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AMTRAK v. CONRAIL

October 3, 1988

NATIONAL RAILROAD PASSENGER CORPORATION, Plaintiff,
v.
CONSOLIDATED RAIL CORPORATION, Defendant



The opinion of the court was delivered by: GASCH

 HONORABLE OLIVER GASCH, SENIOR UNITED STATES DISTRICT JUDGE

 I. INTRODUCTION

 This is a declaratory judgment action brought by the National Railroad Passenger Corporation ("Amtrak") against Consolidated Rail Corporation ("Conrail"). Amtrak seeks a determination that it is not required to pay on Conrail's behalf compensatory, punitive or exemplary damages awarded against Conrail resulting from a train wreck that occurred at Chase, Maryland, on January 4, 1987.

 The Chase, Maryland train wreck was one of the worst disasters in railroad history, resulting in 16 deaths and more than 350 injury claims from Amtrak passengers and employees. Over sixty personal injury and wrongful death actions arising out of the Chase disaster have been brought against Amtrak and Conrail. Stipulation, filed November 5, 1987, para. 18. The plaintiffs in many of those cases allege that Conrail or Amtrak or both committed reckless, wanton, willful or grossly negligent acts and assert entitlement to compensatory and punitive damages totaling many millions of dollars. Id.

 The accident occurred when an Amtrak train collided with three Conrail freight locomotives which had entered the path of the high-speed northbound Amtrak passenger train. Just prior to crossing over onto the track being used by the Amtrak train, the Conrail engineer and brakeman in control of the Conrail locomotives had failed to heed a series of slow and stop signals at or before a track juncture near Chase, Maryland. The Conrail engineer has admitted to a host of wrongs: that the Conrail crew had recently used marijuana, was speeding, was operating a train in which the cab signal had been rendered inoperative because the light bulb had been removed from it, and was operating a train in which an audible warning device had been intentionally disabled. He has also admitted that he failed to call out signals to his brakeman, as required by applicable safety regulations, that he failed to maintain a proper lookout, and that he did not adhere to the cab signals or the wayside signals. *fn1" In a plea bargain arrangement with the State of Maryland, the engineer of the Conrail freight train involved in the Chase accident pleaded guilty on February 16, 1988, to a single count of manslaughter by locomotive that names all 16 persons killed in the train wreck. On March 29, 1988, the engineer was given the maximum penalty for manslaughter, five years imprisonment and $1,000 in fines. Additionally, on May 25, 1988, the Conrail engineer pleaded guilty to a federal charge of conspiring to obstruct the federal investigation of the accident.

 At the time of the Chase accident, Conrail and Amtrak were parties to an agreement entitled "Second Amended and Restated Northeast Corridor Freight Operating Agreement" (hereinafter "Freight Operating Agreement") dated October 1, 1986. Stipulation, Filed November 5, 1987, para. 15; Agreements, Tab 22. This action seeks a declaration of the rights and obligations of the parties with respect to the indemnification provisions of the Freight Operating Agreement.

 Armed with provisions of the Freight Operating Agreement which bear on liability apportionment, Conrail has demanded that Amtrak defend and indemnify it for any claims and damages arising out of the Chase accident. Amtrak contends that it need not indemnify Conrail for reckless, wanton, willful or grossly negligent acts or for punitive damages. Amtrak bases its contention on the argument that enforcement of the liability apportionment provisions would violate public policy in the case of findings of more than mere negligence or awards of punitive damages.

 The Court has previously held that this case presents a justiciable controversy such that the issue presented falls within the scope of the Declaratory Judgment Act. National Railroad Passenger Corp. v. Consolidated Rail Corp., 670 F. Supp. 424, 432 (D.D.C. 1987). The issue presented in this case is whether Amtrak must indemnify Conrail for any damages -- compensatory, punitive or exemplary -- arising out of the Chase accident that are founded upon reckless, wanton, willful, or grossly negligent acts by Conrail.

 In addition to determining that declaratory relief is proper in this case, the Court previously held that there was an issue of fact as to the intention of the parties, precluding summary judgment. Id. at 434. In early November of 1987, the Court held an evidentiary hearing in order to determine the intent of the parties at the time they entered the Freight Operating Agreement. The parties, in accordance with a stipulation filed on October 13, 1987, submitted proposed findings of fact and conclusions of law, as well as post-hearing memoranda. The evidentiary record before the Court principally derives from pre-hearing stipulations, the testimony heard at trial, designated deposition testimony, affidavits, joint exhibits, and the agreements and side letters covered in the evidentiary hearing. This memorandum represents the Court's findings of fact and conclusions of law.

 II. FINDINGS OF FACT

 The Chase, Maryland disaster occurred on a stretch of railroad line known as the Northeast Corridor, which runs from Washington, D.C. to Boston, Massachusetts. Amtrak owns the segment of the Northeast Corridor that runs between Washington, D.C. and New York, which is the most heavily used rail line in the nation. At the time of the train wreck near Chase, Maryland, Conrail used the Northeast Corridor pursuant to the Freight Operating Agreement. The Second Amended and Restated Northeast Corridor Freight Operating Agreement dated October 1, 1986, between Amtrak and Conrail, Article Two, Section 2.2(d), respecting Operation, Management and Control, reads as follows:

 
All personnel, including employees of Conrail, rendering any services which involve responsibility for Amtrak's operating facilities or for the handling or movement of any trains over the NEC, shall be subject to the direction, supervision, and control of Amtrak, and any such services performed by or for Conrail shall be governed by and subject to all then current operating and safety rules, orders and procedures of Amtrak with respect thereto. Amtrak may, for cause, require that any person performing services hereunder be prohibited or removed from performance of such services, subject to the requirement that Amtrak shall support any action defending such prohibition or removal and bear the cost of any claims growing out of any improper prohibition or removal.

 (Emphasis supplied).

 The Freight Operating Agreement also bears on the liability apportionment between Amtrak and Conrail for the Chase accident. A series of indemnification clauses included in the Freight Operating Agreement contain the provisions for liability apportionment that are relevant to this case. The indemnification provisions in the agreement between Conrail and Amtrak are set forth in sections 5.3 and 5.6 of the Freight Operating Agreement. Agreements, Tab 22, §§ 5.3 & 5.6. Section 5.3 of the Freight Operating Agreement states as follows:

 
Section 5.3. Amtrak Employees
 
Amtrak agrees to indemnify and save harmless Conrail and Conrail Employees, irrespective of any negligence or fault of Conrail or Conrail Employees, or howsoever the same shall occur or be caused, from any and all liability for injury to or death of any Amtrak Employee, or for loss of, damage to, or destruction of the property of any such Amtrak Employee. It is expressly understood and agreed that Amtrak Employee furnished to Conrail, and Amtrak Employees who are involved in Amtrak's provision of services to Conrail, shall be regarded for purposes of this Article V as employees of Amtrak, and not of Conrail.

 Section 5.6 provides:

 
Section 5.6. Amtrak Passengers
 
Amtrak agrees to indemnify and save harmless Conrail and Conrail Employees, irrespective of any negligence or fault of Conrail or Conrail Employees, or howsoever the same shall occur or be caused, from any and all liability for injuries to or death of any Amtrak Passenger and for loss of, damage to, or destruction of any property of any such passenger.

 There are other sections of the Freight Operating Agreement that allocate liability to Conrail "irrespective of any negligence or fault of Amtrak or Amtrak Employees, or howsoever the same shall occur or be caused," for "any and all liability" arising from the injury or death of any Conrail employees, any injury, death or damage caused by the explosion or release of the contents of a Conrail train, and any injury, death or damage arising out of the transportation of hazardous or toxic material in Conrail trains. See Agreements, Tab 22, Sections 5.2, 5.7 & 5.12.

 In addition, section 5.16 of the Freight Operating Agreement provides that the indemnifying party has the duty to defend such suits. Section 5.16 states:

 The agreement also provides for severability from the Freight Operating Agreement of clauses determined to be invalid, illegal or unenforceable. Section 4.7 of the Freight Operating Agreement states:

 
If any part of this Agreement is determined to be invalid, illegal or unenforceable, such determination shall not affect the validity, legality or enforceability of any other part of this Agreement and the remaining parts of this Agreement shall be enforced as if such invalid, illegal or unenforceable part were not contained herein.

