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Bits & Pieces

Oak Harbor v. Sears Roebuck

United States District Court,

W.D. Washington.

OAK HARBOR FREIGHT LINES, INC., a Washington Corporation, Plaintiff,

v.

SEARS ROEBUCK & CO., d/b/a Sears Contract Sales, a foreign Corporation; and

National Logistics Corporation, a foreign corporation, Defendants.

No. C05-284Z.

 

March 2, 2006.

 

ORDER

 

ZILLY, J.

 

This case comes before the Court on cross-motions for summary judgment filed by Plaintiff Oak Harbor Freight Lines, Inc. (“Oak Harbor”), docket no. 55, Defendant Sears, Roebuck & Co. (“Sears”), docket no. 54, and Defendant National Logistics Corporation (“NLC”), docket no. 58. [] Having considered the briefs and declarations in support of and in opposition to the motions, and the oral argument of counsel on February 24, 2006, the Court now enters the following Order, holding Sears and NLC jointly and severally liable to Oak Harbor for $426,417.94, and holding NLC liable to Sears for $227,202.50 in the event Oak Harbor collects at least $227,202.50 from Sears on Oak Harbor’s judgment against Sears and NLC.

 

BACKGROUND

 

A. The Parties

 

Plaintiff Oak Harbor is a Washington corporation and a licenced motor carrier authorized under the Federal Motor Carrier Safety Act, 49 U.S.C. §  13102(12), [] to provide intrastate and interstate freight transportation services. Am. Compl., docket no. 47, at 1 ¶ ¶  1.1, 2.1. Defendant Sears is a New York corporation that sells appliances and tools to builders and other bulk purchasers. Sears’ Answer to Pl.’s Am. Compl., docket no. 50, at 2 ¶  1.2; Sears’ Cross-claim, docket no. 31, ¶  7; Hart Decl., docket no. 56, Ex. E (Reed Dep.) at 18-19. Defendant NLC is an Illinois corporation and a licensed registered property broker authorized under the Federal Motor Carrier Safety Act, 49 U.S.C. §  13102(2), [] to arrange transportation by motor carrier for compensation. NLC’s Answer to Pl.’s Am. Compl., docket no. 52, at 2 ¶  1.3; NLC’s Answer to Sears’ Cross-claim, docket no. 35, ¶  5.

 

The parties have a long history of doing business with each other, as described in more detail below. In summary, NLC performed brokerage services  [] for Sears in arranging for Oak Harbor to haul Sears’ freight. NLC also performed non-brokerage services  [] for Sears in auditing Oak Harbor’s freight bills and collecting funds from Sears to pay Oak Harbor’s freight bills. Staton Decl., docket no. 59, ¶  7.

 

B. The Present Case

 

Oak Harbor is suing Sears and NLC to recover $426,417.94 that all parties agree Oak Harbor is owed for transporting Sears’ freight between approximately August 1, 2004, and November 12, 2004. [] Am. Compl., docket no. 47, ¶  2.5. Oak Harbor incurred these freight charges in connection with 3,386 shipments that Oak Harbor billed to NLC. Hart Decl., docket no. 56, Ex. F (Fallon Dep.) at 30; Hobby Decl., docket no. 57, ¶ ¶  3, 5. Sears and NLC each argue that the other party is liable to Oak Harbor for the payment. Sears argues that a contract signed in 1992 by NLC and Oak Harbor makes NLC solely liable for Oak Harbor’s freight charges. NLC argues that the bills of lading used in connection with the shipments arranged by NLC constitute contracts between Sears and Oak Harbor and that these contracts make Sears solely liable for Oak Harbor’s freight charges. As discussed below, the Court concludes that both Sears and NLC are liable under their respective contracts with Oak Harbor.

 

Sears has filed a cross-claim against NLC for $227,202.50, an amount that Sears asserts it has already paid NLC to cover Oak Harbor’s freight charges. Sears’ Cross-Claim, docket no. 31, at 4-5 ¶  18; Hart Decl., docket no. 56, Ex. F (Fallon Dep.) at 29-31 (explaining how the $278,127.17 alleged in Sears’ cross-claim was reduced by $50,924.67 to $227,202.50 to reflect NLC’s markup on Oak Harbor’s freight charges). NLC responds to Sears’ cross-claim by asserting that Sears owes NLC over $2.9 million for freight hauling services rendered between 1995 and 2004. Staton Decl., docket no. 59, ¶ ¶  35-43, Exs. C and D (NLC’s invoices to Sears).

 

C. NLC’s Brokerage Services for Sears

 

In 1989, Sears began using NLC as a broker to arrange inbound freight transportation services. Hart Decl., docket no. 56, Ex. A (Oct. 4, 1989 and Nov. 7, 1989 Letters of Understanding  []) and Ex. G (Staton Dep.) at 11- 12; Staton Decl., docket no. 59, ¶ ¶  4-5. As the broker for inbound shipments, NLC identified carriers to move Sears’ freight from Sears’ vendors, such as GE, Whirlpool and Gold Star, to Sears’ warehouses. Hart Decl., docket no. 56, Ex. G (Staton Dep.) at 12; Sears’ Exhibits, docket no. 54, Ex. C (Francesconi Dep.) at 14, and Ex. E (Chapman Dep.) at 11.

 

In approximately 1990, Sears set up nine regional “mixing” warehouses (i.e., distribution centers) around the country, including a Seattle-based mixing warehouse, to accept inbound shipments from vendors and to arrange outbound shipments to Sears’ customers. Sears’ Exhibits, docket no. 61, Ex. A (Reed Dep.) at 225-227, and Ex. C (Francesconi Dep.) at 20; Hart Decl., docket no. 56, Ex. C (Baxley Dep.) at 155-57, and Ex. E (Reed Dep.) at 34-38, 172; Steinbach Decl., docket no. 61, ¶  2. Sears owned the Seattle warehouse, and another company, APL Logistics, managed it. Hart Decl ., docket no. 56, Ex. C (Baxley Dep.) at 12, and Ex. D (Steinbach Dep .) at 157.

 

In late 1991 or early 1992, Sears expanded the scope of brokerage services that it wanted NLC to provide, and Sears began using NLC as a broker to arrange outbound freight transportation services for its regional mixing warehouses around the country, including the Seattle warehouse. Hart Decl., docket no. 56, Ex. E (Reed Dep.) at 170-72, 181-82. As the broker for outbound shipments, NLC identified carriers to move Sears’ freight from Sears’ warehouses to freight transportation and delivery companies known as “cross-docks.”  [] Hart Decl., docket no. 56, Ex. D (Steinbach Dep.) at 54, Ex. E (Reed Dep.) at 177, and Ex. G (Staton Dep.) at 16, 19; Sears’ Exhibits, docket no. 54, Ex. E (Chapman Dep.) at 12. NLC negotiated rates with the carriers, including Oak Harbor, on an annual basis. Hart Decl., docket no. 56, Ex. H (Hartmann Dep.) at 35; Staton Decl., docket no. 59, ¶  16; Sears’ Exhibits, docket no. 54, Ex. C (Francesconi Dep.) at 184, Ex. F (Hartmann Dep.) at 152, Ex. H (Jensen Dep.) at 47, and Exs. 15-17, 27, 34-35, 99, 131. NLC never operated as a motor carrier for Sears. Staton Decl., docket no. 59, ¶  8. In 2001, Sears and NLC discussed a new written contract, but Sears never signed it. Id. ¶ ¶  10-13, Ex. B; Barrette Decl., docket no. 65, Ex. C (correspondence); Hart Decl., docket no. 56, Ex. D (Steinbach Dep.) at 72-73.

 

D. Oak Harbor’s Transportation of Sears’ Freight and the 1992 Carrier Contract

 

In late 1991 or early 1992, when Sears began using NLC to arrange outbound shipments from Sears’ Seattle warehouse, Sears instructed NLC to work with Oak Harbor. Hart Decl., docket no. 56, Ex. C (Baxley Dep.) at 19-20, 85, and Ex. G (Staton Dep.) at 26. [] Sears owned the goods that Oak Harbor hauled. Hart Decl., docket no. 56, Ex. C (Baxley Dep.) at 59, Ex. D (Steinbach Dep.) at 166, and Ex. E (Reed Dep.) at 219. On January 8, 1992, Oak Harbor and NLC signed a “National Logistics Corporation Carrier Contract” (the “Carrier Contract”). Hobby Decl., docket no. 57, Ex. B. Sears did not sign the Carrier Contract. Id. The Carrier Contract provides, in pertinent part:

This AGREEMENT between NATIONAL LOGISTICS CORPORATION (BROKER/SHIPPER), operating under ICC Broker No. MC205436 and Oak Harbor Freight Lines, Inc. (CARRIER), MC # 139763 engaged in the business of conducting the transportation of regulated commodities in Interstate Commerce over public highways, provides that NATIONAL LOGISTICS CORPORATION will offer a series of shipments to the CARRIER, which the CARRIER agrees to transport…. BROKER/SHIPPER and CARRIER agree rates governing shipments will be established to meet the schedules verbally agreed upon and verbal agreement will be reduced to writing by CARRIER submitting its invoice to BROKER/SHIPPER. SHIPPER agrees to pay CARRIER within a predetermined time from date of receipt regardless whether or not BROKER/SHIPPER has been paid for movement…. This AGREEMENT shall be effective on the date it is signed and will remain in full force and effect from the signing date for twelve (12) months. Agreement shall be automatically extended for successive twelve (12) month terms or until canceled by either party by giving written notice to the other party at least thirty (30) days prior to the date of termination.

