Source: http://cabadvantage.com/articles/category/cases-from-bits/c46-volume-11-edition-9/
Timestamp: 2019-04-26 00:40:16+00:00

Document:
Byrnes v. Billion BMW, Inc.
andDependable Auto Shippers, Inc., Defendant-Appellant/Cross-Respondent.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-4466-03.
Michael E. Unger argued the cause for appellant/cross-respondent Dependable Auto Shippers, Inc. (Law Offices of Freehill, Hogan & Mahar, LLP, attorneys; Mr. Unger and Pamela L. Schultz, on the brief).
Ronald L. Lueddeke argued the cause for respondent/cross-appellant James Byrnes (Lueddeke Law Firm, attorneys; Mr. Lueddeke and Karri Lueddeke, on the brief).
James A. Paone, II, argued the cause for cross-respondent Billion BMW, Inc. (Lomurro, Davison, Eastman & Munoz, attorneys; Mr. Paone, of counsel and on the brief).
Before Judges AXELRAD, SAPP-PETERSON and MESSANO.
Defendant Dependable Auto Shippers, Inc. (DAS) appeals from the July 28, 2006, order entering judgment, after a jury trial, in favor of plaintiff James Byrnes in the amount of $93,000, and dismissing all claims and cross-claims against co-defendant Billion BMW, Inc. (Billion). Plaintiff cross-appeals from those portions of the order dismissing his claims against Billion, as well as the September 8, 2006, order that denied his request for counsel fees. We have considered the arguments raised by the parties in light of the record and applicable legal standards. We reverse and remand the matter for further proceedings consistent with this opinion.
We recite the relevant facts from the trial testimony. On October 20, 2002, plaintiff purchased a 2003 BMW 750 Li for $82,476.17 from Billion, a car dealership based in Sioux Falls, South Dakota. After shopping for the car at local dealerships, plaintiff searched the internet to locate the specific car and options that he desired at a better price, and subsequently had a series of phone conversations with Billion’s salesman prior to the purchase. Plaintiff paid $30,000 of the purchase price in cash, and financed the balance by securing a bank loan, amortized by monthly payments of $1,066 over sixty months, beginning in November 2002. Plaintiff testified that as of the trial, in April 2006, he had continued to make his monthly payments on the car loan and approximately $19,200 remained as a balance on the loan.
Billion contracted with DAS, a shipper of high-end automobiles, to transport the car from DAS’s agent’s facility in Omaha, Nebraska, to DAS’s facility in Linden, New Jersey, where plaintiff was to take delivery. On October 29, 2002, Billion transported the car to Omaha, and on November 11, 2002, a DAS truck picked it up for transport to New Jersey. Upon taking custody of the car, DAS issued a bill of lading that limited its liability to $250 unless “valuation coverage” was purchased. Plaintiff had purchased insurance for the car, and it is undisputed that neither Billion nor plaintiff purchased “valuation coverage” from DAS.
The car arrived at the DAS yard in Linden on November 14, 2002. Company policy required that DAS personnel inspect any delivered vehicle and make a notation of any damages. DAS’s risk manager, Vernon Allison, testified that the company had no records of any post-shipment damage to plaintiff’s new car.
Two days later, plaintiff arrived to pick up the car and observed that it was covered in “mud all over the place,” and had marks and multiple dents on its body. The vehicle’s armrests were up, cup holders were out, and the cellular phone that was included in the purchase price was stolen. Plaintiff crossed his name off the bill of lading he previously signed upon arrival at the DAS facility, marked “refused” on it, and, pursuant to advice he received from Billion’s salesman, Jeff Boe, left to report the incident to the police. He returned two hours later with a police officer who prepared a report documenting plaintiff’s complaints about the condition of the car.
Noticing a dirt track at the back of the DAS facility, that the mud on the car appeared similar to that of the dirt track, and the nervous demeanor of the DAS employees responsible for giving him the car, plaintiff surmised that DAS’s employees had taken the car for a joyride on the track. A DAS employee, documenting the damage to the car, informed plaintiff that the bill of lading limited DAS’s liability.
Plaintiff told Boe that he was rejecting the car because of the damage. Plaintiff testified that Boe told him that Billion would have the car examined by an auto-body repair shop, and, if plaintiff did not want the car after it was repaired, Billion would send him a brand new one. Billion arranged for Garden State Auto Body (GSAB) to remove the car from the DAS yard and repair it. GSAB’s written estimate confirmed damage to the rear bumper, trunk lid, and rear quarter panel, a missing taillight, and the need for various cleaning and painting. Additionally, the odometer of the car now registered fourteen miles, seven more than when Billion delivered it to DAS.On January 6, 2003, Billion paid GSAB’s repair bill of $2388.67.
There is other contradictory evidence on this point in the record, including the written purchase order for the car that indicated it already had twenty-five miles on its odometer before it was delivered to Omaha.
Plaintiff was unsatisfied with the repairs, however, and Boe authorized additional repairs at an estimated cost of $1014.47. A few weeks after the second round of repairs were complete, plaintiff returned to GSAB to inspect the car. Plaintiff testified that the owner of GSAB, Peter Ciccone, told him that the car needed further work, and that Billion had authorized only some of the work in “piecemeal” fashion. However, when Ciccone testified, he indicated that there were no further problems with the car after the second round of repairs, and that plaintiff did not advise him of any further work he believed needed to be done.
At this point, plaintiff called Billion to advise that he was still refusing to accept the car. Boe had left Billion’s employ, so plaintiff spoke to Billion’s vice-president, David Billion, who advised that Billion would not discount the car or give plaintiff a new one. Billion testified that if indeed Boe had ever made such a representation to plaintiff, he was unaware of it, and Boe was not authorized to do so. Despite refusing to accept the car or sell it, plaintiff continued making the monthly payments on his car loan because he believed he needed to protect his credit rating.