 In section 4.6 of the Freight Operating Agreement, the parties agreed that the agreement is governed by and should be construed in accordance with the laws of the District of Columbia.

 In order to determine the intent of the parties in agreeing to the indemnification provisions in the Freight Operating Agreement, the Court has examined the negotiations and discussions culminating in this agreement and its predecessors. Because the language used in the Freight Operating Agreement's indemnification provisions can be traced back to 1972, the Court has heard testimony and examined the history of the language used in the various liability agreements between Amtrak and Conrail and the evolution of the indemnification provisions.

 A. The History of the Indemnification Provisions

 Many of the provisions in the 1986 Freight Operating Agreement, including the indemnification provisions at issue in this case are derived from the 1976 Northeast Corridor Freight Operating Agreement between Conrail and Amtrak. Those provisions were borrowed from an agreement struck between Amtrak and Burlington Northern in 1972. The origin of the indemnification provisions in all of these agreements can be traced to the railroad industry's 1971 negotiations with Amtrak in its infancy.

 1. 1971-1972 Negotiations

 Amtrak was created in the aftermath of heavy losses suffered by the railroad industry in providing passenger services. In 1970, Congress enacted the Rail Passenger Service Act, 45 U.S.C. § 501 et seq., which provided for the creation of Amtrak as an intercity and commuter rail passenger service. Id. § 541. Amtrak was required to enter contracts with the railroads on or before May 1, 1971, to relieve the railroads of their responsibility for providing intercity rail passenger services. Id. § 561(a)(1).

 Prior to the creation of Conrail, the Penn Central Transportation Company ("Penn Central") operated Amtrak's intercity passenger service in the Northeast Corridor. Amtrak owned no rail lines and had no operating personnel at that time, so it operated by contracting with the railroads, such as Penn Central, for the use of tracks, equipment, and personnel for the provision of intercity passenger service. After negotiations between Amtrak's incorporators and representatives of the freight railroads, Amtrak and the freight railroads entered into the National Railroad Passenger Corporation Agreement (the "Basic Agreement") dated April 28, 1971. Stipulation filed November 5, 1987 para. 4. The negotiators were unable to reach a permanent agreement regarding responsibility for casualty losses and other tort liability occasioned by the railroad's operation of passenger trains on Amtrak's behalf by and over the tracks of the various railroads. Id. para. 3.

 Penn Central was among the freight railroad companies that entered into the Basic Agreement with Amtrak in the spring of 1971. Id. para. 4. Section 7.2 of the Basic Agreement set forth an interim arrangement governing responsibility for liability for casualty losses. It states:

 
Railroad agrees to assume all liability for injury to or death of persons or damage to or destruction of property arising out of activities conducted pursuant to this Agreement, and in consideration of the assumption of such liability NRPC agrees to pay to Railroad for each month during which such assumption is in effect an amount computed at the rate of 4% of all amounts reimbursable by NRPC to railroad for such month pursuant to this Agreement. Commencing promptly after May 1, 1971, NRPC and Railroad will negotiate in good faith regarding a method of dealing with the matter of such liability and the risk thereof after December 1, 1971. In the event the parties have not, by December 1, 1971, agreed upon such a method, which may be a percentage method or a legal apportionment of casualty liability or some other method, the determination thereof shall be submitted to arbitration pursuant to Article Six hereof not later than December 31, 1971, provided, however, that, taking into account (i) the inability of NRPC and Railroad in the time and on the data available to agree upon a satisfactory long-term method of dealing with such liability, (ii) the desire of both parties that Railroad be fairly compensated or [sic] assuming the risk of such liability, and (iii) the conviction of NRPC that in the light of experience, including the effect of reduction of Intercity Rail Passenger Service, a rate of not more than 2% will be fair for the future, if method determined by arbitration is a percentage method, the percentage shall not exceed 2% unless clear and convincing evidence establishes that a higher percentage is justified.
 
During the period such method is in the course of negotiation or arbitration, the method of handling such liability previously in effect shall be continued in effect on an interim basis.
 
Such arbitration shall be conducted by the National Arbitration Panel, and the parties shall make all reasonable efforts to expedite the arbitration.
 
In the event a percentage method is agreed upon or established by arbitration, it shall remain in effect for a minimum of one year prospectively after the same becomes established, after which the percentage may again be changed by arbitration.

 Stipulation filed November 5, 1987, para. 4 (emphasis added). If the railroads were unable to agree with Amtrak on a permanent arrangement for the allocation of liability and risk by December 1, 1971, then the matter was to be submitted to arbitration no later than December 31, 1971. See id.

 Beginning in the summer of 1971 and extending through early 1972, discussions and exchanges of correspondence ensued between Amtrak and an ad hoc subcommittee of the American Association of Railroads ("AAR") regarding a permanent replacement for section 7.2. Stipulation filed November 5, 1987, para. 5; Tr. 487-88, 121. In preparing for the discussions concerning liability apportionment, the chairman of the ad hoc subcommittee of the AAR sent a letter to the railroads on July 14, 1971, asking for their views about how to resolve the liability issue. Tr. 652-54; Joint Exh. 2. Among the responses received by the chairman was a letter from the Union Pacific Railroad dated August 2, 1971, which stated:

 
Because the indemnity law in many states is to the effect that an indemnity agreement will not be interpreted to be applicable with respect to losses due solely to the negligence of the indemnitee unless that intent is clearly and unequivocally expressed, the language of any arrangement reached with AMTRAK should be tailored appropriately if it is agreed, as appears to me to be desirable, that the risk of liability and of loss from casualties should be fixed between the railroads and AMTRAK independently of the cause of such loss insofar as negligence fault or similar considerations are concerned.

 Tr. 655; Joint Exh. 3, p. 2. This response, as well as others received by the chairman, was circulated to members of the AAR subcommittee, including to Mr. Donald Brinkworth of Penn Central, a witness in this case. Mr. Brinkworth had knowledge as of 1971 that under the law of various states, indemnification provisions purporting to indemnify someone against his own negligence are to be strictly and narrowly construed. Tr. 701-02.

 On September 13, 1971, the negotiators for the railroad met with Amtrak's representatives to discuss the negotiation of a permanent agreement on liability. Tr. 655-56; Joint Exh. 6. At that meeting, Amtrak's representatives made clear their concern that the railroad safety programs not deteriorate. Tr. 658-59.

 About a week later, on September 22, 1971, the AAR subcommittee sent a letter to Amtrak's representatives enclosing a draft proposal for a permanent liability agreement. Tr. 657-58; Joint Exh. 6. Several days later, on September 26, 1971, Amtrak appointed its first vice president-general counsel, Robert S. Medvecky, who almost immediately thereafter became involved with the renegotiation of section 7.2. Medvecky Affidavit para. 1, Tr. 116, Joint Exh. 102.

 Sometime between September 26 and October 1, 1971, Mr. Medvecky met with members of the AAR subcommittee for the purpose of discussing changes in section 7.2. Tr. 121, 156, 163; see also Joint Exh. 100, pp. 1-3. The railroad representatives proposed to Mr. Medvecky that Amtrak serve as an insurer for the railroads with first dollar coverage, without limits. Tr. 121. Their proposal provided that Amtrak would be liable and would indemnify the railroad "regardless of the negligence of the railroad." Joint Exh. 6, p. 4; Tr. 121-22. Mr. Medvecky rejected this proposal. Tr. 122.

 Amtrak representatives met again with the AAR subcommittee on November 12, 1971, in Jacksonville, Florida, in a continuing attempt to renegotiate section 7.2. Tr. 123. At that meeting, the railroads' position was that Amtrak should accept full and complete responsibility for all liability losses that the railroad might incur as a result of Amtrak's passenger service. Tr. 660-61; Joint Exh. 7, p. 3. Mr. Medvecky responded that Amtrak would never accept the premise that the entire cost of a collision between a passenger train and a freight train should be borne by Amtrak simply because it was in the business of providing passenger service. Tr. 661-62; Joint Exh. 7, pp. 3-4.

