MINNEAPOLIS PERSONAL INJURY ATTORNEY  
attorney Michael E. Douglas Attorney at Law
  Personal Injury Attorney
  St. Paul Workers Compensation Lawyer work comp attorney
 > About Me
   :: My Commitment
   :: Our Community
   
 > Legal Practice Areas
  twin cities comsumer lawPersonal Injury
   :: Traffic Accidents
   :: Medical Malpractice
   :: Social Security Disability
   :: Premises Liability
   :: Wrongful Death
   :: Dog Bite
   :: Back/Spinal/Neck Injuries
   :: Whiplash
   :: Defective Medical Devices
   :: Defective Drugs
  Minnesota Personal InjuryWorkers Compensation
  St. Paul personal injuryConsumer Law
   :: Debt Collection
   :: Repossessions
   :: Foreclosures
   :: Loan, Credit, Banking
   :: Arbitration Agreements
   :: Deception and Fraud
   :: Auto Fraud / Lemon Law
   :: Warranties
   :: Predatory Lending
   
 > Contact Us
   :: Contact Us
 

Law Offices of Michael E. Douglas
P.O. Box 251551
Woodbury, Minnesota 55125-6551
   

 Saint Paul Lawyer
 
 mdouglas@injurylawtwincities.com

 

US District Court : Contract - contractual limitations period barred suit; no tolling; agency

