United States Court of Appeals

For the First Circuit

No. 02-2572

RONALD J. RANKIN; LIZ RANKIN,

Plaintiffs, Appellants,

v.

ALLSTATE INSURANCE CO.; CONCORD GENERAL MUTUAL INSURANCE CO.;

SI TRUCKING, INC.,

Defendants, Appellees.

__________

RIGHT-ON-TIME MOVING & STORAGE, INC.,

Defendant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Margaret J. Kravchuk, U.S. Magistrate Judge]

Before

 Boudin, Chief Judge,

Torruella and Lipez, Circuit Judges.

Arthur J. Greif with whom Julie D. Farr and Gilbert & Greif,

P.A. were on brief for appellants.

James E. Fortin with whom Martica S. Douglas and Douglas,

Denham, Buccina & Ernst, P.A. were on brief for appellee Allstate

Insurance Co.

July 14, 2003
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BOUDIN, Chief Judge. This appeal concerns claims,

complicated both factually and legally, arising from an ill-starred

household move. On June 16, 2000, Ronald and Liz Rankin contracted

with Right-On-Time Moving & Storage, Inc. ("ROTMS") to transport

their possessions from California to Maine. ROTMS subcontracted

with SI Trucking, Inc. ("SI") to handle most of the move. The

Rankins had homeowners insurance policies in force with Allstate

Insurance Company ("Allstate") and Concord General Mutual Insurance

Company ("Concord"), one covering the origin residence and one the

destination.

ROTMS employees picked up the Rankins' possessions in

California in June 2000 and brought them to a warehouse. SI

employees then transferred them to an SI truck for transportation

and delivery. When SI arrived at the Rankins' new home in Maine on

July 24, 2000, the Rankins discovered that some of their

possessions had been damaged and that many others were missing.

Upon delivery, the SI movers could not account for the damaged or

missing items and became abusive and threatening toward the

Rankins.

Shortly thereafter, the Rankins notified their insurer,

Allstate, which hired an adjuster to determine what goods were

damaged and their value. In August 2000, the Rankins provided

Allstate with a detailed list of lost or damaged items,

supplemented with more information in September. The task of
1The Concord policy covered damage but not theft and all

parties appear to agree that, as to damaged property, Allstate and

Concord were each liable for half. Concord ultimately valued the

losses from damage at around $24,000, and paid half of that amount

to the Rankins in February 2002. 

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appraisal was substantial as the list comprised a large array of

objects, including household goods, electronics, artwork, and

furniture. In September, their attorney sent Allstate a demand

letter. 

The Allstate policy covered theft and damage to property

in transit but, on Allstate's reading, did not cover items that

were merely misplaced by the carrier. Allstate maintained in an

October 2000 letter that the Rankins' missing goods were not

covered by the policy because it was unclear whether they were

stolen or merely misplaced in a carrier or warehouse. On December

19, 2000, the Rankins filed a police report about the missing

goods, convinced by now that their property had in fact been

stolen. 

On January 23, 2001, Allstate sent a worksheet to the

Rankins giving its appraisal of the damaged items, but making no

mention of the larger number of stolen items. In the Rankins' view

at the time, the damage to the items that were delivered amounted

to about $24,000-–of which Allstate's share was half.1 On February

12, 2001, Allstate agreed to pay $6,000 to satisfy what it claimed

was its share of the losses stemming from the damaged goods. The

next day the Rankins gave Allstate an itemized account of their
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losses, calculating the total loss (damaged goods and stolen goods)

at $97,583 (a figure the Rankins later raised to $106,000). 

On March 2, 2001, the Rankins brought suit against ROTMS

and Allstate in federal district court in Maine. The original

complaint alleged inter alia that ROTMS had violated the Carmack

Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706 (2000),

which imposes something close to strict liability upon originating

and delivering carriers, and that Allstate had breached its

contract with the Rankins by failing to provide the benefits due

them under the insurance policy. 

In June 2001, the Rankins added SI as a defendant,

claiming against it under the Carmack Amendment and separately for

intentional infliction of emotional distress based on the behavior

of the employees who delivered the load and abused the Rankins.

