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Bits & Pieces

Volume 20, Edition 3

Welcome to Spring.  I am looking forward to the coming Annual IMUA meeting and the chance to catch up with so many of you.  It has been an interesting year and I appreciate having that time to find out firsthand what is happening with you.

I want to start this month Bits & Pieces with a story which is near and dear to me.  So many of you know that I focus my time and energy to find ways to reduce hunger in the country and to see what we, as an industry can do to help.   Everyday thousands of pounds of food is salvaged for pennies, or disposed of because of transit or warehouse events which may have impacted the grade of the product from the customer’s perspective.   Indiana now has a website to allow rejected food that is still edible to be donated to Indiana charities.  IndyFoodDrop.org is designed to help the trucking industry redirect any food rejected by local grocers and distributors from the landfills and into the hands of people in need. Midwest Food Bank, Gleaners Food Bank, Second Helpings and St. Vincent de Paul Food Pantry teamed with the Indiana Motor Truck Association on this initiative.   The insurance industry can join and help out. IndyFoodDrop.org provides drivers with access and information on where they can bring the food. Drivers will receive help unloading the truck and a tax-deductible receipt. Dry, frozen and refrigerated foods are all acceptable. However, product seals must not be broken, and ingredients and dating must be listed on the food products.  If you are aware of any other similar organizations please let me know as I will publicize that here.  If we all work together we can minimize waste and help feed those that are food insecure.  Humanitarian gestures and tax write offs can also benefit everyone.

SAFETY FITNESS DETERMINATION – Back to the drawing board?  The FMSCA has withdrawn the safety fitness determination (SFD) rulemaking issued in January 2016 and will also cancel plans to issue a supplemental notice of proposed rulemaking to help support the SFD effort.  We will wait to see what they decide following completion of the government mandated study from the National Academies of Science.

NAFTA DATA – NAFTA is in the news as the Trump Administration considers what steps it will take with respect to foreign trade.  The Bureau of Transportation Statistics arm of the USDOT has released North American Free Trade Agreement (NAFTA) data for 2016.  There was another loss.  Less freight was carried by 4 out of 5 modes and that included trucking.  You can read the report here.  Overall freight value for 2016 was $1.069 trillion, a 3.4 percent decline from 2015. Freight value decreased by 7.3 percent in 2015. Both 2013 and 2014 experienced yearly increases of 2.8 percent and 4.6 percent, respectively. Trucks carried $700 billion of NAFTA freight last year, the smallest decrease across all modes at 1.65 percent, and accounted for approximately 65.5 percent of total NAFTA freight.

HOS RESTART – I do believe that I started writing about the HOS changes a million years ago and we are still waiting to see if they get it right.  Apparently the DOT study has now determined that the changes to the voluntary 34-hour restart that added two mandatory overnight periods and limited its use to once every seven days did not benefit driver safety, fatigue or health. The rules were suspended and will, perhaps, now be withdrawn entirely.

ENGINEER INFRASCTRUCTURE REPORT – The American Society of Civil Engineers, gave the US infrastructure a D+ concluding that there are too many outdated bridges, roadways and tunnels which cannot handle what we give to say nothing of the many problems with mass transit (something we here in the Tri-State area deal with daily). $4.5 trillion is needed to achieve significant improvements in the transportation grid.  Bridges were graded C+, improving from a D in 2013. Rail got better, raising to a B grade.   Ports received a C+ and roads a D. Four years prior, they were graded C+, and C, respectively.  You can see the full report here.

CASES

CARGO

The District Court in Maryland concluded that a plaintiff’s claims for loss or damage to freight were preempted by Carmack even when the motor carrier only performed an intra-state leg of an international move.  As the plaintiff always intended the goods to move internationally Federal Court jurisdiction existed and a motion to remand was denied. The Court reframed the state law causes of action under Carmack and also allowed a claim for excessive fees to remain, concluding that the claim was outside the scope of Carmack.  (Monga v. ABS Moving & Storage, 2017 WL 749236)

Fed Ex was successful in having its bill of lading limitation applied when the shipper’s agent prepared the bill of lading which incorporated a tariff limitation. The Southern District of Florida also held that a small limitation for a reconditioned engine was not unreasonable when the plaintiff could have selected and paid for a higher valuation.  Of note was the fact that the Court also addressed what was necessary to establish a prima facie case for recovery when the plaintiff only submitted an affidavit in support of its burden.  The Court held could it could be reliable circumstantial evidence.  (Eastern Air Express v. FedEx Corp., 2017 US DIST 29010)

