EQT Gathering, LLC v. A Tract of Property Situated in Knott County, Kentucky
MEMORANDUM OPINION & ORDER: (1) The property owners motion to dismiss for lack of standing, R. 41 , is DENIED. (2) The property owners motion to certify or to stay, R. 45 , is DENIED. (3) The plaintiffs motion for partial summary judgment, R. 57 , is DENIED. (4) The Court will enter a separate Order setting pretrial deadlines and a trial date for the bench trial on the takings issue. Signed by Judge Amul R. Thapar on 8/26/13.(MJY)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
EQT GATHERING, LLC,
A TRACT OF PROPERTY SITUATED
IN KNOTT COUNTY, KENTUCKY,
Corresponding to Property Tax Map
Number 87, Parcel 47 (160 acres), et al.,
Civil No. 12-58-ART
OPINION AND ORDER
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.
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. 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.
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
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
The complaint lists eleven property rights. R. 1 at 6–7 ¶ 14(a)-(l). Some of those rights relate to the
construction of a pipeline. See id. ¶ 14(b), (e). Others relate to pipeline use and maintenance. See id. at 7 ¶
(f)-(i). And some restrict what others can do to or around the pipeline. See id. at 7 ¶ (j)-(k).
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
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 that
condemnation can redress, it has standing to bring this condemnation suit.
The property owners’ argument to the contrary is misguided. As they see it, EQT
cannot have its property rights and condemn them too. If EQT thinks that it already owns the
property rights that it seeks to condemn, then it has no injury that condemnation could fix.
See R. 41-1 at 7–8. As the property owners concede, they have not directed the Court to a
case that supports their position. See R. 63 at 1. Perhaps the Court should not fault the
property owners for that. After all, how often does this situation—where a party offers to
pay good money for something it thinks it owns already—arise? Even so, the property
owners’ argument is flawed for another reason. Just because EQT believes it should win in
the state court trespass action does not mean that it will win. As just explained, the dispute in
the state court trespass action is an injury that gives EQT standing. In this way, EQT’s injury
is not so different than the injury of a plaintiff in a quiet title suit. In a quiet title suit, both
parties have asserted some claim to a piece of property, and the court resolves the dispute.
There, as here, the injury is the competing claim of ownership. Cf. Haws v. Short, Ky., 304
S.W.2d 924, 925 (Ky. 1957) (“It is fundamental that in an action to quiet title the plaintiff
must allege and prove both title and possession.”).
EQT’s positions in the state court trespass action and this condemnation action can be
thought of as an alternative pleading, one that takes place across two cases. See United
States v. San Geronimo Dev. Co., 154 F.2d 78, 82–83 (1st Cir. 1946) (describing the United
States’ claim that it held a valid lease to certain property that it also sought to condemn as an
alternative pleading). The property owners concede that they have not provided the Court
with any authority for their argument that such an alternative pleading presents a standing
problem. R. 63 at 1. The Supreme Court sanctioned the tactic in United States v. 93.970
Acres of Land, 360 U.S. 328 (1959). There, the United States argued that it had validly
revoked a lease, meaning the condemnee had no interest in the subject property. See id. at
329–30. The United States also sought to condemn the lease, just in case. See id. at 330.
The Supreme Court held that the United States could raise both arguments in one cause of
action and did not mention standing. See id. at 332; cf. United States v. Hays, 515 U.S. 737,
742 (1995) (explaining that “federal courts are under an independent obligation” to ensure
the parties before them have standing).
EQT also has standing to condemn the second category of property rights, those that
it does not claim to own already. The reason for this is simple. EQT claims that it needs
those property rights to maintain the pipeline, and the property owners have not disputed that
claim. So, the lack of those property rights is an injury that condemnation would redress.
