Columbia Gas Transmission Corp. v. Tarbuck

• Decision Date: 09 August 1995
• Docket Number: No. 94-3643,94-3643
• Citation: 62 F.3d 538
• Parties: COLUMBIA GAS TRANSMISSION CORPORATION v. Michael D. TARBUCK, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

Page 538

62 F.3d 538

COLUMBIA GAS TRANSMISSION CORPORATION v. Michael D. TARBUCK, Appellant.

No. 94-3643.

United States Court of Appeals Third Circuit.

Argued June 28, 1995.

Decided Aug. 9, 1995.

Sanford S. Finder (argued), Finder, Allison & Graham, Washington, PA, for appellant.

Harry C. Bruner Jr., Columbia Gas Transmission Corp., Charleston, WV, Kevin C. Abbott, Deborah P. Powell (argued), Carolyn Holtschlag Allen, Thorp, Reed & Armstrong, Pittsburgh, PA, for appellee.

Before: HUTCHINSON, ROTH and GARTH, Circuit Judges.

OPINION OF THE COURT

GARTH, Circuit Judge:

Michael Tarbuck appeals the district court's order of October 14, 1994, which permanently enjoined Tarbuck from encroaching on rights of way owned by Columbia Gas Transmission Corporation. Tarbuck argues that the amount in controversy between Columbia and himself does not exceed $50,000 as required by 28 U.S.C. Sec. 1332.

The district court found that Columbia owned two fifty foot rights of way over Tarbuck's property and that it would cost Tarbuck $4,000 to remove the overburden which had been placed by Tarbuck on the rights of way. Tarbuck argues that $4,000 is the amount in controversy. The Supreme Court's decision in Glenwood Light Co. v. Mutual Light Co., 239 U.S. 121, 36 S.Ct. 30, 60 L.Ed. 174 (1915), however, settled that in diversity suits for injunctions the cost of compliance is not the definitive measure of the amount in controversy. Rather, we measure the amount in controversy by the value of the rights which the plaintiff seeks to protect.

Because the value to Columbia of protecting the rights of way by this action is alleged to be in excess of the jurisdictional minimum and the actual value to Columbia is not legally certain to be less than the jurisdictional threshold, we conclude that federal jurisdiction exists. Accordingly, we will affirm the district court's judgment in favor of Columbia. In doing so, we hold that the district court had jurisdiction under 28 U.S.C. Sec. 1332 and that Columbia's rights of way are indeed fifty feet wide.

I.

Michael Tarbuck owns two parcels of land adjacent to Route 19 in Southwestern Pennsylvania. Pursuant to two separate deeds, Columbia owns rights of way across the parcels to operate a twenty inch natural gas pipeline. In December 1993, Columbia sought a preliminary and a permanent injunction, requiring Tarbuck to remove the overburden on the rights of way (i.e. the three to six feet of excess topsoil which Tarbuck placed on Columbia's rights of way). Columbia also sought an order preventing Tarbuck from placing any further topsoil on the easements.

In his answer, Tarbuck denied any encroachment, denied that Columbia's right of way was fifty feet in width, and claimed that the district court lacked jurisdiction because the amount in controversy did not exceed $50,000.

To sustain its claim to diversity jurisdiction, ¹ Columbia introduced the following evidence which the district court accepted. Columbia engineers testified that the overburden placed additional pressure on the pipe which could result in a possible rupture. Further, the engineers testified that the overburden interfered with instruments used in periodic federally mandated inspections of the protective coating of the pipeline. The district court recognized that if the pipeline were to leak, the escaping gas could migrate to a nearby building or a nearby road and explode, causing significant personal and property damage. The district court also concluded that Columbia was presently violating the applicable federal regulations and thus could not continue to operate the pipeline under these conditions indefinitely.

The district court also determined the following. It would cost approximately $4,000 for Tarbuck to remove the excess cover. Alternatively, it would cost Columbia $100,000 to raise the pipe to the appropriate level within the existing right of way or $1,000,000 to relocate the pipeline to different property. Neither party presented any evidence as to the value of the rights of way nor the value of Tarbuck's land whether or not burdened by the rights of way.

Based on these facts, the district court concluded that the amount in controversy exceeded $50,000. It further concluded that Tarbuck had encroached on the rights of way by placing additional topsoil over the pipeline and entered a permanent injunction requiring the removal of the overburden.

