Opinion
No. 3:03-CV-2106-P.
November 5, 2004
MEMORANDUM OPINION AND ORDER
Now before the Court are the following Motions:
1. Plaintiff Union Pacific Railroad Company's ("Union Pacific") Motion for Summary Judgment ("Pl.'s Mot."), filed September 10, 2004.
2. Plaintiff Union Pacific's Motion to Compel Defendant National Converting's Initial Disclosures and to Impose Sanctions ("Motion to Impose Sanctions"), filed May 28, 2004.
Defendant National Converting Fulfillment Corporation ("National Converting") filed a Response ("Def.'s Resp.") October 18, 2004.
As the Defendant filed its initial disclosures on October 18, 2004, see infra note 4 and accompanying discussion., the Court considers Plaintiff's Motion to Impose Sanctions with respect to only costs and sanctions.
After considering the parties' arguments and briefing, and the applicable law, the Court GRANTS in PART and DENIES in PART Plaintiff's Motion for Summary Judgment, and GRANTS in PART and DENIES in PART Plaintiff's Motion to Impose Sanctions.
I. Background and Procedural History
This is a suit for freight charges and related demurrage. Between September 21, 2001, and January 13, 2003, Plaintiff, a common carrier, transported goods on several occasions for Defendant from Lerdo, California, to Defendant's facilities in Hutchins and Ennis, Texas, for which Defendant incurred freight charges. Stock Aff. ¶ 3 (App. to Pl.'s Mot. for Summ. J. ("App.") at p. 32). Plaintiff alleges that during this time period, Defendant "failed to timely unload its freight from Union Pacific's railcars after the freight arrived at [Defendant's] facilities on seven separate occasions." Id. ¶ 5 (App. at p. 33). Consequently, Plaintiff assessed demurrage charges against Defendant in addition to the freight charges. See Union Pacific Accessorial Tariff UP 6004 ("6004 Tariff") at pp. 7-9 (App. at 201-03). At all times, Defendant acted as "the consignee for the shipments that are the subject of [Plaintiff's] complaint." Request for Admission No. 4 (Exhibit B to Def.'s Resp.).
In this case, the Court defines demurrage as "[l]iquidated damages owed by a charterer to a shipowner for the charterer's failure to load or unload cargo by the agreed time," and contract demurrage as "demurrage paid by a vessel's charterer if the time to load or unload the vessel at port takes longer than that agreed on in the charterer's contract with the shipowner." Blacks Law Dictionary 465 (8th ed. 2004); see also Blacks Law Dictionary (6th ed. Abridged 1991) ("With respect to railroads a charge exacted by a carrier from a shipper or consignee on account of a failure on the latter's part to load or unload cars within the specified time prescribed by the applicable tariffs; the purpose of the charge is to expedite the loading and unloading of cars, thus facilitating the flow of commerce, which is in the public interest. Demurrage is extended freight and is the amount payable for delays by receiver in loading or unloading cargo; it is stipulated damages for detention.").
Plaintiff further alleges that Defendant failed to pay any portion of its freight or demurrage charges, and now asserts total outstanding charges against Defendant in the amount of $162, 411.62 plus applicable interest. App. at pp. 34-118. Nevertheless, while Defendant disputes all demurrage charges, it does admit liability for an undetermined portion of the freight charges. Def.'s Resp. at p. 1 ("Defendant does owe certain of the freight charges (not demurrage) but is still attempting to compute the exact amount.").
The following procedural information is also relevant to this decision. On January 15, 2004, this Court entered a Scheduling Order requiring each party to provide initial disclosures no later than February 17, 2004. Plaintiff fully complied with that Order by previously serving its initial disclosures to Defendant on January 15, 2004. Defendant however, failed to serve its initial disclosures until October 18, 2004.
On May 14, 2004, Plaintiff served its Requests for Admission, along with other discovery requests, on Defendant, through its counsel, Patrick Mulry ("Mulry"). See App. at pp. 5-11B, 271-81. Shortly thereafter, on May 25, 2004, Mulry withdrew as counsel for Defendant. App. at p. 288. Defendant then failed to respond to Plaintiff's Requests for Admission, which became due "within 30 days after service of [those] request[s]. . . ." Fed.R.Civ.P. 36(a). Thereafter, on September 10, 2004, Plaintiff filed its Motion for Summary Judgment. As of that date, Defendant had not yet filed any responses or objections to Plaintiff's discovery requests, nor had it filed its initial disclosures. Finally, on October 18, 2004, Defendant filed its Response to Plaintiff's Motion, its responses and objections to Plaintiff's discovery requests, and its initial disclosures.
