United States District Court, D. Massachusetts.

JAMES JULSONNET and DIANE JULSONNET

v.

TOPHILLS INC. and ENRIQUE ESCOBAR

CIVIL ACTION NO. 22-10767-RGS

|

Filed 02/13/2024

MEMORANDUM AND ORDER ON DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

Richard G. Stearns UNITED STATES DISTRICT JUDGE

*1 Plaintiffs James and Diane Julsonnet hired Febex Moving & Storage to cart their belongings across the country, from Massachusetts to Colorado. The Julsonnets and Febex executed a moving and storage agreement (Contract) with a binding estimate of $26,998.61. The Julsonnets paid a 25% deposit to Febex upon signing. On the day of the move, a subcontractor – defendant Tophills Inc.¹ – arrived at the Julsonnets’ home to collect and load their belongings. The movers did not finish loading the truck on the day of the pickup but promised to return the next day to finish the job. As the reader might suspect, the Julsonnets allege that Tophills never returned and refused to complete the pickup and delivery of their belongings, claiming that the Julsonnets had failed to pay the balance due under the Contract on the day of the pickup. Tophills further refused to return the Julsonnets’ belongings loaded the previous day.

The Julsonnets then filed a thirteen-count Complaint against Tophills, its president Enrique Escobar, Febex, and Febex’s owner, Mikhail Naryshkin. The Complaint alleges violations of the federal Motor Carrier Safety Act, 49 U.S.C. § 10101 et seq. (Count I); violations of the civil liability provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962 (Counts II and III); violations of the Federal Trade Commission Act, 15 U.S.C. § 45 (Count IV); breach of contract (Counts V and VI); conversion and trespass (Count VII); violations of the Massachusetts Unfair Business Practices Act, Mass. Gen. Laws ch. 93A (Count VIII); fraudulent and negligent misrepresentation (Count IX); breach of the covenant of good faith and fair dealing (Count X); replevin and trover (Count XI); negligence (Count XII); and joint and several liability (Count XIII). Tophills asserted two counterclaims, alleging that the Julsonnets failed to pay it for part of the moving and packing services. It seeks recovery of damages, attorneys’ fees, and costs under a breach of contract theory or, in the alternative, quantum meruit.

Febex and Naryshkin were previously dismissed from the case because the Julsonnets failed to make proper service. See Dkt. # 26. As Febex is no longer a defendant, Count V, which alleges breach of contract against Febex, and Count XIII, which alleges joint and several liability between Febex and Tophills, are dismissed. The remaining defendants (Tophills and Escobar) now move for summary judgment on all remaining counts against them.² Their motion is allowed in part and denied in part.

BACKGROUND

In 2021, James and Diane Julsonnet undertook a move from North Andover, Massachusetts, to Colorado Springs, Colorado. On August 30, 2021, James Julsonnet executed the moving Contract with Febex. Mot. for Summ. J., Ex. A (Contract) (Dkt. # 38-1). Their personal belongings, which they valued at $142,800, included household goods and Mrs. Julsonnet’s business inventory. Id. Febex gave a firm estimate of the cost of the move at $26,998.61. Id. The Contract required the Julsonnets to pay a deposit of $5,998.61 at signing (which they paid with a credit card), 65% of the balance due “on the day of pick up [sic],” and the remaining balance at the time of final delivery. Id.

*2 The parties agreed that Febex would collect the Julsonnets’ belongings in North Andover on September 12 and 13, 2021. Id. But on September 10, the movers called and asked to begin the move one day early. Pls.’ Opp’n to Defs.’ Mot. for Summ. J. (Opp’n) (Dkt. # 43) at 2. The Julsonnets agreed, and on September 11, 2021, movers from Tophills arrived at their home with a truck.³

According to the Julsonnets, the following unfolded.⁴ Upon arrival, Tophills’s foreman “demanded” that they sign a new bill of lading before the movers began loading the truck, which Mr. Julsonnet refused to do. Opp’n at 2. The packing nonetheless commenced, although at some point during the day, Mr. Julsonnet told the foreman that he would not pay the 65% of the balance due until the truck was fully loaded. Id. at 3. Tophills did not finish loading the truck, and despite Tophills’s promise, never returned to finish. Id. When it became clear to the Julsonnets that Tophills had abandoned the job, they rented a U-Haul truck, packed the remainder of their belongings, and embarked for Colorado Springs on September 13, 2021. Id. at 4.

Three days later, on September 16, Escobar telephoned the Julsonnets and “told them they needed to come into the office in Massachusetts and sign the paperwork,” which they explained they could not physically do. Id. After many attempts to speak with employees at Febex or Tophills, the Julsonnets were finally told that their belongings would be delivered only if they paid approximately $58,000. Id.; see also id., Ex. F (Dkt. # 43-7) at 30:1-7. The Julsonnets then contacted the police, who obtained bill of lading from Tophills that included an alleged forgery of Mr. Julsonnet’s signature. Opp’n at 4; id., Ex. H (Dkt. # 43-9). The Julsonnets were finally reunited with their belongings on January 10, 2024 (although the record is not clear whether the Julsonnets paid Tophills anything to retrieve them). Opp’n at 5.

DISCUSSION

Summary judgment is appropriate where the movant demonstrates that, based upon the record, “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A dispute is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Hayes v. Douglas Dynamics, Inc., 8 F.3d 88, 90 (1st Cir. 1993), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The movant must “identify for the district court the portions of the record that show the absence of any genuine issue of material fact.” Flovac, Inc. v. Airvac, Inc., 817 F.3d 849, 853 (1st Cir. 2016). If the movant carries this burden, “the burden shifts to the nonmoving party, who must, with respect to each issue on which [they] would bear the burden of proof at trial, demonstrate that a trier of fact could reasonably resolve that issue in [their] favor.” Borges ex rel. S.M.B.W. v. Serrano-Isern, 605 F.3d 1, 5 (1st Cir. 2010). “This demonstration must be accomplished by reference to materials of evidentiary quality, and that evidence must be more than ‘merely colorable.’ ” Flovac, 817 F.3d at 853, quoting Anderson, 477 U.S. at 249 (citation omitted).

