Hartford Fire Ins. Co. v. 3DL Design Incorporation.
United States District Court for the District of Arizona
May 25, 2018, Decided; May 25, 2018, Filed
No. CV-17-02937-PHX-GMS

Reporter
2018 U.S. Dist. LEXIS 87849 *
Hartford Fire Insurance Company, Plaintiff, v. 3DL Design Incorporation, et al., Defendants.AIT Worldwide Logistics, Inc., Cross-Claimant, v. 3DL Design, Inc., Cross-Defendant.AIT Worldwide Logistics, Inc., Third-Party Plaintiff, v. American Linehaul Corporation, et al., Third-Party Defendants.

WO

ORDER
Pending before the Court is the Motion to Dismiss of Defendant AIT Worldwide Logistics, Inc. (Doc. 14) and the Rule 56(d) Motion of Plaintiff Hartford Fire Insurance Company (Doc. 29). For the following reasons, the Court grants in part and denies in part the Motion to Dismiss. The Court dismisses the Rule 56(d) Motion as moot.

BACKGROUND
Stainless Steel Brakes Corporation (“SSBC”) produces custom after-market breaks and often attends trade shows to display its goods to potential customers. At these trade shows, SSBC uses a custom-made display booth. In November 2016, SSBC hired 3DL Design, Inc. (“3DL”) to transport a display booth from Wisconsin to Nevada. 3DL was also hired to transport the booth from Nevada to New York, at the end of the trade show. For this transport, 3DL hired AIT Worldwide Logistics, Inc. (“AIT’) to assist with packing and transit. On November 18, 2016, the AIT trailer was involved in a fire in Navajo, Arizona, and all of SSCB’s cargo was [*3] destroyed. AIT issued a settlement check to 3DL in the amount of $2,548.50. AIT calculated this using a rate of $.50 per pound, as specified in AIT’s Contract of Carriage. 3DL accepted and cashed the check.
Hartford Fire Insurance Company (“Hartford”) is SSBC’s insurer, and according to SSBC’s insurance policy, Hartford would be subrogated to any rights that SSBC might have against a third party responsible for losses. Hartford filed suit alleging breach of contract, negligence, and breach of transportation contract (the Carmack Amendment) against Defendants 3DL and AIT. (Doc. 1). Defendant AIT moves to dismiss the Complaint, arguing that the check issued to 3DL was an accord and satisfaction to SSBC’s agent, 3DL. (Doc. 14). Hartford construes AIT’s Motion to Dismiss as a Motion for Summary Judgment, and accordingly, requests relief under Fed. R. Civ. P. 56(d) to allow more time for discovery before the Court rules on dispositive motions. (Doc. 29).

DISCUSSION

I. Legal Standard
“A Rule 12(b)(6) motion tests the legal sufficiency of a claim.” Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). “In deciding such a motion, all material allegations of the complaint are accepted as true, as well as all reasonable inferences to be drawn from them.” Id. However, “the tenet that a court must [*4] accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009).
To survive dismissal for failure to state a claim pursuant to Rule 12(b)(6), a complaint must contain more than “labels and conclusions” or a “formulaic recitation of the elements of a cause of action”; it must contain factual allegations sufficient to “raise a right to relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). A plaintiff must allege sufficient facts to state a claim to relief that is plausible on its face. Iqbal, 556 U.S. at 678. “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.” Id. “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.” Id.

