Court of Appeals of New York.

COUNTRY–WIDE INSURANCE COMPANY, Appellant,

v.

PREFERRED TRUCKING SERVICES CORP., et al., Defendants,

Filippo Gallina, et al., Respondents.

 

No. 21.

Feb. 18, 2014.

 

Thomas Torto, for appellant.

 

Alexander J. Wulwick, for respondents.

 

PIGOTT, J.

Filippo Gallina was injured during the unloading of a vehicle owned by Preferred Trucking Services Corp. and operated by Carlos Arias. In March 2007, Gallina and his wife commenced a personal injury action against Preferred Trucking, Arias, and other defendants. Preferred Trucking was insured by Country–Wide Insurance Company under a “business auto policy” with limits of $500,000 per accident. The policy, a standard one, required that insureds cooperate with Country–Wide in its investigation or settlement of a claim or defense against a lawsuit.

 

Throughout the spring of 2007, Country–Wide made numerous attempts to contact both the president of Preferred Trucking, Andrew Markos, and the driver, Arias with no success. Markos and Arias did not respond to the lawsuit either and, as a result, on September 21, 2007, the plaintiffs filed an application for a default judgment against Preferred Trucking and Arias. When their attorney faxed a copy of the motion to Country–Wide on October 4, 2007, the insurance company received its first formal notice of the lawsuit. On October 10, 2007, Country–Wide informed Preferred Trucking and Arias, by letters, that it was exercising its “right to issue a disclaimer of indemnity” and reserving its “right to disclaim any duty to defend” because of the insureds’ failure to cooperate.

 

At this point, Markos contacted Country–Wide, once, expressing willingness to cooperate, but he then proved impossible to reach. The insurance company continued its efforts to contact Markos and Arias through the summer of 2008. Meanwhile, Cheven, Keely & Hatzis, a law firm retained by Country–Wide to defend its insureds, sent multiple letters to Arias, advising him of a scheduled deposition and reminding him of the need to cooperate. On May 29, 2008, Supreme Court informed the parties that failure to submit to a deposition would preclude Preferred Trucking “from offering evidence in support of its claims or defenses.” Further futile efforts by Cheven, Keely & Hatzis to reach Markos and Arias ensued.

 

On July 7, 2008, a Country–Wide investigator visited Markos’s home for the sixth time. Markos’s wife said that her husband was not at home, but she would relay a message to him that he should call Country–Wide. Again, Markos failed to respond.

 

On July 28, 2008, a Country–Wide investigator was able to speak with Arias’s daughter, who told the investigator that Arias did not speak much English, but gave him her father’s cell phone number. On August 18, a Spanish-speaking Country–Wide investigator finally reached Arias; according to the investigator’s notes, Arias said he would cooperate. The following day, Cheven, Keely & Hatzis wrote to Arias, in Spanish, informing him of the upcoming deposition, now scheduled for September 9. Arias did not respond.

 

On October 13, 2008, the Spanish-speaking investigator again spoke to Arias, who now said that he did not “care about the EBT date,” because of a “family situation.” The investigator was unable to reach Arias by telephone over the next two days, although he left messages explaining in Spanish the urgent need for Arias to attend the deposition (or reschedule it). On October 16, 2008, Supreme Court granted the Gallinas’ motion to strike defendants’ answer for failure to appear.

 

On November 6, 2008, Country–Wide disclaimed its obligation to defend and indemnify Preferred Trucking and Arias, based upon refusal to cooperate in the defense. Subsequently, Supreme Court granted the motion of Cheven, Keely & Hatzis to be relieved as defendants’ counsel.

 

Supreme Court struck defendants’ answer, awarded judgment to the Gallinas, and directed an assessment of damages. An inquest was duly held and Supreme Court awarded the Gallinas $2,550,000 in damages, by default, against Preferred Trucking, plus interest, costs and disbursements.

