Total Quality Logistics, L.L.C. v. Red Chamber Co. , 92 N.E.3d 62 ( 2017 )

[Cite as Total Quality Logistics, L.L.C. v. Red Chamber Co., 2017-Ohio-4369.]
IN THE COURT OF APPEALS
TWELFTH APPELLATE DISTRICT OF OHIO
CLERMONT COUNTY
TOTAL QUALITY LOGISTICS, LLC, :
CASE NO. CA2016-09-062
Plaintiff-Appellee, :
OPINION
: 6/19/2017
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:
RED CHAMBER CO., et al., :
Defendants-Appellants. :
CIVIL APPEAL FROM CLERMONT COUNTY COURT OF COMMON PLEAS
Case No. 2013-CVH-1841
Lindhorst & Dreidame, Barry Fagel and Matthew Curran, 312 Walnut Street, Suite 3100,
Cincinnati, Ohio 45202, for plaintiff-appellee
David Prince and Miles Prince, 1912 East Vernon Avenue, Suite 100, Los Angeles, California
90058, for defendant-appellant
Durkee and Uhle, Richard Uhle, Jr., 285 E. Main Street, Batavia, Ohio 45103, for defendant-
appellant
S. POWELL, J.
{¶ 1} Defendant-appellant, Red Chamber Co. ("RC"), appeals a decision of the
Clermont County Court of Common Pleas, granting summary judgment in favor of plaintiff-
appellee, Total Quality Logistics, LLC ("TQL").
{¶ 2} In 2008, RC, a seafood distributor began using TQL's services as a freight
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broker to transport RC's products to its customers. In turn, as a broker, TQL contracted with
third-party trucking companies to transport the products across the country. A credit
agreement governed this working relationship, and provided:
Applicant understands motor carriers under contract with [TQL]
are required to maintain cargo loss and damage liability
insurance in the amount of $100,000.00 per shipment. Please
sign below acknowledging that [l]oads valued in excess of
$100,000[.00] will not be tendered without enough prior written
notification to TQL to allow TQL and its carriers the opportunity to
arrange for increased insurance limits. Failure to provide timely
written notice will result in your loads not being insured to the
extent the value exceeds $100,000.00.
{¶ 3} In April 2013, RC contracted with TQL to arrange the transport of RC's goods
from California to Florida. In turn, TQL retained Wells Trucking to transport and deliver RC's
goods. During transport, an unknown third-party stole the load of goods valued at $186,450,
which RC never recovered. TQL brought this action against RC claiming it had breached the
credit agreement by failing to pay for 13 other brokered shipments between April 2, 2013 and
July 5, 2013, and alleged damages of $53,402, plus interest, collection costs, and attorney
fees. RC counterclaimed, asserting the loss of the value of the stolen goods was a result of
TQL's breach of contract, negligence, and negligent supervision and hiring. TQL filed a third-
party complaint against Wells Trucking alleging negligence and seeking indemnification.
Wells Trucking's insurance carrier settled with RC for $100,000. In so doing, RC agreed to
indemnify Wells Trucking for any claims by any other party for damages resulting from the
loss.
{¶ 4} TQL moved for summary judgment on its breach of contract claim and RC's
counterclaims. In so doing, TQL argued RC's counterclaims were barred by the doctrine of
circular indemnity, preempted by the Carmack Amendment, 49 U.S.C. 14706(a), to the ICC
Termination Act of 1995, 49 U.S.C. 14501(b), and fail on their merits as a matter of law. With
respect to its breach of contract claim, TQL asserted RC's counterclaim was an attempt to
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offset the damages from RC's nonpayment of the 13 other brokered shipments; therefore,
TQL was entitled to judgment as a matter of law. The trial court granted summary judgment
in favor of TQL on its claim and RC's counterclaims. The trial court found the ICCTA
preempted RC's state law counterclaims. The trial court further found TQL met its burden of
demonstrating an absence of a genuine issue of material fact regarding its claim, and that
RC failed to rebut the evidence presented by TQL; therefore, TQL was entitled to judgment
as a matter of law. This appeal followed.
