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Appalachian Power Co. v. Nissen

United States District Court, W.D. Virginia, Roanoke Division

December 18, 2015

APPALACHIAN POWER COMPANY., Plaintiff,
v.
WILLIAM W. NISSEN II, and LORA J. NISSEN, Defendants

          For Appalachian Power Company, Plaintiff: Charles Carter Lee, Matthew Patrick Warren Pritts, LEAD ATTORNEYS, Woods Rogers PLC, Roanoke, VA.

         For William W. Nissen, II, Lora J. Nissen, Defendants: Bart Steven Fisher, LEAD ATTORNEY, PRO HAC VICE, The Law Office of Bart S. Fisher, Washington, DC; Ross Alan Fisher, LEAD ATTORNEY, The Law Office of Bart S. Fisher, Washington, DC.

         MEMORANDUM OPINION

         NORMAN K. MOON, UNITED STATES DISTRICT JUDGE.

         I. Introduction

         Appalachian Power Company (" APCO," or " Plaintiff" ) filed this action on October 3, 2014, pursuant to the Declaratory Judgment Act, 28 U.S.C. § § 2201 et seq. and the Federal Power Act (" FPA" ), 16 U.S.C. § § 791a et seq. Plaintiff alleges that William Nissen, II and Lora J. Nissen (collectively " Nissens" or " Defendants" ) are constructing a dock on Smith Mountain Lake that violates APCO's legal rights. The construction and related changes made to the land, Plaintiff argues, violate both a flowage easement that APCO holds on Defendants' property and a license order granted to APCO by the Federal Energy Regulatory Commission (" FERC" ). Compl. ¶ 34. Plaintiff holds these rights because it operates the Smith Mountain Hydroelectric Project on the Smith Mountain and Leesville Lakes in Southwest Virginia. Id. ¶ 7. Plaintiff seeks the following: (1) a declaratory judgment that the Defendants are in violation of its easement; (2) an injunction requiring Defendants to repair some of the alleged damage caused by the dock's construction; and (3) an injunction to remove the dock if Defendants fail to obtain a permit from APCO approving its construction. Compl. ¶ ¶ 34, 38. Despite Defendants efforts to muddy the waters, this case is a simple one: APCO seeks to determine if Defendants' construction violates the terms of its FERC License and, if so, whether the flowage easement grants it sufficient property rights to halt the construction and undo certain changes made to the land.

         The matter is now before me upon Plaintiff's motion for summary judgment. In its motion, APCO asks this Court enter judgment upon its request for declaratory relief. More specifically, APCO asks me to determine that: (1) it has the authority to regulate the use and occupancies of the project lands; (2) the Nissens have constructed a dock in violation of APCO's rights; (3) the Nissens have removed vegetation in violation of APCO's rights; (4) the Nissens have constructed a road in violation of APCO's rights; and (5) the Nissens have engaged in unauthorized fill activity in violation of APCO's rights. Furthermore, APCO requests that summary judgment be entered for it on the Nissens' request for declaratory relief. The Nissens object to these requests. However, they have not moved for summary judgment on their own behalf. As this opinion will explain, I will grant APCO's motion for summary judgment on every item, except I will deny APCO's request that this Court require the Nissens to act affirmatively. Such a requirement would contravene the plain language of the Flowage Easement.[1]

         The Court will also grant a permanent injunction in favor of APCO to prevent future violations as explained further below.

         II. Background

         Plaintiff APCO operates the Smith Mountain Hydroelectric Project (" the Project" ) pursuant to a license issued to it by the Federal Energy Regulatory Commission (" FERC" ). The Federal Power Act (" FPA" ), 16 U.S.C. § 791a et seq., vests FERC with the authority to license hydroelectric projects for the use and benefit of interstate and foreign commerce. By an order dated April 25, 1960, FERC issued a fifty-year license to APCO for the Project, thus delegating its duties and responsibilities to APCO. FERC extended this license for an additional ten years by an order issued on December 15, 2009. The Project boundary encompasses the reservoir at Smith Mountain Lake and all lands on the shoreline of the lake lying below a specific elevation, 800 feet above mean sea level (" FMSL" ). When FERC granted APCO the license, it required APCO to acquire title to or the right to use all property necessary to construct, maintain, and operate the Project. Accordingly, APCO has obtained property rights to all Project lands (those below 800 FMSL), and either owns them in fee simple or has obtained rights of occupancy and use via flowage rights and easement deeds. At dispute in this case is whether the property rights acquired on Defendants' property allow APCO to enforce the requirements of the FERC license.

