Logistics v. Express

• Decision Date: 21 October 2011
• Docket Number: No. 10–1907.,10–1907.
• Citation: 659 F.3d 331
• Parties: 5K LOGISTICS, INCORPORATED, Defendant/Third Party Plaintiff–Appellee,andDominion Resources Services, Incorporated, Plaintiff,v.DAILY EXPRESS, INCORPORATED, Third Party Defendant–Appellant,andThermal Engineering International USA, Incorporated, Third Party Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

659 F.3d 331

5K LOGISTICS, INCORPORATED, Defendant/Third Party Plaintiff–Appellee,andDominion Resources Services, Incorporated, Plaintiff,

v.DAILY EXPRESS, INCORPORATED, Third Party Defendant–Appellant,andThermal Engineering International USA, Incorporated, Third Party Defendant.

No. 10–1907.

United States Court of Appeals, Fourth Circuit.

Argued: Sept. 20, 2011.Decided: Oct. 21, 2011.

ARGUED: Robert G. Rothstein, Franklin & Prokopik PC, Herndon, Virginia, for Appellant. Mark T. Coberly, Vandeventer Black, LLP, Norfolk, Virginia, for Appellee. ON BRIEF: Anne G. Bibeau, Vandeventer Black, LLP, Norfolk, Virginia, for Appellee.Before WILKINSON, NIEMEYER, and FLOYD, Circuit Judges.Reversed and remanded by published opinion. Judge WILKINSON wrote the opinion, in which Judge NIEMEYER and Judge FLOYD joined.

OPINION

WILKINSON, Circuit Judge:

The Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706, sets up a framework for the timely filing of claims against carriers for damaged cargo. In this case, it is undisputed that neither the shipper nor the shipping broker filed either a claim or a lawsuit within the prescribed time limitations. Were we to create some exception to the statutorily authorized, contractually mandated requirements of prompt filing, we would blow a hole in the balance struck by the Carmack Amendment and undermine Congress's intent to protect carriers against stale claims. We therefore reverse the judgment of the district court in favor of the shipping broker, and remand with instructions to dismiss the lawsuit.

I.

The facts as stipulated by the parties in the proceedings below and as found by the district court are not disputed on appeal. Dominion Resources Services, Inc. (“DRS”) contracted with 5K Logistics, Inc. (“5K”) for the transportation of two “tube bundles” from a warehouse in Chambersburg, Pennsylvania, to DRS's facility in Lusby, Maryland. 5K is not a carrier of goods; it is a broker of transportation services that subcontracted with Daily Express, Inc. (“DXI”) for the actual carriage of the cargo.

On August 24, 2006, the two tube bundles were loaded onto two DXI trucks at the Chambersburg warehouse, and two separate short-form bills of lading were issued. The relevant bill of lading identified DXI as the carrier and “Dominion Power” as the shipper, and further declared DXI's receipt of the cargo from “Dominion Power c/o 5K Logistics.” The bill of lading also incorporated the terms and conditions set forth in DXI's published tariff. That tariff contained requirements that any claim for damage to cargo be filed within nine months of delivery and that any lawsuit for cargo damage be filed within two years of the written denial of a claim.

While en route, one of the tube bundles fell onto I–495 in Maryland and was damaged. As a result, DRS refused to accept delivery of the bundle in Lusby.

On November 14, 2006, 5K sent a letter to DXI notifying DXI that DRS was claiming $192,072.50 from 5K for damage to the tube bundle, and that, in the event 5K was required to compensate DRS, 5K would seek to recover from DXI. DXI responded on November 27, 2006, indicating that it had completed its investigation and that any claims “will be denied.”

On May 14, 2009, approximately two years and nine months after the accident, DRS commenced this action against 5K in the Eastern District of Virginia. Four months later, on September 11, 2009, three years and one month after the accident, 5K filed its Answer and its Third–Party Complaint against DXI.

On February 26, 2010, the district court granted DRS's motion for summary judgment, finding that 5K was liable for breaching the Master Service Agreement between 5K and DRS, awarding damages of $192,072.50 and fees and costs of $135,973.53. In the third-party action between 5K and DXI, the district court granted summary judgment to DXI on 5K's breach of contract claim and also held that 5K's state law indemnity and contribution claims were preempted by the federal Carmack Amendment. A bench trial was held on 5K's remaining Carmack Amendment claim for indemnity and contribution, resulting in a judgment against DXI on July 8, 2010.

