***************************************************8
Court Decision : Associates Insurance Vs Gerald's Truck Repair: April 2000
The following is public information that has been obtained from the 15th Judicial District Court in Lafayette Parish, Louisiana,
15th District Court
Docket Number 98-3326-G
Associates Insurance Company, ET AL Vs Gerald's Truck Repair and Towing, Inc.
Lafayette Parish, Louisiana
REASONS FOR RULING
The Plaintiff's (and Defendants in reconvention are insurers, who provided cargo and property damage coverage to a trucking company, Bushwell Transport, Inc (Bushwell), and an independent truck driver, Eliseo Martinez Jr. who was under contract with Bushwell to haul produce with his tractor trailer. On July 5, 1998, Martinez's refrigerated rig, carrying a load of lettuce and cabbage, was involved in an accident on Interstate Highway 10 causing it to leave the roadway, careen up a steep embankment and come to rest over the guardrail on La. Highway 724 where it crosses over Interstate 10 between Duson and Scott, Louisiana.
The Defendant (and Plaintiff in reconvention), Gerald's Truck Repair and Towing Inc, (Gerald's), was called to the scene to recover the rig and its cargo. The Insurer's refused to pay Gerald's fees contending that they were excessively high and filed this action to seize the rig from Gerald's storage. Gerald's reconvened for payment of its fees for the recovery, transport, and storage of the tractor, trailer and cargo. Only the reconvention demand was tried before the court and is the subject of these reasons for ruling.
FACTS
According to the trial testimony of Gerald Arceneaux, the owner of Gerald's, he arrived on the scene about three (3) o'clock on July 5, 1998, in response to a call from the police. He sought to determine whether the call was made according to the rotation schedule routinely used by law enforcement for summoning towing services (termed a "non-consensual" call) or because a vehicle owner had specifically requested his company (termed a " consensual: call). He says that he spoke with Richard Bushwell of Bustle Transport Inc at the scene and that Bushwell had specifically requested Gerald's for the job. Tim Arceneaux, who also worked for Gerald's testified at trial that he was personally acquainted with Richard Bushwell from a previous towing job and also spoke with him at the scene of the accident They discussed the situation facing them, the risks involved in the recovery operation, the danger of losing the cargo from loss of refrigeration and the procedure Gerald's intended to utilize in the recovery operating But they never discussed fees or costs. Richard Bushwell did not testify at trial.
Recovery of the vehicle was hazardous and slow. Several pieces of heavy equipment were used to lift the 40 tons of tractor trailer rig loaded with cargo off the guardrail and to winch it back down the embankment to the shoulder next to Interstate 10. From there it was moved up the shoulder to the roadway and placed on a transport vehicle that carried it to Gerald's storage facility. The entire operation lasted until about nine (9) or ten (10) o'clock in the evening, a total of some six (6) or seven (7) hours. In addition to the actual towing, the recovery included clean-up of the site, repair of the guardrail, ground restoration, off loading fuel from the damaged vehicle, storage of the tractor trailer and trailer for six (6) days and disposal of the cargo.
The cargo of lettuce was originally destined for Houma, Louisiana. After the accident, the refrigeration unit on the trailer was not functioning and could not be repaired until the rig was removed from the guardrail. This portion of the recovery took about four (4) hours, after which the refrigeration unit was repaired and restarted. During this time and until the following day the trailer remained closed to conserve the cold air and preserve the cargo. On July 6th, the day following the accident, Gerald's transferred the cargo into a different trailer and transported it to Houma, where the buyer inspected and rejected it. The ruined cargo was brought back to Gerald's storage and Later disposed of.
At trial Gerald Arceneaux testified that he submitted a final bill for all services performed by Gerald's in the amount of $21,829.50. The insurers contend that these charges are excessive, do not meet the reasonableness test under the doctrine of quantum meruit and constitute unjust enrichment.
