Indiana Harbor Belt Railroad Company v. United Rail Service, Inc. et al

Filing 29

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART 21 MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM filed by Indiana Harbor Belt Railroad Company. The Motion is GRANTED as to the Motion for a More Definite Statement Pursuant to R ule 12(e) and United Rail is ORDERED to file an amended counterclaim within 14 days from the date of this Order that adequately pleads sufficient factual matter to state claims that are plausible on their face, provides notice to Indiana Harbor of it s claims, and satisfies Rule 10(b) by setting forth each claim in a separate count. The Motion is DENIED WITHOUT PREJUDICE to refiling at a later time as to the Motion to Dismiss pursuant to Rule 12(b)(6) and the Motion to Strike pursuant to Rule 12(f). Signed by Judge Rudy Lozano on 4/17/18. (ksp)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
INDIANA HARBOR BELT RAILROAD
COMPANY,
Plaintiff,
v.
UNITED RAIL SERVICE, INC.
And UNITED TRANSPORTATION
GROUP, INC.,
Defendant.

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NO. 2:17-cv-287

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OPINION AND ORDER
This matter is before the Court on the Counter-Defendant’s
Motion to Dismiss Counterclaim Pursuant to Federal Rule of Civil
Procedure 12(b)(6) or for a More Definite Statement Pursuant to
Rule 12(E) and to Strike Pursuant to Rule 12(F), filed by CounterDefendant, Indiana Harbor Belt Railroad Company, on December 14,
2017 (DE #21).

For the reasons set forth below, the Motion (DE

#21) is GRANTED IN PART AND DENIED IN PART.

The Motion is GRANTED

as to the Motion for a More Definite Statement Pursuant to Rule
12(e) and United Rail is ORDERED to file an amended counterclaim
within 14 days from the date of this Order that adequately pleads
sufficient factual matter to state claims that are plausible on
their face, provides notice to Indiana Harbor of its claims, and
satisfies Rule 10(b) by setting forth each claim in a separate
count.

The Motion is DENIED WITHOUT PREJUDICE to refiling at a

later time as to the Motion to Dismiss pursuant to Rule 12(b)(6)
and the Motion to Strike pursuant to Rule 12(f).

BACKGROUND
Plaintiff, Indiana Harbor Belt Railroad (hereinafter “Indiana
Harbor”), filed a complaint in this case on July 3, 2017 (DE #1),
pursuant to 49 U.S.C. § 10101 et seq., to collect certain freight,
demurrage and storage charges for railcars delivered to Defendants,
United Rail Service, Inc. and United Transportation Group, Inc.
(hereinafter “United”).

The deliveries in question were made to

defendants at their facility in East Chicago between July 2014 and
October 2016. (Id. ¶ 6.)
United filed an answer and counterclaim on October 26, 2017.
(DE #13.) The counterclaim does not specify the damages requested,
and seems to invoke a number of legal theories (including breach of
contract, negligence, trespass, and monopoly), but without setting
forth separate counts.
Indiana Harbor seeks dismissal pursuant to Federal Rule of
Civil

Procedure

12(b)(6),

or

alternatively,

a

more

definite

statement pursuant to Rule 12(e), and to strike pursuant to Rule
12(f).

In response, United argues that it has set forth the

specific elements and factual support to defeat any challenge under
Rule

12(b)(6)

for

negligence,

breach

of

trespass, monopoly, and estoppel. (DE #25.)
a reply on January 3, 2018 (DE #26).

contract,

damages,

Indiana Harbor filed

Therefore, this motion is

fully briefed and ready for adjudication.

DISCUSSION
The sufficiency of a complaint can be tested in several ways
under Rule 12, including a motion to dismiss for failure to state
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a claim pursuant to Rule 12(b)(6); a motion for a more definite
statement of a vague or ambiguous complaint pursuant to Rule 12(e),
or a motion to strike redundant, immaterial, impertinent, or
scandalous matter in a complaint pursuant to Rule 12(f).

In this

case, Indiana Harbor has invoked all three of these avenues in the
same motion.

However, Indiana Harbor largely argues that the

counterclaim does not contain sufficient factual allegations to put
it on notice of any plausible claims.

Rule 12(b)(6)
Federal Rule of Civil Procedure 12(b)(6) allows a complaint to
be dismissed if it fails to “state a claim upon which relief can be
granted.”

