United States District Court,

D. Maryland.

John SCHRAMM, et al.

v.

Brian Ashley FOSTER, et al.

Mitchell THOMPSON, et al.

v.

Brian Ashley FOSTER, et al.

Aug. 23, 2004.

OPINION

MOTZ, J.

Plaintiffs John and Marla Schramm, individually and as guardians of Tyler Schramm, and Plaintiffs Mitchell, Biff, and Dorothy Thompson have brought this action against Defendants Brian Ashley Foster, Groff Brothers Trucking, LLC (“Groff Brothers”), and C.H. Robinson Worldwide, Inc. (“Robinson”) for personal injuries suffered by Tyler Schramm and Mitchell Thompson in a motor vehicle accident involving a tractor-trailer driven by Foster. Plaintiffs assert state common law claims for negligence, negligent entrustment, and negligent hiring and supervision, and federal claims under the Motor Carrier Act (“MCA”) and Federal Motor Carrier Safety Regulations (“FMCSR”). Now pending before the Court are Robinson’s motion for summary judgment and plaintiffs’ cross motion for partial summary judgment as to the liability of Robinson.

I will deny plaintiffs’ motion as to all claims, and I will grant Robinson’s motion, except as to plaintiffs’ claim for negligent hiring. [FN1]

FN1. Robinson’s motion to strike the reports of plaintiffs’ experts is granted. The experts express opinions on legal issues that are for the court to determine.

I. Facts

A.

This case arises out of a catastrophic accident between a passenger vehicle and a tractor-trailer in Allegany County, Maryland. Foster was transporting a load of soy milk from the warehouse of Jasper Products, LLC (“Jasper”) in Joplin, Missouri, to White Rose Food Corporation in Cateret, New Jersey. Foster was an employee of Groff Brothers at the time.

On May 2, 2002, Jasper requested that Robinson arrange for transportation of the soy milk. Robinson made contact with Ronald Groff of Groff Brothers, with whom Robinson had a contract carrier agreement, and Groff Brothers accepted the shipment request. Groff then assigned the job to Foster who was one of his drivers.

On May 5, 2002, en route to New Jersey, Foster was traveling eastbound on I-68 in a tractor-trailer when he decided to exit onto Maryland Route 36. Upon reaching the stop sign at the end of the off-ramp, Foster failed to stop or yield the right of way to on-coming traffic and proceeded into the intersection, blocking all southbound lanes on Route 36. Tyler J. Schramm, a minor, was driving southbound in a pick-up truck with Mitchell A. Thompson on Route 36 at the time. Schramm’s pick-up truck collided with the tractor-trailer and traveled underneath it until it came to a stop on the other side. The roof of the pick-up truck was severed as it proceeded underneath the tractor-trailer. Foster had been driving in excess of the maximum driving hours allowed by law for operators of property-carrying vehicles.

Schramm suffered neurological damage from which he is not expected to recover. He remains in a semi-vegetative state and suffers from various complications, including seizures, caused by injuries to his brain. As a result of these injuries, Schramm requires assistance with all basic life functions. In addition, Thompson sustained severe and permanent injuries to his head and body.

B.

Robinson describes its business in the following manner:

C.H. Robinson Worldwide, Inc., together with its subsidiaries and affiliates, is a third party logistics “3PL” company that specializes in brokering the shipment of goods via truck, rail, ocean and air. C.H. Robinson does not own transportation equipment (trucks, trains, ships or aircraft), but instead matches shippers together with carriers that do own and operate such equipment so that commercial goods can be moved efficiently from origin to destination. C.H. Robinson and its affiliates operate over 150 branch offices in the United States and abroad. They brokered approximately 2.8 million shipments in 2002 and 3.2 million shipments in 2003. As part of its motor carrier property brokerage operation, C.H. Robinson has brokerage contracts with more than 20,000 licensed motor carriers, whereby the carriers agree to haul loads for shippers through C.H. Robinson. At the same time, C.H. Robinson markets itself to businesses and manufacturers with transportation needs. With a simple phone call or fax to C.H. Robinson, shippers with transportation needs have ready access to available carriers to haul their loads, and carriers with available trucks can find shippers with goods requiring transportation.

(Def.’s Mem. Supp. Summ. J. at 3.)

Plaintiffs assert, and Robinson does not dispute, that third party logistics companies such as Robinson have emerged in the wake of the deregulation of the trucking industry. Prior to deregulation, independent owner operators typically associated themselves with larger carriers who entered into contracts with shippers, either directly or through brokers. Because of the size of their internal networks, the large carriers could provide integrated services to the shippers. Shippers were able to rely upon the large carriers’ quality control monitoring of the independent owner operators (incentivized by the carriers’ potential liability) and their established processes for handling freight claims. [FN2] The carriers also provided excess liability insurance coverage, over and above the required regulatory minimum (presently $750,000) the independent owner operators were required to carry.

FN2. Plaintiffs also contend that the drivers of unionized carriers would also ensure that safety regulations, such as the maximum driving hour rule violated by Foster, were enforced.

Robinson proclaims that it provides such “one point of contact” service to shippers. It maintains what apparently can fairly be described as a “stable” of small carriers who can pick up loads from one of Robinson’s shipping clients at a moment’s notice. In the event that the cargo is damaged during transit, “we [Robinson] are the ones to write them [the shipper] the check for the damage if we decide that it is a viable claim. They don’t go to the trucking company directly. That’s one of the points of being a one point of contact.” (Birdwell Dep. at 38-39.) Robinson also addresses the issue of personal injury liability in its promotional materials: [FN3]

FN3. This particular advertisement was not produced until October, 2002, several months after the accident involved here. However, Robinson has not suggested that it is inconsistent with marketing approaches its sales representative took prior to the accident.

