The Carmack Amendment as a Double Edged Sword

Kevin Anderson Cargo Liability, Transportation

In a twist on how the Carmack Amendment is typically used, a trucking company took full advantage of the provisions of the Carmack Amendment. This is another example of the powerful tool the Carmack Amendment can be to hold carriers liable for damaged cargo.

In this case, a driver of a trucking company had a break down while traveling interstate, and learned that his engine had a hole in it. Because time is money, the company got right on the issue and ordered a new engine for the truck so it could get back on the road. But once the engine arrived to replace the old one, that is when the real problems began.

As it turned out, the trucking company bought the engine from the repair shop who had it shipped to them by another trucking company. But once it was discovered the engine was damaged, the shipper tried to get the shop to pay for it. They won a judgement in court, but the shop soon went out of business, so there was no collection on the proceeds.

Carmack Amendment and Third Parties

It was at this point that the original trucking company got creative with their legal arguments. They argued that because they purchased the engine from the shop, who then had it shipped, they should be entitled to be compensated for the damages to the engine. But the carrier did not see it that way.

The carrier made two effective arguments the court agreed with, and which ended up dismissing the suit. The first of these arguments was that the bill of lading required any claim be made within 9 months of the goods being damaged. And the court agreed with this position. In fact, this is a lesson for trucking companies that the Carmack Amendment has specific rules on time limits for making claims in a bill of lading. The minimum time requirements are 9 months for a claim, and two years for a civil claim based on that claim.

The court used this argument to make its ruling that the trucking company was time barred from bringing a suit under the Carmack Amendment. Even though the trucking company was not a party to the bill of lading, they were trying to recover for damages, under the Carmack Amendment, based on the contract between the carrier and now defunct repair shop. As a result, they were bound by the terms of the original bill of lading.

So in this case the court denied the claim under the Carmack Amendment, and now the trucking company is stuck without any remedy to recover their losses. But there are several, broader points to be taken from this case for transportation companies. One of those lessons is the fact that the Carmack Amendment has many provisions in it that can be used as a double edged sword. For example, the time limits a company can use in a bill of lading to bar a claim.

To better understand how your company could be using all the provisions of the Carmack Amendment to your benefit, you need the right professional team counseling you in your business. At Anderson and Yamada we have decades of experience helping trucking companies with all their legal needs. Contact us today.