Chessie Logistics Company LLC v. Krinos Foods Inc et al

Filing 129

MEMORANDUM Opinion and Order. Defendants' motion to dismiss Count III of the amended complaint 76 is granted. Count III of the amended complaint is dismissed with prejudice. Counterdefendant Chessie Logistics Company, LLC's motion for ju dgment on the pleadings on counterplaintiff 4545 James Place Realty, LLC's counterclaim 81 is denied. Counterplaintiff 4545 James Place Realty, LLC's motion to supplement its response to counterdefendant's motion for judgment on the pleadings 92 is denied. Counterdefendant's motion to supplement its motion for judgment on the pleadings 121 is denied. This case is set for a status hearing on April 23, 2015 at 9:30 a.m. Signed by the Honorable Jorge L. Alonso on 4/10/2015. Notice mailed by judge's staff (ntf, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CHESSIE LOGISTICS COMPANY, LLC,

)
)
Plaintiff,
)
)
v.
)
)
KRINOS HOLDINGS, INC.,
)
KRINOS FOODS, LLC,
)
KRINOS REALTY, LLC, and
)
4545 JAMES PLACE REALTY, LLC,
)
)
Defendants.
)
_______________________________________
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4545 JAMES PLACE REALTY, LLC,
)
)
Counterplaintiff,
)
)
v.
)
)
CHESSIE LOGISTICS COMPANY, LLC,
)
)
Counterdefendant.
)

No. 13 C 8864
Judge Jorge L. Alonso

MEMORANDUM OPINION AND ORDER
Before the Court are several motions. For the reasons explained below, defendants’
motion to dismiss Count III of the amended complaint is granted; counterdefendant Chessie
Logistics Company, LLC’s motion for judgment on the pleadings on the counterclaim is denied;
counterplaintiff 4545 James Place Realty, LLC’s motion to supplement its response is denied;
and counterdefendant’s motion to supplement its motion is denied.
BACKGROUND
Plaintiff, Chessie Logistics Company, LLC (“Chessie”), brought this action for trespass,
negligence, and violation of 49 U.S.C. § 10903 against defendants Krinos Holdings, Inc.; Krinos

Foods, LLC; Krinos Realty, LLC; and 4545 James Place Realty, LLC (“4545 James Place”).
Chessie is “a common carrier by railroad” that “owns and operates 1.006 miles of railroad track
and underlying real property” in Melrose Park, Illinois. (R. 74, Am. Compl. ¶ 1.) 4545 James
Place owns, and one or more of the Krinos defendants operate, an industrial facility adjacent to
Chessie’s railroad track. (Id. ¶ 3.) Chessie alleges that it “obtained and currently owns an
easement [] for the ‘construction, operation, maintenance, repair and use of switch and spur
track’ . . . over lots located in the industrial park where the main line railroad track . . . is
located.” (Id. ¶ 2.) According to Chessie, this easement includes the use of a side track and a
spur track that ends in a bumper, which “cross[] over” the property owned by 4545 James Place
and connect with Chessie’s lead railroad track. (Id. ¶ 4.)
Chessie alleges that in 2012, defendants’ construction of a sewer line to serve their
facility resulted in the burial of the spur track under landfill material, making the track
impassable. (Id. ¶ 10.) The material deposited on the spur track altered the landscape by
creating a “downward slope,” causing “runoff from the slope to drain onto, encroach upon, and
contaminate the lead railroad track and the side track, contaminating the rock ballasts supporting
the track with dirt and thereby destabilizing the tracks during wet or freezing weather conditions
due to the retained water.” (Id. ¶ 12.) In addition, at some time in January or February 2013,
defendants’ construction activities resulted in dirt, landfill material, and other debris being
deposited on Chessie’s lead railroad track, causing it to become impassable and interfering with
Chessie’s railroad operations. (Id. ¶ 11.) It is further alleged that after Chessie complained to
defendants, defendants attempted to remove the material but ended up damaging Chessie’s track,
burying the spur track even deeper, and creating drainage problems, and defendants also dumped
brush on Chessie’s property. (Id. ¶¶ 15-18.) Defendants assert that Chessie was never granted
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easements on their property, or, in the alternative, Chessie abandoned the easements. (R. 78,
Answer 9-10.)
DISCUSSION
A.

Defendants’ Motion to Dismiss Count III
Defendants move to dismiss Count III of the amended complaint, which alleges that

defendants violated 49 U.S.C. § 10903.
1.

