Amlin Corporate Insurance N.V. et al v. Union Pacific Railroad Company et al

Filing 98

MEMORANDUM AND ORDER - IT IS ORDERED: Plaintiffs' motion for reconsideration (Filing No. 82 ) is denied. Plaintiff CG Power Systems Canada, Inc.'s motion to dismiss (Filing No. 89 ) is denied. Ordered by Senior Judge Lyle E. Strom. (TCL )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
AMLIN CORPORATE INSURANCE
N.V., and CG POWER SYSTEMS
CANADA, INC.,

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Plaintiffs,
v.
UNION PACIFIC RAILROAD
COMPANY,
Defendant.

8:10CV31

MEMORANDUM AND ORDER

This matter is before the Court upon plaintiffs’ motion
for reconsideration(Filing No. 82).

Plaintiffs request that the

Court reconsider its memorandum and order dated January 25, 2011
(Filing

No.

80)

enforcing

defendant

Union

Pacific

Railroad

Company’s (Union Pacific) purported limitation of liability.

Also

before the Court is plaintiff CG Power Systems Canada, Inc.’s (CG
Power) motion to dismiss the counterclaim of defendant Union
Pacific for failure to state a claim under Fed. R. Civ. P. 12(b)(6)
(Filing No. 89).

Upon review of the motions, briefs, and relevant

law, the Court finds the motions will be denied.
I.

STANDARDS OF REVIEW
This Court will construe a motion for reconsideration

under

Rules

Procedure.

59(e)

and

60(b)

of

the

Federal

Rules

of

Civil

A Rule 59(e) motion is properly granted, among other

things, where it is necessary to “correct manifest errors of law or
fact upon which the judgment is based” and/or “to protect manifest

injustice.”

WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE, § 2810.1, p.

124 (1995). Similarly, the Court may grant relief under Rule 60(b)
due to, among other things, “mistake, inadvertence, surprise, or
excusable neglect.”

Fed. R. Civ. P. 60(b)(1).

When ruling on a motion to dismiss, a judge must rule “on
the assumption that all the allegations in the complaint are true,”
and “a well-pleaded complaint may proceed even if it strikes a
savvy judge that actual proof of those facts is improbable, and
‘that recovery is very remote and unlikely.’”

Bell Atl. Corp. v.

Twombly, 550 U.S. 544, 556 (2007) (quoting Scheuer v. Rhodes, 416
U.S. 232, 236 (1974)).
II.

MOTION TO RECONSIDER
To recap the relevant, undisputed facts surrounding the

rail

movement

subject

to

this

lawsuit:

plaintiff

CG

Power

contracted with Canadian National Railroad (CNR) to ship a large
electrical transformer from Canada to Fort Worth, Texas (with BNSF
Railway Co. (BNSF) performing carriage from Noyes, Minnesota to
Fort Worth, Texas) pursuant to the CNR contract.

Plaintiff CG

Power entered into a separate contract (the Union Pacific contract)
with defendant Union Pacific to move the transformer from Fort
Worth, Texas to McCoy, Texas.

On or about January 26, 2009, the

train car carrying the transformer derailed at Union Pacific’s
Davidson Yard in Fort Worth, Texas. Plaintiffs never sued CNR, and
BNSF has been dismissed from this lawsuit.

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Plaintiff Amlin

Corporate Insurance, N.V. (Amlin) is the insurer of the shipment
that is subject to this action.

Thus, the terms of the Union

Pacific contract and the events which took place during Union
Pacific’s shipment of the transformer are the only facts relevant
to this case.
The Union Pacific shipment was subject to Union Pacific
Price Authority 4467, Item 3002-G.

The Union Pacific Price

Authority 4467, Item 3002-G provided:
GENERAL APPLICATION RULES FOR ITEM
3002-G
1. Price is subject to Exempt
Circular 16 (series), item 695
(series) . . .
3.

Price is subject to Exempt
Circular UP (series) . . .

6.

Subject to maximum liability of
$25,000 per Car.

(Plts.,’ Ex. 8, UP Price Authority 4467) (emphasis added).
Union Pacific’s Circular 16-E provided:
On moves that originate in the
United States Shippers may, at their
option, select liability provisions
set forth in 49 U.S.C. Section 11706
(Carmack) as explained in ITEM 17.
If 49 U.S.C. Section 11706 (Carmack)
is not selected, the liability
provisions of this item will govern.
(Plts.’ Ex. 9, UP Circular 16-E, p. 185 para. 1.C.) (emphasis
added).

Union Pacific’s Circular 16-E, ITEM 17 provided:
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49 U.S.C. Section 11706 provides for
full-value
liability
and
other
liability terms for the carrier and
the shipper.
To make a shipment
pursuant to the terms of 49 U.S.C.
Section 11706, the shipper must
comply with all of the following
provisions:
1.

Shipper must notify carrier no
less than 72 hours before the
shipment
is
released
for
transportation that the shipper
chooses
Carmack
liability
protection.

2.

Shipper may at this option
specify in the Bill of Lading
that the shipment shall move
under the liability provisions
set for under 49 U.S.C. Section
11706, in which case the rate
shall be 200 percent of the
applicable rate subject to this
circular.

3.

The shipping instructions must
note that the shipment is
moving under 49 U.S.C. Section
11706 liability terms and that
the shipment is subject to a
specific pricing authority.

4.

Carmack liability coverage is
not available for shipments
that originate in Mexico.

Paul Stein, speaking of behalf of CG Power, testified
that he never read the above-referenced terms before agreeing to
contract with Union Pacific thereunder.

See Union Pacific’s brief

supporting denial of plaintiffs’ motion for reconsideration, Filing
No. 86, p. 7.

