RONALD R. RUSSELL, Plaintiff, vs. PACIFIC MOTOR TRUCKING COMPANY, Defendant.

 

Case No.: SACV 13-0717-DOC (DTBx)

 

UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, SOUTHERN DIVISION

 

2014 U.S. Dist. LEXIS 175513

 

 

December 18, 2014, Decided

December 18, 2014, Filed

 

 

COUNSEL:  [*1] For Ronald R Russell, Plaintiff: William M Crosby, LEAD ATTORNEY, William M Crosby Law Offices, Tustin, CA; Brian M Wendler, PRO HAC VICE, Wendler Law PC, Edwardsville, IL.

 

For Pacific Motor Trucking Company, a Missouri corporation, Defendant: Vince Mojica Verde, LEAD ATTORNEY, Ogletree Deakins Nash Smoak and Stewart PC, Costa Mesa, CA; David P Thatcher, PRO HAC VICE, Olgetree Deakins Nash Smoak and Stewart PC, Atlanta, GA; Jordon R Ferguson, Ogletree Deakins Nash Smoak & Stewart, Costa Mesa, CA.

 

JUDGES: DAVID O. CARTER, UNITED STATES DISTRICT JUDGE.

 

OPINION BY: DAVID O. CARTER

 

OPINION

 

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [49]

Before the Court is Defendant’s Motion for Summary Judgment (Dkt. 49). A hearing on this matter was held on December 15, 2014. Upon consideration of the arguments and the briefing, the Court hereby GRANTS the Motion.

 

I. INTRODUCTION

This case involves a dispute over Defendant Pacific Motor Trucking Company’s (“Defendant” or “PMT”) short-lived implementation of an “owner-operator” truck leasing program. Plaintiff, Ronald R. Russell (“Plaintiff” or “Mr. Russell”) was a participant in the program. Mr. Russell claims that Defendant induced him into signing on to the program by allegedly [*2]  representing that it would be a long-term arrangement, a statement that proved false given the program’s cancellation in 2009, and that a breach of contract occurred when PMT terminated the program.

Defendant now moves for summary judgment, arguing that even if it had represented that the program would be long-term, there is no evidence that Defendant and its representatives had knowledge of the falsity of that statement. Further, Defendant claims Plaintiff was not entitled to rely on that statement in signing up for the program. Defendant also argues that Plaintiff has waived his claim of fraudulent inducement by performing under the terms of his first lease agreement and subsequently entering into a second lease agreement in 2009. Defendant also maintains that it acted according to the terms of the agreement when it cancelled the lease agreement in 2009.

 

II. FACTUAL BACKGROUND

Mr. Russell worked as a car hauler for PMT from 1987 through 2010. Uncontroverted Material Fact (“UMF”) 1-2. Consistent with its employment agreements, in 2007 PMT elected for the first time to implement an owner-operator program (“Program”). Before that time, all drivers were company employees driving company [*3]  tractor trailers. Mr. Russell learned of the Program in late 2006 or early 2007 at an informational meeting. UMF 7. Mr. Randy Beggs (“Mr. Beggs”), PMT’s Vice-President at the time, presented at that meeting. He informed the company drivers that PMT would be opening the Program to them if they wished to join. UMF 8. At the meeting, Mr. Russell recalls that Mr. Beggs told him and other drivers that participants in the Program would receive 68% of the revenue from the hauls that were made using the leased equipment. UMF 11. Mr. Russell also recalls that Mr. Beggs mentioned that “it would be beneficial to us…if we would like to be a partner on getting… trucks, becoming an owner/operator” and that it was “a long time thing.” Depo. of Ronald Russell (“Russell Depo.”) at 43, 143. Mr. Russell understood this to mean that the program would last forever. Id.at 95. Mr. Russell also believes Mr. Beggs made an oral representation at this meeting that PMT would perform maintenance at a reduced rate. Id. at 91. Apart from this meeting, Plaintiff had no other discussion with PMT representatives about the Program prior to purchasing a truck in 2007. UMF 13.1

 

1   Under Local Rule 56-2, any party who opposes a motion for summary judgment [*4]  must file a “Statement of Genuine Disputes” in which the party must set forth “all material facts as to which it is contended there exists a genuine dispute.” L.R. 56-2. In reviewing the Plaintiff’s statement, however, the Court finds the “genuine disputes” are often uncited, unsupported by admissible evidence, or do not contradict the material fact at issue. For example, in this instance Plaintiff cites to meetings that postdate Mr. Russell’s purchase of the Sterling Truck — conversations with Mr. McGuire that took place after Mr. Russell purchased his truck in 2007 and 2009 conversations with Mr. Beggs. As such, the Court finds that there is no genuine dispute as to the material fact presented by the Defendant: that Plaintiff had no other discussion with PMT representatives prior to the purchase of the truck. The Court considered each dispute included in the Plaintiff’s response, and adopted a fact as undisputed to the extent Plaintiff did not cite to relevant, admissible evidence that contradicted the fact presented.

Mr. Russell decided to participate in the program. He did not seek out legal or financial advice prior to purchasing a truck, UMF 15-16, nor did PMT advise him to do so. Mr. [*5]  Russell joined a group of other drivers in purchasing trucks and trailers from West Coast Enterprises to secure group financing. UMF 20. He purchased a Sterling truck (“Sterling Truck”), although PMT did not specify Plaintiff purchase a specific type of truck for use in the Program. UMF 24. Mr. Russell explains that he felt compelled to purchase a Sterling, as the PMT shop would only work on these types of trucks. Russell Depo. at 51-54. At the time he purchased the truck, Mr. Russell had not seen the lease agreement (“2007 Agreement”) that would govern his lease under the owner-operator program. UMF 21. Mr. Russell indicates that he was not allowed to see the agreement prior to signing it, as PMT claimed it contained confidential information. Russell Depo. at 61:24-62:1. He signed the agreement around July 3, 2007, directly before retrieving the Sterling Truck he had purchased. UMF 30. The 2007 Agreement had provisions that provided for cancellation in its first 90 days, and allowed either party to terminate the agreement upon 30 days’ notice. UMF 32-33. It did not contain any provisions regarding repairs. UMF 53, 55. After signing the agreement, he immediately began driving for PMT [*6]  as an owner-operator. UMF 35.

During the course of the 2007 Agreement, Mr. Russell learned that PMT had ceased to provide maintenance to Program trucks at the PMT shop. UMF. 36. He never received any maintenance under the Program. UMF 38. Mr. Russell thus came to believe that certain statements made by Mr. Beggs at the informational meeting were false. UMF 40.

Mr. Russell continued to drive his 2007 Sterling Truck for approximately 18-months, until replacing it with a new, more expensive, vehicle (the “Sleeper Truck Combo”) in 2009. UMF 41. Mr. Russell considered this to be an upgrade in quality, and because PMT was not performing maintenance, switching brands was preferable because he could get the truck fixed anywhere. UMF 45, Russell Depo. at 68:2-5. Mr. Russell spoke to Mr. Beggs twice prior to making this purchase. Russell Depo. at 78:16-82:1. Mr. Beggs told him that the new truck would need to be PMT colors with straps, and that PMT would “take care of” the license on the truck. UMF 43; Russell Depo. at 78:20-24. Mr. Russell entered into a subsequent lease agreement with PMT in 2009 when he purchased the Sleeper Truck Combo. UMF 50. Mr. Russell acknowledges that he read through [*7]  the entirety of the 2007 Lease Agreement during the time he was operating under that agreement, and had knowledge of all the terms of the lease agreement prior to purchasing the 2009 Sleeper Truck Combo and when he entered in to the new lease agreement (the “2009 Agreement”). Plaintiff knew at this time that there was a term in the 2009 Lease agreement that allowed either party to terminate the lease on 30-days’ notice. UMF 53. He signed the 2009 Agreement on January 20, 2009. UMF 52. No one from PMT at that time told him how long the lease would last. UMF 51.

Plaintiff claims he would not have joined the Program if he had known its actual duration. UMF 49. Mr. Russell believed the leases would last “forever.” Russell Depo. at 95.

On February 16, 2009, PMT issued a thirty day notice to Mr. Russell that it had decided to terminate the 2009 Agreement pursuant to Section 8.01 of the 2009 Agreement. UMF 64. PMT maintains that the program was canceled upon the severe downturn in the economy, and subsequent drop in business. Accordingly, Mr. Russell’s 2009 Agreement ended on March 18, 2009. Mr. Russell had no information about why the Program was cancelled. Mr. Russell subsequently returned to his former [*8]  role with PMT as a company driver until May 2010. UMF 70. After retiring from PMT, Plaintiff worked for at least two other companies to afford $5,000 per month payments on his Sleeper Truck Combo. UMF 74; Russell Depo. at 70. His truck was eventually repossessed when he was unable to make the payments. Mr. Russell did not personally seek PMT’s assistance in selling the truck. UMF 76.

 

III. EVIDENTIARY DISPUTES

In support of his Opposition, Mr. Russell submitted unauthenticated and unmarked excerpts of deposition testimony, sworn statements from Mr. Russell’s attorneys and a declaration from Mr. Russell himself. Defendant argues that all of the evidence Plaintiff presented should be disregarded as inadmissible. Reply at 3, Defendant’s Objection to and Motion to Strike Plaintiff’s Evidence ISO Defendant’s Motion for Summary Judgment (Dkt. 62-4).

As to the depositions, the Plaintiff eventually cured the defect, and the Court will consider the record. It is worth noting, however, that in considering the Deposition evidence it will rely exclusively on the text of the deposition, rather than any restatements of the record.2

 

2   The Court is concerned about the manner in which Plaintiff cites to the [*9]  evidence, and the clear mischaracterization of Mr. Russell’s own deposition testimony. For example, in response to UMF 61, Plaintiff states that “Mr. Beggs represented the program would last forever.” This is clearly contradicted by the cited testimony, which shows that it was Mr. Russell’s subjective belief that it would last “forever.” There is no evidence to indicate that Mr. Beggs ever made this representation.

PMT further argues that Mr. Russell’s declaration, which apparently directly controverts or significantly supplements Mr. Russell’s own deposition testimony, should be disregard as a “sham.” Reply at 1-5. Generally, a party should not be able to substitute an affidavit alleging helpful facts for earlier deposition testimony harmful to its case in order to avoid summary judgment. Sch. Dist. No. 1J, Multnomah Cnty., Or. v. ACandS, Inc., 5 F.3d 1255, 1264 (9th Cir. 1993) (citing Foster v. Arcata Assocs., Inc., 772 F.2d 1453, 1462 (9th Cir.1985); Radobenko v. Automated Equipment Corp., 520 F.2d 540, 544 (9th Cir.1975).) However, the Ninth Circuit has held that rule should be applied with caution, and only after the Court makes a finding of fact that the affidavit is a “sham,” generated solely in order to create a genuine issue of material fact. Id.

