It was great seeing so many of you in Williamsburg, VA last week at the IMUA annual meeting. As always the meeting was a great success. Our congratulations and warm wishes go out to Ron Thorton, who announced his retirement as President of the IMUA. He will be a tough act to follow and we wish him much success in his post retirement career as Grandfather Extraordinaire.
Since I am heading off for a long awaited family trip to Ireland this report will be short this month. Too much to do and too little time to get it done before I head out. So I report:
INSURANCE SURVEY – NIP Group, Inc. released the results of the Transportation Insurance Pricing Survey (TIPS™) for the first quarter of 2010. Over 95% of the respondents reported that during the 1st quarter, the transportation insurance market was flat or softer when compared to the fourth quarter of 2009. More than half of respondents believe that underwriting capacity has increased as more insurers have entered the transportation market. You can read the report at here.
PRE-EMPLOYMENT SCREENING – The FMCSA is now allowing access to the safety data base for screening driver applicants. This information is available only to prospective employers. The internet based program allows access to 5 years of an applicant’s crash history and 3 years of inspection history. The driver must give approval before the information is released. Underwriters can begin to inquire whether their insureds are utilizing this system to vet drivers.
HOURS OF SERVICE – The FMCSA extended the hours of service for carriers transporting equipment, materials and supplies to help clean up the oil spill. The exemption applies to transportation within Louisiana, Mississippi, Alabama and Florida, along with any portion of the trip outside those areas. Carriers or drivers who are placed out of service can not claim the benefit of this extension. In other news the American Transportation Research Institute released its report on its crash survey and found that the majority of commercial vehicle crashes occur during the first eight hours of driving. The analysis, based on hours-of-service surveys from about 260 motor carriers, found that 87% of crashes were in the first eight hours, while 12% occurred in the 9th to 11th hours. A copy of the report can be viewed here.
FUEL LEGISLATION – President Obama has ordered the DOT and the EPA to join together to formulate a rule which will set limits on the fuel consumed and emissions produced by large commercial vehicles beginning with the 2014 model year. The departments were directed to aim for a final rule by the summer of 2011.
FREIGHT FORECAST – The ATA’s Freight Forecast report was released and things are looking good. Freight tonnage is expected to grow across the board, with projected trucking growth at 30% between now and 2021. If the forecast proves true trucking will increase its share of the market to 70.7% by 2021.
NAFTA – President Calderon was in town this month and you would not lose if you bet that cross-border truck operations were a subject of discussion with President Obama. Remember the U.S. has been hit with more than $2.4 billion in tariffs since it closed the border in 2009. The Presidents reported that they are hard at work trying to come to some resolution of the issues.
DRIVER SALARIES – Accordingly to research done by Morgan Stanley, driver pay has decreased by 6.6 percent from the third quarter of 2007 through the first quarter of 2010, the largest drop since they started monitoring those numbers. According to the research, driver pay is down 10 percent compared to the Consumer Price Index.
AGRICULTURAL TRUCKING – The USDA released its Study of Rural Transportation Issues. The report reviews transportation and its effect on rural communities, with an emphasis on agricultural transportation. More agricultural goods are moved than any other. Agricultural transportation claimed 31% percent of all ton-miles transported in the U.S. in 2007. A copy of the report can be viewed here.
