The Esquire Group, Inc. v. Columbia Gas Transmission, LLC
Filing
17
MEMORANDUM OPINION AND ORDER denying Defendants' 7 Motion to Dismiss Complaint. Signed by Judge Robert C. Chambers on 10/7/2014. (cc: attys; any unrepresented parties) (mkw)
IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF WEST VIRGINIA
HUNTINGTON DIVISION
THE ESQUIRE GROUP, INC.,
Plaintiff,
v.
CIVIL ACTION NO. 3:14-24972
COLUMBIA GAS TRANSMISSION, LLC,
a Delaware limited liability company, et al.,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending before the Court is Defendants’ Motion to Dismiss Complaint, brought pursuant
to Rule 12(b)(6) of the Federal Rules of Civil Procedure, ECF No. 7. For the foregoing reasons, the
Court DENIES Defendants’ motion.
I.
Background
Plaintiff, Esquire Group, Inc., raises a breach of contract claim related to two written
express easements involving Defendants’ BM-74 natural gas transmission pipeline. ECF No. 4 ¶¶
29–50. 1 Plaintiff operates a golf course and residential community located near the village of
Barboursville, Cabell County, West Virginia. Id. ¶ 9. Defendant Columbia Pipeline is the
successor in interest to a pipeline easement across Plaintiff’s property and right of way agreement
dated December 20, 1956 (“1956 Easement”). Id. ¶ 10; ECF No. 8 at 3. In relevant part, the 1956
Easement provides:
1
After original filing in the Bankruptcy Court, ECF No.4, on August 21, 2014, this Court granted
Defendants’ Consent Motion to Withdraw Reference of Adversary Proceeding.
[T]he right, privilege and authority for the purposes of laying, constructing,
maintaining, operating, altering, repairing, removing, changing the size of and
replacing pipe lines (with fittings, tie-overs and appliances, including Cathodic
Protection equipment) for the transportation of oil, gas, petroleum products or any
other liquids, gases or substances which can be transported through pipe lines, . . .
the Grantee to have the right to select, change or alter the routes under, upon, over
and through lands which the [Grantor] owns or in which the [Grantor] has an
interest . . .
Grantee has the right to lay, construct, maintain, operate, alter, repair, remove,
change the size of and replace at any time or from time to time one or more
additional lines of pipe, said additional lines not necessarily parallel to any existing
line laid under the terms of this agreement . . .
The Grantee shall have all other rights and benefits necessary or convenient for the
full enjoyment or use of the rights herein granted, including, but without limiting
the same to, the free right of ingress and egress over and across said lands.
To have and to hold the said rights, privileges and authority, unto said Grantee, its
successors and assigns, until such pipe line be constructed and so long thereafter as
a pipe line, telephone line, telegraph line or electric transmission line is maintained
thereon; and the undersigned hereby bind themselves, their heirs, executors and
administrators (and successors and assigns) to warrant and forever defend all and
singular said premises unto the Grantee, its successors and assigns, against every
person whomsoever lawfully claiming or to claim the same or any part thereof.
Ex. A, ECF No. 4. Consistent with the terms of the 1956 Easement, Defendants’ predecessor in
interest installed an eighteen inch high-pressure pipeline. ECF No. 4 ¶ 10. Defendants continue to
use portions of the 1956 Easement as an anode in a cathodic protection system for the BM-74
pipeline. Declaration of Timothy L. Sweeney, ECF No. 8-1 ¶ 5.
On August 6, 1974, Plaintiff and Defendants entered into a second right of way agreement,
granting a second easement across Plaintiff’s property (“1974 Easement”). ECF No. 4 ¶ 11; ECF
No. 8 at 4. Plaintiff alleges that Defendants drafted the 1974 Easement and attached Plat Plan and
that Defendants’ stated purpose for the 1974 Easement was to remove a portion of the 1956
Easement and replace it with a new pipeline located along the berm of the Guyandotte River.
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Affidavit of Joe C. Midkiff, ECF No. 9-5 ¶¶ 5–10. As quoted by Defendants in their supporting
memorandum, the 1974 Easement provides:
[T]he right to lay, maintain, operate and remove a pipe line for the transportation of
gas, and appurtenances, including cathodic protection, necessary to operate said
pipe line over and through its lands . . .
Included and also granted as part of this easement is the rights of ingress and egress
to and from the same, together with, where necessary and convenient, the right to
haul over the lands traversed by this easement such pipe and material needed in the
construction of pipelines on any adjoining lands.
