United States District Court,D. New Jersey.

Mary Ellen BERRYMAN, Plaintiff,

v.

WHEATON VAN LINES, INC., Davi & Valenti Movers, Inc. and ABC Corps, 1-10 (fictional business entities), Defendants.

 

 

 

 

OPINION

PETER G. SHERIDAN, U.S.D.J.

Plaintiff Mary Ellen Berryman, a New Jersey resident, brought this action for breach of contract, negligence, breach of the implied covenant of good faith and fair dealing, negligent infliction of emotional distress, and violation of the New Jersey Consumer Fraud Act, after some of her personal belongings were damaged or destroyed in a move from Florida to New Jersey. Defendants, Wheaton Van Lines, Inc. (“Wheaton”) and Davi & Valenti Movers, Inc. (“DVM”) (collectively referred to as “defendants”), incorporated in the States of Indiana and Florida, respectively, removed the matter based on diversity jurisdiction. Defendants have now moved to dismiss based on preemption of the Carmack Amendment, 49 U.S.C. §  14706.

 

 

I.

 

On or about December 16, 2004, plaintiff entered into an interstate contract of carriage to transport plaintiff’s household goods and effects from Sarasota, Florida to Freehold, New Jersey. Plaintiff paid for services and an additional amount which plaintiff believed to be for insurance coverage. At some unspecified date, the items were placed in the exclusive control of at least one of the defendants and stored at that defendant’s warehouse. It is claimed that at the time plaintiff’s personalty was given to defendants and placed within defendants’ sole control and custody, the items were undamaged. On or about August 10, 2005, the plaintiff’s items were removed from the storage facility for delivery to Freehold, New Jersey. Plaintiff’s personalty arrived in Freehold, New Jersey, on or about August 17, 2005, as set forth in the agreement. However, according to plaintiff’s Complaint, “many items arrived damaged and/or were destroyed.”

 

Plaintiff filed a Complaint in the Superior Court of New Jersey, Essex County, alleging breach of contract, negligence, breach of the implied covenant of good faith and fair dealing, negligent infliction of emotional distress, and violation of the New Jersey Consumer Fraud Act. Defendants removed the matter to this Court based on diversity and now move to dismiss.

 

 

II.

 

Because plaintiff alleges a cause of action against an interstate carrier based on loss of a shipped good, this case is governed by the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. §  14706. See, e.g., Orlick v. J.D. Carton & Son, Inc., 144 F.Supp .2d 337, 345 (D.N. J.2001). The Supreme Court holds that the Carmack Amendment normally preempts state law claims against a carrier’s loss of a shipped good. Adams Express Company v. Croninger, 144 F.Supp.2d 337, 505-506, 33 S.Ct. 148, 57 L.Ed. 314 (1913) (stating that Congress enacted the Carmack Amendment to “take possession of the subject [of interstate carriers’ liability for lost property] and to supersede all state regulation”); Peyton v. Railway Express Agency, 316 U.S. 350, 62 S.Ct. 1171, 86 L.Ed. 1525 (1942) (holding that the application of common law would open the floodgates of confusion that the Interstate Commerce Act was designed to prevent). In accordance with the Supreme Court rulings, Circuit Courts have consistently found that the Carmack Amendment preempts state law. E.g., Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112, 1115-1121 (10th Cir.1989); Intech, Inc. v. Consol. Freightways, Inc., 836 F.2d 672, 677 (1st Cir.1987); Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir.1987); Hopper Furs Inc. v. Emery Air Freight Corp., 749 F.2d 1261, 1264 (8th Cir.1984); Air Prod. & Chem. v. Ill. Cent. GulfR.R. Co., 721 F.2d 483, 487 (5th Cir.1983); W.D. Lawson & Co. v. Penn Cent. Co., 456 F.2d 419, 421 (6th Cir.1972).