 It was apparent at this juncture that Amtrak's efforts to reach an agreement with all of the freight railroads at once through negotiations with the subcommittee of the AAR were futile. Tr. 133. Following the November 1971 Jacksonville, Florida meeting, Amtrak's general counsel reported to the Amtrak Board of Directors that further discussions with the AAR subcommittee would not likely be productive. Mr. Medvecky proposed that Amtrak try to find one railroad to negotiate with individually rather than continuing to negotiate with the railroads as a group. Tr. 133. The chairman of Burlington Northern Railroad ("BN"), Lewis Menk, who was also a director of Amtrak, volunteered Burlington Northern to enter separate negotiations with Amtrak as a way of avoiding an impasse that appeared to be present in the negotiations between the subcommittee of the AAR and Amtrak. Tr. 522.

 Beginning in December 1971, Amtrak and BN commenced bilateral negotiations in an effort to reach an agreement on a permanent replacement for the original section 7.2 in their Basic Agreement. Stipulation filed November 5, 1987 at para. 6. Amtrak envisioned that such an agreement would serve as a model to replace the original section 7.2 in the Basic Agreement with all of the railroads. Id. Negotiations between Amtrak representatives and representatives of BN took place in St. Paul, Minnesota on December 28 and 29, 1971, February 16, 1972, and March 1, 1972. *fn2"

  At the outset of its negotiations with Burlington Northern, Amtrak took the position that liability should be assigned on the basis of who was at fault for an accident. Tr. 137-38; 527. Burlington Northern contended that Amtrak should fully indemnify the railroads, bearing complete liability for all passenger train accidents in an arrangement similar to the standard detour agreement. *fn3" Tr. 528; Joint Exh. 10 at 2, 5. Burlington Northern's negotiators persuaded Amtrak's negotiators that assigning liability on the basis of fault would encourage fighting among the defendants and enhance the cost of settling a claim, therefore, it would be an unsatisfactory solution to the liability question. Tr. 528, 533, 565; Joint Exh. 10 at 9.

 During the negotiations, Burlington Northern's past claims experience was exhaustively reviewed, including examples of specific cases in its passenger train operations. Joint Exhs. 10 at 6; 12 at 3. The memoranda of the meetings do not reflect any discussions of the treatment of liability arising from passenger train accidents caused by gross negligence, recklessness, willful or wanton misconduct on the part of the railroad. Joint Exhs. 10-13. Nor do they reflect any discussions of the treatment of punitive damages arising from such accidents or passenger train accidents caused by drunken engineers. Id.

 At the close of the first negotiating session, Burlington Northern and Amtrak agreed to exchange drafts of a new section 7.2 under which categories of claims would be assigned generally to one party or another by prior agreement, without regard to fault. Tr. 533-34, 536; Joint Exh. 10 at 3, 9-10, 15. Mr. Medvecky sent a draft of Amtrak's proposed section 7.2 to Burlington Northern on January 12, 1972. Joint Exh. 9; Tr. 149. The proposal provided for divisions or allocations of responsibility under which Amtrak would agree arbitrarily to carve out certain categories of liability that it would accept. Medvecky Affidavit para. 10, Joint Exh. 102; Tr. 180, 529; Joint Exh. 10 at 9. This draft proposal contained essentially the same language that is at issue in this case, including the phrases "irrespective of any negligence or fault . . . or howsoever the same shall occur or be caused." Tr. 147-49; Joint Exh. 9. Mr. Medvecky believed that the use of the terms "or fault," "negligence," and "or howsoever the same shall occur or be caused," was redundant. Tr. 149. He believed claims relating to passengers were a minimal part of the total monetary cost of liability, in that the bulk of the liability cost was for claims relating to the injury or death of railroad employees under the Federal Employers Liability Act. Tr. 139, 144. Amtrak's proposal imposed liability upon Burlington Northern for death or injury to BN employees, and on Amtrak the liability for injuries or deaths involving Amtrak passengers and employees. Joint Exh. 10 at 3; Tr. 139.

 Amtrak's proposal did not exclude gross negligence expressly because of Mr. Medvecky's belief that the line between negligence and gross negligence is subjective. Tr. 178, 180. Mr. Medvecky believed that under his proposed solution to the liability provision, Amtrak would have to pay compensatory damages for injuries to passengers in situations where the freight railroad's conduct included "some" gross negligence. Tr. 178, 180. He did not intend for his liability apportionment proposal to apply to punitive damages, or to misconduct that might lead to punitive damages, such as wanton, willful, or reckless misconduct. Tr. 168, 177, 180. At no time during the negotiations between Amtrak and Burlington Northern did any of Burlington Northern's negotiators ask Mr. Medvecky or suggest to anyone at Amtrak that the proposal would extend to cases involving gross negligence, or reckless, willful or wanton misconduct, or to conduct that would lead to an award of punitive damages. Tr. 152-53; Joint Exhs. 10-13. At no time during the negotiations when Burlington Northern was urging the adoption of the indemnification formula in the Standard Detour Agreement did Burlington Northern's representative mention that the United States Court of Appeals for the Fifth Circuit had held that indemnification formula invalid as a matter of public policy to the extent that it purported to extend to indemnification for willful or wanton misconduct by the railroad. Tr. 561-64; see Alabama Great Southern R.R. v. Louisville & Nashville R.R., 224 F.2d 1 (5th Cir. 1955).

 Throughout the evidentiary hearing in the case, the parties raised discussions of a hypothetical accident caused by a drunken engineer. Frank S. Farrell, vice president-general counsel of Burlington Northern, who negotiated with Amtrak on behalf of Burlington Northern in 1972, does not recall any discussions about a hypothetical accident involving a drunken engineer during their negotiations. Tr. 566-67. Mr. Medvecky recalls having raised the hypothetical drunken engineer in discussions of indemnification for claims by railroad employees under the Federal Employers' Liability Act ("FELA"), 45 U.S.C. § 51 et seq. Tr. 140-41. Mr. Farrell vaguely recalls discussing an actual accident that had occurred on the Northern Pacific in 1962 involving a drunken engineer but does not recall any discussions of a hypothetical drunken engineer. Tr. 531, 566-67, 570-71. Neither Mr. Farrell nor Mr. Medvecky testified that liability for punitive damages was a topic of discussion between Amtrak and Burlington Northern negotiators.

 Mr. Farrell testified that he recalls discussing at the first negotiation meeting between BN and Amtrak the concept of the degree of fault as it would relate to the indemnification proposal. He testified that two employees in BN's claims department were present at the meeting for the purpose of providing statistical information concerning the frequency with which BN had been charged with gross negligence and punitive damages and about how standards of negligence vary from state to state. Tr. 530. The memorandum summarizing the discussions at that negotiation meeting reflects that Amtrak would accept full liability for death or injuries suffered by Amtrak passengers and employees irrespective of cause and would indemnify BN with respect thereto. Joint Exh. 10 at 3. The memorandum states that the parties recognized that "'fault' was not a sound basis for arriving at a new agreement." Id. at 9. Instead, the parties agreed upon an "arbitrary assignment of risk." Id.

 Negotiators for Amtrak raised their concern about the operation of BN's safety program. Tr. 574-77. Indeed, during the first negotiation session in December 1971, Amtrak expressed its position that it could not accept a full indemnification formula because it had no control over railroad personnel or railroad safety equipment and programs. Tr. 571-72, 574; Joint Exh. 10 at 2, 5. Such a formula would force Amtrak to rely upon railroad management for control over personnel behavior and safety practices. Id. In February of 1972, during the second negotiation session, representatives of Amtrak expressed the need to consider how Amtrak might be given control and exert control over safety matters and railroad employees. Tr. 574; Joint Exh. 12 at 7-8. In response, BN negotiators stated that Amtrak should assume the hazards of operation if BN performed the operations safely and prudently. Tr. 575-76; Joint Exh. 10 at 8, 10. BN representatives then explained in detail the railroad's safety department policies, crew education program, safety rules, accident prevention techniques, post-accident corrective measures taken as a preventative measure, the trainmaster's role, and safety equipment, including speed signals and safety signals. Tr. 575-76; Joint Exh. 10 at 8, 11.

