United States Court of Appeals,

Sixth Circuit.

ATIC ENTERPRISES, INC., Plaintiff-Appellant,

v.

COTTINGHAM & BUTLER INSURANCE SERVICES, INC., Defendant-Appellee.

Case No. 16-6549

|

May 23, 2017

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF KENTUCKY

BEFORE: GIBBONS, SUTTON, and COOK, Circuit Judges.

 

 

OPINION

JULIA SMITH GIBBONS, Circuit Judge.

*1 Plaintiff Atic Enterprises, Inc. (“Atic”) is a now-defunct trucking company that bought an insurance policy through Cottingham & Butler Insurance Services, Inc. (“Cottingham & Butler”). After two loads of copper were stolen from Atic’s trucks, it filed a claim with Cottingham & Butler, which was denied. Atic sued Cottingham & Butler, contending that the insurance company was negligent and misrepresented Atic’s policy. Cottingham & Butler defends that it provided more notice of the change in insurance coverage than is required by Kentucky law. Further, Cottingham & Butler notes that, despite being asked specifically what cargo the company hauled, Atic concealed that it hauled copper. The district court granted summary judgment for Cottingham & Butler and dismissed Atic’s claim. For the reasons that follow, we affirm the judgment of the district court.

 

 

I.

Atic was a contract-carrier trucking company based in Bowling Green, Kentucky.1 Atic claimed that it transported general freight, including commodities dry bulk, non-alcoholic beverages, and paper products, from 2011 to 2014. Atic also hauled copper, despite not disclosing this fact to government regulators or to its insurance provider. The company did not own any of the goods it transported but rather served as a transport service for other companies shipping their goods.

 

From July 2012 to July 2013, Atic had an insurance policy with Westchester Fire Insurance Company, sold by Cottingham & Butler sales agent Jacob Zeal. Prior to the initial sale of the 2012–13 policy, Cottingham & Butler requested information from Atic about what materials the company transported. Atic did not list copper among the items it transported. Instead, it listed that it transported canned goods, paper and paper products, non-alcoholic beverages, and general merchandise. It also stated that the information provided an accurate and complete representation of its business. On this basis, Cottingham & Butler sold Atic a policy from Westchester Insurance that covered its transporting needs. The 2012–13 policy did not contain a copper exclusion.

 

Prior to the expiration of the initial insurance policy, Westchester notified Atic that it would not automatically renew its current policy. The notice read that “[i]f we are able to offer you insurance for the next policy term, the terms, limits and premium may be materially different from your current insurance policy.” Atic received and read this notice. It prompted further conversations between Atic and Cottingham & Butler’s agent, Zeal, about a policy for 2013–14. In July 2013, Zeal sent Atic a proposal for a new policy. The proposal included a side-by-side comparison of the proposed 2013–14 policy and the current 2012–13 policy. The proposal showed explicitly that copper was excluded from the new policy. In fact, copper is the first item listed under the “Property Not Covered” list at the bottom of the side-by-side coverage-comparison page. Again, Atic received and read this policy proposal. Cottingham & Butler provided Atic with the opportunity to update information about its coverage needs, including a chance to update the commodities it listed under “cargo” in the proposal paperwork. Atic, again, did not disclose that it was transporting copper.

 

*2 In September 2013, Cottingham & Butler mailed the new 2013–14 policy to Atic. The new policy included a handful of explicit exclusions, including copper. Each of the new exclusions was listed on its own page providing specific details. Among them was a separate page titled “COPPER EXCLUSION.” The page stated, “THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.” It stated that “[c]opper is added to Paragraph A.2, Property Not Covered.” Atic contends that it never received this policy.

 

In early November 2013, two loads of copper were stolen from Atic’s trucks. Following the theft, Atic contacted Zeal for a copy of the 2013–14 policy. Zeal explained that the new policy excluded copper but encouraged Atic to submit a claim nonetheless. Atic submitted a claim, which Cottingham & Butler subsequently denied.

