Lake State vs. State of Michigan Lawsuit

[John Ryan]

Michigan Attorney General Mike Cox has filed a lawsuit in state court against the Lake State Railway, seeking over $1M in reimbursement and fines, stemming from a 2008 forest fire that he alleges the Lake State started. The railroad is charged with two felony counts of starting a forest fire and two misdemeanor counts of operating a locomotive without required safety appliances. The charges stem from a massive fire on April 24th, 2008 that burned over 1,300 acres near Grayling and subsequent fire in Arenac County six days later. The state is seeking reimbursement of the $935,000 required to fight both fires, along with unspecified fines and damages.

This judgement against the railroad, if successful, would open the door to property owners and their insurance companies seeking additional reimbursement and restitution from Lake State, possibly to the tune of tens of millions of dollars. A number of homes and business were destroyed or damaged in the blaze.

I seem to recall hearing that the Lake State lost their insurance coverage about two years ago, after numerous derailments and other problems. I had been told that this was the reason there were no longer any Bluewater NRHS trips on the Lake State, as the property was "uninsurable" due to concerns over track condition and train handling. If this is true, that would mean that this potential judgement, a minimum of $1M and as high as $10M+, would have to be paid directly by the Railway. Could this result in bankruptcy or a change in ownership, especially coming right after Jim George's death?

[MDH]

Could this result in bankruptcy or a change in ownership, especially coming right after Jim George's death?

I don't know the background on this to comment with certainty but taking what you stated at face value and guestimating at the (financial) size of the company I'd be willing to bet that you could remove the "Could" and add a "will" to your sentence. I doubt many shortline railroads could take that kind of financial hit without any insurance and still keep the doors open...

[AARR]

The number that I've heard (but seems high to me) is they handle 20,000 cars a year of mostly aggregate, cement, and flyash (does not include SBS). They operate 250ish miles of track. They're a little under the one car per 100 miles per year of track.

[OwlCaboose2853]

Memories of Grayling Wildfire Linger as Railroad Company Faces Charges
http://www.9and10news.com/Category/Stor ... 6456&cID=1
Lake State Railway is accused of starting the fire that burned trees, homes and other buildings in and near Grayling in April 2008. The attorney general says the company ignored safety regulations, and embers flew out from the exhaust system, sparking the fire along the track.

[OwlCaboose2853]

Michigan Attorney General Mike Cox has filed a lawsuit in state court against the Lake State Railway, seeking over $1M in reimbursement and fines, stemming from a 2008 forest fire that he alleges the Lake State started. The railroad is charged with two felony counts of starting a forest fire and two misdemeanor counts of operating a locomotive without required safety appliances.

Do you believe Attorney Mr. Cox and firefighters blames Lake State Railway cause blazes? What a trespasser did do resulted that afterward they’re run way to hide or home from railroad lines? Probably, he doesn’t think about trespasser. I bet that Mr. Cox was lairs all times.

[John Ryan]

Do you believe Attorney Mr. Cox and firefighters blames Lake State Railway cause blazes? What a trespasser did do resulted that afterward they’re run way to hide or home from railroad lines? Probably, he doesn’t think about trespasser. I bet that Mr. Cox was lairs all times.

Mr. Owl, what an absurd statement. The state would not have spent tens of thousands of dollars and conducted a TWO YEAR INVESTIGATION, all to charge the wrong party. Mr. Cox and the other attorneys for the State believe that they have conclusive evidence that Lake State's locomotives, not equipped with spark arrestors, emitted hot embers that set the fire. The State believes there was a pattern of smaller brush fires along the tracks in the days prior to the big fire, that should have 1) clued Lake State into the fact that there was a problem with their equipment, and 2) identified Lake State as only party in the area that was starting fires along the railroad tracks.

I would say that this is a fairly simple matter, but given the amount of money at stake and the lengthy investigation, the State wanted some certainty before proceeding with the expense of a trial. But, if you have some information that suggests that a trespasser started this fire and that "Mr. Cox was liars all times," I would suggest you contact both the railroad and Mr. Cox right away. This is why we have trials; so that Lake State can refute what evidence the State has. Perhaps they will say, as you suggest, that a trespasser was following the train over the course of several weeks, setting fires to the brush along the tracks.

