ENVIRONMENTAL CLEANUP INC., Plaintiff, v. RUIZ TRANSPORT, LLC, Defendant, and GLOBAL HAWK INSURANCE CO., Garnishee.

 

Case No. CIV-15-867-R

 

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA

 

2017 U.S. Dist. LEXIS 72707

 

 

May 12, 2017, Decided

May 12, 2017, Filed

 

 

COUNSEL:  [*1] For Environmental Cleanup Inc, Plaintiff: Daniel C Hays, Perry E Kaufman, LEAD ATTORNEY, Goolsby Proctor Heefner & Gibbs PC, Oklahoma City, OK.

 

For Global Hawk Insurance Company RRG, Garnishee: Harry A Parrish, Robert E Applegate, Coffey Senger & McDaniel PLLC Tulsa, OK.

 

JUDGES: DAVID L. RUSSELL, UNITED STATES DISTRICT JUDGE.

 

OPINION BY: DAVID L. RUSSELL

 

OPINION

 

ORDER

Before the Court are cross motions for summary judgment, Docs. 32 & 35, and the matter is fully briefed. Docs. 36, 42, & 43. For the reasons that follow, summary judgment is entered in favor of Plaintiff.

 

1. Background

The lone issue before the Court is whether Garnishee Global Hawk Insurance Co. must reimburse Plaintiff Environmental Cleanup, Inc. (ECI) for cleanup services ECI performed at the request of Defendant Ruiz Transport. ECI believes it is entitled to reimbursement, while Global Hawk disagrees. Both parties have moved for summary judgment. The specific dispute is whether Global Hawk is liable under the surety obligation included in the policy it issued to Ruiz Transport. Ruiz Transport and Global Hawk included the surety obligation in the insurance contract in order to comply with the Motor Carrier Act, a federal law governing trucking companies [*2]  like Ruiz Transport.

Congress enacted the Motor Carrier Act of 1980 (MCA), Pub.L. No. 96-296, 94 Stat. 793, “to deregulate the trucking industry, increase competition, reduce entry barriers, and improve quality of service.” Carolina Casualty Ins. Co. v. Yeates, 584 F.3d 868, 873 (10th Cir. 2009). And in no small part, the MCA was meant to “address abuses that had arisen in the interstate trucking industry which threatened public safety, including the use by motor carriers of leased or borrowed vehicles to avoid financial responsibility for accidents that occurred while goods were being transported in interstate commerce.” Canal Ins. Co. v. Distribution Servs., Inc., 320 F.3d 488, 489 (4th Cir. 2003). To that end, the MCA and subsequent regulations promulgated by the Federal Motor Carrier Safety Administration now require interstate motor carriers to obtain “a special endorsement . . . providing that the insurer will pay within policy limits any judgment recovered against the insured motor carrier for liability resulting from the carrier’s negligence, whether or not the vehicle involved in the accident is specifically described in the policy. Yeates, 584 F.3d at 874 (citing Ill. Cent. R.R. v. Dupont, 326 F.3d 665, 666 (5th Cir. 2003)). The endorsement guarantees that commercial motor carriers are “willing and able to comply with . . . [certain] minimum financial responsibility requirements.” 49 U.S.C. § 13902(a)(1).

The motor carrier proves this “requisite financial [*3]  responsibility in one of three ways–(1) by an MCS-90 endorsement, (2) by a surety bond, or (3) by self-insurance.” Yeates, 584 F.3d at 874; 49 U.S.C. § 31139(f)(1)(A); 49 C.F.R. § 387.7(d)(1). Many carriers opt for the MCS-90 endorsement, which is why every liability insurance policy issued to motor carriers of interstate commerce contains the MCS-90 endorsement. Herrod v. Wilshire Ins. Co., 499 Fed. Appx. 753, 755 (10th Cir. 2012). The endorsement is essentially a surety obligation; it provides that the motor carrier’s insurer “agrees to pay, within the limits of liability described herein, any final judgment recovered against the insured for public liability resulting from negligence in the operation, maintenance or use of motor vehicles subject to the financial responsibility requirements of . . . the [MCA]” whether or not the vehicle involved in the accident is specifically described in the policy. 49 C.F.R. § 387.15; Doc. 35, Ex. 1. That said, the MCS-90 endorsement does not create a windfall for the motor carrier or alter the terms of the insurance policy’s other coverage limits, since “[a] motor carrier may be required to reimburse the MCS-90 insurer for any payout the insurer would not otherwise have been obligated to make.” Carolina Cas. Ins. Co. v. Yeates, 584 F.3d 868, 879 (10th Cir. 2009).

