Adrian & Blissfield R. Co. v. Village of Blissfield

Decision Date18 December 2008
Docket NumberNo. 07-1664.,07-1664.
Citation550 F.3d 533
PartiesADRIAN & BLISSFIELD RAILROAD COMPANY, Plaintiff-Appellee, v. VILLAGE OF BLISSFIELD, Defendant-Appellant.
CourtU.S. Court of Appeals — Sixth Circuit

Michael M. Wachsberg, Pedersen, Keenan, King, Wachsberg & Andrzejak, Commerce Township, Michigan, for Appellant. Charles E. Kovsky, Charles E. Kovsky Assoc., Livonia, Michigan, for Appellee.

ON BRIEF:

Michael M. Wachsberg, Pedersen, Keenan, King, Wachsberg & Andrzejak, Commerce Township, Michigan, for Appellant. Charles E. Kovsky, Charles E. Kovsky Assoc., Livonia, Michigan, David E. Sims, Finkel, Whitefield, Selik, Farmington Hills, Michigan, for Appellee.

Before MOORE and CLAY, Circuit Judges; SCHWARZER, District Judge.*

OPINION

KAREN NELSON MOORE, Circuit Judge.

The Village of Blissfield ("the Village") appeals the judgment of the district court granting declaratory relief to Adrian & Blissfield Railroad Company ("the Railroad"). After a bench trial, the district court held that the Interstate Commerce Commission Termination Act ("Termination Act" or "ICCTA") of 1995, 49 U.S.C. §§ 10101-16106, preempted a Michigan statute requiring the Railroad to pay for pedestrian crossings installed by the Village across the Railroad's tracks and sidewalks near the Railroad's property. For the following reasons, we REVERSE the judgment of the district court and REMAND for further proceedings consistent with this opinion.

I. BACKGROUND

Adrian & Blissfield Railroad Company is a short-line railroad based in Lenawee County, Michigan. The Railroad owns approximately 2.5 miles of track that run through the Village, and, although the Railroad does "not cross state lines[,] ... the traffic that originates or terminates on [the] railroad crosses state lines." J.A. at 110 (Dobronski Test. at 17:12-14). The Railroad also has a small depot in the Village, located on U.S. 223.

The Village Administrator, James Wonacott, testified that in 2003 and 2004 the Village implemented a sidewalk-construction program pursuant to Mich. Comp. Laws § 462.309(6). The 2003 project derived from the Village's concern that "without the benefit of a sidewalk or dedicated pedestrian way, [pedestrians] would have to cross [US] 223 at a street intersection and a rail grade crossing and a drainage ditch." J.A. at 174 (Wonacott Test. at 156:16-18). Apparently, owing to the previous Railroad president's failure to transfer records, the Railroad's president, Mark Dobronski, did not become aware of the correspondence from the Village regarding the sidewalk project until he received a letter from the Village Attorney, Frank Riley, in August 2003. The letter stated that, if the Railroad failed to complete the sidewalk, the Village would complete the construction and bill the Railroad. Dobronski testified that he responded with a letter stating that he thought the Federal Railway Safety Act ("FRSA") preempted the Village's actions.

Dobronski met with town officials in mid-September. After talking with the engineer for the project, Dobronski became concerned "because he didn't seem to know much of anything about what the railroad standards or the specifications were." J.A. at 123 (Dobronski Test. at 34:8-10). Despite these discussions, the Village installed the sidewalk without the Railroad's consent "between November and December 2003." J.A. at 79 (Mem. Op. at 4). "The sidewalk constructed along U.S. 223 is within the right-of-way of the Michigan Department of Transportation ("MDOT") and abuts real property owned by [the Railroad] on which" the train depot is situated. J.A. at 79 (Mem. Op. at 4). Additionally, "[a] portion of the constructed sidewalks near where [the Railroad's] tracks cross U.S. 223 several hundred feet east of the depot is outside the MDOT right-of-way and is on [the Railroad's] property." Id.

The Village's 2004 sidewalk project involved installing a new walkway across the Railroad's tracks and repairing two existing walkways. On August 13, 2004, the Village sent a letter to the Railroad stating that, because the Railroad had not responded, the Village would once again contract out the sidewalk work and bill the Railroad unless the Railroad completed the work by September 17, 2004. As in 2003, when the Railroad did not proceed with construction, the Village did. On September 20, 2004, Dobronski was alerted that one of the Railroad's engineers had to conduct an emergency stop because a gravel truck used in the construction was parked across the tracks. Dobronski immediately visited the area and observed construction taking place. Dobronski testified that he was "in utter disbelief seeing a bulldozer going down bumping into my rail, chopping up ties, doing damage to the railroad infrastructure." J.A. at 137 (Dobronski Test. at 55:7-9). After this incident, Dobronski sent a "cease and desist" letter to the Village. J.A. at 80 (Mem. Op. at 5). In December 2004, the Village completed work on the walkways across the tracks.

