American Nat. Fire Ins. v. Yellow Freight Systems

• Decision Date: 10 April 2003
• Docket Number: No. 02-1639.,No. 02-1741.,02-1639.,02-1741.
• Citation: 325 F.3d 924
• Parties: AMERICAN NATIONAL FIRE INSURANCE COMPANY, as subrogee of Tabacalera Contreras Cigar Company, Plaintiff-Appellee/Cross-Appellant, v. YELLOW FREIGHT SYSTEMS, INCORPORATED, Defendant-Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

325 F.3d 924

AMERICAN NATIONAL FIRE INSURANCE COMPANY, as subrogee of Tabacalera Contreras Cigar Company, Plaintiff-Appellee/Cross-Appellant, v. YELLOW FREIGHT SYSTEMS, INCORPORATED, Defendant-Appellant/Cross-Appellee.

No. 02-1639.

No. 02-1741.

United States Court of Appeals, Seventh Circuit.

Argued October 16, 2002.

Decided April 10, 2003.

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Dennis Minichello (argued), Marwedel, Minichello & Reeb, Chicago, IL, for Plaintiff-Appellee.

H.N. Cunningham, III, (argued), Roberts, Cunningham & Stripling, Dallas, TX, for Defendant-Appellant.

Before COFFEY, RIPPLE and WILLIAMS, Circuit Judges.

RIPPLE, Circuit Judge.

American National Insurance Company ("National Insurance"), as subrogee of Tabacalera Contreras Cigar Company ("Tabacalera"), brought this action under the Carmack Amendment, 49 U.S.C. § 14706, seeking damages from Yellow Freight Systems, Inc. ("Yellow Freight"). It alleged that a shipment of cigars entrusted to Yellow Freight was damaged in transit. After a bench trial, the district court awarded damages including freight, taxes, fees, insurance and prejudgment interest to National Insurance. Yellow Freight now appeals the district court's rulings that National Insurance made out a prima facie case under the Carmack Amendment, 49 U.S.C. § 14706, that none of the excepted causes under the Carmack Amendment were proven by Yellow Freight, and that the damaged cartons were part of the shipment at issue in the case. Yellow Freight also appeals the district court's award of freight, taxes and insurance. National Insurance cross-appeals the district court's determinations that the date of subrogation rather than the date of delivery of the damaged goods is the date of accrual for prejudgment interest and that prejudgment interest would be simple rather than compound. For the reasons stated in the following opinion, we affirm in part and reverse and remand in part the judgment of the district court.

I BACKGROUND

Tabacalera imports cigars from the Dominican Republic. In April 1998, it imported a shipment of 200,000 cigars contained in 118 cardboard boxes from the Dominican Republic to Dee's Cold Storage in Oconomowoc, Wisconsin. Yellow Freight picked up the shipment in Miami and took it to Wisconsin. When Yellow Freight's driver picked up the shipment in Miami, he noted that some of the cardboard box tops were "set down" or "crunch[ed]," but he did not consider the cartons sufficiently damaged to indicate that any of the cigars were damaged. Trial Tr. at 306, 297. He saw no indication that any of the cartons were wet. He signed a clean bill of lading and loaded the shipment on his truck.

When the shipment was delivered to Tabacalera at Dee's Cold Storage, the top and bottom boxes in the shipment were wet, and many were crushed. Yellow Freight, when informed of the damage, sent an adjuster to investigate and inspect; National Insurance also sent an adjuster. Both adjusters found extensive damage. The report by National Insurance's adjuster inventories the type and lengths of cigars damaged, and also lists cigars of several lengths. In contrast, the original packing list for the 118 carton shipment lists cigars of only two different lengths.

After a bench trial, the district court determined that National Insurance had made out a prima facie case under the Carmack Amendment, which allows a shipper to recover from a carrier for actual loss caused by the carrier. The court further concluded Yellow Freight had failed to rebut the prima facie case because it had not established any of the excepted causes that relieve the carrier of liability under the Carmack Amendment. See Missouri Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964) (explaining that the Carmack Amendment has the effect of "codif[ying] the common-law rule that a carrier ... is liable for damage to goods transported by it unless it can show that the damage was caused by (a) the act of God; (b) the public enemy; (c) the act of the shipper himself; (d) public authority; (e) or the inherent vice or nature of the goods" (internal quotation marks and citations omitted)); see also Allied Tube & Conduit Corp. v. S. Pac. Transp. Co., 211 F.3d 367, 369 n. 2 (7th Cir.2000). The district court held that National Insurance was entitled to the value of all of the damaged cartons, despite the inconsistency between the shipping list and adjuster's reports.¹ The court also awarded National Insurance damages for freight, taxes, fees and insurance on the entire shipment. With respect to prejudgment interest, the district court originally awarded National Insurance compound interest from the date Tabacalera received the damaged shipment, but, upon motion by Yellow Freight, the court modified the judgment, awarding simple, rather than compound, prejudgment interest from the date of subrogation, the date National Insurance paid Tabacalera for its loss.

