Western Express, Inc. v. Villanueva et al
MEMORANDUM OPINION OF THE COURT. Signed by District Judge Aleta A. Trauger on 10/24/17. (DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(am)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
WESTERN EXPRESS, INC. d/b/a
OSCAR VILLANUEVA d/b/a LAS
MARIAS PALLETS, PROGRESSIVE
INSURANCE COMPANY d/b/a DRIVE
INSURANCE FROM PROGRESSIVE,
KASSNICK TRUCK, INC., NATIONAL
INDEMNITY COMPANY d/b/a
NATIONAL LIABILITY & FIRE
INSURANCE, and ALLIANZ GLOBAL
CORPORATE AND SPECIALTY d/b/a
AGCS MARINE INSURANCE
Case No. 3:17-cv-01006
Judge Aleta A. Trauger
Plaintiff Western Express, Inc. (“Western”) initiated this action seeking resolution of the
question of what entity should bear financial responsibility for a misdelivered shipment. Now
before the court are five separate Motions to Dismiss, filed by each of the five defendants:
National Indemnity Company d/b/a National Liability & Fire Insurance (“National”) (Doc. No.
1-4) 1; Progressive Insurance Company d/b/a Drive Insurance from Progressive (“Progressive”)
(Doc. No. 14) 2; Oscar Villanueva d/b/a Las Marias Pallets (“LMP”) (Doc. No. 21); Kassnick
This motion was filed in state court prior to removal.
This motion supersedes the Motion to Dismiss filed by Progressive while this action
was still pending in the Circuit Court for Davidson County, Tennessee.
Trucking, Inc. (“Kassnick”) (Doc. No. 32); and Allianz Global Corporate and Specialty
(“Allianz”) (Doc. No. 40).
The motions have been fully briefed and are ripe for review. 3 For the reasons set forth
herein, LMP’s motion will be denied, and the other defendants’ motions will be granted.
Factual and Procedural Background
Western initiated this action by filing a Complaint in the Circuit Court for Davidson
County, Tennessee on May 24, 2017, alleging that it entered into a Carrier-Broker Contract with
LMP, pursuant to which LMP agreed to deliver a shipment for Western’s customer, ColgatePalmolive Company (“Colgate”), a non-party. (See Compl. ¶¶ 1, 2, 7 & Ex. 1, Doc. No. 1-5, at
LMP accepted load #5843456 for pick up in Redlands, California, on May 26, 2016, to
be delivered to a Wal-Mart Distribution Center in Red Bluff, California, on May 27, 2017. (See
Compl. ¶ 12 & Ex. 2, Doc. No. 1-5, at 16.) LMP enlisted the aid of subcontractor Kassnick to
fulfill its contractual obligation to deliver the shipment. (Compl. ¶ 15.) Instead of delivering the
load to the Wal-Mart Distribution Center in Red Bluff, California, Kassnick misdelivered the
load to an address other than the address indicated on the Bill of Lading. (Compl. ¶ 16.) The
shipment never reached its intended destination, and Western’s customer filed a claim with
Western for the misdelivered shipment in the amount of $88,787.80. (Compl. ¶ 19 & Ex. 6, Doc.
No. 1-5, at 23.)
According to Western, LMP is obligated by the Carrier-Broker Contract (“Contract”) to
carry not less than $100,000 in cargo insurance to compensate a party entitled to recover under a
Western’s response to Allianz’s Motion to Dismiss is not actually due until October 30,
2017. The court finds it unlikely that the anticipated response will make any arguments not
already included in the Responses to National’s and Progressive’s respective Motions to
bill of lading covering the goods being transported. (Compl. ¶ 8; Contract ¶ 1(b).) The Contract
provides that LMP’s liability as “carrier” “shall begin at the time cargo is loaded upon
CARRIER’S equipment at point of origin and shall continue until said cargo is delivered to the
designated consignee at destination.” (Compl. ¶ 9; Contract ¶ 1(c).) In addition, LMP agreed to
“defend and hold harmless” Western and Western’s customers “against any and all loss and
damage claims on each shipment transported by CARRIER pursuant to this agreement . . .
related to shipments transported by CARRIER.” (Compl. ¶ 10; Contract ¶ 1(d).) The untitled
document to which Express refers as the “Rate Confirmation and Load Tender” (Compl. ¶ 12 &
Ex. 2) also provides that LMP as carrier agreed to “defend, indemnify, and hold broker its
customers [sic] harmless from and against expenses and damages arising out of or related to
services provided by Carrier,” and it specifies that “any dispute arising from or related hereto
shall be brought exclusively in the courts of Davidson County, Tennessee.” (Compl. Ex. 2.)
Defendant Progressive agreed to insure LMP for cargo losses and issued a certificate of
insurance covering such losses that was effective at all times relevant to this suit. (Compl. ¶ 14 &
Ex. 3, Doc. No. 1-5, at 17.) Defendant National agreed to insure Kassnick for liability, and
Allianz agreed to insure Kassnick for loss and damage to cargo transported by Kassnick. (Compl.
¶¶ 17–18 & Ex. 5, Doc. No. 1-5, at 22.)
