In: Re: Apex Humboldt Express v. The Wise Co.
| Decision Date | 03 May 1999 |
| Docket Number | No. 98-2204,98-2204 |
| Citation | 190 F.3d 624 |
| Parties | (4th Cir. 1999) In Re: APEX EXPRESS CORPORATION; HUMBOLDT EXPRESS, INCORPORATED, Debtors. HUMBOLDT EXPRESS, INCORPORATED, Plaintiff-Appellee, v. THE WISE COMPANY, INCORPORATED, Defendant-Appellant. Argued: |
| Court | U.S. Court of Appeals — Fourth Circuit |
Appeal from the United States District Court for the Western District of North Carolina, at Charlotte. Robert D. Potter, Senior District Judge.
COUNSEL ARGUED: Raymond Andrew Selvaggio, Sr., AUGELLO, PEZOLD & HIRSCHMANN, P.C., Huntington, New York, for Appellant. Joseph L. Steinfeld, Jr., A.S.K. FINANCIAL, Washington, D.C., for Appellee. ON BRIEF: George Carl Pezold, AUGELLO, PEZOLD & HIRSCHMANN, P.C., Huntington New York; Howard M. Widis, Charlotte, North Carolina, for Appellant. John T. Siegler, Joseph A. Hess, A.S.K. FINANCIAL, Washington, D.C.; A.S.K. FINANCIAL, Eagan, Minnesota, for Appellee.
Before MURNAGHAN, LUTTIG, and KING, Circuit Judges.
Affirmed in part, reversed in part, and remanded by published opinion. Judge Murnaghan wrote the opinion, in which Judge Luttig and Judge King joined.
Plaintiff Humboldt Express, Inc. ("Humboldt"), a freight trucking corporation in bankruptcy, seeks to recover amounts allegedly owed by Defendant The Wise Co., Inc. ("Wise"), as penalties for late payment of freight charges. This case is one of hundreds of similar suits brought by the bankruptcy estate. After Humboldt went bankrupt, it paid an outside firm to "mine" its computer billing records to find long-settled accounts for which Humboldt could technically invoke the late payment penalty provisions of its tariffs.
The bankruptcy court granted summary judgment in favor of Humboldt; the district court affirmed. Both of these courts found that Humboldt had made a prima facie showing that Wise owed the late payment penalties and that Wise had not presented any evidence creating a genuine issue of material fact. Wise now appeals, claiming, inter alia, that the district court used the wrong standard of review; that a genuine issue of material fact existed; that the late payment penalties are unreasonable; that Humboldt's claim is subject to various equitable defenses; that the bankruptcy court should have referred various issues to the Surface Transportation Board ("STB"); and that Wise enjoys various statutory defenses. We affirm in part, reverse in part, and remand for proceedings consistent with this disposition.
Humboldt was a trucking company which held dual authority from the Interstate Commerce Commission ("ICC") 1 to operate as a common and contract carrier. Wise manufactures seats for vehicles such as trucks, tractors, boats and forklifts. From 1985 through the end of 1995, Wise used the services of Humboldt to transport its products. During its relationship with Humboldt, Wise asserts that it tendered approximately 15 to 24 shipments per month, or about 240 per year.
The rates at which Humboldt transported this freight were expressed in terms of discounts taken off of what are commonly called "class" or "bureau" rates. These"class" rates are collectively-made rates utilized by trucking companies as a benchmark. Wise asserts, however, that full class rates are seldom charged to a regular customer. Instead, each trucking company establishes discounted rates, which are the rates that are set to meet the prevailing market rate offered by competitors. These assertions are supported by the record, as Humboldt generally charged Wise a rate which was enumerated as a discount off of the class rate. During the period at issue Wise was initially receiving a 50 percent discount off the class rates. In early 1995, Wise's discount level was increased to 55 percent.
Humboldt's governing tariff provided that if a customer failed to pay its freight charges within thirty days, the customer would be penalized by losing its discount:
PENALTY FOR NONPAYMENT OR LATE PAYMENT
1. Failure to make payment of freight charges to[Humboldt] for service performed as a common carrier within thirty (30) calendar days of presentation of the Freight Bill will result in the forfeiture of all discounts, allowances, commodity rates, brokerage agreements, incentives or any other reductions to which the debtor may otherwise be entitled.
(J.A. at 67.) The rule goes on to provide that if no discounts are applicable, Humboldt will assess a thirty percent (30%) late charge subject to a $25.00 minimum. (Collectively, the loss of discount provision and the late payment assessment will be referred to as the "late payment penalties.")
