Maggard Truck Line, Inc. v. Deaton, Inc.

• Citation: 573 F. Supp. 1388
• Decision Date: 21 October 1983
• Docket Number: Civ. A. No. C82-779A.
• Parties: MAGGARD TRUCK LINE, INC., Plaintiff, v. DEATON, INC. and Protective Insurance Company, Defendants.
• Court: United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Northern District of Georgia

573 F. Supp. 1388

MAGGARD TRUCK LINE, INC., Plaintiff, v. DEATON, INC. and Protective Insurance Company, Defendants.

Civ. A. No. C82-779A.

United States District Court, N.D. Georgia, Atlanta Division.

October 21, 1983.

COPYRIGHT MATERIAL OMITTED

Thomas S. Carlock and Diane Q. House, Dennis, Corry, Webb, Carlock & Williams, Atlanta, Ga., for plaintiff.

Dan B. Wingate and Ben L. Weinberg, Jr., Long, Weinberg, Ansley & Wheeler, Atlanta, Ga., for defendants.

ORDER

ROBERT H. HALL, District Judge.

This case stems from the destruction by fire of 80 bales of cotton while en route from Texas to North Carolina. The case is now before this court on plaintiff's, Maggard Truck Line, Inc. (Maggard), motion in limine and request for pretrial rulings. Jurisdiction is pursuant to 28 U.S.C. § 1332. For the reasons stated hereinafter plaintiff's motion is GRANTED in part, DENIED in part.

FACTS

On August 13, 1980, L.T. Barringer & Co. (Barringer) consigned 80 bales of cotton to Maggard. The cotton was to be shipped from Harlinger, Texas to Kannapolis, North Carolina. Maggard, acting as a broker for transportation, entered into an agreement with Deaton, Inc. (Deaton), under which Deaton would transport the cotton to North Carolina. On August 14, 1980, while in the sole possession of Deaton, the entire load of cotton was destroyed by fire. Maggard contends that Deaton received the cotton in good condition and that Deaton's negligence was the sole cause of the loss.

Barringer was initially compensated for its loss by its own insurance carrier. Barringer's insurance carrier then made a claim against Maggard and was paid by Maggard's insurance carrier. Maggard now seeks reimbursement from Deaton for the money Maggard and its insurance carrier paid Barringer.¹

Further facts will be disclosed as necessary for the discussion of this motion.

DISCUSSION

In this motion in limine and request for pretrial rulings plaintiff asks the court to rule as follows:

(1) that the defendants are precluded from tendering in evidence or from introducing or injecting by way of testimony, argument or otherwise matters relating to the insurance coverage provided to Maggard for the loss of the shipment;

(2) that the construction of the terms of the bill of lading at issue is a question of law and should be decided by the court; and

(3) that the defendants carry the burden of proof once plaintiff has established its prima facie case.

Defendants oppose each of these requests.

The plaintiff's requests will be discussed by the Court in the order listed above.

I. Evidence of Insurance

Plaintiff contends "that the fact of insurance is not an issue in a damage action such as this." (Plaintiff's Motion in Limine and Request for Pre-Trial Rulings, p. 3). It is plaintiff's belief that the evidence that the claim against plaintiff was paid by plaintiff's insurance company should be excluded because it is irrelevant and prejudicial. Defendants, on the other hand, contend that the evidence of plaintiff's insurance coverage should be allowed to be introduced because it is relevant to three issues in the case. These three issues are:

1) Defendants' contention that plaintiff or plaintiff's shipper "assumed the risk" of any loss to the cargo by purchasing its own insurance and thereby paying a lower freight rate;

2) Defendants' contention that § 2(c) of the Bill of Lading (relating to insurance coverage) applies to defendants and, therefore, precludes any liability on the part of defendants; and 3) Defendants' contention that Tex.Stat. Ann. tit. 25, art. 905 applies to this case and that this statute gives defendants the benefit of plaintiff's cargo insurance.

These three contentions will be discussed separately.

1. "Assumption of Risk"

In support of its first argument defendant Deaton asserts that the rates it charges for shipping goods reflect the understanding that the shipper's in this case, Maggard's insurance covers the goods being transported. In this regard Deaton tenders the testimony of Mr. Lloyd Wallace, Assistant Safety Director for Deaton: "It is the general policy and understanding of Deaton, and Deaton's quoted rates reflect, that the broker placing the shipment provides cargo insurance or coverage and the parties look to that coverage to cover whatever risk of loss there might be on the cargo." Defendants' theory, in essence, is that by paying a lower freight rate Maggard assumed the responsibility of insuring the shipment, "thus releasing defendants from liability." (Defendants' Response to Plaintiff's Motion, p. 3)

Maggard specifically disputes this "understanding." Maggard's President, Harry Maggard stated in his deposition that although Maggard does carry insurance on all cargo, the company has not, in the last three years, paid a rate differential to a trucker based on whether s/he provided insurance on the cargo. Plaintiff contends that it carries its own insurance so that its customers can immediately be paid for any loss without having to seek payment from the actual carrier. Plaintiff argues that the fact that it carries insurance does not mean that it intends to release the actual carrier from liability.

