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Easements : Don’t Forget to Say the Magic Word(s) Ramon A. Molina Joshua A. Speirs Ross Molina Oliveros, P.C.

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Presentation on theme: "Easements : Don’t Forget to Say the Magic Word(s) Ramon A. Molina Joshua A. Speirs Ross Molina Oliveros, P.C."— Presentation transcript:

1 Easements : Don’t Forget to Say the Magic Word(s) Ramon A. Molina Joshua A. Speirs Ross Molina Oliveros, P.C.

2 Overview: Issues to Explore Purposes of the Easement Right to Upgrade Technological Advancement Communication Lines Future Lines When an Easement is Silent

3 WARNING Easement case law can be extremely tedious. Often times, inexplicably, the courts decide to insert the entire easement into the opinion even when only a few words or sentences matter. The Speaker is not responsible if you suffer any harm from boredom while attempting to read the case law.

4 Courts Interpreting Easements Scope depends on parties’ intentions as expressed in the grant. If terms not defined, use plain, ordinary and generally accepted meaning. Look at the four corners of the document – no parole evidence. Look to all clauses and try to make them harmonious. Generally adopt interpretation giving grantee greatest estate permissible under the instrument. May imply rights but to extent reasonably necessary to enjoy expressed ones. If the language is ambiguous, then look to parole evidence but still a matter of law if uncontroverted If parole evidence conflicts then a jury determines meaning. Ambiguity - if after applying rules of construction an agreement is susceptible to more than one meaning.

5 The Purposes Grant – very broad purposes Pipeline: “locating, establishing, constructing, laying, installing, operating, using, maintaining, inspecting, testing, protecting, cathodically protecting, repairing, assigning, restoring, renewing, reconstructing, replacing, substituting, changing, altering, converting, relocating within the easement, changing the size of and removing.” Electric Transmission Line: “The easement, right-of-way, rights, and privileges herein granted shall be used for the purposes of locating, constructing, placing, operating, maintaining, reconstructing, replacing, rebuilding, upgrading, removing, inspecting, patrolling, repairing, protecting, or altering the project, or any part of the project, and making connections therewith.” Typically “construct, operate and maintain” or similar Explore how courts are interpreting the grant language

6 Knox – Condemnor Case Facts: - Predecessor in interest to Pioneer Gas Company entered into pipeline easement with Predecessor in interest to Knox -Original Easement allowed pipeline company to “lay, maintain, operate... a pipe line for the transportation of gas.” -In 1928, the pipeline company laid a pipeline using 8” and 10” pipe. -In 1938, the parties agreed Pioneer could replace the 10” portion of pipe with a 15” low- pressure pipe. -In 1955, the demand for gas increased. Pioneer wanted to replace the 8” and 15” with 12” high- pressure pipeline – but Knox refused. Pioneer built it anyway. -Knox files suit. The Purposes Knox v. Pioneer Natural Gas Co., 321 S.W.2d 596 (Tex. Civ. App.— El Paso, 1959, writ ref’d n.r.e.)

7 Determination: 1. The court looked at grant language: “lay, maintain, operate and remove”. 2. The language included “additions to” “improvements on” and the “repair” and “replace” the pipeline. 3. It is important that the easement is defined or has language like Knox that allows for “sufficient width” to achieve the purposes. 4. The court found it important that there was no limitation language in the grant. Interestingly, the court ignored landowner’s argument that language that had been deleted from the easement. Holding: Based on the language in the easement, the easement grant was broad enough to include the right to replace the line. -“Every easement carries with it the right to do whatever is reasonably necessary for the full enjoyment of the easement itself. The extent to which incidental rights may be exercised depends upon the object and purpose of the grant and whether such rights are limited by the terms of the grant.” -Prescriptive Rights Distinction: Prescriptive easement limited to original use to which it was put, but conveyed easement depends on grant language. The Purposes Knox v. Pioneer Natural Gas Co., 321 S.W.2d 596 (Tex. Civ. App.— El Paso, 1959, writ ref’d n.r.e.)