The same amendment added a claim against Allstate under Maine's

Unfair Claims Settlement Practices Act ("UCSPA"), 24-A M.R.S.A. §

2436-A(1)(E) (2000), which imposes attorneys' fees and interest for

an insurer's unreasonable failure to make timely settlement of

insurance claims.

The magistrate judge empowered by consent to act as the

district court, 28 U.S.C. § 636(c) (2000), permitted the addition

of the new claims and defendants but deferred then-existing

discovery deadlines. The Rankins and Allstate made obligatory

disclosures and conducted some discovery. When SI failed to answer
2The arbitration provision, limited to valuation disputes,

provided for each side to appoint an appraiser and, if the two

appraisers could not agree, to select an "umpire" whose decision

would be final.

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the amended complaint, the Rankins in September 2001 sought and

received entry of default against it. Fed. R. Civ. P. 55(a). On

September 14, 2001, the court set a new discovery deadline of

December 14, 2001.

In October 2001, all parties had an informal settlement

conference. Allstate thereafter requested a copy of the police

report filed by the Rankins in December 2000, which the Rankins

then provided. Allstate did not depose the Rankins–-it had their

recorded statements--but Concord did take their deposition in

December 2001. Allstate did depose ROTMS and also asked that its

adjuster be allowed to contact the Rankins directly. 

Shortly after the discovery deadline and not long before

the scheduled trial date of February 11, 2002, Allstate, on

December 19, 2001, sent a letter invoking an arbitration provision

in the policy for resolving disputes as to the amount of loss or

damage.2 The Rankins rejected this demand as coming too late.

Allstate then, on December 26, 2001, sent the Rankins a check for

$38,500, as purported full payment for the theft claims–-which the

Rankins had estimated as approximately $82,000. 

Allstate then sought summary judgment on the claims

against it. The court granted the motion on March 25, 2002, as to
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certain claims not pressed on this appeal but denied the motion as

to the Rankins' contract and UCSPA claims with which we are now

concerned. Trial was rescheduled for August 2002, and the parties

were ordered to confer and provide further information to each

other. In consequence, Allstate paid the Rankins two further sums

(totaling a little over $25,000) on account of the theft claim in

May and July 2002. This brought the total payments for theft to

about $63,500--still about $19,000 short of the Rankins' final

estimate.

On July 11, 2002, the court reconsidered sua sponte its

denials of summary judgment, invited a new motion by Allstate, and

deferred the trial again. On September 16, 2002, the court granted

the motion for summary judgment, resolving both the contract claim

and the UCSPA claim in favor of Allstate. Thereafter the court

held a hearing on November 6, 2002, to determine SI's liability on

the default and heard evidence from the Rankins as to the amount of

their property losses and as to their emotional distress claims.

The next day it awarded $150,000 on the latter but--on grounds

described below--denied recovery on the former.

In the course of the litigation, the Rankins settled

their disputes with ROTMS and Concord out of court. The Rankins

have now appealed from the district court's dismissal of their

contract and UCSPA claims against Allstate and the refusal of the

district court to award damages on their property loss claim
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against SI. We consider the issues on appeal in the same order.

On the grant of summary judgment, our review is de novo. Roche v.

John Hancock Mut. Life Ins. Co., 81 F.3d 249, 253 (1st Cir. 1996).

As to the ruling on the default judgment determination, the

standard of review depends upon the basis for the ruling.

Contract Claims. In a nutshell, the Rankins say that

Allstate breached its insurance contract by failing to make timely

payment for all covered losses; that Allstate's share of the losses

is still not completely paid--a further breach of contract; and,

finally, that Allstate cannot rely on the arbitration provision for

two reasons: that Allstate itself breached the contract and that it

failed to invoke the arbitration provision in a timely manner.

The magistrate judge concluded that the delays in payment

were explainable in light of the changing nature of the Rankins'

claims and various litigation-related events and that no reasonable

jury could find otherwise. As to the remaining gap between what

Allstate paid and the Rankins' larger estimate of losses, the

magistrate judge stated that "Allstate is entitled to invoke the

contract provision requiring arbitration of any remaining disputes

regarding the value of items stolen or damaged."

