breach of terminal access agreement - hurricane damage

BREACH OF CONTRACT - FAILURE TO PROTECT RAILCARS DURING HURRICANE

Claim at Issue: 

Multiple railcars were damaged at a container terminal located in the Port of New York and New Jersey as a result of Hurricane Sandy.  KCM filed suit on behalf of our railroad client seeking to recover the costs of the repairs from the terminal operator totaling over $214,000.00.


Key Legal or Factual Issues: 

  • Whether the railroad could recover under a theory of breach of contract where the only contract between the parties had expired approximately six years prior and there was no evidence that the parties expressly agreed to extend its terms. 
  • Whether defendant was liable for the damage to the railcars where the railcars were delivered the day the hurricane arrived, the defendant did not have any locomotives to remove the railcars from the terminal and they had been damaged by a classic "Act of God."
  • Another significant hurdle was the fact that many documents that would support the railroad's position were also destroyed as a result of Hurricane Sandy and no backups were available.


Case Summary:

In order to achieve success in this matter, KCM had to overcome the daunting legal and factual obstacles referenced above. Seizing on these issues, including a possibly terminated contract and strong Act of God defenses, the terminal operator moved for summary judgment, which we defeated even though the judge was inclined to grant the defendant's motion prior to oral argument. The matter then proceeded to a bench trial where we successfully established that the contract applied and the defendant failed to take reasonable measures to safeguard the railcars during the storm. The court entered judgment for the railroad for the full amount sought plus attorneys' fees and costs as provided by the terms of the contract.


In obtaining a successful result, we focused on a provision of the contract that provided that any terms of the contract that had "continuing relevance" would survive the termination of the contract. We then pursued discovery to support this theory including deposing the individuals responsible for drafting the document some ten years prior who had long since retired. Using the facts obtained through discovery and the terms of the contract itself, we convinced the court that all terms pertaining to rail operations continued to have relevance, and still applied as a result.


With respect to the Act of God defense, we argued the storm surge caused by Hurricane Sandy was foreseeable based on the news coverage of the approaching storm and the defendant's internal emails in which they discussed the storm and hurricane preparedness. And while the defendant could not move the railcars themselves, we argued that it could have submitted a car movement request to the railroad to relocate the cars to a safe location away from the port where the terminal was located. Because it did not make that request and elected to leave the cars on its property, the terminal was responsible for safeguarding the railcars and paying for the costs of repairs if they did not. The court, in an opinion that adopted our position, agreed with these arguments awarding the full $214,000.00 in damages. We then filed a motion seeking compensation for attorneys' fees pursuant to the terms of the applicable agreement. The final result of this motion was a payment to our railroad client in the amount of $339,516.00.