Enbridge Pipelines (illinois) L.l.c. v. Michael S. Moore

Hon. Rebecca R. Pallmeyer, of the Northern District of å
Illinois, sitting by designation.
In the
United States Court of Appeals
For the Seventh Circuit
Nos. 10-2268, 10-2305, 10-2313, 10-2850
ENBRIDGE PIPELINES (ILLINOIS) L.L.C.,
Plaintiff-Appellee,
v.
MICHAEL S. MOORE, et al.,
Defendants-Appellants.
Appeals from the United States District Courts for the
Central and Southern Districts of Illinois.
Nos. 08-2215, et al.; 08-cv-697-DRH, et al.
Harold A. Baker, Judge, and David R. Herndon, Chief Judge.
ARGUED DECEMBER 1, 2010—DECIDED JANUARY 24, 2011
Before BAUER and POSNER, Circuit Judges, and
PALLMEYER, District Judge.å
POSNER, Circuit Judge. Before us for decision are con-
solidated appeals from judgments, all in favor of the
plaintiff, in 18 lawsuits brought in two federal district
courts in Illinois under the diversity jurisdiction. (Origi-

-- 1 of 9 --

2 Nos. 10-2268, 10-2305, 10-2313, 10-2850
nally there were 25 suits; three of the other seven were
settled; presumably the defendants in the other four
simply accepted their defeat.) Illinois law is agreed to
govern the substantive issues. The plaintiff, Enbridge,
sought in each suit a declaration that its easement to
operate an oil pipeline under the defendant’s property
is—as the defendants deny—still in force. The district
judges granted summary judgment for Enbridge in each
of the cases, and entered the declaration that it sought.
Enbridge is trying to build a 170-mile-long pipeline
in Illinois as part of a larger project of pipeline construc-
tion to meet increased American demand for Canadian
oil. A 120-mile segment of the 170-mile construction
route already contains a pipeline, though it has only a 10-
inch diameter and has not been in use for many years.
The construction and operation of that pipeline, built
in 1939, was made possible by easements granted to a
predecessor of Enbridge by the farmers owning the
land under the surface of which the pipeline passes.
Enbridge wants to replace the 10-inch pipeline with a 36-
inch one. The defendants contend that Enbridge’s pred-
ecessors (the existing pipeline has had several owners
since it was built), and hence Enbridge, have forfeited
the easements by failing to maintain the pipeline in
good working condition.
The easements gave the original grantee “the right to
lay, operate, and maintain a pipe line for the transporta-
tion of oil, gasoline and/or other fluids,” and gave “its
successors and assigns”—thus including Enbridge—
the same rights “so long as such pipe lines or other struc-

-- 2 of 9 --

Nos. 10-2268, 10-2305, 10-2313, 10-2850 3
tures are maintained.” The holder of the easement
must pay the landowner “for any and all damages to
crops owned by [him], fences, and land which may be
suffered from the construction, operation or main-
tenance of such pipe lines.” (The parties attach no signifi-
cance to the fact that “pipe line” is singular in the
first clause and plural in the others.) The existing
pipeline had been inactive for almost a quarter of a
century when Enbridge acquired it and the easements,
and, according to the defendants, was in a state of dis-
repair. They contend that cathodic protection (running
an electrical current through the pipeline to prevent
rust) had been neglected; missing segments of the pipe
had not been replaced (thus disrupting the electrical
current at times when the pipeline owner did try to
provide cathodic protection); valves and pumps had not
been maintained and some of them had been removed
and not replaced; the interior of the pipeline had not
been cleaned and various seam and joint failures had
not been repaired.
The defendants’ allegations are exaggerated. Although
the pipeline was indeed not in use between 1988 and
2006, considerable maintenance was performed in 1992,
1993, and 2004. There is no evidence of any missing
segments, and an engineer who performed 27 “integrity
digs” (excavations for the purpose of inspection) testified
that “the pipeline is capable of transporting liquid.” His
affidavit described “the pipeline [as] close to being as
good as new and could with relative ease be placed
back into active service as a crude oil line, a gas line, or
a water line.”

-- 3 of 9 --

4 Nos. 10-2268, 10-2305, 10-2313, 10-2850
One of the district judges determined, in disagreement
with the defendants’ allegations, that maintenance ap-
propriate for an inactive pipeline had been con-
ducted; the other that the easements were valid as long
as the pipeline remained in existence, no matter how
dilapidated it became.
A threshold question is whether, as the diversity
statute requires, the amount in controversy in each of
the suits exceeds $75,000. 28 U.S.C. § 1332. Enbridge
alleged in its complaints that it did. Most though not
all of the defendants denied the allegation, though
without presenting any evidence or reason to doubt
its truth. A plaintiff is required to supply “competent
proof” of the amount in controversy if the “jurisdictional
facts are challenged by his adversary in any appropriate
manner.” McNutt v. General Motors Acceptance Corp.,
298 U.S. 178, 189 (1936). But what is an “appropriate
manner”? The cases do not appear to require more than a
bare denial to put the plaintiff to his proof, see, e.g.,
McMillian v. Sheraton Chicago Hotel & Towers, 567 F.3d
839, 844-45 (7th Cir. 2009); Rexford Rand Corp. v. Ancel, 58
F.3d 1215, 1218 (7th Cir. 1995), even if the result is
merely to slow down litigation and increase its costs.
But no matter; Enbridge did respond to the defendants’
denial, presenting evidence that to build its pipeline
around the defendants’ properties would cost at least
$75,000, per property, in pipe alone, ignoring construction
costs, which would bring the total cost well above $75,000.
The defendants reply that maybe Enbridge wouldn’t
have to do any building around; maybe it could buy a

