Ross & Wallace Paper Prods., Inc. v. Team Logistics, Inc.

• Decision Date: 08 July 2020
• Docket Number: 2019 CA 0196
• Citation: 308 So.3d 346
• Court: Court of Appeal of Louisiana — District of US
• Parties: ROSS AND WALLACE PAPER PRODUCTS, INC. v. TEAM LOGISTICS, INC., and Pittsburgh Logistics Systems Inc. d/b/a PLS Logistics Services

308 So.3d 346

ROSS AND WALLACE PAPER PRODUCTS, INC.

v.TEAM LOGISTICS, INC., and Pittsburgh Logistics Systems Inc. d/b/a PLS Logistics Services

2019 CA 0196

Court of Appeal of Louisiana, First Circuit.

Judgment Rendered: JULY 08, 2020

John C. Funderbunk, Elisabeth Quinn Prescott, Mallory McKnight Fuller, Baton Rouge, Louisiana, Attorneys for Appellant Defendant—Pittsburgh Logistics Systems, Inc. d/b/a PLS Logistics Services

Benjamin J. Steinberg, pro hac vice, Kristine A. Grega, pro hac vice, Jeffrey P. Myers, pro hac vice, Warrendale, Pennsylvania, Glen R. Galbraith, Kenneth LeVergene Ross, Hammond, Louisiana, Attorneys for Appellee Plaintiff—Ross and Wallace Paper Products, Inc.

Before: Guidry, McClendon, Welch, Theriot, and Holdridge, JJ.

WELCH, J.

In this breach of contract suit, the defendant, Pittsburgh Logistics Systems, Inc. d/b/a PLS Logistics Services ("PLS"), appeals the trial court's judgment rendered in favor of the plaintiff, Ross and Wallace Paper Products, Inc. ("Ross and Wallace"), following a bench trial on the merits. Based on the foregoing, we affirm.

FACTUAL AND PROCEDURAL HISTORY

Ross and Wallace is a paper company that operates a factory in Hammond, Louisiana, manufacturing paper products, including paper bags. Ross and Wallace purchased a machine used to produce "four-pound" paper bags from Cougar Paper Corporation in San Bernadino, California in July 2015. Ross and Wallace contracted with PLS, a third party freight broker/logistics company, to ship its newly purchased paper bag machine from California to Louisiana. Ross and Wallace paid PLS for a "full truck" transport, i.e., an 18-wheeler tractor-trailer with no other cargo transported in the bed of the trailer with the paper bag machine.¹

PLS contracted with another company, Team Logistics, Inc., to ship the paper bag machine to Louisiana. Prior to the shipment, the CEO of Ross and Wallace, Kenneth Ross, and its maintenance manager, Kenneth Klingman, traveled to California to personally inspect the paper bag machine, loaded it onto the bed of the tractor-trailer, and secured it at the front of the bed of the trailer. When the 18-wheeler tractor-trailer transporting the paper bag machine arrived in Hammond, the machine was unsecured, was at the rear of the bed of the trailer, and was present along with other cargo. The machine had sustained visible damage in transit and was no longer in working order. Ross and Wallace received a repair estimate quote from Custom Machine Works, Inc. in the amount of $19,000.00 to $19,500.00, but elected to repair the machine in-house to reduce costs, for $16,660.00.

Thereafter, Ross and Wallace filed a petition for damages against PLS and Team Logistics on February 11, 2016, alleging breach of contract and seeking damages for labor and materials used to repair the damaged paper bag machine, lost use of the machine during repairs, lost profits, and lost opportunities.

PLS answered the petition, asserting general denials, except admitting that Ross and Wallace purchased a paper bag machine from Cougar Paper Corporation in San Bernadino, California and that the paper bag machine suffered damage during shipment. PLS denied, however, that a contract existed between it and Ross and Wallace to ship the paper bag machine from California to Louisiana. PLS further raised the affirmative defense that Ross and Wallace's claims against PLS were barred, in whole or in part, because the alleged damages were caused by the act or omissions of a third party (namely, Team Logistics) for whom PLS is not liable.

Team Logistics failed to file an answer to the February 11, 2016 petition; thereafter, Ross and Wallace moved for the entry of a preliminary default against Team Logistics, which the trial court granted on May 17, 2016. Ross and Wallace then moved to confirm the preliminary default against Team Logistics. The trial court confirmed the preliminary default, entering judgment in favor of Ross and Wallace and against Team Logistics, Inc. in the total amount of $36,810.00, together with interest from the date of judicial demand (February 11, 2016) and costs, in a judgment signed on August 22, 2016.²

On October 4, 2018, the trial court held a bench trial on the merits of Ross and Wallace's claims against PLS. At the conclusion of the bench trial, the trial court held the record open for fifteen days to allow the parties to submit written closing arguments in the form of findings of fact and conclusions of law. Thereafter, the trial court issued reasons for judgment on October 29, 2019. The trial court rendered judgment in accordance therewith on November 26, 2018, in favor of Ross and Wallace and against PLS, awarding Ross and Wallace $46,660.00 in damages, plus all costs of the proceedings.³ PLS now suspensively appeals the November 26, 2018 judgment.

