United States Court of Appeals,

Tenth Circuit.

HIGBY CRANE SERVICES, LLC; NATIONAL INTERSTATE INSURANCE COMPANY, Plaintiffs – Appellants/ Cross-Appellees,

v.

NATIONAL HELIUM, LLC, a Delaware company; DCP MIDSTREAM, LP, a Delaware limited partnership, Defendants – Appellees/ Cross-Appellants.

Nos. 16-3271

|

16-3279

|

August 14, 2017

(D.C. No. 6:10-CV-01334-JAR-GLR) (D. Kansas)

Before KELLY, MURPHY, and BACHARACH, Circuit Judges.

 

 

ORDER AND JUDGMENT*

Michael R. Murphy Circuit Judge

 

1. Introduction

*1 Appellee/Cross-Appellant DCP Midstream, LP (“DCP”) negligently started a fire that damaged a crane belonging to Appellant/Cross-Appellee Higby Crane Services, LLC (“Higby”). At the time of the fire, the crane was located on the grounds of a gas processing plant (the “National Helium Plant”) owned by DCP’s wholly owned subsidiary, National Helium, LLC. Higby’s insurer, Appellant National Interstate Insurance Co. (“National”), paid for the damage under the terms of a commercial inland marine policy. National and Higby (collectively “Plaintiffs”) then sued DCP, seeking to recover the cost to repair the crane. On September 28, 2015, the district court granted DCP’s motion for summary judgment, concluding the anti-subrogation rule barred recovery by National against DCP because DCP was National’s insured under a commercial general liability policy that also covered the loss. Several months later, the district court granted Plaintiffs’ motion for summary judgment on DCP’s request for attorney’s fees.

 

In Appeal No. 16-3271, Plaintiffs challenge the grant of summary judgment in favor of DCP, arguing any promise Higby made to procure insurance covering DCP for DCP’s own negligence is void under Colorado law. See Colo. Rev. Stat. § 13-21-111.5(6). In Appeal No. 16-3279, DCP argues the district court erred by granting summary judgment to Plaintiffs on the attorney’s fee issue.

 

Exercising jurisdiction over both appeals pursuant to 28 U.S.C. § 1291, this court reverses the grant of summary judgment to DCP in Appeal No. 16-3271 and affirms the grant of summary judgment to Plaintiffs in Appeal No. 16-3279.

 

 

1. Background

Additional facts detailing the genesis of this ongoing dispute between Plaintiffs and DCP are fully set out in this court’s prior opinion in this matter. Higby Crane Servs., LLC v. Nat’l Helium, LLC, 751 F.3d 1157, 1159-60 (10th Cir. 2014). Relevant to this appeal, Higby and DCP1 entered into an agreement titled Master Service Agreement (“MSA”) on November 1, 2001. Pursuant to its terms, the MSA “establish[ed] certain general terms and conditions which shall apply to and become part of each and every contract, whether written or oral, entered into between the parties.” One of those terms and conditions required Higby to “carry and pay for” commercial general liability (“CGL”) insurance coverage and to name DCP as an additional insured under the policy (the “Additional Insured Provision”). Six years later, Higby obtained the policy at issue here—a CGL policy from National—for the period from September 13, 2007, through September 13, 2008 (the “CGL Policy”).

 

In August 2008, DCP telephoned Higby and requested it to perform a job at the National Helium Plant (the “2008 Work Order”). A Higby crew began work on August 19, 2008, but was unable to complete the project because DCP did not have a required part. When the Higby crew arrived at the National Helium Plant the next day, it learned a flash fire had damaged Higby’s crane, rendering it inoperable. DCP concedes the fire was caused by its own negligence.

 

*2 In addition to the CGL Policy, National insured Higby for direct physical loss to Higby’s property under the terms of a separate commercial inland marine policy (“CIM Policy”). National paid Higby for its loss pursuant to the terms of the CIM Policy. Id. at 1158. National and Higby then brought this action against DCP, seeking to recover the amount of the loss.2 After the matter was removed from Kansas state court to federal district court, Plaintiffs filed a motion for summary judgment which was granted by the district court. Id. at 1160. On appeal, this court reversed the district court’s ruling and remanded the matter for further proceedings. Id. at 1167.

 

On remand, the district court was again presented with cross-motions for summary judgment. In their motion, Plaintiffs argued, inter alia, that the anti-subrogation rule did not bar their claims against DCP because Higby owed no contractual duty to procure insurance covering DCP for the loss at issue. Relying on a Colorado statute enacted in July 2007, Plaintiffs asserted Colorado law expressly prohibits any construction contract requiring one party to indemnify, insure, or defend another party against liability arising out of the negligence or fault of the indemnitee. See Colo. Rev. Stat. § 13-21-111.5(6). Accordingly, Plaintiffs argued, any agreement between the parties requiring Higby to carry insurance covering DCP for DCP’s own negligence was unenforceable.

 

The district court denied Plaintiffs’ motion and granted DCP’s motion in part. The court concluded Colo. Rev. Stat. § 13-21-111.5(6) (the “Anti-Indemnification Statute”) was inapplicable because the MSA was the operative contract and it was entered into prior to the Statute’s July 2007 effective date. The court further concluded Plaintiffs’ action was barred by the anti-subrogation rule because the CGL Policy covered DCP for the damage to Higby’s crane.3 Subsequently, the district court denied DCP’s request for attorney’s fees.

