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Arctic Express, Inc. v. Del Monte Fresh Produce NA

March 30, 2007


The opinion of the court was delivered by: Judge Algenon L. Marbley



Pending before this Court is an appeal of a decision and judgment by the United States Bankruptcy Court for the Southern District of Ohio, dated April 18, 2006 and May 30, 2006, respectively, in a dispute between Plaintiff-Appellee Arctic Express, Inc, ("Arctic") a carrier of goods, and Defendant-Appellant Del Monte Fresh Produce NA, Inc., (Del Monte") a shipper of goods. In its decision and judgment the Bankruptcy Court: (1) granted Arctic's Motion for Summary Judgment; (2) denied Del Monte's Motion for Summary Judgment; and (3) granted judgment against Del Monte, ordering it to pay damages, with interest, to Arctic. For the reasons set forth below, the Bankruptcy Court's decision is REVERSED and REMANDED.


A. Facts

Arctic is a motor carrier company that transports cargo for interstate shippers; Del Monte is an interstate shipper of produce. All claims comprising the underlying action relate to interstate transportation services provided by Arctic for Del Monte during the period of October 2000 through February 2001. Arctic claims that it was never paid for these services, and seeks to recover the amount due (the "Freight Charges"). Both parties agree that the reasonable Freight Charges for such services, under normal circumstances, totaled $169,941.68, the amount Arctic seeks in damages.

On February 28, 3003, Arctic filed a complaint in the Franklin county Court of Common Pleas for payment of the outstanding Freight Charges, asserting state-based causes of action for payment of an outstanding account, breach of contract, unjust enrichment, and conversion. Del Monte filed an answer and counterclaim seeking compensation for damages that allegedly occurred by reason of Arctic's failure to deliver Del Monte's produce in a conforming conduction. Although the produce was tendered to Arctic in good condition, according to Del Monte, it frequently arrived in damaged or spoiled condition, or later than the designated delivery time, and was rejected by Del Monte's customers. Del Monte, therefore, issued refunds or credits to its customers, and seeks damages from Arctic in the amount of $173,540.12. Del Monte originally stated state law claims for breach of contract and negligence, but later conceded that its exclusive remedy rests with the federal law set forth in the Carmack Amendment.

B. Procedural History

On October 31, 2003, Arctic filed voluntary petitions pursuant to Chapter 11, Title II of the United States Code in the United States Bankruptcy Court for the Southern District of Ohio, commencing the underlying bankruptcy case. Arctic's bankruptcy stayed the state court proceeding, and by an Agreed Order entered on May 27, 2004 both parties stipulated to attempt resolution of the dispute through mediation, and to continue litigation in the Bankruptcy Court if such effort failed. When the mediation proved unsuccessful, the parties filed pleadings with the Bankruptcy Court as they had done in the state court. Arctic filed its Complaint on July 23, 2004 and Del Monte filed its Answer and Counterclaim, which included the federal Carmack Amendment claim, on August 6, 2004.

Following the initial pleadings, on September 15, 2004, the parties entered into a Stipulation Regarding Parties' Preliminary Pre-Trial Statement ("Stipulation") in which the parties agreed to present certain legal issues to the Bankruptcy Court for resolution through cross motions for summary judgment. The pertinent portion of that document states:

The mediation failed to resolve the case, primarily due to the parties' disagreement over certain legal issues, including the statute of limitations applicable to the claims asserted by one another. The parties now agree that it is in the best interest of the partes that these legal issues should be briefed and resolved by the Court before additional fact discovery is considered. The parties agree that the Court's ruling on these legal issues will most likely limit or eliminate the need for additional discovery or trial for this matter, and that resolving the disputed legal issues first should promote judicial economy and save time and expense for both parties.

Thereafter, the parties filed motions for summary judgment with respect to the statute of limitations issues and each party presented its argument during an oral hearing conducted before the Bankruptcy Court on February 8, 2005. On April 18, 2005, the Bankruptcy Court issued its Memorandum of Opinion and Order Ruling on Arctic's and Del Monte's Motions for Summary Judgment ("Bankruptcy Opinion"). The Bankruptcy Opinion stated that: (1) Arctic's claims for unpaid Freight Charges are premised in state law and not, therefore, affected by statute of limitations set forth in 49 U.S.C. § 14705; and (2) the Carmack Amendment (49 U.S.C. § 14706(e)), which preempts Del Monte's state law claims, barred Del Monte's damages claims because they were filed beyond the time contemplated by the statute. The Bankruptcy Court also issued a Judgment Entry in favor of Arctic on May 30, 2006, awarding Arctic damages in the amount of $232,550.91 ($169,941.68 plus prejudgment interest).

On April 28, 2006, Del Monte appealed the Bankruptcy Opinion. On July 6, 2006 Del Monte submitted its Brief in Support of Appeal; Arctic filed its Response on August 11, 2006 and Del Monte submitted its Reply on August 28, 2006. Jurisdiction over the instant appeal is vested in this Court pursuant to 28 U.S.C. § 158(a)(1). Accordingly, the appeal is ripe for this Court's review.


Where the Bankruptcy Court acts as the trial court, the Bankruptcy Court makes initial findings of fact and conclusions of law. Thomasville Furniture Indus., Inc. v. Elder-Beerman Stores Corp. 250 B.R. 609, 619 (S.D. Ohio 1998). The District Court, serving as an appellate court, then reviews the Bankruptcy Court's findings of fact for clear error, and the Bankruptcy Court's conclusions of law de novo. Wesbanco Bank Barnesville v. Rafoth (In re Baker & Getty Fin. Servs., Inc.), 106 F.3d 1255, 1259 (6th Cir. 1997) (citing Fed. R. Bankr. P. 8013), cert. denied, 522 U.S. 816, (1997). "A factual finding will only be clearly erroneous when, although there is evidence to support it, 'the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed.'" U.S. v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948); United States v. Ayen, 997 F.2d 1150, 1152 (6th Cir.1993) (citations omitted).


On appeal, Del Monte asserts three arguments: (1) the Bankruptcy Court erred in determining that Arctic's claims for unpaid Freight Charges were unaffected by the limitations period found in 49 U.S.C. § 14705(a); (2) the Bankruptcy Court erred in holding that Del Monte's damage claims were barred by 49 U.S.C. § 14706(e)(1); and (3) the Bankruptcy Court exceeded its jurisdiction in its Judgment Entry because, as expressed in the parties' Stipulation, the purpose of the cross motions for summary judgment was to resolve only the question of ...

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