Court Opinion

ID: 9392544
Source: CourtListenerOpinion
Date Created: 2023-05-05 14:05:46.523277+00
Date Added: 2024-06-11T17:18:46.508825
License: Public Domain

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                  NOT TO BE PUBLISHED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

                              -2-
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

                             -3-
            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

                             -4-
                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

                                         -5-
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.

                                          -6-
              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:

                                          -7-
              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.

                                         -8-
             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

                                          -9-
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

                                         -10-
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.

                                         -11-
             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.

                                        -12-
             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,

                                        -13-
              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

                                         -14-
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.

                                           -15-
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:

                                         -16-
             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

                                        -17-
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.

                                         -18-
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

                             -19-