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Total Quality Logistics, LLC v. Tucker, Albin and Assocs.

Court of Appeals of Ohio, Twelfth Appellate District, Clermont County

May 31, 2022, Decided

CASE NO. CA2021-06-031

Reporter

2022-Ohio-1802 *; 2022 Ohio App. LEXIS 1666 **; 2022 WL 1741059

TOTAL QUALITY LOGISTICS, LLC, Appellant, -vs- TUCKER, ALBIN AND ASSOCIATES, et al., Appellees.

Prior History:  [**1] CIVIL APPEAL FROM CLERMONT COUNTY COURT OF COMMON PLEAS. Case No. 2019 CVH 01237.

Disposition: May 21, 2021 judgment entering summary judgment is affirmed in part and reversed in part. May 22, 2020 judgment dismissing claims is affirmed.

Core Terms

customers, damages, trial court, tortious interference, goodwill, business relationship, carriers, summary judgment, injunctive relief, loss of goodwill, lost goodwill, injunction, reputation, nominal damages, costs, trucking company, attorney’s fees, lost profits, allegations, irreparable harm, prevailing party, do business, contacting, Contracts, parties, accounts receivable, breach of contract, demand for payment, assigned error, speculation

Case Summary

Overview

HOLDINGS: [1]-The trial court properly granted the defendant’s summary judgment under Civ.R. 56(C) on the plaintiff’s request for a permanent injunction because the evidence did not show that it faces immediate and irreparable injury or harm. Also, the plaintiff identified its interests (i.e., goodwill and reputation) but offered nothing beyond mere speculation that an injunction was necessary to prevent the defendant from continuing to injure the interests; [2]-The trial court properly dismissed the plaintiff’s claim for tortious interference under Civ.R. 12(B)(6) because the complaint did not allege that the defendant induced or otherwise purposely caused a third person not to enter or to continue a business relation or not to perform a contract with it. Therefore the plaintiff could not be granted relief on the claim.

Outcome

Judgment affirmed in part and reversed in part.

LexisNexis® Headnotes

Civil Procedure > Appeals > Standards of Review > De Novo Review

Civil Procedure > Judgments > Summary Judgment > Entitlement as Matter of Law

Civil Procedure > … > Summary Judgment > Summary Judgment Review > Standards of Review

Civil Procedure > … > Summary Judgment > Entitlement as Matter of Law > Genuine Disputes

Civil Procedure > … > Summary Judgment > Entitlement as Matter of Law > Legal Entitlement

HN1  Standards of Review, De Novo Review

Under Civ.R. 56(C), summary judgment is proper when the movant demonstrates that there is no issue as to any material fact, that the moving party is entitled to judgment as a matter of law, and that reasonable minds can come to but one conclusion, and that conclusion is adverse to the nonmoving party. The appellate court reviews a trial court’s ruling on a summary-judgment motion de novo, that is, without deference to the trial court’s decision. De novo review means that the appellate court uses the same standard that the trial court should have used, and the court examines the evidence to determine whether as a matter of law no genuine issues exist for trial.

Business & Corporate Compliance > … > Breach > Breach of Contract Actions > Elements of Contract Claims

HN2  Breach of Contract Actions, Elements of Contract Claims

A plaintiff seeking to recover on a claim for breach of contract must prove not only a contractual violation but also that the plaintiff incurred damages as a result.

Civil Procedure > Remedies > Damages > Compensatory Damages

Contracts Law > … > Damages > Types of Damages > Compensatory Damages

HN3  Damages, Compensatory Damages

The sole purpose of contract damages is to compensate the nonbreaching party for losses suffered as a result of a breach.

Civil Procedure > Remedies > Damages > Compensatory Damages

Contracts Law > … > Measurement of Damages > Foreseeable Damages > Lost Profits

HN4  Damages, Compensatory Damages

Goodwill is, in essence, the probability that the old customers will resort to the old place. A loss of goodwill is a form of lost profits, both of which are recoverable as compensatory damages.

Civil Procedure > Remedies > Damages > Compensatory Damages

Contracts Law > … > Measurement of Damages > Foreseeable Damages > Lost Profits

HN5  Damages, Compensatory Damages

The comprehensive definition of goodwill is the advantage or benefit, which is acquired by an establishment, beyond the mere value of the capital, stock, funds, or property employed therein, in consequence of the general public patronage and encouragement, which it receives from constant or habitual customers, on account of its local position, or common celebrity, or reputation for skill or affluence, or punctuality, or from other accidental circumstances or necessities, or even from ancient partialities or prejudices.

Contracts Law > … > Measurement of Damages > Foreseeable Damages > Lost Profits

HN6  Foreseeable Damages, Lost Profits

The general rule for recovery of lost profits, which rule also applies to a claim for loss of goodwill, is that lost profits may be recovered by the plaintiff in a breach of contract action if: profits were within the contemplation of the parties at the time the contract was made, the loss of profits is the probable result of the breach of contract, and the profits are not remote and speculative and may be shown with reasonable certainty.

Contracts Law > … > Measurement of Damages > Foreseeable Damages > Lost Profits

HN7  Foreseeable Damages, Lost Profits

The loss of goodwill can be established with testimony by those who have first-hand knowledge of such loss.

Contracts Law > … > Measurement of Damages > Foreseeable Damages > Lost Profits

HN8  Foreseeable Damages, Lost Profits

Where loss of goodwill is not adequately proven by expert testimony, no speculation is allowed as to those damages.

Contracts Law > … > Measurement of Damages > Foreseeable Damages > Lost Profits

HN9  Foreseeable Damages, Lost Profits

It is commonsense that having a reputation of not paying bills hurts goodwill and results in lost profits.

Business & Corporate Compliance > … > Contracts Law > Breach > Nonperformance

HN10  Breach, Nonperformance

An unexcused failure to perform a contract is a legal wrong.

Contracts Law > … > Damages > Measurement of Damages > Nominal Damages

HN11  Measurement of Damages, Nominal Damages

If a plaintiff proves breach of contract at trial but fails to prove actual damages resulting from that breach, the trial court may enter judgment for the plaintiff and award nominal damages. The nominal damages constitute a penalty or punishment for breaching the contract, that is, a small sum fixed without regard to the amount of loss.

Contracts Law > … > Damages > Measurement of Damages > Nominal Damages

HN12  Measurement of Damages, Nominal Damages

If only nominal damages are available, an appellate court may reverse and remand only if a significant right is involved, including inequitable assessment of costs.

Civil Procedure > … > Attorney Fees & Expenses > Basis of Recovery > English Rule

HN13  Basis of Recovery, English Rule

A prevailing party is generally the party in whose favor the decision, verdict, or judgment is rendered. This includes the party to a suit who successfully prosecutes the action, prevailing on the main issue, even though not necessarily to the extent of his original contention.

Civil Procedure > Preliminary Considerations > Equity > Adequate Remedy at Law

Evidence > Burdens of Proof > Clear & Convincing Proof

Civil Procedure > … > Injunctions > Grounds for Injunctions > Irreparable Harm

Civil Procedure > Preliminary Considerations > Equity > Irreparable Injury

HN14  Equity, Adequate Remedy at Law

It is well-established that in order to obtain an injunction, the moving party must show by clear and convincing evidence that immediate and irreparable injury, loss or damage will result to the applicant and that no adequate remedy at law exists. Actual irreparable harm usually may not be presumed but must be proved. Injunctive relief may also be available to the extent that irreparable harm is actually threatened. Irreparable injury or harm has been defined as an injury for the redress of which, after its occurrence, there could be no plain, adequate and complete remedy at law, and for which restitution in specie (money) would be impossible, difficult or incomplete.