Preemption

*3 Defendants argue that Counts VI⁵ and VII-XIII – which are state-law claims – are preempted by the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706. The Carmack Amendment permits “the person entitled to recover under the receipt or bill of lading” to recover for “actual loss or injury to the property” caused by the carrier. Id. § 14706(a)(1). The statute preempts state-law “liability stemming from damage or loss of goods, liability stemming from the claims process, and liability related to the payment of claims.” Rini v. United Van Lines, Inc., 104 F.3d 502, 506 (1st Cir. 1997); see also Adams Express Co. v. Croninger, 226 U.S. 491, 505 (1913). However, Carmack preemption does not apply to state-law liability “arising from separate harms—apart from the loss or damage of goods.” Rini, 104 F.3d at 506.

The Julsonnets urge that Carmack preemption cannot apply because the statute applies only to the interstate shipments of goods, while Tophills never left Massachusetts with their personal effects. This argument is foreclosed by United States Supreme Court precedent. The intended destination at the time of contracting is the touchstone by which to determine whether the “character of the commerce” is interstate or intrastate. Sprout v. City of S. Bend, 277 U.S. 163, 168 (1928); see also Swift Textiles, Inc. v. Watkins Motor Lines, Inc., 799 F.2d 697, 699 (11th Cir. 1986) (character of the commerce is “reflected by the ‘intention formed prior to shipment.’ ”), quoting Great N. Ry. Co. v. Thompson, 222 F. Supp. 573, 582 (D.N.D. 1963). Based on the Contract, the transaction was intended to be “incident to an interstate journey,” so it is “within the ambit of the Interstate Commerce Act.” New York, New Haven & Hartford R.R. Co. v. Nothnagle, 346 U.S. 128, 130 (1953).

Counts VI, VIII, IX, and X allege harms apart from the loss or damage of goods and therefore are not preempted.⁶ See Rini, 107 F.3d at 506. However, Counts VII, XI and XII allege that the defendants lost, “damaged[,] or destroyed” the Julsonnets’ property. Compl. (Dkt. # 1) ¶¶ 85, 102, 107. These claims are preempted and are therefore dismissed.

Count I – Federal Motor Carrier Safety Act

Defendants’ sole argument for dismissing Count I is that the Julsonnets have “provided no evidence of what [the] actual loss or injury to their property is.” This is contrary to undisputed facts in the record: the Contract valued the property at $142,800, and Ms. Julsonnet testified that the business inventory alone was worth “at least several hundred thousand dollars,” and that her business made “[p]robably maybe [$]40,000” each year. Opp’n Ex. F (Dkt. # 43-7) at 42:3, 46:13. The court will thus deny summary judgment on Count I.

Counts II and III – Civil RICO

The Julsonnets allege RICO violations against both Tophills and Escobar. However, “[i]t is only a person, or one associated with an enterprise, not the enterprise itself, who can violate the provisions of [18 U.S.C. § 1962(c)].” Schofield v. First Commodity Corp. of Boston, 793 F.2d 28, 30 (1st Cir. 1986), quoting Van Schaick v. Church of Scientology of California, 535 F. Supp. 1125, 1136 (D. Mass. 1982); see also Crimson Galeria Ltd. P’ship v. Healthy Pharms, Inc., 337 F. Supp. 3d 20, 41 (D. Mass. 2018) (same, for § 1962(d)). Counts II and III will accordingly be dismissed as against Tophills.

*4 RICO makes it unlawful for “any person employed by or associated with any enterprise engaged in … interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt,” or to conspire to do so. 18 U.S.C. § 1962(c), (d); see also id. § 1964(c) (creating a private right of action to “[a]ny person injured in his business or property by reason of a violation of [the criminal RICO provisions]”). The statute defines “racketeering activity” broadly “to include a host of so-called predicate acts.” Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 647 (2008). As relevant here, racketeering activity includes “any act or threat involving … extortion” and “any act which is indictable under” the federal mail fraud and wire fraud statutes, 18 U.S.C. §§ 1341 (mail fraud), 1343 (wire fraud). 18 U.S.C. § 1961(1).

Proof of a predicate act alone is insufficient to generate civil RICO liability; the Julsonnets must also prove a pattern of racketeering activity by showing both continuity and relatedness of the predicate acts. See Giuliano v. Fulton, 399 F.3d 381, 386-387 (1st Cir. 2005). They may show continuity by proving either a “closed period of repeated conduct” that “amounted to … continued criminal activity” or “past conduct that by its nature projects into the future with a threat of repetition.” H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 237, 241 (1989). Predicate acts are related when they “embrace[ ] criminal acts that have the same or similar purposes, results, participants, victims, or methods of commission, or otherwise are interrelated by distinguishing characteristics and are not isolated events.” Id., quoting 18 U.S.C. § 3575(e).

Escobar asserts, without citation, that the sole conduct the Julsonnets allege gives rise to their RICO claims is that defendants “forged their signature on the bill of lading and converted their belongings.” Mot. for Summ. J. at 7 (footnote omitted). This is both contrary to the record, see Opp’n, Ex. A (Dkt. # 43-2), and patently deficient to carry his burden, see Flovac, 817 F.3d at 853. Although Escobar need not negate the Julsonnets’ factual bases for their RICO claims, see Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986), he has not identified anything in the record showing that there is no genuine factual dispute about the conduct that gives rise to the RICO claims. Summary judgment cannot be granted on so thin a showing by Escobar.