Upon reviewing the Plaintiff’s deposition and Mr. Russell’s declaration, the Court finds that the declaration was manufactured in large [*10]  part to “create an issue of fact at trial and avoid summary judgment.” Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 267 (9th Cir. 1991). Mr. Russell’s new recollections that contradict his previous deposition testimony are unpersuasive. For example, in paragraph 9 of Mr. Russell’s declaration, he claims that prior to purchasing his second truck, he spoke to Mr. Beggs who told him that “there was no need to be concerned about any risks, as PMTC had been around for many years and the lease term would be indefinite as long as PMTC remained in business.” Decl. of Ronald R. Russell in Opposition to Defendant’s Mot. (“Russell Decl.”) ¶ 9. At his deposition, however, Mr. Russell testified that Mr. Beggs told Mr. Russell that picking up the new truck was “fine,” advised Mr. Russell as to the colors of the truck, told him that it had to be a “strap truck,” and that “we’ll take care of” the license. Russell Depo. at 74:1-75:4, 78:16-80:17. Mr. Russell represented at that time that this was the extent of the conversation. Id. at 78:19-79:4. Thus, the statement that Mr. Beggs told him that “there was no need to be concerned about any risks, …and the lease term would be indefinite as long as PMTC remains in business” directly contradicts Mr. Russell’s previous [*11]  testimony as to his recollection of his meeting with Mr. Beggs prior to purchasing the Sleeper Truck Combo. Although the meetings occurred several years in the past, and Plaintiff claimed at the time of the deposition that he could not recall everything, it does not appear that there is an honest discrepancy, mistake, or new evidence that has generated this inconsistent testimony.3 Id. Therefore, in so far as Mr. Russell’s declaration contradicts his prior deposition testimony, it will be disregarded. Thus, the Court GRANTS Defendant’s evidentiary objections 1-4, 7, 9, and 12. The Court need not address the other objections as the contents were not relevant to the material facts at issue.

 

3   Plaintiff claims that documents “refreshed” Mr. Russell’s recollections — but does not provide these documents or described their contents to add context to the new and clearly contradictory information. In light of the absence of any additional documentary materials, the Court cannot assess the merit of whether these materials explain an honest mistake.

 

IV. LEGAL STANDARD

Summary judgment is proper if “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled [*12]  to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Summary judgment is to be granted cautiously, with due respect for a party’s right to have its factually grounded claims and defenses tried to a jury. Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). The court must view the facts and draw inferences in the manner most favorable to the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 8 L. Ed. 2d 176 (1992); Chevron Corp. v. Pennzoil Co., 974 F.2d 1156, 1161 (9th Cir. 1992). The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact for trial, but it need not disprove the other party’s case. Celotex, 477 U.S. at 323. When the non-moving party bears the burden of proving the claim or defense, the moving party can meet its burden by pointing out that the non-moving party has failed to present any genuine issue of material fact as to an essential element of its case. See Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir. 1990).

Once the moving party meets its burden, the burden shifts to the opposing party to set out specific material facts showing a genuine issue for trial. See Liberty Lobby, 477 U.S. at 248-49. A “material fact” is one which “might affect the outcome of the suit under the governing law . . . .” Id. at 248. A party cannot create a genuine issue of material fact simply by making assertions in its legal papers. S.A. Empresa de Viacao Aerea Rio Grandense v. Walter Kidde & Co., Inc., 690 F.2d 1235, 1238 (9th Cir. 1982). Rather, there must be specific, admissible evidence identifying the basis for the dispute. Id. The court need [*13]  not “comb the record” looking for other evidence; it is only required to consider evidence set forth in the moving and opposing papers and the portions of the record cited therein. Fed. R. Civ. P. 56(c)(3); Carmen v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1029 (9th Cir. 2001). The Supreme Court has held that “[t]he mere existence of a scintilla of evidence . . . will be insufficient; there must be evidence on which the jury could reasonably find for [the opposing party].” Liberty Lobby, 477 U.S. at 252.

 

V. ANALYSIS

 

A. Fraudulent Misrepresentation4

 

4   Due to a choice-of-law provision in the parties’ contract, the Court has previously determined that this case is governed by Missouri substantive law. Order, February 6, 2014 (Dkt. 28).

Under Missouri law, intentional misrepresentation consists of (1) a representation; (2) its falsity; (3) its materiality; (4) the speaker’s knowledge of its falsity or his or her ignorance of the truth; (5) the speaker’s intent that it should be acted on by the person in the manner reasonably contemplated; (6) the hearer’s ignorance of the falsity of the representation; (7) the hearer’s reliance on the representation being true; (8) the hearer’s right to rely thereon; and (9) the hearer’s consequent and proximately caused injury. Renaissance Leasing, LLC v. Vermeer Mfg. Co., 322 S.W.3d 112, 132 (citing Larabee v. Eichler, 271 S.W.3d 542, 546 (Mo. 2008)). A plaintiff’s failure to establish any one of [*14]  the essential elements of fraud is fatal to recovery. Id. (citing Verni v. Cleveland Chiropractic College, 212 S.W.3d 150, 154 (Mo. 2007) (en banc).

Plaintiff alleges that PMT made two false statements during the 2006/2007 introductory meeting: (1) that maintenance work on owner-operator trucks would be performed at PMT’s shop at reduced rates; and (2) that the Program would be a “long-term” arrangement. Plaintiff presents no additional evidence of specific statements made to the Plaintiff by PMT prior to signing the 2007 Agreement. Defendant maintains that Plaintiff has presented no evidence to suggest that PMT made these misrepresentations knowing of their falsity. Further, Defendant argues that any reliance on these representations was unreasonable. Finally, Defendant argues that even if the representations were fraudulent, Plaintiff has waived any claim for fraud by entering into a subsequent agreement in 2009. The Court agrees with the Defendant.

 

Long-Term Partnership

The primary statement that Plaintiff allegedly relied on in purchasing his trucks was the statement of Randy Beggs, allegedly made at the 2006/2007 introductory meeting, asserting that the program would be “long-term.” Plaintiff has pointed to no evidence of PMT specifically representing [*15]  to the Plaintiff the duration of the Program, nor did he seek clarification about the length of the program during that meeting or prior to purchasing the truck or signing the lease agreement. Despite the absence of a representation as to a specific or minimum length of time that the Program would last, however, Plaintiff subjectively believed that “the lease [would be] good forever.” Russell Depo. at 95.

Defendant claims that Plaintiff has no evidence to prove element (4) above, the speaker’s knowledge of the falsity of the statement. Plaintiff argues that that the Defendant must have known the terms of the lease (which it allegedly concealed from him at the time of the purchase of his truck), demonstrating that PMT knew the program would not be long-term because of the presence of the cancellation/termination provisions.

This evidence, however, does not support the proposition that Mr. Beggs or PMT knew that the program would last for under two years at the time of the introductory meeting. Drawing all inferences in the non-movant’s favor, the presence of a clause allowing for the cancellation of the lease by either party does not support the conclusion that PMT knew the program was [*16]  going to end after a short period of time when the introductory meeting took place; it only shows that PMT knew that either party could cancel or terminate the lease. Plaintiff’s other evidence of alleged non-disclosure or concealment of the contract terms (Opp’n at 15-16 ) is also unconvincing. For example, Defendant’s failure to disclose that the program might be terminated when Plaintiff signed his renewed lease agreement in 2009 has no bearing on whether PMT had knowledge that the program would not be long-term when it made the representation in 2006/2007. Accordingly, the Court finds that the Plaintiff has not presented any admissible evidence as to this element of his claim.

Under an alternate theory, the Plaintiff argues that he and other drivers believed that the representation made by Mr. Beggs regarding the length of the program meant that the program would last “forever,” as long as PMT was in business. Thus, Plaintiff argues, the presence of a clause allowing for the cancellation of the lease agreements contradicts Plaintiff’s understanding of Mr. Beggs’s representation. Opp’n at 15 (“the ‘forever’ language is not in the contract”). Under Missouri law, “the truth or falsity [*17]  of representations for purposes of a fraud claim is judged ‘in the light of the meaning which the plaintiffs would reasonably attach to them in existing circumstances and the words employed must be considered against the background and in the context in which they were used.'” Renaissance Leasing, 322 S.W.3d at 133 (citing Haberstick v. Gordon A. Gundaker Real Estate Co., 921 S.W.2d 104, 109 (Mo.App. 1996)). While the meaning of “long-term” is subject to differing interpretations, be it one year or five, the language simply does not signify an interminable period. Thus, Plaintiff’s subjective belief that this meant the 2007 lease agreement would last “forever” is unreasonable as a matter of law in light of the words employed. Id. As such, although the presence of a cancellation clause in a lease agreement could draw an inference that PMT knew the lease would not last “forever,” it does not support the inference that PMT knew the lease would not be “long-term.” Therefore, Plaintiff’s theory regarding his subjective belief as to the length of the lease agreement is unavailing.

Defendant cites to evidence demonstrating that PMT wanted the owner-operator program to succeed, and logic dictates as much. Ex. D (Declaration of Randy Beggs) (“Beggs Decl.”) at 14:20. It is patently unreasonable for a business to [*18]  begin a venture which it believes will fail after a short time. Basic logic reinforces PMT’s evidence that shows that the downturn in the economy is the reason for the ultimate cancellation of the program in 2009, and that neither Mr. Beggs nor anyone in PMT was aware of the expected duration of the program when it was implemented in 2007.

In his briefing, Plaintiff also alludes to the fact that PMT allegedly concealed material information. As a preliminary matter, Plaintiff failed to plead a claim for fraudulent concealment in his Second Amended Complaint. SAC ¶¶ 13-19. Even if the court were to consider this the late-pleaded theory, it would fail regardless. Plaintiff relies on Hess v. Chase Manhattan Bank to support his position the PMT fraudulently concealed information regarding the length of the lease agreements. Hess v. Chase Manhattan Bank, USA, N.A., 220 S.W.3d 758, 765 (Mo. 2007). Under Missouri law, “in nondisclosure cases, a party’s silence amounts to a representation where the law imposes a duty to speak.” Id. “Silence can be an act of fraud where matters are not what they appear to be and the true state of affairs is not discoverable by ordinary diligence.” Id.

Hess is inapplicable here for several reasons. First, Hess involved the sale of [*19]  real property where the defendant knew at all times that the EPA was investigating the property for contamination, but represented to the Plaintiff that it “had never seen nor occupied the property and that it had not inspected [the] property.” Id. at 764. Under these circumstances the court found that the defendant had a duty to disclose, where defendant had knowledge of undisclosed material facts that Hess would not have discovered through ordinary diligence. Id. As discussed above, Plaintiff has not presented evidence that PMT knew the program would be short lived — nor could it have been aware that Plaintiff was operating under the assumption that the Program would last forever. It is unclear what, then, PMT had an alleged duty to disclose. Outside of the length of the program, Plaintiff has not indicated what material facts PMT fraudulently failed to disclose.

Plaintiff explains that he thought that the partnership would be “no-risk” even after reviewing the 2007 Agreement, due to Mr. Beggs’s failure to mention that the program could end. Opp’n at 9. In addition, he claims that Mr. Beggs’s statement, before signing the 2009 Agreement, that “we’ll take care of it” is further grounds for [*20]  believing the program contained no risk and would proceed indefinitely. Neither of these representations is specific enough to justify reliance for entering into a new agreement — at which point Plaintiff had fully reviewed the terms of the lease and knew that the terms contradicted his understanding of the contract. Moreover, Beggs’s statement was made with respect to the licensing of the vehicle, not the duration of the lease.

Plaintiff also argues that, even if Mr. Beggs did not know that his statement regarding a long-term partnership was false, he also did not have the basis to assert the information. Opp’n at 16. Once more, Plaintiff cites to no evidence in his opposition to support this position, or contradict the evidence that Mr. Beggs and PMT believed the company was in a sound financial position when beginning the Program. The record contains undisputed evidence that both PMT and Mr. Beggs believed the company was going to be successful when beginning the Program and had no reason to believe that the financial collapse would cause the Program to end after only a year and a half.

Regarding the argument that Mr. Beggs’s statement created a fiduciary relationship between the [*21]  company and the owner-operators, the Court is not convinced. The evidence presented to the Court does not support the establishment of a relationship of trust and confidence to support existence of a fiduciary relationship. See, e.g., Western Blue Print Co., LLC. V. Roberts, 367 S.W.3d 7, 9 (Mo. 2012). Therefore, Plaintiff’s expectations that the program would not end prior to the company’s dissolution was unfounded.

