January 2023

Grothe v. Kushnivich

Court of Appeals of Washington, Division Three

October 24, 2022, Oral Argument; December 6, 2022, Filed

No. 39010-1-III

Reporter

2022 Wash. App. LEXIS 2308 *

Mark Grothe, Appellant, v. Victor Kushnivich et al., Respondents.

Prior History: [*1] Appeal from Pierce County Superior Court. Docket No: 20-2-08176-6. Judge signing: Honorable Elizabeth P. Martin. Judgment or order under review. Date filed: 10/29/2021.

Core Terms

damages, repaired, carrier, diminished, loss of use, prelitigation, summary judgment, measure of damages, double recovery, market value, repair costs, bill of lading, trial court, recoverable, transport, actual loss, notice, proposed amended complaint, claim requirement, preempted

Case Summary

Overview

HOLDINGS: [1]-The trial court’s summary judgment dismissal of the purchaser’s negligence claim was proper because, even under the generous notice pleading standards, his complaint failed to assert a Carmack claim under 49 U.S.C.S. § 14706; [2]-The denial of the purchaser’s motion to amend to assert a claim under the Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, for loss use while the goods were being repaired and for diminished value of the repaired goods was improper because recoverable damages included loss of use while the goods were being repaired and diminished value of the repaired goods.

Outcome

Judgment affirmed in part; reversed in part; remanded.

LexisNexis® Headnotes

Antitrust & Trade Law > Regulated Industries > Transportation > Common Carriers

Transportation Law > Rail Transportation > Carmack Amendment

Transportation Law > Carrier Duties & Liabilities > Damages

HN1 Transportation, Common Carriers

The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, provides the exclusive remedy for goods damaged in interstate commerce by a common carrier.

Transportation Law > Rail Transportation > Carmack Amendment

Transportation Law > Carrier Duties & Liabilities > Damages

HN2 Rail Transportation, Carmack Amendment

Under the Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, recoverable damages include loss of use while the goods were being repaired and diminished value of the repaired goods.

Civil Procedure > Appeals > Costs & Attorney Fees

Civil Procedure > Appeals > Frivolous Appeals

HN3 Appeals, Costs & Attorney Fees

Under Wash. R. App. P. 10.2(i), an appellate court may impose sanctions under Wash. R. App. P. 18.9 for failure to timely file and serve a brief. Rule 18.9(a) in turn provides for the imposition of monetary sanctions for a party who uses these rules for the purpose of delay, files a frivolous appeal, or fails to comply with the rules to pay terms or compensatory damages to any other party who has been harmed by the delay or the failure to comply or to pay sanctions to the court.

Civil Procedure > … > Pleadings > Complaints > Requirements for Complaint

HN4 Complaints, Requirements for Complaint

Washington is a notice pleading state. An action is not dismissed simply because a complaint fails to artfully state each element of a particular cause of action. Rather, notice pleading must adequately inform the defendant of the nature of the plaintiff’s claims as well as the legal grounds upon which those claims rest.

Civil Procedure > Appeals > Standards of Review > Abuse of Discretion

Civil Procedure > … > Pleadings > Amendment of Pleadings > Leave of Court

HN5 Standards of Review, Abuse of Discretion

An appellate court reviews for an abuse of discretion a trial court’s denial of a motion to amend a pleading. To constitute an abuse of discretion, the trial court’s decision must be manifestly unreasonable, based on untenable grounds, or made for untenable reasons. If the trial court’s ruling is based on an erroneous view of the law or involves application of an incorrect legal analysis, it necessarily abuses its discretion.

Antitrust & Trade Law > Regulated Industries > Transportation > Common Carriers

Transportation Law > Carrier Duties & Liabilities > Bills of Lading

Transportation Law > Rail Transportation > Carmack Amendment

Transportation Law > Carrier Duties & Liabilities > Damages

HN6 Transportation, Common Carriers

The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, permits recovery of actual loss or injury to the property caused by a carrier over whose line or route the property is transported in the United States when transported under a bill of lading. 49 U.S.C.S. § 14706(a)(1).

Antitrust & Trade Law > Regulated Industries > Transportation > Common Carriers

Transportation Law > Rail Transportation > Carmack Amendment

Transportation Law > Carrier Duties & Liabilities > Damages

HN7 Transportation, Common Carriers

The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, provides the cause of action but applicable common law provides the measure of damages.

Real Property Law > … > Damages > Types of Damages > Compensatory Damages

Torts > … > Types of Damages > Property Damages > Loss of Use

Torts > … > Types of Damages > Property Damages > Measurements

HN8 Types of Damages, Compensatory Damages

In Washington, the measure of damages for loss caused to personal property is arrived at by a three-part analysis: (1) If the property is a total loss the measure of damages is the value of the property destroyed or damaged. This is its market value, if it has a market value. (2) If the property is damaged but not destroyed, the measure of damages is the difference between the market value of the property before the injury and its market value after the injury. (3) If the property does not have a market value, then if a total loss, the measure of damages is the cost to replace or reproduce the article. If it cannot be reproduced or replaced, then its value for the owner may be considered in fixing damages. Thus, recoverable damages are measured by the property’s diminished value, i.e., the difference between the market value of the property before the loss and its market value after the loss. This is consistent with the holding that diminution in value is recoverable if a repaired car cannot be fully restored to its preloss condition.

Civil Procedure > Remedies > Damages > Compensatory Damages

HN9 Damages, Compensatory Damages

It is a basic principle of damages, both tort and contract, that there shall be no double recovery for the same injury.

Torts > Vicarious Liability > Family Members > Family Purpose Doctrine

Torts > … > Types of Damages > Property Damages > Loss of Use

HN10 Family Members, Family Purpose Doctrine

Loss of use is a recoverable component of damages. In general, the plaintiff can almost always recover some measure of damages for a reasonable period of lost use. Loss of use claims are appropriate in the case of private chattels, such as the family car or the pleasure boat. Loss of use may be measured by (1) lost profit, (2) cost of renting a substitute chattel, (3) rental valued of the plaintiff’s own chattel, or (4) interest.

