Following the adoption of new tank car regulations in the aftermath of Lac Megantic, many in the industry feared shortages of rail cars to support their businesses. Contract negotiations with railcar suppliers became more contentious, and parties tussled over clauses dealing with delivery deadlines and delay damages. Since then, crude oil prices, and demand for crude-by-rail, have dropped precipitously. And in an interesting twist, one railcar purchaser is now suing a tank car manufacturer for delivering railcars the purchaser no longer wants using some interesting legal theories.
In Murex LLC v. Union Tank Car Company, now pending in the U.S. District Court for the Northern District of Texas, Murex is seeking to disavow its contract with Union Tank Car for the purchase of 400 tank cars. Murex ordered the cars before FRA issued its latest tank car regulations, using the guidelines that, at the time, many in the industry believed would become the final, required standards. In the end, the FRA adopted less stringent standards, but Murex was left with an order for cars with significantly more reinforcing (and weight) than the new standards required. Murex claims that Union Tank Car owed the purchaser a fiduciary obligation to change the specifications for the ordered tank cars once the FRA announced its tank car regulations.
It is a novel argument, but one not likely to be successful. It will be interesting to see how many other disgruntled car purchasers try this approach.
A copy of Union Tank Car’s Memorandum in support of its Motion to Dismiss can be found here.