Just as CHRW [Robinson] takes responsibility for freight claims, we also step forward when liability issues arise. We insulate the shipper in three important ways:

1. We work only with carriers who carry full insurance coverage. When CHRW begins to do business with a carrier, we verify their insurance coverage and keep a copy in our files of documents that prove the carrier has Federal Operating Authority and a current insurance certificate, with a minimum of $25,000 and $750,000 auto liability coverage. In addition, we check in with carriers regularly to make sure their coverage is current and renewed at necessary levels.

2. If an accident occurs, the carrier indemnifies both the shipper and CHRW from liability.

3. In the rare event that the damage goes beyond the carrier’s insurance limits, CHRW maintains a liability insurance policy that pays the rest.

(Transport Folio Article, Pls.’ Mem. Supp. Summ. J. Ex. 27; see also Commercial Umbrella policy Ex. 28.) (Emphasis added).

C.

Groff Brothers entered into a contract carrier agreement with Robinson on January 26, 2001. Prior to that date, Ronald Groff (one of the Groff brothers), doing business as “RG Transportation,” had been a carrier in Robinson’s stable of carriers. He had entered into a master transportation contract with Robinson on March 18, 1998, and a contract carrier agreement on November 21, 2000. RG Transportation was originally granted motor common carrier authority by the Federal Motor Carrier Safety Administration (“FMSCA”) on January 29, 1998. This authority was voluntarily revoked as of March 13, 2002, and was reinstated on August 20, 2002.

Robinson’s contract carrier agreement with Groff Brothers (like its agreements with other carriers) required Groff Brothers to have a “Satisfactory” U.S. Department of Transportation rating. However, Groff Brothers did not have such a rating at the time it entered into the agreement with Robinson because it was a new company. Robinson was aware of this fact by virtue of a response Groff Brothers submitted to a Carrier Information Survey sent out by Robinson.

The FMSCA provides information regarding carriers on several websites and internet pages. This information includes “SafeStat,” which reports on and rates carriers’ safety performance. [FN4] “Safety Evaluation Area” values used on this site range from 0 (best) to 100 (worst). According to SafeStat, only SAE ratings of 75 or higher are deemed to be deficient. In September, 2001, Groff Brothers had an SEA rating of 74.00 in the driver safety evaluation area. By March 23, 2002, this rating had decreased to 70.63.

FN4. As Robinson points out, a caution page appears before the SafeStat information is accessed. This caution reads as follows:

“WARNING

Because of State data variations, FMCSA cautions those who seek to use the SafeStat data analysis system in ways not intended by FMCSA. Please be aware that use of SafeStat for purposes other than identifying and prioritizing carriers for FMCSA and state safety improvement and enforcement programs may produce unintended results and not be suitable for certain uses.”

II. Negligence/Respondeat Superior

A.

Plaintiffs argue that Robinson is liable for Foster’s negligence under a respondeat superior theory because Foster acted as an agent of Robinson in the transportation of the Jasper load. Under the doctrine of respondeat superior, an employer is vicariously liable for the tortious conduct of his employee or agent when that employee or agent is acting within the scope of the master-servant relationship. Schweizer v. Keating, 150 F.Supp.2d 830, 839 (D.Md.2001); Hunt v. Mercy Med. Ctr., 121 Md.App. 516, 545, 710 A.2d 362 (1998); Kersten v. Van Grack, Axelson & Williamowsky, P.C., 92 Md.App. 466, 469, 608 A.2d 1270 (1992).

An agency relationship “results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.” Restatement (Second) of Agency, § 1(1) (1958). An agency relationship may be established by written agreement or inference. Patten v. Board of Liquor, 107 Md.App. 224, 238, 667 A.2d 940 (1995). In this case, there was no written agreement in which Robinson and Foster or Groff Brothers manifestly consented to have Foster act as Robinson’s agent. Rather, plaintiffs contend that an agency relationship may be inferred from the circumstances.

To establish a principal-agent relationship by inference, plaintiffs must show that 1) the agent was subject to the principal’s right of control; 2) the agent had a duty to primarily act for the benefit of the principal; and 3) the agent held the power to alter the legal relations of the principal. Schear v. Motel Management Corp., 61 Md.App. 670, 687, 487 A.2d 1240 (1985), quoting Restatement (Second) of Agency, § 12–14 (1958).

Plaintiffs argue that Robinson asserted its control over Foster under the terms of the contract carrier agreement it executed with Groff Brothers. The contract states that Robinson controls the transportation of freight on behalf of its customers. It further instructs the carrier to obtain instructions concerning the handling of the load, to inspect the goods before loading to ensure that they are in good condition, and to notify Robinson if they are not. According to plaintiffs, pursuant to these provisions, Robinson exercised control when it dispatched Foster, directed him to pick up and deliver the load at specific times, and gave him directions from the Jasper warehouse to the warehouse in New Jersey. Robinson also gave Foster specific instructions regarding the load, including requiring Foster to use load locks on the trailer. Finally, according to plaintiffs, Robinson monitored Foster’s performance by requiring him to call when he had successfully picked up the load and then periodically throughout the trip.

