IAG Engine Ctr. Corp. v. Cagney Glob. Logistics Inc.

Full title: IAG ENGINE CENTER CORP., et al., Plaintiffs, v. CAGNEY GLOBAL LOGISTICS…

Court: UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

Date published: Nov 17, 2020

501 F. Supp. 3d 1287 (S.D. Fla. 2020)

Opinion

CASE NO. 17-CIV-23271-RAR

2020-11-17

IAG ENGINE CENTER CORP., et al., Plaintiffs, v. CAGNEY GLOBAL LOGISTICS INC., et al., Defendants.

RODOLFO A. RUIZ II, UNITED STATES DISTRICT JUDGE

ORDER AFFIRMING AND ADOPTING IN PART REPORT AND RECOMMENDATION, GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

THIS CAUSE comes before the Court upon United States Magistrate Judge Jacqueline Becerra's Report and Recommendation [ECF No. 110] ("Report"), filed on September 4, 2020. The Report recommends that the Court grant in part and deny in part Defendant Cagney Global Logistics Inc.’s Motion to Dismiss Plaintiff's Amended Complaint with Prejudice [ECF No. 89] ("Motion"). Each party filed objections to the Report [ECF Nos. 111, 112] and responses to their counterpart's objections [ECF Nos. 113, 114]. Having reviewed the Report, objections, and responses, conducted a de novo review of the record, and being otherwise fully advised in the premises, it is

ORDERED AND ADJUDGED as follows: 1) the Report [ECF No. 110] is hereby AFFIRMED AND ADOPTED IN PART as supplemented herein; and 2) Defendant's Motion to Dismiss Plaintiff's Amended Complaint with Prejudice [ECF No. 89] is GRANTED IN PART AND DENIED IN PART as set forth herein.

BACKGROUND

While the facts of this case are rather straightforward, the procedural history is anything but. The Court will thus recount for posterity the procedural background on which Defendant's Motion turns. This action involves claims by Plaintiffs IAG Engine Center Corp. ("IAG") and certain subrogating underwriters subscribing to a policy of insurance (UM No. B0572NA14L060) effected through Tyser North America ("Underwriters") against Defendants Cagney Global Logistics, Inc. ("Cagney") and Nolan Transportation Group ("Nolan" and together with Cagney, "Defendants") regarding damages to a GE CF6-80C2 Jet Aircraft Engine that occurred during interstate transportation on July 20, 2015. See First Am. Compl. [ECF No. 84].

On October 27, 2017, Cagney Global filed a Notice of Bankruptcy and Automatic Stay [ECF No. 32], informing the Court that it had filed a bankruptcy petition in the United States Bankruptcy Court for the Northern District of Texas ("Bankruptcy Court"), under Case No. 17-33935-HDH-7. After determining that the entire action should be stayed, the Court entered an order staying all proceedings in this matter. [ECF No. 33].

On February 27, 2018, IAG filed a proof of claim in the Cagney bankruptcy case for $4,359,343.91 for the damages to the engine. On March 1, 2019, IAG filed an Amended Motion to Partially Lift the Automatic Bankruptcy Stay and to Re-open the Case [ECF No. 36] after IAG and Cagney Global came to an agreement with the bankruptcy trustee ("Trustee") to allow IAG to pursue its claim against Cagney. The order entered by the Bankruptcy Court stated that "the automatic stay is modified to allow IAG to proceed in the Florida Litigation to liquidate its claim therein and proceed to collect against insurance proceeds only." [ECF No. 36-2] ("Agreed Order") at 2. On March 1, 2019, the Court granted the motion to lift the stay and reopened proceedings in this case. [ECF No. 37].

Significantly, in 2015, IAG executed a settlement agreement with its insurers—Underwriters—under which IAG assigned to Underwriters at least some of its rights to bring claims regarding the incident at issue. [ECF 89-1]. In pertinent part, that agreement states:

SUBROGATION RECEIPT

By way of payment of the Final Net Amount of US $1,990,000.00 (ONE MILLION NINE HUNDRED NINETY THOUSAND UNITED STATES DOLLARS AND ZERO CENTS) and to the extent thereof, Insurers are subrogated to all rights of IAG ENGINE CENTER CORP. in respect of the damage to the Aircraft in the Incident and are entitled to use the name of IAG ENGINE CENTER CORP. and to make any claims and bring any actions of whatsoever nature and however arising out of the Incident against any person including any corporation, body of persons unincorporated, or Government agency or otherwise who shall be or may be liable for the Incident and IAG ENGINE CENTER CORP. hereby warrants that no settlement has been made with any such person relating to the damage in the Incident. If, and to the extent that, the warranty contained in this paragraph is breached, Insurers will be entitled to recover losses they may have otherwise recovered from third parties from the party breaching said warranty.

Id. at ¶ 7. There is no indication in the record that IAG advised the Bankruptcy Court of any assignment of its rights, nor did Underwriters submit a proof of claim in Cagney's bankruptcy. Cagney represented to the Court that it learned for the first time of such an assignment of rights through IAG's Rule 26 disclosures in this case. Mot. at 3.

On December 11, 2019, IAG filed a Notice of Ratification [ECF No. 71] ("Notice"), providing notice to Underwriters and representing, inter alia , that this action "has since its inception, been brought on behalf of IAG[ ] in its individual capacity and the [Underwriters], through IAG[ ]." Id. at 3. Shortly thereafter, on January 21, 2020, Cagney filed a Motion to Strike IAG's Notice of Ratification and Dismiss Plaintiff's Complaint [ECF No. 75], arguing that IAG did not have standing to pursue this action on behalf of Underwriters nor was it a proper party under Rule 17 of the Federal Rules of Civil Procedure. On January 21, 2020, IAG filed an Amended Motion for Leave to File a First Amended Complaint [ECF No. 77], wherein it sought to join the third-party Defendant Nolan and join Underwriters as a plaintiff. IAG also filed a Supplemental Notice of Ratification of Plaintiff's Standing by Purported Real Party in Interest [ECF No. 78], reasserting its standing to bring an action on behalf of Underwriters, ratifying IAG's capacity to bring this action in its name, nunc pro tunc to the date of the case's filing, and seeking to establish IAG as the real party in interest in this matter. Id. at 3-4.

To reboot this litigation and gain a clearer understanding of each party's claims, the Court heard argument on the outstanding motions on January 23, 2020. Tr. of Hr'g Held 1/23/20 [ECF No. 85] ("Tr."). The Court then issued an Omnibus Order [ECF No. 81], which, inter alia , granted IAG's Amended Motion for Leave to File an Amended Complaint, finding that the amended complaint adding Underwriters as a plaintiff would relate back to the original Complaint. Id. at 2. The Omnibus Order also instructed IAG that the new pleading must ensure the claims clearly delineate which party is seeking what amount in damages. Id. at 3. Finally, and most importantly for purposes of the instant decision, the Omnibus Order made clear that "any Defendant may move to dismiss the Amended Complaint—or any claim therein—if it fail[ed] to comply with relevant pleading standards." Id.

IAG and Underwriters filed their First Amended Complaint on February 7, 2020, which avers that IAG is pursuing those damages above the $1,990,000.00 that it already received from Underwriters, and Underwriters are pursuing the $1,990,000.00 that it paid on the claim. [ECF No. 84]. The First Amended Complaint alleges five causes of action: three against Defendant Cagney—which are the subject of this opinion—and two against Defendant Nolan. First, Plaintiffs allege that Cagney is strictly liable to IAG under the Carmack Amendment for the amount of its losses over and above the amount paid to it by Underwriters; and strictly liable to Underwriters for the amount they paid to IAG (Count I). Id. ¶¶ 34–35. Second, Plaintiffs allege Cagney is liable for damages based upon Cagney's actions engaging in an inherently dangerous activity (Count II). Id. ¶ 38. And third, Plaintiffs allege Cagney was negligent through its employees and agents: Nolan, AJS Transport, and the driver of the truck on which the engine was loaded (Count III). Id. ¶ 50.

On March 5, 2020, Cagney filed its Motion to Dismiss Plaintiffs’ First Amended Complaint [ECF No. 89], which argues: 1) Plaintiffs’ First Amended Complaint is void ab initio under applicable case law in the Eleventh Circuit because the filing of the First Amended Complaint naming Underwriters as an additional plaintiff violates the Bankruptcy Court's automatic stay; 2) Plaintiffs’ state law claims must be dismissed because they are preempted by the Carmack Amendment; 3) the First Amended Complaint does not relate back to the original pleadings because of the addition of Underwriters as a plaintiff, and the addition of Count II as a new claim; and 4) IAG does not have standing to bring the action because IAG subrogated and assigned its claims to Underwriters.

