KENT GARDNER v. ACE MOVING AND STORAGE LLC ATLAS VAN LINES INC SEDGWICK CLAIMS MANAGEMENT SERVICES INC (2024)

ORDER

Before the Court is the Motion to Dismiss [Doc. No. 16] filed by Defendants Ace Moving and Storage, LLC (“Ace”) and Atlas Van Lines, Inc. (“Atlas”). Plaintiff has responded [Doc. No. 17] and the Defendants have replied [Doc. No. 19].

Also before the Court is the Motion to Dismiss [Doc. No. 20] filed by Defendant Sedgwick Claims Management Services, Inc. (“Sedgwick”), where Sedgwick joins and reasserts the arguments made in Ace and Atlas's Motion. Id. at 1-3. Plaintiff has responded, [Doc. No. 21], asserting the same substantive points argued in its Response to the Ace and Atlas Motion. Compare id.; with [Doc. No. 17]. Sedgwick has replied. [Doc. No. 22]. Accordingly, both matters are fully briefed and ready for determination, and the Court addresses them together.

I. Background

Mr. Gardner originally filed this action in the District Court of Oklahoma County, State of Oklahoma. See Pet. [Doc. No. 1-1]. Ace and Atlas removed the action this Court pursuant to 28 U.S.C. § 1441, maintaining the Court has federal question jurisdiction under 28 U.S.C. § 1331 because Mr. Gardner asserts a claim under the Carmack Amendment, 49 U.S.C. § 14706. See Notice of Removal [Doc. No. 1] at 2-3. Mr. Gardner later filed his Amended Complaint, where he asserts a claim for damage to his property under the Carmack Amendment, in addition to state law claims for deceit, constructive fraud, and promissory estoppel against Sedgwick, Atlas, and Ace. See [Doc. No. 14] ¶¶ 24-45.

II. Governing Standard

In considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a court must determine whether the plaintiff has stated a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). A pleading must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).

To survive dismissal, a plaintiff must plead sufficient factual allegations “to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible “when the plaintiff pleads 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).

For purposes of a motion to dismiss, the court accepts as true all well-pleaded facts in the complaint and construes those facts in the light most favorable to the plaintiff. Western Watersheds Project v. Michael, 869 F.3d 1189, 1193 (10th Cir. 2017). The court does not, however, accept as true conclusory statements or legal conclusions. Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 555).

III. Factual Allegations of the Amended Complaint

In August of 2021, Mr. Gardner entered into a contract and bill of lading with Ace and Atlas to move his family's personal property from Oklahoma City to University Park, Texas. Am. Compl. [Doc. No. 14] ¶ 7. Ace and Atlas packed Mr. Gardner's property for transport on September 13-15, 2021. Id. ¶ 10. The property was in excellent condition when delivered to Ace and Atlas, and it has considerable sentimental value. Id.

Ace and Atlas delivered the property to Mr. Gardner's Texas residence on September 16, 2021. Id. ¶ 11. Ace and Atlas badly damaged Mr. Gardner's property, and it had been exclusively within their possession, custody, and control from September 13–September 16. Id. ¶¶ 12-13.

Mr. Gardner immediately made a claim with Ace and Atlas for the damage to his property and provided details to an Ace employee named Kendra Evans. Id. ¶ 14. After initially ignoring the claim and often not returning phone calls, Ms. Evans eventually notified Mr. Gardner the claim had been turned over to Ace and Atlas's insurance carrier, Intact Insurance Specialty Solutions (“Intact”). Id. A representative of Intact contacted Mr. Gardner and advised him Sedgwick was being retained to handle the claim on behalf of Ace and Atlas. Id.

On October 20, 2021, Sedgwick representatives visited the Gardner residence to inspect the damage. Id. ¶ 15. One of the Sedwick representatives told Mr. Gardner's wife “it is the worst damage I have ever seen.” Id. Sedgwick employees repeatedly assured Mr. Gardner and his wife that they were sympathetic to their situation, and that they would take care of everything. See id. ¶ 17. A Sedgwick employee told Mr. Gardner that he informed Ace, Atlas, and Intact the damage claim would be at least $200,000.00. Id. ¶ 18.

