Bits & Pieces

Poston v. Velox Transp., LLC

MICHAEL POSTON and JOANNA POSTON, individually and as guardian of Michael Poston, Plaintiffs,

VELOX TRANSPORT SOLUTIONS, LLC, JULIO SANTOS, CES HOSPITALITY, ALMO DISTRIBUTING, and DOES 1-15, Defendants,

ALMO DISTRIBUTING PENNSYLVANIA, INC., Third-Party Plaintiff,

UBER FREIGHT LLC, Third-Party Defendant.

CV 23-28-M-DWM

Filed 11/17/2023

ORDER

Donald W. Molloy, District Judge United States District Court

Introduction

*1 Michael Poston’s and Joanna Poston’s, individually and as guardian of Michael Poston, (“Plaintiffs”) initial Complaint and Demand for Jury Trial includes six claims related to a motor-vehicle collision that occurred on January 21, 2022, against Defendants Velox Transport Solutions, LLC (“Velox”), Julio Santos, CES Hospitality, Almo Distributing Pennsylvania, Inc. (“Almo”), and Does 1–5. Velox is the motor carrier that owned and operated the semi-truck and trailer involved in the collision. Santos, a Velox employee, was driving the semi-truck and trailer at the time of the collision. CES Hospitality and Almo contracted to dropship the cargo being transported by Velox. Plaintiffs are suing for damages allegedly incurred because of the highway collision. Plaintiffs also claim that CES Hospitality and Almo negligently selected Velox to ship CES Hospitality’s cargo. (See Doc. 1.)

As alleged in the Complaint, on January 21, 2022, Poston was injured when he collided with a semi-truck operated by Santos and owned by Velox on Montana Highway 2 in Flathead County. (Doc. 1.) Poston alleges Santos made an improper U-turn that caused Poston’s vehicle to collide with the semi-truck and become lodged under its trailer. (Id. at ¶ 11.) Poston suffered severe skull fractures, brain trauma, and other injuries. (Id. at ¶ 12.) Santos, the driver of the truck, plead guilty to Careless Driving Involving Death or Serious Bodily Injury in violation of Montana Code Annotated § 61-8-302. (Id. at ¶ 20.)

Almo denies liability for the collision. (Doc. 3.) In addition to denying negligence, Defendant and third-party Plaintiff Almo filed a third-party complaint against Uber Freight LLC (“Uber”) for negligence, contribution, and/or indemnity. (Doc. 3.) Almo asserts that Uber failed to conduct a proper investigation into Velox’s hiring practices, training practices, and background and safety records. (Id. at ¶ 8.) Almo seeks judgment against Uber making Uber either directly liable for any damages assessed against Almo or liable for contribution and/or indemnity. (Id. at ¶ 9.)

Uber now moves to dismiss Almo’s Third-Party Complaint under Federal Rule of Civil Procedure 12(b)(6). (Doc. 12.) Uber argues dismissal is warranted because Almo’s claims are preempted under the Federal Aviation Administration Authorization Act (the “Act”)¹ and that Almo has failed to state sufficient facts and law supporting a negligence claim. Almo responds that negligence claims are either not preempted or fall under an exception within the Act and that they have pled sufficient facts and law to support their claims. Because Almo has the better argument, Uber’s motion is denied.

Legal Standard

*2 To survive a motion to dismiss under Rule 12(b)(6), “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.” Id. Dismissal is appropriate “where there is no cognizable legal theory or an absence of sufficient facts alleged to support a cognizable legal theory.” L.A. Lakers, Inc. v. Fed. Ins. Co., 869 F.3d 795, 800 (9th Cir. 2017) (quotation marks omitted).

Analysis

Uber argues that two independent reasons entitle them to be dismissed from this suit. First, Uber argues that state law tort claims are preempted by the Act given Uber’s position as a freight broker and any negligence claim relates to Uber’s services as a broker. Second, Uber argues that Almo failed to meet the pleading standard under Rule 8(a)(2) by not alleging facts showing Uber’s conduct was negligent. Almo disagrees arguing that highway regulations fall under the traditional state police power and, even though related to a broker’s services, they are an exception to the Act and not preempted. Almo also asserts it has presented sufficient facts and appropriately stated a claim pursuant to Rule 8(a)(2). Almo has the better argument because state tort laws fall under the safety exception of the Act and are not preempted. Almo is also correct that the facts presented are sufficient to meet Rule 8(a)(2) standards. Therefore, Uber’s motion to dismiss is denied.

