Security Ins. Co. v. Old Dominion Freight, Docket No. 03-7981.

Decision Date02 December 2004
Docket NumberDocket No. 03-7981.
Citation391 F.3d 77
PartiesSECURITY INSURANCE COMPANY OF HARTFORD a/s/o JT International Holdings, B.V., Plaintiff-Appellee, v. OLD DOMINION FREIGHT LINE, INC., Defendant-Cross-Claimant-Appellant, v. Concord Transportation, Inc., Defendant-Cross-Defendant.
CourtU.S. Court of Appeals — Second Circuit

Graham, Miller, Neandross, Mullin & Roonan, New York (Michael J. Slevin, New York, New York, of counsel), for Plaintiff-Appellee.

Mauro Goldberg & Lilling, Great Neck, New York (Barbara D. Goldberg, Great Neck, New York, of counsel), for Defendant-Appellant.

Before: VAN GRAAFEILAND*, KEARSE, and WESLEY, Circuit Judges.

KEARSE, Circuit Judge.

Defendant Old Dominion Freight Lines, Inc. ("Old Dominion"), appeals from a judgment entered in the United States District Court for the Southern District of New York, Gerard E. Lynch, Judge, ordering it to pay $237,963.01 in damages and prejudgment interest to plaintiff Security Insurance Company of Hartford ("Security") as subrogee of the shipper of goods carried by Old Dominion that were stolen prior to delivery to their final destination. The district court, in an Opinion and Order dated August 20, 2003 ("District Court Opinion"), granted summary judgment in favor of plaintiff, ruling, inter alia, that, under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706 ("Carmack Amendment"), Old Dominion was strictly liable for the loss of the goods and that plaintiff had presented sufficient evidence as to the quality and quantity of the goods delivered to Old Dominion for carriage. The court also rejected Old Dominion's contention that the present suit was not timely. On appeal, Old Dominion contends principally that the district court erred (1) in rejecting its untimeliness argument, (2) in ruling that Old Dominion was subject to strict liability, rather than to a negligence standard, and (3) granting summary judgment despite the presence of genuine issues of fact to be tried as to the contents and condition of the shipment when delivered to Old Dominion. We reject Old Dominion's first two contentions substantially for the reasons stated in the District Court Opinion at 9-14, 17-19. We find merit in the third contention for the reasons that follow.


The facts of this case are largely undisputed. Old Dominion, a trucking company, and RJ Reynolds Tobacco Company ("RJR") were parties to a contract for the carriage of goods from RJR's Central Distribution Center in Winston-Salem, North Carolina ("RJR Distribution Center" or "Distribution Center"). Pursuant to the contract, on July 13, 1999, a shipment of Winston cigarettes and Camel Light cigarettes was loaded onto an Old Dominion truck at the Distribution Center and was to be transported to RJR's consignee, RJR-Macdonald, Inc. ("RJR-Macdonald"), in Montreal, Canada (the "July 13 shipment"). Through a subcontractor, Old Dominion transported the cigarettes to the Canadian border; there the shipment was stopped by Canadian customs officials, who ordered it detained until it received clearance. Pending customs approval of its release, the cargo was placed in a bonded warehouse. The cargo was stolen, by persons unknown, from the warehouse.

When the July 13 shipment failed to arrive at its final destination, RJR-Macdonald investigated and reported the theft to the Montreal police. The Canadian Mounties ultimately recovered some of the cargo; however, due to concerns about the quality of the recovered cigarettes, those cigarettes were destroyed.

RJR filed a claim with Old Dominion seeking compensation for the stolen cargo, and RJR-Macdonald filed an insurance claim with its insurer, Security. Security eventually paid RJR-Macdonald $195,938 for the loss and brought the present suit as subrogee of RJR's claim against Old Dominion, requesting $195,938 in damages, plus interest, costs, and attorneys' fees.

A. Security's Motion for Summary Judgment

Security moved for summary judgment on its claim, submitting, to the extent pertinent to the merits, an affirmation by its attorney Michael J. Slevin and an affidavit by Walter F. Nowicki, who in July 1999 was a distribution manager at the RJR Distribution Center. Thereafter, Security also submitted the affidavit of Robert McMaster, who in 2002 was Director of Taxation and Insurance of the JTI-Macdonald Corp. (formerly called RJR-Macdonald). The Slevin affirmation, dated January 21, 2003 ("Slevin Aff."), briefly summarized the events and attached (1) the bill of lading for the July 13 shipment, (2) a chronology of the events surrounding that shipment, which Slevin described as having been prepared by (unidentified) RJR-Macdonald employees, (3) the contract between Old Dominion and RJR, and (4) correspondence between Old Dominion and RJR with respect to Old Dominion's rejection of RJR's claim.

