Where, on an interstate household goods move an Individual Shipper (the “Shipper”) alleged that the Mover either lost or stole one-third of the items valued at approximately $1.9 million from the shipment, a federal district court judge dismissed her Carmack Amendment loss claim and State law conversion claim as untimely and preempted.[1] The court held Shipper’s notation made on a delivery ticket adjacent to the pre-printed “Received in Good Condition”: “absolutely not. destroyed mess. can’t believe it” insufficient to constitute a timely written cargo claim. The court held the representative that the Shipper assigned to supervise the move arrangements legally bound Shipper to the Mover’s terms and conditions, including “boilerplate” requiring claims to be made within 9 months of delivery when he signed the bills of lading ordering the service and acknowledging said “conditions on the back.” Each of the three bills of lading for each day of the move, were prepared by the Mover (presumably at the office before reporting to the residence) naming the Shipper and her representative at the top left of the document adjacent to the word “Name.”
The court concludes the bill of lading terms and conditions adequately provided notice of the Mover’s limitation of the time period for filing a written claim and commencing suit. In this case, Shipper failed to do so and thus the court dismissed the suit relying on the Carmack Amendment ruling the loss claim was untimely and the conversion claim preempted.
Dissatisfied, the Shipper appealed. The Fourth Circuit Court of Appeals upheld the lower court’s dismissal on the grounds the Carmack Amendment rendered both the cargo claim untimely and the State law conversion claim preempted.[2]
Background
The Shipper hired the Mover to move household goods from a residence in Virginia to a residence in the District of Columbia. According to the plaintiff, it was understood that packing, loading and transport of the entire contents of the residence would occur on a single day, without stopovers. To manage the details, Shipper “assigned” one of her household staff to oversee the arrangements with the Mover, supervise the physical execution of the move and commence the move on a date certain.
On the days the Mover packed and moved the goods Shipper alleges she was absent because her representative told her that would help facilitate the move. The Mover packed approximately 380 containers utilizing a 5-person packing crew over an entire day and another two full days moving the household goods utilizing 3-4 vans (depending on the day) and a 4-person crew each day.
Contrary to Shipper’s understanding of the move details, her representative “deviated radically” from “instructions” given to him, enabling the Mover to start the move later than planned and to make multiple deliveries to the warehouse; which S.I.T. was then delivered out “piecemeal over a period of six months” to the D.C. residence.[3]
According to the court, the only written notice within nine months of delivery was her notation, “seven words in total” “absolutely not. destroyed mess. can’t believe it” on the Mover’s delivery ticket issued to Shipper in July of 2015.
Legal Claims
The federal complaint filed on 9/14/20 asserted three claims against the Mover:
(1) Recovery under the Carmack Amendment for the missing 1/3rd of the goods from the shipment computed at the full replacement cost – “approximately” $1.9 million;
(2) “Criminal conversion” of the 1/3rd of the goods under State law either: a) directly for the Mover’s own use or b) the use of those for whom the Mover is vicariously responsible – seeking punitive damages of not less than $10 million; and
(3) Conversion “by larceny” under State law for the theft of $10,000 cash and a diamond ring committed by an individual employed by the Mover, alleged to have been acting within the course of his employment and who was convicted and sentenced for the theft of those items. As to this third count, the stolen items were always part of the D.C. residence and were never part of the contract of carriage.
Court Findings
Bills of Lading Are Integral To The Complaint’s Allegations And Therefore Considered By Court on Motion To Dismiss
The complaint omitted copies of the Mover’s bills of lading. The Mover included copies with its motion to dismiss. It argued they should be considered dispositive on the timeliness of her cargo claim under Carmack. As a threshold issue, the parties’ arm-wrestled over whether the bills of lading could properly be considered by the court. The judge concluded that because Shipper’s complaint cites and discusses the bills of lading, they are “integral” and should be considered.
