Tremco Inc. v. General Transport & Consultants, Inc.

Ariz.App. Div. 1,2008.

Notice: THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES. See Ariz. R. Supreme Court 111(c); ARCAP 28(c); Ariz. R.Crim. P. 31.24.

Court of Appeals of Arizona,Division 1, Department E.

TREMCO INCORPORATED, an Ohio corporation, Plaintiff/Appellee,

v.

GENERAL TRANSPORT & CONSULTANTS, INC., an Ohio corporation, Defendant/Appellant.

May 15, 2008.

Appeal from the Superior Court in Maricopa County; Cause No. CV2006-014232; The Honorable Edward O. Burke, Judge. AFFIRMED.

Alvarez & Gilbert, PLLC by Donald R. Alvarez, Scottsdale, Attorneys for Plaintiff/Appellee.

Gordon & Rees LLP by Stephen W. Tully, Phoenix, Attorneys for Defendant/Appellant.

MEMORANDUM DECISION

PORTLEY, Judge.

1 General Transport & Consultants, Inc. (“General”) challenges the summary judgment granted to Tremco Incorporated. For the following reasons, we affirm.

FACTS

2 Tremco hired General in 2004 to move a truckload of Tremco’s products from Ohio to California. General then brokered  the load to Seaboard Products, Inc. (“Seaboard”), and Seaboard brokered the load to Value Truck (“Value”), an Arizona corporation.

We use the term “broker” to refer to an agreement that includes a delegation of the duty to transport a shipment.

3 Value took possession of Tremco’s product. Value refused to deliver the shipment until the $4,800 debt Seaboard owed was paid in full. Tremco demanded the return of its product, but Value refused to release it.

4 Tremco filed suit against General and Value in September 2006. It claimed that General was liable for breach of contract and Value was liable, among other things, for conversion. After Value failed to file a timely answer, the court entered a default judgment against Value for $79,674.16.

5 In February 2007 Tremco filed a motion for summary judgment against General. After oral argument, the court granted Tremco’s motion and entered a judgment in favor of Tremco for $49,382.16. General appeals, and we have jurisdiction pursuant to Arizona Revised Statutes (“A.R.S.”) sections 12-120.21(A)(1) (2003) and 12-2101(B) (2003).

DISCUSSION

6 General contends that the court erred in granting Tremco’s motion for summary judgment. We review a trial court’s grant of summary judgment de novo. See Orfaly v. Tucson Symphony Soc’y, 209 Ariz. 260, 263, ¶ 8, 99 P.3d 1030, 1033 (App.2004). A trial court may grant summary judgment if “there is no genuine issue as to any material fact” and the movant “is entitled to judgment as a matter of law.”Ariz. R. Civ. P. 56(c)(1).

7 A shipment of goods that is moved between two states is subject to the Carmack Amendment to the Interstate Commerce Act (“the Act”).See49 U.S.C. § 13501(1)(A) (2007). Under the Act, a carrier is liable for loss or injury to shipped property. Id. § 14706(a)(1) (2007). All state law breach of contract claims are preempted by the Act. See Hall v. N. Am. Van Lines, Inc ., 476 F.3d 683, 688-89 (9th Cir.2007).

8 To establish a prima facie case under the Act, a shipper must establish: (1) that the goods were delivered in good condition to the carrier; (2) that the goods arrived in a damaged condition; and (3) the amount of damages.John Morrell & Co. v. Frozen Food Express, Inc., 700 F.2d 256, 258 (5th Cir.1983) (citation omitted). The shipper does not need to specifically mention the Act in its pleading to raise a claim under the Act as long as it establishes the proper elements. See Nichols v. Mayflower Transit, LLC, 368 F.Supp.2d 1104, 1110 (D.Nev.2003); Mayflower Transit, Inc. v. Davenport, 714 N.E.2d 794, 798 (Ind.Ct.App.1999) (holding that a state law negligence claim for damaged goods shipped in interstate commerce constituted a claim for relief under the Act because it included the proper elements).

9 In its complaint, as well as in its statement of facts supporting its motion for summary judgment, Tremco alleged that: (1) Tremco hired General to ship Tremco’s products to California; (2) General brokered the load to Seaboard; (3) Seaboard brokered the load to Value; (4) Tremco’s products were worth approximately $45,000 at the time that General received them; and (5) Tremco’s products were rendered worthless because Value refused to deliver the load.Tremco established all of the elements of a claim under the Act.See John Morrell & Co., 700 F.2d at 258.

