LAW OFFICE OF DAVID MAGNARELLI, DAVID J. MAGNARELLI, ESQ., Camillus, NY, Counsel for Plaintiff.
WEBER, GALLAGHER, SIMPSON, STAPLETON, FIRES & NEWBY L.L.P. JAMES A. WESCOE, ESQ., Philadelphia, PA, Counsel for Defendants.
MEMORANDUM-DECISION and ORDER
GLENN T. SUDDABY, District Judge.
Currently before the Court, in this civil action filed by Stephenson Equipment ("Plaintiff") against ATS Specialized, Inc., and ATS Trucking Service, Inc. ("Defendants"), are Defendants' motion for summary judgment (Dkt. No. 23), and Plaintiff's cross-motion for summary judgment (Dkt. No. 26). For the reasons set forth below, Defendants' motion is denied, and Plaintiff's cross-motion is denied.
I. RELEVANT BACKGROUND
A. Plaintiff's Complaint and Defendants' Answer
Generally, Plaintiff's Verified Complaint alleges as follows: (1) Plaintiff is in the business of selling and renting large construction equipment, including construction cranes; (2) Defendants are in the business of carrying freight, including specialized heavy equipment, by motor vehicle for hire in interstate commerce; (3) on or about August 8, 2008, Plaintiff contracted with Defendants for the shipment of a crane from Baltimore, Maryland, to Troy, New York, between August 11, 2008, and August 13, 2008; (4) specifically, the crane was a Manitowoc Model 8500 Crane with a 150-foot-long main boom, a 60-foot-long fixed jib, a 12ton ball hook, a 60-ton hook block, and a third drum ("the Crane"); (5) pursuant to the agreement, shipment of the Crane was to take place in five separate loads in "assembly order, " to allow Plaintiff to assemble the Crane as each segment was delivered; (6) on or about August 11, 2008, Plaintiff caused the Crane to be delivered to Defendants in Baltimore, Maryland, in undamaged condition; (7) however, the first three loads were not delivered by Defendants to Troy, New York, until August 14, 2008, and the remaining two loads-which were combined by Defendants into a single load-were not delivered by Defendants to Troy, New York, until August 18, 2008; (8) moreover, the final load (containing the "boom top" and "butt section" of the Crane) was delivered by Defendants to Troy, New York, in a damaged condition, due to improper loading by Defendants, which caused the "boom top" and "butt section" to improperly rub and bump against each other and other pieces of equipment being transported; and (9) as a result, Defendants breached the agreement in that they did not deliver the Crane (a) in "assembly order, " (b) on time, and (c) undamaged. ( See generally Dkt. No. 1, Attach. 1.)
Based on these factual allegations, Plaintiff asserts the following three claims against Defendants: (1) a statutory claim for violation of the Carmack Amendment to the Interstate Commerce Act; (2) a state common-law claim for breach of contract; and (3) a state common-law claim for negligence. ( Id. ) As relief, Plaintiff seeks $78, 474.47 in damages plus costs and interest as provided by statute. ( Id. ) Familiarity with the remainder of Plaintiff's Verified Complaint is assumed in this Decision and Order, which is intended primarily for the review of the parties. ( Id. )
Generally, liberally construed, Defendants' Answer asserts affirmative defenses including those based on the limitation-of-liability provisions contained in the Bill of Lading and Rules Tariff, as well as related defenses contained in the Carmack Amendment. (Dkt. No. 4.) In addition, Defendants' Answer asserts a counterclaim against Plaintiff for $8, 564.40 in charges incurred by Defendants, but not paid by Plaintiff, for Defendants' shipment of the subject cargo from Maryland to New York between approximately August 11, 2008, and August 18, 2008. (Dkt. No. 4.)
B. Parties' Briefing on Their Cross-Motions for Summary Judgment
Generally, in support of their motion for summary judgment, Defendants assert the following two alternative arguments: (1) pursuant to the Carmack Amendment to the Interstate Commerce Act (which permits a carrier to limits its liability to a value established by a written declaration or agreement), Plaintiff is entitled, as a matter of law, to only $2, 700 in damages, because it is undisputed that (a) the damaged "boom top" and "butt section" of the Crane weighed 1, 080 pounds, (b) the Bill of Lading limited liability of $2.50 per pound on standard cargo liability, (c) the Rules Tariff gave Plaintiff the choice of higher freight rates for higher limitations, and (d) Plaintiff, a reasonable commercial enterprise, made a deliberate and informed choice to accept the lower limitation and decline the option of a higher limitation of liability for a higher freight rate; and (2) in the alternative, pursuant to common-law rule that special or consequential damages are generally not recoverable in an action for breach of contract unless the shipper gave the carrier notice of the need for special handling and thus the foreseeability of such damages (which the Carmack Amendment has not altered), Plaintiff is entitled, as a matter of law, to only $20, 094.22 in damages, because it is undisputed that (a) Plaintiff never gave Defendants notice that any special damages would be incurred in the event of a delayed or damaged delivery, and (b) the actual damage to the boom amounted to only $20, 094.22. ( See generally Dkt. No. 23, Attach. 2 [Defs.' Memo. of Law].)
