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United States ex rel. Peterson v. Port of Benton County

United States District Court, E.D. Washington

May 17, 2019

UNITED STATES OF AMERICA, ex rel., RANDOLPH PETERSON and TRI-CITY RAILROAD COMPANY, LLC, Plaintiffs,
v.
PORT OF BENTON COUNTY, et al., Defendants.

          ORDER DENYING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT AGAINST THE CITY OF RICHLAND

          THOMAS O. RICE CHIEF UNITED STATES DISTRICT JUDGE.

         BEFORE THE COURT is Plaintiffs Randolph Peterson and Tri-City Railroad Company, LLC's Motion for Partial Summary Judgment Against the City of Richland (ECF No. 87), Motion to Strike (ECF No. 104), and Motion to Expedite (ECF No. 105). These matters were submitted for consideration without a request for oral argument. Defendants the City of Richland and the Port of Benton filed a Response. The Court has reviewed the record and files herein, and is fully informed.

         Plaintiffs' request to strike Defendant City of Richland's Sur-Reply and corresponding request to expedite (ECF Nos. 104; 105) are denied as moot, as the Court does not rely on the complained of briefing for this Order. For the reasons discussed below, the Motion for Partial Summary Judgment (ECF No. 87) is denied.

         BACKGROUND

         The pending motion for summary judgment concerns alleged retaliation by the City of Richland against Plaintiff Tri-City Railroad Company, LLC (“TCRY”) for successfully petitioning the United States Surface Transportation Board (“STB”) for relief from the City of Richland's efforts to create an at-grade crossing over railroad tracks leased by TCRY. As discussed more fully below, TCRY alleges the City of Richland retaliated by creating a “Southern Connection Options List” and by threatening suit against the Union Pacific Railroad (“UP”), among other things. The following provides the context for Plaintiffs' allegations.[1]

         1. TCRY's leasehold interest in tracks owned by the Port of Benton

         The Port of Benton (the “Port”) owns approximately 16 miles of railroad trackage, which is generally referred to as the “Southern Connection.” ECF No. 97 at 2, ¶ 4. In 2002, TCRY began leasing the trackage from the Port and agreed to maintain the tracks and pay monthly rent, inter alia. ECF No. 88-3. Relevant to the pending motion, the southern end of the track runs between Gage Boulevard and Tapteal Drive, passing through the City of Richland and into the City of Kennewick, a what is called the “Richland Junction”.

         2. Center Parkway crossing - initial efforts

         In 2001, before TCRY acquired its leasehold, the City of Kennewick and the City of Richland had already “began a coordinated effort” to create an at-grade railroa crossing (the “Center Parkway Extension”) over two sets of tracks-one set owned by the Port (and subsequently leased to TCRY) and the other owned by UP. ECF No. 95 at 4; 98 at 2-3, ¶ 2; ECF No. 93-2 (2001 agreement between City of Kennewick and City of Richland regarding preparation for Center Parkway crossing); see ECF No. 93-4. The crossing was part of a plan between the City of Kennewick and the City of Richland to connect commercial retail centers between the two cities by extending Center Parkway Road over the tracks, connecting Gage Boulevard and Tapteal Drive. ECF No. 95 at 4. Because the plans called for an at-grade crossing over the Port's tracks, “the proposed project was hostile to the Port's property interests” as owner and TCRY's leasehold property interest. ECF No. 95 at 4-5.

         In April of 2004, the City of Kennewick, in conjunction with the City of Richland, petitioned the Washington State Utilities & Transportation Commission (“WUTC”) to obtain “an at-grade crossing of Center Parkway over the Union Pacific railroad spur west of the Richland Junction[.]” ECF No. 89 at 3, ¶ 4. In November 2005, at UP's request, Kennewick's petition to cross TCRY tracks at Center Parkway was consolidated with the first petition. ECF No. 89 at 3, ¶ 5.

         According to the Port, “[t]he Port recognized that Richland and Kennewick had compelling arguments that could likely support efforts to condemn the Port's property in favor of extending Center Parkway over the Port-owned railroad track.” ECF No. 95 at 5; see ECF No. 88-4 (petition). As such, “[r]ather than risk losing the ability to participate in how its interests would be impacted, in 2006, the Port entered into a Railroad Crossing Agreement [] with Richland and Kennewick” where “the Port agreed to grant the cities a crossing easement over its trackage” and the cities agreed “to obtain authority for the crossing from the Port's lessee, TCRY, or to obtain legal authority (e.g., authority from the court) for the proposed crossing.” ECF No. 95 at 5-6.