For the aforementioned reasons, the Court finds that the Plaintiff has not presented evidence to support an essential element of his claim — that PMT knew of the falsity of Mr. Beggs’s statement regarding the length of the program at the time it was made. PMT’s Motion is GRANTED as to the claim for fraudulent misrepresentation pertaining to the length of the Program.

 

Maintenance Program

Plaintiff also alleges that PMT falsely represented that drivers would be able to access PMT’s shop under the Program, giving them access to discount maintenance services. Although afforded little attention in the briefing, the Court will address this statement independently. Unlike the statements regarding the duration of the program, there is evidence to support the fact that PMT knew that this statement was false when made, given the fact that the maintenance [*22]  program was not included in the 2007 Agreement and that the maintenance services were cancelled so soon after the initiation of the Program.

Defendant argues, however, that the Plaintiff has waived his claim for fraud regarding the maintenance program by signing the subsequent 2009 Agreement. Under Missouri law, “the authorities are unanimous in holding that where one has been induced by fraud to enter into a contract and, after discovery of the fraud, enters into an agreement concerning the subject matter of the contract, … he is conclusively deemed to have waived any claim for damages on account of fraud.” Peck v. Jadwin, 704 S.W.2d 708, 711 (Mo. Ct. App. 1986) (citations omitted) (emphasis in the original). “The foregoing rule does not operate unless the defrauded party, at the time of making the second agreement, had knowledge of the fraud which induced his entry into the first agreement.” Id; see also, Ainsworth Corp. v. Cenco Inc., 107 Ill. App. 3d 435, 440, 437 N.E.2d 817, 821, 63 Ill. Dec. 168 (1982). Although knowledge of the fraud is typically a question of fact, the undisputed record in this case confirms that the Plaintiff had full knowledge of the alleged fraud and that he voluntarily entered into a subsequent agreement confirming the terms of the lease with PMT.

Plaintiff argues that he did not have knowledge of the fraud [*23]  at the time of the ratification of the contract in 2009 because Defendant failed to disclose that it was considering cancelling the contract. Opp’n at 20-21. This purported failure to disclose has no bearing on the falsity of Mr. Beggs’s 2006/2007 statement which is the basis of the fraud. Plaintiff’s argument that he had no knowledge of the falsity of Mr. Beggs’s statements is belied by Plaintiff’s knowledge of the terms of the contract when he signed the 2009 Agreement. The evidence shows that, in 2009, Plaintiff knew (1) that the maintenance program was cancelled and (2) that the lease agreement for the Program contained a cancellation provision. Thus, Plaintiff had knowledge that even his subjective understanding of Mr. Beggs’s representations at the introductory meeting were false at the time that he signed the 2009 Agreement.

Plaintiff further argues that the doctrine of waiver is inapplicable here because the Plaintiff incurred substantial debt as a result of Defendant’s misrepresentations, and it would have been impossible for him to rescind the contract. The crux of Plaintiff’s argument is that he had no choice but to purchase the new vehicle in 2009 because of PMT’s cancellation [*24]  of the maintenance program, and the fact that he was firmly committed to the program due to his initial purchase of the truck.

Plaintiff’s arguments, though sympathetic, are unavailing. First, he has cited no law to support the fact that the incurrence of a debt upon entering into a contract renders the principal of waiver inapplicable when the party later ratifies the initial contract. Nor does the case law at issue support this position. In Brown, the court considered precisely that issue. The plaintiffs argued that because they had expended $3,476 in entering a lease agreement before the discovery of the fraud, they should not be barred from bringing a fraud case despite the execution of a new agreement ratifying the terms of the original agreement. Brown v. S. Joplin Lead & Zinc Mining Co., 231 Mo. 166, 132 S.W. 693, 695 (1910). The court explicitly rejected this argument. “This doctrine of waiving the right to sue for fraud and deceit by entering into a new agreement concerning the same subject-matter may well be sustained on the theory that all such questions were considered by the parties in making the new agreement.” Id.

There is also no evidence to support the fact that PMT compelled the Plaintiff to purchase the new truck in 2009. While the Plaintiff believed [*25]  that the purchase was a sound financial decision, he made that decision knowing the terms of the lease agreement that he was allegedly fraudulently compelled to enter into, including the existence of the clauses allowing for cancellation of the agreement and, more importantly, PMT’s cancellation of the maintenance program. The uncontroverted evidence shows that, after the discovery of the lack of the maintenance program and the existence of a cancellation clause, the Plaintiff entered into a subsequent agreement concerning the subject matter of the contract. He ostensibly did so because, under the program, he was earning substantial amounts of money (three times more than as a company driver) and was otherwise satisfied with the Program. In purchasing a second vehicle and signing a new agreement, the Plaintiff waived his claim of fraud in the inducement regarding the maintenance program as to the 2007 Agreement.

For this reason PMT’s Motion is GRANTED as to the claim for fraudulent misrepresentation pertaining to the maintenance program and the Defendant’s Motion for Summary Judgment as to the claim for fraudulent misrepresentation is GRANTED in FULL.

 

B. Breach of Contract

On February [*26]  6, 2014, the Court held that the only basis on which the Plaintiff could bring a claim for breach of contract was that PMT failed to assist in selling or purchasing Plaintiff’s truck. Order at 17. The Court found that PMT’s cancellation of the contract was proper pursuant to Section 8.01 of the Lease Agreement. Id.

In an attempt to salvage his breach of contract claim, Plaintiff claims there are genuine issues that exist with respect to whether the defendant should be estopped from enforcing the terms of the 2009 Agreement governing the termination (Section 8.01) or cancellation (Section 5.02) of the contract. Plaintiff failed to allege a claim for estoppel in his second amended complaint. The SAC alleges that PMT breached the contract when it failed to assist Plaintiff in selling his truck or purchasing it at fair-market value and by refusing to allow Plaintiff to continue participation in the program, without addressing the estoppel argument. SAC ¶ 20-23. Under Missouri law, estoppel must be pleaded with particularity in the complaint. E. C. Robinson Lumber Co. v. Lowrey, 276 S.W.2d 636, 641-42 (Mo. Ct. App. 1955) (estoppel must be pleaded to make evidence offered on that theory admissible); Grafeman Dairy Co. v. Nw. Bank, 315 Mo. 849, 859, 288 S.W. 359, 363 (1926) (Not only must the estoppel be pleaded, but this must be done with more certainty than is requisite, or [*27]  will suffice in ordinary defenses).

The pleading requirements of Rule 8 are in place to provide a party with adequate notice of the allegations against them. Pickern v. Pier 1 Imports (U.S.), Inc., 457 F.3d 963, 968 (9th Cir. 2006). A party may not, therefore, allege new claims in his opposition to a summary judgment motion not previously raised in his complaint. Wasco Products, Inc. v. Southwall Technologies, Inc., 435 F.3d 989, 991 (9th Cir. 2006) (plaintiffs seeking to toll the statute of limitations on various grounds must have included the allegation in their pleadings; this rule applies even where the tolling argument is raised in opposition to summary judgment). Allowing Plaintiff to plead this theory in opposition to the motion for summary judgment would cause prejudice to PMT, who has not been afforded sufficient opportunity to discover evidence and respond to these new theories. McKinney v. Am. Airlines, Inc., 641 F. Supp. 2d 962, 982 (C.D. Cal. 2009) (“Unless a plaintiff includes allegations in her complaint or informs the defendant before the close of discovery of her intent to rely on previously undisclosed allegations, she may not assert them for the first time in opposing summary judgment.”). For these reasons, the Plaintiff will not now be allowed to introduce an argument for estoppel barring enforcement of Section 5.02 or 8.01.5

 

5   Furthermore, Plaintiff cites to no Missouri law to support his late-alleged [*28]  claim for estoppel, citing instead only to three Florida cases. Additionally, the evidentiary records contains no support for the fact that Defendant knew the program was going to end abruptly when Plaintiff signed the 2009 Agreement — therefore, for the same reasons the fraud claim fails, an estoppel claim would also fall short. This Court is not obliged to further consider claims that have not been properly pleaded, confirmed by the evidentiary record, or supported by applicable law in the briefing. In oral arguments, Plaintiff moved for leave to amend under Rule 15. Plaintiff had ample time to amend his pleadings prior to this date, and Defendant would be exposed to substantial prejudice if Plaintiff were allowed to amend at this late date. Moreover, as discussed above, as Plaintiff has presented no admissible evidence that Defendant knew the program was going to end prior to Plaintiff signing the 2009 agreement, or that it made any representations about the length of the 2009 agreement, the estoppel claim would be fruitless. The motion is denied.

As the Plaintiff has abandoned his claim for breach based on PMT’s alleged failure to assist him in selling his truck (Opp’n at 24), and this [*29]  Court has previously determined that PMT’s cancellation of the agreement was proper pursuant to Section 8.01, there remains no issue of material fact regarding the breach of contract.

Defendant’s motion is GRANTED as to the breach of contract claim.

As the Court has dismissed both the fraud and contract claims, there remains no genuine issue of material fact with respect to punitive damages.

 

VI. DISPOSITION

For the reasons set forth herein, Defendant’s Motion for Summary Judgment is GRANTED in full.

It is hereby ordered that Plaintiff’s claims be dismissed with prejudice.

DATED: December 18, 2014

/s/ David O. Carter

DAVID O. CARTER

UNITED STATES DISTRICT JUDGE

 

 

 

ASARCO LLC, Plaintiff, v. England Logistics Incorporated, et al., Defendants.

 

No. CV-13-00686-TUC-CRP

 

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA

 

2014 U.S. Dist. LEXIS 176784

 

 

December 22, 2014, Decided

December 23, 2014, Filed

 

 

COUNSEL:  [*1] For ASARCO LLC, a Delaware limited liability company, Plaintiff: Ali J Farhang, Roberto C Garcia, LEAD ATTORNEYS, Ryan Raymond Seidel, Farhang & Medcoff PLLC, Tucson, AZ.

 

For England Logistics Incorporated, a Utah corporation, CR England Incorporated, a Utah corporation, Defendants: Randy Lee Kingery, Tamara Nydell Cook, LEAD ATTORNEYS, Renaud Cook Drury Mesaros PA, Phoenix, AZ.

 

For Plumley Trucking Incorporated, a South Carolina corporation, Defendant: Walter Grochowski, LEAD ATTORNEY, Potts & Associates, Phoenix, AZ.

 

For Plumley Logistics Incorporated, a South Carolina corporation, Defendant: Cassandra K Gaines, LEAD ATTORNEY, Global Tranz Enterprises Incorporated, Phoenix, AZ; Jeffrey R Simmons, Venus G Booth, LEAD ATTORNEYS, Lewis Brisbois Bisgaard & Smith LLP – Phoenix, AZ Phoenix, AZ; Casper Fredric Marcinak, Smith Moore Leatherwood – Greenville, SC, Greenville, SC.

 

JUDGES: CHARLES R. PYLE, UNITED STATES MAGISTRATE JUDGE.

 

OPINION BY: CHARLES R. PYLE

 

OPINION

WO

 

ORDER

This action arises from a shipment of 55 copper anodes that went missing. ASARCO alleges that in July 2011, ASARCO requested that Defendants CR England, Inc. (“CR”) and England Logistics (“EL”) arrange for transport of 55 copper anodes from ASARCO’s [*2]  facility in Hayden, Arizona, to ASARCO’s facility in Amarillo, Texas (“the Shipment”). (First Amended Complaint, (“FAC”) ¶¶29; Doc. 101, p. 5). ASARCO alleges that CR/EL unilaterally re-brokered and/or re-assigned the Shipment to Defendant Plumley Trucking, Inc., (“PT”) who, thereafter, re-brokered and/or assigned the Shipment through Defendant Plumley Logistics, Inc., (“PL”) to non-party Pavlyukh Express, whose driver Andriy Kuba picked up the Shipment on July 24, 2011. (FAC, ¶¶31, 34, 37, 39). The Shipment never arrived at ASARCO’s Texas facility and is still missing. (FAC, ¶¶ 38, 43).

