Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-02168/USCOURTS-azd-2_04-cv-02168-0/pdf.json

Nature of Suit Code: 450
Nature of Suit: Interstate Commerce
Cause of Action: 49:11702(a)(4) Violations of Interstate Commerce Act

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

AIG Aviation, Inc. and American Home

Insurance Company, Arizona corporations,

Plaintiffs, 

vs.

On Time Express, Inc., an Arizona

corporation,

Defendant. 

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No. CIV 04-2168-PHX-DKD

ORDER

Pending before this Court is Defendant On Time Express, Inc.'s ("On Time") Motion to

Dismiss Counts I and II of the Plaintiffs, AIG Aviation Inc. and American Home Insurance

Company's ("AIG") Complaint (Doc. #2). 

FACTUAL AND PROCEDURAL HISTORY

This case arises from an automobile accident that occurred while Defendant On Time

was delivering cargo pursuant to a November 22, 2002 contract with Mesa Airlines/Freedom

Airlines ("Freedom") from Phoenix, Arizona to Santa Fe Springs, California. As a result of the

November 25, 2002 accident, AIG, Freedom’s insurance provider, covered the losses for the

damaged cargo. Now AIG is seeking to recover from On Time for the damage to the property,

cost of repair, loss of use, diminished value and other damages. Specifically, AIG has claimed

that Defendant (1) was negligent, (2) breached its bailment contract and (3) was liable pursuant

to the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706 ("Carmack"),

governing interstate commerce of common carriers. Plaintiffs argue that under the Carmack

Case 2:04-cv-02168-DKD Document 12 Filed 09/30/05 Page 1 of 6
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Amendment, On Time is liable for damages arising from the failure to deliver the cargo and for

damages to the cargo itself. 

Defendant's Motion to Dismiss asserts that, pursuant to Carmack, the Federal remedy

provided therein is the sole and exclusive remedy. On Time also argues that the state law

claims, Negligence (Count I) and Breach of Contract (Count II), cannot be converted into the

Carmack claim as AIG argues, but that Carmack simply preempts the state claims. In addition

to arguing that Carmack was not intended to preempt all state law, AIG maintains that the

Motion to Dismiss should be denied or ruling withheld to provide time for more discovery with

respect to identifying whether On Time is a "Carrier" or a "Freight Forwarder". On Time

asserts that aside from being evident that On Time is a carrier, for the purposes of a Motion to

Dismiss, the court must presume the truth of all factual allegations. On Time argues that AIG

alleged in the Complaint that On Time was a Carrier and governed by Carmack. Finally, On

Time argues that, although AIG alleges the state claims are "separate and apart" from the

Carmack claim, they are not. On Time reasons that because they are not claims distinct from

loss or damage to goods, such as intentional infliction of emotional distress, they are not apart

from the loss or damage to goods claim exclusively governed under the Carmack Amendment.

In its Motion to Dismiss, On Time moves to dismiss Counts I and II of the Complaint.

AIG originally filed the Complaint in Maricopa County Superior Court on September

20, 2004. Plaintiffs' claim was for $211,185.38, plus costs, attorney's fees, prejudgment interest

and loss of use of the equipment in question. The case was removed to Federal Court pursuant

to 28 U.S.C. § 1441(a) on October 13, 2004 (Doc. #1). On November 8, 2004, AIG filed its

Response in Opposition to On Time's Motion to Dismiss Counts I and II of the Complaint (Doc.

#4). On November 18, 2004, On Time filed its Reply (Doc. #6). This Court has original federal

question jurisdiction, and all parties have consented to proceed before a Magistrate Judge in

accordance with 28 U.S.C. § 636(c) (Doc. #11).

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STANDARD OF REVIEW

When considering a Motion to Dismiss for failure to state a claim brought pursuant to

FRCP 12(b)(6), the court must presume all the factual allegations of the complaint to be true and

draw all reasonable inferences in favor of the non-moving party. Holden v. Hagopian, 978 F.2d

1115, 1118 (9th Cir. 1992). A complaint should not be dismissed unless it appears beyond a

doubt that Plaintiff can prove no set of facts in support of his claim which would entitle him to

relief. Steckman v. Hart Brewing, Inc., 143 F.3d 1293 (9th Cir. 1998).

DISCUSSION

The Carmack Amendment, originally passed in 1906, addresses the liability of common

carriers for goods lost or damaged during shipment and provides shippers the statutory right to

recover for the actual loss or injury to their property caused by any of the carriers involved in

the shipment. Alitalia v. Arrow Trucking Co., 977 F.Supp. 973, 978 (D.Ariz. 1997) (citing

Pietro Culotta Grapes v. Southern Pacific Transp., 917 F.Supp. 713, 715 (E.D. Cal.1996).

Common Carrier status is determined by reference to what the trucker holds itself out to be and

the services offered, not by corporate character or declared purpose. Hughes Aircraft v. North

American Van Lines, Inc., 970 F.2d 609 (9th Cir. 1992). 

The Carmack Amendment established a uniform national liability policy for interstate

carriers and subjects motor carriers to absolute liability, although the carrier may limit its

liability for such damage. Id. at 611-612. A carrier is liable for damages to transported goods

unless it shows the damage was caused by "(a) “The act of God; (b) the public enemy; (c) the

act of the shipper himself; (d) the public authority; or (e) the inherent vice or nature of the

goods.” Missouri Pacific R.R. v. Elmore & Stahl, 377 U.S. 134, 137 (1964). A shipper

establishes a prima facie case under Carmack when it is shown that (1) delivery of the shipment

to the carrier was in good condition, (2) arrival of the shipment was in damaged condition, and

(3) the amount of damages. Id. at 138. The burden of proof then shifts to the carrier to show

both that it is free from negligence, and that damage to the cargo was due to one of the excepted

causes relieving the carrier of liability. Id. The general rule for determining damages is the

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Sokhos v. Mayflower Transit Inc., 691 F.Supp. 1578 (D.Mass. 1988); Mesta v. Allied Van Lines International, Inc.,

695 F.Supp. 63 (D.Mass. 1988).

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"Except as otherwise provided in this part, the remedies provided under this part are in addition to remedies

existing under another law or common law." 49 U.S.C. § 13103 (1971).

