September 2023

Scottsdale Ins. Co. v. Am. English, LLC

United States District Court for the Northern District of Illinois, Eastern Division

August 21, 2023, Decided; August 21, 2023, Filed

No. 23 C 28

Reporter

2023 U.S. Dist. LEXIS 146167 *; 2023 WL 5348765

SCOTTSDALE INSURANCE CO., Plaintiff, v. AMERICAN ENGLISH, LLC and BESSIE SALTER, Defendants.

Core Terms

insured, allegations, unloading, coverage, loading, cart, duty to defend, van, underlying lawsuit, pleadings, injuries

Counsel: [*1] For Scottsdale Insurance Company, Plaintiff: Glenn A Klinger, Freeman Mathis & Gary, LLP, Chicago, IL; Jonathan L. Schwartz, Chicago, IL.

For American English, LLC, Defendant: Joseph P. DiPino, LEAD ATTORNEY, Beverly & Pause, Chicago, IL.

For Bessie Salter, Defendant: Matthew Yukito Yasuoka, LEAD ATTORNEY, Burnes Libman Law Group, Burnes Libman Law Group, Chicago, IL; Scott Norris, LEAD ATTORNEY, Burnes & Libman, Chicago, IL; Cody D Libman, Burnes Libman Law Group, Chicago, IL.

Judges: HONORABLE MARIA VALDEZ, United States Magistrate Judge.

Opinion by: MARIA VALDEZ

Opinion

MEMORANDUM OPINION AND ORDER

This matter is before the Court on Plaintiff Scottsdale Insurance Co.’s Motion for Judgment on the Pleadings [Doc. No. 32]. For the reasons that follow, Plaintiff’s motion is granted.

BACKGROUND

In this insurance coverage action, Plaintiff Scottsdale Insurance Co. seeks a declaratory judgment that it does not have a duty to defend or indemnify defendant American English, LLC in connection with a lawsuit brought against it by defendant Bessie Salter in Cook County, Illinois.¹ In the Underlying Lawsuit, Salter alleges that she was injured after being struck by a cart and/or the operator of the cart while it was being unloaded [*2] from a van owned by Defendant. The “cart” at issue was a wheeled trunk. Plaintiff has defended Defendant in the Underlying Lawsuit subject to a reservation of rights.

Plaintiff issued to Defendant a commercial general liability insurance policy, No. CPS3058145, effective June 1, 2018 to June 1, 2019.² With respect to bodily injury liability coverage, the CGL Policy provides that Plaintiff:

will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” . . . to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” . . . to which this insurance does not apply . . .

(Compl., Ex. A at 13, ¶ 1.)

According to Plaintiff, it has no duty to defend or indemnify Defendant in the Underlying Lawsuit due to the CGL Policy’s Auto Exclusion, which states that Defendant is not insured for:

“[b]odily injury” . . . arising out of the ownership, maintenance, use or entrustment to others of any . . . “auto” . . . owned or operated by or rented or loaned to any insured. Use includes operation [*3] and “loading and unloading”.

This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured, if the “occurrence” which caused the “bodily injury” . . . involved the ownership, maintenance, use or entrustment to others of any . . . “auto” . . . that is owned or operated by or rented or loaned to any insured.

(Compl. Ex. A at 16, ¶ 2.g.)

DISCUSSION

Federal Rule of Civil Procedure 12(c) provides that “[a]fter the pleadings are closed — but early enough not to delay trial — a party may move for judgment on the pleadings.” See Hanover Ins. Co. v. R.W. Dunteman Co., 51 F.4th 779, 785 (7th Cir. 2022) (“Like a dismissal for the failure to state a claim under Rule 12(b)(6), our task is to determine ‘whether the well-pleaded factual allegations viewed in favor of the nonmoving party state a facially plausible claim for relief.'”) (citation omitted). A motion for judgment on the pleadings operates like a motion to dismiss, i.e., “the motion should not be granted unless it appears beyond doubt that the nonmovant cannot prove facts sufficient to support its position, and that the plaintiff is entitled to relief.” Federated Mut. Ins. Co. v. Coyle Mech. Supply Inc., 983 F.3d 307, 313 (7th Cir. 2020) (“As with a motion to dismiss, the court views all facts and inferences in the light [*4] most favorable to the non-moving party.”); see Zurich Am. Ins. Co. v. Ocwen Fin. Corp., 990 F.3d 1073, 1078 (7th Cir. 2021).

