Opinion
Case No. 8:03CV208.
June 1, 2004
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This matter came on for trial before the undersigned judge on the 18th day of May, 2004. Appearing for the Plaintiff, Bishop Business Equipment Company (hereafter "Bishop"), was John M. Lingelbach of Koley Jessen, P.C. Appearing for the Defendant, Watkins Motor Lines, Inc. (hereafter "Watkins"), was Craig A. Knickrehm of Knickrehm Law Offices. Trial briefs and proposed findings of fact and conclusions of law were submitted on behalf of both parties and have been considered by the Court, along with the trial testimony, exhibits, and closing arguments.
Having been advised in the premises, the Court issues the following findings of fact and conclusions of law:
FINDINGS OF FACT
1. Bishop is a Nebraska corporation doing business in Omaha, Nebraska, and sells office equipment, including photocopiers. (Pretrial Order, Filing No. 28).
2. Watkins is a Florida corporation in the business of shipping goods by truck, including deliveries in the State of Nebraska. ( Id.)
3. Bishop used Watkins's shipping services for more than ten years, prior to the incidents giving rise to this action, to transport business equipment from a Toshiba warehouse in Memphis, Tennessee, to Bishop's facility in Omaha. (Testimony of Steve L. Kerns, Bishop Chief Financial Officer.)
4. On June 17, 2002, Watkins executed a bill of lading to transport four cartons, weighing 354.30 pounds from Toshiba's facility in Memphis, Tennessee, to Bishop's office in Omaha, collect. (Ex. 33B.)
5. On June 19, 2002, Watkins delivered a Toshiba e-studio 310 photocopier serial number AE210389 to Bishop. At delivery, Kent Rutz, an employee of Bishop authorized to receive such deliveries, signed a "clean receipt" for the delivery. Next to the signature blank, the receipt form stated: "RECEIVED ABOVE PROPERTY IN GOOD CONDITION." (Ex. 11.)
6. On June 26, 2002, Bishop employees opened the box containing the photocopier serial number AE210389 and noted damage to the photocopier.
7. On June 27, 2002, Watkins arranged for an inspector to inspect the damage to photocopier serial number AE210389. The inspection revealed that the back of the copier was pushed in on both sides and was "out of the frame work;" that the back was bowed at the bottom; that the doors on the left side would not close; that the parts did not close "as it appears the frame is sprung;" that the frame was out of square and trays would not close; and that the trays and doors on the right side would not close. The inspection also revealed that the corner posts of the box in which the copier was shipped had compressions, and that the top of the box had "a puncture for area of 10 × 10 [and was] pushed down about 1 ½ [inches]." (Ex. 12.)
8. On July 1, 2002, Bishop sent written notice to Watkins of the damage to photocopier serial number AE210389, valued at $10,725. (Ex. 9.)
9. On August 1, 2002, Watkins executed two bills of lading to transport copier machines or parts thereof from Toshiba's facility in Memphis, to Bishop's office in Omaha, collect. (Ex. 34B, 37E, 37F.)
10. On August 7, 2002, Watkins delivered a Toshiba e-studio photocopier serial number XG210134 to Bishop. Rutz signed a receipt for the delivery. The driver noted on the receipt "carton damage" to "e-studio 810 serial number XG21077." (Ex. 25.) Each box containing Toshiba equipment has the serial number of the equipment marked on the outside of the box. (Testimony of Rutz.)
11. On August 14, 2002, Bishop employees opened the box containing the photocopier serial number XG210134, and noted damage to the photocopier.
12. On August 14, 2004, Watkins arranged for an inspector to inspect the damage to photocopier serial number XG210134. The inspection revealed that the top lid was broken; the hinge base was bent about 30 degrees out of position; the plate to which the hinges attach was broken; the side cover panel was bent; the right side panel was bent and broken at the top; and the unit was out-of-square. The inspection also revealed that the box in which the copier had been shipped was crushed at "both corners;" had "both corner posts" crushed; and had a "piece 4 × 10 torn off" the top. (Ex. 26.)
13. On August 14, 2002, Bishop sent written notice to Watkins of the damage to photocopier serial number XG210134, having a value of $13,181. (Ex. 23.)
14. On August 15, 2002, Watkins executed a bill of lading to transport copier machines or parts thereof from Toshiba's facility in Memphis to Bishop's office in Omaha, collect. (Ex. 39A.)
15. On August 20, 2002, Watkins delivered a Toshiba finisher serial number MF210480 to Bishop. At delivery, R.J. Ruff, an employee authorized by Bishop to accept such deliveries, signed a "clean receipt" for the delivery. Next to the signature blank, the receipt form stated: "RECEIVED ABOVE PROPERTY IN GOOD CONDITION." (Ex. 18.)
16. On September 6, 2002, Bishop employees opened the box containing the Toshiba finisher serial number MF210480, and noted damage to the finisher.