I. The Act

In 1994, Congress passed the Act to deregulate the trucking industry at the state level. Congress was concerned that state regulation “impeded the free flow of trade, traffic, and transportation of interstate commerce” and “resolved to displace certain aspects of the state regulatory process.” Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 263 (2013) (internal quotation marks omitted). The Act’s “driving concern was preventing states from replacing market forces with their own, varied commands, like telling carriers they had to provide services not yet offered in the marketplace.” Ca. Trucking Ass’n v. Su, 903 F.3d 953, 961 (9th Cir. 2018) (internal citation and quotation marks omitted). In pertinent part, the Act states:

Except as provided in paragraphs (2) and (3), a State, political subdivision of a State, or political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier (other than a carrier affiliated with a direct air carrier covered by section 41713(b)(4)) or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.

49 U.S.C. § 14501(c)(1). The language of the Act expressly preempts any state law “related to” services provided by brokers and motor carriers. The Act did carve out a safety exception that allows states to create regulations designed to protect the safety and welfare of its residents. See § 14501(c)(2). Accordingly, the question is whether state negligence laws are included in the language found in § 1450(c)(1) and if so, does the safety exception in § 14501(c)(2) apply.

A. General Preemption

Pursuant to the Supremacy Clause of the U.S. Constitution, federal statues may expressly preempt state laws. U.S. Const. art. VI, cl. 2. Courts consider the surrounding statutory framework and Congress’s stated purposes in enacting the statute to identify the domain expressly preempted by that language. Nat’l R.R. Passenger Corp. v. Su, 41 F.4th 1147, 1152 (9th Cir. 2022). Once a court has done so, it asks whether the state law at issue falls within the scope of the preemption clause. Id. at 1152–53.

*3 The Act contains an express provision that preempts any state laws related to the services of a broker and a motor carrier. See § 14501(c)(1). In general, provisions using parallel or identical language within a statute should be interpreted similarly. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992). While Montana has not addressed the issue of preemption regarding negligence claims against brokers, the Ninth Circuit has addressed negligence claims against motor carriers. See Dilts v. Penske Logistics, LLC, 769 F.3d 637, 646 (9th Cir. 2014). Since the preemption language in the Act addressing motor carriers is parallel to the language addressing brokers, any case law regarding preemption pursuant to the Act can be applied to both motor carriers and brokers. Morales, 504 U.S. at 384.

State laws are preempted only if they relate to the price, route, or service of a motor carrier or broker. A generally applicable state law is not “related to a price, route, or service of any motor carrier [or broker]” for purposes of preemption under the Act unless the state law “binds the carrier to a particular price, route or service.” Dilts, 769 F.3d at 646. The court in California Trucking Association, Inc. v. Bonta stated that a state law “does not have such a binding or freezing effect unless it compels a result at the level of the motor carrier’s relationship with its customers or consumers.” 996 F.3d 644, 658 (9th Cir. 2021). Therefore, a determination must be made whether the state negligence laws at issue have a “binding or freezing effect” on Uber’s relationship with its customers or consumers, i.e., Velox and Almo.

The state laws at issue have binding or freezing effects on Uber’s relationship with its customers which relates to Uber’s services as a broker. Uber’s customers are the motor carriers and shippers that use Uber’s services, i.e., its online platform. As discussed in Dilts, state enforcement actions that have an indirect effect on services can be preempted if there is a significant impact. 769 F.3d at 645. Requiring Uber to fully investigate the hiring, training, and safety practices of any motor carrier could affect Uber’s relationship with motor carriers and limit the amount of motor carriers willing to use the online platform. Thus, if there is a decrease in available motor carriers using the online platform, Uber’s ability to provide services to shippers would decrease.

Additionally, investigations into the hiring, safety, and training practices of motor carriers require time, resources, and disclosure of business information which affects the efficiency and daily practices of both brokers and motor carriers. Shippers and motor carriers that contract with Uber would be directly affected by more stringent investigations through increased requirements or potential delays in shipping. Dilts clarifies that changes in costs or business operations may indirectly affect “services” enough to warrant preemption. 769 F.3d at 646–47. Therefore, any state negligent hiring laws have a binding or freezing effect on Uber, relate to Uber’s services as a broker, and fall within the scope of the preemption clause in the Act.