Count VI – Breach of Contract

To prove that defendants breached the moving Contract, the Julsonnets must show that: (1) the parties had a valid contract; (2) defendants breached the contract; and (3) the Julsonnets sustained damages because of the breach. Brooks v. AIG SunAmerica Life Assurance Co., 480 F.3d 579, 586 (1st Cir. 2007).⁷ Defendants claim that the Contract is invalid for want of consideration because the Julsonnets did not pay the amount owed to Tophills and because they received a refund of their deposit from their credit card company. Mot. for Summ. J. at 4.

Defendants’ argument is better characterized as an affirmative defense meant to justify their breach on grounds that the Julsonnets failed to perform.⁸ But even this more accurate framing is unsuccessful. The Contract provides that the Julsonnets were required to pay 65% of the balance due “[o]n the day of pick up [sic]” and defines the pickup date as “09/12/2021-09/13/2021.” Contract at 3. As noted, the parties orally modified the agreement to schedule the pickup on September 11 and 12. But as the Contract defined the pickup date as two days, the most reasonable interpretation of this is that the Julsonnets were required to pay the 65% of the balance due on completion of the pickup on the second day.

*5 The undisputed facts are that the Julsonnets were ready to perform on September 12. But they were not required to perform before defendants completed the pickup the next day.⁹ Opp’n at 10. The court will therefore deny summary judgment on Count VI.

Count VIII – Chapter 93A

To prevail on their Chapter 93A claim, the Julsonnets must show “1) that the defendant[s] … committed an unfair or deceptive act or practice; … 2) a loss of money or property suffered as a result; and 3) a causal connection between the loss suffered and the defendant’s unfair or deceptive method, act, or practice.” Auto Flat Car Crushers, Inc. v. Hanover Ins. Co., 469 Mass. 813, 820 (2014) (footnote omitted). Defendants argue that the Julsonnets failed to serve a pre-suit demand letter as is required to pursue a § 9 claim under Chapter 93A. The Julsonnets concede that they did not send a demand letter, but argue they are pursuing a § 11 claim, which does not require pre-suit notice.

Section 11 protects “[a]ny person who engages in the conduct of any trade or commerce” from suffering damages from another’s unfair or deceptive act or practice. Mass. Gen. Laws ch. 93A, § 11. “The question of whether a private individual’s participation in an isolated transaction takes place in a ‘business context,’ ” and is thus within § 11’s ambit, is “determined from the circumstances of each case.” Begelfer v. Najarian, 381 Mass. 177, 190-191 (1980). The relevant circumstances include “the frequency of similar transactions, the motivation behind the transaction, and the role of the participant in the transaction.” Kunelius v. Town of Stow, 588 F.3d 1, 16 (1st Cir. 2009).

The court finds that the Julsonnets’ engagement of Febex and Tophills is not a commercial transaction. Although Ms. Julsonnet intended to move her business inventory along with their household belongings, there is no evidence that “the nature of the transaction was grounded in business.” See Garango & Assocs., P.C. v. John Swider & Assocs., 55 Mass. App. Ct. 256, 263 (2002). That is, it is not clear that the decision to hire a moving company was “motivated by business” rather than “personal reasons.” See Begelfer, 381 Mass. at 191. The Julsonnets’ Chapter 93A claim is thus better characterized as a § 9 claim. As they failed to serve the requisite demand letter on defendants, Count VIII is dismissed.

Count IX – Misrepresentation

The Julsonnets concede that their misrepresentation claim “is based on the misrepresentations made to [them] to induce [them] to enter into the contract.” Opp’n at 12. The only alleged misrepresentations were made by Febex. As Febex is no longer a defendant, the court will allow summary judgment on Count IX.

ORDER

For the foregoing reasons, defendants’ motion for summary judgment is ALLOWED as to Counts VII, VIII, IX, XI, and XII against all defendants, ALLOWED as to Counts II and III as against Tophills, DENIED as to Counts I, VI, and X as against all defendants, and DENIED as against Escobar as to Counts II and III. The court hereby DISMISSES WITH PREJUDICE Counts II and III as against Tophills and Counts V, VII, VIII, IX, XI, XII, and XIII as against all defendants.

*6 SO ORDERED.

All Citations

Footnotes  

1. Although Tophills was doing business as Five Star Movers during the relevant period, the court will refer to Tophills by its name of incorporation.  
2. The court previously dismissed Count IV for failure to state a claim. Dkt. # 32.  
3. The Contract permitted Febex to hire independent subcontractors for pickup and delivery. See Contract at 5.  
4. Defendants do not expressly dispute any of these facts, and they identify only six “undisputed” facts, nearly all of which the Julsonnets dispute. See Pls.’ Statement of Disputed Facts (Dkt. # 45).
5. Defendants’ Motion states that they are moving to dismiss “Count IV – Breach of Contract.” Mot. for Summ. J. (Dkt. # 39) at 1. Count VI alleges breach of contract, so the court assumes this is a typographical error.  
6. Defendants’ only argument as to why Count X should be dismissed is that it is preempted by the Carmack Amendment. Because it is not, the motion for summary judgment will be denied on Count X.  
7. As a technical matter, “causation of damages is not an element of breach of contract [under the Massachusetts rule], as a plaintiff is entitled to at least nominal damages upon proving a breach.” Boston Prop. Exch. Transfer Co. v. Iantosca, 720 F.3d 1, 11 (1st Cir. 2013), citing Nathan v. Tremont Storage Warehouse, Inc., 328 Mass. 168, 171 (1951).  
8. The requisite consideration that created a valid contract was the 25% deposit.  
9. Defendants’ (very brief) argument that payment was a condition precedent to completing the move also fails. This may be true, but the Julsonnets’ belongings needed to be loaded onto the truck before beginning the move.  

End of Document

© 2024 Thomson Reuters. No claim to original U.S. Government Works.  

