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SECURITY INSURANCE COMPANY OF HARTFORD v. OLD DOMINION FRT.

August 20, 2003

SECURITY INSURANCE COMPANY OF HARTFORD, A/S/O JT INTERNATIONAL HOLDINGS, B.A., PLAINTIFF, V OLD DOMINION FREIGHT LINE, INC., AND CONCORD TRANSPORTATION, INC., DEFENDANTS


The opinion of the court was delivered by: Gerard E. Lynch, District Judge

OPINION AND ORDER

This dispute concerns a shipment of cigarettes transported by truck from North Carolina to Montreal, Canada, where it was stolen shortly after being deposited in a bonded warehouse pending inspection and release by the Canadian customs authorities. Plaintiff Security Insurance of Hartford ("Security") is the subrogee of RJ Reynolds, Inc. ("RJR" or "the shipper"), which owned the cigarettes and contracted for their transportation to Canada. Security sues the trucking company that RJR hired to ship the cigarettes, Old Dominion Freight Line, Inc. ("Old Dominion" or "the carrier"), for the full value of the lost cargo. Security originally named Concord [ Page 2]

Transportation, Inc. ("Concord"), a Canadian transportation company that was Old Dominion's subcontractor, as a co-defendant, but later withdrew its complaint against Concord.*fn1 Old Dominion, however, then filed a cross-claim against Concord which remains pending.

Several motions have been filed. Security has moved for summary judgment, arguing that Old Dominion is strictly liable for the loss of the cargo under the law relating to common carrier liability. Both Old Dominion and Concord moved either to dismiss the complaint on the grounds of forum non conveniens, or to stay this action pending resolution of a prior action in a Canadian court involving the same incident (the "Canadian Action"). The parties appeared for oral argument on the motions on June 30, 2003.

For the reasons that follow, the Court finds that Old Dominion is strictly liable for the loss of the cargo en route to its final destination in Canada. Therefore, Old Dominion's motion for dismissal or stay based on forum non conveniens is denied, because there would be no additional convenience in trying a strict liability action between an American shipper and an American carrier in Canada. Moreover, because there are no issues of material fact in dispute, and because Old Dominion fails to raise an adequate defense to the prima facie case for liability, summary judgment is awarded to Security. Finally, because Old Dominion's claim against Concord essentially concerns matters that are more appropriately tried in Canada, Concord's motion to dismiss the cross-claim on grounds of forum non conveniens is granted. [ Page 3]

BACKGROUND*fn2

Carriage from North Carolina to Canada

On March 20, 1996, RJR entered into a Transportation Agreement or contract of carriage ("Contract") with Old Dominion setting forth terms of carriage for shipments undertaken by Old Dominion. The Contract automatically renewed for one year periods unless cancelled in writing. Plaintiff alleges that on July 13, 1999, 604 cases of Camel Light cigarettes and 175 cases of Winston KS cigarettes were loaded into an Old Dominion truck on the premises of RJR in Winston-Salem, North Carolina. The straight bill of lading for that shipment identified the consignee as RJR Macdonald, Inc., in Montreal, Canada, c/o Collector of Customs. (Straight Bill of Lading dated July 13, 1999, Ex. A. to Affirmation of Michael J. Slevin, dated Jan. 21, 2003 ("Slevin Aff.").)

Old Dominion transported the cargo to Greensboro, North Carolina, where it turned the cargo over to its subcontractor, Concord. (Slevin Aff. ¶ 4.) Concord trucked the cargo to Lewiston, New York, and over the border into Canada, on July 14, 1999. (Slevin Aff, Ex. B.) At the direction of the Canadian customs authorities, Concord transported the cigarettes to a [ Page 4]

warehouse owned by Intermediate Terminals Warehousing ("Intermediate") in Montreal on July 20, 1999, to be stored there in the Concord trailer pending customs release at which time they were to be delivered to the consignee, RJR Macdonald in Montreal.

Theft of the Cigarettes

The parties agree that the cargo was subsequently stolen from the Intermediate warehouse by an unknown party. The plaintiff claims that the cigarettes were stolen on the same day they arrived at the warehouse, and that no one noted the theft until the consignee began looking for the missing shipment over a week later, after Canadian customs authorities had officially released the cigarettes.

Old Dominion was apparently unaware of the theft, and did not report it to the shipper in North Carolina or to the consignee in Montreal. When the cargo did not arrive at the final destination in Montreal by August 3, 1999, RJR Macdonald reported the loss to the Montreal police. The plaintiff claims to have learned, in the course of subsequent investigation, that the Concord trailer, missing its cargo, had been discovered by the Montreal police in front of some other warehouse on July 22, 1999. It appears undisputed that the police did not identify the origin of the trailer it found, nor did the bonded customs warehouse notice the theft of the trailer from its premises, until after RJR Macdonald had reported the missing cargo to the police.

