Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-13-07119/USCOURTS-caDC-13-07119-0/pdf.json

Parties Involved:
City of New York
Appellant
National Railroad Passenger Corporation
Appellee

Document Text:

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 24, 2014 Decided January 16, 2015

No. 13-7119

CITY OF NEW YORK,

APPELLANT

v.

NATIONAL RAILROAD PASSENGER CORPORATION, (AMTRAK),

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 1:11-cv-01169)

Scott Shorr argued the cause and filed the briefs for

appellant. 

Daniel G. Jarcho argued the cause for appellee. With him

on the brief were Craig D. Rust and Dennis M. Moore. 

Before: PILLARD, Circuit Judge, and SILBERMAN and

SENTELLE, Senior Circuit Judges.

Opinion for the Court filed by Senior Circuit Judge

SILBERMAN.

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SILBERMAN, Senior Circuit Judge: The dispute in this case is

over who bears financial responsibility for the $25 million

rehabilitation of a bridge carrying a public highway over a

parcel of land in the Bronx: New York City or Amtrak. The

City invokes a 1906 agreement obligating Amtrak’s predecessor

to maintain and repair the bridge. It asserts the agreement is a

covenant running with the land which survived the land’s

subsequent Rail Act conveyance made “free and clear of any

liens or encumbrances.” The City also seeks to recoup

payments it made to Amtrak in exchange for Amtrak’s removal

of electrical equipment attached to the bridge so the

rehabilitation could proceed. The district court granted

summary judgment to Amtrak on both claims, holding that the

Rail Act extinguished the obligation and the City was not

entitled to recover its already-incurred costs under the narrow

theory of restitution it advanced. We affirm.

I.

The background facts giving rise to the Regional Rail

Reorganization Act of 1973 and the history of the Shore Circle

Road Bridge are detailed in the district court’s thoughtful and

comprehensive opinion. City of New York v. Nat’l R.R.

Passenger Corp., 960 F. Supp. 2d 84, 86-89 (D.D.C. 2013). We

only briefly state the facts necessary to our disposition of the

appeal. 

Amtrak’s predecessor purchased a parcel of land in

Pelham Bay in the Bronx from the City in 1906. Pursuant to

the terms of the deed, that railroad company built a bridge over

the land, conveyed an easement to the City “limited for the

purpose of the continued existence of a bridge carrying the

public highway . . . across the railroad tracks,” and promised

that it and its successors would “maintain and keep [the bridge]

in repair.” Otherwise, the land would revert back to the City. 

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Over the decades, the land went through a series of transfers

until it fell into Penn Central’s hands. In 1970, Penn Central

filed for bankruptcy along with seven other major railroad

companies, creating a rail transportation crisis endangering the

national welfare. Congress responded with the Rail Act. The

Act sought to build new, financially viable railroads from the

bankrupt rail system. Properties conveyed to Amtrak were to be

conveyed “free and clear of any liens or encumbrances.” 45

U.S.C. § 743(b)(2). 

The Rail Act also created a Special Court to order the

conveyances of rail properties and resolve disputes related to the

reorganization. The Act endowed the Special Court with

“original and exclusive jurisdiction [over] any action [] to

interpret, alter, amend, modify, or implement any of the [court’s

conveyance orders].” Id. § 719(e)(2). That provision was

subsequently interpreted by the Special Court to include any

issue “relating” to conveyance orders or agreements entered

pursuant to conveyance orders. Consol. Rail Corp. v. United

States, 883 F. Supp. 1565, 1571 n.15 (Reg’l Rail Reorg. Ct.

1995) (emphasis added). In 1997, Congress abolished the

Special Court as a separate tribunal and transferred its original

and exclusive jurisdiction to adjudicate cases that implicate the

conveyance orders to the district court for the District of

Columbia. § 719(b)(2) (Supp. III 1997). Cases are appealable

to this court pursuant to 28 U.S.C. §§ 1291-92, 1294. 45 U.S.C.

§719(e)(3). 

Amtrak received the land supporting the bridge pursuant

to a Special Court conveyance order. The land was transferred

free and clear of any liens or encumbrances but subject to all

existing easements. Time passed, and the bridge fell into

disrepair. The City began planning to replace the bridge in

1997, but Amtrak’s electrical equipment attached to the

underside of the bridge impeded the project. In 2003, the City

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agreed pursuant to a Force Account Agreement to pay Amtrak

to remove its equipment so the construction could proceed, but

reserved the right to recover the cost of moving the equipment

if a court determined that Amtrak was the responsible party.