The question is whether the MCS-90 endorsement on Ruiz Transport’s insurance policy applies, thus entitling [*4]  ECI to compensation for the substantial remediation services it performed for Ruiz. Global Hawk issued the insurance policy to Ruiz on June 13, 2014, and the policy was still in effect on May 26, 2015. Doc. 32, Ex. 1. That day, Ruiz Transport was hauling transformers from Mexico to Kansas when the tractor pulling the trailers was involved in a single-vehicle accident, spilling hundreds of gallons of transformer oil and diesel fuel on the highway and surrounding areas. Id.; Doc. 35, at 4. On Ruiz’s request, ECI performed remediation services over a four-day period: it allegedly shipped samples of contaminated soil to a testing site, removed and delivered several tons of contaminated soil to a disposal facility, and subsequently swapped out the contaminated soil for several tons of uncontaminated soil–all to the tune of approximately $112,000. Doc. 35, at 2.

ECI sued Ruiz Transport after it refused to pay. And when Ruiz Transport did not respond, the Court entered a default judgment in favor of ECI in the amount of $126,431.10. Doc. 12. ECI then commenced this post-judgment garnishment proceeding against Global Hawk, arguing that the MCS-90 endorsement entitled it to reimbursement. Doc. [*5]  16. In ECI’s view, the endorsement’s coverage limit of $750,000–as required under the MCA, 49 U.S.C. § 31139(b)(2)–clearly covers the judgment rendered against Ruiz Transport. The endorsement expressly provides that the insurer agrees to pay for final judgments recovered against the insured for public liability resulting from the negligent operation of covered vehicles. Doc. 35, Ex. 1. The endorsement specifically defines public liability to include environmental restoration. And environmental restoration is broadly defined as

 

restitution for the loss, damage, or destruction of natural resources arising out of the accidental discharge, dispersal, release, or escape into or upon the land . . . of any commodity transported by a motor carrier. This shall include the cost of removal and the ocst of necessary measures taken to minimize or mitigate damage to human health, the natural environment, fish, shellfish, and wildlife.

Id.

 

 

In other words, ECI contends this is precisely the type of accident contemplated by the MCS-90 Endorsement. Global Hawk, however, disagrees. It argues that the MCS-90 endorsement does not apply and ECI is entitled to recover only $10,000–the coverage limit for pollution liability under [*6]  Ruiz’s purchased policy. Doc. 32, Ex. 1, at 42.

 

1. Summary Judgment Standard

Summary judgment is proper if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56. The Court “view[s] the evidence and draw[s] reasonable inferences therefrom in the light most favorable to the nonmoving party.” Sanders v. Sw. Bell Tel., L.P., 544 F.3d 1101, 1104 (10th Cir. 2008) (internal quotation marks omitted).

 

III. Analysis

Arguing that the MCS-90 endorsement does not apply, Global Hawk hangs its hat on a single decision, Carolina Cas. Ins. Co. v. Yeates, in which the Tenth Circuit set forth the–according to Global Hawk, exclusive–circumstances that trigger an insurance company’s surety obligation under the MCS-90 endorsement. 584 F.3d 868 (10th Cir. 2009).

