Central Marketing Associates Inc v. Cresap
Filing
23
ORDER denying 17 Defendants' Motion for Partial Summary Judgment and granting 20 Plaintiff's Motion for Partial Summary Judgment. Signed by Magistrate Judge Mark R. Abel on 8/13/13. (sh1) Modified text and added link on 8/13/2013 (er1).
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
Central Marketing Associates, Inc.,
:
Plaintiff
:
v.
Civil Action 2:12-cv-01109
:
Robert E. Cresap d/b/a Robert Cresap
Trucking and Daily Underwriters of
America,
:
Magistrate Judge Abel
:
Defendant
ORDER
This matter is before the Court on defendants Robert E. Cresap d/b/a Robert
Cresap Trucking (“Cresap”) and Daily Underwriters of America’s (“DUOA”) June 3,
2013 motion for partial summary judgment (doc. 18) and plaintiff Central Marketing
Associates’ (“CMA”) June 3, 2013 motion for partial summary judgment (doc. 20).
I.
Allegations in the Complaint
The complaint pleads a claim under the Carmack Amendment for losses Central
Marketing Associates, Inc. suffered when perishable goods were allegedly damaged
during shipment. It makes the following allegations. The bill of lading advised Cresap
Trucking that the shipment comprised perishable food that required a temperature of
32 - 34 degrees at all times. The consignee of the shipment, Meijer of Tipp City, Ohio
rejected the entire shipment due to spoilage caused by temperature abuse. Investigation
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revealed that due to a malfunction and breakdown the transport refrigeration unit
permitted temperatures in excess of 34 degrees. Central Marketing Associates, Inc.'s loss
was $53,308.
II.
Arguments of the Parties
A.
Defendants Robert E. Cresap d/b/a Robert Cresap Trucking and
Daily Underwriters of America
Defendants argue that the material facts of record clearly establish that the loss
complained of was caused by something other than a mechanical breakdown of the
refrigeration unit and outside the finite and clearly-expressed limitations of the cargo
liability insurance policy’s refrigeration breakdown endorsement. Defendants maintain
that CMA has misapprehended the meaning and the coverage of the refrigeration
breakdown endorsement
DUOA provided Cresap with a Motor Truck Cargo Liability Form, which was
modified and supplemented by a Commercial Marine Refrigeration Breakdown
Endorsement. The Endorsement provides that DUOA will pay for a loss to covered
property due to spoilage resulting from malfunction or mechanical breakdown of a
temperature control and/or refrigeration unit attached to any vehicle carrying the
covered property.
Based on Cresap’s report that the trailer chute had been knocked down, DUOA
advised Cresap that the loss was not covered by the Endorsement because ThermoKing, the manufacturer of the refrigeration unit stated that a trailer chute is not
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considered to be part of the refrigeration unit. The chute is sold separately as an
accessory and is not needed to cool the contents of the trailer.
Defendants maintain that the refrigeration unit performed as expected and did
not suffer from any malfunction or mechanical breakdown. Temperature recorders
were inserted with the cherries in the trailer to record the temperature inside the trailer
for the duration of the trip from Yakima, Washington to Tipp City, Ohio. One
temperature recorder was placed at the front of the trailer and one at the rear. The
recorder at the front of the trailer recorded temperatures between 32 and 34 degrees
Fahrenheit. The unit at the back of the trailer recorded temperatures warmer than that.
Defendants contend that the trailer chute is an air handling system that is
separate and distinct from an air chilling or a mechanical refrigeration unit. The chute
and refrigeration unit provide separate and distinct roles. Defendants maintain that the
chute is not part of the refrigeration unit, and a malfunction of the chute does not
equate to a breakdown of the refrigeration unit.
Defendants argue that plaintiff has the burden of proving that the loss was
caused by a peril insured against in the cargo policy. Defendants maintain that there is
no evidence of a mechanical breakdown. The refrigeration unit performed flawlessly
and continuously throughout the trip, maintaining the inside temperature of the front
of the trailer at a constant 32-34 degrees Fahrenheit as required by the bill of lading and
evidenced by the temperature recording. Cresap stated that he entered the trailer after
the load was rejected and found that the clips holding the chute had broken. He
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believes that chute was torn when the pallets of cherries were loaded onto the trailer.
Cresap picked up a frozen load the day after the load of cherries was rejected, and
delivered it to Iowa without any problems maintaining the temperature.
B.
Plaintiff Central Marketing Associates
Plaintiff CMA argues that the Refrigeration Breakdown Endorsement provides
coverage in the event of any “malfunction” or “mechanical breakdown” of a
temperature control and/or refrigeration unit. In the alternative, plaintiff argues that
the Motor Truck Cargo Liability Coverage Form covers any damage to cargo for any
non-excluded cause, none of which are present here. The policy also contains Physical
Damage Coverage, which provides coverage where the cause of loss involved a
collision with an object such as a cargo loading device.
Plaintiff argues that according to industry experts, the chute is part of the
refrigeration unit. A refrigeration unit is not complete without all temperature control
elements properly functioning, including the chute.
Plaintiff maintains that the language of the contract does not support a denial of
coverage. Defendant chose to delineate its loss coverage by using certain vague and
undefined terms in addition to using the term “or”, creating four possible losses. As a
result, “malfunction” is not the same as “mechanical breakdown”, and “temperature
control” unit is not the same as “refrigeration unit.” Plaintiff maintains that in order to
defeat coverage DUOA must establish not only that the policy is capable of its
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interpretation of the policy, but that its interpretation is the only one that can fairly be
placed on the language in question.
Plaintiff further argues that the to the extent that DUOA attempts to argue that
the chute was knocked off the system by an impact at the loading dock, this event
would trigger coverage under the provision providing for “collision” coverage.