{¶ 5} Assignment of Error No. 1:
{¶ 6} THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT FOR
APPELLEE ON APPELLANT'S COUNTERCLAIM.
{¶ 7} RC contends the trial court erred by sua sponte granting summary judgment in
favor of TQL on grounds not offered in TQL's motion for summary judgment thereby denying
RC a meaningful opportunity to respond. Specifically, RC asserts the trial court erred by
relying on the ICCTA in granting summary judgment on RC's counterclaims in favor of TQL
because, at no point during the pendency of the matter, was that section of the statute
presented as a basis for summary judgment.
{¶ 8} We review a trial court's ruling on a motion for summary judgment de novo.
Grizinski v. Am. Express Fin. Advisors, Inc., 187 Ohio App.3d 393, 2010-Ohio-1945, ¶ 14
(12th Dist.). "De novo review means that this court uses the same standard that the trial
court should have used, and we examine the evidence to determine whether as a matter of
law no genuine issues exist for trial." Morris v. Dobbins Nursing Home, 12th Dist. Clermont
No. CA2010-12-102, 2011-Ohio-3014, ¶ 14. Summary judgment is proper if there are no
genuine issues of material fact to be litigated, the moving party is entitled to judgment as a
matter of law, and reasonable minds can come to only one conclusion, and that conclusion is
adverse to the nonmoving party. Civ.R. 56(C); Williams v. McFarland Properties, LLC, 177
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Ohio App.3d 490, 2008-Ohio-3594, ¶ 7 (12th Dist.). The moving party bears the initial
burden of demonstrating the absence of a genuine issue of material fact. Dresher v. Burt, 75
Ohio St.3d 280, 293, 1996-Ohio-107. If the moving party meets its burden, the nonmoving
party has a reciprocal burden to set forth specific facts showing a genuine issue for trial. Id.{¶ 9} "A party seeking summary judgment must specifically delineate the basis upon
which summary judgment is sought in order to allow the opposing party a meaningful
opportunity to respond." Mitseff v. Wheeler, 38 Ohio St.3d 112 (1988), paragraph one of the
syllabus. The moving party must state with particularity the areas of the opposing party's
claim that do not raise a genuine issue of material fact and such assertion may be supported
by evidence as allowed by Civ.R. 56(C). Id. at 115. A trial court, generally, may not sua
sponte grant summary judgment upon grounds not raised by the prevailing party. Marshall v.
Aaron, 15 Ohio St.3d 48, 50-51 (1984). Thus, a grant of summary judgment is improper
when the nonmoving party has not had notice summary judgment may be entered against
him. Ballinger v. Leaniz Roofing, Ltd., 10th Dist. Franklin No. 07AP-696, 2008-Ohio-1421, ¶
22. However, a trial court does not deprive a party of a meaningful opportunity to respond
where the party has notice of an issue. See Revlock v. Lin, 8th Dist. Cuyahoga No. 99243,
2013-Ohio-2544, ¶ 12; Ballinger at ¶ 23.
{¶ 10} Thus, the inquiry requires this court to examine the substance of the motion for
summary judgment in the context of the statute to determine whether such notice was
present. See Ameriswiss Tech. v. Midway Line of Ill., Inc., 888 F.Supp.2d 197, 206
(D.N.H.2012) (stating applicability of the preemption statute hinges on the subject matter and
effect of each claim). RC contends TQL argued its motion for summary judgment pursuant to
only the Carmack Amendment, without any mention of the other sections of the ICCTA, and
therefore, RC did not have notice of the issue upon which the trial court ruled, depriving RC
of a meaningful opportunity to respond. Whereas, TQL asserts RC had such notice, as TQL
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specifically argued federal preemption pursuant to an amendment to the ICCTA, and in so
doing, cited several cases that thoroughly examined both the Carmack Amendment and the
ICCTA.
