Maas Flanges Corp v. Totran Transportation Services, Inc.

Filing 23

MEMORANDUM AND OPINION entered: The motion for summary judgment limiting Maass Flange to actual loss damages based on the purchase price less the salvage value is denied. The motion for summary judgment precluding Maass Flange from recovering special or consequential damages is granted.(Signed by Judge Lee H Rosenthal) Parties notified.(leddins, 4)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
MAASS FLANGES CORP.,
Plaintiff,
VS.
TOTRAN TRANSPORTATION SERVICES
INC., et al.,
Defendants.

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CIVIL ACTION NO. H-13-1090

MEMORANDUM AND OPINION
This is a property damage case under the Carmack Amendment, 49 U.S.C. § 14706. The
defendants, Totran Transportation Services, Inc. and Totran Transportation Services, Ltd. (together,
“Totran Transportation”), have moved for a summary judgment ruling that the damages the plaintiffowner of a boring mill, Maass Flanges Corp., may recover are no more than $8,900. (Docket Entry
No. 16). This amount represents the difference between the purchase price Maass Flange paid for
the boring mill ($14,500) before it was damaged during shipment, and the amount received at public
auction after the damage to the mill occurred ($5,600). Totran Transportation also seeks a summary
judgment ruling that Maass Flanges is not entitled to recover lost profits as special or consequential
damages. Maass Flanges has responded, urging that the limits on damages Totran Transportation
proposes do not apply given the evidence in the record, and that there are genuine factual disputes
material to determining the damages it may recover. (Docket Entry No. 20).
Totran Transportation’s motion raises two issues. The first is whether a plaintiff propertyowner’s actual damages under the Carmack Amendment are limited to the difference between the
price it paid for the cargo before it was damaged and what was received at the salvage sale after the

damage, or whether the plaintiff may recover a higher amount based on evidence that what it paid
for the cargo was below market. The second issue is whether the plaintiff may recover special or
consequential damages, specifically, lost profits it claims resulted from its inability to use the
property because it was damaged.
Based on the pleadings, the motion and response, the record, and the applicable law, this
court denies the summary judgment motion in part and grants it in part. The court denies summary
judgment limiting Maass Flange’s actual loss recovery to its purchase price less the salvage value,
and grants summary judgment that Maass Flange may not recover special or consequential damages.
The reasons are set out below.
I.

Background
The plaintiff, Maass Flange, manufactures and produces stainless steel and alloy flanges.

In mid-February of 2013, Maass Flange purchased a used Froriep Machine Type KE 16 Super
Vertical Boring Mill (the “Mill”), originally built around 1965, to use at its Houston, Texas facility.
Maass Flange paid the invoiced price, $14,500.00. (Docket Entry No. 16, Ex. A). The seller was
located in Edmonton, Alberta, Canada. Maass Flange contracted with Totran Transportation to have
the Mill shipped from Edmonton to Houston. The Mill was delivered to Totran Transportation in
good condition. On February 28, 2013, Totran Transportation issued a Bill of Lading, noting no
exceptions or damage to the Mill. (Id., Ex. B). A U.S. Department of Customs and Border
Protection entry form completed for the shipment stated the value reported by the “importer” as
$10,000. (Id., Ex. C). Maass Flange was the importer but denies that it completed the form.
(Docket Entry No. 20 at 2 n.1). The record is unclear whether Maass Flange provided the
information used for the form.
The Mill was damaged when it struck an overpass near Denton, Texas.
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Totran