Individual Had The Apparent And Actual Authority To Bind Shipper To Mover’s Bill Of Lading Terms And Conditions
As any carrier who has been in the business of transporting goods for hire for any length of time knows, the bill of lading serves three functions: 1. It records that a carrier has received goods from the party that wishes to ship them; 2. states the terms of carriage; and 3. serves as evidence of the contract of carriage.
The court holds by signing the bills of lading, the representative bound Shipper to the terms and conditions, including the time limit for making a written claim for loss/damage of the good so entrusted.
Applying Virginia’s law of agency, the court held the representative had the needed legal authority. The complaint allegations, buttressed with the Mover’s bills of lading as prepared and issued, overcame any duty the Mover may have had to check with Shipper to inquire into her representative’s actual authority. The allegations in the complaint “sent an unmistakably clear signal to [the Mover] that [the representative] was the point of contact for the move and that [he] should complete all tasks necessary to commence the move, including the task of signing the bill of lading.”
Why would signing the bill of lading be a part of an agent’s actual or apparent authority during a household goods move? “[B]ecause signing a bill of lading is a typical part of dealing with a mover,” incidental to his actions overseeing, supervising and commencing the move.
This favorable ruling was critical to the Mover’s success in defending its actions.
Shipper Failed To Submit A Timely Written Claim Within 9 Months
The Carmack Amendment provides, in pertinent part:
A carrier may not provide by rule, contract, or otherwise, a period of less than 9 months for filing a claim against it [asserting liability under receipts and bills of lading] and a period of less than 2 years for bringing a civil action against it . . . 49 U.S.C. § 14706(e)(1).
Note that the above limitation on the time for filing claims and commencing suit against the carrier is not a “mandatory” or default rule; it is permissive. To prevail on a timeliness defense, a carrier must establish that the shipper received a bill of lading which provided the shipper with adequate notice of the requirement to file a timely written claim. This of course is customarily achieved by having appropriate language in the bill of lading and obtaining the shipper’s acknowledgement of his or her acceptance to the terms, conditions and limitations as evidenced by the shipper’s signature on the bill of lading prior to performing any transportation or service.
The representative’s signature on the front of the bill of lading adjacent to the words “subject to all the conditions on the back hereof” acknowledged the move was subject to terms and conditions on the back, including:
CLAIMS PROCEDURES AND LIMITATIONS
Sec.2 (b) As a condition precedent of recovery, claims [for loss, damage, injury or delay] must be filed in writing with the . . . carrier issuing this bill of lading . . . within nine months after delivery of the property … or in case of failure to make delivery, then within nine months after a reasonable time, (sic) for delivery has elapsed, . . . . Where claims are not filed . . . in accordance with the foregoing provision, no carrier hereunder shall be liable, and such claims will not be paid.
Under the Department of Transportation regulations controlling shipper claims for loss, damage or delay to property transported by for-hire motor carriers, a timely written notice to the carrier has three required elements: the claim must 1. Contain facts sufficient to identify the baggage or shipment (or shipments) of property; 2. assert liability for alleged loss, damage, injury, or delay, and 3. make a claim for the payment of a specified or determinable amount of money.[4]
The court holds Shipper’s notation on the delivery receipt neither “comports nor substantially comports” with the applicable elements for filing a proper written claim under the Carmack Amendment applying Fourth Circuit precedent.
While the court does not identify specifically how Shipper’s claim failed, this writer suspects that if the timeliness issue were adjudicated in Massachusetts, a court would likely conclude the solitary notation on a delivery receipt or bill of lading – “absolutely not. destroyed mess. can’t believe it” – standing alone, probably would not constitute a timely written claim for at least two reasons. First, the applicable rules reject “bad order reports” or other notifications on the delivery receipt of shortage or damage as being legally sufficient. In addition, the shipper’s report of dissatisfaction is insufficient because, the shipper failed to explicitly assert liability against the carrier and failed to include with the cargo claim a demand for the payment of a specified or determinable amount of money for the actual value of the loss or damage to her goods.
The Carmack Amendment Preempts State Law Claim Of “Criminal Conversion”
Finally, the court held the “criminal” conversion claim under State law was preempted by applicable Fourth Circuit precedent interpreting the preemptive impact of the Carmack Amendment.
