5k Logistics, Inc. v. Daily Express, Inc., No. 10-1907

Decided: Oct. 21, 2011

When Dominion Resources Services (DRS) contracted with 5k Logistics to transport “tube bundles” from Pennsylvania to Maryland, 5k subcontracted the work to Daily Express Inc. (DXI) to serve as the actual carrier of the goods. According to the bill of lading, DXI acted as carrier with DRS listed as shipper and 5k acted merely as a broker. The bill provided that all claims for damages that may befall the goods be made within nine months and any actions be brought within two years of a denial of a claim.

Of course, one of the tube bundles was damaged in transport; two years and nine months later DRS sued 5k for damages to the tubes. 5k was found liable to DRS but later won its indemnity claim against DXI. The district court found that 5k could not file a claim against DXI until its liability to DRS had been decided so the time limitations did not apply to its claim.

The Fourth Circuit reversed, holding that 5k’s separate contract subjecting it to potential liability with DRS did not affect its agreement with DXI. The Carmack Amendment to the Interstate Commerce Act allows shippers and carriers to make agreements about time limits to bring claims. Moreover, while the Amendment allows indemnity claims from carriers, brokers are not subject to the time limitations exception. The court reasoned that the Carmack Amendment sufficiently protected both carriers and shippers and that allowing a broker to bring a stale claim against a carrier, even when the damage was the fault of the carrier, would “blow a hole in the balance struck by the Carmack Amendment.”

Full Opinion

-C. Alexander Cable

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