United States District Court, W.D. Washington,

at Seattle.

STARR INDEMNITY & LIABILITY COMPANY, a/s/o Polaris, Inc., Plaintiff,

v.

EXPEDITORS INTERNATIONAL OF WASHINGTON, INC., a Washington corporation, et al., Defendants.

Case No. 2:23-cv-00621-TL

|

Signed January 31, 2024

Attorneys and Law Firms

Vi Jean Reno, Seattle, WA, for Plaintiff.

Cameron W. Roberts, Roberts & Kehagiaras LLP, Long Beach, CA, for Defendant Expeditors International of Washington Inc.

Mitchell B. Diesko, Tyson L. Calvert, Lindsay Hart LLP, Portland, OR, for Defendants Max Trans Logistics LLC, Max Trans Logistics of Chattanooga LLC.

Benjamin H. Vaughan, Pro Hac Vice, Eric C. Palombo, Pro Hac Vice, Jeffrey D. Cohen, Pro Hac Vice, Cohen & Palombo PC, Ardmore, PA, Todd W. Wyatt, Wyatt Debenedetti PLLC, Issaquah, WA, for Defendant BNSF Railway Co.

Order on Motions to Dismiss

Tana Lin, United States District Judge

*1 This is an action for damages resulting from the derailment of a train carrying cargo from Seattle, Washington, to Wilmington, Ohio. This matter is before the Court on motions to dismiss by Defendant BNSF Railway Company (Dkt. No. 24) and Defendant Max Trans Logistics LLC (Dkt. No. 25). Having reviewed Plaintiff Starr Indemnity and Liability Company’s responses (Dkt. Nos. 27, 33), Defendant BNSF’s reply (Dkt. No. 30), and the relevant record, and finding oral argument unnecessary, see LCR 7(b)(4), the Court grants the motions with leave to amend certain claims.

I. Background

The allegations are stated as pleaded in the Amended Complaint. Dkt. No. 6.

A. The Parties

Plaintiff Starr Indemnity and Liability Company (“Starr Indemnity”) is a Texas corporation, with its principal place of business in New York City. Dkt. No. 6 ¶ 1.1. Plaintiff is subrogree of Polaris, Inc., a Minnesota corporation with its principal place of business in Medina, Minnesota. Id. ¶¶ 1.2, 3.13–3.14.

Defendant Expeditors International of Washington, Inc. (“Expeditors”), is a Washington corporation, with its principal place of business in Seattle, Washington. Id. ¶ 1.4.

Defendants Max Trans Logistics LLC and Max Trans Logistics of Chattanooga, LLC (collectively, “Max Trans”) are Tennessee companies with their principal place of business in Chattanooga, Tennessee. Id. ¶ 1.5.

Defendant Delta Trucking, Inc., is a Florida corporation with its principal place of business in Miami, Florida. Id. ¶ 1.6. Defendant Delta Logistics, Inc., is an Oregon company, with its principal place of business in Wilsonville, Oregon. Id. Delta Logistics also does business as foreign profit corporation Delta Logistics WA, Inc. out of Kent, Washington. Id. Collectively, these Defendants will be referred to as “Delta.”

Defendant Burlington Northern Santa Fe (“BNSF”) Railway Company is a Delaware corporation with its principal place of business in Fort Worth, Texas. Id. ¶ 1.7.

B. Factual Background

Polaris purchased outerwear (jackets and pants), shoes, and helmets (the “Subject Goods”) to be transported by sea from Vietnam, South Korea, and China, for ultimate delivery to customers in Ohio. Id. ¶ 3.1. Teton Outfitters LLC was the importer and consignee of the Subject Goods. Id. ¶ 3.2.

Defendant Expeditors was the non-vessel owning common carrier (“NVOCC”) which issued two sea waybills (Nos. 65T0010179, 65T001173) dated January 3, 2022, for transportation of the Subject Goods in four 40’ containers to be delivered to Seattle and Tacoma, Washington. Id. ¶ 3.3. On various dates in March and early April of 2022, the Subject Goods arrived in Seattle. Id. ¶ 3.4.

Defendant Expeditors was also the freight forwarder responsible for then transporting and delivering the Subject Goods from Washington to Ohio. Id. Defendant Expeditors caused the four containers of Subject Goods to be placed in a container yard in Sumner, Washington, and consolidated into two cargo trailers. Id. ¶¶ 3.5–3.6. Defendant Expeditors also issued two bookings (Nos. H030201566, H030201567) to transport the two trailers overland from Washington to Ohio. Id. ¶ 3.6.

*2 Defendant Expeditors agreed to transport the Subject Goods by motor truck and hired Defendant Max Trans, a motor truck carrier, to pick up the Subject Goods and carry them from Washington to Ohio. Id. ¶¶ 3.3, 3.7. Defendant Max Trans picked up the Subject Goods in Seattle and took them to a container yard. Id.

Defendant Max Trans subcontracted some or all of the interstate motor truck carriage to Delta. Id. In the container yard, and based upon their position in the yard, Defendant Max Trans and/or Defendant Delta “erroneously believed” that the Subject Goods were scheduled for travel by rail to Ohio. Id. One or both Defendants took the Subject Goods to Defendant BNSF’s rail yard, where they were loaded in a trailer on flat car (“TOFC”) configuration. Id. ¶ 3.8. However, the shipper had specifically requested, and Defendant Expeditors had agreed, that the Subject Goods were to be transported overland by truck. Id. ¶ 3.9.

On May 1, 2022, Defendant BNSF’s eastbound train, on which the two trailers were loaded, derailed and caught fire between Minot and Des Lacs, North Dakota. Id. ¶ 3.10. All of the Subject Goods were either destroyed by the derailment or caught fire and were destroyed by the subsequent fire and/or remediation efforts after the derailment. Id. ¶ 3.11. The total value of the goods lost and/or destroyed as a result was $1,262,898. Id. ¶ 3.12.