B. The Safety Exception to the Act

Despite the broad preemption language in the Act, Congress did not intend to undermine state safety regulations and included § 14501(c)(2) as an exception to preemption to protect the safety interests of the state. The safety exception allows states to enact or enforce laws that fall generally within the traditional power of the state to address transportation, safety, welfare, or business rules that “do not otherwise regulate prices, routes, or services.” Dilts, 769 F.3d at 644. Section 14501(c)(2) states:

*4 Paragraph (1) [of § 14501(c)] shall not restrict the safety regulatory authority of a State with respect to motor vehicles, the authority of a State to impose highway route controls or limitations based on the size or weight of the motor vehicle or the hazardous nature of the cargo, or the authority of a State to regulate motor carriers with regard to minimum amounts of financial responsibility relating to insurance requirements and self-insurance authorization.

The Supreme Court addressed this issue in Rowe v. New Hampshire Motor Transport Association and held that not all state regulation is preempted. 552 U.S. 364, 375 (2008). Specifically, regulation that broadly prohibits certain forms of conduct that apply to all members of the public or that only affects “rates, routes, or services in ‘too tenuous, remote, or peripheral a manner’ ” is not preempted. Id. (citing Morales, 504 U.S. at 390); see also Ward v. United Airlines, Inc., 986 F.3d 1234, 1243 (9th Cir. 2021) (explaining that safety regulations are examples of generally applicable regulations, and they are not preempted “even if employers must factor those provisions into their decisions about the prices that they set” or “if they raise the overall cost of doing business”). The Ninth Circuit also concluded that “the safety regulatory authority of a State” encompasses common-law tort claims. Miller, 976 F.3d at 1026. Miller defines the exception and reasons that “Congress intended to preserve the States’ broad power over safety, a power that includes the ability to regulate conduct not only through legislative and administrative enactments, but also though common-law damages awards.” Id. at 1020. The Miller court opined that if the preemption clause was narrowly interpreted, much of state law would be beyond the reach of the exception and would not be “consistent with both federalism concerns and the historic primacy of state regulation of matters of health and safety.” Id. at 1028 (quoting Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, (1996)). Almo argues that even if their claims are preempted, the safety exception applies. Uber asserts the safety exception only applies to motor vehicles and not brokers. Because safety regulations and standards for hiring, even if preempted, fall within the safety exception because every industry has a duty to hire individuals that meet accepted standards and safety regulations, Almo is correct.

Here, Uber seeks to escape Montana’s regulatory authority. Uber argues that any claim related to a broker’s services is expressly preempted under the Act because subsection (c)(1) is unambiguous: state laws relating to the services of a broker are preempted. Following Uber’s argument, the Act would preempt any state tort claim against not only the broker, but also the motor carrier and any entity providing services related to the transportation of property as defined by the Act. Thus, if Uber’s argument is accepted, any citizen of Montana would be left without civil recourse in the event of a traffic collision with any interstate motor carrier, which was not the intent of Congress. See Miller, 976 F.3d at 1020.

Furthermore, Uber relies upon irrelevant case law. Uber cites other circuit decisions regarding application of the safety exception in the Act to common law tort claims, but since there is clear direction from the Ninth Circuit any conflicting circuit decisions are irrelevant. (See Doc. 13.) Given the Ninth Circuit’s clear treatment of the safety exception to the Act and evidence of Congress’s intent, Almo’s negligence claims are not preempted by the Act because they involve general safety regulations that directly fall under state safety regulatory authority.

II. Pleading Standards

*5 Uber’s second argument is that Almo failed to state a negligence claim in its third-party complaint. (Doc. 13 at 17.) Almo argues that it presented sufficient factual matter to support a negligence claim. (Doc. 3.) Neither party addressed the Rule 14(a) standard that applies to third-party complaints. The parties rely on the standards set forth in Rule 8(a)(2). Almo presented sufficient factual matter to transfer full or partial liability to Uber for the underlying claims which satisfies Rule 14(a). In addition to the satisfaction of Rule 14(a) requirements, Rule 8(a)(2) is satisfied as Almo presented facts sufficient to plausibly plead that Uber may be negligent or liable to Almo. Thus, Almo did not fail to state a claim.

