City of Wyandotte MI v. Consolidated Rail Corp.

• Citation: 262 F.3d 581
• Decision Date: 01 May 2001
• Docket Number: No. 00-1151,00-1151
• Parties: (6th Cir. 2001) City of Wyandotte, a Michigan municipal corporation, Plaintiff-Appellee, v. Consolidated Rail Corporation, also known as Conrail, also known as Conrail, Inc., a Pennsylvania corporation, Defendant-Appellant. Argued:
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 581

262 F.3d 581 (6th Cir. 2001)

City of Wyandotte, a Michigan municipal corporation, Plaintiff-Appellee, v. Consolidated Rail Corporation, also known as Conrail, also known as Conrail, Inc., a Pennsylvania corporation, Defendant-Appellant.

No. 00-1151

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: May 1, 2001

Decided and Filed: August 24, 2001

Appeal from the United States District Court for the Eastern District of Michigan at Detroit, No. 97-71237, John Corbett O'Meara, District Judge. [Copyrighted Material Omitted] William R. Look, LOOK, MAKOWSKI & LOOK, Wyandotte, Michigan, for Appellee.

Gregory A. Clifton, Joseph J. McDonnell, DURKIN, McDONNELL, CLIFTON, DAVIS & O'DONNELL, Detroit, Michigan, for Appellant.

Before: JONES, COLE, and GILMAN, Circuit Judges.

OPINION

COLE, Circuit Judge.

In this diversity action, Defendant-Appellant Consolidated Rail Corporation ("Conrail") appeals from the district court's grant of summary judgment in favor of Plaintiff-Appellee City of Wyandotte ("the City"). The underlying action stems from a dispute concerning whether Conrail is obligated to undertake certain cosmetic improvements of two bridges pursuant to a grade separation agreement ("the Agreement"). The district court found that the terms of the Agreement unambiguously require Conrail to perform the disputed improvements and, accordingly, granted the City's motion for summary judgment on this point, from which Conrail now appeals. Also a subject of this appeal is the district court's denial of Conrail's motion for summary judgment urging dismissal of the City's complaint for its alleged failure to raise claims within the applicable six-year statute-of-limitations period and, alternatively, for its alleged undue delay (and attendant prejudice suffered by Conrail) in raising its claims. Because we are persuaded that the contract terms at issue in this case are susceptible to multiple interpretations, we hold that the district court erred in granting the City's motion for summary judgment, and we accordingly REVERSE its decision. We do not believe, however, that the City's claims are barred by either Michigan's statute of limitations or by the equitable doctrine of laches, and we AFFIRM the district court's denial of Conrail's motion for summary judgment on this ground.

I. BACKGROUND

On April 22, 1927, the City entered into a grade separation agreement with four railroads, all of which agreed to construct and maintain five bridges over Eureka Road in Wyandotte, Michigan. One of the railroads was to construct and maintain two of the bridges and the other railroads each were to construct and maintain one bridge. The purpose of the bridges was to allow railroad tracks to span Eureka Road and to avoid the construction of a multiple-track grade crossing. Conrail, as a successor to the Agreement, now maintains tracks over two of the bridges and has assumed all rights and obligations provided for by the Agreement as to those two bridges. Pursuant to the Agreement, Conrail is required "to maintain, repair and renew at its own expense, all parts of its bridge structures, track structures, retaining walls, piers, abutments and wingwells, within the lines of its right-of-way . . . ." The Agreement does not, however, expressly require Conrail to undertake any cosmetic improvements of the bridges, and Conrail in fact has never made any such improvements.

Sometime in 1993, the City requested Conrail's participation in the "Eureka Avenue Corridor Landscaping and Beautification Project," an initiative that would have required Conrail to perform certain cosmetic improvements of the bridges, which the City characterized in written correspondence to Conrail as being in a "very decayed condition." Although the other parties to the Agreement participated in the project to the satisfaction of the City, Conrail declined, concluding that the express terms of the Agreement mandated only that the bridges be maintained for structural soundness and imposed no requirement that Conrail preserve or enhance the appearance of the bridges. Because the bridges at that time were structurally sound, properly maintained, and in no need of replacement, it reasoned that no further action was required under the Agreement.

