City of Shawnee, Kan. v. AT & T CORP.

• Citation: 910 F. Supp. 1546
• Decision Date: 22 December 1995
• Docket Number: No. 94-2444-JWL.,94-2444-JWL.
• Court: U.S. District Court — District of Kansas
• Parties: CITY OF SHAWNEE, KANSAS and City of Merriam, Kansas, Plaintiffs, v. AT & T CORP., AT & T Communications, Inc. and AT & T Communications of the Southwest, Inc., Defendants.

910 F. Supp. 1546

CITY OF SHAWNEE, KANSAS and City of Merriam, Kansas, Plaintiffs, v. AT & T CORP., AT & T Communications, Inc. and AT & T Communications of the Southwest, Inc., Defendants.

No. 94-2444-JWL.

United States District Court, D. Kansas.

December 22, 1995.

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Marvin E. Rainey, Rainey, Byrum & Rainey, Overland Park, KS, for City of Shawnee, Kansas.

Lewis A. Heaven, Jr., John D. Tongier, Holbrook, Heaven & Fay, P.A., Merriam, KS, for City of Merriam, Kansas.

John L. Vratil, W. Joseph Hatley, Patrick J. Gregory, Lathrop & Norquist, Overland Park, KS, for AT & T Corp., AT & T Communications, Inc., AT & T Communications of Southwest, Inc.

MEMORANDUM AND ORDER

LUNGSTRUM, District Judge.

The cities of Shawnee, Kansas (Shawnee) and Merriam, Kansas (Merriam) bring this action to determine the rights and obligations of AT & T¹ to construct, operate and maintain fiber optic telecommunications cables within each plaintiff's boundaries. Presently before the court is AT & T's motion for summary judgment (Doc. # 38). For the reasons stated below, the court makes the following rulings: (1) Merriam may not rescind its agreement with AT & T; (2) the ordinances passed by Merriam and Shawnee are invalid; (3) Merriam's nuisance claim is barred by Kansas statutory law; (4) to the extent AT & T's fiber optic cable lies within Shawnee's right-of-ways, Kansas statutory law bars Shawnee's nuisance and trespass claims; (5) to the extent AT & T's fiber optic cable lies outside Shawnee's right-of-ways, Shawnee's nuisance and trespass claims survive summary judgment; and (6) Shawnee may seek punitive damages notwithstanding its failure to seek actual damages in the pretrial order. As a result of these rulings, AT & T's motion for summary judgment is granted in part and denied in part.

I. Factual Background²

In September and October of 1990, AT & T installed fiber optic cable (cable) within and under public right-of-ways in Shawnee and Merriam. The cable is one portion of AT & T's Topeka Diversity Reroute project, an approximately 19 mile long line laid between downtown Kansas City, Missouri and a regenerating station in Olathe, Kansas. The purpose of the Topeka Diversity Reroute is to separate AT & T's transcontinental lines. Prior to laying the cable, a north-south transcontinental line and an east-west transcontinental line were laid in a single trench. By laying the cable through Merriam and Shawnee, AT & T separated the two transcontinental lines and prevented the compromise of a single trench from disrupting its entire network.

The cable carries inter-exchange (long distance) communications and is not directly connected to any business or residence in either Shawnee or Merriam. Long distance calls in Shawnee and Merriam are routed by a local telecommunications company to a switching station connected with the cable. Through this method, AT & T provides long distance telecommunications to businesses and residences in Shawnee and Merriam.

On September 14, 1990, AT & T and Merriam entered into an agreement (Merriam Agreement) that permitted AT & T to place cable under and along Merriam streets. In exchange, AT & T agreed to make an initial payment to Merriam of $1000 and additional payments of $1000 annually for 20 years. After the Merriam Agreement was enacted by Merriam city council, AT & T made its initial payment of $1000 but has made no further payments. AT & T's failure to make the annual payments was inadvertent and AT & T states its ability and willingness to pay the amount it is in arrears.

By a letter dated December 13, 1993, Merriam, a city of the second class under Kansas law, notified AT & T that due to AT & T's failure to make its annual payments, Merriam was rescinding the Merriam Agreement with AT & T and declaring it null and void. Subsequently, on September 26, 1994, Merriam enacted Ordinance No. 1223 (Merriam Ordinance). The Merriam Ordinance states that AT & T has the right and privilege to construct, operate and maintain cables in the public right-of-ways of Merriam. The Merriam Ordinance requires AT & T to make annual payments beginning on the date of enactment of $2.50 per linear foot of right-of-way in which cable is laid. According to the Merriam Ordinance, AT & T has laid 7800 feet of cable in Merriam right-of-ways.

