Volume 19 (2016)

Sanofi-Aventis U.S., LLC, et al., Plaintiffs, v. Great American Lines, Inc., et al

United States District Court,

New Jersey.

Sanofi-Aventis U.S., LLC, et al., Plaintiffs,

Great American Lines, Inc., et al., Defendants.

Civil Action No. 10-2023 (MAS) (TJB)

Signed 08/22/2016

Attorneys and Law Firms

George N. Styliades, Styliades Law Offices, Cherry Hill, NJ, James Paul Krauzlis, Casey & Barnett, LLC, New York, NY, for Plaintiffs.

Eric C. Palombo, Jeffrey David Cohen, Keenan Cohen & Howard P.C., Jenkintown, PA, for Defendants.

MEMORANDUM OPINION

SHIPP, District Judge

*1 This matter comes before the Court on two motions for reconsideration of the Court’s Memorandum Opinion and Order dated December 23, 2015 (“December Opinion”), by Defendants Great American Lines, Inc. (“GAL”) and M.V.P. Leasing, Inc. (“MVP”, and with GAL, “Transporter Defendants”), and Plaintiff AXA Corporate Solutions Assurance a/s/o McKesson Corporation (“Plaintiff”). (ECF Nos. 215, 216.) Plaintiff filed opposition to Transporter Defendants’ motion (ECF No. 219), and Transporter Defendants filed a motion for leave to file a reply brief (ECF No. 220).1 Defendant Pilot Travel Centers LLC (“Pilot”) and Transporter Defendants filed opposition to Plaintiff’s motion. (ECF Nos. 217, 218.) The Court has carefully considered the parties’ submissions and decides the matter without oral argument pursuant to Local Civil Rule 78.1. For the reasons stated below, Transporter Defendants’ motion for reconsideration is granted and Plaintiff’s motion for reconsideration is denied.

Legal Standard

Reconsideration under Local Civil Rule 7.1 is “an extraordinary remedy” that should be granted “very sparingly.” Interfaith Cmty. Org. v. Honeywell Int’l, Inc., 215 F. Supp. 2d 482,507 (D.N.J. 2002) (internal quotation marks omitted). The moving party must show “at least one of the following grounds: (1) an intervening change in the controlling law; (2) the availability of new evidence that was not available when the court granted the motion for summary judgment; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice.” Max’s Seafood Cafe ex rel. Lou–Aiw, Inc. v. Quinteros, 176 F.3d 669,677 (3d Cir. 1999). The scope of the motion is “extremely limited,” and the party moving for reconsideration cannot use the motion “as an opportunity to relitigate the case.” Blystone v. Horn, 664 F.3d 397, 415 (3d Cir. 2011). Local Civil Rule 7.1(i) provides that the moving party must set forth “concisely the matter or controlling decisions” that the party believes the court has overlooked. L. Civ. R. 7.1(i). “Mere disagreement with a court’s decision normally should be raised through the appellate process and is inappropriate on a motion for [reconsideration].” United States v. Pinkhasov, No. 08-285,2009 WL 150669, at *1 (D.N.J. Jan. 21,2009).

Transporter Defendants’ Motion for Reconsideration2

*2 In their motion for reconsideration, Transporter Defendants argue that the Court must reconsider the December Opinion because it committed a clear error when it held that the Transportation Contract did not bind Plaintiff, as Plaintiff was not a signatory to that contract, and thus, the Transportation Contract did not waive the rights and remedies Plaintiff may have under the Carmack Amendment. (Defs.’ Reconsideration Moving Br. 6, ECF No. 215-1.) Specifically, Transporter Defendants argue that this holding leads to the implicit determination by the Court that “a carrier could be subject to § 14101 contractual liability and Carmack liability for the same shipment.” (Id.) As case law is clear that the Carmack Amendment provides the exclusive cause of action for interstate-shipping contract claims alleging loss or damage to property, the Court agrees with Transporter Defendants that its December Opinion leads to the implicit holding that carriers could be subject to both contractual liability and Carmack liability for the same shipment. Accordingly, the Court will grant Transporter Defendants’ motion for reconsideration to correct the error of law that results from the Court’s implicit holding in the December Opinion. The Court will also decide whether there was a clear and express waiver of the Carmack Amendment claims in the Transportation Contract, and the further implications of that ruling on Transporter Defendants’ previous motions for summary judgment.

