Mid-America Pipeline Co. v. Lario Enterprises, Inc., MID-AMERICA

• Decision Date: 30 August 1991
• Docket Number: MID-AMERICA,89-3246,Nos. 89-3231,s. 89-3231
• Citation: 942 F.2d 1519
• Parties: PIPELINE COMPANY, Plaintiff-Appellant-Cross-Appellee, v. LARIO ENTERPRISES, INC., and the City of Topeka, Kansas, Defendants-Appellees-Cross-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1519

942 F.2d 1519

MID-AMERICA PIPELINE COMPANY, Plaintiff-Appellant-Cross-Appellee, v. LARIO ENTERPRISES, INC., and the City of Topeka, Kansas,

Defendants-Appellees-Cross-Appellants.

Nos. 89-3231, 89-3246.

United States Court of Appeals, Tenth Circuit.

Aug. 30, 1991.

Rehearing Denied Oct. 17, 1991.

Leonard J. Johnson (David C. Stout with him on the briefs) of Morrison, Hecker, Curtis, Kuder & Parrish, Kansas City, Mo. and James L. Grimes of Cosgrove, Webb & Oman, Topeka, Kan., for plaintiff-appellant-cross-appellee.

Gerald L. Goodell (Leslie E. Diehl of

Goodell, Stratton, Edmonds & Palmer; Stephen P. Weir and Edwin P. Carpenter of Carpenter, Weir & Myers, with him on the briefs) of Goodell, Stratton, Edmonds & Palmer, Topeka, Kan., for defendants-appellees-cross-appellants.

Before BALDOCK and BRORBY, Circuit Judges, and ANDERSON, ^* District Judge.

BRORBY, Circuit Judge.

Mid-America Pipeline Company ("MAPCO" or Appellant) seeks equitable relief from the construction of Heartland Park Topeka (HPT), a newly-built automobile raceway that partially overlies MAPCO's pre-existing high-pressure liquid gas pipeline easements. MAPCO appeals the United States District Court for the District of Kansas's denial of an injunction mandating the removal of the offending parts of the racetrack. HPT's owners, Lario Enterprises and the City of Topeka, Kansas (collectively, "Lario") cross-appeal certain rulings of the district court. The Memorandum and Order denying injunctive relief is published as Mid-America Pipeline Co. v. Lario Enters., 716 F.Supp. 511 (D.Kan.1989).

Jurisdiction in the district court was based on diversity of citizenship pursuant to 28 U.S.C. § 1332. Our jurisdiction arises under 28 U.S.C. § 1292(a)(1).

Facts

MAPCO purchased certain easements across undeveloped farmland in 1960, and duly recorded the easements. MAPCO selected the path of the easements so as to avoid developed property. Mid-America, 716 F.Supp. at 514. The easements define a sixty-foot wide right of way and provide substantial rights, which are reprinted at length in Mid-America, id. at 513-14. The relevant easement provision states:

Grantor shall have the right to fully use and enjoy the above described premises subject to the rights herein granted. Grantee shall have the right to clear and keep clear all trees, undergrowth and other obstructions from the herein granted right of way, and Grantor agrees not to build, construct or create, nor permit others to build, construct or create any buildings or other structures on the herein granted right of way that will interfere with the normal operation and maintenance of the said line or lines.

Id. MAPCO drew the easement language. Id. at 514. MAPCO subsequently installed two high-pressure liquid gas pipelines through the easements. Id. at 513. The pipelines were buried at a depth of thirty to forty-eight inches. Id.

MAPCO's officers learned of Lario's plans to build HPT in the summer of 1988, and promptly informed Lario of its easement rights and objections to the planned construction. Id. at 514. Lario had both actual and constructive notice of MAPCO's easements and the existence of its gas pipelines prior to its construction of HPT. MAPCO filed this lawsuit on August 30, 1988. Lario subsequently deeded certain areas of HPT, including parts of the pipeline easements, to the City of Topeka, with agreement that the land and project would be reconveyed to Lario after a term of twenty-three years. MAPCO then joined the City as a defendant.

Substantial construction of HPT has occurred since the filing of the lawsuit, and has continued in light of the district court's denial of MAPCO's request for a preliminary injunction. The court described the existing and planned parts of HPT that are located above the gas pipelines in the following terms:

Currently, four racetrack surfaces approximately 36 feet in width cross over the pipelines. A drag strip approximately 60 feet in width also crosses the pipelines. These surfaces are composed of 7 1/2 inches of asphalt over a 12 inch fly ash/clay base. The base is a mixture of materials designed to set up like concrete. The depth of the cover has been increased over the pipelines in some areas by as much as 12 to 20 feet. It is anticipated that moveable concrete barriers weighing approximately 8,000 pounds apiece shall border the racetrack. Two chain link fences will cross the pipelines in four locations. Additionally, two tram roadways that will also cross the pipelines are contemplated in the future.

