Ward v. Allied Van Lines

• Decision Date: 07 April 2000
• Docket Number: No. 99-1338,No. 99-1746,99-1338,99-1746
• Citation: 231 F.3d 135
• Court: U.S. Court of Appeals — Fourth Circuit
• Parties: (4th Cir. 2000) MICHAEL A. WARD; KIMBERLY WARD, Plaintiffs-Appellees, v. ALLIED VAN LINES, INCORPORATED, a Delaware corporation; ACADEMY, INCORPORATED, d/b/a Academy Moving & Storage, d/b/a Academy/Allied Moving & Storage, a California Corporation; J.D. CARTON & SON, INCORPORATED, a New Jersey corporation; SAMUEL SMITH, Defendants-Appellants, and NORFOLK SOUTHERN RAILWAY COMPANY, Defendant. MICHAEL A. WARD; KIMBERLY WARD, Plaintiffs-Appellees, v. ALLIED VAN LINES, INCORPORATED, a Delaware corporation; ACADEMY, INCORPORATED, d/b/a Academy Moving & Storage, d/b/a Academy/Allied Moving & Storage, a California Corporation; J.D. CARTON & SON, INCORPORATED, a New Jersey corporation; SAMUEL SMITH, Defendants-Appellants, and NORFOLK SOUTHERN RAILWAY COMPANY, Defendant. . Argued:

Page 135

231 F.3d 135 (4th Cir. 2000)

MICHAEL A. WARD; KIMBERLY WARD, Plaintiffs-Appellees, v. ALLIED VAN LINES, INCORPORATED, a Delaware corporation; ACADEMY, INCORPORATED, d/b/a Academy Moving & Storage, d/b/a Academy/Allied Moving & Storage, a California Corporation; J.D. CARTON & SON, INCORPORATED, a New Jersey corporation; SAMUEL SMITH, Defendants-Appellants and NORFOLK SOUTHERN RAILWAY COMPANY, Defendant.

MICHAEL A. WARD; KIMBERLY WARD, Plaintiffs-Appellees, v. ALLIED VAN LINES, INCORPORATED, a Delaware corporation; ACADEMY, INCORPORATED, d/b/a Academy Moving & Storage, d/b/a Academy/Allied Moving & Storage, a California Corporation; J.D. CARTON & SON, INCORPORATED, a New Jersey corporation; SAMUEL SMITH, Defendants-Appellants and NORFOLK SOUTHERN RAILWAY COMPANY, Defendant.

No. 99-1338 No. 99-1746.

UNITED STATES COURT OF APPEALS, FOR THE FOURTH CIRCUIT.

Argued: April 7, 2000.

Decided: November 2, 2000.

Appeals from the United States District Court for the Eastern District of North Carolina, at Raleigh.

Terrence W. Boyle, Chief District Judge. (CA-96-886-5-BO) [Copyrighted Material Omitted] COUNSEL ARGUED: Gregory Charles York, MORRIS, YORK, WILLIAMS, SURLES & BARRINGER, L.L.P., Charlotte, North Carolina, for Appellants. Barry Sidney Cobb, YATES, MCLAMB & WEYHER, L.L.P., Raleigh, North Carolina, for Appellees. ON BRIEF: Anna L. Baird, MORRIS, YORK, WILLIAMS, SURLES & BARRINGER, L.L.P., Charlotte, North Carolina, for Appellants. R. Scott Brown, YATES, MCLAMB & WEYHER, L.L.P., Raleigh, North Carolina, for Appellees.

Before WILLIAMS, MICHAEL, and KING, Circuit Judges.

Affirmed in part, reversed in part, and remanded by published opinion. Judge Michael wrote the opinion, in which Judge Williams and Judge King joined.

OPINION

MICHAEL, Circuit Judge:

This case arises under a federal statute, known as the Carmack Amendment, which makes motor carriers liable as virtual insurers for loss or damage to the goods they transport. See 49 U.S.C. § 14706(a)(1) (1997) (amending and recodifying 49 U.S.C. § 11707(a)(1) (1994)). A Norfolk Southern Railway Company (Norfolk Southern) train hit and wrecked a moving van carrying the household goods of Michael and Kimberly Ward. To recover for their damages, the Wards sued Allied Van Lines, Inc. and several of its agents (the Allied defendants or Allied), asserting claims under the Carmack Amendment and other theories. The Wards also sued Norfolk Southern for negligence. The Wards settled with the railroad before trial and obtained a jury verdict for money damages on their Carmack Amendment claim against the Allied defendants. The first issue on appeal is whether the Allied defendants are entitled to a setoff for the pretrial settlement the railroad paid to the Wards. We hold that a setoff is required, and we reverse the district court on that point. On the second issue, relating to attorneys' fees, we affirm the award of fees to the Wards.

I.

Michael Ward worked for Mitsubishi Electronics America in Morristown, New Jersey. In September 1994 the company transferred Ward, as part of a job promotion, to its facility in Cary, North Carolina. Mitsubishi had a standing contract with Allied under which Allied packed and moved the household property of Mitsubishi employees who were transferred to new locations. An Allied moving van arrived at the Wards' New Jersey residence on September 16, 1994, and the carrier completed packing and loading in a couple of days. The loaded van never made it to the Wards' new house, however. In the early evening of September 22, 1994, the moving van got stuck on a railroad crossing in Morrisville, North Carolina, within a few miles of its destination. While the van was stuck, a Norfolk Southern train rammed into its side, demolishing it and destroying or damaging almost all of the Wards' household property.

