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Bnsf Railway Company, A Delaware Corporation v. San Joaquin Valley Railroad Company

June 12, 2012

BNSF RAILWAY COMPANY, A DELAWARE CORPORATION, PLAINTIFF,
v.
SAN JOAQUIN VALLEY RAILROAD COMPANY, A CALIFORNIA CORPORATION,
AND TULARE VALLEY RAILROAD COMPANY, A NEVADA CORPORATION,
DEFENDANTS.



MEMORANDUM OPINION AND ORDER ON DEFENDANT'S MOTION FOR RECONSIDERATION OF COURT'S ORDER OF APRIL 18, 2012 Doc. # 235

On April 18, 2012, the court issued a Memorandum Opinion and Order on Cross-Motions for Summary Judgment or Summary Adjudication (hereinafter, the "April 18 Order"). Doc. # 231. The court's April 18 Order granted summary judgment as to each of the claims for relief of plaintiff Burlington Northern Santa Fe Rail Road ("Plaintiff" or "BNSF") and correspondingly denied claims for relief alleged by defendant and cross-complainant San Joaquin Valley Rail Road ("Defendant" or "SJVR"). The court directed the parties to notify the court as to any remaining issues not settled by the cross-motions for summary judgment or to move for entry of judgment if there were no remaining issues. On May 3, 2012, Defendant moved for reconsideration of the court's April 18 Order. Doc. # 235. Plaintiff filed its opposition on May 21, 2012, and Defendant filed its reply on May 29, 2012. The court also notes Plaintiff BNSF filed an objection to Defendant's proffer of evidence submitted in conjunction with their motion for reconsideration.

LEGAL STANDARD

Rule 60(b) permits a district court to relieve a party from a final order or judgment on grounds of: "(1) mistake, inadvertence, surprise, or excusable neglect; (3) fraud . . . of an adverse party, . . . or (6) any other reason justifying relief from the operation of the judgment." The motion for reconsideration must be made within a reasonable time, in any event "not more than one year after the judgment, order, or proceeding was entered or taken." Id. Motions to reconsider are committed to the discretion of the trial court. Combs v. Nick Garin Trucking, 825 F.2d 437, 441 (D.C.Cir. 1987); Rodgers v. Watt, 722 F.2d 456, 460 (9th Cir. 1983) (en banc). To succeed, a party must set forth facts or law of a strongly convincing nature to induce the court to reverse its prior decision. See, e.g., Kern-Tulare Water Dist. v. City of Bakersfield, 634 F.Supp. 656, 665 (E.D.Cal. 1986), aff'd in part and rev'd in part on other grounds, 828 F.2d 514 (9th Cir. 1987), cert. denied, 486 U.S. 1015, 108 S.Ct. 1752, 100 L.Ed.2d 214 (1988). The Ninth Circuit has stated that "[c]lause 60(b)(6) is residual and 'must be read as being exclusive of the preceding clauses.'" LaFarge Conseils et Etudes, S.A. v. Kaiser Cement, 791 F.2d 1334, 1338 (9th Cir. 1986), quoting Corex Corp. v. United States, 638 F.2d 119 (9th Cir. 1981). Accordingly, "the clause is reserved for 'extraordinary circumstances.'" Id. See Catholic Soc. Servs. V. Ashcroft, (No. CIV S-86-1343 LKK), 2002 U.S. Dist. LEXIS 19194, *57, n. 18 (E.D. Cal. July 25, 2002) ("Generally speaking, before reconsideration may be granted, there must be a change in the controlling law, the need to correct a clear error, or the need to prevent manifest injustice.").

DISCUSSION

Defendant requests reconsideration based on four grounds. First, and most importantly, Defendant contends the court erred by making the factual determination that "Division of Revenue" as used in the 1992 Sale Agreement is the same as or synonymous with the term "switching absorption charges" as used in the 1994 Agreement. With that as background, Defendant contends that the court failed to interpret the 1992 and 1994 contracts according to the appropriate rules of construction. Defendant also contends that the court's finding that "subject of the contracts are ambiguous" prevents an award of summary judgment because a material issue of fact remains unresolved. Finally, Defendant contends the court, having misapplied the rules of contractual interpretation, should reconsider its application of estoppel to bar Defendant's claim of breach of the 1992 Agreement. The court will consider each contention in turn.