While Defendant filed only "one" document on October 18, 2004, its Response included "Defendant's Response to Plaintiff's First Set of Written Interrogatories ("Written Interrogatories")" as Exhibit A, "Defendant's Response to Plaintiff's Request for Admissions" as Exhibit B, and "Defendant's Initial Disclosures" as Exhibit C.
II. Summary Judgment Standard
Summary judgment shall be rendered when the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). All evidence and the reasonable inferences to be drawn therefrom must be viewed in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962). The moving party bears the burden of informing the district court of the basis for its belief that there is an absence of a genuine issue for trial, and of identifying those portions of the record that demonstrate such an absence. Celotex, 477 U.S. at 323.
Once the moving party has made an initial showing, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The party defending against the motion for summary judgment cannot defeat the motion unless she provides specific facts that show the case presents a genuine issue of material fact, such that a reasonable jury might return a verdict in her favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Mere assertions of a factual dispute unsupported by probative evidence will not prevent summary judgment. Id. at 248-50; Abbott v. Equity Group, 2 F.3d 613, 619 (5th Cir. 1993). In other words, conclusory statements, speculation and unsubstantiated assertions will not suffice to defeat a motion for summary judgment. Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1429 (5th Cir. 1996) (en banc). If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to her case, and on which she bears the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.
Finally, the Court has no duty to search the record for triable issues. Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). "The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which the evidence supports his or her claim." Id. A party may not rely upon "unsubstantiated assertions" as competent summary judgment evidence. Id.
III. Requests for Admission
A party failing to respond to a request for admission, may have the answer admitted against its interest as a matter of law. Fed.R.Civ.P. 36(a) states in relevant part that
[t]he matter is admitted unless, within 30 days after service of the request, or within such shorter or longer time as the court may allow or as the parties may agree to in writing . . . the party to whom the request is directed serves upon the party requesting the admission a written answer or objection addressed to the matter, signed by the party or by the party's attorney.
Fed.R.Civ.P. 36(a) (emphasis added). See also Hulsey v. State of Texas, 929 F.2d 168, 171 (5th Cir. 1991) ("Under Federal Rule of Civil Procedure 36(a), a matter in a request for admissions is admitted unless the party to whom the request is directed answers or objects to the matter within 30 days. Fed.R.Civ.P. 36(a)."). Plaintiff argues that Defendant's failure to respond translates into conclusive proof that Defendant admitted Plaintiff's Requests for Admission.
However, a party's failure to comply with the mandate of Rule 36(a) does not always trigger automatic admission. "Under Rule 36(b), `Any matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission.'" Hulsey, 929 F.2d at 171 (citing Fed R. Civ. P. 36(b); Dukes v. South Carolina Ins. Co., 770 F.2d 545, 548-49 (5th Cir. 1985)) (emphasis added). Defendant asserts that it "failed to timely Respond to Request for Admissions and other written discovery as at the time same were due [because] the Defendant had no attorney of record nor the finances to employ an attorney." Def. Resp. at p. 1. As such, the Court must now decide whether to permit Defendant's amendment of the admission. In this case, Rule 36(a) effectively prohibited Defendant from responding through anyone other than a licensed attorney.
a. Appearance of a Corporation
"Generally, a corporation cannot appear in person, and hence it must appear through an attorney admitted to practice in the jurisdiction in which the action is pending." William Meade Fletcher, 9A Fletcher Cyclopedia of the Law of Private Corporations § 4463 (2004); see also Southwest Express Co., v. Interstate Commerce Commission, 670 F.2d 53, 55 (5th Cir. 1982) ("The rule is well established that a corporation can appear in a court of record only by an attorney at law.") (citing Flora Construction Company v. Fireman's Fund Insurance Co., 307 F.2d 413, 414 (10th Cir. 1962)); Kunstoplast of America, Inc., Formosa Plastics Corp., 937 S.W.2d 455, 456 (Tex. 1996) ("Generally a corporation may be represented only by a licensed attorney. . . ."). Because no attorney represented Defendant from May 25, 2004, until approximately October 18, 2004, Defendant found itself without the ability to speak. Compare App. at p. 288 with Def.'s Resp. at p. 1.
