Ace USA & Ace European Grp. Ltd. v. Union Pac. R.R. Co.
| Decision Date | 15 August 2011 |
| Docket Number | CIVIL ACTION No. 09-2194-KHV |
| Parties | ACE USA and ACE EUROPEAN GROUP LIMITED, Plaintiffs, v. UNION PACIFIC RAILROAD COMPANY, INC., Defendant. |
| Court | U.S. District Court — District of Kansas |
Insurance companies ACE USA and ACE European Group Limited bring suit as subrogees of AGC Soda Corporation ("AG Soda") against Union Pacific Railroad Company, Inc. Plaintiffs allege that defendant is liable under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 11706, for water damage to soda ash which Union Pacific transported from Wyoming to Texas in June and July of 2007, the cost of removing the damaged ash from the railcars and the cost of remediating soil contamination caused by the damaged ash. This matter comes before the Court on Plaintiffs' Motion For Partial Summary Judgment On Defendant's Defenses (Doc. #106) filed April 5, 2011 and Defendant Union Pacific Railroad Company's Motion For Summary Judgment (Doc. #127) filed May 31, 2011. For the following reasons the Court sustains defendant's motion for summary judgment and overrules plaintiffs' motion.
Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Andersonv. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Vitkus v. Beatrice Co., 11 F.3d 1535, 1538-39 (10th Cir. 1993). A factual dispute is "material" only if it "might affect the outcome of the suit under the governing law." Liberty Lobby, 477 U.S. at 248. A "genuine" factual dispute requires more than a mere scintilla of evidence. Id. at 252.
The moving party bears the initial burden of showing the absence of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Hicks v. City of Watonga, 942 F.2d 737, 743 (10th Cir. 1991). Once the moving party meets its burden, the burden shifts to the nonmoving party to demonstrate that genuine issues remain for trial as to those dispositive matters for which it carries the burden of proof. Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir. 1990); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Bacchus Indus., Inc. v. Arvin Indus., Inc., 939 F.2d 887, 891 (10th Cir. 1991). The nonmoving party may not rest on its pleadings but must set forth specific facts. Applied Genetics, 912 F.2d at 1241.
The Court views the record in the light most favorable to the nonmoving party. Deepwater Invs., Ltd. v. Jackson Hole Ski Corp., 938 F.2d 1105, 1110 (10th Cir. 1991). It may grant summary judgment if the nonmoving party's evidence is merely colorable or is not significantly probative. Liberty Lobby, 477 U.S. at 250-51. In a response to a motion for summary judgment, a party cannot rely on ignorance of facts, on speculation, or on suspicion, and may not escape summary judgment in the mere hope that something will turn up at trial. Conaway v. Smith, 853 F.2d 789, 794 (10th Cir. 1988). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law." Liberty Lobby, 477 U.S. at 251-52.
Unless otherwise noted, the following material facts are uncontroverted.
As noted above, plaintiffs are two insurance companies, ACE USA and ACE European Group, which bring suit as subrugees of AG Soda. Plaintiffs assert that AG Soda was the owner and consignee of soda ash which was damaged by flood waters while defendant transported it from Green River, Wyoming to Port Arthur, Texas under a bill of lading from Solvay Chemicals Co.1 On June 25, 2007, Solvay issued to Union Pacific bill of lading number 80816562 ("Solvay Bill of Lading") which provided the terms and conditions for the shipment. Doc. #128, Ex. 27.
The Solvay Bill of Lading referenced an agreement between defendant and the American National Soda Ash Corporation ("ANSAC"), known as UP-C-35322.2 The parties agree that UP-C-35322 governed their relationship. The Solvay Bill of Lading also incorporated by reference "all theterms and conditions of the Uniform Domestic Straight Bill of Lading set forth (1) in Uniform Freight Classification in effect on the date hereof, if this is a rail or rail water shipment or (2) in the applicable motor carrier classification or tariff if this is a motor carrier shipment, or (3) as otherwise agreed to in writing by the shipper, railroad(s) and motor carrier(s)." Solvay Bill of Lading, Doc. #128, Ex. 26. The parties dispute what terms and conditions this provision incorporates by reference.
