Exciting things are happening here at CAB. We hope that you have taken the time to check out the new enhancements to the Premium section of our Subscriber web site. Is it a chameleon carrier™? Is its location really an apartment building? CAB is here to answer those and many other questions about your accounts. We would love your feedback and comments on the new changes and we look forward to further enhancements in the coming year.
We also published our annual review of the industry with an eye toward coming events in 2012. If you have not had a chance to check it out, you can view it here.
And big news! We will be moving to an upgraded facility very soon. CAB is moving to the Jersey Shore! Once we get ourselves set up visits are welcome!
This month we report:
CSA FACTSHEETS – The CSA now provides 7 separate factsheets on the makeup of the seven basics. The factsheets, which can be viewed here, provide information on what steps a carrier can take to minimize scores and can assist underwriters in understanding the reasons for the scores that you are viewing on our website.
REVISED HOUSEHOLD GOODS REGULATIONS – The Surface Transportation Bureau has issued revised rulings for valuation limitations for household goods carriers. The first change will require moving companies to provide certain information on the written estimate (a) a disclosure statement explaining that customers may select either replacement value (full-value protection) for lost or damaged goods or, for a lower rate, a lesser level of protection; and (b) an estimate of the cost of a move under full-value protection. In addition, $6.00 will be the new per-pound value to be used to ascertain the value of a shipment when the consumer selects full-value protection and either does not write in a total value for the shipment or writes in a total value that is below the floor. The ultimate total value for the shipment will be deemed to be either $6.00 times the weight of the shipment in pounds or $6,000, whichever is higher. A complete copy of the rulemaking can be viewed here.
TRUCKING INVESTIGATION – Results were released of a computer-assisted investigation by the U.S. Department of Transportation using heavy truck inspection data from 2003 to 2008 in Northwest Indiana. The numbers are expected to be reflective of trends throughout the country. Of the 8,929 trucks inspected, more than 1 in 4 were found to have out of service violations. Drive book violations were high, as well as driver fatigue, with more than 1,400 violations for hours of service violations.
FMCSA AUTHORITY GLITCH – Computer glitches hit everyone. This month a technical upgrade to the FMCSA licensing and insurance information system was supposed to have brought the system up to regulatory compliance on mandatory cargo liability insurance reporting. Instead, some motor carriers are erroneously receiving notices regarding authority. A notice sent out by the Department of Transportation states that the glitch could affect 4,000 carriers nationwide, and it immediately affected 136 carriers. We are still trying to get to the bottom of this as it appears that the DOT is still revoking the authority of some contract carriers of household goods who do not have cargo filings, even though the regulation indicates that they do not need the filing.
FMCSA STATE OF THE UNION – As is customary in the month of January, government agencies tout their coming plans for the year. The FMCSA has indicated that it will publish rules of medical examiners, a drug and alcohol clearing house, mandatory EORB rules and will make some more changes to CSA.
TRUCKING EXPECTIONS – Transport Capital Partners released its 4th quarter Business Expectations Survey this month. TCP indicates that medical costs are a big concern to motor carriers and expectations are that changes in health care will only further impact their bottom line. Of interest is also the fact that motor carriers believe that they must increase driver pay to retain more experienced drivers as attention turns, once again, to the possibility of severe driver shortages.
EQUIPMENT SALES – ACT Research Co., in its annual state of the industry for truck purchases, indicated that things bode well for equipment manufacturers. Net orders for total trailers grew 38% year-over-year, with build jumping 69%. Good news for insurers as newer trucks hopefully makes transport safer and reduces the risk of out of service violations.
CURRENT CASES
AUTO
Is holding someone hostage in a trailer a claim which belongs under an auto liability policy? The Southern District in Florida dismissed a complaint against the auto liability carrier in a declaratory judgment action against the general liability and auto liability carriers. The court held that the connection between the trailer and the wrongful imprisonment was too tenuous to permit coverage. (Wheeler’s Moving & Storage Inc. v. Markel Ins Co, 2012 WL 87107)
The Appellate Division in New York held that when a plaintiff has no memory of an accident because of brain trauma the plaintiff must only establish a prima facie case of the truck driver’s negligence in a rear end collision. The plaintiff had struck the truck which was pulled partially off the side of the road. The mechanical application of the rear end collision rule would not apply in this scenario where the plaintiff’s injuries prevented full recollection of the loss events. (Bah v. Benton, 2011 WL 6965792)
Is the trailer owner liable for the actions of a driver working for another trucker? The court held that the trailer owner could not be liable on an implied lease or statutory employee theory. The Western District in Oklahoma held that these federal theories, stemming from leasing regulations, do not create a federal theory of liability which supplants state law theories. The court allowed the plaintiff to proceed solely on state law theories of vicarious liability, with no automatic presumption of responsibility. (Jett v. Van Eerden Trucking Co., Inc. 2012 WL 37504)
