National RR Passenger Corp. v. Consolidated Rail Corp.
Decision Date | 03 October 1988 |
Docket Number | Civ. A. No. 87-0277-OG. |
Citation | 698 F. Supp. 951 |
Parties | NATIONAL RAILROAD PASSENGER CORPORATION, Plaintiff, v. CONSOLIDATED RAIL CORPORATION, Defendant. |
Court | U.S. District Court — District of Columbia |
Harold R. Henderson, Stephen C. Rogers, T. Michael Kerrine, William R. Perlik, Deanne C. Siemer, Michael L. Burack, Murray A. Indick, Washington, D.C., for plaintiff.
Gerald P. Norton, Washington, D.C., Laurence Z. Sheikman, Thomas E. Zemaitis, Philadelphia, Pa., for defendant.
This is a declaratory judgment action brought by the National Railroad Passenger Corporation ("Amtrak") against Consolidated Rail Corporation ("Conrail"). Amtrak seeks a determination that it is not required to pay on Conrail's behalf compensatory, punitive or exemplary damages awarded against Conrail resulting from a train wreck that occurred at Chase, Maryland, on January 4, 1987.
The Chase, Maryland train wreck was one of the worst disasters in railroad history, resulting in 16 deaths and more than 350 injury claims from Amtrak passengers and employees. Over sixty personal injury and wrongful death actions arising out of the Chase disaster have been brought against Amtrak and Conrail. Stipulation, filed November 5, 1987, ¶ 18. The plaintiffs in many of those cases allege that Conrail or Amtrak or both committed reckless, wanton, willful or grossly negligent acts and assert entitlement to compensatory and punitive damages totaling many millions of dollars. Id.
The accident occurred when an Amtrak train collided with three Conrail freight locomotives which had entered the path of the high-speed northbound Amtrak passenger train. Just prior to crossing over onto the track being used by the Amtrak train, the Conrail engineer and brakeman in control of the Conrail locomotives had failed to heed a series of slow and stop signals at or before a track juncture near Chase, Maryland. The Conrail engineer has admitted to a host of wrongs: that the Conrail crew had recently used marijuana, was speeding, was operating a train in which the cab signal had been rendered inoperative because the light bulb had been removed from it, and was operating a train in which an audible warning device had been intentionally disabled. He has also admitted that he failed to call out signals to his brakeman, as required by applicable safety regulations, that he failed to maintain a proper lookout, and that he did not adhere to the cab signals or the wayside signals.1 In a plea bargain arrangement with the State of Maryland, the engineer of the Conrail freight train involved in the Chase accident pleaded guilty on February 16, 1988, to a single count of manslaughter by locomotive that names all 16 persons killed in the train wreck. On March 29, 1988, the engineer was given the maximum penalty for manslaughter, five years imprisonment and $1,000 in fines. Additionally, on May 25, 1988, the Conrail engineer pleaded guilty to a federal charge of conspiring to obstruct the federal investigation of the accident.
At the time of the Chase accident, Conrail and Amtrak were parties to an agreement entitled "Second Amended and Restated Northeast Corridor Freight Operating Agreement" (hereinafter "Freight Operating Agreement") dated October 1, 1986. Stipulation, Filed November 5, 1987, ¶ 15; Agreements, Tab 22. This action seeks a declaration of the rights and obligations of the parties with respect to the indemnification provisions of the Freight Operating Agreement.
Armed with provisions of the Freight Operating Agreement which bear on liability apportionment, Conrail has demanded that Amtrak defend and indemnify it for any claims and damages arising out of the Chase accident. Amtrak contends that it need not indemnify Conrail for reckless, wanton, willful or grossly negligent acts or for punitive damages. Amtrak bases its contention on the argument that enforcement of the liability apportionment provisions would violate public policy in the case of findings of more than mere negligence or awards of punitive damages.