Based on these allegations, Western asserts that LMP violated the Contract with Western
by failing to deliver the shipment as directed on the Bill of Lading and is therefore liable for
losses caused by that breach. Western has called upon Progressive to cover the loss on behalf of
its insured, LMP, but Progressive has failed to cover the loss. (Compl. ¶ 23.)
Western asserts that Kassnick was negligent in failing to transport the shipment to the
address indicated on the Bill of Lading, thereby causing loss to Western and Western’s customer.
Western has called upon National to cover the loss caused by its insured, Kassnick, but National
has failed to cover the loss. (Compl. ¶ 24–26.) Western also asserts that Kassnick breached its
agreement with LMP by failing to deliver the shipment to the address directed by the Bill of
Lading, causing loss to Western and Western’s customer, and that Allianz has failed to cover that
loss. (Compl. ¶¶ 27–28.)
Progressive removed this action to federal court on July 5, 2017. Prior to removal, both
Progressive and National had filed Motions to Dismiss in state court and counsel for LMP had
entered an appearance. It appears that neither Kassnick nor Allianz had been served prior to
Following removal, both National and Villanueva filed Notices of Consent to Removal.
Progressive filed a new Motion to Dismiss in this court (Doc. No. 14), which supersedes the first
(Doc. No. 1-3); National’s pre-removal Motion to Dismiss remains pending as well (Doc. No. 14). Following removal, LMP, Kassnick, and Allianz each filed a Motion to Dismiss (Doc. Nos.
21, 32, 40). Western has now filed a Response in opposition to each of the motions (Doc. Nos.
18, 42, 30, 44) except that of Allianz (see Note 3, supra). Progressive, National, and Kassnick
filed Replies. (Doc. Nos. 23-1, 49, 52).
Standards of Review
In deciding a motion to dismiss for failure to state a claim under Rule 12(b)(6), the court
must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as
true, and draw all reasonable inferences in favor of the plaintiff.” Directv, Inc. v. Treesh, 487
F.3d 471, 476 (6th Cir. 2007); Inge v. Rock Fin. Corp., 281 F.3d 613, 619 (6th Cir. 2002). The
Federal Rules of Civil Procedure require that a plaintiff provide “‘a short and plain statement of
the claim’ that will give the defendant fair notice of what the plaintiff’s claim is and the grounds
upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47 (1957) (quoting Fed. R. Civ. P. 8(a)(2)).
The court must determine whether “the claimant is entitled to offer evidence to support the
claims,” not whether the plaintiff can ultimately prove the facts alleged. Swierkiewicz v. Sorema
N.A., 534 U.S. 506, 511 (2002) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).
The complaint’s allegations, however, “must be enough to raise a right to relief above the
speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). To establish the
“facial plausibility” required to “unlock the doors of discovery,” the plaintiff cannot rely on
“legal conclusions” or “[t]hreadbare recitals of the elements of a cause of action”; instead, the
plaintiff must plead “factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Rules 12(b)(1) and 12(b)(2)
Rule 12(b)(1) provides that the defendant may file a motion to dismiss based on a court’s
“lack of subject-matter jurisdiction.” Fed. R. Civ. P. 12(b)(1). The plaintiff has the burden of
proving jurisdiction when the defendant challenges subject-matter jurisdiction under Rule
12(b)(1). Rogers v. Stratton Indus., 798 F.2d 913, 915 (6th Cir. 1986).
Likewise, a plaintiff confronted with a Rule 12(b)(2) motion “bears the burden of
establishing the existence of jurisdiction” over the defendant’s person. Estate of Thompson v.
Toyota Motor Corp. Worldwide, 545 F.3d 357, 360 (6th Cir. 2008) (citation omitted).
LMP’s Motion to Dismiss
LMP’s motion is premised on Rules 12(b)(1) and 12(b)(6). It seeks dismissal based on
two theories. First, it asserts that Western does not have Article III standing to assert a breach of
contract claim against LMP, because it has not paid its customer-shipper, Colgate, for the alleged
loss occasioned by the misdelivered shipment and does not hold an assignment of Colgate’s
rights. Thus, it argues, Western is not the real party in interest and its breach of contract claim
against LMP must be dismissed.
Second, it argues that the Contract between Western and LMP, by its terms, is governed
by the Carmack Amendment, 49 U.S.C. § 14706 et seq., which preempts the Contract and
renders it void as a matter of law, because Western does not have an assignment from its
customer-shipper and therefore cannot step into the customer’s shoes for purposes of a claim
under the Carmack Amendment.
In conjunction with its Response in opposition to LMP’s motion, Western submitted a
copy of the Assignment of Claim executed on August 7, 2017 by and between Western and
Colgate, the customer-shipper whose lost cargo is the subject of this lawsuit. The Assignment
makes it clear that Western paid Colgate the value of its claim, and Colgate assigned to Western
all “right, title and interest of Colgate related to its aforementioned claim and its interest under
the Bill of Lading, with right to collect and exercise all rights in relation thereto.” (Doc. No. 301.) Based on the Assignment, Western asserts that it has standing and that both of the theories
upon which LMP relies in support of its motion to dismiss have been rendered moot.