Civil Procedure > Appeals > Standards of Review > Abuse of Discretion

Civil Procedure > Remedies > Injunctions > Preliminary & Temporary Injunctions

Civil Procedure > Judicial Officers > Judges > Discretionary Powers

Civil Procedure > … > Injunctions > Grounds for Injunctions > Irreparable Harm

HN15  Standards of Review, Abuse of Discretion

The grant or denial of a motion for injunctive relief is solely within the trial court’s discretion. It follows that it is within the trial court’s discretion to make a reasonable determination whether an adequate remedy at law is available or whether irreparable injury will result to the party seeking an injunction if no injunction is issued. The appellate court reviews a decision on injunctive relief for abuse of discretion.

Civil Procedure > Appeals > Standards of Review > De Novo Review

Torts > Business Torts > Commercial Interference

HN16  Standards of Review, De Novo Review

In a tortious interference claim, the appellate court reviews the trial court’s decision de novo.

Civil Procedure > … > Defenses, Demurrers & Objections > Motions to Dismiss > Failure to State Claim

HN17  Motions to Dismiss, Failure to State Claim

A Civ.R. 12(B)(6) motion for failure to state a claim asks a court to determine if the allegations in a complaint set forth an actionable claim. A court may look only to the complaint to determine whether the allegations are legally sufficient to state a claim. The court must presume that all factual allegations in the complaint are true and must make all reasonable inferences in favor of the nonmoving party. The court should dismiss the claim if it appears beyond a reasonable doubt from the complaint that the plaintiff can prove no set of facts entitling it to relief.

Torts > … > Commercial Interference > Employment Relationships > Defenses

Torts > … > Business Relationships > Intentional Interference > Remedies

Torts > … > Business Relationships > Intentional Interference > Elements

Torts > … > Commercial Interference > Employment Relationships > Elements

HN18  Employment Relationships, Defenses

The torts of interference with business relationships and contract rights generally occur when a person, without a privilege to do so, induces or otherwise purposely causes a third person not to enter into or continue a business relation with another, or not to perform a contract with another. The elements essential to recovery for a tortious interference with a business relationship are: (1) a business relationship; (2) the wrongdoer’s knowledge thereof; (3) an intentional interference causing a breach or termination of the relationship; and (4) damages resulting therefrom. The elements of tortious interference with contract are (1) the existence of a contract, (2) the wrongdoer’s knowledge of the contract, (3) the wrongdoer’s intentional procurement of the contract’s breach, (4) the lack of justification, and (5) resulting damages.

Torts > … > Business Relationships > Intentional Interference > Elements

Torts > … > Prospective Advantage > Intentional Interference > Elements

HN19[]  Intentional Interference, Elements

Tortious interference requires at least two people who have a (prospective) business relationship or a contract plus one other person who interferes with that relationship or gets one of the first two to breach their contract.

Counsel: Lindhorst & Dreidame, and Barry F. Fagel and Elizabeth M. Johnson, for appellant.

Statman, Harris & Eyrick, and William B. Fecher, for appellees.

Judges: M. POWELL, P.J. S. POWELL and BYRNE, JJ., concur.

Opinion by: M. POWELL

Opinion

M. POWELL, P.J.

 [*P1]  Total Quality Logistics, LLC, (“TQL”) appeals the judgment of the Clermont County Court of Common Pleas granting summary judgment to appellees, Tucker, Albin and Associates (“Tucker”) and Chris Reed (“Reed”), on its claims for breach of contract and punitive damages and its request for a permanent injunction. TQL also appeals the judgment of the trial court dismissing, under Civ.R. 12(B)(6), its claim for tortious interference with contract and/or business relationships.

 [*P2]  TQL is a freight broker that arranges transportation of goods for its customers with third-party trucking companies. In this case, TQL arranged for Daansa Services, LLC (“Daansa”), to transport a load of goods to Prestige Kitchen and Bath (“Prestige”), a customer of The Corsi Group. Daansa had signed [**2]  a Broker-Carrier Agreement with TQL, paragraph 4(b) of which pertinently states that Daansa may seek payment only from TQL:

CARRIER [Daansa] agrees that BROKER [TQL] is the sole party responsible for payment of CARRIER’s invoices related to the Services and that, under no circumstances, will CARRIER contact or seek payment from any CUSTOMER or any other party responsible for any payment related to the Services. CARRIER waives any right to collect from CUSTOMERS, unless BROKER provides CARRIER with consent in a writing[.]

 [*P3]  A dispute developed between TQL and Daansa concerning the Corsi load, and TQL refused to pay Daansa, leaving Daansa with an account receivable on its balance sheet. Daansa sold the account to Tucker, a Texas company that purchases accounts receivable from trucking companies and tries to collect.

 [*P4]  On September 11, 2019, Tucker began efforts to collect upon the Daansa account. Reed, one of Tucker’s collections agents, called Prestige and demanded payment on the Daansa account. This call spawned a series of communications that day. Unsure what to do, Prestige emailed Corsi about the call, noting, “I guess TQL did not pay the trucking company.” Corsi forwarded Prestige’s [**3]  email to Kevin Fitzgerald at TQL, who evidently called Reed right away, because Reed sent Fitzgerald a follow-up email, stating, “Yes I agree calling 3rd parties creates hassle however it is part of the process.” Fitzgerald responded that he was transferring the matter to TQL’s legal department. Shortly after, TQL legal-claims specialist Amy Unger sent Reed an email telling him plainly that under the Broker-Carrier Agreement payment may be sought only from TQL and that contacting anyone else about payment violates the Agreement. Unger further told Reed, “Besides

being a blatant breach of our Agreement, contacting its customers is not something TQL takes lightly. * * * We will work with you on any payment disputes that you represent, but this unlawful contact is not something we will abide.”

 [*P5]  Less than a month later, on October 4, 2019, TQL filed suit against Tucker and Reed (herein collectively referred to as Tucker), asserting claims for breach of contract, tortious interference with contract and/or business relationships, and punitive damages. The complaint alleged that Tucker is bound by the Broker-Carrier Agreement signed by Daansa, because Tucker either is the assignee of Daansa’s [**4]  account receivable or was acting as Daansa’s agent. In addition to punitive damages, the complaint sought compensatory damages for injury to business goodwill, attorney fees, and costs. The complaint also sought “injunctive relief prohibiting the Defendants, or their agents, from contacting or suing any TQL customers, or TQL’s customers’ customers, demanding payment for invoices allegedly owed to trucking companies.”

 [*P6]  Tucker filed a motion to dismiss TQL’s tortious interference claim under Civ.R. 12(B)(6). On May 22, 2020, the trial court granted the dismissal motion, concluding that the complaint failed to allege that Tucker’s actions caused a breach in TQL’s relationship with a third party or caused the breach of a contract that existed between TQL and a third party. Tucker later filed a motion for summary judgment on the breach-of-contract and punitive-damages claims and separately filed a motion for summary judgment on the request for an injunction. On May 21, 2021, the trial court ruled on both summary-judgment motions together. The court granted summary judgment for Tucker on the breach-of-contract and punitive-damages claims as well as on TQL’s permanent-injunction request. The court found [**5]  that while Tucker had violated the Agreement, TQL failed to show that it suffered injury to goodwill as a result. Additionally, because TQL failed to show damages and failed to show that Tucker threatened imminent and irreparable harm, the court declined to grant injunctive relief.

