Flawed policies for concealed damage

Flawed policies for concealed damage

Copyright 2008, Traffic World, Inc.

Q:

We had a shipment that was received on a clear delivery receipt.

However, there was in fact damage, which was reported by the consignee on the same day to two other sources both verbally and in writing.

The motor carrier is denying my claim based on the fact that it was concealed damage and I (the shipper) did not file the claim within 15 days of the delivery date. So I set out to show "reasonable evidence" that the damage did in fact occur prior to delivery. I also asked them for a copy of their claims policy.

What I got in return from the carrier''s claims supervisor was a copy of your article from April 17, 2000, issue ("Claims for Concealed Damage"). They do not have a written policy regarding their claims.

Is it fair for them to hold me to any sort of standard when they have not explicitly told me what their policy is or isn''t? They are using your article as their "policy."

I find that rather ridiculous and unreasonable. I cannot be held responsible for something that does not exist between me and my carrier.



A:

You should have said they''re misusing my article as their policy, because they are.

I had to dig through my (rather poorly organized) files to get at my copy of this old article, and it doesn''t say what they are contending it does.

In that article it was my questioner who spoke about an "industry standard" that concealed damage be reported to the carrier within 15 days of delivery. I simply didn''t dispute the contention, pointing out that this 15-day "rule" is incorporated in, among other things, the National Motor Freight Classification.

But even the NMFC provision states only that concealed damage should be reported within the 15 days, not that claim must be filed in that period. You say your consignee contacted "two other sources both verbally and in writing" within that period; if either of them was the carrier that satisfies the nominal requirement.

I say "nominal" because even in its NMFC incarnation it''s less a requirement than a declaration of intent. Under the Carmack Amendment (49 U.S.C. ? 14706) carriers may not allow a time of less than nine months following delivery for the filing of a claim, and the law doesn''t distinguish between concealed and visible damage.

So the 15-day standard is nothing more than a carrier statement to this effect: "Shippers, if you don''t let us know about concealed damage within 15 days we''re going to assume the damage occurred after delivery, and you''ll play hob convincing us otherwise."

Actually, I don''t think such a statement is all that unreasonable, do you? Sure, 15 days is a little arbitrary, but don''t they have to draw the line somewhere? The longer the shipment sits around the consignee''s facility the more opportunity there is for post-delivery damage to occur, and carriers are simply emphasizing that they won''t be responsible for that.

Nor is it the sort of thing to which the carrier needed to obtain your agreement ahead of time. Carriers are free to pay or decline claims as they choose, with or without a "policy." Whether they can sustain a declination in law is an entirely different matter, but no law can compel them to make voluntary payment.

Which leaves you with three possible courses of action. One is what you say you''re already doing, try to persuade the carrier that the damage did indeed occur in transit. Even if the damage wasn''t reported to them in a timely manner you can try to get evidence that it was mentioned to somebody else early on, so there''s no chance it occurred long afterwards.

And you may also have other evidence you can muster. Certain types of damage can reasonably be ascribed only to the hazards of over-the-road movement, the consignee''s own records may reflect contemporaneous discussion of the damage, etc.

If this fails you can take the carrier to court. It can spout off all it likes about its 15-day policy, but so long as you got your formal claim in within the nine-month limit you have two years and a day following the carrier''s written declination to sue and its "rule" carries no judicial weight whatever.

Your third option, only to be used if you''re absolutely certain that not only is your claim valid but you can prove that in court if you must, is set-off. That is, unilaterally deduct the amount of the claim from freight charges (or any other money) that you owe the carrier.

I''m always hesitant to suggest this, since so many shippers abuse it. I know some who simply set off against carriers without even giving them a chance to pay (or decline) claims, which I find both rude and stupid.

The "rude" part is obvious. The "stupid" is because the carrier is free to sue you for the unpaid charges and, if your claim isn''t upheld in court, you can wind up liable not only for the freight but potentially sizeable late-payment penalties plus legal fees.

So only take this tack if you''re really sure. But it does seem possibly applicable when the carrier''s declination is for a reason as silly and misguided as this one''s seems to be.



-- 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 536-page compiled edition of past Q&A columns, published in 2001, at $80 plus shipping.