Tremco’s statement of facts was supported by the affidavit of Ralph Skrobacs, Tremco’s manager of transportation services.

Although we examine Tremco’s claim under federal law, Arizona common law also holds common carriers liable for the damage or loss of shipped goods. S. Pac. Co. v. Loden, 19 Ariz.App. 460, 463, 508 P.2d 347, 350 (1973).

10 General then had the burden to produce sufficient competent evidence to demonstrate that there was a genuine issue of material fact. See GM Dev. Corp. v. Cmty. Am. Mortgage Corp., 165 Ariz. 1, 5, 795 P.2d 827, 831 (App.1990) (citation omitted). General contends that its partial denial in its answer was sufficient to establish that there was a genuine issue of material fact. We disagree.

11 After a summary judgment motion has been filed and is properly supported, the other party “may not rest upon the mere allegations or denials of the adverse party’s pleading” to oppose the motion. Ariz. R. Civ. P. 56(e); see also GM Dev. Corp., 165 Ariz. at 5, 795 P.2d at 831. Instead, it must present sufficient competent evidence that challenges the movant’s evidence. See GM Dev. Corp, 165 Ariz. at 5, 795 P.2d at 831. General’s partial denial in its answer, therefore, was insufficient as a matter of law to rebut Tremco’s motion. Moreover, General’s response was unsupported by affidavit or other competent evidence. See id.(stating that a party opposing summary judgment cannot “rely solely on unsworn assertions of fact to controvert a motion which is supported by sworn facts”).

12 General next contends that summary judgment was improper because it presented “unrefuted” evidence of its impossibility defense.

13 The only defenses to a claim under the Act for lost or damaged property are: “(1) an act of God, (2) an act of the public enemy, (3) an act of the shipper, (4) an act of the public authority or (5) the inherent nature or vice of the goods.”Tokio Marine and Fire Ins. Co. v. Amato Motors, Inc., 871 F.Supp. 1010, 1014 (N.D.Ill.1994). Because General did not raise a defense that is recognized by the Act, the court was not precluded from granting summary judgment.

Even if Tremco’s claim had been based in contract, General would not be entitled to the defense of impossibility because: (1) General could have avoided the damages by paying Value the money it was owed by Seaboard, seeRestatement (Second) of Contracts § 261 cmt. d (stating that a party cannot assert the defense of impossibility if it does not attempt to surmount obstacles to performance); and (2) General relied on Value, a third party, to deliver the shipment. See id. cmt. e (stating that if a party’s performance depends on some act of a third party, “he is not ordinarily discharged because of a failure by that party because this is also a risk that is commonly understood to be on the obligor .”).

14 General finally contends that if we affirm the summary judgment, it should be held jointly and severally liable with Value to prevent a double recovery by Tremco. Tremco agrees that it is not entitled to a double recovery, but contends that joint and several liability would be inappropriate because the damages it was awarded against General and Value differ.

15 General did not argue in its answer or in its response to the motion for summary judgment that if found liable, it should be held jointly and severally liable with Tremco. Consequently, General has waived the argument. Odom v. Farmers Ins. Co. of Ariz ., 216 Ariz. 530, 535, ¶ 18, 169 P.3d 120, 125 (App.2007) (“Generally, arguments raised for the first time on appeal are untimely and deemed waived.”).

CONCLUSION

16 For the foregoing reasons, we affirm the trial court’s grant of Tremco’s motion for summary judgment.

CONCURRING: DONN KESSLER, Presiding Judge and PATRICIA A. OROZCO, Judge.

Ariz.App. Div. 1,2008.

Tremco Inc. v. General Transport & Consultants, Inc.

Court of Appeals of Texas,Houston (14th Dist.).

BENNETT TRUCK TRANSPORT, LLC, Appellant

v.

WILLIAMS BROTHERS CONSTRUCTION, Appellee.

May 22, 2008.

On Appeal from the County Civil Court at Law No. 1, Harris County, Texas, Trial Court Cause No. 849496.