Whether Allstate unreasonably delayed payment of what was

due, whether it stills owes money, and whether it lost its right to

invoke the arbitration provision are three different questions,

albeit set against the same background facts and intertwined with
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each other (and with the Rankins' separate statutory claim based on

unreasonable delay).

We start with the question whether Allstate unreasonably

delayed making payment of what was (or still is) due to the

Rankins. More precisely, the question is whether summary judgment

should have been granted by the magistrate judge on that issue.

Our conclusion is that the undue delay question presents a jury

issue, assuming arguendo that there is a contractual obligation to

act diligently. The reasons why the delay question could not be

decided on summary judgment are more appropriately set forth in our

later discussion of the statutory claim, where the answer clearly

matters.

Quite likely the answer does not matter in the case of

the contract claim. Whatever may still be due under the policy for

direct losses (that is, for direct damage to or loss of insured

goods) is due regardless of whether there has been delay. The

Rankins have suggested only two reasons why delay itself may be

pertinent to their contract claim: first, as a basis for

consequential damages and second, as a basis for rejecting the

arbitration demand. The first is doubtful and the second wrong.

There is only the barest hint that the Rankins are

seriously seeking consequential damages, that is, damages not for

the direct loss but in consequence of it. In his deposition, Ron

Rankin indicated quite tersely that because his new house was awash
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in damaged furnishings, he could not use it for some in-house

meeting or demonstration relating to his work. Almost nothing

about this is said in his appellate briefs and it strikes us as an

improbable claim.

The Rankins have not briefed the question whether the

policy permits liability for consequential damages; nor is it clear

that such a claim would turn on undue delay; nor is it especially

plausible that either the damage to furnishings or the delay in

reimbursement prevented Rankin from conducting business from home.

This has more the feel of a kitchen-sink claim than anything likely

to be pursued on the remand that is otherwise required because of

the statutory consequences of any undue delay.

The other reason why the Rankins say undue delay is

relevant under the contract concerns the arbitration clause.

Describing the delay as a "total" breach of contract by Allstate,

as opposed to a partial breach, the Rankins say that the total

breach prevents Allstate from taking advantage of any other

provision of the contract, including the arbitration clause. Undue

delay or not, we think that on the facts of this case no one could

reasonably conclude that the delay is the kind of breach that would

defeat the arbitration clause, if timely invoked (which is a

different question).

Arbitration clauses are often invoked precisely because

one side claims, and the other denies, that a contract has been
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violated. Some violations may be so broad and fundamental that

they should prevent the wrongdoer from invoking the arbitration

provision itself. But for obvious reasons of doctrine and policy,

this requires something more than a claim by one side that the

other paid some of what was due a bit too slowly and is insisting

on arbitration as to the rest under a provision explicitly designed

to resolve disputes about value. County of Middlesex v. Gevyn

Constr. Corp., 450 F.2d 53, 56 (1st Cir. 1971), cert. denied, 405

U.S. 955 (1972); 15 Corbin on Contracts § 1443, at 388-89 (interim

ed. 1962). 

Whether the arbitration is defeated by Allstate's delay

in invoking the clause is a different issue commonly addressed

under the heading "waiver," here meaning forfeiture rather than

intentional relinquishment. The Rankins support their waiver

argument by invoking a Maine insurance law provision requiring

timely reservation of defenses by the insurer, 24-A M.R.S.A. §

2436-A(1)(D); but it is not clear whether this provision applies at

all to an arbitration clause, and there is not much state law

precedent as to the statute. 

Yet an arbitration provision has to be invoked in a

timely manner or the option is lost. See, e.g., Menorah Ins. Co.,

Ltd. v. INX Reinsurance Corp., 72 F.3d 218, 221-22 (1st Cir. 1995);

Saga Communications of New England v. Voornas, 756 A.2d 954, 959-

61 (Me. 2000). Under federal law, such a forfeiture is an issue
3Although the parties do not discuss the question,

arbitration-related issues in this case are probably governed by

the Federal Arbitration Act, 9 U.S.C. § 1, et seq. (2000). If so,

federal law would automatically govern waiver issues, S & H

Contractors v. A.J. Taft Coal Co., 906 F.2d 1507, 1514 (11th Cir.

