Michael A. Ward; Kimberly Ward v. ALLIED VAN LINES, INCORPORATED, a Delaware corporation

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
 MICHAEL A. WARD; KIMBERLY
WARD,
Plaintiffs-Appellees,
v.
ALLIED VAN LINES, INCORPORATED, a
Delaware corporation; ACADEMY,
INCORPORATED, d/b/a Academy
Moving & Storage, d/b/a
Academy/Allied Moving & Storage, No. 99-1338 a California Corporation; J.D.
CARTON & SON, INCORPORATED, a
New Jersey corporation; SAMUEL
SMITH,
Defendants-Appellants,
and
NORFOLK SOUTHERN RAILWAY
COMPANY,
Defendant. 

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 MICHAEL A. WARD; KIMBERLY
WARD,
Plaintiffs-Appellees,
v.
ALLIED VAN LINES, INCORPORATED, a
Delaware corporation; ACADEMY,
INCORPORATED, d/b/a Academy
Moving & Storage, d/b/a
Academy/Allied Moving & Storage, No. 99-1746 a California Corporation; J.D.
CARTON & SON, INCORPORATED, a
New Jersey corporation; SAMUEL
SMITH,
Defendants-Appellants,
and
NORFOLK SOUTHERN RAILWAY
COMPANY,
Defendant. 
Appeals from the United States District Court
for the Eastern District of North Carolina, at Raleigh.
Terrence W. Boyle, Chief District Judge.
(CA-96-886-5-BO)
Argued: April 7, 2000
Decided: November 2, 2000
Before WILLIAMS, MICHAEL, and KING, Circuit Judges.
Affirmed in part, reversed in part, and remanded by published opin-
ion. Judge Michael wrote the opinion, in which Judge Williams and
Judge King joined.
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COUNSEL
ARGUED: Gregory Charles York, MORRIS, YORK, WILLIAMS,
SURLES & BARRINGER, L.L.P., Charlotte, North Carolina, for
Appellants. Barry Sidney Cobb, YATES, MCLAMB & WEYHER,
L.L.P., Raleigh, North Carolina, for Appellees. ON BRIEF: Anna L.
Baird, MORRIS, YORK, WILLIAMS, SURLES & BARRINGER,
L.L.P., Charlotte, North Carolina, for Appellants. R. Scott Brown,
YATES, MCLAMB & WEYHER, L.L.P., Raleigh, North Carolina,
for Appellees.
OPINION
MICHAEL, Circuit Judge:
This case arises under a federal statute, known as the Carmack
Amendment, which makes motor carriers liable as virtual insurers for
loss or damage to the goods they transport. See 49 U.S.C.
§ 14706(a)(1) (1997) (amending and recodifying 49 U.S.C.
§ 11707(a)(1) (1994)). A Norfolk Southern Railway Company (Nor-
folk Southern) train hit and wrecked a moving van carrying the
household goods of Michael and Kimberly Ward. To recover for their
damages, the Wards sued Allied Van Lines, Inc. and several of its
agents (the Allied defendants or Allied), asserting claims under the
Carmack Amendment and other theories. The Wards also sued Nor-
folk Southern for negligence. The Wards settled with the railroad
before trial and obtained a jury verdict for money damages on their
Carmack Amendment claim against the Allied defendants. The first
issue on appeal is whether the Allied defendants are entitled to a set-
off for the pretrial settlement the railroad paid to the Wards. We hold
that a setoff is required, and we reverse the district court on that point.
On the second issue, relating to attorneys’ fees, we affirm the award
of fees to the Wards.
I.
