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Csx Transportation, Inc v. Total Grain Marketing

March 29, 2013

CSX TRANSPORTATION, INC., PLAINTIFF,
v.
TOTAL GRAIN MARKETING, LLC, DEFENDANT.



The opinion of the court was delivered by: Stiehl, District Judge:

MEMORANDUM & ORDER

Before the Court is plaintiff's motion for partial summary judgment (Doc. 64), to which defendant has filed a response (Doc. 82), and plaintiff a reply (Doc. 84). Also before the Court is plaintiff's motion for partial summary judgment based on federal preemption (Doc. 90), to which defendant has filed a response (Doc. 100), and plaintiff a reply (Doc. 101). Defendant has also filed a motion for summary judgment (Doc. 92), to which plaintiff has filed a response (Doc. 103), and defendant a reply (Doc. 105).

This series of motions is less than a model of clarity. These motions in essence, ask the Court to decide who, based on contractual agreements between the parties, bears responsibility for and, therefore, the costs of a 2009 train derailment. The contractual agreements involved in the parties' ultimate agreement are many. In 2006 TGM was the recipient of an "Assignment" of rights from a non-party, Huisinga Grain, Inc. ("Huisinga"), of Huisinga's rights under agreements (from 1972 and 1983) with CSX (or its predecessor in interest). TGM then executed a 2006 "Assumption" of those rights, subject to certain amendments listed in the 2006 Assumption. In 2007 CSX signed a "Consent" agreeing to the terms of the Assignment and Assumption. All of these agreements, including the 1972 and 1983 Agreements, republished according to the terms of the 2006 Assumption, created one clumsy final agreement between TGM and CSX.

BACKGROUND

Plaintiff, CSX Transportation, Inc. ("CSX"), brought this action to recover approximately $77,000 in property damage that was allegedly caused by a train derailment. Defendant, Total Grain Marketing, LLC ("TGM"), has filed a five-count counterclaim seeking to recover approximately $40,000 in property damage allegedly caused by the same derailment.

I.The Derailment

On July 3, 2009, a CSX crew, consisting of an engineer and a conductor, was retrieving a train of sixty-six (66) rail cars that TGM had placed on the industry track the previous evening after loading them with grain from their grain elevator located adjacent to the track in Casey, Illinois. When the CSX crew attempted to pull the train toward the main line, 6 railcars derailed as they passed over a switch that was allegedly not properly aligned, and, had been "run through," thereby damaging the switch so that railcars passing over the switch would move in an unintended direction. According to TGM, a "run through" in these circumstances means that the switch was lined for cars west of the switch to go southeast onto the industry track from the sidetrack; however, cars on the east side of the switch on the sidetrack were instead pushed backwards through the switch in a westerly direction (also called a "trailing point move") causing damage to the switch. When the CSX engineer pulled the railcars eastward, the cars derailed due to the damage caused to the switch by the prior run-through.

The switch was located in a turnout where the western side of the industry track (also referred to by the parties as the "loading track," and "Track No. 80") split south from the sidetrack (also referred to by the parties as the "leased track" and "Track No. 9"). In its motion for summary judgment, TGM provided the following diagram of the tracks and switch where the derailment occurred. There is no indication of the scale of the drawing or particular measurements, but a visual depiction of the tracks and switch at issue is a helpful aide in understanding the issues of this case. CSX has not objected to this depiction of the site. The Court will refer to the particular tracks as indicated below as the "industry track," the "sidetrack," and the "main line."

On July 2, 2009 (the day before the derailment), TGM personnel had operated that switch while loading the railcars with grain. During the loading process, the railcars would have passed over or through that switch approximately eight times. The railcars were left parked on top of the switch overnight. From the close of business on July 2, 2009, until sometime after the derailment on July 3, 2009, TGM personnel did not control or exercise control over the switch at which the derailment occurred.

On July 3, 2009, prior to moving the train, the CSX conductor manipulated a different switch, which allowed the train to move onto the main line. The conductor did not inspect the switch located under the train, although TGM alleges he was required to do so pursuant to CSX's Operating Rules. The locomotive pulling the train was several hundred feet to the east of the switch, and the rear of the train was several hundred feet to the west of the switch. The CSX crew backed the train over the switch at issue 112 feet, in an alleged trailing point move, before moving forward, at which time, the railcars derailed. The CSX engineer who operated the train during the derailment failed to shut off the engines upon first feeling resistance in the pull of the train, although TGM alleges he was required to do so pursuant to CSX's Operating Rules. The CSX engineer allowed the train to come to a stop on its own as a result of the further derailment of the cars. The CSX engineer then accelerated the engines, even though he had received confirmation from the conductor that the air brakes were not the issue, moving the train farther forward until the engines were allegedly hopping up and down and could go no further.

