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NORFOLK S. RY. CO. v. READING BLUE MT. & N. RAILROAD CO.

December 2, 2004.

NORFOLK SOUTHERN RAILWAY COMPANY, Plaintiff
v.
READING BLUE MOUNTAIN & NORTHERN RAILROAD COMPANY, Defendants.



The opinion of the court was delivered by: JAMES MUNLEY, District Judge

MEMORANDUM

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.

I. Background

  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 ¶ 7).

  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.

  II. Jurisdiction

  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)).

  III. Standard

  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.

  III. Discussion

  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. ...


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