Bits & Pieces








2016 U.S. Dist. LEXIS 142476



October 13, 2016, Decided

October 14, 2016, Filed



COUNSEL:  [*1] For Dotty Fortenberry, wife of and, Alvin L Fortenberry, Plaintiffs, Counter Defendants: Stephen Michael Chouest, LEAD ATTORNEY, J. Rand Smith, Jr., Chouest Law Firm, Metairie, LA.


For Liberty Mutual Fire Insurance Company, Defendant, Counter Claimant: H. Minor Pipes, III, LEAD ATTORNEY, Catherine Fornias Giarrusso, Barrasso, Usdin, Kupperman, Freeman & Sarver, LLC, LL&E Tower, New Orleans, LA.


For United Services Automobile Association, Defendant, Counter Claimant: Peter Joseph Wanek, LEAD ATTORNEY, Craig Joseph Canizaro, Elizabeth Bradley McDermott, McCranie, Sistrunk, Anzelmo, Hardy (New Orleans), New Orleans, LA; Kathryn T. Trew, McCranie, Sistrunk (Metairie), Metairie, LA.


For Western World Insurance Company, Defendant: Kirk A. Patrick, III, LEAD ATTORNEY, Blake Anthony Altazan, Grant T. Herrin, Donohue, Patrick & Scott, Baton Rouge, LA.


For B&R Hot Shot Logistics, LLC, Defendant: James Allen Lochridge, Jr., LEAD ATTORNEY, Voorhies & Labbe (Lafayette), Lafayette, LA.




OPINION BY: Eldon E. Fallon





Before the Court are Plaintiffs’ Dotty and Alvin Fortenberrys’ (“Fortenberrys”) Motions to Strike the Defendants’ Answers and Counterclaims. R. [*2]  Docs. 13, 30. Defendant Liberty Mutual Fire Insurance Company (“Liberty Mutual”), has filed an Opposition. R. Doc. 17. Defendant United Services Automobile Association (“USAA”) has adopted Liberty Mutual’s arguments. R. Doc. 36. The Court has reviewed the extensive briefing on these issues and the applicable law and now issues this Order & Reasons.



This case involves an insurance coverage dispute for damages arising out of a car accident. On November 15, 2013, Plaintiffs Dotty and Alvin Fortenberry were injured when their vehicle was struck by a commercial delivery truck operated by David Scott in East Baton Rouge Parish, Louisiana. R. Doc. 13-1 at 2-3. Mr. Scott was operating the truck on behalf of either JYD Trucking (“JYD”), a Louisiana limited liability company, or B&R Hot Shot Logistics (“B&R”).1 Mr. Scott, the truck, and JYD were insured by a Scottsdale Insurance Company policy which provided $100,000 of liability coverage per injured person. B&R had a one million dollar liability policy with Western World Insurance Company (“Western World”). The Western World policy includes a MCS-90 endorsement, which assures compliance with federal minimum levels of responsibility [*3]  for motor carriers. See Canal Ins. Co. v. Coleman, 625 F.3d 244, 247 (5th Cir. 2010)


1   It appears this issue is somewhat in dispute. Plaintiff asserts that Scott was operating the truck on behalf of B&R but the truck was not covered by the B&R policy, (R. Doc. 13-1 at 4), while Defendant Liberty Mutual indicates Scott was driving the truck on behalf of “JYD and/or B&R.” R. Doc. 17 at 2.

At the time of the accident, Mr. Fortenberry was driving a 2013 Ford Fusion, provided by his employer, United Services Automobile Association (“USAA”). According to Plaintiffs’, the Fusion and driver were insured by a under/uninsured motorist (“UM/UMI”) Liberty Mutual policy which provided two million dollars of coverage. The Plaintiffs also had a personal UM/UMI policy with USAA providing $500,000 in coverage. R. Doc. 13-1 at 3. As a result of the accident, Mr. Fortenberry sustained serious injuries, which required extensive medical treatment. According to the Plaintiffs, Mr. Fortenberry is now permanently disabled.

On May 27, 2014, Plaintiffs filed suit in state court seeking damages against Scott, JYD Trucking, B&R, Scottsdale, and Western World. Western World denied coverage, as the vehicle involved in the accident was not listed on the policy. After exhausting [*4]  the Scottsdale $100,000 policy limits, Plaintiffs then filed a claim for UM coverage under both the USAA and Liberty Mutual policies. R. Doc. 13-1 at 4. Liberty Mutual denied the claim, contending that the policy did not provide coverage because USAA, the policy holder, validly waived UM coverage. R. Doc. 9 at 11. USAA denied coverage, arguing that the Liberty Mutual coverage is primary, and must be exhausted before coverage is triggered under the USAA policy. R. Doc. 13-1 at 4. USAA also argues that Western World’s MCS-90 endorsement2 constitutes insurance coverage which must be exhausted before triggering either of the UM Policies.3 R. Doc. 13-1 at 5.


2   Judge Beer explained the role of the MCS-90 amendment in insurance coverage disputes in Herkes v. Doe, “the Fifth Circuit has stated that the MCS-90 and the relevant federal regulations do not address coverage for the purpose of disputes between the insured and the insurer. However, when the protection of injured members of the public is at stake ‘the insurer’s obligations under the MCS-90 are triggered when the policy to which it is attached provides no coverage to the insured.’ Thus, where the policy provides no coverage for the vehicle, [*5]  the MCS-90 endorsement is triggered for the benefit of plaintiff.” Herkes v. Doe, No. CIV.A. 01-0700, 2002 U.S. Dist. LEXIS 5747, 2002 WL 465192, at *2 (E.D. La. Mar. 25, 2002) (quoting T.H.E. Insurance Company v. Larson Intermodel Service, Inc., 242 F.3d 667, 672 (5th Cir. 2001).

3   Plaintiff claims that Liberty Mutual is arguing the Western World policy must be exhausted before triggering UM coverage, while Liberty Mutual takes the position that the policy holder waived UM coverage in this case. R. Doc. 17 at 1.

The parties have filed multiple motions for summary judgment and engaged in extensive discovery in the state court proceeding. See R. Docs. 17 at 3-4; 13-1 at 6-7. Of note is Liberty Mutual’s Motion seeking summary judgment that the Plaintiffs were not covered under a Liberty Mutual UM/UMI policy because USAA validity waived UM coverage to reduce its policy premiums. R. Doc. 17 at 3. Plaintiffs filed a cross Motion seeking summary judgment that the Liberty Mutual policy did provide UM/UMI coverage to Plaintiffs. These Motions were denied, because the state court found there were outstanding issues of material fact. R. Doc. 17 at 3. Plaintiff contends that not only was Liberty Mutual’s Motion denied, but both the Louisiana Fifth Circuit and the Louisiana Supreme Court denied writs. R. Doc. 13-1 at 6.

On June 22, 2016, more than two years after the initial lawsuit was filed in state [*6]  court, Plaintiffs filed a Complaint in this Court, seeking a declaratory judgement to determine whether the federally-mandated MCS-90 endorsement constitutes automotive liability insurance. R. Doc. 2 at 4. If so, Plaintiffs would need to exhaust the Western World policy limits before triggering coverage under either of the UM policies issued by Liberty Mutual or USAA. Plaintiffs contend that no other federal or Louisiana state court has yet to rule on this issue. R. Doc. 2 at 4. In addition, Plaintiffs emphasize that they only seek a declaratory judgment regarding this single issue of federal law, and do not want to litigate the entire claim in federal court. R. Doc. 2. at 6. As such, Plaintiffs’ Complaint seeks a declaration that “the MCS-90 endorsement represents a surety agreement and that it is not liability ‘insurance.'” R. Doc. 2 at 10.