Plaintiffs filed their Response in Opposition to Cagney's Global Motion to Dismiss the [First] Amended Complaint on April 2, 2020 [ECF No. 94] ("Response" or "Resp."), and Cagney filed its Reply to Plaintiff's Response on April 9, 2020 [ECF No. 96] ("Reply"). Plaintiffs then filed a Sur-reply on April 17, 2020. [ECF No. 100].

On April 23, 2020, the Court referred Defendant's Motion to Magistrate Judge Becerra. [ECF No. 101]. On September 1, 2020, Magistrate Judge Becerra issued her Report, in which she concluded: 1) the First Amended Complaint does not violate the bankruptcy court's automatic stay; 2) Plaintiffs’ state law claims are preempted by the Carmack Amendment; 3) IAG has standing because it is a real party in interest; and 4) Underwriters’ claims are not time-barred because they relate back to the original Complaint. Accordingly, the Report recommended that Counts II and III of the First Amended Complaint be dismissed because they are preempted by the Carmack Amendment, while the remaining counts should proceed. Id. at 19. LEGAL STANDARD

The Court may accept, reject, or modify a magistrate judge's report and recommendation. 28 U.S.C. § 636(b)(1). Those portions of the Report to which objection is made are accorded de novo review so long as those objections "pinpoint the specific findings that the party disagrees with." United States v. Schultz , 565 F.3d 1353, 1360 (11th Cir. 2009) ; see also Fed. R. Civ. P. 72(b)(3). Any portions of the Report to which no specific objection is made are reviewed only for clear error. Liberty Am. Ins. Grp., Inc. v. WestPoint Underwriters, L.L.C., 199 F. Supp. 2d 1271, 1276 (M.D. Fla. 2001); accord Macort v. Prem, Inc. , 208 F. App'x 781, 784 (11th Cir. 2006).

ANALYSIS

Plaintiffs filed their Objections to the Report on September 10, 2020 [ECF No. 111] ("Plaintiffs’ Obj."), challenging the Report's conclusion that Plaintiffs’ state law claims are preempted by the Carmack Amendment because, according to Plaintiffs, IAG has denied that it was acting as a "carrier" under the Amendment. Cagney filed its Objections on September 18, 2020 [ECF No. 112], arguing that the Report erred in concluding that the inclusion of Underwriters in the First Amended Complaint did not violate the bankruptcy's automatic stay. In addition, Cagney objects to the Report's conclusion that Underwriters’ claims relate back to the original Complaint, thereby overcoming the statute of limitations. Id. at 7-11. The Court will address these objections in turn.

A. Plaintiffs’ State Law Claims Are Preempted by the Carmack Amendment

The conclusions of the Report in this regard are adopted in full as supplemented herein. As the Report explained, "the Carmack Amendment preempts state law claims arising from failures in the transportation and delivery of goods." Smith v. UPS , 296 F.3d 1244, 1246 (11th Cir. 2002). Thus, "only claims based on conduct separate and distinct from the delivery, loss of, or damage to goods escape preemption." Id. at 1248-49. The Report found that both state law claims are "squarely premised on allegations involving the transportation of goods in interstate commerce" and are therefore preempted. Report at 1297–98. Plaintiffs contend that Cagney has taken the position that it was acting as a "broker"—rather than a "carrier"—in the incident at issue, which, if proven, would mean that Plaintiffs’ state law claims would not be preempted since they would not be based on the actual interstate transportation of goods. Plaintiffs’ Obj. at 2-3.

Plaintiffs’ First Amended Complaint belies that position. In ruling on a motion to dismiss under Fed. R. Civ. P. 12(b)(6), "the Court accepts as true all allegations in the complaint." Erickson v. Pardus , 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (citing Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A complaint is also subject to dismissal under Rule 12(b)(6) when its allegations—on their face—show that an affirmative defense bars recovery on the claim." Marsh v. Butler Cty., Ala. , 268 F.3d 1014, 1022 (11th Cir. 2001) (en banc ), abrogated on other grounds by Twombly , 550 U.S. at 561–63, 127 S.Ct. 1955. As we have previously explained, "ordinary preemption asserts state claims have been substantively displaced by federal law[ ] and is an affirmative defense to the allegations in a complaint." Reva, Inc. v. Humana Health Benefit Plan of La., Inc. , No. 18-20136, 2018 WL 1701969, at *5 (S.D. Fla. Mar. 19, 2018) (citing Geddes v. Am. Airlines, Inc. , 321 F.3d 1349, 1352 (11th Cir. 2003) ). "Generally, the existence of an affirmative defense will not support a motion to dismiss." Quiller v. Barclays Am./Credit, Inc. , 727 F.2d 1067, 1069 (11th Cir. 1984). However, "a complaint may be dismissed under Rule 12(b)(6) when its own allegations indicate the existence of an affirmative defense, so long as the defense clearly appears on the face of the complaint." Id.

Here, the First Amended Complaint states that "[t]his action involves a claim for the destruction of a [ ] Jet Aircraft Engine ... during interstate transportation from the State of Michigan to the State of Florida." First Am. Compl. at ¶ 11 (emphasis added). It also states that "[a]t all times material hereto Cagney was acting as an interstate motor carrier subject to [the Carmack Amendment]." Id. at ¶ 13. Finally, it alleges that "Cagney loaded the subject [e]ngine on a flatbed truck trailer which ... resulted in a load that was greater than the legal limit" and that "Cagney's Driver proceeded under the bridge at a high rate of speed, striking the bridge with the [e]ngine and causing irreparable damage to the subject engine." Id. at ¶¶ 20, 24. Thus, the face of the First Amended Complaint makes clear that the state law claims "aris[e] from the failures in the transportation and delivery of" the engine and are not "based on conduct separate and distinct from the delivery, loss of, or damage to goods." Smith , 296 F.3d at 1246. The state law claims are therefore preempted, and Plaintiffs’ objections are overruled.

B. The Claims of Underwriters Violate the Bankruptcy Court's Order Granting Relief from the Automatic Stay

The Court declines to adopt the Report's conclusion that the First Amended Complaint does not violate the Bankruptcy Court's automatic stay. When a debtor files a bankruptcy petition, 11 U.S.C. § 362(a) imposes an automatic stay on proceedings against the debtor. "Because a section 362 stay freezes in place all proceedings against the debtor, and because only an order of the bankruptcy court can authorize any further progress in the stayed proceedings, it follows that the continuation of any proceeding can derive legitimacy only from the bankruptcy court order." Casperone v. Landmark Oil & Gas Corp. , 819 F.2d 112, 114 (5th Cir. 1987). Accordingly, the determination of whether Underwriters’ involvement in this suit violates the automatic stay must begin with a close examination of the order entered by the Bankruptcy Court modifying the automatic stay. "The terms of [the] order modifying the automatic stay must therefore be strictly construed. " Id. (emphasis added); see also In re Wardrobe , 559 F.3d 932, 934-35 (9th Cir. 2009) (same). Moreover, "an Agreed Order [lifting the automatic stay] is a contract and its interpretation is governed by basic rules of contract construction." In re Thornburg , 277 B.R. 719, 726 (Bankr. E.D. Tex. 2002) (citing In re Continental Airlines Corp. , 907 F.2d 1500, 1508 n.6 (5th Cir. 1990) ).

The Agreed Order was entered by the Bankruptcy Court on January 30, 2019 and stated, in relevant part, "that the agreement of IAG and the Chapter 7 Trustee is approved and the automatic stay is modified to allow IAG to proceed in the Florida Litigation to liquidate its claim therein and proceed to collect against insurance proceeds only." [ECF 36-2] at 2. This Court must therefore determine what was meant by "allow[ing] IAG to proceed ... on its claim." Id. (emphasis added). Strict construction of the Agreed Order's terms compels the conclusion that the involvement of Underwriters in this suit was not contemplated by the Agreed Order and therefore violates the automatic stay.

The Agreed Order does not mention Underwriters, does not reference any assignment of benefits executed by IAG, and does not authorize any party besides IAG to pursue claims against Cagney. [ECF No. 36-2]. But more than three years before the Agreed Order was entered, on October 30, 2015, IAG assigned to Underwriters its rights to a portion of the claim against Cagney for damages to the aircraft engine. See Ex. A, Motion [ECF No. 89-1] at 14. That agreement stated that "to the extent" of the payment of $1,990,000.00 from Underwriters to IAG, Underwriters became "subrogated to all rights of IAG ... in respect of the damage to the Aircraft in the Incident and [were] entitled to make any claims and bring any actions of whatsoever nature and however arising out of the Incident ...." Id. As the Report explained in Section II, C, this agreement reflects both an assignment to Underwriters of IAG's rights to sue Cagney (or, theoretically, any third party) for the damages to the engine to the extent of the $1,990,000.00 payment, as well as a subrogation of Underwriters to those rights in place of IAG. See Continental Cas. Co. v. Ryan Inc. E. , 974 So. 2d 368, 376 (Fla. 2008) (explaining that "subrogation is a broader concept [than an assignment]" and an assignment of rights is a conventional subrogation agreement).

