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June 2023

Bunis v. Masha Mobile Moving and Storage, LLC

2023 WL 3689984

Only the Westlaw citation is currently available.

United States District Court, E.D. Pennsylvania.

Dr. Regina BUNIS

v.

MASHA MOBILE MOVING AND STORAGE, LCC

CIVIL ACTION NO. 23-1237

|

Filed May 26, 2023

Attorneys and Law Firms

William Carl Katz, Silverang Rosenzweig & Haltzman LLC, King of Prussia, PA, for Dr. Regina Bunis.

Thomas F. Reilly, The Chartwell Law Offices LLP, Philadelphia, PA, for Masha Mobile Moving and Storage, LLC.

MEMORANDUM

KEARNEY, District Judge

*1 We today address who may need to pay for a woman’s personal possessions lost or damaged when allegedly in the control of a moving and storage company. A Pennsylvanian hired a moving and storage company to first store and then eventually move her personal possessions to a new residence in Illinois. She paid more for upgraded storage and moving services. She claims the mover either lost or destroyed several hundred thousand dollars of her personal property before and during delivery to her new Illinois home. The mover told her to call its insurer. She had no contract or contact with the mover’s insurer nor did the mover’s insurer have anything to do with storing and then moving her property to Illinois. The mover’s insurer told her the losses did not meet the mover’s $500 deductible. She now sues the mover and its insurer for her losses. We understand her alleged facts as applied to the mover’s conduct. But she offers no basis to sue the mover’s insurer under federal law applying to interstate movers. She does not plead a contract relationship with the mover’s insurer. We grant the insurer’s motion to dismiss finding she did not plead a claim allowing her to sue the insurer under federal law nor did she plead a contract relationship with the mover’s insurer.

I. Alleged Facts

Dr. Regina Bunis decided in July 2021 to move from Pennsylvania to Illinois.1 She hired professional moving company Masha Mobile Moving and Storage, LLC to first store her personal items while she located housing and then ship those items to her new residence.2 Masha Mobile’s business model includes loading the customer’s belongings into padlocked shipping containers and transporting the containers to the customer’s new home.3 Masha Mobile represented offering “a safe and secure moving and storage facility where [Dr. Bunis’s] personal property would be safely stored in locked containers untouched by anyone from the moment it left her home until it arrived in Illinois.”4 Dr. Bunis purchased a series of premium services and upgrades including “general packing and unpacking services; disassembly, packing and reassembly of several large furniture items; and specialty packaging and packing services for Dr. Bunis’s lawn mowers and tools.”5

Masha Mobile began to pack Dr. Bunis’s household goods and belongings from her Pennsylvania home in July 2021. It packed her personal property into seven separate shipping containers.6 Masha Mobile employees instructed Dr. Bunis to lock the seven containers with her own padlocks and informed her they would be stored at Masha Mobile’s storage facility in Pottstown, Pennsylvania until delivery to Dr. Bunis’s next home.7 Masha Mobile packed and Dr. Bunis locked an additional five containers to be stored in Pottstown, Pennsylvania in August 2022.8 Dr. Bunis and Masha Mobile signed a bill of lading.9

*2 Dr. Bunis decided to relocate from her home in Rose Valley, Pennsylvania to Alton, Illinois. Dr. Bunis purchased a home in Alton, Illinois in November 2022.10 Dr. Bunis requested Masha Mobile deliver the twelve containers to her Illinois home, unpack her property, and reassemble her furniture.11 Masha Mobile quoted Dr. Bunis $29,700 for this service, plus an additional $420 per month in storage fees.12

Dr. Bunis’s personal property “began to arrive [in Illinois] in moving trucks after her lock [had] apparently been removed and her property … insecurely and haphazardly packed for transport on the moving trucks.”13 Masha Mobile damaged the vast majority of Dr. Bunis’s personal property during transport, including valuable antiques, gardening tools, a specialty bed, and a crystal chandelier.14 Dr. Bunis’s furniture hardware never arrived.15 Masha Mobile employees broke her padlocks, rummaged through, and stole many of her possessions.16 Masha Mobile failed to reassemble several large items of furniture for which Dr. Bunis contracted.17 Dr. Bunis reported the missing containers and items to Masha Mobile.18 Masha Mobile attempted to locate or repair the missing items with very limited success.19 Dr. Bunis inventoried the lost and damaged household goods and made a written demand to Masha Mobile.20 Masha Mobile charged Dr. Bunis the full $29,700.21