 

Atic sued Cottingham & Butler in connection with the 2013–14 policy. Although Atic initially filed multiple claims against Cottingham & Butler, it abandoned all but its negligence claim. Cottingham & Butler moved for summary judgment, arguing that it did not have a duty to advise Atic of the policy change, and that, even if it did have that duty, it was satisfied. The district court granted Cottingham & Butler’s motion, finding that the 2013–14 policy clearly stated a copper exclusion, and that there was no further duty to advise or notify Atic of the policy change. Atic now appeals.

 

 

II.

We review a district court’s grant of a summary judgment motion de novo. Great Am. Ins. Co. v. E.L. Bailey & Co., Inc., 841 F.3d 439, 443 (6th Cir. 2016). Taking the evidence in the light most favorable to the non-moving party, summary judgment is 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. The mere presence of a scintilla of evidence in support of the non-moving party’s position is insufficient; there must be evidence upon which a jury could reasonably find for the non-moving party. Hartsel v. Keys, 87 F.3d 795, 799 (6th Cir. 1996) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)). This diversity action is governed by Kentucky negligence law.2

 

 

A.

To recover on a claim of negligence, Kentucky law requires a plaintiff to establish (1) that the defendant owed a duty of care; (2) that the defendant breached that duty; and (3) that the breach actually and proximately caused plaintiff’s damages. Helton v. Am. Gen. Life Ins. Co., 946 F. Supp. 2d 695, 708 (W.D. Ky. 2013) (citing Mullins v. Commonwealth Life Ins. Co., 839 S.W.2d 245 (Ky. 1992)). Cottingham & Butler argues that it owed Atic a standard duty of care in the sale of the 2013–14 insurance policy and that it subsequently met that duty. Atic disagrees. It argues that Cottingham & Butler owed a higher duty of care and was required under Kentucky law to notify it of the policy change and discuss that change at length in its role as insurance advisor. We find that Cottingham & Butler had no such additional duty under Kentucky law, and even if it did, that the company satisfied that duty.

 

The duty an insurance agent has to his clients is a question of law. Hardy Oil Co., Inc. v. Nationwide Agribusiness Ins. Co., 587 F. App’x 238, 240 (6th Cir. 2014). Under Kentucky law, there is “no affirmative duty to advise … by the mere creation of an agency relationship.” Id. Instead, an insurance agent owes his clients a standard duty of reasonable care. Associated Ins. Serv., Inc. v. Garcia, 307 S.W.3d 58, 63 (Ky. 2010); Helton, 946 F. Supp. 2d at 708. Atic, however, contends that Cottingham & Butler’s agent, Zeal, took on the special role of insurance advisor, and with that, owed a heightened standard of care.

 

*3 An insurance agent can assume a duty to advise if he expressly or impliedly undertook to advise his client. Mullins, 839 S.W.2d at 248. “An implied assumption of duty may be present when: (1) the insured pays the insurance agent consideration beyond a mere payment of the premium; (2) there is a course of dealing over an extended period of time which would put an objectively reasonable insurance agent on notice that his advice is being sought and relied on; or (3) the insured clearly makes a request for advice.” Id. (internal citations omitted).

 

Applying these factors, Zeal did not expressly or impliedly assume a duty to advise. Atic had been using Cottingham & Butler as its insurance agent since 2012. They bought a one year policy, and then when Westchester indicated it would not renew the policy, they worked for a second time with Zeal to update their information and purchase a new policy for 2013–14. Thus, this was not a long course of dealing. Additionally, there is no evidence that Atic paid Zeal consideration beyond the payment of a premium. Mullins, 839 S.W.2d at 248. And, most importantly, Atic never made any clear requests for advice on its insurance coverage relating to transporting copper. In fact, Atic never even disclosed to Cottingham & Butler that it transported copper. It withheld that information in the forms Zeal provided as a part of the application for insurance coverage. As the district court aptly noted, Atic’s “allegations are simply a description of the role of an insurance agent.” Zeal is licensed, represented that he was a transportation consultant, tried to sell insurance to Atic, and represented to Atic that it would be easier for it to get insurance if it consolidated its company. But this conduct does not make Zeal responsible to Atic at a higher standard. Thus, Cottingham & Butler owed Atic the standard duty of care.

 

 

B.

