United States Court of Appeals,

Fourth Circuit.

ALSTOM POWER, INCORPORATED, a Delaware corporation, Plaintiff–Appellee,

v.

NORFOLK SOUTHERN RAILWAY COMPANY, an entity operating in Maryland, Defendant–

Appellant.

Argued Sept. 20, 2005.

Decided Nov. 17, 2005.

PER CURIAM:

Norfolk Southern Railway Company (“Norfolk Southern”) appeals various findings of fact and conclusions of law entered by the district court following a bench trial in an action brought by Alstom Power, Inc. (“Alstom”) under the Carmack Amendment to the Interstate Commerce Act. See 49 U.S.C.A. § 11706 (West 1997). For the reasons that follow, we affirm.

I.

Alstom designs, fabricates and supplies components for heat recovery steam generators (“HRS generators”) used in electric power plants. In July 1998, Alstom entered into a five-year contract to supply HRS generators to Duke/Fluor Daniel, Inc. (“DFD”), the general contractor for the construction of power plants in Hidalgo, Texas, and Veazie, Maine. The contract imposed various delivery deadlines for the HRS generator components to arrive at the DFD construction sites. The contract included a liquidated damages provision that was triggered by a missed delivery date. The amount of liquidated damages due under this provision increased proportionally with the length of the delay.

Alstom fabricates the components for its HRS generators–steel modules and steam drums–at plants in Kings Mountain, North Carolina, and Chattanooga, Tennessee. The tremendous weight of the components generally requires Alstom to ship them by rail. In the fall of 1998, Alstom’s Manager of Transportation, Gregory Gowans, arranged for the shipment of the HRS generator components to DFD’s construction site at Veazie with Norfolk Southern, the only rail carrier that serviced Alstom’s North Carolina and Tennessee plants. In explaining Alstom’s shipping requirements for the DFD contract, Gowans informed Norfolk Southern that Alstom’s planning was predicated upon an expected transit time of seven to fourteen days, and that the final deadline for the delivery of the modules to Veazie was June 30, 1999, pursuant to Alstom’s contract with DFD. Gowans also informed upper-level managers from Norfolk Southern that late delivery would give DFD the right to seek liquidated damages from Alstom.

In May 1999, Alstom began delivering modules to Norfolk Southern for shipment. Each module was shipped under a separate Uniform Bill of Lading requiring Norfolk Southern to transport the shipments with “reasonable dispatch.” The “reasonable dispatch” period was not defined. Ultimately, twenty-six out of thirty steel modules being shipped to Veazie arrived after the June 30 deadline. Both parties contributed to the delays: Norfolk Southern’s actual transit time ranged from 29-62 days, and Alstom experienced manufacturing problems that contributed to the delay of certain shipments. At some point during the summer of 1999, when it was apparent that Alstom would have difficulty meeting the delivery deadlines, Gowans secured premium transportation services for some of the shipments, including special trains to transport only Alstom’s modules and weekend inspections at transfer points.

In September 1999, Alstom and DFD began negotiating DFD’s claim for damages as a result of the untimely deliveries. Initially, DFD sought liquidated damages under the contract of more than ten million dollars–$5.08 million attributable to the late deliveries to Veazie and the remainder attributable to late deliveries to DFD’s Hidalgo, Texas, construction site. Eventually, however, DFD relented on its demand for liquidated damages and indicated that it would settle for actual damages caused by the delayed deliveries, provided that a settlement could be reached quickly and without haggling.

The parties ultimately reached a settlement based on DFD’s unilateral calculation of actual damages. Mike Stark, a former DFD employee who negotiated the settlement terms with Alstom, testified that on November 15, 1999, DFD presented its calculation of actual damages to Alstom and explained the general basis for the claim. However, in light of DFD’s right to pursue liquidated damages under the contract, DFD “made it quite clear … that [DFD] had no contractual obligation to give [Alstom] … information” about how DFD arrived at an actual damages figure or to “prove that this was right or wrong.” J.A. 1638.

Concluding that DFD’s calculations were accurate and reasonable under the circumstances–indeed, they were much less than the liquidated damages originally sought by DFD–Alstom’s negotiators accepted DFD’s settlement offer without requiring an accounting or itemization of the alleged actual damages. The final settlement figure was $3.6 million, covering damages incurred by DFD at both the Veazie and Hidalgo sites. The $3.6 million amount consisted of $1.8 million in cash and $1.8 million in extended warranties.

