W. Express, Inc. v. Villanueva, Case No. 3:17-cv-01006

• Decision Date: 24 October 2017
• Docket Number: Case No. 3:17-cv-01006
• Court: U.S. District Court — Middle District of Tennessee
• Parties: WESTERN EXPRESS, INC. d/b/a WESTERN LOGISTICS, Plaintiff, v. OSCAR VILLANUEVA d/b/a LAS MARIAS PALLETS, PROGRESSIVE INSURANCE COMPANY d/b/a DRIVE INSURANCE FROM PROGRESSIVE, KASSNICK TRUCK, INC., NATIONAL INDEMNITY COMPANY d/b/a NATIONAL LIABILITY & FIRE INSURANCE, and ALLIANZ GLOBAL CORPORATE AND SPECIALTY d/b/a AGCS MARINE INSURANCE COMPANY, Defendants.

WESTERN EXPRESS, INC. d/b/a WESTERN LOGISTICS, Plaintiff, v. OSCAR VILLANUEVA d/b/a LAS MARIAS PALLETS, PROGRESSIVE INSURANCE COMPANYd/b/a DRIVE INSURANCE FROM PROGRESSIVE,

KASSNICK TRUCK, INC., NATIONAL INDEMNITY COMPANY d/b/a NATIONAL LIABILITY & FIRE INSURANCE,

and ALLIANZ GLOBAL CORPORATE AND SPECIALTY d/b/a AGCS MARINE INSURANCE COMPANY, Defendants.

Case No. 3:17-cv-01006

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

October 24, 2017

Judge Aleta A. Trauger

MEMORANDUM

Plaintiff Western Express, Inc. ("Western") initiated this action seeking resolution of the question of what entity should bear financial responsibility for a misdelivered shipment. Now before the court are five separate Motions to Dismiss, filed by each of the five defendants: National Indemnity Company d/b/a National Liability & Fire Insurance ("National") (Doc. No. 1-4)¹; Progressive Insurance Company d/b/a Drive Insurance from Progressive ("Progressive") (Doc. No. 14)²; Oscar Villanueva d/b/a Las Marias Pallets ("LMP") (Doc. No. 21); KassnickTrucking, Inc. ("Kassnick") (Doc. No. 32); and Allianz Global Corporate and Specialty ("Allianz") (Doc. No. 40).

The motions have been fully briefed and are ripe for review.³ For the reasons set forth herein, LMP's motion will be denied, and the other defendants' motions will be granted.

I. Factual and Procedural Background

Western initiated this action by filing a Complaint in the Circuit Court for Davidson County, Tennessee on May 24, 2017, alleging that it entered into a Carrier-Broker Contract with LMP, pursuant to which LMP agreed to deliver a shipment for Western's customer, Colgate-Palmolive Company ("Colgate"), a non-party. (See Compl. ¶¶ 1, 2, 7 & Ex. 1, Doc. No. 1-5, at 11-15.)

LMP accepted load #5843456 for pick up in Redlands, California, on May 26, 2016, to be delivered to a Wal-Mart Distribution Center in Red Bluff, California, on May 27, 2017. (See Compl. ¶ 12 & Ex. 2, Doc. No. 1-5, at 16.) LMP enlisted the aid of subcontractor Kassnick to fulfill its contractual obligation to deliver the shipment. (Compl. ¶ 15.) Instead of delivering the load to the Wal-Mart Distribution Center in Red Bluff, California, Kassnick misdelivered the load to an address other than the address indicated on the Bill of Lading. (Compl. ¶ 16.) The shipment never reached its intended destination, and Western's customer filed a claim with Western for the misdelivered shipment in the amount of $88,787.80. (Compl. ¶ 19 & Ex. 6, Doc. No. 1-5, at 23.)

According to Western, LMP is obligated by the Carrier-Broker Contract ("Contract") to carry not less than $100,000 in cargo insurance to compensate a party entitled to recover under abill of lading covering the goods being transported. (Compl. ¶ 8; Contract ¶ 1(b).) The Contract provides that LMP's liability as "carrier" "shall begin at the time cargo is loaded upon CARRIER'S equipment at point of origin and shall continue until said cargo is delivered to the designated consignee at destination." (Compl. ¶ 9; Contract ¶ 1(c).) In addition, LMP agreed to "defend and hold harmless" Western and Western's customers "against any and all loss and damage claims on each shipment transported by CARRIER pursuant to this agreement . . . related to shipments transported by CARRIER." (Compl. ¶ 10; Contract ¶ 1(d).) The untitled document to which Express refers as the "Rate Confirmation and Load Tender" (Compl. ¶ 12 & Ex. 2) also provides that LMP as carrier agreed to "defend, indemnify, and hold broker its customers [sic] harmless from and against expenses and damages arising out of or related to services provided by Carrier," and it specifies that "any dispute arising from or related hereto shall be brought exclusively in the courts of Davidson County, Tennessee." (Compl. Ex. 2.)