[chapmaja]

The story seems to indicate the Lake State was responsible for the fire, HOWEVER that may not be as easy to PROVE BEYOND A REASOnAbLE DOUBT as is required in a criminal complaint. There cartainly is circumstantial evidence that leads one to beleive the Lake State is guilty, but without something more than circumstantial evidence this may nt be as easy PROVE as it would seem.

The easier of the charges to prove will be the operation without spark arresting equipment charge. I'm sure the fire investigators looked into that and were witnesses to the operation of the equipment without the required equipment.

For the record, I think the Lake State is in deep deep trouble now because of this. I wonder if they will take a proactive approach if found guilty and decalre bancruptcy prior to any civil claims beig filed against the company.

If they are found guilty the State of Michigan will get first dibs at a HUGE fine and restituion.

I suspect that you will see a new owner/operator of the line within the next few years because of this.

Someone mentioned they no longer had the insurance. The Big Question will be when was the insurance dropped. If it was after this, the insurance company may still be on the hook for the claims to the extent the policy allows. If the insurance was lost before the Lake State will really be SOL.

[jukeman45]

Michigan Attorney General Mike Cox has filed a lawsuit in state court against the Lake State Railway, seeking over $1M in reimbursement and fines, stemming from a 2008 forest fire that he alleges the Lake State started. The railroad is charged with two felony counts of starting a forest fire and two misdemeanor counts of operating a locomotive without required safety appliances.

Do you believe Attorney Mr. Cox and firefighters blames Lake State Railway cause blazes? What a trespasser did do resulted that afterward they’re run way to hide or home from railroad lines? Probably, he doesn’t think about trespasser. I bet that Mr. Cox was lairs all times.

You know as well as I do that the Alco's Blow fire and sparks out of the stacks all of the time.

[jukeman45]

The story seems to indicate the Lake State was responsible for the fire, HOWEVER that may not be as easy to PROVE BEYOND A REASOnAbLE DOUBT as is required in a criminal complaint. There cartainly is circumstantial evidence that leads one to beleive the Lake State is guilty, but without something more than circumstantial evidence this may nt be as easy PROVE as it would seem.

The easier of the charges to prove will be the operation without spark arresting equipment charge. I'm sure the fire investigators looked into that and were witnesses to the operation of the equipment without the required equipment.

For the record, I think the Lake State is in deep deep trouble now because of this. I wonder if they will take a proactive approach if found guilty and decalre bancruptcy prior to any civil claims beig filed against the company.

If they are found guilty the State of Michigan will get first dibs at a HUGE fine and restituion.

I suspect that you will see a new owner/operator of the line within the next few years because of this.

Someone mentioned they no longer had the insurance. The Big Question will be when was the insurance dropped. If it was after this, the insurance company may still be on the hook for the claims to the extent the policy allows. If the insurance was lost before the Lake State will really be SOL.

Wouldn't be surprised if the State doesn't end up owning the Railroad before it's all said and done.
GLC may have it to operate as well.

[AARR]

Wouldn't be surprised if the State doesn't end up owning the Railroad before it's all said and done.
GLC may have it to operate as well.

There's interested parties. Just hope that ex-D&M lines are looked at as well. Segment from Pinconning to Gaylord does not generate a lot of traffic for 100-120ish miles of track.

[BerkshireKid]

IIRC isn't the line that the fire occurred on owned by the state and its leased to the LSRC just like the arrangement on GLC.
I think they Huron Sub is owned by LSRC and would explain the difference in maintenance and speeds.

[OwlCaboose2853]

Do you believe Attorney Mr. Cox and firefighters blames Lake State Railway cause blazes? What a trespasser did do resulted that afterward they’re run way to hide or home from railroad lines? Probably, he doesn’t think about trespasser. I bet that Mr. Cox was lairs all times.

Mr. Owl, what an absurd statement. The state would not have spent tens of thousands of dollars and conducted a TWO YEAR INVESTIGATION, all to charge the wrong party. Mr. Cox and the other attorneys for the State believe that they have conclusive evidence that Lake State's locomotives, not equipped with spark arrestors, emitted hot embers that set the fire. The State believes there was a pattern of smaller brush fires along the tracks in the days prior to the big fire, that should have 1) clued Lake State into the fact that there was a problem with their equipment, and 2) identified Lake State as only party in the area that was starting fires along the railroad tracks.