CASES:
Cargo:
The Southern District of Texas held that a cargo insurer could not deny coverage for failure to cooperate when there was no evidence that further investigation would have done anything to change the motor carrier’s liability, The court also held that the cooperation clause was to determine liability and not a means for the insurer to find ways to deny coverage. Of critical importance was the fact that the court also allowed the shipper to recover its attorney’s fees against the insurer, as the court found that they stood in the shoes of the insured, which would have been able to recover the fees. (Ocean Garden Products, Inc. v. Northfield Insurance Co., 2010 WL 1640940)
The District Court in Arizona held that a motor carrier which seeks indemnification from another carrier is entitled to recover the fees incurred in defending a claim by the cargo owner. While the indemnitee argued that fees were not recoverable since it admitted liability, the court held that that was not sufficient under the Carmack Amendment to avoid the expenses and, in addition, that the indemnitee’s different positions on the applicability of various limitations of liability precluded a finding that the indemnitee has simply agreed to liability. (Pacific Indemnity Co. v. Pickens Kane Moving & Storage, 2010 WL 1814959)
The Western District of New York held that the Federal Arbitration Act would govern the enforcement of an arbitration award that invalidated a limitation of liability. The court held that the arbitrator did not manifestly disregard the law when he held that the Carmack Amendment was inapplicable to the storage of household goods and that the limitation of liability applied only to the transportation. (Petrie v Clark Moving & Storage, 2010 WL 1965801)
Although a party may remove a case based upon federal question issues, such as Carmack, a carrier found out the hard way that it still needed permission of all of the defendants. The court also held that causes of action are not separate and distinct when a shipper sues both its customer and the carrier for payment of goods. (Pelican Plumbing Supply v. Fox, 2010, WL 1936190)
Pre-emption is not generally addressed when considering a claim against a broker. However, this month the Southern District of Texas dismissed negligence and DPTA causes of action against a transportation broker. The court held that the only action which the plaintiff would have against a broker for failure to insure that a motor carrier was properly insured, and capable of performing the work, was a breach of contract action. (Huntington Operating Corp. v. Sybonney Express, Inc., 2010 WL 1930087)
We do not see many cases on the two year and one day suit filing requirements. The Eastern District of Virginia looked at one this month. Initially the court held that a denial of liability with a request for additional information would not be a proper disallowance to start the time running. However, once the carrier spelled out the reasons for an offer and denial of additional parts of the claim and did not invite any additional response the clock started ticking. Since the plaintiff filed suit over three years later the court dismissed the action. (Paladino v. Atlas Van Lines, 2010 WL 1780319)
Miscellaneous:
It is always important to monitor certificates of insurance issued by agents. The Court of Appeals in Kentucky held an agent liable for affirmative misrepresentations on a certificate of insurance. The agent listed the certificate holder as an additional insured and indicated that there was blanket coverage for equipment which was incorrect. The court held that the standard disclaimer wording on the certificate would not help when there was a direct conflict between the policy and the certificate. (Western Leasing, Inc. v Acordia of Ky, 2010 WL 1814959)
Interesting issue – is a crane, which is self-propelled by a truck chassis on which it is mounted, considered “property”, within the federal motor carrier statues. According to the FMCSA and the 19th Circuit it is. The owner of such a crane is considered a “private motor carrier” subject to the jurisdiction of the FMCSA and all of its rules. (Midwest Crane & Rigging v. Federal Motor Carrier Safety Administration, 2010 WL 1663289)
Auto:
The Northern District of Indiana refused to permit a truck driver to recover from a shipper when he was at the shipper’s place of business. According to the driver an employee of the shipper jolted the flatbed during the loading process causing him to fall off. The plaintiff had not proven who the person was who was operating the forklift at the time and whether he was an employee of the shipper. Would a random stranger show up with a forklift to load cargo? The court also held that the plaintiff had not really proven that the flatbed was even jolted. (May v. Gale Tschuor Company, 2010 WL 1837769 (N.D.Ind.))
An additional insured endorsement which was applicable to loss which arose out of the named insured’s operations required only that the loss be connected to the operations. So when the shipper’s employee caused injury to a third party while loading a motor carrier’s vehicle, the additional insured endorsement on the motor carrier general liability policy triggered an obligation to defend and indemnify in the Middle District of Alabama. The court also held that the auto exclusion was inapplicable because the forklift was a mechanical device and also that the contractual liability exclusion did not apply because the issue involved an additional insured and not an obligation to indemnify. (International Paper Co. v. QBE Insurance Corp., 2010 WL 1856193)
The Court of Appeals in California considered the many issues raised by a cross-claim asserted by a shipper against a carrier seeking indemnification for injuries to an owner-operator under lease to the carrier. The court held that summary judgment in favor or the carrier was improper when the shipper had in fact asserted a viable claim based upon violation of FMCSR. The court held that the driver was an intended beneficiary of the FMCSR and the shipper could seek indemnity if the carrier violated the regulations. (Amerigas v. Landstar Ranger, 2010 WL 1966517)
Have a great June.