II. Analysis
AIT asserts that it tendered a settlement to 3DL, which 3DL accepted, constituting an accord and satisfaction of any recovery owed based on the destruction of SSBC’s cargo in transit. According to AIT, 3DL was authorized to accept this settlement on behalf of SSBC because 3DL was an agent of SSBC. In Arizona, “[a]gency is the fiduciary [*5] relationship that arises when one person (a ‘principal’) manifests assent to another person (an ‘agent’) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents so to act.” Goodman v. Physical Resource Engineering, Inc., 229 Ariz. 25, 270 P.3d 852, 856 (Ariz. Ct. App. 2011) (quoting Restatement (Third) of Agency § 1.01). There are two forms of agency: actual and apparent. Actual authority “may be proved by direct evidence of express contract of agency between the principal and agent or by proof of facts implying such contract or the ratification thereof.” Ruesga v. Kindred Nursing Centers, L.L.C., 215 Ariz. 589, 161 P.3d 1253, 1261 (Ariz. Ct. App. 2007) (quoting Corral v. Fiduciary Bankers Life Ins. Co., 129 Ariz. 323, 630 P.2d 1055, 1058 (Ariz. Ct. App. 1981)). Apparent agency exists when “the principal has intentionally or inadvertently induced third persons to believe that such a person was its agent although no actual or express authority was conferred on him as an agent.” Curran v. Industrial Commission, 156 Ariz. 434, 752 P.2d 523, 526 (Ariz. Ct. App. 1988) (quoting Canyon State Canners v. Hooks, 74 Ariz. 70, 243 P.2d 1023, 1025 (Ariz. 1952)). An agent “may only bind a principal within the scope of his authority, actual or apparent.” Lois Grunow Memorial Clinic v. Davis, 49 Ariz. 277, 66 P.2d 238, 241 (Ariz. 1937). The “mere fact that one is found to be a general agent justifies neither the court nor jury in guessing that given acts are within the scope of his authority.” Brutinel v. Nygren, 17 Ariz. 491, 154 P. 1042, 1046 (Ariz. 1916). When a third party deals with a known agent, “he must exercise due caution in ascertaining whether the agent is acting within the scope of his authority if he wishes to bind the principal.” [*6] Lois Grunow Memorial Clinic, 66 P.2d at 242. Therefore, the “third party bears the burden of showing that its reliance on the agent’s apparent authority was reasonable.” Best Choice Fund, LLC v. Low & Childers, P.C., 228 Ariz. 502, 269 P.3d 678, 688 (Ariz. Ct. App. 2011). Therefore, “whether agency exists is [generally] a question of fact.” Goodman, 270 P.3d at 856.
There is minimal discussion of the scope of 3DL’s authority (whether actual or apparent) in the Complaint. The Complaint alleges that 3DL was required to “hire, retain[ ], recommend, and/or entrust the Cargo to carriers and/or agents that were reputable, reliable, safe, [and] knowledgeable[,]” to “ensure that the motor carrier it retained and/or recommended contained all the appropriate and necessary information about the Cargo[,]” and to “ensure that its client, SSBC, was properly protected in the event of damage to the Cargo during their transport.” (Doc. 1, ¶¶ 32-34). AIT argues that 3DL had authority to enter into contracts for shipment of SSBC’s cargo, and so 3DL necessarily had authority to resolve subsequent cargo claims. This assertion as to the scope of 3DL’s authority requires an analysis of facts outside of the Complaint. The question of whether AIT exercised due caution in ascertaining whether 3DL had authority to accept a settlement on behalf of SSBC is also a question of [*7] fact that cannot be determined based on the pleadings alone. Because the issue of SSBC and 3DL’s principal-agent relationship is a factual question that requires information outside of the pleadings to answer, the Court cannot grant AIT’s Motion to Dismiss at this stage.
In the context of a maritime transportation dispute, the Supreme Court held that “[w]hen an intermediary contracts with a carrier to transport goods, the cargo owner’s recovery against the carrier is limited by the liability limitation to which the intermediary and carrier agreed.” Norfolk Southern Railway Co. v. Kirby, 543 U.S. 14, 33, 125 S. Ct. 385, 160 L. Ed. 2d 283 (2004). Therefore, “intermediaries, entrusted with goods, are ‘agents’ only in their ability to contract for liability limitations with carriers downstream.” Id. at 34. Kirby was based on maritime law, but other circuits have extended the rule beyond just maritime transportation. The Eleventh Circuit, for example, concluded that “Kirby’s teaching is not limited to maritime law. Kirby expressly derived its holding from . . . a non-maritime case. Furthermore, the principles of fairness and efficiency animating the Kirby rule are not unique to the maritime context. . . . [C]ontracts for carriage on land as well as sea may involve extended chains of parties [*8] and agreements. Thus the benefits of allowing carriers to rely on limitations of liability negotiated by intermediaries are equally as great here as under maritime law.” Werner Enterprises, Inc. v. Westwind Maritime Intern., Inc., 554 F.3d 1319, 1324-25 (11th Cir. 2009). While 3DL, as the intermediary, may have had the authority to contract for limited liability with the downstream carrier, AIT, it does not necessarily follow that 3DL had the authority to accept settlement with AIT on behalf of SSBC. This question cannot be resolved based solely on the pleadings.
Hartford does, however, agree that the state law negligence claims are not appropriate. Both AIT and Hartford agree that the Carmack Amendment, 49 U.S.C. § 14706, governs the dispute and preempts state law claims. See Hughes Aircraft Co. v. North American Van Lines, Inc., 970 F.2d 609, 613 (9th Cir. 1992) (holding the Carmack Amendment “established a uniform national liability policy for interstate carriers” and preempts “any state common law action” against a common carrier or a contract carrier). The Court grants the motion to dismiss Count Two as to Defendant AIT.1