Plaintiff retained counsel, but negotiations to resolve the dispute were not fruitful. Plaintiff testified that after the second round of repairs, he was not going to accept the car; however, apparently through counsel, and in an attempt to resolve the dispute, plaintiff demanded that Billion pay the additional repair costs and provide him a credit of $8000, an amount ostensibly related to plaintiff’s costs in renting a luxury replacement car.
At a different point in his testimony, David Billion estimated the value of the car as between $72,000 and $75,000.
As of May 2003, the balance for the second round of repairs still remained unpaid and GSAB notified Billion and plaintiff that it would begin assessing a daily storage fee for the vehicle. On June 2, 2004, GSAB again reminded Billion of the unpaid balance and accruing storage fees and also sent plaintiff a similar reminder on August 27, 2004. On June 7, 2005, GSAB filed with New Jersey’s Motor Vehicle Commission its notice of intention to sell the BMW as an abandoned vehicle, serving same on plaintiff and Billion. With no response from the parties, Ciccone testified that he eventually sold the car for “$20,000 some [ ] dollars” to cover his repair costs and storage fees.
In the interim, on September 29, 2003, plaintiff filed a complaint against Billion and DAS asserting claims of breach of contract, negligence, legal fraud, spoliation of evidence, breach of express and implied warranties, violation of the Consumer Fraud Act, N.J.S.A. 56:8-1 through -20 (the CFA), and breach of the implied covenant of good faith and fair dealing. In its answer, DAS asserted affirmative defenses that included an allegation that plaintiff had failed to mitigate damages and that his claim for damages was limited by the bill of lading and by statute. DAS also cross-claimed against Billion, seeking indemnity and contribution, and Billion’s answer asserted similar cross-claims against DAS.
On September 22, 2004, two weeks after the discovery period ended, DAS moved for summary judgment arguing: (1) that plaintiff could not establish a prima facie case that its employees had damaged the car; or (2) alternatively, that its liability was limited to $250 pursuant to the terms of the bill of lading, or to the amount of plaintiff’s “actual damages” under the Carmack Amendment (the Amendment), 49 U.S.C.A. § 14706. Plaintiff also moved for partial summary judgment against Billion. On November 10, 2004, the motion judge denied both applications, and DAS’s motion for reconsideration was similarly denied on March 15, 2005.
DAS sought the same relief immediately before trial by way of a motion in limine that was also denied, and trial commenced over three days from April 11 to April 13, 2006. During an extensive charge conference following completion of the testimony, DAS and Billion agreed that if plaintiff prevailed, the judge should determine any allocation of damages between the two. The defendants also agreed that their respective claims for indemnification and contribution should be decided post-trial by the judge. Plaintiff reserved a right to seek counsel fees from the court if he prevailed.
In responding to specific interrogatories posed on the verdict sheet, the jury returned a verdict in favor of plaintiff and found both Billion and DAS had breached their contracts. The jury also found that Billion’s subsequent repairs of the car “cure[d] any defect.” It further found the car had been damaged while in DAS’s custody, that DAS’s employees took the car for a joyride, and that DAS was grossly negligent in its custody and care of the vehicle. Finally, the jury determined the car’s January 2003 post-repair value to be $75,000, that plaintiff had mitigated his damages, and awarded plaintiff $93,000 in damages.
Damages are very easy to fix in this case …. $30,000 down payment … [Forty-two] payments, at … $1,066.08….
… [T]hat comes out to $44,775.36. And of course [plaintiff] had the balance due for the remaining payments, … that the current payoff I think is 19-2. Which comes up to $93,975.36…. [T]hat’s the figure I would respectfully suggest is the appropriate one based upon the evidence.
The sum of plaintiff’s down payment and the total costs associated with his car loan, according to the loan documents in evidence, was $93,964.80.
Following trial, plaintiff moved for the entry of judgment jointly and severally against Billion and DAS, as well as counsel fees. DAS moved to limit the amount of any judgment against it, arguing that even if its liability were not limited by the bill of lading or the Amendment, it could not be responsible for any damages exceeding the difference between the purchase price of the car and the estimated market value after repairs. DAS noted that after Billion moved the car to GSAB, DAS no longer had control over the vehicle. Billion cross-moved to fix the form of judgment, arguing that the risk of loss passed to plaintiff at the time of delivery to DAS’s Linden facility, or alternatively, after it cured any defects by completing the second repairs in January 2003. It contended that the jury’s verdict required dismissal of all claims against it.
Relying on the jury’s answers to specific interrogatories, the judge agreed that any further risk of loss passed to plaintiff after Billion had affected a cure through repairs, and he entered a judgment of no cause of action against Billion. Because the jury had found DAS “grossly negligent,” and plaintiff had mitigated his damages, the judge refused to set aside or reduce the $93,000 verdict against DAS. The judge reserved ruling on plaintiff’s motion for counsel fees and sought further briefing. On July 28, 2006, he entered an order granting plaintiff judgment in the amount of $93,000 against DAS, and entering a judgment of no cause of action against Billion.
On September 8, 2006, the judge denied plaintiff’s request for counsel fees and costs. Later that day, plaintiff filed a motion for reconsideration. On September 27, 2006, DAS filed its appeal and plaintiff cross-appealed. On October 6, 2006, the judge dismissed plaintiff’s motion for reconsideration, concluding he lacked jurisdiction because the appellate processes had been invoked.
DAS argues: 1) that its pre-trial motions for summary judgment should have been granted; 2) that the trial judge erred in excluding certain photographic evidence; and 3) that the judgment amount must be set aside because a) plaintiff is limited to recovery of his “actual damages” under the Amendment; b) because plaintiff had a duty to accept the vehicle after it was repaired; and c) because the parties had otherwise agreed to limit DAS’s damages to those that occurred while the car was in its possession. Plaintiff counters that the pre-trial motions were properly denied, that the evidence was properly excluded, and that the judgment amount was proper and was not subject to any agreement of limitation between plaintiff and defendants.
