Richard Pressl v. Appalachian Power Company

Filing

PUBLISHED AUTHORED OPINION filed. Originating case number: 7:15-cv-00343-NKM-RSB. [999972025]. [15-2348]

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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 15-2348

RICHARD A. PRESSL; THERESA PRESSL,
Plaintiffs - Appellants,
v.
APPALACHIAN POWER COMPANY,
Defendant - Appellee.

Appeal from the United States District Court for the Western
District of Virginia, at Roanoke.
Norman K. Moon, Senior
District Judge. (7:15-cv-00343-NKM-RSB)

Argued:

October 26, 2016

Decided:

November 21, 2016

Before MOTZ, TRAXLER, and FLOYD, Circuit Judges.

Vacated and remanded by published opinion. Judge Motz wrote the
opinion, in which Judge Traxler and Judge Floyd joined.

ARGUED: James Frederick Watson, CASKIE & FROST, P.C., Lynchburg,
Virginia, for Appellants.
Frank Kenneth Friedman, Matthew
Patrick Warren Pritts, WOODS ROGERS, PLC, Roanoke, Virginia, for
Appellee.
ON BRIEF: Pavlina B. Dirom, CASKIE & FROST, P.C.,
Lynchburg, Virginia, for Appellants.
C. Carter Lee, WOODS
ROGERS, PLC, Roanoke, Virginia, for Appellee.

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DIANA GRIBBON MOTZ, Circuit Judge:
Landowners brought this action in state court seeking a
declaration of their rights to build a dock on property subject
to a flowage easement.
easement,

removed

After the power company, which owns the

the

case

to

federal

court,

sought to remand the case to state court.

the

landowners

The district court

denied the motion to remand and then dismissed the landowners’
complaint.

Because the district court lacked subject matter

jurisdiction, we must vacate and remand.

I.
Richard A. Pressl and Theresa Pressl own property adjacent
to Smith Mountain Lake in Franklin County, Virginia.

They own

about two and a half acres of land sitting more than 800 feet
above median sea level.
adjoining

land

below

The Pressls also own half an acre of

the

800-foot

elevation

contour.

They

acquired the property subject to a flowage easement that the
Pressls’ predecessors in interest granted in 1960 to Appalachian
Power Company (“APCO”).
The flowage easement recites APCO’s intention to construct
a

dam

and

Mountain.

operate
It

a

provides

hydroelectric
that

the

power

elevation

station

at

of

impounded

the

waters the dam creates generally would not exceed 800 feet.
easement grants APCO the right to:
2

Smith

The

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overflow and/or affect so much of said premises as may
be overflowed and/or affected, continuously or from
time to time in any manner whatsoever, as the result
of the construction, existence, operation and/or
maintenance of the aforesaid dam and/or power station,
the impounding of the waters of [Roanoke] river and
tributaries and/or the varying of the level of the so
impounded waters by reason of the operation of said
power station, including any pumping as part of such
operation.
The easement also gives APCO the right to:
enter upon said premises at any time and from time to
time and, at Appalachian’s discretion, to cut, burn
and/or
remove
therefrom
any
and
all
buildings,
structures, improvements, trees, bushes, driftwood and
other objects and debris of any and every kind or
description which are or may hereafter be located on
the portion of said premises below the contour the
elevation of which is 800 feet.
The easement provides that the landowners retain the right to
“possess and use said premises in any manner not inconsistent
with” APCO’s flowage easement, including crossing the land for
recreational purposes.
After

acquiring

the

property,

the

Pressls

sought

construct a dock below the 800-foot elevation contour.

to
APCO

advised the Pressls that, as a condition for building the dock,
they had to execute an Occupancy and Use Permit and agree to
abide by its restrictions.
Balking

at

this

requirement,

the

Pressls

filed

suit

in

Virginia state court, seeking a declaratory judgment that APCO’s
demands violated the flowage easement.

