American Rock Salt Co. v. Norfolk Southern Corp.

• Decision Date: 17 September 2001
• Docket Number: No. 00-CV-6534L.,00-CV-6534L.
• Citation: 180 F.Supp.2d 420
• Parties: AMERICAN ROCK SALT COMPANY, LLC, Plaintiff, v. NORFOLK SOUTHERN CORPORATION, Norfolk Southern Railway Company, Defendants.
• Court: U.S. District Court — Western District of New York

180 F.Supp.2d 420

AMERICAN ROCK SALT COMPANY, LLC, Plaintiff, v. NORFOLK SOUTHERN CORPORATION, Norfolk Southern Railway Company, Defendants.

No. 00-CV-6534L.

United States District Court, W.D. New York.

September 17, 2001.

Paul J. Yesawich, III, Harris Beach LLP, Pittsford, NY, for plaintiff.

Robert S. Attardo, Rochester, NY, Paul D. Keenan, George S. Bobnak, Hoyle, Morris & Kerr, LLP, Philadelphia, PA, for defendants.

DECISION AND ORDER

LARIMER, Chief Judge.

Plaintiff, American Rock Salt Company, LLC ("ARSCO"), commenced this action in New York State Supreme Court, Livingston County, on October 13, 2000. Defendants, Norfolk Southern Corporation ("NSC") and Norfolk Southern Railway Company ("NSR"), removed the action to this court, based on diversity jurisdiction under 28 U.S.C. § 1332. Defendants have moved to dismiss the complaint (with the exception of one cause of action against NSR), for failure to state a claim upon which relief can be granted. For the following reasons, defendants' motion is denied.

BACKGROUND

The complaint alleges the following facts, which must be accepted as true for the purposes of defendants' motion to dismiss. Hospital Bldg. Co. v. Trustees of Rex Hosp., 425 U.S. 738, 739, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976).

ARSCO, a limited liability company with its principal place of business in Mount Morris, New York, is engaged in the business of mining, producing, and selling rock salt in the Northeastern United States. ARSCO ships salt, particularly deicing salt, to and from various points in the Northeast. This salt comes both from ARSCO's own salt mines and from other parties from whom ARSCO purchases salt for resale.

Prior to June 1999, ARSCO had a transportation contract with Consolidated Rail Corporation, Inc. ("Conrail"), pursuant to which Conrail agreed to transport ARSCO's products by rail from certain points of origin. In the Spring of 1997, however, Conrail was acquired by NSC and CSX, Inc. NSC is a Virginia corporation that owns NSR, a rail carrier providing rail transportation and distribution services.

NSC and CSX did not actually begin operation of the former Conrail system until June 1, 1999. On that date, NSC and NSR assumed responsibility for providing rail service to ARSCO along former Conrail routes. Accordingly, on June 8, 1999, ARSCO and NSR entered into a contract ("the contract") for the provision of transportation services. NSC was not a signatory to the contract.

The complaint alleges that prior to the execution of the contract, NSC represented both to the Surface Transportation Board ("STB") (which had the authority to approve or deny NSC's acquisition of Conrail's assets) and to ARSCO that NSC would timely integrate Conrail's routes into NSC's existing rail network and that the Conrail acquisition would not cause any disruption of rail service.

Plaintiff alleges that despite these assurances, ARSCO began to experience delays and other service problems in connection with the shipment of its deicing salt on former Conrail lines now being operated by defendants. In some cases, shipments were delayed by as much as six months. The average "turn time," i.e., the time needed to make a round trip between two points, also increased by several weeks compared to when Conrail ran the lines.

Because of these delays, ARSCO incurred expenses attributable to additional days of railroad car rental. ARSCO was also forced to rent trucks to ship its product when rail service was unacceptably delayed. ARSCO also claims to have lost business and profits as a result of its inability to make deliveries on time.

Based upon these allegations, plaintiff asserts three causes of action. The first alleges that defendants have breached the contract by failing to provide services and deliver ARSCO's products in a timely manner. The second cause of action alleges that defendants' failure to provide timely transportation upon reasonable request constitutes a breach of their obligations as a common carrier under 49 U.S.C. §§ 11101(a) and 11121(a)(1). The third cause of action alleges that defendants have failed to deliver ARSCO's goods with reasonable dispatch, in violation of 49 U.S.C. § 14706 and 49 C.F.R. § 1035.1(b)(2). Plaintiff seeks compensatory damages, which are alleged to exceed $700,000, and costs and attorney's fees.

DISCUSSION

I. Motion to Dismiss Claims Against NSC

Defendants contend that all three causes of action must be dismissed as to NSC for the simple reason that NSC is not a party to the contract at issue, and hence cannot have breached any obligation arising by virtue of that contract. Defendants allege that NSC is merely a holding company that does not provide any rail transportation services.

