Midwest Trading Grp., Inc. v. Globaltranz Enters., Inc.

MIDWEST TRADING GROUP, INC., Plaintiff, v. GLOBALTRANZ ENTERPRISES, INC.,AMERICAN FREIGHT NETWORK, INC.,AKOP KARAPETAN D/B/A V& R TRUCKING,AND EVERTEK, INC., Defendants.

No. 12 C 9313

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

March 5, 2015

Judge Thomas M. Durkin

MEMORANDUM OPINION AND ORDER

Before the Court is defendant GlobalTranz Enterprises, Inc.'s ("GlobalTranz") motion for reconsideration. On July 23, 2014, the Court entered a Memorandum Opinion and Order granting in part, and denying in part, GlobalTranz's motion for summary judgment. GlobalTranz has asked the Court to reconsider two portions of its ruling. First, GlobalTranz argues that the Court incorrectly held that the Interstate Commerce Commission Termination Act ("ICCTA"), 49 U.S.C. § 14501(c)(1), does not preempt plaintiff Midwest Trading Group, Inc.'s ("Midwest") fraud claim. Second, GlobalTranz argues that the Court incorrectly held that material factual disputes precluded summary judgment on Midwest's claim for damages in excess of the "limitation of liability" provision of GlobalTranz's "Freight Broker Agreement Terms and Conditions" ("Terms and Conditions"). For thefollowing reasons, the Court grants GlobalTranz's motion to reconsider in part, and denies it in part.

Background

The Court will assume that the reader is familiar with its prior Memorandum Opinion and Order in this case. See Midwest Trading Grp., Inc. v. GlobalTranz Enter., Inc., No. 12 C 9313, 2014 WL 3672932 (N.D. Ill. July 23, 2014). Nevertheless, an overview of the facts and the relevant portions of the Court's opinion will be helpful.

In January 2012, West Coast Imports, Inc. ("West Coast"), acting as Midwest's agent, contacted GlobalTranz — a transportation broker — to arrange for the shipment of Android tablet computers. Id. at *1. The shipment was divided into two loads, one destined for Texas (zip code 78218) and the other for North Carolina (zip code 27536). Id. at *2. Midwest had used GlobalTranz as a broker on one prior occasion. Id. at *1. West Coast had previously booked over 100 shipments with GlobalTranz on various occasions for other customers. Id. Nuria Coronado, a West Coast employee, contends that it was her "standard practice to book all load shipments via email directly with" Shawn Gengler, a GlobalTranz employee. R. 44-1 at ¶ 3. Coronado attaches to her declaration an email that she sent to Gengler with respect to the Texas shipment:

[Coronado:]

Hi Shawn Please quote[:] 6 Pallets[,] 3,710 Lbs[,] Dest. zip 78218[,] Android Tablet[,] $250,000.00[.]

Best Regards,

Nuria Coronado.

[Gengler:]

$950 is my rate for this[.]

Id. at 8 (reformatted for clarity). It was Coronado's "understanding based on [her] experience with GlobalTranz that the quote included the cost of insurance." Id. at 1-2 ¶ 4. Vinay Saboo, West Coast's President, states that Gengler "confirmed" that the quoted price "included insurance against the loss or theft of the tablets during shipment." R. 29-2 ¶ 6. Gengler states that he "did not offer and West Coast did not request" such insurance. R. 20 at ¶ 7. GlobalTranz brokered the shipment to American Freight, which in turn brokered the shipment to V & R Trucking. Midwest, 2014 WL 3672932, at *2. While V & R's driver was out of the truck eating lunch, the tractor and trailer containing the tablets were stolen. Id. After the theft, Saboo emailed Gengler to confirm that tablets were insured. R. 44-3 at 2-3. Gengler confirmed that West Coast had purchased insurance in amounts sufficient to cover Midwest's losses from the theft. Id. at 2. In fact, GlobalTranz had not purchased third-party insurance and has refused to pay Midwest for the stolen shipments, prompting this lawsuit. Midwest alleges that GlobalTranz: (1) fraudulently induced Midwest to enter into a contract with GlobalTranz by misrepresenting that it would provide insurance for the shipments (Count I); (2) negligently "fail[ed] to take steps necessary to assure" that the Android tablets were not stolen (Count II); and (3) breached its contract by failing to obtain the insurance that it had agreed to procure (Count III). R. 1-1 ¶¶ 20-40.

In its summary-judgment motion, GlobalTranz argued that the ICCTA preempts Midwest's tort claims:

[A] State, political subdivision of a State, or political authority of 2 or more States may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier (other than a carrier affiliated with a direct air carrier covered by section 41713(b)(4)) or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.

