LKL Associates et al v. Union Pacific Railroad

Filing 153

MEMORANDUM DECISION AND ORDER granting in part and denying in part 127 Motion for Summary Judgment. Signed by Judge Bruce S. Jenkins on 5/29/2018. (las)

FILED
2018 MAY 29 AM 10:25
CLERK
U.S. DISTRICT COURT
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH

L.K.L. ASSOCIATES, INC., a Utah
corporation; and HEBER RENTALS, LC, a
Utah limited liability company,

Plaintiffs,

MEMORANDUM OPINION AND
ORDER

v.
UNION PACIFIC RAILROAD
COMP ANY, a Delaware corporation,
Defendant and
Counterclaim Plaintiff.

Case No. 2:15-CV-00347-BSJ
District Judge Bruce S. Jenkins

Plaintiffs L.K.L. Associates, Inc. ("LKL") and Heber Rentals, LC ("Heber Rentals")
(hereinafter collectively "Plaintiffs") filed a Motion for Summary Judgment on July 28, 2017. 1
After the motion was fully briefed by the parties, 2 the matter came before the court for hearing
on August 24, 2017. David R. Nielson appeared on behalf of Plaintiffs. Julianne P. Blanch and
Adam E. Weinacker appeared on behalf of Defendant Union Pacific Railroad Company ("Union
Pacific"). 3 After lengthy arguments and discussion, the parties requested the court reserve on the
matter until September 7, 2017, in order to give the parties time to revisit settlement
negotiations. 4 The parties were unsuccessful in their settlement attempts. 5 On September 8, 2017,

1

Pls.' Mot. for Summ. J., filed July 28, 2017 (CM/ECF No. 127).

2

See Union Pacific's Opp'n Mem. to Pls.' Mot. for Summ. J., filed Aug. 11, 2017 (CM/ECF No. 132);
Pls.' Reply Mem. in Supp. of Their Mot. for Summ. J., filed Aug. 21, 2017 (CM/ECF No. 137).
3

See Minute Entry (CM/ECF No. 138).

4

See id.

5

See Notice of Unsuccessful Settlement Discussions, filed Sept. 7, 2017 (CM/ECF No. 142).

Union Pacific submitted to the court a Notice of Supplemental Authority, 6 attaching a copy of a
newly issued Memorandum from the U.S. Department of the Interior's Office of the Solicitor
(the "2017 M-Opinion") regarding the scope of railroad right of ways under the General Railroad
Right-of-Way Act of March 3, 1875 (the "1875 Act"). 7 The court held a status conference
regarding Union Pacific's supplemental authority on September 19, 2017, during which the court
set deadlines for the parties to submit additional briefing. 8 All additional briefing was completed
on November 13, 2017. 9
Having considered the parties' briefs, the evidence presented, the arguments of counsel,
and the relevant law, the court hereby GRANTS IN PART and DENIES IN PART Plaintiffs'
Motion for Summary Judgment. The court denies Plaintiffs' Motion for Summary Judgment as
to its claim for rescission and return of lease payments. The court finds rescission unwarranted
because (i) the claim is untimely, and (ii) rescission is redundant because the lease agreements do
not serve a railroad purpose and therefore are unenforceable. The court further denies Plaintiffs
Motion for Summary Judgment as to its claims for declaratory relief, as the declarations sought
are in excess of the necessities of this case. As to Union Pacific's counterclaims, the court grants
Plaintiffs' Motion for Summary Judgment.

6

Union Pacific's Notice of Suppl. Authority, filed Sept. 8, 2017 (CM/ECF No. 143).

7

2017 M-Opinion (CM/ECF No. 143-1).

8

See Minute Entry (CM/ECF No, 145).

9

See Union Pacific's Suppl. Br. Regarding 2017 Department of Interior Mem. Op., filed Oct. 16, 2017
(CM/ECF No. 150); Pls.' Mem. in Opp'n to Union Pacific's Suppl. Br. Regarding 2017 Department ofinterior
Mem. Op., filed Nov. 3, 2017 (CM/ECF No. 151); Reply Mem. Supporting Union Pacific's Suppl. Br. Regarding
2017 Department ofinterior Mem. Op., filed Nov. 13, 201.7 (CM/ECF No. 152).

2

BACKGROUND
The following provides an overview of the relevant undisputed facts 10 for purposes of
Plaintiffs' Motion for Summary Judgment:
•

In 1856, C.L. Craig of the United States Government Land Office
surveyed Township 6 South, Range 2 East, Salt Lake Meridian, in the
Utah Territory. This case involves property located in the west half of
the northwest quarter of Section 16 of that Township. 11

•

In 1873, Utah Southern Railroad ("Utah Southern") finished
construction of a railroad from Salt Lake County to Utah County. The
railroad enters Section 16 from the north, a little east of the west
section comer, and traverses in a south-easterly direction until it exits
the west half of the northwest quarter of Section 16 in the south. This
section of the track shall be referred to hereinafter as the "Provo
Industrial Lead." This case involves the property located to the west of
the railroad track in this particular area. 12

