CONSOL. RAIL CORP., ETC. v. Penn Central Corp.

533 F. Supp. 1351
CourtSpecial Court under the Regional Rail Reorganization Act
DecidedFebruary 2, 1982
DocketCiv. A. No. 81-9
StatusPublished
Cited by6 cases

This text of 533 F. Supp. 1351 (CONSOL. RAIL CORP., ETC. v. Penn Central Corp.) is published on Counsel Stack Legal Research, covering Special Court under the Regional Rail Reorganization Act primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
CONSOL. RAIL CORP., ETC. v. Penn Central Corp., 533 F. Supp. 1351 (reglrailreorgct 1982).

Opinion

533 F.Supp. 1351 (1982)

CONSOLIDATED RAIL CORPORATION, Relco-Pa., Inc. and Investors Diversified Services, Inc.
v.
The PENN CENTRAL CORPORATION.

Civ. A. No. 81-9.

Special Court, Regional Rail Reorganization Act.

February 2, 1982.

*1352 Laurence Z. Shiekman, Steven D. McLamb and Pepper, Hamilton & Scheetz, Philadelphia, Pa., for plaintiffs.

Jeffrey R. Lerman, John M. Bernard, John E. Caruso, Montgomery, McCracken, Walker & Rhoads, Philadelphia, Pa., Paul R. Duke, Covington & Burling, Washington, D. C., and Terrence M. Quirin, Philadelphia, Pa., for defendant.

Before FRIENDLY, Presiding Judge, and WISDOM and THOMSEN, Judges.

PER CURIAM:

Consolidated Rail Corporation (Conrail), Relco-Pa., Inc. (Relco), and Investors Diversified Services, Inc. (IDS) bring this action for a declaratory judgment that the March 26, 1976 conveyance order of this court conveyed to Conrail all of Penn Central's right, title and interest in a lease of certain railroad equipment dated January 1, 1960, "including all right to the entire adjustment of rental" provided in the lease and that "Penn Central has no right, title or interest whatsoever in said equipment or lease." Relco and IDS have moved this court for a "stay of certain proceedings" in an action brought by Penn Central against Relco and IDS in the United States District Court for the Eastern District of Pennsylvania. Specifically, Relco and IDS ask this court to enjoin the district court proceedings "to the extent, and only to the extent, that the district court is requested or required to adjudicate whether [Conrail] is entitled to any portion of the `adjustment of rental' set forth" in the lease. Penn Central opposes the motion for a stay on the ground that none of the issues raised in the district court fall within the original and exclusive jurisdiction of this court. We agree with the plaintiffs and shall enter an appropriate stay. First, however, we deem it necessary to consider, as a threshold question, whether we have jurisdiction of the declaratory judgment action.

I.

The controversy arises out of a twenty-year lease between Relco, as lessor, and the Pennsylvania Railroad Company, as lessee, of 4,000 hopper cars. At the time that lease was executed, Relco was a wholly-owned subsidiary of IDS. During the period between January 1, 1960 and March 31, 1976, the Pennsylvania Railroad Company and its successor, Penn Central, used the railroad equipment and paid the required rentals. As required by our conveyance order of March 25, 1976, the trustees of Penn Central and Conrail entered into an Assignment of Rolling Stock and Equipment, dated March 31, 1976. During the period from April 1, 1976 to February 29, 1980, Conrail held all leasehold rights to the use of the cars and made the rental payments.

On February 25, 1980, Conrail and IDS entered into an agreement for the purchase by Conrail of 100% of the common stock of Relco, and on March 28, 1980, Conrail acquired the stock for $6.1 million. On the day of acquisition, Relco extended the lease for a term of ten years.

