Mitsui Sumitomo Ins. Co. v. Singh

Filed 4/3/07 Mitsui Sumitomo Ins. Co. v. Singh CA2/7

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

SECOND APPELLATE DISTRICT

DIVISION SEVEN

APPEAL from a judgment of the Superior Court of Los Angeles County. John Shepard Wiley, Judge. Affirmed.

Law Offices of Dennis A. Cammarano and Dennis A. Cammarano for Plaintiff and Appellant.

Gilbert, Kelly, Crowley & Jennett, James P. Spaltro and Warren S. Fujimoto for Defendants and Respondents.

_______________________

Mitsui Sumitomo Insurance Company (Mitsui) appeals from the grant of summary judgment in its subrogation action against Cargo Solution, Inc. (CSI) and Happy Singh, Rajesh Sharma Aka, Bobby Kang, Yudvinder Kang, Balwinder Kang and Baldeu Singh Kang (collectively Singh) for payment of monies to Mitsuis insured Sony Electronics, Inc. (Sony) for non-delivery of cargo entrusted to CSI. The trial court found Singh had no personal liability for the non-delivery of cargo, and that CSIs liability was limited to $100,000 as set forth in the bill of lading. Mitsui contends that (1) the trial court erred in proceeding with the motion when Mitsui had not completed discovery, (2) CSIs and Singhs liability is not limited to $100,000, and (3) the trial court erred in denying prejudgment interest on CSIs $100,000 liability. CSI cross-appeals the trial courts denial of its request for an offset of monies paid by the shipping broker to Mitsui. We affirm.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

Plaintiffs complaint alleged that on July 19, 2003, Emerald Air Express (Emerald) arranged with UTXL, Inc. (UTXL) to have UTXL transport a shipment of Sony computers from Rancho Dominguez, California, to Bethlehem, Pennsylvania. UTXL agreed to maintain contingent cargo insurance in the amount of $1 million in the event the Sony cargo was lost or damaged by a sub-carrier without adequate coverage for full liability. UTXL contracted with CSI to haul the computers by truck. However, UTXL failed to obtain carriers with adequate insurance coverage for the cargo, and while in transit, the cargo was lost. Mitsui paid its insured $787,823.54 for the loss.

UTXL cross-claimed for contribution and indemnity against CSI, Singh, and certain other individuals. CSI and Singh cross-claimed for contribution, indemnity and declaratory relief against UTXL and Horacio Perez, the operator of the trucking company that shipped the goods.

Mitsui made a Code of Civil Procedure section 998 offer of $100,000 to CSI.

CSI and Singh filed a summary judgment motion, contending that under the Carmack Amendment (49 U.S.C.  14706), which governs interstate shipment of goods, their liability was limited to the $100,000 stated in the bill of lading, and they were entitled to an offset of $250,000 on account of the settlement monies received from Emerald, the shipping broker. The individual defendants argued they could not be held personally liable because they were acting as employees on behalf of their corporate employer, CSI.

In support of their motion, these defendants presented evidence that on July 18, 2003, UTXL contacted CSI and requested CSI to pick up a load of Sony cargo from Emerald in Inglewood for delivery to Bethlehem, Pennsylvania. UTXL instructed that it was a rush delivery and the driver was not to make any unnecessary stops. CSI informed UTXL that it only had $100,000 in cargo insurance coverage, and UTXL assured CSI that was all that the shipper required.

On July 19, 2003, two CSI employees picked up the cargo from Emerald. The bill of lading accompanying the cargo stated that the loads declared value was $100,000, and provided that the driver was not to make any unnecessary stops. When Emerald prepared the bill of lading, it inserted the $100,000 figure because that was all the coverage CSI could provide. Emerald understood that UTXL would provide bridge coverage for any difference between the amount declared and the amount of stated liability. CSI maintained it would not have accepted the load if the declared value had been higher due to the limits of CSIs insurance coverage.

CSI hired Horacio Perez pursuant to a vehicle lease agreement to transport the cargo to Pennsylvania.

