Cargo - Central Analysis Bureau

SLT Imports, Inc. v. SAR Transport Systems Pvt. Ltd.

NOT FOR PUBLICATION

United States District Court, D. New Jersey.

SLT IMPORTS, INC., Plaintiff,

SAR TRANSPORT SYSTEMS PVT LTD., et al., Defendants.

No. 23cv18484 (EP) (JBC)

Signed July 2, 2024

Filed July 3, 2024

Attorneys and Law Firms

Seth Alan Abrams, Schumann Hanlon Margulies, LLC, Jersey City, NJ, for Plaintiff.

Matthew Louis Bodi, Finazzo Cossolini O’Leary Meola & Hager, LLC, Morristown, NJ, for Defendants.

OPINION

PADIN, District Judge.

*1 This is an admiralty action concerning a deal between Plaintiff SLT Imports, Inc. (“Plaintiff” or “SLT”) and non-party Krishna Food Corp. (“Krishna”). The deal was that SLT would provide financing, through a bank facility, to Krishna so that Krishna can purchase food products from an Indian supplier to be shipped to Krishna in New Jersey (the “Cargo”). Defendant SAR Transport Systems Pvt Ltd. (“Defendant” or “SAR”) was the shipping carrier for the Cargo. SLT alleges that SAR intentionally delivered the Cargo directly to Krishna without the required proof of payment by Krishna to SLT, in the form of endorsed bills of lading. Furthermore, SLT alleges that SAR knew at the time it issued the bills of lading that it would not comply with the requirement to deliver the Cargo to Krishna only upon such proof of payment. SLT alleges that these actions constitute fraud in the execution of a maritime contract (Count I) or, alternatively, breach of a maritime contract under the Carriage of Goods by Sea Act, 46 U.S.C. § 30701, et seq. (“COGSA”) and general maritime law (Count II). D.E. 49 (“Second Amended Complaint” or “SAC”).¹

SAR moves for judgment on the pleadings seeking dismissal of the Second Amended Complaint under Rule 12(c). D.E. 81-1 (“Mot.”).² The Court decides the motion without oral argument. See Fed. R. Civ. P. 78(b); L.Civ.R.78(b). For the reasons set forth below, SAR’s motion for judgment on the pleadings will be GRANTED and the Second Amended Complaint will be DISMISSED with prejudice.

I. BACKGROUND

A. Factual Background³

1. SLT and Krishna’s agreement

Several years ago,⁴ Krishna approached SLT’s owner and principal, Sandip Patel (“Patel”) to seek SLT’s assistance in purchasing goods from non-party Bikaji Foods International, Ltd. (“Bikaji”) in India to be shipped to Krishna in New Jersey. SAC ¶¶ 11, 16. Krishna needed SLT’s assistance because Krishna had “creditworthiness issues” and could not purchase the goods from Bikaji without financial assistance. Id. ¶ 16. SLT helped Krishna by allowing Krishna to draw on SLT’s bank credit facility to pay Bikaji for the goods. Id. ¶¶ 16-17. Krishna was to then repay SLT by paying down SLT’s bank facility with the moneys owed to SLT. Id. Payment to SLT was to be invoice amount that was paid to Bikaji, plus reimbursement of SLT’s bank costs and a four percent commission to SLT. Id. ¶ 17.

*2 Upon such payment, Krishna could obtain an endorsement on bills of lading provided by the shipping carrier.⁵ Id. ¶ 16. Such endorsement could not be provided without full payment by Krishna. See id. This arrangement with Krishna further required SLT to be the named consignee on all bills of lading issued by the shipping carrier and the carrier could not release the Cargo to Krishna without an endorsed bill of lading. Id. The arrangement was memorialized “in or about 2011” with a purchase agreement between SLT and Krishna (the “Purchase Agreement”). Id. ¶ 17.

2. SAR’s role as shipping carrier

SAR was selected as the carrier to ship the Cargo from Bikaji in India to Krishna in New Jersey.⁶ See id. ¶ 20. SAR is a “Federal Maritime Commission licensed Ocean Transport Intermediary” (“OTI”) carrier based in Mumbai, India. Id. ¶ 9. SAR utilizes other companies’ vessels to facilitate international shipments. Id. The bills of lading SAR issued listed Bikaji as the consignor, SLT as the consignee, and Krishna as the “notify address.” See id. ¶ 20, Ex. 2. The bills of lading issued by SAR also specified that the Cargo can be released to Krishna only upon Krishna’s presentation and surrender to SAR of an endorsed bill of lading (a/k/a “multi-modal transport document” or “MTD”). Id. ¶¶ 20-21. The relevant language, included in the bills of lading, containing this obligation is:

Taken in charge in apparently good condition herein at the place of receipt for transport & delivery as mentioned above unless otherwise stated. The MTD in accordance with the provision contained in the MTD undertakes to perform or to procure the performance of the multimodal transport from the place at which the goods are taken in charge, to the place designated for delivery & assume responsibility of such transport. One of the MTD(s) must be surrendered, duly endorsed in exchange of goods. In witness where of the original MTD all of this tenor and date have been signed in the number indicated below one of which being accomplished the other(s) to be void.

Id. ¶ 21 (emphasis added), Ex. 2.

3. SAR delivers the Cargo to Krishna without requiring Krishna to surrender endorsed bills of lading

However, without SLT’s knowledge or consent, SAR systematically caused Cargo to be released to Krishna without requiring that Krishna provide endorsed bills of lading to SAR in exchange for the delivery. Id. ¶ 23. SAR did so through its delivery agents RTW Logistics Inc. (“RTW”) and TTI Worldwide LLC (“TTI”) (non-parties). Id. ¶¶ 38-39. SAR, RTW, and TTI all knew that that Krishna was required to provide endorsed bills of lading before the Cargo could be released to Krishna. Id. ¶ 39.

Moreover, at the time that SAR issued each bill of lading, containing the requirement that the Cargo not be released to Krishna without an endorsed bill of lading, SAR knew that it would not comply with that requirement and would instead release the Cargo to Krishna without the surrender of an endorsed bill of lading. Id. ¶ 26. Instead, SAR accepted “letters of indemnity” from Krishna whereby Krishna promised to indemnify SAR in connection with the release of the Cargo without surrendering the bills of lading. Id. ¶ 27.

4. Krishna does not pay SLT for the Cargo

Around November 2021, SLT had not received interest payments on its bank facility from Krishna for the past six months and conducted an audit of Krishna’s interest payments. Id. ¶ 40. Through that audit, SLT discovered that Krishna had been ordering goods from Indian suppliers using SLT’s credit facility but without SLT’s knowledge or consent and without making the required payments to SLT’s bank. Id.⁷

*3 Patel confronted Krishna on or about November 15, 2021. Id. ¶ 41. Krishna’s owner, Girish Malhotra (“Malhotra”) informed Patel that SAR released Cargo to Krishna without endorsed bills of lading. Id. Malhotra further informed Patel that, instead of the endorsed bills of lading, Krishna provided SAR with letters of indemnity falsely claiming the Cargo was consigned to Krishna, the bills of lading had not yet arrived, and requested the Cargo be released to Krishna without producing an endorsed bill of lading. Id.

SLT claims that Krishna owes over $1,000,000 for the Cargo. Id. ¶ 55. Because Krishna is insolvent, SLT was unable to collect damages from Krishna and has now turned to SAR to seek compensation and alleges that SAR’s failure to require the surrender of endorsed bills of lading resulted in the alleged damages. Id. ¶¶ 55, 75.

