Bailey v. Morgan Drive-Away, Inc.

• Decision Date: 22 October 1986
• Docket Number: Civ. A. No. 85-4132.
• Citation: 647 F. Supp. 648
• Parties: Greg BAILEY and Stacy Bailey, Plaintiffs, v. MORGAN DRIVE-AWAY, INC., Defendant.
• Court: U.S. District Court — District of Kansas

647 F. Supp. 648

Greg BAILEY and Stacy Bailey, Plaintiffs, v. MORGAN DRIVE-AWAY, INC., Defendant.

Civ. A. No. 85-4132.

United States District Court, D. Kansas.

October 22, 1986.

Lynn Hursh, Turner & Boisseau, Overland Park, Kan., for plaintiffs.

Dale W. Bell, Guy, Helbert, Bell & Smith, Emporia, Kan., William T. North, Masoner & North, Cottonwood Falls, Kan., for defendant.

MEMORANDUM AND ORDER

EARL E. O'CONNOR, Chief Judge.

This action was filed by the plaintiffs against the defendant, Morgan Drive-Away, for claims relating to a one-half section of plaintiffs' mobile home and its contents, which were damaged while being transported by the defendant. Plaintiffs' action was originally filed in the District Court of Pratt County, Kansas, and was subsequently removed to this court pursuant to 28 U.S.C. § 1446. Plaintiffs' petition contains six separate counts alleging breach of contract, negligence, estoppel, fraud, violation of the Kansas Consumer Protection Act and violation of K.S.A. 66-304.

The matter comes before the court on the defendant's motion for summary judgment. Defendant contends that all of the plaintiffs' claims should be dismissed, except for the breach of contract claim. Further, defendant argues that the breach of contract claim, as a matter of law, can only be based on the bill of lading issued by the defendant and signed by the plaintiffs.

The court is familiar with the standards governing the consideration of motions for summary judgment. To rule favorably on a motion for summary judgment, the court must first determine that the matters on file regarding the motion "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R. Civ.P. 56(c). The court must look at the record in the light most favorable to the non-moving party. Lindley v. Amoco Production Co., 639 F.2d 671, 672 (10th Cir. 1981). Pleadings and documentary evidence must be liberally construed in favor of the party opposing the motion. Thomas v. United States Dept. of Energy, 719 F.2d 342, 344 (10th Cir.1983). A party resisting a motion for summary judgment, however, must set forth specific facts showing that there is a genuine issue for trial. Dart Indus., Inc. v. Plunkett Co. of Oklahoma, Inc., 704 F.2d 496, 498 (10th Cir.1983).

Many of the facts in this case are disputed by the parties. However, to clarify this court's rulings, the facts will be stated as follows. Sometime before November 2, 1984, plaintiffs made several telephone calls to defendant's local office. The plaintiffs inquired into the possibility of hiring defendant to transport their 1981 double-wide Commodore mobile home and its contents from Pratt, Kansas, to Lavant, Kansas. According to the plaintiffs, the defendant's agent represented that the mobile home and its contents would be insured by the defendant to their full value in the event of an accident. Plaintiffs allegedly accepted these terms of shipment.

Shortly before the defendant arrived to transport the mobile home, plaintiffs were informed they had to split the home apart. However, plaintiffs understood that the defendant's agents would inspect the mobile home before shipment to ensure it was adequately secure for transportation. On November 2, 1984, defendant's drivers arrived to transport the mobile home. At the time, plaintiff Greg Bailey was given the bills of lading for the two sections of the mobile home, which he signed. The bills of lading contained several provisions purporting to limit the carrier's liability to preprinted "released values." However, plaintiffs allege in their affidavit that Mr. Bailey was given no time to read the documents due to pressure by the defendant's agents. Plaintiffs also allege that they were not informed of the pre-established released value or the limitations on liability. Plaintiffs further state that Mr. Bailey assumed the bill of lading contained the terms represented earlier by defendant's terminal agent.

During the shipment, one section of the mobile home became disconnected from the truck, left the roadway and became severely damaged. Many of the contents left in that section of the mobile home were also damaged or destroyed. Plaintiffs are seeking damages for the loss of the entire mobile home, for the loss of the contents and for consequential living and storage expenses. The defendant claims that its liability is limited by the provisions in the bills of lading signed by Greg Bailey.

