Opinion
Civil Action No. 00-2043-CM
June 26, 2002
MEMORANDUM AND ORDER
Plaintiff Western Resources, Inc. ("WR") filed suit against defendants Union Pacific Railroad Company ("UP") and The Burlington Northern and Santa Fe Railway Company ("BNSF") alleging defendants breached Rail Transportation Agreements entered into between the parties. Plaintiff also alleges one count of breach of the duty of good faith and fair dealing and one count for restitution against defendants UP and BNSF. All claims relate to the alleged breach of the Rail Transportation Agreements. Pending before the court is defendant UP and defendant BNSF's Motion for Partial Summary Judgment Dismissing Plaintiff's Claims for Contract Termination and Restitution (Doc. 71). As set forth below, defendants' motion is denied.
In accordance with the applicable summary judgment standard, the facts are uncontroverted or related in the light most favorable to plaintiff as the non-moving party. Fed.R.Civ.P. 56. The pending motion has been filed early in the course of litigation, before the parties have had the benefit of extensive discovery to support their asserted facts. In several instances the court has referenced facts that the parties "allege" or "contend." Although the court has used these terms, it notes that the "facts" associated with them have been set forth by affidavit as required by Rule 56 and the court accepts them as true under the guidelines of Rule 56 for purposes of this motion.
• Agreements Between Parties
Plaintiff is a utility serving the State of Kansas. Plaintiff supplies electricity 365 days a year to over 600,000 electric customers in the State of Kansas. Defendants are both interstate railroads that, among other things, provide transportation of coal by rail.
Plaintiff operates Jeffrey Energy Center ("JEC"), a 3-unit electric generating station located in Pottawatomie County in Kansas. JEC is plaintiff's largest coal-fired plant and runs exclusively on coal fuel. Accordingly, plaintiff must receive a regular and constant supply of coal at JEC in order to supply electricity to its customers.
In July 1973, plaintiff entered into a contract to purchase coal from a supplier. The current coal supply agreement with this provider specifies that plaintiff "shall purchase exclusively from [the supplier] all coal . . . necessary to operate units 1-3 of the JEC through December 31, 2020. The coal from this supplier originates in the state of Wyoming's Powder River Basin ("PRB"). Defendant railroads are the only railroads which can transport coal from the PRB origin mines to JEC.
Since 1972, plaintiff has had a contract with defendant railroads for transporting coal from the PRB in Wyoming to plaintiff's JEC facility in Pottawatomie County, Kansas. In 1991, plaintiff and defendant railroads considered entering into an amended or a new contract for the transportation of the coal. Accordingly, in 1991, plaintiff and defendant railroads (or their predecessors) began negotiation of a contract for transportation of coal from the PRB to JEC. On January 27, 1993, the parties entered into a Letter of Understanding that formed the basis for a rail transportation agreement. In 1994, plaintiff and defendant railroads entered into an agreement that is designated ICC-BN-C-2801 (the "agreement" or "contract"). The agreement became effective on July 15, 1994. The parties agreed that the terms, conditions, and rates set forth in the agreement would apply retroactively to January 27, 1993. The agreement is set to expire on December 31, 2013.
Under the agreement, defendant railroads have a joint obligation to transport JEC's coal requirements from the PRB origin mines to JEC. Typically, defendant BNSF transports plaintiff's coal trains between the PRB and Northport, Nebraska, and defendant UP then transports the trains between Northport and JEC. The agreement obligates defendant railroads to transport 100% of the coal required for and shipped to JEC from the origin mines while the agreement is in effect. In addition, the agreement specifies that the "parties further desire that the contractual arrangement promote maximum equipment utilization and efficiency."
Plaintiff and defendant BNSF (previously Burlington Northern) also entered into a separate contract, designated ICC-BN-C-2802. This second agreement applies to BNSF's transportation of coal to JEC on or after January 1, 1993.
• Specific Contract Provisions
Rates
Articles X and XI of the agreement establish the rates to be charged for, and other terms of, the transportation services provided under the agreement. The rate for transportation services under the contract is $11.20 per ton of coal. However, plaintiff contends that since the alleged breach by defendants in April 1997, the contract rate is more properly listed as $5.00 to $6.00.
Unless otherwise indicated, reference to "agreement" denotes the agreement designated ICC-BN-C-2801 entered into between all parties.
Plaintiff further asserts that without the benefit of discovery, the true contract rate is indeterminable.
