Court Opinion

ID: 1038562
Source: CourtListenerOpinion
Date Created: 2013-08-28 20:10:53.336064+00
Date Added: 2024-06-11T15:13:02.290903
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 13-1019

RUSH INDUSTRIES, INC.,

                Plaintiff - Appellant,

          v.

MWP CONTRACTORS, LLC; BRANN’S TRANSPORT SERVICES, INC.,

                Defendants - Appellees.

Appeal from the United States District Court for the Middle
District of North Carolina, at Greensboro. Thomas D. Schroeder,
District Judge. (1:08-cv-00810-TDS-LPA)

Submitted:   July 25, 2013                 Decided:   August 28, 2013

Before NIEMEYER, GREGORY, and DIAZ, Circuit Judges.

Affirmed by unpublished per curiam opinion.

Kenneth L. Jones, CARRUTHERS & ROTH, P.A., Greensboro, North
Carolina, for Appellant. Kenneth J. Gumbiner, HIGGINS BENJAMIN,
PLLC, Greensboro, North Carolina, for Appellee MWP Contractors,
LLC.   Stanley F. Hammer, WYATT, EARLY, HARRIS & WHEELER, LLP,
High Point, North Carolina, for Appellee Brann’s Transport
Services, Inc.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

     Appellant      Rush       Industries,          a    furniture        manufacturing

company, challenges the district court’s decision in favor of

Appellee MWP Contractors, who coordinated shipping of a used

panel     saw   that    failed     to    operate          upon     arrival       at     Rush

Industries’ manufacturing plant.                   Finding no error, we affirm

the district court’s ruling.

                                         I.

     In late 2006, Rush Industries purchased a used Italian-made

Gabbiani    panel   saw    through      an       internet       auction   for     $14,300.

Michael Rush, the owner of Rush Industries, purchased the saw

for use at the company’s plant in Americus, Georgia.                             An expert

witness    testified      at   trial    that       the    twelve-year-old         saw   was

already    beyond   its    expected     useful          life.      The    bill    of    sale

provides that Rush Industries made its purchase of the saw “AS

IS, WHERE IS, WITH ALL FAULTS.”                  After purchasing the saw, Rush

traveled to South Boston, Virginia, where the saw was located in

the facility of a defunct business called D-Scan.                            After Rush

videotaped an operator make a successful demonstration cut using

the saw, he made arrangements with MWP to disassemble, package,

coordinate shipping, and install the saw at Rush Industries’

Americus plant.        Rush sent a check to MWP on December 8, 2006,

for an initial payment of $5,300.

                                             2
     The saw remained in D-Scan’s facility until January 8th,

2007.     During that time, MWP made basic repairs to the saw at

Rush Industries’ request.          MWP contracted with Appellee Brann’s

Transport Services to move the saw to Americus.                     MWP employees

loaded the saw onto two Brann’s trucks.                   However, MWP did not

request that Brann’s tarp the load.

     Upon arrival, Rush and MWP’s foreman discovered that the

saw’s     ten   ribbon    cables   and       connectors     had     been   damaged.

Nonetheless, Rush accepted the shipment, and directed MWP to

unload and install the saw, which was not operational without

new connectors.         MWP offered to locate new connectors.                   During

January 2007, Rush contacted MWP at least twice to inform the

company     that   he    needed    MWP       to   make   the      saw   operational

immediately to avoid losing orders that required use of the saw.

According to MWP, because there were only a limited number of

these saws manufactured overseas over a decade prior, it was

difficult, yet important, to obtain the right replacement parts.

Vicki Rush, Rush’s wife, caused further delay when she provided

MWP with the wrong serial number for the damaged parts.

     On February 28, 2007, MWP sent Rush Industries a statement

for the remaining $4,000 balance due for shipment.                      On April 9,

2007,   Rush    Industries    filed      a   lawsuit     against    MWP    in   North

Carolina state court.         Unaware of the suit, Anthony Wilson, an

employee for MWP, contacted Rush to arrange a time to install

                                         3
proper connectors which he was finally able to locate.                             Rush

explained that he had filed a lawsuit against MWP “for a million

dollars” and refused to speak with Wilson or accept the cables

and connectors he had obtained.