{¶ 11} Pursuant to well-established principles of transportation law, cargo damage
claims against interstate motor carriers are determined under the Carmack Amendment to
the ICCTA. Chubb Group Ins. Cos. v. H.A. Transp. Sys., Inc., 243 F.Supp.2d 1064, 1068-69
(C.D.Cal.2002). Whereas the amendment does not specifically govern brokers in the
scheme of interstate cargo loss and damage liability. Id. The ICCTA provides two potential
theories of preemption. Ameriswiss at 204. The Carmack Amendment provides that:
[a] carrier providing transportation or service * * * shall issue a
receipt or bill of lading for property it receives for transportation
under this part. That carrier and any other carrier that delivers
the property and is providing transportation or service * * * are
liable to the person entitled to recover under the receipt or bill of
lading. The liability imposed under this paragraph is for the
actual loss or injury to the property caused by (A) the receiving
carrier, (B) the delivering carrier, or (C) another carrier over
whose line or route the property is transported in the United
States * * *.
(Citations omitted.) 49 U.S.C. 14706(a)(1). Accordingly, the Carmack Amendment creates a
federal statutory remedy on a bill of lading against both the originating and destination carrier.
To assert a prima facie case pursuant to the Carmack Amendment, one must demonstrate
(1) delivery to the carrier in good condition, (2) delivery failure or arrival in damaged
condition, and (3) the amount of damages caused by the loss. Camar Corp. v. Preston
Trucking Co., 221 F.3d 271, 274 (1st Cir.2000).
{¶ 12} "It is accepted * * * that the principal purpose of the [Carmack] Amendment was
to achieve national uniformity in the liability assigned to carriers." Rini v. United Van Lines,
104 F.3d 502, 504 (1st Cir.1997) (stating the preemptive effect of the Carmack Amendment
over state law claims is well-established). Thus, the "Carmack Amendment impliedly
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preempts state regulations related to damages for the loss or destruction of property during
the course of interstate shipment." Ameriswiss at 204 (stating Congress impliedly preempts
state law by creating a federal regulation scheme so pervasive so there is a reasonable
inference Congress intended to leave no room for the State to supplement it), citing
Fitzgerald v. Harris, 549 F.3d 46, 52 (1st Cir.2008). Additionally, Congress may expressly
preempt state law by including "language in the federal statute that reveals an explicit
congressional intent to pre-empt state law." Fitzgerald at 52. In addition to the Carmack
Amendment, the ICCTA expressly preempts state regulation of interstate transportation of
goods. Ameriswiss at 204, discussing 49 U.S.C. 14501.
{¶ 13} The ICCTA provides, in pertinent part:
a State * * * may not enact or enforce a law, regulation, or other
provision having the force and effect of law related to a price,
route, or service of any motor carrier * * * or any motor private
carrier, broker, or freight forwarder with respect to the
transportation of property.
(Emphasis added.) 49 U.S.C. 14501(c)(1). The two theories of preemption are not mutually
exclusive, as one's claims may be preempted impliedly by the Carmack Amendment,
expressly by the ICCTA, or both. Ameriswiss at 205-06 (demonstrating any claim brought
against a party in its capacity as a carrier is preempted by the Carmack Amendment,
whereas any claim brought against a party in its capacity as a broker is preempted by the
ICCTA).
{¶ 14} In its motion for summary judgment, TQL thoroughly argued the application of
the Carmack Amendment to preempt RC's state law counterclaims. TQL asserted the
Carmack Amendment only applies to carriers and freight forwarders. Thus, as a broker, TQL
fell outside the parameters of permissible claims brought pursuant to the Carmack
Amendment. Further, since the Carmack Amendment preempts state law claims in
situations where carriers are held liable for actual loss or injury to property, RC's
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counterclaims are preempted against TQL, even though it was a broker, because the claims
stem from actual loss of property during transport by the carrier.