Polaris submitted its claim to Plaintiff, its underwriters, for the total amount of its loss. Id. ¶ 3.13. Plaintiff paid its insured for the total amount and became subrogated to the rights of Polaris. Id. ¶ 3.14.

C. Procedural History

On April 27, 2023, Plaintiff commenced the instant action. Dkt. No. 1. On June 7, 2023, Plaintiff filed its Amended Complaint. Dkt. No. 6. Relevant to the instant motions, Plaintiff asserts against Defendant BNSF claims of negligence and breach of contract, as well as violations of federal statutes and regulations. Id. ¶¶ 7.1–7.11. Plaintiff asserts against Defendant Max Trans a claim of negligence and a violation of a federal statute. Id. ¶¶ 5.1–5.6.

Defendants BNSF and Max Trans now bring the instant motions to dismiss the claims against them. Dkt. Nos. 24, 25. Plaintiff opposes both motions. Dkt. Nos. 27, 33. To date, no other Defendants have filed a motion to dismiss.

II. Legal Standard

A defendant may seek dismissal when a plaintiff fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). In reviewing a FRCP 12(b)(6) motion to dismiss, the Court takes all well-pleaded factual allegations as true and considers whether the complaint “state[s] a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). While “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements” are insufficient, a claim has “facial plausibility” when the party seeking relief “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 672. “When reviewing a dismissal pursuant to Rule … 12(b)(6), ‘we accept as true all facts alleged in the complaint and construe them in the light most favorable to plaintiff[ ], the non-moving party.’ ” DaVinci Aircraft, Inc. v. United States, 926 F.3d 1117, 1122 (9th Cir. 2019) (alteration in original) (quoting Snyder & Assocs. Acquisitions LLC v. United States, 859 F.3d 1152, 1156–57 (9th Cir. 2017)).

III. Discussion

*3 Defendants BNSF and Max Trans make substantially similar arguments.¹ Both argue that federal law, including the Carmack Amendment to the Interstate Commerce Act and the Carriage of Goods by Sea Act (“COGSA”), preempt Plaintiff’s common law claims. Dkt. No. 24 at 10–11; Dkt. No. 25 at 3–5. Defendant BNSF also argues that Plaintiff’s claim for “Violation of Federal Railroad Safety Regulations” is preempted. Dkt. No. 24 at 11–13. Finally, both Defendants argue that Plaintiff has not stated a claim for relief, regardless of preemption. Id. at 13–18; Dkt. No. 25 at 5–8. The Court considers each argument in turn.

As an initial matter, Plaintiff “offers no argument or authority whatsoever” in defense of its regulatory claim against Defendant BNSF, “nor does it even respond to BNSF’s related arguments.” Dkt. No. 30 at 2; see also Dkt. No. 27 at 5–6, 8–10. Therefore, as to Plaintiff’s regulatory claim, Defendant BNSF’s motion to dismiss is granted and the claim is dismissed.

A. Preemption by Carmack Amendment

1. Background

“For over one hundred years, the Supreme Court has consistently held that the Carmack Amendment has completely occupied the field of interstate shipping.” Certain Underwriters at Interest at Lloyds of London v. United Parcel Serv. of Am., Inc., 762 F.3d 332, 335 (3d Cir. 2014) (“Lloyds”); see Adams Express Co. v. Croninger, 226 U.S. 491, 505–06 (1913) (“Almost every detail of the subject is covered so completely that there can be no rational doubt but that Congress intended to take possession of the subject, and supersede all state regulation with reference to it.”); N.Y., New Haven & Hartford Ry. Co. v. Nothnagle, 346 U.S. 128, 131 (1953) (“Congress superseded diverse state laws with a nationally uniform policy governing interstate carriers’ liability for property loss.”). “The Courts of Appeals have also unanimously held that the Carmack Amendment ‘preempts all state or common law remedies available to a shipper against a carrier for loss or damage to interstate shipments.’ ” Lloyds, 762 F.3d at 336 (quoting N. Am. Van Lines, Inc. v. Pinkerton Sec. Sys., Inc., 89 F.3d 452, 456 (7th Cir. 1996)); see also Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 687–88 (9th Cir. 2007).

As the Ninth Circuit has explained, “[t]he Carmack Amendment is a federal statute that provides the exclusive cause of action for interstate shipping contract claims, and it completely preempts state law claims alleging delay, loss, failure to deliver and damage to property.” White v. Mayflower Transit, 543 F.3d 581, 584 (9th Cir. 2008); accord Smallwood v. Allied Van Lines, Inc., 660 F.3d 1115, 1120 (9th Cir. 2011); Hall, 476 F.3d at 688. The Carmack Amendment also “constitutes a complete defense to common law claims against interstate carriers for negligence, fraud and conversion, even though these claims may not be completely preempted.”² White, 543 F.3d at 584 (citing Hall, 476 F.3d at 689).

2. Statutory Text

As to rail carriers, the Carmack Amendment states in relevant part:

A rail carrier providing transportation or service subject to the jurisdiction of the [Surface Transportation] Board [“STB”] under this part shall issue a receipt or bill of lading for property it receives for transportation under this part. That rail carrier and any other carrier that delivers the property and is providing transportation or service subject to the jurisdiction of the Board under this part are liable to the person entitled to recover under the receipt or bill of lading.

*4 The liability imposed under this subsection is for the actual loss or injury to the property caused by—

(1) the receiving rail carrier;

(2) the delivering rail carrier; or

(3) another rail carrier over whose line or route the property is transported in the United States or from a place in the United States to a place in an adjacent foreign country when transported under a through bill of lading.

Failure to issue a receipt or bill of lading does not affect the liability of a rail carrier.

