United States District Court for the District of Massachusetts

December 9, 2022, Decided; December 9, 2022, Filed

Civil Action No. 21-CV-11412-AK

Reporter

2022 U.S. Dist. LEXIS 222091 *; 2022 WL 17555657

NARIMAN SKAKOV, Plaintiff, v. BLACK BEAR MOVING AND STORAGE, and ANTHEM CLAIM MANAGEMENT; Defendants.

Core Terms

damages, carrier, allegations, default, preemption, insurer, default judgment, settlement, interstate, missing, prejudgment interest, cause of action

Counsel:  [*1] For Nariman Skakov, Plaintiff: Erik T. Hagen, LEAD ATTORNEY, Falbo, Solari & Goldberg, Winthrop, MA.

Judges: Hon. Angel Kelley, United States District Judge.

Opinion by: Angel Kelley

Opinion

MEMORANDUM AND ORDER

A. KELLEY, D.J.

Plaintiff Nariman Skakov (“Mr. Skakov”) moved from California to Massachusetts in 2020, enlisting the services of Black Bear Moving and Storage (“Black Bear”), a California-based moving company. Black Bear was insured by Anthem Claim Management (“Anthem”), an Arizona-based insurance company. The move did not go as planned, and Mr. Skakov ultimately made a claim upon Anthem for property that Black Bear had lost and damaged, and subsequently sued both parties under state and federal consumer protection statutes. Mr. Skakov obtained an entry of default after the defendants failed to respond to the complaint or otherwise defend this action and has now moved for default judgment. Because the Court finds that Mr. Skakov has pled sufficient facts to establish liability, but insufficient facts to establish his measure of damages, it will DENY the motion without prejudice pending more definite briefing.

I. Factual and Procedural Background

Unless otherwise noted, the facts are recited as alleged in Mr. [*2]  Skakov’s complaint. [See Dkt. 1 (“Compl.”)]. In July 2020, Mr. Skakov contracted with Allegiance Moving and Storage (“Allegiance”), a Florida-based moving broker, to move from San Francisco to Cambridge, Massachusetts. Allegiance brokered a contract between Mr. Skakov and Black Bear under which Black Bear would perform the move, and Mr. Skakov would directly pay Black Bear. This contract provided that Black Bear would pick up Mr. Skakov’s property from his San Francisco residence between 3:00 p.m. and 6:00 p.m. on July 27, 2020, and would deliver the property to Cambridge by August 13, 2020.

Black Bear did not arrive on time to perform the move, not reaching Mr. Skakov’s San Francisco address until 11:30 p.m. Black Bear also lacked the necessary materials for safe packing. Black Bear completed packing Mr. Skakov’s property at about 3:00 a.m. on July 28, 2020, and Mr. Skakov expressed concern that Black Bear’s lack of safe packing materials could lead to property damage during the move. The property arrived in Cambridge on August 14, 2020, one day later than the contract had provided for, in a different truck from the one that had been loaded in San Francisco on July 28. Mr. Skakov observed [*3]  that some items had been broken, scratched, and otherwise damaged. Further, some items, including artwork, were missing.

Mr. Skakov reported the missing and damaged property to a Black Bear customer service agent. The agent acknowledged that property was missing and damaged, and that Black Bear bore responsibility for locating the missing items. Black Bear informed Mr. Skakov on or around August 31, 2020 that some of the missing artwork had been located, but provided no further information. On or around September 11, 2020, the broker Allegiance informed Mr. Skakov that his missing property had been inadvertently left in a warehouse along the route from San Francisco to Cambridge. Black Bear indicated on September 15, 2020 that it had located all of the missing property. However, Black Bear and Allegiance delayed returning the property as they did not have any scheduled trips between the warehouse and Cambridge.

Black Bear returned two of the three missing items to Mr. Skakov on October 7, 2020, but stated it could not locate the third missing item. Black Bear directed Mr. Skakov to file a claim against its insurer, Anthem, which Mr. Skakov did on October 29, 2020. On March 4, 2021, Mr. [*4]  Skakov served a settlement demand letter on Anthem, Allegiance, and Black Bear. No party tendered Mr. Skakov a reasonable settlement offer in response to this letter.

In August 2021, Mr. Skakov filed the instant action against Anthem, Allegiance, and Black Bear, alleging violations of state and federal consumer protection laws. Mr. Skakov completed service upon Anthem and Allegiance in November 2021, [Dkts. 11-12], and after being granted an extension of time to complete service, upon Black Bear in February 2022, [Dkt. 22]. Of the three defendants, only Allegiance responded to the complaint, moving to dismiss it for failure to state a claim. [Dkt. 31]. That motion was mooted in June 2022 by a settlement between Mr. Skakov and Allegiance. [Dkts. 42-43]. In May 2022, the clerk of this Court entered notices of default against Anthem and Black Bear, as they had failed to timely answer the complaint following service. [Dkts. 32-33]. Mr. Skakov then timely moved for default judgment. [Dkt. 41].