However, both the written agreement and the conduct of the parties belie plaintiffs’ arguments. The contract expressly provides that the “relationship of Carrier to Robinson hereunder is solely that of an independent contractor.” Pl.’s Ex. 13, Contract Carrier Agreement, ¶ 6. The contract further states that the carrier shall employ all drivers transporting goods under the contract and that “such persons are not employees or agents of Robinson or its Customers.” Id. Under the terms of the agreement, Groff Brothers was to pay Foster’s salary and all expenses incurred in transporting the load and was to provide all necessary equipment and fuel required for the shipment. Id. at ¶ 4, 487 A.2d 1240. According to the contract, “the Parties agree that Carrier shall be the party solely responsible for operating the equipment necessary to transport commodities under this Contract.” Id. at ¶ 9, 487 A.2d 1240. Clearly, Groff Brothers and Robinson understood that Groff Brothers was to maintain control of the means and method of transportation, including the performance of the driver.

Moreover, there is no evidence that Robinson controlled Foster’s actual performance through its coordination of the shipment. Groff Brothers remained at all times an independent contractor. An independent contractor is “one who contracts to perform a certain work for another according to his own means and methods, free from control of his employer in all details connected with the performance of the work except as to its product or result.” Kersten, 92 Md.App. at 469, 608 A.2d at 1272 (quoting Gale v. Greater Washington Softball Umpires Ass’n, 19 Md.App. 481, 487, 311 A.2d 817 (1973)). The rule of respondeat superior does not impose liability on an employer for the wrongdoing of an independent contractor. See Brady v. Ralph Parsons Co., 308 Md. 486, 512, 520 A.2d 717 (1987); Rowley v. Mayor and City Council of Baltimore, 305 Md. 456, 461, 505 A.2d 494 (1986).

The mere fact that Robinson had Foster call Robinson directly to receive the dispatch information, rather than receive it from Groff Brothers does not demonstrate that Foster was under Robinson’s control in the performance of his work. Furthermore, although Robinson provided Foster with directions to and from the Jasper warehouse, it explicitly stated that the directions provided were simply for informational purposes. [FN5] The driving directions and special loading instructions provided by Robinson did not circumscribe Foster’s performance to the extent that the details of his performance were precisely determined by Robinson’s authority over the transaction. See Tartaglione v. Shaw’s Exp., Inc., 790 F.Supp. 438, 441 (S.D.N.Y.1992) (concluding that the fact that broker controlled the location where cargo was picked up and delivered did not establish an agency relationship because such control involved only the result of the work and not the manner in which it was undertaken).

FN5. The Carrier Load Confirmation sent by Robinson to Groff Brothers stated: “Directions supplied by C.H. Robinson or its Customers either orally and/or in written form are for informational purposes only. It is the Carrier’s sole responsibility to confirm that it may lawfully operate a loaded vehicle of any weight, commodity, or dimension over any highway, bridge or route.” Def.’s Ex. 11, Carrier Load Confirmation, at 2.

“Complete control over the result to be accomplished is not enough to make an independent contractor an employee … ‘[A]n employer has a right to exercise such control over an independent contractor as is necessary to secure the performance of the contract according to its terms, in order to accomplish the results contemplated by the parties in making the contract, without thereby creating such contractor an employee.” ‘ Taylor v. Local No. 7, Intern. Union of Journeymen Horseshoers of U.S. and Canada (AFL-CIO), 353 F.2d 593, 596 (4th Cir.1965) (citation omitted). Thus, the fact that Robinson provided driving directions and required Foster to inspect the load upon pick-up, use load locks, and arrange for the shipment to be unloaded did not destroy Foster’s status as an independent contractor; rather, such instructions simply served to secure performance of Robinson’s agreement with Jasper according to its terms.

Professional Communications, Inc. v. Contract Freighters, Inc., 171 F.Supp.2d 546 (D.Md.2001), is on point. There, the court considered whether an agency relationship existed between a broker and a carrier hired to transport a shipment of cell phones. As evidence of the agency relationship, the plaintiffs presented a “Driver Trip Sheet” which included a heading with attention to the broker and contained instructions for the driver to report any delays to the broker. Id. at 551. The court found that these instructions were consistent with the broker’s role and did not indicate a principal-agent relationship. Id. The court concluded that “[a] mere contract to ship goods does not establish an agency relationship.” Id.

Finally, the fact that Robinson provided Foster with a number to call in case he experienced any problems during the transportation of the load, and Robinson’s desire to have Foster call periodically to check in do not indicate that Robinson exercised sufficient control over Foster’s movements as to make him an agent of Robinson. “Even some reservation of control to supervise the manner in which the work is done, or to inspect the work during its performance does not destroy the independent contractor relationship where the contractor is not deprived of his judgment in the execution of his duties.” Id.; Schweizer, 150 F.Supp.2d at 840; Brooks v. Euclid Systems Corp., 151 Md.App. 487, 510, 827 A.2d 887 (2003)). See also Schearer, 61 Md.App. at 688, 487 A.2d 1240 (franchisor’s right to conduct periodic inspections of franchisee’s hotel to assure adherence to quality control standards did not create agency relationship). [FN6]

FN6. Plaintiffs also claim that Foster exercised the authority to alter Robinson’s legal relations with Jasper when he signed the bill of lading which designated Robinson as “carrier.” Foster’s signature on the bill of lading is insufficient to establish an agency relationship, however, because Foster was not authorized, either expressly or implicitly, to alter Robinson’s legal relations in that manner. The authority of an agent must come from the principal, and the principal must either knowingly permit the agent to exercise the authority or hold out the agent as possessing it. Integrated Consulting Services, Inc. v. LDDS Communications, Inc., 996 F.Supp. 470, 474 (D.Md.1998) (citing Homa v. Friendly Mobile Manor, 93 Md.App. 337, 359-360, 612 A.2d 322 (1992)). Although Foster was authorized to sign the bill of lading on behalf of Groff Brothers upon receiving the load, Robinson never expressly authorized Foster or held him out as authorized to legally bind Robinson by signing a bill of lading which, erroneously and without Robinson’s knowledge, named Robinson as the carrier. See Chubb Group of Ins. Companies v. H.A. Transp. Systems, Inc., 243 F.Supp.2d 1064, 1070 (C.D.Cal.2002) (where transportation company did not prepare or assist in preparing bill of lading which listed company as “carrier”, bill of lading could not be relied upon as basis for imposing carrier liability on company).

