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March 6, 1975

In the Matter of the Arbitration of Certain Disputes Between AAACON AUTO TRANSPORT, INC. and FRED R. HICKS, JR., Petitioners, and SANFORD ROBERT EICHLER, Respondent

The opinion of the court was delivered by: PLATT


 By Petition and Notice of Motion, petitioners seek an order pursuant to Title 9, USCA § 4, "directing respondent to arbitrate all claims against petitioners in the manner provided in the agreement between the parties * * * and enjoining and staying the respondent from proceeding with litigation heretofore commenced against petitioners, pending such arbitration."


 On or about January 16, 1974, respondent filed a so-called "Motion for Judgment" (apparently the equivalent of a complaint) in the Circuit Court of the City of Norfolk, Virginia, against the petitioners herein "complaining that defendants (therein) falsely and fraudulently misrepresented material matters to induce the plaintiff (respondent) to enter into an agreement with AAACON AUTO TRANSPORT, INC. ("AAACON") to transport an automobile from Norfolk to Glendale, California." The defendants (petitioners herein) removed the action from the State Court to the U.S. District Court for the Eastern District of Virginia "on grounds that the claim was framed under the laws and statutes of the United States governing carriers in interstate commerce and that exclusive jurisdiction was in the federal court", where it was scheduled to be tried on September 10, 1974.

 Thereafter, the plaintiff (respondent herein) moved to remand the proceedings to the State Court and the defendants (petitioners herein) moved to stay the proceedings pending arbitration under the agreement to arbitrate referred to above.

 In sustaining plaintiff's motion for remand the Federal District Court (MacKenzie, J.) set forth the following reasons for his decision:

"In light of the peculiar facts of this case, we are persuaded that Kiewet, supra, more nearly applies for a number of reasons.
"In the first place, in the case at bar the plaintiff has alleged fraud in the inducement and does not base his case on the Bill of Lading Agreement. In the second place, plaintiff has not called into play any federal statute or any state law or regulations to aid him in bringing this defendant, carrier, to bay, be it an initial carrier or the only carrier. Quite succinctly he has stated that he was defrauded both by the Transport Company and by Hicks through the representations they made to him about the nature of their business and the driver to be secured to drive his car across the country. In the third place, Hicks, the individual, is a defendant, and properly so, under the plaintiff's theory. However, under the Carmack Amendment it is questionable whether he would be able to be made a party defendant since he is not a party to the contract, or bill of lading.
"Quite candidly plaintiff asserts that he purposely avoided the federal court and the federal statutes because in the event of non-delivery of the car, the plaintiff would be forced to arbitrate a settlement in New York City. A Norfolk plaintiff can understandably wish to avoid the expense and difficulties which would thus be incurred with forced arbitration in New York City even though he brings his suit in a federal court in Virginia. The Court thinks he has the right to make an election to proceed in some other manner if it is more appropriate to his purposes and if such a cause of action is available to him. Such an election seems apparent from the language of the Carmack Amendment itself, that 'nothing in this section shall deprive any holder of such receipt or bill of lading of any remedy or right of action which he has under existing law.' 49 U.S.C. § 20(11).
"The plaintiff has chosen to proceed on the false and fraudulent misrepresentations of the defendants. This is the more difficult course for him to take. One would certainly expect the defendants to deny such misrepresentations. The plaintiff's case, being couched entirely on such fraud, can only be sustained by proof of such fraud by a preponderance of evidence. The mere proof of non-delivery in California would not sustain the burden which the plaintiff has, by his pleadings, assumed.
"On the other hand, plaintiff, by invoking the bill of lading and 49 U.S.C. § 20(11) could rest his case after showing only delivery of the car to defendants in Norfolk and non-delivery of the car in California. Obviously, this would be the far easier route.
"In any event the choice is his.
"Since the evidence to sustain plaintiff's claim is far different in this common law misrepresentation suit than would be necessary under a Carmack Agreement action, the suit here cannot ...

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