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Legal Proceedings and Other Contingencies
9 Months Ended
Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]  
Legal Proceedings and Other Contingencies
Legal Proceedings and Other Contingencies

Various legal actions, claims, assessments and other contingencies arising in the ordinary course of business are pending against GATX and certain of our subsidiaries. These matters are subject to many uncertainties, and it is possible that some of these matters could ultimately be decided, resolved or settled adversely. For a full discussion of our pending legal matters, please refer to "Note 24. Legal Proceedings and Other Contingencies" of our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2015.

Viareggio Derailment

In June 2009, a train consisting of fourteen liquefied petroleum gas (“LPG”) tank cars owned by GATX Rail Austria GmbH (an indirect subsidiary of the Company, "GATX Rail Austria") and its subsidiaries derailed while passing through the City of Viareggio, in the province of Lucca, Italy. Five tank cars overturned and one of the overturned cars was punctured by a peg or obstacle along the side of the track, resulting in a release of LPG, which subsequently ignited. Thirty-two people died and others were injured in the fire, which also resulted in property damage. The LPG tank cars were leased to FS Logistica S.p.A., a subsidiary of the Italian state-owned railway, Ferrovie dello Stato S.p.A (the “Italian Railway”).

On December 14, 2012, the Public Prosecutors of Lucca ("Public Prosecutors") formally charged GATX Rail Austria and two of its subsidiaries (collectively, "GRA"), as well as ten maintenance and supervisory employees (the "Employees"), with various negligence-based crimes related to the accident, all of which are punishable under Italian law by incarceration, damages, and fines. Similar charges were brought against four Italian Railway companies and eighteen of their employees, among others. The Public Prosecutors assert that the axle on a tank car broke, causing the derailment and resulting in a tank rupture and release of LPG, after the car hit an obstacle placed on the side of the track by the Italian Railway. The Public Prosecutors further allege that a crack in the axle was detectable at the time of final inspection but was overlooked by the Employees at the Jungenthal Waggon GmbH workshop (a subsidiary of GATX Rail Austria).

The trial in the Court of Lucca (the “Lucca Trial”) commenced on November 13, 2013. In July 2016, all parties finished presenting their evidentiary cases, and closing arguments began in September, 2016. The Public Prosecutors are seeking acquittals for two of the Employees, incarceration of six to ten years for the other eight Employees, and fines of 1.0 million euros against each of GATX Rail Austria and its two defendant subsidiaries. GRA believes that it and its Employees acted diligently and properly, but we cannot predict the outcome of the Lucca Trial and, therefore, cannot reasonably estimate the possible range of loss, fines or penalties that may ultimately be incurred in connection with this matter. While we anticipate that the Lucca Trial will conclude in 2016, we also expect that further appeals will be filed.

With respect to civil claims, GRA’s insurers continue to work cooperatively with the insurer for the Italian Railway to adjust and settle personal injury and property damage claims. These joint settlement efforts have so far settled most of the significant civil claims related to the accident; however, approximately 55 civil claimants did not settle and are currently parties to the Lucca Trial. The Court of Lucca will determine both the civil and criminal liability of the defendants in the one proceeding. Final civil damage awards for each claimant will be determined at subsequent civil damage hearings. GRA expects that its insurers will cover virtually all civil damages, if awarded to the claimants in the Lucca Trial or at subsequent civil damage hearings, as well as defense costs for such damage hearings. However, in the event that the Court of Lucca awards any reputational damages claimed by certain labor unions and associations, GRA’s insurers will not cover those damages, which could range from €0.5 million to €2.0 million ($0.6 million to $2.2 million).

Since May 2012, one of the excess insurers providing coverage, Liberty Mutual Insurance Europe Limited (“Liberty”), has settled civil claims but refused to reimburse GRA for its ongoing legal defense fees and costs, taking a position contrary to our other insurers in the prior underlying layers that had provided coverage for such expenses. For the period from May 2012 to September 30, 2016, GRA incurred approximately $19.4 million in defense fees and costs, and GRA continues to incur costs in connection with the Lucca Trial. In October 2013, GRA filed an arbitration proceeding against Liberty seeking to recoup its unreimbursed defense fees and costs (the “Liberty Arbitration”), which was heard in November 2015. GRA received a partial arbitration award in its favor and subsequently settled with Liberty and all other insurers in the current coverage layer. Pursuant to this settlement and subject to certain terms and conditions therein, the insurers will provide reimbursement of approximately 40% of defense costs incurred to date and through the end of the Lucca Trial. As of October 31, 2016, insurance reimbursements for the Lucca Trial totaled approximately $6.4 million.