Court Opinion

ID: 2985787
Source: CourtListenerOpinion
Date Created: 2015-09-23 00:18:47.863799+00
Date Added: 2024-06-11T12:40:37.526715
License: Public Domain

Affirmed in Part, Reversed and Rendered in Part, and Opinion on Remand filed
October 15, 2013.

                                    In The

                   Fourteenth Court of Appeals

                             NO. 14-09-01032-CV

                  DAYBREAK EXPRESS, INC., Appellant
                                       V.
   LEXINGTON INSURANCE COMPANY, AS SUBROGEE OF BURR
     COMPUTER ENVIRONMENTS, INC. AND J. SUPOR & SONS
            TRUCKING & RIGGING CO., Appellee

                  On Appeal from the 333rd District Court
                           Harris County, Texas
                     Trial Court Cause No. 2005-01530

                   OPINION ON REMAND
     Lexington Insurance Co. sued Daybreak Express, Inc. in this subrogation
action in connection with property damage that occurred during the interstate
shipment of electronic equipment owned by Burr Computer Environments, Inc.

     The trial court found that (1) Lexington proved all elements of a claim under
the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C.A. § 14706;
(2) the claim was not time-barred under the applicable statute of limitations; and
(3) Lexington sustained damages of $85,800.         The trial court signed a final
judgment in favor of Lexington awarding damages and attorney’s fees, and
Daybreak appealed. We affirm the trial court’s judgment in part with respect to
actual damages.    We reverse the judgment in part and render judgment that
Lexington take nothing with respect to its attorney’s fees.

                                   BACKGROUND

      J. Supor & Sons Trucking and Rigging Company hired Daybreak to
transport computer equipment belonging to Burr Computer Environments, Inc.
from New Jersey to Texas. See generally Daybreak Express, Inc. v. Lexington Ins.
Co., 342 S.W.3d 795, 798 (Tex. App.—Houston [14th Dist.] 2011), rev’d, 393
S.W.3d 242 (Tex. 2013).       Supor issued a bill of lading to Daybreak for the
shipment. Id. Supor’s personnel loaded the equipment onto Daybreak’s truck, and
Daybreak transported the equipment to Daybreak’s New Jersey terminal.             Id.
Daybreak transferred the bill of lading to its sister company, which then transferred
it to T. Orr Trucking, Inc. Id. Orr transported the equipment to Texas. Id. The
equipment arrived in Texas on August 15, 2002 in a damaged condition. Id.

      Burr presented a written claim for damages to Daybreak on September 11,
2002. Id. Daybreak hired an independent adjuster from Cunningham Lindsey to
investigate Burr’s claim.    Id.   The adjuster submitted a report to Daybreak
reflecting that the adjuster and Burr had agreed to value Burr’s claim at $166,655.
Id. Burr contended that this valuation was a settlement agreement. Id. Daybreak
contacted Burr on February 6, 2003, and informed Burr that Daybreak would pay
only $5,420 for the claim. Id.

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      Burr also filed a damage claim with Supor. Id. Supor paid Burr $5,000 on
November 13, 2003, to meet its insurance policy deductible. Id. Supor’s insurer,
Lexington, paid Burr $87,500 to settle the claim on November 18, 2003. Id.

      Lexington filed a subrogation suit against Daybreak in Texas state court on
January 6, 2005. Id. In its original petition, Lexington asserted a single state law
breach of contract claim based on the alleged settlement agreement between Burr
and Daybreak. Id.

      Daybreak removed the case to federal court, arguing that Lexington’s claim
―is a civil action pending in the State Court against a common carrier to recover
damages for alleged delay, loss, or injury to a shipment arising under the Interstate
Commerce Act.‖ Id. (citing 49 U.S.C.A. § 14706 (West 2005)). Lexington filed a
motion to remand and contended that federal question jurisdiction under 28
U.S.C.A. § 1331 and 1441(b) did not encompass the single state law breach of
contract action pleaded in its original petition.    Daybreak Express, Inc., 342
S.W.3d at 799; see 28 U.S.C.A. §§ 1331, 1441(b) (West 2011). In response,
Daybreak conceded that ―a federal claim does not appear on the face of the original
petition, but argue[d] that federal jurisdiction is nevertheless proper under the
complete preemption doctrine.‖ See Daybreak Express, Inc., 342 S.W.3d at 799
(citing Lexington Ins. Co. v. Daybreak Express, Inc., 391 F. Supp. 2d 538, 540
(S.D. Tex. 2005)).

