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From Banking and Finance Law Daily, May 13, 2013

USSCt: Federal Law Does Not Preempt New Hampshire Storage Lien Provisions

By Lisa M. Goolik, J.D.

The U.S. Supreme Court has unanimously decided that a debtor’s action against a towing company for allegedly violating New Hampshire’s towing and storage lien provisions was not preempted by the Federal Aviation Administration Authorization Act (FAAAA). Affirming the decision of the Supreme Court of New Hampshire, the Court concluded that the New Hampshire provisions did not regulate the price, route, or service of a motor carrier with respect to the transportation of property (Dan’s City Used Cars, Inc. d/b/a Dan’s City Auto Body v. Pelkey, May 13, 2013, Ginsburg, J.).

Background. While the debtor was hospitalized with an illness, the company towed the debtor’s vehicle pursuant to a policy of the debtor’s landlord that prohibited parking during a snowstorm. After the debtor discovered his vehicle was missing, he contacted the towing company, which falsely informed the debtor that it had sold his vehicle at auction. Two days later, the towing company traded the vehicle to a third party.

The debtor brought suit against the towing company for violations of New Hampshire’s Consumer Protection Act, New Hampshire’s towing and storage lien law, and other common law claims, alleging that the towing company failed to properly dispose of a stored vehicle, made false statements about the condition and value of his vehicle, and proceeded with the sale despite notice that the debtor wanted to reclaim the car. The towing company responded that the FAAAA preempted the debtor’s claims.

Transportation of property. The FAAAA, which amended the Interstate Commerce Act, preempts states from enacting any law related to the price, route, or service of a motor carrier with respect to the transportation of property. Towing companies, as companies that provide motor vehicle transportation for compensation, are motor carriers as defined by the FAAAA.

The New Hampshire Supreme Court had concluded that the FAAAA does not preempt state laws pertaining to the manner in which a towing company disposes of vehicles in its custody in order to collect towing and storage charges secured by a lien. New Hampshire’s towing and storage lien provisions, which prescribe the process by which a towing company may recover vehicle towing and storage costs, are state laws with respect to the collection of debts, not the transportation of property.

Towing and storage. The Supreme Court agreed, concluding that the FAAAA does not preempt state-law claims stemming from the storage and disposal of a towed vehicle. The FAAAA defines “transportation” as services related to the movement of property, “arranging for, receipt, delivery, elevation, transfer in transit, refrigeration, icing, ventilation, storage, handling, packing, unpacking, and interchange of passengers and property.” Storage and handling, however, are only included within the definition when those services relate to the movement of property, the Court determined. “Temporary storage of an item in transit en route to its final destination relates to the movement of property and therefore fits within [the] definition. But property stored after delivery is no longer in transit,” the Court added. Thus, the towing company’s storage of the debtor’s car after the towing job was done, did not involve “transportation” with¬in the meaning of the FAAAA.

The docket number is No. 12–52.

Attorneys: Andre D. Bouffard (Downs Rachlin Martin PLLC) and Katherine Strickland for Dan's City Used Cars, Inc., d/b/a Dan's City Auto Body. Adina H. Rosenbaum (Public Citizen Litigation Group) and Brian C. Shaughnessy (Kazan Shaughnessy Kasten) for Robert Pelkey.

Companies: Dan’s City Used Cars, Inc. d/b/a Dan’s City Auto Body

MainStory: TopStory NewHampshireNews Preemption SecuredTransactions

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