Waiver of Carmack Amendment Claims

Transporter Defendants argue that pursuant to 49 U.S.C. § 14101(b)(1), the Transportation Contract waived any rights and remedies that Plaintiff may have under the Carmack Amendment. (GAL’s SJ Moving Br. 5-9, ECF No. 180-1; MVP’s SJ Moving Br. 4-5, ECF No. 181-1.) In opposition, Plaintiff argues that the waiver clause in the Transportation Contract does not fulfill § 14101(b)(1) requirements for waiver because it “is not an unambiguous and complete waiver of Carmack in that the clause, as worded, in so far as it states Carmack is waived only to the extent the provisions of Carmack conflict with the terms of the Transportation Contract or the parties’ course of conduct” (Pl’s SJ Moving Br. 8, ECF No. 182-1.)

“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). Case law provides “that the Carmack Amendment is the ‘exclusive cause of action for interstate-shipping contract [and tort] claims alleging loss or damage to property.’ ” Id. at 336 (quoting Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 688-90 (9th Cir. 2007)). Through § 14101, however, Congress statutorily authorized carriers and shippers to enter into a contract to opt out of the Carmack Amendment’s default rules:

If the shipper and carrier, in writing, expressly waive any or all rights and remedies under this part for the transportation covered by the contract, the transportation provided under the contract shall not be subject to the waived rights and remedies and may not be subsequently challenged on the ground that it violates the waived rights and remedies.

49 U.S.C. § 14101(b)(1). “Section 14101 essentially permits parties to avoid liability under the Carmack Amendment when they ‘in writing, expressly waive any or all rights’ thereunder.” Midamerican Energy Co. v. Start Enters., Inc., 437 F. Supp. 2d 969, 972 (S.D. Iowa 2006).

Here, the Transportation Contract states, in relevant part:

Pursuant to 49 U.S.C.A. [§] 14101(b)(1), the parties expressly waive any and all provisions under the ICC Termination Act of 1995, U.S. Code Title 49, Subtitle IV, Part B, and the regulations thereunder to the extent that such provisions conflict with the terms of [the Transportation Contract] or the parties’ course of performance hereunder.

(Certification of Jeffrey D. Cohen, Esq. (“Cohen Cert.”) Ex. D, 12, ECF No. 180-6.) The parties clearly and expressly agreed to waive Carmack Amendment claims in the first section of this waiver clause: “Pursuant to … [§] 14101(b)(1), the parties expressly waive any and all provisions under [Carmack].” (Id.) Plaintiff, however, argues that the last phrase in the waiver clause renders it ambiguous and ineffective. (Pl.’s SJ Moving Br. 8, ECF No. 182-1.) The Court disagrees with Plaintiff and finds that Sanofi-Aventis U.S., LLC (“Sanofi”), as the shipper, and GAL, as the carrier, effectively waived Carmack Amendment claims as they are entitled to pursuant to § 14101(b)(1). See Smithfield Beef Grp.-Tolleson, Inc. v. Knight Refrigerated, LLC, No. 08-1923, 2009 WL 1651289, at *2 (D. Ariz. June 12, 2009) (finding that an express waiver of the Carmack Amendment followed by additional references to the Carmack Amendment in the same agreement was an effective waiver under § 14101(b)(1) because the reasonable explanation “is that the parties agreed to waive the Carmack Amendment as a whole, but chose to selectively incorporate certain aspects of it back into their agreement without adopting it as a whole”). Here, the reasonable explanation for the inclusion of the limiting language in the waiver—“to the extent that such provisions conflict”—is that Sanofi and GAL agreed to waive the Carmack Amendment as a whole, but wanted to make clear that any of the default rules of the Carmack Amendment that they wrote specifically into the Transportation Contract should not be disturbed. Additionally, the contract language the Court looked to in its December Opinion—“[t]his contract shall be binding upon and inure to the benefit of the parties hereto only”—does not change this analysis. First, Plaintiff does not argue that this language relates to the validity of the waiver. Second, even if the Court were to look at this language, the reasonable interpretation would still be that the parties agreed to waive the Carmack Amendment as a whole and only wanted to provide rights and remedies under the Transportation Contract to themselves as opposed to the broader rights available under the default rules.

*3 Furthermore, in reviewing the language of the statute, case law, and the parties’ arguments on reconsideration, the Court finds that § 14101(b)(l) does not require that the consignee agree to the waiver to be bound. See § 14101 (b)( 1) (“If the shipper and carrier, in writing, expressly waive any or all rights and remedies under [the Carmack Amendment] …, the transportation provided under the contract shall not be subject to the waived rights and remedies….”) (emphasis added); Norfolk S. Railway Co. v. Kirby, 543 U.S. 14, 34 (2004); see also Harrah v. Minn. Mining & Mfg. Co., 809 F. Supp. 313,319 (D.N.J. 1992). Therefore, there was an effective waiver of the Carmack Amendment claims in this case, and Plaintiff, as the consignee, is bound by that waiver. Accordingly, Transporter Defendants’ motions for summary judgment are granted with respect to the Carmack Amendment claims.