49 U.S.C. § 14501(c)(1). The Court reviewed the relevant controlling authority construing § 14501(c)(1) and the comparable provision of the Airline Deregulatory Act ("ADA"). See Midwest, 2014 WL 3972932, *4-7.¹ Applying those authorities, the Court held that the ICCTA preempted Midwest's negligence claim, id. at *7, but not its fraud claim. Id. at *7-8. Although it was a close question, see id. at *7, the Court concluded that Midwest's fraud claim did not "relate to" GlobalTranz's services as broker:

Midwest's claims do not relate to GlobalTranz's conduct in brokering the cargo. Rather, Midwest is claiming it was fraudulently induced into entering into a contract with GlobalTranz—i.e., it would not have paid GlobalTranz and allowed GlobalTranz to transport its shipments of Android tablets if it knew GlobalTranz would not procure insurance. That claim relates to pre-transportation conduct, as opposed to how any contracted-for services of GlobalTranz were carried out.

Id. The Court further concluded that "enforcing the common law prohibition on fraud in this case will simply hold the parties to their bargained-for expectation." Id. at *8. "[P]rohibiting parties from misrepresenting the terms of a contract provides a generally-applicable rule that affects a carrier's rates and service only in its capacity as a member of the general public." Id.

With respect to Midwest's breach-of-contract claim, GlobalTranz argued that the parties, through their course of dealing, had agreed to be bound by GlobalTranz's Terms and Conditions.² That document includes a provision limiting GlobalTranz's liability to an amount equal to the fees it earned in connection with the shipment. R. 20-3 at 20. The Court held that there was a genuine dispute of fact regarding whether the parties intended to be bound by the Terms and Conditions. Midwest, 2014 WL 3672932, at *10-11.

Analysis

I. Legal Standard

This Court has "inherent authority" under Rule 54(b) to reconsider its interlocutory orders. Janusz v. City of Chi., No. 03 C 4402, 2015 WL 269934, at *4 (N.D. Ill. Jan. 20, 2015); Fed. R. Civ. P. 54(b) (Non-final orders "may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities."); see also Gibbs v. Lomas, 755 F.3d 529, 535 (7th Cir. 2014) (An order denying a summary-judgment motion is interlocutory.). A motionto reconsider is not, however, a proper vehicle for rehashing arguments that the Court previously rejected. See Janusz, 2015 WL 269934, at *4. "Rather, a motion to reconsider allows a party to direct the court's attention to manifest errors of fact or law, a significant change in the law or facts, the court's misunderstanding of a party's argument, or a party's contention that the court ruled on an issue that was not properly before it." Id.

II. Preemption

GlobalTranz argues that the Court misapplied the Supreme Court's decision in Dan's City. R. 51 at 5-6. The defendant towing company in Dan's City towed the plaintiff's car from his apartment complex's parking lot at his landlord's request. Dan's City, 133 S.Ct. at 1776-77. The defendant did not know the plaintiff and was unaware that he was hospitalized when it towed his car. Id. at 1777. The plaintiff remained in the hospital for approximately two months, during which time the defendant stored his car. Id. It later put the car up for auction and traded it to a third party when the auction did not attract any bidders. Id. The plaintiff sued the defendant for violating the New Hampshire Consumer Protection Act and breaching its "statutory and common-law duties as a bailee to use reasonable care in disposing of the car." Id. The Supreme Court rejected the defendant's argument that § 14501(c)(1) preempted these claims on essentially two grounds. First, the Court held that the plaintiff's claims did not relate to the "transportation of property." Title 49 defines "transportation" as follows:

Transportation. -- The term "transportation" includes —(A) a motor vehicle, vessel, warehouse, wharf, pier, dock, yard, property, facility, instrumentality, or equipment of any kind related to the movement of passengers or property, or both, regardless of ownership or an agreement concerning use; and

(B) services related to that movement, including arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.

49 U.S.C. § 13102(23). The Supreme Court concluded that "storage" and "handling" fit within this definition "only when those services 'relat[e] to th[e] movement' of property." Dan's City, 133 S.Ct. at 1779. It observed that "[t]emporary storage of an item in transit en route to its final destination relates to the movement of property and therefore fits within § 13102(23)(B)'s definition." Id. Storage and handling after transportation—the focal points of the plaintiff's statutory and common-law claims—do not. Id. Second, the Court held that the plaintiff's claims were "unrelated to a 'service' a motor carrier renders its customers." Id. The defendant's transportation service—towing the plaintiff's vehicle from his landlord's parking lot—"ended months before the conduct on which [the plain...