 

Country–Wide brought the present action against Preferred Trucking, Arias, the Gallinas, and others, seeking a declaration that it is not obligated to defend and indemnify Preferred Trucking and Arias in the underlying action. The Gallinas moved for summary judgment, arguing, among other things, that Country–Wide’s disclaimers were untimely as a matter of law. Country–Wide cross-moved for summary judgment.

 

Supreme Court granted the Gallinas’ motion to the extent of declaring that Country–Wide is obligated to indemnify Preferred Trucking in the underlying action, granted Country–Wide’s cross motion to the extent of declaring that Country–Wide is not obligated to indemnify Arias (and is obliged to indemnify Preferred Trucking only up to the policy limit), and otherwise denied Country–Wide’s cross motion. Country–Wide appealed. The Gallinas did not cross-appeal.

 

On appeal, the parties dispute one question: whether Country–Wide’s November 6, 2008 disclaimer was timely as a matter of law. The Appellate Division affirmed Supreme Court’s order, insofar as appealed from, holding that the insurer’s disclaimer on that date “was untimely, since it came approximately four months after it learned of the ground for the disclaimer” ( 99 A.D.3d 582, 952 N.Y.S.2d 539 [1st Dept 2012] ).

 

We granted Country–Wide leave to appeal, and now reverse.

 

[1] The governing statute in this area is Insurance Law § 3420, which provides, with respect to a liability policy issued or delivered in New York, that if “an insurer shall disclaim liability or deny coverage for death or bodily injury arising out of a motor vehicle accident or any other type of accident occurring within this state, it shall give written notice as soon as is reasonably possible of such disclaimer of liability or denial of coverage to the insured and the injured person or any other claimant” (Insurance Law § 3420[d][2] [emphasis added] ). The law protects both policyholders and injured parties who are made aware as soon as possible that the defendant’s insurer has a ground for refusal of coverage.

 

[2] We have clarified the application of the statute by holding that “once the insurer has sufficient knowledge of facts entitling it to disclaim, or knows that it will disclaim coverage, it must notify the policyholder in writing as soon as is reasonably possible … [T]imeliness of an insurer’s disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage” ( First Fin. Ins. Co. v. Jetco Contr. Corp., 1 N.Y.3d 64, 66, 68–69 [2003] [internal quotation marks and citation omitted). Moreover, “[a]n insurer who delays in giving written notice of disclaimer bears the burden of justifying the delay” (id. at 69, 769 N.Y.S.2d 459, 801 N.E.2d 835).

 

[3] The question whether an insurer disclaimed as soon as reasonably possible is necessarily case-specific. In some cases, very different from this one, the justification for disclaimer is “readily ascertainable from the face of the complaint in the underlying action” ( Fish King Enters. v. Countrywide Ins. Co., 88 A.D.3d 639, 642, 930 N.Y.S.2d 256 [2d Dept 2011] ) or “all relevant facts supporting … a disclaimer [are] immediately apparent … upon … receipt of notice of the accident” ( Matter of Allstate Ins. Co. v. Cruz, 30 A.D.3d 511, 513, 817 N.Y.S.2d 129 [2d Dept 2006] ). In such cases, a disclaimer must be made rapidly. The present appeal, on the other hand, involves disclaimer for noncooperation by an insured. A determination as to whether such a disclaimer was made within a reasonable time is more complex because “an insured’s noncooperative attitude is often not readily apparent” ( Continental Cas. Co. v. Stradford, 11 N.Y.3d 443, 449 [2008] ). We have emphasized that “insurers must be encouraged to disclaim for noncooperation only after it is clear that further reasonable attempts to elicit their insured’s cooperation will be futile” (id. at 450, 871 N.Y.S.2d 607, 900 N.E.2d 144).

