AIR LIQUIDE MEXICO S. de R.L. de C.V. and AIR LIQUIDE PROCESS AND CONSTRUCTION, INC., Plaintiffs, v. TALLERES WILLIE, INC., BERNARDO AINSLIE, FELIX NINO LEIJA, TRAILBLAZER PILOT CAR SERVICES, LLC, CLAUDE JOSEPH KIMMEL d/b/a FREEDOM PILOT CAR SERVICES, CHARLES VAN KIRK d/b/a SLINGSHOT PILOT ESCORT SERVICES, WHEELING EQUIPMENT COMPANY, INC., GEORGE ORTIZ, and CONTRACTORS CARGO COMPANY, Defendants.

 

CIVIL ACTION NO. H-14-211

 

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, HOUSTON DIVISION

 

2015 U.S. Dist. LEXIS 100650

 

 

July 31, 2015, Decided

July 31, 2015, Filed

 

 

COUNSEL:  [*1] For Air Liquide Mexico S. de R.L. de C.V., Air Liquide Process and Construction, Inc., Plaintiffs: Jay W Brown, LEAD ATTORNEY, Amparo Yanez Guerra, Hilary C Borow, Winstead, PC, Houston, TX.

 

For Talleres Willie, Inc., Bernardo Ainslie, Defendants: Louis Keith Slade, LEAD ATTORNEY, Tucker Taunton et al, Houston, TX.

 

For Trailblazer Pilot Car Services, LLC, Claude Joseph Kimmel, doing business as Freedom Pilot Car Services, Charles Van Kirk, doing business as Slingshot Pilot Escort Services, Defendants: Patrick Nichols Smith, LEAD ATTORNEY, Ramsey & Murray, P.C., Houston, TX.

 

For Wheeling Equipment Company, Inc., George Ortiz, Defendants: Juan Roberto Fuentes, The Fuentes Firm, P.C., Spring, TX.

 

For Contractors Cargo Company, Defendant: Amanda S Hilty, LEAD ATTORNEY, BairHilty PC, Houston, TX; Gerard Joseph Kimmitt, II, Jacob Cortez Esparza, Legge Farrow et al, Houston, TX; Wendi Rai Ervin, Bair Hilty, P.C., Houston, TX.

 

JUDGES: EWING WERLEIN, JR., UNITED STATES DISTRICT JUDGE.

 

OPINION BY: EWING WERLEIN, JR.

 

OPINION

 

MEMORANDUM AND ORDER ON PENDING MOTIONS

Pending are Plaintiffs’ Motion for Reconsideration Regarding Trailblazer Pilot Car Services, LLC, and Motion for Leave to File Third Amended Complaint (Document No. 85); [*2]  Defendant Contractors Cargo Company’s Motion for Entry of Final Judgment (Document No. 86), in which Defendant Trailblazer Pilot Car Services, LLC has joinied;1 Defendants Wheeling Equipment Company, Inc. and George Ortiz’s Joint Motion to Dismiss the Second Amended Complaint Pursuant to Federal Rule of Civil Procedure Rule 12(b)(6) (Document No. 91), in which Defendants Charles Van Kirk d/b/a Slingshot Pilot Car Services (“Van Kirk”) and Claude Joseph Kimmel d/b/a Freedom Pilot Car (“Kimmel”) join;2 Plaintiffs’ Motion for Summary Judgment Regarding Limitation of Liability (Document No. 93); Defendants Van Kirk and Kimmel’s Third Motion to Dismiss, with Prejudice (Document No. 96); Defendants Van Kirk and Kimmel’s Counter-Motion for Summary Judgment (Document No. 113); Plaintiffs’ Motion to Strike Counter-Motion for Summary Judgment as Untimely (Document No. 116); Plaintiffs’ Opposed Objections and Motion to Strike Certain Summary Judgment Evidence Relied Upon by Pilot Cars Defendants and Talleres Willie Defendants (Document No. 117); and Defendants Van Kirk and Kimmel’s Supplement to Third Motion to Dismiss under FRCP 12(b)(1) (Document No. 126).3 After carefully considering the motions, responses, replies, and the applicable law, the Court [*3]  concludes as follows.

 

1   Document No. 87.

2   Document No. 109.

3   Also pending are Defendants Talleres Willie, Inc. and Bernardo Ainslie’s Motion to Extend Time to Respond to Plaintiffs’ Motion for Summary Judgment (Document No. 100), which is GRANTED, and Defendants Van Kirk’s and Kimmel’s Opposed Motion for New Docket Control Order and Status Conference (Document No. 112), which is DENIED. Plaintiffs’ Opposed Motion to Strike and Response to Pilot Car Defendants’ Motion for New Docket Control Order and Status Conference (Document No. 118) is therefore DENIED AS MOOT.

 

I. Background

Plaintiffs Air Liquide Mexico S. de R.L. de C.V. (“Air Liquide Mexico”) and Air Liquide Process and Construction, Inc. (“Air Liquide Process,” and together with Air Liquide Mexico, “Plaintiffs”) purchased a purification skid, which is a specialized piece of refinery processing equipment, to be used in Air Liquide Mexico’s facilities in Mexico.4 The purification skid (sometimes referred to in the record as the APU skid) was more than 60 feet long, over 15 feet tall, over 15 feet wide, weighed approximately 63 tons, and was valued at more than $1 million.5 Plaintiffs contracted with Hansa Meyer Global Transport USA, LLC [*4]  (“Hansa Meyer”) to ship the purification skid from India to the Port of Houston, and from there to transport it by tractor trailer overland to Mexico.6

 

4   Document No. 79 ¶ 12 (Pls.’ 2d Am. Compl.).

5   Id.

6   Hansa Meyer is not a party to this suit, and Plaintiffs’ Second Amended Complaint–like their earlier pleadings–omits any reference to Hansa Meyer. See id. ¶¶ 12-13 (“After arriving at the Port of Houston, the APU skid was to be transported via tractor trailer from the Port of Houston directly to its final destination in Pesqueria, Mexico. Contractors Cargo Company was hired to transport the APU Skid. While it did not itself transport the Skid, it coordinated and arranged for the transport of the APU skid.”). As previously noted, Plaintiffs acknowledge that their sole contract was with Hansa Meyer. Document No. 56 at 2 n.1 (“Plaintiffs sued Hansa Meyer Global Transport, LLC (the logistics company with whom Air Liquide contracted) for breach of contract and that lawsuit is pending in Montgomery County, Texas. Plaintiffs had no contract with any of the Defendants in the instant lawsuit.”).

Hansa Meyer in turn hired Contractors Cargo Company (“Contractors Cargo”) to arrange for the overland transportation [*5]  of the purification skid.7 Contractors Cargo constructed a 140 foot long custom-made lowboy trailer for the purification skid and then, acting as a broker, contracted with Defendant Talleres Willie, Inc. (“Talleres Willie”) to transport the trailer and the purification skid to Mexico.8 Talleres Willie supplied the tractor, driver (Defendant Felix Nino Leija (“Leija”)), and other crew members (including Defendant Bernardo Ainslie (“Ainslie”)) to transport the purification skid.9 Contractors Cargo also contracted with Defendant Wheeling Equipment Company, Inc. (“Wheeling”) to provide a bucket truck driver, Defendant George Ortiz (“Ortiz”), and with Defendant Trailblazer Pilot Car Services, LLC (“Trailblazer”), which in turn selected and hired pilot car escorts–Defendants Van Kirk and Kimmel–for the transportation of the purification skid.10

 

7   Document No. 79 ¶ 13.

8   Id. ¶¶ 14-15. A lowboy trailer is designed to carry tall loads and stay within certain height limits. See Document No. 115-18 at 2 of 4 to 4 of 4 (photographs of trailer).

9   Id. ¶¶ 15, 17. Plaintiffs have been unable to serve Leija and believe he may be in Mexico. Id. ¶ 5.

10   Id. ¶ 18; Document No. 56 at 2.

On March 4, 2013, a train hit the [*6]  trailer, which was stalled across the tracks at a railroad crossing in Magnolia, Texas, severely damaging the purification skid.11 Plaintiffs allege that Defendants improperly attempted to cross the railroad crossing at an angle from the left side of the street, and then abandoned the trailer when it became stuck.12 Plaintiffs further allege that this accident was the result of a host of careless acts by Defendants, including most significantly their failure to inform the railroad of their crossing.13

 

11   Document No. 79 ¶ 20.

12   Id. ¶¶ 20, 28.

13   Id. ¶¶ 21-30.

Plaintiffs brought suit in state court and Contractors Cargo14 timely removed the suit.15 The Court on February 18, 2015 held that Plaintiffs’ state law claims against Talleres Willie, Ainslie, Van Kirk, Kimmel, Trailblazer, and Contractors Cargo were completely preempted by the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706, and accordingly dismissed those claims with prejudice, but granted Plaintiffs leave to amend their pleading to allege against Ainslie, Leija, Kimmel, and Van Kirk claims under the Carmack Amendment.16 Plaintiffs then filed their Second Amended Complaint, alleging a single claim for violation of the Carmack Amendment against Ainslie, Leija, Kimmel, Van Kirk, Wheeling, and Ortiz.17 Plaintiffs also move for reconsideration [*7]  of the Court’s dismissal of Plaintiffs’ claims against Trailblazer, seeking leave to file a Third Amended Complaint adding claims against Trailblazer based on new evidence.18 Contractors Cargo and Trailblazer move for entry of final judgment based on the Court’s dismissal of Plaintiffs’ claims against them.19 Van Kirk and Kimmel move to dismiss the case under Rule 12(b)(1), and Wheeling, Ortiz, Van Kirk, and Kimmel move to dismiss the claims against them under Rule 12(b)(6).20 Plaintiffs and Van Kirk and Kimmel have filed cross-motions for summary judgment regarding the applicability of a limitation of liability provision in the contract between Contractors Cargo and Hansa Meyer.21 Finally, Plaintiffs move to strike various motions and evidence, and seek Rule 11 sanctions against Van Kirk and Kimmel.22

 

14   Contractors Cargo and Trailblazer were both Defendants in this suit until the Court dismissed Plaintiffs’ claims against them on February 18, 2015. See Document No. 75.