In sum, EQT has standing to condemn both the property rights that it claims to own as
a defense to the state court trespass action and the property rights that it does not claim to
own. For that reason, the property owners’ motion to dismiss for lack of standing will be
Certification of the Question Whether Section 278.502 is Constitutional Is Not
The property owners moved to certify the question whether Ky. Rev. Stat. § 278.502
violates the Kentucky Constitution as applied in this case. R. 45. Kentucky Rule of Civil
Procedure 76.37(1) permits a federal district court to certify “questions of law” to the
Kentucky Supreme Court only where “it appears to the party or the originating court that
there is no controlling precedent in the decisions of the [Kentucky] Supreme Court and the
Court of Appeals.” The Kentucky courts have repeatedly upheld the constitutionality of
section 278.502. So, certification is inappropriate.
In an earlier motion to dismiss, the property owners claimed that the constitutionality
of section 278.502 was an open question, and the Court explained that it was not. There, the
property owners argued that section 278.502 violated the Kentucky Constitution. They asked
this Court to abstain from hearing the case and let the Kentucky courts hear the challenge. R.
21 at 26–28. The Court explained that the “Kentucky Supreme Court has repeatedly held
that § 278.502 (and previous versions of the statute) does not violate the Kentucky
Constitution.” R. 29 at 9 (citing four cases). As a result, the Court declined to abstain. Id.
As the property owners see it, the question is actually open because those Kentucky
Supreme Court precedents can be distinguished, are wrong, and will likely be overruled.
First, they cite three condemnation-related cases and argue that the Kentucky Supreme Court
has not ruled on the constitutionality of section 278.502 in light of those cases. R. 45-1 at 5–
6. Next, they claim that that those precedents rest on a shaky foundation. See id. at 7–8.
Finally, they argue that the trend in the Kentucky courts is to narrow the reach of
condemnation statutes like section 278.502. Id. at 8–9.
Those arguments do not provide a basis for certification because clear, controlling
precedent upheld the constitutionality of section 278.502. Kentucky Rule of Civil Procedure
76.37(1) permits certification only where “there is no controlling precedent in the decisions
of the [Kentucky] Supreme Court and the Court of Appeals.” Four published decisions of
the Kentucky Supreme Court clearly and unquestionably held that section 278.502 is
constitutional under the Kentucky Constitution. R. 29 at 9. Such decisions are “controlling”
when this court sits in diversity jurisdiction. See Allstate Ins. Co. v. Thrifty Rent-A-Car Sys.,
Inc., 249 F.3d 450, 454 (6th Cir. 2001) (“In diversity cases such as this, we apply state law in
accordance with the controlling decisions of the state supreme court.”).
owners’ arguments may be reasons why the Kentucky Supreme Court cases were wrongly
decided or should be overruled, but they are not reasons why those decisions are not
“controlling precedent” in this case. See Shaheen v. Yonts, 394 F. App’x 224, 233 n.7 (6th
Cir. 2010) (explaining that federal courts should not “trouble . . . state courts every time an
arguably unsettled question of state law comes across our desks”).
What’s more, the property owners offer only weak arguments to challenge the
validity of that controlling precedent. The property owners point to three Kentucky Supreme
Court cases, R. 45-1 at 5, none of which are on point. The first held an Act unconstitutional
because it allowed a local government to condemn property and convey it to private
developers for commercial and industrial uses.
S.W.2d 3, 7–8 (Ky. 1979).
See City of Owensboro v. McCormick, 581
The second held a local ordinance condemning property
unconstitutional because no evidence in the record demonstrated that the property was
blighted, as required by the relevant condemnation statute.
See Prestonia Area
Neighborhood Ass’n v. Abramson, 797 S.W.2d 708, 712 (Ky. 1990). And the third held that
a property owner has a right to repurchase property after a taking when it turns out that the
property is not needed. See Miles v. Dawson, 830 S.W.2d 368, 371 (Ky. 1991). Stating the
holdings of these cases is enough to show that they do not cast doubt on (or even relate to)
the constitutionality of section 278.502.
