Marilyn Rummage Muerdter v. Louisville Gas and Electric Company ( 2023 )

RENDERED: APRIL 28, 2023; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2021-CA-1280-MR
MARILYN RUMMAGE MUERDTER;
ANTHONY TANNER STIVERS;
DAVID RUMMAGE; JESSIE
STIVERS; KIMBERLY RUMMAGE;
MARY F. RUMMAGE; PEGGY A.
RUMMAGE; AND TERRY J.
RUMMAGE APPELLANTS
APPEAL FROM BULLITT CIRCUIT COURT
v. HONORABLE RODNEY DARREL BURRESS, JUDGE
ACTION NO. 19-CI-00752
LOUISVILLE GAS AND ELECTRIC
COMPANY APPELLEE
AND
NO. 2021-CA-1282-MR
MARILYN RUMMAGE MUERDTER;
ANTHONY TANNER STIVERS;
DAVID RUMMAGE; JESSIE
STIVERS; KIMBERLY RUMMAGE;
MARY F. RUMMAGE; PEGGY A.
RUMMAGE; AND TERRY J.
RUMMAGE APPELLANTS
APPEAL FROM BULLITT CIRCUIT COURT
v. HONORABLE RODNEY DARREL BURRESS, JUDGE
ACTION NO. 19-CI-00754
LOUISVILLE GAS AND ELECTRIC
COMPANY APPELLEE
AND
NO. 2021-CA-1283-MR
MARILYN RUMMAGE MUERDTER;
ANTHONY TANNER STIVERS;
DAVID RUMMAGE; JESSIE
STIVERS; KIMBERLY RUMMAGE;
MARY F. RUMMAGE; PEGGY A.
RUMMAGE; AND TERRY J.
RUMMAGE APPELLANTS
APPEAL FROM BULLITT CIRCUIT COURT
v. HONORABLE RODNEY DARREL BURRESS, JUDGE
ACTION NO. 19-CI-00758
LOUISVILLE GAS AND ELECTRIC
COMPANY APPELLEE
AND
NO. 2021-CA-1286-MR
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IOLA CAPITAL, LLC; MARK E.
CARTER; MONICA LYNNE
CARTER; AND PAMELA
QUARTERLY APPELLANTS
APPEAL FROM BULLITT CIRCUIT COURT
v. HONORABLE RODNEY DARREL BURRESS, JUDGE
ACTION NO. 19-CI-00755
LOUISVILLE GAS AND ELECTRIC
COMPANY; ANTHONY TANNER
STIVERS; DAVID RUMMAGE; EAST
KENTUCKY POWER
COOPERATIVE, INC.; ENERGY
TRANSFER PARTNERS, LLC; JESSIE
STIVERS; KIMBERLY RUMMAGE;
MARILYN RUMMAGE MUERDTER;
MARY RUMMAGE; PAUL
MITCHELL WHITWORTH; PEGGY
A. RUMMAGE; PNC FINANCIAL
SERVICES GROUP; SALT RIVER
ELECTRIC COOPERATIVE
CORPORATION; TERRY J.
RUMMAGE; AND WEST POINT
BANK APPELLEES
AND
NO. 2021-CA-1288-MR
IOLA CAPITAL, LLC; MARK E.
CARTER; MONICA LYNNE
CARTER; AND PAMELA
QUARTERLY APPELLANTS
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APPEAL FROM BULLITT CIRCUIT COURT
v. HONORABLE RODNEY DARREL BURRESS, JUDGE
ACTION NO. 19-CI-00750
LOUISVILLE GAS AND ELECTRIC
COMPANY; ANTHONY TANNER
STIVERS; DAVID RUMMAGE; EAST
KENTUCKY POWER
COOPERATIVE, INC.; ENERGY
TRANSFER PARTNERS, LLC; JESSIE
STIVERS; KIMBERLY RUMMAGE;
MARILYN RUMMAGE MUERDTER;
MARY RUMMAGE; PAUL
MITCHELL WHITWORTH; PEGGY
A. RUMMAGE; PNC FINANCIAL
SERVICES GROUP; SALT RIVER
ELECTRIC COOPERATIVE
CORPORATION; TERRY J.
