broker] and/or shipper for any loss or damage.” Id. at 572. Like the court in Intransit, the Edwards court held that the contract claim was not preempted by the Carmack Amendment: “[The broker] is not seeking damages under the bill of lading …. Because the Carmack Amendment was enacted to protect the rights of shippers suing under a receipt or bill of lading, not brokers, it does not preempt Overdrive’s breach of contract claim in this case.” Id.

 

Other courts have reached the opposite conclusion, holding that breach of contract claims between brokers and carriers are preempted by the Carmack amendment. See, e.g., Dominion Resource Services, Inc. v. 5k Logistics, Inc., no. 3:09–cv–315, 2010 WL 679845, at *1 (E.D.Va. Feb.24, 2010) (holding that the only remedy available to the broker was one arising under the Carmack Amendment).

 

This Court finds the logic of Intransit and Edwards Brothers more persuasive. Here, the master agreement between Exel and SRT is a negotiated contract that establishes an ongoing business relationship between sophisticated parties. As in Intransit and Edwards Brothers, the contract does not focus on shipping under a bill of lading, but instead establishes the basics of a brokerage relationship. As in those cases, this relationship falls outside of the shipper-carrier relationship and outside of the preemptive field of the Carmack Amendment.

 

*6 Defendant points to a number of cases that describe the field preempted by the Carmack Amendment in sweeping terms but none of these cases directly address a breach of contract claim brought by a broker against a carrier and they do not compel a different result. See Adams Express, 226 U.S. at 499 ( Carmack Amendment preempts directly conflicting state law regarding carrier liability to shipper); Smith v. United Parcel Service, 296 F.3d 1244 (11th Cir.2002) (shippers’ state claims against carrier preempted); Rini v. United Van Lines, 104 F.3d 502 (1st Cir.1997) (shipper’s state claim against carrier preempted); Shao v. Link Cargo, 986 F.2d at 705 (same); W.D. Lawson & Co. v. Penn Cent. Co., 456 F.2d 419 (6th Cir.1972) (common-law claims preempted in suit between shipper and carrier); Schneider Elec. USA, Inc. v. Landstar Inway, Inc., No. 1:11–cv–801, 2012 WL 1068170 (S.D.Ohio Mar.29, 2012) (contract claim brought by shipper against carrier preempted); Great W. Cas. Co. v. Flandrich, 605 F.Supp.2d 955 (S.D.Ohio 2009) (breach of contract claim brought by shipper’s insurer against carrier preempted); Cent. Transp Intern., Inc. v. Alcoa, Inc., No. 6–cv–11913–DT, 2006 WL 2844097 (E.D.Mich. Sept.29, 2006) (state claims brought by shipper against carrier preempted).

 

ii. Conflict Preemption

The plaintiff’s contract claim is not subject to implied preemption by the Carmack Amendment, nor is it preempted under a conflict preemption analysis. “Conflict preemption refers to circumstances ‘where compliance with both federal and state regulations is a physical impossibility, or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’ ” Wimbush v. Wyeth, 619 F.3d 632, 643 (6th Cir.2010) (quoting Rollins v. Wilson County Gov’t, 154 F.3d 626, 629 (6th Cir.1998)). In this case, a contract that establishes liability between a broker and carrier is not at odds with the goals of the Carmack Amendment. The federal law seeks to “create a national scheme of carrier liability for goods damaged or lost during interstate shipment under a valid bill of lading.” Shao v. Link Cargo, 986 F.3d at 704. The Court in Intransit held that the indemnity contract at issue there did not conflict with this goal because the action was “sufficiently removed from a shipper or some other party who has rights under the bill of lading” and so did not undercut the purposes of the Carmack Amendment—to regulate the shipper-carrier relationship. 426 F.Supp.2d at 1141. The court further found that the contract did not put the uniform system established by the Amendment at risk: “[I]n this case, the alleged liability arises from a contract that will not be interpreted differently from one jurisdiction to the next ….” Id. Similar logic may be applied in this case. Carriers face no risk of patchwork regulation by being allowed to enter into brokerage contracts that establish liability to shipping brokers. To the contrary, such arrangements may simplify and clarify liability between the parties. Nor does this contract undercut the system of liability that Congress has established under the Carmack Amendment.

