MICHAEL F. URBANSKI, Chief District Judge.
The matter presently before the court is Norfolk Southern Railroad Company's ("Norfolk Southern") motion for clarification, ECF No. 274, of the court's ruling on its third motion in limine, ECF No. 220, to exclude evidence relating to transportation contracts entered into prior to the execution of a January 2010 mutual release between it and Drummond Coal Sales, Inc. ("Drummond"). Norfolk Southern seeks clarification of two aspects of the court's July 22, 2019 memorandum opinion, ECF No. 267, granting in part and denying in part its motion, namely: (1) "[w]hether the [c]ourt's ruling with respect to C-9290 excludes evidence and argument relating to
In its original motion in limine, ECF No. 220, Norfolk Southern asserted that the mutual release executed by and between the parties in January 2010 in the course of settling
ECF No. 249 (Ex. B). Norfolk Southern asserted that the mutual release should be construed to preclude Drummond from introducing evidence or testimony related to the rates and minimum volume commitments set forth in three Destination Contracts: (1) C-9290, (2) 7545, and (3) C-9289. The present motion concerns only C-9290, which was executed on July 1, 2009, and subsequently amended at least four times after the execution of the mutual release in January 2010: Amendment 1, ECF No. 132-31, at 25 (executed February 24, 2010); Amendment 2,
With respect to C-9290, the question presented in Norfolk Southern's third motion in limine was whether the parties' mutual release operated as a waiver of all claims connected with C-9290 and, relatedly, Drummond's right to introduce evidence of this Destination Contract in support of its prior material breach claim under C-9337. Drummond argued that because the aforementioned Amendments pertain to rail rates, minimum volume requirements, and liquidated damages provisions in C-9290, as well as postdate the January 2010 release, they supply it with new bases for claims under C-9337 which fall outside the scope of the release. Norfolk Southern argued that the post-release Amendments do not give rise to new claims because all the ostensibly new "claims" existed under and related back to the original terms of C-9290, and could have, but were not, brought in the prior action. ECF No. 221, at 4. Norfolk Southern averred that at all times since the effective date of C-9290, "the relevant contractual terms have been the same."
In its July 22, 2019 memorandum opinion, ECF No. 267, the court first noted that there is little doubt that any claim and/or cause of action arising or accruing prior to the parties' execution of the mutual release in January 2010 is barred by the express terms of the release. The court also noted, however, that it is equally clear that the release only applies to "claims, demands, debts, causes of action, or obligations" which existed prior to the effective date of the mutual release. In other words, the release was held not to be a prospective waiver of the right to sue for subsequent violations of C-9337 which occurred after January 14, 2010. The court, relying on the
In C-7545, for example, § 3, the durational clause, states that the "term of this Agreement shall be extended for up to two (2) consecutive additional five (5) year periods without additional action by either [p]arty...." Given that § 3 of C-7545 provides for future extensions of C-7545, a post-release amendment merely memorializing such an extension provided for in the original contract would not give rise to a post-release claim under the broad language of the mutual release. In its motion for clarification, Norfolk Southern asserts that as with a hypothetical extension of C-7545 pursuant to § 3 of that contract, the rate changes in the post-release Amendments to C-9290 "merely reflected the previously existing rates as escalated pursuant to [C-9290's] original terms." ECF No. 275, at 2. For this reason, Norfolk Southern asserts that the "putative" rate changes represent changes of "form rather than substance," and therefore do not alter the underlying payment obligation provided for in the original terms of C-9290. To illustrate its argument further, Norfolk Southern provided the following hypothetical. Norfolk Southern states that if a hypothetical transportation contract were to provide for a base rate of $100 in year one, to be escalated annually by 10%, then the rate after year five would be $181.55. Thus, if the parties were to replace — in year five — the contract's original rate provision of "$100 in year one, to be escalated annually by 10%" with a rate provision that provided for a rate of $181.55, there would be no change to the contract's original rate because the substantive payment obligation of the contracting party remains the same. Norfolk Southern asserts that "[t]his is precisely what happened with the post-release amendments to C-9290 as they relate to the relevant Shipyard [River] Terminal [(`SRT')] rates."
Norfolk Southern notes that pursuant to the Adjustment Clause of Article 14 in C-9290, the base rates found in Appendix A are adjusted quarterly based upon an index published by the Association of American Railroads, plus a 5% increase after the adjustments of July 1, 2010, 2013, and 2016.
In
Norfolk Southern claims that because there was no "substantive change" in the rates from the SRT to Roxboro or Mayo after the date of the mutual release, it would be "placing form over substance to rely on the restatement of the [SRT] rates in Amendment 4 as the basis for a post-release claim, when the rates found in that amendment simply reflected the escalation called for by the original contract."