Notification of Annual Cycle Times
Article V.B. of the agreement provides that "[n]ot later than each November 1 during the term of this Agreement, Railroads shall provide to Shipper its non-binding projected Train cycle times for the next calendar year, by month for Trains moved pursuant to this Agreement." Since April 30, 1997, and most recently in November 1999, plaintiff has requested, and defendant railroads have provided, the non-binding train cycle time projections required by Article V.B. of the agreement.
A cycle time within the meaning of the agreement is the number of hours it takes a coal train to complete a round trip from the PRB origin mine to JEC and back to the PRB mine.
Notification of Annual Coal Requirements
Under the agreement, plaintiff notifies defendant railroads of its coal requirements each year. The agreement provides that "[n]ot later than each December 1 during the term of this Agreement, Shipper shall provide to Railroads a non-binding declaration of Tons of Coal anticipated to be shipped under this Agreement in the next calendar year, by month." Since April 30, 1997, plaintiff has continued to make its declarations of tons of coal anticipated to be shipped under the agreement.
Unloading Times
Article VI.G.2 of the agreement allows plaintiff six hours of time to unload a train and release it to defendant railroads, called "unloading time." Under Article VI.G.2 of the agreement, if unloading takes more than six hours, plaintiff must pay defendant UP a "Destination Detention Charge" of $225, subject to adjustment, for each additional hour. Under this same provision, if an "Unloading Disability Under Section J of this Agreement occurs during a Train's Unloading Free Time, Shipper's Unloading Free Time shall be extended for the duration of Unloading Disability Time as defined in Section J of this Agreement." Since April 30, 1997, and as recently as August 11, 2000, plaintiff has frequently provided defendant UP with notices of Unloading Disability that entitle plaintiff to additional time to unload a train without incurring a detention charge.
Provision of Rail Cars
Article IV.A.1 of the agreement provides that the "Shipper shall furnish sufficient railcars, including spares, to assemble Trains of 115 railcars for shipments under this agreement at no charge to Railroads, except as otherwise provided in this Agreement." Article IX.A of the Agreement provides that "Railroads shall, at Shipper's verbal request, confirmed in writing, remove, rotate and/or add Shipper Supplied Railcars."
• Facts Related to Alleged Breaches
• Alleged Breaching Conduct/Miscellaneous Facts
Plaintiff contends defendant railroads' alleged failures to perform the agreements commenced in April 1997 and continue to the present time. Specifically, plaintiff contends that commencing in April 1997 defendant railroads failed to deliver to JEC approximately 1.6 million tons of the coal required by plaintiff for JEC as nominated in writing by plaintiff to defendant railroads. Between May 1, 1997 and August 31, 2000, defendant railroads transported over 27 million tons of coal to JEC, representing more than 1800 round trips between PRB and JEC.
In 1997, 1998, 1999 and 2000, plaintiff has been compelled to provide more trainsets than were reasonably necessary to enable JEC to receive its coal requirements. Accordingly, on several occasions since April 30, 1997, plaintiff has invoked defendant railroads' obligations under the agreement to place additional trains in service to JEC in order to minimize the damages plaintiff was incurring due to defendant railroads' lack of service. However, even though these additional cars were provided in 1997 and 1998, plaintiff contends defendant railroads still failed to transport JEC's coal requirements. Therefore, plaintiff asserts that since March 31, 1997 through the present, defendant railroads have failed to provide sufficient locomotives, equipment, facilities, and personnel to enable JEC's coal requirements to be transported with less than six trainsets.
Due to defendant railroads' alleged failure to perform, JEC's coal supply levels reached critically low levels, thereby requiring plaintiff to obtain power from sources other than JEC, curtail off-system sales, obtain redundant coal rail cars and to incur other damages.
Because defendant railroads' deliveries of coal are made in increments, plaintiff asserts that it could not assess with reasonable certainty when, taken together, defendant railroads' deficient deliveries of coal amounted to depriving plaintiff of the object of the agreements or when defendant railroads would provide transportation in accordance with the agreements. Plaintiff asserts that the degree of non-performance by defendant railroads varied from month to month. In addition, beginning in at least November 1996, defendant railroads made some assurances of contract performance to plaintiff.
Plaintiff further contends that it had no alternative but to continue to utilize defendant railroads for JEC's coal transportation service, regardless of whether they were meeting their obligations under the agreement. Specifically, plaintiff contends it was forced by its statutory obligation to provide electricity on a daily basis and could not risk any non-judicial attempt to terminate the agreement because of the consequence of defendant railroads halting coal deliveries altogether, even for a short period of time. Accordingly, plaintiff asserts it suffered duress when defendant railroads failed to comply with terms of agreement and failed to exercise good faith in performance of the agreement.
