Chisesi Brothers Meat Packing Company, Inc. v. Transco Logistics, Co., et al

Filing 27

ORDER AND REASONS granting in part and denying in part 8 Motion to Dismiss for Failure to State a Claim. The motion is GRANTED insofar as Chisesi's claim against Travelers for bad faith is preempted by the Carmack Amendment and is DISMISSED with prejudice. The motion is DENIED insofar as the Court finds that Chisesi's direction action suit is sufficiently pled and is not preempted by the Carmack Amendment. Chisesi's direct action suit is limited to the claims available to it against Transco, namely, the Carmack Amendment claim. Signed by Judge Martin L.C. Feldman on 6/14/2017. (clc)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
CHISESI BROTHERS MEAT
PACKING COMPANY

CIVIL ACTION

V.

NO. 17-2747

TRANSCO LOGISTICS, INC.,
ET AL.

SECTION "F"
ORDER AND REASONS

Before the Court is Travelers Property Casualty Company of
America’s Rule 12(b)(6) motion to dismiss. For the following
reasons, the motion is GRANTED in part and DENIED in part. The
motion is denied insofar as Chisesi has a valid direct action suit
against Travelers derivative to its underlying Carmack Amendment
claim against Transco. The motion is granted as to Chisesi’s bad
faith claim against Travelers.
Background
This
Metalquimia

case

arises

Movistick

out
5500

of

an

interstate

Boneless

Injector

shipment
machine

of

a

(the

injector) from New Jersey to Louisiana. On May 18, 2017, the Court
issued an Order and Reasons, wherein it extensively discussed the
factual background of the case. For the sake of brevity, the Court
adopts the factual background and assumes familiarity with the
case.
On or about February 22, 2016, Transco Logistics transported
this specialized piece of equipment, the injector, from New Jersey

1

to the Chisesi plant in Jefferson Parish, Louisiana. Chisesi
alleges that the injector was in good condition before Transco
loaded it onto the truck for delivery. However, Chisesi contends
that when the injector arrived at its plant, the injector was
severely damaged and missed several of its component parts.
As a result of the injector’s damage, Chisesi brought this
lawsuit

against

Transco

and

its

insurer,

Travelers.

Both

defendants moved to dismiss Chisesi’s complaint. The Court granted
Transco’s motion, insofar as Chisesi brought claims outside of the
federal Carmack Amendment but denied the motion to allow for a
Carmack Amendment claim. The Court then continued the hearing date
for Travelers’ motion and requested additional briefing on the
issues raised before the Court. Specifically, the Court is now
moved to determine whether Chisesi can bring a claim against
Travelers under the Louisiana Direct Action Statute (LDAS) or
whether the federal Carmack Amendment preempts Chisesi’s claims
against Travelers under the LDAS. The Court must also determine
whether Chisesi can bring a claim against Travelers for bad faith
in failing to make an offer of settlement.
I.
Rule 12(b)(6) of the Federal Rules of Civil Procedure allows
a party to move for dismissal of a complaint for failure to state
a claim upon which relief can be granted.

Such a motion is rarely

granted because it is viewed with disfavor.
2

See Lowrey v. Tex. A

& M Univ. Sys., 117 F.3d 242, 247 (5th Cir. 1997) (quoting Kaiser
Aluminum & Chem. Sales, Inc. v. Avondale Shipyards, Inc., 677 F.2d
1045, 1050 (5th Cir. 1982)).
Under Rule 8(a)(2) of the Federal Rules of Civil Procedure,
a pleading must contain a "short and plain statement of the claim
showing that the pleader is entitled to relief."

Ashcroft v.

Iqbal, 556 U.S. 662, 678-79 (2009) (citing Fed. R. Civ. P. 8).
"[T]he

pleading

'detailed

factual

standard

Rule

8

allegations,'

announces

but

it

does

demands

not
more

require
than

an

unadorned, the-defendant-unlawfully-harmed-me accusation." Id. at
678 (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)).
Thus,

in

considering

a

Rule

12(b)(6)

motion,

the

Court

"accepts 'all well-pleaded facts as true, viewing them in the light
most favorable to the plaintiff.'"

