Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-09-07027/USCOURTS-caDC-09-07027-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 15, 2010 Decided June 22, 2010

No. 09-7027

RLI INSURANCE COMPANY,

APPELLEE

v.

ALL STAR TRANSPORTATION, INC., ET AL.,

APPELLANTS

Consolidated with 09-7112

Appeals from the United States District Court

for the District of Columbia

(No. 1:08-cv-00695-JR)

Paul D. Cullen Jr. argued the cause for appellants. With 

him on the briefs were Paul D. Cullen Sr. and Randall S. 

Herrick-Stare.

Eric R. Stanco argued the cause and filed the brief for 

appellee.

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Before: GINSBURG, ROGERS, and KAVANAUGH, Circuit 

Judges.

KAVANAUGH, Circuit Judge: The trucking industry 

consists of three main players: (i) shippers, who typically are 

manufacturers sending goods to retailers or others; (ii) 

truckers, who transport the goods; and (iii) brokers, who act 

as intermediaries between shippers and truckers. When a 

shipper needs to send goods, it hires a broker. The broker 

arranges for shipment by finding a trucker to transport the 

goods. The broker receives money from the shipper and, after 

taking a cut for itself, pays the trucker. 

The problem at the root of this case is that the broker

sometimes fails to pay the trucker. To protect the trucker, a 

fourth player is brought in – the surety. Federal regulations 

require brokers to obtain a surety bond – akin to a guarantee –

in the amount of $10,000. Therefore, if a broker does not pay 

a trucker, the surety does so, at least up to $10,000. 

This case involves Sam’s Transportation Services, a

broker that went into bankruptcy. Sam’s maintained a surety 

bond with RLI Insurance Company, a surety. The face value 

of the bond was $10,000. Because of Sam’s pending 

insolvency, Sam’s failed to pay numerous truckers that it 

owed. Some of the truckers filed claims with RLI to recover 

payment under the surety bond. RLI refused to pay more than 

a total of $10,000 and instituted an interpleader action in 

court. The truckers assert that, under the bond, RLI must pay 

up to $10,000 on each claim. RLI counters that it need only 

pay $10,000 total for all claims combined. 

We agree with RLI, and we therefore affirm the judgment 

of the District Court.

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I

Sam’s Transportation Services was a broker that

connected shippers and truckers for the shipment of goods. 

Sam’s was supposed to receive money from the shippers and 

pay it to the truckers. In accordance with federal regulations, 

Sam’s obtained a surety bond of $10,000 with RLI Insurance 

Company. The bond guaranteed Sam’s obligations to the 

truckers in case Sam’s failed to make payment. 

After Sam’s failed to make certain payments because of 

its insolvency, 68 truckers filed claims with RLI to recover 

under the bond. Most of their claims ranged from $350 to 

$7800. But together, the claims came to $161,823.50. The 

total value of the claims therefore far exceeded the $10,000 

face value of the bond.

RLI initiated an interpleader action in U.S. District Court. 

Interpleader “allows a party exposed to multiple claims on a 

single obligation or property” – such as the $10,000 surety

bond here – “to settle the controversy and satisfy his 

obligation in one proceeding.” Commercial Union Ins. Co. v. 

United States, 999 F.2d 581, 583 (D.C. Cir. 1993); see also 28 

U.S.C. § 1335 (requirements for statutory interpleader). RLI 

deposited $10,000 into the registry of the District Court. RLI

asked the court to distribute the sum among truckers with 

valid claims. Only seven of the 68 truckers that had filed 

claims with RLI bothered to file claims with the court. Those 

seven claims totaled $15,060. Six of the seven truckers then

moved to dismiss the interpleader action, arguing that RLI’s 

duty under the surety bond was to pay up to $10,000 on each 

trucker’s claim, not $10,000 for all claims combined. The 

District Court denied the motion. It ordered the court clerk to 

pay specified pro rata shares of the $10,000 to the seven

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truckers who had submitted valid claims to the court. Five of 

the truckers now appeal.

II

This case turns on whether the face value of the surety 

bond limits RLI’s liability for Sam’s default to $10,000 on 

each claim or to $10,000 on all claims combined.

The parties apparently have no actual copy of the bond 

agreement. But surety bonds must conform to the terms of 

their governing statutes and regulations.