CONCLUSION
Defendant AIT’s Motion to Dismiss is based on its argument that a settlement payment to Defendant 3DL constituted proper accord and satisfaction that resolved all claims against AIT. Without factual development, the Court cannot determine whether 3DL was entitled to act as SSBC’s agent [*9] in accepting a settlement from AIT. Because AIT and Hartford agree that the federal Carmack Amendment controls the case and preempts state law, the Court grants AIT’s Motion to Dismiss Count Two.
IT IS THEREFORE ORDERED that the Motion to Dismiss of Defendant AIT (Doc. 14) is granted in part and denied in part.
IT IS FURTHER ORDERED that the Rule 56(d) Motion (Doc. 29) of Plaintiff Hartford is dismissed as moot.
Dated this 25th day of May, 2018.
/s/ G. Murray Snow
Honorable G. Murray Snow
United States District Judge

2018 WL 2248425

United States District Court, M.D. North Carolina.
CASIMIRO GRACIANO, Plaintiff,
v.
BLUE SKY LOGISTICS, LLC, and MICHAEL WALKER DANIELS, Defendants.
1:17CV889
|
Filed 05/16/2018

MEMORANDUM OPINION AND ORDER
*1 Presently before this court is a Motion to Strike filed by Defendants Blue Sky Logistics, LLC, and Michael Walker Daniels (“Defendants”). (Doc. 8.) Defendants have filed a corrected brief in support of their motion, (Doc. 10), Plaintiff Casimiro Graciano (“Plaintiff”) has responded in opposition, (Doc. 11), and Defendants have replied, (Doc. 12). This matter is ripe for resolution, and for the reasons stated herein, this court will deny Defendants’ Motion to Strike.

I. FACTUAL BACKGROUND
The following facts are recited in the light most favorable to Plaintiff. On or about March 1, 2016, Plaintiff was operating a tractor trailer in Surry County, North Carolina. (Complaint (“Compl.”) (Doc. 1) ¶¶ 42, 44.) On the same date, Defendant Michael Walker Daniels (“Defendant Daniels”) was also operating a tractor trailer in Surry County, North Carolina as an employee of Defendant Blue Sky Logistics, LLC (“Defendant Blue Sky”). (Id. ¶¶ 42-43.) The tractor trailer driven by Defendant Daniels crashed into the tractor trailer driven by Plaintiff, causing injuries to Plaintiff. (Id. ¶¶ 46-47.) Plaintiff alleges that he properly came to a stop for traffic while Defendant Daniels failed to reduce his speed, causing the collision. (Id. ¶¶ 45-46.)

Plaintiff’s Complaint details necessary requirements that Defendant Blue Sky met in order to become a licensed motor carrier. (Id. ¶¶ 8-10.) Plaintiff then extensively outlines prior instances of Defendant Blue Sky employees being cited for violations of Federal Motor Carrier Safety Regulations. (Id. ¶¶ 11-40.) After describing the circumstances of the collision at issue, Plaintiff alleges that “[d]ue to the circumstances in the collision, combined with Defendant Blue Sky Logistics, LLC’s history of hours-of-service violation, upon information and belief Defendant Daniels was fatigued and operating in violation of the hours of service regulation set out in the Federal Motor Carrier Safety Regulations.” (Id. ¶ 48.) Plaintiff further alleges that “[d]ue to Defendant Blue Sky Logistics LLC’s historic pattern of violations of the Federal Motor Carrier Safety Regulations and state traffic laws, upon information and belief Blue Sky Logistics had an inadequate driver qualification, training, and monitoring process.” (Id. ¶ 49.)

Plaintiff asserts, among other things, a cause of action against Defendants for negligence, asserting that Defendant Daniels’s actions are imputed to Defendant Blue Sky under the doctrine of respondeat superior. (Id. ¶¶ 52-62.) Plaintiff seeks, jointly and severally from the Defendants, compensatory damages, punitive damages, prejudgment interest, postjudgment interest, and court costs. (Id. at 8.)1

II. ANALYSIS
A. Jurisdiction
While jurisdiction has not been challenged in the existing motions, the existence of jurisdiction is a “question the court is bound to ask and answer for itself[.]” Mansfield, C. & L.M. Ry. Co. v. Swan, 111 U.S. 379, 382 (1884). This case finds jurisdiction in this court pursuant to 28 U.S.C. § 1332. Plaintiff is a citizen of Texas while Defendant Blue Sky is a Utah corporation with Utah headquarters. Defendant Daniels is a citizen of Nevada. The amount in controversy exceeds $75,000. (Compl. (Doc. 1) ¶¶ 1-4.)