1Because the parties have cross-moved for summary judgment, the Court recounts here
only undisputed facts and facts as to which any dispute is immaterial.
- 1 -
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
HARTFORD FIRE INSURANCE
COMPANY,
Plaintiff,
v.
DONALD LAVERNE CLARK, JR., ROBIN
PARSONS, and TRANSGROUP EXPRESS,
INC., a Washington Corporation d/b/a/
TransGroup,
Defendants.
Case No. 03-CV-3190 (PJS/JJG)
ORDER GRANTING DEFENDANT
TRANSGROUP EXPRESS, INC.S
MOTION FOR SUMMARY JUDGMENT
AND DENYING PLAINTIFFS MOTION
FOR SUMMARY JUDGMENT
Cole S. Kain and Gilbert J. Schroeder, CLAUSEN MILLER PC; David H. Wright,
Teresa J. Kimker, and Brian N. Johnson, HALLELAND LEWIS NILAN & JOHNSON
PA, for plaintiff.
James M. Lockhart and Christopher R. Grote, LINDQUIST & VENNUM PLLP, for
defendant Transgroup Express, Inc.
This matter is before the Court on the cross-motions for summary judgment of plaintiff
Hartford Fire Insurance Company (Hartford) and defendant Transgroup Express, Inc.
(Transgroup). For the reasons that follow, Transgroups motion for summary judgment is
granted, and Hartfords motion is denied.
I. BACKGROUND1
For about ten years, from April 1992 to May 2001, defendant Donald Clark, Jr., was the
shipping and warehouse manager for Buffets, Inc. Compl. 11 [Docket No. 1]. Buffets is a
- 2 -
company headquartered in Minneapolis, Minnesota, that runs several restaurant chains, including
Old Country Buffet. Id. 10; Grote Decl. Ex. D (Compl.) 1 [Docket No. 122].
As Buffetss shipping and warehouse manager, Clark placed many shipments with
defendant Robin Parsons and his company. Compl. 18; Grote Decl. Ex. F (Clark Dep.) at 42,
45. Together, Clark and Parsons hatched a scheme to enrich themselves at the expense of
Buffets. The scheme was simple: Clark would place a shipment with Parsonss company,
Buffets would be overcharged for the shipment, Clark would approve payment of the inflated
charges, and Parsons would pay Clark kickbacks out of Parsonss proceeds from the scheme.
Compl. 22-28; Grote Decl. Ex. F (Clark Dep.) at 51-53, 151; Grote Decl. Ex. E (Parsons
Dep.) at 80-81, 112. Clark and Parsons have both pleaded guilty to criminal charges stemming
from the scheme. Pl. Mem. Supp. Mot. S.J. Ex. B (Kain Aff.) at Ex. B.2 (Parsons plea
agreement), Ex. B.3 (Clark plea agreement) [Docket No. 117].
Although the scheme was simple, identifying the responsible parties other than Clark
and Parsons is less simple. Parsons owned a company based in Eagan, Minnesota, called Carr
Freight, Inc. Grote Decl. Ex. E (Parsons Dep.) at 12-15. Carr Freight used its own trucks to do
local shipping in the Twin Cities area, and Carr Freight invoiced customers, including Buffets,
directly for such local shipments. Id. at 15; Grote Decl. Ex. P (Carr Freight invoices); Kain Aff.
Ex. B.5 (Lee Dep.) at 26. But Carr Freight was also affiliated with defendant Transgroup, a
company based in Seattle, Washington. As a Transgroup affiliate, Carr Freight arranged for
customers goods to be shipped outside of the Twin Cities area on trucks and planes owned by
other carriers (and not by Carr Freight).
- 3 -
The precise legal nature of the relationship between Carr Freight and Transgroup is
disputed, but the essential facts are not. In 1995, Carr Freight and Transgroup executed a
Transportation Services Agreement. Santillan Aff. Ex. A [Docket No. 120]. The agreement
provides that Carr Freight will represent [Transgroup] in the sale and movement of air, ocean,
less-than-truck and full truck load, barge or rail freight movements to or from any location in
North America, as well as to or from any point internationally. Id. at 2. The agreement
requires Carr Freight to utilize a [Transgroup] bill of lading on all outbound freight originated
by [Carr Freight] and, to a reasonable extent, on all routed freight within [Carr Freights service
area]. Id. at 9. The agreement gives Carr Freight the right to use Transgroups name on
vehicles, stationery, business cards, but vehicles bearing Transgroups name must also bear
Carr Freights name on the door in letters no less than one inch high followed by the
designation owner/operator. Id. at 7; see also Grote Decl. Ex. E (Parsons Dep.) at 22; Kain
Aff. Ex. B.5 (Lee Dep.) at 68-69.
The Transgroup bills of lading, which Carr Freight was required to use for long-distance
shipments, direct shippers (such as Buffets) to make payments directly to Transgroups office in
Seattle. Santillan Aff. Ex. B at DOJ-CARR005646, Ex. C at DOJ-CARR021125. Based on the