RUMMAGE; AND WEST POINT
BANK APPELLEES
AND
NO. 2021-CA-1289-MR
MARILYN RUMMAGE MUERDTER;
ANTHONY TANNER STIVERS;
DAVID RUMMAGE; JESSIE
STIVERS; KIMBERLY RUMMAGE;
MARY F. RUMMAGE; PEGGY A.
RUMMAGE; AND TERRY J.
RUMMAGE APPELLANTS
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APPEAL FROM BULLITT CIRCUIT COURT
v. HONORABLE RODNEY DARREL BURRESS, JUDGE
ACTION NO. 19-CI-00753
LOUISVILLE GAS AND ELECTRIC
COMPANY APPELLEE
OPINION
AFFIRMING
** ** ** ** **
BEFORE: GOODWINE, LAMBERT, AND MCNEILL, JUDGES.
GOODWINE, JUDGE: Appellants, Marilyn Rummage Muerdter; Anthony
Tanner Stivers; David Rummage; Jessie Stivers; Kimberly Rummage; Mary F.
Rummage; Peggy A. Rummage; and Terry J. Rummage (collectively “the
Rummage family”) and Iola Capital, LLC; Mark E. Carter; Monica Lynne Carter;
and Pamela Quarterly (collectively “Iola”) appeal from the Bullitt Circuit Court’s
interlocutory judgment allowing Appellee, Louisville Gas and Electric Company
(“LG&E”), to condemn portions of their property to obtain easements to construct
a natural gas pipeline. After careful review, finding no error, we affirm.
LG&E is a public utility that provides natural gas service to the people
of the Commonwealth, including Bullitt County. In May 2018, LG&E began
negotiating the purchase of easements from the Rummage family and Iola for the
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construction of a new natural gas pipeline. Negotiations were unsuccessful. On
July 30, 2019, LG&E filed complaints against the Rummage family and Iola to
condemn their property to obtain easements for its natural gas pipeline project
under the Eminent Domain Act of Kentucky (KRS1 278.502).
On May 18, 2021, the Bullitt Circuit Court entered a judgment in
favor of LG&E ordering the Rummage family and Iola to convey the rights and
easements sought to LG&E. The circuit court found LG&E negotiated in good
faith, and the pipeline is for public use. Thus, LG&E did not abuse its discretion in
condemning the properties for easements.
The Rummage family moved to alter, amend, or vacate and for
clarification of factual issues. The Rummage family argued that the circuit court
must make additional findings to determine the “primary purpose in seeking
condemnation.” Record (“R.”) at 857 (19-CI-00753). On September 29, 2021, the
circuit court entered an order denying the motion. The court found that the
Rummage family failed to produce evidence “to counter the fact that the new
pipeline is necessary for additional dependable service and capacity” in Bullitt
County. R. at 859. The court found LG&E’s witnesses credible regarding the
proposed pipeline and its public use. The court found that a primary purpose
standard was not the law; instead, the utility must show a public purpose.
1
Kentucky Revised Statutes.
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The circuit court also denied the Rummage family’s motion to alter,
amend, or vacate to obtain relief from their failure to respond to LG&E’s
interrogatories and requests for the production of documents and to introduce new
“smoking gun” evidence. The court found none of the materials or arguments
tendered address whether the LG&E “is a public utility and has a public use behind
the proposed pipeline.” R. at 862.
Iola also moved to alter, amend, or vacate and for clarification of
factual findings on the same basis as the Rummage family. The circuit court
entered an order on September 29, 2021, denying the motion. The court reiterated
that the focus of its analysis was on public use. LG&E presented undisputed
testimony that the pipeline was for public use. This appeal followed.
Before proceeding with our review, we note two other Kentucky
Court of Appeals opinions concerning LG&E’s natural gas pipeline project in
Bullitt County. First, in Kentucky Heritage Land Conservation Fund Board v.
