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National Bankers Trust Corp. v. Peak Logistics, LLC

United States District Court, W.D. Tennessee

October 20, 2014

ANDY TRANSPORT, INC., Third-Party Defendant.


S. THOMAS ANDERSON, District Judge.

Before the Court is Third-Party Defendant Andy Transport, Inc.'s ("Andy") Motion for Partial Summary Judgment as to Peak Logistics, LLC ("Peak") and Summitt Trucking LLC's ("Summitt") Claims, filed June 12, 2014 (D.E. # 178). Peak filed a Response in Opposition to the Motion (D.E. # 179), to which Andy filed a Reply (D.E. # 183). Futhermore, on October 2, 2014, National Bankers Trust ("NBT") filed its Notice of Joinder in Andy's Motion (D.E. #5> 194), to which Peak filed yet another Response (D.E. # 197). For the reasons stated below, Andy's Motion for Partial Summary Judgment is GRANTED IN PART, DENIED IN PART.


The third-party litigation at issue stems from original litigation filed by NBT against Defendants, including Peak. Peak then filed a third-party complaint against Andy (D.E. # 37), and Andy answered and counterclaimed against Defendants, including Peak and Summitt (D.E. # 50).[1] Andy seeks summary judgment on several issues in Peak's Third-Party Complaint: (1) whether Peak is entitled to its alleged lost profits; (2) whether Andy must indemnify Peak for the litigation; and (3) whether Peak may recover for Andy's alleged fraudulent misrepresentation and negligence.

NBT is engaged in the business of factoring for motor carriers. (Pl.'s Compl. ¶ 1). NBT purchases its clients' accounts receivable at a discount and takes a security interest in its clients' assets to secure the purchase price. ( Id. ¶ 15). NBT remits a portion of the purchase price, known as the "advance rate, " at the time of purchase, reserving a portion of the purchase price as further security. ( Id. ¶ 16). NBT releases the reserved funds to its clients once the shipper pays the account. ( Id. ¶ 17). One such client was Andy. On August 15, 2011, NBT and Andy entered into a factoring agreement. ( Id. ¶ 18). In October 2011, Peak and Andy entered into a Broker-Carrier Agreement ("Agreement"). (Andy's Statement of Undisputed Facts ¶ 1). This Agreement between Peak and Andy is the subject of Peak's claims against Andy and Andy's counterclaims against Peak.

Andy's relationship with NBT, on the other hand, is governed by the parties' factoring agreement. Under the factoring agreement, Andy sold at least some of its receivables- including accounts that Peak owed to Andy-to NBT. (Joint Response to Mot. for Partial Summ. J. 3). The factoring agreement gave NBT, as assignee, the right to collect on at least some Andy's open accounts, although the parties dispute the number of accounts actually purchased.[2] NBT notified Peak of its purchase of the accounts from Andy, triggering Peak's obligation to pay NBT what it originally owed Andy.

On November 23, 2011, and January 5, 2012, Andy hauled two separate loads of Defendant's (Zappos) shoes-loads brokered by Peak. ( Id. ). Both were stolen. ( Id ). Peak claims that after the first theft, it communicated to Andy, in writing and verbally, that Peak would require implementation of additional security measures on Zappos loads to prevent future losses. (Peak's Third-Party Compl. ¶ 12). Andy, Peak claims, did not implement or follow those additional measures, despite assuring Peak that it would do so. ( Id. ¶ 13-19). Andy continued to carry the loads until the second theft. ( Id. ¶ 18).

Andy states that its insurer paid $250, 000.00 on each of the two thefts, but that Peak had to pay $82, 333.45 in excess of Andy's insurance coverage. ( See id. ¶ 20). While Andy's insurance claims were still pending, Peak began withholding payment on its open invoices with Andy, which affected both Andy and NBT. Peak continues to assert a right of setoff for the cargo loss and for the loss of business that it claims it incurred as a result of Andy's alleged breach of the Broker-Carrier Agreement. ( Id. ¶ 28). The alleged loss of business stems from Peak's claim that Pacer Transportation Systems, Inc. ("Pacer") stopped doing business with Peak after the cargo thefts. When NBT did not receive payment on the factored receivables, it sued Peak on sworn account for $187, 600.00. (Pl.'s Compl. ¶ 44). Peak then brought a third-party complaint against Andy, and Andy counterclaimed against the Defendants/Third-Party Plaintiffs, including Peak. The Court granted in part and denied in part Peak's Motion for Summary Judgment on Andy's counterclaims, and it does the same for Andy's Motion for Partial Summary Judgment on Peak's claims.


Federal Rule of Civil Procedure 56(a) provides that a party is entitled to summary judgment if the moving party "shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law."[3] In reviewing a motion for summary judgment, the court views the evidence in the light most favorable to the nonmoving party, [4] and it "may not make credibility determinations or weigh the evidence."[5] When the motion is supported by documentary proof such as depositions and affidavits, the nonmoving party may not rest on his pleadings but, rather, must present some "specific facts showing that there is a genuine issue for trial."[6] It is not sufficient "simply [to] show that there is some metaphysical doubt as to the material facts."[7] These facts must be more than a scintilla of evidence and must meet the standard of whether a reasonable juror could find by a preponderance of the evidence that the nonmoving party is entitled to a verdict.[8] When determining if summary judgment is appropriate, the Court should ask "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law."[9] In this Circuit, the nonmoving party must "put up or shut up" as to the critical issues of the claim.[10] The Court must enter summary judgment "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial."[11]


I. Contractual Claims

In its third-party complaint, Peak seeks a declaratory judgment on two issues, both rooted in the Broker-Carrier Agreement. Peak claims that Andy breached the Agreement, and therefore the Agreement affords Peak the remedies contained therein. Andy now asks for summary judgment as to these two issues. First, Andy asks the court to decide as a matter of law that Peak is not entitled to offset payments for its alleged lost profits. Second, Andy seeks summary judgment on whether the indemnity provision in the Broker-Carrier Agreement requires Andy to indemnify Peak.

A. Applicable Law

1. Carmack Amendment

In its Notice of Joinder in Andy's Motion for Partial Summary Judgment, NBT argues that Peak's common-law claims against Andy are preempted by federal law under the Carmack Amendment to the Interstate Commerce Act, which governs shippers' liability to carriers for damage to or loss of interstate shipments.[12] Indeed, this Court has held that the Carmack Amendment preempts shippers' state common-law suits against interstate commercial carriers of property.[13] The Carmack Amendment, in an attempt to "relieve shippers of the burden of searching out a particular negligent carrier from among the often numerous carriers handling an interstate shipment of goods, "[14] imposes absolute liability on a carrier for the "actual loss or injury to the ...

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