Close Armstrong, LLC v. Trunkline Gas Co.

• Decision Date: 21 January 2020
• Docket Number: CAUSE NO. 3:18-CV-270 DRL-MGG CONSOLIDATED WITH: CAUSE NO. 3:18-CV-494 DRL-MGG
• Parties: CLOSE ARMSTRONG, LLC, Plaintiff, v. TRUNKLINE GAS COMPANY, LLC, Defendant. Randall L. Dickson and Jaymie L. Dickson, Plaintiffs, v. Trunkline Gas Company, LLC, Defendant.
• Court: U.S. District Court — Northern District of Indiana

434 F.Supp.3d 658

CLOSE ARMSTRONG, LLC, Plaintiff,

v.TRUNKLINE GAS COMPANY, LLC, Defendant.

Randall L. Dickson and Jaymie L. Dickson, Plaintiffs,

v.Trunkline Gas Company, LLC, Defendant.

CAUSE NO. 3:18-CV-270 DRL-MGG CONSOLIDATED WITH: CAUSE NO. 3:18-CV-494 DRL-MGG

United States District Court, N.D. Indiana, South Bend Division.

Signed January 21, 2020

Jere L. Humphrey, Janette E. Surrisi, Wyland Humphrey Clevenger & Surrisi LLP, Plymouth, IN, David L Van Slyke, PHV, Plunkett Cooney PC, Columbus, OH, Pamela A. Paige, Plunkett Cooney PC, Indianapolis, IN, for Plaintiff.

A. Richard M. Blaiklock, Derek G. Raymond, Ryan J. Vershay Lewis Wagner LLP Indianapolis, IN for Defendant.

OPINION AND ORDER

Damon R. Leichty, Judge, United States District Court

This opinion addresses a consolidated case with two sets of landowners filing suit against Defendant Trunkline Gas Company, LLC. Trunkline filed a summary judgment motion as to both landowners—Close Armstrong, LLC in one case, and Randall L. Dickson and Jaymie L. Dickson in the other case. Trunkline currently owns a pipeline that traverses their respective land and claims that it procured in 1959 a floating easement over the entire two parcels of real property to install future pipelines or to move its current pipeline. The assertion of these rights today has interfered with the landowners' desire to place their land within the Agricultural Conservation Easement Program sponsored by the United States Department of Agriculture. The parties thus seek a judicial declaration of rights. The case has been bifurcated, so the court addresses here only the existence and efficacy of the easement rights granted to Trunkline under the right-of-way agreements in this phase I opinion, leaving questions of equity and the final scope of any easement to phase II.

FACTUAL BACKGROUND

In the late 1950s, Trunkline and its sole member, Panhandle Eastern Pipe Line Company, wanted to install an underground gas line through hundreds of parcels in Northwest Indiana as part of its proposed installation of a gas transmission pipeline from the Gulf of Mexico to the Michigan border. ECF 81-3 at 2-3. At that time, Trunkline had not determined the exact location or trajectory of its proposed 26-inch diameter high-pressure interstate natural gas transmission pipeline ("100 Line"). Id. ¶¶ 3-10. As a result, Trunkline and Panhandle approached the then-property owners of the land, seeking easements across their property to lay the pipes. See Panhandle E. Pipe Line Co. v. United States , 408 F.2d 690, 694-95 (Fed. Ct. Cl. 1969). Trunkline was able to obtain identical right-of-way agreements with the various property owners. ECF 81-3 ¶ 4; ECF 81-4, 5, 6. The agreements covered a swath of land approximately one mile wide (ECF 94 at 5) (see Image 1 and 2 below).

Image 1

Image 2¹

The plaintiffs in both cases are successors in interest to the real property that Trunkline acquired an easement through for the 100 Line. See ECF 81-22 ¶ 11; ECF 76-1, Ex. A ¶ 2. The Dicksons purchased their property (depicted above as property #8) in 2013 with the intent to grant an Agricultural Conservation Easement to the United States Department of Agriculture (USDA). ECF 81-22 ¶ 5. It appears Close Armstrong acquired its property (depicted as property #11) sometime after the company's formation in January 2017. ECF 76-1, Ex. A ¶ 2, 4-5. Both the Dicksons and Close Armstrong want to grant the USDA an Agricultural Conservation Easement. See ECF 93 at ¶ 34; ECF 78 ¶¶ 38-40.

A conservation easement "is a deed restriction landowners voluntarily place on their property to protect resources such as productive agricultural land, ground and surface water, habitat, historic sites or scenic views." Am. Farm. Trust, Agri. Conserv. Easements (2016), https://s30428.pcdn.co/wp- content/uploads/sites/2/2019/09/Agricultural_Conservation_Easements_AFT_FIC_01-2016.pdf. Generally, these easements limit non-farm development, which would ostensibly include the construction of underground pipelines and other uses that are inconsistent with the easement's purposes. Id.

