Am. Energy Corp. v. Tex. Eastern Transmission

• Citation: 701 F.Supp.2d 921
• Decision Date: 23 March 2010
• Docket Number: Case No.: 2:09-cv-623.
• Parties: AMERICAN ENERGY CORP., et al., Plaintiffs,v.TEXAS EASTERN TRANSMISSION, LP, Defendant.
• Court: U.S. District Court — Southern District of Ohio

701 F.Supp.2d 921

AMERICAN ENERGY CORP., et al., Plaintiffs,v.TEXAS EASTERN TRANSMISSION, LP, Defendant.

Case No.: 2:09-cv-623.

United States District Court,

S.D. Ohio,

Eastern Division.

March 23, 2010.

COPYRIGHT MATERIAL OMITTED

John Elliot Jevicky, A. Hunt Marckwald, Jr., Jeffrey A. Willis, William M. Mattes, Dinsmore & Shohl LLP, Cincinnati, OH, for Plaintiffs.

Drew H. Campbell, Frank Leslie Merrill, Matthew Wesley Warnock, Bricker & Eckler LLP, Columbus, OH, Craig P. Wilson, David R. Overstreet, K&L Gates LLP, Harrisburg, PA, for Defendant.

OPINION AND ORDER

GEORGE C. SMITH, District Judge.

This matter is before the Court on Defendant Texas Eastern Transmission, LP's Motion to Dismiss for Failure to State a Claim Upon Which Relief May be Granted (Doc. 4). Plaintiffs American Energy Corporation and Consolidated Land Company have filed a Memorandum in Opposition, and Defendant has filed a Reply. This Motion is therefore fully briefed and ripe for review. For the reasons that follow, this Court DENIES Defendant's Motion to Dismiss.

I. FACTS

Plaintiff Consolidated Land Company (“Consolidated”) is the real property owner of certain coal estates located in Monroe County, Ohio (“the Coal Estates”). Plaintiff American Energy Corporation (“American Energy” or “AEC”) leases the rights to mine all of the coal in the Coal Estates from Consolidated, including the right to extract all of the coal by longwall mining. (Compl. ¶¶ 4, 18). American Energy operates a full-extraction coal mine, known as the Century Mine, pursuant to a permit issued by the Ohio Department of Natural Resources (“ODNR”), Mineral Resources Management. (Compl. ¶ 1). Defendant Texas Eastern Transmission, LP (“Texas Eastern” or “TET”) is involved in the interstate transportation and storage of natural gas through its large interstate transmission pipeline network, including operation of pipelines that run through the State of Ohio, as authorized by the Federal Regulatory Commission (“FERC”) pursuant to the Natural Gas Act (“NGA”). (Compl. ¶ 7). Pursuant to FERC approval, Texas Eastern operates interstate natural gas pipelines that originate in Texas, Louisiana, and the Gulf of Mexico and pass through Mississippi, Arkansas, Missouri, Tennessee, Illinois, Indiana, Kentucky, Ohio, Pennsylvania, and New Jersey.

This action relates to sections of four of Texas Eastern's pipelines located in Monroe County, Ohio. (Compl. ¶¶ 10, 20 & 57). Sections of the pipelines in Monroe County were installed in the 1950's in surface rights-of-way acquired in 1943 and transferred to Texas Eastern in 1947. (Compl. ¶¶ 20-22). Three of these pipelines (the “Active Pipelines”) are, and for the foreseeable future will remain, active. (Compl. ¶ 57). The fourth (the “Inactive Pipeline”) will soon be inactive.¹ (Compl. ¶ 58).

Plaintiffs are the successors in interest to the original grantees of the dominant Coal Estates, located at or near Century Mine. (Compl. ¶ 9). Plaintiffs own extensive and superior rights in the property to mine and remove all of the coal. These extensive rights include the uninterrupted right to mine all of the coal and subside the surface estates located above the Coal Estates without liability for any damages. (Compl. ¶¶ 9, 14).

On October 22, 1984, ODNR issued a coal mining permit (No. D-0425) (the “Permit”) to Plaintiffs' predecessor-in-interest that provided for full-extraction longwall coal mining. This method of mining extracts all of the coal along a long continuous working face. (Compl. ¶¶ 27, 29). The mine became fully operational in 2001. Consolidated purchased the Coal Estates and transferred the Permit to American Energy in 2002. (Compl. ¶¶ 2, 17, and 26).