Admiralty & Maritime Law > Shipping > Bills of Lading > Effectiveness & Validity

Transportation Law > Carrier Duties & Liabilities > Bills of Lading

Antitrust & Trade Law > Regulated Industries > Transportation > Common Carriers

Transportation Law > Rail Transportation > Carmack Amendment

Transportation Law > Carrier Duties & Liabilities > Damages

HN11 Bills of Lading, Effectiveness & Validity

The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, permits carriers to impose contractual time limitations for bringing suit, subject only to the statutory minimum of 9 months for filing a claim and 2 years for bringing a civil action. The statute contemplates that limitation periods are to be bargained over between shipper and carrier and does not itself impose a limitation. Rather, the limitations are to come from the bill of lading or other contract of carriage. 49 C.F.R. § 1005.2(a) (2021).

Admiralty & Maritime Law > Shipping > Bills of Lading > Effectiveness & Validity

Transportation Law > Carrier Duties & Liabilities > Bills of Lading

Transportation Law > Carrier Duties & Liabilities > Damages

Transportation Law > Rail Transportation > Carmack Amendment

HN12 Bills of Lading, Effectiveness & Validity

Under 49 U.S.C.S. § 14706(a)(1), a carrier is liable for damage to a shipper’s property even if the carrier does not issue a receipt or bill of lading. It does not impose a prelitigation claim requirement.

Counsel: For Appellant: Paul Michael Veillon, Galileo Law, PLLC, Renton, WA.

For Respondent: Mick Anthony Jaeger, Keith Marc Hayasaka, Lewis Brisbois Bisgaard & Smith LLP, Seattle, WA.

Judges: Authored by Robert Lawrence-Berrey. Concurring: Rebecca Pennell, George Fearing.

Opinion by: Robert Lawrence-Berrey

Opinion

¶1 HN1 Lawrence-Berrey, A.C.J. — The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C. § 14706, provides the exclusive remedy for goods damaged in interstate commerce by a common carrier. Carmack provides the cause of action, but applicable common law provides the measure of damages.

¶2 HN2 The question presented is whether recoverable damages include loss of use while the goods were being repaired and diminished value of the repaired goods. We hold they do.

¶3 We affirm the trial court’s summary judgment dismissal of Mark Grothe’s negligence claim, but we reverse its denial of his motion to amend to assert a claim under Carmack for loss of use while the goods were being repaired and for diminished value of the repaired goods.

FACTS

¶4 In 2019, Mark Grothe bought a new Volvo and had it shipped to his home by Victor Kushnivich. [*2] Along the way, Kushnivich’s truck was involved in an accident, and Grothe’s car suffered extensive damage. Grothe’s insurance company paid to repair the Volvo, and it recovered the repair costs in a subrogation claim against Kushnivich’s insurance company.

Grothe’s lawsuit against Kushnivich

¶5 In October 2020, Grothe sued Kushnivich. As relevant here, his complaint alleged:

5. On or about April 3, 2019, the Defendant VICTOR KUSHNIVICH was driving a semi-truck pulling a trailer that was being used to transport … vehicles [including] Plaintiff’s recently purchased Volvo … . Defendant KUSHNIVICH had been hired by the Plaintiff to transport his vehicle from California to Washington State. While traveling along the interstate in California, the Defendant lost control of his vehicle, causing the truck and trailer to veer off of the road and overturn. The Plaintiff’s brand new vehicle was damaged in this incident.

6. … Defendant KUSHNIVICH negligently failed to maintain reasonable control of [his] vehicle and caused the Plaintiff’s vehicle to fall off of his trailer. The aforesaid collision involving the Plaintiff’s vehicle and the Defendant’s vehicle was proximately caused by the tortious [*3] conduct of the Defendant KUSHNIVICH.

7. The Plaintiff MARK GROTHE has suffered damages for injury to his property, including, without limitation, physical damage to the vehicle involved in the collision, the cost to repair said damage, loss of use, rental expenses, storage costs, reduced fair cash market value of the damaged property, and other out of pocket expenses, in an amount to be proved at the time of trial.

8. The Plaintiff MARK GROTHE hereby notifies the Defendants … that he will not honor as a setoff defense to his claims any payments they or their insurers or representatives make for the damages set forth above to any party besides the Plaintiff MARK GROTHE particularly but not limited to his own auto insurer FARMERS. …

Clerk’s Papers (CP) at 1-2.

¶6 In his answer, Kushnivich asserted a number of defenses, including that Grothe’s claims were “preempted, in whole or in part, by federal statute(s), including 49 U.S.C. § 14706 et seq.” CP at 7 (alteration in original).¹

¶7 Through discovery, Grothe provided Kushnivich with his expert’s reports on diminished value and loss of use damages. Grothe’s expert concluded that the Volvo’s value was diminished due to “buyers’ aversion to purchasing a vehicle that [*4] has residual physical damage.” CP at 72. The report explained that some factory processes cannot be replicated in a body shop and that some repaired parts, such as metal that was bent and reshaped, “are never as strong at the molecular level as they were before they suffered damage.” CP at 72. The report stated that the Volvo’s preloss value was $44,994 and its postloss value was $27,465, for a diminution in value of $17,529. The same expert provided a separate report that concluded Grothe lost $93 per day for the 105 days the Volvo was in the shop being repaired, for a total of $9,765.

Motion for summary judgment

¶8 Kushnivich moved for summary judgment, arguing that Grothe’s negligence claim was preempted by Carmack and that even if Grothe pleaded a claim under Carmack, the claim would be barred because Grothe was seeking a double recovery. The motion was supported by documents showing that Kushnivich’s insurance company had already reimbursed Grothe’s insurance company for repair costs.

