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360networks Tennessee, L.L.C. v. Illinois Central Railroad Co.

May 10, 2007

360NETWORKS TENNESSEE, L.L.C., FORMERLY KNOWN AS IC FIBER TENNESSEE, L.L.C., AND 360NETWORKS MISSISSIPPI, L.L.C., FORMERLY KNOWN AS IC FIBER MISSISSIPPI, L.L.C., PLAINTIFFS/COUNTER-DEFENDANTS,
v.
ILLINOIS CENTRAL RAILROAD COMPANY, AN ILLINOIS CORPORATION, DEFENDANT/COUNTER-PLAINTIFF,
ILLINOIS CENTRAL RAILROAD COMPANY, AN ILLINOIS CORPORATION, PLAINTIFF,
v.
360NETWORKS LOUISIANA, L.L.C., FORMERLY KNOWN AS IC FIBER LOUISIANA, L.L.C., DEFENDANT.



The opinion of the court was delivered by: Hon. Harry D. Leinenweber

MEMORANDUM OPINION AND ORDER

This case arises out of a fiber optic cable installation project along a railroad right-of-way; the parties dispute who must bear the substantial cost of relocating the cable due to the reconstruction of old and decaying timber bridges between Chicago and New Orleans. Both parties have moved for summary partial summary judgment on the issue of liability (but not damages).

I. BACKGROUND

The following facts are uncontested, except as noted. Defendant Illinois Central Railroad Company (hereinafter, "IC") owns and operates a railroad between Chicago and New Orleans. On May 28, 1999, Plaintiffs 360networks Mississippi, 360networks Tennessee (hereinafter, collectively, "360") and 360networks Louisiana entered into license agreements (hereinafter, "the Agreements") with IC to construct and operate fiber optic facilities along IC's right of way in Mississippi, Tennessee, and Louisiana. For use of the right of way, 360 paid IC a fee and provided IC with limited use of the fiber optic facilities. The Agreements were amended and restated on March 6, 2000.

In 1998, Canadian National Railway (hereinafter, "CNR") and IC merged; pursuant to this merger, CNR filed an application to acquire control of IC with the Surface Transportation Board (hereinafter, "the STB"). This application included an operating plan that set forth various representations with respect to maintenance of facilities. Specifically, CNR and IC represented that "CN/IC will not hesitate to make investments in yards, terminals, rail lines, equipment, and systems where necessary to improve service to our customers and increase the efficiency of operations." At the time of the merger, IC had an existing plan to replace many of the timber bridges with more modern steel and concrete bridges. IC has not indicated to this Court that any specific representations were made concerning bridges (specifically or generally). The STB permitted the merger.

360 was informed of the plan to replace the timber bridges prior to installation (the parties appear to dispute the exact time 360 was informed of IC's bridge reconstruction plans). The Agreements provided that 360 must install the cables "so as not to unreasonably interfere with IC's operations." As a result, the parties agreed that 360 would not attach the cable to the existing timber bridges, but would instead use a technique called a "directional bore" to (presumably) run the cable under the waterway. This technique was substantially more expensive than the more commonly used method of attaching cable to an existing bridge. At the project's initial "kick-off" meeting between the parties, an IC engineer suggested that the cable be installed at the edge of the right of way to facilitate this reconstruction and to avoid necessitating relocation of the cable during such reconstruction. The parties dispute the importance of these statements.

360 installed the cable in a 1,000 mile build. The Agreements provided that 360 would submit so-called working drawings of the route to IC prior to construction for IC's approval. IC asserts that this procedure was not followed as working drawings were never submitted. 360 appears to argue both that the working drawings were approved in the field by IC engineers and that it submitted working drawings to Mr. Lowe, IC's division engineer in the Midwest division. Mr. Lowe does not recall receiving the working drawings, and IC asserts that it did not receive any. No working drawings were disclosed by either party during discovery; 360 asserts that they were destroyed after the installation. The Agreements provided that if IC did not object to submitted working drawings within a specified period of time, then they were deemed approved.

Some IC representatives were present when the route was staked and during installation, but the parties dispute exactly what authority these representatives had. 360 asserts that the route was jointly staked with IC engineers, the engineers signed off on the placement of the cable in relation to the railroad tracks, and the engineers at times advised 360 to lay the cable on particular sides of the tracks due to planned future improvements and construction. 360 has not named a single IC engineer present during staking or installation. IC asserts that no representative of the IC engineering department was present during the staking or installation. The parties appear to agree that IC representatives responsible for flagging, safety, and/or the preservation of railroad property were on-site during the staking process and installation. For the most part, the cable was installed six feet away from the tracks and approximately four feet underground; however, some of the cables were closer. None of the cable was installed at the edge of the right-of-way.

Fast forward to August 13, 2002. An IC construction crew accidentally cut through the fiber optic cable while replacing a bridge near Memphis, Tennessee. IC claims that this was the first time that it was aware that the cable was not installed on the edge of the right-of-way; 360 asserts that IC had been aware of this fact all along (as its engineers were present for and helped with staking the route). 360 gave IC "as-built" drawings of the route in September 2002, which showed the begin bore and end bore locations at the bridges. IC asserts that these drawings are not in sufficient detail to determine how far off the bridge the cable had been installed. There are some inaccuracies in these drawings.

Eventually, IC determined that replacement of the timber bridges would require relocation of the fiber optic cable, regardless of the fact that the cable was not attached to the bridges. (The parties dispute whether IC determined this before or after the accident in Memphis or before or after it discovered that the cable was not laid on the edge of the right of way). Now, IC and 360 dispute who should bear the cost of the relocations -- IC or 360. The Agreements addressed the possibility of cable relocation and provided that 360 would bear the cost if the relocation were ordered by any authority with jurisdiction to do so, but that IC would bear the cost if the relocation was undertaken for any other reason (specifically including preplanned work).

II. STANDARD

Summary judgment is appropriate 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 a judgment as a matter of law." FED. R. CIV. P. 56(c). A fact is material if it could affect the suit's outcome under the governing law, and a dispute is genuine where the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The court must view all the evidence and any reasonable inferences therefrom in the light most favorable to the non-moving party. See Miller v. American Family Mut. Ins. Co., 203 F.3d 997, 1003 (7th Cir. 2000).

III. DISCUSSION

Both parties have moved for summary judgment. IC argues that 360 breached the Agreements' requirement to install the cable propertly in accordance with IC's standards and in a manner so as not to interfere with IC's operations, and should therefore bear the relocation costs. 360 argues that pursuant to the Agreements' relocation cost provisions, IC must bear the cost for the relocation of the cable, as IC was not ...


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