Consolidated Rail Corp. v. Grand Trunk Western Railroad

853 F. Supp. 2d 666, 2012 U.S. Dist. LEXIS 19468, 2012 WL 511553
CourtDistrict Court, E.D. Michigan
DecidedFebruary 16, 2012
DocketCase No. 09-cv-10179
StatusPublished
Cited by5 cases

This text of 853 F. Supp. 2d 666 (Consolidated Rail Corp. v. Grand Trunk Western Railroad) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Consolidated Rail Corp. v. Grand Trunk Western Railroad, 853 F. Supp. 2d 666, 2012 U.S. Dist. LEXIS 19468, 2012 WL 511553 (E.D. Mich. 2012).

Opinion

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [171]

NANCY G. EDMUNDS, District Judge.

This matter comes before the Court on Defendant’s motion for summary judgment on Plaintiffs’ claim that Defendant breached the 1996 Trackage Rights Agreement. For the reasons set forth below, Defendant’s motion is GRANTED in part and DENIED in part.

I. Facts

A. Third Amended Complaint

On January 19, 2012, this Court granted Plaintiffs’ motion for leave to file a Third-Amended Complaint. The Third Amended Complaint alleged a new breach of contract claim against Defendant, for breaching the 1996 Trackage Rights Agreement (“TRA”). Defendant opposed this motion, arguing that Plaintiffs failed to allege that Conrail had any damages and Norfolk Southern did not have standing. In granting Plaintiffs’ motion to amend the complaint, this Court recognized that Count V of the Third Amended Complaint reads, “Conrail and Norfolk Southern have suffered monetary damages in the form of increased expenses, lost opportunities and lost revenues as a result of [Defendant’s] failure to uphold its obligations under the [TRA].” (Third Am. Compl. ¶ 90.) On January 17, 2012, Plaintiffs presented the Shared Assets Area Operating Agreement (“SAAOA”) for Detroit between Conrail, Norfolk Southern, and CSX to the Court for the first time. The Court relied on the SAAOA, which provides that Conrail will bill Norfolk Southern and CSX each month for 102% of the amount of each reimburse-able expense. Conrail effectively acquires a 2% profit on any expenses it incurs and [668]*668later bills to Norfolk Southern. This Court determined Plaintiffs’ allegation of Conrail’s loss of the 2% profit was enough to state a claim and granted Plaintiffs leave to amend.

B. Evidence of Conrail’s Damages During Discovery

Plaintiffs’ First Amended Complaint and Second Amended Complaint alleged that only Norfolk Southern suffered damages as a result of the claims pled therein (see Second Amended Complaint, ¶¶ 58, 75, and 82). Despite the fact that Plaintiffs did not originally allege that Conrail suffered any damages, Defendant sought discovery on any possible claim for damages incurred by either Conrail or Norfolk Southern.

On May 8, 2009, Plaintiffs filed their initial disclosures, which indicates, “Conrail seeks damages representing the losses incurred as a result of [Defendant’s] refusal to allow Conrail access to the tracks at issue to service Korneffel. At this time, Conrail is not able to make the calculation associated with these damages and will supplement these disclosures accordingly.” (Def. Mot. Ex. 5.) Defendant’s first set of requests for production of documents and materials included “Documents or materials relating to any and all damages claimed to have been suffered or which you claim will be suffered by you in your Complaint.” (Def. Mot. Ex. 4.) On June 26, 2009, Plaintiffs objected to this request as “premature and unduly burdensome.” (Id.) Defendant claims that Plaintiffs never supplemented either of these responses, despite their obligation to do so under Rule 26(e)(1)(A).

In October 18, 2009, Defendant sent out a Rule 30(b)(6) notice for witness(es) to testify regarding “[t]he basis for computation of any and all damages sought by Conrail.” (Def. Mot. Ex. 1, ¶ 58.) Plaintiffs designated James Schaaf, Group Vice President of Metals for Norfolk Southern, as their 30(b)(6) witness as to damages for Norfolk Southern and Conrail. Schaaf testified that he understood that he would be testifying regarding damages that were allegedly incurred by Norfolk Southern and Conrail. (Schaaf Dep. 98:19-99:1, April 21, 2010.)

Schaaf testified that Conrail is not a commercial entity, is not party to any agreements with customers, and all commercial activities relating to any customer is handled by Norfolk Southern or CSX. (James Schaaf Dep. 48:4-10; 51:9-11, Aug. 3, 2010.) At Schaaf s deposition, Plaintiffs produced a spreadsheet entitled “Estimated NS Damages.” Furthermore, Schaaf testified that all the loss he calculated was for Norfolk Southern and that Conrail really suffered no damages because it was acting as Norfolk Southern’s agent. (Schaaf Dep. 283:15-284:5, April 21, 2010; Schaaf Dep. 70:11-20, Aug. 3, 2010.) Schaaf also testified:

Q. So in effect, Conrail has suffered no damages in this, but you have suffered, that being you, NS has suffered, correct? That is all I’m trying to get at, is that fair to say, because ultimately you are responsible?
A. I’m not clear that I can fully answer that question as to whether or not Conrail had damages and you may want to ask a Conrail person that question, but I — but I have tried to the best of my ability to explain to you that any of the expenses that are incurred with respect to these shipments, that we as the owner will bore those expenses on behalf of our agent.
A. I’m saying that the damages that have been presented for Norfolk [669]*669Southern are those which are listed here.
Q. And you don’t have any knowledge of Conrail damages, correct?
A. Again, I will tell you, no, I do not. (Schaaf Dep. 71:17-73:2, Aug. 3, 2010.)

C. Norfolk Southern Standing

In 1996, at the time Conrail and Defendant entered into the TRA, Conrail was still an independent commercial entity in direct competition with Norfolk Southern. In June 1997, Norfolk Southern, Conrail, and CSX submitted their merger agreement to the Surface Transportation Board (“STB”) for approval. The STB is an economic regulatory agency, created by Congress to resolve rate and service disputes and review mergers in the railroad industry.

On July 20, 1998, the STB, in its Decision No. 89, “approv[ed] applicants’ request to override antiassignment and other similar clauses in Conrail’s Trackage Agreements.”1 (“Decision 89”) The STB further stated:

[Norfolk Southern] shall have the right to operate and use the ... Shared Assets ... including those presently operated by [Conrail] under trackage rights or leases ... as fully as [Conrail] itself had possessed the right to use them, notwithstanding any provision of law, agreement, order, document, or otherwise, purporting to limit or prohibit [Conrail]’s unilateral assignment of its operating rights to another person or persons, or purporting to affect those rights in the case of a change of control.

(Id. at 168.) The TRA in this case is a joint facility contract in the Detroit Shared Assets Area, entered into on May 1, 1996 and is therefore, covered by this STB Decision.

II. Standard

Summary judgment is appropriate only when there is “no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). The central inquiry is “whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

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Bluebook (online)
853 F. Supp. 2d 666, 2012 U.S. Dist. LEXIS 19468, 2012 WL 511553, Counsel Stack Legal Research, https://law.counselstack.com/opinion/consolidated-rail-corp-v-grand-trunk-western-railroad-mied-2012.