November 2022

Scotlynn USA Div., Inc. v. Titan Trans Corp.

United States District Court for the Middle District of Florida, Fort Myers Division

September 26, 2022, Decided; September 26, 2022, Filed

Case No. 2:18-cv-521-JLB-NPM

Reporter

2022 U.S. Dist. LEXIS 173700 *; 2022 WL 4463646

SCOTLYNN USA DIVISION, INC., Plaintiff, v. TITAN TRANS CORPORATION, Defendant.

Prior History: Scotlynn USA Div., Inc. v. Titan Trans Corp., 2022 U.S. Dist. LEXIS 174352 (M.D. Fla., Aug. 25, 2022)

Core Terms

attorney’s fees, costs, preempted, report and recommendation, entitlement, contract claim, cargo, prevailed, indemnification, federal law, fee-shifting, provisions, quotation

Case Summary

Overview

HOLDINGS: [1]-Defendant’s contention that it was entitled to attorney’s fees and costs as to the Carmack Amendment had no merit because plaintiff did not bring the Carmack amendment claim to enforce, or pursuant to the Broker-Carrier Agreement at all but rather it was because it was an assignment of a claim from a third person; [2]-Defendant’s request for attorney’s fees as a prevailing party feel within the preemptive scope of the Federal Aviation Administration Authorization Act of 1994 because plaintiff failed to show evidence regarding his claim and Fla. Stat. § 57.105(7) and defendant’s claim for attorney’s fees was not preempted by the Federal Aviation Administration Authorization Act of 1994.

Outcome

Report and recommendation adopted.

LexisNexis® Headnotes

Civil Procedure > Judicial Officers > Magistrates > Objections

Civil Procedure > Judicial Officers > Magistrates > Standards of Review

Civil Procedure > Judicial Officers > Magistrates > Pretrial Referrals

HN1 Magistrates, Objections

A district judge may accept, reject, or modify a magistrate judge’s report and recommendation. 28 U.S.C.S. § 636(b)(1). When a party makes a timely and specific objection to a report and recommendation, the district judge shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.

Civil Procedure > … > Attorney Fees & Expenses > Basis of Recovery > American Rule

Civil Procedure > … > Attorney Fees & Expenses > Basis of Recovery > Statutory Awards

HN2 Basis of Recovery, American Rule

Under Florida law, a party must bear its own attorneys’ fees unless a contract or statute provides otherwise.

Civil Procedure > … > Attorney Fees & Expenses > Basis of Recovery > Statutory Awards

HN3 Basis of Recovery, Statutory Awards

Florida law is clear that no person can claim fees under Fla. Stat. § 57.105(7) unless that person is a party to the contract that includes the fee provision.

Constitutional Law > Supremacy Clause > Federal Preemption

HN4 Supremacy Clause, Federal Preemption

State laws are preempted when they conflict with federal law. As the Eleventh Circuit has instructed, this includes cases where compliance with both federal and state regulations is not possible and where a state law is an obstacle to the purpose and objective of a federal law. Where Congress has superseded state legislation by statute, a court must identify the domain expressly pre-empted by focusing on the statutory language, which necessarily contains the best evidence of Congress’ preemptive intent. As the Magistrate Judge noted, the Supreme Court has previously held that fee-shifting statutes of general application do not conflict with federal provisions regulating the interstate transportation of goods that remain silent about litigation costs.

Business & Corporate Compliance > … > Transportation Law > Carrier Duties & Liabilities > Rates & Tariffs

Constitutional Law > Supremacy Clause > Federal Preemption

HN5 Common Carrier Duties & Liabilities, Rates & Tariffs

Although that statute’s preemptive scope may be broad, federal law does not pre-empt state laws that affect rates, routes, or services in too tenuous, remote, or peripheral a manner. Further, the state laws whose effect is forbidden under federal law are those with a significant impact on carrier rates, routes, or services.

Civil Procedure > … > Attorney Fees & Expenses > Basis of Recovery > Statutory Awards

HN6 Basis of Recovery, Statutory Awards

Fla. Stat. § 57.105(7) mandates that contractual attorney’s fees provisions be reciprocal obligations. The award of attorneys’ fees under Fla. Stat. § 57.105(7) is mandatory for the prevailing party.

Counsel: [*1] For Scotlynn USA Division, Inc., Plaintiff: Katy Koestner Esquivel, LEAD ATTORNEY, Esquivel Law, Chartered, Naples, FL USA; Michael J. Connick, LEAD ATTORNEY, PRO HAC VICE, Michael J. Connick Co., LPA, Zanesville, OH USA.

For Titan Trans Corporation, Defendant: Kristen Marie Jarvis Johnson, LEAD ATTORNEY, Taylor Johnson PL, Winter Haven, FL USA; Elena Pauline Adang, Quality Carriers, Inc., Tampa, FL USA.

Judges: JOHN L. BADALAMENTI, UNITED STATES DISTRICT JUDGE.

Opinion by: JOHN L. BADALAMENTI

Opinion

ORDER

Following a three-day bench trial, this Court entered Findings of Fact and Conclusions of Law in which it found that Defendant Titan Trans Corporation (“Titan”) was not liable to Plaintiff Scotlynn USA Division, Inc. (“Scotlynn”) for the loss of transported cargo or for indemnification of attorney’s fees and costs. (Doc. 155.) The Magistrate Judge has issued a Report and Recommendation (Doc. 171), recommending that Titan’s subsequent Motion on Entitlement to an Award of Attorney’s Fees and Costs (Doc. 157) be granted. Upon independent review of the record, the Report and Recommendation, and both parties’ timely objections (Doc. 174; Doc. 176), the Court adopts the Report and Recommendation and grants the motion [*2] on entitlement to attorney’s fees and costs as outlined and clarified below.

BACKGROUND

This case’s factual and procedural history was extensively outlined in the Findings of Fact and Conclusions of Law. (See Doc. 155.) In short, pursuant to a Broker-Carrier Agreement between the parties, Titan transported a cargo of meat for Scotlynn’s customer, Cargill Meat Logistics Solutions, Inc. (“Cargill”). (Doc. 147-1 at 7-8, ¶¶ 7, 11; Doc. 147-68.) For various reasons, Cargill rejected that cargo, which was later deemed a loss, and this action ensued. (Doc. 155 at 14-16, 27-28.)

Scotlynn initially sued Titan under the Broker-Carrier Agreement, but the judge previously assigned to this matter held that Scotlynn’s contract claim was preempted by the Carmack Amendment to the Interstate Commerce Act, and Scotlynn elected not to revisit the issue before trial. (Doc. 61 at 11-13; Doc. 1 at ¶¶ 15-16.) Instead, Scotlynn asserted a claim in Count II under the Carmack Amendment as Cargill’s assignee. (Doc. 144 at ¶ 14.) Additionally, in Count I, Scotlynn sought “entry of a judgment against Titan . . . for costs, expenses and attorney fees” based on an indemnification provision in the Broker-Carrier Agreement. (Doc. 62 [*3] at ¶¶ 15-17; Doc. 147-1 at p. 9, ¶ 12(c), p. 10, ¶ 22.)

After a three-day bench trial conducted by the undersigned, the Court found that Scotlynn did not establish a prima facie case under the Carmack Amendment and that, even if it did, Titan had shown that it was free of negligence and the damage to the cargo was caused by shipper error. (Doc. 155 at 43-52.) As to Scotlynn’s claim for attorney’s fees and costs in Count I, building off the prior preemption ruling, the Court concluded that the claim was also preempted. (Id. at 55-57.) The Court alternatively determined that even if the claim was not preempted, indemnification was unwarranted because, among other reasons, Cargill and Scotlynn were not shown to be without fault in the loss of the cargo and the Broker-Carrier Agreement did not express an intent in clear and unequivocal terms for indemnification to apply in these circumstances. (Id. at 57-58.)

