Volume 11, Edition 9 (posted 9/29/2008)
This is a difficult month to find any trucking news which is unrelated to the unprecedented economic crisis which the country faces. Trucking is not alone as every industry is focusing on how these problems will impact their industry. As we wait to see if the terms of an agreed economic bailout will work, the country seems to be in a holding pattern on all other issues. But we continue to find items to address.
ECONOMIC WOES – The economic state of the trucking industry has historically been a harbinger of the state of the economy. Unfortunately that continues to be true now, as the economic crisis places a severe dent in the industry’s ability to operate profitably. A number of publicly traded trucking companies have been hit on the market, with some ratings downgraded this week. The ATA has announced its support of a possible bailout, noting that the tightening market is making it difficult for carriers to finance the purchase of trucks and the credit crunch is also making collection of accounts receivable more difficult.
HIGHWAY BILL – Congress has transferred $8 billion into the Highway Trust Fund after receiving word that Pres. Bush had changed his position and would agree to the additional funding. This money is to be used to fund projects to upgrade and repair the failing infrastructure of the country.
NAFTA – The House has voted against any continued Mexico-U.S. Border program. The bill, if ultimately passed, would prohibit the DOT from issuing operating authority to any Mexican carrier outside of the currently recognized US-Mexican commercial zone.
HAZARDOUS MATERIALS – The Pipeline and Hazardous Materials Safety Administration has proposed new rulemaking to reclassify the hazardous materials to reflect those which are actually safety risks. The current list, which is extremely broad, does not consider any distinction between materials which are a significant security risk and those which, while hazardous materials, are generally not items which could be used in a terrorist attack. The new rule, supported by the ATA, would consider these factors in classifying any item.
DISASTER OPERATIONS – As has occurred in the past, in response to the natural disasters caused by the recent hurricanes, the FMCSA has relaxed regulations for trucking companies in certain locations through out the country, A list of the current locations, and the applicable dates for return to regulations, can be viewed at http://www.fmcsa.dot.gov/emergency/disaster-relief.htm
BUS SAFETY – As we have been reporting, the safety of bus transportation has been a focus of government interest these past few months in light of some of the tragic accidents which have occurred. The FMCSA has announced that as part of its recent strike force, 1200 buses and 225 bus drivers were placed out of service last month. During the target period the FMCSA conducted 12,000 inspections and 500 compliance reviews. The FMCSA is considering further steps to protect the traveling public.
An insurer was granted judgment in a declaratory judgment action which considered the effect of the employee exclusion under a commercial auto policy. The 8th Circuit Court determined that the plaintiff, who was hired to transport agricultural products on an “as needed” basis was an employee under Arkansas law, and not a temporary employee or independent contract as argued by plaintiff. (Northland Insurance Co. v. Weeks, 2008 WL 3927274) (thanks to Mike Dempsey of Northland!)
The 5th Circuit Court of Appeals considered the effect on a non-trucking use endorsement this month. The court granted judgment to the insurer, holding that the driver was in the business of the trucking company. The driver had completed delivery of one shipment and was on his way to a hotel with the expectation that another load would be available the following day. (Mahaffey v General Security Insurance Co., 2008 WL 4368926)
The Eastern District of California addressed the damages which can be recovered against a household goods carrier. The court set forth the rules for recovering attorney’s fees, also awarding pre and post judgment interest. In the favor of the motor carrier the court only awarded the plaintiff the actual hard damages, refusing to award the damages plaintiff could not fully support, including sentimental value. (Waller v. Gary & Koby Transportation, 2008 WL 4224722)
What does this say? A court will often take judicial notice of facts which are not in dispute and are generally deemed to be accurate and ready to determination. In the Middle District of Georgia, the court refused to take judicial notice of the Safer website! Actually the court held that the website did not fit within the parameters to items for which judicial notice should be taken. (FCCI Insurance Group. V. Rodgers Metal Craft, 2008 WL 4185997)
Shippers beware! In an action in the Seventh Circuit the court held that a shipper who sells goods FOB origin may still be held liable to the consignee for damages which occur when the shipper voluntarily elects to load the cargo into the carrier’s truck. If he does not do it right he can be held responsible for the damages. Some times it does not pay to be helpful. (Atlantic Mutual v. Jardis Industries, 2008 WL 3977381)
The issue of when a driver is considered the statutory employee of a motor carrier was considered in the District Court in Mississippi. The court held that where the motor carrier’s placards were on the truck and there was a lease between the motor carrier and the owner of the tractor the driver would be the statutory employee of the motor carrier. (Horridge v. Keystone Lines, 2008 WL 4104188)
The Ninth Circuit considered the issue of whether a plaintiff’s claim for intentional infliction of emotional distress was preempted by the Carmack Amendment. The Court held that as long as the distress arose out of the delay or damage to the goods, plaintiff’s cause of action would be preempted. (White v. Mayflower Transit, 2008 WL 4181600) The Middle District of Georgia also upheld the preemption rule in an action against Federal Express. (Rykard v. FedEx Ground Package System, Inc., 2008 WL 4003629)
