Chubb Group of Ins. Comoanies v. H.A. Transp. Sys.

Decision Date09 October 2002
Docket NumberNo. CV 01-9192 AHM.,CV 01-9192 AHM.
Citation243 F.Supp.2d 1064
CourtU.S. District Court — Central District of California

R Joseph Decker, Haleh Jenkins, Prindler Decker & Amaro, Long Beach, CA, for Plai

Charles M Farano, Jeffrey L Farano, Farano & Kieviet, Anaheim, CA, James Attridge, Shawn Mann & Neidermayer, San Francisco, CA, for Defendant.


MATZ, District Judge.


This action is before the Court on the motion of Defendant H.A. Transportation ("HA") for Summary Judgment. For the reasons stated below, Defendant's motion is GRANTED.


Unless otherwise noted, the following facts are undisputed.1 This action arises from the theft of a truck and trailer in South Gate, California in June, 2000. Compl. at 2. That truck and trailer contained 1,200 cases of menthol cigarettes en route from Madrid, Spain to Benicia, California. The cigarettes were the property of Cigarettes Cheaper!,2 which had contracted with HA in June, 2000 to transport the cigarettes for the inland leg of the shipment—from Carson, California to Benicia. Compl. at 2.

HA is a licensed property broker and acts as a middleman between shippers and prospective truckers. As such, HA did not transport the shipment itself. Declaration of Alan Huttman ¶ 3-4. Rather, HA contracted with Orozco Transportation, Inc. ("Orozco") to transport the cargo. Orozco, in turn, subcontracted the load to R & G Trucking ("R & G"). Compl. at 2. The cigarettes were stolen when the R & G driver parked the truck containing the shipment in a restaurant parking lot in South Gate, California. Compl. at 2.

On August 3, 2001, Chubb brought a suit for breach of contract, negligence, and violation of California Civil Codes §§ 2194 and 2195 in Los Angeles Superior Court against HA, Orozco, and R & G. Notice of Removal ("NOR") at 1. On October 25, 2001, Defendants timely removed to federal court based on federal question jurisdiction. NOR at 2.

On August 16, 2002, HA filed this Motion for Summary Judgment. HA noted that the Complaint identifies HA as a "common carrier" and that HA is in fact a "broker" and not a "common carrier." Because HA claims that the standards of liability for brokers differ from those that apply to common carriers, HA argues that it is not liable under any of the claims alleged in the Complaint. HA's Motion for Summary Judgment at 9-10. On August 28, 2002, Plaintiff filed a motion to amend its Complaint as to its allegations against HA to replace "common carrier" with "transportation broker" throughout and to allege "broker liability based on a negligent entrustment (hiring) theory." Plaintiff also sought to add allegations that all of the Defendants were agents of each other and that all engaged in conduct for which all are liable. The Court denied that motion on October 4, 2002.

A. Summary Judgment Standard

Federal Rule of Civil Procedure 56(c) provides for Summary Judgment when "the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." The moving party bears the initial burden of demonstrating the absence of a "genuine issue of material fact for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is material if it could affect the outcome of the suit under the governing substantive law. Id. at 248, 106 S.Ct. 2505. The burden then shifts to the nonmoving party to establish, beyond the pleadings, that there is a genuine issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

When the moving party does not bear the burden of proof at trial, as is the case here, the moving party need not disprove the other party's case for the purposes of Summary Judgment, but rather must point out the absence of evidence proffered by the non-moving party. See Celotex, 477 U.S. at 325, 106 S.Ct. 2548. Thus, "[s]ummary judgment for a defendant is appropriate when the plaintiff `fails to make a showing sufficient to establish the existence of an element essential to [his] case, and on which [he] will bear the burden of proof at trial.'" Cleveland v. Policy Management Sys. Corp., 526 U.S. 795, 805-06, 119 S.Ct. 1597, 143 L.Ed.2d 966 (1999) (citing Celotex, 477 U.S. at 322, 106 S.Ct. 2548).

When the moving party meets its burden, the "adverse party may not rest upon the mere allegations or denials of the adverse party's pleadings, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed. R. Civ.P. 56(e). Summary Judgment will be entered against the non-moving party if that party does not present such specific facts. Id. Only admissible evidence may be considered in deciding a Motion for Summary Judgment. Id.; Beyene v. Coleman Sec. Serv., Inc., 854 F.2d 1179, 1181 (9th Cir. 1988).