ECF No. 8 at 4 (quoting Ex. B, ECF No. 4,). Defendants allow the ellipses following the first
quoted sentence to substitute for language that is unmistakably relevant to resolving the instant
dispute. The omitted sentence provides:
Attached to and made a part of this agreement is a “Plat Plan” for “ESQUIRE
COUNTRY CLUB” which shows the center line location of the right-of-way
granted for this 18 ̋ Pipeline and also shows a section of Columbia’s 18 ̋ pipeline
“To be abandoned”.
Ex. B, ECF No. 4. In lieu of providing this key contractual language, Defendants offered their own
explanation of what the attached Plat Plan shows. Specifically, Defendants summarized the Plat
Plan as showing “the ‘Possible Relocation of 18 ̋ High Pressure Gas Line,’ and portions of the
Original BM-74 to be administratively abandoned from a regulatory standpoint.” ECF No. 8 at 4.
Upon its own review, the Court further observes that the attached Plat Plan also (1)
variously refers to the “Possible Relocation” quoted by Defendants as the “Proposed Relocation of
Line BM-74” and (2) has cross-hatches drawn over a segment of the earlier right-of-way with the
notation “18 ̋ gas pipeline to be abandoned.” Ex. C, ECF No. 16-3. However, the Court is unable to
identify any reference on the Plat Plan to administrative abandonment from a regulatory
standpoint. Similarly, the Court finds no language in the right of agreement itself mentioning
administrative abandonment from a regulatory standpoint.
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According to Plaintiff, the 1956 Easement pipeline is now fifty-eight years old, and there is
subsidence indicative of subsurface instability along the section of the 1956 Easement pipeline at
issue here. ECF No. 4 ¶¶ 42–43. As explained in the affidavits of Mr. Joe C. Midkiff and Mr.
Joseph Q. Midkiff, Plaintiff further claims that Defendant has failed to maintain areas of both the
1956 Easement and the 1974 Easement that are “outside the manicured golf course areas which are
passable with a vehicle or by foot,” allegedly including a failure to inspect areas of subsidence. Ex.
E, Affidavit of Joe C. Midkiff, ECF No. 9-5 ¶¶ 13–15; Ex. D, Affidavit of Joseph Q. Midkiff, ECF
No 9-4 ¶¶ 4–7; ECF No. 4 ¶¶ 42–43.
Plaintiff further alleges that, as evidenced by a recent explosion of a 20 ̋ high pressure
pipeline owned by Defendants and findings of a subsequent investigation by the National
Transportation Safety Board (“NTSB”), Defendants have a common course of corporate policy,
pattern, practice, and conduct of similar inspection, maintenance, evaluation, operation, and
analysis that result in unsafe pipeline conditions. ECF No. 4 ¶¶ 16–17.
Plaintiff asserts that Defendants are in breach of contract for: (1) failing to abandon the
section of the 1956 pipeline identified as “to be abandoned” in the 1974 Easement; and (2) failing
to maintain both the 1956 Easement and the 1974 Easement. Plaintiff seeks relief in the form of
rescission of the contractual easements and right of way agreements, or in the alternative, damages
for breach of contract.
II.
Discussion
A motion to dismiss brought under Rule 12(b)(6) of the Federal Rules of Civil Procedure
tests the legal sufficiency of a complaint. Republican Party of N. Carolina v. Martin, 980 F.2d 943,
952 (4th Cir. 1992). “[I]t does not resolve contests surrounding the facts, the merits of a claim, or
the applicability of defenses. Id. (citation omitted).
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When considering a motion to dismiss, a court should (1) “begin by identifying pleadings
that, because they are no more than conclusions, are not entitled to the assumption of truth. . . .,”
Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009), and then (2) “[w]hen there are well-pleaded factual
allegations, a court should assume their veracity and then determine whether they plausibly give
rise to an entitlement to relief.” Id.
For the first step, the complaint must provide the plaintiff’s “grounds of . . . entitlement to
relief” in more factual detail than mere “labels and conclusions.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (internal quotation marks omitted). “[A] formulaic recitation of the elements
of a cause of action will not do.” Id. at 555. “While legal conclusions can provide the framework of
a complaint, they must be supported by factual allegations.” Iqbal, 556 U.S. at 679.
For the second step, a court must take the factual allegations in the complaint as true, and
the complaint must be viewed in the light most favorable to the plaintiff. See Twombly, 550 U.S. at
555-56. The complaint must contain “enough facts to state a claim to relief that is plausible on its
face.” Id. at 555, 570 (internal quotation marks omitted). Plausibility is established “when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678. “The plausibility standard .
. . asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint
pleads facts that are merely consistent with a defendant’s liability, it stops short of the line between
possibility and plausibility of entitlement to relief.” Id. (internal quotation marks omitted).
Under West Virginia law, a breach of contract claim requires that a plaintiff allege: (1) the
existence of a valid, enforceable contract; (2) that the plaintiff has performed under the contract;
(3) that the defendant has breached or violated its duties or obligations under the contract; and (4)
that the plaintiff has been injured as a result. Wince v. Easterbrooke Cellular Corp., 681 F.Supp.2d
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688, 693 (N.D. W.Va. 2010) (citing Exec. Risk Indem., Inc. v. Charleston Area Med. Ctr., Inc., 681
F.Supp.2d 694, 730 (S.D. W.Va. 2009).
“A valid written instrument which expresses the intent of the parties in plain and
unambiguous language is not subject to judicial construction or interpretation but will be applied
and enforced according to such intent.” Syllabus Point 1, Cotiga Dev. Co. v. United Fuel Gas Co.,
128 S.E. 626, 628 (W.Va. 1962). “The language of the instrument itself, and not surrounding
circumstances, is the first and foremost evidence of the parties’ intent.” Sally-Mike Properties v.
Yokum, 332 S.E.2d 597, 601 (W.Va. 1985). “However, when a contract is ambiguous, it is subject
to construction.” Estate of Tawney v. Columbia Natural Resources, LLC, 633 S.E.2d 22, 28
(W.Va. 2006). “A contract is ambiguous when it is reasonably susceptible to more than one
meaning in light of the surrounding circumstances and after applying the established rules of
construction.” Williams v. Precision Coil, Inc., 459 S.E.2d 329, 342 n.23 (W.Va. 1995).
In resolving uncertainties or ambiguities, the parties urge the Court to move in opposite
directions. On one hand, Defendants point to Brewer v. Yellow Poplar Lumber Co., 130 S.E. 454
(W.Va. 1925), in support of the proposition that “to the extent a right-of-way agreement is
ambiguous, such ambiguity is to be resolved against the grantor.” ECF No. 8 at 7 (citing Brewer,
130 S.E.2d at 456 (“[W]here the language of the deed is ambiguous, it will be given an
interpretation most favorable to the grantee.”)). Though there has been no negative treatment of
Brewer, there also do not appear to be any cases at all that have cited to Brewer in the almost ninety
years since its issuance. On the other hand, Plaintiff provides case language that “[u]nder our law,
‘uncertainties in an intricate and involved contract should be resolved against the party who
prepared it.’” Estate of Tawney v. Columbia Natural Resources, LLC, 633 S.E.2d 22, 29 (W.Va.
2006) (citing Charlton v. Chevrolet Motor Co., 174 S.E. 570 (1934).
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Here, Plaintiff has stated enough facts to plausibly make out its breach of contract claim.
First, the pleadings establish that there is at least one valid and enforceable contract between the
parties. Plaintiff and Defendants both direct the Court’s attention to two contracts. The first
concerning the 1956 Easement and the second concerning the 1974 Easement. The parties agree
that the 1974 agreement is a valid, enforceable contract, but disagree regarding the continued
enforceability of the 1956 agreement.
Plaintiff asserts that the plain language of the 1974 Easement expresses an intention by
Defendants to abandon a specifically identified portion of the 1956 Easement. Defendants instead
argue that both easements remain in effect and expressly authorize Defendants’ actions. Though
there is disagreement regarding the effect of the later agreement on the 1956 Easement, at the very
least, the later 1974 Easement agreement is valid and enforceable.
Whether one or both of the contracts remains valid and enforceable, either standing alone
would confer an obligation on Defendants to maintain the easements burdening Plaintiff’s
property. Furthermore, it is plausible that the language included in the 1974 Easement, which was
drafted by Defendants and supported by the attached Plat Plan, supports Plaintiff’s contention that
the 1974 Easement included an obligation on the part of the Defendants to abandon a section of the
earlier pipeline.
Second, facts alleged in the pleadings, taken as true, establish that Plaintiffs have
performed their obligations under both agreements. The relevant contracts only require that
Plaintiff allow access to the areas granted under the respective easements. Plaintiff claims to have
fulfilled its contractual obligations with respect to either agreement, and neither party has alleged
any facts that would suggest otherwise.
