IAG Engine Ctr. Corp. v. Cagney Global Logistics Inc.

• Decision Date: 17 November 2020
• Docket Number: CASE NO. 17-CIV-23271-RAR
• Citation: 501 F.Supp.3d 1287
• Parties: IAG ENGINE CENTER CORP., et al., Plaintiffs, v. CAGNEY GLOBAL LOGISTICS INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Florida

501 F.Supp.3d 1287

IAG ENGINE CENTER CORP., et al., Plaintiffs,

v.CAGNEY GLOBAL LOGISTICS INC., et al., Defendants.

CASE NO. 17-CIV-23271-RAR

United States District Court, S.D. Florida.

Signed November 17, 2020

ORDER AFFIRMING AND ADOPTING IN PART REPORT AND RECOMMENDATION, GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

RODOLFO A. RUIZ II, UNITED STATES DISTRICT JUDGE

THIS CAUSE comes before the Court upon United States Magistrate Judge Jacqueline Becerra's Report and Recommendation [ECF No. 110] ("Report"), filed on September 4, 2020. The Report recommends that the Court grant in part and deny in part Defendant Cagney Global Logistics Inc.’s Motion to Dismiss Plaintiff's Amended Complaint with Prejudice [ECF No. 89] ("Motion"). Each party filed objections to the Report [ECF Nos. 111, 112] and responses to their counterpart's objections [ECF Nos. 113, 114]. Having reviewed the Report, objections, and responses, conducted a de novo review of the record, and being otherwise fully advised in the premises, it is

ORDERED AND ADJUDGED as follows: 1) the Report [ECF No. 110] is hereby AFFIRMED AND ADOPTED IN PART as supplemented herein; and 2) Defendant's Motion to Dismiss Plaintiff's Amended Complaint with Prejudice [ECF No. 89] is GRANTED IN PART AND DENIED IN PART as set forth herein.

BACKGROUND

While the facts of this case are rather straightforward, the procedural history is anything but. The Court will thus recount for posterity the procedural background on which Defendant's Motion turns. This action involves claims by Plaintiffs IAG Engine Center Corp. ("IAG") and certain subrogating underwriters subscribing to a policy of insurance (UM No. B0572NA14L060) effected through Tyser North America ("Underwriters") against Defendants Cagney Global Logistics, Inc. ("Cagney") and Nolan Transportation Group ("Nolan" and together with Cagney, "Defendants") regarding damages to a GE CF6-80C2 Jet Aircraft Engine that occurred during interstate transportation on July 20, 2015. See First Am. Compl. [ECF No. 84].

On October 27, 2017, Cagney Global filed a Notice of Bankruptcy and Automatic Stay [ECF No. 32], informing the Court that it had filed a bankruptcy petition in the United States Bankruptcy Court for the Northern District of Texas ("Bankruptcy Court"), under Case No. 17-33935-HDH-7. After determining that the entire action should be stayed, the Court entered an order staying all proceedings in this matter. [ECF No. 33].

On February 27, 2018, IAG filed a proof of claim in the Cagney bankruptcy case for $4,359,343.91 for the damages to the engine. On March 1, 2019, IAG filed an Amended Motion to Partially Lift the Automatic Bankruptcy Stay and to Re-open the Case [ECF No. 36] after IAG and Cagney Global came to an agreement with the bankruptcy trustee ("Trustee") to allow IAG to pursue its claim against Cagney. The order entered by the Bankruptcy Court stated that "the automatic stay is modified to allow IAG to proceed in the Florida Litigation to liquidate its claim therein and proceed to collect against insurance proceeds only." [ECF No. 36-2] ("Agreed Order") at 2. On March 1, 2019, the Court granted the motion to lift the stay and reopened proceedings in this case. [ECF No. 37].

Significantly, in 2015, IAG executed a settlement agreement with its insurers—Underwriters—under which IAG assigned to Underwriters at least some of its rights to bring claims regarding the incident at issue. [ECF 89-1]. In pertinent part, that agreement states:

SUBROGATION RECEIPT

By way of payment of the Final Net Amount of US $1,990,000.00 (ONE MILLION NINE HUNDRED NINETY THOUSAND UNITED STATES DOLLARS AND ZERO CENTS) and to the extent thereof, Insurers are subrogated to all rights of IAG ENGINE CENTER CORP. in respect of the damage to the Aircraft in the Incident and are entitled to use the name of IAG ENGINE CENTER CORP. and to make any claims and bring any actions of whatsoever nature and however arising out of the Incident against any person including any corporation, body of persons unincorporated, or Government agency or otherwise who shall be or may be liable for the Incident and IAG ENGINE CENTER CORP. hereby warrants that no settlement has been made with any such person relating to the damage in the Incident. If, and to the extent that, the warranty contained in this paragraph is breached, Insurers will be entitled to recover losses they may have otherwise recovered from third parties from the party breaching said warranty.

Id. at ¶ 7. There is no indication in the record that IAG advised the Bankruptcy Court of any assignment of its rights, nor did Underwriters submit a proof of claim in Cagney's bankruptcy. Cagney represented to the Court that it learned for the first time of such an assignment of rights through IAG's Rule 26 disclosures in this case. Mot. at 3.