II. Legal Standard

The Federal Rules of Civil Procedure provide a two-step process for default judgment. See Fed. R. Civ. P. 55. First, the clerk must enter a notice of default “[w]hen a party against whom judgment for [*5]  affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise.” Fed. R. Civ. P. 55(a). Second, upon obtaining a notice of default, the plaintiff must apply to the court for default judgment where the amount of damages is not a “sum certain.” See Fed. R. Civ. P. 55(b). The party that has defaulted “is deemed to have admitted all of the allegations in the complaint.” CNE Direct, Inc. v. Blackberry Corp., 55 F. Supp. 3d 233, 234 (D. Mass. 2014); see SEC v. Tropikgadget FZE, 146 F. Supp. 3d 270, 275 (D. Mass. 2015) (noting that entry of default “constitutes an admission of all facts well-pleaded in the complaint” (citation omitted)). However, the court independently “may examine a plaintiff’s complaint, taking all well-pleaded factual allegations as true, to determine whether it alleges a cause of action.” Ramos-Falcon v. Autoridad de Energia Electrica, 301 F.3d 1, 2 (1st Cir. 2002). While the court may set a hearing to determine damages “when the amount is in dispute or is not ascertainable from the pleadings,” the court may order default judgment without a hearing where “the allegations in the complaint state a specific, cognizable claim for relief, and the defaulted party had fair notice of its opportunity to object.” In re The Home Rests., Inc., 285 F.3d 111, 114 (1st Cir. 2002).

III. Discussion

Mr. Skakov has satisfied the first step of the default judgment process by obtaining an entry of default. The Court now must evaluate whether the allegations [*6]  in his complaint comprise legally cognizable causes of action against Anthem and Black Bear. If the Court finds that he has made such a showing, it must assess his request for damages. Because Count 3 raises a preemption issue that predominates over the remaining claims, the Court begins its analysis there.¹

A. Count 3: Violation of the Carmack Amendment by Black Bear

Count 3 brings a claim for damages against Black Bear under the Carmack Amendment, 49 U.S.C. § 14706, a federal statute governing a carrier’s liability for loss or damage to interstate shipments of cargo. The statute makes a carrier liable for all “actual loss or injury to [] property” that is carried between states unless the carrier takes specific actions to limit its liability, and requires the carrier to “issue a receipt or bill of lading for property it receives for transportation.” Id. To state a claim under the Carmack Amendment, “a plaintiff must show (1) delivery to the carrier in good condition; (2) arrival in damaged condition; and (3) the amount of damages caused by the loss.” Camar Corp. v. Preston Trucking Co., Inc., 221 F.3d 271, 274 (1st Cir. 2000).

Here, Mr. Skakov has pled allegations sufficient to support a Carmack Amendment claim. The complaint states that Mr. Skakov delivered his property to Black Bear in “good and satisfactory condition, free [*7]  from damage and defect.” [Compl. ¶ 41]. Black Bear transported the property from California to Massachusetts, and some property arrived “broken, scratched, or otherwise evidencing clear damage,” [id. ¶ 15], while one item of property was, at Black Bear’s own admission, permanently lost, [id. ¶ 25]. Further, Black Bear did not comply with the procedural requirements of the Carmack Amendment, as it did not “provide a Bill of Lading upon receipt.” [Id. ¶¶ 46-47]. Thus, the complaint states a claim under the Carmack Amendment sufficient to support entry of default judgment. The Court addresses the damages element below.

B. Counts 2 and 4: Violation of Massachusetts Statutes by Black Bear

Count 2 alleges that Black Bear violated M.G.L. Chapter 93A, the Commonwealth’s consumer protection statute. Chapter 93A provides relief to “any person who engages in the conduct of any trade or commerce and who suffers any loss of money or property . . . as a result of the use . . . by another person who engages in any trade or commerce of . . . an unfair or deceptive act or practice.” M.G.L. ch. 93A, § 11. Likewise, Count 4 alleges that Black Bear violated M.G.L. Chapter 107, Section 7-309(a), which imposes a statutory negligence standard on carriers.

The Court need not evaluate the facts pled in support of Counts [*8]  2 and 4 because the Carmack Amendment, which forms the basis of Count 3, preempts state-law claims brought against a carrier related to loss or damage to interstate shipments of cargo. Rini v. United Van Lines, Inc., 104 F.3d 502, 506 (1st Cir. 1997). The First Circuit specifically held in Rini that the Carmack Amendment preempts “negligence, misrepresentation, and chapter 93A claims” related to loss or damage of property by an interstate carrier, id. (emphasis added), directly foreclosing any possibility of relief under the Massachusetts statutes that form the basis of Counts 2 and 4.

The Rini court did not, however, expressly resolve the question of whether Carmack Amendment preemption was “ordinary preemption,” and thus a waivable defense that must be affirmatively raised by a defendant, or “complete preemption”—and thus, jurisdictional, and not subject to waiver. Complete preemption “applies to subjects over which federal law is so pervasive that it is impossible to make out a state-law claim.” Clean Harbors Recycling Servs. Ctr. v. Harold Marcus Ltd., No. 12-10594-DPW, 2013 U.S. Dist. LEXIS 45703, 2013 WL 1329532 at *6 (D. Mass. Mar. 29. 2013) (citation omitted); see SPGGC, LLC v. Ayotte, 488 F.3d 525, 534 (1st Cir. 2007) (distinguishing complete preemption, which “determines whether a federal court has jurisdiction over a claim,” from ordinary preemption, which determines “whether a state enforcement action would be precluded on the merits”). State and federal courts are barred from considering a party’s [*9]  state-law cause of action in an area where Congress intended the federal cause of action to be exclusive. See Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 9-10, 123 S. Ct. 2058, 156 L. Ed. 2d 1 (2003).