 

iii. Other Arguments

*7 Defendant SRT argues that if plaintiff’s contract claim is not preempted, then double recovery will be available against SRT. That is not a possible outcome of this case. Because the shipper has assigned its claim for the lost cargo to the plaintiff, defendant need not be concerned about a separate action by Sandoz, and Exel seeks recovery here either under the bill of lading or the master agreement, not both. Plaintiff does not seek damages in an amount that could represent double recovery. (Doc. 1 at 7.)

 

IV. Conclusion

Based on the foregoing analysis, the Order of December 15, 2011 (doc. 24) is VACATED with respect to Count IV. Defendant’s motion for partial judgment on the pleadings (doc. 6) is DENIED with respect to Count IV. In light of this order, both plaintiff’s and defendant’s motions for summary judgment are denied without prejudice, and may be resubmitted should the parties so choose.

 

IT IS SO ORDERED.

United States District Court, M.D. Florida,

Tampa Division.

GREAT AMERICAN ASSURANCE COMPANY, a foreign corporation, Plaintiff,

v.

SANCHUK, LLC, a Florida corporation, and Chuck Elliott, a Florida citizen, Defendants.

Sanchuk, LLC, a Florida corporation, and Chuck Elliott, a Florida citizen, Counter–Plaintiffs,

v.

Great American Assurance Company, a foreign corporation, and Wellington F. Roemer Insurance Agency, Inc., a foreign corporation, Counter–Defendants.

 

No. 8:10–cv–2568–T–33AEP.

July 30, 2012.

 

Eric A. Hiller, Melissa A. Gillinov, Miami, FL, John Joseph Cavo, Sina Bahadoran, Christine Renella Prieto, Coral Gables, FL, for Plaintiff.

 

Daniel P. Mitchell, Debra M. Metzler, Barr, Murman & Tonelli, PA, Tampa, FL, Kenneth Charles Podor, The Podor Law Firm, LLC, Salon, OH, for Defendants.

 

ORDER

VIRGINA M. HERNANDEZ COVINGTON, District Judge.

*1 This matter comes before the Court pursuant to Counter–Plaintiffs’ Dispositive Motion for Partial Summary Judgment on Issue of Agency of Wellington Roemer Insurance, Inc. (Doc. # 91), filed on May 29, 2012. Counter–Defendant Great American Assurance Company filed its Response in Opposition (Doc. # 99) on June 15, 2012. Also before this Court is Great American’s Motion for Summary Judgment (Doc. # 96), filed on May 29, 2012. Defendants/Counter–Plaintiffs Sanchuk, LLC and Chuck Elliott filed their Response (Doc. # 100) on June 18, 2012. Great American filed a Reply, with leave of Court, on June 27, 2012. (Doc. # 106).

 

For the reasons that follow, the Court denies both Motions.

 

I. Background and Procedural History

Sanchuk, LLC is a Florida corporation engaged in hauling paint for Sherwin Williams under a lease agreement. Sanchuk is solely owned by Sandra Rodholm. Chuck Elliott worked for Sanchuk as an independent contractor, driving the company’s 2006 Volvo tractor. (Doc. # 95, Rodholm Dep. at 14–15).

 

In November 2009, Chuck Elliott contacted Kim Kastel of Wellington F. Roemer Insurance Agency, Inc. to obtain an insurance quote and begin the process of binding a policy on the 2006 Volvo tractor. (Doc. # 92, Kastel Dep. at 13). Rodholm signed the insurance application on December 11, 2009. (Id., Ex. 2 at 22–24). Rodholm subsequently signed a form electing $1 million in non-stacked uninsured motorist (UM) coverage. (Id. at 27–28). Great American issued a Non–Trucking Liability and Physical Damage insurance policy to Sanchuk, Policy No. GTP9229665–00 (Doc. # # 96–8, 96–9, the “Policy”), with coverage effective December 24, 2009. The Policy provided $1 million in UM coverage at a premium of $10 a month. (Doc. # 96–8 at 2).

