Underwriters at Lloyds of London v. North American Van Lines, No. 87-1872

CourtUnited States Courts of Appeals. United States Court of Appeals (10th Circuit)
Writing for the CourtBefore HOLLOWAY, Chief Judge, MCKAY, LOGAN, SEYMOUR, MOORE, ANDERSON, TACHA, BALDOCK, BRORBY and EBEL; STEPHEN H. ANDERSON
PartiesUNDERWRITERS AT LLOYDS OF LONDON, Plaintiff-Appellee, v. NORTH AMERICAN VAN LINES, Defendant-Appellant.
Docket NumberNo. 87-1872
Decision Date30 November 1989

Page 1112

890 F.2d 1112
58 USLW 2351
UNDERWRITERS AT LLOYDS OF LONDON, Plaintiff-Appellee,
v.
NORTH AMERICAN VAN LINES, Defendant-Appellant.
No. 87-1872.
United States Court of Appeals,
Tenth Circuit.
Nov. 30, 1989.

Kenneth D. Upton, Jr. (Linda G. Alexander, with him on the briefs), Niemeyer, Noland & Alexander, Oklahoma City, Okl., for plaintiff-appellee.

David A. Cheek (Victor F. Albert, with him on the briefs), McKinney, Stringer & Webster, P.C., Oklahoma City, Okl., for defendant-appellant.

Page 1113

Before HOLLOWAY, Chief Judge, MCKAY, LOGAN, SEYMOUR, MOORE, ANDERSON, TACHA, BALDOCK, BRORBY and EBEL, Circuit Judges.

STEPHEN H. ANDERSON, Circuit Judge.

The court on its own motion has determined to consider en banc whether the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. Secs. 11707 and 10730, 1 preempts state common law remedies for negligent damage to goods shipped by common carrier. After reviewing the law on this subject, and reconsidering our position, we now hold that state common law remedies are preempted by the Carmack Amendment. To the extent that our prior decisions in Reed v. Aaacon Transportation, Inc., 637 F.2d 1302 (10th Cir.1981); Litvak Meat Co. v. Baker, 446 F.2d 329 (10th Cir.1971); and L.E. Whitlock Truck Service, Inc. v. Regal Drilling Co., 333 F.2d 488 (10th Cir.1964), hold or state otherwise, they are overruled. Because the proceedings and judgment in the district court were, of necessity, based on those decisions, the judgment of the district court must be vacated and the case remanded for further proceedings consistent with this opinion.

I.

In connection with an employment-related transfer, Robert and Lucinda Chapman engaged defendant-appellant North American Van Lines ("North American") to move their household goods and other personal property from Denver, Colorado to Houston, Texas. For this and other matters relating to the move, the Chapmans were assisted and represented by professional consultants hired by their employer.

As permitted by the Interstate Commerce Commission, and in accordance with its filed tariff, North American's charge for transporting the Chapman's goods depended upon the extent of the liability it assumed for loss or damage. The bill of lading signed by the Chapmans contained the following terms relating to that subject:

"VALUATION STATEMENT

UNLESS THE SHIPPER EXPRESSLY RELEASES THE SHIPMENT TO A VALUE OF 60 CENTS PER POUND PER ARTICLE, THE FORWARDER'S MAXIMUM LIABILITY FOR LOSS AND DAMAGE SHALL BE EITHER THE LUMP SUM VALUE DECLARED BY THE SHIPPER OR AN AMOUNT EQUAL TO $1.25 FOR EACH POUND OF WEIGHT IN THE SHIPMENT, WHICHEVER IS GREATER.

THE SHIPMENT WILL MOVE SUBJECT TO THE RULES AND CONDITIONS OF THE FORWARDER'S TARIFF. SHIPPER HEREBY RELEASES THE ENTIRE SHIPMENT TO A VALUE NOT EXCEEDING: $.60 per lb.

NOTICE: THE SHIPPER SIGNING THIS CONTRACT MUST INSERT IN THE SPACE ABOVE, IN HIS OWN

Page 1114

HANDWRITING, EITHER HIS DECLARATION OF THE ACTUAL VALUE OF THE SHIPMENT, OR THE WORDS '60 cents per pound per article.' OTHERWISE, THE SHIPMENT WILL BE DEEMED RELEASED TO A MAXIMUM VALUE EQUAL TO $1.25 TIMES THE WEIGHT OF THE SHIPMENT IN POUNDS."

