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CCPS Transportation, LLC v. Sloan

United States District Court, Tenth Circuit

July 29, 2013

CCPS TRANSPORTATION, LLC, and ENBRIDGE PIPELINES FSP, L.L.C., Plaintiff
v.
BYSON SLOAN AND TERRY SLOAN, Defendant.

MEMORANDUM AND ORDER

CARLOS MURGUIA, United States District Judge

Plaintiff Enbridge Pipelines (FSP) L.L.C. (“Enbridge”) wants to build a pipeline on defendants Byron and Terry Sloan’s land. Plaintiff CCPS Transportation, LLC (“CCPS”), already operates a pipeline on defendants’ land and is the successor-in-interest to Sinclair Pipe Line Company (“Sinclair”). CCPS granted Enbridge a partial assignment of the right to construct a new pipeline, based on a 1951 easement granted by defendants’ predecessor to Sinclair. Plaintiffs ask the court for declaratory judgment in their favor, as well as injunctive relief and damages for breach of contract.

The case is before the court on Plaintiffs’ Motion for Partial Summary Judgment (Doc. 48); Defendants’ Motion for Summary Judgment (Doc. 54); and defendants’ Motion to Certify Questions to the Kansas Supreme Court (Doc. 64). Plaintiffs seek summary judgment on their declaratory judgment claim. Defendants claim that they are entitled to summary judgment because (1) plaintiffs’ request is premature; (2) plaintiffs have not yet satisfied a condition precedent—payment; (3) the stated consideration is inadequate to support construction of additional pipelines; (4) plaintiffs’ right to enforce has lapsed; (5) enforcement is barred based on the doctrines of laches and/or waiver; and (6) enforcement would be unconscionable. Alternatively, defendants ask the court to certify questions to the Kansas Supreme Court for resolution.

I. Factual Background

On August 4, 1951, Cora E. Huss executed a written Right of Way agreement with Sinclair. In this agreement, Ms. Huss gave Sinclair and its successors and assigns an easement across her land. Specifically, for consideration of $63.00, Ms. Huss granted Sinclair and its successors and assigns the following rights:

to lay, maintain, inspect, operate, protect, repair, replace and remove a pipe line for the transportation of liquids and/or gases, on, over and through [defendants’ land] together with the right of unimpaired access to said pipe line and the right of ingress and egress on, over and through said land for any and all purposes necessary and incident to the exercise by said grantee of the rights granted hereunder.
. . . .
As a part of the consideration hereinabove set forth Grantors hereby grant unto said Grantee the right at any time or times to construct and operate an additional pipe line or lines alongside of said first pipe line on, over and through said land, and Grantee agrees to pay Grantors for each additional pipe line so placed the sum of Sixty-three Dollars, on or before the time Grantee commences to construct such pipe line on the land hereinabove described. . . .

(Doc. 49-1 at 1.) Recorded in Allen County, Kansas, the agreement provides that payment may be made directly to the grantors or deposited in the Stark State Bank of Stark, Kansas. The Stark State Bank, however, no longer exists.

As previously noted, CCPS, as Sinclair’s successor-in-interest, granted Enbridge a partial assignment of its rights under the Right of Way. Defendants purchased the property with full knowledge of the easement and its terms.

In 1951, the property governed by the agreement was one parcel. The property was later subdivided, but both parcels remain within the area covered by the Right of Way. A one-room schoolhouse sits on part of the subdivided property. Defendants have made a number of improvements to the schoolhouse over the years and are concerned that plaintiffs will impact the schoolhouse with an additional pipeline. At the time Ms. Huss executed the Right of Way, the portion of the property containing the schoolhouse was leased to the Osage Valley School District.

The existing pipeline has been on the property since 1953. Other owners of the property (between Ms. Huss and defendants) entered into an oil and gas lease with Reese Exploration, Inc., in 1980. That document is also on file in Allen County.

In 2012, Enbridge contacted defendants to discuss construction of a new pipeline. Defendants denied that Enbridge had the right to construct another pipeline and denied access to the land for preconstruction surveys.

Plaintiffs contend that the Right of Way governs the entire forty-acre plot of defendants’ land, although they do not claim any right to damage or destroy the one-room schoolhouse. The proposed route of the pipeline runs parallel to the existing pipeline through defendants’ property.

Enbridge has not yet made any payment to defendants for construction of the additional pipeline. In 1951 and 1953, the average price per acre of defendants’ land was $63.00. As of 2013, the average price per acre is $2, 000.00. For other portions of Enbridge’s proposed pipeline, Enbridge offers or pays $3, 500 for farm land in Allen County, Kansas.

