Opinion ID: 348324
Heading Depth: 1
Heading Rank: 2

Heading: the scope of the reorganization court's order 2569

Text: 42 The issue yet to be decided is whether the Regional Rail Reorganization Act of 1973, 45 U.S.C. § 701 et seq., as amended, and the consequent conveyance of certain of Penn Central's rail assets to ConRail excused the Penn Central trustees from performance of work or damages claims related to Penn Central's pre-conveyance contractual track maintenance obligations to Amtrak as required under the Basic Agreement. At this point in the litigation, the Reorganization Court has not definitively granted or denied any claim made by Amtrak related to the alleged pre-conveyance contractual breaches of the Penn Central because the Arbitration Panel never decided whether the conveyance to ConRail relieved the trustees of liability for money damages and did not consider the effects of the Rail Act on the performance of the obligations. In short, the Rail Act issue has never been litigated in any forum. 43 In developing the record below, Amtrak relied almost exclusively on the res judicata effect of the Indiana district court's declaratory judgment without ever reaching the substantive merits of the Rail Act's effects; this position has been vitiated by the reversal in Blanchette, supra. 14 Under the Indiana district court's confirmation order of March 24, 1976, however, Amtrak has established, at least, a case of pre-conveyance contractual breaches by the Penn Central trustees. We have noted that the record is substantially undeveloped with regard to the Rail Act issue and to the effect of the Final System plan in relieving the Penn Central trustees of liability, as an expense of administration, for damages for the breach of contract found by the Arbitration Panel and confirmed by the Indiana district court. We express no opinion on these issues at this time. See, e. g., note 12 above. It is also clear that the determination of the amount of damages is still to be decided. See Arbitration Award at 32a-33a. 44 The language of Order 2569 would be too sweeping if we did not have the Reorganization Court's Memorandum and Order Nos. 2921-2 of April 22, 1977. However, in light of the wording used there, it is clear that Amtrak has the right to request enforcement of the arbitration award by the Reorganization Court or to establish its claims to damages as a result of the pre-conveyance breaches. 15 Although we believe the language of the Reorganization Court's order in this case contemplated no more than that enforcement of the Arbitration Award, supra, is now to be reviewed by the Reorganization Court in the light of any defenses which the trustees may raise, we have concluded that the language of the first sentence of paragraph 2 of Order 2569 is too sweeping and will be vacated. 16 45 We agree with Judge Hastings' holding that the Indiana Court was without jurisdiction by declaratory judgment, or other judicial means, to circumscribe the jurisdiction of the Pennsylvania Reorganization Court as to the enforcement of an arbitration award which was subsequently confirmed by the Indiana Court, and we now so hold. Blanchette, supra, at 135. 46 For the reasons stated, the first sentence of paragraph 2 of Order 2569 will be vacated and that order will be affirmed in all other respects, with directions to the court, on remand, to join ConRail under Rule 719, if this has not already been done (see footnote 8 at pages 173-174 above). That Court may now proceed to the question of any enforcement of the Arbitration Award or the claim on which it is based, taking into consideration any defenses that may be raised by the trustees.