Court Opinion

ID: 3017468
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:17:20.969044+00
Date Added: 2024-06-11T12:09:33.902357
License: Public Domain

___________

                                   No. 95-3588
                                    ___________

Grantwood Village,                      *
                                        *
             Appellant,                 *
                                        *   Appeal from the United States
        v.                              *   District Court for the
                                        *   Eastern District of Missouri.
Missouri Pacific Railroad               *
Company; Gateway Trailnet,              *
Inc.; Grant's Farm Manor, Inc.; *
Union Pacific Railroad Company,         *
                                        *
           Appellees,                   *
____________________                    *
                                        *
Rails to Trails Conservancy,            *
                                        *
             Amicus Curiae.             *
                                   ___________

                      Submitted:    April 10, 1996

                          Filed:   September 9, 1996
                                   ___________

Before BOWMAN, BEAM, and MURPHY, Circuit Judges.
                               ___________

BEAM, Circuit Judge.

        This case involves a dispute over the conversion of a railroad right-
of-way into a trail system under the National Trail Systems Act (Trails
Act).    Grantwood Village (the Village) appeals the district court's order1
granting summary judgment to the defendants.      For reversal, Grantwood makes
two broad arguments:

         1
       The Honorable Terry I. Adelman, United States Magistrate
Judge for the United States District Court for the Eastern District
of Missouri.    The parties consented to try their case before
Magistrate Adelman pursuant to 28 U.S.C. § 636(c).
(1)   the     district court did not have jurisdiction over this dispute
involving rights to real property under Missouri law; and (2) even if the
district court had jurisdiction, Gateway Trailnet, Inc. (Trailnet) does not
have a valid interest in the property.             We affirm.

I.     BACKGROUND

       The origin of this dispute derives from a letter dated April 6, 1872,
in which President Ulysses S. Grant authorized his St. Louis agent, Charles
W. Ford, to grant Pacific Railroad Company (Pacific) a right-of-way over
his   land    outside   of    St.   Louis,    Missouri.     Later      in   1872,   Pacific
constructed its Carondelet Branch across this property.                      There is no
recorded easement or other indicia of title from President Grant to
Pacific.

       Missouri Pacific Railroad Company (MoPac), Pacific's successor in
interest to the right-of-way, provided railroad service to customers on the
Carondelet Branch until approximately 1987, at which time the line was used
for other types of railroad service.           In June 1991, MoPac's parent company,
Union Pacific, decided to proceed with abandonment of the Carondelet
Branch.       Thus, in early 1992, MoPac filed notice with the Interstate
Commerce Commission (ICC)2 pursuant to 49 C.F.R. § 1152.50, seeking
exemption from other applicable federal laws governing the procedures for
abandonment of any part of a railroad line (set out in 49 U.S.C.A. §§ 10903
&    10904    (West   Supp.   1996)).        MoPac's   request   for    abandonment     and
discontinuance of operations over 6.2 miles of the Carondelet Branch
included the portion of the right-of-way now in

          2
       As of January 1996, the ICC was abolished as a separate
agency and its functions have been taken over by the Surface
Transportation Board (STB) in the Department of Transportation.
This administrative change, however, does not affect our analysis
in the present case because the applicable laws have also been
amended to apply to the STB. Therefore, for ease of reference we
continue to refer to the entity as the ICC throughout this opinion.

                                             -2-
question.     On February 28, 1992, a Notice of Exemption was served and
published in the Federal Register.   This Notice of Exemption was to become
effective on March 29, 1992.

     Prior to publication of the notice, Trailnet asked the ICC to issue
a Notice of Interim Trail Use or Abandonment (NITU) pursuant to ICC
regulations (49 C.F.R. § 1152.29) adopted to implement the applicable
portion of the Trails Act.     See 16 U.S.C.A. § 1247(d) (West Supp. 1996).
MoPac expressed its willingness to negotiate with Trailnet for interim
trail use by filing a letter with the ICC.

     On March 25, 1992, the ICC issued its Decision and NITU (Decision),
in which it reopened proceedings and stated that the Notice of Exemption
published in the Federal Register on February 28 was modified as necessary
to implement interim trail use under the Trails Act.       The ICC further
stated in its Decision that interim trail use could be implemented if,
within 180 days from the date of service of the Decision, an agreement was
reached.    The Decision also provided that if no agreement were reached by
that time, MoPac could abandon that line.    Subsequently, the ICC granted
two extensions of the 180-day negotiation period at the request of the
parties.

