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Rail Switching Services, Inc. v. Marquis-Missouri Terminal, LLC

Court of Appeals of Missouri, Eastern District, Fifth Division

November 7, 2017

RAIL SWITCHING SERVICES, INC., Appellant,
v.
MARQUIS-MISSOURI TERMINAL, LLC, Respondent.

         Appeal from the Circuit Court of St. Louis County Honorable Ellen Levy Siwak

          KURT S. ODENWALD, JUDGE.

         Introduction

         Rail Switching Services, Inc. ("RSSI") appeals from the trial court's grant of summary judgment in favor of Marquis-Missouri Terminal, LLC ("MMT") on RSSI's claim for tortious-interference. RSSI alleged in its petition that MMT interfered with a contract between RSSI and the Pemiscot County Port Authority ("the Port Authority") granting RSSI exclusive use of the Port Authority's railway. The trial court found that the contract between RSSI and the Port Authority was void ab initio under Section 432.070.[1] The trial court then granted summary judgment, holding that, as a matter of law, MMT could not interfere with a void agreement.

         On appeal, RSSI raises three points. First, RSSI asserts that summary judgment was improper because material facts remain in dispute on its claim for tortious interference. Second, RSSI claims that the trial court erred, as a matter of law, in holding that Section 432.070 rendered RSSI's contract void, and assuming arguendo, even if the agreement was void, the contract's invalidity did not preclude RSSI from obtaining relief on its claim for tortious interference. Third, RSSI argues that the trial court erroneously relied upon Section 432.070 to find the agreement between RSSI and MMT to be void because Section 432.070 is vague and therefore unconstitutional.

         Because the record shows that there are no material facts in dispute, we deny RSSI's first point on appeal. We reject RSSI's second point on appeal because the trial court did not err in finding that the contract between RSSI and the Port Authority was void and that MMT could not interfere with a void contract. Finally, in its third point, we reject RSSI's claim that Section 432.070 is unconstitutional. We affirm the judgment of the trial court.

         Factual and Procedural History

         The focal point of the present dispute is a five-mile railway owned by the Pemiscot County Port Authority ("the Port Authority Line") that extends from the town of Hayti, Missouri to the Mississippi River. The Port Authority Line connects with a mainline railway owned by the Burlington Northern and Santa Fe Railway Company ("the BNSF Line") in Hayti, Missouri.

         In late 2011 or early 2012, RSSI[2] began negotiating for an agreement relating to RSSI's use of the Port Authority Line with David Madison ("Madison"), the Executive Director of the Port Authority. The Port Authority had previously entered into agreements with RSSI that allowed RSSI to store railcars owned by third parties on the Port Authority Line.

         By March 2012, RSSI and Madison reached an agreement expanding RSSI's activities on the Port Authority Line. The agreement ("the 2012 Operating Agreement") allowed RSSI to continue storing railcars on the Port Authority Line. However, in its "Use and Operation" section, the 2012 Operating Agreement also provided the following:

The [Port Authority] Line shall be used by RSSI operating as a non-common carrier contract switcher under the provisions of the Interstate Commerce Act, as amended. RSSI shall have exclusive use of the [Port Authority] Line for all rail purposes, provided, however, that 1) [the Port] Authority may, to the extent that it does not unreasonably interfere with RSSI's use thereof, continue to extend the [Port Authority] Line using its own forces and resources, and that 2) RSSI does not unreasonably hinder or interfere with the ability of [the Port] Authority to allow customers to ship or receive products or materials on the [Port Authority] Line. ... It is understood, that a customer may provide his own means of switching his industry, i.e. a track mobile; but customers will not be allowed to retrieve from or deliver cars to the BNSF. . . . (emphasis added).

         Madison and J. Michael Carr, the President of RSSI, signed the 2012 Operating Agreement. According to its own terms, the 2012 Operating Agreement was set to terminate after February 28, 2014.

         A Board of Commissioners ("the Board") governs and administers the Port Authority.[3]Although Madison apprised the Board of his negotiations with RSSI and the existence of a new purported agreement, the Board never voted to approve the 2012 Operating Agreement. The Board, as an entity, never signed the 2012 Operating Agreement. Nor did the Board authorize, in writing, Madison to execute the 2012 Operating Agreement. The Board did not create or produce any writing expressly establishing Madison's authority, as the Executive Director of the Port Authority, to execute the 2012 Operating Agreement on the Board's behalf.

         In April 2012, Mark Marquis ("Marquis"), the President of MMT, contacted the Port Authority regarding MMT's interest in building an oil-storage facility near Hayti. MMT proposed building its facility along the Port Authority Line, where MMT would extract oil from arriving unit trains and load the oil onto barges for transport on the Mississippi River. Madison believed that MMT could become the Port Authority's most profitable customer.