Transportation asserts that the route was designated by the Texas Department of Transportation for
oversized loads. (See Docket Entry No. 16, Ex. D). Maass Flange asserts that Totran Transportation
failed to measure the Mill’s height correctly and that the Mill exceeded the clearance height. Totran
Transportation asserts that the top of the Mill “scraped” the overpass; Maass Flange asserts that the
top of the Mill “struck” the overpass.
The Mill was delivered to Maass Flange’s facility in Houston, Texas in a damaged condition,
and Maass Flange refused to accept it. (Docket Entry No. 16 at 2). The Mill was moved to the
Totran Transportation facility in Houston and later sold as unclaimed freight at auction for $5,600.
(Id., Ex. E). The amount was inadequate to offset handling, storage, and auction expenses. (Docket
Entry No. 16 at 2).
On April 17, 2013, Maass Flange filed this suit. (Docket Entry No. 1). The Carmack
Amendment governs. Totran Transportation has moved for summary judgment seeking to limit
Mass Flange’s damages to $8,900 as a matter of law. (Docket Entry No. 16). That figure is the
purchase price for the Mill less the amount received at auction. Maass Flange responds that there
are genuine fact disputes about the amount of actual loss from the Mill’s damage that preclude
summary judgment. (Docket Entry No. 20). Maass Flange recognizes that the limitation of liability
clause contained in the Bill of Lading precludes any damage award above $103,000.00 ($2.00/pound
multiplied by 51,530 pounds). (Id. at 3 n.3).
The summary judgment evidence includes exhibits submitted by both parties. Totran
Transportation’s exhibits include the invoice to Maass Flange for the Mill’s purchase from Pacific
Industries, Inc.; the Bill of Lading; the Customs Entry Form; a Texas Department of Transportation
summary of the approved route; documents reflecting the sale at auction; and an email showing that
a company was interested in purchasing the Mill, which would have allowed Totran Transportation
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to sell the Mill without incurring auction fees. (Docket Entry No. 16, Exs. A–G). Maass Flange’s
exhibits include a declaration from Alexander Maass describing the purchase of the Mill and
damages Maas Flange suffered from the Mill’s damage; the Bill of Lading; a Totran Transportation
incident report describing how the Mill was damaged; an appraisal of the Mill dated May 24, 2013;
and price quotes for similar boring mills. (Docket Entry No. 20, Exs. A–E)
II.

The Summary Judgment Standard
“The court shall grant summary judgment if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to summary judgment as a matter of law.”
FED. R. CIV. PROC. 56(a). “A party asserting that a fact cannot be or is genuinely disputed must
support the assertion by citing to particular parts of materials in the record . . . .” FED. R. CIV. PROC.
56(c)(1)(A). “[T]he plain language of Rule 56[] mandates the entry of summary judgment, after
adequate time for discovery and upon motion, against a party who fails to make a showing sufficient
to establish the existence of an element essential to that party’s case, and on which that party will
bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
“Initially, the moving party bears the burden of demonstrating the absence of a genuine
issue of material fact.” Cannata v. Catholic Diocese of Austin, 700 F.3d 169, 172 (5th Cir. 2012)
(citing Celotex, 477 U.S. at 323). If the burden of proof at trial lies with the nonmoving party,
the movant may satisfy its initial burden by “‘showing’—that is, pointing out to the district court
– that there is an absence of evidence to support the nonmoving party’s case.” Celotex, 477 U.S.
at 325. While the party moving for summary judgment must demonstrate the absence of a
genuine issue of material fact, it does not need to negate the elements of the nonmovant’s case.
Duffie v. United States, 600 F.3d 362, 371 (5th Cir. 2010).
“A fact is ‘material’ if its resolution in favor of one party might affect the outcome of the
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lawsuit under governing law.” Sossamon v. Lone Star State of Tex., 560 F.3d 316, 326 (5th Cir.
2009) (quotation omitted). “If the moving party fails to meet its initial burden, the motion for
summary judgment must be denied, regardless of the nonmovant’s response.” Duffie, 600 F.3d at
371 (internal quotation marks omitted).
“When the moving party has met its Rule 56[] burden, the nonmoving party cannot survive
a summary judgment motion by resting on the mere allegations of its pleadings.” Id. The
nonmovant must identify specific evidence in the record and articulate how that evidence supports
that party’s claim. Id. (internal quotation marks omitted). “This burden will not be satisfied by
‘some metaphysical doubt as to the material facts, by conclusory allegations, by unsubstantiated
assertions, or by only a scintilla of evidence.’” Boudreaux v. Swift Transp. Co., 402 F.3d 536, 540
(5th Cir. 2005) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc)).
“In deciding a summary judgment motion, the court draws all reasonable inferences in the light most
favorable to the nonmoving party.” Duffie, 600 F.3d at 371.
III.