     On December 30, 1992, one day before time was to expire under the
extensions, MoPac and Trailnet entered into a "Donation, Purchase and Sale
Agreement" (Agreement) under which MoPac agreed to sell its interest in the
property to Trailnet for interim trail use.        MoPac contemporaneously
executed and delivered a quitclaim deed to Trailnet.         The Agreement
expressly stated that it did not merge into the deed, thereby surviving the
closing and transfer of title.    The Agreement also expressly stated that
its terms and the transfer were subject to the provisions of the Trails Act
and applicable ICC orders.    Upon transfer of the property, MoPac

                                     -3-
removed its rails and ties.    Trailnet made improvements and has maintained
the property for trail use.

     The right-of-way in question is located on real property adjacent to
lots in a Village subdivision.     The Village has been using portions of this
property as a parkway and bird sanctuary.       The Village originally filed a
single-count quiet title action in state court against MoPac and Trailnet.
MoPac answered by stating that it no longer had any interest in the
property because it had been transferred to Trailnet.        In its first amended
petition, the Village sought a declaratory judgment regarding the rights
of the parties in the property at issue.              Specifically, the Village
requested a declaration that it is the fee simple absolute owner of the
real property.   The Village also sought ejectment of Trailnet, Grant's Farm
Manor, Inc.,3 and another party subsequently dismissed from the case.
Trailnet had the case removed to federal district court on the basis that
the first amended petition includes rights of Trailnet arising under the
laws of the United States--i.e., the Trails Act.        The district court denied
the Village's motion to remand the case back to state court.

     Both   Trailnet   and   the   Village   filed    cross-motions   for   summary
judgment.   The district court denied the Village's motion but granted
summary judgment to MoPac and Trailnet.        The court concluded that under
Missouri law, Pacific had acquired an easement by estoppel, which had
passed to MoPac and eventually to Trailnet.              The court rejected the
Village's contention that any right held by MoPac had been abandoned for
railroad purposes, holding that the ICC had retained jurisdiction over the
right-of-way by authorizing interim trail use and that federal law preempts
state law on the question of abandonment.            Finally, the district court
concluded

      3
      The Village added Grant's Farm Manor, Inc.--the fee title-
holder to property south of the disputed railroad right-of-way--as
a named defendant in the event that entity could claim some
interest in the property at issue.

                                       -4-
that it lacked jurisdiction to review an ICC order.         The Village now
appeals to this court.

       On appeal, the Village asserts that federal courts lack subject
matter jurisdiction to hear this dispute because it involves rights to real
property under Missouri law.      Thus, according to the Village, this case
should be remanded to state court.    The Village also argues that Trailnet
does not have an interest in the property under Missouri law.

II.    DISCUSSION

       We review a grant of summary judgment de novo and apply the same
standards as the district court.    Allen v. Bridgestone/Firestone, Inc., 81
F.3d 793, 795 (8th Cir. 1996).       Summary judgment is appropriate if the
pleadings and other evidence "show that there is no genuine issue as to any
material fact and that the moving party is entitled to a judgment as a
matter of law."     Fed. R. Civ. P. 56(c).   We give the nonmoving party the
benefit of every inference drawn from the evidence.       Reich v. ConAgra,
Inc., 987 F.2d 1357, 1359 (8th Cir. 1993).

       We are first called upon to determine whether the district court
erred in determining that this case was properly removed from state court.
We conclude that it did not.   Although the Village attempts to characterize
this lawsuit as a "quiet title" action, it is in essence a collateral
attack on the ICC's order authorizing interim trail use on the right-of-
way.   Trailnet received MoPac's interest pursuant to a quitclaim deed and
Agreement executed in compliance with the ICC's Decision and NITU.     Thus,
a challenge to Trailnet's interest in the right-of-way necessarily includes
a review of the ICC's Decision.    Moreover, the Village's attempt to prevent
the preservation of the railroad right-of-way necessarily entails a finding
that MoPac abandoned the right-of-way at some point in time.     Because the
ICC has exclusive and plenary authority

                                      -5-
to determine whether a rail line has been abandoned, see, e.g., Chicago &
N.W. Transp. v. Kalo Brick & Tile, Co., 450 U.S. 311, 321 (1981), the
question of whether MoPac abandoned the right-of-way necessarily involves
federal law.       See id.; see also 28 U.S.C. § 1331.           Therefore, federal
jurisdiction is proper and the district court did not err in refusing to
remand this case to state court.      See 28 U.S.C. § 1441(b).