Defendant Liberty Mutual filed an Answer denying liability and averring that the Liberty Mutual policy does not provide UM coverage to Plaintiffs because USAA, the policyholder, waived UM coverage to reduce its premiums. R. Doc. 9 at 1. This is the same issue Liberty Mutual previous raised in state court. Liberty Mutual also filed a counterclaim [*7]  seeking declaratory relief that (1) it owes no obligation to plaintiffs/counter-defendants under the policy because USAA waived UM coverage and (2) that Liberty Mutual handled Plaintiffs claim in accordance with Louisiana law and did not violate either La. Rev. Stat. 22:1982 or La. Rev. Stat. 22:1973, the insurance bad faith statutes. Liberty Mutual invokes jurisdiction for its counterclaims under either 28 U.S.C. § 1367(a), claiming the counterclaims form part of the same case or controversy as the Plaintiffs’ claims, or diversity jurisdiction pursuant to 28 U.S.C. § 1332. R. Doc. 9 at 10-11.

Defendant USAA also filed an Answer denying liability and asserting a counterclaim in this case. R. Doc. 24. USAA contends that the Court has jurisdiction over the counterclaim under supplemental jurisdiction pursuant to 28 U.S.C. § 1367, or in the alternative, diversity jurisdiction pursuant to 28 U.S.C. § 1332. R. Doc. 24 at 2. USAA’s counterclaim is essentially the inverse to the original complaint seeking a declaratory judgment in this matter. In the counterclaim, USAA argues that the coverage provided by the MCS-90 Endorsement should prime any insurance policies potentially triggered by the accident. R. Doc. 24 at 5. USAA contends that the purpose of the MCS-90 Endorsement is “to ensure that an interstate [*8]  motor carrier takes financial responsibility for all drivers . . . . Requiring UM/UIM coverage to prime the MCS-90 Endorsement would defeat Congress’ purpose of mandating an MCS-90 Endorsement to ensure that the financial responsibility for a third party’s injury rests with the negligent tortfeasors.” R. Doc. 24 at 5. Thus, according to USAA, coverage under the USAA and Liberty Mutual Policies should only be triggered after the $750,000 limit provided in the MCS-90 Endorsement has been exhausted. USAA seeks a declaratory judgement that Western World’s coverage under the MCS-90 Endorsement is primary, and any UM/UIM coverage is in excess of the endorsement. R. Doc. 24 at 5.



On August 2, 2016, Plaintiffs filed a Motion to Strike Defendant Liberty Mutual’s Answer and Counterclaim. R. Doc. 13. Liberty Mutual filed an Opposition on August 23, 2016. R. Doc. 17. The Plaintiffs replied, Defendants surreplied, and Plaintiffs submitted yet another response. R. Docs. 16, 32, 35. On August 30, 2016, Plaintiffs filed a Motion to Strike Defendant USAA’s Answer and Counterclaim. R. Doc. 30. Defendant USAA filed an opposition, adopting Liberty Mutual’s arguments. R. Doc. 36.


  1. Plaintiffs’ [*9] Motion to Strike Liberty Mutual’s Answer and Counterclaim (R. Doc. 13)

In Plaintiffs’ Motion to Strike they argue their complaint seeks only to determine a discrete question of federal law, while Liberty Mutual’s counterclaim seeks “to complicate and delay this matter” by introducing substantive issues of Louisiana law. R. Doc. 13-1 at 1-2. Additionally, Plaintiffs aver that the questions raised in the counterclaim have already been addressed in the state court action, and while not yet resolved, should remain in state court. R. Doc. 13-1 at 2. Plaintiffs ask this Court to refuse to extend supplemental jurisdiction and strike the counterclaim under Rule 12. R. Doc. 13-1 at 2.

Plaintiffs argue that Liberty Mutual has already had an opportunity to litigate these questions in state court. R. Doc. 13-1 at 6. Specifically, they emphasize that Liberty Mutual’s Motion for Summary Judgment regarding USAA’s alleged waiver of UM coverage was already denied, and both the Louisiana Fifth Circuit and the Louisiana Supreme Court denied writs. R. Doc. 13-1 at 6. Plaintiff frames the counterclaim as an attempt to relitigate an argument that has already been denied in Louisiana state courts. Additionally, Plaintiffs [*10]  refute Liberty Mutual’s claim that diversity jurisdiction exists in this case. R. Doc. 13-1 at 8. Plaintiffs argue that this action include non-diverse defendants, as both USAA and B&R Hotshot Logistics are Louisiana citizens, thus destroying diversity. R. Doc. 13-1 at 8.

Finally, Plaintiffs argue that the Court should decline to exercise supplemental jurisdiction in this case. First, they assert that the issues in Liberty Mutual’s counterclaim, namely whether USAA validly waived UM coverage and whether Liberty Mutual violated Louisiana “bad faith” statutes in handling Plaintiffs claim, are not sufficiently related to Plaintiffs’ complaint for a declaratory judgment to form the same case or controversy. (citing Wisconsin Dep’t of Corr. v. Schacht, 524 U.S. 381, 387, 118 S. Ct. 2047, 141 L. Ed. 2d 364 (1998)). Second, Plaintiffs argue that the counterclaim raises novel issues of state law and this Court should decline to exercise supplemental jurisdiction. (citing 28 U.S.C. § 1454(d)(2); id. § 1367(c)(1)-(4); Team Express Distributing LLC v. Junction Solutions, Inc., No. 5:15-CV-994, 2016 U.S. Dist. LEXIS 70337, 2016 WL 3081020, slip op. (W.D. Tex May 31, 2016)) R. Doc. 13-1 at 9. Therefore, Plaintiffs contend that these issues would be best resolved in the action already pending in state court.


  1. Liberty Mutual’s Opposition

Liberty Mutual timely responds. R. Doc. [*11]  17. Liberty Mutual makes three arguments in support of its counterclaim: (1) an entire pleading cannot be struck under Rule 12, and the counterclaim is not within the category of pleadings that can be struck under Rule 12(f); (2) the Court has diversity and supplemental jurisdiction under 28 U.S.C. §1332 and 28 U.S.C. §1367, respectively; and (3) because the UM coverage issue has not yet been resolved in state court, granting a declaratory judgment on the matter would save the parties additional time and expense.

Liberty begins by reviewing the path the UM issue has already taken in the state courts. First, they explain that Plaintiffs filed a motion for summary judgment in February 2015, alleging that they did in fact have UM coverage under the Liberty Mutual policy. R. Doc. 17 at 3. Liberty filed a cross motion, arguing the policyholder had validly waived UM coverage. R. Doc. 17 at 3. The state court denied both motions. Liberty asserts that “[n]o party ever has sought appellate review of this Judgment, which is an interlocutory ruling and not a final judgment under Louisiana law.” (citing Williams v. City of New Orleans, 2015-0769 (La. App. 4 Cir. 4/20/16), 193 So. 3d 259, 264 (“‘[T]he denial of an initial motion for summary judgment is an interlocutory judgment, and therefore, not a final judgment.'”) (quoting Hargett v. Progressive Ins. Co., 08-0293 (La. App. 4 Cir. 10/29/08), 996 So. 2d 1199, 1202). Liberty [*12]  contends that this unresolved issue has led to “discovery and motion practice for the past fourteen months.” R. Doc. 17 at 4.

