City of N.Y. v. Nat'l R.R. Passenger Corp.

Decision Date16 January 2015
Docket NumberNo. 13–7119.,13–7119.
Citation776 F.3d 11
PartiesCITY OF NEW YORK, Appellant v. NATIONAL RAILROAD PASSENGER CORPORATION, (Amtrak), Appellee.
CourtU.S. Court of Appeals — District of Columbia Circuit

OPINION TEXT STARTS HERE

Appeal from the United States District Court for the District of Columbia (No. 1:11–cv–01169).

Scott Shorr argued the cause and filed the briefs for appellant.

Daniel G. Jarcho argued the cause for appellee. With him on the brief were Craig D. Rust and Dennis M. Moore.

Before: PILLARD, Circuit Judge, and SILBERMAN and SENTELLE, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge SILBERMAN.

SILBERMAN, Senior Circuit Judge:

The dispute in this case is over who bears financial responsibility for the $25 million rehabilitation of a bridge carrying a public highway over a parcel of land in the Bronx: New York City or Amtrak. The City invokes a 1906 agreement obligating Amtrak's predecessor to maintain and repair the bridge. It asserts the agreement is a covenant running with the land which survived the land's subsequent Rail Act conveyance made “free and clear of any liens or encumbrances.” The City also seeks to recoup payments it made to Amtrak in exchange for Amtrak's removal of electrical equipment attached to the bridge so the rehabilitation could proceed. The district court granted summary judgment to Amtrak on both claims, holding that the Rail Act extinguished the obligation and the City was not entitled to recover its already-incurred costs under the narrow theory of restitution it advanced. We affirm.

I.

The background facts giving rise to the Regional Rail Reorganization Act of 1973 and the history of the Shore Circle Road Bridge are detailed in the district court's thoughtful and comprehensive opinion. City of New York v. Nat'l R.R. Passenger Corp., 960 F.Supp.2d 84, 86–89 (D.D.C.2013). We only briefly state the facts necessary to our disposition of the appeal.

Amtrak's predecessor purchased a parcel of land in Pelham Bay in the Bronx from the City in 1906. Pursuant to the terms of the deed, that railroad company built a bridge over the land, conveyed an easement to the City “limited for the purpose of the continued existence of a bridge carrying the public highway ... across the railroad tracks,” and promised that it and its successors would “maintain and keep [the bridge] in repair.” Otherwise, the land would revert back to the City.

Over the decades, the land went through a series of transfers until it fell into Penn Central's hands. In 1970, Penn Central filed for bankruptcy along with seven other major railroad companies, creating a rail transportation crisis endangering the national welfare. Congress responded with the Rail Act. The Act sought to build new, financially viable railroads from the bankrupt rail system. Properties conveyed to Amtrak were to be conveyed “free and clear of any liens or encumbrances.” 45 U.S.C. § 743(b)(2).

The Rail Act also created a Special Court to order the conveyances of rail properties and resolve disputes related to the reorganization. The Act endowed the Special Court with “original and exclusive jurisdiction [over] any action [ ] to interpret, alter, amend, modify, or implement any of the [court's conveyance orders].” Id. § 719(e)(2). That provision was subsequently interpreted by the Special Court to include any issue “ relating ” to conveyance orders or agreements entered pursuant to conveyance orders. Consol. Rail Corp. v. United States, 883 F.Supp. 1565, 1571 n. 15 (Reg'l Rail Reorg.Ct.1995) (emphasis added). In 1997, Congress abolished the Special Court as a separate tribunal and transferred its original and exclusive jurisdiction to adjudicate cases that implicate the conveyance orders to the district court for the District of Columbia. § 719(b)(2) (Supp. III 1997). Cases are appealable to this court pursuant to 28 U.S.C. §§ 1291–92, 1294. 45 U.S.C. § 719(e)(3).

Amtrak received the land supporting the bridge pursuant to a Special Court conveyance order. The land was transferred free and clear of any liens or encumbrances but subject to all existing easements. Time passed, and the bridge fell into disrepair. The City began planning to replace the bridge in 1997, but Amtrak's electrical equipment attached to the underside of the bridge impeded the project. In 2003, the City agreed pursuant to a Force Account Agreement to pay Amtrak to remove its equipment so the construction could proceed, but reserved the right to recover the cost of moving the equipment if a court determined that Amtrak was the responsible party.