The USDA has administered the Agricultural Conservation Easement Program (ACEP) since its establishment in 2014. National Sustainable Agriculture Coalition, Agri. Conserv. Easement Program (2019), https://sustainableagriculture.net/publications/grassrootsguide/conservation-environment/ agricultural-conservation-easement-program/#basics. ACEP is a combination of three previously separate conservation easement programs: the Wetlands Reserve Program, Grassland Reserve Program, and the Farm and Ranch Lands Protection Program. Id. Under the Wetlands Reserve Program, in which the landowners here aimed to participate, the USDA's objective is "to restore, protect, and enhance wetland values and functions on wetlands that have been in agricultural production." Id. It is a competitive program, allowing landowners to submit bids to the USDA for enrollment. Id. Landowners have the option of granting the USDA two different types of easements: permanent or long-term (usually 30 year) easements. Id. For permanent wetland easements, the USDA pays the landowner the lowest of: (1) the fair market value of the land; (2) the value from an area wide market analysis or survey; or (3) an offer made by the landowner. Id. For long-term easements, though, the USDA provides between 50%-75% of the compensation that would be paid for a permanent easement. Id.

Much of the property here contains wetland-derived soils and is considered eligible for the agricultural easement. See ECF 81-22 ¶ 12; ECF 76-1, Ex. A ¶¶ 9-15. As a condition precedent to the USDA's acceptance of the conservation easement, USDA required that a 60-year title examination be performed. ECF 81-22 ¶ 16. This examination revealed the existence of Trunkline's right-of-way agreements. Id.

The landowners attempted to contact Trunkline to clarify the scope of its rights over the property so that it would not conflict with the conservation easement. See ECF 81-22 ¶ 17. More details will follow on this front; but, suffice to say now, Trunkline declined to clarify the easement's scope, and the landowners have been unable to consummate the proposed Agricultural Conservation Easement with the USDA. See, e.g., ECF 81-22 ¶ 20. None of the proposed property for the USDA easement falls within the area occupied by Trunkline's current pipelines, nor would it interfere with any of the constructed pipelines that exist. ECF 76-1, Ex. A ¶¶ 29-31. The failure of the parties to agree on Trunkline's easement rights in the two properties led to this dispute.

Because the dispute centers on the grant's express language, and given its relevance to understand the context of communications among the parties, the court provides the language of the Close Armstrong easement in its entirety below (noting that the names change for the Dicksons' agreement but otherwise remain the same):

KNOW ALL MEN BY THESE PRESENTS: that the undersigned, Leo A. Paull, and Vincent G. Paull, single, and as joint tenants, (hereinafter called GRANTOR, whether one or more), for and in consideration of one dollar in hand paid, receipt of which is hereby acknowledged, and the further consideration of one dollar ($1.00) per linear rod to be paid before the first pipe line is laid, does hereby grant, bargain, sell, convey, and warrant unto TRUNKLINE GAS COMPANY (a Natural Gas Company under the Act of Congress of June 21, 1938, 15 U.S.C.A. 717 ) a Delaware corporation, its successors and assigns (hereinafter called GRANTEE) a right of way and easement to construct, lay, maintain, operate, alter, repair, remove, change the size of, and replace one or more pipe lines and appurtenances thereto (including without limitation Cathodic Protection equipment) for the transportation of oil, gas, petroleum products or any other liquids, gases or substances which can be transported through pipe lines, the Grantee to have the right to select, change, or alter the routes of such pipe lines under, upon, over, and through lands which the undersigned owns or in which the undersigned has an interest, situated in the County of Starke, State of Indiana, described as follows:

[location omitted]

By the terms of this agreement, Grantee is granted the right to lay, construct, maintain, operate, alter, repair, remove, change the size of, and replace at any time or from time to time one or more additional lines of pipe and appurtenances thereto, said additional lines not to necessarily parallel any existing line laid under the terms of this agreement. Provided, however, that for each additional line laid after the first line is laid hereunder, Grantee shall pay Grantor, his heirs or assigns, one dollar ($1.00) per lineal rod of additional pipe line laid under, upon, over or through said hereinabove described property.

The Grantee, its successors and assigns, is hereby expressly given and granted the right to assign said right-of-way and easement herein granted and conveyed, or any part thereof, or interest therein. The same shall be divisible among two or more owners as to any right or rights granted hereunder so that each assignee or owner shall have the rights and privileges herein granted, to be owned and enjoyed either in common or in severalty.

TO HAVE AND TO HOLD unto the Grantee, its successors and assigns, with ingress to and egress from the premises for the purposes herein granted.

The said Grantor may fully use and enjoy said premises except for the purposes herein granted to the said Grantee and provided the said Grantor shall not construct or permit to be constructed any house, structures or obstructions on or over or that will interfere with the construction, maintenance or operation of any pipe line or appurtenances constructed hereunder and will not change the grade of such pipe line.

Grantee hereby agrees to bury all pipes to a sufficient depth so as not to interfere with cultivation of the soil and agrees to pay for any damage to

...