The parties agree that the CGL Policy’s terms are to be construed under Illinois law, and thus contract principles govern the policy’s interpretation. See Sanders v. Illinois Union Ins. Co., 2019 IL 124565, ¶ 22, 157 N.E.3d 463, 467. Courts are directed to “ascertain and give effect to the intention of the parties, as expressed in the policy language.” Id.; see Valley Forge Ins. Co. v. Swiderski Elecs., Inc., 223 Ill. 2d 352, 860 N.E.2d 307, 314, 307 Ill. Dec. 653 (Ill. 2006). “Like any contract, an insurance policy is to be construed as a whole, giving effect to every provision, if possible, because it must be assumed that every provision was intended to serve a purpose.” Valley Forge Ins., 860 N.E.2d at 314.

Clear and unambiguous terms are to be ascribed their plain and ordinary meaning. Sanders, 2019 IL 124565, ¶ 23; see Valley Forge Ins., 860 N.E.2d at 314 (“However, if the words used in the policy are ambiguous, they will be strictly construed against the drafter.”). “Words are ambiguous if they are reasonably susceptible to more than one interpretation, not simply if the parties can suggest creative possibilities for their meaning, and a court will not search for ambiguity where there is none.” Valley Forge Ins., 860 N.E.2d at 314 (citations omitted); see Sanders, 2019 IL 124565, ¶ 23.

In determining whether Plaintiff has a duty to defend, the Court must review the CGL Policy in conjunction with the underlying complaint.³ See Valley Forge Ins., 860 N.E.2d at 314 (“The allegations must be liberally construed in favor of [*5] the insured.”); see also Federated Mut. Ins., 983 F.3d at 314 (“‘Any doubts about the duty to defend are resolved in favor of the insured.'”) (citation omitted). “[A] insurer may not justifiably refuse to defend a lawsuit against its insured unless it is clear from the face of the underlying complaint that the allegations set forth in the complaint fail to state facts that bring the case within, or potentially within, the coverage of the policy.” Valley Forge Ins., 860 N.E.2d at 315. It does not matter “if the allegations are groundless, false, or fraudulent, [or] even if only one of several theories of recovery alleged in the complaint falls within the potential coverage of the policy.” Id.; see Federated Mut. Ins., 983 F.3d at 314 (quoting Ill. Tool Works Inc. v. Travelers Cas. & Sur. Co., 2015 IL App (1st) 132350, 389 Ill. Dec. 331, 26 N.E.3d 421, 428 (Ill. App. Ct. 2015)) (“‘An insurer can only refuse to defend if the allegations of the underlying complaint preclude any possibility of coverage.'”); Mesa Labs., Inc. v. Fed. Ins. Co., 994 F.3d 865, 868 (7th Cir. 2021) (“[I]f even one claim is covered, then the insurer has a duty to defend the entire suit.”).

Plaintiff argues that it has no duty to defend or indemnify Defendant in the underlying lawsuit under the terms of the CGL Policy’s Auto Exclusion, which precludes coverage for bodily injury arising out of the use of a covered auto, and the definition of “use” includes loading and unloading. The CGL Policy defines “Loading or Unloading” [*6] as:

[T]he handling of property:

a. After it is moved from the place where it is accepted for movement into or onto an . . . “auto”;

b. While it is in or on an . . . “auto”; or

c. While it is being moved from an . . . “auto” to the place where it is finally delivered; but “loading or unloading” does not include the movement of property by means of a mechanical device, other than a hand truck, that is not attached to the . . . “auto”.

(Compl. Ex. A at 26, ¶ 11.)

