Grano v. Rappahannock Elec. Coop.

Decision Date04 August 2021
Docket NumberCase No. 3:20-cv-65
Parties John R. GRANO, Jr. & Cynthia Taft Grano, Plaintiffs, v. RAPPAHANNOCK ELECTRIC COOPERATIVE, a Virginia Nonstock Corporation, Defendant.
CourtU.S. District Court — Western District of Virginia

Brian Gerard Kunze, Joshua Ellis Baker, Russell Gregory Terman, Blake Alan Willis, Waldo & Lyle, P.C., Norfolk, VA, Robert H. Thomas, Pacific Legal Foundation, Sacramento, CA, for Plaintiffs.

Andrew Philip Sherrod, Elizabeth Childress Burneson, Hirschler Fleischer, P.C., Richmond, VA, for Defendant.



Rappahannock Electric Cooperative ("REC") holds an easement on the Granos’ property that grants REC a right of way to construct, operate, and maintain an electrical distribution system. In 2020, the Virginia legislature enacted Va. Code § 55.1-306, which purports to broaden the scope of existing electrical easements to include the right to use those easements for the installation and operation of broadband,1 without further compensation to the landowner.

Plaintiffs John and Cynthia Grano, owners of the property, challenge the constitutionality of the new statute by seeking declaratory and injunctive relief under 42 U.S.C. § 1983 for three claims: (1) an arbitrary and capricious deprivation of property without due process of law (substantive due process), (2) a deprivation of property without procedural due process, and (3) a violation of the Contracts Clause. In response, REC filed a motion to dismiss under Rule 12(b)(1), for lack of jurisdiction, and under Rule 12(b)(6), for failure to state a claim. Dkt. 12.

For the reasons stated herein, the Court will deny REC's Rule 12(b)(1) motion and grant REC's motion under Rule 12(b)(6), in part. The Court will grant REC's Rule 12(b)(6) motion as to counts 1 and 2, and will dismiss those counts, but will deny the motion as to the Contracts Clause violation alleged in count 3.

I. Standard of Review

A motion to dismiss under Rule 12(b)(1) challenges a district court's subject matter jurisdiction. "The burden of establishing subject matter jurisdiction rests with the plaintiff." Demetres v. East West Const., Inc. , 776 F.3d 271, 272 (4th Cir. 2015).

Rule 12(b)(6) tests the legal sufficiency of a complaint to determine whether a plaintiff has properly stated a claim; it "does not resolve contests surrounding the facts, the merits of a claim, or the applicability of defenses." Republican Party of N.C. v. Martin , 980 F.2d 943, 952 (4th Cir. 1992). To survive a motion to dismiss pursuant to Rule 12(b)(6), a plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level," thereby "nudging claims across the line from conceivable to plausible." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The Court must take all facts and reasonable inferences in favor of the plaintiff, disregard any legal conclusions, and not credit any formulaic recitations of the elements. See Iqbal v. Ashcroft , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ; Twombly , 550 U.S. at 555, 557, 127 S.Ct. 1955.

II. Facts as Alleged
A. The 1989 Agreement

The Granos have owned the property in Mitchells, Virginia since 1990. Dkt. 1 ¶ 9. In 1989, the property's previous owner granted REC an easement across the property. Id. ¶¶ 13, 17; see Dkt. 1-2. The contract grants REC "the perpetual right, privilege and easement of right of way over, under, upon and across [the property] to construct, operate and maintain an electric distribution system including all appurtenances and attachments desirable in connection therewith," both "overhead and underground." Dkt. 1 ¶ 23; Dkt. 1-2. It also provides that the "facilities to be constructed" will "consist of the installation of primary and service conductors, poles, guy supports, pad mount transformers, sectionalizing cabinet, conduit and appurtenances ...." Dkt. 1-2.

B. Virginia Code § 55.1-306.1

Va. Code § 55.1-306.1 took effect on July 1, 2020. See Dkt. 1-3. In short, § 55.1-306.1 provides that easements "for the location and use of electric and communications facilities may be used to provide or expand broadband or other communications services." Id. The crux of the statute is § 55.1-306.1(B)(4), which declares:

The use of easements, appurtenant or gross, to provide or expand broadband or other communications services (i) does not constitute a change in the physical use of the easement, (ii) does not interfere with, impair, or take any vested or other rights of the owner or occupant of the servient estate, (iii) does not place any additional burden on the servient estate other than a de minimis burden, if any; (iv) has value to the owner or occupant of the servient estate greater than any de minimis impact.

And unless the easement has an "express prohibition on the installation and operation of broadband or other communications services," then any "installation and operation of broadband or other communications services ... shall be deemed, as a matter of law, to be a permitted use within the scope of every easement for the location and use of electric and communications facilities." Va. Code § 55.1-306.1(D).