In the insurance context “where the language of an insurance contract unambiguously explains the terms and conditions, no separate formal notification is required to effectuate a policy provision unless the unannounced change misleads an insured.” Marcum v. Rice, 987 S.W.2d 789, 791–92 (Ky. 1999). It is clear from the language of the policy that copper was excluded from coverage. Thus, Cottingham & Butler had no additional duty to provide separate notification of the exclusion beyond the language of the policy, and there was no reason to further explain the policy’s terms because those terms were unambiguous.

 

Despite the absence of a duty to provide additional notice, Cottingham & Butler provided Atic with multiple documents that listed the new policy’s copper exclusion. Atic admits to reading many of the documents in which the exclusion was present but claims that it did not notice it. Despite Atic’s protestations, Cottingham & Butler provided ample additional notice of the policy change prior to the issuance of the new policy, and it did so despite not being required to provide such notice. Even if, as Atic contends, it did not receive a copy of the 2013–14 policy from Cottingham & Butler, it was clear in every document leading up to purchasing that policy that copper was explicitly excluded. And Cottingham & Butler did not know that Atic was hauling copper, since Atic concealed that fact when it applied for insurance coverage, so Zeal had no reason to further advise Atic about the exclusion.

 

 

III.

For the reasons stated above, we affirm the judgment of the district court.

 

All Citations

— Fed.Appx. —-, 2017 WL 2261004

 

 

Footnotes

1

The company is no longer in business.

2

The parties do not dispute the choice-of-law issue, as all relevant events occurred in Kentucky.

 

 

 

 

 

 

UNITED ROAD LOGISTICS LLC, Plaintiff, v. ALPHA TRANSPORTATION GROUP LLC, Defendant.

 

CASE NO. 16-12128

 

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN, SOUTHERN DIVISION

 

2017 U.S. Dist. LEXIS 68802

 

 

May 5, 2017, Decided

May 5, 2017, Filed

 

 

PRIOR HISTORY: United Rd. Logistics, LLC v. JM Transfer, LLC, 2017 U.S. Dist. LEXIS 40894 ( E.D. Mich., Mar. 22, 2017)

 

COUNSEL:  [*1] For United Road Logistics LLC, Plaintiff: Jonathan E. Sriro, Jaffe Raitt Heuer & Weiss, Detroit, MI.

 

For Alpha Transportation Group LLC, Defendant: Wesley S. Chused, Preti Flaherty Beliveau & Pachios LLP, Boston, MA; Dirk H. Beckwith, Foster, Swift, Southfield, MI.

 

JUDGES: Denise Page Hood, Chief United States District Judge.

 

OPINION BY: Denise Page Hood

 

OPINION

 

ORDER DENYING DEFENDANT’S MOTION FOR RECONSIDERATION [#24] AND DENYING DEFENDANT’S MOTION TO CERTIFY INTERLOCUTORY APPEAL AND STAY REMAND PENDING APPEAL [#26]

 

1. BACKGROUND

This matter is now before the Court on Defendant Alpha Transportation Group LLC’s (“Alpha”) Motion for Reconsideration filed on April 4, 2017 (Doc # 24), and Alpha’s Motion to Certify Interlocutory Appeal and Stay Remand Pending Appeal filed on April 6, 2017 (Doc # 26). On March 22, 2017, the Court entered an Order Granting in Part and Denying in Part Defendant’s Motion to Dismiss and Order Remanding Back to Wayne County Circuit Court. (Doc # 22) For the reasons set forth below, the Court denies Alpha’s Motion for Reconsideration and denies Alpha’s Motion to Certify Interlocutory Appeal and Stay Remand Pending Appeal.

 

1. MOTION FOR RECONSIDERATION

 

1. Standard of Review

The Local Rules of the [*2]  Eastern District of Michigan provide that any motion for reconsideration must be filed within 14 days after entry of the judgment or order. E.D. Mich. LR 7.1(h)(1). No response to the motion and no oral argument thereon are permitted unless the Court orders otherwise. Id. at 7.1(h)(2). Alpha’s Motion is timely filed.