ASARCO seeks relief as follows: (1) against the Plumley Defendants under the Carmack Amendment, 49 U.S.C. § 14706 (Count I); (2) alternatively, against all Defendants for negligence (Count II); (3) alternatively, against all Defendants for negligent hiring, retention, or supervision (Count III); (4) alternatively, against CR and/or EL for breach of contract (Count IV); and (5) alternatively, against the Plumley Defendants for breach of contract (Count V). Counts II through V are alleged “in the alternative and in the event the Court determines Carmack is not applicable in this case.” (FAC, ¶¶64, 75, 86, 92).

Defendants PL, PT and the [*3]  England Defendants have filed separate motions seeking summary judgment. (Doc. 90 (PL’s motion); Doc. 98 (PT’s motion); Doc. 100 (the England Defendants’ motion)). ASARCO has filed a Motion for Partial Summary Judgment (“MPSJ”) against PL on the breach of contract claim (Doc. 101). Additionally, PT joins in PL’s motion and response to ASARCO’s MPSJ, and the England Defendants join in PL’s and PT’s argument regarding pre-emption.

The Magistrate Judge has jurisdiction over this matter pursuant to the parties’ consent. See 28 U.S.C. § 636(c). For the following reasons, the Court: (1) denies in part and grants in part the motions for summary judgment filed by Plumley Logistics and Plumley Trucking; (2) denies ASARCO’s Motion for Partial Summary Judgment; and (3) grants in part and denies in part the England Defendants’ Motion for Summary Judgment.

 

BACKGROUND

For purposes of PL’s Motion, it is undisputed that in July 2011, ASARCO contracted with EL to transport and/or arrange for the Shipment. (ASARCO’s Controverting Statement of Facts Regarding PL’s Statement of Facts and ASARCO’s Additional Statement of Facts (Doc. 107), ¶A; PL’s Statement of Facts (Doc. 91), ¶1; PL’s Controverting SOF (Doc. 109), ¶3). Thereafter, [*4]  according to Tammy Foster, who testified that she is an employee of PL, EL contacted her for the purpose of “find[ing] a carrier to pick up the load.” (Doc. 107, Exh. A, pp. 9, 49; see also id. at p. 49 (in this case the carrier PL found to pick up the load was Pavlyukh Express)).

Despite Foster’s testimony that she is employed by PL, ASARCO disputes whether Foster works for PL or PT. This dispute is discussed in further detail infra.

It is undisputed that PL is authorized by the Federal Motor Carrier Safety Administration as a freight broker and does not have motor carrier authority. (Doc. 91, ¶5; Doc. 107, ¶5). It is also undisputed that PT is a federally authorized carrier. (PT’s Statement of Facts (Doc. 99), &14; ASARCO’s Controverting Statement of Facts regarding PT’s Statement of Facts (Doc. 113), ¶C).

As discussed infra, PL and EL, and PT and the England Defendants, have entered into “Transportation Brokerage Agreements”, respectively.

PL argues that it acted as a broker and is, therefore, not liable under the Carmack Amendment. PL further argues that the Transportation Brokerage Agreements do not apply to the Shipment, and that ASARCO’s negligence claims are pre-empted. PT argues that it had no involvement regarding the [*5]  Shipment, that the Transportation Brokerage Agreements do not apply to the Shipment, and that ASARCO’s negligence claims are pre-empted. CR argues that it had no involvement with the Shipment and, to any extent it did, it acted as a broker. EL and CR both argue that ASARCO’s state law claims are pre-empted. ASARCO argues that PL breached the Transportation Brokerage Agreement.

 

STANDARD

Summary judgment is appropriate when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The party seeking summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of [the record]…which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotation marks and citation omitted). Once satisfied, the burden shifts to the nonmoving party to demonstrate through production of probative evidence that an issue of fact remains to be tried. Id. at 324. At the summary judgment stage, the court must not weigh evidence or make credibility determinations. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The nonmoving party’s evidence is presumed true and all inferences are to be drawn in the light [*6]  most favorable to that party. Eisenberg v. Insurance Co. of North Amer., 815 F.2d 1285, 1289 (9th Cir. 1987).

Only disputes over facts that might affect the outcome of the suit will prevent the entry of summary judgment, and the disputed evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson., 477 U.S. at 248. Thus, if the record taken as a whole “could not lead a rational trier of fact to find for the nonmoving party,” summary judgment is warranted. Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 988 (9th Cir.2006) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). If the burden of persuasion at trial would be on the nonmoving party, the movant may carry its initial burden of production under Rule 56 by producing, “evidence negating an essential element of the nonmoving party’s claim or defense…,” or by showing, after suitable discovery, that the “nonmoving party does not have enough evidence of an essential element of its claim or defense to carry its ultimate burden of persuasion at trial.” Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1105-1106 (9th Cir. 2000).

 

CARMACK AMENDMENT CLAIM ALLEGED AGAINST THE PLUMLEY DEFENDANTS

The Carmack Amendment, 49 U.S.C. § 14706, governs liability for all losses, damages or injuries to goods transported in interstate commerce. Hewlett-Packard, Co. v. Brother’s Trucking Ent., 373 F.Supp.2d 1349, 1351 (S.D. Fla. 2005); Chubb Group of Insur. Co. v. H.A. Transportation Sys. Inc., 243 F.Supp.2d 1064, 1068 (C.D. Cal. 2002). The statute “subjects common carriers and freight forwarders transporting cargo in interstate commerce to absolute liability for actual loss or injury to property.” KLS Air Express v. Cheetah Transportation, LLC, 2007 WL 2428294,*3 (E.D. Cal. 2007). A shipper, such as ASARCO, establishes a prima [*7]  facie case of a carrier’s liability under the Carmack Amendment by establishing by a preponderance of the evidence that the goods were: (1) delivered to the carrier in good condition; (2) the goods were damaged or lost while in the carrier’s possession; and (3) damages. Missouri Pacific R.R. v. Elmore & Stahl, 377 U.S. 134, 138 (1964); Chubb, 243 F.Supp.2d at 1068. The Carmack Amendment limits recovery to actual damages. 49 U.S.C. §14706(a)(1).

While the Carmack Amendment applies to motor carriers and freight fowarders1, the statute does not apply to brokers. KLS Air Express, 2007 WL 2428294, at *3; Chubb, 243 F.Supp. 2d at 1069. Under the Carmack Amendment, a “broker” is defined as:

 

A person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal, or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.

 

 

49 U.S.C. § 13102(2). Federal regulations also specify that:

A broker shall not, directly or indirectly, represent its operations to be that of a carrier. Any advertising shall show the broker status of the operation.

 

 

49 C.F.R. §371.7(b).

 

1   Although whether a party acted as freight forwarder does not seem to be at issue here, a “Freight Forwarder” is defined as:

 

 

a person holding itself out to the general public…to provide transportation of property for compensation and in the ordinary course of business–

(A) [*8]  assembles and consolidates, or provides for assembling and consolidating, shipments and performs or provides for break-bulk and distribution operations of the shipments;

(B) assumes responsibility for the transportation from the place of receipt to the place of destination; and

(C) uses for any part of the transportation a carrier subject to jurisdiction under this subtitle.

 

 

49 U.S.C. §13102(8).

The Carmack Amendment defines “motor carrier” as “a person providing motor vehicle transportation for compensation.” 49 U.S.C. § 13102(14). Federal regulations further clarify that:

 

Motor carriers, or persons who are employees or bona fide agents of carriers, are not brokers within the meaning of this section when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they have accepted and legally bound themselves to transport.

 

 

49 C.F.R. § 371.2.

THE PLUMLEY DEFENDANTS’ ARGUMENT. PL contends that the Carmack Amendment does not apply because PL is a freight broker and acted as a freight broker with regard to the Shipment, and the Carmack Amendment does not apply to brokers.

PT contends that prior to this lawsuit, no one took the position that PT had anything to do with the Shipment. PT stresses it was not the carrier, it did not accept the Shipment, did not agree to transport [*9]  the Shipment or assume responsibility for the transportation of the Shipment. PT points out that Foster worked for PL and that PT and PL are separate entities.

ASARCO maintains that there are factual disputes regarding the Plumley Defendants’ role regarding the Shipment.

DISCUSSION. “Whether a company is a broker or a carrier is not determined by what the company labels itself, but by how it represents itself to the world and its relationship to the shipper.” Hewlett Packard, 373 F.Supp.2d at 1352 (citation omitted); Chubb, 243 F.Supp.2d at 1070 (“‘[a] carrier’s status as a common carrier is determined not by reference to its authority but rather by reference to what it holds itself out to be.'” (quoting Ensco, Inc. v. Weicker Transfer and Storage Co., 689 F.2d 921, 925 (10th Cir. 1982)). “The difference between a carrier and a broker is often blurry. The crucial distinction is whether the party legally binds itself to transport, in which case it is considered a carrier. See 49 C.F.R. § 371.2(a). That is, if [the defendant] accepted responsibility for ensuring delivery of the goods, regardless of who actually transported them, then [the defendant] qualifies as a carrier. If however [the defendant] merely agreed to locate and hire a third party to transport the [shipment], then it was acting as a broker.” CGU Intern. Ins., PLC v. Keystones Lines Corp, 2004 WL 1047982, *2 (N.D. Cal. May 5, 2004) (holding defendant was a broker because the agent [*10]  worked for the brokering division, there was never an understanding that defendant would assume responsibility for shipping the goods, defendant never took physical possession of the goods but was merely a conduit between the shipper and the carrier, and the contract between defendant and carrier identified their roles). The focus of the court’s inquiry must be on the Defendants’ role in the specific transaction, and the nature of the relationship between ASARCO, EL and the Plumley Defendants. See Schramm v. Foster, 341 F.Supp.2d 536, 549 (D.Md. 2004).

Here, PL maintains it acted solely as a broker when it arranged for Pavlyukh Express to transport the Shipment, and PT contends it had absolutely nothing to do with the Shipment. (See Doc. 91, ¶11; Doc. 98, pp. 3-8; Doc. 109, ¶3, Doc. 91, Exh. A p.8 (Foster testified that PL “is a broker and we broker freight out to other carriers….I have customers that give me freight, and I find carriers to move that freight.”)) The Plumley Defendants cite Foster’s testimony that she is an employee of PL, which operates solely as a broker, and that PL never took possession of the Shipment. Foster also testified that EL agents requested PL to find a carrier to transport the Shipment. Further, a broker-carrier [*11]  agreement for the Shipment identifies Pavlyukh Express as the “carrier” and PL as the “broker”. (Doc. 91, Exh. F, PL 0021-PL0023).

PL’s interaction with EL is not as clear cut as PL contends. EL agents Freeman and Whitlock testified that they believed Foster worked for PT2 and neither knew of PL or had worked with PL. (See Doc. 107, Exh. 2, pp. 48-49, 54 (Freeman) & Exh. 3, pp. 23, 30 (Whitlock); see also Doc. 91, Exh. B, p. 50). Nor had PL “been set up as a vendor for…[EL].” (Doc. 91, Exh. B, p. 30). When Freeman “reached out to Tammy Foster with regard to this shipment”, he thought he was reaching out to PT. (Doc. 91, Exh. B, p. 54). Both Freeman and Whitlock testified that in July 2011, the only two carriers authorized to rebroker3 EL loads were PT and Mike’s Trucking and Landstar. (Doc. 91, Exh. B, p. 17 (Freeman) & Exh. C, p. 24 (Whitlock)). Freeman testified that PT was authorized to re-broker freight because “we had a really good relationship with Tammy [Foster]. She did a great job for us when she was at Landstar, and…she gave us no reason to feel that she couldn’t do a good job for us at Plumley Trucking.” (Doc. 91, Exh. B, pp. 17-18). When asked whether he ever understood PT to be a [*12]  broker in addition to being a carrier, Freeman testified: “Well, we made that distinction when we allowed her [Foster] to subcontract loads out to other drivers.” (Id. at pp. 50-51). Freeman stated that the decision to allow PT to broker loads to other carriers was made after Foster “moved from Landstar to Plumley….” (Id. at p. 50). Freeman also testified that at the time of the Shipment, PT was authorized by England to broker loads. (Id. at p. 51).