We do not see many unattended vehicle exclusion insurance cases although it is a common addition to many motor truck cargo policies. The Eastern District in Arkansas upheld an insurer’s denial of coverage where the driver left the vehicle in a parking lot which provided no security for the trailer. The court held that the unattended clause was unambiguous. (Hot Food Xpress, LLC v. Century Company, 2008 WL 4080111)
How many times do you see a motor carrier attempt delivery only to be rebuffed when the consignee can not accept the shipment? Invariably you see it because the load is then stolen and a cargo claim is presented. In the Eastern District of California the court held that the carrier’s strict liability as a motor carrier terminated when he tendered the goods for delivery. The court held that it would then be a question of fact as to whether the carrier was negligent in his storage of the cargo pending final delivery. (Advantage Freight Network v. Sanchez, 2008 WL 4183987)
Can an additional insured seek coverage under a policy for its own liability to the plaintiff? In the Eastern District of Virginia, at least under the applicable policy endorsement, it can not. In this case the additional insured endorsement was sufficiently clear to limit the obligations of the insurer to provide a defense and indemnity only when the additional insured was vicariously liable for the actions of the named insured. (Smurfit Stone Container Enterprises, Inc. v. National Interstate Insurance Co., 2008 WL 4153762)
In an action in the Southern District of New York an injured consignee sought recovery against a motor carrier when injured while moving the cargo into his building. The motor carrier had refused to deliver the product into the building, leaving it on the sidewalk. The court held that the plaintiff made his own decision to lift the heavy piece and granted judgment to the motor carrier. (Gonzalez v. Caballero, 2008 WL 3919404)
In an action in the Missouri Court of Appeals the court refused to permit a plaintiff to question a driver on false statements made by the driver in his application for employment Interestingly enough the plaintiff had called the driver as her witness. Procedurally the plaintiff could only impeach the witness’s credibility with prior inconsistent statements, or criminal convictions. Since the act of lying on the employment application did not fall within either of those categories the plaintiff could not get the testimony into evidence. (Giles v Riverside Transport, 2008 WL 4200613)
Whether a party is a broker or a carrier is often very difficult to resolve. The Eastern District in New York refused to grant summary judgment to one party on the basis that resolution of that disputed issue belongs with the jury. (Trans-Pro Logistic, Inc. v. Coby Electronics Corp., 2008 WL 4163992)
A homeowner was able to recover lost profit on the sale of his home, along with additional mortgage payments, from a household goods carrier who failed to move the homeowner by the scheduled date. The court held that the requirement that a claim be filed for a determinable amount did not mean a specific amount but simply enough information to make it possible to determine the amount at some later time. That is a new twist on the claim filing requirement. (Lewis v Atlas Van Lines, 2008 WL 4138489)
Is a doctor liable to a trucking company when the doctor certifies a driver’s fitness to operate a commercial motor vehicle incorrectly? That was the issue addressed in the Appellate Court in Illinois this month. The court rejected the suit, holding that the physician owed no duty of care to the trucking company. (Hollywood Trucking v. Watters, 2008 WL 4277596)
The Southern District in Texas considered the possibility of extending a bill of lading limitation between other parties to an inland trucker when the bill of lading was not issued at origin. In this case the two contracting parties had a detailed contract in place and the plaintiff was relying only on the technicality that the bill of lading was not issued. The court rejected plaintiff’s argument and held that the contract prevailed. The court also held that the limitation applied to the downstream subcontractor even when that subcontractor was not specifically identified in the contract. (Hyundai Corp. v. Contractors Cargo Co., 2007 WL 4178188)
In a related opinion in the Southern District of New York, the court considered whether a rail carrier would be entitled to the limitation in a bill of lading which governed transport from Japan to North Carolina. The Southern District supporting the Second Circuit decision in Sompo held that the inland rail carrier could not reap the benefit of the through bill of lading as it was a proper limitation of liability under the Carmack Amendment. (Mitsui Sumitomo Insurance Co. v. Evergreen Marine Corp, 2008 WL 4369763 ) Similar issues where considered by the court in yet another Sompo case in which the court held that the Carmack Amendment applied to intermediate shipping companies, also holding that forum selection clauses do not apply when the shipment is governed by Carmack. Ultimately the court dismissed the action holding that it was not brought in the proper Carmack permitted forum. (Sompo v. Yang Ming Marine Transport, 2008 WL 4330058)
Transporting expensive cars is a big business. The Appellate Court in New Jersey considered a case against the carrier this month where there were allegations that employees went joy riding with the vehicle. The court rejected the limitation of liability, holding the carrier liable for gross negligence. However plaintiff’s attempts to obtain costs for repairs, diminished value, and purchase and financing costs was thwarted. Plaintiff was entitled to recovery only the repair cost and the diminished value. Cargo insurers note that diminished value was part of the actual damages. (Byrnes v. Billion BMW, Inc., 2008 WL 4131509)
Here is hoping for a better coming month.