Louisville Gas and Electric Company, 648 S.W.3d 76 (Ky. App. 2022), this Court
addressed the sole issue of “whether the doctrine of sovereign immunity precludes
the Bullitt Circuit Court from proceeding to determine whether LG&E is entitled to
exercise the right of eminent domain with respect to property upon which the
Commonwealth of Kentucky owns a conservation easement.” Id. at 78. This
Court held:
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the plain language of KRS 382.850(2) authorizes a
statutory right of eminent domain to prevail over a
conservation easement because a conservation easement
is assumed not to exist upon the exercise of a statutory
right of eminent domain. If it is assumed that the
Board’s conservation easement does not exist, then there
is no prior public use to impede the exercise of LG&E’s
right of eminent domain.
Id. at 89.
Additionally, in Iola Capital v. Public Service Commission of
Kentucky, 659 S.W.3d 563 (Ky. App. 2022), Iola challenged LG&E’s certificate of
public convenience and necessity (“CPCN”). This Court affirmed “the Franklin
Circuit Court’s order dismissing Iola’s and Bernheim’s claims for redress of the
Commission’s action in approving the CPCN and not allowing them relief through
the complaint process.” Id. at 579. There, this Court noted the condemnation case,
which is currently before us, was the appropriate case to address the eminent
domain issues:
We note that denying the appellants’ claims for redress in
this appeal does not mean that the pipeline will
necessarily be constructed through their properties.
Instead, the appellants’ interests are specifically
addressed and preserved by the Eminent Domain Act of
Kentucky (KRS 416.540 to 416.670) in the ongoing
condemnation proceedings before the Bullitt Circuit
Court.
Id. at 578.
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On appeal, the Rummage family argues: (1) the circuit court erred in
failing to determine the primary purpose of the condemnation; (2) LG&E abused
its discretion in determining the route of the pipeline and fraudulently concealed
information from the public in selecting the proposed route; and (3) LG&E failed
to act in good faith. Iola argues that the circuit court erred in refusing to determine
whether the asserted public benefit of the pipeline was a pretext, which is
substantially similar to the Rummage family’s first argument.
“[T]he provisions of KRS 416.610(4) referring to an interlocutory
judgment . . . , allows an immediate, expedited appeal, by the condemnee of the
question of the condemnor’s right to take.” Ratliff v. Fiscal Court of Caldwell
Cnty., Kentucky, 617 S.W.2d 36, 39 (Ky. 1981). “Although the factors of necessity
and public use associated with condemnation are ultimately legal issues, resolution
of those issues encompasses factual matters subject to deferential review on
appeal.” God’s Center Foundation, Inc. v. Lexington Fayette Urban Cnty.
Government, 125 S.W.3d 295, 300 (Ky. App. 2002). Thus, “we review the trial
court’s factual findings under a clearly erroneous standard and the legal issues de
novo. Factual findings are not clearly erroneous if they are supported by
substantial evidence.” Id. (footnote omitted).
First, the Rummage family argues that the circuit court was required
to determine the “primary purpose” of the condemnation. Similarly, Iola argues
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that the circuit court erred in refusing to determine whether the asserted public
benefit of the pipeline was a pretext and also argues that we should apply a
“primary purpose” standard. Both the Rummage family and Iola argue that God’s
Center Foundation supports their positions.
However, our review shows that God’s Center does not mention a
“primary purpose” or “pretext” standard. God’s Center addresses eminent domain
in the context of a city government exercising eminent domain over a building “for
use as an African-American cultural center[.]” Id. at 298. There, although God’s
Center alleged “LFUC’s predominant intent was to benefit a small group of
individuals,” it failed to produce anything beyond speculation in support of its
position. Id. at 301-02. This Court held the “valid ‘public use’ that would benefit
both the public at large and the African American community in particular” and
affirmed the city’s right to condemn. Id. at 301.
