Big Sandy Co. v. Eqt Gathering, LLC

545 S.W.3d 842
CourtMissouri Court of Appeals
DecidedApril 26, 2018
Docket2016-SC-000561-DG
StatusPublished
Cited by19 cases

This text of 545 S.W.3d 842 (Big Sandy Co. v. Eqt Gathering, LLC) is published on Counsel Stack Legal Research, covering Missouri Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Big Sandy Co. v. Eqt Gathering, LLC, 545 S.W.3d 842 (Mo. Ct. App. 2018).

Opinion

OPINION OF THE COURT BY JUSTICE KELLER

The Pike Circuit Court entered a declaratory judgment in favor of Big Sandy Company, LP (Big Sandy), interpreting a pipeline easement agreement in Big Sandy's favor. EQT Gathering, LLC and EQT Production Company (collectively, EQT) appealed, and the Court of Appeals reversed. Big Sandy petitioned this Court for discretionary review, which we granted. After careful review, we reverse the Court of Appeals.

I. BACKGROUND

The majority of the facts are undisputed. On August 1, 2003, Big Sandy entered into a Pipeline Easement Agreement (the Agreement) with Kentucky West Virginia Gas Company, LLC (KWVA). KWVA is EQT's predecessor in interest. In the Agreement, Big Sandy granted KWVA an easement for the construction, operation, and maintenance of a pipeline. The parties refer to the pipeline covered by the Agreement as the "Myra Pipeline." The Agreement was negotiated by a representative for Big Sandy, Chauncey Curtz, and a representative of KWVA, Lester Zitkus. The parties negotiated the Agreement from 1999 until the Agreement was signed.

The Agreement granted KWVA1 and its successors-in-interest "a non-exclusive sixty foot wide temporary easement for initial construction, and a non-exclusive thirty foot wide right of way and easement" for:

A pipeline twelve inches or less in diameter, for the transportation of natural gas (the Pipeline) over, through, and across certain surface tracts and mineral tracts of Big Sandy situated on the waters of the Elkhorn Creek in Pike County, Kentucky, the centerline of which is as shown on the color print attached hereto and made a part hereof and marked as Exhibit "A."

Exhibit A is a map showing where the pipeline crosses Big Sandy's surface and mineral tracts. The map indicates which portions of the pipeline were already in the *844ground and also indicated the location of the proposed route for new pipe.

The Agreement provides that if Big Sandy decides to mine in the vicinity of an area covered by the easement and the Agreement, EQT must either purchase the minerals underlying the pipeline or, if EQT does not want to purchase the minerals, it must remove and relocate the pipeline at its own expense.

Big Sandy desires to mine on three tracts, tracts 1, 2, and 3 (subject tracts), on the map. On these subject tracts, Big Sandy holds only a mineral estate, not a surface estate. Also, on these subject tracts, the map shows that pipe was already located in the ground before the Agreement became effective. EQT argued the Agreement only applied to those tracts that referenced "proposed pipeline routes," excluding the tracts where the pipe was already in the ground prior to the Agreement. If this interpretation was correct, it would mean that the Agreement does not apply to the subject tracts that Big Sandy intends to mine. If the Agreement is not applicable, Big Sandy would be liable for the cost of removing and relocating the pipeline if it did, in fact, commence mining in these locations. Big Sandy of course maintains that the Agreement applies to all tracts depicted on the map.

EQT filed suit against Big Sandy requesting declaratory relief regarding the interpretation and scope of the Agreement. Big Sandy filed its answer and counterclaims for breach of contract, declaratory relief, and tortious interference with prospective advantage. EQT then filed an amended complaint adding a claim for reimbursement for costs incurred. The parties each then filed motions for partial summary judgment. The trial court held a hearing, ruling only on the interpretation of the Agreement.

The trial court agreed with Big Sandy that the Agreement applied to all tracts depicted on the map, finding there was no language in the Agreement or on the map that indicated the parties' intent to exclude specific tracts from the scope of the Agreement. Therefore, according to the trial court, the Agreement was unambiguous, and because the map was incorporated and made part of the Agreement, Big Sandy's interpretation prevailed.

EQT appealed. Although also finding the Agreement to be unambiguous, the Court of Appeals reversed. Relying on four paragraphs (5, 7, 10, and 14), the Court of Appeals held that Big Sandy's interpretation would be absurd and render much of the Agreement meaningless. Judge Thompson dissented and would have affirmed the trial court. Big Sandy petitioned this Court for discretionary review. After a thorough review of the record, we now reverse the Court of Appeals.

II. STANDARD OF REVIEW

In a declaratory action, findings of fact are reviewed under a clearly erroneous standard, and conclusions of law are reviewed de novo. Baze v. Rees , 217 S.W.3d 207, 210 (Ky. 2006)"The interpretation of a contract including determining whether a contract is ambiguous, is a question of law to be determined de novo on appellate review." Kentucky Shakespeare Festival, Inc. v. Dunaway , 490 S.W.3d 691, 695 (Ky. 2016) (internal citations omitted).

III. ANALYSIS

A. The Agreement is unambiguous and applies to the subject tracts.

"In interpreting a contract, we first determine as a matter of law whether the contract is ambiguous. A contract written in clear and unambiguous language is not subject to interpretation or construction *845and must be enforced according to its terms." Board of Trustees of Kentucky School Boards Insurance Trust v. Pope, 528 S.W.3d 901, 906 (Ky. 2017) (citing New York Life Ins. Co. v. Conrad, 269 Ky. 359, 107 S.W.2d 248, 250-51 (1937) ). A contract is ambiguous if a reasonable person would find it susceptible to different or inconsistent interpretations. Cantrell Supply, Inc. v. Liberty Mut. Ins. Co. , 94 S.W.3d 381, 385 (Ky. App. 2002) (internal citations omitted).

We agree with both the trial court and Court of Appeals that the Agreement is unambiguous; and furthermore, as a matter of law, we hold the Agreement clearly applies to the subject tracts.

Paragraph 1 of the Agreement states as follows:

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Cite This Page — Counsel Stack

Bluebook (online)
545 S.W.3d 842, Counsel Stack Legal Research, https://law.counselstack.com/opinion/big-sandy-co-v-eqt-gathering-llc-moctapp-2018.