 

This dispute arises from a trucking accident that occurred on August 17, 2010. (Doc. # 1 at ¶ 9). Elliott, who was operating the 2006 Volvo tractor “under load,” was injured in the accident and sought UM coverage under the Policy. (Id. at ¶ 11). Great American denied coverage based upon an alleged Trucking or Business Use exclusion. Great American then filed suit on November 16, 2010, seeking declaratory judgment that it is not obligated to provide Elliott with UM coverage. (Id.)

 

Sanchuk and Elliott filed a Counterclaim (Doc. # 9) on April 18, 2011, and an Amended Counterclaim (Doc. # 22) on June 23, 2011. Sanchuk and Elliott asserted five counts against Great American: Policy reformation (Count I), promissory estoppel (Count II), oral contract (Count III), uninsured motorist benefits (Count IV) and attorney’s fees (Count VI). The Amended Counterclaim also asserted negligent failure to procure insurance coverage against Wellington F. Roemer Insurance Agency, Inc. (Count V). Sanchuk and Elliott allege that Elliott told Kastel he only drove the 2006 Volvo tractor under load, and Kastel represented that UM coverage would protect him during business use of the vehicle. (Id. at ¶¶ 16–17). As such, Sanchuk and Elliott argue that the business use exclusion is not enforceable. Alternatively, they argue that Roemer breached its duty to acquire a policy providing the insurance coverage they requested.

 

*2 Roemer filed a Motion to Dismiss the Amended Counterclaim (Doc. # 24) on July 5, 2011, and Great American filed a Motion to Strike and Renewed Motion to Dismiss (Doc. # 32) on July 17, 2011. On January 23, 2012, this Court entered an order (Doc. # 61) granting Roemer’s Motion to Dismiss and dismissing Count V without prejudice. The Court also granted Great American’s Motion to Dismiss as to Count III of the Amended Counterclaim. Great American’s Motion was otherwise denied.

 

Great American filed its Answer and Affirmative Defenses (Doc. # 75) on March 20, 2012. On March 28, 2012, Sanchuk and Elliott moved to strike Great American’s Answer and Affirmative Defenses as untimely and insufficient as a matter of law. (Doc. # 77). On May 10, 2012, the Court granted the motion to strike as to Great American’s first and second affirmative defenses but otherwise denied the motion. (Doc. # 90).

 

II. Legal Standard

Summary judgment is appropriate if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). An issue is genuine if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742 (11th Cir.1996) (citing Hairston v. Gainesville Sun Publ’ g Co., 9 F.3d 913, 918 (11th Cir.1993)). A fact is material if it may affect the outcome of the suit under the governing law. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.1997).

 

The Court must draw all inferences from the evidence in the light most favorable to the non-movant and resolve all reasonable doubts in that party’s favor. See Porter v. Ray, 461 F.3d 1315, 1320 (11th Cir.2006). The moving party bears the initial burden of showing the Court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial. See id. When a moving party has discharged its burden, the non-moving party must then go beyond the pleadings, and by its own affidavits, or by depositions, answers to interrogatories and admissions on file, designate specific facts showing there is a genuine issue for trial. See id.

 

III. Sanchuk and Elliott’s Motion

Sanchuk and Elliott move for partial summary judgement as to the issue of the agency relationship between Great American and Roemer (Doc. # 91). Sanchuk and Elliott assert that Kastel “acted with actual and apparent authority on behalf of Great American” and that “Roemer is the agent for Great American for purposes of all transaction[s] arising out of the insurance coverage issues herein.” (Doc. # 91 at 2). As a result, Sanchuk and Elliott contend that “Great American is bound by the representations of Roemer and Roemer’s knowledge as to the transactions with Sanchuk is imputed to Great American.” (Id.).

 

*3 “Three elements are needed to establish apparent agency: (1) a representation by the purported principal; (2) reliance on that representation by a third party; and (3) a change in position by the third party in reliance upon such representation.” Lensa Corp. v. Poinciana Gardens Ass’n, Inc., 765 So.2d 296, 298 (Fla. 4th DCA 2000). “The reliance of a third party on the apparent authority of the principal’s agent must be reasonable and rest in the actions of or appearances created by the principal and not by agents who often ingeniously create an appearance of authority by their own acts.” Blunt v. Tripp Scott, P.A., 962 So.2d 987, 989 (Fla. 4th DCA 2007) (internal quotations and citations omitted).