See Martin K. Eby Constr. Co.

v. Dall. Area Rapid Transit, 369 F.3d 464 (5th Cir. 2004) (quoting
Jones v. Greninger, 188 F.3d 322, 324 (5th Cir. 1999)).

But, in

deciding whether dismissal is warranted, the Court will not accept
conclusory allegations in the complaint as true.
at 1050.

Kaiser, 677 F.2d

Indeed, the Court must first identify allegations that

are conclusory and thus not entitled to the assumption of truth.
Iqbal, 556 U.S. at 678-79.

A corollary: legal conclusions "must

be supported by factual allegations." Id. at 678.

Assuming the

veracity of the well-pleaded factual allegations, the Court must

3

then determine "whether they plausibly give rise to an entitlement
to relief." Id. at 679.
"'To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to state a claim to
relief that is plausible on its face.'"

Gonzalez v. Kay, 577 F.3d

600, 603 (5th Cir. 2009) (quoting Iqbal, 556 U.S. at 678) (internal
quotation marks omitted).

"Factual allegations must be enough to

raise a right to relief above the speculative level, on the
assumption that all the allegations in the complaint are true (even
if doubtful in fact)."
footnote omitted).

Twombly, 550 U.S. at 555 (citations and

"A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw the
reasonable

inference

misconduct alleged."

that

the

defendant

is

liable

for

the

Iqbal, 556 U.S. at 678 ("The plausibility

standard is not akin to a 'probability requirement,' but it asks
for more than a sheer possibility that a defendant has acted
unlawfully.").

This is a "context-specific task that requires the

reviewing court to draw on its judicial experience and common
sense."

Id. at 679.

"Where a complaint pleads facts that are

merely consistent with a defendant's liability, it stops short of
the line between possibility and plausibility of entitlement to
relief." Id. at 678 (internal quotations omitted) (citing Twombly,
550 U.S. at 557).

"[A] plaintiff's obligation to provide the

'grounds' of his 'entitle[ment] to relief'" thus "requires more
4

than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do."

Twombly, 550 U.S. at

555 (alteration in original) (citation omitted).
In deciding a motion to dismiss, the Court may consider
documents that are essentially "part of the pleadings."

That is,

any documents attached to or incorporated in the plaintiff's
complaint that are central to the plaintiff's claim for relief.
Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th
Cir. 2004) (citing Collins v. Morgan Stanley Dean Witter, 224 F.3d
496, 498-99 (5th Cir. 2000)).

Also, the Court is permitted to

consider matters of public record and other matters subject to
judicial notice without converting a motion to dismiss into one
for summary judgment.

See United States ex rel. Willard v. Humana

Health Plan of Tex. Inc.,

336 F.3d 375, 379 (5th Cir. 2003).

II. Carmack Amendment
As the Court previously discussed in its Order and Reasons,
dtd. May 18, 2017, Congress enacted the Carmack Amendment to cover
all claims that arise out of loss or damage to property that was
transported in interstate commerce. 49 U.S.C. § 14706(a)(1). The
Carmack Amendment has been interpreted to preempt all other state
and common law claims. The Fifth Circuit has further instructed
that the Carmack Amendment’s broad scope preempts all state law
claims, whether it contradicts or supplements remedies under the
Carmack Amendment. See Hoskins v. Bekins Van Lines, 343 F.3d 769,
5