B. Procedural Background

This action was first filed on August 31, 2022, in the Central District of California against SAR and RTW alleging only fraud in the execution of a maritime contract. D.E. 1. SLT then dismissed RTW from the action. D.E. 13. After the Central District of California permitted SLT to serve SAR through alternative means pursuant to Fed. R. Civ. P. 4(f)(3), D.E. 22, the court granted SLT an opportunity to amend its complaint, D.E. 40, and SLT filed a first amended complaint on June 15, 2023, D.E. 41. SLT attempted to file a second amended complaint on July 14, 2024, D.E. 44, but the court struck the complaint for failure to comply with Fed. R. Civ. P. 15(a)(2) and Central District of California Local Rule 7-1, D.E. 46. However, on July 19, 2023, the court allowed SLT to file a second amended complaint, D.E. 48, and the Second Amended Complaint was filed on July 20, 2023, D.E. 49.

SAR moved to dismiss the Second Amended Complaint for lack of personal jurisdiction in California pursuant to Fed. R. Civ. P. 12(b)(2). D.E. 52. The court denied SAR’s motion and instead transferred the action to this Court. D.E. 56. On January 31, 2024, SAR answered. D.E. 69.

SAR now moves for judgment on the pleadings pursuant to Rule 12(c). Mot. SLT opposes. D.E. 84 (“Opp’n”). SAR replies. D.E. 86 (“Reply”).

II. LEGAL STANDARD

Rule 12(h)(2) provides that a defense of failure to state a claim upon which relief can be granted may also be made by a motion for judgment on the pleadings. See Turbe v. Gov’t of Virgin Islands, 938 F.2d 427, 428 (3d Cir. 1991). Therefore, a court applies the same legal standards to a Rule 12(c) motion as it would to a Rule 12(b)(6) motion. See id. The Court accepts all well-pled facts as true, construes the complaint in the plaintiff’s favor, and determines “whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (internal quotation marks and citation omitted). The Plaintiff’s claims must be facially plausible, meaning that the well-pled facts “allow[ ] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The allegations must be “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

In determining whether a plaintiff states a claim, “a court must consider only the complaint, exhibits attached to the complaint, matters of public record, as well as undisputedly authentic documents if the complainant’s claims are based upon these documents.” Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010). “When an allegation in the complaint is contradicted by a document incorporated in it by reference, the document controls and the allegation is not accepted as true.” Lungu v. Antares Pharma Inc., No. 21-1624, 2022 WL 212309, at *5 n.14 (3d Cir. Jan. 25, 2022).

III. ANALYSIS

A. Plaintiff’s Fraud in the Execution of a Maritime Contract Claim (Count I) is Time-barred

*4 Defendant argues that Plaintiff cannot plead around COGSA’s one-year statute of limitation, which was surpassed in 2018 at the latest. Mot. at 5-11. Plaintiff argues that the three-year statute of limitations applying to maritime torts under 46 U.S.C. § 30106 applies and began to run when Plaintiff first discovered the alleged fraud: November 1, 2021. Opp’n at 11. The Court agrees with Defendant.⁸ This is a breach of contract case covered by COGSA and its one-year time limitation. Plaintiff’s attempt to creatively plead around this fact, invoking fraud in the execution, is unpersuasive. With respect to its fraud allegation, Plaintiff, at most, pleads that Defendant knew it would breach the terms of the bills of lading when it issued them. However, it does not allege Defendant misrepresented the very nature of the contract to Plaintiff, thus duping Plaintiff into entering a contract that was significantly different than the ones at issue here. Because Plaintiff does not allege a fraud claim, COGSA, and its one-year time limitation applies to the entire action. Therefore, Count I will be DISMISSED with prejudice.

1. COGSA applies to Count I

“COGSA represents the codification of the United States’ obligations under the International Convention for the Unification of Certain Rules of Law Relating to Bills of Lading, August 25, 1924, 51 Stat. 233.” J.C.B. Sales Ltd. v. Wallenius Lines, 124 F.3d 132, 134 (2d Cir. 1997). This convention was the result of a “multinational effort ‘to establish uniform ocean bills of lading to govern the rights and liabilities of carriers and shippers inter se in international trade.’ ” Id. (quoting Robert C. Herd & Co. v. Krawill Mack Corp., 359 U.S. 297, 301 (1959)). COGSA applies to “every bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade.” 46 U.S.C. § 30701, note.⁹

COGSA contains a one-year statute of limitations: “In any event the carrier … shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered.” 46 U.S.C. § 1303(6).

It is undisputed that COGSA applies to Count I. See SAC ¶¶ 47, 58; Opp’n at 3-4 (arguing that although COGSA applies, an unreasonable deviation waives a carrier’s rights to the defenses provided by COGSA); Mot. at 5. Defendant argues that since the bills of lading are all from 2015 or 2016, SAC at Exs. 1-2, even if some of the deliveries were scheduled to be in 2017, if the COGSA one-year limitation applies Plaintiff’s claim in Count I would be timely only if brought should have been brought by 2018 at the latest. Mot. at 7. Plaintiff does not dispute this reasoning, but, despite admitting that COGSA applies, argues that COGSA’s one-year statute of limitation does not bar its fraud in the execution claim because (1) Defendant’s conduct amounts to an “unreasonable deviation” under COGSA’s deviation doctrine resulting in the one-year statute of limitations not applying, Opp’n at 3-6, (2) the statute does not apply to such a claim because the underlying contract applying COGSA is void ab initio, id. at 5-11, and (3) Defendant should be estopped from asserting COGSA’s one-year limitation period because its conduct was inequitable, id. at 4.

*5 The Court finds that (1) Plaintiff does not state a claim for fraud in the execution and, therefore, the bills of lading, to which COGSA applies, are not void ab initio; (2) Plaintiff’s allegations constitute, at most, a misdelivery to which the COGSA one-year limitation period applies—not an unreasonable deviation or quasi-deviation; and (3) Plaintiff does not allege inequitable conduct that would estop Defendant from relying on COGSA’s one-year time limitation. Therefore, Count I, even if it could be re-pled, is time-barred.

2. Plaintiff does not state a claim for fraud in the execution

Plaintiff argues that the bills of lading are void ab initio because Plaintiff pleads a claim for fraud in the execution¹⁰, and because there is no contract, COGSA does not apply to Plaintiff’s fraud claim. Opp’n at 7-11. The Court disagrees. Plaintiff’s allegations do not convert this case from a contract case into a fraud case.

To state a claim sounding in fraud, the plaintiff must meet Rule 9(b)’s heightened pleading standard. “To satisfy this standard, the plaintiff must plead or allege the date, time and place of the alleged fraud or otherwise inject precision or some measure of substantiation into a fraud allegation.” Frederico v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007).

Fraud in the execution occurs “when a party executes an agreement ‘with neither knowledge nor reasonable opportunity to obtain knowledge of its character or its essential terms.’ ” Connors, 30 F.3d at 490 (quoting Southwest Administrators, Inc. v. Rozay’s Transfer, 791 F.2d 769, 774 (9th Cir. 1986) (quoting U.C.C. § 3-305(2)(c)¹¹)). A party claiming fraud in the execution must show that it “signed an instrument that is radically different from that which [it] is led to believe that [it] is signing.” Id. at 491 (quoting John D. Calamari & Joseph M. Perillo, The Law of Contracts § 9-22 (3d ed. 1987)). A party claiming fraud in the execution “must show ‘excusable ignorance of the contents of the writing signed.’ ” Agathos v. Starlite Motel, 977 F.2d 1500, 1505 (3d Cir. 1992) (quoting Rozay’s Transfer, 791 F.2d at 774). Fraud in the execution renders a contract void ab initio. Connors, 30 F.3d at 490.