In response, ARSCO concedes that NSC was not a signatory to the contract, but contends that the complaint sufficiently alleges facts that would support a finding that NSC, through its words or conduct, manifested its intent to be bound by the contract.

Defendants do not appear to dispute the general proposition that a non-signatory to a written contract can still, through its own consent, be bound by its terms. That consent can be manifested by both the party's words and its actions.¹ See, e.g., Marefield Meadows, Inc. v. Lorenz, 245 Va. 255, 260, 427 S.E.2d 363 (1993) ("A meeting of the minds is essential to the formation of a contract, but `the law imputes to a person an intention corresponding to the reasonable meaning of his words and acts'") (quoting Lucy v. Zehmer, 196 Va. 493, 503, 84 S.E.2d 516 (1954)); States Roofing Corp. v. Bush Constr. Corp., 15 Va.App. 613, 618, 426 S.E.2d 124 (1993) (conduct of all parties "manifested a clear understanding" that plaintiff, which had purchased subcontractor's assets, had assumed contracts subcontractor's contracts with both general contractor and sub-subcontractor); City of Richmond, Virginia v. Madison Mgmt. Group, Inc., 918 F.2d 438, 451 and n. 11 (4th Cir.1990) (evidence was sufficient to support finding that corporation that had purchased assets of manufacturer "implicitly assumed" manufacturer's liabilities by continuing to work on project in which manufacturer had been engaged; noting that this determination was "necessarily fact-bound").

Defendants, however, maintain that the complaint does not allege sufficient facts to support such a theory in this case. Defendants argue that the facts relied upon by plaintiff to establish that NSC consented to be bound by the terms of the contract (e.g., NSC's alleged participation in the negotiation of the contract) are contained solely in the affidavit of plaintiff's counsel, who lacks personal knowledge of the matters asserted, and must therefore be disregarded. Defendants argue that since the complaint itself makes no allegation that NSC was a party to the contract, the claims against NSC must fail.

It is true that an attorney's affidavit that is not based on personal knowledge carries no weight and may be disregarded. See, e.g., In re Western Dist. Xerox Litigation, 850 F.Supp. 1079, 1088 (W.D.N.Y.1994). Plaintiff, however, is not seeking to present evidence or make new allegations through its attorney's affidavit. The affidavit simply points to various allegations in the complaint that, in plaintiff's view, tend to show that NSC could be found to have consented to be bound by the contract. These include allegations that: NSR is a wholly-owned subsidiary of NSC; NSC owns and controls the railroad lines that NSR operates on its behalf; NSC and NSR assumed responsibility for providing rail service to ARSCO over the former Conrail routes; and NSC made various representations to the STB and to ARSCO concerning the effects of NSC's acquisition of the Conrail routes on the provision of rail service to former Conrail customers, including ARSCO.

In addition, plaintiff has attached a copy of the contract to plaintiff's attorney's affidavit. In an action for breach of contract, the contract itself, as long as its authenticity is not in dispute, is generally to be considered a part of the pleadings, and may be considered on a Rule 12(b)(6) motion. See, e.g., Shaw v. Digital Equip. Corp., 82 F.3d 1194, 1219-20 (1st Cir.1996) (noting that written documents integral to complaint, including contracts, are not considered "matters outside the pleadings" for purposes of Rule 12(b)); Watterson v. Page, 987 F.2d 1, 3-4 (1st Cir.1993) (documents whose authenticity is not disputed by the parties, including official public records, documents central to plaintiff's claim, or documents sufficiently referred to in the complaint, may be treated as part of the pleadings, even though not attached to complaint); Rayburn v. Car Credit Ctr. Corp., No. 00 C 3361, 2000 WL 1508238 *1 n. 1 (N.D.Ill. Oct.10, 2000) (plaintiff "did not attach the contract to her complaint. Nevertheless, the document is considered a part of the pleadings and may be utilized for purposes of a motion to dismiss where, as here, the document is referred to in the plaintiff's complaint and is central to her claim"); Ingeniera y Representaciones Internacionales S.A. v. Stone & Webster Int'l Projects Corp., No. 96 CIV. 7335, 1997 WL 529015 *1 (S.D.N.Y. Aug.25, 1997) ("Although the parties failed to attach the relevant contract to the pleadings, it may still be considered as part of the pleadings").

The contract itself contains some references to NSC. It states that upon request by NSR, ARSCO must certify to NSC that ARSCO has complied with its minimum-volume requirements under the contract. Yesawich Aff. Ex. A § 3. It also provides that all notices and other communications under the contract are to be directed to ARSCO and to NSC, not to NSR. Id. § 11.

In assessing the strength of these allegations, it is important to keep in mind that this is a motion to dismiss, not a motion for summary judgment. On a motion to dismiss for failure to state a claim, the "complaint must be sustained if relief could be granted `under any...