United States District Court,

C.D. California.

LLR LOGISTICS LLC

v.

K & R TRANSPORTATION LOGISTICS, INC., Etc., et al.

No. CV-10-666-JST (PJWx).

 

Oct. 14, 2010.

 

PROCEEDINGS: (IN CHAMBERS) ORDER GRANTING

 

Honorable JOSEPHINE STATON TUCKER, District Judge.

 

Ellen Matheson, Deputy Clerk.

 

Having reviewed the briefs and heard parties’ oral arguments, the Court GRANTS Defendant/Cross-Complainant Schulz Transportation Services, Inc.’s Motion for Summary Judgment against Defendant/Cross-Defendant Fred Meyer, Inc. (Doc. 52).

 

I. BACKGROUND

 

Schulz Transportation Services, Inc. (“Schulz”), a Nebraska-based trucking company, delivered 91 truckloads of food products to Defendant/Cross-Defendant Fred Meyer, Inc. (“Meyer”) pursuant to a subcontract with Defendant/Cross-Defendant K & R Transportation Logistics, Inc (“K & R”). (Cross-Complainant Schulz’s Separate Statement of Uncontroverted Facts and Conclusions of Law [hereinafter Cross-Compl.’s Facts], Doc. 53, ¶ 3.) K & R paid Schulz’s freight charges for the first 50 truckloads (id. ¶ 4,) but was unable to pay for the additional 41 truckloads because of its own financial problems. (Id. ¶ 7.) Schulz has produced the corresponding bills of lading for the 41 unpaid truckloads. (Decl. of Alan Schulz [hereinafter Schulz’s Deck], Doc. 54, Exh. B.)

 

Because of K & R’s potential insolvency, Schulz contacted Meyer, the consignee on the bills of lading, directly to inquire about payment of its unpaid freight charges. (Id.) Schulz learned that Meyer had not had any direct dealings with K & R, but rather had contracted with Plaintiff LLR Logistics, LLC (“LLR”), a freight broker, to arrange transportation. (Id. ¶ 8.) LLR subsequently contracted with K & R. (Id.) LLR received payment from Meyer for the 91 truckloads, and was in possession of $70,000 that had not been paid out. (Meyer’s Statement of Genuine Issues of Material Fact [hereinafter Meyer’s Facts], Doc. 68, at 10-11 ¶¶ 9, 10.) The $70,000 allegedly accounts for payment for the 41 truckloads. (Id. ¶ 13.)

 

LLR filed a complaint in interpleader in Los Angeles Superior Court against Schulz, Meyer, and TransAm Financial Services, and deposited the $70,000 with the court. (Notice of Removal, Doc. 1, at 18 “Notice of Deposit of Interplead Funds.”) After the case was removed to federal court, Schulz filed a cross-claim against Meyer for quantum meruit and breach of contract, alleging that Meyer was liable for the unpaid freight charges (Doc. 24). Meyer filed its answer to the cross-claim (Doc. 48), and Schulz subsequently filed this Motion for Summary Judgment (Doc. 52).

 

II. LEGAL STANDARD

 

In deciding a summary judgment motion, the court must view the evidence in the light most favorable to the non-moving party and draw all justifiable inferences in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is proper “if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). A factual issue is “genuine” when there is sufficient evidence such that a reasonable trier of fact could resolve the issue in the non-movant’s favor, and an issue is “material” when its resolution might affect the outcome of the suit under the governing law. Anderson, 477 U.S. at 248. The moving party bears the initial burden of demonstrating the absence of a genuine issue of fact.   Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The burden then shifts to the non-moving party to “set out ‘specific facts showing a genuine issue for trial.’ ” Id. at 324 (quoting Fed.R.Civ.P. 56(e)).