APPLICABILITY OF LAFAYETTE CODE OF ORDINANCES
The insurers contend that the towing and recovery of the tractor, trailer, and cargo was governed by the provisions of the Parish of Lafayette Code of Ordinances regulating towing and recovery operators and services, specifically Chapter 22, Section 22-38, which limit's the compensation for towing and recovery $150.00 per hour for each heavy duty piece of wrecker equipment, unless a different compensation is agreed on before the services are performed.
Gerald's correctly argues that the ordinance relied upon by the insurers was not in effect on the dates that the services were rendered, July 5, 6, 7, 1998. It was not until August 4, 1998 that the Lafayette Parish City - Parish Council voted to introduce the ordinance in question, completely revising previous ordinances dealing with towing and recovery services. The ordinance became effective on September 11, 1998.
EXISTENCE OF A CONTRACT
Louisiana Civil Code article 1906 defines a contract as an agreement by two (2) or more parties that creates, modifies or extinguishes obligations. Louisiana Civil Code article 1927 provides that a contract is formed when the consent of the parties is established by an offer and an acceptance made orally, in writing or by some action or inaction that clearly indicates consent, given the circumstances. In this case, there was a valid oral contract. The request by Richard Bushwell that Gerald's be called to perform the recovery operation constituted an offer. The object of the agreement was that Gerald's would supply the services and equipment needed to recover the tractor , trailer and cargo after the accident. This is established clearly by the testimony of Gerald and Tim Arceneaux regarding the conversations of the occurrence as well as the actions and inaction of the parties, all of which clearly show a mutual intention to contract.
Although there was a valid contract, there was no agreement as to compensation. The trial testimony clearly establishes that fees were never discussed. In that regard Louisiana Civil Code article 2054 provides as follows " When the parties made no provision for a particular situation, it must be assumed that they intended to bind themselves not only to the express provisions of the contract, but also to whatever the law, equity or usage regards as implied in a contract of that kind or necessary for the contract to achieve its purpose"
This article changes the former law of contacts by providing a rule of interpretation for those instances where the contract is not doubtful or ambiguous, but simply fails to address particular questions. Revision Comments 1984, Louisiana Civil Code article 2055 explains "equity and usage"; Equity, as intended in the preceding articles, is based on the principles that no one is allowed to take unfair advantage of another and that no one is allowed to enrich himself at the justice of another.
Usage, as intended in the preceding articles, is a practice regularly observed in affairs of a nature identical or similar to the object of a contract subject to interpretation. Both parties rely, somewhat inappropriately, on Morph, Makofsky & Masson, Inc V Canal Place 2000 538 So. 2nd 569 (La.1989), which held that, where the amount of compensation to be receive by the provider of services under a valid contract is not specified, "the law …. Implies a provision that (the provider of services) would be paid a reasonable sum for his services", Id at page 573. In researching this conclusion, the court applied the civil code articles on obligations in effect prior to the 1984 revisions, including former articles 1903, 1964, and 1965 and cases interpreting those provisions. The 1984 revisions of the civil code includes new articles 2054 and 2055 for the use in determining the compensation received where the contract is silent or not specific in that regard. The former "reasonable value of service" test, based loosely on the common law principle of quarium meruit, has been replaced. After the 1984 revisions of the Civil Code, compensation must be determined in keeping with, "whatever the law, equity or usage regards as implied in a contract of that kind, or necessary for the contract to achieve its purpose" Louisiana Civil Code article 2054.
BASED ON THE LAW, EQUITY OR USAGE, WERE GERALDS CHARGES EXCESSIVE ?
At trail, discussion of Gerald's charges where divided into: (1) towing and recovery, and (2) handling and disposal of the cargo. At the core of the controversy over the charges for removing the tractor - trailer rig from the guardrail and transporting it away from the scene is Gerald's method of billing, which is by the pound, rather then by the hour. This formula for billing, relatively new to the industry, is now being used by some towing and recovery professionals throughout the country. Most towing and recovery operators still bill by the more traditional hourly fee for each piece of equipment used on the job.