 [*P7]  TQL now appeals, raising two assignments of error.

 [*P8]  Assignment of Error No. 1:

 [*P9]  THE TRIAL COURT ERRED AS A MATTER OF LAW WHEN IT GRANTED DEFENDANTS’ MOTIONS FOR SUMMARY JUDGMENT.

 [*P10]  TQL first challenges the trial court’s May 21, 2021 decision granting summary judgment for Tucker regarding TQL’s claim for breach of contract and request for injunctive relief. TQL argues that the trial court erred by finding that it failed to show damage caused by Tucker’s violation of paragraph 4(B) of the Broker-Carrier Agreement. TQL maintains that its goodwill was injured because of Reed’s call to Prestige, because it suggests to TQL’s customers that TQL does not always pay the companies who might transport their goods. TQL also argues that the trial court erred by finding that it failed to show imminent and irreparable harm. TQL contends that Tucker will continue to violate the Agreement without an injunction prohibiting it [**6]  from doing so.

 [*P11]  HN1 Under Civ.R. 56(C), summary judgment is proper when the movant demonstrates “that there is no issue as to any material fact, that the moving party is entitled to judgment as a matter of law, and that reasonable minds can come to but one conclusion, and that conclusion is adverse to the nonmoving party.” Miller v. Bike Athletic Co., 80 Ohio St.3d 607, 617, 1998-Ohio-178, 687 N.E.2d 735. We review a trial court’s ruling on a summary-judgment motion de novo, that is, without deference to the trial court’s decision. Shannon v. Fischer, 12th Dist. Clermont No. CA2020-05-022, 2020-Ohio-5567, ¶ 13. “De novo review means that this court uses the same standard that the trial court should have used, and we examine the evidence to determine whether as a matter of law no genuine issues exist for trial.” Morris v. Dobbins Nursing Home, 12th Dist. Clermont No. CA2010-12-102, 2011-Ohio-3014, ¶ 14.

 [*P12]  HN2 A plaintiff seeking to recover on a claim for breach of contract must prove not only a contractual violation but also that “the plaintiff incurred damages as a result.” S&G Invests., L.L.C. v. United Cos., L.L.C., 12th Dist. Clermont No. CA2010-03-017, 2010-Ohio-3691, ¶ 12. Tucker does not dispute that it is bound by and violated the Agreement. The issue is whether TQL presented sufficient evidence to show that it is entitled to monetary relief for the violation.

 [*P13]  “‘HN3 [T]he sole purpose of contract damages is to compensate the nonbreaching party for losses suffered as a result of a breach[.]'” DeCastro v. Wellston City School Dist. Bd. of Edn., 94 Ohio St.3d 197, 201, 2002-Ohio-478, 761 N.E.2d 612, quoting 3 Restatement of the Law 2d, Contracts, Section 355, [**7]  at 154 (1981). TQL claims that it suffered a loss of business goodwill. HN4[] Goodwill is, in essence, “the probability that the old customers will resort to the old place.” Spayd v. Turner, Granzow & Hollenkamp, 19 Ohio St.3d 55, 60, 19 Ohio B. 54, 482 N.E.2d 1232 (1985).1 A loss of goodwill is a form of lost profits, both of which are recoverable as compensatory damages. Charles R. Combs Trucking, Inc. v. Internatl. Harvester Co., 12 Ohio St.3d 241, 244, 12 Ohio B. 322, 466 N.E.2d 883 (1984); Homes by Calkins, Inc. v. Fisher, 92 Ohio App.3d 262, 269, 634 N.E.2d 1039 (12th Dist.1993) (referring to damages for lost goodwill as damages for lost profits).

 [*P14]  HN6 The general rule for recovery of lost profits, which rule also applies to a claim for loss of goodwill, is that “lost profits may be recovered by the plaintiff in a breach of contract action if: profits were within the contemplation of the parties at the time the contract was made, the loss of profits is the probable result of the breach of contract, and the profits are not remote and speculative and may be shown with reasonable certainty.” (Citation omitted.) Combs at 244. See also Fisher at 268-271 (applying this rule to a claim for lost goodwill).

 [*P15]  HN7 The loss of goodwill can be established with “testimony by those who have first-hand knowledge of such loss.” Kinetico, Inc. v. Indep. Ohio Nail Co., 19 Ohio App.3d 26, 31, 19 Ohio B. 92, 482 N.E.2d 1345 (8th Dist.1984). See also Combs, 12 Ohio St.3d at 244-245. In Combs, it was the testimony of the owner of the company and its secretary-treasurer whose goodwill the plaintiff claimed to have lost, along with testimony from the [**8]  plaintiff, that established a claim for lost goodwill. See Combs at 244-245. The testimony of an outside expert on goodwill was not required. Kinetico does not teach otherwise. HN8 The Kinetico court stated that “[w]here loss of goodwill is not adequately proven by expert testimony,” no speculation is allowed as to those damages. Kinetico at 31. The court’s use of the word “expert” appears to mean one with “first-hand knowledge of such loss,” consistent with Combs. It was the Kinetico plaintiff’s vice president who had testified about lost goodwill, and the appellate court never questioned whether he qualified as an expert on this matter.

 [*P16]  TQL argues that the principal evidence establishing lost goodwill is one of its interrogatory answers and the affidavit of one of its employees. In response to an interrogatory asking it to identify damages, TQL stated, “Defendants’ actions and false accusations have jeopardized TQL’s customer relationships. In addition, TQL is entitled to recover any loss of business because of defendants’ conduct as well as recovery of TQL’s attorney fees.” In her affidavit, TQL’s legal-claims specialist Amy Unger explained, “[A] reputation of not paying bills interferes with a broker’s ability to get and retain business. [**9]  False allegations that TQL does not pay the carriers significantly hurts our reputation and dissuades carriers and customers from doing business with TQL. This is especially harmful due to the tight market within the highly competitive freight brokerage industry.” According to Unger, “Tucker and Reed’s actions are extremely harmful to TQL’s ongoing relationships with its customers and carriers. As such, TQL’s reputation has been damaged.” In fact, said Unger, “[d]ue to Tucker and Reed’s actions, TQL’s customer threatened to stop doing business with TQL.” We note that Unger’s email to Reed, quoted earlier, shows how seriously TQL takes actions like Tucker’s. Indeed, paragraph 4(b) of the Broker-Carrier Agreement suggests that TQL thinks keeping payment disputes with carriers close to the vest is very important to its business.

 [*P17]  The action that forms the basis of TQL’s breach-of-contract claim is Reed’s phone call to Prestige demanding payment. This led Prestige to tell TQL’s customer Corsi about the demand and to suggest to Corsi that TQL did not pay Daansa. Thus, TQL believes that Reed’s single call is responsible for its loss of goodwill. TQL does not request any specific sum for lost [**10]  goodwill, though. Also, there are only what amount to self-serving declarations in TQL’s interrogatory answer and Unger’s affidavit that such a loss was sustained at all. Further, while Unger defined loss of goodwill as the loss of reputation, which harms TQL’s relationships with customers and carriers, she identified only one customer (presumably Corsi) who had merely “threatened to stop doing business with TQL.”

