Michelle Knight, et al v. Enbridge Pipelines (Illinois), et al
Filing
Filed opinion of the court by Judge Easterbrook. The district court properly denied the Owner s request to quiet title in its favor. That portion of the judgment is AFFIRMED. The remainder of the judgment is VACATED, and the case is REMANDED with instructions to dismiss the farmability aspect of the case for want of a justiciable controversy. Richard D. Cudahy, Circuit Judge; Frank H. Easterbrook, Circuit Judge and William T. Lawrence, District Court Judge*. *Of the Southern District of Indiana, sitting by designation. [6590712-1] [6590712] [13-3481]
Case: 13-3481
Document: 29
Filed: 07/16/2014
Pages: 5
In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13-‐‑3481
MICHELLE KNIGHT and JEFFREY BARTH,
Plaintiffs-‐‑Appellants,
v.
ENBRIDGE PIPELINES (FSP) L.L.C. and CCPS TRANSPORTATION,
LLC,
Defendants-‐‑Appellees.
____________________
Appeal from the United States District Court
for the Central District of Illinois.
No. 12-‐‑1244 — James E. Shadid, Chief Judge.
____________________
ARGUED APRIL 10, 2014 — DECIDED JULY 16, 2014
____________________
Before CUDAHY and EASTERBROOK, Circuit Judges, and
LAWRENCE, District Judge.*
EASTERBROOK, Circuit Judge. In 1952 the owner of some
land in Illinois granted a pipeline operator an easement for
two pipelines across the parcel. The first was built immedi-‐‑
ately; the second, if built at all, had to be within 10 feet of the
* Of the Southern District of Indiana, sitting by designation.
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No. 13-‐‑3481
first. The operator promised that the land would remain
farmable. (The contract says that any pipeline must be “bur-‐‑
ied to such depth as will not interfere with such cultiva-‐‑
tion”.) The current suit is between successors to the parties
who made this bargain. We call them the Owner (of the
land) and the Operator (of the pipeline), using the singular
for simplicity although two parties are on each side.
In 2012 the Operator notified the Owner that it planned
to build a second pipeline. The Owner responded with this
quiet-‐‑title suit under Illinois law. It is in federal court under
the diversity jurisdiction. The Owner asked the court to de-‐‑
clare that the Operator has no right to build a second pipe-‐‑
line—either because the right to do so has expired or be-‐‑
cause another pipeline would violate the farmability condi-‐‑
tion of the 1952 contract. The Operator replied that the right
to build a pipeline has no time limit and that federal law, in
particular 49 U.S.C. §60104(c), preempts enforcement of the
farmability condition. The district court agreed with both of
these arguments and dismissed the suit.
Meanwhile a second pipeline has been built. It is located
not 10 but 50 feet from the first and so could not be con-‐‑
structed under the easement. The Operator used eminent
domain to obtain the rights needed to construct the second
pipeline. This does not make the controversy moot, howev-‐‑
er, because the Owner anticipates the construction of a third
pipeline that would be within 10 feet of the first. Once a
utility creates a transportation corridor, more construction
may follow. A quiet-‐‑title suit is live as long as there is a real
contest. The Operator continues to assert a right to build an-‐‑
other pipeline within 10 feet of the first, the Owner denies
that this right exists, and the existence of competing claims
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Filed: 07/16/2014
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to real estate means that the controversy is real. The value of
the land will rise if the Owner prevails, while the value of
the Operator’s interest will rise if it prevails.
But the fact that no construction is in prospect does mean
that the district court acted prematurely in resolving the Op-‐‑
erator’s defense under §60104(c). The Owner’s assertion that
a third pipeline would be incompatible with farming the sur-‐‑
face is just speculation. Until the details of a third pipeline’s
construction and operation are known, it is not possible to
determine what effect it would have on the land’s agricul-‐‑
tural use. The Operator promised to leave the surface farma-‐‑
ble. Failure to keep that promise could be addressed under
the law of contract. Only if a third pipeline prevents using
the land for agriculture would it be necessary (or for that
matter prudent) to determine whether §60104(c) gives the
Operator a federal right to destroy more of the land’s value
than it paid for in 1952—and, if it does, whether the Owner
would be entitled to just compensation for a taking. The Su-‐‑
preme Court summarized in Susan B. Anthony List v.
Driehaus, No. 13–193 (U.S. June 16, 2014), how close and
probable a loss must be to create a justiciable controversy.
The potential dispute about the effect of §60104(c) on a third
pipeline is well short of what the Court requires.
What remains is the Owner’s contention that the Opera-‐‑
tor’s right to build a new pipeline within 10 feet of the first
has expired. The Owner characterizes the right to build an-‐‑
other pipeline as an “option” whose unlimited duration vio-‐‑
lates the Rule Against Perpetuities. The Operator character-‐‑
izes the right to build a further pipeline as a part of an ease-‐‑
ment granted in 1952. If there is no option, the Rule Against
Perpetuities is irrelevant.
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What can be said for the Owner’s position is that, if the
Operator builds another pipeline, it must pay the Owner
$68. That could be characterized as an option’s strike price,
though maybe it is just (slight) compensation for the incon-‐‑
venience caused by digging and filling in a new trench.
What can be said for the Operator’s position is that the 1952
document—which is captioned “Right of Way”, the lan-‐‑
guage of easement rather than option—declares that it is ef-‐‑
fective when signed and “hereby grants” the Operator’s in-‐‑
terest. The specific language dealing with the additional
pipeline provides that the Owner “gives and grants unto
[the Operator] the right of way to construct and operate” a
second pipe within 10 feet of the first. That’s the language of
an immediate grant, not of an option promising to grant
something in the future if a condition is satisfied.
The district court concluded that the Operator has the
better of this exchange. Our task in diversity litigation is to
predict how the Supreme Court of Illinois would answer the
question. Contracts such as this must be common. We asked
counsel for the Owner whether any Illinois court, ever, had
characterized a contract of this kind as an option subject to
the Rule Against Perpetuities. Counsel answered “no,” and
if there is no support for the Owner’s position in Illinois case
law the game is up. (The Owner does not rely on a statute or
any gloss such as one of the ALI’s Restatements.)
Counsel asserted at oral argument that other states have
applied the Rule Against Perpetuities to transactions similar
to this one, and he asked us to predict that Illinois would
agree if given the chance. What a peculiar thing to say. The
Owner could have given the state judiciary that chance but
filed in federal court instead. We take state law as it is rather
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than predicting novel developments. See Prime Eagle Group
Ltd. v. Steel Dynamics, Inc., 614 F.3d 375, 379 (7th Cir. 2010).
And what other states deem similar transactions to be op-‐‑
tions? The Owner’s opening brief does not cite a single case
decided outside Illinois. The reply brief cites a few non-‐‑
Illinois cases, but only to distinguish them, as all tend to
support the Operator’s position. We have not gone looking
on our own. An appellant must develop an argument rather
than depend on the court of appeals to create one.
We have no reason to think that Illinois would call the
1952 contract an option or apply the Rule Against Perpetui-‐‑
ties. The district court therefore properly denied the Owner’s
request to quiet title in its favor. That portion of the judg-‐‑
ment is affirmed. The remainder of the judgment is vacated,
and the case is remanded with instructions to dismiss the
farmability aspect of the case for want of a justiciable con-‐‑
troversy.
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