A injured plaintiff lost its suit against a trucking company in the Court of Appeals in Nebraska. The plaintiff had lost control of her own vehicle and entered into the left lane where she hit a guardrail and was struck by the truck proceeding in the left lane. Her efforts to introduce a statement from a witness to the accident that the truck driver was driving too fast were to no avail as she could not meet the burden to establish its credibility as a hearsay exception. (Adams v. Logan Contractors Supply, 2011 WL 6820330)
The simple fact that a truck driver crossed into the other lane of traffic, which was a statutory violation, while navigating a curve did not allow for a directed verdict against the motor carrier. The Court of Appeals in Kentucky upheld the jury’s decision that the actions of the truck driver did not cause the injury but rather the plaintiff’s reaction to the driver’s cross over led her to crash into a guard rail. She had enough room to avoid him. (Ferguson v. Undertow Trucking, 2011 WL 674337)
The long standing rule set forth in Savage Truck Lines that a carrier is solely responsible for securing cargo, was attacked in Iowa. The Court of Appeals held that a driver could in fact sue a shipper for improperly loading cargo which resulted in an injury to the driver. Comparative fault, and a ruling that a shipper owed a duty of reasonable care, allowed the court to conclude that there was a question of fact which required a jury’s evaluation. (Smith v. HD Supply Water Works, Inc., 2011 WL 6655356)
Where should I put this case? I am putting it at the end of the auto and right before the cargo as it encompasses both. The Eastern District of Wisconsin held that the provisions of the Carmack Amendment are inapplicable to a claim for personal injuries suffered by an employee of the consignee who was injured while unloading a shipment of wet product. The Court concluded that Carmack was limited to the claims for property and this was a separate and distinct event. (McGinn v JB Hunt Transport, Inc., 2012 WL 124401)
CARGO
It is not often that we see cases on the two year and one day suit clause under the Carmack Amendment. This month we got two decisions on the provision. The Eastern District in Tennessee upheld the provision, dismissing a plaintiff’s law suit as untimely. The court also held that a household goods agent has no liability for a cargo loss and that state law claims against the carrier were preempted by Carmack. (Thornton v. Philpot Relocation Systems, 2012 WL 174937 (E.D.Tenn.)) In the Appellate Court in New Jersey the court held that a local trucker, who received goods which had traveled from another state and held them in storage in New Jersey, ultimately delivering them to the pier in New Jersey for overseas transport, was entitled to the benefits of the Carmack Amendment. As suit was not commenced against the carrier within two years and one day of the denial the claim was held time barred. (Blue Gulf Indus. Supply, Co. P.J.T. Transport, Inc., 2012 WL 141322 (N.J.Super.A.D.))
The Southern District in Alabama tackled the applicability of Carmack in a household goods case this month. The inter-relationship between the business operations of the motor carrier and the packing company were explored in detail, with the court ultimately concluding that the fact that they operated at the same location, and had related ownership could only lead it to conclude that there were questions of fact which needed to be addressed by a jury as to the liability of either for the acts of the other. The court also held that while Carmack precluded any state claim for damages to the goods which were in interstate commerce, the same would not be true for that portion of the shipment which was being placed in storage in Alabama. The court also held that the motor carrier could not simply rely on a shipper’s act defense if the shipper loaded the goods as it was also required to establish that it was not negligent in the transport. (Stabler v. Florida Van Lines, 2012 WL 32600)
The Southern District of Texas issued yet another decision that you cannot get attorney’s fees in a Carmack case for cargo loss to general commodities. That remedy is limited to certain household goods claims. (Siemens Water Technology Corp. v. Trans-United, Inc., 2011 WL 6726432)
MISCELLANEOUS
Technicalities sometimes play havoc on a plan of action. The Supreme Court in Kansas held that consent judgments of more than $58 million entered against a warehouse were extinguished when the plaintiffs failed to keep the judgments alive while they pursued the warehouse insurers for coverage. Since the judgment was no longer enforceable the insurers would have no further obligation to respond. The fact that garnishment proceedings were pending did not impact the fact that the plaintiffs were required to continue to keep the judgment alive. (Associated Wholesale Grocers v, Americold, 2011 WL 6604590)
In Tennessee one plaintiff suffered the loss of his appeal against his physical damage insurer by hours. A truck driver’s efforts to appeal were lost because he forgot that August has 31 days and not 30 and so his appeal, filed on the 91st day, was untimely. (Redland Insurance Co. v. Willis, 2012 WL 112595)
One insurer’s efforts to obtain a declaratory judgment in Alabama were thwarted because of representations by another insurer. The auto insurer, with an MCS-90, sought a declaration that it was not obligated to pay a worker’s comp insurer for payments it made to a party injured in a truck accident. Once the worker’s comp insurer represented that its interests were protected in the suit by its insured against the truck driver, the court held that the coverage case had no controversy. (Canal Insurance Co v. Yelder, 2012 WL 139263)
Removal cases generally address other technical grounds that often prevent the removing party from keeping a case in federal court. In the Eastern District in Kentucky the court held that an insurer was not permitted to remove a case on the grounds of diversity. The Court held that when a case is not initially removable, and grounds are later determined to exist, the removing party still must remove within one year from the date the original complaint is filed, even if a subsequently added defendant was not a party initially. (In Re Pikeville School Bus Collision Cases 2011 WL 6752564)
Happy Valentine’s Day. See you next month.
