UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURGH,
PENNSYLVANIA,
Plaintiff-Appellee,

v.

CSX CORPORATION; CSX
INTERMODAL, INCORPORATED; CSX
INTERMODAL, INCORPORATED, Motor
                                                               No. 97-2657
Carrier Operations; CSX SERVICES,
INCORPORATED; O-O TRUCK SALES,
INCORPORATED; CSX/SEA-LAND
TERMINALS, INCORPORATED; BARONIAL
TRANSPORTATION CORPORATION;
CUSTOMIZED TRANSPORTATION,
INCORPORATED; CUSTOMIZED
TRANSPORTATION, LIMITED,
Defendants-Appellants.

Appeal from the United States District Court
for the District of Maryland, at Baltimore.
Joseph H. Young, Senior District Judge.
(CA-94-2543-Y)

Argued: April 7, 1998

Decided: July 2, 1998

Before WILKINSON, Chief Judge, and HAMILTON and
MICHAEL, Circuit Judges.

_________________________________________________________________

Vacated and remanded by unpublished per curiam opinion.
COUNSEL

ARGUED: Kenneth C. Bass, III, VENABLE, BAETJER, HOWARD
& CIVILETTI, L.L.P., Washington, D.C., for Appellants. Mark
Andrew Dombroff, DOMBROFF & GILMORE, P.C., Washington,
D.C., for Appellee. ON BRIEF: James K. Archibald, VENABLE,
BAETJER, HOWARD & CIVILETTI, L.L.P., Washington, D.C., for
Appellants. Thomas B. Almy, Mark E. McKinnon, DOMBROFF &
GILMORE, P.C., Washington, D.C., for Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

On May 16, 1994, a semitrailer that defendant CSX Intermodal,
Inc. (CSXI) had loaded onto a flatbed railway car came loose on a
moving freight train and rotated into the path of an Amtrak passenger
train near Selma, North Carolina. The Amtrak train derailed, killing
an assistant engineer and injuring eleven other people.

At the time of the accident CSXI held two insurance policies from
plaintiff National Union Fire Insurance Company (National Union)
for excess liability. The first of these, the lower level policy, provides
up to $4,000,000 in excess liability coverage. This policy excludes
from coverage any claims "involving the operation and maintenance
of a railroad." It does not specify whether loading a semitrailer onto
a railroad car would be considered "the operation and maintenance of
a railroad."

The second policy, the upper level policy, provides for a further
$20,000,000 in excess coverage above that provided by the lower
level policy. In addition to an exclusion for operation and mainte-
nance of a railroad, the upper level policy also explicitly excludes
claims arising from the loading or unloading of a railroad car. Both
parties agree that only the lower level policy is at issue in this appeal.

                     2
This dispute began when National Union filed an action in district
court seeking a declaration that it was not obligated to defend or
indemnify CSXI for the May 16, 1994, train accident. On January 18,
1996, the district court granted National Union a declaratory judg-
ment after a bench trial. The court held that the train accident itself
involved the operation of a railroad and was therefore excluded from
coverage under the lower level policy. See National Union Fire Ins.
Co. v. CSX Corp., Civ. No. Y-94-2453, slip op. at 5 (D. Md. Jan. 18,
1996). On April 14, 1997, we vacated that judgment and remanded
the case for the district court to make the factual findings required for
a determination whether the actions of CSXI, which included loading
and fastening the trailer onto the railroad car, involved the operation
of a railroad under the terms of the exclusion in the lower level pol-
icy. See National Union Fire Ins. Co. v. CSX Corp., 131 F.3d 135 (4th
Cir. 1997) (table) (amended op.).

Our instructions on remand were misunderstood. The district court
did not decide the factual dispute that governs whether the exclusion
in the lower level policy applies. Rather, the court mistakenly referred
to the language of the upper level policy, which explicitly excludes
the loading of railroad cars from coverage, instead of the lower level
policy, which only excludes the operation and maintenance of a rail-
road. National Union Fire Ins. Co. v. CSX Corp. , Civ. No. Y-94-
2453, slip op. at 5 (D. Md. Nov. 14, 1997). The court then used the
language of the upper level policy to conclude that the loading of rail-
road cars was excluded from coverage. See id.

In sum, the district court erred on remand by not considering the
railroad operation exclusion in the lower level policy, which the par-
ties agree is the applicable policy. The court further erred in failing
to resolve the factual issue that is central to the coverage question --
whether CSXI's actions involved the operation of a railroad. Accord-
ingly, we vacate the district court's memorandum opinion and order
of November 14, 1997, and remand for reconsideration in light of
what we have said here and in our prior opinion.

VACATED AND REMANDED

                     3
