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Essex Insurance Company v. Barrett Moving & Storage, Inc.

United States Court of Appeals, Eleventh Circuit

March 21, 2018

ESSEX INSURANCE Company, a.s.o. Nationwide Imaging Services, Inc., NATIONWIDE IMAGING SERVICES, INC., Plaintiffs-Appellees,

          Appeal from the United States District Court for the Middle District of Florida D.C. Docket No. 3:12-cv-00219-JRK

          Before TJOFLAT and ROSENBAUM, Circuit Judges, and REEVES, [*] District Judge.


         This case involves a magnetic resonance imaging machine ("MRI") that was irreparably damaged during transportation from Illinois to Texas. The MRI's components were divided into two separate shipments. The machine's owner, Nationwide Imaging Services, Inc., coordinated its transportation with one company, Barrett Moving & Storage, Inc., which transported one of the shipments with its own truck and arranged for a third party, Landstar Transportation Logistics, Inc., to transport the other shipment. The components shipped on the Landstar truck were damaged in transit, while the components shipped on the Barrett truck arrived intact. The damage to the components on the Landstar truck rendered the entire MRI inoperable.

         Nationwide and its insurer, Essex Insurance Company, brought suit against both transportation companies to recover for the loss of the MRI under the Carmack Amendment, 49 U.S.C. § 14706 et seq., which makes motor carriers in interstate commerce strictly liable to shippers for the actual loss of goods damaged in transit, unless a shipper and motor carrier agree to a limitation on the carrier's liability. The parties consented to a bench trial by a magistrate judge, but instead of trying the case, the Magistrate Judge opted to dispose of the controversy by granting summary judgment for Nationwide and Essex against both transportation companies. The transportation companies now appeal the grants of summary judgment against them.

         After careful review of the record and with the benefit of oral argument, we reverse the grants of summary judgment against both Barrett and Landstar.



         In November 2010, Nationwide, a company that buys and sells used medical equipment, contacted Barrett to obtain a quote for the shipment of an MRI Nationwide owned from Park Ridge, Illinois to Dallas, Texas. Ann Marie McGuigan, an employee of Nationwide, emailed Stacey Jacobson, an employee of Barrett, to obtain the quote. McGuigan told Jacobson that the MRI would have to be shipped in two pieces: the MRI's magnet had to be shipped on a flatbed truck while the machine's electronics needed to be shipped in an enclosed trailer. McGuigan also stated that both shipments had to arrive at the site in Dallas at the same time. Jacobson responded to McGuigan's email with a quote for the shipment: $2, 236 for the flatbed truck and $3, 860 for the enclosed trailer.

         Thereafter, the parties exchanged a series of emails to work out the logistics of the shipment and the specific dates and times of the MRI's pickup and delivery, settling on a shipment date of December 2. On December 1, Nationwide placed the shipment on hold until further notice due to scheduling changes. On December 10, the parties resumed discussion over the dates and times of pickup and delivery, settling on a new pickup date of December 16 and delivery date of December 18. Due to the quick turnaround time between pickup and delivery Nationwide requested, Jacobson told McGuigan that she would need to book a team of drivers for the flatbed, as opposed to a single driver, to ensure that no single flatbed driver would exceed the number of consecutive driving hours without a break allowable under federal regulations. Jacobson stated that a team would cost $3, 375 and that she would need to check the availability of a team that could accommodate the desired schedule. McGuigan authorized Jacobson to proceed with scheduling the shipment and reiterated that Nationwide needed the shipment to be delivered at noon on Saturday, December 18. Jacobson responded to confirm and said she had "notified my logistics to begin searching [for] a flatbed team."

         During this exchange, Jacobson sent McGuigan emails with the names of the drivers for both the flatbed truck and the enclosed trailer. In one of those emails, Jacobson referred to the driver of the enclosed trailer, Jerry Armson, as a "Barrett driver." In a subsequent email, Jacobson gave McGuigan the names of the flatbed team drivers, Jeff and Rebecca Waldorf. In that message, Jacobson did not state whether the Waldorfs were "Barrett drivers" or drivers for another company. In another email, Jacobson provided a phone number for an "emergency contact at Barrett" who would be available during the weekend shipment. The contact, Brigitt Berlin, was a Barrett employee.

         On the day of the scheduled pickup, the flatbed truck and the enclosed trailer arrived at the site in Park Ridge as planned. The enclosed trailer that arrived was owned by Barrett and driven by Armson, a Barrett driver, but the flatbed was owned by Landstar and driven by a team of Landstar drivers. Also present at the pickup site was Mark Depew. Nationwide hired Depew, an "independent engineer, " to oversee the "loading, packing, and unloading of the [MRI] equipment." Larry Knight, an associate of Depew, was also present and observed the loading and unloading of the MRI. Knight testified he inspected the MRI and found it "in excellent condition, " and the packaging and loading of the machine onto the trucks went without incident. Depew agreed.

         The Landstar drivers presented Depew with a "Uniform Straight Bill of Lading, " which Depew signed.[1] Depew was the only signer; the record does not suggest that a Nationwide employee or any other person received or signed the bill of lading at that time. Thereafter, the drivers departed with the MRI. As planned, the magnet traveled on the flatbed trailer while the electronic components traveled inside the enclosed trailer.