 Amtrak and BN reached agreement on a permanent replacement to the original section 7.2 in the Basic Agreement, executing the Supplemental Agreement on May 15, 1972. Stipulation filed November 5, 1987, para. 7. The effectiveness of the Supplemental Agreement between Amtrak and BN was contingent upon the execution of substantively identical agreements with Amtrak by a specified percent of the other freight railroads. Id.; Tr. 153-54, 183-84.

 The new section 7.2 provided:

 
(b) NRPC agrees to indemnify and save harmless Railroad, irrespective of any negligence or fault of Railroad, its employees, agents or servants, or howsoever the same shall occur or be caused, from any and all liability for injuries to or death of any person or passenger who has purchased an NRPC-approved ticket for any train operated by or for the account of NRPC and for loss of, damage to or destruction of property of such person or passenger and for injuries to or death of any other person who may be on, getting on, or alighting from such train for the purpose of accompanying or meeting a passenger, and for loss of, damage to or destruction of the property of such person.

 Agreements, Tab 2. Under similar provisions, BN agreed to indemnify Amtrak "irrespective of any negligence or fault of NRPC, its employees, agents or servants, or howsoever the same shall occur or be caused," for "any and all liability" arising from the injury or death of BN's employees and any other person other than Amtrak passengers, employees or persons injured or killed at grade crossings. Agreements, Tab 2, § 7.2(e). Amtrak agreed to pay BN 3.67 cents per train mile for each Amtrak train operated over the lines of BN, in consideration for the liability assumed by BN. Agreements, Tab 2, § 7.2(f). The agreement did not mention gross negligence, willful or wanton misconduct, recklessness, or punitive damages.

 Amtrak transmitted the new section 7.2 to each of the other freight railroads. Mr. Medvecky met with each railroad, inviting each to sign a substantially similar agreement and to discuss any questions they might have with the agreement. Tr. 154-57. Mr. Medvecky offered to provide written clarification and interpretation by way of side letters to those railroads who raised significant questions. Id.; Stipulation filed November 5, 1987, para. 8.

 The Atchison, Topeka & Santa Fe Railroad ("Santa Fe") was among the railroads with which Amtrak sought to execute the Supplemental Agreement. On March 31, 1972, Mr. Medvecky wrote to Richard Knowlton, the assistant general counsel at Santa Fe, enclosing a copy of the agreement Amtrak had executed with BN, and proposing that the Santa Fe execute a similar agreement. Tr. 159-60; Joint Exh. 14. Mr. Medvecky disabused the representatives of the Santa Fe of the notion that they would have a de novo negotiation concerning the liability agreement. Tr. 160; Conrail Knowlton designation 41-42; Amtrak Knowlton counterdesignation 10-11. At a meeting in Chicago between Mr. Medvecky and Mr. Knowlton, the proposed Amtrak Santa Fe agreement was discussed. Tr. 160; Conrail Knowlton designation 43. On May 11, 1972, Amtrak and Santa Fe executed substantially the same agreement amending section 7.2 that had been agreed to by BN. Tr. 162; Agreements, Tab 4. The agreement does not mention gross negligence, willful or wanton misconduct, recklessness, or punitive damages. Agreements, Tab 4.

 Mr. Medvecky provided a side letter to Mr. Knowlton, on May 24, 1972, which reflects no question or discussion of gross negligence, willful or wanton misconduct, recklessness, or punitive damages. Agreements, Tab 6. Mr. Knowlton has no specific recollection of any of the discussions or negotiations concerning the 1972 supplemental liability agreement, nor does he recall any discussions about liability for heightened levels of negligence. Amtrak Knowlton designation 9-15. Mr. Knowlton believes that, to illustrate the agreement under the amendment to section 7.2, he and Amtrak negotiators used the hypothetical example of an accident caused by a "drunken engineer." Knowlton Affidavit para. 5, Joint Exh. 106; Conrail Knowlton designation 58-59. But Mr. Knowlton cannot specifically state that such a conversation actually took place, nor does he recall any of the circumstances of the conversation. Amtrak Knowlton designation 17-19. Mr. Medvecky testified that, to the best of his recollection, Mr. Knowlton did not discuss any hypothetical drunken engineer with him. Tr. 165. The Court cannot find that there was any discussion of a drunken engineer between Amtrak negotiators and those representatives of Santa Fe.

 In a similar fashion as with the Santa Fe, Mr. Medvecky transmitted a copy of the proposed Supplemental Agreement to Mr. Brinkworth, then general counsel for Penn Central, inviting Penn Central to enter the same agreement. Tr. 505. In April of 1972, Mr. Brinkworth met with Mr. Medvecky to discuss the amendment of section 7.2. Tr. 510. At that meeting, Mr. Medvecky made it clear that each freight railroad was required to execute the same agreement that had been reached with BN. Tr. 155-56, 510. Mr. Brinkworth did not ask Mr. Medvecky about what the language in the Supplemental Agreement concerning negligence or fault meant, but Mr. Brinkworth believed that the language was broad. Tr. 511-12.

 On June 1, 1972, Mr. Medvecky provided a side letter to Penn Central at Mr. Brinkworth's request. Tr. 512-13; Agreements, Tab 5. Mr. Brinkworth had asked for a clarification of the circumstances under which Penn Central would be indemnified by Amtrak under the new section 7.2. Tr. at 512. Mr. Brinkworth did not ask nor does the side letter reflect any question about gross negligence, recklessness, willful or wanton misconduct, or misconduct warranting punitive damages. Tr. 675-76; Agreements Tab 5. Nor did Mr. Brinkworth and Mr. Medvecky discuss the subjects of gross negligence, willful or wanton misconduct, recklessness, or punitive damages in connection with the proposed Supplemental Agreement. Tr. 675-77.

 On June 1, 1972, Amtrak and Penn Central agreed to a new section 7.2 of the Basic Agreement between Amtrak and Penn Central, Tab 3, identical to that which had been agreed upon by Amtrak with BN and Santa Fe. Agreements, Tab 3. The agreement itself makes no mention of gross negligence, willful or wanton misconduct, recklessness, or punitive damages, nor is there any documentation reflecting discussions of those subjects in negotiating the Supplemental Agreement. Id.; Tr. 676.

 By July 1, 1972, the other freight railroads that chose to had entered into an agreement with Amtrak that was substantively identical to the Amtrak BN agreement. Stipulation filed November 5, 1987, para. 8. Amtrak and the freight railroads dealt with matters of interpretation by means of side letters issued shortly after the various agreements were executed. Id. Each side letter responded to those concerns raised by the particular railroad. Id. Just as with the agreements of BN, the Santa Fe, and Penn Central, none of the supplemental agreements with the other railroads specifically addresses gross negligence, willful or wanton misconduct, recklessness, intentional misconduct or punitive damages, nor is there evidence that these subjects were discussed. Tr. 165-66.

 2. 1976 Negotiations

 Between 1972 and 1976, when Conrail assumed the freight operations of Penn Central, there were no substantive changes made in the liability apportionment provisions. Tr. 583; Stipulation filed November 5, 1987, para. 9. On April 1, 1976, the rail properties comprising the Northeast Corridor were transferred from Penn Central, through Conrail as a conduit, to Amtrak. Brinkworth Affidavit para. 13; Joint Exh. 104. Concurrently with the execution of the purchase agreement, dated April 1, 1976, which transferred the Northeast Corridor to Amtrak, Conrail and Amtrak entered into six agreements governing the operation of the Northeast Corridor and Amtrak's intercity passenger service on Conrail's off-corridor rail properties. Stipulation filed November 5, 1987, para. 10. Those operating agreements were: 1) the Northeast Corridor Freight Operating Agreement; 2) the Maintenance of Commuter Equipment Service Agreement; 3) the Maintenance of Freight Equipment Service Agreement; 4) the Northeast Corridor Management Agreement; 5) the Northeast Corridor Commuter Operating Agreement; and, 6) the Off-Corridor Operating Agreement. Id.; Agreements Tabs 7-12. Each of these agreements contained liability apportionment provisions. Stipulation filed November 5, 1987, para. 10. The Northeast Corridor Freight Operating Agreement governed Conrail's freight operations on the Northeast Corridor tracks owned by Amtrak. Id. para. 11. The language of the liability apportionment provisions contained in all of the 1976 agreements tracks the language of the amended section 7.2 that was agreed to in 1972. Tr. 282. It is noted that Section 2.2(d) of the Freight Operating Agreement requires Conrail to adhere to Amtrak's safety rules.