15   Document No. 1. The Court denied Plaintiffs’ motion to remand. Document No. 38.

16   Document No. 75.

17   Document No. 79. Although Wheeling and Ortiz–unlike the other Defendants–had not filed a motion to dismiss Plaintiffs’ prior pleading, Plaintiffs concluded that “because [*8]  Plaintiffs’ claims against Defendants Wheeling and Ortiz are similar to Plaintiffs’ claims against the other Defendants, Plaintiffs believe the Court would view such claims as Carmack Amendment claims,” and repled those claims accordingly. Id. at 3 n.2.

18   Document No. 85.

19   Document Nos. 86, 87.

20   Document Nos. 91, 96, 109, 126.

21   Document Nos. 93, 113.

22   Document Nos. 116-118.

 

II. Motion for Reconsideration

Plaintiffs move under Rule 59(e) for reconsideration of the Court’s dismissal of their state law claims against Trailblazer based on “additional evidence previously unknown to Plaintiffs showing that Trailblazer was far more involved with the transport than Plaintiffs knew when they filed their First Amended Complaint,” and seek leave to file a Third Amended Complaint to assert claims against Trailblazer.23

 

23   Document No. 85 at 2.

“A FRCP 59(e) motion to reconsider should not be granted unless there is: (1) an intervening change in controlling law; (2) the availability of new evidence not previously available; [or] (3) the need to correct a clear error of law or fact or to prevent a manifest injustice.” Brown v. Mississippi Co-op Extension Serv., 89 F. App’x 437, 439 (5th Cir. 2004) (citations omitted). Where, as here, the motion to reconsider is based on an alleged discovery of new evidence, it should be granted only if (1) the [*9]  facts discovered are of such a nature that they would probably change the outcome, (2) the facts alleged are actually newly discovered and could not have been discovered earlier by proper diligence, and (3) the facts are not merely cumulative or impeaching. Johnson v. Diversicare Afton Oaks, LLC, 597 F.3d 673, 677 (5th Cir. 2010) (citation omitted).

The “newly discovered evidence” on which Plaintiffs rely consists of testimony of Jake Kimmel (the cousin of Defendant Claude Joseph Kimmel) given at his deposition on November 24, 2014.24 The Court’s Memorandum and Order dismissing Plaintiffs’ claims against Trailblazer was not entered until February 18, 2015, almost three months later.25 Thus, the evidence was not newly discovered after entry of the Court’s Order, and is not a proper basis for reconsideration under Rule 59(e).26 See Pejouhesh v. Capital One Bank, No. CIV.A. H-14-2060, 2015 U.S. Dist. LEXIS 14903, 2015 WL 539549, at *2 (S.D. Tex. Feb. 9, 2015) (Rosenthal, J.) (“A Rule 59(e) motion may not be used to relitigate old matters or to raise arguments or present evidence that could have been raised before the entry of the judgment or order.”) (citing Rosenzweig v. Azurix Corp., 332 F.3d 854, 863 (5th Cir. 2003)).

 

24   Document No. 85 at 2, 4.

25   Document No. 75.

26   Plaintiffs argue that they “could not have previously brought this evidence to the Court’s attention in their briefing because the new evidence was not discovered [*10]  until . . . after Plaintiffs’ briefing deadline,” and “because of the voluminous briefing pending before the Court [including four motions to dismiss] it would have been inappropriate for Plaintiffs to seek leave to amend their complaint while all of these filings were pending before the Court.” Document No. 97 at 4-6. These considerations do not excuse Plaintiffs’ lack of diligence to seek leave either to file supplemental briefing or to amend their complaint in light of what Plaintiffs believe was newly discovered evidence. Instead, Plaintiffs waited until the Court’s adverse ruling and then moved to reconsider.

In the alternative, Plaintiffs seek leave to file a new Carmack Amendment claim based on the “newly discovered evidence,” which purportedly shows “that Trailblazer supplied equipment and services for this transport thereby making Trailblazer a ‘carrier’ under the Carmack Amendment.”27 Plaintiffs’ proposed Carmack Claim alleges that:

 

Defendant Trailblazer supplied its transportation services in the form of instructions and advice to its pilot car drivers during the transport of the APU skid. Defendant Trailblazer also supplied equipment such as a cell phone, orange flags, and ‘oversized’ signs to Defendant Claude [*11]  Kimmel. Therefore, to the extent Defendant Trailblazer can be considered a ‘carrier,’ Plaintiffs alternatively assert a Carmack Amendment claim against Defendant Trailblazer.28

 

 

Assuming that the advice and supplies provided by Trailblazer were used by persons engaged in the carriage of the purification skid, which Trailblazer questions,29 Plaintiffs cite to no authority holding that such a de minimis contribution as the provision of advice, a cell phone, flags, and signs is sufficient to establish liability as a “carrier” under the Carmack Amendment.30 See Foman v. Davis, 371 U.S. 178, 83 S. Ct. 227, 230, 9 L. Ed. 2d 222 (1962) (listing “futility of amendment” as a reason to deny leave to amend). Because such an amendment would be futile, and because Plaintiffs base their motion on evidence that was known to Plaintiffs before the Court dismissed their claims against Trailblazer, Plaintiffs’ motion to reconsider and for leave to file a Third Amended Complaint is denied.

 

27   Document No. 85 at 8.

28   Document No. 85-2 ¶ 45.

29   See Document No. 95 at 18.

30   The Interstate Commerce Act’s definition of a carrier includes “a person providing motor vehicle transportation for compensation,” and “transportation” includes:

 

(A) a motor vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, [*12]  or equipment of any kind related to the movement of passengers or property, or both, regardless of ownership or an agreement concerning use; and

(B) services related to that movement, including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.

 

 

49 U.S.C. § 13102(3), (14), (16), (23). Under the ejusdem generis cannon of construction, the specific statutory examples preceding the general language of “equipment of any kind related to the movement of passengers or property,” preclude a finding that vendors of common items such as cell phones, flags, and signs used by actual carriers thereby themselves become “person[s] providing motor vehicle transportation for compensation” within the meaning of the Carmack Amendment.

 

III. Motion for Entry of Final Judgment

Contractors Cargo moves under Rule 54(b) for entry for final judgment in its favor, which motion Trailblazer adopts and joins.31 Although Plaintiffs have filed no response to the motion, Rule 54(b) motions are disfavored and should be granted only “when there exists some danger of hardship or injustice through delay which would be alleviated by immediate appeal.” PYCA Indus., Inc. v. Harrison Cnty. Waste Mgmt., 81 F.3d 1412, 1421 (5th Cir. 1996). Neither Contractors [*13]  Cargo nor Trailblazer has shown any danger of hardship or injustice through delay that would be alleviated by an immediate appeal. Accordingly, and consistent with the Fifth Circuit’s disfavor of piecemeal appeals, Contractors Cargo’s Motion for Entry of Final Judgment under Rule 54(b) is denied.

 

31   Document Nos. 86, 87.

 

IV. Rule 12(b)(1) Motion to Dismiss

 

A. Legal Standard

“When a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the court should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits.” Ramming v. United States, 281 F.3d 158, 161 (5th Cir. 2001). Under Rule 12(b)(1), a party can seek dismissal of an action for lack of subject matter jurisdiction. FED. R. CIV. P. 12(b)(1). The question of subject matter jurisdiction is for the court to decide even if the question hinges on legal or factual determinations. See Ramming, 281 F.3d at 161. The Fifth Circuit distinguishes between “facial” and “factual” attacks to subject matter jurisdiction. Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981). A facial attack consists of a Rule 12(b)(1) motion unaccompanied by supporting evidence, challenging the court’s jurisdiction based solely on the pleadings, the allegations in which must be accepted as true. See id. When a party submits evidence along with its motion to dismiss, it has made a factual attack on the court’s jurisdiction. Id. In a factual [*14]  attack, “a plaintiff is also required to submit facts through some evidentiary method and has the burden of proving by a preponderance of the evidence that the trial court does have subject matter jurisdiction.” Id.