         By May 2012, MMT entered into a five-year Lease Agreement with the Port Authority to lease certain premises near the Port Authority Line. Marquis and Duane Michie ("Michie"), Chairman of the Board of Commissioners, signed the agreement. Pursuant to the Lease Agreement, MMT built a facility near the Port Authority Line, constructed storage tanks, installed 8, 000 feet of additional track as rail siding, fitted pipelines for collecting and transferring oil, and connected additional rail switches. MMT spent approximately $15 million on these improvements.

         In August 2012, MMT entered into a Railroad Track Usage Agreement with the Port Authority. Marquis and Michie signed and executed the agreement. The Railroad Track Usage Agreement granted MMT non-exclusive track access rights over and across the entire Port Authority Line for the movement of railcars, locomotives, and track mobiles to all points on the Port Authority Line. The Railroad Track Usage Agreement did not require MMT to use RSSFs services, nor did the agreement reference any rights RSSI had regarding the Port Authority Line. MMT planned to receive unit trains of oil, transported by BNSF Co., starting in mid-October 2012.[4]

         When the Port Authority signed the Railroad Track Usage Agreement with MMT, Madison did not believe that MMT's operations violated the terms of the 2012 Operating Agreement. Madison also did not believe that the language in the "Use and Operation" section of the 2012 Operating Agreement required a customer on the Port Authority Line to use RSSFs services. Accordingly, Madison never instructed MMT that it needed to use RSSI to switch the unit trains or use RSSI to provide any services relating to receiving unit trains on the Port Authority Line.[5] On October 17, 2012, as scheduled, MMT began receiving unit trains of oil on the Port Authority Line.

         Disputes subsequently arose over MMT's use of the Port Authority Line. RSSI maintained that the exclusive-use provision of the 2012 Operating Agreement prohibited MMT from directly receiving or delivering cars from the BNSF Line and that MMT was required to use RSSFs services to switch the unit trains from the BNSF Line to the Port Authority Line. In turn, MMT contended that its Railroad Track Usage Agreement with the Port Authority did not require MMT's use of RSSFs services and that, even if valid, the 2012 Operating Agreement prohibited RSSFs unreasonable interference with the ability of the Port Authority's customers to receive products on the Port Authority Line.

         Embroiled in conflict over the use of the Port Authority Line, the Port Authority filed suit, seeking a declaratory judgment that its 2012 Operating Agreement with RSSI was void.[6]The Port Authority averred that it was a municipal corporation subject to the mandate of Section 432.070 requiring contracts with municipal corporations to be in writing. The Port Authority argued that its agreement with RSSI was void due to non-compliance with the statute because the Port Authority never signed the 2012 Operating Agreement. The Port Authority moved for summary judgment. Finding for the Port Authority, the trial court declared the 2012 Operating Agreement void ab initio for violating Section 432.070's mandate that contracts of a municipal corporation be subscribed by the parties, or their agents authorized by law, duly appointed, and authorized in writing. RSSI appealed. On appeal, the Southern District of this Court affirmed the trial court's judgment, holding that Section 432.070 applied to the Port Authority's contract with RSSI and that the 2012 Operating Agreement did not comply, actually or substantially, with the statute's requirements. Pemiscot Cty. Port Auth. v. Rail Switching Servs.. 523 S.W.3d 530, 535-36 (Mo. App. S.D. 2017). The Supreme Court of Missouri denied transfer. Pemiscot Cty. Port Auth. v. Rail Switching Servs.. 2017 Mo. LEXIS 354 (SC96505) (Mo. Aug. 22, 2017).

         While its lawsuit against the Port Authority was pending, RSSI filed a one-count petition against MMT alleging tortious interference.[7] In its petition, RSSI asserted that the 2012 Operating Agreement "granted RSSI the exclusive right of operation for all rail purposes" and that the agreement "prohibited [Port Authority] customers from retrieving or delivering cars to/from BNSF." RSSI further claimed that MMT knew of the terms of the 2012 Operating Agreement; however, MMT entered into agreements with BNSF Co. and the Port Authority in direct contravention of RSSI's purported contract with the Port Authority. Specifically, RSSI alleged that when "MMT entered into its Lease and Usage Agreement with [the Port Authority], RSSI and [the Port Authority] had a valid, existing contract that gave RSSI exclusive use of the [Port Authority] Line for all purposes as the sole rail carrier authorized to retrieve from or deliver cars to BNSF." RSSI maintained that, although informed of the terms of the 2012 Operating Agreement, "MMT intentionally induced [the Port Authority] to breach its contractual obligations to RSSI to avoid the cost and expense of RSSI providing MMT's rail switching needs, and continues to do so." According to RSSI, MMT lacked any "justification or excuse for interfering with [the 2012 Operating Agreement] or for inducing [the Port Authority] to breach said agreement." MMT moved for summary judgment on RSSI's claim, and RSSI filed a counter-motion for summary judgment.