A. Rule 14(a)

The appropriate standard when assessing whether Almo, as a third-party plaintiff, sufficiently stated a claim must include Rule 14(a) standards. See Fed. Trade Comm’n v. Am. Evoice, Ltd., 2016 WL 7165904, at *3 (D. Mont. Aug. 9, 2016); Stewart v. Am. Intern. Oil & Gas Co., 845 F.2d 196 (9th Cir. 1988). Rule 14(a) states that “a defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it.” Fed. R. Civ. P. 14. Rule 14 requires that the third-party complaint be submitted within 14 days from service of the original answer. Id. Here, Almo alleged that Uber is liable for indemnity or contribution for all or part of the damages that may be assessed against Almo. (Doc. 3 at ¶ 9.) Almo also alleged that Uber may be directly liable to Plaintiffs for the alleged injuries. (Id. at ¶ 9.) Almo filed the Third-Party Complaint jointly with its Answer. (See Doc. 3.) Given that Almo timely filed its Third-Party Complaint on a party that may be liable to Almo for all or part of Plaintiffs’ injuries, Rule 14(a) is satisfied.

B. Rule 8(a)(2)

Assuming the veracity of Almo’s allegations in the Third-Party Complaint, Almo may be entitled to relief as there is sufficient evidence that Uber contracted with Velox to ship cargo. Uber asserts that Almo needed to present facts supporting all elements of a negligence claim, however the plausibility standard is not a “probability requirement” and courts take a context-specific approach that draws on “judicial experience and common sense.” Iqbal, at 679. Under Rule 8(a)(2) and Iqbal, a pleading that states a claim for relief must allow the court to reasonably infer that the defendant is liable for the alleged misconduct. Id. at 678.

Here, despite the brevity of Almo’s Third-Party Complaint, there are sufficient facts presented to infer that Uber may be liable to Almo and/or jointly and severally liable to Plaintiffs for the underlying claim. Uber admits that it contracted with Velox and provided services as a broker. (Doc. 3 at ¶¶ 6-7.) Without the contract between Uber and Velox, Almo could not contract with Velox to ship the cargo on January 21, 2022. Uber is within the chain of causation because Plaintiffs’ injuries stem from the results of the contract between Almo and Velox, which Uber facilitated. Therefore, Almo sufficiently presented factual matter that allows an inference to be made about Uber’s alleged liability. Almo’s claims that Uber did not verify the qualifications or hiring practices of Velox are also plausible given the existence of the contract between Uber and Velox. Due to the presence of the contract between Uber and Velox, the Court could infer that Uber has, or should have had, hiring practices to ensure that any federal or state regulations relative to the industry are followed. Because Almo pleaded plausible negligent hiring and negligence claims, the claims survive here.

Conclusion

Based on the foregoing, Uber’s Motion to Dismiss (Doc. 12) is denied.

*6 DATED this 17^th day of November, 2023.

All Citations

Slip Copy, 2023 WL 8003510

Footnotes
¹	Plaintiffs are not alleging violations of the Federal Motor Carrier Safety Act, which would fall directly within the jurisdiction of the U.S. Department of Transportation and require administrative proceedings. See Firebaugh v. United States, 2013 WL 4048977, at *2 (D. Nev. Aug. 9, 2013) (citing 49 C.F.R. § 386.12).

End of Document

Brian Scott Kidd and Suzanne Kidd, Plaintiff, v. American Reliable Insurance Company

United States District Court,

C.D. California, Southern Division.

Brian Scott Kidd and Suzanne Kidd, Plaintiff,

American Reliable Insurance Company, Defendant.

American Reliable Insurance Company, Third-Party Plaintiff,

Deep Water Transport Enterprises, Inc. and Cedar Island Marina, Inc., Third-Party Defendants.

Cedar Island Marina, Inc., Cross-Claimant,

Deep Water Transport Enterprises, Inc., Cross-Defendant.

Case No.: SACV 15-01720-CJC(KESx)

Signed 08/23/2016

Attorneys and Law Firms

Arya Firoozmand, Laura Watkins Ives, Robert Kennedy Scott, Stephen M. Hauptman, Newmeyer and Dillion LLP, Newport Beach, CA, for Plaintiff.

