DIRECT COAST TO COAST, LLC v. DOOR TO DOOR COURIER SERVICE LLC

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.




                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-3820-16T2

DIRECT COAST TO COAST, LLC
and SELECTIVE TRANSPORTATION
CORP.,

        Plaintiffs-Respondents,

v.

DOOR TO DOOR COURIER SERVICE,
LLC, ABA PACKAGING CORP.,
CAPITAL HARDWARE SUPPLY, INC.,
R. AMATEAU PRODUCTS, INC.,
and US DUCT ADHESIVE, INC.,

        Defendants,

and

EMPIRE SPECIALTY FOODS, INC.
and SUN GROVE FOODS, INC.,

     Defendants-Appellants.
_________________________________

              Submitted February 27, 2018 – Decided April 12, 2018

              Before Judges Reisner and Gilson.

              On appeal from Superior Court of New Jersey,
              Law Division, Middlesex County, Docket No.
              L-4336-15.

              Miller, Meyerson & Corbo, attorneys for
              appellants Empire Specialty Foods, Inc. and
           Sun Grove Foods, Inc. (Gerald D. Miller, on
           the brief).

           Ronald Horowitz, attorney for respondents.

PER CURIAM

      Defendants Empire Specialty Foods, Inc. (Empire) and Sun

Grove Foods, Inc. (Sun) appeal from two orders dated April 24,

2017, entering judgments against them in the amounts of $11,893.81

and $6,022.66, respectively. We affirm because under the governing

bills of lading, Empire and Sun were responsible for the shipping

costs, and there are no facts supporting an equitable estoppel.

                                    I.

      This appeal arises out of disputes over payments for the

shipment of goods.     The parties stipulated to the material facts.

Plaintiffs, Direct Coast to Coast, LLC (Direct) and Selective

Transportation Corporation (Selective), are common carriers that

transport goods.     Empire and Sun are shippers that used a broker,

Door to Door Courier Service, LLC (Door to Door), to arrange for

the transportation of their goods by Direct and Selective.

      Direct and Selective successfully transported three shipments

for   Empire   and   three   shipments   for   Sun.   Each   shipment   was




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accompanied by a bill of lading issued by Empire and Sun.         None

of the bills of lading contained a non-recourse provision.1

     Under the shipping arrangements, if Direct and Selective were

paid within thirty days, they offered defendants a discounted

rate.   If they were paid after thirty days, they were owed a much

higher shipping rate.   The discounted rates for the shipments made

for Empire and Sun totaled $990 and $513, respectively.     The full

rates for the shipments were $12,883.81 for Empire, and $6,535.66

for Sun.

     Empire and Sun paid the broker, Door to Door, the discounted

rates for the transportation provided by Direct and Selective.

Door to Door, however, did not pay Direct and Selective.

     Direct and Selective sued Door to Door, Empire, Sun, and

several other shippers who had used Door to Door as a broker.      The

other shippers either defaulted or settled.       Door to Door also

settled by paying Direct and Selective the discounted rates, which

for the shipments for Empire was $990, and for the shipments for

Sun was $513.

     Direct and Selective then pursued their claims against Empire

and Sun.   The case came on for trial.   At trial, the parties agreed


1
  In submitting stipulated facts, the parties apparently elected
not to submit the actual bills of lading. In that regard, the
parties did not submit the bills of lading in the record presented
to us.

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to submit the case on stipulated facts.                The parties then provided

those stipulated facts to the trial court, together with legal

memoranda.     After reviewing the stipulated facts and analyzing the

law, the trial court found that the bills of lading did not excuse

Empire   and   Sun     from    having   to     pay    Direct    and   Selective   the

remainder of the full shipping rates because the non-recourse

provisions in the bills of lading were not signed, and there were

no separate contracts for the transportation of the goods.                        The

court also held that equitable estoppel did not apply under the

facts of this case. Accordingly, the trial court issued two orders

on April 24, 2017, together with a written opinion.

                                        II.

       Empire and Sun appeal from the April 24, 2017 orders. They

make   one   argument,        contending     that     Direct    and   Selective   are

equitably estopped from seeking the full shipping rates from them

because Direct and Selective settled their claims against Door to

Door and accepted the discounted rates.                  In other words, Empire

and Sun argue that when Direct and Selective accepted payments of

$990 and $513 from Door to Door, as part of a settlement in a

litigation,     they    became     equitably         estopped   from   seeking    the

remainder of the full shipment rate of $11,893.81 and $6,022.66

from Empire and Sun.          We disagree and affirm.



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     The issue presented to us is a question of law.         The facts

were stipulated.    Thus, our review is de novo.     Manalapan Realty,

LP v. Twp. Comm. of Manalapan, 
140 N.J. 366, 378 (1995) (explaining

that a trial court's interpretation of the law and the legal

consequences that flow from established facts are reviewed de novo

on appeal).

     The governing law is well-established.        A bill of lading is

"the basic transportation contract between the shipper-consignor

and the carrier" for the interstate shipment of goods, and the

shipper and all connecting carriers are bound by its terms.            S.

Pac. Transp. Co. v. Commercial Metals, Co., 
456 U.S. 336, 342

(1982) (citing Tex. & Pac. Ry. Co. v. Leatherwood, 
250 U.S. 478,

481 (1919)).     Accordingly, a bill of lading is subject to the

general principles of contract law.        E.F. Operating Corp. v. Am.

Bldgs., 
993 F.2d 1046, 1050 (3d Cir. 1993).