 

Plaintiffs appeal from the grant of summary judgment to DCP and the denial of its motion for summary judgment. DCP cross-appeals from the denial of its request for attorney’s fees.

 

 

III. Plaintiffs’ Appeal

This court reviews the disposition of a motion for summary judgment de novo, applying the same standard as the district court. Cornhusker Cas. Co. v. Skaj, 786 F.3d 842, 849 (10th Cir. 2015). Summary judgment is only appropriate 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). Applying the applicable standard, the district court erred by granting summary judgment in favor of DCP.

 

National claims a right of subrogation in this matter through Higby for amounts paid to Higby under the CIM Policy. See supra n.2. DCP has consistently argued the anti-subrogation rule bars the claims raised in the suit because DCP is an insured of National under the CGL policy and the CGL Policy also covers the loss at issue.4 See DeHerrera v. Am. Family Mut. Ins. Co., 219 P.3d 346, 351 (Colo. App. 2009) (“Under the anti-subrogation rule, an insurer may not seek recovery against its insured on a claim arising from the risk for which the insured was covered.”). The district court identified the central question presented in the cross-motions for summary judgment as “whether the anti-subrogation rule prohibits [this] subrogation action against DCP for loss resulting from DCP’s negligence.”

 

*3 Plaintiffs assert the CGL Policy cannot cover DCP for the loss at issue because the Additional Insured Provision is void under Colorado’s Anti-Indemnification Statute which bars a construction business from contracting out liability for its own negligence. Colo. Rev. Stat. § 13-21-111.5(6). The statute is based on the Colorado legislature’s finding that the use of contract provisions to shift financial responsibility for such negligence circumvents the intent of tort law. Id. § 13-21-111.5(6)(a)(III). Any provision in a construction agreement that requires one party to purchase insurance covering the other party for liability resulting from the other party’s own negligence is void as against public policy. Id. § 13-21-111.5(6)(d)(I). Because DCP concedes it is solely responsible for the fire that damaged Higby’s crane, if the Anti-Indemnification Statute applies to the operative contract between DCP and Higby the anti-subrogation rule is inapplicable because DCP is not covered by the CGL Policy for the loss at issue.

 

As it did before the district court, DCP argues the MSA is the operative contract between itself and Higby. Because the MSA predates the Anti-Indemnification Statute, DCP takes the position the Statute does not apply retroactively to invalidate the Additional Insured Provision in the MSA. See Riley v. People, 828 P.2d 254, 257 (Colo. 1992) (“Legislation is presumed to have prospective effect unless a contrary intent is expressed by the General Assembly.”). Plaintiffs argue the 2008 Work Order, which was entered into after the effective date of the Anti-Indemnification Statute, is the operative contract.5 We agree.

 

The MSA specifically states that its purpose is to “establish certain general terms and conditions which shall apply to and become part of each and every contract, whether written or oral, entered into between the parties.” “Contracts Between the Parties” is thereafter defined as “[a]ny [written or oral] contract whereby [Higby] agrees to perform work and/or provide items of equipment, machinery, materials or supplies for [DCP].” Higby did not agree to perform any work for DCP pursuant to the terms of the MSA. It did, however, so agree on August 18, 2008, when it orally entered into the 2008 Work Order. The unchallenged evidence in the record confirms this oral contract.

 

Higby received a call from DCP requesting that Higby send a crane to the National Helium Plant at 10:00 a.m. on August 19, 2008, to be used to lift a heat exchanger. Higby accepted the job, sending the crane to the agreed-upon location at the agreed-upon time. Higby’s crane was damaged while it was completing the work it orally agreed to perform. Pursuant to its terms, the MSA established the general terms and conditions of the oral agreement. Thus, the 2008 Work Order is the operative contract between the parties and is applicable to the loss at issue. It contains the general terms and conditions set out in the MSA, including the Additional Insured Provision, and the specific terms and conditions mutually agreed to by the parties on August 18, 2008.

 

Because the 2008 Work Order was a new contract entered into after the effective date of the Anti-Indemnification Act, Higby’s agreement to obtain insurance covering DCP for DCP’s own negligence is void under Colorado law. Id. § 13-21-111.5(6)(d)(I). Accordingly, National is not DCP’s insurer for purposes of the loss at issue and the anti-subrogation rule does not apply.

 

*4 DCP makes several fruitless attempts to avoid this result. It argues the 2008 Work Order cannot be the operative contract because it does not reference the MSA. DCP does not explain why each such contract must contain a reference to the MSA. The MSA clearly states that its terms apply to “each and every contract, whether written or oral, entered into between the parties.” The purpose of the MSA is to supply the “general terms and conditions” governing any future contracts into which the parties may enter. The MSA specifically provides that its provisions “shall apply to and become part of each and every” subsequent contract.

 

DCP also argues the August 2008 project at the National Helium Plant was an “operation” Higby was required to fulfill under the terms of the 2001 MSA. This argument fails. No provision in the MSA requires DCP to engage Higby to perform any “operation” for DCP and, likewise, no provision requires Higby to accept any request made by DCP. Instead, the MSA clearly contemplates that any work will commence only if the parties enter into subsequent contracts pursuant to the terms of which Higby agrees to “perform work and/or provide items of equipment, machinery, materials or supplies.”

