D.M. Diamond Corp. v. Dunbar Armored, Inc., 14-01-00531-CV.

• Decision Date: 23 September 2003
• Docket Number: No. 14-01-00531-CV.,14-01-00531-CV.
• Parties: D.M. DIAMOND CORPORATION, Appellant, v. DUNBAR ARMORED, INC. and P.C. Brown, Appellees.
• Court: Texas Court of Appeals

124 S.W.3d 655

D.M. DIAMOND CORPORATION, Appellant, v. DUNBAR ARMORED, INC. and P.C. Brown, Appellees.

No. 14-01-00531-CV.

Court of Appeals of Texas, Houston (14th Dist.).

September 23, 2003.

Rehearing En Banc Overruled February 12, 2004.

Karl Robert Schneider, Edward A. Mattingly, Houston, for appellants.

Kenya Latrese Scott, Dallas, Robert Lee Soza, San Antonio, for appellees.

Panel consists of Justices HUDSON, FOWLER and Senior Justice DUGGAN.^*

OPINION ON MOTION FOR REHEARING

LEE DUGGAN, JR., Senior Justice (Assigned).

Our opinion of June 12, 2003 is withdrawn, and this opinion is issued in its place.

Appellees' motion for rehearing urges that the recent opinion of the Texas Supreme Court in Delta Airlines, Inc. v. Black, 46 Tex. Sup.Ct. J. 872, 2003 WL 21468864 (June 26, 2003), speaks to the breach of contract claim asserted in appellant's first issue, and requires affirmance of the summary judgment. We disagree. The motion for rehearing is overruled; the summary judgment is reversed and the cause is remanded to the trial court.

This appeal centers on the law applicable to the loss of a package of diamonds shipped in interstate transport.

Appellant, D.M. Diamond Corporation ("DM"), a shipper, appeals a take-nothing summary judgment in favor of appellees, Dunbar Armored, Inc., an interstate carrier, and its employee, P.C. Brown (collectively, "Dunbar"). DM asserts nine issues on appeal.

Because we find the trial court erred in determining both (1) that the Carmack Amendment¹ to the Interstate Commerce Act ("the Carmack") governed the underlying shipment, rather than the Air Deregulation Act² ("the ADA"), and (2) that certain of DM's causes of action were barred by federal preemption, we reverse and remand.

Background and Procedural History

DM is a wholesale diamond merchant. Dunbar is both a motor carrier and indirect air freight carrier. Since 1995, DM and Dunbar have operated together under a Service Contract whereby Dunbar provides pickup and overnight delivery of sealed packages containing precious stones and other valuables for DM. Pursuant to the Service Contract, DM called on Dunbar to transport from Houston to New York City a package of diamonds that DM had received on consignment from merchants in New York City. A DM representative filled out a Dunbar air bill for delivery, including a declaration that the value of the package was $30,000. Brown, Dunbar's employee, picked up the package on February 19, 1999. On March 1, 1999, Dunbar invoiced DM for the delivery; DM paid Dunbar's invoice on March 16, 1999.

The New York City merchants' invoice to DM would have been due on or about May 19, 1999, if DM did not return the consigned diamonds. On May 26, 1999, the merchants faxed DM a request for payment. Unaware that Dunbar had not delivered the package, DM contacted Dunbar that same day or the next, and requested a copy of the signed air bill to show DM's consignor that the package had been delivered.

Over the next several months, Dunbar repeatedly assured DM that it had the signed air bill, that it was continuing to look for it, and that it was encountering delays in locating it due to a move of its storage warehouse. On June 25, 1999, Dunbar promised DM in writing that it would locate the signed air bill by June 28, 1999. However, Dunbar never produced the signed air bill.

On July 6, 1999, approximately five months after Dunbar picked up the package from DM for delivery, DM filed a formal written claim of loss with Dunbar. A little over a month later, on August 9, 1999, Dunbar denied DM's claim, invoking paragraph five of the Terms and Conditions of the Service Contract as its basis. Paragraph five states:

Within ten (10) days after discovery of any loss, but in no event more than thirty (30) days after delivery to Dunbar of the ... valuable articles in connection with which such claim is asserted, [DM] shall give notice of claim in writing to Dunbar. If [DM] fails to comply with these conditions, [DM] agrees that all claims against Dunbar relating to the lost items are deemed waived and released.

(hereinafter the "30-Day Rule").

DM's Lawsuit

DM sued Dunbar, alleging breach of contract, breach of warranty, violation of the DTPA³, fraud, ambiguity/unreasonableness, estoppel/waiver as to the 30-Day Rule, and waiver of the Carmack's preemption of state law regulation and limitation of carrier's liability to shippers. Dunbar answered and filed a motion for summary judgment.

Dunbar's Motion for Summary Judgment

Dunbar's motion for summary judgment asserted that: (1) the Carmack applies and preempts all of DM's state law claims; (2) DM's claim of loss is limited to the amount it declared as the value of the package contents⁴; (3) DM's claims are barred because DM failed to comply with the 30 Day Rule; and, in the alternative, (4) there is no evidence that Dunbar breached the Service Contract.

DM's Motion for Partial Summary Judgment

DM filed a motion for partial summary judgment, asserting: (1) a bailment and Dunbar's negligence; (2) Dunbar's breach of the contract, and, alternatively; (3) Dunbar's presumptive liability under the Carmack for picking up the package and failing to deliver it.

DM's Response to Dunbar's Motion for Summary Judgment

DM also filed a response to Dunbar's motion for summary judgment, arguing that: (1) Dunbar waived the Carmack's protection from civil actions by its draftsmanship of section 13 of the Service Contract; (2) the 30-Day Rule "fails because it is ambiguous, oppressive and void" under both federal and state statutes because it conflicts with the Carmack's requirement that "[a] carrier may not provide by rule, contract, or otherwise, a period of less than 9 months for filing a claim against it under this section ...;"⁵ (3) the Carmack does not preempt pre-contract DTPA misrepresentations; (4) Dunbar was barred by estoppel and quasi-estoppel from relying on, and had waived its right to assert, the 30-Day Rule; (5) the Service Contract's 30-Day Rule is ambiguous and unreasonable because no provision is made for a loss discovered more than 30 days after Dunbar accepts goods for delivery; (6) the limitation of liability violates the DTPA; and (7) evidence exists to support DM's claims for breach of contract, DTPA, and bailment.

The trial court granted Dunbar's motion for summary judgment and denied DM's motion for partial summary judgment. DM appeals only the trial court's granting of Dunbar's motion for summary judgment.

Standard of Review

In order to prevail on summary judgment, a defendant/movant must disprove at least one essential element of each of the plaintiff's causes of action. Riddick v. Quail Harbor Condo. Ass'n, Inc., 7 S.W.3d 663, 669 (Tex.App.-Houston [14th Dist.] 1999, no pet.).

We review a summary judgment by applying the following well-established rules: (1) the movant has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law; (2) in deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true; and (3) every reasonable inference must be indulged in favor of the nonmovant and any doubts must be resolved in favor of the nonmovant. Am. Tobacco Co. v. Grinnell, 951 S.W.2d 420, 425 (Tex. 1997).

In considering grounds for reversal on appeal, we are limited to those grounds expressly set forth in the summary judgment motions, answers, or other responses. Tex.R. Civ. P. 166a(c); McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d 337, 341 (Tex.1993) (plurality opinion)⁶ (citing City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979)); Clemons v. State Farm Fire and Cas. Co., 879 S.W.2d 385, 390 (Tex. App.-Houston [14th Dist.] 1994, no writ). In determining what grounds are expressly presented, we may not rely on the appellate briefs or summary judgment evidence. McConnell, 858 S.W.2d at 341.

Arguments and Authorities

DM asserts in its first issue that the trial court erred in granting summary judgment because it incorrectly relied on the Carmack Amendment, which regulates interstate transportation of goods by motor carrier, rather than the ADA, which governs the interstate transportation of goods by air carrier. DM argues that "[t]he Air Bill makes this an ADA case," and that with the ADA's 1978 deregulation of air transportation, interstate air carriers and shippers are now free to negotiate their own contracts, which may be interpreted and enforced under state law. DM argues that, while the ADA governs interstate air transportation, state law governs the interpretation and enforcement of contracts between shippers and carriers without federal preemption as long as state law does not enlarge or enhance the terms of the contract, citing Am. Airlines, Inc. v. Wolens, 513 U.S. 219, 115 S.Ct. 817, 130 L.Ed.2d 715 (1995).

Dunbar responds that: (1) DM failed to urge its ADA argument to the trial court, and is therefore barred from urging it on appeal; and (2) whether the Carmack or the ADA applies, Dunbar still prevails because federal law—either Carmack or ADA—governs Dunbar as an indirect air carrier, and preempts all state law causes of action between shippers and carriers, citing Sam L. Majors Jewelers v. ABX, Inc., 117 F.3d 922, 926-29 (5th Cir.1997).

DM did, in fact, fail to present to the trial court in its partial summary judgment motion, answers or other responses the argument it now asserts on appeal, i.e., that the ADA, and not the Carmack, applies to the Service Contract. However, while DM, as the nonmovant, must have expressly presented to the trial court any arguments for avoiding Dunbar's right to summary judgment, DM may, nevertheless, challenge on appeal the legal sufficiency of movant Dunbar's summary judgment proof. Tex.R.App. P. 33.1; see McConnell, 858 S.W.2d at 341 (citing City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979)...