Here, Plaintiff does not allege that Defendant duped it into thinking the bills of lading were any different than what Plaintiff thought they were.¹² This is not a situation where Defendant told Plaintiff the bills of lading contained a provision mandating the surrender of endorsed bills of lading before the Cargo could be turned over to Krishna where, in fact, the bills of lading contained no such provision. Rather, Plaintiff alleges both it and Defendant were aware of the exact terms contained in the bills of lading, but that Defendant knew it would breach the terms when it issued the bills of lading. This is not fraud in the execution. See, e.g., Agathos, 977 F.2d at 1506 (“Starlite does not argue that it thought the collective bargaining agreement it signed was a different document. Nor does Starlite contend that the Union misrepresented to it the nature of the document it was asked to sign.”). Therefore, Plaintiff fails to plead fraud in the execution in Count I and thus cannot show that the bills of lading, to which COGSA applies, are void ab initio.¹³

3. Plaintiff’s allegations do not constitute unreasonable deviation—they are, at most, misdelivery subject to COGSA’s one-year limitation period

*6 Plaintiff argues that, despite titling Count I as a claim for fraud in the execution, Defendant’s conduct amounts to an “unreasonable deviation” or “quasi-deviation,” and is therefore not subject to COGSA’s time limitation.¹⁴ The Court disagrees. Although there is some precedent to suggest that an unreasonable deviation or quasi-deviation may bar a defendant from relying on COGSA’s one-year limitation period, see, e.g., Berisford Metals Corp. v. S/S Salvador, 779 F.2d 841, 848-49 (2d Cir. 1985), cert. denied, 476 U.S. 1188 (1986), Plaintiff does not allege such deviation here.¹⁵

Deviation is a limited doctrine that applies in cases where there is a geographic departure form the contractual voyage and unauthorized on-deck stowage of cargo. See B.M.A. Indus., Ltd. v. Nigerian Star Line, Ltd., 786 F.2d 90, 91-92 (2d Cir. 1986) (discussing the history and applicability of the deviation doctrine); see also Vision Air Flight Servs., Inc. v. M/V Nat’l Pride, 155 F.3d 1165, 1174-75 (9th Cir. 1999) (agreeing that the deviation doctrine “should not be liberally expanded”); Universal Leaf Tobacco Co. v. Companhia de Navegacao Maritima Netumar, 993 F.2d 414, 417 (4th Cir. 1993) (refusing to “extend the unreasonable deviation doctrine beyond its current boundaries”) (cleaned up). The Third Circuit has agreed with the limited nature of the deviation doctrine. See SPM Corp. v. M/V Ming Moon, 965 F.2d 1297, 1304 (3d Cir. 1992) (“We agree with our sister circuits that the doctrine of quasi-deviation is not to be viewed expansively in the post-COGSA era.”).

Importantly, the deviation doctrine does not apply to misdeliveries, even “corrupt or criminal” misdeliveries. B.M.A. Indus., 786 F.2d at 92. Plaintiff’s allegations fit more squarely into the misdelivery category than into the deviation category. Like the allegations in this case, in B.M.A. Indus., the carrier was only authorized to release the cargo upon “submission of original duly endorsed bills of lading,” but instead released the cargo upon presentation of a “warehouse delivery order, rather than the original bills of lading.” Id. at 91. As is alleged here, this resulted in non-payment. See id. Because these allegations did not consist of a geographic departure from the contractual voyage or unauthorized on-deck stowage of cargo, the Second Circuit declined to extend the deviation doctrine to cover these allegations. See id. at 92. The Court agrees with the Second Circuit and finds that the deviation doctrine should similarly not be extended here and that Plaintiff’s allegations here constitute, at most, a misdelivery.

The case of Unimac Co., Inc. v. C.F. Ocean Serv., Inc., 43 F.3d 1434 (11th Cir. 1995) is also instructive. There, like the case here, the consignee plaintiff alleged that the carrier defendant failed to ensure the plaintiff was paid for the cargo prior to releasing it. Id. at 1435-36. The plaintiff argued that the defendant’s delivery of goods despite not receiving proof of payment constituted a deviation that prevented the defendant relying on COGSA’s protections. Id. at 1437. However, the Eleventh Circuit concluded that delivering cargo before the consignee had been paid, contrary to the instructions to the carrier, was misdelivery and not deviation, and that COGSA limitations applied. Id. at 1437-38.

*7 Courts hold that claims for misdelivery—even intentional misdelivery—are subject to COGSA’s one-year time limitation. For example, in Int’l Paper Co. v. Malaysia Overseas Lines, Ltd., No. 75-297, 1975 WL 6444140, at *1 (S.D.N.Y. Aug. 25, 1975), the plaintiff argued that the defendant carrier misdelivered cargo to “unauthorized persons without the surrender of the appropriate … bill of lading ….” The court rejected Plaintiff’s argument that the intentional misdelivery was deviation and rejected the claim as time-barred under COGSA’s one-year statute of limitation. See id. at 145. The court reasoned that the intentional release of cargo without surrender of the bill of lading breached the contract of carriage, but it did not “vitiate its terms” and, therefore, such an intentional misdelivery does not deprive a carrier of the protections of COGSA, including the statute of limitations. Id. (citing Bank of California, N.A. v. Int’l Mercantile Marine Co., 64 F.2d 97 (2nd Cir. 1933), cert. denied, 290 U.S. 649 (1933)); see also Unimac, 43 F.3d at 1437-38.

This court has held the same previously. In Hapag-Lloyd Aktiengesellschaft v. Levy, No. 20-11155, 2021 WL 5630299 (D.N.J. Dec. 1, 2021), the court clearly held that COGSA’s one-year limitation period applies to misdeliveries.¹⁶ Id. at *5 (citing Timco Eng’g, Inc. v. Rex & Co., 603 F. Supp. 925, 929 (E.D. Pa. 1985); Morse Electro Prods. Corp. v. S.S. Great Peace, 437 F. Supp. 474 (D.N.J. 1977); Barretto Peat, Inc. v. Luis Ayala Colon Sucrs., Inc., 896 F.2d 656, 660-61 (5th Cir. 1990); Hellyer v. Nippon Yesen Kaisya, 130 F. Supp. 209, 211 (S.D.N.Y. 1955); Leather’s Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800 (2d Cir. 1971); David Crystal, Inc. v. Cunard S.S. Co., 339 F.2d 295 (2d Cir. 1964), cert. denied, 380 U.S. 976 (1965)). Therefore, Plaintiff’s claims are not for deviation but are, at most, for misdelivery to which the COGSA time limitation applies.

4. Plaintiff does not allege inequitable conduct that would estop Defendant from relying on COGSA’s one-year statute of limitations

Plaintiff also argues that Defendant should be estopped from asserting COGSA’s one-year limitation period because Defendant’s conduct was inequitable. Mot. at 4. The Court disagrees.

In support of its argument, Plaintiff cites United Fruit Co. v. J.A. Folger & Co., 270 F.2d 666 (5th Cir. 1959) and Nichols & Co., Inc. v. Cunard S.S. Ltd., 367 F. Supp. 947 (S.D.N.Y. 1973). Neither case suggests that Defendant should be estopped from relying on COGSA’s one-year limitation period here.