Defendant Progressive agreed to insure LMP for cargo losses and issued a certificate of insurance covering such losses that was effective at all times relevant to this suit. (Compl. ¶ 14 & Ex. 3, Doc. No. 1-5, at 17.) Defendant National agreed to insure Kassnick for liability, and Allianz agreed to insure Kassnick for loss and damage to cargo transported by Kassnick. (Compl. ¶¶ 17-18 & Ex. 5, Doc. No. 1-5, at 22.)

Based on these allegations, Western asserts that LMP violated the Contract with Western by failing to deliver the shipment as directed on the Bill of Lading and is therefore liable for losses caused by that breach. Western has called upon Progressive to cover the loss on behalf of its insured, LMP, but Progressive has failed to cover the loss. (Compl. ¶ 23.)

Western asserts that Kassnick was negligent in failing to transport the shipment to the address indicated on the Bill of Lading, thereby causing loss to Western and Western's customer. Western has called upon National to cover the loss caused by its insured, Kassnick, but National has failed to cover the loss. (Compl. ¶ 24-26.) Western also asserts that Kassnick breached its agreement with LMP by failing to deliver the shipment to the address directed by the Bill of Lading, causing loss to Western and Western's customer, and that Allianz has failed to cover that loss. (Compl. ¶¶ 27-28.)

Progressive removed this action to federal court on July 5, 2017. Prior to removal, both Progressive and National had filed Motions to Dismiss in state court and counsel for LMP had entered an appearance. It appears that neither Kassnick nor Allianz had been served prior to removal.

Following removal, both National and Villanueva filed Notices of Consent to Removal. Progressive filed a new Motion to Dismiss in this court (Doc. No. 14), which supersedes the first (Doc. No. 1-3); National's pre-removal Motion to Dismiss remains pending as well (Doc. No. 1-4). Following removal, LMP, Kassnick, and Allianz each filed a Motion to Dismiss (Doc. Nos. 21, 32, 40). Western has now filed a Response in opposition to each of the motions (Doc. Nos. 18, 42, 30, 44) except that of Allianz (see Note 3, supra). Progressive, National, and Kassnick filed Replies. (Doc. Nos. 23-1, 49, 52).

II. Standards of Review

A. Rule 12(b)(6)

In deciding a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court must "construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff." Directv, Inc. v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007); Inge v. Rock Fin. Corp., 281 F.3d 613, 619 (6th Cir. 2002). The Federal Rules of Civil Procedure require that a plaintiff provide "'a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957) (quoting Fed. R. Civ. P. 8(a)(2)). The court must determine whether "the claimant is entitled to offer evidence to support the claims," not whether the plaintiff can ultimately prove the facts alleged. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511 (2002) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

The complaint's allegations, however, "must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). To establish the "facial plausibility" required to "unlock the doors of discovery," the plaintiff cannot rely on "legal conclusions" or "[t]hreadbare recitals of the elements of a cause of action"; instead, the plaintiff must plead "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

B. Rules 12(b)(1) and 12(b)(2)

Rule 12(b)(1) provides that the defendant may file a motion to dismiss based on a court's "lack of subject-matter jurisdiction." Fed. R. Civ. P. 12(b)(1). The plaintiff has the burden of proving jurisdiction when the defendant challenges subject-matter jurisdiction under Rule 12(b)(1). Rogers v. Stratton Indus., 798 F.2d 913, 915 (6th Cir. 1986).

Likewise, a plaintiff confronted with a Rule 12(b)(2) motion "bears the burden of establishing the existence of jurisdiction" over the defendant's person. Estate of Thompson v. Toyota Motor Corp. Worldwide, 545 F.3d 357, 360 (6th Cir. 2008) (citation omitted).

III. LMP's Motion to Dismiss

LMP's motion is premised on Rules 12(b)(1) and 12(b)(6). It seeks dismissal based on two theories. First, it asserts that Western does not have Article III standing to assert a breach of contract claim against LMP, because it has not paid its customer-shipper, Colgate, for the alleged loss occasioned by the misdelivered shipment and does not hold an assignment of Colgate's rights. Thus, it argues, Western is not the real party in interest and its breach of contract claim against LMP must be dismissed.

Second, it argues that the Contract between Western and LMP, by its terms, is governed by the Carmack Amendment, 49 U.S.C. § 14706 et seq., which preempts the Contract and renders it void as a matter of law, because Western does not have an assignment from its customer-shipper and therefore cannot step into the customer's shoes for purposes of a claim under the Carmack Amendment.

In conjunction with its Response in opposition to LMP's motion, Western submitted a copy of the Assignment of Claim executed on August 7, 2017 by and between Western and Colgate, the customer-shipper whose lost cargo is the subject of this lawsuit. The Assignment makes it clear that Western paid Colgate the value of its claim, and Colgate assigned to Western all "right, title and interest of Colgate related to its aforementioned claim and its interest under the Bill of Lading, with right to collect and exercise all rights in relation thereto." (Doc. No. 30-1.) Based on the Assignment, Western asserts that it has standing and that both of the theories upon which LMP relies in support of its motion to dismiss have been rendered moot.

The court notes, first, that there is a fundamental...