Because Underwriters were assigned IAG's rights to sue Cagney for the $1,990,000.00, IAG was not able to seek relief from the automatic stay for the prosecution of that claim by Underwriters. Real-party-in-interest issues arise by application of Rule 17 of the Federal Rules of Civil Procedure, made applicable in bankruptcy by Bankruptcy Rule 7017. Thus, "[o]nly a ‘party in interest’ may request relief from the automatic stay." In re Williams , 533 B.R. 557, 563 (Bankr. N.D. Tex. 2015) (quoting 11 U.S.C. § 362(d) ).¹ In this regard, "[a] real party in interest is the one that holds a substantive right sought to be enforced" against the debtor. In re Crymes , No. 16-10206-rlj13, Adv. No. 18-01-000, 2018 WL 4006320, at *6 (Bankr. N.D. Tex. Aug. 20, 2018) (citing U.S. ex. rel Spicer v. Westbrook , 751 F.3d 354, 362 (5th Cir. 2014) ); see also In re Rice , 462 B.R. 651, 656 (6th Cir. BAP 2011) ("[As] to the issue of who is a ‘party in interest’ for purposes of § 362(d), courts [ ] focus the definition on parties who are entitled to enforce the obligation.") (collecting cases). Accord In re Enron Corp. Secs., Derivative & ERISA Litig. , 279 F.R.D. 395, 409 (S.D. Tex. 2011) ("A plaintiff that does not possess a right under the substantive law is not the real party in interest with respect to that right and may not assert it.") (citing United States v. 936.71 Acres of Land , 418 F.2d 551, 556 (5th Cir. 1969) ).

1 The Agreed Order was entered by the Bankruptcy Court for the Northern District of Texas, so this Court looks to case law from the United States Court of Appeals for the Fifth Circuit regarding the Agreed Order's construction and application.

"Whether a person is the real party in interest, with respect to a particular claim, is determined by state and federal substantive law." Crymes , 2018 WL 4006320, at *6. The Carmack Amendment does not itself provide a right for a third party to sue on another's behalf, so when these claims are assigned, courts look to the state law governing the assignment to determine who holds the substantive right to sue. See Pyramid Transp., Inc. v. Greatwide Dallas Mavis, LLC , No. 3:12-CV-0149-D, 2013 WL 3834626, at *2 n.2 (N.D. Tex. July 25, 2013) (looking to Texas law to determine who was the party in interest to assert a claim under the Carmack Amendment because Texas law governed the assignment of the claim); Hansen v. Wheaton Van Lines, Inc. , 486 F. Supp. 2d 1339, 1346 (S.D. Fla. 2006) (looking to Florida law to determine the effect of an assignment of a claim under the Carmack Amendment). Accord ECI Mgmt. Corp. v. Scottsdale Ins. Co. , 23 F.3d 354, 356 (11th Cir. 1994) ("Real party in interest analysis [under Fed. R. Civ. P. 17 ] is a matter of federal procedure, but we refer to state law to identify the true owner of the legal interest at issue.").

Florida law governs the subrogation agreement between IAG and Underwriters under the applicable choice of law provision. [ECF No. 89-1] at 2. Under Florida law, "once transferred, the assignor no longer has a right to enforce the interest because the assignee has all rights to the thing assigned." Continental Cas. Co. , 974 So. 2d at 376 ; see also Hansen , 486 F. Supp. 2d at 1346 ("Once the assignor assigns its rights to pursue a claim against a third party to another, the assignor retains no right to sue the third party. An assignment transfers all rights in the thing assigned.") (citing Lawyers Title Ins. Co., Inc. v. Novastar Mortg., Inc. , 862 So. 2d 793, 798 (Fla. 4th DCA 2004) ; Rose v. Teitler , 736 So. 2d 122, 122 (Fla. 4th DCA 1999) ). Therefore, IAG was not a party in interest able to seek relief from the stay to pursue Underwriters’ claim. In other words, IAG's claim in this litigation, which is all that was permitted to proceed by the Agreed Order, did not include Underwriters’ claim for $1,990,000.00.²

2 The parties do not dispute which law applies, but the Court notes out of an abundance of caution that even an application of Illinois law pursuant to the choice of law provision in the Bill of Lading, see Ex. C, First Am. Compl. [ECF No. 84], would result in the same conclusion. See Cars R Us Sales and Rentals, Inc. v. Ford Motor Co. , No. 08 C 50270, 2009 WL 1703123, at *2 (N.D. Ill. June 18, 2009) ("In Illinois, an insurer with subrogation rights to an insured's claim ‘owns’ a claim and is a real party in interest.") (citing Brook Inns, Inc. et al. v. S & R Hi–Fi and TV , 249 Ill.App.3d 1064, 188 Ill.Dec. 164, 618 N.E.2d 734, 743 (1993) ).

Two key facts establish this conclusion. The first is that IAG had assigned these rights to Underwriters before the Bankruptcy Court granted relief from the automatic stay. In In re Noone , for example, the bank in possession of the debtor's mortgage successfully sought relief from the automatic stay to foreclose on the debtor's property. 188 B.R. 710, 711 (Bankr. D. Mass. 1995). Then, prior to the foreclosure sale, the bank assigned the mortgage to a third party, who proceeded to conduct the foreclosure sale. Id. The bankruptcy court rejected the debtor's argument that the assignee was required to return to the bankruptcy court to seek relief from the automatic stay, concluding that "[a]s an assignee, he was in effect subrogated to the rights of the mortgagee." Id. at 712. Here, by contrast, IAG assigned its rights to the claim for $1,990,000.00 to Underwriters before it sought relief from the automatic stay. Underwriters subrogated to the rights of IAG at the time of the assignment, which did not include the relief from the automatic stay.

Because this claim was assigned before the bankruptcy, the relief in the Agreed Order could have easily been granted in favor of "IAG and any subrogee or assignee." Alternatively, the parties could have sought clarification from the Bankruptcy Court to ensure the Agreed Order applied to IAG's subrogees or assignees. Indeed, because the language of orders granting relief from the automatic stay must be strictly construed, bankruptcy courts frequently amend such orders to clarify confusion as to whom the order applies. See, e.g., In re Boateng , No. 17-26830-TJC, 2019 WL 1574285, at *1 (Bankr. D. Md. Apr. 10, 2019) ("The corrected order will clarify that the relief in the Lift Stay Order runs to the party who sought stay relief and its assignees, successors, and agents."). The second fact critical to the Court's conclusion is that the Bankruptcy Court was apparently unaware of the assignment to Underwriters. Multiple courts have limited the scope of orders granting relief from the automatic stay to claims or proceedings which were directly considered and addressed by the bankruptcy court. In Nugent v. Am. Broad. Sys. , 1 Fed. Appx. 633 (9th Cir. 2001), the creditors obtained a stay modification order that allowed their "district court litigation to ‘proceed to final liquidation.’ " Id. at 635. At the time the bankruptcy court issued the order, the creditors’ complaint pending in the district court sought only damages and an accounting of stock—but after the bankruptcy court granted the order, the creditors amended the complaint to include a constructive trust claim. Id. The Ninth Circuit affirmed "the bankruptcy court's conclusion that the automatic stay was modified only as to the claims that were actually pending in the district court litigation as of the date of the order modifying the stay." Id. The court noted that the creditors had "fail[ed] to explain how the bankruptcy court could lift the automatic stay as to the constructive trust claim when, at the time of its order, the bankruptcy court had no idea that the claim existed. " Id. at 635–36 (emphasis added); see also Wardrobe , 559 F.3d at 937 (finding "that an order granting limited relief from an automatic stay to allow a creditor to proceed to judgment in a pending state court action is effective only as to those claims actually pending in the state court at the time the order modifying the stay issues, or that were expressly brought to the attention of the bankruptcy court during the relief from stay proceedings.").

Similarly, in In re Thornburg , the bankruptcy court entered an agreed order between the debtor and creditor that allowed the creditor to "have a hearing in state court on her Motion for Enforcement" respecting the parties’ final decree of divorce. 277 B.R. at 726. After the hearing, the state court made factual findings and entered judgment against the debtor, and the bankruptcy court held that these later acts violated the automatic stay. Id. Noting that an agreed order is a contract, the court held that its terms were "unambiguous" and "cannot be broadened retroactively." Id. Because the terms of the order controlled, the creditor's argument that she thought the relief order allowed her to prosecute her motion to judgment was of no consequence. Id.

Like the addition of the new claim in the amended complaint in Nugent , the addition of Underwriters in this lawsuit violates the automatic stay because the Bankruptcy Court was not aware of Underwriters’ existence in this lawsuit at the time it entered the Agreed Order. And like the agreed order in Thornburg , the Agreed Order here is unambiguous: "[t]he automatic stay is modified to allow IAG to proceed in the Florida Litigation to liquidate its claim therein and proceed to collect against insurance proceeds only." [ECF No. 36-2]. For the reasons explained above, "its claim" did not include the portion of the claim assigned to Underwriters.

