United States District Court,

E.D. Pennsylvania.

S & H HARDWARE & SUPPLY CO.

v.

YELLOW TRANSPORTATION, INC.

July 8, 2004.

MEMORANDUM AND ORDER

SAVAGE, J.

In this action brought under the Carmack Amendment, 49 U.S.C. § 14706(d), [FN1] S & H Hardware (“S & H”) seeks damages from Yellow Transportation, Inc. (“Yellow”), a common carrier, for failure to deliver goods which had been shipped by the manufacturer to S & H at the request of Ace Hardware (“Ace”) which was billed for them. Invoking the strict notice requirement of the Carmack Amendment incorporated into its freight tariff, Yellow has moved for summary judgment. [FN2] S & H, conceding that it failed to file a timely formal written claim with Yellow, argues that this failure should be excused because Yellow had actual notice of the potential claim and was not prejudiced by the lack of formal notice.

FN1. The amendment is to the Interstate Commerce Act, 49 U.S.C. § 11707.

FN2. Summary judgment is appropriate if “there is no genuine issue as to any material fact and … the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). The nonmovant “must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.” Fed. R. Civ. P. 56(e). Facts which could alter the outcome are material and disputes are genuine “if evidence exists from which a rational person could conclude that the position of the person with the burden of proof on the disputed issue is correct.” Ideal Dairy Farms, Inc. v. John Lebatt, Ltd., 90 F.3d 737, 743 (3d Cir.1996). All evidence of the nonmovant is assumed to be true and all justifiable inferences are to be drawn in the nonmovant’s favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An inference based upon speculation or conjecture does not create a material fact. Robertson v. Allied Signal, Inc., 914 F.2d 360, 382 n. 12 (3d Cir.1990). The nonmovant must show more than the “mere existence of a scintilla of evidence” for elements on which he bears the burden of production. Anderson, 477 U.S. at 252. Thus, “[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

Background

For several years, S & H had ordered model trains from Lionel LLC (“Lionel”), through a buying consortium, Ace Hardware. Pl. Resp. to Mot. for Summ. J. at 4. Using Yellow as a carrier, Lionel shipped the trains to S & H. Def. Stmt. of Undisputed Facts ¶ 9; Pl. Stmt. of Disputed Facts ¶ 9. Lionel billed Ace, which in turn billed S & H. Harold Stern Dep. at 69, 87 (Pl. Resp. to. Mot. for Summ. J. Ex. A ). S & H paid the freight charges at the time of delivery. Id. at 19-20, 32.

Typically, a Yellow truck would arrive at S & H’s retail store in Philadelphia, the consigned location on the bill of lading. Harold Stem Dep. at 19, 99 (Pl. Resp. to. Mot. for Summ. J. Ex. A ). After S & H paid the freight bill, the Yellow driver would then unload the freight at the rear of S & H’s store or at its nearby warehouse as instructed by Steven Schwartz (“Schwartz”), an S & H employee. Id. at 20-21, 31-32. S & H did not pay for the trains before or upon delivery. Instead, Ace later billed S & H. Id. at 87.

In November 2000, S & H received an invoice from Ace for over $1.6 million for Lionel trains that were not in S & H’s inventory. Pl. Resp. to Mot. for Summ. J. at 4; Harold Stern Dep. at 68 (Pl. Resp. to. Mot. for Summ. J. Ex. A ). S & H’s investigation revealed that starting in early 2000 and continuing into March 2001, while he had been on medical leave, Schwartz had schemed to divert the train shipments to his own location from which he would sell them and keep the proceeds. Harold Stern Dep. at 71 (Pl. Resp. to. Mot. for Summ. J. Ex. A ). Schwartz accomplished the diversion by contacting the Yellow driver en route and instructing him to deliver the trains to a private warehouse where Schwartz would meet him, pay the freight charges and tip him. Thomas Janusz Dep. at 52, 58 (Pl. Resp. to. Mot. for Summ. J., Ex. C ); Harold Stem Dep. at 70 (Pl. Resp. to. Mot. for Summ. J. Ex. A ).

In April 2001, when S & H learned that Schwartz had placed an unauthorized order of Lionel trains, it contacted the FBI and Yellow’s security division to notify them of the possible criminal involvement of one of its drivers. Herbert Stem Dep. at 63, 65 (Pl. Resp. to. Mot. for Summ. J. Ex. B ). Yellow’s security department attempted to follow the truck containing the unauthorized shipment, but lost track of it. Clifford Shaw Dep. at 12-15 (Pl. Resp. to. Mot. for Summ. J. Ex. D ). Alerted by Yellow’s dispatcher that they were under surveillance, Schwartz and the Yellow driver packed the unloaded trains back into the delivery truck and the Yellow driver proceeded to S & H’s store where he attempted to deliver the unauthorized shipment to S & H. Thomas Janusz Dep. at 30-32 (Pl. Resp. to. Mot. for Summ. J., Ex. C ); Joseph A. Purcell Dep. at 47 (Pl. Resp. to. Mot. for Summ. J. Ex. F ). The shipment was refused because it had not been ordered by S & H. Pl. Resp. to Mot. for Summ. J. Ex. J.

What transpired after S & H discovered Schwartz’s diversionary scheme until this lawsuit was filed is vague. The parties dispute when S & H first learned of the diverted shipments. However, it is undisputed that S & H never filed a formal written claim with Yellow. Def. Stmt. of Undisputed Facts ¶ 11; Pl. Stmt. of Disputed Facts ¶ 11.

