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Amark Logistics, Inc. v. UPS Ground Freight, Inc.

United States District Court, N.D. Ohio, Eastern Division

January 16, 2020

AMARK LOGISTICS, INC., Plaintiff,
v.
UPS GROUND FREIGHT, INC., d/b/a UPS FREIGHT LTL TRANSP., Defendant.

          ORDER

          Thomas M. Parker, United States Magistrate Judge

         On October 14, 2019, plaintiff Amark Logistics, Inc.'s (“Amark”) filed a complaint in the Cuyahoga County Court of Common Pleas, after cargo was damaged and rendered unsaleable while being transported by defendant UPS Ground Freight, Inc., d/b/a/ UPS Freight LTL Transportation (“UPS”). ECF Doc. 1 at 9-18. Count One of the complaint alleged a state law claim for breach of contract (the “Broker/Carrier Master Transportation Agreement”); Count Two alleged a violation of the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706; and Count Three alleged a state law negligence claim. ECF Doc. 1 at 7-9. On November 12, 2019, UPS removed the case to this court, and on November 18, 2019, UPS moved to dismiss Counts One and Three for failure to state a claim pursuant to Fed.R.Civ.P. 12(b)(6) because the claims are preempted under the Carmack Amendment. ECF Doc. 5 at 1, 5-7. Amark responds that, because it is a broker and the Carmack Amendment preempts only shippers' claims, Counts One and Three are not preempted. ECF Doc. 8. In its reply brief, UPS re-asserts its arguments that counts one and three are preempted. ECF Doc. 12 at 2-5. UPS also contends - for the first time in its reply brief - that: (1) alternatively the court should dismiss Amark's Carmack Amendment claim because a broker has no standing to sue a carrier under the Carmack Amendment; and (2) Amark's negligence claim should be dismissed under the “gist of the case” doctrine, which bars tort claims when the basis of the claim arises solely from a breach of contract. ECF Doc. 12 at 5-6.

         Because the court agrees that Amark is a broker, and therefore lacks standing to bring a Carmack Amendment claim against UPS, Amark's Count Two claim (ECF Doc. 1 at 7-8) must be DISMISSED. Further, because the court declines to exercise supplemental jurisdiction over Amark's remaining state-law claims, UPS' motion to dismiss Counts One and Three (ECF Doc. 5) must be DENIED AS MOOT. Finally, this action shall be REMANDED to Cuyahoga County Court of Common Pleas, No. CV-19-923257.

         I. Facts

         In July 2013, Amark and UPS entered into a “Broker/Carrier Master Transportation Agreement” (the “Master Agreement”), which generally provided the rates and terms under which UPS would transport goods for Amark's customers. ECF Doc. 1 at 11 (¶8). The Master Agreement identified Amark as a “licensed transportation services broker” engaged in “arranging the transportation of property by authorized motor carriers” for third parties, and UPS as a motor carrier authorized to transport property in interstate, intrastate, and foreign commerce. ECF Doc. 1 at 20 (¶¶A-B).[1] The Master Agreement also described how liability would be distributed in the event of lost or damaged goods as follows:

11. CLAIMS: Broker or customer shall Immediately notify Carrier upon the discovery of any loss of, or damage to, property transported by Carrier under this Agreement. All claims for loss of or damage to property transported by Canter must be filed with and received by Carrier within nine (9) months following delivery (or attempted delivery in the case of refused shipments), except that claims for failure to make delivery must be filed within nine (9) months after a reasonable time for delivery has elapsed, and the failure to file a claim within the applicable time period shall forever bar recovery of the claim,
Any civil lawsuit on account of a claim for loss, damage, Injury or delay shall be Instituted against Carrier not later than two (2) years and one (1) day from the day when written notice is given by Carrier to the claimant that Carrier has disallowed the claim or any part or parts of the claim stated in such notice, and the failure to file a claim within the applicable time period shall forever bar the institution of any such lawsuit. Claims shall be handled pursuant to Principals and practices for the Investigation and Disposition of Freight Claims as set forth in 49 C.F.R. Part 370.
12. LOSS OR DAMAGE AND CARRIER LIABILITY: Carrier shall be liable for cargo loss or damage as a common carrier as set forth under Title 49 of the United States Code Section 14706 subject to the liability provisions and limits in Carrier's Tariff UPGF 102 series in effect at the time of shipment.
* * *
21. ATTORNEYS FEES: If it shall be necessary for either party hereto to hire and/or retain legal counsel, pursue any legal remedy, or incur any other expense in order to force the other to comply with and/or perform any of the provisions, conditions, and/or covenants of this Agreement, then the prevailing party shall be reimbursed by the other for the entire reasonable customary costs thereof, and such obligation shall be deemed to have accrued on the date of the commencement of any action and to be enforceable whether or not the action is prosecuted to judgment.

ECF Doc. 1 at 22-23 (¶¶11-12, 21).

         Pursuant to the Master Agreement, Amark arranged for UPS to transport five supersacks of Kocide LLC's ManKocide Copper Product (the “Goods”) from Arkansas to California. ECF Doc. 1 at 11 (¶10). UPS then received the goods from Kocide LLC. ECF Doc. 1 at 11 (¶12). The Goods were damaged while in UPS' custody, the intended recipient refused delivery, and the Goods were returned to a UPS facility. ECF Doc. 1 at 11-12 (¶¶13-17). UPS hired a HAZMAT response team to clean up and repackage the Goods, and three of the five supersacks were redelivered to the intended recipient. ECF Doc. 1 at 12 (¶¶16-18). But the three redelivered supersacks were no longer able to be sold under federal law. ECF Doc. 1 at 13 (¶¶25-26).

         Amark “immediately” filed a claim with UPS, pursuant to Section 11 of the Master Agreement, stating that the total value of the goods was $21, 835.58. ECF Doc. 1 at 14 (¶¶28-29). UPS acknowledged responsibility for damage to the Goods but refused to pay the full $21, 835.58. ECF Doc. 1 at 14 (¶31). Instead, UPS paid only $223.86 “based upon the belief that the only damage that was incurred was relative to the material that was spilled.” ECF Doc. 1 at 14 (¶32).

         II. ...


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