{¶ 15} The trial court declined to address TQL's preemption argument pursuant to the
Carmack Amendment, and instead, found the ICCTA expressly preempted RC's state law
counterclaims. Likewise, we need not address the validity of TQL's Carmack Amendment
argument, and note, as the trial court found, the federal courts have inconsistently answered
the question whether the Carmack Amendment extends to state law claims against brokers.
Compare Ameriswiss at 208 (holding state law tort claims against broker preempted impliedly
and expressly), with Belnik, Inc. v. TBB Global Logistics, Inc., 106 F.Supp.3d 551, 560
(M.D.Pa.2015) (holding state law tort claims against broker only expressly preempted).
{¶ 16} No such inconsistency exists with respect to express preemption for state law
claims under the ICCTA, as courts have repeatedly found that holding a broker liable for a
negligence claim is subject to express preemption. See, e.g., ASARCO LLC v. Eng.
Logistics Inc., 71 F.Supp.3d 990, 1006-07 (D.Ariz.2014) (finding that holding a broker liable
for negligence "would certainly have more than a tenuous, remote or peripheral effect on
rates and services"); AIG Eur. Ltd. v. General Sys., Inc., 2014 U.S. Dist. LEXIS 99152, *12
(D.Md.2014) (July 22, 2014) (finding ICCTA expressly preempts negligence claim against
broker who allegedly failed to select a carrier with sufficient insurance, as the "claim clearly
relates to the service provided by a broker"); Ameriswiss at 206-07 (citing a series of cases
finding ICCTA expressly preempts state law claims against a broker). Therefore, the trial
court properly found the ICCTA expressly preempted RC's counterclaims.
{¶ 17} We next turn to the question of whether the trial court's finding deprived RC of a
meaningful opportunity to respond under Civ.R. 56. Specifically, whether TQL's motion for
summary judgment asserting implied preemption pursuant to the Carmack Amendment to the
ICCTA provided sufficient notice of the possible applicability of the express preemption
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section of the statute. We find TQL's motion for summary judgment provided such notice.
{¶ 18} As discussed above, a review of the statute itself and the supporting case law
clearly indicates there are two avenues for federal preemption of state law claims related to
actual loss or injury to property while in interstate transit. The well-established purpose
behind preempting such state law claims is to achieve national uniformity in such cases
where liability is imposed. Rini v. United Van Lines, 104 F.3d 502, 504 (1st Cir.1997). A
review of authority relating to preemption pursuant to the Carmack Amendment and the
ICCTA indicates review of one necessitates review of the other, because they are often
interrelated and analyzed together. Contrary to RC's claim otherwise, the trial court did not
deprive RC of a meaningful opportunity to respond because TQL's motion extensively cited
authority demonstrating such interrelatedness.
{¶ 19} Additionally, this court has previously addressed a similar set of facts and found
the nonmoving party was not deprived of a meaningful opportunity to respond. See Hunter v.
Wal-Mart Stores, Inc., 12th Dist. Clinton No. CA2001-10-035, 2002-Ohio-2604, ¶ 13. In
Hunter, the plaintiff filed a negligence action against Wal-Mart in a slip-and-fall case. Id. at ¶
1. In moving for summary judgment, Wal-Mart exclusively asserted the "open and obvious"
defense. Id. at ¶ 12. The trial court rejected the "open and obvious" defense, but
nevertheless, granted summary judgment in favor of Wal-Mart because the plaintiff failed to
present credible evidence that Wal-Mart received constructive notice of the presence of a
substance on the floor. Id. at ¶ 12. The plaintiff made the only mention of the constructive
notice issue during the briefing stage of summary judgment and we upheld the trial court's
grant of summary judgment on the issue in favor of Wal-Mart. Id. at ¶ 13. In so doing, we
found the trial court did not deprive the plaintiff of a meaningful opportunity to respond where
the moving party did not raise the issue in its motion. Id.
