Union Pacific R. v. Cedar Rapids and Iowa City R., No. C 05-166-MWB.

CourtUnited States District Courts. 8th Circuit. Northern District of Iowa
Writing for the CourtBennett
Citation477 F.Supp.2d 980
PartiesUNION PACIFIC RAILROAD COMPANY, Plaintiff, v. CEDAR RAPIDS AND IOWA CITY RAILWAY COMPANY, Defendant.
Docket NumberNo. C 05-166-MWB.
Decision Date09 February 2007
477 F.Supp.2d 980
UNION PACIFIC RAILROAD COMPANY, Plaintiff,
v.
CEDAR RAPIDS AND IOWA CITY RAILWAY COMPANY, Defendant.
No. C 05-166-MWB.
United States District Court, N.D. Iowa, Cedar Rapids Division.
February 9, 2007.

Page 981

COPYRIGHT MATERIAL OMITTED

Page 982

Bruce E. Johnson, Cutler Law Firm, P.C., West Des Moines, IA, for Plaintiff.

Jeffrey K. Rosencrants, Alliant Energy, Sean W. McPartland, Lynch, Dallas, PC, Cedar Rapids, IA, for Defendant.

MEMORANDUM OPINION AND ORDER REGARDING THE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

BENNETT, District Judge.


 TABLE OF CONTENTS
                 I. INTRODUCTION................................................ 983
                 A. Factual Background...................................... 983
                 B. Procedural Background................................... 986
                 II. LEGAL ANALYSIS.............................................. 987
                 A. Summary Judgment Standards.............................. 987
                 B. UP's Express Contract Claim............................. 988
                 1. Arguments of the parties............................ 988
                 a. CRANDIC's opening argument...................... 988
                 b. UP's response................................... 989
                 c. CRANDIC's reply.................................. 989
                 2. Applicable law...................................... 989
                 3. Application of the law.............................. 990
                 C. UP's Implied Contract Claim............................. 992
                 1. Arguments of the parties............................ 995
                 a. CRANDIC's opening argument...................... 995
                 b. UP's response................................... 996
                

Page 983

 c. CRANDIC's reply................................. 996
                 2. Applicable law and analysis......................... 996
                 a. Preliminary matters............................. 996
                 i. Bar by express contract claim............. 997
                 ii. Statute of frauds......................... 997
                 iii. Nature of the claim....................... 997
                 b. Substance of the claim..........................1000
                 i. "Implied in fact" contract claim..........1000
                 ii. "Promissory estoppel" claim...............1001
                 iii. "Unjust enrichment" claim.................1003
                III. CONCLUSION................................................. 1003
                

One railroad contends that another railroad has breached an express written contract or an implied-in-fact contract to pay a share of the costs to construct, a rail interchange yard between, the two railroads' lines to improve service by both railroads to a key customer. In a motion for summary judgment, the defendant railroad asserts that the plaintiff breached the conditions precedent in the parties' written contract and then decided to go forward on its own with the construction project, precluding recovery on either an express or implied contract theory. The plaintiff contends that summary judgment is not appropriate, because there are at least genuine issues of material fact that it substantially satisfied the conditions precedent in the written contract and, in the alternative, that it would be unfair to allow the defendant to reap the benefits of the newly constructed interchange yard without paying its fair share of the construction costs. Despite voluminous briefing by the parties, the court finds that the material issues are relatively few and quickly resolved.

I. INTRODUCTION
A. Factual Background

The court will not attempt here an exhaustive dissertation on the undisputed and disputed facts in this case. Rather, the court will set forth sufficient of the facts, both undisputed and disputed, to put in context the parties' arguments concerning the defendant's motion for summary judgment. The court will then discuss specific factual disputes, and the extent to which they may be material, in the context of pertinent portions of its legal analysis.

Plaintiff Union Pacific Railroad Company (UP) is an international transportation company with its principal place of business in the State of Nebraska. Defendant Cedar Rapids and Iowa City Railway Company (CRANDIC) is a "shortline" rail-road with its principal place of business in Cedar Rapids, Iowa. CRANDIC has approximately 60 miles of main line track between Cedar Rapids and Iowa City, Iowa, and between Cedar Rapids and Amana, Iowa. The parties appear to agree that CRANDIC's stock is owned by nonparty Alliant Energy Corporation (Alliant). Non-party Archer Daniels Midland (ADM) is an international food production and processing company with a major plant in southwest Cedar Rapids, near tracks owned by both UP and CRANDIC.1

