Milam v. Viking Energy Holdings, LLC

370 S.W.3d 530, 2012 WL 2360500, 2012 Ky. App. LEXIS 99
CourtCourt of Appeals of Kentucky
DecidedJune 22, 2012
DocketNo. 2011-CA-001060-MR
StatusPublished
Cited by2 cases

This text of 370 S.W.3d 530 (Milam v. Viking Energy Holdings, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals of Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Milam v. Viking Energy Holdings, LLC, 370 S.W.3d 530, 2012 WL 2360500, 2012 Ky. App. LEXIS 99 (Ky. Ct. App. 2012).

Opinion

OPINION

LAMBERT, Judge:

In accordance with Kentucky Revised Statutes (KRS) 416.620(2), Steven B. Mi-lam and Amy L. Milam (the Milams) have appealed from the May 12, 2011, findings of fact, conclusions of law, and interlocutory judgment of the Warren Circuit Court relative to the condemnation by Viking Energy Holdings, LLC (Viking) of a pipeline easement across their property. After thoroughly reviewing the record and the parties’ arguments in their brief, we hold that the circuit court did not commit any error in its interlocutory ruling; hence, we affirm.

These proceedings began in March 2009 with the filing against the Milams and Republic Bank and Trust Company1 of a petition for condemnation and to enforce the terms of a pipeline easement by Viking. Viking is a Delaware Limited Liability Company with its principal place of business in Bowling Green, Kentucky. The petition states that the company is licensed in the Commonwealth of Kentucky as a gathering line operator pursuant to 805 Kentucky Administrative Regulations (KAR) 1:190, and that it is engaged in the business of construction, maintaining, and operating a complex integrated pipeline system for the gathering, transportation, and delivery of natural gas from the Richardsville area to Bowling Green. Viking also claimed to be a statutory common carrier pursuant to Kentucky Revised Statutes (KRS) 278.470, meaning that its receipt, transportation, and delivery of gas is a public use.

In the petition, Viking claimed to have obtained the rights to the pipeline easement on the Milams’ property via a 2002 assignment, correction of assignment, and a 2006 quitclaim deed. The Milams’ predecessors in interest, Gordon and Virgie Milam, conveyed a 30-foot wide pipeline easement to Pride Energy Corporation in 1985, under which a gas pipeline was buried. Viking then obtained the pipeline easement through assignment from Setco, which company had purchased the buried pipeline and pipeline easements at a Master Commissioner’s sale in 2002. The buried pipeline has been declared in prior rulings to be Viking’s separate trade fixture and personal property. Viking contended that the 1985 pipeline easement was still in full force and effect at the time it filed the petition. It further alleged that it initiated negotiations with the Milams when they refused to allow the company access to the property in order to repair any potential leaks in the line buried on their property. In an amended petition filed April 7, 2009, Viking amended the portions of the original petition referencing the location of the pipeline easement.

On April 14, 2009, the circuit court appointed commissioners pursuant to KRS 416.580, who were charged with viewing the real property and awarding the owners the fair market value. The commissioners filed their report on April 20, 2009, calculating the fair market value of the pipeline easement to be taken as $2,583.35. The [532]*532Milams filed exceptions to the commissioner’s award along with their answer to Viking’s petition. They denied that a good faith offer had been made as described in the petition, that Viking had the right to acquire an easement by eminent domain, or that Viking owned the pipeline buried under their property. The Milams specifically asserted as an affirmative defense that the easement had terminated because the pipeline had ceased to be used and was abandoned, and that the applicable statute of limitations barred Viking from claiming the easement.

On June 25, 2009, the circuit court entered a temporary injunction to permit Viking to enter the property in order to repair a break in the buried gas pipeline and conduct additional testing. By order entered July 27, 2009, the court further permitted Viking re-entry to the property to complete testing and make any necessary repairs to the system. The necessary testing and repairs were completed as of August 21, 2009.

In June 2009, the circuit court entered a pretrial order, scheduling a two-day bench trial beginning November 3, 2009, and set several pretrial deadlines and procedures. The issues to be raised at trial included whether the parties engaged in good faith negotiations prior to the filing of the petition, whether Viking, as a private company, was required to comply with the federal requirement and provide the Milams with an appraisal, and whether Viking had the statutory authority to initiate condemnation of the pipeline easement. Viking also sought pretrial rulings regarding good faith negotiations, compliance with the federal uniform act, the commissioners’ compliance with their statutory duties, burden of proof at trial, and its status as a common carrier. In an amended filing, the Milams set forth their arguments related to the legal issues in dispute, discussing the difference between a gathering line and a transmission line as well as the sufficiency of the identification of the easement.

On October 15, 2009, Viking filed a memorandum in support of its argument that it had the authority to exercise the right of eminent domain. It argued that it had such a right because it was a common carrier providing a statutory public service under Kentucky law. A supplemental memorandum was filed on December 3, 2009.

A bench trial commenced on November 3, 2009. On the second day of trial, the circuit court granted Viking’s motion to amend its complaint to substitute Viking Oil and Gas, LLC, for Viking to conform to the evidence. The amended complaint was filed -on November 13, 2009, and the Mi-lams answered this complaint the following month, adopting their previous responses and defenses, and specifically arguing that the new complaint was untimely.

After the conclusion of the bench trial on March 18, 2010, the circuit court issued its findings of fact, conclusions of law, and interlocutory judgment in favor of Viking. This appeal follows.

On appeal, the Milams present essentially two arguments. The first addresses whether Viking was authorized to exercise the power of eminent domain to condemn the pipeline easement on their property. The second argument is two-fold, and it addresses whether the necessary statutory requirements were followed 1) by the proper company conducting a good faith negotiation with the Milams before filing the petition and 2) by providing a particular description of the property it sought to condemn. Viking has responded to each of these arguments, urging this Court to affirm the circuit court’s interlocutory judgment.

[533]*533Because the Milams have not challenged the circuit court’s factual findings, but merely the application of the law to those facts, our review shall be de novo. See Cinelli v. Ward, 997 S.W.2d 474, 476 (Ky. App.1998) (“We review questions of law de novo [.]”).

The first issue we shall address is whether the circuit court properly ruled that Viking had the power to condemn the pipeline easement. The circuit court’s factual findings on this issue are as follows:

12. The Court finds that the Viking pipeline system, which begins west of the respondents’ property, is used for the purpose of transporting natural gas through its system of pipeline easements revealed in Viking Exhibit 9. The natural gas passing through this system is produced from the leases obtained by Viking (see Viking Exhibit 10) and agreements with third-party gas producers.

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Bluebook (online)
370 S.W.3d 530, 2012 WL 2360500, 2012 Ky. App. LEXIS 99, Counsel Stack Legal Research, https://law.counselstack.com/opinion/milam-v-viking-energy-holdings-llc-kyctapp-2012.