There is a general “principle that, in a proper case, a respondent may, by his representations, promises, or conduct, be estopped to assert the [COGSA statute of limitations].” United Fruit Co., 270 F.2d at 669 (citing Glus v. Brooklyn Eastern Dist. Terminal, 359 U.S. 231 (1959)). In Glus, the petitioner claimed that the respondent was estopped from raising a statute of limitations found in the Federal Employer’s Liability Act because it had “induced the delay by representing to petitioner that he had seven years in which to sue.” 359 U.S. at 231-32. The Court found that the doctrine of estoppel applied to that statutory scheme and that petitioner’s allegations were sufficient to state a trial question on whether there were grounds to apply the estoppel doctrine. Id. at 235. In United Fruit Co., the court found that “there is no basis for the shipper to argue estoppel against the carrier” but, rather, it was the shipper who acted unconscionably by “inducing the carrier, just four days before the running of the statute, to grant [an] extension” thus “put[ting] the carrier in the posture of not being able to plead the original statutory period.” 270 F.2d at 669.

*8 In Nichols, the court found a dispute of fact regarding the question of estoppel in a COGSA claim where the plaintiff alleged that a carrier “lulled plaintiff into a false sense of security” by, inter alia, assuring “defendants’ agents that the claims would be paid” even “through and beyond the expiration of the time for bringing suit.” 367 F. Supp. at 949.

That conduct is not alleged here. Plaintiff’s allegations do not suggest, under any reading, that Defendant misled Plaintiff to induce it not to bring suit earlier. Merely not requiring Krishna to provide endorsed bills of lading before releasing the Cargo to Krishna does not rise to the level of inequitable conduct that would estop Defendant from relying on COGSA’s one-year time bar. Perhaps Plaintiff could make such allegations against Krishna, but Plaintiff chose not to bring suit against Krishna—apparently because it does not have sufficient assets to satisfy its debt to Plaintiff. SAC ¶ 55. But Krishna’s insolvency does not deprive Defendant of COGSA’s protections. Therefore, Count I will be DISMISSED with prejudice. See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 245 (3d Cir. 2008) (holding that a district court need not permit a curative amendment if amendment would be futile).¹⁷

B. Plaintiff’s Breach of Maritime Contract Claim (Count II) is Abandoned and Time-barred

Defendant argues that the entire action, including Count II, is barred by COGSA’s one-year limitation period. Mot. at 5-7. The Court agrees.

Plaintiff admits in its Second Amended Complaint that COGSA applies to Count II. SAC ¶¶ 64, 72. Plaintiff does not address in its opposition Defendant’s argument that COGSA’s one-year limitation period applies to Count II. Therefore, Plaintiff waives this count. See Griglak v. CTX Mortg. Co., LLC, No. 09-5247, 2010 WL 1424023, at *3 (D.N.J. Apr. 8, 2010) (“The failure to respond to a substantive argument to dismiss a count, when a party otherwise files opposition, results in a waiver of that count.”).

Plaintiff appears to argue in the Second Amended Complaint that the breach of contract is a “fundamental” or “intentional” breach and should therefore not be subject to the one-year statute of limitations in COGSA, SAC ¶ 64. However, this is not persuasive as a “fundamental” or “intentional” breach is no different than an unreasonable deviation,¹⁸ which the Court has already found Plaintiff does not allege, supra. Therefore, Count II will be DISMISSED with prejudice.

IV. CONCLUSION

For the foregoing reasons, SAR’s motion will be GRANTED and the Second Amended Complaint will be DISMISSED with prejudice. An appropriate Order accompanies this Opinion.

All Citations

Slip Copy, 2024 WL 3289649

Footnotes
¹	SLT also names “DOES 1-10” as unidentified additional defendants but does not address their relationship to the named parties or the action.
²	Although the parties do not dispute this Court’s subject matter jurisdiction, the Court has an independent duty to determine its own subject matter jurisdiction. See N.J. Carpenters and the Trustees Thereof v. Trishman Const. Corp. of N.J., 760 F.3d 297, 302 (3d Cir. 2014). The Court is satisfied that it has admiralty jurisdiction pursuant to 28 U.S.C. § 1333.
³	The facts in this section are taken from the well-pled factual allegations in the Second Amended Complaint, which the Court presumes to be true for purposes of resolving the motion. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
⁴	Plaintiff does not specify when.
⁵	Plaintiff does not specify who would endorse the bills of lading.
⁶	Plaintiff does not specify who selected SAR as the carrier or even whether it had any contact with SAR whatsoever.
⁷	SLT does not explain how Krishna was able to obtain money from SLT’s credit facility without SLT’s approval.
⁸	As Defendant points out, 46 U.S.C. § 30106 is inapplicable under a plain reading of its text. Reply at 11. 46 U.S.C. § 30106 states: “Except as otherwise provide by law a civil action for damages for personal injury or death arising out of a maritime tort must be brought within 3 years after the cause of action arose.” Plaintiff does not allege claims for personal injury or death. Therefore, 46 U.S.C. § 30106 is inapplicable. Plaintiff does not identify any other statute of limitations that could apply here.
⁹	“In 2006, Congress recodified Title 46 of the U.S. Code, and COGSA was uncodified but reprinted at 46 U.S.C. § 30701, historical and statutory notes.” Caddell Constr. Co. (DE), LLC v. Danmar Lines Ltd., No. 18-2900, 2018 WL 6726549, at *2 n.1 (S.D.N.Y. Dec. 20, 2018) (citing Pub. L. No. 109-301; 120 Stat. 1485 (2006)).
¹⁰	Plaintiff does not provide any authority for the existence of a cause of action for fraud in the execution as opposed to an affirmative defense for fraud in the execution. It also does not state which law applies to such a cause of action. In any event, Plaintiff’s allegations do not rise to the level of fraud in the execution and the Court does not base its decision on the existence, or lack thereof, of a cause of action for fraud in the execution.
¹¹	The current U.C.C. provision, as a result of amendment since Connors was decided, is U.C.C. § 3-305 (a)(1).
¹²	Plaintiff also does not allege that it executed any of the bills of lading or had any interactions with SAR prior to the bills of lading being issued.
¹³	Because the Court finds that Plaintiff does not state a claim for fraud in the execution, it need not determine whether the COGSA one-year time limitation applies if the bills of lading were void ab initio.
¹⁴	Throughout the Second Amended Complaint, Plaintiff characterized SAR’s conduct as a “fundamental” or “intentional” breach of the bills of lading and that such breach prevents SAR from relying on the COGSA time limitation. SAC ¶¶ 28, 24, 58, 64, 72, 73.
¹⁵	Defendant argues that COGSA’s one-year limitation period still applies to unreasonable deviation. Mot. at 13-14 (citing Bunge Edible Oil Corp. v. M/V’s Torm Rask & Ft. Steele, 949 F.2d 786, 788 (5th Cir. 1992); Mesocap Indus. v. Torm Lines, 194 F.3d 1342, 1345 (11th Cir. 1999)). However, the Court need not decide this issue as it finds that Plaintiff does not allege an unreasonable deviation.
¹⁶	Plaintiff attempts to distinguish Hapag-Lloyd Aktiengesellschaft because it does not involve claims for fraud. Opp’n at 6. However, as the Court will find, infra, the inclusion of a fraud allegation does not change this analysis.
¹⁷	Even were the Court to allow Plaintiff an opportunity to amend its complaint to state a misdelivery claim, that claim would be time-barred by COGSA’s one-year limitation period.
¹⁸	See General Electric Co. Int’l Sales Div., 706 F.2d 80, 87 (2d Cir. 1983); Deltak, L.L.C. v. Indus. Mar. Carriers Worldwide, No. 04-1494, 2004 WL 3007088 at 3 (N.D. Cal. June 21, 2004); In re M.V. Floreana, 65 F. Supp. 2d 489, 492 (S.D. Tex. 1999); Unimac, 1993 WL 766955, at 7.

