Steelhead Farms, LLC v. Ne. Ohio Nat. Gas Corp.
| Docket Number | 2022-L-081 |
| Decision Date | 31 July 2023 |
| Citation | 2023 Ohio 2649 |
| Parties | STEELHEAD FARMS, LLC, Plaintiff-Appellant, v. NORTHEAST OHIO NATURAL GAS CORP., Defendant-Appellee. |
| Court | Ohio Court of Appeals |
Civil Appeal from the Court of Common Pleas Trial Court No. 2020 CV 000795
Judgment Affirmed
Joseph E. Altomare, (Plaintiff-Appellee).
John P. Archer and Alexander M. Welsh, Kohrman Jackson & Krantz LLP, (For Defendant-Appellee).
{¶1} Plaintiff-appellant, Steelhead Farms, LLC, appeals from the judgment of the Lake County Court of Common Pleas, granting summary judgment in favor of defendant-appellee, Northeast Ohio Natural Gas Corp. (NEO). For the following reasons, we affirm the judgment of the lower court.
{¶2} On June 24, 2020, Steelhead Farms filed a Complaint against NEO, amended on July 22, 2020. The Amended Complaint alleged that NEO utilized and maintained pipelines for the transport of natural gas on property owned by Steelhead Farms without legal authority to do so. It raised claims for Trespass, Ejectment, and Quiet Title, requesting that NEO be ordered to cease its use of and remove the pipelines and pay damages.
{¶3} NEO filed an Answer and Counterclaim on August 5, 2020. It requested a declaratory judgment declaring that it may continue lawful operation of the pipeline. It asserted that it possessed a valid easement, purchased through receivership proceedings, allowing it to operate the pipeline on Steelhead Farms' property.
{¶4} Steelhead Farms filed a motion for partial summary judgment on March 8, 2021, arguing NEO did not have a valid easement. The trial court denied the motion.
{¶5} NEO filed a Motion for Summary Judgment on April 15, 2022 advancing its argument that it was permitted to operate the pipeline since it legally acquired the pipeline and easement necessary for its operation when it purchased such assets from Orwell Trumbull Pipeline Co., LLC (OTP) through the receivership sale. It contended that there was an implied easement granted by the owner, Richard M. Osborne, to OTP and that Steelhead Farms was aware of such easement. Steelhead Farms filed a response in which it argued that NEO's easement was invalid since the owner whose assets had been sold in the receivership, OTP, did not have a valid easement and thus, it could not be reached by the receiver.
{¶6} The following evidence was presented through the summary judgment motions:
{¶7} William Dawson testified that he created Steelhead Farms, LLC, for the purchase of the property at issue in the present matter from Williams Rd., LLC, a company owned by Richard Osborne. He testified that at the time of the purchase, he was aware that there was oil and gas infrastructure on the property. He was aware that Osborne operated natural gas pipelines and "assumed" that he had installed a gas pipeline on the property purchased by Steelhead Farms.
{¶8} Records presented regarding the foregoing property demonstrated the history of its ownership. Steelhead Farms purchased the property from Williams Rd. LLC. The deed was executed by Richard Osborne, managing member of Williams Rd. on April 26, 2019. Williams Rd. purchased the property by Sheriff's Deed dated November 14, 2014, following proceedings against Richard Osborne, Trustee, by the Lake County Treasurer. Richard Osborne, as Trustee of the Richard Osborne Trust, acquired the property from Richard Osborne via a quit-claim deed dated February 12, 2001. Richard Osborne purchased the Property from Charles Galayda by Warranty Deed dated October 31, 1995.
{¶9} Across the Steelhead Farms property runs a pipeline called the Orwell Trumbull Pipeline System, which is 137 miles long and provides natural gas to properties across Northeast Ohio. This pipeline was constructed by OTP in the mid-2000s and continued to be operated by that company until 2019. Jessica Carothers, Account Manager for OTP, stated that OTP was majority owned by Richard M. Osborne as Trustee of the Richard Osborne Trust. Osborne was the Chairman and CEO of OTP and copies of OTP's operating agreement indicated Richard M. Osborne, Trustee, owned 85.93% of OTP. According to Carothers, OTP operated the Pipeline "through properties owned by Richard M. Osborne, Sr.'s various holding companies * * * with Richard M. Osborne Sr.'s knowledge." She maintained that OTP operated the pipeline until a court appointed receiver took possession of it in connection with a receivership in Richard M. Osborne, et al., v. Park View National Savings Bank in Cuyahoga County Court of Common Pleas Case No. CV 14-822810.
