Big Sandy Co. v. Eqt Gathering, LLC
545 S.W.3d 842
Mo. Ct. App.2018Background
- In 2003 Big Sandy Company, LP granted Kentucky West Virginia Gas Co. (now EQT) a pipeline easement (the Myra Pipeline) documented by a written Agreement and an incorporated map (Exhibit A).
- The Agreement granted a temporary 60' construction easement and a permanent 30' right-of-way for a pipeline ≤12" across certain surface tracts and mineral tracts shown on the map.
- Big Sandy owns only the mineral estates on three subject tracts where pipe was already in the ground; Big Sandy wishes to mine those tracts.
- Agreement provisions require EQT either to purchase underlying minerals or remove/relocate the pipeline at EQT's expense if Big Sandy elects to mine near the pipeline, subject to notice and safety/operations limitations.
- Pike Circuit Court held the Agreement unambiguous and applicable to all tracts depicted on the map; the Court of Appeals reversed, interpreting several paragraphs to limit the Agreement to surface-tract locations. The Kentucky Supreme Court granted review and reversed the Court of Appeals, reinstating the trial court judgment.
Issues
| Issue | Plaintiff's Argument (Big Sandy) | Defendant's Argument (EQT) | Held |
|---|---|---|---|
| Does the Agreement unambiguously apply to the subject tracts (including mineral-only tracts and portions with preexisting pipe)? | Agreement language (Paragraph 1) grants easement over "Surface Tracts and Mineral Tracts" and map is incorporated; applies to all depicted tracts. | Agreement should be read to apply only to tracts with both surface and mineral ownership or only to proposed-route portions (excluding pipe already in ground). | Court: Agreement is unambiguous and applies to the subject tracts. |
| Can EQT avoid obligations to relocate or purchase minerals by parsing relocation language to limit the Agreement's scope? | Relocation language refers to putting relocated pipe "elsewhere on Big Sandy's Surface Tracts," which presupposes the Agreement already covers the underlying tracts; it does not restrict the Agreement’s scope. | Because relocation must be on Big Sandy's surface tracts, the Agreement must only apply to surface tracts, not mineral-only tracts. | Court: That reading improperly reads terms into the contract; relocation phrase does not limit overall scope. |
| Do reversion provisions (Paragraphs 10 and 14) create an absurdity if Big Sandy lacks surface title? | Reversion refers to the easement interest conveyed and can revert to Big Sandy as grantor of the easement (regardless of surface title). | It would be absurd for Big Sandy to reacquire a reversionary interest in surface it never owned. | Court: No absurdity — reversion is to Big Sandy’s easement interest conveyed under the Agreement; Big Sandy had an interest in all tracts and could receive the easement back. |
| Was the Court of Appeals correct to reinterpret the Agreement despite clear language? | The appellate court read words into the contract and created limitations the parties did not draft. | N/A (EQT relied on those interpretive points). | Court: Court of Appeals erred as a matter of law; trial court interpretation stands. |
Key Cases Cited
- Baze v. Rees, 217 S.W.3d 207 (Ky. 2006) (standards for appellate review in declaratory actions)
- Kentucky Shakespeare Festival, Inc. v. Dunaway, 490 S.W.3d 691 (Ky. 2016) (contract interpretation and ambiguity are questions of law)
- Board of Trustees of Kentucky School Boards Insurance Trust v. Pope, 528 S.W.3d 901 (Ky. 2017) (unambiguous contracts enforced according to terms)
- New York Life Ins. Co. v. Conrad, 107 S.W.2d 248 (Ky. 1937) (construction of clear contracts)
- Cantrell Supply, Inc. v. Liberty Mut. Ins. Co., 94 S.W.3d 381 (Ky. App. 2002) (definition of contractual ambiguity)
- City of Louisa v. Newland, 705 S.W.2d 916 (Ky. 1986) (contracts construed as a whole to give effect to all parts)
- Kentucky Southern Coal Corp. v. Kentucky Energy and Environment Cabinet, 396 S.W.3d 804 (Ky. 2013) (mineral estate dominance and mining rights context)
- General Refractories Co. v. Swetman, 197 S.W.2d 908 (Ky. 1946) (limits on mineral owner’s surface access)
- Alexander v. Theatre Realty Corp., 70 S.W.2d 380 (Ky. 1934) (court cannot make a contract for parties or read in terms not present)
- Dukes v. Link, 315 S.W.3d 712 (Ky. App. 2010) (grantor can convey only its own interest)