Texas Tape & Label Co. v. Central Freight Lines, Inc. ( 2009 )

IN THE
TENTH COURT OF APPEALS
No. 10-08-00388-CV
TEXAS TAPE & LABEL CO.,
Appellant
v.
CENTRAL FREIGHT LINES, INC.,
Appellee
From the 414th District Court
McLennan County, Texas
Trial Court No. 2006-3594-5
MEMORANDUM OPINION
Central Freight Lines, Inc. damaged, and subsequently lost, a package shipped
by Texas Tape & Label Co. Texas Tape filed a claim to recover $24,930 in damages.
Claiming that liability was limited to $25 per pound, Central tendered the sum of $3,750
for the loss of the 150-pound package. Texas Tape sued Central to recover the
remaining $21,180. After a bench trial, the trial court ruled in favor of Central. In one
issue, Texas Tape contends that the trial court erred by finding that Central’s liability is
limited to $25 per pound. We affirm.
ANALYSIS
The Carmack Amendment “subjects a motor carrier transporting cargo in
interstate commerce to absolute liability for ‘actual loss or injury to property.’” Hughes
Aircraft Co. v. N. Am. Van Lines, Inc., 970 F.2d 609, 611 (9th Cir. 1992); see 49 U.S.C.S. §
14706 (LexisNexis 2004). To limit its liability under the Carmack Amendment, a carrier
must: (1) maintain a tariff within the prescribed guidelines of the Interstate Commerce
Commission; (2) obtain the shipper’s agreement as to his choice of liability; (3) give the
shipper a reasonable opportunity to choose between two or more levels of liability; and
(4) issue a receipt or bill of lading prior to moving the shipment. Hughes v. United Van
Lines, Inc., 829 F.2d 1407, 1415 (7th Cir. 1987).
Texas Tape contends that Central fails this test because it neither obtained Texas
Tape’s agreement as to its choice of liability nor gave Texas Tape a reasonable
opportunity to choose between different levels of liability.
A reasonable opportunity to choose arises where “the shipper had both
reasonable notice of the liability limitation and the opportunity to obtain information
necessary to making a deliberate and well-informed choice.” Hughes Aircraft, 970 F.2d
at 612. ”The agreement must evidence an ‘absolute, deliberate and well-informed
choice by the shipper.’” Id. A bill of lading is the “form most frequently used for such
agreements.” Rohner Gehrig Co. v. Tri-State Motor Transit, 950 F.2d 1079, 1082 (5th Cir.
1992). “The choice of liability is inextricably intertwined with a reasonable opportunity
to choose.” Id. at 1083.
Tex. Tape & Label Co. v. Cent. Freight Lines, Inc. Page 2
Whether the bill of lading contains a declared value box is tantamount to
whether the shipper had a reasonable opportunity to choose:
If the shipper fails to fill in the blanks on the bill of lading, there is no
“value established by written or electronic declaration of the shipper.”
Because the shipper is charged with notice of the carrier’s tariff, a
provision in a tariff which limits liability to a certain amount absent a
declaration of value in the bill of lading constitutes a “written agreement
between the carrier and shipper,” limiting the carrier’s liability to the
value provided in the tariff. In that situation, the declared value box
provides the reasonable opportunity to choose a higher level of liability,
and the shipper’s expectation that the carrier would be fully liable for any
potential loss despite a failure to declare the actual value of the shipment
is no more than a unilateral mistake.
On the other hand, where the bill of lading or other relevant document
does not contain a declared value box, an attempted liability limitation
contained in the carrier’s tariff is not effective because the carrier has not
given the shipper a reasonable opportunity to choose a higher level of
liability. In those cases there is no unilateral mistake on the part of the
shipper; instead, there is the absence of a reasonable opportunity for the
shipper to choose different levels of coverage.
Sassy Doll Creations, Inc. v. Watkins Motor Lines, Inc., 331 F.3d 834, 842 (11th Cir. 2003)
(internal citations omitted).
Central’s tariff limits liability to $25 per pound absent “an agreed upon excess
valuation.” The bill of lading contains a declared value box:
Where the rate is dependent on value, shippers are required to state
specifically in writing the agreed or declared value of the property. The
agreed or declared value of the property is hereby specifically stated by
the shipper to be not exceeding:
$ ___________ per pound.
