Continuing with our series of articles summarizing past DRC arbitration decisions. We believe this will help members to better understand how the DRC Dispute Rules and Regulations (R&R) apply in the event of a dispute. DRC Dispute R&R state that all DRC arbitrations are private and confidential. As such, the names of all parties, including arbitrators and companies are not included. A reminder that DRC’s sole role is as administrator of the arbitration process; DRC does not participate in any hearings. Therefore, this summary is based solely on the arbitrator’s written decision and may not reflect important information shared with the arbitrator through written briefs or verbal testimony.
Case: DRC File #19418 – Parties Domiciled – Ontario, Canada vs Richmond, BC
Facts
Respondent hired Claimant to transport five loads of fresh produce (mixed vegetables) from Houston, TX., to Surrey, BC., between January 23, 2015, and March 11, 2015. The invoices show a desired temperature of 35F for all shipments and a USD $28,500 freight amount for all invoices.
Respondent claimed damages on one of the loads (BoL#17294).
BoL#17294 shows 15 different varieties of vegetables on the load. A CFIA inspection was performed just on four of the 15 commodities, showing the following results:
- Gai Lan – Pulp Temperature of 5F
- Discoloration 7% (Water-soaked discolouration affecting more than 20% of the plant)
- Wilting 85% (Affecting more than 20% of the plant; limp and pliable)
- Baby Bok Choy – pulp Temperatures of 34F-35F
- Decay 0%
- Bruising 11% (More than 2 leaves are materially bruised)
- Wilting 8% (Affecting more than 2 leaves per plant)
- Yu Choy Sum – Pulp Temperature of 37.2F
- Decay 0%
- Wilting 69% (Affecting more than 20% of the plant; limp and pliable)
- Yu Choy Mieu – Pulp Temperatures of 37.2F-39.5F.
- Decay 0%
- Wilting 61% (Affecting more than 20% of the plant; limp and pliable)
In an email dated June 10, 2015, the Claimant offered a final settlement of $4,000 (no currency specified) adjustment to their invoices to resolve the matter.
The Claimant sought a total of USD$30,700, which included USD$2,200 Arbitration fees.
Issue
Whether there was a breach of the contract and did Respondent suffer damages
Arbitrator’s Analysis/Reasoning
Supporting documentation submitted by Respondent clearly references BoL# 17771, which was signed completely clean and free of protest on arrival.
The BoLs do not specify a desired temperature while in transit, but Claimant’s invoices state “maintain 35F”.
The BoL with the “Hi” temperature notation was for a shipment in February 2015, BoL# 17294.
Therefore, it appears that Respondent is claiming losses on a properly delivered shipment (BoL# 17771) and not on the shipment that arrived with high temperatures (BoL# 17294).
BoL# 17294 had 15 different items on the load. There are four CFIA Inspection certificates submitted by Respondent for only four of those items. Two certificates show normal pulp temperatures (Gai Lan 34.5F, Baby Bok Choy 34F-35F). One certificate for Yu Choy Sum shows 37.2F. Recommended temperatures for this product must be assumed to be as stated on Claimant’s invoices as 35F. Given that it is only warmer by 2F, one would not expect damages, if any, to be too severe. The certificate for Yu Choy Mieu shows 37.2F-39.5F, which might be considered a little on the warmer side.
Three of the certificates show large percentages of “limp and pliable” and the 4th certificate shows “bruising and wilting”. There are 4 varieties of vegetables highlighted as the damaged goods in question on the invoice from Respondent’s supplier in Texas. The other 11 items have not been highlighted nor inspected as per the submitted documents.
The extent of the damages cited by CFIA on these 4 items could possibly be attributed to poor shipping condition at the time of shipment. In addition, the temperatures during shipment did not affect 11 items or 73% of the load.
Respondent is claiming on a load that was received without objections. That is, Respondent did not claim on the load that was protested for “Hi” temperatures. Respondent’s documents include a temperature recording tape. However, the temperature recording device with a serial number or tape number is not documented or identified to verify which shipment it belongs to. Further to that, the tape submitted reflects the in-transit temperatures of 32F-33F.
There is, however, an email that Respondent submitted where it appears there had to have been some discussions about temperature and losses.
Claimant submitted an email dated June 10, 2015, suggesting splitting $22,136.00 loss three ways. There is no indication if this loss was USD$ or CAD$.
Furthermore, Claimant offered only a credit of $3,000.00 (no currency specified) and then finally raised the offer to $4,000.00 with immediate payment of the balance due.
In the arbitrator’s opinion, the e-mail where the Claimant offers a credit to the Respondent, does not present itself as admission by Claimant to causing any damage, more so it represents a token of trying to resolve a problem and move forward.
Regardless of any of the commentary provided herein, Respondent is claiming on a shipment that was signed free and clear on arrival.
Respondent has not submitted any claim or documentation to substantiate claim, on the only shipment that had a notation as to “Hi” temperatures. Therefore, the arbitrator concluded there were no objections or consequences from that shipment arriving with “Hi” temperatures.
Arbitrator’s Decision
The Respondent was required to remit to Claimant the amount of USD$30,700 payable within 30 days of the date of this decision.
DRC Comments
When making a claim against a transportation company, receivers must be able to link the transit temperatures or transit delays to the damage or deterioration presented on the product upon arrival.
In this case, the receiver only inspected a small portion of the load, that is four of the fifteen commodities included in the BoL and invoice, and the results of the inspections show acceptable temperatures. While it is possible that a truck can damage only a portion of a load, when transit temperatures are close to the desired transit temperature, it would be difficult for a truck to damage only a portion of a load.
Settlement offers exchanged by emails during a negotiation to try to close a file between parties, does not necessarily mean an agreement has been reached. In the arbitrator’s analysis, emails exchanged between parties, which show Claimant’s offer of a $4,000 credit to settle the dispute, did not mean the carrier was accepting liability. Sometimes, these types of offers are made to prevent matters from escalating and to continue the business relationship.