 

B. Analysis

In their Motion to Dismiss, Van Kirk and Kimmel argue under Rule 12(b)(6) that Plaintiffs have not alleged facts showing their standing as owners or shippers of the damaged cargo, and on the last page of this motion add an assertion under Rule 12(b)(1) that Plaintiffs lack standing to bring this suit. Their conclusory “argument” consists of two sentences:

 

As discussed above, while Plaintiffs have alleged that they are entitled to damages, Defendants challenge their standing and state that they do not have standing to bring suit. Plaintiffs cannot establish the elements of standing: injury in fact, causation and redressability.32

 

 

Two months later, long after the dispositive motions deadline, Van Kirk and Kimmel filed a “Supplement” to this motion, arguing that Plaintiffs lack standing because they have received almost $2 million from their insurers for the loss to the purification skid, and the insurers now own the rights to the claim for loss.33 Van Kirk and Kimmel attach some excerpts of deposition [*15]  testimony to their “Supplement,” and Plaintiffs have responded with evidence pertaining to both motions, which are therefore construed as factual attacks.

 

32   Document No. 96 at 8.

33   Document No. 126.

Although Plaintiffs in their Second Amended Complaint allege that they “procured a very specialized piece of equipment called a purification skid” for use in Mexico, Van Kirk and Kimmel argue that Plaintiffs have not adequately alleged ownership of the purification skid.34 This surprising assertion is totally at odds with Van Kirk’s and Kimmel’s prior filings in which they themselves acknowledged and stated that Plaintiffs owned the purification skid.35 This is not a matter of genuine dispute: the uncontroverted evidence is that Plaintiffs purchased the purification skid and arranged for its transportation to Mexico.36

 

34   Document No. 96 at 4.

35   See Document No. 25 at 2 (“The transport truck was hauling a 63-ton [purification skid] owned by Plaintiffs and bound for Pesqueria, Mexico.”) (emphasis added); Document No. 51 at 2 (“As the Court has stated, this suit arises out of damage to Plaintiffs’ property–an APU Skid–while it was being transported by truck from Texas to Mexico.”) (emphasis added).

36   See, e.g [*16] ., Document No. 107-15 (invoice for purification skid made out to Air Liquide Process and showing final destination as “TERNIUM / AIR LIQUIDE MEXICO S DE RL DE CV.”); Document No. 107-19 (Transportation Entry and Manifest of Goods Subject to CPB Inspection and Permit for purification skid showing Air Liquide Process as importer and Air Liquide Mexico as consignee).

Van Kirk’s and Kimmel’s Supplement, moreover, implicitly acknowledges that Plaintiffs owned the skid, for now they contend that Plaintiffs lack standing because their insurers already have compensated them for their loss and the insurers were subrogated into Plaintiffs’ rights.37 Van Kirk and Kimmel exhibit a January 14, 2014 Subrogation Form in which Air Liquide Process on behalf of Air Liquide Mexico acknowledged receipt of a total of $1,806,396 from five insurance companies “[f]or covered physical damage to property,” namely, “1 APU SKID hit by a train in Magnolia, Texas on March 04th 2013.”38 The Subrogation Form further provides that “the above mentioned insurance companies are subrogated into all rights, actions and recoveries arising against all liable parties (carriers and/or others) for the above mentioned loss and damage.” [*17] 39

 

37   See Document No. 126.

38   Document No. 126-2.

39   Id.

Van Kirk’s and Kimmel’s standing argument based on subrogation rights fails for several reasons. First, Plaintiffs produce a written assignment in which the five insurers identified by Van Kirk and Kimmel assigned and transferred their subrogation rights back to Plaintiff Air Liquide Process.40 Second, the collateral source rule applies. As Plaintiffs correctly argue, under the collateral source rule, a wrongdoer cannot benefit from insurance independently procured by the injured party and to which the wrongdoer was not privy. See Davis v. Odeco, Inc., 18 F.3d 1237, 1243 (5th Cir. 1994) (“The collateral source rule is a substantive rule of law that bars a tortfeasor from reducing the quantum of damages owed to a plaintiff by the amount of recovery the plaintiff receives from other sources of compensation that are independent of (or collateral to) the tortfeasor.”); Brown v. Am. Transfer & Storage Co., 601 S.W.2d 931, 934 (Tex. 1980) (“The theory behind the collateral source rule is that a wrongdoer should not have the benefit of insurance independently procured by the injured party, and to which the wrongdoer was not privy.”) (trucker not entitled to benefit of third party insurance payment for damaged goods); see also Custom Rubber Corp. v. ATS Specialized, Inc., 633 F. Supp. 2d 495, 515 (N.D. Ohio 2009) (collateral source rule applies to Carmack Amendment claims). [*18]  Thus, Plaintiffs’ receipt of insurance payments from insurance independently procured by them and covering part of their loss has no bearing on Plaintiffs’ standing to recover from Van Kirk and Kimmel. Van Kirk’s and Kimmel’s motion to dismiss for lack of subject matter jurisdiction is denied.

 

40   Document No. 128-9 at 2 of 3 to 3 of 3. Moreover, the original subrogation did not involve all of Plaintiffs’ claims, but only those “[f]or covered physical damage” to the purification skid. Plaintiffs seek recovery not only of the replacement cost of the skid but also of numerous other costs directly arising from its destruction, which claims total almost $7.7 million. See Document No. 128-10 at 2 of 5 (itemized list of damages claimed). Thus, the $1.8 million in insurance benefits Plaintiffs received would not preclude their recovery of their remaining damages even in the absence of the collateral source rule, discussed next.

 

C. Plaintiffs’ Request for Sanctions

In their responses to each of Van Kirk’s and Kimmel’s Rule 12(b)(1) motions, Plaintiffs “ask the Court to exercise its discretion under Rule 11 and award them their attorneys’ fees and costs for having to respond” to each motion because Van Kirk’s and Kimmel’s [*19]  arguments are entirely lacking in merit.41 Given this record, Plaintiffs’ motion would deserve serious consideration if Plaintiffs themselves had complied with Rule 11. “A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b),” which Plaintiffs have not done. FED. R. CIV. P. 11(c)(2) (emphasis added). The requests for attorney fees and costs as a sanction for violations of Rule 11(b) is therefore denied.

 

41   Document No. 107 at 17; Document No. 128 at 13.

 

V. Rule 12(b)(6) Motions to Dismiss

 

A. Legal Standard

Rule 12(b)(6) provides for dismissal of an action for “failure to state a claim upon which relief can be granted.” FED. R. CIV. P. 12(b)(6). When a district court reviews the sufficiency of a complaint before it receives any evidence either by affidavit or admission, its task is inevitably a limited one. See Scheuer v. Rhodes, 416 U.S. 232, 94 S. Ct. 1683, 1686, 40 L. Ed. 2d 90 (1974), abrogated on other grounds by Harlow v. Fitzgerald, 457 U.S. 800, 102 S. Ct. 2727, 73 L. Ed. 2d 396 (1982). The issue is not whether the plaintiff ultimately will prevail, but whether the plaintiff is entitled to offer evidence to support the claims. Id.

In considering a motion to dismiss under Rule 12(b)(6), the district court must construe the allegations in the complaint favorably to the pleader and must accept as true all well-pleaded facts in the complaint. [*20]  See Lowrey v. Tex. A&M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997). To survive dismissal, a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 127 S. Ct. 1955, 1974, 167 L. Ed. 2d 929 (2007). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949, 173 L. Ed. 2d 868 (2009). While a complaint “does not need detailed factual allegations . . . [the] allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Twombly, 127 S. Ct. at 1964-65 (citations and internal footnote omitted).

 

B. Van Kirk’s and Kimmel’s Motion to Dismiss

Van Kirk and Kimmel argue in their Rule 12(b)(6) motion that Plaintiffs have not pled facts “to support claims for special damages under Carmack.”42 “The Carmack Amendment allows a shipper to recover damages from a carrier for ‘actual loss or injury to the property’ resulting from the transportation of cargo in interstate commerce.” Nat’l Hispanic Circus, Inc. v. Rex Trucking, Inc., 414 F.3d 546, 549 (5th Cir. 2005) (citing 49 U.S.C. § 14706(a)(1)). “A carrier’s liability under the Carmack Amendment includes all reasonably foreseeable damages resulting from the breach of its contract of carriage, ‘including those resulting from nondelivery of the shipped goods as provided by the bill of lading.'” [*21]  Id. (citing Air Prods. & Chems., Inc. v. Ill. Cent. Gulf R.R. Co., 721 F.2d 483, 485 (5th Cir. 1983)); see also Camar Corp. v. Preston Trucking Co., 221 F.3d 271, 277 (1st Cir. 2000) (“The Carmack Amendment incorporates common law principles of damages, and permits recovery of lost profits unless they are speculative.”) (citations omitted). The Fifth Circuit has explained that

 

Both general and special damages may be recovered under the Carmack Amendment. General damages are those that are foreseeable at the time of contracting. Special damages are those that result from a party’s breach of contract but are not reasonably foreseeable. Special damages generally are not recoverable in a breach of contract action absent actual notice to the defendant of special circumstances from which such damages might arise.