 [*P18]  HN9 It is commonsense that having a reputation of not paying bills hurts goodwill and results in lost profits. We recognize that a business’s reputation is often lost one allegation at a time. Perhaps one or two or even three allegations do not dissuade carriers or customers, but enough allegations can snowball. It is incredibly difficult, though, to determine how much any one allegation contributes to lost goodwill and ultimately to lost profits. In this case, while it is conceivable that Tucker’s actions might have injured TQL’s goodwill and might be part of the snowball that leads to lost profits down the road, TQL did not present any evidence that this is so or any evidence suggesting a specific amount for lost goodwill attributable to Tucker’s breach. Although an exact calculation [**11]  is not required at this stage of the litigation, there is no evidence that any amount could even be calculated, and it would be speculative to assign a dollar amount for TQL’s goodwill damages. A party cannot recover damages beyond the amount established with reasonable certainty.

 [*P19]  None of the evidence presented in this case shows that the violation of the Agreement—Reed’s call to Prestige—actually had an appreciable negative effect on TQL’s reputation or its customer relationships, resulted in the loss of business, or in any way affected TQL’s bottom line. Simply put, no reasonable mind could find a loss of goodwill from Reed’s one phone call. The vague, unsupported assertions in the evidence are—alone—not enough to find any lost goodwill. At most, the evidence shows that, due to this payment dispute, one customer threatened to stop doing business with TQL. Thus there is a lack of evidence that TQL’s goodwill was damaged. See Kinetico, 19 Ohio App.3d at 31-32 (concluding the same on similar evidence).

 [*P20]  In sum, TQL failed to show the existence of—not simply the calculation of—actual damage to its goodwill resulting from Tucker’s violation of the Agreement. Thus, the trial court properly found that Tucker failed to present [**12]  sufficient evidence that it suffered goodwill damages.

 [*P21]  However, Tucker unequivocally breached the Broker-Carrier Agreement by seeking payment from Prestige and that breach invaded a significant interest of TQL. Pursuant to paragraph 4(b) of the Broker-Carrier Agreement, TQL seeks to insulate its contracted shippers and their customers from dealing with payment disputes between TQL and its contracted carriers. By doing so, TQL’s customers are spared the hassle involved with those disputes, which makes doing business with TQL appealing. TQL is entitled to vindicate its rights in maintaining the integrity of its business model. Tucker’s efforts to collect the Daansa account by contacting Prestige frustrated the manner in which TQL conducts business.

 [*P22]  “‘HN10 An unexcused failure to perform a contract is a legal wrong.'” DeCastro, 94 Ohio St.3d at 199, quoting 11 Williston on Contracts, Section 1339A (3d Ed.1968). HN11 If “a plaintiff proves breach of contract at trial but fails to prove actual damages resulting from that breach, the trial court may enter judgment for the plaintiff and award nominal damages.” Id. See also Lacey v. Laird, 166 Ohio St. 12, 139 N.E.2d 25 (1956), paragraph two of the syllabus. The nominal damages constitute a penalty or punishment for breaching the [**13]  contract, that is, “‘a small sum fixed without regard to the amount of loss.'” Id., quoting 3 Restatement of the Law 2d, Contracts, Section 346 (1981). This means that despite TQL’s failure to prove a loss of goodwill from Tucker’s breach, the trial court may still enter judgment for TQL and award it nominal damages.

 [*P23]  The Ohio Supreme Court has held that HN12 if only nominal damages are available, an appellate court may reverse and remand only if “a significant right is involved, including inequitable assessment of costs.” Id. at 200. Here, there are significant rights involved: recovery of attorney fees and costs. The complaint seeks attorney fees and costs associated with bringing this lawsuit. It appears that TQL may be contractually entitled to these amounts under paragraph 15 of the Broker-Carrier Agreement, which pertinently states: “The prevailing party in any lawsuit between the Parties shall be entitled to all reasonable expenses, attorney fees, and costs (including court costs).”

 [*P24]  “Prevailing party” is not defined in the Agreement. HN13 “A prevailing party is generally the party in whose favor the decision, verdict, or judgment [is] rendered.” (Citation omitted.) Windward Ents., Inc. v. Valley City Dev. Group L.L.C., 9th Dist. Medina No. 18CA0001-M, 2019-Ohio-3419, ¶ 34, 142 N.E.3d 177; Marafiote v. Estate of Marafiote, 7th Dist. Mahoning No. 14 MA 0130, 2016-Ohio-4809, ¶ 13, 68 N.E.3d 238. This includes “‘[t]he party [**14]  to a suit who successfully prosecutes the action * * *, prevailing on the main issue, even though not necessarily to the extent of his original contention.'” (Emphasis sic.) Id., quoting Moga v. Crawford, 9th Dist. Summit No. 23965, 2008-Ohio-2155, ¶ 6. Here, despite not being able to show a loss of goodwill, TQL is entitled to recover nominal damages on its breach-of-contract claim. An award of nominal damages may serve to confer prevailing party status upon TQL, entitling it an award of attorney fees and costs pursuant to the Agreement.

 [*P25]  In sum, we conclude that TQL is entitled to nominal damages for Tucker’s violation of the Agreement and, subject to a determination of whether TQL is the prevailing party in the litigation, an award of reasonable expenses, attorney fees, and costs under the Agreement. We therefore remand this case to the trial court for an assessment of nominal damages and a prevailing party determination.

 [*P26]  The trial court also granted Tucker summary judgment on TQL’s request for a permanent injunction “prohibiting the Defendants, or their agents, from contacting or suing any TQL customers, or TQL’s customers’ customers, demanding payment for invoices allegedly owed to trucking companies.”

 [*P27]  HN14 “It is well-established that in order to [**15]  obtain an injunction, the moving party must show by clear and convincing evidence that immediate and irreparable injury, loss or damage will result to the applicant and that no adequate remedy at law exists. Actual irreparable harm usually may not be presumed but must be proved.” (Citation omitted.) Middletown v. Butler Cty. Bd. of Cty. Commrs., 12th Dist. Butler No. CA94-03-084, 1995 Ohio App. LEXIS 525, 1995 WL 55320, *2 (Feb. 13, 1995). Injunctive relief may also be available “to the extent that irreparable harm is actually threatened.” Id. Irreparable injury or harm has been defined as “an injury ‘for the redress of which, after its occurrence, there could be no plain, adequate and complete remedy at law, and for which restitution in specie (money) would be impossible, difficult or incomplete.'” (Citations omitted.) Connor Group v. Raney, 2d Dist. Montgomery No. 26653, 2016-Ohio-2959, ¶ 21.

 [*P28]  HN15 “The grant or denial of a motion for injunctive relief is solely within the trial court’s discretion.” Southwestern Ohio Basketball, Inc. v. Himes, 12th Dist. Warren No. CA2020-08-045, 2021-Ohio-415, ¶ 34. It follows that “[i]t is within the trial court’s discretion to make a reasonable determination whether an adequate remedy at law is available or whether irreparable injury will result to the party seeking an injunction if no injunction is issued.” Connor Group at ¶ 21. We review a decision on injunctive relief for abuse of discretion. See Deerfield Twp., Warren Cty. v. Loveland Park Baptist Church, 12th Dist. Warren No. CA2000-07-064, 2001 Ohio App. LEXIS 1415, 2001 WL 290270, *2 (Mar. 26, 2001).