Breach of Contract Claim against GAL3

GAL argues that Plaintiff’s breach of contract claim fails as Plaintiff “is neither a party to, nor an intended beneficiary of, any transportation contracts with GAL.” (GAL’s SJ Moving Br. 10-13, ECF No. 180-1.) Conversely, Plaintiff argues that “Sanofi acted as [Plaintiff’s] agent, and [Plaintiff] was, therefore, clearly the intended beneficiary of any contracts entered into by Sanofi in making the transportation arrangements on [Plaintiff’s] behalf.” (Pl.’s SJ Moving Br. 12, ECF No. 182-1; Pl.’s SJ Opp’n Br. 13, ECF No. 186.) Thus, Plaintiff argues that it is an intended beneficiary of the Transportation Contract and the Quality Assurance Agreement4 between Sanofi and GAL. (Id.) Specifically, to support its argument, Plaintiff relies on: (1) the distribution agreement between Plaintiff and Sanofi requiring Sanofi to make the necessary transportation arrangements for the shipment; (2) Plaintiff’s name as the consignee on the Truck Manifest issued by GAL; and (3) deposition testimony of Sanofi and Plaintiff’s witnesses that “clearly and undisputedly show[ ] a contractual intent on the part of all parties.” (Pl.’s SJ Moving Br. 12-13; Pl.’s SJ Opp’n Br. 13-14.)

It is undisputed that Plaintiff was not a party to either the Transportation Contract or the Quality Assurance Agreement between Sanofi and GAL. Instead, Plaintiff argues it was an intended beneficiary. “The determining factor as to the rights of a third party beneficiary is the intention of the parties who actually made the contract…. Thus, the real test is whether the contracting parties intended that a third party should receive a benefit which might be enforced in the courts ….” Borough of Brooklawn v. Brooklawn Hous. Corp., 124 N.J.L. 73, 76-77 (1940). “The contractual intent to recognize a right to performance in the third person is the key. If that intent does not exist, then the third person is only an incidental beneficiary, having no contractual standing.” Broadway Maint. Corp. v. Rutgers, State Univ., 90 N.J. 253,259(1982). Additionally, “[t]he parties of course may expressly negate any legally enforceable right in a third party.” Id. at 260.

*4 Here, the Transportation Contract specifically states that it “shall be binding upon and inure to the benefit of the parties hereto only.” (Cohen Cert. Ex. D, 10.) Such language is demonstrative of the parties’ intent not to create any rights in any third party beneficiary. The Court’s analysis could stop there. However, even looking at the evidence provided by Plaintiff on the competing summary judgment motions, Plaintiff has not come forward with any evidence demonstrating GAL’s intent to include Plaintiff as a third party beneficiary. Plaintiff merely relies on evidence that, at most, shows Plaintiff’s and Sanofi’s intent. This is insufficient to carry Plaintiff’s burden. Therefore, GAL’s motion for summary judgment is granted with respect to the breach of contract claim.5

III. Plaintiff’s Motion for Reconsideration

In its motion for reconsideration, Plaintiff argues that the Court must reconsider the December Opinion because it committed a clear error when it held: (1) Plaintiff’s claim for breach of implied contract of bailment as to MVP failed because the tractor trailer was under GAL’s exclusive possession, control, and use; and (2) Plaintiff’s negligence claim as to Pilot failed as a matter of law because Plaintiff failed to offer evidence sufficient to find causation.6 (Pl.’s Reconsideration Moving Br. 7-12, ECF No. 216-2.)

As to Plaintiff’s first argument, Plaintiff asserts that this Court was “clearly erroneous in its interpretation of the Independent Contractor Service Agreement (‘ISCA’) and in applying 49 C.F.R. § 376.12(c)(1) standards, rather than the actual terms and conditions of the ICSA.” (Id. at 7.) Plaintiff argues that 49 C.F.R. § 367.12(c)(1) “sets forth the written requirements for a lease agreement between an authorized carrier and the owner of the equipment,” however “the ICSA was not a lease at all… but was an independent contractor agreement under which both GAL and MVP expressly agreed MVP would be solely responsible for all cargo carriage and cargo claims.” (Id. at 8.) Thus, Plaintiff argues that it presented the Court with sufficient material facts not in dispute regarding the relationship between MVP and GAL with respect to the shipment, to preclude the Court from dismissing this claim.