II. Certification to Kansas Supreme Court

The court first takes up defendants’ motion for certification, where defendants ask the court to certify three questions to the Kansas Supreme Court:

1. Is the Right of Way on file in Book M51 at Page 107 at the Register of Deeds Office, Allen County, Kansas enforceable to allow plaintiffs to construct additional pipelines on defendants’ forty-acre tract of land in Allen County, Kansas?
2. If the Right of Way agreement is enforceable for additional pipelines on defendants’ property, does the easement created burden the entire forty-acre estate?
3. Should the order of specific performance be granted against defendants, requiring defendants to provide plaintiffs with the land for pipeline construction based upon the 1951 Right of Way agreement referenced above?

(Doc. 64 at 1.)

Kan. Stat. Ann. § 60-3201 authorizes the Kansas Supreme Court to rule on questions of law certified to it by a federal court. Certification is appropriate if (1) the question(s) of law may be determinative to the cause and (2) there is a lack of controlling Kansas law regarding the question(s). Kan. Stat. Ann. § 60-3201; Copier ex rel. Lindsey v. Smith & Wesson Corp., 138 F.3d 833, 838 (10th Cir. 1998); Armijo v. Ex Cam, Inc., 843 F.2d 406, 407 (10th Cir. 1988). The decision to certify is within the sound discretion of the court. Hartford Ins. Co. of the Midwest v. Cline, 427 F.3d 715, 716– 17 (10th Cir. 2005) (quotation omitted). But “‘[c]ertification is not to be routinely invoked whenever a federal court is presented with an unsettled question of state law.’” Marzolf v. Gilgore, 924 F.Supp. 127, 129 (D. Kan. 1996) (quoting Armijo, 843 F.2d 406). Federal courts should decide questions of state law when necessary to render a judgment, unless there exists “some recognized public policy or defined principle guiding the exercise of the jurisdiction conferred.” Copier, 138 F.3d at 838 (quoting Meredith v. City of Winter Haven, 320 U.S. 228, 234 (1943)). “Certification is never compelled, even when there is no state law governing an issue.” Boyd Rosene & Assocs., Inc. v. Kan. Mun. Gas Agency, 178 F.3d 1363, 1364 (10th Cir. 1999) (citing Lehman Bros. v. Schein, 416 U.S. 386, 390–91 (1974)).

A. Is there controlling Kansas law regarding the following legal questions?

1. Is the Right of Way on file in Book M51 at Page 107 at the Register of Deeds Office, Allen County, Kansas enforceable to allow plaintiffs to construct additional pipelines on defendants’ forty-acre tract of land in Allen County, Kansas?

This question is one of interpretation of the scope of the easement. Kansas has ample case law surrounding questions of easement interpretation. The important legal question is not whether this particular easement has been interpreted under Kansas law, but rather, whether there is controlling law to direct this court how to interpret an easement of this kind.

Kansas law provides, “Courts determine the character and extent of each parties’ rights under the easement by examining the language of the grant and the extent of the dominant tenant’s use of the easement at the time it was granted.” Brown v. ConocoPhillips Pipeline Co., 47 P.3d 1269, 1274 (Kan.Ct.App. 2012) (citing S. Star Cent. Gas Pipeline, Inc. v. Cunning, 157 P.3d 1120 (Kan.Ct.App. 2007)). Generally, if a written instrument has clear language and can be carried out as written, rules of construction are unnecessary. See City of Ark. City v. Bruton, 166 P.3d 992, 1001–02 (Kan. 2007) (citing Decatur Cnty. Feed Yard, Inc. v. Fahey, 974 P.2d 569, 574 (Kan. 1999)). These guiding principles represent controlling law from which the court can determine whether the easement is enforceable. Defendants, in fact, cite a number of Kansas cases in support of their position. The court declines to certify this question to the Kansas Supreme Court.

2. If the Right of Way agreement is enforceable for additional pipelines on defendants’ property, does the easement created burden the entire forty-acre estate?

Again, this question is rooted in controlling Kansas law. There is Kansas case law to guide this court in determining whether the easement is a blanket easement and, if so, the extent of the easement and the significance of its “blanket easement” label. This, much like the previous question, is an easement interpretation question concerning the geographical and spatial scope of the easement.

The case law cited above is instructive in interpreting the scope of the easement. On multiple occasions, Kansas courts have answered questions about blanket easements. They have even done so in similar factual contexts. Because there is not a lack of controlling Kansas law regarding this question, the court denies the request to certify it to the Kansas Supreme Court.

3. Should the order of specific performance be granted against defendants, requiring defendants to provide plaintiffs with the land for pipeline construction based upon the 1951 ...


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