Transport Financial Services, LLC v. ETL, Inc.

Filing 29

ORDER by Judge Anna J. Brown. The Court DENIES Plaintiff's Motion (# 15 ) for Summary Judgment and GRANTS Defendant's Cross-Motion (#[ 21 ) for Summary Judgment. IT IS SO ORDERED. See order for further details. Signed on 9/18/17. (jy)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON

TRANSPORT FINANCIAL SERVICES,
LLC, a Florida corporation,

3:16-CV-01506-BR
OPINION AND ORDER

Plaintiff,
v.
ETL, INC., a Washington
corporation,
Defendant.

JOHN P. MANNING
8196 S.W. Hall Boulevard
Suite 203
Beaverton, OR 97008
[phone]
Attorney for Plaintiff
KEVIN M. ANDERSON
ANDREW I. SCHLEGEL
Anderson and Yamada, PC
9755 S.W. Barnes Road
Suite 675
Portland, OR 97225
[phone]
Attorneys for Defendant

1 - OPINION AND ORDER

BROWN, Judge.
This matter comes before the Court on Plaintiff’s Motion
(#15) for Summary Judgment and Defendant’s Cross-Motion (#21) for
Summary Judgment.

For the reasons that follow, the Court DENIES

Plaintiff’s Motion and GRANTS Defendant’s Motion.

BACKGROUND
The following facts are taken from the Statement of Agreed
Facts and the parties’ filings related to their Motions for
Summary Judgment.
Plaintiff Transport Financial Services (TFS) is a limited
liability company that is authorized by the Federal Motor Carrier
Safety Administration (FMCSA) to issue and to file Form BMC-85,
which is a transportation broker’s or freight forwarder’s trust
fund agreement, pursuant to 49 U.S.C. § 13906(a).1
During the relevant period Rail Logistics, LLC,2 was a
transportation broker licensed and registered by the FMCSA
pursuant to 49 U.S.C. § 13904.

A transportation broker is “a

1

49 U.S.C. § 13906(a) provides in relevant part: “The
Secretary may register a motor carrier under section 13902 only
if the registrant files with the Secretary a bond, insurance
policy, or other type of security approved by the Secretary . . .
sufficient to pay . . . for each final judgment against the
registrant for bodily injury to, or death of, an individual
resulting from the negligent operation, maintenance, or use of
motor vehicles, or for loss or damage to property . . . or both.”
2

Rail Logistics is not a party to this action.

2 - OPINION AND ORDER

person who, for compensation, arranges, or offers to arrange, the
transportation of property by an authorized motor carrier.”

49

C.F.R. § 371.2.
Defendant ETL, Inc., is an interstate motor carrier defined
as being in “the business of transporting, for compensation, the
goods or property of another.”

49 C.F.R. § 387.5.

Defendant is

registered with the FMCSA pursuant to 49 U.S.C. § 13902(a), which
provides the Secretary of Transportation “shall register a person
to provide transportation . . . as a motor carrier using
self-propelled vehicles the motor carrier owns, rents, or leases”
when certain conditions are satisfied.
On October 1, 2013, Plaintiff issued a Form BMC-85 to Rail
Logistics in the amount of $75,000.
On October 28, 2013, Rail Logistics and Defendant entered
into a Broker-Carrier Agreement under which Defendant “was to be
paid for its carrier services by Rail Logistics.”
Agreed Facts at ¶ 5.

Statement of

Defendant “performed motor carrier

transportation services under the Broker-Carrier Agreement.”
Statement of Agreed Facts at ¶ 6.

Plaintiff alleges Rail

Logistics was paid by “the responsible account debtor for each of
the shipments involved.”

Compl. at ¶ 11.

At some point in 2014 Rail Logistics “ceased doing it [sic]
brokerage business.”

Statement of Agreed Facts at ¶ 7.

Defendant demanded Rail Logistics “pay its claims for it [sic]

3 - OPINION AND ORDER

services provided to Rail Logistics.
do so.”

Rail Logistics refused to

Statement of Agreed Facts at ¶ 7.

At some point after Rail Logistics’s refusal to pay
Defendant, Defendant submitted its claims to Plaintiff pursuant
to the Form BMC-85 Trust Agreement for payments that Rail
Logistics owed Defendant.
Plaintiff paid a portion of Defendant’s claim in the amount
of $22,295.
On July 26, 2016, Plaintiff filed a Complaint for
Declaratory Judgment in this Court in which it alleges it
“mistakenly paid [Defendant’s] claims under the Form BMC-85 . . .
in the amount of $22,295, [because] the . . . shipments made by
[Defendant] were exempt from coverage under the BMC-85 trust fund
agreement [by the terms of] 49 CRF [sic] 1090.2 captioned
‘Exemption of rail and highway TOFC/COFC service.’”3
¶ 16.