778 (5th Cir. 2003) (“We are persuaded by the preceding decisions
and analysis by the Supreme Court, and this Court, that Congress
intended for the Carmack Amendment to provide the exclusive cause
of action for loss or damages to goods arising from the interstate
transportation of those goods by a common carrier.”) (emphasis in
original).
III. Louisiana Direct Action Statute
“The Louisiana Direct Action Statute allows a tort victim to
sue both the insured and its insurer, as a solidary obligor, or
the insurer alone, when certain conditions set forth in the statute
are met.” New England Ins. V. Barnett, 465 F. App’x 302, 309 (5th
Cir. 2012). The statute provides that an:
injured person . . ., at their option, shall have a right
of direct action against the insurer within the terms
and limits of the policy; and, such action may be brought
against the insurer alone, or against both the insured
and insurer jointly and in solido. . . . This right of
direct action shall exist whether or not the policy of
insurance sued upon was written or delivered in the state
of Louisiana and whether or not such policy contains a
provision forbidding such direct action, provided the
accident or injury occurred within the state of
Louisiana. . . .
LA. STAT. ANN. § 22:1269 (B)(1), (B)(2). The statute “‘does not
create an independent cause of action against the insurer, it
merely grants a procedural right of action against the insurer
where the plaintiff has a substantive cause of action against the
insured.’” New England Ins., 465 F. App’x at 309 (quoting Descant

6

v. Adm’rs of Tulane Educ. Fund, 639 So. 2d 246, 249 (La. 1994)).
Instead, the LDAS “‘vests the injured third party with the rights
at the time of the tort to institute an action directly against
the insurer within the terms and limits of the policy.’” New
England Ins., 465 F. App’x at 310 (quoting Haynes v. New Orleans
Archdiocesan Cemetaries, 805 So. 2d 320, 323 (La. App. 4 Cir.
2001)). Therefore, the injured person need not wait for an entry
of judgment against an insured to have a claim against the insurer.
New England Ins., 465 F. App’x at 310.
IV. Chisesi’s Direct Action Claim against Travelers
A. Travelers’ Contentions
Travelers moves to dismiss the plaintiff’s claims against it
under two theories: (1) The petition fails to state a claim upon
which relief can be granted because the plaintiff’s claims against
it are preempted by the Carmack Amendment; and (2) The plaintiff
has not established a right of action against Travelers pursuant
to Louisiana’s Direct Action Statute. The Court first considers
whether

the

Carmack

Amendment

preempts

the

plaintiff’s

claim

against Travelers brought under the LDAS.
Travelers contends that Congress intended for the Carmack
Amendment to supersede diverse state laws. Because the Carmack
Amendment completely preempts all state law claims, Travelers
urges that a shipper’s claims against an insured carrier are
limited to the recovery allowed under the Amendment. The fact that
7

Louisiana has enacted a direct action statute should not affect
this well-established principle of the Amendment’s preemption.
Travelers submits that the direct action statute neither affects
the potential liability of the parties nor imparts substantive
causes of action against the insurer where none existed otherwise.
Therefore, Travelers contends that its liability, if any at all,
is completely derivative of that of its insured, just as would be
the case in any other state, regardless of whether the state offers
a direct action claim for procedural efficiency. Travelers submits
that the Carmack Amendment preempts state law claims against common
carries and also does not authorize direct action suits against a
common carrier’s insurer; accordingly, the LDAS is preempted and
any finding to the contrary runs afoul of the complete preemption
doctrine recognized by the Supreme Court and Fifth Circuit.
B. Chisesi’s Response
Chisesi

responds

that

the

Carmack

Amendment

applies

to

carriers. Travelers is not a carrier and thus should not be subject
to liability or limitations under the Carmack Amendment. It also
contends that its claims against Travelers do not increase the
liability of the carrier responsible for Chisesi’s loss; the claims
against Travelers therefore fall outside the scope of the Carmack
Amendment.

Because

the

claims

are

outside

the

scope

of

the

Amendment, Chisesi submits, its claims cannot be preempted by the
Amendment.
8

Chisesi next submits that the only requirement for a viable
LDAS suit is that the injured party have a valid substantive cause
of

action.

It

contends

that

because

the

Court

has

already

established that Chisesi has a valid Carmack Amendment claim
against Transco, the carrier, then that satisfies any prerequisite
for it to bring an LDAS claim. It further submits that there is no
requirement that the underlying cause of action be a state law
cause of action.