Although the Rini court was not required to reach this question, it strongly indicated in dicta that Congress intended the Carmack Amendment to be an exclusive cause of action. 104 F.3d at 507 (citing “the federal government’s exclusive jurisdiction over the shipper-carrier relationship,” and the statute’s purpose to “to provide uniformity to claims for the loss or damage to goods”). In accordance with this reasoning, the prevailing position in this district is that the Carmack Amendment completely preempts state law, and is a jurisdictional barrier to plaintiffs asserting state-law claims against carriers for damages incurred in interstate transportation. See Clean Harbors, 2013 U.S. Dist. LEXIS 45703, 2013 WL 1329532 at *6. At least two federal circuit courts that have directly considered this question have reached the same conclusion about the Carmack Amendment‘s preemptive effect. Hall v. North Am. Van Lines, Inc., 476 F.3d 683, 688 (9th Cir. 2007); Hoskins v. Bekins Van Lines, 343 F.3d 769, 778 (5th Cir. 2003).

Accordingly, the Court need not consider the fact that Black Bear, through its default, waived its ability to assert preemption as an affirmative defense to the Massachusetts-law claims. Congress’ passage of the Carmack Amendment as the sole remedy governing carrier liability for loss or damage to cargo in interstate shipping prevents Mr. [*10]  Skakov from seeking further relief under state law, and default judgment may not enter on his state law claims against Black Bear.

C. Count 5: Violation of Chapter 93A by Anthem

Count 5 brings a Chapter 93A claim against Anthem only, alleging that the insurer failed to timely tender an offer of settlement upon its receipt of a Chapter 93A demand letter, despite the liability of its insured (Black Bear) having become reasonably clear. Because Anthem is an insurer, not a carrier, it is not a party subject to Carmack Amendment liability, and thus Count 5 is not subject to the preemption analysis that prevents the Court from granting relief on Counts 2 and 4.

The standard for insurer liability under Chapter 93A in Massachusetts is well-established. Among its other statutory and common-law duties, an insurer has a responsibility to “effectuate prompt, fair, and equitable settlements of claims in which liability has become reasonably clear.” Hopkins v. Liberty Mut. Ins. Co., 434 Mass. 556, 750 N.E.2d 943, 948 (Mass. 2001) (quoting M.G.L. ch. 176D, § 3(9)(f)). A violation of this requirement subjects the insurer to penalties under Chapter 93A. Id.; Calandro v. Sedgwick Claims Management Servs., Inc., 919 F.3d 26, 34 (1st Cir. 2019).

Here, the complaint alleges that Anthem was the insurer for Black Bear at the time that Black Bear lost Mr. Skakov’s property. [Compl. ¶ 25]. Mr. Skakov made a claim [*11]  for the lost property on or around October 29, 2020. [Id. ¶ 26]. About four months later, on March 4, 2021, Mr. Skakov served a demand letter on Anthem, but did not receive any reasonable offers of settlement in response. [Id. ¶ 28].

Because Anthem’s insured directly admitted liability for loss of property to Mr. Skakov on October 7, 2020, [id. ¶ 25], liability should have been clear to Anthem at or shortly after the time it opened its file on this claim. The complaint’s allegations that Anthem did not tender an offer of settlement at the time the claim was filed in October 2020, at the time of the demand letter in March 2021, or by the time this lawsuit was filed in August 2021 collectively state a clear and obvious case for liability under Chapter 93A, and default judgment may thus enter against Anthem on Count 5.

D. Damages

Having found sufficient allegations to against Black Bear on Count 3 and against Anthem on Count 5, the Court now turns to the question of the appropriate measures of damages.

1. Count 3: Carmack Amendment

Under the Carmack Amendment, “actual loss … is the proper measure of damages.” Camar Corp. v. Preston Trucking Co., Inc., 221 F.3d 271, 276 (1st Cir. 2000). The statute ordinarily measures damages by “the reduction in market value at destination or by replacement or repair [*12]  costs occasioned by the harm,” and “incorporates common law principles of damages.” Id. at 277. Punitive damages and “damages unrelated to the property at issue” are not available. Fredette v. Allied Van Lines, Inc., 66 F.3d 369, 372 (1st Cir. 1995). The Court cannot award damages beyond the sales value of the damaged or lost goods if the “record is too speculative to form the basis of a [greater] damages award.” See Camar, 221 F.3d at 277.

Here, counsel for Mr. Skakov has filed an affidavit requesting that judgment be entered in the amount of $27,728.02 against Black Bear. [Dkt. 41 at 3-4]. Of this amount, $16,618 is attributable to lost and damaged property, [id.], the central measure of damages under the statute. However, the affidavit provides no indication of how this figure was ascertained—far from any itemization of damages by item, neither the complaint nor the affidavit discloses the nature of the item that Black Bear lost during transit, nor the nature or extent of the damage done to the property which was delivered. Likewise, the remainder of the proposed damages award (excluding interest) is attributed to nonperformance of the delivery and contract terms, “additional cash payments,” lost time and wages, and general “costs,” with no further description. [Id.] This barebones [*13]  categorization of losses is far too speculative a basis to support an award of damages greater than the change in market value of Mr. Skakov’s property. The Court does not preclude the possibility of an award of actual damages on any or all of these measures, subject to Mr. Skakov’s development of a record establishing the nature and amount of each of these costs, and how they were directly attributable to the Carmack Amendment violation.

2. Count 5: Chapter 93A

The same analysis applies to Mr. Skakov’s identical claim for damages against Anthem on Count 5. Chapter 93A makes a defendant liable for “all losses which were the foreseeable consequences of the defendant’s unfair or deceptive act or practice,” but a plaintiff cannot recover for damages that “are remote, speculative, hypothetical, and not within the realm of reasonable certainty.” H1 Lincoln, Inc. v. South Washington Street, LLC, 489 Mass. 1, 179 N.E.3d 545, 562 (Mass. 2022). Because the affidavit provides no grounds upon which the Court can conclude with “reasonable certainty” that its claimed damages are the true measure of Mr. Skakov’s losses, it cannot, on this record, enter a damages award on Count 5.