Because the terms of the Agreed Order control, IAG's reliance on the affidavit of its bankruptcy counsel in support of its argument that the Agreed Order encompassed Underwriters’ claims is unpersuasive. [ECF No. 94-1]. IAG argues that the inclusion of Underwriters does not violate the automatic stay because their claims do not add anything to the total amount the Bankruptcy Court allowed to proceed. See Resp. at 6-7. To be sure, this argument is appealing on its face: if the Bankruptcy Court allowed a claim for roughly $4.4 million in damages to proceed, why does it matter which party is pursuing various portions of those damages? But the Agreed Order is a contract. Cagney was unaware of the existence of Underwriters when it agreed to that contract, as was the Bankruptcy Court when it entered the Agreed Order. Thus, the inclusion of Underwriters was clearly not contemplated by the Agreed Order, and it is not for this Court to decide that their inclusion is meaningless. "This Court must find that the order on the motion for relief from the automatic stay granted the relief requested ..., no more no less." Thornburg , 277 B.R. at 727.

While this may seem overly technical, strictly construing orders granting relief from the automatic stay is necessary to ensure an orderly bankruptcy process. This rule "discourages creditors from misrepresenting the actual or potential scope of the cause of action pending before [another] court and thereby tends to ensure that the bankruptcy court is fully informed as to the potential effect of any order granting relief from the automatic stay. In this way, it furthers the purpose of the automatic stay." Wardrobe , 559 F.3d at 936.

The Report concluded that the inclusion of Underwriters does not violate the automatic stay because this Court allowed IAG to amend its complaint to add Underwriters as a party. Report at 1296–97. Therefore, in Magistrate Judge Becerra's view, "[t]he fact that the Court chose a different route to more clearly proceed with the pleadings should not now serve as a bar to the action." Id. However, the Court allowed IAG to amend its complaint to "reboot" the action and rectify then-existing confusion as to which party was seeking which damages. See Tr. at 90:21-23 ("Get both parties in here so there are no concerns about who is doing what and who is claiming what and how we're doing it and how we're recovering."); id. at 88:6-12 ("[I]t seems to me that I should give them an amendment and let it be very clear what each party is pursuing or if they're interchangeably pursuing the same. That may give us a roadmap. What I [was] hoping to do was [ ] clean up the pleadings in that regard so we know it is not a moving target."); id. at 90:6-13 ("I'm going to opt to go through Rule 15 and allow there to be the alternative mechanism of having both [ ] entities, [ ] IAG and [U]nderwriters, listed as plaintiffs. I think that [ ] doing so ... will clearly delineate how all claims are being structured between both plaintiffs so that we can get a sense of what exactly is the claim here."). In doing so, the Court made clear that it was not deciding the propriety of Underwriters pursuing damages in this action—an issue that had yet to be fully briefed for the Court:

I think the easiest thing to do is let them plead it out and then perhaps what will happen is if there is a motion to dismiss, the way in which you will be able to structure it, so you're not prejudiced as you were somewhat today with things on the fly, you will be able to look at it with one vision and then reassert some of the arguments today but maybe in a different light seeing the new complaint by being able to say to me, Judge, now looking at how it's pled, we would say that one of these two parties must be dismissed by virtue of the four corners of [the subrogation agreement].

Id. at 92:14-23; see also id. at 47:13-16 ("One ... concern [is] that [U]nderwriters [were] never really given leave to pursue that claim from the bankruptcy. I think that's just never been addressed. The only thing against Cagney was IAG claims, right? So that would be problem one."). Accordingly, by allowing IAG to amend its complaint, the Court did not foreclose Cagney's ability to argue—as they have done successfully—that Underwriters must be dismissed from this action due to the violation of the automatic stay. However, that conclusion does not compel the complete dismissal of this action. Actions taken in violation of the automatic stay are void and without effect. United States v. White , 466 F.3d 1241, 1244 (11th Cir. 2006). Tellingly, though, Cagney cites no authority for its proposition that because "all counts of the First Amended Complaint are brought jointly by the Plaintiffs, the First Amended Complaint must be dismissed." Reply at 4. That is because "[a]ll proceedings in a single case are not lumped together for purposes of automatic stay analysis." Maritime Elec. Co. v. United Jersey Bank , 959 F.2d 1194, 1204 (3d Cir. 1991). Instead, "[m]ultiple claim and multiple party litigation must be disaggregated so that particular claims, counterclaims, crossclaims and third-party claims are treated independently when determining which of their respective proceedings are subject to the bankruptcy stay." Id. ; see also In re Hall , 304 F.3d 743, 746 (7th Cir. 2002) ; Parker v. Bain , 68 F.3d 1131, 1137 (9th Cir. 1995) ; In re Duncan , 987 F.2d 490, 491 n.2 (8th Cir. 1993). Because "[m]ultiple claims within a single case are disaggregated for purposes of automatic stay analysis[,] ... [w]ithin a single case, some actions may be stayed, others not." In re Choice ATM Enters., Inc. , Case No. 14-44982-DML, 2015 WL 1014617, at *2 (Bankr. N.D. Tex. Mar. 4, 2015) (citing Maritime , 959 F.2d at 1204 ). Thus, the Court disaggregates IAG's claims from those of Underwriters and will allow the former to proceed while dismissing the latter as violative of the automatic stay.

CONCLUSION

Underwriters’ participation in this lawsuit was not contemplated by the relief granted from the automatic stay by the Bankruptcy Court for the Northern District of Texas. Therefore, their participation violates the automatic stay unless and until they receive authority to proceed from that court. IAG is permitted to proceed on its claim, which is limited to the amount of its losses over and above the $1,990,000.00 paid to it by Underwriters. Because Underwriters are not permitted to proceed, the Court need not decide whether Underwriters’ claims relate back to the original complaint so as to avoid the applicable statute of limitations.

Based on the foregoing, it is hereby ORDERED AND ADJUDGED as follows:

1. The Report [ECF No. 110] is AFFIRMED AND ADOPTED as supplemented herein. Specifically, the Report is affirmed and adopted as to its conclusions regarding preemption of IAG's state law claims (Section II, B) as well as its conclusions regarding IAG's standing as the real party in interest to pursue the claims not assigned to Underwriters (Section II, C). The Court declines to adopt the Report's conclusions regarding the applicability of the automatic stay to Underwriters’ claims (Section II, A), as well as its conclusions regarding Underwriters’ claims relating back to the original complaint (Section II, D), which have been rendered moot by the dismissal of Underwriters from this action.

2. Defendant's Motion to Dismiss Plaintiff's Amended Complaint with Prejudice [ECF No. 89] is GRANTED IN PART AND DENIED IN PART . Counts II and III of Plaintiffs’ First Amended Complaint [ECF No. 84] are DISMISSED with prejudice because they are preempted by the Carmack Amendment. And Underwriters are hereby DISMISSED as a party to this lawsuit. IAG may proceed on Count I against Cagney but only to the extent of its losses over and above the $1,990,000.00 paid to it by Underwriters. IAG may also proceed with Counts IV and V, which are against Defendant Nolan and were not the subject of the Motion to Dismiss at issue here. DONE AND ORDERED in Fort Lauderdale, Florida, this 17th day of November, 2020.

REPORT AND RECOMMENDATION ON DEFENDANT CAGNEY GLOBAL LOGISTIC INC'S MOTIONS TO DISMISS

JACQUELINE BECERRA, United States Magistrate Judge

THIS CAUSE came before the Court on a Motion to Dismiss Plaintiffs’ First Amended Complaint filed by Defendant, Cagney Global Logistic Inc.’s ("Cagney Global"), on March 5, 2020. ECF No. [89]. Plaintiffs, IAG Engine Center Corp. ("IAGEC"), and certain subrogating underwriters subscribing to a policy of insurance (UM No. B0572NA14L060) effected through Tyser North America ("Underwriters"), filed a Response in Opposition to Cagney Global's Motion to Dismiss on April 2, 2020. ECF No. [94]. On April 9, 2020, Cagney Global timely filed a Reply to Plaintiffs’ Response in Opposition of Cagney Global's Motion to Dismiss. ECF. No. [96]. Plaintiffs subsequently filed, on April 17, 2020, a Sur-Reply Opposing Cagney Global's Motion to Dismiss. ECF No. [100]. After a review of the pertinent portions of the record and the relevant authorities, for the reasons stated below, it is hereby RECOMMENDED that Cagney Global's Motion to Dismiss, ECF No. [89], be GRANTED IN PART AND DENIED IN PART .