Sedgwick took control of Mr. Gardner's property as part of the claim handling process. Id. ¶ 19. Sedgwick hired Paul Davis Restoration (“Davis Restoration”) to open each box, unpack each item, inspect the damage, and then repack the items. Id. Sedgwick negotiated compensation agreements with Davis Restoration but did not disclose those arrangements to Mr. Gardner. Id. Davis Restoration took approximately six weeks to complete the initial box inspection, then Sedgwick instructed that the Gardner property be moved and stored at Davis Restoration's warehouse. Id.

At some point, Mr. Gardner signed a work authorization for Davis Restoration. See id. ¶ 20. He alleges he only did so based on promises by the Sedgwick employees that Defendants would take care of the claim in its entirety, and that he would be made whole for all damage caused by Ace and Atlas. Id. Mr. Gardner further states he would not have agreed to let Davis Restoration participate but for these representations. Id.

Ace, Atlas, and Sedgwick failed to pay Davis Restoration for its pack-out, storage, cleaning, and restoration work. Id. ¶ 22. Davis Restoration placed a lien on Mr. Gardner's property and made demands for payment. Id. Davis Restoration told Mr. Gardner and representatives of Ace, Atlas, Intact, and Sedgwick it planned to sell Mr. Gardner's property if payment was not made within thirty days. Id.

Mr. Gardner made a demand on Ace, Atlas, Intact, and Sedgwick to pay Davis Restoration as promised, but they ignored his pleas. Id. Mr. Garner had to pay nearly $130,000.00 to Davis Restoration to obtain a release of his property. Id. ¶ 23.

IV. Discussion

In their Motions, Ace, Atlas, and Sedgwick primarily contend Plaintiff's claims for deceit, constructive fraud, and promissory estoppel are completely preempted by the Carmack Amendment. [Doc. No. 16] at 8-14; [Doc. No. 20] at 1-3. Ace also contends it cannot be liable because it solely acted as an agent for its disclosed principal, Atlas. [Doc. No. 16] at 3-8. Sedgwick likewise claims it is not a proper party to this action. [Doc. No. 20] at 3-4.

In his Responses, Mr. Gardner first contends Ace, Atlas, and Sedwick waived the right to bring their Motions by filing entries of appearance and reservations of time in state court prior to removal.¹ [Doc. No. 17] at 4-5; [Doc. No. 21] at 7-9. Mr. Gardner next asserts his state law claims are not preempted because the conduct and the harm he alleges in relation to those claims are distinct from any damage to his personal property which is the subject of his Carmack Amendment claim against Atlas. [Doc. No. 17] at 6-9; [Doc. No. 21] at 9-12.

A. Preemption

In 1906, “Congress enacted the Carmack Amendment to establish uniformity and consistency among states in the application and resolution of interstate shipping loss and damage cases.” Sec. USA Servs., Inc. v. United Parcel Serv., Inc., 371 F. Supp. 3d 966, 970 (D.N.M. 2019). “In exchange for making carriers strictly liable for damage to or loss of goods, carriers obtained a uniform, nationwide scheme of liability, with damages limited to actual loss—or less if the shipper and carrier could agree to a lower declared value of the shipment.” Certain Underwriters at Interest at Lloyds of London v. United Parcel Serv. of Am., Inc., 762 F.3d 332, 335 (3d Cir. 2014).

Since the early days of its enactment, the Supreme Court has “described the Carmack Amendment in broad, preemptive terms[.]” Underwriters at Lloyds of London v. N. Am. Van Lines, 890 F.2d 1112, 1116 (10th Cir. 1989). Most notably, it observed that “[a]lmost every detail of the subject [of interstate shipments] is covered so completely that there can be no rational doubt that Congress intended to take possession of the subject, and supersede all state regulation with reference to it.” Adams Express Co. v. Croninger, 226 U.S. 491, 505 (1913). Accordingly, the Courts of Appeals “have consistently held that the Carmack Amendment is the exclusive cause of action for interstate-shipping contract [and tort] claims alleging loss or damage to property.” Certain Underwriters at Int. at Lloyds of London, 762 F.3d at 336 (internal quotation marks and citation omitted).