 

Finally, DCP asserts the CGL Policy could not have been issued pursuant to the 2008 Work Order because it was obtained months earlier, on September 13, 2007. While this is true, it is irrelevant. The 2008 Work Order incorporated all the terms and conditions of the MSA, one of which was the requirement that Higby name DCP as an additional insured in a commercial general liability policy and carry that insurance throughout the term of the MSA. Higby agreed to procure CGL insurance when the MSA was executed in 2001 “in consideration of having the opportunity to provide services” to DCP. As DCP itself states in correspondence it sent to Higby in October 2005, Higby could not perform work for DCP unless it could first prove the coverage was in place. The 2008 Work Order incorporated Higby’s agreement to carry CGL insurance covering DCP during the performance of its work for DCP. Thus, the date on which Higby purchased the CGL Policy has no bearing on whether the 2008 Work Order is the operative contract. The coverage was latent until the parties entered into the 2008 Work Order pursuant to the terms of which Higby agreed to perform the project at the National Helium Plant.

 

One final issue must be addressed—whether the 2008 Work Order is a construction agreement under the terms of the Anti-Indemnification Statute.6 DCP makes no credible argument that it is not. The Anti-Indemnification Statute defines a construction agreement as “a contract, subcontract, or agreement for materials or labor for the construction, alteration, renovation, repair, maintenance, … or observation of any building, building site, structure, … gas or other distribution system, or other work dealing with construction or for any moving, demolition, or excavation connected with such construction.” Colo. Rev. Stat. § 13-21-111.5(6)(e)(I). Here, Higby’s work order shows it performed the following work for DCP: “Pulled off end caps to plug tubes on heat exchangers.” The work was performed at a gas processing plant. The 2008 Work Order meets the definition of a construction agreement.

 

Colorado law prohibits DCP from contracting with Higby to obtain additional-insured coverage for liabilities arising from DCP’s own negligence. Thus, any promise Higby made in the 2008 Work Order to provide such coverage is unenforceable and the CGL Policy does not cover DCP under the circumstances of this case. Consequently, DCP is not National’s insured for the loss at issue and the anti-subrogation rule is inapplicable. Because DCP has conceded the damage to Higby’s crane was caused by its own negligence, the district court erred by denying Plaintiffs’ motion for summary judgment.

 

 

1. DCP’s Cross-Appeal
2. Attorney’s Fees

*5 In a cross-motion for summary judgment, DCP argued it was entitled to recover its attorney’s fees and costs for two reasons. According to DCP, Higby breached the waiver-of-subrogation provision in the MSA and breached the “other insurance” provision in the MSA by obtaining the CIM Policy, thereby causing the CGL Policy to potentially not be primary coverage for the loss at issue. According to DCP, these two breaches caused it to incur significant attorney’s fees and costs associated with defending Plaintiffs’ lawsuit. The district court granted Higby’s cross-motion for summary judgment, concluding Higby did not breach either provision.

 

A party may recover attorney’s fees based upon a showing of a material breach of the MSA. See Bernhard v. Farmers Ins. Exch., 915 P.2d 1285, 1287 (Colo. 1996) (“As a general rule, in the absence of a statute, court rule, or private contract to the contrary, attorney fees are not recoverable by the prevailing party in either a contract or tort action.” (footnote omitted)). Even assuming Higby breached the two relevant provisions of the MSA,7 any such breach was not material under the unique facts of this case. The purpose of both the waiver-of-subrogation provision and the other-insurance provision is to preserve DCP’s rights under the Additional Insured Provision. DCP’s assertion that Higby breached the waiver-of-subrogation provision and the other-insurance provision is simply another avenue by which DCP attempts to enforce the Additional Insured Provision. Because the Additional Insured Provision is void as to the loss at issue in this matter, any breach of those provisions is not material.

 

 

1. Breach of the MSA

DCP argues that if the grant of summary judgment in its favor is reversed, this court should remand this matter to the district court to permit the court to revisit its ruling that Higby did not breach the MSA by failing to purchase CGL insurance covering DCP for DCP’s own negligence. Plaintiffs counter that the MSA was not breached because parties cannot contract around the requirements of Colorado law.

 

This court has concluded any promise Higby made to purchase insurance covering DCP for the loss at issue is void under Colorado’s Anti-Indemnification Statute which bars a construction business from contracting out liability for its own negligence. Colo. Rev. Stat. § 13-21-111.5(6). Colorado “[c]ourts will not enforce contracts or contract terms that are void as contrary to public policy.” Norton Frickey, P.C. v. James B. Turner, P.C., 94 P.3d 1266, 1267 (Colo. App. 2004). Accordingly, as a matter of law, DCP cannot show that Higby breached its agreement to provide such coverage and it is unnecessary to remand this matter for further proceedings. See Colo. Rev. Stat. § 13-21-111.5(6)(d)(I) (determining that contract provisions like the one at issue here are “void as against public policy”).