Ultimately, the Carmack Amendment should not be

found to preempt the LDAS because the sole purpose of the LDAS is
to provide a procedural mechanism to facilitate an injured party’s
recovery, not to enlarge or diminish the liability of the carrier.
In the event the Court finds that the LDAS is preempted by
the Carmack Amendment, Chisesi urges the Court to consider the
McCarran-Ferguson Act and its application to the LDAS with respect
to the Carmack Amendment. The Court need not reach that issue.
C. Court’s Analysis
The Court first acknowledges that the issue of whether the
Carmack Amendment preempts the LDAS is a res nova issue for this
Circuit. Because of that and because Louisiana is one of only two
states to implement direct action suits, the Court turns to nonbinding precedent for relevant guidance.
In support of its position that the Carmack Amendment preempts
Chisesi’s LDAS claim against it, Travelers provides the Court with
case law from Wisconsin (another direct-action suit state). In
9

Land O’Lakes v. Joslin Trucking, Inc., the Western District of
Wisconsin

held

that

the

Carmack

Amendment

preempted

the

plaintiff’s direct action claim against the carrier’s insurer. No.
8-355, 2008 WL 5205910, at *2-3 (W.D. Wis. Dec. 11, 2008). The
court reached its outcome because a “[p]laintiff cannot assert a
direct action suit under Wisconsin law against an insurer unless
it is suing on a state law negligence claim.” Id. at *2. Because
the plaintiff asserted a federal statutory claim under the Carmack
Amendment, the plaintiff had no grounds to maintain a direct action
suit against the carrier’s insurer. Id.
Here, the Court agrees that the plaintiff similarly has a
Carmack Amendment claim against the carrier and a direct action
suit against the carrier’s insurer. However, the basis for the
Wisconsin court’s decision is inapplicable; namely, the LDAS does
not require that the underlying claim be a state law negligence
claim for a plaintiff to bring a direct action suit. See id.; LA.
REV. STAT. ANN. 22:1269 (B)(1), (B)(2). Therefore, the only legal
guidance provided to the Court is inapposite. Because the LDAS
does not have the requirement that it is only applicable to a state
negligence claim, this Court is not at liberty to impose a narrow
construction on a longstanding state principle. To hold that the
LDAS is inapplicable and preempted would run afoul to the efficient
procedural
Accordingly,

safeguards
the

Louisiana

Carmack

intends

Amendment
10

for

does

its

not

residents.

preempt

the

plaintiff’s direct action suit against Travelers. The Court must
now consider whether the plaintiff also satisfies the pleading
requirements such that it actually states a claim under the LDAS
for which relief can be granted.
“Under Louisiana law, a right of direct action may be brought
against an insurer in only three limited circumstances: (1) if the
accident occurred in Louisiana; (2) if the policy was written in
Louisiana; or (3) if the policy was delivered in Louisiana.” Landry
v.

Travelers

Indem.

Co.,

890

F.2d

770,

772

(5th

Cir.

1989)

(emphasis in original).
Travelers first contends that the plaintiff fails to allege
that the injury occurred in Louisiana. Travelers submits that a
plain reading of the statute establishes that the words “or injury”
are meant to be the injury arising out of the “accident” that
“occurred

within

Offshore,

Inc.,

(rejecting

the
776

State
So.

plaintiff’s

2d

of

Louisiana.”

620,

argument

633-34
that

Harper

(La.
injury

Ct.

v.

Falrig

App.

2000)

occurred

when

plaintiff returned to his home in Louisiana). Travelers contends
that the plaintiff has not satisfied Twombly pleading requirements
because it has not pled the location of the alleged accident or
injury that resulted in damage to the injector. Travelers submits
that the facts indicate the accident or injury happened before the
injector arrived in Chicago, Illinois, while on its journey to

