Opinion ID: 185233
Heading Depth: 2
Heading Rank: 2

Heading: Material Facts of the Case

Text: 4 The basic facts material to this issue are not disputed. The bridge in question crosses six railway tracks in the railroad right of way at 41st Street in Philadelphia. The City owns the bridges over 40th Street and 42nd Street, but maintains that the railroads own the 41st Street bridge. The 41st Street bridge crosses six railway tracks, four owned by Amtrak and two owned by Conrail. The original steel and timber bridge elevating 41st Street where it intersects with the railroad right of way was built at the site in 1875. That bridge was replaced by the now-deteriorating steel and concrete structure which was built in 1929, pursuant to a Philadelphia city ordinance that required the Pennsylvania Railroad to build and maintain the bridge at its own cost under the supervision of the Philadelphia Department of Public Works. The Pennsylvania Railroad 1 signed a document accepting these requirements on May 11, 1927. The Pennsylvania Public Service Commission (which became the PUC) issued a Certificate of Public Convenience for construction of the highway bridge on February 21, 1928, and Penn Central completed construction in August of 1929. None of these documents mentions ownership of the bridge. 5 It appears that the Pennsylvania Railroad and its successor Penn Central lived up to this contractual obligation until financial crisis struck the rail industry in the northeast, threatening its extinction. By 1971, Penn Central had filed for bankruptcy. It was not alone. By the early 1970s, the railroads in the northeast were failing at such a rapid rate that Congress stepped in to resolve the regional rail crisis. Congress passed the Regional Rail Reorganization Act of 1973, Pub. L. No. 93-236, 87 Stat. 985 (1974) (codified as amended at 45 U.S.C. § 701 et seq. (1994)) (the Rail Act), which allowed the railroads to reorganize into a single entity, and Conrail was designed to salvage the viable rail properties, leaving much of the debt behind in bankruptcy and beginning with a clean slate. The process by which new, financially viable railroads were built from the wreckage that was the northeastern rail system forms the essential legal background to this case. See generally Regional Rail Reorganization Act Cases, 419 U.S. 102, 108-17 (1974). 6 The Rail Act created the United States Railway Association, see 45 U.S.C. § 711(a), a non-profit corporation, which in turn prepared a Final System Plan (FSP) which designated how rail properties held by the bankrupt railroads would be distributed, see 45 U.S.C. § 716. The Rail Act also created Conrail, see 45 U.S.C. § 741(a), and mandated that rail properties designated in the FSP be conveyed to Conrail, see 45 U.S.C. § 743(b). The conveyance process was supervised by the Special Court and implemented through a Conveyance Order of the Special Court. See 45 U.S.C. § 719(b). Properties related to passenger rail service were then reconveyed to Amtrak. The transfer that matters in this case occurred when, pursuant to the Rail Act, all of Penn Central's rail properties, i.e. properties used or useful in rail transportation service, 45 U.S.C. § 702(14), were conveyed to Conrail, and the property related to passenger rail service was reconveyed to Amtrak. The City and the PUC claim that Penn Central's trustees in bankruptcy conveyed all of the real property in Philadelphia County to Conrail, including the railroad right of way, rails, and the 41st Street Bridge formerly owned by [the Pennsylvania Railroad]. 7 The railroads dispute that the bridge was ever owned by Penn Central, and thus dispute that it could ever have been properly conveyed to them. They characterize the Rail Act conveyances differently. According to the railroads, the deeds between the trustees of the Penn Central bankruptcy estate and Conrail, and between Conrail and Amtrak, conveyed the real property free and clear of liens and encumbrances. The six railroad tracks under the 41st Street bridge were conveyed to Conrail, and four of them were reconveyed to Amtrak. Real property was conveyed by deed, and other property was conveyed by Bills of Sale and Assignment, which specifically excluded contracts for the rehabilitation and modernization of property without complete financial remuneration of the new railroads. Contracts for the maintenance and security of property not passed to Conrail also were expressly not conveyed. 8 The railroads denied any ownership interest in the bridge, and opposed attempts by the City to have them maintain the bridge. The bridge continued to deteriorate to the point that it was closed to vehicular traffic in 1993, and only pedestrians were allowed across. The City notified the PUC of the deteriorated condition of the bridge, and the PUC approved the closure. (To the extent not preempted by federal law, the PUC has regulatory authority over bridges crossing railroad rights of way under Pennsylvania law, and may permit changes or construction, and determine who must pay for maintenance.) The PUC began an investigation to determine who was responsible for the repair and future maintenance of the bridge. The PUC directed Amtrak to create a plan for repairing the bridge, and ordered the City to pay the initial costs of repair. 9 The current case was initiated by the City in the Special Court asking for a declaration that the responsibility to maintain the 41st Street bridge had been conveyed to Amtrak and Conrail by the Special Court's order transferring PennCentral's property. Conrail then brought a related action against the PUC, seeking to bind it to any order issued by the Special Court. The two cases were consolidated. On simultaneous motions for summary judgment, the Special Court held that the real property under the 41st Street bridge and the bridge itself had been owned by Penn Central and had been conveyed to Conrail and Amtrak, and that the contractual obligation to maintain the bridge under the 1927 agreement had also been conveyed. The Special Court further held that while Conrail and Amtrak were not responsible for any deterioration that took place prior to April 1, 1976 under the Rail Act's fresh start policy, the deterioration had substantially occurred after that date. It held Conrail and Amtrak responsible for all of the costs associated with repair and maintenance of the bridge, and apportioned two-thirds to Amtrak and one-third to Conrail, according to the number of rail lines each owned. The Court also stated that Amtrak's obligation was not a tax or fee, but a contractual obligation.It did not address Amtrak's defenses that the action under the contract was barred by the statute of limitations or discharged in the Penn Central bankruptcy proceeding.