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difference between the market value of the property in the condition in which it should have

arrived and the damaged condition in which it did arrive. Tayloe v. Kachina Moving & Storage,

Inc., 16 F.Supp. 2d 1123 (D.Ariz. 1998), citing Contempo Metal Furniture Co. of California

v. East Texas Motor Freight Lines, Inc., 661 F.2d 761, 764 (9th Cir. 1981); F.J. McCarty Co.

v. Southern Pacific Co., 428 F.2d 690, 692 (9th Cir. 1970).

An interstate shipper’s sole remedy against common carriers for damages to goods is

Carmack. Margetson v. United Van Lines, Inc., 785 F.Supp. 917 (D.N.M. 1991). The Carmack

Amendment was interpreted by the United States Supreme Court as evidence of Congressional

intent to "[t]ake possession of the subject, and supercede all state regulation with reference to

it." Adams Express Co. v. Croninger, 226 U.S. 491, 505-06 (1913). In Margetson, the court

found that the shipper’s breach of contract claim was preempted by Carmack and stated that the

cases "have consistently recognized the preemptive effect of Carmack over breach of contract

claims." Margetson v. United Van Lines, 785 F.Supp. at 919. The court found that "in

transportation" included storage and that the intent of Congress did not limit the Amendment

to damages incurred while in movement. Id. at 920.

"Virtually every circuit to address this issue has held that the Carmack Amendment

preempts state law remedies for loss or damage to goods shipped by common carriers." Schultz

v. Auld, 848 F.Supp. 1497, 1502 (D. Idaho 1993). Nevertheless some courts have allowed a

plaintiff to assert a state law claim because the courts reasoned that Carmack’s preemptive

effect extended only to the shipment and delivery of goods, not to events occurring prior to, or

after the shipment and delivery.1

The Savings Clause2 in the Carmack Amendment does not preserve remedies for claims

of damage to goods. Hubbard v. All States Relocation Services, Inc., 114 F.Supp.2d 1374, 1379

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(Doc. # 1).

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(Doc. # 6).

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(S.D. Ga. 2000). However, it does preserve rights and remedies that are not inconsistent with

the rules prescribed by the provisions of the Carmack Amendment. Id. (citing Adams Express

Co. v. Croninger, 226 U.S. at 507). The First Circuit has held that if a Plaintiff can allege a

claim separate and apart from the loss of damage to goods, that claim is not preempted. Rini

v. United Van Lines, Inc., 104 F.3d 502, 506 (1st Cir. 1997). 

Allowing a Plaintiff’s state law claims to impose greater liability than under the Carmack

Amendment would undermine the certainty that the legislature intended to provide. Pietro

Culotta Grapes v. Southern Pacific Transp., 917 F.Supp. at 716; Charleston & W. C. Ry. Co.

v. Varnville Furniture Co., 237 U.S. 597, 603 (1915).

CONCLUSION

It is clear from the case law of this and other jurisdictions that the Carmack Amendment

is the sole and exclusive remedy provided by Congress with respect to damage resulting from

shipment and delivery of goods interstate. Although AIG asserts that determination of On

Time’s carrier status is needed, this Court finds for the purposes of the Carmack Amendment

that On Time is a carrier and governed by Carmack. Not only did AIG allege this status in the

Complaint3

, but On Time essentially conceded its status in its Reply.4 The Court will accept

that "self-evident" status as represented by Defendant. Reply at p. 4. Further, although urged

by AIG that the state law claims are converted into claims arising under federal law, the case

law demonstrates that this does not mean the claims are incorporated or given additional

consideration by the court. Instead Carmack’s ordinary preemption means that if the claim is

not separate and apart from damages to the goods, then it has already been contemplated within

Carmack’s sole remedy function. 

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(Doc. #4-Response). 

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AIG’s claims for loss of use, "diminution in value, and consequential damages which

may include business interruption, lost profits, or other matters,"5

 are not separate and apart

from the Carmack damage to goods claim. Carmack has specifically been held to preempt state

common law claims which seek loss of business damages. Consolidated Rail Corp. v. Primary

Industries Corp., 868 F.Supp. 566 (S.D.N.Y. 1994). All of AIG’s consequential damages

claims are not only a direct result of but are recognized as included within the damages to goods

claim under Carmack. Some courts have held that a state law claim of intentional infliction of

emotional distress can be asserted as separate and apart from the damaged goods. However, no

claim above and beyond that already covered by Carmack has been asserted here. See Hubbard

v. All States Relocation Services, Inc., 114 F.Supp.2d 1374 (S.D. Ga. 2000).

In accordance with the foregoing, this Court will dismiss Counts I and II of Plaintiffs'

complaint as preempted by the Carmack Amendment, thus leaving Count III, AIG’s Carmack,

claim to be determined.

IT IS HEREBY ORDERED that Defendant On Time's Motion to Dismiss Counts I and

II of Plaintiff, AIG’s Complaint, is GRANTED (Doc. #2).

The Court will set a Rule 16 Conference by separate order.

DATED this 30th day of September, 2005.

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