Perezs drivers took possession of the Sony cargo, and CSI instructed them it was a rush delivery and that they were not to make unnecessary stops. Nonetheless, on July 20, 2003, CSI learned that the truck had been stolen during the previous evening when one of the drivers stopped at his home. Subsequently, Mitsui obtained a settlement of approximately $250,000 from Emerald.

Mitsui opposed summary judgment, arguing that defendants negligence, which resulted in the theft of the cargo, vitiated any purported limitation on its liability. Mitsui did not dispute that the bill of lading stated the declared value of the cargo was $100,000 or that it had obtained a $250,000 settlement from Emerald. However, Mitsui contended that CSIs liability was not limited to $100,000 because a separate writing, a load confirmation sheet, stated that carrier accepts full loss liability for cargo and that numerous driver changes took place before the cargo left Emeralds facility. After the cargo was picked up, the truck was parked overnight in an unsecured lot and was discovered missing the next morning.

The rate for transport Emerald negotiated with UTXL was based upon two drivers being with the cargo at all times, and Emerald informed UTXL that it did not want the trailer sitting unattended. UTXL had informed CSI the cargo had a high value, although they never discussed the fact CSI would only handle loads up to $100,000 in value. Mitsui paid its insured the value of the cargo, $887,823.54, less the deductible of $100,000. After payment from Emerald of $249,016.25, Mitsuis loss totaled $638,807.28.

The trial court found CSIs liability was limited to $100,000, and that the combined liability of all defendants was $100,000; it granted summary judgment in favor of the Singh defendants.[1] The trial court denied CSIs request for an offset of the $250,000 settlement received from Emerald. The trial court entered judgment against CSI in the sum of $100,000 and in favor of the Singh defendants.[2]

Mitsui filed a memorandum of costs in which it sought, among other things, prejudgment interest on the $100,000 in the amount of $17,782.60. Defendant moved to strike/tax costs, arguing that prejudgment interest was not recoverable pursuant to a cost bill, and in any event, Mitsui was not entitled to prejudgment interest because the amount of its damages was not certain. Mitsui contended that $100,000 was a sum certain because the parties did not dispute that $100,000 was the minimum amount of defendants liability to it. The trial court disallowed Mitsuis claim for prejudgment interest. The court concluded that although there was a minimum amount of liability, Mitsui sought greater damages and therefore the amount in dispute was not a sum certain.

DISCUSSION

I. STANDARD OF REVIEW.

[T]he party moving for summary judgment bears the burden of persuasion that there is no triable issue of material fact and that he is entitled to judgment as a matter of law. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 850 (Aguilar).) Once the [movant] has met that burden, the burden shifts to the [other party] to show that a triable issue of one or more material facts exists as to that cause of action. (Code Civ. Proc.,  437c, subd. (p)(1); Aguilar, supra, 25 Cal.4th at p. 850.) A triable issue of material fact exists where the evidence would allow a reasonable trier of fact to find the underlying fact in favor of the party opposing the motion in accordance with the applicable standard of proof. (Aguilar, supra, at p. 850.) Where summary judgment has been granted, we review the trial courts decision de novo, considering all of the evidence the parties offered in connection with the motion (except that which the court properly excluded) and the uncontradicted inferences the evidence reasonably supports. (Merrill v. Navigar, Inc. (2001) 26 Cal.4th 465, 476.)

II. SUMMARY JUDGMENT.

A. Mitsuis Recovery From CSI is Limited to $100,000.

Mitsui contends first that CSIs carriage of the cargo breached the contract of carriage and therefore it is liable for the full loss. Furthermore, Mitsui asserts that a separate writing, a load confirmation agreement, which stated that carrier accepts full liability for cargo, is incorporated into and supersedes the bill of lading. Finally it argues that CSIs complicity in the theft of the cargo vitiates any purported liability limitation. We disagree.