 

The District Courts within the Third Circuit have reached the same conclusion. In Orlick, 144 F.Supp.2d 337, a fairly recent case out of this district, the Court considered a similar set of facts. There, plaintiffs hired defendants to transport their belonging from New Jersey to Florida. The plaintiffs in Orlick purchased an “Extra Protection Plan” from defendants. When their property arrived damaged, plaintiffs sought damages based on a breach of contract, common law fraud, violation of the Consumer Fraud Act, slander of credit and punitive damages. The Court concluded that “the Carmack Amendment completely preempts Plaintiffs’ state law claims because Plaintiffs’ complaint [ ] alleg[es] a cause of action against interstate carriers based on loss or damages to shipped goods …” Id. at 344-45. Although that case concerned an appeal of a magistrate’s report and recommendation on a motion to remand, the District Court’s analysis of federal question jurisdiction is applicable. The Court noted that “[p]laintiffs articulate precisely the type of cause of action envisioned by the Carmack Amendment.” Id. at 345.

 

Several other district courts within New Jersey and throughout the Third Circuit are in agreement. See Harrah v. Minnesota Mining and Manufacturing Co., 809 F.Supp. 313, 317 (D.N.J.1992)(“common law actions against interstate carriers are preempted by the Interstate Commerce Act.”); Strike v. Atlas Van Lines, Inc., 102 F.Supp.2d 599 (M.D.Pa.2000) (the Carmack Amendment preempted state law causes of action “whether contract based or tort based claims”); Tirgan v. Roadway Package Systems, Inc., 1995 WL 21098 (D.N.J.1995); Faust v. Clark and Reid Co., Inc., 1994 WL 675132 (E.D.Pa.1994).

 

With regard to the specific claims set forth in plaintiff’s Complaint, case law clearly demonstrates that such claims are preempted. See Usinor Steel Corp. v. Norfolk Southern Corp., 308 F.Supp.2d 510, 518 (D.N.J.2004) ( “Plaintiff’s claims for breach of contract, negligence, breach of bailment and conversion are preempted and the Court will consider Plaintiff’s plea for relief as one for ‘actual losses’ as provided under the Carmack Amendment, 49 U.S.C. 11706(a).”); Tirgan v. Roadway Package Systems, Inc., 1995 WL 21098 (D.N.J.1995) (acknowledging that some district courts have allowed plaintiffs to pursue actions for a breach of the implied covenant of good faith and fair dealing under federal common law in an attempt to circumvent the insulation of common carriers from liability for bad faith handling of claims, the Court chose to follow the Second Circuit’s reasoning in Cleveland v. Beltman N. Am. Co., 30 F.3d 373 (2d Cir.1994), which rejected such a claim to promote the purpose of the Carmack Amendment.); Orlick, 144 F.Supp.2d 337 (noting plaintiffs’ claim under the New Jersey Consumer Fraud Act is preempted by the Carmack Amendment); Moffit v. Bekins Van Lines Co.,, 306 (5th Cir.1993) (holding that the Carmack Amendment preempted all of the plaintiff’s state law claims which included, among others, claims for negligent infliction of emotional distress, breach of contract, and negligence.).

 

Plaintiff’s opposition focuses solely on the consumer fraud claim, arguing that the allegation is “independent from the loss or damage to goods,” and co 6 F.3d 305 ncerns “separate and distinct conduct.” See Rini v. United Van Lines, Inc., 104 F.3d 502 (1st Cir.1997). It is plaintiff’s contention that she paid defendants an additional amount for insurance coverage and selected on the Bill of Lading, “Option 1 Full (Replacement) Value Protection,” indicating a shipment value of $50,000.00, and choosing no deductible. The portion of the Bill of Lading plaintiff refers to is found on the lower lefthand portion of the document and contains the following clause:

 

 

CUSTOMER’S DECLARATION of VALUE

 

THIS IS A TARIFF LEVEL OF CARRIER LIABILITY-IT IS NOT INSURANCE

 

 

You must select, in your own handwriting, one of the following two options for your shipment. The option you select establishes your mover’s maximum liability for your goods, subject to the rules contained in your mover’s tariff.