End of Document

Arnold v. Allied Van Lines

United States District Court, W.D. Texas, San Antonio Division.

Michael ARNOLD, Linda Arnold, Plaintiffs

ALLIED VAN LINES, INC., Defendant

SA-21-CV-00438-XR

Signed June 14, 2024

Synopsis

Background: Property owners brought action in state court against carrier, which owners hired to transport personal property and household items for their move from Alabama to Texas, seeking to recover for items that were damaged in transit. Following removal and jury verdict awarding owners $31,909 in damages, owners moved for award of attorney’s fees and costs and transporter moved for costs.

Holdings: The District Court, Xavier Rodriguez, J., held that:

^[1] transaction between owners and carrier was not collect on delivery (COD), and thus owners were not entitled to award of attorney’s fees under Carmack Amendment;

^[2] taxation of costs in favor of owners would be declined;

^[3] carrier was entitled to award of costs under offer of judgment rule of procedure on ground that owners did not obtain more favorable verdict than unaccepted offer;

^[4] carrier’s depositions of owners were necessary, entitling carrier to award of costs for deposition transcripts;

^[5] carrier was entitled to award of costs for deposition exhibits;

^[6] carrier failed to demonstrate that trial exhibit notebooks were necessarily obtained for use at trial, which was required for award of costs for such notebooks; and

^[7] carrier was not entitled to requested award of $4,604.06 for its expert’s inspection and travel costs.

Owners’ motion denied; carrier’s motion granted in part.

See also 2022 WL 2392875.

West Headnotes (21)

[1]	CarriersDelivery of goods shipped C.O.D
	As a general rule, the common practice of shipping goods collect on delivery (COD) to a buyer instructs the carrier not to deliver the goods until the price has been collected.

[2]

Costs, Fees, and SanctionsCarriers

Transaction between property owners and carrier, in which owners hired carrier to transport personal property and household items from Alabama to Texas, was not collect on delivery (COD), and thus owners were not entitled to award of attorney’s fees under Carmack Amendment, which governed carrier liability for transportation services in interstate commerce, even though owners understood transaction to be COD, where owners paid carrier prior to delivery of items in Texas. 49 U.S.C.A. § 14708.

[3]	Costs, Fees, and SanctionsBill of Costs, Statement, or Memorandum
	District Court would decline to tax costs in favor of property owners, who obtained damages award against carrier to recover for items damaged during transit for owners’ move from Alabama to Texas, where owners failed to file bill of costs with Court as required by local procedural rules. U.S.Dist.Ct.Rules W.D.Tex. Rule CV-54.

[4]

Costs, Fees, and SanctionsRecovery less favorable than tender or offer

Carrier was entitled to award of costs under offer of judgment rule of procedure, in property owners’ action seeking to recover damages for personal property and household items that were damages during transit for owners’ move from Alabama to Texas, on ground that owners did not obtain more favorable verdict than unaccepted offer; owners ultimately recovered $31,909 in damages following jury trial, but carrier made offer of judgment for $32,500.00 prior to trial. Fed. R. Civ. P. 68.

[5]	Costs, Fees, and SanctionsDiscretion of court
	In the context of awarding costs, offer of judgment rule of procedure is mandatory and leaves no room for court discretion. Fed. R. Civ. P. 68.

[6]	Costs, Fees, and SanctionsDepositions
	Video depositions and written deposition transcripts are taxable costs so long as they are necessarily obtained for use in a case. 28 U.S.C.A. § 1920(2).

[7]	Costs, Fees, and SanctionsDepositions
	In the context of whether the cost in taking a deposition is a taxable cost, the deposition need not be introduced into evidence at trial in order to be necessarily obtained for the use in the case. 28 U.S.C.A. § 1920(2).

[8]	Costs, Fees, and SanctionsDepositions
	Under the taxation of costs statute, copies of depositions are allowed as costs if they were necessarily obtained for use in a case. 28 U.S.C.A. § 1920(4).

[9]	Costs, Fees, and SanctionsQuestions of law and fact
	Whether a deposition or copy was necessarily obtained for use in the case, so as to be a taxable cost, is a factual determination to be made by the district court. 28 U.S.C.A. § 1920(2, 4).

[10]	Costs, Fees, and SanctionsDepositions
	Under the taxation of costs statute, a court does not generally award costs for both deposition transcripts and videos unless the videos were actually used at trial. 28 U.S.C.A. § 1920(2).

[11]

Costs, Fees, and SanctionsDepositions

Carrier’s depositions of property owners were necessary in owners’ action to recover for damage to personal property and household items in move from Alabama to Texas, and thus carrier was entitled to award of costs for deposition transcripts, where, at time deposition transcripts were ordered, carrier’s counsel could have reasonably anticipated using transcripts in preparing motion for summary judgment or in preparing for trial. 28 U.S.C.A. § 1920(2, 4).

[12]

Costs, Fees, and SanctionsDepositions

Carrier’s video depositions of property owners were not necessary in owners’ action to recover for damage to personal property and household items in move from Alabama to Texas, and thus carrier was not entitled to award of costs for video depositions, where video depositions were not used at trial, and carrier was awarded costs for deposition transcripts, which were necessary for trial. 28 U.S.C.A. § 1920(2).

[13]

Costs, Fees, and SanctionsDepositions

Carrier of property owners’ personal property and household items, transported from Alabama to Texas for owners’ move, was entitled to award of costs for deposition exhibits following trial in owners’ action to recover damages for items damaged in transit, where carrier could have reasonably expected to use depositions and the associated exhibits in preparation for trial since deposition transcripts were necessarily obtained for use in case. 28 U.S.C.A. § 1920(2).

[14]

Costs, Fees, and SanctionsDepositions

Courts routinely permit the award of deposition exhibit costs under the taxation of costs statute, finding that a party has a reasonable expectation that the depositions, as well as their associated exhibits, would be used for trial preparation. 28 U.S.C.A. § 1920(2).

[15]	Costs, Fees, and SanctionsPrinting and copying Costs, Fees, and SanctionsExemplifications and exhibits
	The taxation of costs statute permits the court to tax as costs fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case; indeed the losing party should be taxed for the cost of reproducing relevant documents and exhibits for use in the case. 28 U.S.C.A. § 1920(4).

[16]

Costs, Fees, and SanctionsExemplifications and exhibits

Carrier of property owners’ personal property and household items, transported from Alabama to Texas for owners’ move, failed to demonstrate that trial exhibit notebooks were necessarily obtained for use at trial on owners’ claims seeking to recover damages for items damaged in transit, and thus were not entitled to award of costs for such notebooks, where all parties’ trial exhibits were filed and submitted to court electronically. 28 U.S.C.A. § 1920(4).

[17]

Costs, Fees, and SanctionsExperts

Carrier was not entitled to requested award of $4,604.06 for its expert’s inspection and travel costs prior to trial in property owners’ action to recover for damage to personal property and household items in move from Alabama to Texas; witness fee statute limited scope of recoverable fees to witness’s appearance before court or at deposition, and expert’s inspection of damages items did not relate to appearance at either deposition or before court. 28 U.S.C.A. §§ 1821(a)(1), 1920.

[18]

Costs, Fees, and SanctionsExperts

Carrier was entitled to award of $160 in costs for expert’s attendance at trial in property owners’ action to recover for damage to personal property and household items in move from Alabama to Texas; expert committed four days to trial, two in courtroom and two for travel time, and witness fee statute allowed for expert to be paid $40 per day for each day’s attendance at trial. 28 U.S.C.A. §§ 1821(b), 1920.