Fed. R. Civ. P. 12(b)(6).

Allegations other than fraud

and mistake are governed by the pleading standard outlined in
Federal Rule of Civil Procedure 8(a), which requires a “short and
plain statement” that the pleader is entitled to relief. Maddox v.
Love, 655 F.3d 709, 718 (7th Cir. 2011).
In order to survive a Rule 12(b)(6) motion, the complaint
“must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face’.” Ashcroft
v. Iqbal, 129 S. Ct. 1937, 1949 (2009)(quoting Bell Atlantic Corp.
v. Twombly, 550 U.S. 544, 570 (2007)). All well-pleaded facts must
be accepted as true, and all reasonable inferences from those facts
must be resolved in the plaintiff’s favor.
521 F.3d 686, 692 (7th Cir. 2008).

Pugh v. Tribune Co.,

However, pleadings consisting

of no more than mere conclusions are not entitled to the assumption
of truth.

Iqbal, 556 U.S. at 678-79.
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This includes legal

conclusions

couched

as

factual

allegations,

as

well

as

“[t]hreadbare recitals of the elements of a cause of action,
supported by mere conclusory statements.”

Id. at 678 (citing

Twombly, 550 U.S. at 555).
United Rail points to the following material facts in the
counterclaim (actually, they point to all of the allegations in the
counterclaim in its entirety), contending they have sufficiently
complied with Rule 8, and sufficiently stated claims:
1.IHB delivered rail cars to URS under an agreement among URS
and IHB from 1986 through June 2014.
2. URS and UTG never had the ability to call in particular
rail cars or groups of rail card during this period.
3. IHB, in its sole discretion, determined which rail cars to
deliver to URS and when to deliver those rail cars.
4. By the conduct described in Paragraph 3, IHB restricted and
limited the number of rail cars URS could service for its
customers.
5. Throughout this period of time, IHB did not collect
demurrage charges against URS.
6. On August 26, 2014, however, IHB issued, for the first
time, an invoice to URS for demurrage charges related to the month
of July 2014.
7. URS never requested IHB to store rail cars, nor did URS
ever request delayed delivery of rail cars from IHB to URS.
8. IHB’s unilateral identification of deliverable rail cars
and determination of timing of delivery of said rail cars presents
the sole basis for demurrage charges referenced in its invoice from
August 2014.
9. On October 24, 2014, IHB issued two (2) more invoices to
URS reflecting demurrage charges.
10. URS disputed each demurrage charge reflected in all
invoices IHB delivered to URS.
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11. Demurrage charges continued in spite of said objection,
without prior notice of the imposition of, or explanation from IHB
as to the basis for, said demurrage charges.
12. Not until March 24, 2015, did IHB agree to sit down to
discuss the demurrage charges with URS, at which meeting IHB
explained, for the first time, that IHB now required URS to
individually call in rail cars every day for delivery to avoid
further demurrage charges.
13. URS requested a copy of whatever formed the basis for
IHB’s demurrage charges against URS, as well as a copy of the
methodology for calculating the demurrage charges, but IHB never
responded.
14. Through the period from 1986 through 2016, IHB asserted
control over URS and UTG’s switch lines and leads, often
prohibiting URS and UTG’s use of said switch lines and leads for
one (1) or more days per week regardless of URS or UTG’s need for
service.
15. IHB invoiced URS full switch charges for delivery of rail
cars, but only dropped each rail car at the incoming lead - about
half (½) the service for which URS and UTG had bargained for within
IHB. IHB’s practice resulted in gross overbilling for services
rendered to URS.
16. Often, IHB stored other customers’ rail cars on URS and
UTG leads without permission from or recompense to URS and UTG,
which recompense URS and UTG expected to receive from IHB.
17. IHB caused damage to URS and UTG property through its
negligent movement of rail cars, which property IHB held a duty to
protect; a duty IHB breached and proximately caused URS and UTG
damages.
18. IHB has monopolized rail service at the URS and UTG
location in East Chicago, with monopolization resulted in
oppression and damage to URS and UTG for which IHB be required to
compensate URS and UTG.
19. While URS and UTG are not asserting a claim for punitive
damages as part of this counterclaim, discovery and investigation
may uncover a dilatory and intentional effort by IHB to apply rules
and regulations IHB knew or very likely should have known did not
apply to URS and UTG. As such, URS and UTG reserve their right to
assert a claim for punitive damages as part of their Counterclaim
herein.
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(DE #13.)
Here, reading these factual allegations in their entirety, the
Court cannot say that at this stage of the proceedings that it
appears, beyond reasonable doubt, that United Rail can prove no set
of facts entitling it to relief.
42, 45-46 (1957).