Liberty then addresses Plaintiffs’ arguments. First, Liberty avers that Rule 12 is not the proper, nor preferred, procedural mechanism for dismissing a claim. (citing Rowe v. Hornblower Fleet, No. C-11-4979, 2012 U.S. Dist. LEXIS 164402n 2012 WL 5833541, at *6 (N.D. Cal. 2012) “[M]otions to strike are generally disfavored . . . A Rule 12(f) motion is not a proper method to procure dismissal of all or part of a complaint or counterclaim;” 5C Fed. Prac & Proc. Civ. § 1380 (3d ed. 2016) “[Rule 12 (f)] is neither an authorized nor a proper way to procure the dismissal of all or a part of a complaint, or a counterclaim.”) Instead, Liberty Mutual argues that if Plaintiffs wish to attack subject matter jurisdiction, they must do so through a motion to dismiss under Rule 12(b)(1).

Second, Liberty argues that this Court has subject matter jurisdiction over the counterclaim. Addressing Plaintiffs’ arguments that there is a lack of complete diversity in this case, Liberty contends that the only parties to its counterclaim are Plaintiffs, Louisiana citizens, and Liberty Mutual, a citizen of Wisconsin and Massachusetts. R. Doc. 17 at 5-6. Thus, Liberty contends there is complete diversity in this [*13]  case. The parties did not dispute that the jurisdictional amount is met.

As to supplemental jurisdiction, Liberty contends “a loose factual connection” is generally sufficient to satisfy the requirement that the claims arise from a common nucleus of operative fact. (quoting Hankins v. Yellow Fin Marine Servs., LLC, No. 15-2494, 2015 U.S. Dist. LEXIS 168253, 2015 WL 9004447, at *3 (E.D. La. 2015). Furthermore, Liberty asserts that the counterclaim arises from the same transaction or occurrence–the underlying car accident–and is thus a compulsory counterclaim.

Finally, Liberty argues that none of the factors allowing the Court to decline jurisdiction under § 1367 (c) are present here. According to Liberty, the counterclaim does not raise any novel or complex issues of state law, as Louisiana and Texas law regarding UM coverage is well-settled. R. Doc. 17 at 9-10. Further, Liberty argues the counterclaim does not “predominate” over Plaintiff’s claims. Thus, they contend “there are no compelling reasons to decline jurisdiction.” R. Doc. 17 at 10.


  1. Plaintiffs’ Reply (R. Doc. 26)

Plaintiffs filed a Reply to Liberty’s Motion, R. Doc. 26, which reiterates Plaintiffs’ argument that the original complaint does not seek a decision regarding the ranking of the policies potentially implicated in this matter, but merely to “clarify [*14]  a pure issue of federal law.” R. Doc. 26 at 2, 5. Plaintiffs argue they only seek a declaration whether a MCS-90 endorsement constitutes insurance or suretyship. R. Doc. 26 at 2. Plaintiffs contend Liberty Mutual filed its counterclaim to complicate and delay this case, rather than merely addressing the correct interpretation of the MCS-90 endorsement.

Addressing the arguments Liberty makes in its opposition, Plaintiffs argue they are not using the federal forum to resolve a state law insurance coverage issue, and dispute Liberty’s allegation that the motion to strike is procedurally defective. However, Plaintiffs do not directly address the alleged procedural deficiencies in their original Motion to Strike, but instead argue there are other reasons that Liberty’s counterclaim should be dismissed. R. Doc. 26 at 5. Plaintiffs then proceed to discuss legal doctrines regarding whether abstention is appropriate in this case.

First, Plaintiffs argue that in a suit for declaratory relief, the Wilton/Brillhart Standard provides the district court with “discretion to entertain or to stay an ‘action for declaratory relief where parallel proceedings . . . were underway in state court.'” R. Doc. [*15]  26 at 6 (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 288, 115 S. Ct. 2137, 132 L. Ed. 2d 214 (1995). Plaintiffs aver that the Fifth Circuit has developed a seven-factor test to determine whether to retain jurisdiction over declaratory judgments. R. Doc. 26 at 6. (citing St. Paul Ins. Co. v. Trejo, 39 F.3d 585, 590 (5th Cir. 1994)). According to Plaintiffs, these factors demonstrate the Court should exercise jurisdiction over the Plaintiffs’ claim for declaratory relief. R. Doc. 26 at 7.

However, Plaintiffs contend that because the Defendant’s counterclaim seeks monetary or other coercive relief, the Colorado River abstention doctrine applies to the counterclaim. R. Doc. 26 at 8; (citing Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S. Ct. 1236, 47 L. Ed. 2d 483 (1976)). Under Colorado River, a federal court should abstain when there are parallel proceedings in state and federal court. R. Doc. 26 at 8. Plaintiffs argue that because the issues in Defendant’s counterclaim are already pending in state court, the Court should decline to exercise jurisdiction pursuant to Colorado River. R. Doc. 26 at 11.

Finally, Plaintiffs argue that the Rooker-Feldman abstention doctrine prevents federal district courts from hearing collateral attacks on state court judgments. R. Doc. 26 at 12 (citing Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280, 291, 125 S. Ct. 1517, 161 L. Ed. 2d 454 (2005)). Plaintiffs contend that Liberty Mutual’s counterclaim seeks to relitigate issues that were already decided in state court, and [*16]  thus this Court is precluded from hearing the case under Rooker-Feldman. R. Doc. 26 at 12. Further, Plaintiffs aver that the Rooker-Feldman provides a basis for challenging the Court’s subject matter jurisdiction. R. Doc. 26 at 12.


  1. Liberty Mutual’s Surreply (R. Doc. 32)

Defendant Liberty Mutual argues that Plaintiffs improperly raised new arguments in their reply, which the Court should not consider. R. Doc. 32 at 1. Additionally, Liberty objects to the additional relief Plaintiffs request in their reply; initially, Plaintiffs sought to strike the counterclaim, but in their latest filing have requested administrative dismissal. R. Doc. 32 at 1. Further, Liberty contends that Plaintiffs should not be able to use abstention doctrines to bar the Defendant’s counterclaim after they filed this suit in federal court. R. Doc. 32 at 1.

Addressing Plaintiffs’ abstention arguments, Liberty argues that Plaintiffs should not be allowed to bring part of their case into federal court while simultaneously preventing Liberty from exercising that same right. R. Doc. 32 at 2. Further, Liberty contends that federal courts have an obligation to exercise jurisdiction over claims filed in federal court [*17]  even if there are similar matters pending in state court. R. Doc. 32 at 3. While Liberty Mutual agrees that the Brillhart standard applies to cases seeking declaratory relief, they disagree with Plaintiffs’ characterization of the counterclaims in this matter. R. Doc. 32 at 3. Liberty argues that its counterclaim only seeks declaratory relief, and therefore any possible abstention regarding its counterclaim is also governed by Brillhart, not Colorado River. Finally, Liberty argues that the Brillhart standards “weigh heavily” in favor of exercising jurisdiction over Liberty Mutual’s counterclaim. R. Doc. 32 at 4.