In its opinion, Dominion Res. Servs., Inc. v. 5K Logistics, Inc., 2010 WL 2721355 (E.D.Va. July 8, 2010), the district court concluded that 5K had never filed a formal claim against DXI as required by the Carmack Amendment, and that the limitations period for bringing a lawsuit against DXI therefore never began to toll. Id. at *2–3. The district court further concluded that 5K could not have filed a claim for indemnity and contribution against DXI until 5K's liability to DRS had been fixed, so the limitations periods did not apply to that claim. Id. Having concluded that 5K's claims were not time-barred, the district court then determined that 5K was entitled to recovery from DXI, both of the $192,072.50 that 5K paid to DRS and of the costs incurred by 5K in defending the suit brought by DRS. Id. at *4. Those costs were fixed at $135,973.53 in the district court's order of September 7, 2010. This appeal followed.

II.

Initially enacted in 1906 as an amendment to the Interstate Commerce Act of 1887, the Carmack Amendment creates “a national scheme of carrier liability for goods damaged or lost during interstate shipment under a valid bill of lading.” Shao v. Link Cargo (Taiwan) Ltd., 986 F.2d 700, 704 (4th Cir.1993). It is a comprehensive exercise of Congress's power to regulate interstate commerce. As a result it has long been interpreted to preempt state liability rules pertaining to cargo carriage, either under statute or common law: “Almost every detail of the subject is covered so completely [by the Carmack Amendment] that there can be no rational doubt but that Congress intended to take possession of the subject and supersede all state regulation with reference to it.” Adams Express Co. v. Croninger, 226 U.S. 491, 505–06, 33 S.Ct. 148, 57 L.Ed. 314 (1913).

In creating this uniform nationwide scheme of statutory remedies, Congress legislated with remarkable care, striking a precise balance between the rights of shippers and carriers. For example, although the Carmack Amendment relieves carriers of the burden of multiple state regulations of their business, it also facilitates claims by shippers, requiring them to make only a prima facie case in order to shift the burden to the carrier to prove that it was not negligent and that the damage was caused by an event excepted by the common law. See Mo. Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137–38, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964).

Similarly, the statute allows shippers to bring suit against either the initial carrier (the issuer of the bill of lading) or the delivering carrier, removing “the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment.” Reider v. Thompson, 339 U.S. 113, 119, 70 S.Ct. 499, 94 L.Ed. 698 (1950). But Congress balanced that provision by allowing “[t]he carrier issuing the receipt or bill of lading ... or delivering the property ... to recover from the carrier over whose line or route the loss or injury occurred the amount required to be paid to the owners of the property.” 49 U.S.C. § 14706(b).

Congress narrowly limited application of this section, entitled “Apportionment,” to “carrier[s],” a term expressly defined in the statute. See 49 U.S.C. § 13102(3). Moreover, there is no overlap in the statute between “carriers” and “brokers,” who are defined as “person[s], other than a motor carrier or an employee or agent of a motor carrier,” 49 U.S.C. § 13102(2) (emphasis added). In short, because they did not share in the “something close to strict liability,” Mitsui Sumitomo Ins. Co., Ltd. v. Evergreen Marine Corp., 621 F.3d 215, 217 (2d Cir.2010) (quoting Rankin v. Allstate Ins. Co., 336 F.3d 8, 9 (1st Cir.2003)), that applies to “carriers” under the first section of the statute, 49 U.S.C. § 14706(a), Congress explicitly chose not to extend the apportionment remedy to “brokers” under the second section, 49 U.S.C. § 14706(b).

The Carmack Amendment also seeks to preserve this equilibrium in the contractual terms to which carriers and shippers may agree. Although a carrier's substantive liability “may not be limited by contract,” Hubbard v. Allied Van Lines, Inc., 540 F.2d 1224, 1228 (4th Cir.1976), carriers are permitted to impose contractual time limitations for bringing suit, subject only to the statutory minimum of “9 months for filing a claim” and “2 years for bringing a civil action,” 49 U.S.C. § 14706(e)(1). This serves to “insure that the carrier may promptly investigate claims,” S & H Hardware & Supply Co. v. Yellow Transp. Inc., 432 F.3d 550, 554 (3d Cir.2005), while still preserving an adequate minimum time for shippers to seek recompense for damaged cargo. Such restrictions not only function as “an industry-wide, indisputably legal, and federally sanctioned statute of limitations,” Swift Textiles, Inc. v. Watkins Motor Lines, Inc., 799 F.2d 697, 704 (11th Cir.1986), but also serve as essential features of the contractual arrangement for the carriage of goods: “The Carmack Amendment thus contemplates that limitation periods are terms to be bargained over between shipper and carrier.” Shao, 986 F.2d at 707–08.

III.

It is undisputed that DXI's tariff contained the statutorily permissible, contractually negotiable minimum time limitation for a cargo damage claim: nine months to file a claim and two years from denial of that claim to bring suit. Nor do the parties challenge the district court's determination that no claim was filed, much less one within the specified window. DRS certainly did not file one. And 5K does not contest the district court's finding that its letter of November 14, 2006, was “merely a notice of its intention to file a claim” rather than the required claim itself. Dominion Res. Servs., 2010 WL 2721355, at *3. The district...