On December 22, 1999, the parties confirmed the essential terms of the settlement agreement in a two-page document (the “Term Sheet”). The Term Sheet purported to “serve as the basis for a negotiated settlement agreement between [DFD] and [Alstom] for Liquidated Damages arising from delayed deliveries for the Maine Independence Project … and for Hidalgo Energy Project.” J.A. 2906. The Term Sheet set forth the amount of the cash payment, explained Alstom’s extended warranty obligations, and indicated that the settlement covered all past and present claims relating to delays at the Veazie and Hidalgo construction sites. The Term Sheet, however, did not apportion settlement between the Veazie and Hidalgo sites, and it did not distinguish between damages resulting from Alstom’s own manufacturing delays and those caused by Norfolk Southern’s transit issues. The Term Sheet also reflected the parties’ agreement “to reduce these terms to a settlement agreement for signature as soon as possible after the holidays.” J.A. 2907. There is no evidence, however, that the parties subsequently executed a formal settlement agreement. According to John Stratton, an Alstom employee who participated in the negotiation process, the parties honored the Term Sheet even though no formal agreement was prepared or signed after the holidays.

On March 6, 2000, Alstom’s attorney submitted an eleven-page letter to Norfolk Southern asserting a claim under the Carmack Amendment for damages caused by the late deliveries to the Veazie site. Neither this letter nor the subsequent lawsuit sought indemnification for damages paid by Alstom in connection with the Hidalgo site. Although the letter incorrectly indicated that, pursuant to its contract with DFD, Alstom had already paid $1,695,000 in liquidated damages, it acknowledged that Alstom’s production problems contributed to the delays and thus demanded reimbursement from Norfolk Southern in the amount of $930,000–less than the full amount. Alstom’s claim also included $203,276 in premium freight charges that Alstom paid for substitute rail service incurred “[a]s a direct result of [Norfolk Southern’s] failure to provide timely service to Veazie.” J.A. 2916. In the claim letter, Alstom offered to disclose to Norfolk Southern “confidential contract provisions” and other relevant documents upon the execution of a confidentiality agreement. J.A. 2908. Norfolk Southern, which was undergoing a merger with another rail carrier, indicated it would respond to the claim as soon as possible. Although Alstom sent additional letters in April and September 2000, Norfolk Southern failed to respond.

On March 2, 2001, Alstom filed this action, seeking to recover damages for the late deliveries to Veazie under the Carmack Amendment. Following the completion of discovery, Alstom moved for partial summary judgment, seeking a ruling that Norfolk Southern, as a matter of law, “violated its statutory obligation under the Carmack Amendment to transport Alstom’s modules with reasonable dispatch.” J.A. 848. The parties agreed that, in order to rule on this issue, the district court would first need to determine the reasonable dispatch period for these shipments, the point at which the reasonable dispatch period begins to run, and the actual delivery time. Even accepting Norfolk Southern’s evidence as true, the court determined that thirty-one of thirty-two modules were not delivered with reasonable dispatch. The district court concluded that it would be for the finder of fact at trial to decide whether the remaining module was delivered with reasonable dispatch.

Alstom also included claims for (1) breach of the bills of lading, (2) breach of the duty of good faith and fair dealing, and (3) breach of contract. The district court dismissed the first two claims and Norfolk Southern was awarded summary judgment on the third.

Norfolk Southern filed a cross-motion for summary judgment, contending that Alstom offered insufficient evidence that Norfolk Southern, regardless of whether it delivered with reasonable dispatch, caused any of the damages claimed by Alstom. Specifically, Norfolk Southern argued that because the modules at the time of delivery were missing parts due to manufacturing problems, Norfolk Southern’s failure to deliver with reasonable dispatch did not cause Alstom to violate its delivery deadlines. Norfolk Southern also argued that it was not liable for any portion of the unallocated settlement because the apportionment of damages rested on speculation. Finally, Norfolk Southern contended that it was not liable for the premium rail services procured by Alstom. The district court concluded that a triable issue of fact existed as to all three issues and denied the motion.