•

In 1875, the United States passed the General Railroad Right of Way
Act of 1875 ("1875 Act") granting railroads (including Utah Southern)
a right of way across the public lands of the United States to the extent
of one hundred feet on each side of the central line of the railroad. See
43 U.S.C. § 934. By virtue of the 1875 Act, Utah Southern acquired a
right of way to the extent of 100 feet (in both directions) from the
center line of the Provo Industrial Lead. 13

•

On or about January 4, 1896, the State of Utah received from the
federal government, through the Fundamental Enabling Act of July 16,
1894, 28 Stat. 107, all parts of Section 16 that had not "been sold or

10

These facts are drawn from the parties' summary judgment briefing, as well as the proposed joint pretrial
order the parties submitted to the court on July 6, 2017 (hereinafter July 2017 Proposed Pretrial Order) in
anticipation of the evidentiary pretrial expert and motions hearings held July 12-14, 2017. The court has not
executed the proposed order, but the relevant stipulations remain and were used by the parties and considered by the
court. The court notes that the parties use the words "Provo Industrial Lead," which are themselves ambiguous and
vague. They are sometimes used as a substitute for the right of way, and sometimes for the railroad track itself.
Those ambiguities also appear in the background summary set forth hereafter.
11

See Union Pacific's Opp'n Mem. to Pls.' Mot. for Summ. J., filed Aug. 11, 2017 (CM/ECF No. 132) at 8

12

See id.

13

See id.

of70.

3

otherwise disposed of by or under the authority of any act of
Congress" for school purposes. 14
•

Union Pacific acquired full ownership of the Provo Industrial Lead in
1987. 15

•

Heber Rentals owns and has been deeded property within Section 16. 16

•

The Provo Industrial Lead rnns parallel to the east boundary of Heber
Rentals' property. 17

•

The deeds of conveyance leading up to Heber Rentals' current
ownership describe real property lying within the western portion of
Union Pacific's claimed right of way, if the property descrigtions are
taken from the survey monuments that are currently in place. 8

•

There is a fence to the west of, and parallel to, the Provo Industrial
Lead, and it separates Heber Rentals' claimed property from the track.
The fence is located less than 50 feet west of the center line of the
current location of the Provo Industrial Lead. 19

•

Plaintiffs are currently using and occupying property up to the fence.
Heber Rentals has never claimed to own, nor has it ever used, any
portion of Union Pacific's claimed right of way east of the fence. 20

•

The dispute in the present case is limited to the property located to the
west of the fence-an area Plaintiffs characterize as the "Disputed
Property.'.21

•

In 1979, Plaintiffs constrncted a building on the northern portion of
their claimed property. A portion of this building falls within the 100foot right of way being claimed by Union Pacific. 22

14

See Pls.' Opp'n to Union Pacific Railroad Company's Mot. for Summ. J. Regarding Heber Rental's Lack
of Ownership of Land Within Right of Way, filed March 8, 2017 (CM/ECF No. 79) at 3.
15

See Union Pacific's Opp'n Mem. to Pls.' Mot. for Summ. J., filed Aug. 11, 2017 (CM/ECF No. 132) at

16

See July 2017 Proposed Pretrial Order, at 16.

17

See id.

18

See id.

19

See id.

20

See id.

21

See Union Pacific's Opp'n Mem. to Pls.' Mot. for Summ. J., filed Aug. 11, 2017 (CM/ECF No. 132) at

22

See id. at 19 of70.

12 of70.

11 of70.

4

•

•

On or about January 14, 1997, Heber Rentals agreed to lease a portion
of the property located within Union Pacific's claimed right ofway. 25

•

In 1998, LK.L entered into a lease directly with Union Pacific, and the
lease between Heber Rentals and Union Pacific was canceled at that
time. 26

•

Pursuant to the terms of the lease agreements, Union Pacific was
obligated to deliver possession of the Disputed Property, or the portion
thereof identified in the lease agreements, to Plaintiffs. 27

•

When the parties entered into each of the lease agreements, the parties
believed Union Pacific had an exclusive right to use and possess the
Disputed Property. 28

•

Plaintiffs Heber Rentals and LK.L have paid Union Pacific at least
$8,884.00 and $120,010.69, respectively, in lease payments. 29

•

On March 10, 2014, the U.S. Supreme Court issued its decision in
Marvin M Brandt Revocable Trust v. United States, 134 S. Ct. 1257
(2014) ("Brandt"). 30

•

24

In 1997, and many times thereafter, Union Pacific represented to
Plaintiffs that the property located west of the fence, but within 100
feet of the center line of the Provo Industrial Lead, was the railroad's
property and could not be used or occupied by Plaintiffs without a
signed lease agreement. 24

•

23

If Heber Rentals' deed descriptions are taken from the existing county
monument locations, then the building is situated within the
boundaries of the descriptions. 23

After Brandt, Plaintiffs interpreted the decision to mean that Union
Pacific did not have exclusive use and possession of its right of way.

See id.
See July 2017 Proposed Pretrial Order, at 18.