1990), cert. denied, 498 U.S. 1026 (1991); Saga, 756 A.2d at 958-

59, although there is no indication that Maine law differs as to

the requirements for waiver. See Design Dwellings, Inc. v.

Labrecque, No. Civ. A. RE-00-039, 2001 WL 1710593, at *1 (Me.

Super. Apr. 5, 2001).

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for the judge, Menorah, 72 F.3d at 220, and, pertinent fact

findings by the judge aside (which would be reviewed for clear

error), our review is plenary. Id. Where we are dealing with a

forfeiture by inaction (as opposed to an explicit waiver), the

components of waiver of an arbitration clause are undue delay and

a modicum of prejudice to the other side. Id. at 221-22.3 

In this instance, by February 2001 the parties were in

disagreement not only about whether the missing items were covered

at all–-not an issue subject to arbitration-–but also about the

value of damaged items, value being the arbitrable issue. Yet

Allstate neither invoked the arbitration clause at that time nor

did it in its April 2001 answer to the complaint filed in March

2001. Nor did it assert its right to arbitrate value in June 2001

when the Rankins' final list of lost and damaged items and

estimates was delivered and when the likelihood of theft was fairly

obvious.

Ordinarily, arbitration is provided for the dispute, not

some limited aspect of it, so the precedents tend to insist that an
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arbitration clause be invoked at the earliest opportunity.

E.g., Cabinetree of Wis., Inc. v. Kraftmaid Cabinetry, Inc., 50

F.3d 388, 391 (7th Cir. 1995). If arbitration is invoked in

response to a lawsuit, this must be done early on in the case so

resources are not needlessly deployed. E.g., Menorah, 72 F.3d at

221. Here, the situation is somewhat different: the arbitration

clause applies only to disputes about value and not to other

questions, including in this case whether certain of the goods were

stolen and so covered at all. 

 Even so, it is still hard to see why arbitration was

not demanded once the suit had been brought and the Rankins'

estimated losses had been firmed up in June 2001. Admittedly some,

perhaps most, of the disagreements as to value concerned items as

to which coverage was still disputed–-although it is not easy to

understand why theft was doubtful by June 2001. Still, discovery

in the suit was open until December 2001, the delays being no

apparent fault of Allstate and owing something to the Rankins'

addition of new claims and defendants in June 2001.

It is true that discovery could narrow the arbitrable

issues or even produce a settlement, and sometimes arbitrating as

to value might make no sense until after discovery or even after

trial (e.g., if liability itself could only be determined at

trial). Yet our concern here is with when a timely demand for

arbitration must be made, not when the arbitration itself occurs.
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And knowing early on, or at least after suit is brought what

procedures are to be followed--specifically, whether arbitration is

sought as to arbitrable issues--is a condition of efficient

planning by the court and in protecting the opponent against

prejudice.

We need not fashion some mechanical rule embracing all

possible cases. It is sufficient here that by waiting until after

discovery had closed and the long-scheduled trial date had almost

arrived, Allstate did unduly delay in invoking the arbitration

clause in this case. Certainly by June 2001, Allstate ought to

have known that theft coverage was likely to apply and that it

would dispute some of the theft claims as to value, the Rankins

having asserted these claims throughout and given their own dollar

figures as early as February 2001.

But was there any prejudice from the delay? The Rankins

say that they told Allstate in September 2000, after Allstate's

appraiser had a chance to examine the property, that they (the

Rankins) planned to dispose of broken or damaged items, which they

then did. Now, they say they have been prejudiced because--

arbitration having been belatedly demanded--they have nothing

(beyond photographs) to show the experts who act as appraisers

under the policy. Allstate does not deny the allegation or

otherwise respond to the waiver argument. 
4In the alternative, Allstate says that it is entitled to

summary judgment on the contract claim because the Rankins failed

to present any evidence regarding the value of their possessions at

the summary judgment stage and thus did not meet their burden of

proof. However, the Rankins gave their own estimates of their

property's value, and owner valuation is sufficient to show

damages. Fredette v. Allied Van Lines, Inc., 66 F.3d 369, 372-73

(1st Cir. 1995); Glidden v. Belden, 684 A.2d 1306, 1320 (Me. 1996).