 

 

Nat’l Hispanic Circus, 414 F.3d at 549 (citations omitted). Van Kirk and Kimmel cite no authority establishing that special damages must be pled with particularity in Carmack Amendment cases.43 Cf. New Process Steel Corp. v. Union Pac. R. Co., 91 F. App’x 895, 899-900 (5th Cir. 2003) (reversing summary judgment where district court had held that claim under railroad provision of Carmack Amendment failed because plaintiff did not plead that its consequential damages were specifically foreseeable) (“Under our Circuit’s precedent, . . . a Carmack Amendment plaintiff is not required to show that its consequential damages were specifically foreseeable”).

 

42   Document No. 96 at 5. Van Kirk and Kimmel also argue that Plaintiffs have failed to allege facts showing that [*22]  they are owners or shippers of the purification skid. As discussed above, this argument is without merit.

43   Van Kirk and Kimmel cite numerous cases involving either the adequacy of evidence of special damages at summary judgment and trial, or the requirement to allege special damages in business disparagement and libel cases, for which special damages are an essential element. Document No. 96 at 5-8.

Plaintiffs’ Second Amended Complaint employs the statutory language (“actual loss or injury to the property,”) in praying for recovery of “actual damages,” including the following: inspection assessment of the damage to the purification skid; assessment of a replacement skid; storage fees; costs associated with locating, dismantling, transporting, revamping and installing the replacement skid; costs and penalties incurred for delay; additional site running costs, including labor, expenses, management and supervision; replacement value of the skid in mitigation of repair costs; loss of use of the skid, including customer claims; increased costs; out of pocket damages; lost profits; and loss of goodwill.44 Although Plaintiffs do not list their general damages separately from their special damages, [*23]  it would appear that most are general damages foreseeable at the time of contracting–for example, allegations for the recovery of damages for the inspection assessment of damages done to the skid and the costs for purchase of its replacement and shipment. Nonetheless, some of the claimed losses would appear to be special damages not generally recoverable. There is no requirement in the statute and none known to the Court in case law that Plaintiffs in a Carmack Amendment case carve out from Plaintiffs’ actual damages and identify separately at the pleading stage which of Plaintiffs’ actual damages are special damages requiring Plaintiffs to prove at trial that Defendants had actual notice of special circumstances that would subject them to liability for special damages.

 

44   Document No. 79 at 15.

Plaintiffs’ pleading that the purification skid was “a very specialized piece of equipment” and “a sophisticated component of refinery processing equipment” that Defendants knew was being “transported to Air Liquide’s plant in Pesqueria, Mexico” on a “custom-made, specialized lowboy trailer over 140 feet long and 10 feet wide,” combined with their claim for both general and special damages, is sufficient notice [*24]  alleging that Defendants were on notice of circumstances that would subject them to liability for special damages. At least at this pleading stage, the allegations are sufficient to state a plausible cause of action for special damages under Rule 12(b)(6). Accordingly, Van Kirk’s and Kimmel’s Rule 12(b)(6) motion is denied.

 

C. Wheeling’s and Ortiz’s Motion to Dismiss

Wheeling and Ortiz move to dismiss Plaintiffs’ claims against them, arguing that the Carmack Amendment provides a cause of action against only a receiving or delivering carrier, and that because they were neither, Plaintiffs have failed to state a claim against them.45 Plaintiffs respond that (1) based on the Court’s reasoning in its prior ruling, Plaintiffs’ claims against Wheeling and Ortiz arise under the Carmack Amendment, (2) Wheeling and Ortiz were receiving or delivering carriers, and (3) even if Wheeling and Ortiz were intermediary carriers, the Carmack Amendment allows Plaintiffs to recover from them.46

 

45   Document No. 91. Van Kirk and Kimmel join in Wheeling and Ortiz’s motion. Document No. 109.

46   Document No. 98.

In the Memorandum and Order dated February 18, 2015, it was determined that Plaintiffs had alleged facts establishing that Ainslie, Van Kirk, and Kimmel were carriers under the broad definitions [*25]  in the Carmack Amendment and the Interstate Commerce Act based on their participation as part of the transportation crew for carriage of the purification skid.47 Plaintiffs correctly argue that by the same logic, Wheeling and Ortiz, as the bucket truck supplier and operator, and integral components of the carriage team, are also carriers under the Carmack Amendment.48 The parties did not argue in the earlier motions whether any Defendants were receiving or delivering carriers. The fact that Plaintiffs’ claims are preempted by the Carmack Amendment does not necessarily allow them to bring Carmack claims against all Defendants who are carriers. See Tech Data Corp. v. Mainfreight, Inc., No. 8:14-CV-1809-T-23MAP, 2015 U.S. Dist. LEXIS 45296, 2015 WL 1546639, at *1 (M.D. Fla. Apr. 7, 2015) (“Tech Data’s argument ignores the distinction between an inapplicable statute and an applicable statute that creates no cause of action. The Carmack Amendment governs this action (even if Central Transport is a connecting carrier), but the Carmack Amendment creates no claim for a cargo owner to allege against a connecting carrier. Instead, under the Carmack Amendment, a cargo owner may sue the receiving or delivering carrier for the fault of a connecting carrier.”) (citing CNA Ins. Co. v. Hyundai Merch. Marine Co., 747 F.3d 339, 353 (6th Cir. 2014)).

 

47   Document No. 75 at 9, 12.

48   Document No. 98 at 4-5.

The case law is generally consistent in holding that the Carmack Amendment gives the holder of a bill of lading a right [*26]  to recover only against the receiving carrier–i.e., the carrier that issued the bill of lading and received the cargo for transportation–and the delivering carrier, defined at 49 U.S.C. § 14706(a)(1) as “the carrier performing the line-haul transportation nearest the destination.” See Arnold J. Rodin, Inc. v. Atchison, T. & S. F. R. Co., 477 F.2d 682, 688 (5th Cir. 1973) (“Under the Carmack Amendment the holder of the bill of lading is given a cause of action only against the receiving or delivering carrier.”); 5K Logistics, Inc. v. Daily Exp., Inc., 659 F.3d 331, 335 (4th Cir. 2011) (“[Section 14706] allows shippers to bring suit against either the initial carrier (the issuer of the bill of lading) or the delivering carrier, removing ‘the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment.'”) (citing Reider v. Thompson, 339 U.S. 113, 70 S. Ct. 499, 502, 94 L. Ed. 698 (1950)); Strickland Transp. Co. v. Johnston, 238 S.W.2d 717, 719 (Tex. Civ. App.-Amarillo 1951) (“[T]here is no provision of the Carmack Amendment which places liability on the intermediate carrier.”); Tokio Marine & Fire Ins. Co. v. Amato Motors, Inc., No. 90 C 4823, 1995 U.S. Dist. LEXIS 11730, 1995 WL 493434, at *4 (N.D. Ill. Aug. 15, 1995) (“Unlike ‘initial’ and ‘delivering’ carriers, those carriers whose work is performed after the original shipment but before the journey’s final leg–the so-called ‘intermediate connecting carriers’–are not amenable to suit under the Carmack Amendment.”), aff’d sub nom. Tokio Marine & Fire Ins. Co. v. Chicago & Nw. Transp. Co., 129 F.3d 960 (7th Cir. 1997) (citations omitted).49

 

49   Although many of these cases involve the section of the Carmack Amendment governing rail carriers, the liability provision therein is not materially different from that of Section 14706 governing [*27]  motor carriers. Compare 49 U.S.C. § 11706(a), with id. § 14706(a).

Plaintiffs argue that most of the cases upon which Wheeling and Ortiz rely were governed by an older version of the Carmack Amendment, and that the current version provides for recovery from the carrier responsible for the loss.50 Section 14706 does provide for recovery from “the carrier over whose line or route the loss or injury occurred,” but only by a receiving or delivering carrier seeking to recover the amount paid to the cargo owners.51 In contrast, only the receiving carrier and “any other carrier that delivers the property and is providing transportation or service subject to jurisdiction . . . are liable to the person entitled to recover under the receipt or bill of lading.” 49 U.S.C. § 14706(a)(1).52

 

50   Document No. 98 at 7-10.

51   See 49 U.S.C. § 14706(b) (“The carrier issuing the receipt or bill of lading under subsection (a) of this section or delivering the property for which the receipt or bill of lading was issued is entitled to recover from the carrier over whose line or route the loss or injury occurred the amount required to be paid to the owners of the property, as evidenced by a receipt, judgment, or transcript, and the amount of its expenses reasonably incurred in defending a civil action brought by that person.”).

52   The Carmack Amendment’s venue provision [*28]  provides that “[a] civil action under this section may be brought against the carrier alleged to have caused the loss or damage, in the judicial district in which such loss or damage is alleged to have occurred.” 49 U.S.C. § 14706(d)(2). This provision evidently refers to claims brought by receiving or delivering carriers under Section 14706(b).