The court notes, first, that there is a fundamental difference between statutory standing
and Article III standing. The Supreme Court has enumerated the elements necessary to
establishing the latter:
First, Plaintiff must have suffered an injury in fact—an invasion of a legallyprotected interest which is (a) concrete and particularized; and (b) actual or
imminent, not conjectural or hypothetical. Second, there must be a causal
connection between the injury and the conduct complained of—the injury has to
be fairly traceable to the challenged action of the defendant, and not the result of
the independent action of some third party not before the court. Third, it must be
likely, as opposed to merely speculative, that the injury will be redressed by a
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61 (1992) (internal citations and quotations
Statutory standing, on the other hand, asks
“whether this plaintiff has a cause of action under [a particular] statute.” The
question is closely related to the merits inquiry (oftentimes overlapping it) and is
analytically distinct from the question whether a federal court has subject-matter
jurisdiction to decide the merits of a case.
Roberts v. Hamer, 655 F.3d 578, 580–81 (6th Cir. 2011) (quoting Steel Co. v. Citizens for a
Better Env’t, 523 U.S. 83, 97 n.2 (1998)); see also Davis v. Passman, 442 U.S. 228, 239 n.18
(1979) (distinguishing the concepts of Article III standing and cause of action and noting that
“[w]hether petitioner has asserted a cause of action . . . depends not on the quality or extent of
her injury,” as does the inquiry under Article III standing, “but on whether the class of litigants
of which petitioner is a member may use the courts to enforce the right at issue”). Thus, “[w]here
a plaintiff lacks statutory standing to sue, her claim should be dismissed for failure to state a
claim upon which relief can be granted, not for lack of subject-matter jurisdiction.” Roberts, 655
F.3d at 581 (citing Traverse Bay Area Intermediate Sch. Dist. v. Mich. Dep’t of Educ., 615 F.3d
622, 626 (6th Cir. 2010)).
In this case, the allegations in the Complaint are clearly sufficient to establish Article III
standing. The plaintiff alleges the existence of a contract between it and LMP, breach of that
contract, and damages. Specifically, LMP’s breach caused Western to breach its own obligations
to Colgate, as a result of which Colgate filed a claim with Western demanding reimbursement of
nearly $89,000. (Compl. ¶ 19.) The facts as alleged by Western, regardless of whether Western
had actually paid Colgate’s claim at the time it filed suit, are sufficient to establish that Western
had suffered the invasion of a legally protected interest and suffered an injury that was both
“concrete and particularized” and “actual or imminent,” rather than conjectural or hypothetical.
Dismissal for lack of subject-matter jurisdiction under Rule 12(b)(1) is therefore unwarranted.
LMP’s second theory in support of dismissal is that Western lacks statutory standing: the
motion asks whether Western is authorized under the Carmack Amendment to bring suit in its
own name, in the absence of an assignment of rights from Colgate, the shipper. Apparently
conceding that it does not, Western has now obtained the requisite assignment and insists that
LMP’s motion has thereby been rendered moot.
The court agrees that the Assignment renders moot LMP’s argument based on lack of
statutory standing and will therefore deny the Motion to Dismiss. However, Western will be
required to file an Amended Complaint expressly pleading the assignment.
Kassnick’s Motion to Dismiss
Defendant Kassnick seeks dismissal based on lack of personal jurisdiction, under Rule
12(b)(2). Kassnick argues that it does not have sufficient contacts with the state of Tennessee to
support the exercise of personal jurisdiction over it—either specific or general—for purposes of
the state law negligence and breach of contract claims, based on Tennessee’s long-arm
jurisdiction statute and constitutional principles of due process. (Doc. No. 33, at 3–4 (citing
Tenn. Code Ann. § 20-2-223(a) and Bridgeport Music, Inc. v. Still N The Water Publ’g, 327 F.3d
472, 477 (6th Cir. 2003).)
It is well established that federal courts follow state law to determine the bounds of
personal jurisdiction over a defendant. See Fed. R. Civ. P. 4(k)(1)(A) (service of process is
effective to establish personal jurisdiction over a defendant “who is subject to the jurisdiction of
a court of general jurisdiction in the state where the district court is located”). Tennessee statutes
authorize the exercise of jurisdiction over nonresident defendants on “[a]ny basis not inconsistent
with the constitution of this state or of the United States.” Tenn. Code Ann. §§ 20-2-214(a), 202-225(2). These statutes have been construed to expand the jurisdictional reach of Tennessee
courts “as far as constitutionally permissible.” First Cmty. Bank, N.A. v. First Tennessee Bank,
N.A., 489 S.W.3d 369, 384 (Tenn. 2015), cert. denied sub nom. Fitch Ratings, Inc. v. First Cmty.
Bank, N.A., 136 S. Ct. 2511 (2016). The question here is whether this court’s exercise of
jurisdiction over Kassnick would “comport with the limits imposed by federal due process.”
Daimler AG v. Bauman, 134 S. Ct. 746, 753 (2014).