Michael Ward worked for Mitsubishi Electronics America in Mor-
ristown, New Jersey. In September 1994 the company transferred
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Ward, as part of a job promotion, to its facility in Cary, North Caro-
lina. Mitsubishi had a standing contract with Allied under which
Allied packed and moved the household property of Mitsubishi
employees who were transferred to new locations. An Allied moving
van arrived at the Wards’ New Jersey residence on September 16,
1994, and the carrier completed packing and loading in a couple of
days. The loaded van never made it to the Wards’ new house, how-
ever. In the early evening of September 22, 1994, the moving van got
stuck on a railroad crossing in Morrisville, North Carolina, within a
few miles of its destination. While the van was stuck, a Norfolk
Southern train rammed into its side, demolishing it and destroying or
damaging almost all of the Wards’ household property.
The Wards filed a claim with Allied for their loss, but the matter
could not be resolved. The Wards then sued the Allied defendants and
Norfolk Southern, asserting a variety of state law and Carmack
Amendment claims against the Allied defendants and a negligence
claim against Norfolk Southern. When the dust settled after disposi-
tive motions, two claims remained: the Carmack Amendment claim
against the Allied defendants and the negligence claim against the
railroad. The Wards settled their claim against Norfolk Southern for
$40,000 shortly before trial.
At trial on the Carmack Amendment claim against the Allied
defendants, the Wards sought $314,000 in damages. The jury returned
a $207,000 verdict in favor of the Wards. The district court entered
judgment for the Wards in the amount of $187,000, after applying a
credit for a $20,000 advance Allied had made to them shortly after the
accident. The district court denied the Allied defendants’ motion for
an additional setoff of $40,000, representing the settlement paid by
Norfolk Southern to the Wards. Finally, the district court awarded the
Wards costs of $3,104.08, attorneys’ fees of $40,987, and prejudg-
ment interest on the $187,000 damage award. The Allied defendants
appeal the district court’s orders denying the $40,000 setoff and
granting the Wards attorneys’ fees.
II.
The Allied defendants first argue that the district court erred in
denying them a setoff or credit for the $40,000 settlement payment
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that Norfolk Southern made to the Wards prior to trial. This issue
presents a question of law that we review de novo. See Deans v. CSX
Transp., Inc., 152 F.3d 326, 329 (4th Cir. 1998).
The Carmack Amendment was enacted in 1906 as an amendment
to the Interstate Commerce Act of 1887. See Act of June 29, 1906, ch.
3591, 34 Stat. 584. The Amendment makes a carrier liable "for the
actual loss or injury to the property" it transports. 49 U.S.C.
§ 14706(a)(1) (1997).1 Congress enacted the Carmack Amendment
"to create a national scheme of carrier liability for goods damaged or
lost during interstate shipment under a valid bill of lading." Shao v.
Link Cargo (Taiwan) Ltd., 986 F.2d 700, 704 (4th Cir. 1993). The
Carmack Amendment preempts a shipper’s state and common law
claims against a carrier for loss or damage to goods during shipment.
See id. at 705.
The setoff issue before us today cannot be decided by looking at
the text of the Carmack Amendment. Federal case law does not pro-
vide the answer either. Nevertheless, the following two Carmack
Amendment cases discussing setoff are worth mentioning, even
though they do not control our decision. In the first case, Oak Hall
Cap & Gown Co. v. Old Dominion Freight Line, Inc., 899 F.2d 291
(4th Cir. 1990), our court allowed a setoff against a Carmack Amend-
ment award, but the facts are distinguishable. In Oak Hall a shipment
of academic gowns was damaged by smoke when vandals set a fire
in the back of the carrier’s parked semitrailer. The shipper, a gown
company, immediately pressed the carrier "to try and fix the gar-
ments" by having them cleaned. Id. at 293. When the cleaning was
finished, the gown company maintained that the gowns still smelled
of smoke, and it sued the carrier under the Carmack Amendment for
the value of the goods. After a bench trial the district court awarded
the gown company damages equal to the replacement cost of the
gowns, less a setoff for the amount spent by the carrier in attempting
1At the time of the accident in this case, the Carmack Amendment was
codified at 49 U.S.C. § 11707(a)(1) (1994). Thereafter, the Interstate
Commerce Commission Termination Act of 1995, Pub. L. No. 104-88,
109 Stat. 803, 907-08, amended and recodified the Carmack Amendment
at 49 U.S.C. § 14706(a)(1). The language imposing carrier liability was
not changed.