UP-C-35322 is titled "RAIL TRANSPORTATION CONTRACT PURSUANT TO 49 U.S.C. SECTION 10709." It also contains a provision labeled "LIABILITY AND CLAIMS" which provides as follows:
Customer agrees not to file any claim for freight loss or damage when the amount of proven loss or damage is less than Two Hundred Dollars ($200.00) per railcar (Minimum Claim Amount). If Customer's proven loss or damage is determined to be in excess of the Minimum Claim Amount, the Minimum Claim Amount shall be deducted from any claim against Railroad for loss or damage to Commodity. In all other respects, claims shall be processed in accordance with 49 U.S.C. Section 11706 and 49 C.F.R. Part 1005.
UP-C-35322, Doc. #128, Ex. 27 at 3.
The threshold question is whether the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 11706, or the Solvay Bill of Lading, UP-C-35322 and the terms and conditions incorporated therein, provide the standard for defendant's liability.
Plaintiffs' complaint seeks damages under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 11706. The parties' motions for summary judgment raise numerous grounds for summary judgment,3 but the central question is whether the Carmack Amendment governs the parties'relationship. If the Carmack Amendment does not apply, defendant is entitled to summary judgment. I. Carmack Amendment
The Carmack Amendment regulates the liability of rail carriers. It provides that any rail carrier that delivers property and provides transportation or service subject to the jurisdiction of the Surface Transportation Board is "liable to the person entitled to recover under the receipt or bill of lading." 49 U.S.C. § 11706(a).4 Under Section 11706, a rail carrier subject to the Board's jurisdiction may notlimit or be exempt from this liability, except that it may establish rates for transportation of property under which (1) the rail carrier's liability "is limited to a value established by written declaration of the shipper or by a written agreement between the shipper and the carrier," or (2) "specified amounts are deducted, pursuant to a written agreement between the shipper and the carrier, from any claim against the carrier with respect to the transportation of such property." 49 U.S.C. § 11706(c).5
Section 10709 provides a mechanism, however, for rail carriers and purchasers of rail services to avoid the Carmack Amendment by contract. 49 U.S.C. § 10709(a)-(c); see Babcock & Wilcox Co. v. Kan. City S. Ry. Co., 557 F.3d 134, 138 (3d Cir. 2009) (); Dow Chem. Co. v. Union Pac. Corp., 8 F. Supp.2d 940, 941-42 (S.D. Tex. 1998) (). Under Section 10709, rail carriers and purchasers of rail services may enter into a private contract for specified services under specified rates and conditions. 49 U.S.C. § 10709(a). Such contract exclusively governs the parties' duties in connection with services provided under the contract and is not subject to the rail regulations in Part A of Subtitle IV of Title 49 of the United States Code, which includes the Carmack Amendment. 49 U.S.C. § 10709(a)-(c).6 II. Solvay Bill Of Lading And UP-C-35322
Both parties agree that the Solvay Bill of Lading, and any other contract, terms or conditions incorporated therein, governed the parties' relationship. See Pretrial Order (Doc. #131) filed June 1, 2011 at 2; see also Plaintiffs' Memorandum Of Law In Support Of Their Motion For Partial Summary Judgment On Defendant's Defenses (Doc. #107) filed April 5, 2011 at 21-22; Doc. #128 at 52-54. The parties also agree that UP-C-35322 is incorporated into the bill of lading. Doc. #107 at 21; Doc. #128 at 52; Doc. #131 at 8. Defendant argues that the Uniform Domestic Straight Bill of Lading, specifically the Uniform Freight Classification 6000-M, and UP Circular 16-E are also incorporated into the bill of lading. Doc. #128 at 46-48; Doc. #131 at 8. Defendant further argues that it is entitled to summary judgment because the terms and conditions in these documents bar plaintiffs' claim. Doc. #131 at 8-9; see Doc. #128 at 48-55. Plaintiffs argue that neither the Uniform Freight Classification 6000-M nor the UP Circular 16-E is incorporated into the bill of lading. They also argue that the Carmack Amendment does apply because UP-C-35322 expressly incorporates the Carmack Amendment liability provisions. Doc. #107 at 20-22.
The Court need not determine whether the Solvay Bill of Lading incorporates the Uniform Freight Classification 6000-M or the UP Circular 16-E because UP-C-35322 is clearly a Section 10709 contract and both parties agree that UP-C-35322 applies. As noted above, whether the CarmackAmendment applies is a matter of contract interpretation.7 When determining the meaning of contract terms, the Court begins with the plain language of the agreement. Liggatt v. Employers Mut. Cas. Co., 273 Kan. 915, 921, 46 P.3d 1120, 1125 (2002); Fayard v....
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