 

[4] The primary reason that we allow a longer period for disclaimer for noncooperation lies in a well-established principle of our case law, which is intended to facilitate the full compensation of injured victims suing for damages. This is the requirement that an insurer may not properly disclaim for noncooperation unless it has satisfied its burden, described in the precedent as “a heavy one indeed,” of showing “that it acted diligently in seeking to bring about the insured’s co-operation; that the efforts employed by the insurer were reasonably calculated to obtain the insurer’s co-operation; and that the attitude of the insured, after his co-operation was sought, was one of willful and avowed obstruction” ( Thrasher v. United States Liability Ins. Co., 19 N.Y.2d 159, 168 [1967] [internal quotation marks and citations omitted] ).

 

[5] Country–Wide does not dispute that it knew or should have known in July 2008 that Markos, the president of Preferred Trucking, would not cooperate. Instead, Country–Wide contends that it was not in a position to know that Arias, the driver of the vehicle, would not cooperate until October 13, 2008, when he said he did not “care about the EBT date.”

 

Country–Wide’s argument is compelling. The period at issue extends from July to October 2008. During most of this time, while it may have been clear that Markos would not be cooperative, the situation with respect to Arias remained opaque. One Country–Wide investigator made a breakthrough in that he reached Arias’s daughter, who volunteered her father’s contact number and explained that Arias spoke little English, possibly accounting for his failure to communicate with Country–Wide. Moreover, when a Spanish-speaking Country–Wide investigator finally reached him, Arias said he would cooperate. It was only in mid-October 2008 that Arias’s unwillingness to cooperate became clear, when he told the investigator that he did not care about the deposition and thereafter gave no further response.

 

In these circumstances, in which Arias “punctuated periods of noncompliance with sporadic cooperation or promises to cooperate” ( Stradford, 11 N.Y.3d at 450, 871 N.Y.S.2d 607, 900 N.E.2d 144), we hold that Country–Wide established as a matter of law that its delay was reasonable. The Gallinas fail to raise a triable issue of fact regarding whether Country–Wide knew or should have known that it would disclaim coverage as soon as it became clear that Markos would not cooperate. The named insured was Preferred Trucking, and its cooperation could occur through Arias, the driver. Arias, unlike Markos, had personal knowledge of the accident and was in a position to provide a meaningful defense, or, alternatively, testify in such a way as to bind Preferred Trucking. As Country–Wide argues, as long as it was still seeking Arias’s cooperation in good faith, it could not disclaim.

 

Accordingly, the order of the Appellate Division should be reversed, with costs, and judgment granted declaring that Country–Wide is not obligated to defend and indemnify Preferred Trucking in the underlying action.

 

Order reversed, with costs, and judgment granted declaring in accordance with the opinion herein.

 

Chief Judge LIPPMAN and Judges GRAFFEO, READ, SMITH and RIVERA concur.

Judge ABDUS–SALAAM took no part.

United States District Court,

S.D. Ohio,

Western Division.

TOTAL QUALITY LOGISTICS, LLC, Plaintiff,

v.

MACKTOON, INC., dba Arrow Transportation, Defendant.

 

No. 1:12–cv–620.

Feb. 19, 2014.

 

Raymond William Lembke, Cincinnati, OH, for Plaintiff.

 

Juan Jose Gonzales Perez, Laura Monsivais Jurcevich, Sarah Crabtree Perez, Perez & Morris LLC, Columbus, OH, for Defendant.

 

FINDINGS OF FACT AND CONCLUSIONS OF LAW AFTER TRIAL TO THE COURT

TIMOTHY S. BLACK, District Judge.

*1 This civil case is before the Court pursuant to the parties’ filings, including witnesses’ testimony via videotaped deposition. The parties expressly agree that all relevant testimony and evidence is now before the Court, and that this case is ripe for final adjudication as upon trial to the Court. (Docs.55, 58); see also the Court’s Notation Order of 8/21/13. The parties have submitted pretrial briefs and proposed Findings of Fact and Conclusions of Law. (Docs. 25, 26, 28, and 29). Thereafter, Defendant submitted a short response brief. (Doc. 44). Pursuant to Fed.R.Civ.P. 52, the Court now sets forth and enters its Findings of Fact and Conclusions of Law.

