CNA Insurance Company v. Hyundai Merchant Marine Co., Ltd. et al
Filing
207
MEMORANDUM OPINION signed by Senior Judge Charles R. Simpson, III on 07/15/2014, granting 203 Motion Award of Prejudgment Interest by Plaintiff CNA Insurance Company. A separate order and judgment will be entered this date in accordance with this opinion. cc: Counsel (TJD)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
AT LOUISVILLE
CNA INSURANCE COMPANY a/s/o CORNING, INC.
v.
PLAINTIFF
CIVIL ACTION NO. 3:07CV-141-S
HYUNDAI MERCHANT MARINE, CO., LTD., et al.
DEFENDANTS
MEMORANDUM OPINION
This matter is before the court on remand from the United States Court of Appeals for the
Sixth Circuit for reconsideration of the question of prejudgment interest. CNA Ins. Co. v. Hyundai
Merchant Marine Co., Ltd., 747 F.3d 339, 376 (6th Cir. 2014). More particularly, the Court of
Appeals stated:
We necessarily remand this case for reconsideration of the question of prejudgment
interest in light of the pertinent provisions of the Service Contract as applied to the
present decision. We also direct the court’s attention to In re ClassicStar Mare
Leasing Litigation, 727 F.3d 473, 494-97 (6th Cir. 2013), which amplifies our current
view of prejudgment interest.
747 F.3d at 376.
In addressing the directive of the Court of Appeals on remand, we must address the two parts
of the order and their proper application.
This action as filed by CNA Insurance Company (“CNA”) as subrogee of Corning, Inc.
(“Corning”) to recover the cost of a shipment of damaged glass shipped from Corning’s facility in
Harrodsburg, Kentucky, destined for Corning Display Technologies in Tainan, Taiwan. The
shipment, traveling by truck and rail, arrived damaged at the Washington United Terminal and was
never loaded onto a vessel for oversea transport, but rather was sent back to Harrodsburg. CNA paid
Corning $664,679.88 on the claim for the shipment which was declared a total loss. CNA,
subrogated to the rights of Corning, filed suit in the Southern District of New York naming Norfolk
Southern Railway Company (“Norfolk”), Burlington Northern Santa Fe Railway Company
(“BNSF”), and Hyundai Merchant Marine Co., Ltd. (“Hyundai”). CNA claimed breach of the
Service Agreement with Hyundai. Under the agreement, Corning agreed to ship and Hyundai agreed
to carry cargo from certain locations in the United States to Asia. Corning dealt exclusively with
Hyundai as the sole carrier for a through shipment, made a single payment to Hyundai, and had no
role in selecting or contracting with any other carriers in the chain. CNA also asserted claims for
bailment and negligence. CNA cited the Carmack Amendment, 49 U.S.C. § 11706, in the
jurisdiction section of the complaint.
The case was transferred from New York to Kentucky. The case was ultimately tried to a
jury under what was deemed to be one comprehensive Carmack Amendment cause of action. The
jury found for CNA holding the three carriers jointly and severally liable for $498,509.91. This
court denied the defendants’ motions for judgment as a matter of law. The court declined to award
prejudgment interest, but awarded post-judgment interest in accordance with 28 U.S.C. § 1961.
On appeal, the Court of Appeals reversed the judgment of this court in part. The court
vacated the jury verdicts as against Norfolk and BNSF, and affirmed the judgment against Hyundai
in the amount of $498,509.91. Additionally, the Court of Appeals found, contrary to the district
court’s ruling, that by failing to reimburse Corning for the cost of the damaged glass at the time of
the accident, Hyundai had the use of Corning’s (or CNA’s) money during that time, and therefore
the district court should “reconsider[ ] the question of prejudgment interest in light of the pertinent
provisions of the Service Contract as applied in the present decision.” 747 F.3d at 376.
-2-
After an extensive analysis of the issue, the Court of Appeals held that “the Carmack
Amendment does not apply to the road or rail leg of an intermodal overseas export shipped under
a single through bill of lading.” 747 F.3d at 370. The court found that CNA’s sole colorable cause
of action was for breach of the Service Contract, a maritime contract governed by federal maritime
law. 747 F.3d at 370; 371, n. 37. The court concluded that, as a matter of law, CNA could not
maintain a breach of contract action against Norfolk or BNSF. 747 F.3d at 373.