The bill of lading further states: (1) “RECEIVED, subject to the classifications and tariffs
in effect on the date of the issue of this Bill of Lading;” (2) “Shipper hereby certifies that
he is familiar with all the bill of lading terms and conditions in the governing
Tex. Tape & Label Co. v. Cent. Freight Lines, Inc. Page 3
classifications and the said terms and conditions are hereby agreed to be (sic) the
shipper and accepted for himself and his assigns;” and (3) “Freight received under this
bill of lading will be transported pursuant to Central’s applicable tariffs on file with the
applicable state or federal regulatory agencies or on file at the carrier’s principal place
of business, except where otherwise provided in any valid and effective written contract
signed by Central and its shipper.”
Texas Tape did not declare a value on the bill of lading. Thus, Central argues
that it satisfies the Hughes test and liability is limited to $25 per pound pursuant to its
tariff. The trial court agreed with this position.1 Texas Tape disagrees for two reasons.
First, Texas Tape contends that any reasonable opportunity to choose was
“nullified” by Central’s reliance on an alleged pricing agreement. Central employee
James Grossman testified that Central handled Texas Tape’s claim under the
assumption that an existing pricing agreement limited liability to $25 per pound.
Central abandoned this position when it discovered that Texas Tape had not signed the
agreement. Grossman testified that if a pricing agreement were in place, the $25 limit
would be the only option, despite a declared value on the bill of lading. Thus, Texas
Tape argues that the $25 per pound limit would have been enforced, regardless of
whether the bill of lading contained a declared value.
1 Texas Tape takes issue with the following findings of fact: (1) the bill of lading “contains a clearly
marked section for a shipper to insert a declared value,” but Texas Tape did not declare a value; and (2)
Central’s tariff “limits carrier liability in the event of loss or damage on shipments to a maximum value
not exceeding $25.00 per pound” and the tariff was made available to customers. Thus, it challenges the
trial court’s conclusion of law that “The Bill of Lading and Tariff 100 together demonstrate that the
maximum Plaintiff may recover is $25 per pound, or $3,750.00.”
Tex. Tape & Label Co. v. Cent. Freight Lines, Inc. Page 4
However, no such pricing agreement was in force in this case. 2 Additionally,
“[t]he valuation the shipper declares determines the legal rate where there are two rates
based upon valuation.” Kansas City S. R. Co. v. Carl, 227 U.S. 639, 652, 33 S. Ct. 391, 395,
57 L. Ed. 683 (1913) (emphasis added). In Shull v. UPS, 4 S.W.3d 46 (Tex. App.—San
Antonio 1999, pet. denied), Shull argued that he was “not given a reasonable
opportunity to choose between two or more levels of liability” because “UPS placed a
value cap on computer equipment.” Shull, 4 S.W.3d at 49. The Court disagreed because
“Shull was given the opportunity to declare the value of his computer at whatever
value he assessed.” Id. at 50. “Shull was given a reasonable opportunity to choose
between levels of liability and [] UPS obtained Shull’s agreement as to his choice of
carrier liability since it was Shull who determined the declared value of the goods he
was shipping.” Id.
Texas Tape had the opportunity to declare a value on the bill of lading. See Shull,
4 S.W.3d at 50. A declared value would have controlled. See Carl, 227 U.S. at 652, 33 S.
Ct. at 395. Central’s mere belief in the existence of a pricing agreement, which turned
out to be unenforceable, did not nullify Texas Tape’s reasonable opportunity to choose.
Second, Texas Tape argues that any reasonable opportunity to choose was
“destroyed” by Central’s representations made at the time it received the package for
shipment. Trey Metz, an owner of Texas Tape, testified that he could not weigh the
2
Grossman also testified that even shippers bound by a pricing agreement may declare a higher
value, but will be charged a fee for doing so. Central driver William Walton testified that, in a situation
involving fragile freight, he would probably advise the customer to declare a value and if the value were
too high, he would call in to ensure that he could accept the package for shipping.
