Happy Spring and happy holidays to one and all. Whatever holiday you may be celebrating we hope you have a great time and enjoy friends and family.
For those of you who, like me, are sometimes geographically challenged (just exactly where is that state?), we have added a new feature to our web-based Submission Report™ . Now you can view a full country map which shows you exactly where in the USA your motor carrier is operating. Our Radius of Operations graph is still, of course, part of the report, but now we have enhanced your ability to see, at a quick glance, exactly where the carrier is going.
CURRENT NEWS
ECONOMIC UPTURN – For the fist time in a long time truck capacity is finally even with freight demand and may actually be headed in the right direction. According to the Internet Truck Stop report demand is growing in Texas, California, parts of the Midwest, Pennsylvania, Alabama and Georgia. While this is positive news, it brings with it concerns over driver shortage. Many drivers left the industry following the downturn and many more face problems with the coming CSA 2010 initiative, raising concerns that as freight demand increases driver shortage will once again become a problem.
HAZARDOUS MATERIALS – The DOT has announced new rules, which will be effective in October, which reclassify certain commodities. Paint and diesel fuel are being removed from the list. Currently carriers hauling those items on the high security risk list are required to implement plans for personnel security and unauthorized access in addition to the many obligations that they face.
TWIC – The utilization of TWIC cards has surpassed the expectations of the TSA. They report that over 1.5 million people have obtained TWIC cards. 277,000 of those are local and over the road truckers. The cards are increasingly being used to establish identity for routine carrier pick-ups as a way to prevent identity theft.
NAFTA – Mexico has advised that it will implement additional tariff penalties in an effort to force the border openings required under NAFTA. Higher tariffs will be imposed on additional products. The high tariffs, which have been imposed on some products for over a year, have impacted trucking and retail businesses as costs become even higher to bring these goods into Mexico. Apparently the sale of French fries to Mexico, one item hard hit with the tariff, has dropped substantially, impacting sales and freight revenue. At the same time, on this side of the border some Congressmen are looking to completely renegotiate NAFTA and eliminate any obligation to open the border while Ray LaHood has indicated that the DOT is close to putting forth its cross-border plan.
UCR REVENUE – Although 2010 rates are still in dispute, the DOT has authorized the states to begin to collect fees under the 2009 rates. The FMCSA is still considering a rate increase of 122% to combat the loss in fees in prior years.
TRAFFIC FATALITIES – The NHTSA has released its preliminary report on the number of traffic fatalities in 2009. The report indicates that the numbers are the lowest since 1954. Fatalities fell an additional 8.9% from 2008. A copy of the preliminary report can be viewed here.
CURRENT CASES
AUTO
In the Northern District of Illinois, in an action in which Schindel, Farman, Lipsius, Gardner & Rabinovich, LLP represented the insurer, the court held that a Contractor Operating Agreement under which the driver operated his wife’s tractor on behalf of a carrier constitutes a lease under federal regulations and by operation of law. Since the driver was engaged in the business of the carrier at the time of the accident, the rental exclusion of the bob-tail insurance policy applied and the insurer had no obligation to respond to the suit. (Clarendon Nat. Ins. Co. v. Medina, 2010 WL 1050195)
The Western District of Pennsylvania granted summary judgment to a motor carrier in a fatality loss. The plaintiff decedent was killed when he crossed into oncoming traffic while attempting to pass a wide trailer. The court held that there was no evidence that the width of the trailer was a proximate cause of the accident. (Maruca v. Golden Eagle Express, 2010 WL 786264)
A truck driver’s judgment against a shipper for improper loading of cargo was severely reduced. The Eastern District of New York held that the plaintiff’s injuries, though severe, did not warrant a $5 million judgment and concluded that $3 million was more reasonable. (Dwyer v. Deutsche Lufthansa, 2010 WL 643408)
Defense and indemnity of shippers and a shipper’s status as additional insured was addressed in Wisconsin this month. The Court of Appeals held that the motor carrier had no obligation to defend and indemnify the shipper as the indemnification clause required defense and indemnity only when the suit alleged that the loss was caused by the motor carrier. Similarly the motor carrier’s insurer was not obligated to defend the shipper when the allegations against the shipper did not arise from the work of the motor carrier. (Mathy Construction v. West Bend Mutual Insurance Co., 2010 WL 653100)