25

See id.

26

See Union Pacific's Opp'n Mem. to Pls.' Mot. for Summ. J., filed Aug. 11, 2017 (CM/ECF No. 132) at

27

See id. at 27 of70.

28

See id. at 30 of70.

29

See id.

30

See July 2017 Proposed Pretrial Order, at 20.

26 of70.

5

Consequently, LKL stopped making lease payments to Union
Pacific. 31 The last lease payment was made on January 5, 2015. 32
•

On April 16, 2015, Plaintiffs filed a lawsuit in Utah state court. Their
Complaint seeks an order rescinding the leases on the grounds of
mutual mistake, claiming that the parties mistakenly believed that
Union Pacific had the exclusive right to possess the Disputed Property
at the time the leases were created. The Complaint also seeks
declaratory relief declaring the leases to be null and void and further
declaring that neither Plaintiffs nor their successors are required to
make lease payments to Union Pacific or its successors in connection
with their use of the Disputed Property. 33

•

On May 12, 2015, Union Pacific removed the l~wsuit to this court.

•

On May 19, 2015, Union Pacific filed its answer and counterclaim,
wherein Union Pacific asks the court to issue an order compelling
Plaintiffs to remove their building and property from the Disputed
Property and also seeks an award of damages for breach of contract
and trespass, among other things. Union Pacific also requests an award
of attorney fees pursuant to the attorney fee provision in the leases. 35

•

The precise location of the boundaries of Heber Rentals' property is
disputed by the parties. 36

34

• In 1874, A.J. Stewart of the Government Land Office performed a
- - retracement survey of Section_l 6 and reseUhe surrey monuments for
the northwest comer and the west quarter corner of Section 16. 37
•

In 1898, the Utah County surveyor performed a survey on the western
half of the northwest quarter of Section 16 and created a map
(hereinafter "Map 80"). 38

31

See id.

32

See Union Pacific's Opp'n Mem. to Pls.' Mot. for Summ. J., filed Aug. 11, 2017 (CM/ECF No. 132) at

33

See id. at 33 of70.

34

See id.

35

See id.

32 of70.

36

See id. at41-47 of70; Pls.' Mot. for Summ. J, filedJuly28, 2017 (CM/ECFNo. 127) at47-65; Pls.'
ReplyMem. in Supp. of Their Mot. for Summ. J., filed Aug. 21, 2017 (CM/ECF No. 137) at 41-49.
37

See Union Pacific's Opp'n Mem. to Pls.' Mot. for Summ. J., filed Aug. 11, 2017 (CM/ECF No. 132) at

38

See id. at 14 of70.

13 of70.

6

•

In Map 80, the half quarter section was divided into numbered lots. 39

•

Map 80 was filed with the State Board of Land Commissioners, as
indicated on the signature block on the bottom right of Map 80. 40

•

The State issued patents to Lots 1, 3, 4, and 5 based on Map 80. 41

•

Lot 2 was retained by the State of Utah and never patented to any other
person or entity. 42

•

The location of Lot 2 and the location of Union Pacific's Provo
Industrial lead tracks within Lot 2 are disputed by the parties. 43

•

The patents refer to the acreage transferred as calculated from the
acreages shown on Map 80. 44

•

In 1909, the northwest section comer and west quarter comer on
Section 16 were re-monumented. 45

•

The current section comer marker and quarter section marker are
perpetuations of the 1909 re-mohumentation. 46

•

Through a series of transfers and court orders, Heber Rentals became
the owner of properties located within the properties depicted as Lots 3
and 4 on Map 80. 47

•

The relationship between Map 80 and the location of existing county
monument locations-and whether there is a discrepancy between
them-is disputed by the parties. 48

39

See id.

40

See id.

41

See id.

42

See id.

43

See Pls.' Reply Mem. in Supp. of Their Mot. for Summ. J., filed Aug. 21, 2017 (CM/ECF No. 137) at 8-

44

See Union Pacific's Opp'n Mem. to Pls.' Mot. for Summ. J., filed Aug. 11, 2017 (CM/ECF No. 132) at

45

See id.

46

See id.

9, 13-16.

15 of70.

47

See id. at 15-17 of70; Pls.' Reply Mem. in Supp. of Their Mot. for Summ. J., filed Aug. 21, 2017
(CM/ECF No. 137) at 8.
48

See Union Pacific's Opp'n Mem. to Pls.' Mot. for Summ. J., filed Aug. 11, 2017 (CM/ECF No. 132) at
17-18 of70; Pls.' Reply Mem. in Supp. of Their Mot. for Summ. J., filed Aug. 21, 2017 (CM/ECF No. 137) at 9-12,
16-18.