OPTION 1: Full (Replacement) Value Protection. If any article is lost, destroyed or damaged while in your mover’s custody, your mover will either (1) repair the article to the extent necessary to restore it to the same condition as when it was received by your mover, or pay you for the cost of such repairs; or if not repairable, (2) replace the article with an article of like kind and quality, or pay you for the cost of such a replacement.

 

(Emphasis in original).

 

Notwithstanding the clear language in the Bill of Lading indicating that this provision “establishes your mover’s maximum liability for your goods” and that “IT IS NOT INSURANCE,” plaintiff argues that defendants failed to procure insurance coverage for which plaintiff paid. Nevertheless, this issue has been decided by several courts, none of which permitted such a claim to coexist alongside the Carmack Amendment. In Orlick, the Court stated that “the claims of fraud as to the bill of lading [and] any claim that may arise from Plaintiffs’ extra protection plan … should be considered under the Carmack Amendment.” Orlick, 144 F.Supp.2d at 345; see also Cleveland v. Beltman North American Co., Inc., 30 F.3d 373 (2d Cir.1994); Pierre v. UPS, Inc., 774 F.Supp. 1149 (N.D.Ill.1991). Plaintiff has cited to no case holding otherwise.

 

In light of the overwhelming case law, it is clear that the claims set forth by plaintiff are preempted by the Carmack Amendment.

 

 

III.

 

The relief requested in defendants’ motion is not a dismissal with prejudice, but rather a dismissal without prejudice allowing plaintiff the opportunity to replead the Carmack Amendment. Defendants, however, seek dismissal with prejudice as to DVM who acted solely as Wheaton’s household goods booking and origin agent with respect to the interstate shipment of plaintiff’s goods. Defendants cite to several cases that stand for the proposition that where the agency relationship between a carrier and its agent is disclosed to the shipper, the agent has no direct or independent liability to the consignor and is not a party to the bill of laden contract. Valkenburg, K.-G. v. The Henry Denny, 295 F.2d 330, 333 (7th Cir.1961) (in signing the bill of lading as agent for the master of a named ship, the agent sufficiently disclosed the identity of the principal for whom it acted, and was therefore not liable); Nichols v. Mayflower Transit, LLC, 2003 WL 21981994,(D.Nev.2003).

 

The language relied upon by defendants stems from basic agency principles recognized in the Third Circuit.

Generally, of course, an agent of a disclosed principal, even one who negotiates and signs a contract for her principal, does not become a party to the contract. Moreover, under traditional agency principles, the only other way we understand that an agent can be bound by the terms of a contract is if she is made a party to the contract by her principal acting on her behalf with actual, implied, or apparent authority.

 

Bel-Ray Co., Inc. v. Chemrite (Pty) Ltd., 181 F.3d 435, 445 (3d 1999) (internal citations omitted).

 

Moreover, 49 U.S.C. §  13907 specifically provides that the carrier is the party responsible for the acts of the agent

Each motor carrier providing transportation of household goods shall be responsible for all acts or omissions of any of its agents which relate to the performance of household goods transportation services (including accessorial or terminal services) and which are within the actual or apparent authority of the agent from the carrier or which are ratified by the carrier.

 

See also Werner v. Lawrence Transp. Sys., Inc., 30 F.3d 373, 568-69 (E.D.N.C.1998) (“Not only does the statutory language impose liability on a motor carrier for the acts and omissions of the carrier’s agent, but case law holds that the agent of a disclosed principal cannot be held liable pursuant to a duly issued bill of lading contract.”).

 

Plaintiff’s opposition offers nothing to rebut defendants’ contentions. The case law appears clear that dismissal of DVM is appropriate.

 

 

IV.

 

Plaintiff’s Complaint is dismissed with prejudice as to DVM, but without prejudice as to Wheaton with leave to replead under the Carmack Amendment within 20 days.