KRS 416.675(1) dictates that eminent domain authority must only be
exercised “to effectuate a public use of the condemned property.” Pertinent to this
appeal, the definition of “public use” includes: “(d) The use of the property for the
creation or operation of public utilities or common carriers; or (e) Other use of the
property expressly authorized by statute.” KRS 416.675(2). There is no question
that LG&E is a public utility. City of Bardstown v. Louisville Gas & Elec. Co.,
383 S.W.2d 918, 920 (Ky. 1964). Additionally, LG&E is a common carrier under
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KRS 278.470: “Every company receiving, transporting, or delivering a supply of
oil or natural gas for public consumption is declared to be a common carrier, and
the receipt, transportation, and delivery of natural gas into, through and from a
pipeline operated by any such company is declared to be a public use.” KRS
278.470.
Additionally, KRS 278.502 provides LG&E express authority to
condemn property for natural gas pipelines under the Eminent Domain Act of
Kentucky:
Any corporation or partnership organized for the purpose
of, and any individual engaged in or proposing to engage
in, constructing, maintaining, or operating oil or gas
wells or pipelines for transporting or delivering oil or
gas, including oil and gas products, in public service
may, if it is unable to contract or agree with the owner
after a good faith effort to do so, condemn the lands and
material or the use and occupation of the lands that are
necessary for constructing, maintaining, drilling,
utilizing, and operating pipelines, underground oil or gas
storage fields, and wells giving access thereto and all
necessary machinery, equipment, pumping stations,
appliances, and fixtures, including tanks and telephone
lines, and other communication facilities, for use in
connection therewith, and the necessary rights of ingress
and egress to construct, examine, alter, repair, maintain,
operate, or remove such pipelines or underground gas
storage fields, to drill new wells and utilize existing wells
in connection therewith, and remove pipe, casing,
equipment, and other facilities relating to such
underground storage fields and access wells. The
proceedings for condemnation shall be as provided in the
Eminent Domain Act of Kentucky.
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The circuit court found that although Jim Beam “stands to benefit
greatly from this pipeline project,” it also “would undoubtedly serve the broader
public.” R. at 671 (19-CI-00752). The Rummage family and Iola indeed
presented evidence that the primary purpose of the pipeline, at least initially, would
be “to supply Jim Beam more natural gas for its facilities in Clermont and Boston.”
R. at 1064 (19-CI-00750). They presented evidence that “Jim Beam would
account for one-hundred percent (100%) of natural gas load growth provided by
this new pipeline for the first two years and roughly ninety-five percent (95%) in
the following three years.” R. at 1064-65.
However, the circuit court also found LG&E’s “natural gas pipeline
system in Bullitt County already presents reliability issues for current customers.
An additional line is needed to improve reliability issues for current customers,”
and LG&E has had to deny hundreds of new service requests due to lack of
capacity. R. at 1065. The circuit court noted that the Rummage family and Iola
failed to present contrary evidence. Thus, the circuit court found “there is
significant proof that [LG&E’s] pipeline project will improve and expand natural
gas service for current and future customers in Bullitt County. Therefore, the
[c]ourt finds [LG&E’s] condemnation of [the Rummage family’s and Iola’s] land
would effectuate public use.” R. at 1066.
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We agree. This Court has held that KRS 278.502 “expressly grants
LG&E the right to condemn property to construct the pipeline at issue because, as
a public carrier, it is providing a public service.” Diebold v. Louisville Gas and
Electric Company, No. 2019-CA-000393-MR, 2020 WL 113936, at *2 (Ky. App.
Jan. 10, 2020). Though Diebold is an unpublished opinion, the statute’s plain
language is clear. Kentucky law does not define how many people or entities must
primarily benefit from a pipeline for it to constitute a public use. Even though the
circuit court found the primary purpose of the pipeline was to provide natural gas
to Jim Beam’s facilities, no Kentucky case law or statute provides that a primary
benefit to one entity does not qualify as public use. As noted by the circuit court,
the law does not require the identification of a primary purpose. Additionally, the
Bullitt County community will still benefit from expanded capacity over time.
Thus, the circuit court correctly found that LG&E could exercise its power of
eminent domain to build the pipeline.