Compl. at

Plaintiff seeks a declaration from that Court that it “was

not required to pay [Defendant’s] claims inasmuch as the
underlying movements were exempt from coverage under [the Form
BMC-85] and, further, requiring [Defendant] to refund all amounts
paid on such claims to [Plaintiff].”

Compl. at ¶ 17.

On April 28, 2017, Plaintiff filed a Motion for Summary

3

TOFC/COFC is a form of mixed train and truck
transportation that enables a carrier to transport a trailer and
its contents by rail on a flatcar and then to haul the trailer on
the highway.
4 - OPINION AND ORDER

Judgment seeking a judgment in its favor.

On May 19, 2017,

Defendant filed a Cross-Motion for Summary Judgment seeking a
judgment in its favor.
On September 1, 2017, Plaintiff filed a Supplemental Brief.
On September 15, 2017, Defendant filed a Supplemental Response.
The Court took the parties’ Motions under advisement on
September 15, 2017.

STANDARDS
Summary judgment is appropriate when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”

Washington Mut. Ins. v. United

States, 636 F.3d 1207, 1216 (9th Cir. 2011).
Civ. P. 56(a).

See also Fed. R.

The moving party must show the absence of a

dispute as to a material fact.

Rivera v. Philip Morris, Inc.,

395 F.3d 1142, 1146 (9th Cir. 2005).

In response to a properly

supported motion for summary judgment, the nonmoving party must
go beyond the pleadings and show there is a genuine dispute as to
a material fact for trial.
. . . .

Id.

"This burden is not a light one

The non-moving party must do more than show there is

some 'metaphysical doubt' as to the material facts at issue."

In

re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010)
(citation omitted).
A dispute as to a material fact is genuine "if the evidence
5 - OPINION AND ORDER

is such that a reasonable jury could return a verdict for the
nonmoving party."

Villiarimo v. Aloha Island Air, Inc., 281 F.3d

1054, 1061 (9th Cir. 2002)(quoting Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986)).

The court must draw all

reasonable inferences in favor of the nonmoving party.
v. Verity, Inc., 606 F.3d 584, 587 (9th Cir. 2010).

Sluimer

"Summary

judgment cannot be granted where contrary inferences may be drawn
from the evidence as to material issues."

Easter v. Am. W. Fin.,

381 F.3d 948, 957 (9th Cir. 2004)(citation omitted).

A “mere

disagreement or bald assertion” that a genuine dispute as to a
material fact exists “will not preclude the grant of summary
judgment.”

Deering v. Lassen Cmty. Coll. Dist., No. 2:07-CV-

1521-JAM-DAD, 2011 WL 202797, at *2 (E.D. Cal., Jan. 20, 2011)
(citing Harper v. Wallingford, 877 F.2d 728, 731 (9th Cir.
1989)).

When the nonmoving party's claims are factually

implausible, that party must "come forward with more persuasive
evidence than otherwise would be necessary."

LVRC Holdings LLC

v. Brekka, 581 F.3d 1127, 1137 (9th Cir. 2009)(citation omitted).
The substantive law governing a claim or a defense
determines whether a fact is material.

Miller v. Glenn Miller

Prod., Inc., 454 F.3d 975, 987 (9th Cir. 2006).

If the

resolution of a factual dispute would not affect the outcome of
the claim, the court may grant summary judgment.

6 - OPINION AND ORDER

Id.

DISCUSSION
As noted, Plaintiff seeks a declaration that it was not
required to pay Defendant’s claims because Defendant’s freight
movements were exempt from coverage under the Form BMC-85
pursuant 49 C.F.R. § 1090.2.

Defendant asserts genuine disputes

of material fact exist as to whether the shipments underlying the
litigation satisfy the definition of TOFC/COFC as set out in 49
C.F.R. § 1090.1.

Even if the shipments satisfied that

definition, Defendant asserts it is entitled to summary judgment
because Plaintiff has not established Defendant satisfied the
requirements of 49 C.F.R. § 1090.3 necessary for a motor carrier
to use TOFC/COFC service, and, therefore, Defendant’s freight
movements were not exempt from coverage under the Form BMC-85
pursuant 49 C.F.R. § 1090.2.
As noted, a transportation broker is “a person who, for
compensation, arranges, or offers to arrange, the transportation
of property by an authorized motor carrier.”