Raymond J. Tittmann, Edison McDowell and Hetherington LLP, Pasadena, CA, Edward J. Valdespino, Robert Douglas Whitney, Edison McDowell and Hetherington LLP, Oakland, CA, William Benjamin Thomas, Edison McDowell and Hetherington LLP, Houston, TX, for Defendant.

ORDER DENYING THIRD-PARTY DEFENDANT DEEP WATER TRANSPORT’S MOTION FOR JUDGMENT ON THE PLEADINGS AS TO THE THIRD-PARTY COMPLAINT AND CROSS-CLAIM

CORMAC J. CARNEY, UNITED STATES DISTRICT JUDGE

INTRODUCTION

*1 This action arises from Plaintiffs Brian Scott Kidd and Suzanne Kidd’s purchase of a boat located in New London, Connecticut. (Dkt. 1-1 at 9 ¶ 11.) Following their purchase, Plaintiffs obtained an insurance policy on the boat from Defendant American Reliable Insurance Company [ARIC]. (Id. at 8 ¶ 9.) To prepare the boat for transport, the Kidds hired Third-Party Defendant Cedar Island Marina [Marina]. (Dkt. 8-1 at 11 ¶ 9). Pursuant to the Kidds’ instructions, Marina then transferred the boat to Third-Party Defendant Deep Water Transport [DWT] to deliver the boat from New London, Connecticut, to Dana Point, California, where the Kidds lived. (Id. at ¶ 10; Dkt. 1-1 at 9 ¶ 11.)

Shortly after the boat arrived in California, it was discovered that the engine had been significantly damaged by salt water intrusion. (Dkt. 1-1 at 9 ¶ 12.) Plaintiffs allege that improper transport is the source of the damage. (Id. at ¶ 13.) Plaintiffs filed an insurance claim with ARIC, which was denied. (Id. at ¶ 14.) Plaintiffs bring this claim against ARIC, alleging claims of breach of contract and breach of covenant of good faith and fair dealing; they seek compensatory damages, as well as damages for emotional distress, punitive damages, and exemplary damages. (Dkt. 1-1 at 10–13.)

Defendant ARIC then initiated a third-party complaint against Marina and DWT. (Dkt. 8; see also Dkt. 21 (granting leave to file third-party complaint).) ARIC’s complaint seeks a declaratory judgment pursuant to 28 U.S.C. § 2201 that, “to the extent ARIC is required to or does pay or reimburse the Kidds or any person on behalf of [DWT and/or Marina], ARIC is entitled through subrogation to collect [from them] all sums paid on their behalf due to their individual or collective acts or omissions.” (Dkt. 8-1 at 12.)

Third-Party Defendant Marina subsequently filed a cross-claim against Third-Party Defendant DWT. (Dkt. 31 at 2.) The cross-claim seeks equitable/implied indemnity, apportionment and contribution, and declaratory relief. (Dkt. 31 at 12–14.) Essentially, Marina alleges that the liability for the Kidds’ losses should be borne entirely by DWT. (See Dkt. 31 at 14 ¶ 25.)

In response to Defendant ARIC’s third-party claim and Third-Party Defendant Marina’s cross-claim, DWT filed the motion for judgment on the pleadings at issue here. (Dkt. 47.) DWT argues that all the claims in both the third-party complaint and the cross-claim are barred as a matter of law by the Carmack Amendment, 49 U.S.C. § 14706. (Dkt. 47-1 at 2.) DWT also argues that ARIC and Marina lack standing to raise their claims. (Id. at 5.)

For the following reasons, the motion is DENIED.1

LEGAL STANDARD

A court may grant a motion for judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c), which provides that “after the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings.” A motion for judgment on the pleadings is substantially identical to a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6) because both permit challenges to the legal sufficiency of the opposing party’s pleadings. Qwest Commc’ns Corp. v. City of Berkeley, 208 F.R.D. 288, 291 (N.D. Cal. 2002). The main difference between the two motions is timing: a 12(b)(6) motion is brought before filing an answer, whereas a motion for judgment on the pleadings is brought after the pleadings are closed. Schwarzer, et al., Rutter Group Practice Guide: Federal Civil Procedure Before Trial, § 9:199, at 9-50 (2007). Judgment on the pleadings is appropriate when, accepting as true all material allegations contained in the nonmoving party’s pleadings, the moving party is entitled to judgment as a matter of law. Torbet v. United Airlines, Inc., 298 F.3d 1087, 1089 (9th Cir. 2002).

