Hope you all had a wonderful summer and are ready to gear up for fall. We are so pleased by the favorable reports we are getting from you over the use of the new VITAL program. What – you have not tried it yet? If not, call or email Laib Roberts over here at CAB (212-244-6575, ext 227) and see what you have been missing.
As part of our commitment to our client base, the CAB team is constantly working on new features to aid and enhance the use of our popular online tools. In response to your requests, we have now added to the information in our inspection category to include recorded accidents on any vehicle over the past 36 months. By clicking a button you can get detailed crash reports that offer information not available anywhere else, including the crash events as recorded by the investigating officer and links to any other commercial vehicles that may have been involved in the accident. Additionally, full itemized reports are available based on the individual violation categories to allow underwriters and claims adjusters to focus on specific issues without needing to weed though overwhelming amounts of data. To complete the circle, full integration with our VITAL search engine has been included with all of these enhancements, and a full historical VITAL report can be accessed by simply clicking on a VIN or License number from any of our online reports.
This month we report:
GAO SAFETY REPORT – The government has released its survey on the results of its investigation into safety in the trucking and bus industries. CAB has been an active part in assisting the government with ferreting out these unsafe carriers. The report found that rouge carriers continue to operate under different names to avoid the impact of being placed out of service. A copy of the study can be viewed here. Using the VITAL System can help you stay away from these dangerous carriers.
FOOD SAFETY RULES – The Food Safety Enhancement Act of 2009 has been passed by the House. The bill, if passed by the Senate, will require producers, packers, manufacturers and other in the food chain to register with the FDA and adopt standards to prevent contamination of food products.
TEXT MESSAGING – The Virginia Tech Transportation Institute released its study on the impact of test messaging while driving. To know ones surprise texting while driving is dangerous. Truckers who text are 23 times more likely to be involved in a crash. A copy of the report can be viewed at here.
TRUCKING FAILURES – Trucking failures have slowed as the economy pushes toward an upward swing. Only 370 carriers are reported to have failed in the 2d quarter, down from the 970 recorded in the second quarter last year. At least one forecaster has advised that additional carriers need to fail in order to insurer that the strong will be able to continue to operate.
UCR RATES – While it was thought that UCR rates would not be increased, this week the FMCSA published a Notice of Proposed Rulemaking to establish an increase in the fees that interstate commercial truck and bus companies, brokers, freight forwarders and leasing companies must pay under the Unified Carrier Registration (UCR) Plan for registration year 2010.
SAFETY EXAMS FOR NEW ENTRANTS – The Federal Motor Carrier Safety Administration issued advance notice of proposed rulemaking (ANPRM) regarding a new entrant proficiency exam following the implementation of the new rules imposed on new entrants late last year.
CURRENT CASES:
CARGO
The question of whether an entity is a carrier or a broker causes much concern in the transportation industry. This month the Southern District of New York held that an entity which signed a transportation contract and whose name was on the bill of lading and which otherwise held itself out as a carrier was not a broker. The defendant was held liable under the Carmack Amendment. (AIOI Insurance Co. v. Timely Integrated, Inc., 2009 WL 2474072)
AIOI Ins. Co. v. Timely Integrated, Inc.
On the other hand, in the Southern District of Texas the court granted judgment to a broker, concluding that the plaintiff had not produced any admissible evidence to show that it believed that the defendant was operating as a carrier. The court also held that there was no basis for a bailment claim. A negligence claim also failed as there was no evidence that the trucker which was hired was incapable of performing the task. ( Fireman’s Fund Ins. Co. v. ATS Logistics Services, Inc. )
A third party which holds a judgment against a motor carrier has standing to sue the cargo insurer in the Southern District of Texas. The court held that the plaintiff met its initial burden by alleging the judgment while also holding that a suit could be sustained with an allegation that the plaintiff is a beneficiary of the insurance contract. (Huntington Operating Corp. v. Sybonney Exp., Inc.)
The Second District in California addressed an insurer’s obligations under a cargo policy when coverage is declined. The court held that a cargo insurer is required to notify the insured of any suit clause when declining coverage or it will be estopped to raise that exclusion, even if the insured is represented by counsel before the time expires. In addition, the court held that an exclusion for autos under the cargo policy would not apply to the transport of a dump truck. Finally the court allowed an action to proceed against the insurer of fraud and punitive damage claims based on the allegation that the insurer represented its understanding of the insured’s business yet failed to provide proper coverage. (Superior Dispatch, Inc. v. Insurance Corp. of NY, 2009 WL 2315764)
Claim filing requirements were addressed by the court in the Eastern District of Kentucky. The court held that a letter from counsel which identified the shipment, asserted liability and demanded settlement for a certain amount was sufficient to meet the requirements. It was interesting that this court was rendering a decision on an issue before a motion was even made. (Hitachi Simitomo Heavy Industries Const. Crane Co., Ltd. v. Midwest Specialized Transp., Inc.)
UPS Supply Chain was not given summary judgment in the Northern District of Illinois for a shipment damaged by failure to provide proper refrigeration. American Airlines, the carrier, had actually marked the bill of lading that it would not guarantee refrigeration. American Airlines was also denied summary judgment on its assertion that the claim filing requirements were not met because there was no specific assertion of liability in the claim letter. (UPS Supply Chain Solutions, Inc. v. American Airlines, Inc.