         Plaintiff manages the Project in accordance with a Shoreline Management Plan (the " SMP" ), which was developed in 2003. This plan was developed through community input and FERC approved the plan. Since approval, the SMP has been incorporated by and is now a part of APCO's license from FERC. The SMP provides detailed guidelines for managing development within the Project's boundaries. Accordingly, the SMP imposes various restrictions on landowners aimed at promoting shoreline stabilization and the protection of aesthetic and environmental quality. Among other things, the regulations address the location, length, height, and maximum size of docks. The SMP also establishes certain " Vegetative Cover Regulations," which require that vegetation within the Project boundary be preserved, and that none may be removed without a permit from APCO. The SMP further limits what can be constructed between an elevation of 795 and 800 FMSL. Structures located within this zone are limited to those that provide access to a dock, as well as pilings or cables installed for purposes of enhancing the stability of a floating structure.

         Defendants own a parcel of land on Smith Mountain Lake. Their property is located at 164 Windmere Trail, Moneta, Virginia 24121. Defendants' property consists of approximately 1.441 acres, some of it lying above and some of it lying below the Project boundary of 800 FMSL. The parcel was conveyed to Defendants subject to all easements, restrictions, reservations, and covenants of record by Deed dated April 14, 2014. Plaintiff APCO had previously obtained easement rights over Defendants' Property pursuant to the Flowage Right and Easement Deed (" Flowage Easement" ) dated September 12, 1960, by and between APCO and Defendants' predecessors-in-title. The Flowage Easement provides APCO with:

[T]he further right to enter upon said premises at any time and from time to time and, at Appalachian's discretion, to cut, burn and/or remove therefrom any and all buildings, structures, improvements, trees, bushes, driftwood and other objects and debris of any and every kind or description which are or may hereafter be located on the portion of said premises below the contour the elevation of which is 800 feet.

Flowage Easement 1. The Flowage Easement also reserves certain rights to the Grantor:

Grantors shall have the right to possess and use said premises in any manner not inconsistent with the estate, rights and privileges herein granted to Appalachian, including (a) the right to cross said land to reach the impounded waters for recreational purposes and for obtaining their domestic water supply and water for their livestock and (b) the right to extend and maintain necessary fences across said land and into the impounded waters for a sufficient distance to prevent livestock from wading around said fences.

Flowage Easement 2.

         Defendants have, without obtaining permission from APCO, commenced construction of a dock, removed vegetation, and constructed a road, all on the portion of their property that falls within the Project boundary. The Defendants' proposed dock, which will be located close to a neighboring lot, will measure roughly 3,520 square feet in size, approximately 110 feet in length, and over 26 feet in height. Plaintiff APCO alleges that the proposed dock does not conform to the requirements of the FERC License Order and integrated SMP, as it is " oversized, too long, too high, and is located too close to the neighboring property." Compl. ¶ 31. Additionally, Defendants' road construction violated the SMP by destroying vegetation and placing additional fill within the Project boundary.

         III. Flowage Easement Excerpt

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) and other valuable considerations in hand paid by Appalachian to Grantors, the receipt of which is hereby acknowledged, Grantors hereby grant, bargain, sell and convey with covenants of general warranty, unto Appalachian forever the right to overflow and/or affect so much of said premises as may be overflowed and/or affected, continuously or from time to time in any manner whatsoever, as the result of the construction, existence, operation and/or maintenance of the aforesaid dam and/or power station, the impounding of the waters of said river and tributaries and/or the varying of the level of the so impounded waters by reason of the operation of said power station, including any pumping as part of such operation.
ALSO, for the above mentioned considerations, Grantors hereby grant to Appalachian the further right to enter upon said premises at any time and from time to time and, at Appalachian's discretion, to cut, burn and/or remove therefrom any and all buildings, structures, improvements, trees, bushes, driftwood and other objects and debris of any and every kind or description which are or may hereafter be located on the portion of said premises below the contour the elevation of which is 800 feet. . . .
Grantors shall have the right to possess and use said premises in any manner not inconsistent with the estate, rights and privileges herein granted to Appalachian, including (a) the right to cross said land to reach the impounded waters for recreational purposes and for obtaining their domestic water supply and water for their livestock and (b) the right to extend and maintain necessary fences across said land and into the impounded waters for a sufficient distance to prevent livestock from wading around said fences.

Flowage Easement 1-2 (emphasis added).

         IV. LEGAL STANDARD

         Summary judgment is warranted if the Court concludes that no genuine issue of material fact exists for trial and that the moving party is entitled to judgment as a matter of law, based on the totality of the evidence, including pleadings, depositions, answers to interrogatories, and affidavits. Whiteman v. Chesapeake Appalachia, L.L.C., 729 F.3d 381, 385 (4th Cir. 2013) (citing Fed.R.Civ.P. 56). A genuine issue of material fact exists " if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

         To demonstrate that a genuine issue of material fact exists, a party may not rest upon his own mere allegations or denials. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Rather, the party must " proffer[] sufficient proof, in the form of admissible evidence, that could carry the burden of proof of his claim at trial." Mitchell v. Data Gen. Corp., 12 F.3d 1310, 1316 (4th Cir. 1993). To this end, a district court has an " affirmative obligation . . . to prevent 'factually unsupported claims [or] defenses' from proceeding to trial." Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir. 1987) (quoting Celotex, 477 U.S. at 323-24).