*2 DWT’s motion for judgment on the pleadings argues that both ARIC’s third-party complaint and Marina’s cross-claim are preempted by the Carmack Amendment, 49 U.S.C. § 14706. (Dkt. 47-1.) That statute subjects common carriers and freight forwarders transporting cargo in interstate commerce to absolute liability for actual loss or injury to property. See 49 U.S.C.A. § 14706(a). The Carmack Amendment was enacted in 1906 as an amendment to the Interstate Commerce Act. Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 561 U.S. 89, 96 (2010). It has since been amended repeatedly, but its purpose has always been “to relieve cargo owners ‘of the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of goods.’ ” Id. at 98 (quoting Reider v. Thompson, 339 U.S. 113, 119 (1950)). The applicability of the Carmack Amendment to DWT’s liability is not disputed by ARIC or Marina. (See Dkt. 48 at 6, 7; Dkt. 49.)

It is well-settled that the Carmack Amendment is the exclusive cause of action for interstate-shipping contract claims alleging loss or damage to property. See, e.g., Adams Express Co. v. Croninger, 226 U.S. 491, 505–06 (1913) (Carmack covers “the subject of the liability of the carrier under a bill of lading … so completely that there can be no rational doubt but that Congress intended to take possession of the subject, and supersede all state regulation with reference to it.”). Underscoring this, the Ninth Circuit has held that “the Carmack Amendment constitutes a complete defense to common law claims alleging all manner of harms” arising from loss of cargo in interstate shipping. Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 689 (9th Cir. 2007).

III. DISCUSSION

DWT’s motion for judgment on the pleadings does not differentiate between ARIC’s third-party complaint and Marina’s cross-claim. (See Dkt. 47-1 at 3.) However, each cause of action is considered in turn as to the preclusive impact of the Carmack Amendment and each party’s standing to raise the claims in question.

ARIC

ARIC’s third-party complaint contains one cause of action seeking declaratory judgment that it is entitled “through subrogation” to collect from DWT and Marina for “sums paid on their behalf due to their individual or collective acts or omissions.” (Dkt. 8-1 at 12 ¶ 17.) Declaratory judgment is sought under the Federal Declaratory Judgment Act, 28 U.S.C. § 2201. (Id. ¶ 16.)

DWT challenges ARIC’s standing to obtain a declaratory judgment. (Dkt. 47-1 at 5–7.) The Carmack Amendment specifies that carriers are liable specifically “to the person entitled to recovery under the receipt or bill of landing.” 49 U.S.C. § 14706. As mentioned, ARIC brings its claim for declaratory relief as a subrogee of the Kidds. (Dkt. 8-1 at 12 ¶ 17.) Since ARIC has not paid the Kidds, DWT argues, ARIC’s argument that it is a subrogee entitled to raise the Kidds’ legal claims fails. (Dkt. 47-1 at 5.)

“Subrogation is defined as the substitution of another person in place of the creditor or claimant to whose rights he or she succeeds in relation to the debt or claim.” Fireman’s Fund Ins. Co. v. Maryland Casualty Co., 65 Cal. App. 4th 1279, 1291 (1998). “In the insurance context, subrogation takes the form of an insurer’s right to be put in the position of the insured for a loss that the insurer has both insured and paid. When an insurance company pays out a claim on a property insurance policy, the insurance company is subrogated to the rights of its insured against any wrongdoer who is liable to the insured for the insured’s damages.” State Farm Gen. Ins. Co. v. Wells Fargo Bank, N.A., 143 Cal. App. 4th 1098, 1106 (2006) (citations omitted). As a subrogee, an insurer’s rights are equal to, not greater than, those possessed by its insured, and its claims are subject to the same defenses. See Liberty Mut. Ins. Co. v. Fales, 8 Cal. 3d 712, 717 (1973).