The property owners also appear to move for a stay based on arguments raised in
briefs they have filed on other motions in this case and a separate case. See, e.g., R. 45 at 1–
3. If the Court excised those referenced documents and added them to the defendant’s
motion to stay, the motion would exceed the page limit in Local Rule 7.1(d).
importantly, the property owners are asking the Court to cut and paste from three different
documents and restructure them into one, coherent brief. That is the job of their counsel, not
the Court. See Northland Ins. Co. v. Stewart Title Guar. Co., 327 F.3d 448, 452 (6th Cir.
2003) (describing such attempts to incorporate arguments by reference as “a pointless
imposition on the court’s time” and explaining that parties “must make all arguments
accessible to the judges, rather than ask them to play archaeologist with the record” (quoting
DeSilva v. DiLeonardi, 181 F.3d 865, 866–67 (7th Cir. 1999))). So, the Court will not
consider the arguments made in those cross-referenced documents.
Finally, the property owners ask the Court to stay the case and allow the state court to
resolve the trespass action first. R. 45-1 at 13–16. The property owners point out that the
state court trespass action could resolve the title question. They suggest that if that question
is resolved in EQT’s favor, EQT might drop this condemnation suit.
In light of that
possibility, the Court should stay this case to avoid wasting resources. Id. at 16. In response,
EQT has stated on the record that it seeks more property rights in this condemnation action
than it claims to own in the state court trespass action. R. 63 at 2. For that reason, the state
court trespass action will not eliminate the need for this condemnation action. And this
Court has already explained that a similar or related action in state court “does not generally
bar a plaintiff from filing suit in federal court.” R. 29 at 5 (citing Colo. River Water
Conservation Dist. v. United States, 424 U.S. 800, 817 (1976)). In response to the property
owners’ first motion to stay, the Court addressed the many abstention doctrines raised in that
motion and explained why they did not apply in this case. See id. at 6–10. This second
request includes no new arguments, so the Court’s earlier explanations still apply.
For these reasons, the Court will not certify the question whether section 278.502
violates the Kentucky Constitution or stay this case in favor of the state court trespass action.
Summary Judgment in Favor of EQT Is Not Appropriate.
To prevail on a motion for summary judgment, the moving party must show that there
are no genuine issues of material fact in dispute. See Fed. R. Civ. P. 56. The moving party
bears the initial burden of explaining why it believes that standard has been met. Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). The nonmoving party must then respond with
“specific facts showing that there is a genuine issue for trial.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986) (quoting Fed. R. Civ. P. 56(e)). The Court then decides
whether there is “a sufficient disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law.” Id. at 251–52. When making that
decision, the Court views the evidence and draws “all justifiable inferences” in favor of the
nonmoving party. Id. at 255. A mere “scintilla” of evidence in support of the non-moving
party's position is insufficient to defeat summary judgment. Id. at 251.
EQT filed a motion for partial summary judgment on the question of its authority to
condemn the subject property under section 278.502. R. 57. Section 278.502 contains
several requirements a pipeline company must meet before it may invoke eminent-domain
authority. The property owners argue that summary judgment is inappropriate because EQT
has not met three of those requirements. R. 58. The property owners have raised a genuine
issue of material fact as to two of those requirements, so summary judgment is inappropriate
at this time.
Section 278.502 grants condemnation authority to pipeline companies under certain
conditions. The statute reads:
Any corporation or partnership organized for the purpose of, and any
individual engaged in or proposing to engage in, constructing, maintaining, or
operating oil or gas wells or pipelines for transporting or delivering oil or gas,
including oil and gas products, in public service may, if it is unable to contract
or agree with the owner after a good faith effort to do so, condemn the lands
and material or the use and occupation of the lands that are necessary for
constructing, maintaining, drilling, utilizing, and operating pipelines . . . .
Ky. Rev. Stat. § 278.502. The property owners argue that: (1) EQT is not a pipeline
company “in public service;” (2) EQT did not engage in a “good faith effort” to purchase
their land; and (3) condemning their property is not necessary. R. 58 at 3–5, 9–12. The
defendants’ second and third arguments raise a genuine issue of material fact.2
The Public Service Requirement:
By statute, Kentucky has declared that the
transportation of natural gas by a common carrier is a public service. The property owners
do not contest that EQT is both a common carrier of natural gas and a public service
company under Kentucky law. See Ky. Rev. Stat. §§ 136.120, 278.470; see also R. 57-6.