The court found, however, that Corning and Hyundai contracted for Hyundai to be liable “to
the extent to which [a road or rail carrier] would have been liable to [the shipper] if it had made a
direct and separate contract with [the shipper]” for that carrier’s portion of the journey. 747 F.3d
at 374. The court noted that “Of course, if a road or rail carrier made a separate contract with the
shipper for carriage, it would be subject to Carmack.” Id. The court then stated:
Based on the foregoing, we conclude as a matter of law and pursuant to the terms of
the Service Contract, that CNA’s claim for breach of contract by Hyundai for
“damage caused during the handling, storage, or carriage of Goods by [Hyundai’s]
Subcontractor” – be it DHL, Norfolk Southern, BNSF, or TMBR – must be resolved
under Carmack. Because the district court proceeded on the theory, which the jury
later confirmed by its verdict, that the damage occurred while the cargo was in the
custody of either Norfolk Southern or BNSF, the court was ultimately correct in its
application of Carmack to determine Hyundai’s liability and we can affirm this
portion of the decision.
747 F.3d at 375.
Thus, reconsidering prejudgment interest in light of the pertinent provisions of the Service
Contract, as we were directed to do, we will award prejudgment interest on this maritime contract
claim. “Prejudgment interest on admiralty claims is generally allowed on claims for prejudgment
economic harm ‘as compensation for the use of funds to which the plaintiff was ultimately judged
entitled, but which the defendant had the use of prior to judgment.” Borges v. Our Lady of the Sea
-3-
Corp., 935 F.2d 436 (1st Cir. 1991), citing Miller v. Caterpillar Tractor Co., 733 F.2d 813, 823 (11th
Cir. 1984). This decision is in keeping with the Court of Appeals’ view that “[b]y failing to
reimburse Corning for the cost of the damaged glass at the time of the accident (and thereby forcing
Corning to file a claim with CNA), Hyundai did have the use of Corning’s (or CNA’s) money during
that time.” 747 F.3d at 375-76. Additionally, an award of prejudgment interest herein is in keeping
with the equitable principles set forth in In re ClassicStar Mare Lease Litigation, 727 F.3d 473 (6th
Cir. 2013) to fully compensate CNA, without overcompensating the plaintiff or punishing the
defendant. The Court of Appeals noted that our earlier rationale in denying prejudgment interest,
that the Carmack Amendment does not specifically provide for the recovery of prejudgment interest,
was insupportable in light of its finding that the Service Contract controls. 747 F.3d at 375. Thus,
despite the fact that Hyundai’s liability is ultimately determined under Carmack, the Court of
Appeals has determined that the claim itself is one for breach of a maritime contract. Thus this court
finds, in its discretion, that there is no disharmony in awarding prejudgment interest.
The court finds that the rate of interest specified in 28 U.S.C. § 1961 is appropriate in this
case. The rate of prejudgment interest is discretionary with the court. In re ClassicStar, 727 F.3d
at 494; Green v. Nevers, 196 F.3d 627, 633 (6th Cir. 1999). This maritime claim is governed by
admiralty law which counsels that the court may be properly guided in the exercise of its discretion
by the rate set out in 28 U.S.C. § 1961. Sun Ship, Inc. v. Matson Navigation Co., 785 F.2d 59, 63
(3d Cir. 1986); Thomas v. iStar Fin., Inc., 652 F.3d 141, 150 (2d Cir. 2010)(applying th federal rate
to judgments based on combined federal and state claims); Kotsopoulos v. Asturia Shipping Co., 467
F.2d 91, 94 (2d Cir. 1972)(prejudgment interest governed by maritime rather than State law).1
1
We find CNA’s argument for application of the New York prejudgment interest statute to be without merit, and in any
(continued...)
-4-
For the reasons set forth herein, the court will award prejudgment interest from March 5,
2006, the date of loss,2 at a rate equal to the weekly average 1-year constant maturity Treasury yield,
as published by the Board of Governors of the Federal Reserve System, for the calendar week
preceding the date of judgment. A separate order and judgment will be entered this date in
accordance with this opinion.
IT IS SO ORDERED.
July 15, 2014
C al R Smpo I , ei J d e
h r s . i sn I Sno u g
e
I
r
U i dSae Ds i C ut
nt tt ir t o r
e
s tc
1
(...continued)
event, an award at 9% under that statute would overcompensate the plaintiff. There is no rationale articulated for the alternative
suggestion that the court apply Kentucky’s 8% interest rate.
2
The damage was discovered in Tacoma, Washington on March 5, 2006. Hyundai apparently concedes that prejudgment
interest, if awarded, runs from the date of loss, and that date, for purposes of this motion, is March 5, 2006. It has not argued
otherwise.
-5-
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?