II DISCUSSION

A. The District Court's Findings

Yellow Freight contends that several of the district court's determinations cannot stand. Specifically, it challenges the court's determinations (1) that the cigars were delivered to Yellow Freight in good condition; (2) that the prima facie case was not rebutted; and (3) that the damaged cartons were part of the shipment of 118 cartons. Two basic principles must guide our review of these submissions. First, in reviewing a bench trial, the district court's findings of fact "shall not be set aside unless clearly erroneous." Fed. R.Civ.P. 52(a). "[R]eview under the clearly erroneous standard is significantly deferential, requiring a definite and firm conviction that a mistake has been committed." Concrete Pipe & Prods. of California, Inc. v. Constr. Laborers Pension Trust for S. California, 508 U.S. 602, 623, 113 S.Ct. 2264, 124 L.Ed.2d 539 (1993) (internal quotation marks omitted). Second, we review legal conclusions de novo. Cerros v. Steel Techs., Inc., 288 F.3d 1040, 1044 (7th Cir.2002). With these principles in mind, we turn to each of the determinations challenged by Yellow Freight.

1. The Condition of the Cigars Upon Delivery

This lawsuit arises under the Carmack Amendment, 49 U.S.C. § 14706 which "provides shippers with the statutory right to recover for actual losses to their property caused by carriers." Allied Tube & Conduit Corp. v. S. Pac. Transp. Co., 211 F.3d 367, 369 (7th Cir.2000). In Allied Tube, we noted that:

Pursuant to this statute ... the shipper establishes a prima facie case when it shows (1) delivery in good condition; (2) arrival in damaged condition; and (3) the amount of damages. Upon such a showing, the burden shifts to the carrier to show both that it was free from negligence and that the damage to the cargo was due to one of the excepted causes relieving the carrier of liability.

Id.

Yellow Freight submits that the district court's finding of "delivery in good condition" should be set aside because the court impermissibly relied on the failure of Yellow Freight's driver to note any exceptions to the bill of lading. Yellow Freight further contends that the bill of lading cannot establish the "good condition" of the cigars because the bill of lading stated that Yellow Freight had received "the property described above in apparent good order, except as noted (contents and condition of contents of packages unknown)." Plaintiff's Ex.3.

Although "a bill of lading, on its own, may not necessarily establish a prima facie case that an entire shipment was received in good order," Allied Tube, 211 F.3d at 371, a bill of lading is certainly some evidence of that condition. See id. Indeed, in its conclusions of law, the district court specifically stated that: "A carrier's bill of lading noting no exceptions (i.e., no indication of damage) regarding the condition of the shipment constitutes some evidence that the shipment was received in good condition." R.35 at 21.

Moreover, a "statement in the bill of lading as to `apparent good order' [is] prima facie evidence ... that, as to parts which were open to inspection and visible, the goods were in good order at the point of origin." Hoover Motor Express Co. v. United States, 262 F.2d 832, 834 (6th Cir. 1959). In conformity with this principle, the district court found that the cartons (not the cigars themselves) were open to inspection and thus the bill of lading was prima facie evidence that the cartons themselves (but not the contents) were in apparent good order.

In two cases where a bill of lading stated that the shipment was received in "apparent good order, but that the contents and condition" of the cargo itself was unknown, Faribault Woolen Mill Co. v. Chicago, Rock Island & Pacific Railroad Co., 289 N.W.2d 126, 129 (Minn.1980), and Reider v. Thompson, 197 F.2d 158 (5th Cir.1952), the courts found that

[w]hen packages are received by the carrier in acknowledged good external condition but are delivered by the carrier in a damaged or stained condition which could reasonably and logically be found to indicate that the discovered damage or deterioration of the contents resulted from the cause indicated by the condition of the external package, theretofore received in good condition, the trier of facts may infer from these circumstances that damage to the contents was occasioned by the negligence of the carrier in the respect indicated by the changed external condition of the package.

Reider, 197 F.2d at 161; see also Faribault, 289 N.W.2d at 129 (same). In Faribault, the court quoted the Reider district court's statement on remand that

"[w]hen a consignment is received by a common carrier in external good order and condition and delivered by it in damaged condition, with the external covering of the goods so damaged as to account for the damage to the contents the consignee need not prove the internal good order of the goods at the time of receipt by the carrier, and the presumptive liability...