{¶10} Ken Oostman, the president of NEO, which provides natural gas service in Northeast Ohio, testified that in October 2019, NEO "purchased the Pipeline and related property rights from a court-appointed receiver by means of the Sale Order and Asset Purchase Agreement," which include easements used by or belonging to OTP and those relating to operating and distributing natural gas. Oostman indicated that the ability to operate the pipeline is necessary to continuing to provide gas service to customers, carry on NEO's business, and is "essential to NEO's uninterrupted operation of the purchased assets as ordered by the Receivership Court."
{¶11} Pursuant to filings in Cuyahoga County Court of Common Pleas Case No. CV 14-822810, a Notice of Sale of the assets of OTP was filed on March 15, 2019. On September 9, 2019, the court issued an Order Granting Receiver's Motion for Approval of Sale. The court found that Park View Federal Savings Bank held a lien against the assets of OTP, that there had been an Asset Purchase Agreement entered and that the sale was approved. Pursuant to the Asset Purchase Agreement, NEO agreed to purchase, for $3,000,000, OTP's rights and interest in "all pipeline owned by Seller, including without limitation all pipeline locations, farm taps, stations, and valves shown on the attached maps and GPS coordinates, as well as real property and easements used in the 'specified business,' which is 'the high-pressure distribution of natural gas.'" The court's order approving the sale states that it "shall be construed and shall constitute for any and all purposes a full and complete general assignment, conveyance, and transfer" of the "Debtor's interests in the Assets, including any and all necessary easements, licenses, leases, rights of way of other agreements reasonably necessary for the effectuation of the Purchased Assets and uninterrupted operation of the Assets."
{¶12} The trial court issued a Judgment Entry on July 29, 2022, granting NEO's Motion for Summary Judgment. It found that there was no genuine issue of material fact and that "NEO has provided evidence showing that it purchased all rights necessary to operate the pipeline at issue in this case, including all easements via a valid and binding Receivership Sale which is a complete defense to Plaintiff's claims" and NEO "has a valid implied easement that it purchased from the aforementioned receivership and is entitled to continue operating the pipeline through Plaintiffs property without further disruption." It dismissed the claims raised by Steelhead Farms and found the ruling "disposes of Defendant's Counterclaim in favor of the defendant."
{¶13} Steelhead Farms timely appeals and raises the following assignments of error:
{¶14} "[1.] The trial court erred in rejecting as hearsay the admission by an employee that NEO knew that it had no easement to maintain the pipeline on the Steelhead property.
{¶15} "[2.] The trial court erred in granting summary judgment in favor of NEO based on the erroneous conclusion of law that 'NEO has a valid Implied Easement that it purchased from the [Receiver].'
{¶16} "[3.] The trial court erred in granting summary judgment in favor of NEO because the record does not support any other basis of doing so.
{¶17}
{¶18} Pursuant to Civil Rule 56(C), summary judgment is proper when (1) the evidence shows "that there is no genuine issue as to any material fact" to be litigated, (2) "the moving party is entitled to judgment as a matter of law," and (3) "it appears from the evidence * * * that reasonable minds can come to but one conclusion and that conclusion is adverse to the party against whom the motion for summary judgment is made, that party being entitled to have the evidence * * * construed most strongly in the party's favor."
{¶19} A trial court's decision to grant summary judgment is reviewed by an appellate court under a de novo standard of review. Grafton v. Ohio Edison Co., 77 Ohio St.3d 102, 105, 671 N.E.2d 241 (1996). "A de novo review requires the appellate court to conduct an independent review of the evidence before the trial court without deference to the trial court's decision." Peer v. Sayers, 11 th Dist. Trumbull No. 2011 -T-0014, 2011 -Ohio-5439, ¶ 27.
{¶20} In its first assignment of error, Steelhead Farms argues that the lower court erred by rejecting as hearsay testimony regarding an admission by an NEO employee that NEO knew it had no easement to maintain the pipeline on Steelhead property. It argues that it was admissible as an admission made in the scope of employment.
{¶21} The statement at issue was relayed in Dawson's testimony. According to Dawson, he inquired of NEO whether it had an easement on his property in relation to the pipeline. Dawson testified that NEO representative Jeff Heidnik "admitted * * * that there was no easement here." The trial court found that Steelhead Farms' "reliance upon inadmissible hearsay" as well as other facts "do not create a genuine issue of material fact." Steelhead Farms argues that Heidnik's admission that there...
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