Also on December 13, 1993, Shawnee, a city of the first class under Kansas law, enacted Ordinance No. 2131 (Shawnee Ordinance). The Shawnee Ordinance gives AT & T the right and privilege to construct, operate and maintain cables in the public right-of-ways of Shawnee. The Shawnee Ordinance requires AT & T to pay an initial fee of $40,000 and annual payments of $2.10 per linear foot of right-of-way in which cable is laid. According to the Shawnee Ordinance, 11,955 feet of cable lie in Shawnee's right-of-ways.

In Shawnee, the cable running along 55th Street between the eastern city limits and Pflumm Road is buried in a four-inch steel conduit. From 55th Street south to Shawnee's southern city limit, the cable lies within a steel petroleum pipeline owned by Williams Pipeline (Williams). Williams granted AT & T a license to use the pipeline for its cable. Shawnee owns in fee simple property under which the pipeline runs. The property is not, however, a public right-of-way. Shawnee granted Williams an easement for its pipeline but the easement was restricted to oil or oil products, gas and water. Shawnee never granted either Williams or AT & T an easement to use the petroleum pipeline for telecommunications. Although Shawnee never granted AT & T an easement, Shawnee knew in 1990 that AT & T was installing its cable in the Williams pipeline.

Williams has other, apparently operating, pipelines in Shawnee. Although some of Williams's pipelines cross public streets, Shawnee has not enacted a similar ordinance directed at Williams.

AT & T has refused to make the payments required by the Merriam and Shawnee Ordinances. This suit ensued.

II. Legal Standard

When considering a motion for summary judgment, the court must examine all the evidence in the light most favorable to the nonmoving party. Jones v. Unisys Corp., 54 F.3d 624, 628 (10th Cir.1995). A moving party who bears the burden of proof at trial is entitled to summary judgment only when the evidence indicates that no genuine issue of material fact exists. Fed.R.Civ.P. 56(c); Anglemyer v. Hamilton County Hosp., 58 F.3d 533 (10th Cir.1995). If the moving party does not bear the burden of proof at trial, it must show "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986).

Once the movant meets these requirements, the burden shifts to the party resisting the motion to "set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). The nonmovant may not merely rest on the pleadings to meet this burden. Id. Genuine factual issues must exist that "can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Id. at 250, 106 S.Ct. at 2511; Tersiner v. Union Pacific R.R., 740 F.Supp. 1519, 1522-23 (D.Kan. 1990). More than a "disfavored procedural shortcut," summary judgment is an important procedure "designed `to secure the just, speedy and inexpensive determination of every action.' Fed.R.Civ.P. 1." Celotex, 477 U.S. at 327, 106 S.Ct. at 2555.

III. Discussion

In this action, plaintiffs seek declaratory judgments holding the Shawnee and Merriam Ordinances valid and enforceable. Alternatively, plaintiffs allege that AT & T's cable constitutes a public nuisance. Shawnee also claims that AT & T's use of the Williams pipeline constitutes a trespass. Not surprisingly, AT & T asserts that summary judgment should be entered on its behalf on all counts and offers various arguments for its position. The court considers each in turn.

A. The Merriam Agreement

AT & T argues initially that Merriam may not, as a matter of law, rescind³ the Merriam Agreement. AT & T alleges that rescission is unwarranted because its failure to pay was inadvertent, Merriam failed to notify AT & T within a reasonable time of its election to rescind and AT & T's breaches of the agreement were not sufficiently material. Although AT & T's first two arguments do not support summary judgment, the court agrees that AT & T's breaches of the Merriam Agreement were not sufficiently material to warrant rescission and grants summary judgment on that basis.

In Kansas, the right to rescind a contract does not arise from every breach. Baker v. Tucker, 227 Kan. 86, 89, 605 P.2d 114, 117 (1980); Whiteley v. O'Dell, 219 Kan. 314, 316, 548 P.2d 798, 801 (1976); In re Estate of Johnson, 202 Kan. 684, 691, 452 P.2d 286, 292, modified, 203 Kan. 262, 452 P.2d 286 (1969). To warrant rescission of a contract for breach of its terms:

The breach of contract must be material and the failure to perform so substantial as to defeat the object of the parties in making the agreement. A breach which goes to only a part of the consideration, which is incidental and subordinate to the main purpose of a contract, does not warrant a rescission.

In re Estate of Johnson, 202 Kan. at 691-92, 452 P.2d at 292; see Federal Land Bank of Wichita v. Krug, 253 Kan. 307, 313, 856 P.2d 111, 115 (1993); Kohn v. Babb, 204 Kan. 245, 251, 461 P.2d 775, 780 (1969).

AT & T maintains that rescission can only be a possible remedy if AT & T's failure to make payments was willful or intentional. For its argument, AT & T relies on the case syllabus from Reid v. Mix, 63 Kan. 745, syl. ¶ 2, 66 P. 1021 (1901). There the court stated:

One seeking to rescind a mutual contract, of which time is not the essence, on the ground of delay by the other party in complying with its terms,

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