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Bay Colony Railroad Corporation v. Yarmouth

Supreme Judicial Court of Massachusetts, Norfolk

January 29, 2015

Bay Colony Railroad Corporation
v.
Town of Yarmouth & another. [1]

Argued: October 7, 2014.

Civil action commenced in the Superior Court Department on January 14, 2008.

Motions for summary judgment were heard by John P. Connor, Jr., J.; the remaining issues were tried before him; and a motion for judgment notwithstanding the verdict was considered by him.

Page 516

The Supreme Judicial Court on its own initiative transferred the case from the Appeals Court.

Joseph L. Tehan, Jr. ( Jackie Cowin with him) for town of Yarmouth.

Joel G. Beckman ( Dana A. Zakarian with him) for the plaintiff.

Present: Gants, C.J., Spina, Cordy, Botsford, Duffly, Lenk, & Hines, JJ.

OPINION

[23 N.E.3d 909] Gants, C.J.

On June 30, 1989, the town of Yarmouth (town) entered into a transportation contract (contract) with the Bay Colony Railroad Corporation (Bay Colony) whereby Bay Colony was to transport solid waste from the town's waste transfer station to a waste-to-energy facility in Rochester (facility) operated by the SEMASS Partnership (SEMASS). At that time, Bay Colony operated several rail lines in southeastern Massachusetts, including rail lines between the town and Rochester, pursuant to a lease agreement with the Commonwealth. However, in the fall of 2007, the Commonwealth notified Bay Colony that, effective December 31, 2007, it would terminate Bay Colony's lease of the Cape Cod rail lines, which meant that Bay Colony would no longer be able to transport the town's waste to the facility by rail. Section 9 of the contract provided that, in the event the Commonwealth terminated Bay Colony's lease of the rail line, the town agreed to permit Bay Colony either to assign the contract to the railroad company that was awarded the lease of the rail line or to continue to transport the waste " pursuant to the terms of the [contract] either under an arrangement with a successor operator or by other modes of transportation." Bay Colony notified the town by letter that, in accordance with the provisions of section 9, it intended to continue to transport waste under the contract " by other modes of transportation," specifically, by truck rather than rail. The town, however, replied by letter that it intended to assign the [23 N.E.3d 910] contract to the railroad operating company that was awarded the relevant rail lease.[2] In or about April 2008, the town began transporting its waste from the transfer station to the facility with that railroad company.

Bay Colony filed suit, contending, among other claims, that the town had committed a breach of the contract by terminating Bay Colony as the waste transporter. A Superior Court judge granted Bay Colony's motion for summary judgment on its declaratory judgment claim, and declared that the contract granted Bay Colony " the right to assign its interest or fulfill the agreement by

Page 517

alternate means of transportation." [3] After trial, a Superior Court jury found that the town had committed a breach of the contract, and awarded damages of $800,000.

On appeal, the town claims, first, that G. L. c. 160, § 70A, prohibited Bay Colony from transporting the town's waste by truck after it lost its rail lease, and the judge erred as a matter of law in concluding that § 70A was preempted by the Federal Aviation Administration Authorization Act (act); second, that the permit issued to the town by the Department of Environmental Protection (DEP) for the operation of the town's waste transfer station prohibited the long-term trucking of waste, and the town had no obligation under the contract to seek a modification of the permit to allow its waste to be transported by truck; and third, that the town's contract with Bay Colony had terminated prior to the alleged breach.[4] We transferred the appeal on our own motion. We reject each of the town's three claims and affirm the judgment.

Discussion.

1. Federal preemption of G. L. c. 160, § 70A.

Enacted in 1925, G. L. c. 160, § 70A, allows " railroad corporation[s] ... [to] own, maintain and operate motor vehicles not running upon rails or tracks ... for the transportation of ... freight." G. L. c. 160, § 70A, inserted by St. 1925, c. 125, § 1, as amended through St. 1932, c. 236. But the statute forbids a railroad corporation from operating trucks for the transportation of freight within the Commonwealth in areas that the railroad corporation does not " serve[ ]" by rail. Id. (" Motor vehicles operated by a railroad corporation directly or through subsidiaries for the transportation of freight within the commonwealth shall be operated only in areas now served by such corporation" ). The town contends that Bay Colony could not lawfully perform the contract by truck once it lost its rail line lease because it would then be operating motor vehicles for the transportation of freight in areas where it no longer provides rail service, in violation of § 70A.

In 1994, however, Congress passed the act " upon finding that [S]tate governance of intrastate transportation of property had become 'unreasonably burden[some]' to 'free trade, interstate commerce, and ...


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