Mich. GeoSearch, Inc. v. TC Energy Corp.
Decision Date | 08 June 2021 |
Docket Number | Case No. 2:20-cv-12600 |
Parties | MICHIGAN GEOSEARCH, INC., Plaintiff, v. TC ENERGY CORPORATION, Defendant. |
Court | U.S. District Court — Eastern District of Michigan |
HONORABLE STEPHEN J. MURPHY, III
Plaintiff Michigan GeoSearch, Inc. sued Defendant TC Energy1 on several state and federal law claims. ECF 1. Defendant moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6). ECF 10. The parties fully briefed the motion, ECF 13, 14, and a hearing is unnecessary. See E.D. Mich. L.R. 7.1(f). For the reasons below, the Court will grant in part and deny in part the motion to dismiss.
Plaintiff and Defendant are companies in the natural gas industry. ECF 1, PgID 1-2. Since the 1970s, Defendant—through a subsidiary for a time—has owneda natural gas storage field in Macomb, Michigan. Id. at 3. The underground field spans three hundred acres and is in a depleted reef reservoir. Id.
Located Southeast of Defendant's gas storage field is Plaintiff's property. Id. Since 1989, Plaintiff has owned a well on the property, the reef reservoir beneath it, and oil and gas leases associated with the property. Id.
In 1994, Plaintiff observed its well re-pressurizing. Id. at 6. Plaintiff believed the pressure readings showed an "influx of natural gas from somewhere." Id. Plaintiff theorized the "high-pressure [] storage gas" from Defendant's reservoir "was migrating south-eastward" and re-pressurizing Plaintiff's reservoir.3 Id.
Plaintiff therefore contacted Defendant4 about the migration concerns. Id. In response, a Director for Defendant denied any migration or leakage from Defendant's land. Id. Instead, the Director claimed the well's re-pressurizing came from elsewhere. Id. at 9.
In 1997, Plaintiff conducted an isotopic natural gas analysis. Id. Plaintiff alleged that the natural gas industry widely accepts isotopic gas analysis "as the definitive technique to be used in determining the origin, source and exact chemical properties of natural gas." Id. In layman's terms, isotopic analysis identifies "thechemical fingerprint" of natural gas, which is then compared to natural gas found elsewhere. Id.
Plaintiff's isotopic analysis found natural gas from Defendant's storage field in Plaintiff's reservoir. Id. At that point, Plaintiff's experts believed "that there ha[d] been an intrusion of storage gas" from Defendant's field into Plaintiff's reservoir. Id. at 10. When Plaintiff revealed the findings to Defendant, Defendant again denied any leakage and maintained that its storage field and Plaintiff's reservoir were distinct reservoirs. Id.
Over the next year, Plaintiff continued to see rising pressure in its well. Id. So Plaintiff again contacted Defendant and asked if Defendant would "participate in a new, joint analysis of gas samples." Id. But Defendant refused to engage in any testing or data collection. Id. at 10-11.
The Michigan Department of Environmental Quality later directed Plaintiff to start producing natural gas from its reservoir or abandon the property. Id. at 12. Plaintiff reluctantly "proceeded to extract several hundred thousand cubic feet of gas from the reservoir over a number of years." Id. at 13. During that span, Plaintiff believed the gas produced from its well contained samples from Defendant's storage field. Id. In the end, Plaintiff's gas production lowered the pressure in its well. Id. But when Plaintiff stopped producing gas in May 2019, the pressure in the well built up again. Id.
In 2020, the Pipeline and Hazardous Materials Safety Administration ("PHMSA") "imposed safety standards and reporting requirements on undergroundnatural gas storage facilities." Id. at 14; see 49 C.F.R. § 192.12(b)(2). Plaintiff began to worry about the PHMSA regulatory effect on its reservoir because of the gas migration from Defendant's storage field. ECF 1, PgID 15. Plaintiff then contacted Defendant which, this time, agreed to a joint sample collection. Id. Plaintiff later sent its samples to the same experts who conducted the 1997 isotopic analysis. Id. The experts' report again confirmed the presence of natural gas from Defendant's storage field in Plaintiff's reservoir. Id. The report "also excluded any other potential source of gas migration as the cause of pressurized storage gas" in Plaintiff's reservoir. Id.
Plaintiff believed Defendant knew since 1980 about the "high probability" of gas migration from Defendant's storage field into Plaintiff's reservoir. Id. at 7. Defendant allegedly knew about the migration because Defendant had hired an expert to survey the field and the expert later informed Defendant about the migration issue. Id. at 7-8.