I would say that this is a fairly simple matter, but given the amount of money at stake and the lengthy investigation, the State wanted some certainty before proceeding with the expense of a trial. But, if you have some information that suggests that a trespasser started this fire and that "Mr. Cox was liars all times," I would suggest you contact both the railroad and Mr. Cox right away. This is why we have trials; so that Lake State can refute what evidence the State has. Perhaps they will say, as you suggest, that a trespasser was following the train over the course of several weeks, setting fires to the brush along the tracks.

I did remembered that when I walked to Barton Dam Park area. I saw trespasser walked on Huron River Bridge NS Michigan Line of Barton Dam in north of Ann Arbor. When they finished a cigarette then threw away onto ditch on old dry grass from second railroad bed. But luck no burn grass this times. Mr. Cox did not see any trespasser on track. Well, there is having a hard proof it. Well so!

[CSX_CO]

I didn't go into any depth in reading, but if this is a Civil Matter, the State only needs to prove the railroad is liable or at fault for what they did. They don't need "beyond a reasonable doubt" in a Civil matter. I'm guessing this is a 'civil' case, as it would be pretty tough to charge a 'railroad' with a crime. I mean...who do you put in jail if found guilty?

That's why OJ Simpson was found innocent (weither he is or isn't) in a criminal trial, but found liable for the two deaths in the civil trial that followed. The State could prove he had 'fault' in the killings, and didn't need beyond a reasonable doubt.

Depending on LSRC's insurance policy, they (insurance company) probably write the state a check if found liable, and thats the end of it. Also, if found guilty, appeals will probably get the amount lessened to something LSRC can afford. What good does it do the state to levy a hefty fine, if the defendent can't pay it?

Now, if they can afford insurance after this, or if they have castastrophe insurance like the Class Ones, is a different matter.

Practice Safe CSX

[CSX_CO]

When they finished a cigarette then threw away onto ditch on old dry grass from second railroad bed. But luck no burn grass this times. Mr. Cox did not see any trespasser on track. Well, there is having a hard proof it. Well so!

Its not going to be the State's job to prove a trespasser DIDN'T do it, it is going to be LSRC's job to prove a trespasser DID do it, and not them. The State feels that LSRC is liable after their investigation. If LSRC can prove they aren't, or that something ELSE started the fires besides their equipment, then the State has no case against LSRC. If it has come this far, the State probably knows what they are going after, and aren't going to bring this to trial (or attempt to bring to trial) without a solid case.

Based upon the reading, and how smaller fires had been started after LSRC had passed by in the weeks prior, my guess is it was their equipment. May have even been a crew member tossing a cigarette out the window. Who knows? Whichever the case, LSRC's actions make them liable in this matter.

Practice Safe CSX

[OwlCaboose2853]

When they finished a cigarette then threw away onto ditch on old dry grass from second railroad bed. But luck no burn grass this times. Mr. Cox did not see any trespasser on track. Well, there is having a hard proof it. Well so!

Its not going to be the State's job to prove a trespasser DIDN'T do it, it is going to be LSRC's job to prove a trespasser DID do it, and not them. The State feels that LSRC is liable after their investigation. If LSRC can prove they aren't, or that something ELSE started the fires besides their equipment, then the State has no case against LSRC. If it has come this far, the State probably knows what they are going after, and aren't going to bring this to trial (or attempt to bring to trial) without a solid case.

Based upon the reading, and how smaller fires had been started after LSRC had passed by in the weeks prior, my guess is it was their equipment. May have even been a crew member tossing a cigarette out the window. Who knows? Whichever the case, LSRC's actions make them liable in this matter.

Practice Safe CSX

Just several years ago, Pittsfield firefighters did blamed and lawsuit against Ann Arbor RR, least 800 areas damage by burned grass during on high noon from Urania between Bemis Rd and Willis Rd, where fire started Bemis Rd crossing from spread south side on dry grass. But they were run slowing least 35 mph speeds at after midnight time. You know night has dew and damp grass. AARR won.

In Washtenaw County, when in spring time, the firefighters showed up and spread onto where spots burn old grass ditch from Michigan Lines. I have no idea they had still blames which NS or Amtrak trains had cause 60 mph speeds by wheels-rail spark flew on ground.

