Opinion
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
APPEAL from an order of the Superior Court of Los Angeles County, Los Angeles County Super. Ct. No. BC346559.
Victor Person, Judge. Reversed and remanded with directions.
Shernoff Bidart Darras, Michael J. Bidart, Ricardo Echeverria, Steven Schuetze for Plaintiff and Appellant.
Glassman, Browning, Saltsman & Jacobs, Inc., Alexander Rufus-Isaacs for Defendant and Respondent.
BOREN, P.J.
This appeal concerns an interpretation of the Carmack Amendment, a federal law governing the liability of interstate motor carriers. We conclude that the law does not apply when an imposter purporting to be an interstate carrier’s employee steals goods before the carrier receives them. The goods never came into the interstate carrier’s possession: the carrier did not provide a bill of lading reflecting its receipt of the goods and memorializing the terms of the transportation agreement. The jewelry seller who sustained the loss in this case has alleged a viable negligence claim under state law based on the interstate carrier’s failure to implement adequate security measures.
The factual allegations are taken from the first amended complaint.
PNS Jewelry, Inc. (PNS) sells jewelry in downtown Los Angeles, under the name Oro Diamante. Since 1999, PNS has used the services of Dunbar Armored, Inc. (Dunbar) to transport jewelry to shows and exhibitions. In 2005, PNS arranged for Dunbar to pick up jewelry valued at over $1.5 million, for transport to the Phoenix jewelry show. Only Dunbar employees knew that January 28 was the date scheduled for the jewelry pickup at PNS’s business in Los Angeles. Dunbar established security arrangements for collecting the jewelry from PNS.
On January 27, 2005, a Dunbar shipping coordinator telephoned PNS to advise that the jewelry pickup would occur early in the morning on January 28. At 8:40 a.m. on January 28, an individual carrying a dolly and wearing clothing identical to that worn by Dunbar employees rang the entry buzzer and stated only, “Dunbar.” This is “the exact same” security procedure used by Dunbar since 1999. The putative Dunbar employee received the merchandise and gave PNS a multi-page air waybill, which Dunbar always provided to PNS.
Because no one but Dunbar and PNS knew of the scheduled pickup on January 28, PNS released the jewelry to the individual who PNS believed was employed by Dunbar. Shortly after the individual took the jewelry and departed, PNS received a call from Dunbar saying that the “pick-up was coming.” PNS advised Dunbar that the jewelry was already picked up. Dunbar informed PNS that it would verify whether a Dunbar employee had collected the jewelry and instructed PNS not to contact the police. After 45 minutes, Dunbar called to say that the signature on the air waybill did not belong to a Dunbar employee. PNS was again advised not to contact police until Dunbar could review a security tape. After Dunbar reviewed the security tape, and 2.5 hours after the potential breach was first identified, PNS contacted the police.
PNS asserts a single claim of negligence, alleging that Dunbar owed a duty to PNS to establish security protocols and to prevent a breach of those protocols so that PNS would be protected from an unauthorized pickup of its valuables by an imposter purporting to be a Dunbar employee. PNS asserts that Dunbar negligently disclosed its protocols to unknown third parties, whereby it revealed: the date and time frame of the scheduled pickup at PNS; the method of ringing the entry buzzer and saying only “Dunbar”; and the type of clothing worn by Dunbar employees. Dunbar failed to establish appropriate and unique measures--such as notification, identification and verification--to ensure that anyone purporting to be a Dunbar employee was in fact a Dunbar employee, to prevent unauthorized pickups. Moreover, Dunbar failed to establish a means of immediately determining that an unauthorized pickup was made, without requiring a time-consuming investigative delay. Finally, Dunbar negligently instructed PNS not to contact the police. As a result of these negligent acts, PNS lost $1.5 million in jewelry.
Dunbar demurred to the pleading on the grounds that PNS’s claims are preempted by federal law. The court sustained the demurrer without leave to amend. On November 8, 2006, the court signed an order dismissing PNS’s complaint with prejudice.
DISCUSSION
1. Appeal and Review
Appeal is taken from the dismissal of PNS’s first amended complaint. (Code Civ. Proc., § 581, subd. (f)(1).) The signed dismissal order is an appealable final judgment. (Code Civ. Proc., § 581d; Desai v. Farmers Ins. Exchange (1996) 47 Cal.App.4th 1110, 1115.) We review de novo the trial court’s ruling, exercising our independent judgment to determine whether, as a matter of law, a claim has been stated. (Ibid.) The factual allegations of the complaint are accepted as true. (Construction Protective Services, Inc. v. TIG Specialty Ins. Co. (2002) 29 Cal.4th 189, 193.)