 

2   PL and PT are both corporations organized and existing under the laws of South Carolina (Doc. 107, Exh. 11); PL was formed in 2007 and PT was formed in 2003. (Doc. 99, Exh. A, ¶3).

3   Rebrokering occurs when a broker refers a shipment to another broker to actually arrange for the transportation of the freight or when a carrier brokers a shipment rather than transports the shipment itself. (Doc. 91, p.5 n. 3).

Moreover, although Foster testified that EL asked her to find a carrier for the Shipment, Whitlock testified that he did not remember whether he asked her to act as a carrier (i.e., “take this load for me”) or to broker the load (i.e. “find somebody that can take this load for us”). (Doc. 107, Exh. 3, pp. 43-44; see also id. at p. 44 (Whitlock’s communication with Foster would have been [*13]  over the phone or through e-mail and he has no written communications with Foster regarding the Shipment.)).

Whitlock testified that when Foster informed him on July 22, 2011, that Pavlyukh Express was going to haul the Shipment, he believed that “Foster had rebrokered the load[.]” (Doc. 91, Exh. C, p. 52). Although EL must give express permission for a load to be rebrokered, Whitlock did not provide written confirmation that Foster could rebroker the load, nor did he confirm that she had received any such confirmation. (Id. at pp. 52-53; see also id. at p. 52 (“In order for someone to rebroker loads, they have to have permission from [EL] to do that. We don’t do that on every single load that they haul.”) Whitlock had no objections to Pavlyukh Express, nor did he do any follow up to determine whether Pavlyukh Express was a reliable carrier. (Id. at pp. 53-54).

The record reflects that the load and rate confirmation for the Shipment lists PT as the carrier. (Doc. 91, p.4 n.1; see also Doc. 107, Exh. 1, pp. 41-42 (Foster testifying to same)). Foster testified that EL required that the name PT be used. (Doc. 91, Exh. A, p. 131).

Based on the testimony, there is no question that EL agents thought they were dealing with Foster as an [*14]  employee of PT and they were not aware of PL’s role. Whitlock’s and Freeman’s belief that they were dealing with PT through Foster is understandable given the manner in which PT and PL hold themselves out. For example, at her deposition, Foster identified a business card bearing her name and stating “Plumley Trucking and Logistics, Incorporated”. (Doc. 107, Exh. 1, p. 17). She testified that there is no such company and she could not explain why her business card read the way it did. (Id.). She also testified that the website plumleytrucking.com reads: “Plumley Trucking, Logistics, and Warehousing”, which is a company that does not exist (Id. at pp. 19-21; see also Doc. 107, Exh. 9, p. 14 (Craig Plumley, President of PL and PT, also testifying there is no such business)). Foster agreed that the website marketed Plumley Trucking, Logistics and Warehousing, Inc., as a one-stop shop for all of a shipper’s transportation needs. (Doc. 107, Exh. 1, p. 20). Further, although the website states that “all of our equipment…is meticulously maintained…”, it does not specify that the equipment belongs only to PT given that PL has no equipment. (Id. at p. 22 (Foster testified that PL owned no trucking equipment)). Finally, [*15]  the portion of the website containing an application of employment for drivers does not specify whether the application is for employment with PL or PT. (Id. at pp. 23-24). Moreover, both PL and PT use the same phone number (which directs the caller via prompts to PT or PL) and fax number which goes to PT, (Id. at pp. 23-24(phone), 30 (fax)); operate out of the same building but in separate offices (Id. at p. 30); use the same phone system, Internet system and water system (Id.); and all PL invoices are directed to and paid by an employee for PT but, as far as Foster understands, the invoices are paid out of separate accounts. (Id. at p. 33). Foster also testified that although she is an employee of PL, her paychecks “say” PT: “we have a payroll company, TLC, and Plumley Trucking is on that payroll company.” (Doc. 91, Exh. A, p. 9; see also Doc. 113, Exh. 3, p. 9)). Foster testified that she does no work for PT. (Doc. 91, Exh. A, p. 9; Doc. 99, Exh. B, p.99.).

Craig Plumley, President of PT and PL (Doc. 99, Exh. A, ¶2), confirmed that PL and PT share the same Internet service, water, power, and phone service; however, a cost sharing agreement “on everything” is in place: “Any bills related to the building whether it be power, water, Internet, [*16]  phone service, Logistics pays between 25 and 30 percent of those bills every month.” (Doc. 107, Exh. 9, p. 13-14; see also id. at p. 10 (Craig Plumley is 100% owner of PT and PL, and all authority is vested in him as there is no Board of Directors for either corporation); Doc. 107, Exh. 4, PL 0172 (document on PT stationary dated January 2011 stating, in pertinent part: PL “agrees to pay [PT] a percentage of utilities (including power, water, phone, internet, etc.) based on [PL] revenue. This percentage can be paid monthly or yearly.”)). Craig Plumley also stated that PT does not own PL and that PT is not responsible for the debts and liabilities of PL. (Doc. 99, Exh. A, ¶¶3-5).

According to Craig Plumley, PT did not agree to transport the Shipment, did not agree to arrange for such transport by another company, did not take possession of or transport the copper anodes at issue, and had no contact or communication with Pavlyukh Express or its driver Kuba regarding the Shipment. (Id. at ¶¶7-11). Instead, it was Foster through PL who searched for a carrier for the Shipment, selected and arranged for Pavlyukh Express or its driver Kuba to transport the Shipment, and who communicated with Pavlyukh Express [*17]  or Kuba in July 2011 regarding the Shipment. (Id. at ¶¶6-11).

On the instant record, the Court finds that factual issues exist concerning PL’s and PT’s role. With regard to PL, the evidence of record could lead a reasonable fact finder to conclude that PL held it held itself out as part of the PT operation, which according to the website and Foster’s card, appeared to provide both brokering and carrying services. See, e.g. Schramm, 341 F.Supp.2d at 549 (“A transportation entity may have authority to operate as both a broker and a carrier.”). As discussed supra, when analyzing whether an entity operated as a broker or a carrier, courts have looked to the understanding among the parties involved, which includes consideration of how the entity held itself out.4 See id. (defendant acted as a broker where, inter alia, “[n]othing in the record suggests that [the shipper] believed [the defendant] was accepting responsibility to ship the load itself pursuant to its motor carrier authority.”); Chatelaine, Inc. v. Twin Modal, Inc., 737 F.Supp.2d 638, 642 (N.D. Tex. Aug. 2010) (holding defendant was a broker because “it only held itself out to arrange for transportation and facilitated the transaction between the buyer and the carrier. [The defendant] arranged for [the carrier] to physically transfer the Product [*18]  to its destination and, beyond being in communication with…[carrier’s] driver, had no connection to its actual transportation.”); Chubb, 243 F.Supp.2d at 1070 (holding defendant was a broker where the bill of lading identifying defendant as the carrier was written by third party and there was no showing that defendant represented to plaintiff that it would transport the items itself; instead, defendant’s actions were consistent with those of a broker) with Hewlett-Packard, 373 F.Supp.2d at 1352 (question of fact existed where defendant’s solicitations and statements suggest that defendant’s “actions were not limited to arranging transport, but also exerting some measure of control over the[] drivers” by ensuring “consistent and timely transit times….”); KLS Air Express, Inc., 2007 WL 2428294 at *4 (question of fact where defendant’s advertising stated it was a carrier and did not state it was also broker, and shipper offered evidence that it intended defendant would be the carrier, defendant agreed to act as the carrier and never informed shipper it had arranged for another carrier, and defendant remained shipper’s sole point of contact at all times).

 

4   ASARCO discusses the standard for piercing the corporate veil of the Plumley entities. However, for purposes of the Carmack Amendment, the focus is upon how PL [*19]  held itself to the world and its relationship to EL and ASARCO.

“An entity may be considered a motor carrier, as opposed to a broker, only if it engages in solicitation for its own account.” Schramm, 341 F.Supp.2d at 550 (citing Global Van Lines, Inc. v. I.C C., 691 F.2d 773, 775 (5th Cir.1982)). Upon consideration of the evidence, a reasonable jury could certainly determine that PL and PT held themselves out as one operation involving both broker and carrier services.5 PL’s representations on its website and Foster’s card completely fail to identify PL as an entity separate from PT. Further, the load and rate confirmation for the Shipment list PT as the carrier. Although Whitlock could not remember whether he contacted Foster to carry the Shipment or broker it, upon learning from Foster that Pavlyukh Express was going to carry the Shipment, Whitlock thought that Foster, whom he and Freeman believed worked for PT, had rebrokered the Shipment, which was something England authorized PT to do and, thus, was consistent with EL’s expectations of its dealings with PT as a carrier.

 

5   Although brokers are not subject to liability under the Carmack Amendment, the actions of PL are so intertwined with the actions of PT that dismissal of the Carmack Amendment claim against PL would be inappropriate at this time.

As for PT, “[i]f [PT] [*20]  accepted responsibility for ensuring delivery of the goods, regardless of who actually transported them, then [PT] qualifies as a carrier [and Carmack would apply]. If however [PT] merely agreed to locate and hire a third party to transport the [Shipment], then it was acting as a broker.” CGU International Insur., 2004 WL 1047982, *2 (May 5, 2004). There is a question of fact regarding PT’s involvement. EL agents thought they were dealing with PT when they dealt with Foster. As discussed above, based on the manner that PT and PL held themselves out, a reasonable jury could determine that PT was involved in the Shipment. Moreover, Whitlock cannot remember whether he asked Foster, whom he thought worked for PT, to broker or carry the load and he ultimately thought that PT had “rebrokered” the load to Pavylukh Express.

PT goes on to argue that even if the Carmack Amendment applies, no timely claim was filed against PT. This is primarily because EL submitted a claim to Foster, who PT contends works for PL and the claim names PL and does not mention PT.

There is no dispute that within the 9-month deadline for filing a claim under the Carmack Amendment, ASARCO timely submitted a claim for the lost Shipment to EL, which, in turn, submitted the claim to Foster. (ASARCO’s Statement of Facts [*21]  in Support of its MPSJ (Doc. 102), ¶8 & Exh. 8 pp. 26-27; Doc. 109, ¶7; see also Doc. 113, Exh. 1, pp. 56-57). Andre Andersen, EL’s claims manager who tendered the claim to “Tammy [Foster] at Plumley…” testified that he “was uncertain if [Foster is] specifically with Plumley Trucking or Plumley Logistics.” (Doc. 102, Exh. 8, pp. 26-27; see also Doc. 113, Exh. 1, p 57 (Freeman identifying Andersen as EL’s claims manager)). EL’s understanding is that the Plumley Defendants’ insurance company denied the claim, as did the insurance company for Pavlyukh Express. (Doc. 102, Exh. 8, pp. 26-27).

Just as the issue of PL’s and PT’s role in this matter is a question for the jury, so is whether EL’s tendering of the claim to Foster, who EL agents believed worked for PT, constituted tendering of the claim to PT as well as PL.

