Camper’s World is a seller, manufacturer, and distributor of women’s apparel.
On Jan. 8, 2013, Atlantic Drayage agreed to deliver a container holding 2,440 cartons of women’s clothing apparel from Newark, N.J., to Camper’s World in Hicksville, on Long Island, New York.
Atlantic Drayage contracted with Port Kearny Security (PKS) to leave the cargo at the firm’s storage lot overnight.
When the cargo was delivered to Camper’s World on Jan. 9, 914 cartons were missing.
Camper’s World filed a claim with its insurer, Starr Indemnity, and Starr paid Camper’s World $393,668.12 and became subrogated to the rights of Camper’s World for its loss under the terms of the insurance policy.
Starr then filed a complaint in U.S. District Court on Feb. 7, 2014, to recover damages from both Atlantic Drayage and PKS.
PKS filed an answer with cross-claims, alleging Atlantic Drayage breached the terms and conditions of its agreement and release by failing to defend, indemnify, release and hold PKS harmless against the subrogation claims.
PKS’s cross-claims included breach of contract, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing, and indemnification and contribution.
Atlantic Drayage moved to dismiss the cross-claim. It argued the Carmack Amendment to the Interstate Commerce Act preempted PKS’s claims of breach of fiduciary duty, breach of the covenant of good faith and fair dealing, and indemnity and contribution.
The court found “The Carmack Amendment simply does not apply to the relationship between Atlantic Drayage and PKS.” (Starr Indemnity & Liability Company a/s/o Camper’s World Apparel v. Atlantic Drayage & Transport, Inc. and Port Kearny Security, Inc. N.J. District. No. 2:14–cv–00807. Nov. 24.)
The court noted in 1906 that Congress enacted the Carmack Amendment to establish a nationwide scheme of liability for interstate carriers. Under Carmack an interstate carrier is held strictly liable to the person entitled to recover under the bill of lading for damages up to the actual loss or injury to the property.
But it said PKS has no rights under a bill of lading and that its rights are based on a contract for overnight storage. Since PKS has no rights under a bill of lading, the Carmack Amendment does not apply to its cross-claims against Atlantic Drayage and the court denied its motion to dismiss.
This column was published in the April 2015 issue of American Shipper.