Id. (emphasis added). The Carrier Contract thus identifies NLC as the  “Broker/Shipper” and Oak Harbor as the “Carrier.” Id. The Carrier Contract does not define “Shipper.” Nowhere does the Carrier Contract mention Sears by name. Id. Sears had no input into the Carrier Contract. Sears’ Exhibits, docket no. 54, Ex. I (Staton Dep.) at 56.

 

E. Bills of Lading

 

The parties used two different bills of lading for shipments arranged by NLC:  (1) the Sears-generated bill of lading for outbound shipments, and (2) the Oak Harbor-generated bill of lading for return shipments.

 

1. Bills of Lading for Outbound Shipments

 

The majority of the shipments for which Oak Harbor is seeking payment were outbound shipments arranged by NLC. A typical transaction for an outbound shipment transpired as follows. Sears received a purchase order from a customer and entered the data into Sears’ computer system in Augusta, Georgia. Hart Decl., docket no. 56, Ex. C (Baxley Dep.) at 11-12, and Ex. D (Steinbach Dep.) at 102-05, 125, 159-60. Sears then sent the information to its regional mixing warehouses, where Sears’ computer system printed a unique “Sears Contract Sales Uniform Straight Bill of Lading” from the information provided. Hart Decl., docket no. 56, Ex. C (Baxley Dep.) at 12, Ex. D (Steinbach Dep.) at 159-60, 172, and Ex. E (Reed Dep.) at 173-74; see, e.g., Hobby Decl., docket no. 57, Ex. C; Sears’ Exhibits, docket no. 54, Exs. 4 and 21. Sears designed its bill of lading to comply with the industry standard, the uniform straight bill of lading. Hart Decl., docket no. 56, Ex. C (Baxley Dep.) at 56-57, 118, 120. The Oak Harbor driver picked up the Sears-generated bill of lading at the mixing warehouse when he arrived there to pick up the deliveries for that day. Hart Decl., docket no. 56, Ex. I (Hobby Dep.) at 14-15.

 

The Sears-generated bills of lading stated: “Freight Terms: PREPAID.” See, e.g., Hobby Decl., docket no. 57, Ex. C; Sears’ Exhibits, docket no. 54, Exs. 4 and 21. These bills of lading instructed the carrier to: “Send Freight Bills To: National Logistics Corporation, 495 Commons Drive, Suite 101, Aurora, IL 60504.” Id. They were marked: “Domestic,” and they each carried a unique bill of lading number as well as a print date. Id . They listed business names and addresses for the following categories: “Ship From,” “Consign To” and “Carrier.” Id. These bills of lading listed the “Ship From” party as: “190/SA, [0] APL Logistics, 4798 1st Avenue South, Seattle, WA, 98134, United States.” Id. These bills of lading did not indicate the “Shipper” or “Consignor” of the goods. See id . The “Consign To” party changed, depending on the destination of the shipment. Id. These bills of lading listed the “Carrier” as “Oak Harbor Freight Lines, Box 1469, Auburn, WA, United States.” Id. They also included an order number, customer purchase order and customer phone number. Id. They noted the commodity being shipped, such as dishwashers, and the quantity and weight of the commodity. Id. At the bottom of these bills of lading, they provided: “This document is tendered as an individual Bill of Lading. All terms and conditions of the straight Bill of Lading and applicable tariff and classifications in effect as of the date hereon apply.” Id.

 

2. Bills of Lading for Return Shipments

 

In addition to outbound shipments arranged by NLC, Oak Harbor also hauled Sears’ freight for return shipments, moving freight from Sears’ customers back to the Sears’ Seattle warehouse. Hobby Decl., docket no. 68, ¶  5; Hart Decl., docket no. 56, Ex. C (Baxley Dep.) at 114-16, 146-47. Once Oak Harbor received a Return Authorization from Sears, Oak Harbor generated a bill of lading, using its standard, uniform straight bill of lading form. Hobby Decl., docket no. 68, ¶  5; see, e.g., Hobby Decl., docket no. 57, Ex. D. Oak Harbor designed its bill of lading to comply with the industry standard, as set forth in the Rules for Uniform Bill of Lading Terms and Conditions, published on the National Motor Freight Classification (“NMFC”) 100-AD form. Hobby Decl., docket no. 68, at ¶  5, Ex. D. These Oak Harbor-generated bills of lading designated “Sears Contract Sales” as the “Consignee.” Hobby Decl ., docket no. 57, Ex. D. These bills of lading stated, “Freight Charges Are Prepaid Unless Marked Collect,” after which the box next to “Collect” was marked. Id. “Third Party Billing” was written in the “Bill To” section of these bills of lading. Id.

 

F. Billing

 

With regards to billing, the parties typically conducted themselves as follows: 1) Oak Harbor billed NLC at least three days after Oak Harbor delivered the freight, and Oak Harbor expected to be paid by NLC within thirty days of the invoice, Hart Decl., docket no. 56, Ex. I (Hobby Dep.) at 18, 26, 33-34, 183; Sears’ Exhibits, docket no. 54, Ex. E (Chapman Dep.) at 74- 75, Ex. F (Hartmann Dep.) at 70; 2) NLC audited the freight bills received from Oak Harbor and then billed Sears for the freight charges on a weekly basis, Hart Decl., docket no. 56, Ex. G (Staton Dep.) at 68-71; Sears’ Exhibits, docket no. 54, Ex. E (Chapman Dep.) at 32-33, 57-58, and Ex. 65; 3) Sears paid NLC approximately five days after NLC billed Sears, Hart Decl., docket no. 56, Ex. G (Staton Dep.) at 87-88; and 4) NLC paid Oak Harbor with funds received from Sears approximately twenty-five days after NLC received the freight invoice from Oak Harbor, id. at 87-88; Sears’ Exhibits, docket no. 54, Ex. K (Tagle Dep.) at 41-42; Hart Decl., docket no. 56, Ex. D (Steinbach Dep.) at 169, and Ex. E (Reed Dep.) at 219. In short, Oak Harbor billed NLC, and NLC billed Sears. NLC then paid Oak Harbor using Sears’ funds.

 

Tracking the flow of the money from Sears to NLC to Oak Harbor is not as straightforward as the above description of the billing process might imply. That is because NLC billed Sears for services related to multiple carriers, and Sears wired payments to a common fund from which NLC paid the carriers as the carriers’ bills came due. Hart Decl., docket no. 56, Ex. G (Staton Dep.) at 88-89. In other words, NLC did not bill Sears separately for Oak Harbor’s freight charges, and NLC did not maintain a separate account for Oak Harbor’s funds. See id. at 128-29.

 

DISCUSSION

 

A. Summary Judgment Standard

 

Summary judgment is appropriate when the movant demonstrates that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir.2000). The party moving for summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed.R.Civ.P. 56(c)). Once the moving party meets its initial responsibility, the burden shifts to the non-moving party to establish that a genuine issue as to any material fact exists. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The non-moving party must present significant probative evidence tending to support its claim or defense. Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir.1991). Evidence submitted by a party opposing summary judgment is presumed valid, and all reasonable inferences that may be drawn from that evidence must be drawn in favor of the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

 

B. Oak Harbor v. NLC

 

Oak Harbor moves for summary judgment against NLC on four legal theories: 1) conversion; 2) constructive trust; 3) resulting trust, and 4) breach of contract.

 

1. Conversion, Constructive Trust and Resulting Trust Claims

 

Rule 8(a)(2) of the Federal Rules of Civil Procedure requires that a complaint contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). Rule 8(f) requires that “[a]ll pleadings shall be so construed as to do substantial justice.” Fed.R.Civ.P. 8(f). In determining whether a complaint contains sufficient pleadings, the Court “recognize[s] that the main purpose of the complaint is to provide notice to the defendant of what plaintiff’s claim is and the grounds upon which the claim rests.” Self Directed Placement Corp. v. Control Data Corp., 908 F.2d 462, 466 (9th Cir.1990). Oak Harbor failed to plead claims for conversion, constructive trust and resulting trust in its Amended Complaint, docket no. 47, and also failed to allege facts giving rise to such claims. Because Oak Harbor’s Amended Complaint did not put NLC on notice of claims for conversion, constructive trust and resulting trust, the Court is precluded from entering summary judgment in favor of Oak Harbor based on these claims.

 

2. Breach of Contract

 

Oak Harbor’s “Amended Complaint for Monies Due” adequately provided notice to NLC of a breach of contract claim against it. Am. Compl., docket no. 47, at 2-3 ¶ ¶  2.3-2.5. Oak Harbor argues that NLC has breached the Carrier Contract by not paying Oak Harbor within thirty days of NLC’s receipt of Oak Harbor’s freight bills. The Carrier Contract provides, in pertinent part: “SHIPPER agrees to pay CARRIER within a predetermined time from date of receipt regardless whether or not BROKER/SHIPPER has been paid for movement.” NLC responds that the term “Shipper” in the Carrier Contract refers to Sears, not NLC.

 

“When interpreting a contract, our primary objective is to discern the parties’ intent.” Wm. Dickson Co. v. Pierce County, 128 Wash.App. 488, 493, 116 P.3d 409 (2005). The Washington Supreme Court has rejected the theory that ambiguity in the meaning of contract language must exist before evidence of the surrounding circumstances is admissible. Berg v. Hudesman, 115 Wash.2d 657, 669, 801 P.2d 222 (1990). “Determination of the intent of the contracting parties is to be accomplished by viewing the contract as a whole, the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties to the contract, and the reasonableness of respective interpretations advocated by the parties.” Id. at 667, 801 P.2d 222 (quoting Stender v. Twin City Foods, Inc., 82 Wash.2d 250, 254, 510 P.2d 221 (1973)).