 Safety provisions were discussed by the parties from time to time. Amtrak insisted that its safety and operating rules be followed by Conrail in its utilization of Amtrak's trackage in the Corridor. Ultimately, Conrail agreed and Section 2.2(d) was adopted, which states that any services performed by Conrail that involve responsibility for the handling or movement of any trains over the Northeast Corridor "shall be governed by and subject to all the current operating and safety rules, orders, procedures and standards of Amtrak with respect thereto."

 Amtrak's negotiators for the 1976 agreements were T. Page Sharp, Amtrak's associate general counsel, and Donald G. Avery, Amtrak's assistant general counsel. Tr. 194, 273, 422. The primary negotiators for Conrail were Donald A. Brinkworth, then assistant general counsel to Penn Central, on assignment to Conrail, and Elam M. Hitchner of Pepper, Hamilton & Scheetz, Conrail's outside counsel. Tr. 196, 283, 420-21. Negotiations began in early January when it was agreed that the Off-Corridor Agreement would be essentially a continuation of the 1971 Basic Agreement, including amended section 7.2, the Supplemental Agreement. Tr. 203-04, 283, 423. Because the agreement had to be in place by April 1, 1976, the negotiation sessions accelerated rapidly during the month of March, routinely lasting 10 to 14 hours each day, sometimes going around the clock. Tr. 196, 199, 276, 283, 298, 426. Unlike the Off-Corridor Agreement, the 1976 Freight Operating Agreement had no preexisting model from which to draw its provisions. Tr. 197, 286. As a result, approximately half of the negotiations centered on the 1976 Freight Operating Agreement. Id.

 Mr. Avery drafted the liability apportionment provisions for the 1976 Freight Operating Agreement, using section 7.2 of the Supplemental Agreement to the Basic Agreement as the "starting point." Tr. 203-05, 422-23, 591. The parties created a "mirror image" to the preexisting provisions of section 7.2 to be applicable to Conrail's operations over Amtrak's lines. Tr. 204, 217; Joint Exh. 101. Mr. Sharp had determined that the basic liability provisions would not be changed, and that they would "stick exactly with what we had" under the 1972 Supplemental Agreement. Tr. 275-76. Indeed, Mr. Sharp had been instructed not to change the liability provisions. Tr. 302. As a result, the key language from the 1972 agreement ("irrespective of any negligence or fault," "howsoever the same shall occur or be caused," "and any and all liability"), was incorporated verbatim into the 1976 agreement. Tr. 250-52; Joint Exh. 101.

 The only substantive discussion of liability apportionment in the 1976 negotiations was a brief exchange that took place sometime between March 22 and 28, 1976. Tr. 202, 287, 432, 454, 591, 596; Joint Exhs. 21, 23, 24, 25, 27. During the exchange, Mr. Avery raised a hypothetical train explosion so severe that it would destroy a city block in downtown Philadelphia. Mr. Avery maintained that Amtrak should not bear any liability for damages that occurred off of the right of way on account of Conrail's freight operations. Tr. 223-25; Joint Exh. 23. He was concerned that section 6.1 of the proposed Freight Operating Agreement as it was drafted would impose liability for damages for such a hypothetical train explosion on Amtrak. Mr. Avery proposed and Conrail accepted a change that departed from the basic liability provisions that preexisted these negotiations. Tr. 225; Joint Exh. 25; Agreements Tab 7.

 According to Mr. Hitchner, he raised the concern during this brief exchange that the language in the indemnification provision was not sufficiently broad to cover gross negligence or willful or wanton conduct, because he had recently read a Pennsylvania case in which gross negligence or willful misconduct would not be covered by using the word negligence. Tr. 436-37, 439, 445-46. He believes that he suggested incorporating a clause along the lines of "including but not limited to," with reference to types of conduct in excess of negligence. Tr. 437, 444, 445. Mr. Hitchner recalled that Mr. Sharp told him that the language was sufficiently broad to cover Mr. Hitchner's concerns, and that no changes would be made because of potential problems with Amtrak's agreements with other railroads. Tr. 448. Both Mr. Sharp and Mr. Brinkworth recall that Mr. Hitchner raised the idea of broadening the liability provisions to make the language more explicit so that Amtrak would be liable for any of its passengers and employees under any circumstances, but that the idea was not adopted. Tr. 287-88, 592, 686. Mr. Sharp refused to change the indemnification provision, and testified that his position was "absolute in his mind." Tr. 276. Mr. Sharp does not recall any discussion about punitive damages or willful and wanton conduct, nor did he believe that the indemnification provision should be broad enough to cover any type of misconduct. Tr. 293-94. Mr. Brinkworth testified that he informed Mr. Hitchner that he believed the liability provisions to be broad enough to cover all degrees of negligence. Tr. 688. Mr. Brinkworth does not recall Mr. Sharp using the terms gross negligence, willful or wanton conduct, or recklessness, or intentional conduct. Tr. 688-89. Mr. Brinkworth has no recollection of anyone mentioning punitive damages during this exchange. Tr. 689.

 Similarly, Mr. Avery has no recollection of anyone discussing liability apportionment for punitive damages, recklessness, willful or wanton misconduct, or gross negligence during the 1976 negotiations. Tr. 244. Mr. Avery prepared two written reports in March of 1976, summarizing the status of the negotiations, the open issues, the resolved issues, and how they had been resolved for distribution to senior Amtrak management. Tr. 237-38; Joint Exhs. 24, 27. These reports do not reflect any discussions about broadening the liability apportionment provision. Joint Exhs. 24, 27. None of the principal negotiators of the 1976 agreements -- Avery, Sharp, Hitchner, Brinkworth -- recalls any discussion of punitive damages or intentional misconduct during the one negotiation concerning liability. Tr. 244, 249-50, 291-93, 457-58, 689.

 But the hypothetical drunken engineer reared his ugly head again during this brief exchange. Mr. Brinkworth raised the hypothetical accident caused by a drunken engineer, believing in his own mind that the example represented more than ordinary negligence, but not stating that belief to the other negotiators. Tr. 597-98. Mr. Sharp, on the other hand, believed that the hypothetical drunken engineer represented an example of negligence, not of aggravated negligence or recklessness or intentional misconduct. Tr. 300, 303. For that reason, Mr. Sharp told Mr. Brinkworth that, in his opinion, an accident caused by a drunken Conrail engineer would be covered by the indemnification provision. Tr. 300. *fn4" Both Mr. Hitchner and Mr. Brinkworth conceded that, depending on the circumstances, a drunken engineer situation might be subject to liability for varying degrees of culpability. Tr. 452, 710-12.

 The 1976 Freight Operating Agreement was executed April 1, 1976 between Conrail and Amtrak. Stipulation filed November 5, 1987, para. 10. Section 6.1(e) of the 1976 Freight Operating Agreement provides:

 
Amtrak agrees to indemnify and save harmless ConRail, irrespective of any negligence or fault of ConRail, its agents, employees or servants, or howsoever the same shall occur or be caused, from any and all liability for injury to or death of any employee or employees of Amtrak and for loss of, damage to or destruction of any property or equipment owned by, leased to, used by, or otherwise in the control, custody or possession of Amtrak or its employees, . . . which arises from activities conducted by or for the account of ConRail pursuant to this Agreement . . . .

 Agreements, Tab 7, section 6.1(e). In section 6.1(f), Amtrak and Conrail agreed that:

 
Amtrak agrees to indemnify and save harmless ConRail, irrespective of any negligence or fault of ConRail, its employees, agents or servants, or howsoever the same shall occur or be caused, from any and all liability for injury to or death of any person or persons (other than those persons, employees or passengers described in Section 6.1(a), 6.1(b) and 6.1(d) hereof) . . . which arises from activities conducted by or for the account of ConRail pursuant to this Agreement.

 Agreements, Tab 7, section 6.1(f).