A delivering rail carrier is deemed to be the rail carrier performing the line-haul transportation nearest the destination but does not include a rail carrier providing only a switching service at the destination.

49 U.S.C. § 11706(a).

Similarly, as to motor carriers and freight forwarders, the Carmack Amendment states in relevant part:

A carrier providing transportation or service subject to jurisdiction under subchapter I [motor carriers] or III [freight forwarders] of chapter 135 shall issue a receipt or bill of lading for property it receives for transportation under this part. That carrier and any other carrier that delivers the property and is providing transportation or service subject to jurisdiction under subchapter I or III of chapter 135 or chapter 105 [rail carriers] are liable to the person entitled to recover under the receipt or bill of lading.

The liability imposed under this paragraph is for the actual loss or injury to the property caused by

(A) the receiving carrier,

(B) the delivering carrier, or

(C) another carrier over whose line or route the property is transported in the United States or from a place in the United States to a place in an adjacent foreign country when transported under a through bill of lading and, except in the case of a freight forwarder, applies to property reconsigned or diverted under a tariff under section 13702.

Failure to issue a receipt or bill of lading does not affect the liability of a carrier.

A delivering carrier is deemed to be the carrier performing the line-haul transportation nearest the destination but does not include a carrier providing only a switching service at the destination.

49 U.S.C. § 14706(a)(1). These provisions are “virtually identical.” CNA Ins. Co. v. Hyundai Merch. Marine Co., 747 F.3d 339, 353 (6th Cir. 2014).

Thus, “Carmack applies only to transport of property for which Carmack requires a receiving carrier to issue a bill of lading, regardless of whether that carrier erroneously fail[ed] to issue such a bill.” Smallwood, 660 F.3d at 1120 n.5 (emphases added) (quoting Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89, 102–03 (2010) (“Regal-Beloit”)).

Further, a bill of lading is required if two conditions are met. First, the carrier must “provid[e] transportation or service” subject to certain jurisdiction. 49 U.S.C. §§ 11706(a), 14706(a)(1). Second, the carrier must “receive[ ]” the property for “transportation under this part,” where “this part” is the applicable jurisdiction. Id. Carmack only requires a receiving carrier—and not a delivering or connecting carrier—to issue a bill of lading. Regal-Beloit, 561 U.S. at 101. As applies here, the STB has jurisdiction over interstate transportation within the United States. 49 U.S.C. §§ 10501(2)(A) (rail carriers), 13501(1)(A) (motor carriers), 13531(a)(1) (freight forwarders).

3. Application

(1) BNSF

*5 Plaintiff alleges that Defendant BNSF attempted to transport the Subject Goods from Washington to Ohio, by rail and while loaded in a TOFC configuration. Dkt. No. 6 ¶¶ 3.7–3.12. This transportation occurred after Defendants Max Trans and/or Delta “erroneously believed” the Subject Goods were assigned to rail and loaded them accordingly at Defendant BNSF’s rail yard—even though the shipper (Polaris) had requested transport overland by truck. Id.

Plaintiff “agrees … in principle” that its common law claims should be dismissed because they are preempted, “but unless and until this Court holds that the Carmack Amendment is the law applicable to this case,” Plaintiff pleads its state law claims in the alternative. Dkt. No. 27 at 6. Plaintiff appears to suggest elsewhere in its brief that the Carmack Amendment may not apply because the carriage of the Subject Goods was undertaken “by mistake” and that Plaintiff’s subrogor, Polaris, had not “purposefully availed itself of [Defendant] BNSF’s services as a carrier.” Id. at 10.

The Court finds that the Carmack Amendment applies to this case and preempts Plaintiff’s common law claims. Plaintiff alleges that Defendant Expeditors issued two sea waybills for overseas transportation from various locations to Seattle and Tacoma, Washington.³ Dkt. No. 6 ¶ 3.3. Defendant Expeditors, a freight forwarder, then issued two “bookings”⁴ for overland transportation from Washington to Ohio, and it hired Defendant Max Trans, a motor truck carrier, to pick up the Subject Goods in Seattle and transport them to Ohio. Id. ¶¶ 3.6–3.7. Defendant Max Trans picked up the Subject Goods and moved them to a container yard. Id. ¶ 3.7. Defendant Max Trans further subcontracted some or all of the interstate carriage to Defendant Delta. Id. The overland transportation was ultimately performed by Defendant BNSF, which carried the Subject Goods eastbound by rail.⁵ Id. ¶ 3.8, 3.10. Under these circumstances, one of the receiving entities at the point of origin—be it freight forwarder Defendant Expeditors or motor carrier Defendant Max Trans—was required to issue a separate Carmack-compliant bill of lading. 49 U.S.C. § 14706(a)(1).⁶

*6 Plaintiff notes that there is no evidence or allegation that Defendant BNSF issued a bill of lading. Dkt. No. 27 at 6. While there is no evidence or allegation at this stage that any carrier issued a bill of lading, it does not matter: “The decisive question is not whether the [ ] carrier in fact issued a Carmack bill but rather whether the carrier was required to issue a bill by Carmack’s first sentence.” Regal-Beloit, 561 U.S. at 103. As one of the Defendants was required to issue such a bill (even if a bill was never actually issued), the Carmack Amendment applies and “completely preempts” Plaintiff’s claims of negligence and breach of contract, which stem entirely from alleged damage to the Subject Goods. White, 543 F.3d at 584; see also, e.g., BNSF Logistics, LLC v. L&N Express, Inc., No. C11-5810, 2012 WL 525526, at *4–5 (N.D. Cal. Feb. 16, 2012) (holding breach of contract and negligence claims preempted by Carmack Amendment).

