Pcs Phosphate Co., Inc. v. Norfolk Southern Corp.
| Decision Date | 28 September 2007 |
| Docket Number | No. 4:05-CV-55-D.,4:05-CV-55-D. |
| Citation | 520 F.Supp.2d 705 |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | PCS PHOSPHATE COMPANY, INC., Plaintiff, v. NORFOLK SOUTHERN CORPORATION and Norfolk Southern Railway Company, Defendants. |
Charles E. Raynal, IV, Roy B. Thompson, II, Parker, Poe, Adams & Bernstein, LLP, Raleigh, NC, for Plaintiff.
John S. Byrd, II, Odes L. Stroupe, Jr., Bode, Call & Stroupe, Raleigh, NC, for Defendants.
PCS Phosphate Company, Inc. ("PCS" or "plaintiff") filed suit against Norfolk Southern Corporation ("NSC") and Norfolk Southern Railway Company ("NSRC") (collectively "defendants") for breach of contract, breach of easement covenants, unjust enrichment, and unfair and deceptive trade practices. Plaintiff alleges that defendants are obligated under deeds of easement negotiated in 1965 and 1966 to relocate at their expense a portion of their rail lines on plaintiffs property. NSC filed an amended motion to dismiss for lack of personal jurisdiction, and plaintiff and NSRC filed cross motions for summary judgment. As explained below, the court denies NSC's amended motion to dismiss, grants plaintiffs motion for summary judgment on its breach of contract and breach of easement covenants claims, and grants NSRC's motion for summary judgment on the unjust enrichment and unfair and deceptive trade practices claims.
Plaintiff owns and operates a phosphate mining and processing plant on 70,000 acres near Aurora, North Carolina ("Aurora facility"). Compl. ¶ 9. The Aurora facility was constructed in the 1960s by two companies — Texas Gulf Sulphur Company ("TGSC") and North Carolina Phosphate Corporation ("NCPC"). These two companies merged in 1985 and became what is now PCS. Id. ¶ 10. PCS is a successor in interest to TGSC and NCPC. See Answer ¶ 10.
Since its creation, the Aurora facility has relied on rail access for the receipt of raw materials and the shipment of its products. Compl. ¶ 13. On October 30, 1963, NSRC's predecessor by the same name — Norfolk Southern Railway Company — applied to the United States Interstate Commerce Commission ("ICC") to construct and operate a rail line in Beaufort County, North Carolina to serve the Aurora facility. See Answer ¶ 4; Pl.'s Mot. for Summ. J., Ex. 3 at 2 (ICC Report, Certificate, and Order). On October 30, 1964, the ICC approved the application. Pl.'s Mot. for Summ. J., Ex. 3 at 30.
After obtaining approval from the ICC, Norfolk Southern Railway Company negotiated five deeds of easement to construct a rail line between Phosphate Junction and Lee Creek ("Lee Creek rail line"), the location of the Aurora facility. Compl. ¶¶ 18, 15-16. On June 29, 1965, NCPC and the Weyerhaeuser Company ("Weyerhaeuser") granted to Norfolk Southern Railway Company two deeds of easement across property owned by NCPC and Weyerhaeuser. Pl.'s Mot. for Summ. J., Exs. 4, 5 (deeds of easement). NCPC and Weyerhaeuser granted the easement "for so long as said right of way and easement shall be used for railroad purposes and shall not be abandoned or relocated." Id. at 2. The parties also agreed to certain conditions:
(1) If, after ten (10) years from the date of this instrument, either Grantor determines that all or any part of said right of way and easement interferes with its anticipated mining or processing operations in the Beaufort County, North Carolina area, then said Grantor shall notify Grantee in writing of its desire that the right of way and track be moved, specifying in said notice the date on which it requires said track to be relocated which date shall not be less than one year from the date of said notice and designating in the notice a new location for the right of way and relocation of the said track, and Grantors shall provide Grantee with a right of way and easement over said new location and Grantee at its expense shall relocate the said track on the said new right of way; provided, however, that the new location for the right of way and relocation of said track shall be determined by engineering representatives of Grantors and Grantee and shall be over such land as will provide a track subgrade elevation between elevation nine feet and thirteen feet above mean sea level, and be such land as will avoid excessive curvature, grade and distances for the relocated track....
(3) That if this easement or right of way be relocated or if the Grantee shall abandon the aforesaid land or right of way for railroad purposes and cease to use the same for such purposes, the Grantors and their respective successors and assigns shall be seized of their former estates therein and the aforesaid right of way and easement shall cease and determine. If a railroad track is placed on the right of way and easement and later removed and not replaced within one year, this shall be conclusively presumed to constitute an abandonment.