     Under the default terms of a bill of lading, the shipper is

primarily liable to the carrier for payment for the shipping

services.     S. Pac. Transp. Co., 
456 U.S.  at 343.       Parties to a

bill of lading may modify the default liability standards either

by including a non-recourse provision in the bill of lading, or

by creating a separate contract.       See C.A.R. Transp. Brokerage Co.

v. Darden Rests., Inc., 
213 F.3d 474, 478-79 (9th Cir. 2000) ("If

the non-recourse clause is signed by the consignor and no provision

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is made for the payment of freight, delivery of the shipment to

the consignee relieves the consignor of liability."); see also Oak

Harbor Freight Lines, Inc. v. Sears Roebuck & Co., 
513 F.3d 949,

956 (9th Cir. 2008) ("The parties to a freight shipment generally

are free to assign liability for the payment of freight charges

through a contract separate from the bill of lading.").

     Shippers may, and often do, retain a broker to arrange for

the transportation or physical movement of the goods.   Oak Harbor,

513 F.3d    at 952.   Often, shippers will pay the broker with the

understanding that the broker will pay the carrier.     Payment to

the broker, however, does not relieve the shipper of primary

liability for the transportation charges to the carrier.    Id. at

958 ("Although it is well-established that a contract between the

parties to a bill of lading––the shipper, the carrier, and the

consignee––can allocate liability for payment of freight charges,

there is no support for the proposition that a contract with a

broker, who is not a party to the bill of lading, can do the

same."). To protect itself from primary liability for the shipping

charges, the shipper must make that clear to the carrier by either

signing the non-recourse clause in the standard bill of lading or

executing a separate transportation contract.      Id. at 956-57

(holding that using a broker does not "insulate" a shipper from



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liability    for    the   payment        of       transportation       charges   to   the

carrier).

      Here, the parties stipulated that "[n]one of the bills of

lading contained a non-recourse provision against the shippers

(i.e. Empire and Sun)."             Empire and Sun also presented no separate

contract assigning liability for the payment to Door to Door or

absolving them of the payment to Direct and Selective for the

shipping costs.

      Despite the lack of a non-recourse or other contractual

provision, Empire and Sun rely on the principle of equitable

estoppel.    They point to certain cases that have estopped carriers

from recovering payment when the carrier represented that it

already had been paid.          See, e.g., S. Pac. Transp. Co., 
456 U.S. 336; Checker Van Lines v. Siltek Int'l Ltd., 
169 N.J. Super. 102

(App. Div. 1979); Penbrook Hauling Co. v. Sovereign Constr. Co.,


128 N.J. Super. 179 (Law Div. 1974).                     Reliance on those cases,

however, is misplaced.

      In the cases where equitable estoppel has been applied,

generally there has been some misrepresentation by the carrier and

detrimental reliance by the consignee.                     For example, equitable

estoppel has been applied when the carrier misrepresents that it

has   been   prepaid      on    the    bill        of   lading   and    the   consignee

detrimentally      relied      on    that     prepayment     representation.          See

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Checker Van Lines, 
169 N.J. Super. at 106-09; Penbrook, 
128 N.J.

Super. at 184-85.     Those cases did not apply equitable estoppel

to relieve a shipper from liability for payment under a bill of

lading that did not have a signed non-recourse provision. Instead,

those cases involved a misrepresentation by the carrier upon which

the consignee relied to its detriment.

     Choosing   to   tender   payment   through   a   broker    instead    of

directly to the carrier for shipping charges does not estop a

carrier from collecting full payment from the shipper. Oak Harbor,

513 F.3d    at 958 (finding that the Sixth Circuit's decision in

Olson is an "outlier" and holding that a shipper assumes the risk

of non-payment when it retains a broker to tender payment to the

carrier); see also Olson Distrib. Sys., Inc. v. Glasurit Am.,

Inc., 
850 F.2d 295 (6th Cir. 1988) (finding a shipper not liable

for payment to a carrier under the equitable estoppel doctrine

where the carrier instructed the shipper to pay the broker, the

carrier failed to diligently bill the broker, and the carrier

violated then-current credit regulations).

     Here, there are no facts to support an equitable estoppel

against Direct and Selective.     As already noted, the non-recourse

provisions in the bills of lading were not signed.             Thus, Direct

and Selective can justifiably look to Empire and Sun for payment,

as well as Door to Door.      While the bills of lading did indicate

                                   8                                A-3820-16T2
that Door to Door would make the payment, that fact alone does not

establish an equitable estoppel.       Empire and Sun agreed to make

payment through Door to Door, but there are no facts to show that

they absolved themselves of liability to the carriers in the event

of non-payment by Door to Door.       See Oak Harbor, 513 F.3d    at 960

("[The shipper] took no actions to limit its liability.              In

particular, [the shipper] could have elected to pay [the carrier]

directly, but did not, and thereby assumed the risk that [the

broker] would fail to forward payment.").

     Moreover, the acceptance of a settlement payment from Door

to Door in the course of a litigation, does not, in and of itself

establish a basis for equitable estoppel.        The parties did not

provide us with a settlement and release among Direct, Selective,

and Door to Door.   Absent an express provision stating that that

partial payment was a full settlement of all of the claims, the

settlement and release does not protect Empire and Sun.

     In short, neither the governing contract––here, the bills of

lading––nor principles of equitable estoppel excuse Empire and Sun

from their obligations to pay for the shipment of their goods.

Accordingly, the orders of April 24, 2017, are affirmed.

     Affirmed.




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