Masha Mobile directed Dr. Bunis to submit an insurance claim for her lost and damages items to its insurer The Hanover Insurance Company.22 Dr. Bunis submitted a claim to Hanover for the damaged and missing items totaling almost $300,000.23 Hanover denied Dr. Bunis’s claim asserting her claim did not exceed Masha Mover’s $500 deductible.24

II. Analysis

Dr. Bunis sued Masha Mobile and Hanover for damages relating to Masha Mobile’s mishandling and damaging of her personal property while moving the shipping containers from Pennsylvania to Illinois.25 Dr. Bunis sued both Masha Mobile and Hanover for violating the Carmack Amendment and for breach of contract.26 Dr. Bunis also sued Masha Mobile for conversion, violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, unjust enrichment, fraud, and negligent infliction of emotional distress.27

Hanover now moves to dismiss the Carmack Amendment and breach of contract claims against it.28 We grant Hanover’s Motion to dismiss the Carmack Amendment and breach of contract claims.

A. We dismiss Dr. Bunis’s Carmack Amendment claim against Hanover.

*3 Hanover moves to dismiss Dr. Bunis’s Carmack Amendment claim against it because Hanover is not a carrier.29 Hanover argues the Carmack Amendment only governs the liability of common carriers on bills of lading.30 Hanover contends liability under the Carmack Amendment does not apply to a carrier’s insurer.31 Hanover further contends Dr. Bunis cannot establish a prima facie case under the Carmack Amendment because Dr. Bunis cannot show delivery of goods to Hanover.32 Dr. Bunis concedes Hanover is not a carrier and is not directly liable under the Carmack Amendment.33 We agree Hanover is not liable under the Carmack Amendment and dismiss Dr. Bunis’s claim against it.

The Carmack Amendment to the Interstate Commerce Act creates a private cause of action for shippers against carriers causing loss or damage during the transportation of a shippers’ goods.34 The Carmack Amendment “imposes liability on a common carrier for the actual loss or injury to goods in an interstate commerce shipment.”35 The Carmack Amendment specifically provides “[a] carrier providing transportation or service … shall issue a receipt or bill of lading for property it receives for transportation…. That carrier and any other carrier that delivers the property … are liable to the person entitled to recover under the receipt or bill of lading.”36 The plain language of Carmack Amendment only “governs the liability of common carriers on bills of lading.”37 A shipper’s prima facie case requires proving “(1) delivery of goods to the initial carrier in good condition, (2) damage of the goods before delivery to their final destination, and (3) amount of the damages.”38

Hanover cannot be held directly liable under the Carmack Amendment. Hanover is undisputedly an insurer of a common carrier, and not a carrier itself.39 Dr. Bunis’s and Masha Mobile’s bill of lading does not include Hanover. The Carmack Amendment does not apply to Hanover because it is not a carrier and it did not sign a bill of lading with Dr. Bunis. There are no allegations Dr. Bunis delivered personal property or goods to Hanover. Dr. Bunis did not plead the first element required to establish Carmack Amendment liability against Hanover. We dismiss Dr. Bunis’s Carmack Amendment claim against Hanover.

B. We dismiss Dr. Bunis’s contract claim against Hanover.

Hanover moves to dismiss Dr. Bunis’s breach of contract claim against it arguing: (1) the Carmack Amendment preempts Dr. Bunis’s claims, and (2) Dr. Bunis is not in privity with Hanover Insurance.40

Hanover first argues all claims relating to the delivery, loss of, and damages of Dr. Bunis’s household goods are preempted by the Carmack Amendment.41 Hanover argues the Carmack Amendment provides the exclusive remedy for causes of action “involving losses of or damages caused by interstate shipment of household goods by common carriers under a bill of lading.”42

*4 Dr. Bunis counters the Carmack Amendment only preempts claims against carriers for injuries resulting directly from the loss of property shipped across state lines.43 Dr. Bunis contends Hanover is an insurer, not a carrier, so the Carmack Amendment does not apply. Dr. Bunis also argues she alleges damages resulting only from the storage and packing of her property in Pennsylvania, which is not preempted by the Carmack Amendment because it does not involve shipping of goods across state lines.44

Hanover then argues Dr. Bunis cannot maintain a direct claim against it because she does not have a contractual or legal relationship with Hanover.45 Hanover argues Pennsylvania law is well-settled: a third-party claimant cannot bring or maintain a direct action against an alleged tortfeasor’s liability insurer under any theory.46 Dr. Bunis counters she alleged privity with Hanover.47

We find Dr. Bunis’s claims are not preempted by the Carmack Amendment, but she cannot sue Hanover under a direct theory because Hanover and Dr. Bunis do not have a contractual or legal relationship. We dismiss Dr. Bunis’s breach of contract claim against Hanover.