Mr. Gardner maintains his claims against Ace, Atlas, and Sedwick for deceit, constructive fraud, and promissory estoppel are not within the broad purview of Carmack Amendment preemption because they are “distinct” from the alleged damage to his property and are based on events during the post-shipment claim process that “occurred long after the shipment of and damage to the goods took place.” Resp. [Doc. No. 17] at 8; [Doc. No. 21] at 12.²

The Supreme Court “has not clarified the extent to which state law provisions pertaining to the claims process, as opposed to the shipping of goods, are preempted.” Rini v. United Van Lines, Inc., 104 F.3d 502, 504–05 (1st Cir. 1997). The First and Seventh Circuits have held Carmack Amendment preemption extends to the state law claims for “liability stemming from the claims process, and liability related to the payment of claims.” Id. at 506 (state law claims for negligence, misrepresentation, and violation of a state statute associated with the claims process were preempted); see also Gordon v. United Van Lines, Inc., 130 F.3d 282, 289-90 (7th Cir. 1997) (holding a claim for fraud partially based on conduct during the claims process “is directly related to the loss or damage to the goods that were shipped” and therefore preempted).³

In finding preemption appropriate as to causes of action based on the claims process, the First and Seventh Circuits pointed out the Carmack Amendment and accompanying regulations have provisions governing that very process. Rini, 104 F.3d at 505 (“The Carmack Amendment and the set of federal regulations that complement it cover not only the actual transport of goods, but they also govern the claims process.”); Gordon, 130 F.3d at 290 (“[t]he Carmack Amendment speaks to the claims process, by imposing both a minimum and a maximum period of time for allowing shippers to file claims.”). The Court finds this rationale persuasive and that Carmack Amendment preemption includes causes of action based on the claims process.

Although it has not addressed preemption as to the claims process, the Tenth Circuit has instructed that “the focus is on whether the state [law] substantively enlarges the carrier's responsibility for the loss.” A.T. Clayton & Co. v. Missouri-Kansas-Texas R. Co., 901 F.2d 833, 835 (10th Cir. 1990) (an Oklahoma attorney fee statute was not preempted because “the award of reasonable attorney fees under the Oklahoma statute did not “provide an alternative avenue of recovery” or “an additional remedy”). Accordingly, “the analytic focus is on the effect the state law claim has on the scope of the carrier's liability for property that has been lost or damaged during an interstate shipment.” Shemes v. U.S. Moving Serv. LLC, No. 23-cv-02084-HLT-TJJ, 2023 WL 6390524, at *6 (D. Kan. Oct. 2, 2023).

Mr. Gardner seeks to hold Ace, Atlas, and Sedgwick liable for economic and noneconomic damages based on representations made during the claims process, which was initiated solely to resolve the issues regarding his damaged goods. Am. Compl. [Doc. No. 14] ¶¶ 14-23, 33-45; see also Resp. [Doc. No. 17] at 8; [Doc. No. 21] at 12. But he fails to acknowledge that the damages sought would “substantively enlarge the responsibility of the carrier.” See Sec. USA Servs., Inc., 371 F. Supp. 3d at 972 (finding a bad faith claim preempted even though it “did not arise directly out of damage to goods, but related to Defendant's poor dealings in the claims process,” because such a claim substantively enlarges the responsibility of the carrier. (citations omitted)); see also Rini, 104 F.3d at 506 (finding imposition of liability on a carrier “stemming from the claims process, or liability related to the payment of claims” would substantively enlarge the carrier's responsibility).⁴

Moreover, Mr. Gardner's state law claims are all based on conduct during the claims process that centered entirely on damage to his goods, and such claims would not exist but for that damage. See Am. Compl. [Doc. No. 14] ¶¶ 14-23; 33-45. In his Responses, he characterizes the representations and other actions by Sedgwick as having occurred “long after ․ the claim was made” and as “post claim misconduct.” Resp. [Doc. No. 17] at 8; [Doc. No. 21] at 12. But his Amended Complaint tells a different story: the very representations he relies on for deceit, constructive fraud, and promissory estoppel were all made by Sedgwick employees during their involvement with the claim, and they are expressly related to his claim for damaged goods and “making him whole” for that damage. Compare Am. Compl. [Doc. No. 14] ¶¶ 36-37, 43; with id. ¶¶ 17, 20.