 

III. DISCUSSION

 

A. Summary Judgment

 

Schulz’s Motion for Summary Judgment against Meyer relies on the bills of lading between Meyer and Schulz for the 41 truckloads at issue. (Schulz’s Memorandum of Points and Authorities [hereinafter Cross-Compl.’s M.P.A.], Doc. 52, at 6; see Schulz’s Decl., Ex. B .) “[A] a bill of lading is the basic transportation contract between the shipper/consignor and the carrier, the terms and conditions of which bind the shipper and all connecting carriers.”   Oak Harbor Freight Lines, Inc. v. Sears Roebuck, & Co., 513 F.3d 949, 954 (9th Cir.2008) (citing S. Pac. Transp. Co. v. Commercial Metals Co., 456 U.S. 336, 342, 102 S.Ct. 1815, 72 L.Ed.2d 114 (1982)). The default terms and conditions of a standard bill of lading provide that:

 

the owner or consignee shall pay the freight and all other lawful charges upon the transported property and that the consignor remains liable to the carrier for all lawful charges. The bill of lading, however, also contains “nonrecourse” and “prepaid” provisions that, if marked by the parties, release the consignor and consignee from liability for the freight charges. If the nonrecourse clause is signed by the consignor and no provision is made for the payment of freight, delivery of the shipment to the consignee relieves the consignor of liability. Similarly, when the prepaid provision on the bill of lading has been marked and the consignee has already paid its bill to the consignor, the consignee is not liable to the carrier for payment of the freight charges.

 

Id. at 954-55 (quoting C.A.R. Transp. Brokerage Co. v. Darden Rests., Inc., 213 F.3d 474, 478-79 (9th Cir.2000)). Absent a separate agreement that modifies the default terms, “a consignee is liable for freight charges unless the bill of lading is marked ‘prepaid.’ ” Id. at 955 (citing C.A.R. Transp., 213 F.3d at 478-79).

 

Here, Schulz submitted with its Motion copies of the bills of lading for the 41 truckloads it delivered to Meyer. (Schulz’s Decl. Ex. B.) The bills of lading comply with the trucking-industry standard “short form,” and incorporate by reference the standard bill of lading terms and conditions. (Id. ¶ 12.) The bills of lading designate Meyer as the consignee. (Id. ¶ 13.) The bills of lading contain an unsigned nonrecourse section, (Schulz’s Decl. Ex. B,) and all but one are marked “collect.” (Meyer’s Facts at 6 ¶ 13; see Schulz’s Decl. Ex. B. at 15.) None are marked prepaid. (Schulz’s Decl. Ex. B. at 15.) Schulz did not have a separate agreement with Meyer modifying the terms of the bills of lading or precluding Schulz from pursuing collection of its freight charges from Meyer. (Meyer’s Facts at 8 ¶ 16.) Meyer does not dispute the authenticity or accuracy of the bills of lading. Therefore, Meyer, as the consignee, is liable for Schulz’s unpaid freight charges for the 41 truckloads.

 

At the top of the bills of lading, the following text appears: “STRAIGHT BILL OF LADING-SHORT FORM-Original-Not Negotiable. RECEIVED subject to the classifications and tariffs in effect on the date of the issue of this Original Bill of Lading.” At the bottom, the following text appears: “RECEIVED, subject to the classifications and tariffs in effect on the date of the issue of this Bill of Lading ….“ (Schulz’s Decl. Ex. B); see Oak Harbor Freight Lines, 513 F.3d at 953 (citing the following text from the bills of lading in determining that they “complied with industry standards”: “This document is tendered as an individual Bill of Lading. All terms and conditions of the straight Bill of Lading and applicable tariff and classifications in effect as of the date hereon apply.”).