Plaintiff’s other arguments are also unavailing. In its request for leave to amend, Plaintiff appears to suggest (without authority) that because transportation by Defendant BNSF was “likely … by mistake,” the Carmack Amendment does not apply. Dkt. No. 27 at 10. However, there is no requirement in the text of Carmack that a carrier be specifically and intentionally selected for Carmack to apply. Indeed, the purpose of the Carmack Amendment is “to relieve cargo owners ‘of the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of goods.’ ” Regal-Beloit, 561 U.S. at 98 (quoting Reider v. Thompson, 339 U.S. 113, 119 (1950)). Plaintiff itself pleads in the alternative that Defendant BNSF “entered an implied and express contract with Polaris” to carry the Subject Goods, suggesting that regardless of the parties’ intentions, Defendant BNSF entered some kind of contract for transportation of the Subject Goods. Dkt. No. 6 ¶ 7.4. Finally, the Ninth Circuit’s decision in Smallwood strongly suggests that a mistake in effectuating the shipper’s instructions (here, carriage by rail instead of by motor) does not negate the application of Carmack. 660 F.3d at 1120 n.5 (finding Carmack “plainly governs” the shipment, even though carrier shipped goods abroad instead of storing them as instructed).

Relatedly, also in its request for leave to amend, Plaintiff appears to suggest (without authority) that because neither Polaris nor any of its agents “appears to have purposefully availed itself” of Defendant BNSF’s carrier services, the Carmack Amendment may not apply. Dkt. No. 27 at 10. But under Carmack, “[f]or the purposes of Fixing the liability, the several carriers must be treated, not as independent contracting parties, but as one system.” Mo., Kan. & Tex. Ry. Co. of Tex. v. Ward, 244 U.S. 383, 387–88 (1917); see also CNA Ins. Co., 747 F.3d at 356 (observing that in Ward, the Supreme Court “allowed the shipper to sue and recover from subsequent rail carriers, despite the absence of contractual privity between the shipper and those carriers”). Thus, it is irrelevant that Polaris did not contract with Defendant BNSF specifically. What matters is that Defendant BNSF was part of the chain of carriers engaged to transport the Subject Goods.

Therefore, as to Plaintiff’s common law claims, Defendant BNSF’s motion to dismiss is granted and the claims are dismissed without leave to amend, as amendment would be futile.

(2) Max Trans

Plaintiff “agrees that [Defendant] BNSF and [Defendant] Max Trans are, at this early juncture, in substantially similar positions in relation to this destroyed cargo.” Dkt. No. 33 at 2. Plaintiff also again “agrees, in principle,” that the Carmack Amendment preempts state law claims, but notes that the Court must first rule that Carmack applies. Id. at 3.

*7 As to Defendant Max Trans, Plaintiff presents no questions of mistake or purposeful availment; on the contrary, Plaintiff alleges that Defendant Expeditors explicitly hired Defendant Max Trans as a motor truck carrier to carry the Subject Goods to Ohio. Dkt. No. 6 ¶ 3.7. Plaintiff makes no distinct argument against application of the Carmack Amendment to claims against Defendant Max Trans. Moreover, the Court has found that the Carmack Amendment applies to this case. See supra Section III.A.3.1.

Therefore, as to Plaintiff’s common law claims, Defendant Max Trans’s motion to dismiss is granted and the claims are dismissed without leave to amend, as amendment would be futile.⁷

B. Failure to State a Claim

“A shipper … establishes a prima facie case of a carrier’s liability under the Carmack Amendment by establishing by a preponderance of the evidence that the goods were: (1) delivered to the carrier in good condition; (2) the goods were damaged or lost while in the carrier’s possession; and (3) damages.” ASARCO LLC v. England Logistics, Inc., 71 F. Supp. 3d 990, 994 (D. Ariz. 2014) (citing Mo. Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 138 (1964)); accord CNA Ins. Co., 747 F.3d at 353.

Defendants BNSF and Max Trans both argue that Plaintiff’s claim under the Carmack Amendment is not plausibly alleged because Plaintiff has not alleged the condition of the goods when provided to them. Dkt. No. 24 at 18; Dkt. No. 25 at 8. In addition, Defendant BNSF argues in one sentence that Plaintiff does not allege that it satisfied “claim submission requirements” prior to suit (Dkt. No. 24 at 18), and Defendant Max Trans argues that Plaintiff “fail[s] to definitively allege that Max Trans actually took possession or, in the alternative, subcontracted to Delta to take possession” prior to loading (Dkt. No. 25 at 8). Plaintiff responds that “it is legally inferred in federal cargo litigation that the cargo was in good order when it is destroyed in transit.” Dkt. No. 27 at 9; accord Dkt. No. 33 at 4. Plaintiff also points out that Defendant BNSF does not specify the alleged claim requirements. Dkt. No. 27 at 10.

The Court agrees that Plaintiff has failed to sufficiently allege the condition of the Subject Goods. Indeed, Plaintiff makes no allegation as to the condition of the Subject Goods at any stage of transport, save their ultimate destruction in the derailment. Dkt. No. 6 ¶ 3.11. However, as Plaintiff notes, this deficiency is “clearly curable by amended allegations.” Dkt. No. 27 at 11. Therefore, as to Plaintiff’s Carmack claims, Defendants’ motions are granted, and the claims are dismissed with leave to amend.