 

“The general rule is that an independent agent or broker acts on behalf of the insured rather than the insurer.” Steele v. Jackson Nat. Life Ins. Co., 691 So.2d 525, 527 (Fla. 5th DCA 1997). However, “an independent insurance agent can be the agent of the insurance company for one purpose and the agent of the insured for another.” Id. Furthermore, the Florida Supreme Court has held that Section 626.342(2) of the Florida Statutes, as well as Florida common law, can impose civil liability upon insurers “who cloak unaffiliated insurance agents with sufficient indicia of agency to induce a reasonable person to conclude that there is an actual agency relationship.” FN1 Almerico v. RLI Ins. Co., 716 So.2d 774, 783 (Fla.1998).

 

FN1. Section 626.342(2) states in pertinent part:

 

Any insurer … who furnishes … supplies … to any agent or prospective agent not licensed to represent the insurer and who accepts from or writes any insurance business for such agent or agency shall be subject to civil liability to any insured of such insurer to the same extent and in the same manner as if the agent or prospective agent had been appointed, licensed or authorized by the insurer ro such agent to act in its or his behalf.

 

Such “supplies” include “blank forms, applications, stationery and other supplies to be used in soliciting, negotiating, or effecting contracts of insurance.” Fla. Stat. § 626.342(1).

 

Sanchuk and Elliott argue that Roemer employee Kastel provided an application for insurance on Great American letterhead listing Roemer as the “agent” for Great American. (Doc. # 92, Kastel Dep., Ex. 2 at 22). She provided no additional applications for any other insurance company. (Doc. # 97, Elliott Dep. at 42–43). Indeed, the Great American policy was the only one Roemer offered to leased operators such as Sanchuk. (Doc. # 93, Clinton Dep. at 13–14). Once Roemer takes the application and binds the policy, those documents are submitted to Great American electronically and the policy is issued automatically. (Id. at 12). Great American trains the staff of agencies such as Roemer on policy and coverage descriptions and underwriting guidelines. (Id. at 12–13). Sanchuk and Elliott contend that these factors constitute sufficient indicia of agency such that they would reasonably conclude that there was an agency relationship between Roemer and Great American.

 

Great American asserts that Elliott contacted Kastel in order to obtain insurance. (Doc. # 97, Elliott Dep. at 39). After reviewing the policy, Elliott saw that the UM coverage was incorrect and asked Kastel to increase the limit to $1 million. (Doc. # 92, Kastel Dep. at 53). Elliott requested information about occupational accident coverage (which would have covered the accident at issue) but decided not to purchase it. (Id. at 27–28). Elliott also requested that his brother be added as a driver and that the application be amended to reflect Sanchuk as the insured (Id. at 14–15).

 

*4 Great American argues that this two-month process shows that Kastel was working as Sanchuk and Elliott’s agent, helping to ensure they obtained the exact policy they wanted. Great American further argues that Sanchuk and Elliott have failed to provide any evidence that they changed their position in detrimental reliance on the alleged apparent agency.

 

Drawing all inferences from the evidence in the light most favorable to Great American, as the nonmoving party, the Court finds that there are genuine issues of material fact as to the alleged agency relationship between Roemer and Great American. Furthermore, “[t]he existence of an agency relationship is normally one for the trier of fact to decide.” Villazon v. Prudential Health Care Plan, Inc., 843 So.2d 842, 853 (Fla.2003). The Court therefore denies Sanchuk and Elliott’s Motion for partial summary judgment on this issue.

 

IV. Great American’s Motion

Great American moves for summary judgment as to all counts of Sanchuk and Elliott’s Amended Counterclaim. Great American asserts that Sanchuk’s trailer was under load at the time of the accident, thus the Policy’s business use exclusion precludes Elliott’s UM claim. Great American further argues that Sanchuk and Elliott have failed to adequately support their claims for promissory estoppel and policy reformation.

