Page 34 - ATR 5 2014 web

amount that the broker told SRT to have
- the court refused to cap SRT’s liability
“if the shiPPer sues for the loss of the at the $100,000 level?”
“Yep” your lawyer replies. “SRT got
shiPPer’s load, theN the carrier could limit stuck for the full $8 mil.”
its exPosure. but if the shiPPer has the Now you’re starting to worry. You
broker file suit for the Very same loss, mutter “So what do we do?”
theN the carrier caN get PoPPed for the finding proTECTion
whole amouNt?” Your lawyer sighs and continues,
“As an initial matter, the decision may
have limited implications. Some of its
conclusions – specifically, its preemp-
contracted with a freight broker, Exel, Your lawyer explains “Nope. The tion analysis and the interplay between
to arrange for the shipment of phar- Ohio court rejected SRT’s argument insurance procurement requirements
maceuticals. Exel enlisted Southern that Carmack preempted Exel’s indem- and limits of liability – may not hold
Refrigerated Transport (SRT) to carry nity claim. It pointed out that, while up in other jurisdictions, including
loads and SRT then signed Exel’s stan- a claim brought by the shipper might Arkansas. Yet, the ruling cannot be
dard ‘Master Transportation Services have been limited to the release value, ignored.”
Agreement.’ That Agreement contained this suit had been brought by the bro- “Tell me this,” your lawyer says,
one clause requiring SRT to indemnify ker, not the shipper. And while some “When the broker sent your salesman
the broker for any loss and another courts, including one in Arkansas in a that master services agreement for these
clause that required SRT to obtain cargo case called Propak Logistics, have deter- 20 loads, did your salesman send it over
insurance coverage of $100,000 max mined that the Carmack Amendment’s to your risk management folks to review
per vehicle.” preemptive effect extended not only before he signed it?”
At this point, you jump in “And to shippers, but also to brokers, other You say, “I have no idea. I guess
lemme guess, one of the loads trans- courts have ruled to the contrary.” you’re suggesting that the language of
ported by SRT was stolen, right?” Now you interject “I think I see that master services agreement could be
Your lawyer says “Precisely. Though where this is going.” important?”
the bill of lading had a release value of “Yes” your lawyer says, “Since Your lawyer replies “Yeah, send it
under $57,000, the shipper claimed that it ruled that Carmack did not pre- to me. I want to see if it’s the American
the load was pharmaceuticals valued empt Exel’s breach of contract claim, Trucking Associations’ Model motor
at over $8 million. So Exel presented the court found that SRT agreed to carrier/broker agreement.”
a claim to SRT on behalf of the ship- indemnify Exel for any loss of cargo. “What if it is?”
per for the full $8 million. And as you And while one provision of the Master “Then you may have some protec-
might expect, SRT rejected the claim, Agreement had also obligated SRT to tions that SRT didn’t have.”
contending that its liability would be maintain a maximum of $100,000 in “What if it isn’t?” you ask.
limited under the bill of lading to the cargo insurance, yet another provision “Well, then I want to see if it has
release value.” stated that the insurance provision did an indemnity clause with a carve-out
This is starting to sound all too not limit SRT’s liability under other sec- for cargo claims…or maybe a limitation
familiar to you so you ask “What hap- tions in Master Agreement.” of liability clause. Or maybe a provision
pened?” “Now wait a minute” you respond. requiring the broker to disclose cargo
Your lawyer continues, “Well, the “You’re telling me that, if the shipper value in excess of the required insur-
shipper assigned its claim to Exel and sues for the loss of the shipper’s load, ance.”
then Exel sued SRT under several theo- then the carrier could limit its expo- “What if it doesn’t?”
ries, including breach of the indemnity sure. But if the shipper has the broker Your lawyer responds “Then we
clause in the Master Agreement. In file suit for the very same loss, then the may need to get my colleague Charlie
response, SRT argued that, in light of carrier can get popped for the whole on the line. He knows far more about
Carmack, Exel’s state-based contractual amount?” bankruptcy than I do.”
indemnity claim would necessarily be Your lawyer responds “Yes, that’s
preempted.” what the judge said.” Greg Jones is a partner with Wright,
Lindsey & Jennings LLP in Little Rock
“And that’s right, isn’t it? That’s “That seems nuts! You’re say- and serves as general counsel to the
that ‘compromise’ you mentioned ear- ing that even though SRT had that Arkansas Trucking Association, Inc. He
lier, right?” $100,000 in insurance - the very can be reached at gjones@wlj.com

34 aRkansas tRuCking RepoRt | issue 5 2014