[RRTTF]

The Constitution of the United States of America AND the Constitution of the Great State of Michigan both expressly provide that the accused shall in all cases be presumed INNOCENT until proven guilty beyond a reasonable doubt. The State has a long, long road to travel before LSRC may be found guilty of anything.

Do not discount the possibility that this may all be "political posturing" by the State. Just look at all the criminal charges that the City of Plymouth attempted to bring against CSX Transportation. In the end, CSX Transportation won, but first they had to get outside the State of Michigan court system and get into the Federal court system to obtain justice! There is no dearth of court cases where state, county, or local government agencies have attempted to strongarm railroad companies.

Michigan's history is... believe it or not... very ANTI-railroad! In the year 1900, then-Governor Pingree attempted to dissolve all of the railroads in the State and to take their property (right-of-way) as State property. The Michigan Central, the Detroit, Grand Haven and Milwaukee, and the Lake Shore & Michigan Southern (and others) all had to fight the illegal "takings" in Court and each railroad ultimately prevailed. (And, in each case, it took getting into the Federal court system before the tables turned favorable for the railroads.) For the DGH&M, the court battles would take a full 27 years, until 1927, before they came to an end. For you history buffs, that was the year that the State negotiated a deal to move the DGH&M (soon to be GTW, then CN) tracks running between Detroit and Pontiac.

It will be interesting to see how the State's case develops.

[Jeff L]

Am I reading this right? LSRC now facing a 2nd lawsuit for a separate fire?

http://www.crawfordcountyavalanche.com/ ... 846390.txt

LSRC will likely face bankruptcy.

[John Ryan]

Yes, two separate fires. There were smaller grass fires along the line that burned out on their own. Two that destroyed personal property and required firefighting. There is a pattern here, and that is likely what attorneys for the State will present to the jury.

As to the question of bankruptcy, I will defer to those on this board with railroad management experience. I had heard that LSRC had lost outside coverage and were now "self insuring." Even with insurance, when a derailment demolished the bridge in Oscoda several years ago, the Lake State had to go to LaFarge for financial assistance, as their insurance policy had a cap of $500,000 at the time. One can argue that a derailment is an "Act of God," but missing spark arrestors would be an act of the shop employees; something that is entirely preventable. I do not know 1) if LSRC still has insurance, 2) if insurance would cover negligence, and 3) if so, is there a cap on payments?

Remember, if the state is able to prove their case and assign blame to LSRC, that opens the door to lawsuits by property owners and their insurance companies. I suspect that LSRC could potentially survive a $1M judgement, but other lawsuits in the hands of sympathetic juries could create a far large problem for the railroad.

[Raildudes dad]

Most railroads "self insure" for a substancial deductible on their polices. I used to be familiar with the numbers but have been "out of the business" since 2002. Yes, insurance will cover negligence. I had a crane operator put a boom into the power lines coming out of a substation. Our insurance company covered the Consumers bill. (I was not a happy camper) I'm guessing Lake States had a $500,000 deductible, not a cap, in their insurance with the bridge incident. MMRR had a $250,000 deductible in the past (10-12 years ago).

[RRTTF]

It is not a "deductible", it is called a "self insured retention" or "SIR". All railroads are "on the hook" for each and every claim up to their SIR, and thereafter their insurance carrier covers. Suffice it to say that the SIRs are not small amounts, and any railroad that has enough claims will find itself in financial insolvency. Most, if not all, of the Class 1 railroads are self-insured (meaning, they have no insurance) or have a HUGE (7 or 8 digits) SIR for each claim (along with a maximum or cap for overall claims during the policy year).

This also explains why so many railroads are becoming "anti-railfan" and "anti-trespasser". Trespassers (and, railfans are lumped into this category) are the NUMBER 1 cause of claims (lawsuits) against railroads. Over the last 10 years or so, the number of insurance pools that will insure railroads has dropped down to a small handful. These insurers are demanding higher SIRs (or else will not provide coverage at all) and demanding that railroads have proactive programs in place to deal with high risk factors, such as trespassers. And, this all took place before TSA recently stepped in and has started it own anti-trespasser initiatives.