Rail Switching Servs., Inc. v. Marquis-Missouri Terminal, LLC

Citation533 S.W.3d 245
Decision Date07 November 2017
Docket NumberNo. ED 105242,ED 105242
Parties RAIL SWITCHING SERVICES, INC., Appellant, v. MARQUIS-MISSOURI TERMINAL, LLC, Respondent.
CourtCourt of Appeal of Missouri (US)

James R. Jarrow, 2400 Pershing Rd., St 500, Kansas City, MO 64108, Caroline Tinsley, 1010 Market St., Suite 950, St. Louis, MO 63101, for appellant.

Gerard T. Carmody, 120 S. Central, Suite 1800, St. Louis, MO 63105, for respondent.

KURT S. ODENWALD, Judge

Introduction

Rail Switching Services, Inc. ("RSSI") appeals from the trial court's grant of summary judgment in favor of Marquis-Missouri Terminal, LLC ("MMT") on RSSI's claim for tortious-interference. RSSI alleged in its petition that MMT interfered with a contract between RSSI and the Pemiscot County Port Authority ("the Port Authority") granting RSSI exclusive use of the Port Authority's railway. The trial court found that the contract between RSSI and the Port Authority was void ab initio under Section 432.070.1 The trial court then granted summary judgment, holding that, as a matter of law, MMT could not interfere with a void agreement.

On appeal, RSSI raises three points. First, RSSI asserts that summary judgment was improper because material facts remain in dispute on its claim for tortious interference. Second, RSSI claims that the trial court erred, as a matter of law, in holding that Section 432.070 rendered RSSI's contract void, and assuming arguendo, even if the agreement was void, the contract's invalidity did not preclude RSSI from obtaining relief on its claim for tortious interference. Third, RSSI argues that the trial court erroneously relied upon Section 432.070 to find the agreement between RSSI and MMT to be void because Section 432.070 is vague and therefore unconstitutional.

Because the record shows that there are no material facts in dispute, we deny RSSI's first point on appeal, We reject RSSI's second point on appeal because the trial court did not err in finding that the contract between RSSI and the Port Authority was void and that MMT could not interfere with a void contract. Finally, in its third point, we reject RSSI's claim that Section 432.070 is unconstitutional. We affirm the judgment of the trial court.

Factual and Procedural History

The focal point of the present dispute is a five-mile railway owned by the Pemiscot County Port Authority ("the Port Authority Line") that extends from the town of Hayti, Missouri to the Mississippi River. The Port Authority Line connects with a mainline railway owned by the Burlington Northern and Santa Fe Railway Company ("the BNSF Line") in Hayti, Missouri.

In late 2011 or early 2012, RSSI2 began negotiating for an agreement relating to RSSI's use of the Port Authority Line with David Madison ("Madison"), the Executive Director of the Port Authority. The Port Authority had previously entered into agreements with RSSI that allowed RSSI to store railcars owned by third parties on the Port Authority Line.

By March 2012, RSSI and Madison reached an agreement expanding RSSI's activities on the Port Authority Line. The agreement ("the 2012 Operating Agreement") allowed RSSI to continue storing railcars on the Port Authority Line. However, in its "Use and Operation" section, the 2012 Operating Agreement also provided the following:

The [Port Authority] Line shall be used by RSSI operating as a non-common carrier contract switcher under the provisions of the Interstate Commerce Act, as amended. RSSI shall have exclusive use of the [Port Authority] Line for all rail purposes, provided, however, that 1) [the Port] Authority may, to the extent that it does not unreasonably interfere with RSSI's use thereof, continue to extend the [Port Authority] Line using its own forces and resources, and that 2) RSSI does not unreasonably hinder or interfere with the ability of [the Port] Authority to allow customers to ship or receive products or materials on the [Port Authority] Line.... It is understood, that a customer may provide his own means of switching his industry, i.e. a track mobile; but customers will not be allowed to retrieve from or deliver cars to the BNSF.... (emphasis added).

Madison and J. Michael Carr, the President of RSSI, signed the 2012 Operating Agreement. According to its own terms, the 2012 Operating Agreement was set to terminate after February 28, 2014.

A Board of Commissioners ("the Board") governs and administers the Port Authority.3 Although Madison apprised the Board of his negotiations with RSSI and the existence of a new purported agreement, the Board never voted to approve the 2012 Operating Agreement. The Board, as an entity, never signed the 2012 Operating Agreement. Nor did the Board authorize, in writing, Madison to execute the 2012 Operating Agreement. The Board did not create or produce any writing expressly establishing Madison's authority, as the Executive Director of the Port Authority, to execute the 2012 Operating Agreement on the Board's behalf.