Shortly thereafter, Penn Central filed suit against Relco in the United States District Court for the Eastern District of Pennsylvania, claiming that the lease extension was "wrongful" because, inter alia, it had the effect of depriving Penn Central of certain payments to be made to the lessee at the termination of the lease as an "adjustment of rental" corresponding to the period Penn Central or its predecessor was lessee. On September 19, 1980, Penn Central filed suit in the same district court against IDS, alleging that IDS is liable to Penn Central because, inter alia, the sale of Relco by IDS to Conrail had the effect of depriving Penn Central of its portion of the adjustment of rental. Penn Central argues that the failure of IDS and Relco to pay the adjustment of rental to Penn Central breaches contractual and fiduciary duties owed by IDS and Relco to Penn Central. The two cases have been consolidated for trial. At this point, Conrail, Relco, and IDS *1353 brought this action and requested that we grant a partial stay of the district court proceedings.

II.

Section 209(e)(2) of the Rail Act, 45 U.S.C. § 719(e)(2), provides in pertinent part:

The original and exclusive jurisdiction of the special court shall include any action, whether filed by any interested person or initiated by the special court itself, to interpret, alter, amend, modify, or implement any of the orders entered by such court pursuant to section 303(b) of this Act in order to effect the purposes of this Act or the goals of the final system plan.

This court made it clear in Consolidated Rail Corp. v. State of Illinois, Sp.Ct.R.R. R.A. 1977, 423 F.Supp. 941, 948, cert. denied, 429 U.S. 1095, 97 S.Ct. 1111, 51 L.Ed.2d 542 (1977), that not every challenge "relating to the [Rail] Act" is within its exclusive jurisdiction. This court has exclusive jurisdiction where resolution of the dispute involves the court's "central functions." Consolidated Rail Corp. v. Pittsburgh & Lake Erie Railroad Co., Sp.Ct.R.R. R.A. 1978, 459 F.Supp. 1013, 1017. See also Stratford Land & Improvement Co., Inc., v. Blanchette, Sp.Ct.R.R.R.A. 1978, 448 F.Supp. 279; and General Motors Corp. v. Blanchette, Sp.Ct.R.R.R.A. 1979, 470 F.Supp. 866.

Penn Central contends that, because its action in the district court does not challenge the Rail Act, the final system plan (FSP), or this court's conveyance order, this court has no jurisdiction. That view, though, approaches the problem from the wrong perspective. To determine whether we have jurisdiction in the declaratory judgment action, we must examine the issues raised in that action and not the issues raised in a proceeding before another court.[1] Conrail, Relco, and IDS have asked us to declare that our order of conveyance and the assignment executed thereunder included the rental adjustment along with the leasehold interest of Penn Central.

The interpretation of a conveyance order is clearly within the exclusive original jurisdiction of this Court. § 209(e)(2).[2] Our jurisdiction to interpret the conveyance document itself is not as obvious. Nonetheless, we are convinced that we have jurisdiction to consider at least some aspects of that instrument. Section 209(e)(2), set out earlier, gives us jurisdiction over any action to implement our orders. It is true that the plain language and the legislative history of the provision demonstrate that that grant of jurisdiction is not all-encompassing. The Conference Committee deleted the Senate bill's grant of jurisdiction over any action to challenge, enforce, or declare rights under the Rail Act. In explanation, the Committee *1354 stated, "Many actions covered by this provision undoubtedly would be within the exclusive jurisdiction of the special court under other provisions of this bill, but still others may be of no concern to the central functions of the special court..." S.Rep.No. 94-595, 94th Cong., 2d Sess. 187-88, reprinted in [1976] U.S.Code Cong. & Ad.News 14, 148, 202-03; see generally Consolidated Rail Corp. v. Pittsburgh & Lake Erie Railroad Co., Sp.Ct.R.R.R.A. 1978, 459 F.Supp. 1013, 1016-17.

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Cite This Page — Counsel Stack

Bluebook (online)
533 F. Supp. 1351, Counsel Stack Legal Research, https://law.counselstack.com/opinion/consol-rail-corp-etc-v-penn-central-corp-reglrailreorgct-1982.