               IN THE SUPREME COURT OF TEXAS
                                         444444444444
                                           NO . 11-0597
                                         444444444444


              LEXINGTON INSURANCE COMPANY, AS SUBROGEE OF
          BURR COMPUTER ENVIRONMENTS, INC. AND J. SUPOR AND SONS
                  TRUCKING AND RIGGING CO., PETITIONER,
                                                 v.


                         DAYBREAK EXPRESS, INC., RESPONDENT

           4444444444444444444444444444444444444444444444444444
                           ON PETITION FOR REVIEW FROM THE
                 COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS
           4444444444444444444444444444444444444444444444444444


                                         PER CURIAM


       The principal question in this case is whether, for purposes of Section 16.068 of the Texas

Civil Practice and Remedies Code, an action for cargo damage against a common carrier, brought

under the Carmack Amendment to the Interstate Commerce Act, 49 U.S.C. § 14706, relates back to

an action for breach of an agreement to settle the cargo-damage claim. The answer depends on

whether the cargo-damage claim is, in the words of Section 16.068, “wholly based on a new, distinct,

or different transaction or occurrence” than the breach-of-settlement claim. A divided court of

appeals held that a cargo-damage claim does not relate back and is therefore barred by limitations.

342 S.W.3d 795 (Tex. App.–Houston [14th Dist.] 2011). We disagree and accordingly reverse the

judgment of the court of appeals and render judgment for the plaintiff.
       J. Supor and Son Trucking and Rigging Company engaged respondent Daybreak Express,

Inc. to transport computer equipment belonging to Burr Computer Environments, Inc. from New

Jersey to Texas. When the shipment arrived, Burr claimed it was damaged. Despite Burr’s

contention that Daybreak’s adjuster had agreed on Daybreak’s behalf to settle the claim for

$166,655, Daybreak would pay only $5,420. Burr also asserted a claim against Supor, whose

insurer, petitioner Lexington Insurance Co., paid Burr $87,500. Then, as subrogee, Lexington sued

Daybreak, but only for breaching the settlement agreement, not for damaging Burr’s equipment.

       An interstate carrier’s responsibility for goods it transports is governed by the Carmack

Amendment. Enacted in 1906, the Carmack Amendment “supersedes all state laws as to the rights

and liabilities and exemptions created by such transaction.” Adams Express Co. v. Croninger, 226

U.S. 491, 505 (1913) (internal quotation marks omitted). Because the only action against an

interstate common carrier for cargo damage is under federal law, Daybreak removed the case to

federal court. It cited Hoskins v. Bekins Van Lines, 343 F.3d 769, 778 (5th Cir. 2003), which states:

       Congress intended for the Carmack Amendment to provide the exclusive cause of
       action for loss or damages to goods arising from the interstate transportation of
       those goods by a common carrier. Accordingly, we hold that the complete
       pre-emption doctrine applies. Because the Carmack Amendment provides the
       exclusive cause of action for such claims, . . . claims [for such loss or damages] “only
       arise[ ] under federal law and [can], therefore, be removed . . . .”

(emphasis in original, citation omitted). But the federal court distinguished Hoskins:

                In the present case, by contrast, Lexington does not seek to impose liability
       on Daybreak for damages arising from the interstate transport of property. Instead,
       Lexington seeks to enforce an agreement it alleges Daybreak entered into in order to
       settle claims for damages to a shipment of electrical equipment. Resolution of this
       contract claim does not turn on the rights and responsibilities of Daybreak as a carrier
       in interstate commerce. The point of the alleged settlement agreement was precisely

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          that Lexington’s subrogor would not pursue the claims that may fall under the
          Carmack Amendment. Because this is not a suit to recover for loss or damage to
          property against a carrier but rather one to enforce a settlement agreement, the case
          will be remanded to state court.

Lexington Ins. Co. v. Daybreak Express, Inc., 391 F. Supp. 2d 538, 541 (S.D. Tex. 2005) (footnote

omitted).

          Although Lexington successfully avoided removal by not asserting a cargo-damage claim,

on remand, it amended its petition to assert one. Lexington filed its amended pleading more than

four years after Daybreak rejected Burr’s claim, and Daybreak contended the claim was barred by

limitations. But Lexington argued that the cargo-damage claim related back to its original action for

breach of the settlement agreement, which was filed within two years of Daybreak’s rejection of

Burr’s claim and not barred by limitations. The relation-back doctrine, codified in Section 16.068,

states:

                  If a filed pleading relates to a cause of action . . . that is not subject to a plea
          of limitation when the pleading is filed, a subsequent amendment or supplement to
          the pleading that changes the facts or grounds of liability or defense is not subject to
          a plea of limitation unless the amendment or supplement is wholly based on a new,
          distinct, or different transaction or occurrence.

TEX . CIV . PRAC. & REM . CODE § 16.068. The trial court agreed with Lexington, and after a bench

trial, rendered judgment against Daybreak for $85,800.

          A divided court of appeals reversed. 342 S.W.3d 795 (Tex. App.–Houston [14th Dist.]

2011). The court held that Section 16.068 applies to a Carmack Amendment claim. Id. at 803-804.

Since the parties do not argue to the contrary, we assume this is correct. The majority then

concluded that the cargo-damage and breach-of-settlement claims were based on wholly different


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transactions, one centering on the transport of Burr’s equipment and the other on the existence of a

settlement agreement. Id. at 804. Further, the court reasoned, if the shipment and settlement were

not different transactions, the Carmack Amendment would preempt the breach-of-settlement claim

and removal would have been proper.

