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Exceptions To Liability Under The Carmack Amendment In Motor Truck Cargo Claims

Posted in Liability, Transportation Cargo Claims

The Carmack Amendment to the Interstate Commerce Act generally imposes strict liability on motor carriers for actual loss or injury to property which occurs during interstate shipments.

However, there are five (5) exceptions outlined in the Carmack Amendment that a motor carrier can use to deny liability for freight claims. The burden of proof for each of the exceptions is on the motor carrier to prove the exception applies.

(1) Act of God: This defense applies when a carrier can show that damage was caused by a physical phenomenon or natural disaster than was not within the control of the carrier. For example, wind blowing over a trailer, or damage caused by tornado or flooding. Not every weather related condition falls under this exception, but rather, only those which are of such unanticipated force and severity that the carrier could not have been expected to take actions to protect against it.

(2) Public Enemy or Act of War: This exception applies to damage caused by hostile acts of military forces that are enemies of the government. This exception does not apply to organized crime.

(3) Act or Default of Shipper: The carrier can avoid liability if it can show that the damage to the cargo was as a result of some act of the shipper such as poor packaging of the product.

(4) Public Authority: Under the Carmack Amendment a carrier can also avoid liability if the cargo damage was caused by the government. For example, quarantines, product recalls, or trade embargos would fall under this exception.

(5) The Inherent Vice or Nature of the Goods Transported: If the goods being transported are naturally subject to defects, diseases, or decay, and the carrier can show that this "inherent vice" in the product was the cause of the damage, and not the carrier’s negligence, there is no liability on the carrier. Examples of these products include fruits, vegetables, and cheese. The burden of proof is on the carrier to show that this exception applies.

Application Of The Carmack Amendment In Motor Truck Cargo Claims

Posted in Liability, Transportation Cargo Claims

Congress enacted the Interstate Commerce Act in 1887 to regulate interstate transportation. Then in 1906 it enacted the Carmack Amendment. The purpose of the Carmack Amendment is to establish uniform federal guidelines designed to remove the uncertainty surrounding a carrier’s liability when damage occurs to a shipper’s interstate shipment. The provisions and limitations of the Carmack Amendment are important to know when dealing with a Motor Truck Cargo (MTC) claim for physical damage.

The Carmack Amendment applies only when there is interstate transportation by a motor carrier. 49 U.S.C. 13501(1). To make a case for carrier liability under the Carmack Amendment it must be shown that (1) that the goods were delivered to the carrier in good condition, (2) that they arrived at the place of delivery in damaged condition, and that (3) the amount of damages is measurable.

The Carmack Amendment subjects a motor carrier transporting cargo in interstate commerce to absolute or strict liability for actual loss or injury to property. As a result, the complaining party does not need to show that the carrier damaged the goods, but only that they arrived in a damaged state. To evidence the condition of the goods being shipped, the carrier issues a bill of lading, which is the carrier’s receipt for the condition and quantity of the goods. 49 U.S.C. 14706(a)(1). The bill of lading can also place limitations on the amount of the carrier’s liability in the event a claim is made. Punitive damages are not allowed under the Carmack Amendment.

The Carmack Amendment also allows a carrier to limit the time for filing a claim. A carrier may require that any claims for damaged goods be brought within nine months.

Train Wreck

Posted in Liability

Plaintiff was injured when the vehicle he was driving was struck by a train at a railroad crossing. Plaintiff drove his vehicle on a road which ran parallel to the railroad tracks and then turned on a road running perpendicular to the railroad tracks. He approached the railroad crossing which was marked by reflective crossbucks. Plaintiff drove his vehicle over the train tracks and his vehicle was hit by the train.

Plaintiff sued the railroad, alleging it was negligent in failing to properly mark the crossing, operating a train too fast, etc. The incident was captured on videotape.

The railroad filed a motion for summary judgment, asserting: 1) the accident was proximately caused by Plaintiff’s negligence; and 2) all of Plaintiff’s claims were preempted by federal law.

The trial court granted summary judgment in favor of the railroad based on the accident video and all of the other evidence available on the record. The approaching train was plainly visible to the driver. Plaintiff appealed the summary judgment entered in favor of the railroad.

The Oklahoma Court of Civil Appeals affirmed the summary judgment for the railroad, holding: 1) all of Plaintiff’s negligence claims were preempted by federal law; and 2) agreeing the Plaintiff’s own negligence was the proximate cause of the accident.

 Short v. Union Pacific Railroad Company, 2013 OK CIV APP 110. 315 P.3d 400

Coverage Insurers Each Pay For One-Half Of The Defense

Posted in Insurance Coverage

A physician was sued for defamation and interference with business relations. The physician had liability insurance policies with two different insurers: Physicians Liability and American National. The doctor reported the lawsuit to both insurers.

Physicians Liability agreed to defend the lawsuit, but American National refused to provide a defense or participate in the cost of defense. Physicians Liability sued in federal court asking the court to rule that American National was responsible for one-half of the expenses.

