GSS, LLC v. Centerpoint Energy Gas Transmission Co.

• Citation: 432 S.W.3d 583,2014 Ark. 144
• Decision Date: 03 April 2014
• Docket Number: No. CV–12–1011.,CV–12–1011.
• Parties: GSS, LLC, Appellant v. CENTERPOINT ENERGY GAS TRANSMISSION COMPANY, Appellee.
• Court: Supreme Court of Arkansas

2014 Ark. 144
432 S.W.3d 583

GSS, LLC, Appellant
v.
CENTERPOINT ENERGY GAS TRANSMISSION COMPANY, Appellee.

No. CV–12–1011.

Supreme Court of Arkansas.

April 3, 2014.

[432 S.W.3d 585]

Huffman Butler, PLLC, Benton, by: Bryan R. Huffman, for appellant.

Smart & Stone, PLLC, by: Phillip A. Stone, for appellee.

CLIFF HOOFMAN, Justice.

In this condemnation case, appellant GSS, LLC (“GSS”) appeals from the jury verdict awarding it $64,000 as just compensation for a pipeline-easement taking by appellee CenterPoint Energy Gas Transmission Co. (“CenterPoint”). On appeal, GSS argues (1) that the circuit court abused its discretion in excluding evidence of value of a contiguous parcel of land; (2) that the circuit court erred in granting summary judgment in favor of CenterPoint on GSS's counterclaim because CenterPoint proceeded under a wholly or partially preempted statute; and (3) that the circuit court erred in granting summary judgment to CenterPoint because CenterPoint proceeded under color of law to deny CSS's rights. We assumed jurisdiction of this case pursuant to Ark. Sup.Ct. R. l–2(b)( l ) and (6), as it involves issues of first impression and statutory interpretation. We affirm.

CenterPoint, a gas pipeline company that has the power of eminent domain pursuant to section 7 of the Natural Gas Act of 1938 (“NGA”) and Arkansas Code Annotated §§ 18– 15–1301 et seq., and 23–15–101 et seq., began negotiating in June 2009 to purchase a right-of-way easement on GSS's property in order to construct a new pipeline. After CenterPoint and GSS were unable to agree on the compensation to be paid for the easement, CenterPoint filed a petition to condemn the property on February 19, 2010, alleging that it was authorized underits “Certificate of Conveyance and Necessity” issued by the Federal Power Commission to acquire the property at issue by eminent domain, as it was necessary to the construction or operation of its business. CenterPoint further alleged that the determination of just compensation to GSS was likely to materially prejudice and retard the progress of the construction and asked the court to designate an amount of money to be deposited by CenterPoint into the registry of the court for the purpose of ascertaining such compensation and for an order of possession, allowing it to enter and take possession of the subject property to proceed with the construction of the pipeline. CenterPoint also filed a Declaration of Taking, and an affidavit in support of its order of possession, in which it averred that the value of the right-of-way easement was estimated to be $64,000. The description of the property attached to CenterPoint's documents showed that the proposed easement consisted of a twenty-foot-wide right-of-way, which was to run directly adjacent to an already existing twenty-foot easement for a gas pipeline that had been in place since at least 1949, as well as a forty-by-forty-foot work site and an access road.

On February 19, 2010, the circuit court entered an order of possession, finding that CenterPoint's petition to condemn should be granted and that the estimated just compensation for the easement on GSS's property in the amount of $64,000 had been deposited into the registry of the court. On March 15, 2010, GSS filed an answer to the petition to condemn and the declaration of taking. GSS also alleged counterclaims against CenterPoint for unlawful taking, violation of the Arkansas Civil Rights Act of 1993, trespass, and outrage. Although GSS filed a motion for

[432 S.W.3d 586]

a preliminary injunction on May 17, 2010, it voluntarily withdrew the motion following a hearing. A second motion for a preliminary injunction was then filed by GSS, and a hearing was set for August 2010; however, GSS again withdrew the motion as moot after CenterPoint entered the property prior to the hearing date.

CenterPoint filed a motion to dismiss GSS's counterclaims, and GSS then filed a motion for summary judgment, asserting that CenterPoint's petition to condemn should be dismissed because it had proceeded under a wholly or partially preempted state statutory scheme and also because it had failed to comply with the prerequisites set forth in the NGA, 15 U.S.C. § 717f(h). On June 30, 2011, the circuit court denied both CenterPoint's motion to dismiss and GSS's motion for summary judgment; however, the court found that the Arkansas condemnation statutes and procedures followed by CenterPoint were constitutional.