Gerald's, and other proponents of the newer billing method, defend charging by the pound as more effective for the customer, since it is less subject to abuse. The price per pound charge is constant regardless of the difficulty of the recovery, the amount of time that it takes or the manpower and equipment used. Another local towing and recovery operator who charges by the pound, Maxie Magnon, testified for Gerald's. He contends that the more traditional per hour charge penalizes the well equipped, experienced operator, who can perform a recovery in a fraction of the time it might take others, and more safely as well. In his view, the price per pound method does not result in any excessive or unreasonable billing.
In fact, professional associations and state regulatory boards are considering sanctioning the use of this method for "non-consensual calls". He says that the price per pound method of charging is gaining acceptance as an alternative to per hour billing. Mr. Magnon was also asked to review Gerald's charges for transport, storage, and cargo handling, and found them all to be reasonable under the circumstances and well within the fees charged in the industry.
The insurers called three (3) towing and recovery operators to the witness stand with a very different view. James Smart, Bert King, and Richard Baker all testified that their companies charge only by the hour using rates that vary from $ 160 to $ 200 per hour, per piece of equipment used. They are all familiar with the price per pound billing method and are aware of operators who, like Gerald's have adopted it. They condemn this method as inherently unfair and abusive.
There is, apparently, a strong division in the industry regarding acceptable methods of billing. The practice of charging by the hour is certainly more traditional and widespread, but the Price Per Pound billing formula has its proponents as well. The evidence does not establish any clear custom or usage in the industry for charging fees, since both methods are used. Neither does the evidence show that one method consistently results in either higher or lower charges than the other. All of the experienced towing and recovery operators who testified acknowledged that per hour charges are sometimes higher than per pound and vice versa, depending on the particular circumstances of the recovery.
One of them, Bert King, serves as a member of the state regulatory board, and conceded that the board is considering the approval of the Price Per Pound formula for "non-consensual calls", but will in his opinion, limit the rate to a maximum of 10 cents per pound. The court notes that this is somewhat lower than Gerald's rate of 13 - 15 cents per pound, but the maximum hourly rate of $150.00 for "non-consensual calls" is currently in force and is also somewhat lower than the hourly rates charged by all three (3) of the insurers witnesses, whose average charge is about $ 185.00 per hour.
Besides condemning Gerald's billing method, the three (3) operators called by the insurers where of his opinion that the recovery operation in question was not nearly so treacherous, difficult or time consuming as Gerald's made it out to be. They testified that they could have removed the rig and its cargo safely in less time and with less equipment, and at less than half the cost. They estimate that they could have completed the entire recovery and handled the cargo for a total of between $ 8,000.00 and $ 10,000.00.
They disagree at every turn with Gerald Arceneaux and his expert regarding the manner in which the recovery should have been handled. They disagree with Gerald's choice of equipment; they disagree with his assessment of the condition of the refrigerated trailer and his decision to carry it (rather than tow it) along the roadway to the storage facility (and later to Houma): they contend that he could have restarted the refrigeration unit sooner and saved the cargo: they question his decision to drain the fuel from the tractor before removing it from the guardrail as a safety precaution; and finally, they criticize his handling of the cargo and the method he chose to dispose of ruined cargo of lettuce and cabbage.
However, none of them were present at the scene to see the situation for themselves, and make the necessary on the spot decisions regarding the safety of the workers and the public could have depended on. They would have the court conclude that Gerald's did nothing right, and then overcharged for it. Their opinions are based only on photographs of the scene, and of the trailer and its cargo. The court does not give this testimony much weight.
Gerald's utilized 8 men and 6 pieces of heavy equipment to remove the tractor-rig and its cargo from the scene of the accident and transport them to its storage facility. The equipment included two (2) large hydraulic wreckers, one rotating crane, one large bobtail trailer, a medium-duty hydraulic flatbed and a fifty (50) ton unit called a Landoll.
With this equipment, the rig was lifted off the guardrail, winched back down the incline, moved across the shoulder of the roadway, loaded onto a flatbed and transported away. Gerald's fee for these services was calculated by multiplying the weight of the rig and its cargo Eighty Thousand (80,000) pounds by 15.4 cents for a total of $12,320.00. The rate of 15.4 cents per pound was based on a fee schedule used nationwide by towing and recovery professionals who charge on a per pound basis. If Gerald's had charged $185.00 per hour for each piece of equipment, as suggested by the insurers witness, the cost for this part of the recovery operation would have been about $8,800.00, a difference of about $3,400.00.