2. PNS’s Claim Is Not Preempted by Federal Law
Dunbar asserts that PNS’s negligence action under California law is preempted by federal law. Dunbar relies upon the Carmack Amendment to the Interstate Commerce Act, 49 United States Code section 14706. The purpose of Carmack is to “establish uniform federal guidelines designed in part to remove the uncertainty surrounding a carrier’s liability when damage occurs to a shipper’s interstate shipment.” (Hughes v. United Van Lines, Inc. (7th Cir. 1987) 829 F.2d 1407, 1415.) When Carmack applies to a transaction, it preempts state law claims and constitutes the exclusive remedy against an interstate carrier for loss of or damage to transported cargo. (Adams Express Co. v. Croninger (1913) 226 U.S. 491, 505-506; Charleston Car. R. R. v. Varnville Furniture Co. (1915) 237 U.S. 597; Atchison & Topeka Ry. v. Harold (1916) 241 U.S. 371, 378.)
We shall refer to the Carmack Amendment as “Carmack” or as “§ 14706.”
“The Carmack Amendment applies only when the packages are transported exclusively by motor carrier.” (Desardouin v. United Parcel Service, Inc. (D.Conn. 2003) 285 F.Supp.2d 153, 164, fn. 11.) “[F]ederal common law governs where packages are transported by air.” (Ibid. See Nippon Fire & Marine v. Skyway Freight Systems (2d Cir. 2000) 235 F.3d 53, 59, and cases cited therein discussing liability for shipments lost or damaged during transport under an air waybill; Sam L. Majors Jewelers v. ABX, Inc. (5th Cir. 1997) 117 F.3d 922, 927-928; Treiber & Straub, Inc. v. U.P.S., Inc. (7th Cir. 2007) 474 F.3d 379, 383-385; Federal Exp. v. California Public Utilities Com’n (9th Cir. 1991) 936 F.2d 1075, 1078-1079.) In short, Carmack does not apply to air shipments. (Arkwright-Boston Mfrs. v. Great Western Airlines (8th Cir. 1985) 767 F.2d 425, 427-428; Kemper Ins. Companies v. Federal Exp. Corp. (1st Cir. 2001) 252 F.3d 509, 514, fn. 5.)
PNS alleges that it received an air waybill from an imposter, the same type of multi-page air waybill that Dunbar always provided to PNS. “An air waybill is a written document describing the shipping arrangement between the air carrier and the shipper. It includes, among other things, the point of origin and destination and a description of the goods included in the shipment.” (Insurance Co. of North America v. Federal Express (9th Cir. 1999) 189 F.3d 914, 916, fn. 2.) In its brief on appeal, Dunbar asserts that because it issued air waybills in the past to PNS, we must infer that Dunbar issued the air waybill involved in the present case. Dunbar observes in a footnote that “[a]n air waybill serves as the bill of lading for goods transported by air.” On page 20 of its brief, Dunbar writes that an air waybill “is ‘a written document describing the shipping arrangement between the air carrier and the shipper,’” adding, “if the parties make arrangements for an interstate shipment by air, the court can infer that the carrier will normally issue an air waybill to the shipper.”
After examining the complaint and the briefs, we sent a letter to the parties expressing our concern that Carmack does not apply to this case at all, even if the parties and the trial court relied upon it, because the case appears to involve an air shipment, not a motor carrier shipment. After receiving our letter, the parties took divergent paths. PNS argues that federal common law applies to this intended air shipment. And Dunbar (while conceding that Carmack does not apply to air shipments) is now arguing that the jewelry shipment--had it been picked up by Dunbar--would have traveled by ground transportation, despite the references in Dunbar’s original brief to air waybills and air carriers. Thus, the parties do not agree whether the shipment was to be made by air or by ground.
Dunbar attempted to introduce evidence of the contemplated manner of transport, which we reject. Documentary evidence cannot be introduced by the defendant on demurrer.
Assuming, for purposes of argument, that the shipment was to be made by motor carrier instead of air carrier, we still conclude that Carmack does not apply, based on the allegations in the complaint.
Carmack states 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 . . . [is] 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 . . . .” (§ 14706, subd. (a)(1).) Carmack “requires a carrier to issue a bill of lading and subject it to absolute liability for actual loss incurred during transportations . . . .” (Dictor v. David & Simon, Inc. (2003) 106 Cal.App.4th 238, 247.)