The train was equipped with an on-board event data recorder.*fn1 CSX initially asserted that the data was not downloaded from the event recorder in this instance, and no longer retrievable. CSX has subsequently asserted, however, that it has located the data from the event recorder and produced it to TGM during discovery. (Doc. 91).

Data recorded by the electronic monitoring device aboard the train, and disclosed by CSX, confirmed that the CSX engineer allowed the train to travel over 100 feet after feeling resistance, and before applying the brakes or shutting down the engines, and accelerated the train after it came to a stop. CSX disputes the allegation that the engineer's acceleration of the train caused the engines to hop up and down. The data recorder also confirmed that the CSX crew backed the train over the switch 112 feet before proceeding forward and derailing the 6 railcars.

TGM claims that video footage from a video recorder on the locomotive may have been recorded on the date of the derailment, but that CSX did not preserve the footage, and TGM raises a spoliation claim on this basis. TGM asserts that the video footage would show that the engineer's actions in fact caused the engines to hop up and down, and that the engineer caused the train to further move forward a short distance after the train had come to a stop on its own, despite previously confirming with the conductor that the air brakes were not the cause of the stoppage. TGM claims that CSX failed to preserve the video recording, although it was required to retain the video recordings until at least December of 2012, in accordance with its general retention policies with respect to investigative material and information from the derailment. TGM claims that it has been unable to fully develop this claim however, and obtain information regarding CSX's retention policy with respect to these video recordings specifically, because CSX has failed to designate a witness or provide information in accordance with TGM's supplemental Rule 30(b)(6) Deposition Notice and the Court's corresponding order, with respect to video recording devices about the locomotive and preservation of video taken by the devices.

CSX employees who investigated the derailment and coordinated the re-railing of the derailed cars concluded that the cause of the derailment was that the switch had been "run through" by TGM. TGM asserts, however, that CSX has not produced and cannot produce sufficient evidence creating a genuine issue of material fact that anyone from TGM ran through the switch on July 2, 2009. TGM asserts that vandals could have moved the switches to the wrong position, a proposition that has not been ruled out. Additionally, TGM asserts that because the CSX crew backed the train up 112 feet prior to forward movement, pushing cars through the switch at issue, it could have been CSX that ran through the switch at issue and caused the damage which caused the derailment.

II.Agreements

TGM began operations at the Casey, Illinois location pursuant to a September 2006 Assignment and Assumption between TGM and Huisinga. Huisinga was the previous grain elevator operator. CSX agreed to and consented to the assignment and assumption, by executing a "Consent" in 2007, and, in fact, prepared and drafted both the 2006 Assignment and Assumption executed by TGM and Huisinga.

Pursuant to the 2006 Assignment, Huisinga Grain assigned its rights and interests to TGM in the three agreements identified in Schedule A of the Assignment. Pursuant to the 2006 Assumption Agreement, ("2006 Assumption"), TGM agreed to assume the agreements assigned by Huisigna, subject to certain specific additional terms and conditions. The three agreements included: (1) a 1972 Sidetrack Agreement (the "'72 Agreement") originally executed by Huisinga and Penn Central Transportation Company (CSX is a successor to Penn Central); (2) a 1983 Lease Agreement (the "'83 Agreement") originally executed by Huisinga and Consolidated Rail Corporation (CSX is a successor to Consolidated Rail Corporation); and (3) a 2001 Agreement originally executed by Huisinga and CSX. Under the terms of the 2006 Assumption, TGM was bound by the terms of the three agreements as if an original party thereto, and bound by certain amendments specifically referenced.

The 2006 Assumption also contained the following clause: "[a]ll other terms contained in the Agreement(s) shall remain as if republished herein." (Doc. 64-6 at 6). The 2006 Assumption, therefore, republished the terms of both the '72 Agreement and the '83 Agreement, including the agreements' terms regarding liability and indemnification, which are conflicting. Specifically, the '72 Agreement provides:

Except as herein otherwise specifically provided, in respect of all loss or damage to property, other than by fire as aforesaid, or in respect of injury to or death of persons, caused by or in connection with the construction, operation, maintenance, use, presence or removal of said sidetrack, as between the parties hereto;

(i) The Railroad shall assume responsibility for and hold the Industry harmless and defend the Industry from all losses (including claims for injuries to employes [sic] of the Industry or of the Railroad), expenses, attorneys' fees, damages, claims and judgments arising from or growing out of the actionable acts or omissions of the Railroad, its agents or employes [sic], solely or in conjunction with a third person;