Accordingly, his “state law claims are directly connected to, based on, or predicated upon, the damage to the shipped goods.” EMI Techs., Inc. v. Landstar Sys., Inc., No. CV 10-196 WPL/CEG, 2010 WL 11596678, at *3 (D.N.M. Aug. 25, 2010) (state law causes of action for bad faith, fraud, and misrepresentation based on actions taken during the claims process were preempted by the Carmack Amendment); see also Gordon, 130 F.3d at 290 (claim for fraud in the claims process was preempted because “people would not be involved in the process unless either loss or damage had occurred.”).

Mr. Gardner makes no effort to explain how his state law claims are akin to claims for personal injury and intentional infliction of emotional distress which have been found outside the broad purview of Carmack Amendment preemption in other jurisdictions. Nor does he cite any case finding state law claims based on representations made during the claim process are beyond the scope of Carmack Amendment preemption. By contrast, there are multiple persuasive examples of courts finding preemption applicable to fraud or misrepresentation claims based on conduct during the claims process much like those at issue here. See, e.g., Gordon, 130 F.3d at 289-90 (finding preemption applied “[n]o matter how despicably [the carrier] behaved during this process, by lying to [the plaintiff] when she called to inquire about her shipment, keeping her hopes up, and finally dashing them”); see also Rini, 104 F.3d at 506; EMI Techs., Inc., 2010 WL 11596678, at *3.

For all the reasons set forth above, Mr. Gardner's state law claims for deceit, constructive fraud, and promissory estoppel are preempted by the Carmack Amendment.

B. Dismissal of Ace and Sedgwick

As set forth, only Mr. Gardner's Carmack Amendment claim remains pending, and there is no dispute that claim is asserted against Atlas only. See Am. Compl. [Doc. No. 14] ¶¶ 24-32; see also Resp. [Doc. No. 17] at 5. Accordingly, all claims asserted by Mr. Gardner against Ace and Sedgwick are hereby dismissed, and the Court need not address their separate arguments for dismissal.

V. Conclusion

IT IS THEREFORE ORDERED that the Defendants' Motions to Dismiss [Doc. Nos. 16, 20] are GRANTED as set forth above. Plaintiff's state law claims for deceit, constructive fraud, and promissory estoppel are dismissed with prejudice. Plaintiff's Carmack Amendment claim against Atlas remains pending.

IT IS SO ORDERED this 22nd day of July, 2024.

FOOTNOTES

1.   Mr. Gardner's waiver arguments are without merit. The special entries of appearance he refers to were filed in state court before removal, and the Federal Rules of Civil Procedure do not recognize special appearances. Cf. Helms v. Sorenson, No. CIV-14-1003-W, 2015 WL 1569181, at *1 (W.D. Okla. Apr. 7, 2015) (“Rule 12 ․ abolished the distinction between general and special appearances in 1938, and these labels have no legal significance.”). More importantly, the Motions at issue were filed in response to Mr. Gardner's Amended Complaint, which “supersede[d] the original and render[ed] it of no legal effect.” Davis v. TXO Prod. Corp., 929 F.2d 1515, 1517 (10th Cir. 1991). Mr. Gardner does not explain how the reservations of time to respond to the initial Petition have any bearing on Defendants' ability to respond to the Amended Complaint. In any event, denial of the motions based on waiver would not encourage the “just, speedy, and inexpensive determination of [this] action,” Fed. R. Civ. P. 1, because it “almost certainly would lead [Defendants] to restyle and refile the instant motion[s] under Rule 12(c).” Mighty Siren, LLC v. Bates, No. CIV-21-788-R, 2023 WL 2878800, at *1 (W.D. Okla. Apr. 10, 2023) (converting a Rule 12(b)(6) motion to a Rule 12(c) motion for that reason). This is equally true for Sedgwick's Motion, filed after its Answer, because courts commonly treat such motions as motions for judgment on the pleadings. See Jacobsen v. Deseret Book Co., 287 F.3d 936, 941 n.2 (10th Cir. 2002) (“If the defendant makes the motion after filing the answer, the motion should generally be treated as a motion for judgment on the pleadings.”).

