NEWS

Jury awards Herman Howry and Breen client, Longhorn Railway Company, 3 million dollars after finding Capital Metro put it out of business.

December 21, 2001 | Press Release, Tim Herman

An Austin jury has awarded a small freight business three million dollars after finding Capital Metro contracted with it to do work, and then made it essentially impossible to do so.

At issue, the Giddings to Llano Railroad – Capital Metro purchased the line to use for mass transit. However, the transit system as owner is required by federal law to provide freight service along the line. Because of that, Capital Metro was able to purchase the line, appraised at $56-million in 1995, for about $1-million. Enter Longhorn Railway Company, owned by small businessman Don Cheatham. Longhorn was contracted to run that freight – but according to his attorney Tim Herman of Herman Howry and Breen, it simply couldn’t.

“The rail was so broken down and deteriorated, with rotting bridges and crossings, the trains couldnt move. Hard to be productive,” Herman says, “when you can only move about five miles an hour. Trains should be able to move about 25 mph along that track.”

As a result, Cheatham lost everything, his business and his life savings. Herman says the jury agreed, finding that Capital Metro intentionally refused to make improvements. The improvements were not only necessary; they were promised and fully budgeted. The finding came with the help of some key witnesses – former Capital Metro rail managers. They told jurors they were stymied when trying to bring the line up to standards. Herman says their contention was that Capital Metro had a brazen attitude, with disregard for keeping the rail moving, that Capital Metro had an eye on the light at the end of the tunnel – Light Rail - intentionally ignoring its freight rail obligations. Tim Herman says, “When Capital Metro abandoned its original $200-million plan for commuter rail in favor of a $900-million electrified light rail plan, the management of the agency neglected its freight obligations because freight did not further its light rail agenda.”

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