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Rockies Express Pipeline LLC v. 77.620 acres more or less

August 3, 2010

ROCKIES EXPRESS PIPELINE LLC, PLAINTIFF,
v.
77.620 ACRES MORE OR LESS, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Richard Mills, U.S. District Judge

OPINION

This case is before the Court on the Plaintiff's Motion for Summary Judgment [d/e 466], and multiple Motions in Limine by both the Plaintiff [d/e 432, 435, 438, 441, and 454] and the Defendants [d/e 457, 459, 461, and 463].

Plaintiff's Motion for Summary Judgment is granted. Plaintiff's Motions in Limine are allowed. Defendants' Motions in Limine are denied as moot.

I. BACKGROUND

Rockies Express Pipeline LLC ("REX"), a natural gas pipeline company, is constructing a pipeline through Missouri, Illinois, Indiana, and Ohio. The Federal Energy Regulatory Commission (FERC) has granted REX a Certificate of Public Convenience and Necessity, pursuant to 15 U.S.C. § 717f(c). As a certificate holder, REX may acquire rights-of-way and land by the exercise of the right of eminent domain, after attempting to obtain the rights-of-way and land via contract. See 15 U.S.C. § 717f(h).

REX began this action on June 6, 2008, seeking the condemnation of a host of properties in Scott, Morgan, Sangamon, Macon, Moultrie, Douglas, and Edgar Counties. See Verified Complaint for Condemnation of Pipeline Right-Of-Way against all Defendants [d/e 1]. The Court confirmed REX's condemnation a few months later. See Opinion of August 15, 2008 [d/e 389]. Shortly after confirming the condemnation, the Court authorized immediate possession of the rights-of-way. See Opinion of August 20, 2008 [d/e 400].

Following these two rulings, the only issue that remained in the suit was the compensation for the landowners. REX moved for the establishment of a commission to determine compensation, pursuant to Federal Rules of Civil Procedure 71.1(h). However, the Court denied the motion because there were so few Defendants remaining at that time and the properties are not far from the courthouse. See Opinion of January 6, 2009 [d/e 415]. Since that time, additional Defendants have dropped out of the case.

There are only five tracts remaining in the case, with three groups of Defendants. Robert and Bettie Burtle own two tracts--40.69 acres and 20.24 acres--located in Sangamon County. Richard Watts is the trustee of a trust that owns two tracts (38.04 acres and 80 acres), also located in Sangamon County. Finally, Dorothy Bruntjen holds a life estate in a 162.3 acre tract located in Moultrie County, and five family members have a remainder interest in the tract.

II. APPLICABLE LAW AND STANDARDS

A. Applicable Law

This case was brought under the Natural Gas Act, 15 U.S.C. § 717 et seq.

1. Procedural Law

The Natural Gas Act contains language stating that in carrying out the condemnation, the district court is to follow the practices and procedures of the states where the property is situated. See 15 U.S.C. § 717f(h).

However, the majority of courts hold that the practices and procedure clause was superseded by a combination of the "supersession clause" of the Rules Enabling Act,*fn1 and the subsequent adoption of what is now Federal Rule of Civil Procedure 71.1 in 1951. See N. Border Pipeline Co. v. 64.111 Acres of Land in Will County, Ill., 344 F.3d 693, 694 (7th Cir. 2003); S. Natural Gas Co. v. Land, Cullman County, 197 F.3d 1368, 1372-75 (11th Cir. 1999) (citing Kirby Forest Indus. v. United States, 467 U.S. 1 (1984)); 13 James Wm. Moore et al., Moore's Federal Practice-Civil § 71.1.04[1] (2010) (hereinafter Moore's Federal Practice-Civil); but see Portland Natural Gas Transmission Sys. v. 19.2 Acres of Land, 195 F.Supp. 2d 314 (D. Mass. 2002).

2. Substantive Law

There is some debate regarding whether to apply state or federal substantive law to determine compensation in condemnation cases involving federal licensees. Some courts have favored the application of federal substantive law, relying upon the federal common law of condemnation that has developed in cases related to condemnations by the federal government. See E. Tenn. Natural Gas Co. v. 7.74 Acres in Wythe County, Va., 228 Fed. Appx. 323, 327 (4th Cir. 2007) (applying "reasonably probable" change of land use test elaborated in a federal condemnation case -- United States v. 69.1 Acres of Land, 942 F.2d 290, 292 (4th Cir. 1991)).