On December 11, 2019, IAG filed a Notice of Ratification [ECF No. 71] ("Notice"), providing notice to Underwriters and representing, inter alia , that this action "has since its inception, been brought on behalf of IAG[ ] in its individual capacity and the [Underwriters], through IAG[ ]." Id. at 3. Shortly thereafter, on January 21, 2020, Cagney filed a Motion to Strike IAG's Notice of Ratification and Dismiss Plaintiff's Complaint [ECF No. 75], arguing that IAG did not have standing to pursue this action on behalf of Underwriters nor was it a proper party under Rule 17 of the Federal Rules of Civil Procedure. On January 21, 2020, IAG filed an Amended Motion for Leave to File a First Amended Complaint [ECF No. 77], wherein it sought to join the third-party Defendant Nolan and join Underwriters as a plaintiff. IAG also filed a Supplemental Notice of Ratification of Plaintiff's Standing by Purported Real Party in Interest [ECF No. 78], reasserting its standing to bring an action on behalf of Underwriters, ratifying IAG's capacity to bring this action in its name, nunc pro tunc to the date of the case's filing, and seeking to establish IAG as the real party in interest in this matter. Id. at 3-4.

To reboot this litigation and gain a clearer understanding of each party's claims, the Court heard argument on the outstanding motions on January 23, 2020. Tr. of Hr'g Held 1/23/20 [ECF No. 85] ("Tr.").

The Court then issued an Omnibus Order [ECF No. 81], which, inter alia , granted IAG's Amended Motion for Leave to File an Amended Complaint, finding that the amended complaint adding Underwriters as a plaintiff would relate back to the original Complaint. Id. at 2. The Omnibus Order also instructed IAG that the new pleading must ensure the claims clearly delineate which party is seeking what amount in damages. Id. at 3. Finally, and most importantly for purposes of the instant decision, the Omnibus Order made clear that "any Defendant may move to dismiss the Amended Complaint—or any claim therein—if it fail[ed] to comply with relevant pleading standards." Id.

IAG and Underwriters filed their First Amended Complaint on February 7, 2020, which avers that IAG is pursuing those damages above the $1,990,000.00 that it already received from Underwriters, and Underwriters are pursuing the $1,990,000.00 that it paid on the claim. [ECF No. 84]. The First Amended Complaint alleges five causes of action: three against Defendant Cagney—which are the subject of this opinion—and two against Defendant Nolan. First, Plaintiffs allege that Cagney is strictly liable to IAG under the Carmack Amendment for the amount of its losses over and above the amount paid to it by Underwriters; and strictly liable to Underwriters for the amount they paid to IAG (Count I). Id. ¶¶ 34–35. Second, Plaintiffs allege Cagney is liable for damages based upon Cagney's actions engaging in an inherently dangerous activity (Count II). Id. ¶ 38. And third, Plaintiffs allege Cagney was negligent through its employees and agents: Nolan, AJS Transport, and the driver of the truck on which the engine was loaded (Count III). Id. ¶ 50.

On March 5, 2020, Cagney filed its Motion to Dismiss Plaintiffs’ First Amended Complaint [ECF No. 89], which argues: 1) Plaintiffs’ First Amended Complaint is void ab initio under applicable case law in the Eleventh Circuit because the filing of the First Amended Complaint naming Underwriters as an additional plaintiff violates the Bankruptcy Court's automatic stay; 2) Plaintiffs’ state law claims must be dismissed because they are preempted by the Carmack Amendment; 3) the First Amended Complaint does not relate back to the original pleadings because of the addition of Underwriters as a plaintiff, and the addition of Count II as a new claim; and 4) IAG does not have standing to bring the action because IAG subrogated and assigned its claims to Underwriters.

Plaintiffs filed their Response in Opposition to Cagney's Global Motion to Dismiss the [First] Amended Complaint on April 2, 2020 [ECF No. 94] ("Response" or "Resp."), and Cagney filed its Reply to Plaintiff's Response on April 9, 2020 [ECF No. 96] ("Reply"). Plaintiffs then filed a Sur-reply on April 17, 2020. [ECF No. 100].

On April 23, 2020, the Court referred Defendant's Motion to Magistrate Judge Becerra. [ECF No. 101]. On September 1, 2020, Magistrate Judge Becerra issued her Report, in which she concluded: 1) the First Amended Complaint does not violate the bankruptcy court's automatic stay; 2) Plaintiffs’ state law claims are preempted by the Carmack Amendment; 3) IAG has standing because it is a real party in interest; and 4) Underwriters’ claims are not time-barred because they relate back to the original Complaint. Accordingly, the Report recommended that Counts II and III of the First Amended Complaint be dismissed because they are preempted by the Carmack Amendment, while the remaining counts should proceed. Id. at 19.

LEGAL STANDARD

The Court may accept, reject, or modify a magistrate judge's report and recommendation. 28 U.S.C. § 636(b)(1). Those portions of the Report to which objection is made are accorded de novo...