The Carmack Amendment “preempts all state law or common law remedies available to a shipper against a carrier for loss or damage to interstate shipments.”48 Our Court of Appeals has instructed “state law breach of contract and negligence claims against a carrier for loss of or damage to goods [while in interstate transit] are preempted” by the Carmack Amendment.49 But the Carmack Amendment “does not preempt causes of action against the shipper or other non-carrier.”50 The Carmack Amendment “only preempts claims for damage caused by the carrier, and does not preclude suit against non-carrier entities to the extent that they are liable under other law.51 In Pelletron Corporation v. C.H. Robinson Worldwide, Inc., Judge Schiller analyzed in a Carmack Amendment case whether a party acted as a broker or carrier of interstate shipment of goods.52 Judge Schiller acknowledged “contrasted with a carrier, a broker is not liable under the Carmack Amendment.”53 Judge Schiller ultimately found claims against a non-carrier broker would not be preempted by the Carmack Amendment because the Carmack Amendment governs carriers only.54

*5 Dr. Bunis’s claims against Hanover are not preempted by the Carmack Amendment. It is undisputed Hanover is an insurer and not a carrier. Both Dr. Bunis and Hanover agree, as discussed above, the Carmack Amendment does not apply to Hanover because Hanover is not a carrier.55 The Carmack amendment does not preempt Dr. Bunis’s breach of contract claim against non-carrier Hanover. We next determine whether Dr. Bunis has sufficiently alleged a breach of contract claim against Hanover. We conclude she has not.

Pennsylvania law requires privity for a breach of contract claim.56 Fundamental contract law requires “one cannot be liable for breach of contract unless one is a party to that contract.”57 Our Court of Appeals instructs “[i]t is well-settled that under Pennsylvania law, an injured party has no right to directly sue the insurer of an alleged tortfeasor unless a provision of the policy or a statute create such a right.”58

An exception to the general rule a party must be a signatory to the contract to sue grants “intended third party beneficiaries standing to pursue a breach of contract claim.”59 For an intended third-party beneficiary to recover on a contract, “both contracting parties must have expressed an intention that the third party be a beneficiary, and that intention must have affirmatively appeared in the contract itself.”60 In Holovich v. Progressive Specialty Insurance Company, Judge Smith dismissed a breach of contract claim against a tortfeasor’s insurance company for lack of third-party standing because “[t]here is no allegation in the complaint that the … policy contained any provision expressly providing that an injured party could pursue a claim against Progressive.”61 Judge Smith found the injured party did not have a direct contractual relationship with Progressive nor did the signatories to the contract intend the injured party to be an intended third party beneficiary and dismissed the breach of contract claim.62

We find Dr. Bunis does not allege direct or intended third-party standing to pursue a breach of contract claim against Hanover. Dr. Bunis does not allege she is a signatory to the insurance contract between Hanover and Masha Mobile.63 Dr. Bunis does not allege she has contract standing with Hanover. She does not have direct standing to sue Hanover.64 We are also persuaded by Judge Smith’s reasoning in Holovich. We find Dr. Bunis does not have intended third-party standing.65 Dr. Bunis, despite arguing she alleges privity, does not allege she is an intended third-party beneficiary.66 Dr. Bunis alleges no facts Masha Mobile and Hanover intended Dr. Bunis to be a beneficiary or facts showing the policy contains a provision “providing that an injured party could pursue a claim against” Hanover.67 We must dismiss Dr. Bunis’s breach of contract claim against Hanover.

III. Conclusion

*6 We grant Hanover’s Motion to dismiss. We dismiss Dr. Bunis’s Carmack Amendment claim against Hanover because Hanover is not a carrier. We dismiss Dr. Bunis’s breach of contract claim against Hanover because she lacks privity and intended third-party beneficiary standing to pursue this claim.

