Maryland Transit v. National R.R. Passenger
| Decision Date | 06 June 2005 |
| Docket Number | No. CIV. AMD 04-3650.,No. CIV. AMD 04-3683.,No. CIV. AMD 05-403.,CIV. AMD 04-3650.,CIV. AMD 04-3683.,CIV. AMD 05-403. |
| Citation | 372 F.Supp.2d 478 |
| Parties | MARYLAND TRANSIT ADMINISTRATION, Plaintiff v. NATIONAL RAILROAD PASSENGER CORPORATION, Defendant National Railroad Passenger Corporation, Plaintiff v. Maryland Transit Administration, Defendant |
| Court | U.S. District Court — District of Maryland |
Douglas G. Carrey Beaver, State of Maryland Office of the Attorney General, Callista Marie Freedman, Maryland Transit Administration, Baltimore, MD, for Plaintiff.
Dale B. Garbutt, Whiteford Taylor and Preston, Baltimore, MD, William G. Ballaine, Landman Corsi Ballaine and Ford PC, New York City, for Defendant.
These three cases arise out of a pair of arbitration proceedings between the parties, Maryland Transit Administration ("MTA") and National Railroad Passenger Corporation ("AMTRAK"). Two distinct arbitration awards are at issue. In the first award, a majority of the arbitration panel ruled in favor of MTA, and concluded that a train collision near the Baltimore train station was the fault, i.e., resulted from gross negligence, of an AMTRAK locomotive engineer. In case number AMD 04-3683, MTA seeks confirmation of that award pursuant to the Federal Arbitration Act ("FAA"). See 9 U.S.C. § 9.1 The court concludes that MTA's petition is untimely, and thus shall dismiss that case without prejudice.
In the second award, the majority of a different panel of arbitrators concluded that notwithstanding the first arbitration award, MTA had contractually bound itself to procure liability insurance to protect both itself and AMTRAK from losses arising out of accidents of the type involved here. Accordingly, the panel concluded, MTA was required to provide insurance coverage to AMTRAK for some of the losses occasioned by the locomotive engineer's gross negligence. In cases numbered AMD 04-3650 AMD 05-403, respectively, MTA seeks an order vacating, and AMTRAK seeks an order confirming, the second arbitration award. For the reasons stated herein, the court shall confirm the second arbitration award.
MTA, formerly known as the Mass Transit Administration, is a part of the Maryland Department of Transportation. AMTRAK is a corporation organized under the Rail Passenger Act of 1970, 45 U.S.C. §§ 501, et seq., and the laws of the District of Columbia.2 The parties are signatories to an agreement dated January 1, 1994 ("the Agreement"), pursuant to which AMTRAK succeeded CSX Transportation, Inc., as a provider of equipment, personnel, and various services to MTA in respect to the operation of commuter rail passenger service between Perryville, Maryland, and Washington, D.C.
The Agreement contains a broad arbitration clause, providing as follows, in part:
Any dispute, claim, or controversy between the parties hereto relating to the interpretation, application, or implementation of this Agreement shall be submitted to binding arbitration...
Any arbitration award rendered hereunder shall be final and binding upon the parties. Judgment upon any such arbitration award may be entered in any United States District Court having jurisdiction over the parties.
Section 9 of the Agreement is entitled "Risk of Liability." It provides as follows, in relevant part:
Except as provided in the second paragraph hereof, [MTA] agrees to indemnify and save harmless Amtrak ... and other third parties to the extent Amtrak is obligated to indemnify or save harmless such third parties, irrespective of negligence or fault of Amtrak or such third parties, for all damage or liability for personal injury, death, or property damage which would not have been incurred but for the existence of [the commuter rail service] provided by Amtrak; provided, however, that [MTA] shall have no responsibility to Amtrak or any other party for injury or death to Amtrak employees engage directly in the provision of the [commuter rail service].
[MTA]'s agreement to indemnify and save harmless Amtrak, as set forth in the first paragraph hereof, shall not apply to any claim for damages or for any liability for personal injury, death, or property damage, including damage to Amtrak property, (a) which is caused by the gross negligence, or willful or wanton conduct of Amtrak as agreed by the parties or determined by arbitration pursuant to Section 22 of this Agreement....
Finally, section 10 of the Agreement is entitled "Liability Insurance." It provides as follows, in relevant part:
(a) Liability Insurance
[MTA] shall procure and maintain for the duration of this Agreement, liability insurance, with combined single limits for bodily injury and property damage of at least $150,000,000 per occurrence, with Amtrak and [MTA] designated as the named insureds. Such insurance shall cover the Named Insureds' liability for injury or death of persons and damage to property, including coverage for punitive or exemplary damages, arising out of the [commuter rail service] .... [MTA] shall have the right to self-insure for any part of the insurance procurement up to $5,000,000 per occurrence. Amtrak shall have the right of approval that the insurance placements and self-insurance arrangements adequately protect Amtrak against liability for bodily injury, death and property damages, which approval shall not be unreasonably withheld.