See Conley v. Gibson, 355 U.S.

This motion is premature.

Rule 12(f)
Under Federal Rule of Civil Procedure 12(f), “[t]he court may
strike

from

a

pleading

.

.

.

any

redundant,

immaterial,

impertinent, or scandalous matter . . . (1) on its own; or (2) on
motion

made

disfavored.

by

a

party.”

Rule

12(f)

motions

are

generally

Hardin v. American Elec. Power, 188 F.R.D. 509, 511

(S.D. Ind. 1999).

However, a motion to strike that expedites

litigation by removing “unnecessary clutter” should be granted.
Heller Fin., Inc. v. Midwhey Powder Co., Inc., 883 F.2d 1286, 1294
(7th Cir. 1989); see also Lincoln Nat’l Corp. v. Steadfast Ins.
Co., No. 1:06-CV-58, 2006 WL 1660591, at *2 (N.D. Ind. June 9,
2006)

(“[R]epetitious

and

unnecessary

pleadings,

such

as

a

counterclaim that merely restates an affirmative defense, or which
seeks the opposite effect of the complaint, should be stricken
regardless of whether prejudice has been shown.”).
After reviewing the counterclaim, the Court finds that the
motion

to

litigation.

strike

is

premature

given

the

early

stage

of

the

Rather, the better practice is to move for a more

definite statement under Rule 12(e), which is addressed below.

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Rule 12(e)
Rule

12(e)

allows

a

party

to

move

for

a

more

definite

statement of a pleading that is “so vague or ambiguous that the
party cannot reasonably prepare a response.”
12(e).

Fed. R. Civ. P.

A motion for more definite statement should be granted

“only in cases where the movant cannot reasonably be required to
frame an answer or other responsive pleading to the pleading in
question.”

Fed. R. Civ. P. 12(e) advisory committee’s note.

In

considering whether to grant a Rule 12(e) motion for a more
definite statement, a court’s inquiry is guided by the federal
pleading requirements. Pursuant to Federal Rule of Civil Procedure
8(a), a plaintiff’s complaint need only contain “a short and plain
statement of the claim showing that the pleader is entitled to
relief.”

Fed. R. Civ. P. 8(a)(2).

Due to the liberal notice-

pleading standard and the availability of discovery, “Rule 12(e)
motions are generally disfavored” and should be granted “only when
the pleading is so unintelligible that the movant cannot draft a
responsive pleading.” United States of Use of Argyle Cut Stone Co.
v. Paschen Contractors, Inc., 664 F.Supp. 298, 303 (N.D. Ill.
1987).
Regarding the motion under Rule 12(e), Indiana Harbor argues
that the counterclaim “fails to state a claim upon which relief can
be granted, because although it seems to allege certain ‘bad
conduct’ by IHB in the course of its dealings with United, it fails
to give IHB notice of precisely how this ‘bad conduct’ entitles
United to some relief.”

(DE #21 at 3.)

It is well settled that

Rule 12(e) motions should not be used as a substitution for
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discovery.

Nikolic v. St. Catherine Hosp., No. 2:10-CV-406, 2011

WL 4537911, at *6 (N.D. Ind. Sept. 28, 2011).

However, a motion

for a more definite statement is appropriate “[i]f a pleading fails
to specify the allegations in a manner that provides sufficient
notice.”

Swierkiewicz v. Sorema N.A., 534 U.S. 506, 513 (2002).

This Court is satisfied that this is not an impermissible Rule
12(e) motion just seeking discovery; but rather, that United Rail
has stated vague and ambiguous allegations in the counterclaim, the
claims are unclear, and Indiana Harbor would have difficulty filing
an answer.

Indeed, it is not evident from the counterclaim what

exact claims are being alleged.

While Rule 8(a)(2) does not

require the pleading of detailed allegations, it nevertheless
demands

something

more

“than

an

unlawfully-harmed-me accusation.”

unadorned,

the-defendant-

Iqbal, 556 U.S. at 677.