  1. Plaintiffs’ Response (R. Doc. 35)

Plaintiffs argue that their reply did not seek any additional relief that was not already requested in the motion to strike. R. Doc. 35 at 2. Further, they restate their position that the issues in Liberty Mutual’s counterclaim are not part of the same case or controversy as the declaratory judgement, and thus supplemental jurisdiction does not exist. R. Doc. 35 at 3. Finally, Plaintiffs argue that the correct application of the Brillhart standards demonstrates that the Court should not exercise jurisdiction over the Defendants’ counterclaims. [*18]  R. Doc. 35 at 4.


  1. Plaintiffs’ Motion to Dismiss USAA’s Answer and Counterclaim (R. Doc. 30-1)

After USAA filed its Answer and Crossclaim, seeking a declaration that coverage under the MCS-90 Endorsement is primary to any UM/UIM policies, Plaintiffs filed a Motion to Strike, Abstain, or Dismiss. R. Doc. 30-1. Plaintffs begin by reviewing the factual and procedural background of this case, and note that the case has been pending in state court for 27 months. R. Doc. 30-1 at 1. Plaintiffs argue that “numerous federal cases” have determined that an MCS-90 Endorsement is a surety obligation rather than insurance, and this determination is governed by federal law. R. Doc. 30-1 at 4.

Next Plaintiffs admit that USAA’s allegation that B&R is liable for the driver’s negligence, because his is an employee under federal law, raises an additional question of federal law. R. Doc. 30-1 at 5. However, Plaintiffs aver that this is an insufficient basis to extend jurisdiction over all the state law claims asserted in the counterclaim, as these issues are already being litigated in state court. R. Doc. 30-1 at 6. Plaintiffs object to USAA’s request seeking a ruling regarding the ranking of the insurance [*19]  policies and the MCS-90 endorsement, and argue that their original complaint does not seek a ranking of the policies, but only a declaration of whether a MCS-90 endorsement constitutes liability insurance. R. Doc. 30-1 at 6.

Plaintiffs then review the timeline of the filings in this Court, along with the filings in the related state court proceeding. R. Doc. 30-1 at 7-9. According to Plaintiffs, this history reveals that the Defendants are seeking to delay and complicate this matter, and thus, the Court should only issue a decision on the classification of the MCS-90 Endorsement, while deferring all other matters to the state court proceeding. R. Doc. 30-1 at 10. Finally, Plaintiffs argue that under Colorado River and the Rooker-Feldman doctrine, this Court should abstain from addressing any of the issues USAA raises in its counterclaim. R. Doc. 30-1 at 12.


  1. USAA’s Opposition (R. Doc. 36)

In its Opposition to Plaintiff’s Motion to Strike, Dismiss, or Abstain, Defendant USAA adopts Liberty Mutual’s positions and arguments. R. Doc. 36 at 1. For these reasons, Defendant USAA argues the Court should deny Plaintiffs’ Motion, and exercise jurisdiction over USAA’s counterclaim. R. Doc. 36 [*20]  at 1.



Plaintiffs’ complaint in this matter sought a declaratory judgment. Likewise, Defendants Liberty Mutual and USAA filed counterclaims seeking declaratory judgments in this matter. All of these claims are pursuant to The Declaratory Judgment Act, a procedural mechanism designed to provide parties a new remedy in federal court. However, the Act does not confer jurisdiction. Days Inns of America, Inc. v. Reno, 935 F.Supp. 874, 877 (W.D. Tex. 1996). A court need not provide a party with declaratory judgment relief on request “as this is a matter left to the district court’s sound discretion.” Odeco Oil & Gas Co., Drilling Div. v. Bonnette, 4 F.3d 401, 404 (5th Cir.), reh’g denied, 9 F.3d 105 (5th Cir. 1993), cert. denied, 511 U.S. 1004, 114 S. Ct. 1370, 128 L. Ed. 2d 47 (1994). The Declaratory Judgment Act provides that “in a case of actual controversy within its jurisdiction . . . any court of the United States . . . may declare the rights and other legal relations of any interested party seeking such a declaration . . . .” 28 U.S.C. § 2201(a). Since its inception, the Act “has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants.” Wilton v. Seven Falls Co., 515 U.S. 277, 284, 115 S. Ct. 2137, 132 L. Ed. 2d 214 (1995). In exercising its discretion, a district court is authorized to stay or to dismiss an action seeking declaratory judgment. Id. When the basis for declining to proceed is the pendency of a state [*21]  court proceeding, as is the case here, a stay is often the preferable course. Id. at 288 n.2.

Although the district court’s discretion is broad, it is not unfettered. Courts may not dismiss requests “for declaratory judgment relief on the basis of whim or personal disinclination.” Rowan Cos., Inc. v. Griffin, 876 F.2d 26, 28-29 (5th Cir. 1989) (quoting Hollis v. Itawamba County Loans, 657 F.2d 746, 750 (5th Cir. 1981)). The Fifth Circuit has set out several factors which the district court must consider when deciding whether to hear a declaratory judgment action, which include, but are not limited to: (1) whether there is a pending state action in which all of the matters in controversy may be fully litigated; (2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant; (3) whether the plaintiff engaged in forum shopping in bringing the suit; (4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist; (5) whether the federal court is a convenient forum for the parties and witnesses; (6) whether retaining the lawsuit would serve the purposes of 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 [*22]  between the same parties is pending. St. Paul Insurance Co. v. Trejo, 39 F.3d 585, 590-91 (5th Cir.1994).

In Wilton v. Seven Falls Co., the Supreme Court simplified the above test by stating that whether the district court should exercise its discretion comes down to considerations of practicality and wise judicial administration. Wilton, 515 U.S. at 288. In Wilton, the Supreme Court affirmed a Fifth Circuit decision upholding a district court’s ruling to stay a declaratory judgment action pending the resolution of a later-filed state court suit. Id. The Wilton court found that the issuance of such a stay was not an abuse of the trial court’s discretion. Id.

After a review of the law and facts surrounding this case, this Court, in the exercise of its discretion, finds that this declaratory judgment action should be stayed pending the resolution of the state court matter. The Court will address each of the Trejo factors in turn.


  1. The pending state action

First, the pending state court action can fully resolve all of the issues between the parties in this litigation. As Plaintiffs emphasize, that case has been pending for more than two years, and the parties have engaged in extensive discovery and motion practice. Additionally, the Court has been advised that the state court [*23]  recently took this very same issue–whether the MCS-90 Endorsement constitutes insurance or suretyship–under consideration. As Plaintiffs point out in their motion, multiple federal courts have addressed the nature of the MCS-90 Endorsement, providing substantial guidance to the state court on this issue. As such, the state court has precedence in both the time the suit was filed, and the extent of involvement it has in resolving these claims.


  1. Did Plaintiff file suit in anticipation of a lawsuit by the Defendant?

The second factor weighs weighs against abstention. Plaintiff filed this suit for a declaratory judgment in order to expedite, rather than avoid the state proceedings. Nonetheless, this factor is not dispositive.


