Professional Communications v. Contract Freighters, CIV. CCB-00-CV1309.

• Decision Date: 17 October 2001
• Docket Number: No. CIV. CCB-00-CV1309.,CIV. CCB-00-CV1309.
• Citation: 171 F.Supp.2d 546
• Parties: PROFESSIONAL COMMUNICATIONS, INC., et al. v. CONTRACT FREIGHTERS, INC., et al.
• Court: U.S. District Court — District of Maryland

171 F.Supp.2d 546

PROFESSIONAL COMMUNICATIONS, INC., et al. v. CONTRACT FREIGHTERS, INC., et al.

No. CIV. CCB-00-CV1309.

United States District Court, D. Maryland.

October 17, 2001.

COPYRIGHT MATERIAL OMITTED

Melvin J. Kodenski, Kodenski and Canaras, Baltimore, MD, James D. Skeen, Wright, Constable & Skeen, Baltimore, MD, for Plaintiffs.

Patrick G. Cullen, Baltimore, MD, Robert O. O'Brien, Niles, Barton and Wilmer, LLP, Baltimore, MD, John J. O'Neill, Jr., Rockville, MD, Craig F. Ballew, Tracey Dallahan McLauchlin, Ferguson, Schetelich & Heffernan, Baltimore, MD, for Defendants.

MEMORANDUM

BLAKE, District Judge.

Pending in this case alleging negligent shipping, storing and maintaining of a shipment of cell phones are four motions for summary judgment. The motions have been filed by the following parties: (1) Defendant, Covenant Transport, Inc. ("Covenant") against Plaintiffs, Professional Communications, Inc. ("PCI") and AI Marine Adjusters ("AI"); (2) Defendant and Cross-Defendant, Covenant against Defendant and Cross-Plaintiff, HBI Priority Freight ("HBI"); (3) Plaintiffs PCI and AI against Defendant, HBI; and (4) Defendant, Contract Freighters, Inc. against Plaintiffs, PCI and AI. This matter has been fully briefed and no hearing is necessary. See Local Rule 105.6. For the reasons that follow, Covenant's motions against PCI and AI will be granted, Covenant's motion against HBI will be granted, PCI's and AI's motion against HBI will be granted in part and denied in part and Contract Freighter's motion against PCI and AI will be denied.

I.

Rule 56(c) of the Federal Rules of Civil Procedure provides that:

[Summary judgment] shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

A genuine issue of material fact exists if there is sufficient evidence for a reasonable jury to return a verdict in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Shaw v. Stroud, 13 F.3d 791, 794 (4th Cir.1994). In making this determination, the evidence of the party opposing summary judgment is to be believed and all justifiable inferences drawn in her favor. Halperin v. Abacus Tech. Corp., 128 F.3d 191, 196 (4th Cir.1997) (citing Anderson, 477 U.S. at 255, 106 S.Ct. 2505). The non-moving party may not rest upon mere allegations or denials in her pleading, however, but must set forth specific facts showing that there is a genuine issue for trial. Anderson, 477 U.S. at 248, 106 S.Ct. 2505; Allstate Fin. Corp. v. Financorp, Inc., 934 F.2d 55, 58 (4th Cir.1991). The "mere existence of a scintilla of evidence" in support of the non-moving party's position is not enough to defeat a summary judgment motion. Anderson, 477 U.S. at 252, 106 S.Ct. 2505.

II.

PCI purchased 38,000 cellular phones from YAM International in Miami, Florida. PCI retained Eagle USA Airfreight ("Eagle") to ship 63 crates from Miami, Florida to Baltimore, Maryland. (Pl. Mem. at 2.) Eagle contacted Covenant to coordinate the shipment of the crates. The relationship between Eagle and Covenant was set forth by Todd E. Smith's uncontroverted affidavit. Smith is employed by Covenant as a Risk Manager. He stated that during the relevant time period, Eagle agreed to coordinate all of its shipping through Covenant. (Smith Aff. at ¶ 3.) Covenant agreed to transport some of the shipments for Eagle directly. For the other shipments, Covenant created a separate logistics company, Covenant Transport Logistics, Inc. ("CTLI"). (Id. at ¶¶ 4-5.) CTLI acted as a broker for PCI's shipment of cell phones. (Id.) CTLI arranged for Contract Freighters to be the actual carrier for the shipment of cell phones in this case.

On July 29, 1999, Henry Caldarozza and Dawn Lynch, the owners of PCI, observed 63 crates being loaded into an Eagle truck at YAM International's warehouse. Caldarozza and Lynch noted that the crates were secured and undamaged. (Pl. Mem. as to HBI at 3.) The Eagle truck transported the 63 crates to Eagle's hub where they were stored overnight and loaded the next morning on a truck operated by Contract Freighters and driven by Arnold Langley. (Id. at 4.) Only 59 of the 63 crates were loaded onto the truck. The four remaining crates, which were left behind because they had slightly different dimensions, were delivered by Eagle directly to PCI on August 4, 1999. (Id.) Langley transported the 59 crates to Glen Burnie, Maryland and arrived on July 30, 1999. (Id. at 5.) Upon receipt, HBI's warehouse manager Christof Filip inspected the shipment. Mr. Filip noted that four of the crates were damaged and that there were cell phone chargers loose and broken in the shipment. (HBI Opp. Mem. at 12; Pl.Ex. I, Pl. Mem.) From July 31, 1999 to August 4, 1999, the crates were stored at the Glen Burnie warehouse.