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to clean them. We affirmed the setoff because the carrier, to its finan-
cial detriment, had relied on the gown company’s representation that
the carrier should promptly pursue the cleaning option because the
gown company "needed to know soon" whether the gowns would be
marketable in the upcoming spring season. Id. at 296 (applying the
principle that "a party which relies to its detriment on a [representa-
tion] may receive a setoff in damages equal to the amount expended
in reliance"). Oak Hall thus allowed the carrier to receive a setoff, but
the reliance theory upon which the setoff was based is not applicable
here.
The Wards cite a second Carmack Amendment case, Anton v.
Greyhound Van Lines, Inc., 591 F.2d 103 (1st Cir. 1978), in support
of the district court’s decision to deny the Allied defendants’ motion
for a setoff. In Anton the U.S. Air Force engaged a carrier to move
the household belongings of a colonel who was retiring. The goods
were damaged by fire while in transit, and the Air Force paid the col-
onel $10,000 under a federal law that allowed a military department
to pay an employee up to $10,000 for damage to or loss of personal
property incident to her service. The colonel, in turn, assigned to the
government $10,000 of her claim against the carrier. The colonel then
sued the carrier under the Carmack Amendment, and the jury awarded
her $13,405.09 in damages. The carrier moved to reduce the judgment
by $10,000, the amount the Air Force had paid the colonel for her
loss. The district court denied the setoff, and the First Circuit affirmed
by applying the "collateral source rule." The rule is this: when the vic-
tim of a tort receives payment for his injuries from a collateral source,
that is, a source independent of the tortfeasor, the payment should not
be deducted from the damages owed by the tortfeasor. "Insurance pro-
ceeds are the most common collateral source." Black’s Law Dictio-
nary 256-57 (7th ed. 1999). The Anton court reasoned that the Air
Force’s payment under the statute was comparable to an insurance
benefit because the colonel, as claimant, was not required to prove
wrongdoing or negligence, only loss. The court then held that the col-
lateral source rule prevented the carrier from reducing its liability by
deducting what was, in effect, an insurance payment to the victim. See
Anton, 591 F.2d at 110. The colonel was, of course, contractually
obligated to apply a part of her recovery to reimburse the Air Force.
The question is whether Anton supports the Wards’ argument that the
Allied defendants are not entitled to receive a setoff for the money
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Norfolk Southern paid to the Wards. Anton does not help the Wards
because the railroad’s $40,000 payment to them was not akin to an
insurance benefit. Rather, the payment was in settlement of the
Wards’ negligence claim against the railroad. Norfolk Southern was
not a collateral source; it was a tortfeasor.
Thus, there is no answer in the statute or federal case law, and we
must look elsewhere. Because the Carmack Amendment "essentially
adopts the common law of carriers," Millers Mut. Ins. Ass’n v. South-
ern Ry. Corp., 483 F.2d 1044, 1048 (4th Cir. 1973), we may draw
upon principles of common law in arriving at our decision. See Hec-
tor Martinez & Co. v. Southern Pac. Transp. Co., 606 F.2d 106, 108
& n.1 (5th Cir. 1979). At common law a carrier was liable for more
than its negligent acts; it essentially acted as an insurer of the goods
it transported. The Carmack Amendment "codifie[d] the common-law
rule that a carrier, though not an absolute insurer, is liable for damage
to goods transported by it unless it can show that the damage was
caused by (a) the act of God; (b) the public enemy; (c) the act of the
shipper himself; (d) public authority; (e) or the inherent vice or nature
of the goods." Chandler v. Aero Mayflower Transit Co., 374 F.2d
129, 132 n.2 (4th Cir. 1967) (quoting Missouri Pac. R.R. v. Elmore
& Stahl, 377 U.S. 134, 137 (1964)) (internal quotation marks omit-
ted). Because carriers acted as virtual insurers at common law, their
liability was broad.