"[I]n ruling on a Motion for Summary Judgment, the nonmoving party's evidence `is to be believed, and all justifiable inferences are to be drawn in [that party's] favor.'" Hunt v. Cromartie, 526 U.S. 541, 119 S.Ct. 1545, 1551-52, 143 L.Ed.2d 731 (1999) (quoting Anderson, 477 U.S. at 255, 106 S.Ct. 2505). But the non-moving party must come forward with more than "the mere existence of a scintilla of evidence." Anderson, All U.S. at 252, 106 S.Ct. 2505. Thus, "[w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (citation omitted).

B. Legal Framework: Carriers vs. Brokers

The Carmack Amendment (49 U.S.C. § 14706 (1996)) imposes liability on a carrier for all losses relating to goods it transports in interstate commerce.3 The Plaintiff need not prove negligence. "A shipper establishes a prima facie case of a carrier's negligence under the Carmack Amendment by evincing proof by a preponderance of the evidence that the goods '1) were delivered to the carrier in good condition, 2) arrived in damaged condition, and 3) resulted in the specified amount of damage.'" Fuente Cigar, Ltd, v. Roadway Express, Inc., 961 F.2d 1558, 1560 (11th Cir.1992) (quoting Fine Foliage of Florida, Inc. v. Bowman Transportation, Inc., 901 F.2d 1034, 1037 (11th Cir.1990); Offshore Aviation v. Transcon Lines, Inc., 831 F.2d 1013 (11th Cir.1987)). Once the Plaintiff establishes a prima facie case of negligence, the burden shifts to the defendant to show that it was free of negligence and that the damage was caused by one of the several excepted causes that relieve carriers of liability. Independent Machinery, Inc. v. Kuehne & Nagel, Inc., 867 F.Supp. 752, 758 (N.D.Ill.1994).

The Carmack Amendment governs "motor carriers" and "freight forwarders." 49 U.S.C. §§ 14706(a) (1996). The statute absolutely preempts all state common law claims against such carriers and freight forwarders. Hughes Aircraft Co. v. North American Van Lines, Inc., 970 F.2d 609, 613 (9th Cir.1992). However, the Carmack Amendment does not apply to brokers.4 See, e.g. Professional Communications, Inc. v. Contract Freighters, Inc., 171 F.Supp.2d. 546, 551 (D.Md.2001); Independent Machinery, 867 F.Supp. at 761; Adelman v. Hub City Los Angeles Terminal, 856 F.Supp. 1544, 1547-48 (N.D.Ala.1994). Consequently, most courts hold that brokers may be held liable under state tort or contract law in connection with shipments. Intercargo Ins. Co. v. Burlington Northern Santa Fe Railroad, 185 F.Supp.2d. 1103, 1113-1115 (C.D.Ca.2001) (applying California law to party that was neither a carrier nor a freight forwarder); Professional Communications, 171 F.Supp.2d. at 551-52 (applying Florida and Maryland law of negligence to a motor carrier broker); Independent Machinery, 867 F.Supp. at 762 (applying state law to party that was neither a carrier nor a freight forwarder); Adelman, 856 F.Supp. at 1548^9 (same).5

C. There is no genuine issue of fact as to Defendant's status as a broker in this transaction.

Because the legal standards that apply to carriers and brokers diverge, it is important to ascertain first whether HA was acting as a "carrier" or as a "broker" in this transaction. Both parties now agree that HA acted as a broker in the transaction in question. Although Chubb hints in its Opposition that it believes HA acted as a common carrier in this transaction ("Whether ... H.A. was an exclusive broker is debatable." Plaintiffs Opposition at 5), the Court construes HA's identity as a broker to no longer be at issue, given that Plaintiff itself moved on August 28, 2002 to amend its Complaint based on "recent discovery" revealing that HA "acted as a broker in this case." Plaintiffs Motion to Amend Complaint at 2.

However, while Plaintiff Chubb concedes that HA did not act as a common carrier, Chubb argues that HA held itself out as a common carrier in the transaction at issue. Plaintiffs Opposition at 4-5. Chubb cites Ensco, Inc. v. Weicker Transfer and Storage Co., 689 F.2d 921, 925 (10th Cir. 1982), for the proposition that "[a] carrier's status as a common carrier is determined not by reference to its authority but rather by reference to what it holds itself out to be." Even if Ensco—which concerned the distinction between "contract carriers" and "common carriers"— applies here, Chubb has not alleged sufficient facts to show that there is a genuine issue for trial regarding this matter. Fed. R. Civ.P. 56(e).

Chubb points to only three facts to support its argument that HA held itself out as a common carrier. First, Chubb has filed excerpts of the...

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