I. BACKGROUND

A. The Original Complaint

On June 30, 2017, IAGEC filed a civil action in the Circuit Court of the Eleventh Judicial Circuit in and for Miami-Dade County, Florida, against Defendants, Cagney Global Logistics, Inc. f/k/a/ Wildernest Logistics Solutions, Inc., d/b/a Cagney Global Logistics and Cagney Express Inc. ("Cagney Global"). ECF No. [1-2] at 4. On August 29, 2017, Defendants filed a Notice of Removal of Civil Action, thereby removing the civil action to the United States District Court for the Southern District of Florida. ECF No. [1] at 2. That action involved a claim by IAGEC against Defendants for the damages to a GE CF6-80C2 Jet Aircraft Engine ("Engine") during interstate transportation from Michigan to Florida. Id. ; ECF No. [1-3] ¶ 6.

According to the Original Complaint, in July 2015 IAGEC's manager contacted Cagney Global and arranged for transportation of the Engine from Oscoda, Michigan to Miami, Florida. Id. ¶ 7. The Original Complaint alleges that Cagney Global was acting as an interstate motor carrier subject to the Interstate Commerce Act, 49 U.S.C. § 14706. Id. ¶ 8. Cagney Global, after accepting the Engine, arranged to have its agent, AJS Transport Co. ("AJS Transport"), take possession of the Engine. Id. ¶¶ 10–11. Cagney Global loaded the Engine on the truck trailer. Id. ¶ 12. The height of the Engine combined with the height of the flatbed truck trailer resulted in a load that was greater than the legal limit of 13 feet and 6 inches for use on the highway in the State of Michigan. Id. The truck loaded with the Engine was too high to pass under a highway bridge at the Melita Road overpass; however, the driver proceeded under the bridge at a high rate of speed which resulted in irreparable damage to the Engine. Id. ¶ 16.

The Original Complaint alleged two counts of action: Liability under Carmack Amendment (Count I); and Negligence (Count II). Id. ¶¶ 19, 26. Regarding Count I, IAGEC alleges Cagney Global is strictly liable to it for the destruction of the Engine, which was damaged in the amount of $4,359,343.91. Id. ¶¶ 22–24. Count II, which is plead in the alternative, alleges that Cagney Global had a duty to use reasonable care in the transportation of the Engine. Id. ¶¶ 27–28. Plaintiff claims Cagney Global failed to use reasonable care in: (1) the selection of the driver to operate the truck; (2) selecting a vehicle that would accommodate the height of the Engine; (3) planning the route for the Engine that would allow it to be transported to its intended destination without sustaining damage; and (4) the operation of the truck upon which the Engine was loaded. Id. ¶¶ 29–32. Plaintiffs, IAGEC, sought to recover damages. Id. ¶ 1.¹

1 On September 5, 2017, Cagney Global Logistics Inc. and Cagney Express Inc., filed their respective Answers and Affirmative Defenses to Plaintiff's Complaint. ECF Nos. [7], [8].

B. Notice of Bankruptcy and Automatic Stay

On October 27, 2017, Cagney Global filed a Notice of Bankruptcy and Automatic Stay. ECF No. [32]. The Notice informed that on October 19, 2017, Cagney Global filed a bankruptcy petition in the United States Bankruptcy Court for the Northern District of Texas, under Case No. 17-33935-HDH-7. Id. at 2. On October 31, 2017, the District Court issued an Order granting the Notice of Bankruptcy and determining that the entire proceeding should be stayed. ECF No. [33].

On March 1, 2019, IAGEC filed an Amended Motion to Partially Lift Automatic Bankruptcy Stay and to Re-open Terminated Case, and Memorandum of Law in Support Thereof. ECF No. [36].² IAGEC and Cagney Global came to an agreement with the bankruptcy trustee ("Trustee") that was filed in the United States Bankruptcy Court for the Northern District of Texas. The Bankruptcy Court entered an Agreed Order on January 31, 2019. ECF No. [36-2]. In the Agreed Order, the Bankruptcy Court ordered that "the automatic stay is modified to allow IAG[EC] to proceed in the Florida Litigation to liquidate its claim therein and proceed to collect against insurance proceeds only." Id. at 2. The District Court granted the motion to lift the stay. ECF No. [37].

2 On February 15, 2019, Plaintiff, IAGEC, filed a Motion to Lift Automatic Bankruptcy Stay and to Re-open Terminated Case. ECF No. [34]. The Court denied the Motion without prejudice for failing to indicate whether Defendants agreed with the relief requested, and for failure to incorporate a memorandum of law citing supporting authorities. ECF No. [35].

C. Third-Party Defendants and Ratification In The Instant Action.

On September 18, 2017, Cagney Global filed a Third-Party Complaint against Third-Party Defendants, Nolan Transportation Group, LLC ("Nolan") and AJS Transport Corp. ("AJS Transport"). ECF No. [10]. On May 16, 2019, Nolan filed a Motion to Dismiss Third Party Complaint and Incorporated Memorandum of Law arguing that Cagney Global failed to state a claim for which relief can be granted. ECF No. [41]. On August 22, 2019, Cagney Global filed a Motion for Leave to File First Amended Complaint and Memorandum of Law in Support Thereof. ECF No. [56]. Cagney Global sought to join Nolan as a Defendant. Id. at 1.

On December 11, 2019, IAGEC filed a Notice of Ratification, providing notice to those Underwriters. ECF No. [71]. On January 10, 2020, Cagney Global filed a Motion to Strike IAGEC's Notice of Ratification and Motion to Dismiss Plaintiff's Complaint. ECF No. [75]. On January 21, 2020, IAGEC filed a Supplemental Notice of Ratification of Plaintiff's standing to bring an action on behalf of Underwriters. ECF No. [78].

The District Court heard argument on the outstanding motions on January 23, 2020 ("Hearing"). ECF No. [80]. At the Hearing, the Court also addressed IAGEC's Amended Motion for Leave to File Amended Judgment, ECF Nos. [77], [81] at 1.

D. The District Court's Omnibus Order

On January 24, 2020, the Court issued an Omnibus Order regarding: (1) Nolan's Motion to Dismiss Third Party Complaint, ECF No. [41]; (2) Plaintiff's Motion for Leave to file a First Amended Complaint, ECF No. [56]; and (3) Defendant/Third-Party Plaintiff's Motion to Strike, ECF No. [75]. See ECF No. [81]. The Omnibus Order granted in part IAGEC's Amended Motion for Leave, ECF No. [77], and denied as moot IAGEC's Motion for Leave, ECF No. [56]. ECF No. [81] at 2. In this Omnibus Order, the District Court clarified that the amended complaint adding Underwriters as a plaintiff would relate back to the Original Complaint. Id. The Omnibus Order also instructed IAGEC that the new pleading must ensure that the claims are clearly delineated regarding how each claim is structured on behalf of each Plaintiff. Id. at 3.

Finally, the Omnibus Order denied Cagney Global's Motion to Strike, ECF No. [75], as moot because the Court was giving Plaintiff leave to file an amended complaint. Id. Although IAGEC's Supplemental Notice of Ratification, ECF No. [78], cured the deficiencies originally determined in IAGEC's Notice of Ratification, ECF No. [71], the District Court determined the issue was of no moment because Underwriters were being named as a plaintiff in the amended pleading. Id. The Omnibus Order also adds Nolan as a named Defendant, which dispensed with the need to implicate AJS Transport in the case. Id. at 3–4. Consequently, the Third-Party Complaint, ECF No. [10], was dismissed without prejudice; and Nolan's Motion to Dismiss, ECF No. [41], and AJS’ Motion for Summary Judgment, ECF No. [45], were denied as moot. Id. at 4.

E. The First Amended Complaint

On February 7, 2020, Plaintiffs, IAGEC and Underwriters, filed a First Amended Complaint alleging a claim for the destruction of a GE CF6-80C2 Jet Aircraft Engine ("Engine") during interstate transportation. ECF No. [84]. The First Amended Complaint alleges five legal causes of action against Defendants Cagney Global³ and Nolan. Id. First, Plaintiffs allege that Cagney Global is strictly liable to IAGEC under the Carmack Amendment for the amount of its losses over and above the amount paid to it by Underwriters; and strictly liable to Underwriters for the amount they paid to IAGEC (Count I). Id. ¶¶ 34–35. Second, Plaintiffs allege Cagney Global is liable for damages based upon Cagney Global's actions engaging in an inherently dangerous activity (Count II). Id. ¶ 38. Third, Plaintiffs allege Cagney Global was negligent through its employees and agents: Nolan, AJS Transport, and the driver of the truck for which the Engine was loaded (Count III). Id. ¶ 50. Finally, Plaintiffs also seek to recover damages against Nolan (Count IV, Count V). Id. ¶¶ 63, 75, 77–80.