Transgroup bills of lading, Carr Freight prepared invoices for shippers on Transgroup forms; the
invoices did not feature Carr Freights name. Kain Aff. Ex. B.5 (Lee Dep.) at 25-26.
Transgroup collected all payments for shipments that were placed and invoiced through Carr
Freight and that used Transgroup bills of lading, and Transgroup retained eleven percent of the
amounts billed. Santillan Aff. Ex. A at 20. Of the remaining eighty-nine percent, Transgroup
used some portion of that amount to pay the companies that actually carried the goods, retained
- 4 -
another portion as an allowance for bad debt, and remitted the balance to Carr Freight. Id. at 20,
22; Grote Decl. Ex. E (Parsons Dep.) at 82-85; Kain Aff. Ex. B.5 (Lee Dep.) at 41. Of the
inflated invoices submitted to Buffets and approved by Clark, only those invoices on Transgroup
forms, based on Transgroup bills of lading, are at issue for purposes of the motions now before
the Court.
Some time in early 2001, executives at Buffets began to suspect that they were
overpaying for shipping. The suspicions of the companys chief operating officer, David
Goronkin, were aroused by a ,000 invoice for shipping 400 pieces of luggage in connection
with a company retreat. Grote Decl. Ex. N (Walsh Dep.) at 29-34; Grote Decl. Ex. R (Holl Dep.)
at 42-44. Goronkin was also concerned about a 6,500 invoice for shipping bags designed to
hold costumes for store mascots an invoice that Clark apparently said, when confronted,
could be reduced by 5,000 if Clark made some phone calls. Grote Decl. Ex. N (Walsh Dep.)
at 34-39; Grote Decl. Ex. G (Nesbit letter) at BUF CLM 0010. Buffets began investigating
Clark and Parsons, see Grote Decl. Ex. G (Nesbit letter), and the matter eventually came to the
attention of the office of the United States Attorney for the District of Minnesota. The U.S.
Attorney filed charges against Clark and Parsons on December 10, 2003, and they pleaded guilty
soon after. See United States v. Parsons, Case No. 0:03-CR-0424 (D. Minn.), Docket Report;
Kain Aff. Ex. B.2 (Parsons plea agreement), Ex. B.3 (Clark plea agreement).
For its part, Buffets filed a claim with its insurance carrier, plaintiff Hartford, to recover
under an employee-theft insurance policy for the losses that resulted from Clark and Parsonss
scheme. Grote Decl. Ex. G (Nesbit letter). Hartford had paid Buffets roughly .6 million under
the employee-theft policy by the time Hartford brought this suit in May 2003. Compl. 9; Pl.
2Buffets originally sued Hartford in the United States District Court for the Northern
District of Georgia. See Buffets, Inc. v. Hartford Fire Ins. Co., Case No. 1:05-CV-0128 (N.D.
Ga.), Docket Report. By order dated April 22, 2005, that court transferred the case to this
district.
- 5 -
Mem. Supp. Mot. S.J. Ex. A (Fish Aff.) 5. Since then, as the result of a separate lawsuit
brought by Buffets against Hartford in 2005, Buffets has recovered roughly .3 million more
from Hartford under the employee-theft policy. See Buffets, Inc. v. Hartford Fire Ins. Co., Case
No. 0:05-CV-0931 (D. Minn.), Docket Report.2
In this suit, Hartford seeks to recover from Clark, Parsons, and Transgroup the roughly
million that Hartford has paid out to Buffets. Hartford, as Buffetss subrogee, stands in
Buffetss shoes and can recover from the defendants to the same extent but only to the same
extent that Buffets could recover if it sued the defendants directly.
Hartfords seven-count complaint features one claim against Clark only (Count 1, for
breach of fiduciary duty), one claim against Parsons and Transgroup only (Count 6, for aiding
and abetting Clarks breach of fiduciary duty), and five claims against all defendants. Count 2
alleges intentional misrepresentation; Count 3 alleges negligent misrepresentation; Count 4
alleges conversion; Count 5 alleges unjust enrichment; and Count 7 alleges civil conspiracy.
Hartford moves for summary judgment against Transgroup alone, and on the question of liability
only, arguing that Transgroup is vicariously liable as a matter of law for the actions of Parsons.
Pl. Mot. S.J. [Docket No. 113].
For its part, Transgroup moves for summary judgment on all claims against it. Def.
Transgroup Mot. S.J. [Docket No. 115]. Transgroup argues that all of Hartfords claims,
whether based on vicarious or direct liability, are time-barred. Def. Transgroup Mem. Supp.
Mot. S.J. (Transgroup S.J. Mem.) at 2, 11, 15, 22 [Docket No. 118]. Transgroup also argues