Analysis of the relevant due process considerations would ordinarily require the court to
examine the defendant’s contacts with the state to determine whether the defendant is subject to
the exercise of either general or specific jurisdiction within this state. Here, however, the plaintiff
contends only that personal jurisdiction over Kassnick exists because Kassnick has consented to
the exercise of general jurisdiction by the courts of Tennessee. See Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472 n.14 (1985) (“[B]ecause the personal jurisdiction requirement is a
waivable right, there are a ‘variety of legal arrangements’ by which a litigant may give ‘express
or implied consent to the personal jurisdiction of the court.’” (quoting Ins. Corp. of Ireland v.
Compagnie des Bauxites de Guinee, 456 U.S. 694, 703 (1982))).
Specifically, Western argues that Kassnick, as an authorized, interstate motor carrier of
freight for hire, is subject to 49 U.S.C. § 13304(a), a provision of the Motor Carrier Act of 1935.
This provision states in pertinent part:
A motor carrier or broker providing transportation subject to jurisdiction under
chapter 135 4 . . . shall designate an agent in each State in which it operates by
name and post office address on whom process issued by a court with subject
“[J]urisdiction under chapter 135” generally refers to the jurisdiction of the Secretary of
the Department of Transportation and the Surface Transportation Board, see 49 U.S.C. §
13102(1) & (2) (defining “Board” and “Secretary”) over the interstate “transportation by motor
carrier and the procurement of that transportation.”
matter jurisdiction may be served in an action brought against that carrier or
Id. Kassnick concedes that, although it has never operated in or through Tennessee or had any
other contact with Tennessee (see generally Guevara Aff., Doc. No. 34), it is authorized to
transport materials in the forty-eight contiguous states and that, in accordance with § 13304(a), it
has designated an agent for service of process in Tennessee. It is also apparent from the record
that Western served Kassnick’s designated Tennessee agent on October 3, 2017. (Doc. No. 43,
Ex. A.) Citing Shapiro v. Southeastern Greyhound Lines, 155 F.2d 135 (6th Cir. 1946), Scott v.
Southeastern Greyhound Lines, 5 F.R.D. 11 (N.D. Ohio 1945), and Grubb v. Day to Day
Logistics, Inc., No. 2:14-cv-01587, 2015 WL 4068742 (S.D. Ohio July 2, 2015), Western argues
that designation of an agent for service of process pursuant to a statutory requirement constitutes
“consent to be sued in each of the States in which the required designation is filed” (Doc. No. 44,
at 2 (quoting Grubb, 2015 WL 4068742, at *3)), regardless of the presence or absence of
minimum contacts with any such state. Western also argues that the Supreme Court’s recent
holding in Daimler AG v. Bauman, limiting general jurisdiction over a foreign corporation to the
corporation’s principal place of business and place of incorporation, is inapposite because it did
not address the principle of consent. (See id. at 3 (“Since, under current Sixth Circuit law,
Kassnick consented to personal jurisdiction, there is no need to analyze whether there exists
specific or general jurisdictional basis or the presence of ‘minimum contacts.’”).)
Kassnick, citing Bendix Autolite Corp. v. Midwesco Enterprises, 486 U.S. 888 (1988),
and Pittock v. Otis Elevator Company, 8 F.3d 325 (6th Cir. 1993), argues to the contrary that the
mere designation of an agent for service of process, in compliance with a service-of-process
statute, does not automatically subject it to general jurisdiction within that state.
Both parties acknowledge that there are numerous cases holding that the designation of
an agent for service of process does imply consent to personal jurisdiction. See, e.g., Ocepek v.
Corporate Transp., Inc., 950 F.2d 556, 557 & n.1 (8th Cir. 1991) (holding that designation of an
agent under 49 U.S.C. § 10330(b), the predecessor to § 13304(a), gave the court jurisdiction by
consent, thus obviating the need for any examination of the defendant’s minimum contacts with
the forum under the state’s long-arm statute); Grubb, 2015 WL 4068742, at *3–4 (finding
jurisdiction by consent under 49 U.S.C. § 13304(a)); R.R. Donnelley & Sons Co. v. Jet
Messenger Serv., Inc., No. 03 C 7823, 2004 WL 1375402, at *4 (N.D. Ill. May 25, 2004)
(recognizing split of authority but denying the defendant’s motion to dismiss for lack of personal
jurisdiction based on its holding that “the weight of authority analyzing 49 U.S.C. § 13304(a)’s
service of process provision correctly holds that a corporation has consented to be sued in the
forum where it designates an agent to receive service of process”); Rounds v. Rea, 947 F. Supp.
78, 82–84 (W.D.N.Y. 1996) (same). And there are numerous cases standing for the opposite
premise as well. See, e.g., Davis v. Quality Carriers, Inc., Nos. 08-4533 (SRC), 08-6262(SRC),
2009 WL 1291985, at *5 (D.N.J. May 7, 2009) (disagreeing with Ocepek and holding that
designation of national agent for service of process in compliance with Motor Carrier Act does
not constitute consent to personal jurisdiction in any particular state); Landreville v. Joe Brown
Co., No. 06–5568, 2008 WL 910009, at * 4 (E.D. Pa. April 2, 2008) (same); Lyons v. Swift
Transp. Co., No. 01-0209, 2001 WL 1153001, at *5 (E.D. La. Sept. 26, 2001) (same).