      In January 2008, Rush’s wife purchased replacement ribbon

cables and connectors off the internet for $103.60, plus $14.63

for   shipping.       Rush’s     employees       installed     the       cables    and

connectors.        While the control panel for the saw lit up, the saw

remained     dysfunctional.        Rush    testified    that    he       subsequently

engaged several electricians and service companies in an attempt

to diagnose and fix the problem.                 However, none could make the

saw operational.        Rush testified that the saw has no value in

its current dysfunctional state because the cost to haul the

metal exceeds the scrap value of the saw.

      Also    in     January   2008,      Rush    Industries       added     Appellee

Brann’s as a defendant.            This constituted Brann’s first notice

that the saw it had transported was not operational and that

Rush Industries had filed a lawsuit.                The complaint against MWP

and Brann’s alleged breach of contract, negligence, and bailment

claims.       Rush    Industries    sought       recovery    for     value    of   the

damaged    equipment,     lost     income     and   profits,       and     additional

consequential damages.           MWP filed a counterclaim against Rush

                                          4
Industries for unpaid invoices. 1            The Defendants removed the case

to federal court in November 2008 on the basis that it fell

under the purview of the Carmack Amendment to the Interstate

Commerce Act, 49 U.S.C. § 14706.

     On Defendants’ motion for summary judgment, the district

court       dismissed    Rush   Industries’     state-law   claims   for   lost

profits and its negligence claims insofar as they did not arise

from bailment.          It deferred judgment on the application of the

Carmack Amendment.          The parties tried the remaining issues in a

bench trial in October 2012.           The district court found that the

Carmack Amendment preempted all state-law claims arising out of

damage occurring during transportation of the saw.                   After re-

characterizing          state-law   claims    as   federal-law   claims,    the

district court awarded damages to Rush Industries in the amount

of $118.23 for the cost of replacement ribbons and connectors,

and to MWP for $6,388.59 for unpaid invoices.                    The district

court dismissed all claims against Brann’s.

     Rush Industries’ filed a timely appeal of which we have

jurisdiction pursuant to 28 U.S.C. § 1291.

        1
         Brann’s   and   MWP   also  filed  cross-claims   for
indemnification against any damages the court awarded.   These
cross-claims are not at issue here.

                                        5
                                    II.

       We review a district court’s judgments at a bench trial

under a mixed standard:        factual findings for clear error and

conclusions of law de novo.        Helton v. AT & T, Inc., 709 F.3d

343, 350 (4th Cir. 2013).

                                    A.

       Rush Industries first argues that the district court erred

when it determined that its claims against MWP are covered by

the Carmack Amendment.       Specifically, Rush Industries contends

that the services provided by MWP fall outside the parameters of

the Carmack Amendment because Brann’s, not MWP, provided actual

transport of the saw, and because MWP’s services did not involve

transport.

       The   Carmack   Amendment   is       a   “comprehensive   exercise   of

Congress’s power to regulate interstate commerce” that creates

“a national scheme of carrier liability for goods damaged or

lost during interstate shipment under a valid bill of lading.”

5K Logistics, Inc. v. Daily Exp., Inc., 659 F.3d 331, 335 (4th

Cir.   2011)   (internal   quotations        and   citations   omitted).    It

preempts all state or common law claims available to a shipper

against a carrier for loss or damage associated with interstate

shipments.     Shao v. Link Cargo (Taiwan) Ltd., 986 F.2d 700, 704-

05 (4th Cir. 1993).

                                        6
     Contrary           to    Rush        Industries’        argument,         the        Carmack

Amendment       goes    beyond       the    physical       act    of   transportation           to

include     associated         services.             See    49    U.S.C.       §     13102(23).

Further,       it    applies    to    a    company,        such   as    MWP,       that    is   in

contract with a shipper to handle the movement of property and

subcontracts the actual physical shipping of the property in

question.            See,    e.g.,    Land     O’Lakes,      Inc.      v.    Superior       Serv.