The Kentucky Legislature has determined that the transportation of natural gas by a common
carrier is in the public service. See id. § 416.675(2)(d) (declaring that “the use of property
for the . . . operation of public utilities or common carriers” is a public use for the purpose of
condemnation). Thus, the Mayking Node 3 pipeline is in the “public service.” See Milam v.
Viking Energy Holdings, LLC, 370 S.W.3d 530, 533–35 (Ky. Ct. App. 2012) (holding that a
The parties disagree on the burden of proof in this case. Kentucky law governs the burden of proof in
diversity actions such as this case. See Safeco Ins. Co. of Am. v. City of White House, Tenn., 191 F.3d 675, 681
(6th Cir. 1999). In Henderson v. City of Lexington, 111 S.W. 318 (Ky. 1908), the Kentucky Supreme Court
distinguished between condemnations by a governmental entity and a private entity. When the condemnor is
the government, the taking is presumed to be necessary for a public purpose. Id. at 322. When the condemnor
is a private entity, “it must, if the matter is put in issue, affirmatively show by evidence that the property is
needed for its use in the performance of its duties to the public.” Id. EQT argues that the property owners bear
the burden of disproving the taking’s validity in this case, but it relies only on cases that deal with takings by
government entities. R. 57-1 at 11. The burden of proof is on EQT because Henderson has not been overruled.
common carrier that transported natural gas for public consumption was operating in the
“public service” under section 278.502).
The property owners argue that this Court cannot rely on these statutory findings but
must instead independently assess whether this particular pipeline will be a public use. R. 58
at 3–9. The first problem with their argument is that it is not on point. Section 278.502
creates a set of statutory requirements that a pipeline must meet before it can exercise
condemnation authority. The property owners do not argue that EQT has not met those
statutory requirements. Instead, they argue that the requirements in section 278.502 are not
enough to ensure that all condemnations under the statute meet the constitutional
requirements for a taking.
In other words, they concede that EQT has condemnation
authority under the statute but believe that the grant of authority is unconstitutional. The
proper place for that argument is a cross-motion for summary judgment. The property
owners have not filed such a motion, and the time to do so has passed. The second problem
is that section 278.502 has repeatedly been upheld against similar constitutional challenges.
See R. 29 at 9. The property owners cite several cases and claim that those cases require
condemned property be fully open to the public for that property to be in the public use. R.
58 at 4–8 (citing McCormick, 581 S.W.2d 3, and Henderson v. City of Lexington, 111 S.W.
318 (Ky. 1908)). But those cases stand only for the uncontroversial proposition that property
cannot be constitutionally condemned unless it will be put to a public use. Not only does the
property owners’ argument lack precedential support, it lacks logical support.
regulated pipelines that carry highly flammable materials need not be fully open to the public
to be a public use. EQT permits other natural gas companies to use their pipeline to transport
natural gas. R. 57-2 at 3; R. 59-1. So, the Mayking Node 3 pipeline is available for public
use by the portion of the public relevant here—natural gas transportation companies.
The Good Faith Requirement: Under section 278.502, a natural gas pipeline
company does not have condemnation authority unless “it is unable to contract or agree with
the owner after a good faith effort to do so.”
The parties have introduced conflicting affidavits on the issue of whether EQT
offered to purchase the property owners’ property outright before filing this condemnation
action.3 EQT filed an affidavit by Kimberly McCann, its counsel in both the state trespass
case and this case. R. 57-3. In that affidavit, Ms. McCann states that she extended an initial
offer of $90,000 to purchase the property rights at issue in this case and later increased that
offer. R. 57–3 at 2. EQT also filed a copy of the letter it sent to the defendants offering to
purchase an easement and settle the defendants’ claims. R. 59-4. The property owners filed
an affidavit by Adam Collins, their attorney in the state trespass action. Mr. Collins states
that EQT never offered to purchase the same property rights that it seeks to condemn in this
action. R. 58-1 at 2.