Analysis
A.

Damages under the Carmack Amendment

Under § 14706 of the Carmack Amendment, “[a] carrier providing transportation or service”
as well as “any other carrier that delivers the property and is providing transportation or service” are
liable “for the actual loss or injury to the property.” 49 U.S.C. § 14706. A carrier’s liability
includes reasonably foreseeable damages resulting from the breach of its contract of carriage. See
Nat’l Hispanic Circus, Inc. v. Rex Trucking, Inc., 414 F.3d 546 (5th Cir. 2005). Totran is a carrier
under § 14706.
To prevail under the Carmack Amendment, the plaintiff must show that: (1) it delivered the
goods to the carrier in good condition; (2) the goods arrived in a damaged condition; and (3) the
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shipper suffered damages of an ascertainable amount. See John Case Morrell & Co. v. Frozen Food
Express, Inc., 700 F.2d 256 (5th Cir. 1983). Although the Carmack Amendment does not require
the shipper to prove that the carrier was negligent, the issue raised by the summary judgment motion
is not liability, but damages.
B.

Damages for Actual Loss

The first issue is whether the damages for actual loss Maass Flange may recover are limited
to the difference between the price it paid for the Mill ($14,500), and the price received at the
salvage auction sale ($5,600), as Totran Transportation contends. Maass Flange responds that
under the Carmack Amendment, the court should calculate damages in accordance with the fair
market value of the Mill if it had been delivered to Houston, Texas undamaged, not the actual price
Maass Flange paid for the Mill (at least, not if it was lower than the fair market value).
The general damages measure under the Carmack Amendment is actual loss, which
represents “the difference between the market value of the property in the condition in which it
should have arrived at its destination and its market value in the condition in which it did arrive,”
minus salvage value. Contempo Metal Furniture Co. of Calif. v. E. Tex. Motor Freight Lines, 661
F.2d 761, 764 (9th Cir. 1981); Mineral U.S. Inc. Exam-Met Div. v. M/V/ Moslavina, 46 F.3d 501 (5th
Cir. 1995); see also Fredette v. Allied Van Lines, Inc., 66 F.3d 369, 372 (1st Cir. 1995) (stating that
actual loss is “ordinarily measured by the reduction in market value at destination or by replacement
or repair costs occasioned by the harm”). The issue in this case is how to measure the Mill’s fair
market value before it was damaged. Neither side disputes that fair market value should apply; the
dispute is whether that value is limited to the purchase price. Totran Transportation asserts that the
purchase price is the only reliable measure of fair market value in this case, and that any other value
would be speculative. (Docket Entry No. 16 at 5). Maass Flange asserts that the purchase price
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need not be the exclusive measure when there is competent summary judgment evidence of a
different and more reliable or accurate fair market value. (Docket Entry No. 20 at 5–8).
Totran Transportation cites Carmar Corp. v. Preston Trucking Co., Inc., 18 F. Supp. 2d 112,
115 (D. Mass. 1998), aff’d, Carmar Corp. v. Preston Trucking, 221 F.3d 271 (1st Cir. 2000). In that
case, which involved surplus equipment purchased from the Navy for resale, the court found the
purchase price was an appropriate measure of damages. Given the evidence in the case, the court
concluded that another measure of fair market value would be speculative. In affirming the district
court, the First Circuit noted that the shipper’s evidence of “past” sales of similar goods did not
“identify any prospective purchasers for the lost [or] used equipment at prices like those paid for the
previously sold equipment.” Carmar Corp., 221 F.3d at 277. The court also noted a lack of
essential information about the equipment’s condition. Id. In contrast to the plaintiff in Carmar
Corp., Maass Flange has submitted competent evidence showing that the market value for the Mill
when it was to have been delivered in Houston was higher than the invoice value. The evidence
includes an appraisal by a certified appraiser, Ronald Braman, C.E.A. – A.M.E.A. (Docket Entry
No. 20, Ex. D). Braman opined that the Mill’s fair market value was $72,500.00. Id. The record
includes evidence that the appraised value was consistent with values for similar mills available (or
previously available) on the market for sale. The record also includes evidence of other mill sales.
(Id., Ex. E). Given the evidence, there is no basis to find that the purchase or invoice price is the
exclusive measure of the Mill’s fair market value before it was damaged. See Paper Magic Group
v. J.B. Hunt Transp., 318 F.3d 458, 461 (3rd Cir. 2003) (noting that damages may be based on
invoice value when that “conforms to the market value of the [goods] at the time they should have
been delivered.”); Nat’l Hispanic Circus, Inc., 414 F.3d at 552–53 (5th Cir. 2005) (stating that
replacement cost may be a legitimate measure of actual-loss damages under the Carmack
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Amendment).
The conflicting evidence as to fair market value in this record does not permit a ruling that,
as a matter of law, Maass Flange’s damages for its actual loss are limited to the invoice price paid
less the salvage value. Summary judgment on this first issue is denied.
C.

