Cleveland-Cliffs Iron v. Chicago & NW Transp. Co.

• Decision Date: 05 March 1984
• Docket Number: No. M81-68 CA2.,M81-68 CA2.
• Citation: 581 F. Supp. 1144
• Parties: The CLEVELAND-CLIFFS IRON COMPANY, Plaintiff, v. CHICAGO & NORTH WESTERN TRANSPORTATION COMPANY, Defendant.
• Court: U.S. District Court — Western District of Michigan

581 F. Supp. 1144

The CLEVELAND-CLIFFS IRON COMPANY, Plaintiff, v. CHICAGO & NORTH WESTERN TRANSPORTATION COMPANY, Defendant.

No. M81-68 CA2.

United States District Court, W.D. Michigan, N.D.

March 5, 1984.

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Crowell & Moring by Herbert J. Martin, Frederick W. Claybrook, Jr., Mark R. Rosen, Washington, D.C., Warner, Norcross & Judd by William K. Holmes & Joseph G. Scoville, Grand Rapids, Mich., for plaintiff.

Christopher A. Mills, Sr. Commerce Counsel, C & NW, Chicago, Ill., for defendant.

OPINION RE MOTION FOR SUMMARY JUDGMENT

HILLMAN, District Judge.

This is an action for declaratory and injunctive relief, to enforce a rail tariff agreement between a carrier and a shipper and to enjoin the carrier from charging a higher rate, set forth in a supplemental tariff which was filed with the Interstate Commerce Commission (hereinafter "ICC"). Federal jurisdiction exists under 28 U.S.C. § 1332 and 28 U.S.C. § 1331, the federal question arising under Section 208(a)(i)(2) and (j) of the Staggers Rail Act of 1980, 49 U.S.C. § 10713(i)(2) and (j). The case is now before the court on plaintiff's motion for summary judgment. Oral argument on the motion was heard on August 8, 1983.

I.

The shipper, Cleveland-Cliffs Iron Company ("Cleveland-Cliffs") is the owner or long-term lessee of extensive iron rich properties in the Upper Peninsula of Michigan. Cleveland-Cliffs and groups of steel manufacturers have formed three partnerships which are engaged in the business of mining and pelletizing iron ore from the Republic, Tilden and Empire mines in the Marquette Iron Range. Defendant, Chicago & North Western Transportation Company ("C & NW") is a rail carrier, which, in conjunction with the Lake Superior and Ishpeming Railroad, transports iron ore and pellets from these mines to the port of Escanaba, Michigan.

In 1967, the C & NW began construction of a modern highly-mechanized iron ore storage and transfer facility in Escanaba. This new facility became operational in 1969. The facility has a current capacity to handle 10 million tons of ore annually and a potential capacity of 20 million tons.

In March, 1969, plaintiff and defendant entered into two agreements for the transportation of large amounts of ore and pellets to the Escanaba dock facility at bulk prices. The first of these agreements, the Marquette Range Agreement, provides for the shipment of 1.5 million long tons of ore from the Republic and Tilden mines to the C & NW Escanaba dock. The second agreement, the Empire Agreement, provides for the annual shipment of 2.21 million tons of iron ore from the Empire mine to Escanaba. The rates for these shipments were established by a tariff schedule incorporated into the agreements and filed with the ICC. The tariff provides for periodic price increases through an acceleration clause. The minimum life of the agreement extends to April 3, 1984, unless the mines permanently cease ore production. Plaintiff contends that a February, 1969, letter from C & NW to Cleveland-Cliffs transmitting the two agreements ("Braun letter"), contains the proposed terms and conditions binding upon the parties.

Cleveland-Cliffs and C & NW have observed the agreements for 12 years. On March 10, 1981, the carrier sought to increase the rail rate by filing a supplemental tariff with the ICC. On March 25, 1981, the shipper filed a complaint with the ICC asking the Commission to suspend the supplemental tariff before its effective date of April 25, 1981. On April 24, 1981, the ICC issued an order stating its intention to investigate the supplemental tariff, but declining to suspend it. On that same day, and after the ICC decision, the shipper filed the instant action seeking a temporary restraining order, a declaration that its contracts with the carrier were valid and binding, and injunctive relief.

The ICC intervened to support the railroad's position that this court lacked subject matter jurisdiction over rate contracts entered into prior to the effective date of the Staggers Act. The court ruled, however, that under section 208 of the Act, 49 U.S.C. § 10713, it had jurisdiction to decide all questions relating to the 1969 contract, except whether the rate provided for in that contract was confiscatory. The court ruled that the ICC retained exclusive jurisdiction over that question.

On May 27, 1981, the court granted the shipper's request for a preliminary injunction enforcing the contract until either the ICC determined whether the contract was confiscatory, or the court reached a decision on the merits. On the same day, the court denied the carrier's motion to dismiss for lack of subject matter jurisdiction. See generally, Cleveland-Cliffs Iron Company v. Chicago & North Western Transportation Company, 516 F.Supp. 399 (W.D. Mich.1981).