B. Motion to Strike
*2 Defendants, pursuant to Federal Rule of Civil Procedure 12(f), seek to strike paragraphs eight through forty, forty-eight, and forty-nine of the Complaint.2 (Defs.’ Br. in Supp. of their Mot. to Strike (“Defs.’ Br.”) (Doc. 10) at 1.) These portions of the Complaint largely deal with alleged prior citations issued to Defendant Blue Sky’s employees. (See Compl. (Doc. 1) ¶¶ 8-40, 48, 49.) Defendants contend that these paragraphs “assert inadmissible subject matter which will unnecessarily broaden the scope and increase the expense of discovery and this litigation as a whole, distract from the issues at bar, and unfairly and unjustly smear Defendants.” (Defs.’ Br. (Doc. 10) at 1.) Specifically, Defendant contend that the paragraphs at issue are purported “prior bad acts” which are either unrelated to the conduct at issue, (¶¶ 8-30), or, if related, are used to suggest that Defendants acted in conformity therewith during the time at issue, (¶¶ 8-30, 48, 49). (Id. at 2.)

Federal Rule of Civil Procedure 12(f) provides: “The court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). “Such motions can prevent the litigation of ‘unnecessary issues,’ and expedite the proceedings.” Staton v. N. State Acceptance, LLC, No. 1:13-CV-277, 2013 WL 3910153, at *2 (M.D.N.C. July 29, 2013) (citations omitted). Courts have broad discretion in disposing of motions to strike, but “Rule 12(f) motions are generally viewed with disfavor ‘because striking a portion of a pleading is a drastic remedy and because it is often sought by the movant simply as a dilatory tactic.’ ” Waste Mgmt. Holdings, Inc. v. Gilmore, 252 F.3d 316, 347 (4th Cir. 2001) (citing 5A A. Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1380, 647 (2d ed. 1990)); see also Simaan, Inc. v. BP Prods. N. Am., Inc., 395 F. Supp. 2d 271, 278 (M.D.N.C. 2005). “When reviewing a motion to strike, a court must view the pleading under attack in a light most favorable to the pleader.” Guessford v. Pa. Nat’l Mut. Cas. Ins. Co., 918 F. Supp. 2d 453, 465 (M.D.N.C. 2013) (citing Racick v. Dominion Law Assocs., 270 F.R.D. 228, 232 (E.D.N.C. 2010)).

1. Motion to Strike Paragraphs Eight through Thirty as Irrelevant
With respect to Defendants’ contention that paragraphs eight through thirty of the Complaint are irrelevant, Plaintiff contends that the paragraphs in question
set[ ] out prior actions of Defendant Blue Sky and its employees in order to support, give context and background to, Plaintiff’s claims against Defendant Blue Sky specifically for its own negligent actions. The facts identified in the Motion to Strike support the third group of claims – that Defendant Blue Sky was negligent in the performance of its qualification and training of drivers. Repeated violations further show that Defendant knew of its inadequate programs but failed to take action to remedy them. Plaintiff is required to plead facts in support of each claim and these facts offer support for the third group of claims alleged in the Complaint.
(Pl.’s Resp. and Br. in Opp’n to Defs.’ Mot. to Strike (“Pl.’s Resp.”) (Doc. 11) at 2.) Defendants, in their reply, contend that Plaintiff has only asserted a claim against Defendant Blue Sky by way of respondeat superior liability and has not stated a claim directly against Defendant Blue Sky. (Defs.’ Reply in Supp. of their Mot. to Strike (“Defs.’ Reply”) (Doc. 12) at 1-2.) As such, Defendants contend that the paragraphs in question are irrelevant as to what is actually alleged in the Complaint. (Id.)

“[A] motion to strike on the basis of irrelevancy should only be granted when it is clear that the material in question can have no possible bearing upon the subject matter of the litigation and the material may prejudice the other party.” Simaan, 395 F. Supp. 2d at 278 (citation omitted). In the present case, Plaintiff has alleged that his injuries were proximately caused by “Defendants’ negligent and wanton conduct as complained of herein.” (Compl. (Doc. 1) ¶ 50.) In other words, Plaintiff has alleged that the conduct of both Defendant Daniels and Defendant Blue Sky caused his injuries. Liberally construing the Complaint, this court does not agree with Defendants that the Complaint exclusively alleges liability against Defendant Blue Sky on a respondeat superior theory. (See Defs.’ Reply (Doc. 12) at 2-3.) To the contrary, Plaintiff has alleged that Defendant Blue Sky “had an inadequate driver qualification, training, and monitoring process.” (Compl. (Doc. 1) ¶ 49.) Consequently, this court cannot conclude, at this stage in the proceedings, that “the material in question [has] no possible bearing upon the subject matter of the litigation[,]” Simaan, 395 F. Supp. 2d at 278, and will accordingly deny Defendants’ Motion to Strike paragraphs eight through thirty on this basis.

