Accura Systems, Inc. v. Watkins Motor Lines, Inc., 95-10795

• Decision Date: 05 November 1996
• Docket Number: No. 95-10795,95-10795
• Citation: 98 F.3d 874
• Parties: Fed. Carr. Cas. P 84,036 ACCURA SYSTEMS, INC., Plaintiff-Appellee, v. WATKINS MOTOR LINES, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 874

98 F.3d 874

Fed. Carr. Cas. P 84,036

ACCURA SYSTEMS, INC., Plaintiff-Appellee, v. WATKINS MOTOR LINES, INC., Defendant-Appellant.

No. 95-10795.

United States Court of Appeals Fifth Circuit.

Nov. 5, 1996.

Billy Michael Chitty, B. Michael Chitty, Attorney at Law, Terrell, TX, for Plaintiff-Appellee.

Lawrence J. Roberts, Hinshaw & Culbertson, Miami, FL, for Defendant-Appellant.

Appeal from the United States District Court for the Northern District of Texas.

Before PARKER and SMITH, Circuit Judges, and JUSTICE, ¹ District Judge.

JUSTICE, District Judge:

Defendant-appellant, Watkins Motor Lines, Inc. ("Watkins"), appeals the district court's judgment in favor of the plaintiff, Accura Systems, Inc. ("Accura"). Watkins presents three issues on appeal: whether the award of attorney's fees was proper in an interstate freight damage case, whether Accura met its burden of proving the "delivery to carrier in good condition" element of its prima facia case, and whether the district court should have awarded Watkins all of its unpaid freight charges. "The award of attorney's fees to Accura will be reversed and vacated; the finding that Accura proved 'delivery to carrier in good condition' will be affirmed; and the award of unpaid freight charges to Watkins will be reversed and remanded."

FACTS AND PROCEDURAL HISTORY

On July 14, 1994, Accura (as shipper) tendered to Watkins (as carrier) at Sunnyvale, Texas, twelve packages of specially coated aluminum building materials, including panels and accessories, for shipment to Apex Curtain Wall Group in Universal City, California.

On or about July 19, 1994, the shipment was delivered to Apex Curtain Wall Group in California and exceptions were noted to the condition of the shipment. Most of the individual panels were damaged with scratches, gouges, and dents.

Accura brought suit seeking to recover for the damages to the building panels. Watkins counterclaimed for freight charges which Accura had withheld on the ground that the freight damage claim entitled it to an allowance or set-off against Watkins.

After a bench trial on the merits in the district court, judgment was entered in favor of Accura in the amount of $15,807.07, less an offset of $1,073.58 for a portion of the freight charges sought by Watkins. The judgment also provided for an award of attorney's fees to Accura.

STANDARD OF REVIEW

Watkins appeals from judgment entered by the district court. This court reviews the district court's findings of fact for clear error and legal issues de novo. Joslyn Mfg. Co. v. Koppers Co., Inc., 40 F.3d 750, 753 (5th Cir.1994).

DISCUSSION

1. Attorney's fees

This case was brought under the Carmack Amendment, 49 U.S.C. § 11707, ² which codifies an initial carrier's liability for goods lost or damaged in shipment. The Carmack Amendment generally preempts state law claims arising out of the shipment of goods by interstate carriers. Moffit v. Bekins Van Lines Co., 6 F.3d 305 (5th Cir.1993).

This Circuit has held that attorney's fees authorized by state law are not available in Carmack Amendment actions. Strickland Transp. Co. v. American Distributing Co., 198 F.2d 546, 547 (5th Cir.1952). The Strickland court rejected the plaintiff's attempt to plead attorney's fees in order to meet the jurisdictional limits for removal under the Carmack Amendment. This holding has more recently been relied upon to deny the award of attorney's fees in a railroad shipping case:

There is no provision of the Interstate Commerce Act which authorizes recovery of attorney's fees in a lawsuit to collect unpaid tariff charges. We find the decision disallowing recovery of attorney's fees in freight damage suits to be persuasive.

Missouri Pac. R.R. Co. v. Center Plains Indus., Inc., 720 F.2d 818, 819 (5th Cir.1983).

Accura relies upon Farmland Industries Inc. v. Andrews Transport Co., 888 F.2d 1066 (5th Cir.1989). In Farmland, this court ordered an award of attorney's fees under Texas law in a state law breach of contract case, and noted:

Attorney's fees may likewise be recoverable for the failure of a common carrier to deliver goods, since they fall in the "lost freight" category [of the state statute].

Id. at 1068. The rights vindicated in Farmland were state contract rights; the court did not reach any federal questions and did not apply the Carmack Amendment.

Accura also relies upon A.T. Clayton & Co., Inc. v. Missouri-Kansas-Texas Railroad Co., 901 F.2d 833 (10th Cir.1990), and Missouri, Kansas & Texas Railway Co. of Texas v. Harris, 234 U.S. 412, 34 S.Ct. 790, 58 L.Ed. 1377 (1914). In Clayton, the Tenth Circuit held that the Carmack Amendment did not preempt an Oklahoma statute allowing recovery of attorney's fees. In reaching its conclusion, the Tenth Circuit focused on "whether the state statute substantively enlarges the carrier's responsibility for the loss." Clayton, 901 F.2d at 835. The court reasoned that the Oklahoma attorney's fees statute should apply because it "is incidental to and consistent with the overall purpose of the Carmack Amendment since it promotes settlement, encourages small well-founded claims, and discourages unnecessary litigation." Id. at 835.