The common law also recognizes the right of an insurer to be sub-
rogated to any cause of action that its insured has against a third party
with respect to a covered loss. "As a general rule, applicable to insur-
ance and indemnity contracts of all kinds, the insurer, on paying to
the insured the amount of the loss on the property insured, is subro-
gated in a corresponding amount to the insured’s right of action
against any other person responsible for the loss, that is, any person
whose negligent or other tortious conduct caused the loss." Gill v.
Rollins Protective Servs. Co., 773 F.2d 592, 598 (4th Cir. 1985) (cita-
tion omitted), amended on denial of reh’g en banc, 788 F.2d 1042
(4th Cir. 1986). The subrogation right "may be either the right of con-
ventional subrogation—that is, subrogation by agreement between the
insurer and the insured—or the right of equitable subrogation, by
operation of law, upon the payment of the loss." Milwaukee Ins. Co.
v. McLean Trucking Co., 125 S.E.2d 25, 29 (N.C. 1962). The two
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forms of subrogation are equally effective. See DuBoise v. State Farm
Mut. Auto. Ins. Co., 619 P.2d 1223, 1224 (Nev. 1980); E.J. Shambley
v. Jobe-Blackley Plumbing & Heating Co., 142 S.E.2d 18, 20 (N.C.
1965); 16 Couch on Ins. §§ 61:2, 61:29 (2d rev. ed. 1983). Under a
related right an insurer who pays a property insurance claim may, in
the proper circumstances, seek reimbursement from its insured when
the insured settles with or releases a third party responsible for the
loss. See 16 Couch on Ins. § 60:41. When the insurance contract does
not provide for reimbursement, the right may be sustained "upon the
theory that the law will create an implication of a promise to repay
an amount paid as indemnity for damages suffered, when the party,
who caused such damages, has also made good the damages to the
injured party." Hamilton Fire Ins. Co. v. Greger, 158 N.E. 60, 61
(N.Y. 1927). See also Continental Ins. Co. v. Connecticut Natural
Gas Corp., 497 A.2d 53, 59 (Conn. App. Ct. 1985); General Exch.
Ins. Corp. v. Driscoll, 52 N.E.2d 970, 973 (Mass. 1944); 16 Couch
on Ins. § 60:41.
The related rights of subrogation and reimbursement serve to pro-
tect the insurer. They prevent the insured from receiving or retaining
a double recovery (from both his insurer and the wrongdoer) for a sin-
gle harm. See Shipley v. Northwestern Mut. Ins. Co., 428 S.W.2d 268,
270 (Ark. 1968); Marquez v. Prudential Property & Cas. Ins. Co.,
620 P.2d 29, 33 (Colo. 1980); Standard Accident Ins. Co. v. Pellec-
chia, 104 A.2d 288, 292 (N.J. 1954); 16 Couch on Ins. § 61:18. These
rights are rooted in equity and allow for an adjustment among the par-
ties so that a loss is paid by the party who should bear the responsibil-
ity. See Skauge v. Mountain States Tel. & Tel. Co., 565 P.2d 628, 630
(Mont. 1977); Lawyers’ Title Guar. Fund v. Sanders, 571 P.2d 454,
456 (Okla. 1977); 16 Couch on Ins. § 61:18.
This background provides the basis for a decision on the setoff
question. As we said, the Carmack Amendment codifies the common
law rule that carriers are essentially insurers of the goods they trans-
port. Because the Carmack Amendment treats carriers as insurers, we
conclude that carriers should have the benefit of the rights of subroga-
tion and reimbursement that apply to insurers at common law. In the
present case the jury found that the Wards’ total loss was $207,000.