According to Plaintiff, the Underlying Lawsuit’s allegations fit squarely into the Auto Exclusion because when Salter was injured, the van was being unloaded, Defendant’s agent was removing the cart from the van, the cart was not powered by electricity, and the cart struck Salter. Defendant responds that certain of Salter’s allegations take her complaint out of the Auto Exclusion, namely that Defendant’s agent “a. Carelessly and negligently allowed a loaded cart to get loose and roll into Ms. Salter; and b. Carelessly and negligently failed to follow the policies and procedures of the Hollywood Casino Aurora when loading and unloading equipment.” (Compl. Ex. B at 4, ¶ 4.) Defendant also argues that the Auto Exclusion does not apply [*7] because Salter was not struck by the vehicle, its agent was not behind the wheel at the time of the injury, and the circumstances of Salter’s injury are unconnected from the vehicle’s use.

Defendant, however, acknowledges that the Illinois Supreme Court has defined “use of an automobile” as denoting “its employment for some purpose of the user.” Schultz v. Ill. Farmers Ins. Co., 237 Ill. 2d 391, 930 N.E.2d 943, 949, 341 Ill. Dec. 429 (Ill. 2010). “One uses an automobile whenever such use ‘is rationally connected to the vehicle for the purpose of providing transportation or satisfying some other related need of the user.'” Id. The transportation of equipment is unquestionably connected to the vehicle. Moreover, the Auto Exclusion expressly states that “[u]se includes operation and ‘loading and unloading’.” (Compl. Ex. A at 16, ¶ 2.g.). The plain, unambiguous language of the CGL Policy excludes injuries caused by the unloading of the van, and the cart that allegedly ran into Salter was being unloaded from the van.

Defendant further maintains that the Auto Exclusion does not apply because when considering Salter’s general negligence allegations, the vehicle was merely the location of incidental conduct causing injury, citing Mount Vernon Fire Ins. Co. v. Heaven’s Little Hands Day Care, 343 Ill. App. 3d 309, 795 N.E.2d 1034, 277 Ill. Dec. 366 (Ill. App. Ct. 2003), where a child died after being mistakenly left in a day care [*8] vehicle. The Court concludes that Mount Vernon is inapposite and instead finds that the use of the vehicle was central, not merely incidental, to Salter’s alleged injuries. Unlike in Mount Vernon, the injury to Salter was not “attenuated from the actual legitimate purpose” of Defendant’s vehicle, and the vehicle was not merely the situs of the injury. Id. at 1043.

Mount Vernon described the “use” of a vehicle in the context of a motor vehicle policy – “[a] causal relation or nexus must exist between the accident or injury and the ownership, use or maintenance of the vehicle in order for the accident or injury to come within the policy coverage; where such nexus or connection is absent, coverage is denied.” Id. at 1041 (cleaned up, citation omitted) (“The resolution of this issue must be obtained by determining whether the alleged use of the vehicle is reasonably consistent with the inherent nature of the vehicle.”). Defendant’s use of the vehicle to transport and unload equipment was entirely consistent with the van’s nature, and there is a direct nexus between that use and the injuries Salter alleges.

In addition, it is not relevant that the Underlying Lawsuit contains allegations that Defendant negligently failed to follow the venue’s policies [*9] and procedures when unloading the equipment. Those allegations “are nothing more than rephrasings of the fact that the student [Salter’s] injuries arose from [Defendant’s] use or operation of a motor vehicle.” Northbrook Prop. & Cas. Co. v. Transp. Joint Agreement, 194 Ill. 2d 96, 741 N.E.2d 253, 254, 251 Ill. Dec. 659 (Ill. 2000); see Pactiv Corp. v. Nat’l Union Fire Ins. Co., 179 F. Supp. 3d 803, 808 (N.D. Ill. 2015) (explaining that injuries caused by trailer doors flying open arose from the trailer’s use, even if it were negligently loaded as alleged in the underlying complaint); see also Zurich Am. Ins., 990 F.3d at 1082 (“An underlying complaint’s vague allegations and legal labels, without supporting facts, do not trigger a duty to defend.”).

CONCLUSION

For the foregoing reasons, Plaintiff Scottsdale Insurance Co.’s Motion for Judgment on the Pleadings [Doc. No. 32] is granted.