In that order, the Court noted that “[t]he issue of whether Titan is entitled to attorney’s fees and costs is not before this Court” and that “[a]ny such request must comply with [this Court’s] Local Rules.” (Id. at 58 n.44.) Pursuant to Local Rule 7.01(b) and Fla. Stat. § 57.105(7), Titan now moves for entitlement to attorney’s fees and [*4] costs. (Doc. 157.) The Magistrate Judge has entered a Report and Recommendation, finding that Titan is “entitled to its fees for defeating the contract claims on preemption grounds,” but not the claim under the Carmack Amendment. (Doc. 171 at 5.)

In so finding, the Magistrate Judge first determined that section 57.105(7) was “enforceable” and not “displaced” by the Carmack Amendment or Federal Aviation Administration Authorization Act of 1994 (“FAAAA”). (Id. at 3-4.) The Magistrate Judge next found there was no dispute that a contract was formed, that the Broker-Carrier Agreement contained a fee-shifting provision, or that Titan prevailed “with respect to the contract.” (Id. at 4.) The Magistrate Judge concluded that “[h]ad Scotlynn prevailed on its contract claim, Scotlynn would have been entitled to its related fees and costs,” and that therefore Titan was entitled to the same under the reciprocal fee-shifting rights. (Id. at 5.) The Magistrate Judge reasoned, however, that “it appears from the court’s trial ruling that Scotlynn would not have been entitled to attorney’s fees even if it had prevailed on its Carmack claim,” and thus Titan “is not entitled to any prevailing-party fee award for litigating the Carmack Amendment claim.” (Id. at 5-6 (emphasis added).) Both parties have filed objections, and this [*5] matter is extensively briefed. (Doc. 174; Doc. 176; see also Doc. 157; Doc. 165; Doc. 169; Doc. 170.)¹

STANDARD OF REVIEW

HN1 A district judge may accept, reject, or modify a magistrate judge’s report and recommendation. 28 U.S.C. § 636(b)(1). When a party makes a timely and specific objection to a report and recommendation, the district judge “shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.” Id.

DISCUSSION

As noted, Scotlynn and Titan each raise various objections to the Magistrate Judge’s Report and Recommendation. Upon review, neither party’s objections are persuasive. The Court will begin with Titan’s objections.

Titan’s First Objection: Titan’s entitlement to attorneys’ fees and costs on Count I should not be limited to “preemption grounds.”

Titan raises two related objections. It first argues that its entitlement to fees and costs should not be limited to “defeating the contract claims on preemption grounds” because, as pleaded and set forth at trial, the “indemnity claim [was] wholly dependent upon a finding that Titan was responsible for damage to the cargo and that Titan failed to indemnify Scotlynn [*6] for the damage as required under [the Broker-Carrier Agreement].” (Doc. 174 at 4-7.) To the extent Titan argues it is entitled to attorney’s fees and costs as to the Carmack Amendment claim, its contention is unpersuasive.

HN2 Under Florida law, a party must bear “its own attorneys’ fees unless a contract or statute provides otherwise.” Price v. Tyler, 890 So. 2d 246, 250 (Fla. 2004) (quotation omitted). Section 57.105(7), Florida Statutes provides as follows:

If a contract contains a provision allowing attorney’s fees to a party when he or she is required to take any action to enforce the contract, the court may also allow reasonable attorney’s fees to the other party when that party prevails in any action, whether as plaintiff or defendant, with respect to the contract.

Fla. Stat. § 57.105(7). The fee-shifting provision in the Broker-Carrier Agreement provides that Titan:

shall pay all costs, expenses and attorney fees which may be expended or incurred by [Scotlynn] in enforcing this Agreement or any provision thereof . . . or in exercising any right or remedy of [Scotlynn] against [Titan], or in any litigation incurred by [Scotlynn] because of any act or omission of [Titan] under this Agreement.

(Doc. 147-1 at 10, ¶ 22.)

As noted, the judge previously assigned to this matter granted Titan’s motion for summary [*7] judgment, finding that Count I for indemnification based on the damage to the cargo was preempted by the Carmack Amendment. (Doc. 61 at 11-13.) That order, however, granted Scotlynn leave to amend its pleading to “limit the recovery sought to attorney’s fees and costs in accordance with Paragraphs 12 and 22 of the Agreement” and UPS Supply Chain Solutions, Inc. v. Megatrux Transportation, Inc., 750 F.3d 1282 (11th Cir. 2014). (Doc. 61 at 12.) Consistent with that order, in Count I of its second amended complaint Scotlynn sought “entry of a judgment against Titan . . . for costs, expenses and attorney fees,” relying again on the Broker-Carrier Agreement. (Doc. 62 at ¶¶ 15-17.)

In rejecting the claim following trial, the Court first found that the claim was also preempted because Scotlynn failed to establish separate and distinct conduct to support its claim for attorney’s fees and costs. (Doc. 155 at 56); see UPS Supply Chain Sols., Inc., 750 F.3d at 1284-85. The Court alternatively found that Scotlynn had failed to establish that Scotlynn (or Cargill) was without fault in the loss of the cargo, that neither faced liability founded on Titan’s liability, and that the text of the Broker-Carrier Agreement did not express an intent in clear and unequivocal terms for indemnificiation to apply in these circumstances. (Doc. 155 at 57-58.)

The Magistrate [*8] Judge concluded that, unlike with the preempted contract claims,² even if Scotlynn had prevailed on its claim under the Carmack Amendment it would not have been entitled to attorney’s fees under the Broker-Carrier Agreement. (Doc. 171 at 5.) Indeed, attorney’s fees and costs were unavailable to Scotlynn on the Carmack Amendment claim for several reasons. And as the Magistrate Judge observed, Titan did not previously view the “act of litigating the loss as conduct separate and distinct from the loss itself, but now it does.” (Doc. 171 at 5 n.5; see Doc. 138.)

It is also worth noting that, despite some overlap between the two counts, Scotlynn did not bring the Carmack Amendment claim to enforce, or pursuant to, the Broker-Carrier Agreement at all, but rather via an assignment of the claim from Cargill. (Doc. 155 at 41-42, 58; Doc. 144 ¶ 14; Doc. 147-87.) Cargill, of course, was not a party to the agreement between Scotlynn and Titan and would not have been entitled to attorney’s fees. See Azalea Trace, Inc. v. Matos, 249 So. 3d 699, 702 (Fla. 4th DCA 2018) (“HN3[] Florida law is clear that no person can claim fees under section 57.105(7) unless that person is a ‘party’ to the contract that includes the fee provision.”). It is thus not clear how the fee-shifting provision in the agreement between Scotlynn and Titan, made reciprocal [*9] by Fla. Stat. § 57.105(7), would entitle Scotlynn to attorney’s fees and costs on the Carmack Amendment claim. Cf. Inland Dredging Co. v. Panama City Port Auth., 406 F. Supp. 2d 1277, 1283 (N.D. Fla. 2005) (“Under § 57.105(7), plaintiff gets what it gave: the ability to recover fees in litigation arising under these contractual provisions. But the case at bar did not arise under or relate in any way to these contractual provisions.”); Int’l Fid. Ins. Co. v. Americaribe-Moriarty JV, 906 F.3d 1329, 1338 (11th Cir. 2018) (“Because the general indemnity provision of the subcontract would not allow Americaribe to recover attorney’s fees in an action against CPM to enforce the subcontract, that provision is not a unilateral contract provision for attorney’s fees and thus does not come within the scope of Fla. Stat. § 57.105(7).”).³

In all events, Titan has not shown that the Magistrate Judge erred in limiting Titan’s entitlement of attorney’s fees and costs to the defense of Scotlynn’s contract claims and not the Carmack Amendment claim.⁴

Titan’s Second Objection: Titan is entitled to attorneys’ fees and costs on the Carmack Amendment count because the Court explicitly found that the basis of the Carmack Amendment count was “the same” as the indemnity count.