LAW AND DISCUSSION

Assignment of Error 1: Federal Preemption of State Law Regarding Liability to a Shipper for Losses Related to the Interstate Shipment of Goods; Conflicts of Law

PLS argues that the trial court erroneously applied Louisiana State contract law to Ross and Wallace's claims against it, versus federal law governing a motor carrier's liability to a shipper for the loss of, or damage to, an interstate shipment of goods. The issue of whether federal law preempts state law is a question of law that must be reviewed de novo by this court. See Jackson v. City of New Orleans, 2012-2742 (La. 1/28/14), 144 So. 3d 876, 882 ; Dahiya v. Talmidge Int'l Ltd., 2005-0514 (La. App. 4th Cir. 5/26/06), 931 So. 2d 1163, 1167, writ denied, 2006-1913 (La. 12/8/06), 943 So. 2d 1088.

The Interstate Commerce Act, 49 U.S.C. § 11706 et seq., contains several provisions governing a motor carrier's liability to a shipper for the loss of, or damage to, an interstate shipment of goods. These provisions are commonly referred to collectively as the Carmack Amendment, 49 U.S.C. § 14706 et seq. See Grigg v. SAIA Motor Freight Line, Inc., 30,293 (La. App. 2nd Cir. 2/25/98), 709 So. 2d 896, 898. The Carmack Amendment established a uniform national liability policy for interstate carriers. New York, New Haven & Hartford RR Co. v. Nothnagle, 346 U.S. 128, 131, 73 S. Ct. 986, 988, 97 L. Ed. 1500 (1953).

The Carmack Amendment governs "motor carriers" and "freight forwarders" and provides the exclusive cause of action for loss or damages to goods arising from the interstate transportation of those goods by a common carrier and preempts all state common law claims against such carrier and freight forwarders. 49 U.S.C. § 14706(a)(1) and (2). See also Hoskins v. Bekins Van Lines, 343 F.3d 769, 778 (5th Cir. 2003) ; Hughes Aircraft Co. v. N. Am. Van Lines, Inc., 970 F.2d 609, 613 (9th Cir. 1992).

However, the Carmack Amendment does not apply to "brokers." See Chubb Grp. of Ins. Companies v. H.A. Transp. Sys., Inc., 243 F. Supp. 2d 1064, 1068-69 (C.D. Cal. 2002) ; Adelman v. Hub City Los Angeles Terminal, Inc., 856 F. Supp. 1544, 1547-48 (N.D. Ala. 1994). Pursuant to 49 U.S.C. § 13102(2) :

The term "broker" means a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.

Consequently, courts have held that brokers may be held liable under state tort or contract law in connection with shipments. See Chubb Grp. of Ins. Companies, 243 F. Supp. 2d at 1069, and Corbin v. Arkansas Best Corp., No. 2:08CV00006 JLH, 2009 WL 707407, at *3 (E.D. Ark. Mar. 16 2009) (unpublished).

It is undisputed, and PLS has asserted throughout the record, that PLS was a broker at all times pertinent to the instant matter. In its reasons for judgment, the trial court held: "In this matter, PLS asserts that it was merely a broker, to which this Court would agree. However, the further assertion that any claim in this Court would be preempted by the Carmack Amendment would be contradicted by the cases." Like the trial court, we hold that the Carmack Amendment does not apply, and PLS may be held liable under Louisiana State contract law for the claims asserted against it by Ross and Wallace.

PLS further argues that the trial court failed to apply federal law to the facts of this case pursuant to a conflicts of law analysis under La. C.C. art. 3515 et seq. PLS contends that under a conflicts of law analysis, federal law (i.e., the Carmack Amendment) applies to the facts of this case instead of Louisiana state contract law. This court reviews conflicts of law questions de novo. See Jackson, 144 So. 3d at 882 ; Wooley v. Lucksinger, 2006-1140 (La. App. 1st Cir. 12/30/08), 14 So. 3d 311, 358-59, writs granted. 2009-0586 (La. 12/18/09), 23 So. 3d 951, 2009-0585 (La. 12/18/09), 23 So. 3d 951, 2009-0584 (La. 12/18/09), 23 So. 3d 952, 2009-0571 (La. 12/18/09), 23 So. 3d 953, aff'd in part, rev'd in part, 2009-0571 (La. 4/1/11), 61 So. 3d 507.

Louisiana's Conflicts of Law provisions afford the balancing of competing interests between states. The objective of those provisions is to identify the state whose policies would be most seriously impaired if its laws were not applied to the issue at hand. La. C.C. arts. 3515 and 3537 ; Champagne v. Ward, 2003-3211 (La. 1/19/05), 893 So. 2d 773, 786. The threshold question in determining the application of La. C.C. art. 3515 et seq. is whether there is a true conflict, a false conflict, or no conflict. See Champagne, 893 So. 2d at 786.

The supremacy clause of the United States Constitution governs federal preemption of state law. See U.S. Const. art. VI, cl. 2 ; Baca v. Sabine River Auth., 2018-1046 (La. App. 1st Cir. 12/27/18), 271 So. 3d 223, 229, writ denied, 2019-0149 (La. 3/18/19), 267 So. 3d 95. The Louisiana Code of Civil Procedure governs the raising of affirmative defenses, including federal preemption. See La. C.C.P. arts. 1003 and 1005. As noted by Ross and...