Rli Insurance Company v. All Star Transportation , Inc .

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 15, 2010 Decided June 22, 2010
No. 09-7027
RLI INSURANCE C OMPANY ,
APPELLEE
v.
A LL S TAR TRANSPORTATION , INC ., ET AL.,
APPELLANTS
Consolidated with 09-7112
Appeals from the United States District Court
for the District of Columbia
(No. 1:08-cv-00695-JR)
Paul D. Cullen Jr. argued the cause for appellants. With
him on the briefs were Paul D. Cullen Sr. and Randall S.
Herrick-Stare.
Eric R. Stanco argued the cause and filed the brief for
appellee.

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Before: G INSBURG , R OGERS , and KAVANAUGH , Circuit
Judges.
KAVANAUGH , Circuit Judge: The trucking industry
consists of three main players: (i) shippers, who typically are
manufacturers sending goods to retailers or others; (ii)
truckers, who transport the goods; and (iii) brokers, who act
as intermediaries between shippers and truckers. When a
shipper needs to send goods, it hires a broker. The broker
arranges for shipment by finding a trucker to transport the
goods. The broker receives money from the shipper and, after
taking a cut for itself, pays the trucker.
The problem at the root of this case is that the broker
sometimes fails to pay the trucker. To protect the trucker, a
fourth player is brought in – the surety. Federal regulations
require brokers to obtain a surety bond – akin to a guarantee –
in the amount of $10,000. Therefore, if a broker does not pay
a trucker, the surety does so, at least up to $10,000.
This case involves Sam’s Transportation Services, a
broker that went into bankruptcy. Sam’s maintained a surety
bond with RLI Insurance Company, a surety. The face value
of the bond was $10,000. Because of Sam’s pending
insolvency, Sam’s failed to pay numerous truckers that it
owed. Some of the truckers filed claims with RLI to recover
payment under the surety bond. RLI refused to pay more than
a total of $10,000 and instituted an interpleader action in
court. The truckers assert that, under the bond, RLI must pay
up to $10,000 on each claim. RLI counters that it need only
pay $10,000 total for all claims combined.
We agree with RLI, and we therefore affirm the judgment
of the District Court.

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I
Sam’s Transportation Services was a broker that
connected shippers and truckers for the shipment of goods.
Sam’s was supposed to receive money from the shippers and
pay it to the truckers. In accordance with federal regulations,
Sam’s obtained a surety bond of $10,000 with RLI Insurance
Company. The bond guaranteed Sam’s obligations to the
truckers in case Sam’s failed to make payment.
After Sam’s failed to make certain payments because of
its insolvency, 68 truckers filed claims with RLI to recover
under the bond. Most of their claims ranged from $350 to
$7800. But together, the claims came to $161,823.50. The
total value of the claims therefore far exceeded the $10,000
face value of the bond.
RLI initiated an interpleader action in U.S. District Court.
Interpleader “allows a party exposed to multiple claims on a
single obligation or property” – such as the $10,000 surety
bond here – “to settle the controversy and satisfy his
obligation in one proceeding.” Commercial Union Ins. Co. v.
United States, 999 F.2d 581, 583 (D.C. Cir. 1993); see also 28
U.S.C. § 1335 (requirements for statutory interpleader). RLI
deposited $10,000 into the registry of the District Court. RLI
asked the court to distribute the sum among truckers with
valid claims. Only seven of the 68 truckers that had filed
claims with RLI bothered to file claims with the court. Those
seven claims totaled $15,060. Six of the seven truckers then
moved to dismiss the interpleader action, arguing that RLI’s
duty under the surety bond was to pay up to $10,000 on each
trucker’s claim, not $10,000 for all claims combined. The
District Court denied the motion. It ordered the court clerk to
pay specified pro rata shares of the $10,000 to the seven