In his cross-appeal, plaintiff argues the trial judge improperly denied his motion for counsel fees because they were specifically provided for by the bill of lading. He also argues that the judge committed error by dismissing his CFA claim against Billion, and in finding no cause of action against Billion based upon the jury interrogatories. Billion counters by arguing that plaintiff’s CFA claim was properly dismissed, that the judge properly entered no cause of action in favor of Billion based upon the jury’s findings, and that any agreement it reached with DAS during the litigation did not serve to indemnify DAS for plaintiff’s judgment.
We initially dispense with DAS’s arguments regarding the denial of its pre-trial motions and the judge’s evidence ruling finding them to be of insufficient merit to warrant extensive discussion in this opinion. R. 2:11-3(e)(1)(E). We add these brief comments.
DAS contends its motion for summary judgment on liability should have been granted because plaintiff failed to raise sufficient proof to demonstrate DAS’s employees were responsible for the damage to the car. Relying upon Housel v. Theodorididis, 314 N.J. Super . 597 (App.Div.1998), and Gonzalez v. Ideal Title Importing Co., 371 N.J.Super. 349 (App.Div.2004), aff’d,184 N.J .415 (2005), DAS contends that plaintiff failed to oppose its statement of material facts in support of the summary judgment motion and supplied no information based upon personal knowledge that DAS’s employees had damaged the car.
The motion judge properly determined that a genuine dispute of material fact precluding summary judgment existed based upon plaintiff’s opposition to the motion, which included documentation of his loan agreement with the bank binding him to make payments for the car, the damage report and appraisal prepared by GSAB, the bill of lading marked with plaintiff’s refusal to accept the car because of the damage, and a certification that plaintiff believed DAS’s employees caused the damage.We find that the information supplied in opposition to the motion, together with the reasonable inferences to be drawn, could have led to the conclusion that the car was damaged while in DAS’s control.
The certification also included an unsigned narrative prepared by plaintiff detailing the events that took place when plaintiff first appeared at DAS’s Linden facility.
Both cases DAS cites are readily distinguishable. In Housel, the non-moving party presented no opposition disputing the moving party’s statement of material facts. Housel, supra, 314 N.J.Super. at 602-04. In Gonzalez, the opposition contradicting the moving party’s factual assertions was not based upon any personal knowledge. Gonzalez, supra, 371 N.J.Super. at 358. As we noted, plaintiff’s opposition, though circumstantial in nature, clearly led to the reasonable conclusion that DAS’s employees damaged the car and was based upon his own personal knowledge of the events.
We note in passing, that DAS never asserted in the motion papers that the vehicle was not in fact damaged while in its custody.
In the alternative, DAS argued it was entitled to partial summary judgment on damages, contending that any recovery by plaintiff was limited to $250 as set forth in its bill of lading. However, DAS acknowledges in its brief that the limitation would not apply if the carrier was “grossly negligent or intentionally reckless in its care and custody of the” car, citing American Cyanamid Co. v. New Penn Motor Express, 979 F.2d 310, 315-16 (3d Cir.1992). Therefore, it seems to us that the judge properly denied the motion for partial summary judgment as to damages based upon the rather sparse motion record occasioned by the lack of any significant discovery by the parties.For these reasons, we find no error in the denial of DAS’s motion for reconsideration of these issues.
DAS’s argument relies in significant part upon the motion judge’s conclusion that further discovery was necessary and that the matter was not “ripe” for summary judgment. It argues that since the discovery deadline had passed, and plaintiff never sought any additional discovery, the judge’s reliance upon the need for further discovery was misplaced. We conclude that the judge’s ultimate reason for denying the motion, i.e., that on the motion record available disputed material facts existed, was correct.
We discuss the issues DAS raises regarding the denial of its motion for partial summary judgment limiting plaintiff’s claim to “actual” damages in greater detail below, and in the context of the trial testimony.
As to the alleged error regarding the trial judge’s refusal to permit DAS to introduce photographic evidence that there was no dirt track at the rear of its Linden facility, we conclude the judge’s decision was not a mistaken exercise of discretion, or, alternatively, if it was error, it was harmless. The issue arose during a break in Allison’s testimony when DAS sought to introduce photographs of the Linden facility taken in 2006. We gather from the record the photos demonstrated there was no dirt track in the rear of the facility and were intended to rebut plaintiff’s testimony that the mud on the new vehicle came from the dirt track that “looked like it was” at the rear of the DAS’s yard.
However, it was undisputed that DAS never furnished the photographs during discovery, or even at the onset of trial. The trial judge, recognizing that DAS was on notice from “day one” that plaintiff alleged there was mud on the car, that DAS employees had driven the car, and that plaintiff had specifically demanded production of all photographs DAS intended to use, denied DAS’s request and excluded the photographs. Under these specific circumstances, we cannot conclude that the trial judge mistakenly exercised his broad discretion regarding the admission of evidence. Benevenga v. Digregorio, 325 N.J.Super. 27, 32 (App.Div.1999), certif. denied,163 N.J. 79 (2000). Furthermore, Allison, who was a long-term employee of DAS and fully familiar with its operations and facilities, was permitted to testify that the entire DAS facility in Linden was covered in asphalt and that there was no dirt track. Therefore, any error in not permitting the photographs taken three years after the events was harmless.
We consider the issues DAS raises regarding the jury’s award of damages in the amount of $93,000 in light of the jury’s specific interrogatory answers, and the judge’s subsequent conclusion that based upon those answers, Billion was not liable to plaintiff for any damages. In essence, urging various legal theories, DAS contends that, at worst, it cannot be legally liable to plaintiff for any award of damages that exceeds the actual diminution of the BMW’s value caused as a result of its employees’ gross negligence.