7

DISCUSSION

Plaintiffs' Motion for Summary Judgment seeks the following relief: (i) summary
judgment on Count I of the Complaint (Rescission-Mutual Mistake); (ii) summary judgment on
a portion of Count VIII of the Complaint (Declaratory Relief); and (iii) dismissal of all of Union
Pacific's counterclaims. 49
In addressing Plaintiffs Motion for Summary Judgment, the court first answers two
fundamental questions.
The first fundamental question presented in this case is the existence of an overlap
between Plaintiffs' claimed property and Union Pacific's right of way. The court finds that there
is such an overlap, borne out by using the railroad track as located on the ground and measuring
out from its centerline. While there is an alleged dispute as to the extent of the overlap, the
parties have conceded that there is an overlap between the railroad right of way and a portion of
the building constructed by Plaintiffs.
The width of the right of way is defined by the 1875 Act itself. The 1875 Act provides:
The right of way through the public lands of the United States is
granted to any railroad company * * * which shall have filed with
the Secretary of the Interior a copy of its articles of incorporation,
and due proofs of its organization under the same, to the extent of
one hundred feet on each side of the central line of said road. 50
In affinning an earlier case arising out of this district, The Tenth Circuit stated the
following:
The district court held that actual construction of the track plus the
filing of the specified documents perfected the Railroads' right of

49

See Pls.' Mot. for Summ. J., filed July 28, 2017 (CM/ECF No. 127) at 6.

so 43

u.s.c. § 934.
8

way to the extent of 100 feet on each side of the center line of the
51
track.
After citing to Jamestown and Northern R. Co. v. Jones, 177 U.S. 125, 130-31 (1900), wherein
the Supreme Court adopted the rnle that "the right of way may be definitely located by the actual
construction of the road," the Tenth Circuit stated that "[a]ctual construction is notice oflocation
whether it occurs before or after the [1875] Act."

52

Using the railroad track as located on the ground, as the cases require, the right of way of
the railroad as measured from its centerline extends beyond the west fence and overlaps a portion
of the land claimed by Plaintiffs. Information in the record seems to indicate that in the eastern
portion of Plaintiffs' claimed land there is an unresolved gap in land description which may well
reside in the state of Utah, a non-party to this litigation.
While Plaintiffs suggest that the railroad track may have been moved since its original
location, there is an absence of evidence in the record to support such an occurrence.
When measured from the centerline of the track, the suggested dispute between the
parties as to surveys and markers and extraneous maps becomes historically interesting but
largely irrelevant for present purposes. We have a statutorily mandated beginning point. That
resolves the question oflocation and measurement. As noted by the Tenth Circuit, "state law
cannot operate to 'impair the efficacy' of a federal grant or vest title in someone other than the
federal grantee."

53

The second fundamental question presented in this case is the nature and scope of the
railroad right of way.

51

Boise Cascade Corp. v. Union Pac. R. Co., 630 F.2d 720, 722 (10th Cir. 1980).

52

See id. at 722-23.

53

See id. at 724.

9

The right of way is limited. The right of way is to be used for railroad purposes. 54 Indeed,
the parties agree that, whatever the nature of the easement Union Pacific received under the 1875
Act, the easement must be used for a railroad purpose. 55 Prior to 187 5, the railroads had
generally done very well in Congress, 56 and the 187 5 Act was in part an effort at limiting railroad
benefits. 57 On March 10, 2014, the Supreme Court issued its decision in Marvin M Brandt

Revocable Trust v. United States, 134 S.Ct. 1257 (2014). The Brandt decision merely affinned
what the 1875 Act and the Supreme Court had already said for decades, namely that the right of
way provided under the 187 5 Act had always been limited by purpose, specifically a railroad
purpose.
Having addressed these fundamental questions and determined that (i) an overlap exists
between Union Pacific's right of way and at least a portion of the building constructed by
Plaintiffs, and (ii) that Brandt merely affirmed a truth set forth in the 1875 Act and Supreme
Court case law that the-187 S-AcTonly granted a limited-riglif of waytooei1sed fofii railroaa----purpose, the court now turns to Plaintiffs Motion for Summary Judgment. The court will first

54

See, e.g., Marvin M Brandt Revocable Tr. v. United States, 134 S. Ct. 1257, 1265 (2014) (citing United
States v. Union Pacific R. Co., 353 U.S. 112, 119 (1957) for its reference to Great Northern's conclusion that, in the
period after 1871, "only an easement for railroad purposes was granted"); Chicago & N W. Ry. Co. v. Cont'! Oil
Co., 253 F.2d 468, 472 (10th Cir. 1958) ("Upon the filing of the location map, the railroad acquired an easement for
railroad purposes"); Barahona v. Union Pac. R.R. Co., 881 F.3d 1122, 1133 (9th Cir. 2018) ("[E]ven though we
have concluded that the pre-1871 Acts do not require a railroad purpose, we must still decide whether the pipeline
served such a purpose for those rights of way acquired under the 1875 Act."); Beres v. United States, 104 Fed. Cl.
408, 453 (Fed. Cl., 2012) ("The 1875 Act easements by the 1875 Act's very terms, as validated by contextual
history, were limited to railroad purposes").
55

See Aug. 24, 2017 Hr'g Tr., (CM/ECF No. 139) at 8:23-25, 12:7-8, 23:5-6, 26:14-27:2, 29:14-23, 49:1-8;
see also, e.g., Pls.' Mot. for Partial Summ. J. on Pls.' Claims for Rescission, Lack of Consideration, Quiet Title,
Declaratory Relief and on Def.'s Counterclaims, filed Jan. 20, 2017 (CM/ECF No. 67) at 22, 25; Union Pacific's
Opp'n Mem. to Pls.' Mot. for Summ. J., filed Aug. 11, 2017 (CM/ECF No. 132) at 21and48 of70.
56

See Richard White, Railroaded: The Transcontinentals and the Making ofModern America 23 (2011 ).

