Fox River Valley R.R. Corp. v. Escanaba and Lake Superior R. Co.
| Decision Date | 01 November 1994 |
| Docket Number | No. 93-2354,93-2354 |
| Citation | 189 Wis.2d 490,527 N.W.2d 398 |
| Parties | NOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES. FOX RIVER VALLEY RAILROAD CORPORATION, a Wisconsin Corporation, Plaintiff-Respondent, v. ESCANABA AND LAKE SUPERIOR RAILROAD CO., a Michigan Corporation, Defendant-Appellant, Fox Valley & Western Ltd., an Illinois Corporation, Intervenor. |
| Court | Wisconsin Court of Appeals |
Before CANE, P.J., and LaROCQUE and MYSE, JJ.
CANE.
Escanaba and Lake Superior Railroad Company (Escanaba) was enjoined from obstructing use by Fox River Valley Railroad Corporation (Fox River) of a track crossing the Village of Howard Industrial Park (Industrial Park). Escanaba barricaded the entrance to the Industrial Park in order to prohibit Fox River from entering and using the trackage. The trial court held that Fox River had the right to use the track to serve customers in the Industrial Park as an assignee of the Chicago & North Western Transportation Company (CNW) because of a written contract entered into between Escanaba, CNW and the Village of Howard. Escanaba appeals the judgment and injunction. Because we conclude that CNW and consequently Fox River had trackage rights to the Industrial Park, we affirm the trial court's permanent injunction against Escanaba.
Escanaba is a small railroad, whose operations include the transportation of forest products from Michigan's Upper Peninsula to Green Bay. CNW is also a railroad, which entered into an agreement with Escanaba and the Village of Howard for the construction and use of industrial park trackage. The Village of Howard is directly northwest and adjacent to Green Bay. Fox River was assigned CNW's assets, which include the Construction Agreement, Car Refund Allowance Agreement and Switching Agreement at issue in this case. Although Fox River is the respondent on appeal, at the time of trial it was no longer a business entity, having committed to sell its assets to Fox Valley & Western (Fox Valley). Fox Valley is a Wisconsin Central subsidiary and intervenor in this case.
John Larkin is the president and owner of Escanaba, and Edward Burkhardt, who was a former CNW vice-president, is president of Wisconsin Central and its subsidiary, Fox Valley. While employed at CNW, Burkhardt negotiated three agreements with Larkin: (1) the Construction Agreement, (2) the Car Refund Allowance and (3) the Switching Agreement. The interpretation of these agreements is at issue on appeal.
In November 1985, Escanaba, CNW and the Village of Howard entered into a Construction Agreement to build new rail trackage in the Village of Howard Industrial Park. There was trackage, including trackage CNW owned, already in existence in the Industrial Park before the Construction Agreement was entered into. As part of the Construction Agreement, the parties contracted that any customer that located in the Industrial Park and required rail service could be served with direct access by either CNW or Escanaba. The parties also agreed that ownership of the trackage would not determine which railroad served the customer.
Escanaba and CNW also entered into a Car Refund Allowance Agreement, whereby CNW agreed to pay Escanaba's Village of Howard escrow account $40 per car for each loaded car interchanged by CNW to Escanaba or interchanged by Escanaba to CNW at Green Bay. CNW's obligation to make these payments ended once the Village had been repaid the sum it advanced for the construction under the Construction Agreement. Furthermore, a Switching Agreement was agreed upon in which CNW assented to perform switching services for Escanaba at Green Bay. Thus, these three contracts enabled the Village of Howard to offer two competing railroads from which the industrial tenants could choose railroad service.
In 1988, CNW and Fox River entered into an Asset Purchase Agreement by which Fox River purchased certain assets from CNW. As part of the asset purchase, Fox River agreed to assume all obligations under the Construction Agreement, the Car Refund Allowance Agreement and Switching Agreement.
Fox River's assignment left it separated by 1.7 miles of the CNW track to the entrance to the Industrial Park, which it is entitled to under the terms of the Construction Agreement. The separation was not intentional, but an oversight or error. Therefore, Fox River had to negotiate a route to access the Industrial Park. Fox River had two routes available to get railway cars to the Industrial Park and pursued discussions with both Escanaba and CNW to gain access via one of these routes.
