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Whatley v. Canadian Pacific Railway Ltd.

United States Court of Appeals, Eighth Circuit

September 14, 2018

Joe R. Whatley, Jr., solely in his capacity as the WD Trustee of the WD Trust Plaintiff-Appellant
Canadian Pacific Railway Limited; Canadian Pacific Railway Company; Soo Line Corporation; Soo Line Railroad Company Defendants-Appellees

          Submitted: March 13, 2018

          Appeal from United States District Court for the District of North Dakota - Bismarck

          Before GRUENDER, BEAM, and KELLY, Circuit Judges.

          BEAM, Circuit Judge.

         Joe Whatley, Trustee of the wrongful death claimants' trust (WD Trust), appeals the district court's order finding that his claim under the Carmack Amendment, 49 U.S.C. § 11706, against Canadian Pacific Railway was untimely. We reverse and remand for further proceedings.

         I. BACKGROUND

         On June 29, 2013, a train carrying crude oil left New Town, North Dakota, destined for an oil refinery near Saint John, New Brunswick, in Canada. The bill of lading for the train's cargo designated Western Petroleum Company[1] (WFE) as the shipper, Irving Oil Ltd. as the consignee, and Canadian Pacific Railway (CP) as the carrier. (CP is the parent company of the other rail defendants, including Soo Line Railroad Company, and we will refer to the defendants collectively as CP). The bill of lading was drafted and issued by CP and accepted by WFE through an online process. The online form did not indicate or designate any particular tariffs, price lists or any limitations of liability by CP. Soo Line transported the train from New Town, North Dakota, to just over the Canadian border. From there, Canadian Pacific took the train to its rail yard outside of Montreal, Quebec, where it turned the train over to Montreal Maine & Atlantic Railway (MAR) Canada.

         Around midnight on July 5, 2013, MAR parked the train on the main tracks and left it unattended. At some point early in the morning of July 6, 2013, the unattended train began rolling downhill toward Lac-Mégantic, Quebec. As the runaway train entered Lac-Mégantic, sixty-three of the train's seventy-two tanker cars derailed, spilling crude oil and causing a series of massive explosions. The derailment and subsequent explosions killed approximately forty-seven people and destroyed nearly the entire town of Lac-Mégantic. Obviously, neither the tanker cars nor the cargo made it to the intended destination and Irving did not receive the shipment.

         On August 7, 2013, MAR filed for bankruptcy protection. On November 5, 2013, WFE sent a notice of damages related to the derailment to CP. This letter notified CP that it was making a claim under Canadian law, and expressly stated that it was not making a claim under the Carmack Amendment. See 49 U.S.C. § 11706 (codifying the exclusive remedy for the liability of rail carriers under receipts and bills of lading). This WFE letter further stated that a Carmack Amendment claim would be sent at a later date. On November 27, 2013, CP responded to WFE by denying the Canadian claim, and by noting that the Canadian claim was indeed not a claim pursuant to the Carmack Amendment. CP also stated in the November 27 denial that,

even if [WFE] were to submit a proper Carmack Amendment claim, CP's liability, if any, could not exceed the value of the lading (crude oil) and would not encompass rail-car damage claims or indemnity against third-party tort or governmental environmental claims. Those matters unquestionably go beyond the value of the property that CP received for transportation.

Appellant's App. at 1944.

         On April 4, 2014, WFE sent a notice of claim to CP under the Carmack Amendment for all damages arising out of the derailment, including any amounts that WFE might be liable for to injured parties or for environmental cleanup. CP sent a letter in response to WFE on April 24 acknowledging that the April 4 claim was proper notice for the Carmack Amendment claim, and that WFE's November 5 claim was under Canadian law, but ultimately disallowing the Carmack Amendment claim based upon WFE's alleged negligent conduct.[2]

         Irving sent CP a letter on April 16, 2015, notifying it of potential derailment claims under various laws, including the Carmack Amendment. CP did not respond to Irving's letter. In October 2015, a bankruptcy court in Maine confirmed the MAR bankruptcy plan, and the federal district court in Maine adopted this order. CP withdrew its objections to confirmation of the plan. As may be relevant, the bankruptcy plan tolled any and all applicable limitations periods.

         WFE and Irving settled its negligence claims against MAR's Chapter 11 Trustee and the Canadian insolvency monitor for $110 million U.S. dollars and $75 million in Canadian currency, respectively. The Trustee assigned Whatley, the Trustee of the WD Trust, the rights of both WFE and Irving to bring any possible claims against CP under the Carmack Amendment. Whatley brought claims pursuant to the Carmack Amendment in the District Court of North Dakota on behalf of WFE and Irving on April 12, 2016. CP filed an answer to the complaint in May 2016, and a motion for judgment on the pleadings or in the alternative, for summary judgment, in November 2016, seeking to dismiss the Carmack Amendment claims as untimely and for other reasons. In March 2017, the district court granted the motion. The court rejected Whatley's arguments that CP was barred by res judicata from denying the claims because it did not object when the bankruptcy Trustee was considering whether to assign the Carmack Amendment claims to the WD Trust. The court determined that it should consider WFE's and Irving's claims separately, and ruled that WFE's Carmack Amendment claim was untimely because suit was not filed within two years of the denial letter sent by CP ...

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