The City filed a lawsuit in the Southern District of New

York in 2010, seeking a declaratory judgment that Amtrak was

liable for rehabilitation of the bridge pursuant to its

predecessor’s 1906 obligation to maintain and repair the bridge,

and an order requiring Amtrak to reimburse the City for all of

the City’s already-incurred construction costs. Judge Crotty

determined that the court lacked subject matter jurisdiction to

hear the City’s claims because they require the review and

interpretation of a Rail Act conveyance order, and granted

Amtrak’s motion to transfer the case to the district court for the

District of Columbia. Once here, the parties cross-moved for

summary judgment, each asserting that the other was liable for

the bridge’s rehabilitation and reimbursement for the removal of

the electrical equipment.

The district court granted summary judgment to Amtrak

on all claims, holding that Amtrak has no obligation to maintain

and repair the bridge that survives the Rail Act, whether the

City’s claim was based on a contract or a covenant. The court 1

held, therefore, that under New York law the City is responsible

for maintaining the bridge because it owns it. See also City of

Philadelphia v. Consol. Rail Corp., 222 F.3d 990 (D.C. Cir.

2001) (holding the same under Pennsylvania law where a

railroad’s contractual obligation was extinguished by the Rail

Act). Although the district court determined that Amtrak owed

the City a duty to relocate the electrical facilities under New

The City concedes that if the agreement is an executory contract it 1

would not survive the Rail Act. We assume, arguendo, that the

agreement is a covenant running with the land.

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York’s public utility rule, it found that the City could not

recover its costs under either the emergency assistance doctrine

(a narrow theory of restitution) or indemnification. City of New

York, 960 F. Supp. 2d at 86-87. This appeal followed. 

II.

The City argues that we should interpret the Rail Act

phrase “free and clear of any liens or encumbrances” consistent

with the meaning of analogous bankruptcy provisions. We are

told that since the maintenance and repair agreement is a

covenant running with the land, under ordinary bankruptcy law,

conveyances of a debtor’s real property “free and clear of any

liens or encumbrances” do not extinguish third-parties’ deedbased covenants. The City challenges the district court’s

application of the Rail Act as unconstitutional because it would

exceed the Congress’s bankruptcy powers and result in an

uncompensated taking. As to the restitution claim, which is

purely a question of state law, the City concedes that it advanced

meritless causes of action before the district court, but on appeal

asserts a new one – unjust enrichment. 

Amtrak responds with a number of arguments, ranging

from a contention that the City’s claims are untimely, to an

assertion that the maintenance and repair agreement is an

executory contract rather than a covenant running with the land

and was thus disclaimed in the Rail Act conveyance. But its

core argument regarding the bridge rehabilitation claim is that

even assuming the City enjoyed a covenant running with the

land, it was extinguished by the Rail Act. 

Turning to the City’s unjust enrichment claim, Amtrak

asserts that the City forfeited this new argument by not asserting

it to the district court. Were we to reach it nevertheless, Amtrak

presents a series of arguments based on New York law to

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support its position – that it owes no duty to the City to pay for

the removal of that electrical equipment.

III.

We start with consideration of our jurisdiction. Neither

party actually contests the district court’s exclusive jurisdiction

to decide cases that implicate conveyance orders under the Rail

Act, and therefore our appellate jurisdiction. Nevertheless, we

have an independent obligation to assure ourselves of

jurisdiction. And the City relies on a New York federal district

court case affirmed by the Second Circuit, City of New York v.

Nat’l R.R. Passenger Corp., No. 06-CV-793, 2008 WL

5169636, at *1 (E.D.N.Y. Dec. 9, 2008) aff’d, 373 F. App’x 84

(2d Cir. 2010), involving a facially similar case in which the

district court took jurisdiction and, in dicta, expressed the view 2

that the Rail Act employed the principles of bankruptcy law. 

Although that court’s subject matter jurisdiction was challenged,

the court rejected the jurisdictional objectionwithout discussion. 

(It is rather puzzling that the Second Circuit summarily

affirmed, also without discussing its subject matter jurisdiction.) 

As noted above, any issue that relates to a conveyance order or

agreement entered pursuant to a conveyance order falls within

the exclusive jurisdiction of the Special Court. See Consol. Rail

Corp., 883 F. Supp. at 1571 n.15. Since that case involved a

deed implementing a Rail Act conveyance order, as does ours,

The district court held that a condition to an easement had survived 2

the Rail Act conveyance where the parties both agreed that the

easement itself was not extinguished. The court did not opine on the

effect (if any) of the Rail Act on covenants. City of New York, 2008

WL 5169636, at *8.