 

The contract defines “BROKER/SHIPPER” as NLC and does not separately define  “SHIPPER.” The ambiguity arises because the Carrier Contract uses the term “SHIPPER” instead of “BROKER/SHIPPER” only once in the contract–in the sentence regarding the payment obligation. The remainder of the sentence helps the Court discern the parties’ intent. First, the sentence states that “SHIPPER agrees….” Sears could not have “agreed” to anything given that it was not a party to, and did not sign, the contract. Second, the sentence states that the payment will occur “within a predetermined time from date of receipt.” Because NLC, not Sears, was receiving Oak Harbor’s freight bills and was expected to pay them within thirty days, the term “SHIPPER” in the Carrier Contract must mean NLC. Furthermore, the subsequent conduct of NLC and Oak Harbor makes it absolutely clear that NLC was expected to pay, and typically did pay, Oak Harbor within thirty days of NLC’s receipt of Oak Harbor’s freight bills. The Court concludes that the parties intended the term “SHIPPER” in the Carrier Contract to mean NLC. Thus, the Carrier Contract imposes a payment obligation on NLC, which NLC has breached by not paying Oak Harbor within thirty days of NLC’s receipt of Oak Harbor’s freight bills.

 

NLC attempts to avoid liability under the Carrier Contract by arguing that NLC entered the contract as Sears’ agent. This argument fails for multiple reasons. First, NLC has failed to provide any case law supporting its argument that the definitions of “brokerage services” and “non-brokerage services,” see 49 C.F.R. § §  371.1(c)-(d), automatically make all brokers agents because they act “on behalf of” someone else. NLC’s argument overlooks the definition of broker in 49 U.S.C. §  13102(2), which explicitly states that a broker is a person who acts “as a principal or agent” in arranging for transportation by motor carrier for compensation. Second, NLC’s reliance on Hopkins v. Anderson, 7 Wash.App. 762, 502 P.2d 473 (1971), is misplaced. Hopkins holds that an agent for a disclosed principal does not become a party to a contract. See Hopkins, 7 Wash.App. at 766, 502 P.2d 473. Hopkins does not apply here because Sears is not a disclosed principal in the Carrier Contract. Third, NLC has failed to argue that it had actual or apparent authority to bind Sears. See King v. Riveland, 125 Wash.2d 500, 507, 886 P.2d 160 (1994) (summarizing agency principles); State v. Morse, 156 Wash.2d 1, 12 n. 3, 123 P.3d 832 (2005). Fourth, NLC failed to address the numerous cases relied upon by Sears in support of Sears’ argument that NLC was acting as an independent contractor who entered the Carrier Contract on its own behalf. See e.g., Jackson Rapid Delivery Serv., Inc. v. Thomson Consumer Elecs., Inc. ., 210 F.Supp.2d 949, 954 (N.D.Ill.2001) (holding that a broker was acting as an independent contractor, not as a shipper’s agent, in entering a contract with a carrier).

 

In conclusion, the Court GRANTS Oak Harbor’s motion for summary judgment against NLC and DENIES NLC’s cross-motion for summary judgment. NLC has breached the Carrier Contract’s requirement that NLC pay Oak Harbor within a predetermined time (i.e., thirty days) of NLC’s receipt of Oak Harbor’s freight bills. Even though Oak Harbor has only moved for partial summary judgment against NLC for the amount of $227,202.50, the Court grants Oak Harbor’s entire claim against NLC for the amount of $426,417.94. [1] The issues have been fully briefed, and the breach of contract rationale for holding NLC liable does not limit Oak Harbor’s recovery.

 

C. Oak Harbor v. Sears

 

Oak Harbor moves for summary judgment against Sears and argues that the bills of lading constitute contracts between Sears and Oak Harbor.

 

1. Liability under Default Provisions of Uniform Straight Bill of Lading

 

“The bill of lading is the basic transportation contract between the shipper-consignor and the carrier; its terms and conditions bind the shipper and all connecting carriers.” Southern Pac. Transp. Co. v. Commercial Metals Co., 456 U.S. 336, 342, 102 S.Ct. 1815, 72 L.Ed.2d 114 (1982) (involving common carrier by rail); C.A.R. Transp. Brokerage Co. v. Darden Restaurants, 213 F.3d 474, 478-79 (9th Cir.2000) (applying bill of lading contract formation rule of Southern Pacific Transportation Company to case involving motor carriers where the parties adopted the terms of the Uniform Straight Bill of Lading). “Unless the bill provides to the contrary, the consignor remains primarily liable for the freight charges.” Southern Pac. Transp. Co., 456 U.S. at 343. The consignor may “effectuate its release from liability by executing the nonrecourse clause in the bill of lading.” Id.; see also C.A.R., 213 F.3d at 479. Under Section 7 of the Uniform Straight Bill of Lading, the consignee (i.e., the party entitled to delivery under a bill of lading) may also be liable for “the freight and all other lawful charges upon the transported property.” C.A.R., 213 F.3d at 478-79. However, when the shipment has been marked “prepaid” on the bill of lading and the consignee has already paid the consignor for the freight charges, the consignee is not liable to the carrier for payment of the freight charges. Id. at 479.

 

a. The Sears-Generated Bills of Lading for Outbound Shipments

 

[10] As previously noted, Sears designed its bills of lading for outbound shipments to comply with the industry standard. These bills of lading expressly stated that “All terms and conditions of the straight Bill of Lading and applicable tariff and classifications in effect as of the date hereon apply.” As a result, the Sears-generated bills of lading clearly adopted the terms of the Uniform Straight Bill of Lading. It is undisputed that these bills of lading did not include a nonrecourse clause. Thus, under Southern Pacific Transportation Company and C.A.R., the shipper/consignor is liable for freight charges on these bills of lading. [2]

 

In the briefing, Sears disputes that it is the “shipper” on the Sears-generated bills of lading. Sears relies on the fact that the Sears-generated bills of lading listed “APL Logistics,” not Sears, as the “Ship From” party. As previously noted, APL Logistics was the manager of the Sears-owned Seattle warehouse. The testimony of Sears’ employee, Mr. Scott Neal, undermines Sears’ argument. Mr. Neal testified that the “Ship From” party indicated the warehouse location from which the goods were shipped; that “[t]he shipper would be the owner of the merchandise;” and that “Sears Roebuck” was the owner of the product. Barrette Decl., docket no. 65, Ex. B (Neal Dep.) at 141-144. Mr. Neal’s understanding of the meaning of the term “shipper” comports with the presumption in the bills of lading case law that the shipper/consignor is the owner of the goods being shipped. See, e.g., Southern Pac. Transp. Co., 456 U.S. at 337-338 (owner of steel goods is the consignor); C.A.R., 213 F.3d at 476 (owner of shrimp is the shipper). Moreover, Sears admitted at oral argument that Sears would be liable on the Sears-generated bills of lading if no Carrier Contract existed. Thus, Sears’ only argument for avoiding liability on the Sears-generated bills of lading is that the Carrier Contract trumps the default provisions of the bills of lading (see further discussion below).

 

b. The Oak Harbor-Generated Bills of Lading for Return Shipments

 

[11] As with the Sears-generated bills of lading, Oak Harbor designed its bills of lading for return shipments to comply with the industry standard. As previously noted, the Oak Harbor-generated bills of lading were marked “Collect.” The marking of these bills of lading as “collect” nullified the prepaid default provision set forth on the face of the bill of lading. Thus, under Southern Pacific Transportation Company and C.A.R., the consignee is liable for freight charges on these bills of lading. [3] Because the bills of lading designated “Sears Contract Sales” as the “Consignee,” Sears is indisputably the consignee. Sears’ only argument for avoiding liability on the Oak Harbor-generated bills of lading is that the Carrier Contract trumps the default provisions of the bills of lading.

 

2. Freedom to Contract Around Default Provisions of the Bills of Lading

 

[12][13][14] Sears argues that the Carrier Contract trumps the bills of lading and that the bills of lading are mere receipts. A bill of lading is an “instrument [that] serves both as a receipt and as a contract.” Louisville & N.R. Co. v. Central Iron & Coal Co., 265 U.S. 59, 67, 44 S.Ct. 441, 68 L.Ed. 900 (1924). “Ordinarily, the person from whom the goods are received for shipment assumes the obligation to pay the freight charges, and his obligation is ordinarily a primary one.” Id. However, the carrier and shipper are “free to contract” “when or by whom the payment should be made.” Id. at 66; see also A-Transport Northwest Co. v. United States, 36 F.3d 1576, 1583 (Fed.Cir.1994) (stating that the bill of lading is not “the exclusive means of creating a contract”). The parties may agree that “the shipper agrees absolutely to pay … or … that he shall pay if the consignee does not pay … or … only [the consignee] shall be liable for the freight charges, or both the shipper and the consignee may be made liable.” Louisville, 265 U.S. at 66-67.