 

I. FINDINGS OF FACT

1. Plaintiff Total Quality Logistics, LLC is a freight broker. (Doc. 2 at 1). Plaintiff is an Ohio limited liability company with its principal place of business in Clermont County, Ohio. (Id.) Customers having cargo to transport hire Plaintiff to effect that transportation. (Id.) Plaintiff, in turn, hires a motor carrier to actually haul the cargo. (Id.)

 

2. In August, 2011, Versacold hired Plaintiff to arrange transport of a load of Pepperidge Farm frozen bread products from a Versacold cold storage warehouse in Malvern, Pennsylvania to an Americold cold storage warehouse in Clearfield, Utah.FN1 (Doc. 23 at 10–13).

 

FN1. Versacold was subsequently acquired by Americold. (Doc. 23 at 17–18). The parties and witnesses refer to the operator of the Malvern, Pennsylvania facility from which the cargo at issue was shipped as Versacold and Americold interchangeably.

 

3. Defendant Macktoon, Inc. is a Maryland corporation and trucking company that does business under the name “Arrow Transportation.” (Doc. 24 at 7).

 

4. Plaintiff hired Defendant to haul the load of frozen bread products from Malvern, Pennsylvania to Clearfield, Utah. (Id. at 14–16; Doc. 57–3).

 

5. The Rate Confirmation which Plaintiff issued to Defendant for this load directed that Defendant was to maintain the cargo at a temperature of –10 degrees “continuous.” (Doc. 24 at 15–16; Doc. 57–3).

 

6. The Broker Carrier Agreement between Plaintiff and Defendant obligated Defendant to comply with this direction. (Doc. 24–1 at 5). The bill of lading for this cargo also directs “maintain –10 Degree Fahrenheit.” (Id. at 9).

 

7. There is undisputed testimony that –10 degrees is an industry standard and a Pepperidge Farm standard. (Doc. 21 at 10; Doc. 22 at 11).

 

8. Defendant’s driver, Keith Macktoon (“Mr.Macktoon”), arrived at the Versacold facility in Malvern, Pennsylvania on August 26, 2011 to pick up a load of 1,862 cases of frozen bread products. (Doc. 57–4).

 

9. Defendant’s refrigeration unit was pre-cooled to –10 degrees prior to picking up the load at Versacold’s facility. (Doc. 24 at 89).

 

10. Mr. Macktoon did not inspect the cargo when it was loaded onto his truck in Malvern and does not know the condition of the cargo when he received it into his truck. (Id. at 23–24). The undisputed testimony is that the cargo was in good condition and frozen when it was loaded onto Defendant’s truck. (Doc. 23 at 14). Versacold also verified that Defendant’s truck was set to keep the cargo at the temperature specified in the bill of lading. (Id. at 15).

 

*2 11. Versacold issued a bill of lading for the cargo. (Id. at 11–12; Doc. 57–4). The undisputed testimony is that Versacold would not print a bill of lading unless the cargo was frozen when it was loaded onto Defendant’s truck. (Doc. 23 at 23–24).

 

12. Defendant delivered the cargo to the Americold facility in Clearfield, Utah on August 29, 2011. (Doc. 24 at 29–30). His unloading appointment time was 11:30 a.m. (Doc. 21 at 30).

 

13. Prior to a carrier’s unloading appointment time at the Americold facility, the carrier retains responsibility for the condition of the cargo. (Id. at 39).

 

14. Americold personnel starting to unload the cargo determined that it was a “warm unload,” defined as “anything that is a temperature above what the customer requires for their specifications.” (Id. at 8). The unloading personnel notified Mr. Drew Dunifer. (Id.)

 

15. Mr. Dunifer is the inventory control manager at the Americold facility in Clearfield, Utah. (Id. at 5). Mr. Dunifer has held that position for approximately nine years, and has been with Americold for almost 22 years. (Id. at 6–7). Americold is a third-party logistics warehouse that handles primarily frozen and refrigerated food products. (Id. at 5–6).

