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Enbridge Pipeline (Illinois), LLC v. Hoke

Court of Appeals of Illinois, Fourth District

July 6, 2017

ENBRIDGE PIPELINE (ILLINOIS), LLC, n/k/a Illinois Extension Pipeline Company, LLC, Plaintiff-Appellee,
EDWARD HOKE, SONNA H. HOKE, NON-RECORD CLAIMANTS, and UNKNOWN OWNERS, Defendants-Appellants. ENBRIDGE PIPELINE (ILLINOIS), LLC, n/k/a Illinois Extension Pipeline Company, LLC, Plaintiff-Appellee,

         Appeal from Circuit Court of DeWitt County No. 14ED3 No. 14ED4, Honorable William Hugh Finson, Judge Presiding.

          STEIGMANN JUSTICE delivered the judgment of the court, with opinion. Justices Holder White and Pope concurred in the judgment and opinion.



         ¶ 1 In April 2014, the Illinois Commerce Commission (Commission) granted plaintiff, Enbridge Pipeline (Illinois), LLC, now known as the Illinois Extension Pipeline Company (IEPC), eminent-domain authority to acquire easements over certain real estate for the planned construction of an approximately 170-mile liquid petroleum (oil) pipeline known as the Southern Access Extension (SAX project).

         ¶ 2 In July and August 2014, IEPC filed separate complaints for "condemnation of permanent and temporary easements for common-carrier pipeline" against defendants (1) Edward Hoke and Sonna H. Hoke (Hokes) (DeWitt County case No. 14-ED-3; this court's case No. 4-15-0544) and (2) PMC Farms, LLC, and its tenant, Charles Murphy, (PMC) (DeWitt County case No. 14-ED-4 and this court's case No. 4-15-0545) (collectively, landowners). Through its condemnation filing, IEPC sought to obtain right-of-way and easement interests in landowners' respective properties and determine just compensation for both interests. Thereafter, landowners each filed a "traverse and motion to dismiss" (traverse motions), requesting dismissal of IEPC's condemnation complaints. In December 2014, the trial court denied both traverse motions.

         ¶ 3 At a jury trial that began in May 2015, IEPC presented its case-in-chief. Thereafter, the trial court permitted IEPC to conduct a voir dire inquiry of Edward and Charles out of the jury's presence. Immediately following IEPC's inquiry, the court granted IEPC's motion to bar the testimony of Edward and Charles regarding the (1) fair-market value of their properties before and after installation of the SAX project and (2) damages incurred to the value of their remaining property after completion of the SAX project. The court also granted IEPC's oral motion to exclude landowners' expert's valuation testimony pursuant to Illinois Supreme Court Rule 213(g) (eff. Jan. 1, 2007) because the expert failed to disclose the basis for his valuation opinions as required by Illinois Supreme Court Rule 213(f)(3) (eff. Jan. 1, 2007). IEPC then moved for directed verdicts on its condemnation suits. Following argument, the court (1) granted directed verdicts in IEPC's favor and (2) awarded landowners compensation of $8500 in case No. 14-ED-3 and $2000 in case No. 14-ED-4.

         ¶ 4 Landowners appeal, raising numerous claims that challenge the trial court's rulings. For the reasons that follow, we vacate the trial court's denial of landowners' traverse motions and remand with directions for further proceedings.

         ¶ 5 I. BACKGROUND

         ¶ 6 A. Procedural History

         ¶ 7 We provide the following synopsis of the pertinent litigation involving the SAX project to place landowners' appeal in context.

