Opinion ID: 1060090
Heading Depth: 1
Heading Rank: 2

Heading: scope of federal preemption

Text: Resolution of the venue issues upon which an appeal has been awarded in this case requires consideration of two questions: (1) whether federal law in fact controls the merits of the claims, and, if so, (2) whether the venue provisions of the applicable federal law compel dismissal here.
Exercising its authority under the Commerce Clause, Article I, Section 8, Clause 3 of the United States Constitution, the federal government has retained for itself the power to regulate and supervise the activities of common carriers operating across state lines. The principal medium for enforcing this authority has been the Interstate Commerce Act. In 1906, legislation which has become known as the Carmack Amendment included in the Act provisions for liability of common carriers arising under receipts or bills of lading. Although the carrier is not an insurer under the Carmack Amendment, the shipper need only prove, in essence, that the goods were received by the carrier at the point of origin but were delivered at the destination in a damaged condition or with a portion or all of the goods missing. The liability [of the carrier] arises under a theory similar to res ipsa loquitur. United States v. Seaboard Coast Line Railroad, 384 F.Supp. 1103, 1106-07 (E.D.Va.1974) (citation omitted) (emphasis added). In Adams Express Company v. Croninger, 226 U.S. 491, 33 S.Ct. 148, 57 L.Ed. 314 (1913), the United States Supreme Court determined that the Carmack Amendment superseded all state regulation with respect to claims arising out of such liability. Id. at 505-06, 33 S.Ct. at 151-52; see also Manieri v. Seaboard Air Line Railway Co., 147 Va. 415, 420, 137 S.E. 496, 498 (1927). Since state courts have concurrent jurisdiction over claims controlled by the Carmack Amendment, see Missouri, Kansas & Texas Ry. v. Harris, 234 U.S. 412, 421, 34 S.Ct. 790, 794, 58 L.Ed. 1377 (1914), a case against common carriers asserting liability for loss or damage may properly be heard in the Virginia circuit court on the merits, applying federal law.
The motion for judgment alleges that Northland received damaged vehicles from Newsome to either repair or to pay Hairston Motor Company for them. It further alleges that Northland did not repair or pay for the vehicles, but sold two of the vehicles. One of the sales allegedly occurred in Virginia. Based upon these allegations, Hairston asserted a claim for common law conversion against Northland. Nevertheless, Northland has asserted that the Carmack Amendment precludes claims against an interstate carrier's insurance company in these circumstances. We disagree. By its express terms, the Carmack Amendment applies only to the liability of a common carrier under a receipt or bill of lading. 49 U.S.C.A. § 11707(a)(1) (now 49 U.S.C.A. § 14706(a)(1)). Northland is not a common carrier, see former 49 U.S.C. § 10102(4); see also 49 U.S.C.A. § 13102(12), nor is Hairston's action for conversion of property premised on a receipt or bill of lading. An allegation of the tort of conversion asserts a wrongful exercise or assumption of authority ... over another's goods, depriving him of their possession; [and any] act of dominion wrongfully exerted over property in denial of the owner's right, or inconsistent with it. Universal C.I.T. Credit Corp. v. Kaplan, 198 Va. 67, 75, 92 S.E.2d 359, 365 (1956). While Northland may have initially acquired possession of the vehicles from its insured during the course of an interstate shipment, Hairston's common law claim for conversion does not arise from the transportation or damage of the property, or even under the contract of insurance between Newsome and Northland. Common law claims not superseded by the Carmack Amendment are preserved under the Act. See former 49 U.S.C.A. § 10103. Common law claims not premised on transportation or damage by carriers and not arising from a receipt or bill of lading are preserved under the Act. See Sokhos v. Mayflower Transit, Inc., 691 F.Supp. 1578, 1581-82 (D.Mass. 1988). Accordingly, we hold that the trial court's determination that the claim against Northland is preempted by federal law was in error, and dismissal of the action for violation of the federal venue provision was likewise in error. [4]
Hairston has asserted in a one-count motion for judgment that Flynn and Newsome breached their contracts to deliver the vehicles to Danville. While Hairston's allegations did not cite federal liability standards, and indeed were pled solely ex contractu, they are indisputably claims against common carriers arising from loss or damage of goods in interstate transportation. Hence, they are controlled by federal law, which preempts state regulation of liability in such circumstances. Croninger, 226 U.S. at 505-06, 33 S.Ct. at 151-52. For example, with respect to Flynn, it is specifically alleged that this defendant in its capacity as a common carrier contracted to deliver eighteen vehicles received in Manheim, Pennsylvania, and that [f]ifteen of the eighteen motor vehicles which Flynn Transport, Inc. was engaged to deliver to Danville, Virginia were delivered. Three motor vehicles were not. It is further asserted that the value of the three vehicles not delivered was $53,525. With respect to Newsome, the motion for judgment alleges that Flynn engaged Newsome in his capacity as a common carrier to deliver nine of the eighteen vehicles, that after damaging three of the vehicles, Newsome turned the vehicles over to Northland, and that Newsome breached his contract as a connecting carrier to deliver nine motor vehicles to Hairston Motor Company in Danville, Virginia. Although describing Newsome as a connecting carrier, the factual averments expressly state that Newsome was also the delivering carrier of the nine vehicles he contracted with Flynn to deliver to Hairston. We find, therefore, that Hairston's claims fall squarely within the subject matters in which common law claims are preempted, and to which federal carrier liability standards apply under the Carmack Amendment. The issue upon which an assignment of error was granted is limited to the application of venue standards, rather than the sufficiency of plaintiff's motion for judgment to state a prima facie claim under the applicable federal standards. Hence, we turn to the question whether the venue provisions of the federal statute preclude proceedings in Danville. [5]