Panel consists of Justices YATES, FOWLER, and GUZMAN.

OPINION

LESLIE B. YATES, Justice.

Appellant Bennett Truck Transport, LLC appeals from the trial court’s order granting summary judgment against it on its claim against appellee William Brothers Construction. Because we conclude material fact issues exist, we reverse and remand.

BACKGROUND

Bennett is a for-hire motorcarrier in the business of transporting goods. The Texas Department of Transportation (“TxDOT”) issued a permit to Bennett to transport an oversized manufactured housing unit within Texas on a specified route. The permit directed Bennett to travel through Houston, Texas southward on Loop 610 and to exit from Loop 610 onto Highway 59 South. However, due to road construction being conducted by Williams Brothers, the lanes on the exit ramp had been narrowed and were too narrow to accommodate the oversized load. As Bennett’s driver traveled on the exit ramp, the manufactured home was damaged beyond repair. As a common carrier, Bennett paid the housing unit owner $24,340 for damage to the home.

Nearly two years after the accident, Bennett sued Williams Brothers, claiming that Williams Brothers negligently failed to place proper signs alerting drivers to the narrowed lanes, as required by its contract with TxDOT. Williams Brothers moved for summary judgment, arguing that Bennett did not have standing because it did not own the housing unit and the owner had not assigned its claim to Bennett. Williams Brothers asserted that Bennett was a settling joint tortfeasor and was prohibited from seeking contribution from Williams Brothers as a co-tortfeasor under Beech Aircraft Corp. v. Jinkins, 739 S.W.2d 19 (Tex.1987). Bennett responded that it was not seeking contribution but was claiming a right to reimbursement based on equitable subrogation, arguing that, as a common carrier, it was an insurer of the property and thus entitled to subrogation. Williams Brothers also moved for summary judgment on the ground that it was protected from liability by section 97.002 of the Texas Civil Practice and Remedies Code, which protects those who contract with TxDOT for road repairs if they comply with relevant contract specifications. SeeTEX. CIV. PRAC. & REM.CODE ANN. § 97.002 (Vernon 2005). Bennett responded that Williams Brothers did not comply with the contract specifications, which required proper signage. The trial court granted summary judgment without specifying the basis, and this appeal followed. In two issues, Bennett argues that the trial court erred in granting summary judgment because it is entitled to proceed under an equitable subrogation theory and because Williams Brothers is not protected from liability under section 97.002.

Standard of Review

The standard of review for a traditional motion for summary judgment is whether the successful movant at the trial level carried its burden of showing that there is no genuine issue of material fact and that judgment should be granted as a matter of law. KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988 S.W.2d 746, 748 (Tex.1999). A defendant must conclusively negate at least one essential element of each of the plaintiff’s causes of action or conclusively establish each element of an affirmative defense. Sci. Spectrum, Inc. v. Martinez, 941 S.W.2d 910, 911 (Tex.1997). Under this traditional standard, the court must take as true all evidence favorable to the nonmovant and must make all reasonable inferences in the nonmovant’s favor. See id.When, as here, the trial court does not specify the basis for its summary judgment, we will affirm the judgment if any one of the theories advanced in the motion is meritorious. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 157 (Tex.2004).

Section 97.002

Section 97.002 of the Civil Practice and Remedies Code provides:

A contractor who constructs or repairs a highway, road, or street for the Texas Department of Transportation is not liable to a claimant for … property damage … arising from the performance of the construction or repair if, at the time of the … property damage, … the contractor is in compliance with the contract documents material to the condition or defect that was the proximate cause of the … property damage….

Williams Brothers moved for summary judgment, arguing that it complied with all TxDOT contract requirements and therefore is protected from liability. In its second issue, Bennett argues that summary judgment on this basis was improper because a fact issue exists regarding Williams Brothers’s compliance. We agree. Williams Brothers’s contract with TxDOT required proper signage to notify motorists of any lane narrowing. Williams Brothers presented evidence that it generally complied with the contract signage requirements and that at least one employee checked the site multiple times daily to ensure all signs were in place. However, Bennett presented an affidavit from its driver stating that as he was traveling from Loop 610 approaching the exit for Highway 59 south, a route he had traveled many times before, “there were not any signs indicating that there were narrowed lanes on the ramp.”A Williams Brothers manager testified that even though he could not recall any signs missing, he could not testify that at the exact date and time of the accident, a sign was present. Based on this evidence, we conclude that a fact issue exists as to whether, despite its policy and belief to the contrary, the necessary signs were in place when Bennett’s driver passed through the exit ramp. Therefore, the trial court erred to the extent that it granted summary judgment on this basis, and we sustain Bennett’s second issue.