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Third, facts alleged in the pleadings plausibly establish that Defendants may have breached
their duties under the contracts. With respect to the alleged failure to maintain the easements, as
supported by affidavits, Plaintiffs have alleged sufficient facts, taken as true, suggesting that the
Defendants have failed to maintain areas of the 1956 Easement that are not readily accessible by
vehicle or by foot due to overgrowth. Plaintiff further alleges that Defendants have failed to
adequately inspect these areas, potentially creating hazardous conditions.
With respect to the alleged failure to abandon a segment of the 1956 Easement, Defendants
argue that the 1974 Easement did not include an obligation to abandon or remove a segment of the
1956 Easement, and that Defendants’ actions in continuing to use that segment of the 1956
Easement are consistent with the terms of the 1956 Easement, which remains in full effect.
Defendants first rely on Toler v. Merritt, No. 12-0394, 2013 WL 2149858 at *2 (W. Va. May 17,
2013) (unpublished opinion), for the proposition that “the owner of an easement by grant cannot
lose that easement by his mere nonuse.” As an unpublished opinion by the Supreme Court of
Appeals of West Virginia, Toler has “no precedential value and for this reason may not be cited in
any court of this state as precedent or authority, except to support a claim of res judicata, collateral
estoppel, or law of the case.” Pugh v. Workers’ Compensation Comm’r, 424 S.E.2d 759, 762 (W.
Va. 1992).
Instead, the Court looks to Moyer v. Martin, 131 S.E. 859 (W. Va. 1926), wherein the
Supreme Court of Appeals of West Virginia opined that “it is universally held that mere [nonuse]
of an easement by grant, however long, will not extinguish the right, unless otherwise provided by
statute or by provision in the grant itself.” 131 S.E. at 861 (citing 19 C.J. p.942; Warren v. Syme, 7
W. Va. 474 (W. Va. 1874). Furthermore, an easement by grant may be lost “by abandonment, not
by mere [nonuse], but by proofs of an intention to abandon; or, of course, by deed or other
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instrument in writing.” Id. Addressing abandonment of a prescriptive easement, the Supreme
Court of Appeals has further explained that “[i]t is the burden of the party asserting the absence of
an easement by prescription to prove abandonment by clear and convincing evidence.” Walls v.
DeNoone, 209 W.Va. 675, 550 S.E.2d 653 (W.Va. 2001). (citations omitted).
While acknowledging that mere nonuse does not amount to abandonment, here, Plaintiff
alleges something more than mere nonuse: Plaintiff alleges that the 1974 Easement provides both
proof of an intention to abandon and a contractual obligation to abandon a segment of the original
pipeline. Defendant maintains that the language of the 1974 Easement speaks only to the intent to
administratively abandon that segment for regulatory purposes, but has offered no facts supporting
the assertion that “to be abandoned” should be understood to carry that considerably more
specialized meaning. Furthermore, non-binding case law offered by Defendant is readily
distinguishable. In ETC Texas Pipeline, Ltd v. Payne, No. 10-11-00137-CV, 2011 WL 3850043
(Tex.App.—Waco August 31, 2011) (unpublished memorandum opinion), there does not appear
to have been any communication by the grantee, written or otherwise, suggesting that the pipeline
at issue was “to be abandoned.” Similarly, in Guzzetta v. Texas Pipeline Co., 477 So.2d 1221 (La.
Ct. App. 1985), writ granted, 479 So.2d 913 (La. 1985), the court noted that there was no written
renunciation as required under Louisiana law that would provide Plaintiff with a cause of action
for removal of an abandoned pipeline. Given the plain meaning of the phrase “to be abandoned”
and the absence of support—factual or otherwise—for a contrary reading, the complaint provides
sufficient factual support for the alleged breach of Defendants’ contractual duties.
Fourth, the pleadings provide facts sufficiently alleging some injury to Plaintiff as a result
of Defendants’ alleged breach. The scope of injury will ultimately depend on the ability of Plaintiff
to offer proof at trial sufficiently supporting breach of contract under both the failure to maintain
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and failure to abandon or remove theories. Under the first theory, injury alleged includes subsided
sections along the 1956 Easement. Under the second theory, injury might further include
interference with development plans. Accordingly, Plaintiff has alleged facts, which, taken as true,
plausibly state a claim for breach of contract for the alleged failure to maintain the easements as
well as the alleged failure to abandon a designated portion of the original easement.
III.
Conclusion
For the foregoing reasons, the Court DENIES Defendants’ Motion to Dismiss.
The Court DIRECTS the Clerk to send a copy of this written Opinion and Order to counsel
of record and any unrepresented parties.
ENTER:
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October 7, 2014
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