17. On September 10, 2002, Watkins arranged for an inspector to inspect the damage to the Toshiba finisher serial number MF210480. The inspection revealed that the unit appeared to be out-of-square and the lid would not close; that the side panels did not line up vertically; and that the plastic cover on the left side was cracked at the connection. The inspection also revealed that the box in which the finisher had been shipped had a puncture at the top and appeared to have been compressed; that a corner of the box was crushed; and that the bottom of the box appeared to have been compressed. (Ex. 20.)
18. On September 10, 2002, Bishop sent written notice to Watkins of the damage to finisher serial number MF210480, valued at $2,028.
19. On August 16, 2002, Watkins executed a bill of lading to transport copier machines of parts thereof from Toshiba's facility in Memphis to Bishop's office in Omaha, collect. (Ex. 36B.)
20. On August 20, 2002, Watkins delivered one Toshiba e-studio 810 copier serial number XG210173 to Bishop. At delivery, Ruff signed a "clean receipt" for the delivery. Next to the signature blank, the receipt form stated: "RECEIVED ABOVE PROPERTY IN GOOD CONDITION." (Ex. 3.)
21. On September 6, 2002, Bishop employees opened the box containing the Toshiba 810 copier serial number XG210173, and noted damage to the copier.
22. On September 10, 2002, Watkins arranged for an inspector to inspect the damage to the Toshiba e-studio copier serial number XG210173. The inspection revealed that the copier was "out of square sideways;" that the copier had "open areas that should be closer together;" that two side panels at the back had been dislodged; that the left side of the cabinet at the top had been cracked and broken; and that the top cover on the left side was cracked. The inspector also noted that the box in which the copier was shipped was "scuffed up from top to bottom on both edges;" that the base of the box had two forklift holes; and that the lid was crushed on one side and "[had] possible fork punctures." (Ex. 5.)
23. On September 10, 2002, Bishop sent written notice to Watkins of the damage to Toshiba e-studio 810 copier serial number XG210173, valued at $13,181.00. (Ex. 2.)
24. With respect to all the bills of lading noted above, Watkins acknowledged receipt of the property in "apparent good order, except as noted (contents and conditions of contents of packages unknown). . . ." (Ex. 34(b), 35(b), 36(b), 37(e), 37(f), 39(a).) All such property was boxed when received by Watkins and when delivered by Watkins to Bishop. It was undisputed that upon Watkins's receipt of the property, during Watkins's transportation of the property, and upon Watkins's delivery of the property, Watkins's employees or agents inspected only the cartons in which the property was shipped and not the contents of the cartons.
25. Danny Sanders, distribution manager for Toshiba, testified by deposition that based on his knowledge of Toshiba's practices and procedures, Toshiba would not have shipped the copiers and finisher in a damaged condition. (Sanders deposition, 13:17-20; 16:4-8; 18:6-9; 21:9-12.) Based on Sanders's knowledge of Toshiba's practices and procedures, Toshiba would not have shipped goods in damaged cartons. ( Id., 22:9-18.) Sanders did not personally view the copiers and finisher in question. ( Id., 26:19 to 27:7.)
26. At trial, Rutz, testified that he was working in "set up and delivery" at Bishop and was formerly assigned to "shipping and receiving." He testified that he actually received all four of the allegedly-damaged items of equipment, and that he acknowledged their receipt in good condition. He further testified that if a box showed visible signs of damage such as crushing or punctures, his practice was to accept the delivery, but to tell the driver to note the damage on the receipt. (Rutz testimony.)
27. It was Bishop's routine practice to store equipment it received without un-boxing or inspecting the equipment, until Bishop received an order from a customer for the purchase of the equipment. The equipment would then be unpackaged for set-up and delivery to the customer. That was the practice followed with respect to the four damaged items of equipment in this case. (Kerns testimony.)
28. The four items of damaged equipment could not be repaired, and Bishop did not attempt to mitigate its damages by selling the equipment or any parts of the equipment. (Kerns testimony.)
29. The salvage value of the four pieces of damaged equipment was approximately $13,000. (Testimony of Daniel Trout, Bishop service manager.)
30. Watkins denied liability for the damage to the copiers and finisher.
PROCEDURAL HISTORY
Bishop brought this action in the District Court of Douglas County, Nebraska. The case was removed to this Court on May 29, 2003. (Filing No. 1). The Complaint alleged causes of action under contract, negligence, and the Carmack Amendments to the Interstate Commerce Act, 49 U.S.C. § 14706, et seq. (hereafter "Carmack Amendments"). Bishop's causes of action under contract and negligence were dismissed (Filing No. 11), and the matter proceeded to trial on the Carmack Amendments claim alone.
CONCLUSIONS OF LAW
1. This Court has subject matter jurisdiction in this case under 28 U.S.C. § 1337 and the Carmack Amendments, and has personal jurisdiction of the parties.
