Oak Harbor Freight Lines, Inc. v. Sears Roebuck

• Citation: 513 F.3d 949
• Decision Date: 18 January 2008
• Docket Number: No. 06-35460.,06-35460.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Parties: OAK HARBOR FREIGHT LINES, INC., a Washington corporation, Plaintiff-Appellee, v. SEARS ROEBUCK & CO., dba Sears Contract Sales, a foreign corporation, Defendant-cross-claimant-Appellant, and National Logistics Corporation, a foreign corporation, Defendant-cross-defendant.

513 F.3d 949

OAK HARBOR FREIGHT LINES, INC., a Washington corporation, Plaintiff-Appellee, v. SEARS ROEBUCK & CO., dba Sears Contract Sales, a foreign corporation, Defendant-cross-claimant-Appellant, and National Logistics Corporation, a foreign corporation, Defendant-cross-defendant.

No. 06-35460.

United States Court of Appeals, Ninth Circuit

Argued and Submitted November 5, 2007.

Filed January 18, 2008.

Paula E. Litt and William B. Berndt, Schopf & Weiss LLP, Chicago, IL, for the defendant-appellant.

Kenneth W. Hart, Larson Hart & Shepherd PLLC, Seattle, WA, for the plaintiff-appellee.

Appeal from the United States District Court for the Western District of Washington; Thomas S. Zilly, District Judge, Presiding. D.C. No. CV-05-00284-TSZ.

Before: WILLIAM C. CANBY, JR., SUSAN P. GRABER, and RONALD M. GOULD, Circuit Judges.

GRABER, Circuit Judge:

Plaintiff Oak Harbor Freight Lines, Inc. ("Oak Harbor"), brought suit against Defendants Sears Roebuck & Co. ("Sears") and National Logistics Corporation ("NLC") to recover nearly half a million dollars for transportation of Sears' freight. NLC arranged the transportation, which Oak Harbor provided. Following cross-motions for summary judgment, the district court held NLC and Sears jointly and severally liable for the charges under Washington law. In a later order, the district court held that Oak Harbor was entitled to both prejudgment and postjudgment interest, with the rate of prejudgment interest set according to Washington law. Sears timely appealed.¹ We now affirm.

FACTUAL AND PROCEDURAL HISTORY

The district court's opinion recites the facts in detail. Oak Harbor Freight Lines, Inc. v. Sears Roebuck & Co., 420 F.Supp.2d 1138, 1140-45 (W.D.Wash.2006). Because the facts are uncontested, we rely on the district court's findings.

Oak Harbor, a Washington corporation and licensed "motor carrier" under the Federal Motor Carrier Safety Act, 49 U.S.C. § 13102(14), provides intrastate and interstate freight transportation. Sears is a New York corporation that, among other things, sells tools and appliances at wholesale and retail. NLC, an Illinois corporation, is a licensed and registered property "broker" that arranges transportation by motor carrier under the authority of the Federal Motor Carrier Safety Act. Id. § 13102(2).

NLC provided both brokerage and non-brokerage services for Sears. As a part of its brokerage services, NLC arranged for Oak Harbor to move Sears' freight. See 49 C.F.R. § 371.2(c) ("`Brokerage' or `brokerage service' is the arranging of transportation or the physical movement of a motor vehicle or of property. It can be performed on behalf of a motor carrier, consignor, or consignee."). As a part of its non-brokerage services, NLC reviewed and audited Oak Harbor's freight bills and collected funds from Sears to pay those freight bills. See id. § 371.2(d) ("Non-brokerage service' is all other service performed by a broker on behalf of a motor carrier, consignor, or consignee.").

Oak Harbor hauled Sears' freight for a number of years without the use of an intermediary. In 1989, Sears hired NLC to perform brokerage services. At first, NLC was hired only to perform brokerage services for "inbound" or "return" shipments, which involved identifying carriers to move freight from Sears' vendors to Sears' warehouses. By early 1992, Sears expanded the scope of NLC's responsibilities to include broker services for "outbound" shipments. The outbound brokerage services required NLC to identify carriers to move Sears' freight from Sears' warehouses to various freight transportation and delivery companies.

On January 8, 1992, Oak Harbor and NLC signed a National Logistics Corporation Carrier Contract ("Carrier Contract") to govern their relationship. The Carrier Contract provided, in pertinent part:

This AGREEMENT between NATIONAL LOGISTICS CORPORATION (BROKER/ SHIPPER), operating under ICC Broker No. MC205436 and Oak Harbor Freight Lines, Inc. (CARRIER), MC # 139763 engaged in the business of conducting the transportation of regulated commodities in Interstate Commerce over public highways, provides that NATIONAL LOGISTICS CORPORATION will offer a series of shipments to the CARRIER, which the CARRIER agrees to transport. . . . BROKER/SHIPPER and CARRIER agree rates governing shipments will be established to meet the schedules verbally agreed upon and verbal agreement will be reduced to writing by CARRIER submitting its invoice to BROKER/SHIPPER. SHIPPER agrees to pay CARRIER within a predetermined time from date of receipt regardless whether or not BROKER/SHIPPER has been paid for movement. . . . This AGREEMENT shall be effective on the date it is signed and will remain in full force and effect from signing date for twelve (12) months. AGREEMENT shall be automatically extended for successive twelve (12) month terms or until canceled by either party by giving written notice to the other party at least thirty (30) days prior to the date of termination.