As a contract customer, plaintiff enjoys the benefits of the rates and other contract terms that the parties negotiated. However, as noted, plaintiff contends defendant railroads' failure to transport coal in accord with the agreement has denied plaintiff the benefits of the agreement. Plaintiff asserts it did not obtain coal requirements for JEC and that it continues to have to supply excessive numbers of rail cars to defendant railroads.
• Communication Regarding Alleged Breaches
Plaintiff made its complaints known to defendant railroads and urged them to improve service, beginning in July 1997. Plaintiff specifically notified defendant railroads in writing of the alleged material breach of the agreements by letters dated March 8, 1999, and May 3, 1999.
In a letter dated March 8, 1999, from Jack Reid, plaintiff's Director of Fuels Generation Services to Rich Vasy, defendant UP's Senior Assistant Vice President-Energy, and David Quilici, defendant BNSF's Vice President Coal Marketing-West, plaintiff advised defendant railroads that plaintiff thought defendant railroads had materially breached the agreement. In the letter, plaintiff submitted a claim for $25,000,000.00 and demanded that service be restored in accord with the agreement. In addition, the letter indicated that plaintiff sought to engage in good faith negotiations to resolve its submitted claim. The letter does not explicitly suggest that plaintiff sought to terminate the agreement.
Following the March 8 letter, in a May 3, 1999 letter to defendant railroads, plaintiff's counsel Don Barry, reiterated plaintiff's belief that defendant railroads had materially breached the contract. In the May 3 letter, plaintiff indicated that it would pursue "litigation" and that it was entitled to "appropriate relief." Plaintiff noted that with this language, plaintiff suggested that it would seek to terminate the agreement. At no time prior to filing its original complaint did plaintiff explicitly state that it considered the agreements void or terminated in any respect.
Plaintiff never attempted to terminate the agreement prior to filing its complaint in this action. However, plaintiff asserts that it did not have the reasonable ability to unilaterally terminate the agreement without subjecting itself to an unacceptable risk that defendant railroads would not perform at all under the contract. Because of plaintiff's dependence on coal to fuel its JEC, coupled with the fact that only defendant railroads could physically transport coal from the PRB origin to JEC, plaintiff believed it could not terminate the agreement without a court judgment. Moreover, plaintiff asserts that defendant railroads themselves in their answer in this case claim that plaintiff did not have the right to terminate the agreement. Therefore, plaintiff contends the only way it could attempt to terminate the agreement was to file a lawsuit, which it has now done. No prior lawsuits regarding this matter have been filed.
• Complaint
In its complaint, plaintiff contends that delays in coal deliveries began in April 1997 and that material breaches of the agreements commenced on April 30, 1997. Plaintiff further alleges that breaches of the agreements continue to the present. Defendants contend that plaintiff has continued to treat the agreements as fully binding and has continuously sought to enjoy the benefits of the agreements. However, plaintiff asserts that it has not treated the agreements as fully binding. Specifically, plaintiff asserts that it has not received the benefit of the agreements because defendant railroads failed to transport JEC's coal requirements since at least March 1997, thus depriving plaintiff of benefits as set forth in the agreements.
• Summary Judgment Standard
Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Adler v. Wal-Mart Stores, Inc . , 144 F.3d 664, 670 (10th Cir. 1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp . , 475 U.S. 574, 587 (1986)). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Id . (citing Anderson v. Liberty Lobby, Inc . , 477 U.S. 242, 248 (1986)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Id . (citing Anderson , 477 U.S. at 248). The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Id . at 670-71. In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. Id . at 671 (citing Celotex Corp. v. Catrett , 477 U.S. 317, 325 (1986)). Once the movant has met this initial burden, the burden shifts to the nonmoving party to "set forth specific facts showing that there is a genuine issue for trial." Anderson , 477 U.S. at 256; see Adler , 144 F.3d at 671 n. 1 (concerning shifting burdens on summary judgment). The nonmoving party may not simply rest upon its pleadings to satisfy its burden. Anderson , 477 U.S. at 256. Rather, the nonmoving party must "set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant." Adler , 144 F.3d at 671. "To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein." Id .