ISSUES

I. Prior Oral Agreement.

Defendant contends that plaintiffs' breach of contract claim can only be based on the bill of lading signed by Greg Bailey. It is well-established in Kansas that an individual who signs a contract has a duty to learn and know its contents before signing it. Commercial Credit Corp. v. Harris, 212 Kan. 310, 314, 510 P.2d 1322, 1325 (1973). One who signs a written instrument is bound by its terms in the absence of fraud, undue influence or mutual mistake, regardless of the person's failure to read it before it was signed. Squires v. Woodbury, 5 Kan.App.2d 596, 598, 621 P.2d 443, 446 (1980), rev. denied, 229 Kan. 671 (1981). However, courts have recently adopted the rule that when a party signs a contract without reading it, thinking he knows its terms, he has assented under mistake of fact if those terms are different from what he thought they were. Whether or not this mistake of fact makes the contract voidable depends on whether the other party had reason to know of the mistake. Coleman v. Holecek, 542 F.2d 532, 535 (10th Cir.1976); Squires, 5 Kan.App.2d at 599, 621 P.2d at 446-47.

Plaintiffs have alleged sufficient facts to create genuine issues as to the existence of fraud in light of the alleged misrepresentations made by defendant's agents. Similarly, there are disputed facts which relate to whether the defendant had reason to know that the plaintiffs signed the bill of lading under a mistake of fact. Therefore, summary judgment is improper on this issue.

Defendant also contends that the parol evidence rule prohibits the admission of evidence of prior oral agreements or negotiations to vary the terms of a subsequent written agreement. This rule is followed in Kansas. See Stapleton v. Mendoza, 174 Kan. 468, 471, 257 P.2d 113, 115 (1953). However, the rule only applies when the written contract evidences the final agreement of the parties. Id. Exceptions to the rule exist which allow such evidence to show that there had been misrepresentations or concealments as to what the contract contained or to show mutual mistake or fraud. Id. (citations omitted). In relation to bills of lading, the same general rule applies.

The general rule denying the admissibility of parol evidence to vary written contracts is applicable to the contractual stipulations in a bill of lading.... However, before the rule can be applied, it must appear that the bill of lading was intended by the parties to represent the contract between them, and that all prior negotiations leading up to the issuance of the bill were made in contemplation of its execution; if it should appear that the bill of lading was not intended by the parties to be the contract of carriage, parol evidence is admissible to establish the real contract.

13 Am.Jur.2d Carriers § 294 at 795.

Plaintiffs' allegations of misrepresentations and the lack of an opportunity to examine the bill of lading are sufficient to raise genuine issues as to whether the bill of lading was intended by the parties to represent the contract of carriage. Similarly, evidence of any alleged prior agreement is clearly admissible to prove plaintiffs' claims of fraud and deceptive practices. Therefore, the defendant is not entitled to summary judgment on this issue.

II. Contract Limitations on Damages.

Even if the bill of lading is the only enforceable contract between the parties, the plaintiffs contend that the provisions which limit defendant's liability for their loss are unenforceable. The bill of lading issued by the defendant and signed by the plaintiff Greg Bailey contained the following two provisions on the face of the document in small print:

NOTICE: THE SHIPPER HEREBY RELEASES THE VALUE OF THE TRAILER AND THE FACTORY INSTALLED EQUIPMENT TO A VALUE NOT EXCEEDING $7,500.00 UNLESS AN EXCESS VALUE IS DECLARED BELOW AND CHARGES FOR SUCH EXCESS VALUE ARE PAID (APPLIES ONLY ON UNITS DESIGNED FOR OTHER THAN LIVING PURPOSES).

NOTICE: THE SHIPPER HEREBY RELEASES THE VALUE OF THE ENTIRE CONTENTS OTHER THAN FACTORY INSTALLED EQUIPMENT TO A VALUE NOT EXCEEDING $250.00 PER SHIPMENT UNLESS AN EXCESS VALUE IS DECLARED BELOW BY SHIPPER AND CHARGES FOR SUCH EXCESS VALUE ARE PAID (APPLIES ONLY ON UNITS DESIGNED FOR LIVING PURPOSES).

The defendant has finally conceded that the $7,500.00 limitation is not applicable in this case to the mobile home since it is a unit designed for living purposes. However, the parties dispute the validity of the $250.00 limitation as it applies to the contents of plaintiffs' mobile home.

The defendant argues that as a common carrier, it can lawfully limit its liability for damage to shipped property through its bill of lading to the "released value" of the property. A common carrier's liability for damages arising from intrastate shipments is governed by state law. The Kansas statute applicable to this issue is K.S.A. 66-304. This section provides, in part:

Any common carrier receiving property for the transportation from one point in this state to another point in this state shall issue a receipt or bill of lading therefor and such carrier ... shall be liable to the owner of such property for any loss, damage or injury caused by ... said carriers, and no contract, rule or regulation shall exempt any of such common carriers from the liability thereby imposed....

K.S.A. 66-304 (emphasis added).

While the statute clearly prohibits carriers from "exempting" themselves from liability, this has not been...