11

Louisiana. Therefore, Travelers asserts that no amendment to the
pleadings can cure this defect.
The plaintiff responds that a portion of the damage to the
injector occurred in an unknown location somewhere along the route
between New Jersey and Louisiana. But, the plaintiff asserts that
additional damages ensued during the unloading of the injector at
Chisesi’s Louisiana plant. Chisesi submits that there is no case
law, however, discussing whether a right of action exists under
the LDAS in cases where there are multiples situses of injury. It
urges the Court to turn to this court’s previous interpretations
of similarly-worded Carmack Amendment venue provisions. This Court
interpreted a Carmack Amendment venue provision and instructed
that venue was proper in the judicial district in which the loss
was alleged to have occurred. New Orleans Lakal Envelope Co. v.
Chicago Express, Inc., No. , 1999 WL 1277527, at *1 (E.D. La. Dec.
21, 1999). The Court held that venue was proper in the Eastern
District of Louisiana because “at least some of the injury or
damage is alleged to have occurred” in that district. Id. at *2.
Similarly, the plaintiff alleges that at least some of the injury
occurred in Louisiana in its complaint.
For example, in the complaint, Chisesi alleges, “[Transco]
engaged in further wrongful conduct when unloading the Injector at
the [Chisesi] plant. The negligent actions of [Transco] caused
additional component parts to break or become damaged during the
12

unloading

of

information

the

and

Injector.”

belief,

the

It

further

Injector

alleges

was

that

“[u]pon

negligently

dropped

during the loading, unloading, or transportation of the Injector
. . . causing extensive damage to the Injector and resulting in
the

destruction

or

loss

of

several

of

its

component

parts.”

Applying the same reasoning as this Court’s interpretation of a
venue provision of the Carmack Amendment, which importantly serves
as the basis of this LDAS claim, the plaintiff urges that its
allegation that some injury occurred in Louisiana is sufficient to
invoke the LDAS injury requirement. The Court agrees.
At this stage in litigation, the Court finds it premature to
dismiss the plaintiff’s allegations against Travelers when it has
alleged

that

some,

if

not

all,

of

the

damages

occurred

in

Louisiana. Discovery will be necessary to determine the precise
location or locations of damage; the Court will not preclude the
plaintiff from reaching that determination at this early stage in
the litigation.
The plaintiff does not address the additional two methods to
properly invoke the LDAS because it relies on the location of the
injury

having

occurred

in

Louisiana.

However,

Travelers

does

address whether the insurance policy was issued or delivered in
Louisiana; the Court will briefly summarize the arguments.
Travelers contends that the policy was neither issued nor
delivered in Louisiana. Because the plaintiff bears the burden of
13

proving that the policy was issued or delivered in Louisiana and
the plaintiff has failed to do so, Travelers submits that dismissal
of the plaintiff’s claims against it is appropriate. Travelers
also submits that undisputed facts demonstrate that the policy was
neither issued nor delivered in Louisiana. Transco is an Illinois
company with its principal place of business there. 1 Because the
Court finds that the plaintiff, at a minimum, alleges sufficient
facts that the injury occurred in Louisiana, the Court need not
address whether the policy was or was not issued or delivered in
Louisiana.
Finally, Travelers maintains that any other alleged contacts
with the state of Louisiana are irrelevant for the Direct Action
Statute.

Thus,

it

contends

that

the

plaintiff’s

Louisiana

citizenship is irrelevant under the Direct Action Statute. While
true, the Court finds this has no bearing on the ultimate issue
before the Court - whether the plaintiff appropriately filed a
claim against Travelers under Louisiana’s Direct Action Statute. 2

1

Travelers’ arguments on this issue are more suitable for a motion
for summary judgment. The Court includes it for the sake of
completeness, but notes that only the allegations in the complaint
and pleadings are relevant for considering its motion to dismiss.
2 The Court recited the three means under which a plaintiff may
file a claim against a party under Louisiana’s Direct Action
Statute. “Other alleged contacts with Louisiana” is not an option
to invoke the Direct Action Statute and the plaintiff does not
contend that its Louisiana citizenship is the basis upon which it
attempts to invoke the Direct Action Statute.
14