 [*P29]  TQL argues that injunctive relief is needed to prevent imminent and irreparable [**16]  harm to its goodwill and reputation. Although Reed made only a single telephone call, TQL states that Tucker has indicated it would continue making collection calls, pointing out that Tucker has never said it would cease collection efforts. TQL speculates that other trucking companies could assign their accounts receivable to Tucker. TQL also cites Reed’s statement that “calling 3rd parties * * * is part of the process” and asserts that this shows Tucker will continue seeking to collect TQL accounts from others because that is how it does business.

 [*P30]  The trial court was not persuaded, concluding that there was no genuine issue of fact as to whether TQL faced imminent and irreparable harm. The court found little evidence that Tucker would continue violating the Agreement in its efforts to collect the Daansa account, reiterating its determination that there was no evidence that TQL had suffered any harm.

 [*P31]  We find that the trial court’s decision is eminently reasonable. The evidence does not show that TQL faces immediate and irreparable injury or harm. Nothing shows that Tucker has actually threatened TQL with continued harm. TQL identified its interests (i.e., goodwill and reputation) but [**17]  offered nothing beyond mere speculation that an injunction is necessary to prevent Tucker from continuing to injure these interests. Moreover, there is no evidence that other trucking companies have assigned their accounts receivable with TQL to Tucker or that Tucker will persist in contacting Prestige, Corsi, or anyone other than TQL to collect on Daansa’s—or any other—account. Although we do not hold that a single act may never serve as the basis for injunctive relief, under the circumstances of this case the trial court did not abuse its discretion by denying TQL’s request for a permanent injunction.

 [*P32]  The first assignment of error is sustained in part and overruled in part.

 [*P33]  Assignment of Error No. 2:

 [*P34]  THE TRIAL COURT ERRED WHEN IT DISMISSED COUNT 2 OF PLAINTIFF’S AMENDED COMPLAINT, WHICH MADE CLAIMS FOR TORTIOUS INTERFERENCE WITH CONTRACT AND TORTIOUS INTERFERENCE WITH A BUSINESS RELATIONSHIP.

 [*P35]  The trial court dismissed TQL’s tortious interference claim under Civ.R. 12(B)(6); TQL contends that it should not have done so. HN16 We review the trial court’s decision de novo. A N Bros. Corp. v. Total Quality Logistics, L.L.C., 12th Dist. Clermont No. CA2015-02-021, 2016-Ohio-549, ¶ 18, 59 N.E.3d 758.

 [*P36]  HN17 A Civ.R. 12(B)(6) motion for failure to state a claim asks a court to determine if the allegations in a complaint set forth an actionable claim. [**18]  Pyle v. Ledex, Inc., 49 Ohio App.3d 139, 143, 551 N.E.2d 205 (12th Dist.1988). A court may look only to the complaint to determine whether the allegations are legally sufficient to state a claim. Ward v. Graue, 12th Dist. Clermont No. CA2011-04-032, 2012-Ohio-760, ¶ 10. The court must presume that all factual allegations in the complaint are true and must make all reasonable inferences in favor of the nonmoving party. Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190, 192, 532 N.E.2d 753 (1988). The court should dismiss the claim if it appears beyond a reasonable doubt from the complaint that the plaintiff can prove no set of facts entitling it to relief. LeRoy v. Allen, Yurasek & Merklin, 114 Ohio St.3d 323, 2007-Ohio-3608, ¶ 14, 872 N.E.2d 254.

 [*P37]  HN18 “The torts of interference with business relationships and contract rights generally occur when a person, without a privilege to do so, induces or otherwise purposely causes a third person not to enter into or continue a business relation with another, or not to perform a contract with another.” A & B-Abell Elevator Co. v. Columbus/Cent. Ohio Bldg. & Constr. Trades Council, 73 Ohio St.3d 1, 14, 1995-Ohio-66, 651 N.E.2d 1283. “The elements essential to recovery for a tortious interference with a business relationship are: (1) a business relationship; (2) the wrongdoer’s knowledge thereof; (3) an intentional interference causing a breach or termination of the relationship; and (4) damages resulting therefrom.” Ginn v. Stonecreek Dental Care, 12th Dist. Fayette No. CA2014-06-015, 2015-Ohio-1600, ¶ 11, 30 N.E.3d 1034. The elements of tortious interference with contract are “‘(1) the existence of a contract, (2) the wrongdoer’s knowledge of the contract, (3) the wrongdoer’s intentional procurement [**19]  of the contract’s breach, (4) the lack of justification, and (5) resulting damages.'” Id. at ¶ 12, quoting Fred Siegel Co., L.P.A. v. Arter & Hadden, 85 Ohio St.3d 171, 176, 1999-Ohio-260, 707 N.E.2d 853.

 [*P38]  TQL’s claim for tortious interference with contract and/or business states facts concerning Tucker’s collection call to Prestige. The claim pertinently alleges that “Tucker and Reed’s actions in demanding payment from customers and parties other than TQL amounts [sic] to a tortious interference with TQL’s contracts and/or business relationships with these customers and third parties.” As an initial matter, we note that the allegation that Tucker’s actions “amount[] to a tortious interference” is a legal conclusion, not a statement of fact. HN19 But more importantly, tortious interference requires at least two people who have a (prospective) business relationship or a contract plus one other person who interferes with that relationship or gets one of the first two to breach their contract. A & B-Abell at 14 (“purposely causes a third person not to enter into or continue a business relation with another, or not to perform a contract with another”). TQL’s only business relationship identified in the complaint is that with Corsi. It is not alleged that Tucker’s actions caused Corsi—or any other potential [**20]  or existing customer—not to continue or enter a business relationship with TQL. The only contract mentioned is the Broker-Carrier Agreement binding TQL, Daansa, and Tucker. The complaint does not allege that Tucker caused Daansa to violate the Agreement. The breach of contract in this case plainly was not a third-party breach caused by Tucker’s tortious interference but Tucker’s own first-party breach.

 [*P39]  The trial court properly dismissed TQL’s claim for tortious interference. The complaint does not allege that Tucker induced or otherwise purposely caused a third person not to enter or to continue a business relation or not to perform a contract with TQL. Therefore TQL cannot be granted relief on this claim.

 [*P40]  The second assignment of error is overruled.

 [*P41]  We have sustained the first assignment of error in part and overruled it in part. Accordingly, the trial court’s May 21, 2021 judgment granting summary judgment is reversed regarding the claim for monetary relief and affirmed regarding the denial of injunctive relief. We have overruled the second assignment of error in full. So the court’s May 22, 2020 judgment granting dismissal of the tortious interference claim is affirmed. This case [**21]  is remanded for further proceedings consistent with this Opinion.

 [*P42]  May 21, 2021 judgment entering summary judgment is affirmed in part and reversed in part.

 [*P43]  May 22, 2020 judgment dismissing claims is affirmed.