In this case, Dunbar is not a “receiving carrier,” or a “delivering carrier,” or any other type of carrier. There is no allegation that Dunbar ever took possession of PNS’s jewelry, in order to become a “receiving” carrier. In fact, Dunbar concedes in its brief that it “never took delivery of [the] stolen goods.” We decline Dunbar’s invitation to infer from the pleadings that Dunbar gave PNS an air waybill as a receipt, given Dunbar’s concession that it did not pick up the jewelry. The only reasonable inference is that the air waybill came from an unknown third party--a criminal--not from an interstate carrier.
No case law supports the conclusion that Carmack applies when goods are stolen from an interstate carrier before it takes delivery of them. As Dunbar observes in its brief, “neither party has been able to find a case where an imposter stole goods before a shipment was delivered to the carrier.” Several federal cases hold that Carmack applies when goods are stolen after the interstate carrier has taken possession of them and delivers them to a warehouse. For example, in NYK Line v. Burlington Northern and Santa Fe Ry. (C.D.Cal. 2002) 222 F.Supp.2d 1176, 1178-1182, a carrier was subject to the application of Carmack after delivering goods to a secure facility, where they were stolen by an imposter in possession of a confidential pickup number; however, though Carmack applied, the carrier was not liable for the loss because its responsibility for the shipment ended after it delivered the goods. (See also Tokio v. Chicago & Northwestern Transp. (7th Cir. 1997) 129 F.3d 960, 961 [Carmack preempts common law remedies for loss of goods shipped “under a proper bill of lading,” but no liability attached once the carrier delivered the goods to their destination, where they were stolen by an imposter posing as a trucking company employee]; Intercargo Ins. Co. v. Burlington N. Santa Fe R. R. (C.D.Cal. 2001) 185 F.Supp.2d 1103, 1112.)
Dunbar contends that the preemptive theft occurred during the course of the parties’ shipping contract. Dunbar recites PNS’s allegation that it “made arrangements with defendant DUNBAR to pick up jewelry and merchandise valued at $1,528,317.00 from Plaintiff’s place of business in Los Angeles to [transport to] the Phoenix Jewelry show.” Dunbar surmises that “the arrangements in question had to be contractual” in nature; therefore, Dunbar reasons, we should “infer from this that Dunbar and PNS had already entered into a contract for this shipment . . . .”
We cannot infer that a telephone call requesting a future pick up constitutes “a contract” for interstate shipping of jewelry worth $1.5 million. Under Carmack, “[t]he bill of lading operates as both the receipt and the basic transportation contract between the shipper-consignor and the carrier, and its terms and conditions are binding.” (EF Operating Corp. v. American Bldgs. (3d Cir. 1993) 993 F.2d 1046, 1050; Penske Logistics, Inc. v. KLLM, Inc. (D.N.J. 2003) 285 F.Supp.2d 468, 473.) Without a written memorialization, no shipping agreement can be said to exist between the parties, not least because the bill of lading establishes the declared value of the shipped goods and the liability limits of the carrier. (§ 14706, subd. (f); Southern Ry. V. Prescott (1916) 240 U.S. 632, 639-640; Bio-Lab, Inc. v. Pony Exp. Courier Corp. (11th Cir. 1990) 911 F.2d 1580, 1581-1583; Martino, S.A. v. Transgroup Express (S.D.N.Y. 2003) 269 F.Supp.2d 448, 449.) An air waybill issued by a thief does not create a contract between Dunbar and PNS.
Before a carrier’s attempt to limit its liability will be effective, the carrier must (1) maintain an appropriate tariff; (2) give the shipper a reasonable opportunity to choose between two or more levels of liability; (3) obtain the shipper’s agreement as to his choice of carrier liability limit; and (4) issue a receipt or bill of lading prior to moving the shipment that reflects any such agreement. (Opp v. Wheaton Van Lines, Inc. (7th Cir. 2000) 231 F.3d 1060, 1063; Hughes Aircraft v. North American Van Lines (9th Cir. 1992) 970 F.2d 609, 611-612; Bio-Lab, Inc. v. Pony Exp. Courier Corp., supra, 911 F.2d at p. 1582.) Because Dunbar concededly never picked up the jewelry and did not issue a bill of lading to PNS reflecting the parties’ agreement, Dunbar cannot rely on Carmack to limit its liability.
3. PNS Has Adequately Alleged a Claim for Negligence
PNS argued in its opening brief that it adequately alleged a negligence claim. Dunbar offered no argument on this issue in its brief.