Drummond contends that despite Norfolk Southern's claim that none of the Amendments to C-9290 actually altered any of the rates to the SRT in that contract, Amendment 2, Amendment 3, and Amendment 4 "all substantively changed important aspects of C-9290," and all were executed after the parties' signed the mutual release in January 2010. ECF No. 280, at 2. With respect to C-9290's base rates, Drummond notes: (1) that Amendment 4 effectively reduced all of the rates in C-9290 by adding a "Volume Incentive Refund" of $1.00 per ton in 2014 and 2015, and $1.65 in 2016, 2017, and the first half of 2018; (2) that Amendment 2 "deleted in their entirety and replaced" the Appendices to C-9290 containing the rail rates, reducing the Illinois Basin ("ILB") and Northern Appalachian ("NAPP") rates between 7.5% and 15%; (3) that Amendment 2 changed all of the SRT rates applicable to smaller train sizes; and (4) that Norfolk Southern continued to exclude SRT from the Asheville rate. Drummond contends that Norfolk Southern's "purposeful decisions to change the rate schedules in C-9290 while renewing its ... exclusion of SRT from the Asheville rate schedule are separate, actionable wrongs that occurred well after Drummond executed the [m]utual [r]elease." ECF No. 280, at 3. Lastly, Drummond asserts that Norfolk Southern's motion improperly construes the Amendments to C-9290 in isolation, eliding the fact that Amendment 4 to C-9290 was signed contemporaneously with Amendment 4 to C-9545. Drummond asserts that those amendments were "part of a package deal" between Duke Energy Carolinas, LLC ("Duke") and Norfolk Southern that increased the minimum volume commitment at Duke's Marshall plant (a Destination in Appendix A to C-9337) from 25% to 95%, effectively rendering the Marshall plant "solely served by Norfolk Southern" and "eviscerating the value of Drummond's C-9337 rate to Marshall." ECF No. 280, at 4. Drummond contends that Norfolk Southern's internal documents "confirm that, in exchange for various refunds and rate reductions it gave to Duke ..., Norfolk Southern specifically bargained for the reinstatement of the minimum volume commitments in C-9290."
With respect to Amendment 3 to C-9290, the court previously described its substance as follows:
The court also noted that:
Norfolk Southern argues in the present motion that because two of the three minimum volume commitments cited by the court in Amendment 3,
In sum, Norfolk Southern asserts that, as with Amendments 2 and 4, Amendment 3 did not substantively alter the minimum volume commitments to Roxboro, Mayo, and Asheville that would have "otherwise been in effect," and allowing evidence of such minimum volume commitments would conflict with
Drummond argues that although Norfolk Southern dismisses Amendment 3 as simply restating terms from Article 26 of C-9290, rather than imposing new commitments, the amendment "added a new minimum volume requirement from NAPP origins, and it also removed the minimum volume requirements for Cape Fear and Lee plants," both of which were Destinations in Drummond's contact (C-9337). Further, Drummond asserts that Norfolk Southern also "made the deliberate decision to reinstate the minimum volume requirements applicable to Roxboro and Mayo plants to exclude SRT ... as an origin with respect to the Asheville plant." ECF No. 280, at 3. Drummond claims that "[a]s with Amendments 2 and 4, Norfolk Southern's purposeful decision to delete and reinstate those minimum volume requirements and exclude SRT from the Asheville rate schedule constitutes a separate, actionable wrong that occurred after Drummond executed the mutual release."
Norfolk Southern notes that it does not oppose Drummond's introducing evidence and argument relating
The court further finds, however, that certain language contained in Amendments 2, 3, and 4 compels a finding that Drummond may rely upon these same amendments in their entirety, rather than on just those terms which do not mirror terms in the original contract. The following provisions in Amendments 2, 3, and 4, broadly deleting and replacing Article 13 and Article 26, portions of which Norfolk Southern considers "original terms" barred by the release, draws these amendments in their entirety outside the scope of the mutual release:
The court need not go beyond the plain wording of the above prefatory provisions to hold that amendments are not merely restating or republishing terms of an earlier contract as alleged by Norfolk Southern. Under accepted canons of contract interpretation, the only fair reading of the above provisions is as displacing, wholesale, the preexisting obligations under Article 13 and Article 26 under C-9290 through the substitution of modified versions of these same articles. While some of the terms remained the same, the above provisions signify that the original terms of Article 13 and Article 26, in their entirety, are no longer operative. Indeed, the inclusion of full force and effect clauses in all three amendments stating, "Except as herein amended ...," all other provisions of C-9337 remain in effect, by negative implication, underscores that those provisions which were deleted in their entirety and/or replaced,
In sum, Drummond may rely upon the rates contained in Amendments 2 and 4, the minimum volume commitments at issue in Amendment 3, as well as those other contractual provisions Norfolk Southern concedes were not part of the original contract. Drummond may also introduce evidence and/or argument related to the non-existence of a rate from the SRT to Asheville.
It is