 

In C.A.R., the Ninth Circuit upheld an agreement between several carriers and a broker that expressly waived the liability of both the shipper (i.e., “Trans-Pac”) and the consignee (i.e., “Trans-Pac’s customer”). See C.A.R., 213 F.3d at 479. The agreement, entitled “Waiver of Claim by Subcontractor,” provided:

The undersigned motor carrier acknowledges and agrees that:

1. It is providing contract carriage services to [Trans-Pac] and/or [Trans-Pac’s] customer as a subcontractor for another motor carrier or broker;

2. [Trans-Pac] and [Trans-Pac’s] customer have made no agreement, express or implied, to pay the undersigned for such services;

3. The Undersigned will not seek payment from [Trans-Pac] or [Trans-Pac’s] customer for such services; and

4. To the extent the Undersigned is determined to have any legal right to such payment from [Trans-Pac] or [Trans-Pac’s] customer, the Undersigned hereby waives such claim.

C.A.R., 213 F.3d at 476 n. 2. The Ninth Circuit concluded that this  “external contract, entered into by the Carriers, lawfully allocated liability for the freight charges,” making it unnecessary to “resort to the allocation presumptions on the bill of lading.” Id. at 479. To further protect its interests, the shipper in C .A.R. also initialed a nonrecourse clause in the bill of lading. See id. at 476-77.

 

In the present case, the Carrier Contract does not contain any provisions akin to paragraphs two, three and four of the external contract in C.A.R. In other words, the Carrier Contract does not state that Sears has made no agreement, express or implied, to pay Oak Harbor for its freight services; it does not state that Oak Harbor will not seek payment from Sears for such services; and it does not state that Oak Harbor waives any claim for payment from Sears. The Carrier Contract does not even mention Sears, by name or implication. In the absence of an unequivocal waiver of Oak Harbor’s rights to collect freight charges from Sears, Sears’ argument that the Carrier Contract trumps the bills of lading must fail. [4]

 

In conclusion, the Court GRANTS Oak Harbor’s motion for summary judgment against Sears and DENIES Sears’ cross-motion for summary judgment. The terms of the Carrier Contract that make NLC liable to Oak Harbor are not inconsistent with the allocation presumptions on the bills of lading. The Sears-generated bills of lading for outbound shipments make Sears liable as the shipper/consignor of the goods being shipped, and the Oak Harbor-generated bills of lading for return shipments make Sears liable as the consignee. Sears is liable to Oak Harbor for freight charges at the discounted rates established pursuant to the Carrier Contract.

 

3. Equitable Estoppel Is Not a Bar to Sears’ Liability for $227,202.50

 

[15] Sears argues that equitable estoppel bars the Court from imposing liability on Sears because it would result in Sears’ double payment of the $227,202.50 in freight charges that it has already paid to NLC. The question is which party, the shipper or the carrier, bears the risk if a middleman (i.e., cargo consolidator, freight forwarder, broker) fails to forward the freight payment to the carrier or if a consignee fails to pay both the shipper and the carrier. The Ninth Circuit has not ruled on the issue, and other circuit courts are split on the question.

 

In Southern Pacific Transportation Company, the United States Supreme Court discussed the category of “double payment cases” as those which “involved a carrier’s misrepresentation, such as a false assertion of prepayment on the bill of lading, upon which a consignee detrimentally relied only to find itself later sued by the carrier for the same freight charges.” 456 U.S. at 351. The Supreme Court referred to Consolidated Freightways Corporation v. Admiral Corporation, 442 F.2d 56 (7th Cir.1971), as an example of a double payment case. In Consolidated Freightways, the carrier was estopped from collecting against the consignee because, among other things, the bill of lading marked the freight charges as prepaid, which led the consignee to accept the delivery of the shipments and promptly pay the consignor’s invoices for the freight charges. 442 F.2d at 59-60. In contrast, in Southern Pacific Transportation Company, the Supreme Court found that “no similar double payment liability is in prospect here” and went on to hold a shipper liable even though the shipper had not been paid by the consignee. 456 U.S. at 351-52. The Supreme Court declined to apply equitable estoppel because the shipper had chosen the consignee, and the shipper had failed to execute the nonrecourse provision in the bill of lading. See id. These cases demonstrate a concern about the double liability of a consignee, not a shipper. See also Missouri Pac. R.R. Co. v. Nat’l Milling Co., 409 F.2d 882 (3d Cir.1969) (barring a carrier from imposing a double payment upon a consignee).

 

Subsequent to Southern Pacific Transportation Company, the Sixth Circuit applied the doctrine of equitable estoppel to bar a carrier’s claim against a shipper where the shipper had already paid a freight forwarder and the freight forwarder never forwarded the money to the carrier. See Olson Distrib. Sys., Inc. v. Glasurit Am., Inc., 850 F.2d 295, 297 (6th Cir.1988). The Olson Court reasoned that the shipper relied on the “bill to” provisions of the bills of lading, which indicated that the carrier would be sending all freight charges to, and expect payment from, the freight forwarder. Id. Olson, however, is an outlier. [5]

 

The Fourth, Eleventh and Fifth Circuits have held that a carrier can recover from a shipper even if the shipper has already paid a freight forwarder. See Hawkspere Shipping Co., Ltd. v. Intamex, S.A., 330 F.3d 225, 237-38 (4th Cir.2003); National Shipping Co. v. Omni Lines, Inc., 106 F.3d 1544, 1546- 47 (11th Cir.1997); Strachan Shipping Co. v. Dresser Indus., Inc., 701 F.2d 483, 489-90 (5th Cir.1983). These courts have emphasized the policy reasons for holding a shipper liable:

[W]e think that our result comports with economic reality. A freight forwarder provides a service. He sells his expertise and experience in booking and preparing cargo for shipment. He depends upon the fees paid by both shipper and carrier. He has few assets, and he books amounts of cargo far exceeding his net worth. Carriers must expect payment will come from the shipper, although it may pass through the forwarder’s hands. While the carrier may extend credit to the forwarder, there is no economically rational motive for the carrier to release the shipper. The more parties that are liable, the greater the assurance for the carrier that he will be paid.

Hawkspere, 330 F.3d at 238 (quoting Strachan, 701 F.2d at 490);  National Shipping, 106 F.3d at 1547. “Should the shipper wish to avoid liability for double payment, it must take precaution to deal with a reputable freight forwarder or contract with the carrier to secure its release.” National Shipping, 106 F.3d at 1547. Shippers may also avoid liability for double payment “by simply paying their carrier directly.” Hawkspere, 330 F.3d at 237.

 

With respect to the outbound shipments at issue in this case, Sears was the shipper and should be held liable under the Hawkspere, National Shipping and Strachan line of cases. Sears chose to do business with NLC and directed Oak Harbor, via the Sears-generated bills of lading, to send its freight bills to NLC. Sears did not protect itself by including a nonrecourse provision in the bills of lading that it generated. With respect to the return shipments, Sears was the consignee. Those bills of lading did not include a “prepaid” notation that Sears, as the consignee, could have detrimentally relied upon. By not insisting on a “prepaid” notation on the Oak Harbor-generated bills of lading, Sears failed to protect itself from double liability for these shipments. With respect to all of the bills of lading, Sears could have protected itself by directly paying Oak Harbor. Because Sears assumed the risk of double payment, equitable estoppel does not bar Sears’ liability to Oak Harbor for the $227,202.50 that Sears has already paid NLC.

 

D. Sears v. NLC

 

Sears has filed a cross-claim against NLC for $227,202.50. A Sears’ accountant, Mr. John J. Fallon, testified that Sears has been billed for and has paid $227,202.50 to NLC to cover Oak Harbor’s freight charges for 2,651 of the 3,386 shipments at issue in this case. Hart Decl., docket no. 56, Ex. F (Fallon Dep.) at 5, 20-31. NLC billed Sears for this subset of Oak Harbor’s freight bills through 23 invoices, attached as Exhibits 3-25 to Sears’ cross-claim, docket no. 31. Mr. Fallon testified that Sears has paid NLC’s 23 invoices and that these invoices cover the subset of Oak Harbor’s 2004 freight charges as documented in the spreadsheet attached as Exhibit 61 to docket no. 54. Fallon Dep., docket no. 61, Ex. Q at 75-77. At oral argument, NLC admitted that Sears wired funds to NLC to cover the invoices attached as Exhibits 3-25 to Sears’ cross-claim. Sears’ testimony that these invoices cover $227,202.50 of Oak Harbor’s unpaid freight charges is unrebutted. Accordingly, the Court GRANTS Sears’ motion for summary judgment against NLC on Sears’ cross-claim and DENIES NLC’s cross-motion for summary judgment.  [6]

 

CONCLUSION

 

The Court ORDERS as follows:

 

1. The Court GRANTS IN PART and DENIES IN PART Plaintiff’s Motion for Summary Judgment, docket no. 55. The Court grants Oak Harbor’s motion against NLC and Sears, holding NLC and Sears jointly and severally liable to Oak Harbor for $426,417.94 in freight charges that were incurred in connection with shipments arranged by NLC. The Court denies Oak Harbor’s motion against Sears in connection with the shipments arranged by Menlo Logistics.

 

2. The Court GRANTS IN PART and DENIES IN PART Sears, Roebuck & Co.’s Motion for Summary Judgment, docket no. 54. The Court grants Sears’ motion as to Sears’ cross-claim against NLC. Sears is entitled to recover in indemnity against NLC any portion of the $227,202.50 that Sears directly pays Oak Harbor. The Court denies Sears’ motion as to Oak Harbor’s Amended Complaint.

 

3. The Court DENIES National Logistics Corporation’s Fed.R.Civ.P. 56(a) Motion for Summary Judgment Concerning Sears’ Cross-Claim and Concerning Oak Harbor’s Complaint, docket no. 58.