       Although the district court had general subject matter jurisdiction
under 28 U.S.C. § 1331 and a remand to state court was not required, a
separate question arises as to whether the district court had jurisdiction
to review a lawsuit challenging, in effect, the validity of an ICC order.4
Pursuant to the Hobbs Act, circuit courts (other than the Federal Circuit)
have   exclusive    jurisdiction   over    any   action   to   enjoin,   suspend,    or
determine the validity of an ICC order.           28 U.S.C. § 2342(5).      No other
court would have jurisdiction to review an ICC decision such as the one in
this case.   Glosemeyer v. Missouri-Kansas-Texas R.R., 879 F.2d 316, 320
(8th Cir. 1989), cert. denied, 494 U.S. 1003 (1990).                Therefore, the
district court correctly concluded that it did not have jurisdiction to
review the ICC's Decision.

       Although the Village could have challenged the ICC's Decision by
filing a petition directly in this court, they failed to do so.                     The
Village's attacks on the ICC's Decision are, therefore, foreclosed because
the Village failed to make these arguments to the ICC and failed to file
a petition for judicial review within sixty days of the ICC's decision of
March 25, 1992, as required by the Hobbs Act.         28 U.S.C. §§ 2341 et seq.;
see also 28 U.S.C.

       4
      Complaints originally filed in state court opposing, either
directly or indirectly, the continued use of a railroad right-of-
way under the Trails Act are routinely removed to federal court,
even though the district court goes on to hold that it lacks
jurisdiction to review an ICC order. See, e.g., Schneider v. Union
Pac. R.R., 864 F. Supp. 120 (D. Neb. 1994); Victor Oolitic Stone
Co. v. CSX Transp., Inc., 852 F. Supp. 721 (S.D. Ind. 1994).

                                          -6-
§ 2321.     Therefore, the Village has waived any challenge to the validity
of the ICC's order.

       Even after reviewing the Village's contentions, we find them to be
without merit.    The Village contends that neither MoPac nor Trailnet have
an interest in the right-of-way.     Specifically, the Village asserts that
under Missouri law MoPac only had a nontransferable license and that it
abandoned this interest when it stopped using the right-of-way.

       We turn first to the question of what interest Trailnet has in the
Carondelet right-of-way under Missouri law.     The Village argues that the
right-of-way was only a license and as such it was not transferable to
Trailnet.    We recognize that state law defines the nature of the property
interest.     In this case, a railroad used the right-of-way for over one-
hundred years,     undoubtedly incurring significant expenses in doing so.
President Grant's letter clearly gave MoPac's predecessor in interest a
right-of-way across his property.   If the interest in the right-of-way had
been only a personal, nontransferable license, then it is curious how the
license passed from the original grantee (Pacific) to its successors in
interest.     Therefore, we agree with the district court that Trailnet
received a valid real estate interest from MoPac under Missouri law.    See
Allee v. Kirk, 602 S.W.2d 922, 924-25 (Mo. Ct. App. 1980) (citing Sanford
v. Kern, 122 S.W. 1051 (Mo. 1909)).

       The Village next contends that MoPac abandoned any interest it had
in the right-of-way.    We are again guided by the principle that the ICC's
determination of abandonment is plenary, pervasive, and exclusive of state
law.   See Colorado v. United States, 271 U.S. 153, 164-65 (1926); Kalo
Brick & Tile, 450 U.S. at 323.    Therefore, federal law preempts state law
on the question of abandonment while the ICC retains jurisdiction over the
right-of-way.     Accordingly, we must next examine the applicable federal
law.

                                     -7-
        In 1968, Congress enacted the Trails Act in order to establish a
national system of nature trails.   See Glosemeyer, 879 F.2d at 318.    By the
early 1970s, Congress had become concerned about the abandonment of
railroad rights-of-way.    Id. (referring to the Railroad Revitalization and
Regulatory Reform Act of 1976, § 809, Pub. L. No. 94-210, Title VIII, 90
Stat. 144 (codified as amended at 49 U.S.C. § 10906)).      One of the major
impediments to preserving these rights-of-way existed in state property
laws which prescribed that once rail service is discontinued after the
ICC's approval of abandonment, such easements would automatically expire
and the rights-of-way would revert to adjacent property owners.        Id.   In
response to this problem, Congress enacted the Trails Act Amendments of
1983.     These amendments included a section that expressly dealt with the
question of abandonment.     Specifically, this section provides:

        Consistent with the purposes of that Act, and in furtherance of
        the national policy to preserve established railroad rights-of-
        way for future reactivation of rail service, to protect rail
        transportation corridors, and to encourage energy efficient
        transportation use, in the case of interim use of any
        established railroad rights-of-way pursuant to donation,
        transfer, lease, sale, or otherwise in a manner consistent with
        this chapter, if such interim use is subject to restoration or
        reconstruction for railroad purposes, such interim use shall
        not be treated, for purposes of any law or rule of law, as an
        abandonment of the use of such rights-of-way for railroad
        purposes.