2.   Mr. Gardner also briefly references the “savings” clause of the Carmack Amendment, which provides that the remedies provided therein are “in addition to the remedies existing under another law or at common law.” 49 U.S.C. § 15103. But that rationale was expressly foreclosed in Underwriters at Lloyds of London, where the Tenth Circuit explained: “the Supreme Court and other authorities have described the Carmack Amendment in broad, preemptive terms, and have relegated the proviso relating to other remedies to a category of almost total insignificance.” 890 F.2d at 1116.

3.   Mr. Gardner is correct that both cases recognized “liability arising from separate harms—apart from the loss or damage of goods—is not preempted.” Rini, 104 F.3d at 606 (explaining, in dicta, that liability for an employee of the carrier injuring the shipper or a claim by the shipper for intentional infliction of emotional distress would not be preempted); see also Gardner, 130 F.3d at 289 (the Carmack Amendment does not preempt “those state law claims [such as intentional infliction of emotional distress] that allege liability on a ground that is separate and distinct from the loss of, or the damage to, the goods that were shipped in interstate commerce.”). As set forth below, however, Mr. Gardner does not adequately explain how the damages he alleges are “separate and distinct” from the damage to his goods, and he fails to consider some of the damages may be within the scope of his Carmack Amendment claim. See n.5, infra. His argument also ignores the fact that all the alleged conduct occurred as part of the claim process.

4.   Mr. Gardner includes a conclusory assertion, separate from his legal argument, that the money he paid to Davis Restoration and his emotional damages are separate and distinct. See Resp. [Doc. No. 17] at 3, 8; [Doc. No. 21] at 6, 12. But he fails to adequately develop that argument, and he does not actually explain how those damages are unrelated to (or not the direct result of) the damage to his goods. Id.; see also Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 382-83 (5th Cir. 1998) (claims for lost wages and emotional suffering were preempted because both resulted directly from the destruction of the plaintiffs' household goods). In any event, it is unclear at this time whether dismissal of his state law claims has any consequence, because some of the damages he alleges may be recoverable via his Carmack Amendment claim. See V.R. Compounding Corp. v. Occidental Chem. Corp., No. 99 C 8087, 2000 WL 1368045, at *3 (N.D.Ill. Sept. 15, 2000) (“Courts have interpreted the scope of carrier liability covered by the Carmack Amendment to extend beyond claims for damages to the property being delivered.”); see also Am. Nat. Fire Ins. Co. ex rel. Tabacalera Contreras Cigar Co. v. Yellow Freight Sys., Inc., 325 F.3d 924, 931 (7th Cir. 2003) (“Recoverable damages include damages for delay, lost profits (unless they are speculative), and all reasonably foreseeable consequential damages.” (citations omitted)); Contempo Metal Furniture Co. of California v. E. Texas Motor Freight Lines, Inc., 661 F.2d 761, 765-66 (9th Cir. 1981) (holding the plaintiff could recover special damages on a Carmack Amendment claim where the “carrier had notice of the special circumstances from which such damages would flow.”). This apparent overlap in terms of damages recoverable also weighs in favor of preemption. See Shemes v. United States Moving Serv. LLC, No. 223CV02084HLTTJJ, 2023 WL 6390524, at *6 (D. Kan. Oct. 2, 2023) (state law “claims cannot create an alternative path to recover for the same losses already covered by the Carmack Amendment.”).

SCOTT L. PALK UNITED STATES DISTRICT JUDGE