Using the test established by Louisiana Civil Code articles 2054 and 2055, the court does not find that Gerald's billing for this portion of the operation is excessive, There is no evidence that Gerald's has taken "unfair advantage" of anyone or "enriched itself unjustly at the expense of another", Nor is Gerald's method of billing contrary to "usage" in the industry, as it has been shown that both the hourly and the Price Per Pound methods of billing are "practices regularly observed: in the industry. It seems that Gerald's charges are higher in this instance because he has used the Price Per Pound formula, but higher is not necessarily excessive.
Since Bushwell chose Gerald's to perform the work and didn't inquire as to cost, it can be assumed that he selected Gerald's for reasons other than cost. The evidence shows that Gerald's had preciously performed at least one towing and recovery job for Bushwell, and charged on a per pound basis. If he objected to this method, it seems that Bushwell would have not requested Gerald's again. The court finds that the charge of $12,320.00 for removing a rig and its cargo and transporting them to its facility is not excessive under the law. The court further finds that the storage charges of $40.00 per day for the tractor and $45.00 per day for the trailer are standard in the industry , and that the total charge for storage of these items in the amount of $510.00 is not excessive. Additionally, the court finds that the charges for $400.00 for repair of the guardrail, $90.50 for repair of the refrigeration unit, $250.00 for offloading the fuel, and $800.00 for ground restoration are not excessive.
The charges for handling, transport, storage, and disposal of the cargo present a more complicated set of circumstances. Gerald Arceneaux testified at trial that, on the morning after the accident, July 6,1998, he spoke on the telephone with Bushwell, and he was instructed to transport the perishable cargo on to its final destination at Houma. There was not discussion about cost. At about 9 o'clock AM, he put seven men to work unloading the cargo of lettuce and cabbage, re-packing it, unloading it into one of Gerald's refrigerated trucks. He testified that this as a difficult job because the cargo, consisting of 40,000 pounds of lettuce and cabbage, was partially damaged and some had spilled from its containers. The unloading and re-loading of the cargo was completed at 5 o'clock PM. Bushwell called at least twice during the day to check on the progress of the job. Gerald's charged for these services on the per pound formula (40,000 pounds of cargo X 13.1 cents per pound = $5240.00)
Gerald's was informed, by the recipient of the cargo in Houma that cargo could not be offloaded until 7 o'clock AM, the following day, July 7, 1998. Upon arrival in Houma, the cargo was inspected and rejected. Gerald's truck returned to its storage facility with the cargo still inside. The cargo remained in Gerald's refrigeration trailer for approximately six (6) days. The total charge for the tractor - trailer transport, rentals and driver for transporting the cargo to Houma and back was based on an hourly rate, rather than the per pound formula, and totaled $ 2,500.00.
Approximately one (1) week later, the insurers instructed Gerald's to dispose to the ruined cargo. Arceneaux testified that he first offered it to the public, who took about one-half (½) of it and he buried the rest.
The claims adjuster for the insurers was Bobby Crump. He testified at trial that his first contact with Gerald's was on July 7, 1998, the day the cargo was returned from Houma. At that time, he only had authority to discuss the cargo claim, he later received authority to adjust the whole claim. He did not give any instructions that day to Gerald's regarding disposal of the cargo. He did testify that, in his opinion if the refrigeration unit cooling the cargo on the Bushwell rig was not function for the first four (4) hours after the accident, then the cargo was ruined before it ever left the scene. He testified that it really didn't matter how the cargo was handled after that.
By the next day, July 8, 1998, Crump had authority to adjust both the cargo and the towing and recovery claims and, when told what the charges were, insisted that they were unreasonably high. He had known before that day that Gerald's charged by the pound, and he had authorized payment of similar towing and recovery charges in the past. However, he felt that, under the circumstances in this case, the charges were excessive.