         While the MRI was in transit, Depew and Knight traveled to Dallas on their own so that they would be present when the shipment arrived at the delivery site. When the shipment arrived, Depew again signed the bill of lading.[2] Then, the riggers removed the "tarp like covering" from the magnet and it was revealed that the magnet had "ice buildup" on its exterior surface. Depew and Knight both stated that the Landstar drivers were unfamiliar with "MRI machinery" and "thought that the ice on the unit was there as a result of exposure to the elements during transport." After several days of testing, Nationwide learned that the inside of the magnet was severely damaged: all of the helium inside the magnet had leaked out, which caused the ice buildup witnessed by the team at the delivery site. The experts who tested the magnet determined that "the unit suffered a severe shock during transportation from Chicago to Dallas which resulted in a thermal short to the magnet, " hence the helium leakage and the ice buildup. The damage to the magnet resulted in a total loss of the MRI unit.

         Nationwide paid $420, 000 to purchase the MRI and was planning to sell it for $560, 000. As a result, Nationwide filed a claim with Essex, its insurer. Essex paid the policy limit on the magnet, $346, 500, and retained subrogation rights in the amount it paid.


         In January 2011, Nationwide sent Barrett a letter informing Barrett that it intended to file a claim for the loss of the MRI. In response, Barrett drafted a letter it sent "to all concerned parties, " including Nationwide and Landstar. In the letter, Barrett stated that it was "the transportation arranger of this shipment" and that it was sending the letter "to confirm identification of all responsible parties to facilitate the claims process."

         Thereafter, Nationwide and Essex[3] brought this action in the United States District Court for the Middle District of Florida against both Barrett and Landstar. Nationwide brought its claim under the Carmack Amendment, 49 U.S.C. § 14706 et seq. The Carmack Amendment, a part of the Interstate Commerce Act ("ICA"), makes all motor carriers "who receive[], deliver[], or provide[] transportation or service" during a shipment strictly liable to the shipper "for the actual loss or injury to the property, " regardless of which carrier had possession of the shipment at the time it was lost or damaged. See id. § 14706(a)(1).

         The parties agreed to a bench trial by a magistrate judge. After Nationwide commenced its action and the parties conducted some discovery, Nationwide moved for summary judgment against both defendants. Nationwide argued that the undisputed evidence established as a matter of law that Barrett and Landstar were jointly liable to Nationwide under the Carmack Amendment. Likewise, Barrett moved for summary judgment against Nationwide as to its liability for the loss of the MRI. Barrett contended that it was a broker and not a carrier under the Carmack Amendment's definitions; thus, Barrett argued, it was not subject to the Amendment's strict-liability provision.

         Landstar moved for partial summary judgment as to the amount of damages for which it was liable. Although it did not contest that it was subject to the strict-liability provision, Landstar argued that it could only be held liable for a portion of the damages, on account of both the liability limitation on the bill of lading and the liability limitation in an agreement Landstar previously negotiated with Barrett that applied to shipments Barrett subcontracted to Landstar.

         Nationwide responded that Nationwide was completely unaware that Landstar would participate in the shipment. This was because, according to Nationwide, Barrett held itself out as the sole party assuming responsibility to ship the MRI. Thus, Nationwide argued, Barrett fell within the definition of a "motor carrier" under the Carmack Amendment's strict-liability provision. Nationwide further argued that the liability limitation between Barrett and Landstar could not limit Landstar's liability to Nationwide, because Nationwide negotiated the terms of the shipment agreement solely with Barrett and had no opportunity to agree to any limitation with Landstar.

         The Magistrate Judge denied Barrett and Landstar's motions for summary judgment and granted Nationwide's motions for summary judgment against both Barrett and Landstar. He found as a matter of law that Barrett acted as a carrier with regard to the shipment. He also agreed with Nationwide that the terms of the shipment were contained solely within the chain of emails between Nationwide and Barrett; hence, the liability limitation between Barrett and Landstar was not applicable to Nationwide. Accordingly, he held Barrett and Landstar jointly and severally liable to Nationwide and entered judgment against both companies in the amount of $560, 000, the full value of the lost MRI. Thereafter, Barrett and Landstar timely appealed.


         The Magistrate Judge's grant of summary judgment in favor of Nationwide and against Barrett implicates a question of first impression in this Circuit: what is the proper test for distinguishing "brokers" from "carriers" under the Carmack Amendment? We conclude that the Magistrate Judge applied the correct standard for distinguishing brokers from carriers but erred in finding no factual dispute over whether Barrett met that standard.

         By contrast, the grant of summary judgment for Nationwide and against Landstar on the question of Landstar's limition of liability implicates well-established precedent in this Circuit. The Magistrate Judge overlooked this precedent: as a matter of law, Landstar's agreement with Barrett met the Carmack Amendment's requirements for a valid liability limitation under the principles set forth in Werner Enterprises, Inc. v. Westwind Maritime International, Inc., 554 F.3d 1319 (11th Cir. 2009). Thus, the $1.00 ...

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