On March 27, 2012, CenterPoint filed its own motion for summary judgment on GSS's counterclaims. CenterPoint asserted that GSS had failed to meet its burden of showing that the Arkansas condemnation statutes followed in this case were unconstitutional or preempted by the NGA and that all of GSS's counterclaims therefore failed to create genuine issues of material fact and should be dismissed as a matter of law. In support of its motion, CenterPoint attached excerpts from depositions of its employees and agents, a right-of-way data sheet, and an appraisal by GSS of the property being taken. In his deposition, Larry Wright, who negotiated with GSS on behalf of CenterPoint, stated that he first met with Guy Collins, GSS's agent, in early June 2009 on GSS's properly, which was currently being operated as a nine-hole public golf course. Wright stated that he presented the easement being requested to Collins and that they discussed Collins's specific requests that the putting greens, cart paths, tee boxes, and fairways not be open cut. Wright indicated that CenterPoint agreed to drill under the greens but not the fairways. He stated that Collins had requested that the route of the line be changed, but he told him that the route that had been established by their engineers, which followed the route of the already existing pipeline and easement, was the one that he “had to go with.” Wright did state that Collins had requested a small deviation in the route to accommodate the future building site of his home, which CenterPoint approved.

The negotiation over the price for the easement did not go well, according to Wright. CenterPoint first offered $46,000 for the easement, and GSS counteroffered with $464,000. In late September, GSS offered to accept $288,000, while CenterPoint raised its offer to $64,000. Wright stated that he negotiated with Collins on ten to fifteen separate occasions over six or seven months, but they could not reach an agreement. He was told by his supervisor, Richard Brinker, to then turn over the file to CenterPoint's attorney. Wright indicated that he had only one more contact with Collins, when he let him know that CenterPoint was moving in the drilling rig. He stated that another CenterPoint agent also went out and looked at the properly to see what could be done to minimize damage.

Richard Brinker, who was Wright's supervisor at CenterPoint, agreed that the two parties were $200,000 apart on the price for the easement when negotiations ceased. He stated that CenterPoint takes the property owner's rights and any rerouting requests into consideration and that Collins did request and obtain a reroute around his future home site. According to

[432 S.W.3d 587]

Brinker, he received weekly progress reports from all of the agents who were working on the proposed eight-mile pipeline and that there was a completion date across the board, after which CenterPoint would typically file a condemnation proceeding if an agreement was not reached with the landowner. The right-of-way data sheet attached in support of CenterPoint's motion contained notes on the details of Wright's negotiations with Collins and was consistent with the deposition testimony. CenterPoint also attached a portion of the report from GSS's appraiser, Mike Pearce, which concluded that the just compensation for the properly being taken was $103,000.

In its response to the motion, GSS contended that there were sufficient issues of material fact to preclude the grant of summary judgment. GSS asserted that CenterPoint had proceeded under a preempted statutory scheme and that the procedure it used in condemning GSS's property violated GSS's constitutional rights. In addition, GSS argued that CenterPoint did not negotiate in good faith as required under the NGA and cited to Wright's and Blinker's deposition testimony that CenterPoint did not agree to change the location of the pipeline across GSS's property. GSS also attached an affidavit by Collins, stating that the properly had a current value in excess of $2 million and that he had received inquiries to purchase the property well in excess of that amount. The affidavit further averred that the use of the property as a golf course would be adversely affected by the construction and that Collins attempted to negotiate in good faith with CenterPoint, offering a reasonably acceptable alternative route for the proposed easement; however, CenterPoint refused to consider the alternative route and would only consider the route it wanted to take.

GSS's response also attached its entire appraisal report, which revealed that its appraiser included the already existing easement in favor of CenterPoint and calculated the total amount of land being taken as 3.36 acres. CenterPoint's appraisal by John Stone, Jr., which was also attached as an exhibit, calculated only the acreage contained in the currently proposed easement, which was 1.731 acres. Stone concluded in his appraisal that the just compensation for the present taking was $32,000.

After a hearing prior to the beginning of the jury trial on July 5, 2012,...