*3 ARIC’s status as a subrogee in this case arises from California state law.2 See, e.g., Mort v. United States, 86 F.3d 890, 893 (9th Cir. 1996). DWT argues that ARIC lacks standing because it has not issued payment to the Kidds. However, ARIC has the right to bring the claim for declaratory relief in anticipation of future subrogation. California has recognized that so long as (1) declaratory relief alone is sought, (2) an insured has sued only their insurer rather than the primary actor, and (3) the damage has occurred and is therefore of fixed value, a pre-subrogation declaratory judgment is available. See Liberty Mut. Ins. Co. v. Harris, Kerr, Forster & Co., 10 Cal. App. 3d 1100, 1101, 89 Cal. Rptr. 437, 438 (Ct. App. 1970); see also HCC Life Ins. Co. v. Managed Ben. Adm’rs LLC, No. 207-CV-02542-MCE-DAD, 2008 WL 2439665, at *4 (E.D. Cal. June 12, 2008) (“Although an insurer who has not fully discharged a debt is generally not entitled to equitable subrogation, a party asserting subrogation may seek declaratory relief without paying the underlying debt.”). Here, these conditions are met. ARIC raises only a claim for declaratory relief, (Dkt. 8 at 12), the Kidds have only sued ARIC, not DWT or Marina, (Dkt. 1-1 at 10–13), and the damage has already occurred, (id. at 4). Therefore, the Court today reiterates its earlier indication that ARIC has standing to raise this claim for declaratory judgment against DWT. (Cf. Dkt. 21 (“Because the Kidds have alleged that ARIC’s liability stems from the negligence of Deep Water Transport or Cedar Islands Marina, it is apparent that ARIC (standing in the plaintiffs’ shoes) would be able to pursue a subrogation claim against one or both of those entities should ARIC be found liable to the Kidds.”).)

DWT also argues that ARIC’s claim for declaratory judgment is preempted by the Carmack Amendment. The Declaratory Judgment Act provides that in “a case of actual controversy,” a district court “may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought.” 28 U.S.C. § 2201(a). Actions under the Declaratory Judgment Act “must first present an actual case or controversy within the meaning of Article III” and must also meet “statutory jurisdictional prerequisites.” Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220, 1222–23 (9th Cir. 1998). The availability of declaratory judgments, therefore, depends on the presence of an underlying legally-cognizable cause of action. “It is necessary to first examine the underlying law because the Declaratory Judgment Act only creates new remedies, and therefore, the adverse legal interests required by Article III must be created by the authority governing the asserted controversy between the parties.” Shell Gulf of Mexico Inc. v. Ctr. for Biological Diversity, Inc., 771 F.3d 632, 636 (9th Cir. 2014). “A declaratory judgment offers a means by which rights and obligations may be adjudicated in cases that have not reached a stage at which either party may seek a coercive remedy and in cases where a party who could sue for coercive relief has not yet done so.” Seattle Audubon Soc. v. Moseley, 80 F.3d 1401, 1405 (9th Cir. 1996). The Declaratory Judgment Act helps potential defendants avoid a multiplicity of actions by affording an adequate, expedient, and inexpensive means for declaring in one action the rights and obligations of the litigants. Biodiversity Legal Found. v. Badgley, 309 F.3d 1166, 1172 (9th Cir. 2002).

Declaratory judgments are designed for situations like this one in which courts can efficiently determine the scope and apportionment of liability as between multiple parties. Since declaratory judgments do not themselves alter the nature or scope of liability, they are available in the context of Carmack Amendment claims. See, e.g., Mayflower Transit, L.L.C. v. Troutt, 332 F. Supp. 2d 971, 981 (W.D. Tex. 2004); McLaughlin Transp. Sys., Inc. v. Rubinstein, 390 F. Supp. 2d 50, 56 (D. Mass. 2005).3 As noted above, ARIC agrees with DWT that the Carmack Amendment is relevant to the outcome of the declaratory judgment proceeding. (See Dkt. 48 at 5.) Accordingly, the applicability and exclusivity of Carmack Amendment liability are issues properly raised on motions for summary judgment; seeking a declaratory judgment does not conflict with potential Carmack preemption. For these reasons, ARIC’s claim for declaratory judgement survives DWT’s motion to dismiss.

MARINA

*4 The Marina presents three causes of action in its cross-claim, seeking equitable/implied indemnity, apportionment and contribution, and declaratory relief. (Dkt. 31 at 12–14.) DWT raises the same defenses—standing and preemption. (Dkt. 47-1 at 3, 5.)