8 Dwyer – Landowner case Facts: -On March 9, 1926, Dwyer’s predecessor in interest granted an easement to Houston Pipeline Co. -Easement had deletions in it: “remove” and the clause allowing for additional pipelines. -No specifications on size of the pipeline, no metes and bounds and no course or direction. -Houston Pipe Line constructed a 18” line. -On December 15, 1959 Houston Pipeline removed the old pipeline and installed a 30” high pressure pipeline. -Dwyer sued Houston Pipeline. The Purposes Houston Pipe Line Co. v. Dwyer, 374 S.W.2d 662 (Tex. 1964)

9 Determination: (grant – “lay, construct, maintain, operate and repair” – no “replace” or “improve”) 1.Big question: What do “Operate” and “Maintain” mean? Answer: “at least broad enough to include the right to remove the original pipe and replace the original pipe with pipe of the same size when necessary.” 2.Differentiates Knox because there “the grant clearly gave the grantee a right in excess of the one actually used... there is no language in the present agreement which can be [so] constructed.” 3.Also significant was the lack of a legal description or course: “If [Houston] is correct that the 1926 agreement authorized an increase in size of the pipeline every time an increased demand for gas [occurred]... the extent of the easement could never become fixed or ascertainable.” Holding: Based on the language in the easement, the easement grant was not broad enough to include the right to replace with a substantially bigger line. The Purposes Houston Pipe Line Co. v. Dwyer, 374 S.W.2d 662 (Tex. 1964)

10 The Purposes Although the landowner prevailed in Dwyer, courts often reconcile Dwyer with Knox, and if enough of the right language is used, follow the Knox reasoning. Courts discourage vagueness or indefiniteness of grant. Practice Point: Be sure to include words like “remove”, “replace”, “additions to”, or “improvements on” and fix the easement’s size.

11 The Right to Upgrade

12 Right to Upgrade Lower Colo. River Auth. v. Ashby, 530 S.W.2d 628 (Tex. App.—Austin 1975, writ ref’d n.r.e.) Ashby – Condemnor case Facts: -Easement entered into in 1940 between LCRA and Ashby. -No physical changes to easement until Prior to 1972: two wooden h-frame structures 60 feet tall; 3 size 4/0 conductor wires; one 138 kV circuit. -After 1972: two steel towers installed 60 feet higher; 3 larger.795 circular mil wires; installed second 138 kV circuit; capacity up to 200,000 kilowatts, but still designed to operate at 138 kV. -Ashby sued LCRA.

13 Determination: – Easement language: - “variable numbers of wires” from granting clause (i.e. circuits) - “for the purpose of constructing, reconstructing, inspecting, patrolling, hanging new wire on, maintaining and removing said lines and appurtenances; the right to relocate along the same general direction of said lines” -“poles made of wood, metal or other material” -Allowed for more towers to be purchased at a set price -“These provisions represent language added to the easement to expand the grant.” – The term “maintain” includes the right to completely remove and rebuild the transmission line in whatever manner and form authorized by the easement. – The term “reconstruct” includes the right to reconstruct “an electric transmission line consisting of a variable number of wires (with) all necessary or desirable appurtenances including (steel) towers.” Holding: Grantee had rights in excess of the ones used and such rights would still exist notwithstanding the prior exercise of a lesser privilege. – Distinguished Dwyer on the facts – no limitation on improvements or size/location of the easement in Dwyer (100 ft. wide = no vagueness) Right to Upgrade Lower Colo. River Auth. v. Ashby, 530 S.W.2d 628 (Tex. App.—Austin 1975, writ ref’d n.r.e.)

14 Voges case: Condemnor Case Facts: - LCRA acquired 50-year interest in property in 1943 (not recorded) - Renewed 1966/1967 (contract in 1966 but easement signed in 1967 after Voges purchase) - Vogues deed referenced LCRA’s 40’ perpetual easement. – Originally constructed H-frame wooden structures operated at 69 kV – Replaced with concrete poles increased voltage to 138 kV. – Easement Language: 1943: the purpose of "constructing and reconstructing, repairing, operating and maintaining or removing" the electric line. No dispute that would give them the right to upgrade 1967: the right “to place, construct, maintain, operate, repair, replace, patrol and remove an electric transmission line”. – The language above, as well as language in the original easement allowing for “poles, towers, wires and other fixtures and appurtenances as [the LCRA] now requires and may from time to time hereafter require” allowed for the increased voltage and upgrade from wooden poles to concrete. Problem – Went to Jury. Voges argued they were jury questions then lost to jury and argued they were legal questions for the court to decide. Can’t switch on appeal. Right to Upgrade Voges v. Lower Colo. River Auth., No CV, 1999 Tex. App. LEXIS 857 (Tex. App.—Austin February 11, 1999, no pet.) (not designated for publication)