The complaint asks the

court to declare “that APCO has no regulatory authority over the
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plaintiffs’
beyond

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property

those

which

rights

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lies

defined

below

by

the

the

800

flowage

foot

contour

easement,

the

contemporaneous expressions of the parties, and vested rights to
build

and

own

structures

recreational purposes.”

to

access

Smith

Mountain

Lake

for

It further requests the court to hold

that the Pressls “be allowed to use their property in any manner
not

inconsistent

electric

power

with

the

maintenance

generation

plant

of

operated

a
by

dam
APCO

and
at

hydroSmith

Mountain.”
APCO removed the case to the United States District Court
for the Western District of Virginia.

APCO asserted that the

federal district court had subject matter jurisdiction because
the

Pressls’

property

lies

within

the

project

boundary

for

APCO’s Smith Mountain hydroelectric project, which APCO operates
under

a

license

issued

by

the

Federal

Energy

Regulatory

Commission (“FERC”).
The

district

court

agreed.

It

concluded

that

it

had

jurisdiction under both 28 U.S.C. § 1331 and 16 U.S.C. § 825p.
The court then granted APCO’s motion to dismiss, analyzing the
easement under Virginia law.

The court held that the plain

language of the flowage easement gave APCO the right to remove
any dock built below the 800-foot elevation contour and that
APCO’s exercise of that right would be in furtherance of the
original purpose of the easement -- to allow APCO to operate its
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hydroelectric project.

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The district court also held that the

Pressls needed to raise any complaints about APCO’s actions with
FERC

prior

to

filing

suit.

The

Pressls

the

Pressls

renew

their

timely

noted

this

appeal.
Before

that

the

federal district court lacked subject matter jurisdiction. 1

We

review

us,

questions

as

to

subject

matter

argument

jurisdiction

de

novo.

Dixon v. Coburg Dairy, Inc., 369 F.3d 811, 815-16 (4th Cir.
2004) (en banc).

The party seeking to remove a case to federal

court has the burden of demonstrating federal jurisdiction.
at

816.

necessary.”

“If

federal

jurisdiction

is

doubtful,

a

remand

Id.
is

Mulcahey v. Columbia Organic Chems. Co., Inc., 29

F.3d 148, 151 (4th Cir. 1994).

APCO argues that jurisdiction

lies under 18 U.S.C. § 1331 and 16 U.S.C. § 825p.

We consider

each statute in turn.

II.
To determine whether a case “arises under” federal law for
the purposes of establishing federal question jurisdiction under
28 U.S.C. § 1331, we follow the well-pleaded complaint rule.
Jurisdiction exists “only when a federal question is presented
1

The Pressls also challenge the district court’s dismissal
of their complaint on the merits.
Because we hold that the
court did not have subject matter jurisdiction, we do not reach
that contention.
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on

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the

face

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of

the

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plaintiff’s

properly

pleaded

complaint.”

Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987).

It is

not enough that there may be a defense grounded in federal law
or that the complaint anticipates and rebuts such a defense.
Id. at 392-93.
In

an

action

for

declaratory

judgment,

however,

“the

federal right litigated may belong to the declaratory judgment
defendant

rather

than

the

declaratory

judgment

plaintiff.”

Columbia Gas Transmission Corp. v. Drain, 237 F.3d 366, 370 (4th
Cir. 2001).

Under this “coercive action doctrine,” although the

declaratory judgment plaintiff does not assert a claim arising
under federal law, federal question jurisdiction exists if “the
complaint alleges a claim arising under federal law that the
declaratory judgment defendant could affirmatively bring against
the declaratory judgment plaintiff.”
Charles

Alan

Wright,

et

al.,

Id.

Federal

See generally 13D

Practice

and

Procedure

§ 3566 (3d ed.), Westlaw (database updated April 2016).
In this case, the Pressls seek a declaratory judgment that
APCO

does

not

possess

rights

under

the

flowage

easement

to

prevent or regulate construction of a dock on their property.
APCO maintains that federal question jurisdiction lies because
its hypothetical coercive suit, seeking a declaration as to its
rights to prevent or regulate construction or an injunction to
enforce those rights, would arise under federal law.
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“[T]he vast majority” of cases arising under federal law
“are those in which federal law creates the cause of action.”
Merrell Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808 (1986).
Cases

may

also

arise

under

federal

law,

however,

when

“the

vindication of a right under state law necessarily turn[s] on
some construction of federal law.”