       The expansive reach of complete preemption under the Carmack Amendment means
       that any cause of action arising from the interstate transportation of goods by a
       common carrier “is either wholly federal or nothing at all” regardless of how it is
       labeled. . . . Lexington’s claim for breach of the purported settlement agreement
       cannot be both un-preempted and less than wholly distinct from the interstate
       transportation of goods by a common carrier.

Id. at 806 (quoting Hoskins, 343 F.3d at 773, emphasis in original, internal quotation marks partially

omitted).

       “Transaction or occurrence” is a concept fundamental to modern civil procedure. See, e.g.,

TEX . R. CIV . P. 38 (third-party practice), 40 (joinder), 50 (pleading), 97 (counterclaims and cross-

claims); TEX . CIV . PRAC. & REM . CODE § 16.068 (limitations); Barr v. Resolution Trust Corp., 837

S.W.2d 627 (Tex. 1992) (res judicata). The United States Supreme Court has observed that

“‘[t]ransaction’ is a word of flexible meaning. It may comprehend a series of many occurrences,

depending not so much upon the immediateness of their connection as upon their logical

relationship.” Moore v. N.Y. Cotton Exch., 270 U.S. 593, 610 (1926). Rule 15(c)(1)(B) of the

Federal Rules of Civil Procedure employs a standard similar to Section 16.068, allowing relation

back of a claim, pleaded by amendment, “that arose out of the conduct, transaction, or occurrence

set out — or attempted to be set out — in the original pleading.” FED . R. CIV . P. 15(c)(1)(B). “[T]he

search . . . is for a common core of operative facts in the two pleadings.” 6 CHARLES ALAN WRIGHT ,


                                                  4
ARTHUR R. MILLER, & MARY K. KANE , FEDERAL PRACTICE & PROCEDURE § 1497 (3rd ed. 2010).

“Although not expressly mentioned in the rule, the courts also inquire into whether the opposing

party has been put on notice regarding the claim or defense raised by the amended pleading.” Id.;

see also 2 ROY W. MCDONALD & ELAINE A. GRAFTON CARLSON , TEXAS CIVIL PRACTICE § 10.18

(2d ed. 2002) (“The inquiry applied should be the pragmatic one of notice . . . .”).

       In the present case, the cargo-damage claim and the breach-of-settlement claim both arose

out of the same occurrence: Daybreak’s shipment of Burr’s computer equipment. The settlement

was an effort to reach agreement on the damages recoverable under the Carmack Amendment.

Although Lexington might recover on the breach-of-settlement claim without proving the amount

of damage to the equipment, that damage was the basis for the settlement agreement. Daybreak

might well argue that it is unreasonable to believe that it agreed to pay thirty times more than it

actually paid. Daybreak had fair notice that the amount of damage might be in issue, as well as

whether an agreement had been reached.

       The court of appeals’ conclusion that the two claims are based on two separate transactions

is contradicted by our decision in Leonard v. Texaco, Inc., 422 S.W.2d 160 (Tex. 1967). There, a

surface owner sued the mineral lessee for property damages caused by the lessee’s seismic

operations. Later, after limitations had run, the surface owner amended his petition to add a claim

that the lessee had breached an agreement to pay for the damages, possibly to avoid having to prove

negligence. Id. at 161, 162; see Humble Oil & Ref. Co. v. Williams, 420 S.W.2d 133, 134 (Tex.

1967) (“A person who seeks to recover from the lessee for damages to the surface has the burden of

alleging and proving either specific acts of negligence or that more of the land was used by the lessee

                                                  5
than was reasonably necessary.”). In Leonard, the surface owner prevailed on the contract claim at

trial, but the court of civil appeals reversed, holding under Section 16.068’s predecessor, which

contained the same relation-back standard, that the contract claim did not relate back to the property

damage claim and was therefore barred by limitations. We disagreed. Id. at 162. Though the initial

claim “sounded in tort and alleged an excessive use of land” and the later claim “set up a promise

to pay . . . damages” that sounded in contract, we concluded: “it cannot be said” that the latter was

“wholly based upon and growing out of a different transaction or occurrence.” Id. at 163.

       In Leonard, as in the present case, one claim centered on damage to property and the other

on an alleged agreement to pay for the damage. And in each case, the requirements for proof of the

two claims were somewhat different. But the claims in each cases arose out of the same occurrence

and involved the same injury to property. Leonard’s holding that the two claims were not based on

wholly different transactions forecloses the court of appeals’ contrary conclusion in this case.

       The federal district court’s holding that Lexington’s breach-of-settlement claim is not

preempted by the Carmack Amendment does not compel the conclusion that it is based on a wholly

different transaction than the cargo-damage claim. Again, “‘[t]ransaction’ is a word of flexible

meaning.” Moore, 270 U.S. at 610. Preemption assures uniform, predictable standards of

responsibility for common carriers in transactions involving interstate shipments. Relation back

allows an untimely claim not wholly based on a different transaction than a timely claim. The two

principles serve different purposes.

       We hold that under Section 16.068, Lexington’s cargo-damage claim was not barred by

limitations. Accordingly, we grant Lexington’s petition for review, and without hearing oral

                                                  6
argument, reverse the judgment of the court of appeals and render judgment for Lexington, as the

trial court did. TEX . R. APP . P. 59.1.



Opinion delivered: August 31, 2012




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