15 Dicta: Discussed that Knox gave the right to upgrade when only a lesser right is exercised “Grantee is entitled to... avail himself of modern inventions if by so doing he can more fully exercise and carry out the object for which the [easement] was granted.” Unlike Dwyer, here the 40’ easement is identified by metes and bounds. Practice Point: Be sure to include broad enough language that would allow for a right to upgrade. Be specific. Right to Upgrade Voges v. Lower Colo. River Auth., No CV, 1999 Tex. App. LEXIS 857 (Tex. App.—Austin February 11, 1999, no pet.) (not designated for publication)

16 What about technological advances?

17 Technological Advances Marcus Cable Assoc., L.P. v. Krohn, 90 S.W.3d 697 (Tex. 2002) Marcus Cable – Landowner case Facts: – In 1939, Krohn’s predecessor in interest granted an easement to Hill County Electric Cooperative for “an electric transmission or distribution line or system.” – In 1991, Hill County Electric entered into a joint use agreement allowing cable-television provider to install cable lines on its poles. – Marcus Cable was assigned the right and did so without any assurance that it had the right to install its lines. – Landowner sues Marcus Cable for trespass.

18 Technological Advances Marcus Cable Assoc., L.P. v. Krohn, 90 S.W.3d 697 (Tex. 2002) Marcus Cable – Landowner case Determination: – Easement language was specifically for an “electric transmission or distribution line or system.” – Common understanding of that language is for power companies to convey electricity to the public. – Easements may be apportioned to third parties so long as the use does not exceed the rights expressly granted to the easement holder. – “Cable-television wires” did not fall within the stated purpose of “transmission lines.” Holding: Court agreed that it was a trespass – “television transmission is not a more technologically advanced method of delivering electricity.” Immaterial to what extent it increases the burden on the landowner. – Dissent: Parties did intend for wires to be strung to poles that transmit electric current. Television is a technological advancement without an increased burden.

19 Technological Advances CenterPoint Energy Houston Electric LLC v. Bluebonnet Drive, Ltd., 264 S.W.3d 381 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) CenterPoint – Condemnor case Facts: -In 1929 predecessor in interest to CenterPoint entered into an easement with predecessors to Bluebonnet Drive and Petro-Guard for an electric line connecting substations. -In 1970’s, Southwestern Bell hung telephone wire below the electric for landline service. -In 1998, Sprint installs wireless communication and related telecommunication equipment on existing towers. -Bluebonnet and Petro-Guard bought the property in 2004 and sued CenterPoint and Sprint shortly thereafter for trespass.

20 Technological Advances CenterPoint Energy Houston Electric LLC v. Bluebonnet Drive, Ltd., 264 S.W.3d 381 (Tex. App.—Houston [1st Dist.] 2008, pet. denied) Determination: Easement language: not just for “electric transmission and distributing lines consisting of a variable number of wires” but also for “all necessary or desirable appurtenances” which include “telephone and telegraph” wires Common law allows that the “manner, frequency and intensity of an easement’s use may change over time to accommodate technological advances” BUT, the upgrades still must fall within the purposes of the easement. (incidental right) The easement included more than the electric line purpose - also telephone and telegraph transmission Holding: The court reasoned that the cellular devices were simply a technological advance of the “telephone lines,” which were expressly permitted in the easement. From Voges: “The grantee is entitled to vary his mode of enjoying [his rights in the land], and from time to time to avail himself of modern inventions if by so doing he can more fully exercise and carry out the object for which” it was granted.

21 Technological Advances Corley v. Entergy Corp., 246 F. Supp.2d 565 (E.D. Tex. 2003) Facts: Entergy held four different easement forms for power lines and wanted to allow third parties to install voice, data, and video transmission through fiber optic cables. Allowed? Depends on the wording: 1.“…for transmission of electricity” - this easement permitted the placement of fiber optic cable only for internal communications. No third party. 2.“…transportation of electricity and grantees [sic] communications” - this easement could only be used for internal communications since the terms specifically stated “grantees.” No third party. 3.“…and for telephone or telegraph use.” - allowed third party voice and data, but no video. The court said “telephone” allowed transmission of sound/voice and “telegraph” allowed for transmission of data. No video transmission was allowed. 4.“…transmission of electricity and communications.” - The broad wording allows for third party voice, data, and video. Practice Point: When possible, use the term “all necessary and desirable appurtenances” and “communications” See CenterPoint Case.