In contrast to this case, the motor carrier in Yeates held two insurance policies. Id. at 871. One of those policies was issued by State Farm, who quickly tendered the policy limit of $750,000 to plaintiffs after they were involved in a head-on collision with the truck that was specifically covered by the State Farm policy. Id. The question was the amount, if any, owed by Carolina Casualty Insurance Company, who had issued [*7]  a general liability policy that covered a variety of commercial claims but not the specific truck involved in the accident. Id. While plaintiffs’ negligence case was pending in state court, Carolina Casualty sought a declaratory judgment that it was not liable under the general policy. Id. at 872. Relying on earlier circuit precedent, the district court denied relief. Id.

On appeal, the Tenth Circuit reversed, finding that the MCS-90 endorsement–and thus Carolina Casualty’s surety obligation–was not triggered because

 

The MCS-90 endorsement only applies where: (1) the underlying insurance policy to which the endorsement is attached does not provide coverage for the motor carrier’s accident, and (2) the motor carrier’s insurance coverage is either not sufficient to satisfy the federally-prescribed minimum levels of financial responsibility or is non-existent.

Id. (emphasis in original).

 

 

This, Global Hawk contends, are the only circumstances under which the MCS-90 applies. First and foremost, the policy to which the MCS-90 endorsement attached cannot already provide coverage for the accident. And here, the MCS-90’s underlying insurance policy does provide coverage for the spilled oil and fuel–up to [*8]  $10,000 for “pollution liability.” Doc. 32, Ex. 1, at 42. Because it has already remitted this $10,000 to plaintiffs, Global Hawk insists it satisfied its obligation and ECI is therefore on the hook for the remaining $102,000 it incurred in cleaning up the spill. After all, the Tenth Circuit specifically noted that “[i]t would make no sense to jump to the insurer’s MCS-90 endorsement obligation” where the underlying insurance policy already covers the accident. 584 F.3d at 884.

Yeates, however, does not excuse Global Hawk’s surety obligation. And a conclusion to the contrary would make little sense. Start with Yeates’s obvious differences from this case: the motor carrier there had two insurance policies, one of which required State Farm to tender $750,000–coincidentally the coverage limit of the MCS-90 endorsement–to the plaintiffs. 584 F.3d at 871. Simply put, the plaintiffs had been made whole–and had received the amount they would have if only the policy with the MCS-90 endorsement applied. Yeates, in short, did not deal with the glaring problem that ECI faces here: is the MCS-90 endorsement triggered where the underlying policy applies but is grossly inadequate to cover a plaintiff’s damages?

Global Hawk contends [*9]  that ECI construes Yeates’s holding too narrowly. Yeates could not have merely addressed situations where multiple insurance policies were at play: Not only did the court hold that the MCS-90 “simply covers the public when other coverage is lacking,” but it did so while citing two cases that did not involve multiple insurers or insurance policies. Id. at 878. Neither of these cases, though, suggest Global Hawk can shirk its surety obligation. In fact, in both of the cases the insurance company provided coverage pursuant to the MCS-90 endorsement and neither address the question of insufficient coverage ECI faces here. The first case, T.H.E. Ins. Co. v. Larsen Intermodal Servs., Inc., decided an insurance company could seek reimbursement from its insured after it paid the plaintiffs’ claims as required by the MCS-90 endorsement. 242 F.3d 667, 670 (5th Cir. 2001). Likewise, Harco Nat. Ins. Co. v. Bobac Trucking Inc. held that even though an insurer paid to settle its insured’s liability in accordance with the MCS-90 endorsement, the endorsement did not obligate the insurere to defend the insured on the underlying tort claim. 107 F.3d 733, 736-737 (9th Cir. 1997). In short, neither of Global Hawk’s cited cases bear on this issue.

