April 13, 2017

Federal Statute of Limitations Does Not Preempt Indiana Statute of Limitations

Category: Civil Procedure, Indianapolis Law Club | Author: | Share:

The new administration has promised to deregulate various industries. Kennedy Tank & Mfg. Co., Inc. v. Emmert Ind. Corp. may be instructive, as it shows how the Indiana Supreme Court is willing to let Indiana assert control in these deregulated areas.

Kennedy hired Emmert to transport a “massive” piece of equipment called a process tower vessel from its headquarters in Indianapolis to Clarksville, Tennessee. The contract required that Kennedy pay $197,650, plus additional unforeseen costs. Those unforeseen costs were substantial. Construction delays, road closures, permit applications, safety escorts, and bureaucratic delays cost Emmert an additional $691,301.03. Despite these troubles, Emmert delivered the vessel on November 11, 2011.

Emmert sought to collect these costs from Kennedy, but Kennedy refused to pay any additional charges. Emmert sued, claiming breach of contract and unjust enrichment. Kennedy moved to dismiss the complaint (filed in 2014), relying on an 18-month federal statute of limitations. Emmert claimed that Indiana’s 10-year statute of limitations should apply. The trial court denied the motion to dismiss, and the Indiana Court of Appeals reversed that decision. The Indiana Supreme Court then requested transfer.

The Court began its analysis with the presumption that federal statutes do not preempt state law. It then turned to whether the doctrine of conflict preemption applies, the type of conflict preemption which arises when a state law does “major damage” to the federal law’s purpose.

In this case, the federal law provided that “[a] carrier providing transportation or service subject to [federal] jurisdiction … must begin a civil action to recover charges for transportation or service provided by the carrier within 18 months after the claim accrues.” Kennedy argued that this was an attempt to create a national standard for diligently pursuing claims, and it pointed to CERCLE and a legislative report. But the Court distinguished both of these authorities, concluding that Kennedy had “not persuaded us that Congress intended to dictate a national statute of limitations.” Rather, Congress “has actually removed its prior exclusive federal regulation from contract actions related to interstate transport.” Given this deregulation, the Court found that there was no preemption.

Therefore, the claim was timely under Indiana’s statute of limitations and Emmert’s claim should not be dismissed.

Lessons

  1. The federal statute of limitations for bringing a civil action related to interstate transportation services does not preempt Indiana’s statute of limitations for written contracts.
  2. When the federal government decides to deregulate in an area, then state statutes in that area are unlikely to be preempted by federal law.

Read the full February 23, 2017 Law Club Handout or listen to the recording here.