Consolidated Rail Corporation v. West Jefferson Railroad Company

Filing 79

ORDER entered 31 Motion for Summary Judgment; modifying in part and adopting in part 71 Report and Recommendation ; entered 27 Motion for Summary Judgment. See order for details. Signed by District Judge Victoria A. Roberts. (CPin)

UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTICT OF MICHIGAN
SOUTHERN DIVISION
CONSOLIDATED RAIL
CORPORATION,
Plaintiff,

Case No. 15-12828
Honorable Victoria A. Roberts

v.
WEST JEFFERSON RAILROAD
COMPANY,
Defendant.
___________________________/
ORDER: (1) MODIFYING IN PART AND ADOPTING IN PART
REPORT AND RECOMMENDATION [Doc. 71]; and (2) REGARDING THE
PARTIES’ CROSS MOTIONS FOR SUMMARY JUDGMENT [Docs. 27, 31]
On August 9, 2017, Magistrate Judge Anthony P. Patti issued a Report and
Recommendation (“R&R”) [Doc. 71], recommending that the parties’ cross motions for
summary judgment [Docs. 27, 31] each be GRANTED IN PART and DENIED IN PART.
Specifically, Magistrate Judge Patti recommended that: (1) Plaintiff’s motion be granted
to the extent that it is entitled to pursue its hostile use theory as part of its quiet title
claim, and denied in all other respects; and (2) Defendant’s motion be granted as to
Plaintiff’s “intended but imperfectly created easement argument,” and denied in all other
respects.
Both parties filed objections to the R&R.
Under Federal Rule of Civil Procedure 72(b)(3), a district judge is required to
determine de novo any part of a magistrate judge’s report and recommendation that has
been properly objected to. Id.; see also 28 U.S.C. § 636(b)(1)(C). This de novo review
requires the Court to re-examine all relevant evidence previously reviewed by the

magistrate judge to determine whether the recommendation should be accepted,
rejected, or modified in whole or in part. Cole v. Comm’r of Soc. Sec., 105 F. Supp. 3d
738, 741 (E.D. Mich. 2015); 28 U.S.C. § 636(b)(1). If necessary, the Court may “receive
further evidence.” Fed. R. Civ. P. 72(b)(3).
After a de novo review of the record and careful consideration of the parties’
arguments and the governing law, the Court finds that additional evidence is necessary
to determine the issues presented. This case is on track for a bench trial. Because of
this, the Court finds that it will promote judicial efficiency and the interests of justice to
proceed to trial and consider the further evidence at that juncture, rather than as part of
the summary judgment briefing.
Accordingly, except where explicitly stated otherwise below, the Court MODIFIES
Magistrate Judge Patti’s R&R [Doc. 71] and DENIES WITHOUT PREJUDICE and/or
RESERVES RULING on the parties’ motions for summary judgment [Docs. 27, 31].
Regarding Plaintiff’s hostile use theory under its claim for quiet title, the Court
agrees with the R&R; the Court ADOPTS the R&R’s finding that Plaintiff may proceed
with its hostile use theory argument to show a prescriptive easement. Moreover, even if
Defendant is correct that the complaint should have alleged specific facts related to the
hostile use theory, the Court would permit Plaintiff to amend the complaint under Fed.
R. Civ. P. 15(b)(1) to allege the requisite facts; the parties conducted discovery related
to hostile use, such that Defendant would not be prejudiced. On this matter only,
Plaintiff’s motion for summary judgment is GRANTED.
Second, the Court agrees with Magistrate Judge Patti’s finding that an entity
owning railroad tracks is a “Railroad” under Mich. Comp. Laws § 462.109(1). The Court

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ADOPTS the R&R’s statutory interpretation of Railroad. Notwithstanding this finding,
the Court agrees with Plaintiff that the R&R did not address its argument that Defendant
is a sham corporation and is not a legitimate railroad, even if the R&R interpretation of
“Railroad” is correct. Plaintiff may make this argument during trial.
In light of the evidence that its stock valuation fails to comply with M.C.L. §
462.201(1) and the evidence showing that its company is a shell corporation with no
business plan and no intent to operate or maintain a railroad – among other things –
Defendant should be prepared to demonstrate at trial why it is entitled to protection
against condemnation under M.C.L. § 462.241.
Finally, contrary to the R&R’s finding, the Court finds that Defendant is not
entitled to summary judgment on Plaintiff’s “intended but imperfectly created easement”
theory/argument. Plaintiff may introduce evidence and attempt to prove this at trial.
IT IS ORDERED.
S/Victoria A. Roberts
Victoria A. Roberts
United States District Judge
Dated: September 28, 2017

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