The Nowicki affidavit described procedures generally used at the RJR Distribution Center to prepare shipments for transport:

4. The process used to retrieve and ship cigarettes is as follows:

When the carrier's truck arrives, an order is activated in our Central Distribution Management system and our automated retrieval system begins to send the product through a series of conveyor systems directly to the truck loading dock at which the carrier's truck is parked.

The movement of the product is monitored until it is confirmed arrived at the loading dock.

The product is then removed from the storage pallet and loaded on the floor of the truck.

Once the truck is loaded, the order is confirmed as being complete, "closed out" and shipped in the Central Distribution Management system. At this point the Bill of Lading is printed. An order cannot be "closed out" or confirmed "shipped" unless 100% of the required product has been delivered to the appropriate truck dock.

Once the order is confirmed shipped in the Central Distribution Management system, our inventory records are decremented [sic] by the amount loaded and shipped. This is confirmed through our inventory reconciliation process. Our inventories are reconciled to the book inventory daily as required by the Bureau of Alcohol Tobacco and Firearms.

When the Bill of Lading is printed, it is presented to the carrier for a signature and date and becomes our proof of shipment. The truck is then released to the carrier's driver.

(Affidavit of Walter Nowicki dated January 22, 2003 ("Nowicki Aff."), ¶ 4.)

As to the July 13 shipment in particular, Nowicki stated only that the shipment

was tendered to Old Dominion Freight Lines ("ODFL") for carriage from Winston-Salem, NC to the premises of RJR-Macdonald Inc. in Montreal, Quebec, Canada. Invoice # 84897903 was a "made to order" invoice. The two items shipped on this invoice were unique to this order and produced to a specific quantity. A true copy of the bill of lading for this shipment is attached hereto as Exhibit A. A representative of ODFL, presumably the driver of the truck, signed this document on July 13, 1999.

(Nowicki Aff. ¶ 5.) Although Nowicki stated that he was familiar with these procedures (see id. ¶ 3), he did not state that he had any personal knowledge as to the July 13 shipment.

The McMaster affidavit indicated that McMaster had no personal knowledge with respect to the July 13 shipment; a different RJR-Macdonald employee had been responsible for filing claims with the trucker and the insurer, and McMaster had subsequently assumed that employee's duties; McMaster stated that he had reviewed RJR-MacDonald's business records with respect to that shipment. (Affidavit of Robert McMaster dated December 22, 2002 ("McMaster Aff."), ¶¶ 3-4.) In addition to the bill of lading, the documents attached to the McMaster affidavit were the first page of the RJR invoice for the shipment (bearing the number 84897903), a Canadian customs invoice for taxes due, and a copy of RJR-MacDonald's check to customs. The RJR invoice indicated that the shipment contained 175 cases of "Winston Box" and 604 cases of "Camel Lt." (McMaster Aff. Exh. B.) According to the "PACKING DETAILS" section of that invoice, the gross per-case weight of the 175 cases was 17.20 pounds. The per-case weight of the 604 cases of Camel Lights was not shown; the bottom of the page bore a notion that the packing details were "CONTINUED ON NEXT PAGE" (id.), but no other pages were attached to the affidavit or otherwise made part of the district court record. The customs invoice showed the assessment of tax on a shipment containing "875mi WINSTON CIGARETTES" and "3020mi CAMEL LT. CIGARETTES." (McMaster Aff. Exh. C.) McMaster stated that RJR-Macdonald had filed a claim with Security for the loss of the July shipment and that Security had paid it $195,938 for that loss. (See McMaster Aff. ¶¶ 8, 11.)

The bill of lading, dated July 13, 1999, which was attached as Exhibit A to the Nowicki and McMaster affidavits and the Slevin affirmation (and which will henceforth be cited simply as "Exhibit A"), referred to invoice number 84897903 and listed the contents of the shipment as 604 cases of Camel Light cigarettes weighing 8,758 (the unit unspecified), and 175 cases of Winston Box cigarettes weighing 3,010 (unit unspecified). (See Exhibit A at 1.) The bill of lading also bore the notations "SHIPPER LOAD AND COUNT — CARRIER UNLOAD" (id. at 2) and "SEAL NO. 397999" (id. at 1; id. at 2).

In opposition to Security's summary judgment motion, Old Dominion proffered no affidavits but noted that Security had not submitted a statement of undisputed material facts, as required by Local Rule 56.1, and argued that the presence of several genuine issues of material fact was apparent from Security's own submissions. Old Dominion argued that one such issue was whether the cargo was delivered to Old Dominion in good condition. Old Dominion contended that the Nowicki affidavit suggested that the cargo had been loaded and sealed by RJR; and if the cargo were...

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