More than anything, the underlying [*10]  rationale of both the MCA and Yeates suggests the MCS-90 endorsement applies here. As Yeates noted, the very purpose of the MCA is to “assure that motor carriers maintain an appropriate level of financial responsibility for motor vehicles operated on public highways.” Yeates, 584 F.3d at 881 (citing 49 C.F.R. § 387.1). Because the MCS-90 endorsement “is a surety in the event judgment against the carrier is for some reason unsatisfied,” its purpose is “clearly implicated” where “the carrier fails to maintain insurance (or sufficient insurance) on a truck involved in an accident and fails to pay out of its own pocket for its liability to the injured party.” Id. at 880-881. “The endorsement in this circumstance would effectuate a minimum level of recovery for the injured party from the MCS-90 provider.” Id. at 881. If the MCA’s concern is unsatisfied judgments and injured plaintiffs, it is difficult to see how excusing Global Hawk from its surety obligation does not frustrate that very purpose.

Perhaps that is why nowhere in Yeates does the Tenth Circuit hold that an insurer can avoid its obligations under the MCS-90 endorsement by conceding that its issued policy provides coverage–but only to a limit that leaves the public liability judgment largely [*11]  unsatisfied. If that were the case, there would be little to stop an insurance company from arguing the issued policy always provides some coverage, no matter how meager, in order to escape the MCA surety obligation. If Yeates offers anything to this case, it is a clear picture of the Tenth Circuit’s understanding of the MCS-90 endorsement–which it specifically noted “ensure[s] the collectability of a judgment,” serves as “a safety net in the event other insurance is lacking,” and “guarantee[s] a source of recovery in the event the motor carrier negligently injures a member of the public on the highways.” 584 F.3d at 875, 878. Given this, it is no surprise Yeates remarked that “the endorsement may be implicated where the sum of all liability coverage applicable to a motor carrier’s accident is insufficient to meet the financial responsibility minimums.” Id. at 885. Of course, it used the example of when the motor carrier’s multiple insurance policies have policy limits that are nonetheless too low in the aggregate. Id. But the same rationale applies to situations where the coverage limit for the only policy at issue is also too low. And without belaboring the point, this rationale is not unique to the Tenth Circuit. See, e.g., T.H.E. Ins. Co., 242 F.3d at 672 (noting [*12]  that the MCS-90’s purpose is “to assure that injured members of the public [are] able to obtain judgments collectible against negligent authorized carriers”); see also Nat. Indep. Truckers Ins. Co. v. Gadway, 860 F.Supp.2d 946, 954 (D. Neb. 2012) (clarifying that “[a]n MCS-90 insurer’s duty to pay a judgment arises not from any insurance obligation, but from the endorsement’s language guaranteeing a source of recovery in the event the motor carrier negligently injures a member of the public on the highways”); Real Legacy Assur. Co. v. Santori Trucking, Inc., 560 F. Supp. 2d 143, 147 (D.P.R. 2008) (explaining that the MCS-90 endorsement “simply covers the public when other coverage is lacking).

Nor does the Court agree with Global Hawk’s contention that the MCS-90 endorsement actually requires it to pay only the $10,000 limit for pollution liability. It argues that if the MCS-90 endorsement applies, this essentially alters the terms of the original insurance policy–which the MCS-90 endorsement specifically precludes by including its legally required language that “all terms, conditions, and limitations in the policy to which the endorsement is attached shall remain in full force and effect as binding between the insured and the company.” 49 C.F.R. § 387.15; Doc. 32, Ex. 1. Even Yeates noted that despite the endorsement, “the underlying insurance policy remains in force [*13]  on its original terms as between the motor carrier and the respective insurance company.” 584 F.3d at 882.

