Richard Baatz v. Columbia Gas Transmission
Richard Baatz v. Columbia Gas Transmission
Opinion
Richard Baatz and fifty other landowners in Medina, Ohio ("Landowners") appeal the district court's grant of summary judgment to Columbia Gas Transmission, LLC ("Columbia Gas") on Landowners' state-law trespass and unjust enrichment claims involving underground storage of natural gas. Among other things, this case concerns an unusual situation in which, as to one of the claims on which appellee Columbia Gas was found liable (unjust enrichment), it is content to pay the damages awarded even though its position is that no liability should have been imposed at all. A question arises, therefore, as to whether Columbia Gas needed to file a cross-appeal in order to defend the damages award based on an argument that it had no liability on the underlying claim. For the reasons explained below, we hold that no such cross-appeal on liability was necessary, and we AFFIRM the judgment of the district court in all respects.
*770 I.
This dispute concerns a natural gas storage area known as the Medina Storage Field, located within the Clinton sandstone formation and approximately 3,000 feet underground in Medina, Ohio. 1 Columbia Gas injects natural gas into the Medina Storage Field (and other storage fields) during the summer months when gas demand is low and withdraws the stored gas during the winter months when demand is high. Landowners own property either directly above or near the boundary of the Medina Storage Field. Although Columbia Gas or its predecessor in interest has been storing gas in the Medina Storage Field since 1959, the earliest that any Landowner purchased any property at issue was September of 1990. Landowners argue that Columbia Gas intentionally invaded the subsurface of their properties to store natural gas without their permission and unjustly enriched itself by using their land without paying fair market rental value for the easement they claim is needed to use the subsurface.
Columbia Gas is subject to the Natural Gas Act ("NGA") and is regulated by the Federal Energy Regulatory Commission ("FERC"). Under the NGA, FERC may issue certificates of public convenience and necessity to authorize the construction and maintenance of facilities related to the natural gas industry. 15 U.S.C. § 717f(c). The NGA also authorizes the FERC certificate holder (e.g., Columbia Gas) to obtain the necessary property by eminent domain if the certificate holder "cannot acquire by contract, or is unable to agree with the owner of property to the compensation to be paid." Id. § 717f(h). The NGA does not require the certificate holder to acquire the property it uses for its natural gas storage; the statute merely authorizes acquisition. See id.
Columbia Gas or its predecessor in interest has been a certificate holder of the Medina Storage Field since 1958, but Columbia Gas did not attempt to obtain any easement rights for the Medina Storage Field until September 2013. At that time, Columbia Gas wrote letters to Landowners offering to purchase a subsurface easement under each of their properties. Landowners rejected Columbia Gas's offer and filed suit soon thereafter, asserting claims for (1) Trespass, (2) Unjust Enrichment-Use of Property for Storage, (3) Mandamus-Inverse Condemnation, (4) Declaratory Judgment, and (5) Permanent Injunction. These claims were similar to those in a different class action,
Wilson v. Columbia Gas Transmission, LLC
, No. 2:12-cv-01203 (S.D. Ohio 2012).
Wilson
involved Columbia Gas but did not include the Landowners. Soon after Landowners filed suit, Columbia Gas filed an amended counterclaim in
Wilson
, adding Landowners as defendants in that case. As part of this filing in
Wilson
, Columbia Gas sought condemnation to establish easements in the subsurface of Landowners' properties. Columbia Gas then moved to dismiss the present case, arguing that
Wilson
had "first to file" priority. The district court granted the motion, but this court reversed.
See
Baatz v. Columbia Gas Transmission, LLC
,
On remand, Columbia Gas and Landowners jointly requested to sever their claims in Wilson and to transfer that case to the United States District Court for the Northern District of Ohio. This request was granted, and Wilson was transferred and re-captioned as *771 Columbia Gas Transmission, LLC v. Booth , 1:16-cv-01418 (N.D. Ohio 2016).
In Booth , the district court decided that Columbia Gas had a right to obtain Landowners' property by eminent domain and could take possession of the land after it paid just compensation. After that decision, the Booth court empaneled a three-commissioner panel to determine the appropriate award for just compensation. No party objected to the commissioners' final report.
After the transfer to the Northern District of Ohio, Columbia Gas moved to dismiss the complaint in the present case. Because Landowners conceded that the condemnation action in Booth "moots their claims for mandamus/inverse condemnation, declaratory judgment, and injunctive relief," the district court dismissed all of Landowners' claims except their trespass and unjust enrichment claims. R. 58, PageID 1032. After discovery, the parties cross-moved for summary judgment.
The district court granted Columbia Gas's motion for summary judgment on Landowners' trespass claims, holding that
Chance v. BP Chemicals, Inc.