57

See generally Barahona v. Union Pac. R.R. Co., 881F.3d1122, 1125-26 (9th Cir. 2018) (providing
historical background to Congress's role in facilitating westward railroad expansion).

10

address Plaintiffs' request for judgment on the rescission claim and then address the issue of
declaratory relief and counterclaims.

A. Rescission of Lease Agreements
Plaintiffs contend "[t]his entire case is centered on the resolution of one principle
oflaw: di.d the [1875 Act] convey the 'right of possession' to ralfroads." 58 Relying on the United .
States Supreme Court decision in Brandt, Plaintiffa asserts that Union Pacific received under the
1875 Act "nothing more than a non-possessory easement, allowing Plaintiffs to.occupy and _
utilize their property encumbered by the right of way in any manner that does not disrnpt the
authorized use of the right of way by Union Pacific." 59 However, when the parties entered into
their1lease agreements, it is claimed that both Plaintiffs and Union Pacific believed that Union
'

Pacific owned the right of possession.

60

Plaintiffs contend that it was only after reading Brandt

and a subsequent Utah state court case that Plaintiffs realized the limitations of Union Pacific's
- - -nglifofway,·wliicli realization promptea-Plaintiffs to stop makiiiglease payments. 61-Tlius, - - - - · - - - ,
Plaintiffs argue, there was a material mistake of fact by both parties when the parties entered into
the lease agreement, which warrants rescission of the leases and a return of the money Plaintiffs
have paid under the leases with interest. 62
The court finds that to some extent-an important extent-Plaintiffs are correct. Brandt
articulates the non-possessory nature of the easement Union Pacific received under the 1875 Act:
The essential features of easements-including, most important
here, what happens when they cease to be used-are well settled as
58

See Pls.' Mot. for Summ. J., filed July 28, 2017 (CM/ECF No. 127) at 4.

59

See id. at 4-5.

60

See id. at 66.

61

See id. at 26.

62

See id. at 66-67.

11

a matter of property law. An easement is a "nonpossessory right to
enter and use land in the possession of another and obligates the
possessor not to interfere with the uses authorized by the
easement." Restatement (Third) of Property: Servitudes § 1.2(1)
(1998). 63

In a footnote, Brandt further clarifies:
Because granting an easement merely gives the grantee the right to
enter and use the grantor's land for a certain purpose, but does not
give the grantee any possessory interest in the land, it does not
make sense under common law property principles to speak of the
grantor of an easement having retained a "reversionary interest." A
reversionary interest is "any futt1re interest left 1n a transferor or
his successor in interest." Restatement (First) of Property §
154(1 )(1936). It arises when the grantor "transfers less than his
entire interest" in a piece of land, and it is either certain or possible
that he will retake the transferred interest at a future date. Id.,
Comment a. Because the grantor of an easement has not
transferred his estate or possessory interest, he has not retained a
reversionary interest. He retains all his ownership interest, subject
to an easement. See Preseault v. United States, 100 F.3d 1525,
1533-1534 (C.A.Fed.1996) (en banc). 64
-Tnl.1s, the court agrees withPlamttffstnaCCTmon Pactfic received a non-possessory
easement under the 1875 Act. But it is not non-possessory in the classic sense. The 1875 Act did
indeed give Union Pacific power to possess under a limiting condition. Union Pacific has the
power to possess for a railroad purpose. Any right, if any, acquired from Union Pacific's
acquiescence in Plaintiffs' possession is always subject to the power of Union Pacific to possess
for a railroad purpose. Plaintiffs can occupy and utilize certain described property encumbered
by the right of way insofar as it does not interfere with Union Pacific's election, now or in the
future, to use and possess for a railroad purpose.

63

Marvin M Brandt Revocable Tr. v. United States, 134 S. Ct. 1257, 1265 (2014).

64

Id. at 1266 n.4.

12

But the court disagrees with Plaintiffs to the extent they contend that rescission of the
parties' lease agreements is the result of such a finding. The court finds that rescission is
inappropriate for two primary reasons.
First, Plaintiffs' claim for rescission is untimely. While Plaintiffs argue that it was only
after the Brandt decision that they discovered the limitations on Union Pacific's right of way,

Brandt merely confirmed what the Supreme Court had already said more than half a century
before in Great Northern R. Co. v. US., 315 U.S. 262 (1942). In Great Northern, the Supreme
Court explicitly held that the 1875 Act "clearly grants only an easement, and not a fee." 65
Although Plaintiffs contend Brandt clarified what Great Northern meant by "easement,"66 the
Supreme Court specifically noted in Brandt that the essential features of easements were already
"well settled as a matter of property law." 67 Plaintiffs do not dispute that claims for relief based
on mistake are subject to a three-year statute oflimitations period under Utah Code§ 78B-2___ ~5(3f68 By exercising reasonable diligence-and inquiry, there is no reason thatPlaintiffs could
not have decades earlier used Great Northern to make the same arguments it makes today based
on Brandt.
Second, Plaintiff's claim for rescission is redundant. In the present case, there is no
enforceable contract. The parties' "lease agreements" fail to serve a railroad purpose.