(Emphasis added.) In accordance with the terms of the Carrier Contract, Oak Harbor and NLC negotiated the rates governing the shipments on a roughly annual basis. Other than with respect to rates, they never updated or replaced the Carrier Contract.

Bills of lading were used for all of Sears' freight carried by Oak Harbor.² For return shipments, Oak Harbor generated the bills of lading ("return bills of lading" or "Oak Harbor-generated bills of lading") using its standard, uniform straight bill of lading form. Oak Harbor designed its bills of lading to comply with industry standards. The return bills of lading designated Sears as the "consignee" and were marked "collect." In the "Bill To" section of the return bills of lading, "Third Party Billing" was written.

Sears generated the bills of lading for outbound shipments ("outbound bills of lading" or "Sears-generated bills of lading"). As with the Oak Harbor-generated bills of lading, Sears designed its outbound bills of lading to comply with industry standards. On the bottom of the outbound bills of lading the following text appeared: "This document is tendered as an individual Bill of Lading. All terms and conditions of the straight Bill of Lading and applicable tariff and classifications in effect as of the date hereon apply." The outbound bills of lading read "Freight Terms: PREPAID" and instructed the carrier to send freight bills to NLC. These bills of lading did not identify the "Shipper" or "Consignor," but they did contain entries under the categories "Ship From," "Consign to," and "Carrier." The "Ship From" category identified a Sears warehouse. The "Consign to" category identified the destination of the shipment. The "Carrier" category identified Oak Harbor.

In accordance with the terms of the bills of lading, billing and payment between the parties generally followed this pattern: (1) Oak Harbor sent NLC a billing invoice at least three days after Oak Harbor delivered the freight, and Oak Harbor expected to be paid by NLC within 30 days of the date shown on the invoice; (2) after auditing the invoices, NLC billed Sears weekly for the freight charges that had accumulated since the last billing date; (3) Sears paid NLC about five days after receiving the bill from NLC; and (4) NLC paid Oak Harbor, with the funds received from Sears, about 25 days after NLC received Oak Harbor's billing invoice.

In mid-2004, Oak Harbor learned that Sears would no longer use NLC as its broker as of January 2005. In fact, Sears terminated NLC's services earlier, on November 12, 2004. By the end of November 2004, Oak Harbor was owed more than $400,000 for shipments of Sears' freight. On December 12, 2004, NLC sent Oak Harbor a letter recommending that Oak Harbor seek payment directly from Sears. In response to inquiries by Oak Harbor concerning payment, Sears denied liability and informed Oak Harbor that NLC was responsible for the freight charges. By the time. Oak Harbor sought collection from Sears, Sears had paid $227,202.50 to NLC for freight charges invoiced by Oak Harbor.³

In early 2005, Oak Harbor sued both NLC and Sears in Washington state court for "monies due." Sears timely removed the proceeding to federal district court pursuant to 28 U.S.C. §§ 1332, 1441, and 1446.

Following cross-motions for summary judgment, the district court held "NLC and Sears jointly and severally liable to Oak Harbor for $426,417.94 in freight A charges that were incurred in connection with [the] shipments arranged by NLC." Oak Harbor, 420 F.Supp.2d at 1152. The district court also held that Sears was "entitled to recover in indemnity against NLC any portion of the $227,202.50 that Sears directly pays Oak Harbor." Id.

In reaching its holdings, the district court explained that NLC was liable to Oak Harbor under the Carrier Contract. Id. at 1146-47. The district court did not premise Sears' liability, however, on the Carrier Contract. Rather, the district court interpreted the bills of lading generated by Sears and Oak Harbor as imposing liability on Sears, which the Carrier Contract did not limit. Id. at 1147-50. In an issue of first impression within the Ninth Circuit, the district court followed the Fourth, Fifth, and Eleventh Circuits and adopted a rule that equitable estoppel does not bar Sears' liability for the $227,202.50 already paid to NLC for freight shipments. Id. at 1151.

After the district court entered judgment, Oak Harbor moved for an award of prejudgment and post-judgment interest. The district court held Sears liable for prejudgment interest at the rate set by Washington state law and' for postjudgment interest at the rate set by federal law.

Sears timely appealed.

STANDARDS OF REVIEW

We review de novo a district court's grant of summary judgment. Universal Health Servs. Inc. v. Thompson, 363 F.3d 1013, 1019 (9th Cir.2004). Viewing the evidence in the light most favorable to the nonmoving party, we must determine whether there are genuine...