Plaintiff also suggested that Defendant concealed the gas migration from Plaintiff and made materially false statements to Defendant and others when Plaintiff raised the migration issue with Defendant in the late 1990s. Id. at 9-11. Plaintiff further alleged Defendant has no plan to stop sending gas into Plaintiff's reservoir and has not paid Plaintiff for the rights to use its reservoir for natural gas storage. Id. at 16.
Based on the events, Plaintiff sued Defendant for six claims. First, Plaintiff asserted a claim under 42 U.S.C. § 1983 because Defendant's actions, under the color of state law, amounted to a de facto taking of Plaintiff's property in violation of itsFifth Amendment right. Id. at 18-20. Plaintiff's second claim asserted an inverse condemnation claim because Defendant unlawfully took Plaintiff's property for public use without just compensation and in violation of the Michigan Constitution. Id. at 20-22. Plaintiff's remaining state law claims against Defendant asserted trespass, nuisance, negligence, and unjust enrichment. Id. at 22-26. And last, Plaintiff sought declaratory relief under 28 U.S.C. § 2201 and Federal Rule of Civil Procedure 57. Id. at 26-27. The relief sought a declaration that Defendant must pursue an adverse condemnation of Plaintiff's property under federal law and must comply with the new PHMSA regulations. Id. Defendant asserted several reasons to dismiss Plaintiff's claims, including that each claim is time-barred. ECF 10, PgID 97-104.
The Court may dismiss a claim under Rule 12(b)(6) if "the allegations in the complaint affirmatively show that the claim is time-barred." Stein v. Regions Morgan Keegan Select High Income Fund, Inc., 821 F.3d 780, 786 (6th Cir. 2016) (quotation omitted). The Court may also grant a Rule 12(b)(6) motion if the complaint fails to allege facts "sufficient 'to raise a right to relief above the speculative level,' and to 'state a claim to relief that is plausible on its face.'" Hensley Mfg. v. ProPride, Inc., 579 F.3d 603, 609 (6th Cir. 2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007)). The Court must view the complaint in the light most favorable to the plaintiff, presume the truth of all well-pleaded factual assertions, and draw everyreasonable inference in favor of the nonmoving party. Bassett v. Nat'l Collegiate Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008).
But the Court will not presume the truth of legal conclusions in the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). If "a cause of action fails as a matter of law, regardless of whether the plaintiff's factual allegations are true or not," then the Court must dismiss. Winnett v. Caterpillar, Inc., 553 F.3d 1000, 1005 (6th Cir. 2009). To resolve a Rule 12(b)(6) motion, the Court may rely on "exhibits attached [to the complaint] . . . and exhibits attached to [D]efendant's motion to dismiss so long as they are referred to in the [c]omplaint and are central to [the] claims." Bassett, 528 F.3d at 430.
The Court will address Defendant's arguments to dismiss each claim in turn. For each claim, the Court will first determine whether the claim is time barred.
The Fifth Amendment's Takings Clause prohibits the Government from taking "private property [] for public use, without just compensation." U.S. Const. Amend. V. Until recently, federal courts rarely heard § 1983 claims that stemmed from a Takings Clause violation. Knick v. Twp. of Scott, --- U.S. ---, 139 S. Ct. 2162, 2167 (2019). Now, however, a property owner may assert a § 1983 claim "for a violation of the Takings Clause as soon as a government takes [its] property for public use without paying for it." Id. at 2170.
Defendant asserted two arguments for dismissing the § 1983 claim: First, that the claim is time-barred. ECF 10, PgID 101-02. And second, that Plaintiff failed to state a claim because the storage field operated under the color of federal law, not state law. Id. at 108-09. The Court will address each argument in turn.
"Limitations periods in § 1983 suits are to be determined by reference to the appropriate state statute of limitations and the coordinate tolling rules." Hardin v. Straub, 490 U.S. 536, 539 (1989) (quotation omitted). For § 1983 claims arising in Michigan, federal courts borrow the state's three-year limitations period for personal injury actions. Haines v. Fed. Motor Carrier Safety Admin., 814 F.3d 417, 430 (6th Cir. 2016) (citations omitted); Mich. Comp. Laws § 600.5805(2) ().
Although state law governs the length of a limitation period for § 1983 claims, federal law governs when the § 1983 claim accrues. Wallace v. Kato, 549 U.S. 384, 388 (2007). "Ordinarily, the limitation period starts to run when the plaintiff knows or has reason to know of the injury which is the basis of his action." Eidson v. Tenn. Dep't of Children's Servs., 510 F.3d 631, 635 (6th Cir. 2007). In other words, the limitations period begins to accrue after the event that "should have alerted the typical lay...
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