Based on its review of the above-referenced cases, the opinions upon which they rely,
and controlling Sixth Circuit precedent, this court concludes that the mere designation of an
agent for service of process in compliance with 49 U.S.C. § 13304 does not, standing alone,
constitute consent to the general jurisdiction of the state in which such agent is appointed, for the
reasons explained below.
Western’s argument hinges upon the applicability of Shapiro v. Southeastern Greyhound
Lines, which Western characterizes as “upholding personal jurisdiction on the basis of service of
process on a registered agent under the theory of consent.” (Doc. No. 44, at 2.) In fact, in
Shapiro, the Sixth Circuit considered an appeal of an order quashing service of summons on the
grounds of improper venue. Shapiro, 155 F.2d at 136. The exercise of personal jurisdiction was
not in question. Rather, under the federal venue statute then in effect, in any case in which the
court’s jurisdiction was premised upon diversity, venue was proper only in a state in which either
the plaintiff or the defendant resided. Neither party in Shapiro resided in Ohio, but the defendant,
a motor carrier, had designated an agent for service of process in Ohio in accordance with 49
U.S.C. § 321(c), a predecessor to § 33401(a). The defendant’s “motion to quash service was
sustained, presumably upon that ground.” Id. The Shapiro court found that the order quashing
service was erroneous in light of a recent Supreme Court case, Neirbo Co. v. Bethlehem
Shipbuilding Corp., 308 U.S. 165 (1939).
Neirbo, however, like Shapiro itself, concerned venue, not jurisdiction. The matter
concerned events that arose within New York, the state in which suit had been filed, and
jurisdiction was not contested. The statute requiring registration of an agent for service of
process in that case was a state, rather than a federal, statute—a difference the Sixth Circuit
found immaterial in Shapiro. The Supreme Court held that a corporation that registers an agent
for service of process in a state consents to venue in that state and thus waives application of the
applicable venue statute, which, as indicated above, provided that venue in a diversity action was
appropriate only in a state in which either the defendant or the plaintiff resided. That the case
concerned venue rather than jurisdiction was affirmed by later Supreme Court opinions
construing Neirbo. See, e.g., Olberding v. Ill. Cent. R.R. Co., 346 U.S. 338, 341–42 (1953)
(describing Neirbo as holding that “the venue requirements of what is now 28 U.S.C. § 1391(a)
[were] satisfied because Bethlehem had designated an agent in New York ‘upon whom a
summons may be served within the State of New York’”); Okla. Packing Co. v. Okla. Gas &
Elec. Co., 309 U.S. 4, 5 (1940) (construing Neirbo as holding that a corporation that has
designated an agent for service of process in a state consents to be sued in the courts of that state
“upon causes of action arising in that state”). Thus, to the extent that some loose language in
Shapiro might be read as suggesting that a corporation that designates an agent for service of
process in a state consents to the general jurisdiction of that state even for actions arising outside
that state, 5 any such suggestion was purely dictum and well outside the bounds of the Supreme
Court case upon which the actual holding was based. 6
Shapiro quoted from an older Supreme Court case, also referenced by Neirbo, which
If the citizenship of the parties is sufficient, a defendant may consent to be sued anywhere
he pleases, and certainly jurisdiction will not be ousted because he has consented. Here,
the defendant companies have provided that they can be found in a district other than that
in which they reside, if a particular mode of proceeding is adopted, and they have been so
found. In our opinion, therefore, the Circuit Court has jurisdiction of the causes * * * .
Shapiro, 155 F.2d at 136 (quoting Ex parte Schollenberger, 96 U.S. 369, 378 (1877)). Certainly
it remains true that a party may consent to the exercise of personal jurisdiction, see, e.g., Burger
King Corp., 471 U.S. at 472 n.14, but Shapiro—and Schollenberger—concerned objections to
venue, not personal jurisdiction.
Another case upon which the plaintiff relies and which has been heavily cited by other
courts finding that registration of an agent under the Motor Carrier Act constitutes consent to
personal jurisdiction, Scott v. Southeastern Greyhound Lines, 5 F.R.D. 11 (N.D. Ohio 1945), is
wholly inapplicable. There, the plaintiff, an Ohio resident, had been injured on a bus traveling
through Kentucky. She filed suit in Ohio and effected service upon the defendant’s designated
agent for service of process. The designation was made pursuant to the Motor Carrier Act. The
venue statute then in effect was satisfied, because the plaintiff filed suit in the state in which she
resided. The defendant sought to quash the return of summons, arguing that the cause of action
arose in Kentucky and that the Ohio court therefore lacked subject matter jurisdiction. The court
Thereafter, in Bendix Autolite Corp. v. Medwesco Enterprises, 486 U.S. 888 (1988), the
Supreme Court suggested, again in dictum, that, pursuant to Ohio statute, “to be present in Ohio,
a foreign corporation must appoint an agent for service of process, which operates as consent to
the general jurisdiction of the Ohio courts.” Id. at 889. The Court did not conduct any analysis of
the state statute, however, and was not called upon to judge its constitutionality. The actual
holding in the case was that an Ohio statute that suspended statute-of-limitations protections for
out-of-state entities, but not for in-state entities or for companies that had a registered agent for
service of process and thus qualified as in-state entities, violated the Commerce Clause.