¶9 In response, Grothe argued his complaint did plead a claim under Carmack. In the alternative, he requested leave to amend his complaint, arguing that Carmack permitted recovery for diminished value and [*5] loss of use in addition to costs of repair. His proposed amended complaint differed from the original complaint in just two respects. It stated the court had jurisdiction under 49 U.S.C. § 14706(d)(1) and it added the words italicized below:

6. … The aforesaid collision involving the Plaintiff’s vehicle and the Defendant’s vehicle was proximately caused by conduct of the Defendant KUSHNIVICH that subjects him to liability under 49 U.S.C. [§] 14706(d)(1).

CP at 102.² Grothe failed to file any declaration supporting his claim for damages.

¶10 In reply, Kushnivich advanced a new argument that Grothe’s request to amend his complaint should be denied because he failed to file a notice of claim with Kushnivich before bringing suit. He reiterated that Grothe had been fully compensated for repair costs and that further damages would be a double recovery.

¶11 Grothe countered that he had no contractual obligation to file a notice of claim as a prerequisite to a civil suit and that if there was a requirement, Kushnivich had waived it by paying Grothe’s insurance company’s subrogation claim.

¶12 During oral argument of the motion, Grothe asserted he was only seeking damages for diminished value and for loss of use. He conceded that he had been compensated [*6] for repair costs.

¶13 The court nonetheless expressed concern that Grothe was attempting a double recovery, “[H]asn’t your client already recovered? I mean, that’s part of what’s really troubling me here. I mean, he got his car fixed and he’s been compensated.” Report of Proceedings (RP) at 9. The court noted that under Carmack, damage was limited to actual loss and opined that if Grothe had already received the cost of repair, he could not receive diminished value as well, “It’s one or the other, right?” RP at 10.

¶14 Kushnivich argued that if Grothe was seeking diminished value, he should have elected that as his measure of damages after the crash and should not have also repaired his car. Kushnivich asserted that despite the allegations in Grothe’s complaint and the statement he would not honor a setoff defense, “in the face of summary judgment” Grothe had “suddenly pivoted” to accept a setoff for the cost of repairs. RP at 14.

¶15 The court concluded, “I believe that plaintiff’s claims are preempted by Carmack and I will—I’m going to grant the motion.” RP at 15. Its order granting summary judgment did not further explain its reasoning. The court without explanation also denied Grothe’s request [*7] to file his proposed amended complaint.

Motion for reconsideration

¶16 Grothe moved for reconsideration of the court’s decision, arguing it was contrary to law under CR 59(a)(7). For the first time, Grothe included his expert’s reports on diminished value and loss of use damages. Grothe largely repeated his arguments in opposition to the motion for summary judgment, arguing that diminished value and loss of use damages were recoverable even where a plaintiff had received the costs of repair and that there was no notice of claim requirement.

¶17 The court, without hearing argument, denied Grothe’s motion for reconsideration. Its written order stated:

Plaintiff’s state law negligence claim was preempted by the Carmack Amendment, 49 U.S.C. § 14706 et seq. (“Carmack”), warranting summary judgment, and Plaintiff’s Motion to Amend Complaint was denied on the grounds the proposed amendment to add a Carmack claim was meritless, duplicative, and/or futile.

CP at 125 (alteration in original).

¶18 Grothe timely appealed.

ANALYSIS

A. Objection to Grothe’s Brief

¶19 Kushnivich objects to our consideration of Grothe’s opening brief, which was filed four days late. To the extent this objection is meant as a motion to strike the brief, we deny it.

¶20 HN3 Under RAP 10.2(i), we may impose sanctions [*8] under RAP 18.9 “for failure to timely file and serve a brief.” RAP 18.9(a) in turn provides for the imposition of monetary sanctions for a party “who uses these rules for the purpose of delay, files a frivolous appeal, or fails to comply with these rules to pay terms or compensatory damages to any other party who has been harmed by the delay or the failure to comply or to pay sanctions to the court.” Striking Grothe’s late-filed brief is not an appropriate remedy under RAP 10.2 and RAP 18.9, and Kushnivich identifies no harm caused by Grothe’s delay that requires monetary compensation. We therefore deny Kushnivich’s motion to strike Grothe’s brief.

B. Grant of Summary Judgment

¶21 Grothe argues the trial court erred by construing his original complaint as not asserting a cause of action under Carmack. We disagree.

¶22 HN4 Washington is a notice pleading state. Champagne v. Thurston Cnty., 163 Wn.2d 69, 84, 178 P.3d 936 (2008). An action is not dismissed simply because a complaint fails to artfully state each element of a particular cause of action. Id. at 84-87. Rather, notice pleading must “adequately inform the defendant of the nature of the plaintiff’s claims as well as the legal grounds upon which those claims rest.” Reagan v. Newton, 7 Wn. App. 2d 781, 801, 436 P.3d 411 (2019).

¶23 Here, Grothe’s complaint repeatedly references negligence and never references Carmack. [*9] The parties—both below and on appeal—agree that Carmack preempts state negligence claims. We conclude, even under the generous notice pleading standards, that Grothe’s complaint failed to assert a Carmack claim and the trial court did not err in dismissing it.

C. Denial of request to file proposed amended complaint

¶24 Grothe argues the trial court erred by denying his request that he be allowed to file his proposed amended complaint. We agree.

Standard of review

¶25 HN5 An appellate court reviews for an abuse of discretion a trial court’s denial of a motion to amend a pleading. Specialty Asphalt & Constr., LLC v. Lincoln Cnty., 191 Wn.2d 182, 199, 421 P.3d 925 (2018). To constitute an abuse of discretion, the trial court’s decision must be manifestly unreasonable, based on untenable grounds, or made for untenable reasons. Wilson v. Horsley, 137 Wn.2d 500, 505, 974 P.2d 316 (1999). If the trial court’s ruling is based on an erroneous view of the law or involves application of an incorrect legal analysis, it necessarily abuses its discretion. Dix v. ICT Grp., Inc., 160 Wn.2d 826, 833, 161 P.3d 1016 (2007).

The amendment was not meritless, duplicative, and/or futile

¶26 The trial court denied Grothe’s request that he be allowed to file his proposed amended complaint because it believed the amended pleading was meritless, duplicative, and/or futile. We presume its reasons for believing this were based on Kushnivich’s [*10] arguments that (1) the damages sought by Grothe were barred by Carmack or amounted to a double recovery, and (2) Grothe failed to file a prelitigation claim. We address each argument in turn.