SO ORDERED.

ENTERED:

/s/ Maria Valdez

HON. MARIA VALDEZ

United States Magistrate Judge

DATE: August 21, 2023

End of Document

¹Although Salter is also a nominal defendant, the term “Defendant” in this opinion refers only to American English, LLC.

²The insurance policy is attached to the complaint as Exhibit A and may be considered in this motion. See Fed. Mut. Ins. Co. v. Coyle Mech. Supply, Inc., 983 F.3d 307, 312-13 (7th Cir. 2020) (“Pleadings ‘include the complaint, the answer, and any written instruments attached as exhibits.'”) (citation omitted).

³“Under Illinois law, ‘[a]n insurer’s duty to defend is broader than its duty to indemnify.” Federated Mut. Ins. Co. v. Coyle Mech. Supply Inc., 983 F.3d 307, 314 (7th Cir. 2020) (citation omitted).

Montaze Broz, LLC v. Global Ocean Line, Inc.

United States District Court for the Southern District of Florida

August 4, 2023, Decided; August 4, 2023, Entered on Docket

Case No. 23-cv-21788-BLOOM/Otazo-Reyes

MONTAZE BROZ, LLC, a Florida Limited Liability Company, Plaintiff, v. GLOBAL OCEAN LINE, INC., a Florida for Profit Company, Defendant.

Counsel: [*1] For MONTAZE BROZ, LLC., a Florida Limited Liability Company, Plaintiff: Manuel Gabriel Fente, LEAD ATTORNEY, Fente and Fente Attorneys at Law, Coral Gables, FL; Manuel Felix Fente, Law Offices of Manuel F. Fente, P.A., Coral Gables, FL.

For GLOBAL OCEAN LINE, INC., a Florida for Profit Company, Defendant: Jonathan Scott Cooper, Blanck & Cooper, P.A., Miami, FL.

Judges: BETH BLOOM, UNITED STATES DISTRICT JUDGE.

Opinion by: BETH BLOOM

Opinion

ORDER ON MOTION TO DISMISS

THIS CAUSE is before the Court on Defendant Global Ocean Line’s (“GOL” or “Defendant”) Motion to Dismiss, ECF No. [6] (“Motion”), and the attached exhibits that include terms and conditions of a GOL Bill of Lading, ECF No. [6-1] (“Exhibit A” or “Terms and Conditions”);¹ a Booking Confirmation from ocean carrier CMA-CGM to Defendant, ECF No. [6-2] (“Booking Confirmation” or “Exhibit B”); and a Booking Form from NationWideDealers LLC, an entity that booked a shipment with Defendant on behalf of Plaintiff Montaze Broz, LLC, ECF No. [6-3] (“Booking Form” or “Exhibit C”). Plaintiff filed a Response, ECF No. [8], to which Defendant did not file a Reply. The Court has considered the Motion, the Exhibits attached thereto, the Response, the record in this case, [*2] the applicable law, and is otherwise duly advised. For reasons that follow, the Motion is denied.

I. BACKGROUND

This action is based on cargo owned by Plaintiff and stolen while in Defendant’s custody. On May 12, 2023, Plaintiff filed its Complaint asserting one count of negligence and admiralty or maritime jurisdiction under 28 U.S.C. § 1333, ECF No. [1] ¶ 1. Plaintiff alleges the following: Plaintiff is a limited liability company and the owner of a 2019 Ford Raptor F-150 bearing VIN 1FTFW1RG9KFB88757 (“Cargo”), and Defendant is a for-profit company engaged in transporting goods for hire by water, and/or operating as a non-vessel operating common carrier. Id. ¶ 2. On November 11, 2022, Plaintiff delivered its Cargo to Defendant for Defendant to transport the same from Miami, Florida, to Bremerhaven, Germany. Id. ¶ 4. Defendant issued a Booking Confirmation which did not refer to any terms and conditions and Defendant did not provide Plaintiff at any time with any other document to which the parties agreed to any terms or conditions incident to the transport of the F-150. Id. ¶¶ 4, 5. On November 15, 2022, the Cargo was stolen while in storage and under the exclusive control and possession of Defendant. [*3] Id. ¶ 6. As a result of Defendant’s negligence, Plaintiff has been damaged in excess of approximately $37,360.71. Id. ¶ 9.