 

 

1. Conclusion

The district court’s grant of summary judgment in favor of DCP in Appeal No. 16-3271 is reversed. The matter is remanded with instruction to enter judgment in favor of Plaintiffs based on this court’s conclusion that the anti-subrogation rule is inapplicable because the Additional Insured Provision of the 2008 Work Order is void, in relevant part,8 pursuant to the terms of the Colorado Anti-Indemnification Statute.

 

*6 The district court’s grant of summary judgment in favor of Plaintiffs on the attorney’s fee issue raised in Appeal No. 16-3279 is affirmed.

 

ENTERED FOR THE COURT

 

All Citations

— Fed.Appx. —-, 2017 WL 3495478

 

 

Footnotes

1

At the time the MSA was executed, DCP was known as Duke Energy Field Services, LP.

2

National claimed a right of subrogation through Higby. See Cont’l Divide Ins. Co. v. W. Skies Mgmt., Inc., 107 P.3d 1145, 1148 (Colo. App. 2004) (“Under the doctrine of equitable subrogation, when an insurer has paid its insured for a loss caused by a third party, it may seek recovery from the third party.”). Plaintiffs allege both Higby and National made payments to repair the damage to Higby’s crane.

3

Plaintiffs argued the CGL Policy excluded coverage for damage to property owned by Higby. Because Higby owned the crane, Plaintiffs asserted DCP’s negligence was not covered under the terms of the CGL Policy. The district court ruled in DCP’s favor and Plaintiffs challenge that ruling in this appeal. Because we conclude the Anti-Indemnification Statute prohibits the coverage at issue, it is unnecessary to address this issue.

4

In its motion for summary judgment, DCP argued it was immaterial for purposes of the anti-subrogation rule “that the loss was paid under a CIM Policy and the coverage DCP would seek is under the CGL Policy.” Because the Additional Insured Provision is void under the Anti-Indemnification Statute, it is not necessary to address the correctness of this argument.

5

DCP argues that Plaintiffs have waived the argument that the 2008 Work Order is the operative contract because it was not presented to the district court. The district court’s order, however, specifically states: “Plaintiffs argue that the MSA is not the contract at issue, but instead the critical inquiry under the [Anti-Indemnification Statute] is the date the parties entered into the contract pertaining to the work that Higby was performing at the time of the fire. That work order was issued August 18, 2008, one year after the effective date of the statute.”

6

DCP admits the MSA is governed by Colorado law and does not argue the 2008 Work Order is not also so governed.

7

Because we reverse the district court’s entry of summary judgment in favor of DCP on the merits of Plaintiffs’ claims, DCP is no longer the prevailing party in Plaintiffs’ subrogation action. DCP’s claim of entitlement to attorney’s fees, however, is based on its counter-claim that Higby breached the MSA by “permitting or failing to preclude” National’s subrogation action. Nowhere in its appellate brief does DCP identify the other damages it sought for the alleged breaches of the MSA. Plaintiffs, however, do not argue DCP’s claim for attorney’s fees was not properly pleaded. See Lawry v. Palm, 192 P.3d 550, 569-70 (Colo. App. 2008) (discussing the availability of attorney’s fees as either consequential or special damages).

8

Because the issue is not before us, we express no opinion on whether the Additional Insured Provision is enforceable as to coverage for claims not based on DCP’s own negligence. We note, however, that the severability clause of the MSA states as follows: “If any provision of this Agreement shall be held invalid, illegal or unenforceable, the validity, legality or enforceability of the other provisions of this Agreement shall not be affected thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.”

United States District Court,

1. Maryland, Southern Division.

Celestin MONGA, Plaintiff,

v.

A.B.S. MOVING & STORAGE, INC., et al., Defendants.

Case No.: PWG-16-2000

|

Filed 07/31/2017

Attorneys and Law Firms

Fredric David Abramson, Law Offices of Fredric D. Abramson, Gaithersburg, MD, for Plaintiff.

Colin Bell, Franklin and Prokopik PC, Baltimore, MD, for Defendants.

 

 

MEMORANDUM OPINION AND ORDER

Paul W. Grimm, United States District Judge

*1 Pending before the Court is Defendants A.B.S. Moving & Storage, Inc., Natalie Smith, and Avi Sabban (collectively, “A.B.S.”)’s Combined Motion for Reconsideration and Motion to Dismiss. Defs.’ Mot., ECF No. 34. Plaintiff Celestin Monga alleges that A.B.S., a moving company, took advantage of his absence from the United States by refusing to release his household goods to an international shipper until he paid additional fees that were not disclosed in the company’s estimate. Previously, I held that Monga’s Complaint, which brings exclusively state-law claims, presents a federal question because the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706, completely preempts some of his claims. Mem. Op. 9, ECF No. 26. In accordance with Fourth Circuit law on complete preemption, however, I held that the preempted claims should not be dismissed, but rather should proceed as if brought under the Carmack Amendment. Id. I also held that the aspects of Monga’s claims that dealt with A.B.S.’s alleged overcharges rather than property loss or damage could proceed as originally pled. Id. at 10. A.B.S.’s Motion urges me to revisit the latter holding or otherwise hold the remaining state-law claims preempted by the Interstate Commerce Commission Termination Act (“ICCTA”), 49 U.S.C. § 14501(c)(1). The Motion is fully briefed, Defs.’ Mem., ECF No. 34-1; Pl.’s Opp’n ECF No. 35; Defs.’ Reply, ECF No. 36, and no hearing is necessary, Loc. R. 105.6 (D. Md.). I do not find that my previous ruling on the Carmack Amendment’s preemptive effect was clearly erroneous, so I will deny A.B.S.’s Motion to Reconsider; however I do find that Monga’s remaining state-law claims—with the exception of his breach-of-contract claim—are barred by the ICCTA’s preemption provision. Accordingly, I will grant A.B.S.’s Motion to Dismiss in part and deny it in part.