All Citations

Footnotes

  1. ECF Doc. No. 1 ¶ 31.  
  2. Id. ¶¶ 19–21.  
  3. Id. ¶ 20.  
  4. Id. ¶ 34.  
  5. Id. ¶ 36.  
  6. Id. ¶ 37; see also 49 U.S.C.A. § 13102 (“The term ‘household goods’, as used in connection with transportation, means personal effects and property used or to be used in a dwelling, when a part of the equipment or supply of such dwelling, and similar property if the transportation of such effects or property is– (A) arranged and paid for by the householder, except such term does not include property moving from a factory or store, other than property that the householder has purchased with the intent to use in his or her dwelling and is transported at the request of, and the transportation charges are paid to the carrier by, the householder; or (B) arranged and paid for by another party.).  
  7. ECF Doc. No. 1 ¶ 38.  
  8. Id. ¶ 39.  
  9. Id. ¶ 41.  
  10. Id. ¶ 44.  
  11. Id.
  12. Id. ¶¶ 43, 45.  
  13. Id. ¶ 47.  
  14. Id. ¶¶ 48–50.  
  15. Id. ¶ 51.  
  16. Id. ¶ 52–53.  
  17. Id. ¶ 54.  
  18. Id. ¶ 55.  
  19. Id. ¶ 56–57.  
  20. Id. ¶ 65.  
  21. Id. ¶62.  
  22. Id. ¶¶ 66–67.  
  23. Id. ¶ 67–69. See also ECF Doc. Nos. 1-1(inventory of damaged or missing items), 1-2 (photographs of missing or damaged items).
  24. Id. ¶ 69.  
  25. ECF Doc. No. 1 at 14–24.  
  26. Id. ¶¶ 71–88; 49 U.S.C. § 14706; 49 C.F.R. 375.101.  
  27. ECF Doc. No. 1 ¶¶ 89–118; 73 P.S. § 201-1. We construe Dr. Bunis as alleging only Carmack Amendment violations and breach of contract against Hanover. See ECF Doc. No. 10-2 at 2, n. 1 (“Hanover is named in Count I for violations of the Carmack Amendment, 49 USC § 14706, et. seq., and Count II for Breach of Contract. Although Count IV is against “all defendants” for violations of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, the allegations of this count pertain to Masha Mobile, only. The remaining allegations are against Masha Mobile, only.”). Dr. Bunis’s claims against Masha Mobile remain unaffected by today’s Order.  
  28. ECF Doc. No. 10. A complaint must state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). The purpose of Rule 12(b)(6) is to test the sufficiency of the factual allegations in a complaint. Sanders v. United States, 790 F. App’x 424, 426 (3d Cir. 2019). If a plaintiff is unable to plead “enough facts to state a claim to relief that is plausible on its face,” the court should dismiss the complaint. Id. (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Kajla v. U.S. Bank Nat’l Ass’n as Tr. for Credit Suisse First Boston MBS ARMT 2005-8, 806 F. App’x 101, 104 n.5 (3d Cir. 2020) (quoting Warren Gen. Hosp. v. Amgen Inc., 643 F.3d 77, 84 (3d Cir. 2011)). “A claim is facially plausible ‘when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ” Klotz v. Celentano Stadtmauer and Walentowicz LLP, 991 F.3d 458, 462 (3d Cir. 2021) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). While “[t]he plausibility standard is not akin to a ‘probability requirement,’ ” it does require the pleading show “more than a sheer possibility … a defendant has acted unlawfully.” Riboldi v. Warren Cnty. Dep’t of Human Servs. Div. of Temp. Assistance & Soc. Servs., 781 F. App’x 44, 46 (3d Cir. 2019) (quoting Iqbal, 556 U.S. at 678). “A pleading that merely ‘tenders naked assertion[s] devoid of further factual enhancement’ is insufficient.” Id. (quoting Iqbal, 556 U.S. at 668). In determining whether to grant a Rule 12(b)(6) motion, “we accept all well-pleaded allegations as true and draw all reasonable inferences in favor of the plaintiff” but “disregard threadbare recitals of the elements of a cause of action, legal conclusions, and conclusory statements.” Robert W. Mauthe, M.D., P.C. v. Spreemo, Inc., 806 F. App’x 151, 152 (3d Cir. 2020) (quoting City of Cambridge Ret. Sys. v. Altisource Asset Mgmt. Corp., 908 F.3d 872, 878–79 (3d Cir. 2018)). Our Court of Appeals requires us to apply a three-step analysis to a 12(b)(6) motion: (1) we “ ‘tak[e] note of the elements a plaintiff must plead to state a claim’ ”; (2) we “identify allegations that … ‘are not entitled to the assumption of truth’ because those allegations ‘are no more than conclusion[s]’ ”; and, (3) “ ‘[w]hen there are well-pleaded factual allegations,’ we ‘assume their veracity’ … in addition to assuming the veracity of ‘all reasonable inferences that can be drawn from’ those allegations … and, construing the allegations and reasonable inferences ‘in the light most favorable to the [plaintiff]’ …, we determine whether they ‘plausibly give rise to an entitlement to relief.’ ” Oakwood Lab’ys LLC v. Thanoo, 999 F.3d 892, 904 (3d Cir. 2021) (internal citations omitted); Connelly v. Lane Constr. Corp., 809 F.3d 780, 787 (3d Cir. 2016).  
  29. ECF Doc. No. 10.  
  30. ECF Doc. No. 10-2 at 4.  
  31. Id.
  32. Id. at 4–5.  
  33. ECF Doc. No. 11 at 7.  
