The opinion of the court was delivered by: JAMES MUNLEY, District Judge
Presently before the court is Defendant Reading Blue Mountain &
Northern Railroad Company's ("RBMN") motion for partial summary
judgment. Plaintiff Norfolk Southern Railway Company ("Norfolk")
opposes this motion. The parties have fully briefed this matter
and it is ripe for disposition. For the following reasons, we
will grant RBMN's motion.
RBMN and Norfolk are parties to an agreement entitled "Common
C&S Facilities Maintenance Agreement," which governs the parties'
responsibilities and rights regarding the maintenance of a
communications system which serviced an eleven mile stretch of
track in the Lehigh Valley area of Pennsylvania. (Pl. Ex. 3,
"Common C & S Facilities Maintenance Agreement") (the
"Agreement"). This stretch of track consists of two tracks
running parallel to each other near Jim Thorpe, Pennsylvania.
(Pl. Ex. 7, Brian Sykes Aff. ¶ 4). Prior to 1996, Conrail owned
both tracks. (Def. Ex. A, Wayne Michel Aff. ¶¶ 3-4). In 1996,
Conrail sold one of the tracks to RBMN ("Track 1"), but retained
ownership over the other ("Track 2"). (Id.) Pursuant to this
sale, Conrail and RBMN entered into the Agreement to govern the
maintenance of the existing communications system. (Id. at ¶
The Agreement regulated the shared maintenance of the
communications and signaling system. (Agreement). Train operators
and railroad personnel use signaling systems to ensure safe train
travel. (Pl. Ex. 7, Brian Sykes Aff. ¶¶ 7-8). The system warns
train crews of irregularities or obstructions on the track and
instructs them as to how to proceed safely. (Id.) The signaling
system in place when Conrail and RBMN entered into the Agreement
included a series of poles, similar to telephone poles,
suspending wires above Tracks 1 and 2. (Def. Ex. A, Wayne Michel
Aff. ¶ 7). These wires provided power to the entire system, and
also relayed the information for the signal boxes along the
tracks to display. (Id.) The Agreement provided that Conrail
would be responsible for the maintenance of the system, but RBMN
would be required to contribute fifty-percent of the maintenance
costs. (Agreement). In 1999, Norfolk purchased Track 2 from
Conrail and succeeded to Conrail's interests under the Agreement.
(Def. Ex. A, Wayne Michel Aff. ¶¶ 3-4) Following the sale,
Norfolk and RBMN also shared the use of their tracks. (Pl. Ex. 7,
Brian Sykes Aff. ¶ 10).
On December 25-26, 2002, a severe winter storm (the "storm")
severed the communications wires and destroyed the majority of
the poles, thus disabling the communications system. (Def. Ex. C,
Robert Bortz Depo. at 78-79). Following the damage, RBMN
expressed to Norfolk that sharing a communications and signaling
system was no longer practical because the original shared system was
destroyed. (Pl. Ex. 9, E-mail from Wayne Michel, Jan. 9, 2003).
RBMN suggested that each company install and maintain its own
communications and signaling system for its own track instead of
building a new shared system. (Id.) Norfolk intended to
continue with the sharing agreement, proposed two options for
replacing the pole line system with a new system, and also
proposed to rebuild the damaged pole line system. (Def. Ex. 11,
Letter From Mark Owens to Wayne Michel, Feb. 3, 2003). Both
parties agreed that the old pole and wire system was antiquated,
inefficient, dangerous to rebuild, and expensive (Pl. Ex. 6, Jeff
Seidel Depo., 60-62), but RBMN did not accept any of Norfolk's
proposals for installing an updated system because it did not
desire to share a new system with Norfolk. (Def. Ex. 12, Letter
from Wayne Michel to Mark Owens, Feb. 4, 2003).
While RBMN and Norfolk negotiated, they continued running
trains without signals, a situation they refer to as running
"dark" or "form D." (Pl. Ex. 7, Brian Sykes, Aff. ¶ 15). Federal
regulations mandate that trains may run without signals for only
six months, unless the company receives approval from the Federal
Railroad Association ("FRA"). (Id.) The FRA restricts the
frequency and speed of trains traveling without signals. (Id.
at 18). Due to a desire to use its track at full capacity while
complying with federal regulations, Norfolk installed a new
communications system on its track. (Id. at 24). This system
uses circuitry within the track to transmit information to the
signal boxes, radios for communication, and powers the system
with solar paneling. (Id. at 24, Pl. Ex. 5, Brian Sykes Depo.
at 253-54). This system does not provide signaling to RBMN's
track. (Pl. Ex. 7, Brian Sykes Aff. ¶ 32). Norfolk filed suit initiating the case sub judice on May 1,
2003. Norfolk seeks recovery from RBMN under the Agreement for
its portion of the new circuitry and solar paneling system. RBMN
filed a motion for partial summary judgment on April 23, 2004,
bringing this case to its present posture.
This Court has jurisdiction pursuant to the diversity
jurisdiction statute, 28 U.S.C. § 1332. The plaintiff is a
Virginia corporation with its principal place of business in
Virginia, and the defendant is a Pennsylvania corporation with
its principal place of business in Pennsylvania. Because we are
sitting in diversity, the substantive law of Pennsylvania shall
apply to the instant case. Chamberlain v. Giampapa,
210 F.3d 154, 158 (3d Cir. 2000) (citing Erie R.R. v. Tompkins,
304 U.S. 64, 78 (1938)).
Granting summary judgment is proper 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. See Knabe v.
Boury, 114 F.3d 407, 410 n. 4 (3d Cir. 1997) (citing FED. R.
CIV. P. 56(c)). "[T]his standard provides that the mere existence
of some alleged factual dispute between the parties will not
defeat an otherwise properly supported motion for summary
judgment; the requirement is that there be no genuine issue of
material fact." Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247-48 (1986) (emphasis in original).
In considering a motion for summary judgment, the court must
examine the facts in the light most favorable to the party opposing the motion.
International Raw Materials, Ltd. v. Stauffer Chemical Co.,
898 F.2d 946, 949 (3d Cir. 1990). The burden is on the moving party
to demonstrate that the evidence is such that a reasonable jury
could not return a verdict for the non-moving party. Anderson,
477 U.S. at 248 (1986). A fact is material when it might affect
the outcome of the suit under the governing law. Id. Where the
non-moving party will bear the burden of proof at trial, the
party moving for summary judgment may meet its burden by showing
that the evidentiary materials of record, if reduced to
admissible evidence, would be insufficient to carry the
non-movant's burden of proof at trial. Celotex v. Catrett,
477 U.S. 317, 322 (1986). Once the moving party satisfies its burden,
the burden shifts to the nonmoving party, who must go beyond its
pleadings, and designate specific facts by the use of affidavits,
depositions, admissions, or answers to interrogatories showing
that there is a genuine issue for trial. Id. at 324.
RBMN raises two separate issues in its summary judgment motion.
First, it seeks to dismiss Norfolk's claim under the Agreement
for contribution for the installation of the new system for Track
1. RBMN argues that the installations are not covered by the
Agreement because Norfolk did not similarly improve Track 2.
Second, RBMN seeks declaratory judgment that, under the doctrine
of discharge by supervening frustration, it had no contractual
obligations to contribute to the replacement of the
communications system following the storm. We will address these
issues separately. ...