International Paper v. Mci Worldcom Network

• Decision Date: 01 May 2002
• Docket Number: No. CIV.00-6202.,CIV.00-6202.
• Citation: 202 F.Supp.2d 895
• Parties: INTERNATIONAL PAPER COMPANY Plaintiff v. MCI WORLDCOM NETWORK SERVICES, INC. Defendant
• Court: U.S. District Court — Western District of Arkansas

202 F.Supp.2d 895

INTERNATIONAL PAPER COMPANY Plaintiff v. MCI WORLDCOM NETWORK SERVICES, INC. Defendant

No. CIV.00-6202.

United States District Court, W.D. Arkansas, Hot Springs Division.

May 1, 2002.

COPYRIGHT MATERIAL OMITTED

Sherry P. Bartley and Leigh Anne Shults, Mitchell, Williams, Selig, Gates & Woodyard, Little Rock, for Plaintiff or Petitioner.

Kevin A. Crass and Jay T. Taylor, Friday, Eldredge & Clark, Little Rock, David A. Handzo and J. Alex Ward, Jenner & Block, LLC, Washington, D.C., for Defendant or Respondent.

OPINION AND ORDER

DAWSON, District Judge.

On this 1st day of May 2002, there comes on for consideration the motion for summary judgment filed by defendant MCI Worldcom Network Services, Inc. (MCI) on December 11, 2001. (Doc. # 13). The questions presented by the motion require this court to apply centuries-old real property principles to resolve a dispute involving modern technology. In 1987 and 1988, MCI installed fiber optic cables within a railroad right-of-way held by Union Pacific Railroad Company, successor in interest to Missouri Pacific Railroad (the railroad). The railroad right-of-way runs through property owned in fee by the plaintiff, International Paper Company (IPC). The installation of the fiber optic cable was completed by agreement with the railroad; however, MCI did not obtain the consent of, nor did it compensate, IPC, the owner of the underlying interest. Plaintiff IPC filed this litigation alleging trespass, unjust enrichment, and slander of title seeking declaratory and injunctive relief, an accounting, compensatory and punitive damages, and attorneys' fees and costs. MCI moves for summary judgment on the grounds that the claims are barred by the applicable statute of limitations, and also because it was not necessary to obtain any authorization from IPC to install the cable within the railroad right-of-way. For the reasons set forth within this memorandum, the motion for summary judgment will be granted and this case will be dismissed.

Factual Background

The facts are not substantially in dispute. At some point within the past century (and perhaps even further in the past), the railroad acquired for its use a right-of-way corridor running through the land currently owned in fee by IPC in Hot Spring and Clark Counties, Arkansas. The record before the court does not disclose whether the railroad rights-of-way were acquired by private deed, public grant, condemnation, or otherwise, and it is unknown with regard to each specific tract or segment of land whether the railroad owns the right-of-way in fee or whether the railroad's interest is something less. IPC acquired its interest in the tracts of land between 1941 and 1975, and the titles to IPC's tracts are subject to the railroad rights-of-way.¹ Pl.'s Exs. Resp. Mot. Summ. J. Exs. 3-16.

In the early 1980's, after the long distance communication market was opened to competitors of AT & T, various telecommunications companies, both large and small, began exploring the feasibility of developing their own long-distance communications networks. Most of these companies focused on the use of fiber-optic cable as the preferred technology on which to base their new systems, finding that fiber-optics offered performance advantages over satellite or microwave transmission technologies. After establishing that the fiber-optic technology could be acquired and utilized on a cost efficient basis, telecommunications companies began searching for a means to acquire rights-of-way for installing the cable. Historically, railway and telegraph companies often formed symbiotic alliances because of the numerous benefits the arrangement afforded to both industries. Many of the same benefits enjoyed by the telegraph companies by association with the railroads, including availability of the rights-of-way, routing considerations, relative ease of acquisition, security, accessability, and safety, were found to be of equal or greater value to modern long distance companies, and it was determined that fiber-optic cables would be placed within railroad rights-of-way. As one study concluded, "Railroad rights-of-way provided the foundation for the earliest nation-wide telecommunications service, the telegraph; so why not the latest?" Dale Hatfield & Roland S. Homet, Jr., The Use of Sale of Railroad Rights-of-way for Fiber-Optic Communications, Phase One at 14 (March 15, 1983)(unpublished manuscript, on file with the Association of American Railroads Library). Pl.'s Resp. Mot. Summ. J. Ex. 1.