(Shipper) s/Lucinda Chapman

DATE: 1/9/85

Addendum at Tab 5, p. 1. The bill of lading also contained the following printed language, taken verbatim from North American's Interstate Commerce Commission Tariff:

"This contract is subject to all the rules, regulations, rates and charges, in carrier's currently effective applicable tariffs on file with the Interstate Commerce Commission including, but not limited to, the following terms and conditions:

* * *

* * *

The carrier's maximum liability shall be either:

(1) The amount of the actual loss or damage not exceeding $1.25 times the actual weight (in pounds) of the shipment, or the lump sum declared value, whichever is greater; or

(2) The actual loss or damage not exceeding sixty (60) cents per pound of the weight of any lost or damaged article when the shipper has released the shipment to carrier, in writing, with liability limited to sixty (60) cents per pound per article."

Id. at p. 2.

The actual value of the Chapmans' property exceeded $100,000.00. However, North American's charge for assuming a liability in that amount substantially exceeded what plaintiff-appellee Lloyds of London ("Lloyds") would charge for an equal amount of insurance on the goods. Accordingly, the Chapmans, upon the professional advice of their consultant, made a deliberate, fully informed, and calculated decision to save money by insuring their goods for $100,000.00 with Lloyds and signing up for North American's cheapest freight charge. They obtained that low rate by declaring in handwriting on the bill of lading that the value of their goods did not exceed $.60 per pound, Def. Ex. 1, or a total of approximately $7,500, according to North American.

As the district court found, the bill of lading, completed and signed by the Chapmans, clearly and unambiguously limited North American's liability for loss and damage to the Chapmans' household goods to $.60 per pound. The Chapmans knowledgeably bargained for that limitation and the corresponding freight rate. There was full equality of bargaining power, especially considering the professional consultants who advised the Chapmans in their dealings with North American. See, e.g., R.Vol. II at 138-40, 153; R.Vol. III at 170. There is not the slightest indication that the bargained-for limitation on North American's liability was understood by the parties to be less than a blanket limitation covering all forms of action against North American for loss or damage to the Chapmans' goods. Finally, there is no dispute that the bill of lading was lawful in form, properly completed, and reflected a tariff duly filed with and approved by the Interstate Commerce Commission.

In the course of shipment, the Chapmans' goods were destroyed or damaged by fire. Lloyds paid on its insurance policy more than $100,000.00 directly to or on behalf of the Chapmans for the loss and repair of their property. Thereafter, pursuant to its subrogation rights Lloyds pursued this suit against North American for the entire amount of the loss, without regard to any limitation on liability contained in the bill of lading.

Lloyds litigation strategy for avoiding the agreed upon limitation of liability in the bill of lading was to plead and prove common law negligence on the part of North American. Lloyds reasoned that the bill of lading, being a contract, served only to limit damages in contract actions for an alleged breach of North American's obligations specified in the bill of lading, and that a cause of action in tort is completely separate from an action on the bill of lading itself. This position found partial support

Page 1115

in our decisions in Reed, Litvak, and Whitlock, which held that the Carmack Amendment did not preempt state common law actions by shippers against carriers. None of those cases suggested what the court's position would be with respect to an argument that the parties could lawfully contract to limit common law tort liability, even if such a cause of action was not preempted by the Carmack Amendment.

Because of our decisions in Reed, Litvak, and Whitlock, the district court denied North American's motion for partial summary judgment to restrict the amount of damages in this case to the value stated in the bill of lading and allowed Lloyds to proceed to trial before a jury solely on a theory of common law negligence. During the trial the district court also refused to admit North American's evidence that even under a common law negligence cause of action, the amount of damages in this case were limited to the contractually agreed amount. At the close of the evidence North American moved for a directed verdict limiting any damages to the contractually agreed amount of $.60 per pound per article. That motion was denied and the case was submitted to the jury under a common law negligence theory without evidence or instructions regarding the contractual limitation of damages. The jury returned a verdict in favor of Lloyds in the amount of $70,000.00. North American does not appeal the jury's finding of negligence. It appeals only with respect to the issue of damages. North American asks us first to reconsider this court's position on the preemptive effect of the Carmack Amendment on common law negligence remedies. As an alternative argument, North American contends that the district court erred in excluding evidence that the parties contractually limited North American's liability for negligent damage to the Chapmans' goods, and erred in denying North American's motion for a directed verdict limiting the amount of common law damages to $.60 per pound.

II.