3 Cagney Global and Cagney Express are collectively known as "Cagney Global".

F. Cagney Global's Motion to Dismiss Plaintiffs’ First Amended Complaint.

On March 5, 2020, Cagney Global filed a Motion to Dismiss Plaintiffs’ First Amended Complaint. ECF No. [89]. Cagney Global argues that Plaintiffs’ First Amended Complaint is void ab initio under applicable case law in the Eleventh Circuit because the filing of the First Amended Complaint naming Underwriters as an additional Plaintiff violates the Bankruptcy Court's automatic stay. Id. at 4-5. Cagney Global also challenges Plaintiffs’ state law claims and argues they must be dismissed because they are preempted by the Carmack Amendment. Id. at 7-8. Cagney Global further argues that the First Amended Complaint must be dismissed for failure to relate back to the original pleadings because of the addition of Underwriters as Plaintiffs, and the addition of Count II as a new claim. Id. at 11. Lastly, Cagney Global disputes IAGEC's standing to bring the action because IAGEC subrogated and assigned its claims to Underwriters. Id. at 14.

G. Plaintiffs’ Response in Opposition to Cagney Global's Motion to Dismiss First Amended Complaint

On April 2, 2020, Plaintiffs filed a Response in Opposition to Cagney Global's Motion to Dismiss [First] Amended Complaint. ECF No. [94]. Plaintiffs contest Cagney Global's claims that the filing of the First Amended Complaint naming Underwriters as an additional Plaintiff violates the bankruptcy automatic stay. Id. at 2. Instead, Plaintiffs provided the declaration of Plaintiffs’ bankruptcy counsel, Buffy Elizabeth Klein ("Ms. Klein"), which asserts that the claim being asserted by Underwriters is a derivative of the claim of IAGEC. Id. at 3–4. Plaintiffs also add that the state law claims should not be dismissed as federally preempted because they are plead in the alternative to the Carmack Amendment. Id. at 7. Plaintiffs challenge the contention that the First Amended Complaint is time-barred. Id. at 9. Instead, Plaintiffs maintain that the addition of an insurer who has paid a loss relates back to the time of filing the original action. Id. at 9–10. Plaintiffs also counter Cagney Global's plea for dismissal of the First Amended Complaint on the basis of standing. Id. at 12. Plaintiffs assert that IAGEC remained a real party in interest notwithstanding the subject assignment, and that the assignment permitted prosecution of the action in the name of IAGEC. Id.

H. Cagney Global’ Reply to Plaintiffs’ Response to Cagney's Motion to Dismiss Plaintiff's [First] Amended Complaint

On April 9, 2020, Cagney Global filed a Reply to Plaintiff's Response to Cagney Global's Motion to Dismiss Plaintiffs’ [First] Amended Complaint. ECF No. [96]. In this Reply, Cagney Global reaffirms the assertions stated in support of the Motion to Dismiss Plaintiffs’ [First] Amended Complaint. In addition to addressing Plaintiffs’ responses to Cagney Global's Motion to Dismiss, Cagney Global also makes certain claims which address Plaintiffs’ motives in failing to take proper procedural steps to protect such interest. Id. at 4. Cagney Global affirms that the bankruptcy order did not include any mention of Underwriters nor of any subrogee or assignee, and thus only permitted IAGEC to obtain relief. Id. at 3-4. Cagney Global also asserts that Plaintiffs’ Response to the Motion to Dismiss confuses the type of damages that each Plaintiff is seeking; and that there is no qualification in the First Amended Complaint which indicates Underwriters are seeking to sue Cagney Global in name only to proceed against Cagney Global Policy, like IAGEC agreed to do in the Bankruptcy Court. Id. at 5-6. Finally, Defendant argue that the declaration of Plaintiffs’ bankruptcy counsel is self-serving and should be stricken. Id. at 3-4.

I. Plaintiffs’ Sur-Reply Opposing Cagney Global's Motion to Dismiss

On April 17, 2020 Plaintiffs filed a Sur-Reply opposing Cagney Global's Motion to Dismiss. ECF No. [100]. Plaintiffs reasserted their previous arguments but made additional ones with respect to the Bankruptcy Stay. As to that, Plaintiffs state they are not asking for more than the Bankruptcy Court permitted to be sought and add that the stay does not preclude Underwriters’ assertion of its claim, which is against Cagney Global's insurers. Id. Plaintiffs also refute Cagney Global's assertions that there is confusion about what damages Plaintiffs are seeking. Id. Plaintiffs stipulated "that the amount of damages sought by Underwriters in its own right is the amount to which they became subrogated by virtue of their payment to IAG: $1,990,000.00, but as limited by the Bankruptcy Court's partial modification of the stay to Cagney Global's liability insurance limits." Id. at 2. Plaintiffs also add that to the extent that the assignment from IAGEC to Underwriters requires IAGEC's claim to be brought by Underwriters, the amount sought for the benefit of IAGEC is "the amount of IAGEC's uncompensated damages ... also as limited by the Bankruptcy Court's partial modification of the stay ...." Id.

II. ANALYSIS

Before considering the legal challenges posed to the First Amended Complaint, it is important to note that its filing was permitted after briefing and argument before the District Court regarding a number of pending issues, including the scope of IAGEC's and the Underwriter's claims. A reading of the record and of that Hearing transcript makes clear, at least to the undersigned, that the District Court was allowing Plaintiffs an opportunity to start a new, to "reboot," so as to, among other things, clearly articulate the position of each Plaintiff. In addition, Plaintiffs were given leave to do so under a Rule 15 analysis, not by Rule 17 although the Court ultimately ruled that Rule 17 was satisfied. Plaintiffs were also specifically directed to "clearly delineate[ ] how each claim is structured on behalf of each [P]laintiff." ECF No. [81] at 3.⁴ Plaintiffs have now filed the First Amended Complaint on behalf of two parties, IAGEC and the Underwriters, and have set out how the claims as to each are structured.

4 Indeed, the motion seeking leave to file the amended complaint, filed before the Hearing and the Court's Omnibus Order, proposed a very different pleading. See ECF No. [56–1].

Specifically, Paragraph 25 states that the damages to IAGEC are $4,359,343.91. Paragraph 26 alleges that pursuant to an insurance policy and a Form of Release and Discharge that was executed by IAGEC, the Underwriters paid the sum of $1,990,000.00, which were the proceeds of the policy limits minus the deductible. Paragraph 27 specifically addresses how the claims are structed on behalf of Plaintiffs. Paragraph 27 also alleges that "[b]y payment of said sum, in accordance with paragraph 7 of [the Form of Release and Discharge], the Underwriters became partially subrogated to the rights of IAGEC against the Defendants in this action to the extent of Underwriter's payment of $1,990,000.00." No other part of the First Amended Complaint addresses the interests of Plaintiffs. As such, the First Amended Complaint now sets out what each Plaintiff is seeking: IAGEC is pursuing those damages above the $1,990,000.00 that it already received from Underwriters, and the Underwriters are pursuing the $1,990,000.00 that it paid on the claim.⁵

5 In its Sur-Reply, Plaintiff notes that the Underwriters may also be pursuing the entire amount of damages, both on behalf of themselves and as assignees of all of IAGEC's claim. ECF No. [100] at 2. However, the Amended Complaint does not support an alternative basis. It is First Amended Complaint, and not the argument of counsel, that frames the review of the undersigned.

A. The First Amended Complaint Does Not Violate The Bankruptcy Court's Automatic Stay.

Cagney Global argues that the First Amended Complaint is void ab initio because naming Underwriters as an additional Plaintiff is the commencement of an action that violates the bankruptcy automatic stay. ECF No. [89] at 5. Defendant relies on Bankruptcy Code § 362(a)(1) which provides that a filed bankruptcy petition operates as an automatic stay of:

the commencement or continuation ... of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against a debtor that arose before the commencement of the case under this title.

11 U.S.C. § 362(a)(1). A bankruptcy petition also functions as an automatic stay of "any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate." 11 U.S.C § 362(a)(3). If a plaintiff's action violates the automatic stay of a Bankruptcy Court, the action is void ab initio. S. Dallas Water Auth. v. Guarantee Co. of N. Am., USA, 767 F. Supp. 2d 1284, 1298 (S.D. Ala. 2011) ; United States v. White , 466 F.3d 1241, 1244 (11th Cir. 2006) (citing Borg-Warner Acceptance Corp. v. Hall , 685 F. 2d 1306, 1308 (11th Cir. 1982) ).

Plaintiffs counter that the First Amended Complaint does not violate the bankruptcy stay because the modification order allows IAGEC to seek the same set of damages as are being sought here. ECF No. [94] at 3. As such, because "there is nothing different about the liability, amount of damages, and limits on recovery as a result of Underwriters being named as a Plaintiff in this action," the First Amended Complaint is not subject to a stay and is not void. Id. ⁶

6 Plaintiffs rely on the affidavit of their counsel in support of their position. In its Conditional Motion for Leave to File Supplemental Response, ECF No. [98], Plaintiffs add that the Bankruptcy Trustee agrees with that assessment. The undersigned finds that the affidavit is nothing more than the Bankruptcy lawyer's opinion of the modification, however, it is for the Court to decide what the current modification encompasses.