Id. at 2-3 (emphasis added). On October 12, 1965, Fred R. Alfred, Betty A. Alfred, and TGSC granted a similar deed of easement to Norfolk Southern Railway Company. Id., Ex. 6. Likewise, TGSC granted two nearly identical deeds of easement to Norfolk Southern Railway Company on April 15, 1966, and May 3, 1966. Id, Exs. 7, 8.
The Norfolk Southern Railway Company constructed the Lee Creek rail line pursuant to the deeds of easement, and its successors in interest, including the modern NSRC, provided continuous rail service to the Aurora facility from 1966 to the present. See Compl. ¶ 15; Answer ¶ 4. NSRC is a wholly owned subsidiary of NSC. Answer ¶ 3. Since 1977, a competitor railroad, CSX Transportation, Inc. and its predecessors ("CSX Transportation"), also has provided rail service over the Lee Creek rail line to the Aurora facility. Id. ¶ 13; NSRC's Am. Mem. in Resp. to Pl.'s Mot. for Summ. J. 4. CSX is not a party to the 1965-66 deeds of easement. Id.
According to plaintiff, it has contemplated mining phosphate reserves located below the Lee Creek rail line since at least 1981. Compl. ¶ 25. By 1999, plaintiff conducted preliminary studies that concluded that the Lee Creek rail line would interfere with mining operations at the Aurora facility if the line was not relocated by mid-2007. Id. ¶ 27. In 2001, plaintiff developed a final relocation proposal based on its own engineering study. Id. ¶ 28. Plaintiff claims it conferred with defendants in developing its proposal, but defendants contend they did not discuss relocation with plaintiff until 2002. See id.; Answer ¶ 28. On November 30, 2003, plaintiff formally notified "Norfolk Southern pursuant to the Relocation Agreements of its desire that the railroad track and right of way be moved" to the locations it identified in its engineering study. Compl., Attach. F at 2. Plaintiff stated that the "relocation must be initialized by mid-year 2005 and completed no later than mid-year 2007." Id. Defendants refused to relocate the track. See, e.g., NSRC's Mem. in Supp. of Mot. for Summ. J., Exs. K, L, & M. Plaintiff claims it was, therefore, "forced to mitigate damages by relocating a portion of the Lee Creek Rail Line at its own expense and to seek damages from the Defendants resulting from the Defendants' breach." Compl. ¶ 43.
On May 6, 2005, plaintiff filed this action, seeking in excess of $12.1 million on its breach of contract, breach of easement covenants, and unjust enrichment claims. Plaintiff also seeks treble damages pursuant to North Carolina's Unfair and Deceptive Trade Practices Act ("UDTPA"), N.C. Gen.Stat. §§ 75-1.1 et seq.
On November 17, 2005, NSRC filed an application with the Surface Transportation Board ("STB") for permission to abandon the Lee Creek rail line. Pl.'s Mem. in Opp. to NSRC's Mot. for Summ. J., Ex. 22 at 1 (STB Decision). On December 7, 2005, the STB rejected NSRC's application as premature in light of this action and "substantially incomplete and defective" for its failure to detail the proposed abandonment's impact on CSX's operations and the environment. Id. at 2-3.
NSC filed an amended motion to dismiss for lack of personal jurisdiction, or alternatively for summary judgment. Plaintiff and NSCR filed cross motions for summary judgment.
Initially, the court considers NSC's amended motion to dismiss for lack of personal jurisdiction. The court does not have personal jurisdiction over a nonresident defendant unless jurisdiction is consistent with the forum state's long-arm statute and with due process. See, e.g., Mitrano v. Hawes, 377 F.3d 402, 406 (4th Cir.2004). North Carolina's long-arm statute is construed to reach the limits of constitutional due process. Christian Sci. Bd. of Dirs. of First Church of Christ, Scientist v. Nolan, 259 F.3d 209, 215 (4th Cir.2001). Thus, the statutory inquiry merges into the constitutional inquiry, i.e., whether haling NSC before this court violates due process. See id.
Due process requires a defendant to have "certain minimum contacts" with the forum state "such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). The extent of the contacts needed for jurisdiction turns on whether the claims asserted against a defendant relate to or arise out of the defendant's contacts with the forum state. See ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 712 (4th Cir.2002). If the defendant's contacts with the state are the basis for the suit, specific jurisdiction may exist. Id. In determining specific jurisdiction, the court considers "(1) the extent to which the defendant purposefully avai[ed] itself of the privilege of conducting activities in the State; (2) whether the plaintiffs claims arise out of those...
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