 

16. Mr. Dunifer performed a visual inspection of the cargo and used a digital thermometer to take temperatures. (Id. at 11). Mr. Dunifer checked temperatures between cases on several pallets, and the lowest temperatures he could obtain were between 42 and 44 degrees. (Id. at 14). Mr. Dunifer also opened a case and took temperatures between interior packages. (Id. at 14–15). The coldest temperatures Mr. Dunifer could detect inside the case were between 38.6 and 38.8 degrees. (Id.) Mr. Dunifer also used a laser thermometer to take a temperature of the inside of Defendant’s trailer, which registered 50 degrees. (Id. at 16). These temperatures “were considered quite high.” (Id. at 19). The concern is food safety: “not knowing what can happen to this product when it is not maintained at … its required temperature for transportation and storage.” (Id. at 20).

 

17. The temperature readings taken at the Americold facility in Utah were e-mailed to Richard Powell, Pepperidge Farm’s manager for planning and logistics. (Doc. 22 at 7, 12–13; Doc. 21 at 11–13; Doc. 39–1 at 4). The e-mail to Mr. Powell had attached photographs showing how Americold took the temperature readings reported. (Doc. 22 at 13). Mr. Powell testified that these readings were outside of Pepperidge Farm’s specifications and rendered the products in the cargo substandard and not salable. (Id. at 14–15, 35–37).

 

18. Pepperidge Farm directed that the cargo be destroyed. (Id . at 24). Powell testified that “we always at Pepperidge Farm in the frozen world we always have the product dumped. That way we know where it goes and we’re confident that it can’t get out to a customer.” (Id. at 16).

 

*3 19. Pepperidge Farm presented a claim to Americold for $41,088.96. (Id. at 19; Doc. 39–1 at 7). This amount was calculated as the probable return to Pepperidge Farm had the product been sold plus the cost to dispose of the product. (Doc. 22 at 20–21). This amount was paid by Americold. (Id. at 19). Americold made a claim of like amount to Plaintiff which was paid by Plaintiff. (Doc. 38–1 at 7).

 

II. CONCLUSIONS OF LAW

1. In this action, Plaintiff seeks damages from Defendant for Defendant’s failure to properly perform a contract for interstate carriage of goods. Therefore, Plaintiff’s claim is governed by the Carmack Amendment, 49 U.S.C. § 14706. See American Synthetic Rubber Co. v. Louisville & Nashville Railroad Co., 422 F.2d 462, 466 (6th Cir.1970); Excel, Inc. v. Southern Refrigerated Transport, Inc., 835 F.Supp.2d 472, 476 (S.D.Ohio 2011).

 

2. Under the Carmack Amendment, Plaintiff establishes a prima facie case by showing that (1) the cargo was in good condition when it was delivered to Defendant in Malvern, Pennsylvania; (2) the cargo was in damaged condition when Defendant arrived with it in Clearfield, Utah; and (3) damages. Missouri Pacific Railroad Co. v. Elmore & Stahl, 377 U.S. 134, 138, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964); Super Service Motor Freight Co. v. United States, 350 F.2d 541, 542 (6th Cir.1965).

 

3. Once Plaintiff establishes a prima facie case, the burden of proof shifts to Defendant to prove (1) that it was not negligent and (2) that the damage to the cargo was caused by (a) an act of God, (b) public enemy, (c) acts of the shipper, (d) public authority, or (e) the inherent vice or nature of the goods. Missouri Pacific Railroad Co., 377 U.S. at 137; Plough, Inc. v. Mason and Dixon Lines, 630 F.2d 468, 470–71 (6th Cir.1980). This burden of proof shifts to Defendant and remains there. Plough, Inc., 630 F.2d at 470–71; Super Service Motor Freight Co., 350 F.2d at 543. A corollary to this burden of proof placed on the carrier by the Carmack Amendment is that other common law defenses are preempted. Malone v. Mayflower Transit, Inc., 819 F.Supp. 724, 725 (E.D.Tenn.1993).