22 Future Lines Negotiate Carefully

23 Future Lines: Singular vs. Plural Pioneer Natural Gas Co. v. Russell, 453 S.W.2d 882 (Tex. Civ. App.—Amarillo 1970, writ ref’d n.r.e.) Does simply adding “s” to pipeline in the grant allow for multiple lines? Pioneer Natural Gas – Landowner case Facts: -Predecessor in interest Russell grants easement to Pioneer’s predecessor in interest in Easement allowed for “parallel pipelines”, “pipelines”, “pipe line or lines” and “said pipe lines” -Only one 8” pipeline constructed in In 1968, Pioneer built a second pipeline that was 10” in diameter. -Russell filed suit against Pioneer because he did not believe the easement allowed the installation of a second pipeline.

24 Grant language was general – “lay, maintain, operate and remove parallel pipelines.” No express provision for laying of additional lines in the future. “Parallel lines” became fixed as one line after original pipeline constructed because wording was inconsistent – at times plural but twice singular. Cases where future lines expressly granted or price set for future lines are interpreted as multi- line easements. Future Lines: Singular vs. Plural Pioneer Natural Gas Co. v. Russell, 453 S.W.2d 882 (Tex. Civ. App.—Amarillo 1970, writ ref’d n.r.e.)

25 Moody case: Condemnor friendly Facts: -In 1944 Moody’s predecessor in interest granted easement to Phillips. -Between 1945 and 1978 additional pipelines are constructed. -In 1978, the Landowner refused payment for a new line being constructed. -Easements used plural language throughout -Did not state course or width of easement Future Lines: Singular vs. Plural Moody v. Phillips Petroleum Co., 594 S.W.2d 189 (Tex. Civ. App.—Amarillo 1980, writ ref’d n.r.e.)

26 Determination: “lay, maintain, inspect, erect, operate and remove a pipe line or pipe lines…” Because the agreement included language, “if at any time or times any such pipe line or pipe lines shall be laid,” as well as a price per rod for the line or lines, the intent was a multiple line easement. Holding: Phillips had a multiple line easement. Practice Point: Add a specific multiple line provision and make sure the easement width is defined. May want to add the price of the future line. Doing this will reserve the “greater right” of multiple lines. See Knox, 321 S.W.2d at 600. Future Lines: Singular vs. Plural Moody v. Phillips Petroleum Co., 594 S.W.2d 189 (Tex. Civ. App.—Amarillo 1980, writ ref’d n.r.e.)

27 Mind the Details in Agreements…

28 Attempts to Limit Rights How does landowner attorneys limit these rights? Purpose: Other than deleting rights, you often see caps on pipeline sizes or voltages. Upgrade or Technological Advances: Try to put “only” in front of the grant. Communication Lines: Tie them to internal use. Future Lines – Limit on number of pipelines or circuits, agree to price and add CPI adjustment or put a duration period for amount of time to build. Again, it will depend on the other language in the easement. – Look again at Dwyer and Knox: The Knox easement had the additional language and the Dwyer easement did not. Make sure the language is clear that improvements are allowed.

29 Silence is not always Golden If easement is silent or vague in its terms, the rights may become fixed and certain upon construction. See Dwyer and Pioneer Nat. Gas. For example: If the easement contains general terms and Company X constructs one 10” pipeline in a 30’ easement, its rights would likely be fixed for one 10” pipeline in a 30’ easement.

30 BUT...

31 Silence... (Continued) The City Public Service Board of San Antonio v. Karp, 585 S.W.2d 838 (Tex. Civ. App.—San Antonio 1979, no pet.) Karp case: CPS Energy wanted to remove an underground transformer and replace it with an above-ground transformer. Landowner claimed this was not allowed under the easement. Trial court: because the easement was general, vague, and indefinite, future use of the easement was restricted to its initial use. Court of Appeals: the easement was not vague because it defined the location and purpose (for a transformer easement). “An easement granted for general purposes includes not only the use required at the time of the grant, but also the right to use the easement for any purposes connected with the use to which the property is being put.” Result: CPS allowed to install above-ground transformer.

32 CONCLUSION Be clear in the easement – don’t be vague. – Purposes – Upgrade – Technological Advancements – Multiple lines – Communication lines – Other appurtenances THANK YOU

33 Real Property Acquisition and Transactional Eminent Domain Real Property Litigation R AMON M OLINA (210) rmolawfirm.com


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