U.S. Aviation Underwriters v. Yellow Freight Sys.

• Citation: 296 F.Supp.2d 1322
• Decision Date: 22 December 2003
• Docket Number: No. CIV.A. 02-0883-WS-M.,CIV.A. 02-0883-WS-M.
• Parties: UNITED STATES AVIATION UNDERWRITERS, INC., Plaintiff, v. YELLOW FREIGHT SYSTEM, INC., Defendant.
• Court: U.S. District Court — Southern District of Alabama

296 F.Supp.2d 1322

UNITED STATES AVIATION UNDERWRITERS, INC., Plaintiff, v. YELLOW FREIGHT SYSTEM, INC., Defendant.

No. CIV.A. 02-0883-WS-M.

United States District Court, S.D. Alabama. Southern Division.

December 22, 2003.

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Frederick G. Helmsing, Louisa Long Stockman, Helmsing, Leach, Herlong, Newman & Rouse, P.C., Mobile, AL, for Plaintiff.

H. N. Cunningham, III, James C. Baker, Roberts, Cunningham & Stripling, Dallas TX, James M. Sizemore, Jr., Montgomery, AL, for Defendant.

ORDER

STEELE, District Judge.

This matter is before the Court on cross-motions for summary judgment filed by plaintiff United States Aviation Underwriters, Inc. (doc. 15) and defendant Yellow Freight System, Inc. (doc. 19). The motions having been exhaustively briefed, they are now ripe for disposition. Upon careful consideration of the summary judgment record, the arguments and authorities presented by the parties, and all other pertinent materials in the court file, the Court finds that both motions for summary judgment are due to be denied, except that defendant's motion is granted insofar as it seeks dismissal of plaintiff's state law claims.

I. Background.

Despite the abundance of trees felled by the parties in briefing their respective positions and proffering exhibits for the court file, the core issues presented on summary judgment are straightforward. Plaintiff United States Aviation Underwriters, Inc. ("USAU") filed this action against defendant Yellow Freight System, Inc. ("Yellow") seeking recovery of losses incurred by USAU as a result of damage to a jet engine that Yellow transported from Mobile, Alabama to Bridgeport, West Virginia in February 2002 on behalf of USAU's insured. Notwithstanding the proliferation of ancillary issues in the summary judgment filings, the paramount question presented by the cross-motions for summary judgment is whether Yellow is legally responsible for the damage to that engine.

A. Findings of Fact.¹

In early 2002, non-party Jemco of Pensacola, Inc. ("Jemco") hired non-party Earheart Aviation ("Earheart") to perform maintenance work on one of Jemco's aircraft whose engine was experiencing a low torque problem. (Joyner Decl., ¶ 3; Benjamin Dep., at 12-13.) Earheart decided to ship the engine, a Pratt & Whitney PT6A bearing serial number RB0049 (the "Engine"), back to the manufacturer, Pratt & Whitney ("Pratt"), for repairs. (Id., ¶¶ 3-4.) Pratt provided Earheart with a special shipping container, a triple-wall corrugated fiberboard box fitted to the contours of the Engine. (Id., ¶¶ 4-6.) On February 8, 2002, Earheart supervised the packing of the Engine into the shipping container. (Id.) The Engine was pinned and bolted onto a wooden skid, then packaged in the container supplied by Pratt. (Id., ¶¶ 6-7.)

Earheart contracted with defendant Yellow to ship the Engine from Earheart's facility in Mobile, Alabama to Pratt's service center in Bridgeport, West Virginia. (Id., ¶¶ 4, 7; Bill of Lading at Exh. E to USAU's Motion for Summary Judgment.)² On February 8, 2002, Yellow picked up the Engine from Earheart's facility. (Id., ¶ 8.) When they were loaded onto Yellow's truck, both the Engine and its container were intact and undamaged. (Id., ¶ 7.)

On February 12, 2002, Yellow delivered the Engine to Pratt's service facility in Bridgeport, West Virginia. (Randy Myers Dep., at 7-8 & Exh. 2.) Randy Myers, a shipping/ receiving clerk with 14 years of service at Pratt, signed a Yellow delivery receipt for the Engine under the legend "Received in Good Condition Except as Noted by," without noting any damage to the shipment. (Id.) Myers does not recall receiving this particular Engine, and it is not unusual for him to receive several engines in a given day. (Myers Dep., at 5, 24.) Neither party has offered testimony from Pratt employees who specifically recall examining this Engine on the date of its arrival at the Pratt facility.

Myers explained his practice and custom for receiving engines in the following terms:

"Once the engine is removed from the truck we do a visual check for any obvious damage. At that time we sign off on the paperwork. From there we do a check in of the engine by opening the container, removing log books, verifying serial numbers and, again, a visual check for any obvious engine damage. At that time a handwritten receiver is done and processed to sales."

