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Arbitration of Certain Controversies Between Petrie v. Clark Moving & Storage

May 17, 2010

IN THE MATTER OF THE ARBITRATION OF CERTAIN CONTROVERSIES BETWEEN JOHN PETRIE, TERI PETRIE AND DELPHI CORPORATION, PETITIONERS,
v.
CLARK MOVING & STORAGE, INC., RESPONDENT.



The opinion of the court was delivered by: Michael A. Telesca United States District Judge

DECISION AND ORDER

INTRODUCTION

Before this Court is a motion to confirm an arbitration award and a cross-motion to vacate the same arbitration award. The award stems from a dispute going back to 1999 when John Petrie and Teri Petrie (the "Petries" and/or "petitioners") as well as Delphi Corporation ("Delphi") contracted with Clark Moving & Storage, Inc. ("Clark Moving" and/or "respondent") to store and ship the Petries' household goods. The underlying dispute was initially handled in Monroe County Supreme Court. The case proceeded with discovery and then to arbitration pursuant to the terms of the contract issued by Clark Moving. The arbitrator issued an award favorable to the Petries. Thereafter, the Petries filed a Petition to Confirm the arbitration award in Monroe County Supreme Court. The case was removed to this Court without objection and Clark Moving filed a cross-motion to vacate the arbitration award. Under a limited standard of review, this Court cannot disturb the arbitrator's award unless Clark Moving proves by clear and convincing evidence that the award is premised on a manifest disregard of the law. I find that the arbitration award is confirmed and the remaining question of whether to award interest remains with the parties.

BACKGROUND

I. Facts

In 1999, John and Teri Petrie, along with John's employer, Delphi Corporation, planned to have Clark Moving move the Petries' household goods from their home in Pittsford, New York, to a storage facility in Rochester under the control of Clark Moving. Under this arrangement, Clark Moving packed and stored over 28,000 pounds of the Petries' household goods. The contract signed by the Petries insured the goods at a rate of $.60 per pound per item. Delphi's agent, GMAC Relocation Services, informed Clark that they would not pay for a higher valuation. The actual values of the goods equals approximately $500,000. Deplhi paid the storage costs until June 2002.

Sometime in 2001, a leak developed at the storage facility causing extensive damage to the Petries' household goods. In 2003, the Petries' arranged for Clark Moving to move the household goods to their new residence in Michigan. When the goods arrived in Michigan, the Petries discovered their household goods had mold and water damage.

II. Procedural Posture

As background but not necessary to this dispute, a battle between the insurance carriers ensued. The Petries' have been made whole and have assigned any right of recovery against Clark Moving to Delphi. Before the arbitration, the Petries and Delphi sued Clark Moving in state court alleging, inter alia, negligence and breach of contract. See Docket #8(2) - Verified Complaint. In January 2009, the parties entered into a binding arbitration agreement. The parties provided submissions before the arbitrator in April 2009 and the arbitrator heard live testimony.

III. The Arbitration

Clark Moving's contractual liability forms the center of this dispute. Clark Moving contends that since 1999, the character of this transaction has been one involving interstate commerce. Accordingly, Clark Moving argues that the Carmack Amendment, 49 U.S.C. § 14706 ("Carmack Amendment"), applies because the final destination of the goods was Michigan. Under the Carmack Amendment, a common carrier can limit its liability to a published tariff or an otherwise declared value agreed to between the shipper and the carrier by ensuring the contract sets forth the limitations in a "reasonably communicative" manner in a "fair, open, just and reasonable agreement between the carrier and shipper and where the contract offers the shipper the possibility of higher recovery by paying the carrier a higher rate." Martino v. Transgroup Express, 269 F.Supp 2d 448, 449 (S.D.N.Y. 2003) (citations omitted). Clark Moving submits it fulfilled this test and the parties agreed to insure the goods at a rate of $.60 per pound per item.

The Petries and Delphi argued, and the arbitrator agreed, that there were two contracts involved in this transaction--one for storage in 1999 and a separate agreement in 2003 to move the goods. Reasoning that the Carmack Amendment would not apply, the arbitrator found that there was correspondence before the goods were placed in storage showing an actual value of $500,000. The arbitrator ignored the $.60 per pound per item contractual limitation because Clark Moving did not offer the Petries a higher-valued insurance plan as required by law to under-insure household goods. The award also states that "[n]o award is made for interest." After a clarification, the arbitrator stated this was not meant to eliminate an award of interest, but rather notify the parties that the $500,000 should be allocated entirely to principal and that the determination of interest rests with the parties.

The arbitrator issued the award in August 2009. Petitioners, moved in state court to confirm the award, but respondent successfully removed this action to federal ...


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