The governing statute is not particularly illuminating with 

respect to the issue here. It merely states: “The Secretary may 

register a person as a broker under section 13904 only if the 

person files with the Secretary a bond, insurance policy, or 

other type of security approved by the Secretary to ensure that 

the transportation for which a broker arranges is provided. 

The registration remains in effect only as long as the broker 

continues to satisfy the security requirements of this 

subsection.” 49 U.S.C. § 13906(b).

The applicable regulation is somewhat more helpful. It

reads: “A property broker must have a surety bond or trust 

fund in effect for $10,000.” 49 C.F.R. § 387.307(a). That 

text seems to suggest that a bond “for $10,000” imposes a 

total liability of $10,000, not a vastly more uncertain and 

potentially greater amount. 

A number of courts have reached the same conclusion, 

albeit implicitly. District courts have adjudicated cases 

involving these types of bonds via statutory interpleader. As 

explained above, interpleader is only available where there is 

a single finite obligation at issue. Thus, those courts 

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necessarily assumed that the surety’s liability was limited to a 

single amount for all claims combined. See, e.g., Great 

American Ins. Co. v. American Freightway Servs., Inc., 2007 

WL 3334337 (W.D.N.C. Nov. 5, 2007); Underwriters Ins. 

Co. v. ATA Trucking, Inc., 2004 WL 445173 (M.D.N.C. Feb. 

26, 2006); Victore Ins. Co. v. Ross Neely Sys., Inc., 757 So. 2d 

473 (Ala. Civ. App. 2000). 

In any event, the standardized federal form that governs 

these surety bonds removes any lingering doubt on the 

disputed issue in this case. This form, known as Form BMC 

84, was promulgated by the Interstate Commerce 

Commission, a predecessor of the Federal Motor Carrier 

Safety Administration. See 49 C.F.R. § 387.307(b); Milan 

Express Co. v. W. Surety Co., 886 F.2d 783, 787-88 (6th Cir. 

1989). Federal regulations require sureties to use the form or 

an electronic version of it. See 49 C.F.R. § 387.307(b), (d); 

see also 49 C.F.R. § 387.323. The form provides a set of 

standard terms and conditions. Those terms say quite plainly 

that the face value of the bond is “the sum of $10,000”; that 

the surety’s liability is “discharged” when payments under the 

bond “amount in the aggregate” to that value; and “in no 

event shall the Surety’s obligation hereunder exceed” that 

value.

The truckers have no substantive answer to the text of 

Form BMC 84, but they object to our even considering it here 

on a variety of other grounds. The truckers contend that: (i) 

the form is irrelevant because the regulation trumps any 

conflicting language the form might contain; (ii) the form 

does not have the force and effect of law; (iii) the document in 

the record purporting to be Form BMC 84 has not been 

authenticated; (iv) the form cannot be taken to indicate the 

terms of the bond because no executed copy of the form exists

in the record; (v) the District Court should not have 

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considered Form BMC 84 at the motion to dismiss stage 

because it was a document outside the pleadings; and (vi) we 

should at least remand to permit the truckers an opportunity to 

discover whether RLI filed a paper copy of the form. 

Those objections have no merit: (i) Form BMC 84 is 

consistent with the regulations; (ii) it was promulgated by the 

Interstate Commerce Commission; (iii) the form’s content

was authenticated by the District Court, which relied

appropriately on the Form BMC 84 reproduced in the 

Matthew Bender appendix of forms, see Clarification of 

Insurance Regulation, 3 I.C.C.2d 689, 693 n.3 (1987) (forms 

“are printed by the industry”); (iv) federal regulations require 

RLI to use the form; (v) at the motion to dismiss stage, the 

District Court may consider a document such as Form BMC

84 “where the complaint relies heavily upon its terms and 

effect,” Chambers v. Time Warner, Inc., 282 F.3d 147, 153 

(2d Cir. 2002) (internal quotation marks omitted); and (vi) the 

further discovery the truckers seek is unnecessary as a 

practical matter because the truckers already submitted a 

FOIA request to the relevant federal agency and found out 

that RLI had filed its form electronically, not on paper. See 

Tr. of Oral Arg. at 9-10.

* * *

We affirm the judgment of the District Court.

So ordered. 

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