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In order for Union Pacific to limit its liability,
plaintiffs

claim

Union

Pacific

needed

to

have

offered

an

alternative liability rate pursuant to the Carmack Amendment,
and/or federal common law, and/or state law.

Although defendant

Union Pacific did indeed offer plaintiffs the opportunity to elect
an alternative liability rate in the above-referenced provisions,
plaintiffs assert this Court should find that defendant is not
entitled to a limitation of liability of $25,000 per car because
the move of the transformer did not “originate in the United
States,”

making

the

provision

of

the

Union

Pacific

contract

offering an alternative liability rate inapplicable to the move of
the transformer.

The Court disagrees.

Plaintiffs respectfully submit that the Court overlooked
controlling Supreme Court precedent in determining that the rail
movement subject to this lawsuit originated in the United States.
If the provisions of the Carmack Amendment, as codified in 49
U.S.C. Section 11706, apply to the Union Pacific contract as
plaintiffs contend, this Court must decide the meaning of the word
originate as found in the Union Pacific contract, pursuant to
Supreme Court precedent analyzing the Carmack Amendment.

In

Kawasaki Kisen Kaisha Ltd. et al v. Regal-Beloit Corp. et al, 130
S.Ct. 2433, 2445 (2010), the Supreme Court held:
[I]f . . . the bills of lading for
[an international] transport ended
at this country’s ports and the
cargo owners then contracted with
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Union Pacific to complete a new
journey to an inland destination in
the United States[,] [u]nder those
circumstances, Union Pacific would
have been the receiving rail carrier
and would have been required to
issue a separate Carmack-compliant
bill of lading to the cargo owners.
See Reider v. Thompson, 339 U.S.
113, 117 (1950)(“If the various
parties dealing with this shipment
separated the carriage into distinct
portions by their contracts, it is
not for courts judicially to meld
the portions into something they are
not.”)
Under Carmack, a “receiving” rail carrier is considered
the “originating” rail carrier.

See Kawasaki, 130 S.Ct. at 2445

(2010); see also Reider, 339 U.S. at 117 (“The test is not where
the shipment originated, but where the obligation of the carrier as
receiving carrier originated.”).

Thus, as the contract for the

transport of the transformer from Canada to Fort Worth, Texas ended
in Fort Worth, and CG Power then contracted with Union Pacific to
complete a new journey to a destination within the United States,
Union Pacific is considered the receiving carrier for the newly
issued, separate Union Pacific contract.

Such makes Union Pacific

the originating carrier of the new Union Pacific contract for the
new journey.

As the various parties dealing with this shipment

separated the carriage into distinct portions by their contracts,
it is not for this Court to judicially meld the two contracts
together into something they are not.

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Even

if

it

is

later

discovered

or

held

that

the

provisions of the Carmack Amendment do not apply to this move,
“[t]he terms of a contract are to be accorded their plain and
ordinary meaning as ordinary, average, or reasonable persons would
understand them.”

Nebraska Public Power Dist. v. MidAmerican

Energy Co., 234 F.3d 1032 (8th Cir. 2000) (citations omitted).
There were two parties to this contract: defendant Union Pacific
and plaintiff CG Power.

The sole purpose of this contract was to

govern a move of an electronic transformer from one point in Texas
to another point in Texas.

As the shipment took place entirely in

one state in the United States, it can be said that the shipment
subject to this contract originated in the United States.

Thus,

there was explicit language within the contract providing CG Power
an opportunity to seek an alternative liability rate, although CG
Power did not choose to enforce such provision when entering into
this distinct contract with Union Pacific.
The Court has thoroughly reviewed its previous ruling and
finds it was not based upon mistake, inadvertence, or manifest
error of law or fact.

The Court maintains Union Pacific is

entitled to enforce the $25,000 liability limitation per car which
plaintiff

CG

Power

agreed

to

pursuant

to

the

Union

Pacific

contract.
III. MOTION TO DISMISS
Union Pacific filed a counterclaim with this Court’s

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permission against CG Power for breach of contract. See Filing No.
81.

Union Pacific claims CG Power breached and/or materially

deviated from its duties under the Union Pacific contract by
failing to keep in force general liability (including contractual
liability) insurance of $500,000 or the amount required by law for
bodily injury, property damage, and any other insurance required by
law,

whichever

is

greater

which

named

Union

Pacific

as

an

additional insured and/or failing to respond to Union Pacific’s
status as an additional insured. As a result, Union Pacific claims
it has suffered and will continue to suffer money damages.
CG Power claims the counterclaim fails to state a claim
upon which relief can be granted pursuant to Fed. R. Civ. Pro.
12(b)(6) because: (1) the clause Union Pacific cites to in its
contract is void against public policy; and (2) as a separate
basis, the general liability (including contractual liability)
policy

that

definition,

Union

Pacific

cover

damage

purportedly
to

transformer being carried).

the

required

property

does

itself

not,

(i.e.

by
the

Although CG Power’s arguments may

contain merit, the Court finds Union Pacific has set forth the
required elements to state a plausible breach of contract claim in
its counterclaim against CG Power, even if actual recovery on that
claim is remote or unlikely.

Twombly, 550 U.S. at 556 (quoting

Scheuer, 416 U.S. at 236 (1974)).
IT IS ORDERED:

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1. Plaintiffs’ motion for reconsideration (Filing No. 82)
is denied.
2. Plaintiff CG Power Systems Canada, Inc.’s motion to
dismiss (Filing No. 89) is denied.
DATED this 29th day of June, 2011.
BY THE COURT:
/s/ Lyle E. Strom
____________________________
LYLE E. STROM, Senior Judge
United States District Court

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