Plaintiffs argue that Wheeling and Ortiz acted as receiving and/or delivering carriers, and not as intermediary carriers.53 The receiving carrier liable under Section 14706 is the carrier that “issue[s] a receipt or bill of lading for property it receives for transportation,” 49 U.S.C. § 14706(a)(1), and there is no allegation that either Wheeling or Ortiz issued a bill of lading for the purification skid. “A delivering carrier is deemed to be the carrier performing the line-haul transportation nearest the destination but does not include a carrier providing only a switching service at the destination.” Id. Plaintiffs argue that “the pertinent definitions . . . as well as the Court’s analysis in its [ February 18, 2015] Memorandum and Order, show that there can be more than one . . . delivering carrier,” and that Wheeling and Ortiz “were a necessary and integral part of the transportation team for receiving and delivering the [*29]  skid.”54

 

53   Document No. 98 at 5-7.

54   Id. at 6-7.

None of the case law upon which Wheeling and Ortiz rely establishes that there can be only one delivering carrier. Indeed, such a limitation would not advance the overriding purpose of the Carmack Amendment, which completely preempts this field, especially in a case such as this where there is involved the overland carriage of a massive unit of freight requiring a transportation team concurrently composed of multiple motor vehicles and persons providing specialized services all acting in concert as a unit to perform the “line-haul transportation nearest the destination,” 49 U.S.C. § 14706(a). In contrast, most of the case law applying the Carmack Amendment has arisen in conventional settings where typically there are series of consecutive carriers and, to be sure, a principal purpose of the Amendment was to resolve the frequent problem of cargo arriving damaged with no way of knowing where amongst a series of carriers the damage occurred. See Rodin, 477 F.2d at 688 (“The purpose of the Carmack Amendment was to make the initial and delivering carriers responsible so that the lawful holder of a bill of lading does not have to search out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of goods. [*30]  The initial or delivering carrier could then recover damages from the connecting carrier on whose line the loss or damage to the property was sustained.”); see also Tokio Marine, 1995 U.S. Dist. LEXIS 11730, 1995 WL 493434, at *4 (defining intermediate connecting carriers not subject to liability as “those carriers whose work is performed after the original shipment but before the journey’s final leg”). Wheeling and Ortiz argue that they were not a receiving or delivering carrier. Plainly, however, they were not intermediate connecting carriers performing their work after the original shipment but before the final leg of the transport, which is the only other category of carrier contemplated in the Carmack Amendment and the case law. The allegations are that Wheeling and Ortiz provided bucket truck services as part of the line-haul transportation from Houston, Texas until the cargo’s destruction in Magnolia, Texas, and, at this pleading stage, Plaintiffs have plausibly pled that Wheeling and Ortiz were part of a team operating together as delivering carriers subject to liability under the Carmack Amendment. Accordingly, Wheeling’s and Ortiz’s motion to dismiss is denied.

 

VI. Motions for Summary Judgment

Plaintiffs move for a partial summary judgment ruling that their damages are not limited to $100,000 by a limitation of liability [*31]  provision in the contract between Hansa Meyer and Contractors Cargo (the “Hansa Meyer/Contractors Cargo Contract”).55 Talleres Willie and Ainslie filed a response in opposition, and Van Kirk and Kimmel filed a response and “counter-motion for summary judgment” arguing that their liability is limited to $100,000.56

 

55   Document No. 93.

56   Document Nos. 106, 113. Van Kirk’s and Kimmel’s response and counter-motion compose a single document, which was filed twice at Document Nos. 108 and 113. For ease of reference, the Court refers only to the latter filing.

Plaintiffs’ Motion to Strike Counter-Motion for Summary Judgment as Untimely (Document No. 116) is denied. Plaintiffs have presented no evidence of any prejudice caused by Van Kirk’s and Kimmel’s late filing of their counter-motion for summary judgment, which was combined with their response to Plaintiffs’ motion and addressed the same issues. Plaintiffs’ response to Van Kirk’s and Kimmel’s counter-motion was combined with and indistinguishable from their reply in support of their own motion.

 

A. Motion to Strike

Plaintiffs’ objections (Document No. 117) to a series of unauthenticated documents produced by Van Kirk and Kimmel at Document No. 113-4 [*32]  in opposition to Plaintiffs’ motion for summary judgment and in support of their counter-motion for summary judgment are SUSTAINED, and the unauthenticated documents are STRICKEN.

Plaintiffs’ objection (Document No. 117) to certain portions of the deposition testimony of Frank Scheibner, Hansa Meyer’s President and Chief Executive Officer, is SUSTAINED IN PART, namely, as to Scheibner’s hearsay and/or speculative testimony that Air Liquide had notice or actual knowledge of the limitation of liability provision contained in the Hansa Meyer/Contractors Cargo Contract, and the objection is otherwise OVERRULED.

 

B. Fact Issues Preclude Summary Judgment

It is uncontroverted that the Hansa Meyer/Contractors Cargo Contract includes within its terms a separate limitation of liability provision, not a mere incorporation by reference of a very similar clause in Contractors Cargo’s tariff, which tariff Plaintiffs contend is inapplicable to carriage from the United States to Mexico. The Limited Liability clause in the Hansa Meyer/ Contractors Cargo Contract states:

 

Limited Liability:

Carrier’s liability for loss of or damage to freight, including recovery of damaged freight, in Carrier’s possession [*33]  shall be subject to release value of $2.50 per pound to a maximum of $100,000 per load as provided in Tariff ICC-CCC 400, unless a greater amount is declared and accepted, in writing, by Carrier and Customer has paid the cost of excess valuation.57

 

 

 

 

57   Document No. 93-1 at 1.

After carefully reviewing the submissions and summary judgment evidence, it appears that genuine issues of material fact have been raised on (1) whether Plaintiffs had notice of the limitation of liability provision in the Hansa Meyer/Contractors Cargo Contract or authorized Hansa Meyer as their agent to agree to such a limitation, and (2) whether Plaintiffs or their agent had a reasonable opportunity to choose between two or more levels of liability. Accordingly, neither Plaintiffs nor Van Kirk and Kimmel are entitled to summary judgment on the limitation of liability’s applicability.

 

VIII. Order

For the foregoing reasons, it is

ORDERED that Plaintiffs’ Motion for Reconsideration Regarding Trailblazer Pilot Car Services, LLC, and Motion for Leave to File Third Amended Complaint (Document No. 85), Motion for Summary Judgment Regarding Limitation of Liability (Document No. 93), and Motion to Strike Counter-Motion for Summary [*34]  Judgment as Untimely (Document No. 116) are all DENIED, and Plaintiffs’ Motion to Strike and Response to Pilot Car Defendants’ Motion for New Docket Control Order and Status Conference (Document No. 118) is DENIED AS MOOT; and it is further

ORDERED that Defendant Contractors Cargo Company’s Motion for Entry of Final Judgment (Document No. 86), in which Defendant Trailblazer Pilot Car Services, LLC joins, is DENIED; and it is further

ORDERED that Defendants Wheeling Equipment Company, Inc.’s and George Ortiz’s Joint Motion to Dismiss the Second Amended Complaint (Document No. 91), in which Defendants Charles Van Kirk d/b/a Slingshot Pilot Car Services and Claude Joseph Kimmel d/b/a Freedom Pilot Car join, is DENIED; and it is further

ORDERED that Defendants Charles Van Kirk d/b/a Slingshot Pilot Car Services’s and Claude Joseph Kimmel d/b/a Freedom Pilot Car’s Third Motion to Dismiss (Document No. 96), Motion for New Docket Control Order and Status Conference (Document No. 112), Counter-Motion for Summary Judgment (Document No. 113), and Supplement to Third Motion to Dismiss (Document No. 126) are all DENIED; and it is further

ORDERED that Defendant Talleres Willie, Inc.’s and Bernardo [*35]  Ainslie’s Motion to Extend Time to Respond to Plaintiffs’ Motion for Summary Judgment (Document No. 100) is GRANTED.

The Clerk will enter this Order, providing a correct copy to all counsel of record.

SIGNED at Houston, Texas, on this 31st day of July, 2015.

/s/ Ewing Werlein, Jr.

EWING WERLEIN, JR.

UNITED STATES DISTRICT JUDGE

SUN CAPITAL PARTNERS, INC., Plaintiff, v. TWIN CITY FIRE INSURANCE COMPANY, INC., Defendant.

 

CASE NO.: 12-CV-81397-KAM

 

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF FLORIDA

 

2015 U.S. Dist. LEXIS 102445

 

 

August 5, 2015, Decided

August 5, 2015, Filed

 

 

COUNSEL:  [*1] For Sun Capital Partners, Inc., Plaintiff: Heather Jo Gorin, LEAD ATTORNEY, Arya Attari, Ver Ploeg & Lumpkin, P.A., Miami, FL; Richard Hugh Lumpkin, LEAD ATTORNEY, Ver Ploeg & Lumpkin, Miami, FL; Christopher Thomas Kuleba, Ver Ploeg, Lumpkin, P.A., Miami, FL; Tiffany Compres, Ver Ploeg & Lumpkin, P.A., Miami, FL.