  1. Forum shopping

Plaintiff filed this motion in an attempt to accelerate a decision in state court. This same issue was recently taken under consideration in the state court proceeding. Because the state court is fully capable of determining the questions at issue here, the Court can see no reason why federal court is a more convenient forum. Thus, to the extent Plaintiff filed this action to reach a faster result, the Court finds that Plaintiff engaged in forum shopping. [*24]  This factor weighs in favor of abstention.


  1. Possible inequities that would exist in changing forums

The parties repeatedly mention the vast discovery and motion practice that has already taken place in federal court. Plaintiffs argue that this supports their position that the Court should only resolve the questions presented in their complaint, while denying the Defendants access to the federal forum. This outcome would certainly be inequitable. However, forcing the parties to refile and relitigate all the issues raised in the complaint and crossclaims would only further delay this matter. As such, the Court finds that the fourth factor weighs in favor of abstention.


  1. Convenience of federal court

The Court finds this factor is neutral, due to the geographic proximity of this Court and the state court in Jefferson Parish.


  1. Judicial economy

The Court finds that retaining this lawsuit in federal court would frustrate–rather than serve–the purposes of judicial economy. One only needs to review the filings in this Court to appreciate the extent and depth of the litigation currently pending in state court. The overwhelming evidence demonstrates that considerations of practicality and wise [*25]  judicial administration are best served by allowing this case to continue in state court–without this Court issuing rulings on the declaratory judgments requested in Plaintiffs’ original complaint or Defendants’ counterclaims. Thus, these question should remain in state court and be resolved alongside the entirely of the state court action.4


4   While the parties raise myriad arguments in support of their respective positions, the Court finds that because abstention is proper, it is not necessary to address those arguments at this time.


  1. Does the federal suit seek to construe a state judicial decree?

While none of the questions raised in the complaint or crossclaims have been completely resolved by the state court, many of the issues have already been addressed via motions for summary judgment. Further, the parties have filed motions in state court addressing these same issues. As such, federalism and comity concerns dictate that the seventh factor weighs in favor of abstention.

The Court finds that the first, third, fourth, sixth, and seventh favors weigh in favor of abstention. The fifth factor is neutral. Only the second factor weighs against abstention in this case. For the foregoing [*26]  reasons, the Court decides to exercise its discretion to abstain from ruling in this declaratory judgment action.

Furthermore, the United States Supreme Court explained that “where the basis for declining to proceed is the pendency of a state proceeding, a stay will often be the preferable course, because it assures that the federal action can proceed without risk of a time bar if the state case, for any reason, fails to resolve the matter in controversy.” See Wilton, 515 U.S. at 288 n.2. Thus the Court finds that staying this action will avoid duplicative litigation while allowing the parties to reopen the case without the risk of a time bar if, for any reason, the state court case fails to resolve the matter in controversy.



For the foregoing reasons, IT IS ORDERED that Plaintiffs’ Motions to Strike Defendants’ Answers and Counterclaims, R. Docs. 13, 30, are DENIED. Further, the above captioned matter is STAYED and Administratively Closed, pending the resolution of the state court matter entitled Dotty Fortenberry wife of/and Alvin L. Fortenberry vs. Scottsdale Insurance Company, Liberty Mutual Insurance Company, JYD Trucking LLC., David Lyle Scott, Sr., and United Services Automobile Association [*27] , bearing civil docket number 738-827, now pending in the 24th Judicial District Court for the Parish of Jefferson, State of Louisiana.

New Orleans, Louisiana, this 13th day of October, 2016.

/s/ Eldon E. Fallon





Case No. 1:15-cv-798




2016 U.S. Dist. LEXIS 145621



October 20, 2016, Decided

October 20, 2016, Filed



COUNSEL:  [*1] For Mitsui Sumitomo Insurance Company of America, substituted for, Denso Manufacturing Michigan, Inc., plaintiff: Timothy S. McGovern, Swanson Martin & Bell LLP, Chicago, IL.


For Mac R Behnke Rentals, Ltd., defendant: Gary P. Bartosiewicz, Lennon Miller O’Connor & Bartosiewicz, Kalamazoo, MI.


For Facilitative Mediator, mediator: Stephen M. Denenfeld, LEAD ATTORNEY, Lewis Reed & Allen PC, Kalamazoo, MI.


JUDGES: HON. JANET T. NEFF, United States District Judge.





Plaintiff Mitsui Sumitomo Insurance Company of America filed this insurance subrogation action seeking recovery for a $114,473.66 loss by Plaintiff’s insured, Denso Manufacturing Michigan, Inc., related to a shipment of blower motors damaged in a single vehicle trucking accident that occurred during interstate carriage by Defendant Mac R Behnke Rentals, Ltd. Pending before the Court is Defendant’s Motion for Summary Judgment (Dkts 46, 47); Plaintiff has filed a Response and Cross-Motion for Summary Judgment (Dkts 48, 49). Defendant has filed a Reply (Dkt 51), and Plaintiff has filed a Surreply (Dkt 52). Having fully considered the parties’ submissions, the Court concludes that oral argument would not assist in the disposition [*2]  of the issues presented. See W.D. Mich. LCivR 7.2(d).

For the reasons that follow, Defendant’s motion for summary judgment is denied in part and granted in part; the motion is denied as to Plaintiff’s Carmack Amendment claim, but granted as to Plaintiff’s Bailment claim. Plaintiff’s cross-motion for summary judgment is granted in part and denied in part; the Court concludes that Plaintiff has established the elements of its Carmack Amendment claim, and the only issue remaining for decision is the amount of damages to which Plaintiff is entitled with respect to element three.


  1. Facts

Pursuant to this Court’s dispositive motion procedures, the parties have stipulated to the following Joint Statement of Facts (JSMF) (Dkt 50) for purposes of the cross-motions:


  1. This action involves a shipment of blower motors (the “Cargo”) carried by defendant, Mac R Behnke Rentals Ltd. (“Behnke”).
  2. Plaintiff, Mitsui Insurance Company of America (“MSI”), is a corporation engaged in the business of providing insurance.
  3. MSI and Denso Manufacturing Michigan, Inc. (“Denso”) entered into a contract of insurance, a true and accurate copy of which is submitted as PageID.652-685.
  4. MSI paid a claim for loss of the Cargo to its insured, Denso, in return for subrogation rights. [*3] A true and accurate copy of the subrogation receipt was submitted as PageID.7.
  5. Denso is engaged in the business of manufacturing and assembling components for vehicles. For purposes of the instant action, Denso purchased blower motors from its supplier in North Carolina, ANSO1 North Carolina, for installation into defrost systems used for trucks.
  6. Mac R Behnke Rentals Ltd. (“Behnke”) is a Michigan corporation with a principal place of business in Battle Creek, Michigan.
  7. At all material times herein, Behnke was engaged in the business of transporting goods by road in interstate commerce pursuant to authority granted by the United States Department of Transportation.
  8. On or about June 23, 2009, Denso and Behnke entered into a “Transportation Services Agreement,” a true and accurate copy of which is submitted herewith as Exhibit J-1 and made a part hereof (the “Agreement”).
  9. Pursuant to the Agreement, Denso engaged Behnke to carry the shipment of blower motors that is the subject of this action (the “Shipment”) from ANSO’s facility in North Carolina to Denso’s facility in Michigan.
  10. The Shipment contained over 9,000 blower motors.
  11. ANSO packed the Shipment in cardboard containers. [*4]
  12. Behnke provided a trailer with an air-ride suspension system to minimize road vibration and shock during transportation (the “Trailer”).
  13. On or about October 15, 2013, the Shipment was loaded into the Trailer at ANSO’s facility.
  14. Upon completion of loading of the Shipment into the Trailer, Behnke issued a bill of lading, a true and accurate copy of which is submitted as PageID.8.
  15. On October 16, 2013 at 3:03 a.m., during interstate carriage of the Shipment, Behnke’s truck traveled through Ohio. Behnke’s truck veered off the road, hit a concrete embankment and entered a field, where it ultimately stopped (the “Accident”).
  16. No other vehicles were involved in the Accident.
  17. A true and accurate copy of the police report related to the Accident is submitted herewith as PageID.12-14.
  18. Following the Accident, a wrecker truck assisted in extracting Behnke’s Trailer from the field.
  19. In the field, while attempting to extract the Trailer, the wrecker truck pulled the Trailer such that the axles pulled away from the frame of the Trailer.
  20. As a result of the wrecker pulling the axles away from the frame of the Trailer, the trailer was no longer suitable for road carriage. Therefore, [*5] the wrecker hauled the Trailer to a shop in Ohio for repair.
  21. Behnke dispatched a separate trailer to the shop in Ohio to complete the carriage of the Shipment to Denso.
  22. While in the shop in Ohio, Behnke transloaded the Shipment from the Trailer into a new trailer.
  23. Behnke carried the Shipment in the new trailer to Denso’s facility in Michigan.
  24. Prior to delivery of the Shipment, Behnke never advised Denso regarding the Accident.
  25. Prior to delivery of the Shipment, Behnke never advised Denso of the damage to the Trailer.
  26. Prior to delivery of the Shipment, Behnke never advised Denso of the transloading of the Shipment from the Trailer to a new trailer.
  27. Behnke delivered the Shipment to Denso on October 16, 2013.
  28. Within days of delivery of the Shipment by Behnke, Denso observed damage to some of the Shipment and contacted Behnke.
  29. The parties agreed that Denso should isolate any part of the Shipment that had not entered production.
  30. Denso and Behnke agreed that Behnke would take the blower motors to its facility for inspection and storage.
  31. 2912 motors from the shipment were placed into production.





1   Although the JSMF identifies the supplier as “ANSO” North Carolina, [*6]  it appears from the briefing and supporting documentation that the North Carolina manufacturer/supplier is in fact “ASMO.”

Plaintiff’s Complaint (Dkt 1) alleges two claims: Count I, Carmack Amendment, 49 U.S.C. § 14706; and Count II, Bailment.


  1. Legal Standards

Summary judgment is proper “if the movant shows that 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). The court must consider the evidence and all reasonable inferences in favor of the nonmoving party. Burgess v. Fischer, 735 F.3d 462, 471 (6th Cir. 2013); U.S. S.E.C. v. Sierra Brokerage Servs., Inc., 712 F.3d 321, 327 (6th Cir. 2013).

The moving party has the initial burden of showing the absence of a genuine issue of material fact. Jakubowski v. Christ Hosp., Inc., 627 F.3d 195, 200 (6th Cir. 2010). The burden then “shifts to the nonmoving party, who must present some ‘specific facts showing that there is a genuine issue for trial.'” Id. (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986)). “There is no genuine issue for trial where the record ‘taken as a whole could not lead a rational trier of fact to find for the non-moving party.'” Burgess, 735 F.3d at 471 (quoting Matsushita Elec. Indus., Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986)). “The ultimate inquiry is ‘whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'” Sierra Brokerage Servs., 712 F.3d at 327 (quoting Anderson, 477 U.S. at 251-52).

The parties seek to resolve this case through cross-motions for summary judgment. ” [*7] [T]he standards upon which the court evaluates the motions for summary judgment do not change simply because the parties present cross-motions.” Taft Broad. Co. v. United States, 929 F.2d 240, 248 (6th Cir. 1991). “‘[T]he court must evaluate each party”s motion on its own merits, taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.'” Id. (quotingMingus Constructors, Inc. v. United States, 812 F.2d 1387, 1391 (Fed. Cir. 1987)); see also B.F. Goodrich Co. v. U.S. Filter Corp., 245 F.3d 587, 592-93 (2001). The Court considers the cross-motions accordingly.


III. Analysis


  1. Defendant’s Motion

Defendant advances several independent bases for summary judgment of Plaintiff’s Carmack Amendment claim, none of which the Court finds persuasive, as discussed subsequently.

Defendant also seeks summary judgment/dismissal of Plaintiff’s Bailment claim on the ground that regardless whether the claim is advanced under federal or state law, it is preempted by the Carmack Amendment. Plaintiff has not responded to this argument. The Sixth Circuit has recognized that, with the Carmack Amendment, Congress fully preempted state law concerning the liability of interstate rail and road carriers. CNA Ins. Co. v. Hyundai Merchant Marine Co., Ltd., 747 F.3d 339, 355 (6th Cir. 2014) (citing Adams Express Co. v. Croninger, 226 U.S. 491, 505-06, 33 S. Ct. 148, 57 L. Ed. 314 (1913)). See Thornton v. Philpot Relocation Sys., No. 3:09-CV-329, 2012 U.S. Dist. LEXIS 6696, 2012 WL 174937, at *3-4 (E.D. Tenn. Jan. 20, 2012) (state law claims for breach of contract, bailment, and breach of warranty, stemming from an interstate move, fall squarely within the exclusive ambit of the Carmack Amendment, and are, therefore, preempted). Having [*8]  received no argument or authority to the contrary from Plaintiff, the Court grants Defendant’s motion for summary judgment as to Count II, Bailment.


Defendant first argues that Plaintiff’s Carmack Amendment claim fails as a matter of law because Plaintiff cannot establish its prima facie case under the Carmack Amendment. Defendant contends Plaintiff cannot prove Defendant received the cargo in good condition, cannot prove the cargo was damaged or show an actual loss.

Pursuant to the Carmack Amendment, 49 U.S.C. § 14706, a plaintiff establishes a prima facie case by showing “three basic elements”:


(1) that the initial (“receiving”) carrier received the cargo in good condition,

(2) that the cargo was lost or damaged, and

(3) the amount of actual loss or damages.



CNA Ins. Co., 747 F.3d at 353 (citing Mo. Pac. R.R. v. Elmore & Stahl, 377 U.S. 134, 137-38, 84 S. Ct. 1142, 12 L. Ed. 2d 194 (1964)). The burden then “shifts to the defendant-carrier to show both that it was not negligent and that the damage was instead due to one of five excepted causes: (1) an act of God; (2) an act of terrorism or war; (3) an act of the shipper itself; (4) an act of public authority; or (5) the inherent vice or nature of the goods.” Id. “If the defendant-carrier meets this burden, it wins. If not, then the shipper prevails based on its establishing the–very low threshold–prima facie case.” CNA Ins. Co., 747 F.3d at 353 (emphasis added).