3. Prejudgment Interest

Mr. Skakov further seeks prejudgment interest on his award. This Court has previously held that prejudgment [*14]  interest is available, at the federal rate, for violations of the Carmack Amendment, upon finding that federal-rate awards support the statute’s purpose of providing predictable, uniform recovery for consumers where interstate carriers lose and damage cargo. Richwell Grp., Inc. v. Seneca Logistics Grp., Inc., 433 F. Supp. 3d 58, 64 (D. Mass. 2019). Likewise, prejudgment interest is available for violations of Chapter 93A at the Massachusetts statutory rate. McDermott v. Marcus, Errico, Emmer & Brooks, P.C., 911 F. Supp. 2d 1, 102 (D. Mass. 2012). Accordingly, upon calculation of its award to Mr. Skakov, the Court will award prejudgment interest against Black Bear at the federal rate and against Anthem at the Massachusetts rate in the amount that has accrued as of the date of the award.

IV. Conclusion

For the foregoing reasons, Mr. Skakov’s motion for default judgment is DENIED WITHOUT PREJUDICE. Mr. Skakov is hereby ORDERED to, within 30 days, submit a renewed motion accompanied by a definite affidavit supporting his claimed damages award, or move for a hearing on damages.

SO ORDERED.

Dated: December 9, 2022

/s/ Angel Kelley

Hon. Angel Kelley

United States District Judge

End of Document

---

¹ Count 1, which brought a claim only against Allegiance, has been settled. [Dkt. 42].

Court of Appeals of Washington, Division Three

October 24, 2022, Oral Argument; December 6, 2022, Filed

No. 39010-1-III

Reporter

2022 Wash. App. LEXIS 2308 *

Mark Grothe, Appellant, v. Victor Kushnivich et al., Respondents.

Prior History:  [*1] Appeal from Pierce County Superior Court. Docket No: 20-2-08176-6. Judge signing: Honorable Elizabeth P. Martin. Judgment or order under review. Date filed: 10/29/2021.

Core Terms

damages, repaired, carrier, diminished, loss of use, prelitigation, summary judgment, measure of damages, double recovery, market value, repair costs, bill of lading, trial court, recoverable, transport, actual loss, notice, proposed amended complaint, claim requirement, preempted

Case Summary

Overview

HOLDINGS: [1]-The trial court’s summary judgment dismissal of the purchaser’s negligence claim was proper because, even under the generous notice pleading standards, his complaint failed to assert a Carmack claim under 49 U.S.C.S. § 14706; [2]-The denial of the purchaser’s motion to amend to assert a claim under the Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, for loss use while the goods were being repaired and for diminished value of the repaired goods was improper because recoverable damages included loss of use while the goods were being repaired and diminished value of the repaired goods.

Outcome

Judgment affirmed in part; reversed in part; remanded.

LexisNexis® Headnotes

Antitrust & Trade Law > Regulated Industries > Transportation > Common Carriers

Transportation Law > Rail Transportation > Carmack Amendment

Transportation Law > Carrier Duties & Liabilities > Damages

HN1  Transportation, Common Carriers

The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, provides the exclusive remedy for goods damaged in interstate commerce by a common carrier.

Transportation Law > Rail Transportation > Carmack Amendment

Transportation Law > Carrier Duties & Liabilities > Damages

HN2  Rail Transportation, Carmack Amendment

Under the Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, recoverable damages include loss of use while the goods were being repaired and diminished value of the repaired goods.

Civil Procedure > Appeals > Costs & Attorney Fees

Civil Procedure > Appeals > Frivolous Appeals

HN3  Appeals, Costs & Attorney Fees

Under Wash. R. App. P. 10.2(i), an appellate court may impose sanctions under Wash. R. App. P. 18.9 for failure to timely file and serve a brief. Rule 18.9(a) in turn provides for the imposition of monetary sanctions for a party who uses these rules for the purpose of delay, files a frivolous appeal, or fails to comply with the rules to pay terms or compensatory damages to any other party who has been harmed by the delay or the failure to comply or to pay sanctions to the court.

Civil Procedure > … > Pleadings > Complaints > Requirements for Complaint

HN4  Complaints, Requirements for Complaint

Washington is a notice pleading state. An action is not dismissed simply because a complaint fails to artfully state each element of a particular cause of action. Rather, notice pleading must adequately inform the defendant of the nature of the plaintiff’s claims as well as the legal grounds upon which those claims rest.

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

Civil Procedure > … > Pleadings > Amendment of Pleadings > Leave of Court

HN5  Standards of Review, Abuse of Discretion

An appellate court reviews for an abuse of discretion a trial court’s denial of a motion to amend a pleading. To constitute an abuse of discretion, the trial court’s decision must be manifestly unreasonable, based on untenable grounds, or made for untenable reasons. If the trial court’s ruling is based on an erroneous view of the law or involves application of an incorrect legal analysis, it necessarily abuses its discretion.

Antitrust & Trade Law > Regulated Industries > Transportation > Common Carriers

Transportation Law > Carrier Duties & Liabilities > Bills of Lading

Transportation Law > Rail Transportation > Carmack Amendment

Transportation Law > Carrier Duties & Liabilities > Damages

HN6  Transportation, Common Carriers

The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, permits recovery of actual loss or injury to the property caused by a carrier over whose line or route the property is transported in the United States when transported under a bill of lading. 49 U.S.C.S. § 14706(a)(1).