The Court finds that Plaintiff has not met its burden on a motion for reconsideration as it has not explained how the Court’s holding in relation to Plaintiff’s breach of implied contract of bailment claim against MVP is a clear error of law. Plaintiff has not cited to any case law in support of its position, but instead reargues the same arguments this Court rejected in connection with the summary judgment motions. Under Georgia law, exclusive possession and control is a required element of a bailment claim. The contract between GAL and MVP specifically states that it is entered into “pursuant to the federal leasing regulations under 49 C.F.R. Part 376.” (Certification of Jeffrey D. Cohen, Esq. (“Cohen Cert. II”) Ex. B, 1, ECF No. 181-4.) Under these “federal regulations, the tractor and trailer were both deemed to be under GAL’s exclusive possession, control, and use.” (Memo. Op. 10-11, Dec. 23, 2015, ECF No. 213 (citing 49 C.F.R. § 376.12(c)(1)).) Accordingly, the Court denies Plaintiff’s motion for reconsideration based on this argument.

*5 As to Plaintiff’s second argument regarding its negligence claims against Pilot as the premises owner, Plaintiff argues that the Court “was clearly erroneous is concluding that Plaintiff could not show causation on the cause of action asserted against Pilot, and that it was not more likely than not that the conduct of Pilot was a cause in fact of the theft.” (Pl.’s Reconsideration Moving Br. 11.) Specifically, Plaintiff argues that the following additional facts in the record support causation that were not considered by the Court: (1) “Sanofi was informed prior to the theft that ‘there is a known cargo ring that operates on the East Coast [of the United States], primarily made up of Cubans’ ”; (2) Pilot’s truck stop manager testified that “there was no security training,” “there have been a lot of truck thefts,” and “he thought maybe security training should be implemented”; and (3) Pilot’s Senior Manager of Corporate Risk testified that having armed security guards “would be a good idea” and “that the use of a security guard would serve as a deterrent to criminal based activity.” (Id. at 10-11.)

In the December Opinion, this Court found that Plaintiff failed to offer evidence sufficient to find causation, because without evidence as to the particular circumstances of the theft, it would be pure speculation as to whether or not Pilot’s conduct was a cause in fact of the theft. (Memo. Op. 11-13, Dec. 23,2015.) Specifically, the Court stated that Plaintiff failed to provide evidence as to “who perpetrated the theft; whether it was perpetrated by a single individual or a group of thieves; or whether and how the perpetrators targeted the freight.” (Id. at 13.) Reconsideration is appropriate where a court overlooked dispositive factual matters. The facts Plaintiff points to on reconsideration, however, were not overlooked by the Court because they do not provide any evidence as to who committed the theft or how the theft was committed. Instead, Plaintiff simply disagrees with this Court’s reasoning on the motions for summary judgment. Accordingly, Plaintiff’s motion for reconsideration is denied.

Conclusion

For the reasons set forth above, Transporter Defendants’ motion for reconsideration is granted and Plaintiff’s motion for reconsideration is denied. An order consistent with this Memorandum Opinion will be entered.

All Citations

Slip Copy, 2016 WL 4472949

Footnotes

Plaintiff filed correspondence in opposition to Transporter Defendants’ motion for leave to file a reply brief. (ECF No. 221.) Transporter Defendants seek leave to file a reply brief “to address the arguments raised by [Plaintiff] in opposition to their Motion for Reconsideration.” (ECF No. 2201.) Transporter Defendants, however, do not state how the arguments Plaintiff raises in opposition are new to warrant a reply brief on a motion for reconsideration. Furthermore, the Court’s review of Transporter Defendants’ proposed reply brief did not identify any additional arguments being made, but instead Transporter Defendants reargue and recite the same legal authorities that are contained in their moving brief. Thus, as the Court has all the necessary information before it to rule on the motion sub judice, the Court denies Transporter Defendants’ motion for leave to file a reply brief.

The background for this dispute is set forth in detail in the Court’s previous Memorandum Opinion. (ECF No.213.)

Plaintiff conceded that if the Court found an effective waiver, its sole remedy against GAL is for breach of contract, and Plaintiff’s claims for negligence and breach of implied contract of bailment should be dismissed. (Pl.’s SJ Moving Br. 11-12, ECF No. 182-1; Pl.’s SJ Opp’n Br. 12, ECF No. 186.)

GAL also argues that Plaintiff cannot rely on the Quality Assurance Agreement because it is silent with respect to liability. (GAL’s SJ Opp’n Br. 11, ECF No. 185.) As Plaintiff has not provided any evidence of GAL’s intent as to either contract, this Court’s analysis applies as to both and the Court will not reach the issue of whether the Quality Assurance Agreement provides for liability.

