Shared tracks don't mean shared pockets, appeals court rules in railroad case

Steve Korris Jul. 31, 2008, 4:59am

Kansas City Southern Railway has already paid a family to settle a wrongful death suit and expected to recover the cost from Union Pacific Railroad, but an appeals court in Beaumont has ruled that Kansas City Southern can't recover a dime.

The 9th District Court of Appeals affirmed the ruling by Orange County District Judge Dennis Powell, who entered a take nothing judgment against Kansas City Southern after a bench trial in 2006.

Both railroads had settled with the family of John Keen, who died in 2002 when a Union Pacific engine struck his van on KCS tracks.

Kansas City Southern then sued Union Pacific, arguing that a track sharing agreement required Union Pacific to indemnify Kansas City Southern against the claim.

Union Pacific moved for summary judgment and Powell granted it.

Kansas City Southern appealed. In 2004, the 9th District reversed Powell and remanded the dispute to him with instructions to develop facts.

At trial, Powell learned that the railroads entered into a joint track agreement in 1937.

It expired in 1952, but in 1991 the railroads retroactively reinstated it.

Powell held that Kansas City Southern presented no evidence of actual knowledge that would obligate Union Pacific to indemnify it pursuant to the agreement.

Powell ruled that, "Union Pacific does not have a contractual duty to indemnify KCS."

Kansas City Southern returned to the 9th District, arguing that Powell released Union Pacific from responsibility for its own negligence.

"Union Pacific had notice and knowledge of the indemnity provision at issue and had ratified the indemnity agreement as a result of similar past crossing accidents on the very joint tracks at issue," Kansas City Southern argued.

All four accidents occurred in the 1980s, however, after the agreement had expired.

On top of that, the 9th District found that circumstances of the four earlier accidents were not the same as those in this case.

"While Union Pacific acknowledged defending those cases, it disputed that it indemnified KCS for KCS's fault in any of those cases and asserted that Union Pacific had not defended KCS based on the terms contained in the joint track agreement," Justice Hollis Horton wrote.

"Because KCS failed to prove Union Pacific's actual knowledge of the terms at issue, these provisions of the contract were unenforceable," Horton wrote.

Chief Justice Steve McKeithen and Justice Charles Kreger joined the opinion.

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