  34. Kotick v. Atlas Van Lines, Inc., No. 18-11916, 2019 WL 5388163, at *2 (D.N.J. Oct. 22, 2019) (citing S & H Hardware & Supply Co. v. Yellow Transp., Inc., 432 F.3d 550, 554 (3d Cir. 2005)) (“The Carmack Amendment provides for liability of common carriers for damage to or loss of goods during shipment.”). See also 49 U.S.C. § 14706(d).  
  35. Mallory v. Allied Van Lines, Inc., No. 02-7800, 2003 WL 22391296, at *2 (E.D. Pa. Oct. 20, 2003) (citing Beta Spawn, Inc. v. FFE Transp. Servs., Inc., 250 F.3d 218, 223 n. 4 (3d Cir. 2001)).  
  36. 49 U.S.C.A. § 14706(a)(1).  
  37. Paper Magic Grp., Inc. v. J.B. Hunt Transp., Inc., 318 F.3d 458, 461 (3d Cir. 2003). A bill of lading is a transportation contract between a shipper/consignor and a carrier. Id. (citing EF Operating Corp. v. American Bldgs., 993 F.2d 1046, 1050 (3d Cir. 1993)).  
  38. Paper Magic Grp., Inc., 318 F.3d at 461 (quoting Beta Spawn, Inc., 250 F.3d at 223).
  39. See ECF Doc. No. 10-2 at 4–5; ECF Doc. No. 11 at 7.   
  40. ECF Doc. No. 10.  
  41. ECF Doc. No. 10-2 at 5–8.  
  42. Id. at 6 (citing Strike v. Atlas Van Lines, 102 F. Supp. 2d 599, 600 (M.D. Pa 2000)). We acknowledge Hanover first argues the Carmack Amendment does not apply to it because Hanover is not a carrier, but then proceeds to argue the Carmack Amendment, which prevents state and common law claims against carriers only, should preempt Dr. Bunis’s common law claim against non-carrier Hanover. See ECF Doc. Nos. 10-2 at 4–8; ECF Doc. No. 11 at 7.  
  43. ECF Doc. No. 11 at 7–11.  
  44. We do not address Dr. Bunis’s second argument arguing injuries resulting from intrastate shipping and storage are not preempted by the Carmack Amendment because it does not involve interstate shipment of household goods. We find the Carmack Amendment does not apply to Hanover as it Hanover is not a carrier.  
  45. ECF Doc. No. 10-2 at 8-10.  
  46. Id.
  47. ECF Doc. No. 11 at 6.  
  48. Certain Underwriters at Int. at Lloyds of London v. United Parcel Serv. of Am., Inc., 762 F.3d 332, 336 (3d Cir. 2014) (quoting N. Am. Van Lines, Inc. v. Pinkerton Sec. Sys., Inc., 89 F.3d 452, 456 (7th Cir. 1996)). See also Certain Underwriters, 762 F.3d at 336 (“Courts of Appeals from the First, Second, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, and Eleventh Circuits have consistently held that the Carmack Amendment is the ‘exclusive cause of action for interstate-shipping contract [and tort] claims alleging loss or damage to property.’ ”) (internal citations omitted).  
  49. Certain Underwriters,762 F.3d at 336 (citing Lewis v. Atlas Van Lines, Inc., 542 F.3d 403, 407–08 (3d Cir. 2008)).
  50. Daily Exp. v. Maverick Transp., LLC, No. 10-1168, 2010 WL 5464452, at *2 (M.D. Pa. Dec. 9, 2010).  
  51. Taylor v. Allied Van Lines, No. 08-1218, 2008 WL 5225809, at *3 (D. Ariz. Dec. 15, 2008). See also Campbell v. Allied Van Lines, Inc., 410 F.3d 618, 620 (9th Cir. 2005) (“The Carmack Amendment preempts many state and common law claims against carriers in an effort to create a national scheme of carrier liability for goods damages or lost during interstate shipment.”) (emphasis added).
  52. Pelletron Corp. v. C.H. Robinson Worldwide, Inc., No. 11-6944, 2012 WL 3104845, at *3 (E.D. Pa. July 31, 2012).  
  53. Id. (citing Hewlett–Packard Co. v. Brother’s Trucking Enters., Inc., 373 F.Supp. 1349, 1351 (S.D. Fla. 2005)) (“The Carmack Amendment governs carriers, not brokers.”).  
  54. Pelletron Corp., 2012 WL 3104845, at *2–3 (citing Cont’l Cas. v. Quick Enters., No. 12–2351, 2012 WL 2522970, at *2 (D.N.J. June 29, 2012) (“The Third Circuit has also not addressed whether the Carmack Amendment preempts state law claims raised against freight brokers. It appears, however, that several other courts have considered the issue and found that the Carmack Amendment does not preempt such claims.”)).  
  55. ECF Doc. No. 10-2 at 4–5; ECF Doc. No. 11 at 7.  
  56. Whitaker v. Herr Foods, Inc., 198 F. Supp. 3d 476, 486 (E.D. Pa. 2016).  
  57. Id. (citing Electron Energy Corp. v. Short, 408 Pa.Super. 563 (1991)).  
  58. Holovich v. Progressive Specialty Ins. Co., 600 F. Supp. 3d 572, 579 (E.D. Pa. 2022) (quoting Apalucci v. Agora Syndicate, Inc., 145 F.3d 630, 632 (3d Cir. 1998)).  
  59. Republic Servs. of Pennsylvania, LLC v. Caribbean Operators, LLC, 301 F. Supp. 3d 468, 476 (E.D. Pa. 2018) (citing Guy v. Liederbach, 501 Pa. 47 (1983)).  
  60. Republic Servs. of Pennsylvania, LLC, 301 F. Supp. 3d at 476 (quoting Scarpitti v. Weborg, 530 Pa. 366 (1992)).  
  61. Holovich, 600 F. Supp. 3d at 579.  
  62. Id. at 579–80.  
  63. We have not seen an insurance contract. The parties did not attach a copy of the insurance contract to their filings.  
  64. See Electron Energy Corp. v. Short, 408 Pa.Super. 563 (1991).  
  65. Holovich, 600 F. Supp. 3d at 579.  
  66. See ECF Doc. Nos. 1, 11 at 6.  
  67. Holovich, 600 F. Supp. 3d at 579; See ECF Doc. No. 1.