716 F.Supp. at 514.

The court found the asphalt covering, the fly ash/clay base, and the fill dirt would render the task of excavating the pipelines "more difficult, time-consuming and expensive." Id. However, given the history of the pipelines, the court concluded the probability that excavation would be necessary "appears remote." Id. at 515. Nevertheless, addressing the language of the easements, the court held:

The asphalt tracks of HPT are 'structures which interfere with the normal operation and maintenance of the

[pipe]lines' and, therefore, violate plaintiff's easement rights.

Id. The court also noted, "[o]f course, not all structures are barred by the easements. Only structures which 'interfere with the normal operation and maintenance' of the pipelines are prohibited." Id. at 516.

Reasoning from the terms of the easement, the court concluded "[i]f trees and undergrowth, which the easements expressly designate for removal, can be considered interference, it is logical to believe the parties would consider the racetracks as interference." Id. at 517. The court found otherwise with respect to the fences, concrete barriers, and tramways, concluding they do not unreasonably or materially interfere with the normal operations and maintenance of the pipelines. Id.

The court also considered the much-disputed safety implications of operating the racetrack over the liquid gas pipelines. The propane and ethane gases transported in the pipelines are heavier than air and, in leak situations, pose a danger of accumulation at ground level and explosion. MAPCO claims HPT interferes with its ability to detect pipeline leaks by obscuring the easement from the by-weekly overflights MAPCO uses to look for the dead vegetation or ice plugs that indicate a gas leak. MAPCO further claims HPT will increase the cost and decrease the accuracy of its close-interval cathodic surveys--a means of electrically testing the corrosion resistance of the pipes. MAPCO is also concerned about the increased danger and delay involved in the task of digging down to the pipelines through the asphalt racetracks and increased overburden--perhaps in the presence of explosive gases and under emergency circumstances. Lario argues that because MAPCO never had to dig up the pipes before, and because the pipes have now been inspected, repaired, and certified safe, there is no safety problem.

The court in essence agreed with Lario, citing the lack of prior leaks or problems at the HPT site, the present safe condition of the pipelines, and the comprehensive pipeline-monitoring system used by MAPCO to detect leaks. 716 F.Supp. at 514. The court concluded the probability that pipeline excavation will be necessary "appears remote," and "absent a safety risk from the operation of HPT over the pipelines, the court has no reason to believe that the substantial cost of relocating the pipelines should be suffered by any party in this case." Id. at 515, 520.

The district court refused to grant an injunction mandating the removal of the racetracks or any other aspect of HPT from the easements. The court offered three grounds in explaining its denial of the injunction: "plaintiff has an adequate remedy in condemnation or damages; an injunction would place an unfair hardship upon defendants; and, an injunction would not be in the interests of the public." Id. at 513.

Issues Raised

MAPCO appeals the court's denial of injunctive relief. Lario argues on cross-appeal that although the district court correctly denied injunctive relief, it erred in finding the asphalt tracks are "structures" under the easements and in finding the tracks "interfere with the normal operation and maintenance" of the pipelines.

Standard of Review

We apply the law of the forum state in determining whether to grant mandatory injunctive relief in diversity cases. Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938); Genovese Drug Stores, Inc. v. Bercrose Assocs., 563 F.Supp. 1299, 1304 (D.Conn.1983) ("Where injunctive relief is sought, a federal court must look to state law to determine whether a party is entitled to equitable remedial rights."). See also United States v. O'Block, 788 F.2d 1433, 1435 (10th Cir.1986) (absent controlling federal law, questions involving real property rights are resolved under state law); 2 J. Moore, W. Taggart & J. Wicker, Moore's Federal Practice p 2.09 (1990) ("Assuming a case is in the federal court solely because of diversity and that the right to be adjudicated concerns only local law then the parties are entitled to the same substantial treatment they would get in the same [state] court.").

We review the state law determinations of the district court de novo, according no deference. Salve Regina College v. Russell, --- U.S. ----, ----, 111 S.Ct. 1217, 1221-25, 113 L.Ed.2d 190 (1991). Although Erie dictates we apply Kansas law to the merits of this case, as a matter of independent federal procedure we utilize the normal federal standards of appellate review to examine the district court's decision process. Cf. Manchester Pipeline Corp. v. Peoples Natural Gas Co., 862 F.2d 1439, 1444 (10th Cir.1988) (federal standards applied in review of sufficiency of evidence and motion for new trial in diversity case). Therefore, in this appeal, legal conclusions reached by the federal district court are reviewed de novo, while findings of fact are examined...