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we simply do not understand why the New York district court

assumed jurisdiction.3

The City’s claim that the Rail Act incorporated principles

of the Bankruptcy Code and therefore a covenant running with

the land per New York law would not be extinguished by

743(b)(2) as a “lien or encumbrance” is quite weak. Indeed,

even if we granted the premise, it is by no means clear under

New York law, which would be used in a bankruptcy court to

determine the property rights in bankrupt’s estate, that any

alleged covenant would survive.4

Be that as it may, appellant’s premise is quite wrong; the

Rail Act uses different language than the Bankruptcy Code. 

743(b)(2) provides flatly that a rail property is conveyed “free

and clear of any liens or encumbrances,” whereas the

Bankruptcy Code permits a trustee to sell a debtor’s property

interests “free and clear of any interest . . . only if [one of five

conditions is met],” 11 U.S.C. § 363(f) (emphasis added) –

essentially assuring the owner of a property interest that it gain

monetary satisfaction if its property rights are extinguished. The

Rail Act simply does not provide the same protection for a

holder of a property interest. To be sure, it has been recognized

that such an entity had the right to make a monetary claim in the

Penn Central bankruptcy proceeding. Indeed, the City of New

Because the Eastern District lacked jurisdiction, we are disposed to 3

ignore its view of the relationship between the Rail Act and the

Bankruptcy Code.

N.Y. Real Prop. Acts. Law §§ 1951-1955 allows courts to terminate

4

covenants in several circumstances, including upon payment of

damages. See 328 Owens Corp. v. 330 W. 86 Oaks Corp., 865 N.E.2d

1228, 1229-30 (N.Y. 2007). In any event, a covenant is indisputably

an encumbrance under New York law. Nicholson v. 300 Broadway

Realty Corp., 164 N.E.2d 832, 834 (N.Y. 1959).

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York was a creditor in that proceeding – and received

compensation for a tax lien. And the Supreme Court has held

that any creditor who did not receive full value for a lien would

have a remedy under the Tucker Act. Regional Rail

Reorganization Act Cases, 419 U.S. 102, 154 (1974).

Appellant’s argument that the Rail Act should be

interpreted with the BankruptcyCode in mind is not a new claim

to our court. Ironically, it was Conrail, Amtrak’s statutory

cousin, that made that argument in an effort to avoid pre-Rail

Act tort claims in Consolidated Rail Corp. v. Ray, 632 F.3d

1279 (D.C. Cir. 2011). But we squarely held that since §

743(b)(2) uses different language than the BankruptcyCode, the

latter “does not inform our reading of the former.” Id. at 1282;

see also Penn Cent. Corp. v. United States, 862 F. Supp. 437,

462 (Reg’l Rail Reorg. Ct. 1994). Appellant’s effort to

distinguish Ray is ineffective.

Finally, there remains appellant’s constitutional claim; that

an interpretation of Section 743(b)(2) which is contrary to the

Bankruptcy Code – allowing extinction of property claims that

would allegedly survive bankruptcy – would be unconstitutional

because the Rail Act was passed pursuant to the bankruptcy

power, and the Bankruptcy Code represents the outer limit of

Congress’s bankruptcy authority. The City points us to no

authority to support the latter point, and we disagree as to the

first. In fact, the Supreme Court has said that the Rail Act was

not “merely an eminent domain statute;” Congress did draw

upon its bankruptcy authority. Regional Rail Reorganization

Act Cases, 419 U.S. at 152 (emphasis added). And as Judge

Friendly on the Special Court recognized, Congress did not limit

itself to bankruptcy powers. It also drew on its eminent domain

authority under the Commerce Clause. See In re Penn Cent.

Transp. Co., 384 F. Supp. 895, 949 (Reg’l Rail Reorg. Ct.

1974). It was this latter authority that was the basis for holding

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that any inadequacies in the compensation afforded under the

Rail Act could be recovered in an action in the Court of Claims

under the Tucker Act (which disposes of appellant’s claim that

the district court’s opinion results in an uncompensated taking). 

In sum, we quite agree with the district court that the City’s

claim against Amtrak for the rehabilitation of the bridge should

be rejected.

IV.

