The Carmack Amendment, Attorney’s Fees, and Summary Judgement

Kevin Anderson Cargo Liability, Judgments, Transportation

A federal district court out of New Jersey recently decided a case that illustrates the importance of summary judgment in Carmack Amendment cases and when attorney’s fees are justified. As we have discussed on this blog, the Carmack Amendment is the sole avenue of recovery when goods are damaged while being shipped in interstate commerce.

In a typical Carmack Amendment case, the amount a plaintiff can recover in damages is limited to the fair market value of the lost or damaged goods. But in certain circumstances a carrier can limit what damages are recoverable under the Carmack Amendment through an effective rate negotiation prior to shipping any cargo.

What Happened in This Case

This case, Yohan Choi v. ABF Freight System, Inc., Civ. No. 14-7458 (New Jersey Dec. 14, 2015), involved facts typical to most Carmack Amendment cases. The shipper contracted with the carrier to move goods from Texas to New Jersey. The shipper’s entire household goods were contained in a pod provided by the carrier, and were supposed to arrive at the same time as the shipper.

Somewhere in transit the pod was destroyed after the carrier’s truck driver and trailer were in an accident. The carrier notified the shipper of the accident, and subsequently the shipper sued the carrier for breach of contract and damages under the Carmack Amendment. Of course the carrier would be held liable, but the amount of liability is what the two parties would fight over in federal court.

The shipper in this case claimed that all of his household goods, valued at over $50,000, were in the destroyed pod. As a result, he demanded that the carrier pay that amount. But the carrier claimed that they negotiated a limited liability amount of $7,500 in the event his goods were lost or damaged. Due to the conflicted positions, it was left to the federal judge to decide just how much in damages should be awarded to the plaintiff.

Summary Judgement and Attorney’s Fees

Summary judgement is an oft used tool in Carmack Amendment cases. Authorized by federal rule of civil procedure 56, summary judgement gives a judge the authority to decide certain issues and issue final orders, thus preventing the issue to go to trial. In this case the court could clearly see that the parties properly limited liability to $7,500, and ruled in favor of the carrier.

After the plaintiff lost his case on summary judgment, he was not satisfied and asked the court to reconsider its ruling. While authorized to do so under the rules, the defendant saw this move as frivolous and asked the court to penalize the further plaintiff and require him to pay attorney’s fees for the cost of defending the reconsideration claim.

The court decided not to award attorney’s fees for one simple reason. In our system of justice both parties are expected to pay their own litigation expenses and fees as a result of a lawsuit. There are exceptions that can be found in federal and state statutes, court rules, and case law, but they are rare. This is known as the American Rule, and it is what the court cited to justify a denial of awarding attorney’s fees.

Your Company’s Legal Partner for the Future

As you can see from this case, one issue can turn into another once parties begin the process of litigation. When it comes to your company’s legal needs concerning transportation law, contact us. At Anderson and Yamada, P.C., we will put our significant and storied experience to work for you and your company.