On June 12, 2023, Defendant filed the instant Motion, contending that the maritime Economic Loss Rule bars the negligence claim because Plaintiff has not alleged any damage other than the loss of the Cargo, and asserting the following:

the Complaint alleges that a Bill of Lading had not issued at the time the cargo had been damaged, however that is not to say that a bill of lading was not intended to have been issued, as it is the standard in the industry for the Bills of Lading to be issued only after the cargo is loaded on board ship and the ship sails.

See ECF No. [6] at 3. As such, Defendant argues that the relationship between the parties is contractual, so Plaintiff’s alleged losses are not recoverable under a negligence theory because the maritime Economic Loss Rule bars the claim. Id.

As noted, Defendant attaches certain Exhibits to its Motion. Defendant highlights the following provisions in the Terms and Conditions:

All carriage under this Bill of Lading to or from the United States shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, 46 U.S.C. sections 1300-1315 (hereafter, “COGSA“).

[*4] . . .

Except as may be otherwise specifically provided herein, said law shall govern before the goods are loaded on and after they are discharged from the vessel whether the goods are carried on deck or under deck and throughout the entire time the goods are in the custody of the carrier.

. . .

The defenses and limits of liability provided for in this Bill of Lading shall apply in any action or claim against Carrier relating to the goods, or the receipt, transportation, storage or delivery thereof, whether the action be founded in contract, tort or otherwise.

. . .

Carrier’s liability for compensation for loss of or damage to goods shall in no case exceed the amount of US $500.00 per package or per customary freight unit, unless Merchant, with the consent of Carrier, has declared a higher value for the goods in the space provided on front of this Bill of Lading and paid extra freight per Carrier’s tariff, in which case such higher value shall be the limit of Carrier’s liability.

ECF No. [6-1] at 1. Ostensibly, Defendant seeks to limit Plaintiff’s recovery to the $500.00 limitation of liability provision described above.

The Booking Confirmation identifies Defendant as the Shipper for one “40’HC” [*5] of “[o]ther vehicles, with only spar” from Miami, Florida to Bremerhaven, Germany. See ECF No. [6-2] at 1. Exhibit C is an unexecuted Booking Form from NationWideDealers LLC that identifies Plaintiff as the “Party in US / Seller / Origin.” ECF No. [6-3] at 1. The Booking Form pertains to a 2019 Ford F150 Raptor bearing VIN 1FTFW1RG9KFB88757. Id.

Plaintiff responds that the Court is limited to considering the four corners of the Complaint on a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, ECF No. [8] at 3-4, and it has adequately pled a claim sounding in negligence. Id. Moreover, even if the Court were to consider the attachments to the Motion, Plaintiff reasons that it was not bound by the Terms and Conditions because there are no allegations or evidence supporting that Defendant provided those Terms and Conditions nor did Defendant make any reasonable effort to warn Plaintiff that the Booking Confirmation was subject to those Terms and Conditions. Id. at 3.

II. STANDARD

To survive a motion to dismiss for failure to state a claim under Rule 12(b)(6), a pleading in a civil action must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). Although a complaint “does not need [*6] detailed factual allegations,” it must provide “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007) (citations omitted); see Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (explaining that Rule 8(a)(2)‘s pleading standard “demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation”). Nor can a complaint rest on “‘naked assertion[s]’ devoid of ‘further factual enhancement.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557 (alteration in original)). “To survive a motion to dismiss a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Id. (quoting Twombly, 550 U.S. at 570). When a defendant moves to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6), the court must accept the plaintiff’s allegations as true and evaluate all possible inferences derived from those facts in favor of the plaintiff. See Miccosukee Tribe of Indians of Fla. v. S. Everglades Restoration All., 304 F.3d 1076, 1084 (11th Cir. 2002); AXA Equitable Life Ins. Co. v. Infinity Fin. Grp., LLC, 608 F. Supp. 2d 1349, 1353 (S.D. Fla. 2009).