Everyone is responsible not only for willful acts, “but also for an injury occasioned to another by his or her want or ordinary care or skill in the management of his or her property or person, except so far as the latter has, willfully or by want of ordinary care, brought the injury upon himself or herself.” (Civ. Code, § 1714, subd. (a).) Actionable negligence involves “(1) a legal duty to use due care; (2) a breach of that duty; and (3) the breach as the proximate or legal cause of the resulting injury.” (6 Witkin, Summary of Cal. Law (10th ed. 2005) § 835, p. 52.) Negligence may be pleaded “by setting forth particular facts that, as a matter of substantive law, amount to the breach of a legal duty of care.” (4 Witkin, Cal. Procedure (4th ed. 1997) § 565, p. 659.)
The courts decide, as a matter of law, whether there is a duty of care. (Morris v. De La Torre (2005) 36 Cal.4th 260, 269.) The factors in determining a duty of care are “the foreseeability of harm to the plaintiff, the degree of certainty that the plaintiff suffered injury, the closeness of the connection between the defendant’s conduct and the injury suffered, the moral blame attached to the defendant’s conduct, the policy of preventing future harm, the extent of the burden to the defendant and consequences to the community of imposing a duty to exercise care with resulting liability for the breach, and the availability, cost, and prevalence of insurance for the risk involved.” (Rowland v. Christian (1968) 69 Cal.2d 108, 113.)
Dunbar is hired by customers to protect cash and valuables during transportation. PNS has used Dunbar’s services since 1999 to transport jewelry. Because Dunbar is known to transport cash and valuables as part of its “armored” service, it is foreseeable that Dunbar will be the target of thieves. Dunbar’s security measures are paramount to its clientele: without adequate security, there is no point in hiring Dunbar for protection, and Dunbar’s customers may as well toss their cash and valuables into the United States mail with a 41-cent postage stamp. It is certain that PNS suffered injury when it contacted Dunbar and arranged to have Dunbar transport $1.5 million in jewelry on January 28, 2005, only to have it stolen right out of its office by a thief posing as a Dunbar employee.
In accordance with Evidence Code sections 452 and 459, we take judicial notice that the largest cash robbery in the United States--$18.9 million--occurred in 1997, at the Dunbar Armored facility in Los Angeles. (Cal. Bar J., Dec. 2001, http://calbar.ca.gov/ calbar/2cbj/01dec/page25-1.htm.)
Based on the allegations of the complaint, which we must accept as true on demurrer, Dunbar did not implement any security procedures to ensure the safety of its customers: it did not take measures to prevent the disclosure of confidential information regarding the date, time and place of PNS’s jewelry pickup; it did not prevent the disclosure of its method of ringing the entry buzzer and stating only “Dunbar”; it did not provide a means of verifying the identity of its employees to prevent unauthorized pickups; and it did not provide any means for immediately determining that an unauthorized pickup was made without a lengthy investigation that delayed notification of the theft to the police.
Judging from the complaint, Dunbar’s inadequate security protocols led directly to the theft of PNS’s property. It is in the community’s best interest to encourage Dunbar to adopt adequate security protocols to prevent future loss to businesses and individuals who use Dunbar to transport their valuables. Doing so would not impose an undue burden on Dunbar. If Dunbar chooses not to implement security protocols, then it should have insurance to cover losses to its customers when thieves obtain confidential, “inside” information regarding the time and place of pickups.
“Duty” is “‘“‘only an expression of the sum total of those considerations of policy which lead the law to say that the particular plaintiff is entitled to protection.’”’” (Parsons v. Crown Disposal Co. (1997) 15 Cal.4th 456, 472.) In this instance, Dunbar has a close connection to PNS’s loss: if PNS had not called Dunbar and requested the transport of its jewelry to Phoenix, no one would have arrived at PNS’s office on the appointed date, at the appointed hour, wearing a Dunbar uniform, using “the exact same” security protocol that Dunbar had used with PNS since 1999, and issuing PNS a multi-page air waybill. Only Dunbar and its employees knew this information. As a matter of public policy, PNS is entitled to protection from an armored transport company that failed to protect confidential information and failed to take adequate security measures to ensure that a legitimate Dunbar employee collects its customers’ valuables, not a thief.
DISPOSITION
The judgment is reversed, and the case is remanded to the trial court with directions to reinstate the first amended complaint. Respondent Dunbar to bear all costs on appeal.
We concur: DOI TODD, J., ASHMANN-GERST, J.