The Wards have already received $40,000 from Norfolk Southern for
its wrongdoing in causing that loss. If the Allied defendants are
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required as virtual insurers to pay the Wards the full $207,000, those
defendants would be forced to shoulder Norfolk Southern’s portion of
the responsibility ($40,000), and the Wards would receive a double
recovery in that amount. To prevent that, the Allied defendants must
be allowed a setoff in the sum of $40,000, subject to one adjustment.
The setoff should be reduced by the amount of fees and expenses rea-
sonably incurred by the Wards in reaching the settlement with Nor-
folk Southern.
III.
The Allied defendants also challenge the district court’s award of
$40,987 in attorneys’ fees to the Wards. We review a fee award under
an abuse of discretion standard. See McDonnell v. Miller Oil Co., 134
F.3d 638, 640 (4th Cir. 1998).
The Allied defendants first assert that the Wards did not meet the
statutory prerequisites for an award of fees in a Carmack Amendment
case. As a preliminary matter, we must decide whether the old fee
provision, 49 U.S.C. § 11711 (1994), or the new one, 49 U.S.C.
§ 14708 (1997), applies. All parties agree that the old version of the
attorneys’ fees statute applies in this case, and we reach the same con-
clusion. We would create a retroactivity problem for the Allied defen-
dants if we applied the new version in this case.
The Wards tendered their household goods to Allied in September
1994, and the new provision governing attorneys’ fees was not
enacted until December 29, 1995. The new fee provision is linked to
a revised scheme for the resolution of claims for loss or damage in
the cartage of household goods. A carrier of household goods is now
required to offer neutral arbitration as a means of settling these dis-
putes, and the carrier must give the shipper notice of the availability
of arbitration "before such goods are tendered to the carrier for trans-
portation." 49 U.S.C. § 14708(b)(2).2 If a claim for damaged or lost
goods is arbitrated to a timely, but non-binding, conclusion, the ship-
per cannot recover attorneys’ fees in a subsequent court action against
2The old statute simply encouraged carriers of households goods to
"establish a program to settle disputes between such carriers and ship-
pers" of those goods. 49 U.S.C. § 11711(a)(1).
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the carrier. See id. § 14708(d). The question is whether the new stat-
ute can be applied to award fees to the Wards because Allied did not
make arbitration, or notice of it, available to the Wards, even though
an arbitration program was not required when the goods were trans-
ported. The answer is so obvious that we can run through the retroac-
tivity analysis rather quickly.
First of all, Congress has not expressly required that the new attor-
neys’ fees provision be given retroactive effect. See Landgraf v. USI
Film Prods., 511 U.S. 244, 280 (1994); Tasios v. Reno, 204 F.3d 544,
547 (4th Cir. 2000). The act that revised the fee provision, the Inter-
state Commerce Commission Termination Act, does include a savings
clause, which says that the "Act . . . shall not affect suits commenced
before the date of the enactment of this Act [Dec. 29, 1995]." 49
U.S.C. § 701 note. This clause, however, does not address the situa-
tion in this case: suit was commenced after the date of enactment, and
attorneys’ fees are being sought in part because of Allied’s conduct
prior to enactment. Because Congress did not say whether the new fee
provision reaches back to cover this situation, we determine whether
the application of the statute to the conduct at issue would result in
"retroactive effects inconsistent with the usual rule that legislation is
deemed to be prospective." Martin v. Hadix, 527 U.S. 343, 357
(1999). Applying the new provision would have a retroactive effect
because it would "impose new duties with respect to transactions
already completed." Landgraf, 511 U.S. at 280. The new provision,
if applied, would impose on Allied the new duties of offering neutral
arbitration and pre-shipment notice of its availability with respect to
the already completed transaction of transporting the Wards’ belong-
ings in 1994. It would be especially unfair to penalize Allied for fail-
ing to notify the Wards about an arbitration program that was not yet
required. In this circumstance, we must apply the presumption against
statutory retroactivity. See Landgraf, 511 U.S. at 273. Accordingly,
the old attorneys’ fees provision (the one in effect at the time of the
accident), 49 U.S.C. § 11711, governs the fee application in this case.
