ICC v. Baltimore and Annapolis Railroad Company, Civ. No. B-74-786.

• Decision Date: 12 May 1975
• Docket Number: Civ. No. B-74-786.
• Citation: 398 F. Supp. 454
• Parties: INTERSTATE COMMERCE COMMISSION and Alco-Gravure, Inc. v. The BALTIMORE AND ANNAPOLIS RAILROAD COMPANY and Elmer J. Jubb.
• Court: U.S. Bankruptcy Court — District of Maryland

398 F. Supp. 454

INTERSTATE COMMERCE COMMISSION and Alco-Gravure, Inc. v. The BALTIMORE AND ANNAPOLIS RAILROAD COMPANY and Elmer J. Jubb.

Civ. No. B-74-786.

United States District Court, D. Maryland, Baltimore Division.

April 29, 1975.

Order May 12, 1975.

COPYRIGHT MATERIAL OMITTED

Daniel S. Linhardt, Interstate Commerce Commission, Washington, D. C.; Earl H. Nemser, New York City, and Francis J. Gorman, Baltimore, Md., for plaintiffs.

Joseph I. Huesman, Baltimore, Md., for defendants.

MEMORANDUM

BLAIR, District Judge.

The Interstate Commerce Commission (ICC) instituted this civil action on July 25, 1974, seeking preliminary and permanent injunctive relief against the defendants, The Baltimore and Annapolis Railroad Company (B & A) and its President, Elmer J. Jubb. Specifically, the ICC seeks to restrain B & A from its alleged illegal abandonment of a segment of its track that runs from Clifford Junction in Baltimore City to a point approximately six miles south. Shortly after the suit was filed a former customer of B & A, Alco-Gravure, Inc. (Alco), sought to intervene in the action pursuant to Rule 24(b) of the Federal Rules of Civil Procedure. Before a hearing on the motion for preliminary injunction, B & A moved to dismiss or, in the alternative, to stay the proceedings pending the outcome of an application now before the ICC in which it seeks permission to abandon service permanently along its entire route. The hearing was limited, however, solely to the motion for a preliminary injunction and the motion to intervene, and a decision on defendants' motion to dismiss or stay the proceedings was postponed until a hearing on the merits of the permanent injunction could be held.

Testimony and argument on ICC's motion for a preliminary injunction and Alco's motion for leave to intervene were heard August 20-22, 1974. On August 26, this court granted Alco leave to intervene, but denied the request for a preliminary injunction. I.C.C. v. Baltimore & A. R. R., 64 F.R.D. 337 (D.Md.1974). Alco's complaint alleging violations by defendants of 49 U.S.C. §§ 1(18)-(20) and requesting permanent injunctive relief only was filed the same day.

On August 30, 1974, Alco filed its first amended complaint, which added a prayer for damages based upon common law principles and upon 49 U.S.C. §§ 1(4), 1(11) (1970). Defendants again filed a motion to stay the proceedings pending the outcome of the ICC abandonment proceedings. The decision on this motion was also deferred pending a hearing on the merits of the request for permanent injunctive relief.

On February 21, 1975, defendants answered the complaints of ICC and Alco, and moved to dismiss Alco's request for injunctive relief and damages. Defendants also requested a jury trial on the issue of damages. With the concurrence of counsel for all parties, the court heard testimony and argument limited solely to the merits of the permanent injunction on March 11, 1975, postponing a ruling on the defendants' motion to dismiss Alco's damage claim.

The facts as found by this court in its opinion of August 26, 1974, denying ICC's motion for a preliminary injunction are adopted for purposes of this decision, except as modified or changed.

Findings of Fact

A. Developments since August 1974 hearing.

At the time of the hearing on ICC's motion for a preliminary injunction in August of 1974, there was pending before an ICC review board a decision on the exceptions taken by both parties to the initial decision of the administrative law judge concerning Alco's complaint before the ICC. The law judge had found B & A in violation of sections 1(4) and 1(18) of the Act. Based on the violation of section 1(4), he had ordered B & A to cancel the temporary embargo and take the necessary steps to restore rail service to Alco. He also ruled, however, that Alco had failed to establish a prima facie case for showing a violation of section 1(11) and that the ICC had no jurisdiction to enforce violations of section 1(18). The filing of the exceptions by both B & A and Alco stayed the effect of the initial decision.