         ¶ 8 1. IEPC's Application for a Certificate in Good Standing and Eminent-Domain Authority

         ¶ 9 In August 2007, IEPC applied for a certificate in good standing and other relief pursuant to section 15-401 of the Common Carrier by Pipeline Law (Pipeline Law) (220 ILCS 5/15-401 (West 2006)). (The Pipeline Law appears under article XV of the Public Utilities Act (220 ILCS 5/1-101 to 20-120 (West 2006)).) IEPC sought the Commission's authorization to (1) construct, operate, and maintain the SAX project and (2) acquire, when necessary, private property under eminent-domain authority to install and maintain the SAX project as permitted by section 8-509 of the Public Utilities Act (220 ILCS 5/8-509 (West 2006)). IEPC described the proposed SAX project as a 36-inch diameter underground oil pipeline, originating from IEPC's Flanagan terminal located near Pontiac, Illinois, and terminating approximately 170 miles south, at IEPC's Patoka terminal located near Patoka, Illinois. The planned SAX project traversed 679 tracts of land located in the counties of Livingston, McLean, DeWitt, Macon, Shelby, Christian, Fayette, and Marion. Specifically, IEPC sought (1) a 60-foot wide permanent easement right-of-way for the pipeline and (2) an additional 60-foot temporary easement to facilitate construction.

         ¶ 10 In July 2009, the Commission issued an order in docket No. 07-0446, granting IEPC a certificate in good standing but denying IEPC's request for eminent-domain authority. As to eminent domain, the Commission instead urged that IEPC continue negotiations with landowners who had declined the compensation IEPC had offered in exchange for the aforementioned easements on the landowners' respective properties. The Commission's order provided, however, that IEPC could renew its request for eminent-domain authority by "demonstrating that it has made reasonable attempts to obtain easements, through good-faith negotiations."

         ¶ 11 Some affected landowners (intervenors) appealed the Commission's grant of the certificate in good standing, and this court affirmed. Pliura Intervenors v. Illinois Commerce Comm'n, 405 Ill.App.3d 199, 200, 942 N.E.2d 576, 578 (2010) (Intervenors I). Specifically, we rejected intervenors' argument that the Commission erred by determining that (1) IEPC was fit, willing, and able to construct, operate, and maintain an oil pipeline and (2) a public need existed for the pipeline. Id. at 208-09, 942 N.E.2d at 584-85. The Supreme Court of Illinois later denied intervenors' petition for leave to appeal. Pliura Intervenors v. Illinois Commerce Comm'n, 239 Ill.2d 589, 943 N.E.2d 1108 (2011) (table).

         ¶ 12 2. IEPC's Renewed Petition for Eminent-Domain Authority

         ¶ 13 In July 2013, IEPC renewed its request for eminent-domain authority, seeking to condemn 148 of the 679 tracts of land traversed by the planned SAX project route because the owners of those respective properties had either (1) refused to negotiate with IEPC or (2) declined IEPC's compensation offers despite extensive negotiations. (IEPC's continued negotiations reduced the number of "holdout" landowners from 148 to 127, meaning approximately 81% of landowners had reached an agreement with IEPC.)

         ¶ 14 In December 2013, an administrative law judge (ALJ) conducted a hearing on IEPC's request for eminent-domain authority. A senior engineer employed by the Commission testified, in pertinent part, that approval to exercise eminent-domain authority required IEPC to show that (1) reasonable attempts were made to acquire the outstanding land rights through good-faith negotiations and (2) additional attempts to acquire the land rights at issue would have been unsuccessful. In evaluating those two metrics, the engineer stated that the Commission considers numerous factors, which include-but are not limited to-the following: (1) the number and extent of the petitioner's contacts with the landowner, (2) whether the petitioner explained its compensation offer to the landowner, (3) whether the compensation the petitioner offered was comparable to offers made to similarly situated landowners, (4) petitioner's efforts to address landowner concerns, and (5) the likelihood that further negotiations would be successful. After testifying about IEPC's efforts as to each of these five factors, the engineer recommended that the Commission approve IEPC's petition for eminent-domain authority. In April 2014, the ALJ recommended that the Commission grant IEPC eminent-domain authority.