Here, the matter was stayed for almost two years and is proceeding now as a result of the Bankruptcy Court's order which modified the stay. ECF No. [36–2]. Specifically, the Bankruptcy Court ordered that "the automatic stay is modified to allow IAG[EC] to proceed in the Florida Litigation to liquidate its claim therein and proceed to collect against insurance proceeds only." Id. at 2. The District Court, thereafter, granted the motion to lift the stay based on that modification by the Bankruptcy Court. ECF No. [37]. The question for the Court now is whether that modification also allows the claims of the Underwriters to move forward, given that, on its face, only the claims of IAGEC were specifically allowed. Given that, most of the authorities Defendant relies on miss the mark because the Court is not weighting whether the bankruptcy stay provided for by statute applies, but rather it must consider whether the modification applies. Indeed, if the modification does not allow for the First Amended Complaint, the action would be void as Defendant argues.

To be sure, there are a few things that concern the undersigned in allowing the matter to proceed. The Bankruptcy Court's order modifying the stay was an agreed order that was entered as a result of an agreement between Defendants and IAGEC. However, at the time of that agreement, Defendant was not aware that IAGEC had assigned its rights as to part of their claim, and therefore, could not properly assert the claim, at least not in its entirety. Specifically, at the time the modification was agreed to by the parties, IAGEC was pursuing damages it was not entitled to pursue in its own name because it had already subrogated and assigned the rights to the $1,990,000.00 to Underwriters. In fact, it's Defendant's position that it had no right to pursue any claim because the entirety was assigned to Underwriters. Although that argument has not won the day, as noted below, the fact that the party was negotiating over an amount it had no claim to is difficult to disregard. In addition, the Order that lifted the stay in the instant matter also relied on the fact that the parties did not oppose the lifting of the stay. ECF No. [37] at 4.

Notwithstanding, the undersigned recommends that the Court reject Defendants’ arguments and allow the matter to proceed. There is no dispute that the damages at issue here are the same as those the Bankruptcy Court was aware of and was allowing IAGEC to pursue. The issue is whether the additional party, Underwriters, defeats the Court's jurisdiction because they were not mentioned in the modification order. However, the fact that Underwriters are a party now was by decision of the District Court. Specifically, this Court found that those damages should be pursued by IAGEC and Underwriters under a Rule 15 analysis, but only after noting that the Rule 17 ratification was sufficient. ECF No. [81] at 3. The fact that the Court chose a different route to more clearly proceed with the pleadings should not now serve as a bar to the action.⁷ As such, the undersigned recommends that the matter proceed under the modification that has already been permitted by the Bankruptcy Court.

7 Plaintiffs’ reliance on Tucker v. Am. Int'l Grp., Inc. , 745 F. Supp. 2d 53 (D. Conn. 2010), ECF No. [100], however, is misplaced. In Tucker , an action against an insurer was allowed despite the stay from the bankruptcy court. The court's holding was that the defendant was afforded the protection of the bankruptcy stay, but that its insurance company could not benefit from that protection because it was not the party in bankruptcy. Here, the action is not against Cagney Global's insurer, it is against Cagney Global, the parties who now enjoy the protection afforded by the bankruptcy action. Although the Bankruptcy Court's modification gives "IAG[EC] the ability to pursue claims against the underwriters under the insurance contracts in the event insurance coverage is denied," ECF No. [36–2] at 2, what is at issue before this Court at this stage is whether the modification allows Underwriters to pursue claims against Cagney Global, not whether Underwriters or IAGEC can pursue Cagney Global's underwriters.

B. Plaintiffs’ State Law Claims Are Preempted By The Carmack Amendment.

Defendant argues that Counts II and III assert state law causes of action that are preempted by the Carmack Amendment. ECF No. [89] at 7–9. Plaintiffs responded that the state law claims should not be dismissed as preempted by the Carmack Amendment because they are pleaded in the alternative. ECF No. [94] at 7. Because Cagney Global has not conceded that it is subject to liability under the Carmack Amendment, Plaintiffs argue that they would be left without a remedy if the Court or jury found that the Carmack Amendment did not apply. Id.

The Carmack Amendment, 49 U.S.C. § 14706 (1994), standardizes and creates a uniform rule for carrier liability in the transportation of goods in interstate commerce. Smith v. United Parcel Service , 296 F.3d 1244, 1246 (11th Cir. 2002) (citing New York, New Haven & Hartford R.R. Co. v. Nothnagle , 346 U.S. 128, 131, 73 S.Ct. 986, 97 L.Ed. 1500 (1953) ; Adams Express Co. v. Croninger , 226 U.S. 491, 506, 33 S.Ct. 148, 57 L.Ed. 314 (1913) ). The congressional action is "paramount and supersedes all state laws as to the rights and liabilities and exemptions created by such transactions." Adams Express Co. , 226 U.S. at 505, 33 S.Ct. 148. "To accomplish the goal of uniformity, the Carmack Amendment preempts state law claims arising from failures in the transportation and delivery of goods." Smith v. UPS , 296 F.3d 1244, 1246 (11th Cir. 2002). The Eleventh Circuit has held that "only claims based on conduct separate and distinct from the delivery, loss of, or damage to goods escape preemption." Id. at 1248–49. Indeed, "separate and distinct conduct ... must exist for a claim to fall outside the preemptive scope of the Carmack Amendment." Id. at 1249.

Here, Plaintiffs’ state law claims, Counts II and III, are preempted by the Carmack Amendment. Both counts are not "based on conduct separate and distinct from delivery, loss of, or damage to goods," as described in Smith , 296 F.3d at 1246, but rather, are squarely premised on allegations involving the transportation of goods in interstate commerce. ECF No. [84] ¶ 11. Specifically, Plaintiffs are seeking to hold Defendants liable for the damages caused to the Engine during interstate transportation from Michigan to Florida. Id. As such, Plaintiffs’ state law claims, Counts II and III, are preempted by the Carmack Amendment.

Plaintiffs’ argument that these counts are not preempted because they are pled in the alternative also fails. Plaintiff relies on Pizzo v. Bekin Van Lines, Co. , 258 F.3d 629 (7th Cir. 2001), in arguing that the state law claims should not be dismissed as preempted by the Carmack Amendment because it is pled in the alternative. ECF No. [94] at 8. However, the Court does not find Pizzo to be persuasive. In Pizzo, the court determined that the Carmack Amendment should not have been dismissed for failure to satisfy the minimum required amount in controversy because there was sufficient information pled that contested the amount at issue. See 258 F.3d at 635. The reasoning in Pizzo does not concern the preemption of state-law claims concerning interstate transportation of goods and is unpersuasive. Id. As Defendant notes, the alternative pleading the Pizzo court was allowing was the Carmack claim as to one party and a fraud claim as to another party, as alternate theories of recovery not as an alternative pleading as is being presented here. ECF No. [96] at 7. Indeed, to allow the pleading in the alternative would effectively undermine the purpose of the Carmack Amendment which was to federally preempt these very state law claims.

C. IAGEC Has Standing Because It Is A Real Party In Interest.

Cagney Global argues that since IAGEC subrogated and assigned the claims to another entity, in this case Underwriters, IAGEC is no longer the real party in interest and no longer has Article III standing to pursue the claim. ECF No. [89] at 12–14. Defendant rely on the "Subrogation Receipt" clause of the Form of Release and Discharge states:

By way payment of the Final Net Amount of US $1,990,000.00 (ONE MILLION NINE HUNDRED NINETY THOUSAND UNITED STATES DOLLARS AND ZERO CENTS) and to the extent thereof, Insurers are subrogated to all rights of IAG ENGINE CENTER CORP. in respect of the damage to the Aircraft in the Incident and are entitled to use the name of IAG ENGINE CENTER CORP. and to make any claims and bring any actions of whatsoever natures and however arising out of the Incident against any person including any corporation, body of persons unincorporated, or Government agency or otherwise who shall be or may be liable for the Incident and IAG ENGINE CENTER CORP. hereby warrants that no settlement has been made with any such person relating to the damage in

the Incident. If, and to the extent that, the warranty contained in this paragraph is breached, Insurers will be entitled to recover losses they may have otherwise recovered from third parties form the party breaching said warranty.

ECF No. [84] at 32; ECF No. [89-1] at 14.

