In re Carolina Motor Exp., Inc.
| Decision Date | 16 March 1988 |
| Docket Number | Adv. No. 86-0498,87-0028.,Bankruptcy No. SH-B-86-00226 |
| Court | U.S. Bankruptcy Court — Western District of North Carolina |
| Parties | In re CAROLINA MOTOR EXPRESS, INC. I.D. No. 56-1299892, Debtor. Langdon M. COOPER, Trustee in Bankruptcy for Carolina Motor Express, Inc., and Mark & Associates of North Carolina, Inc., Plaintiffs, v. CALIFORNIA CONSOLIDATED ENTERPRISES, INC., and Peter C. Reiter, Defendants. |
Joseph L. Steinfeld, Jr., Washington, D.C., Langdon M. Cooper, Gastonia, N.C., for plaintiffs.
Stuart R. Childs, Charlotte, N.C., for defendants.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
THESE MATTERS coming on to be heard and being heard before the undersigned Judge presiding over the United States Bankruptcy Court for the Western District of North Carolina, on February 16, 1988, at a bench trial on the Complaints of Langdon M. Cooper, Trustee in Bankruptcy for Carolina Motor Express, Inc., Debtor, and Mark & Associates of North Carolina, Inc., as Plaintiffs, seeking money damages against California Consolidated Enterprises, Inc. and Peter C. Reiter, Defendants, for the failure of Defendants to fully pay freight charges owed to the Debtor for services rendered by the Debtor to these Defendants; and the parties having stipulated to all facts at issue in these proceedings and having agreed to consolidate these proceedings for trial; and the Court, after reviewing the record and stipulated facts in these proceedings, and after hearing the arguments of counsel, pursuant to Bankruptcy Rule 7052 makes the following FINDINGS OF FACTS AND CONCLUSIONS OF LAW:
FINDINGS OF FACTS
These actions arose upon the filing of Complaints jointly by Langdon M. Cooper, the duly appointed qualified and currently serving Trustee of Carolina Motor Express, Inc., Debtor (hereinafter called the "Debtor") and Mark & Associates of North Carolina, Inc. (hereinafter called "Mark") against the Defendants who are former customers of the Debtor. Pursuant to an audit contract approved by this Court on July 15, 1986, Mark audited the Defendants' freight bills for the purpose of determining whether said bills were properly rated according to the common carrier tariffs that the Debtor had on file with the Interstate Commerce Commission (ICC) and which were in effect at the date of each shipment.
The Debtor operated at all times under consideration in these proceedings as a motor common carrier transporting freight in interstate commerce pursuant to authority issued by the ICC. As such, the Debtor was required to charge all of its customers pursuant to the tariffs it has on file with the ICC. The Debtor however, did not initially charge the Defendants in these proceedings its published tariff rates.
Defendant, California Consolidated Enterprises, Inc. (hereinafter called "CCE"), is a California corporation with a principal place of business at 14704 Radburn, Santa Fe Springs, California.
The Debtor's employees or agents, as an inducement to secure CCE's business, orally quoted to CCE certain freight rates and charges for the transportation of specified commodities between named origin and destination points. The quoted freight rates and charges were discussed by CCE and the Debtor's agents in various telephone conversations between them, and were set forth in a letter.
Following the completion of the negotiations between the parties, the quoted freight rates were accepted by CCE. During those negotiations the Debtor's agents or employees represented to CCE that the quoted freight rates and charges would cover the period that the shipments moved. CCE believed that the Debtor would publish the quoted freight rates in its tariffs filed with the ICC. CCE asked the Debtor for a copy of its tariff, but it was never produced.
The Debtor's original freight bills for the shipments confirmed the negotiated freight rates.
CCE was billed for the shipments at the negotiated rate, and CCE has paid to the Debtor all the original transportation charges for the shipments, with the exception of an uncontested balance owing the Debtor of $4,804.55 for previous unpaid invoices.
After CCE had made payment of the original transportation charges, the Plaintiffs billed CCE higher rates and charges for the same shipments, alleging that the higher freight rates and charges were those actually stated in the pertinent tariffs filed with the ICC during the period from December of 1983 through April of 1986, when the shipments moved. The orally quoted, agreed upon, and confirmed freight rates and charges were never published by the Debtor in tariffs filed with the ICC.
