United States District Court,

E.D. New York.

FIREMAN’S FUND INSURANCE COMPANY, as subrogee of Quality King Distributors, Inc., Plaintiff,

v.

NEVER STOP TRUCKING, INC., Defendants.

No. 08-CV-3445(FB)(RER).

 

Oct. 13, 2009.

 

MEMORANDUM AND ORDER

 

BLOCK, Senior District Judge.

 

On July 31, 2009, Magistrate Judge Reyes issued a Report and Recommendation (“R & R”) recommending that the Court enter a default judgment against defendant in the amount of $361,650.52 plus interest. See R & R at 8. The R & R also stated that failure to object within ten days would preclude appellate review. See id. Attorney for plaintiffs mailed a copy of the R & R to defendant on July 31, 2009; no objections have been filed.

 

If clear notice has been given of the consequences of failure to object, and there are no objections, the Court may adopt the R & R without de novo review. See Mario v. P & C Food Mkts., Inc., 313 F.3d 758, 766 (2d Cir.2002) (“Where parties receive clear notice of the consequences, failure timely to object to a magistrate’s report and recommendation operates as a waiver of further judicial review of the magistrate’s decision.”). The Court will excuse the failure to object and conduct de novo review if it appears that the magistrate judge may have committed plain error, see Spence v. Superintendent, Great Meadow Corr. Facility, 219 F .3d 162, 174 (2d Cir.2000); no such error appears here. Accordingly, the Court adopts the R & R without de novo review and directs the Clerk to enter judgment in accordance with the R & R.

 

SO ORDERED.

 

REPORT & RECOMMENDATION

 

RAMON E. REYES, JR., United States Magistrate Judge.

 

Plaintiff Fireman’s Fund Insurance Company (“Fireman’s Fund” or “plaintiff”) initiated this action on August 22, 2008 against Sunteck Transport Group (“Sunteck”) and Never Stop Trucking, Inc. (“Never Stop Trucking” or “defendant”), for, inter alia, alleged violations of the Carmack Amendment, 49 U.S.C. § 14706 (2005). (Compl.¶ 29-33.) On September 30, 2008, Fireman’s Fund filed an Amended Complaint, naming only Never Stop Trucking as defendant. (Docket Entry 6.) Due to Never Stop Trucking’s failure to answer or otherwise respond, Fireman’s Fund moved for default judgment on December 18, 2008. (Docket Entry 10.) On February 3, 2009, the Honorable Frederic Block granted the motion and referred the matter to me for a Report and Recommendation on the issue of damages. (Docket Entry 11.) For the reasons that follow, I respectfully recommend that Fireman’s Fund be awarded a judgment against Never Stop Trucking in the amount of $361,650.52 plus interest.

 

FACTS

 

Fireman’s Fund, an insurance company incorporated in California, is the insurer of Quality King Distributors, Inc. (“Quality King”), a New York corporation engaged in selling personal care products. (Am.Compl.¶¶ 1, 7.) On or before October 10, 2007, Quality King engaged Sunteck, a Florida corporation, to ship merchandise (“ Cargo”) from Florida to New York. (Id. ¶¶ 8-9.) On or about the same day, Sunteck contracted with Never Stop Trucking, a Florida corporation, to assist in transporting the Cargo to New York. (Id. ¶ ¶ 2, 10-11.) Never Stop Trucking, as carrier, completed and signed a straight bill of lading on or about October 10, 2007. (Docket Entry 14.) The bill of lading named Quality King as consignee of the Cargo. (Id.) Never Stop Trucking failed to deliver the merchandise, and reported the Cargo as stolen. (Am.Compl.¶¶ 13-15.) Consequently, Quality King filed an insurance claim for the lost Cargo with Fireman’s Fund. Fireman’s Fund eventually paid Quality King $366,112.58 (minus a $10,000 deductible for its loss) in satisfaction of the claim. (Id. ¶ 18; Dhurj onSingh Aff. ¶¶ 11-12, Feb. 24, 2009.) Fireman’s Fund then brought this action as Quality King’s subrogee. (Am.Compl.¶ 19.)

 

DISCUSSION

 

In his Memorandum and Order, the Honorable Frederic Block granted Fireman’s Fund’s motion for default judgment based on breaches of contract  and duties under the Carmack Amendment. (Mem. and Order 3, Feb. 10, 2009.) “While a party’s default is deemed to constitute a concession of all well pleaded allegations of liability, it is not considered an admission of damages.” Greyhound Exhibitgroup, Inc. v. E.L. U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir.1992) (citing Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir.1974) and FED. R. CIV. P. 8(d)). Instead, claims for damages must generally be established in an evidentiary proceeding at which the defendant is afforded the opportunity to contest the amount claimed. Id. An evidentiary proceeding is required so that the court may ensure that there is a basis for the damages sought before entering judgment in the amount demanded. See Fustok v. Conticommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir.1989). A court may make this determination based upon evidence presented at a hearing or upon a review of detailed affidavits and documentary evidence. See FED. R. CIV. P. 55(b)(2); Action S.A. v. Marc Rich & Co., Inc., 951 F.2d 504, 508 (2d Cir.1991); Fustok, 873 F.2d at 40. Never Stop Trucking has not submitted any opposition to the papers submitted by Fireman’s Fund. Accordingly, a hearing is not warranted.