65

See Great Northern R. Co. v. US., 315 U.S. 262, 271 (1942).

66

See Pls.' Mot. for Summ. J., filed July 28, 2017 (CM/ECF No. 127) at 39.

67

Brandt, 134 S. Ct. at 1265.

68

See Pls.' Opp'n to Union Pacific Railroad Company's Mot. for Partial Summ. J. Re: Pls.' Claims for
Rescission, Lack of Consideration, Breach of Contract, Quiet Title, Declaratory Relief, and Unjust Enrichment, filed
Dec. 14, 2016 (CM/ECF No. 56) at 5.

13

The parties agree that an 1875 Act easement must be used for a railroad purpose. 69 The
court likewise agrees that an 1875 Act easement only authorizes uses that further a railroad
purpose. 70 The railroad's power to occupy is a function of purpose. Though the parameters of
"railroad purpose" may not be defined with specificity, 71 it is clear to the court that the parties'
"lease agreements" do not serve a railroad purpose. Although Union Pacific has recently tried to
recast the lease agreements as precautions that further the railroad purposes of public safety and
preservation of the right of way, 72 the effort is unpersuasive. The lease agreemenj:s are wholly
unnecessary and irrelevant to Union Pacific's ability to preserve the safety and availability of the
right of way. That ability is derived not from a private contract with Plaintiffs but from a
congressional grant under the 1875 Act. Under the 1875 Act, Union Pacific can prevent
69

See Aug. 24, 2017 Hr'g Tr., (CM/ECF No. 139) at 8:23-25, 12:7-8, 23:5-6, 26:14-27:2, 29:14-23, 49:1-8;
see also, e.g., Pls.' Mot. for Partial Summ. J. on Pls.' Claims for Rescission, Lack of Consideration, Quiet Title,
Declaratory Relief and on Def.'s Counterclaims, filed Jan. 20, 2017 (CM/ECF No. 67) at 22, 25; Union Pacific's
Opp'n Mem. to Pls.' Mot. for Summ. J., filed Aug. 11, 2017 (CM/ECF No. 132) at 21 and 48 of70.
70

See, e.g., Marvin M Brandt Revocable Tr. v. United States, 134 S. Ct. 1257, 1265 (2014) (citing United
States v. Union Pacific R. Co., 353 U.S. 112, 119 (1957) for its reference to Great Northern's conclusion that, in the
period after 1871, "only an easement for railroad purposes was granted"); Chicago & N W. Ry. Co. v. Cont'! Oil
Co., 253 F.2d 468, 472 (10th Cir. 1958) ("Upon the filing of the location map, the railroad acquired an easement for
railroad purposes"); Barahona v. Union Pac. R.R. Co., 881 F.3d 1122, 1133 (9th Cir. 2018) ("[E]ven though we
have concluded that the pre-1871 Acts do not require a railroad purpose, we must still decide whether the pipeline
served such a purpose for those rights of way acquired under the 1875 Act."); Beres v. United States, 104 Fed. CL
408, 453 (Fed. CL, 2012) ("The 1875 Act easements by the 1875 Act's very terms, as validated by contextual
history, were limited to railroad purposes").
71

See Aug. 24, 2017 Hr'g Tr., (CM/ECF ~o. 139) at 24:7-11; 34:21-24.

72

In its post-hearing supplemental briefing, Union Pacific contended that its authorization of Plaintiffs'
activities via the lease agreements "derives from or furthers a railroad purpose" because it "(l) requires Plaintiffs to
obtain a $1 million insurance policy covering the portion of the right of way they are using, (2) reserves to Union
Pacific 'the right to construct, maintain and operate new and existing facilities (including, without limitation,
trackage, fences, communication facilities, roadways and utilities)' within the right of way; (3) requires Plaintiffs to
keep the right of way 'in a safe, neat, clean and presentable condition'; (4) prohibits the 'use, treatment,
manufacture, production, storage or recycling of any Hazardous Substances' and release or discharge of Hazardous
Substances within the right of way; (5) prohibits Plaintiffs from altering or making improvements within the right of
way without Union Pacific's consent; (6) requires Plaintiffs to comply with Union Pacific's clearance standards; and
(7) allows Union Pacific to tenninate the lease upon written notice." See Union Pacific's Suppl. Br. Regarding 2017
Department oflnterior Mem. Op., filed Oct. 16, 2017 (CM/ECF No. 150) at 19-20 of 21. According to Union
Pacific, "[a]ll of these protections further the operation of the railroad by protecting it from liability, preventing
contamination of the right of way, regulating Plaintiffs' activities to avoid additional encroachments into or
improvements within the right of way, and preserving Union Pacific's ability to use the right of way for future
operations." See id. at 20 of21.