The Court has previously held that this case presents a justiciable controversy such that the issue presented falls within the scope of the Declaratory Judgment Act. National Railroad Passenger Corp. v. Consolidated Rail Corp., 670 F.Supp. 424, 432 (D.D.C.1987). The issue presented in this case is whether Amtrak must indemnify Conrail for any damages — compensatory, punitive or exemplary — arising out of the Chase accident that are founded upon reckless, wanton, willful, or grossly negligent acts by Conrail.
In addition to determining that declaratory relief is proper in this case, the Court previously held that there was an issue of fact as to the intention of the parties, precluding summary judgment. Id. at 434. In early November of 1987, the Court held an evidentiary hearing in order to determine the intent of the parties at the time they entered the Freight Operating Agreement. The parties, in accordance with a stipulation filed on October 13, 1987, submitted proposed findings of fact and conclusions of law, as well as post-hearing memoranda. The evidentiary record before the Court principally derives from pre-hearing stipulations, the testimony heard at trial, designated deposition testimony, affidavits, joint exhibits, and the agreements and side letters covered in the evidentiary hearing. This memorandum represents the Court's findings of fact and conclusions of law.
The Chase, Maryland disaster occurred on a stretch of railroad line known as the Northeast Corridor, which runs from Washington, D.C. to Boston, Massachusetts. Amtrak owns the segment of the Northeast Corridor that runs between Washington, D.C. and New York, which is the most heavily used rail line in the nation. At the time of the train wreck near Chase, Maryland, Conrail used the Northeast Corridor pursuant to the Freight Operating Agreement. The Second Amended and Restated Northeast Corridor Freight Operating Agreement dated October 1, 1986, between Amtrak and Conrail, Article Two, Section 2.2(d), respecting Operation, Management and Control, reads as follows:
All personnel, including employees of Conrail, rendering any services which involve responsibility for Amtrak's operating facilities or for the handling or movement of any trains over the NEC, shall be subject to the direction, supervision, and control of Amtrak, and any such services performed by or for Conrail shall be governed by and subject to all then current operating and safety rules, orders and procedures of Amtrak with respect thereto. Amtrak may, for cause, require that any person performing services hereunder be prohibited or removed from performance of such services, subject to the requirement that Amtrak shall support any action defending such prohibition or removal and bear the cost of any claims growing out of any improper prohibition or removal.
(Emphasis supplied).
The Freight Operating Agreement also bears on the liability apportionment between Amtrak and Conrail for the Chase accident. A series of indemnification clauses included in the Freight Operating Agreement contain the provisions for liability apportionment that are relevant to this case. The indemnification provisions in the agreement between Conrail and Amtrak are set forth in sections 5.3 and 5.6 of the Freight Operating Agreement. Agreements, Tab 22, §§ 5.3 & 5.6. Section 5.3 of the Freight Operating Agreement states as follows:
Section 5.6 provides:
There are other sections of the Freight Operating Agreement that allocate liability to Conrail "irrespective of any negligence or fault of Amtrak or Amtrak Employees, or howsoever the same shall occur or be caused," for "any and all liability" arising from the injury or death of any Conrail employees, any injury, death or damage caused by the explosion or release of the contents of a Conrail train, and any injury, death or damage arising out of the transportation of hazardous or toxic material in Conrail trains. See Agreements, Tab 22, Sections 5.2, 5.7 & 5.12.
In addition, section 5.16 of the Freight Operating Agreement provides that the indemnifying party has the duty to defend such suits. Section 5.16 states:
In the event of any suit brought against either Conrail or Amtrak asserting a liability against which the other has agreed to indemnify and save harmless the party sued, the indemnifying party shall, at its sole cost and expense, defend such suit and indemnify and save harmless the parties sued against all costs and expenses thereof and promptly pay or cause to be paid any final judgment recovered against the party sued.
The agreement also provides for severability from the Freight Operating Agreement of clauses determined to be invalid, illegal or unenforceable. Section 4.7 of the Freight Operating Agreement states:
If any part of this Agreement is determined to be invalid,...
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