[19]

Costs, Fees, and SanctionsTravel expenses

Carrier was entitled to award of $897.96 in costs for airfare incurred by its expert to travel to trial in property owners’ action to recover for damage to personal property and household items in move from Alabama to Texas; expert testified that he lived in Arizona, and witness fee statute permitted recovery of costs for expert’s normal travel expenses within and outside judicial district. 28 U.S.C.A. §§ 1821(c)(4), 1920.

[20]

Costs, Fees, and SanctionsTravel expenses

Carrier’s award of costs for expert’s subsistence allowance incurred for trial in property owners’ action to recover for damage to personal property and household items in move from Alabama to Texas would be limited to total of $224; even though expert incurred $230 in food and transportation fees over four days that expert committed to trial, current regional rate for daily subsistence allowance under witness fee statute was $64 for full day and $48 for first and last day of travel. 28 U.S.C.A. §§ 1821(d)(1, 2, 3), 1920.

[21]	Costs, Fees, and SanctionsTravel expenses
	District Court would decline to award carrier any costs associated with daily lodging for its expert, who appeared at trial in property owners’ action to recover for damage to personal property and household items in move from Alabama to Texas, even though expert testified that he lived in Arizona, where expert did not bill for hotel expenses. 28 U.S.C.A. §§ 1821(c)(4), 1920.

Attorneys and Law Firms

Nicholas S. Bressi, Law Office of Nicholas Bressi, Austin, TX, for Plaintiffs.

Emileigh Stewart Hubbard, Vic Houston Henry, Henry Oddo Austin & Fletcher, P.C., Dallas, TX, for Defendant.

ORDER

XAVIER RODRIGUEZ, UNITED STATES DISTRICT JUDGE

*1 On this date, the Court considered Plaintiffs’ application for attorney’s fees (ECF No. 105) and Defendant’s response (ECF No. 111). In addition, the Court also considered Defendant’s motion to award costs (ECF No. 106) and Plaintiffs’ response (ECF No. 107). After careful consideration, the Court issues the following order.

BACKGROUND

Plaintiffs Michael and Linda Arnold are husband and wife. In 2020, they moved residences from Alabama to Texas. In preparation for their move, the Arnolds hired Defendant Allied Van Lines, Inc. (“Allied”) to pack, store, and transport their household goods and personal property (“Items”).

Allied packed the Plaintiffs’ Items from March 31, 2020 to April 3, 2020, and stored Plaintiffs’ Items until the beginning of September 2020, at which point Allied delivered the Items to Plaintiffs in Texas. However, upon the delivery, Plaintiffs learned that some Items were damaged while in Allied’s possession.

On April 13, 2021, Plaintiffs brought suit against Allied in state court for the damage to the Items. See ECF No. 1. On May 3, 2021, Allied removed Plaintiffs’ claims to this Court as Plaintiff sought a claim under the Carmack Amendment, a federal statute governing the liability of those who provide transportation services in interstate commerce within the jurisdiction of the Surface Transportation Board, and claims for loss or damage to shipments moved in interstate commerce. 49 U.S.C. § 14706.

On March 18, 2022, Allied extended an offer of judgment to Plaintiffs for $32,500.00. ECF No. 106-2. However, Plaintiffs ultimately rejected the offer of judgment, electing instead to proceed to trial. See ECF No. 106.

The case was then tried by a jury from January 16, 2024, to January 18, 2024, before the undersigned. Ultimately, the jury issued a verdict awarding Plaintiffs $31,909 in damages. ECF Nos. 102, 103.

On February 7, 2024, Plaintiffs filed an application for attorney’s fees (ECF No. 105), seeking attorney’s fees under 49 U.S.C. § 14708 as well as costs. In turn, on February 8, 2024, Allied filed a motion to award costs (ECF No. 106) based on Plaintiffs’ alleged failure to obtain a judgment more favorable than the unaccepted offer.

DISCUSSION

I. Plaintiffs’ Application for Attorney’s Fees (ECF No. 105)

According to the parties, Plaintiffs’ entitlement to attorney’s fees under 49 U.S.C. § 14708 turns on (1) whether the transaction between Plaintiffs and Allied was a collect-on-delivery (“C.O.D.”) transaction and (2) whether Plaintiffs are “prevailing parties” such that this Court may properly award attorney’s fees. ECF Nos. 105, 111.

The language of 49 U.S.C. § 14708(d) reads:

In any court action to resolve a dispute between a shipper of household goods and a carrier providing transportation or service subject to jurisdiction under subchapter I or III of chapter 135 concerning the transportation of household goods by such carrier, the shipper shall be awarded reasonable attorney’s fees if–

(1) the shipper submits a claim to the carrier within 120 days after the date the shipment is delivered or the date the delivery is scheduled, whichever is later;

*2 (2) the shipper prevails in such court action; and

(3)(A) the shipper was not advised by the carrier during the claim settlement process that a dispute settlement program was available to resolve the dispute;

(B) a decision resolving the dispute was not rendered through arbitration under this section within the period provided under subsection (b)(8) of this section or an extension of such period under such subsection; or

(C) the court proceeding is to enforce a decision rendered through arbitration under this section and is instituted after the period for performance under such decision has elapsed.

(emphasis added). Notably, 49 U.S.C. § 14708(f) specifically limits applicability of the section’s provisions to “collect-on-delivery transportation of household goods.”

a. Was the Move a C.O.D. Transaction?

According to Plaintiffs, “the undisputed and uncontroverted evidence at trial proved that the Bill of Lading and Freight Bill signed by both parties clearly marked the ‘Payment Type’ as ‘C.O.D.’ ” ECF No. 105 at 3; see Pl.’s Trial Exs. 3, 4. In addition, Plaintiffs contends that “the uncontroverted testimony of Michael Arnold established that Plaintiffs paid Allied via the making of a deposit paid on April 9, 2020 in the amount of $8,149.95 and the shipment was then paid COD at time of delivery on September 8, 2020, in the amount of $15,785.74” and that “Mr. Arnold further testified that he was required to pay at time of the delivery, and he understood the payment method to be ‘C.O.D.’ ” ECF No. 105 at 3.

According to Allied, Plaintiffs paid for the shipment in advance of the delivery as demonstrated by Plaintiffs’ credit card receipts and per the facts stipulated to by Plaintiffs at trial. See Pl.’s Trial Ex. 23; Def.’s Trial Ex. 23; ECF No. 82 at 4 (“Prior to delivery, Plaintiffs made payments for their move on April 20, 2020, and September 8, 2020, for a total of $23,935.69.”); id. (“On September 9, 2020, Allied delivered the Plaintiffs’ household goods to them in Guadalupe County, Texas.”).

^[1]“As a general rule, the common practice of shipping goods collect on delivery (C.O.D.) to a buyer instructs the carrier not to deliver the goods until the price has been collected.” Young v. Santa Fe Trail Transp. Co., 179 Kan. 678, 681, 298 P.2d 235 (1956); see also Hoover v. Allied Van Lines, Inc., 111 P.3d 1076 (Kan. Ct. App. 2005). Specifically, Black’s Law Dictionary defines C.O.D. as “1. Cash on delivery; collect on delivery. By consenting to this delivery term, the buyer agrees to pay simultaneously with delivery and appoints the carrier as the buyer’s agent to receive and transmit the payment to the seller. With C.O.D. contracts, the practice of carriers has traditionally been to disallow inspection before payment. 2. Costs on delivery. 3. Cash on demand.” C.O.D., Black’s Law Dictionary (11th ed. 2019) (emphasis added). Thus, to recover attorney’s fees under 49 U.S.C. § 14708, Plaintiffs must have paid Allied at the time of delivery—not before or after delivery.