© 2023 Thomson Reuters. No claim to original U.S. Government Works.

End of Document

Hughes v. Ace American Insurance Company

HUGHES

v.

ACE AMERICAN INSURANCE COMPANY.

A23A0609

May 26, 2023

Synopsis

Background: Driver of truck involved in automobile collision brought, inter alia, direct action claim against insurer of van for employer’s parent company, as well as the company, seeking to recover for damages sustained in collision after van’s driver made improper lane change. The Superior Court, Gwinnett County, Shawn F. Bratton, J., entered summary judgment for insurer. Victim appealed.

[Holding:] The Court of Appeals, Brown, J., held that driver was not entitled to bring direct action claim against insurer.

Affirmed.

West Headnotes (4)

[1] Insurance Direct action by injured person, in general  

The purpose of permitting joinder of an insurance company in a Motor Carrier Act direct action claim against a motor carrier is to further the policy of the Act, that is, to protect the public against injuries caused by the motor carrier’s negligence. Ga. Code Ann. § 40-1-112(c).    

[2] Insurance

The purpose of permitting joinder of an insurance company in a Motor Carrier Act direct action claim against a motor carrier enables injured persons to recover compensation more efficiently and quickly, and encourages insurers to resolve legitimate claims by settlement. Ga. Code Ann. § 40-1-112(c).    

[3] Insurance

Direct action statute permitting direct action against motor carrier’s liability insurer is in derogation of common law, and its terms require strict compliance. Ga. Code Ann. § 40-1-112(c).    

[4] Insurance

Direct action by injured person, in general  

Van used to transport residents of group home was not “public conveyance” as term was used in definition of “passenger” under direct action statute and, thus, driver of truck involved in collision with van was not entitled to bring direct action claim against insurer of van for home’s parent company; van was not used to transport people for compensation but, rather, was used to drive residents to medical appointments, a drug store to pick up prescriptions, the library, a park, special events, or a ride if a resident was restless. Ga. Code Ann. §§ 40-1-100(13), 40-1-112(c).  

Attorneys and Law Firms

Anna Green Cross, Nola D. Jackson, Michael L. Werner, Atlanta, Trevor Everton Brice, Jenna Hough, for Appellant.

Matthew A. Boyd, Tiffany Bianca Harlow, Atlanta, for Appellee.

Opinion

Brown, Judge.

*1 Kenneth Hughes appeals from the trial court’s order granting Ace American Insurance Company’s (“Ace Insurance”) motion for summary judgment. Hughes asserts that a genuine issue of material fact exists as to whether a passenger van insured by Ace was owned or operated by a “motor carrier” under OCGA § 40-1-100 et seq. For the reasons explained below, we disagree and affirm.