I. Division of Revenue and Switching Absorption Fees

In the April 18 Order, the court discussed the terms "General Traffic Divisions" as used in Table 1 of the 1992 Agreement and "Switching Absorption Rates" as used in Table 1 of the 1994 Agreement. See Doc. # 231 at 12. Based on a reading of the agreements and the presentation and contents of the two Tables, the court concluded "the "Switching Absorption Rates" paid by BNSF pursuant to the 1994 Table 1 represent payment for the same services that were paid under Table 1 of the 1992 Agreement." Id. at 12:16-18. Defendant contends that this finding by the court is (1) pivotal, and (2) made without the benefit of evidence or argument. Defendant contends that its silence on the issue was a result of an unawareness that the court would take it upon itself to make that finding and that if given notice of the court's intent it would have provided evidence to show that:

Under a division of rate set setting method one railroad carrier pays another railroad a stated portion or percentage of the carrier's through-rate. Consistent with a division of revenue rate method, the initial rates set out in 1992 Table 1 were to be automatically adjusted to maintain the agreed division of revenues. On the other hand, under a switch absorption rate setting provision the rates listed on the attached Table 1 represent the "maximum" rate or amount that the Class 1 carrier (BNSF) will "absorb" into (or pay out of) its through rates. Doc.# 237 at 7n. 2 (citing Frangler Decl. ¶¶ 11-14; Shelfbine Decl. ¶¶ 4-5.

The court has two observations. First, Defendant's contentions regarding the meanings of the terms "division of revenues" and "switching absorption" fail to convey to the court any sense of why the distinction is anything more than semantic. The court concluded that Table 1 of the 1992 Agreement was the schedule for payment by BNSF to TVRR for the same services that are paid to SJVR under the 1994 Agreement. That continues to be the court's conclusion notwithstanding any technical differences between the two terms.

Second, Defendant has failed to explain how the fact that the two terms are technically different methods of compensation advances Defendant's contention that it suffered manifest injustice as a consequence of the court's determination that the terms were essentially synonymous. Presuming for the sake of discussion that "switching absorption rates" are different from "division of revenue rates" in some important respect, how does manifest injustice result? SJVR was not signatory to the 1992 agreement between BNSF's predecessor and TVRR but was signatory to the 1994 agreement between BNSF's predecessor and SJVR. That means -- presuming the validity of Defendant's contentions regarding the different meanings of the terms -- that SJVR signed onto an agreement whereby they are to be paid according to a scheme that was more completely removed from the agreement by which TVRR agreed to be paid for its short-haul services than the court presumed.

It bears emphasizing at this point that the court's April 18 Order addressed the two legal theories by which SJVR could have stated a claim against BNSF for the alleged failure to report through-rate changes and to correct the division of revenues accordingly. The first theory is that SJVR had rights under the 1992 Agreement from the time it began providing short haul services until it purchased TVRR's rights in 1999 and was therefore entitled to damages arising from BNSF's failure to disclose rate changes or adjust divisions of revenue.*fn1

The court determined SJVR did not acquire rights under the 1992 Agreement prior to 1999. The question upon Defendant's motion for reconsideration then becomes, if SJVR agreed in 1994 to a completely different basis for computing what it was owed for short haul services than was provided for by the 1992 Agreement, how does that make a difference in the court's analysis? Defendant does not explain how the distinction, if any, between the definitions of "switching absorption rates" and "division of revenues rates" makes a difference in the court's analysis of SJVR's rights, or lack thereof, under the 1992 Agreement. Even if the court did err in its conclusion that the terms were functionally synonymous, Defendant has the burden to show that manifest injustice resulted because the court's analysis would have been different. Defendant has failed to carry this burden.

II. Summary Judgment and Factual Ambiguity

Defendant next contends that the court erred by granting summary judgment after finding that Paragraph 31 of the 1992 Agreement created "[a]t best, from SJVR's standpoint" a factual ambiguity as to the intention of the parties with regard to whether reporting yearly changes in through rates and adjusting Table 1 of the 1992 Agreement accordingly is a condition precedent to BNSF's authority to set through rates ...


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