T.O.F.C., Inc. v. United States

683 F.2d 389, 30 Cont. Cas. Fed. 70,112, 231 Ct. Cl. 182, 1982 U.S. Ct. Cl. LEXIS 538
CourtUnited States Court of Claims
DecidedJune 30, 1982
DocketNo. 207-81C
StatusPublished
Cited by9 cases

This text of 683 F.2d 389 (T.O.F.C., Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
T.O.F.C., Inc. v. United States, 683 F.2d 389, 30 Cont. Cas. Fed. 70,112, 231 Ct. Cl. 182, 1982 U.S. Ct. Cl. LEXIS 538 (cc 1982).

Opinion

SMITH, Judge,

delivered the opinion of the court:

In this case plaintiff claims that it is entitled to compensation from defendant upon the ground either of an express or implied contract with defendant or of a taking which falls within the purview of the fifth amendment. We hold [183]*183that any contract claim that plaintiff has must be against the Consolidated Railroad Corporation (Conrail), an entity over which we have no jurisdiction. We further hold that the actions of defendant did not result in a taking of plaintiffs property which is compensable under the fifth amendment.

Plaintiffs claims concern a September 27, 1960, contract between plaintiff and the Erie Railroad Company, later called the Erie-Lackawanna Railroad Company (Erie). By the terms of the contract, the parties constructed facilities for transferring highway semi-trailers to and from railroad flat cars, known as "piggyback” loading terminals. Erie retained or took title to the facilities and the related land. Plaintiff did not take a lien on the properties. Plaintiff, however, was given the exclusive right to operate the facilities. Erie agreed to pay plaintiff, in addition to the fees for the use of the facilities, determinable sums certain at the rate of $0.75 per revenue motor common carrier trailer handled at these facilities, operated by plaintiff, for designated periods in order to reimburse plaintiff for its investment in the terminals.

Erie made the agreed payments to plaintiff until Erie filed for bankruptcy on June 27, 1972. Thereafter, Erie’s obligations were performed by the trustee in bankruptcy, pursuant to court order, until the trustee, in accordance with the Regional Rail Reorganization Act of 1973 (RRRA),1 transferred all of Erie’s properties to Conrail on April 1, 1976. Conrail accepted Erie’s property, including the facilities involved herein at Chicago, Illinois, and Croxton, New Jersey, and apparently at Cleveland, Ohio, but refused to assume Erie’s obligations to plaintiff for the payment of the $0.75 per revenue carrier trailer handled at the facilities.

On February 15, 1978, the Special Master for the federal district court supervising the reorganization of Erie held that plaintiff was entitled to be recognized as a creditor of Erie to the extent it could show damages.2

In its opinion of July 24, 1979, the federal district court reversed the Special Master’s decision on Erie’s liability to [184]*184plaintiff and held that plaintiff had no claim against Erie’s bankruptcy estate based on their agreement.3 The district court concluded that since Conrail, and not Erie, used plaintiff’s facilities after March 31, 1976, the contract clause which triggered payments from Erie to plaintiff, i.e., the payment of $0.75 per revenue motor common carrier handled by plaintiff for Erie, ceased to be applicable to Erie. In other words, Erie’s duty of performance had been excused by the nonoccurrence of an express condition precedent. The court further concluded that Erie had no obligation to plaintiff outside of the $0.75 per carrier payments. Finally, the court noted that its decision did not reach the issue whether plaintiff has any recognizable claims against Conrail or the United States by reason of Conrail’s refusal to accept the assignment of the agreement.

The United States Court of Appeals for the Sixth Circuit affirmed the district court’s decision and held that article seventh of the contract controlled Erie’s obligation to plaintiff, and that article "conditioned Erie’s obligation to repay T.O.F.C. upon Erie’s earning revenue on trailers which it moved through the facilities. Since Erie has received no additional revenue since April 1,1976, it has no liability.”4

Plaintiff filed its petition with this court on April 1,1981. After receiving and reviewing briefs from both sides, the court in its order of October 23,1981, requested both parties to inform the court of the status of plaintiffs claim in relation to the proceedings before the Special Court concerning the Erie-Lackawanna Railroad Company.5 The parties have responded to the court’s order and we now issue this opinion.

I.

As stated above, plaintiff bases its claims that it is entitled to receive damages from defendant upon two grounds. First, plaintiff claims that the Government, through the workings of the RRRA’s provisions, effectively [185]*185entered into an express or implied contract with plaintiff whereby defendant assumed Erie’s obligations under its agreement with plaintiff. Second, plaintiff claims that the transfer of the railroad facilities in question to Conrail without compensation to plaintiff violates the taking clause of the fifth amendment to the Constitution.

Defendant bases its motion to dismiss on three grounds. First, if any entity has entered into a contract with plaintiff concerning the railroad facilities, it must be Conrail, and defendant argues that Conrail cannot be sued in this court. Second, if Conrail can be sued in this court, or, if it is the Government which has entered into a contract with plaintiff, the contract is one which is implied-in-law and, therefore, is also outside the court’s jurisdiction. Third, defendant has taken no action which can be construed as a compensable taking under the fifth amendment to the Constitution. Defendant argues that there has not been a direct appropriation of plaintiffs property, that is, plaintiffs contractual rights under its agreement with Erie, nor has defendant received any benefit of plaintiffs contract. In other words, defendant claims that while plaintiffs contract may have come to an end as a consequence of the taking of the railroad properties which were the subject matter of plaintiffs contract, defendant did not appropriate the contract itself.

In the following opinion, we begin with a brief discussion of the RRRA and the Supreme Court’s related opinion, Regional Rail Reorganization Act Cases6 (RRRA Cases). We focus on the RRRA’s provisions and how they apply to the transfer of the railroads’ properties. We then consider plaintiffs contract claim and hold that a contract here, if any, must be with Conrail, an entity over which we do not have jurisdiction. Finally, we consider plaintiffs claim that defendant’s actions resulted in a taking of plaintiffs property. We find that plaintiffs contract was affected in a manner for which the RRRA did not provide. We therefore examine plaintiffs claim outside the act and hold that no compensable taking of plaintiffs property took place.

[186]*186II.

This case presents a facet of the RRRA which was not directly addressed in the Supreme Court opinion in RRRA Cases. In that opinion, the Supreme Court upheld the constitutionality of the RRRA, which had been called into question because the RRRA contains a set dollar amount fund for the reimbursement of all takings under the fifth amendment which occurred when the private railroads were transferred to Conrail.

The Supreme Court’s analysis began with an examination of the workings of the RRRA. Basically the process involved three steps. First, each district court which had jurisdiction over an included bankrupt railroad was required to determine whether that railroad could be viable outside the consolidation of the railroads.

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Bluebook (online)
683 F.2d 389, 30 Cont. Cas. Fed. 70,112, 231 Ct. Cl. 182, 1982 U.S. Ct. Cl. LEXIS 538, Counsel Stack Legal Research, https://law.counselstack.com/opinion/tofc-inc-v-united-states-cc-1982.