3Transgroup also asserts offhandedly, without citing any authority, that Hartfords claims
fail because Buffets did not comply with the other claims-related procedures specified in
- 6 -
that Hartfords claims fail as a matter of law to the extent that they are based on vicarious
liability, because Transgroup is not vicariously liable for Parsonss actions. Id. at 22-32.
Finally, Transgroup raises additional defenses to some of Hartfords direct-liability claims. Id. at
32-34.
II. DISCUSSION
A. Standard of Review
Summary judgment is appropriate if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law. Fed. R. Civ. P. 56(c). A dispute over a fact is material only if its resolution
might affect the outcome of the suit under the governing substantive law. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute over a fact is genuine only if the evidence is
such that a reasonable jury could return a verdict for either party. Ohio Cas. Ins. Co. v. Union
Pac. R.R., 469 F.3d 1158, 1162 (8th Cir. 2006). In considering a motion for summary judgment,
a court must assume that the nonmoving partys evidence is true. Taylor v. White, 321 F.3d 710,
715 (8th Cir. 2003).
B. Timeliness
Transgroup argues that because all of Hartfords claims are ultimately based on
overcharges on Transgroup invoices, those claims are untimely in light of the contractual
limitations periods found in the Transgroup bills of lading. Transgroup S.J. Mem. at 11, 17, 22.
The Court agrees.3
Transgroups bills of lading. Transgroup S.J. Mem. at 22 (Hartfords claim thus fails for the
additional reason that Buffets did not comply with Transgroups claims procedures.) The Court
does not address this insufficiently developed defense.
4The list of potentially questionable, and thus re-rated, Transgroup invoices prepared for
Buffets by Rubenstein Logistics Services, Inc., includes invoices dated as late as August 19,
2001. Grote Decl. Ex. M at BUF CLM 0296. The complaint, however, alleges that Transgroup,
through Parsons, provided shipping services to Buffets through May 2001, and that Buffets
discovered the kickback scheme that month. Compl. 16, 29. Whether the last inflated
Transgroup invoice was dated in May 2001 or August 2001 is immaterial for purposes of the
motions before the Court. The Court will therefore generally refer to May 2001 as the ending
date of Parsons and Clarks scheme.
- 7 -
The parties do not dispute that during the relevant time period of 1995 to May 2001,4
every long-distance shipment placed by Buffets with Carr Freight was shipped under an
associated Transgroup-branded bill of lading. The front of each bill of lading features
information about the particular shipment, such as the shipper (i.e., Buffets), the consignee (i.e.,
the intended recipient), the goods being shipped, and the price. The reverse of each bill of lading
includes various terms and conditions governing the shipment. See Santillan Aff. Exs. A & B.
Among the terms and conditions on the reverse of the bills of lading is a provision that
requires shippers such as Buffets to make claims for overcharges directly to Transgroup within a
specified period of time either nine months and nine days (for shipments before June 1998) or
ninety days (for shipments after June 1998). Between 1991 and June 1998, the relevant term
provided:
All claims for overcharges must be made in writing to the home
office of Transgroup Express [in Seattle, Washington] within a
period of nine months and nine days after the date of acceptance of
the shipment by the origin carrier.
Santillan Aff. 8-9 & Ex. B at DOJ-CARR005646. Around June 1998, this term was modified
so that the period for filing claims with the home office was shortened to ninety days.
5Hartford does not argue that the contractual limitations periods are unreasonable, and the
Court accordingly does not address that issue. Further, Transgroup has moved for summary
judgment as to all of Hartfords claims based on the contractual time limits, and Hartford does
not differentiate among its claims in responding to Transgroups motion. Accordingly,
Hartfords claims stand or fall together.
- 8 -
Santillan Aff. 8-9 & Ex. C at DOJ-CARR021125. For the entire period of 1995 to May 2001,
the bills of lading also impose a one-year limitations period on legal actions, providing:
Carrier shall not be liable in any action brought to enforce a claim
unless all claims procedures have been complied with and the
action is brought within one year after the date that carrier
disallowed all or part of the claim.