Allstate also apparently failed to raise the issue before the

magistrate judge. Daigle v. Me. Med. Ctr., Inc., 14 F.3d 684, 687

(1st Cir. 1994).

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The absence of the damaged items themselves does not help

the Rankins very much. The Rankins cannot have supposed that

Allstate was conceding value and, seemingly, the now disposed of

property would have been as useful (or useless) in a jury trial as

in arbitration. A better argument, at least hinted at, is that

there is prejudice inherent in wasted trial preparation when an

arbitration demand is made, and effectively granted, after many

months of delay and only six weeks before a long-scheduled trial.

In our view, this is enough in this case. The prejudice

showing required is tame at best, Menorah, 72 F.3d at 222, and

Allstate's failure to address the issue in its brief is itself a

kind of waiver. Brandt v. Wand Partners, 242 F.3d 6, 17 (1st Cir.

2001). If there were no hint of prejudice, that would be a

different matter. But as the case stands, we think that Allstate

has forfeited its right to arbitration and that value disputes

should be tried in court, along with the statutory claim to which

we now turn.4
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The Statutory Claim. This claim, understandably, is a

major focus of Allstate's attention. The difference between

Allstate and the Rankins in valuation of damaged and stolen

property is fairly limited (about $25,000). By contrast, if

Allstate violated its duty under the UCSPA to make timely payment,

it is liable for attorneys' fees and prejudgment interest. To

state our conclusion at the outset, we think that the question

whether Allstate complied with its duty of prompt settlement under

the statute is complicated, arguably close, and (alas) not subject

to resolution on summary judgment.

The Maine statute says that an insured is entitled to

reasonable attorneys' fees and prejudgment interest (one and a half

percent interest per month on damages) if the insurer, "[w]ithout

just cause," fails to "effectuate prompt, fair and equitable

settlement of claims submitted in which liability has become

reasonably clear." 24-A M.R.S.A. § 2436-A(1)(E). The statute thus

has two conditions and is narrowly construed, Marquis v. Farm

Family Mut. Ins. Co., 628 A.2d 644, 651 (Me. 1993); but seemingly

the insurer (absent good cause) must pay claims clearly due even

though other claims from the same incident are open to dispute,

Curtis v. Allstate Ins. Co., 787 A.2d 760, 768-69 (Me. 2002), and

whether or not there is pending litigation. County Forest Prods.,

Inc. v. Green Mountain Agency, Inc., 758 A.2d 59, 68 n.4 (Me.

2000). 
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Here, by February 2001, Allstate knew that the listed

property had been undelivered for more than six months and that the

Rankins were claiming that it had been stolen. Perhaps it did not

know that the Rankins had filed a police report in December 2000,

a condition of a theft claim under the policy; but if this were the

concern, Allstate could easily have objected on this ground and

would have been given a copy of the report, as it was later when it

requested a copy. Allstate apparently offered no such objection.

Allstate had no obligation to take the Rankins' word as

to whether the property had been stolen, what items were still

missing or what the items were worth. As to the first, it could

have contacted the carriers and the police; as to the second, the

Rankins were there to be interrogated (and several recorded

statements were taken); and as to the third, the arbitration

provision could have been invoked. But under the statute, Allstate

did have a duty to investigate, cf. Masters v. Allstate Ins. Co.,

No. 99-37-B, 1999 WL 33117068, at *2 (D. Me. Sept. 20, 1999), and

not just wait to be sued–-unless it wanted to face claims under

UCSPA.

The magistrate judge-–whose reasoning is heavily relied

upon by Allstate--said this in substance: that matters were

uncertain until early 2001 and once litigation had begun in March

2001, discovery rules prevented Allstate from engaging in discovery

until the court ordered or the parties so agreed, Fed. R. Civ. P.
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26(d); that when the "discovery window" opened on May 7, 2001, with

an order by the court, it was closed again in mid-June by the court

due to the Rankins' own addition of new claims and defendants and

did not reopen until a new order in mid-September 2001, setting a

three month discovery schedule.