To prevail at summary judgment, the moving party must demonstrate that there is no genuine issue of material fact and that the undisputed facts, viewed in the nonmovant’s favor, warrant judgment as a matter of law. We review de novo a trial court’s [grant or] denial of summary judgment, construing the evidence in a light most favorable to the nonmoving party.

(Citation and punctuation omitted.) Mornay v. Nat.Union Fire Ins. Co. of Pittsburgh, PA., 331 Ga. App. 112, 769 S.E.2d 807 (2015).

So viewed, the record shows that a seven-passenger Dodge Caravan driven by Jeremiah Belk collided with a Chevrolet Colorado truck driven by Kenneth Hughes after Belk made an improper lane change. Hughes filed a complaint, as amended, against Belk’s employer, Normal Life of Georgia, Inc. (“Normal Life”), Res-Care, Inc. (“Res-Care”), the parent company of Res-Care, and Ace Insurance, the insurance carrier of Res-Care, asserting various theories of liability for the negligent and/or reckless conduct of Belk. Hughes asserted a direct action claim against Ace Insurance pursuant to OCGA § 40-1-112, based on his contention that Normal Life and Res-Care are motor carriers under OCGA § 40-1-100. The trial court subsequently granted Ace Insurance’s motion for summary judgment based on its conclusion that there was no genuine issue of material fact as to whether any of the defendants were a motor carrier.

[1] [2] [3]Georgia’s direct action provision of the Georgia Motor Carrier Act (“the Act”) states: “It shall be permissible under this part for any person having a cause of action arising under this part to join in the same action the motor carrier and the insurance carrier, whether arising in tort or contract.” OCGA § 40-1-112 (c). See generally Sapp v. Canal Ins. Co., 288 Ga. 681, 682-683 (1), 706 S.E.2d 644 (2011). “The purpose of permitting joinder of [an insurance company] in a claim against a [motor] carrier is to further the policy of the Motor Carrier Act, that is, to protect the public against injuries caused by the motor carrier’s negligence.” Andrews v. Yellow Freight System, 262 Ga. 476, 421 S.E.2d 712 (1992). See also Reis v. OOIDA Risk Retention Group, 303 Ga. 659, 664, n.12, 814 S.E.2d 338 (2018) (Noting that former OCGA § 46-7-12 (c) provided: “ ‘It shall be permissible under this article for any person having a cause of action arising under this article to join in the same action the motor carrier and the insurance carrier, whether arising in tort or contract.’ ”). Additionally, it “enables injured persons to recover compensation more efficiently and quickly and encourages insurers to resolve legitimate claims by settlement.” Grissom v. Gleason, 262 Ga. 374, 378 (3), 418 S.E.2d 27 (1992). “Importantly, the direct action statute is in derogation of common law, and its terms require strict compliance.” (Citation and punctuation omitted.) Stubbs Oil Co. v. Price, 357 Ga. App. 606, 616 (4), 848 S.E.2d 739 (2020). Cf. Record Truck Line v. Harrison, 220 Ga. 289, 291 (1), 138 S.E.2d 578 (1964) (holding different provision of statutory scheme governing motor carriers in derogation of common law and must be strictly construed).

*2 The first step of the analysis is to determine whether Normal Life and Res-Care fall within the definition of “motor carrier” in the Act. OCGA § 40-1-100 (12) (A) provides that this term

means: [e]very person owning, controlling, operating, or managing any motor vehicle, including the lessees, receivers, or trustees of such persons or receivers appointed by any court, used in the business of transporting for hire persons, household goods, or property or engaged in the activity of nonconsensual towing pursuant to Code Section 44-1-13 for hire over any public highway in this state.

(Emphasis supplied.) OCGA § 40-1-100 (8) defines “ ‘for hire’ ” to mean “an activity relating to a person engaged in the transportation of goods or passengers for compensation.” (Emphasis supplied.) And,

“[p]assenger” means a person who travels in a public conveyance by virtue of a contract, either express or implied, with the carrier as to the payment of the fare or that which is accepted as an equivalent therefor. The prepayment of fare is not necessary to establish the relationship of passenger and carrier, although a carrier may demand prepayment of fare if persons enter his or her vehicle by his or her permission with the intention of being carried; in the absence of such a demand, an obligation to pay fare is implied on the part of the passenger, and the reciprocal obligation of carriage of the carrier arises upon the entry of the passenger.

