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EQT Gathering, LLC v. A Tract of Property Situated in Knott County

United States District Court, E.D. Kentucky

August 26, 2013

EQT GATHERING, LLC, Plaintiff,
v.
A TRACT OF PROPERTY SITUATED IN KNOTT COUNTY, KENTUCKY, Corresponding to Property Tax Map Number 87, Parcel 47 (160 acres), et al., Defendants

Page 656

For EQT Gathering, LLC, Plaintiff: Kimberly S. McCann, W. Mitchell Hall, Jr., LEAD ATTORNEYS, VanAntwerp, Monge, Jones & Edwards, Ashland, KY.

For A Tract of Property Situated in Knott County, Kentucky, Corresponding to Property Tax Map Number 87 Parcel 47 (160 Acres), Harold Hall, Mike Hall, Meredith Diane Hall, Dale Hall, and spouse, if any, Aubrey N. Hall, and spouse, if any, Harold O. Hall, Peggy Hall, James Dean Hall, Judith Hall, Chelsea Faye King, Jimmy King, Aretta Fern Hice, Larry Hice, Morris Donald Hall, and spouse, if any, Glenda Hall, and spouse, if any, Larry Joe Hall, and spouse, if any, William Ray Hall, and spouse, if any, Defendants, Counter Claimants, Counter Defendants: Nicholas C.A. Vaughn, Law Office of Nick Vaughn, Somerset, KY.

OPINION

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MEMORANDUM OPINION AND ORDER

Amul R. Thapar, United States District Judge.

The parties have agreed on very little during the course of this condemnation action. The three pending motions are no exception. For the reasons given below, EQT has standing to bring this condemnation action and there is no reason to doubt the constitutionality of the statute that grants EQT condemnation authority. However, there is reason to doubt whether EQT meets the requirements in that statute, so summary judgment in its favor is not appropriate. For that reason, this case must proceed to a trial on the question whether EQT has the authority to condemn the property named in its complaint.

BACKGROUND

EQT Gathering, LLC, a company that constructs, maintains, and operates natural gas pipelines, filed this diversity condemnation action under Federal Rule of Civil Procedure 71.1 to acquire rights of way on 160 acres of property in Knott County, Kentucky. Compl., R. 1 ¶ ¶ 1, 4, 13. EQT alleges that it needs the rights of way to maintain and operate an existing pipeline--the Mayking Node 3--that crosses the land. Id. at ¶ 6.

EQT's pipeline runs through a certain piece of property whose owners want the pipeline gone. In 2009, the property owners sued EQT and other defendants in the Knott County Circuit Court claiming that the pipeline was a trespass under Kentucky law. The state court defendants tried to resolve the trespass case in several ways. First, they moved for summary judgment on the merits question. They argued that they hold property rights giving them the right to build and maintain the pipeline, so they had not trespassed. R. 23-9. Second, they tried to settle the case in mediation. R. 59-4. Finally, they moved for summary judgment on the damages question. They argued that because some of the defendants have condemnation authority under Kentucky law, damages were limited to what the property owners could receive in an inverse condemnation action. R. 23-12. Their efforts were unsuccessful. R. 44-2; R. 44-4.

After the property owners refused EQT's settlement offer, EQT filed this Rule 71.1 condemnation action. R. 1. EQT claims the authority to condemn their property from Ky. Rev. Stat. § 278.502. R. 1 ¶ 13.

Rule 71.1 lays out a two-step process for eminent domain actions. The first step is an expedited determination of the validity of the taking. If the taking is proper, the second step is a determination of just compensation.

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See Memorandum Opinion and Order, R. 37 at 2-3 (describing the stages of a Rule 71.1 action).

This case is still at the first step. The property owners filed two motions, hoping to end this case. The first is a motion to dismiss for lack of standing. R. 41. The second is a motion to certify the question of the constitutionality of Ky. Rev. Stat. § 278.502 to the Kentucky Supreme Court or to stay the case. R. 45. EQT filed a motion for partial summary judgment on the takings issue, hoping to move the case along to the second step. R. 57. This Court ordered supplemental briefing on the motion to dismiss and held a hearing on the three motions. R. 60; R. 63.

DISCUSSION

I. EQT Has Standing To Bring This Rule 71.1 Condemnation Action.

EQT seeks to condemn two categories of property rights. The first category is property rights that EQT has claimed to own as a defense in the state court trespass case. The second category is property rights that EQT does not claim to own. The parties do not agree on which property rights fall into which category. [1] See R. 63 at 2. For the purposes of standing, it does not matter. EQT has standing to condemn both categories of property rights.

The familiar concept of standing becomes less familiar in the context of a condemnation action. A plaintiff has standing if he has an injury that is traceable to the defendant and can be redressed by the relief he seeks. See Murray v. U.S. Dep't of Treasury, 681 F.3d 744, 748 (6th Cir. 2012). A condemnation case is an in rem proceeding, meaning it is an action against the property to be condemned. See United States v. 6.45 Acres of Land, 409 F.3d 139, 145-46 (3d Cir. 2005). It is not an action against those who have, or might have, an interest in the property to be condemned. See Cadorette v. United States, 988 F.2d 215, 222-24 (1st Cir. 1993) (explaining the difference between a condemnation action, which is in rem, and a quiet title action, which is in personam ). So, standing in a condemnation action requires an injury traceable to the property that will be redressed by condemnation.

EQT has standing to condemn the first category of property rights, those that EQT has asserted as a defense to the state court trespass action. EQT and the other defendants asserted various easements, deeds, and mineral rights as a defense to the state court trespass action. R. 61 at 11. There, they argued that they " had a legal right to enter the property and construct the pipeline and therefore their entry was privileged and could not be a trespass." Id. The property owners disagreed and claimed ownership over those same rights. R. 23-10 at 3. Based in part on that factual dispute, the state court has denied summary judgment and set the trespass action for trial. R. 23-11; R. 64-1. The existence and scope of EQT's property rights are clearly in dispute in the state trespass case. EQT's injury is the cloud on its title created by the state court trespass case, in other words, the possibility that EQT may lose in state court. This condemnation action can redress that injury by resolving the title dispute in EQT's favor. Because EQT has an injury traceable to the subject property

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that condemnation can redress, it has standing to bring this ...


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