The opposing view is that state substantive law should apply in condemnations by FERC licensees. See Georgia Power Co. v. Sanders, 617 F.2d 1112, 1115-24 (5th Cir. 1980) (en banc) (holding that state substantive law applies in condemnation proceeding brought under the Federal Power Act); see also Fla. Gas Transmission Co. v. Approx. 9.854 Acre Natural Gas Transmission Pipeline Easement, No. 96-14083-CIV, 2000 WL 33712490, at *8-*13 (S.D. Fla. March 21, 2000) (applying Florida substantive law).

Courts have generally interpreted Georgia Power as applying solely to cases where licensees of the federal government are carrying out condemnations pursuant to federal statutes, while holding that when the federal government is condemning land, the substantive law is federal common law. See Nat'l R.R. Passenger Corp. v. Two Parcels of Land, 822 F.2d 1261, 1266-67 (2d Cir. 1987); United States v. 33.5 Acres of Land, 789 F.2d 1396, 1400 (9th Cir. 1986). The Sixth Circuit endorsed Georgia Power in Columbia Gas Transmission Corp. v. Exclusive Natural Gas Storage Easement, 962 F.2d 1192, 1197-99 (6th Cir. 1992).*fn2

The Court has been unable to locate any authority from the U.S. Court of Appeals for the Seventh Circuit definitively stating whether federal or state substantive law should apply.

District courts within the Seventh Circuit have diverged on this point. Compare Guardian Pipeline, L.L.C. v. 950.80 Acres of Land, No. 01 C 4696, 2002 WL 1160939, at *1 (N.D. Ill. May 30, 2002) (rejecting Georgia Power and Columbia Gas, and applying federal substantive law to determine compensation) with Guardian Pipeline, L.L.C. v. 295.49 Acres of Land, No. 08-C-0028, 2008 WL 4830138, at *1 (E.D. Wis. Oct. 28, 2008) (applying state substantive law to determine compensation).

The Court finds the arguments supporting the application of state law more persuasive. In general, property rights are defined by state law. Furthermore, the Court does not see an overriding need for national uniformity on substantive property law when dealing with a FERC licensee. The uniform procedure under Federal Rule of Civil Procedure 71.1 provides sufficient predictability.

In the case at bar, the Parties have assumed that state substantive law applies. The briefing relies upon state law, and applying federal law at this point would be manifestly unfair.

B. Summary Judgment Standards

As mentioned above, Federal Rule of Civil Procedure 71.1(a) states that the "Federal Rules of Civil Procedure apply to condemnation actions except as otherwise provided in Rule 71.1." 13 Moore's Federal Practice-Civil § 71.1.04[1]. "Since Rule 71.1 has no provisions governing summary judgment or partial summary judgment, Rule 56 applies." Id. at § 71.1.04[2][f].

"Summary judgment is appropriate when the evidence submitted, viewed in the light most favorable to the non-moving party, shows 'no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.'" Smith v. Hope School, 560 F.3d 694, 699 (7th Cir. 2009) (quoting Fed. R. Civ. P. 56(c) and citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986)).

In order to survive summary judgment, there must be sufficient evidence that a reasonable jury could find for the nonmoving party. Trade Finance Partners, LLC v. AAR Corp., 573 F.3d 401, 406-407 (7th Cir. 2009) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986)).

"A motion for summary judgment requires the responding party to come forward with the evidence that it has -- it is the 'put up or shut up' moment in a lawsuit." Eberts v. Goderstad, 569 F.3d 757, 767 (7th Cir. 2009) (internal quotation marks and citations omitted). Although inferences are drawn in favor of the nonmoving party, inferences relying on speculation or conjecture are insufficient. Stephens v. Erickson, 569 F.3d 779, 786 (7th Cir. 2009).

III. ANALYSIS

A. Plaintiff's Motions in Limine

The Plaintiff has filed five Motions in Limine [d/e 432, 435, 438, 441, and 454]. One motion [d/e 454] relates to the exclusion of evidence regarding the value of a parcel of land owned by Dorothy Bruntjen. The four remaining motions [d/e 432, 435, 438, and 441] pertain to the four separate tracts in Sangamon County, but all raise the same issue -- barring the testimony of Doug Stallard, an expert retained by Mr. Watts and the Burtles.