 Under similar provisions, Conrail agreed to indemnify Amtrak "irrespective of any negligence or fault of Amtrak, its employees, agents or servants, or howsoever the same shall occur or be caused," from "any and all liability" arising from the injury or death of Conrail employees (section 6.1(a)), and from damage to Conrail's locomotives, railroad cars and other property (section 6.1(c)). Conrail also agreed to indemnify Amtrak's injuries to Conrail passengers, in section 6.1(b), which provides:

 
ConRail agrees to indemnify and save harmless Amtrak, irrespective of any negligence or fault of Amtrak, its employees, agents or servants or howsoever the same shall occur or be caused, from any and all liability for injury to or death of any person or passenger (other than employees or agents of Amtrak arising pursuant to Section 6.3(a) hereof), who has purchased tickets for or is riding on any train operated by or for the account of ConRail (other than trains operated for the account of Amtrak) and for loss of, damage to or destruction of property of such person or passenger or for injuries to or death of any other person who may be on, getting on, or alighting from such train for the purpose of accompanying or meeting a ConRail passenger, and for loss of, damage to or destruction of the property of such person, and for loss of, damage to or destruction of freight or lading on any such train.

 Agreements, Tab 7, section 6.1(b).

 3. 1979 Negotiations

 Amtrak's chief negotiator for the Liability Apportionment Agreement was James L. Larson, who focused on compensation issues. Tr. 330-31. Mr. Avery was responsible for the negotiations and discussions of the liability provisions and drafted the contract language on behalf of Amtrak. Id. Mr. Brinkworth and Mr. Hitchner represented Conrail in the 1979 negotiations. Tr. 330, 606-07. Both Mr. Larson and Mr. Brinkworth attended all of the negotiation sessions for the 1979 Liability Apportionment Agreement. Tr. 330-31, 606-07. As the Liability Apportionment Agreement was intended to be a compilation of liability provisions, and not to effect a substantive change in the liability apportionment negotiated in 1976, no substantive changes were made in the liability apportionment arrangements in connection with the 1979 negotiations. Stipulation filed November 5, 1987 para. 12; Tr. 607-08, 755-56. During the 1979 discussions of the Liability Apportionment Agreement, terms such as gross negligence, reckless, willful or wanton misconduct, or punitive damages, and the ubiquitous hypothetical drunken engineer were not raised. Tr. 332-33, 378, 618, 694, 756.

 4. 1982 Negotiations

 On December 22, 1982, Amtrak and Conrail executed an amendment to the 1979 Liability Apportionment Agreement to be effective January 1, 1983. Stipulation filed November 5, 1987 para. 13. As in the 1979 discussions, issues of gross negligence, willful, wanton or reckless misconduct, punitive damages and the drunken engineer were not raised. Tr. 378, 667-69, 694; Agreements, Tab 18.

 5. 1983 Negotiations

 Effective October 1, 1983, Amtrak and Conrail entered into the First Amended and Restated Northeast Corridor Freight Operating Agreement. Stipulation filed November 5, 1987 para. 14. At the time of the 1983 agreement's execution, the liability apportionment provisions applicable to Conrail's freight operations on the Northeast Corridor were contained in the Liability Apportionment Agreement and its amendment. Id. The 1983 First Amended and Restated Northeast Corridor Freight Operating Agreement did not make any change in existing liability apportionment provisions. Id.; Tr. 334, 620-21, 757-58. The primary objective of the parties in 1983 was to amend the compensation provisions of the 1976 Freight Operating Agreement. Tr. 334, 620-21, 756-57; Agreements, Tab 20. Mr. Larson served as Amtrak's chief negotiator, assisted by Frederick C. Ohly as counsel and Ron Jefferson of Amtrak's finance department. Tr. 333. For Conrail, Mr. Brinkworth and Mr. Hitchner served as principal negotiators. Tr. 333. At no time during the negotiations of the 1983 Freight Operating Agreement did the parties discuss liability apportionment, degrees of culpability, punitive damages or a drunken engineer. Tr. 334, 345, 378, 459-60, 757-58, 620-21, 694.

  6. 1986 Negotiations

  Effective October 1, 1986, Amtrak and Conrail entered into the Second Amended and Restated Northeast Corridor Freight Operating Agreement. Stipulation filed November 5, 1987, para. 15; Tr. 396; Agreements, Tab 22. That agreement did contain indemnification provisions that were changed from those found in the 1979 agreement. Id. However, the provisions concerning responsibility for injury to Amtrak passengers remained unchanged. Tr. 766.

  Principally involved in the negotiation of the 1986 Freight Operating Agreement on behalf of Conrail were Mr. Brinkworth, then General Counsel-Litigation for Conrail, and Mr. Hitchner. Tr. 335. Negotiators on behalf of Amtrak were Frederick C. Ohly, Associate General Counsel, and James L. Larson, Assistant Vice President-Contract Administration. Tr. 335. The negotiations arose after Congress changed the compensation standard governing Conrail's presence on the Northeast Corridor from an avoidable cost basis to an allocated cost basis, giving Amtrak a more favorable basis for compensation. 45 U.S.C. § 562(a); Tr. 27, 371-72. These negotiations were held over a period of several months during the spring and fall of 1986. Tr. 335. Both Mr. Larson and Mr. Ohly attended all the 1986 negotiation sessions, with Larson's primary concern the compensation provision and Ohly's responsibility to draft the agreement and negotiate the liability apportionment provision. Tr. 335, 361-62, 372. Due to the statutory change, the subject of compensation was the major issue in these negotiations, taking 90 to 95 percent of the negotiators' time. Tr. 373-74, 634-35. Because the parties initially failed to reach an agreement on the compensation issue, Amtrak commenced a proceeding before the Interstate Commerce Commission ("the Commission") seeking a solution to the question of compensation. Tr. 374. Pursuant to the contract, Amtrak gave Conrail notice that it wanted to reopen the compensation provisions of the Freight Operating Agreement for negotiation. Tr. 635; see Agreements, Tab 20 section 3.8. Thereafter, negotiations resumed, culminating in an agreement on the principal issue of compensation for Conrail's use of the Northeast Corridor. Tr. 34.

  The discussions concerning liability apportionment covered such risks as electrocutions, hazardous materials, maintenance of some freight tracks, and Amtrak employee injury additives, and injury to Amtrak's passengers. Tr. 34, 374, 636-38. Several hours were spent discussing the issues of electrocutions and hazardous materials, and ultimately, changes favorable to Amtrak were made with respect to those risks. Tr. 375-76, 334-35. Conrail agreed to accept the risk of liability arising from hazardous or toxic materials carried in Conrail trains on the Northeast Corridor. Agreements, Tab 22 § 5.12. Conrail also agreed to accept one-half of the exposure to liability for injuries or deaths of third parties coming in contact with Amtrak's electric catenary wires after climbing upon Conrail equipment. Id. § 5.11. Although Amtrak raised a proposal to shift liability for passenger injuries to Conrail, these discussions were limited, and Amtrak ultimately dropped the issue because of Conrail's total unwillingness to discuss that category of liability. Tr. 345-46, 376, 460, 638, 762-63. Conrail also rejected Amtrak's proposal of reducing the term of the new agreement from five years to three years so that the issue of shifting liability for passengers could be reopened sooner. Tr. 377, 394-95.

  As with previous discussions and negotiations between Amtrak and Conrail over the course of fifteen years, no one mentioned gross negligence, recklessness, willful or wanton misconduct or punitive damages. Tr. 336, 356-57, 378-79, 692. Unlike in previous years, Conrail did not request a side letter interpreting the 1986 agreement. Tr. 693. Only the Conrail negotiators recall any discussion of the hypothetical drunken engineer during the 1986 negotiations. Tr. 61, 641-42, 764. Neither Mr. Hitchner nor Mr. Brinkworth recalls who raised the drunken engineer hypothetical or in what context it had arisen. Tr. 764, 706-08. These vague recollections of the hypothetical drunken engineer afford no basis for finding that the parties mutually and unequivocally intended the indemnification provisions to cover gross negligence or wanton, willful, or reckless misconduct, or punitive damages.