1. Recoverable damages under Carmack

¶27 HN6 Carmack permits recovery of “actual loss or injury to the property” caused by a carrier over whose line or route the property is transported in the United States when transported under a bill of lading. 49 U.S.C. § 14706(a)(1). The statute does not define “actual loss or injury to the property.” Nevertheless, the Supreme Court of the United States long ago construed similar language consistent with our view that the damages recoverable under Carmack extend beyond property damage.

¶28 In New York, Philadelphia, & Norfolk Railroad Co. v. Peninsula Produce Exchange of Maryland, 240 U.S. 34, 38, 36 S. Ct. 230, 60 L. Ed. 511 (1916), the Supreme Court construed an early version of Carmack that permitted recovery of “‘any loss, damage, or injury to such property.’” The high court reasoned, “It is not necessary, nor is it natural, in view of the general purpose of the statute, to take the words ‘to the property’ as limiting the word ‘damage’ as well as the word ‘injury,’ and thus as rendering the former wholly superfluous.” Id. Construing “any loss, damage, or injury to such property” broadly, it concluded that the phrase is “comprehensive [*11] enough to embrace all damages resulting from any failure to discharge a carrier’s duty with respect to any part of the transportation to the agreed destination.” Id. Specifically, the court held that the shipper was entitled to recover for a carrier’s failure to deliver the goods within a reasonable time. Id. Similarly, we construe the modern phrase, “actual loss or injury to the property” in a disjunctive manner, so as to permit recovery for “actual loss.”

¶29 HN7 Carmack provides the cause of action but applicable common law provides the measure of damages. Hector Martinez & Co. v. S. Pac. Transp. Co., 606 F.2d 106, 108 (5th Cir. 1979) (Carmack Amendment incorporates common law principles for damages). The parties do not contest that Washington common law controls our analysis.

¶30 HN8 In Washington, the measure of damages for loss caused to personal property is arrived at by a three-part analysis:

“[1] If the property is a total loss the measure of damages is the value of the property destroyed or damaged. This is its market value, if it has a market value. [2] If the property is damaged but not destroyed, the measure of damages is the difference between the market value of the property before the injury and its market value after the injury. … [3] If the property does not have a market [*12] value, then if a total loss, the measure of damages is the cost to replace or reproduce the article. If it cannot be reproduced or replaced, then its value for the owner may be considered in fixing damages.”

Sherman v. Kissinger, 146 Wn. App. 855, 871, 195 P.3d 539 (2008) (quoting McCurdy v. Union Pac. R.R., 68 Wn.2d 457, 467, 413 P.2d 617 (1966)).

¶31 Here, the property is not a total loss and a market value for the repaired Volvo exists. Thus, recoverable damages are measured by the property’s diminished value, i.e., the difference between the market value of the property before the loss and its market value after the loss. This is consistent with our holding in Moeller v. Farmers Insurance Co., 155 Wn. App. 133, 142, 229 P.3d 857 (2010), that diminution in value is recoverable if a repaired car cannot be fully restored to its preloss condition.

¶32 To the extent that Grothe pleads or requests double recovery, it must be denied. HN9 “It is a basic principle of damages, both tort and contract, that there shall be no double recovery for the same injury.” Eagle Point Condo. Owners Ass’n v. Coy, 102 Wn. App. 697, 702, 9 P.3d 898 (2000). But as explained above, Grothe’s claim of damages for diminished value is not a double recovery. If the evidence shows his repaired Volvo has a lower market value than the new Volvo he purchased, recovery for the difference is proper.

¶33 HN10 Loss of use is also a recoverable component of damages. We have previously explained:

“In general, the plaintiff can [*13] almost always recover some measure of damages for a reasonable period of lost use. Loss of use claims are appropriate in the case of private chattels, such as the family car or the pleasure boat. …

Loss of use may be measured by (1) lost profit, (2) cost of renting a substitute chattel, (3) rental valued of the plaintiff’s own chattel, or (4) interest.“

Straka Trucking, Inc. v. Estate of Peterson, 98 Wn. App. 209, 211, 989 P.2d 1181 (1999) (quoting Dan B. Dobbs, Law of Remedies § 5.15(1), at 875 (2d ed. 1993)). Here, Grothe may recover the rental value of a new Volvo for a reasonable period of nonuse, likely the period during which the Volvo was being repaired. We conclude the trial court abused its discretion if it concluded that Grothe’s request for damages was barred by Carmack or amounted to a double recovery.

2. Prelitigation claim

¶34 Kushnivich argues the amended complaint would have been futile because Carmack requires a plaintiff to file a prelitigation claim, and Grothe failed to do so. We disagree that Carmack requires plaintiffs to file a prelitigation claim.

¶35 HN11 Carmack permits carriers “to impose contractual time limitations for bringing suit, subject only to the statutory minimum of ‘9 months for filing a claim’ and ‘2 years for bringing a civil action.’” 5K Logistics, Inc. v. Daily Express, Inc., 659 F.3d 331, 336 (4th Cir. 2011) (quoting 49 U.S.C. § 14706(e)(1)). The statute “‘contemplates that [*14] limitation periods are to be bargained over between shipper and carrier’” and does not itself impose a limitation. Id. (quoting Shao v. Link Cargo (Taiwan) Ltd., 986 F.2d 700, 707-08 (4th Cir. 1993)). Rather, the limitations are to come from the “bill of lading or other contract of carriage.” 49 C.F.R. § 1005.2(a) (2021).

¶36 In support of his motion for summary judgment, Kushnivich asserted that Grothe failed to file a prelitigation claim with him. However, Kushnivich provided no bill of lading or other contract of carriage that imposed a prelitigation claim requirement on Grothe. In the absence of an agreement between Kushnivich and Grothe imposing a prelitigation claim requirement, Grothe’s failure to file a claim with Kushnivich was not a prerequisite to bringing this suit.