         The trial court adjudicating RSSI's tortious-interference claim entered summary judgment in favor of MMT and against RSSI. The trial court found that RSSI pursued a claim for MMT's alleged tortious interference with the 2012 Operating Agreement, but that the 2012 Operating Agreement had been declared void ab initio in the prior suit. Because RSSI could not establish the existence of a valid contract, MMT was entitled to judgment in its favor as a matter of law on RSSI's claim for tortious inference with the 2012 Operating Agreement. The trial court entered summary judgment in favor of MMT on RSSI's petition. This appeal follows.[8]

         Points on Appeal

         RSSI raises three points. First, RSSI asserts that entry of summary judgment was error because material facts remain in dispute regarding the validity of the 2012 Operating Agreement, RSSI's business expectancies with the Port Authority, and MMT's improper inducement of the Port Authority to breach its contractual agreements. Second, RSSI claims the trial court erred in determining that Section 432.070 rendered void the 2012 Operating Agreement, and that the contract's invalidity precluded RSSI from obtaining relief. Third, RSSI argues that Section 432.070, and in particular the statute's use of the phrase "other municipal corporation, " is unconstitutionally vague.

         Standard of Review

         We review summary judgment de novo. Brentwood Glass Co. v. Pal's Glass Serv., Inc., 499 S.W.3d 296, 300 (Mo. banc 2016) (referencing ITT Commercial Fin. Corp. v. Mid-Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993)). "Summary judgment is appropriate when 'there is no genuine dispute about material facts and, under the undisputed facts, the moving party is entitled to judgment as a matter of law.'" Bishop & Assocs., LLC v. Ameren Corp.. 520 S.W.3d 463, 468 (Mo. banc 2017) (quoting Parr v. Breeden. 489 S.W.3d 774, 778 (Mo. banc 2016)). A defending party establishes entitlement to summary judgment by demonstrating:

(1) facts negating any of the claimant's necessary elements; (2) the claimant, after an adequate period of discovery, has been unable, and will not be able, to produce evidence sufficient to allow the trier of fact to find the existence of any one of the claimant's elements; or (3) there is no genuine dispute of the existence of facts required to support the defending party's properly pleaded affirmative defense.

Scottsdale Ins. Co. v. Addison Ins. Co., 448 S.W.3d 818, 826 (Mo. banc 2014) (citing ITT Commercial Fin. Corp., 854 S.W.2d at 381). Each of these methods individually establishes that the defending party's right to judgment as a matter of law. Goerlitz v. City of Maryville. 333 S.W.3d 450, 453 (Mo. banc 2011). This Court will affirm the trial court's grant of summary judgment on any reasonable theory supported by the record. Id.

         On review, we view factual assertions in the light most favorable to the non-movant and draw all reasonable factual inferences in the non-movant's favor. Arbors at Sugar Creek Homeowners Ass'n v. Jefferson Bank & Trust Co.. 464 S.W.3d 177, 183 (Mo. banc 2015). But, we accept as true the facts contained in the moving party's affidavits or otherwise propounded in support of the moving party's motion, unless the non-moving party's response properly contradicts the proffered facts. Goerlitz, 333 S.W.3d at 452-53. In the context of summary judgment, a material fact is one from which the right to judgment flows. Cent. Trust & Inv. Co. v. Sienaboint Asset Mamt.. LLC. 422 S.W.3d 312, 320 (Mo. banc 2014) (citing Goerlitz, 333 S.W.3d at 453). "A genuine dispute exists when 'the issue, or dispute, [is] a real and substantial one-one consisting not merely of conjecture, theory[, ] and possibilities.'" Brentwood Glass Co., 499 S.W.3d at 300 (quoting ITT Commercial Fin. Corp., 854 S.W.2d at 378).

         Discussion

         We will discuss RSSI's three points on appeal in reverse order. Because Point Three challenges the constitutionality of a state statute-and thereby potentially depriving this Court of jurisdiction to consider the appeal-we will begin with Point Three. Next, we will consider Point Two regarding whether RSSI established a viable claim against MMT as a matter of law. Finally, we will review Point One and decide whether there are any material facts in dispute.

         I.Point Three-The Constitutionality of ...


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