Santillan Aff. Ex. B at DOJ-CARR005646 & Ex. C at DOJ-CARR021125.
The last Transgroup-branded invoice at issue in this case is dated some time in 2001. It
is undisputed that Buffets never made any claims for overcharges with Transgroups home
office at all, and that Hartford (as Buffetss subrogee) did not file this suit until May 15, 2003
well over one year after the last fraudulent invoice. Transgroup argues that Hartfords claims
in this lawsuit are therefore all untimely.
Hartford makes four arguments in response. First, Hartford argues that the limitations
periods in the bills of lading apply only to contractual claims, not to claims that sound in tort and
in equity (as do Hartfords claims in this case). Pl. Resp. Transgroup Mot. S.J. (Pl. S.J. Resp.)
at 2-3 [Docket No. 135]. Second, Hartford argues that Transgroup was neither a party to, nor a
third-party beneficiary of, the bills of lading and therefore cannot enforce their terms. Id. at 5-6.
Third, Hartford contends that because Parsons breached his contract with Buffets by
overcharging them, Buffets is excused from complying with the contractual time limits. Id. at 6.
Finally, according to Hartford, the contractual limitations periods are tolled because of Clarks
fraudulent concealment.5 Id. at 4, 6. The Court addresses each argument in turn.
- 9 -
First, according to Hartford, it is axiomatic that the time limits in the bills of lading,
because they are found in a contract, apply only to contractual claims. Id. at 3. If this
proposition were indeed axiomatic, Hartford should have been able to cite some authority
supporting it. Hartford has cited no such authority. And Hartford is in fact mistaken. Parties
can, by contract, specify that contractual and noncontractual claims are subject to the same
limitations period, just as they can specify that contractual and noncontractual claims are subject
to arbitration. See, e.g., Maxcess, Inc. v. Lucent Techs., Inc., 433 F.3d 1337, 1343 (11th Cir.
2005) (finding, under New York Law, that a shortened [contractual] limitations period covers
both claims arising in contract law and in tort law where the contractual language clearly
covers any action or proceeding, and is not limited to contractual or tort claims); Maldonado
v. PPG Indus., Inc., 514 F.2d 614, 616 (1st Cir. 1975) (holding that arbitration clause that
provide[s] for arbitration of any controversy or claim arising out of or relating to this
Agreement or the breach thereof . . . covers contract-generated or contract-related disputes
between the parties however labeled: it is immaterial whether claims are in contract or tort).
The Transgroup bills of lading require that [a]ll claims for overcharges all claims,
not just contractual claims be made to Transgroup within a given time period (either nine
months and nine days, or ninety days), and shippers have a year from the denial of those claims
to file suit. Santillan Aff. Ex. B at DOJ-CARR005646, Ex. C at DOJ-CARR021125 (emphasis
added). This language is broad enough to cover Hartfords claims in this case, all of which
(however styled) are claims for overcharges that is, claims that arise out of the inflated
Transgroup invoices generated by Parsons, approved by Clark, and paid by Buffets. Hartford
has not even attempted to explain why its claims whether grounded in the law of contract, the
- 10 -
law of tort, or something else should not be considered claims for overcharges within the
meaning of the bills of lading. The Court therefore finds, as a matter of law, that Hartfords
claims in this case are claims for overcharges that come within the scope of the time
limitations in the bills of lading.
Second, the Court also rejects, as a matter of law, Hartfords argument that Transgroup
cannot rely on the limitations provisions in the bills of lading because Transgroup is not a party
to the bills of lading. Two representative bills of lading in evidence, one from 1995 and one
from 2001, feature Transgroups name prominently, exclusively, and repeatedly. Santillan Aff.
Ex. B at DOJ-CARR005645-46, Ex. C at DOJ-CARR021124-25. The front of each bill of
lading bears Transgroups name and its Seattle address at the top. The box for selecting shipping
methods (express air, standard air, etc.) is headed Transgroup (U.S./Can). The 1995 form has
a box titled Received By Transgroup Express, and another titled Signed for Transgroup
Express, while the 2001 form has a section headed Received by Transgroup Agent.