Based on the negotiated freight rates and charges agreed upon by the parties, and which were originally assessed by the Debtor, on the shipments paid in full by CCE, CCE unreasonably relied on the representation of the employees and agents of the Debtor, and utilized the Debtor, instead of other available motor carriers, and failed to make any reasonable investigation, or check with regard to the legal tariffs, all of which they were equipped by knowledge and experience so to do, in short, through blind and unreasonable faith, Defendants participated in the illegal action of the Debtor to the detriment of the then Debtor entity.
Defendant, Peter C. Reiter (hereinafter called "Reiter") is a sole proprietorship with a principal place of business at 1041 Parakeet Circle, Fountain Valley, California.
The Debtor's employees or agents, as an inducement to secure Reiter's business, orally quoted to Reiter certain freight rates and charges for the transportation of specified commodities between named origin and destination points. The quoted freight rates and charges were discussed by Reiter and the Debtor's agents in various telephone conversations between them, and were set forth in a letter. During the negotiations the Debtor's agents or employees represented to Reiter that the quoted freight rates and charges would cover the period that the shipments moved. Following the completion of the negotiations between the parties, the quoted freight rates were accepted by Reiter. Reiter believed that the Debtor would publish the quoted freight rates in its tariffs filed with the ICC. Reiter asked the Debtor for a copy of its tariff, but it was never produced, on the grounds that it was too "voluminous."
The Debtor's original freight bills for the shipments confirmed the negotiated freight rates and charges.
Reiter was originally billed for the shipments at the negotiated rate, and Reiter paid to the Debtor these original bills in full.
After Reiter had made payment of the original transportation charges, the Plaintiffs billed Reiter higher rates and charges for the same shipments, alleging that the higher freight rates and charges were those actually stated in the pertinent tariffs filed with the ICC during the period from January of 1985 through April of 1986, when the shipments moved.
The orally quoted, agreed upon, and confirmed freight rates and charges were never published by the Debtor in tariffs filed with the ICC.
Based on the negotiated freight rates and charges agreed upon by the parties, and which were originally assessed by the Debtor, on the shipments paid in full by Reiter, Reiter unreasonably relied on the representation of the employees and agents of the Debtor, and utilized the Debtor, instead of other available motor carriers, and failed to make any reasonable investigation, or check with regard to the legal tariffs, all of which they were equipped by knowledge and experience so to do, in short, through blind and unreasonable faith, Defendants participated in the illegal action of the Debtor to the detriment of the then Debtor entity.
Both defendants are ICC licensed brokers who, pursuant to 49 C.F.R. Section 1045.10, are bound by laws and ICC regulations concerning the payment of freight charges.
Pursuant to the freight bill audit contract, Mark audited all of the shipments handled by the Debtor for each of the Defendants by comparing the commodities, weights, points of origin, destination and declared value of each shipment to the applicable common carrier tariff rate which the Debtor had on file with the ICC, and which was in effect on the date of each shipment was handled for each Defendant.
The results of said audit produced balance due invoices in the amounts of $58,793.03 owed by CCE and $13,795.73 owed by Reiter.
In addition to these balance due freight bills, the audit performed by Mark also revealed that Defendant CCE had failed to pay original invoices in the amount of $24,201.90. On March 31, 1987, CCE paid the Trustee $16,277.35 and submitted a proof of claim for $3,120.00, leaving an uncontested account receivable owed the Debtor of $4,804.55.
In response to the audit findings, Defendants claim that they dealt with the Debtor as a contract carrier, and that the rates agreed upon by themselves and the Debtor were part of an oral contract. Alternatively, CCE and Reiter claim that they dealt with the Debtor as a common carrier, and relied upon the Debtor to file its negotiated rates with the ICC.
Additionally, each of the Defendants has moved the Court for referral to the ICC. The asserted purpose of the Defendants' requests for ICC referral is to obtain an advisory determination from the ICC as to whether or not the Debtor's practices were unreasonable, and whether the Trustee and Mark should be permitted to enforce the filed tariff rates. The Court previously denied CCE and Reiter's Motion for Referral to the ICC by Order entered March 25, 1987. These Defendants reasserted their Motions to Refer at trial.
The Defendants were aware at all times involved in this proceeding that the Debtor, when transporting freight as a common carrier, was required to charge for its transportation services pursuant to the tariffs it had on file with the ICC. The Defendants negotiated rates with the Debtor...
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