Special Damages

The second issue is whether Maass Flange may recover special or consequential damages.
Totran Transportation moves for summary judgment that no such recovery is permissible in this case
because Totran Transportation did not have notice of special circumstances giving rise to such
damages when the Bill of Lading issued. (Docket Entry No. 16 at 6–7). Under the Carmack
Amendment, a shipper may recover special damages, including loss profits, under certain
circumstances. See Contempo Metal Furniture Co. of Cal. v. E. Tex. Motor Freight Lines, Inc., 661
F.2d 761, 765 (9th Cir. 1981). “Special damages are those that a carrier did not have to foresee as
ordinary, natural consequences of a breach when the contract was made.” Id.
Neither the Bill of Lading nor the freight-broker documents in the summary judgment record
note any circumstances that could give rise to the recovery of special or consequential damages.
Maass Flange relies on the facts that it was a manufacturer of flanges and that the Mill was to be
transported to its facility in Houston, Texas to show that Totran Transportation had notice that
Maass Flange’s inability to use the Mill would result in lost profits. Maass Flange has submitted
summary judgment evidence in the form of declarations that it purchased the Mill to use in its
facility and that it has incurred $1,400 per week in lost profits because it could not do so. (Docket
Entry No. 20, Exs. A, B).
The evidence Maass Flange presents is inadequate to support the recovery of lost profits.
If such evidence was sufficient to impose liability for consequential damages on a carrier, virtually
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every shipment to any kind of manufacturing or similar facility would expose the carrier to such
damages. The cases do not indicate such a relaxed standard. To the contrary, the cases require
notice of special damages to allow the carrier to protect itself from exposure by “negotiating special
contractual terms, declining the shipment, or taking special precautions to avoid the loss.”
Contempo Metal Furniture Co., 661 F.2d at 765.
The summary judgment evidence in this case is clear that Maass Flange cannot recover more
than its actual losses; special or consequential damages are not recoverable. Summary judgment is
granted on this issue.
III.

Conclusion
The motion for summary judgment limiting Maass Flange to actual loss damages based on

the purchase price less the salvage value is denied. The motion for summary judgment precluding
Maass Flange from recovering special or consequential damages is granted.
SIGNED on January 2, 2014, at Houston, Texas.

______________________________________
Lee H. Rosenthal
United States District Judge

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