Turning to the width of the rights of way, the district court found that Columbia's predecessor in interest obtained the easements in the 1940s by two deeds. While one deed expressly provided for a fifty foot right of way, the other deed stated no width.

Columbia introduced evidence that it had regularly mowed twenty five feet to either side of its pipeline. Further, it used the whole fifty feet in 1981 to replace part of the pipe. Finally, Columbia's engineers testified that Columbia needed fifty feet to maintain or repair the line because occupational safety regulations required that Columbia slope the excavation and place equipment safely around the stretch of pipe being repaired.

Tarbuck was on notice of Columbia's claim to fifty feet before he acquired the property. Three months before purchasing the property in April 1991, Tarbuck tacitly acknowledged the existence of a fifty foot right of way when he sought information on the building restrictions imposed by the rights of way. Representatives of Columbia marked the location of the pipeline with flags for Tarbuck and completed the Location of Gas Lines form which he signed. The Columbia form Tarbuck signed explicitly stated that the rights of way were fifty feet in width.

Based on this evidence, the district court concluded that each of the rights of way was fifty feet in width.

II.

The principal issue on appeal is whether the amount in controversy exceeds $50,000. 28 U.S.C. Sec. 1332 provides that:

The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $50,000, exclusive of interest and costs, and is between ... citizens of different States....

Tarbuck argues that we must measure the amount in controversy by reference to the cost ($4,000) of removing the overburden. Columbia principally contends that the appropriate measure of the jurisdictional amount is either the cost of the injuries which could result if the pipeline leaked or the cost of possible federal fines that could be imposed. At oral argument, Columbia, citing Glenwood Light Co. v. Mutual Light Co., 239 U.S. 121, 36 S.Ct. 30, 60 L.Ed. 174 (1915), additionally claimed that the value of maintaining its rights of way without interference from Tarbuck must be considered in determining the jurisdictional amount in controversy.

The amount in controversy is measured by reference to the value of the rights which Columbia possesses by virtue of the rights of way. We hold that because it is not legally certain that the value of these rights is less than $50,000, section 1332 was satisfied, thereby meeting federal jurisdictional requirements.

A party who invokes the jurisdiction of the federal courts has the burden of demonstrating the court's jurisdiction. McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936). In diversity cases, we generally accept a party's good faith allegation of the amount in controversy, but where a defendant or the court challenges the plaintiff's allegations regarding the amount in question, the plaintiff who seeks the assistance of the federal courts must produce sufficient evidence to justify its claims. Burns v. Massachusetts Mutual Life Insurance Co., 820 F.2d 246, 248 (8th Cir.1987).

The test for determining the amount in controversy in diversity cases was established by the Supreme Court in St. Paul Mercury Indemnity Co. v. Red Cab. Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 (1938).

The rule governing dismissal for want of jurisdiction in cases brought in the federal court is that, unless the law gives a different rule, the sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal. The inability of plaintiff to recover an amount adequate to give the court jurisdiction does not show his bad faith or oust the jurisdiction. Nor does the fact that the complaint discloses the existence of a valid defense to the claim. But if, from the face of the pleadings, it is apparent, to a legal certainty, that the plaintiff cannot recover the amount claimed, or if, from the proofs, the court is satisfied to a like certainty that the plaintiff never was entitled to recover that amount, and that his claim was therefore colorable for the purpose of conferring jurisdiction, the suit will be dismissed.

Id. at 288-89, 58 S.Ct. at 590 (emphasis added and footnotes omitted). Red Cab gave rise to two jurisdictional principles. First, dismissal is appropriate only if the federal court is certain that the jurisdictional amount cannot be met; the reasonable probability that the amount exceeds $50,000 suffices to vest the court with jurisdiction. Second, the ultimate failure to prove damages over $50,000 does not belatedly divest the federal court of jurisdiction unless the proofs at trial demonstrate that the plaintiff never had a colorable claim that exceeded $50,000. In that latter circumstance, the case will be dismissed. Jones v. Knox Exploration Corp., 2 F.3d 181 (6th Cir.1993); Ehrenfeld v. Webber, 499 F.Supp. 1283, 1294 (D.Me.1980). ²

Where the plaintiff in a diversity action seeks injunctive or declaratory relief, the amount in controversy is often not readily determinable. Under those circumstances, the amount in controversy is determined by "the value of the object of the litigation." Hunt v. Washington Apple Advertising Comm'n, 432 U.S. 333, 347, 97 S.Ct....