2018 WL 2387930

United States District Court, D. Arizona.
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.
No. CV-17-02937-PHX-GMS
|
Signed 05/25/2018
Attorneys and Law Firms
Benjamin John Branson, Christopher J. Brennan, Matthew Edward Delinko, Bauman Loewe Witt & Maxwell PLLC, Scottsdale, AZ, Daniel J. O’Connor, Karen Johnson Stillwell, Terrence E. Harrison, O’Connor & Campbell PC, Tempe, AZ, Angela L. Cooner, Julie E. Maurer, Lewis Brisbois Bisgaard & Smith LLP, Evan S. Goldstein, Hesam Alagha, Herman Goldstein, Phoenix, AZ, Wesley S. Chused, Preti Flaherty Beliveau & Pachios LLP, Boston, MA, for Plaintiff/Cross-Defendant/Third-Party Defendants.
Michael William Halvorson, Jones Skelton & Hochuli PLC, Angela L. Cooner, Julie E. Maurer, Lewis Brisbois Bisgaard & Smith LLP, Phoenix, AZ, Daniel J. O’Connor, Karen Johnson Stillwell, Terrence E. Harrison, O’Connor & Campbell PC, Tempe, AZ, for Defendants/Cross-Claimant/Third-Party Plaintiff.

ORDER
Honorable G. Murray Snow, United States District Judge
*1 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 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 accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (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 (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
*2 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 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., 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., 161 P.3d 1253, 1261 (Ariz. Ct. App. 2007) (quoting Corral v. Fiduciary Bankers Life Ins. Co., 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, 752 P.2d 523, 526 (Ariz. Ct. App. 1988) (quoting Canyon State Canners v. Hooks, 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, 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, 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.” 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., 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 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 (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 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.

*3 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 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.

All Citations
Slip Copy, 2018 WL 2387930

Footnotes

1
Defendant 3DL has made no such motion to dismiss state law negligence claims at this time.

2018 WL 2317532

NOT FOR PUBLICATION
United States District Court, D. New Jersey.
ALFA ADHESIVES d/b/a Simalfa, Plaintiff,
v.
A. DUIE PYLE, INC., Defendant.
Civil Action No.: 18–3689 (JLL)
|
Signed 05/22/2018
Attorneys and Law Firms
Lisa K. Minichini, McElroy Deutsch Mulvaney & Carpenter LLP, Newark, NJ, Anthony Michael Carlino, McElroy, Deutsch & Mulvaney, Esqs, Ridgewood, NJ, for Plaintiff.
Kevin M. Capuzzi, Benesch Friedlander Coplan & Aronoff LLP, Hackensack, NJ, for Defendant.

OPINION
JOSE L. LINARES, Chief Judge
*1 This matter comes before the Court by way of Defendant A. Duie Pyle Inc.’s Motion to Dismiss Plaintiff Alfa Adhesive d/b/a Simalfa’s Complaint and Compel Arbitration pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 6). Plaintiff has submitted Opposition (ECF No. 8), which Defendant has replied to. (ECF No. 9). The Court decides this matter without oral argument pursuant to Federal Rule of Civil Procedure 78. For the reasons set forth below, the Court grants the Motion to Dismiss and Compel Arbitration.

I. BACKGROUND1
The detailed facts underlying this action are not necessary to the disposition of the current application before this Court. As such, the Court sets forth only the relevant facts. Plaintiff is a New Jersey corporation that “is engaged in the business of adhesive products and services.” (Compl. ¶ 1). Defendant is a Pennsylvania corporation that “is engaged in the business of shipping, logistics, and distribution services.” (Compl. ¶ 2).

Plaintiff manufactures a specific adhesive that is “extremely temperature sensitive” and becomes unsalvageable if its temperature goes below 32 degrees Fahrenheit. (Compl. ¶¶ 4–7). At some unknown point, Plaintiff contracted Defendant to ship this specific adhesive. (Compl. ¶ 5). Additionally, Plaintiff advised Defendant that the product was temperature sensitive and needed to be shipped in heated trailers in order to avoid freezing. (Compl. ¶ 10). Defendant required Plaintiff to pay an additional fee for this special shipping accommodation. (Compl. ¶ 11).