For years, American Energy conducted longwall coal mining activities at the Century Mine pursuant to the above-referenced Permit. On June 11, 2008, American Energy filed a Permit Adjacent Area Application No. D-0425-9 (the “Application”) with ODNR, seeking to expand its mining area to add additional coal acreage. (Compl. ¶¶ 31-32). The additional area is located under Transmission Lines 10, 15, and 25 in Monroe County, Ohio. (Compl. ¶ 33). On June 23, 2008, American Energy provided Texas Eastern with notification that it planned to longwall mine beneath or adjacent to Transmission Lines 10, 15, and 25. (Compl. ¶ 35). On March 31, 2009, ODNR approved the Application and issued Permit Revision No. D-0425-9 to American Energy. (Compl. ¶ 34). Texas Eastern, however, has appealed this permit revision to the Ohio Reclamation Commission to clarify the obligations of American Energy under state mining law. ( See Texas Eastern Transmission, LP v. Husted, Case No. RC-09-003).

The concern raised by Plaintiffs is that if measures are not taken to protect the pipelines from subsidence or related damage, American Energy's mining operations will compromise pipeline integrity and threaten to disrupt the interstate transmission of natural gas.² (Compl. ¶¶ 38 & 41). Plaintiffs rely on the coal severance deeds, including waivers of surface support and related damages, acquired prior to 1913 by its predecessors in interest. (Compl. ¶ 11). The severance deeds convey ownership of the coal to be mined, provide the grantee with a right of way to access and mine the coal, and waive “all surface damages or damages of any sort arising therefrom or from the removal of all said coal.” (Compl. ¶ 13). American Energy, purporting to exercise rights it claims were conferred on it by the severance deeds and by “law,” requested that Texas Eastern develop, implement, and pay for a mitigation plan to avoid interfering with a Coal Estate owner's superior property rights, including the right to mine all coal. (Compl. ¶ 37, 42). Plaintiffs have requested that Texas Eastern develop, implement, and pay for a mitigation plan so that it could commence its mining activities and subside the surface estates, including Texas Eastern's easement. Plaintiffs assert that Texas Eastern's refusal to develop such a mitigation plan has impacted their business interests and will result in the sterilization of Plaintiffs' Coal Estates, which is approximately 3.2 million tons of coal, at a loss of over one hundred million dollars. (Comp.¶¶ 47, 55).

Plaintiffs initiated this action on June 15, 2009 in the Court of Common Pleas for Monroe County, Ohio, seeking a declaration that: (1) its superior property rights provide entitlement to mine all of its coal in the Coal Estates; (2) Plaintiffs are entitled to mine all of the coal under Texas Eastern's transmission lines 10, 15, and 25 through the longwall mining process and subside the surface estates, including Texas Eastern's easement without interference from Texas Eastern, and without liability for damages; (3) Texas Eastern is required to prudently develop a mitigation plan, as well as to take and pay for mitigation measures to Texas Eastern's transmission lines 10, 15, and 25; and (4) Texas Eastern's transmission line 3 is required to be inactive or have mitigation measures taken to it by a certain date. (Compl. ¶ 72). Defendant then removed the case to this Court on the basis of diversity jurisdiction.³ Defendant Texas Eastern then moved to dismiss Plaintiffs' Complaint and this Motion is now before the Court.

II. STANDARD OF REVIEW

A 12(b)(6) motion to dismiss is directed solely to the complaint and any exhibits attached to it. Roth Steel Prods. v. Sharon Steel Corp., 705 F.2d 134, 155 (6th Cir.1983). Rule 8(a)(2) of the Federal Rules of Civil Procedure requires the complaint to contain a “short and plain statement of the claim showing that the pleader is entitled to relief[.]” A court, in considering a 12(b)(6) motion to dismiss, must “construe the complaint in the light most favorable to the plaintiff,” accepting as true all the plaintiff's factual allegations. Gunasekera v. Irwin, 551 F.3d 461, 466 (6th Cir.2009).

To survive dismissal pursuant to Rule 12(b)(6), however, a claim must contain sufficient factual matter to “state a claim to relief that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The United States Supreme Court, in Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), clarified Twombly's plausibility standard:

Two working principles underlie our decision in Twombly. First, the tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice. Id., at 555, 127 S.Ct. 1955 (Although for the purposes of a motion to dismiss we must take all of the factual allegations in the complaint as true, we “are not bound to accept as true a legal conclusion couched as a factual allegation” (internal quotation marks omitted)). Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions. Second, only a complaint that states a plausible claim for relief survives a motion to dismiss. Id., at 556, 127 S.Ct. 1955. Determining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense. [ Iqbal v. Hasty,] 490 F.3d [143] at 157-158 [ (2d Cir.2007) ]. But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not “show [n]”-“that the pleader is entitled to relief.” Fed. Rule Civ. Proc. 8(a)(2).

Id., at 1949-50.

III. DISCUSSION

Defendant Texas Eastern has moved to dismiss Plaintiffs' Complaint in its entirety, asserting that Plaintiffs have failed to state a claim upon which relief can be granted. Defendant asserts that Plaintiffs' Ohio law claims that D...