B.

Even if Foster were deemed to have acted as an agent of Robinson, Robinson would only be liable for Foster’s negligence if Foster acted as Robinson’s servant in the context of a master-servant relationship. The distinction between an agent and a servant is important because a principal will not ordinarily be liable for the negligence of an agent who is not a servant. Green v. H & R Block, Inc., 355 Md. 488, 509, 735 A.2d 1039, 1051 (1999) (citing Globe Indem. Co. v. Victill Corp., 208 Md. 573, 581, 119 A.2d 423, 427 (1956)). As the Maryland Court of Appeals explained in Globe:

An agent is a person who represents another in contractual negotiations or transactions akin thereto. A servant is a person who is employed to perform personal services for another in his affairs, and who, in respect to his physical movements in the performance of the service is subject to the other’s control or right of control. Persons who render service but retain control over the manner of doing it are not servants … A principal employing an agent to accomplish a result, but not having the right to control the details of his movements, is not responsible for incidental negligence while such agent is conducting the authorized transaction.

208 Md. at 581-82, 119 A.2d at 427.

“One may be an agent of another, owing to his principal the fiduciary obligations of loyalty and general obedience, but at the same time not be sufficiently under the control of the principal to be considered a servant. The relationship of master and servant exists only when the employer has the right to control and direct the servant in the performance of his work and in the manner in which the work is to be done.” Chevron, U.S.A., Inc. v. Lesch, 319 Md. 25, 570 A.2d 840 (1990). A principal is not liable for any physical injury caused by the negligent acts of his agent, who is not a servant, unless the act was done in a manner authorized or directed by the principal, or the result was one the principal authorized or intended. Green, 355 Md. at 509, 735 A.2d at 1051. If Foster was merely an agent rather than a servant of Robinson, Robinson could only be liable for Foster’s negligent acts if Robinson authorized or directed Foster to drive in a fatigued condition in excess of his hours.

Furthermore, it is not enough that Robinson retain general control over Foster’s participation in the transaction. To subject the principal to vicarious liability, “the key element of control, or right to control must exist in respect to the very thing from which the injury arose.” Cutlip v. Lucky Stores, Inc., 22 Md.App. 673, 678, 325 A.2d 432 (1974). Thus, unless Robinson had control over Foster’s driving time and the condition in which he drove, it will not be vicariously liable for Foster’s negligence.

United States District Court,

W.D. Texas,

El Paso Division.

MAYFLOWER TRANSIT, L.L.C., Plaintiff,

v.

Eric TROUTT and Amy Troutt, Defendants.

Aug. 19, 2004.

ORDER GRANTING PLAINTIFF’S MOTION FOR DEFAULT JUDGMENT

MARTINEZ, District J.

On this day, the Court considered Plaintiff Mayflower Transit L.L .C.’s (“Mayflower”) “Motion for Default Judgment Against Eric Troutt and Amy Troutt and Brief in Support Thereof” (“Motion”) and Mayflower’s “Request for Entry of Default Judgment and Memorandum in Support” (“Request”) filed on March 25, 2004 and June 7, 2004, respectively, in the above-captioned cause. As of the date of this order, Defendants Eric Troutt and Amy Troutt (“Defendants” or “the Troutts”) have neither responded to the Motion nor have they filed a motion to set aside the entry of their default.

After careful consideration, the Court is of the opinion that Mayflower’s Motion should be granted and that default judgment should be entered in its favor, for the reasons set forth below.

I. FACTUAL AND PROCEDURAL BACKGROUND

On January 28, 2004, Mayflower, a Missouri corporation and interstate motor carrier of household goods, filed its “Complaint for Declaratory Judgment” (“Complaint”) in this Court. With its Complaint, Mayflower requests that the Court enter a declaratory judgment in its favor essentially stating that it has no duty to deliver certain office furniture to the Troutts, a husband and wife who formerly resided in El Paso, Texas and now reside in Mt. Vernon, Illinois.

Mayflower claims that, at some time in November 2002, the Troutts “contacted Mayflower’s agent, Valley Moving & Storage (“Valley”), to provide an estimate for the transportation of their household goods from El Paso, Texas to Mt. Vernon, Illinois.” Complaint ¶ 8. Allegedly, Eric Troutt requested that Valley provide two cost estimates, one for the cost of shipping various household possessions and another estimate for the cost of shipping other office furniture located outside the Troutts’ El Paso home. Id. According to Mayflower, Valley provided the Troutts with both estimates, but Eric Troutt stated that “the estimate for moving the office furniture exceeded the amount that [he] had been allowed by a third party who was purportedly reimbursing [him] for his move.” Id. Apparently, Eric Troutt never requested Mayflower to move the office furniture to Illinois. Id.

Mayflower states that the Troutts tendered various household goods to Mayflower on or about January 30, 2003 for transport to Illinois. Id. ¶ 9. Mayflower next claims that, on February 13, 2003, the Troutts executed a Bill of Lading relating to their shipment. Id. ¶ 10. Thereafter, the Troutts’ household items were shipped and delivered to the Troutts in Illinois. [FN1] Id. ¶ 11. Mayflower claims that, after delivery was complete, it received an April 23, 2003 letter from the Troutts, in which the Troutts stated that they were still awaiting the arrival of their office furniture. Id. Mayflower states that the Troutts never arranged for the delivery of their office furniture; nevertheless, it informed the Troutts that it could arrange for the delivery of the office furniture in exchange for proper payment. Id. On January 14, 2004, Mayflower apparently received a demand from the Troutts, in which the Troutts asserted various common law claims against Mayflower [FN2] and demanded $75,000 [FN3] in damages. Id.

