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Md Mall Associates, LLC v. Csx Transportation

April 30, 2013


On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 2-11-cv-04068) District Judge: Hon. Juan R. Sanchez

The opinion of the court was delivered by: Jordan, Circuit Judge.


Argued January 8, 2013

Before: RENDELL, FISHER, and JORDAN, Circuit Judges.


MD Mall Associates, L.L.C. ("MD Mall"), appeals from the summary judgment entered against it by the United States District Court for the Eastern District of Pennsylvania on MD Mall‟s claims that CSX Transportation, Inc. ("CSX"), a railroad, is liable for storm water flooding MD Mall‟s property. For the reasons that follow, we will vacate the District Court‟s grant of summary judgment, and remand for further proceedings consistent with this opinion.

I. Background*fn1

A. The Runoff Problem

MD Mall owns and operates the MacDade Mall (the "Mall") located in Delaware County, Pennsylvania. The Mall is bounded on the south by a single railroad track owned by CSX, and, interestingly enough, on the east by South Avenue. CSX‟s property consists of the track and two drainage ditches, one running along either side of the track. Houses located to the south of the track are at a higher elevation than the track, and the track is at a higher elevation than the Mall. CSX‟s predecessor in interest designed and installed an earthen berm on the north side of the track to prevent storm water from flowing downhill onto the property occupied by the Mall. The berm straddles the property line of the Mall and the railroad, with the north side of it sloping down into the parking lot. The Mall claims ownership of that slope up to the crest of the berm.

For many years after being built, the berm prevented storm water from discharging onto MD Mall‟s property. In October 2010, however, storm water breached the berm at a spot near South Avenue, allowing water runoff and debris from CSX‟s property to flow down the slope and overwhelm a private storm water inlet located in the Mall parking lot. An MD Mall representative sent two letters, dated October 29, 2010, and January 13, 2011, asking CSX to contact him to discuss a resolution to the runoff problem. In response, CSX‟s road master responsible for that portion of the track inspected the site. Based on the road master‟s findings, a CSX engineer wrote in an internal memorandum that, "[i]nstead of the water flowing over the crossing [at South Avenue] and down the road towards the storm drains, it is not reaching the crossing and [is] instead running towards the [Mall] property." (App. at 56.) The engineer proposed that

CSX dig a "[d]itch" on CSX property "along the area and block the hill leading to the property, allowing the water to flow into the road and down to [a public] storm drain." (App. at 56.) He also raised the possibility of installing a culvert under South Avenue to send the water to a nearby stream. In an email dated January 20, 2011, the engineer notified MD Mall that CSX intended to implement the first option, which was less costly, and that it would complete the project "in a timely fashion." (App. at 57.)

Despite that assurance, CSX did not go forward with that plan. Instead, it began constructing a concrete spillway on the Mall‟s side of the berm to direct CSX‟s storm water into the Mall‟s private drainage inlet. CSX workers cleared out a channel on the berm and set up wooden forms to create the spillway, all of which MD Mall asserts was done without its consent, while CSX claims that MD Mall had consented to the installation in order to stop mud and debris from entering the Mall property.

Whether or not there had been consent, when the Mall‟s manager discovered what CSX was doing, he immediately halted the work, demanding that the wooden forms be removed and that the Mall‟s side of the berm be restored to its original grade. CSX agreed to halt construction of the spillway, but requested permission to install riprap in the cleared out channel. MD Mall granted consent in writing but insisted that CSX provide a permanent solution to the runoff problem. When CSX was not forthcoming with a permanent solution, MD Mall filed the present suit, invoking diversity jurisdiction in the District Court.

B. Procedural History

MD Mall brought claims of negligence (Count I) and continuing storm water trespass (Count II) against CSX for "failing to properly maintain CSX‟s property so as to prevent water on CSX‟s property from flowing over onto [MD Mall‟s] property and causing damage ... ."*fn2 (App. at 122.)

Although it initially sought "compensatory and consequential damages ... , together with prejudgment interest and costs" (App. at 123), MD Mall later dropped its demand for damages and sought only injunctive relief that would require CSX to remedy the runoff problem.

Both parties moved for summary judgment. MD Mall had learned during discovery that, in March 2009, CSX had refurbished the relevant portion of the track, deploying approximately 30 pieces of heavy equipment to replace 325 railroad ties. Based on that information, MD Mall argued in its motion for summary judgment that the "substantial modifications to the tracks‟ drainage system" in 2009 "led to the discharge of CSX‟s water run-off onto the Mall Property and the noticeably deep property erosion by fall 2010."

(Supplemental App. at 80.) For support, MD Mall cited the deposition testimony of its expert, Dr. Frank X. Browne, who identified the source of the water problem as CSX‟s 2009 alteration of the drainage system and the hydrological condition of the property. MD Mall also asserted that, for five years, CSX had failed to clear out the ditch adjacent to the berm.

The fact that storm water had discharged from CSX‟s property onto MD Mall‟s property was evidence, according to MD Mall, that CSX had violated a federal regulation enacted pursuant to the Federal Railroad Safety Act (the "FRSA" or the "Act"), which "require[s] that CSX manage and control the stormwater occurring on its property." (Supplemental App. at 90.) That regulation provides that "[e]ach drainage or other water carrying facility under or immediately adjacent to the roadbed shall be maintained and kept free of obstruction, to accommodate expected water flow for the area concerned." 49 C.F.R. 213.33. MD Mall argued that § 213.33 imposed on CSX a duty to ensure that the earthen berm system that was designed to prevent water from flowing onto the Mall property is properly maintained. (Supplemental App. at 90.)

Given the erosion of the berm and the consequent flooding, MD Mall continued, "CSX is clearly not accommodating the expected water flow from its property, as required under Section 213.33."*fn3 (Supplemental App. at 90.) As relief, MD Mall requested that "CSX be ordered to control and manage the water run-off occurring on its property pursuant to a full engineering plan." (Supplemental App. at 91.)

Despite invoking § 213.33, MD Mall asserted that its claims were not preempted by the FRSA, even though that Act expressly provides that "[a] state may adopt or continue in force a law, regulation, or order related to railroad safety ... until the Secretary of Transportation (with respect to railroad safety matters) ... prescribes a regulation or issues an order covering the subject matter of the State requirement." 49 U.S.C. § 20106(a)(2). In support of its position, MD Mall cited a 2007 amendment to that preemption provision, which serves as a "[c]clarification regarding State law causes of action." 49 U.S.C. § 20106 (the "Clarification Amendment" or the "Amendment"). The Clarification Amendment provides that "[n]othing in [the FRSA] shall be construed to preempt an action under State law seeking damages for personal injury, death, or property damage alleging that a party ... has failed to comply with the Federal standard of care established by a regulation or order issued by the Secretary of Transportation." Id. MD Mall argued that, under the Amendment, its claims were not preempted.

The District Court saw things differently. It granted CSX‟s cross-motion for summary judgment, holding that MD Mall‟s claims were blocked by the express preemption provision of the FRSA. Because MD Mall had asserted that CSX was in violation of § 213.33, the District Court held that MD Mall had "implicitly acknowledge[d]" that the regulation is applicable to its claims (App. at 7), and the Court then determined that the claims were preempted.*fn4

The District Court rejected MD Mall‟s argument that its negligence and continuing storm water trespass claims were subject to the Clarification Amendment. While state law actions are permitted to proceed when they allege a failure to comply with a federal standard of care, the Court held that the Amendment is limited to cases " seeking damages for personal injury, death, or property damage.‟" (App. at 8 (quoting 49 U.S.C. § 20106(b)(1)).) Because MD Mall "appears to have disavowed any claim ...

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