Plaintiffs argue that they have standing because although Underwriters paid a portion of its claim against Defendant, this does not divest IAGEC of standing to prosecute the balance of its claims as a real party in interest. The First Amended Complaint alleges that IAGEC only partially subrogated its rights to Underwriters. ECF No. [84] at ¶ 27. Specifically, they allege that IAGEC suffered a loss in the amount of $4,359,343.91, of which Underwriters paid $1,990,000.00 which represented the policy limits of $2,000,000.00 less the deductible of $10,000. Id. at ¶ 25–26., Because Underwriters only paid a portion of the loss, IAGEC retained a substantive right to pursue those damages over and above the amount paid by Underwriters. In support of their position, they cite the settlement clause above but argue that the term "to the extent thereof" makes clear that the subrogation is only as to the amount paid by Underwriters.

An assignment of rights to pursue a claim against a third party to another removes the assignor's rights to sue the third party because the assignment transfers all rights in the thing assigned. See Hansen v. Wheaton Van Lines, Inc. , 486 F. Supp. 2d 1339, 1346 (S.D. Fla. 2006) (mentioning Lawyers Title Insurance Co., Inc. v. Novastar Mortgage, Inc. , 862 So.2d 793, 798 (Fla. 4th DCA 2004) ; and Rose v. Teitler , 736 So.2d 122, 122 (Fla. 4th DCA 1999) ). When an insurance company pays an entire loss suffered by the insured, it is the only real party in interest and consequently must sue in its own name; however, "if the insurer ‘[pays] only part of the loss, both the insured and insurer ... have substantive rights against the tortfeasor which qualify them as real parties in interest.’ " Phoenix Ins. Co. v. JD & Sons, Inc. , No. 8:14-CV-2271-T-35MAP, 2015 WL 12861163, at *2 (M.D. Fla. Feb. 2, 2015) (quoting United States v. Aetna Cas. & Sur. Co. , 338 U.S. 366, 380-81, 70 S.Ct. 207, 94 L.Ed. 171 (1949) ). However, when an insurer only pays part of a loss, both the insured and insurer are parties in interest. Id. (holding that since an insurer paid only part of the loss, both insured and insurer are real parties in interest).

Here, Plaintiffs argument was considered and accepted by the District Court when the Court granted Plaintiffs the right to amend with both IAGEC and Underwriters being allowed to proceed. ECF No. [85].⁸ The Amended Complaint, in Paragraph 27, clearly sets out their position. There are clearly two plaintiffs now: (1) IAG, seeking all the damages outside of those that were subrogated and assigned to Underwriters; and (2) the Underwriters, who seek the damages for the claim that was subrogated and assigned to them, the $1,990,000.00 amount it paid. As such, IAGEC has standing to pursue the claim outlined in the First Amended Complaint because it did not assign all its rights, it only assigned those to the extent that the Underwriters paid. D. Underwriters’ Claims Are Not Time-Barred Because They Relate Back To The Original Complaint.

8 Defendant points to Plaintiffs’ statement in the opposition that "the release reflects an assignment of all of IAGEC's rights against Defendant–not just the rights to the $1.99 million paid by insurance," ECF No. [94] at 14, as a concession that should not be ignored. ECF No. [96] at 8. No doubt some of Plaintiffs’ arguments appear to contradict other arguments, however, the undersigned's reading of the Amended Complaint is that the subrogation and/or assignment of claims is only as to the payment that was made by the Underwriters.

Cagney Global argues that the First Amended Complaint cannot relate back as required by Federal Rule of Civil Procedure 15(c) because: (1) it alleges a new cause of action, Liability of Cagney Global for Inherently Dangerous Activity (Count II), of which Cagney Global was not on notice in the original pleadings, and (2) because Plaintiffs’ Original Complaint was filed by IAGEC alone as a strategic decision which involved more than a misnomer. ECF No. [89] at 11.⁹ Therefore, Cagney Global argues that since Underwriters’ claims do not relate back to the original pleadings, they are time-barred under the statute of limitations. Id. Plaintiffs, however, argue that the Amended Complaint is not time-barred because the substitution of an insurer who has paid a loss and is subrogated to the claims of a party who had timely sued does not create a new cause of action and thus the claims relate back to the original pleadings. ECF No. [94] at 9. Plaintiffs also rely on the District Court's Omnibus Order to support their argument that the Original Complaint put Cagney Global on notice of any claim that could be raised by Underwriters. Id. at 11.

9 Given that Plaintiffs’ state law claims are preempted by the Carmack Amendment, the Court does not further address whether Count II relates back to the date of the Original Complaint.

An amended complaint relates back when adding a new plaintiff if: "(1) the provisions of Rule 15(c)(1)(B) are satisfied; (2) the amendment does not prejudice the defendant; and (3) the original complaint provided the defendant with adequate notice of the claims raised by the newly-added plaintiff." Reasoner v. All Seasons Pool Serv., Inc. , No. 606CV-1819-ORL-19DAB, 2007 WL 4326808, at *3 (M.D. Fla. Dec. 7, 2007) (citing Cliff v. Payco Gen. Am. Credits, Inc. , 363 F. 3d 1113, 1132 (11th Cir. 2004) ).¹⁰ Federal Rule of Civil Procedure 15(c)(1)(B) provides that if "the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out – or attempted to be set out – in the original pleading" the amendment to the pleading relates back to the date of the original pleading. Fed. R. Civ. P. 15(c)(1)(B). Rule 15 also requires that "the party to be brought in by amendment ... knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party's identity." Krupski v. Costa Crociere S.p.A. , 560 U.S. 538, 541, 130 S.Ct. 2485, 177 L.Ed.2d 48 (2010) ; see also Walker v. Fulton Cty. Sch. Dist. , 624 F. App'x 683, 686 (11th Cir. 2015) (reasoning that for an amended pleading to properly relate back to the original pleading, the original complaint must give the defendant notice of the claim asserted in the amendment). In a situation where an insurer is substituted in the place of the insured who timely filed a complaint, it relates back to the original complaint if the claim asserted after the substitution "arose out of the conduct, transaction, or occurrence set forth in the original complaint." Am. Fid. & Cas. Co. v. All Am. Bus Lines , 190 F.2d 234, 236 (10th Cir. 1951)

10 In the Omnibus Order, the District Court relied on this standard when addressing Cagney's concern that an "Amended Complaint that added Underwriters as a plaintiff would relate back to the original complaint," to which the Court found that "it would." ECF No. [81] at 2.

In the present case, the addition of Underwriters as Plaintiffs relates back and does not change any substantive right of Plaintiffs. First, the addition of Underwriters as Plaintiffs in the First Amended Complaint does not modify the claims which "arose out of the conduct, transaction, or occurrence set out ... in the original pleading." See Fed. R. Civ. P. 15(c) ; see also ECF No. [85] at 71. The allegations of the First Amended Complaint arose out of the same occurrence as was set out in the Original Complaint because both are claims for the destruction of the Engine while in transport from Michigan to Florida. See ECF Nos. [1-1] ¶ 6, [84] ¶ 11. Since the only claims permitted to proceed against Cagney Global is the Carmack Amendment Claim (Count I), and it is the same claim asserted and described in the Original Complaint, Cagney Global had sufficient notice of the claims and therefore Cagney Global will not be unduly prejudiced by the addition of Underwriters as a party. See Reasoner , 2007 WL 4326808, at *3-4 (finding that the addition of a plaintiff did not prejudice the defendant and that since all elements of the test are satisfied, the action relates back to the original pleading). Indeed, Omnibus Order noted that the Original Complaint put Cagney Global on notice of any claim that could be raised by Underwriters. ECF No. [81] at 3. Finally, Cagney Global is not prejudiced by the addition of Underwriters as Plaintiffs. Indeed, the District Court already found that the matter related back, both at the Hearing, ECF No. [85] at 71, and in its Omnibus Order. ECF No. [81] at 2.

III. RECOMMENDATION

Based on the foregoing, it is hereby RECOMMENDED that Cagney Global's Motion to Dismiss be GRANTED IN PART and DENIED IN PART . The undersigned RECOMMENDS that Counts II and III against Defendant be dismissed because they are preempted by the Carmack Amendment and all the remaining claims may proceed.

IV. OBJECTIONS

Pursuant to Local Magistrate Rule 4(b) and Federal Rule of Civil Procedure 73, the parties have fourteen (14) days from service of this Report and Recommendation within which to file written objections, if any, with the District Judge. Any request for an extension of this deadline must be made within five (5) calendar days from the date of this Report and Recommendation. Failure to timely file objections shall bar the parties from de novo determination by the District Judge of any factual or legal issue covered in the report and shall bar the parties from challenging on appeal the District Judge's Order based on any factual or legal conclusions included in this Report and Recommendation to which the parties failed to object. 28 U.S.C. § 636(b)(1) ; Resolution Tr. Corp. v. Hallmark Builders, Inc. , 996 F.2d 1144, 1149 (11th Cir. 1993).

DONE AND SUBMITTED in Chambers this 4^th day of September, 2020.