 

4. Plaintiff has proven its prima facie case. When, as here, “the shipment at issue is in a sealed container, then the carrier has no independent ability to ascertain the contents of the shipment, and the shipper is held to a higher standard of proof … [and t]he bill of lading, by itself, is never sufficient to establish a prima facie case.” Nevertheless, here, beyond the bill of lading, Plaintiff has also shown that the cargo was loaded in good condition by evidencing the Rate Confirmation and the testimony of Daryl Moats of Versacold/Americold in Malvern, Pennsylvania. A.I.G. Uruguay Compania de Seguros, S.A. v. AAA Cooper Transp., 334 F.3d 997, 1004 (11th Cir.2003) (citing Offshore Aviation v. Transcon Lines, Inc., 831 F.2d 1013, 1014 (11th Cir.1994). That evidence shows that the cargo of Pepperidge Farm bread products was to be maintained at –10 degrees throughout shipment. The undisputed testimony of Mr. Moats is that the product was frozen and in good condition when it was loaded onto Defendant’s truck and that Versacold verified that the truck was set to maintain the cargo at the temperature required by the Rate Confirmation and bill of lading. The testimony of Mr. Dunifer shows that the cargo was at a substantially higher temperature than specified, and a temperature well above freezing, at the time the cargo was unloaded from Defendant’s truck. The testimony of Mr. Powell establishes that the temperature at the time of unloading was outside of Pepperidge Farm’s specifications and rendered the product in the cargo substandard and unsalable. This establishes that Defendant delivered the Pepperidge Farm products in a damaged condition.

 

*4 5. Plaintiff has also established damages. In the case of goods intended for sale, the proper measure of damages under the Carmack Amendment is “the value the goods would have brought to [their owner] had [the carrier] delivered the shipment without damage.” Oak Hall Cap & Gown Co. v. Old Dominion Freight Line, Inc., 899 F.2d 291, 296 (4th Cir.1990). This is because the purpose of Carmack Amendment damages is to compensate the cargo owner for “what he ‘would have had if the contract [of delivery] had been performed.’ ”   Polaroid Corp. v. Schuster’s Express, Inc. ., 484 F.2d 349, 351 (1st Cir.1973) (quoting Chicago, Milwaukee, & St. Paul Ry. Co. v. McCaull–Dinsmore Co., 253 U.S. 97, 100, 40 S.Ct. 504, 64 L.Ed. 801 (1920) (brackets in original)). Here, the product was intended for sale, and the undisputed testimony shows that the probable return to Pepperidge Farm from such sale was $39,488.96 and that Pepperidge Farm paid $1,600.00 to dispose of the product. Pepperidge Farm claimed this amount from Americold and was paid. Americold claimed this amount from Plaintiff and was paid, because Plaintiff hired Defendant.

 

6. As permitted by paragraph 8 of the parties’ Broker Carrier Agreement, Plaintiff has withheld payment from Defendant in the amount of $4,499.88 for the load which Defendant transported from Rigby, Idaho to Swedesboro, New Jersey that is the subject of Defendant’s counterclaim. (Doc. 15 at 1–3).

 

7. Less the amount which Plaintiff was contractually entitled to withhold from Defendant as a set-off (i.e., $4,499.88), Plaintiff has suffered damages in the amount of $36,589.08.

 

8. Defendant does not contend that the cargo was damaged by an act of God, public enemy, public authority, or the inherent nature of the cargo. Rather, Defendant contends that any damage was caused by the acts of the shipper. Mr. Macktoon testified that he arrived at the Americold facility in Clearfield, Utah between 4:00 a.m. and 5:00 a.m., before the Americold facility had opened for the day. (Doc. 24 at 29–30). Mr. Macktoon testified that the refrigeration unit on his trailer stopped operating at 9:50 a.m., and that he told Americold of the problem at 10:00 a.m., but that Americold did not start unloading the truck until 12:40 p.m. (Id. at 34–36). Mr. Macktoon testified that he was done at Americold between 1:20 p.m. and 1:30 p.m. and that he then “headed toward Idaho.” (Id. at 48).