S. POWELL and BYRNE, JJ., concur.


End of Document

1 HN5 “The comprehensive definition of ‘goodwill’ is ‘the advantage or benefit, which is acquired by an establishment, beyond the mere value of the capital, stock, funds, or property employed therein, in consequence of the general public patronage and encouragement, which it receives from constant or habitual customers, on account of its local position, or common celebrity, or reputation for skill or affluence, or punctuality, or from other accidental circumstances or necessities, or even from ancient partialities or prejudices.'” Spayd v. Turner, Granzow & Hollenkamp, 19 Ohio St.3d 55, 59-60, 19 Ohio B. 54, 482 N.E.2d 1232 (1985), quoting Story, Commentaries on the Law of Partnership, Section 99, at 170 (6th Ed.1868).

Mata v. Allupick, Inc.

United States District Court for the Northern District of Alabama, Middle Division

May 16, 2022, Decided; May 16, 2022, Filed

4:21-cv-00865-ACA

Reporter

2022 U.S. Dist. LEXIS 87656 *; 2022 WL 1541294

MARIA DE LOS ANGELES MATA, as the Administrator for the Estate of Claudio Mancilla, Deceased Plaintiff, v. ALLUPICK, INC., et al., Defendants.

Core Terms

motor carrier, broker, exemption, motor vehicle, preemption, preempts, routes, regulation, regulatory authority, transportation, transportation of property, preemption provision, quotation, marks, state law, carriers, freight, prices, pleadings, trucking, common law, selecting, unsafe, safe

Counsel:  [*1] For Maria De Los Angeles Mata, as the Administrator for the Estate of Claudio Mancilla, Deceased, Plaintiff: David Lee Bruce, LEAD ATTORNEY, BELT AND BRUNER, PC, Birmingham, AL; James Donald Sears, LEAD ATTORNEY, LAW OFFICES OF SEARS & SEARS PC, Hoover, AL; Leslie Ann Wright, Sigfredo Rubio, LEAD ATTORNEY, RUBIO LAW FIRM PC, Birmingham, AL; Robert P Bruner, LEAD ATTORNEY, BELT & BRUNER P.C., Birmingham, AL.

For Allupick Inc, a coporation, For Tariku Samson, an individual, Defendants: James C Gray, III, LEAD ATTORNEY, LLOYD, GRAY, WHITEHEAD & MONROE, PC, Birmingham, AL; James C Gray, III, Jeffrey Williams Speegle, LEAD ATTORNEY, Lloyd, Gray, Whitehead & Monroe, Birmingham, AL.

For Abebe Baraki, an individual, Defendant: Ralph J Bolen, LEAD ATTORNEY, BOLEN & BOLEN, Chelsea, AL.

For Jear Logistics LLC, Defendant: Thomas Sidney Rue, LEAD ATTORNEY, MAYNARD COOPER GALE, Mobile, AL; Evan P Moltz, MAYNARD COOPER & GALE PC, Birmingham, AL.

Judges: ANNEMARIE CARNEY AXON, UNITED STATES DISTRICT JUDGE.

Opinion by: ANNEMARIE CARNEY AXON

Opinion


MEMORANDUM OPINION AND ORDER

Claudio Mancilla died in a car accident involving a tractor-trailer hauling a load of frozen chicken. His sister, Plaintiff Maria de los Angeles Mata, filed this [*2]  wrongful death action against six defendants in her capacity as the administrator for Mr. Mancilla’s estate. (Doc. 41). Defendant Jear Logistics, LLC, is the freight broker that hired the trucking company whose employee caused the accident. (Id. at 2 ¶ 5). Ms. Mata seeks to hold Jear Logistics liable for negligence and wantonness in selecting that trucking company. (Id. at 11-12).

Jear Logistics moves for judgment on the pleadings, under Federal Rule of Civil Procedure 12(c), on the ground that the Federal Aviation Administrative Authorization Act of 1994 (“FAAAA”), 49 U.S.C. § 14501(c)(1), preempts the claims against it. (Doc. 45 (incorporating doc. 21)).1 But although Ms. Mata’s negligence and wantonness claims are “related to” a freight broker’s “services,” such that § 14501(c)(1) preemption applies, these particular claims are exempt from preemption based on the State’s “safety regulatory authority . . . with respect to motor vehicles.” 49 U.S.C. § 14501(c)(2)(A). Accordingly, the court DENIES Jear Logistics’ motion for judgment on the pleadings.


I. BACKGROUND

In reviewing a Rule 12(c) motion for judgment on the pleadings, the court “must take the facts alleged in the complaint as true and view them in the light most favorable to the nonmoving party.” Mergens v. Dreyfoos, 166 F.3d 1114, 1117 (11th Cir. 1999). In response to the motion, Ms. Mata has submitted evidence including orders and a judgment from [*3]  unrelated cases, a transcript of a motion hearing, and a house conference report. (Doc. 24-1 to 24-5). Typically the court cannot consider evidence in deciding a motion for judgment on the pleadings. See Fed. R. Civ. P. 12(d). Thus, to the extent Ms. Mata’s submissions are intended as evidence in support of her claims, the court does not consider them. However, the court may consider judicially noticed facts, such as the content of a house conference report. See Horsley v. Rivera, 292 F.3d 695, 700 (11th Cir. 2002).

Jear Logistics is freight broker, hired by a company to arrange the shipment of a load of frozen chicken. (Doc. 41 at 2 ¶ 5, 5 ¶¶ 17-19). It selected Defendant Allupick, Inc. to transport the chicken without performing any research to ensure that Allupick “was a safe operator and employed safe drivers.” (Id. at 2 ¶ 5, 11 ¶ 41). And it turns out that Allupick was “an unsafe motor carrier” with “a demonstrated disregard for the safety of the traveling public,” and its employee, Defendant Tariku Samson, was “an unsafe driver.” (Id. at 11-12 ¶¶ 41-42). While transporting the chicken in Allupick’s truck, Mr. Samson struck Mr. Mancilla’s car, causing Mr. Mancilla’s death. (Id. at 3-4 ¶¶ 11-12). Mr. Mancilla’s sister, Ms. Angeles Mata, filed this wrongful [*4]  death suit against various defendants. (Id. at 6-15). She claims that Jear Logistics’ selection of Allupick was negligent and wanton. (Id. at 12 ¶ 43).


II. DISCUSSION

Jear Logistics moves for judgment on the pleadings as to the negligence and wantonness claims brought against it for selecting Allupick, arguing that the FAAAA preempts any claim relating to how it performs its function of hiring motor carriers.2 (Doc. 21 at 4-15). Whether the FAAAA preempts negligent selection claims against freight brokers is an open question in the Eleventh Circuit.

The Supremacy Clause provides: “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof . . . shall be the supreme Law of the Land.” U.S. Const. art. VI, cl. 2. “Consideration of issues arising under the Supremacy Clause starts with the assumption that the historic police powers of the States are not to be superseded by . . . Federal Act unless that is the clear and manifest purpose of Congress. Accordingly, the purpose of Congress is the ultimate touchstone of pre-emption analysis.” Cipollone v. Liggett Grp., Inc., 505 U.S. 504, 516, 112 S. Ct. 2608, 120 L. Ed. 2d 407 (1992) (quotation marks, citations, and alterations omitted).