1. Bruntjen Property (IL-MU-001.000)

a. Defining the Subject Property

REX claims that the subject property is a 162.3 acre parcel. The Defendants claim that the subject property is 240 acres--the 162.3 acre parcel, plus an adjacent 80 acre parcel.

Under Illinois law, adjoining tracts of land can be considered part of the subject property if the owner can show unity of use, contiguity, and unity of title. See Dep't of Transp. v. Chicago Title and Trust Co., 303 Ill. App. 3d 484, 495 (1st Dist. 1999). Contiguity and unity of use are not contested,*fn3 but unity of title is.

As indicated above, Dorothy Bruntjen has a life estate in the 162.3 acres, with John Bruntjen, Michael Bruntjen, Gail (White) Bruntjen, Rise Shears, and Carol Reubner (Phillips) holding a remainder interest. The 80 acre tract, however, is owned by Bruntjen Farms, Inc. Dorothy Bruntjen does not have an interest in Bruntjen Farms, Inc., and neither does Rise Shears. The other remaindermen are shareholders of Bruntjen Farms, Inc. However, there are an additional four shareholders of Bruntjen Farms, Inc., that have no interest in the 162.3 acre tract.

Citing to non-Illinois authorities, the Defendants argue that there is sufficient overlap between the two groups to justify a finding of unity of title.

However, under Illinois law, the parcels do not enjoy unity of title. In Department of Conservation v. Franzen, the Appellate Court of Illinois stated:

[W]here there is complete identity between the holders of the beneficial interest in land trust property described in the condemnation petition and other property alleged to be damaged, the common ownership of the beneficial interest is sufficient to permit the filing of a petition for severance damages provided other requirements necessary to the filing of a cross-petition are met.

43 Ill. App. 3d 374, 381 (2d Dist. 1976) (emphasis added).

While there is overlap between the two parcels in the instant case, there is not "complete identity." There are some remaindermen who have no interest in Bruntjen Farms, and there are Bruntjen Farms shareholders who do not have a remainder interest in the 162.3 acres tract. Therefore, there is no unity of title. Consequently, the subject property is the 162.3 acre tract (identified as IL-MU-001.000), and does not include the approximately 80 acre tract owned by Bruntjen Farms, Inc.

b. Pipeline Report

Through interrogatories, the Defendants have indicated that Michael and John Bruntjen plan to testify as to valuation. The Defendants have indicated that Michael and John Bruntjen will testify regarding the valuation of the land, and include in their testimony information derived from a report prepared for the Gas Research Institute. The report was prepared by Mark J. Stephens of C-FER Technologies, of Edmonton, Alberta, Canada.

The report, published in October 2000, develops an approach to assessing the area that would be impacted by a worst-case ignited rupture of a natural gas pipeline. See Stephens Report [d/e 455-5], ii.

Mr. Stephens has not been disclosed as an expert in this case. The report was not prepared for the purposes of this litigation. The report contains complex formulas that laypersons would not be able to easily understand. Only an expert would be able to testify as to the reliability of the report, or its possible application to the case at hand. Therefore, there is no foundation for admitting the report. The Defendants are attempting to offer the contents of the report for the truth of the matter asserted. See Fed. R. Evid. 801. Therefore the report is barred because it is without foundation and it is hearsay. See Fed. R. Evid. 802.

John Bruntjen testified at his deposition that his attorney provided him with the information from the study. Neither Michael nor John Bruntjen is aware of the reliability of the study. Neither is an expert in studying high consequence areas related to natural gas pipelines. See Fed. R. Evid. 701. Therefore, Michael Bruntjen and John Bruntjen are barred from referencing the study or any information contained therein. See id.

Finally, the Court finds REX's arguments regarding prejudice persuasive. Evidence of fire and explosions could be used to confuse the jury. "Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury." Fed. R. Evid. 403.

Under Illinois law, testimony about the likelihood of fire and explosions from underground pipelines is irrelevant when the condemned land is used solely for agriculture. See Trunkline Gas Co. v. O'Bryan, 21 Ill. 2d 95, 102 (1960). The whole of the 162.3 acre tract is used for agricultural purposes, and there are no buildings on the land.

Therefore, the report authored by Mark J. Stephens is barred.

c. Comparable Tracts of Land

i. Sales Mentioned in Interrogatories

The Defendants referenced in the interrogatories two land sales as possible "comparables." The Parties agree that the Sangamon County sale ($8,042 per acre) is without foundation, ...


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