Antitrust & Trade Law > Regulated Industries > Transportation > Common Carriers

Transportation Law > Rail Transportation > Carmack Amendment

Transportation Law > Carrier Duties & Liabilities > Damages

HN7  Transportation, Common Carriers

The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, provides the cause of action but applicable common law provides the measure of damages.

Real Property Law > … > Damages > Types of Damages > Compensatory Damages

Torts > … > Types of Damages > Property Damages > Loss of Use

Torts > … > Types of Damages > Property Damages > Measurements

HN8  Types of Damages, Compensatory Damages

In Washington, the measure of damages for loss caused to personal property is arrived at by a three-part analysis: (1) If the property is a total loss the measure of damages is the value of the property destroyed or damaged. This is its market value, if it has a market value. (2) If the property is damaged but not destroyed, the measure of damages is the difference between the market value of the property before the injury and its market value after the injury. (3) If the property does not have a market value, then if a total loss, the measure of damages is the cost to replace or reproduce the article. If it cannot be reproduced or replaced, then its value for the owner may be considered in fixing damages. Thus, recoverable damages are measured by the property’s diminished value, i.e., the difference between the market value of the property before the loss and its market value after the loss. This is consistent with the holding that diminution in value is recoverable if a repaired car cannot be fully restored to its preloss condition.

Civil Procedure > Remedies > Damages > Compensatory Damages

HN9  Damages, Compensatory Damages

It is a basic principle of damages, both tort and contract, that there shall be no double recovery for the same injury.

Torts > Vicarious Liability > Family Members > Family Purpose Doctrine

Torts > … > Types of Damages > Property Damages > Loss of Use

HN10  Family Members, Family Purpose Doctrine

Loss of use is a recoverable component of damages. In general, the plaintiff can almost always recover some measure of damages for a reasonable period of lost use. Loss of use claims are appropriate in the case of private chattels, such as the family car or the pleasure boat. Loss of use may be measured by (1) lost profit, (2) cost of renting a substitute chattel, (3) rental valued of the plaintiff’s own chattel, or (4) interest.

Admiralty & Maritime Law > Shipping > Bills of Lading > Effectiveness & Validity

Transportation Law > Carrier Duties & Liabilities > Bills of Lading

Antitrust & Trade Law > Regulated Industries > Transportation > Common Carriers

Transportation Law > Rail Transportation > Carmack Amendment

Transportation Law > Carrier Duties & Liabilities > Damages

HN11  Bills of Lading, Effectiveness & Validity

The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C.S. § 14706, permits carriers to impose contractual time limitations for bringing suit, subject only to the statutory minimum of 9 months for filing a claim and 2 years for bringing a civil action. The statute contemplates that limitation periods are to be bargained over between shipper and carrier and does not itself impose a limitation. Rather, the limitations are to come from the bill of lading or other contract of carriage. 49 C.F.R. § 1005.2(a) (2021).

Admiralty & Maritime Law > Shipping > Bills of Lading > Effectiveness & Validity

Transportation Law > Carrier Duties & Liabilities > Bills of Lading

Transportation Law > Carrier Duties & Liabilities > Damages

Transportation Law > Rail Transportation > Carmack Amendment

HN12  Bills of Lading, Effectiveness & Validity

Under 49 U.S.C.S. § 14706(a)(1), a carrier is liable for damage to a shipper’s property even if the carrier does not issue a receipt or bill of lading. It does not impose a prelitigation claim requirement.

Counsel: For Appellant: Paul Michael Veillon, Galileo Law, PLLC, Renton, WA.

For Respondent: Mick Anthony Jaeger, Keith Marc Hayasaka, Lewis Brisbois Bisgaard & Smith LLP, Seattle, WA.

Judges: Authored by Robert Lawrence-Berrey. Concurring: Rebecca Pennell, George Fearing.

Opinion by: Robert Lawrence-Berrey

Opinion

¶1 HN1 Lawrence-Berrey, A.C.J. — The Carmack Amendment to the Interstate Commerce Act of 1887, 49 U.S.C. § 14706, provides the exclusive remedy for goods damaged in interstate commerce by a common carrier. Carmack provides the cause of action, but applicable common law provides the measure of damages.

¶2 HN2 The question presented is whether recoverable damages include loss of use while the goods were being repaired and diminished value of the repaired goods. We hold they do.

¶3 We affirm the trial court’s summary judgment dismissal of Mark Grothe’s negligence claim, but we reverse its denial of his motion to amend to assert a claim under Carmack for loss of use while the goods were being repaired and for diminished value of the repaired goods.

FACTS

¶4 In 2019, Mark Grothe bought a new Volvo and had it shipped to his home by Victor Kushnivich. [*2]  Along the way, Kushnivich’s truck was involved in an accident, and Grothe’s car suffered extensive damage. Grothe’s insurance company paid to repair the Volvo, and it recovered the repair costs in a subrogation claim against Kushnivich’s insurance company.

Grothe’s lawsuit against Kushnivich

¶5 In October 2020, Grothe sued Kushnivich. As relevant here, his complaint alleged:

5. On or about April 3, 2019, the Defendant VICTOR KUSHNIVICH was driving a semi-truck pulling a trailer that was being used to transport … vehicles [including] Plaintiff’s recently purchased Volvo … . Defendant KUSHNIVICH had been hired by the Plaintiff to transport his vehicle from California to Washington State. While traveling along the interstate in California, the Defendant lost control of his vehicle, causing the truck and trailer to veer off of the road and overturn. The Plaintiff’s brand new vehicle was damaged in this incident.