On August 22, 1974, the ICC Review Board rendered its decision on the exceptions. It agreed with the administrative law judge as to his section 1(11) and section 1(18) rulings. However, the Board further ruled that the ICC had no jurisdiction to enforce section 1(4) of the Act. The Board therefore dismissed Alco's complaint. Subsequent to the decision of this court denying ICC's motion for a preliminary injunction, Alco petitioned the ICC for reconsideration of its earlier decision. This petition was denied on January 16, 1975. Alco has not sought judicial review of the ICC decision.

As to the progress of B & A's abandonment application before the ICC, a draft environmental impact statement has now been prepared and a hearing on the abandonment application was to be held April 16, 1975. A final decision by the ICC is expected to take at least six months; in addition, final resolution of B & A's abandonment request could be further delayed by subsequent judicial review. In short, a final decision on B & A's petition for abandonment is not imminent. In the meantime, no repairs to the rail line have been undertaken, and rail service to Alco's Glen Burnie plant has not been restored.

B. Effect of cessation of service upon operation of Alco's Glen Burnie plant.

As of June 30, 1974, Alco had incurred additional costs of $218,000 as a consequence of the loss of B & A's rail service. Since that time, this figure has risen by $42,000 to $260,000. Of this total, Alco has passed on $124,000 to various customers in the form of direct billings and absorbed $136,000. Alco's Maryland plant is thus placed at a competitive disadvantage at least as compared to its position before June of 1972 but nevertheless remains profitable and has increased its output substantially since June of 1972.

Because this court denied the ICC's motion for a preliminary injunction, Alco was required to renew its warehouse lease for 1975 at a substantial increase in rent, which is reflected in the figures noted above. However, the lease can be terminated upon thirty days' notice.

C. Costs to restore rail service to Alco's plant.

There are three major cost categories in determining the total expenditure required to restore service to Alco's plant: (1) 4.2 miles of trackage; (2) the bridge over the Patapsco River, including the trackwork thereon; and (3) the bridge over Old Annapolis Road.

The cost of repairs to the trackage was subject to much dispute. Defendants' experts, employees of Rhinehart Railroad Construction, Inc., estimated the costs as of June 1973 to be $187,000 plus contingencies of $37,000, for a total of $224,000, which includes $4,000 for the trackage across the Patapsco River bridge. As of September 1974, these costs had increased to $242,000, plus contingencies of $49,000, for a total of $291,000. This includes $9,800 for track work over the bridge. These figures, however, were not limited to standards for a class one railroad and would allow an operating speed of at least 25 miles per hour, 15-20 miles per hour greater than would be required. They contained no breakdown as to Agnes-related damage. The estimate also assumed new rail would have to be purchased, without considering the use of second-hand rail that B & A owns but which is not currently used.

Alco's expert, Jack D. Storm, based his estimate upon Federal Railroad Administration class one standards for operating speeds of ten miles per hour. His estimate was also broken down into damage caused by Agnes, and conditions existing before Agnes and conditions arising since. Mr. Storm estimated that the total cost of repair of trackage at 1972 prices would have been $32,000, only $700 of which was attributable to Agnes. At 1975 prices, these figures are $43,000 and $1,200 respectively. None of the figures include costs for track work over the bridge. The costs not attributable to Agnes are directly attributable to B & A's failure to expend funds necessary for routine maintenance over the years. Mr. Storm is eminently qualified as an expert in this field, and his painstaking methodology and detailed summaries render his testimony the most credible. Hence, this court finds as fact the cost figures submitted by Mr. Storm.

The only testimony concerning the cost of bridge repair was provided in the form of expert testimony from a McLean Contracting Co. employee, Mr. G. R. Wentz, called by the defendants in both the preliminary injunction and permanent injunction hearings. As of November 1972, McLean estimated the cost of repair to be $40,000 — $45,000. As of June 1973, this cost had risen to $55,000. Neither figure included the cost of design engineering, which could be expected to increase the total by approximately ten percent. As of March 1975, Mr. Wentz estimated the total cost of repair to be $100,000, which includes the consulting engineer's fee for design. None of these figures includes the cost to repair the track work over the bridge.

The November 1972 and June 1973 estimates contained no specific breakdown as to which costs were or were not attributable to Hurricane Agnes. Mr. Wentz stated that deterioration of the concrete supports took place over a period of years, but he could not state whether the failure to repair would have caused the final destruction when Agnes swept by. Given the fact that most of the cost to repair the trackage is a result of B & A's conscious policy of deferred maintenance, it is reasonable to infer that such a policy also substantially contributed to the washout of the Patapsco River bridge. Although it cannot be stated with certainty that the bridge would have been operational after Agnes had B & A not failed to perform routine maintenance on the bridge, this court finds that the cost to repair and restore service over the bridge would have been substantially less, even though the final washout was...