Mayflower Transit, Inc. v. Davenport

• Decision Date: 18 August 1999
• Docket Number: No. 71A03-9810-CV-448.,71A03-9810-CV-448.
• Parties: MAYFLOWER TRANSIT, INC., Appellant-Defendant, v. Leo Oleta DAVENPORT, Appellee-Plaintiff.
• Court: Indiana Appellate Court

714 N.E.2d 794

MAYFLOWER TRANSIT, INC., Appellant-Defendant, v. Leo Oleta DAVENPORT, Appellee-Plaintiff.

No. 71A03-9810-CV-448.

Court of Appeals of Indiana.

August 18, 1999.

Jeffrey S. Wrage, Kopka, Landau & Pinkus, Crown Point, Indiana, Attorney for Appellant.

Edward C. Hilgendorf, South Bend, Indiana, Attorney for Appellee.

OPINION

NAJAM, Judge

STATEMENT OF THE CASE

Lea Oleta Davenport filed a Statement of Claim against Mayflower Transit Co., Inc. ("Mayflower") in the Small Claims Division of St. Joseph Superior Court alleging that carrier negligence resulted in damage to her furniture. After a hearing, the trial court awarded Davenport $2,000.00 in equity for water damage to her household goods.

We affirm.

ISSUES

In this appeal from a small claims judgment, Mayflower presents three issues for our review, which we restate as:

1. Whether Davenport's state law negligence claim is preempted by the Carmack Amendment to the Interstate Commerce Act.

2. Whether Mayflower took the steps necessary to limit its liability under the Carmack Amendment.

3. Whether the trial court erred when it granted Davenport equitable relief.

FACTS AND PROCEDURAL HISTORY

In February of 1997, Davenport hired Jordan's Mishawaka Transfer, Inc., a local Mayflower agent, to transport household furniture from Elkhart, Indiana, to Pinellas Park, Florida.¹ Mayflower gave Davenport a replacement value estimate and informed her that a lower valuation rate was available. Davenport, an infrequent shipper, asked a Mayflower agent what was the usual and reasonable amount of liability limitation selected and then chose the sixty cents per pound option recommended. Davenport signed the Bill of Lading just prior to shipment on February 19, 1997.

The moving truck leaked en route, which caused water damage to Davenport's furniture, including antiques. Davenport filed a claim with Mayflower for damage to nine of fifty-four items transported. Mayflower offered Davenport $333.00 based upon the liability limitation of sixty cents per pound per article as stipulated in the Bill of Lading.

Davenport refused the offer and filed a pro se small claims action against Mayflower for "negligence of the moving company to provide a van free of leaks." Davenport requested $2,990.00 in damages. At trial, Mayflower argued that under the Carmack Amendment to the Interstate Commerce Act,² Davenport had selected liability coverage in the Bill of Lading which prohibited her from recovering damages beyond $333.00. The trial court held that Davenport was entitled to recover $2,000.00 in equity. Mayflower now appeals.

DISCUSSION AND DECISION

Standard of Review

Our standard of review is particularly deferential in small claims actions, where "the trial shall be informal, with the sole objective of dispensing speedy justice between the parties according to the rules of substantive law." Ind. Small Claims Rule 8(A); City of Dunkirk Water & Sewage Dep't v. Hall, 657 N.E.2d 115, 116 (Ind.1995). Nevertheless, the parties in a small claims court bear the same burdens of proof as they would in a regular civil action on the same issues. Ind. Small Claims Rule 4(A). While the method of proof may be informal, the relaxation of evidentiary rules is not the equivalent of relaxation of the burden of proof. Eichler v. Scott Pools, Inc., 513 N.E.2d 665, 667 (Ind.Ct.App.1987). It is incumbent upon the party who bears the burden of proof to demonstrate that it is entitled to the recovery sought. Id.

Mayflower appeals from a general judgment, which may be affirmed upon any legal theory supported by the evidence. Board of Comm'rs of Delaware County v. Lions Delaware County Fair, Inc., 580 N.E.2d 280, 283 (Ind.Ct.App.1991). Mayflower carried the burden of proof on its affirmative defense of limited liability under the Carmack Amendment and also appeals from a negative judgment on that issue. Thus, Mayflower must show that the judgment is contrary to law. A judgment is contrary to law when the evidence is without conflict and leads to but one conclusion which is opposite from that reached by the trial court. Id.

Issue One: Application of the Carmack Amendment

Mayflower first argues that Davenport's state law negligence claim is preempted by the Carmack Amendment and, therefore, that the trial court erred when it failed to dismiss her claim. The Carmack Amendment provides the exclusive remedy for damaged goods shipped in interstate commerce, and because Congress has preempted the field, a shipper may not resort to any right of action against a carrier existing under state law. United Parcel Serv., Inc. v. Smith, 645 N.E.2d 1, 3 (Ind.Ct.App.1994). It is clear that when damages are sought against a carrier for negligent performance of an interstate contract of carriage, the Carmack Amendment governs. Hughes v. United Van Lines, Inc., 829 F.2d 1407, 1414 (7th Cir. 1987), cert. denied, 485 U.S. 913, 108 S.Ct. 1068, 99 L.Ed.2d 248 (1988); American Synthetic Rubber Corp. v. Louisville & N.R.R. Co., 422 F.2d 462, 468 (6th Cir.1970). In this case, Davenport asserted a claim for carrier negligence, alleging damage to household furniture. It follows that Davenport's claim is preempted by the Carmack Amendment.