6. … Defendant KUSHNIVICH negligently failed to maintain reasonable control of [his] vehicle and caused the Plaintiff’s vehicle to fall off of his trailer. The aforesaid collision involving the Plaintiff’s vehicle and the Defendant’s vehicle was proximately caused by the tortious [*3]  conduct of the Defendant KUSHNIVICH.

7. The Plaintiff MARK GROTHE has suffered damages for injury to his property, including, without limitation, physical damage to the vehicle involved in the collision, the cost to repair said damage, loss of use, rental expenses, storage costs, reduced fair cash market value of the damaged property, and other out of pocket expenses, in an amount to be proved at the time of trial.

8. The Plaintiff MARK GROTHE hereby notifies the Defendants … that he will not honor as a setoff defense to his claims any payments they or their insurers or representatives make for the damages set forth above to any party besides the Plaintiff MARK GROTHE particularly but not limited to his own auto insurer FARMERS. …

Clerk’s Papers (CP) at 1-2.

¶6 In his answer, Kushnivich asserted a number of defenses, including that Grothe’s claims were “preempted, in whole or in part, by federal statute(s), including 49 U.S.C. § 14706 et seq.” CP at 7 (alteration in original).¹

¶7 Through discovery, Grothe provided Kushnivich with his expert’s reports on diminished value and loss of use damages. Grothe’s expert concluded that the Volvo’s value was diminished due to “buyers’ aversion to purchasing a vehicle that [*4]  has residual physical damage.” CP at 72. The report explained that some factory processes cannot be replicated in a body shop and that some repaired parts, such as metal that was bent and reshaped, “are never as strong at the molecular level as they were before they suffered damage.” CP at 72. The report stated that the Volvo’s preloss value was $44,994 and its postloss value was $27,465, for a diminution in value of $17,529. The same expert provided a separate report that concluded Grothe lost $93 per day for the 105 days the Volvo was in the shop being repaired, for a total of $9,765.

Motion for summary judgment

¶8 Kushnivich moved for summary judgment, arguing that Grothe’s negligence claim was preempted by Carmack and that even if Grothe pleaded a claim under Carmack, the claim would be barred because Grothe was seeking a double recovery. The motion was supported by documents showing that Kushnivich’s insurance company had already reimbursed Grothe’s insurance company for repair costs.

¶9 In response, Grothe argued his complaint did plead a claim under Carmack. In the alternative, he requested leave to amend his complaint, arguing that Carmack permitted recovery for diminished value and [*5]  loss of use in addition to costs of repair. His proposed amended complaint differed from the original complaint in just two respects. It stated the court had jurisdiction under 49 U.S.C. § 14706(d)(1) and it added the words italicized below:

6. … The aforesaid collision involving the Plaintiff’s vehicle and the Defendant’s vehicle was proximately caused by conduct of the Defendant KUSHNIVICH that subjects him to liability under 49 U.S.C. [§] 14706(d)(1).

CP at 102.² Grothe failed to file any declaration supporting his claim for damages.

¶10 In reply, Kushnivich advanced a new argument that Grothe’s request to amend his complaint should be denied because he failed to file a notice of claim with Kushnivich before bringing suit. He reiterated that Grothe had been fully compensated for repair costs and that further damages would be a double recovery.

¶11 Grothe countered that he had no contractual obligation to file a notice of claim as a prerequisite to a civil suit and that if there was a requirement, Kushnivich had waived it by paying Grothe’s insurance company’s subrogation claim.

¶12 During oral argument of the motion, Grothe asserted he was only seeking damages for diminished value and for loss of use. He conceded that he had been compensated [*6]  for repair costs.

¶13 The court nonetheless expressed concern that Grothe was attempting a double recovery, “[H]asn’t your client already recovered? I mean, that’s part of what’s really troubling me here. I mean, he got his car fixed and he’s been compensated.” Report of Proceedings (RP) at 9. The court noted that under Carmack, damage was limited to actual loss and opined that if Grothe had already received the cost of repair, he could not receive diminished value as well, “It’s one or the other, right?” RP at 10.

¶14 Kushnivich argued that if Grothe was seeking diminished value, he should have elected that as his measure of damages after the crash and should not have also repaired his car. Kushnivich asserted that despite the allegations in Grothe’s complaint and the statement he would not honor a setoff defense, “in the face of summary judgment” Grothe had “suddenly pivoted” to accept a setoff for the cost of repairs. RP at 14.

¶15 The court concluded, “I believe that plaintiff’s claims are preempted by Carmack and I will—I’m going to grant the motion.” RP at 15. Its order granting summary judgment did not further explain its reasoning. The court without explanation also denied Grothe’s request [*7]  to file his proposed amended complaint.

Motion for reconsideration

¶16 Grothe moved for reconsideration of the court’s decision, arguing it was contrary to law under CR 59(a)(7). For the first time, Grothe included his expert’s reports on diminished value and loss of use damages. Grothe largely repeated his arguments in opposition to the motion for summary judgment, arguing that diminished value and loss of use damages were recoverable even where a plaintiff had received the costs of repair and that there was no notice of claim requirement.

¶17 The court, without hearing argument, denied Grothe’s motion for reconsideration. Its written order stated:

Plaintiff’s state law negligence claim was preempted by the Carmack Amendment, 49 U.S.C. § 14706 et seq. (“Carmack”), warranting summary judgment, and Plaintiff’s Motion to Amend Complaint was denied on the grounds the proposed amendment to add a Carmack claim was meritless, duplicative, and/or futile.