Local Rule 7.1 further states:

 

(3) Grounds. Generally, and without restricting the court’s discretion, the court will not grant motions for rehearing or reconsideration that merely present the same issues ruled upon by the court, either expressly or by reasonable implication. The movant must not only demonstrate a palpable defect by which the court and the parties and other persons entitled to be heard on the motion have been misled but also show that correcting the defect will result in a different disposition of the case.

 

 

Id. at 7.1(h)(3). “A ‘palpable defect’ is a defect which is obvious, clear, unmistakable, manifest, or plain.” Fleck v. Titan Tire Corp., 177 F. Supp. 2d 605, 624 (E.D. Mich. 2001). A motion for reconsideration is not a vehicle to rehash old arguments, or to proffer new arguments or evidence that the movant could have brought up earlier. Sault Ste. Marie Tribe v. Engler, 146 F.3d 367, 374 (6th Cir. 1998) (motions under Fed. R. Civ. P. 59(e) “are aimed at re consideration, not initial consideration”) (citing Federal Deposit Ins. Corp. v. World University, Inc., 978 F.2d 10, 16 (1st Cir. 1992)).

 

1. Palpable Defect

Alpha [*3]  argues that the Court made a palpable error when the Court rejected Alpha’s argument that United Road Logistics LLC’s (“URL”) breach of contract claim is preempted by the Carmack Amendment because Alpha, an interstate motor carrier, never executed an express written waiver, pursuant to 49 U.S.C. § 14101(b), of its right to limited liability under the Carmack Amendment.

In its March 22, 2017 Order, this Court expressly considered Alpha’s argument that, in the absence of an express written waiver, the Carmack amendment governed Alpha’s liability, rather than the broker-carrier contract between URL and Alpha. The Court also expressly considered URL’s argument that the express written waiver requirement applied only to shippers and carriers, and not brokers. The Court went on to quote and analyze the express written waiver requirement in the Carmack Amendment, 49 U.S.C. § 14101(b)(1). The Court found that, under the plain terms of the statute, only a shipper and a carrier can enter into an agreement waiving rights under the statute. See Exel, Inc. v. S. Refrigerated Transp., Inc., 807 F.3d 140, 148-49 (6th Cir. 2015). The Court further found that URL’s breach of contract claim is not preempted by the Carmack Amendment because it is a claim for direct contractual indemnity under the terms of a separate broker-carrier contract, and not a claim under the bill of lading.

The Court [*4]  finds that Alpha has not met its burden on a motion for reconsideration, as it has not demonstrated a palpable defect by which the court has been misled. Instead, Alpha reargues the same arguments that this Court already rejected. Alpha cites several cases (which it could have cited earlier) in its Motion for Reconsideration. These cases include general discussions of the Carmack Amendment’s purpose and scope, but Alpha fails to cite any case in which a broker’s claim against a carrier for direct contractual indemnity under the terms of a broker-carrier contract that is entirely separate from the bill of lading was held to be preempted by the Carmack Amendment.1 As the Court discussed in its March 22, 2017 Order, such preemption would not serve the Carmack Amendment’s purpose given that the shipper is not involved, and given that the carrier can easily predict its potential liability when entering into such a broker-carrier contract under the laws of the state in which the contract is made. Alpha’s Motion for Reconsideration is denied.

 

1   In contrast, the Carmack Amendment does provide the shipper’s (or his subrogee’s or assignee’s) exclusive remedy in actions seeking damages for the loss of property shipped in interstate commerce by a carrier under a receipt or bill of landing. See Hoskins v. Bekins Van Lines, 343 F.3d 769, 777 (5th Cir. 2003); Transcorr Nat’l Logistics, LLC v. Chaler Corp., No. 1:08-CV-375-TAB-SEB, 2008 U.S. Dist. LEXIS 104472, 2008 WL 5272895, at *4 (S.D. Ind. Dec. 19, 2008) (noting that the plaintiff broker could not reasonably be the holder of the bill of lading where it did not own the property being shipped and was not suing on behalf of or taking over the claim of its shipper-customer).

