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Enbridge Energy (Illinois), L.L.C. v. Kuerth

Court of Appeals of Illinois, Fourth District

February 27, 2018

ENBRIDGE ENERGY (ILLINOIS), L.L.C., n/k/a Illinois Extension Pipeline Company, Plaintiff-Appellee,
v.
DEBRA S. KUERTH, as Trustee of the Debra S. Kuerth Trust, Under the Declaration of Trust Dated January 29, 2007; THE DEBRA S. KUERTH TRUST, Under Declaration of Trust Dated January 29, 2007; NONRECORD CLAIMANTS; and UNKNOWN OWNERS, Defendants- Appellants. ENBRIDGE ENERGY (ILLINOIS), L.L.C., n/k/a Illinois Extension Pipeline Company, Plaintiff-Appellee,
v.
KENNETH L. KUERTH; DIANNE KUERTH; NONRECORD CLAIMANTS; and UNKNOWN OWNERS, Defendants-Appellants.

          Appeal from the Circuit Court of Livingston County, Nos. 14-ED-12, 14-ED-13; the Hon. Mark A. Fellheimer, Judge,

          Thomas J. Pliura, of LeRoy, for appellants.

          Gerald A. Ambrose, Steven J. Horowitz, Brian A. McAleenan, and Dale E. Thomas, of Sidley Austin LLP, of Chicago, John M. Spesia and Jacob E. Gancarczyk, of Spesia & Taylor, of Joliet, and Christopher J. Spanos, of Hinshaw & Culbertson LLP, of Peoria, for appellee.

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

          OPINION

          STEIGMANN, JUSTICE

         ¶ 1 This case, which is an appeal from a condemnation proceeding under the Eminent Domain Act (Act) (735 ILCS 30/5-5-5(c) (West 2014)), is before this court for the second time. The first time resulted in Enbridge Energy (Illinois), L.L.C. v. Kuerth, 2016 IL App (4th) 150519, 69 N.E.3d 287 (hereinafter Kuerth I). In Kuerth I, we resolved some of the issues that case presented but remanded the case to the trial court with specific directions regarding further proceedings. Id. ¶¶ 173-83. The trial court has conducted those further proceedings and has returned the case to this court so that we may now resolve all of the issues this appeal presents.

         ¶ 2 I. Procedural History

         ¶ 3 In April 2014, the Illinois Commerce Commission (Commission) granted plaintiff, Enbridge Energy (Illinois), L.L.C., now known as the Illinois Extension Pipeline Company (IEPC), eminent-domain authority to acquire easements for the construction of an oil pipeline project known as the Southern Access Extension (SAX). Marathon Petroleum Company (Marathon) contributed to the cost of the pipeline and has the contractual right to approximately two-thirds of the pipeline's capacity.

         ¶ 4 In July 2014, IEPC filed for condemnation proceedings for an easement against defendants Debra S. Kuerth and the Debra S. Kuerth Trust (Livingston County case No. 14-ED-12; this court's case No. 4-15-0519) and Kenneth L. Kuerth and Dianne Kuerth (Livingston County case No. 14-ED-13; this court's case No. 4-15-0520) (collectively, landowners).

         ¶ 5 In July 2014, landowners filed a traverse motion seeking to block construction of the pipeline. In October 2014, landowners filed a motion for discovery and a memorandum in support of their traverse motions. The trial court denied landowners' request for discovery and denied their traverse motions. The court then granted a directed verdict in IEPC's favor, granting it permission to build the pipeline and determining the value of compensation to be paid to the landowners.

         ¶ 6 In Kuerth I, landowners appealed and argued that the trial court erred by (1) denying their motion for discovery, (2) denying their traverse motions, (3) barring landowners' testimony concerning just compensation, and (4) barring the testimony of two potential expert witnesses. We agreed in part, holding that the denial of the traverse motions effectively deprived landowners of the opportunity to present relevant evidence to (1) rebut the presumptions of public use and public necessity and (2) refute the Commission's determination that IEPC had engaged in good-faith negotiations when the Commission granted IEPC eminent-domain authority. Id. ¶ 151. We otherwise affirmed the trial court. We then remanded this case to the trial court with explicit instructions to conduct a traverse hearing. Id. ¶ 179.

         ¶ 7 On remand, landowners filed a discovery request seeking "[t]he identity of any and all, past or present, shippers who have shipped on the SAX pipeline, the amount of product each entity has shipped or is shipping on the SAX pipeline and terms under which each individual entity has shipped or is shipping on the SAX pipeline." In February 2017, the court denied landowners' request for discovery.