Filing of the Claim

RJR filed a claim with Old Dominion for reimbursement for the lost cargo. None of the motion papers before the Court includes a copy of plaintiff's claim letter, nor do the parties refer to the date of the claim, but on May 22, 2000, Old Dominion's Director of Claims sent a letter to RJR referring to a claim in the amount of $133,436.05. The letter stated that because the [ Page 5]

shipment had been transferred to Concord, Old Dominion would transfer the file to Concord, and Concord "would resolve this matter with [RJR] direct [sic]," and that Old Dominion was closing its file on the claim. (Letter from Ernie Benge to S. Appelbe/Frt Claims, Ex. A to Affidavit of Ernie S. Benge, dated Feb. 17, 2003 ("Benge Aff.").)

The parties dispute whether the May 22 letter constituted a disallowance of RJR's claim, sufficient to start the clock on the shipper's time to initiate suit. Old Dominion argues that the letter was a clear rejection of liability for the claim. (Def. Mem. in Opp. to Summ. J. at 12.) Security argues that while the letter referred RJR to Concord for further proceedings on the claim, RJR had no reason to believe that Old Dominion had rejected its responsibility for the loss. The May 22 letter to RJR enclosed a letter from Concord to Old Dominion, wherein Concord advised Old Dominion that RJR had filed a claim against Concord, and that Concord had in turn filed a claim against the warehouse in Canada. (Letter from Jacqueline Craig to Eddie Wooten dated May 5, 2000, Ex. B to Reply Affirmation of Michael J. Slevin, dated Feb. 25, 2003 ("Slevin Reply Aff.").) Concord agreed to advise Old Dominion "upon closure of RJ Reynold's [sic] claim against Concord Transportation Inc. when all pertinent matters have been attended to." (Id.)

There was no further correspondence between the parties concerning the claim until nearly two years later, when counsel for Security, as subrogee to the shipper,*fn3 sent a letter to Old Dominion inquiring into the status of the claim. (Def. Mem. in Opp. to Summ. J. at 14; Letter from Michael J. Slevin to Old Dominion dated March 11, 2002, Slevin Reply Aff. Ex. A). [ Page 6]

The Canadian and U.S. Lawsuits

On June 17, 2002, Security brought suit in the Superior Court of the Province of Quebec, District of Montreal, against Concord, Intermediate, and Le Groupe de Securite— that is, against the Canadian subcontractor, warehouse, and security firm involved in the events surrounding the theft of the cargo ("Canadian Action"). (Declaration of Gregory Azancot dated Oct. 23, 2002 ("Azancot Decl."), ¶ 3.) Old Dominion, a Virginia corporation with headquarters in North Carolina, was not named in the Canadian Action. In the Canadian Action, Security seeks damages equal to the $195,938 (U.S.) it had paid out on the claim, in addition to interest and statutory indemnity available under Canadian law. (Azancot Decl. Ex. A at 3.)

On July 10, 2002, less than a month after filing the Canadian Action, plaintiff filed the instant lawsuit against Old Dominion and Concord, demanding damages in the amount of $195,938, plus interest, costs and attorneys fees. (Compl. at 5-6.) After having withdrawn its claims against Concord, plaintiff is left with two lawsuits in two countries concerning the same theft, with no overlap of defendants between the suits (except to the extent that Concord remains in this action as a defendant on Old Dominion's cross-claim).

DISCUSSION

The Court is faced with a set of intertwined motions concerning procedural questions (defendant and cross-claim defendant's motions for stay or dismissal based on forum non conveniens), as well as questions on the merits (plaintiff's motion for summary judgment). Essentially, plaintiff argues that the doctrine of strict liability under common carrier law applies to this dispute, and that there is no practical barrier to this Court exercising jurisdiction because the Court is fully capable of interpreting the Contract, which was executed in the United States. [ Page 7]

Furthermore, plaintiff argues that the Court should award summary judgment in its favor and find Old Dominion strictly liable for the lost cargo because plaintiff made a timely loss claim, and because plaintiff has established an unrebutted prima facie case of carrier liability.

Old Dominion, on the other hand, argues that strict liability is not the appropriate standard here because the Contract provides that a negligence standard applies to loss in cases such as this one. Under Old Dominion's negligence theory, there are numerous contested issues of fact concerning the depositing of the cigarettes in the customs warehouse, which would require discovery into the details of the security at the warehouse, and the theft itself. Because the theft occurred in Canada and all witnesses to the depositing of the cargo in the warehouse are in Canada, and because this Court does not have the power to compel testimony or issue discovery orders enforceable in Canada, Old Dominion argues that Canada is the proper forum for this dispute. To the extent that Old Dominion might not otherwise be subject to Canadian jurisdiction, it offers to submit to the jurisdiction of the Quebec court as a condition of the dismissal it seeks here.

I. Forum Non Conveniens

Since the most fundamental issue is whether the Court should exercise jurisdiction, we turn first to the forum non conveniens analysis. Under the doctrine of forum non conveniens, a district court has broad discretion to dismiss an action, over which jurisdiction is otherwise proper, based on the convenience of the parties and the interests of justice. See Koster v. (American) Lumbermens Mut. Cas. Co., 330 U.S. 518, 527 (1947); R. Maganlal & Co. v. M.G. Chem. Co., Inc., 942 F.2d 164, 167 (2d Cir. 1991) ("A district court has broad ...


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