CP at 125 (alteration in original).

¶18 Grothe timely appealed.

ANALYSIS

A. Objection to Grothe’s Brief

¶19 Kushnivich objects to our consideration of Grothe’s opening brief, which was filed four days late. To the extent this objection is meant as a motion to strike the brief, we deny it.

¶20 HN3 Under RAP 10.2(i), we may impose sanctions [*8]  under RAP 18.9 “for failure to timely file and serve a brief.” RAP 18.9(a) in turn provides for the imposition of monetary sanctions for a party “who uses these rules for the purpose of delay, files a frivolous appeal, or fails to comply with these rules to pay terms or compensatory damages to any other party who has been harmed by the delay or the failure to comply or to pay sanctions to the court.” Striking Grothe’s late-filed brief is not an appropriate remedy under RAP 10.2 and RAP 18.9, and Kushnivich identifies no harm caused by Grothe’s delay that requires monetary compensation. We therefore deny Kushnivich’s motion to strike Grothe’s brief.

B. Grant of Summary Judgment

¶21 Grothe argues the trial court erred by construing his original complaint as not asserting a cause of action under Carmack. We disagree.

¶22 HN4 Washington is a notice pleading state. Champagne v. Thurston Cnty., 163 Wn.2d 69, 84, 178 P.3d 936 (2008). An action is not dismissed simply because a complaint fails to artfully state each element of a particular cause of action. Id. at 84-87. Rather, notice pleading must “adequately inform the defendant of the nature of the plaintiff’s claims as well as the legal grounds upon which those claims rest.” Reagan v. Newton, 7 Wn. App. 2d 781, 801, 436 P.3d 411 (2019).

¶23 Here, Grothe’s complaint repeatedly references negligence and never references Carmack. [*9]  The parties—both below and on appeal—agree that Carmack preempts state negligence claims. We conclude, even under the generous notice pleading standards, that Grothe’s complaint failed to assert a Carmack claim and the trial court did not err in dismissing it.

C. Denial of request to file proposed amended complaint

¶24 Grothe argues the trial court erred by denying his request that he be allowed to file his proposed amended complaint. We agree.

Standard of review

¶25 HN5 An appellate court reviews for an abuse of discretion a trial court’s denial of a motion to amend a pleading. Specialty Asphalt & Constr., LLC v. Lincoln Cnty., 191 Wn.2d 182, 199, 421 P.3d 925 (2018). To constitute an abuse of discretion, the trial court’s decision must be manifestly unreasonable, based on untenable grounds, or made for untenable reasons. Wilson v. Horsley, 137 Wn.2d 500, 505, 974 P.2d 316 (1999). If the trial court’s ruling is based on an erroneous view of the law or involves application of an incorrect legal analysis, it necessarily abuses its discretion. Dix v. ICT Grp., Inc., 160 Wn.2d 826, 833, 161 P.3d 1016 (2007).

The amendment was not meritless, duplicative, and/or futile

¶26 The trial court denied Grothe’s request that he be allowed to file his proposed amended complaint because it believed the amended pleading was meritless, duplicative, and/or futile. We presume its reasons for believing this were based on Kushnivich’s [*10]  arguments that (1) the damages sought by Grothe were barred by Carmack or amounted to a double recovery, and (2) Grothe failed to file a prelitigation claim. We address each argument in turn.

1. Recoverable damages under Carmack

¶27 HN6 Carmack permits recovery of “actual loss or injury to the property” caused by a carrier over whose line or route the property is transported in the United States when transported under a bill of lading. 49 U.S.C. § 14706(a)(1). The statute does not define “actual loss or injury to the property.” Nevertheless, the Supreme Court of the United States long ago construed similar language consistent with our view that the damages recoverable under Carmack extend beyond property damage.

¶28 In New York, Philadelphia, & Norfolk Railroad Co. v. Peninsula Produce Exchange of Maryland, 240 U.S. 34, 38, 36 S. Ct. 230, 60 L. Ed. 511 (1916), the Supreme Court construed an early version of Carmack that permitted recovery of “‘any loss, damage, or injury to such property.’” The high court reasoned, “It is not necessary, nor is it natural, in view of the general purpose of the statute, to take the words ‘to the property’ as limiting the word ‘damage’ as well as the word ‘injury,’ and thus as rendering the former wholly superfluous.” Id. Construing “any loss, damage, or injury to such property” broadly, it concluded that the phrase is “comprehensive [*11]  enough to embrace all damages resulting from any failure to discharge a carrier’s duty with respect to any part of the transportation to the agreed destination.” Id. Specifically, the court held that the shipper was entitled to recover for a carrier’s failure to deliver the goods within a reasonable time. Id. Similarly, we construe the modern phrase, “actual loss or injury to the property” in a disjunctive manner, so as to permit recovery for “actual loss.”

¶29 HN7 Carmack provides the cause of action but applicable common law provides the measure of damages. Hector Martinez & Co. v. S. Pac. Transp. Co., 606 F.2d 106, 108 (5th Cir. 1979) (Carmack Amendment incorporates common law principles for damages). The parties do not contest that Washington common law controls our analysis.

¶30 HN8 In Washington, the measure of damages for loss caused to personal property is arrived at by a three-part analysis:

“[1] If the property is a total loss the measure of damages is the value of the property destroyed or damaged. This is its market value, if it has a market value. [2] If the property is damaged but not destroyed, the measure of damages is the difference between the market value of the property before the injury and its market value after the injury. … [3] If the property does not have a market [*12]  value, then if a total loss, the measure of damages is the cost to replace or reproduce the article. If it cannot be reproduced or replaced, then its value for the owner may be considered in fixing damages.”