 

BREACH OF CONTRACT CLAIM AGAINST THE PLUMLEY DEFENDANTS

ASARCO brings this claim as an alternative claim if the Carmack Amendment claim fails. If ASARCO’s claim under the Carmack Amendment survives, then this claim is pre-empted. See Hall v. North Amer. Van Lines, Inc., 476 F.3d 683, 688 (9th Cir. 2007) (“It is well settled that the Carmack Amendment is the exclusive cause of action for interstate-shipping contract claims alleging loss or damage to property.”). (See also Doc. 90, pp.12, 15; Doc. [*22]  108, p.8 n.5)).

ASARCO alleges that PT and PL breached contracts entered into by CR and PT in 2008 and EL and PL in 2010. ASARCO contends that it is a third party beneficiary of the 2010 Agreement. (Doc. 101, p. 3). Both contracts are captioned “Transportation Brokerage Agreement”.

A “Transportation Brokerage Agreement” (“2010 Agreement”) dated November 3, 2010 between EL and PL identifies EL as a “Registered Broker” and PL as “a Registered Motor Carrier”.6 (Doc. 91, ¶17 & Exh. J, PL 0007-0010)). The 2010 Agreement is signed by R. Craig Plumley, President of PL. (Doc. 91, Exh. J, PL 0010)). There is no signature in the space reserved for an authorized representative of EL. (Id.). In pertinent part, the 2010 Agreement provides at §I(j):

 

CARRIER shall defend, indemnify and hold BROKER and its shipper customer harmless from any and all claims, actions, suits, demands, or damages, arising out of or related to CARRIER’s acts, omissions, or performance under this Agreement, including, but not limited to, cargo loss or damage, theft, delay, damage to real or personal property, personal injury or death. The obligation to defend shall include any and all costs of defense as they accrue, including but not limited [*23]  to attorney’s fees from counsel of BROKER’s choice.

 

 

(Id. at PL 0007). The 2010 Agreement also provides at ‘3(c)(ii) and (iii) that:

ii. CARRIER’s liability for any cargo damage, loss, or theft from any cause shall be determined under the Carmack Amendment, 49 U.S.C. § 14706; and

iii. Special Damages: CARRIER’s indemnification liability herein for freight loss and damage claims shall include legal fees which shall constitute special damages, the risk of which is expressly assumed by CARRIER and which shall not be limited by any liability of CARRIER under sub par (ii) above.

 

 

(Id. at PL 0008).

 

6   The Agreement is a form agreement in which the date and PL’s name and DOT number are hand written in blank spaces provided for such information.

The 2010 Agreement also contains a provision prohibiting the rebrokering of loads without the prior written consent of EL. (Doc. 91, ¶21; Doc. 107, ¶21).

Foster, who participated in negotiating the 2010 Agreement with EL, testified that even though PL is a broker and not a carrier, PL entered into the Agreement identifying it as a “Carrier” because: “[EL] said if we were going to do business with them, that’s the contract that we had to sign, so that’s the contract that we signed.” (Doc. 91, Exh. A, pp. 53-54). [*24]  Foster had concerns about PL being labeled a “Carrier” in the Agreement, because she “wanted to make sure [EL]…knew we were brokering the freight and they were okay with it, and they were okay with it.” (Doc. 91, Exh. A, p. 55).

Foster testified that EL informed that the Agreement “was a corporate agreement, and they said it could not be amended. The communication, as far as us brokering it, was between agent and agent.” (Id.; see also id. at p. 56 (EL “said they didn’t have…” a broker-to broker agreement.)). Foster described the agreement between agent and agent as follows: “That means for Bret Freeman and Tammy Foster, we had the agreement. And that’s what Bret Freeman told me. That was my understanding.” (Id. at p. 55). She also testified that “brokers and brokers…have verbal agreements that the freight can be brokered, and we had ours via e-mail.” (Id. at p. 56). When Foster “had a carrier that I was going to be sending to pick up freight at ASARCO[,] I would give [Freeman]…the carrier name and the driver’s name that would be picking up the freight….And that was our agreement, that would be through e-mail.” (Id. at pp. 56-57). Foster testified that based on that e-mail, EL would understand that PL was brokering a load and [*25]  would know who the carrier would be. (Id. at p. 57). Foster also testified that PL provided EL with a copy of its broker authority. (Id. at p. 123); however, ASARCO points out that EL representatives testified they thought they were doing business with PT and did not know of PL’s existence.

When EL agent Freeman was presented with the 2010 Agreement at his deposition, he testified that he was “not sure when…Plumley got this agreement, but it’s never been executed….[PL] has never been set up as a vender for [EL].” (Doc. 91, Exh. B, p. 30). When asked whether he has ever worked with PL before, Freeman responded: “I’ve worked with Plumley Trucking.” (Id.).

The load and rate confirmation for the Shipment lists PT as the carrier. (Doc. 91, p. 4 n. 1; see also Doc. 107, Exh. 1, pp. 41-42 (Foster testifying to same)). However, PL points to Foster’s testimony when asked:

 

Q. …the only reason that the name Plumley Trucking appears on any documents related to the subject shipment is because England Logistics requested that that name be used?

A. [Foster]: Yes.

 

 

(Doc. 91, Exh. A, p. 131).

Additionally, the following exchange took place at Craig Plumley’s deposition:

 

Q. …there are documents reflecting multiple loads being…shipped [*26]  under the name of Plumley Trucking through brokered loads from England Logistics on behalf of shipper ASARCO. Were you aware of that before this litigation?

A. [Craig Plumley]: Yes, ma’am. As I stated earlier, when I filled out that Broker Carrier Agreement with England Logistics and Tammy emailed it to, I don’t know who she was dealing with at England, they refused to write the checks to Plumley Logistics. They said it has to be set up as Plumley Trucking.

 

 

(Doc. 99, Exh. C, p. 37). Craig Plumley also testified that nothing came to mind during Foster’s testimony with which he disagreed and, in his view, Foster’s testimony was truthful and accurate. (Id. at pp. 26-27).

The record also contains a March 2008 Transportation Brokerage Agreement identifying CR as the “Broker” and “PT” as the “Carrier”. (Doc. 91, Exh. J, ENGRFP 000237). The heading of that Agreement includes “C.R. England, Inc.” and “England Logistics”. (Id.). That Agreement is signed by a representative of PT and is not signed on behalf of CR or EL. (Id. at ENGRFP 000239). PL and ASARCO agree that this Agreement, like the 2010 Agreement, includes an indemnification clause and a provision prohibiting rebrokering of loads without prior consent. [*27]  (Doc. 91, ¶21; Doc. 107, ¶21).

WHETHER THE AGREEMENTS APPLY TO THIS SHIPMENT. PL contends that the Agreements govern transactions in which CR/EL tenders a load for transportation, i.e., a broker-to-carrier transaction. Therefore, PL contends that the Agreements are inapplicable to the instant Shipment because the Shipment was tendered to PL to broker, not to transport, and the 2010 Agreement does not apply to broker-to-broker dealings between EL and PL. (Doc. 90, p. 9). PL also points to Freeman’s testimony that the 2010 Agreement was never executed. (Id.). According to PL, “[t]he general rule is where an instrument has been executed by only a portion of the parties purported to be bound thereby, the instrument is incomplete and never takes effect as a valid contract even against those who have executed it.” Modular Sys. Inc. v. Naisbitt, 114 Ariz. 582, 562 P.2d 1080, 1083 (App. 1977); In re Gaynes, 27 B.R. 161, 162 (9th Cir. 1983) (“The general rule for an enforceable contract to exist requires the signature of all parties to be bound.”).

However, under both Arizona and Utah law7, an exception to this general rule is that if the parties, by their actions recognize the validity of the agreement and acquiescence in its performance. See e.g. Muchesko v. Muchesko, 191 Ariz. 265, 268, 944 P.2d 21, 24 (Ct. App. 1997); Ellsworth v. American Arbitration Ass’n., 148 P.3d 983, 988 (Utah 2006) (“Performance my bind a party to a contract it has not signed.”); Ercanbrack v. Cransall-Walker Motor Co., 550 P.2d 723, 725 (Utah 1976) (It [*28]  is a principal of “contract law contract law that the parties may become bound by the terms of a contract even though they did not sign the contract, where they…have otherwise indicated their acceptance of the contract, or led the other party to so believe that they have accepted the contract.”); Commercial Union Assoc. v. Clayton, 863 P.2d 29, 34 (Utah Ct. App. 1993) (“It is…established that the purpose of a signature is to demonstrate ‘mutuality of assent’ which could as well be shown through the conduct of the parties.”) (citation omitted).

 

7   Under the Agreement, Utah law governs. PL contends that because the Agreement was never in force, Arizona law applies. (PL’s Response in Opposition to ASARCO’s MPSJ (Doc. 108), p. 3 n.1).

A question of fact exists as to the application of the Agreements to the Shipment. First, if a jury determines that PT agreed to carry the load, then the 2008 Agreement arguably applies. Second, Foster’s testimony establishes that PL entered into the 2010 Agreement despite reservations about being labeled a “Carrier.” ASARCO persuasively points out that “[i]t makes no sense for [PL] to argue that the relevant agreement is not controlling or applicable when that agreement was a condition precedent to it doing business with England.” [*29]  (ASARCO Opposition to PL’s MSJ (Doc. 106), p. 10). ASARCO further stresses that, despite PL’s claim that the Agreement is inapplicable because PL is labeled as a “Carrier,” its contract claim arises from the obligations that PL accepted to do business with England. (Id.). According to ASARCO, PL promised to become the insurer for England and ASARCO in the event that any damage arose in connection with PL’s acts. ASARCO further argues that PL brokered the Shipment to Pavlyukh Express in a manner contrary to its obligations under the contract and/or law. (Id.). Moreover, it seems nonsensical for EL and PL to enter into a contract where PL is identified as a “Carrier” given that PL is not an authorized carrier but is an authorized broker–thus making Foster’s version more believable.

ASARCO also cites the Agreement’s Integration Clause to override any argument that some other verbal agreement governed EL’s and PL’s actions concerning the Shipment. The Integration Clause provides:

 

ENTIRE AGREEMENT:…unless otherwise agreed in writing, this Agreement contains the entire agreement and understanding of the Parties and supersedes all verbal or written prior agreements, arrangements, and/or understanding of the Parties relating to the subject matter stated [*30]  herein. The Parties further intend that this Agreement constitutes the complete and exclusive statement of its terms, and that no extrinsic evidence may be introduced to reform this Agreement in any judicial or arbitration proceeding involving this Agreement.

 

 

(Doc. 118, p.4 (citing Doc. 102, ¶1; Doc. 107, Exh. 12)). ASARCO stresses that “[t]o attempt to claim that some other unproduced ‘side’ or ‘verbal’ agreement applies to the Shipment is to, again, ignore the very terms of the Agreement.” (Doc. 118, p. 5).

ASARCO also persuasively points out that saying that rebrokering loads falls outside the scope of the Agreement is to ignore its very terms given that the Agreement explicitly contemplates the rebrokering of loads to other carriers, noting that: “CARRIER [i.e., PL] will not re-broker, co-broker, subcontract, assign, interline, or transfer shipments hereunder without prior written consent of BROKER [i.e., EL].” (Doc. 118, p.5 (citing Doc. 102, ¶5)). However, Whitlock testified that although such confirmation is required, “[w]e don’t do that on every single load they haul.” (Doc. 91, Exh. C, p. 52).

On the instant record, PL has failed to establish that no factual issues exist as to whether [*31]  the 2010 Agreement covered the transaction and, thus, PL’s motion should be denied on this issue. Additionally, because factual issues remain as to whether the 2010 Agreement applied to the Shipment and given EL agents’ confusion as to whether they were dealing with PT or PL and Freeman’s position that PL was not an authorized vendor, ASARCO’s MPSJ is denied.