 

 

Background

My previous Memorandum Opinion set forth the relevant facts:

In November 2014, Monga accepted a position with UNIDO [the United Nations Industrial Development Organization] and began organizing his relocation to Austria. Compl. ¶ 14. The following month, Monga contacted A.B.S. to “obtain an estimate of the costs to pack and move the contents of his household … to an A.B.S. storage facility, to then be picked up by another carrier for shipment to Vienna, Austria.” Id. ¶ 15. Defendant Avi Sabban, an A.B.S. employee, provided a written estimate of $1,720.00 plus a $200 monthly storage fee. Id. ¶¶ 16, 18. Monga intended to store the items for no more than thirty days while he arranged international shipment of the items to Austria. Id. ¶ 19. A.B.S. began packing and moving the items on December 15, 2014 and completed the job the next day. Id. ¶ 20. Shortly after the move, Monga called Sabban, attempting to secure an inventory of the items packed and loaded, and Sabban informed him that the final cost of the move had exceeded the estimate by $264.53. See id. ¶ 21. Monga paid the requested amount. Id. ¶ 25. On January 15, 2015, A.B.S. requested an additional $2,887.50, which another A.B.S. employee, Defendant Natalie Smith, later explained included a previously undisclosed “pickup fee of $1987.50 plus $900.00 for storage” that the company would require Monga to pay before she would “discuss … whom you would like to have your household items released to.” Id. ¶¶ 26, 29 (quoting Email from Natalie Smith, to Celestin Monga (Jan. 22, 2015, 7:55 P.M.), Compl. Ex. 4, ECF No. 2-4). Around the same time, Monga hired Allied International (“Allied”) to retrieve the household goods from A.B.S. and ship them to Austria. Id. ¶ 33. An Allied representative contacted A.B.S., which indicated that it would not release Monga’s belongings for international shipment until it received the additional $2,877.50 and a notarized letter authorizing the release. Id. ¶¶ 33–34. When Allied sought confirmation of these details on Monga’s behalf, A.B.S. requested an additional $140.00 loading fee. Id. ¶ 36. Monga paid the additional $2,887.50 on February 12, 2015. Id. ¶ 32. After additional difficulties securing release of the items, Allied successfully obtained Monga’s belongings on March 3, 2015 and documented lost and damaged items. Id. ¶¶ 39–40.

Mem. Op. 3–4.

 

 

Standard of Review

*2 Rule 54(b) provides that “any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties … may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties’ rights and liabilities.” Fed. R. Civ. P. 54(b). Although the Fourth Circuit has not articulated a standard for reviewing such motions, see Am. Canoe Ass’n v. Murphy Farms, Inc., 326 F.3d 505, 514 (4th Cir. 2003); Fayetteville Investors v. Commercial Builders, Inc., 936 F.2d 1462, 1472 (4th Cir. 1991), the standards for reviewing Rule 59(e) and 60(b) motions provide guidance for the review of a Rule 54(b) motion, see Cezair v. JPMorgan Chase Bank, N.A., No. DKC 13-2928, 2014 WL 4955535, at *1 (D. Md. Sept. 30, 2014). Rule 59(e) permits reconsideration on the basis of, among other things, “a need to correct a clear error or prevent manifest injustice.” Robinson v. Wix Filtration Corp. LLC, 599 F.3d 403, 411 (4th Cir. 2010).

 

Federal Rule of Civil Procedure 12(b)(6) provides for “the dismissal of a complaint if it fails to state a claim upon which relief can be granted.” Velencia v. Drezhlo, No. RDB-12-237, 2012 WL 6562764, at *4 (D. Md. Dec. 13, 2012). This rule’s purpose “is to test the sufficiency of a complaint and not to resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses.” Id. (quoting Presley v. City of Charlottesville, 464 F.3d 480, 483 (4th Cir. 2006)). To that end, the Court bears in mind the requirements of Fed. R. Civ. P. 8, Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), when considering a motion to dismiss pursuant to Rule 12(b)(6). Specifically, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief,” Fed. R. Civ. P. 8(a)(2), and must state “a plausible claim for relief,” as “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice,” Iqbal, 556 U.S. at 678–79. See Velencia, 2012 WL 6562764, at *4 (discussing standard from Iqbal and Twombly). “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. With respect to claims that allege fraud, “a party must state with particularity the circumstances constituting the fraud or mistake.” Fed. R. Civ. P. 9(b). Fraud allegations that meet these heightened pleading requirements “typically ‘include the time, place and contents of the false representation, as well as the identity of the person making the misrepresentation and what [was] obtained thereby.’ ” Piotrowski v. Wells Fargo Bank, N.A., No. DKC-11-3758, 2013 WL 247549, at *5 (D. Md. Jan. 22, 2013) (quoting Superior Bank, F.S.B. v. Tandem Nat’l Mortg., Inc., 197 F. Supp. 2d 298, 313–14 (D. Md. 2000)).

