Question

In 1998, the governor of New York, George Pataki, formulated a $185 million plan to update old Amtrak trains. The purpose of such a project was to make the old trains faster than the more current Amtrak trains. Such a reconstruction would allow for a high-speed rail system between Albany and New York City. Unfortunately, Amtrak produced only one train, and though millions of dollars were poured into the company to fund the project, auditing showed that the company showed little spending on the trains. Problems stemmed in part from the lack of engineering expertise of the Steel Company that was picked to work on the trains. Also, the state's Department of Transportation (DOT) was not experienced in overseeing projects of this type, so little oversight was given to Amtrak. Furthermore, unforeseen problems arose such as air conditioning malfunctions and the removal of asbestos from train cabins. After the plan seemed as though it would never be successful and Amtrak was extremely low on money due to normal operations, the company tried to settle with the state to escape the project. However, the state filed a lawsuit against Amtrak. Amtrak's defense was that both parties made a unilateral mistake because neither party foresaw the problems or extra costs associated with the project that made it unrealistic. How do you think the court decided? [New York v. AMTRAK,2007 U.S. Dist. LEXIS 13045 (N.D.N.Y, Feb. 23, 2007).]

Answer 1

In 2010, in the Southern District of New York the City filed a lawsuit seeking a declaratory judgment to held Amtrak liable for rehabilitation of the bridge pursuant to its predecessor's 1906 obligation for repairing and maintaining the bridge, and also for the reimbursement to the City for all of the City's already-incurred construction costs.

The district court granted summary judgment to Amtrak on the entire claims, holding that Amtrak has no obligation for repairing and maintaining the bridge that survives the Rail Act, whether the City's claim was based on a covenant or contract. Thus under New York law the City has to be held responsible for repairing and maintaining the bridge as it owns it. However Amtrak owed the City a duty for the relocation of the electrical facilities under New York's public utility rule, in case the City failed to recover its costs under either the emergency assistance doctrine or indemnification. This appeal followed, and the apex court also agreed with the district court that the City's claim against Amtrak for the rehabilitation of the bridge needs to be rejected