The Tenth Circuit's holding in Clayton depends, in part, upon the Supreme Court's holding in Harris that a Texas attorney's fee statute was not preempted by the Carmack Amendment. The Supreme Court noted that state laws enacted under the reserve powers are "not to be set aside as inconsistent with an act of Congress, unless there is actual repugnancy." Harris, 234 U.S. at 419, 34 S.Ct. at 793. Because the Texas statute "[did] not in anywise enlarge or limit the responsibility of the carrier for the loss of property," it was not preempted. Id. at 421, 34 S.Ct. at 794. Watkins distinguishes Harris by noting that the statute at issue there only allowed claims "not exceeding $200 in amount." Id. at 415, 34 S.Ct. at 791. The plaintiff in Harris recovered a ten dollar attorney's fee on a three dollar and fifty cent judgment. Id.

A recent district court decision from this circuit, Earl's Offset Sales & Service Co. v. Bekins/EDC, Inc., 903 F.Supp. 1148 (S.D.Tex.1995), holds that the Carmack Amendment preempts the Texas attorney's fee statute. The district court relies on the holding of Adams Express Co. v. Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.Ed. 314 (1913), that the Carmack Amendment "supersedes all state laws" of carrier liability for interstate shipments. Id. at 505-07, 33 S.Ct. at 152. This holding is expressly distinguished by the Supreme Court in Harris, 234 U.S. at 420, 34 S.Ct. at 793-94. The district court distinguished Harris by contrasting the "potentially unlimited recovery of attorney's fees" under the Texas statute with the limited fees available under the statute approved in Harris. Earl's Offset, 903 F.Supp. at 1150. The district court rejected Clayton because the Oklahoma state courts, unlike the Texas state courts, have held that the state attorney's fee statute is not preempted by the Carmack Amendment. See Southwestern Motor Transp. Co. v. Valley Weathermakers, Inc., 427 S.W.2d 597 (Tex.1968); Yellow Freight Sys., Inc. v. North Am. Cabinet Corp., 670 S.W.2d 387 (Tex.App.--Texarkana 1984, no writ).

In light of the holding in Strickland Transportation Co. v. American Distributing Co., 198 F.2d 546, 547 (5th Cir.1952), we reverse and vacate the award of attorney's fees.

2. Sufficiency of proof that goods were delivered to carrier in good condition

A plaintiff shipper seeking damages from a carrier for injury to a shipment may make out a prima facia case by showing "delivery in good condition, arrival in damaged condition, and the amount of damages." Missouri Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 138, 84 S.Ct. 1142, 1145, 12 L.Ed.2d 194 (1964). Watkins argues that Accura's evidence did not establish delivery in good condition.

The goods at issue were delivered to Watkins already wrapped. The packaging consisted of polyform sheeting around the individual panels, which were then stacked on pallets. The stacked goods were then wrapped in stretch-wrap and cardboard, which was secured with metal bands. The panels were neither painted nor packaged by Accura, but by a contractor, Texas Finishing.

To show delivery in good condition, Accura first relies on the bill of lading, which shows receipt of the goods by Watkins "in apparent good order, except as noted (contents and conditions of contents of packages unknown)."

This Circuit has held that a bill of lading is prima facia evidence of delivery in good condition, but that bill of lading with an "apparent good order" clause is evidence "only as to those portions of the shipment which are visible and open to inspection." Spartus Corp. v. S/S Yafo, 590 F.2d 1310, 1319 (5th Cir.1979); see also D.P. Apparel Corp. v. Roadway Exp., Inc., 736 F.2d 1 (1st Cir.1984); Blue Bird Food Prods. Co. v. Baltimore & Ohio R.R., 474 F.2d 102 (3d Cir.1973); Hoover Motor Express Co. v. United States, 262 F.2d 832 (6th Cir.1959). Other courts have reached the same conclusion, although using language which refers only to goods under seal. Pillsbury Co. v. Illinois Cent. Gulf R.R., 687 F.2d 241, 244 (8th Cir.1982); see also Blue Bird, 474 F.2d at 104-05 (discussing whether goods "under seal" are "open and visible"). In Spartus, the goods were sealed and not available for inspection; in order to recover, the court held, the shipper would have to present "proof from elsewhere" of delivery in good condition. Id. While the goods at issue here were not under seal, they were similarly obscure to the carrier. See D.P. Apparel, 736 F.2d at 4 n. 4 (rejecting distinction between goods delivered under seal and goods not open and visible); National Transp., Inc. v. Inn Foods, Inc., 827 F.2d 351, 354 (8th Cir.1987) (equating "under seal" with "not visible"). In light of the language of Spartus, and Accura's failure to articulate a distinction between goods under seal and...