AMENDED MEMORANDUM OPINION AND ORDER
In early December 1989, Matsushita Electric Corporation of America, acting through its agent, Hub City, contracted with American President Intermodal Company, Ltd. (API) to transport several containers of Panasonic equipment from Seattle to Chicago. The container's ultimate destination was to be a warehouse in Arlington Heights, Illinois. API--the carrier for the first leg of the journey--was to provide "ramp-to-ramp" service, transporting the containers from a Seattle railhead to the Chicago and Northwestern (C&NW) railhead in Chicago. Another company, Amato Motors, was in charge of moving the containers in from Chicago to the Panasonic Warehouse in Arlington Heights, Illinois.
The containers left Washington State on December 12, 1989. On December 15, API notified Amato by fax that the containers would-arrive in Chicago the next day. The fax contained two crucial bits of confidential information Amato would need before it could take possession: the container and pick-up numbers.
After depositing the containers at the C&NW railhead in Chicago on December 16, API informed Amato--first verbally, then via fax--that the containers had been constructively placed and were available for pick-up. Amato would not be picking up the container itself, having subcontracted with another company, Raven Transport, to pick up the containers on December 18th and take them to the Arlington Heights warehouse. Amato faxed Raven, passing on the confidential container and pick-up numbers recently forwarded by API.
On December 18, a man entered the C&NW yard driving Raven tractor No. 105. He identified himself as "Wilson," a Raven employee, and presented the confidential pick-up number for one of the seven containers. After loading the newly-released container into the Raven truck, Wilson drove straight past the C&NW guards, on through the gates, and out of this story.
Certain facts emerged quickly--Raven employed no one named "Wilson"; Raven tractor No. 105 was reported missing--but not quickly enough. The container, like the imposter who pilfered it, had disappeared without a trace.
Tokio Marine and Fire Insurance Co., Ltd. and Chiyoda Fire and Marine Insurance Co., Ltd. had insured the containers. They compensated Matsushita for the lost goods stored in the container, paying $ 452,117.41 and $ 38,194.00 respectively. The insurers, as subrogees for Matsushita, now seek to hold API liable for the value of the lost merchandise under 49 U.S.C. § 11707, the Carmack Amendment.
The insurers allege that the first carrier was contractually obligated to guarantee physical delivery of the container into the hands of the second carrier. Since the second carrier (Amato, the "notify" party) had inherited nothing it could physically pick up, API--so the insurers would have it--is strictly liable under the Carmack Amendment for their loss.
API moves for summary judgement pursuant to Fed. R. Civ. P. 56, claiming that, first, it fulfilled its contractual obligations; second, it fulfilled any legal duty owed to the shipper when it delivered the container to Chicago and notified Amato that it was ready for pick-up; and third, it cannot be held liable for a loss occurring subsequent to its relinquishing control. API argues that it is entitled to summary judgment because the insurers can allege no genuine issues of material fact regarding API's liability.
Summary judgment is appropriate if, after drawing all reasonable inferences in favor of the nonmoving party, the court concludes there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Juarez v. Ameritech Mobile Communications, Inc., 957 F.2d 317, 320 (7th Cir. 1992). In deciding motions for summary judgment, the district court has "one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial." Waldridge v. American Hoechst Corp., 24 F.3d 918, 920 (7th Cir. 1994) (citations omitted).
The parties, in turn, bear a concomitant burden to identify specific evidence that will facilitate this assessment. Id. If the nonmovant fails to "come forward with evidence that would reasonably permit the finder of fact to find in her favor on a material question, then the court must enter summary judgment against her." Id., citing Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-87, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986).
I. A Prima Facie Case Under the Carmack Amendment
The insurers bring this action against API under 49 U.S.C. § 11707, the Carmack Amendment.
They allege that API, as the "initial receiving carrier,"
is strictly liable for the value of the goods stolen by the imposter. To establish a prima facie case under the Carmack Amendment a plaintiff must prove that (1) the goods in question had been delivered to the carrier in good condition; (2) the goods had arrived at the final destination in a damaged or diminished condition; and (3) the damages can be specified. S.C. Johnson & Son, Inc. v. Louisville & Nashville R.R., 695 F.2d 253, 256 (7th Cir. 1982); Louis Padnos Iron & Metal Co. v. Chesapeake and Ohio Ry., 500 F. Supp. 591, 595 (1980). See also Jos. Schlitz Brewing Co. v. Transcon Lines, 757 F.2d 171, 173 (7th Cir. 1985), cert. denied, 474 U.S. 848, 88 L. Ed. 2d 118, 106 S. Ct. 143 (1985). Only after the shipper has established a prima facie case may the carrier assert one of the following events as a defense: (1) an act of God, (2) an act of the public enemy, (3) an act of the shipper, (4) an act of the public authority or (5) the inherent nature or vice of the goods. S.C. Johnson & Sons, 695 F.2d at 256. Federal law applies.
No one disputes that the insurers have fulfilled the first and third elements of the prima facie test. To defeat API's motion, the insurers must present evidence establishing the second element: the goods arrival at the final destination in a damaged or diminished condition. Which destination of the two leg journey is considered "final" is significant. The insurers claim API is liable because the container disappeared before it reached the Arlington Heights warehouse (the ultimate destination). API, however, maintains that it had fulfilled its contract by delivering the containers to the railhead in Chicago (the penultimate destination for the containers, but the "final" destination for API's purposes).
Raven, the carrier hired to transport the containers to their ultimate destination on the second leg of their journey, could not deliver what it could not pick up. Is API liable for the container's disappearance after dropping it off? Was it required to physically deliver the containers into the hands of the notify party as the insurers claim? Or was API only obligated, as it maintains, to get the goods to Chicago, inform Amato of the arrival, and provide it with the confidential pick up and container numbers it would need to take possession. The answer to these questions centers around API's contractual duties.
Because a carrier's liability for the loss of goods shipped through interstate commerce extinguishes upon delivery, the issue turns on what constitutes delivery. Since "delivery" must mean "delivery as required by the contract. . . the intention of the parties" defines the scope of delivery. Intech, Inc. v. Consolidated Freightways, 836 F.2d 672, 674-75 (1st. Cir. 1987). See also John Morrell & Co. v. Frozen Food Exp., Inc., 700 F.2d 256, 258 (5th Cir. 1983). Generally speaking, delivery occurs when one party Surrenders--and the other party accepts-- possession, custody, and control of the goods involved. Illinois Central R.R. v. Moore, 228 F.2d 873, 877 (6th Cir. 1956).
I have scrutinized the deposition testimony of Hub City's president (James Decker), C&NW's terminal superintendent (James Gates), API's Vice President of Transportation Purchasing in 1989 (Dan Charles Pendleton), Amato's President (Paul Walk), and APL's
Land Transport Regional Service Manager (Katalin Toth). They all testified about the custom, the practice, and the intention of the parties regarding ramp-to-ramp service. The consensus among them is that "delivery" was understood to consist--and was intended to consist--of the following:
1. Transporting the shipment to the C&NW ramp in Chicago;