 

 

Discussion

Carmack Amendment Preemption

The Carmack Amendment provides a federal cause of action to recover damages from motor carriers for “actual loss or injury to … property” during interstate transportation. 49 U.S.C. § 14706(a)(1).1 The Constitution’s Supremacy Clause declares federal law “the supreme Law of the Land … any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.” U.S. Const. art. VI, cl. 2. “As a result, federal statutes and regulations properly enacted and promulgated ‘can nullify conflicting state or local actions.’ ” Coll. Loan Corp. v. SLM Corp., 396 F.3d 588, 595 (4th Cir. 2005) (quoting Nat’l Home Equity Mortg. Ass’n v. Face, 239 F.3d 633, 637 (4th Cir. 2001)). Preemption takes three forms: (1) “express preemption,” where “Congress has clearly expressed an intention” to nullify state law; (2) “complete” or “field preemption,” where Congress “by legislating comprehensively” expresses a clear intention to “occupy an entire field of regulation”; and (3) “conflict preemption,” where “state law conflicts with federal law.” Id. at 596. The Supreme Court has held that Congress intended the Carmack Amendment to completely preempt overlapping state law. Adams Express Co. v. Croninger, 226 U.S. 491, 505–06 (1913).

 

*3 But the Carmack Amendment’s preemptive reach depends on its regulatory scope. A.B.S. argues that the provision preempts all “ancillary causes of action related to the transportation contract and the failure in the duty of the carrier to deliver goods and not necessarily related to loss and damage to those goods.” Defs.’ Mem. 9. Monga takes the position that the Carmack Amendment regulates precisely what it says it regulates—“actual loss or injury to … property.” Pl.’s Opp’n 6–7 (“If Congress intended for the Carmack Amendment to limit all carrier liability in a transaction, it would be written in the statute.”); 49 U.S.C. § 14706(a)(1). And that impulse informed my previous ruling. Upon closer examination of the issue, and with the benefit of more fulsome briefing with regard to the Carmack Amendment’s application to Monga’s remaining state law claims, I now see that while there is considerable disagreement and even confusion regarding whether the Carmack Amendment’s preclusive effect extends beyond claims related to the loss, damage, or delayed delivery of household goods, some courts have indeed treated the Carmack Amendment as regulating far more than its text suggests. Even so, it is still not clear to me that it bars plaintiffs from bringing state-law contract claims that related to overcharges and unrelated to any loss, damage, or delay in delivery of the shipped property.

 

In the early days of the Carmack Amendment, the Supreme Court held that the statute encompasses “[a]lmost every detail” of “the subject of the liability of the carrier under a bill of lading.” Adams Express, 226 U.S. at 505. And the Court has specifically held that the law preempts state-law claims for damages caused by delayed delivery, even though the statute is silent on that issue. See Se. Express Co. v. Pastime Amusement Co., 299 U.S. 28, 29–30 (1936) (per curiam). Similarly, the Court has held that the provision bars common-law conversion claims. American Ry. Express Co. v. Levee, 263 U.S. 19, 21 (1923).

 

Relying on Adams Express’s broad language, some courts, including this one, have held or suggested in dicta that the Carmack Amendment preempts an even wider array of claims. In its Motion, A.B.S. quotes at length from Richter v. North American Van Lines, Inc., 110 F. Supp. 2d 406 (D. Md. 2000). Defs.’ Mot. 5–6. In that case, Judge Peter Messitte held that “virtually every kind of state cause of action relating to the contract of shipment … is preempted” by the Carmack Amendment and that only state claims that “have nothing at all to do with the transportation of goods” fall outside the preemptive scope. Richter, 110 F. Supp. 2d at 411 (emphasis added). Thus, for example, a tort claim against a moving company’s employee who assaults a customer would not be barred under this rule, as assault has nothing to do with a shipping contract. Id. But Richter’s broad language was dicta because the case addressed claims for damages caused by delayed delivery, id. at 410, an issue resolved by Pastime Amusement’s holding that the Carmack Amendment encompasses claims relating to delays, 299 U.S. at 29–30. Richter does not, therefore, offer clear guidance on whether or not Monga’s remaining claims are preempted, and, in any event, it is not binding authority.

 