{¶ 20} Similar to our opinion in Hunter, the trial court did not deprive RC of a
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meaningful opportunity to respond to the federal preemption issue. See Revlock v. Lin, 8th
Dist. Cuyahoga No. 99243, 2013-Ohio-2544, ¶ 12 (finding party was not deprived of a
meaningful opportunity to respond where party briefed the rescue doctrine and the trial court
granted summary judgment on an exception to the rescue doctrine); Ballinger v. Leaniz
Roofing, Ltd., 10th Dist. Franklin No. 07AP-696, 2008-Ohio-1421, ¶ 23 (finding plaintiff must
have been on notice his own fault was at issue where defendant raised assumption of risk
defense). Contrary to RC's claim otherwise, the trial court's grant of summary judgment
based on express preemption versus implied preemption does not demonstrate RC did not
have sufficient notice of the issue of possible federal preemption applicable to the facts of
this case. Rather, RC briefed the matter regarding applicability of the Carmack Amendment,
which as discussed above, is so interrelated to the ICCTA that one would not likely consider
preemption under one, but not the other. Thus, the trial court's declining to reach a decision
on the applicability of the Carmack Amendment to brokers, in favor of correctly applying the
express preemption section of the statute, does not constitute reversible error.
{¶ 21} Accordingly, RC's first assignment of error is overruled.
{¶ 22} Assignment of Error No. 2:
{¶ 23} THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT FOR
APPELLEE ON THE COMPLAINT.
{¶ 24} RC contends the trial court erred by granting summary judgment in favor of
TQL because RC presented sufficient evidence to demonstrate a genuine issue of material
fact existed for TQL's breach of contract claim. Specifically, RC contends there are three
triable issues of fact in dispute: (1) whether TQL committed a breach in its role as a broker,
(2) if yes, was it a material breach, and (3) whether such breach discharged RC's duty to
perform relative to the 13 other brokered shipments.
{¶ 25} As discussed above, the moving party bears the initial burden of showing there
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is no genuine issue of material fact and that it is entitled to judgment as a matter of law.
Dresher v. Burt, 75 Ohio St.3d 280, 293 (1996). If the moving party meets its burden, the
nonmoving party has a reciprocal burden to set forth specific facts showing a genuine issue
for trial. Id. The nonmoving party may not rest upon the mere allegations of its pleadings,
but must set forth evidence of specific facts showing the existence of a genuine triable issue.
Mootispaw v. Eckstein, 76 Ohio St.3d 383, 385 (1996).
{¶ 26} In support of its motion for summary judgment, TQL submitted the affidavit of
Marc Bostwick, an operations manager for TQL, who averred that "[b]etween April 2, 2013
and July 5, 2013, TQL brokered transportation for 13 loads for [RC], aside from the [stolen]
load * * * at issue in this case." Bostwick further averred RC had yet to pay the $53,402, plus
interest, owed for those 13 loads. TQL further supported its motion with the credit
application, including the terms and conditions for the 13 loads, as well as RC's statement of
accounts demonstrating $53,402 due for unpaid shipments. The only evidence submitted by
RC in opposition to TQL's motion for summary judgment was the affidavit of Eithel Yocupicio,
traffic manager for RC, who averred to the procedure related to contracting for the stolen
shipment. Yocupicio's affidavit does not provide any evidence to rebut the evidence related
to TQL's breach of contract claim, but rather, supports RC's counterclaims. Therefore, the
trial court properly found RC failed to meet its burden to demonstrate the existence of a
genuine issue of material fact with respect to TQL's breach of contract claim, and TQL is
entitled to judgment as a matter of law.
{¶ 27} Accordingly, RC's second assignment of error is overruled.
{¶ 28} Judgment affirmed.
HENDRICKSON, P.J., and RINGLAND, J., concur.
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