Takeaways
It is an open question whether the finding of agency as applied and upheld in this case would result in the same outcome in Massachusetts on similar facts. A determination on the issue of an agent’s authority to bind the principal will always involve three parties: the “principal” (i.e., a customer), the “agent” (the person who signs the document) and “third party” (i.e., a Mover).
In Massachusetts, actual authority, either express or implied, is the agent’s power to affect the principal’s relations with third parties as manifested to the agent by the principal. Actual authority results when the principal explicitly manifests consent, either through words or conduct, that the agent should act on behalf of the principal. Apparent authority is created as to a third party by written or spoken words or any other conduct of the principal which, reasonably interpreted causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him. Only the words and conduct of the principal, however, and not those of the agent, are considered in determining the existence of apparent authority.
In this case, the Shipper was not at the origin residence on the days the Mover packed, loaded and moved the goods; days on which the bills of lading were issued. In this case, the Shipper wanted to avoid the terms and conditions in the bill of lading limiting the time period in which to file claims so that she could file her Carmack claim for actual loss subject only to either the federal “catch-all” statute of limitations of 4 years or, if that was not applicable, “borrow” from the forum State’s limitation laws; presumably either for torts or contract.
While each move turns on its own set of facts and circumstances, in my practice, there have been numerous instances where a properly drafted, correctly executed power of attorney for a shipper-absent transaction has served my clients’ interests well. Examination of whether such an instrument is required turns on the language in the particular bill of lading and consideration of other factors reviewed between the attorney and client.
Where the Mover knows the customer is going to be absent from the move, what better way would there be to evidence explicit manifestation of the customer’s intention to authorize his or her agent to contract on his or her behalf than with a properly completed POA, if something were to go wrong later?
Finally, as this case shows, a bill of lading containing the adequate terms and conditions, properly completed and signed when issued is critical in order to adequately defend a loss or damage case involving household goods.
Dated: Sudbury, MA
January 19, 2022
Andresen & Borovick, LLP
323 Boston Post Road
Sudbury, Massachusetts 01776
www.abmasslaw.com
Tel: (978) 443-6868
borovick@abmasslaw.com
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[1] Brentzel v. Fairfax Transfer and Storage, Inc., No. 20-1076 Order (E.D. Va Dec. 10, 2020) (Doc 17). The court dismisses “without prejudice” a third claim (conversion by larceny) against the Mover for the criminal conduct of one of its employees convicted of stealing cash and a diamond ring from the D.C. residence. Defendant did not argue the Carmack Amendment preempts that claim. Due to the limited nature of federal jurisdiction, because the dismissed claim involved interpretation of State law (vicarious liability) the court declined to exercise jurisdiction. Shipper would be free to refile that claim against the Mover in State court.
[2] Brentzel v. Fairfax Transfer and Storage, Inc., No. 21-1025, Unpublished Opinion, aff’d in part and dismissed in part (4th Cir. Dec. 29, 2021), slip op. at 13 and 14.
[3] Later in the litigation Shipper doubles-down on the questionable status of character of the representative she assigned to oversee the move when arguing in court that the bills of lading should not be considered as they lacked authenticity because “the bills were administered to and signed by a career criminal acting as unauthorized agent of [the Shipper] (and whom [the Mover] knew was unauthorized).” The court rejected the argument noting that the Shipper admitted the representative signed the bills of lading and the Mover was not relying on any provisions that could have been altered by handwriting.
[4] The considerations giving rise to what constitutes a timely, written notice of claim when it comes to household goods transportation is beyond the scope of this article. Some jurisdictions, including here in the First Circuit, include “strict compliance” with all of the required elements by the shipper in order for a claim to be considered legally proper and thus obligating the carrier to reimburse a customer for loss, damage, injury, or delay to shipped goods pursuant to the Carmack Amendment. Note, there are exceptions to the rule; and where applicable, a shipper may be excused from strict compliance.