Linder v. Arkansas Midstream Gas Serv. Corp.

• Decision Date: 11 March 2010
• Docket Number: No. 09–705.,09–705.
• Citation: 2010 Ark. 117,362 S.W.3d 889
• Parties: Perry L. LINDER, Jr. and Kathy Linder, Appellants, v. ARKANSAS MIDSTREAM GAS SERVICES CORP., Appellee.
• Court: Arkansas Supreme Court

2010 Ark. 117

362 S.W.3d 889

Perry L. LINDER, Jr. and Kathy Linder, Appellants,

v.ARKANSAS MIDSTREAM GAS SERVICES CORP., Appellee.

No. 09–705.

Supreme Court of Arkansas.

March 11, 2010.

Mays & White, PLLC, by: Richard H. Mays, Heber Springs, and Ginger L. Harper, Little Rock, for appellants.

Daily & Woods, P.L.L.C., by: Jerry L. Canfield, Fort Smith, and Coby W. Logan, Little Rock, for appellees.

ROBERT L. BROWN, Justice.

Appellants Perry L. Linder and Kathy A. Linder appeal from a Cleburne County Circuit Court order finding that appellee Arkansas Midstream Gas Services Corporation (Midstream) had the authority to exercise the power of eminent domain over appellants' land to construct and maintain a natural gas pipeline. Authority for the circuit judge's order was Arkansas Code Annotated section 23–15–101, which provides in pertinent part as follows:

All pipeline companies operating in this state are given the right of eminent domain and are declared to be common carriers, except pipelines operated for conveying natural gas for public utility service.

Ark.Code Ann. § 23–15–101 (Repl.2002). The Linders assert on appeal that the circuit judge's order was in error because section 23–15–101 is unconstitutional in that it grants private corporations the right of eminent domain to acquire property for private, rather than public, use. We disagree with the Linders' conclusion that this is a private use, and we affirm.

Midstream is an Arkansas pipeline company currently engaged in a project to construct a pipeline for natural-gas transmission across land located in Cleburne County. The Linders own land located in Section Twenty–Five (25), Township Ten (10) North, Range Nine (9) West, Cleburne County.

After an unsuccessful attempt to negotiate a right-of-way agreement with the Linders, Midstream petitioned the Cleburne County Circuit Court on September 17, 2008, to assert the power of eminent domain over the Linders' land under Arkansas Code Annotated sections 23–15–101 and 18–15–303.

On October 6, 2008, the circuit judge entered an order of possession granting Midstream the immediate right of entry onto, and the possession of, the following portions of the Linders' land and approved this use:

A. A permanent pipeline easement 60.00 feet wide lying 30.00 feet on both sides of the following described centerline:

Lying in the SW 1/4 and the SE 1/4 NW 1/4 of Section 25, Township 10 North, Range 9 West, Cleburne County, Arkansas, described as commencing at the Northwest Corner of said SW 1/4 and running thence S 01 °49'58? W along the West line of said SW 1/5 154.97 feet to a gas line said point being the point of beginning; thence run S 88°03'24? W, 1532.08 feet; thence N 39–19'04–E, 885.40; thence N 21'38'47? E, 945.28 feet to the North line of said SE 1/4 NE 1/4, said point being the point of termination.

B. A Temporary Construction Easement 15.00 feet wide lying adjacent to the north side of said 60.00 feet permanent easement.

That same day, the Linders answered Midstream's petition and denied that Midstream was entitled to exercise eminent domain. In the alternative, the Linders requested a trial by jury on the amount of just compensation.

The Linders next moved for partial judgment on the pleadings and for an injunction and damages. They contended that Midstream was not entitled to exercise the right of eminent domain under Arkansas Code Annotated section 23–15–101 because it was a pipeline company operated to convey natural gas for public utility service and that, alternatively, section 23–15–101 was unconstitutional. The Linders further asked the circuit judge for an injunction directing Midstream to remove the pipeline and all other equipment and materials from their property and for damages for illegal trespass. Midstream responded and filed an affidavit by Danny Trowbridge, a land-acquisition supervisor for Midstream.