^[2]Here, the evidence demonstrates that the transaction was not C.O.D. Despite Mr. Arnold’s testimony that he understood the move to be C.O.D. and the Bill of Lading’s indication that the transaction was C.O.D., ECF No. 105 at 66–68; Trial Tr. 102:23–103:16, the other evidence and Plaintiffs’ own stipulations demonstrate the contrary, see ECF No. 105 at 69–71; ECF No. 82 at 4. First, the credit card receipts proffered by Plaintiffs here show that payment for the shipment was made before delivery. ECF No. 105 at 69–71. Second, Plaintiff’s stipulated that “[p]rior to delivery, Plaintiffs made payments for their move on April 20, 2020, and September 8, 2020, for a total of $23,935.69” and that “[o]n September 9, 2020, Allied delivered the Plaintiffs’ household goods to them in Guadalupe County, Texas.” ECF No. 82 at 4.

*3 Accordingly, since Plaintiffs paid Allied before delivery, Plaintiffs move was not a C.O.D. transaction. Therefore, Plaintiffs are not entitled to attorney’s fees. See 49 U.S.C. § 14708(f).

b. Are Plaintiffs Prevailing Parties?

Given that the Court concludes that the transaction between the Plaintiffs and Allied was not C.O.D., the Court need not address whether Plaintiffs are prevailing parties for the purposes of attorney’s fees under 49 U.S.C. § 14708.

c. Entitlement to Costs?

^[3]Though Plaintiffs purport to seek recovery of costs in their motion, Plaintiffs have not filed a bill of costs with the Court pursuant to Local Rule CV-54. See ECF No. 105. Accordingly, the Court declines to tax costs in favor of Plaintiffs. See MWK Recruiting, Inc. v. Jowers, No. 1:18-CV-444-RP, 2024 WL 756280, at *6 (W.D. Tex. Jan. 29, 2024) (“Failure to file a bill of costs precludes a party from recovering taxable costs awarded under Rule 54(d)(1).” (alterations omitted)).

II. Defendant’s Motion to Award Costs (ECF No. 106)

In its motion to award costs, Allied contends that it made a valid offer of judgment to Plaintiff for $32,500.00 on March 18, 2022, which Plaintiffs ultimately rejected. ECF No. 106 at 3. Allied argues that the judgment obtained by Plaintiffs was not more favorable than that unaccepted offer of judgment, and Allied is thus entitled to recover from Plaintiffs all costs incurred after the offer was made. Id.

Under Rule 68(a), “[a]t least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued.” However, if that offer is rejected and “[i]f the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.” Fed R. Civ. Pro. 68. The Supreme Court has stated that “[t]he plain purpose of Rule 68 is to encourage settlement and avoid litigation.” Marek v. Chesny, 473 U.S. 1, 5, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985).

^[4] ^[5]Here, given that Plaintiff ultimately recovered $31,909 in damages from Defendant Allied Van Lines, Inc. and Allied made an offer of judgment for $32,500.00 on March 18, 2022, see ECF Nos. 103, 106-2, the judgment obtained by Plaintiffs is not more favorable than the unacceptable offer. Accordingly, Allied is entitled to recover costs incurred after March 18, 2022, as discussed below.¹

a. Which Costs is Allied Entitled to?

The costs that Allied may recover are set out under 28 U.S.C. § 1920. See Hobbs v. Alcoa Inc., No. A-04-CA-566 AWA, 2006 WL 8435708, at *4 (W.D. Tex. July 7, 2006), aff’d, 501 F.3d 395 (5th Cir. 2007).² Section 1920 provides:

A judge or clerk of any court of the United States may tax as costs the following: (1) Fees of the clerk and marshal; (2) Fees for printed or electronically recorded transcripts necessarily obtained for use in the case; (3) Fees and disbursements for printing and witnesses; (4) Fees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case; (5) Docket fees under section 1923 of this title; (6) Compensation of court appointed experts, compensation of interpreters, and salaries, fees, expenses, and costs of special interpretation services under section 1828 of this title.

*4 28 U.S.C. § 1920.

Allied claims that it incurred the following costs after March 18, 2022:

1. $4,578.05 for deposition transcripts of Plaintiff Linda and Michael Arnold;

2. $1,700.00 for video depositions of Plaintiffs Linda and Michael Arnold;

3. $66.00 for deposition exhibits for depositions of Linda and Michael Arnold;

4. $3,111.54 for trial exhibit notebooks for trial;

5. $4,604.06 in expert witness fees for inspection and travel;

6. $4,077.96 in expert witness fees for trial testimony and travel.

ECF No. 106 at 4–5. In support of its motion, Allied submits receipts documenting these costs. ECF Nos. 106-3, 106-4, 106-5, 106-6, 106-7; 106-8.

i. Deposition Transcripts & Video Depositions

^[6] ^[7] ^[8] ^[9] ^[10]“Video depositions and written deposition transcripts are taxable costs under § 1920(2) so long as they are ‘necessarily obtained for use’ in a case.” Cinemark Holdings, Inc. v. Factory Mut. Ins. Co., No. 4:21-CV-00011, 2024 WL 964723, at *4 (E.D. Tex. Mar. 6, 2024) (quoting Gibson Brands, Inc. v. Armadillo Distrib. Enters., Inc., No. 4:19-cv-00358, 2023 WL 2899050, at *4 (E.D. Tex. Apr. 11, 2023)). Costs related to the taking of depositions are allowed under § 1920(2) “if the materials were necessarily obtained for use in the case.” 28 U.S.C. § 1920(2); Stearns Airport Equip. Co., Inc. v. FMC Corp., 170 F.3d 518, 536 (5th Cir. 1999). “[A] deposition need not be introduced into evidence at trial in order to be necessarily obtained for the use in the case.” Fogleman v. ARAMCO, 920 F.2d 278, 285 (5th Cir. 1991) (quotations omitted). In addition, copies of depositions are allowed if they were necessarily obtained for use in a case pursuant to § 1920(4). Gaddis v. United States, 381 F.3d 444, 456 (5th Cir. 2004). Whether a deposition or copy was necessarily obtained for use in the case is a factual determination to be made by the district court. Fogleman, 920 F.2d at 285–86. However, “the Court does not generally award costs for both transcripts and videos unless the videos were actually used at trial.” Two–Way Media, LLC v. AT&T Servs., Inc., No. SA-09-CA-00476-OLG, 2013 WL 12090356, at *3 (W.D. Tex. Nov. 22, 2013).