III.
Summary Judgment
Summary judgment shall be granted “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). A party asserting the absence or presence of a
genuine dispute must support that assertion by either “(A) citing to particular parts of
materials in the record, including depositions, documents, electronically stored
information, affidavits or declarations, stipulations (including those made for purposes
of the motion only), admissions, interrogatory answers, or other materials”; or “(B)
showing that the materials cited do not establish the absence or presence of a genuine
dispute, or that an adverse party cannot produce admissible evidence to support the
fact.” Fed. R. Civ. P. 56(c)(1).
A party may object that the cited material “cannot be presented in a form that
would be admissible in evidence,” and “[t]he burden is on the proponent to show that
the material is admissible as presented or to explain the admissible form that is
anticipated.” Fed. R. Civ. P. 56(c)(2); Fed. R. Civ. P. 56 advisory committee’s note. If a
party uses an affidavit or declaration to support or oppose a motion, such affidavit or
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declaration “must be made on personal knowledge, set out facts that would be
admissible in evidence, and show that the affiant or declarant is competent to testify on
the matters stated.” Fed. R. Civ. P. 56(c)(4).
While the court must consider the cited materials, it may also consider other
materials in the record. Fed. R. Civ. P. 56(c)(3). However, “[i]n considering a motion for
summary judgment, the district court must construe the evidence and draw all
reasonable inferences in favor of the nonmoving party.” Revis v. Meldrum, 489 F.3d 273,
279 (6th Cir. 2007) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986)). “The central issue is ‘whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one party
must prevail as a matter of law.’” Id., 489 F.3d at 279–80 (citing Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 251–52 (1986)).
IV.
Discussion
The parties appear to agree on the basic facts underlying this case. Plaintiff CMA
was hired by its customer, Meijer, to obtain transportation for a shipment of bing
cherries from its point of origin in Yakima, Washington to its point of destination in
Meijer, in Tipp City, Ohio. On July 2, 2012, defendant Cresap Trucking took possession
of the shipment. Meijer issued a bill of lading that advised Cresap Trucking to maintain
the cherries at a temperature of 32-34 degrees Fahrenheit. Upon delivery to its point of
destination, Meijer of Tipp City, Ohio rejected the entire shipment due to spoilage
caused by not being maintained at the proper temperature.
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Cresap made a demand upon DUOA to provide insurance coverage in
accordance with his insurance policy. On July 26, 2012, DUOA denied coverage on the
basis that its Refrigeration Breakdown Endorsement did not include any loss associated
with the chute.
Although Cresap speculated that the chute was damaged when the cherries were
loaded, what damaged the chute and caused it to fail to function properly is unknown.
The parties, however, agree, that the refrigeration unit in the front of the trailer
mechanically functioned properly as evidenced by the temperature readings taken from
the front of the trailer.
This case turns on the interpretation of the Commercial Marine Refrigeration
Breakdown Endorsement, which provides in pertinent part:
We will pay for “loss” to Covered Property when its due to spoilage,
change in flavor, wet or dampness, being spotted, discolored, molded,
rusted, frosted or rotten IF resulting from a malfunction or mechanical
breakdown of a temperature control and/or refrigeration unit attached to
any vehicle covering the Covered Property.
Doc. 20-11. Specifically, the Court must determine whether the failure of the chute to
properly circulate the refrigerated air constitutes a “malfunction” of a “temperature
control”.
The interpretation of an insurance contract is a question of law. GenCorp, Inc. v.
American Int’l Underwriters, 178 F.3d 804 (6th Cir. 1999). To determine the intent of the
parties, the Court looks at the plain and ordinary meaning of the language in the
contract to determine the intent of the parties. Safeco Ins. Co. Of Am. v. White, 122 Ohio
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St. 3d 562, 567 (2009). Ambiguous provisions in an insurance contract must be
construed against the insurer. Id.
Defendant argues that the separation of the chute from the trailer wall cannot
constitute a malfunction or mechanical breakdown of the refrigeration unit. Plaintiff
contends, that the chute is a “temperature control” unit that malfunctioned. What the
Court must decide is whether the air flow system, i.e., the chute, is a temperature
control unit. The chute does not provide refrigeration, rather it circulates the
refrigerated air.
For mechanical refrigeration to properly maintain the desired temperature in the
trailer, an air circulation system is necessary. See doc. 20-1 at PageID# 342; UNITED
STATES DEPT. OF AGRICULTURE, Protecting Perishable Foods During transport by Truck,
(Handbook No. 669, Sept, 1995) (“Air circulation is one of the most important factors in
protecting refrigerated loads of perishable foods. Refrigeration capabilities are
meaningless if the refrigerated air is not properly circulated to maintain product
temperature.”). Although defendants seem to contend that a temperature control unit
and a refrigeration unit are synonymous, the contractual language does not support
that interpretation. Here, coverage is provided for malfunctioning of a temperature
control unit and/or a refrigeration unit. The use of “and/or” indicates that these two
units are separate and distinct from one another and that one or both of those units
could malfunction. The function of the chute is to control the temperature throughout
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the trailer. Here, a malfunction of the chute resulted in the spoilage of the cherries. I
conclude that this loss is covered under the Refrigeration Breakdown Endorsement.
V.
Conclusion
For the reasons stated above, defendants Robert E. Cresap d/b/a Robert Cresap
Trucking (“Cresap”) and Daily Underwriters of America’s (“DUOA”) June 3, 2013
motion for partial summary judgment (doc. 18) is DENIED and plaintiff Central
Marketing Associates’ (“CMA”) June 3, 2013 motion for partial summary judgment
(doc. 20) is GRANTED.
s/Mark R. Abel
United States Magistrate Judge
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