The statute does not require the utility company to purchase, to institute eminent domain proceedings, or to otherwise take affirmative steps to acquire fiber optic rights. Va. Code § 55.1-306.1(B)(3). Only if "additional utility poles are installed" is a utility company directed to pay additional compensation. Va. Code § 55.1-306.1(E). Otherwise, a utility company may use "an easement to install, construct, provide, maintain, modify ... communications equipment ... and provide communications services through the same, without ... paying additional compensation to the owner ... of the servient estate." Va. Code § 55.1-306.1(E). The statute also limits recovery by landowners to actual damages for "trespass, or any claim sounding in trespass," and forbids landowners from seeking injunctive relief. Va. Code § 55.1-306.1(I).

C. REC's Actions Prior to the Enactment of § 55.1-306.1

On November 19, 2019, REC contacted the Granos and asked permission to install fiber optic cable for broadband on their property. Dkt. 13-1.2 In early December, REC installed a pair of 2-inch underground PVC conduits along the existing underground route on the property, as well as above-ground appurtenances for fiber optic cable. Dkt. 1 ¶¶ 69–70. REC did not install any fiber optic cable. Id. Over the next five months, REC and the Granos engaged in negotiations for a new easement for the fiber optic cable. Dkt. 13-1 ¶ 7; see also Dkt. 1 ¶¶ 62–65. REC sought to obtain either an updated easement agreement that included provisions related to fiber optics or a new easement specifically addressing fiber optic installation. Dkt. 13-1 ¶ 7; see also Dkt. 1-5.

REC informed the Granos that it preferred to negotiate a new easement instead of waiting to exercise statutory authority under Va. Code § 55.1-306.1 (effective July 1, 2020). Dkt. 13-1 ¶ 8. Indeed, an email from REC's counsel to the Granos stated "[REC] is not the type to be heavy handed and could easily wait until July 1 to proceed. However, [REC] want[s] to maintain a good relationship with its members. [REC] also believe[s] the telecommunication facilities benefit the entire community." Id. ; see also Dkt. 1 ¶¶ 66–67.

Ultimately, the negotiations stalled, and REC pursued an alternative route that did not involve the Granos’ property. Dkt. 13-1 ¶¶ 9–11. By the end of May 2020, REC had obtained easements from all affected property owners on REC's new route. Id. After receiving a permit for the alternate route in July, REC completed its construction in August 2020. Id. ¶ 15.

Prior to completion, REC informed the Granos that the alternate route had been selected and that it would bypass the Granos’ property. Id. The Granos then asked REC when it would remove the temporary installation equipment which remained on their property from the December installation (the underground conduits and above-ground appurtenances). Id. ¶ 16. REC states that the Granos gave it permission to install and bury conduits for fiber optic cable. Dkt. 13-1 ¶¶ 6, 18. For their part, the Granos assert that REC installed the conduits "in anticipation of exercising [their] purported rights" under § 55.1-306.1, and they believe the conduits "remain[ ] on the property in violation of REC's existing easement." Dkt. 1 ¶ 69.3 REC removed the above-ground appurtenances in July 2020; however, the below-ground conduits remain. Dkt. 13-1 ¶ 18. REC states that it has no future plans or intentions to place fiber optic cable on the property. Id. ¶ 19.

III. Discussion

REC relies on two theories in its motion to dismiss. First, REC argues that the Court lacks subject matter jurisdiction. Second, REC contends that even if there is subject matter jurisdiction, the allegations in the Granos’ complaint, taken as true, fail to demonstrate that REC acted under color of state law.

A. Lack of Subject Matter Jurisdiction—Ripeness

The ripeness doctrine addresses subject matter jurisdiction and "presents a threshold question [ ] of justiciability." Scoggins v. Lee's Crossing Homeowner's Ass'n , 718 F.3d 262, 269 (4th Cir. 2013) (internal citations and quotations omitted); see Sansotta v. Town of Nags Head , 724 F.3d 533, 548 (4th Cir. 2013). Specifically, ripeness "concerns the appropriate timing of judicial intervention." Cooksey v. Futrell , 721 F.3d 226, 240 (4th Cir. 2013) (quoting Va. Soc'y for Human Life, Inc. v. FEC , 263 F.3d 379, 389 (4th Cir. 2001) ).

Whether a claim is ripe turns on the type of claim and the type of constitutional challenge a plaintiff has brought, i.e., a facial or an as-applied challenge. The Granos raise both facial and as applied challenges under substantive due process (count 1), procedural due process (count 2), and the contracts clause (count 3).

1. Facial Challenge


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