      United States District Judge Sim Lake concluded that ―Lexington does not
seek to impose liability on Daybreak for damages arising from the interstate
transport of property.‖ See Daybreak Express, Inc., 342 S.W.3d at 799 (citing
Lexington Ins. Co., 391 F. Supp. 2d at 541). ―Instead, Lexington seeks to enforce
an agreement it alleges Daybreak entered into in order to settle claims for damages
to a shipment of electrical equipment.‖ Id. ―Resolution of this contract claim does

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not turn on the rights and responsibilities of Daybreak as a carrier in interstate
commerce.‖ Id. The federal district court also observed as follows: ―Lexington
seeks to recover in contract not for loss or damage to the electrical equipment, but
rather for breach of Daybreak’s alleged promise to settle those claims for the
specified sum.‖ See Daybreak Express, Inc., 342 S.W.3d at 799 (citing Lexington
Ins. Co., 391 F. Supp. 2d at 541 n.8). Accordingly, the federal district court
remanded this case on June 24, 2005. Lexington Ins. Co., 391 F. Supp. 2d at 541.

       More than two years after Daybreak rejected the valuation of Burr’s claim,
Lexington added claims for breach of contract, indemnity, contribution, and unjust
enrichment arising from the payment it made to Burr on Supor’s behalf. See
Daybreak Express, Inc., 342 S.W.3d at 799. On May 4, 2007, Lexington pleaded
for the first time that Daybreak is liable for damages under the Carmack
Amendment. Id.

       The trial court concluded that the ―New Jersey statute of limitations is
applicable and therefore [Lexington’s] claim is not time barred.‖ Id. The trial
court found that the equipment was ―delivered to the initial carrier in good
condition‖ and was ―damaged before delivery‖ to its final destination, which
entitles Lexington to damages under its Carmack Amendment claim. Id.; see also
Missouri Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137–38 (1964). The trial
court awarded Lexington $85,800 in damages, representing the amount paid to
Burr less the damaged equipment’s salvage value, plus attorney’s fees.                             See
Daybreak Express, Inc., 342 S.W.3d at 799.1

       1
         These findings were recited in the final judgment. We consider findings of fact recited in the
judgment unless they are supplanted by separately filed findings. See In re C.A.B., 289 S.W.3d 874, 880-
81 (Tex. App.—Houston [14th Dist.] 2009, no pet.). The trial court made no findings on any element of
any claims other than the Carmack Amendment claim, and we do not consider the other claims here. See
Tex. R. Civ. P. 299 (―The judgment may not be supported upon appeal by a presumed finding upon any
ground of recovery . . . no element of which has been included in findings of fact . . . . .‖).

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        On original submission, a majority of this court reversed the trial court’s
judgment and rendered a take nothing judgment in favor of Daybreak on grounds
that Lexington’s Carmack Amendment claim was barred by limitations under
Texas law. Id. at 806. The panel majority determined that Lexington’s 2007
Carmack Amendment claim arose from a distinct transaction; did not relate back to
the original 2005 claim for breach of an alleged settlement agreement; and was
barred by the two-year limitations period. Id. Justice Christopher dissented on
grounds that the Carmack Amendment claim was timely because it related back.
Id. at 806-808 (Christopher, J., dissenting).

        The Texas Supreme Court reversed this court’s judgment. The supreme
court rendered judgment in favor of Lexington ―in accordance with the trial court’s
judgment.‖ The supreme court’s original judgment was rendered on August 13,
2012.

        Daybreak then filed a ―Motion for Rehearing on the Limited Issues of
Attorney’s Fees‖ in the supreme court in which it argued that Lexington could not
recover attorney’s fees under the Carmack Amendment.               After granting
Daybreak’s limited motion for rehearing in part on January 25, 2013, the supreme
court again ruled in favor of Lexington; it held that the Carmack Amendment claim
arose out of the same transaction or occurrence and thus related back to the 2005
claim for breach of an alleged settlement agreement.        Lexington Ins. Co. v.
Daybreak Exp., Inc., 393 S.W.3d 242, 245 (Tex. 2013). In contrast to the supreme
court’s August 13, 2012 judgment, which rendered judgment ―in accordance with
the trial court’s judgment‖ and included attorney’s fees, the supreme court’s
January 25, 2013 judgment stated that the case was to be ―remanded to the court of
appeals for further proceedings in accordance with this court’s opinion.‖       As
revised, the supreme court’s January 25, 2013 judgment did not require an award

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of attorney’s fees as awarded in the trial court’s judgment.

      We now address the remaining portion of the case on remand.

                                     ANALYSIS

I.    Scope of Remand

      Daybreak asks this court to address three issues on remand: (1) Lexington’s
asserted failure to establish a prima facie case under the Carmack Amendment; (2)
the propriety of an award for full replacement value of the damaged cargo under
the Carmack Amendment; and (3) the availability of attorney’s fees under the
Carmack Amendment. Lexington contends that Daybreak abandoned all issues on
remand except for attorney’s fees and asks this court to address only that issue.
We agree with Lexington that the sole issue to be addressed on remand is the
propriety of awarding attorney’s fees.

