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Bits & Pieces

Volume 20, Edition 4

The IMUA annual meeting is coming up. If you are not registered there is still time.  Come on down and join us for a great annual meeting in Atlanta, GA and stop by our table for a visit. CAB will be sponsoring the transportation session.

There is not much to report this month.  It seems like everyone is waiting to see what regulations will continue under the new administration so that they can figure out how to present their position.  This month we report:

BRAKE VIOLATIONS – The FMCSA added an out-of-service (OOS) brake violation to the list of citations to be scored for CSA.  This violation differs from other OOS brake violations currently in the SMS. A carrier will be considered in violation if 20 percent or more of the total brakes are defective and the vehicle is placed out of service. Violations which occur prior to May, 2017 will not be part of the calculation.

LARGE TRUCK AND BUS CRASH REPORT – FMCSA released its Large Truck and Bus Crash Facts for 2015. The initial point of impact of the truck was in the front in more than half of fatal truck crashes, followed by the rear at 20 percent, left side at 10.2 percent and the right side at 6.2 percent.  When a truck rear-ends a passenger vehicle, both the trucker and car driver recorded driver-related factors 62.8 percent of the time. However, when a passenger vehicle rear-ends a truck, only 28.4 percent of truckers reported driver-related factors. Two-thirds of fatal truck crashes reported another vehicle’s encroachment into a trucker’s lane or other vehicle in the truck’s lane as a “critical pre-crash event.” Only 21 percent of crashes involved a trucker losing control or the truck’s movement, e.g. crossing intersection, turning left or right, etc.  Only approximately 6% of fatal accidents resulted from faulty equipment on a truck. The report has many factors and breaks down the data into many categories.  You can review the crash facts here.

CRASH REPORTS – A review by the National Safety Council (NSC) of motor vehicle crash reports from across the U.S. finds that no state “fully captures” critical data regarding incidences involving drunk and/or drugged drivers, distracted driving, and fatigued driving, among others. The findings are summarized in a new NSC report entitled: “Undercounted is Underinvested: How incomplete crash reports impact efforts to save lives.”  According to the report there is a wide variety in what is reported by the various states, calling into question whether there is sufficient common data to allow analysis.

Preliminary estimates from the NSC indicate as many as 40,000 people died in car crashes in 2016. That marks a 6% increase over 2015 and a 14% increase over 2014 – the most dramatic two-year escalation since 1964. The NSC identified 23 specific crash factors that should be captured on crash reports. You can view the report here.

The recommendations of the NSC include:

* Filling out crash reports electronically

* Updating forms more frequently to capture emerging issues such as fatigue and the use of new technologies by drivers

* Adopting an “investigatory approach” to motor vehicles crashes

* Using electronic data recorders to collect crash factors such as performance information on any advanced driver assistance system in the vehicle

CURRENT CASES: 

CARGO: 

There was an interesting decision out of the Court in the Northern District of North Carolina.  A motor carrier was sued by its customer for the theft of a shipment of cargo.  The Court allowed the motor carrier to proceed against the shipper of the goods in a third party action for implied in law indemnity when the shipper allegedly misled the motor carrier as to the value of the freight, preventing the carrier from providing additional security.  The Court also held that the motor carrier had a claim for deceptive trade practices under the applicable state law.  (Macy’s v. Western Express, 2017 WL 1194358)

The Eastern District of Michigan denied a request to consolidate five cases in which the same broker sued 5 different truckers for cargo losses. The Court held that while the broker used the same contract with each carrier the remaining facts of each case differed sufficiently to warrant a denial of consolidation.  (United Road Logistics v. JM Transfer, 2017 WL 1077951)

Everyone always asks about the exempt commodities, which is always a confusing issue.  The Eastern District of Michigan addressed the issue and determined that bags of salad were exempt from regulation and therefore a Carmack Amendment claim would fail   The Court vacated a default against the motor carrier and dismissed the action for lack of subject matter jurisdiction.  (Service First Logistics v J. Rodriguez Trucking, 2017 WL 1365410)

