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ARTICLE FOR TIA JOURNAL
THE 18-MONTH STATUTE OF LIMITATION (49 USC §14705) FOR CLAIMS ASSERTED BY AND AGAINST CARRIERS INCLUDES MORE THAN JUST TRANSPORTING FREIGHT.
Emmert Industrial Corporation v. Artisan Associates, 2005 WL 913129 (D. Or.).
Factual Background: Emmert, Plaintiff in this case, was an engineering and transportation company that specialized in transporting heavy objects weighing more than 100,000 pounds. Artisan was a broker that specialized in complex transportation projects. In May 1996, Artisan solicited bids on behalf of its shipper (General Motors) for transporting six metal stamping machines from Japan to various locations in the United States. In June 1996, Artisan accepted a bid from Emmert for Emmert to be the “primary carrier”. Emmert completed two of the projects and billed Artisan $4,900,931. Artisan paid Emmert $4,195,557. Emmert alleges that the payments leave an unpaid balance of not less than $570,000. It was learned before all of the moves were completed that General Motors did not want to deal with Emmert and, in fact, did not use Artisan as its broker on the remaining shipments. In October 1997, Artisan told Emmert it would not pay the remaining balance, and this lawsuit followed.
Discussion: Emmert claimed that Artisan breached the contract by failing to pay the balance remaining on its invoices. Artisan, the broker, claimed that Emmert’s claims were barred by the 18-month statute of limitations, 49 USC §14705, for the transportation services. If Artisan was correct, it would avoid the liability, $570,000, asserted by Emmert. Emmert argued that the services for which it was seeking payment were not transportation services, and therefore the claims were not preempted by the statute of limitations, 49 USC §14705, but rather the six-year statute of limitations for breach of contract actions in the State of Oregon. The alleged “non-transportation” services for which Emmert sought to collect included preparing route plans, working with civil authorities and highway authorities to obtain proper permits, monitoring bridges, hiring additional personnel, all involved in arranging for the transportation of the presses. The Court cited the definitional section of 49 USC §13102(12) (now 19) stating that the transportation services governed by the 18-month statute of limitations are not limited to the actual movement or shipment of the items. Under the definitions “(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 agreement concerning use; and (b) services related to that movement, including arranging for, receipt, delivery, elevation, transfer and transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.” The Court went on to cite numerous cases where efforts have been made to impose a more restrictive definition of the meaning of the term “transportation” as used in the statute.
The Court concluded that while Emmert’s efforts to characterize their engineering and consulting services outside of the meaning of the word “transportation”, that they were actually involved in the transportation of goods. Thus, Emmert’s argument failed.
The final dispute between the parties involved the meaning of the term “primary carrier”, which no one had bothered to define.
Emmert claimed that the term “primary carrier” meant it was entitled to complete performance of the contract. The Court found that the term primary did not mean “exclusive”. Thus, the Court concluded that Artisan, the broker, had the right not to pay the remaining balance when it was not obligated to do so under its contract.
Since the 18-month statute of limitations applies to claims against carriers, brokers are reminded that their billing to carriers for brokerage and related services must be made before the 18-month statute of limitations period expires.
The moral of the story:
(1) Don’t wait to do your billing. The 18-month statute of limitations applies to a broad range of transportation-related services; and
(2) Be careful to define terms in your contract which you “assume” everyone understands.