This action revolves around three shipments of Plaintiff’s adhesive that were allegedly improperly shipped and/or handled while in transit to Plaintiffs customers. For example, in early January of 2016, Plaintiff shipped the adhesive to one of its customers through Defendant’s shipping service. (Compl. ¶ 12). During the course of this shipment, the temperature dropped below the aforementioned critical temperature. (Compl. ¶ 16). As such, Plaintiff’s adhesive was damaged requiring Plaintiff to send another batch to its customer and submit a claim to Defendant. (Compl. ¶¶ 18–21). Plaintiff alleges two additional, and nearly identical, incidents that required Plaintiff to replace the adhesive and submit claims to Defendant. (Compl. ¶¶ 22–42).

According to Plaintiff, Defendant has not responded to its demands for reimbursement for the ruined shipments. (Compl. ¶ 45). Hence, Plaintiff brought this one count complaint seeking damages pursuant to the Carmack Amendment, 49 U.S.C. § 14706. (Compl. ¶¶ 46–60).

II. LEGAL STANDARD
To withstand a motion to dismiss for failure to state a claim, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007) ). “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 (citing Twombly, 550 U.S. at 556). “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.

*2 To determine the sufficiency of a complaint under Twombly and Iqbal in the Third Circuit, the court must take three steps: first, the court must take note of the elements a plaintiff must plead to state a claim; second, the court should identify allegations that, because they are no more than conclusions, are not entitled to the assumption of truth; finally, where there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement for relief. See Connelly v. Lane Constr. Corp., 809 F.3d 780, 787 (3d Cir. 2016) (citations omitted). “In deciding a Rule 12(b)(6) motion, a court must consider only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant’s claims are based upon these documents.” Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010).

III. ANALYSIS
Generally, an agreement to arbitrate a dispute “is a matter of contract and a party cannot be required to submit to arbitration any dispute which he has not agreed so to submit.” E.M. Diagnostic Sys., Inc. v. Local 169, Int’l Bhd of Teamsters, Chauffeurs, Warehousemen & Helpers of Am., 812 F.2d 91, 94 (3d Cir. 1987) (quoting Steelworkers v. Warrior & Gulf Navigation Co., 363 U.S. 574, 582 (1960) ). The Federal Arbitration Act (“FAA”) applies to arbitration clauses contained in contracts involving matters of interstate commerce. See 9 U.S.C. § 2; Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24 (1983). When a party, whose claims are subject to the FAA, refuses to arbitrate same the district court must decipher whether the claims are arbitrable. Medtronic Ave, Inc. v. Advanced Cardiovascular Sys., Inc., 247 F.3d 44, 54 (3d Cir. 2001) (citing AT&T Tech., Inc. v. Commc’n. Workers of Am., 475 U.S. 643, 649 (1986) ). “In the absence of any express provision excluding a particular grievance from arbitration, … only the most forceful evidence of a purpose to exclude the claim from arbitration can prevail.” AT&T Tech., 475 U.S. at 654 (quotations omitted); see Par–Knit Mills, Inc. v. Stockbridge Fabrics Co., 636 F.2d 51, 54 (3d Cir. 1980) (“Before a party to a lawsuit can be ordered to arbitrate and thus be deprived of a day in court, there should be an express, unequivocal agreement to that effect.”).

“[F]ederal policy favors arbitration and thus a court resolves doubts about the scope of an arbitration agreement in favor of arbitration.” Medtronic, 247 F.3d at 55 (citing Moses H. Cone, 460 U.S. at 24–25); Zimmerman, 783 F. Supp. at 868. The presumption in favor of arbitration guides district courts to refrain from denying a motion to compel arbitration absent certainty that the claims do not fall within the scope of an arbitration clause. See Medtronic, 247 F.3d at 55; Mutual Ben. Life Ins., Co., v. Zimmerman, 783 F. Supp. 853, 869 (D.N.J. 1992) (“There is a presumption of arbitrability in the sense that an order to arbitrate the particular grievance should not be denied unless it may be said with positive assurance that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.”) (internal citations and quotations omitted). However, “[i]f there is doubt as to whether such an agreement [to arbitrate] exists, the matter, upon a proper and timely demand, should be submitted to a jury.” Par–Knit, 636 F.2d at 54. In considering a motion to compel arbitration, a court must engage in a two-step analysis: it must determine first whether there is a valid agreement to arbitrate and, if so, whether the specific “dispute falls within the scope of that agreement.” See Century Indem. Co. v. Certain Underwriters at Lloyd’s, 584 F.3d 513, 523 (3d Cir. 2009) (emphasis added); Salvadori v. Option One Mtg. Corp., 420 F. Supp. 2d 349, 356 (D.N.J. 2006).

