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Zamierowski v. National Railroad Passenger Corp.

June 28, 2006

GERALDINE ZAMIEROWSKI, INDIVIDUALLY, AND AS THE ADMINISTRATRIX OF THE ESTATE OF MICHAEL ZAMIEROWSKI, DECEASED, PLAINTIFFS,
v.
NATIONAL RAILROAD PASSENGER CORPORATION D/B/A AMTRAK, METRO-NORTH COMMUTER RAILROAD A/K/A MTA METRO-NORTH RAILROAD A/K/A METRO RAILROAD, CONSOLIDATED RAILROAD CORPORATION D/B/A CONRAIL AND PIRATE CANOE CLUB, INC., DEFENDANTS.



The opinion of the court was delivered by: Conner, Senior D.J.

OPINION AND ORDER

ECF CASE

This action arises out of the death of Michael Zamierowski ("Zamierowski" or "decedent"), who was killed on December 17, 2004 when a northbound Amtrak train traveling approximately 85 to 95 miles per hour struck his Ford box truck. At the time of the accident, Zamierowski was attempting to pass through an unsignaled, ungated private railway crossing (the "Pirate Canoe Club Crossing" or the "Crossing") en route to defendant Pirate Canoe Club, Inc. ("PCC").

On September 9, 2005, plaintiff Geraldine Zamierowski, decedent's widow, filed an action in state court for negligence, wrongful death and loss of services against defendants National Railroad Passenger Corporation ("Amtrak"), Metro-North Commuter Railroad ("Metro-North"), Consolidated Railroad Corporation ("Conrail") (collectively, the "railroad defendants") and PCC (collectively, "defendants"). In their Amended Answer, the railroad defendants asserted cross-claims against PCC for common law and contractual indemnification. The railroad defendants then removed the action to the United States District Court for the Southern District of New York, where it was assigned to this Court.*fn1

Presently before the Court is PCC's motion for judgment on the pleadings pursuant to FED. R. CIV. P. 12(c) or, in the alternative, for summary judgment pursuant to FED. R. CIV. P. 56, seeking dismissal of the railroad defendants' cross-claims. Specifically, PCC contends, with reference to the contractual indemnification cross-claim, that: (1) the railroad defendants materially breached the contract; and (2) the contract's indemnification clause is void as a matter of public policy. For the reasons stated herein, PCC's motion is granted in part and denied in part, though based on different reasoning.

BACKGROUND

On November 13, 2002, the New York State Department of Transportation ("NYDOT") informed PCC that the results of a recent railway crossing safety study prompted the agency to recommend that Metro-North install signal lights and gates at the private railway crossing known as the Pirate Canoe Club Crossing. (Sullivan Decl. ¶ 3 & Ex. A.) According to the NYDOT, it was willing to fund the estimated $200,000 installation under the condition that, in relevant part, PCC pay for annual inspection and maintenance costs associated with the equipment. (Id.) PCC responded that, while it did not object to Metro-North installing such equipment, it did object to Metro-North doing so on PCC property. (Ferrara Decl., Ex. B.) PCC also refused to pay any maintenance or inspection costs. (Id.) PCC contended that the railroad received a permanent easement-reserving to the grantor a right-of-access-from the property's original owner in 1858. (Sullivan Decl. ¶ 6 & Ex. D.) Accordingly, since PCC neither owned nor operated the Crossing, it did not feel it should bear any expense relating to the safety equipment. (Id. ¶ 4.) A series of letters among NYDOT, Metro-North and PCC contesting ownership of the Crossing and arguing about payment allocation followed. (Id., Exs. C-F; Ferrara Decl., Ex. C.)

On January 22, 2004, Metro-North sent a draft agreement to PCC under which Metro-North agreed to maintain the Crossing safety equipment. (Sullivan Decl. ¶¶ 7-8 & Ex. F; Ferrara Decl., Ex. D.) Although Metro-North agreed to absorb the maintenance costs, the railroad defendants believed that installation was contingent upon receiving the NYDOT funds. (Defs. Mem. Opp. Mot. Dismiss at 6; Hom Decl. ¶ 3.) As early as December 1, 2003, Metro-North's Assistant Director of Administration sent a letter to the NYDOT Regional Director enclosing a cost estimate of $257,825 for the project. (Ferrara Decl., Ex. L.) LeRoi Armstead, an NYDOT Senior Transportation Analyst, responded via letter on January 6, 2004, indicating the NYDOT had begun its project initiation process. (Id., Ex. M.)