Therefore, the Court finds sufficient reason to allow Defendant amendment of its admission. Requests for Admission cannot be classified as ministerial tasks, and hence require the appearance of counsel to be answered. See Fletcher at § 4463 ("In some cases, such as proceedings in small claims courts and administrative proceedings, an appearance by an officer or agent of the corporation may be permissible."). Moreover, as Defendant found itself without financial ability to obtain counsel, and has since done so, the Court believes it should be given opportunity to respond to Plaintiff's assertions. Cf. KSNG Architects, Inc. v. Beasley, 109 S.W.3d 894, 899 (Tex.App.-Dallas 2003) (finding that because Texas law favors liberal amendment of pleadings, the trial court abused its discretion by failing to allow the corporation "to hire counsel and replead"); Richdel, Inc. V. Sunspool Corp., 699 F.2d 1366, 1366 (Fed. Cir. 1983) (ruling that the continuing cost of legal representation could not ratify the appearance of corporation without counsel). Finally, while Defendant's responses were not rightly forthcoming, the Court cannot decidedly find dilatory motives. But cf. Ackra Direct Marketing Corp. v. Fingerhut Corp., 86 F.3d 852, 856 (8th Cir. 1996) (finding that "failure to respond to the magistrate judge's discovery order and other orders, failure to comply with pretrial requirements, and failure to attend the final pretrial/settlement conference constituted dilatory tactics). Consequently, the Court accepts Defendant's Responses to Requests for Admission.
IV. Initial Disclosures
Plaintiff next asserts that summary judgment is proper because Defendant "waived its ability to present evidence by failing to serve initial disclosures." Pl.'s Mot. at p. 8.
Fed.R.Civ.P. 37(c)(1) provides that
A party that without substantial justification fails to disclose information required by Rule 26(a) . . . is not, unless such failure is harmless, permitted to use as evidence at a trial, at a hearing, or on a motion any witness or information not so disclosed. In addition to or in lieu of this sanction, the court, on motion and after affording an opportunity to be heard, may impose other appropriate sanctions. In addition to requiring payment of reasonable expenses, including attorney's fees, caused by the failure, these sanctions may include any of the actions authorized under Rule 37(b)(2)(A), (B), and (C) and may include informing the jury of the failure to make the disclosure.
Fed.R.Civ.P. 37(c)(1) (emphasis added).
"In evaluating whether a violation of rule 26 is harmless, and thus whether the . . . evidence [can] be used at trial," the court must "look to four factors: (1) the importance of the evidence; (2) the prejudice to the opposing party of including the evidence; (3) the possibility of curing such prejudice by granting a continuance; and (4) the explanation for the party's failure to disclose." Texas AM Research Found. v. Magna Transp., Inc., 338 F.3d 394, 402 (5th Cir. 2003). As the matter under consideration is initial disclosures, the Court finds such evidence to be of the utmost importance. Conversely, Plaintiffs do endure prejudice through inclusion of this evidence. Defendant's initial disclosures became due February 17, 2004; Defendant's counsel did not withdraw until May 25, 2004. Defendant offers no explanation for its failure to respond during this time period. Moreover, the deadline for completing discovery ended August 20, 2004, and the trial date is scheduled to begin within the next five weeks. In sum, Defendant's inactions weigh against accepting its initial disclosures.
Therefore, in order to offset prejudice against the Plaintiff, the Court will entertain a motion for continuance in order to reopen formal discovery procedures should the Plaintiff so request.
Similar to the Motion to Impose Sanctions, the parties are free to conduct more informal discovery procedures through consensual agreement. See infra note 6 and accompanying discussion.
a. Requests for Attorney's Fees and Costs
With regard to Defendant's Initial disclosures, Plaintiff also moves the Court to grant it attorney's fees and costs associated with bringing its Motion to Compel. Fed.R.Civ.P. 37(a)(4) provides that:
If the motion [to compel] is granted or if the disclosure or requested discovery is provided after the motion was filed, the court shall, after affording an opportunity to be heard, require the party or deponent whose conduct necessitated the motion . . . to pay to the moving party the reasonable expenses incurred in making the motion . . . unless the court finds that the motion was filed without the movant's first making a good faith effort to obtain the disclosure or discovery . . . or the opposing party's nondisclosure . . . was substantially justified. . . .