Id. (quoting Franchise Tax

Bd. v. Constr. Laborers Vacation Tr., 463 U.S. 1, 9 (1983)).
APCO admits that neither the Pressls’ complaint nor APCO’s
hypothetical coercive suit alleges a federal cause of action.
APCO

contends

because

its

that

rights

federal
under

jurisdiction

state

law

nonetheless

necessarily

construction of its federal license.

turn

exists
on

the

For a federal court to

have jurisdiction in these circumstances, the federal issue must
be

“(1)

necessarily

substantial,
without

and

(4)

disrupting

Congress.”

raised,
capable

the

(2)
of

actually

resolution

federal-state

in

balance

disputed,
federal

(3)
court

approved

by

Gunn v. Minton, 133 S. Ct. 1059, 1065 (2013); see

also Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545
U.S. 308, 312-14 (2005).

Federal jurisdiction will lie only if

a case meets all four requirements.

Gunn, 133 S. Ct. at 1065.

A.
i.
We first address whether this case necessarily raises a
federal question.

APCO emphasizes that the property subject to
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the flowage easement lies within the project boundary for the
Smith Mountain Hydroelectric Project that APCO operates.
imposes

certain

duties

on

APCO

for

managing

FERC

development

and

construction within the project boundary -- including managing
the

construction

of

docks.

APCO

argues

that

the

Pressls’

complaint necessarily raises federal issues because it seeks a
declaration

that

APCO

does

construction of a dock.

not

have

authority

to

regulate

According to APCO, a court must examine

APCO’s authority under its federal license to adjudicate the
issue.

Appellee Br. at 13-15, 20-21, 25-26.

In

proffering

complaint.
duties

to

The

this

argument,

Pressls

FERC.

Nor

do

do

not

they

APCO

misreads

challenge
dispute

the

APCO’s

the

Pressls’

substantial

extent

of

APCO’s

authority over the property in the event the flowage easement
provides APCO with sufficient property rights.
The Pressls maintain only that APCO has not acquired the
property right to constrain the Pressls’ construction of a dock.
Because neither the Federal Power Act nor APCO’s FERC license
provides APCO with the property rights necessary to operate the
hydroelectric

project,

see,

e.g.,

Appalachian

Power

Co.,

153

FERC ¶ 61299, at ¶ 29 (Dec. 17, 2015), APCO must acquire these
rights either through condemnation or contract.
(yet)

condemned

maintain

that

any

the

of

the

contract

Pressls’
provision
8

land,
at

and

issue

APCO has not
the
here

Pressls
--

the

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flowage

easement

property

rights.

complaint

--

does

not

In

accord

that

asserts

Pg: 9 of 16

the

provide

with

APCO

this

with

theory,

“controversy

between

sufficient

the

Pressls’

the

parties

regard[s] the rights granted . . . pursuant to the . . . flowage
easement” and “aver[s] that the flowage easement does not give
APCO the right to regulate any use which [the Pressls] may make
of their property.”

This controversy does not necessarily raise

a federal question.
ii.
Alternatively,
necessarily
easement.
building

APCO

arises

in

maintains

that

interpreting

the

a

federal

scope

of

question

the

flowage

It argues that its right to prevent the Pressls from
a

dock

derives

from

two

easement

provisions:

the

provision allowing APCO to “overflow and/or affect” the property
“by

reason

of

station” and

the

the

operation

provision

of

[the

allowing

Smith

APCO

to

Mountain]
remove

power

“any

and

all . . . structures.”

APCO asserts that, under Virginia law, a

reasonableness

based

inquiry

on

the

easement limits these broad powers.

original

purpose

of

the

Because the purpose of the

easement was to allow it to construct and operate a dam and
power station, APCO contends that a court must interpret its
FERC license to determine the reasonable limit of its rights
under the easement.

Appellee Br. at 21-22.

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But a claim “necessarily depends on a question of federal
law only when every legal theory supporting the claim requires
the resolution of a federal issue.”
Franchising,

LLC,

757

F.3d

Dixon, 369 F.3d at 816).
interpreting

the

177,

Flying Pigs, LLC v. RRAJ

182

(4th

Cir.