United States District Court,E.D. Pennsylvania.

KOENIG ENGINEERING, INC. and State Farm Insurance Company

v.

CENTRAL TRANSPORT INTERNATIONAL, INC.

May 2, 2007.

 

 

 

DECISION

JOYNER, J.

In July, 2005, Plaintiff Koenig Engineering, Inc. commenced this action in the Court of Common Pleas of Chester County under the Carmack Amendment, 49 U.S.C. §  14706, to recover the value of two destroyed torque converters. The case was thereafter timely removed to this Court and heard by a Board of Arbitrators. Following appeal from the arbitrators’ decision and joinder of State Farm Insurance Company as a party plaintiff, a non-jury trial was held before the undersigned on October 10, 2006. At this time, the matter is ripe for disposition and we now make the following:

 

 

Findings of Fact

 

1. Plaintiff Koenig Engineering, Inc. (“Koenig”) is a Pennsylvania corporation with its principal place of business located at 410 Eagleview Boulevard, Suite 104, Exton, Pennsylvania.

 

2. Defendant Central Transport International, Inc. (“CTI”) is a corporation organized and existing in accordance with the laws of Michigan with a principal place of business located at 1225 Stephens Road, Warren, Michigan.

 

3. Intervenor-Plaintiff State Farm Insurance Company is an Illinois corporation with a principal place of business located at One State Farm Plaza, Bloomington, Illinois.

 

4. On January 22, 2004, Koenig purchased two torque converters from Twin Disc, Inc. of Racine, Wisconsin for $29,672.77 each.

 

5. Koenig retained TBB Global Logistics, Inc. (“TBB”) as its agent for the purpose of arranging the transport of the two torque converters which it purchased from Twin Disc, Inc. to an entity known as L.B. Smith in Camp Hill, Pennsylvania. TBB is a third party logistics company which acts as an independent shipping and transportation broker arranging for transportation of cargo and freight on behalf of its customers. Typically it is TBB, as the agent of the customer, that is listed on the bill of lading.

 

6. TBB then contacted CTI to arrange for the transport of the two torque converters by motor carrier from Racine, Wisconsin to Camp Hill, Pennsylvania.

 

7. At all times relevant to this case, TBB and CTI were parties to and acting in accordance with a Motor Transportation Contract dated June 15, 2003. Paragraph 8 of that Contract provides in relevant part that CTI, the Trucker,

“shall be liable to either TBB or the customer or the beneficial owner for the full actual loss or injury to freight occurring while in the possession of or under the control of Trucker in accordance with Section 14706 of the Act. Unless specifically provided for in this Contract, Trucker shall not have the right to limit its liability. All liability standards and burdens of proof are governed by the common law applicable to carriers classified as “common carriers.” Notwithstanding the above, maximum liability shall be $25.00 per pound per package, subject to a maximum liability of $150,000 per occurrence.

 

 

8. Paragraph 9 of the Motor Transportation Contract provides still further:

Trucker’s liability begins when it signs a bill of lading or receipt and there is nothing further for TBB or its customer to do in tendering the freight to Trucker. Trucker’s common carrier liability shall end when it receives a signed delivery receipt from the proper named consignee and nothing remains to be done by Trucker to deliver the shipment to the consignee. When a shipment is refused by the consignee, or Trucker is unable to deliver it for any reason, Trucker’s liability as a warehouseman shall not begin until Trucker has placed the shipment in a public warehouse or in its terminal or storage facility under reasonable security, and TBB or its customer have been notified in writing of such placement and such notification has been received by TBB and or its customer.

 

 

9. CTI picked up the torque converters on the day of the sale. Despite the standard, pre-printed language of the bill of lading which provides that “[t]he property described below [is] in apparent good order, except as noted …,” there is nothing noted anywhere on the bill of lading which reflects any damages to or other deficiencies in the torque converters at the time that CTI took possession of them.