Generally, in opposition to Defendants' motion for summary judgment, and in support of its own cross-motion for summary judgment, Plaintiff asserts the following four arguments: (1) Plaintiff has established a prima facie case against Defendants as a matter of law, shifting the burden to Defendants to prove they were free from liability, which they have not done; (2) the limitation-of-liability provision contained in the Bill of Lading and Rules Tariff is unenforceable pursuant to the "material deviation doctrine, " because the promise to ship the Crane in five different segments in a designated order (which Defendants breached, causing damages) was designed to lessen the risk of loss; (3) in the alternative, the limitation-of-liability provision contained in the Bill of Lading and Rules Tariff is unenforceable, because (a) it failed to give Plaintiff reasonable notice of its applicability in the event of an intentional breach, and/or (b) the Rules Tariff ambiguously (if not unequivocally) stated, in an "exception" section, that the choice of higher freight rates for higher limitations did not apply when the declared actual cargo value on the Bill of Lading was not more than $100, 000 per trailer (depriving Plaintiff of a choice); and (4) contrary to Defendants' argument, the Carmack Amendment permits the recovery of foreseeable consequential damages (such as the reasonable cost of repair and restoration, fees incurred, and non-speculative lost profits) and, here, Defendants had notice of the possibility of special damages (specifically, through their knowledge of the fact that the Crane was being shipped to an active job site, and the fact that the consignee for the shipment was not Plaintiff but a non-party). ( See generally Dkt. No. 27 [Plf.'s Opp'n Memo. of Law].)
Generally, in their combined reply-opposition memorandum of law (as required by Local Rule 7.1[c] of the Court's Local Rules of Practice), Defendants assert the following four arguments: (1) the "material deviation doctrine, " which is rooted in maritime law (and the need to avoid special problems resulting from maritime transit), does not apply to motor carriage cases unless the parties have discussed a specific requirement to secure the cargo during transit and the shipper paid additional charges to obtain that additional service, which did not happen here; (2) moreover, the limitation-of-liability provision is enforceable, because (a) the fact that a breach was intentional (even if true, which it is not) does not render the provision unenforceable, and (b) the "exception" section of Rules Tariff relied on by Plaintiff applies only where the shipper both declares a value greater than $2.50 per pound and declares a total value less than $100, 000, neither of which happened here; (3) while Defendants acknowledge that generally a court may award consequential damages in Carmack Amendment cases, here the circumstances that purportedly gave Defendants notice of the possibility of special damages (i.e., the that the Crane was being shipped to a non-party on an active job site) were not sufficient to notify Defendants that damages would flow from a breach of contract; and (4) at the very least, Plaintiff's cross-motion should be denied because (a) it has failed to establish the third element of a prima facie case against Defendants (i.e., regarding damages), and (b) it has failed to establish that Defendants did not give Plaintiff a choice of a higher limitation, or that Defendants had notice of the possibility of special damages. ( See generally Dkt. No. 31 [Defs.' Reply-Opp'n Memo. of Law].)
Finally, in an unauthorized reply on its cross-motion,  Plaintiff assert the following four arguments: (1) the limitation-of-liability provision contained in the Bill of Lading and Rules Tariff is unenforceable, because those documents do not clearly state that Defendants' liability will be limited even where Defendants fail to abide by the terms governing the manner of shipment of the Crane (especially where they fail to do so intentionally); (2) in the alternative, the limitation-of-liability provision contained in the Bill of Lading and Rules Tariff is unenforceable, because the cases cited by Defendants, which are factually distinguishable from the current case, do not preclude the extension of the "material deviation" doctrine to the transportation of goods by land; (3) moreover, the fact that the Bills of Lading and shipping forms repeatedly indicate that the that the Crane was being shipped to a non-party (American Iron, Inc.) on an active construction site was sufficient to notify Plaintiff that damages would flow from a breach of contract, including the loss of profits from Plaintiff's lease of the Crane to the non-party and the cost to Plaintiff of removing the Crane from the construction site; and (4) at the very least, Defendants' motion should be denied because genuine disputes of material fact exists as to whether (a) the limitation-of-liability provision was clearly disclosed and fairly negotiated and (b) Defendants knew the nature and extent of the damages that would result in the event of a breach. ( See generally Dkt. No. 33 [Plf.'s Reply Memo. of Law].)
C. Undisputed Material Facts on the Parties' Cross-Motions
Both Defendants and Plaintiff have violated Local Rule 7.1(a)(3) of the Court's Local Rules of Practice, which requires (1) a Rule 7.1 Statement setting forth in numbered paragraphs each material fact about which the movant contends there exists no genuine issue supported by a specific citation to the record where the fact is established, and (2) a Rule 7.1 Response admitting and/or denying each of the movant's assertions in matching numbered paragraphs and supporting each denial with a specific citation to the record where the factual issue arises. ( See Dkt. No. 24 [Defs.' Rule 7.1 Statement] with Dkt. No. 26 [Plf.'s Affid. in Opp'n].) Based on this ground alone, the Court may deny both Defendants' motion and Plaintiff's cross-motion. N.D.N.Y. L.R. 7.1(a)(3). In the interest of thoroughness, however, the Court has conducted a sua sponte review of the record, and concluded that, generally, the following material facts appear to be undisputed by the parties.
On August 8, 2008, Plaintiff contracted with Defendants for the shipment of the Crane from Baltimore, Maryland, to Troy, New York, between August 11, 2008, and August 13, 2008. Pursuant to the agreement, shipment ...