BIG SANDY COMPANY, L.P. APPELLANT
EQT GATHERING, LLC and EQT PRODUCTION COMPANY APPELLEES
REVIEW FROM COURT OF APPEALS CASE NO. 2015-CA-000490 PIKE
CIRCUIT COURT NO. 13-CI-00617
COUNSEL FOR APPELLANT: Grahmn New Morgan Adrianne Strong
Dinsmore & Shohl LLP David Baird Baird & Baird, PSC
COUNSEL FOR APPELLEE: John Kevin West Candace Smith Steptoe
& Johnson PLLC
Pike Circuit Court entered a declaratory judgment in favor of
Big Sandy Company, LP (Big Sandy), interpreting a pipeline
easement agreement in Big Sandy's favor. EQT Gathering,
LLC and EQT Production Company (collectively, EQT) appealed,
and the Court of Appeals reversed. Big Sandy petitioned this
Court for discretionary review, which we granted. After
careful review, we reverse the Court of Appeals.
majority of the facts are undisputed. On August 1, 2003, Big
Sandy entered into a Pipeline Easement Agreement (the
Agreement) with Kentucky West Virginia Gas Company, LLC
(KWVA). KWVA is EQT's predecessor in interest. In the
Agreement, Big Sandy, granted KWVA an easement for the
construction, operation, and maintenance of a pipeline. The
parties refer to the pipeline covered by the Agreement as the
"Myra Pipeline." The Agreement was negotiated by a
representative for Big Sandy, Chauncey Curtz, and a
representative of KWVA, Lester Zitkus. The parties negotiated
the Agreement from 1999 until the Agreement was signed.
Agreement granted KWVA and its successors-in-interest "a
nonexclusive sixty foot wide temporary easement for initial
construction, and a non-exclusive thirty foot wide right of
way and easement" for:
A pipeline twelve inches or less in diameter, for(
the transportation of natural gas (the Pipeline) over,
through, and across certain surface tracts and mineral tracts
of Big Sandy situated on the waters of the Elkhorn Creek in
Pike County, Kentucky, the centerline of which is as shown on
the color print attached hereto and made a part hereof and
marked as Exhibit "A."
A is a map showing where the pipeline crosses Big Sandy's
surface and mineral tracts. The map indicates which portions
of the pipeline were already in the ground and also indicated
the location of the proposed route for new pipe.
Agreement provides that if Big Sandy decides to mine in the
vicinity of an area covered by the easement and the
Agreement, EQT must either purchase the minerals underlying
the pipeline or, if EQT does not want to (
purchase the minerals, it must remove and relocate the
pipeline at its own expense.
Sandy desires to mine on three tracts, tracts 1, 2, and 3
(subject tracts), on the map. On these subject tracts, Big
Sandy holds only a mineral estate, not a surface estate.
Also, on these subject tracts, the map shows that pipe was
already located in the ground before the Agreement became
effective. EQT argued the Agreement only applied to those
tracts that referenced "proposed pipeline routes, "
excluding the tracts where the pipe was already in the ground
prior to the Agreement. If this interpretation was correct,
it would mean that the Agreement does not apply to the
subject tracts that Big Sandy intends to mine. If the
Agreement is not applicable, Big Sandy would be liable for
the cost of removing and relocating the pipeline if it did,
in fact, commence mining in these locations. Big Sandy of
course maintains that the Agreement applies to all tracts
depicted on the map.
filed suit against Big Sandy requesting declaratory relief
regarding ' the interpretation and scope of the
Agreement. Big Sandy filed its answer and counterclaims for
breach of contract, declaratory relief, and tortious
interference with prospective advantage. EQT then filed an
amended complaint adding a claim for reimbursement for costs
incurred. The parties each then filed motions for ...