The Court notes that the unique set of facts of this case put Plaintiff in a difficult position in that it relied on Sanofi to transport the goods on FOB origin terms, but Sanofi waived Plaintiff’s rights against the carrier under the Carmack Amendment and also excluded Plaintiff from seeking recovery against the carrier under Sanofi’s contracts with the carrier. The Court, however, cannot change the terms of the contract Plaintiff negotiated with Sanofi in relation to this transaction or extend the limits GAL negotiated in its contract with Sanofi.

Plaintiff additionally argues that reconsideration is warranted on this Court’s finding in the December Opinion that there were genuine disputes of material fact as to whether Transporter Defendants have an affirmative defense to Plaintiff’s claims under the Carmack Amendment. (Pl’s Reconsideration Moving Br. 5-7, ECF No. 216-2.) As the Court has now found that the Carmack Amendment claims were waived, Plaintiff’s argument is moot.

Brian Scott Kidd and Suzanne Kidd, Plaintiff, v. American Reliable Insurance Company

United States District Court,

C.D. California, Southern Division.

Brian Scott Kidd and Suzanne Kidd, Plaintiff,

American Reliable Insurance Company, Defendant.

American Reliable Insurance Company, Third-Party Plaintiff,

Deep Water Transport Enterprises, Inc. and Cedar Island Marina, Inc., Third-Party Defendants.

Cedar Island Marina, Inc., Cross-Claimant,

Deep Water Transport Enterprises, Inc., Cross-Defendant.

Case No.: SACV 15-01720-CJC(KESx)

Signed 08/23/2016

Attorneys and Law Firms

Arya Firoozmand, Laura Watkins Ives, Robert Kennedy Scott, Stephen M. Hauptman, Newmeyer and Dillion LLP, Newport Beach, CA, for Plaintiff.

Raymond J. Tittmann, Edison McDowell and Hetherington LLP, Pasadena, CA, Edward J. Valdespino, Robert Douglas Whitney, Edison McDowell and Hetherington LLP, Oakland, CA, William Benjamin Thomas, Edison McDowell and Hetherington LLP, Houston, TX, for Defendant.

ORDER DENYING THIRD-PARTY DEFENDANT DEEP WATER TRANSPORT’S MOTION FOR JUDGMENT ON THE PLEADINGS AS TO THE THIRD-PARTY COMPLAINT AND CROSS-CLAIM

CORMAC J. CARNEY, UNITED STATES DISTRICT JUDGE

INTRODUCTION

*1 This action arises from Plaintiffs Brian Scott Kidd and Suzanne Kidd’s purchase of a boat located in New London, Connecticut. (Dkt. 1-1 at 9 ¶ 11.) Following their purchase, Plaintiffs obtained an insurance policy on the boat from Defendant American Reliable Insurance Company [ARIC]. (Id. at 8 ¶ 9.) To prepare the boat for transport, the Kidds hired Third-Party Defendant Cedar Island Marina [Marina]. (Dkt. 8-1 at 11 ¶ 9). Pursuant to the Kidds’ instructions, Marina then transferred the boat to Third-Party Defendant Deep Water Transport [DWT] to deliver the boat from New London, Connecticut, to Dana Point, California, where the Kidds lived. (Id. at ¶ 10; Dkt. 1-1 at 9 ¶ 11.)

Shortly after the boat arrived in California, it was discovered that the engine had been significantly damaged by salt water intrusion. (Dkt. 1-1 at 9 ¶ 12.) Plaintiffs allege that improper transport is the source of the damage. (Id. at ¶ 13.) Plaintiffs filed an insurance claim with ARIC, which was denied. (Id. at ¶ 14.) Plaintiffs bring this claim against ARIC, alleging claims of breach of contract and breach of covenant of good faith and fair dealing; they seek compensatory damages, as well as damages for emotional distress, punitive damages, and exemplary damages. (Dkt. 1-1 at 10–13.)

Defendant ARIC then initiated a third-party complaint against Marina and DWT. (Dkt. 8; see also Dkt. 21 (granting leave to file third-party complaint).) ARIC’s complaint seeks a declaratory judgment pursuant to 28 U.S.C. § 2201 that, “to the extent ARIC is required to or does pay or reimburse the Kidds or any person on behalf of [DWT and/or Marina], ARIC is entitled through subrogation to collect [from them] all sums paid on their behalf due to their individual or collective acts or omissions.” (Dkt. 8-1 at 12.)