 

Although one of the bills of lading, (“August 10, 2009,” Schulz’s Decl. Ex. B. at 15,) was not checked “collect,” under the default terms of a standard bill of lading, “a consignee is liable for freight charges unless the bill of lading is marked prepaid.” Oak Harbor Freight Lines, 513 F.3d at 955 (internal quotations omitted) (emphasis added). The bill of lading was not marked prepaid. Furthermore, Meyer, through its agent LLR, abided by “custom and practice” of the collect method:

 

LLR helped obtain carriers to transport goods for a particular shipper as need. The shipper would then tender the goods to the carrier, along with the appropriate Bill of Lading. Upon completion of the work, the carrier would submit an invoice and the appropriate Bill of Lading to the broker, and the broker would then collect payment from the shipper. When the shipper tendered payment, the broker LLR in this instance, would take a commission and then remit the payment to the carrier for the work.

 

(Meyer’s Facts at 9-10 ¶ 5.) Therefore, Meyer is liable for all 41 truckloads.

 

Meyer asserts that it is not liable for the unpaid freight charges because Meyer and Schulz were not in contractual privity  and because equitable estoppel should bar Schulz from collecting from Meyer. (Meyer’s Response to Mot. for Summ. J. at 4-5.) Both arguments fail. First, the law is clear: “under the default terms, a consignee is liable for freight charges unless the bill of lading is marked ‘prepaid.’ “ Oak Harbor Freight Lines, 513 F.3d at 955. All outstanding bills of lading operated under the default terms and listed Meyer as the consignee; none were marked prepaid. (Schulz’s Decl. Ex. B.) “[I]n the absence of a separate agreement” modifying these provisions or waiving consignee liability, Meyer is liable for Schulz’s unpaid freight charges. See Oak Harbor Freight Lines, 513 F.3d at 955.

 

Meyer argues that it was not in contractual privity with Schulz because Schulz did not “prepare” the bills of lading for the 41 truckloads. (Meyer’s Response to Mot. for Summ. J. at 5.) This argument lacks merit because “the terms and conditions of [a bill of lading] bind … all connecting carriers” regardless of who prepared the bill of lading. Oak Harbor Freight Lines, 513 F.3d at 954 (emphasis added).

 

Second, Meyer may not make an equitable estoppel defense because it is not an “innocent consignee.” Id. at 960. In this context, courts have “applied estoppel only in limited circumstances: ‘Each and all of them involved a carrier’s misrepresentation, such as a false assertion of prepayment on the bill of lading, upon which a consignee detrimentally relied only to find itself later sued by the carrier for the same freight charges.’ ” Oak Harbor Freight Lines, 513 F.3d at 955 (quoting S. Pac. Transp. Co., 456 U.S. at 351. In Oak Harbor Freight Lines, the court held that equitable estoppel did not bar carrier Oak Harbor’s recovery of freight charges from consignee Sears, noting:

 

The bills of lading clearly were marked “collect,” which put [the consignee] on notice that payment was due. In addition, [the consignee] undertook no actions to limits [sic] its liability. In particular, [the consignee] could have elected to pay [the carrier] directly, but did not, and thereby assumed the risk that [the freight broker] would fail to forward payment.

 

Id. at 960.

 

Similarly, here all but one of the unpaid bills of lading were marked “collect,” (Schulz’s Decl. Ex. B,) which put Meyer on notice of payment. Although Meyer paid LLR, its freight broker, for the shipments, (Meyer’s Facts at 9 ¶ 3; see Declaration of Ray Rivera, Doc. 60, ¶ 8,) the payment was never forwarded to Schulz. (Meyer’s Facts at 11 ¶¶ 11-14.) Meyer also made no effort to limit its liability to Schulz. Finally, although Meyer now argues that it “was never given adequate notice that the carrier for the shipments was Schulz, and as such, [Meyer] could not have limited [its] liability by making the payments directly to Schulz,” (Meyer’s Response to Mot. Summ. J. at 6,) this argument is unavailing. “[A] shipper should bear the risk when it chooses to pay for freight charges through a broker rather than directly to a carrier.”   Oak Harbor Freight Lines, 513 F.3d at 959. Thus, Meyer remains liable for Schulz’s unpaid freight charges.