Legal Standards

“A motion under Rule 12(b)(6) tests whether the complaint states a claim on which relief
may be granted.” Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012). Under Rule 8(a)(2), a
complaint must include “a short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule 8(a)(2)
must “give the defendant fair notice of what the claim is and the grounds upon which it rests.”
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (ellipsis omitted).

Under federal

notice-pleading standards, a plaintiff’s “[f]actual allegations must be enough to raise a right to
relief above the speculative level.” Id. Stated differently, “a complaint must contain sufficient
factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S.
at 570, 556 (2007)). “In reviewing the sufficiency of a complaint under the plausibility standard,
[courts must] accept the well-pleaded facts in the complaint as true, but [they] ‘need[ ] not accept
as true legal conclusions, or threadbare recitals of the elements of a cause of action, supported by

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mere conclusory statements.’” Alam v. Miller Brewing Co., 709 F.3d 662, 665–66 (7th Cir.
2013) (quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009)).
2.

No Private Right of Action

Chessie alleges that defendants have violated 49 U.S.C. § 10903, a statute that requires
rail carriers who provide transportation subject to the jurisdiction of the Surface Transportation
Board (the “Board”) to apply to the Board for authorization to abandon any part of, or
discontinue the operation of all rail transportation over, any part of their railroad lines. 49
U.S.C. § 10903(a)(1). The statute describes what the carrier must include in the application and
the procedural steps for its filing. Id. § 10903(a)(2), (3), (c)(2). Section 10903 also specifies the
factors that the Board must consider when deciding whether to approve the application. Id. §
10903(d), (e). According to Chessie, when a party other than the rail carrier seeks to have a
railroad line or a portion thereof to be deemed abandoned, that party must seek the approval of
the Board through an “adverse abandonment” proceeding. (Am. Compl. ¶ 29.) Chessie’s theory
is that by rendering Chessie’s lead railroad track impassable, defendants have caused an
“unauthorized adverse abandonment” of a portion of that track in violation of § 10903. (Id. ¶
30.)
Defendants contend that there is no private right of action under § 10903. The Court
agrees. The statute does not expressly confer a private right of enforcement and contains no
rights-creating language whatsoever from which the Court can infer a legislative intent to create
such a right (or any remedy). Cf. Mich. S. R.R. v. Branch & St. Joseph Cntys. Rail Users Ass’n,
287 F.3d 568, 574 (6th Cir. 2002) (stating that § 10903 does not provide for a private cause of
action by one party to a private contract against the other for its failure to obtain Board approval

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for operation of a rail line, when such approval is made a condition of the contract).1 None of
the cases cited by plaintiff support its argument that § 10903 implies a private right of action.
Accordingly, Count III of the amended complaint is dismissed with prejudice.
B.

Chessie’s Motion for Judgment on the Pleadings on the Counterclaim
4545 James Place has filed a counterclaim seeking: a declaratory judgment that Chessie

does not own an easement in the side track or spur track (Count I); to quiet title (Count II); and
ejectment (Count III). Chessie moves for judgment on the pleadings pursuant to Federal Rule of
Civil Procedure 12(c). “A Rule 12(c) motion is governed by the same standards as a motion to
dismiss for failure to state a claim under Rule 12(b)(6).” Lodholtz v. York Risk Servs. Grp., Inc.,
778 F.3d 635, 639 (7th Cir. 2015).
1.

Standing/Ripeness

Chessie’s first argument is that on the declaratory judgment claim, 4545 James Place has
failed to establish that it has standing and that there is an actual controversy ripe for adjudication
under the Declaratory Judgment Act. (Chessie’s Mot. J. Pleadings 5-6.) The Court rejects this
argument. A plaintiff invoking federal jurisdiction must demonstrate (1) an injury in fact, which
is an invasion of a legally-protected interest that is concrete and particularized and actual or
imminent; (2) a causal connection between the injury and the conduct complained of; and (3) a
likelihood that a favorable decision will redress the injury. Reid L. v. Ill. State Bd. of Educ., 358
F.3d 511, 515 (7th Cir. 2004) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61
(1992)). Defendant has adequately pleaded standing and ripeness by alleging that it owns the
property in fee simple upon which the spur and side tracks are located, Chessie claims an

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Chessie’s efforts to distinguish Michigan Southern on this point and argue that the decision
actually supports its position are unavailing.
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easement to use those tracks on defendant’s property, and defendant disputes that Chessie has an
easement. These allegations, if true, show that defendant has suffered an injury caused by
Chessie that the Court can redress through a declaratory judgment regarding Chessie’s right to
an easement.
2.

