Tunnel blame drama begins

Sun Staff

Six days. That's how long it took before city officials began the public fingerpoint- ing in the wake of last week's CSX train derailment and tunnel fire.

And legal experts say it's likely to intensify as federal regulators, city engineers and private insurance investigators search above and below Howard Street for whom to blame in the accident, which set off a chain reaction that snarled downtown traffic for days, damaged some businesses and forced the Orioles to postpone three games.

At stake are millions of dollars and potentially years of legal wrangling, depending on the strength of the evidence and whether the blame ultimately falls to the city, the railroad or some unforeseen act of nature. The National Transportation Safety Board (NTSB) is studying whether the derailment might have been caused by a city water main break, or vice versa, as city officials forcefully claimed earlier this week at a press conference that had the air of a courtroom presentation.

Beyond CSX Transportation Inc. and Baltimore City, the list of potential litigants is long, ranging from the manufacturer of the train cars involved in the accident to the company that designed the water pipe buried under Howard Street.

"What they [the NTSB] say could have millions of dollars of impact on somebody's bottom line," said John W. Bagby, professor of business law at Penn State's Smeal College of Business. "But there are staff attorneys and investigators for both the city and CSX looking at this, so the NTSB won't be the only source of information that will impact court litigation."

The complexity of the case -- a combined train derailment, fire and water main break -- increases the potential for a lengthy legal scrimmage, experts say.

"You could be talking about huge litigation," said Frank Branson, a Dallas attorney familiar with railroad litigation. "It'll be enough to keep insurance lawyers busy in Baltimore for years. Property damage cases can take a lot of time and energy."

Though it is not admitting fault while the investigation continues, CSX is playing the role of dutiful corporate citizen in hopes of avoiding courtroom confrontations. The Jacksonville, Fla.-based railroad sent a team of six claims agents to knock on doors up and down Howard Street this week looking for businesses that were affected by the accident. So far, 25 have been identified, although that doesn't include several larger companies in the affected area, said CSX spokesman Robert L. Gould.

Legal experts said it is customary for companies to try to settle matters quickly and without going to court. In the majority of cases, claims are settled quietly. "There's just a tremendous amount of pressure to want to settle these things so its brand and image don't get destroyed," Bagby said.

Although its legal responsibility is unclear, the railroad won public praise from Mayor Martin O'Malley for agreeing to pay the city for the overtime that firefighters and emergency crews put in trying to extinguish the stubborn fire. The figure stands at $1.3 million, though the number may ultimately be adjusted. The railroad continues to meet with city officials to discuss costs associated with the disaster.

"We pay taxes here," Gould said. "We want the mayor to be successful on his initiative of reducing the crime rate, and we also recognize the Fire Department needs all the money it can get to do its job, and overtime obviously eats into budgets for both those things."

Flagstaff, Ariz., was less fortunate when a train carrying several cars full of liquid petroleum derailed in 1981, forcing the evacuation of residents up to a mile away.

That city went after the Atchison, Topeka and Santa Fe Railway Co. for overtime and other emergency expenses incurred in the accident, arguing that its costs were the result of the railroad's negligence. The U.S. 9th Circuit Court of Appeals ruled against Flagstaff, saying the cost of providing fire protection and emergency services is to be borne by the taxpaying public.

How Maryland law would come down on the issue is unclear, since there is little legal precedence for such cases, said Philip Andrews, a managing principal at the Kramon & Graham law firm in Baltimore.

The legal issues are less murky with respect to businesses affected by street closures and flooding resulting from the water main break, experts said. Legal precedence suggests that parties can be held liable for a chain reaction of events that result from their own negligence. If investigators are able to assess clear blame for the derailment, the responsible party could be ordered to pay for lost business and other costs associated with the derailment, water main break or delayed rail freight shipments, in some cases.

That's a big if, legal experts admit. But behind the scenes, insurance adjusters, engineers and other experts are studying the potential causes and adding up the costs to clients. Already, lawyers are drafting letters to potential litigants warning of possible damages. And business owners are studying balance sheets to document profits lost while portions of downtown were shut down.

While the question of blame remains unresolved, parties who suffered damages are most likely informing both the city and CSX that they may have a case against them, said Eric N. Schloss, an associate with the Baltimore law firm of Gordon Feinblatt. Early notification is especially important if the city shoulders some of the blame, he said, because statutes require parties to file notice of loss with a municipality within 180 days.

If the city is found to be at fault for the water main break and train wreck, victims of the accident could be out of luck. In some cases, municipalities are immune from paying damages that result while providing essential services, such as water, unless victims can prove that the city should have known an accident was imminent. In this case, attorneys would have to prove that the city should have known its water pipe was faulty.

"As a lawyer, I'd be looking for a pattern of problems with that water main," Schloss said.

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