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Markwest Liberty Midstream & Resources v. Nutt

Supreme Court of West Virginia

January 24, 2018

MARKWEST LIBERTY MIDSTREAM & RESOURCES, a Delaware Limited Liability Company, Defendant Below, Petitioner
JAMES T. NUTT, Trustee of the Tobey Lynn Nutt Declaration of Trust, dated January 28, 2004, Plaintiff Below, Respondent

         (Doddridge County No. 16-C-56)


         The petitioner herein and defendant below, Markwest Liberty Midstream & Resources ("Markwest"), by counsel Carte P. Goodwin, Andrew G. Jenkins, and Kara S. Eaton, appeal an order entered January 12, 2017, by the Circuit Court of Doddridge County. By that order, the circuit court granted James T. Nutt's, Trustee of the Tobey Lynn Nutt Declaration of Trust, dated January28, 2004 (" the Trust"), motion for preliminary injunction regarding Markwest activities on property owned by the Trust and on which Markwest has certain rights-of-way and easements with respect to natural gas pipelines and electric power lines. The Trust is represented by counsel, O. Gay Elmore, Jr. On appeal to this Court, Markwest contends that the circuit court erred in failing to consider and apply the standards for issuance of a preliminary injunction when there was no showing of any irreparable harm, no showing that the damages remedy at law was inadequate, and no balancing of the comparative hardships of the parties. Additionally, Markwest asserts that the circuit court erred in failing to consider any evidence such that the Trust did not meet its evidentiary burden of proof supporting the issuance of a preliminary injunction. Finally, Markwest contends that the court erred in granting a preliminary injunction that may require Markwest to violate its legal obligations imposed by third-party governmental regulatory agencies.

         Upon our review of the parties' arguments, the appendix record, and the pertinent authorities, we find that the circuit court erred in granting the motion for a preliminary injunction. Accordingly, we reverse and remand this case. Because this case does not present a new or significant issue of law, and for the reasons set forth herein, we find this case satisfies the "limited circumstances" requirements of Rule 21(d) of the West Virginia Rules of Appellate Procedure and is proper for disposition as a memorandum decision.

         On October 28, 2016, the Trust filed its verified complaint and motion for preliminary and/or permanent injunction against Markwest. The allegations involve an approximately319 acre tract of land located in Doddridge County, West Virginia, and owned by the Trust. Beginning in 2011 and continuing into 2014, the Trust and Markwest entered into several agreements whereby, in exchange for monetary consideration, Markwest obtained rights-of-way and easements across the property. It is represented that the Trust uses the property for recreational purposes including hunting and fishing. Markwest is said to be engaged in the gathering, processing, and transportation of natural gas and natural gas liquids in the State of West Virginia including the construction, operation, and maintenance of oil and gas pipelines.

         The purpose of the rights-of-way and easements was for the installation of multiple oil and gas pipelines, installation of an electrical line, and the construction of two temporary access roads for constructing and maintaining the pipelines. The agreements entered into by the parties also included reclamation requirements such as restoration of natural elevation and contour, road grading, rocking, stoning, and ditching for usability and the prevention of erosion, burning or removal of timber debris, installation of water bars or culverts, existing road widening, grading of an ATV trail, fencing, seeding with imperial whitetail clover, fertilizing with lime, removal of a tree stand, planting of trees, and other activities. It appears that the initial oil and gas pipeline and roads were built in 2012, a second pipeline was completed in 2014, and the electric power line was completed in 2015. It further appears that Markwest continues to maintain the pipelines and the electric lines and has various legal, regulatory, and other obligations with respect to their maintenance.

         As alleged, the dispute involves claims that the reclamation requirements of the various agreements were not performed by Markwest to the satisfaction of the Trust and constituted a breach of the agreements. In its verified complaint, the Trust seeks monetary damages with respect to three counts of breach of contract. Additionally, the Trust sought a preliminary and/or permanent injunction requiring Markwest to "cease any activities, which will cause damage to or alter [the Trust's] property; including but not limited to, digging, excavating, paving, etc., on [the Trust's] property." On November 3, 2016, the circuit court entered a rule to show cause order requiring Markwest to appear and show cause why the relief should not be awarded. Markwest filed a response in opposition to the motion for a preliminary and/or permanent injunction on December 8, 2016, and on December 12, 2016, filed an answer to the verified complaint denying the substantive allegations regarding the claimed breaches of the agreements. Additionally, Markwest filed a counterclaim alleging that the Trust breached the explicit terms of one of the agreements by interfering with Markwest's right-of-way and easement by cutting roads across it, building a permanent structure within it, and by placing a locked gate blocking Markwest's access.

         A hearing on the Trust's motion for a preliminary injunction was held on December 13, 2016. The Trust had no witness present to testify, presented no evidence, and submitted no affidavits. Markwest had the project manager, who was said to oversee the activities on the property, including the reclamation, present for purposes of testimony and represented it had other evidence to show that certain reclamation such as seeding with clover had in fact been done in accord with the agreements. The circuit court indicated that the way the court viewed the case meant that the issue was not "necessarily an evidentiary issue." Thus, the hearing was not an evidentiary hearing and consisted of presentation of oral argument by counsel for the parties.

         On January 12, 2017, the circuit court entered an order granting the Trust's motion for a preliminary injunction. The court indicated that it found the Trust's argument that injunctive relief was necessary to maintain the status quo and prevent spoliation of evidence persuasive. The order did not set forth any analysis other than citing to Syllabus point 2, Powhatan Coal and Coke Co. v. Ritz, 60 W.Va. 395, 56 S.E. 257 (1906), overruled on other grounds by Eastern Associated Coal Corp. v. John Doe, 159 W.Va. 200, 220 S.E.2d 672 (1975), for the sole proposition that "the function of a preliminary injunction, whether it be prohibitory or mandatory, is to preserve the status quo until, upon final hearing, the court may grant full relief." Additionally, the order included the following language:

2. Provided, the defendant may lawfully exercise any rights granted and fulfill any legal obligations imposed by plaintiff or any third party government agency within its legitimate exercise of power so long as the same is not contrary to the injunction granted hereby. In the event the parties cannot agree as to the defendant's activities in this regard, the Court shall make such determination upon proper scheduling and notice.

         This appeal followed the entry of the order granting the Trust's motion for a preliminary injunction.

         Our review of the circuit court's grant of a preliminary injunction has three parts:

"'In reviewing the exceptions to the findings of fact and conclusions of law supporting the granting of a temporary or preliminary injunction, we will apply a three-pronged deferential standard of review. We review the final order granting the temporary injunction and the ultimate disposition under an abuse of discretion standard, West v. National Mines Corp., 168 W.Va. 578, 590, 285 S.E.2d 670, 678 (1981), we review the circuit court's underlying factual findings under a clearly erroneous standard, and we review questions of law de novo.' Syllabus Point 4, Burgess v. Porterfield, 196 W.Va. 178, 469 S.E.2d 114 (1996)." Syl. pt. 1, State v. Imperial Marketing, 196 W.Va. 346, 472 S.E.2d 792 (1996).

Syl. pt. 1, Camden-Clark Mem'l Hosp. Corp. v. Turner, 212 W.Va. 752, 575 S.E.2d 362 (2002). With due regard for this standard of review, we proceed to our analysis of the issues raised on appeal.

         This Court has consistently articulated the criteria for preliminary ...

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