By Staff
A federal appeals court has ruled that a deal is a deal, regardless of time passed and how much one entity wants to evade its responsibility.
In a March 4 decision, the U.S. Court of Appeals for the Fourth Circuit sided with PCS Phosphate in its dispute with Norfolk Southern Corp. over the cost of moving a railway line. PCS Phosphate had sued Norfolk Southern for the expense of relocating the line leading to its mine-and-plant complex near Aurora.
PCS Phosphate wanted to shift the line so it could mine beneath the old railroad bed. It had an agreement that when the time came for such a shift, the railroad would pay relocation expenses.
Norfolk Southern declined, so the mining company moved the line, then sued to recoup its expenditures.
The deal at the heart of the case was more than old enough to have sprouted whiskers: It was inked in 1965 and carefully filed away in the Beaufort County Courthouse. The companies that struck the accord don’t really exist any more. Two phosphate companies merged and were bought as part of deal that created PCS Phosphate. The railroad was acquired by a larger competitor.
Norfolk Southern raised a bevy of objections. The company’s lawyers said the deal was too old to be enforceable, void because the rail line was no longer a monopoly and only between the three original, no-longer-extant companies, not the new companies that took their places. They said PCS Phosphate took too long to sue and that a federal transit authority had jurisdiction, not the courts.
But the court said, in essence, that a bargain can’t be ignored just because it’s no longer profitable. It’s a concept of waning popularity in a country where underwater homeowners — those who owe more on their mortgages than their homes are worth — are clamoring for a bailout. Still, we’re glad to see someone thinks a deal ought to mean something.
The judges decided that:
The deal was meant to be long-term, so it couldn’t be too old. The railroad ended its monopoly, not some outside force, so the changed circumstances didn’t matter. The deal specifically included any future companies that took over. PCS Phosphate sued right on schedule. The federal transit authority that Norfolk Southern cited can’t stop the courts from enforcing private, voluntary contracts.
The decision was a victory for common sense and honest business practices. It was also a blow to a company that, during negotiations, tried to abandon the railway line, a move that would have crippled PCS Phosphate’s Aurora operation, and our county’s economy with it.
That’s not to say that PCS Phosphate got everything it wanted, or that it should have.
The court did turn down a request from PCS Phosphate’s attorneys to ramp up the damages — already at more than $18 million in expenses and interest — under North Carolina’s Unfair and Deceptive Trade Practices Act.
It’s not that Norfolk Southern didn’t engage in unfair or deceptive practices; it’s that the statute isn’t named quite right. It’s supposed to protect consumers from truly unscrupulous merchants, not one big company from another in a deal like this.
We’re glad that PCS Phosphate came out ahead, and we’re glad it’s getting its $18 million, though that’s not a huge amount of money for a company as big as PCS Phosphate’s parent, PotashCorp. We’re also glad that PCS Phosphate and Norfolk Southern have managed to keep their business relationship intact, and that the rail cars will keep running back and forth along the new line, pulling money into the county and phosphate ore out.