Congress may preempt state law in several ways, of which only one is relevant here: express preemption. [*5]  See Irving v. Mazda Motor Corp., 136 F.3d 764, 767 (11th Cir. 1998). “[E]xpress preemption clauses must be construed narrowly” when “the subject matter, such as the provision of tort remedies to compensate for personal injuries, is one that has traditionally been regarded as properly within the scope of states’ rights.” Id. (quotation marks omitted).

The FAAAA was enacted to deregulate the trucking industry. Dan’s City Used Cars, Inc. v. Pelkey, 569 U.S. 251, 256, 133 S. Ct. 1769, 185 L. Ed. 2d 909 (2013). The statute’s stated policy is “to promote competitive and efficient transportation services in order to” accomplish a number of enumerated goals, including “encourag[ing] fair competition,” “promot[ing] efficiency,” “meet[ing] the needs of shippers, receivers, passengers, and consumers”; “allow[ing] a variety of quality and price options”; “allow[ing] the most productive use of equipment and energy resources”; enabling carriers to earn profits, attach capital, and provide fair wages and working conditions; providing service to small communities and small shippers; providing commuter bus operations; “improv[ing] and maintain[ing] a sound, safe, and competitively privately owned motor carrier system”; promoting participation by minorities; and promoting intermodal transportation. 49 U.S.C. § 13101(a)(2).

The Supreme Court has described Congress’s purpose in enacting [*6]  the FAAAA as “ensur[ing] transportation rates, routes, and services that reflect ‘maximum reliance on competitive market forces,’ thereby stimulating ‘efficiency, innovation, and low prices,’ as well as ‘variety’ and ‘quality.'” Rowe v. New Hampshire Motor Transp. Ass’n, 552 U.S. 364, 364, 128 S. Ct. 989, 169 L. Ed. 2d 933 (2008) (quoting Morales v. Trans World Airlines, Inc., 504 U.S. 374, 378, 112 S. Ct. 2031, 119 L. Ed. 2d 157 (1992)). The Supreme Court has also highlighted the economic purpose behind the FAAAA: to avoid “state economic regulation of motor carrier operations” because such regulation “is a huge problem for national and regional carriers attempting to conduct a standard way of doing business.” City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 440, 122 S. Ct. 2226, 153 L. Ed. 2d 430 (2002).

The FAAAA therefore provides that a State “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 . . . or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). Congress borrowed most of this language from the Airline Deregulation Act of 1978 (“ADA”), 49 U.S.C. § 14501(c)(1), which included a preemption provision prohibiting States from enacting or enforcing any law “relating to rates, routes, or services of any air carrier.” Rowe, 552 U.S. at 367. Because of the similarity in language, the Supreme Court has held that cases interpreting the ADA are instructive in [*7]  interpreting the FAAAA. Id. at 370. But courts must also bear in mind that the FAAAA’s inclusion of the final clause “with respect to the transportation of property”—which the ADA does not include—”massively limits” the scope of the FAAAA’s preemption compared to the ADA’s preemption. Pelkey, 569 U.S. at 261 (quotation marks omitted).

The phrase “related to” “express[es] a broad pre-emptive purpose.” Morales, 504 U.S. at 383 (concerning the ADA’s preemption provision). It includes “state enforcement actions having a connection with, or reference to, . . . rates, routes, or services,” even if “a state law’s effect on rates, routes, or services is only indirect,” and regardless of “whether a state law is consistent or inconsistent with federal regulation,” as long as “state laws have a significant impact related to Congress’ deregulatory and pre-emption-related objectives.” Rowe, 552 U.S. at 370 (quotation marks and emphasis omitted). However, the FAAAA preempts only state laws concerning “transportation of property,” which the FAAA defines in relevant part to “include . . . services related to [the] movement [of passengers or property], including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, [*8]  packing, unpacking, and interchange of passengers and property.” 49 U.S.C. § 13102(23)(B). The statute does not preempt state laws “affecting . . . prices, routes, and services in only a tenuous, remote, or peripheral manner.” Pelkey, 569 U.S. at 261 (quotation marks and alteration omitted).

Jear Logistics contends that, as a freight broker, selecting a motor carrier is one of its primary services, so a claim of negligent selection of a motor carrier falls directly under the purview of the FAAAA’s preemption provision. (Doc. 21 at 7-10). Ms. Mata responds that (1) the FAAAA does not preempt personal injury tort claims; (2) a claim of negligent selection may impact a broker’s method of selecting carriers but it does not require that the broker change its pricing, routes, or services; (3) under a set of factors set out by the Third Circuit, a claim of negligent selection does not have a significant effect on prices, routes, or services. (Doc. 24 at 6-21).

As an initial matter, the Supreme Court has vigorously rejected the position that the ADA cannot preempt common law tort causes of action. See Morales, 504 U.S. at 386; see also Riegel v. Medtronic, Inc., 552 U.S. 312, 316-29, 128 S. Ct. 999, 169 L. Ed. 2d 892 (2008) (finding state common law tort claims for negligence, strict liability, and breach of implied warranty preempted by a federal [*9]  statute’s provision prohibiting a State from enforcing any “requirement . . . which relates to the safety or effectiveness of [medical devices intended for human use]”); Cipollone, 505 U.S. at 521-22 (plurality opinion) (explaining that common law damages actions can constitute state regulation because “[t]he obligation to pay compensation can be, indeed is designed to be, a potent method of governing conduct and controlling policy”) (quotation marks omitted); id. at 535 (Blackmun, J., concurring in part, concurring in the judgment in part, and dissenting in part) (agreeing with the plurality that “that phrase ‘State law,’ in an appropriate case, can encompass the common law as well as positive enactments such as statutes and regulations”); id. at 548-49 (Scalia, J, concurring in the judgment in part and dissenting in part) (agreeing with the plurality that “general tort-law duties . . . can, as a general matter, impose requirements or prohibitions . . . and that the phrase ‘State law’ as used in [the statute at issue] embraces state common law”) (quotation marks and alterations omitted). This reasoning applies equally to the FAAAA’s preemption provision. Nothing about the FAAAA’s additional language about “the transportation of property” [*10]  changes the definition of “law, regulation, or other provision having the force and effect of law.” See 49 U.S.C. § 14501(c)(1).

Moreover, the only Eleventh Circuit case on which Ms. Mata relies is Parise v. Delta Airlines, Inc., 141 F.3d 1463 (11th Cir. 1998). (See doc. 24 at 9 n.32). In Parise, the Eleventh Circuit held that the ADA did not preempt Florida’s age discrimination law because a claim of age discrimination made against an airline does not relate to an airline’s prices, routes, or services. 141 F.3d at 1466. Parise does not hold that the ADA never preempts any common law personal injury claims. Parise is consistent with the Supreme Court’s approach, which requires the court to analyze whether the claim—whether arising from common law or a statute—”relate[s] to a price, route, or service of any . . . broker . . . with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1); see, e.g., Medtronic, Inc., 518 U.S. at 492-501 (addressing each of several common law claims asserted in the case to determine whether the federal statute at issue in that case preempted them).

In her complaint, Ms. Mata asserts Jear Logistics negligently selected an unsafe motor carrier to transport goods, leading to the accident that killed Mr. Mancilla. This claim of negligent selection relates directly to the services a freight broker provides: selecting a motor [*11]  carrier to transport goods. See 49 U.S.C. § 13102(2) (defining a “broker” as one who “arrang[es] for[ ] transportation by motor carrier for compensation”); id. § 13102(23)(B) (defining “transportation of property” to include “arranging for” the movement of property). Accordingly, this claim “relates to a . . . service of . . . any . . . broker . . . with respect to the transportation of property.” Id. § 14501(c)(1).

