Judge denies plaintiffs’ request for summary judgment in Bakersfield pipeline dispute

By Sandra Lane | Jun 21, 2018

FRESNO – A federal judge in the U.S. District Court for Eastern District of California recently denied plaintiffs’ motion for partial summary judgment on three issues in a case involving pipelines that interfered with the property owners’ development plans.

This case concerns an easement on 138 acres of undeveloped land in Bakersfield purchased by plaintiffs C&C Properties, JEC Panama and Wings Way from defendant Chevron U.S.A. on June 28, 2013. The plaintiffs intended to develop the property for commercial and/or industrial use. However, prior to the closing, an easement containing several pipelines extending across the front of the property was discovered. These easements were owned by Shell, Chevron and Alon USA Paramount Petroleum Corporation.

Plaintiffs requested the owners of the pipelines to remove and/or relocate the pipelines, which they refused to do, resulting in the filing of a lawsuit on Nov. 26, 2014, seeking a preliminary injunction compelling defendants to remove their pipelines.

After a hearing presided over by a magistrate judge, Alon agreed to remove its 10-inch pipeline within 120 days without a court order and Shell also agreed to remove its 12-inchCross-Valley Pipeline within 120 days.

However, Shell refused to remove its 14-inch Bakersfield Crude Pipeline. 

On Sept. 23, 2015, plaintiffs were granted a preliminary injunction to remove the Bakersfield Crude Pipeline. On Dec. 3, 2015, a district judge adopted the findings and recommendations. 

In their current motion for partial summary judgment, plaintiffs said that although all pipelines were removed by April 16, 2016, they wish to seek damages resulting from these violations of the relocation clauses of the agreements.

In announcing his decision on June 14, U.S. District Judge Drozd said, “On a motion for summary judgment, the moving party initially bears the burden of proving the absence of a genuine issue of material fact. When, as is the case here, the moving party is a plaintiff, he or she must adduce admissible evidence on all matters.” Accordingly, Drozd denied summary judgment requested by plaintiffs on all of the issues.

Regarding an ejectment claim, Drozd ruled, “Having failed to show that the easements terminated automatically, plaintiffs have failed to establish that the presence of the pipelines on the property was wrongful as a matter of law, as they must do to succeed on their ejectment claim. Accordingly, plaintiffs’ motion for summary judgment on their ejectment claim will be denied."

Regardong a trespass claim, the judge said, “There is a genuine dispute of material fact here. ... Some evidence suggests that C&C’s opinion of interference was reasonable, while other evidence suggests the opposite. The court is not permitted to weigh competing evidence at this stage.”

The judge stated that resolution of the question of reasonableness is necessary to resolving plaintiffs’ trespass claim because if plaintiffs’ opinion as to interference was unreasonable, then plaintiffs may not invoke the satisfaction clause and demand that defendants relocate their pipelines.

Accordingly, the judge ruled, “Because the antecedent question of reasonableness cannot be resolved on summary judgment, plaintiffs’ motion will be denied in this respect.”

Regarding a breach of contract claim, Drozd said, “The parties’ dispute centers on the issue of breach, with plaintiffs claiming that Shell and Alon breached the easements by refusing to relocate their pipelines following C&C’s demand letter. However, for the same reasons the granting of summary judgment is precluded on plaintiffs’ trespass claim, it is also precluded on plaintiffs’ breach of contract claim.” 

Here again, the judge said that “reasonableness” is to be considered. “Plaintiffs’ success on the merits of the breach of contract claim hinges on the reasonableness of its opinion that the pipelines interfered with its use of the property. If plaintiffs’ invocation of the satisfaction clause was objectively unreasonable, they had no basis to demand that the pipelines be relocated. In that event, defendants did not breach the easements by failing to relocate the pipelines. Only the trier of fact can resolve that issue in this case.”

His final ruling was that plaintiffs’ motion for summary judgment on its breach of contract claim was therefore denied as well.

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