During the post-trial motion to settle the form of judgment, DAS’s counsel moved to set aside the jury verdict and limit plaintiff’s damages to the difference between the purchase price of the car, and $75,000, the value of the car after repairs, as found by the jury. The judge denied the motion, finding that the jury relieved Billion of liability because it had decided that Billion cured any defect by repair, while at the same time finding that plaintiff was entitled to a full measure of his damages because he properly mitigated damages.
In support of its appeal of that denial, DAS raises three specific arguments under the general rubric that the judgment fails to “comport with [ ] applicable law.” First, DAS contends that the Amendment limits plaintiff’s recovery to his “actual damages,” in this case the diminution in the value of the BMW after it was repaired. Second, and as a corollary to its first argument, DAS contends that plaintiff had a duty under the Amendment to accept the car after it was repaired a second time. Third, DAS maintains that the judgment somehow does not comport with the parties’ earlier agreement. Because we agree that plaintiff’s damages against DAS are limited to “actual damages,” we need not consider the balance of defendant’s arguments.
To establish a prima facie case of liability under the Amendment, a shipper must prove the following three elements: (1) delivery of the goods to the initial carrier in good condition, (2) damage of the goods before delivery to their final destination, and (3) the amount of damages. After a plaintiff establishes a prima facie case of liability against the carrier, the carrier has the burden of proving that it was not negligent and that the loss was caused by an act of God, act of public enemy, act of shipper, act of public authority, or the inherent nature or vice of the goods.
The rights and obligations conferred by the Amendment upon shippers, like Billion, apply to consignees, like plaintiff, as well. See S & H Hardware & Supply Co. v. Yellow Transp., Inc., 432 F.3d 550 (3d. Cir.2005). Plaintiff concedes that his claim against DAS is strictly governed by the Amendment.
A carrier may limit its liability for goods lost or damaged in transit to a sum certain. Industrial Risk, supra, 328 N.J.Super. at 591. DAS included such a limitation of liability in the amount of $250.00 in its bill of lading. DAS concedes, however, that this limitation does not apply since the jury determined it was grossly negligent, a position we accept for purposes of this appeal.
But, even if the limitation of liability is inapplicable, DAS argues that plaintiff’s damages against it were limited to “the actual loss or injury to the property caused by” its gross negligence. 49 U.S.C.A. § 14706(a)(1). It continues that the upper limit of possible damages that it could be liable for in this case should be the car’s reduction in market value and the repair costs, because that is the measure of “actual loss” occasioned by its gross negligence. Camar Corp. v. Preston Trucking Co., 221 F.3d 271, 277 (1st Cir.2000).
However, as plaintiff counters, decisional law construing the Amendment “incorporates common law principles for calculation of damages,” and “[u]nder particular circumstances, replacement cost can be a legitimate measure of [ ] Amendment damages.”Nat’l Hispanics Circus, Inc., v. Rex Trucking, Inc., 414 F.3d 546, 552 (5th Cir.2005). Additionally, “an injured party may recover damages for delay, non-speculative lost profits, and all reasonably foreseeable consequential damages” occasioned by the carrier’s negligence. Mach Mold Inc. v. Clover Assocs., 383 F.Supp.2d 1015, 1032 (N.D.Ill.2005).
We agree with DAS that the critical inquiry is whether plaintiff’s claim for damages-all costs associated with the purchase and financing of the car-is a claim for foreseeable damages proximately caused by DAS’s gross negligence. We conclude it is not, and that DAS was entitled, as a matter of law, to have its damages capped at an amount equal to the costs of repairs and the diminution in the market value of the car after the repairs.
In other circumstances, discussing the measure of damages attributable to a damaged automobile, we have held that “ ‘[t]he general primary rule is that, in the absence of the total destruction of an automobile the measure of damages is the difference in its value immediately before and after the injury.’ “ Premier XXI Claims Management v. Rigstad, 381 N.J.Super. 281, 283 (App.Div.2005)(quoting Jones v. Lahn, 1 N.J. 358, 362 (1949))(emphasis added). However, “when the cost to repair a vehicle is proven, but there exists additional proof showing that even with the repair, the vehicle has depreciated, plaintiff is entitled to the reasonable cost of repair plus the depreciation, if any.” Premier XXI Claims Management, supra, 381 N.J.Super. at 284.
In this case, there was no proof that the car was destroyed or otherwise worthless; rather, the only proof was to the contrary, i.e ., that the value of the car after the repairs were made was at least $72,000 wholesale. The jury found as a fact that the car was worth $75,000 after it was repaired.
Counsel: Now if the jury accepts the testimony that it was delivered to DAS in Linden perfectly and then the DAS people joyride the vehicle and damage it, then can I seek rescission damages against DAS?
Judge: The answer is no.
Counsel: So, that’s the problem. I’m left with diminution of value and I’ve totally lost remedies against Billion. So it would seem like I can win against either … get one or the other, but my remedies are different depending on how that’s played out.
At various points throughout the trial, the judge agreed that plaintiff’s recovery against DAS was indeed limited.
This essential distinction as to the remedies available to plaintiff vis-à-vis each defendant was not explained to the jury, nor adequately considered by the judge after he dismissed Billion from the case. Plaintiff may have had the right under the UCC to the tender of a perfect car as to Billion, see Ramirez v. Autosport, 88 N.J. 277, 290 (1982), but his remedy against DAS was strictly proscribed by the Amendment and the common law principles as to damages that flowed therefrom.
After Billion removed the vehicle from DAS’s facility to repair it, the car was never returned to DAS’s control. It was unable to repair the vehicle itself, unable to sell it for its undisputed, significant market value, or otherwise limit plaintiff’s recovery to the actual damages that then existed; at the same time, plaintiff’s alleged damages were escalating. Instead, DAS became the unwitting “third man out” in the struggle between plaintiff and Billion to resolve their dispute. In short, the reasonably foreseeable damages proximately caused by DAS’s gross negligence were limited to the diminution of the value of the car after it was repaired, and the costs of those repairs.
Plaintiff’s claim for damages associated with his financing costs are in the nature of “special damages,” which, under the Amendment and as to DAS, are unrecoverable anyway. See Mach Mold Inc., supra, 383 F.Supp.2d. at 33 (holding special damages must be “reasonably foresee [n] as the ordinary consequence of a breach at the time the contract was made” and that the “carrier had notice of circumstances which might lead to such damages”). There was no evidence that DAS was on notice that plaintiff financed the purchase of the car over time and would be responsible for continued payments on the car loan whether he accepted delivery of the vehicle or not.
A jury verdict will not be set aside unless it clearly and convincingly appears that there was a miscarriage of justice under the law. R. 2:10-1; Dolson v. Anastasia, 55 N.J. 2, 7-8 (1969). Here, the jury should have been advised, as a matter of law, that in the event it found for plaintiff as against DAS, it was limited to an award of damages that could not exceed the difference between $75,000 and the purchase price of the car. For that reason, the judgment against DAS must be reversed.
Before we turn to plaintiff’s cross-appeal, we would note that denial of DAS’s summary judgment motion on this issue was proper. While DAS was entitled to a determination, pre-trial, that plaintiff’s recovery under the Amendment was limited to “actual” damages, the exact parameters of the claim certainly could not have been fleshed-out on the scant motion record that then existed, and, at best would have resulted merely in an order declaring plaintiff’s claim against DAS to be so limited, without more. In light of our ruling, we conclude that there was no error in the denial of DAS’s summary judgment motion.
Plaintiff’s cross-appeal argues that the judge’s entry of no cause of action against Billion was error, as was his earlier dismissal of plaintiff’s CFA claim. Plaintiff also contends that he was entitled to an award of counsel fees against DAS based upon the express language of the bill of lading.
Plaintiff’s claim of error regarding the dismissal of his CFA claim is multi-faceted. He contends that Billion misrepresented that the car would be shipped to New Jersey in a closed container and it was not; that Billion reneged on its promise to supply plaintiff with a new car if he was unsatisfied with the repairs; that it failed to obtain his consent to the bill of lading’s limitation of liability; and that it improperly demanded that plaintiff accept the car before paying for the second round of repairs. Individually or collectively, he contends that these events are sufficient to prove a violation of the CFA. He also argues that the trial judge misinterpreted existing law by concluding that a claim for breach of contract cannot also be a cognizable claim under the CFA. Since we agree with the trial judge’s conclusion that these factual assertions, even if believed by the jury, do not set forth a claim under the CFA, we need not consider the last point plaintiff raises.
The act, use or employment by any person of any unconscionable commercial practice, deception, fraud, false pretense, false promise, misrepresentation … in connection with the sale or advertisement of any merchandise or real estate, or with the subsequent performance of such person as aforesaid, whether or not any person has in fact been misled, deceived or damaged thereby, is declared to be an unlawful practice….
“The standard of conduct contemplated by the unconscionability clause is good faith, honesty in fact and observance of fair dealing….”Kugler v. Romain, 58 N.J. 522, 544 (1971). A violation of the CFA can arise in three different settings. Gennari v. Weichart Co. Realtors, 148 N.J. 582, 605 (1997). An affirmative misrepresentation, even if unaccompanied by knowledge of its falsity or an intention to deceive, is sufficient. Ibid. (citing Strawn v. Canuso, 140 N.J. 43, 60 (1995)). An omission or failure to disclose a material fact, if accompanied by knowledge and intent, is sufficient to violate the CFA. Ibid. (citing Cox v. Sears Roebuck & Co., 138 N.J. 2, 18 (1994)).“[T]he third category of unlawful acts consists of violations of specific regulations promulgated under the [CFA]. In those instances, intent is not an element of the unlawful practice, and the regulations impose strict liability for such violations.”Cox, supra, 138 N.J. at 18.
First, there was no evidence that whether the car was shipped in a closed container or not was in any way material to plaintiff’s acceptance of the car; plaintiff repeatedly testified that he did not even know the circumstances regarding the shipment of the car. Second, any promise Billion’s representatives made to plaintiff regarding replacing the car was a statement made while the parties were attempting to negotiate a resolution of the dispute, and was not made during either the formation or performance of the contract for the car’s purchase. It cannot, therefore, be a violation of the CFA. Third, any failure by Billion to discuss the liability limitation in the bill of lading was similarly immaterial because plaintiff believed that since the car was insured, he was protected from any further loss. Lastly, Billion’s conditioning of payment for the second repair bill upon plaintiff’s acceptance of the car cannot underpin a CFA claim because it, too, occurred after the formation and performance of the contract and was in the nature of an attempt to resolve the conflict.
In short, plaintiff failed to establish a prima facie case of any violation of the CFA against Billion, and the trial judge properly dismissed that aspect of plaintiff’s complaint.
Our Uniform Commercial Code … provides, where a tender or delivery of goods so fails to conform to the contract, as it did in this case, as to give a right of rejection, which it did in this case because there was damage to the car, the risk of loss remains on the seller, and it did in this case until cure or acceptance….
And it makes sense that the “or” be there, because if it weren’t there, someone, such as [plaintiff], would say, [”]I don’t accept,[”] as he did in this case, unreasonably so, I find. There was damage to his car. There’s no question and it was DAS’s employee who took it for a joyride.
It wasn’t Billion. Billion did what Billion had to do, delivered the car, there was a problem with it, he fixed it. [Plaintiff] comes back, I still don’t like it. It[‘s] got some scratches…. Fix it again. Bring it back again. Now is it okay? Again, if acceptance was the only requirement, this could go on forever with someone like [plaintiff] and it probably would….
This was cured, not because [I] say[ ] so, but because the jury said so. The jury said … that Billion cured…. Once they sa[id] that, Billion is off the hook because under the law, once it’s cured, the risk of loss under [N.J.S.A. 12A:]2-510(1) shifts to the buyer.