,
Landowners timely appealed, challenging the district court's grant of summary judgment with respect to both their trespass claims and unjust enrichment claims. Columbia Gas did not file a cross appeal.
II.
We review a district court's decision to grant summary judgment de novo.
Simpson v. Ernst & Young
,
*772
Matsushita Elec. Indus. Co. v. Zenith Radio Corp.
,
A. Trespass Claims
Under Ohio law, which the parties do not dispute applies here, "[t]respass is an unlawful entry upon the property of another."
Chance
,
One of the issues in
Chance
was whether BP Chemicals had trespassed by injecting hazardous waste into the subsurface at a remote location which later migrated to the subsurface beneath the plaintiffs' land. As part of its reasoning, the Ohio Supreme Court addressed the property owners' argument that BP Chemicals was liable for trespass because "the owner of land has absolute ownership of all the subsurface property."
Chance
,
Before
Chance
, the Ohio Supreme Court had characterized a property owner's subsurface ownership as absolute: "The word
land
includes not only the face of the earth, but everything under it or over it. He who owns a piece of land, therefore, is the owner of everything underneath in a direct line to the center of the earth and everything above to the heavens."
Winton v. Cornish
,
Applying the new rule, Chance held that the property owners "did not, as a matter of law, establish an unlawful entry on their properties by [BP Chemicals]." Id. at 993. Stated differently, BP Chemicals did not interfere with the property owners' possessory interest in the subsurface. To interfere with that possessory interest, the defendant must interfere "with the reasonable and foreseeable use of the[ir] properties." Id.
Landowners insist that the
Chance
reasoning concerned an indirect trespass and does not apply to direct trespass claims, which they contend they are asserting.
2
We are not persuaded. In holding
*773
that BP Chemicals did not trespass in
Chance
, the Ohio Supreme Court necessarily decided the scope of the plaintiffs' possessory interest in their subsurface for both direct and indirect trespass. There is nothing in the Ohio Supreme Court's rejection of the proposition that a property owner has absolute rights in the subsurface indicating a different definition of possessory interest for direct versus indirect trespass.
See
Chance
,
Landowners also attempt to distinguish
Chance
because "the Ohio Supreme Court explicitly limited its ruling by stating that oil and gas extraction was 'fundamentally dissimilar to the unique situation' that it faced, declining to apply such law." Appellants Br. at 18 (quoting
Chance
,
Landowners further argue that instead of applying
Chance
, we should follow
Bowman v. Columbia Gas Transmission Corp.
,
Thus, under Ohio law, to survive summary judgment on the trespass claim (whether direct or indirect), Landowners must show that Columbia Gas interfered with the possessory interest in their subsurface (i.e., interference with a reasonable or foreseeable use of the subsurface).
Chance
,
*774 B. Unjust Enrichment Claims
The court believed that "Columbia [Gas] has been unjustly enriched by storing natural gas beneath [Landowners'] properties 'since 1959' without having to pay storage fees or even paying just compensation for the taking." R. 118-1, PageID 3679. But it disagreed that Columbia Gas had been unjustly enriched at Landowners' expense for that entire time. This was because "the earliest any of the Landowners' acquired their property was 1990."
Having held Columbia Gas liable for unjust enrichment, the district court ordered that Columbia Gas pay Landowners additional damages in the form of pre-judgment interest on the
Booth
award. The district court limited the Landowners' damages in this regard from "March 5, 2008 through the date of the judgment rendered herein,"
Columbia Gas had argued, among other things, that Landowners "had no ownership right in the stratum," and that "if [Landowners] have no rights in that formation, then they cannot have conferred a benefit upon Columbia by 'allowing' its storage of natural gas there." R. 118-1, PageID 3679. In rejecting that argument, the district court concluded that the Ohio Supreme Court's "use of the terms 'limited' and 'not absolute' in
Chance
signifies that some residual rights in the subsurface strata belong to the surface landowner[s]," and thus Columbia Gas is liable to the Landowners for unjust enrichment.
On appeal, Columbia Gas does not challenge the district court's holding that it is liable for unjust enrichment. Instead, Columbia Gas asserts that Landowners' claims for additional unjust enrichment damages claims are "precluded on another ground," because in view of Chance , "where a landowner does not use the subsurface, the landowner has no benefit to confer (or at least no benefit that it would be inequitable for an alleged occupier to retain) and an unjust enrichment claim is thus unavailable as a matter of law." Appellee Br. at 44. For the reasons explained below, Columbia Gas's position has merit. However, before we address the merits of this substantive argument, we must address the significant procedural issue noted earlier: did Columbia Gas need to file a cross-appeal in order to preserve its argument to affirm the damages judgment on the ground that Columbia Gas has no underlying liability?