Over in the Southern District of Texas the Court also dismissed all state law claims against a household goods carrier.  Only the Carmack claim and the claim for attorney’s fees were permitted to continue.  (United Van Lines v. Hajjar, 2017 US Dist. Lexis  54096)  The same result was received in the Eastern District of Michigan when the transport was intended for overseas transport but was involved in an accident in the origin state. (Al Joukhay Trading v. Vantage International Shipping, 2017 WL 1382296)

AUTO:

A driver seeking recovery from a shipper for injuries at the transport site was unable to avoid dismissal of his personal injury as time barred under the applicable statute of limitations.  While the shipper and the motor carrier had a master service agreement which allowed for an extended statute of limitations the 5th Circuit held that the agreement did not provide any protection for the driver. (Oubre v. Schlumberger, 2017 US App LEXIS 5890)

A motor carrier was not liable for the intentional torts of a driver who hit another driver.  The Northern District of Ohio held that the driver was not operating within the scope of his employment when he hit the driver.  The Court also held that there was no negligent hiring claim as the motor carrier undertook all necessary steps to vet the driver and that criminal background checks were not required.  (Herndon V. Torres, 2017 WL 1422847)

The Eastern District of New York refused to remand an action back to State Court when the evidence led to a conclusion that the motor carrier who defeated complete diversity was fraudulently joined by the plaintiff.  The non-diverse motor carrier was not the owner of the vehicle and did not employ the motor carrier, who was employed with the contractor hired by the motor carrier.  The Court held that the motor carrier could not be held liable for the loss and was dismissed from the suit.  (Pondexter v. Oruzio, 2017 WL 1079974)

In another decision the Eastern District did remand a case back to State Court when the plaintiff added a non-diverse party.  This time the plaintiff tried to fight the remand alleging that the non-diverse party was really part of an extended corporate structure with a nerve center out of the state. The Court rejected that argument.  (Palmiotti v. JAF Carriers, 2017 WL1166364)

Summary judgment was denied to a motor carrier who asserted the sudden emergency defense as the reason why he hit the plaintiff.  The motor carrier was traveling in the lane when the plaintiff turned into the lane ahead of the defendant.  The Southern District of Ohio held that there were questions of fact as to whether the accident happened so suddenly that the defendant could not avoid it.  (Miller v. TST Transforce, 2017 WL 1079984)

An insured’s rejection of uninsured motorist coverage was held valid under Indiana law, even when executed 5 years prior to the date of loss.  The Northern District of Indiana dismissed an action against the insurer of a motor carrier concluding that the rejection did not have be a part of the policy by endorsement.  The Court concluded that under Indiana law the insured must only sign that coverage was rejected and the effective date of the rejection.  (Kar v Swift Transportation, 2017 WL 1105934)

Ryder Truck Lines was successful in obtaining coverage under a motor carrier’s policy, and payment of all incurred defense costs and fees for the coverage suit.  Ryder was afforded coverage under the Lessor-Additional Insured and Loss Payee endorsement to the policy.  While the insurer argued that coverage was limited to claims against the lessor arising from the negligence of the motor carrier the Eastern District of Wisconsin held that the endorsement did not require a negligent act by the motor carrier.  (Ryder Truck Rental Inc. v. National Fire Insurance, 2017 WL1194663)

See you soon, hopefully in Atlanta.

Volume 20, Edition 3

Welcome to Spring.  I am looking forward to the coming Annual IMUA meeting and the chance to catch up with so many of you.  It has been an interesting year and I appreciate having that time to find out firsthand what is happening with you.

