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Overview:

A damaged jet engine, a hefty insurance payout, and a lawsuit – this case has it all. An insurance company is suing a trucking company and its subcontractors after a jet engine it insured was damaged during transport. The insurer claims the subcontractors' negligence led to a $6.7 million loss, highlighting the importance of risk management and subrogation for insurance companies.

The Case:

In 2022, an aircraft manufacturer entrusted a valuable jet engine, Model Neo, Serial Number 800060, to a trucking company for transportation from Connecticut to Alabama. The trucking company, in turn, hired subcontractors to handle the job. Unfortunately, the journey took an unexpected turn when the truck carrying the engine veered off an Alabama highway, crashing down an embankment and striking multiple trees. The result? A severely damaged jet engine, as vividly depicted in the evidence included in the lawsuit.

The insurer stepped in to cover the loss, shelling out over $6.7 million. Now, armed with a subrogation agreement, the insurance firm is taking the trucking company and its subcontractors to court, seeking to recoup its losses. As reported by Law360, the insurer claims breach of contract, failure to deliver the engine in good condition, and negligence.

Details from the Court Filing:

The complaint, filed in the U.S. District Court for the District of Connecticut, provides further details about the incident and the legal claims. It states that the trucking company had a Shipper Specific Agreement (SSA) with the aircraft manufacturer, outlining the terms of their transportation agreement. 

A Shipper Specific Agreement (SSA) is a contract between a shipper and a carrier that outlines the terms and conditions for the transportation of goods. It typically includes details such as the scope of services, liability limitations, insurance requirements, and payment terms.

The SSA specifically states that the trucking company's liability for loss and damage is limited to "the original invoice value of the Commodities lost and/or damaged." The insurer argues that the subcontractors breached this agreement by failing to deliver the jet engine in the same condition as it was received.

Breach of Bailment Obligations:

In legal terms, a bailment is created when one party (the bailor) entrusts their property to another party (the bailee) for a specific purpose, with the understanding that the property will be returned to the bailor in the same condition.  

The insurer argues that the trucking company and its subcontractors failed to exercise reasonable care in handling the entrusted property, resulting in its damage. This breach of bailment obligations forms a separate cause of action in the lawsuit, in addition to the breach of contract claim.

Key Takeaways:

• Mitigating Transportation Risks: This case underscores the potential risks involved in insuring high-value cargo during transportation. Thorough vetting of transportation providers and their subcontractors is crucial to minimize such risks.
• The Power of Subrogation: Subrogation allows insurers to recover losses paid to their insured by pursuing negligent third parties. This case exemplifies how subrogation can be a powerful tool for managing risk and protecting financial interests.

QPWB: Your Partner in Protecting Insurance Interests

Quintairos, Prieto, Wood & Boyer, P.A. is a national litigation firm. We understand the complexities of transportation and insurance law. Our team of experienced attorneys can provide guidance and representation on a wide range of matters, including:

• Subrogation and recovery: We assist insurers in pursuing claims against negligent third parties to recover losses paid under insurance policies.
• Insurance coverage disputes: We help insurers navigate complex coverage issues and defend against claims.

Need assistance with a transportation-related claim or other insurance matters? Contact QPWB today to discuss your legal needs.