Tex. Tape & Label Co. v. Cent. Freight Lines, Inc. Page 5
package because of its awkward shape. At the time of pick up, Metz communicated
this problem to Central driver William Walton. Walton replied, “Don’t worry about it.
We’ll take care of ya.” At least twice more, Metz asked whether he needed to fill in
anything else on the bill of lading. Walton replied, “No, just sign at the bottom and
we’ll take care of ya.” In light of this testimony, Texas Tape maintains that Metz was
“essentially told not to fill in the ‘$___ per pound’ blank on the Bill of Lading.”
However, parol evidence cannot be used to contradict the tariff or bill of lading:
The valuation declared or agreed upon as evidenced by the contract of
shipment upon which the published tariff rate is applied, must be
conclusive in an action to recover for loss or damage a greater sum.
…
To permit such a declared valuation to be overthrown by evidence
aliunde the contract, for the purpose of enabling the shipper to obtain a
recovery in a suit for loss or damage in excess of the maximum valuation
thus fixed, would both encourage and reward undervaluations and bring
about preferences and discriminations forbidden by the law. Such a result
would neither be just nor conducive to sound morals or wise policies.
Carl, 227 U.S. at 652, 33 S. Ct. at 395; see Montalvo v. Bekins Moving Solutions, Inc., 613 F.
Supp. 2d 892, 897 (S.D. Tex. 2009) (“As a general rule, a shipper is conclusively bound
by tariff rules of a carrier and parol evidence cannot be received to vary the terms
thereof.”). We reject Texas Tape’s argument.3 See Atwood v. U W Freight Line, Inc., 127 F.
3 Even assuming that parol evidence is admissible, Walton testified that he could “care less”
whether the box was completed, but that he would never tell a customer, including Metz, not to declare a
value. If a customer cannot weigh the package, Walton testified that Central weighs the package and the
customer accepts the weight. The trial court could have concluded that Walton did not tell Texas Tape
not to declare a value on the bill of lading. See LaCroix v. Simpson, 148 S.W.3d 731, 734 (Tex. App.—Dallas
2004, no pet.) (“In a bench trial, it is for the court, as trier of fact, to judge the witnesses, to assign the
weight to be given their testimony, and to resolve any conflicts or inconsistencies in the testimony.”)
Tex. Tape & Label Co. v. Cent. Freight Lines, Inc. Page 6
Supp. 2d 1155, 1162 (D. Idaho 1999) (Rejecting plaintiff’s attempt to introduce evidence
of “Mrs. Atwood’s conversation with the U W Freight driver and Mr. Atwood’s
testimony as to his understanding as to the function of a bill of lading;” “what the
Plaintiff seeks to do is create an issue of fact by using parole (sic) evidence, i.e. what the
driver may have told Mrs. Atwood, to alter the express terms of the contract.”).
In summary, Central’s tariff limited liability to $25 per pound absent “an agreed
upon excess valuation.” The bill of lading contains a declared value box where Texas
Tape could state an “excess valuation.” Despite the opportunity to declare a value,
Texas Tape left the box blank and signed the bill of lading. We, therefore, conclude that
Texas Tape had a reasonable opportunity to choose and Central obtained Texas Tape’s
agreement as to its choice of liability. Under these circumstances, the trial court
properly found that Central’s liability is limited to $25 per pound. See Sassy Doll, 331
F.3d at 842; see also Hollingsworth & Vose Co. v. A P, 158 F.3d 617, 619 (1st Cir. 1998);
Atwood, 127 F. Supp. 2d at 1161-62. We overrule Texas Tape’s sole issue and, having
addressed all arguments preserved for appeal, we affirm the trial court’s judgment.
FELIPE REYNA
Justice
Before Chief Justice Gray,
Justice Reyna, and
Judge Woodward4
Affirmed
Opinion delivered and filed December 16, 2009
[CV06]
4
The Honorable G. Benton Woodward, Judge of the 119th District Court of Tom Green County,
sitting by assignment of the Chief Justice of the Supreme Court of Texas pursuant to section 74.003(h) of
the Government Code. See TEX. GOV’T CODE ANN. § 74.003(h) (Vernon 2005).
Tex. Tape & Label Co. v. Cent. Freight Lines, Inc. Page 7