30 F.3d 373 (2nd Cir. 1994), 583, Cleveland v. Beltman North American Co., Inc.

Docket Nº:583, Docket 93-7516.
Citation:30 F.3d 373
Party Name:Donald L. CLEVELAND; Christa A. Cleveland, Plaintiffs-Appellees, v. BELTMAN NORTH AMERICAN CO., INC.; N. American Van Lines, Defendants-Appellants.
Case Date:July 27, 1994
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

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30 F.3d 373 (2nd Cir. 1994)

Donald L. CLEVELAND; Christa A. Cleveland, Plaintiffs-Appellees,




No. 583, Docket 93-7516.

United States Court of Appeals, Second Circuit

July 27, 1994

Argued Nov. 8, 1993.

William J. Dreyer, Albany, NY (Daniel J. Stewart, Dreyer, Boyajian & Tuttle, of counsel), for defendants-appellants Beltman

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North American Co., Inc.; N. American Van Lines.

Kenneth L. Ayers, West Coxsackie, NY (Law Offices of Kenneth L. Ayers, of counsel), for plaintiffs-appellees Donald L. Cleveland and Christa A. Cleveland.

George W. Wright, Newark, NJ (Kroll & Tract, of counsel), filed an amicus curiae brief for American Movers Conference.

Before: CARDAMONE, JACOBS and GOODWIN, [*] Circuit Judges

CARDAMONE, Circuit Judge:

This appeal brings before us a married couple whose household belongings, after being transported by movers from Iowa to New York, were found upon arrival to be badly damaged. When claims made against the moving company to obtain compensation proved unavailing, the instant litigation was commenced. In handling plaintiffs' claims, the moving company--in a deliberate and determined effort to frustrate plaintiffs' collection of damages for their losses--was guilty of foot-dragging and stonewalling. It did not deal fairly or in good faith with the couple.

Ordinarily, common law principles of equity leaven the law, softening its rigors so that the law's aim of administering justice fairly is not lost. But on occasion, and this is one, the equities urge a course that the law may not take. Here, a hope that conduct such as that shown by the moving company could result in an award beyond compensatory damages is doomed to disappointment. We must reckon with an area of interstate commerce law that has been fully occupied by Congress' passage of a statute delineating what remedies are available, leaving no room for additional state or federal common law causes of action.


Plaintiffs' Move to New York

In August 1988 Donald and Christa Cleveland moved from West Des Moines, Iowa to Slingerlands, New York, a suburb of Albany. To prepare for the move, the Clevelands searched for a reputable moving company to carry their household goods and personal belongings. In a decision they have no doubt come to regret, they hired defendant North American Van Lines (North American) and North American's local agent in Des Moines, defendant Beltman North American Co., Inc. (Beltman). North American and Beltman (defendants) are common carriers as that term is defined by the Interstate Commerce Act, 49 U.S.C. Sec. 10102(4) (1988).

Following the usual practice, the Clevelands, North American, and Beltman executed a shipping contract, commonly called a bill of lading. Under a standard bill of lading carriers are responsible for only 60 cents per pound for damaged items. Having recently purchased new furniture, the Clevelands worried whether this reimbursement rate would adequately cover a loss they might incur were their belongings to be accidentally damaged or lost. Because of this concern, they purchased supplemental protection from the moving company at an additional cost of $320. The protection plan, which was incorporated into the bill of lading, provided for the repair, replacement or 100 percent reimbursement at current prices without depreciation for any goods damaged or lost during transport for a sum up to $50,000.

Beltman loaded the Clevelands' possessions into its van on August 19, 1988. When the driver who was scheduled to drive the van to New York State was unable to do so on account of family illness, the trailer with the Clevelands' household goods was separated from its tractor and taken to Beltman's lot in Des Moines to await another driver. After several days a new driver was found, but as a result of this change the Clevelands' belongings were reloaded onto a different van. Since it was North American's policy to require that blankets and other packing materials utilized by the initial loaders remain with the original van, upon being reloaded

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into a different van the Clevelands' goods were repacked.