Likewise, factual issues remain for the jury’s determination regarding PT’s role with the Shipment. PT contends that the Agreement between it and the England Defendants is not applicable because “it only applies to shipments [PT] actually transported as a motor carrier” and PT did not act as a motor carrier or freight forwarder, did not take possession of the copper anodes or directly or indirectly transport them from

ASARCO’s Hayden facility, did not agree to transport the Shipment and “did not rebroker or subcontract the [S]hipment.” (Doc. 98, p. 11) ASARCO counters that, consistent with the contracts, PT acted as the initial carrier who accepted responsibility for the Shipment. (Doc. 98, p. 6). A reasonable jury could conclude that this is the case given the manner in which PT and PL held themselves out and the EL agents’ testimony that [*32]  they thought they were dealing with PT. At bottom, factual issues remain as to whether the Agreement(s) applied to the Shipment.

WHETHER THERE WAS A BREACH. PL argues that even if the Court determines the Agreement is enforceable, there was no breach. PL cites Freeman’s and Whitlock’s testimony that PT was authorized to rebroker loads. (Doc. 90, pp. 10-11 (citing Doc. 91, ¶¶24, 25)). To get around the fact that Freeman and Whitlock referred to PT and not PL, PL argues that EL’s decision to allow PT to rebroker loads was based upon its relationship to Foster, who is an employee of PL and not PT. (Doc. 90, p. 10, n. 4 (citing Doc. 91, ¶24). Moreover, upon learning that Pavlyukh Express would be the carrier transporting the Shipment, Whitlock did not lodge an objection. Thus, PL contends there was no breach when the load was assigned to Pavlyukh Express.

Further, PL contends the contract required only that PL indemnify EL, not ASARCO. (Doc. 90, p. 11). PL “as a broker agreed only to arrange for the transportation of the Shipment[,]…[PL] fulfilled this obligation, and because the claims do not stem from the failure to arrange for the transportation, the claims do not arise out of [PL’s] [*33]  acts or omissions, or out of the performance of an agreement between [PL] and [EL]. Instead, the claims arise solely from the criminal acts of a third-party in stealing the Shipment.” (Doc. 90, p. 12).

ASARCO counters that its “breach of contract claim has nothing to do with [PL’s] selection of Pavlyukh.” (Doc. 118, p. 5). Instead, ASARCO’s claim arises under the Agreement’s indemnity provision requiring PL to “defend, indemnify and hold [EL] and [its shipper customer, i.e., ASARCO] harmless from any and all claims, actions, suits, demands, or damages, arising out of or related to [PL’s] acts, omissions or performance under this Agreement including, but not limited to, cargo loss or damage, theft, delay, damage to real or personal property….” (Id. at 6 (citing Doc. 102, ¶1) (emphasis in original)). According to ASARCO, “[t]o say that the Agreement allows [PL] to “pass the buck” to a carrier after they are selected is illogical and untenable. Indeed, the very purpose of the indemnity provision is to provide an avenue of recovery for issues with delivery of shipments….[PL] agreed to act as insurer and indemnify against any cargo loss, damage, or theft of shipment it carried or re-brokered under [*34]  the Agreement. In other words, the Agreement specifically contemplates [PL’s] indemnification of a shipper for cargo, loss, damage or theft–the very scenario presented here.” (Id.) (emphasis in original).

On this record, factual disputes remain as to whether the Agreement(s) applied and whether a breach occurred. Consequently, PL’s, PT’s and ASARCO’s Motions are denied as to the breach of contract claim.

 

STATE-LAW NEGLIGENCE CLAIMS AGAINST ALL DEFENDANTS

ASARCO alleges that all Defendants were negligent. ASARCO acknowledges that it cannot pursue these claims against the Plumley Defendants if the Carmack Amendment applies to them.

ASARCO alleges that PL and PT breached their duties hiring Pavlyukh Express, a newly formed carrier who did not have an established history, and that PT and PL failed to exercise due care to ensure the Shipment’s delivery in good condition and to protect the Shipment. (FAC, ¶¶69-70). ASARCO alleges that the England Defendants, were negligent in selecting PT and or PL “to deliver the shipment because, among other reasons, PT and/or PL did not properly vet carriers who transported shipments….” (FAC, ¶67). ASARCO alleges that all Defendants were negligent in hiring, retaining and [*35]  supervising Pavlyukh Express. (FAC, Count III).

All Defendants argue that ASARCO’s negligence claims are pre-empted under 49 U.S.C. § 14501, which is referred to interchangeably as the Federal Aviation Administration Authorization Act (“FAAAA”) and the Interstate Commerce Commission Termination Act (“ICCTA”) (Doc. 90, p.13 n.5): Pursuant to §14501,

 

a State…may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier…or any private motor carrier, broker or freight forwarder with respect to the transportation of property.

 

 

49 U.S.C. §14501(c)(1); see also Ameriswiss Tech., LLC v. Midway Line of Ill., Inc., 888 F.Supp.2d 197, 204 n.7 (D.N.H. 2012) (“The ICCTA preemption provision had been part of the…[FAAAA] passed by Congress in 1994.” (internal quotation marks and citation omitted)). For purposes of §14501(c), “[s]tate common law counts as an ‘other provision having the force and effect of law.'” Ameriswiss Tech., LLC, 888 F.Supp.2d at 204 n. 6 (quoting Non Typical, Inc. v. Transglobal Logistics Grp., Inc., 2012 WL 1910076 at *2 (E.D. Wis. May 28, 2012)). Because the provisions of § 14501 “closely parallel those found in the Airline Deregulation Act of 1978 (‘ADA’), codified at 49 U.S.C. § 41713(b)(4)(A) and 49 U.S.C. §41713(b)(4)(B)(i)…”, courts have interpreted the preemptive scope of §14501(c) in accordance with case law addressing the ADA. Huntington Operating Corp. v. Sybonny Exp., Inc., 2010 WL 1930087 at *3 (citations omitted); see also Works v. Landstar Ranger, Inc., 2011 WL 9206170 *1 (C.D. Cal. 2011).

In interpreting this provision, the Supreme Court has determined:

 

(1) that “[s]tate [*36]  enforcement actions having a connection with, or reference to,” carrier “‘rates, routes, or services’ are pre-empted,” …; (2) that such pre-emption may occur even if a state law’s effect on rates, routes, or services “is only indirect,” …; (3) that, in respect to pre-emption, it makes no difference whether a state law is “consistent” or “inconsistent” with federal regulation, …; and (4) that pre-emption occurs at least where state laws have a “significant impact” related to Congress’ deregulatory and pre-emption-related objectives,….

 

 

Rowe v. New Hampshire Motor Transp. Ass’n., 552 U.S. 364, 370-71 (internal citations and punctuation omitted) (quoting Morales v. Trans World Airlines, Inc., 504 U.S. 374, 383-34, 390 (2008)). The Court has also stated that “[a] regulation is ‘related to’ prices, routes, or services when it affects those prices, routes, or services in a manner that is more than ‘tenuous, remote, or peripheral [such as state laws forbidding gambling].'” Works, 2011 WL 9206170 at *1 (quoting Morales, 504 U.S. at 383-34; see also Rowe, 552 U.S. at 371 (noting that the Morales Court “did not say where, or how, ‘it would be appropriate to draw the line[.]'”) (quoting Morales, 504 U.S. at 390).

Under Rowe, state laws are pre-empted when they “produce[] the very effect that the federal law sought to avoid, namely, a State’s direct substitution of its own governmental commands for ‘competitive market forces’ [*37]  in determining (to a significant degree) the services that motor carriers will provide.” Rowe, 552 U.S. at 372 (quoting Morales, 504 U.S. at 378). Pre-emption will also occur where the state regulation requires services “that differ significantly from those that, in the absence of the regulation, the market might dictate.” Id. (regulation requiring shipper to use carrier who will verify tobacco buyer’s age was pre-empted). At bottom, courts have recognized that §14501 “broadly” pre-empts state law claims that would regulate interstate transportation of goods. Huntington Operating Corp., 2010 WL 1930087 at *3 (citation omitted); Chatelaine, Inc., 737 F.Supp.2d at 642 (citation omitted); AIG Europe Ltd. v. General Sys., Inc., 2014 WL 3671566, *3(D. Md. July 22, 2014).

The Ninth Circuit has interpreted the term “service” as used in the ADA “narrowly because Congress intended to ‘preempt only state laws and lawsuits that would adversely affect the economic deregulation of, and the forces of competition within’ the industry it meant to deregulate.” Works, 2011 WL 9206170 at *1 (quoting Charas v. Trans World Airlines, Inc., 160 F.3d 1259, 1261 (9th Cir. 1998) (en banc), amended, 169 F.3d 1703 (9th Cir. 1999)). The parties disagree about the viability of Charas after Rowe. Regardless, “the Court must look to the nature of the particular claim advanced.” Ko v. Eva Airways Corp., 2012 WL 11851427, *4 (C.D. Cal. Feb. 23, 2012). Thus, in determining whether §14501 pre-empts state claims, “the Court must determine whether Plaintiffs’ common law negligence claims are ‘related to’ (that is, have a connection with) [*38]  a price, route or service of [defendant broker] with respect to the transportation of property.”8 Owens v. Anthony, 2011 WL 6056409, *2 (M.D. Tenn. 2011) (personal injury negligence claims were not pre-empted by §14501).

 

8   Section 14501 carves out an exception for state regulatory authority by expressly stating that the provisions of §14501(c) “shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” 49 U.S.C. § 14501(c)(2). Owens, 2011 WL 6056409 at *2. In cases where personal injury is alleged, even if the claim has a connection to prices, routes or services, courts will go on to “determine whether such claims are ‘saved’ under the safety regulatory authority exception.” Id. ASARCO does not allege that the safety authority exception applies; thus, the Court foregoes that portion of the analysis.

ASARCO relies heavily on a decision from the District Court for the Central District of California in Works v. Landstar Ranger, Inc., 2011 WLL 9206170 at *1. There, the shipper plaintiff alleged that the broker defendant was negligent in hiring the carrier, who delivered damaged goods, and that the broker committed fraud in an attempt to cover up that negligence. Id. The court held that such claims were not pre-empted under §14501(c) given that:

 

Neither the delivery of damaged goods, nor an attempt [*39]  to cover up that damage, has more than a tenuous, remote, or peripheral effect on [defendant broker’s] “prices, schedules, origins and destinations of the point-to-point transaction of passengers, cargo, or mail.” Plaintiff’s negligence and fraud claims merely seek to enforce a normal duty of care and a duty not to defraud one’s customers. This had nothing to do with the service offerings–i.e., its schedules, origins, or destinations-by [defendant broker] of the carriers with which it contracts.

 

 

Id. at *2 (denying motion to dismiss).

In contrast to the Works decision, PL and all other Defendants contend that §14501 pre-empts state law negligence claims against brokers. See. e.g. Ameriswiss Tech., 888 F.Supp.2d at 206 (§14501 expressly pre-empted plaintiff’s claims against a broker for negligence and bailment when plaintiff’s property was damaged in transport from one place to another) (citing cases holding §14501 pre-empted negligence claims against brokers)). In holding that state law negligence claims are pre-empted, courts have found persuasive the fact that §14501(c) expressly includes “brokers”. See id.; Non-Typical, 2012 WL 1910076 at *3 (court also found persuasive that given the amount of damages sought on the negligence claim, permitting such a claim to go forward would have an economic [*40]  effect on the rates the broker charges and how it provides transportation services); AIG Europe Ltd, 2014 WL 3671566 at *4 (§14501 pre-empts claim against broker for negligence in failing to advise shipper that carrier was underinsured because “[t]he claim clearly relates to the service provided by a broker.”); Huntington Operating Corp., 2010 WL 1930087 (§14501 pre-empted claims against broker for failure to ensure carrier had adequate insurance coverage, negligence, negligent misrepresentation, and violation of state deceptive trade practices act).