Third-Party Defendant Marina subsequently filed a cross-claim against Third-Party Defendant DWT. (Dkt. 31 at 2.) The cross-claim seeks equitable/implied indemnity, apportionment and contribution, and declaratory relief. (Dkt. 31 at 12–14.) Essentially, Marina alleges that the liability for the Kidds’ losses should be borne entirely by DWT. (See Dkt. 31 at 14 ¶ 25.)

In response to Defendant ARIC’s third-party claim and Third-Party Defendant Marina’s cross-claim, DWT filed the motion for judgment on the pleadings at issue here. (Dkt. 47.) DWT argues that all the claims in both the third-party complaint and the cross-claim are barred as a matter of law by the Carmack Amendment, 49 U.S.C. § 14706. (Dkt. 47-1 at 2.) DWT also argues that ARIC and Marina lack standing to raise their claims. (Id. at 5.)

For the following reasons, the motion is DENIED.1

LEGAL STANDARD

A court may grant a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c), which provides that “after the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings.” A motion for judgment on the pleadings is substantially identical to a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) because both permit challenges to the legal sufficiency of the opposing party’s pleadings. Qwest Commc’ns Corp. v. City of Berkeley, 208 F.R.D. 288, 291 (N.D. Cal. 2002). The main difference between the two motions is timing: a 12(b)(6) motion is brought before filing an answer, whereas a motion for judgment on the pleadings is brought after the pleadings are closed. Schwarzer, et al., Rutter Group Practice Guide: Federal Civil Procedure Before Trial, § 9:199, at 9-50 (2007). Judgment on the pleadings is appropriate when, accepting as true all material allegations contained in the nonmoving party’s pleadings, the moving party is entitled to judgment as a matter of law. Torbet v. United Airlines, Inc., 298 F.3d 1087, 1089 (9th Cir. 2002).

*2 DWT’s motion for judgment on the pleadings argues that both ARIC’s third-party complaint and Marina’s cross-claim are preempted by the Carmack Amendment, 49 U.S.C. § 14706. (Dkt. 47-1.) That statute subjects common carriers and freight forwarders transporting cargo in interstate commerce to absolute liability for actual loss or injury to property. See 49 U.S.C.A. § 14706(a). The Carmack Amendment was enacted in 1906 as an amendment to the Interstate Commerce Act. Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89, 96 (2010). It has since been amended repeatedly, but its purpose has always been “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.’ ” Id. at 98 (quoting Reider v. Thompson, 339 U.S. 113, 119 (1950)). The applicability of the Carmack Amendment to DWT’s liability is not disputed by ARIC or Marina. (See Dkt. 48 at 6, 7; Dkt. 49.)

It is well-settled that the Carmack Amendment is the exclusive cause of action for interstate-shipping contract claims alleging loss or damage to property. See, e.g., Adams Express Co. v. Croninger, 226 U.S. 491, 505–06 (1913) (Carmack covers “the subject of the liability of the carrier under a bill of lading … 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.”). Underscoring this, the Ninth Circuit has held that “the Carmack Amendment constitutes a complete defense to common law claims alleging all manner of harms” arising from loss of cargo in interstate shipping. Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 689 (9th Cir. 2007).

III. DISCUSSION

DWT’s motion for judgment on the pleadings does not differentiate between ARIC’s third-party complaint and Marina’s cross-claim. (See Dkt. 47-1 at 3.) However, each cause of action is considered in turn as to the preclusive impact of the Carmack Amendment and each party’s standing to raise the claims in question.

ARIC

ARIC’s third-party complaint contains one cause of action seeking declaratory judgment that it is entitled “through subrogation” to collect from DWT and Marina for “sums paid on their behalf due to their individual or collective acts or omissions.” (Dkt. 8-1 at 12 ¶ 17.) Declaratory judgment is sought under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201. (Id. ¶ 16.)

DWT challenges ARIC’s standing to obtain a declaratory judgment. (Dkt. 47-1 at 5–7.) The Carmack Amendment specifies that carriers are liable specifically “to the person entitled to recovery under the receipt or bill of landing.” 49 U.S.C. § 14706. As mentioned, ARIC brings its claim for declaratory relief as a subrogee of the Kidds. (Dkt. 8-1 at 12 ¶ 17.) Since ARIC has not paid the Kidds, DWT argues, ARIC’s argument that it is a subrogee entitled to raise the Kidds’ legal claims fails. (Dkt. 47-1 at 5.)