Applying the MCS-90 endorsement, though, does not alter the terms of the policy or increase Global Hawk’s actual liability. The endorsement is no more than a surety obligation, which is why it provides that “[t]he insured agrees to reimburse the company for any payment made by the company . . . that the company would not have been obligated to make under the provisions of the policy except for the agreement contained in the endorsement.” Yeates, at 881 (citing 49 C.F.R. § 387.15); Doc. 32, Ex. 1. In other words, “[t]he peculiar nature of the MCS–90 endorsement grants the judgment creditor the right to demand payment directly from the insurer, and simultaneously grants the insurer the right to demand reimbursement from the insured.” Canal Ins. Co. v. Underwriters at Lloyd’s London, 435 F.3d 431, 442 (3d Cir. 2006). Consequently, the endorsement “presents neither a windfall for the motor carrier, nor does it alter the motor carrier’s coverage under its other insurance policies.” Yeates, 584 F.3d at 879. If Global Hawk believes the policy would not otherwise obligate it to compensate ECI for the remediation services, it is more than free to seek reimbursement from Ruiz.

In conclusion, ECI’s Motion for Summary Judgment [Doc. 35] is GRANTED, [*14]  and Global Hawk’s Motion for Summary Judgment [Doc. 32] is DENIED. Judgment against Global Hawk will be entered in the amount of $126,431.10, less the $10,000 that Global Hawk has already paid to ECI, for a total of $116,431.10. 10

IT IS SO ORDERED this 12th day of May 2017.

/s/ David L. Russell

DAVID L. RUSSELL

UNITED STATES DISTRICT JUDGE

CHISESI BROTHERS MEAT PACKING COMPANY, INC. v. TRANSCO LOGISTICS CO., ET AL.

 

CIVIL ACTION NO. 17-2747 SECTION “F”

 

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF LOUISIANA

 

2017 U.S. Dist. LEXIS 75580

 

 

May 18, 2017, Decided

May 18, 2017, Filed

 

 

COUNSEL:  [*1] For Chisesi Brothers Meat Packing Company, Inc, Plaintiff: Timothy S. Madden, LEAD ATTORNEY, Diana J Masters, King, Krebs & Jurgens, PLLC (New Orleans), New Orleans, LA.

 

For Transco Logistics, Co., Transco Logistics, Inc., Defendants: Jacqueline G. Griffith, LEAD ATTORNEY, Lewis Brisbois Bisgaard & Smith LLP (New Orleans), New Orleans, LA.

 

For Travelers Property Casualty Company of America, Defendant: Seth Andrew Schmeeckle, LEAD ATTORNEY, Shaundra Marie Schudmak, Lugenbuhl, Wheaton, Peck, Rankin & Hubbard (New Orleans), New Orleans, LA.

 

JUDGES: MARTIN L.C. FELDMAN, UNITED STATES DISTRICT JUDGE.

 

OPINION BY: MARTIN L.C. FELDMAN

 

OPINION

 

ORDER AND REASONS

Before the Court are two motions to dismiss: (1) Transco Logistics, Inc.’s and Transco Logistics, LLC’s (Transco) Rule 12(b)(6) motion to dismiss and (2) Travelers Property Casualty Company of America’s Rule 12(b)(6) motion to dismiss. For the following reasons, Trancso’s motion is GRANTED IN PART and Travelers’ motion is CONTINUED, to allow for supplemental briefing.

 

Background

This case arises out of an interstate shipment of a Metalquimia Movistick 5500 Boneless Injector machine (the injector) from New Jersey to Louisiana.

Chisesi Brothers purchased the injector, which is a complex and specialized [*2]  piece of equipment that is extremely limited in supply in the United States. On or about February 22, 2016, Transco transported the injector in a truck from its location in New Jersey to the Chisesi plant in Jefferson Parish, Louisiana.

Chisesi alleges that the injector was in good condition before Transco loaded it onto the truck for delivery to Chisesi. However, Chisesi contends that when the injector arrived at its plant, the injector was severely damaged and missed several component parts.

Chisesi alleges that the injector was negligently dropped during the loading, unloading, or transportation of the injector, all while in the care, custody, and control of Transco. This negligent handling caused extensive damaged to the injector. Moreover, Chisesi alleges that Transco engaged in even more wrongful conduct when it unloaded the injector at its plant. Chisesi contends that this caused additional component parts to break or become damaged during the unloading process at Chisesi’s plant.

