Cedar Farm, Harrison County, Inc. v. Louisville Gas & Electric Co.
658 F.3d 807
7th Cir.2011Background
- Cedar Farm owns approximately 2,485 acres along the Ohio River, including historic, environmental, and public-use features, with a classified forest and endangered wildlife habitats.
- LG & E holds oil and gas leases on portions of Cedar Farm's property, consolidated into the Amended and Consolidated Oil, Gas and Gas Storage Lease, encumbering about 2,176 acres.
- The Lease survives while oil or gas is produced in paying quantities or the property is used for underground gas storage, and permits termination only via a surrender option or nonpayment after demand.
- Cedar Farm alleges multiple breaches by LG & E (trees removed, limbs cut, pump jacks and tanks installed, debris and ruts created, and access issues) and that these harms are ongoing and irreparable.
- Cedar Farm sued in state court (removed to federal court) with count I for damages and count II for ejectment/termination; the district court granted partial summary judgment on ejectment, holding damages are the proper remedy and termination isn’t triggered by the alleged breaches.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether termination/ejectment is permitted when damages may remedy the harm | Cedar Farm argues breaches justify ejectment despite a damages remedy. | LG & E contends damages are adequate and the lease contemplates damages, not ejectment. | Ejectment not permitted; damages adequate; affirmed. |
| Whether the district court treated the case as a summary-judgment remedy issue rather than a 12(b)(6) dismissal | Cedar Farm asserts the court decided this as law based on pleadings. | LG & E notes the court applied summary judgment standards to the absence of evidence on adequacy of damages. | Court correctly applied summary-judgment standards; not a 12(b)(6) dismissal. |
| Whether the court should certify a question to the Indiana Supreme Court | Cedar Farm seeks certification on whether recurring breaches allow termination for intangible harm. | LG & E argues no appropriate state-law question; decisions are fact-specific and not suitable for certification. | Certification denied. |
Key Cases Cited
- Rembarger v. Losch, 118 N.E.2d 831 (Ind. App. 1918) (forfeiture required when money damages are inadequate)
- Risch v. Burch, 95 N.E.123 (Ind. 1911) (forfeiture favored before drilling; preserve value of resources)
- Barrett v. Dorr, 212 N.E.2d 29 (Ind. App. 1965) (remedy by damages preferred; forfeiture is disfavored)
- Thurner v. Kaufman, 237 Kan. 184 (Kan. 1985) (extreme misuse can support termination when surface rights are denied)
- Amoco Prod. Co. v. Village of Gambell, 480 U.S. 531 (1987) (environmental injury seldom compensable by money damages)
- Omnicare, Inc. v. UnitedHealth Group, Inc., 629 F.3d 697 (7th Cir. 2011) (to survive summary judgment, must show collectively viable evidence)
- State Farm Mut. Auto. Ins. Co. v. Pate, 275 F.3d 666 (7th Cir. 2001) (certification standards; determine determinative state-law issues)
- Marion v. City of Corydon, Ind., 559 F.3d 700 (7th Cir. 2009) (summary-judgment standard; view facts in light favorable to non-movant)
- Walker v. Sheahan, 526 F.3d 973 (7th Cir. 2008) (standard for reviewing summary judgments de novo)