Plaintiff argues now, as he did below, that Billion was obligated to not only cure the defect through repairs, but also to “redeliver” the vehicle to plaintiff. He continues that since it was undisputed that Billion never paid the bill for the second round of repairs, but rather conditioned its payment upon plaintiff’s concession that he would accept the car, redelivery never occurred.
Plaintiff’s further argument that Billion’s time to deliver the car had expired prior to making the repairs, and therefore Billion was unable to cure under the UCC, is raised for the first-time on appeal. We refuse to consider it. Nieder v. Royal Indemn. Ins. Co., 62 N.J. 229, 234 (1973).
Billion counters that under the applicable provisions of the UCC, it was absolved from liability once it “cured” any defects, i.e., made the second round of repairs. Since the jury specifically found it had cured any defects, the judge correctly entered a no cause verdict in its favor. Alternatively, it argues it was entitled to a no cause verdict because the car was delivered undamaged at DAS’s Linden facility, and that the risk of loss passed to plaintiff at that point, an argument not specifically addressed by the judge post-verdict.
the UCC preserves the perfect tender rule to the extent of permitting a buyer to reject good for an nonconformity. Nonetheless, that rejection does not automatically terminate the contract. A seller may still effect a cure and preclude unfair rejection and cancellation by the buyer.
[Ramirez, supra, 88 N.J. at 290].
If the goods are non-conforming and properly rejected by the buyer, “the risk of their loss remains on the seller until cure or acceptance.”N.J.S.A. 12A:2-510(1). Since plaintiff never accepted the car, the issue becomes whether Billion affected a cure for purposes of the UCC.
A valid cure that effectively shifts the risk of loss to the buyer requires that a seller “seasonably notify the buyer of his intention to cure and [ ] then … make a conforming delivery.”N.J.S.A. 12A:2-508(1). In Jakowski v. Carol Chevrolet, Inc., 180 N.J.Super. 122 (Law Div.1981), the defendant/seller, having forgotten to apply a polymer coating to the car as promised by the contract of sale, recalled the car from the plaintiff/buyer to effect a cure. Id. at 124.The buyer returned the car but it was stolen before the seller had the chance to return it. Ibid. In granting judgment in favor of the buyer, the court held “that where a seller obtains possession of the goods in an effort to cure defects in them so as to comply with his end of the bargain, he is under a contractual duty to redeliver them to the buyer.”Id. at 127.
A “tender of delivery requires that the seller put and hold conforming goods at the buyer’s disposition and give the buyer any notification reasonably necessary to take delivery.”N.J.S.A. 12A:2-503(1). A “tender” for purposes of Article Two of the UCC is further defined in the commentary.
The term “tender” is used in this Article in two different senses. In one sense, it … contemplates an offer coupled with a present ability to fulfill all the conditions resting on the tendering party and must be followed by actual performance if the other party shows himself ready to proceed. Unless the context unmistakably indicates otherwise this is the meaning of “tender” in this Article…. At other times it is used to refer to an offer of goods … under a contract as if in fulfillment of its conditions even though there is a defect when measured against the contract obligation. Used in either sense, however, “tender” connotes such performance by the tendering party as puts the other party in default if he fails to proceed in some manner.
“[B]are offers of potentially curative performance” made by the seller are insufficient. Sinco, Inc. v. Metro-North Commuter R.R., 133 F.Supp.2d 308, 314 (S.D.N.Y.2001). One court has explained the subtleties of a UCC “tender” by noting, “It is clear that although tender does not require that the seller put the goods in the possession of the buyer, the seller must have the present ability to do so in order to preserve its rights.”Allied Semi-Conductors Int’l v. Pulsar Components Int’l, 907 F.Supp. 618, 625 (E.D.N.Y.1995).
Sompo Japan Ins. Co. of America v. Yang Ming Marine Transport Corp.
YANG MING MARINE TRANSPORT CORP., Defendant.
On April 18, 2006, three cargo shipments insured by plaintiffs Sompo Japan Insurance Company of America and Sompo Japan Insurance, Inc. (together “Sompo”) were damaged when the train carrying the cargo derailed in Texas. Sompo asserts twelve claims against defendant Yang Ming Transport Corporation (“Yang Ming”)-the company that arranged for the transport of the cargo aboard the train-to recover for the damage.
Yang Ming moves to dismiss nine of the twelve counts against it. First it moves to dismiss the claims brought under the Carmack Amendment (“ Carmack”) pursuant to Fed.R.Civ.P. 12(b)(6); second, if the Carmack claims survive, it moves to dismiss the common law negligence and breach of bailment claims as preempted; and, third, if the Carmack claims survive, it moves to dismiss for improper venue under Fed.R.Civ.P. 12(b)(3). For the reasons that follow, defendant’s 12(b)(6) motion is denied with respect to the Carmack claims, the common law claims are dismissed as preempted, and defendant’s motion to dismiss for improper venue is granted. As the remaining three claims arise from the same nucleus of common fact as the Carmack claims, they are dismissed sua sponte for improper venue.
Congress added the Carmack Amendment to the Interstate Commerce Act (the “ICA”) in 1906 to create “a national scheme of carrier liability for goods damaged or lost during interstate shipment under a valid bill of lading.”Sompo Japan Ins. Co. of Am. v. Union Pac. R.R. Co., 456 F.3d 54, 58 (2d Cir.2006) (internal quotations and citation omitted).
The relevant facts are described in detail in the Court’s March 20, 2008, decision in a related case, Sompo Japan Insurance Co. v. Norfolk Southern Railway Co., 540 F.Supp.2d 486 (S.D.N.Y.2008) (the “related case”), and are not disputed.