In 2001 or 2002, UP, CRANDIC, and ADM rekindled discussions for construction of additional tracks in Fairfax, Iowa, (the Fairfax project) to improve operations of both railroads and, in particular, to facilitate handling of "solid" or "unit" trains to

Page 984

ADM, thereby reducing the need to break up strings of cars and to perform multiple switching operations. Those discussions eventually ripened into a "Letter Agreement" dated June 14, 2002, drafted and signed by John Rebensdorf, Vice President of Network Service and Planning,2 to Paul Treangen, the Vice President and General Manager of CRANDIC. The body of the Letter. Agreement, in its entirety, provided as follows:

Dear Paul:

Union Pacific, CRANDIC and Archer Daniels Midland ("ADM") agree to construct two interchange tracks connecting UP and CRANDIC trackage near Fairfax, Iowa. Ownership and financing of the two tracks will be as follows:

1. ADM and the two railroads will share in the estimated $7.28 million cost of constructing the two Fairfax tracks as follows: ADM — $3.64 million 950%), UP — $2.64 million (36.3%), CRANDIC — $1.0 million (13.7%). In the event that the actual cost of the project differs from the estimated $7.28 million cost (either over or under), the difference will be shared by the parties based on the percentages stated above.

2 ADM's share will be paid back by UP over a five-year period with interest based on a per car refund of $26 on each loaded car moved in or out of the ADM Cedar Rapids facility with a UP line-haul move.

3. UP and CRANDIC will share the cost of the remaining $3.64 million as follows:

A. UP will fund up-front the case cost of $3.64 million.

B. CRANDIC will pay UP $1.0 million (or 13.7%) of the total construction cost) as its share of the cost of constructing the Fairfax interchange tracks at completion of the two Fairfax interchange tracks, but no earlier than January 2003.

4. After five years, the ownership of the two Fairfax interchange tracks will be 86.3% UP and 13.7% CRANDIC. Maintenance and any further capital spent on the two tracks will be split based on ownership.

5. UP and CRANDIC agree to hold rates for switching between the two railroads in Cedar Rapids level for five years.

This agreement between UP and CRANDIC to construct the two tracks at Fairfax will be contingent on the following:

1. Participation by ADM on the terms described in item (2) above and consummation of an agreement between ADM and UP.

2. Approval by the Alliant Energy Corporation Board of Directors of a CRANDIC Capital Budget for 2003 that includes the payments to UP described in Paragraph 3(B) above.

3. Negotiation of an operating agreement between UP and CRANDIC covering the two Fairfax tracks.

Construction of the two Fairfax interchange tracks will begin as soon as agreements are signed between CRANDIC and UP and UP and ADM.

If this is agreeable to CRANDIC, please sign both copies of this letter,

Page 985

returning one copy to me and retaining the other for your file.

Defendant's Appendix at 8-9. Paul Treangen signed the Letter Agreement on June 27, 2006, on behalf of CRANDIC, evidencing CRANDIC's agreement to the terms of the Letter Agreement.

UP admits that neither part of the first contingency in the Letter Agreement was ever satisfied — that is, there was no participation by ADM in paying the cost of construction and no consummation of an agreement between ADM and UP concerning such participation — despite UP forwarding ADM two drafts of a proposed agreement between UP and ADM in accordance with the first contingency of the Letter Agreement. UP also admits that CRANDIC was never presented with, and never executed, any agreement to amend the Letter Agreement to remove this contingency. However, UP contends that the essence of the first contingency was met, because UP decided to and did pay up front ADM's share of the construction costs of the Fairfax project. Similarly, UP admits that, no operating agreement between UP and CRANDIC concerning the Fairfax interchange tracks was completed before construction of the tracks began, as required by the third contingency in the Letter Agreement. UP contends, however, that while it was the intent of the parties that the operating agreement would be completed before construction began, they recognized that the agreement might not be in place before construction began, because nobody wanted to delay the track building project. Although UP admits that CRANDIC sent UP a "redline mark-up" of a proposed operating agreement on July 15, 2002, UP admits that it then "ceased negotiating" over the terms of the operating agreement, explaining that it did so, because language proposed by CRANDIC concerning shared liability was deemed "unreasonable" by UP. UP points out, however, that it eventually entered into an operating agreement with CRANDIC for the Fairfax interchange tracks in May 2005, albeit several months after the construction of those tracks was actually completed. In contrast, UP admits that the second contingency was fulfilled, precisely as stated, because Alliant's Board of Directors did approve a CRANDIC capital budget for 2003 that included the payment to UP described in paragraph 3(B) of the Letter Agreement and that CRANDIC had money in place in its 2003 budget consistent with the Letter Agreement.