FN1. Mayflower’s Complaint states that Troutts executed the Bill of Lading on February 13, 2003, and that they also received their household items that same day. Id. ¶ ¶ 10-11. The Court believes that the Bill of Lading may have been executed prior to receipt and that one of these dates may be incorrect. Regardless, any error is of no consequence to Mayflower’s Motion.

FN2. Based on the record, the only claims that the Troutts asserted were claims related to the loss of, or damage to, their office furniture. Nothing in Mayflower’s Complaint shows that the Troutts raised an issue relating to their household items.

FN3. A demand of exactly $75,000 would be insufficient for purposes of diversity jurisdiction.

In further support of its Complaint, Mayflower points out that Valley prepared a Table of Measurements detailing the specific goods that were to be moved, and that the Table of Measurements did not include any of the Troutts’ office furniture. Id. ¶ 14. Additionally, Eric Troutt allegedly signed a Household Goods Descriptive Inventory, acknowledging the contents shipped and received. Id. ¶ 15. The Troutts “declared no exceptions to the Household Goods Delivery Inventory at origin or destination” of carriage. Id. Finally, Mayflower notes that the Bill of Lading provides that any claim that the Troutts had relating to the loss of, or damage to, their property had to be filed with Mayflower no later than nine months after delivery, but the Troutts have not submitted a properly prepared claim. Id. ¶ 16. Thus, it argues, the Troutts are time-barred from pursing a claim relating to Mayflower’s shipment of their possessions. Id.

Mayflower seeks a declaratory judgment which would declare (1) that “any alleged claims of Defendants for breach of contract, loss of use, fraud and property damage are preempted by the Carmack Amendment,” (2) that “Mayflower is not liable to Defendants for delay or property damage,” and (3) that “Mayflower is not obligated to transport Defendants’ office furniture until Defendants pay the applicable interstate tariff charges for such a shipment.” Id. at 5-6.

II. ANALYSIS

In order to properly resolve Mayflower’s Motion, the Court must conduct two primary inquiries and assess (1) whether default judgment is procedurally proper and (2) whether declaratory relief is appropriate.

A. Is Default Judgment Procedurally Proper?

Federal Rule of Civil Procedure 55 [FN4] sets forth certain conditions under which default may be entered against a party, as well as the procedure by which a party may seek the entry of default judgment. If a party “against whom a judgment for affirmative relief is sought” fails to “plead or otherwise defend” a case, and “that fact is made to appear by affidavit or otherwise, the clerk [of court] shall enter the party’s default.” FED. R. CIV. P. 55(a). Once a default is entered, “the party entitled to a judgment by default” may move the Court for entry of default judgment. FED. R. CIV. P. 55(b). The Fifth Circuit has concisely summarized the steps leading up to default judgment.

FN4. Any citation of a “Rule” in this Order is a citation to the Federal Rules of Civil Procedure.

A default occurs when a defendant has failed to plead or otherwise respond to the complaint within the time required by the Federal Rules. An entry of default is what the clerk enters when the default is established by affidavit or otherwise … After defendant’s default has been entered, plaintiff may apply for a judgment based on such default. This is a default judgment.

New York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir.1996) (citation omitted).

“Default judgments are a drastic remedy, not favored by the Federal Rules and resorted to by courts only in extreme situations.” Sun Bank of Ocala v. Pelican Homestead and Sav. Ass’n, 874 F.2d 274, 276 (5th Cir.1989) (citations omitted). In accord with that policy, “[a] party is not entitled to a default judgment as a matter of right, even where the defendant is technically in default.” Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir.1996). Rather, a default judgment is normally committed to the discretion of the district court. Mason v. Lister, 562 F.2d 343, 345 (5th Cir.1977).

The procedural background of this case establishes that the Troutts did default and that the District Clerk’s entry of their default was proper. Mayflower filed its Complaint on January 26, 2004. Shortly thereafter, it proceeded to serve the Troutts through the Texas Secretary of State. [FN5] Although the Troutts were served with Mayflower’s Complaint, they defaulted by failing to timely “plead or otherwise defend.” On March 25, 2004, the District Clerk properly entered their default, pursuant to Rule 55(a).

FN5. The Secretary of State received Mayflower’s Summons and Complaint on February 2, 2004, and forwarded those documents to both of the Troutts individually on February 6, 2004 via certified mail, return receipt requested. See Cert. Serv. The Secretary of State received both return receipts on February 9, 2004. Id.

On March 26, 2004, the Troutts faxed a document entitled “Entry of Appearance and Request for Enlargement of Time to Further Plead or Answer” (“Entry of Appearance”) directly to the undersigned judge’s chambers, without obtaining permission to do so. [FN6] Because the Troutts were appearing pro se, the Court entered an order stating that it would permit their Entry of Appearance to be filed despite the fact that they had not submitted it in accordance with the Court’s local rules or procedure. [FN7] The Court also granted the Troutts an extension of time (until April 14, 2004) to file a motion to set aside entry of default. In no uncertain terms, the Court pointed out to the Troutts that because default had been entered, they were required to file a motion to set aside entry of default, succeed on that motion, and only then would they be permitted to file a responsive pleading or motion. The Troutts failed to timely respond to the Court’s March 30, 2004 order.

