McEwen v. MCR, LLC

2012 MT 319, 291 P.3d 1253, 368 Mont. 38, 2012 Mont. LEXIS 380
CourtMontana Supreme Court
DecidedDecember 31, 2012
DocketDA 11-0722
StatusPublished
Cited by17 cases

This text of 2012 MT 319 (McEwen v. MCR, LLC) is published on Counsel Stack Legal Research, covering Montana Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McEwen v. MCR, LLC, 2012 MT 319, 291 P.3d 1253, 368 Mont. 38, 2012 Mont. LEXIS 380 (Mo. 2012).

Opinions

JUSTICE MORRIS

delivered the Opinion of the Court.

¶1 MCR, LLC (MCR) filed an action for condemnation of a compressor station site on property owned by appellees David and Lenora McEwen (McEwens). McEwens counterclaimed against MCR for damage to McEwens’ property. McEwens also claimed punitive damages. McEwens sought restoration costs as the measure of damages for their contract, trespass, and nuisance claims. The parties stipulated to the substitution of MCR Transmission, LLC (MCR-T) for MCR on the condemnation claim.

¶2 The District Court denied MCR-T’s motion for a preliminary condemnation order. The District Court granted McEwens’ summary judgment motion that allowed McEwens to seek restoration costs. The jury awarded restoration costs and punitive damages to McEwens. MCR and MCR-T appeal. We affirm in part, reverse in part, and remand.

¶3 MCR and MCR-T present the following issues on appeal:

¶4 Issue One. Whether the District Court properly denied MCR-T’s motion to condemn McEwens’ property for a compressor station.

¶5 Issue Two. Whether the District Court properly determined that McEwens were entitled to seek restoration costs as the measure of their damages.

¶6 Issue Three. Whether the District Court properly admitted evidence at trial that MCR had jumped McEwens’ hid on state trust land leases.

PROCEDURAL AND FACTUAL BACKGROUND

¶7 McEwens purchased their ranch near the Sweet Grass Hills in Toole County, Montana, in 1992. McEwens took the ranch subject to a lease of two acres by Fulton Fuel Company (Fulton) on which sat a compressor station. MCR-T purchased Fulton’s interest in the compressor station in 2004. MCR-T entered into a five-year lease with McEwens to continue to operate the compressor station.

¶8 MCR operated natural gas wells on McEwens’ property pursuant to MCR’s mineral rights. MCR needed a place to dump produced water [41]*41from one of its wells. MCR and McEwens entered into a contract that allowed MCR to dump this produced water from one well into a pond on McEwens’ property. The contract required MCR to provide McEwens with water tests of the produced water every six weeks. McEwens wanted the water test results due to the fact that McEwens believed that produced water from a different well had killed some of McEwens’ sheep in 1996. McEwens wanted to ensure that the produced water did not contaminate their pond.

¶9 MCR failed to test the produced water every six weeks as required under the contract. In fact, McEwens alleged at trial that MCR had deposited produced water from two other wells into the pond, including produced water from the sour well that may have killed McEwens’ sheep in 1996.

¶10 MCR also caused significant damage to McEwens’ property over this same time period. MCR employees defecated and littered on McEwens’ property. MCR disturbed McEwens’ property for a variety of pits, tanks, and pipelines. MCR did not reclaim McEwens’ property after it had completed these projects.

¶11 McEwens and their predecessors had leased four 40-acre parcels of state trust land as agricultural grazing for their livestock. McEwens paid $6.97 per animal unit month (AUM). MCR bid on this leased land in 2009. MCR never had ranched or raised cattle or other livestock before it submitted the bid. MCR has not ranched or raised livestock since that time. McEwens alleged at trial that MCR had submitted this bid out of spite and that the bid represented another instance of MCR treating McEwens with malice. McEwens successfully matched MCR’s bid and retained the lease on the state trust land. MCR’s bid forced McEwens to pay $36.97 per AUM. The State ultimately refunded part of this money, but McEwens had to pay almost twice what they had been paying previously as a result of MCR’s bid.

¶12 McEwens and MCR-T failed to reach an agreement to renew the lease for the two-acre parcel where the compressor station sits. MCR filed an action for condemnation of the compressor station site. McEwens counterclaimed against MCR for breach of contract, trespass, nuisance, and violations of the Surface Damages Act, and sought punitive damages. McEwens sought restoration costs as the measure of damages for their contract, trespass, and nuisance claims. The parties stipulated to substitution of MCR-T for MCR on the condemnation claim.

¶13 The District Court dismissed MCR-T’s condemnation claim. The court relied on the holding in McCabe Petroleum Corp. v. Easement & [42]*42Right of Way Across Township 12 N., 2004 MT 73, 320 Mont. 384, 87 P.3d 479, that eminent domain power cannot be implied or inferred from vague language, and that it must not exist merely by implication. McCabe, ¶ 12. The District Court determined that the legislature’s failure to enumerate compressor stations in the list of public uses in § 70-30-102, MCA, excluded a compressor station as a public use. This determination left MCR-T unable to pursue its condemnation action.

¶14 The District Court issued an order on summáry judgment that McEwens could seek restoration damages for their breach of contract, trespass, and nuisance claims. The District Court instructed the jury at the close of trial that it could award McEwens’ costs necessary to restore McEwens’ property to the condition in which it existed before MCR dumped the produced water. The District Court allowed McEwens to introduce evidence that MCR had jumped McEwens’ bid on state trust land. The jury awarded restoration costs and punitive damages to McEwens. MCR and MCR-T appeal.

STANDARD OF REVIEW

¶15 We review for correctness a district court’s conclusion of law. Varano v. Hicks, 2012 MT 195, ¶ 7, 366 Mont. 171, 285 P.3d 592. We review de novo a district court’s grant of summary judgment. Lampi v. Speed, 2011 MT 231, ¶ 10, 362 Mont. 122, 261 P.3d 1000. Summary judgment may be granted only when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Lampi, ¶ 11.

¶16 A district court possesses broad discretion when it determines the admissibility of evidence. McCormack v. Andres, 2008 MT 182, ¶ 22, 343 Mont. 424, 185 P.3d 973. We review for abuse of discretion a district court’s evidentiary rulings. McCormack, ¶ 22. A district court abuses its discretion when it acts arbitrarily without employment of conscientious judgment or so exceeds the bounds of reason as to work a substantial injustice. McCormack, ¶ 22.

DISCUSSION

¶17 Issue One. Whether the District Court properly denied MCR-T’s motion to condemn McEwens’ property for a compressor station.

¶18 Eminent domain involves the State’s inherent right to take private property for public use. Section 70-30-101, MCA. The Montana legislature further has endowed private individuals with eminent domain power for specific activities that the legislature has deemed public uses. Section 70-1-205, MCA.

[43]*43¶19 Section 70-30-111(1), MCA, first requires MCR-T to demonstrate that its proposed use of McEwens’ property qualifies as a public use under § 70-30-102, MCA. MCR-T then must demonstrate that it needs McEwens’land for the proposed public use. Section 70-30-111(2), MCA. MCR must demonstrate both of these factors by a preponderance of the evidence. Section 70-30-111, MCA.

¶20 The legislature has declared gas pipelines to constitute a public use.

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Cite This Page — Counsel Stack

Bluebook (online)
2012 MT 319, 291 P.3d 1253, 368 Mont. 38, 2012 Mont. LEXIS 380, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcewen-v-mcr-llc-mont-2012.