¶37 Kushnivich argues that his failure to issue a bill of lading does not impact the prelitigation claim requirement, pointing to 49 U.S.C. § 14706(a)(1): “[f]ailure to issue a receipt or bill of lading does not affect the liability of a carrier.” This provision does not support Kushnivich’s argument; indeed, it contradicts it. That provision more fully reads:

A carrier … shall issue a receipt or bill of lading for property it receives for transportation … . That carrier and any other carrier that [transports or delivers [*15] the property] are liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property … . Failure to issue a receipt or bill of lading does not affect the liability of a carrier.

49 U.S.C. § 14706(a)(1). HN12[] Put another way, the last line means that a carrier is liable for damage to a shipper’s property even if the carrier does not issue a receipt or bill of lading—as appears to be the case here. It does not impose a prelitigation claim requirement. We conclude the trial court abused its discretion if it believed a prelitigation claim was necessary in the absence of a contractual provision.

¶38 We remand for the trial court to allow Grothe to file his amended complaint and to proceed in a manner consistent with this opinion.

Fearing and Pennell, JJ., concur.

End of Document

¹The federal statute is the Carmack Amendment (Carmack). Congress enacted Carmack in 1906 as part of the former Interstate Commerce Act and intended for it to provide the exclusive cause of action for loss or damage to goods arriving by interstate transportation by common carrier. Hall v. N. Am. Van Lines, Inc., 476 F.3d 683 (9th Cir. 2007). Carmack constitutes a complete defense to common law claims of negligence alleging all manner of harm arising from property damage in interstate commerce. Id. at 688-89.

²Grothe’s summary judgment response stated that his proposed amended complaint was attached to his proposed order. The proposed order is not in our record. We presume the proposed amended complaint is the same as the one accompanying his reconsideration motion, which is in our record.

Hanson v. Werner Enters.

United States District Court for the Eastern District of Texas, Marshall Division

December 19, 2022, Decided; December 20, 2022, Filed

Case No. 2:21-cv-00245-RSP

Reporter

2022 U.S. Dist. LEXIS 228808 *; 2022 WL 17823981

SARAH LYNNE HANSON, Plaintiff, v. WERNER ENTERPRISES, INC. and ANGELO MIGUEL FLORES, Defendants.

Subsequent History: Motion denied by Hanson v. Werner Enter., Inc., 2022 U.S. Dist. LEXIS 229734 (E.D. Tex., Dec. 21, 2022)

Core Terms

summary judgment, gross negligence, training, supervision, negligent hiring, entrustment, driver, genuine dispute, incompetent, hiring, retention, ordinary negligence, material fact, negligence per se, driving, respondeat superior, driving skills, nonmovant’s, competency, survive, fails, solo

Counsel: [*1] For Sarah Lynne Hanson, Plaintiff: Joel Brent Goudarzi, Goudarzi & Young, Gilmer, TX; Keith Lamar Langston, Langston Law Firm, Longview, TX; Kristina Pierce Joseph, Marty Leon Young, Goudarzi & Young, LLP – Gilmer, Gilmer, TX.

For Werner Enterprises, Inc., Angelo Miguel Flores, Defendants: Adam J. Strange, Daniel M Karp, Fee Smith Sharp & Vitullo, LLP – Dallas, Three Galleria Tower, Dallas, TX; Brian James Cathey, Jessica Z Barger, Wright Close & Barger LLP – Houston, Houston, TX.

Judges: ROY S. PAYNE, UNITED STATES MAGISTRATE JUDGE.

Opinion by: ROY S. PAYNE

Opinion

MEMORANDUM ORDER

Before the Court defendants Werner Enterprises, Inc. and Angelo Miguel Flores move for entry of partial summary judgment. Dkt. No. 51. For the following reasons, the motion is GRANTED IN PART.

I. Background

This lawsuit arises out of a motor vehicle accident that occurred on August 13, 2019, in Morris County, Texas, wherein plaintiff Sarah Lynne Hanson alleges she was travelling south on U.S. Highway 259 and, as she approached the intersection with the I-30 West exit ramp, Flores failed to yield at a stop sign and struck her tractor-trailer causing bodily injury. At the time of this incident, Flores was operating a vehicle in the course and [*2] scope of his employment with Werner Enterprises. Hanson alleges that Flores was negligent in the operation of his vehicle, that Werner Enterprises was negligent in hiring, training, supervising, retaining, and entrusting Flores. She further alleges that Werner Enterprises was negligent in failing to maintain the tractor-trailer in a reasonably safe and prudent manner in violation of the Texas Transportation Code and Federal Motor Carrier Safety Regulations, and that the actions of Flores and Werner Enterprises equate to gross negligence.

Werner Enterprises and Flores move for partial summary judgment claiming that the law does not support the claim of, and/or the evidence fails to establish (1) gross negligence by Flores and by Werner Enterprises, via respondeat superior, (2) gross negligence by Werner Enterprises directly, (3) direct negligence by Werner Enterprises, (4) negligent hiring, training, supervision, retention, and entrustment of Flores by Werner Enterprises, and (5) negligence per se. Dkt. No. 51. Hanson filed a response, Dkt. No. 55, to which defendants filed a reply, Dkt. No. 58. Accordingly, the motion is fully briefed.

II. Summary Judgment Standard

Summary judgment is [*3] appropriate if the record shows “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).¹ “A fact is material only if its resolution would affect the outcome of the action.” Wiley v. State Farm Fire & Cas. Co., 585 F.3d 206, 210 (5th Cir. 2009). A genuine dispute for trial exists if the record taken as a whole could lead a reasonable trier of fact to find for the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986); Bayle v. Allstate Ins. Co., 615 F.3d 350, 355 (5th Cir. 2010). Because there must be a genuine dispute of material fact, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).