*4 More recently, other courts have directly addressed the issue of overcharge claims. As I noted in my previous opinion, Mem. Op. 10, some courts have found that such claims are not preempted by the Carmack Amendment, Frey v. Bekins Van Lines, Inc., 748 F. Supp. 2d 176, 178–79, 181 (E.D.N.Y. 2010); Learning Links, Inc. v. United Parcel Serv. of Am., Inc., No. 03-cv-7902, 2006 WL 785274, at *1–*2, *4–*5 (S.D.N.Y. Mar. 27, 2006). But, as A.B.S. points out, Defs.’ Mem. 7–9, lower courts do not unanimously take that position. In Hall v. North American Van Lines, Inc., 476 F.3d 683, 685–86 (9th Cir. 2007), a plaintiff brought breach-of-contract, fraud, and conversion claims arising out of a shipping company’s refusal to release her goods until she paid an extra $13,312 (a situation similar to Monga’s allegations in this case). The court rejected the plaintiff’s argument that the Carmack Amendment did not preempt her claims because they did not relate to property loss or damage, holding that the statute “completely preempts a contract claim alleging the late delivery of goods, even without loss or property damage.” Id. at 688. The court further held that the conversion and fraud claims were barred on account of conflict preemption. See id. at 689–90 & n.8. And in a decision that predated Hall, the Northern District of California held that the Carmack Amendment did not preempt claims arising out of similar bait-and-switch tactics, Roberts v. N. Am. Van Lines, Inc., 394 F. Supp. 2d 1174, 1182 (N.D. Cal. 2004), but that they were nevertheless barred on field-preemption grounds because of Congress’s “pervasive[ ]” regulation of “every aspect of the arrangements made for interstate transportation of household goods,” id. The court specifically cited Congress’s delegation of “plenary authority” to the Department of Transportation “to issue regulations governing interstate transportation of household goods” and the agency’s promulgation of rules governing overcharges as evidence of broader field preemption than the Carmack Amendment alone provides. Id. at 1183–84 (citing 49 U.S.C. § 14104(a)).2

 

I suspect that much of the confusion surrounding the Carmack Amendment stems from its enactment during an era when a different (more expansive) approach to statutory interpretation held sway. If permitted to interpret the statute on a clean slate, I would be inclined to take an approach more rooted in the statute’s text, as Monga advocates. But the Northern District of California’s analysis in Roberts also persuades me that discussion of Congress’s preemptive intent when it comes to interstate transportation of household goods is too myopically focused on the Carmack Amendment alone rather than the broader regulatory framework that applies to the subject matter. Indeed, this narrow focus on the Carmack Amendment seems more evocative of an express– or conflict-preemption rather than the field-preemption analysis that the provision supposedly triggers. Congress’s pervasive regulation of interstate transportation of household goods may preempt claims like Monga’s even if they fall outside the Carmack Amendment’s regulatory scope. But because A.B.S. has not argued that Congress’s broader regulation of interstate transportation of household goods (either directly or via delegated authority) preempts Monga’s remaining claims and because I do not find that my previous interpretation of the Carmack Amendment’s regulatory scope was clearly erroneous, I will deny A.B.S.’s Motion for Reconsideration.

 

 

ICCTA Preemption

A.B.S. alternatively argues that the ICCTA’s preemption clause bars Monga’s remaining state-law claims. Defs.’ Mem. 11–13. The ICCTA’s preemption provision nullifies “state law[ or] regulation … related to a price, route, or service of any motor carrier.” 49 U.S.C. § 14501(c)(1) (emphasis added). The provision contains a specific carveout for “intrastate transportation of household goods.” Id. § 14501(c)(2)(B). Monga argues that the ICCTA does not preempt his claims because A.B.S. only shipped his household goods within Maryland state lines. Pl.’s Opp’n 8. But I have already determined that the shipment was an interstate one for Carmack Amendment purposes, Mem. Op. 7, and Monga cites no authority supporting a different definition of interstate transportation in the ICCTA context. And my own review has not uncovered any authority suggesting a different definition governs. Monga also argues that his claims do not relate to price because they “have nothing to do with the price originally contracted to.” Pl.’s Opp’n 9. The ICCTA’s preemption clause closely resembles a similar provision in the Airline Deregulation Act of 1978, 49 U.S.C. § 4713(b)(4)(A), (B)(i). In discussing the analogous preemption provision, the Supreme Court defined “relating to” as “having a connection with or reference to.” Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992). Overcharge claims are clearly connected to the price charged by a motor carrier, as is an allegation of bait-and-switch tactics connected to the service provided by the carrier. The nub of Monga’s overcharge claims is that the price A.B.S. charged exceeded what the company represented and contracted to. This Court previously held that the ICCTA’s preemption provision barred misrepresentation, negligent misrepresentation, and unjust enrichment claims against a shipper that “orally agreed to a price for its service, but later charged … more than the allegedly agreed upon price.” Mastercraft Interiors, Ltd. v. ABF Freight Sys., Inc., 284 F. Supp. 2d 284, 288 (D. Md. 2003); accord Frey v. Bekins Van Lines, Inc., 802 F. Supp. 2d 438, 441–42 (E.D.N.Y. 2011); Data Mfg., Inc. v. United Parcel Serv., Inc., No. 4:07-CV-1456 (CEJ), 2008 WL 648483, at *4 (E.D. Mo. Mar. 5, 2008), aff’d in relevant part, 557 F.3d 849, 852–53 (8th Cir. 2009). For the same reason, most of Monga’s remaining state-law claims are preempted. But unlike the Carmack Amendment, which completely preempts state-law claims related to loss, damage, and delayed delivery of household goods, Pastime Amusement Co., 299 U.S. at 29–30; Adams Express, 226 U.S. at 505–06, the ICCTA expressly preempts state law claims. Mitsui O.S.K. Lines, Ltd. v. Evans Delivery Co., Inc., 948 F. Supp. 2d 406, 413 (D.N.J. 2013) (“While [the ICCTA’s preemption] provision may serve as the basis for a defense of express federal preemption against [the Plaintiff’s] state law claims, it has no bearing on the issue of complete preemption, which requires an exclusively federal cause of action.”). Although completely preempted claims must be recharacterized as their federal analogs, directly preempted claims must be dismissed. Compare Mastercraft Interiors, 284 F. Supp. 2d at 288 (dismissing claims preempted by ICCTA), with Rush Indus., Inc. v. MWP Contractors, LLC, 539 Fed.Appx. 91, 95 (4th Cir. 2013) (recharacterizing as Carmack Amendment claims state-law claims preempted by the provision). Thus, with one exception, Monga’s remaining state-law claims related to overcharges must be dismissed.

