B. Willis, C.P.A., Inc. v. Bnsf Ry. Corp.

• Citation: 531 F.3d 1282
• Decision Date: 16 July 2008
• Docket Number: No. 06-5015.,06-5015.
• Parties: B. WILLIS, C.P.A., INC., an Oklahoma corporation, Plaintiff-Appellant, v. BNSF RAILWAY CORPORATION, a foreign corporation; Union Pacific Railroad Company, a foreign corporation; Public Service Company of Oklahoma, an Oklahoma corporation, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

531 F.3d 1282

B. WILLIS, C.P.A., INC., an Oklahoma corporation, Plaintiff-Appellant, v. BNSF RAILWAY CORPORATION, a foreign corporation; Union Pacific Railroad Company, a foreign corporation; Public Service Company of Oklahoma, an Oklahoma corporation, Defendants-Appellees.

No. 06-5015.

United States Court of Appeals, Tenth Circuit.

July 16, 2008.

William T. Dickson, Tulsa, OK, for Plaintiff-Appellant B. Willis, C.P.A., Inc.

Stratton Taylor, Taylor, Burrage, Foster, Mallett, Downs & Ramsey, Claremore, OK (Hugh D. Rice and William P. Tunnell, Rainey, Ross, Rice & Binns, Oklahoma City, OK; Mark H. Ramsey and Clinton D. Russell, Taylor, Burrage, Foster, Mallett, Downs & Ramsey, Tulsa, OK; and Robert D. Hart, Gibbs, Armstrong, Borochoff, Mullican & Hart, Tulsa, OK, with him on the briefs), for Defendants-Appellees BNSF Railway Corporation, Union Pacific Railroad Company and Public Service Company of Oklahoma.

Before TACHA, EBEL and KANE,^* Circuit Judges.

EBEL, Circuit Judge.

In 1992, Defendant-Appellee Public Service Company of Oklahoma ("PSO") used the eminent domain authority granted to it under Oklahoma law to condemn an easement across property owned by Plaintiff-Appellant B. Willis, C.P.A., Inc. ("Willis"). Willis, in turn, invoked remedies available under Oklahoma law, first to challenge, before a state court judge, the necessity for PSO to condemn this easement for a public use; and second to challenge, in a jury trial, the amount of compensation awarded Willis for the easement. Pursuant to Oklahoma law, PSO took possession of the easement while Willis' challenges to the condemnation proceedings were ongoing and, since 1995, has operated a rail line across Willis' property.

Willis commenced this federal litigation while those state proceedings remained pending, asserting federal and state law claims in this federal action that challenged aspects of the state condemnation case. The district court dismissed these claims, concluding that prior federal proceedings precluded one of Willis' claims and that Willis' other claims would not be ripe for adjudication as long as the state court condemnation action remained ongoing. While the district court's decision was before this court on appeal, however, the state courts finally resolved Willis' challenge to the necessity of PSO's condemning the easement, concluding that PSO had established a public necessity sufficient to warrant condemnation of the easement.

Because this decision conclusively resolved the material issues presented by most of Willis' claims asserted in this federal action, Oklahoma issue preclusion principles preclude Willis from pursuing all but portions of two of its claims. The two exceptions are 1) aspects of Willis' due process/equal protection claim, to the extent that Willis alleges PSO acted in concert with the state trial judge to deprive Willis of an initial hearing and discovery to challenge the public necessity of the easement; and 2) Willis' trespass claim, to the extent that claim alleges that PSO removed limestone and coal from below the surface of the easement.

We AFFIRM the district court's dismissal of all but these aspects of Willis' due process/equal protection and trespass claims, but we REMAND those precluded claims with directions that the district court dismiss them with prejudice. As to those portions of Willis' due process/equal protection and trespass claims that are not precluded, because the state proceedings challenging the amount of compensation awarded for the easement are still pending, those claims are not yet ripe for adjudication. We, therefore, AFFIRM the dismissal of those claims, but REMAND them to the district court to clarify that their dismissal is without prejudice.

I. BACKGROUND

A. Prior litigation between the parties

Willis¹ owns property in Oolagah, Rogers County, Oklahoma. PSO operates a power plant nearby. Defendant Union Pacific owns a rail line that runs adjacent to this power plant.

To fuel its plant, PSO purchases coal from the Powder River Basin in Wyoming and contracts with Defendant BNSF Railway Corporation ("BNSF") to transport the coal to the Oolagah plant. Because BNSF did not own or operate a rail line adjacent to the plant, however, it had to subcontract with Union Pacific to complete delivery. PSO believed that it could obtain much better shipping terms if BNSF also had a rail line running to the power plant, because then the two railroads would have to compete for PSO's shipping business. Therefore, PSO sought to build a rail line, approximately ten miles long, connecting the power plant to an already-existing BNSF line. That new line ran through Willis' property.