         “In 2007, WUTC rejected Kennewick's . . . petitions for the at-grade crossing over UP and TCRY tracks at Center Parkway[.]” ECF No. 89 at 4, ¶ 7.

         Over the course of the next few years, the City of Richland continued to pursue its goal of securing the Center Parkway crossing. See ECF No. 89 at 4-8, ¶¶ 8-25. In particular, the City of Richland entered into a Standard Form Railroad Track Use Agreement (“SFRTUA”) with UP in April of 2011. ECF No. 89 at 7, ¶ 15. The agreement included the declaration that “the City desires that all railroad interchange operations at Richland Junction be permanently eliminated[.]” ECF No. 89 at 5, ¶ 16. As part of the agreement, UP agreed to “secure[] all agreements necessary with Tri-City Railroad Company, LLC . . . to permanently relocate the UP/Tri City Railroad interchange from Richland Junction and the path of Center Parkway.” ECF No. 89 at 7, ¶ 22. UP also reserved the right “to name an agent to handle UP rail traffic to and from industries located along the Track” and “named TCRY as its agent to handle UP rail traffic to and from industries located on the Horn Rapids Rail Spur.” ECF No. 89 at 8, ¶¶ 24-25.

         3. Second WUTC petition for crossing; TCRY's “protected” conduct

         On April 8, 2013, the City of Kennewick filed another petition with the WUTC to construct an at-grade rail crossing at Center Parkway. ECF No. 89 at 8, ¶ 27. On May 31, 2013, the City of Richland filed a motion to intervene with the WUTC in support of the City of Kennewick's petition; the motion was granted on June 4, 2013. ECF No. 89 at 8, 28. In November, 2014, TCRY received notice of the petition. ECF No. 89 at 9, ¶ 29. The WUTC “approved the extension of Center Parkway between Kennewick and Richland” and the Superior Court for the County of Benton, Washington affirmed the WUTC orders on December 9, 2014. See Tri-City R.R. Co. v. State of Washington, Benton County Cause No. 14-2-07894-8; ECF No. 88-24 at 2.

         On March 19, 2015, TCRY petitioned the United States Surface Transportation Board (STB) “for a declaratory order seeking preemption of Kennewick and Richland's efforts at Richland Junction to protect its railroad operations and leasehold rights.” ECF No. 89 at 9, ¶ 30 (emphasis own).

         “On May 7, 2015, Kennewick and Richland filed a petition for condemnation with the Benton County Superior Court for an easement across TCRY tracks at Richland Junction for an at-grade-crossing.” ECF No. 89 at 9, ¶ 31.

         “On September 12, 2016, the STB issued a declaratory order preempting Kennewick and Richland's attempt at condemnation and denying the City of Richland's request for an at-grade crossing[;] Richland subsequently appealed the STB declaratory order to the Ninth Circuit Court of Appeals.” ECF No. 89 at 10, ¶ 33.

         4. Southern Connection Options List

         Plaintiffs assert the City of Richland, through the firm Fletcher & Sippel, create the so-called “Southern Connection Options List” out of retaliation for TCRY petitioning the STB. The Port paints a much different picture-according to the Port, the Port hired the firm Fletcher & Sippel to create the Options List and City of Richland played no part in its formation. ECF No. 95 at 9-10. The Port further asserts the Options List had nothing to do with the Center Parkway project, and provides an explanation as to the origin and purpose of the Options List, as detailed below.

         According to the Port, the Horn Rapids Industrial Park-an industrial area located at the opposite end of the Southern Connection from the Richland Junction (approximately 12 miles away)-began seeing economic growth in 2012. ECF No. 95 at 8. Due to the expected increase in rail traffic, the Port hired a railroad consulting firm, Tangent Services, Inc., to advise the Port on how to best utilize its railroad assets to support economic development. ECF No. 95 at 8.

         Around this time, the Port “began questioning whether TCRY was meeting its lease obligations and properly maintaining the Port's trackage” and these “concerns were compounded by the fact that TCRY refused to provide the Port with any maintenance records” while “representing that it was not required to maintain the track at any specific Federal Railroad Administration standard, which the Port disputed.” ECF No. 95 at 9. “The Port decided to consult with an attorney who focused on railroad law to advise the Port on the terms of the lease, including TCRY's maintenance obligations” and “[a]s the Port's concerns about TCRY grew, in early 2016, the ...


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