 

10. On January 29, 2004, a fire occurred at CTI’s transport terminal facility, located in Harrisburg, Pennsylvania.

 

11. The torque converters, which were present in CTI’s Harrisburg facility at the time of the January 29, 2004 fire were so severely damaged that they had no salvage value.

 

12. On February 2, 2004, Koenig filed a claim with CTI for the loss of the torque converters in the amount of $59,345.54, which Koenig represents is the value of the damaged property.

 

13. On April 19, 2004, CTI approved Koenig’s claim in the full amount, but subsequently determined that it was entitled to credit the amount of Koenig’s claim against monies owed to it by TBB. In making this determination, CTI did not know whether any of the monies owed to it by TBB were attributable to freight bills and/or transportation services for Koenig.

 

14. CTI has produced no documents which evince that it ever gave a credit to the TBB account or otherwise reduced the amount which it claims TBB is indebted to it in the amount of Koenig’s claim.

 

15. Due to the fire which occurred at CTI’s Harrisburg, PA facility, CTI is unable to return the torque converters to Koenig or to TBB in the condition in which it received them.

 

16. To date, CTI has yet to pay the sum claimed to Koenig, despite Koenig’s repeated requests therefor.

 

17. State Farm Insurance Company has paid Koenig $15,000 for some of the damages to the torque converters pursuant to a policy of insurance between them.

 

 

Discussion

 

As noted above, the plaintiff brought suit under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. §  14706, which provides for liability of common carriers for damage to or loss of goods during shipment. See, S & H Hardware & Supply Co. v. Yellow Transportation, Inc., 432 F.3d 550, 554 (3d Cir.2005), citing 49 U.S.C. §  14706(a). Indeed, the Carmack Amendment provides the exclusive remedy for damages and/or loss of such goods transported by interstate common carrier and/or freight forwarder. Phoenix Assurance Co. v. K Mart Corp., 977 F.Supp. 319, 324 (D.N.J.1997); Mesta v. Allied Van Lines, 695 F.Supp. 63 (D.Mass.1988). Specifically, Section 14706(a) states in relevant part:

 

 

Under 49 U.S.C. §  14706(a)(2),

“[a] freight forwarder is both the receiving and delivering carrier. When a freight forwarder provides service and uses a motor carrier providing transportation subject to jurisdiction under subchapter I of chapter 135 to receive property from a consignor, the motor carrier may execute the bill of lading or shipping receipt for the freight forwarder with its consent. With the consent of the freight forwarder, a motor carrier may deliver property for a freight forwarder on the freight forwarder’s bill of lading, freight bill, or shipping receipt to the consignee named in it, and receipt for the property may be made on the freight forwarder’s delivery receipt.

See Also, Accu-Spec Electronic Services, Inc. v. Central Transport International, 391 F.Supp.2d 367, 370 (W.D.Pa.2005).

 

(1) Motor carriers and freight forwarders.-A carrier providing transportation or service subject to jurisdiction … shall issue a receipt or bill of lading for property it receives for transportation under this part. That carrier and any other carrier that delivers the property and is providing transportation or service … are liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) another carrier over whose line or route the property is transported in the United States or from a place in the United States to a place in an adjacent foreign country when transported under a through bill of lading and, except in the case of a freight forwarder, applies to property reconsigned or diverted under a tariff under section 13702. Failure to issue a receipt or bill of lading does not affect the liability of a carrier. 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.

 

