NAT. RR PASSENGER CORP. v. Consol. Rail Corp., Civ. A. No. 87-0277-OG.
Decision Date | 03 August 1987 |
Docket Number | Civ. A. No. 87-0277-OG. |
Citation | 670 F. Supp. 424 |
Parties | NATIONAL RAILROAD PASSENGER CORPORATION, Plaintiff, v. CONSOLIDATED RAIL CORPORATION, Defendant. |
Court | U.S. District Court — District of Columbia |
John C. Morland and Harold Henderson, Washington, D.C., for plaintiff Amtrak.
Lawrence Shiekman and Gerald Norton, Washington, D.C., for defendant Conrail.
On January 4, 1987, a northbound freight train controlled by an engineer and a brakeman and owned by the Consolidated Rail Corporation ("Conrail"), failed to heed a series of slow and stop signals at a track juncture near Chase, Maryland.1 Consequently the Conrail train entered the path of a high speed northbound passenger train operated by the National Railroad Passenger Corporation ("Amtrak"). A collision ensued, resulting in sixteen deaths, several hundred injuries, and millions of dollars in property damage. Since the accident, at least 38 lawsuits have been filed naming Amtrak, Conrail or both as defendants. Sixteen lawsuits filed against both railroads allege negligence, gross negligence, or wanton and reckless misconduct. Twelve lawsuits seek punitive damages totalling $500 million.2
Conrail and Amtrak are parties to a contract which arguably bears upon liability apportionment for the aforementioned accident. In the Second Amended and Restated Northeast Corridor Freight Operating Agreement ("Freight Operating Agreement" or "Agreement") of October 1, 1986, Amtrak agreed, inter alia, to indemnify Conrail for injuries to Amtrak passengers. Section 5.6 of the Agreement states as follows:
Amtrak agrees to indemnify and save harmless Conrail and Conrail Employees, irrespective of any negligence or fault of Conrail or Conrail Employees, or howsoever the same shall occur or be caused, from any and all liability for injuries to or death of any Amtrak Passenger and for loss of, damage to, or destruction of any property of any such passenger.
Moreover, the Agreement provides that the indemnifying party shall defend all such suits. See Freight Operating Agreement § 5.16. On the basis of these provisions, Conrail has demanded that Amtrak defend and indemnify it for any claims and damages arising out of the accident at Chase, Maryland. Despite the obvious breadth of the Agreement's indemnification provision, Amtrak claims that it is not obligated to reimburse Conrail for all damages. Amtrak maintains that it need not indemnify Conrail for conduct determined to be reckless, wanton, willful, or grossly negligent. Amtrak contends that an indemnification agreement embracing such conduct is unenforceable as against public policy. Similarly, Amtrak argues that there can be no indemnification for punitive damages. Amtrak seeks a declaratory judgment to this effect. See 28 U.S.C. § 2201.3
The provision of the Freight Operating Agreement at issue in this case is an indemnity clause.4 Accordingly, Amtrak's legal obligation under the clause does not arise unless and until Conrail is found at least to have negligently caused the Chase, Maryland collision and liability attaches to such a finding. Amtrak does not here dispute that if Conrail is found merely to be negligent that the indemnity clause will be triggered and will be fully enforceable. Amtrak only disputes its obligation to indemnify Conrail if a trier of fact concludes that Conrail is liable to passengers for wanton, willful, reckless or grossly negligent conduct of its employees or in the event that Conrail is subject to an award of punitive damages in favor of a passenger. Complaint at ¶¶ 9, 15-26. It is undisputed that no such finding has yet been made. The defendant maintains that the scope of the Declaratory Judgment Act is not so broad as to allow the Court to address questions founded on an event which may never occur. For reasons hereafter provided, the Court disagrees and finds that declaratory judgment relief is proper in this case.
28 U.S.C. § 2201(a). Cf. Fed.R.Civ.P. 57. This statute was enacted, at least in part, to "enable litigants to narrow the issue, speed the decision, and settle the controversy before an accumulation of differences and hostility engendered a wide and general conflict, involving numerous collateral issues." S.Rep. No. 1005, 73d Cong., 2d Sess. 3 (1934) ("Senate Report"). To facilitate these ends, courts have repeatedly stated that the Act should have a liberal interpretation. See, e.g., Simmonds Aerocessories, Ltd. v. Elastic Stop Nut Corp. of Am., 257 F.2d 485, 489 (3d Cir.1958); M. Swift & Sons, Inc. v. Lemon, 24 F.R.D. 43, 46 (S.D.N.Y.1959). Nevertheless, a federal court's power to issue a declaratory judgment is not unlimited. The Act is expressly applied only to cases of "actual controversy." This limitation is not unique; it merely incorporates Article III's requirement that federal courts may only entertain "cases or controversies." See Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 239-40, 57 S.Ct. 461, 463-64, 81 L.Ed. 617, reh'g denied, 300 U.S. 687, 57 S.Ct. 667, 81 L.Ed. 889 (1937).
Id. at 240-41, 57 S.Ct. at 463-64 (citations omitted). This statement makes clear that courts should not be "umpires to debates concerning harmless, empty shadows." Poe v. Ullman, 367 U.S. 497, 508, 81 S.Ct. 1752, 1758, 6 L.Ed.2d 989, reh'g denied, 368 U.S. 869, 82 S.Ct. 21, 7 L.Ed.2d 69 (1961). However, the Supreme Court has recognized that it is not possible to fashion a "precise test" to determine the adequacy of a particular controversy. See Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941). Thus, "the propriety of declaratory relief in a particular case will depend upon a circumspect sense of its fitness informed by the teachings and experience concerning the functions and extent of federal judicial power." Public Service Comm'n of Utah v. Wycoff Co., Inc., 344 U.S. 237, 243, 73 S.Ct. 236, 239, 97 L.Ed. 291 (1952). To aid courts in this endeavor, the Supreme Court has set out a somewhat more workable test:
Haworth, supra, 300 U.S. at 241, 57 S.Ct. at 464.
Applied to the facts of this case, these standards can yield only the conclusion that Amtrak's complaint states a proper controversy. First, Amtrak's suit does not confront the Court with a hypothetical set of facts. Injured passengers have filed suit against Conrail based on theories of gross negligence and including claims for punitive damages. Conrail has demanded that Amtrak indemnify it as to those claims. Amtrak has refused, alleging that public policy precludes indemnification for such claims. The pending lawsuits naming Conrail as a defendant are not hypothetical. In each of these cases, there is some likelihood that Conrail will be found grossly negligent or that punitive damages will be awarded. Accordingly, there is a "real and substantial" possibility that Amtrak will be called upon to indemnify Conrail for such claims. E.g., Keene Corp. v. Insurance Co. of N. America, 667 F.2d 1034, 1040 (D.C.Cir.1981), cert. denied, 455 U.S. 1007, 102 S.Ct. 1644, 71 L.Ed.2d 875, reh'g denied, 456 U.S. 951, 102 S.Ct. 2023, 72 L.Ed. 2d 476 (1982).5
United States v. Fruehauf, 365 U.S. 146, 157, 81 S.Ct. 547, 554, 5 L.Ed.2d 476, reh'g denied, 365 U.S. 875, 81 S.Ct. 899, 5 L.Ed. 2d 864 (1961). In the case at bar, Amtrak poses a question of public policy. Further discovery of facts relating to the accident at Chase, Maryland is not necessary to frame this issue. See supra, note 2. In support of their positions, the parties already have submitted briefs and exhibits in excess of 500 pages.6 It would strain credulity to hold that the...
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