Baatz v. Columbia Gas Transmission, LLC

• Decision Date: 14 February 2018
• Docket Number: Case No. 1:14–cv–505
• Citation: 295 F.Supp.3d 776
• Parties: Richard BAATZ, et. al., Plaintiffs, v. COLUMBIA GAS TRANSMISSION, LLC, Defendant.
• Court: U.S. District Court — Northern District of Ohio

295 F.Supp.3d 776

Richard BAATZ, et. al., Plaintiffs,

v.COLUMBIA GAS TRANSMISSION, LLC, Defendant.

Case No. 1:14–cv–505

United States District Court, N.D. Ohio, Eastern Division.

Signed February 14, 2018

Ricky L. Ferrara, Daniel F. Lindner, Cleveland, OH, for Plaintiffs.

Branden P. Moore, Alexander M. Madrid, Leonard J. Marsico, McGuire Woods, Paul K. Stockman, Kazmarek Mowrey Cloud Laseter, Pittsburgh, PA, Jodie Herrmann Lawson, McGuire Woods, Charlotte, NC, Michael L. Snyder, Benesch, Friedlander, Coplan & Aronoff, Cleveland, OH, Yvette G. Harmon, McGuire Woods, New York, NY, for Defendant.

AMENDED MEMORANDUM OF OPINION AND ORDER

Thomas M. Parker, United States Magistrate Judge

I. Introduction

Plaintiffs in this action are the owners of residential lots in Medina County, Ohio ("Landowners"). Defendant Columbia Gas Transmission, LLC ("Columbia") is a wholesale producer and distributor of natural gas which established a 10,000 acre underground natural gas storage facility in the Clinton sandstone formation in Medina County (the "Medina Storage Field"). Columbia was authorized—and required—to construct and operate the Medina Storage Field by the former Federal Power Commission in 1958, and it has stored natural gas in that facility since 1959. Federal law authorizes natural gas facility operators to take property by eminent domain to accomplish the purposes set forth in certificates of public convenience and necessity under the Natural Gas Act. Despite receiving a certificate in 1958 and operating the Medina Storage Field since 1959, Columbia did not seek to acquire underground gas storage easements under the Landowners' properties until 2014. The Landowners sued for trespass and unjust enrichment damages. Columbia has moved for summary judgment on the Landowners claims. ECF Doc. 89. The Landowners have also moved for partial summary judgment, seeking a liability determination that Columbia has trespassed on each of the Landowners' properties since 1959 and a declaration that the trespass was malicious. EFC Doc. 86. Because the Landowners have no evidence that Columbia's conduct has caused actual damage to Landowners' properties or has in any way interfered with Landowners' use or anticipated use of their properties, and because Columbia's construction and operation of the Medina Storage Field was mandated by federal agency action, Columbia cannot be liable to the Landowners for trespass. In addition, because Landowners will receive just compensation for Columbia's taking in a companion action, Columbia's only potential liability on an unjust enrichment claim is for interest on the just compensation amount it is required to pay. The court will direct the parties to submit an agreed calculation of the prejudgment interest amount. As a result, Columbia's motion for summary judgment will be GRANTED in PART and DEFERRED in PART and Landowners' motion for partial summary judgment will be DENIED.

II. Procedural Background and Claims Asserted

The Landowners instituted this action on March 5, 2014. Doc. 1. They asserted claims similar to those alleged in an earlier-filed putative class action case in the Southern District of Ohio, Wilson et al v. Columbia Gas Transmission, LLC , Case No. 2:12cv01203 (S.D. Ohio 2012). None of the plaintiffs in this case was an original party in Wilson ; but Columbia is the defendant in both cases. On April 22, 2014, Columbia filed an amended counterclaim in Wilson joining the Medina Landowners as counterclaim defendants. The next day, Columbia moved to dismiss the instant case, asserting that Wilson , the first filed case, had priority. On March 5, 2015, Judge Wells granted Columbia's motion to dismiss. ECF Doc. Nos. 18, 19. On February 24, 2016, the Sixth Circuit reversed the dismissal and remanded the case. ECF Doc. No. 22. Taking a suggestion by the court of appeals, Columbia moved to stay this case. ECF Doc. No. 27. On May 4, 2016, Judge Gwin¹ denied defendant's motion to stay due, in part, to delays in Wilson and the appropriateness of venue in the Northern District of Ohio.

