Court Opinion

ID: 3136459
Source: CourtListenerOpinion
Date Created: 2015-10-22 17:44:19.146982+00
Date Added: 2024-06-11T07:38:25.076878
License: Public Domain

No. 2--96--0838

___________________________________________________________________

                                  IN THE

                        APPELLATE COURT OF ILLINOIS

                              SECOND DISTRICT

___________________________________________________________________

RAY NOWAKOWSKI and LUCY         )  Appeal from the Circuit Court

NOWAKOWSKI,                     )  of Lake County. 

                                )

     Plaintiffs-Appellants,          )  No. 95--L--442

                                     )

v.                                   )      

                                     )

AMERICAN RED BALL TRANSIT       )

COMPANY, INC., and ARROW        )

MOVING AND STORAGE COMPANY,     )

                                )

     Defendants-Appellees       )

                                )

(American Red Ball Transit      )

Company, Inc., Third-Party      )

Plaintiff and Third-Party       )

Defendant, v. Arrow Moving      )

and Storage Company, Third-     )  Honorable

Party Defendant and Third-      )  Peter M. Trobe,

Party Plaintiff).               )  Judge, Presiding. 

___________________________________________________________________

     JUSTICE RATHJE delivered the opinion of the court:     

     Plaintiffs, Ray and Lucy Nowakowski, appeal the entry of

summary judgment (735 ILCS 5/2--1005(c) (West 1994)) for

defendants, American Red Ball Transit Company, Inc. (Red Ball), and

Arrow Moving & Storage Company (Arrow), in a suit under the

Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud

Act)(815 ILCS 505/1 et seq. (West 1994)).  The trial court ruled

that the suit was barred by the Carmack Amendment to the Interstate

Commerce Act (Carmack Amendment)(49 U.S.C.A. §11707 (West 1997)),

and by section 10b(1) of the Consumer Fraud Act (815 ILCS

505/10b(1)(West 1994)).  On appeal, plaintiffs argue that neither

the Carmack Amendment nor section 10b(1) of the Consumer Fraud Act

bars a suit against an interstate motor carrier or its agent for

fraudulently depriving shippers of the benefit of insurance for

goods damaged in transit.  We hold that, because this suit is in

substance one for loss from the carrier's damage to the shippers'

goods, it is preempted by the Carmack Amendment.  Therefore, we

affirm.

     Plaintiffs' complaint alleges the following facts.   Red Ball

is a motor carrier engaged in interstate commerce.  Plaintiffs

entered into a contract with Arrow, Red Ball's agent, to ship

plaintiffs' household goods from Gurnee, Illinois, to Sun Lakes,

Arizona.  When the parties agreed to the contract, Arrow told

plaintiffs they could obtain extra insurance against breakage that

might occur during the move.  Relying on this representation,

plaintiffs purchased extra insurance for $492.68.  However, Red

Ball never obtained the extra insurance or furnished plaintiffs a

policy.  Red Ball picked up the goods and delivered them to Sun

Lakes.  When plaintiffs unpacked the items, they discovered $7,500

worth of breakage.  Plaintiffs made a claim for this amount, but

Red Ball and Arrow denied the claim.

     Plaintiffs alleged that Red Ball and Arrow committed statutory

consumer fraud. They relied in part on an Interstate Commerce

Commission regulation providing that, whenever a common carrier of

household goods sells insurance covering loss or damage in excess

of the carrier's specified liability and the carrier fails to

provide the shipper with the policy or other appropriate evidence

of the insurance purchased, the carrier shall be subject to full

liability for any claim.  See 49 C.F.R. §1056.11(a)(1995). 

Plaintiffs sought $7,500 actual damages and $30,000 punitive

damages.  Each defendant then sought contribution or indemnity

against the other for any liability to plaintiffs.  

     In granting defendants' summary judgment, the court held that

the Carmack Amendment preempts the claims and that section 10b(1)

of the Consumer Fraud Act also exempts defendants from liability

under the state statute.  Plaintiffs timely appealed.

     Plaintiffs contend that the trial court erred in holding that

the Carmack Amendment preempts their claim for consumer fraud. 

Plaintiffs concede that the federal statute preempts a state-law

cause of action for breach of contract to ship goods under a

receipt or bill of lading or for negligence in the delivery of

goods under such a contract.  However, they assert that they are

suing for fraud in the procurement of insurance rather than loss

from improper shipping.  Thus, they reason, their action under

Illinois law is consistent with the Carmack Amendment.

