Partial Win for Amtrak Sandy Insurance Federal Appeal

Amtrak secured a partial U.S. appellate court win on Wednesday in its efforts to recoup insurance coverage after the railroad service sustained more than $1 billion in losses during Superstorm Sandy in 2012.

The 2nd U.S. Circuit Court of Appeals ruled that a lower-court judge in 2015 erred in finding Amtrak could not claim up to $125 million in coverage for replacing undamaged portions of tunnels under the East and Hudson Rivers in New York City.

The three-judge panel said that ruling was premature because Amtrak had yet to submit its repair plans to the Federal Railroad Administration and did not know what changes to undamaged portions of the tunnels the agency would require.

But the court declined to overturn separate decisions by U.S. District Judge Jed Rakoff in Manhattan that, among other things, capped Amtrak’s coverage at $125 million for damage caused by an inundation of water in the tunnels.

The 2nd Circuit also upheld Rakoff’s ruling that corrosion of Amtrak’s equipment after the railroad pumped out the seawater was not an “ensuing loss” that would be exempt from the $125 million flood sublimit.

A lawyer for Amtrak declined to comment. Lawyers for the insurers did not immediately respond to requests for comment.

With winds extending more than 1,000 miles, Sandy made landfall in the mid-Atlantic states on Oct. 29, 2012, damaging or destroying more than 650,000 homes.

New York and New Jersey bore much of the storm’s impact, and service on Amtrak’s busy Northeast Corridor was halted or disrupted for weeks afterward.

Amtrak, whose formal name is National Railroad Passenger Corp, said it had property damage of more than $1 billion, largely in two tunnels that connect to New York’s Pennsylvania Station.

The railroad said its insurers agreed to pay up to $675 million per covered occurrence but have only paid $30 million.

In 2014, Amtrak sued several insurers, including PartnerRe Ltd’s Partner Reinsurance Europe Plc, Aspen Specialty Insurance and Swiss Re’s Westport Insurance Corp.

The case is National Railroad Passenger Corp v Aspen Specialty Insurance Co et al, 2nd U.S. Circuit Court of Appeals. No. 15-2358.

(Reporting by Nate Raymond in New York; Editing by Lisa Von Ahn)