According to Trowbridge's affidavit, Midstream was not a public utility company and the Arkansas Public Service Commission had determined that Midstream could exercise the eminent-domain authority delegated by section 23–15–101 as a common carrier without obtaining a certificate of convenience and necessity or other approval from the Public Service Commission prior to doing so. As to the pipeline project, Trowbridge's affidavit provided the following:

The subject gas transmission line project (“Puckett Line”) will cross the Defendants' property in Section 25, Township 10 North, Range 9 West, for the purpose of connecting two natural gas production wells located in Section 27, Township 10 North, Range 9 West to the pipeline. The natural gas produced from the two gas production wells in Section 27 will be transported through the pipeline crossing portions of Sections 27, 26, 25 and 24 of the Township 10 North, Range 9 West and also a portion of Section 19 in Township 10 North, Range 8 West. The gathering pipeline will connect to the GEO III line, a main trunk transportation line, in said Section 19. As to the existing and proposed gas production wells which will be connected to the Puckett line, there are several working interest owners (as to which Chesapeake Operating, Inc. an affiliate of Arkansas Midstream, is only one) who own the gas which will be transported through the Puckett line and there are multiple royalty owners who will receive royalties from the gas sold from the gas transported through the Puckett line. There are multiple other potential working interest owners (including unleased surface owners who may elect to participate in the drilling of wells in the involved sections) to whom the Puckett line would provide the only existing (after construction) means of transporting natural gas to markets. As the Puckett line will gather gas from several gas production units, the line cannot be constructed under the lease rights applicable to any one governmental section.

Following a hearing on the matter, the circuit judge entered his order denying the Linders' motion for judgment on the pleadings on April 13, 2009. The circuit judge found that Midstream was not a public utility company, and that, pursuant to sections 23–15–101 and 18–15–1303, Midstream was entitled to proceed with the eminent-domain action. On April 27, 2009, the circuit judge entered an amended order certifying the judgment as final under Arkansas Rule of Civil Procedure 54(b). The remaining issue to be determined was just compensation, should this court affirm the order.

The sole issue presented by this appeal is the constitutionality of section 23–15–101 as applied to the facts of this case.¹ The Linders, as already noted, raised their constitutional challenge in their motion for judgment on the pleadings, which was denied by the circuit judge. Nevertheless, if on a motion for judgment on the pleadings, matters outside of the pleadings are presented to and not excluded by the circuit judge, the motion shall be treated as one for summary judgment. See Ark. R. Civ. P. 12(c). In the instant case, Midstream's response to the Linders' motion for judgment on the pleadings was supported by the Trowbridge affidavit, and the circuit judge did not specifically exclude it from consideration. Hence, we treat the circuit judge's order as one for summary judgment and apply the appropriate standard of review accordingly. See Bennett v. Spaight, 372 Ark. 446, 277 S.W.3d 182 (2008).

Ordinarily, upon reviewing a circuit judge's decision on a summary-judgment motion, we would examine the record to determine if genuine issues of material fact exist. Ruth R. Remmel Revocable Trust v. Regions Fin. Corp., 369 Ark. 392, 255 S.W.3d 453 (2007). But in a case such as this one, which does not involve the question of whether factual issues exist but rather the application of legal principles, we simply determine whether the appellee was entitled to judgment as a matter of law. Travis Lumber Co. v. Deichman, 2009 Ark. 299, 319 S.W.3d 239. A circuit judge's conclusion on a matter of law is reviewed by this court de novo and given no deference on appeal. Robinson v. Villines, 2009 Ark. 632, 362 S.W.3d 870.

The Linders assert that section 23–15–101 is unconstitutional in that it grants private, for-profit corporations, such as Midstream, the right of eminent domain to acquire private property for private use in violation of article 2, section 22, of the Arkansas Constitution.² Pointing to the Trowbridge affidavit, the Linders contend that Midstream's use in taking their property is “clearly a private one” in that Midstream is undertaking “by special agreement in particular instances to transport gas for Chesapeake, a few royalty owners and ‘other potential working interest owners.’ ” Citing City of Little Rock v. Raines, 241 Ark. 1071, 411 S.W.2d 486 (1967), the Linders assert that the use for which the right of eminent domain is exercised must in fact be a public one and that if the taking is for the exclusive use of a collection of individuals less than the public, the use is stamped as a private one. The Linders urge this court to declare section 23–15–101 unconstitutional “because it focuses on the nature of the entity rather than its purpose,” thereby granting the power of eminent domain to corporations for private use.³

Article 2, section 22, of the Arkansas Constitution provides that “[t]he right of property is before and higher than any constitutional sanction; and private property shall not be taken, appropriated or damaged for public use, without just compensation therefor.” The power of eminent domain is an attribute of, and inherent in, a sovereign state. Ark. Const. art. 2, § 23; Pfeifer v. City of Little Rock, 346 Ark. 449, 57 S.W.3d 714 (2001).

It is a well-established principle that the right of eminent domain cannot be exercised for the purpose of acquiring property for private use; the Legislature cannot exercise the power of eminent domain nor delegate its exercise except for public use. See, e.g., Ark....