“Subrogation is defined as the substitution of another person in place of the creditor or claimant to whose rights he or she succeeds in relation to the debt or claim.” Fireman’s Fund Ins. Co. v. Maryland Casualty Co., 65 Cal. App. 4th 1279, 1291 (1998). “In the insurance context, subrogation takes the form of an insurer’s right to be put in the position of the insured for a loss that the insurer has both insured and paid. When an insurance company pays out a claim on a property insurance policy, the insurance company is subrogated to the rights of its insured against any wrongdoer who is liable to the insured for the insured’s damages.” State Farm Gen. Ins. Co. v. Wells Fargo Bank, N.A., 143 Cal. App. 4th 1098, 1106 (2006) (citations omitted). As a subrogee, an insurer’s rights are equal to, not greater than, those possessed by its insured, and its claims are subject to the same defenses. See Liberty Mut. Ins. Co. v. Fales, 8 Cal. 3d 712, 717 (1973).

*3 ARIC’s status as a subrogee in this case arises from California state law.2 See, e.g., Mort v. United States, 86 F.3d 890, 893 (9th Cir. 1996). DWT argues that ARIC lacks standing because it has not issued payment to the Kidds. However, ARIC has the right to bring the claim for declaratory relief in anticipation of future subrogation. California has recognized that so long as (1) declaratory relief alone is sought, (2) an insured has sued only their insurer rather than the primary actor, and (3) the damage has occurred and is therefore of fixed value, a pre-subrogation declaratory judgment is available. See Liberty Mut. Ins. Co. v. Harris, Kerr, Forster & Co., 10 Cal. App. 3d 1100, 1101, 89 Cal. Rptr. 437, 438 (Ct. App. 1970); see also HCC Life Ins. Co. v. Managed Ben. Adm’rs LLC, No. 207-CV-02542-MCE-DAD, 2008 WL 2439665, at *4 (E.D. Cal. June 12, 2008) (“Although an insurer who has not fully discharged a debt is generally not entitled to equitable subrogation, a party asserting subrogation may seek declaratory relief without paying the underlying debt.”). Here, these conditions are met. ARIC raises only a claim for declaratory relief, (Dkt. 8 at 12), the Kidds have only sued ARIC, not DWT or Marina, (Dkt. 1-1 at 10–13), and the damage has already occurred, (id. at 4). Therefore, the Court today reiterates its earlier indication that ARIC has standing to raise this claim for declaratory judgment against DWT. (Cf. Dkt. 21 (“Because the Kidds have alleged that ARIC’s liability stems from the negligence of Deep Water Transport or Cedar Islands Marina, it is apparent that ARIC (standing in the plaintiffs’ shoes) would be able to pursue a subrogation claim against one or both of those entities should ARIC be found liable to the Kidds.”).)

DWT also argues that ARIC’s claim for declaratory judgment is preempted by the Carmack Amendment. The Declaratory Judgment Act provides that in “a case of actual controversy,” a district court “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.” 28 U.S.C. § 2201(a). Actions under the Declaratory Judgment Act “must first present an actual case or controversy within the meaning of Article III” and must also meet “statutory jurisdictional prerequisites.” Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1222–23 (9th Cir. 1998). The availability of declaratory judgments, therefore, depends on the presence of an underlying legally-cognizable cause of action. “It is necessary to first examine the underlying law because the Declaratory Judgment Act only creates new remedies, and therefore, the adverse legal interests required by Article III must be created by the authority governing the asserted controversy between the parties.” Shell Gulf of Mexico Inc. v. Ctr. for Biological Diversity, Inc., 771 F.3d 632, 636 (9th Cir. 2014). “A declaratory judgment offers a means by which rights and obligations may be adjudicated in cases that have not reached a stage at which either party may seek a coercive remedy and in cases where a party who could sue for coercive relief has not yet done so.” Seattle Audubon Soc. v. Moseley, 80 F.3d 1401, 1405 (9th Cir. 1996). The Declaratory Judgment Act helps potential defendants avoid a multiplicity of actions by affording an adequate, expedient, and inexpensive means for declaring in one action the rights and obligations of the litigants. Biodiversity Legal Found. v. Badgley, 309 F.3d 1166, 1172 (9th Cir. 2002).

Declaratory judgments are designed for situations like this one in which courts can efficiently determine the scope and apportionment of liability as between multiple parties. Since declaratory judgments do not themselves alter the nature or scope of liability, they are available in the context of Carmack Amendment claims. See, e.g., Mayflower Transit, L.L.C. v. Troutt, 332 F. Supp. 2d 971, 981 (W.D. Tex. 2004); McLaughlin Transp. Sys., Inc. v. Rubinstein, 390 F. Supp. 2d 50, 56 (D. Mass. 2005).3 As noted above, ARIC agrees with DWT that the Carmack Amendment is relevant to the outcome of the declaratory judgment proceeding. (See Dkt. 48 at 5.) Accordingly, the applicability and exclusivity of Carmack Amendment liability are issues properly raised on motions for summary judgment; seeking a declaratory judgment does not conflict with potential Carmack preemption. For these reasons, ARIC’s claim for declaratory judgement survives DWT’s motion to dismiss.