Similar to its first objection, Titan next argues it is entitled to attorney’s fees and costs on the Carmack Amendment count because its underlying basis was the “same” as the indemnification count. (Doc. 174 at 7-10.) This contention is likewise [*10] unpersuasive.

First, as explained, the Magistrate Judge noted that even if Scotlynn had prevailed on its claim under the Carmack Amendment, Scotlynn would not have been entitled to attorney’s fees and costs. For the same reasons, Titan is not entitled to attorney’s fees and costs on the Carmack Amendment claim, despite any overlap in Scotlynn’s various claims.

Next, Titan relies on several cases for the proposition that, where “‘a party is entitled to an award of fees for only some of the claims involved in the litigation, . . . the trial court must evaluate the relationship between the claims’ to determine the scope of the fee award.” (Doc. 174 at 8 (quoting Durden v. Citicorp Tr. Bank, FSB, 763 F. Supp. 2d 1299, 1306-07 (M.D. Fla. 2011)). These cases, however, relate to the question of the scope of a fee award, not whether a party is entitled to attorney’s fees and costs on a certain claim. See e.g., Palm Beach Polo, Inc. v. Vill. of Wellington, No. 19-cv-80435, 2021 WL 5024550, at *6 (S.D. Fla. Oct. 13, 2021), adopted, 2021 WL 5013748 (S.D. Fla. Oct. 28, 2021); see also Yellow Pages Photos, Inc. v. Ziplocal, LP, 846 F.3d 1159, 1164 n.3 (11th Cir. 2017). In fact, Titan appears to concede as much. (See Doc. 174 at 4 n.1 (acknowledging that “[t]his argument is, perhaps, better raised as part of the Local Rule 7.01(c) supplemental motion on the amount of attorneys’ fees and costs to be awarded”).) Accordingly, although this objection is not a basis to reject or modify the Report and Recommendation, Titan may reraise the issue in its supplemental [*11] motion on amount, consistent with M.D. Fla. Local Rule 7.01(c).

Scotlynn’s First Objection: Federal law preempts Titan’s claim for attorneys’ fees.

The Court now turns to Scotlynn’s objections. Scotlynn first objects to the Magistrate Judge’s finding that “Titan’s attorneys’ fee claim was not preempted” by the FAAAA and the Carmack Amendment. (Doc. 176 at 3-7.) This objection is unpersuasive.⁵

HN4 “State laws are preempted when they conflict with federal law.” UPS Supply Chain Solutions, Inc., 750 F.3d at 1289. As the Eleventh Circuit has instructed, this includes cases where compliance with both federal and state regulations is not possible and where a state law is an obstacle to the purpose and objective of a federal law. Id. Where Congress has “superseded state legislation by statute,” a court must “identify the domain expressly pre-empted” by focusing “on the statutory language, which necessarily contains the best evidence of Congress’ preemptive intent.” Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 260, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013) (quotations omitted). As the Magistrate Judge noted, the Supreme Court has previously held that fee-shifting statutes of general application do not conflict with federal provisions regulating the interstate transportation of goods that remain silent about litigation costs. See Missouri, K. & T. Ry. Co. of Tex. v. Harris, 234 U.S. 412, 422, 34 S. Ct. 790, 58 L. Ed. 1377 (1914); [*12] see also UPS Supply Chain Solutions, Inc., 750 F.3d at 1291 n.9.

As to the FAAAA, Scotlynn has failed to show how Titan’s request for attorney’s fees as a prevailing party on Scotlynn’s contract claims falls within the preemptive scope of the FAAAA. HN5 Although that statute’s preemptive scope may be broad, “federal law does not pre-empt state laws that affect rates, routes, or services in too tenuous, remote, or peripheral a manner.” Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 375, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008) (quotation omitted). Further, “the state laws whose effect is forbidden under federal law are those with a significant impact on carrier rates, routes, or services.” Id. (quotation omitted). Here, the state statute allowing for Titan’s fee entitlement is not “related to a price, route, or service” of a motor carrier or broker “with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). In short, section 57.105(7) and Titan’s claim for attorney’s fees are not preempted by the FAAAA.

Second, as to the Carmack Amendment, again, there is no conflict between the relevant provisions and section 57.105(7).⁶ See e.g., UPS Supply Chain Sols., Inc., 750 F.3d at 1291. Indeed, as noted above, Titan is entitled to remuneration for an unsuccessful lawsuit brought by Scotlynn pursuant to the Broker-Carrier Agreement, not for a loss of cargo. In summary, the Magistrate Judge did not err in finding that the FAAAA and Carmack Amendment [*13] do not preempt section 57.105(7) or Titan’s claim for entitlement to attorney’s fees and costs on the contract claims.

Scotlynn’s Second Objection: An award of fees under section 57.105(7) is discretionary.

Lastly, Scotlynn objects to the Magistrate Judge’s finding that an award of attorney’s fees and costs under section 57.105(7) is mandatory, not discretionary. (Doc. 174 at 15-18.) This final contention is not persuasive.

HN6 As the Magistrate Judge noted, despite the statute’s use of the word “may” rather than “must,” both Florida courts and the Eleventh Circuit have consistently held that section 57.105(7) “mandates that contractual attorney’s fees provisions be reciprocal obligations.” Landry v. Countrywide Home Loans, Inc., 731 So. 2d 137, 140 (Fla. 1st DCA 1999) (quotation omitted); see also Sequoia Fin. Sols., Inc. v. Warren, 660 F. App’x 725, 728 (11th Cir. 2016) (“The award of attorneys’ fees under § 57.105(7) is mandatory for the prevailing party.”). And as the Magistrate Judge observed, the Broker-Carrier Agreement provides that litigation fees “shall” be shifted, and section 57.105(7) renders that provision reciprocal. (Doc. 147-1 at 10, ¶ 22.) Accordingly, Scotlynn has not shown that the Magistrate Judge erred on this point.⁷

CONCLUSION

After an independent review of the record, it is ORDERED:

1. The parties’ objections to the Magistrate Judge’s Report and Recommendation (Doc. 174; Doc. 176) are OVERRULED.

2. The Report [*14] and Recommendation (Doc. 171) is ADOPTED and made part of this Order as outlined above.

3. Defendant’s Motion on Entitlement to an Award of Attorney’s Fees and Costs (Doc. 157) is GRANTED to the extent that Defendant is entitled to an award of attorney’s fees and nontaxable expenses for defending against Plaintiff’s contract claims, obtaining its fee-and-expense award, and taxing its costs.

4. Within forty-five days of this Order, consistent with the above and M.D. Fla. Local Rule 7.01, Defendant is DIRECTED to file a supplemental motion on the amount of attorney’s fees and costs it seeks.

ORDERED in Fort Myers, Florida, on September 26, 2022.

/s/ John L. Badalamenti

JOHN L. BADALAMENTI

United States District Judge

End of Document

¹In light of this, and the nature of the instant motion, it is unnecessary to await Titan’s potential response to Scotlynn’s objections to rule on this matter. (See Doc. 176.) Should a response be filed and any part of this order merit modification because of such, the Court would sua sponte address anything of note in a subsequent order. Meanwhile, the deadline for Scotlynn to file a response to Titan’s objections has expired. (See Doc. 174.)