Second, the Rummage family argues that LG&E abused its discretion
in determining the pipeline route and fraudulently concealed information from the
public in selecting the proposed route. We review this argument under the
following standard:
Generally, the condemning body has broad discretion in
exercising its eminent domain authority including the
amount of land to be taken. God’s Ctr. Found., Inc. v.
Lexington Fayette Urban Cty. Gov’t, 125 S.W.3d 295,
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299 (Ky. App. 2002). The Courts will not interfere with
a decision to condemn unless “there has been such a clear
and gross abuse of discretion as to violate Section 2 of
the Constitution of Kentucky, which section is a guaranty
against the exercise of arbitrary power.”
Kuchle Realty Company, LLC v. Commonwealth, 571 S.W.3d 95, 99 (Ky. App.
2018). The Rummage family and Iola bore the burden of presenting “positive
proof of fraud, collusion or a clear abuse of discretion.” Pike Cnty. Bd. of Ed. v.
Ford, 279 S.W.2d 245, 248 (Ky. 1955). On appeal, we review the circuit court’s
“determination under a clearly erroneous standard and will uphold its ruling if
supported by substantial evidence.” Kuchle Realty, 571 S.W.3d at 99 (citing Clark
v. Bd. of Regents of W. Ky. Univ., 311 S.W.3d 726, 731 (Ky. App. 2010)).
The circuit court determined that the Rummage family and Iola failed
to provide positive proof that LG&E abused its discretion in selecting the pipeline
route. The circuit court found LG&E “has broad discretion to choose a fitting
route for its pipeline, and the [c]ourt finds that [LG&E] has proved this route is
appropriate and necessary to satisfy a public need to increase capacity and improve
reliability for commercial and residential natural gas customers in Bullitt County.”
R. at 1068.
On appeal, the Rummage family takes issue with the fact that LG&E
did not file a formal application for a CPCN and failed to provide themselves and
the public with notice of the plan of the pipeline or application. As noted by the
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circuit court, these issues regarding the notice were addressed in Iola Capital v.
Public Service Commission of Kentucky, 659 S.W.3d 563 (Ky. App. 2022), which
the Rummage family fails to mention in their brief. The Rummage family
complains the route was filed under seal, denying them the ability to object to the
confidentiality, but “[m]atters submitted to the Commission may be requested to be
kept confidential pursuant to 807 KAR[2] 5:001 Section 13 if they qualify for
confidentiality under KRS 61.878. To avoid land speculation, the route where
easements will be sought is often made confidential as it was here.” Id. at 570-71.
This Court held “it was not unlawful or arbitrary for the Commission to issue a
CPCN pursuant to KRS 278.020(1)(a), without requiring LG&E to first file a
separate CPCN application.” Id. at 572. Furthermore, this Court held “no notice,
whatsoever, was due to either of the appellants.” Id.
In Iola v. PSC, this Court stated the Rummage family’s “claims of
impropriety on the part of LG&E and the Commission, including those of
coordinated intentional concealment, have not been precluded by our decision and
are properly left for consideration within the condemnation proceedings.” Id. at
578. Here, although this issue is properly before us, the Rummage family failed to
present any positive proof of fraudulent concealment or abuse of discretion in
LG&E’s selection of the route. Instead, they reassert their argument that LG&E
2
Kentucky Administrative Regulations.
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did not file a formal application for a CPCN. Merely alleging coordinated
intentional concealment without positive proof beyond the facts presented in Iola
PSC, in which the CPCN authorization was upheld, is insufficient for a finding of
fraudulent concealment or abuse of discretion. Thus, the circuit court’s finding
that LG&E did not abuse its discretion or fraudulently conceal the proposed route
was supported by substantial evidence.
Finally, the Rummage family argues that LG&E failed to act in good
faith in negotiating a settlement. KRS 416.550 provides:
Whenever any condemnor cannot, by agreement with the
owner thereof, acquire the property right, privileges or
easements needed for any of the uses or purposes for
which the condemnor is authorized by law, to exercise its
right of eminent domain, the condemnor may condemn
such property, property rights, privileges or easements
pursuant to the provisions of KRS 416.550 to 416.670. It
is not a prerequisite to an action to attempt to agree with
an owner who is unknown or who, after reasonable
effort, cannot be found within the state or with an owner
who is under a disability.