(ii) The Industry shall assume responsibility for and hold Railroad harmless and defend the Railroad from all losses (including claims for injuries to employes [sic] of the Industry or of the Railroad), expenses, attorneys' fees, damages, claims and judgments arising from or growing out of the actionable acts or omissions of the Industry, its agents or employes [sic], solely or in conjunction with a third person; and

(iii) The parties hereto shall equally bear all losses (including claims for injuries to employes [sic] of the Industry or of the Railroad), expenses, attorneys' fees, damages, claims and judgments arising from or growing out of the joint or concurring actionable acts or omissions of both parties hereto, their respective agents or employes [sic]. (Doc. 64-3 at 4).

The '83 Agreement provides:

Lessee will be responsible for and will indemnify, save harmless and defend the Railroad Company against and from any and all claims and suits for, and any and all liability, loss or expense arising from or incidental to or in connection with, damage to or loss of property of the Railroad Company, Lessee, or of agents, servants or employees of either, or of any other person, and against and from any and all claims and suits for, and any and all liability, loss or expense arising from or incidental to or in connection with, injury to or death of persons, including agents, servants, or employees of the Railroad Company, or of Lessee, or any other person (including Lessee if a natural person), which said damage, loss, injury or death shall arise in any manner, directly or indirectly, out of or incidental to or in connection with, this lease or the demised premises, of the use or occupation thereof. (Doc. 64-5 at 2).

III.Claims and Counterclaims

CSX's Amended Complaint contains three separate causes of action: (1) breach of contract for violation of the '83 Agreement; (2) negligence (in the alternative) alleging that TGM is vicariously liable for the actions and/or inactions of its employees with respect to the derailment, and that TGM's negligence was the proximate cause of the costs incurred by CSX; and (3) res ipsa loquitur (in the alternative), alleging that TGM operated and maintained the switch at issue immediately before the derailment, and that a derailment would not typically occur in the absence of negligence, and therefore, the inference may be drawn that TGM was negligent. For each count, CSX requests judgment in its favor and against TGM, and seeks no less than $120,262.23, together with costs, prejudgment interest, additional attorneys' fees, and such other relief as the Court may allow.

TGM alleges five counterclaims: (1) a negligence claim for failure to maintain and/or inspect the track and switch at issue; and/or failure to properly operate the engines pulling the train; (2) CSX's engineer's conduct constitutes willful and wanton and/or intentional conduct; (3) indemnification; (4) negligent spoliation of evidence for negligently failing to preserve data from the electronic monitoring device and allowing destruction of the same; and (5) willful and wanton spoliation of evidence.

IV.Motions for Summary Judgment

CSX's first motion for partial summary judgment (Doc. 64) seeks judgment with respect to Count I of its Amended Complaint based on CSX's assertion that the '83 Agreement entitles it to total indemnification for the derailment at issue, regardless of whether CSX's negligence caused or contributed to the damage. CSX also seeks summary judgment with respect to Counts I, III, IV (in part) and V of TGM's Counterclaim, based on the same assertion that the '83 indemnification clause bars Counts I, III, and IV (in part) of TGM's counterclaims. CSX also asserts that it is entitled to attorney's fees pursuant to the '83 Agreement. CSX seeks summary judgment on Count V of TGM's Counterclaim, based on its assertion that there is no recognized cause of action in Illinois for willful and wanton spoliation of evidence.

CSX's second motion for partial summary judgment (Doc. 90) seeks judgment in its favor with respect to Counts I, IV and V of TGM's counterclaims on the basis of federal preemption.

TGM also filed a motion for summary judgment, seeking judgment in its favor on Counts I, II, and III of CSX's amended complaint. TGM seeks summary judgment on Count I on the basis that the '83 Agreement's exculpatory clause is unenforceable in that it is void, and unconscionable, and that application of the clause in this instance would be contrary to the rules of contract interpretation. TGM seeks summary judgment on Count II because CSX failed to produce sufficient evidence that establishes causation, an essential element of Count II. TGM seeks summary judgment on Count III because TGM was not in exclusive control of the switch that allegedly caused the derailment.

LEGAL STANDARD

Summary judgment is proper when the record, "including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials," show there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The Court must draw all reasonable inferences and resolve all factual disputes in favor of the non-movant. Malen v. MTD Products, Inc., 628 F.3d 296, 303 (7th Cir. 2010). A court can not grant summary judgment if a genuine dispute relates to a material ...


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