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Volume 12, Edition 7 PDF Print E-mail
Thursday, 30 July 2009 19:00

This is going to be a short Bits and Pieces.  It seems like everyone is on vacation and there are only a handful of cases and very little coming from the government or the transportation industry which is important to transmit.  In fact I am writing this to you from the Green Mountains in Vermont so there are other things I would rather be doing.  Hope you are enjoying your summer.

Here is our report:

NEW BRAKE RULES - The National Highway Traffic Safety Administration has determined that there will be new stringent new braking standards which will improve large truck stopping distances by 30%. The new standard requires that a tractor-trailer traveling at 60 miles per hour come to a complete stop in 250 feet. The old standard required a complete stop within 355 feet. NHTSA estimates that the new braking requirement will save 227 lives annually, and will also prevent 300 serious injuries. It is estimated to reduce property damage costs by over $169 million annually.
- The National Highway Traffic Safety Administration also released the preliminary numbers on truck-related highway fatalities.  Fatalities have dropped12% in 2008 to 4,229, the lowest total since the federal government began keeping records. The drop was the third decline in three years .  Overall highways fatalities fell 9.7% to 37,261. The report, which included a state by state analysis can be viewed here.

- U.S. Department of Labor has reported that payroll employment among for-hire trucking companies in June dropped 0.9 percent from May levels and 9.2 percent from June 2008 on a seasonally adjusted basis. The trucking industry has lost more than 75,000 jobs since the end of 2008 – a decline of 5.6 percent. Seasonally adjusted trucking employment was highest in January 2007 at more than 1.45 million. For-hire trucking companies have lost 13% of their jobs. 

- Global logistics security provider FreightWatch International's Bi-Annual Cargo Theft Report has been released.  According to FreightWatch it recorded 74 cargo theft incidents in June, beyond the average of 48 to 50 thefts per month recorded throughout 2008 and early 2009. Cell phones, in particular, are reportedly being stolen at a rate 50 percent higher than in 2008, while average loss per incident has risen from $1.1 million in 2008 to $2.1 million in 2009. Full truckload pharmaceutical thefts are supposedly down, although you can not tell that by the claims we are handling.  Reportedly the research conducted by FreightWatch shows the average loss per incident for virtually every commodity group except pharmaceuticals and electronics has increased significantly from the first six months of 2008 to the same time period this year.

- Transport Topics reported this month that brokers are believed to be gaining shares of the transportation market. Most of the large publicly traded carriers have brokerage operations and report a market increase in those divisions.  One survey reports that brokered freight has not suffered the reduction in volume which has hit carriers in this recession and another indicates that revenue for brokers in on the increase.  We remind cargo underwriters that it is important to properly allot that revenue to make sure that proper premium is collected.


The Northern District of Illinois upheld preemption in an action against a carrier. The court refused, however, to dismiss a suit on the basis that a claim was not filed within nine months. The court held that the Carmack Amendment does not provide for nine month claim filing requirement, but rather only a minimum period. In the absence of a bill of lading or contract which incorporated a claim filing requirement there was none.  (Ace Motors, Inc. v. Total Transport, Inc., 2009 WL 2031780)

Preemption once again.  The Southern District of New York held that a loss in transit by air carriers, Fed Ex, to be specific was subject to Federal law, but that a claim for breach of contract in failing obtain proper signatures was not preempted and was subject to state law.  However, in any event the court held that the carrier’s liability was limited to $100, provided the pro se plaintiff could establish damages stemming from the failure to get signatures for a letter to his lady friend.  (Soto v. FedEx Exp. Corp., 2009 WL 2146600)

The Eastern District of Louisiana held that a carrier was not liable for a Hurricane Katrina loss when it delivered a barge of goods to Louisiana days before the Hurricane hits.  The court held that the shipment had been turned over to the customer, the loss was an act of God and that at the time of delivery there was no clear evidence that the hurricane was going to hit that area of Louisiana. (Conagra Trade Group, Inc. v. AEP MEMCO, LLC 2009 WL 2023174)

The factors to be addressed by a court in determining whether to transfer a declaratory judgment action seeking recovery on a cargo policy were addressed in the Southern District of New York.  Despite the fact that the insurer contended that the policy was issued and negotiated in New York, the court held that the substantive facts of the loss, whether the cargo was unattended or whether there was compliance with a “2 driver” rule were events which occurred in California.  Since the policy itself was straightforward, and the issue was only whether the facts precluded coverage, the court transferred the case. (Fireman's Fund Ins. Co. v. Personal Communications Devices, LLC, 2009 WL 1973534)