 

*5 The ICCTA does not preempt Monga’s breach-of-contract claim (Count 3).3 In American Airlines, Inc. v. Wolens, 513 U.S. 219 (1995), plaintiffs brought consumer-fraud and breach-of-contract claims in order to prevent retroactive application of a change to American Airlines’ frequent flyer program to their existing credit mileage, id. at 225. The Court held that the Airline Deregulation Act preempted the fraud claims, id. at 228, but that the contract claims could proceed because “terms and conditions airlines offer and passengers accept are privately ordered obligations” and thus do not implicate state law. Id. at 228–29. Based on Wolens, the Fourth Circuit held that the ICCTA also does not preempt “routine breach of contract case[s].” Gaines Motor Lines, Inc. v. Klaussner Furniture Indus., Inc., 734 F.3d 296 (4th Cir. 2013). And in the context of alleged overcharges by a motor carrier, the Eighth Circuit has held specifically that while the ICCTA does preempt fraudulent and negligent misrepresentation claims, Data Mfg., 557 F.3d at 853, it does not preempt “four-corners [contract] claim[s] solely between the parties that does not derive from the enactment or enforcement of state law,” id. at 854. Monga’s breach-of-contract claim—at least as it pertains to the alleged overcharges—is a matter of routine contract interpretation and does not rely on enforcement of state law. It only requires the Court to determine whether Monga agreed to the fees that A.B.S. ultimately charged him. Accordingly, the breach-of-contract claim is not preempted by the ICCTA.

 

 

Conclusion

After additional consideration of the Carmack Amendment’s preemptive scope, I find that I did not commit clear error by holding Monga’s state-law claims pertaining to alleged overcharges not preempted by that statute. Although the Supreme Court has characterized the statutory provision in broader terms than its text suggests, it has not provided clear guidance on the provision’s outer limits, and lower-court authority on the topic is divided. Under the circumstances, there is no basis for revisiting my initial determination that the provision does not bar Monga’s remaining state-law claims. On the other hand, the ICCTA’s preemption provision does bar Monga’s remaining state claims, with the exception of his breach-of-contract claim, and must be dismissed. But because his breach-of-contract claim depends on an interpretation of what he and A.B.S. agreed to between themselves rather than on enforcement of state law, it may proceed.

 

 

ORDER

Accordingly, for the reasons stated, it is this 31st day of July, 2017, hereby ORDERED that Defendant A.B.S.’s Combined Motion for Reconsideration and Motion to Dismiss, ECF No. 34, is GRANTED in part AND DENIED in part as follows:

1. A.B.S.’s Motion for Reconsideration IS DENIED;
2. As I previously ruled, Monga’s claims related to loss, damage or delayed delivery of household goods may proceed as Carmack Amendment claims;
3. A.B.S.’S Motion to Dismiss IS GRANTED as to the aspects of Counts 1–2 and 4–7 related to overcharges allegedly assessed by A.B.S, which ARE DISMISSED;
4. A.B.S.’s Motion to Dismiss IS DENIED as to Count 3 insofar as it relates to overcharges allegedly assessed by A.B.S;
5. Monga may only pursue his claims related to overcharges through the remaining breach-of-contract claim (Count 3).

 

All Citations

Slip Copy, 2017 WL 3228139

 

 

Footnotes

1

In my previous opinion, I held that A.B.S.’s transportation of Monga’s household goods within Maryland state lines amounted to interstate transportation for Carmack Amendment purposes because “Monga intended all along for his household goods to be shipped to him in Austria.” Mem. Op. 7; see also Bongam Inv. Corp. v. Pioneer Shipping Logistics, Inc., No. CCB-09-965, 2009 WL 1766782, at *2 (D. Md. June 9, 2009) (“If the court finds that the intention formed prior to shipment was for the goods to be carried by a continuous unified movement to final destination beyond the port of discharge, then the Carmack Amendment may apply to the intrastate portion of the shipment.”).

2

Monga misleadingly cites this case for the proposition that the Carmack Amendment does not preempt claims related to bait-and-switch conduct but fails to disclose that the court ultimately found the claims barred due to Congress’s broader occupation of the regulatory field of interstate transportation of household goods. Pl.’s Opp’n 10.

3

Monga’s breach-of-contract claim largely addresses the alleged overcharges. Compl. ¶ 61 (“A.B.S. Moving & Storage added charges that were not agreed to, which increased Mr. Monga’s out of pocket costs to over $4,000.”). He also alleges that A.B.S. breached the contract by “not fully complet[ing] the services as promised, which includes omitting to pack items that have now been presumed as lost and/or stolen….” Id. ¶ 62. I have already recharacterized that aspect of his breach-of-contract claim as a Carmack Amendment claim. Mem. Op. 9.