CHASSIS LIABILITY OFTEN A COMPLEX ISSUE

CHASSIS LIABILITY OFTEN A COMPLEX ISSUE

Who may be liable if an equipment failure of the chassis in a tractor-trailer rig causes an accident?

In many instances, the tractor portion of a tractor-trailer is owned by the driver. However, the chassis and container are usually owned by one or more ocean-shipping companies.As a result, when the driver has to make a delivery, he drives his tractor to a terminal where he picks up both a container and a chassis.

The liability question the arrangement raises is a logical one.

To distribute liability, a chassis pooling agreement or chassis interchange agreement is customarily used in the shipping industry. (An interchange occurs when one carrier gives possession of its equipment to another for use in the transportation of cargo.)

These agreements allow signatories to pool their chassis so that they may be used by any member, or to transfer equipment owned by one carrier to another so that cargo can be efficiently transported.

Chassis pooling agreements typically require one signatory, called a pool manager, to coordinate interchange agreements with third-party carriers. Each member is required to have a certain number of chassis at its designated pool location.

The members agree that both the pool manager and the owner of the chassis are to be indemnified from any legal liability for loss or damage arising out of the use, operation, maintenance or possession of the chassis during the use period of the responsible member. (However, the pool manager would often remain liable for latent structural defects.)

The signatories typically base the distribution of liability upon who has possession of the chassis at any particular time.

For example, in the case of Clement vs. Consolidated Rail Corp., American President Lines entered into several transportation/interchange contracts with Pennsylvania Truck Lines and Consolidated Rail (Conrail).

Under PTL's interchange agreement with APL, the trucking company took possession of a chassis in order to take it to Conrail's terminal.

Thereafter, PTL interchanged the chassis with Conrail and moved it alongside a train in the terminal.

While PTL's employee Thomas Clement was operating a pickup truck in Conrail's terminal, he drove into the chassis and was killed.

Clement's estate alleged that APL was responsible because it did not disclose that its chassis was defective; it did not properly service and maintain the chassis; it did not adequately ''reflectorize'' the chassis with illuminating paint so that it was more visible at night; and it was negligent with regard to the movement or placement of the chassis in the terminal.

The Uniform Intermodal Interchange Agreement, a national contract that governs the interchange of transportation equipment, was in effect between the parties. It stated that:

The user, while in possession of interchange equipment, releases and agrees to hold harmless the owner . . . from and against any and all loss, damage, liability, cost or expenses suffered or incurred . . . arising out of or connected with injuries or death of any persons . . . arising out of the user's use, operation, maintenance or possession of interchange equipment.

Conrail and APL were both signatories to the agreement and Conrail conceded it was in possession of the chassis. Conrail was required to indemnify and hold harmless APL with regard to any damages arising out of its use, operation, maintenance and possession of the chassis.

The court held, however, that the ''reflectorization'' of the chassis was a requirement that concerned the physical characteristics of the chassis and therefore did not arise out of the use, operation, maintenance, or possession of the chassis.

As a result, APL was not entitled to indemnification for that claim, but was entitled to indemnification for the other use-related claims.

The Clement case provides an excellent example of both the enforceability and the limitations of interchange and chassis pooling agreements.

While they successfully transfer liability to the operator of the chassis for certain liabilities, they will not do so for causes of action that arise from defects in the chassis itself. Those liabilities will likely remain upon the chassis owner or pool manager.