 

For Twin City Fire Insurance Company, Defendant: Catherine Salinas Acree, David M. Leonard, LEAD ATTORNEYS, PRO HAC VICE, Carlton Fields, P.A., Atlanta, GA; Courtney E. Scott, Michael R. Delhagen, LEAD ATTORNEYS, PRO HAC VICE, Tressler, LLP, New York, NY; David John Forestner, LEAD ATTORNEY, Carlton Fields Jorden Burt, P.A., Atlanta, GA; Justan C. Bounds, LEAD ATTORNEY, PRO HAC VICE, Carlton Fields Jorden Burt, P.A., Atlanta, GA; Joseph Ianno, Jr., Carlton Fields PA, West Palm Beach, FL.

 

For Cerberus Partners, LP, Defendant: Brian W. Toth, PRO HAC VICE, Holland & Knight, Miami, FL.

 

JUDGES: KENNETH A. MARRA, United States District Judge.

 

OPINION BY: KENNETH A. MARRA

 

OPINION

 

OPINION AND ORDER ON PLAINTIFF’S MOTION FOR CHOICE OF LAW DETERMINATION

This cause is before the Court on Plaintiff Sun Capital’s Motion for Choice of Law Determination. (DE 82). The motion is ripe for review. Stemming from this motion is [*2]  Defendant Twin City’s Motion to Strike [Plaintiff’s reply in support of its choice-of-law motion] or File Surreply or for Additional Discovery. (DE 87). This motion is also ripe. After some time elapsed, Defendant filed a supplemental response in opposition to Plaintiff’s choice-of-law motion, in which it brought newly discovered documents to the Court’s attention. Plaintiff moved to strike that supplement or requested leave to file a response. (DE 126). The Court concludes that it has sufficient materials from which to conclude that New York law governs the interpretation of Plaintiff’s insurance policies.

In a diversity action, a federal court must apply the choice-of-law rules of the forum state. LaFarge Corp. v. Travelers Indem. Co., 118 F.3d 1511, 1515 (11th Cir. 1997). The parties agree that Florida’s rule of lex loci contractus governs the Court’s choice-of-law determination in this contract dispute. (DE 82 at 3; DE 83 at 4). This rule “provides that the law of the jurisdiction where the contract was executed governs the rights and liabilities of the parties in determining an issue of insurance coverage. State Farm Mut. Auto. Ins. Co. v. Roach, 945 So. 2d 1160, 1163 (Fla. 2006). Lex loci contractus is, in general, an ‘inflexible,’ bright-line rule that exists ‘to ensure stability in contract arrangements.’ Id. at 1164.” Rando v. Gov’t Employees Ins. Co., 556 F.3d 1173, 1176 (11th Cir. 2009).

“The determination [*3]  of where a contract was executed is fact-intensive, and requires a determination of where the last act necessary to complete the contract was done.” Prime Ins. Syndicate, Inc. v. B.J. Handley Trucking, Inc., 363 F.3d 1089, 1092-93 (11th Cir. 2004) (internal quotation marks and alteration omitted). As the Eleventh Circuit has held in the context of Florida’s rule of lex loci contractus, “[t]he last act necessary to complete a contract is the offeree’s communication of acceptance to the offeror.” Id. at 1093 (citing Buell v. State, 704 So. 2d 552, 555 (Fla. Dist. Ct. App. 1997)). In the same opinion, however, the Court of Appeals noted–without calling into question–that some courts hold “that a contract dispute is governed by the laws of the state in which the contract was delivered.” Id. (noting holding from Pastor v. Union Cent. Life Ins. Co., 184 F. Supp. 2d 1301, 1305 (S.D. Fla. 2002)).

The parties take differing views on where the “last act” necessary to complete Plaintiff’s insurance contracts occurred.1 Stressing the Eleventh Circuit’s reliance on “communication of the acceptance,” Defendant argues that the last act necessary to create a contract was the insurers’ agents’ communication of acceptance of Plaintiff’s agent’s order to bind coverage. (DE 83 at 13; DE 124 at 2). Because acceptance was communicated from New York (to one of Plaintiff’s agents who was also in New York), Defendant argues that New York law applies. (DE 83 [*4]  at 1-2).

 

1   This litigation involves an excess “following form” insurance policy Plaintiff obtained from Defendant Twin City. (See DE 82 at 1). Plaintiff obtained its primary insurance policy from Houston Casualty Company. In the context of a “following form” policy, the choice-of-law determination for the primary policy governs the choice-of-law determination for the excess policy. See CNL Hotels & Resorts, Inc. v. Houston Cas. Co., 505 F. Supp. 2d 1317, 1321 (M.D. Fla. 2007); (DE 82 at 2 n.2; DE 83 at 2 & n.1). Plaintiff argues that this issue is immaterial, however, because both the primary and excess “policies were issued for delivery in the same manner.” (DE 82 at 2 n.2).

On the other hand, Plaintiff argues that the last act was the delivery of the subject policies to Plaintiff at its place of business in Florida. (See DE 126-1 at 3). Consistently rejecting the notion that this Court should undertake a “fact-intensive” inquiry into where the last act of contract formation occurred, Plaintiff argues that Florida law rigidly “requires that the law of the state in which the policy was delivered be applied to interpretation of the policy.” (DE 86 at 2).

The Court concludes that Defendant has identified the correct approach.

 

I. Communication of Acceptance

The Eleventh Circuit’s [*5]  decision in Prime Insurance Syndicate is illustrative. 363 F.3d 1089. There, a trucking company located in Alabama orally purchased a business auto-liability insurance policy covering the period of May 17, 2000, to May 17, 2001. Id. at 1091. On May 19, 2000, before the trucking company received its insurance binder, an employee was involved in an automobile accident in Florida. Id. On May 23, 2000, the insurance company issued the written binder confirming the earlier oral agreement. Id.

The insurance company disputed coverage in the underlying state court litigation, and it filed a declaratory action in the Southern District of Florida to resolve the coverage issue. Id. The state-court action settled, and the insurance company voluntarily dismissed its declaratory action; however, the district court retained jurisdiction to consider attorneys’ fees. Id. The insureds sought attorneys’ fees in accordance with Florida law; the insurer argued that Alabama law–which did not allow an insured to recover attorneys’ fees in a coverage dispute–applied. Id. at 1091, 1093.

The Eleventh Circuit affirmed the district court’s holding that Alabama law applied. After concluding that the dispute was governed by lex loci contractus, the court [*6]  agreed that the insurer’s “communication of the oral binder to [the insured] constituted acceptance of [the insured’s] offer to purchase insurance and, therefore, was the last act necessary to complete the contract” Id. at 1093. “The fortuitous timing of the accident–occurring before the written policy was actually delivered–d[id] not alter the fact that the [insurer] had already communicated acceptance of the contract to [the insured]. Therefore, the district court did not err in applying lex loci contractus to determine that Alabama law governed th[e] insurance contract.” Id.

Under facts closely analogous to the instant case, district courts in Florida have found that an insurer’s (or its agent’s) communication of acceptance of the insured’s (or its agent’s) offer to purchase insurance is the last act necessary to execute an insurance contract. In National Trust Insurance Company v. Graham Brothers Construction Company, the insurance company argued that Georgia law applied “because the Policy was delivered to the Georgia insured at its principal office in Georgia,” whereas the third-party claimant argued Florida law applied because “the last act necessary to complete the contract is the offeree’s communication [*7]  of acceptance to the offeror, which . . . occurred in Florida.” 916 F. Supp. 2d 1244, 1252 (M.D. Fla. 2013). After noting the Eleventh Circuit’s decision in Prime Insurance Syndicate, the court agreed with the third-party claimant. Id. The evidence demonstrated that, “after [the insured’s] agent emailed [the insurer] with an offer to purchase insurance, stating ‘We got the formal order on this account. Please bind coverage effective 11/2/04,’ [the insurer] accepted this offer by issuing the Policy from its office in Florida.” Id. (internal record citation omitted). Given this evidence, the court held that “the last act necessary to complete the contract occurred in Florida when [the insurer] accepted the agent’s offer to bind coverage by issuing the Policy.”

The court in National Trust relied on a similar decision in Granite State Insurance Company v. American Building Materials, No. 10-CV-1542, 2011 U.S. Dist. LEXIS 139455, 2011 WL 6025655, at *1 (M.D. Fla. Dec. 5, 2011), aff’d 504 F. App’x 815 (11th Cir. 2013) (declining to decide the choice-of-law question), in which the insured’s agent emailed the insurer’s agent an offer to purchase insurance by requesting that coverage be bound. The court in Granite State2 held that Massachusetts law applied based on the following facts:

 

In each year, the agents for [the insureds] (who are both located in Florida), received a quote for the policies from the managing general [*8]  underwriter for the Insurer, VMGU (who is located in Massachusetts). Next, [the insureds’] agent emailed VMGU an offer to purchase the insurance at the prices quoted, by requesting that coverage be bound. VMGU then accepted that offer on behalf of the Insurer and issued a binder for the coverage from its offices in Massachusetts. Each year, after issuing the binder from its offices in Massachusetts, VMGU itself completed the information on the declarations pages of the policies, generated the policies, and emailed electronic versions of the policies to [the insureds’] agents in Florida.