On June 8, 1981, the court certified for immediate appeal to the United States Court of Appeals for the Sixth Circuit, the issue of whether the Staggers Act gives the district court jurisdiction to enforce rate agreements entered into prior to the effective date of the Act, where such contracts were not at issue in an ICC proceeding pending on the effective date of the Act. On March 29, 1982, the Court of Appeals, 701 F.2d 175, upheld this court's ruling on the jurisdictional issue, noting that the contracts at issue are no longer subject to reasonableness review by the ICC, and that jurisdiction to enforce such contracts lies in the courts. See also Cleveland-Cliffs Iron Company v. ICC, 664 F.2d 568 (6th Cir.1982).

On December 23, 1981, the ICC completed its investigation, determining that the C & NW's proposed rates were unlawful, and ordered them cancelled. The Commission ordered that all but one contract rate be enforced, and ordered that a rate be negotiated to replace the rate which was not enforced. C & NW agreed to cancel its proposed rates, thus mooting a major portion of this lawsuit.

However, on June 8, 1981, Cleveland-Cliffs filed a First Amended Complaint. The amended complaint differs from the original complaint in that it contains allegations that C & NW breached the 1969 agreement. It is also alleged that during the 1979 shipping season, C & NW charged Cleveland-Cliffs rates in excess of those contained in the Braun letter. Similar violations are alleged for the 1980 shipping season. As a result of those alleged breaches, Cleveland-Cliffs claims that it was injured in the amount of $240,902 for the 1979 season and $244,312 during the 1980 season.

C & NW then filed a motion to dismiss the amended complaint, 553 F.Supp. 371 (W.D.Mich.1982), arguing that under section 229 of the Staggers Act, this court lacked jurisdiction. This court held that where the railroad rates at issue were in effect on the effective date of the Staggers Act and where the lawfulness of those rates was not challenged in this action, the matter was properly subjected to the jurisdiction of this court. Id. at 375. On July 28, 1983, C & NW filed its Amended Answer, in which it raised nine affirmative defenses, and counterclaimed for damages, declaratory relief and reformation of the Marquette Range and Empire Agreements.

The matter is now before the court on plaintiff's motion for summary judgment. Also before the court is defendant's motion to join Lake Superior and Ishpeming Railroad, a signatory to one of the agreements as a co-defendant, under Rule 19.

II.

On a motion for summary judgment the movant bears the burden of showing conclusively that there is no genuine issue of material fact, and that the moving party is entitled to summary judgment as a matter of law. Smith v. Hudson, 600 F.2d 60 (6th Cir.1979); Tee-Pak, Inc. v. St. Regis Paper Co., 491 F.2d 1193 (6th Cir.1974); Fed.R.Civ.P. 56(a). In determining whether there are issues of fact requiring a trial, "the inferences to be drawn from the underlying facts contained in the affidavits, attached exhibits and depositions must be viewed in the light most favorable to the party opposing the motion." United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962). A court may not resolve disputed questions of fact in a summary judgment decision, and if a disputed question of fact remains, the district court should deny the motion, and proceed to trial. United States v. Articles of Device, 527 F.2d 1008, 1011 (6th Cir. 1976). However, the fact that two parties to a contract may differ on the interpretation of terms in that contract does not, by itself, render summary judgment inappropriate. See Steinmetz Electrical Contractors v. Local Union No. 58, 517 F.Supp. 428, 432 (E.D.Mich.1981). See also Tennessee Consolidated Coal Co. v. United Mine Workers of America, 416 F.2d 1192, 1199 (6th Cir.1969); Freeman v. Continental Gin Co., 381 F.2d 459, 465 (5th Cir.1967). The real issue is not whether the parties disagree on the meaning of terms to the contract, but whether the terms themselves are ambiguous. If the contract terms are not ambiguous, then contradictory inferences which may be drawn are subjective, and irrelevant. Naph-Sol Refining Co. v. Murphy Oil Corp., 550 F.Supp. 297, 301-302 (W.D.Mich.1982), rev'd on other grounds, 728 F.2d 1477 (T.E.C.A.1983). From the complaint and answer, and the briefs and oral argument on this motion, it is readily apparent that the facts leading up to this dispute are not at issue; the disagreement between the parties centers on the legal effect of those facts. At its heart, this is a contract action, concerning the enforceability of an agreement between the two parties, and the defenses raised by C & NW basically argue that the agreements signed by the parties cannot be enforced for a number of reasons. Cleveland-Cliffs, on the other hand, asks the court for a declaratory judgment that there is a valid contract in force between the two parties.

The remedy made available by the Declaratory Judgment Act and Rule 57 is designed to minimize the...