²It is undisputable that Scotlynn pursued the contract claims to “enforce” the Broker-Carrier Agreement or to “exercis[e] any right or remedy” thereunder, and the claims thus fall squarely within the ambit of the fee-shifting provision. (Doc. 147-1 at 10, ¶ 22.) It is also clear that Titan “successfully defended against an action to enforce the contract.” Ghent v. HSBC Mortg. Servs., Inc., 323 So. 3d 758, 760 (Fla. 4th DCA 2021) (quotation omitted); Page v. Deutsche Bank Tr. Co. Americas, 308 So. 3d 953, 959 (Fla. 2020). Further, neither party challenges the Magistrate Judge’s application of David v. Richman, 568 So. 2d 922, 924 (Fla. 1990), in which the Supreme Court of Florida noted that “when litigation ensues in connection with a validly formed contract, attorney’s fees may be recovered under a prevailing-party provision of the contract even though the contract has been rescinded or held to be unenforceable.” (Doc. 171 at 5.)

³The Broker-Carrier Agreement’s fee-shifting provision did ostensibly provide for expenses “expended or incurred by . . . [Scotlynn’s] Customers in enforcing this Agreement,” or in “exercising any right or remedy of . . . [Scotlynn’s] Customers against [Titan].” (Doc. 147-1 at 10, ¶ 22.) However, no party explains how this language—or even the assignment—affects Titan’s entitlement to attorney’s fees and costs.

⁴The parties read too much into the Report and Recommendation’s apparent limitation of Titan’s recovery to defeating the contract claims on specifically “preemption grounds.” (See Doc. 173 at 3; Doc. 176 at 19; Doc. 171 at 5, 8.) Titan’s entitlement extends to fees and costs related to defending the contract claims, which includes the successful grounds of preemption. Any related issues may be raised in Titan’s supplemental motion.

⁵Scotlynn notes that “to the extent this Court disagrees with Scotlynn’s objection set forth above, Scotlynn has no objection to the remainder of the Report.” (Doc. 176 at 18.) In this vein, Scotlynn alternatively agrees that the Magistrate Judge “was correct in finding that ‘Titan [is] entitled to a limited fee-and-expense award,’ ‘[t]he court should find Titan entitled to its fees for defeating the contract claims on preemption grounds,’ and ‘that Titan — like Scotlynn — is not entitled to any prevailing-party fee award for litigating the Carmack Amendment claim.'” (Id. at 19 (citations omitted).)

⁶As the Magistrate Judge noted, an inapplicable provision of the Carmack Amendment provides for attorney’s fees in the context of the shipment of household goods. See 49 U.S.C. §§ 14708(d), (e).

⁷In all events, even assuming the award is discretionary, the Court deems it warranted as to the contract claims here.

Nicholas Meat, LLC v. Pittsburgh Logistics Sys.

Superior Court of Pennsylvania

October 4, 2022, Decided; October 4, 2022, Filed

No. 1398 WDA 2021

Reporter

2022 Pa. Super. Unpub. LEXIS 2350 *; 2022 WL 4904418

NICHOLAS MEAT, LLC v. PITTSBURGH LOGISTICS SYSTEMS, INC., D/B/A PLS LOGISTICS SERVICES, Appellant

Notice: NON-PRECEDENTIAL DECISION — SEE SUPERIOR COURT I.O.P. 65.37

Prior History: [*1] Appeal from the Judgment Entered October 28, 2021. In the Court of Common Pleas of Butler County Civil Division at No(s): 2017-10872.

Meat v. Pittsburgh Logistics Sys., 2021 Pa. Dist. & Cnty. Dec. LEXIS 4374 (Oct. 27, 2021)

Core Terms

carrier, broker, preempted, cargo, terms, Load, trial court, breach of contract claim, transportation, insurance certificate, Trucking, shipper, motor carrier, contractual, liability insurance, summary judgment, breached, shipment, federal law, state law, Memorandum, arrange, damages, freight, summary judgment motion, parties’ agreement, district court, third-party, preemption, quotation

Judges: BEFORE: McLAUGHLIN, J., McCAFFERY, J., and PELLEGRINI, J.^* MEMORANDUM BY McCAFFERY, J.

Opinion by: McCAFFERY

Opinion

MEMORANDUM BY McCAFFERY, J.:

Pittsburgh Logistics Systems, Inc., d/b/a PLS Logistics Services (PLS) appeals from the judgment entered in the Butler County Court of Common Pleas after the trial court granted summary judgment in favor of Nicholas Meat, LLC (Nicholas Meat) in this breach of contract action. On appeal, PLS argues the trial court erred by granting relief based upon contractual terms that were not part of the parties’ agreement, and by concluding Nicholas Meat’s claim was not preempted by federal law. For the reasons below, we affirm.

The relevant facts underlying this breach of contract action are aptly summarized by the trial court as follows:

This action arises out of a freight-brokerage relationship between Plaintiff, [Nicholas Meat,] and Defendant, [PLS]. PLS is a freight broker that serves as an intermediary between shippers that need to transport goods and motor carriers with the capacity to move goods.¹

In or around May 2015, Nicholas Meat and PLS [*2] began discussing the formation of a business relationship for PLS to arrange the shipment of Nicholas Meat’s products on a transactional basis. To facilitate the formation of a business relationship, Nicholas Meat filled out the PLS Commercial Credit Application and executed the PLS Credit Application & Setup Form. Item 8 of the Terms and Conditions on the PLS Credit Application & Setup Form stated:

[Nicholas Meat] understands motor carriers under contract with PLS are required to maintain cargo loss and damage liability insurance in the amount of $100,000.00 per shipment. Load[s] valued in excess of $100,000.00 will not be tendered without advanced written notification to allow PLS and the contracted carrier the opportunity to arrange for increased insurance limits. Failure to provide written notice will result in your loads not being insured to the extent the value exceeds $100,000.00.

Additionally, PLS completed Nicholas Meat’s New Carrier Information Form. PLS also provided to Nicholas Meat a Certificate of Insurance reflecting PLS’s insurance coverages. PLS’s Certificate of Insurance listed contingent cargo liability coverage of $250,000 per occurrence. Nicholas Meat approved PLS [*3] as a freight broker and proceeded to hire PLS to arrange shipments of Nicholas Meat goods on a transactional basis beginning in June 2015.

Before awarding shipments to a carrier, PLS collects certain information from the carrier and requires the carrier to agree to certain terms and conditions, a process known as carrier onboarding. At PLS, in 2015, carrier onboarding was handled by PLS carrier management personnel located in Ukraine. PLS required carriers to complete and submit a “Carrier Setup Packet,” which in part included forms setting forth the carrier’s contact information, accounts payable information, and equipment information. PLS’s carrier management personnel did not routinely verify the contact information provided by a prospective carrier. In addition to the Carrier Information Packet, PLS also required prospective carriers to submit other documents, including a Certificate of Insurance, government-issued motor carrier permit, W-9 form, and cab card. PLS’s carrier management personnel reviewed each certificate of insurance provided by prospective carriers to ensure that the limits of insurance coverage were correct and to make sure there were no other exceptions on the [*4] insurance certificate. PLS carrier management personnel did not routinely contact the insurance agent or broker listed on a prospective carrier’s Certificate of Insurance. Once a prospective carrier was approved by PLS, the carrier would gain access to PLS Pro, PLS’s electronic transportation management system. Once a carrier was made active in PLS Pro, the carrier could view upcoming shipments and could be selected to transport shipments for PLS’s shipper-customers, without additional vetting.

On October 27, 2015, a person or entity holding itself out as GA Trucking (the “Carrier”) submitted its Carrier Setup Packet and related documents, including a certificate of insurance to PLS. PLS did not verify that the Carrier’s contact information or certificate of insurance was legitimate. In November 2015, PLS awarded a shipment to the Carrier for another customer.

In November 2015, Nicholas Meat asked PLS to arrange to ship two loads of boneless beef trimmings from Nicholas Meat’s facility in Loganton, Pennsylvania on November 21, 2015 for delivery to Cargill Meat Solutions in Milwaukee, Wisconsin on November 23, 2015 (the “Cargill Load”). The Cargill Load consisted of two separate loads [*5] for which Nicholas Meat was to be paid $53,353.33 and $54,846.77 upon delivery to its customer, Meyer Natural Foods. At a total value of $108,200.10, Nicholas Meat required the carrier of the Cargill Load to have $150,000.00 in cargo liability insurance coverage. The shipment arrangements made between PLS and Nicholas Meat regarding the Cargill Load are documented, in part, through email between the parties and evidenced by PLS’s Award Confirmation.

The Cargill Load was not delivered to its destination, and it was discovered that the GA Trucking’s identity had been stolen. The truck used to pick up the Cargill Load was found abandoned and empty on November 24, 2015. The contents of the Cargill Load were never found. It was determined that the Certificate of Insurance presented to PLS by the Carrier (purporting to be GA Trucking) contained a fabricated insurance agent with a non-existent email address and the phone number of a random, unrelated residence. The insurance policy reflected on the Carrier’s Certificate of Insurance did not exist. The real GA Trucking did not carry cargo insurance.

Trial Ct. Memorandum Op., 10/27/21, at 5-7 (emphases added).

In October of 2016, Nicholas Meat filed a civil action against PLS in Clinton County, Pennsylvania. The lawsuit was subsequently transferred to Butler County. On November 26, 2019, Nicholas Meat filed a first amended complaint asserting claims for breach of contract, promissory estoppel, negligence, negligent misrepresentation, and vicarious liability. With regard to its breach of contract claim, Nicholas Meat asserted that, pursuant to the “Terms and Conditions” of their agreement, “motor carriers under contract with PLS were required to maintain cargo loss and damage liability insurance in the amount of $100,000.00[,]” or more if Nicholas Meat provided the requisite advance notification. Nicholas Meat’s First Amended Complaint, 11/26/19, at 28-29; see also id. at Exhibit 1, PLS Credit Application & Setup Form, 5/27/15, Terms & Conditions (PLS Terms & Conditions) at ¶ 8. Nicholas Meat provided the requisite advance notification [*7] with respect to the Cargill Load, which required the carrier to have $150,000.00 in insurance. See Nicholas Meat’s First Amended Complaint at 29. However, “PLS breached its own Terms and Conditions . . . because it did not in fact require that the Carrier selected to transport the Cargill Load maintain the necessary cargo loss and damage liability insurance.” Id. Further, Nicholas Meat asserted that as a result of PLS’s breach, it incurred “significant damages[.]” Id.

PLS filed preliminary objections in December of 2019, followed by amended preliminary objections in March of 2020. Relevant herein, it asserted, inter alia, that Nicholas Meat’s claims were preempted by federal law, in particular the Carmack Amendment² to the Interstate Commerce Act.³ See PLS’s Amended Preliminary Objections, 3/18/20, at 5-7. On July 13, 2020, the trial court overruled PLS’s federal preemption preliminary objection.⁴ Order, 7/13/20, at 1 (unpaginated).

On September 11, 2020, Nicholas Meat filed a motion for summary judgment. It argued that PLS breached the terms of Item 8 in the parties’ agreement by failing to ensure the motor carrier it hired “‘maintain[ed]’ adequate and legitimate cargo liability [*8] insurance[.]” Nicholas Meat’s Motion for Summary Judgment, 8/11/21, at 41. It also asserted that PLS violated “the implied duty of good faith and fair dealing.” Id. at 46. Alternatively, Nicholas Meat argued it was entitled to relief on its claims for negligence — PLS negligently hired and supervised the carrier, and negligently misrepresented its carrier vetting process — or promissory estoppel based upon the promises PLS made “to Nicholas Meat in order to induce Nicholas Meat to business with it.” Id. at 50, 53-54, 56.

PLS filed a competing motion for summary judgment on September 2, 2021. First, it insisted Nicholas Meat’s claims were preempted by federal law, including the Interstate Commerce Commission Termination Act (ICCTA), 49 U.S.C. § 14501(b), the Federal Aviation Administration Authorization Act (FAAAA), 49 U.S.C. § 14501(c), as well as the Carmack Amendment. PLS’s Motion for Summary Judgment, 9/2/21, at 10-11. Further, PLS argued that it did not breach any terms of the parties’ agreement, but rather, it “did require that its contracted third-party motor carriers maintained $100,000 in cargo loss and damage liability insurance[,]” and, specifically, required GA Trucking to certify that it carried $150,000 of coverage for the Cargill Load. Id. at 14-15. PLS also repeated its contention [*9] that the tort claims were barred by the “gist of the action” doctrine,⁵ and argued that Nicholas Meat failed to prove its claim for promissory estoppel. See id. at 9, 21.

The trial court conducted oral argument on October 15, 2021. Thereafter, on October 27th, the court entered an order: (1) granting Nicholas Meat’s motion for summary judgment with respect to its breach of contract claim; (2) denying PLS’s motion with respect to its federal preemption argument; and (3) granting PLS’s motion for summary judgment with respect to the negligence claims. See Order, 10/27/21, at 1-2 (unpaginated). The next day, the trial court entered judgment in favor of Nicholas Meat in the amount of $108,200.10, plus prejudgment interest from November 24, 2015. This timely appeal by PLS followed.⁶,⁷

PLS presents two issues for our review:

Whether the [trial] court erred in its October 27, 2021 order of court, as explained in its accompanying Memorandum, by:

a. creating contractual terms that were not part of the agreement between [PLS] and [Nicholas Meat; and]

b. holding [Nicholas Meat’s] breach of contract claim was not preempted by federal law.

PLS’s Brief at 10 (some capitalization [*10] omitted).

Our review of an order granting summary judgment is guided by the following:

When a party seeks summary judgment, a court shall enter judgment whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense that could be established by additional discovery. A motion for summary judgment is based on an evidentiary record that entitles the moving party to a judgment as a matter of law. In considering the merits of a motion for summary judgment, a court views the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Finally, the court may grant summary judgment only when the right to such a judgment is clear and free from doubt. An appellate court may reverse the granting of a motion for summary judgment if there has been an error of law or an abuse of discretion. . . .

Gallagher v. GEICO Indem. Co., 650 Pa. 600, 201 A.3d 131, 136-37 (Pa. 2019) (citations & quotation marks omitted).

In its first issue, PLS argues the trial court erred or abused its discretion when it granted summary judgment to Nicholas Meat on the breach of contract claim.

A breach of contract claim consists of the three [*11] elements: “[(1)] the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract and (3) resultant damages.” Burlington Coat Factory of Pennsylvania, LLC v. Grace Const. Mgmt. Co., LLC, 2015 PA Super 227, 126 A.3d 1010, 1018 (Pa. Super. 2015) (en banc) (citation omitted). When interpreting the meaning of a contract, the fundamental rule “is to acertain and give effect to the intent of the parties.” Binswanger of Pennsylvania, Inc. v. TSG Real Est. LLC, 655 Pa. 166, 217 A.3d 256, 262 (Pa. 2019). Our Supreme Court has explained:

[T]he intent of the parties to a contract is to be regarded as embodied in the writing itself, and, as such, the entire agreement must be taken into account in determining contractual intent.