The City, on appeal, has reformulated its restitution claim

for the $1.16 million Amtrak was paid under the Force

Agreement as an “unjust enrichment” claim. It concedes that its

suit in the district court based on the “emergency assistance”

theory of restitution was in error but it argues, essentially, that

was simply a labeling matter and, after all, the district court did

conclude as a matter of law that Amtrak owed a duty to repay

the money. See Transit Comm’n v. Long Island R.R. Co., 253

N.Y. 345, 351(N.Y.1930) (public service corporations maintain

rights in streets but are bound by the “public utility” doctrine to

relocate their structures at their own expense whenever the

public health, safety or convenience requires). 

We are not at all convinced that the duty the district court

determined exists because even assuming a railroad company

was a “public utility,” we can find no case imposing a removal

duty on a public utility whose installments did not actually

occupy public land. The duty is based on the proposition that

utilities assume the risk of relocating their structures at their

own expense as a condition of being granted the special

privilege or “franchise” of installing structures on or embedding

them in public property in the first place. See, e.g., New York

Tel. Co. v. City of Binghamton, 219 N.E.2d 184, 186-87 (N.Y.

1966). But here, the record shows that the electrical equipment

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actually occupied Amtrak’s air space and was not on or in City

property, and that the insulators that touched the bridge were

placed there, not pursuant to a special privilege granted by the

City, but for the City’s benefit. The only structure abutting the

bridge was used to insulate it from electrical current, so the

benefit arguably inures to the City. 

In any event, we have authority to reach arguments not

presented to the district court only under exceptional

circumstances. Potter v. District of Columbia, 558 F.3d 542,

547, 551 (D.C. Cir. 2009). We generally exercise our discretion,

for example, “in cases involving uncertainty in the law; novel,

important, and recurring questions of federal law; intervening

change in the law; and extraordinarysituations with the potential

for miscarriages of justice.” Flynn v. C.I.R., 269 F.3d 1064,

1068-69 (D.C. Cir. 2001) (citations omitted). 

On its way to concluding that Amtrak did not owe the City

restitution under New York’s narrow “emergency assistance”

theory (because bridge repairs were not immediately necessary

to stave off an emergency), the district court nonetheless

determined, as one of the elements of the emergency assistance

inquiry, that Amtrak owed the City a duty to remove its

electrical equipment and insulators pursuant to New York’s

“public utility” rule. City of New York, 960 F. Supp. 2d at 98. 

It could be thought that this is therefore a case of extraordinary

circumstances with the potential for a miscarriage of justice,

since the district judge did decide the underlying issue – whether

Amtrak owed the duty. To be sure, the City did raise a general

restitution claim, under the public utility rule simpliciter, in its

summary judgment briefing before the district court. See New

York Motion for Summary Judgment at 27-29, City of New

York, 960 F. Supp. 2d 84 (No. 11–1169); New York

Reply-Opposition to Amtrak’s Cross-Motion for Summary

Judgment at 20-21, City of New York, 960 F. Supp. 2d 84 (No.

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11–1169). But the City never brought to the district court’s

attention the apparent contradiction in its opinion, and

affirmatively disavowed in this court that it had raised the

broader restitution theory below. Appellant Br. 17, 65.

Appellant’s restitution argument seems to us to raise an

issue of first impression. Therefore, even if we were to reach it,

we would be inclined to certify the issue to the New York Court

of Appeals. We decline to decide the issue for another reason,

however: the City did not seek a “rehearing” as a motion under

Rule 59(e) or 60(b)(6) before the district judge. It might be

thought that the district judge virtually invited such a motion by

explicitly holding that Amtrak owed the City the duty. And it is

hard to imagine that the district judge would then have denied a

Rule 59(e) or 60(b)(6) motion. The standards for granting such

a motion are virtually the same as ours for entertaining a new

argument not presented in the district court. So if it would be

appropriate for us to reach the argument on appeal, it certainly

would have been appropriate for the district court to entertain it

first.

We have previously held that a party seeking to raise a new

issue on appeal should first present it to the district court

pursuant to a Rule 59(e) or 60(b)(6) motion. Arias v. Dyncorp,

752 F.3d 1011, 1016 (D.C. Cir. 2014); Jones v. Horne, 634 F.3d

588, 603 (D.C. Cir. 2011). Where a party makes such a motion,

it can no longer be said that an argument was “not made in the

lower tribunal,” Flynn, 269 F.3d at 1068, and we will therefore

review it as we would any other claim preserved for appeal. Our

respect for the district judges suggests we continue to insist that

a party wishing to raise a new issue after judgment first advance

it before the district court. 

In sum, since we perceive no excuse for appellant not filing

such a motion, we reject its refashioned claim.

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* * *

For the foregoing reasons, the judgment of the district

court is

Affirmed. 

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