         ¶ 15 Later that month, the Commission issued its written order, in which it accepted the ALJ's recommendation and granted IEPC eminent-domain authority. In so doing, the Commission explained that the grant of a request for eminent-domain authority under section 8-509 of the Public Utilities Act requires "a utility [to] show that it made a reasonable attempt to acquire the property at issue." The Commission then recognized that as to the aforementioned five factors, sufficient evidence was presented to show that (1) the number, nature, and extent of [IEPC's] contacts with the landowners had been adequate; (2) IEPC adequately explained its offer of compensation to landowners; (3) IEPC's offers were comparable to offers made to similarly situated landowners, noting that IEPC's offers for the easements were 125% of fee value; (4) IEPC made an effort to address landowner concerns by making adjustments to the SAX route to avoid certain structures, land features, or wooded areas; and (5) "given the large numbers of holdouts and the length of time that has elapsed during the negotiation phase, the situation is unlikely to change on a large scale absent the Commission granting [IEPC] the right to exercise eminent domain."

         ¶ 16 Intervenors affected by the Commission's grant of eminent-domain authority appealed, and this court affirmed. Pliura Intervenors v. Illinois Commerce Comm'n, 2015 IL App (4th) 140592-U (Intervenors II). Pertinent to this appeal, we rejected intervenors' argument that the Commission's grant of eminent-domain authority was not supported by substantial evidence that IEPC had engaged in good-faith negotiations. Id.

         ¶ 17 3. IEPC's Motion To Reopen

         ¶ 18 In May 2014, IEPC filed a "Motion to Reopen and Amend Order Concerning Diameter of the [SAX], " requesting an amendment to the July 2009 certificate in good standing that the Commission issued in docket No. 07-0446. Specifically, IEPC's amendment sought only to reduce the pipeline's diameter from 36 to 24 inches.

         ¶ 19 In support of its motion, IEPC alleged that uncertain economic conditions and market demand for a different grade of crude oil caused IEPC to reevaluate the original parameters of the SAX project. Based on these changed factors, IEPC calculated that the capacity requirements of the SAX project would be approximately 300, 000 barrels per day (bpd) of oil, which "can be readily accommodated by a 24-inch outside diameter pipeline." (In its August 2007 application for a certificate in good standing, IEPC determined that the capacity of the 36-inch pipeline was approximately 400, 000 bpd.) With regard to its 300, 000 bpd approximation, IEPC had received long-term contractual commitments from Marathon Petroleum Company (Marathon) and another undisclosed oil shipper for a total volume of approximately 210, 000 bpd. IEPC stated that the remaining 90, 000 bpd capacity would be available to other shippers of light and heavy crude.

         ¶ 20 In June 2014, the Commission reopened docket No. 07-0446, and at a later evidentiary hearing, an ALJ considered (1) written and oral direct testimony and (2) oral cross-examination testimony on IEPC's May 2014 motion to amend. Thereafter, the parties to that litigation filed, in pertinent part, additional posthearing briefs. In its November 2014 posthearing reply brief, IEPC acknowledged that in July 2014, Enbridge Energy Company, Inc. (IEPC's parent company) agreed to sell to a 35% equity interest in the SAX project to Marathon.

         ¶ 21 In December 2014, the ALJ recommended that the Commission grant IEPC's motion to amend, subject to certain conditions. Later that month, the Commission determined that public convenience and necessity required issuance of an amended certificate to authorize a 24-inch pipeline. In particular, the Commission found that (1) a public need for the 24-inch pipeline existed; (2) no other substantial changes specified in the original certificate, such as pipeline route and easement width, were proposed or granted; and (3) the 24-inch pipeline would not impose additional burdens on landowners than the originally proposed 36-inch pipeline.