The Carmack Amendment was enacted in 1906 as an amendment to the Interstate Commerce Act of 1887, and as part of the Hepburn Act, ch. 3591, 34 Stat. 584 (1906), and was codified at 49 U.S.C. 20(11). It deals with the familiar and historic subject of carrier liability for goods lost or damaged in shipment. The enactment codified the initial carrier's liability. It also contained the proviso "[t]hat nothing in this section shall deprive any holder of such receipt or bill of lading of any remedy or right of action which he has under the existing law." 34 Stat. at 593. The substance of that proviso has been retained to the present time, appearing at 49 U.S.C. Sec. 10103 as follows:

"Except as otherwise provided in this subtitle, the remedies provided under this subtitle are in addition to remedies existing under another law or at common law."

In Litvak, relying extensively on our prior decision in Whitlock, we referred to that proviso in the law and noted that the statute "[b]y its very terms ... did not intend to preempt every cause of action brought by a shipper against a carrier for damage to its interstate shipment." Litvak Meat Co. v. Baker, 446 F.2d at 335. Rathe...

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  • Orlick v. J.D. Carton & Son, Inc., No. CIV. A. 00-3486(JAG).
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • May 2, 2001
    ...Bakery, Inc. v. Consol. Freightways, Inc., 799 F.Supp. 26, 28 (D.N.J.1992)(citing Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112, 1115-1121 (10th Cir.1989); Intech, Inc. v. Consol. Freightways, Inc., 836 F.2d 672, 677 (1st Cir.1987); Hughes v. United Van Lines, Inc., 82......
  • Sunnyland Farms Inc. v. Cent. N.M. Electric Coop. Inc., No. 28,807.
    • United States
    • New Mexico Court of Appeals of New Mexico
    • May 17, 2011
    ...Transport, Inc., 637 F.2d 1302, 1305 (10th Cir.1981), overruled on other grounds by Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112 (10th Cir.1989), and Clifton, 86 N.M. at 758, 527 P.2d at 799, two cases that do not support O'Toole's footnoted statement). 6. Dr. Bauerle......
  • Union Pac. R.R. Co. v. Beemac Trucking, LLC, Case No. 8:11CV8.
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    • United States District Courts. 8th Circuit. United States District Court of Nebraska
    • March 7, 2013
    ...has described the preemptive effect of the Carmack Amendment very broadly.”); Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112, 1116 (10th Cir.1989) (“[T]he Supreme Court and other authorities have described the Carmack Amendment in broad, preemptive terms, and have releg......
  • Ayala v. Speckard, Nos. 1304
    • United States
    • U.S. Court of Appeals — Second Circuit
    • December 3, 1997
    ...by the trial judge was a well-established constitutional principle undergirding the right to public trial. See, e.g., Davis v. Reynolds, 890 F.2d at 1112 (vacating and remanding the conviction of habeas petitioner because trial court failed to follow Waller prongs, including third, in viola......
  • Request a trial to view additional results
70 cases
  • Orlick v. J.D. Carton & Son, Inc., No. CIV. A. 00-3486(JAG).
    • United States
    • United States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey
    • May 2, 2001
    ...Bakery, Inc. v. Consol. Freightways, Inc., 799 F.Supp. 26, 28 (D.N.J.1992)(citing Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112, 1115-1121 (10th Cir.1989); Intech, Inc. v. Consol. Freightways, Inc., 836 F.2d 672, 677 (1st Cir.1987); Hughes v. United Van Lines, Inc., 82......
  • Sunnyland Farms Inc. v. Cent. N.M. Electric Coop. Inc., No. 28,807.
    • United States
    • New Mexico Court of Appeals of New Mexico
    • May 17, 2011
    ...Transport, Inc., 637 F.2d 1302, 1305 (10th Cir.1981), overruled on other grounds by Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112 (10th Cir.1989), and Clifton, 86 N.M. at 758, 527 P.2d at 799, two cases that do not support O'Toole's footnoted statement). 6. Dr. Bauerle......
  • Union Pac. R.R. Co. v. Beemac Trucking, LLC, Case No. 8:11CV8.
    • United States
    • United States District Courts. 8th Circuit. United States District Court of Nebraska
    • March 7, 2013
    ...has described the preemptive effect of the Carmack Amendment very broadly.”); Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112, 1116 (10th Cir.1989) (“[T]he Supreme Court and other authorities have described the Carmack Amendment in broad, preemptive terms, and have releg......
  • Ayala v. Speckard, Nos. 1304
    • United States
    • U.S. Court of Appeals — Second Circuit
    • December 3, 1997
    ...by the trial judge was a well-established constitutional principle undergirding the right to public trial. See, e.g., Davis v. Reynolds, 890 F.2d at 1112 (vacating and remanding the conviction of habeas petitioner because trial court failed to follow Waller prongs, including third, in viola......
  • Request a trial to view additional results

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