 

4. The Court DENIES Sears’ Motion to Strike Declaration of Thomas Marcet,  docket no. 62, as moot.

 

5. The Court SCHEDULES a telephone conference with all of the parties for Thursday, March 30, 2006 at 9:30 a.m. PST for the following purposes: (1) to discuss the entry of the judgments in accordance with this Order; (2) to discuss Oak Harbor’s remaining claim against Sears for $1,959.52; and (3) to set a trial date, if necessary. The parties are directed to set up the call and, once all of the parties are on the line, to call the Court at: (206) 370- 8830 at 9:30 a.m. PST.

 

IT IS SO ORDERED.

 

Also before the Court is Sears’ Motion to Strike the Declaration of Thomas Marcet, docket no. 62, which the Court DENIES, as moot. The Marcet Declaration, which is attached as Exhibit 9 to the Barrette Declaration, docket no. 60, pertains to NLC’s claim against Sears for over $2.9 million, a claim which is pending in the United States District Court for the Northern District of Illinois and is not pending in this Court. See Lopez Decl., docket no. 60, Ex. Y at 18-26 ¶ ¶  3-54 (NLC’s Counterclaims I and II in Sears, Roebuck & Co. v. Nat’l Logistics Corp. et al., No. 05 C 2266 (N.D. Ill. filed Apr. 15, 2005)).

 

“The term ‘motor carrier’ means a person providing commercial motor vehicle (as defined in section 31132) transportation for compensation.” 49 U.S.C. §  13102(12).

 

“The term ‘broker’ means a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers for sale, negotiates for, or holds itself out by solicitation, advertisement, or otherwise as selling, providing, or arranging for, transportation by motor carrier for compensation.” 49 U.S.C. §  13102(2); see also 49 C.F.R. §  371.2(a) (“Broker means a person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier….”).

 

49 C.F.R. §  371.2(c) (“Brokerage or brokerage service is the arranging of transportation or the physical movement of a motor vehicle or of property. It can be performed on behalf of a motor carrier, consignor, or consignee.”).

 

49 C.F.R. §  371.2(d) (“Non-brokerage service is all other service performed by a broker on behalf of a motor carrier, consignor, or consignee.”).

 

Oak Harbor seeks another $1,959.52 from Sears in connection with shipments of Sears’ freight that were arranged by Menlo Logistics after Sears terminated its contract with NLC on November 12, 2004. Am. Compl., docket no. 47, ¶  2.6; Hobby Decl., docket no. 57, ¶ ¶  2-3. Oak Harbor has failed to provide sufficient factual and legal support for this claim to meet its burden on summary judgment. Most notably, the bills of lading used in connection with these shipments are absent from the record. Accordingly, the Court DENIES the motion for summary judgment as to Oak Harbor’s claim against Sears for $1,959.52 allegedly incurred by Oak Harbor in connection with shipments arranged by Menlo Logistics.

 

Mr. John D. Staton, the President of NLC, testifies that the October 4, 1989 Letter of Understanding “was our first contract with Sears … [t]urned out to be the only one.” Hart Decl., docket no. 56, Ex. G (Staton Dep.) at 11. Sears’ employees testify that the November 7, 1989 Letter of Understanding is the operable contract between Sears and NLC. Sears’ Exhibits, docket no. 54, Ex. A (Reed Dep.) at 225; Hart Decl., docket no. 56, Ex. D (Steinbach Dep.) at 188-90. The Court does not decide which letter constitutes the operable contract between Sears and NLC because no party argues that these letters are material to the issues before the Court.

 

The cross-docks subsequently delivered the freight to Sears’ customers. Hart Decl., docket no. 56, Ex. G (Staton Dep.) at 16. Sears contracted directly with the cross-docks and paid them directly. Hart Decl., docket no. 56, Ex. C (Baxley Dep.) at 24; Sears’ Exhibits, docket no. 54, Ex. B (Steinbach Dep.) at 142.

 

Oak Harbor had been transporting Sears’ freight since at least 1986. Hobby Decl., docket no. 57, ¶  6, Ex. A.

 

0. Sears used “190/SA” as a code in their computer system to indicate that these bills of lading, which were generated by Sears in Augusta, Georgia, should be printed at the Seattle mixing warehouse. Hart Decl., docket no. 56, Ex. C (Baxley Dep.) at 55-56, 147.

 

1. Oak Harbor’s Amended Complaint seeks a “[j]udgment against the defendants, and each of them, in the principal amount of $426,417.94….” Am. Compl., docket no. 47, at 4 ¶  1 (emphasis added).

 

2. Whether the consignee is liable on the Sears-generated bills of lading is not an issue in this case.

 

3. Whether the shipper/consignor is liable on the Oak Harbor-generated bills of lading is not an issue in this case.

 

4. Sears emphasizes that federal law governing “contract carriers” in effect in 1992 required NLC and Oak Harbor to enter a contract in order for Oak Harbor to charge non-tariff (i.e., discounted) rates and that the Carrier Contract must therefore be the controlling contract. However, at oral argument, Sears admitted that the effect of the Carrier Contract on Sears’ liability under the bills of lading would be the same if the Carrier Contract had been entered into after federal law governing “contract carriers” changed in 1995. Whether NLC and Oak Harbor entered the Carrier Contract to comply with federal law or for other reasons is irrelevant to the present dispute.

 

5. The Fourth Circuit, in Hawkspere Shipping Co., Ltd. v. Intamex, S.A., 330 F.3d 225, 237-38 (4th Cir.2003), summarizes the double payment cases and indicates that the Eighth Circuit, in Inman Freight Systems, Inc. v. Olin Corporation, 807 F.2d 117 (8th Cir.1986), has joined the Sixth Circuit in Olson in holding that a carrier may be estopped from collecting freight charges from a shipper who paid freight to a consolidator on a carrier’s representation. While it is true that the Inman Court did not hold the shipper liable, it was because the shipper had included a nonrecourse provision in its bill of lading, not because of equitable estoppel. See 807 F.2d at 121.

 

6. The Court does not decide whether and how much, if anything, Sears owes NLC. NLC’s claim against Sears for over $2.9 million is pending in the United States District Court for the Northern District of Illinois and shall therefore be decided by that Court.

 

St. Paul Fire & Marine v. Schneider National Carriers

United States District Court,

S.D. New York.

ST. PAUL FIRE AND MARINE INSURANCE, COMPANY and Ait Worldwide Logisitics, Inc.,

Plaintiffs,

v.

SCHNEIDER NATIONAL CARRIERS, INC., Defendant.

No. 03 CIV 5197 RMB/GWG.

 

March 3, 2006.

 

DECISION AND ORDER (FINDINGS OF FACT AND CONCLUSIONS OF LAW)

 

BERMAN, J.

 

I. Introduction

 

On or about July 15, 2003, St. Paul Fire and Marine Insurance Company  (“St.Paul”) and AIT Worldwide Logistics, Inc. (“AIT”) (collectively, “Plaintiffs”) commenced this action against Schneider National Carriers, Inc. (“Defendant” or “Schneider National”) alleging, among other things, that Schneider National was “negligent and careless” in handling computer equipment that was owned by two of AIT’s shipping customers, CDW Computer Centers, Inc. (“CDW”) and PC Wholesale (“PC Wholesale”), and which AIT had provided to Schneider National for shipment. (See Complaint, dated July 15, 2003 (“Complaint”).) Plaintiffs allege that CDW and PC Wholesale’s computer equipment (“Computer Equipment”) “was seriously damaged and/or destroyed” when Schneider National’s truck was involved in an accident on or about March 9, 2002, at or near St. Louis, Missouri. (See Complaint at 3.) Plaintiffs allege that Schneider National is obligated to reimburse AIT and St. Paul for $692,092.85 for the payments that they made to CDW and PC Wholesale, respectively, to compensate CDW and PC Wholesale for damages sustained by the equipment in the accident. (See id.)  []

 

This amount includes $672,092.85 to reimburse St. Paul for payments it made to AIT, as well as $20,000 for payments AIT made which were not reimbursed by St. Paul.

Plaintiffs contend that they were obligated to pay CDW and PC Wholesale for the full amount of their damages because, among other things, AIT, CDW, and PC Wholesale “agree that it was their expectation that AIT would be liable … for the cargo’s full value in the event cargo damage was sustained.” (See Plaintiffs’ Memorandum of Law, dated October 29, 2004 (“Pl.Mem.”), at 7.)

 

On or about October 13, 2003, Defendant filed an answer, denying that it was  “negligent and careless” in the handling of the cargo. (See Answer, dated October 9, 2003 (“Answer”), at 4.) Defendant also denied that it was liable for the payments that it says AIT and St. Paul “voluntarily” made to CDW and PC Wholesale, (see Answer at 4), contending that there was a $100,000 per shipper limitation of liability contained in the four Air Waybills issued by AIT to CDW and PC Wholesale (“Four Air Waybills”) and that AIT’s “legal liability for the cargo claims at issue was limited to $200,000.” (See Defendant’s Memorandum of Law, dated November 30, 2004 (“Def.Mem.”), at 1.)

 

The parties submitted a Joint Pre-Trial Order, dated October 26, 2004 (“Pre-Trial Order”), as well as trial exhibits, deposition testimony, and affidavits. (See Joint Pre-Trial Order, dated October 26, 2004 (“PTO”).)