 

A. UM Coverage and Alleged Policy Ambiguity

The Amended Complaint rests on equitable claims for promissory estoppel and policy reformation. Nevertheless, Great American argues that the unambiguous language of the Policy excludes coverage for any accident that occurs while the covered vehicle is being used to transport cargo. Great American cites several extra-jurisdictional cases for the proposition that courts have found similar business-use exclusions to be unambiguous and enforceable.

 

“Insurance contracts are construed in accordance with the plain language of the policies as bargained for by the parties. Ambiguities are interpreted liberally in favor of the insured and strictly against the insurer who prepared the policy.” Prudential Prop. & Cas. Inc. Co. v. Swindal, 622 So.2d 467, 470 (Fla.1993). This Court may not “rewrite a contract of insurance, extending the coverage afforded beyond that plainly set forth in the insurance contract.” AAA Life Ins. Co. v. Nicolas, 603 So.2d 622, 623 (Fla. 3d DCA 1992). The problem in this instance is that Sanchuk and Elliott are suing Great American not under the terms of the Policy but pursuant to equitable theories of promissory estoppel and policy reformation.

 

In their Response, Sanchuk and Elliott contend that the Policy is indeed ambiguous. They assert that the business use exclusion under Part II of the Policy (Doc. # 96 at 9) does not specifically state that it applies to UM claims. Furthermore, they argue that the UM endorsement is not subject to the exclusions under Part III of the Policy, and that the UM endorsement (Doc. # 96–9) does not reference the business use exclusion.

 

*5 In its Reply (Doc. # 106), Great American asserts that Sanchuk and Elliott have raised the issue of Policy ambiguity for the first time in their Response; therefore, the Court should not consider this theory. In addition, Great American argues that Sanchuk and Elliott have waived their right to assert the ambiguity argument. In their response to Great American’s Motion to Strike and Renewed Motion to Dismiss, Sanchuk and Elliott stated that “UIM benefits is the relief sought under a variety of [equitable] theories…. It is not the literal written policy for which Sanchuk seeks enforcement; it is the alternative theories that allow enforcement of the UIM coverage.” (Doc. # 33 at 17).

 

Sanchuk and Elliott argue that the alleged Policy ambiguity supports their claims for policy reformation and promissory estoppel, discussed below. They claim that their understanding of the Policy provisions and the alleged representations made by Kastel relate to the issues of mistake and detrimental reliance.

 

The Court declines to grant summary judgment based upon interpretation of the Policy language when Sanchuk and Elliott are asserting equitable claims. The Court will, however, consider these arguments insofar as they relate to Sanchuk and Elliott’s reasonable belief as to coverage and assertions as to mutual mistake.

 

B. Promissory Estoppel

Great American argues that Sanchuk and Elliott have failed to establish their claim for promissory estoppel. Great American asserts that Kastel did not represent that Sanchuk had UM coverage while under load, and that Sanchuk and Elliott could not reasonably believe the Policy provided such coverage. Great American further argues that Sanchuk and Elliott cannot establish detrimental reliance.

 

“The general rule is that estoppel may not be invoked to enlarge or extend the coverage specific in an insurance contract.” Solar Time Ltd. v. XL Specialty Ins. Co., 142 F. App’x 430, 433–34 (11th Cir.2005) (internal quotations and citations omitted). However, the Florida Supreme Court has recognized a narrow exception to this rule under which coverage may be created through promissory estoppel “where to refuse to do so would sanction fraud or other injustice.”   Crown Life Ins. Co. v. McBride, 517 So.2d 660, 662 (Fla.1987). To prove entitlement to promissory estoppel, Sanchuk and Elliott must prove by clear and convincing evidence that (1) Kastel represented that the policy provided UM coverage under load, (2) Sanchuk and Elliott reasonably relied upon that representation, and (3) because of that reliance Sanchuk and Elliott failed to their detriment to obtain alternative insurance coverage. See Universal Underwriters Ins. Co. v. Abe’s Wrecker Serv., Inc., 564 F.Supp.2d 1350, 1356 (M.D.Fla.2008).