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truckers who had submitted valid claims to the court. Five of
the truckers now appeal.
II
This case turns on whether the face value of the surety
bond limits RLI’s liability for Sam’s default to $10,000 on
each claim or to $10,000 on all claims combined.
The parties apparently have no actual copy of the bond
agreement. But surety bonds must conform to the terms of
their governing statutes and regulations.
The governing statute is not particularly illuminating with
respect to the issue here. It merely states: “The Secretary may
register a person as a broker under section 13904 only if the
person files with the Secretary a bond, insurance policy, or
other type of security approved by the Secretary to ensure that
the transportation for which a broker arranges is provided.
The registration remains in effect only as long as the broker
continues to satisfy the security requirements of this
subsection.” 49 U.S.C. § 13906(b).
The applicable regulation is somewhat more helpful. It
reads: “A property broker must have a surety bond or trust
fund in effect for $10,000.” 49 C.F.R. § 387.307(a). That
text seems to suggest that a bond “for $10,000” imposes a
total liability of $10,000, not a vastly more uncertain and
potentially greater amount.
A number of courts have reached the same conclusion,
albeit implicitly. District courts have adjudicated cases
involving these types of bonds via statutory interpleader. As
explained above, interpleader is only available where there is
a single finite obligation at issue. Thus, those courts

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necessarily assumed that the surety’s liability was limited to a
single amount for all claims combined. See, e.g., Great
American Ins. Co. v. American Freightway Servs., Inc., 2007
WL 3334337 (W.D.N.C. Nov. 5, 2007); Underwriters Ins.
Co. v. ATA Trucking, Inc., 2004 WL 445173 (M.D.N.C. Feb.
26, 2006); Victore Ins. Co. v. Ross Neely Sys., Inc., 757 So. 2d
473 (Ala. Civ. App. 2000).
In any event, the standardized federal form that governs
these surety bonds removes any lingering doubt on the
disputed issue in this case. This form, known as Form BMC
84, was promulgated by the Interstate Commerce
Commission, a predecessor of the Federal Motor Carrier
Safety Administration. See 49 C.F.R. § 387.307(b); Milan
Express Co. v. W. Surety Co., 886 F.2d 783, 787-88 (6th Cir.
1989). Federal regulations require sureties to use the form or
an electronic version of it. See 49 C.F.R. § 387.307(b), (d);
see also 49 C.F.R. § 387.323. The form provides a set of
standard terms and conditions. Those terms say quite plainly
that the face value of the bond is “the sum of $10,000”; that
the surety’s liability is “discharged” when payments under the
bond “amount in the aggregate” to that value; and “in no
event shall the Surety’s obligation hereunder exceed” that
value.
The truckers have no substantive answer to the text of
Form BMC 84, but they object to our even considering it here
on a variety of other grounds. The truckers contend that: (i)
the form is irrelevant because the regulation trumps any
conflicting language the form might contain; (ii) the form
does not have the force and effect of law; (iii) the document in
the record purporting to be Form BMC 84 has not been
authenticated; (iv) the form cannot be taken to indicate the
terms of the bond because no executed copy of the form exists
in the record; (v) the District Court should not have

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considered Form BMC 84 at the motion to dismiss stage
because it was a document outside the pleadings; and (vi) we
should at least remand to permit the truckers an opportunity to
discover whether RLI filed a paper copy of the form.
Those objections have no merit: (i) Form BMC 84 is
consistent with the regulations; (ii) it was promulgated by the
Interstate Commerce Commission; (iii) the form’s content
was authenticated by the District Court, which relied
appropriately on the Form BMC 84 reproduced in the
Matthew Bender appendix of forms, see Clarification of
Insurance Regulation, 3 I.C.C.2d 689, 693 n.3 (1987) (forms
“are printed by the industry”); (iv) federal regulations require
RLI to use the form; (v) at the motion to dismiss stage, the
District Court may consider a document such as Form BMC
84 “where the complaint relies heavily upon its terms and
effect,” Chambers v. Time Warner, Inc., 282 F.3d 147, 153
(2d Cir. 2002) (internal quotation marks omitted); and (vi) the
further discovery the truckers seek is unnecessary as a
practical matter because the truckers already submitted a
FOIA request to the relevant federal agency and found out
that RLI had filed its form electronically, not on paper. See
Tr. of Oral Arg. at 9-10.
* * *
We affirm the judgment of the District Court.
So ordered.

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