FN6. All documents presented for filing in the El Paso Division of the Western District of Texas must be submitted to the District Clerk’s office, not directly to a judge’s chambers.

FN7. Although Eric Troutt represented that he is an attorney, the Court was unaware of his prior experience in this courthouse. The Court has learned that Eric Troutt has filed at least two civil actions on his own behalf with the El Paso Division: (1) Troutt v. Transcontinental Adjustment Co., EP-02-CV-181, a suit filed under the Fair Debt Collection Act (“FDCA”) (dismissed against Troutt for failure to prosecute) and (2) Troutt v. Bank Regions, EP-02-CV-305, another FDCA suit (dismissed by Troutt himself). The Court sees no reason justifying Troutt’s inability to comply with this Court’s local rules; he is an attorney with past experience with this Division.

On May 17, 2004, the Court entered an Order to Show Cause why Mayflower’s Motion should not be granted in light of the Troutts’ failure to move to set aside entry of default. On June 1, 2004, the Troutts disregarded the Court’s local rules and its March 30, 2004 order by faxing another document directly to chambers. The District Clerk’s office returned this document to the Troutts with clear instructions to properly re-file the document. To date, the Court has yet to receive a motion to set aside entry of default from the Troutts, and it can only conclude that the Troutts do not oppose the entry of default judgment. [FN8]

FN8. Western District of Texas Local Rule CV-7 provides that the Court may treat a motion as unopposed when a party fails to properly oppose it.

Finally, Rule 55(b) specifically restricts the availability of default judgments, but none of its restrictions apply in this case. This case does not involve “an infant or incompetent person,” see FED. R. CIV. P. 55(b)(2), nor does it involve a default against the United States, see FED. R. CIV. P. 55(e). Further, neither of the Troutts is in military service. See 50 U.S.C. Appx. § 501, et seq.; FED. R. CIV. P. 55, Adv. Comm. Notes; Mot. ¶ 5. Additionally, Rule 55(b)(2) requires that notice be provided to a party facing entry of default judgment, but only if that defaulting party has appeared in the action. FED. R. CIV. P. 55(b)(2). Here, the Troutts have received notice of Mayflower’s Complaint, Mayflower’s Motion, and Mayflower’s Request; thus, the requirement of Rule 55(b)(2) has been satisfied.

Accordingly, all procedural prerequisites for entry of default judgment have been met, and default judgment is procedurally warranted in this matter.

B. Is Declaratory Relief Appropriate?

With the procedural requirements for default judgment satisfied, the Court must next evaluate Mayflower’s Complaint and satisfy itself that “[t]here [is] a sufficient basis in the pleadings for the judgment.” Nishimatsu Const. Co., Ltd. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir.1975). That said, by virtue of its default, the Troutts have “admit[ted] [Mayflower’s] well-pleaded allegations of fact.” Id. See also Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir.1977) (stating “[t]he general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true”). Thus, only if Mayflower’s Complaint provides a sufficient basis for the relief it seeks can the Court grant default judgment, and issue declaratory relief, in Mayflower’s favor. Because Mayflower seeks a declaratory judgment, certain specific considerations must be addressed.

1. Does The Court Have Subject Matter Jurisdiction?

The Declaratory Judgment Act (“DJA”) does not provide an independent source of federal jurisdiction; rather, it provides a federal remedy that may be invoked when jurisdiction otherwise properly exists. See Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671-72 (1950); TTEA v. Ysleta del Sur Pueblo, 181 F.3d 676, 681 (5th Cir.1999). “If there is an underlying ground for federal court jurisdiction, the [DJA] ‘allow[s] parties to precipitate suits that otherwise might need to wait for the declaratory relief defendant to bring a coercive action.” Household Bank v. JFS Group, 320 F.3d 1249, 1253 (11th Cir.2003) (citation omitted). “[A] federal district court has subject matter jurisdiction over a declaratory judgment action if … a plaintiff’s well-pleaded complaint alleges facts demonstrating the defendant could file a coercive action arising under federal law.” Id. at 1259.

The Carmack Amendment to the Interstate Commerce Act is codified at 49 U.S.C. § 14706, and it affords interstate shippers a statutory right to recover actual losses to property caused by interstate carriers. Am. Nat’l Fire Ins. Co. v. Yellow Freight Sys., Inc., 325 F.3d 924, 928-29 (7th Cir.2003). In other words, it sets forth “a comprehensive remedial scheme whereby a shipper whose cargo is lost or damaged by a carrier may recover damages for that loss.” Glass v. Crimins Transfer Co., 299 F.Supp.2d 878, 884 (C.D.Ill.2004).

Carmack Amendment claims may be pursued in either state or federal court, see 49 U.S.C. § 14706(d); Hoskins v. Bekins Van Lines, 343 F.3d 769, 778 n. 7 (5th Cir.2003), and federal district courts have original jurisdiction over Carmack Amendment claims “only if the matter in controversy for each receipt or bill of lading exceeds $10,000, exclusive of interest and costs,” 28 U.S.C. § 1337(a).