OCGA § 40-1-100 (13). Finally, “ ‘[c]arrier’ ” is defined to mean “a person who undertakes the transporting of goods or passengers for compensation.” OCGA § 40-1-100 (1). Taken together, it is clear from the plain language of the statute that the term “motor carrier” depends in turn on the definition of “for hire,” which in turn depends upon the definition of “passenger” found in OCGA § 40-1-100 (13).

Hughes contends that record evidence shows that Normal Life and Res-Care “operate as a joint enterprise” with both companies “employing” and “directing” Belk’s activities,1 which included transporting their clients. In his view, a genuine issue of material fact exists as to “whether the for-profit companies that charged to provide services including transportation over Georgia roadways” fall within the definition of motor carrier. He argues that “[t]he law just requires that one purpose of the vehicle falls within the statutory definition of ‘motor carrier’ — there is no percentage allocation or analysis of whether the statutorily enumerated services of a motor carrier are ‘ancillary’ to a business goal.”

Ace Insurance, on the other hand, asserts that the van was not used for “the business of transporting people for compensation” and that it was “an entirely ancillary part of [Normal Life’s] service of providing home health care.” According to Ace, the defendant companies “are solely in the business of providing rehabilitative home health care support to individuals with disabilities. Neither company … [is] compensated for transporting residents — they are paid for caregiving services and would be paid exactly the same if they never transported any resident, ever.”

*3 Sharae McMasters, an OCGA § 9-11-30 (b) (6) representative for Normal Life, testified that she is the executive director of southeast operations for Normal Life. She explained that Normal Life, which is a subsidiary of Res-Care, “managed the healthcare and pretty much every aspect of people with intellectual disabilities …. Basically, taking care of them … in a group home or in a personal home[.]” For the most part, Normal Life followed policies and procedures developed by Res-Care. A “Res[-]Care Corrective Action Form” states: “The Company’s mission is to be the best diversified health and human services provider in serving populations of various needs in our communities; creating optimal environments that foster independence, safety, and outcomes, through best-in-class services, an innovative and technology-led approach, and highly engaged people.” The declarations page for the business auto policy covering the Dodge Caravan listed Res-Care’s business as “job training and vocational rehabilitation services.”

Belk worked for Normal Life as direct support staff at two particular group homes and driving was a regular part of his job duties. The Dodge Caravan was used to drive residents of the group home to medical appointments, a drug store to pick up prescriptions, the grocery or a big box store, the library, a park, special events, or just a ride if a resident was restless. Basically, the residents of the group home could “go anywhere they need[ed] or want[ed] to go” in the Dodge Caravan, which would be driven by Normal Life staff. At the time of the accident, Belk was transporting a resident back to the group home; the reason for the trip cannot be determined from the record before us.

In an affidavit submitted at the same time as Ace Insurance’s motion for summary judgment, Normal Life’s 30 (b) (6) representative averred that

Normal Life is paid to provide group residential home services for its disabled clients — assisting them with eating, bathing, dressing, mobility, behavioral monitoring and redirection, and other activities of daily living, including general supervision in the home….

As an adjunct to those core activities, Normal Life employees sometimes drive clients to various appointments, doctor/medical/psychiatric visits, and similar errands….

Normal Life does not charge extra or separately for transporting clients. Normal Life’s expenses for transporting its clients are paid from its general operating budget. Normal Life does not transport residents for its own benefit or revenue, but as a service ancillary to its primary function of operating residential homes for disabled individuals….

Normal Life provides transportation for its clients only, and its transportation services are not held out for hire to the general public.

[4]Having considered the particular facts and circumstances of this case, the requirement that we must strictly construe the Act, and all other relevant rules of statutory construction, see, e.g., McIver v. State, 314 Ga. 109, 119-120 (2) (b), 875 S.E.2d 810 (2022), we conclude that no genuine issue of material fact exists as to whether the Dodge Caravan was a “public conveyance” as that term is used in the statutory definition of “passenger.” OCGA § 40-1-100 (13). See Harlan v. Six Flags over Georgia, 250 Ga. 352, 353, 297 S.E.2d 468 (1982) (noting that “elevators, taxicabs, buses, and railroads” are public conveyances). See also Haulers Ins. Co. v. Davenport, 344 Ga. App. 444, 446-448 (2), 810 S.E.2d 617 (2018) (holding ordinary, plain, and unambiguous meaning of term “public conveyance” means the vehicle must be held out indiscriminately to the general public for hire). We therefore affirm the trial court’s grant of summary judgment favor of Ace Insurance.

Judgment affirmed.

McFadden, P. J., and Markle, J., concur.

All Citations

Footnotes

  1. Ace asserts that whether the companies acted as a joint venture is irrelevant to whether either entity qualifies as a “motor carrier.”  

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