 

Plaintiffs submitted: (i) a memorandum of law on October 29, 2004 (see Pl. Mem.); (ii) a trial affidavit of Curt Dony, Director of Corporate Operations at AIT, dated October 25, 2004 (“Dony Aff.”); (iii) a trial affidavit of James Rodwell, Team Leader of the Claims and Logistics Group of CDW, dated October 18, 2004 (“Rodwell Aff.”); (iv) a trial affidavit of Ruben Locke, Director of Distribution Operations of PC Wholesale, dated October 14, 2004 (“Locke Aff.”); and a reply letter on December 3, 2004 (see Plaintiffs’ Reply Letter from Laura R. Landau to the Court, dated December 3, 2004 (“Pl.Reply”).).

 

Defendant submitted a memorandum of law on November 30, 2004. (See Def. Mem.)   []

 

References to “Stip. Facts” are to the stipulated facts contained in the Pre-Trial Order submitted by the parties; references to “J.E.” are to the Joint Trial Exhibits submitted by the parties.

 

The parties agreed to have the Court adjudicate the matter based upon these written submissions without oral testimony.

 

Pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ.P.”) 52(a), the Court’s findings of fact and conclusions of law follow:

 

II. Findings of Fact

 

1. “AIT is a freight forwarder that arranges for the transport of cargo for its customers.” (Stip. Facts ¶  1.)

 

2. “In March of 2002, AIT was retained by various shippers to transport cargoes, consisting mostly of computer equipment and electronic goods, from Illinois to California.” (Id. ¶  5.) AIT issued approximately 45 Air Waybills to its shippers, including four to CDW and PC Wholesale, “to reflect the shipments loaded into the trailer being transported by Schneider.” (Id. ¶ ¶  7-8.)

 

3. “AIT issued CDW and PC Wholesale an Air Waybill for each shipment at issue. The [Four] Air Waybills issued to CDW and PC Wholesale constituted the contracts of carriage between those shippers and AIT.” (Id. ¶  13.)

 

4. AIT’s standard form Air Waybill, which was put into use in or about 2000  (“Standard Form Air Waybill”), gives shippers “an opportunity to declare the value of their shipments.” (Id. ¶ ¶  14-15.) The declared values are to be typed onto the Standard Form Air Waybill in a box designated “DECLARED VALUE.” (See, e.g, Air Waybill, dated March 7, 2002, J.E. 2.)

 

5. Immediately beside the space where shippers can declare the value of their cargo, the Standard Form Air Waybill provides that:

THE DECLARED VALUE FOR CARRIAGE OF THIS SHIPMENT IS AGREED AND UNDERSTOOD TO BE $50.00 OR $0.50 PER POUND, WHICHEVER IS GREATER, UNLESS A HIGHER VALUE IS DECLARED AND APPLICABLE CHARGES PAID. (SUBJECT TO THE TERMS AND CONDITIONS ON REVERSE SIDE, THE LIABILITY OF AIT WORLDWIDE FOR LOSS/DAMAGE IS AS STATED ABOVE.)

(Stip. Facts ¶  16.)

 

6. Paragraph 1 of the printed Conditions of Contract of Carriage on the reverse side of the Standard Form Air Waybill provides that:

Except to the extent of any written contract between shipper and AIT, this shipping document supercedes and negates any claimed, alleged, or asserted oral agreement, promise, representation, or understanding between the parties with respect to this shipment.

(Stip. Facts ¶  18.)

 

7. Paragraph 12 of the Conditions of Contract of Carriage on the reverse side of the Standard Form Air Waybill provides that:

Liability for aggregate losses at any one time at any one place is limited to $100,000.00. For shipments having declared values over $25,000.00, AIT must be given advance notice prior to pickup.

(Stip. Facts ¶  17.)

 

8. AIT issued Air Waybill numbers 0081358330 and 0081360595 to PC Wholesale. PC Wholesale, in turn, entered values in the “DECLARED VALUE” sections of these Standard Form Air Waybills in the amounts of $387,000.00 and $108,680.00, respectively. (See Air Waybill, dated March 7, 2002, J.E. 2; Air Waybill, dated March 7, 2002, J.E. 3.)

 

9. AIT issued Air Waybill numbers CGH4470400 and CA00010754 to CDW. CDW, in turn, entered values in the “DECLARED VALUE” sections of these Standard Form Air Waybills in the amounts of $277,819.00 and $5,594.00, respectively. (See Air Waybill, dated March 6, 2002, J.E. 4; Air Waybill, dated March 6, 2002, J.E. 5.)

 

10. The total declared value for the Four Air Waybills was $774,092.85.  (See Letter from St. Paul to AIT, dated June 18, 2002 (“Letter Approving Claims”), Ex. 14, at 436.)

 

11. PC Wholesale understood “that in cases where PC Wholesale declared the value of its goods, AIT would be liable to PC Wholesale for its replacement cost in the event of damage.” (Locke Aff. ¶  5 .) Likewise, CDW understood “that in cases where PC Wholesale declared the value of its goods, AIT would be liable to CDW for its replacement cost in the event of damage.” (Rodwell Aff. ¶  5.)

 

12. It was AIT’s policy that when a shipper declares the value of a shipment,  “AIT is obligated to pay that shipper for its replacement costs up to the amount declared.” (Dony Aff. ¶  18.)

 

13. Prior to the March 9, 2002 shipping accident, when PC Wholesale entered a value of $142,055.46 in the “DECLARED VALUE” section of AIT’s Air Waybill on or about February 12, 2001, and PC Wholesale’s property was damaged during shipping, AIT reimbursed PC Wholesale for (approximately) the declared value, $139,961.95. (See AIT Customer Report, dated May 20, 2004, J.E. 24, at 1.)

 

14. Both CDW and PC Wholesale were sophisticated shippers. (See Stip. Facts ¶ ¶  9-11.) “PC Wholesale has a shipping department, warehouse and a docking facility with more than ten doors.” (Id. ¶  10.) “CDW has a small shipping department, docking facilities and a cargo claims department.” (Id. ¶  11.)

 

15. During discussions between AIT and Schneider National “about the Transportation Contract [dated September 19, 2001] and limitations of liability” there were no discussions “of the terms of AIT’s Air Waybill.” (Dony Aff. ¶  19.) Schneider National’s claims department had never seen AIT’s Standard Form Air Waybill prior to the March 9, 2002 accident. (See Deposition of Janet Terp, dated May 13, 2004 (“Terp.Dep.”), J.E. 34, at 51-52.)

 

16. On or about March 8, 2002, “AIT consolidated the various shipments and retained Schneider to transport the truckload of the cargo from AIT’s facilities in Itasca, Illinois to Hawthorne, California.” (Stip. Facts ¶  6.)

 

17. Schneider National and AIT’s shipping relationship was governed by the Transportation Contract, dated September 19, 2001 (“Transportation Contract”). (Id. ¶  2; Transportation Contract, J.E. 1, at 189.) Paragraph 12 of the Transportation Contract, entitled “Loss or Damage,” provides that:

liability for loss or damage to shipper’s commodities entrusted to [Schneider National’s] care shall be that of a motor common carrier (49 U.S.C. 14706), provided, however, that such liability shall not exceed $750,000 per truckload shipment. Carrier assumes no liability for loss or damage that occurs in Mexico. Claims for loss or damage shall be reduced by its reasonable salvage value.

(Stip. Facts ¶  3.)

 

18. The Transportation Contract between Schneider and AIT was in full force and effect at all times relevant to this litigation. (Id. ¶  4.)

 

19. Before Schneider National picked up the Computer Equipment, “AIT conducted a detailed inspection of the cargo” and found “no damage to any of the packaging.” (Dony Aff. ¶  5)

 

20. “On or about March 8, 2002, Schneider’s driver picked up the cargo from AIT’s facilities.” (Stip.Facts.¶  21.)

 

21. “On March 9, 2002, while en route to California, Schneider’s truck was involved in an accident in St. Louis, Missouri while transporting the subject cargo.” (Id. ¶  22.)

 

22. “As a result of the accident, Schneider’s trailer broke in half and a portion of the trailer fell from the bridge to a parking lot below the elevated highway” and “some of the cargo was damaged .” (Id. ¶ ¶  23-24.)

 

23. The damage to the Computer Equipment was in the amount of $774,092.85.  (See PC Wholesale Claim Documents, pursuant to Air Waybill No. 0081358330, J.E. 17; PC Wholesale Claim Documents, pursuant to Air Waybill No. 0081360595, J.E. 18; CDW Claim Documents, pursuant to Air Waybill No. CGH4470400, J.E. 19, CDW Claim Documents, pursuant to Air Waybill No. CW00010754, J.E. 20; Matthew, Matson & Kelly, Ltd. Survey Report, dated June 18, 2002, J.E. 29)

 

24. CDW and PC Wholesale submitted claims to AIT pursuant to the Four Air Waybills. AIT paid $277,819.00, $5,594.33, $384,794.00 and $105,885.52, respectively (a total of $774,092.85), to reimburse CDW and PC Wholesale for their losses. (See Letter from AIT to CDW, dated April 23, 2002, J.E. 6; Invoice, dated April 9, 2002, J.E. 7; Invoice, dated April 9, 2002, J.E. 8; Letter, dated April 23, 2002, J.E. 9.)

 

25. “AIT secured the highest salvage bid in the amount of $82,000 .00,”  (Id. ¶  32) thus reducing the amount of money that AIT was out-of-pocket to $692,092.85. (See Letter Approving Claims at 436.)

 

26. AIT’s decision to reimburse CDW and PC Wholesale before receiving payment from Schneider National was a “business decision.” (See, e.g., Deposition of Skip Perricelli, dated February 4, 2004, at 70.)