Failure to File Written Claim

The Carmack Amendment provides the exclusive remedy against an interstate common carrier for breach of a carriage contract. 49 U.S.C. § 14706. Before a party can initiate a suit to recover damages, it must file a written claim with the carrier to give it time to investigate the claim and potentially settle it without having to resort to litigation. Perini-North River Assocs. v. Chesapeake & Ohio Ry. Co., 562 F.2d 269, 272-73 (3d Cir.1977). The carrier must allow a minimum nine-month period to file a claim. 49 U.S.C. § 14706(e)(1).

Yellow’s straight bill of lading, which incorporates the terms of the Uniform Bill of Lading, [FN3] 49 C.F.R. Pt. 1035, App. B § 2(b) (” § 2(b)”), requires that a claim be filed within nine months of actual delivery or nine months after a reasonable time for delivery has elapsed. § 2(b). Failure to file a claim within the time limit bars recovery. Id.

FN3. The Surface Transportation Board, the administrative agency designated by the Department of Transportation to regulate interstate commercial transport, requires that all common carriers utilize the straight bill of lading prescribed by the agency. 49 C.F .R. § 1035.1.

The filing of a written claim within the prescribed period is a strict condition precedent to the filing of a lawsuit. Saltzstein v. Bekins Van Lines, 993 F.2d 1187, 1189-90 (5th Cir.1993); Nedlloyd Lines B.V. Corp. v. Harris Transp. Co., 922 F.2d 905, 908-09 (1st Cir.1991); Pathway Bellows, Inc. v. Blanchette, 630 F.2d 900, 904-05 (2d Cir.1980). There are two exceptions to this stringent time limitation: (1) the uncertainty exception excuses late filing where the amount of loss cannot be determined during the nine-month period; and, (2) the estoppel exception applies where the carrier is precluded from raising the time bar because it deliberately lulled the claimant into believing that it was not necessary to file a claim. Pathway Bellows, Inc., 630 F.2d at 905 n. 10.

S & H relies on the estoppel exception, arguing that Yellow should have inferred from its own involvement in the investigation that S & H had a claim for the misdeliveries. Pl. Resp. to Mot. for Summ. J. at 6, 15. To prevail, S & H must establish more than Yellow’s knowledge of a possible claim. Perini-North River Assocs., 562 F.2d at 273. It must demonstrate that Yellow intentionally misled S & H into believing that it did not need to file a claim. Id. S & H makes no such argument. Nor does it allege any intentional deception or misleading on Yellow’s part.

S & H argues that because Yellow became aware of the diversion scheme, it had reason to conclude that there was a claim or one was coming. It cites evidence in Yellow’s file which included an interview with the Yellow driver, an email from Ace Hardware disputing three of the diverted shipments, [FN4] and a delivery slip for the April 3, 2001, shipment with the handwritten notation that the shipment was refused because it was not ordered. Pl. Resp. to Mot. for Summ. J. at 6-7. S & H maintains that this information alone provided sufficient notice of S & H’s claim. Unfortunately for S & H, a carrier’s actual knowledge of a potential claim does not relieve a claimant from its obligation to file a written claim. Perini-North River Assocs., 562 F.2d at 273. Yellow’s knowledge of Schwartz’s scheme and its participation in the federal criminal investigation cannot excuse S & H’s failure to comply with the filing requirement of the Carmack Amendment.

FN4. Ace’s email could have been perceived as Ace potentially making a claim and not S & H.

At no time during its investigation of the diverted shipments did S & H ever advise Yellow that it was making a claim or intended to file one. Harold Stem Dep. at 81 (Def. Mot. for Summ. J. Ex. B ). There is no evidence that Yellow misled S & H into believing that it need not file a claim. [FN5] Indeed, S & H makes no such argument. Accordingly, because there is no issue of fact regarding S & H’s failure to comply with the notice requirement and there are no facts excusing the failure, summary judgment must be granted in favor of Yellow.

FN5. The movant bears initial burden of demonstrating that there were no issues of material fact. Fed. R. Civ. P. 56(c). Once the movant has presented this evidence, the nonmovant must come forward with probative evidence that would be sufficient for a jury to find for the nonmovant. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). S & H has not done so.

Conclusion

S & H’s failure to comply with the mandatory requirements for filing a written claim within nine months of the misdelivery bars it from recovering from Yellow. However, even if S & H had filed a claim under the Carmack Amendment, S & H has failed to allege that it suffered any damages as a result of Yellow’s failure to deliver trains to the consigned location. [FN6]

FN6. Although a consignee has standing to bring an action under the Carmack Amendment to recover the value of goods lost in shipping, it must still prove that it suffered actual damages. Paper Magic Group, Inc. v. J.B. Hunt Transport, Inc., 318 F.3d 458, 461 (3d Cir.2003); Conair Corp. v. Old Dominion Freight Line, Inc., 22 F.3d 529, 531 (3d Cir.1994).

S & H did not suffer any monetary loss as a result of the diverted shipments. At oral argument, S & H conceded that it did not pay for the trains it did not receive. See also Harold Stern Dep. at 69, 87 (Pl. Resp. to. Mot. for Summ. J. Ex. A ). It did not pay Ace which had purchased the trains from Lionel. Id. at 71. Nor did it pay Lionel. Id. Furthermore, S & H does not contend that it was obligated to pay for the missing trains. Thus, because S & H has not alleged nor demonstrated that it sustained any damages, it cannot make out a cause of action in any event.

ORDER

AND NOW, this 8th day of July, 2004, upon consideration of Defendant Yellow Transportation, Inc.’s Motion for Summary Judgment (Docket No. 15) and the plaintiff’s response, and after oral argument, it is ORDERED that the motion is GRANTED.

JUDGMENT IS ENTERED in favor of the defendant and against the plaintiff