At that point, Allstate did ask for the earlier police

report made by the Rankins in December 2000, conducted a deposition

of an ROTMS employee in November 2001, and presumably took

advantage of Concord's deposition of the Rankins in December 2001.

On December 19, 2001, not long after discovery closed, Allstate

paid the Rankins $38,510 on the theft claims (later payments

followed in May and July 2002). It also invoked the arbitration

clause as to the remaining claims.

As to the first payment, the magistrate judge said that

three months from mid-September to mid-December was as a matter of

law not an unreasonable delay. And, as to the subsequent payments,

the magistrate judge said, given the complexity of the case, the

failure of Allstate to "immediately pay all the money [the Rankins]

demanded," was not a violation of the statute. This may mean that

the magistrate judge deemed the amounts over and above the initial

payment to be reasonably disputable until paid in the spring and

summer of 2002, although the point is not discussed in detail.

 We do not think that the magistrate judge's assessment

is unreasonable, and we would likely defer if it were a mixed
5Assuming the matter is fairly debatable, juries in federal

court usually decide whether conduct was "reasonable," e.g.,

Thacker v. City of Columbus, 328 F.3d 244, 255 (6th Cir. 2003).

Under the Seventh Amendment, it would not matter whether Maine

courts gave such issues to the judge. Byrd v. Blue Ridge Rural

Elec. Coop., Inc., 356 U.S. 525, 537-40 (1958). 

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finding of an issue properly committed to the magistrate judge. In

re Howard, 996 F.2d 1320, 1327-28 (1st Cir. 1993). And admittedly,

assessing what is reasonable behavior in the context of litigation

rules and procedures is not the easiest task for a jury. But this

assessment under the UCSPA, unlike the arbitration waiver question,

is committed to the jury unless a reasonable jury could decide it

only one way.5

The precedents today are far more favorable to summary

judgment than they once were, e.g., Celotex Corp. v. Catrett, 477

U.S. 317, 321-23 (1986), and Maine courts do not lightly impose

liability under UCSPA. Marquis, 628 A.2d at 651. Still, the Maine

statute does not make litigation a blanket excuse for inaction by

the insurer, County Forest, 758 A.2d at 68 n.4, nor did the

magistrate judge say otherwise--and we think that a jury, even

after being told how discovery rules limited Allstate, could--if

the trial evidence matches the present record--take a different

view of Allstate's behavior without being deemed irrational. This

is so in two, and possibly three, respects.

First, admittedly, proof that the goods were likely

stolen emerged only over the course of time. But with even modest
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investigation this arguably should have been clear to Allstate even

before the suit was brought on March 2, 2001. Whatever the

limitations on formal discovery during some of the period after

suit, and whatever delay might have been caused by the Rankins'

enlarging slightly their claimed loss in June 2001, a jury might

well think based on the record before us that waiting until late

December 2001 to pay theft claims for items of undisputed value was

not reasonable.

Second, there is very little from Allstate, and nothing

specific from the magistrate judge, to explain why the balance of

the now undisputed claim (some disputed amounts still remain after

all three payments) took until July 2002–-some two years after the

non-delivery. Perhaps there is some good reason for these

subsequent delays; unduly hasty decisions by insurers to pay

doubtful claims raise premiums for everyone. But to justify

summary judgment, it was for Allstate to explain the reasons for

this delay. We can find no explanation so far, although

conceivably it could still be furnished at trial.

Third, it is also unclear what basis Allstate had for

contesting the still disputed amounts ($25,000, of which $19,000

was due to stolen items). We assume that any legitimate doubt is

a safe harbor under UCSPA and that other legitimate reasons for

delay can be offered; but, in its reply brief, the Rankins say

Allstate has never explained why it still disputes these amounts.
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It is true that Allstate invoked the arbitration clause but, quite

apart from what we have found is a waiver of arbitration, the

question remains what basis Allstate had for disputing the figures,

arbitrable or not.