In November 2003, the district court conducted a four-day bench trial and reached the following conclusions. First, the court rejected Norfolk Southern’s argument that Alstom failed to file a valid notice of claim under the Carmack Amendment–a prerequisite for imposing liability upon a rail carrier–because Alstom’s March 6, 2000, letter did not claim a “specified or determinable amount of money.” 49 C.F.R. 1005.2(b). The district court concluded that the letter satisfied the claim requirement. The court reasoned that “[a] Carmack Amendment claim is not intended to serve as an itemized statement of account that the carrier is expected to pay by return mail. Instead, the claim triggers the carrier’s obligation to investigate it promptly upon receipt.” J.A. 3214.

Next, the district court considered whether Norfolk Southern delivered with reasonable dispatch the remaining module, an issue left for trial following the court’s summary judgment ruling. The court found that the reasonable dispatch period for regular train service in this case was fourteen days, a factual determination that fell comfortably between the range of reasonableness suggested by the parties’ witnesses–Alstom took the position that the reasonable transit time was between seven and fourteen days, and Norfolk Southern estimated between sixteen and twenty days. With respect to special trains that charge a premium rate, the court found that a reasonable dispatch period of seven days was appropriate. The district court also determined, contrary to the position taken by Norfolk Southern, that the reasonable dispatch period should be measured from the time that a rail carrier issues a waybill signifying the shipment has been inspected and is approved for transit, not the time that the carrier actually begins “pulling” the shipment. Finally, applying these findings, the court concluded that the last of the thirty-two modules was delivered beyond the reasonable dispatch period in violation of the Carmack Amendment.

As for causation, the district court concluded that Norfolk Southern’s late deliveries caused actual harm even though many of the modules arrived at Veazie without pressure nozzles because of production problems at the Alstom plants. The court found that the missing nozzles did not impede the construction schedule because the nozzles were not needed until shortly before the power plant began operating.

The district court rejected Norfolk Southern’s argument that it was not liable for the premium freight charges paid by Alstom because Alstom’s manufacturing problems would have required the hiring of these special trains in any event. The court reasoned that Gowan’s decision to secure an alternate carrier–before there was any indication of a manufacturing problem–was a reasonable response to the fact that there were transit delays for even the earliest shipments. The district court found, therefore, that “Gowans would have engaged these services regardless of Alstom’s manufacturing problems.” J.A. 3226.

Finally, the district court concluded that, before it could determine the damages owed by Norfolk Southern for its untimely deliveries, it was required to identify the portion of the settlement between Alstom and DFD that was attributable to delays at Veazie, not Hidalgo; to identify the portion of the settlement paid for the late delivery of modules, as opposed to other parts arriving late; to determine a dollar value for the extended warranties portion of the settlement; and to “determine the share attributable to Norfolk [Southern]’s transit delays (rather than Alstom’s manufacturing delays).” J.A. 3226.

Based on the testimony of Mike Stark, a former DFD employee who participated in negotiating the settlement, the district court concluded that sixty-three percent of the settlement amount was attributable to delays at Veazie. The court further found that the entire settlement amount was based on the late delivery of modules as opposed to other parts and equipment. Furthermore, the district court credited the testimony of John Stratton, Alstom’s project director for generators, that it would cost Alstom $700,000 to honor the extended warranty portion of the settlement. Finally, the district court recognized that Norfolk Southern was not solely at fault for the late deliveries, given that Alstom failed to have some of the modules ready for shipping until after the June 30 deadline. Accordingly, the court arrived at the following formula for calculating damages: “$1.575 million multiplied by the percentage of total delay attributable to Norfolk [Southern], plus the cost of premium transportation services.” J.A. 3255.

The district court invited Alstom to submit a proposed final damages figure using this formula and to brief the court on the propriety of pre-judgment interest. The district court likewise invited a response from Norfolk Southern. Alstom submitted a final figure of $1,459,485, including interest. The court reduced the interest claimed by Alstom but otherwise adopted Alstom’s calculation and entered judgment in the amount of $1,230,871.

On appeal, Norfolk Southern does not specifically challenge the award of prejudgment interest.

II.

A.

Norfolk Southern argues that Alstom failed to file a proper written notice of claim and was therefore precluded from bringing suit on its delay claim under the Carmack Amendment. Like the district court, we reject this claim.