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360Networks Tennessee, LLC v. Illinois Central Railroad Co.

October 26, 2009

360NETWORKS TENNESSEE, LLC, FORMERLY KNOWN AS IC FIBER TENNESSEE, LLC, PLAINTIFF,
v.
ILLINOIS CENTRAL RAILROAD COMPANY, AN ILLINOIS CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Robert M. Dow, Jr. United States District Judge

Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

This case arises out of a fiber optic cable installation project along a railroad right-ofway. 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. Plaintiffs 360networks Mississippi, LLC, 360networks Tennessee, LLC, and 360networks Louisiana, LLC have moved for partial summary judgment on liability [111]. For the following reasons, the Court denies Plaintiff's motion for partial summary judgment [111].

I. Background

A. Factual Background

Defendant Illinois Central Railroad Company ("Illinois Central") owns and operates a railroad between Chicago and New Orleans. 360networks Mississippi, LLC, 360networks Tennessee, LLC, and 360networks Louisiana, LLC (referred to collectively as "360networks") are Delaware limited liability companies that offer communication network services, such as installing and operating fiber optic networks. On May 28, 1999, and again on March 6, 2000, 360networks entered into license agreements with Illinois Central to construct and operate fiber optic facilities along Illinois Central's right-of-way in Mississippi, Tennessee, and Louisiana (from Chicago to New Orleans) as well as to provide fiber optic cable or transmission capacity to Illinois Central and third parties. In exchange for use of the right-of-way, 360networks paid Illinois Central a fee and provided Illinois Central with limited use of the fiber optic facilities.

At the project's initial "kick-off" meetings in 1999, representatives from Illinois Central and 360networks met to discuss the layout and construction of the fiber optic network along Illinois Central's route. Prior to installation of the fiber optic facilities, Illinois Central informed 360networks of a plan to replace decaying timber bridges with more modern steel and concrete bridges. The agreements required 360networks to install the cables "so as not to unreasonably interfere with [Illinois Central's] operations." As a result, the parties agreed that 360networks would not attach the cable to the existing timber bridges, but instead would use a technique called a "directional bore" to run the cable under the waterway.*fn1 360networks claims that the parties agreed to install the cables along the route six feet off of the tracks and four feet down into the ground. Illinois Central agrees that this was the protocol for locations other than bridges or other obstructions, but contends that it told 360networks that the fiber optic facilities should be installed at the edge of the right-of-way at bridges and other obstructions. Minutes from one of the initial meetings indicate that Illinois Central engineer Stan Noyszewski suggested that the cable be installed at the edge of the right-of-way "to avoid possible future conflicts." ¶ 8.1 of Minutes of July 29, 1999 meeting. Other than his brief attendance at the initial meeting, Noyszewski had no additional involvement with this project.

To determine where the cable should be installed in Mississippi, Tennessee, and Louisiana, representatives from Illinois Central and 360networks drove the tracks over a period of three days in a process known as "hi-railing." 360networks asserts that Illinois Central engineers staked the route, signed off on the placement of cable, and advised 360network representatives how to deal with existing and contemplated obstructions. While Illinois Central disputes its representatives' involvement in the process, it is apparent that representatives from Illinois Central's engineering, bridges, and signals/communications departments, as well as Illinois Central representatives responsible for flagging, safety, and preservation of railroad property, were at least present during the staking and installation. 360networks asserts that in locations where there were multiple bridges close to one another, representatives from 360networks and Illinois Central would walk from bridge to bridge to determine where and how to install the cable. In response, Illinois Central admitted "only that as it relates to bridges which are not part of this litigation 360 and IC may have walked some bridges."

The license agreements provided that 360networks would submit "working drawings" of the route -- based on the results of the "hi-railing" -- to Illinois Central for approval prior to construction. Illinois Central asserts that 360networks never submitted working drawings, but 360networks claims that Illinois Central engineers approved the working drawings in the field and that the drawings then were submitted to Illinois Central's Midwest division engineer, Dave Lowe. Lowe does not recall receiving the working drawings. In fact, none of the Illinois Central employees deposed recall receiving and reviewing the working drawings, although a few have testified that it is possible that they received the drawings. Further complicating matters, neither party produced the working drawings during discovery; 360networks claims that they were destroyed after installation of the fiber optic cables,*fn2 and Illinois Central states that it has no record of receiving the drawings. The license agreements provided that if Illinois Central did not object to any work drawings that were submitted within a specified period of time, then those drawings were deemed approved.

360networks installed the cable over approximately 1,000 miles. For the most part, the cable was installed six feet away from the tracks and approximately four feet underground; however, some cables were closer to the tracks. None of the cable was installed at the edge of the right-of-way. Despite the additional cost, 360networks, as directed by Illinois Central, installed the cable underwater using directional boring rather than attaching the cable to the bridges to help avoid the need to relocate the cable when Illinois Central replaced the bridges in the future.

In August 2002, an Illinois Central construction crew accidentally cut through the fiber optic cable while replacing a bridge near Memphis, Tennessee. Illinois Central claims that this was the first time that it knew that the cable had not been installed on the edge of the right-ofway, while 360networks asserts that Illinois Central had been aware of this fact all along. In September 2002, 360networks gave Illinois Central "as-built" drawings of the route, which showed the begin bore and end bore locations at the bridges. The drawings contain some inaccuracies, and Illinois Central also claims that the drawings are not sufficiently detailed to determine the exact cable placement. Presumably to avoid additional accidents, during several of the bridge replacements, Illinois Central had "sonde locates" performed to identify the exact location of the cable. At these bridges, the locates revealed that the facilities were not installed at the edge of the right-of-way, nor were they installed in a straight line six feet off the track.

Eventually, Illinois Central determined that replacement of the bridges required relocating the fiber optic cable, even though the cable was not attached to the bridges. The license agreements address the possibility of cable relocation and provide that 360networks bear the cost of relocation if relocation is ordered by any authority with jurisdiction to do so, but that Illinois Central bear the cost if the relocation is undertaken for any other reason. 360networks (or its agents or employees) relocated the fiber optic cable at or near eight bridges so that Illinois Central could replace those bridges. 360networks demanded that Illinois Central reimburse it for the costs incurred in relocating the fiber optic cable, but Illinois Central has refused.

B. Procedural Background

In 2006, the parties filed cross-motions for partial summary judgment. In 360network's motion, it argued that the license agreements required Illinois Central to bear the cost of relocating the fiber optic cable because Illinois Central was not ordered to undertake the bridge reconstruction by any authority having jurisdiction to make such orders and that the bridge reconstruction was "preplanned work." In response, Illinois Central argued that 360networks should bear the cost of relocating the cable because Illinois Central was ordered to rebuild the bridges by the Surface Transportation Board. Illinois Central also argued that 360networks breached the requirement in the license ...


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