We turn to whether the Wards are entitled to attorneys’ fees under
§ 11711(d), which imposed three requirements on shippers:
In any court action to resolve a dispute between a shipper
of household goods and a motor common carrier . . . con-
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cerning the transportation of household goods by such car-
rier, the shipper shall be awarded reasonable attorneys’ fees
if — (1) the shipper submits a claim to the carrier within
120 days after the date the shipment is delivered or the date
the delivery is scheduled, whichever is later; (2) the shipper
prevails in such court action; and (3)(A) no dispute settle-
ment program approved under this section was available for
use by the shipper to resolve the dispute . . . .
Section 11711(d)(3) must be read in conjunction with § 11711(b)(2),
which required a carrier to give the shipper "notice of the availability
of [any dispute settlement] program . . . before [household] goods are
tendered to the carrier for transportation."
The Allied defendants concede that the Wards met the first two
requirements under § 11711(d) for an award of fees: they filed a
timely claim with Allied, and they prevailed in court on their Car-
mack Amendment claim. The Allied defendants argue, however, that
the Wards fail to meet requirement three because the carrier had a dis-
pute settlement program "available for use" by the Wards. The district
court disagreed. The court found that Allied did not give the Wards
notice of the settlement program. Because the Wards were not given
notice, the district court held that no dispute settlement program was
available to the Wards, and § 11711(d)(3) was satisfied. We agree
with the district court. Allied was obligated to give the Wards notice
of the availability of the settlement program, and their lack of knowl-
edge rendered the program unavailable to them. See Drucker v.
O’Brien’s Moving & Storage Inc., 963 F.2d 1171, 1174 (9th Cir.
1992); Rini v. United Van Lines, Inc., 903 F. Supp. 234, 236-37 (D.
Mass. 1995). Because they satisfied all three requirements of
§ 11711(d), the Wards were eligible for attorneys’ fees.
The Allied defendants argue finally that the district court abused its
discretion by awarding attorneys’ fees without making sufficient find-
ings as to the reasonableness of the award. In addition, although the
Allied defendants concede that the Wards’ fee request was based on
reasonable hourly rates, they argue that the fee award was neverthe-
less unreasonable. Specifically, the Allied defendants claim that (1)
the Wards’ fee application included time spent on claims that did not
go to trial, (2) the application included time spent on the claim against
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Norfolk Southern, and (3) the Wards did not prevail completely at
trial because they sought $314,000 but were only awarded $207,000.
The district court’s order indicates that it considered and rejected each
of the specific arguments raised by the Allied defendants. Moreover,
the court said that a review of the Wards’ fee application revealed that
it was "reasonable within the bounds laid out by" McDonnell v. Miller
Oil Co., 134 F.3d 638, 640 (4th Cir. 1998) (listing the twelve factors
for evaluating applications for attorneys’ fees that we adopted in Bar-
ber v. Kimbrell’s, Inc., 577 F.2d 216, 226 n.28 (4th Cir. 1978)). The
district court considered all of the relevant factors, even though it did
not address each one of them in its order. And, as we just said, the
court considered each objection that the Allied defendants made to the
fee application. The court’s order is sufficiently detailed for us to
review it, and we conclude that the court adequately scrutinized the
fee application and the objections to it. The district court did not
abuse its discretion in awarding attorneys’ fees of $40,987 to the
Wards.
IV.
For the foregoing reasons, we reverse the district court’s order
denying the Allied defendants a setoff for the pretrial settlement paid
by Norfolk Southern to the Wards, and we affirm the order awarding
attorneys’ fees to the Wards. The case is remanded for application of
the setoff in accordance with part II of this opinion.
AFFIRMED IN PART, REVERSED
IN PART, AND REMANDED
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