McCartin McAuliffe Mechanical Contractor, Inc. v. Midwest Gas Storage, Inc.,

Citation685 N.E.2d 165
Decision Date18 September 1997
Docket NumberNo. 11A01-9608-CV-274,11A01-9608-CV-274
PartiesMcCARTIN McAULIFFE MECHANICAL CONTRACTOR, INC., Appellant-Plaintiff, v. MIDWEST GAS STORAGE, INC., an Indiana corporation, Enron Finance Corp., a Delaware corporation and Terrence O'Malley, Appellees-Defendants.
CourtIndiana Appellate Court

NAJAM, Judge.


McCartin McAuliffe Mechanical Contractor, Inc. ("McCartin") appeals from the trial court's partial summary judgment in favor of Midwest Gas Storage, Inc. ("Midwest") and against McCartin. Midwest is a public utility engaged in the business of natural gas storage. McCartin had entered into a contract with Midwest for the construction of a natural gas pipeline in Clay and Parke counties. McCartin filed two sets of mechanic's liens against Midwest's various property interests associated with the pipeline and operation of the Carbon-Calcutta underground natural gas storage field. The liens were filed with the Clay and Parke County recorders for work performed on the pipeline and related facilities. McCartin subsequently filed suit against Midwest seeking to foreclose on its mechanic's liens. 2 The trial court granted Midwest's motion for summary judgment on Counts I and V, the mechanic's lien foreclosure counts. McCartin now appeals. 3

We reverse and remand.


McCartin presents several issues for our review:

1. Whether Indiana's mechanic's lien laws are preempted by the Natural Gas Act, 15 U.S.C. § 717.

2. Whether the public use and necessity exception applies to Midwest, a quasi public corporation.

3. Whether McCartin complied with the mechanic's lien statute.


The facts most favorable to McCartin show that McCartin is a mechanical contractor that performs piping installation for the steel, power, chemical and pipeline industries. Midwest is a privately owned public utility which operates under a certificate of public convenience and necessity issued by the Federal Energy Regulatory Commission ("FERC"). Midwest is subject to FERC's jurisdiction and must comply with the provisions of the Natural Gas Act ("NGA"). 4 FERC issued a certificate to Midwest on April 30, 1991, which imposes various requirements upon Midwest and authorizes Midwest to operate the Carbon-Calcutta natural gas storage field, a porous underground natural limestone cavern located in Clay and Parke counties. Midwest's pipeline is connected to a pipeline owned and operated by Panhandle Eastern Pipeline Company ("Panhandle Eastern") which owns and operates thousands of miles of natural gas pipeline in the United States. Part of Panhandle Eastern's system runs near Bellmore, Indiana, in Parke County. Midwest's twelve-inch pipeline connects with Panhandle Eastern's twenty-six inch pipeline approximately one mile north of Bellmore. This point is commonly referred to as the "Bellmore interconnect." Panhandle Eastern, among other companies, deposits natural gas into the Carbon-Calcutta storage field during periods of low demand, typically in the summer and autumn, and withdraws natural gas from the field during periods of high demand, generally in the winter.

On September 4, 1992, McCartin entered into a contract with Midwest to construct fourteen miles of a twelve-inch pipeline to be installed in the Indiana Department of Transportation's highway right-of-way as well as on private property through easements obtained by Midwest. McCartin began work on the project in June of 1993 and, pursuant to the contract, was to be paid $2,315,052.00. To operate properly, the pipeline required the fabrication and installation of a header, which is part of the gathering system. A metering system and compressor station were also needed. 5 The parties agreed that McCartin would perform this work and be paid on a time and materials basis. After Midwest did not pay McCartin in a timely manner, McCartin stopped work on the project in March of 1994.

McCartin then filed mechanic's liens in Clay and Parke Counties for work and labor done and materials and machinery furnished in construction of the pipeline and related facilities. The claims were recorded against Midwest's property, including land, leases, easements and related interests, and the permit issued to Midwest by the Indiana Department of Transportation. 6 The amount of each lien was $1,700,000.00. The liens sought recovery for labor and materials furnished for construction of the twelve-inch pipeline, the gathering system and the compressor station. Additional liens were later filed in both counties, each for $56,783.55.