Transp. of Wis., Inc., 500 F. Supp. 2d 1150, 1155 (E.D. Wis.

2007)    (“Liability          under     the    Carmack      Amendment         . . .       extends

beyond the carrier who actually provides the transportation.”);

Mach Mold, Inc. v. Clover Assocs., Inc., 383 F. Supp. 2d 1015,

1029 (N.D. Ill. 2005) (explaining that the Carmack Amendment

applies to a company that coordinates transportation, but does

not actually transport the property in question).                                  Even though

Brann’s        may     have     owned      and       controlled        the     trucks       that

transported the saw, MWP’s overall coordination of the shipping

places it within the confines of the Carmack Amendment. 2                                       As

such,     we    agree        with    the      district      court      that        the    Carmack

Amendment applies and preempts all tort and common law claims

against MWP.          See Shao, 986 F.2d at 704-05.

     2
       While MWP’s repair work and installation of the saw
arguably falls outside the parameters of the Carmack Amendment,
Rush Industries puts forward no evidence establishing that
damage to the saw occurred during repair or installation.

                                                 7
                                      B.

    Rush Industries next argues that the district court erred

when it granted partial summary judgment dismissing its claims

for lost profits and negligence not arising out of the bailment.

Given that the Carmack Amendment preempts Rush Industries’ state

and common law claims, we do not directly address this argument.

Instead, we review the district court’s treatment of the claims

as re-characterized federal claims under the Carmack Amendment. 3

See Metro. Life Ins. Co. v. Taylor, 481 U.S. 58, 66-67 (1987)

(explaining that a lawsuit that purports to raise only state law

claims   may   be   construed   as   raising   federal   law    claims   where

complete   preemption    exists);     Darcangelo   v.    Verizon    Commc’ns,

Inc., 292 F.3d 181, 195 (4th Cir. 2002) (construing state claims

as federal claims where ERISA preempted state claims).

     The   Carmack     Amendment     establishes    that    a    carrier   is

“liab[le] . . . for the actual loss or injury to the property”

that occurs during shipping.         49 U.S.C. § 14706.         This includes

“all damages resulting from any failure to discharge a carrier’s

     3
       To recover under the Carmack Amendment, a plaintiff must
make out a prima facie case establishing:    (1) delivery to the
carrier in good condition; (2) arrival in damaged condition,
and; (3) amount of damages.    Oak Hall Cap & Gown Co., Inc. v.
Old Dominion Freight Line, Inc., 899 F.2d 291, 294 (4th Cir.
1990). The district court correctly found that Rush Industries
had established the first two prongs of the prima facie case.
Thus, we discuss only the third prong related to damages.

                                      8
duty   with     respect       to    any    part        of   the      transportation        to    the

agreed destination.”               Se. Express Co. v. Pastime Amusement Co.,

299    U.S.    28,     29   (1936).         As        such,     a    plaintiff      shipper      can

recover       all    reasonably      foreseeable              consequential         damages     and

lost profits that are not speculative.                              Am. Nat. Fire Ins. Co.

ex rel. Tabacalera Contreras Cigar Co. v. Yellow Freight Sys.,

Inc., 325 F.3d 924, 931 (7th Cir. 2003).

       Rush Industries argues that the saw sustained irreparable

damage because MWP “withheld replacement parts for some eight

months”       after    it    installed       the          saw   at    the       Americus      plant.

Appellant’s Br. 19.                Because no individual or company can now

fix the broken saw, Rush Industries urges that we find that it

is    entitled        to    the    value     of       a     comparable          brand   new     saw.

Further,      Rush     Industries         claims       that     it    is    entitled       to   lost

profits from contracts it could not fulfill because the saw was

not made operable.