To summarize, in late March and early April 2006, the Kuboto, Unisia, and Hoshizaki companies arranged to ship tractors, auto parts, ice makers, and sushi cases from Japan by boat to the Port of Long Beach, California, and then by train to destinations inland in the eastern United States. (Compl.¶¶ 6, 12, 17). Sompo insured these cargo shipments. (Id. ¶¶ 3, 9, 15).
Sompo’s insureds hired Yang Ming to arrange for the shipment of their cargo from Asia to their final destinations. (Id. ¶¶ 8, 14, 19). Yang Ming arranged for both the ocean passage of the cargo from Asia to California and the rail transportation from California to the final domestic destinations.(Id.; see Barton Decl. Ex. 2). The cargo was transported under Yang Ming through bills of lading. (Compl.¶¶ 6, 12, 17).
The cargo was first delivered in good condition to Yang Ming in Japan, and loaded aboard the M/V CHEROKEE BRIDGE. (Id. ¶¶ 6, 12, 17). The cargo was then transported across the Pacific Ocean on the M/V CHEROKEE BRIDGE, discharged in the Port of Long Beach, California, and placed on rail lines owned and operated by the BNSF Railway. Sompo Japan Ins. Co., 540 F.Supp.2d at 489-90. For the final rail leg of the trip, Yang Ming retained Norfolk Southern Railways Corporation (“NSRC”).Id. at 490.In Dallas, Texas, the containers were interchanged from BNSF Railway to NSRC for the final leg of carriage inland. Id. Sompo’s insureds had no dealings or contracts with NSRC or any other railroad operator regarding the transport of their cargo-rather, Yang Ming was their contact. Id. at 491.
On April 18, 2006, the NSRC train carrying the cargo derailed in Texas. The derailment damaged various cargo on board, including the Kuboto tractors, Unisia auto parts, and Hoshizaki ice makers and sushi cases. Id. at 489.
On April 4, 2007, Sompo filed the related case against NSRC, Norfolk Southern Corporation, and The Kansas City Southern Railway Company to recover for the damage to the cargo, alleging that defendants owned and/or operated the railroads and rail lines along which the cargo was transported.On December 14, 2007, Sompo filed the instant action against Yang Ming, seeking damages for each of the three shipments for (1) violations under 49 U.S.C. § 11706, a provision of Carmack, (2) common law negligence, (3) common law breach of bailment, and (4) breach of contract and breach of duties under the Carriage of Goods By Sea Act (“COGSA”). Sompo’s complaint alleges that Yang Ming was the “delivering rail carrier” under Carmack, and therefore liable under Carmack.
On March 20, 2008, I granted summary judgment in favor of Sompo in the related case, concluding that the railroad defendants had not limited their liability under Carmack. Sompo Japan Ins. Co., 540 F.Supp.2d at 501.
On February 25, 2008, Yang Ming moved to dismiss the Carmack claims pursuant to Rule 12(b)(6). If the Carmack claims survive the motion, Yang Ming asks that the Court dismiss the common law claims as preempted, and alternatively moves to dismiss the Carmack claims for improper venue pursuant to Rule 12(b)(3). On June 16, 2008, I held oral argument. I now consider defendant’s motion.
I conclude that plaintiffs have stated Carmack claims against Yang Ming upon which relief may be granted, and dismiss the preempted common law negligence and breach of bailment claims.
On a Rule 12(b)(6) motion to dismiss, a court must accept a plaintiff’s factual allegations as true and draw all reasonable inferences in its favor.Bernheim v. Litt, 79 F.3d 318, 321 (2d Cir.1996); see Erickson v. Pardus, 127 S.Ct. 2197, 2199 (2007) (per curiam); Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007).
In its recent decision in Bell Atlantic Corp., the Supreme Court announced the “retirement” of the oft-quoted “no set of facts” language from Conley v. Gibson, 355 U.S. 41, 45-47 (1957), adopting in its place a “plausibility” standard. Bell Atl. Corp., 127 S.Ct. at 1969. As interpreted by the Second Circuit, Bell Atlantic Corp. did not announce a “universal standard of heightened fact pleading, but … instead requir[es] a flexible ‘plausibility standard,’ which obligates a pleader to amplify a claim with some factual allegations in those contexts where such amplification is needed to render the claim plausible.” Iqbal v. Hasty, 490 F.3d 143, 157-58 (2d Cir.2007). The question is whether the pleading alleges “ ‘enough facts to state a claim for relief that is plausible on its face.’ “ Patane v. Clark, 508 F.3d 106, 111-12 (2d Cir.2007) (quoting Bell Atl. Corp., 127 S.Ct. at 1974).
The central issue before the Court is whether an intermediary shipping company like Yang Ming, that arranges for rail transportation but does not actually operate a railroad, can be held liable under the rail carrier provision of Carmack. If it cannot be held liable, the Carmack claims against it cannot proceed.
The definition of the term “rail carrier” is found at 49 U.S.C. § 10102(5), which provides that a “ ‘rail carrier’ means a person providing common carrier railroad transportation for compensation.” 49 U.S.C. § 10102(5) (emphasis added). The term “receiving rail carrier” is only found in § 11706, and is not specifically defined anywhere in Title 49. The term “delivering rail carrier,” on the other hand, is specifically defined in § 11706(a), which provides that a “delivering rail carrier is deemed to be the rail carrier performing the line-haul transportation nearest the destination but does not include a rail carrier providing only a switching service at the destination.”49 U.S.C. § 11706(a) (emphasis added).
Sompo has pled facts sufficient to support a claim for relief against Yang Ming under Carmack.
Yang Ming argues that it is not a delivering rail carrier for purposes of Carmack, and, therefore, the Carmack claims against it must be dismissed. Yang Ming contends that it cannot be a delivering rail carrier because it did not provide the line-haul transportation nearest the destination, nor did it ever have possession of the freight. Yang Ming also argues that the Court’s holding in the related case that NSRC was the delivering rail carrier precludes a finding in this case that Yang Ming is the delivering rail carrier.