2. Under the Carmack Amendments, a motor carrier is "liable to the person entitled to recover under the receipt or bill of lading" . . . "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. . . ." 49 U.S.C. § 14705(a)(1).
3. To prevail on a cargo claim under the Carmack Amendments, a shipper, e.g., Bishop, must establish a prima facie case by showing by a preponderance of the evidence that (1) the shipment was delivered to the carrier at origin in good condition, (2) the goods arrived at destination in a damaged or missing condition, and (3) the specified amount of monetary damages. Missouri Pacific R. Co. v. Elmore Stahl, 377 U.S. 134, 138 (1964). The burden of proof then shifts to the carrier to show that it was free from negligence and that the damage to the cargo was due to one of the excepted causes relieving the carrier of liability. Id.
4. When a carrier accepts delivery of goods under seal, the first prong of the shipper's prima facie case — delivery to the carrier at origin in good condition — may only be established through direct and affirmative proof. Continental Grain Co. v. Frank Setzinger Storage, Inc., 837 F.2d 836, 840 (8th Cir. 1988), citing Nat'l Transp. Inc. v. Inn Foods, Inc., 827 F.2d 351, 354 (8th Cir. 1987).
5. A clean bill of lading is evidence of delivery in good condition only as to those goods which the carrier can visually observe or inspect. Where the goods are under seal or otherwise packaged in such a way that they are not visible to the carrier, the shipper may reasonably be required to present some additional evidence of the condition of the goods at the time of delivery to the carrier. Pillsbury Co. v. Illinois Central Gulf R.R., 687 F.2d 241, 244 (8th Cir. 1982).
6. A clean bill of lading does establish that the container in which the cargo was loaded was received by the carrier in undamaged condition. Centennial Ins. Co. v. M/V Constellation Enterprise, 639 F. Supp. 1261, 1263 (S.D.N.Y. 1986). When the carrier gives a clean bill of lading for sealed goods in an undamaged carton; the goods are delivered in a damaged condition, with visible damage to the carton, and common sense and logic compel the conclusion that the damage was caused during shipment, then the plaintiff has met its burden of establishing a prima facie case. Id.
DISCUSSION
The clean bills of lading signed by Watkins upon receipt of the Toshiba equipment are sufficient to demonstrate that the cartons in which the equipment was shipped were in good condition when Watkins took possession of them. Bishop relies heavily on the theory that the cartons were badly damaged — crushed and punctured — upon delivery to Bishop by Watkins, and that the cartons could not have suffered such damage after delivery to Bishop and before the cartons were opened and the equipment inspected. Bishop suggests, therefore, that the damage to the cartons must have occurred during shipment and it should be inferred that the damage to the equipment also occurred during shipment. Toward this end, Bishop relies on Centennial, supra. In Centennial, however, it was undisputed that after the defendant signed a clean bill of lading for a container of cotton rolls, stored the container on the ship's weather deck during its voyage, and then delivered the carton to the plaintiff with a 12-inch by 14-inch hole in the top, several smaller holes, and cotton rolls soaked with sea water. As the court noted, common sense and logic compelled the conclusion that the damage occurred during shipment.The Court cannot accept Bishop's theory in this case. Just as the clean bills of lading signed by Watkins demonstrate that the cartons in which the equipment was shipped were in good condition when received by Watkins, the clean receipts signed by Bishop employees, Rutz and Ruff, demonstrate that the cartons were in good condition when received by Bishop. At trial, Rutz actually acknowledged responsibility for the receipt of all four cartons in question, and stated that if a carton had shown visible damage, he would have asked the driver to note the damage on the receipt. The only damage to a carton noted on any receipt was with respect to an item of equipment not at issue in this case.
Although Rutz testified that Watkins drivers did not wait for Bishop employees to open cartons and inspect equipment, there was no evidence that any Bishop employee had ever asked any Watkins representative to wait until a carton was opened and the contents inspected for damage. If a carton were delivered in badly damaged condition, as Bishop alleges with respect to all four cartons at issue in this case, the Court finds it unlikely that Bishop would wait until a customer ordered the equipment — seven to seventeen days later — before opening the cartons to determine whether the contents had suffered damage.
CONCLUSION
The Carmack Amendments serve the purpose of allocating risk for damage to goods shipped in interstate commerce, particularly when multiple carriers are involved. The law does not place strict liability on the carrier. Just as a carrier is responsible for inspecting a sealed container for damage before signing a clean bill of lading, a shipper is responsible for inspecting a sealed container for damage before signing a clean receipt. While the Court acknowledges the possibility that the four items of equipment at issue in this case were damaged when in the possession of Watkins, Bishop has not met its burden of proof with respect to the first or second prongs of its prima facie case.
IT IS ORDERED:
1. The Court finds in favor of the Defendant, Watkins Motor Lines, Inc., and against the Plaintiff, Bishop Business Equipment Co.;
2. The Plaintiff's Complaint is dismissed, with prejudice; and
3. A separate Judgment will be entered.