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Court reversal rules against Markel unit in damaged MRI shipment


A ruling in favor of a Markel Corp. unit was reversed by a federal appeals court in a decision that hinges on whether a transportation company acted as a broker or a motor carrier in the transport of equipment that arrived damaged.

Wall Township, New Jersey-based Nationwide Imaging Services Inc., which was insured by Glen Allen, Virginia-based Essex Insurance Co., a Markel Corp. unit, buys and resells used medical equipment, according to Wednesday’s 11th U.S. Circuit Court of Appeals in Atlanta in Essex Insurance Co., Nationwide Imaging Services Inc. v. Barrett Moving & Storage Inc., Landstar Transportation Logistics Inc.

In November 2010, it arranged for the transportation of a magnetic resonance imaging machine it owned from Park Ridge, Illinois, to Dallas. The MRI’s shipment was divided in two.

Nationwide coordinated the move with Waukegan, Illinois-based Barrett, which transported one of the shipments with its own truck and arranged for a third party, Jacksonville, Florida-based Landstar Transportation Logistics, Inc., to transport the other shipment.

While the components shipped in the Barret truck arrived intact, damage to a magnet on the Landstar truck rendered the entire MRI inoperable, according to the ruling.

Nationwide, which had paid $425,000 to buy the MRI and was planning to sell it for $560,000, filed a claim with Essex, which paid the policy limit of $346,500, retaining subrogation rights.

Nationwide and Essex then filed suit against both transportation companies in U.S. District Court in Jacksonville to recover from the MRI’s loss under the Carmack Amendment, which makes motor carriers in interstate commerce strictly liable to shippers for the actual loss of goods damaged in transit, unless a shipper and motor carrier agree to a limitation on the carriers’ liability.

The parties agreed to a bench trial by a magistrate judge, but instead of trying the case, the judge decided to grant summary judgment for Nationwide and Essex against both transportation companies.

A three-judge appeals court panel unanimously overturned the ruling. At issue in the case is whether Barret was a motor carrier under the Carmack Amendment, making it strictly liable for the damage sustained, or a broker.

“We conclude that the Magistrate Judge applied the correct standard for distinguishing brokers from carriers but erred in finding no factual dispute over whether Barrett met that standard,” said the ruling.

A “genuine factual dispute existed as to whether Barrett accepted legal responsibility to transport the magnet or communicated to Nationwide that it was brokering the shipment of the magnet to a third party,” said the ruling, in overturning the ruling with respect to Barrett. It also overruled the ruling with respect to Landstar.

The case was remanded for further proceedings.

In June, a U.S. District Court refused to dismiss litigation filed by Lloyd’s of London underwriters against a trucking firm seeking compensation for a $275,000 claim Lloyd’s paid for damaged cargo.