Finally, the court notes that summary judgment is not a "disfavored procedural shortcut," rather, it is an important procedure "designed to secure the just, speedy and inexpensive determination of every action." Celotex , 477 U.S. at 327 (quoting Fed.R.Civ.P. 1).
• Discussion
A. Background
In the Amended Complaint, plaintiff raises three separate counts: 1) breach of Rail Transportation Agreements (hereinafter "contracts" or "agreements"); 2) breach of obligation of good faith; and 3) restitution. In its prayer for relief, plaintiff seeks 1) a declaration that defendants have materially breached the contracts; 2) a declaration that plaintiff is excused from further performance under the contracts from the date of defendants' material breach; 3) a declaration that the contracts were void and are of no further force and effect after the date of the material breach; 4) an award of damages at trial; 5) an award of restitution in the amount defendants were unjustly enriched from the date of the material breach by defendants; and 6) an award of costs, interest, expenses, and other just relief.
Defendants seek partial summary judgment in their favor and against plaintiff on plaintiff's claims for contract termination and restitution. Defendants do not ask the court to determine whether there was a material breach of the contracts at issue. Instead, defendants propose that the sole issue for the court's determination under the pending motion is whether plaintiff has waived any claim for termination or restitution by continuing to accept defendants' performance under the contracts for three years after the date of the alleged material breach. Defendants also specify that they do not seek summary judgment on plaintiff's claim under the contract for consequential damages for the alleged breach.
Considering defendants' assertions, the court construes defendants' motion as seeking summary judgment on plaintiff's claim for restitution, wherein plaintiff seeks an award of restitution in the amount defendants were unjustly enriched from the date of the material breach by defendants. In addition, the court construes defendants' motion as seeking summary judgment on plaintiff's claim for breach of contract to the extent it seeks the relief of 1) a declaration that plaintiff is excused from further performance under the contracts from the date of defendants' material breach and 2) a declaration that the contracts were void and are of no further force and effect after the date of the material breach.
B. Waiver of Right to Seek Termination and Restitution
As noted, plaintiff here seeks the court to declare the contracts void as of the date of the alleged breach and to declare that plaintiff is excused from further performance as of that date.
In its brief in opposition, plaintiff refers to this prayer for relief as a prayer to "terminate" the contract as of the date of the alleged breach. There is also general reference made to "rescission" of the contract in the briefs on the pending motion. These terms appear to be used interchangeably. The court does not address the proper characterization of plaintiff's prayer for relief or the legal effect of such prayer, if any, here.
Plaintiff also seeks restitution for the alleged overpayments to defendants beginning on the date it requests the contract be rescinded — the date of defendants' alleged breach of the contracts.
Rescission or termination of a contract based on an alleged breach may be warranted where the breach is "material and the failure to perform so substantial as to defeat the object of the parties in making the agreement." Alexander v. Everhart, 27 Kan. App. 2d 897, 904, 7 P.3d 1282, 1288 (2000) (citing In re Johnson's Estate, 202 Kan. 684, 691 Syl. ¶ 3, 452 P.2d 286, 292 (1969)). Restitution is a remedy often requested in conjunction with a request for a declaration of rescission of a contract. See 5A Arthur L. Corbin, Corbin on Contracts § 1223 (Election of Remedies) (1964). Restitution as a remedy seeks to restore the injured party to "as good a position as that occupied by him before the contract was made." 5 Arthur L. Corbin, Corbin on Contracts § 995 (Damages) (1964).
• Waiver of Right to Rescind
Defendants argue plaintiff has waived any claim for termination or restitution by continuing to accept defendants' performance under the contracts for three years after the date of the alleged material breach. In certain circumstances, a party may waive its right to assert entitlement to rescission or termination of a contract.
Generally, "[if] a party to a contract remains silent as to a claimed invalidity of a contract and continues to treat property as his own which was the subject of the contract, he will be deemed to have waived his objection and will be bound by the instrument." Sec. Underground Storage, Inc. v. Anderson, 347 F.2d 964, 968 (10th Cir. 1965) (applying Kansas law). Under Kansas law, "[o]nce it has been established that a contractual right has been waived a party possessing the contractual right is precluded from asserting it in a court of law." Iola State Bank v. Biggs, 233 Kan. 450, 458-59, 662 P.2d 563, 571-72 (1983).
The parties do not appear to dispute that Kansas state law governs matters arising out of the agreements at issue.