On May 26, 2016, Columbia and the Medina Landowners jointly requested that their claims in Wilson be severed and transferred to the Northern District of Ohio. That request was granted, and on June 10, 2016, the case was transferred to the Northern District of Ohio and recaptioned Columbia Gas Transmission , LLC v. Booth, et a. , 1:16cv01418 ("Booth. ") Shortly thereafter, Columbia filed an Amended Complaint in condemnation against the Landowners in Booth .²

On May 27, 2016, one day after the parties' joint request to sever and transfer their claims in Wilson , Columbia moved to dismiss the instant case, arguing that its assertion of a condemnation claim in Booth mooted certain claims in this case. ECF Doc. Nos. 32, 33. Columbia contended that all of the Landowners' other claims were preempted by the NGA.

On December 22, 2016, the court granted, in part, Columbia's motion to dismiss. ECF No. 58. Plaintiffs' claims for mandamus/inverse condemnation (Count Three), declaratory judgment (Count Four), and permanent injunction (Count Five) were dismissed. The court declined to dismiss the claims for trespass (Count One) and unjust enrichment (Count Two).

The Landowners premise their trespass and unjust enrichment claims on the contention that Columbia had no right to store natural gas beneath their properties prior to the acquisition of property rights by eminent domain. In Count One, the Landowners claim that Columbia maliciously trespassed and should be liable for nominal, compensatory, and punitive damages and for attorney fees. Count Two asserts that Columbia has been unjustly enriched by being able to store natural gas beneath their properties without cost since 1959. The Landowners claim Columbia should be required to disgorge what it would have paid for such gas storage, or the net profit it earned from storing natural gas beneath their properties. They also impliedly claim Columbia was unjustly enriched by retaining the money it would have paid as just compensation for its taking of their properties.

III. Factual and Regulatory Background

The following facts are undisputed and/or established by the Rule 56 evidence. Columbia is an interstate natural gas company as defined by Section 2(a) of the Natural Gas Act ("NGA"). ECF Docs. 46, 66. Columbia operates an extensive interstate natural gas transportation and storage system that includes one of North America's largest underground natural gas storage systems (37 storage fields in four states with nearly 600 billion cubic feet in total capacity). Id. The Medina Storage Field is one of those facilities. Id. The Medina Storage Field exists within the Clinton sandstone formation located approximately 3,000 feet beneath the surface of the land. Id. Columbia injects natural gas into these storage fields during the summer months when gas demand is low and withdraws the storage gas during the winter months when demand is high, in order to stabilize the supply and, as a result, the price of natural gas. Id.

The Natural Gas Act ("NGA"), 15 U.S.C. § 717 et seq. regulates Columbia's interstate natural gas operations. Id. The NGA authorizes the Federal Energy Regulatory Commission ("FERC") to issue certificates of public convenience and necessity to undertake the construction and maintenance of facilities for the transportation, distribution and sale of natural gas. 15 U.S.C. § 717f(c). Pursuant to the NGA, Columbia's predecessor, the Ohio Fuel Gas Company, obtained a certificate of public convenience and necessity ("1958 Certificate") from the Federal Power Commission—FERC's predecessor—(ECF Doc. 55–1, Page ID# 831–834)³ for the "conversion of Applicant's depleted Clinton Sand of the Medina gas producing field in Medina County, Ohio, into a gas storage field" on July 21, 1958. Id. at Page ID# 832. Ohio Fuel Gas submitted application G–14269 for the certificate on January 6, 1958; the Federal Power Commission granted "[t]emporary authority to construct and operate" the proposed facilities on May 27, 1958, two months prior to the issuance of the certificate. Id.

On April 10, 1987, Columbia filed an application with the Federal Energy Regulatory Commission ("FERC") for a certificate of public convenience and necessity "authorizing the continued operation of five of its existing storage fields...as currently constituted and operated; namely...[the] Medina Storage Field in Medina County, Ohio." (ECF Doc. 55–3, Page ID# 907–908) FERC issued the Certificate on November 2, 1987 (the "1987 Certificate"). Id.

Once FERC issues a certificate of public convenience and necessity, a certificate holder does not have the right to "abandon all or any portion of its facilities, subject to the jurisdiction of the Commission, or any service rendered by means of such facilities without the permission and approval of the Commission...." 15 U.S.C. § 717f(b).

The NGA grants the right of eminent domain to FERC certificate holders as follows:

When any holder of a certificate of public convenience and necessity cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid for, the necessary right-of-way to construct, operate, and maintain a pipe line or pipe lines for the transportation of natural gas, and the necessary land or other property, in addition to right-of-way, for the location of compressor stations, pressure apparatus, or other stations or equipment necessary to the proper operation of such pipe line or pipe lines, it may acquire the same by the exercise of the right of eminent domain in the district court of the United States for the district in which such property may be located, or in the State courts. The practice and procedure in any action or proceeding for that purpose in the district court of the United States shall conform as nearly as may be with the practice and procedure in similar action or proceeding in the courts of the State where the

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