Liberty Mutual Fire Insurance Co., et al. v. The Boldt Company, 2013 WL 632254 (N.D. Ga. 2013)

Shipper Cellu Tissue hired the Boldt Company to load and stow in a trailer a used “wrapper,” which is a heavy and sensitive piece of equipment that wraps paper towels around cardboard tubes during the manufacturing process. The wrapper had to be disassembled and placed into two trailers, and then secured so as to avoid sharp movement during transit from Wisconsin to Georgia. Boldt loaded one trailer with freight secured against its walls, and the other by nailing down the wrapper’s wooden braces to the trailer’s floor.

When the trucker slammed on brakes, the naileddown cargo broke loose, damaging the wrapper, which was worth about $270,000. To repair the damaged one would cost $300,000, and a new one ran about $670,000. But Cellu couldn’t find a used unit to buy, and didn’t have time to await repairs before contracted product was due. So it bought a new wrapper.

Cellu’s subrogated insurers apparently paid Cellu the new unit’s purchase price, and sued Boldt in the U.S. District Court for the Northern District of Georgia seeking to recover $670,000. Boldt moved for summary judgment on liability, arguing its techniques in securing the cargo were reasonable, even if a superior methodology might have been available. After all, no federal regulation specifies how freight has to be secured. Boldt also argued that the wrapper’s fair market value, i.e., replacement cost of a like (used) model, should be extent of its potential liability.

The court didn’t buy the loading methodology argument. Just because regs don’t spell out how every item of freight should or shouldn’t be loaded doesn’t mean that the absence of a reg empowers lumpers to determine unilaterally what’s adequate for liability purposes. Add to that the fact that the more secure methodology clearly was known to Boldt (i.e., the one it employed in the undamaged trailer), as well as a plaintiff expert who begged to differ, and we have a question of fact not proper for determination on summary judgment. This one goes to the jury.

On the damages issue, Boldt did a little better, but still didn’t get the ruling it was looking for. The court asked for additional briefing and reserved ruling for another day. At issue is whether Cellu’s attempt to mitigate damages by buying a new wrapper that would avoid business losses was reasonably foreseeable. In other words, the cost of immediate procurement of a working machine needed to avoid a business loss would be recoverable as consequential damages only if that business loss itself were a recoverable loss. The parties didn’t fully brief that issue, or present evidence supporting their positions. Stay tuned.