Marina’s claim is not preempted by the Carmack Amendment. While Marina subdivides their cross-claim into three causes of action, (Dkt. 31 at 12–14), Marina essentially seeks declaratory judgment insofar as they ask the Court to determine the scope and apportionment of liability. Indeed, indemnity, contribution, and assessment are all devices whereby liability is allocated between parties. Accordingly, courts have utilized each in the context of Carmack Amendment liability. See, e.g., Travelers Prop. Cas. Co. of Am. v. Legacy Transp. Servs., Inc., No. C 10-00505 JSW, 2010 WL 2836766, at *2 (N.D. Cal. July 19, 2010) (“a claim for indemnity under the Carmack Amendment may properly lie and similarly, one for declaratory relief as to the parties’ respective status under the Carmack Amendment”); Air Exp. Int’l USA, Inc. v. FFE Transp. Servs., Inc., No. CV0806112 R (JTLX), 2009 WL 2407957, at *1 (C.D. Cal. July 30, 2009) (apportionment); Gordon H. Mooney, Ltd. v. Farrell Lines, Inc., 616 F.2d 619, 625 (2d Cir. 1980) (contribution).

The Court reiterates that it is well settled that the Carmack Amendment is the exclusive cause of action for interstate-shipping contract claims alleging loss or damage to property. See, e.g., Adams Express Co., 226 U.S. at 505–06 (Carmack covers “the subject of the liability of the carrier under a bill of lading … so completely that there can be no rational doubt but that Congress intended to take possession of the subject, and supersede all state regulation with reference to it.”). Marina does not specify in its complaint if it is relying on state law causes of action. However, because Marina accepts that the Carmack Amendment is relevant to the scope of liability, (see Dkt. 49; Dkt. 48 at 5), the Court construes its cross-claim to seek judicial declaration of the scope and apportionment of liability in the context of the Carmack Amendment and associated federal law.

Since Marina’s claims boil down to the equivalent declaratory relief as ARIC seeks, the same analysis regarding its standing applies4 and Marina has standing to bring its cross-claim. Accordingly, Marina’s cross-claim survives DWT’s motion to dismiss.

CONCLUSION

For the foregoing reasons, Third-Party Defendant DWT’s motion for judgment on the pleadings as to the third-party complaint and cross-claim is DENIED.

DATED: August 23, 2016.

All Citations

Slip Copy, 2016 WL 4502459

Footnotes

Having read and considered the papers presented by the parties, the Court finds this matter appropriate for disposition without a hearing. See Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing set for August 29, 2016, at 1:30 p.m. is hereby vacated and off calendar.

The parties do not dispute that subrogation, though based on state law, is available in the context of a Carmack Amendment claim. (See Dkt. 47-1 at 5; Dkt. 48 at 5.) Indeed, subrogation merely alters who can bring a given claim, not the nature of the claim itself. Carmack Amendment preemption analysis instead affects the nature of the underlying claim. See, e.g., OneBeacon Ins. Co. v. Haas Indus., Inc., 634 F.3d 1092, 1097 (9th Cir. 2011); Chubb Group of Ins. Co. v. H.A. Trans. Sys., Inc., 243 F. Supp. 2d 1064, 1066-1067 (C.D. Cal. 2002); Travelers Prop. Cas. Co. of Am. v. Saffron Express, Inc., No. CIV S-09-0233 GEBGGH, 2009 WL 2868731, at *1 (E.D. Cal. Sept. 2, 2009).

DWT’s reliance on Schoenmann Produce Co. v. BNSF Ry. Co., No. CIV.A. H-07-1776, 2008 WL 336296, at *4 (S.D. Tex. Feb. 5, 2008), is misplaced. (See Dkt. 50 at 4–6.) In Schoenmann, unlike here, the shippers directly sued the transport company under the Carmack Amendment and, in addition, sought declaratory relief under the Texas Declaratory Judgment Act. In contrast, the Kidds have not sued DWT under the Carmack Amendment and ARIC relies on the Federal Declaratory Judgment Act, which merely provides a vehicle for determining the applicability and scope of the Carmack Amendment.

DWT does not argue that Marina could not qualify as a subrogee. Cf. Caito v. United California Bank, 20 Cal. 3d 694, 704 (1978) (setting forth test for subrogee status in California).