  B. Other Evidence

  1. Amtrak's Position: Public Statements and In-House Discussions

  W. Graham Claytor, Jr. became the Chairman and Chief Executive of Amtrak on July 2, 1982. Tr. 8. In the summer of 1984, Mr. Claytor discussed the scope of Amtrak's indemnity agreements with Paul F. Mickey, Jr., Executive Vice President-Law and Public Affairs, in the context of nine serious accidents that had occurred in close succession. Tr. 112-14, 79-81. Mr. Mickey suggested to Mr. Claytor and his predecessor that Amtrak could successfully take the position that it was not obligated to indemnify the railroads for intentional or willful misconduct or other aggravated conduct that constituted more than mere negligence. Tr. 53, 78-81. Mr. Claytor determined that Amtrak would take the position that Amtrak was not obligated to indemnify the freight railroads for damages accruing from gross negligence or aggravated misconduct. Tr. 14-15, 52-53.

  In July of 1984, Mr. Claytor expressed the opinion in testimony before Congress that in his opinion Amtrak was not required to indemnify other railroads for accidents caused by those railroads' gross negligence. Tr. 20, 22-23; Joint Exh. 49, p. 56; Joint Exh. 50, pp. 126-27. He testified before the Subcommittee on Surface Transportation of the Senate Committee on Commerce, Science and Transportation that he was "not happy about the rare case in which you may have gross negligence on the part of the railroad that causes an accident and have [Amtrak] pay for almost the whole thing," adding that Amtrak might be able to obtain an interpretation of the existing contract to "provide that exception." Joint Exh. 49, p. 56. Before the Subcommittee on Transportation, Aviation and Materials of the House Committee on Science and Technology, Mr. Claytor testified that "in the event of a derailment or any accident, Amtrak pays all the costs of damage to its equipment and liability to its passengers," characterizing the indemnification provisions as a "no-fault scheme" designed to avoid "endless and erratic litigation to determine fault." Joint Exh. 50, pp. 126-27. He further testified that Amtrak was "looking into the feasibility of interpreting the contract in such a way . . . in the case of flagrant or gross negligence on the part of the railroads." Id. at 126.

  Throughout the 1986 negotiations, Amtrak's chief legal counsel, Frederick C. Ohly, was aware of Mr. Claytor's testimony before Congress, but did not bring the subject up with Conrail. Tr. 393. Mr. Ohly understood that Amtrak considered taking the position, "if a situation arose," that the agreements did not apply to gross negligence. Tr. 392-93. Mr. Claytor never instructed Amtrak's negotiators to advise Conrail of his interpretation of the indemnification agreements. Tr. 58. Nothing in the record reflects Conrail's awareness of this testimony or interpretation. Tr. 393, 644, 766.

  By letter of June 20, 1984, Mr. Ohly identified to Conrail several categories of accidents for which Amtrak believed changes to the indemnification provisions in the 1979 agreement were in order. Tr. 363-64, 383; Joint Exh. 48. *fn5" Among issues covered in the June 20, 1983 letter are electrocutions by catenary wires of trespassers who climb onto freight equipment, cleanup of hazardous material spills resulting from accidents involving Conrail trains, maintenance of tracks in the event of accidents or damage to the track, and payments for injury or death to Amtrak employees that would be attributed to Conrail's presence on the Northeast Corridor. Tr. 363-64; Joint Exh. 48. Amtrak sought to have Conrail "assume complete responsibility" for electrocutions because "the magnitude of the liability associated with it is unique." Joint Exh. 48, pp. 4-5. Amtrak had discussed internally the question of liability for electrocutions of trespassers who climbed on parked Conrail freight equipment and touched the electric catenary wires. Tr. 97-98; Joint Exh. 44. One internal Amtrak memorandum from Charles Mandolia to Paul Mickey, Jr. suggested that Amtrak should not be subjected to liability for these electrocutions because Amtrak had spent substantial sums for preventative measures such as fencing and police protection. Id. Mr. Mickey believed that the electrocution accidents were not examples of reckless, willful or wanton misconduct or conduct warranting punitive damages. Tr. 95-96. Mr. Mickey understood that Mr. Mandolia was concerned about the potential for large jury verdicts in "electrocution cases where typically a minor is suing a large corporation [and has] a tremendous potential for upsetting a jury." Tr. 96. Amtrak never received a formal or substantive response to Mr. Ohly's June 20, 1983 letter to Conrail, nor was there much discussion about the issues raised by the letter. Tr. 367-68.

  Months after he testified before Congress, Mr. Claytor focused specifically on Amtrak's indemnity agreements with Conrail. Tr. 27-28. Mr. Claytor believed that because Conrail was using Amtrak's Northeast Corridor, Conrail should fully indemnify Amtrak for injuries to Amtrak passengers arising out of the Northeast Corridor. Tr. 27-28. His desire to change the apportionment provisions had no relationship to gross negligence or reckless conduct, but was premised on the belief that Amtrak should rid itself of any obligation. Tr. 28-29. On February 5, 1985, Mr. Claytor expressed his concern to Mr. Ohly about Amtrak's responsibility for injuries to Amtrak passengers arising out of Conrail's operations on the Northeast Corridor. Tr. 369, 391; Joint Exh. 55. It was the first time that Mr. Claytor had expressed such a very strong level of concern about the indemnification arrangements. Tr. 391.

  On February 8, 1985, Amtrak notified Conrail of its intention to raise an amendment to the Liability Apportionment Agreement. Joint Exh. 57. The proposed amendment would provide that in the event of an accident on the Northeast Corridor involving Conrail and Amtrak trains, the two railroads would share in passenger liability. Id. Mr. Brinkworth of Conrail responded that there was no hope for the proposal because Conrail would not agree to change the liability apportionment provisions insofar as passengers were concerned. Tr. 632.

  In early April of 1985, Mr. Ohly wrote to Mr. Brinkworth to propose the renegotiation of the existing agreements "to include provisions that will reasonably cover the entire additional risk to which Amtrak is exposed as a consequence of Conrail's NEC freight operations." Tr. 368; Joint Exh. 58, p. 2. Amtrak proposed alternatives ranging from full indemnification by Conrail to a "carefully defined, limited Conrail liability with respect to certain passenger injuries." Joint Exh. 58, pp. 2-3. This letter was prompted by the concerns raised by Mr. Claytor about the risk Amtrak faced by virtue of Conrail's presence on the Northeast Corridor. Tr. 368-69, 374-75. Noting that "Conrail currently has no responsibility for costs that Amtrak incurs for injury to its passengers, " Mr. Ohly informed Mr. Brinkworth that Amtrak would seek relief from the risk of this liability "either through a change in the risk apportionment or by agreement upon compensation to cover the cost of the liability exposure for which Amtrak accepts responsibility." Joint Exh. 58, p. 2.

  2. Insurance Coverage

  Throughout the period of time from the execution of the Supplemental Agreement amending Section 7.2 of the Basic Agreement between Amtrak and the nation's freight railroads in 1972, through October 1, 1986, Amtrak's insurance policies indemnified Amtrak for any and all sums which Amtrak might become legally liable or obligated by contract to pay as compensation or damages for injury to any person or persons and for damage to property arising out of any of Amtrak's operations within continental North America. Stipulation filed November 19, 1987, para. 1.

  During this period of time, these insurance policies also provided that all railroads except Burlington Northern with whom Amtrak entered into operating agreements were added as Additional Assureds with respect to any liabilities assumed by Amtrak under such agreements. Id. para. 2.

  During this period of time, these insurance policies specifically provided that personal injury caused by eviction from trains or assault by an employee of Amtrak or an employee of a railroad or third party providing services to Amtrak or for the account of Amtrak was deemed covered, provided that the assault was not committed at the specific instance or direction of Amtrak. Id. para. 3.

  Amtrak's insurance coverage was subject to conditions, limits and exclusions as specified in the applicable policy. Id. para. 4. The conditions, limits and exclusions as specified in the policies generally apply in the same way to coverage for Amtrak's liability by contract as they apply to coverage for Amtrak's liability growing out of Amtrak operations. Id. Beginning October 1, 1984, coverage for punitive damages was partially excluded. As of October 1, 1985, punitive damages were totally excluded from coverage. Id.; Tr. 66.