This shipment--now several days late--then began its journey from Iowa to upstate New York. It appears--from information inserted into appellant's brief--that while en route, this second moving van was in an accident causing its fifth wheel to break through the floor of the truck, upheaving the Cleveland's furniture and creating a hole that exposed the truck's contents to water. Ultimately plaintiffs' goods arrived in Slingerlands, New York on August 30, 1988, a week late. When the truck was unloaded, the Clevelands immediately noticed that many of their possessions had been extensively damaged by rainwater that had soaked and stained some of the new items of furniture. Other damage had been caused by the furniture's upheaval or by sloppy repacking and reloading at Beltman's lot in Des Moines. Even though the damage was extensive and included items that would normally qualify for "priority" handling in their repair--for example, a home refrigerator was delivered without its doors being reattached--defendants nonetheless unreasonably assigned this claim to its representative to process on a "regular" basis.

Believing the supplemental plan they had purchased would expedite a recovery for their loss, the Clevelands on September 13, 1988, two weeks after their furniture arrived, made a timely claim with North American both for delay and actual damages to their belongings. The claim for delay damages was paid promptly by North American and is not at issue. Shortly after filing their damages claim the Clevelands realized several items were missing entirely, including Donald Cleveland's tax and business records. A supplemental claim was filed for this loss.

The claims settlement process started smoothly enough. North American dispatched Andrea Daley, who was associated with the Albany, New York firm of Restorers of America, to inspect the Clevelands' goods. She arrived at their home on October 5. During that visit and several others, she took many photographs of the damaged personalty. She also brought along a repairman from an upholstery shop to inspect the damage to the Clevelands' furniture, some of which had been stained purple. The settlement process subsequently grew acrimonious. The Clevelands sent several letters to North American regarding the status of their claims. None of them were answered. By mid-December 1988 the Clevelands, exasperated by this exhibition of foot-dragging by North American, refused to further assist Ms. Daley in her assessment of their property for settlement purposes.

In the second week of February 1989--nearly six months after they had moved--the Clevelands received an offer of settlement for the damages claim from North American in the amount of $9,824.46. As noted, the Clevelands also had submitted a claim that itemized their missing belongings. The offer included no money for their missing belongings, averring that Mr. Cleveland's signature on the delivery receipt indicated that all items had been delivered. This assertion, like much else in this record, reveals that defendants have little, if any, commitment to the truth. In fact, Mr. Cleveland had specifically crossed out the language in the receipt that North American relied upon, and had written instead: "Since the damage was extensive, we have not confirmed the presence of everything."

Plaintiffs rejected North American's offer on February 17, 1988. By letter dated March 30, 1989 North American declined to increase the settlement offer. Nearly four years later, in March 1993, on the eve of trial, North American offered $40,000 in settlement, which the Clevelands also refused.

Proceedings Below

On April 26, 1989 the Clevelands commenced the instant action in the United States District Court for the Northern District of New York, asserting a number of causes of action. They alleged that defendants, first, failed to comply with Interstate Commerce Commission (ICC) regulations regarding shippers' rights and responsibilities under 49 C.F.R. Sec. 1056.2 (1993); second, were guilty of fraud in inducing plaintiffs to sign the shipping contract; third, made negligent misrepresentations; and fifth and sixth,

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were guilty of negligence and gross negligence respectively.

As their fourth claim, plaintiffs asserted breach of contract. This cause of action, as will become apparent in a moment, evolved into a statutory claim brought under the bill of lading, pursuant to 49 U.S.C. Secs. 10103, 10730 and 11707 (Carmack Amendment), for the loss, damage or injury that the defendants caused to the Clevelands' goods.

Defendants' conduct during discovery further evinced their fixed attitude to stonewall claims and demands until forced by circumstances or court order to be forthcoming. Nearly seven months after the litigation began, plaintiffs sought copies of the photographs taken by Ms. Daley, and copies of various of defendants' procedure manuals. Defendants and their counsel declared that such manuals did not exist. Eventually the supposedly non-existing materials were found and turned over to plaintiffs, who then moved to sanction defendants. The magistrate to whom the matter was referred found "that defendants and defense counsel have together engaged in a continuing series of acts designed to frustrate the discovery process in a deliberate attempt to obstruct plaintiffs' prosecution of this litigation." Defendants and their counsel were accordingly sanctioned pursuant to Fed.R.Civ.P. 37. Plaintiffs were awarded attorney's fees amounting to $5,860. Defendants then retained present counsel.

In the wake of the discovery dispute, Chief District Court Judge Neal P. McCurn, in a decision and order dated February 13, 1992 granted plaintiffs'...

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