Azzil Granite Materials, LLC v. Canadian Pac. Ry. Corp.
| Decision Date | 10 May 2023 |
| Docket Number | 20-CV-2381 (JMW) |
| Parties | AZZIL GRANITE MATERIALS, LLC, Plaintiff, v. CANADIAN PACIFIC RAILWAY CORP., DELAWARE AND HUDSON RAILWAY COMPANY, AND NEW YORK AND ATLANTIC RAILWAY, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
Carl Judah Schaerf, Esq., Cynthia A. Murray, Esq., Schnader Harrison Segal & Lewis LLP Attorneys for Plaintiff
Edward Justin Sholinsky, Esq., Ralph G. Wellington, Esq. Schnader Harrison Segal & Lewis LLP Attorneys for Plaintiff
David F Rifkind, Esq. Stinson LLP Attorney for Defendants Canadian Pacific Railway Corporation, and Delaware & Hudson Railway Company
Joshua Poertner, Esq. Stinson LLP Attorney for Defendants Canadian Pacific Railway Corporation, and Delaware & Hudson Railway Company
Kieran M. Corcoran, Esq. Stinson LLP Attorney for Defendants Canadian Pacific Railway Corporation, Delaware & Hudson Railway Company, and New York and Atlantic Railway.
Kyle George Kunst, Esq. Gallet Dreyer & Berkey, LLP Attorney for Defendants New York and Atlantic Railway
William A Mullins, Esq. Baker & Miller, PLLC Attorney for Defendants New York and Atlantic Railway
“[The] prime object [of the Carmack Amendment] was to bring about a uniform rule of responsibility as to interstate commerce and interstate commerce bills of lading.”[1]
This case implicates what appears to be one of the more comprehensive federal regulatory schemes enacted by Congress. The Carmack Amendment to the Interstate Commerce Act of 1877 originated in the early twentieth century, having passed into legislation over a century ago in 1906. It is widely considered as embodying the congressional intent to take possession of the field of carrier liability for the shipment of goods in interstate commerce.
The gravamen of the case involves Defendants' alleged delay or failure to timely deliver stone and return railcars pursuant to a transportation contract between the parties. The stone itself was not damaged, but the delay in returning the railcars to Plaintiff led to damages and ultimately the demise of Plaintiff's business according to the Complaint. Before the Court are the parties' motions and cross-motions for summary judgment (DE 74; DE 76). Specifically, Azzil now moves for partial summary judgment on liability as to its breach of contract claims against Defendants (Counts IV-V). (DE 74.) Defendants in turn cross-move for summary judgment on all counts. (DE 76.) Together the motions raise the following two questions First, are Plaintiff's breach of contract claims within the ambit of the Carmack Amendment? And if so, then second, did Plaintiff comply with the procedural requirements of the Carmack Amendment? Simple as these posited questions may seem, they present a Gordian knot.
For the reasons stated below, Azzil's motion for partial summary judgment (DE 74) is denied, and Defendants' cross-motion for summary judgment (DE 76) is hereby granted.
Plaintiff Azzil Granite Materials, LLC (“Azzil”) filed this action asserting breach of contract claims against Canadian Pacific Railway Corporation (“CP”) and Delaware & Hudson Railway Company (“D&H”) (Count IV), and New York and Atlantic Railway (Count V) (“NYA,” collectively with CP and D&H “Defendants”), as well as claims under the Carmack Amendment, 49 U.S.C. § 11706, against Defendants (Count I-III). (DE 1.) Defendants answered the Complaint (DE 29; DE 30) and the parties engaged in discovery. Both sides now claim the case is ripe for summary judgment.
I. Relevant Undisputed Material Facts[2]
Azzil sells stone products (“stone”) throughout the tri-state area, including New York. (DE 78-1 at ¶ 1.) On or around July 6, 2016, Azzil entered into a rail transportation contract (“Agreement”) with CP for and/or on behalf of D&H (a wholly owned indirect subsidiary of CP), to transport Azzil's stone products. (DE 78-1 at ¶¶ 3, 5.) After entering into the Agreement, Azzil began to ship a portion of its stone by rail. (DE 77-5 at ¶ 11.) The Agreement was renewed on January 15, 2018. (DE 77-5 at ¶ 26.) The Agreement was to transport Plaintiff's railcars from Whitehall, New York or Comstock, New York to Sill, New York or Hicksville New York, identified in Schedule A of the Agreement. (DE 78-1 at ¶¶ 5-8.) The route described in the Agreement is “CPRS-Freshpond, NY-NYA.” (DE 78-1 at ¶ 9.)