Any discussion of the introduction of insurance must begin with the proposition that evidence of insurance is generally inadmissible because it is so highly prejudicial. This type of evidence is especially harmful when used against a plaintiff since it suggests that s/he has been or will be compensated, and that s/he is either seeking double recovery or that the real party in interest is the subrogated insuror. However, evidence of insurance may be introduced if it relates to a real issue in the case and is not introduced merely to try to convince the jury that no "real harm" has been suffered.

The questions before the court, then, are twofold — is the "assumption of risk" argument really an issue in this case and, if so, does the evidence of insurance relate to this, or any other issue. As to the first question, this court has already held that whether there was actually such a risk-shifting agreement is a question for the jury.² Maggard Truck Line, Inc. v. Deaton, C82-779A (N.D.Ga. filed June 13, 1983).

The second question concerns the relevance of plaintiff's insurance to this riskshifting argument or to any other issue in the case. Plaintiff contends that the existence of insurance is irrelevant to the question of who caused the loss. This is true but causation is not the only issue in this case. If the jury determines that Deaton did in fact cause the loss there still remains the question of Deaton's liability. If the parties did in fact agree that Maggard would, in essence, insure Deaton, then Deaton is not liable. In this regard Deaton argues that the "mere existence of insurance on the shipment is consistent with and illustrative of Deaton's intent to place the risk of loss on an insurance carrier." (Defendants' Response to plaintiff's motion, p. 5).

This court agrees with plaintiff that the fact that plaintiff carries insurance on all loads does not automatically shift the risk of loss to the plaintiff. However, whether there was an agreement to release Deaton from liability is a question for the jury. The existence of insurance does have some relevance to the risk-shifting argument. Moreover, if the jury determines that the parties did agree to shift the risk then the existence of plaintiff's insurance and the amount plaintiff received under the policy are of central importance. For these reasons plaintiff's motion in limine to exclude any evidence of insurance is DENIED.

Because the insurance question is resolved on this ground this court need not consider defendants' other two bases for introducing the insurance.

II. The Bill of Lading

Concerning the bill of lading, there are two issues this court must resolve. Number 1, should this court construe the bill of lading or is it a subject for jury determination. Number 2, if this court should construe the bill of lading, what are the terms of that document.

1. Court Construction

Basically a bill of lading operates both as a receipt and as a contract. Louisville & Nashville R.R. Co. v. Central Iron & Coal Co., 265 U.S. 59, 44 S.Ct. 441, 68 L.Ed. 900 (1924). As a contract it is subject to the general rules of construction which govern other contracts. Texas & P.R. Co. v. Reiss, 183 U.S. 621, 22 S.Ct. 253, 46 L.Ed. 358 (1902).

Under Georgia law³ a question of contract interpretation is a question of law for the court. "The construction of a contract is a question of law for the court. Code § 20-701 now O.C.G.A. § 13-2-1." Gilreath v. Argo, 135 Ga.App. 849, 219 S.E.2d 461 (1975). Only where a contractual provision is ambiguous does the interpretation thereof become a jury question. Sim's Crane Service v. Reliance Insurance Co., 514 F.Supp. 1033 (S.D.Ga.1981). Defendants in the instant case argue that the construction of this bill of lading should be left to the jury because there is a "disagreement between the parties as to the intended effect of the contract." (Defendants' Response to Plaintiff's Motion, pp. 7-8). Defendants make this assertion because defendants contend that defendant Deaton is a party to the contract. As discussed infra, this court does not agree that defendant Deaton is a party to the bill of lading. The parties are Maggard (broker) and Barringer (owner) and there appears to be no disagreement between these two parties that would preclude construction by the court.

2. The Terms

Two provisions of the bill of lading are at issue here. The first provision, § 2(b) provides:

As a condition precedent to recovery, claims must be filed in writing with the receiving or delivering carrier, or carrier issuing this bill of lading, or carrier on whose line the loss, damage, injury or delay occurred, within nine (9) months after delivery of the property ... or, in case of failure to make delivery, then within nine (9) months after a reasonable time for

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