The good faith requirement in section 278.502 appears to require at least one offer to
purchase the property to be condemned. This Court found only one case interpreting the
“good faith effort” requirement in section 278.502. See Milam, 370 S.W.3d at 535–36
(finding that company that attempted to negotiate complied with the “good faith effort”
The following facts are not in dispute. EQT and the property owners attended a mediation session on June
13, 2012. During that mediation, the parties discussed settling the trespass action. R. 57-3 (Kimberly McCann
Affidavit); R. 58-1 (Adam Collins Affidavit). The property owners’ initial demand was $6 million, which was
rejected. R. 57-3 at 2; R. 58-1 at 2. Later that day, EQT filed this condemnation suit in light of the property
owners’ refusal of what EQT believed to be “reasonable settlement offers.” R. 57-3 at 2; R. 1 (complaint filed
on June 13, 2012).
The general Kentucky Eminent Domain Act contains an analogous
“reasonable effort” requirement. Ky. Rev. Stat. § 416.550. To satisfy that requirement, the
would-be condemnor must have made “an effort to effect a contract of purchase satisfactory
to the condemnor.” Usher & Gardner, Inc. v. Mayfield Indep. Bd. of Ed., 461 S.W.2d 560,
562–63 (Ky. 1970) (reading a “good faith” requirement into Ky. Rev. Stat. § 162.030, which
grants local school boards eminent domain authority); see also Parker v. Louisville &
Jefferson Cnty. Metro. Sewer Dist., No 2011-CA-000549-MR, 2012 WL 1556388, at *1–*2
(Ky. Ct. App. May 4, 2012) (summarizing case law and explaining that the condemnor must
at least offer to buy the property at issue). Thus, at least one purchase offer is required to
constitute “good faith” under section 278.502.
At this stage, however, summary judgment would be improper. This Court cannot
weigh EQT’s affidavit and filing against the property owners’ affidavit and determine which
is more credible. See Bennett v. City of Eastpointe, 410 F.3d 810, 817 (6th Cir. 2005) (“In
reviewing a summary judgment motion, credibility judgments and weighing of the evidence
are prohibited.”). The conflicting affidavits therefore raise a genuine issue of material fact as
to whether EQT offered to purchase the same property that it seeks to condemn from the
property owners before filing this condemnation action. Therefore, summary judgment on
the takings issue in EQT’s favor is not appropriate.
The Necessity Requirement: Section 278.502 grants natural gas pipeline companies
the authority to condemn only the property that is “necessary for constructing, maintaining,
drilling, utilizing, and operating pipelines.” Necessity is a flexible term. See Petroleum
Exploration v. Hensley, 213 S.W.2d 262, 263 (Ky. 1948) (“The question is: In the light of the
facts here, is the course as desired a practical necessity?”). The property owners claim that
condemnation is not necessary for four reasons, one of which raises a genuine issue of
material fact that precludes summary judgment.
First, the property owners argue that EQT can simply relocate the pipeline off the
defendants’ property instead of condemning that property. R. 58 at 9–10. In support, the
property owners point to an affidavit from a contractor stating that he would be willing to
move the pipeline for $50,000. Id. That affidavit is not part of the record because it was
filed in a separate case and the property owners have not filed it in this case. Even if it were,
the affidavit shows only that one person would be willing to move the pipeline for a certain
amount. But whether relocating the pipeline is possible is irrelevant. As this Court has
already explained, the relevant issue is whether “it is at least plausible that condemnation is a
practical necessity.” R. 29 at 12.
EQT has established that relocation of the pipeline is impractical in this case. EQT
has filed an affidavit from Samuel Smallwood, the Regional Director of Land. R. 57-2. Mr.
Smallwood states that the current pipeline location was chosen because it minimized the cost
of the project, the impact on the surrounding properties, and the risk of “slides and slippages”
that might cause “line ruptures and safety concerns.” Id. at 2. The property owners have not
challenged his assessment. So, although it is possible to relocate the pipeline, doing so
involves serious costs and risks. Condemning the property owners’ property in order to keep
the pipeline in its current location is therefore a practical necessity.