         ¶ 22 Intervenors appealed, arguing that the Commission erred by amending the July 2009 certification because (1) the Commission's findings were not supported by substantial evidence, (2) IEPC's certificate in good standing had expired, and (3) IEPC was no longer a common carrier by pipeline because of self-imposed limits that excluded the public. As to the last argument, intervenors contended that (1) IEPC lost its certification by selling a 35% interest in the SAX project to Marathon, (2) Marathon's 35% interest converted the SAX project into a private pipeline, and (3) the 24-inch amendment to the SAX project discriminated against the general public by not making the SAX capacity available on an equal basis.

         ¶ 23 In March 2016, this court affirmed the Commission's order, rejecting intervenors' (1) sufficiency-of-the-evidence, (2) expiration, and (3) private-pipeline claims. Pliura Intervenors v. Illinois Commerce Comm'n, 2016 IL App (4th) 150084-U (Intervenors III). The Supreme Court of Illinois later denied intervenors' petition for leave to appeal. Pliura Intervenors v. Illinois Commerce Comm'n, No. 120757 (Ill. Sept. 28, 2016).

         ¶ 24 B. The Issues on Appeal

         ¶ 25 The issues presented in this appeal concern primarily the trial court's rulings on the following two issues: (1) landowners' traverse motions, including landowners' requests for discovery prior to the traverse hearing, and (2) IEPC's condemnation suit, which includes landowners' challenges to the trial court's underlying evidentiary rulings. The following chronological discussion is confined to those two issues.

         ¶ 26 1. IEPC's Final Offers and Condemnation Filings

         ¶ 27 In separate letters, both dated May 19, 2014, IEPC proffered a final offer of $23, 354 to the Hokes and $4573 to PMC for a 60-foot permanent right-of-way and a 60-foot temporary work-space area to be used during construction of the SAX project. IEPC informed landowners that (1) the final offer would expire in 10 days and (2) if landowners rejected the final offer, IEPC would file suit against landowners to enforce its interests.

         ¶ 28 In July and August 2014-after landowners failed to respond to its offers-IEPC filed separate "complaints for condemnation of permanent and temporary easements for common carrier pipeline, " seeking to determine the just compensation for its right-of-way and easement interests in landowners' respective properties. Appended to IEPC's motion was the Commission's April 2014 order in docket No. 13-0446, which granted IEPC eminent-domain authority. ¶ 29 2. Landowners' Traverse Motions and Requests for Discovery

         ¶ 30 In August and September 2014, the Hokes and PMC, respectively, filed a traverse motions, alleging that the following circumstances required dismissal of IEPC's condemnation suit:

"1. [IEPC] is not properly vested with authority to acquire the property of [landowners] by proceeding in eminent domain.
2.*** [T]he property sought to be acquired *** is not necessary or convenient for the purpose for which it is sought to be taken.
3.*** [T]he amount of property sought to be taken *** is in excess of [IEPC's] needs.
4.[IEPC] does not seek to use the property sought *** for a public use.
5.*** [T]here has been no bona fide attempt to agree with [landowners] as to the just compensation and damages to be paid for the property sought to be taken.
6.*** [T]he project for which [IEPC] seeks to acquire [landowners' property] does not constitute a public convenience or necessity.
7.*** [T]he project does not constitute a common carrier because of restrictions on access to the proposed pipeline.
8.[IEPC's] authority to acquire the property by eminent domain is limited to a project that [IEPC] is no longer pursuing and is not transferrable to a new and different project.
9.[IEPC] does not possess the legal authority to construct the pipeline *** because it has no certificate in good standing *** for the project it is pursuing and the certificate it previously obtained is expired and is not transferable to a different project."

         ¶ 31 In October 2014, landowners filed memoranda in support of their traverse motions, asserting, in part, that because a traverse motion concerns the protection of a property owner's land rights, such a filing is not-as IEPC claims-the equivalent of a motion to dismiss under section 2-619(a)(9) of the Code of Civil Procedure (Civil Code) (735 ILCS 5/2-619(a)(9) (West 2014) (a court can involuntarily dismiss a cause of action on the grounds "[t]hat the claim asserted against defendant is barred by other affirmative matter avoiding the legal effect of or defeating the claim")). Specifically, landowners alleged that a traverse motion hearing involves an evidentiary proceeding, which necessitates discovery and "resembles a trial more than it does a conventional motion hearing." Landowners asserted further that the "points initially raised by [their] traverse [motions], will require additional discovery not available to [landowners] prior to filing."