The moving party bears the initial burden of informing the court of the basis for the motion and of identifying those portions of the record which demonstrate the absence of a genuine dispute of material fact or the appropriateness of judgment as a matter of law. Celotex Corp. v. Catrett,477 U.S. 317, at 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265; Adams v. Travelers Indem. Co., 465 F.3d 156, 163 (5th Cir. 2006). The movant is not required to negate the elements of the nonmovant’s case and may satisfy its summary judgment burden by demonstrating the absence of facts supporting specific elements of the nonmovant’s causes of action. Little v. Liquid Air Corp., 37 F. 3d 1069, 1075, 1076 n.16 (5th Cir. 1994).

To satisfy this burden, the moving party must provide affidavits or identify any portion of the pleadings, discovery or admissions [*4] that demonstrate the absence of a triable dispute of material fact. Celotex Corp., 477 U.S. at 323; Rodriguez, 980 F.2d at 1019. “If the moving party fails to meet this initial burden, the motion must be denied, regardless of the nonmovant’s response.” Pioneer Expl., L.L.C. v. Steadfast Ins. Co., 767 F.3d 503, 511 (5th Cir. 2014).

If the movant carries its initial burden, the burden shifts to the nonmovant to present competent summary judgment evidence showing the existence of a genuine dispute of material fact. Matsushita, 475 U.S. at 586-87; see also Fed. R. Civ. P. 56(c). Upon the shifting burden, “unsubstantiated assertions, improbable inferences, and unsupported speculation are not sufficient to defeat a motion for summary judgment.” Brown v. City of Houston, Tex., 337 F.3d 539, 541 (5th Cir. 2003); see also Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which this evidence raises a genuine dispute of material fact. Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998) (citing Forsyth v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994)).

In determining the merits of a motion for summary judgment, a court has no duty to search the record for material fact issues or to find a party’s ill-cited evidence. Hernandez v. Yellow Transp., Inc., 670 F.3d 644, 651 (5th Cir. 2012); Ragas, 136 F.3d at 458. In addition, a court may not make credibility determinations or weigh the evidence and must view all evidence and draw all reasonable inferences in the light most favorable to the party opposing the motion. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000); Boudreaux v. Swift Transp. Co., Inc., 402 F.3d 536, 540 (5th Cir. 2005).

Finally, under the Court’s local rules, [*5] a failure to respond “creates a presumption that the party does not controvert the facts set out by movant and has no evidence to offer in opposition.” E.D. Tex. L.R. CV-7(d).

III. Analysis

Defendants contend that they are entitled to summary judgment on Hanson’s claims of (1) gross negligence against Flores and via respondeat superior against Werner Enterprises, (2) gross negligence against Werner Enterprises, (3) direct negligence against Werner Enterprises, (4) negligent hiring, training, supervision, retention, and entrustment of Flores against Werner Enterprises, and (5) negligence per se. Dkt No. 51. Because gross negligence hinges on a finding of ordinary negligence, the Court will address each but in a different order than that presented.

A. Negligent Hiring, Training, Supervision, Retention, And Entrustment

Texas law recognizes a cause of action against employers for negligent hiring, training, supervision, retention and entrustment of an unfit or incompetent employee by third parties injured by the employee’s negligence. See, e.g., Endeavor Energy Res., L.P. v. Cuevas, 593 S.W.3d 307, 311 (Tex. 2019) (discussing negligent hiring); Waffle House, Inc. v. Williams, 313 S.W.3d 796, 804 n.27 (Tex. 2010) (discussing negligent hiring, training, and supervision); Moore Freight Servs., Inc. v. Munoz, 545 S.W.3d 85, 97 (Tex. App.—El Paso 2017, pet. denied) (discussing negligent hiring, supervision, and retention); Castillo v. Gared, Inc., 1 S.W.3d 781, 786 (Tex. App.—Houston [1st Dist.] 1999, pet. denied) (discussing negligent [*6] hiring, training, and supervision); Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 758 (Tex. 2007) (discussing negligent entrustment).

The analysis will focus on the risk of harm to third parties resulting from the employer’s failure to exercise due care. Clark v. PFPP Ltd. P’ship, 455 S.W.3d 283, 287 (Tex. App.—Dallas 2015, no pet.). The employer’s negligent hiring, retention, supervision, training or entrustment must have been a proximate cause of the injury. Morris v. JTM, 78 S.W.3d 28, 49 (Tex. App.—Fort Worth 2002 no pet.); Dieter v. Baker Serv. Tools, a Div. of Baker Int’l, Inc., 739 S.W. 2d 405, 408 (Tex. App.—Corpus Christi 1987, writ denied). However, the employee must also have acted negligently, and “both negligent acts must proximately cause the injury.” Endeavor Energy, 593 S.W.3d at 311.

Because the defendants do not seek summary judgment against the claim the Flores was negligent, the Court assumes for the purpose of this analysis that Flores was at least negligent.

i. Negligent Hiring

“An employer owes a duty to its other employees and to the general public to ascertain the qualifications and competence of the employees it hires, especially when the employees are engaged in occupations that require skill or experience and that could be hazardous to the safety of others.” Morris, 78 S.W.3d at 49. “Therefore, an employer is liable for negligent hiring … if it hires an incompetent or unfit employee, thereby creating an unreasonable risk of harm to others.” Id. (citations omitted). A prerequisite for liability is that Werner Enterprises knew or should [*7] have known of Flores’ incompetence. See Moore Freight Servs. Inc., 545 S.W.3d at 98; Mireles v. Ashley, 201 S.W.3d 779, 783 (Tex. App.—Amarillo 2006 no pet.). In other words, to survive summary judgment Hanson must point to evidence in the record that Flores was incompetent, and that Werner Enterprises knew or should have known of the incompetence. Id.