49 C.F.R. § 371.2.

Plaintiff asserts motor carriers only act as authorized motor
carriers when they engage in interstate commerce through
movements not subject to any exemption from federal economic
regulation.

In addition, BMC-85 Trustees such as Plaintiff are

prohibited from directing or paying BMC-85 funds for claims
arising from movements that are exempted from federal economic
regulation.

Plaintiff asserts Defendant was not acting as an

7 - OPINION AND ORDER

authorized motor carrier when it made the shipments for which it
made claims to Plaintiff because those movements were exempt from
federal economic regulation by 49 C.F.R. § 1090.2.

According to

Plaintiff, therefore, it was prohibited from paying funds to
Defendant pursuant to the Form BMC-85, and it did so in error.
As noted, TOFC/COFC is a form of mixed train and truck
transportation that enables a carrier to transport a trailer and
its contents by rail on a flatcar and then to haul the trailer on
the highway.

49 C.F.R. § 1090.1 provides:

(a) Rail trailer-on-flatcar/container-on-flatcar
(TOFC/COFC) service means the transportation by
rail, in interstate or foreign commerce, of—
(1) Any freight-laden highway truck, trailer,
or semitrailer,
(2) The freight-laden container portion of
any highway truck, trailer, or semitrailer
having a demountable chassis,
(3) Any freight-laden multimodal vehicle
designed to operate both as a highway truck,
trailer, or semitrailer and as a rail car,
(4) Any freight-laden intermodal container
comparable in dimensions to a highway truck,
trailer, or semitrailer and designed to be
transported by more than one mode of
transportation, or
(5) Any of the foregoing types of equipment
when empty and being transported incidental
to its previous or subsequent use in
TOFC/COFC service.
(b) Highway TOFC/COFC service means the highway
transportation, in interstate or foreign commerce,
of any of the types of equipment listed in
paragraph (a) of this section as part of a
8 - OPINION AND ORDER

continuous intermodal movement that includes rail
TOFC/COFC service, and during which the trailer or
container is not unloaded.
Plaintiff relies on 49 C.F.R. § 1090.2 to establish that the
movements underlying this action were exempted from federal
economic regulation and that Plaintiff, therefore, was prohibited
from paying funds to Defendant pursuant to the Form BMC-85.

The

exemption provides:
[R]ail TOFC/COFC service and highway TOFC/COFC
service provided by a rail carrier either itself
or jointly with a motor carrier as part of a
continuous intermodal freight movement is exempt
from the requirements of 49 U.S.C. subtitle IV,
regardless of the type, affiliation, or ownership
of the carrier performing the highway portion of
the service.
49 C.F.R. § 1090.2.
Defendant does not dispute § 1090.2 provides an exemption to
federal economic regulation for TOFC/COFC rail and highway
service.

Defendant, however, asserts it is entitled to summary

judgment because Plaintiff has not established Defendant met the
conditions and requirements provided under 49 C.F.R. § 1090.3 for
Defendant to use TOFC/COFC service, and, therefore, the exemption
from paying funds set out in § 1090.2 does not apply to
Defendant.

Thus, Defendant contends as a matter of law that the

payments Plaintiff made to Defendant were not erroneous.
Specifically, 49 C.F.R. § 1090.3 sets out the conditions and
requirements for a motor carrier such as Defendant to use
TOFC/COFC service as follows:
9 - OPINION AND ORDER

(a) Except as otherwise prohibited by these rules,
motor and water common and contract carriers may
use rail TOFC/COFC service in the performance of
all or any portion of their authorized service.
(b) Motor and water common carriers may use rail
TOFC/COFC service only if their tariff
publications give notice that such service may be
used at their option, but that the right is
reserved to the user of their services to direct
that in any particular instance TOFC/COFC service
not be used.
(c) Motor and water contract carriers may use rail
TOFC/COFC service only if their transportation
contracts and tariffs (for water carriers) make
appropriate provisions therefor.
(d) Tariffs of motor and water common or water
contract carriers providing for the use of rail
TOFC/COFC service shall set forth the points
between which TOFC/COFC service may be used.
Emphasis added.
Defendant notes it is undisputed that it entered into a
Broker-Carrier Agreement with Rail Logistics and that all of the
transportation services provided by Defendant for Rail Logistics
were performed pursuant to that Agreement.
Facts at ¶ 5-6.

Statement of Agreed

Defendant points out that the Broker-Carrier

Agreement does not contain any provision or notice as to the use
of TOFC/COFC service nor does the Agreement even contain the term
TOFC/COFC or any indication that TOFC/COFC service is
contemplated.