Because the Court finds that the plaintiff has sufficiently
pled its direct action suit against Travelers to survive this
motion,

the

Court

emphasizes

that

the

LDAS

claim

is

solely

derivative to Chisesi’s claim against Transco. Because the Court
has held that only the Carmack Amendment claim is legally viable
against Transco, it follows that any action against Travelers under
the LDAS is derivative of that sole Carmack Amendment claim.
V. Chisesi’s Bad Faith Claim
The Court must next consider whether the Carmack Amendment
preempts Chisesi’s bad faith claim against Travelers.
Chisesi

contends

that

its

bad

faith

claim

arose

out

of

Travelers’ breach of its duty to Chisesi, not out of the antecedent
damage to Chisesi’s property. Because the bad faith claim did not
come into existence until Travelers failed to make an offer of
settlement within 30 days of receiving a satisfactory proof of
loss from Chisesi, it should not be subject to Carmack Amendment
preemption because it did not arise directly from the damaged
property claim.
Again, this Court has not addressed the specific question of
whether the Carmack Amendment preempts a claim for bad faith.
However, a Wisconsin district court, which has a similar procedure
for insurance claims, has considered this issue. In Marshall W.
Nelson & Associates, Inc. v. YRC Inc., the court relied on the
Seventh Circuit’s instruction that “claims ‘relating to the making
15

of

the

contract

for

carriage

are

so

closely

related

to

the

performance of the contract, and the measure of damages for such
claims so likely to be the loss or damage to the goods, that they
are . . . preempted by the Carmack Amendment.’” No. 11-401, 2011
WL 3418302, at *3 (E.D. Wis. Aug. 3, 2011) (citing Gordon v. United
Van Lines, Inc., 130 F.3d 282, 289 (7th Cir. 1997)). With regard
to the bad faith claim against the insurance company, the court
reasoned it was:
persuaded that the Carmack Amendment preempts [the
plaintiff’s] claim for bad faith denial of insurance
claim. After all, the plaintiff would not even be in a
position to complain about a bad faith denial of an
insurance claim if it had not sustained damage to goods
that were shipped by the defendant. To quote from Gordon,
‘the claims process is directly related to the loss or
damage to the goods that were shipped. Indeed, people
would not be involved in the process unless either loss
or damage had occurred.’
Marshall, 2011 WL 3418303, at *4 (citing Gordon, 130 F.3d at 290);
see also Hanlon v. United Parcel Sev., 132 F. Supp. 2d 503, 50406 (N.D. Tex. 2001) (holding that the Carmack Amendment preempted
plaintiff’s claims against carrier for bad faith, deceit for
fraudulent insurance fee collection, unauthorized operation as an
insurance company, and violations of the Texas Insurance Code).
Following

other

Circuit

precedent

and

this

Circuit’s

precedent, the Court necessarily must find that Chisesi’s claim
for bad faith against Travelers is preempted. On the Carmack
Amendment preemption topic, the Fifth Circuit instructs that “the

16

Carmack Amendment preempts any common law remedy that increases .
. . liability beyond ‘the actual loss or injury to the property,’
unless the shipper alleges injuries separate and apart from those
resulting directly from the loss of shipped property.” Morris v.
Covan World Wide Moving, Inc., 144 F.3d 377, 382 (5th Cir. 1998)
(citing 49 U.S.C. § 11707(a)(1)). Accordingly, because Chisesi
would not have a claim for bad faith against Travelers were it not
for the damaged shipped property, the bad faith claim is beyond
the actual loss or injury to the property and thus preempted by
the Carmack Amendment.
VI.
IT IS ORDERED that Travelers’ motion to dismiss is GRANTED IN
PART and DENIED IN PART. The motion is GRANTED insofar as Chisesi’s
claim against Travelers for bad faith is preempted by the Carmack
Amendment and is DISMISSED with prejudice. The motion is DENIED
insofar as the Court finds that Chisesi’s direction action suit is
sufficiently pled and is not preempted by the Carmack Amendment.
Chisesi’s direct action suit is limited to the claims available to
it against Transco, namely, the Carmack Amendment claim.

New Orleans, Louisiana, June 14, 2017

______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE

17