 

27. At the time of the accident, AIT was covered for shipping damage under an insurance policy issued on or about March 1, 2002 by St. Paul (“Insurance Policy”). (Stip. Fact ¶  29.) Pursuant to the terms and conditions of the Insurance Policy, AIT had a $5,000 per bill of lading deductible. (Id. ¶  30.)

 

28. AIT submitted claims for the Four Air Waybills to St. Paul for reimbursement. (See Letter from St. Paul to AIT, dated June 18, 2002 (“Letter Approving Claims”), Ex. 14, at 436.) AIT’s claims fell within the terms of the Insurance Policy. (See Letter Approving Claims at 436 (“Based on the documentation received we have determined the following amounts are due under the policy of insurance.”); Deposition of Janice McIntyre, dated February 4, 2004, at 13-16.) “St. Paul issued a check to AIT in the amount of $672,092.85 to reimburse AIT for what AIT paid PC Wholesale and CDW.” (See Stip. Facts ¶  34.)  []

 

The $672,092.85 amount was calculated by reducing the total damage ($774,092.85) by the salvage value ($82,000) and by the amount of AIT’s deductibles ($20,000). (See Letter Approving Claims.)

 

29. On or about June 18, 2002, AIT, CDW and PC Wholesale signed subrogation agreements relating to the Computer Equipment, assigning to St. Paul “all the rights, claims and interest which [AIT, CDW, or PC Wholesale] may now or in the future have, in contract or tort … against any person or corporation in respect of the loss, damage or expense suffered.” (See, e.g., Subrogation Receipt, dated June 18, 2002, J.E. 11, at 65.)

 

30. Schneider National “has not, to date, reimbursed AIT or St. Paul for what was paid to AIT’s shippers.” (Pl. Mem. at 2; see Terp. Dep. at 73-74 (Defendant argued that: “It appears … that AIT paid their customer’s loss profits, perhaps paid their customers more than what was indicated as what they are legal [sic ] liable on the reserve side of the bill of lading.”); Dony Aff. ¶  17.)

 

III. Conclusions of Law

 

(i) Choice of Law

 

1. Schneider National argues that Illinois state law should apply to questions of contract interpretation that are not preempted by the Carmack Amendment. (See Def. Mem. at 11 n. 2 (“[T]he Air Waybills were issued by AIT to CDW and PC Wholesale in Illinois … Because Carmack does not address general rules of contractual drafting and interpretation, those issues are governed by Illinois law.”).) Illinois has the most significant contacts (including, among other things, being the place where the Four Air Waybills were issued), and the Court will, therefore, apply Illinois law. See Indosuez Int’l Fin. B.V. v. Nat’l Reserve Bank, 98 N.Y.2d 238, 245 (2002) (“New York choice of law principles require a court to apply the law of the state with the most significant relationship with the particular issue in conflict.”).

 

(ii) The Carmack Amendment

 

2. Plaintiffs argue that Schneider National is liable for the declared values in the Four Air Waybills because “there is no doubt that the damages sustained to the cargo are attributed to Schneider’s accident.” (Pl. Mem. at 2-4.)

 

3. Schneider National does not contest that the damage sustained by the Computer Equipment occurred as a result of the March 9, 2002 accident, but claims that paragraph 12 in the Four Air Waybills limits its liability to $200,000. (See Def. Mem. at 1 (“[AIT]’s legal liability for the cargo claims at issue was limited to $200,000.”).)  []

 

Schneider National claims that each shipper is limited to $100,000 in damages because “[i]t is undisputed that the damages alleged by Plaintiffs occurred at the time of the accident in St. Louis and therefore, all of the losses at issue occurred at one time and one place.” (Def. Mem. at 21.)

 

4. There is no dispute that the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. §  14706, governs the liability of motor carriers for loss or damage to goods transported in interstate commerce and is applicable to this case. See Pre-Trial Order, Agreed Statement of Law, ¶  1; Calka v. N. Am. Van Lines, Inc., No. 00 Civ. 2733, 2001 WL 434871, at(S.D.N.Y. Apr. 27, 2001); (Def. Mem. at 19 (“The parties agree that Schneider’s liability for the cargo claims is defined [by 49 U.S.C. §  14706].”).).

 

5. The Carmack Amendment reads, in relevant part: “A carrier … shall issue a receipt or bill of lading for property it receives for transportation…. That carrier and any other carrier that delivers the property and is providing transportation or service … are liable to the person entitled to recover under the receipt of bill of lading. The liability imposed under this paragraph is for the actual loss or injury to the property….” 49 U.S.C. 14706(a)(1).

 

6. To state a claim under the Carmack Amendment, a plaintiff must show, by a preponderance of the evidence: (i) that the carrier received the goods in good order and condition; (ii) that the shipment arrived at its destination in a damaged condition or did not arrive at all; and (iii) the amount of the loss. See Project Hope v. M/V IBN Sina, 250 F.3d 67, 73 (2d Cir.2001); Mooney v. Farrell Lines, Inc., 616 F.2d 619, 625 (2d Cir.1980); see also A.I.G. Uruguay Compania De Seguros, S.A. v. AAA Cooper Trans., 334 F.3d 997, 1003 (11th Cir.2003). Once a prima face case is established by a plaintiff, the burden shifts to the defendant to show that “it was free from negligence and that the damage to the cargo was due to one of the expected causes [i.e., act of God or the inherent nature or vice of the cargo] relieving the carrier of liability.” See Mooney, 616 F.2d at 625. If the defendant does not meet this burden, liability for “actual loss or injury to the property” under the Carmack Amendment is established. 49 U.S.C. 14706(a)(1); see Project Hope, 250 F.3d at 73.

 

7. The evidence in this case clearly establishes by a preponderance of the evidence that (i) Schneider National received the Computer Equipment from AIT in good working order (see Dony Aff. ¶  5; Stip. Facts ¶  7); (ii) the cargo was damaged during shipment (see Stip. Facts ¶ ¶  23-24); and (iii) $692,092.85 worth of damage was sustained (see PC Wholesale Claim Documents, pursuant to Air Waybill No. 0081358330, J.E. 17; PC Wholesale Claim Documents, pursuant to Air Waybill No. 0081360595, J.E. 18; CDW Claim Documents, pursuant to Air Waybill No. CGH4470400, J.E. 19, CDW Claim Documents, pursuant to Air Waybill No. CW00010754, J.E. 20; Matthew, Matson & Kelly, Ltd. Survey Report, dated June 18, 2002, J.E. 29).

 

8. Schneider National does not argue that “it was free from negligence and that the damage to the cargo was due to one of the expected causes relieving the carrier of liability.” See Mooney, 616 F.2d at 625.

 

9. The Court concludes that Schneider National is liable for damage to the Computer Equipment under the Carmack Amendment (and other relevant documents) in the amount of $692,092.85, as explained below. See Project Hope, 250 F.3d at 73.

 

No Limitation of Liability

 

10. Defendant argues (unpersuasively) that, pursuant to paragraph 12 of the Four Air Waybills, it should be liable for $100,000 (or, at most, $200,000 for CDW and for PC Wholesale together) because “all of the losses at issue occurred at one time and one place.” (See Def. Mem. at 20-21 (“Based on the relevant facts and applicable law … [AIT]’s legal liability for the cargo claims at issue was limited to $200,000.”).) Defendant contends that “because AIT, as a freight forwarder, steps into the shoes of the shippers, it takes only the rights that CDW and PC Wholesale had under the [Four] Air Waybills.” (Def. Mem. at 19.)

 

11. Plaintiffs argue (persuasively) that Schneider National’s position is “an effort to escape Schneider’s own liability under its separate Transportation Contract with AIT, pursuant to which Schneider is obligated to reimburse AIT up to $750,000.00.” (Pl. Mem. at 8.) Plaintiffs also argue that “Schneider was a total stranger to AIT’s Form Air Waybill as well as to AIT’s contracts with PWC and CDW” and, therefore, “has no standing to challenge the interpretation of the Air Waybill.” (Pl. Mem. at 9.)

 

12. Once liability under the Carmack Amendment has, as here, been established, “[t]he inquiry then becomes the amount of damages and, usually, whether the carrier legitimately limited its liability for the shipment to a specified value or amount.” A.I.G. Uruguay Compania De Seguros, S.A., 334 F.3d at 1003. Schneider National’s liability under the Carmack Amendment is not reduced (limited) to an amount less than the declared value of the Four Air Waybills because, inter alia, the damage to the Computer Equipment does not exceed the $750,000 limit in the Transportation Contract and because Schneider National may not rely on paragraph 12 of the Four Air Waybills to which it was neither a party to nor a beneficiary. (And, in any event, the declared values would supercede any such limitation. See Bio-Lab, Inc. v. Pony Express Courier Corp., 911 F.2d 1580, 1583 (11th Cir.1990).)

 

13. Under the Carmack Amendment, shipping “contracts purporting to grant immunity from, or limitation of, liability must be strictly construed and limited to intended beneficiaries, for they are not to be applied to alter familiar rules visiting liability upon a tortfeasor for the consequences of his negligence, unless the clarity of the language used expresses such to be the understanding of the contracting parties.” See Toyomenka, Inc. v. S.S. Tosaharu Maru, 523 F.2d 518, 521 (2d Cir.1975) (“Such a limitation of common law liability … must be clearly expressed. A bill of lading containing such a limitation will be strictly construed against the parties whom it is claimed to benefit.”) (citing Herd & Co. v. Krawill Machinery Corp., 359 U.S. 297, 305 (1959)); see also Rupp v. Int’l Terminal Operating Co., 479 F.2d 674, 676- 77 (2d Cir.1973).