While a motor carrier was found liable for a 2 hour delay in delivering printed materials which were time sensitive, ultimately the shipper was unable to recover damages. The court held, in a lengthy opinion ferreting out all of the inconsistencies in the testimony that the shipper failed to mitigate its damages. The shipper could have had the shipment redelivered in a timely manner for a small amount of money and instead sought $81,000 in damages. The court also refused to permit plaintiff to recoup its fees under an indemnity clause which did not address delay claims. (R.R. Donnelley and Sons Co. v. Vanguard Transp. Systems, Inc.
Two companies involved in transporting a drilling rig were found liable for damages caused when the rig was damaged in transit. In addition to the basic negligence damages against the actual carrier, the co-defendant, who was the party specifically retained for the move, was also found liable for the additional damages afforded under the Deceptive Trade Practices Act. The court held that entity liable because it advised the plaintiff that it was capable of moving that type of cargo when it was not. (Texas Specialty Trailers, Inc. v. Jackson and Simmen Drilling Co.
And the preemption beat goes on. … The Southern District of West Virginia dismissed a plaintiffs’ state law claim for an interstate household goods shipment and refused to remand the case back to state court. The court acknowledged the original jurisdiction granted by a Carmack case. (O’Boyle v. Superior Moving and Storage, Inc.)
AUTO
The Court of Appeals in Texas refused to permit the wife of a deceased trucker to recover damages from the trucking company when the driver permitted an unauthorized driver to transport the load. The court held that neither the unauthorized operator nor the deceased driver were statutory employees at the time of the loss. (Santana v. Arpin America Moving System, LLC 2009 WL 2462500)
The 5th Circuit held that coverage was not afforded to a truck driver who was sued for an auto accident which killed the owner of the trucking company. The court held that the driver was an insured under the policy and that both the insured and the owner were statutory employees. The court also held that the MCS-90 has no application to the suit between the employees. (Ooida Risk Retention Group, Inc. v. Williams, 2009 WL 2461850)
The Northern District of Ohio held that in a dispute between insurers it would not utilize the placard rule to determine coverage issues. The court also held the vehicle was not being used in the business of the trucker when a driver was utilizing the vehicle to get to a company orientation, thereby triggering the non-trucking liability coverage. (Carolina Cas. Ins. Co. v. Panther II Transp., Inc., 2009 WL 2432339)
The effect of a non-trucking liability policy was called into question in the Middle District in Pennsylvania. The court held the endorsement to be unambiguous, precluding coverage for an accident which occurred while the vehicle owner was hauling cargo. The parties’ argument that a tractor does not carry cargo, which might have eliminated the exclusion, also failed as the court noted that the tractor does in fact carry the cargo, even if it is in a trailer. (Great American Assur. Co. v. Ford, 2009 WL 2487085)
The Middle District of Alabama held that a motor carrier was not entitled to summary judgment when a consignee’s employee was hurt when she fell from a trailer when attempting to retrieve cargo. While the defendant argued that the driver had no reason to know that she was in the vehicle the court held that testimony that the driver and the plaintiff had exited the building together after some unloading raised questions as to the driver’s notice. (Jones v. Hogan Transports, Inc., 2009 WL 2432676)
The Court of Appeals in Texas allowed a case to precede against a Mexican manufacturer whose alleged improper loading of a shipment of good led to an automobile accident. The court held that the contacts with Texas were sufficient to confer jurisdiction. (Zinc Nacional, S.A. v. Bouche Trucking, Inc., 2009 WL 2357133)
It seems that more and more courts are allowing punitive damage claims to proceed against truckers. In the Middle District of Pennsylvania the court allowed discovery to proceed on a punitive damages claim against a driver who went through a red light in foggy weather and against his employer on the theory that there was enough evidence to conclude that the motor carrier should have known that the driver may not have been capable of operating the vehicle. (Sabo v. Suarez, 2009 WL 2365969)
Forum selection worked for an Oklahoma resident in the Western District of Arkansas. The fact that the defendants were located in Arkansas and the plaintiff sued in Arkansas was sufficient for the court to apply Arkansas law to an accident which occurred in Texas. Arkansas law allowed for increased recovery for the plaintiff in a wrongful death action. Those additional damages would not have been allowed in Texas. (Lee v. Overbey, 2009 WL 2386095)
A lumber company was granted summary judgment in its favor on claims of negligent/wanton entrustment and hiring of a driver utilized by a trucking company hired to haul lumber. However the court let proceed the question of whether the lumber company exercised enough control over the operations to be liable for the actions of the driver in causing the accident. (Wright v. McKenzie, 2009 WL 2365237)
Generally most of us assume that pulling off to the side of the road, onto the shoulder or in the emergency lane is a correct course of action when a vehicle is disabled. Unfortunately for one driver that action led to a series of accidents. The court held that the applicable statute in Montana, and the common law duty of care, precluded summary judgment for the carrier. It allowed the action to proceed so that a jury could determine whether the stop was reasonable. (Florea v. Werner Enterprises, Inc., 2009 WL 2421853)
The Second District of California held that a truck driver was not insured under a shipper’s auto policy because the vehicle was not scheduled on the policy and would not be considered a hired car. The court noted that the shipper hired a trucking company and not an auto. (JODY KELLER et al., Plaintiffs and Appellants, v. ARGONAUT INSURANCE COMPANY, 2009 WL 2569150)
The Court of Appeals in Mississippi addressed hired auto coverage and the exclusion for owners and employees of non-owned autos. The court held that despite the fact that a certificate of insurance was issued which stated that there was hired auto coverage, none was provided under the policy. The court then addressed the fact that even if it was available, the noted exclusions precluded coverage. (Estate of Brown v. Progressive Gulf Ins. Co., 2009 WL 2437093)
That is all for now. Have a pleasant Labor Day Holiday. See you next month.
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