 

Great American asserts that “there is no clear and convincing evidence that Kastel said Great American’s policy would provide coverage for this type of loss.” (Doc. # 96 at 17). Great American points to Elliott’s testimony where he states that he requested $1 million in UM coverage (Doc. # 97, Elliott Dep. at 41). Great American then concludes: “In fact, those coverages were provided if the accident occurred while the vehicle was not under load. Thus, Kastel did not make a material representation.” (Doc. # 96 at 17).

 

*6 Great American further contends that Sanchuk and Elliott could not have reasonably believed the Policy provided coverage under load because “Kastel repeatedly emailed documents showing it was a non-trucking policy.” (Doc. # 96 at 19; Doc. # 96–11). In addition, Great American argues that “a reasonable person would not believe the low premium paid by Sanchuk would provide complete coverage.” (Doc # 96 at 19).

 

Great American argues that “Elliott admits Kastel never represented she was authorized to bind on Great American’s behalf” a policy providing UM coverage under load (Doc. # 96 at 21), citing to Elliott’s answer of “no” when asked if Kastel told him what type of insurance products she was able to sell him. (Doc. # 97, Elliott Dep. at 42). Great American asserts that “[t] he testimony was that no policy would provide coverage while the vehicle was under load. In light of that testimony, Sanchuk and Elliott did not detrimentally rely on Kastel’s statements.” (Doc. # 96 at 21). Finally, Great American argues that coverage could not exist even if Kastel had made the alleged representations because she had no authority to bind Great American to a policy covering independent contractors operating under load. (Id. at 21–22).

 

Sanchuk and Elliott contend that Great American’s argument rests on “Kastel’s inability to remember anything about her conversations with Sanchuk” and her “denial that certain conversations ever happened.” (Doc. # 100 at 9). Although Kastel’s notes indicate that she sent Elliott an updated application with $1 million in UM coverage, she testified, “I don’t recall the specifics of any conversation” with Elliott regarding increasing the UM coverage limit. (Doc. # 92, Kastel Dep. at 14).

 

Sanchuk and Elliott argue that Elliott did request UM coverage and told Kastel that the vehicle was only driven under load. (Doc. # 97, Elliott Dep. at 41). Sanchuk and Elliott assert that “Kastel’s failure to provide what the insured specifically requested is a material representation and is the basis for promissory estoppel.” (Doc. # 100 at 11). As such, they seek to apply promissory estoppel to the representations made at the inception of the policy. See Aetna Cas. & Sur. Co. of Am. v. Deluxe Sys., Inc. of Fla., 711 So.2d 1293, 1296 (Fla. 4th DCA 1998) (noting that promissory estoppel “is limited to circumstances surrounding the acquisition or procurement of the very contract of insurance in the first instance, and before any claim on that coverage has been asserted.”)

 

As to reasonable belief of coverage, Sanchuk and Elliott argue that the insurance application they completed (Doc. # 100–1) gives no reference to non-trucking liability and they had no reason to inquire further. They contend that the emails Kastel sent referencing a non-trucking policy do not address Sanchuk and Elliott’s knowledge or establish a reasonable belief that the UM coverage did not apply under load. They further argue that they simply paid the premium quoted based upon the coverage requested.

 

*7 Sanchuk and Elliott assert that Elliott’s deposition testimony cited by Great American (Doc. # 97, Elliott Dep. at 42) does not amount to an affirmative statement that Kastel said she could not write the policy requested. They further argue that “[t]here is no evidence presented by Great American that Sanchuk could not find a policy with UM coverage while ‘under load,’ only that Kim Kastel could not bind that coverage under the policy she sold.” (Doc. # 100 at 16). Finally, they assert that Kastel had authority to bind Great American under its underwriting guidelines and any error she may have made occurred while she was acting on Great American’s behalf.