Defendant argues that Plaintiff [*9]  has not shown that its goods were undamaged when received by Defendant and Plaintiff has failed to identify any witness who can testify on this issue. This argument ignores the record evidence, all of which establishes, either directly or by reasonable inference, that the goods were undamaged when received by Defendant. For example, the Declaration of Miriam Sundalius, Denso’s Director of Quality Assurance, details the manufacturer’s packaging and handling procedures followed to ensure that the blower motors are free from defects and protected from damage prior to installation in vehicles; states that ASMO and Denso maintain rigid quality control measures; and expressly states that ASMO inspected the Cargo before packaging the Cargo for transportation to ensure adherence to these standards (Sundalius Decl., Pl. Ex. 1, Dkt 49-1). In addition to the Declaration’s numerous specific statements addressing the quality control standards and procedures, the Declaration also indicates that ASMO delivered the Cargo to Defendant on October 15, 2013 in good order and condition; that no party identified any damage to the Cargo or packaging in which the Cargo was carried; and that Defendant accepted [*10]  the Cargo without noting any exceptions to the condition of the Cargo or packaging (id. ¶ 15-19).

Defendant’s argument to the contrary is based on no discernable foundation–no evidence, no inference based on the evidence, no factual circumstances and no logical reasoning–and is devoid of merit.2 Plaintiff has established element one of its claim under the Carmack Amendment.


2   Defendant’s attack on Sundalius’ Declaration for lack of personal knowledge similarly falls short. For example, Defendant criticizes the Declaration for failing to detail the basis of Sundalius’ personal knowledge and failing to indicate that she observed the shipping or packaging practices. But Sundalius expressly states that she has visited ASMO’s facility and observed the manufacturing and preparation of blower motors and that Denso and ASMO discuss packaging and handling procedures for quality control purposes (Pl. Ex. 1 ¶ 7). Defendant’s challenge to the Declaration is rejected.

Plaintiff has also presented evidence to establish elements two and three of its Carmack Amendment claim–that the cargo was lost or damaged and the amount of actual loss or damages. Plaintiff presented evidence that Defendant delivered the Cargo in damaged condition to [*11]  Denso, and it could no longer be certified as free from defect as a result of the trucking accident. The evidence shows that Defendant failed to deliver the Cargo “as required,” and the Cargo was “damaged” as a result of the trucking accident and subsequent related events, because it was “exposed to damaging conditions.” See Ga., Fla. & Ala. Ry. Co. v. Blish Milling Co., 241 U.S. 190, 195, 36 S. Ct. 541, 60 L. Ed. 948 (1916); Oshkosh Storage Co. v. Kraze Trucking LLC, 65 F. Supp. 3d 634, 637 (E.D. Wis. 2014); Great Am. Ins. Co. v. USF Holland Inc., 937 F. Supp. 2d 376, 386 (S.D.N.Y. 2013).

Defendant argues that Plaintiff has not demonstrated an actual loss because the “actual value” of Plaintiff’s physical property (the motors) at delivery was the same as it was at the time of shipment. Defendant asserts that Plaintiff’s subrogor’s (Denso’s) refusal to warrant the goods created an injury not based on physical damages. Instead, the refusal to warrant the goods is based on pure speculation that all of the motors must have been damaged in transit because some of the motors were damaged. Defendant relies on its expert inspection by LWG, finding only 32 motors with actual physical damage, and LWG’s indication that additional testing, as necessary, should be performed by the motor manufacturer, which would have testing stations already in place. Defendant states that there is no evidence that such additional testing was performed.

It is undisputed [*12]  that at least some of the Cargo exhibited evidence of physical shock damage. Defendant acknowledges that 32 motors were confirmed to have impact-related physical damages as a result of the trucking accident. Thus, it is apparent that Plaintiff has suffered an actual loss.

Plaintiff has presented further evidence that the only means of testing the entirety of the Cargo to ensure it was free from defect would require dismantling of the blower motors, i.e., destruction. The Cargo was accordingly ultimately destroyed. Plaintiff’s evidence establishes a loss of $114,473.66, which includes the invoice cost of the Cargo, plus freight and insurance. Such losses are appropriate damages under the Carmack Amendment. See Am. Nat’l Fire Ins. Co. v. Yellow Freight Sys. Inc., 325 F.3d 924, 935, n.7 (7th Cir. 2003) (explaining the components and calculation of damages in Carmack Amendment claims); see also Marquette Cement Mfg. Co. v. Louisville &Nashville R.R. Co., 406 F.2d 731, 732 (6th Cir. 1969) (freight charges permissible damages under the Carmack Amendment).

At best, Defendant presents evidence disputing only the extent of Plaintiff’s loss. However, even in that regard, Plaintiff has presented evidence to support its claim that the entire shipment of blower motors was damaged and thus unusable as a result of the trucking accident. Plaintiff has presented ample evidence to establish elements two and three of its Carmack Amendment claim–that [*13]  the Cargo was lost or damaged and the amount of actual loss or damages. Defendant’s argument that Plaintiff has not established a prima facie case under the Carmack Amendment fails.


Defendant next argues that Plaintiff’s claim fails as a matter of law because Plaintiff has not shown that it had an applicable policy of insurance. Specifically, Plaintiff cannot establish that its insurance policy was in effect on the date in question, and Plaintiff cannot prove that there was “physical loss or damage” as that term is used in the policy. Defendant asserts that without these proofs, Plaintiff paid as a volunteer and cannot recover from Defendant.

Plaintiff asserts that Defendant’s arguments challenging insurance coverage make no difference with respect to the substantive dispute. The Court agrees. Plaintiff and its insured agreed that the “all risks” policy covered the loss. Plaintiff paid the claim filed by its insured, Denso, and in return, obtained subrogation rights. Plaintiff is entitled to proceed against Defendant, as though “standing in the shoes” of Denso. See Progressive Mich. Auto. Ins. Co. v. Nat’l Cas. Co., No. 14-13859, 2015 U.S. Dist. LEXIS 140179, 2015 WL 6082088, at *3 (E.D. Mich. 2015) (rights of the subrogee in a subrogation action depend on what rights its subrogor would have had if the subrogor had brought the action [*14]  him or herself); see also Standard Fire Ins. Co. v. Ford Motor Co., 723 F.3d 690, 692 n.1 (6th Cir. 2013) (“As subrogees, plaintiff insurers stand in the shoes of, and have no greater rights than, their insured.”). Defendant provides no authority showing that Defendant has a legal challenge to the policy coverage or claim payment as between Plaintiff and its insured, and this Court is not so persuaded. Regardless, the Court concludes that the attack on the insurance policy is immaterial to Defendant’s liability on the substantive claims, and thus it provides no basis for summary judgment.


Third, Defendant argues that Plaintiff’s case should be dismissed as a sanction for spoiliation of evidence. Defendant asserts that Plaintiff ordered the destruction of the motors knowing that Defendant would be deprived of the opportunity to perform further tests. The motors were destroyed without giving notification to Defendant of the imminent destruction and before Plaintiff filed a formal claim with Defendant. Defendant argues that this intentional destruction of evidence should result in a dismissal of Plaintiff’s claim, as no lesser sanction can remedy the prejudice.