In the spring of 2003, Rebensdorf told Treangen in a telephone conversation that permitting issues and financial...

To continue reading

Request your trial
15 practice notes
  • Catipovic v. Turley, No. C 11-3074-MWB
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • June 8, 2012
    ...element, that there must be no at-law remedy available to the plaintiffs. See Union Pac. R. Co. v. Cedar Rapids and Iowa City R. Co., 477 F. Supp. 2d 980, 1003 (N.D. Iowa 2007) (citing Iowa Waste Sys., Inc. v. Buchanan Cnty. , 617 N.W.2d 23, 30 (Iowa Ct. App. 2000)). However, the Iowa Supre......
  • John Ernest Lucken Revocable Trust v. Heritage Bancshares Grp., Inc., No. C16-4005-MWB
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • August 15, 2017
    ...element, that there must be no at-law remedy available to the plaintiffs. See Union Pac. R. Co. v. Cedar Rapids and Iowa City R. Co., 477 F. Supp.2d 980, 1003 (N.D. Iowa 2007) (citing Iowa Waste Sys., Inc. v. Buchanan Cnty., 617 N.W.2d 23, 30 (Iowa Ct. App. 2000)). However, the Iowa Supreme......
  • Carton v. B&B Equities Grp., LLC, No. 2:11–cv–746–RCJ–PAL.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Nevada
    • December 7, 2011
    ...and the unjust retention of the benefit at the expense of another”); Union Pac. R.R. Co. v. Cedar Rapids & Iowa City R.R. Co., 477 F.Supp.2d 980, 1000 (N.D.Iowa 2007) (stating the elements for an unjust enrichment claim are: (1) the plaintiff confers a benefit on the defendant to his ow......
  • Hirschbach Motor Lines, Inc. v. Smarttruck Undertray Sys., Inc., No. C17-1019-LTS
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • January 3, 2018
    ...V. LT Farm & Ranch, LLC, 779 F. Supp. 2d 949, 966 (S.D. Iowa 2011); Union Pac. R.R. Co. v. Cedar Rapids & Iowa City Ry. Co., 477 F. Supp. 2d 980, 1001-02 (N.D. Iowa 2007). Hirschbach responds that its quasi-contract claims are not foreclosed by its express contract claims, because &......
  • Request a trial to view additional results
15 cases
  • Catipovic v. Turley, No. C 11-3074-MWB
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • June 8, 2012
    ...element, that there must be no at-law remedy available to the plaintiffs. See Union Pac. R. Co. v. Cedar Rapids and Iowa City R. Co., 477 F. Supp. 2d 980, 1003 (N.D. Iowa 2007) (citing Iowa Waste Sys., Inc. v. Buchanan Cnty. , 617 N.W.2d 23, 30 (Iowa Ct. App. 2000)). However, the Iowa Supre......
  • John Ernest Lucken Revocable Trust v. Heritage Bancshares Grp., Inc., No. C16-4005-MWB
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • August 15, 2017
    ...element, that there must be no at-law remedy available to the plaintiffs. See Union Pac. R. Co. v. Cedar Rapids and Iowa City R. Co., 477 F. Supp.2d 980, 1003 (N.D. Iowa 2007) (citing Iowa Waste Sys., Inc. v. Buchanan Cnty., 617 N.W.2d 23, 30 (Iowa Ct. App. 2000)). However, the Iowa Supreme......
  • Carton v. B&B Equities Grp., LLC, No. 2:11–cv–746–RCJ–PAL.
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. District of Nevada
    • December 7, 2011
    ...benefit and the unjust retention of the benefit at the expense of another”); Union Pac. R.R. Co. v. Cedar Rapids & Iowa City R.R. Co., 477 F.Supp.2d 980, 1000 (N.D.Iowa 2007) (stating the elements for an unjust enrichment claim are: (1) the plaintiff confers a benefit on the defendant to hi......
  • Hirschbach Motor Lines, Inc. v. Smarttruck Undertray Sys., Inc., No. C17-1019-LTS
    • United States
    • United States District Courts. 8th Circuit. Northern District of Iowa
    • January 3, 2018
    ...Ltd. V. LT Farm & Ranch, LLC, 779 F. Supp. 2d 949, 966 (S.D. Iowa 2011); Union Pac. R.R. Co. v. Cedar Rapids & Iowa City Ry. Co., 477 F. Supp. 2d 980, 1001-02 (N.D. Iowa 2007). Hirschbach responds that its quasi-contract claims are not foreclosed by its express contract claims, because "a p......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT