High Rd. Craft Ice Cream, Inc. v. Nolan Transp. Grp., LLC

• Decision Date: 15 May 2020
• Docket Number: Civil Action No. 1:19-cv-01885-SDG
• Court: U.S. District Court — Northern District of Georgia
• Parties: HIGH ROAD CRAFT ICE CREAM, INC., Plaintiff, v. NOLAN TRANSPORTATION GROUP, LLC; C. DAVIS XPRESS, LLC; USCS LOGISTICS, LLC; NATIONAL INDEMNITY COMPANY, INC.; ONEBEACON INSURANCE GROUP; AND INSURANCE COMPANY DOES 1-10, Defendants.

HIGH ROAD CRAFT ICE CREAM, INC., Plaintiff, v. NOLAN TRANSPORTATION GROUP, LLC; C. DAVIS XPRESS, LLC;

USCS LOGISTICS, LLC; NATIONAL INDEMNITY COMPANY, INC.;

ONEBEACON INSURANCE GROUP; AND INSURANCE COMPANY DOES 1-10, Defendants.

Civil Action No. 1:19-cv-01885-SDG

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF GEORGIA ATLANTA DIVISION

May 15, 2020

OPINION AND ORDER

This matter is before the Court on Defendant Nolan Transportation Group, LLC's ("Nolan") motion to dismiss [ECF 44] and Defendant OneBeacon Insurance Group's ("OneBeacon") motion to dismiss [ECF 47]. Also before the Court is a motion for leave to file a surreply [ECF 71] filed by Plaintiff High Road Craft Ice Cream, Inc. For the following reasons, Nolan's motion is GRANTED IN PART and DENIED IN PART; OneBeacon's motion is GRANTED; and High Road's motion is GRANTED.

I. BACKGROUND

The Court treats the following facts as true for the purposes of these motions.¹ In April 2018, High Road agreed to sell a shipment of approximately 2,880 cartons of frozen ice cream to H.E.B. Grocery Company ("HEB").² The ice cream shipment possessed an alleged value of $72,345.60.³ High Road contracted with Defendant USCS Logistics, LLC ("USCS") to transport the shipment from Cartersville, Georgia to HEB's location in San Antonio, Texas.⁴ To complete the shipment, USCS subcontracted with Nolan, which in turn, contracted with Defendant C. Davis Xpress, LLC ("Davis Xpress").⁵ The Bill of Lading for the shipment contained the following instructions: "MUST MAINTAIN -20F/CONTAINS FROZEN PRODUCT."⁶

On April 27, 2018, Davis Xpress delivered the shipment to HEB's location in San Antonio, Texas.⁷ On delivery, HEB discovered the ice cream had melted to the extent that it could no longer be sold, which resulted in HEB rejecting the delivery.⁸ According to High Road, the shipment became damaged as a result of a malfunctioning refrigerator unit on Davis Xpress's truck.⁹

High Road initiated this action on April 26, 2019.¹⁰ On August 23, 2019, High Road filed the operative Third Amended Complaint, asserting four causes of action against the named and unnamed Defendants.¹¹ In Count I, High Road asserts a claim under the Carmack Amendment of the Interstate Commerce Act ("ICA") against USCS, Nolan, and Davis Xpress.¹² In Count II, High Road asserts a negligence claim against USCS and Nolan.¹³ In Count III, High Road asserts a breach of contract claim against USCS and Nolan.¹⁴ In Count IV, High Road assertsa claim for insurance liability against National Indemnity Company Inc. ("National Indemnity"), OneBeacon, and ten unnamed "Doe" insurance companies.¹⁵

On September 20, 2019, Nolan filed its motion to dismiss all claims asserted against it (Counts I-III).¹⁶ On September 23, 2019, OneBeacon filed its motion to dismiss the only claim asserted against it (Count IV).¹⁷ High Road filed its response in opposition to Nolan's motion on October 4, 2019, and its response to OneBeacon's motion on October 7, 2019.¹⁸ OneBeacon filed its reply on October 21, 2019; Nolan filed its reply on October 25, 2019.¹⁹ On October 24, 2019, High Road filed a motion for leave to file a surreply to OneBeacon's motion to dismiss.²⁰

Davis Xpress has not appeared in this action. On October 15, 2019, the Clerk entered a default against Davis Xpress.²¹ On October 30, 2019, High Road filedstipulations to the dismissal, with prejudice, of USCS and National Indemnity, which the Clerk duly entered.²²

II. LEGAL STANDARD

Federal Rule of Civil Procedure 8(a)(2) requires a pleading to contain a "short and plain statement of the claim showing that the pleader is entitled to relief." While this standard does not require "detailed factual allegations," the Supreme Court has held that "labels and conclusions" or "a formulaic recitation of the elements of a cause of action will not do." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).

To withstand a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Am. Dental Ass'n v. Cigna Corp., 605 F.3d 1283, 1289 (11th Cir. 2010) (quoting Twombly, 550 U.S. at 570). A complaint is plausible on its face when a plaintiff pleads sufficient factual content for the court to draw the reasonable inference that the defendant is liable for the conduct alleged. Am. Dental Ass'n, 605 F.3d at 1289 (citing Twombly, 550 U.S. at 556). "The plausibility standard is notakin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 556 U.S. at 678. A complaint must also present sufficient facts to "'raise a reasonable expectation that discovery will reveal evidence' of the claim." Am. Dental Ass'n, 605 F.3d at 1289 (quoting Twombly, 550 U.S. at 556).