Defendant’s argument lacks merit under the circumstances presented. Defendant asserts that the claim for [*15]  subrogation was not presented to Defendant until January 2015, after the parts were ordered to be destroyed on October 30, 2014. However, as Plaintiff points out, the record of Defendant’s actions fully establishes that Defendant was aware early on of the claim for damages to the Cargo. Moreover, the damaged Cargo was in Defendant’s own control, and Defendant certainly could have undertaken whatever action was necessary to preserve the Cargo to obtain evidence, if any, to support its contentions.

Plaintiff points out that Defendant has produced a formal notice of claim from Denso dated October 21, 2013, as part of its exhibits supporting its instant motion (Def. Ex. E, Maria Enriquez Dep., Dkt 47-5 at PageID.257). Defendant additionally produced an email from Denso dated October 18, 2013, alerting Defendant of the loss, in an email exchange that shows Defendant visited Denso’s facility to inspect the Cargo on October 18, 2013 (id. at PageID.478-480). Further, Defendant hired LWG to inspect the Cargo on December 16, 2013 (Def. Ex. E, LWG Report, Dkt 47-6 at PageID.300). Defendant inspected the Cargo at Denso’s facility, and on October 22, 2013, moved the Cargo to Defendant’s own facility, [*16]  where it remained until it was destroyed more than a year later. Defendant hired an expert to assess the damage over ten months before the ultimate disposition of the Cargo. Defendant’s hiring of an expert clearly establishes Defendant’s expectation that a formal claim was forthcoming.

A court may impose spoliation sanctions if three conditions are met: (1) the party with control of the evidence must have had an obligation to preserve it at the time it was destroyed, (2) the accused party destroyed the evidence with a culpable state of mind, and (3) the destroyed evidence was relevant to the other side’s claim or defense. Beaven v. U.S. Dep’t of Justice, 622 F.3d 540, 553 (6th Cir. 2010). Here, Defendant had every opportunity to inspect, test or otherwise examine the Cargo during the year it was stored at Defendant’s facility. There is no evidence that the destruction of the evidence was undertaken with a culpable state of mind, and in fact, the only evidence supports that the destruction resulted because the blower motors were determined to be unusable by Denso. The Court finds no basis for spoliation sanctions, and particularly not the harsh sanction of dismissal.


  1. Plaintiffs Cross-Motion

Plaintiff moves for summary judgment of its Carmack Amendment claim, arguing [*17]  that it has established all three elements of this claim: (1) Defendant received the Cargo in good order and condition; (2) Defendant delivered the Cargo in a damaged condition to Denso; and (3) Plaintiff has established its damages. See CNA Ins. Co., 747 F.3d at 353. Plaintiff requests that the Court grant summary judgment and permit Plaintiff to submit an itemized calculation of interest, costs and expenses as of the date of judgment.

The parties do not provide separate argument to specifically address Plaintiff’s motion. For the reasons discussed above, the Court agrees that Plaintiff has fully established elements one and two of this claim; no genuine issues of material fact exist with respect to either of these elements, and Defendant’s arguments to the contrary lack merit. However, as to element three, damages, the Court concludes that genuine issues of material fact exist as to the extent of Plaintiff’s damages. Plaintiff has presented strong evidence from various sources that the entire shipment of blower motors was unusable as a result of Defendant’s trucking accident and Defendant’s subsequent handling of the Cargo. For instance, Plaintiff has presented an extensive expert report on the Cargo damage by [*18]  Derek A. Starr, professional engineer (SoEoA[TM] Report, Pl. Ex. F, Dkt 49-2), which concludes that, as a result of the trucking accident:


o The automotive blower motors were subjected to abuse, beyond that which they were intended to be subjected to, during shipping.

o Any or all of the blower motors within the subject shipment may have been damaged as a result of the abnormal abuse experienced during shipping.

o The bearing assemblies and stator magnets utilized within the subject motors could be damaged in a manner that would not be immediately apparent, but would introduce latent defects that would affect the motors’ long-term ability to operate as intended.

o The only way to identify such damage would be to destructively disassemble and examine the motors, which would render them unusable.



(Id. at PageID.621). The SoEoA2122; Report is in keeping with other substantial, detailed record evidence concerning the use, operation, testing and potential failures of the blower motors as a result of the trucking accident, including a Marine Cargo Survey Report provided by Jill Yandura of VRS Vericlaim (Dkt 47-5 at PageID.274), which concluded:

Based on our inspection of the parts, information gleaned [*19]  over the course of this matter, the explanation provided by Denso’s Director of Quality [Assurance] and the Analysis Report from the manufacturer, it is our opinion that the rejection of the remaining parts is fair and reasonable.



Defendant, on the other hand, has presented a Loss Analysis Report on the Cargo damage from its expert, Timothy C. Hurley, LWG Consulting, which concludes:


  1. LWG observed impact related damage to Model #AY272700-0570 and Model #AY166100-0233 blower motors. The replacement cost value of the confirmed damaged motors is $304.40.
  2. LWG’s professional opinion, based on the visual observations during the site inspection and the preliminary testing performed, is that the majority of the blower motors have not sustained damage related to the loss event.



(Dkt 47-1 at PageID.168).

The LWG Report states that in its basic test of eight motors, LWG did not observe any indications that the internal components were damaged, but that its professional opinion was “that any testing should be performed by the manufacturer who would have the necessary testing stations already in place as part of their quality control” (id. at PageID.159). However, Plaintiff’s expert report from [*20]  Derek Starr concludes that “The opinions stated in the LWG Consulting (LWG) Loss Analysis Report on this matter are both incorrect and misleading (SoEoA2122; Report, Dkt 49-2 at PageID.621).

The parties’ expert opinions are at odds. If the evidence Plaintiff proffers on summary judgment, and most particularly, witness testimony, proves to be credible, the Court has little doubt that Plaintiff will succeed on its claim for damages based on the alleged loss of $114,473.66. Nonetheless, because Defendant has presented evidence, although limited, that only 32 motors were damaged, the Court concludes that there are disputed issues of fact concerning the extent of Plaintiff’s damages, not properly resolved on a motion for summary judgment. In considering a motion for summary judgment, the Court must view the factual evidence and draw all reasonable inferences in favor of the nonmoving party. Dominguez v. Corr. Med. Servs., 555 F.3d 543, 549 (6th Cir. 2009). The court may not, however, make credibility determinations, weigh the evidence or determine the truth of the matter asserted, since such functions rest solely with the ultimate factfinder. Anderson, 477 U.S. at 255; Weaver v. Shadoan, 340 F.3d 398, 405 (6th Cir. 2003).


  1. Conclusion

On the record and arguments presented, the Court concludes that Defendant’s motion for summary [*21]  judgment is properly denied in part and granted in part; the motion is denied as to Plaintiff’s Carmack Amendment claim, but granted as to Plaintiff’s Bailment claim. Plaintiff’s cross-motion for summary judgment is properly granted in part and denied in part given disputed facts concerning the extent of the damage to the Cargo; the Court concludes that Plaintiff has established the elements of its Carmack Amendment claim, and the only issue remaining for decision is the amount of damages to which Plaintiff is entitled with respect to element three of the Carmack Amendment claim.

An Order will enter consistent with this Opinion.

Dated: October 20, 2016

/s/ Janet T. Neff


United States District Judge

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