On appeal, Mayflower contends, in effect, that simply because its liability to Davenport is a question of federal law, Davenport failed to state a claim upon which relief can be granted. We cannot agree. The United States Supreme Court has determined that under federal law, in an action to recover from a carrier for damage to a shipment, the shipper establishes a prima facie case when he shows delivery in good condition, arrival in a damaged condition, and the amount of damages. Missouri Pacific R.R. v. Elmore & Stahl, 377 U.S. 134, 138, 84 S.Ct. 1142, 12 L.Ed.2d 194 (1964). Davenport has stated a claim for relief. While Davenport's recovery might be limited by the liability scheme of the Carmack Amendment incorporated into the shipping contract, it was Mayflower's burden to show not only that the Carmack Amendment applies but also that it had complied with the Carmack Amendment in this case.

Issue Two: Compliance with the Carmack Amendment

Mayflower contends that its liability to Davenport is limited by the Bill of Lading to sixty cents per pound per article. As a result, Mayflower argues that the trial court erred when it awarded Davenport more than $333.00 in damages. We must disagree.

The Carmack Amendment imposes liability upon carriers for the full value of goods damaged during shipment but permits carriers to limit their liability. United Parcel Serv.,645 N.E.2d at 5 (citing 49 U.S.C. § 10730, recodified at 49 U.S.C. § 14706(a)(1) and (f)).³ Limitations on liability are an exception to the general thrust of the Interstate Commerce Act, which places on the carrier absolute liability for damage to a shipper's goods. Id. The purpose of this exception is to enable interstate carriers to assess their risks and predict their potential liability for damages. Hughes, 829 F.2d at 1407; Counter v. United Van Lines, Inc., 935 F.Supp. 505, 507 (D.Vt.1996).

Because the public policy underlying the Carmack Amendment is to hold carriers liable for actual injury to goods shipped, arrangements attempting to limit liability will be strictly construed against the carrier. Anton v. Greyhound Van Lines, Inc., 591 F.2d 103, 109 (1st Cir.1978); Chandler v. Aero Mayflower Transit Co., 374 F.2d 129, 135 (4th Cir.1967). There are four steps a carrier must take to limit its liability under the Carmack Amendment: (1) maintain a tariff according to Interstate Commerce Commission guidelines; (2) obtain the shipper's agreement as to his choice of liability; (3) give the shipper a reasonable opportunity to choose between two or more levels of liability; and (4) issue a receipt or bill of lading prior to shipment. Hughes, 829 F.2d at 1415. The carrier bears the "substantial burden" of establishing that its liability is limited. Bio-Lab, Inc. v. Pony Express Courier Corp., 911 F.2d 1580, 1582 (11th Cir.1990). If the carrier fails to demonstrate that it effectively limited its liability under the Carmack Amendment, the shipper is entitled to her "actual loss or injury to property." Jones v. Yellow Freight Sys., Inc., 656 F.Supp. 550, 552 (M.D.Ga.1987).

First, Mayflower offered no evidence that it maintained a tariff in compliance with Surface Transportation Board⁴ tariff regulations for carriers of household goods.⁵ As we have noted, the carrier must maintain a valid tariff that makes a limited liability rate and an unlimited liability rate available to the shipper. Mayflower maintains that it need not prove compliance with the tariff because Davenport does not dispute its validity. While it seems unlikely that a carrier of Mayflower's prominence would not maintain such a tariff, we cannot make that assumption. The carrier, not the shipper, bears the burden of proving that it limited its liability. See Bio-Lab, 911 F.2d at 1582

. Mayflower did not show that it maintained a valid tariff and, thus, did not prove the first step necessary for a valid liability limitation.

Mayflower also failed to present evidence that Davenport had a fair opportunity to choose between a higher and lower liability level. The federal courts which have considered what constitutes a "fair opportunity" have been unable to agree on a single, bright-line test. See Hollingsworth & Vose Co. v. A-P-A Transp. Corp., 158 F.3d 617, 619 (1st Cir.1998)

(a continuing controversy has developed about how to decide whether there has been a "fair opportunity"). Generally, a "fair opportunity" requires that the shipper have both reasonable notice of the liability limitation and an opportunity to obtain information necessary to make a deliberate and well-informed choice. Hughes, 829 F.2d at 1419 (citing Anton, 591 F.2d at 108). On this issue, Mayflower relies heavily on the Bill of Lading, but we are unable to assess the sufficiency of the...