The City filed a lawsuit in the Southern District of New York in 2010, seeking a declaratory judgment that Amtrak was liable for rehabilitation of the bridge pursuant to its predecessor's 1906 obligation to maintain and repair the bridge, and an order requiring Amtrak to reimburse the City for all of the City's already-incurred construction costs. Judge Crotty determined that the court lacked subject matter jurisdiction to hear the City's claims because they require the review and interpretation of a Rail Act conveyance order, and granted Amtrak's motion to transfer the case to the district court for the District of Columbia. Once here, the parties cross-moved for summary judgment, each asserting that the other was liable for the bridge's rehabilitation and reimbursement for the removal of the electrical equipment.

The district court granted summary judgment to Amtrak on all claims, holding that Amtrak has no obligation to maintain and repair the bridge that survives the Rail Act, whether the City's claim was based on a contract or a covenant. 1 The court held, therefore, that under New York law the City is responsible for maintaining the bridge because it owns it. See also City of Philadelphia v. Consol. Rail Corp., 222 F.3d 990 (D.C.Cir.2000) (holding the same under Pennsylvania law where a railroad's contractual obligation was extinguished by the Rail Act). Although the district court determined that Amtrak owed the City a duty to relocate the electrical facilities under New York's public utility rule, it found that the City could not recover its costs under either the emergency assistance doctrine (a narrow theory of restitution) or indemnification. City of New York, 960 F.Supp.2d at 86–87. This appeal followed.

II.

The City argues that we should interpret the Rail Act phrase “free and clear of any liens or encumbrances” consistent with the meaning of analogous bankruptcy provisions. We are told that since the maintenance and repair agreement is a covenant running with the land, under ordinary bankruptcy law, conveyances of a debtor's real property “free and clear of any liens or encumbrances” do not extinguish third-parties' deed-based covenants. The City challenges the district court's application of the Rail Act as unconstitutional because it would exceed the Congress's bankruptcy powers and result in an uncompensated taking. As to the restitution claim, which is purely a question of state law, the City concedes that it advanced meritless causes of action before the district court, but on appeal asserts a new one—unjust enrichment.

Amtrak responds with a number of arguments, ranging from a contention that the City's claims are untimely, to an assertion that the maintenance and repair agreement is an executory contract rather than a covenant running with the land and was thus disclaimed in the Rail Act conveyance. But its core argument regarding the bridge rehabilitation claim is that even assuming the City enjoyed a covenant running with the land, it was extinguished by the Rail Act.

Turning to the City's unjust enrichment claim, Amtrak asserts that the City forfeited this new argument by not asserting it to the district court. Were we to reach it nevertheless, Amtrak presents a series of arguments based on New York law to support its position—that it owes no duty to the City to pay for the removal of that electrical equipment.

III.

We start with consideration of our jurisdiction. Neither party actually contests the district court's exclusive jurisdiction to decide cases that implicate conveyance orders under the Rail Act, and therefore our appellate jurisdiction. Nevertheless, we have an independent obligation to assure ourselves of jurisdiction. And the City relies on a New York federal district court case affirmed by the Second Circuit, City of New York v. Nat'l R.R. Passenger Corp., No. 06–CV–793, 2008 WL 5169636, at *1 (E.D.N.Y. Dec. 9, 2008)aff'd,373 Fed.Appx. 84 (2d Cir.2010), involving a facially similar case in which the district court took jurisdiction and, in dicta,2 expressed the view that the Rail Act employed the principles of bankruptcy law. Although that court's subject matter jurisdiction was challenged, the court rejected the jurisdictional objection without discussion. (It is rather puzzling that the Second Circuit summarily affirmed, also without discussing its subject matter jurisdiction.) As noted above, any issue that relates to a conveyance order or agreement entered pursuant to a conveyance order falls within the exclusive jurisdiction of the Special Court. See Consol. Rail Corp., 883 F.Supp. at 1571 n. 15. Since that case involved a deed implementing a Rail Act conveyance order, as does ours, we simply do not understand why the New York district court assumed jurisdiction. 3

The City's claim that the Rail Act incorporated principles of the Bankruptcy Code and therefore a covenant running with the land per New York law would not be extinguished by 743(b)(2) as a “lien or encumbrance” is quite weak. Indeed, even if we granted the premise, it is by no means clear under New York law, which would be used in a bankruptcy court to determine the property rights in bankrupt's estate, that any alleged covenant would survive. 4

Be that as it may, appellant's premise is quite wrong; the Rail Act uses different language than the Bankruptcy Code. 743(b)(2) provides flatly...

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