COA: Federal statute supersedes state one

April 22, 2016

The Indiana Court of Appeals ruled a federal statute supersedes a state one regarding the time period in which to sue and thus reversed a decision from the trial court which denied a company’s motion to dismiss a claim against it for breach of contract.

In April 2011, Kennedy Tank Manufacturing Co. hired Emmert International to transport a piece of commercial equipment for $200,000 plus additional expenses Emmert might incur during move. However, Emmert had a number of unforeseeable problems and ended up with additional expenses of almost $700,000 which Kennedy declined to pay.

Emmert sued Kennedy for breach of contract or unjust enrichment. Later, Kennedy moved to dismiss on the grounds Emmert did not bring the action within the 18-month limitations period set forth in 49 U.S.C. Section 14705(a) which it said superseded Indiana’s 10-year limitation period. The trial court said the 10-year period applied.

The COA said the federal 18-month limitation should apply. While Indiana hasn’t ruled on the preemption of the federal limitation, other courts have, and always ruled when a state limitation was longer than a federal one, the federal one should rule. The COA said that should be the case in Indiana as well, and reversed the trial court decision.

Judge Patricia Riley partially dissented in the decision. She agreed the federal statute preempts Indiana’s state statute, but disagreed with how the court majority resolved Emmert’s estoppel claim. Emmert claimed even if the federal statute applied, its claim should not have been dismissed because Kennedy should be estopped from asserting the statute of limitations as an affirmative defense. Riley said even though Emmert’s argument was devoid of any cogent reasoning and that Emmert technically waived its argument, she thought the issue should be determined on its merits.

“Because the trial court ruled in Emmert’s favor – i.e., it denied Kennedy’s motion to dismiss on its finding that 49 U.S.C. Section 14705 does not preempt the relevant statute of limitations – the trial court did not address Emmert’s estoppel claim in its order. As there is nearly $700,000 at stake in this case, I would remand with instructions for the trial court to conduct further proceedings and make a factual determination as to whether Kennedy should be equitably estopped from asserting a statute of limitations defense.”

The case is Kennedy Tank & Mfg. Co. Inc. and Hemlock Semiconductor Corp. and Hemlock Semiconductor LLC v. Emmert Industrial Corporation, d/b/a Emmert International, 49A02-1507-CT-934.