Just a few years later, the Sixth Circuit was called upon to consider the same Ohio statute,
but within a somewhat different context. In Pittock v. Otis Elevator Co., 8 F.3d 325 (6th Cir.
1993), the plaintiffs, residents of Ohio, were injured in Las Vegas, Nevada while riding an
elevator maintained by Otis Elevator. They filed suit against Otis in Ohio. Otis sought to dismiss
for lack of personal jurisdiction under Ohio law, specifically Ohio’s long-arm jurisdiction statute.
In response, the plaintiffs did not present any evidence of Otis’s minimum contacts with the state
under that statute. Instead, relying on Bendix, they argued that Otis consented to personal
jurisdiction in the state by designating an agent for service of process within the state, in
accordance with the Ohio statute that required “[e]very foreign corporation for profit that is
licensed to transact business in this state . . . [to] have and maintain an agent . . . upon whom
process . . . may be served within this state.” Pittock, 8 F.3d at 328 (quoting Ohio Rev. Code §
ultimately determined that it did have jurisdiction, but the defendant did not raise, and the court
did not address, the question of personal jurisdiction. In any event, the decision, which predates
International Shoe v. State of Washington, 326 U.S. 310 (1945), by just a few months, is clearly
The Sixth Circuit concluded that Bendix’s suggestion that the mere designation of an
agent for service of process constitutes consent to jurisdiction was dictum. The court also picked
up on Bendix’s comment that “[r]equiring a foreign corporation to appoint an agent for service in
all cases and to defend itself with reference to all transactions, including those in which it did not
have the minimum contacts necessary for supporting personal jurisdiction, is a significant
burden.” Bendix, 486 U.S. at 893 (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102,
114 (1987)). The Sixth Circuit read that portion of Bendix to be “saying that the mere
designation of an agent in compliance with the service-of-process statute does not automatically
eliminate the requirement of minimum contacts to establish personal jurisdiction.” Pittock, 8
F.3d at 329.
Based in part on that reading, the Pittock court held unequivocally that the mere
designation of an agent for service of process in a particular state, in compliance with a state
statute, standing alone, does not constitute consent to general jurisdiction within that state.
Because the plaintiffs did not show that Otis had any contacts with the state of Ohio and instead
based personal jurisdiction solely on consent, the court affirmed the dismissal of the case based
on lack of personal jurisdiction. The Sixth Circuit’s opinion in Pittock is binding precedent
within the Sixth Circuit on the precise issue presented here. 7
In sum, the court finds that the plaintiff’s reliance on Shapiro, which rests on Neirbo, is
misplaced. Under Pittock, it is clear that Kassnick’s designation of an agent for service of
process, standing alone, does not constitute consent to the general jurisdiction of this state, and
This court specifically rejects the rationale of the Southern District of Ohio in Grubb v.
Day to Day Logistics insofar as it construed Shapiro and Scott as addressing the question of
personal jurisdiction rather than venue and subject matter jurisdiction, respectively, and it failed
to take Pittock into account.
Western has not alleged the requisite minimum contacts required for the assertion of specific
jurisdiction. Kassnick’s Motion to Dismiss (Doc. No. 32) will, therefore, be granted.
The Insurance Companies’ Motions to Dismiss
The Parties’ Positions
The Motions to Dismiss filed by defendants National, Progressive, and Allianz
(collectively, the “Insurance Companies”) (Doc. Nos. 1-4, 14, 40) are all premised upon Rule
12(b)(6) of the Federal Rules of Civil Procedure and assert that, under Tennessee law, the
plaintiff is barred from bringing a direct action against an insurer based solely upon its status as a
In response, Western concedes that Tennessee is not a “direct action” state. Although the
Complaint clearly asserts only state law claims for negligence and breach of contract against
Kassnick and LMP, and Western’s claims for damages against the Insurance Companies are
based on their purported failure to cover the loss on behalf of their insureds, LMP and Kassnick,
Western argues that Tennessee law is irrelevant, because its Complaint is based on, and governed
by, federal law. (See, e.g., Response to Progressive M. Dismiss, Doc. No. 18, at 1.) That is,
Western insists that its claims are premised upon a failure to deliver a shipment by motor carriers
operating in interstate commerce under federal licenses issued by the Federal Motor Carrier
Safety Administration. It asserts that, as federal license holders, defendants LMP and Kassnick
are required by 49 U.S.C. § 13906 to file a bond, insurance policy or other security in an amount
sufficient to cover bodily injury and damage to property. 49 U.S.C. § 13906(a)(1). According to
Western, a motor carrier endorsement form known as MCS-90 must be attached to any insurance
policy issued to a motor carrier, pursuant to 49 C.F.R. § 387.15, and each insurer’s “potential
liability . . . is pursuant to the mandatory policy MCS-90 endorsement,” a “creature of federal
regulation [that] must be interpreted according to federal law.” (See, e.g., Doc. No. 18, at 2
(citing Integral Ins. Co. v. Lawrence Fulbright Trucking, Inc., 930 F.2d 259 (2d Cir. 1991)).)