Sherman v. Kissinger, 146 Wn. App. 855, 871, 195 P.3d 539 (2008) (quoting McCurdy v. Union Pac. R.R., 68 Wn.2d 457, 467, 413 P.2d 617 (1966)).

¶31 Here, the property is not a total loss and a market value for the repaired Volvo exists. Thus, recoverable damages are measured by the property’s diminished value, i.e., the difference between the market value of the property before the loss and its market value after the loss. This is consistent with our holding in Moeller v. Farmers Insurance Co., 155 Wn. App. 133, 142, 229 P.3d 857 (2010), that diminution in value is recoverable if a repaired car cannot be fully restored to its preloss condition.

¶32 To the extent that Grothe pleads or requests double recovery, it must be denied. HN9 “It is a basic principle of damages, both tort and contract, that there shall be no double recovery for the same injury.” Eagle Point Condo. Owners Ass’n v. Coy, 102 Wn. App. 697, 702, 9 P.3d 898 (2000). But as explained above, Grothe’s claim of damages for diminished value is not a double recovery. If the evidence shows his repaired Volvo has a lower market value than the new Volvo he purchased, recovery for the difference is proper.

¶33 HN10 Loss of use is also a recoverable component of damages. We have previously explained:

“In general, the plaintiff can [*13]  almost always recover some measure of damages for a reasonable period of lost use. Loss of use claims are appropriate in the case of private chattels, such as the family car or the pleasure boat. …

Loss of use may be measured by (1) lost profit, (2) cost of renting a substitute chattel, (3) rental valued of the plaintiff’s own chattel, or (4) interest.“

Straka Trucking, Inc. v. Estate of Peterson, 98 Wn. App. 209, 211, 989 P.2d 1181 (1999) (quoting Dan B. Dobbs, Law of Remedies § 5.15(1), at 875 (2d ed. 1993)). Here, Grothe may recover the rental value of a new Volvo for a reasonable period of nonuse, likely the period during which the Volvo was being repaired. We conclude the trial court abused its discretion if it concluded that Grothe’s request for damages was barred by Carmack or amounted to a double recovery.

2. Prelitigation claim

¶34 Kushnivich argues the amended complaint would have been futile because Carmack requires a plaintiff to file a prelitigation claim, and Grothe failed to do so. We disagree that Carmack requires plaintiffs to file a prelitigation claim.

¶35 HN11 Carmack permits carriers “to impose contractual time limitations for bringing suit, subject only to the statutory minimum of ‘9 months for filing a claim’ and ‘2 years for bringing a civil action.’” 5K Logistics, Inc. v. Daily Express, Inc., 659 F.3d 331, 336 (4th Cir. 2011) (quoting 49 U.S.C. § 14706(e)(1)). The statute “‘contemplates that [*14]  limitation periods are to be bargained over between shipper and carrier’” and does not itself impose a limitation. Id. (quoting Shao v. Link Cargo (Taiwan) Ltd., 986 F.2d 700, 707-08 (4th Cir. 1993)). Rather, the limitations are to come from the “bill of lading or other contract of carriage.” 49 C.F.R. § 1005.2(a) (2021).

¶36 In support of his motion for summary judgment, Kushnivich asserted that Grothe failed to file a prelitigation claim with him. However, Kushnivich provided no bill of lading or other contract of carriage that imposed a prelitigation claim requirement on Grothe. In the absence of an agreement between Kushnivich and Grothe imposing a prelitigation claim requirement, Grothe’s failure to file a claim with Kushnivich was not a prerequisite to bringing this suit.

¶37 Kushnivich argues that his failure to issue a bill of lading does not impact the prelitigation claim requirement, pointing to 49 U.S.C. § 14706(a)(1): “[f]ailure to issue a receipt or bill of lading does not affect the liability of a carrier.” This provision does not support Kushnivich’s argument; indeed, it contradicts it. That provision more fully reads:

A carrier … shall issue a receipt or bill of lading for property it receives for transportation … . That carrier and any other carrier that [transports or delivers [*15]  the property] are liable to the person entitled to recover under the receipt or bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property … . Failure to issue a receipt or bill of lading does not affect the liability of a carrier.

49 U.S.C. § 14706(a)(1). HN12[] Put another way, the last line means that a carrier is liable for damage to a shipper’s property even if the carrier does not issue a receipt or bill of lading—as appears to be the case here. It does not impose a prelitigation claim requirement. We conclude the trial court abused its discretion if it believed a prelitigation claim was necessary in the absence of a contractual provision.

¶38 We remand for the trial court to allow Grothe to file his amended complaint and to proceed in a manner consistent with this opinion.

Fearing and Pennell, JJ., concur.

End of Document

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¹ The federal statute is the Carmack Amendment (Carmack). Congress enacted Carmack in 1906 as part of the former Interstate Commerce Act and intended for it to provide the exclusive cause of action for loss or damage to goods arriving by interstate transportation by common carrier. Hall v. N. Am. Van Lines, Inc., 476 F.3d 683 (9th Cir. 2007). Carmack constitutes a complete defense to common law claims of negligence alleging all manner of harm arising from property damage in interstate commerce. Id. at 688-89.

² Grothe’s summary judgment response stated that his proposed amended complaint was attached to his proposed order. The proposed order is not in our record. We presume the proposed amended complaint is the same as the one accompanying his reconsideration motion, which is in our record.