  As of October 1, 1986, Amtrak elected not to renew its insurance for the first $ 50,000,000 of coverage. Tr. 31-32. Instead, Amtrak decided to self-insure this risk by establishing an insurance reserve account into which it would deposit the funds which it would otherwise pay as insurance premiums, until the reserve was adequate to cover its increased risk retention. Joint Exh. 70. As Amtrak described this decision in September, 1986:

  
We recognize that this course of action entails some short-term risk of a major loss before the reserve is fully funded. We believe this risk to be manageable since experience shows that major losses always entail litigation and seldom settle short of three or four years after occurrence.

  Id.

  3. The MBTA Contract

  In May 1985, Amtrak entered into an agreement with the Massachusetts Bay Transportation Authority ("MBTA"), dated July 1, 1984. Joint Exh. 108. Like the indemnification provisions at issue here, the MBTA agreement contains liability apportionment provisions allocating liability for certain categories of liability "irrespective of negligence or fault." Id. at 13-14. Unlike the indemnification agreement between Conrail and Amtrak, the MBTA agreement expressly excludes willful, wanton or reckless misconduct from coverage, providing:

  
Notwithstanding the foregoing apportionment of risk of liability, neither party shall indemnify or waive any claims against the other party for injury or damage of any kind that is caused by the willful, wanton, or reckless acts or omissions of the other party (including its officers, employees, and agents).

  Id. at 14.

  The MBTA agreement was negotiated by Mr. Mickey, Amtrak's Vice President and General Counsel, and by Mr. Ohly, Amtrak's chief legal counsel in the 1986 negotiations with Conrail. Tr. 103.

  C. Summary of Findings

  None of the indemnification agreements between Amtrak and Conrail, or its predecessor, Penn Central, from 1972 to the present expressly refers to gross negligence, recklessness, willful or wanton misconduct or conduct that warrants the imposition of punitive damages. See Agreements, Tabs 1, 3, 7-13, 17-18, 22. Neither do side letters provided to the defendant in this case by Amtrak mention these aggravated types of misconduct. See Agreements, Tab 5. Nor do drafts of the agreements reflect any negotiation with respect to indemnification for those forms of misconduct. See, e.g., Joint Exhs. 21, 23, 25. Furthermore, Conrail presented no internal documentation concerning how the indemnification provisions apply to cases of gross negligence, recklessness, willful or wanton misconduct or awards of punitive damages. Additionally, the documents pertaining to Amtrak's various negotiations with the AAR subcommittee, Burlington Northern, and the Santa Fe lack any references to the treatment of gross negligence, recklessness, willful or wanton conduct or punitive damages under the indemnification provisions. The Court finds that no documentary evidence supports Conrail's position that the parties intended the liability apportionment provisions to extend to reckless, willful or wanton misconduct, gross negligence, or conduct warranting the imposition of punitive damages.

  Further, the Court is unable to find that the parties to this action discussed the treatment of aggravated misconduct or punitive damages under this agreement. Various witnesses have vague and conflicting recollections of discussions centered on the hypothetical drunken engineer and how an accident caused by this phantom would be treated under the indemnification provisions. The Court is unable to find on the basis of these recollections that both parties manifested any intent for the indemnification provisions to cover accidents caused by gross negligence, willful or wanton misconduct, recklessness, intentional misconduct, or punitive damages.

  Throughout these negotiations, as reflected by testimony of the witnesses, it is apparent that Amtrak's representatives were deeply concerned about the maintenance of safety. This is reflected in what Mr. Wyatt, counsel for the Amtrak incorporators, told Mr. Brinkworth in 1971, to the effect that Amtrak would not indemnify Conrail for the actions of any drunken engineer. Tr. 704. Amtrak's representatives also insisted upon the inclusion of Section 2.2(d) respecting the obligation of Conrail to conform to Amtrak's safety rules. In each subsequent version of the Freight Operating Agreement, especially the version in force and effect at the time of the Chase, Maryland accident, the provision requiring Conrail to comply with Amtrak's safety and operating rules and procedures has been retained. The Court finds that Conrail's representatives, including Mr. Brinkworth, were aware throughout these negotiations of Amtrak's concern with the necessity for following applicable safety rules and regulations. At all relevant times, Conrail and the freight railroads were aware that indemnification provisions comparable to the Liability Apportionment Agreement between Amtrak and Conrail were to be construed strictly and narrowly. In none of the agreements negotiated involving liability apportionment was any mention made of gross negligence, recklessness, willful or wanton misconduct or intentional misconduct or punitive damages. Conrail offered no documentation as to how cases involving gross negligence, recklessness, willful or wanton misconduct or punitive damages would be dealt with.

  III. CONCLUSIONS OF LAW

  The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 and the Declaratory Judgment Act, 28 U.S.C. § 2201. Venue is proper under 28 U.S.C. § 1391.

  Under District of Columbia law, it is settled that contractual provisions may be invalidated when they are contrary to public policy. *fn6" See Wisconsin Avenue Assoc. v. 2720 Wisconsin Avenue Cooperative Ass'n, 441 A.2d 956, 964 (D.C.), cert. denied, 459 U.S. 827, 74 L. Ed. 2d 64, 103 S. Ct. 62 (1982). No cases in the District of Columbia specifically address the issue presented in this case, namely, whether a contract which is said to indemnify for gross negligence, reckless, wanton or willful misconduct or for conduct warranting the imposition of punitive damages is void on public policy grounds. In determining whether an indemnification provision offends public policy to the extent that it is pro tanto unenforceable, the Court must balance the weight of public policy considerations against the intentions of the parties to the contract. Burtoff v. Burtoff, 418 A.2d 1085, 1088-90 (D.C. 1980); Maryland-National Capital Park and Planning Commission v. Washington National Arena, 282 Md. 588, 386 A.2d 1216, 1229 (1978); see also Restatement (Second) of Contracts § 178 (1981).

  Contract provisions which appear to indemnify against willful, wanton, reckless, or intentional misconduct by the indemnitee are contrary to public policy. Chicago, Rock Island & Pacific R.R. v. Chicago, Burlington & Quincy R.R., 437 F.2d 6, 10 (7th Cir.), cert. denied, 402 U.S. 996, 29 L. Ed. 2d 161, 91 S. Ct. 2173 (1971); Inland Container Corp. v. Atlantic Coast Line R.R., 266 F.2d 857 (5th Cir. 1959); Alabama Great Southern R.R. v. Louisville & Nashville R.R., 224 F.2d 1, 4 (5th Cir. 1955); Thomas v. Atlantic Coast Line R.R., 201 F.2d 167, 170 (5th Cir. 1953). Additionally, public policy will not sanction indemnification provisions that purport to shift the burden of paying punitive damages away from the tortfeasor. *fn7" Northwestern Casualty Co. v. McNulty, 307 F.2d 432, 440-41 (5th Cir. 1962) (Wisdom, J.); see also Hartford Life Insurance v. Title Guarantee Co., 172 U.S. App. D.C. 156, 520 F.2d 1170, 1175 (1975) (stating that public policy bars liability insurance coverage where intentional or knowledgeable wrongdoing is at issue); Salus Corp. v. Continental Casualty Co., 478 A.2d 1067, 1071-72 (D.C. 1984) (suggesting that, while the duty to defend arises regardless of allegations of punitive damages, the duty to pay punitive damages may be contrary to public policy); Pray v. Lockheed Aircraft Corp., 644 F. Supp. 1289, 1295 (D.D.C. 1986) (suggesting that insurance coverage of punitive damages may be against public policy); Curry v. Giant Food, 522 A.2d 1283, 1290 (D.C. 1987) (acknowledging the McNulty rule).

  Broad indemnification is particularly disfavored where the indemnitee's activities directly affect the public safety. Northwest Airline Inc. v. Alaska Airlines, Inc., 351 F.2d 253, 257-58 (9th Cir. 1965), cert. denied, 383 U.S. 936, 15 L. Ed. 2d 853, 86 S. Ct. 1068 (1966); Fairfax Gas & Supply Co. v. Hadary, 151 F.2d 939, 940 (4th Cir. 1945); Otis Elevator Co. v. Maryland Casualty Co., 95 Colo. 99, 33 P.2d 974, 977 (1934).


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