Another problem with relying solely on the bills of lading, freight bills and invoices filed by TRM is that the documents, in the absence of other information, do not demonstrate that the rates charged by the carriers in these transactions were proper. Plaintiff has submitted Transport Source's bankruptcy schedule which lists debts to BPI, W-H, Landair, RJR, Reaves and H&V. Although this information may confirm that Transport Source concurred with the rate charged by the carriers, the schedule does not cure the lack of evidence provided to Mr. Carney that the debts to these carriers were incurred in property broker transactions. Furthermore, Mr. Carney testified that he was not even aware of this information prior to July 19, 1993. Tr. 50.
There is yet another and independent ground for the Court to find that First NH through Mr. Carney did not breach its duty to administer and manage the trust fund properly. Mr. Carney informed TRM that additional information was needed to substantiate the Landair, RJR, and Reaves claims, but no additional information was ever provided. While Mr. Agnos testified as to his general practice in similar circumstances, and the fact that he would normally submit affidavits or other documentation if requested, his testimony is entitled to much less weight than Mr. Carney's because Mr. Agnos never worked on the claims at issue in this litigation. Furthermore, the fact is that defendant did request additional documentation through Mr. Carney, but TRM did not provide the documentation requested. Nor is there any evidence that TRM prepared or submitted affidavits explaining that there was no documentation prior to the commencement of this litigation.
Except for the fact that the bankruptcy schedule suggests that Transport Source concurs in the rates charged by TRM's assignors, the documents submitted to the Court suffer from the exact same deficiencies as those submitted to Mr. Carney.
The claims submitted to Mr. Carney by TRM on behalf of Landair, FUR, and Reaves did no more than document a debt. They did not establish a property broker-carrier transaction and they did not demonstrate that the rates charged were proper. Thus, the Court finds that it was reasonable for Mr. Carney to deny the Landair, RJR, and Reaves claims.
Mr. Carney's denial of the BPI and W-H claims after they were disputed by Transport Source is not inconsistent with Mr. Agnos' testimony either. Furthermore, Mr. Carney's denying the claims was not unreasonable conduct for a trust administrator. The BMC-85 agreement does not require the surety to pay disputed claims. It states that the Trustee shall only pay sums which it "in good faith, determines that [Transport Source] has failed to pay and would be held legally liable by reason of [its] failure to perform faithfully its contracts, agreements or arrangements for transportation by authorized motor carriers . . . ." Pl. Ex. 1 P 6. In the case of the BPI claim, Transport Source disputed the claim and produced a copy of a Freight Forwarder contract between Transport Source and BPI. Mr. Carney informed BPI of the dispute and denied the claim. Transport Source disputed the W-H claim on the same basis as the BPI claim. The record does not indicate whether the nature of the W-H dispute was ever communicated to TRM or whether Transport Source submitted any evidence in support of its dispute.
Mr. Agnos testified that, in his experience, in the face of such disputes trustees either commence an interpleader action or recommend that the claimant and trustor litigate the dispute. Tr. 132. Although he acknowledged that interpleader is utilized in some cases, Mr. Carney testified that First NH simply chose not to resort to that method of claims resolution in these cases and that it was up to TRM to try to resolve the dispute either through arbitration or litigation. Thus, there really is no conflict between the testimony of Mr. Carney and that of Mr. Agnos. The Court finds that Mr. Carney's decision not to pay the BPI and W-H claims until the dispute was resolved was reasonable and does not evidence bad faith. The Court also finds that the evidence presented by TRM in this litigation does not establish that the BPI and W-H claims involve a property broker-carrier transaction or demonstrate that the rates charged were proper.
Finally, the H&V claim was not submitted to Mr. Carney prior to this litigation. The Court finds that it involved the transportation of gravel which is exempt from the property broker security regulations. 49 C.F.R. § 1043.1(b).
E. Alleged Conflict Of Interest And Breach Of Fiduciary Duty
Plaintiff presented evidence that Mr. Carney was both the Trust Administrator and a member of the AMTEX Board of Directors, that AMTEX paid Mr. Carney's salary for serving as Trust Administrator out of interest earned on the trust fund, and that AMTEX is composed of property brokers who deposit funds into the trust managed by First NH and administered by Mr. Carney. On this basis, plaintiff alleges that Mr. Carney had a conflict of interest and violated his fiduciary duty. Plaintiff cites the BMC-85 which requires that the Trustee and Trustor:
as evidenced by their signatures to this agreement, acknowledge and certify that (a) said Trustee, neither has nor expects to have any interest, financial, proprietary, or otherwise, whatsoever, in Trustor. . . .
Pl. Ex. 1 P 3.
The Court finds that the triangular relationship between First NH, Mr. Carney and AMTEX does not establish a conflict of interest under BMC-85. No evidence in the record establishes that First NH had a financial or other interest in Transport Source or in AMTEX. Plaintiff has not persuaded the Court that First NH would benefit by protecting the trust funds from eligible carriers. In the case of Transport Source, after all the claims against the trust fund have been resolved, the corpus of the fund will revert back to Transport Source, Tr. 74, and presumably become part of the bankruptcy estate. First NH will receive any outstanding interest on the trust funds. The payment of fees to the trustee out of interest earned on Transport Source's deposit into the trust fund is a standard arrangement and is not suggestive of a conflict of interest. The Court therefore finds that First NH did not violate the provisions of the BMC-85 trust fund agreement.
Similarly, Mr. Carney, who administered the trust managed by First NH and was compensated for his services out of interest earned on the trust fund, had no financial or other interest in Transport Source or AMTEX. The facts that AMTEX is an association of property brokers who have deposited money into the trust fund managed by First NH and that Mr. Carney serves on AMTEX's Board of Directors do not establish a conflict of interest.
Plaintiff's claims that First NH breached its fiduciary duties under the Trust Agreement and was negligent in delegating authority to Mr. Carney are based upon a tort theory that holds insurers liable for the bad faith refusal to pay a claim by an insured. The cases on which it relies recognize that there is a special duty on insurers not to refuse or fail to pay a valid claim by the insured without justification. See, e.g., Washington v. Group Hospitalization, Inc., 585 F. Supp. 517 (D.D.C. 1984). To recover under that tort theory, however, a plaintiff must show that defendant did not have a reasonable basis for denying benefits under the policy and that it knew when it denied the claim that it lacked a reasonable basis or recklessly disregarded its lack of a basis. See Messina v. Nationwide Mut. Ins. Co., 302 U.S. App. D.C. 384, 998 F.2d 2, 4 (D.C. Cir. 1993); Washington v. Group Hospitalization, Inc., 585 F. Supp. at 520. The Court need not address the question of whether this theory extends to the facts of this case in light of its findings that Mr. Carney's denial of TRM's claims was reasonable.
II. CONCLUSIONS OF LAW
1. A property broker is "a person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier." 49 U.S.C. §§ 10102(1); 49 C.F.R. § 1045.2.
2. Property brokers are required to post a surety bond or bank trust deposit in the amount of $ 10,000.00 to ensure that the motor carriers it retains are paid for their services. 49 U.S.C. § 10927(b); 49 C.F.R. § 1045.2.
3. A freight forwarder is a person who:
[provides] transportation of property for compensation and in the ordinary course of business:
(A) assembles and consolidates, or provides for assembling and consolidating, shipments and performs or provides for break-bulk and distribution operations of the shipments;