Flying Phoenix Corporation v. Creative Packaging Machinery, et al

Filing

[9974613] Affirmed. Terminated on the merits after oral hearing. Written, signed, published. Judges Kelly (authoring), Ebel and Holmes. Mandate to issue. [11-8077]

FILED
Appellate Case: 11-8077

Document: 01018860200

United States Court of Appeals
Date Filed: 06/12/2012 Circuit 1
Tenth Page:

June 12, 2012
PUBLISH

Elisabeth A. Shumaker
Clerk of Court

UNITED STATES COURT OF APPEALS
TENTH CIRCUIT

FLYING PHOENIX CORPORATION,
Plaintiff - Appellant,
v.

No. 11-8077

CREATIVE PACKAGING
MACHINERY, INC.,
Defendant,
and
NORTH PARK TRANSPORTATION
COMPANY; R&L CARRIERS
SHARED SERVICES, LLC,
Defendants - Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF WYOMING
(D.C. No. 2:11-CV-00119-NDF)

John Schumacher of White & White, P.C., Riverton, Wyoming, for Plaintiff Appellant.
Paula Fleck of Holland & Hart, LLP (and Jonathan James Wylie of Wylie Law
Firm, LLC, on the brief), Jackson, Wyoming, for Defendants - Appellees.

Before KELLY, EBEL, and HOLMES, Circuit Judges.

Appellate Case: 11-8077

Document: 01018860200

Date Filed: 06/12/2012

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KELLY, Circuit Judge.

Plaintiff-Appellant Flying Phoenix Corporation (“Flying Phoenix”) appeals
from the district court’s dismissal of its claims against North Park Transportation
Company and R&L Carriers Shared Services (“the carriers”), with prejudice, for
lack of subject matter jurisdiction. Our jurisdiction arises under 28 U.S.C. §
1291, and we affirm.

Background
Flying Phoenix Corporation, a Wyoming corporation in the business of
importing and reselling fireworks, purchased a machine designed to package
fireworks for sale to end users from Creative Packaging Machinery, Inc., a North
Carolina corporation. Aplt. App. 5, 6. 1 Flying Phoenix previously purchased a
different machine from Creative Packaging, and that machine arrived in
satisfactory condition. Id. at 6. The second machine, however, arrived severely
damaged: “the junction box was damaged, the breaker was destroyed, the frame
was bent underneath, the dolly wheels were broken, the main frame was bent, and
there were various scratches on the machine.” Id. at 8.
Creative Packaging was responsible for shipping the second machine to

1

All facts in the Background section are taken from Flying Phoenix’s
original complaint.
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Flying Phoenix. Id. at 6. To do so, Creative Packaging contracted with R&L
Carriers Shared Services, an Ohio domestic limited liability company, to have the
machine shipped from North Carolina to Wyoming. Id. at 5-6. A bill of lading
issued for the shipment listed Creative Packaging as shipper, R&L Carriers as
carrier, and Flying Phoenix as consignee. Id. at 6-7. Importantly, the bill of
lading limited the period for filing claims with a carrier to nine months, and
limited the time for filing civil suit to two years and one day following denial of a
claim. Id. at 29, 31-32. At some point during the delivery, R&L Carriers
transferred the machine to North Park Transportation Company to complete
delivery to Flying Phoenix. Id. 7. North Park delivered the machine to Flying
Phoenix on April 9, 2007. Id.
Three days after the machine was delivered, Flying Phoenix filed a claim
with North Park based on damage to the machine. Id. Roughly two weeks later,
North Park inspected the machine and confirmed that it was damaged. Id. A
little less than a month later, North Park and R&L Carriers notified Flying
Phoenix that its claim was denied, citing evidence that the shipment was issued
with insufficient packaging or protection. Id. Flying Phoenix renewed its claim
approximately six months later, in November 2007, and the carriers again denied
the claim—this time, asserting that the machine was “used” and inadequately
packaged. Id.