The Wards filed a claim with Allied for their loss, but the matter could not be resolved. The Wards then sued the Allied defendants and Norfolk Southern, asserting a variety of state law and Carmack Amendment claims against the Allied defendants and a negligence claim against Norfolk Southern. When the dust settled after dispositive motions, two claims remained: the Carmack Amendment claim against the Allied defendants and the negligence claim against the railroad. The Wards settled their claim against Norfolk Southern for $40,000 shortly before trial.

At trial on the Carmack Amendment claim against the Allied defendants, the Wards sought $314,000 in damages. The jury returned a $207,000 verdict in favor of the Wards. The district court entered judgment for the Wards in the amount of $187,000, after applying a credit for a $20,000 advance Allied had made to them shortly after the accident. The district court denied the Allied defendants' motion for an additional setoff of $40,000, representing the settlement paid by Norfolk Southern to the Wards. Finally, the district court awarded the Wards costs of $3,104.08, attorneys' fees of $40,987, and prejudgment interest on the $187,000 damage award. The Allied defendants appeal the district court's orders denying the $40,000 setoff and granting the Wards attorneys' fees.

II.

The Allied defendants first argue that the district court erred in denying them a setoff or credit for the $40,000 settlement payment that Norfolk Southern made to the Wards prior to trial. This issue presents a question of law that we review de novo. See Deans v. CSX Transp., Inc., 152 F.3d 326, 329 (4th Cir. 1998).

The Carmack Amendment was enacted in 1906 as an amendment to the Interstate Commerce Act of 1887. See Act of June 29, 1906, ch. 3591, 34 Stat. 584. The Amendment makes a carrier liable "for the actual loss or injury to the property" it transports. 49 U.S.C. § 14706(a)(1) (1997).¹ Congress enacted the Carmack Amendment "to create a national scheme of carrier liability for goods damaged or lost during interstate shipment under a valid bill of lading." Shao v. Link Cargo (Taiwan) Ltd., 986 F.2d 700, 704 (4th Cir. 1993). The Carmack Amendment preempts a shipper's state and common law claims against a carrier for loss or damage to goods during shipment. See id. at 705.

The setoff issue before us today cannot be decided by looking at the text of the Carmack Amendment. Federal case law does not provide the answer either. Nevertheless, the following two Carmack Amendment cases discussing setoff are worth mentioning, even though they do not control our decision. In the first case, Oak Hall Cap & Gown Co. v. Old Dominion Freight Line, Inc. , 899 F.2d 291 (4th Cir. 1990), our court allowed a setoff against a Carmack Amendment award, but the facts are distinguishable. In Oak Hall a shipment of academic gowns was damaged by smoke when vandals set a fire in the back of the carrier's parked semitrailer. The shipper, a gown company, immediately pressed the carrier "to try and fix the garments" by having them cleaned. Id. at 293. When the cleaning was finished, the gown company maintained that the gowns still smelled of smoke, and it sued the carrier under the Carmack Amendment for the value of the goods. After a bench trial the district court awarded the gown company damages equal to the replacement cost of the gowns, less a setoff for the amount spent by the carrier in attempting to clean them. We affirmed the setoff because the carrier, to its financial detriment, had relied on the gown company's representation that the carrier should promptly pursue the cleaning option because the gown company "needed to know soon" whether the gowns would be marketable in the upcoming spring season. Id. at 296 (applying the principle that "a party which relies to its detriment on a [representation] may receive a setoff in damages equal to the amount expended in reliance"). Oak Hall thus allowed the carrier to receive a setoff, but the reliance theory upon which the setoff was based is not applicable here.

The Wards cite a second Carmack Amendment case, Anton v. Greyhound Van Lines, Inc., 591 F.2d 103 (1st Cir. 1978), in support of the district court's decision to deny the Allied defendants' motion for a setoff. In Anton the U.S. Air Force engaged a carrier to move the household belongings of a colonel who was retiring. The goods were damaged by fire while in transit, and the Air Force paid the colonel $10,000 under a federal law that allowed a military department to pay an employee up to $10,000 for damage to or loss of personal property incident to her service. The colonel, in turn, assigned to the government $10,000 of her claim against the carrier. The colonel then sued the carrier under the Carmack Amendment, and the jury awarded her $13,405.09 in damages. The carrier moved to reduce the judgment by $10,000, the amount the Air Force had paid the colonel for her loss. The district court denied the setoff, and the First Circuit affirmed by applying the "collateral source rule." The rule is this: when the victim of a tort receives payment for his injuries from a collateral source, that is, a source independent of the tortfeasor, the payment should not be deducted from the damages owed by the tortfeasor."Insurance proceeds are the most common collateral source." Black's Law Dictionary 256-57 (7th ed. 1999). The Anton court reasoned that the Air Force's payment under the statute was comparable to an insurance benefit because the colonel, as claimant, was not required to prove wrongdoing or negligence, only loss. The court then held that the collateral source rule prevented the carrier from reducing its liability by deducting what was, in effect, an insurance payment to the victim. See Anton, 591 F.2d at 110. The colonel was, of course, contractually obligated to apply a part of her recovery to reimburse the Air Force. The question is whether Anton supports the Wards' argument that the Allied defendants are not entitled to receive a setoff for the money Norfolk Southern paid to the Wards. Anton does not help the Wards because...