Chisesi obtained an estimate to repair the injector from a local construction company, Diversified Construction, in the amount of $125,867. After contacting the broker who arranged for the injector’s [*3]  transportation, the broker informed Chisesi that Transco held liability insurance with Travelers. This insurance policy allegedly covers the type of loss sustained by Chisesi; the broker provided Chisesi with the information to pursue a claim with Travelers. After receiving multiple repair estimates, Travelers allegedly failed to make any offer of settlement to Chisesi within 30 days of receiving the repair estimates.

Chisesi originally filed its petition for damages in the 24th Judicial District Court in Jefferson Parish, Louisiana against Transco, and against Travelers under the Louisiana Direct Action Statute (LDAS). It alleged claims against Transco and Travelers for negligence and breach of contract and brought a claim against Travelers for bad faith in failing to make a written offer to settle with Chisesi within 30 days of proof of loss. The case was removed to this Court. Transco now moves this Court to dismiss the plaintiff’s complaint, contending that the Carmack Amendment preempts the plaintiff’s claims against it. Travelers also moves the Court to dismiss the plaintiff’s claims against, contending that the plaintiff’s claims are preempted by the Carmack Amendment and that the plaintiff has not properly established [*4]  a right of action under Louisiana’s Direct Action statute.

 

Rule 12(b)(6) of the Federal Rules of Civil Procedure allows a party to move for dismissal of a complaint for failure to state a claim upon which relief can be granted. Such a motion is rarely granted because it is viewed with disfavor. See Lowrey v. Tex. A & M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997) (quoting Kaiser Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d 1045, 1050 (5th Cir. 1982)).

Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 678-79, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (citing Fed. R. Civ. P. 8). “[T]he pleading standard Rule 8 announces does not require ‘detailed factual allegations,’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. at 678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007)).

Thus, in considering a Rule 12(b)(6) motion, the Court “accepts ‘all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'” See Martin K. Eby Constr. Co. v. Dall. Area Rapid Transit, 369 F.3d 464 (5th Cir. 2004) (quoting Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999)). But, in deciding whether dismissal is warranted, the Court will not accept conclusory allegations in the complaint as true. Kaiser, 677 F.2d at 1050. Indeed, the Court must first identify allegations that are conclusory and thus not entitled to the assumption of truth. Iqbal, 556 U.S. at 678-79. A corollary: legal conclusions “must be supported by factual allegations.” Id. at 678. Assuming the veracity of the well-pleaded factual allegations, the Court must then determine “whether they plausibly give rise to an entitlement [*5]  to relief.” Id. at 679.

“‘To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009) (quoting Iqbal, 556 U.S. at 678) (internal quotation marks omitted). “Factual allegations must be enough to raise a right to relief above the speculative level, on the assumption that all the allegations in the complaint are true (even if doubtful in fact).” Twombly, 550 U.S. at 555 (citations and footnote omitted). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (“The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.”). This is a “context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679. “Where a complaint pleads facts that are merely consistent with a defendant’s liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. at 678 (internal quotations omitted) (citing Twombly, 550 U.S. at 557). “[A] plaintiff’s obligation to provide the ‘grounds’ of [*6]  his ‘entitle[ment] to relief'” thus “requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (alteration in original) (citation omitted).

In deciding a motion to dismiss, the Court may consider documents that are essentially “part of the pleadings.” That is, any documents attached to or incorporated in the plaintiff’s complaint that are central to the plaintiff’s claim for relief. Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th Cir. 2000)). Also, the Court is permitted to consider matters of public record and other matters subject to judicial notice without converting a motion to dismiss into one for summary judgment. See United States ex rel. Willard v. Humana Health Plan of Tex. Inc., 336 F.3d 375, 379 (5th Cir. 2003).