"Waiver in contract law implies that a party has voluntarily and intentionally renounced or given up a known right, or has caused or done some positive act or positive inaction which is inconsistent with the contractual right." Iola State Bank, 233 Kan. at 458-59, 662 P.2d at 571-72. Kansas courts have noted that "[w]hether the principle is described as equitable estoppel, quasi estoppel, waiver, ratification, election, or as a requirement of consistency in conduct is not very important. It is really but an application of the homely proverb that one may not eat his cake and have it too." Powers v. Scharling, 76 Kan. 855, 859, 92 P. 1099, 1100 (1907).
For waiver to apply, "an intent to waive . . . must be shown." J.T. Majors Son, Inc. v. Lippert Bros, Inc., 263F.2d 650, 654 (10th Cir. 1958) (applying Kansas law). However, an intent to waive "may be inferred from the actions of the parties." Id. Waiver has been inferred from silence and from actions taken that are inconsistent with an intent to rescind a contract. See Lehigh, Inc. v. Stevens, 205 Kan. 103, 110-11, 468 P.2d 177, 184-85 (1970) (continuing to make payments under contract for more than one year after knowledge of defect in product at issue and entering into additional contracts for purchase of same product with knowledge of defects in products deemed waiver of breach of contract remedy); Wells v. Albers, 122 Kan. 643, 645-46, 253 P. 412, 413 (1927) (silence with knowledge of basis for contract repudiation deemed ratification of contract). The "question of intent is usually one of fact." Id.
See also Citizens' Nat'l Bank of Chickasha v. Lehrling, 113 Kan. 545, 548-49, 215 P. 828, 830 (1923) (silence when opportunity to speak deemed election to ratify contract); Cummings Harvester Co. v. Sigerson, 63 Kan. 340, 341-43, 65 P. 639, 639-40 (1901) (finding that where there is acceptance of the property at issue, retention and use therof, knowledge of the grounds for rescission of the contract, then payments on or of the purchase price may give rise to waiver on part of the buyer); Mills v. Osawatomie, 59 Kan. 463, 468-69, 53 P. 470, 471-72 (1898) (delayed silence deemed an election to waive contract rights).
2. Analysis
It is undisputed that plaintiff did not file a lawsuit seeking rescission of the contract and restitution until January 24, 2000 — nearly three years after April 1997 — the month in which plaintiff asserts defendants first breached the agreements. Whether plaintiff manifested an intent to rescind the agreements after the alleged breach in April 1997 but prior to the date the present lawsuit was commenced raises genuine issues of material fact that preclude summary judgment for defendants here.
Following the alleged breach, it is undisputed that plaintiff continued to act in accordance with the terms of the agreements. For example, plaintiff continued to make its annual declarations of tons of coal needed to be shipped after the alleged April 1997 breach. Plaintiff continued to request that defendants provide the non-binding train cycle time projections after the alleged April 1997 breach. Even after April 1997, plaintiff continued to provide defendants with notices of Unloading Disability that entitled plaintiff to additional time to unload a train without incurring a detention charge. In addition, even after April 1997, plaintiff asserted its right under the agreement to require defendants to place additional railcars in service to JEC. Moreover, it is undisputed that plaintiff continued to accept the shipments of coal provided by defendants to JEC and to make payments in accord with the agreements.
However, when plaintiff first voiced its concern regarding the alleged breach and the intent conveyed by its concern is disputed. Plaintiff contends it first made its complaints regarding defendants' alleged breach of the agreements in July 1997. Specifically, plaintiff presents at least twenty-eight letters from plaintiff's personnel to defendants' personnel citing plaintiff's concerns regarding the cycle times for movement of coal from the PRB to JEC. The correspondence ranges in dates from July 11, 1997, to March 5, 1999.
For example, in a January 7, 1998 letter, plaintiff indicated to defendant that it "has not received such projected cycle times and as such [plaintiff] is not able to provide its non-binding declarations of tons of coal anticipated to be shipped . . . [plaintiff] is requesting that [defendants] comply with the above-captioned Article of the Agreement as soon as possible." (Pl.'s Resp. at 21). In a March 10, 1998 letter, plaintiff conveyed to defendants, "As deliveries are not being met, [plaintiff's] concern for future deliveries grows . . . your attention to improving JEC's cycle times is requested." ( Id. at 22). In a May 20, 1998 letter, plaintiff expressed, "Gentlemen, the cycle times for Jeffrey are not improving since completion of the BNSF tunnel work . . . When can we expect effective service?" ( Id.)