The trial court ruled in favor of Physicians Liability and ordered American National to pay one-half. The trial court also ruled that Physicians Liability was not entitled to recover prejudgment interest from American National on the amount awarded. Both parties appealed.

The Tenth Circuit Federal Court of Appeals agreed with the trial court’s ruling and held: 1) the policy language of the American National policy required the insurer to defend the physician; 2) Physicians Liability had a contractual right of subrogation against American National because the Physicians Liability policy stated "in the event of any payment under this policy, the company shall be subrogated to all the insured’s rights of recovery therefor against any person or organization…"; and 3) Physicians Liability could not recover prejudgment interest on the defense costs that it was entitled to collect against American National because prejudgment interest applies only to liquidated claims. The amount of defense costs was unliquidated therefore no interest could be collected.

Yousuf, et al. v. Cohlmia, et al., appeals # 12-5034 and 12-5038 (N.D. OKLA.) (1/21/14)

Mental Capacity To Knowingly Enter Into Contract With Arbitration Clause Is A Question For The Trial Court

Posted in Damages

The Plaintiffs Walker Bark and Debra Yahquo were parties to two contracts with Lake Country Chevrolet for the purchase of automobiles. The Plaintiffs then brought a lawsuit which sought to have the contracts rescinded (or set aside) and to recover damages for fraud on the part of the car dealer. The car dealership filed a motion to compel arbitration arguing that the contracts signed by the Plaintiffs included an agreement to resolve any disputes through arbitration, not a lawsuit.

In response, the Plaintiffs asserted that Mr. Bark suffered from a service-related disability and cognitive impairment and because of this, he did not knowingly agree to any of the terms of the contract including the arbitration clause. As an alternative, the Plaintiffs requested the court hold a hearing where it could hear evidence on the issue of whether cognitive impairment existed and the affect, if any, it had on the Plaintiffs ability to comprehend the contract. The trial court refused to hold a hearing or hear evidence and instead denied the dealership’s motion and allowed the lawsuit to proceed.

The dealership appealed the decision. The appellate court reversed the ruling of the trial court and remanded the case back to the trial court with instructions that it conduct an evidentiary hearing. As part of this hearing the trial court was instructed to make a determination as to the existence of the Plaintiffs’ mental capacity and ability to knowingly enter into a contract and agree to arbitration.

 Bark v. Lake Country Chevrolet Cadillac, LLC, 2014 OK CIV APP 24, __ P.3d __

Medical Clinic Not Responsible For Patient Who Causes An Automobile Accident

Posted in Liability

An elderly patient was examined during a scheduled appointment with a medical clinic. The patient was observed to be unstable. She advised the doctor’s office that she was under a lot of stress due to concern over her daughter being diagnosed with cancer. Upon examination, the doctor did not find any evidence of impairment. She was determined to be alert, could maintain a conversation, and did not exhibit any behavior warranting concern over her ability to drive an automobile.

After the examination, the patient was taken in a wheelchair to her car in the parking lot. The patient then proceeded to drive, striking the back of the Plaintiff’s car. The Plaintiff alleged that she was injured in the collision and blamed the clinic for allowing the patient to drive when she was incapable.

The medical clinic filed a motion for summary judgment which was granted by the court. The Oklahoma Court of Civil Appeals affirmed summary judgment stating that simply because a patient is unsteady on her feet did not reasonably give the physicians notice that an accident would occur; that a nurse taking a patient to the parking lot in a wheel chair to prevent the patient from falling is not sufficient for the Plaintiff to bring suit; members of society are perfectly capable of knowing when they can safely operate an automobile and the clinic was not responsible.

No Insurance Coverage Available Because LLC Was Not A Named Insured

Posted in Insurance Coverage, Liability

No Insurance Coverage Available Because LLC Was Not A Named Insured

No coverage was available to a limited liability company when it was not named as an insured in the liability insurance policy. An individual by the name of Kouk owned multiple businesses. One of the companies, Brown and Kouk Rentals, LLC, owned and rented apartments and mobile homes to people. Another business was Vernon & Sons Construction, LLC, involved in the construction trade. The businesses maintained separate bank accounts and no funds were commingled between the businesses. Vernon & Sons Construction obtained commercial liability insurance coverage through Columbia National Insurance. Vernon & Sons Construction was the only company listed on the insurance policy.

Mr. Kouk went out one evening to a renter’s home to collect the rent. When he arrived, there was a party taking place in the front yard and he was invited to share a beer. Kouk joined the gathering around a burning fire and drank a beer with those present. When he finished, he put the bottle into a metal bucket that was in the fire. Several minutes later, the bottle exploded with a piece of the glass striking a young child of the renter causing him to lose sight in one eye. The father of the injured boy filed suit against Kouk for negligence.