         ¶ 32 3. The Hearing on Landowners' Discovery Requests and Traverse Motions

         ¶ 33 We note that at the time of the November 2014 hearing on landowners' discovery requests and traverse motion filings, (1) this court had published Intervenors I, which affirmed the Commission's July 2009 grant of a certificate in good standing issued to IEPC in docket No. 07-0446; (2) Intervenors II-which challenged the Commission's grant of eminent-domain authority to IEPC in docket No. 13-0446-was pending before this court; and (3) the parties were aware that pending before the Commission was IEPC's motion to amend the certificate in good standing in docket No. 07-0466 to reflect the installation of a 24-inch diameter pipeline instead of a 36-inch diameter pipeline, which this court had yet to consider in Intervenors III.

         ¶ 34 To facilitate the reader's understanding of a traverse motion, we provide the following brief synopsis of the motion's purpose:

" 'A traverse and motion to dismiss challenge plaintiff's right to condemn defendants' property. [Citations.] It is settled law in Illinois that when a traverse is filed, the burden is on the plaintiff to make a prima facie case of the disputed allegations. [Citations.] A prima facie case for the necessity of a condemnation is made by introducing a resolution or ordinance of the governing body which makes a finding that the condemnation is necessary. [Citations.] The agency that has been granted the power of eminent domain, rather than the court, has the authority to decide whether the exercise of the power is necessary to achieve an authorized purpose. Absent a clear abuse of this authority, the court will not inquire into the need or propriety of its exercise. [Citations.] Accordingly, where plaintiff establishes a prima facie case, it becomes the burden of defendant to show that there was an abuse of discretion by the governing board. [Citations.]' " Enbridge Energy (Illinois), L.L.C. v. Kuerth, 2016 IL App (4th) 150519, ¶ 51, 69 N.E.3d 287 (quoting Lake County Forest Preserve District v. First National Bank of Waukegan, 154 Ill.App.3d 45, 51, 506 N.E.2d 424, 428 (1987)).

         ¶ 35 At the November 2014 hearing, the trial court first considered landowners' requests for discovery. Landowners acknowledged that trial courts in Kankakee, Livingston, McLean, and Will Counties had considered and rejected such requests made by similarly situated landowners. Landowners then argued that the reason discovery was necessary prior to the court's consideration of their traverse motions was to facilitate landowners' further inquiry into whether IEPC (1) was constructing a different pipeline than the SAX project the Commission approved in July 2009 in docket No. 07-0446, (2) provided a genuine good-faith offer and conveyed the bases for its offers, and (3) was constructing a private pipeline by virtue of Marathon's ownership interest in the SAX project. Landowners also requested to depose "individuals who have *** submitted *** affidavits" regarding their land-valuation methodology.

         ¶ 36 In response, IEPC argued that landowners were essentially attempting to relitigate issues that had been considered and adjudicated by the Commission. In support of its argument, IEPC noted the Commission's orders in docket Nos. 07-0446 (granting IEPC certification to build the SAX project) and 13-0446 (granting IEPC eminent-domain authority). IEPC claimed that docket No. 07-0446 was a final order by virtue of this court's conclusion that the Commission correctly determined (1) IEPC "was fit, willing, and able to construct, operate, and maintain" the SAX project and (2) the SAX project satisfied a public need. Intervenors I, 405 Ill.App.3d at 207-09, 942 N.E.2d at 583-85. As to docket No. 13-0446, IEPC noted that the Commission's grant of eminent-domain authority remained a valid, enforceable order despite intervenors' then-pending appeal to this court in Intervenors II. IEPC argued further that because landowners' discovery requests were "improper collateral attacks" on the Commission's determinations, no discovery was warranted.

