Interstate Motor Carrier Issues Involving Claims
by Daniel W. Raab, Esq.
Interstate trucking, that is from state to state, is a major element of the transportation industry. It often has a role with the arrival of foreign shipments in addition to purely domestic shipments.
The Carmack Amendment, 49 U.S.C.A. 14706, is the statute that regulates the liability of domestic carriers that travel across state lines within the United States. Although there are some concepts for liability that are similar to ocean carriers, such as the defense of an Act of Nature, the Carriage of Goods by Sea Act and the Carmack Amendment are two distinct statutes with shorter limitations of liability then what would apply in a standard written breach of contract which is typically 5 years in Florida and 4 years for an action in negligence. Many of you deal with motor carriers that cross state lines. This article is only dealing with interstate claims.
If you have a claim against an interstate motor carrier, it is important to obtain a copy of the motor carrier bill of lading. This is the contract that governs the terms and conditions of the contract. Some of the motor carrier’s shipping clients might issue their own bills of lading if they can convince the motor carrier to accept their bills of lading. A shipper bill of lading will be more helpful for the shipper and not the motor carrier. As will be discussed further, motor carrier bills of lading often have limitations of liability including time constraints.
Under the Carmack Amendment, a motor carrier bill of lading can provide that any claim must be made within 9 months. This claim must be in writing if required under the motor carrier bill of lading and should be specific as to the damages that are being claimed by the claimant. It is best to assume that if you are the claimant, you will have to make such a claim within 9 months. The claimant could include the shipper, consignee, or even an insurance company that paid the claim to its insured. I have gone so far as to hire a process server to serve a motor carrier with a claim. If you do not do this, you could lose your claim altogether. I would suggest serving the motor carrier directly with the claim, unless its insurance carrier or attorney gives you written permission from the motor carrier to serve someone else.
If the claim is declined by the motor carrier, you will have two years and a day from the date of declination in order to file a lawsuit. I would suggest that you do it within two years to be on the safe side. The notice and the contractual provisions are different from Florida Law which allows 4 years to file on a negligence claim and 5 years on a breach of contract claim based on a written contract.
The Carmack Amendment does allow for a motor carrier to have a low limitation of liability. (2-15 Law of Commercial Trucking § 15.08) It is important that you be aware of this when you are shipping cargo by truck. These limitations of liability are usually upheld unless there is an act of fraud, theft, conversion, and intentional destruction of the property 2-15 Law of Commercial Trucking § 15.08. It is also important for the motor carrier to offer the shipper an opportunity to declare and pay for a higher value. 2-15 Law of Commercial Trucking § 15.08. A shipper should carry its own first party cargo insurance. Motor carrier insurance policies have many exclusions as well as deductibles. The author has encountered policies that state that they have an unattended vehicle endorsement, but it is only applicable if the unattended vehicle is in a fenced in area with a security guard and/or alarm.
A carrier’s defenses include an act of nature, an act of the public enemy, an act of the shipper (poor packing), inherent vice of the nature of the goods, act of a public authority, and freedom from negligence. The motor carrier should issue its own bills of lading rather than just go along with a shipper bill of lading or one provided by a surface transportation broker so that it can limit its exposure.
If you have an intermodal shipment, that is where trucking is involved as part of an international ocean shipment and if the bill of lading provides that the entire shipment is governed by the Carriage of Goods by Sea Act; the Carriage of Goods by Sea Act would most likely supersede the Carmack Amendment under the Supreme Court cases of Norfolk Southern Ry. v. James N. Kirby, Pty Ltd., 543 U.S. 14 (U.S. 2004) and Kawasaki Kisen Kaisha Ltd. v. Regal-Beloit Corp., 558 U.S. 969 (U.S. 2009). They provide for an extension of contractual liability of the Carriage of Goods by Sea Act. An example of this would be if a shipment went by ocean from London to Miami and then by truck to Atlanta. Even if the loss happened while in the truck’s possession, the liability could be subject to the Carriage of Goods by Sea Act as opposed to the Carmack Amendment. This becomes important because there is a 1-year statute of limitation for filing a lawsuit under the Carriage of Goods by Sea Act and the assertion of the $500.00 per package limitation which has been held at times to be a pallet, drum, car and heavy machinery. I was in a case where the damages to 2 buses on a case governed by the Carriage of Goods by Sea Act were held to a value of $500.00 each. Expeditors International of Washington v. Crowley American Transport, Inc., 117 F. Supp. 2d 663 (S.D. Ohio 2000).
There is also an entity known as a surface transportation forwarder which usually consolidates cargo and is subject to the Carmack Amendment. It is the trucking version of a Non-Vessel Operating Common Carrier as it does not actually own and operate motor vehicles but can be sued as a carrier Transportation Terms and Conditions Third Edition, Raab, p. 36.The surface transportation forwarder can get the shipper a better rate for its cargo.
There is a third type of entity involved in interstate transportation which is a surface transportation broker which serves as a booking agent and is excluded from the Carmack Amendment. It functions like an ocean freight forwarder. If, however a transportation broker acts as a motor carrier on a shipment, it can be sued as a motor carrier and be subject to the Carmack Amendment. This has been the subject of litigation. The author was involved in the case of Active Media Servs. v. CAC Am. Cargo Corp., 2012 U.S. Dist. LEXIS 139785 (D.N.Y. 2012) where the broker was held not to be a motor carrier under the Carmack Amendment.
This article is intended to cover some of the basic issues that you might encounter with Interstate Cargo claims and who the players are that you could encounter in those shipments.
Daniel W. Raab, Esq. is an attorney with offices in Miami Dade County, Florida. He is a graduate of the Johns Hopkins University and the University Of Miami School Of Law. He is the author of Transportation Terms and Conditions, Chapter 47 of the New Appleman Practice Law Guide, Chapter 5 of the Benedict on Admiralty Desk Reference Book, and a Contributing Author to Goods In Transit. He has taught as an Adjunct Professor of Law at the University of Miami School of Law, St. Thomas University School of Law, Florida International College of Law, Florida Coastal School of Law and Truckee Meadows Community College.