When Willis refused to grant PSO an easement across its property to build and operate this rail line, PSO, in October 1992, began proceedings to condemn the easement under Oklahoma's eminent domain provisions. The Oklahoma Constitution permits the condemnation of private property for a public use. See Okla. Const. art. 2, § 24.² And Okla. Stat. tit. 27, § 7 expressly gives a power company, such as PSO, "the right of eminent domain in the same manner and by like proceedings as provided for railroad corporations" under Oklahoma law.³ Oklahoma law further sets forth specific procedures, see Okla. Stat. tit. 66, §§ 51-66, by which a railroad or power company can condemn private property for "a lawful public use." Pub. Serv. Co. of Okla. v. B. Willis, C.P.A., Inc., 941 P.2d 995, 999 (Okla. 1997) (citing Okla. Const. art. 2, §§ 23, 24).

Acting pursuant to these eminent domain procedures, PSO filed a petition in a Rogers County state court to condemn the easement across Willis' property. The state court then appointed a three-member commission, which determined "just compensation" PSO should pay Willis for the easement. Okla. Stat. tit. 66, § 53(A), (C);⁴ see also City of Stigler v. Crumley, 99 P.3d 253, 254 (Okla.Civ.App.2004). Willis objected, not only to the amount of compensation the three-member commission awarded, but to the validity of the condemnation itself, asserting that PSO was not taking the easement for a public use.⁵ See Willis, 941 P.2d at 997.

Notwithstanding Willis' objection challenging the public need for PSO to take an easement across Willis' property, the state trial court denied Willis discovery on this issue and, without conducting an evidentiary hearing, held "that [PSO's] simple allegation of necessity in the [condemnation] petition was sufficient to sustain PSO's case" for condemning the easement; that is, because PSO had statutory authority to condemn property under Okla. Stat. tit. 27, § 7, Willis had no right to contest PSO's taking the easement across Willis' property. Willis, 941 P.2d at 997-98. Willis appealed that determination. See id. at 998.

Despite Willis' pending appeal, Okla. Stat. tit. 66, § 56 permitted PSO to take possession of the easement by paying the court clerk, on Willis' behalf, the amount of compensation the appointed three-member commission had awarded Willis.⁶ See Pub. Serv. Co. of Okla. v. B. Willis, C.P.A., Inc., 155 P.3d 845, 848-49 (Okla.Civ.App.2006), cert. denied, ___ U.S. ___, 128 S.Ct. 66, 169 L.Ed.2d 16 (2007). PSO then built a railroad track and bridge across approximately 1,069 feet of Willis' property. After completing construction of the track, PSO entered into an "Industrial Track and Operating Agreement" with BNSF in March 1995. Under that agreement, BNSF maintains this rail line and runs coal trains across it to PSO's power plant.

Even though the rail line had already been built, Willis' state appeal continued. In March 1995, the Oklahoma Court of Civil Appeals held that the allegation of necessity PSO made in its condemnation petition was sufficient to state a prima facie case for PSO's taking the easement across Willis' property, but that the trial court had abused its discretion in denying Willis discovery to support its effort to rebut PSO's prima facie condemnation case. See Willis, 941 P.2d at 998. Not obtaining all the relief it sought, Willis appealed this decision to the Oklahoma Supreme Court.

While Willis pursued that appeal, it also returned to the state trial court to challenge PSO's and BNSF's continued use of the easement, asserting that PSO had no legal right yet to the easement across Willis' property. Willis, therefore, demanded that PSO and BNSF immediately abandon the easement and stop running coal trains across Willis' land. The state trial court rejected Willis' position and, instead, issued a temporary injunction enjoining Willis from interfering with PSO's and BNSF's continued use of the easement while the Oklahoma Supreme Court considered Willis' appeal.

In 1997, the Oklahoma Supreme Court decided Willis' appeal, vacating the decision of the Oklahoma Court of Civil Appeals and remanding the condemnation action to the state trial court for further proceedings. See id. at 997. In doing so, the Oklahoma Supreme Court disagreed with the Court of Civil Appeals and held instead that PSO's

mere filing of a [condemnation] petition does not establish a prima facie case [for condemnation]. It is well-settled that the condemnor has the initial burden of proof on the issues in a condemnation proceeding and meets that burden to the extent of making a prima facie case of necessity by introduction into evidence of a resolution of necessity from the condemning authority [PSO], whereupon the burden of proof shifts to condemnee [Willis] to show that the taking is not necessary.

Id. at 999. The Oklahoma Supreme Court concluded that, in this case, because PSO had "never attempted to have its resolution [of necessity] admitted into evidence by the trial court," PSO had never met its "initial burden" in the condemnation proceeding. Id.

The Oklahoma Supreme Court further held that, on remand, once PSO meets its initial burden, Oklahoma

law provides a landowner such as Willis with the right and opportunity to contest the condemnor's...