He based this conclusion on his assessment that the trailer was not in such poor condition that it could not have been towed from the scene to Gerald's facility and subsequently on to Houma and back. In his view, there was no need for unloading, re-packing and loading the cargo into another refrigerated trailer in order to take it to Houma. He also felt, that once the cargo was rejected, it should have been disposed of immediately, not held in refrigerated storage for another week. The other towing and recovery operators, who were called as witnesses by the insurers, are also critical of Gerald's handling and disposal of the cargo for the same reasons.
The insurers contend that, since the entire cargo was valued only at $4,300.00, which they had to pay because it was lost, it seems unconscionable that they should be required to pay an additional $7,740.00 for the handling and disposal of it. The court is not unsympathetic to this view, but either does the court feel that Gerald's should be limited to the value of the cargo for its services.
Gerald's should not be penalized for Bushwell's instructions regarding the cargo. The trial testimony clearly shows that the two (2) representatives of Bushwell, Richard and Bonnie Bushwell, were at the scene of the accident. There is no indication that they either inspected the cargo at the scene or at Gerald's storage facility. Bushwell instructed Gerald's to transport the cargo to Houma (editors note approximately 100 miles away).
On July 6, 1998, there were several telephone conservations between Bushwell and Gerald's regarding the progress of the work of reloading the cargo into one of Gerald's refrigerated units. Neither Bushwell or Gerald's knew at this time that the cargo was already ruined.
The cargo was rejected in Houma and returned to Gerald's storage facility on July 7, 1998. On the same day, the claims adjuster for the insurers was present at Gerald's but did not give any instructions regarding the rejected cargo. In fact, the insurers were silent until 6 days later, when Gerald's was finally instructed to dispose of the cargo. Gerald's must be paid for the services rendered at the instructions of Bushwell and the insurers. The court finds that the charges for the reloading, transport, refrigeration, and disposal of the cargo could have been avoided if the insurers had simply either picked up the cargo themselves, or inspected it and found it to be ruined on the day following the accident.
Gerald's original charge of 15.4 cents per pound for towing and recovery from the scene of the accident to its facility in Scott included the weight of the cargo, 40.000 pounds. Gerald's computation of its charges for the next phase, the handling and disposal of the cargo, was, once again, based on the weight of the cargo for which Bushwell was charged at the rate of 13.1 cents per pound ($5240). To this, Gerald's added all of the incidental charges for transporting the cargo to Houma and back, adding another $2,500.00 to the bill.
The court does not find that Gerald's can support the second per pound charge for the cargo. The towing and recovery operation was complete when the cargo was first transported from the scene of the accident to Gerald's storage facility. It was these services for which the per pound charge was intended. The subsequent reloading of the cargo and transport to Houma and back did not constitute another "towing and recovery" operation. It was equitable, under the circumstances, to charge a second per pound fee for these services. From all the evidence and testimony regarding usage in the towing and recovery industry, the court finds that the charges for the equipment and manpower to re-pack and reload the cargo should not of exceeded $185.00 per hour. The cost of transporting the cargo to Houma and back should not of exceeded $500.00 per day, for a total of $3,000.00 and the disposal of the cargo should not of exceeded $800.00. The total charges for handling, transporting, and disposal of the cargo should have not exceeded $5,995.00. While this total still exceeds the value of the cargo, a reduction would only penalize Gerald's for following instructions from Bushwell.
It is the finding of the court that Gerald's is entitled to be paid by the defendants as follows:
Towing and Recovery $12,320.00
Fuel removal $ 250.00
Tractor & Trailer storage $ 510.00
Refrigeration unit repair $ 90.50
Guardrail repair $ 400.00
Ground restoration $ 800.00
Refrigerated storage $ 3,000.00
Transport, Houma & return $ 500.00
Unloading & reloading $ 1,295.00
Cargo disposal $ 800.00
TOTAL $19,965.50
Judgment will be signed in keeping with these reasons.
Abbeville, Louisiana this 31st day of March, 2000
Filed this 3rd day of April, 2000
Durwood Conque, Judge
Ruthie Perret, Deputy Clerk of Court.
(article link - missing link at this time, attempting to relocate it )