In 1984, MCI² entered into a survey agreement with the railroad which gave MCI the right to determine the feasibility of and to prepare and submit construction plans for a fiber-optic system to be placed within the railroad's rights-of-way. In 1985, MCI and the railroad entered into a master agreement which allowed MCI to proceed with the installation of fiber optic cable within the rights-of-way. The master agreement was amended by addendum in 1987 to permit the laying of cable within the railroad right-of-way running between Longview, Texas and Memphis, Tennessee, which corridor includes the lands now owned by IPC in Hot Spring and Clark Counties. The 1985 master agreement and the 1987 addendum were superseded by an amended master agreement in 1989. The perpetual easements granted to MCI by the railroad provide in part that the "grants are made without covenant of title or for quiet enjoyment and without warranty of title express or implied, and are subject and subordinate to outstanding or superior rights." Def.'s Mot. Summ. J. Ex. 10. There is no indication that MCI investigated the nature or quality of the railroad's property interests in the rights-of-way. Pl.'s Resp. Mot. Summ. J. Ex. 17 at 44-45.

MCI installed the fiber optic cables within the railroad right-of-way running across IPC's property in 1987 and 1988. Conspicuous, above-ground marker posts were installed at regular intervals along the cable route to warn of the cable's presence below ground. Def's Mot. Summ. J. Exs. 6 & 7.

Pursuant to the agreements, the railroad is entitled to use and does use a portion of the fiber-optic system buried beneath its tracks for its own railroad information and communications systems, although the exact uses have not been disclosed. Def.'s Mot. Summ. J. Ex. 2; Pl.'s Resp. Mot. Summ. J. Ex. 19 at 28-29. The railroad has averred that the right-of-way in Clark and Hot Spring Counties has been and is actively used as a railroad line. Def.'s Mot. Summ. J. Ex. 9 at ¶ 6.

MCI did not obtain the consent of IPC and did not compensate it for the installation of the fiber optic cable. However, by an agreement dated March 30, 1995, IP Timberlands Operating Company, Ltd., conveyed to MCI a temporary easement allowing MCI:

to enter and re-enter a portion of [IP's] road for the purpose of accessing the railroad right-of-way to facilitate the relocation of [MCI's] fiber optic cable telecommunications system, including the right to park vehicles on [IP's] road.

Id. Ex. 12.³ IP Timberlands Operating Company, Ltd. is a limited partnership that manages some if not most of IPC's timber resources. Id. Ex. 14. It appears that an officer of International Paper signed the temporary easement on behalf of IP Timberlands Operating Company. Id. Ex. 12.

IPC instituted this litigation on November 1, 2000. Jurisdiction is proper under the diversity statute, 28 U.S.C. § 1332.

The Summary Judgment Standard

The court should grant summary judgment "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). A fact is material only when its resolution affects the outcome of the case. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A dispute is genuine if the evidence is such that it could cause a reasonable jury to return a verdict for either party. Id. at 252, 106 S.Ct. at 2512. The court views the evidence in favor of the nonmoving party, giving that party the benefit of all justifiable inferences that can be drawn in its favor. If reasonable minds could differ as to the import of the evidence, judgment should not be granted. Id. at 250-51, 106 S.Ct. at 2511-12. However, the nonmoving party must set forth specific facts, by affidavit or otherwise, sufficient to raise a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); See also Matsushita Elec. Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (opponent must do more than simply show that there is some metaphysical doubt as to the material facts).

The Railroad Rights-of-Way

The question is whether the railroad's interest in the right-of-way traversing the land owned by IPC is sufficient to allow the railroad to grant an easement to MCI for the installation of its fiber-optic cable system. Because this is a diversity case, we apply the substantive law of the state of Arkansas to resolve the question. Salve Regina College v. Russell, 499 U.S. 225, 226-227, 111 S.Ct. 1217, 1218, 113 L.Ed.2d 190 (1991); Shelter Ins. Cos. v. Hildreth, 255 F.3d 921, 925 (8th Cir.2001). A federal court is required to follow the announced state law in a diversity action "unless there are very persuasive grounds for believing that the state's highest court no longer would adhere to [it]." 19 Charles Alan Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure § 4505, at 145-47. (2nd ed.2001). If state law is unsettled, it becomes our duty to predict the rule we believe the Arkansas Supreme Court would follow. Novak v. Navistar Int'l Transp. Corp., 46 F.3d 844, 847 (8th Cir. 1995). We note at the outset that the developed case law concerning railroad...