MARINA

*4 The Marina presents three causes of action in its cross-claim, seeking equitable/implied indemnity, apportionment and contribution, and declaratory relief. (Dkt. 31 at 12–14.) DWT raises the same defenses—standing and preemption. (Dkt. 47-1 at 3, 5.)

Marina’s claim is not preempted by the Carmack Amendment. While Marina subdivides their cross-claim into three causes of action, (Dkt. 31 at 12–14), Marina essentially seeks declaratory judgment insofar as they ask the Court to determine the scope and apportionment of liability. Indeed, indemnity, contribution, and assessment are all devices whereby liability is allocated between parties. Accordingly, courts have utilized each in the context of Carmack Amendment liability. See, e.g., Travelers Prop. Cas. Co. of Am. v. Legacy Transp. Servs., Inc., No. C 10-00505 JSW, 2010 WL 2836766, at *2 (N.D. Cal. July 19, 2010) (“a claim for indemnity under the Carmack Amendment may properly lie and similarly, one for declaratory relief as to the parties’ respective status under the Carmack Amendment”); Air Exp. Int’l USA, Inc. v. FFE Transp. Servs., Inc., No. CV0806112 R (JTLX), 2009 WL 2407957, at *1 (C.D. Cal. July 30, 2009) (apportionment); Gordon H. Mooney, Ltd. v. Farrell Lines, Inc., 616 F.2d 619, 625 (2d Cir. 1980) (contribution).

The Court reiterates that it is well settled that the Carmack Amendment is the exclusive cause of action for interstate-shipping contract claims alleging loss or damage to property. See, e.g., Adams Express Co., 226 U.S. at 505–06 (Carmack covers “the subject of the liability of the carrier under a bill of lading … 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.”). Marina does not specify in its complaint if it is relying on state law causes of action. However, because Marina accepts that the Carmack Amendment is relevant to the scope of liability, (see Dkt. 49; Dkt. 48 at 5), the Court construes its cross-claim to seek judicial declaration of the scope and apportionment of liability in the context of the Carmack Amendment and associated federal law.

Since Marina’s claims boil down to the equivalent declaratory relief as ARIC seeks, the same analysis regarding its standing applies4 and Marina has standing to bring its cross-claim. Accordingly, Marina’s cross-claim survives DWT’s motion to dismiss.

CONCLUSION

For the foregoing reasons, Third-Party Defendant DWT’s motion for judgment on the pleadings as to the third-party complaint and cross-claim is DENIED.

DATED: August 23, 2016.

All Citations

Slip Copy, 2016 WL 4502459

Footnotes

Having read and considered the papers presented by the parties, the Court finds this matter appropriate for disposition without a hearing. See Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing set for August 29, 2016, at 1:30 p.m. is hereby vacated and off calendar.

The parties do not dispute that subrogation, though based on state law, is available in the context of a Carmack Amendment claim. (See Dkt. 47-1 at 5; Dkt. 48 at 5.) Indeed, subrogation merely alters who can bring a given claim, not the nature of the claim itself. Carmack Amendment preemption analysis instead affects the nature of the underlying claim. See, e.g., OneBeacon Ins. Co. v. Haas Indus., Inc., 634 F.3d 1092, 1097 (9th Cir. 2011); Chubb Group of Ins. Co. v. H.A. Trans. Sys., Inc., 243 F. Supp. 2d 1064, 1066-1067 (C.D. Cal. 2002); Travelers Prop. Cas. Co. of Am. v. Saffron Express, Inc., No. CIV S-09-0233 GEBGGH, 2009 WL 2868731, at *1 (E.D. Cal. Sept. 2, 2009).

DWT’s reliance on Schoenmann Produce Co. v. BNSF Ry. Co., No. CIV.A. H-07-1776, 2008 WL 336296, at *4 (S.D. Tex. Feb. 5, 2008), is misplaced. (See Dkt. 50 at 4–6.) In Schoenmann, unlike here, the shippers directly sued the transport company under the Carmack Amendment and, in addition, sought declaratory relief under the Texas Declaratory Judgment Act. In contrast, the Kidds have not sued DWT under the Carmack Amendment and ARIC relies on the Federal Declaratory Judgment Act, which merely provides a vehicle for determining the applicability and scope of the Carmack Amendment.

DWT does not argue that Marina could not qualify as a subrogee. Cf. Caito v. United California Bank, 20 Cal. 3d 694, 704 (1978) (setting forth test for subrogee status in California).