RICHMOND, Va. (CN) - CSX Transportation did not breach a contract in refusing to allow its tracks to be covered to prevent a city from flooding, a Fourth Circuit panel found Tuesday. 

CSX was before the appeals court in December, in a yearslong case filed by flood-stricken residents and companies in the city of Lumberton, North Carolina. The railroad company violated its obligations when it refused to allow the city to fill a gap in a levee left for its tracks, residents argued, resulting in devastating flooding multiple times. 

CSX had worked with the city for decades to prevent lower areas from flooding before deciding to end that cooperation in the late 2000s. The city's levee has a gap where CSX's tracks pass through, which has to be blocked before the water begins to rise for the levee to prevent the city from flooding. But CSX refused to allow the line to be closed and there was catastrophic flooding during Hurricanes Matthew and Florence, resulting in millions of dollars in damage and over 1,500 people being displaced for months, the plaintiffs -  residents, businesses and a church in Lumberton -  asserted. 

The city, the local flood district and CSX's predecessor entered into a contract in 1978, dubbed the Tri-Party Agreement, giving the city the ability to construct an earthen dike to block the tracks. Instead, Lumberton has sought to use other means to close the gap, including sandbags, concrete barriers and floodgates.

But the agreement doesn't give the city the authority to use different stopgaps, CSX argued, because the agreement only mentions a dike, which was never constructed. CSX is not required to allow its tracks to be covered by other methods, it argued, and closing down the line harms the railroad's operations. 

The panel affirmed a lower court's decision granting summary judgment in favor of CSX that found that the company didn't breach its contract. The residents had asked for the order to be reversed so they could take the case to trial. 

"The plaintiffs argue that CSX breached its end of the agreement by refusing to allow for an emergency sandbag dam across its tracks when Hurricane Matthew approached," U.S. Circuit Judge Pamela Harris, a Barack Obama appointee, said in the 10-page opinion. "But CSX did not agree to a sandbag barrier, and the TPA (Tri-Party Agreement) does not license the city to fill the gap on CSX property in any manner it chooses. Instead, the TPA gives the city the (limited) right to close 'said dike' - and 'said dike,' as the plaintiffs admit, has never been built."

CSX could not have been found to have breached its responsibility to close a dike when the dike does not exist, she wrote. She was joined by U.S. Circuit Judges James Wynn Jr., a Barack Obama appointee, and A. Marvin Quattlebaum Jr., a Donald Trump appointee. 

The panel had urged for the parties to come to a settlement agreement when they argued before the court.  

"There's no way in the world the railroad wants to see this city flood," Wynn said during oral argument. "This has been going on for decades, and you've been allowing them to do it for decades, and all of a sudden stop. You know, with the legal arguments that have had some force to it, you know, you prevail, but it just seems to me, just out of public concern, you would settle this thing."

In 2016, CSX refused to allow its tracks to be covered with sandbags during Hurricane Matthew, resulting in flooding so severe that part of the track bed was washed away and the line was put out of service for weeks. 

Then in 2018, CSX threatened the city with felony trespassing if it sandbagged the area for Hurricane Florence. The railroad eventually backed down when the governor issued an emergency order allowing temporary sandbagging, but the delay prevented the city from having enough time to construct an effective dam. The levee failed, again flooding Lumberton and plaintiffs' homes and properties, along with CSX's tracks.

William Cash III, attorney for the plaintiffs, told the court in December that CSX's route has only been affected for 27 days out of the over 16,000 that the contract has been in place. Had the agreement been unduly burdensome, the company would not have stuck to it for over 40 years, he said.  

He told Courthouse News Tuesday that the plaintiffs are disappointed, but still considering available options. 

The residents could request for the case to be reheard en banc by all of the judges sitting on the Fourth Circuit. If so, a judge will need to call for a vote to determine if there is circuit support to rehear the case. If there isn't, the court will decline the request. En banc hearings are rare, and the Fourth Circuit normally only conducts one or two every year.  

A representative for CSX declined to comment. 

This is the second time that the case has been before the Fourth Circuit, which dismissed most issues and remanded a dispute over the plaintiff's third-party beneficiary status in 2020.

Source: Courthouse News Service