      The supreme court originally rendered judgment in favor of Lexington with
respect to actual damages and attorney’s fees. Daybreak filed a limited motion for
rehearing in the supreme court in which it asked the supreme court to ―rehear the
issue of attorney’s fees as an improper remedy under the Carmack Amendment,‖
and also requested in the alternative to ―remand the matter to the 14th Court of
Appeals for consideration of the Trial Court’s award of attorney’s fees under the
Carmack Amendment . . . .‖         In the supreme court, Daybreak did not raise
alternative grounds for attacking the award of actual damages under the Carmack
Amendment in its response to the petition for review; its briefing on the merits; or
in its motion for rehearing. See Tex. R. App. P. 53.4. On January 25, 2013, the
supreme court granted in part Daybreak’s limited motion for rehearing with respect
to attorney’s fees. Therefore, we address only the issue of attorney’s fees on
remand.

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II.     Attorney’s Fees

        The supreme court concluded that Lexington’s Carmack Amendment claim
was not time-barred; therefore, we must address whether Lexington can recover
attorney’s fees under the Carmack Amendment.2                         We hold that an award of
attorney’s fees is foreclosed here under preemption principles.

        Preemption by federal statute precludes enlargement of available remedies.
See U.S. Const. art. VI, cl. 2. State law may be preempted in three ways: (1)
expressly; (2) impliedly when the scope of a federal law or regulation indicates that
Congress intended to exclusively occupy the field; or (3) impliedly when state law
conflicts with a federal law or regulation. BIC Pen Corp. v. Carter, 346 S.W.3d
533, 537 (Tex. 2011).

        The second method of preemption applies here. The Carmack Amendment
was enacted to create uniformity in the determination of damages resulting from
the interstate transportation of goods. See Hoskins v. Bekins Van Lines, 343 F.3d
769, 777 (5th Cir. 2003) (citing Moffit v. Bekins Van Lines Co., 6 F.3d 305, 307
(5th Cir. 1993)). Congress intended the Carmack Amendment ―to provide the
exclusive cause of action for loss or damages to goods arising from the interstate
transportation of those goods by a common carrier.‖ Gulf Rice Arkansas, LLC v.
Union Pac. R.R. Co., 376 F. Supp. 2d 715, 719 (S.D. Tex. 2005) (citing Hoskins,
343 F.3d at 776); see also Schoenmann Produce Co. v. Burlington N. and Santa Fe
Ry. Co., 420 F. Supp. 2d 757, 759 (S.D. Tex. 2006) (citing New York, N. H. &
Hartford R.R. v. Nothnagle, 346 U.S. 128, 131. (1953)).

        It follows that the Carmack Amendment impliedly preempts all state law

        2
          On original submission, Lexington argued that it also is entitled to attorney’s fees based upon a
contractual indemnity claim. Because the trial court’s final judgment was predicated solely on the
Carmack Amendment, we do not consider other asserted bases for an award of attorney’s fees. See Tex.
R. Civ. P. 299.

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claims arising in connection with this dispute involving interstate transportation of
goods by a common carrier. See Shull v. United Parcel Serv., 4 S.W.3d 46, 50
(Tex. App.—San Antonio 1999, pet. denied) (citing Moffit, 6 F.3d at 307); see also
Accura Sys., Inc. v. Watkins Motor Lines, Inc., 98 F.3d 874, 877 (5th Cir. 1996);
Earl’s Offset Sales & Serv. Co. v. Bekins/EDC, Inc., 903 F. Supp. 1148, 1150 (S.D.
Tex. 1995).

      The scope of preemption under the Carmack Amendment includes claims
for attorney’s fees under state law. See Shull, 4 S.W.3d at 50; see also Accura
Sys., Inc., 98 F.3d at 877; Roadway Express, Inc. v. Naturalite, Inc., 435 S.W.2d
555, 559 (Tex. Civ. App.—Eastland 1968, no writ); Thompson v. H. Rouw Co.,
237 S.W.2d 662, 668 (Tex. Civ. App.—San Antonio 1951, writ ref’d n.r.e.). The
Carmack Amendment itself does not provide for an award of attorney’s fees. See
49 U.S.C.A. § 14706(a)(1) (―The liability imposed under this paragraph is for the
actual loss or injury to the property. . . .‖). Therefore, attorney’s fees are not
recoverable under the Carmack Amendment. See Accura Sys. Inc., 98 F.3d at 876
(citing Strickland Transp. Co.v. Am. Distrib. Co., 198 F.2d 546, 547 (5th Cir.
1952)).

                                      CONCLUSION

      We reverse the portion of the trial court’s judgment awarding attorney’s fees
to Lexington, and render judgment that Lexington take nothing with respect to
attorney’s fees. We affirm the remainder of the trial court’s judgment.

                                /s/           William J. Boyce
                                              Justice

Panel consists of Justices Boyce, Christopher, and Donovan.

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