Immediately above the box labeled Total Charges is the statement, All charges payable in 15
days in United States Currency to Transgroup Express, Seattle, WA (1995 form, emphasis in
original) or to Transgroup, Seattle, WA (2001 form, emphasis in original).
The reverse of the bill of lading is entitled Terms & Conditions of Contract and further
emphasizes the relationship between Transgroup and the shipper. Three parties are named in the
terms and conditions: the shipper, the carrier, and Transgroup. The term carrier is
undefined, but some portions of the bill of lading imply that the carrier is Transgroup itself.
For instance, as noted above, the bill of lading specifies that claims for overcharges must be
made to the home office of Transgroup. Similarly, claims for damage or loss must also be
6Transgroup describes itself as a transportation logistics service provider in its briefing.
Transgroup S.J. Mem. at 7. Transgroups president, however, describes the company as a
freight forwarder, which appears to be a more apt description. Kain Aff. Ex. B5 (Lee Dep.)
at 38 (Transgroup is a freight forwarder.). As one court has explained, a freight forwarder
has a dual nature. Gulf & W. Indus., Inc. v. Old Dominion Freight Line, 633 F. Supp. 688, 691
n.1 (M.D.N.C. 1986). With respect to shippers, a freight forwarder is like a carrier because it
accepts shippers packages for transport; with respect to carriers, a freight forwarder is like a
shipper because it places with the carriers for transport packages that originate with the freight
forwarders customers (the original shippers). Id.
- 11 -
reported to the home office of Transgroup. The bill of lading provides further that [c]arrier
shall not be liable in any action brought to enforce a claim unless all claims procedures have
been complied with and the action is brought within one year after the date that carrier
disallowed all or part of the claim. (Emphasis added.) Taken together, the requirement that
claims be made to Transgroups home office, which presumably allows or disallows claims, and
the requirement that lawsuits over claims be filed within a year after carrier disallowed the
claim, suggest that Transgroup is the carrier.6
Even if Transgroup is not the carrier, however, the bill of lading is plainly a contract
between the shipper and Transgroup. See A.A. Metcalf Moving & Storage Co. v. N. St. Paul-
Maplewood-Oakdale Sch., 587 N.W.2d 311, 317 (Minn. Ct. App. 1998) (A bill of lading is a
basic transportation contract and its terms and conditions bind the shipper and carrier.). The
only other possible party to the bill of lading is the carrier. But the bill of lading does not
identify the carrier by name, and it does not define the term carrier sufficiently to identify,
with respect to a particular shipment, anyone other than Transgroup as the carrier. Further, the
bill of lading requires that the shipper render performance i.e., payment directly to
Transgroup, and refers to the home office of Transgroup. If the shipper does not pay
Transgroup, Transgroup has a breach-of-contract claim against the shipper. Conversely, if
7Because the Court finds that Transgroup is a party to the bills of lading, it does not
address whether Transgroup is a third-party beneficiary of the bills of lading. The Court also
does not address whether the carrier is a third-party beneficiary of, or an additional party to,
the bills of lading, which are contracts between the shipper and Transgroup.
- 12 -
Transgroup overcharges the shipper, the shipper has a breach-of-contract claim against
Transgroup. Because Transgroup is a party to the bills of lading, Transgroup is entitled as a
matter of law to rely on the contractual provisions in those bills of lading.7
Third, the Court also rejects Hartfords argument that by overcharging Buffets,
Transgroup breached its contract with Buffets and therefore cannot rely on the contractual time
limits in the bills of lading. On its face, Hartfords argument seems implausible. Carriers surely
have the legal right to establish reasonable procedures for filing claims for overcharges. In
Hartfords view, though, such procedures could never be effective, because any overcharge
breaches the contract, and thus any overcharge automatically renders invalid the procedures for
filing overcharge claims. Under the logic of Hartfords position, a clause requiring that
allegations of breach of contract be arbitrated would also be ineffective, because, if the contract
were breached, the arbitration clause would be rendered invalid. Not surprisingly, Hartford has