On August 4, 1999, HBI delivered the crates to PCI's Maryland office in two shipments. The first shipment was 19 crates on pallets. Upon receipt, Dawn Lynch noted there was "one open lid, one missing lid and broken lids on three." (HBI Delivery Sheet, Pl.Ex. K, Pl. Mem.) The second shipment was 40 crates on pallets. Upon receipt, Dawn Lynch noted there was "very noticeable damage to the pallets, also open lids on almost all pallets." (HBI Delivery Sheet, Pl.Ex. L, Pl. Mem.) Upon delivery to PCI, 5,134 cell phones were missing.

III.

Now before this Court is a motion for summary judgment filed by Defendant, Covenant, against Plaintiffs, PCI and AI. Covenant is the broker who contracted for Contract Freighters to deliver the crates from Florida to Maryland. PCI and AI allege that Covenant is liable as a broker under the Carmack Amendment.

The Carmack Amendment provides shippers with the right to sue carriers for any damage to goods during transport. 49 U.S.C. § 14706(a)(1). In general, brokers are not liable for the value of goods lost during transport unless they are negligent. Commercial Union Ins. Co. v. Forward Air, Inc., 50 F.Supp.2d 255, 257-59 (S.D.N.Y.1999); Phoenix Assurance Co. v. K-Mart Corp., 977 F.Supp. 319, 325-26 (D.N.J.1997).

Under the Carmack Amendment, a broker is "a person, other than a motor carrier or an employee or agent of a motor carrier, that ... sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing or arranging for, transportation by motor carriers for compensation." 49 U.S.C. § 13102(2). A motor carrier is "a person providing motor vehicle transportation for compensation." 49 U.S.C. § 13102(12).

The plaintiffs do not argue that Covenant is a carrier. Instead they contend that Covenant should be held liable as a broker and have made two arguments to support this point.

A.

The plaintiffs first argue that Contract Freighters, the actual carrier, was acting as Covenant's agent. The plaintiffs assert that Covenant is liable for the damages caused by its agent, Contract Freighters. They rely on FDL Foods v. Kokesch Trucking, 233 Ill.App.3d 245, 174 Ill.Dec. 474, 599 N.E.2d 20, 26-27 (1992) (applying Illinois agency law).

Maryland follows the rule of lex loci contractu, which requires that a contract be construed under the law of the state in which it was made. See Hyde v. Fidelity & Deposit Co., 23 F.Supp .2d 630, 632 (D.Md.1998). Contract Freighters is incorporated and has its principal place of business in Missouri. Covenant is incorporated and has its principal place of business in Tennessee. The subject of this contract was a shipment originating in Florida. Presumably, either Missouri, Tennessee or Florida law applies. For purposes of this motion, Missouri, Tennessee and Florida laws on agency are in substantial agreement and are in line with general agency principles.

An agency relationship has certain essential characteristics: (1) the agent is authorized to alter the legal relationship between the principal and third persons; (2) the agent is a fiduciary with respect to matters within the scope of the agency; and (3) the principal has the right to control the conduct of the agent with respect to matters within the scope of the agency. See State ex rel. Ford Motor Co. v. Westbrooke, 12 S.W.3d 386, 390 (Mo.App.2000) (citing Restatement (Second) of Agency); Ilgen v. Henderson Prop. Inc., 683 So.2d 513, 515 (Fla.Dist.Ct.App.1996) ("[T]he elements essential to the existence of an actual agency relationship are: (1) acknowledgment by the principal that the agent will act for him; (2) the agent's acceptance of the undertaking; and (3) control by the principal over the actions of the agent."); Roberts v. Iddins, 797 S.W.2d 615, 617 (Tenn.Ct.App.1990) ("An agent is a fiduciary with respect to matters within the scope of the agency and the relationship implies the principal has reposed trust and confidence in the agent, who is bound to exercise the utmost good faith, loyalty and honesty toward the principal.").

The plaintiffs have failed to demonstrate that Contract Freighters acted as an agent of Covenant. In Kokesch, the case relied upon by plaintiffs, sufficient evidence existed for a jury to conclude the truck driver who actually transported the shipment was an agent and not an independent contractor. 174 Ill.Dec. 474, 599 N.E.2d at 26-27. For example, the driver represented himself as working for the principal, Kokesch, in order to gain entry into a secured premises. Id. at 26. The bill of lading listed Kokesch as "carrier" and the driver as "agent." Id. When the truck broke down, the driver contacted Kokesch to ask for repair funds. Id. at 26-27. Additionally, Kokesch played a substantial role in accepting responsibility for the loss and salvaging the load. Id. at 27.

In this case, the plaintiffs have not produced any evidence that the relationship between Covenant and...