Second, the property owners claim that EQT manufactured any necessity for
condemnation by purposefully placing the pipeline on their property. R. 58 at 11–12. In
support of that claim, the property owners point to an affidavit from Jeffrey L. Hall that was
filed in a separate case. See Hall v. EQT Gathering, LLC, Pikeville Civil No. 12-145 (E.D.
Ky. 2013), R. 12-3. In that affidavit, Hall describes a conversation that he had with Steve
Burgess, one of EQT’s agents, while the pipeline was being built. Burgess told Hall that his
supervisors told him that EQT knew the pipeline was being built on the property owners’
properties but did not want to correct the mistake. Id. at 2. Instead, Burgess’s supervisors
told him that EQT preferred to wait until they sued in trespass. Id.
At summary judgment, the Court may not consider these statements unless they are
admissible. That is a problem for the property owners, because the Hall affidavit contains
double-hearsay. Hearsay is a statement that the declarant “does not make while testifying at
the current trial or hearing” and that is offered “to prove the truth of the matter asserted in the
statement.” Fed. R. Evid. 801(c). The first level of hearsay is Hall’s statement that Burgess
(the declarant) told him about Burgess’s supervisors’ intentions. The second level of hearsay
is Burgess’s statement that his supervisors (the declarants) told him that EQT intentionally
located the pipeline on the property owners’ property. There is an exception for hearsay
statements by a company’s employees that are offered against an opposing party. Fed. R.
Evid. 801(d)(2). To qualify for the exception, those statements must either be (1) “made by a
person whom the party authorized to make a statement on the subject” or (2) be “made by the
party’s agent or employee on a matter within the scope of that relationship and while it
existed.” Fed. R. Evid. 801(d)(2)(C)–(D). For a double-hearsay statement like this one “to
be admissible, each separate statement must . . . fall within a hearsay exception.” Back v.
Nestlé USA, Inc., 694 F.3d 571, 578 (6th Cir. 2012). As the party seeking to admit the
double-hearsay statement, the property owners bear the burden of demonstrating that the
statement falls within an exception to the hearsay rule. See Liadis v. Sears, Roebuck & Co.,
47 F. App’x 295, 303 (6th Cir. 2002).
The second statement by Burgess’s supervisors does not fall within the exception, so
the entire double-hearsay statement is inadmissible. The Hall affidavit does not identify the
names, titles, or job responsibilities of Burgess’s supervisors. Without that information, this
Court cannot find that those supervisors’ statements were either authorized or concerned
matters within the scope of their relationship with EQT. Put another way, this Court has no
way of knowing whether Burgess’s supervisors were involved in the decision about where to
locate the Mayking Node 3 pipeline or were just privy to some water-cooler gossip about the
pipeline. See Back, 694 F.3d at 577–78 (holding that a double-hearsay statement was
inadmissible where there was no evidence that the unidentified declarants were speaking on a
matter within their scope of employment). Because the statements by Burgess are double
hearsay, this Court cannot consider them on summary judgment.
Third, the property owners claim that EQT’s failure to realize that the pipeline was
located on their property until 2012 is evidence that EQT recklessly built the pipeline on
their land. R. 58 at 12. Their description of events is misleading. The uncontested affidavit
of Samuel Smallwood states that EQT “believed that the line would be constructed on . . .
property for which it had obtained . . . right of way agreements.” R. 57-2 at 2. The pipeline
was built in 2008, and EQT does not dispute that it made a mistake and actually constructed
the pipeline on the defendants’ land. R. 1 at 5; R. 57-1 at 3–4. The property owners sued
EQT and the other state court defendants in 2009. R. 57-1 at 4 n.2. The state court
defendants could not enter the property owners’ land to survey the pipeline until 2012, when
they secured a state court order allowing them to access the land. R. 57-1 at 4. EQT clearly
made a mistake when it constructed its pipeline on the property owners’ land. But there is no
evidence that the mistake was made “capriciously or wantonly” that would defeat EQT’s
claim of necessity. Hensley, 213 S.W.2d at 263.