not cited any authority supporting its position.
Hartford is correct that, as a general proposition, when one party breaches a contract, the
other partys return performance is excused. See 8 Dunnell Minn. Digest Contracts 12.00 (5th
ed. 2003). But this does not mean, as Hartford would have it, that the entire contract evaporates
when one party breaches it. Rather, one partys breach excuses the other partys return
performance in this case, Transgroups overcharges excuse (at least partly) Buffetss duty to
pay for shipments. But the balance of the contract terms remain in effect. Cf. HemoCleanse,
Inc. v. Phila. Indem. Ins. Co., 831 N.E.2d 259, 263 (Ind. Ct. App. 2005) (observing that an
- 13 -
arbitration provision is valid and binding even if the party seeking to compel arbitration may
have breached the contract); see also Marr Ents., Inc. v. Lewis Refrigeration Co., 556 F.2d 951,
954 n.2 (deeming unworthy of comment plaintiffs argument, in breach-of-contract suit, that
because [defendant] committed a material breach of the contract it is not entitled to rely on the
[contractual] provisions restricting [plaintiffs] right to sue for recovery of consequential
damages). Accordingly, Buffets was contractually required to make claims for overcharges
within the time limits specified in the bills of lading.
Finally, the Court rejects as a matter of law Hartfords argument that the contractual time
limits in the bills of lading were tolled by fraudulent concealment. First, the Court doubts
whether Transgroups overcharges were concealed from Buffets by Transgroup. Buffetss
shipping and warehouse manager Clark knew all about the overcharges because he and
Parsons orchestrated the kickback scheme. Hartford may be able to argue that any limitations
period applicable to its claims against Clark was tolled by Clarks fraudulent concealment.
Indeed, Hartfords fraudulent-concealment argument rests on the premise that it was Clark who
concealed the kickback scheme. Pl. S.J. Resp. at 4 (As an employee, Clark was obligated not to
steal from Buffets. As a fiduciary, his mere silence is sufficient to toll the limitations period.).
But it is quite a different matter to argue that Transgroup fraudulently concealed its overcharges
from Buffets when those overcharges were known to Clark.
The Court need not decide, however, whether Clarks knowledge of the overcharge
scheme forecloses Hartfords fraudulent-concealment argument, because the undisputed facts
show that Buffets was not diligent in uncovering Transgroups overcharges. For a court to find
that a defendants fraudulent concealment has tolled a limitations period, a plaintiff must
- 14 -
demonstrate, among other things, that the concealment could not have been discovered sooner
by reasonable diligence on his part and was not the result of his own negligence. Wild v. Rarig,
234 N.W.2d 775, 795 (Minn. 1975). In this case, the undisputed evidence shows that for a
period of about six years, no one at Buffets bothered to look over Clarks shoulder. Grote Decl.
Ex. R (Holl Dep.) at 39-42; Grote Decl. Ex. S (Arthur Andersen LLP report) at B-TM-0021
(The warehouse manager [Clark] had expanded his roles and responsibilities . . . and there was
little or no monitoring of this employees activities.). It was not until early 2001, when
Buffetss chief operating officer saw a ,000 bill for shipping some luggage, that anyone in
Buffetss management paid any attention to Clarks activities. Grote Decl. Ex. R (Holl Dep.) at
42-44; Grote Decl. Ex. N (Walsh Dep.) at 29-35. An outside auditors report concluded, in
November 2001, that Buffets had inadequate internal controls over its purchasing, warehouseinventory,
and accounts-payable systems and processes. Grote Decl. Ex. S (Arthur Andersen
LLP report) at B-TM-0020 to -0021. In contrast to this overwhelming evidence of Buffetss lack
of diligence, Hartford has offered nothing that would permit a jury to find that Buffets exercised
reasonable diligence or that would contradict Transgroups contention that, had Buffets
exercised reasonable diligence, it would have uncovered the fraud long before 2001. Hartfords
fraudulent-concealment argument necessarily fails.
C. Vicarious Liability
Hartford has moved for summary judgment on liability on Counts 2 to 7, arguing that
Transgroup is vicariously liable for the actions of Parsons, and that there is no dispute of fact
over whether Parsons (with Clarks connivance) unlawfully overcharged Buffets. In light of the