Indeed, a reviewing court does not assume that contractual language is chosen carelessly, nor does it assume that the parties were ignorant of the meaning of the language they employed; thus, when a writing is clear and unequivocal, its meaning must be determined only by its terms. Related thereto, [b]efore a court will interpret a provision in a statute or in a contract in such a way as to lead to an absurdity or make the statute or contract ineffective to accomplish its purpose, it will endeavor to find an interpretation which will effectuate the reasonable result intended.

Id. (citations & quotation marks omitted).

This Court has also “accepted the principle [*12] . . . that [e]very contract imposes upon each party a duty of good faith and fair dealing in its performance and enforcement.”⁸ Stamerro v. Stamerro, 2005 PA Super 424, 889 A.2d 1251, 1259 (Pa. Super. 2005) (citation & quotation marks omitted). Instances of bad faith include the “lack of diligence and slacking off,” as well as “willful rendering of imperfect performance[.]” Id. (citation omitted). However, the implied duty of good faith “cannot trump the express provisions in the contract[;]” instead it is utilized by the court to “harmonize the reasonable expectation of the parties with the intent of the contractors and the terms in their contract.” Id. (citation omitted).

With this background in mind, we consider PLS’s argument on appeal. PLS insists that the essential terms of its contract with Nicholas Meat were the following: (1) PLS would arrange for Nicholas Meat’s freight to be transported by a third-party carrier; (2) the third-party carrier would be required to maintain cargo loss and damage liability insurance in the amount of $100,000, or a higher specified value if Nicholas Meat provided written notice in advance; (3) because Nicholas Meat did so, PLS would require the carrier of the Cargill Load to have $150,000 in insurance; and (4) Nicholas [*13] Meat would pay PLS within 30 days of receiving an invoice. See PLS’s Brief at 24-25. However, it contends Nicholas Meat requested the trial court read into the contract additional, non-existent terms, requiring PLS to vet its third-party carriers by contacting the carrier’s insurers “to confirm the legitimacy of the insurance information [the carrier] provided to PLS[;]” and “reimburse [Nicholas Meat] for cargo loss in the event the insurers for the carrier and/or PLS do not[.]” Id. at 25-26 (record citations omitted). PLS contends the trial court accepted these additional terms and improperly granted relief on that basis. See id. at 26-27.

Moreover, PLS insists it did not breach the terms of the parties’ agreement because it is “undisputed that PLS did require [the third-party carrier,] GA Trucking, or who they believed to be GA Trucking, to carry $150,000 in cargo coverage, as evidenced by the GA Trucking Certificate of Liability submitted to PLS.” PLS’s Brief at 27-28 (emphasis added). PLS asserts that “[n]owhere in the contract was there an obligation for PLS to take further action[,]” and “[a]t most, an obligation to take reasonable steps for verification creates questions of fact” [*14] precluding summary judgment. Id. at 33. For support, it cites Marx Companies, LLC v. W. Trans Logistics, Inc., 2015 U.S. Dist. LEXIS 6432, 2015 WL 260914 (D.N.J. 2015), an unpublished federal district court decision, which it claims is “almost analogous . . . to this matter.” Id. at 28. Furthermore, PLS contends that Nicholas Meat’s damages did not result from any contractual breach, but rather, its own “failure to file a claim under PLS’s contingent cargo policy, which listed Nicholas Meat as a loss payee.” Id. at 34.

The trial court addressed Nicholas Meat’s breach of contract claim as follows:

There is no dispute that a contract existed between PLS and Nicholas Meat which provided for PLS, as a transportation broker, to arrange for Nicholas Meat’s freight to be transported by a third[-]party motor carrier. An essential term of the contract was that PLS would require the motor carrier it selected for the Cargill Load to carry $150,000.00 in cargo loss and damage liability insurance. PLS assumed a contractual obligation to ensure that the motor carrier selected had the specified insurance. Inherent within this obligation was a duty to take reasonable steps to verify that the cargo liability insurance information provided by the carrier was legitimate. PLS breached the terms of the contract [*15] by arranging for the Cargill Load to be transported by a third[-]party motor carrier without any cargo loss and damage liability insurance. If the Cargill Load had been successfully delivered, Nicholas Meat would have been paid $108,200.10 by its customer. Therefore, as a result of PLS’s breach of a duty imposed by the contract, Nicholas Meat suffered damages in the amount of $108,200.10.

Trial Ct. Memorandum Op. at 8-9.

We agree with the trial court’s interpretation of the parties’ agreement, and its conclusion that PLS breached that agreement, resulting in Nicholas Meat’s damages. The agreement provided, inter alia, that PLS would require its third-party carriers to “maintain cargo loss and damage liability insurance in the amount of $100,000.00 per shipment[,]” or more as requested by its clients. See PLS Terms & Conditions at ¶ 8. PLS would have us conclude that it fulfilled its duty simply by asking the third-party carrier if it had the requisite insurance and collecting a copy of a purported insurance certificate. According to PLS, the fact that the carrier — which was an imposter posing as GA Trucking — presented a fabricated insurance certificate, does not mean that it failed [*16] to perform its contractual obligations; rather, PLS emphasizes that it, too, was defrauded. See PLS’s Brief at 27-28.

Contrary to PLS’s argument, the trial court did not add contractual terms to the agreement. Pursuant to the clear terms of the parties’ agreement, PLS owed a duty to Nicholas Meat to require its carriers maintain the requisite cargo insurance. Here, the carrier that PLS arranged to transport the Cargill Load did not have any cargo insurance. Thus, PLS breached a duty owed to Nicholas Meat under the agreement.

PLS further argues that the court’s determination that it did not take “reasonable steps” to verify the insurance information provided by its carriers, created a question of fact, precluding summary judgment. See PLS’s Brief at 33. We disagree. Had PLS taken any steps to verify the insurance policy information provided by GA Trucking, we might agree that a genuine issue of material fact existed precluding summary judgment; the question of how much verification is sufficient would be for the jury. Here, however, PLS concedes it did nothing — rather, PLS merely accepted, at face value, the fabricated insurance certificate from GA Trucking, which falsely claimed it [*17] had the appropriate amount of cargo insurance. Thus, we agree with the determination of the trial court that PLS’s good faith obligation under its own Terms and Conditions required more. That is not to say we are adding more terms to the contract. Instead, as noted above, “[e]very contract imposes upon each party a duty of good faith and fair dealing[,]” which the court may consider so long as the implied duty does not “trump the express provisions in the contract[.]” Stamerro, 889 A.2d at 1259 (citation omitted). Here, the express terms of the agreement provided that PLS would require its carriers to have a certain amount of cargo insurance. Clearly, this requirement implied that PLS — as a broker — would verify the information provided by prospective carriers.

We also conclude PLS’s reliance on Marx is misplaced. First, Marx is a decision issued by a New Jersey federal district court; thus, it is not binding on this Court. See Huber v. Etkin, 2012 PA Super 254, 58 A.3d 772, 779 n.7 (Pa. Super. 2012) (en banc) (federal district court decisions are “not binding authority” but may be cited for persuasive value). Second, we conclude the decision is distinguishable on its facts.