Is a cargo insurer responsible when the insurance broker fails to notify the insurer that the trucker has added vehicles to its fleet?   The insurer had denied coverage because the loss occurred on a non-scheduled vehicle.   The Court of Appeals held that there was a question of fact on whether the broker was the agent of the insurer, whether it had the authority to bind the insurer and whether notice from the broker to the producer constituted notice of the additional vehicle to the insurer.  (Kaplan Trucking Co. v. Grizzly Falls, Inc.,  2017 Ohio App. LEXIS 902)

Over in Atlanta, the Court allowed a default judgment against a motor carrier in a subrogation action brought by the contingent cargo insurer. Interestingly the Court held that the plaintiff’s affidavit that a breach of the load’s integrity was sufficient to declare it contaminated because of a possible risk of contamination. The matter was not litigated on its merits but it is another decision where the carrier was found liable without evidence of physical loss.  The Court rejected the claim for attorney’s fees. (Travelers Property Casualty v. ASF Intermodal, 2017 WL 894445)

A truck broker who had obtained default judgments against two motor carriers involved in a cargo claim was unable to collect from the insurer for either motor carrier.  The Western District of Arkansas found that one insurer was permitted to decline coverage because the motor carrier did not notify the insurer of the suit until a default was entered.  The second insurer was also permitted to walk away from the suit because the applicable state law did not permit a direct action against a policy not issued in the state and because the policy only permitted a direct claim after a judgment was entered against the motor carrier following a trial.  A judgment by default was insufficient to allow a direct action. (BNSF Logistics, LLC. V. Pennsylvania Mfg. Association, 2017 WL 707494)

Is a trucking company who self-insured certain business losses, including cargo losses, prohibited from seeking recovery from the insurer of a trucking company who caused the loss?  The Southern District of Mississippi held that the answer was no, at least in the 5th Circuit– the plaintiff motor carrier  was permitted to recover and the Court held that it was not akin to a suit between two insurers over who would pay for claims that were covered under both policies. (C.R. England v. Hallmark County Mutual Ins. Co., 2017 US Dist LEXIS 37081)

We do not generally see the Courts actually split cases and transfer only part of a suit to another jurisdiction even when the bill of lading or contract of carriage permits it.  The Eastern District of Louisiana held that the carrier with the master bill of lading would be entitled to have the action commenced against it transferred to another venue, leaving the downstream carriers to fight it out in the home venue and the plaintiff to fight two battles.  (Royal Smit Transformers v. Versus HC BEA-Luna, 2017 US Dist. LEXIS 29506)

The Northern District of Court granted a default judgment against a defunct motor carrier on a household goods claim.  The Court noted that in the household goods arena a homeowner was entitled to opine on the value  of his own property.  The Court accepted his valuations, but refused to allow additional costs for postage, shipping, handling, etc.  The Court also refused to allow attorney’s fees under the federal statute as the plaintiff had failed to file a claim within 120 days.  (Prussin v. Bekins Van Lines, 2017 WL1092332)

AUTO:

A non-trucking use insurance carrier was granted summary judgment declaring that coverage was not afforded when the driver was in the business of a motor carrier at the time of the accident. The driver had not been released to go home, but was on standby to pick up an empty trailer and was taking a federally mandated break at the time of the accident.  That was sufficient to trigger the exclusion.  (Williams v. Great American Insurance Co., 2017 WL 914064)

An insured was not afforded coverage for claims for racially discriminatory practices under the terms of its general liability or umbrella policy, The Northern District of Alabama concluded that the allegations of the complaint asserted intentional acts, which did not constitute an occurrence or accident under the policy.  Neither a defense nor indemnity was required. (Auto-Owners Insurance Company v  McMilan Trucking Co., 2017 WL 992181)

WORKER’S COMPENSATION:

Did you ever consider how much data is available through CAB to evaluate owed premium under Worker’s compensation insurance? The District Court in New Jersey permitted an insurer to proceed in its collection efforts to recover unpaid premium for owner operators utilized by the trucking company. The Court denied a motion to dismiss and a cross-motion for summary judgment, concluding that there were questions on whether the owner operators were employees and whether the hired auto endorsement applied.  CAB can assist you in your efforts to correct proper premium for the worker’s compensation risk you are underwriting.  Give us a call and we can show you how.  (LM Insurance Corp v. Kobys, 2017 WL 1073352)

© 2017 Central Analysis Bureau