16 U.S.C.A. § 1247(d) (emphasis added).    Congress determined that interim
trail    use was to be treated like discontinuance rather than as an
abandonment.     Preseault v. Interstate Commerce Comm'n, 494 U.S. 1, 8
(1990).     Therefore, the ICC's authorization of interim trail use in its
Decision precludes a finding of abandonment of the right-of-way under state
law.    See, e.g.,   Preseault v. Interstate

                                     -8-
Commerce Comm'n, 853 F.2d 145, 150 (2d Cir. 1988), aff'd, 494 U.S. 1
(1990).5

     The Village next argues that MoPac's abandonment predates the Trails
Act's application.   Even prior to enactment of the Trails Act, the ICC had
exclusive jurisdiction to deem a railroad right-of-way abandoned.     See,
e.g., Colorado, 271 U.S. at 164-65; Kalo Brick & Tile, 450 U.S. at 319-20.
State law claims can only be brought after the ICC has authorized an
abandonment and after the railroad has consummated that abandonment
authorization.   See, e.g., Hayfield N. R.R. v. Chicago & N.W. Transp. Co.,
467 U.S. 622, 635 (1984).6   Therefore, MoPac could only have abandoned its
right-of-way, even prior to the Trail Act's application, if the ICC made
such a determination, which it has not done in this case.

     Lastly, the Village attacks the validity of the ICC's Decision on
several other grounds.       The Village asserts that the Trails Act is
inapplicable in this case because the quitclaim deed did not

       5
       Even if we examine Missouri law, we nevertheless conclude
that state law does not mandate a conclusion that the right-of-way
has been abandoned. See Kansas City Area Transp. Auth. v. 4550
Main Assocs., Inc., 742 S.W.2d 182, 191 (Mo. Ct. App. 1987), cert.
denied, 484 U.S. 1063 (1988).     In the present case, the facts
indicate that the right-of-way was used for customer service until
about 1987, at which time it was used for other types of railroad
services until early 1992.        This use of the right-of-way
contradicts a finding of abandonment, even under state law, prior
to 1992 at which time the Trails Act was in effect.
      6
       A recent decision by the D.C. Circuit does not affect our
analysis. In Fritsch v. Interstate Commerce Comm'n, 59 F.3d 248
(D.C. Cir. 1995), cert. denied, 116 S. Ct. 1262 (1996), the court
held that a railroad could abandon its property interest after the
ICC issued a decision permitting abandonment but prior to the
expiration of a 180-day public use condition under 49 U.S.C.
§ 10906, thereby ending the ICC's jurisdiction over the property.
Unlike the Fritsch case, MoPac did not repeatedly express its clear
intent to abandon the right-of-way after the ICC issued its
Decision; rather, MoPac expressed willingness to negotiate with
Trailnet. Moreover, under the Trails Act, the right-of-way could
not have been abandoned during a period of interim use.

                                    -9-
expressly reserve a reversionary interest in MoPac.           Moreover, according
to the Village, the ICC's Decision is void because the 180-day period
lapsed before an agreement was reached between MoPac and Trailnet.                As
noted above, these arguments should have been presented to the ICC and in
a petition directly to us challenging the ICC's Decision.            Therefore, the
Village has waived these arguments.          Nevertheless, the plain language of
the Agreement demonstrates that both it and the quitclaim deed were drafted
in order to comply with the reversionary interest requirement in the Trails
Act.   See 16 U.S.C. § 1247(d).      The ICC, moreover, was free to extend this
time period for an agreement as it did in this case.           Therefore, we find
these arguments meritless.

III. CONCLUSION

       For the reasons discussed above we conclude that the district court
did    not   err   in   granting   summary   judgment   to   MoPac   and   Trailnet.
Accordingly, we affirm the district court's order and deny all pending
motions.

       A true copy.

              Attest:

                    CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.

                                        -10-