 

B. Award

 

Schulz seeks payment from Meyer  of $87,800 in freight charges, plus ten percent prejudgment interest accrued from December 23, 2009, the date on which Schulz demanded payment from Meyer. (Cross-Compl.’s M.P.A. at 10-11; Schulz Decl. ¶ 9, Exh. A at 3-7); see Cal. Civ.Code § 3289. Meyer does not dispute these facts.

 

Because Schulz’s Motion for Summary Judgment seeks relief solely from Meyer, the question of whether Schulz has a claim to the $70,000 of interpleaded funds LLR deposited with the Court goes beyond the scope of this decision. (See TransAm’s Response to Mot. for Summ. J., Doc. 70, at 2-4.) Furthermore, Meyer requests that the Court take judicial notice of: (1) the Notice of Deposit of Interplead Funds in the Amount of $70,000 with the U.S. District Court (Doc. 62), and (2) the Notice of Deposit of Interplead Funds in the Amount of $70,000 with the Los Angeles Superior Court (Doc. 1 at 18). Although Courts may take judicial notice of their own records, United States v. Author Serv., 804 F.2d 1520, 1523 (9th Cir.1986) (citing Shuttlesworth v. City of Birmingham, 394 U.S. 147, 157, 89 S.Ct. 935, 22 L.Ed.2d 162 (1969); Diamond v. Pitchess, 411 F.2d 565, 566 (9th Cir.1969)), neither is relevant to the Court’s determination; therefore, judicial notice is unnecessary.

 

“Prejudgment interest is a substantive aspect of a plaintiff s claims, rather than a merely procedural mechanism.” Oak Harbor Freight Lines, 513 F.3d at 961 (quoting Sea Hawk Seafoods, Inc. v. Exxon Corp. (In re the Exxon Valdez), 484 F.3d 1098, 1101 (9th Cir.2007). “State law generally governs awards of prejudgment interest in diversity actions, but federal law may apply to the calculation of prejudgment interest when a substantive claim derives from federal law alone.” Id. Here, Schulz brings state law claims, so California law governs the award of prejudgment interest.

 

“[California] Civil Code section 3287[a] provides that a party is entitled to recover prejudgment interest on an amount awarded as damages from the date that the amount was both (1) due and owing and (2) certain or capable of being made certain by calculation.” Uzye v. Kadisha, —Cal.Rptr.3d —-, No. B196045, 188 Cal.App.4th 866, 2010 WL 3672251, at (Cal.Ct.App. Sept.22, 2010); see Cal. Civ.Code 3287(a). “Damages are certain or capable of being made certain by calculation, or ascertainable, for purposes of Civil Code section 3287[a] if the defendant actually knows the amount of damages or could compute that amount from information reasonably available to the defendant.” Uzyel, 188 Cal.App.4th 866, 2010 WL 3672251 at *32. Schulz’s freight charges were officially due on December 23, 2009, (Schulz Decl. ¶ 9,) and Schulz provides the invoice number, bill of lading date, and amount owed for each of the 41 truckloads, which totals to $87,800. (Schulz’s Decl. Exh. A at 3-7.) This information was reasonably available to Meyer and Meyer could have computed the $87,800 figure on its own.

 

Under Civil Code section 3289(b), “[i]f a contract entered into after January 1, 1986, does not stipulate a legal rate of interest, the obligation shall bear interest at a rate of 10 percent per annum after a breach.” Cal. Civ.Code 3289(b). Because Schulz’s damages derive from bills of lading, i.e. contracts, and because the bills of lading do not stipulate a legal rate of interest, the $87,800 bears ten percent per annum interest from December 23, 2009. Cal. Civ.Code 3289(a).

 

IV. CONCLUSION

 

For the stated reasons, the Court GRANTS Schulz’s Motion for Summary Judgment and FINDS that Meyer owes Schulz $87,800 in damages plus ten percent prejudgment interest accrued from December 23, 2009. Because there remain unadjudicated claims in this matter, and pursuant to the final judgment rule, see 28 U.S.C. § 1291, the Court does not enter a final judgment at this time.