Equitable Subrogation

A common carrier is one who holds itself out to the general public as engaged in the business of transporting persons or property from one place to another. See BML Stage Lighting, Inc. v. Mayflower Transit, Inc., 14 S.W.3d 395, 402 (Tex.App.-Houston [14th Dist.] 2000, pet. denied). It is undisputed that Bennett was transporting the housing unit as a common carrier. Unless provided otherwise by law, the duty of a common carrier is as provided at common law.TEX. TRANSP. CODE ANN. § 5.001(a)(1) (Vernon 1999). At common law, common carriers were generally liable as insurers for any loss or injury to the property occurring during transport. See Travelers Ins. Co. v. Delta Air Lines, Inc., 498 S.W.2d 443, 445 (Tex.Civ.App.-Texarkana 1973, no writ) (“At common law the common carrier was an insurer of goods entrusted to it for shipment and could only be relieved from liability for failure to deliver by showing affirmatively that such failure to deliver was due to one of several recognized exceptions ….“ (emphasis added)); see also Common Carrier Motor Freight Ass’n v. NCH Corp., 788 S.W.2d 207, 209 (Tex.App.-Austin 1990, writ denied) (noting general rule that “[a]t common law, the carrier is fully liable for all damage to cargo in its possession”); Mo. Pac. R.R. v. John B. Hardwicke Co., 380 S.W.2d 706, 707 (Tex.Civ.App.-San Antonio 1964, no writ) (describing general common law shipper liability rule and exceptions and stating that “[w]here the loss is not due to one of these specified causes, it is immaterial whether the carrier has exercised due care or was negligent”).

In its first issue, Bennett argues that because it paid the loss to the housing unit’s owner as an insurer, it is entitled to seek reimbursement under the theory of equitable subrogation. When an insurer pays a loss, the insurer becomes equitably subrogated to its insured’s rights and stands in the insured’s shoes against the tortfeasor who caused the loss. See Argonaut Ins. Co. v. Allstate Ins. Co., 869 S.W.2d 537, 541 (Tex.App.-Corpus Christi 1993, writ denied); accord Ward v. Allied Van Lines, Inc., 231 F.3d 135, 140 (4th Cir.2000). Equitable subrogation is a “legal fiction” whereby an obligation that is extinguished by a third party is treated as still existing to allow the creditor to seek recovery from the primarily liable party. See Murray v. Cadle Co., No. 05-06-01481-CV, — S.W.3d —-, 2008 WL 1838014, at(Tex.App.-Dallas Apr. 25, 2008, no pet. h.). The party claiming entitlement to equitable subrogation must prove that it acted involuntarily in paying a debt and that the debt was one on which the other party is primarily liable. See Mid-Continent Ins. Co. v.. Liberty Mut. Ins. Co., 236 S.W.3d 765, 774 (Tex.2007); Murray, 2008 WL 1838014, at *6. Texas courts are particularly hospitable to the doctrine. Murray, 2008 WL 1838014, at *5.

Williams Brothers argues that Bennett has no standing to bring this suit because it neither owns the property nor received an assignment of rights from the owner. However, when an insurer pays an owner’s loss, it becomes the owner of the cause of action and therefore does not need an assignment. See Mid-Continent, 236 S .W.3d at 774 (noting that subrogation grants the party seeking it “the right to pursue reimbursement from a third party”); Thoreson v. Thompson, 431 S.W.2d 341, 347 (Tex.1968) (stating that insurer paying insured’s loss becomes owner of cause of action); see also Jones Motor Co. v. Anderson, 602 S.E.2d 228, 230 (Ga.Ct.App.2004) (explaining that subrogation eliminates the need for formal assignment of rights).