Defendants’ other arguments are unavailing. First, Defendant BNSF’s argument about “claim submission requirements” appears to refer to certain regulations setting out “the minimum requirements of a written notice under the UBL [Uniform Bill of Lading].” N.Y. Marine & Gen. Ins. Co. v. Estes Express Lines, Inc., No. C15-2962, 2016 WL 11778406, at *4 (S.D. Cal. Oct. 25, 2016), aff’d, 719 F. App’x 691 (9th Cir. 2018); see 49 U.S.C. § 14706(e)(1); 49 U.S.C. § 11706(e); 49 C.F.R. § 370.3(b); 49 C.F.R. § 1005.2(b); see also S&H Hardware & Supply Co. v. Yellow Transp., Inc., 432 F.3d 550, 554 (3d Cir. 2005) (“Under the implementing regulations of the Carmack Amendment, a claim must file notice of loss or damage with the carrier within the time specified on the bill of lading ….” (emphasis added)). The Ninth Circuit has held that these notice requirements apply to both contested and uncontested claims, but it did so in a case where a bill of lading was issued and included a written notice requirement. See Ins. Co. of N. Am. v. G.I. Trucking Co., 1 F.3d 903, 906 (9th Cir. 1993); see also id. at 905 (stating that the regulations “outline the minimum requirements of a written notice claim under the UBL”).

*8 Notably, Defendant BNSF supplies no authority that these regulations create a free-standing notice requirement in a case like this one, where Plaintiff does not allege that a bill of lading was issued. Thus, “[e]ven if notice ultimately is required in a contested case such as this, [Defendant BNSF] has provided no authority that a plaintiff must affirmatively plead compliance with the notice of claim procedure when pleading a claim pursuant to the Carmack Amendment, particularly where, as here, [Plaintiff has] not alleged that [it was] provided a bill of lading or contract setting forth the notice requirements.” Swenson v. All. Moving & Storage LLC, No. C21-1968, 2022 WL 1508506, at *12 (D. Colo. Apr. 26, 2022), report and recommendation adopted, 2022 WL 1500778 (D. Colo. May 12, 2022).

Defendant BNSF believes “[i]t is at least suggested” by the Amended Complaint “that [Defendant] Expeditors did issue a bill of lading or other receipt for the freight in this case.” Dkt. No. 30 at 6. But a bill of lading is not alleged, nor is one presented to the Court. If Defendant BNSF has a good-faith basis for believing or discovery reveals that a bill of lading was issued and included notice requirements, or if it knows it issued such a bill, Defendant BNSF may be able to assert lack of compliance as a defense. See, e.g., Estes Express Lines, 2016 WL 11778406, at *7 (granting summary judgment where bill of lading required written notice of claim, but notice did not meet regulatory requirements). But at this stage, based on the facts alleged, Plaintiff does not need to plead compliance with such requirements.

Second, Defendant Max Trans’s argument that the allegations do not sufficiently allege its possession of the Subject Goods is meritless. Plaintiff plainly alleges that after Defendant Max Trans was hired by Defendant Expeditors, “Max Trans picked up the two trailers [containing the Subject Goods] at Seattle and took them to a container yard.” Dkt. No. 6 ¶ 3.7. From there, “Max Trans further subcontracted some or all of the interstate motor truck carriage to Delta.” Id. These allegations are sufficient to establish possession by Defendant Max Trans.

IV. Conclusion

Accordingly, it is hereby ordered:

(1) Defendant BNSF’s motion to dismiss (Dkt. No. 24) is granted.

(2) Defendant Max Trans’s motion to dismiss (Dkt. No. 25) is granted.

(3) Plaintiff is granted leave to amend its claims under the Carmack Amendment. Should Plaintiff choose to amend, the amended complaint shall be filed within thirty (30) days of this Order.

All Citations

Footnotes  

1. Indeed, Defendant Max Trans incorporates large swaths of Defendant BNSF’s briefing. See Dkt. No. 25 at 3, 8.  
2. A claim is completely preempted “to the extent that it arises from the same conduct as the claims for delay, loss or damage to shipped property.” White, 543 F.3d at 586 (holding claim for intentional infliction of emotional distress was completely preempted). Complete preemption is an exception to the “well-pleaded complaint rule” for analyzing subject matter jurisdiction. See Hall, 476 F.3d at 686–87.  
3. Plaintiff attaches to its response the sea waybills issued by Defendant Expeditors. See Dkt. No. 28-1. While the Court may not consider this material in a motion to dismiss, the waybills are bills of lading and do state that the overseas leg of the shipment was to end in Washington. Id.
4. Plaintiff did not attach a copy of these “bookings” to the Complaint. Thus, it is unclear whether these “bookings” are bills of lading or what their terms might be. Plaintiff can certainly plead these allegations with more clarity if it files an amended complaint.  
5. Defendant BNSF suggests that the transportation may be “exempt” pursuant to 49 U.S.C. § 10502. See Dkt. No. 24 at 11 n.1; see also 49 C.F.R. § 1092 (rail and highway TOFC service exempt). This exemption permits carriers to offer shippers alternative terms to Carmack liability. See Nippon Yusen Kaisha v. Burlington & N. Santa Fe Ry. Co., 367 F. Supp. 2d 1292, 1300 (C.D. Cal. 2005). Here, there is no allegation that any carrier offered alternative terms. Even if they did, however, “the shipper[ ] sues the carrier under the Carmack Amendment, rather than under a state-law breach of contract or negligence claim; the carrier may plead as an affirmative defense that a limitation of liability applies.” Schoenmann Produce Co. v. Burlington & N. Santa Fe Ry. Co., 420 F. Supp. 2d 757, 762 (S.D. Tex. 2006) (citing Tokio Marine & Fire Ins. Co., Ltd. v. Amato Motors, Inc., 996 F.2d 874, 878 (7th Cir. 1993); then citing, inter alia, Nippon Yusen Kaisha, 367 F. Supp. 2d 1292).  
6. Plaintiff does not allege whether Defendant BNSF or Defendant Max Trans is a “receiving carrier,” a “delivering carrier,” or a “connecting carrier” under Carmack, nor do the Parties address these categories in their briefing. See Regal-Beloit, 561 U.S. at 100. Regardless, the Court finds that Carmack applies to the shipment in this case.  
7. Because the Court finds that the Carmack Amendment preempts all common law claims, the Court need not reach Defendants’ arguments related to COGSA.

End of Document

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