The Carmack Amendment to the Interstate Commerce Act, currently at 49 U.S.C. section 14706, et seq., provides for a uniform system of carrier liability that provides certainty to both carrier and shipper by enabling the carrier to assess its risk and predict its potential liability for damages. (Pietro Culotta Grapes Ltd. v. Southern Pacific Transp. (E. Dist. Cal. 1996) 917 F.Supp. 713, 716.) Thus, under the Carmack Amendment, a carrier may limit its liability to a value established by written declaration of the shipper or by a written agreement. (49 U.S.C. 14706, subd. (f).) To effectively limit liability, the carrier must have a written agreement with the customer or shipper which evidences an absolute, deliberate and well-informed choice by the shipper and in which the shipper is given a reasonable opportunity to choose between different levels of liability. (Carmana Designs, Ltd. v. North American Van Lines, Inc. (3d Cir. 1991) 943 F.2d 316, 319; American Cyanamid Co. v. New Penn Motor Exp., Inc. (3d Cir. 1992) 979 F.2d 310, 313.) The Carmack Amendment thus expressly recognizes the right of a shipper and carrier to establish an agreed value of the goods to be shipped which limits the carriers liability and permits a shipper thereby to benefit from a lower rate. (Rocky Ford Moving Vans, Inc. v. United States (8th Cir. 1974) 501 F.2d 1369, 1372.) These limitations apply even where an intermediary has contracted with the carrier to transport the goods. (Norfolk Southern Railway Co. v. Kirby (2004) 543 U.S. 14, 34.)

Further, even where the carrier intentionally deviates from special instructions relating to delivery, the liability limitation still applies. Only fraud, intentional destruction of the cargo, or appropriation of the cargo by the carrier for its own use will vitiate the agreed liability limitation. (Deiro v. American Airlines, Inc. (9th Cir. 1987) 816 F.2d 1360, 1366; see also American Cyanamid Co. v. New Penn Motor Exp., Inc., supra, 979 F.2d at p. 315-316.) [T]he cases are uniform in holding that the conversion [exception] is pertinent only when there has been a true conversion, i.e., where the carrier has appropriated the property for its own use or gain. Thus, the carrier may properly limit liability where the conversion is by third parties or its own employees. (Kemper Ins. Companies v. Federal Exp. Corp. (1st Cir. 2001) 252 F.3d 509, 515.)

Here, there is no evidence that CSI or its principals converted the contents of the stolen truck for their own use. Rather, at most the evidence establishes that the drivers were negligent in leaving the truck unattended and in so doing disobeyed the instructions on the bill of lading; unknown third parties stole the truck and its contents. This evidence is insufficient to overcome the liability limitations. Furthermore, to the extent Mitsui argues the bill of lading is modified, supplemented or amended by the carrier confirmation sheets language regarding full liability for loss, such parol evidence may not be used to vary or contradict the terms of the bill of lading. (See Anyangwe v. Nedlloyd Lines (D.Md. 1995) 909 F.Supp. 315, 320.)

B. No Error in Denial of Continuance For Discovery.

1. Factual Background.

Mitsui noticed the depositions of certain individuals: Baldeu Kang; Yudvinder Kang; Rajesh Sharma; Balwinder Kang; and the person most knowledgeable at CSI. The depositions were scheduled on dates which would give Mitsui sufficient time to prepare its opposition to the motion.

CSI and Singh moved for a protective order contending they could not produce Gurmeet Singh and Bilbir Singh for deposition because they were not clients of CSI and Singhs counsel; further, the other Singh defendants (except for Happy Singh) were corporate officers of CSI and had no knowledge of the facts relevant to the action. In addition, CSIs counsel was in trial and unavailable, and no other attorney in counsels office could effectively defend the depositions due to counsels expertise in commercial trucking. Mitsui refused to accommodate CSI and Singhs request they take the depositions off calendar.

The trial court denied the request for protective order. Less than a week before Mitsuis opposition was due, defendants produced Sammy Kang as the person most knowledgeable at CSI, but refused to permit him to answer questions unrelated to the two categories on which he was produced to testify. Rajbinder Singh was produced to testify in the remaining categories. The other depositions did not take place.

In its opposition to defendants summary judgment motion, Mitsui contended the motion should be denied because of defendants failure to participate in good faith discovery. Mitsui contended that the depositions were required to show that CSI was complicit in the theft of the cargo, and facts establishing such complicity included the change in drivers, CSIs different identities with the Secretary of State, and inconsistent testimony from Happy Singh, Yudvinder Kang and Rajesh Sharma on previous occasions. CSI contended that a police investigation showed no evidence the theft was an inside job, but rather was the work of third parties and the drivers negligence in leaving the truck unattended.