 

 

2011 U.S. Dist. LEXIS 139455, [WL] at *4. The court rejected the insurer’s contention “that the last act occurred upon receipt of the binders and policies by [the insured’s] agents in Florida, rather than the issuance of the same by VMGU in Massachusetts.” 2011 U.S. Dist. LEXIS 139455, [WL] at *5 (emphasis in original). This argument, the court held, conflicted with the principle of Florida contract law that “a written contract acceptance is effective at the time it is dispatched–not when it is received by the offeror.” Id. (citing Florida cases).

 

2   This court also cited the Eleventh Circuit’s opinion in Prime Insurance Syndicate, noting that where the last act occurred is “fact-intensive” [*9]  and “is the offeree’s communication of acceptance of the offer.” Granite State Ins. Co. v. Am. Bldg. Materials, Inc., 2011 U.S. Dist. LEXIS 139455, 2011 WL 6025655, at *4 (quoting Prime Ins. Syndicate, 363 F.3d at 1092-93).

Finally, in a detailed opinion that predates Prime Insurance Syndicate,3 a bankruptcy court in the Middle District of Florida concluded that the actions of the parties’ agents in binding insurance coverage was the last act necessary to create the insurance contract at issue. The Celotex Corp. v. AIU Insurance Co. (In re The Celotex Corp.), 194 B.R. 668 (Bankr. M.D. Fla. 1996). In Celotex Corp., the bankruptcy court discussed the importance of binders in insurance contract formation. Id. at 673 n.5. Citing treatises, the court concluded that “the binder [is] the last act necessary to complete a contract for coverage.” Id. (“A contract of insurance is ordinarily complete and closed when the binder is signed and delivered.”).

 

3   Although the Eleventh Circuit did not cite In re The Celotex Corp. in its opinion, the underlying decision that the Eleventh Circuit affirmed cited Celotex for the proposition that “delivery does not always dictate what law controls under lex locus contractus, because the determination of where a contract was executed is a fact-intensive one, and requires a determination of ‘where the last act necessary to complete the contract [wa]s done.'” (DE 55 at 6 of No. 02-cv-21108, Prime Insurance Syndicate, Inc. [*10]  v. B.J. Handley Trucking, Inc. (Garber, Mag. J), report and recommendation adopted at (DE 59) (Moreno, J.) (S.D. Fla. 2003)).

Turning to the case at hand, the materials in the record demonstrate as follows:

Plaintiff Sun Capital assigned the duty of purchasing its insurance policies to its national insurance broker, Marsh Inc. (See DE 82 at 2; DE 82-1; DE 124-2, -3). Underwriting for the excess policy (Twin City) was handled by the Hartford. (See DE 82-1 at 5; DE 83 at 3). Underwriting for the primary policy (Houston Casualty Company) was handed by Professional Indemnity Agency, Inc. (See DE 124-2).

The circumstances surrounding the excess policy (Twin City) appear in the record first. On December 28, 2007, Raymond Ash, a Marsh agent located in New York, emailed Ho-Tay Ma, a Hartford agent located in New York, as follows: “Thanks for all your help with this account. Please consider this e-mail as the formal order to bind coverage for Sun Capital’s renewal GPL coverage as follows: [discussing applicable limits, period, and terms] . . . . Please forward the formal binders or confirmation of binding as soon as possible.” (DE 82-1 at 3). From his New York office, Mr. Ma responded to Mr. Ash’s [*11]  email as follows: “Based upon the information provided regarding the above captioned account, we are pleased to provide you with the following Binder for Insurance on behalf of Twin City Fire Insurance Company.” (Id. at 5). Apparently, Mr. Ma emailed a copy of the binder to Mr. Ash in New York, as well as to two Marsh agents located in Florida. (Id. at 4).

The binding of the primary policy (Houston Casualty Company) was handled the same manner. On December 28, 2007, Jennifer Hickox, a Professional Indemnity agent, emailed Mr. Ash as follows: “In accordance with your instructions, we are binding Private Equity Professional Insurance as follows [listing applicable limits, period, and terms].” (DE 124-2 at 2). Ms. Hickox was a Vice President for Professional Indemnity, and her business address was listed in her email as in Mount Kisco, New York. (Id.). Ms. Hickox’s email does not indicate that it was sent to anyone other than Mr. Ash in New York. (See id. (listing only Mr. Ash at “Marsh, Inc. — (NY)”).

These documents show that both Plaintiff’s primary and excess insurance policies were executed in materially similar ways.4 First, Plaintiff’s agent, March Inc., emailed the insurer’s agent an offer to purchase [*12]  insurance by submitting a “formal order to bind coverage.” Next, the insurer’s agent accepted that offer and issued a binder for coverage from an office in New York. This acceptance was effective at the time–and at the place–where it was dispatched, i.e., New York.5 Granite State Ins. Co., 2011 U.S. Dist. LEXIS 139455, 2011 WL 6025655, at *5; Kendel v. Pontious, 261 So. 2d 167, 169 (Fla. 1972). The insurer’s agent’s acceptance of Plaintiff’s agent’s offer to purchase insurance was the last act necessary to complete the insurance contract.6 See Prime Ins. Syndicate, 363 F.3d at 1093. The fact that only binders were initially exchanged, and not the actual policies, does not alter the conclusion that Plaintiff’s agent offered to purchase insurance coverage, specifying the terms of the policy, and the insurer’s agent issued an acceptance based on those terms. (See, e.g., DE 81-1 at 3 (Plaintiff’s agent placing an order “to bind coverage” for the period “12/31/07-08”); DE 82-1 at 6 (insurer’s agent accepting offer to provide coverage “From: 12/31/2007 To 12/31/2008”); DE 124-2 at 2 (insurer’s agent accepting offer to provide coverage from “December 31, 2007 to December 31, 2008”).7

 

4   Plaintiff states that “both policies were issued for delivery in the same manner.” (DE 82 at 2 n.2).

5   Thus, the Court concludes that it is immaterial that the binder for Plaintiff’s excess [*13]  policy was received simultaneously by its agents in New York and Florida. (DE 82-1 at 4; DE 86 at 9-10). Even if delivery of the emails to the agents was the last act necessary (see DE 86 at 9 (citing In re the Celotex Corp., 194 B.R. at 673)), the email acceptance binding coverage for Plaintiff’s primary policy (which controls the choice-of-law determination) was delivered to Mr. Ash in New York only (DE 124-2 at 2).

6   The Court rejects Plaintiff’s argument that the “signed authorization to bind coverage”–in which Plaintiff authorized its agent, Marsh, to “place insurance on our behalf”–was the last act necessary to complete an insurance contract. (DE 82-2 at 2, 4; DE 86 at 9). The authorization does not indicate that the listed insurance entities agreed to be bound once Plaintiff authorized its agent to “place insurance on our behalf.” The fact that Plaintiff’s agent did not place the “formal order to bind coverage” until the next day highlights the fact that the authorization was not the last step to completing a contract (DE 82-1).

7   In arguing that the “last act” must be delivery of the policy itself, Plaintiff points out that binders are merely contracts for “temporary” insurance. (DE 86 at 4 n.4). While this may be true, [*14]  the emails recounted above show that offer and acceptance was based on the full terms of the entire policy. The insurers’ agents accepted Plaintiff’s agent’s offer to purchase insurance on the stated terms; the fact that this acceptance was memorialized by the immediate issuance of a binder, rather than a formal policy, does not change the conclusion that the acts necessary to give rise to a binding insurance contract had occurred. See In re The Celotex Corp., 194 B.R. at 673 n.5 (“A contract of insurance is ordinarily complete and closed when the binder is signed and delivered.”); see also Prime Ins. Syndicate, 363 F.3d at 1093 (holding that “communication of . . . oral binder” constituted acceptance of “offer to purchase insurance,” “before the written policy was actually delivered”).

Based on the foregoing, the Court concludes that the last act necessary to create an insurance contract occurred in New York when the insurers’ agents accepted Plaintiff’s agent formal offer to bind coverage.

 

II. Delivery as the Last Act

Rejecting the “fact-intensive” approach to the “last act” inquiry,8 Plaintiff argues that Florida law dictates that the last act of contract formation is the actual delivery of the policy to the insured. (DE 86 at 2). This Court, like others, acknowledges [*15]  that in many cases, courts have found that the place where an insurance contract was executed is the place where the policy was delivery. See, e.g., Nat’l Trust Ins. Co. 916 F. Supp. 2d at 1252. However, other considerations lead the Court to conclude that the place of delivery is not invariably the locus contractus in Florida.

 

8   Plaintiff argues that the “fact-intensive inquiry” is only applied by courts in the Middle District of Florida, and that those courts deviate from the “last act” principles recognized by the Supreme Court of Florida. (DE 86 at 2, 4, 7). Plaintiff fails to note, however, that the Eleventh Circuit also stated that the inquiry into where the last act occurred is “fact-intensive.” Prime Ins. Syndicate, Inc., 363 F.3d at 1092-93.

For all Plaintiff’s efforts, it has not identified a Florida case holding, in the context of an insurance contract’s locus contractus, that the delivery of the policy to the insured is always the last act essential to contract formation. Some states’ law is clear in this regard;9 however, the Court has not located a Florida case standing for the rigid proposition that the locus contractus is always the place where the contract was delivered.