     We disagree.  The complaint does allege that defendants failed

to deliver insurance as promised.  However, as plaintiffs do not

deny, the sole purpose for this insurance was to compensate them

for damage to the property the carrier delivered.  In essence,

plaintiffs are suing an interstate motor carrier (and its agent)

for the carrier's negligent or improper handling of goods that the

carrier delivered in interstate commerce under a receipt or bill of

lading.  This is precisely the type of liability for which the

Carmack Amendment was intended to provide uniform federal

standards, and it is well within the broad preemptive range of the

statute.  Plaintiffs cannot evade the scope of the federal act by

denominating their cause of action as one for consumer fraud.  

     Courts have long recognized that, under the Carmack

Amendment's comprehensive regulation of carriers' liability,

"[a]lmost every detail of the subject is covered so completely that

there can be no rational doubt but that Congress intended to take

possession of the subject, and supersede all state regulation with

reference to it."  Adams Express Co. v. Croninger, 226 U.S. 491,

505-06, 57 L. Ed. 314, 320, 33 S. Ct. 148, 152 (1913).  The law's

preemptive force stems not only from its breadth but from its

purpose: to preserve uniform national guidelines for interstate

carriers' liability and thereby avoid the uncertainty that would

result from a multiplicity of state standards.  Rini v. United Van

Lines, Inc., 104 F.3d 502, 504 (1st Cir. 1997); Moffit v. Bekins

Van Lines Co., 6 F.3d 305, 306-07 (5th Cir. 1993); Hughes v. United

Van Lines, Inc., 829 F.2d 1407, 1415 (7th Cir. 1987), cert. denied

485 U.S. 913, 99 L. Ed. 2d 248, 108 S. Ct. 1068 (1988);

Consolidated Rail Corp. v. Primary Industries Corp., 868 F. Supp.

566, 574 (S.D.N.Y. 1994).

     Numerous courts have applied these principles in holding that

the Carmack Amendment preempts state-law based claims essentially

indistinguishable from the one here. In Rini, the plaintiff

obtained a jury verdict against a carrier that lost some of her

goods and refused to pay for the loss.  The plaintiff recovered not

only under the Carmack Amendment but also under common-law theories

of negligence and misrepresentation and under the state statute

governing unfair and deceptive business acts.  

     The appellate court reversed, holding that all the state-law

claims upon which the plaintiff prevailed were preempted by the

Carmack Amendment.   Observing that "the principal purpose of the

Amendment was to achieve national uniformity in the liability

assigned to carriers" (Rini, 104 F.3d at 504), the court reasoned

that the federal statute necessarily applied not only to the

transport of goods but the attendant claims process (Rini, 104 F.3d

at 505).  Thus, the court reasoned, the touchstone inquiry in each

case is whether the carrier's liability is based on the loss of or

damage to the goods it shipped.  To allow recovery under state law

where the ultimate harm is property damage or loss would ignore the

long-standing rule that state statutes are preempted if they in any

way enlarge the carrier's responsibility for the loss or at all

affect the ground or measure of recovery.  Rini, 104 F.3d at 504-

05, relying on Charleston & Western Carolina Ry. Co. v. Varnville

Furniture Co., 237 U.S. 597, 603, 59 L. Ed. 1137, 1139, 35 S. Ct.

715, 716 (1915).

     The Rini court concluded that the plaintiff's claims under

state law were preempted even though they were nominally premised

on the carrier's conduct during the claims process rather than

merely on the carrier's loss of her property.  All these causes of

action stemmed from the loss of the plaintiff's goods; this was the

only injury she suffered.  Rini, 104 F.3d at 506.

     In Hughes, the plaintiffs' goods were damaged in transit by a

fire.  The plaintiffs sued not only for negligence and breach of

contract but also for intentional and negligent misrepresentation 

in providing  coverage for damage.  The court held that the Carmack

Amendment preempted all these claims, as the federal goals of

uniformity and certainty would be frustrated by allowing varying

and inconsistent state causes of action for harm caused in

interstate commerce.  Hughes, 829 F.2d at 1412-15.