This Court respectfully disagrees with the decision in Works. A fair and common-sense construction of the term “services”, whether read broadly or narrowly with regard to a “broker” reasonably leads to no other conclusion than that a broker must find a reliable carrier to deliver the shipment. Holding a broker responsible for negligence on the instant facts would certainly have more than a tenuous, remote or peripheral effect on rates and services. Consequently, ASARCO’s negligence claims against the Plumley and England Defendants are pre-empted under §145019 and all Defendants are entitled to summary judgment on ASARCO’s negligence claims alleged in Counts II and III of the First Amended Complaint.

 

9   PT argued that ASARCO’s state-law negligence [*41]  claims were pre-empted by the Carmack Amendment, but cited §14501 as authority. (Doc. 98, p. 11; Doc. 119, pp. 4, 6). The England Defendants argued that the negligence claims were pre-empted by both §14501 and the Carmack Amendment. Because the Court has determined that the negligence claims are preempted under §14501, the Court does not address whether the claims would also be pre-empted by the Carmack Amendment.

The Court recognizes that if the Carmack Amendment does not apply and ASARCO’s common law negligence claims are pre-empted under §14501, then there may be little, if no, recourse for ASARCO. The Ameriswiss court succinctly acknowledged this point:

 

because the Carmack Amendment creates a federal statutory remedy against motor carriers only, when a state common-law claim against a motor private carrier or a broker is preempted by 49 U.S.C. § 14501(c)(1), a plaintiff is left with no claim at all against a defendant who has successfully invoked preemption. While that may seem to be an anomalous result of the interplay between the ICCTA preemption provision and the Carmack Amendment, there is no good basis for arguing that Congress did not intend that result, given its interest in standardizing and simplifying the adjudication of claims arising in the context of interstate shipping. See Rini [v. United Van Lines, Inc.],104 F.3d [502] at 504 [1st Cir. 1997]. Moreover, the ICCTA preemption provision was enacted long [*42]  after the Carmack Amendment, see Robert D. Moseley, Jr. & C. Fredric Marcinak, Federal Preemption in Motor Carrier Selections Cases Against Brokers and Shippers, 39 Transp. L.J. 77, 79 (2012), and, presumably, was enacted with the Carmack Amendment in mind. Finally, it is worth bearing in mind that a plaintiff that loses its common-law claim against an entity such as a broker is not denied an avenue for recovery; such a plaintiff still has its Carmack Act claim against the carrier.

 

 

Amerswiss, 888 F.Supp.2d at 207 (footnote omitted). However, as discussed elsewhere in this Order, if the Carmack Amendment does not apply, ASARCO may pursue its alternative breach of contract claims.

 

BREACH OF CONTRACT CLAIM AGAINST THE ENGLAND DEFENDANTS.

ASARCO alleges that it and the England Defendants entered into a contract for the transportation of goods with a reliable carrier and that the England Defendants breached the contract “when they failed to arrange for the shipment of ASARCO’s property with reliable, reputable, and trustworthy carriers (i.e., PT, PL, and/or Pavlyukh).” (FAC, ¶ 87-88). ASARCO also alleges that the England Defendants promised to administer the loss claim relating to the Shipment and that the England Defendants breached the contract “when they did not timely and/or properly administer the [*43]  loss claim relating to the Shipment.” (Id.). It is undisputed that EL had no written contract with ASARCO. (Doc. 103, ¶10; Doc. 115, ¶10).

There is no evidence that the England Defendants breached the contract by dealing with the Plumley Defendants. Nor is there any evidence in the record that the England Defendants had anything to do with selecting Pavylukh Express. Instead, the record supports the conclusion that until the incident with the instant Shipment, England had positive dealings with Foster, and PT was one of only two companies that EL had authorized to rebroker loads. Thus, there is no question of fact as to whether the England Defendants breached the contract by doing business with the Plumley Defendants or by Foster’s selection of Pavylukh Express and summary judgment shall be entered in favor of the England Defendants on this portion of the breach of contract claim. However, a question of fact exists as to whether the claim was properly administered given PT’s argument that the claim was tendered to PL and not PT. EL states in its Motion that it “brokered the load to co-defendant Plumley Trucking…as the carrier to actually transport the load.” (Doc. 100, p. 2). Yet, [*44]  EL claims manager Andersen stated that he tendered the claim to Foster, although he is uncertain whether she works for PL or PT. (See, Doc. 102, Exh. 8, pp. 26-27; see also discussion supra addressing PT’s argument that the loss claim was not timely filed under the Carmack Amendment). Therefore, the Court will address the England Defendants’ arguments with regard to the portion of the breach of contract claim that involves EL’s submission of the loss claim.

The England Defendants point out that all counts in the FAC, other than the Carmack Count which does not name them, are pled in the alternative. (England Defendants’ MSJ (Doc. 100), p. 3). As to the alternative claims, the FAC states: “ASARCO asserts this…claim in the alternative and in the event the Court determines that Carmack is not applicable in this case.” (FAC, ¶¶ 64, 75, 86, 92). The “alternative” claims against CR/EL allege breach of contract and state law negligence claims. (Id. at ¶¶67-68, 74-84). According to the England Defendants, the Carmack Amendment and the ICCTA provide the exclusive framework for dealing with losses of interstate shipments and pre-empt all other claims alleged in the FAC.

At this point in the litigation, whether the Carmack Amendment applies is a question to be determined by the trier of fact. Moreover, [*45]  the Court is not persuaded by the England Defendants’ argument that any breach of contract claim is pre-empted by §14501 or the Carmack Amendment. As to §14501, it cannot be said that damages for breach of contract would “produce[] the very effect that the federal law sought to avoid[].” Rowe, 552 U.S. at 372. The statute (i.e., the ADA) upon which § 14501 is based, “does not preempt ‘state-law-based court adjudication of routine breach-of-contract claims’ as long as there is ‘no enlargement or enhancement [of the contract] based on state laws or policies external to the agreement.'” Chatelaine, Inc., 737 F.Supp.2d at 641 (quoting American Airlines, Inc. v Wolens, 513 U.S. 219, 232-33 (1995)). This is so because the “ADA was designed to promote ‘maximum reliance on competitive market forces,’ and ‘market efficiency requires effective means to enforce private agreements.'” Id. (no pre-emption of state law contract claim) (quoting Wolens, 513 U.S. at 230).

The England Defendants also rely on the Ameriswiss decision from the New Hampshire District Court to argue that the claim is pre-empted by the Carmack Amendment. The Ameriswiss court held “the Carmack Amendment impliedly preempts state regulations related to damages for the loss or destruction of property during the course of interstate shipment[]” and went on to hold that, if the defendant was a broker10, the shipper’s claims for negligence and bailment would still be [*46]  impliedly pre-empted under Carmack because the role played by the defendant fell within the Amendment’s covered transportation services as being “services related to that movement, including arranging for, receipt, delivery, elevation, transfer in transit,…storage, handling, packing [and] unpacking.” Id. at 205 (internal quotation marks and citation omitted).

 

10   The Ameriswiss court declined to decide whether the defendant was a carrier or broker. Ameriswiss, 888 F.Supp.2d at 205.

The Ameriswiss decision is inapposite. That court’s pre-emption discussion did not include the plaintiff’s breach of contract claim; instead, after holding that negligence and bailment claims were pre-empted, the court went on to address the breach of contract claim on the merits. See id. at 208-11. Further, because the Carmack Amendment does not apply to brokers, it is questionable that such a law could pre-empt claims against brokers. It follows that because the Carmack Amendment does not apply to brokers, the Carmack Amendment’s definition of “covered transportation services” cited by Ameriswiss must only apply to such services when performed by entities such as carriers or freight forwarders, which are covered by the statute. See e.g. CGU, 2004 WL 1047982 at *2 (the Carmack Amendment applies to a carrier even if that carrier only accepted responsibility [*47]  for ensuring delivery of the goods, regardless of who actually transported them). Consequently, the England Defendants’ argument that the breach of contract claim is pre-empted is denied and the claim that they breached the agreement to present a Carmack loss claim remains.

 

WHETHER CR ENGLAND IS A VIABLE DEFENDANT

The England Defendants contend that although CR is a related, but not separate entity from EL, CR had nothing to do with the loss at issue. (Doc. 100, p. 5). “Plaintiff has proffered zero evidence that CR has any involvement whatsoever with the shipment at issue, the loss of the shipment, or the brokering of the shipment.” (Id.).

ASARCO, citing to various records suggesting that CR and EL were at one time one entity, contends that CR’s involvement in brokering the Shipment is a disputed issue of material fact. See e.g. (Doc. 115, Exh. 3, p. 21; Doc. 115, Exh. 4; Doc. 114, p.5). The record reflects that ASARCO contacted EL agents to broker the Shipment and that ASARCO submitted a claim for the lost Shipment to EL. (See Doc. 102, ¶7 & Exh. 8, pp. 26-27; Doc. 107, ¶9; see also Doc. 113, Exh. 1, pp. 56-57). ASARCO as the party opposing CR’s Motion for Summary Judgment has failed [*48]  to point to evidence creating a genuine issue of material fact as to whether CR had any involvement with the Shipment. CR’s Motion for Summary Judgment is granted.

 

CONCLUSION

For the foregoing reasons, questions of fact exist for the jury’s determination as to the role the Plumley Defendants played in the transactions at issue and, alternatively whether the Plumley Defendants’ Agreements with the England Defendants apply to the Shipment and were breached. Additionally, ASARCO’s breach of contract claim against EL with regard to filing the loss claim is not pre-empted. Consequently, ASARCO’s claims under the Carmack Amendment against the Plumley Defendants and alternative claims for breach of contract against the Plumley Defendants and EL must be determined by the trier of fact. However, ASARCO has failed to carry its burden as to its claims against CR. Moreover, ASARCO’s state law negligence claims against all Defendants are pre-empted by §14501. Accordingly,

IT IS ORDERED that:

(1) Plumley Logistics’ Motion for Partial Summary Judgment (Doc. 90) is GRANTED IN PART AND DENIED IN PART. The Motion is GRANTED with regard to ASARCO’s state law negligence claims (Counts II and III). The Motion is DENIED with regard [*49]  to ASARCO’s claim under the Carmack Amendment (Count I) and alternative claim for breach of contract (Count V);

(2) ASARCO’s Motion for Partial Summary Judgment (Doc. 101) against Plumley Logistics on the breach of contract claim (Count V) is DENIED;

(3) Plumley Trucking’s Motion for Summary Judgment (Doc. 98) is GRANTED IN PART AND DENIED IN PART. The Motion is GRANTED with regard to ASARCO’s state law negligence claims (Counts II and III). The Motion is DENIED with regard to ASARCO’s claim under the Carmack Amendment (Count I) and alternative claim for breach of contract (Count V); and

(4) The England Defendants’ Motion for Summary Judgment (Doc. 100) is GRANTED IN PART and DENIED IN PART. The Motion is GRANTED as to all claims asserted against CR England. The Motion is also GRANTED with regard to ASARCO’s claims against England Logistics alleging state law negligence (Counts II and III) and that portion of Count IV alleging breach of contract in arranging for the Shipment to be transported. The Motion is DENIED as to that portion of ASARCO’s breach of contract claim (Count IV) against England Logistics regarding the timely and proper administering of the loss claim relating to the Shipment.

Dated this 22nd day of December, [*50]  2014.

/s/ Charles R. Pyle

CHARLES R. PYLE

UNITED STATES MAGISTRATE JUDGE