In December 1992, Fox River entered into a Trackage/Access Rights and Switching Agreement with CNW, which provided Fox River with the right to operate on and over the 1.7 miles of rail line located outside of the Industrial Park in the Village of Howard. This transaction was exempt from Interstate Commerce Commission (ICC) jurisdiction, and Fox River notified the ICC of such in accordance with the appropriate federal regulation. The granting of this right was intended to enable Fox River to serve the new GenCorp Polymers (GenCorp) plant located in the Industrial Park.
In January 1993, Fox River sought direct access to the Industrial Park while delivering materials to GenCorp. Escanaba responded by blocking Fox River's access to the Industrial Park track and advised Fox River that it would need to get a court order to gain access. Thus, Fox River commenced this action and initially the circuit court granted a temporary restraining order (TRO) and preliminary injunction on grounds that Escanaba denied Fox River access to the Industrial Park in contravention of the Construction Agreement.
Escanaba obeyed the TRO and injunction, allowing Fox River to enter the Industrial Park to serve GenCorp. However, in June 1993, Escanaba sent Fox River a letter stating that it was terminating the Construction Agreement. Thus, Escanaba intended to block Fox Rivers' entry into the Industrial Park indefinitely, unless a permanent injunction was entered. The case was tried to the court without a jury, and the court permanently enjoined Escanaba from obstructing Fox River's use of the track. Escanaba appeals the judgment and injunction.
The issues on appeal include whether: (1) the state court lacks jurisdiction because federal law vests jurisdiction exclusively in the ICC; (2) the Construction Agreement was illegal because it did not have ICC approval; (3) the trial court misinterpreted the Construction Agreement; (4) CNW had the right to assign the Construction Agreement to Fox River; (5) the trial court imposed a vague and indefinite contract on the parties; (6) Fox River experienced irreparable injury from Escanaba's actions, making the injunction an improper remedy; and (7) the controversy is moot because of Fox River's assignment to Fox Valley. 1
Escanaba contends that the trial court lacked jurisdiction to resolve this dispute because federal law implicates that the jurisdiction is exclusively the ICC's. Escanaba contends that under 49 U.S.C.A. § 11343, the acquisition by a railroad of trackage rights over the line owned by another railroad needs ICC approval. Section 11343 pertains to consolidation, merger and acquisition or control, relating to transactions between carriers that transfer property rights. Title 49 U.S.C.A. § 10901 authorizes the construction and operation of railroad lines, such as the arrangement in the Construction Agreement at issue. Nonetheless, whether §§ 11343 or 10901 applies, both situations involve exceptions under 49 U.S.C.A. § 10907.
Thus, the pertinent section of the code is 49 U.S.C.A. § 10907, which states in part:
(a) Notwithstanding sections 10901 and 10902 and subchapter III of chapter 113 of this title, and without the approval of the Interstate Commerce Commission, a rail carrier providing transportation subject to the jurisdiction of the Commission under subchapter I of chapter 105 of this title may enter into arrangements for the joint ownership or joint use of spur, industrial, team, switching, or side tracks.
(b) The Commission does not have authority under sections 10901-10906 of this title over-
(1) the construction, acquisition, operation, abandonment, or discontinuance of spur, industrial, team, switching, or side tracks if the tracks are located, or intended to be located, entirely in one State....
Section 11343 is in subchapter III of ch. 113 of Title 49 U.S.C.A., which is expressly excepted under § 10907(a). Section 10901 is explicitly excepted under subsec. (a) as well. Thus, § 10907 carves out exceptions depriving the ICC of jurisdiction in cases falling under either § 11343 or § 10901.
Accordingly, the appropriate analysis in determining ICC jurisdiction is whether the trackage in question falls under 49 U.S.C.A. § 10907(b). Therefore, a determination must be made as to whether the trackage is a main railroad line or extension, subject to ICC jurisdiction; or a spur, industrial, team, switching or side track, exempt from ICC jurisdiction. The trial court found that there was ample evidence that the Industrial Park track in question was a switching and industrial track, and thus outside the jurisdiction of the ICC. We agree with the trial court that the uses fall under the exceptions carved out in § 10907. Therefore, the trial court did have jurisdiction to adjudicate this dispute.
"Whether a particular stretch of rail is a line of railroad, or is an extended line of railroad or is a spur, industrial, team, switching or side track, is a mixed question of law and fact to be determined judicially rather than administratively." New Orleans Terminal Co. v. Spencer, 366 F.2d 160, 164 (5th Cir.1966). In questions of mixed law and fact, we will only reverse the trial court's factual findings if they are clearly erroneous or against...
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