 

Fireman’s Fund’s breach of contract claim is preempted by the Carmack Amendment. See Project Hope v. M/V IBN SINA, 250 F.3d 67, 73 n.6 (2d Cir.2001) (“[The Carmack Amendment] preempt[s] [the] shipper’s state and common law claims against a carrier for loss or damage to goods during shipment.”). Thus, I herein consider damages only under the Carmack Amendment.

 

The Carmack Amendment entitles an injured party to recover “the actual loss or injury to the property caused by [a carrier].” 49 U .S.C. § 14706(a)(1). Fireman’s Fund seeks $356,112.58 for the cost of the paid insurance claim, $10,000 for Quality King’s deductible, expenses of $1,335, attorneys’ fees, costs of this litigation, and both pre and post-judgment interest. (Dhurjon-Singh Aff. ¶ 14; Am. Compl. 7.)

 

I. Actual Loss or Injury

 

As a result of the violation of the Carmack Amendment, Quality King lost all of the Cargo carried by Never Stop Trucking, and is thus entitled to the value of the Cargo. Calculations of the total amount of actual loss as a result of Never Stop Trucking’s actions equal $366,112.58. (Dhurjon-Singh Aff. ¶ 7, Exs. 2-4.) Thus, Quality King is entitled to an award of this amount.

 

The general rule for insurance company subrogees is that the insurance company is only entitled to the amount that it has paid the insured. See Am. Nat’l Fire Ins. Co. v. Yellow Freight Sys., Inc., 325 F.3d 924, 936 (7th Cir.2003). In a case involving subrogation and the Carmack Amendment, the court in American National stated that “a subrogee is entitled to indemnity to the extent only of the money actually paid by him to discharge the obligation …. “ Id. (internal quotations and citation omitted). In American National, the court addressed the issue of whether an insurance company (subrogee) should recover interest accruing as of the date of the insured’s (subrogor) injury, or the date that the company paid the insured. Id. The court noted that the insurance company “paid for the property damage”; however, it did “not appear that [the company] paid for [the insured’s] loss of its use of money from the time of the damaged shipment until the time of the insurance payment.” Thus, having interest accrue as of the date of the insured’s injury would overcompensate the insurance company. Consequently, the court held that the insurance company could only collect interest from the date it actually paid the insured. I recommend applying this general rule-that the right of subrogation is one of indemnification-in this context. Id. (citing Milan v. Kausch, 194 F.2d 263, 265 (6th Cir.1952); Utica Mut. Ins. Co. v. Denwat Corp., 778 F.Supp. 592, 594 (D.Conn.1991); Colorado Farm Bureau Mut. Ins. Co. v. CAT Continental, Inc., 649 F.Supp. 49, 52 (D.Colo.1986); Maryland Cas. Co. v. Brown, 321 F.Supp. 309, 312 (N.D.Ga.1971); 73 Am.Jur.2d Subrogation § 67 (2009)). Thus, because Fireman’s Fund only paid Quality King $356,112.58, (Dhurjon-Smith Aff. ¶ 11 & Ex. 5), Fireman’s Fund is only entitled to recover this amount. See Low v. Golden Eagle Ins. Co., 125 Cal.Rptr.2d 155, 164 (Ct.App.2002) (holding when insured subrogor is only partially compensated because of deductible, insurance company subrogee can only recover amount paid out); Winkelmann v. Excelsior Ins. Co., 85 N.Y.2d 577, 582 (1995) (holding insurance company subrogee entitled to amount it has paid out after deductible, and insured subrogor may sue for the deductible) (citing Federal Ins. Co. v. Arthur Andersen & Co., 75 N.Y.2d 366, 374-75 (1990) ( “The general rule is that an [insurance company subrogee] which has paid part of a loss may proceed pro tanto ….”)).

 

Accordingly, I recommend Fireman’s Fund be awarded $356,112.58 in actual loss or injury damages.

 

II. Attorneys’ Fees

 

Fireman’s Fund seeks attorneys’ fees incurred as a result of this litigation. (Dhurjon-Singh Aff. ¶ 14.) However, the Carmack Amendment does not expressly provide for attorneys’ fees and the Second Circuit has advised that “where a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it.” Cleveland v. Beltman North American Co., 30 F .3d 373, 380 (2d Cir.1994) (quoting Massachusetts Life Insurance Co. v. Russell, 473 U.S. 134, 147 (1985)) (holding punitive damages unavailable under the Carmack Amendment when it did not expressly allow them). Thus, I recommend that Fireman’s Fund not be awarded attorneys’ fees.

 

III. Expenses

 

Fireman’s Fund seeks expenses of $1,335.00 for, inter alia, payment of a surveying fee to a company that investigated the Cargo loss. (Dhurjon-Singh Aff. ¶¶ 6, 13-14.) The Carmack Amendment does not provide for recovery of expenses. Thus, Fireman’s Fund is not entitled to recover its expenses, and I recommend that they not be awarded. See Cleveland, 30 F.3d at 380.