2014)(quoting

Accordingly, if even one theory for

flowage

easement

does

not

involve

interpretation of federal law, the claim does not “arise under”
federal law.

Dixon, 369 F.3d at 817.

Because of this requirement, we have rejected a similar
contention
depends

that

on

a

interpretation

question

of

of

federal

an
law.

easement
See

necessarily
Columbia

Gas

Transmission Corp. v. Drain, 191 F.3d 552, 559 (4th Cir. 1999).
There, a company regulated by FERC under the Natural Gas Act
brought an action in federal court to enforce an easement for
operation of a gas line.

Id. at 554.

Because the easement did

not explicitly specify the width of the right of way, the court
needed to determine what width was “reasonably necessary” under
state law.

Id. at 557.

We explained that the determination of

that question is often reached without reference to federal law
or regulations.

Id. at 558.

Accordingly, we held that the

state law easement claim did not necessarily raise issues of
federal law.

Id. at 559; see also Columbia Gas Transmission,

LLC v. Singh, 707 F.3d 583, 589-90 (6th Cir. 2013)(holding that
interpretation of an easement owned by an entity subject to FERC
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regulation did not necessarily raise a federal question because
the obligation created by the federal regulation was just one of
many factors considered in the state law inquiry). 2
The same analysis applies in this case.

Under Virginia

law, the most important factor in interpreting an easement is
the language of the easement itself.
D&J

Assocs.,

language
court

of

553
a

S.E.2d

deed

interpreting

is
it

725,

728

‘clear,
‘should

Pyramid Dev., L.L.C. v.
(Va.

2001)

unambiguous,
look

no

and

(“[W]hen

further

the

explicit,’
than

the

a

four

corners of the instrument under review.’” (quoting Langman v.
Alumni Ass’n of Univ. of Virginia, 442 S.E.2d 669, 674 (Va.
1994)).
APCO

Indeed, in holding that the easement at issue here gave

the

right

to

remove

any

structure

below

the

800-foot

elevation contour, the district court relied primarily on the
easement’s text.
APCO’s

license

easement.

It did not need to analyze the meaning of
to

determine

the

reasonable

limits

of

the

The court simply noted that the original purpose of

2

VA Timberline, L.L.C. v. Appalachian Power Co., 343 F.
App’x 915 (4th Cir. 2009) (per curiam), an unpublished opinion
on which APCO relies, offers the company little assistance.
There we upheld the grant of summary judgment to APCO on a claim
involving an easement owner’s right to build a dock.
But the
conveyances at issue in Timberline were explicitly made subject
to
APCO’s
FERC
license
“and
any
amendments
thereof
or
supplements thereto.”
Id. at 916.
Because the plaintiff’s
easement only gave it the right to construct docks that complied
with APCO’s license, interpreting the license was necessary to
resolve the case.
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the

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easement

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was

to

allow

project regulated by FERC.

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APCO

to

operate

a

hydroelectric

Such tangential reference to federal

law does not suffice to create “arising under” jurisdiction.
In sum, this case does not necessarily raise any federal
issue.
B.
Moreover,
disputed.

no

federal

federal

There

is

license.

no

Nor

obligations to FERC.

question
dispute

is

in

over

there

any

this
the

case

is

validity

dispute

actually
of

to

as

APCO’s
APCO’s

The Pressls challenge only whether the

flowage easement by its terms allows APCO to prevent them from
building a dock.

This seems a simple enough dispute, which the

district court may well have properly resolved -- had it arisen
under federal law.

But, of course, it did not.

Rather, this

case presents solely a dispute as to state property law.
C.
Finally,

we

believe

that

any

federal

interest

in

interpreting the flowage easement is not substantial and that
asserting
disrupt

federal
the

jurisdiction

congressionally

over

approved

cases

like

this

federal-state

would

balance.

State courts are just as able (perhaps more able) to interpret
and

enforce

the

property

rights

governed by state law.

12

conveyed

through

instruments

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Undoubtedly, there is a federal interest in ensuring the
effective operation of hydroelectric projects.
property

disputes

interest.

in

state

court

does

not

But resolving
undermine

that

After all, if a state court ultimately holds that

APCO did not acquire all of the property rights it needs to
operate the project in compliance with its license, APCO can
obtain those rights through contract or through eminent domain.
16 U.S.C. § 814.