In reply, the Insurance Companies generally reiterate their argument that Tennessee is not
a direct action state and that Tennessee substantive law in that regard overrides the fact that a
federal question exists within this litigation. In addition, they insist that the MCS-90
endorsement does not authorize a direct action against an insurer unless there is already an
unsatisfied judgment against the insured trucking company and that the MCS-90 endorsement
will never apply to this litigation because MCS-90 liability does not extend to cargo losses,
which is the only type of loss alleged in this lawsuit.
Removal in this case was premised upon diversity jurisdiction and, alternatively, on the
basis that the plaintiff’s claims are governed by the Carmack Amendment to the ICC
Termination Act of 1995, 49 U.S.C. § 14706 8 or by the Federal Aviation Administration
Authorization Act of 1994, 49 U.S.C. § 14501. Western contends that a direct action against the
Insurance Companies is permissible under these federal laws and other federal statutes and
regulations governing liability in this case, including 49 U.S.C. § 13906, 49 C.F.R. § 387.15 and
the MCS-90 endorsement required by that regulation. The court concludes that, whether
The Carmack Amendment provides standardized rules of common-carrier liability for
interstate shipments on roads and rails. CNA Ins. v. Hyundai Merch. Marine Co., 747 F.3d 339,
354 (6th Cir. 2014). The Carmack Amendment “fully preempt[s] state law concerning the
liability of interstate rail and road carriers.” Id. (citing Adams Express Co. v. Croninger, 226 U.S.
491, 505–06 (1913)). The Carmack Amendment only applies to shipping contracts that begin in
one state and terminate in another and is generally inapplicable to shipping contracts where
shipment begins and ends in the same state. Id. In this case, however, the Carrier-Broker
Contract between Western and LMP expressly adopts the application of the Carmack
Amendment and its implementing regulations. (See Compl. Ex. 1, Doc. No. 1-5 at Pt. V.)
jurisdiction is premised upon federal question or diversity of citizenship, the plaintiff may not
bring a direct action against the Insurance Companies.
First, nothing in the federal laws cited by the plaintiff or the Insurance Companies
authorizes a direct action by a person not covered by an insurance policy against an insurer, prior
to the adjudication of liability on the part of the insured. Rather, the Carmack Amendment
expressly authorizes a civil action against a delivering carrier or a carrier responsible for loss or
damage. 49 U.S.C. § 14706(d). Courts that have been called upon to consider the issue have
uniformly concluded that the Carmack Amendment does not authorize a direct action against an
insurer by a third party. See, e.g., Chisesi Bros. Meat Packing Co. v. Transco Logistics, Inc., No.
No. 17-2747, 2017 WL 2573992 (E.D. La. June 14, 2017) (presuming that the Carmack
Amendment does not authorize direct action against insurance companies but nonetheless
concluding that the statute did not preempt Louisiana state law expressly authorizing direct
actions); Harvey D. Bailey, Inc. v. Markel Ins. Co. of Canada, No. 1:09-CV-372-SJD-TSH, 2010
WL 2710511, at *3 (S.D. Ohio Feb. 19, 2010) (“Nothing in the language of the [Carmack
Amendment] provides for a right of action by an injured party against a motor carrier or freight
forwarder’s insurer.”), report and recommendation adopted, No. 1:09CV372, 2010 WL 2723721
(S.D. Ohio July 8, 2010); Land O’ Lakes v. Joslin Trucking, Inc., No. 08-cv-355-bbc, 2008 WL
5205910, at *1 (W.D. Wis. Dec. 11, 2008) (“[T]he Carmack Amendment does not authorize
direct action suits . . . .”).
Likewise, 49 U.S.C. § 13906, which requires a motor carrier to file a bond, insurance
policy or other security in an amount sufficient to cover property damage, does not provide a
basis for suing an insurer directly prior to the determination of the insured’s liability. Accord Air
Plus Ltd. v. Transp. Distrib. Servs., Inc., No. 04 C 3806, 2004 WL 2359256, at *1 (N.D. Ill. Oct.
19, 2004) (“[E]ven a cursory reading of § 13906 demonstrates that the statute was not intended
to create a federal cause of action against a statutory insurer . . . .”).
The plaintiff’s reliance on 49 C.F.R. § 387.15 and the MCS-90 endorsement required by
that regulation is similarly misplaced. The regulation as well as the endorsements as issued
specifically provide that the insurance coverage “as is afforded, for public liability, does not
apply to . . . property transported by the insured, designated as cargo.” 49 C.F.R. § 387.15;
Progressive Reply Ex. 1, Doc. No. 23-2.) The MCS-90 endorsement therefore has no application
in this case, where the only loss alleged is a loss of cargo. Moreover, even if it did apply, the
MCS-90 and 49 C.F.R. § 387.15 do not establish direct liability or authorize suit directly against
an insurer by a third party. Instead, they memorialize the insurer’s agreement “to pay, within the
limits of liability described herein, any final judgment recovered against the insured for public
liability resulting from negligence.” (Id. (emphasis added).) In other words, an insurance
company’s obligations under the endorsement are not triggered until the insured’s liability for
the loss has been established.