As Defendant filed its disclosures after Plaintiff filed its Motion to Compel, the Court finds that Defendant must reimburse Plaintiff for its associated costs and fees. Plaintiff attempted numerous good faith endeavors before filing its Motion to Compel. App. at pp. 271-81. Moreover, while the Court found evidence of sufficient financial difficulties to prevent matters admitted against Defendant, the Court cannot find ample evidence to substantially justify Defendant's delay in filing its initial disclosures. Compare App. at pp. 5-11B, 258-66 (illustrating that while Defendant failed to respond to Plaintiff's Requests for Admissions for nearly four months, Defendant retained no counsel during this time period) with App. at pp. 271-81 (highlighting Plaintiff's efforts to obtain initial disclosures for approximately eight months). As such, the Court GRANTS Plaintiff's Motion to Impose Sanctions, with respect to all costs and attorney's fees associated with the necessity of bringing the Motion to Impose Sanctions. Accordingly, Plaintiff must submit evidence of attorney's fees to the Court within thirty days of the date of this Memorandum Opinion and Order.
In lieu of this requirement, the parties are free to reach consensual agreement on their own and submit an unopposed order to this Court stating the same.
V. Liability Evidence
Plaintiff further argues that regardless of Defendant's admissions, the evidence still favors holding Defendant liable for all of Plaintiff's asserted claims. Plaintiff asserts that both common and statutory law support this contention. As Defendant admitted in its Response that it does bear some responsibility for charges, the Court will analyze the freight and demurrage charges separately.
a. Freight Charges
Plaintiff first contends that notwithstanding Defendant's evidence, liability remains for the full amount of the freight charges. As In Re Penn Central Transportation Co., 477 F.2d 841, 844 (3rd Cir. 1973) states, "[t]he only defense which can be raised to a carrier's suit" for lawful charges "is that the services have been paid for, that the services were not rendered, that the services were charged under an inapplicable tariff schedule, or that the rates were unreasonable." See also Louisville N.R. Co. V. Central Iron Coal Co., 265 U.S. 59, 70 (1924) ("[I]f a shipment is accepted, the consignee becomes liable, as a matter of law, for the full amount of the freight charges, whether they are demanded at the time of delivery, or not until later."); Southern Pacific Co. v. Miller Abattoir Co., 454 F.2d 357, 359 (1972) ("[I]t is settled law that one who accepts goods consigned to him is liable for all freight charges properly due under the applicable tariffs."). Plaintiff addresses each of these four prongs in turn in order to prove the lack of defenses. However, in light of Defendant's Response, the Court finds such an approach unnecessary.
Although Defendant concedes its lack of payment for services, it seems to dispute Plaintiff's claimed tariff schedule. Request for Admission No. 9 (Exhibit B to Def.'s Resp.). Moreover, Defendant implies that particular services may not have been rendered. See Written Interrogatory Nos. 3(d), 4, 6 (Exhibit A to Def.'s Resp.). Nevertheless, Plaintiff maintains that because "the records of common carriers receive a presumption of accuracy," its evidence should therefore be accepted as true. See Stein Hall Co., Inc. v. S.S. Concordia Viking, 494 F.2d 287, 291 (2nd Cir. 1974).
Notwithstanding that contention, because of the summary judgment standard, Plaintiff's presumption of accuracy cannot create an absence of genuine issue for trial. The Court must view all evidence and reasonable inferences in the light most favorable to the Defendant. See Diebold, 369 U.S. at 655. In this case, Defendant disputes the accuracy of Plaintiff's freight charges. At this stage, a genuine issue of material fact exists as to the amount in controversy.