Thus, a ruling against APCO in this case could

not substantially affect federal interests.

The interpretation

of

question

a

state

conveyance

is

a

quintessential

of

state

property law, and Congress has limited our jurisdiction over
such cases.

Accordingly, we conclude that 28 U.S.C. § 1331

provides no basis for federal jurisdiction over this case.

III.
Finally, we turn to the question of whether the exclusive
jurisdiction

provision

in

the

Federal

Power

§ 825p, provides a basis for jurisdiction.

Act,

16

U.S.C.

Section 825p grants

federal district courts exclusive jurisdiction over “all suits
in equity and actions at law brought to enforce any liability or
duty created by, or to enjoin any violation of, [the Federal
Power Act] or any rule, regulation, or order thereunder.”
U.S.C. § 825p.

13

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Neither the Pressls’ suit seeking to define the scope of
the

flowage

easement

nor

APCO’s

hypothetical

coercive

action

would be brought to “enjoin any violation of” the Federal Power
Act.

As discussed above, the Pressls seek only to determine

APCO’s property rights.

They do not allege that APCO violated

its license or its duties to FERC.

And, since FERC regulates

only APCO, the Pressls themselves could not violate the Federal
Power Act by constructing a dock.
APCO nevertheless maintains that § 825p provides a basis
for federal jurisdiction here.
under

the

Federal

Power

APCO notes that it has a duty

Act

to

manage

property

project boundary in compliance with its license.
contends

that

its

hypothetical

suit

seeking

within

the

The company
a

declaratory

judgment that APCO has sufficient property rights to meet its
federal obligations -- or a suit to enjoin the Pressls from
constructing a dock -- would thus be “brought to enforce [a]
liability

or

duty

created

by”

the

Federal

Power

Act.

The

Supreme Court’s recent decision in Merrill Lynch, Pierce, Fenner
& Smith Inc. v. Manning, 136 S. Ct. 1562 (2016), dooms this
argument.
In

Merrill

identical

Lynch,

“brought

to

the

Court

enforce”

interpreted

language

in

the

the

nearly

exclusive

jurisdiction provision of § 27 of the Securities Exchange Act of
1934.

The Court held that the jurisdictional test established
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by § 27 of the Exchange Act is the “same as the one used to
decide if a case ‘arises under’ a federal law” under 28 U.S.C.
§ 1331.

Id. at 1566.

In doing so, the Court rejected the

argument that the “brought to enforce” language provides broad
jurisdiction

over

complaints

that

established by the federal law.

simply

mention

Id. at 1568-69.

a

duty

Rather, claims

are “brought to enforce” such a duty only if their “very success
depends on giving effect to a federal requirement.”
1570.
the

Id. at

The Court further explained that this interpretation of
“brought

precedents,

to

enforce”

preserves

the

language
balance

best

between

comports
federal

with
and

courts, and provides a judicially administrable rule.

its
state

Id. at

1567-68; see also Pan Am. Petroleum Corp. v. Superior Court of
Del. In & For New Castle Cty., 366 U.S. 656, 664 (1961).
Of

particular

import

here,

the

Merrill

Lynch

Court

expressly noted that the “brought to enforce” language in the
statute before it -- § 27 of the Exchange Act -- was materially
indistinguishable

from

§ 825p

in

statute on which APCO relies.

the

Federal

Power

Act,

the

The Supreme Court specifically

identified § 825p as a provision with “[m]uch the same wording”
as

§

27

of

the

Exchange

Act

and

suggested

that

provisions should be interpreted in the same way.
Lynch, 136 S. Ct. at 1568 & n.3, 1572, 1575.

15

the

two

See Merrill

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Because we have held that this case does not “arise under”
federal law for purposes of federal question jurisdiction under
28 U.S.C. § 1331, we must also hold that there is no basis for
exclusive jurisdiction under 16 U.S.C. § 825p.

IV.
For the foregoing reasons, we vacate the judgment of the
district court and remand the case.
VACATED AND REMANDED

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