Indiana Harbor additionally points out that the counterclaim
runs afoul of Rule 10(b), which states in pertinent part that “[i]f
doing so would promote clarity, each claim founded upon a separate
transaction or occurrence . . . must be stated in a separate count
or defense.”

Fed. R. Civ. P. 10(b).

“Although Rule 10(b) does not

specify the appropriate remedy for violations of its provisions,
courts retain the inherent power to order compliance with the
rule.”

Three D Dep’ts, Inc. v. K Mart Corp., 670 F.Supp. 1404,

1409 (N.D. Ill. 1987) (dismissing count with leave to replead where
it combined three separate factual occurrences).

As noted by the

Seventh Circuit, Rule 10 requires the pleader to state his claims
in separate numbered paragraphs, to give defendants fair notice of
the claims against them and the grounds supporting the claims.
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Stanard v. Nygren, 658 F.3d 792, 797-98 (7th Cir. 2011).

As Judge

Simon aptly put it, the requirements of Rule 10(b) “are not just
technical

requirements.

They

are

necessary

handling of litigation in federal court.”

for

the

orderly

Davis v. Alabama Dep’t

of Human Resources of Limestone Cy., Alabama, 2:16-cv-120-PPS, 2017
WL 930649, at *1 (N.D. Ind. Mar. 9, 2017).
The instant counterclaim makes it impossible for Indiana
Harbor to respond, because it is difficult to decipher what claims
are alleged against it.
number

of

theories,

For example, the counterclaim suggests a

including

a

reference

to

“trespass”

and

“monopoly,” and theories under state law, but these counts are not
separated out or supported by sufficient allegations.

United Rail

generally alleges an “agreement,” but then does not allege which
contract it is referring to, or how Indiana Harbor allegedly
breached that agreement.
“Defendants

clearly

show

In its response, United Rail argues that
this

Court

the

negligent

nature

of

Plaintiff’s actions by failing to abide by the contractual duty
that was agreed upon between the Parties regarding their agreement
to store and move railcars” (DE #25 at 4) which seems to mix
together negligence, breach of contract, and possibly negligent
breach of contract claims.

It is important to flesh out the

counts United Rail is alleging - as noted by Indiana Harbor, as a
regulated common carrier, some claims for breach of contract
relating to rates charged or service provided may be preempted.
See, e.g., Gateway, Inc. v. Burlington Northern and Santa Fe Ry.
Co., No. 01 C 9482, 2002 WL 1822919, at *2-3 (N.D. Ill. 2002)
(recognizing certain claims against rail carriers are preempted).
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If United Rail is attempting to state causes of actions under
Indiana law (like breach of contract, trespass, or negligence), it
should allege the elements of each action. For example, for a
negligence claim, United Rail should plead facts identifying a duty
and how Indiana Harbor allegedly breached that duty.

“[I]f the

claim is unclear, the court should require a plaintiff to prepare
a more definite statement under Rule 12(e) instead of ‘lavishing
attention on the complaint until the plaintiff gets it just
right.’” Scott v. City of Chicago, 195 F.3d 950, 952 (7th Cir.
1999) (quotation omitted). Given all the avenues of relief Indiana
Harbor seeks in this case, requiring United Rail to prepare a more
definite statement that complies with Rule 10(b) seems like the
most fair route for the Court to take.
For all of these reasons, the Court GRANTS the motion for a
more definite statement under Rule 12(e).

United Rail has 14 days

from the date of this Order to file an amended counterclaim that
adequately pleads the facts and elements of each cause of action
and satisfies Rule 10(b) by setting forth each claim in a separate
count.

CONCLUSION
For the reasons set forth below, the Motion (DE #21) is
GRANTED IN PART AND DENIED IN PART.

The Motion is GRANTED as to

the Motion for a More Definite Statement Pursuant to Rule 12(e) and
United Rail is ORDERED to file an amended counterclaim within 14
days from the date of this Order that adequately pleads sufficient
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factual matter to state claims that are plausible on their face,
provides notice to Indiana Harbor of its claims, and satisfies Rule
10(b) by setting forth each claim in a separate count.

The Motion

is DENIED WITHOUT PREJUDICE to refiling at a later time as to the
Motion to Dismiss pursuant to Rule 12(b)(6) and the Motion to
Strike pursuant to Rule 12(f).

DATED: April 17, 2018

/s/ RUDY LOZANO, Judge
United States District Court

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