On June 17, 2002, at a location just south of the Baltimore train station, a northbound AMTRAK intercity passenger train destined for New York proceeded through a stop indication and collided with a southbound commuter train, causing significant damage. Unable to agree on the allocation of fault for the accident, and pursuant to the arbitration clause in the Agreement, the parties proceeded to arbitration under a bifurcated process before two separate arbitration panels. The issue presented to the first panel was whether, under § 9 of the Agreement, the AMTRAK engineer was guilty of gross negligence in causing the collision, thereby relieving MTA of any responsibility to indemnify AMTRAK. In a 2-1 decision issued on September 22, 2003 ("the first arbitration award"), and over a vigorous dissent, the arbitration panel, applying Maryland law, found and concluded that the engineer committed gross negligence.3
Notwithstanding the September 22, 2003, award, AMTRAK asserted that, pursuant to § 10 of the Agreement, MTA was required to provide insurance coverage to AMTRAK for the June 2002 accident. MTA denied that § 10 could be read to impose such an obligation upon it in light of the first arbitration award, and as a matter of contract interpretation. Accordingly, the parties once again proceeded to arbitration. In defending against AMTRAK's claim for insurance coverage in the second arbitration proceeding, MTA asserted the following defenses: (1) claim preclusion; (2) estoppel/waiver; (3) failure to give adequate notice of the claim; and (4) the June 2002 accident did not "arise out of" the operation of the commuter rail service as required by § 10 of the Agreement ("Such insurance shall cover the Named Insureds' liability for injury or death of persons and damage to property, including coverage for punitive or exemplary damages, arising out of the [commuter rail service]").
On October 19, 2004, again in a 2-1 split decision issued over a vigorous dissent ("the second arbitration award"), the second arbitration panel agreed with AMTRAK and found and concluded that under § 10 of the Agreement, MTA's obligation to provide insurance to AMTRAK subsisted notwithstanding the fact that the AMTRAK engineer was guilty of gross negligence as determined by the first arbitration panel. The second arbitration panel further found that none of the affirmative defenses offered by MTA had merit. Finally, the second arbitration panel interpreted the phrase "arising out of" as suggested by AMTRAK and rejected MTA's more limited construction of the term.
MTA filed an action in this court to vacate the second arbitration award on November 17, 2004, and an action to enforce the first arbitration award on November 18, 2004. AMTRAK filed an action to confirm the second arbitration award on November 8, 2004, in the United States District Court for the District of Columbia, and that case was transferred to this district on February 10, 2005. The court consolidated the three cases.
The FAA sets out four limited statutory grounds on which a district court can vacate an arbitration award. 9 U.S.C. § 10(a)(1)-(4);4 see also Remmey v PaineWebber, Inc., 32 F.3d 143, 146 (4th Cir.1994)( that Congress has limited the statutory grounds upon which arbitration can be vacated to 9 U.S.C. § 10(a)(1)-(4)), cert. denied, 513 U.S. 1112, 115 S.Ct. 903, 130 L.Ed.2d 786 (1995). In addition, a court may overturn a legal interpretation of an arbitration panel if "it is in manifest disregard for the law." See, e.g., Upshur Coals Corp. v. United Mine Workers of America, 933 F.2d 225, 229 (4th Cir.1991) (citing American Postal Workers v. United States Postal Serv., 682 F.2d 1280, 1284 (9th Cir.1982), cert. denied, 459 U.S. 1200, 103 S.Ct. 1183, 75 L.Ed.2d 431 (1983)); Remmey, 32 F.3d at 149; Apex Plumbing Supply, Inc. v. U.S. Supply Co., Inc., 142 F.3d 188, 193 (4th Cir.)("Federal courts may vacate an arbitration award only upon a showing of one of the grounds listed in the [FAA], or if the arbitrator acted in manifest disregard of law.") (citing In re A.H. Robins Co., Inc., 197 B.R. 513, 516 (E.D.Va.1994)), cert. denied, 525 U.S. 876, 119 S.Ct. 178, 142 L.Ed.2d 145 (1998).
The Fourth Circuit has emphasized "the limited scope of judicial review that courts are permitted to exercise over arbitral decisions." Remmey, 32 F.3d at 146; see Upshur Coals Corp., 933 F.2d at 228 (); Apex Plumbing Supply, Inc., 142 F.3d at 193 (...
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