The district court found that the sidewalks constructed by the Village "have not benefitted [the Railroad] in any material respect." J.A. at 82 (Mem. Op. at 7). In fact, the district court found that the sidewalk construction was "detrimental" to the Railroad because it "potentially increas[ed] its premises liability, and thereby has affected negatively the value of [the Railroad's] operations." J.A. at 83 (Mem. Op. at 8). There currently is a lien against the Railroad's property as a result of its failure to pay the assessments for the construction. At the time of the trial in November 2006, the district court found that the lien amount exceeded $22,000. The district court found that the sidewalk construction constituted a "financial burden on [the Railroad] and divert[ed] money which could be spent on other matters," particularly given that the Railroad had lost money since 2002. J.A. at 83 (Mem. Op. at 8). Finally, the district court found that the Railroad did not pay property taxes to the Village for property that it owns within Village limits.

On January 10, 2006, the Railroad filed a complaint in the United States District Court for the Eastern District of Michigan seeking declaratory relief. The Railroad requested a declaratory judgment that the Village may not impose its rules and regulations against [the Railroad] for safety matters occurring on or about [the Railroad's] property and right of way, in particular, requiring [the Railroad] to construct roadways, grade level crossings; and assessing against [the Railroad] and its property a fee for construction of walkways along and upon the [the Railroad's] property and right of way.

J.A. at 9 (Complaint). The Railroad also sought a declaratory judgment "that the lien filed by [the Village] against [the Railroad's] property for construction of walkways [was] invalid." J.A. at 9 (Complaint). The Railroad claimed money damages incurred during the Village's construction, but this claim was dismissed without prejudice on April 27, 2006, pursuant to the parties' stipulation.

The district court denied the Railroad's motion for summary judgment on October 25, 2006. At that time, the district court noted that "although the preemptive effect of the ICCTA appears to have evolved into Plaintiff's primary argument, both parties ... focused their briefing [for the motion for summary judgment] more on the FRSA than on the ICCTA," and the district court requested additional briefing on the ICCTA prior to trial. J.A. at 40 (Op. & Order Den. Pl.'s Mot. for Summ. J. at 16 n. 14). The district court held a bench trial on November 27, 2006, and, on April 30, 2007, the district court issued a written opinion entering judgment in favor of the Railroad. The Village filed a timely appeal. The Railroad cross-appealed, but later voluntarily withdrew its cross-appeal.

II. ANALYSIS

We must decide whether the district court erred in finding that the Termination Act, also known as the ICCTA, preempts Mich. Comp. Laws § 462.309, which requires the Railroad to pay for the installation and upkeep of sidewalks that abut and cross Railroad property.1

A. Jurisdiction and Standard of Review

The district court's subject-matter jurisdiction in this case is based on the federal-question statute, 28 U.S.C. § 1331. We have appellate jurisdiction over the final decision in the case pursuant to 28 U.S.C. § 1291.

We review de novo district-court determinations of federal preemption. Nye v. CSX Transp. Inc., 437 F.3d 556, 560 (6th Cir.2006). "In considering a district court's decision following a bench trial, we review for clear error the district court's findings of fact." Anderson v. Int'l Union, United Plant Guard Workers of Am., 370 F.3d 542, 550 (6th Cir.2004) (internal quotation marks omitted). "[T]he findings are not clearly erroneous unless the reviewing court, on the entire evidence, is left with a definite and firm conviction that a mistake was committed; and the burden is upon appellant to show such a mistake." J.A. Jones Constr. Co. v. Englert Eng'g Co., 438 F.2d 3, 5 (6th Cir.1971) (internal quotation marks omitted).2

B. Termination-Act Preemption

The district court held that the Termination Act preempted the Michigan statute requiring the Railroad to pay for both pedestrian crossings installed across the Railroad's tracks and sidewalks near and on the Railroad's property. The district court analyzed the preemption provisions of the Termination Act and determined that "the construction or repair of all of the sidewalks in this case constitutes construction of `facilities' under 49 U.S.C. § 10501(2), and thus falls within the exclusive jurisdiction of the STB." J.A. at 96 (Mem. Op. at 21). It held that the "ICCTA preempts not only an attempt to require a railroad to construct facilities, but also an attempt to require a railroad to pay for that construction." Id. In addition, the district court held that the statute imposed "an unbudgeted...

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