Custom Rubber Corp. v. Ats Specialized, Inc., Case No. 1:07 CV 2593.

• Decision Date: 07 January 2009
• Docket Number: Case No. 1:07 CV 2593.
• Parties: CUSTOM RUBBER CORPORATION, Plaintiff, v. ATS SPECIALIZED, INC., Defendant.
• Court: U.S. District Court — Northern District of Ohio

633 F.Supp.2d 495

CUSTOM RUBBER CORPORATION, Plaintiff, v. ATS SPECIALIZED, INC., Defendant.

Case No. 1:07 CV 2593.

United States District Court, N.D. Ohio, Eastern Division.

January 7, 2009.

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Anthony J. Divenere, Erin K. Walsh, McDonald Hopkins, Matthew M. Nee, Cleveland, OH, for Plaintiff.

Clare R. Taft, Eric Larson Zalud, L. Jason Blake, Benesch, Friedlander, Coplan & Aronoff, Cleveland, OH, for Defendant.

MEMORANDUM AND ORDER

KENNETH S. McHARGH, United States Magistrate Judge.

On August 6, 2008 Defendant ATS Specialized, Inc. ("ATS") filed a Motion for Judgment on the Pleadings on Plaintiff's Claim for Attorney Fees Under the Carmack Amendment against Plaintiff Custom Rubber Corporation ("Custom Rubber"). (Doc. 34). Custom Rubber filed an opposition on August 14, 2008, and ATS filed a reply on August 29, 2008. (Doc. 37, 40). On August 28, 2008, Custom Rubber filed a Motion for Summary Judgment against ATS. (Doc. 39). ATS filed its own Motion for Summary Judgment against Custom Rubber on September 2, 2008. (Doc. 44). Both parties filed oppositions and replies. (Doc. 50, 52, 55, 59). For the reasons stated below, Custom Rubber's Motion for Summary Judgment (doc. 39) is GRANTED in part and DENIED in part; ATS' Motion for Summary Judgment (doc. 44) is GRANTED in part and DENIED in part; and ATS' Motion for Judgment on the Pleadings (doc. 34) is DENIED as moot. Specifically, the Court holds that: (1) ATS is liable to Custom Rubber for $137,785.00 under the Carmack Amendment and the ATS bill of lading; (2) ATS is not entitled to set off from Custom Rubber's recovery the insurance proceeds Custom Rubber received from its insurer; and (3) Custom Rubber may not recover either special or consequential damages or attorney's fees.

I. FACTS

This case arises out of shipping accident. Custom Rubber manufactures and sells rubber moldings for use in a variety of end products. (Doc. 46, at ¶ 2). ATS is a trucking company that transports goods throughout the United States. (See doc. 35 ["Loghry Deposition"] [on file with Court], at 11).

On December 2, 2005, Custom Rubber placed an order with Rutil Sr. 1 ("Rutil"), an Italian manufacturer, for the purchase of an injection press to use in its business. The cost of the press was $314,200. (Doc. 46, at ¶ 3). An Italian company, Casasco & Nardi, Inc. ("Nardi") brokered the international shipment and acted as freight forwarder for the shipment and delivery of the press into the United States. (Id., at ¶ 4). Nardi hired Hapag-Lloyd to ship the press overseas from Italy to New Jersey and Atlantic Logistic Services ("ALS") to orchestrate the domestic leg of the machine's journey. (Id., at ¶ 5, 8). Nardi also hired Carmichael International Service ("Carmichael") to act as customs house broker and to serve as attorney-in-fact for Custom Rubber as the press went through United States Customs. (Doc. 44, Defendant's Exhibit ["DX"] B, at ¶¶ 7, 12). ALS hired Harbor Freight Transportation Company ("Harbor Freight") to unload the press from the ship and ATS to transport the press from Port Newark to Cleveland. (Id., DX C, at ¶ 13). Hapag-Lloyd and ATS each issued its own bill of lading. (Id., DX D; doc. 39, PX A-6). Neither Nardi, Carmichael nor ALS issued a bill of lading.

The Hapag-Lloyd bill of lading contains a liability limitation pursuant to the Carriage of Goods By Sea Act ("COGSA"). It states:

(2) U.S. Carriage of Goods by Sea Act Limitation

Notwithstanding any of the foregoing to the contrary, in the event that suit is brought in a court in the United States of America and such court, contrary to Clause 12, accepts jurisdiction, then the Carriage of Goods by Sea Act (COGSA) shall be compulsorily applicable to this contract of carriage if this Sea Waybill covers a shipment to or from the United States. The provisions set forth in COGSA shall also govern before the Goods are loaded on or after they are discharged from the vessel, provided, however, that the Goods at said time are in the actual custody of the Carrier or any Servant or Agent. The Carrier's maximum liability in respect to the Goods shall not exceed USD $500.

(Doc. 44, DX D).

The ATS bill of lading also contains a liability limitation. It states:

NOTE: Carrier's liability for loss of damage to any article or package transported shall be limited to $1.00 per pound (used machinery) or $2.50 per pound (all other articles) of cargo weight as specified in Carrier's Governing Rules Tariff. To declare a value greater than $1.00 or $2.50 per pound, contact carrier for written alternate rate quote, and return quote to ATS and also declare such valuation here ___ By ___. Failure to return signed written alternate rate quote to ATS and pay for greater value charges will revert Carrier's liability to $1.00 or $2.50 per pound.