 

9   For example, regarding the locus contractus of insurance contracts, “Georgia law provides [*16]  that the last act essential to the completion of the contract is delivery.” Johnson v. Occidental Fire & Cas. Co., 954 F.2d 1581, 1584 (11th Cir. 1992); see also Travelers Prop. Cas. Co. of Am. v. Moore, 763 F.3d 1265, 1271 (11th Cir. 2014) (“Under Georgia law, an insurance contract is ‘made’ where it is delivered.”).

Several federal appellate decisions indicate that delivery is not necessarily the “last act” under Florida’s lex loci contractus doctrine. First, there is Prime Insurance Syndicate, in which the Eleventh Circuit stated that the “last act necessary to complete a contract is the offeree’s communication of acceptance of the offer.” 363 F.3d at 1093. The court held that this “last act” occurred “before the written policy was actually delivered.” Id. Second, there is the case of Shapiro v. Associated International Insurance Company, in which the Eleventh Circuit applied Florida’s lex loci contractus rule to conclude that California law applied “because the contract was issued and countersigned in California through a California broker.” 899 F.2d 1116, 1119 (11th Cir. 1990). Although this statement is dicta because the court held that lex loci contractus did not apply, it is notable that the Eleventh Circuit did not mention “delivery” of the policy in its examination of Florida’s “traditional choice of law rule.” Id. Finally, in a decision somewhat removed in time, the former [*17]  Fifth Circuit recognized that a “contract of insurance may arise without the delivery of the policy or prepayment of the premium if the parties so intend.”10 Harris v. Travelers Ins. Co., 80 F.2d 127, 128 (5th Cir. 1935) (applying Texas law, but not limiting this general statement to any particular state’s law).

 

10   As one Florida intermediate appellate court has recognized, a “binding contract of insurance” may be entered before “written evidence thereof is made up in the office of the insurer or its agent or manually delivered to the insured.” Sanders v. Nat’l Cas. Co., 157 So. 2d 436, 439 (Fla. Dist. Ct. App. 1963).

To be sure, Plaintiff has identified numerous cases that apparently equate delivery of an insurance policy with its execution. (DE 82 at 3-7; DE 86 at 2-5). However, many of these cases note only that the “place where a contract was executed is generally considered to be the place were the policy was delivered.” Creative Hospitality Ventures, Inc. v. U.S. Liability Ins. Co., 655 F. Supp. 2d 1316, 1324 (S.D. Fla. 2009) (internal quotation marks omitted) (emphasis added); see also Sparta Ins. Co. v. Colareta, 990 F. Supp. 2d 1357, 1362 (S.D. Fla. 2014) (“generally considered”);11 Adolfo House Distrib. Corp. v. Travelers Prop. & Cas. Ins. Co., 165 F. Supp. 2d 1332, 1335 (S.D. Fla. 2001) (“generally considered”). In other cases, the discussion concerning the place of delivery as the locus contractus was dicta because the parties agreed on which state’s law applied. See Gen. Fid. Ins. Co. v. Foster, 808 F. Supp. 2d 1315, 1319 (S.D. Fla. 2011); Creative Hospitality Ventures, Inc., 655 F. Supp. 2d at 1325; Nova Cas. Co. v. Waserstein, 424 F. Supp. 2d 1325, 1332 (S.D. Fla. 2006). But most notably, none of these cases analyzed the issue of whether delivery would be considered the last act if circumstances [*18]  indicated that a fully consummated insurance contract existed before delivery occurred. See Embroidme.com , Inc. v. Travelers Prop. Cas. Co. of Am., 992 F. Supp. 2d 1259, 1263 (S.D. Fla. 2014) (Marra, J.) (applying Florida law because it “appear[ed]” that the contract was executed in Florida because it listed mostly Florida addresses, and because the “parties rel[ied] on cases that apply Florida law”); CAE USA, Inc. v. XL Ins. Co., No. 11-CV-64-T-24, 2011 U.S. Dist. LEXIS 52794, 2011 WL 1878160, at *2 (M.D. Fla. May 17, 2011) (generally stating that Canadian law applied to policy delivered in Canada, then turning to public policy exceptions to lex loci contractus); Royal Surplus Lines Ins. Co. v. Delta Health Grp., Inc., No. 03CV419-RS, 2006 U.S. Dist. LEXIS 4069, 2006 WL 167565, at *2 (N.D. Fla. Jan. 23, 2006) (finding that delivery was last act without discussion); see also Nyberg v. Cryo-Cell Int’l, Inc., No.11-CV-399-T-30, 2013 U.S. Dist. LEXIS 137644, 2013 WL 5408447, at *5 (M.D. Fla. Sept. 25, 2013) (distinguishing Royal Surplus Lines because the contract at issue was not an insurance contract).

 

11   Plaintiff omits this qualifying phrase when it quotes Sparta Insurance. (DE 86 at 2; DE 126-1 at 3) (“In a case involving an insurance policy, the place where the contract is executed is . . . ‘the place where there policy is delivered.'”).

In all, the cases cited by Plaintiff stand for the proposition that “[t]he delivery of the policy can constitute the ‘last act’ necessary to execute a contract.” AIG Premier Ins. Co. v. RLI Ins. Co., 812 F. Supp. 2d 1315, 1319 (M.D. Fla. 2011) (emphasis added); (see DE 86 at 4) (Plaintiff stating that RLI Ins. Co. applied “place of delivery test”). [*19]  “However, ‘[t]he determination of where a contract was executed is fact-intensive, and requires a determination of ‘where the last act necessary to complete the contract [wa]s done.'” RLI Ins. Co., 812 F. Supp. 2d at 1319 (citing Prime Ins. Syndicate, 363 F.3d at 1092-93)). The cases that have analyzed whether the last act of contract formation must be delivery have rejected that notion. See Nat’l Trust Ins. Co., 916 F. Supp. 2d at 1252 (“[R]elevant cases have made clear that, while the place of delivery of the policy may be the place that the policy was deemed to be executed, it is not necessarily the place that the policy was executed.”) (citing RLI Ins. Co., 812 F. Supp. 2d at 1319) (emphasis in original); CNL Hotels & Resorts, Inc., 505 F. Supp. 2d at 1321 (“Under Florida law, the important factor is the place of execution of the contract, not the place or places to which it was (eventually) mailed.”); In re Celotex Corp., 194 B.R. at 674 (review of Florida cases revealed that “none of them hold the act of delivery is the last act necessary to complete a contract”).

Whatever merit might exist for the adoption of a rule in Florida that the locus contractus of an insurance policy always be the place where it is delivered, as it stands now, the “determination of where a contract was executed is fact-intensive, and requires a determination of where the last act necessary to complete the contract was done.” Prime Ins. Syndicate, 363 F.3d at 1092-93 (internal quotation marks and alteration [*20]  omitted). This determination would not be “fact-intensive” if the only factual consideration was where the contract was ultimately delivered. Delivery may be a necessary condition to contract formation under some insurance contracts; however, Plaintiff does not argue that the effectiveness of the insurance contracts at issue was in any way dependent on delivery of the policies to the insured.12 Where the facts indicate that a fully consummated contract existed prior to delivery of the policy, the last act for contract formation may be found prior to delivery. See Prime Ins. Syndicate, 363 F.3d at 1093.

 

12   The Eleventh Circuit has held that where the “last act” of contract formation occurs may depend on the conditions and contingencies imposed within the insurance application. See Fioretti v. Massachusetts Gen. Life Ins. Co., 53 F.3d 1228, 1236 (11th Cir. 1995) (because insurance policy was contingent on execution of statement of good heath, last act of contract formation occurred in New Jersey, where statement was executed); see also Equit. Life Assur. Soc. v. McRee, 75 Fla. 257, 78 So. 22, 24 (Fla. 1918) (“A life insurance policy which by its terms does not become a completed contract until delivery on payment of first premium is to be construed as a contract made in the state where the first premium is paid and the policy delivered . . . .”). In an unpublished decision, this [*21]  Court concluded that a life insurance policy was executed upon delivery because the application conditioned coverage on delivery and the insured retaining the policy for 30 days. See (DE 69 at 5-6 of No.13-cv-80479, Alvin Gelfound v. Metlife Ins. Co. (S.D. Fla. 2015) (Marra, J.)).

 

III. Conclusion

Accordingly, it is hereby ORDERED AND ADJUDGED that Plaintiff’s Motion for Choice of Law Determination (DE 82) is DENIED insofar as it seeks a determination that Florida law applies to the substantive issues in this insurance coverage action; Defendant’s Motion to Strike (DE 87) is DENIED AS MOOT; Plaintiff’s Motion to Strike or for Leave to File a Response (DE 126) is GRANTED; Plaintiff’s response to Defendant’s supplement (DE 126-1) was considered accordingly.

DONE AND ORDERED in chambers at West Palm Beach, Palm Beach County, Florida, this 5th day of August, 2015.

/s/ Kenneth A. Marra

KENNETH A. MARRA

United States District Judge