Q&A: In This Storage War, There Is No Set-Off

Q: We have a customer claiming a set-off against our freight invoice for storage charges incurred because the less-than-truckload carrier failed to pick up the freight on the requested date. The shipper did not pay for any guaranteed or time-exact service.

My contention is that the set-off is unlawful for two reasons: There is never a guarantee of pickup on an exact date in the LTL market/industry unless this service is specially requested and paid for; and we are a broker that is a third party to any claim the customer may have against the carrier.

What say you?

 

A: I say you’re right on both counts. And there’s still a third factor you haven’t mentioned.

What your question amounts to can be broken down into two subparts. First, does the shipper have a valid claim at all? And second, against whom does it have such a claim? Let’s get part two out of the way before we go back to part one.

As you say, in your capacity of broker, you aren’t directly involved in any claim the shipper may have against the carrier. It’s your bill against which the shipper is “setting off,” not the carrier’s. That’s not a proper or legal use of this approach.

Let’s move on to the shipper’s claim against the carrier now. You’re correct in your statement that a scheduled pickup date isn’t enforceable against the carrier. That holds true not only in LTL trucking but also in all modes of transportation. The only exception will arise if the shipper asks (and pays) for guaranteed service, which you say didn’t happen here.

Therefore, the shipper’s claim isn’t valid in the first place, giving it no justification to “set off” against anybody. But for argument’s sake, let’s suppose the shipper did pay for the guaranteed service and thus had a bona fide argument that the pickup should have been made on time. It still wouldn’t have a valid claim.

There are two kinds of damages a shipper may incur from a carrier’s failure to handle its shipment properly. One is direct, or “general,” damages, which Black’s Law Dictionary defines as “such as might accrue to any person similarly injured” — reduction in value of the goods because of loss or damage, that kind of thing. The other is “special,” or “consequential,” damages.

The latter are, according to Black’s, “those which are the actual, but not the necessary, result of the injury complained of, and which in fact follow it as a natural and proximate consequence in a particular case, that is, by reason of special circumstances or conditions.” And the extra storage charges the shipper says it incurred because of the carrier’s tardiness clearly fall into that category.

Would every shipper incur such charges? Of course not. A shipper who was dispatching out of its own premises, for example, wouldn’t pay an extra dime for the lateness. Indeed, many public warehouses would be prone to forgive charges based on the shipment sitting on its loading dock for another day. So the charges were peculiar to this shipper and this particular set of circumstances.

The rule is that “notice must be given (to the carrier) in order to recover special damages, or the evidence must show that the carrier had knowledge of the special circumstances, and this notice or knowledge must be at or before (the time that) the shipment is made”; M. P. R. R. v. S. L. Robinson Co., 65 S.W.2d 902.

As I explain in my Manager’s Guide to Freight Loss and Damage Claims (Fort Valley, Va.: Loft Press, 3rd ed., 2003), “a carrier is entitled to have a realistic idea of the economic consequences should he lose, damage or delay freight tendered him for transportation.” The carrier has (or should have) a pretty clear notion of what the freight’s worth, which satisfies this test for general damages. But it isn’t necessarily privy to any special circumstances that may result in extraordinary damages — such as the extra storage charges — in specific cases.

You give no hint that the shipper may have provided this advance notice to you or the carrier, and even if it had sprung for guaranteed service, that still wouldn’t have satisfied the legal test. Accordingly, the shipper’s late-pickup claim can’t stand up.

All things considered, the shipper’s feet are on a cloud here, not solid ground. It has no legal basis to sustain any set-off against the freight bill.

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.

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