         V. Appalachian Power's Declaratory Judgment Requests

         A. The Nissens' Alleged Dispute of Material Fact

         Before discussing APCO's requests for declaratory judgment, the Nissens' contention concerning the FERC Licenses must be examined.[2] In their brief, the Nissens argue that " which version of Appalachian's FERC License Order the Court applies when determining the rights Appalachian has in the Nissens' property pursuant to the Flowage Easement is a material fact in dispute because it addresses an issue that is the focal point of this Case." Def. Mem. Opp. 6. More specifically, the Nissens argue that the 1960 FERC License Order should be interpreted against the Flowage Easement to determine APCO's responsibilities to FERC ( i.e., the limitation of the Flowage Easement under Virginia law).

         While the Nissens have couched their argument as a dispute of material fact, the determination of an easement and its limitations are questions for the Court. The rules controlling the interpretation of an easement granted by deed are the same as those that govern the construction of other written documents. Pyramid Development, L.L.C. v. D & J Associates, 262 Va. 750, 553 S.E.2d 725, 728 (Va. 2001). The terms of the easement " are to be construed by giving the words their natural and ordinary meaning," and " [t]he language in the deed is taken most strongly against the grantor and most favorably to the grantee." Bailey v. Town of Saltville, 279 Va. 627, 691 S.E.2d 491, 494 (Va. 2010). Determining the nature of an interest in land conveyed by deed is a question of law. Id. Furthermore, an easement that contains no limitation is limited by a reasonableness inquiry based on the original purpose of the grant: in this case, the original purpose of the Project, to run the hydro electric plant, as determined through the current FERC license. McCarthy Holdings L.L.C. v. Burgher, 282 Va. 267, 716 S.E.2d 461, 464-65 (Va. 2011) (quoting Shooting Point, L.L.C. v, Wescoat, 265 Va. 256, 576 S.E.2d 497, 502-03 (Va. 2003)).

         Although the Nissens' argument concerns a question of law rather than fact, it is worth examining. Presumably, the Nissens suggest that the 1960 FERC license provides a better determination on the original purpose of the grant. See McCarthy Holdings, L.L.C., 716 S.E.2d at 464-65. Specifically, the Nissens point to Article 21 of the April 25, 1960, Order granting APCO its FERC License Order. In that Article, the Order specifically stated that " The Licensee shall, prior to flooding, clear all lands. . . ." (emphasis added). After the introduction, the Order mirrors the language of the Flowage Easement obtained in that same year. Due to this, the Nissens argue that the entire Flowage Easement concerns only the " limited privilege to flood the land subject to the Flowage Easement for the purpose of constructing and operating the Project." Defs. Mem. 9.

         While the argument has been cleverly sculpted, it cannot be accepted. Virginia law limits the unfettered rights that APCO is given under the Flowage Easement through the FERC License and SMP.[3] See McCarthy Holdings, L.L.C., 716 S.E.2d at 464-65. Under the plain terms of the easement, APCO would be allowed to enter the land and remove anything for any reason. Thus, according to the Nissens, the original purpose of the Flowage Easement grant was to flood the land and construct Smith Mountain Lake.[4] This argument fails.

         In the first paragraph of the Flowage Easement, the easement specifically states that it concerns the " construction, existence, operation and/or maintenance of the aforesaid dam and/or power station." This language proves that the original purpose of the Flowage Easement grant concerned an ongoing obligation, on APCO's part, to operate and maintain the dam and power station--obligations that continue to be monitored and determined through updated Licenses and SMPs. These updated obligations were even included in the 1960 License; the same License that the Nissens contend should be interpreted in this case. The 1960 License incorporated the terms and conditions of the Federal Powers Act, and such rules and regulations as the Commission has issued or prescribed. 1960 FERC License, 23 F.P.C. 624 (1960). Specifically, Section 10(c) of the FPA, 16 U.S.C. § 803(c), was incorporated into the license. In Section 10(c), a licensee can be required to conform to rules and regulations that the Commission makes from time to time, thus making the retention of the property rights on APCO's behalf important. 1960 FERC License, 23 F.P.C. 624, at Ordering Paragraph B. Thus, the 1960 FERC License provided the possibility that FERC would issue new licenses in the future providing new rules and regulations.

         Therefore, the 2009 License and 2014 SMP must be analyzed in this case to limit the unfettered language of the Flowage Easement. FERC, the original grantor of the Project, has the best ability to determine what actions APCO must take in order to succeed with the original grant of the easement--to run the dam and power station. Therefore, FERC has just ensured that the Project maintains its purpose through the changing times of technology and activity as evidenced through the updated FERC Orders and SMP. These documents concern the current affairs of the Project and provide an updated determination of what is required of APCO to satisfy the original grant of the easement--to maintain and operate the dam and power station--under the reasonableness inquiry. McCarthy ...


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