*3 Here, both parties agree that Plaintiff’s Motor Freight Tariff (“Tariff”) governs their contractual relationship. (ECF No. 6–1 (“Def. Mov. Br.”) at 3; ECF No. 8 (“Pl. Opp. Br.”) at 3–4). Additionally, neither party disputes the fact that the Tariff contains an arbitration clause and states, in relevant part, the following: “In handling loss and damage claims, any claim disputed by either [Defendant] or [Plaintiff] will be submitted to the Transportation Arbitration Board, National Motor Freight Council … for disposition.” (Def. Mov. Br. at 3). As such, the Court finds that a valid arbitration agreement exists between the parties. Century Indent., 584 F.3d at 523). Thus, the only dispute between the parties, and the only issue for this Court to resolve on this application, is whether this arbitration clause encompasses claims under the Carmack Amendment. (See generally Def. Mov. Br.; Pl. Mov. Br.).

Defendant argues that the unambiguous language of the Tariff requires this claim to be submitted to binding arbitration. (Def. Mov. Br. at 3). Plaintiff argues that the agreement between the parties cannot require Plaintiff to arbitrate its claims because the Carmack Amendment mandates that a party waiving its right under same must do so explicitly and in writing, but the Tariff generally refers to arbitration without mentioning the Carmack Amendment. (Pl. Opp. Br. at 3–4). The Court disagrees with Plaintiff.

Plaintiff is correct in its assertion that Section 14101(b)(1) of the Carmack Amendment requires an express, written waiver of its rights under the Amendment. (Pl. Opp. Br. at 3) (quoting 49 U.S.C. § 14101(b)(1) ). However, as Defendant correctly explains, Courts in this Circuit, along with New Jersey state courts, have held that no specific “form of words” is necessary to waive a statutory right and have the claim submitted to arbitration. See, e.g., Nooman v. Comcast Corp., 2017 U.S. LEXIS 175549, at *21 (D.N.J. Oct. 23, 2017) (citing Atalese v. U.S. Legal Servs. Grp., L.P., 2019 N.J. 430, 444–46 (2014) (finding that “[n]o particular form of words is necessary to accomplish a clear and unambiguous waiver of rights.”); JPMorgan Chase & Co. v. Custer, 2016 U.S. Dist. LEXIS 31595, at *15 (D.N.J. Mar. 10, 2016) (citing Altese, supra), cert. denied, 135 S. Ct. 2804 (2015); see also Moule v. UPS Co., 2016 U.S. Dist. LEXIS 88270, at *34 (E.D. Cal. July 7, 2016) (finding “that because the Carmack Amendment governs all disputes related to the shipment of goods” requiring an arbitration clause to “reference the Carmack Amendment would be redundant and would cause confusion rather than provide clarity.”). Accordingly, claims covered by the Carmack Amendment are arbitable even if the arbitration clause does not explicitly reference the Carmack Amendment, so long as the arbitration clause is in writing and unequivocal.

In light of the foregoing, the Court must dismiss Plaintiff’s Complaint and compel the parties to resolve this dispute by way of arbitration. This is because there is no dispute that the parties entered into a valid agreement and that said agreement contained a binding arbitration clause. Moreover, while the arbitration clause does not specifically reference the Carmack Amendment, said clause explicitly states that any and all claims arising out of the contractual relationship must be arbitrated. Plaintiff’s claims stem directly from the alleged improper shipping of its adhesive pursuant to said contract. As such, this action may only be resolved in a manner consistent with the binding arbitration clause.

IV. CONCLUSION
For the aforementioned reasons, Defendant’s Motion to Dismiss is granted. An appropriate Order accompanies this Opinion.

All Citations
Slip Copy, 2018 WL 2317532

Footnotes

1
This background is derived from Plaintiff’s Complaint (ECF No. 1 (“Compl.”) ), which the Court must accept as true at this stage of the proceedings. See Alston v. Countrywide Fin. Corp., 585 F.3d 753, 758 (3d Cir. 2009).