Forged Paperwork Puts Broker in a Bind

Forged Paperwork Puts Broker in a Bind

Q: My company, a DOT-licensed, bonded and insured transportation broker, is embroiled in a claim scenario that may cost us a good customer and probably the amount of the claim, even though we have no responsibility for the loss other than hiring the wrong carrier.

Three months ago, one of our agents hired a carrier to handle a cross-country shipment of a girth gear with pinion, basically parts of a large kiln. We verified insurance directly with the carrier’s agent and checked the carrier’s safety rating and active authority. The carrier entered into a standard carrier-broker agreement with us.

The parts were loaded per the driver’s instructions, and the driver secured them. A wooden crate containing a pinion was secured on top of other crates. Approximately 80 miles from the origin, the carrier called the customer to advise that the crate carrying the pinion had rolled over, the lid had come off, and the pinion was lost.

I won’t go into the scenario that ensued, but finally I became involved and convinced the driver’s girlfriend (he wouldn’t come to the phone himself) and the customer to deliver the shipment, short the pinion. We then contacted the carrier’s insurance agent and filed a “property loss notice.”

After the shipment was delivered, the customer filed a claim through us with the carrier for the lost pinion and the replacement freight for $8,700. The carrier never responded. We also forwarded the claim to the insurance company.

The claims adjuster wasn’t able to get a statement from the driver, who would only communicate through his co-driver (girlfriend). She said the pinion was probably never shipped in the box, and produced a copy of a delivery receipt that was signed by the receiver as “delivered on time in good condition.” But the copy we got from the customer was noted “pinion not delivered.” The original delivery receipt provided by the carrier to its factoring company shows the notations in different colored ink and handwriting, apparently an altered document. The carrier wouldn’t cooperate or let the claims adjuster talk to the driver.

We then received a letter from the insurer advising that the policy was canceled well before shipment. A copy of the cancellation notice was e-mailed to me with a date of more than a month before we hired the carrier. In other words, the carrier was advised of the cancellation and still produced the certificate and signed the carrier-broker agreement saying he was covered, and the insurance agent still issued the certificate showing coverage in force.

The carrier’s insurer won’t pay, also stating that the loss was a “mysterious disappearance,” that the crate wasn’t properly secured, and, finally, that the packaging was substandard and didn’t meet standards to properly secure the pinion.

I feel like I’m fighting a losing battle and will eventually have to decide whether to pay this claim and collect what I can from my contingency insurance. I’m trying to protect my customer’s interests but feel like I’m the ultimate victim here.

Can you offer a suggestion on what my options are and how to proceed?

A: “Mysterious disappearance,” my foot; thereís no “mystery” about falsehoods and forged paperwork.

If you can keep your customer by doing so, you’re probably best off paying the claim as you suggest. If not, as a broker, you can simply walk away; your customer could theoretically sue you for malfeasance (hiring an uninsured carrier). However, if your story is straight, you have a defense and the money’s too small to support a lawsuit.

And if you pay, you can also sue the carrier if you’re so minded. All you’ll probably do is run it out of business, but, from what you say, it deserves that. And you might even be able to subpoena the close-mouthed driver and his lying girlfriend, which could be fun.

Come on — you know quite well you got worked over by the carrier, the driver and the girlfriend — and maybe the insurance agent, too — and there’s not much you can do about it except what I’ve said.

In your shoes, I’d want to nail their behinds to a wall, but it’ll cost you litigatory dollars to do so.

Though your story says you did your job properly, in future, you might want either to stick to carriers you know or get better proof of insurance. If you demand status as co-insured for purposes of notification, that will do it. Otherwise, though, all I can offer you is my sympathy.

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