 

14. “In Illinois, an individual not a party to a contract may only enforce the contract’s rights when that contract’s original parties intentionally enter into the contract for the direct benefit of the individual.” Cahill v. Eastern Ben. Systems, Inc., 603 N .E.2d 788, 791-792 (Ill.App.Ct.1992); see Continental Cas. Co. v. American Nat. Ins. Co., 417 F.3d 727, 734 (7th Cir.2005) (Illinois law “recognizes two types of third-party beneficiaries, intended and incidental. An intended beneficiary is intended by the parties to the contract to receive a benefit for the performance of the agreement and has rights and may sue under the contract; an incidental beneficiary has no rights and may not sue to enforce them .”); Coalition of 9/11 Families v. Rampe, No. 04 Civ. 6941, 2005 WL 323747, at(S.D.N.Y. Feb. 8, 2005) (third parties may “sue to enforce rights or obtain benefits under a contract only to the extent that the contracting parties specifically intended to provide the third parties with such rights or benefits.”). Schneider National is clearly not an intended beneficiary of the Four Air Waybills.

 

15. The $750,000 limitation contained in the Transportation Contract exceeds the damages at issue in this action. (Stip. Facts ¶  4.)

 

16. The limitation of liability in paragraph 12 of the Four Air Waybills is not available to Schneider National, because Schneider National was not a party to the Four Air Waybills and there is no evidence that AIT, CDW, or PC Wholesale intended to benefit Schneider National when executing the Four Air Waybills. See Toyomenka, 523 F.2d at 520; see also Cahill v. Eastern Ben. Systems, Inc., 603 N.E.2d 788, 791-792 (Ill.App.Ct.1992) (“intention must be shown by an express provision in the contract identifying the third party beneficiary.”); Continental Cas. Co. v. American Nat. Ins. Co., 417 F.3d 727, 734 (7th Cir.2005) (a third-party beneficiary “must be identified in some manner, for example, by describing the class to which it belongs.”); Wallace v. Chicago Housing Authority, 298 F.Supp.2d 710, 724 (N.D.Ill.2003) (“Under Illinois law, there is a strong presumption against creating rights in a third-party beneficiary. To overcome this presumption the intent to benefit a third party must affirmatively appear from the language of the contract and the circumstances surrounding the parties at the time of execution.”).

 

17. Since Plaintiffs have proven that Schneider National is liable for damage to the Computer Equipment under the Carmack Amendment, and because neither the Transportation Contract nor paragraph 12 of the Four Air Waybills limits the amount of the damages available to Plaintiffs, Schneider National is liable to St. Paul and AIT for $692,092.85. See Toyomenka, 523 F.2d at 520.

 

Reasonable Opportunity Doctrine

 

18. The Carmack Amendment’s “reasonable opportunity” doctrine may also provide a basis for rejecting Schneider National’s position that liability should be limited to $100,000 per shipper.

 

19. Plaintiffs argue persuasively that a limitation of liability is impermissible “when a shipper has not been given the opportunity to declare value or choose a higher level of liability” and that this requirement prevents AIT from enforcing the limitation of liability contained (in the boilerplate language) of the Four Air Waybills in the manner that Schneider National suggests. (Pl. Mem. at 12.)

 

20. “[A] very strong burden is placed on a carrier when attempting to enforce a limitation of liability provision pursuant to the Carmack Amendment.” Commercial Union Ins. Co. v. Forward Air., Inc., 50 F.Supp.2d 255, 260 (S.D.N.Y.1999); see Novelty Textile Mills, Inc. v. C.T. Eastern, Inc., 743 F.Supp. 212, 216 (S.D.N.Y.1990). “The general thrust of the Interstate Commerce Act places on the carrier absolute liability for loss or damage of a shipper’s goods. As an exception to this general thrust, a carrier may limit its liability of specific procedures are followed.” Commercial Union, 50 F.Supp.2d at 260 n. 9 (internal citations omitted). “Under the Carmack Amendment, a carrier is liable for the ‘the actual loss or injury to the property,’ unless it limits its liability by (1) maintaining a tariff in compliance with the requirements of the Interstate Commerce Commission; (2) giving the shipper a reasonable opportunity to choose between two or more levels of liability; (3) obtaining the shipper’s agreement as to his choice of carrier liability limit; and (4) issuing a bill of lading prior to moving the shipment that reflects any such agreement.” The Travelers Indem. Co. of Illinois v. Schneider Specialized Carriers, Inc., No. 04 Civ. 5307, 2005 WL 351106, atn. 4 (S.D.N.Y. Feb 10, 2005); see Commercial Union, 50 F.Supp.2d at 260 n. 9; Eatemad Inc. v. Carolina Freight Carriers Corp., No. 95 Civ.1978, 1996 WL 499334, at(S.D.N.Y.1996).

 

21. Where, as here, a “shipper has declared the value of his goods in a bill of lading[,] a provision to the contrary in the printed portion of the document cannot operate as an agreement of the parties establishing a different value unless it is reasonably clear that the shipper was specifically aware of that provision.” Bio-Lab, Inc. v. Pony Express Courier Corp., 911 F.2d 1580, 1583 (11th Cir.1990) (“In other words a carrier cannot limit liability by implication. There must be an absolute, deliberate and well-informed choice by the shipper. Only by granting its customers a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge can a carrier lawfully limit recovery to an amount less than the actual loss sustained.”); see Sassy Doll Creations, Inc. v. Watkins Motor Lines, Inc., 331 F.3d 834, 839 (11th Cir.2003) (where there is “no evidence that the shipper was actually aware of the liability limitation … the carrier’s printed bill of lading and tariff provisions [does] not trump the declared value the shipper had written on the bill of lading.”)

 

22. The evidence presented shows that CDW and PC Wholesale did not agree to limit their exposure in the case of an accident and intended to be reimbursed for damage to their cargo up to the amount declared on the Four Air Waybills. (See Locke Aff. ¶  5; Rodwell Aff. ¶  5.); Commercial Union, 50 F.Supp.2d at 260 n. 9; see also Bio-Lab, Inc. v. Pony Express Courier Corp., 911 F.2d 1580, 1583 (11th Cir.1990); Toyomenka, 523 F.2d at 520.

 

(iii) Contract Ambiguity

 

23. Even assuming, arguendo, that Schneider National could rely on paragraph 12 of the Four Air Waybills, the declared values found on the face of the Four Air Waybills may be said to override the limitation of liability in paragraph 12, because, among other reasons, the Four Air Waybills may be analyzed under Illinois’ “extrinsic ambiguity” doctrine, see Cook, Inc. v. Boston Scientific Corp., No. 01 Civ. 9479., 2002 WL 406977,(N.D.Ill. March 15, 2002); see also Brzozowski v. Northern Trust Co., 618 N.E.2d 405, 409 (Ill.App.Ct.1993) (“Where an ambiguity exists between a typed provision and the printed form, then the typed provision is to be given effect over the printed provision.”), and the parties to the Four Air Waybills clearly intended to provide CDW and PC Wholesale with reimbursement for the declared value of their cargo in the event that the cargo was damaged during shipment (as evidenced by, among other things, the affidavits submitted by CDW, dated October 18, 2004, and PC Wholesale, dated October 14, 2004). (See, e.g., Locke Aff. ¶  5; Rodwell Aff. ¶  5); see also DuQuoin Nat. Bank v. Vergennes Equip., Inc., 599 N.E.2d 1367, 1371 (Ill.App.Ct.1992) (“A court, in construing a contract, must seek to ascertain the intention of the parties.”). Thus, even if Schneider National could properly rely on the Four Air Waybills, it would still be liable to AIT and St. Paul for $692,092.85.

 

(iv) Schneider National’s Volunteer Argument

 

24. Schneider National’s argument that AIT and St. Paul paid claims to CDW and PC Wholesale as “volunteers” is without merit. (See Def. Mem. at 19-20 (“[I]f AIT paid CDW and PC Wholesale’s claims as a volunteer, neither AIT nor St. Paul may recover.”).); Project Hope, 250 F.3d at 73. AIT’s obligation to reimburse CDW and PC Wholesale for damages to the Computer Equipment was not simply voluntary (“to preserve its business relationship with those shippers,” (Def. Mem. at 1)), but was a legal obligation under the Carmack Amendment. See Conclusions of Law ¶  1 et seq.; Stewart Title Guar. Co. v. Azar, No. 92 Civ. 7576, 1993 WL 141797, at(N.D. Ill April 30, 1993) (“To be deemed a volunteer, [plaintiff] must have acted without any potential or possibility of liability. Potential liability should be construed broadly for the purposes of ascertaining whether a party is a volunteer.”); see also Transamerica Ins. Co. v. South, 125 F.3d 392, 397 (7th Cir.1997) (“Consistent with Illinois policy favoring subrogation … [T]he potential for legal liability to the subrogor, as well as the disruption of normal relations and the frustration of reasonable expectations can, in many cases, supply sufficient compulsion to support subrogation.”)

 

IV. Conclusion and Order

 

For the foregoing reasons, the Clerk of the Court is respectfully requested to enter judgment in favor of the Plaintiffs against Defendant Schneider National in the amount of $692,092.85. Plaintiff is also awarded post-judgment interest calculated from the date of entry of this Decision and Order. See 28 U.S.C. §  1961.

 

Thereafter, the Clerk is respectfully requested to close this case.

 

 

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