Metro-North and PCC, after a series of revisions, fully executed a final contract on March 2, 2004 (the "Agreement"). (Sullivan Decl. ¶ 10; Ferrara Decl., Ex. L.) The terms of the Agreement were effective retroactive to January 1, 2004 and were to run through December 31, 2023. (Sanabria Decl., Ex. 1 at ¶ 10.) According to the Agreement, its stated purpose is "to establish the terms and conditions pursuant to which Metro-North will maintain the Crossing." (Id., Ex. 1 at 2.) PCC was obligated to obtain insurance for a number of railroad entities under the following Agreement provision:

3. Insurance

(a) The labor performed by Metro-North employees in connection with the initial installation of the Equipment as well as future maintenance and renewals performed in accordance with this agreement will be included within Metro-North's force account insurance program. The force account insurance provided will be in the amount of Two Million Dollars ($2,000,000.00) for any one occurrence of bodily injury and/or physical damage. PCC will be notified in the event of any material change in the coverage.

(b) PCC shall maintain insurance providing for a total limit of not less than Two Million Dollars ($2,000,000.00) for all damages arising out of bodily injury to or death of all persons in any one accident or occurrence, and for all damages arising out of injury to or destruction of property in any one accident or occurrence and, subject to that limit per accident, a total (or aggregate) limit of Two Million Dollars ($2,000,000.00) for all damages arising out of bodily injury to or death of all persons in any and all accidents or occurrences and out of injury to or destruction of property during the policy period. Metro-North, MTA, National Railroad Passenger Corp. ("Amtrak"), American Premier Underwriters, Inc. and its affiliates and subsidiaries ("APU"), The Connecticut Department of Transportation ("CDOT"), Consolidated Rail Corporation ("CRC"), CSX Transportation Inc. and New York Central Lines LLC ("CSX"), and Delaware & Hudson Railway Company, Inc. ("D&H") shall be named as additional insured parties for this coverage. Each insurance policy shall state that the insurance company(ies) shall agree to investigate and defend the insured against all claims or damages, even if groundless. (Id., Ex. 1 at ¶ 3.) In addition, the Agreement includes an indemnification provision, which reads:

4. Indemnification. PCC shall indemnify, defend, protect and save harmless Metro-North, MTA, Amtrak, APU, CDOT, CRC, CSX and D&H from and against all cost or expense resulting from any and all losses, damages, suits, claims and demands which Metro-North, MTA, Amtrak, APU, CDOT, CRC, CSX or D&H may directly or indirectly suffer, sustain or be subjected to by reason of the construction, existence, maintenance, repair, alteration, relocation or removal of the Crossing and related facilities, whether such losses and damages be suffered or sustained by Metro-North, MTA, Amtrak, APU, CDOT, CRC, CSX, D&H, licensees, or other persons or corporations, or by its employees, patrons, directly, or by its employees, patrons, licensees, or users of the Crossing who may seek to hold Metro-North, MTA, Amtrak, APU, CDOT, CRC, CSX or D&H liable to the extent such losses, damages, suits, claims and demands exceed PCC's insurance coverages under the policies PCC is required to maintain pursuant to Article 3(b) of this agreement, except for gross negligence or willful misconduct of Metro-North, MTA, Amtrak, APU, CDOT, CRC, CSX or D&H. If a claim or action is made or brought against either party hereto for which the other party may be responsible hereunder, in whole or in part, such other party shall be notified and permitted to participate in the handling or defense of all such matters. Each party shall hold harmless the other for any and all costs incurred due to the delay of that party to provide notice in a timely manner under this paragraph. (Id., Ex. 1 at ¶ 4.)

Four months after the Agreement was signed, Metro-North's Engineering Specification and Standard Officer, James Hom, sent an email to Armstead requesting a status update. (Ferrara Decl., Ex. N.) The following day Armstead replied that he did "not know what the hangup" was, but had informed his boss of the lengthy delay. (Id., Ex. O.) At a meeting several weeks later, the two men discussed the funding delay, with Armstead stating he would check on the status and inform Hom of the progress. (Id., Ex. P.) Apparently having received no news from Armstead, Hom emailed Armstead on October 14, 2004 indicating that Hom was "getting all sorts of pressures from different [Metro-North] internal [departments] who would like to ...


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