         ¶ 37 After considering further argument by the parties, the trial court denied landowners' request for discovery prior to the traverse hearing. In so ruling, the court stated that after considering the parties' filings in support of and in opposition to landowners' discovery requests and traverse motions, which included IEPC's July and August 2014 condemnation complaints, the court did not view landowners' discovery requests "appropriate."

         ¶ 38 Prior to conducting a hearing on landowners' traverse motions, the trial court recessed briefly to consider City of Springfield v. West Koke Mill Development Corp., 312 Ill.App.3d 900, 728 N.E.2d 781 (2000). The court did so because IEPC had argued during the court's consideration of landowners' request for discovery that this court's decision in Koke Mill stood for the proposition that a traverse motion is essentially a motion to dismiss under section 2-619(a)(9) of the Civil Code.

         ¶ 39 Upon resuming the hearing, IEPC again noted the Commission's orders granting (1) a certificate in good standing to IEPC in docket No. 07-0446 and (2) eminent-domain authority to IEPC in docket No. 13-0446. IEPC acknowledged that section 5-5-5(c) of the Eminent Domain Act (735 ILCS 30/5-5-5(c) (West 2014)) provided landowners the ability to rebut the statutory presumptions established by the aforementioned orders-specifically, that IEPC's interests in landowners' respective properties were (1) "primarily for the benefit, use, or enjoyment of the public"; and (2) "necessary for a public purpose." IEPC argued that landowners had not presented the requisite clear and convincing evidence to rebut those presumptions.

         ¶ 40 IEPC then attempted to explain that the offers made to landowners for IEPC's interests were based on 125% of the fee value of the landowners' respective properties. Landowners' objected, arguing that IEPC's explanation was improper because they were entitled to an evidentiary hearing where they could cross-examine IEPC's appraiser. The trial court overruled landowners' objections, stating as follows:

"As [the court] read from [Koke Mill], this [traverse proceeding] is akin to a 2[-]619 motion [to dismiss.] [L]ogically, that makes sense because *** the traverse and motion to dismiss is attempting to do the same thing a 2[-]619 motion would do. To rule on a 2[-] 619 motion, the court certainly doesn't need live body testimony. Affidavits, exhibits, [and] things like that suffice. [Landowners'] objection is overruled."

         ¶ 41 After IEPC concluded its argument, landowners attempted to call their first witness. The trial court interrupted, stating that "[the court has] already said [the traverse hearing is] a 2[-] 619 type hearing." When landowners requested to make an offer of proof regarding the content of the expected testimony, the court responded, as follows:

"As [the court] said, this is in the nature of a hearing in a motion under 2[-] 619 [of the Civil Code. The court is] not aware of any authority for any testimony on that kind of a motion, or even for an offer of proof. So, the request to present an offer of proof is denied."

         After further argument, the court denied landowners' traverse motions.

         ¶ 42 4. Landowners' Counterclaim

         ¶ 43 In December 2014, landowners filed a "counterclaim for damages to the remainder, " in which they sought compensation from IEPC for the "substantial, irreparable, and unavoidable" damages to the remainder of their respective properties caused by the impending installation of the SAX project. Landowners claimed that such damage included (1) "the inherent danger of environmental damage, including the possibility of catastrophic environmental damage consequent to a breach, leak, or other failure of the pipeline"; (2) "the inherent danger to life, limb, and property resultant from a fire and/or explosion consequent to a breach, leak, or other failure of the pipeline"; (3) "diminished resale value"; (4) "necessary restrictions on current and future use of the property"; (5) "diminished crop yields"; (6) "diminished ground stability"; (7) "water drainage disruption and displacement"; and (8) "future costs associated with the removal of the abandoned pipeline."

         ¶ 44 5. IEPC's Motions In Limine and the ...

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