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Railroad Must Restore Private Crossing

The Supreme Court of Virginia affirms an order requiring Norfolk Southern Railway to restore a private grade crossing over its railway tracks in Rockingham County, as required under a 1940 Crossing Agreement between the parties’ predecessors which gave appellee – and appellee’s residential tenant – a private right to use the crossing.

The tenant was injured while using the crossing and Norfolk Southern settled the tenant’s suit for damages. Norfolk Southern sued appellee for indemnification, but the circuit court decided that suit against the railroad. When Norfolk Southern removed the crossing, appellee won an injunction requiring its restoration. On appeal, the railroad argues appellee committed the first material breach of the Crossing Agreement.

We have not previously applied the doctrine of first material breach to vested property rights granted under a real estate covenant. This doctrine is ill-suited to address situations in which the covenantor seeks to excuse its unilateral termination of real property interests held by other landowners. Nevertheless, the circuit court did not err in concluding there was no material breach by appellee landowner. In previously determining the enforceability of the indemnity clause of the Crossing Agreement, the circuit court ruled that the Crossing Agreement is a valid covenant running with the land such that appellee, as a successor in interest, was entitled to the use and benefits of the crossing. Also, the circuit court ruled that appellee’s lessee was a successor under the terms of the Crossing Agreement and therefore had a legal right to utilize the crossing independent of whether appellee permitted such use by the lessee. Since the Agreement expressly granted unto the predecessors and their successors the “right and privilege” to use the crossing “solely in their own interest and for their own benefit,” the lessee’s use of the crossing for his own benefit was not a violation of the Crossing Agreement.

The Crossing Agreement did not prohibit the conveyance or lease of the property benefiting from the crossing and did not require that the use of the crossing be excluded from any conveyance or lease of the property benefiting from the crossing. To the contrary, the Crossing Agreement provided it was binding upon the “heirs, executors, administrators, successor and assigns of the parties hereto.” Therefore, the Crossing Agreement did not obligate appellee to preclude its lessee from using the crossing for the lessee’s benefit and appellee cannot be deemed to have breached the Agreement in not preventing such use.

Based on the circuit court rulings in the indemnification litigation, appellee was the successor in interest to the Crossing Agreement, a valid covenant running with the land, under which Norfolk Southern was obligated to construct and maintain the private grade crossing. It is undisputed that Norfolk Southern had notice of the covenant and removed the crossing to which appellee was granted the “right and privilege.” Therefore, appellee was entitled to an injunction requiring the replacement of the crossing unless Norfolk Southern proved such a remedy would create a hardship or injustice out of proportion to the relief sought, or if performance by defendant would be impossible or enforcement of the decree would be unusually difficult.

Appellee presented evidence regarding its use of the crossing, including its need to access the crossing during periods of high water. Norfolk Southern did not present its own witnesses but argues only that appellee was not actually injured, any injury was outweighed by the burden to Norfolk Southern, and appellee had an adequate remedy at law. The circuit court did not abuse its discretion in ordering the requested injunctive relief.

Norfolk Southern was not entitled to a jury on appellee’s claim for injunctive relief because it did not file a plea in equity, and therefore did not have a constitutional or statutory right to a jury.

Appellee assigns cross-error to the circuit court’s denial of attorney’s fees as a sanction under Va. Code § 8.01-271.1 for Norfolk Southern’s failure to produce any evidence at the injunction hearing after asserting there were genuine issues of material fact. We cannot conclude the circuit court abused its discretion. Norfolk Southern opposed summary judgment, among other reasons, on the grounds that appellee was required to prove actual damages and an inadequate remedy at law on which it asserted there were disputed issues of fact. Norfolk Southern continues to maintain on appeal that the circuit court erred in failing to require proof of actual injury, the lack of an adequate remedy at law and in failing to balance the equities in considering the injunction. Although Norfolk Southern chose not to call its corporate witnesses and contest the issues of laches and estoppel at the injunction hearing and did not prevail on its arguments regarding appellee’s burden to prove damages, there is no evidence that Norfolk Sothern’s asserted defenses were not well-grounded or interposed for an improper purpose.

Judgment affirmed.

Dissent

Russell, S.J., joined by Lemons & Millette, JJ.: Here, the circuit court refused to hear evidence of the facts and circumstances relating to the propriety of an injunction, apparently because the court regarded injunctive relief automatically justified by the owner’s showing that the railroad had closed the crossing. The court essentially took the view that the undisputed fact that the railroad had closed the crossing automatically required entry of a permanent injunction. In my view, the circuit court erred in disregarding the traditional equitable principles made specific in prior cases. The parties should have been afforded an opportunity to present evidence of all the relevant circumstances that might inform the chancellor’s discretion in determining the appropriate remedy. I would make the same disposition we made in our prior cases, reverse the decree and remand the case to the circuit court with direction to afford the parties a full opportunity to present evidence.

On remand, if any material issues of fact are disputed, the parties would be entitled to jury trial of those issues pursuant to Rule 3:22(e). I respectfully dissent.

Norfolk Southern Railway Co. v. E.A. Breeden Inc. (McClanahan) No. 131066, April 17, 2014; Rockingham County Cir.Ct. (Lane) Frank K. Friedman, Mark D. Loftis, Erin B. Ashwell for the parties; Terry Lynn for appellee. VLW 014-6-045, 25 pp.

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