 

1. Transco’s Motion to Dismiss

 

1. The Carmack Amendment

The Carmack Amendment to the Interstate Commerce Act defines the parameters of carrier liability for loss and damage to goods transported under interstate contracts of carriage. The intent was to bring uniform treatment to the carrier-shipper relationship. As it relates to the issues before this Court, the Amendment states:

 

A carrier providing transportation or service . . . shall issue a receipt or bill of lading for property it receives for transportation under this part. That carrier and any other carrier that delivers the property and is providing transportation or service . . . are liable to the [*7]  person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property caused by (A) the receiving carrier, (B) the delivering carrier, or (C) another carrier over whose line or route the property is transported in the United States . . . . Failure to issue a receipt or bill of lading does not affect the liability of a carrier. A delivering carrier is deemed to be the carrier performing the line-haul transportation nearest the destination but does not include a carrier providing only a switching service at the destination.

 

 

49 U.S.C. § 14706(a)(1). In response, the Supreme Court interpreted and defined the Carmack Amendment in the broadest terms in the seminal case:

Almost every detail of [interstate common carriers] is covered so completely that there can be no rational doubt but that Congress intended to take possession of the subject, and supersede all state regulation with reference to it. . . . [W]hen Congress act[s] in such a way to manifest a purpose to exercise its conceded authority, the regulating power of the state cease[s] to exist.

 

 

Adams Express Co. v. Croninger, 226 U.S. 491, 505-06, 33 S. Ct. 148, 57 L. Ed. 314 (1913). Therefore, any claim that arises out of loss or damage to property that was transported in interstate state commerce is governed [*8]  by the Carmack Amendment; all state and common law claims are preempted. See id.

Following the Supreme Court’s instruction, this Circuit instructs that the Carmack Amendment’s broad scope preempts all state law claims, whether they contradict or supplement remedies under the Amendment. See Hoskins v. Bekins Van Lines, 343 F.3d 769, 778 (5th Cir. 2003) (“We are persuaded by the preceding decisions and analysis by the Supreme Court, and this Court, that congress intended for the Carmack Amendment to provide the exclusive cause of action for loss or damages to goods arising from the interstate transportation of those goods by a common carrier.”) (emphasis in original); Rouquette v. N. Am. Van Lines, No. 14-290, 2014 U.S. Dist. LEXIS 146374, 2014 WL 5213850, at *2 (E.D. La. Oct. 14, 2014) (dismissing the plaintiff’s state law claims because the plaintiff’s exclusive remedy is under the Carmack Amendment).

 

1. Chisesi’s Claims Against Transco

Transco moves the Court to dismiss the plaintiff’s claims against it. Transco contends that the Carmack Amendment preempts the plaintiff’s negligence and breach of contract claims. In response, the plaintiff contends that its complaint pleads a viable Carmack Amendment claim. Specifically, the plaintiff submits that a complaint need not explicitly invoke the Carmack Amendment in order to successfully plead a federal Carmack Amendment claim. It contends that it is sufficient that the plaintiff satisfies the elements required to plead a prima facie Carmack Amendment claim. As such, the plaintiff [*9]  submits that while it does not specifically invoke the Carmack Amendment language, the facts pled are sufficient to survive this motion to dismiss. The Court agrees.

“In order to state a claim for relief under the Carmack Amendment, Plaintiff must allege (1) that [it] delivered [the] goods to Defendant in good condition, (2) that the goods were either not delivered or were delivered in damaged condition, and (3) the amount of [its] damages.” Rouquette, 2014 U.S. Dist. LEXIS 146374, 2014 WL 5213850, at *2. In Rouquette, the court held that despite alleging state court claims in the complaint, the plaintiff still satisfactorily alleged the elements under the Carmack Amendment. See 2014 U.S. Dist. LEXIS 146374, [WL] at *1-2. Similarly, the plaintiff contends that its complaint should not be dismissed, instead the Court should construe its complaint as alleging a prima facie Carmack Amendment claim and grant leave to amend the complaint.