At the hearing, the trial court found the allegations of theft rose to nothing more than suspicion and speculation.

2. Discussion.

The party seeking a continuance of a summary judgment motion to conduct further discovery must show (1) the facts to be obtained are essential to the motion; (2) there is reason to believe such facts may exist; and (3) the reason additional time is needed to obtain these facts. (Ace American Ins. Co. v. Walker(2004) 121 Cal.App.4th 1017, 1023; Code Civ. Proc.,  437c, subd. (h).) The trial court need not grant a continuance where the proposed discovery is focused on matters beyond the scope of the dispositive issues framed by the pleadings. (Ace American Ins. Co. v. Walker, supra, at p. 1023)

However, because Code of Civil Procedure section 437c, subdivision (h) mandates discovery if the party seeking continuance has made a good faith showing by affidavit that a continuance is needed to obtain facts essential to justify opposition to the motion, such continuances are liberally granted. (Knapp v. Doherty (2004) 123 Cal.App.4th 76, 100-101; Bahl v. Bank of America(2001) 89 Cal.App.4th 389, 395.) [W]hen a party submits an affidavit demonstrating that facts essential to justify opposition may exist but have not been presented to the court because the party has not been diligent in searching for the facts through discovery, the courts discretion to deny a continuance is strictly limited. (Bahl v. Bank of America, supra, 89 Cal.App.4th at p. 398.) However, in the absence of the showing required by Code of Civil Procedure section 437c, subdivision (h), granting a continuance is within the trial courts discretion. (Scott v. CIBA Vision Corp. (1995) 38 Cal.App.4th 307, 324.)

Here, because the liability limitation of the bill of lading would control unless Mitsui could demonstrate CSIs actual conversion of the cargo for its own use, only those depositions that could lead to evidence tending to establish such conversion would be relevant. The facts indicate that the third-party drivers were the negligent parties in leaving the truck unattended; furthermore, the police investigation did not yield evidence of an inside job. Thus, any additional discovery to further explore a theory of conversion, which the facts indicated was speculative, could not have aided Mitsui and the trial court did not abuse its discretion in refusing to deny the motion or to continue it to permit more discovery.

III. MITSUI IS NOT ENTITLED TO PREJUDGMENT INTEREST.

Mitsui argues it is entitled to prejudgment interest because it was never in dispute that CSIs minimum liability was $100,000. Mitsui argues the fact it sought higher damages, but received less, does not change its entitlement to prejudgment interest. CSI contends Mitsuis request for prejudgment interest was improperly placed in its cost bill because prejudgment interest is not a cost, but an element of damages.

Prejudgment interest may be awarded where damages are certain or capable of being made certain by calculation, and the right to recover such damages is vested in the plaintiff on a particular day. (Civ. Code, 3287, subd. (a).) The test of certainty is whether the defendant actually knows the amount owed or could have computed the amount from reasonably available information. (Childrens Hospital & Medical Center v. Bonta (2002) 97 Cal.App.4th 740, 774; Wisper Corp. v. California Commerce Bank (1996) 49 Cal.App.4th 948, 960 (Wisper Corp.).)

The requirement of certainty ensures that in situations where the defendant could have timely paid the amount demanded and has deprived the plaintiff of the economic benefit of those funds, the defendant should therefore compensate with appropriate interest. (Wisper Corp. supra, 49 Cal.App.4th at p. 962.) Where the amount of damages cannot be resolved except by account, verdict or judgment, interest prior to judgment is not allowable. (Stein v. Southern Cal. Edison Co. (1992) 7 Cal.App.4th 565, 573; Wisper Corp., supra, 49 Cal.App.4th at p. 961.)

