Ind. Harbor Belt R.R. Co. v. United Transp. Grp., Inc.

587 F.Supp.3d 731

INDIANA HARBOR BELT RAILROAD COMPANY, Plaintiff,

v.UNITED TRANSPORTATION GROUP, INC. and Michael V. Pellin, individually and d/b/a United Rail Service Inc., Defendants.

CAUSE NO.: 2:17-CV-287-TLS

United States District Court, N.D. Indiana, Hammond Division.

Signed February 23, 2022

Edward A. DeVries, Mary Louise Kandyba, Wilson Elser Moskowitz Edelman & Dicker LLP, Chicago, IL, for Plaintiff.

Larry G. Evans, Andrew T. Shupp, Hoeppner Wagner & Evans LLP, Valparaiso, IN, for Defendants United Transportation Group, Inc., Michael V. Pellin.

OPINION AND ORDER

THERESA L. SPRINGMANN, UNITED STATES DISTRICT JUDGE

This matter is before the Court on the Defendants’ Amended Motion for Partial Summary Judgment [ECF No. 80], which is fully briefed and ripe for ruling. For the reasons set forth below, the Court denies the Defendants’ motion. This case will proceed to trial.

PROCEDURAL BACKGROUND

On July 3, 2017, the Plaintiff, Indiana Harbor Belt Railroad Company (IHB), filed a Complaint [ECF No. 1] against the United Transportation Group, Inc. (UTG) and United Rail Service Inc. (United Rail), seeking to recover $197,150 in rates and charges allowed under the Interstate Commerce Commission Termination Act, 49 U.S.C. § 10101, et seq. Nearly a year later, IHB filed an Amended Complaint [ECF No. 53] on June 27, 2018, which substituted United Rail with Michael Pellin, both individually and doing business as United Rail, because United Rail was administratively dissolved.

On February 28, 2020, the Defendants filed a Motion for Partial Summary Judgment [ECF No. 71] but sought to amend the motion in order to correct an error in Mr. Pellin's declaration and to withdraw certain arguments. See Mot. to Correct 1, ECF No. 75. After the Court granted the motion, see ECF No. 79, the Defendants filed their Amended Motion for Partial Summary Judgment [ECF No. 80] on June 29, 2020. IHB filed a Response on July 13, 2020 [ECF No. 84], and the Defendants filed a Reply on July 27, 2020 [ECF No. 86].

SUMMARY JUDGMENT STANDARD

Summary judgment is warranted when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The nonmoving party must marshal and present the Court with evidence on which a reasonable jury could rely to find in its favor. Goodman v. Nat'l Sec. Agency, Inc. , 621 F.3d 651, 654 (7th Cir. 2010). A court must deny a motion for summary judgment when the nonmoving party presents admissible evidence that creates a genuine issue of material fact. Luster v. Ill. Dep't of Corr. , 652 F.3d 726, 731 (7th Cir. 2011) (citations omitted). A court's role in deciding a motion for summary judgment "is not to sift through the evidence, pondering the nuances and inconsistencies, and decide whom to believe. The court has one task and one task only: to decide, based on the evidence of record, whether there is any material dispute of fact that requires a trial." Waldridge v. Am. Hoechst Corp. , 24 F.3d 918, 920 (7th Cir. 1994). Facts that are outcome determinative under the applicable law are material for summary judgment purposes. Smith ex rel. Smith v. Severn , 129 F.3d 419, 427 (7th Cir. 1997). Although a bare contention that an issue of material fact exists is insufficient to create a factual dispute, a court must construe all facts in a light most favorable to the nonmoving party, view all reasonable inferences in that party's favor, Bellaver v. Quanex Corp. , 200 F.3d 485, 491–92 (7th Cir. 2000), and avoid "the temptation to decide which party's version of the facts is more likely true." Payne v. Pauley , 337 F.3d 767, 770 (7th Cir. 2003).

FACTUAL BACKGROUND

This case is about whether the Defendants owe IHB $197,150 in freight, demurrage, and hold charges that accrued between 2014 and 2016 while the parties conducted business together. See Am. Compl. ¶¶ 14–16, 18, ECF No. 53. IHB is a common carrier by rail that delivered rail cars to a facility in East Chicago, Indiana, where the Defendants operated a rail car cleaning business. See id. at ¶¶ 2, 10, 13–14; Def. Ex. 1, ¶¶ 4, 6, ECF No. 81-1. As an interstate carrier by rail, IHB was subject to various regulations and tariffs that were filed with the Surface Transportation Board, and the Defendants were obligated to pay any applicable rates or charges published in the governing tariff. See Am. Compl. ¶ 12; Answer ¶ 12, ECF No. 59.

The corporations providing rail car cleaning services at the East Chicago location included United Rail and UTG. See Def. Ex. 1, ¶¶ 4, 6. Mr. Pellin was the president and sole shareholder of both UTG and United Rail, managing much of those businesses’ operations. Pl. Ex. 11, 20:10–16, 60:17–19, 77:25–79:17, ECF No. 85–11; see also Def. Ex. 1, ¶¶ 2, 3. Additionally, Mr. Pellin owned other companies that were associated with the East Chicago facility, including Powerhouse, Inc., Fast Tank Corporation, and Kaizen. Pl. Ex. 11, 43:15–23, 82:11–15, 170:7–9; see also Pl. Ex. 24, ECF No. 85-24. Powerhouse owned the physical assets and some of the land at the East Chicago location, and it charged monthly rent to UTG for using the building, tracks, and equipment at the site. Pl. Ex. 11, 42:12–43:13, 168:22–169:12. Fast Tank Corporation also owned a portion of the East Chicago premises that it leased to UTG. Id. at 170:2–22. And finally, Kaizen employed the individuals working at the East Chicago facility. Id. at 82:11–15. UTG, United Rail, Powerhouse, and Fast Tank were all incorporated in Illinois, while Kaizen was incorporated in Indiana. See Pl. Ex. 24.

