Facts. A broker submitted several questions concerning how to deal with the deadbeat/slow pay shipper-customer. The Oregon-based broker arranged for the transportation of a shipment of furniture for a customer located in California. The shipment moved from California to a warehouse in Maryland where it was held on behalf of the owner and ultimately delivered from the warehouse to a destination in Florida. The charges were about $30,000, but the shipper-customer has only paid about $4000, although it has made numerous representations that payment would be forthcoming. The owner of the California shipper-customer signed a credit application that contained a personal guaranty, but he did not provide his DOB or SSN.
Questions: The broker asks the following questions:
- Since the shipper-customer is a member of the BBB, should the broker submit a complaint to the BBB or will it be opening itself up to a possible slander claim?
- Can the broker seek to collect from the warehouse-consignee in Florida?
- Who can the broker file a lawsuit against?
- Can the broker take this to court since some small payments have been made?
First, I do not recommend that the broker file a complaint with BBB. In my 36+ years of practicing law, I have never been involved in, or even heard of, a situation where a complaint to BBB was used as a tool to collect past due charges.
Second, the broker may be able to collect from the warehouse-consignee, but that depends on what the bill of lading states. If the shipment was marked “collect” and/or if “section 7” was initialed by the shipper, then the consignee is primarily liable. The broker needs to look carefully at how the warehouse-consignee was designated. Is there any notation on the bill of lading stating on whose behalf the warehouse was receiving the shipment? If so, then that is your actual consignee. Regardless, the broker might want to send a demand letter to the warehouse-consignee simply to see if they respond and provide useful information or a way to obtain the information needed. If the broker goes after the consignee, it will have to sue them in Maryland or Florida. If the broker has a local attorney handle the claim, he or she can retain control of the case but will have to associate with an attorney in Maryland or Florida and be admitted “pro hac vice” to represent the broker in those courts.
Assuming this shipment was “prepaid,” meaning that the shipper is liable, then I recommend that the broker file a lawsuit here in Oregon against the California shipper and its owner to recover the amount owed. The credit application filled out and signed by the owner should be enough to establish jurisdiction here in Oregon, both against the company and him individually. The broker does not need to know the owner’s DOB or SSN to name him as a defendant. In this regard, the broker’s credit application should contain some of that boilerplate language that people often complain about. Specifically, there should be a “jurisdiction and venue” provision that states any lawsuit must be filed in Oregon in your home or a more convenient county, a “governing law” provision that states that the contract and any lawsuit will be governed by Oregon law, and an “attorney’s fee” provision that states the prevailing party is entitled to recover its attorney fees. If the broker’s credit application does not contain these provisions, it needs to be revised to add them.
In answer to question 4, the answer if yes. The shipper-customer breached its agreement with the broker and has repeatedly breached subsequent promises. The few small payments do not change that result under the facts described.