To the extent that the plaintiff’s claims may be grounded in state law, Tennessee, as a
matter of public policy, does not permit direct actions by a person not covered by an insurance
policy against an insurer, prior to the adjudication of liability on the part of the insured, whether
under a contract or negligence theory of liability. Ferguson v. Nationwide Prop. & Cas. Ins. Co.,
218 S.W.3d 42, 52–58 (Tenn. Ct. App. 2006). In adopting this rule, the Tennessee Court of
Appeals discussed the issue at length and quoted from other jurisdictions around the country
likewise prohibiting direct actions against insurers. The court noted that “[t]he rationale behind
this rule appears to be simply that the Courts feel that it would not be sound public policy to
permit an insurer to be joined as a defendant in an action grounded upon the acts of the insured.”
Id. at 43 (quoting Delmar News, Inc. v. Jacobs Oil Co., 584 A.2d 531, 533–34 (Del. Super. Ct.
1990)). It further noted that, as a matter of contract law, an insurer does not become “legally
obligated to pay as damages” any amount owed by the insured unless and until such an
obligation is established, for instance, by the rendering of a judgment against the insured. Id. at
The question of whether state law either barring or permitting direct actions against
insurance companies should be applied in a federal diversity action, and whether such laws
should be characterized as substantive or procedural, “has long been recognized as problematic
throughout the country.” Polensky v. Continental Cas. Co., 397 F. Supp. 2d 1164, 1167 (D.N.D.
2005) (citing State Trading Corp. v. Assuranceforeningen Skuld, 921 F.2d 409, 414–15 (2d. Cir.
1990)). Some courts have found direct action statutes to be substantive, for purposes of Erie R.R.
Co. v. Tompkins, 304 U.S. 64 (1938). See, e.g., State Trading Corp., 921 F.2d at 416 (holding
that Connecticut’s limited direct action statute is substantive law); Collins v. American Auto. Ins.
Co., 230 F.2d 416, 422 (2d Cir. 1956) (holding that Louisiana’s direct action statute is
substantive because it does more than “merely shorten the legal process; it creates what is
substantially a new right of action”); Allstate Ins. Co. v. Stanley, 282 F. Supp. 2d 1342, 1343–44
(M.D. Fla. 2003) (holding that Florida statute barring direct action against insurance company
was a matter of substantive state law and therefore applied in federal diversity action). Other
courts have found them to be procedural. See, e.g., Moore v. United Services, Auto. Ass’n, 808
F.2d 1147, 1153–54 (5th Cir. 1987) (“The right to maintain a direct action against an insurer
based upon the negligence of its insured is considered a remedial right and is, therefore,
governed by the law of the forum.”); Dechand v. Ins. Co. of State of Pa., 732 F. Supp. 1120,
1122 (D. Kan. 1990) (holding, under Kansas law, that Kansas statute authorizing a direct action
against insurance companies is remedial and does not confer substantive rights upon the injured
plaintiff, but that the rule nonetheless applied in a federal diversity case because there was no
conflicting federal rule).
Here, the court concludes that Tennessee’s bar is likely substantive, because it eliminates
a right of action. Accord Stanley, 282 F. Supp. 2d at 1343. Regardless, it seems that the
substantive/procedural distinction is immaterial, because there is no direct conflict between state
and federal law on the issue. Accord Dechand, 732 F. Supp. at 1122 (citing Hanna v. Plumer,
380 U.S. 460 (1965)).
Conclusion: Insurance Companies’ Motions to Dismiss
Regardless of whether the plaintiff’s claims are governed by the Carmack Amendment or
by state law, and regardless of whether Tennessee’s direct-action rule is considered to be
substantive or procedural, the applicable law precludes a direct cause of action against an insurer
by a person not covered by an insurance policy, prior to the adjudication of liability on the part
of the insured. The Motions to Dismiss filed by the Insurance Companies (Doc. Nos. 1-4, 14, 40)
will therefore be granted. 9
For the reasons set forth herein, the court will deny defendant LMP’s Motion to Dismiss
(Doc. No. 21), but the plaintiff will be required to file an Amended Complaint expressly pleading
Rule 14(a)(1) of the Federal Rules of Civil Procedure authorizes a defendant to implead
a “nonparty who is or may be liable to it for all or part of the claim against it.” The granting of
the insurance companies’ Motions to Dismiss would, of course, be without prejudice to LMP’s
ability to seek permission to implead an insurance company that might be directly liable to it
under Rule 14.
the assignment of rights from Colgate to Western.
Defendant Kassnick’s Motion to Dismiss for lack of personal jurisdiction (Doc. No. 32)
will be granted.
The Insurance Companies’ Motions to Dismiss (Doc. Nos. 1-4, 14, 40) will be granted on
the basis that the plaintiff is barred from bringing a direct action against an insurer based solely
upon its status as a liability insurer.
An appropriate Order is filed herewith.
ENTER this 24th day of October 2017.
ALETA A. TRAUGER
United States District Judge
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