Courts finding that Hartfords claims are time-barred, the Court denies Hartfords motion.
- 15 -
The Court notes briefly, however, that the parties seem to have overlooked the key blackletter
law in briefing the vicarious-liability issues. Hartford frames its entire argument on
vicarious liability in terms of the purported agency relationship between Transgroup and Parsons
(the owner of Carr Freight). Pl. S.J. Mem. at 4-19. In fact, for Transgroup to be held vicariously
liable for Parsonss actions, Hartford would have to establish that Carr Freight was
Transgroups agent, and that Parsons was Transgroups subagent. A subagent is a person
appointed by an agent to perform functions that the agent has consented to perform on behalf of
the agents principal and for whose conduct the appointing agent is responsible to the principal.
Restatement (Third) of Agency 3.15 (2005); see also Restatement (Second) of Agency 5
(1958); Wolfson v. Beris, 295 N.W.2d 562, 565 (Minn. 1980) (citing Restatement (Second) of
Agency 5(1)); In re Natl Audit Def. Network, 332 B.R. 896, 920-21 (Bankr. D. Nev. 2005)
(discussing agency and subagency).
Given the language in Transgroups bills of lading, the nature of the Transportation
Services Agreement between Transgroup and Carr Freight, and the fact that Carr Freights
customers, including Buffets, paid Transgroup directly, it is likely that Hartford could establish
that Carr Freight was an actual agent of Transgroup. And given that Carr Freight is a
corporation that can only act through individuals, it is likely that Parsons was Transgroups
subagent. See Restatement (Third) of Agency 3.15 cmt. b (2005) (When an agent is itself a
corporation or other legal person, its officers, employees, partners, or members who are
designated to work on the principals account are subagents.). The Court does not, however,
reach the merits of these questions.
D. Direct Liability
- 16 -
Hartfords direct-liability claims, like its vicarious-liability claims, are time-barred for
the reasons given above. The Court also notes that Hartford plainly abandoned some of its
direct-liability claims in responding to Transgroups summary-judgment motion. Specifically,
Transgroup argues that Counts 2, 4, 6, and 7 of Hartfords complaint, to the extent that they are
based on a theory of Transgroups direct liability, fail as a matter of law based on the absence of
evidence of culpable action by Transgroup itself. Transgroup S.J. Mem. at 32-34. In response,
Transgroup acknowledges that Counts 2, 6, and 7 are based only on a theory of vicarious
liability. Pl. S.J. Resp. at 18-19. Accordingly, Counts 2, 6, and 7 are dismissed to the extent that
they assert direct-liability claims against Transgroup for the additional reason that those directliability
claims have been abandoned.
ORDER
Based on the foregoing and on all the files, records, and proceedings herein, the Court
GRANTS defendant Transgroup Express, Inc.s motion for summary judgment [Docket No. 115]
and DENIES plaintiffs motion for summary judgment [Docket No. 113].
Accordingly, with respect to defendant Transgroup Express, Inc., Counts 2 through 7 of
the complaint are DISMISSED WITH PREJUDICE AND ON THE MERITS.
Dated: September 4 , 2007 s/Patrick J. Schiltz
Patrick J. Schiltz
United States District Judge
 

 
 
 

  What day were you injured?

  / /


  What caused your injuries?
Traffic/Bicycle Accident
Work-Related Injury
Wrongful Death
Dog Bite
Slip and Fall
Other:


  How have your injuries affected

  your life?

 


  What kinds of medical care
  professionals have you seen?

 


  What has your treatment cost?

 

  Is Insurance Involved?
My insurance may cover
        this.

Someone else's insurance
        may cover this.

I already filed a claim.
I rejected a settlement
        offer.

I accepted a settlement
        offer.

  Were there any witnesses?
Bystanders Witnessed This.
Police Responded and Filed
        a Police Report

Police Responded but Did
        Not File a Police Report


 

 

          By visiting this page or clicking the
  "submit" button above, you agree
  that you have read and accept this   "disclaimer".
 
Copyright © Michael E. Douglas, Attorney at Law, Saint Paul MN. All Rights Reserved.
Minnesota Law Firm representing Personal Injury, Car / Auto Accident, Workers Compensation, Medical Malpractice, Social Security Disability claims.
Dedicated to Injured Workers, Victims of Negligence, Car Accidents, Victims of Fraud, and those in need of legal assistance.