 

9. There are several reasons to question Mr. Macktoon’s testimony. First, although Mr. Macktoon testified to exact times at which various events occurred on August 29, 2011, he also admits that he did not make any record of when these events occurred. (Id. at 34, 36, 42). Moreover, Mr. Macktoon could not recall other details of this trip, such as the time of day he loaded in Malvern, Pennsylvania, the time he started from Malvern in route to Clearfield, Utah, the number of stops he made in route, or any of the places he stopped in route. (Id. at 20, 22–25). It is implausible that Mr. Macktoon would have such precise recall of his truck’s unloading at Americold in Clearfield, Utah, given his testimony that the high temperature of his load at delivery was “nothing to think about.” (Id. at 47, 61).

 

*5 10. Further, commercial interstate truck drivers are required by federal law to maintain an accurate log. 49 C.F.R. § 395.8. The driver is required to certify that the log entries are true and correct. 49 C.F.R. § 395.8(f)(7). The log prepared and certified by Mr. Macktoon for August 29, 2011 records that Mr. Macktoon was in his sleeper berth from 12:00 a.m. through 4:00 p.m. on August 29, 2011; and that he unloaded at Clearfield, Utah at 4:00 p.m. (Doc. 24–1 at 23; Doc. 24 at 70–71). The major discrepancy between Mr. Macktoon’s testimony and the log which he is required by law to keep accurately substantially diminishes his credibility. Defendant has not carried its burden to show that the damage to Pepperidge Farm’s product was caused by Americold. Moreover, Americold was not the shipper. Defendant was hired by Plaintiff. Plaintiff was the shipper as to Defendant.

 

11. Even accepting Mr. Macktoon’s testimony as true, a carrier’s responsibility for the cargo ends upon delivery, and in determining when delivery has occurred, “what is controlling is the contract.” Electro Source, Inc. v. United Parcel Serv., Inc., 95 F.3d 837, 839 (9th Cir.1996). The contract in this case is the June 8, 2008 Broker Carrier Agreement between Plaintiff and Defendant. Paragraph 8 of that contract explicitly states that “CARRIER shall become fully responsible/liable for the freight when it takes/receives possession thereof, which responsibility/liability shall continue until delivery of the shipment to the consignee and the consignee signs the bill of lading or delivery receipt.” Thus, Defendant retained responsibility for the cargo until Americold signed the bill of lading. There is no dispute that the warm temperature of the cargo was discovered as it was being unloaded from Defendant’s trailer. (Doc. 21 at 11, 30–31, 68). Americold signed the bill of lading after Defendant’s trailer was unloaded, around 1:15 p.m. (Doc. 24 at 43). Until that time, delivery was incomplete and Defendant was responsible for the cargo.

 

12. Further, even accepting Mr. Macktoon’s testimony as true, Defendant has failed to carry its burden of showing that it was not negligent. Mr. Macktoon testified that the refrigeration unit on his trailer stopped because a fan belt broke. (Doc. 24 at 38). Mr. Macktoon also testified that he determined from the internet that he could get a replacement belt in Clearfield, Utah, and that he could put the replacement belt on in “five minutes.” (Id. at 38). Mr. Macktoon testified that he did not replace the belt because a receiving clerk at Americold told him “don’t worry about it.” (Id. at 39–40). Although Defendant was hired by Plaintiff, Mr. Macktoon testified that he did not contact Plaintiff about the broken belt, neither when the belt broke nor later. (Id. at 46–47). Mr. Macktoon did replace the broken belt later the same day, after he left Americold. (Id. at 48–49). By failing to make this simple repair to ensure that its trailer maintained the correct temperature for Pepperidge Farm’s products, Defendant failed to exercise reasonable care.