CP does not operate on all the lines that run along the route. (DE 78-1 at ¶¶ 12-14.) NYA provides freight transportation services to its customers over rail lines in Long Island, New York. (DE 78-1 at ¶ 13.) Azzil loaded its railcars in Comstock which was near its Quarry. (DE 77-5 at ¶ 15.) D&H picked up and transported the stone from the Quarry to Albany, New York where, another railroad, CSX, would take the stone and transport it to Fresh Pond, New York to hand off to NYA. (DE 77-5 at ¶¶ 16-18.) D&H and CSX were transporting the stone on behalf of CP, and NYA then divided up the railcars and transported them to their respective destinations in Long Island. (DE 78-1 at ¶ 16.) After the railcars were emptied at their destination in Long Island, the process reversed, and NYA was responsible for returning the empty railcars to Fresh Pond. (DE 78-1 at ¶ 17.) The railcars were provided by Azzil and were leased from another company. (DE 78-1 at ¶ 33.)
The Agreement states that it incorporates by reference CP's “Tariff 1,” and requires claims related to CP's liability to Azzil “or any third party for claims involving any alleged loss, damage or delay to the [stone] shall be the same as that specified in the Liability Regulations and clarified in CP's Guide to Products and Services Tariff 1 under the Rules and Regulation section . . .” (DE 77-5 at ¶ 38-39; DE 74-4 at 3, 4.) Tariff 1 provides that “[f]or transportation of Commodities within the United States, CP's liability for claims and the procedures for processing such claims, shall be the same as that specified in [the Carmack Amendment], except as otherwise provided herein.” (DE 77-5 at ¶ 40.) Tariff 1 also states that notice of claims for loss, damage, or delay must be received “within nine (9) months from the date of delivery” along with certain documentation. (DE 77-5 at ¶ 39.) NYA's Tariff NYA 8000-B is also incorporated, which requires notice within 12 months. (DE 50 at ¶¶ 38-39.)
The Agreement contains a “Minimum Volume Commitment” requiring Azzil to ship no fewer than 1,500 railcars per year, that, if not met, would give CP the ability to assess liquidated damages. (DE 78-1 at ¶ 18-19.) Schedule A provides that “CP will do best commercially reasonable efforts to return all cars within 2 to 4 days available on our line-or according to trip plan in place at the moment of movement.” (DE 78-1 at ¶ 10.) Azzil experienced service issues related to delivery and return of its railcars and made inquiries about the status and whereabouts of certain railcars. (See DE 78-1 at ¶¶ 45-47; DE 74-22; DE 74-23.)
On July 3, 2018, Azzil notified NYA that there were issues regarding moving railcars from out of the Hicksville rail yard, and that a certain number were backed up there. (DE 7423.) NYA stated they would “look into” resolving the issues. (DE 77 at 11.) On August 7, 2018, Azzil notified CP via CP's customer service line and advised that certain railcars arrived back to Comstock fully loaded, and that this had happened four times before. (DE 74-22.) Azzil noted that the issue would cost the company $7,420 and asked CP to ensure Azzil is not charged demurrage/moving costs for the identified railcars or any that are delayed because of the issue. (Id.) On August 16, 2018, Azzil emailed NYA letting them know it has received poor service over the last month. (DE 74-26.) Azzil attached a spreadsheet identifying 80 loaded railcars that had been sitting in Fresh Pond for periods of time varying from 3 days to 35 days. (Id.) Azzil further noted it had not received a railcar in over a week, it had sent numerous emails requesting a status update, and that it was told that NYA would resolve the issue as soon as possible, yet it had not been resolved. (Id.) NYA acknowledged that it “was not happy about sitting on [Azzil's] railcars either.” (Id.)
Given these issues, the Agreement was not renewed when it expired in January 2019, at which point Azzil ceased shipping stone by rail. (DE 77-5 at ¶ 30.) Azzil has provided a spreadsheet reflecting that by the time the Agreement expired, more than 100 of its 150 railcars were either at Whitehall, NYA's Hicksville terminal, or Fresh Pond. (DE 74-28.) Azzil defaulted on its railcar leases due to not receiving them back when expected. (DE 78-1 at ¶ 35.) Azzil had also created a multi-year proposal, dated December 10, 2018, to provide stone to the LIRR 3rd Track Contractors. (DE 74-29 at 2.) The parties dispute whether there was any actual contract in place. The proposal was valued at $17 million and was in the form of an unsigned quote. (DE 74-29 at 2.) Azzil asserts it was unable to ship stone as intended given the service issues and lack of railcars. Azzil's 30(b)(6) witness testified that Azzil started doing “smaller up-front contracts” and when it was unable to supply stone, the LIRR 3rd Track Contractors stated they would no longer use Azzil. (DE 74-21 at ¶ 149.)
On April 11, 2019, CP received a notice from Azzil invoking the mediation clause of the Agreement and asserting that CP had breached the Agreement with Azzil by “delaying transport of and failing to transport Azzil's products,” resulting in continuing financial losses to Azzil. (DE 50-23 at 2.) On May 2, 2019, CP informed Azzil by letter in response to the mediation demand that:
Azzil is required to comply with the claim procedures set out in CP's Tariff 1 CP...
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