To establish a prima facie case against a carrier under the Carmack Amendment, a shipper must prove (1) delivery of goods to the initial carrier in good condition, (2) damage of the goods before delivery to their final destination, and (3) amount of the damages. Paper Magic Group v. J.B. Hunt Transport, Inc., 318 F.3d 458, 461 (3d Cir.2003); Hams Express, Inc. v. Joseph Land & Co., 506 F.Supp. 209, 214 (E.D.Pa.1980). The burden then shifts to the carrier to prove it was not negligent and the damage was caused entirely by “act of God, the public enemy, the act of the shipper itself, public authority or the inherent vice or nature of the goods.” Paper Magic, supra, quoting Beta Spawn, Inc. v. FFE Transportation Services, Inc., 250 F.3d 218, 223 (3d Cir.2001). Where the goods are open and visible to the carrier, a plaintiff can rely solely on a bill of lading to establish the contents of the container. Mallory v. United Van Lines, Inc., Civ. A. No. 02-CV-7800, 2004 U.S. Dist. LEXIS 7237 at *4(E.D.Pa. April 6, 2004). Where the goods are not visible for inspection, a clean bill of lading is not sufficient evidence; instead, the plaintiff must present additional evidence, either direct or circumstantial, in order to establish the initial contents and condition of the cargo. Beta Spawn, 250 F.2d at 224; Diamond Transportation Group, Inc. v. Emerald Logistics Solutions, Inc., Civ. A. No. 05-3828, 2006 U.S. Dist. LEXIS 42918 at (E.D.Pa. June 22, 2006).

 

In this case and as the Defendant acknowledges, the plaintiff has clearly demonstrated that the goods were damaged before delivery to their final destination and that the amount of the damages was $59,345.54. However, in reviewing and re-reviewing the evidence and the record in this matter, we find that the only evidence before us on the condition of the torque converters is the standard, pre-printed language on the bill of lading which declares that “[t]he property described below [is] in apparent good order, except as noted …,” Given that there is also absolutely no evidence as to whether the torque converters were open and visible to the carrier, we are forced to conclude that the plaintiff has failed to satisfy its burden of proving a prima facie case under the Carmack Amendment.

 

 

Plaintiff submits that “there was no need to call at trial any witnesses from Twin Disc to testify as to the condition of the Torque Converters when placed on CTI’s truck …,” ostensibly because CTI had at one time approved the claim for payment in the full amount and because it had “never raised the condition of the Torque Converters as a defense in this litigation.” (See, Footnote 1 to Plaintiff’s Proposed Findings of Fact and Conclusions of Law, filed 10/26/06). Plaintiff, however, has cited no authority to support its argument that the failure to raise this argument as an affirmative defense operates to waive it nor has our independent research revealed any such authority. See, e.g., Fed.R.Civ.P. 8, 12(b). Moreover, in reviewing the Defendant’s answer, it is clear that the defendant denied the averment in paragraph 8 of the complaint that “[a]t the time CTI took possession of the Torque Converters, they were in an undamaged condition,” by responding that it lacked “sufficient knowledge, information or belief to admit or deny the allegations contained in this paragraph …,” and accordingly denying “the averments of this paragraph of the Complaint and demand[ing] strict proof at time of trial.” In so doing, we find that CTI clearly placed Koenig on notice that the matter of the condition of the torque converters would be at issue at the trial of this case.

 

Conclusions of Law

 

1. This Court has jurisdiction over the subject matter and the parties to this litigation pursuant to 49 U.S.C. §  14706(d).

 

2. While the Plaintiff has succeeded in demonstrating two of the three elements necessary to making out a cause of action against the Defendant for the loss of the two Torque Converters which it purchased from Twin Disc, Inc. on January 22, 2004, it has failed to make out a prima facie case under the Carmack Amendment by virtue of its failure to provide any evidence that the torque converters were delivered to CTI in good condition.

 

3. Judgment is properly entered in favor of the defendant and against the plaintiff in no amount.

 

An appropriate order follows.

 

 

ORDER

 

AND NOW, this 2nd day of May, 2007, following Non-Jury Trial in this matter on October 10, 2006 and for the reasons set forth above in the preceding Findings of Fact and Conclusions of Law, it is hereby ORDERED that Judgment is hereby entered in favor of the Defendant, Central Transport International, Inc. and against the Plaintiffs Koenig Engineering, Inc. and State Farm Insurance Company on all of the claims set forth in the Plaintiff’s Amended Complaint and State Farm’s Intervenor Complaint in no amount.