701 Niles, LLC v. AEP Ind. Mich. Transmission Co.
| Citation | 191 N.E.3d 931 |
| Decision Date | 07 July 2022 |
| Docket Number | Court of Appeals Case No. 21A-PL-2123 |
| Parties | 701 NILES, LLC, Appellant-Defendant, v. AEP INDIANA MICHIGAN TRANSMISSION COMPANY, INC., et al., Appellees-Plaintiffs. |
| Court | Court of Appeals of Indiana |
Attorneys for Appellant: Shawn P. Ryan, South Bend, Indiana, Marcel M. Lebbin, South Bend, Indiana
Attorneys for Appellees: Calvert S. Miller, Kimberly Martin, Fort Wayne, Indiana
[1] AEP Indiana Michigan Transmission Company (AEP), a publicly regulated utility, filed a condemnation action against 701 Niles, LLC (701 Niles), seeking to obtain easements, by eminent domain, for AEP's underground electric transmission line (AEP's Line). 701 Niles acknowledged the public purpose of AEP's Line and did not object, but the parties could not agree on the amount of compensation. Thus, a panel of appraisers was appointed pursuant to statute.
[2] During the appraisal process, 701 Niles discovered that AEP had entered into a memorandum of understanding (MOU) with the University of Notre Dame (the University) to allow the University to concurrently occupy the underground duct bank with the placement of a separate private transmission line. 701 Niles filed a motion to enjoin AEP from using the land for this private purpose. 701 Niles argued that placement of the University's line would constitute a separate and distinct use of the property and that a private easement for the University's benefit was constitutionally prohibited from being taken by eminent domain. AEP, on the other hand, argued that 701 Niles had waived any objection to the proposed easement and that the University's private use thereof would be incidental to the paramount public use and, therefore, not an unconstitutional taking.
[3] Following a hearing, the trial court denied the injunction sought by 701 Niles. The trial court rejected AEP's waiver argument but found that irrespective of whether the University was to also occupy the duct bank, AEP would still need the easements for the public purpose of installing and maintaining its transmission line. The court also found that 701 Niles had an adequate remedy at law – compensation for the taking related to the second line. 701 Niles now brings this interlocutory appeal.
[4] We reverse and remand.
[5] To meet its statutory obligation to furnish adequate, reliable electric services in St. Joseph County, AEP undertook the Mussel-Colfax Transmission Line Rebuild Project (the Project). The Project sought to upgrade the electric transmission system in the area and reduce the risk of extended power outages to the public. AEP ultimately determined that the Project, in relevant part, would require easements across three contiguous parcels of land owned by 701 Niles (the Land) for AEP's Line.
[6] 701 Niles and AEP had engaged in discussions about the Project since at least early 2018 while the plan was being developed. Additionally, AEP represented to the public, through public meetings and information campaigns, that this was a public utility project, serving the public, for the public good.
[7] On or about December 23, 2019, AEP presented 701 Niles with a Uniform Easement Acquisition Offer, in which AEP offered $75,875 for the needed easements across the Land. When the parties could not reach an agreement, AEP filed the instant condemnation action on March 24, 2020, to obtain the easements by eminent domain. Each of the proposed permanent easements provided that 701 Niles grant to "AEP ... and its successors, assigns, lessees and tenants" an easement "for underground electric transmission, distribution, and communication lines and appurtenant equipment and fixtures, being in, on, over, under, through and across" the specifically described lands.2 701 Niles's Appendix Vol. 2 at 28, 35, 39.
[8] The trial court set a hearing on any objections to the complaint for August 21, 2020. Two days before the hearing, 701 Niles (and another defendant that was subsequently dismissed from the action) filed a motion to vacate the hearing and to appoint a panel of appraisers. Thus, 701 Niles elected not to file any objections to the complaint and to proceed with the statutory procedure for assessing damages due to the appropriation of the easements. The trial court vacated the hearing and appointed a panel of appraisers pursuant to Ind. Code § 32-24-1-7. On September 21, 2020, the panel took an oath and received instructions, which were later amended. The appraisal process proceeded over the next several months.
[9] On April 7, 2021, the trial court issued an order indicating that the appraisers were seeking guidance on certain questions that were precluding them from completing their final submission. Accordingly, the court set a hearing for April 16 and instructed the appraisers to confer and submit their outstanding questions to counsel of record prior to the hearing. The appraisers submitted the following valuation dilemma:
AEP's Appendix Vol. II at 19 (emphases in original).
[10] At the April 16 hearing, AEP proposed a stipulation to address the appraisers’ dilemma whereby the easements might be revised. The parties agreed to revise the easement language and submit related revisions and stipulations after the hearing. Thereafter, however, the parties were unable to reach an agreement with respect to revisions. In light of the impasse, on May 11, 2021, AEP filed a motion for the trial court to direct the appraisers to proceed with their valuation of the easements as originally written even though, as AEP conceded, such might result in an award disproportionately in favor of 701 Niles.
[11] Also on May 11, 701 Niles filed a motion for direction from the court. 701 Niles indicated that during the parties’ negotiations regarding revision of the easements, AEP disclosed that it intended to lease the easements to a third party. 701 Niles requested documents related to any such lease, which AEP refused to provide. Accordingly, 701 Niles requested that the court set a conference with the appraisers and the parties to address this issue.
[12] 701 Niles's filing made the basis of the parties’ impasse clear. Since the April hearing, AEP had informed 701 Niles, for the first time, that it intended to allow the University to "share AEP's underground corridor for [the University's] hydro
power project." AEP's Appendix Vol. II at 28. AEP agreed to revise the easements to clarify that above-grade use was not permitted and agreed to remove language that gave rights under the easements to AEP's lessees and tenants with the following proposed caveat: "Grantor expressly acknowledges and agrees that AEP may permit the University of Notre Dame to install and maintain its electric transmission facilities within the Easement Area, subject to the rights granted to AEP herein." Id. 701 Niles refused to agree to this revision without additional information regarding AEP's agreement with the University, which 701 Niles believed to involve "the transmission of power from a private generating station to a third party's private facilities." Id. at 26.
[13] On May 12, AEP filed a response to 701 Niles's motion and indicated that it was unwilling to remove the "lessees and tenants" language, which had been set forth in the easements from the start and to which 701 Niles had not timely objected. 701 Niles filed its reply the following day and argued, among other things, that AEP's complaint had failed to put 701 Niles on notice of any intent to lease the easements to private third parties (as opposed to other public utilities in the area). Additionally, 701 Niles noted that AEP had chosen to condemn easements over the Land rather than a transfer of fee simple title.
[14] On June 21, 2021, the trial court held a hearing on 701 Niles's motion for direction from the court and then took the matter under advisement. That same day, 701 Niles filed its Motion to Enjoin Plaintiff from Using Defendant's Land for a Private Use (Motion to Enjoin). In its Motion to Enjoin, 701 Niles made the following three assertions, which it supported with detailed arguments:
701 Niles's Appendix Vol. 3 at 17. Additionally, 701 Niles asserted that construction of the University's private line would cause irreparable harm to 701 Niles for which there was no adequate remedy at law and that equitable relief was within the public's interest of limiting eminent domain proceedings to their intended uses. 701 Niles requested the entry of an order: (1) enjoining AEP from installing any private transmission line(s) on the Land; (2) allowing only public transmission lines; and (3) prohibiting AEP from depriving 701 Niles from the...
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