I agree that Yang Ming is not a delivering rail carrier as defined in § 11706(a), because it was not the rail carrier performing the line-haul transportation nearest the destination. The narrow definition of delivering rail carrier found in § 11706(a) and my opinion in the related case do preclude such a finding. Sompo does not allege in its complaint that Yang Ming performed any line-haul rail transportation.
But the determination of the delivering rail carrier’s identity is not dispositive as to the question of whether liability can be imposed on Yang Ming under Carmack. As explained above, § 11706(a) provides that “a rail carrier providing transportation” shall issue a bill of lading, and may be held liable for damage “caused by” the receiving rail carrier, delivering rail carrier, or another rail carrier over whose line or route the property is transported. The definition of “rail carrier” at § 10102(5) and the use of that term in § 11706(a) indicate that Congress did not intend to restrict liability to only those that operate rail lines or trains, and extended it to those who book or arrange the rail transportation for payment. Under the plain meaning of § 11706(a), therefore, rail carriers that merely provide transportation may be liable, even though the loss or injury was caused by an entity that transported the cargo or over whose line the cargo was transported. The plain language of Carmack contemplates the possibility of multiple rail carrier defendants being held liable for one rail operator’s errors. Subsections (1)-(3) of § 11706(a), which defendant focuses so heavily on in its motion papers, merely address who caused the damage, but not who may be held responsible for that damage.
Yang Ming, although it does not operate a rail line, is nonetheless a “rail carrier” pursuant to § 10102(5) because it provided (i.e., arranged for) the rail transportation to Sompo’s insureds for compensation. Yang Ming issued the bill of lading, placing it squarely under the ambit of § 11706(a). Although the damage to the cargo was caused while the cargo was in NSRC’s possession, Yang Ming may nonetheless be liable.
This conclusion is dictated not only by the statutory language, but also a host of other reasons.
As an initial matter, this holding comports with the Second Circuit’s holding in Sompo Japan Insurance Co. v. Union Pacific Railroad Co., 456 F.3d 54 (2d Cir.2006). The Sompo court held that “ Carmack applies to the domestic rail portion of an international shipment originating in a foreign country and traveling under a through bill of lading.”See Sompo, 456 F.3d at 75. As I noted in my decision in the related case, the Second Circuit does not qualify its holding, nor does it exclude intermediary shipping companies from its scope.
Three recent decisions in this court-Rexroth Hydraudyne B.V. v.. Ocean World Lines, Inc., No. 06 Civ. 5549(LAK), 2007 WL 541958 (S .D.N.Y. Feb. 14, 2007); Swiss National Insurance Co. v. Blue Anchor Line, No. 07 Civ. 9423(LBS), 2008 WL 2434124 (S.D.N.Y. June 10, 2008); and, most recently, Royal & Sun Alliance Insurance PLC v. Ocean World Lines, Inc., No. 07 Civ. 2889(AKH), 2008 WL 3854556 (S .D.N.Y. Aug. 19, 2008)-have addressed liability for intermediaries under Carmack and the scope of Sompo.These decisions have resulted in conflicting holdings.
By letter dated June 20, 2008, plaintiffs alerted the Court to Judge Sand’s decision in Swiss National.This case was decided only four days after oral argument in the instant case. By letter dated August 26, 2008, plaintiffs also alerted the Court to Royal & Sun Alliance, decided on August 19, 2008.
Yang Ming argues that Rexroth should guide. In Rexroth, Judge Kaplan concluded that the Second Circuit’s opinion in Sompo was “an exceptional instructive opinion that resolved a difficult question concerning the liability of a rail carrier,” but that it did not address whether an intermediary shipping company may be held liable under the rail carrier provision of Carmack. Rexroth Hydraudyne, 2007 WL 541958, at(concluding that Sompo does not shed light on liability for a non-vessel operating common carrier or other non-rail carriers). Judge Kaplan did not address, however, whether intermediary shipping companies are themselves “rail carriers” under Carmack, and there is no indication that this argument was advanced by the parties.
Most recently, in Royal & Sun Alliance, Judge Hellerstein addressed liability for a non-vessel operating common carrier (“NVOCC”) under the motor carrier provision of Carmack. In that case, an NVOCC engaged an ocean carrier, which in turn engaged a motor carrier to transport the cargo. See Royal & Sun Alliance, 2008 WL 3854556, at(noting that NVOCCs engage ocean vessel-operating common carriers, which in turn engage rail and truck common carriers). Judge Hellerstein concluded that NVOCCs are not by their terms “ motor carriers” under Carmack, even though an NVOCC might engage a company that might then engage a rail carrier to complete the delivery that the NVOCC was charged with arranging. Id. at *13. In considering the application of Sompo, he concluded that NVOCCs, unlike the defendant rail carrier in Sompo, do not “provide transportation or service” under Carmack, even if the NVOCC issued a bill of lading for the inland portions of carriage. Id. at *15.He also noted that the ocean carrier, and not the NVOCC, engaged and contracted with the motor carrier over whose leg the damage occurred, and, if Carmack were to apply, it would apply to that ocean carrier. Id. at *13.Royal & Sun Alliance is therefore factually distinguishable, because here Yang Ming was the party to directly engage the rail carrier.
In Swiss National, Judge Sand addressed whether NVOCCs can be held liable under the motor carrier provision of Carmack. Explicitly disagreeing with the conclusion in Rexroth, he concluded that Carmack does apply to NVOCCs.Swiss Nat’l Ins. Co., 2008 WL 2434124, at *3. He also noted that while his decision addressed the motor carrier provision of Carmack, his reasoning was entirely applicable to NVOCCs under the rail carrier provision of Carmack, because the language of the two provisions is “essentially identical.” Id. atn. 2 (“[T]he principles in Sompo apply uniformly to both the rail and motor sections of Carmack.”).

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