 

Sanchuk and Elliott face a high bar in establishing their claim for promissory estoppel. Facts supporting such a claim “must be shown with certainty and not taken by argument or inference, nor supplied by intendment, but clearly and satisfactorily proved.” Universal Underwriters, 564 F.Supp.2d at 1356. It must be noted, however, that the Universal Underwriters court conducted a bench trial as to the insured’s claims of estoppel and policy reformation, addressing only policy interpretation on cross motions for summary judgment. It is not the province of this Court to weigh the credibility of evidence on a motion for summary judgment. Drawing all inferences from the evidence in the light most favorable to Sanchuk and Elliott, as nonmovants, the Court finds that genuine issues of material fact preclude summary judgment on the promissory estoppel claim.

 

C. Policy Reformation

Great American argues that Sanchuk and Elliott have failed to introduce any evidence to support their claim for reformation of the Policy. Great American asserts that Rodholm was not privy to Elliott’s conversations with Kastel, that Elliott provided Kastel with information as to what coverage he needed and that Kastel provided exactly that coverage. Great American contends that if Elliott had asked for the type of coverage sought under the Policy reformation theory, Kastel would have told him that she could not write that type of policy.

 

“To state a cause of action for reformation of a contract, the complaint must allege that, as a result of a mutual mistake or a unilateral mistake by one party coupled with the inequitable conduct of the other party, the insurance contract fails to express the agreement of the parties.” Romo v. Amedex Ins. Co., 930 So.2d 643, 649 (Fla. 3d DCA 2006). An insurance policy is prima facie evidence of the intent of the parties; to have it reformed, the plaintiff must show by clear and convincing evidence that a mistake has been made. USAA Cas. Ins. Co. v. Threadgill, 729 So.2d 476, 478 (Fla. 4th DCA 1999). “Rigorous application of the higher standard of proof in reformation cases promotes the policy that parties should not be subjected to contractual obligations to which they never agreed.” Id.

 

Great American points to Rodholm’s testimony that she heard only Elliott’s side of the conversation with Kastel. (Doc. # 95, Rodholm Dep. at 33). Elliott testified that he requested $1 million in UM coverage, told Kastel about Sherwin Williams’ insurance requirements and sent Kastel a copy of those requirements. (Doc. # 97, Elliott Dep. at 41, 44). Sanchuk’s contract with Sherwin Williams required that Sanchuk maintain “bobtail and deadhead” insurance from an acceptable insurance company.FN2 (Doc. # 96–10 at 6). As a result, Great American asserts, Sanchuk and Elliott received the coverage they were obligated to obtain, refuting their allegation of fraud or mutual mistake.

 

FN2. “Bobtail” (when the tractor is operating without a trailer) and “deadhead” (when a tractor and trailer are operating without a load) insurance refers to insurance that provides coverage when the vehicle is not under load.

 

*8 Sanchuk and Elliott reiterate that they specifically requested UM coverage and told Kastel that Elliott only operated the vehicle while under load. “Kastel either misapprehended this fact or sold a policy directly in contravention of what the insured requested.” (Doc. # 100 at 18). Sanchuk and Elliott accepted the Policy under the mistaken belief that it provided coverage while under load.

 

Again, Sanchuk and Elliott face a high bar in establishing their claim policy reformation but the Court finds it inappropriate to grant summary judgment as to this claim.

 

The evidentiary standard of clear and convincing evidence in the context of reformation contemplates testimony from a credible witness who testifies to facts that are distinctly remembered and the details thereof narrated exactly and in due order and that the testimony be clear, direct and weighty and convincing, so as to enable you to come to a clear conviction without hesitancy of the truth of the precise facts and issue.

 

Universal Underwriters, 564 F.Supp.2d at 1356–57. As noted above, the Court in Universal Underwriters found no coverage under a policy reformation theory after a bench trial. This Court is not at liberty to weigh the credibility of the evidence on a motion for summary judgment. The Court finds that genuine issues of fact preclude summary judgment as to the policy reformation claim.

 

Accordingly, it is

 

ORDERED, ADJUDGED, and DECREED:

 

(1) Counter–Plaintiff’s Dispositive Motion for Partial Summary Judgment on Issue of Agency of Wellington Roemer Insurance, Inc. (Doc. # 91)is DENIED.

 

(2) Great American’s Motion for Summary Judgment (Doc. # 96) is DENIED.

 

DONE and ORDERED.