I want to start this month Bits & Pieces with a story which is near and dear to me.  So many of you know that I focus my time and energy to find ways to reduce hunger in the country and to see what we, as an industry can do to help.   Everyday thousands of pounds of food is salvaged for pennies, or disposed of because of transit or warehouse events which may have impacted the grade of the product from the customer’s perspective.   Indiana now has a website to allow rejected food that is still edible to be donated to Indiana charities.  IndyFoodDrop.org is designed to help the trucking industry redirect any food rejected by local grocers and distributors from the landfills and into the hands of people in need. Midwest Food Bank, Gleaners Food Bank, Second Helpings and St. Vincent de Paul Food Pantry teamed with the Indiana Motor Truck Association on this initiative.   The insurance industry can join and help out. IndyFoodDrop.org provides drivers with access and information on where they can bring the food. Drivers will receive help unloading the truck and a tax-deductible receipt. Dry, frozen and refrigerated foods are all acceptable. However, product seals must not be broken, and ingredients and dating must be listed on the food products.  If you are aware of any other similar organizations please let me know as I will publicize that here.  If we all work together we can minimize waste and help feed those that are food insecure.  Humanitarian gestures and tax write offs can also benefit everyone.

SAFETY FITNESS DETERMINATION – Back to the drawing board?  The FMSCA has withdrawn the safety fitness determination (SFD) rulemaking issued in January 2016 and will also cancel plans to issue a supplemental notice of proposed rulemaking to help support the SFD effort.  We will wait to see what they decide following completion of the government mandated study from the National Academies of Science.

NAFTA DATA – NAFTA is in the news as the Trump Administration considers what steps it will take with respect to foreign trade.  The Bureau of Transportation Statistics arm of the USDOT has released North American Free Trade Agreement (NAFTA) data for 2016.  There was another loss.  Less freight was carried by 4 out of 5 modes and that included trucking.  You can read the report here.  Overall freight value for 2016 was $1.069 trillion, a 3.4 percent decline from 2015. Freight value decreased by 7.3 percent in 2015. Both 2013 and 2014 experienced yearly increases of 2.8 percent and 4.6 percent, respectively. Trucks carried $700 billion of NAFTA freight last year, the smallest decrease across all modes at 1.65 percent, and accounted for approximately 65.5 percent of total NAFTA freight.

HOS RESTART – I do believe that I started writing about the HOS changes a million years ago and we are still waiting to see if they get it right.  Apparently the DOT study has now determined that the changes to the voluntary 34-hour restart that added two mandatory overnight periods and limited its use to once every seven days did not benefit driver safety, fatigue or health. The rules were suspended and will, perhaps, now be withdrawn entirely.

ENGINEER INFRASCTRUCTURE REPORT – The American Society of Civil Engineers, gave the US infrastructure a D+ concluding that there are too many outdated bridges, roadways and tunnels which cannot handle what we give to say nothing of the many problems with mass transit (something we here in the Tri-State area deal with daily). $4.5 trillion is needed to achieve significant improvements in the transportation grid.  Bridges were graded C+, improving from a D in 2013. Rail got better, raising to a B grade.   Ports received a C+ and roads a D. Four years prior, they were graded C+, and C, respectively.  You can see the full report here.

CASES

CARGO

The District Court in Maryland concluded that a plaintiff’s claims for loss or damage to freight were preempted by Carmack even when the motor carrier only performed an intra-state leg of an international move.  As the plaintiff always intended the goods to move internationally Federal Court jurisdiction existed and a motion to remand was denied. The Court reframed the state law causes of action under Carmack and also allowed a claim for excessive fees to remain, concluding that the claim was outside the scope of Carmack.  (Monga v. ABS Moving & Storage, 2017 WL 749236)

Fed Ex was successful in having its bill of lading limitation applied when the shipper’s agent prepared the bill of lading which incorporated a tariff limitation. The Southern District of Florida also held that a small limitation for a reconditioned engine was not unreasonable when the plaintiff could have selected and paid for a higher valuation.  Of note was the fact that the Court also addressed what was necessary to establish a prima facie case for recovery when the plaintiff only submitted an affidavit in support of its burden.  The Court held could it could be reliable circumstantial evidence.  (Eastern Air Express v. FedEx Corp., 2017 US DIST 29010)

Is a cargo insurer responsible when the insurance broker fails to notify the insurer that the trucker has added vehicles to its fleet?   The insurer had denied coverage because the loss occurred on a non-scheduled vehicle.   The Court of Appeals held that there was a question of fact on whether the broker was the agent of the insurer, whether it had the authority to bind the insurer and whether notice from the broker to the producer constituted notice of the additional vehicle to the insurer.  (Kaplan Trucking Co. v. Grizzly Falls, Inc.,  2017 Ohio App. LEXIS 902)