         ¶ 8 In April 2017, the trial court conducted the traverse hearing in which the court was required to determine "whether landowners can present (1) clear and convincing evidence to rebut the presumptions of public use and public necessity and (2) sufficient evidence to refute the substantial deference afforded the Commission's good-faith determination." Id. ¶ 174. The court concluded that landowners did not present "clear and convincing evidence" to rebut the presumptions of public use and public necessity or sufficient evidence to rebut "the substantial deference afforded [to] the Commission's good-faith determination." Accordingly, the court denied the traverse motion. The court also denied IEPC's motion for sanctions against landowners' attorney under Illinois Supreme Court Rule 137 (eff. July 1, 2013).

         ¶ 9 This second appeal followed, and landowners now argue that (1) they presented sufficient evidence to rebut IEPC's presumptions by clear and convincing evidence and (2) the trial court erred by denying their request for discovery. IEPC argues that the trial court erred by denying their motion for sanctions. IEPC is also asking this court to impose sanctions pursuant to Illinois Supreme Court Rule 375(b) (eff. Feb. 1, 1994).

         ¶ 10 We conclude that (1) the trial court's holding that landowners failed to rebut the presumptions of public use and public necessity was not against the manifest weight of the evidence, (2) the trial court did not err by denying their request for discovery, and (3) the court did not abuse its discretion in declining to award sanctions against landowners' attorney. We likewise decline to impose sanctions pursuant to Rule 375(b).

         ¶ 11 II. Background

         ¶ 12 A. The Condemnation Proceedings and the First Trial

         ¶ 13 In April 2014, the Commission granted IEPC eminent-domain authority to acquire easements for the construction of the SAX pipeline project. Marathon contributed to the cost of the pipeline and has the contractual right to approximately two-thirds of the pipeline's capacity.

         ¶ 14 In July 2014, IEPC filed for condemnation proceedings for an easement against landowners. IEPC sought to acquire a route for the SAX pipeline and to determine the just compensation to be paid to landowners.

         ¶ 15 In July 2014, landowners filed a traverse motion, arguing that (1) IEPC was not vested with the authority to acquire defendant's property, (2) the property sought to be acquired was not necessary or convenient for the purpose for which it was sought, (3) the amount of property taken was excessive of IEPC's needs, (4) IEPC does not seek the property for a public use, (5) there had been no bona fide attempt to agree with the landowners as to the just compensation and damages to be paid, (6) the pipeline project did not constitute a public convenience or necessity, (7) the pipeline was not a common carrier because of the restrictions on access to the pipeline, (8) IEPC's authority to acquire the property by eminent domain is limited to a project that IEPC was no longer pursuing, and (9) IEPC did not have the legal authority to construct the pipeline because it had no certificate in good standing for the project it was pursuing.

         ¶ 16 In October 2014, landowners filed a motion for discovery, arguing that they were entitled to additional discovery. Later that month, the trial court denied landowners' request for discovery and denied their traverse motions. The court also barred landowners from testifying about the value of their property and barred landowners' supposed expert witness from testifying about the value of the property. The court, after a trial regarding the value of landowners' properties, directed a judgment in IEPC's favor. The court then granted IEPC permission to build the pipeline and determined the compensation to be paid to the landowners.

         ¶ 17 B. The First Appeal and Remand Instructions

         ¶ 18 Landowners appealed, arguing that the trial court erred by (1) denying their motion for discovery, (2) denying their traverse motions, (3) barring landowners' testimony concerning just compensation, and (4) barring the testimony of two potential expert witnesses. We agreed in part, holding that the denial of the traverse motions effectively deprived landowners of the opportunity to present relevant evidence to (1) rebut the presumptions of public use and public necessity and (2) refute the Commission's determination that IEPC had engaged in good-faith negotiations when the Commission granted IEPC eminent-domain authority. Kuerth I, 2016 IL App (4th) 150519, ¶ 151. We otherwise affirmed the trial court. Id. ¶ 114. We then remanded this case to the trial court with explicit instructions to conduct a traverse hearing, and we retained jurisdiction of this appeal. Id. ¶¶ 173-80. We provided the following instructions on remand:

"[W]hen IEPC filed its complaints for condemnation against landowners' respective properties[, ] IEPC enjoyed the rebuttable presumptions that its interests in landowners' respective tracts of land were (1) primarily for the benefit, use, or enjoyment of the public; and (2) necessary for a public purpose. In addition to those presumptions, the Commission determined that eminent-domain authority in IEPC's favor was warranted because good-faith negotiations between IEPC and landowners had failed. Thus, landowners were entitled to present relevant ...

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