In a January 13, 1999 letter, plaintiff asserted "First, [plaintiff] implores the [defendants], jointly or separately, to take immediate steps to remedy their deficiencies in their service to Jeffrey Energy Center . . . I am therefore demanding the railroads return service to the level contemplated in the Agreement which promoted the maximum equipment utilization and efficiency." ( Id. at 24). In a March 8, 1999 letter, plaintiff advised defendants that plaintiff thought defendant railroads had materially breached the agreements. The letter asserted a claim for $25,000,000.00 and demanded that service be restored in accordance with the agreement. The letter does not explicitly state that plaintiff sought to terminate the agreement. In a May 3, 1999 letter to defendants, plaintiff reiterated its belief that defendants had materially breached the agreement and indicated plaintiff would pursue "litigation" and indicated plaintiff was entitled to "appropriate relief."
Defendants argue that these letters do not reference any intent on the part of plaintiff to rescind the contract or to seek restitution from the date of the alleged breach. Instead, defendants assert that the intent of the letters was only to improve service under the contract or to advise defendants of their material breach. Plaintiff asserts that these letters express plaintiff's intent to rescind the contract, especially the May 3, 1999 letter that indicates entitlement to "appropriate relief." Given the dispute regarding what manifestations of intent the letters convey, the court finds a genuine issue of material fact exists regarding whether the correspondence conveys plaintiff's intent to rescind the contract or whether they demonstrate behavior that is inconsistent with an intent to rescind.
In addition, plaintiff asserts no waiver can operate because plaintiff was induced to continue its performance under the contract by defendants' assurances of their contract performance. In Lehigh, Inc. v. Stevens, the Kansas Supreme Court recognized that payments made under a contract even after a party is aware of a defect in the contract may not be used to imply waiver of the right to rescind where those payments have been induced by actions of the allegedly breaching party. Lehigh, 205 Kan. at 110, 468 P.2d at 184. By analogy, where a non-breaching party continues to act in accord with an agreement even after it is aware of a reason entitling it to rescind, those actions may not be used to imply waiver of the right to rescind when they have been induced by actions of the allegedly breaching party.
Here, plaintiff asserts that defendants' continued assurances that they would improve cycle times and perform in accord with the agreement preclude them from now asserting that plaintiff's actions infer an intent to waive its right to rescind. For example, in a report by defendants to the Surface Transportation Board ("STB"), defendants asserted that "Some Powder River Basin coal consumers expressed concerns that UP service from the Basin might deteriorate . . . Operating results to date should alleviate any such concerns." (Pl.'s Resp. at 25). Another filing by defendants with the STB on August 20, 1997, asserted that "service for Powder River Basin coal traffic has been adversely affected by several factors, but appears to be returning to normal." On September 26, 1997, defendants advised plaintiff that they would continue efforts "to restore service to normal levels." ( Id.)
On October 21, 1997, defendants conveyed to STB that they "expected operation to return to acceptable levels on the Central Corridor within 30 days, and after 25 days we are nearly there." ( Id.) In a November 18, 1997 letter to plaintiff, defendants assert that an action plan "will significantly improve train velocity as we work to return to normal service levels." ( Id. at 27). In a December 3, 1997 letter, defendants conveyed to plaintiff that "Everyone at Union Pacific is totally committed to returning our company's service performance to the levels our customers deserve." In a February 19, 1998 email, defendants conveyed to plaintiff "Rest assured everyone at UP is focused on doing everything possible to improve the delivery rates at JEC." ( Id. at 28). Construing the facts in the light most favorable to plaintiff, a reasonable fact finder could conclude that plaintiff was induced into delaying its right to rescind by the assurances of defendants.
Accordingly, the court finds defendants have failed to meet their burden to demonstrate an absence of a genuine issue of material fact regarding plaintiff's intent to rescind the agreements. Defendants' motion is denied.
Plaintiff has also asserted that waiver is inapplicable because plaintiff did not have sufficient notice of the breach, due to the continuing nature of the performance under the agreement. In addition, plaintiff asserts that waiver is inapplicable because plaintiff was operating under economic duress when it decided to continue its compliance with the contract. Given the court's finding that a genuine issue of material facts exists, as noted above, the court declines to address these additional bases for plaintiff's opposition to the entry of summary judgment for defendants here.
• Order
IT IS THEREFORE ORDERED that defendant UP and defendant BNSF's Motion for Partial Summary Judgment Dismissing Plaintiff's Claims for Contract Termination and Restitution (Doc. 71) is denied.
IT IS SO ORDERED