The tort of negligent hiring and negligent retention is a direct tort liability which can not be avoided by the carrier’s acceptance that it is vicariously liable for the actions of the driver. The Appellate Court in California reached that conclusion and held that the evidence of the driver’s employment and driving history could be used against the carrier to establish the carrier’s independent liability. The court also held that the motor carrier willfully disposed of the tachograph chart for the vehicle, allowing a negative inference that the chart, if produced would have harmed the defendant’s defense. (Diaz v. Carcamo, 2010 WL 654346)
A similar question was considered in the Southern District of Florida. A trucking company sought to have allegations of negligent hiring stricken as it has admitted vicarious liability for the actions of the driver. The Court rejected the request. (Capodanno v. Premier Transportation & Warehousing, 2010 WL 996532)
In the Western District of Kentucky there is a rebuttable presumption that any vehicle operated under a lease with a regulated motor carrier is being operated within the scope of that lease at the time of an accident. In the absence of any evidence to rebut that presumption liability stands. It was also interesting that the court rejected the driver’s attempt to have a negligence finding against an unidentified driver who may have undertaken actions which caused the driver to crash. The court also held that the non-trucking use policy would not apply when the driver was returning from delivering a shipment. (Bays v. Summitt Trucking, 2010 WL 724645)
The Court of Appeals in Georgia held that an MCS-90 endorsement provided coverage for plaintiff’s judgment against the motor carrier and its driver. The insurer attempted to argue that the MCS-90 had no application when the policy did not provide coverage for the loss. (Aequicap Ins. Co. v. Canal Insurance Co., 2010 WL 1052208)
The type of evidence which gets before a jury can often sway the damages awarded. In the Supreme Court of Texas the court held that the fact that a truck driver was an illegal immigrant who used a fake social security number was not relevant to the negligent entrustment or hiring claim and that it also could not be used to impeach the driver’s testimony. The Court held the admission of such evidence was not harmless and remanded the case for a new trial. (TXI Transportation Co. v. Hughes, 2010 WL 852159)
The Court of Appeals in Oregon addressed the liability of a motor carrier for a fatal accident when the plaintiff was killed by a second vehicle involved in a traffic jam caused by a motor carrier losing a load of cargo on the road. The court held that the issue of whether the accident was a foreseeable to the trucking company, and whether the other driver’s negligent actions was an intervening act was a question for the jury. (Lasley v. Combined Transport, 2010 WL 715435)
The Supreme Court of Alabama held that the Federal Motor Carrier Safety Act and other federal regulations concerning the operation of commercial vehicles in hazardous conditions did not preempt Alabama’s guest passenger statute. That statute precludes liability for a driver when his passenger is being transported without payment unless the operation of the vehicle is willful or wonton. (Dixon v. Hot Shot Express, 2010 WL 753353)
The Northern District of Mississippi held that the MCS-90 does not obligate an insurer to defend when coverage does not otherwise exist under the policy. The Court also held that the MCS-90 is inapplicable when the accident occurs at a time when the carrier is not transporting passengers or property. The Court also reiterated that the duty to defend is greater than the duty to indemnify and insofar as the complaint alleged that a non-scheduled vehicle was involved in the accident there would be no duty to defend. (Canal Insurance Co. v. P.S. Transport, 2010 WL 817290)
Georgia permits a direct action against the insurer of a motor carrier, subject to certain exemptions. The Appellate Court held that in order to reap the benefit of an exemption for the insurers of log haulers, the insurer had to prove that the vehicle in question was used exclusively for hauling logs. Since the evidence showed that it was used for other operations a direct action was permitted against the insurer. (Occidental Fire & Casualty Company of North Carolina v. Johnson, 2010 WL 761093)
CARGO
The Superior Court in Pennsylvania, in a matter litigated by Schindel, Farman, Lipsius, Gardner & Rabinovich, LLP and an excellent local attorney, Myles McAliney, joined other jurisdictions in holding that 3990.1200-jg- the right to defend under a cargo policy is not a duty to defend. The Court also held that leaving a trailer in a parking lot was not leaving it in a garage, terminal or depot, as required by the policy. (Genaeya Corp. v. Harco National Insurance Co. 2010 WL 892095)