Finally, in an encore performance of their standing argument, the property owners
argue that to the extent that EQT owns any of the property rights that it seeks to condemn,
condemnation is not necessary. R. 58 at 9. The property owners make this argument in a
few sentences, and EQT replies in kind. R. 59 at 10. As a matter of logic, the property
owners are correct: a condemnor cannot take what it already owns. And this makes sense,
after all what would EQT do, write itself a check for the property condemned?4 But, the
property owners did not affirmatively move for summary judgment.5 Rather, they are simply
One counterargument is that a condemnation action gives the condemnor a perfect title, one that is good
against all who may come forward in the future. But, EQT has not alleged, or even implied, that there are any
other parties that might come forward. Instead, the only identified parties with an interest in the property are
the property owners and EQT.
The dispute over current ownership makes this case different than so-called “friendly condemnation” cases.
There, the condemnee agrees to sell the property to the condemnor for a certain amount, but the condemnor is
concerned about defects in the condemnee’s title. The condemnor institutes condemnation proceedings so that
it can hold perfect title as against anyone with an interest in the property. Just compensation is awarded in the
amount agreed to by the condemnor and condemnee. See United States v. Certain Parcels of Land in Fairfax
Cnty., 345 U.S. 344, 348 (1953). In those cases, condemnation is not strictly necessary, in that the condemnor
could probably get by on the basis of the agreement with the condemnee. However, the condemnor is still
allowed to bring condemnation proceedings so that it can gain a perfect title. See id.; see also Straight Creek
Coal Mining Co. v. Straight Creek Coal & Coke Co., 122 S.W. 842, 843 (Ky. 1909) (describing a friendly
condemnation proceeding). The condemnor in a friendly condemnation case still needs to gain title, whereas
EQT might hold title to some of the property it seeks to condemn.
The property owners also did not move to dismiss on this ground, which they probably could have done on
the property EQT already owns. See Virginia Elec. & Power Co. v. King, 130 S.E.2d 318, 320 (N.C. 1963);
Grand River Dam Auth. v. Simpson, 136 P.2d 879, 881 (Okla. 1943); Houston N. Shore Ry. Co. v. Tyrrell, 98
S.W.2d 786, 794 (Tex. 1936); In re City of Yonkers, 23 N.E. 661, 663 (N.Y. 1890). While logic seems to
indicate that a condmnor cannot condemn its own property, some courts have suggested otherwise. See 93.970
Acres of Land, 360 U.S. at 332; United States v. 300 Units of Rentable Hous., Located on Approx. 57.81 Acres
trying to stop EQT from obtaining summary judgment. As such, the Court can only do what
it is already doing—deny EQT summary judgment. So while the argument may assist the
property owners down the road (i.e., if they move for a directed verdict on this ground), the
argument provides them nothing more at this point.
Accordingly, it is ORDERED that:
The property owners’ motion to dismiss for lack of standing, R. 41, is
The property owners’ motion to certify or to stay, R. 45, is DENIED.
The plaintiff’s motion for partial summary judgment, R. 57, is DENIED.
The Court will enter a separate Order setting pretrial deadlines and a trial date
for the bench trial on the takings issue.
This the 26th day of August, 2013.
of Eielson Air Force Base, 668 F.3d 1119, 1124 (9th Cir. 2012); United States v. Turner, 175 F.2d 644, 647–
48 (5th Cir. 1949); see also Fowler v. City of Warm Springs, 519 S.E.2d 703, 705 (Ga. Ct. App. 1999); see
also Shoemaker v. Dep’t of Transp., 241 S.E.2d 820, 823 (Ga. 1978); Ketchum Coal Co. v. Dist. Court of
Carbon Cnty., 159 P. 737, 742 (Utah 1916). The Court, however, need not resolve this issue since the property
owners neither moved to dismiss nor for summary judgment.
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