The Court acknowledges that the plaintiff’s state court claims against Transco are undoubtedly preempted by the Carmack Amendment. The Court also construes the plaintiff’s complaint to allege a prima facie Carmack Amendment claim. First, the plaintiff contends that Transco received the injector undamaged; next, the plaintiff contends that the injector was damaged when delivered to its plant and that further damages ensued during the unloading process; finally, the plaintiff contends [*10]  that its damages amount to nearly $100,000. See Rouquette, 2014 U.S. Dist. LEXIS 146374, 2014 WL 5213850, at *2. On this record, the complaint is sufficient to plead a prima facie Carmack Amendment claim against Transco. Accordingly, the Court dismisses the plaintiff’s state court claims, but the Carmack Amendment claim remains pending, and plaintiff has leave to amend its complaint.

 

III. Travelers’ Motion to Dismiss

Travelers moves to dismiss the plaintiff’s claims against it under two theories: (1) The petition fails to state a claim upon which relief can be granted because the plaintiff’s claims are preempted by the Carmack Amendment; and (2) The plaintiff has not established a right of action against Travelers pursuant to the LDAS.

In response, Chisesi contends that the Carmack Amendment does not preclude its LDAS claims because the LDAS reverse preempts the Carmack Amendment under the McCarran-Ferguson Act. Further, Chisesi submits that it does validly state an LDAS cause of action in its complaint against Travelers. Chisesi finally submits that the Carmack Amendment does not preempt its bad faith claim against Travelers.

At this stage in the proceeding, the Court construes the complaint in favor of the plaintiff and appreciates that Rule 12(b)(6) motions are viewed with disfavor. See Martin, 369 F.3d 464; Lowrey, 117 F.3d at 247. Finding that the plaintiff carries its burden to “raise a right to relief [*11]  above the speculative level,” the Court cannot, without supplemental briefing, determine whether the plaintiff’s claims are legally precluded such that dismissal is appropriate.1 Twombly, 550 U.S. at 555.

 

1   The Court admits that on the face of the complaint, the plaintiff alleges valid LDAS claims against Travelers such that it carries part of its pleading burden. However, Travelers has raised a question of whether the plaintiff’s claims against it are legally precluded. The submitted briefs are inadequate for the Court to make a determination of whether the claims are legally precluded. The Court therefore, continues the hearing date of this motion instead of denying or granting the motion. The Court maintains that this question is proper for determination through a motion to dismiss because it is a legal question before the Court.

IT IS ORDERED: that Travelers and Chisesi shall submit simultaneous supplemental briefing, no later than May 31, 2017, on the following issues:

o Provide the Court with legal support on how the Court should treat Louisiana’s unique Direct Action Statute in the context of Carmack Amendment, and whether the understanding that the Amendment applies only to “carriers” is affected by Louisiana’s statute.

o Provide the Court with legal support on the applicability of the McCarran-Ferguson Act to the Carmack Amendment and the LDAS.

o In light of the Court’s holding that Chisesi has only a federal Carmack Amendment claim against Transco, provide the Court with analysis on what effect, if any, this has on the claims Chisesi could potentially have against Travelers if the LDAS is found not to be preempted.

o Provide the Court with additional briefing on whether the Carmack Amendment preempts Chisesi’s bad faith claim against Travelers.

IT IS FURTHER ORDERED: that the hearing date for Travelers’ motion to dismiss is hereby continued to June 14, 2017, to be heard on the papers.

IT IS FURTHER ORDERED: that Transco’s motion to dismiss is hereby [*12]  GRANTED IN PART. The plaintiff’s state law claims for negligence and breach of contract against Transco are DISMISSED with prejudice, but the Carmack Amendment claim remains pending. The plaintiff has leave to amend its complaint within 14 days from the date of this Order.

New Orleans, Louisiana, May 18, 2017

/s/ Martin L.C. Feldman

MARTIN L.C. FELDMAN

UNITED STATES DISTRICT JUDGE