“The possession of a valid, unrestricted driver’s license is evidence of a driver’s competency absent any evidence to the contrary.” Batte v. Hendricks, 137 S.W.3d 790, 791 (Tex. App.—Dallas 2004, pet denied). The record shows that Flores was a recent graduate from a truck driving school and possessed a valid Florida commercial driver’s license. Dkt. No. 51-1 at 4; Dkt. No. 51-2. Hanson argues that Werner failed to properly screen Flores due to a policy to investigate a driver’s prior history only in the event of an accident. Dkt. No. 55 at 8-9. However, that argument fails to point to evidence suggesting that Flores was incompetent. Further, the uncontested record of Flores’ prior history demonstrates he had no prior accidents, traffic convictions, moving violations, or criminal history. Dkt. No. 51-1. Because Hanson has failed to point to evidence that Flores was incompetent, summary judgment is appropriate with respect to the negligent hiring claim against Werner Enterprises.

ii. Negligent Training

Werner Enterprises does [*8] not contest the existence of a duty to adequately train. Thus, to survive summary judgment against a claim of negligent training, Hanson must point to evidence suggesting that “a reasonably prudent employer would have provided training beyond that which was given and that failure to do so caused [Hanson’s] injuries.” Dangerfield v. Ormsby, 264 S.W.3d 904, 912 (Tex. App.—Fort Worth 2008, no pet.). Hanson argues that Werner’s policies and procedures required it to provide Flores with 275 hours of training, but that Flores only received 84 hours of training; that Flores failed Werner Enterprises’ driving skills tests for safety awareness, speed and space management, and basic driving skills multiple times; that the passage of the driving skills test is a prerequisite to driving solo; that Werner Enterprises nonetheless allowed Flores to drive solo without additional training; that circumstantial evidence suggests that Werner Enterprises passed Flores despite unsatisfactory results; and that the mastery of the skills developed in Werner Enterprises’ training and testing would have prevented the accident. Dkt. No. 55 at 10-19. These facts are supported by the record and create a genuine dispute of fact. Accordingly, summary judgment is not appropriate on this claim. [*9]

iii. Negligent Supervision

Werner Enterprises does not contest the existence of a duty to adequately supervise. Thus, to survive summary judgment against a claim of negligent supervision, Hanson must point to evidence suggesting that Werner Enterprises failed to supervise Flores and that “failure to supervise [Flores] caused [Hanson’s] injuries.” Dangerfield, 264 S.W.3d at 913. The evidence discussed above, specifically that Flores failed tests for safety awareness, speed and space management, and basic driving skills multiple times; that the passage of the driving skills test is a prerequisite to driving solo; that Werner Enterprise nonetheless allow Flores to drive solo without additional training, Dkt. No. 55 at 10-19, creates a genuine dispute of fact regarding Hanson’s claim of negligent supervision precluding summary judgment. Accordingly, summary judgment is not appropriate on this claim.

iv. Negligent Retention

“An employer is not negligent when there is nothing in the employee’s background that would cause a reasonable employer to not hire or retain the employee” Dangerfield, 264 S.W.3d at 912. As discussed supra Part III.A.i, the Court has already concluded that Hanson failed to create a genuine dispute of a material fact as to Flores’ [*10] competence at hiring and that the record evidence does not indicate prior accidents, citations, or other issues relating to Flores’ ability to competently operate a motor vehicle. Further, the record does not indicate anything that would undermine Flores’ competency since hiring. Accordingly, summary judgment is appropriate on the negligent retention claim.

v. Negligent Entrustment

To survive summary judgment against a claim of negligent entrustment, Hanson must point to evidence suggesting (1) entrustment of a vehicle by Werner Enterprises; (2) to an unlicensed, incompetent, or reckless driver; (3) at the time of the entrustment, Werner Enterprises knew or should have known the driver was unlicensed, incompetent, or reckless; (4) the driver was negligent on the occasion in question; and (5) the driver’s negligence proximately caused the accident. Mayes, 236 S.W.3d at 758. The uncontested record demonstrates that Flores had a valid commercial driver’s license from Florida, the possession of which “is evidence of his competency absent any evidence to the contrary.” Batte, 137 S.W.3d at 791. Hanson has not pointed to record evidence to show that Flores was incompetent or reckless. In the absence of such, Hanson fails to create a genuine [*11] dispute of material fact as to the second and third elements. Accordingly, summary judgment is appropriate on this claim.

B. Gross Negligence

Gross negligence is not a separate cause of action from negligence. Prati v. New Prime, Inc., 949 S.W.2d 552, 557 (Tex. App.—Amarillo, 1997, pet. denied). It is a measure of the degree of negligence and is relevant to the recovery of exemplary damages. RLI Ins. Co. v. Union Pac. R.R. Co., 463 F. Supp. 2d 646, 650 (S.D. Tex. 2006). Texas law provides “exemplary damages may be awarded only if the claimant proves by clear and convincing evidence that the harm with respect to which the claimant seeks recovery of exemplary damages results from … gross negligence.” Tex. Civ. Prac. & Rem. Code Ann. § 41.003(a). Gross negligence is an act or omission

(A) which when viewed objectively from the standpoint of the actor at the time of its occurrence involves an extreme degree of risk, considering the probability and magnitude of the potential harm to others; and

(B) of which the actor has actual subjective awareness of the risk involved, but nevertheless proceeds with conscious indifference to the rights, safety, or welfare of others.

Tex. Civ. Prac. & Rem. Code Ann. § 41.001(11).

“Under the objective component, ‘extreme risk’ is not a remote possibility or even a high probability of minor harm, but rather the likelihood of the plaintiff’s serious injury.” U-Haul Int’l, Inc. v. Waldrip, 380 S.W.3d 118, 137 (Tex. 2012). The subjective prong of gross negligence “requires [*12] that the defendant knew about the risk, but the defendant’s acts or omissions demonstrated indifference to the consequences of its acts.” Id. “Although the courts recognize that there is ‘no exact line’ that can be drawn between ordinary and gross negligence, in general, the situation must be ‘highly dangerous.'” Phillips v. Super Servs. Holdings, LLC, 189 F. Supp. 3d 640, 655 (S.D. Tex. 2016) (quoting Wal-Mart Stores, Inc. v. Alexander, 868 S.W.2d 322, 326 (Tex. 1993)). Evidence of ordinary negligence is not enough to establish either the objective or subjective elements of gross negligence. Id. (citing Mobil Oil Corp. v. Ellender, 968 S.W.2d 917, 921 (Tex. 1998)).