When IHB delivered rail cars to the East Chicago facility, its primary point of contact was Kim Guill, who was a Kaizen employee working on behalf of the Defendants. Pl. Ex. 11, 81:8–82:6. Typically, IHB would notify the Defendants that a rail car arrived and, depending on where the car could be received, it would deliver the car to the track running into the facility. See Pl. Ex. 4, ¶¶ 5–8, ECF No. 85-4; Pl. Ex. 8, ¶¶ 13–14, ECF No. 85-8; Def. Ex. 1, ¶ 13. The standard procedure was for IHB to deliver the cars in the same order that IHB received them. Pl. Ex. 4, ¶ 5; see Def. Ex. 1.A, ECF No. 72-1.¹

Beginning in 2014, issues started cropping up. See Def. Ex. 1, ¶¶ 14–15. IHB states that there were an increasing number of the Defendants’ rail cars being stored on IHB's tracks because the Defendants were unable to receive them. Pl. Ex. 4, ¶¶ 6–7; Pl. Ex. 7, ¶¶ 5–6, ECF No. 85-7. As a result, IHB required the Defendants to specifically tell IHB which cars they wanted delivered to the East Chicago facility. Pl. Ex. 7, ¶¶ 7, 22. If IHB was required to hold cars that the Defendants did not have room for, it would charge the Defendants for demurrage in accordance with its Demurrage Tariff, Series 6004A. Id. at ¶¶ 5, 8, 14; Pl. Ex. 8, ¶¶ 17–20. As a result of the problems with delivering cars, IHB assessed the Defendants significant demurrage charges, Pl. Ex. 7, ¶ 5, which, at the time the case was filed, totaled $163,450, see Compl. ¶ 7, ECF No. 1; Am. Compl. ¶ 15.

Mr. Pellin felt that IHB unilaterally changed how the parties previously conducted business, and he claims to have never received a copy of the demurrage tariff. Def. Ex. 1, ¶¶ 14–15. However, Daniel Kelley, IHB's Director of Human Resources and Labor Relations, states that he had conversations with Mr. Pellin and Ms. Guill about the problems with delivering cars, including assessment of demurrage charges. Pl. Ex. 7, ¶ 8. IHB also shows that it would have provided notice of the demurrage tariff to the Defendants. See, e.g. , Pl. Ex. 1, ECF No. 85-1; Pl. Ex. 7, ¶ 13; Pl. Ex. 9, ¶ 6, ECF No. 85-9; Pl. Ex. 10, 88:17–91:13, ECF No. 85-10.

In light of the ongoing difficulties with car deliveries, Mr. Kelley and Tamara Winterfeldt (IHB's Director of Customer Service/Crew Management) met with Mr. Pellin on March 24, 2015, to discuss how the cars were being handled by the Defendants and to find ways to avoid future demurrage charges. Pl. Ex. 7, ¶ 11; Pl. Ex. 9, ¶ 4. Mr. Pellin claims that IHB promised at the meeting to provide documentation for the basis of the demurrage bills as well as a copy of the tariff. Def. Ex. 1, ¶ 17. IHB disputes this, however, and Mr. Kelley and Ms. Winterfeldt claim there was no discussion of the overdue demurrage charges other than to say it should be discussed with Leo Pauwels (IHB's Director of Sales and Industrial Development); there were no promises to provide documentation or a copy of the tariff; and there was no indication that Mr. Pellin lacked previous notice of the tariffs. Pl. Ex. 7, ¶¶ 11–16; Pl. Ex. 9, ¶¶ 6–9.

On April 29, 2015, Mr. Pellin sent a follow up email, which requested the "demurrage rule book or system" to help him understand how charges will be assessed in the future and asked to be referred to the person who had authority to address past demurrage charges. Def. Ex. 1.B, ECF No. 72-1. Mr. Kelley responded that he would follow up on the demurrage chart and reiterated that Mr. Pauwels could address previous demurrage charges. Id. Mr. Kelley also said that if Mr. Pellin was unwilling to address it with Mr. Pauwels, then he should find another person to represent the Defendants’ interests. Id. That person was the Defendants’ attorney, who sent a letter to IHB on May 14, 2015, challenging the imposition of the demurrage charges (as well as other charges) and blaming IHB for various performance issues. Pl. Ex. 9, Decl. Ex. I-1, ECF No. 85-9.

The following year, on September 30, 2016, Mr. Pellin closed on a sale of his companies’ assets located at the East Chicago facility to Lakeshore Railcar Services LLC. See Pl. Ex. 20, ECF No. 85-20. The majority of the proceeds from that sale went to Powerhouse and Fast Tank because they owned the property, while UTG received less than $25,000 from the sale of certain permits. See Pl. Ex. 11, 157:3–159:17; Pl. Ex. 18, at 2, ECF No. 85-18. Following the closing, the Defendants had about...