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anyone-Plaintiffs and otherwise-from interfering in any way with Union Pacific's ability to
effectively and safely operate a railroad.
"The 1875 Act was passed at a time when the federal government was especially
concerned with easing and enabling means of travel to and settlement of the Western United
States."73 Right of ways granted under the 1875 Act "must be limited to the purpose described in
the Act itself, commensurate with Congress's intent to provide for transportation across states."74
It would be an impermissibly expansive reading of the 1875 Act to find that it allows Union

Pacific to enter into lease agreements under which Union Pacific receives payments in exchange
for letting Plaintiffs engage in business that does not serve a railroad purpose. 75 It would be
essentially finding that Union Pacific is allowed to authorize third parties to do something on the
right of way that Union Pacific itself is not authorized to do--and indeed, for Union Pacific to
receive payment for it. 76

73

Geneva Rock Prod., Inc. v. United States, 107 Fed. Cl. 166, 171 (Fed.Cl., 2012).

74

See id. at 172.

75

See Beres v. United States, 104 Fed. CL 408, 447-48 (Fed.Cl., 2012) ("Plaintiffs are correct when they
state: 'Nothing in the [1875] Act purports to create a unique estate in the railroad. Nothing in the Act purports to
characterize the easement, which was the interest the railroad received, as anything other than an easement for the
purpose specified, to inure to the benefit of the subsequent private owner of the subdivision burdened by the
easement. Nothing in the Act purports to transmogrify these railroad easements into a broad, unspecified purpose.'
... Even strictly constrned against the original grantee, an expansive reading to include public recreational trails in
the scope of the 1875 Act grant would appear to defeat the Congressional intent to make public lands available to
railroad companies for the purpose of constrncting railway lines."); Geneva Rock Products, Inc. v. United States,
107 Fed.Cl. 166, 172 (Fed.CL, 2012) ("As such, 1875 Act easements must be limited to the purposes described in
the Act itself, commensurate with Congress's intent to provide for transportation across states. This is a purpose
inconsistent with use of that same land as a recreational trail, the central purpose of which is to provide a venue for
healthful exercise and enjoyment of the outdoor environment rather than conveyance of persons or goods."). The
court notes that neither Plaintiffs nor Defendants have argued that the Plaintiffs' underlying activities on the
disputed area, which the lease agreements attempt to authorize, do themselves further a railroad purpose.
76

Cf Barahona v. Union Pac. R.R. Co., 881F.3d1122, 1135 (9th Cir. 2018) ("We are similarly
unpersuaded by the district court's conclusion that the incidental-use doctrine does not apply because the pipeline is
operated by a third-party and for private gain. Grand Trunk makes it clear that a railroad may license third parties to
do what it could do itself, even if the third party benefits in addition to the railroad. See 91 U.S. at 468 (' [W]e are
not prepared to assert that [the railroad] may not license the erection of buildings for its convenience, even though
they may be also for the convenience of others.')."); Union Pac. R.R. Co. v. Santa Fe Pac. Pipelines, Inc., 231
Cal.App.4th 134, 175 (Cal.App. 2 Dist., 2014) ("It is difficult to imagine that irt a time of national crisis a rational

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Thus, as the court finds the lease agreements do not serve a railroad purpose, they are
unenforceable. 77
Given that Plaintiffs claim for rescission is untimely and redundant, the court finds
Plaintiffs Motion for Summary Judgment as to that claim is denied. Further, Plaintiffs' request
for the return of payments made to Union Pacific under the "lease agreements," is denied. This
request is footed on the rescission claim, which the court has denied. Additionally, the court
notes that Plaintiffs at any time during its "lease" with Union Pacific had the same option of
nonpayment to Union Pacific based on the 1875 Act and Great Northern. 78

B. Declaratory Relief and Counterclaims
Having detennined that rescission of the parties' unenforceable "lease agreements" is
unwarranted, the court turns to the remaining relief sought by Plaintiffs in their Motion for
Summary Judgment: declaratory relief and dismissal of Defendant's counterclaims. 79
Plaintiffs seek the following declarations-rrom the court:
1. that Union Pacific and its successors or assigns have a non-possessory
easement in the Disputed Property;

Congress would pass, and the President would sign, laws to encourage the railroads to constrnct a transportation
corridor through public lands and across the nation, seen as critical to the safety and development of the country, and
at the same time mean to give the railroads the right to rent the subsurface under that corridor to private third parties
from a nonrailroad industry, in order to generate revenue for itself.").
77