Although the facts underlying the suit are not identified, the Court of Appeals in California held that a cause of action for unfair competition against Federal Express was preempted by the Airline Deregulation Act, the FAA Act and the Carmack Amendment, (Federal Express Corp. v. Superior Court of Los Angeles, 2010 WL 852131)
The Western District of Kentucky held that a shipper could not recover penalties for late delivery of shipments when the shipping contract was governed by the carrier’s tariff which prohibited such damages. This result was reached because the bills of lading incorporated the carrier’s tariff even with a separate master transportation contract. (Mafcote Industries v Estes Express Lines, 2010 WL 889531)
Is a seal enough of a lock to establish compliance with a locked vehicle provision in a cargo policy? The Court of Appeals in Arkansas determined that the term “securely locked with keys removed” was not ambiguous and simply placing a seal on the trailer was not enough. The court left open, however, whether “under constant surveillance” would be considered ambiguous. (Source Logistics, Inc. v Certain Underwriter at Lloyds, 2010 Ark App 239 (Ct. of App. 2010))
Preemption once again! A complaint alleging state law claims was dismissed in the Southern District of Texas. (Sharps Compliance v. United Parcel Service, Inc., 2010 WL 838859)
In the District Court in Connecticut the court held that even the plaintiff’s claim that the motor carrier failed to procure insurance for the shipment was subject to preemption. However the cargo insurer’s effort to claim that it too was entitled to preemption was rejected. The court did allow to stand, for the time being, the plaintiff’s contention that it was a third party beneficiary of the insurance contract and allowed a cause of action for bad faith to proceed against the insurer. (Ensign Yachts v. Arrigoni, 2010 WL 918107)
Transportation Logistics Providers should pay attention. The Eastern District in Virginia held that a provider was liable for a cargo loss while goods were being transported by a third party carrier. The wording of the transportation contract obligated the provider to perform the services. The court noted that while the provider could delegate the actual service to a motor carrier, it remained liable for the obligation to deliver it safely. (Dominion Resource Service v. 5K Logistics, 2010 WL 917492)
MISCELLANEOUS/PROCEDURAL CASES
Pay attention to the little things. The Court of Appeals in Ohio refused to consider an appeal over simultaneous denials of summary judgment requested by both parties on the issue of the vicarious liability of a self-insured trucking company when an owner operator was not engaged in the carrier’s business at the time of the accident and whether the carrier was liable for negligent hiring, training or supervision. The denial of the two motions did not result in an entry of judgment for either party and therefore was not a final judgment ripe for appeal. (Duhart v. Lawson, 2010 WL 877638)
The Western District in WA denied a plaintiff’s request for an adverse inference of liability because the carrier could not produce pre and post trip inspection reports. The court did allow plaintiff a limited adverse inference that the safety check was not recorded, solely for the purpose of defeating defendant’s motion for summary judgment. (Taylor v Market Transport, 2010 WL 959931
Does an Offer of Settlement really provide any benefit to a party? The Court of Appeals considered whether an insurer was entitled to attorney’s fees and expenses of litigation when its Offer of Settlement was rejected and the defendant received a verdict in its favor at trial. The court held that the insurer had properly served the Offer of Settlement, fully complying with the requirements of the statute which required specificity as to the terms of the offer. The Court also held that a subsequent offer did not negate the fact that the first offer was rejected. As the trial court had rejected the request for fees without explanation the court remanded the case for either a finding that fees were proper or a specific explanation from the trial court as to why they were rejected out of hand. (Great West Casualty Co v. Bloomfield, 2010 WL 1037553)
The Northern District of California held that it would exercise jurisdiction over a third party complaint filed against a marine terminal by a motor carrier defending a Carmack Action. The court held that the claim for indemnity against the terminal operator who may have mis-loaded the cargo was sufficiently connected to the Carmack Amendment to justify the action proceeding in that court. (Travelers Indemnity Co. v. Colma Drayage, 2010 WL 934076)
Have a great Spring.
Jean Gardner