In Marx, as in the present case, the plaintiff contracted with a shipping broker to assist in transporting two truckloads [*18] of frozen beef. See Marx, 2015 U.S. Dist. LEXIS 6432, 2015 WL 260914 at *1. The contract provided, in relevant part, that the broker “was a responsible third party that had an extensive nationwide network of reliable carriers.” Id. (record citation & quotation marks omitted). The broker “arranged for transportation with Dew—Right Transportation, Inc. (‘DRT’), a company with which it had no prior business dealings but which it believed held the appropriate Department of Transportation credentials.” 2015 U.S. Dist. LEXIS 6432, [WL] at *2. However, the goods were never delivered, and the plaintiff believed they were stolen by DRT. See id. The plaintiff subsequently sued the broker claiming it breached two “implied duties” — i.e, that it would (a) act according to the standard for a professional freight broker, and (b) retain only reliable carriers — and the “express promise” in their agreement that the broker was a “responsible third party that had an extensive nationwide network of reliable carriers.” Id. (record citations omitted). The plaintiff argued the broker breached its duties “by retaining a carrier about which [the broker] had no information and by retaining a carrier that was not insured.” Id. (record citation & quotation marks omitted).

In dismissing the plaintiff’s [*19] complaint, the district court first construed the argument concerning the “implied duties” as a negligence claim, and determined it was preempted by the FAAAA.⁹ See Marx, 2015 U.S. Dist. LEXIS 6432, 2015 WL 260914 at **2 n.2, 3-4. Moreover, with regard to the plaintiff’s breach of contract claim, the court agreed with the broker that “the contractual promise that was allegedly violated [was] not found in the parties’ written agreement.” 2015 U.S. Dist. LEXIS 6432, [WL] at *4. Indeed, on appeal, the plaintiff argued solely that the “promise at issue was ‘implied.'” Id. Because the complaint did not contain any allegation that the broker breached an implied promise, and, in any event, such a claim would be “outside the confines of the express contractual agreement between the parties[,]” the district court concluded that the plaintiff “failed to plead a plausible claim” and dismissed the complaint. 2015 U.S. Dist. LEXIS 6432, [WL] at **4-5.

Here, unlike in Marx, the trial court found PLS breached a specific term of the parties’ agreement — namely, that it would require its carriers to have a certain amount of cargo insurance. Nicholas Meat’s claim does not rest upon PLS’s breach of an implied agreement, as in Marx. Indeed, the relevant provision of the Marx contract provided only that the broker was a “responsible third party that had [*20] an extensive network of reliable carriers.” See Marx, 2015 U.S. Dist. LEXIS 6432, 2015 WL 260914 at *1. The broker’s use of a new, untested carrier in that case did not establish a breach of that clause in the agreement. Thus, Marx provides PLS with no basis for relief.

Lastly, we note PLS asserts, alternatively, that even if we conclude it breached the terms of the parties’ agreement, “Nicholas Meat’s alleged damages were not a direct result of any contractual breach . . ., but [instead due to] Nicholas Meat’s failure to file a claim under PLS’s contingent cargo policy, which listed Nicholas Meat as a loss payee.” PLS’s Brief at 34. The trial court concluded that “Nicholas Meat was not required to attempt recovery through PLS’s insurance policy.” Trial Ct. Memorandum Op. at 16. PLS provides no record citation or authority to the contrary. Rather its “argument” is confined to a single sentence in its brief, and, therefore, waived for our review. See Pa.R.A.P. 2119(a) (requiring argument in brief to include “such discussion and citation to authorities as are deemed pertinent”). Thus, PLS’s first claim fails.

Next, PLS argues that Nicholas Meat’s breach of contract claim was preempted by federal law, specifically the Carmack Amendment, the ICCTA, and the FAAAA. PLS’s Brief at [*21] 35. PLS maintains that the trial court erred when it rejected his claim by analyzing the statutes separately. Id. at 36. Rather, PLS insists “it is the interplay of the statutes together that results in Nicholas Meat[‘]s claim . . . being preempted.” Id.

When considering whether a federal statue preempts state law, we are guided by the following:

Congress has the undisputed power to preempt state law in areas of federal concern. Such preemption does not need to be explicit in a statute invalidating a state law. If the area in question is one of traditional state concern, it should be presumed that Congress did not intend to supersede state authority absent a clear and manifest legislative purpose to the contrary.

Congress’ intent to preempt state law may be express or implied and found in any of three ways:

First, state law may be preempted where the United States Congress enacts a provision which expressly preempts the state enactment. Likewise, preemption may be found where Congress has legislated in a field so comprehensively that it has implicitly expressed an intention to occupy the given field to the exclusion of state law. Finally, a state enactment will be preempted where a state [*22] law conflicts with a federal law. Such a conflict may be found in two instances, when it is impossible to comply with both federal and state law, or where the state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”

Stone Crushed Partnership v. Kassab Archbold Jackson & O’Brien, 589 Pa. 296, 908 A.2d 875, 880-81 (Pa. 2006) (citations omitted & emphasis added).

The three statutory provisions at issue herein involve the federal government’s regulation of transportation. With regard to the Carmack Amendment, the Third Circuit Appeals Court has explained:¹⁰

The Carmack Amendment‘s operation is relatively straightforward. The general rule is that an interstate carrier is strictly liable for damages up to “the actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) [certain intermediary carriers].” 49 U.S.C. § 14706(a)(1). A shipper and carrier can agree to limit the carrier’s liability “to a value established by written or electronic declaration of the shipper or by written agreement between the carrier and shipper if that value would be reasonable under the circumstances” in order for the shipper to obtain a reduced rate. Id. [at] § 14706(c)(1)(A). Shippers may bring a federal private cause of action directly under the Carmack Amendment against a carrier for damages. Id. [*23] [at] § 14706(d).

Certain Underwriters at Int. at Lloyds of London v. United Parcel Serv. of Am., Inc., 762 F.3d 332, 335 (3d Cir. 2014) (footnote omitted).

The ICCTA, codified at 49 U.S.C. § 14501(b)(1) provides, in relevant part:

[N]o State . . . shall enact or enforce any law, rule, regulation, standard, or other provision having the force and effect of law relating to intrastate rates, intrastate routes, or intrastate services of any freight forwarder or broker.

49 U.S.C. § 14501(b)(1) (emphasis added). Subsection (c)(1) codifies a similar provision found in the FAAAA:

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

49 U.S.C. § 14501(c)(1) (emphasis added).

Here, PLS argues the Carmack Amendment “impliedly preempts state law claims by shippers, such as Nicholas Meat, against brokers, such as PLS, while the ICCTA . . . and FAAAA . . . explicitly preempt any such claims by prohibiting state regulation of intrastate services of any . . . broker . . . related to a price, route or service of any . . . broker[.]” PLS’s Brief at 46 (quotation marks omitted). PLS relies, primarily, on the following three federal court decisions, which it insists support federal preemption of Nicholas [*24] Meat’s breach of contract claim: AMG Resources Corp. v. Wooster Motor Ways, Inc., 796 Fed. Appx. 96, 2020 WL 110230 (3d Cir. 2020), Alpine Fresh, Inc. v. Jala Trucking Corp., 181 F.Supp.3d 250 (D.N.J. 2016), and Ameriswiss Technology, LLC v. Midway Line of Illinois, Inc., 888 F.Supp.2d 197 (D.N.H. 2012).