The Superior Court in New Jersey considered the impact of a limitation of liability in a self-storage agreement. The court upheld that limitation which exculpated the self-storage facility from loss, minimizing the application of a prior lower court decision which had invalidated these provisions.  As long as the self-storage facility can meet the requirements of the self-storage act it can transfer risk of loss to the tenant, even for loss which appear to be caused by the facility’s employees.  (Varasteh v. Storage U.S.A., 2009 WL 2045251)

There was an interesting decision in the Eastern District of Virginia on a household goods case that was in default.  Carriers should pay attention to answering complaints.  While the court acknowledged that the shipper did not appear to have paid for increased valuation beyond the .60 cents per pound the burden was on the carrier to show compliance with all Carmack requirements for limitations and since it had defaulted it could not make that showing. The court also addressed all of the types of damages which were recoverable for household goods. The plaintiff was awarded all amounts in excess of the binding estimate, attorney’s fees, prorated freight charges, and full replacement cost for the goods lost.  (Boles v. Destination Movers, Inc.)

The issue of prompt payment of claims can have unexpected consequences for an insurer. In the Northern District of Iowa an insured filed an action seeking additional payments under first party commercial property policy, along with damages for the delay in payment of undisputed amounts. While the defendant sought to avoid discovery on the bad faith action pending a resolution of the coverage issue the court held that discovery would proceed as the bad faith delay in payment was unrelated to the claim for additional payments.  (Penford Corp. v. National Union Fire Ins. Co. of Pittsburgh, PA,
2009 WL 2030377 (N.D.Iowa))

The issue of when coverage commences under a transit ocean policy was considered by the court in the Eastern District of California.  In this case the goods were already in transit at the time that the policy incepted and the insured sought reconsideration of the court’s grant of summary judgment to the insurer.  The court denied reconsideration holding that the simple fact that experts disagree is not enough to create a question of fact when the issue is policy analysis which the court will consider a question of law.  The court also held that the insured’s argument that the binder created an ambiguity because the policy was not issued at the time of the loss was unsupported by evidence where it appeared not to have even read the binder and relied solely on its own broker’s representations.  (Dairy America, Inc. v. New York Marine and Gen. Ins. Co., 2009 WL 2184547)

The Missouri Federal District Court refused to dismiss an action against an insurer who paid its policy limits on behalf of one insured who was sued for injuries stemming from an accident.  After obtaining a large judgment against one insured, the plaintiffs sought recovery under an indemnity contract against a different party, who was also insured under the same policy.  The Court held that while payment of  policy limits on behalf of one insured may extinguish an insurer’s duty to defend another insured, and could protect an insurer from other extra-contractual claims, there would be a question of fact as to whether the settlement was in good faith and reasonable.  (Sentry Select Ins. Co. v. Hosmer, 2009 WL 2151557)

Very often individuals are found responsible for the actions of others simply because they operated in a loose business manner. Fortunately for one individual that did not happen in this case.  This time the defendant “subbed” out work to other individuals to haul dirt from a job site.  All trip tickets were submitted by the defendant, who would be paid in full and then apportion payment to the sub. The Court of Appeals in Texas held that was not enough to establish that the defendant controlled the driver who had the accident, nor was it enough to make him a statutory employee under the Federal regulations.  Since he could not be an employee all causes of action for vicarious liability, negligent hiring or training were dismissed.  (Martinez v. Melendez, 2009 WL 1813152)

Sometimes you just can’t get it right. In an action in Court of Appeals in Ohio the court held that it was improper for the court to enter a default against a trucking company whose counsel failed to appear at the pre-trial conference. The court held that a default judgment was inappropriate where an answer had been filed and that the court should have allowed the case to proceed to trial without the defendant. Unfortunately for the defense counsel the court held that he failed to properly appeal the order and upheld the judgment anyway.  (Untch v. Northern Valley Conts., 2009 WL 1911950)

In the District Court in Delaware the court allowed a case to proceed in which recovery was sought against a defendant whose vehicle was stopped on the highway as a result of an accident and which was possibly a contributing cause to a different accident. The parties in the second accident contended that they were changing lanes because of the presence of the defendant’s accident. Since the defendant had been cited for improper actions in its own accident it was enough to allow the case to proceed. (Halchuck v. Williams, 2009 WL 2058536 (D.Del.))

See you next month.

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