On appeal, Allstate argues that its contractual

obligation under the terms of its policy is to make payment within

60 days after the amount of the loss is "finally determined"

(whatever this means) and that it was always within the control of

the Rankins to invoke the arbitration provision to speed up the

process. This argument is primarily presented in response to the

contract claim, not the UCSPA claim and, however the 60-day

language is read, it is open to serious doubt whether it overrides

UCSPA obligations–-a question of Maine law which we need not

decide.

It is enough for the present that, at least as applied to

the UCSPA claim, the argument based on the policy language is so

little developed that we have no occasion to pass upon it. Brandt,

242 F.3d at 17. Further, according to the Rankins, Allstate never

made this argument in the district court; and, if so, it could not

be made here even if it were developed since new legal arguments

cannot be debuted on the appeal. Daigle, 14 F.3d at 687. And, if

not made before the appeal, it is almost certainly no longer

available even on remand. 
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SI's Liability. The Rankins sued both ROTMS and SI

under the Carmack Amendment. That statute provides a federal

private right of action to obtain actual damages under the bill of

lading for property "loss or injury" caused by carriers

transporting goods in interstate commerce. 49 U.S.C. §

14706(a)(1). It embraces both the originating and the destination

carrier. Id. With irrelevant exceptions, liability is without

fault, PNH Corp. v. Hullquist Corp., 843 F.2d 586, 588-89 (1st Cir.

1988), but subject to limitation as to amount where the contract so

provides in exchange for a reduced transportation rate. 49 U.S.C.

§ 14706(c)(1)(A). 

The claim against ROTMS was proceeding toward eventual

trial when the Rankins and ROTMS reached a settlement. Because SI

never entered an appearance or filed an answer in the lower court,

a default was entered against it on September 17, 2001. Fed. R.

Civ. P. 55(a). Pursuant to Rule 55(b)(2), a hearing for damages

was scheduled on November 5, 2002, at which time the Rankins gave

evidence as to the extent of their losses. Following the hearing,

the magistrate judge determined that damages for property damage

and loss under the statute could not be awarded against SI. Her

full discussion of the Carmack Amendment claim (count I) is as

follows:

Count I seeks relief against

Right-on-Time Moving and Storage, Inc. as a

carrier subject to the Interstate Commerce

Act. SI Trucking's liability under this
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count, as the subcontractor, would necessarily

be co-extensive with Right-on-Time's. I

cannot grant the Rankins greater relief than

their complaint seeks. The Rankins have not

alleged a separate breach of contract claim

against SI Trucking nor a separate tort claim

for damage to personal property nor does Count

I seek any relief against SI Trucking beyond

the relief obtained against Right-On-Time.

The Rankins did not present any evidence of

the extent of SI Trucking's liability under

the Interstate Commerce Act and therefore I

decline to enter judgment in any monetary

amount on Count I and direct that Count I is

DISMISSED as the plaintiffs have not presented

sufficient evidence to establish the amount of

SI Trucking's statutory liability pursuant to

49 U.S.C. § 14706.

The Rankins argue on appeal that ROTMS's liability is

immaterial to SI's liability and that they (the Rankins) did

present evidence of SI's liability and the extent of damages. SI

has not entered an appearance, so there is no one to explain and

defend the ruling of the magistrate judge. We must do the best we

can, adjusting the standard of review--de novo, abuse of

discretion, and so on--to the underlying issues presented by the

ruling.

It is clear from count I that both ROTMS and SI were sued

as "carriers" subject to the Carmack Amendment and, from the

incorporated prior factual assertions in the complaint, that one

was the originating and the other the destination carrier of goods

damaged or stolen in transit. Broadly speaking, the magistrate

judge is right that ordinarily liability of the two carriers would

be co-extensive (not because SI was a subcontractor but because the
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statute makes the two carriers each fully liable)--a liability

understood, in the jargon of the common law, to be joint and

several. Pizzo v. Bekin Van Lines Co., 258 F.3d 629, 634 (7th Cir.