(Id., at 6, 20.)³ Elaborating further, Myers stated that his normal process is to conduct a visual inspection of the exterior of the shipping container for obvious damage before signing the delivery receipt. (Id., at 6-9.) He then notes any damage to the container (such as tears in the box) in writing on the shipper's freight bill. (Id., at 25, 26.) After signing the freight bill, Myers personally opens the container, removes the packaging and conducts a visual check of the engine itself for "obvious damage to as much of the engine as [he] can see." (Id., at 9, 28.) In so doing, however, Myers does not dislodge the engine from its cradle; as such, he is unable to see the underside of the engine. (Id., at 9-10.)⁴ However, Myers can see, and does inspect, the entire engine except for the bottom, which is obscured by the cradle. (Id., at 32.) Myers conducts such inspections on the same day an engine is received, and performs the inspections in the immediate vicinity of the loading dock in Pratt's receiving area. (Id., at 16-17, 21, 22, 28-29.)

After conducting a visual inspection of the container and the engine itself, Myers' practice is to place the shipping container back on the engine and complete a receiving slip for Pratt's in-house use. (Id., at 11-12, 30.) In preparing this slip, Myers notes both obvious damage to the packaging and obvious damage to the engine that he observed in his review of same. (Id., at 28, 30-31, 33-34.) The receiver slip prepared by Myers for the Engine in this case identifies no such damage to either the container or the Engine. (Id. at 24, 28 & Exh. 2.)

There is no evidence as to what Pratt did with the Engine immediately after Myers completed his initial visual inspection. However, on February 13, 2002, one day after Myers received the Engine, a Pratt customer service manager named John Benjamin had occasion to examine the Engine at the "teardown area" of Pratt's Bridgeport facility. (Benjamin Dep., at 9-10, 66.) The teardown area is located at the opposite end of the facility from the receiving area. (Id., at 53-54.) Engines are typically transported by Pratt employees from the receiving area to the teardown area via forklift, a process which takes approximately three to five minutes. (Id., at 67.) The record is devoid of evidence as to when the Engine was moved from receiving to teardown, who moved it, by what method and manner it was moved across the facility, or whether any incidents or problems occurred during the course of transporting the Engine across Pratt's facility. (Id., at 59.)⁵ Pratt policies require employees to complete a report of damage whenever Pratt damages goods. (Id., at 71.) No such report was completed in this case, which could give rise either of two competing inferences: (i) that Pratt employees did not damage the Engine or, alternatively, (ii) that they did damage the Engine but disregarded or overlooked company policy.

In any event, when Benjamin examined the Engine in the teardown area on February 13, 2002, he observed that it had a "damaged exhaust duct port flange," including specifically a "right-hand port flange, [that] was crumpled, buckled in an area above the actual exhaust port." (Id., at 18.) According to Benjamin, the damage to the exhaust duct was "obvious" because the flange itself was crumpled and bent. (Id., at 55-56.) The damaged area was "towards the top, top and side" of the Engine. (Id., at 58.) It was not on the bottom of the Engine, and would not have been obscured from view by the skid. (Id., at 58-59.)⁶ At that time, Benjamin also observed a "curve area indentation in the double wall cardboard [of the shipping container] adjacent to the exhaust duct," with tape on the container in that same area. (Id., at 19.) The indentation on the shipping container was not obvious to Benjamin. (Id., at 56.)

The repairs to the Engine relating to the exhaust duct damage described by Benjamin cost more than $87,000, of which $70,663 went towards a new exhaust duct. (Id., at 37-38; see also Exhibit O to USAU's summary judgment submission.) On March 20, 2002, USAU tendered payment to its insured, Jemco, in the amount of $87,472.76 for damage to the Engine. (Plaintiff's Supporting Documents, at Exh. P; Dean Declaration, ¶ 4.)⁷ USAU then stepped into Jemco's shoes and sued Yellow in an attempt to recover the insurance proceeds.⁸

B. Procedural History.

USAU initially filed this action in the Circuit Court of Mobile County, Alabama. The Complaint alleged common law causes of action against Yellow for breach of contract, negligence and wantonness. Yellow timely removed this action to this District Court on grounds of both diversity of citizenship, pursuant to 28 U.S.C. § 1332, and federal question jurisdiction, pursuant to 28 U.S.C. § 1331. With respect to the latter ground, Yellow contended that USAU's state law claims were preempted by the Carmack Amendment, 49 U.S.C. § 14706, giving rise to federal question jurisdiction. USAU did not challenge the propriety of removal, nor did it seek leave of Court to amend its Complaint to state a proper claim under the Carmack Amendment.

Both parties have now filed and briefed motions for summary judgment centering on the unpleaded Carmack Amendment claim. In addition, Yellow filed objections (doc. 27) to various materials relied on by USAU in its summary judgment filings, while USAU moved to strike (doc. 35) portions of the declaration of John Hope. All of these motions are now ripe for consideration by this Court.

II. Summary Judgment Standard.

Summary...