Standard of Review

Summary judgment is appropriate only if the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Ind.Trial Rule 56(C). Upon review of the trial court's ruling on a motion for summary judgment, we apply the same standard as the trial court. Henshilwood v. Hendricks County, 653 N.E.2d 1062, 1065 (Ind.Ct.App.1995), trans. denied. We resolve any doubt as to a fact, or an inference to be drawn therefrom, in favor of the party opposing the motion. Id. When considering a motion for summary judgment, we may consider only the evidence specifically designated by the parties. Midwest Commerce Banking Co. v. Livings, 608 N.E.2d 1010, 1012 (Ind.Ct.App.1993).

The trial court was not required to disclose and did not disclose its reasons for granting summary judgment on the foreclosure counts. On appeal, the parties dispute various issues as grounds for and against summary judgment. We shall consider each in turn.

Issue One: Preemption

McCartin contends that Indiana's mechanic's lien statutes are not preempted by the NGA. Specifically, McCartin argues that is has filed valid mechanic's liens against Midwest and that the NGA does not prohibit the enforcement and foreclosure of those liens.

Article VI of the Constitution of the United States provides that the laws of the United States "shall be the supreme Law of the Land; ... any Thing in the Constitutions or Laws of any state to the Contrary notwithstanding." Art. VI, cl. 2; Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 2617, 120 L.Ed.2d 407, 422 (1992). Consideration of issues arising under the Supremacy Clause "start[s] with the assumption that the historic police powers of the States [are] not to be superseded by ... Federal Act unless that [is] the clear and manifest purpose of Congress." Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 1152, 91 L.Ed. 1447, 1459 (1947). Accordingly, the purpose of Congress is the ultimate touchstone of preemption analysis. Cipollone, 505 U.S. at 516, 112 S.Ct. at 2617, 120 L.Ed.2d at 422.

Congress' intent to preempt state law may be "express," i.e., explicitly stated in the statute's language, or "implied," i.e., implicitly contained in the statute's structure and purpose. Wilson v. Pleasant, 660 N.E.2d 327, 329 (Ind.1995) (quoting Jones v. Rath Packing Co., 430 U.S. 519, 525, 97 S.Ct. 1305, 1309, 51 L.Ed.2d 604, 614 (1977)). In addition, a federal statute will override a state law either when the scope of a statute indicates that Congress intended federal law to occupy a field exclusively, or when state law is in actual conflict with federal law. Freightliner Corp. v. Myrick, 514 U.S. 280, 287, 115 S.Ct. 1483, 1487, 131 L.Ed.2d 385, 392 (1995).

The fundamental purpose of the NGA is to assure an adequate and reliable supply of gas at reasonable prices. California v. Southland Royalty Co., 436 U.S. 519, 523, 98 S.Ct. 1955, 1957, 56 L.Ed.2d 505, 510 (1978). To this end, not only must those who would serve the interstate market obtain a certificate of public convenience and necessity but also, under § 717f(b) of the Act:

No natural gas company shall abandon all or any portion of its facilities subject to the jurisdiction of the [FERC], or any service rendered by means of such facilities, without the permission and approval of the [FERC] first had and obtained, after due hearing, and a finding by the [FERC] that the available supply of natural gas is depleted to the extent that the continuance of service is unwarranted, or that the present or future public convenience and necessity permit such abandonment.

15 U.S.C. § 717f(b). Accordingly, the seller and purchaser of a gas facility must comply with the federal regulations governing the abandonment and acquisition of a gas storage field. 18 C.F.R. §§ 157.15, 157.18 (1996); 7 see, e.g., Williams Gas Processing Co. v. Federal Energy Regulatory Comm'n, 17 F.3d 1320 (10th Cir.1994) (approving petition for abandonment and transfer of facilities); Viking Gas Transmission Co. and Midwestern Gas Transmission Co. v. Federal Energy Regulatory Comm'n, 47 F.E.R.C. P61,017 (1989) (requiring approval for abandonment and acquisition of facilities). These requirements must be fulfilled to "advise the [FERC] fully concerning the operation, sales, service, construction, extension, or acquisition for which a certificate is requested or the abandonment for which permission and approval is requested." 18 C.F.R. § 157.5(a) (1996). Thus, FERC may control both the terms under which service is provided to the interstate market and the conditions under which it will cease. Southland Royalty, 436 U.S. at 523, 98 S.Ct. at 1957, 56 L.Ed.2d at 510. 8 Indiana law provides for the enforcement of mechanic's liens by sale. IND.CODE § 32-8-3-6. McCartin seeks to foreclose on its liens and argues that foreclosure is not preempted by the NGA because there is no relevant difference between a sale pursuant to foreclosure and a voluntary sale. The forced sale through a state foreclosure proceeding and...

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