At the motion to dismiss stage, "all well-pleaded facts are accepted as true, and the reasonable inferences therefrom are construed in the light most favorable to the plaintiff." FindWhat Inv'r Grp. v. FindWhat.com, 658 F.3d 1282, 1296 (11th Cir. 2011) (quoting Garfield v. NDC Health Corp., 466 F.3d 1255, 1261 (11th Cir. 2006)). This principle, however, does not apply to legal conclusions. Iqbal, 556 U.S. at 678.

III. NOLAN'S MOTION TO DISMISS

Nolan seeks the dismissal of all claims asserted against it: Counts I-III of the Third Amended Complaint. The Court analyzes each Count in turn.

a. High Road's Claim Under the Carmack Amendment (Count I)

Nolan argues that it cannot, as a matter of law, be liable to High Road under the Carmack Amendment for damages related to the April 2018 shipment because it acted as a broker, rather than a motor carrier, with respect to that shipment.

i. Background on the Carmack Amendment

"The Carmack Amendment to the Interstate Commerce Act makes common carriers liable for actual loss of or damage to shipments in interstate commerce." A.I.G. Uruguay Compania de Seguros, S.A. v. AAA Cooper Transp., 334 F.3d 997, 1003 (11th Cir. 2003) (citing 49 U.S.C. § 14706(a)(1)). Congress enacted the Carmack Amendment to "achieve uniformity in rules governing interstate shipments, including the rules governing injury or loss to property shipped." UPS Supply Chain Sols., Inc. v. Megatrux Transp., Inc., 750 F.3d 1282, 1285 (11th Cir. 2014) (citing Adams Express Co. v. Croninger, 226 U.S. 491, 506 (1913)). To ensure such uniformity, the Carmack Amendment "preempts state-law claims against interstate motor carriers who provide motor vehicle transportation or service subject to jurisdiction under the Interstate Commerce Act and replaces those state-law claims with its strict-liability provision." Essex Ins. Co. v. Barrett Moving & Storage, Inc., 885 F.3d 1292, 1300 (11th Cir. 2018) (citing 49 U.S.C. § 14706(a)(1)) (internal punctuation omitted). Congress explicitly provided a private right of action against the "carrier" alleged to have caused loss or damage to a shipment. 49 U.S.C. § 14706(a)(1) & (d)(2). To state a claim under the Carmack Amendment, a plaintiff must establish that "(1) the goods were delivered to the carrier in good condition, (2) the goods arrived at the destination in damaged condition, and (3) aspecified amount of damages resulted." A.I.G. Uruguay, 334 F.3d at 1003 (citing Fine Foliage of Fla., Inc. v. Bowman Transp., Inc., 901 F.2d 1034, 1037 (11th Cir. 1990)).

ii. Application of the Carmack Amendment

As a threshold matter, Nolan is correct that the Carmack Amendment applies only to motor carriers, not brokers. In Essex Insurance Company v. Barrett Moving & Storage, Inc., the Eleventh Circuit made clear that if the defendant "was a 'motor carrier,' the Carmack Amendment applies, state-law claims are preempted, and [defendant] is strictly liable for the damage sustained during transportation," but if defendant "was a 'broker,' the Carmack Amendment does not apply." 885 F.3d at 1299. See also id. at 1300 (stating Carmack Amendment "does not apply to brokers, which are purposefully distinguished from motor carriers"); Factory Mut. Ins. Co. v. One Source Logistics, LLC, Civ. A. No. 16-6385, 2017 WL 2608867, at *7 (C.D. Cal. May 5, 2017) (same); Sompo Japan Ins. Co. of Am. v. B&H Freight, Inc., 177 F. Supp. 3d 1084, 1087 (N.D. Ill. 2016) (holding "brokers are not liable under the Carmack Amendment"); Total Quality Logistics, LLC v. O'Malley, No. 1:16-cv-636, 2016 WL 4051880, at *2 (S.D. Ohio July 28, 2016 ) ("The liability provisions within the Carmack Amendment do not apply to brokers and therefore, a broker is not a proper party in a Carmack Amendment cause of action."); Olympus DairyUSA Corp. v. Pavil Assocs., Inc., No. 12-cv-1897 RML, 2013 WL 6493482, at *2 (E.D.N.Y. Dec. 6, 2013) ("The Carmack amendment imposes liability on carriers and freight forwarders but not on brokers, as those terms are defined by the statute, and thus it is critical to determine whether a defendant was acting as a carrier or freight forwarder, or as a broker, in relation to the particular shipment that was damaged.") (internal punctuation omitted). Thus, the dispositive question here is whether Nolan acted as a "motor carrier" or "broker" with respect to the April 2018 shipment.

The Act defines a "carrier" as a "motor carrier, a water carrier, and a freight forwarder." 49 U.S.C. § 13102(3). A "motor carrier," in turn, is defined as "a person providing motor vehicle transportation for compensation." 49 U.S.C. § 13102(14). Conversely, a "broker" is defined as:

[A] person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.

49 U.S.C. § 13102(2).

In Essex, the Eleventh Circuit stated the "operative textual distinction...