III. DISCUSSION

At the outset, the Court notes Defendant does not dispute that the Complaint contains a short and plain statement of a cognizable claim but argues the maritime Economic Loss Rule bars Plaintiff’s negligence claim. Moreover, the Court may properly consider a document attached to a motion to dismiss without converting [*7] the motion into one for summary judgment if the attached document is (1) central to the plaintiff’s claim and (2) undisputed, meaning that the authenticity of the document is not challenged. Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005).

Here, the Complaint alleges Defendant issued a Booking Confirmation which did not refer to any terms and conditions and did not provide Plaintiff with any other document to which the parties agreed to be bound by any terms or conditions. Id. ¶¶ 4, 5. Therefore, a copy of the Booking Confirmation, and any other documents showing that the parties agreed to any terms and conditions incident to Cargo transport, would be “central” to Plaintiff’s negligence claim because such documents may be dispositive of whether Plaintiff has adequately stated the claim. Exhibit B is a Booking Confirmation issued by Defendant, see ECF No. [6-2], and, therefore, central to Plaintiff’s claim as it is referenced in Plaintiff’s Complaint. See Day, 400 F.3d at 1276 (affirming that contents of a dealership contract were central to appellant’s resale price maintenance claim).

Exhibit A contains Terms and Conditions, ECF No. [6-1], but the Complaint does not refer to those and states there were no terms and conditions to which the shipment of [*8] the cargo was subject. However, if Defendant could show Plaintiff were bound by the Terms and Conditions, the maritime Economic Loss Rule might be applicable to Plaintiff’s negligence claim, so Exhibit A, in conjunction with the Booking Confirmation, would be “central” to the negligence claim. Moreover, the Court finds Exhibit C is also “central” to the claim. Although Exhibit C is an unexecuted Booking Form from NationWideDealers, LLC, it describes Plaintiff as the “Party in US / Seller / Origin” and describes the shipment item as a “2019 FORD F150 RAPTOR” with VIN 1FTFW1RG9KFB88757. ECF No. [6-3]. Exhibit C is offered to show that the Cargo is the subject of the Booking Confirmation. The Court may thus consider the Exhibits because Plaintiff does not dispute their authenticity.

The Court next considers whether the maritime Economic Loss Rule bars Plaintiff’s negligence claim. Although the Florida Supreme Court has limited its application to products liability cases, see Tiara Condo. Ass’n, Inc. v. Marsh & McLennan Cos., Inc., 110 So. 3d 399 (Fla. 2013), no such limitation has been imposed in cases governed by maritime law. Generally, the maritime Economic Loss Rule “provides that a tort action may not lie where the basis for liability arises from a contract.” St. Clair Marine Salvage, Inc. v. M/Y BLUE MARLIN, 2014 U.S. Dist. LEXIS 75164, 2014 WL 2480587, at *4 (E.D. Mich. June 3, 2014) (citing [*9] E. River S.S. Corp. v. Transamerica Delaval, Inc., 476 U.S. 858, 106 S. Ct. 2295, 90 L. Ed. 2d 865 (1986)). The Rule finds its origins in East River S.S., where the Supreme Court held a “manufacturer in a commercial relationship has no duty under either a negligence or strict products-liability theory to prevent a product from injuring itself.” Id. at 871.

The maritime Economic Loss Doctrine has been expanded to reach situations where a party is attempting to bring a breach of contract action couched as a tort claim. See BVI Marine Constr. Ltd. v. ECS-Florida, LLC, 2013 U.S. Dist. LEXIS 178883, 2013 WL 6768646, at *3-4 (S.D. Fla. Dec. 20, 2013). The Supreme Court’s decision in E. River S.S. indirectly cautioned that claims sounding in tort but stemming from a contractual dispute are often more appropriately remedied pursuant to the contractual relationship. East River S.S. Corp., 476 U.S. at 874 (“Permitting recovery for all foreseeable claims for purely economic loss could make a manufacturer liable for vast sums.”). “[W]hen an enforceable contract exists, it is preferable to resolve disputes on the basis of the contractual relationship.” BVI Marine Const., 2013 U.S. Dist. LEXIS 178883, 2013 WL 6768646, at *4. However, the maritime Economic Loss Rule does not bar a claim where “the specific acts of alleged negligence are outside the scope of [a] contractual agreement and do not arise from [a] contractual relationship.” See CGK LLC v. Pantropic Power, Inc., No. 20-cv-60730-WPD, 2020 U.S. Dist. LEXIS 263726, 2020 WL 13356471, at *4 (S.D. Fla. June 12, 2020) (finding that parties were not in privity where specific alleged negligence acts occurred prior to the commencement [*10] of a contractual relationship).