“Kentucky courts have also imposed a duty on the condemnor to negotiate in good
faith the acquisition of the property prior to seeking condemnation.” God’s
Center, 125 S.W.3d at 300. However, “the condemner is not required to haggle in
order to satisfy its obligation to negotiate in good faith the purchase of property[.]”
Id. at 304 (citation omitted). In Coke v. Commonwealth Department of Finance,
502 S.W.2d 57 (Ky. 1973), the Court held:
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The judge found that there was an offer which the
landowners rejected. The evidence showed that efforts to
buy the property were made over a substantial period of
time, that the state made a legitimate offer, and the
landowners flatly rejected it. The evidence further
showed that the landowners had stated on several
occasions that they would sell the house alone but would
never sell the lot on which the house stood. The trial
judge found that the owners had ‘indicated that the
property was not for sale in fee.’ It is our opinion that
there was a good faith effort ‘to agree with the owner
* * * on a price,’ which is what the statute, KRS
56.463(5), requires.
The circuit court found LG&E “presented ample proof of negotiations
with each Defendant. [LG&E] made numerous legitimate offers over a substantial
period of time.” R. at 1062. The circuit court made findings regarding the
negotiations in each circuit case before it. First, in 19-CI-00752, 19-CI-00753, 19-
CI-00754, and 19-CI-00758, LG&E’s “offers ranged from roughly $3,000 to
nearly $14,000. . . . The Defendants in these cases made counter offers of
$250,000 in each case, and $3 million for all tracts sought.” Id. Second, in 19-CI-
00756, LG&E “made offers in November 2018, December 2018, and July
2019. . . . No counteroffer was made.” Id. Third, in 19-CI-00750, LG&E “made
offers on February 2019 and June 2019. . . . No counteroffer was made.” Id.Finally, in 19-CI-00755, LG&E “made offers in October 2018 and July 2019. . . .
The highest offer was $40,000 for the easements sought.” Id. Though LG&E
stated it never received a counteroffer, the “Defendants made a counteroffer of $12
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million for the entire property.” R. at 1062-63. The circuit court found the
evidence proves “LG&E complied with its obligation to conduct good faith
negotiations, as required by law, prior to filing these condemnation proceedings.”
R. at 1063.
The Rummage family again complains LG&E negotiated in bad faith
by concealing the route from the public, telling residents farm taps could be
granted to those who gave LG&E an easement when it could not, and failing to
inform them that once the line was laid, they could no longer drive farm equipment
over it. They cite no law in support of this argument and do not contest the circuit
court’s factual findings regarding the actual negotiation over the value of the
easements.
As noted by the circuit court, the “good faith negotiation requirement
required little more than [LG&E’s] attempt to secure the land for a necessary
sum.” R. at 1059. Though we sympathize with the Rummage family, LG&E
complied with the legal requirements for good faith negotiations prior to filing the
condemnation action. Thus, the circuit court did not err in finding LG&E
negotiated in good faith.
For the foregoing reasons, we affirm the judgment of the Bullitt
Circuit Court.
ALL CONCUR.
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BRIEF FOR APPELLANTS BRIEFS FOR APPELLEE
MARILYN RUMMAGE LOUISVILLE GAS AND ELECTRIC
MUERDTER; ANTHONY TANNER COMPANY:
STIVERS; DAVID RUMMAGE;
JESSIE STIVERS; KIMBERLY Monica H. Braun
RUMMAGE; MARY F. RUMMAGE; Steven B. Loy
PEGGY A. RUMMAGE; AND Mary Ellen Wimberly
TERRY J. RUMMAGE: Lexington, Kentucky
Thomas E. Clay
Louisville, Kentucky
BRIEFS FOR APPELLANTS
IOLA CAPITAL, LLC; MARK E.
CARTER; MONICA LYNNE
CARTER; AND PAMELA
QUARTERLY:
John D. Cox
Petersen S. Thomas
Louisville, Kentucky
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