The City initiated the instant action in Michigan's Wayne County Circuit Court on February 21, 1997, seeking declarations both that Conrail's participation in the beautification project was required by the express terms of the Agreement and that its failure to participate constituted a breach of the Agreement's requirement that each signatory "maintain, repair, and renew" the structures for which it is contractually responsible. Conrail removed the action to the United States District Court for the Eastern District of Michigan on March 25, 1997, based on that court's diversity jurisdiction. The City filed a motion for summary judgment on June 25, 1999, and a hearing to resolve the issues raised in the motion was held on August 20, 1999. Upon finding that the contract terms at issue were unambiguous and thus not properly submissible to a jury, the district court orally granted the City's motion. A provisional order granting the City's motion for summary judgment issued on October 6, 1999. The day before, on October 5, 1999, Conrail filed a motion for summary judgment, arguing that the City's claim, if one was properly stated at all, was barred both by Michigan's six-year statute of limitations period for breach-of-contract actions and by the equitable doctrine of laches. The district court denied Conrail's motion on December 15, 1999, and issued a final order on January 13, 2000, memorializing its grant of the City's motion for summary judgment and its denial of Conrail's motion for summary judgment. This timely appeal follows.

II. CONTRACT TERMS

We review de novo a district court's grant of summary judgment. See Davis v. Sodexho, Cumberland Coll. Cafeteria, 157 F.3d 460, 462 (6th Cir.1998) (citing Middleton v. Reynolds Metals Co., 963 F.2d 881, 882 (6th Cir.1992)). Summary judgment is proper if the evidence shows that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. See Davis, 157 F.3d at 462 (citing City Mgmt. Corp. v. U.S. Chem. Co., 43 F.3d 244, 250 (6th Cir.1994)). We consider all facts and inferences drawn therefrom in the light most favorable to the nonmovant. See Davis, 157 F.3d at 462.

In a diversity action such as the instant one, we apply the substantive law of the forum state -- Michigan, in this case. See Hanover Ins. Co. v. Am. Eng'g Co., 33 F.3d 727, 730 (6th Cir. 1994). Whether or not a contract is ambiguous is a question of law properly determined by the district court. See Saulte Ste. Marie Tribe of Chippewa Indians v. Engler, 146 F.3d 367, 373 (6th Cir. 1998). In making such a determination, a district court is counseled to read the contract as a whole, and to give the contract language its ordinary and natural meaning. See Comerica Bank v. Lexington Ins. Co., 3 F.3d 939, 942 (6th Cir. 1993). A district court's role in construing the terms of a contract is not unqualified, however. "Where [a contract's] meaning is obscure and its construction depends upon other and extrinsic facts in connection with what is written, the question of interpretation should be submitted to the jury, under proper instructions." D'Avanzo v. Wise & Marsac, P.C., 565 N.W.2d 915, 918 (Mich. Ct. App. 1997) (internal citations and quotation marks omitted). The rule of law that has emerged from D'Avanzo, one which guides our consideration of this case, is that "[a] contract is ambiguous if the language is susceptible to two or more reasonable interpretations." Id.

The parties suggest that proper resolution of this appeal requires a close examination of paragraphs 14 and 16 of the Agreement:

14. The Railroads each agree to cause the details of design and construction of all bridge structures, including both substructures and superstructures to conform in appearance and architectural lines to a single standard, and the Railroads further agree that drawings covering all such design and construction shall be subject to the approval of the Board in the above regard.

. . . .

16. After the completion of the works herein provided for, each Railroad agrees to maintain, repair and renew at its own expense, all parts of its bridge structures, track structures, retaining walls, piers, abutments and wingwells, within the lines of its right-of-way; . . . .

The City emphasizes that paragraph 14 fails to use the modifier "new" to describe the "design and construction" of the bridges, and thus should be read to encompass all construction pertaining to the railroad bridges, and not solely new design or new construction, as Conrail submits. We disagree. Although the City argues otherwise, we do not believe that Conrail's participation in a beautification project and any attendant bridge improvement at all concerns design or construction, as provided for in paragraph 14. By the parties' own admissions, when the Agreement was entered into in 1927, the bridges in question had not yet been constructed. Thus, properly viewed in this context, paragraph 14 would seem to govern the procedures ex ante by which the parties were to design and construct the bridges. Paragraph 16, by contrast, as evidenced by its use of the phrase "[a]fter the completion of the works herein provided for," sets forth the duties of the railroads with respect to the bridges once constructed. We thus turn our attention to paragraph 16, which presents us with the core issue of contention, i.e., whether its use of the phrase "maintain, repair and renew" indicates a clear intention of the contracting parties to require Conrail to participate in a cosmetic improvement program that was not expressly contemplated at the time that the parties entered into the Agreement.

If the words "maintain, repair and...