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Bits & Pieces

Volume 19, edition 2

Shuie and I are looking forward to meeting up with many of you at the National Association of Mutual Insurance Companies annual meeting in Chicago this week.  If you are attending please stop by and visit with us.  I am also reminding our Texas friends that I will be speaking at the IMUA Regional meeting in Texas and hope to see you there.

This month we report:

CARGO THEFT – Freightwatch has released its latest report on cargo theft, reporting an average 63 trucking cargo thefts per month in 2015, lower than the previous year.  The average value of the freight was $184,100 which was a 6 percent drop in volume and a 21 percent drop in value compared to 2014.  Pharmaceutical thefts quadrupled in volume, and facility thefts were at record highs, with average theft values of $681,709.  More than half of all recorded in-transit thefts involved stealing stationary and unattended trailers and containers. Food and drinks continue to be the most stolen product type, accounting for 24 percent of total thefts in the U.S. Electronics and home and garden products followed, accounting for 15 percent and 12 percent of all reported thefts respectively. Florida led the way with the most reported thefts, followed close by California, Texas, New Jersey and Georgia.  Full truckload thefts occurred most often followed with 9% of pilferage losses and 5% fictitious pickups

In other related news the state of Mississippi has recognized the need for increased penalties to stop cargo theft.  New legislation would include incarceration and higher fines. Thieves who steal cargo from trucks loaded with controlled substances, or pharmaceuticals, valued at less than $10,000 would face fines up to $100,000 and/or up to 10 years in prison. Theft of controlled substances valued up to $1 million could result in as much as 25 years behind bars and/or fines up to $1 million. Loads valued in excess of $1 million could result in prison terms as long as 30 years and/or fines up to $1 million. Theft of cargo valued as high as $10,000 would include fines up to $100,000 and/or 10 years behind bars. Stolen loads valued in excess of $10,000 could result in 20 years in prison and/or fines up to $1 million.

CROSS BORDER OPERATIONS – The FMCSA has advised that it intends to officially codify New Mexico’s Dona Ana County and Luna County as commercial border zones and expand the commercial border zone around El Paso, Texas.  Commercial border zones along the U.S.-Mexican border allow Mexican-domiciled carriers and drivers and U.S.-based carriers and drivers limited access to cross the U.S.-Mexican border to deliver freight.

BRIDGE INTEGRITY –  The American Road and Transportation Builders Association reports that nearly 10% of the country’s bridges – 58,495 out of 609,539 – were considered structurally deficient last year and needed repairs, The five states with the most deficient bridges were Iowa with 5,025, Pennsylvania with 4,783, Oklahoma with 3,776, Missouri with 3,222 and Nebraska with 2,474. The five states with the biggest share of deficient bridges were Rhode Island at 23.2%, Pennsylvania at 21%, Iowa at 20.7%, South Dakota at 19.7% and Oklahoma at 16.4.  Of the 250 most heavily traveled bridges that need repairs, 85% were built before 1970 with the creation of the interstate highway system.

TRUCKING ECONOMICS – Avondale Partners reports that fleet failures increased sharply in the fourth quarter. 1,380 trucks were taken off the road as fleets shut down between October and December. Despite the fourth-quarter increase, the total number of failures during 2015 was 4,405 trucks, the lowest since they started tracking 20 years ago.

However the Trucking Conditions Index released by FTR shows that the trucking market continues to be solid. The TCI reflects tightening conditions for hauling capacity and is comprised of various metrics, including capacity, fuel, bankruptcies, cost of capital, and freight. According to FTR, a TCI reading above zero represents an adequate trucking environment, with readings above ten indicating that volumes, prices, and margin are in a good range for carriers. The last reported numbers are above 10 – a good sign for trucking.

CASES:

AUTO:

A lessor of a trailer has no liability, thanks to the Graves Amendment, for an accident where there is no evidence that the lessor either failed to maintain the equipment or released it without proper inspection.  The Middle District of Pennsylvania also held that there were questions of fact as to whether the state of mind of the driver or the actions of the trucking company warranted imposition of punitive damages.  (Holder v. Suarez, 2016 WL 593620)

The technicalities of removal and the ease in which they can be missed resulted in a remand in a truck accident case in the Northern District of Mississippi.  The driver’s suit against the owner of the tractor – trailer was remanded back to state court when the removal petition failed to specifically assert that consent of each codefendant was obtained.  (Robinson v. Wheeler, 2016 WL 593624)

A 3 million dollar verdict against a trucker was upheld by the 8th Circuit  The Court held that the evidence supported a finding that the motor carrier was negligent in failing to shut down a bridge before crossing with a log skidder. The Court concluded that it was reasonably foreseeable that another driver would be on the bridge and could be injured.  (Brown v. Davis, 2016 U.S. App LEXIS 3102)

An injured party opposed an insurer’s efforts to seek a declaration regarding the applicability of coverage for a truck accident.  The District Court in Colorado held that the insurer did not abuse the judicial process by seeking a declaration on coverage and dismissed the counter-claim asserted against the insurer. (Artisan and Truckers Casualty Co. v. AIFA Trucking Co., 2016 WL 430026)

The Court of Appeals in Minnesota held that a settlement agreement which was an attempt to bind an insurer was not valid when it was not signed before the insurer undertook the defense under a reservation of rights.  The court held there were questions of fact as to whether a trucking company was liable for negligent retention when a driver assaulted the plaintiff and that the trucking insurer was entitled to intervene in the action to protect its interest in the suit.  (Hartfiel v. Allison, 2016 WL 281416)

Providing a defense without a reservation of rights and not tendering the defense to another insurer until the eve of trial was fatal for an insurer in the Appellate Court in Illinois.  The Court held that the insurer waived its right to seek contribution from the second insurer.  (Acuity v. Southwest Spring, Inc., 2016 U.S. App. 142380-U)

The Northern District of Illinois held that a motor carrier properly rejected UM coverage for all of its insureds despite plaintiff’s efforts to argue otherwise.  The Court held that the insurer was not obligated to list the rejection on the index of policy forms and that the testimony of the insured confirmed that UM coverage was properly rejected.  (Stinton v. Old Republic Insurance Company, 2016 U.S. Dist Lexis 15921)

Is he a broker or a carrier?  That is, as always the question.  The Southern District of Florida held that factual questions precluded a determination of whether the defendant was liable as a carrier or a broker.  The Court also held that a broker was not obligated to verify that a motor carrier did not have an unattended vehicle exclusion in the cargo policy when it was not made a term of the contract with the shipper, but that there were questions as to whether the broker should have instructed the driver that the load could not stop.  Interestingly enough, the Court also held that a trucking company which was related to the broker had no liability without any additional evidence that the shipper relied on the trucking company to haul the shipment.  (National Union Ins. Co. v. All American Freight, 2016 WL 6333710)

See you next month.

© 2019 Central Analysis Bureau