However, “relating to” a broker’s service is not the end of the analysis. Ms. Mata contends that, even if the FAAAA preempts this claim, an exemption applies. The FAAAA expressly carves out from its preemption provision: (1) “the safety regulatory authority of a State with respect to motor vehicles”; (2) “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”; (3) “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”; (4) “the intrastate transportation of household goods”; and (5) “law[s], regulation[s], or other provision[s] relating to the regulation of tow truck operations performed without [*12]  the prior consent or authorization of the owner or operator of the motor vehicle.” 49 U.S.C. § 14501(c)(2).

Ms. Mata contends that the first of these exemptions—”the safety regulatory authority of a State with respect to motor vehicles”—exempts from FAAAA preemption a state tort for personal injury based on a broker’s negligent selection of a motor carrier. (Doc. 24 at 23-27). Jear Logistics contends that this is an overly broad reading of the exemption, which is specific to “motor vehicles” and cannot encompass a claim for negligent selection of a motor carrier. (Doc. 21 at 10-14; doc. 25 at 5-7).

Neither the Supreme Court nor the Eleventh Circuit has addressed the scope of the safety regulatory authority exemption. The Supreme Court has stated that the statutory language “with respect to the transportation of property” means “concern[ing] a motor carrier’s transportation of property.” Pelkey, 133 S. Ct. at 1778-79 (quotation marks omitted). It follows that “with respect to motor vehicles” means “concerning motor vehicles.” See also With Respect To, Webster’s Collegiate Thesaurus (1976) (“[A]s for, as regards, as respects, as to, concerning, re, regarding, respecting, touching.”). However, “concerning motor vehicles” does not necessarily [*13]  mean that the regulation must directly address motor vehicles.

The preemption provision itself uses a similar phrase—”related to”—broadly to include even indirect effects on prices, routes, and services. See, e.g., Pelkey, 569 U.S. at 260; Rowe, 552 U.S. at 370; Morales, 504 U.S. at 383. It is unclear why the court should read the preemption provision’s use of “related to” broadly while reading the exemption narrowly to include only direct effects on motor vehicles.

In a case about the State’s ability to delegate its safety regulatory authority to political subdivisions, the Supreme Court stated that “Congress’ clear purpose in § 14501(c)(2)(A) [the safety regulatory authority exemption] is to ensure that its preemption of States’ economic authority over motor carriers of property . . . ‘not restrict’ the preexisting and traditional state police power over safety.” Ours Garage & Wrecker Serv., Inc., 536 U.S. at 439 (emphasis added). Because of this, a narrow construction of the safety regulatory authority exemption “is surely resistible here, for § 14501(c)(1)‘s preemption rule and § 14501(c)(2)(A)‘s safety exception to it do not necessarily conflict.” Id. at 440. In so stating, the Supreme Court “reiterate[d] that § 14501(c)(2)(A) shields from preemption only ‘safety regulatory authority’ . . . . Local regulation of prices, routes, or services . . . that is not genuinely [*14]  responsive to safety concerns garners no exemption from § 14501(c)(1)‘s preemption rule.” Id. at 442. Ours Garage, however, does not conclusively resolve the question in this case because it did not determine whether the safety regulation at issue was valid, only whether the State had the power to delegate its regulatory authority to a political subdivision. See id.

In this case, Ms. Mata’s negligent selection claim is that Jear Logistics failed “to ensure that the [motor carrier it selected] was a safe operator and employed safe drivers” and selected “an unsafe trucking company . . . that had a demonstrated disregard for the safety of the traveling public.” (Doc. 41 at 11 ¶ 41). Although this claim attacks Jear Logistics’ selection of a motor carrier instead of a motor vehicle, the selection of a motor carrier to transport goods necessarily implicates the use of a motor vehicle. And, as discussed above when determining that the preemption provision applies to common law tort claims, Alabama’s negligence law, even though of general applicability, “can be, indeed is designed to be, a potent method of governing conduct and controlling policy.” Cipollone, 505 U.S. at 521-22 (plurality opinion); id. id. at 535 (Blackmun, J., concurring in part, concurring in [*15]  the judgment in part, and dissenting in part); id. at 548-49 (Scalia, J, concurring in the judgment in part and dissenting in part).

Jear Logistics has not presented this court with any reason to believe that Alabama’s law on negligent selection “is not genuinely responsive to safety concerns” about the motor carriers who will be driving on Alabama roads. See Ours Garage & Wrecker Servs., 536 U.S. at 442. Jear Logistics’ only argument on that point is that the FAAAA expressly mandates motor carriers—but not brokers—to maintain liability insurance to cover personal injury or property damage, showing that Congress did not intend to exempt negligence claims against brokers. (Doc. 25 at 7-8). But Jear Logistics fails to point out where the FAAAA imposes such a requirement on motor carriers. The FAAAA exempts from the preemption provision “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,” 49 U.S.C. § 14501(c)(2)(A), but it does not impose any affirmative requirement that motor carriers maintain a particular type of insurance coverage, nor does it expressly exempt brokers from carrying insurance. Moreover, the district court case on which Jear [*16]  Logistics relies discussed a Supreme Court case about the ADA’s insurance mandate, and expressly distinguished the FAAAA on that ground. (Doc. 25 at 7); see Krauss v. IRIS USA, Inc., 2018 U.S. Dist. LEXIS 74922, 2018 WL 2063829, at *6 (E.D. Pa. May 3, 2018). The court cannot find that Congress intended to exclude claims against brokers from the safety exemption based on an insurance mandate imposed on airlines in a different statute.

Following the Supreme Court’s instruction not to narrowly construe the safety authority regulation exemption, Ours Garage & Wrecker Servs., 536 U.S. at 440, the court concludes that this particular claim that a broker negligently selected an unsafe motor carrier is exempt from preemption under the State’s “safety regulatory authority . . . with respect to motor vehicles,” 49 U.S.C. § 14501(c)(2). The court therefore DENIES Jear Logistics’ motion for judgment on the pleadings.

DONE and ORDERED this May 16, 2022.

/s/ Annemarie Carney Axon

ANNEMARIE CARNEY AXON

UNITED STATES DISTRICT JUDGE


End of Document

1 After an amendment to the complaint mooted Jear’s earlier motion for judgment on the pleadings (doc. 43), the parties jointly filed a notice that Jear was renewing its motion and the parties were incorporating by reference the briefs they had filed with respect to that motion (doc. 45). For ease of reference, the rest of this opinion will cite directly to the earlier motion and briefs.

2 Count Four expressly asserts that Jear Logistics was both negligent and wanton. (Doc. 41 at 12 ¶ 43). Jear Logistics’ motion for judgment on the pleadings discusses only the negligence claim. (See generally doc. 21). Nevertheless, it is clear that Jear Logistics seeks judgment on all claims against it arising from its selection of Allupick. (See id.). And the same preemption analysis applies to both types of claims. Accordingly, the court’s opinion applies equally to both the negligence and the wantonness claim. However, for ease of reference, the court will refer only to the “negligent selection claim.”

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