The Fifth Circuit recently held that the Carmack Amendment completely preempts state and common law claims arising from the loss of, or damage to, goods shipped in interstate commerce. Hoskins, 343 F.3d at 778. As a general rule, federal preemption of state law is a defense that does not serve as a basis for federal subject matter jurisdiction. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392-93 (1987) (discussing “well-pleaded complaint” rule and notion that federal preemption of state law does not permit removal of state claims) (citation omitted). However, “[o]nce an area of state law has been completely preempted, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law.” Id. at 393 (citation omitted) (emphasis added). Because the Carmack Amendment provides the exclusive cause of action for claims arising from the loss of, or damage to, goods shipped in interstate commerce, and preempts state and common law causes of action based on such conduct, a plaintiff cannot “plead around” the Carmack Amendment. Any claim based on the loss of, or damage to, goods shipped in interstate commerce and within the reach of the Carmack Amendment arises under federal law. See, e.g., Stephenson v. Wheaton Van Lines, Inc., 240 F.Supp.2d 1161, 1166 (D.Kan.2002) (finding breach of contract and negligence claims were preempted by Carmack Amendment and preemption “converted” those state law claims into claims arising under federal law); Stein Jewelry Co. v. United Parcel Serv., 228 F.Supp.2d 304, 307 (S.D.N.Y.2002) (stating gravamen of complaint was failure to properly ship goods and claims arose under Carmack Amendment in light of artful-pleading doctrine).

Based on the allegations in Mayflower’s Complaint, if the Troutts pursued a coercive action relating to any loss of, or damage to, their office furniture, their claim would fall directly within the reach of the Carmack Amendment and would, therefore, raise an issue of federal law. [FN9] Any state or common law claims pursued by the Troutts in connection with the loss of, or damage to, their office furniture would be preempted by the Carmack Amendment. See Hoskins, 343 F.3d at 778. Accordingly, federal subject matter jurisdiction would exist over those preempted claims, which means that this Court has subject matter jurisdiction over Mayflower’s request for declaratory relief.

FN9. Beyond that, a federal district court would have original jurisdiction over the Troutts’ claims because they allegedly suffered $75,000 in damages-far in excess of the Carmack Amendment’s $10,000 original jurisdiction requirement.

2. Is Declaratory Relief Appropriate Under The DJA?

The DJA, codified at 28 U.S.C. § 2201(a), states that, subject to certain exceptions,

In a case of actual controversy within its jurisdiction, … any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.

One of the purposes of the DJA is to “resolve outstanding controversies without forcing a putative defendant to wait to see if it will be subjected to suit.” Sherwin-Williams Co. v. Holmes County, 343 F.3d 383, 398 n. 8 (5th Cir.2003). It serves to “minimize the danger of avoidable loss and the unnecessary accrual of damages and afford one threatened with liability an early adjudication without waiting until an adversary should see fit to begin an action.” Marinechance Shipping, Ltd. v. Sebastian, 143 F.3d 216, 219 n. 11 (5th Cir.1998) (citation omitted).

The DJA is an ” ‘enabling Act, which confers a discretion on courts rather than an absolute right upon the litigant.” ‘ Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995) (citation omitted). “District courts have a broad, but not unfettered, measure of discretion in deciding whether to entertain an action for a declaratory judgment.” Dow Agrosciences v. Bates, 332 F.3d 323, 327 (5th Cir.2003) (citations omitted). “In the exercise of their sound discretion to entertain declaratory actions the district courts may not decline on the basis of whim or personal disinclination.” Hollis v. Itawamba County Loans, 657 F.2d 746, 750 (5th Cir.1981).

“When considering a declaratory judgment action, a district court must engage in a three-step inquiry. First, the court must determine whether the declaratory action is justiciable.” Orix Credit Alliance, Inc. v. Wolfe, 212 F.3d 891, 895 (5th Cir.2000). In other words, the Court must be satisfied that the declaratory judgment suit presents an actual “controversy.” Id. (citation omitted). “Second, if it has jurisdiction, then the district court must resolve whether it has the ‘authority’ to grant declaratory relief in the case presented.” Id. (citation omitted). “Third, the court has to determine how to exercise its broad discretion to decide or dismiss a declaratory judgment action.” Id. (citation omitted).

a. Is Mayflower’s Suit Justiciable?

“A declaratory judgment action is ripe for adjudication only where an ‘actual controversy’ exists.” Orix Credit Alliance, 212 F.3d at 896 (citations omitted). “As a general rule, an actual controversy exists where ‘a substantial controversy of sufficient immediacy and reality [exists] between parties having adverse legal interests.” Id. (citations omitted). Simply put, “in order to achieve the status of a case or controversy, a dispute must exist between two parties having adverse legal interests.” S. Jackson & Son, Inc. v. Coffee, Sugar, & Cocoa Exchange, Inc., 24 F.3d 427, 431 (2d Cir.1994) (citation omitted). “Whether particular facts are sufficiently immediate to establish an actual controversy is a question that must be addressed on a case-by-case basis.” Orix Credit Alliance, 212 F.3d at 896. (citations omitted).

With their default, the Troutts have admitted all of Mayflower’s well-pleaded factual allegations as true, and those factual allegations establish that the Troutts believe that Mayflower has a duty to deliver their office furniture to them in Illinois and that Mayflower is liable to them in connection with that duty. This is clearly evidenced by the fact that the Troutts (1) submitted written notice to Mayflower that they were still awaiting their office furniture and (2) followed that notice with written allegations of liability (e.g., breach of contract, fraud, property damage) and a claim for $75,000 in damages. Mayflower, on the other hand, contends that the Troutts never contracted with it or Valley for the transport of the office furniture in the first place. Thus, Mayflower seeks a declaration that it has no duty to deliver any of the Troutt’s office furniture unless and until the Troutts properly arrange for that transport and pay the proper tariff.

Based on these allegations, which the Troutts admitted as true by default, the Court concludes that the case or controversy requirement is satisfied because there is a clear, actual dispute between the parties that is neither hypothetical nor conjectural. A declaratory judgment in this case would not serve as a mere advisory opinion; rather, it would adjudicate the rights, duties, and liabilities of Mayflower and the Troutts in relation to their disparate positions over the shipping contract. Further, it would assist the parties in guiding their future conduct (i.e., if Mayflower has a duty to deliver any office furniture, a declaratory judgment stating such would clarify its duty to do so). Thus, the issues raised may be properly resolved via declaratory relief. [FN10] By failing to respond to Mayflower’s Motion, the Troutts offer nothing to the Court suggesting otherwise.