2001).

Thus it is hard to understand what the magistrate judge

meant in saying that "[t]he Rankins have not alleged a separate

breach of contract claim against SI nor a separate tort claim for

damage to personal property . . . ." The Carmack Amendment

effectively creates a federal statutory remedy on the bill of

lading against both the originating and destination carrier, and

the complaint is clear that the Rankins were seeking this remedy

against SI as well as ROTMS. Whether one thinks of the claim

against the destination carrier as contract, tort, or just a

product of the statute, count I does assert a claim against SI. 

Admittedly, liability is likely to be co-extensive if

each carrier asserts the same defenses and faces and presents the

same evidence; and ROTMS argued that its liability was not for the

full value of the lost or damaged goods because it had limited its

liability to 60 cents per pound, as the Carmack Amendment permits

subject to certain procedures. Hollingsworth & Vose Co. v. A-P-A

Transp. Corp., 158 F.3d 617, 618-21 (1st Cir. 1998). But the

magistrate judge had earlier refused to grant ROTMS summary

judgment even on this limited liability issue (because it was not

clear that the Rankins had consented to the limitation). And that
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defense--which is only a limitation on the amount--was never

adjudicated because ROTMS settled thereafter with the Rankins.

In a few states, a settlement with one joint tortfeasor

releases the other, e.g., Dougherty v. Cal. Kettleman Oil

Royalties, Inc., 88 P.2d 690, 693 (Cal. 1939), but the predominant

"modern" rule is that release of one joint tortfeasor does not

release another. See Restatement (Second) Judgments § 50, cmt. a,

illus. 1 (1982). Of course, anything paid by ROTMS for stolen

property or damage should reduce SI's liability for property loss

or damage--collateral source issues aside, one cannot collect twice

for the same injury, id. at illus. 1--but there is no indication

that ROTMS paid in settlement all of the approximately $105,000

that the Rankins apparently claim.

Did then the magistrate judge mean that the Rankins had

simply failed to offer evidence as to damages? This seems

unlikely, despite one reference to a supposed failure of the

Rankins to present "sufficient evidence to establish the amount" of

SI's liability. The reason why this is unlikely is that the

Rankins plausibly represent that in substance they offered their

own testimony at the hearing as to what was damaged or missing and

provided their estimates of worth, together with photographs of

damaged items. Such evidence is ordinarily competent, even without

expert testimony. See note 4, above. 
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Through a mechanical malfunction, the default judgment

hearing was not recorded. However, the Rankins properly presented

a statement of their evidence for the approval of the magistrate

judge, which was given. Fed. R. App. P. 10(c). This comprised the

lists of property and loss estimates, copies of the photographs,

and the representation that Ron Rankin had testified that the lists

contained accurate statements of what was damaged or missing and

his best estimate of the value of lost items and the dollar value

of the damage. If the magistrate judge thought that the Rankins'

evidence was defective, neither this conclusion nor the grounds for

it have been explicitly set forth.

Accordingly, we are bound to remand the count I claim

against SI for further proceedings. Of course, even if liability

is clear--and we do not foreclose some further explanation of why

it is not--the magistrate judge is not bound to accept the Rankins'

own estimates, which Allstate itself apparently contests; but that

would reduce rather than eliminate SI's liability. If the same

issues are to be tried against Allstate, nothing prevents the

magistrate judge from deferring a decision on SI's liability until

that proceeding is complete.

This is a peculiar case. Although the Rankins have been

largely successful on this appeal, it is far from plain that the

Rankins' estimates, as opposed to Allstate's, will necessarily

prevail at trial and equally unclear that Allstate is liable for
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unreasonable delay under the statute--let alone for consequential

damages: we have said only that the delay issue is not quite

suitable for summary judgment on this record. Given these

uncertainties, we urge again--as we did at oral argument--that the

Rankins and Allstate consider anew the possibility of settlement.

The judgment of the district court insofar as it

dismissed or denied the contract and statutory claims against

Allstate and the Carmack Amendment claim against SI Trucking is

vacated and the matter remanded for further proceedings consistent

with this decision.

It is so ordered.