^[11] ^[12]Here, the Court concludes that while the deposition transcripts obtained for Michael and Linda Arnold were necessary for use in the case, the video deposition costs were not necessary and are unrecoverable. At the time the deposition transcripts were ordered, Allied’s counsel could have reasonably anticipated using the transcripts in preparing its motion for summary judgment or in preparing for trial. Accordingly, the Court will award Allied’s deposition transcript costs. Two–Way Media, 2013 WL 12090356, at *3 (“Deposition costs are generally allowed if the taking of the deposition is shown to have been reasonably necessary in the light of facts known to counsel at the time it was taken.”). However, given that the video deposition was not used at trial and that the Court is already awarding costs for deposition transcripts, the Court will not award video deposition costs. See id.³

ii. Deposition Exhibits

*5 ^[13] ^[14]With respect to the deposition exhibit costs sought by Allied, “[c]ourts routinely permit the award of exhibit costs, finding that a party has a reasonable expectation that the depositions, as well as their associated exhibits, would be used for trial preparation.” Sois v. Crescent Drilling & Prod., Inc., No. SA-19-CV-01194-FB, 2023 WL 8707421, at *5 (W.D. Tex. Oct. 19, 2023), report and recommendation adopted sub nom. Solis v. Crescent Drilling & Prod., Inc., No. CV SA-19-CA-1194-FB, 2023 WL 8704782 (W.D. Tex. Dec. 15, 2023). Here, the Court has already found that the deposition transcripts were necessarily obtained for use in this case, and similarly finds that Allied could have reasonably expected to use the depositions and the associated exhibits in preparation for trial. Accordingly, the Courts will award deposition exhibit costs to Allied.

iii. Trial Exhibit Notebooks

^[15]Section 1920(4) permits the court to tax as costs “[f]ees for exemplification and the costs of making copies of any materials where the copies are necessarily obtained for use in the case.” See also Charles v. Sanchez, No. EP-13-CV-00193-DCG, 2015 WL 11439074, at *13 (W.D. Tex. Oct. 7, 2015). Indeed, the losing party “should be taxed for the cost of reproducing relevant documents and exhibits for use in the case.” Fogleman, 920 F.2d at 286. However, to recover these costs, Allied must demonstrate that “the copies were necessarily incurred for use in the case.” Graves for & on Behalf of W.A.G. v. Toyota Motor Corp., No. 2:09CV169KS-MTP, 2012 WL 13018892, at *7 (S.D. Miss. Apr. 27, 2012) (citing Fogleman v. ARAMCO, 920 F. 2d 278, 286 (5th Cir. 1991)).

^[16]Here, Allied contends, without any additional argument, that its costs for the trial exhibit notebooks were “for necessary use at trial.” ECF No. 106-1 ¶ 7. In response, Plaintiffs argue that such costs were not reasonable as “all parties’ trial exhibits were filed and submitted to the court electronically.” ECF No. 107 at 2. Allied did not file a reply to Plaintiffs’ response. The Court declines to award $3,111.54 in costs to Allied for its trial exhibit notebooks given the electronic submissions.

iv. Expert Witness Fees

Allied seeks recovery of $4,604.06 in expert witness fees for inspection and travel as well as $4,077.96 in expert witness fees for trial testimony and travel. “The Supreme Court has explained that the interrelation of Fed. R. Civ. P. 54(d)(1) (relating to costs other than attorneys’ fees), 28 U.S.C. § 1920 (listing “costs” that may be taxed by a federal court), and 28 U.S.C. § 1821 (authorizing per diem and travel expenses for witnesses) means that expert witness fees in excess of the standard witness per diem and travel allowances cannot be taxed in the absence of express statutory authority to the contrary.” Tyler v. Union Oil Co. of California, 304 F.3d 379, 404 (5th Cir. 2002); see also Roberts v. Baptist Healthcare Sys., LLC, No. 1:20-CV-00092-MAC, 2023 WL 5163374, at *6 (E.D. Tex. June 29, 2023) (“Expert witness fees are not recoverable unless they are court-appointed expert witnesses.”), report and recommendation adopted, No. 1:20-CV-92, 2023 WL 4678545 (E.D. Tex. July 21, 2023). Here, Allied does not identify any statutory authority warranting the recovery of its expert witness fees beyond 28 U.S.C. § 1920. Thus, the Court will limit the taxable costs to those allowances set forth under 28 U.S.C. § 1821.

To begin, 28 U.S.C. § 1821(a)(1) limits its scope to a witness’s appearance in court or at a deposition. Under 28 U.S.C. § 1821(b), “[a] witness shall be paid an attendance fee of $40 per day for each day’s attendance,” and “[a] witness shall also be paid the attendance fee for the time necessarily occupied in going to and returning from the place of attendance at the beginning and end of such attendance or at any time during such attendance.” In addition, 28 U.S.C. § 1821(c)(4) permits the award of “[a]ll normal travel expenses within and outside the judicial district.” In addition, under 28 U.S.C. § 1821(d)(1), “[a] subsistence allowance shall be paid to a witness when an overnight stay is required at the place of attendance because such place is so far removed from the residence of such witness as to prohibit return thereto from day to day.” And pursuant to 28 U.S.C. § 1821(d)(2)–(3), that subsistence allowance is to be set at the per diem rate for official travel in the area of attendance by employees of the Federal Government. Currently, the rates for San Antonio are $64 for a full day and $48 for the first and last day of travel. Further, the government daily lodging rate for San Antonio is $143.⁴

*6 ^[17]First, with respect to the $4,604.06 sought by Allied for its expert’s inspection and travel costs, Allied seeks to recover those costs associated with its expert’s inspection of Plaintiffs’ damaged Items, not for its expert’s appearance at a deposition or before the Court. As stated above, 28 U.S.C. § 1821(a)(1) limits the section’s scope to a witness’s appearance before a court or at a deposition. Accordingly, the Court declines to award costs for the expert’s inspection and travel.

^[18] ^[19] ^[20] ^[21]Second, with respect to the $4,077.96 in expert witness fees for trial testimony and travel sought by Allied, the Court will award witness fees for the expert’s travel to and appearance at trial, as guided by 28 U.S.C. § 1821. All in, Allied’s expert committed four (4) days to the trial in this case, including two days in the courtroom⁵ and two days of travel time. ECF No. 106-8. In addition, Allied’s expert incurred $897.96 for airfare and $230.00 for food/transportation expenses.⁶ However, despite testifying during trial that he lives in Arizona, Allied’s expert did not bill for any hotel expenses and thus the Court will not award any allowance for daily lodging. Accordingly, the Court awards $897.96 for airfare, $160 for Allied’s expert’s attendance, and $224 in subsistence allowance.

CONCLUSION

For the foregoing reasons, the Court DENIES Plaintiffs’ application for attorney’s fees (ECF No. 105). The Court GRANTS IN PART Defendant’s motion to award costs (ECF No. 106). Defendant is entitled to $4,578.05 in deposition transcript costs, $66.00 in deposition exhibit costs, and $1,281.96 in witness fees.

It is so ORDERED.

All Citations

— F.Supp.3d —-, 2024 WL 3063113

Footnotes

The Court, of course, observes that Allied did not file a bill of costs along with its Rule 68 motion. However, the Court had not yet ruled on whether Allied was entitled to costs under Rule 68. In addition, “Rule 68 is mandatory and leaves no room for court discretion.” Hobbs, 2006 WL 8435708, at *4.
“The costs included in Rule 68 are no more extensive than the costs authorized under Rule 54(d), and in each instance the cost award should be based on 28 U.S.C.A. § 1920.” Wright & Miller, 12 Fed. Prac. & Proc. Civ. § 3006 at n.15 (3d ed.) (citing Thomas v. Caudill, 150 F.R.D. 147 (N.D. Ind. 1993)).
Plaintiffs do not dispute that the deposition transcripts were necessarily obtained for use in the case. See ECF No. 107.
https://www.gsa.gov/travel/plan-book/per-diem-rates.
Allied’s expert offered one day of trial testimony and spent one day on standby in case he was needed. See ECF No. 106-8.
Allied’s expert does not itemize his costs for food or transportation. Accordingly, though 28 U.S.C. § 1821(c)(4) authorizes the award of “[a]ll normal travel expenses within and outside the judicial district,” the Court in its discretion construes these food/transportation expenses as falling under the per diem rates set by 28 U.S.C. § 1821.

End of Document