FN10. See FED. R. CIV. P. 57, Adv. Comm. Notes (stating “[w]ritten instruments … may be construed before or after breach at the petition of a properly interested party”).

b. Does The Court Have The Requisite Authority?

“Under the second element of the Orix Credit Alliance test, a district court does not have authority to consider the merits of a declaratory judgment action when: (1) the declaratory defendant previously filed a cause of action in state court; (2) the state case involved the same issues as those in federal court; and (3) the district court is prohibited from enjoining the state proceedings under [28 U.S.C. § ] 2283.” Sherwin-Williams, 343 F.3d at 388 n. 1 (citations omitted). This second step essentially requires the Court to assess whether competing state and federal proceedings exist, and whether the district court is prohibited from intruding in the state action under the Anti-Injunction Act.

Nothing in the record before the Court establishes the existence of a similar, parallel state court action relating to the Troutt’s claims against Mayflower. Further, Mayflower’s Motion suggests that no parallel action exists. See Mot. ¶ 5. Despite proper notice and an extension of time, the Troutts have failed to take proper steps to litigate this dispute, and they have provided nothing to the Court that would justify denying Mayflower’s Motion. With no evidence of a similar pending state court action, the Court has the authority to grant declaratory relief under the guidelines set forth in Orix Credit Alliance.

c. Should The Court Issue Declaratory Relief?

Under the third step set forth in Orix Credit Alliance, a district court faced with a declaratory relief action must determine whether to exercise or decline jurisdiction. The Fifth Circuit has stated that, when determining whether to exercise or decline jurisdiction over a declaratory judgment action, a district court should consider several important factors, namely: (1) whether a state action is pending in which all of the matters in controversy may be fully litigated; (2) whether the plaintiff filed the declaratory action suit in anticipation of a suit by the defendant; (3) whether the plaintiff engaged in forum shopping in bringing the suit; (4) whether possible inequities exist by allowing the declaratory plaintiff to gain precedence in time or to change forums; (5) whether the federal court is convenient for the parties and witnesses; (6) whether retaining the case in federal court will serve judicial economy; and (7) whether the federal court is being called on to construe a state judicial decree involving the same parties and entered by the court before whom the parallel state suit between the same parties is pending. Sherwin-Williams, 343 F.3d at 388 (citing St. Paul Ins. Co. v. Trejo, 39 F.3d 585 (5th Cir.1994)). A district court’s failure to consider or balance these relevant factors constitutes an abuse of discretion. Travelers Ins. Co. v. Louisiana Farm Bureau Federation, Inc., 966 F.2d 774, 778 (5th Cir.1993) (citations omitted).

In Sherwin-Williams, the Fifth Circuit analyzed the factors set forth in Trejo and divided them into three different categories: (1) factors relating to federalism and comity (which include the first and seventh Trejo factors); (2) factors relating to fairness (which include the second, third, and fourth Trejo factors); and (3) factors relating to efficiency (which include the fifth and sixth Trejo factors). 343 F.3d at 390-91.

(1) Federalism Concerns

In connection with the first Trejo factor, “[t]he absence of any pending related state litigation strengthens the argument against dismissal of [a] federal declaratory judgment action.” Id . at 394. The Court has no evidence before it demonstrating the existence of a parallel state court action, and, therefore, this factor favors retaining Mayflower’s request for declaratory relief. Furthermore, based on the allegations in Mayflower’s Complaint (which the Troutts admitted by default), the dispute between the Troutts and Mayflower implicates federal law, which also favors retaining jurisdiction.

The final Trejo factor is inapplicable here because Mayflower is not asking this Court to construe a state judicial decree of any kind.

Based on the record before it, the Court believes that Mayflower’s Complaint raises no serious federalism or comity concerns, that these factors favor adjudicating Mayflower’s request for declaratory relief, and that the Troutts have failed to provide the Court with any reason to come to an opposite conclusion.

(2) Fairness Concerns

With regard to the second Trejo factor, Mayflower obviously filed this declaratory action in anticipation of a suit by the Troutts. Nevertheless, “[t]he mere fact that a declaratory judgment action is brought in anticipation of other suits does not require dismissal of the declaratory judgment action by the federal court.” Sherwin-Williams, 343 F.3d at 397. Mayflower brought its suit with a legitimate purpose in mind, namely the clarification of its duty to the Troutts so that it need not wait until the Troutts see fit to bring an action related to their office furniture.

The third Trejo factor requires the Court to examine whether Mayflower engaged in “forum shopping” by bringing its suit in the Western District of Texas. The allegations of Mayflower’s Complaint suggest that the Troutts’ office furniture was never tendered to Mayflower or Valley at all, and the Western District of Texas appears to be a proper venue for any coercive Carmack Amendment action filed by the Troutts. Additionally, the Western District of Texas has a substantial connection to this suit. The initial estimates and discussions between Valley and the Troutts occurred in El Paso, and the shipment of the Troutts household goods commenced here. [FN11] Furthermore, because the Carmack Amendment would govern any coercive suit filed by the Troutts in connection with their lost or damaged office furniture, it is evident that Mayflower is not attempting to avail itself of a more desirable body of law. Mayflower gains no choice of law advantage by filing suit in the Western District of Texas, because the Carmack Amendment would govern the Troutts’ claims regardless if those claims were filed in another federal court or pursued in a state court.