Over in Atlanta, the Court allowed a default judgment against a motor carrier in a subrogation action brought by the contingent cargo insurer. Interestingly the Court held that the plaintiff’s affidavit that a breach of the load’s integrity was sufficient to declare it contaminated because of a possible risk of contamination. The matter was not litigated on its merits but it is another decision where the carrier was found liable without evidence of physical loss.  The Court rejected the claim for attorney’s fees. (Travelers Property Casualty v. ASF Intermodal, 2017 WL 894445)

A truck broker who had obtained default judgments against two motor carriers involved in a cargo claim was unable to collect from the insurer for either motor carrier.  The Western District of Arkansas found that one insurer was permitted to decline coverage because the motor carrier did not notify the insurer of the suit until a default was entered.  The second insurer was also permitted to walk away from the suit because the applicable state law did not permit a direct action against a policy not issued in the state and because the policy only permitted a direct claim after a judgment was entered against the motor carrier following a trial.  A judgment by default was insufficient to allow a direct action. (BNSF Logistics, LLC. V. Pennsylvania Mfg. Association, 2017 WL 707494)

Is a trucking company who self-insured certain business losses, including cargo losses, prohibited from seeking recovery from the insurer of a trucking company who caused the loss?  The Southern District of Mississippi held that the answer was no, at least in the 5th Circuit– the plaintiff motor carrier  was permitted to recover and the Court held that it was not akin to a suit between two insurers over who would pay for claims that were covered under both policies. (C.R. England v. Hallmark County Mutual Ins. Co., 2017 US Dist LEXIS 37081)

We do not generally see the Courts actually split cases and transfer only part of a suit to another jurisdiction even when the bill of lading or contract of carriage permits it.  The Eastern District of Louisiana held that the carrier with the master bill of lading would be entitled to have the action commenced against it transferred to another venue, leaving the downstream carriers to fight it out in the home venue and the plaintiff to fight two battles.  (Royal Smit Transformers v. Versus HC BEA-Luna, 2017 US Dist. LEXIS 29506)

The Northern District of Court granted a default judgment against a defunct motor carrier on a household goods claim.  The Court noted that in the household goods arena a homeowner was entitled to opine on the value  of his own property.  The Court accepted his valuations, but refused to allow additional costs for postage, shipping, handling, etc.  The Court also refused to allow attorney’s fees under the federal statute as the plaintiff had failed to file a claim within 120 days.  (Prussin v. Bekins Van Lines, 2017 WL1092332)

AUTO:

A non-trucking use insurance carrier was granted summary judgment declaring that coverage was not afforded when the driver was in the business of a motor carrier at the time of the accident. The driver had not been released to go home, but was on standby to pick up an empty trailer and was taking a federally mandated break at the time of the accident.  That was sufficient to trigger the exclusion.  (Williams v. Great American Insurance Co., 2017 WL 914064)

An insured was not afforded coverage for claims for racially discriminatory practices under the terms of its general liability or umbrella policy, The Northern District of Alabama concluded that the allegations of the complaint asserted intentional acts, which did not constitute an occurrence or accident under the policy.  Neither a defense nor indemnity was required. (Auto-Owners Insurance Company v  McMilan Trucking Co., 2017 WL 992181)

WORKER’S COMPENSATION:

Did you ever consider how much data is available through CAB to evaluate owed premium under Worker’s compensation insurance? The District Court in New Jersey permitted an insurer to proceed in its collection efforts to recover unpaid premium for owner operators utilized by the trucking company. The Court denied a motion to dismiss and a cross-motion for summary judgment, concluding that there were questions on whether the owner operators were employees and whether the hired auto endorsement applied.  CAB can assist you in your efforts to correct proper premium for the worker’s compensation risk you are underwriting.  Give us a call and we can show you how.  (LM Insurance Corp v. Kobys, 2017 WL 1073352)

© 2017 Central Analysis Bureau