Kouk notified Columbia National Insurance who provided an attorney to defend the case. Columbia retained separate counsel to conduct an investigation as to whether or not there would be coverage under the policy for the incident. The coverage investigation showed that Kouk was not conducting any business on behalf of Vernon & Sons Construction when the incident happened. Columbia determined there was no coverage from the loss and withdrew the defense of the injured boy’s lawsuit.

Kouk proceeded to defend the lawsuit using his own personal attorney. The jury returned a verdict against Kouk in the sum of $427,000. The minor Plaintiff then filed suit against Columbia to recover the benefits of the insurance policy.

The Oklahoma Court of Civil Appeals ruled:

1. The injured child could proceed directly against the insurer and without the requirement of a garnishment based upon the language in the policy allowing a party to recover a final judgment against an insured;

2. Mr. Kouk was not insured under the policy because he was not conducting business or performing duties as part of the business of the construction company when the accident occurred;

3. Columbia National was not estopped from denying coverage because Mr. Kouk had been timely informed there was a coverage question many months before the lawsuit was even filed.


Posted in Liability

Plaintiff filed a personal injury lawsuit against the Defendant that arose out of a gas pressure vessel explosion on an oil and gas lease. During the discovery phase of the lawsuit, a deposition was conducted of the former co-plaintiff in which the deponent testified he had installed a safety pressure valve three weeks prior to the explosion. Approximately six months after the testimony was given, Plaintiffs’ counsel submitted a correction to the deposition revising the testimony to reflect the valve had actually been installed after the explosion. A second deposition was conducted in which the co-plaintiff admitted to giving false testimony in order to mislead the Defendant, the court, and ultimately the jury. Defendant moved to dismiss the lawsuit based on Plaintiff’s perjury and prevailed. Plaintiff appealed.

The Oklahoma Court of Civil Appeals affirmed the dismissal, holding:

1) the trial court acted properly within its authority to protect judicial process when it dismissed Plaintiff’s claim, and

2) Plaintiff’s rights to due process were not violated when the lawsuit was dismissed as a sanction to Plaintiff’s misconduct.

Agrawal v. Duke Energy Field Services, LP, 2013 OK CIV APP 61, 307 P.3d 371.

Insurance – Automobiles

Posted in Insurance Coverage, Liability

A vehicle insured by Shelter Mutual Insurance Company was permissively being driven by an individual who was insured by American Farmers and Ranchers Mutual Insurance Company . The driver was involved in a collision that occurred when he turned left in front of another vehicle which resulted in injuries to the passengers of the second vehicle. The passengers of the other vehicle made claims for property damage and personal injury against the driver for his negligence and submitted claims to both insurance companies.

American Farmers’ policy contained an "other insurance" clause that stated: "provided, however, the insurance with respect to a . . . non-owned automobile shall be excess insurance over any other valid collectible insurance. . . ."

Shelter’s policy also contained an "other insurance" clause which stated: "if there is other insurance which covers the insured’s liability with respect to a claim also covered by this policy, coverages a and b (i.e., bodily injury and property damage liability) of this policy will apply only as excess to other insurance."

The two insurance companies jointly settled the claims and prorated the amount of the settlement based on the liability limits in the respective insurance policies. The Shelter insurance policy contained an "other insurance" exclusion which limited insurance coverage only to claims only in excess of other insurance which covered an insured’s liability. American Farmers reserved the right to recover from Shelter in the event Shelter’s "other insurance" clause was deemed invalid.

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Evidence Is Necessary For Products Liability Case To Survive Summary Judgment

Posted in Liability

Plaintiff purchased an aluminum ladder at his local Home Depot in September 2003. In 2006, Plaintiff fell while using the ladder when one of the legs "folded." In 2008, Plaintiff filed suit against Home Depot and Warner Company.

Plaintiff alleged that the ladder was defective and unreasonably dangerous. The ladder company, Warner, filed a motion for summary judgment, asserting that the ladder was not defective in design, manufacture or materials. Home Depot also filed a motion for summary judgment and attached evidentiary materials from an expert stating that there was no defect in the ladder.

In response to the motions for summary judgment, Plaintiff said he was competent to express an opinion concerning the allegedly defective design of the ladder. Plaintiff asserted that he was not obligated to produce expert testimony in support of his opinion concerning the existence of a defect.

The trial court granted summary judgment for the ladder company and Home Depot, finding that Plaintiff failed to file sufficient evidentiary material to rebut the expert reports submitted by the Defendants. Plaintiff appealed.

The Oklahoma Court of Civil Appeals affirmed the summary judgment for the Defendants:

 1) when Warner and Home Depot came forward with expert testimony to demonstrate no defect in the ladder, Plaintiff was required to come forward with some evidence to rebut this expert opinion;

2) Plaintiff had no special engineering or other expertise to express an opinion on the issue of design or manufacturing defects;

3) Plaintiff’s bald assertion that the ladder failed because of an alleged defect was insufficient to overcome the expert evidence provided by the defendants.

Doyle v. New Warner Holding Company, Inc., 2013 OK CIV APP 66, ___ P.3d ___

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