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Architectural Contractors, Inc. v. Schilli Transportation Services, Inc.

United States District Court, Western District of Arkansas, Fayetteville Division

December 10, 2014

ARCHITECTURAL CONTRACTORS, INC. and THE CINCINNATI INSURANCE COMPANY, INC. PLAINTIFFS
v.
SCHILLI TRANSPORTATION SERVICES, INC. DEFENDANT

MEMORANDUM OPINION AND ORDER

TIMOTHY L. BROOKS, UNITED STATES DISTRICT JUDGE.

On the 1st day of December, 2014, this matter came on for a bench trial before the Court. During the one-day bench trial, the Court heard testimony from witnesses and received exhibits into evidence. Thereafter the Court ruled in Plaintiffs’ favor. This written Memorandum Opinion and Order is intended to supplement the Court’s ruling from the bench; however, to the extent this Order contradicts the Court’s ruling from the bench, this Order shall control.

I. BACKGROUND

Plaintiffs Architectural Contractors, Inc. (“ACI”) and The Cincinnati Insurance Company, Inc. (“CIC”) filed this action on July 23, 2013 in the Circuit Court of Washington County, Arkansas. On August 22, 2013, Defendant Schilli Transportation Services, Inc. (“Schilli”) removed the matter to this Court pursuant to federal question jurisdiction under 28 U.S.C. § 1331. ACI and CIC allege that certain building materials were damaged during transport by Schilli to ACI’s job site in Springdale, Arkansas.

ACI is an Arkansas company that provides commercial design and construction services. CIC is its insurer. Schilli is an interstate motor vehicle carrier engaged in the transportation of freight. On May 31, 2011, ACI ordered building materials from its supplier, BlueScope Buildings North America (“BlueScope”).[1] The building materials were to be used in the construction of a 31, 000 square foot commercial building ACI was constructing for its customer, the Arkansas and Missouri Railroad (“A&M”). BlueScope arranged shipment of the materials to ACI on six trucks, of which Schilli was the carrier for two loads. The bill of lading associated with the third shipment, the load at issue (“Load Three”), named ACI as the consignee. Damage to certain “wall panels” was discovered on Load Three shortly after arrival to the job site on August 29, 2011.

Due to contractual deadlines with A&M, ACI installed the damaged panels so that it could pour the concrete floor before winter, and subsequently replaced the damaged panels with new panels. ACI made an insurance claim with CIC, which was paid in the approximate sum of $14, 609.00. In this suit ACI, and CIC as subrogee, seek damages from Schilli pursuant to the Carmack Amendment of the Interstate Commerce Act, 49 U.S.C. §14706. Plaintiffs seek to recover the cost and expense to remove the damaged panels and install replacement panels, to include materials, labor, equipment, overhead, and profit.

Prior to trial, the Parties submitted cross Motions for Summary Judgment. Schilli argued that Plaintiffs’ claim was barred by a nine-month claim limitation set forth in a transportation agreement between Schilli and BlueScope. Plaintiffs also sought summary judgment, arguing that the Carmack Amendment applies strict liability to carriers, and there was no geninue dispute that the wall panels in question were damaged during transport.

The Court denied both parties’ Motions for Summary Judgment in its August 5, 2014 Order (Doc. 28), finding that in order to bind ACI to the nine-month limitations period negotiated between Schilli and BlueScope, there must be some reference to the limitations period—or at the very least to the Agreement that contained the limitations period—on the face of the bill of lading. The Court reasoned that nothing in the record suggested that ACI received actual notice of the nine-month limitations period, and it was unclear whether ACI received constructive notice of the Agreement and/or the limitations period. As to Plaintiffs’ request for summary judgment, the Court found that questions of material fact remained as to whether the goods were provided to Schilli in good condition and whether they were delivered to ACI in damaged condition.

Prior to trial, the Parties filed Stipulated Facts and Agreed Basis of Applicable Law (Doc. 33). At the beginning of trial, the parties agreed that the substantive issues to be tried were as follows:

(1) whether materials were in good condition upon receipt by Schilli;
(2) whether materials arrived in damaged condition at ACI’s job site;
(3) whether ACI had either actual or constructive knowledge of the nine-month claim limitation that existed in the transportation agreement between BlueScope and Schilli; and
(4) the extent of ACI’s damages, and whether all of the claimed damages would have been foreseeable to Schilli (i.e., that it would have been foreseeable to Schilli that damaged panels would have been installed as a temporary measure until replaced with new panels).

Plaintiffs called three witnesses: John Berryman, the president and owner of ACI, who appeared in person; Douglas Edwards, Schilli’s driver for Load Three; and Jean McMillian, BlueScope’s traffic manager. Schilli did not call any additional ...


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