Here, the Complaint alleges that on November 11, 2022, Plaintiff delivered the Cargo to Defendant to transport the same from Miami, Florida to Bremerhaven, Germany. ECF No. [1] ¶ 4. The Complaint further alleges Defendant did not issue, nor did it provide Plaintiff, “a Bill of Lading or any other written contract pursuant to which the parties agreed to terms or conditions incident to” Cargo transport. ECF No. [1] ¶ 5. The Booking Confirmation describes a shipment by Defendant as the shipper of a “40’HC” containing “[o]ther vehicles, with only spar.” ECF No. [6-2] at 1. The Booking Confirmation further states that the shipment’s Port of Loading is Miami, FL, and that its Port of Discharge is Bremerhaven. Id. As the Complaint alleges, the Booking Confirmation “makes no mention of terms and conditions or any other document.” ECF No. [1] ¶ 4. The allegations in the Complaint—accepted as true for the purposes of deciding the Motion—and the Booking Confirmation do not show the parties are in contractual privity. That fact distinguishes the instant action from American Marine, a case on which Defendant relies, ECF No. [6] at 2, where the parties in that dispute [*11] sat in contractual privity because the plaintiff and the defendant, under a fictitious name, were named parties to a service agreement. Am. Marine Tech, Inc. v. World Grp. Yachting, Inc., 418 F. Supp. 3d 1075, 1082 (S.D. Fla. 2019). Here, the parties are not named parties to the Booking Confirmation, and there are no indications on the Booking Confirmation that the parties entered into a contractual agreement to ship the Cargo. Although the other Exhibits, the Terms and Conditions and the Booking Form, are relevant to show that the Booking Confirmation relates to the Cargo, there is no indication that the Cargo is subject to the attached Terms and Conditions. That is so because Defendant does not attach a Bill of Lading. As Plaintiff points out, Defendant has acknowledged that a Bill of Lading “had not issued at the time the cargo had been damaged.” See ECF No. [6] at 3. As such, although the Terms and Conditions refer to a Bill of Lading, there is no evidence a Bill of Lading ever issued, and no indication that Plaintiff agreed to be bound by the Terms and Conditions related to the Cargo. Thus, Defendant fails to show that the parties’ relationship is contractual or that the instant action arises from a contractual agreement. See CGK, 2020 U.S. Dist. LEXIS 263726, 2020 WL 13356471, at *4.

Recognizing that its Exhibits do not evidence [*12] on their own Plaintiff’s agreement to be bound by the Terms and Conditions, Defendant contends “it is standard in the industry for the Bills of Lading to be issued only after the cargo is loaded on board ship and the ship sales,” so Plaintiff was subject to the Terms and Conditions of a Bill of Lading. See ECF No. [6] at 3 (citing Berkshire Knitting Mills v. Moore-McCormack Lines, Inc., 265 F. Supp. 846 (S.D.N.Y. 1965)). However, Defendant’s reliance on Berkshire Knitting is misplaced.