On February 7, 1996, Humboldt filed a voluntary petition for liquidation under Chapter 11 in the U.S. Bankruptcy Court for the Western District of North Carolina. At some point, Humboldt contracted with Trans Allied Audit Company ("Trans Allied") to collect its so-called "accounts receivable." Trans Allied specializes in auditing freight bills of bankrupt or otherwise defunct trucking companies. Trans Allied has audited the books of about 100 bankrupt or otherwise defunct carriers. Wise asserts the following about Trans Allied's practices:
Trans Allied reviews the carrier's past billing practices looking for errors to support undercharge claims and to "create" so-called "receivables". In other words, Trans Allied scours the books and records of a defunct carrier . . . looking for errors or technicalities in the trucking company's tariffs that can be used to seek additional charges on invoices that have long since been paid by the trucking company's former customers. Then, Trans Allied issues a bill to the former customers of the trucking company indicating that at the time of shipment ([often] some two or three years ago), the trucking company failed to either charge or collect the correct amount. This type of bill is typically referred to as a bill for "undercharges".2
(Appellant's Br. at 9.) The facts seem to bear out Wise's description of Trans Allied's practices. The case at bar is only one of hundreds of cases brought by Humboldt against its former customers in the wake of Trans Allied's audit of its accounts. Trans Allied apparently found about $15 million in potentially collectible late payment penalties and other amounts due. After Trans Allied uncovered these amounts, Humboldt sent out dunning notices to the customers who allegedly owed for past services. Fourteen of the fifteen late payment penalties Humboldt attributes to Wise were well over one year old when Humboldt began this post-bankruptcy dunning campaign in the summer of 1996. For most of the bills sent to Wise, Wise submitted evidence indicating that this campaign was the first attempt by Humboldt to impose the late charges. When the recipients of the dunning notices refused to pay, Humboldt began filing lawsuits in the bankruptcy court. The present case was filed November 8, 1996.
In order to be able to collect late payment penalties, Humboldt had to prove that it complied with the credit regulations at 49 C.F.R. part 1320.2(g) (1996).3 See section III, infra. To establish compliance, Humboldt needed to show: (1) that Humboldt warned shippers of its late payment terms when it sent out the original freight bills; (2) the date on which original freight bills were mailed by Humboldt; (3) that payment was not received within thirty days of presentation of the original bill; and (4) that Humboldt mailed out a "Past Due" bill within 90 days after the expiration of its credit period, (5) which imposed the late payment penalty.
The first element -whether Humboldt's freight bills warned shippers of late payment penalties -was undisputed. Wise admits that Humboldt's freight bills contained a warning on the back which called for the possibility of a penalty for late payments.
To satisfy the remaining four elements of its prima facie case of compliance, Humboldt relied solely on information gleaned from Trans Allied's post hoc reconstruction of its computer billing records. It is not clear whether Humboldt maintained contemporaneous hardcopy records and, if so, what happened to all of such records. Trans Allied hired James Edward Cook in May 1996 to explore Humboldt's computer records to find the date on which original freight bills were allegedly generated by Humboldt, the date on which Humboldt allegedly received payment, and the date on which the Past Due bills were allegedly generated by the computer. Humboldt then generated duplicates of the Past Due freight bills which Humboldt had allegedly sent out to each of its delinquent customers. Additionally, Humboldt created a post-hoc statement of account recreating all of the necessary data mined from its computers. The statement of account pertinent to the case at bar is reprinted in part below:
To continue reading
Request your trial
-
Burns v. Dennis (In re Southeastern Materials, Inc.)
...the Supreme Court, given that the purpose of the Section was to rectify the unconstitutional jurisdiction found in Marathon. See Apex Express, 190 F.3d at 631–32 (“[A] broad reading of the literal terms of the statutory text could lead to the result that courts treat just about every disput......
-
Aes Sparrows Point Lng, LLC v. Smith, Civil Action No. RDB-06-2478.
...history only comes into play where there is an ambiguity in the statutory language," Humboldt Express, Inc. v. Wise Co. (In re: Apex Express Corp.), 190 F.3d 624, 641 (4th Cir. 1999), the history of the NGA is particularly instructive in understanding congressional intent in this case. In 1......
-
Federal Exp. Corp. v. U.S. Postal Service
...where there exist genuine issues of material fact precluding summary judgment. See, e.g., Humboldt Express v. Wise Co. (In re Apex Express Corporation), 190 F.3d 624, 639-40 (4th Cir.1999). Therefore, it logically follows that to prevail on a defense of laches does not depend upon meeting t......
-
Colin v. Marconi Commerce Sys. Employ. Retirement
...and beneficiary correspondence, can be considered evidence that no such request was made. See Fed.R.Evid. 803(7); In re Apex Express Corp., 190 F.3d 624, 635 (4th Cir.1999) (finding the absence of business records to be evidence of the non-existence of such records). Having been presented w......