2. Motion to Strike Paragraphs Eight through Thirty, Forty-Eight, and Forty-Nine as Inadmissible
*3 With respect to Defendants’ contention that some paragraphs allege prior bad acts suggestive that Defendants acted in conformity therewith during the instances at issue in violation of Federal Rule of Evidence 404(b)(1), (Defs.’ Br. (Doc. 10) at 2), Plaintiff first contends that the admissibility of said acts are outside of the scope of the Motion to Strike, (Pl.’s Resp. (Doc. 11) at 3 n.1). Nonetheless, Plaintiff further contends that evidence of said acts will be admissible as:
The plethora of similar prior violations shows that the collective safety programs instituted by Defendant Blue Sky generally fell below the standard of care for the industry. Such prior acts are further admissible for the purpose of showing knowledge on the part of Defendant Blue Sky of the industry standard and knowledge of the inadequacy of its programs pertaining to qualification, training and supervision of its over-the-road truck drivers.
(Id.)

At this stage in the proceedings, this court is not equipped to conclusively resolve competing arguments as to the admissibility of evidence which would support the allegations in question.3 As such, because motions to strike are generally disfavored, Gilmore, 252 F.3d at 347, and because pleadings at this juncture are reviewed in the light most favorable to the plaintiff, Guessford, 918 F. Supp. 2d at 465, this court will deny Defendant’s Motion to Strike paragraphs eight through thirty, forty-eight, and forty-nine on this basis.

III. CONCLUSION
For the reasons stated herein, IT IS HEREBY ORDERED that Defendants’ Motion to Strike, (Doc. 8), is DENIED.

All Citations
Slip Copy, 2018 WL 2248425

Footnotes

1
All citations in this Memorandum Opinion and Order to documents filed with the court refer to the page numbers located at the bottom right-hand corner of the documents as they appear on CM/ECF.

2
While Defendants’ motion requests to strike paragraphs thirty-one through forty, (Defs.’ Mot. to Strike (Doc. 8) at 1), their supporting brief does not identify a specific basis for striking these paragraphs. Accordingly, this court declines to strike paragraphs thirty-one through forty.

3
This court notes that a number of courts have recognized that it is “improper to raise evidentiary questions, such as those concerning admissibility . . . in Rule 12(f) motions.” Carney v. Town of Weare, Civil No. 15-cv-291-LM, 2016 WL 320128, at *3 (D.N.H. Jan. 26, 2016) (citations omitted); see, e.g., Gallagher v. Funeral Source One Supply & Equip. Co., Civil No. 14-cv-115-PB, 2015 WL 773737, at *3 n.2 (D.N.H. Feb. 24, 2015) (“[T]he majority of courts that have addressed the question [conclude] that Rule 12(f) does not permit allegations in a complaint or counterclaim to be stricken solely because they are based on potentially inadmissible evidence.”); Tolar v. Cummings, No. 2:13-cv-00132-JEO, 2014 WL 3974671, at *6 (N.D. Ala. Aug. 11, 2014) (“[C]ourts generally hesitate to strike allegations in a pleading based on arguments at the threshold of the action that evidence of pled circumstances would not be admissible at trial . . . .”); Mobile Conversions, Inc. v. Allegheny Ford Truck Sales, No. 2:12-cv-1485, 2013 WL 1946183, at *6-7 (W.D. Pa. May 9, 2013); TriQuint Semiconductor, Inc. v. Avago Techs. Ltd., No. CV-09-01531-PHX-JAT, 2010 WL 3034880, at *4 (D. Ariz. Aug. 3, 2010); Steak Umm Co. v. Steak ‘Em Up, Inc., Civil Action No. 09-2857, 2009 WL 3540786, at *3 (E.D. Pa. Oct. 29, 2009); PTR, Inc. v. Forsythe Racing, Inc., No. 08 C 5517, 2009 WL 1606970, at *4 (N.D. Ill. June 9, 2009); Eppenger-Pollard v. Lock Joint Tube, Inc., No. 3:05-CV-116RM, 2005 WL 2216900, at *2 (N.D. Ind. Sept. 9, 2005).