i. Flores

“Texas courts have repeatedly made clear that whether a driver is operating a car or a truck, acts that support a finding of ordinary negligence, such as a party’s failure to obey traffic laws, will not support a finding of gross negligence.” Phillips, 189 F. Supp. 3d at 656 (collecting cases). Here, the record suggests nothing more than a failure to yield. Defendants argue that a failure to yield, without more, does not support a finding of gross negligence. Hanson fails to rebut this position. Accordingly, summary judgment is appropriate.

ii. Werner Enterprises

A corporation may be liable for gross negligence under Texas law when it authorizes or ratifies an agent’s gross negligence, commits gross negligence through the actions of a vice principal, [*13] or is grossly negligent in hiring an unfit agent. Mobil Oil Corp., 968 S.W.2d at 921-22 (citing Hammerly Oaks, Inc. v. Edwards, 958 S.W.2d 387 (Tex. 1997)). However, as discussed supra Part III.B.i, the Court concludes that summary judgment is appropriate to preclude Hanson’s claim of gross negligence against Flores. Accordingly, there is no basis to find Werner Enterprises grossly negligent via respondeat superior. Furthermore, as discussed supra Parts III.A.i, iv, & v, the Court concludes that summary judgment is appropriate to preclude the claims of ordinary negligence against Werner Enterprises for hiring, retaining and entrusting Flores. Accordingly, there is no basis to find Werner Enterprises grossly negligent for hiring, retaining and entrusting Flores.

Regarding Hanson’s claims of gross negligence in training and supervision, the fact that Flores was driving a large vehicle does not establish an extreme risk. Phillips, 189 F. Supp. 3d at 656. Further, evidence of negligent training of the driver of an 18-wheeler also does not establish extreme risk. See Alpizar v. John Christner Trucking, LLC, 2019 U.S. Dist. LEXIS 64751, 2019 WL 1643743, at *7 (W.D. Tex. April 16, 2019) (“A general failure to create a ‘culture of safety’ through lack of ongoing training may in some circumstances create a fact issue on negligence but is not clear and convincing evidence of gross negligence). However, evidence that Werner Enterprises [*14] did not provide Flores the scope of training mandated by company policy and that Werner Enterprises allowed Flores to drive solo prior to passage of driver safety test, is circumstantial evidence that is suggestive of dishonestly passing Flores. The sum of this evidence is sufficient to defeat summary judgment. Accordingly, summary judgment is not appropriate with respect to the claims of gross negligent in training and supervision.

C. Direct Negligence against Werner Enterprises

Some courts have held that when only ordinary negligence is advanced, a claim of negligent training and supervision and a claim of negligence via respondeat superior are mutually exclusive. See, e.g., Trinh v. Hunter, No. SA-20-CV-00725-JKP, 2022 U.S. Dist. LEXIS 185248, 2022 WL 6813293, at *5 (W.D. Tex. Oct. 11, 2022) (compiling and discussing state and federal Texas cases finding mutual exclusion when only ordinary negligence is advance). However, in the instant suit ordinary negligence against Flores was not challenged via summary judgment and a genuine issue of fact exists as to the claim of gross negligence in training and supervision of Flores by Werner Enterprises. Under these circumstances, the claims are not mutually exclusive. See, e.g., McDorman ex rel. Connelly v. Texas—Cola Leasing Co., 288 F.Supp.2d 796, 810 (N.D.Tex.2003) (noting that under Texas law where only ordinary negligence is alleged, negligent [*15] hiring and respondeat superior are mutually exclusive modes of recovery, while, on the other hand, a claim of grossly negligent hiring will preclude the owner from stipulating to vicarious liability for its employee’s negligent acts so as to escape independent liability); Williams v. McCollister, 671 F. Supp. 2d 884, 888-889 (S.D. Tex. 2009) (same). Accordingly, summary judgment is not appropriate as to Hanson’s claim of direct negligence against Werner so long as the claims of gross negligence in training and supervision survive.

IV. Negligence Per Se

When a statute includes an ordinary-prudent-person standard, the negligence per se doctrine cannot apply to the case because the statute implicates the same standard of conduct as the common-law standard of ordinary care. Supreme Beef Packers, Inc. v. Maddox, 67 S.W.3d 453, 456 (Tex. App.—Texarkana 2002, pet. denied); see also Rivera v. Thanh Chi Nguyen, 2019 U.S. Dist. LEXIS 177643, 2019 WL 4999055, at *4 (W.D. Tex. July 22, 2019), report and recommendation adopted, 2019 U.S. Dist. LEXIS 177649, 2019 WL 5026928 (W.D. Tex. Aug. 6, 2019).

Hanson’s complaint cites violations of Section 521.459 of the Texas Transportation Code specifically and federal and state laws and regulations generally. Defendants argue that Section 521.459 of the Texas Transportation Code does not impose a standard beyond that of ordinary care and therefore fails as a basis for negligence per se. Dkt. No. 51 at 18. Regarding the more general citation to federal and state laws and regulations, defendants argue negligence per se is not appropriate in the absence of an identified statute. Hanson does [*16] not rebut either argument. Accordingly, summary judgment is appropriate. While the doctrine of negligence per se will not be presented to the jury, they may be told of the statutes that Plaintiff contends were violated.

V. Conclusion

For the reasons discussed above, summary judgment is GRANTED IN PART dismissing Hanson’s claim against Flores for gross negligence and negligence per se and dismissing Hanson’s claims against Werner Enterprises for negligent hiring, retention, and entrustment of Flores. Otherwise, summary judgment is DENIED. SIGNED this 3rd day of January, 2012.

SIGNED this 19th day of December, 2022.

/s/ Roy S. Payne

ROY S. PAYNE

UNITED STATES MAGISTRATE JUDGE

End of Document

¹Although 2010 amendments replaced “issue” with “dispute,” the summary judgment standard “remains unchanged.” Fed. R. Civ. P. 56 advisory committee notes (2010 amend.).