Plaintiff nonetheless "objects to the Controversy Affidavit in Support of Response to Motion for Summary Judgment in its entirety, and specifically to paragraphs 2 and 3 based on the conclusory statements and legal conclusions contained therein." Pl.'s Reply at p. 2. Citing to Fifth Circuit caselaw, Plaintiff maintains that Defendant's "affidavit fails to set forth specific facts or admissible evidence. . . ." Id. (citing Marshall v. East Carroll Parish Hosp. Serv. Dist., 134 F.3d 319, 324 (5th Cir. 1998). However, while it may be true that "conclusory, unsupported assertions are insufficient to defeat a motion for summary judgment," Marshall, 134 F.3d at 324, the Court finds that Defendant presented sufficient information at this stage.
To be sure, Defendant's Written Interrogatories provide more "than improbable inferences, and unsupported speculation." Krim v. BancTexas Group, Inc., 989 F.3d 1435, 1449 (5th Cir. 1993). Specifically, Melvin E. Riecke, II, General Manager of Defendant National Converting, states that Defendant failed to receive invoices for over five months, that Plaintiff sent invoices that Defendant cannot yet verify, and that Plaintiff's statements do not match Defendant's payables. The Written Interrogatories further assert that Defendant made past attempts to correct these discrepancies. See Written Interrogatory Nos. 3(d), 4, 5, 6 (Exhibit A to Def.'s Resp.). While such answers may not guarantee success at trial, they do overcome the necessary burden to survive a motion for summary judgment. See United States v. East Texas Medical Ctr. Reg'l Healthcare System, 384 F.3d 168, 173 ("At the summary judgment stage, a court may not weigh the evidence or evaluate the credibility of witnesses, and all justifiable inferences will be made in the non-moving party's favor."). As such, the Court finds that Plaintiff's Motion with respect to the alleged amount of freight charges should be DENIED. Nevertheless, the Court notes that Defendant concedes liability for an undetermined portion of the freight charges. See Def.'s Resp. at 1. Therefore, the Court finds that Plaintiff's Motion with respect to the liability of the freight charges should be GRANTED.
b. Demurrage Charges
Finally, Plaintiff alleges that the evidence establishes conclusively that Defendant is liable for the demurrage charges. Specifically, Plaintiff claims that notwithstanding Defendant's failure to timely unload the railcars, it nonetheless remains liable for the demurrage charges. To be sure, "[w]here demurrage charges are prescribed by a tariff, and where a liability for such charges accrues, the carrier is under a duty to collect and the consignee is under a duty to pay them." City of New Orleans v. Southern Scrap Material Co., 491 F.Supp. 46, 48 (E.D. La. 1980) Moreover, "[d]emurrage is properly assessed in accordance with the terms of a tariff even though the detention occurs through no fault of the consignee, for a cause that is beyond the consignee's control." Id. at 48-49 (citing Houston Belt Terminal Railroad Co. V. Connell Rice Sugar Co., 411 F.2d 1220 (5th Cir. 1969), cert. denied, 397 U.S. 908 (1970); Port Terminal Railroad Ass'n v. Connell Rice Sugar Co., 387 F.2d 355 (5th Cir. 1967) ("Frequently, demurrage is assessed and liability attaches although the delay is not caused by the assessed party.").
While Defendant freely admits demurrage charges are prescribed by the 6004 Tariff, it flatly disputes any liability for the claimed demurrage charges. In essence, Defendant asserts liability for such charges has not accrued. In Written Interrogatory No. 6, Defendant declares that "[it] unloaded all cars spotted at [its] dock within 48 hrs." and that it was "not notified that cars were waiting to be unloaded and [Plaintiff's] local traffic was in disarray due to problems with the [Plaintiff's] switching tracks that come to [Defendant's] docks." Written Interrogatory No. 6 (Exhibit A to Def.'s Resp.). Finally, Defendant asserts that after having received demurrage invoices, it attempted unsuccessfully to reconcile such charges with Plaintiff. Id. All such arguments reason against the validity of demurrage accrual. Therefore, the Court finds that a disputable fact remains as to whether Plaintiff "properly assessed demurrage charges in accordance with its Tariff. . . ." See Pl.'s Mot. at p. 14. As such, the Court must DENY Plaintiff's Motion for Summary Judgment with respect to the demurrage charges.
VI. Conclusion
For the foregoing reasons, Plaintiff's Motion for Summary Judgment is hereby GRANTED in PART and DENIED in PART, and Plaintiff's Motion to Impose Sanctions is hereby GRANTED in PART and DENIED in PART.
It is so ordered.