 

This is not a “cost” as defined by 28 U.S.C. § 1920, and thus it may not be awarded under FED. R. CIV. P. 54(d)(1).

 

IV. Costs

 

Fireman’s Fund seeks costs (Dhurjon-Singh Aff. ¶ 14), to which it is entitled. Federal Rule of Civil Procedure 54(d)(1) provides that “[u]nless a federal statute … provides otherwise, costs-other than attorney’s fees-should be allowed to the prevailing party.” FED. R. CIV. P. 54(d)(1). While the Carmack Amendment does not state that costs are available, it also does not provide that costs are unavailable. See St. Paul Fire and Marine Ins. Co. v. AVH Trucking LLC, No. 07-4802(WHW), 2008 WL 4601771, at * 5 (D.N.J. Oct. 15, 2008) (granting costs other than attorneys’ fees under FED. R. CIV. P. 54 in action arising under the Carmack Amendment). Thus, I recommend that Fireman’s Fund be awarded the costs of bringing this lawsuit. However, Fireman’s Fund has not specifically claimed any costs, nor submitted any evidence of such including any affidavits, instead only requesting them in the abstract. (Dhurjon-Singh Aff. ¶ 14.) Thus, I recommend that Fireman’s Fund only be awarded $350, the cost of filing this action.

 

V. Interest

 

In its Amended Complaint, Fireman’s Fund requests pre and post judgment interest, but neglects to address this issue in its Motion for Default Judgment or accompanying affidavits. The decision to grant interest and the rate used is a “matter[ ] confided to the district court’s broad discretion ….“ Endico Potatoes, Inc. v. CIT Group/Factoring, Inc., 67 F.3d 1063, 1071 (2d Cir.1995) (internal citation omitted). In this case, I believe that interest is necessary to fully compensate Fireman’s Fund and make them whole. Two issues remain: when should interest begin accruing, and how much should be awarded?

 

“[C]ourts must be careful that an award [of interest] does not overcompensate a plaintiff.” Commercial Union Assur. Co., PLC v. Milken, 17 F.3d 608, 614 (2d Cir.1994); see also Am. Nat’l Fire Ins. Co., 325 F.3d at 936 (holding interest under the Carmack Amendment for subrogee insurance company to begin accruing as of date subrogee paid subrogor’s claim). Thus, I recommend that interest begin accruing as of the date that Fireman’s Fund paid Quality King in satisfaction of its claim. Fireman’s Fund has not provided any documentation that shows such a date, but has provided the subrogation agreement between it and Quality King, which has a signature date of May 22, 2008. (Dhurjon-Singh Aff. Ex. 6.) Thus, I recommend that interest begin accruing as of May 22, 2008.

 

As for the rate of interest, I choose to roughly follow 28 U.S.C. § 1961, which calculates interest based on the “average 1-year constant maturity Treasury yield, as published by the Board of Governors of the Federal Reserve System.” 28 U.S.C. § 1961 (2000). To fully compensate Fireman’s Fund, I have calculated the average yield from May 2008 through today’s date, which results in an interest rate of 1.22%. Section 1961(b) states that interest is to be compounded annually. Compound interest at a rate of 1.22% accruing from May 22, 2008 to May 21, 2009 equals $4,344.57. Compound interest for the year from May 22, 2009 through May 21, 2010 accrues at the rate of $12.05 per diem. Through today’s date, July 31, 2009, that rate equals $843.37 in further interest. Thus, I recommend that Fireman’s Fund be awarded $5,187.94 in interest, and that this amount increase at the rate of $12.05 per diem through entry of final judgment.

 

Yields can be found at http://www.federalreserve.go v/releases/H15/data/Monthly/H15_TCMNOM_Y1.txt.

 

Interest is calculated as (P(1  i)^n), where “P” is the actual loss ($356,112.58), “i” is the 1.22% interest rate, and “n” is the number of years (1).

 

CONCLUSION

 

For the reasons set forth above, I respectfully recommend that the Court award Fireman’s Fund $361,650.52 in damages (comprised of $356,112.58 in actual loss, $350 in costs, and $5,187.94 in interest) plus $12.05 per diem through entry of final judgment against Never Stop Trucking. Any objections to the recommendations made in this Report must be filed with the Clerk of the Court and the Honorable Frederic Block within ten business days of receipt hereof. Failure to file timely objections may waive the right to appeal the District Court’s Order. See 28 U.S.C. § 636(b)(1); FED. R. CIV. P. 6(a), 6(e), 72; Small v. Sec’y of Health & Human Servs., 892 F.2d 15, 16 (2d Cir.1989). Fireman’s Fund is hereby directed to serve copies of this Report and Recommendation upon Never Stop Trucking, and to promptly file proof of service with the Clerk of the Court.

 

E.D.N.Y.,2009.

Fireman’s Fund Ins. Co. v. Never Stop Trucking, Inc.

Slip Copy, 2009 WL 3297780 (E.D.N.Y.)

 

END OF DOCUMENT