(Doc. 39, Plaintiffs Exhibit ["PX"] A-6). The ATS bill of lading at issue in this case does not contain a declaration of alternate shipment valuation. (Id.). According to the ATS bill of lading, the new Rutil press weighed 55,114 pounds when shipped. (Id.).

Carmichael invoiced Custom Rubber $28,807.60 for the transportation of the press from Italy to the United States. (Doc. 44, DX B, at ¶ 13). The charges included ocean freight costs paid to Nardi in the amount of $16,850.00; $125.00 for the Carmichael customs fee; and $1246.27 in insurance premiums paid to Avalon Risk Management for a mandatory bond. (Id.)

Nardi obtained an insurance policy from an Italian insurer, Aurora Assicurazioni ("Aurora"), on behalf of Custom Rubber to cover the machine during its shipment from Italy to the United States. (Doc. 46, at ¶ 15). The approximate coverage of the insurance policy was $348,000.00. (Id.).

On July 24, 2006 Rutil notified Custom Rubber that the Rutil press would ship on or about July 29, 2006 to the United States aboard the Hapag-Lloyd ocean vessel, the Maersk Madrid. (Doc. 45 ["Braun Deposition"] [on file with Court], at 47); (Braun Deposition Exhibit 2). Apparently, the overseas portion of the press' journey was uneventful, and the press arrived at Port Newark, New Jersey on August 13, 2006 in good condition. (Loghry Deposition, at 47-48).

ALS arranged with Harbor Freight to unload the press from the Maersk Madrid upon its arrival at Port Newark and to store the press in Harbor Freight's warehouse until ATS could pick up the press for transport to Cleveland. (Doc. 44, DX C, at ¶ 13). On or about August 22, 2006, ATS' driver, Michael Loghry, arrived at the Harbor Freight warehouse in Port Newark to pick up and transport the press. (Loghry Deposition, at 7, 17-18). A Harbor Freight crane operator loaded the press onto the ATS trailer at Mr. Loghry's direction. (Id. at 28). Mr. Loghry had the, crane operator place the press between the two axles of the truck's trailer. (Id. at 38). Once the press was loaded, Mr. Loghry secured the press to the trailer using straps and chains. (Id.). Mr. Loghry then departed Port Newark with the press. (Id. at 57). He felt confident that the load was secure. (Id. at 43).

Mr. Loghry stopped for a weigh-in at Travel Centers America in Columbia, New Jersey on the way from Port Newark to Cleveland. (Id. at 58). During the weighin, it was determined that the press was placing too much weight on the rear axle of the trailer. (Id. at 60). Mr. Loghry called a commercial wrecker to pull the press forward so that the weight distribution on the trailer would comply with the applicable legal requirements. (Id.). The press was repositioned at Mr. Loghry's direction and re-weighed several times before Mr. Loghry was satisfied that the load was adequately centered and the weight properly distributed. (Id. at 64). Once the load was in place, Mr. Loghry again secured the load with straps and chains and set out for Cleveland. (Id. at 62, 69-70).

Mr. Loghry later stopped at a Flying J in Brookfield, Pennsylvania. (Id. at 71). At the Flying J, Mr. Loghry made a Uturn to get into the parking spot he wanted, and the trailer he was hauling twisted and tipped over. (Id. at 71-74). Consequently the attached press fell over and hit the ground, sustaining damage. (Id. at 73-74).

Mr. Loghry contacted ATS to send help after the accident, and the police department, fire department, and Hazardous Materials later arrived at the scene. (Id. at 76-77). ATS sent a new driver to Brookfield the following morning to continue transporting the damaged press to Cleveland. (Id. at 78). On or about August 25, 2006, the damaged press arrived at Norris Brothers, Co., Inc. (Doc. 46, at ¶ 11). Custom Rubber inspected the press at Norris Brothers and indicated on the ATS bill of lading that the press was received in heavily damaged condition. (Id., at ¶ 12; doc 39, PX A 6). Custom Rubber subsequently shipped the press back to Rutil in Italy for repairs. (Doc. 46, at ¶ 13). The cost of the repairs totaled $180,412.21. (Id., at ¶ 14). Custom Rubber also incurred expenses in the amount of $27,010.67 for shipping the machine back to Italy for repairs, rigging and storing the machine, and $12,820.66 for a duty deposit. (Id.). Custom Rubber later received a duty drawback in the amount of $9707.25. (Doc. 53, at 1).

Custom Rubber filed a claim with Aurora for the damage to the press. (Doc. 46, at ¶ 16). The claim settled, and Custom Rubber received approximately $95,000 in insurance proceeds. (Id.). According to Custom Rubber, approximately $10,000 of the insurance proceeds went to Custom Rubber's previous attorney and the remaining $85,000 went to Rutil to help cover the cost of repairing the machine. (Id.). Custom Rubber claims that it currently owes Rutil approximately $107,000.00 for the cost of repairs. (Id., at ¶ 17). It claims a total of $210.536.29 in damages. (Doc. 53, at 1). This amount represents the cost of repairing the machine, the costs of rigging, storing, and shipping the machine back to Italy for the repairs,...