 

*6 13. “A bailment has been defined as the delivery of goods or personal property by one person to another in trust for a particular purpose, with a contract, express or implied, that the property shall be returned once the purpose has been faithfully executed.” KeyBank Natl. Assn. v. Mazer Corp., 2010–Ohio–1508, 188 Ohio App.3d 278, 286, 935 N.E.2d 428, 434 (2010) (citing Collins v. Click Camera & Video, Inc. (1993), 86 Ohio App.3d 826, 830, 621 N.E.2d 1294). Plaintiff has failed to state a claim of bailment. Plaintiff did not have any ownership or possessory interest in the goods at issue and did not deliver the goods to Defendant. In addition, there was no contract that the goods be returned to Plaintiff.

 

14. Defendant has offered the purported “expert” testimony of Jeffrey Fine, president of American Salvage Liquidators, Inc., that the Pepperidge Farm product had a salvage value of somewhere between 25% and 35% of the product’s original value, net of his fees and costs of sale. However, Mr. Fine also testified that he did not know the original value of the product, could not recall any comparable transactions that might indicate a “salvage value” for the Pepperidge Farm bread products, and had not inquired as to the price any particular buyer would be willing to pay for these bread products under the circumstances of this case. Mr. Fine also admitted that, if he were handling salvage of this cargo, it would be possible that the bread products would be donated to charity, creating no salvage value. Mr. Fine’s opinion as to a salvage value appears to be based primarily upon his assertion that he knows his customers. Mr. Fine’s opinion is speculative.

 

15. Moreover, the testimony of Mr. Powell makes clear that Pepperidge Farm had the cargo dumped to protect itself against the risk that customers may obtain Pepperidge Farm branded product that was substandard or unfit. This is a legitimate reason not to mitigate damages. See Eastman Kodak Co. v. Westway Motor Freight, Inc., 949 F.2d 317, 320 (10th Cir.1991); SONY Magnetic Products, Inc. v. Merivienti O/Y, 668 F.Supp. 1505, 1515 (S.D.Ala.1987), aff’d, 863 F.2d 1537 (11th Cir.1989). Finally, Plaintiff in this case is Total Quality Logistics, LLC. There is nothing to show that Plaintiff had the ability to cause the Pepperidge Farm products to be sold for salvage, even if a salvage market for the products existed.

 

16. Mr. Fine also opined that the Pepperidge Farm bread products remained fit for human consumption at the time Defendant delivered them to Americold in Clearfield, Utah. However, the record affirmatively shows that Mr. Fine is not qualified to give such an opinion.

 

17. Mr. Fine also opined that the temperatures of the cargo which Drew Dunifer of Americold reported to Dick Powell of Pepperidge Farm on August 29, 2011 were erroneous. Yet Mr. Fine admitted that he was not present when those temperatures were taken, has never inspected the cargo, and did not have the records of the temperature inside the trailer which he would usually review when considering a cargo for salvage. In contrast, Mr. Powell of Pepperidge Farm testified that he considered the temperatures reported by Americold to be reliable. (Doc. 22 at 14). Mr. Powell had access to photographs showing those temperatures being taken. (Id. at 13). Those photographs are not part of the record in this action and, apparently, were not available to Mr. Fine. On this record, the conclusion of Mr. Powell that the temperatures reported by Americold were reliable is persuasive as the more reasonable conclusion.

 

*7 18. In summary, Plaintiff has carried its burden of proof in demonstrating its entitlement to compensation under the Carmack Amendment as a result of Defendant’s breach of contract and negligence in delivering the cargo. Defendant has not carried its burden of proof. Accordingly, Plaintiff is entitled to judgment against Defendant in the amount of $36,589.08, together with interest thereon at the rate specified in 28 U.S.C. § 1961(a) from December 13, 2011 until paid.

 

III. CONCLUSION

Therefore, the Clerk shall enter judgment accordingly. Motions for attorney fees and costs, if any, with supporting affidavits and evidence, must be filed within 28 days from the entry of these Findings of Fact and Conclusions of Law.

 

IT IS SO ORDERED.