We agree that Bennett is entitled to attempt to prove its equitable subrogation theory. Bennett paid full damages to the property owner as an insurer, and thus it should not be precluded from pursuing equitable subrogation as a matter of course without examining the facts of the case. See Ward, 231 F.3d at 139-40 (holding that because common carriers are insurers and insurers have subrogation rights, common carriers have subrogation rights). Williams Brothers asserts that common carriers are not truly insurers because they can avoid liability in some circumstances. See Travelers Ins. Co., 498 S.W.2d at 445;Mo. Pac. R.R., 380 S.W.2d at 707. That common carriers may have different avenues to avoid liability does not negate that they are generally liable for any property damage during transit, regardless of their own negligence. See Mo. Pac. R.R., 380 S.W.2d at 707. Williams Brothers asserts that Bennett’s driver was likely negligent and thus, Williams Brothers “is no more ‘primarily liable’ than Bennett and its driver.”As discussed above, Williams Brothers’s negligence is in dispute, and as Bennett points out, Bennett’s negligence or lack thereof is a fact issue for the jury. Equitable subrogation is an equitable remedy that involves balancing of all the equities in the circumstances, including any negligence of the party seeking subrogation. See Murray, 2008 WL 1838014, at(stating that “each case turns on its own facts when the issue is one of purely equitable subrogation” and that factors to consider in balancing the equities include “the negligence of the party claiming subrogation”); see also Providence Inst. for Savs. v. Sims, 441 S.W.2d 516, 519 (Tex.1969) (noting that a factor of “some importance” in assessing equitable subrogation is “[n]egligence on the part of one seeking subrogation”). Further, a party is not entitled to equitable subrogation if it pays a debt for which it was primarily liable. See Mid-Continent, 236 S.W.3d at 776 (explaining that when one pays a debt upon which it is primarily liable, it fails to satisfy ‘the traditional subrogation requirement that the subrogee pay a debt for which another was primarily liable”). Thus, the issue of the parties’ negligence and who is primarily liable for the accident must be decided by a factfinder.

Williams Brothers asserts that Bennett is really a joint tortfeasor seeking contribution based on Williams Brothers’s percentage of responsibility, which is barred by the Texas Supreme Court’s opinion in Jinkins.The Jinkins court held that “a defendant can settle only his proportionate share of a common liability and cannot preserve contribution rights under either the common law or the comparative negligence statute by attempting to settle the plaintiff’s entire claim.”739 S.W.2d at 22. The court was concerned, among other things, about the settling party assuming multiple roles, explaining that “the settling defendant’s unusual posture as surrogate plaintiff, co-defendant and cross-plaintiff will confuse a jury and possibly prejudice the remaining parties.”Id. We conclude Jinkins does not apply in this situation. Jinkins prohibits a defendant from settling a plaintiff’s entire claim by paying more than its proportionate share of responsibility and then hoping to obtain reimbursement from other joint tortfeasors. See id.That did not happen here. Bennett did not voluntarily pay the owner’s entire damages-it was required to do so because of its status as a common carrier. See Common Carrier Motor Freight Ass’n, 778 S.W.2d at 209;Travelers Ins. Co., 498 S.W.2d at 445;Mo. Pac. R.R., 380 S.W.2d at 707. Williams Brothers emphasizes that allowing Bennett’s suit will require Bennett to play multiple roles as plaintiff and co-defendant, thereby implicating the policy concerns in Jinkins.However, equitable subrogation claims often involve multiple roles, such as when an insurer pursues a claim on behalf of its insured driver where both drivers involved in an accident are alleged to be negligent. See Mid-Continent, 236 S.W.3d at 774 (explaining that subrogation insurers’ claims are subject to any defenses held by the third party against the insured). Texas favors equitable subrogation, even though it may involve dual roles-whether it is the insured’s potential negligence, as in a car wreck case, or the insurer’s potential negligence, as in this case. Equitable subrogation has its own unique set of circumstances and policy considerations, and this is not the situation contemplated in Jinkins.

We conclude the trial court erred to the extent it granted summary judgment on Bennett’s equitable subrogation claim. Fact issues exist regarding the negligence of both Bennett and Williams Brothers, and Bennett is entitled to have a jury determine who is primarily liable for the incident. We sustain Bennett’s first issue.

Because we have concluded that genuine issues of material fact preclude summary judgment, we reverse the trial court’s judgment and remand for further proceedings consistent with this opinion.