Brake Parts, Inc. v. Hosea Project Movers, LLC

Filing 39

WRITTEN Opinion entered by the Honorable Philip G. Reinhard on 12/19/2012: For the reasons stated below, the court grants defendant's motion to dismiss Counts II, III, IV and V of the complaint. The parties are to be prepared to discuss at the February 13, 2013 telephonic conference their efforts at settlement or the possibility of mediation.[ For further details see text below.] Signed by the Honorable Philip G. Reinhard on 12/19/2012:Electronic notice(pg, )

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge

Philip G. Reinhard

CASE NUMBER

12 C 50031

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

DATE

12/19/2012

Brake Parts, Inc. vs. Hosea Project Movers, LLC

DOCKET ENTRY TEXT:

For the reasons stated below, the court grants defendant’s motion to dismiss Counts II, III, IV and V of the
complaint. The parties are to be prepared to discuss at the February 13, 2013 telephonic conference their
efforts at settlement or the possibility of mediation.

O[ For further details see text below.]

Electronic Notices.

STATEMENT - OPINION
Plaintiff, Brake Parts, Inc., filed a five-count complaint against defendant, Hosea Project Movers,
LLC., based on the loss or damage of certain equipment that defendant contracted to transport and store for
plaintiff. Count I alleges a claim under 46 U.S.C. § 14706(a)(1) (Carmack Amendment). Count II is a statelaw claim for breach of a bailment contract. Count III alleges a state-law breach of contract claim. Count IV
alleges a state-law claim of unjust enrichment, and Count V is a state-law claim for conversion. Defendant
filed a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6), contending that all of the state-law claims are
preempted by the Carmack Amendment. Plaintiff, in its response, concedes that Counts II, III, and V are
preempted and should be dismissed, but maintains that the claim for unjust enrichment in Count IV is not
preempted because it is separate and distinct from the cartage contract giving rise to its claims under the
Carmack Amendment. Defendant has replied.
The Carmack Amendment created a nationally uniform rule of carrier liability concerning interstate
shipments. REI Transport, Inc. v. C. H. Robinson Worldwide, Inc., 519 F. 3d 693, 697 (7th Cir. 2008). Since
its enactment, a carrier of an interstate shipment is liable to the person entitled to recover under the receipt or
bill of lading. REI Transport, Inc., 519 F. 3d at 697. The party entitled to recover can do so for the actual
loss or injury to the property caused by the carrier. REI Transport, Inc., 519 F. 3d at 697.
The preemptive sweep of the Carmack Amendment extends to state causes of action against carriers
where goods are damaged or lost in interstate commerce. REI Transport, Inc., 519 F. 3d at 697-98. The
statute limits the carrier’s liability to the actual loss or injury to the property. A shipper cannot bypass this
limit by filing a state-law claim for the damaged goods unless the claim seeks to remedy a “separate and
independently actionable harm.” REI Transport, Inc., 519 F. 3d at 698.
Further, the Carmack Amendment does not preempt every claim related to damaged or lost goods.
REI Transport, Inc., 519 F. 3d at 698. For example, if a shipper withholds a greater amount than what it was
owed for damaged goods, a carrier could seek legal recourse for the difference. REI Transport, Inc., 519 F.
3d at 698. As with carrier liability, the shipper may be liable for other independently actionable harms that
are distinct from the loss or damage to the claims. REI Transport, Inc., 519 F. 3d at 698. Thus, claims that
do not affect a carrier’s liability for lost or damaged goods are not preempted. REI Transport, Inc., 519 F. 3d
12C50031 Brake Parts, Inc. vs. Hosea Project Movers, LLC

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STATEMENT - OPINION
at 698.
Here, plaintiff concedes that the state-law claims in Counts II, III, and V are preempted and should be
dismissed. That leaves the state-law claim in Count IV.
Count IV actually contains two distinct factual bases for the claim of unjust enrichment. Plaintiff
alleges therein a theory of unjust enrichment based on defendant having “accepted payment for the services of
removal and storage of equipment owned [by defendant].” See Complaint, par. 45. Alternatively, in
paragraph 46, plaintiff alleges that defendant “received payment for the sale of certain equipment owned [by
defendant].” Additionally, in paragraph 47, plaintiff alleges that the “retention of payment for services or of
money resulting from the sale of equipment” entitles it to be compensated under the state-law claim of unjust
enrichment.
Plaintiff contends that the allegation in paragraph 46 regarding the sale of some of the equipment and
the retention of the proceeds by defendant constitutes a “separate and independent claim to receive proper
payment for a portion of the profits reaped from the sale of [defendant’s] equipment.” Thus, according to
plaintiff, the unjust enrichment claim is not preempted by the Carmack Amendment.
The court disagrees with plaintiff’s objection to preemption as to Count IV. The theory in paragraph
45, based on defendant’s alleged acceptance of payment under the contract, is clearly preempted as it relates
to an actual loss under the contract and can be recovered under Count I. Likewise, the claim as alleged in
paragraph 46 is also preempted. The alleged sale of certain equipment covered by the contract and the
retention of any proceeds is also part and parcel of any actual loss based on defendant’s contractual
obligations as the carrier. Such a claim, as currently pleaded, is not separate and independent of the cartage
contract, but rather, arises directly out of it. See Eventus Marketing, Inc. v. Sunset Transportation Co., 722 F.
Supp. 2d 1311 (S.D. Fl. July 14, 2010) (ruling unjust enrichment claim preempted as arising under cartage
contract). This is so because Count IV, as alleged by plaintiff, is based on a single, unified contract related to
the transportation and storage of the subject equipment.1 Thus, plaintiff potentially can receive compensation
for such loss under Count I. Accordingly, the basis for the claim in paragraph 46 is also preempted.
Based on the foregoing, the court grants defendant’s motion to dismiss in its entirety and dismisses
Counts II, III, IV, and V.
1. The court notes that this conclusion is based on plaintiff’s allegations reflecting a singular contract related to
the equipment. Paragraph 7 of the complaint states that plaintiff contracted with defendant to remove certain
equipment, transport it, and store it. Additionally, in Count III, the allegations refer to “a contract” and “the
contract” and give no indication that there could in fact be two contracts reflected in the purchase order, one for the
transportation and storage of the equipment and a separate one related to the optional sale of the equipment. While
paragraph 40 in count III refers to defendant having the option to sell the equipment and split the proceeds, that
allegation does not expressly refer to there being a separate contract in that regard. Nor was paragraph 40
incorporated into Count IV which merely incorporates paragraphs 1-18. The allegations of the complaint do not
otherwise allege the existence of two distinct agreements despite the language of the purchase order which seems to
suggest that in fact two separate contracts existed notwithstanding that they were contained within one written
document. The court finds this problematic, but for purposes of the present motion it limits its analysis to the
allegations as set forth in the complaint.
The court is further troubled by the apparent existence of yet another agreement between plaintiff and a third
party regarding the return of the equipment by defendant. Of course, these matters will hopefully be resolved at a
later point in this litigation. With that in mind, the parties are to be prepared to discuss during the telephonic
conference on February 13, 2013, their efforts at settlement or the possibility of mediation.

12C50031 Brake Parts, Inc. vs. Hosea Project Movers, LLC

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