       Rush    Industries          failed    to        present       evidence      establishing

that any undue delay in replacing the ribbons and connectors

caused the saw’s permanently irreparable condition.                                     At trial,

Rush Industries presented only a single witness, Mr. Rush, who

had    extremely       limited       technical            knowledge        of    the    saw.      In

essence, Mr. Rush could say little more than that the saw was

working when he saw it in South Boston and did not work after it

arrived in Americus.               MWP, on the other hand, presented several

                                                  9
witnesses with relevant specialized knowledge who explained that

the    saw,    and    particularly       the    saw’s     computer    system,    were

obsolete and past expected functioning life.                        Further, an MWP

witness who serviced this particular saw when D-Scan owned it

testified that it was uncertain whether the saw would survive

transportation from South Boston to Americus because “there are

a lot of variables that happen during shipment,” and that the

vibrations during transport could cause problems with the saw’s

circuit board.

       Even if Rush could have established that the inoperable

condition of the saw was caused by MWP’s lag in replacing the

cables   and     connectors,      Rush    Industries’       damages    claim    would

result in an exorbitant windfall.                   Rush Industries purchased an

outdated piece of machinery manufactured overseas in a small

batch “AS IS, WHERE IS, WITH ALL FAULTS” for $14,300.                           A new

replacement saw costs over a quarter-million dollars.                        Surely,

MWP could not foresee that its failure to repair damage which

occurred during shipping would require that it purchase a brand

new saw.

       Nor should MWP be held liable for Rush Industries’ alleged

lost   profits       in   the   aftermath      of   the   January    2007   delivery.

Rush Industries presented no evidence that the saw would have

worked had MWP immediately replaced the cables and connectors.

In other words, there is not sufficient evidence to conclude

                                          10
that the problems with the saw upon arrival in Americus were

limited to the cables and connectors.

     There is also no viable evidence in the record that Rush

Industries informed MWP that it had a “million-dollar contract,”

or any other contract for that matter, hinging on the timely

delivery and operability of the saw.            In fact, MWP did nothing

to   guarantee     the   operability    of    the     saw   after    transport.

Moreover, given the age, foreign origin, and limited number of

these saws, it would have been difficult for MWP to obtain the

appropriate      replacement   parts    had    Rush     Industries    provided

correct information.        However, Vicki Rush provided the wrong

serial number to MWP, further delaying MWP’s efforts to repair

the saw.      When MWP’s representative finally contacted Rush to

notify him that he had found the correct parts and to arrange

for installation, Rush shunned his efforts.

     The only damages that Rush Industries has established as

attributable to MWP are for replacement cables and connectors.

As such, we find that the district court correctly found that

MWP’s liability is limited accordingly. 4

     4
       Rush Industries’ failure to establish damages beyond the
replacement cost of the cables and connectors applies also to
its claims against Brann’s.    Additionally, we agree with the
district court that MWP and Rush Industries’ claims against
Brann’s are time barred because neither informed Brann’s of any
claims or problems with the panel saw until January 25, 2008,
well after the applicable nine-month notice requirement expired.
(Continued)
                                       11
                                    III.

     Rush Industries next argues that the district court erred

when it refused to excuse its obligation to pay MWP for services

rendered. 5    MWP satisfied its contractual obligations pursuant to

its agreement with Rush Industries.           MWP conducted repair work

on the saw in South Boston per Rush Industries’ request.              After

shipment,     MWP   employees   complied   with    Rush’s   instructions   to

unload and assemble the saw in Americus in spite of the damaged

state of the cables and connectors.               We find no error in the

district court’s determination that Rush Industries must pay its

past due bills to MWP.

                                    IV.

     Rush Industries took a risk in purchasing an outdated, used

saw at a huge discount and then shipping it some 600 miles.

Unfortunately for Rush Industries, the risk did not pay off.

However, there is no legal basis for pushing the repercussions

onto the company it enlisted to help with shipment.              We find no

See 49 C.F.R. pt. 1035, App. B (“As a condition precedent to
recovery, claims must be filed in writing with the . . .
delivering carrier . . . within nine months after delivery has
elapsed.”).
     5
       MWP counterclaims for $2,388.59 for pre-shipment repairs
it made to the saw in South Boston and $4,000 for unloading the
saw and assembling it in Americus.

                                     12
error   in   the   district   court’s   handling   of   this   case   and

therefore affirm.

                                                                AFFIRMED

                                   13