In its opinion, the trial court provided an extensive analysis supporting its conclusion that the Carmack Amendment does not bar state law claims against brokers. See Trial Ct. Memorandum Op. at 11-14 (determining (1) text of Carmack Amendment explicitly applies only to carriers and not to brokers; (2) AMG is distinguishable on its facts because (a) the shipper “raised both state-law claims and a claim under the Carmack Amendment against two entities, a carrier and a broker [which] shared an address and had common ownership[;]” and (b) the AMG Court did not distinguish between the carrier and broker in its analysis; (3) the Carmack Amendment contains a savings clause that preserves “remedies existing under another law[;]” so that, (4) “the Carmack Amendment should not be read to displace all actions against entities . . . for which it does not provide liability”). We agree with the court’s analysis, and rest upon its well-reasoned basis. Thus, we conclude Nicholas Meat’s breach of contract claim is not preempted by the Carmack Amendment.

Nevertheless, as the trial court acknowledges in its opinion, the above-cited provisions of the ICCTA and FAAAA do — by their very terms — apply to freight brokers, such as PLS. See Trial Ct. Memorandum Op. at 14. [*25] See also 49 U.S.C. § 14501(b)(1), (c)(1). However, the court concluded, and we agree, that “there is a widespread consensus among courts analyzing these provisions that . . . they do not preempt breach of contract claims against freight brokers.” Trial Ct. Memorandum Op. at 14-15 (emphasis added) (citing cases). See Louis M. Marson Jr., Inc. v. Alliance Shippers, Inc., 438 F. Supp. 3d 326, 335 (E.D. Pa. 2020) (“[T]he FAAAA and ICCTA do not preempt routine breach of contract claims.”) (citation omitted).

The two decisions upon which PLS relies do not compel a different result. In Alpine Fresh, a shipper filed a complaint seeking damages from both a broker and motor carrier when its shipment of produce was rejected at the point of delivery because the internal temperature of the truck was incorrect. See Alpine Fresh, 181 F.Supp.3d at 253. The shipper asserted claims for breach of contract, breach of bailment, and negligence. The broker filed a motion to dismiss the breach of bailment and negligence claims, arguing those claims were preempted by federal law, namely, the Carmack Amendment, the ICCTA, and the FAAAA. See id. at 254. The federal district court agreed and dismissed those counts in the complaint. See id. at 257. Significantly, however, the broker did not challenge — and the district court did not address — whether the shipper’s breach of contract claim against the broker was also [*26] preempted by federal law. Thus, Alpine Fresh does not support PLS’s claim here.

The same is true of the decision in Ameriswiss. In that case, a shipper contracted with a broker to transport machinery. See Ameriswiss, 888 F.Supp.2d at 200. The broker, in turn, hired a carrier. Id. During transportation of the machinery, the carrier was involved in an accident, and the machinery was destroyed. Id. The shipper subsequently filed a lawsuit against both the broker and carrier, asserting claims for negligence and breach of contract against the broker, and a Carmack Amendment claim against the carrier. Id. The broker moved for summary judgment on both claims, arguing that the negligence claim was preempted by federal law, and the breach of contract claim failed as a matter of law. See id. at 201. The district court agreed. It concluded that the negligence claim was either “subject to implied preemption under the Carmack Amendment [or] expressly preempted by the ICCTA.” Id. at 205. However, the court found the breach of contract claim failed on its merits. See id. at 209-10. Thus, like Alpine Fresh, the decision in Ameriswiss does not support PLS’s claim.

Accordingly, we agree with the trial court’s determination that Nicholas Meat’s breach of contract claim is not preempted by the Carmack Amendment, which applies only to claims against carriers, nor [*27] by the ICCTA or FAAAA, which do not preempt common law breach of contract claims. Consequently, PLS’s second issue merits no relief.

We direct that a copy of the trial court’s October 27, 2021, opinion be filed along with this memorandum and attached to any future filings in this case.

Judgment affirmed.

Judgment Entered.

Date: 10/04/2022

End of Document

^*Retired Senior Judge assigned to the Superior Court.

¹Our Supreme Court has explained:

Freight brokers do not directly ship [*6] or transport freight; rather, they function as intermediaries which facilitate the shipment of goods. They are the “connecting link between shippers and carriers, uniting shippers who have cargo to deliver with carriers who have available motor transportation.”

S & H Transp., Inc. v. City of York, 653 Pa. 467, 210 A.3d 1028, 1030-31 (Pa. 2019) (citations omitted).

²The Carmack Amendment provides, in relevant part, that a carrier must issue a bill of lading for property it receives for transportation, and that the carrier is then liable for the 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” to the person entitled to recover under the bill of lading. See 49 U.S.C. § 14706(a)(1).

³49 U.S.C. §§ 101-80504.

⁴In the July 13th order, the trial court also: (1) overruled PLS’s preliminary objection asserting Nicholas Meat’s negligence claims were barred by the gist of the action doctrine, but did so without prejudice to PLS to raise the issue in a motion for summary judgment; and (2) sustained PLS’s preliminary objection to Nicholas Meat’s claim for punitive damages, striking those paragraphs from the complaint. See Order, 7/13/20, at 1 (unpaginated).

⁵“Under the ‘gist of the action’ doctrine, an alleged tort claim against a party to a contract is barred when the ‘gist’ of the cause of action, although sounding in tort, is in actuality a claim for breach of contractual obligations.” Patel v. Kandola Real Est., LP, 2021 PA Super 219, 271 A.3d 421, 431 (Pa. Super. 2021) (citation omitted).

⁶PLS complied with the trial court’s directive to file a Pa.R.A.P. 1925(b) concise statement of errors complained of on appeal. The trial court filed a brief Rule 1925(a) opinion on December 30, 2021. Nicholas Meat did not appeal from the ruling of the trial court concerning its negligence claims.

⁷Upon initial review of this appeal, this Court observed that the trial court’s October 27th order did not dispose of Count V in Nicholas Meat’s complaint, which asserted a cause of action for promissory estoppel. Accordingly, on January 28, 2022, this Court issued PLS a rule to show cause why the order on appeal was final. See Order, 1/28/22. PLS filed a timely response, asserting that the promissory estoppel cause of action was pled as an alternative to the breach of contract claim, and because the court granted relief on the contract claim, the promissory estoppel claim is now moot. See PLS’s Letter Response, 2/11/22, at 1-3 (unpaginated). This Court discharged the rule to show cause by order dated February 18, 2022.

Upon our review, we agree that the trial court’s October 27, 2022, order effectively disposed of “all claims and of all parties.” See Pa.R.A.P. 341(b)(1). “The doctrine of promissory estoppel allows a party, under certain circumstances, to enforce a promise even though that promise is not supported by consideration.” Shoemaker v. Commonwealth Bank, 700 A.2d 1003, 1006 (Pa. Super. 1997). As the trial court explained in its opinion, “[d]ue to [its] determination that PLS breached a contractual obligation, the issue of promissory estoppel [need] not be addressed.” Trial Ct. Memorandum Op. at 16 (emphasis added). Nicholas Meat pled a claim of promissory estoppel as an alternative to its breach of contract claim. The court’s ruling granting Nicholas Meat relief on its contract claim renders the estoppel claim moot. Thus, we agree the court’s October 27th order is a final, appealable order.

⁸Additionally, “[t]he General Assembly intentionally imposed an affirmative good faith requirement upon parties to commercial contracts” in the Uniform Commercial Code. Hanaway v. Parksburg Group, LP, 641 Pa. 367, 168 A.3d 146, 157 (Pa. 2017). See 13 Pa.C.S. § 1304 (“Every contract or duty within this title imposes an obligation of good faith in its performance and enforcement.”).

⁹We will address PLS’s federal preemption argument infra.

¹⁰As we noted supra, while federal court decisions are not binding on this Court, they may have persuasive value, particularly, here, where our research has uncovered no Pennsylvania decisions on this matter. See Huber, 58 A.3d at 779 n.7.