The court notes that Union Pacific suggests the court should apply a looser interpretation of "railroad
purpose" under the incidental use doctrine. See Union Pacific's Suppl. Br. Regarding 2017 Department oflnterior
Mem. ·op., filed Oct. 16, 2017 (CM/ECF No. 150) at 6-8 of21; Reply Mem. Supporting Union Pacific's Suppl. Br.
Regarding 2017 Department oflnterior Mem. Op., filed Nov. 13, 2017 (CM/ECF No. 152) at 3-4. As constrned by
Union Pacific, the incidental use doctrine allows it to lease its right of way insofar as the lease is incidental to or not
inconsistent with its continued use of its right of way for railroad purposes. See Union Pacific's Suppl. Br.
Regarding 2017 Department oflnterior Mem. Op., filed Oct. 16, 2017 (CM/ECF No. 150) at 7 of21. But the court
finds nothing in the text, history, or purpose of the 187 5 Act that suggests such a broad interpretation ofrailroad
purpose is appropriately applied to rights of way granted under the 1875 Act.
78

The court further notes that the fact that the contract is unenforceable because of circumstances of this
case does not mean that one cannot agree to pay money, and indeed pay money, and receive a benefit, however
defined, even if the contract as a contract is unenforceable.
79

See Pls.' Mot. for Summ. J., filed July 28, 2017 (CM/ECF No. 127) at 6.

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2. that all lease agreements between Union Pacific and Plaintiffs pertaining
to the Disputed Property, and all iterations of and amendments to the
lease agreements, are null and void, and Plaintiffs have no liability in
connection therewith;
3. that neither Plaintiffs, nor their successors or assigns, nor their tenants,
nor anyone occupying the Property with their permission, are required to
make any lease payments to Union Pacific or its successors or assigns in
connection with their use of the Disputed Property;
4. that no lease or rent can ever be charged by Union Pacific or its
successors and assigns with respect to the use or occupancy of the
Disputed Property by anyone;
5. that Union Pacific has no right to exclude Plaintiffs and their successors,
invitees, and tenants from the Disputed Property; and 6. that the Court's Order may be recorded with the appropriate government
agencies, including the Utah County Recorder, to put the public on notice
of the entry of the order and to clarify issues relative to the Property. 80
The court denies Plaintiffs Motion for Summary Judgment as to these requests for
declaratory relief. The declarations sought by Plaintiffs are in excess of the necessities of this
case. However, the court does declare that Brandt itself declares that Unions Pacific has a non------------

--

-

possessory easement in the area covered by its right of way. The court further declares that
possession is available to Union Pacific only insofar as it exercises its power to use land subject
to its right of way for a railroad purpose.
Further, Plaintiffs' Motion for Summary Judgment seeks the dismissal of all of
Defendant's counterclaims with prejudice. 81 Defendant's counterclaims against Plaintiffs are (1)
declaratory relief, (2) breach of contract, (3) encroachment/trespass, and (4) ejectment. 82
The specific declarations sought by Union Pacific in its counterclaims are as follows:
1. The United States granted a right of way to Utah Southern pursuant to
the terms of the 1875 Act.

80

See id. at 7-8.

81

See id. at 8.

82

See Am. Answer and Countercl., filed Jan. 15, 2016 (CM/ECF No. 15) at 21-25.

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2. The 1875 Right of Way extends to 100 feet on each side of the
centerline of the Provo Industrial Lead in Section 16.
3. Union Pacific is the successor in interest to Utah Southem's 1875
Right of Way.
4. The 1875 Right of Way entitles Union Pacific to exclusive use and
possession of the real property within 100 feet on each side of the
centerline of the Provo Industrial Lead.
Plaintiffs do not dispute the first three declarations sought by Union Pacific. 83 As to the
fourth, the court grants Plaintiffs' Motion for Summary Judgment. The 1875 Act provides Union
Pacific a non-possessory easement that only allows

for exclusive use and pos-sessioii insofar-as-- ---

Union Pacific elects to use the land subject to its easement for a railroad purpose.
As to Union Pacific's counterclaims for breach of contract, encroachment/trespass, and
ejectment, the court grants Plaintiffs' Motion for Summary Judgment. One cannot breach an
unenforceable contract, nor encroach/trespass on a right of way not used for railroad purposes.
The occupancy by Plaintiffs was acquiesced in by Union Pacific. The question of ejectment is
premature, as Union Pacific has not indicated that it wants to use the property for a railroad
purpose. Union Pacific's right of way is a function oflimited purpose and use.

83

See Pls.' Mot. for Summ. J., filed July 28, 2017 (CM/ECF No. 127) at 69.

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CONCLUSION
Having detem1ined that (i) the claim for rescission is unwarranted because it is untimely
and redundant, (ii) the declaratory relief sought by Plaintiffs are in excess of the necessities of
the case, and (iii) summary judgment is appropriate for Union Pacific's counterclaims, as Union
Pacific has not sought to use the relevant property for a railroad purpose, the court hereby
GRANTS IN PART and DENIES IN PART Plaintiffs' Motion for Summary Judgment.
Again noting that the State of_Utah may be involved and helpful to the parties, the court
has considered the issues presented by the parties, and thus let judgment be entered accordingly.

4/,_
DATED this. ~9 day of May, 2018.

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