     Pietro Cullotta Grapes, Ltd. v. Southern Pacific

Transportation Co., 917 F. Supp. 713 (E.D. Cal. 1996), involved

allegations of both property damage and business loss from untimely

shipments.  The plaintiffs' state-law causes of action included

breach of contract, negligence, fraud, and negligent

misrepresentation; in part, they alleged that the defendants

wrongfully induced them to enter the contract by making crucial

representations that they knew were unlikely to be fulfilled.  The

court held that the Carmack Amendment preempted all the state-law

causes of action for damage to the goods or delay in shipment of

the goods.  The court refused to distinguish between actions based

solely on improper shipping and those based on carriers'

preshipment conduct, observing that several other courts had

repudiated such a distinction.  See  Cullotta, 917 F. Supp. at 715-

16 (and cases cited therein).  Furthermore, the court reasoned that

to allow the plaintiffs' state-law claims would undercut the

certainty and uniformity that are the primary goals of the Carmack

Amendment's national system of carrier liability.  Cullotta, 917 F.

Supp. at 716.

     In White v. United Van Lines Inc., 758 F. Supp. 1240 (N.D.

Ill. 1991), the plaintiff's goods were damaged in transit.  Relying

in part on Hughes, the court held that the Carmack Amendment

preempted plaintiff's suit for fraudulent or bad-faith breach of an

insurance contract similar to the one here.  As did Rini later,

White  simply rejected the distinction plaintiffs here attempt to

draw between an action for damages to the goods themselves and one

for the carrier's improper conduct in processing a claim for

damages to the goods.  White, 758 F. Supp. at 1243-44.  

     In Margetson v. United Van Lines, Inc., 785 F. Supp. 917

(D.N.M. 1991), the court held that the Carmack Amendment preempted

claims under state deceptive trade practices statutes even though

the plaintiff alleged not only that the carrier damaged her goods

but that it also deceived her about how it would store and

transport the goods.  The court noted that, ultimately, the

plaintiff was seeking damages for the loss or injury incurred in

transporting her goods interstate.  Margetson, 785 F. Supp. at 920. 

The court also observed that allowing the plaintiff punitive

damages under the state statutes would be inconsistent with the

Carmack Amendment's limitation of carriers' liability to actual

damages.  Margetson, 785 F. Supp. at 920-21; see also Cleveland v.

Beltman North American Co., 30 F.3d 373, 379 (2d Cir.

1994)(punitive damages are inconsistent with Carmack Amendment).

     Other courts have recognized that the Carmack Amendment is

broad enough to preempt state-law claims for damages to goods

shipped interstate, even when these suits are styled as ones for 

fraud or the violation of state consumer protection statutes.  See

Schultz v. Auld, 848 F. Supp. 1497, 1502-03 (D. Idaho 1993)(shipper

alleged that carrier's representations about liability coverage

were fraudulent and violated state consumer practices statute);

United Van Lines, Inc. v. Shooster, 860 F. Supp. 826, 828-29 (S.D.

Fla. 1992)(holding Carmack Amendment preempts state-law claims for

fraud or deceptive trade practices, including defendants'

counterclaim alleging plaintiff fraudulently induced them to enter

into the contract).

     Given this wealth of authority, we have no doubt that the

Carmack Amendment preempts plaintiffs' suit, which in essence seeks

compensation for the damage that defendants caused in transporting

plaintiffs' goods interstate.  Plaintiffs suffered no other injury

and their theories of recovery are merely vehicles to obtain

compensation for this damage.  Their claim must be adjudicated

according to the uniform federal standard of the Carmack Amendment,

for that standard provides the exclusive remedy where "the

substance of the action is ' "nothing more than an action for

damages against the delivering carrier." ' " Intech, Inc. v.

Consolidated Freightways, Inc., 836 F.2d 672, 677 (1st Cir. 1987),

quoting Georgia, Florida & Alabama Ry. Co. v. Blish Milling Co.,

241 U.S. 190, 197, 60 L. Ed. 948, 952, 36 S. Ct. 541, 544 (1916),

quoting Georgia, Florida & Alabama Ry. Co. v. Blish Milling Co., 15

Ga. App. 142, 147, 82 S.E. 784, 787 (1914). 

     Moreover, plaintiffs' invocation of a federal regulation 

addressing the precise situation here is additional evidence that

Congress intended to supplant varying state remedies with a uniform

national standard for cases such as this one.

     Because the Carmack Amendment wholly disposes of this case, we

need not consider whether section 10b(1) of the Consumer Fraud Act

also bars plaintiffs' action.

     The judgment of the circuit court of Lake County is affirmed.

     Affirmed.

     GEIGER, P.J., and DOYLE, J., concur.