 

III. MOTION TO CERTIFY INTERLOCUTORY APPEAL AND STAY REMAND PENDING APPEAL

Alpha argues that the Court should certify an interlocutory [*5]  appeal and stay the remand pending appeal because this Court’s March 22, 2017 Order rejecting Alpha’s Carmack preemption argument involves a controlling question of law as to which there is substantial ground for difference of opinion, and an immediate appeal from the Order may materially advance the ultimate termination of the litigation. See 28 U.S.C. § 1292(b). Alpha intends to appeal the portion of this Court’s March 22, 2017 Order rejecting its Carmack preemption argument. Alpha is concerned that the Sixth Circuit may view the appeal as premature because there is no final judgment. Alpha notes that there will be no final judgment in this Court from which Alpha could appeal because the case has been remanded to state court. Although no Judgment has been issued and this Court has not granted the request for certification of interlocutory appeal, Alpha filed a Notice of Appeal on April 20, 2017. (Doc # 27)

The mere fact that a district court may have erred, not matter how obvious or clear the error, does not permit appellate review absent a congressional grant of authority. DaWalt v. Purdue Pharma, L.P., 397 F.3d 392, 396-97 (6th Cir. 2005). “Where an order of remand is appealed, 28 U.S.C. § 1447 . . . presents a seemingly ironclad bar to review–no matter how the appeal is fashioned.” [*6]  Zuniga v. Blue Cross & Blue Shield of Mich., 52 F.3d 1395, 1399 (6th Cir. 1995) (internal quotations omitted). Section 1447(d) provides that “[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court from which it was removed pursuant to section 1442 or 1443 of this title shall be reviewable by appeal or otherwise.” 28 U.S.C. § 1447(d). Section 1442, related to federal officers and agencies, and Section 1443, related to civil rights cases, do not apply in the case at bar. “Section 1447(d) was enacted so that, once remanded, state court actions could proceed without delay regardless of the correctness of federal courts’ jurisdictional decisions.” Zuniga, 52 F.3d at 1400 (internal quotations omitted).

However, the Supreme Court held long ago that Section 1447(d) precludes review only of remand orders issued pursuant to Section 1447(c). Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 344, 96 S. Ct. 584, 46 L. Ed. 2d 542 (1976). Section 1447(c) states: “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). If a district court remands a case based on the grounds listed in 28 U.S.C. § 1447(c), such a remand order is not reviewable. Zuniga, 52 F.3d at 1400. “This is true even if the district court’s decision to remand is based on erroneous principles or analysis.” Id. (internal quotations omitted).

“An order of remand on jurisdictional grounds is neither a final [*7]  judgment for purposes of 28 U.S.C. § 1291 nor a ruling falling within the “collateral order” exception to that rule.” Baldridge v. Kentucky-Ohio Transp., Inc., 983 F.2d 1341, 1343 (6th Cir. 1993). An order of remand based on a determination that there is no complete preemption is jurisdictional and unreviewable. Id. at 1346. “A remand for lack of complete preemption, that is, a remand for lack of subject matter jurisdiction in the district court, does not foreclose state-court litigation on the preemption defense.” Id. at 1347 (emphasis in original).

In its March 22, 2017 Order, this Court expressly concluded that it lacked subject matter jurisdiction. (Doc # 22, Pg ID 284) The Court’s preemption inquiry in this case was necessarily related to the question of jurisdiction, and the “heart” of the Order was jurisdictional. See Baldridge, 983 F.2d at 1349. Accordingly, the Court finds that its March 22, 2017 Order falls within Section 1447(c) and is unreviewable under Section 1447(d), even if this Court’s decision to remand was based on erroneous principles or analysis. See id. at 1350. As the Court interprets its March 22, 2017 Order as purely jurisdictional, Alpha may raise the merits of any preemption defense in state court. See id. Alpha’s Motion to Certify Interlocutory Appeal and Stay Remand Pending Appeal is denied.

 

1. CONCLUSION

For the reasons set forth above, [*8]

IT IS HEREBY ORDERED that Defendant Alpha Transportation Group LLC’s Motion for Reconsideration (Doc # 24) is DENIED.

IT IS FURTHER ORDERED that Defendant Alpha Transportation Group LLC’s Motion to Certify Interlocutory Appeal and Stay Remand Pending Appeal (Doc # 26) is DENIED.

/s/ Denise Page Hood

Denise Page Hood

Chief Judge, United States District Court