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L.K.L. Associates, Inc v. Union Pacific Railroad Co.

United States District Court, D. Utah

May 29, 2018

L.K.L. ASSOCIATES, INC., a Utah corporation; and HEBER RENTALS, LC, a Utah limited liability company, Plaintiffs,
v.
UNION PACIFIC RAILROAD COMPANY, a Delaware corporation, Defendant and Counterclaim Plaintiff.

          MEMORANDUM OPINION AND ORDER

          Bruce S. Jenkins Senior District Judge

         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, 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.

         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 corner, 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 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 runs 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 descriptions are taken from the survey monuments that are currently in place.[18]
• 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 constructed a building on the northern portion of their claimed property. A portion of this building falls within the 100-foot right of way being claimed by Union Pacific.[22]
• 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]
• 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]
• On or about January 14, 1997, Heber Rentals agreed to lease a portion of the property located within Union Pacific's claimed right of way.[25]
• In 1998, LKL 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 LKL 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]
• After Brandt, Plaintiffs interpreted the decision to mean that Union Pacific did not have exclusive use and possession of its right of way. 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 lawsuit to this court.[34]
• 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]
• In 1874, A.J. Stewart of the Government Land Office performed a retracement survey of Section16 and reset the survey monuments for the northwest corner 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]
• 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 corner and west quarter corner on Section 16 were re-monumented.[45]
• The current section corner marker and quarter section marker are perpetuations of the 1909 re-monumentation.[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]

         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 affirming 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 way to the extent of 100 feet on each side of the center line of the track.[51]

         After citing to Jamestown and Northern R. Co. v. Jones, 111 U.S. 125, 130-31 (1900), wherein the Supreme Court adopted the rule 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 of location 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 ...


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