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Flying Phoenix filed suit against Creative Packaging, 2 R&L Carriers, and
North Park in federal district court on April 1, 2011, id. at 4—almost four years
after its initial claim was denied in May 2007, and nearly two years after the
limitations period for filing civil suit expired. Flying Phoenix asserted a claim
under the Carmack Amendment, 49 U.S.C. § 14706, as well as several state-law
claims. Id. at 8-12. The district court found that Flying Phoenix’s negligence
claim was preempted by the Carmack Amendment, id. at 67-69, and dismissed the
remainder of Flying Phoenix’s suit under Federal Rule of Civil Procedure
12(b)(6), id. at 69-71. Specifically, the district court held that Flying Phoenix’s
remaining claims were brought pursuant to the bill of lading and were time-barred
by the limitations period contained therein. Id. Flying Phoenix unsuccessfully
sought reconsideration, arguing that its claims were independent of the bill of
lading. Id. at 73-78, 87-91.
On appeal, Flying Phoenix argues that the district court erred by holding
that (1) its claims were based on the bill of lading, and (2) it was bound by the
terms of the bill of lading even though it was not a party and did not consent. 3
Flying Phoenix acknowledges that a bill of lading existed for the shipment, but
urges that (1) it was not a party to that bill of lading (but instead was listed as
2

The manufacturer is listed as a defendant and appellee, but has had no
involvement in the present case. Aplt. Br. 4 n.1.
3

Flying Phoenix does not appeal the district court’s conclusion that its
state-law claims were preempted. Aplt. Br. 7.
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consignee by someone else), and (2) it had no knowledge of the bill of lading
until shortly before the present lawsuit was filed.

Discussion
This appeal presents two questions: whether the Carmack Amendment
creates a cause of action independent of a bill of lading, and whether a non-party
consignee may be bound by the terms of a bill of lading. In considering these
questions, we review the district court’s dismissal for lack of subject matter
jurisdiction de novo. Wyoming v. U.S. Dep’t of Interior, 674 F.3d 1220, 1231
(10th Cir. 2012). We address these questions narrowly, and our analysis is
specific to the facts of this case.
The Carmack Amendment, 49 U.S.C. § 14706, does not create a cause of
action independent of a bill of lading when a bill of lading exists. The Carmack
Amendment states, in relevant part:
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. . . . Failure to issue a
receipt or bill of lading does not affect the liability of a carrier.
49 U.S.C. § 14706(a)(1). The Carmack Amendment also enables parties to
contract for limitations periods as short as nine months for filing initial claims,
and two years from denial of those claims for filing any subsequent civil suit. Id.

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§ 14706(e)(1). Flying Phoenix’s argument relies upon the last quoted sentence,
concerning the legal import of failing to issue a receipt or bill of lading.
According to Flying Phoenix, that provision allows a party to bring suit
independent of a bill of lading, even if a bill of lading exists. We disagree, and
read that sentence as simply precluding a defense: a carrier may not escape
liability by failing to issue a receipt or bill of lading. As a practical matter, a
carrier’s failure to issue a bill of lading only precludes the carrier from
contracting for limitations periods in line with § 14706(e)(1). Thus, the Carmack
Amendment does not create an independent cause of action for recovery where a
receipt or bill of lading issued, and Flying Phoenix does not dispute that a bill of
lading was issued in this case.
Separately, Flying Phoenix is bound to the terms of the bill of lading on the
facts of this case. As the Carmack Amendment does not create an independent
cause of action, there is no means other than the bill of lading by which Flying
Phoenix may recover against the carriers. By suing under the bill of lading,
Flying Phoenix must accept the terms of the bill of lading in at least two ways.
First, as a third-party beneficiary, stepping into the shoes of the manufacturershipper, Flying Phoenix takes on the rights and limitations of the manufacturershipper under the bill of lading—one limitation being a time limit for filing civil
suits. Second, Flying Phoenix is deemed to have accepted the terms of the bill of
lading by suing under it. See, e.g., Mitsui & Co. (USA), Inc. v. Mira M/V, 111
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F.3d 33, 36-37 (5th Cir. 1997).
Finally, Flying Phoenix claims that, although it was listed as consignee on
the bill of lading, it never saw the bill of lading until after the limitations period
lapsed. It argues that, since it did not know the terms of the carriage, it should
not be bound. We find no precedent for Flying Phoenix’s position, and Flying
Phoenix has not directed us to any. There is no suggestion in the record that
Flying Phoenix ever sought a copy of the bill of lading but was denied access, and
it is well-established that a party may not sit idly by, making no effort to obtain
obviously necessary documents, and then claim ignorance. Lack of diligence
precludes equitable intervention. See Irwin v. Dep’t of Veterans Affairs, 498
U.S. 89, 96 (1990) (“[T]he principles of equitable tolling described above do not
extend to what is at best a garden variety claim of excusable neglect.”); Sigala v.
Bravo, 656 F.3d 1125, 1128 (10th Cir. 2011) (same).
AFFIRMED.

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