In April 2012, Mark Marquis ("Marquis"), the President of MMT, contacted the Port Authority regarding MMT's interest in building an oil-storage facility near Hayti. MMT proposed building its facility along the Port Authority Line, where MMT would extract oil from arriving unit trains and load the oil onto barges for transport on the Mississippi River. Madison believed that MMT could become the Port Authority's most profitable customer.

By May 2012, MMT entered into a five-year Lease Agreement with the Port Authority to lease certain premises near the Port Authority Line. Marquis and Duane Michie ("Michie"), Chairman of the Board of Commissioners, signed the agreement. Pursuant to the Lease Agreement, MMT built a facility near the Port Authority Line, constructed storage tanks, installed 8,000 feet of additional track as rail siding, fitted pipelines for collecting and transferring oil, and connected additional rail switches. MMT spent approximately $15 million on these improvements.

In August 2012, MMT entered into a Railroad Track Usage Agreement with the Port Authority. Marquis and Michie signed and executed the agreement. The Railroad Track Usage Agreement granted MMT non-exclusive track access rights over and across the entire Port Authority Line for the movement of railcars, locomotives, and track mobiles to all points on the Port Authority Line, The Railroad Track Usage Agreement did not require MMT to use RSSI's services, nor did the agreement reference any rights RSSI had regarding the Port Authority Line. MMT planned to receive unit trains of oil, transported by BNSF Co., starting in mid-October 2012.4

When the Port Authority signed the Railroad Track Usage Agreement with MMT, Madison did not believe that MMT's operations violated the terms of the 2012 Operating Agreement. Madison also did not believe that the language in the "Use and Operation" section of the 2012 Operating Agreement required a customer on the Port Authority Line to use RSSI's services. Accordingly, Madison never instructed MMT that it needed to use RSSI to switch the unit trains or use RSSI to provide any services relating to receiving unit trains on the Port Authority Line.5 On October 17, 2012, as scheduled, MMT began receiving unit trains of oil on the Port Authority Line.

Disputes subsequently arose over MMT's use of the Port Authority Line. RSSI maintained that the exclusive-use provision of the 2012 Operating Agreement prohibited MMT from directly receiving or delivering cars from the BNSF Line and that MMT was required to use RSSI's services to switch the unit trains from the BNSF Line to the Port Authority Line. In turn, MMT contended that its Railroad Track Usage Agreement with the Port Authority did not require MMT's use of RSSI's services and that, even if valid, the 2012 Operating Agreement prohibited RSSI's unreasonable interference with the ability of the Port Authority's customers to receive products on the Port Authority Line.

Embroiled in conflict over the use of the Port Authority Line, the Port Authority filed suit, seeking a declaratory judgment that its 2012 Operating Agreement with RSSI was void.6 The Port Authority averred that it was a municipal corporation subject to the mandate of Section 432.070 requiring contracts with municipal corporations to be in writing. The Port Authority argued that its agreement with RSSI was void due to non-compliance with the statute because the Port Authority never signed the 2012 Operating Agreement. The Port Authority moved for summary judgment. Finding for the Port Authority, the trial court declared the 2012 Operating Agreement void ab initio for violating Section 432.070's mandate that contracts of a municipal corporation be subscribed by the parties, or their agents authorized by law, duly appointed, and authorized in writing. RSSI appealed. On appeal, the Southern District of this Court affirmed the trial court's judgment, holding that Section 432.070 applied to the Port Authority's contract with RSSI and that the 2012 Operating Agreement did not comply, actually or substantially, with the statute's requirements. Pemiscot Cty. Port Auth. v. Rail Switching Servs., 523 S.W.3d 530, 535-36 (Mo. App. S.D. 2017). The Supreme Court of Missouri denied transfer. Pemiscot Cty. Port Auth. v. Rail Switching Servs., 2017 Mo. LEXIS 354 (SC96505) (Mo, Aug. 22, 2017).

While its lawsuit against the Port Authority was pending, RSSI filed a one-count petition against MMT alleging tortious interference.7 In its petition, RSSI asserted that the 2012 Operating Agreement "granted RSSI the exclusive right of operation for all rail purposes" and that the agreement "prohibited [Port Authority] customers from retrieving or delivering cars to/from BNSF." RSSI further claimed that MMT knew of the terms of the 2012 Operating Agreement; however, MMT entered into agreements with BNSF Co. and the Port Authority in direct contravention of RSSI's purported contract with the Port Authority. Specifically, RSSI alleged that when "MMT entered...

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