According to Defendant, therefore, the Broker-

Carrier Agreement does not meet the requirements of § 1090.3(c)
or (d).

In any event, Eddie Garcia, owner and "governor" of

Defendant, states in his Declaration that “[a]t all relevant and
10 - OPINION AND ORDER

material times, [Defendant] did not have a tariff.

[Defendant]

did not . . . have any tariff, rules, or terms that set forth the
points between which TOFC/COFC service may be used.”
Eddie Garcia at ¶ 3.

Decl. of

Thus, Defendant maintains the freight

movements at issue did not satisfy the requirements of
§ 1090.3(b) and (d) and, therefore, the exemption from paying
funds set out in § 1090.2 does not apply and Plaintiff’s payments
were not erroneous.
In its Response to Defendant’s Cross-Motion Plaintiff
asserts the Court should consider the bills of lading, which,
according to Plaintiff, are “basic transportation contract[s]”
rather than relying solely on Defendant’s Broker-Carrier
Agreement with Rail Logistics to ascertain whether the
requirements of § 1090.3 were satisfied.

Plaintiff attaches two

such bills of lading in which the transportation is listed as
“PIG.”

According to Plaintiff, PIG means service via rail and is

equivalent to stating service by TOFC.

See, e.g., I.C.C. v.

Texas, 479 U.S. 450, 451 (1987)(“Trailer-on-flatcar (TOFC or
‘piggyback’) service [is] a form of mixed train and truck
transportation, [and] enables a carrier to transport a trailer
and its contents over rail on a flatcar and then to haul the
trailer on the highway.”).

Plaintiff, therefore, asserts the

bills of lading accompanying the shipments at issue satisfy the
requirements of § 1090.3.

11 - OPINION AND ORDER

Defendant, however, points out that § 1090.3 specifically
provides the appropriate provisions to use TOFC/COFC service must
be set out in a “transportation contract.”

According to

Defendant, bills of lading are distinct from transportation
contracts under Title 49.
provides:

Specifically, 49 U.S.C. § 14101(b)

“A carrier providing transportation or service . . .

may enter into a contract with a shipper . . . to provide
specified services under specified rates and conditions.”

Bills

of lading, however, are governed by the Federal Bill of Lading
Act, which applies “to a bill of lading when the bill is issued
by a common carrier for the transportation of goods.”

49 U.S.C.

§ 80102.
Even if bills of lading constitute transportation contracts
under the circumstances of this case (i.e., Defendant and Rail
Logistics entered into an actual Broker-Carrier Agreement),
Defendant asserts the mere use of the term “PIG” in the bills of
lading does not satisfy the requirements of § 1090.3.

For

example, the bills of lading do not give notice that TOFC/COFC
service may be used at Defendant’s option, “but that the right is
reserved to the user of their services to direct that in any
particular instance TOFC/COFC service not be used.”

Similarly,

the bills of lading do not specify the “appropriate provisions”
for use of TOFC/COFC nor do they “set forth the points between
which TOFC/COFC service may be used.”

12 - OPINION AND ORDER

On this record the Court concludes Plaintiff has not
established as a matter of undisputed fact that either the
Broker-Carrier Agreement entered into by Defendant and Rail
Logistics or the bills of lading satisfied the requirements of 49
C.F.R. § 1090.3.
In its Supplemental Brief Plaintiff asserts the legislative
history of the regulations related to § 1090.3 show a relaxation
of the regulations to the extent that “[t]he I.C.C. found no
evidence that continued regulation was necessary to protect
shippers.”

Plaintiff, however, does not cite any case in which a

court has concluded the requirements of § 1090.3 are no longer in
effect.

The Court cannot simply ignore § 1090.3 or disregard its

clear meaning.

The Court, therefore, concludes Plaintiff has not

established the shipments at issue were subject to the exemption
set out in § 1090.2.

Defendant, in turn, has established the

shipments did not meet the requirements of § 1090.3 and, as a
result, the exemption in § 1090.2 does not apply and the payments
made to Defendant by Plaintiff pursuant to the Form BMC-85 were
not in error.
Accordingly, the Court denies Plaintiff’s Motion for Summary
Judgment and grants Defendant’s Cross-Motion for Summary
Judgment.

13 - OPINION AND ORDER

CONCLUSION
For these reasons, the Court DENIES Plaintiff’s Motion (#15)
for Summary Judgment and GRANTS Defendant’s Cross-Motion (#21)
for Summary Judgment.
IT IS SO ORDERED.
DATED this 18th day of September, 2017.

/s/ Anna J. Brown
ANNA J. BROWN
United States Senior District Judge

14 - OPINION AND ORDER