In Berkshire Knitting, plaintiff sought partial summary judgment striking a defense that defendant’s liability was limited by the Carriage of Goods by Sea Act to an amount not exceeding $500.00. Berkshire Knitting, 265 F. Supp. at 847. Plaintiff sued a carrier when one of its wooden cases containing hosiery knitting machines was damaged on a pier. Id. At the time of the damage, the carrier issued a dock receipt and a bill of lading that had been prepared by plaintiff’s agent, a freight forwarder, but had not been signed or issued. Id. However, the parties stipulated that the bill of lading was to have been submitted to the carrier by the plaintiff or its agent “for signing and issuance at or about the time the cases[, including the case at issue,] were to be loaded on board the designated vessel.” Id. Plaintiff argued in part that the dock receipt was ambiguous and could not be understood [*13] to incorporate the limiting terms of the bill of lading. Id. at 847-48. The court disagreed, explaining that the dock receipt clearly incorporated the terms of the bill of lading. Id. at 847. The court continued, “[t]he form of bill of lading was concededly known, and as a matter of common business experience in transactions of this nature both parties must be deemed bound by the terms it contained.” Id. In the alternative, Berkshire noted that, even if there had been no dock receipt, it was the clear intention of the parties to be bound by the bill of lading. Id. For this proposition, Berkshire relied on Luckenbach S.S. Co. v. American Mills Co., where the former Fifth Circuit held the parties in that case were bound by the terms of a bill of lading in customary form despite the absence of a dock receipt. Luckenbach S.S. Co. v. Am. Mills Co., 24 F.2d 704, 705 (5th Cir. 1928). Luckenbach explained that the appellant in that case was required by law to issue a bill of lading, and that appellee was presumed to know the law, so held that “an implied understanding arose from common business experience that the carrier would issue [a] bill of lading as it was its custom to issue to shippers in the usual course of its business.” Id. Accordingly, Luckenbach held that “a shipper, in the absence of a special contract, [*14] must be presumed to deliver his goods on the terms and conditions usually and customarily imposed by the carrier in the regular course of business.” Id.

The courts in Berkshire and Luckenbach rendered their decisions at later stages of litigation and based on factual determinations. Berkshire describes “common business experience” in the shipping industry, and both Berkshire and Luckenbach advert to the existence of a bill of lading and of customs regarding a carrier operating in the ordinary course of business.

Here, it would be improper for the Court to conclude that industry standards dictate that Plaintiff is bound by the Terms and Conditions. Before the Court is the Complaint and Defendant’s submissions, but no Bill of Lading. Nor is evidence of industry custom or of Defendant’s billing practices in the ordinary course of its business before it. See, e.g., MBH Mar. Int. LLC v. Manteiga, No. 17-61909-CIV, 2018 U.S. Dist. LEXIS 42317, 2018 WL 1363844, at *2 (S.D. Fla. Mar. 15, 2018) (reiterating previous ruling that “[i]ndustry custom and practice may be a central issue in th[e] case, but that is a question of fact to be resolved at summary judgment or trial.”). Moreover, Berkshire is further distinguished by the fact that a bill of lading’s terms and conditions were incorporated by reference into the dock receipt, and the parties there stipulated—unlike here—that [*15] the plaintiff was to have received and signed the bill of lading. As such, there was no question that the parties there were bound by terms and conditions.

To the extent that Luckenbach supports that the terms and conditions of a carrier’s standard bill of lading, issued after the receipt of a booking confirmation, binds a shipper, that would still leave the factual question of whether a Bill of Lading was standard and issued in the ordinary course of Defendant’s business. Thus, the Court is not persuaded at this juncture that Berkshire or Luckenbach require the Court to find that the parties are in contractual privity.

Finding that Defendant has not shown the parties are in contractual privity, the Court declines to reach whether the allegedly negligent conduct is within the scope of the Terms and Conditions. The Court also declines to reach Plaintiff’s argument that Defendant failed to give reasonable notice of the Terms and Conditions. The Motion must therefore be denied.

IV. CONCLUSION

Accordingly, it is ORDERED AND ADJUDGED that the Motion, ECF No. [6], is DENIED. Defendant shall file its Answer to the Complaint by August 14, 2023.

DONE AND ORDERED in Chambers at Miami, Florida, on August 4, 2023.

/s/ Beth Bloom [*16]

BETH BLOOM

UNITED STATES DISTRICT JUDGE

End of Document

¹Defendant did not attach a copy of a Bill of Lading. See ECF No. [6] at 3.