Abandonment

Chessie maintains that defendant has failed to adequately plead abandonment of any
easement. “[T]o establish that a railroad has abandoned its right-of-way easement, it is necessary
to prove actual relinquishment and the intention to abandon the use of the premises.” Schnabel
v. Cnty. of DuPage, 428 N.E.2d 671, 676 (Ill. App. Ct. 1981). “[M]ere nonuse for a fixed period
is not of itself sufficient to establish an abandonment. Abandonment occurs . . . when nonuse is
accompanied by acts which manifest an intention to abandon and which destroy either the object
for which the easement was established or the means of its enjoyment.” Id. (citation omitted).
“Abandonment has been found to exist where no repairs were made on the railroad tracks, the
rails rusted, the ties rotted, the road was overgrown with weeds, and the railroad conveyed part
of the easement to a private person who used the depot as a residence . . . .” Id. (citations
omitted).
Chessie asserts that defendant has failed to plead facts “beyond mere nonuse” to support
its claim of abandonment. Defendant, however, has pleaded that Chessie has not used or
maintained the tracks for many years and that Chessie had never notified defendants of an intent
to use them prior to defendants’ construction activities.

(Countercl. ¶ 5.)

Defendant has

therefore pleaded facts that allow the Court to draw a reasonable inference that Chessie intended
to abandon any easement.

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3.

Quiet Title and Ejectment

In Count II of its counterclaim, 4545 James Place seeks to quiet title to the disputed
easement. In Count III, it seeks ejectment. Chessie contends that it is entitled to judgment on
the pleadings as to these claims because defendant’s Special Warranty Deed (the “Deed”) to the
4545 James Place property, which is attached to the counterclaim as Exhibit 2, “gives actual
notice of easements over the property” and “encumbers [4545 James Place’s] ownership of the
property in favor of these easements.” (Chessie’s Mot. J. Pleadings 9, 11.) 4545 James Place’s
deed provides that the conveyance is subject to the “Permitted Exceptions as set forth on Exhibit
B.” (Countercl., Ex. 2, Deed 1.) Two of the Permitted Exceptions are a “[s]pur track easement
over the Southeasterly portion of the Real Estate as disclosed by survey prepared by Preferred
Survey, Inc. dated June 4, 2010” and “[r]ailroad rights-of-way and spur tracks over the Easterly
15 feet of the Real Estate as disclosed by survey prepared by Preferred Survey, Inc. dated June 4,
2010.” (Id., Ex. B.)
As defendant points out, the Deed identifies what is excluded from its title to the
property, but it does not establish that Chessie owns the easements it claims. Chessie’s argument

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also ignores defendant’s claim that even if Chessie owned the easements, it abandoned them.
Therefore, the Court denies Chessie’s motion as to Counts II and III.2
CONCLUSION
Defendants’ motion to dismiss Count III of the amended complaint [76] is granted.
Count III of the amended complaint is dismissed with prejudice. Counterdefendant Chessie
Logistics Company, LLC’s motion for judgment on the pleadings on counterplaintiff 4545 James
Place Realty, LLC’s counterclaim [81] is denied. Counterplaintiff 4545 James Place Realty,
LLC’s motion to supplement its response to counterdefendant’s motion for judgment on the
pleadings [92] is denied. Counterdefendant’s motion to supplement its motion for judgment on
the pleadings [121] is denied. This case is set for a status hearing on April 23, 2015 at 9:30 a.m.

SO ORDERED.

ENTERED:

April 10, 2015

__________________________________
JORGE L. ALONSO
United States District Judge

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Each side has filed a motion to supplement its briefing with documents recently received
in discovery. 4545 James Place seeks leave to supplement its response with the Purchase and Sale
Agreement pursuant to which Chessie purchased its real property; a commitment for title insurance;
a September 2012 survey of the lots; and a July 2014 e-mail chain between Chessie’s counsel and
counsel for the entity from which Chessie purchased its property. Chessie seeks leave to supplement
its motion with 4545 James Place’s Purchase and Sale Agreement for its property. At least some,
if not all, of these submissions are matters outside the pleadings. To consider them, the Court would
be required to convert Chessie’s motion to a summary judgment motion. The Court declines to do
that because discovery is not yet closed. Moreover, the Court does not find it necessary to consider
these materials in order to render a decision on Chessie’s motion. Both motions to supplement are
therefore denied.
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