1.
"[F]rom its earliest years," the Supreme Court "has recognized that it takes a cross-appeal to justify a remedy in favor of an appellee."
Greenlaw v. United States
,
Applying these principles in
Burch
, we refused to entertain the argument that the district court had abused its discretion by extending the appellant's time to file a notice of appeal. Because the government in that case had not filed a cross-appeal, entertaining its arguments would have been an impermissible attack on, and infringement of, the appellant's right to appeal.
See
Burch
,
As described by Wright & Miller, "[i]t is proper to hold that the award already made cannot be reversed without cross-appeal. The argument that no award was proper, however, should be accepted to the extent that it simply defeats an increase that otherwise might seem appropriate." Wright & Miller, Federal Practice and Procedure § 3904 (2d ed.). The cross-appeal doctrine, by its nature, is designed "to foster repose, providing early notice to the parties of the extent to which a judgment will be challenged by appeal."
The Seventh Circuit's opinion in
In re Oil Spill by Amoco Cadiz off Coast of France on March 16, 1978
,
Columbia Gas's argument is similar to the appellee's argument in In re Oil Spill and Baca . In making the argument that Landowners' unjust enrichment claims are "precluded on another ground," Columbia Gas does not ask us to reverse the district court's judgment. Absent a cross-appeal, that argument would be improper for us to consider. Instead, Columbia Gas makes this argument as an alternative basis for affirming the district court's damages award by tacitly arguing that Landowners should not have been awarded damages in the first instance. Moreover, there is no indication that Landowners have been caught off guard by Appellee's argument on appeal. Indeed, Appellants argued in their opening brief that they may pursue their unjust enrichment claims independent of their trespass claims and rebutted Columbia Gas's alternative argument in their reply brief. Thus, the "flexible" administration of the cross-appeal doctrine is justified in this circumstance, as Landowners were given fair notice of Columbia Gas's position.
In considering Columbia Gas's alternative argument, we are aware that it requires us to conclude that even though the district court found Columbia Gas liable to Landowners for their unjust enrichment claims and subsequently awarded them damages, no further damages should be allowed because no damages should have been awarded at all. However, because Columbia Gas's alternative argument accepts that it must pay the damages that were awarded, it does not run afoul of the cross-appeal doctrine. It seeks no change in the district court's judgment, which, as explained by Wright & Miller, is a key consideration for whether an appellee's argument requires a cross-appeal:
The abstract incongruity of affirming on grounds that logically dictate reversal should not stand in the way. It is enough that the arguments are properly presented in the district court and the court of appeals. The uncertain virtues of cross-appeal requirements should not be pressed to the point of preserving a pleasing symmetry of opinion. The appellant's interest in repose is sufficient served by preserving its judgment.
Wright & Miller, supra , § 3904.
Given these considerations, and the fact that there was no unfair surprise to Landowners from Columbia Gas's alternative argument, no cross-appeal was required for Columbia Gas to argue for affirmance on this ground.
2.
We now turn to the merits of the alternative argument. Under Ohio law, "[u]njust enrichment occurs when a person 'has and retains money or benefits which in justice and equity belong to another', while restitution is the common-law remedy designed to prevent one from retaining property to which he is not justly entitled."
Johnson v. Microsoft Corp.
,
According to Landowners, Columbia Gas unjustly enriched itself by using the Landowners' subsurface to store its gas without paying fair rental rates for
*777
that storage. As the record confirms, and as discussed above, the Landowners do not have a "reasonable and foreseeable use" of their subsurface. As such, the Landowners do not have a present possessory interest in their subsurface and by extension, lack the present ability to exclude Columbia Gas from its subsurface.
See
Chance
,
Absent the "absolute right to admit or exclude persons," a landowner does not have a possessory interest in that property.
See
Martin v. Lambert
,
III.
For the reasons explained above, we AFFIRM the district court's judgment.
In reviewing the grant of Columbia Gas's summary judgment motion, we consider the facts in the light most favorable to Landowners, the parties who lost the motion.
See
B.F. Goodrich Co. v. U.S. Filter Corp.
,
A direct trespass includes those actions traditionally within the scope of common law trespass-for example, when a defendant takes an action that immediately results in an invasion of the plaintiff's property.
See
Williams v. Oeder
,
Reference
- Full Case Name
- Richard BAATZ, Et Al., Plaintiffs-Appellants, v. COLUMBIA GAS TRANSMISSION, LLC, Defendant-Appellee.
- Cited By
- 7 cases
- Status
- Published