Thus, in Overland Machined Products, Inc. v. Swingline Inc. (1968) 263 Cal.App.2d 642, plaintiff by letter demanded $29,609.64 in its complaint for parts the defendant had ordered; ultimately the plaintiff recovered $26,076.49. (Id. at p. 645-646.) The court found the sum due was ascertainable from the date of the letter sent, even though the fact there was a slight difference in the damages ultimately awarded. The mere fact that there is a slight difference between the amount of damages claimed and the amount awarded does not preclude an award of prejudgment interest. (Id. at p. 649.) On the other hand, in Polster, Inc. v. Swing (1985) 164 Cal.App.3d 427, the plaintiff landlord sought $55,000 on account of the lessees damage to the demised premises, but did not provide the lessee with any repair estimates. The parties exchanged correspondence concerning damages, and a settlement offer was made; ultimately, after trial, the landlord recovered $7,836. (Id. at p. 435-436.) The court determined that the amount due was not a sum certain because the lessee was never aware of any amount that would compensate the landlord; further, the amount awarded at trial was inconsistent with a sum certain or capable of being made certain. (Ibid.)

Here, damages were not capable of being made certain because judicial determination was required to establish the exact amount owed although the facts apparently supplied figures susceptible of easy calculation -- Mitsui sought damages in the amount of $787,823.54, which sum was later reduced by the settlement monies received from Emerald; ultimately, the trial court determined the bill of lading limited Mitsuis damages to $100,000. However, until the court made that ruling, CSI was not able to determine the amount owed, and it further cannot be said it depriving Mitsui of any sums owed because CSI did not know what was owed. Because we conclude prejudgment interest was not proper, we need not consider whether Mitsuis cost bill was the appropriate vehicle for claiming such interest.

IV. CSI IS NOT ENTITLED TO AN OFFSET ON ACCOUNT OF THE SETTLMENT MONIES MITSUI RECEIVED FROM EMERALD.

CSI contends it is entitled to a setoff of the monies Emerald paid to Mitsui in settlement of Mitsuis claims against it; further, because Mitsuis recovery is limited to $100,000, the Emerald settlement monies reduce CSIs liability to zero. (See Ward v. Allied Van Lines, Inc. (4th Cir. 2000) 231 F.3d. 135, 140-141.)

The offset provisions of Code of Civil Procedure sections 877, upon which the parties rely, apply to joint tortfeasors. The parties here were not joint tortfeasors, because joint tortfeasors are those who act in concert to accomplish some common purpose or plan, and whose concerted acts cause the harm. (Key v. Caldwell (1940) 39 Cal.App.2d 698, 701.) Moreover, we observe that the offset provisions of section 877 ensure that a plaintiff will not be unjustly enriched by a double recovery by collecting from the various defendants in an action a sum totaling more than the plaintiffs damages. (Reed v. Wilson (1999) 73 Cal.App.4th 439, 444.)

Similar principles were at issue in Ward v. Allied Van Lines, Inc., supra, 231 F.3d. 135, where the plaintiffs goods, which had been loaded on a moving van, were damaged during shipment when a train hit the van. After settling with the moving van company for $40,000, the plaintiffs recovered a $207,000 jury verdict. The railroad sought a setoff of the settlement monies. (Id. at pp. 137-138.) In permitting a setoff of the settlement funds, the court applied principles of equitable subrogation which, like Code of Civil Procedure section 877, aim to insure the plaintiff does not receive a double recovery. (Id. at pp. 140-141.)

Here, there is no danger Mitsui will receive a double recovery. Although CSIs contractual liability is limited to $100,000 under the bill of lading, Mitsuis actual damages were far in excess of that amount. Even after subtracting the settlement monies received from non-defendant Emerald (to whom the courts finding concerning the liability limitation did not apply) and UTXL[3]from its damages, and accounting for CSIs liability for $100,000, Mitsui is still not whole.

DISPOSITION

The judgment of the superior court is affirmed. The parties are to bear their own costs on appeal.

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

ZELON, J.

We concur:

PERLUSS, P. J.

WOODS, J.

Publication courtesy of San Diego pro bono legal advice.

Analysis and review provided by Poway Property line attorney.

[1] Emerald was not a party to the litigation, and therefore this liability limitation applied to CSI, UTXL, and Singh.

[2] UTXL also filed a summary judgment motion, which the trial court granted on the grounds that the combined maximum liability of all defendants was $100,000 and UTXL could only be held liable if it was negligent, and there was no evidence it acted negligently in arranging for the shipment.

[3] During the pendency of this appeal, Mitsui settled its claims against UTXL for $50,000.