-- 4 of 9 --

Nos. 10-2268, 10-2305, 10-2313, 10-2850 5
new easement in each of the defendants’ properties for
less than $75,000. But why for less? If it would cost
Enbridge at least $75,000 to build around a property, it
should be willing to pay that amount for an easement
for the pipeline in its current location—even more,
when construction costs are taken into account, not to
mention the possible unwillingness of a neighboring
property owner to allow Enbridge to build the pipeline
on his property without payment of a substantial price
for an easement. There are also costs of cumulative
delay to be considered. To build around one or two
properties would delay the completion of the new pipe-
line (the 36-inch replacement for the existing 10-inch one)
by only a little. But to build around 25 properties? And
any delay, by postponing the day on which Enbridge
begins to earn revenues from the pipeline project, would
impose costs. These additional costs would increase the
amount that Enbridge would be willing to pay to buy
a new easement from each of the defendants. Knowing
all this, each defendant would demand a very high price.
The district court was thus on solid ground in con-
cluding that Enbridge had satisfied the amount in con-
troversy requirement with respect to all of the defen-
dants’ properties. See McCarty v. Amoco Pipeline Co., 595
F.2d 389, 391-95 (7th Cir. 1979).
One further point needs to be made about the jurisdic-
tional issue. Some of the defendants did not challenge
Enbridge’s allegation about the amount in controversy
until the appeal. That delay was not fatal because a chal-
lenge to subject-matter jurisdiction is timely until at

-- 5 of 9 --

6 Nos. 10-2268, 10-2305, 10-2313, 10-2850
least the entry of a final judgment after exhaustion of
further judicial remedies. Travelers Indemnity Co. v.
Bailey, 129 S. Ct. 2195, 2205-06 (2009); Dexia Credit Local v.
Rogan, 602 F.3d 879, 883 (7th Cir. 2010). But a defendant
who lies back, holding such a challenge in reserve
because he hopes to obtain a judgment on the merits
(which unlike a dismissal for want of subject-matter
jurisdiction would preclude refiling a diversity suit in
state court), in which event he would not raise a juris-
dictional objection, engages in misconduct for which he
can be disciplined. See BEM I, L.L.C. v. Anthropologie, Inc.,
301 F.3d 548, 551-52 (7th Cir. 2002); Aves ex rel. Aves v.
Shah, 997 F.2d 762, 767 (10th Cir. 1993); see also
Mansfield, Coldwater & Lake Michigan Ry. v. Swan, 111 U.S.
379, 388-89 (1884); Belleville Catering Co. v. Champaign
Market Place, L.L.C., 350 F.3d 691, 694 (7th Cir. 2003);
In re Brand Name Prescription Drugs Antitrust Litigation,
248 F.3d 668, 670 (7th Cir. 2001).
On to the merits. The word “maintain” is ambiguous. So
far as bears on this case it can mean engage in mainte-
nance, as when one says that one’s antique auto has
been maintained in mint condition, or it can just mean
occupied or retained, as when one says that one main-
tains an office at Dearborn and Adams. The latter is the
more plausible interpretation of the word as it appears
in the relevant clauses of the easements. The reasons
are the economic value of well-defined property rights
and the undesirability of inducing heavy expenditures
merely to preserve a right. A rule that forfeited a
person’s property right because he’d failed to maintain
the property in good condition would cast a cloud of

-- 6 of 9 --

Nos. 10-2268, 10-2305, 10-2313, 10-2850 7
debilitating uncertainty over property rights, as well as
induce expenditures on maintenance intended not to
enable the productive use of the property but merely
to avoid forfeiture of the property right. Rational parties
to a conveyance of a property right would not negotiate
for such consequences.
An easement can, it is true, be abandoned, and when
that happens the rights granted by it revert to the ease-
ment’s grantor. E.g., Chicago Title & Trust Co. v. Wabash-
Randolph Corp., 51 N.E.2d 132, 139 (Ill. 1943); Gacki v.
Bartels, 859 N.E.2d 1178, 1186 (Ill. App. 2006); Penn
Central Corp. v. United States R.R. Vest Corp., 955 F.2d 1158,
1159-60 (7th Cir. 1992); Borough of Columbia v. Surface
Transportation Board, 342 F.3d 222, 225-26 and n. 2 (3d Cir.
2003). But “abandonment” in the law of property is a
deliberate act, Beloit Foundry Co. v. Ryan, 192 N.E.2d
384, 391 (Ill. 1963); Diaz v. Home Federal Saving & Loan
Ass’n, 786 N.E.2d 1033, 1043 (Ill. App. 2002); Johnston v.
Cornelius, 218 P.3d 129, 135-36 (Or. App. 2009), not a
synonym for poor maintenance or, in the grants in ques-
tion in this case, for failure to “maintain” the pipeline,
because a contrary reading would engender wasteful
maintenance. The original pipeline was not in use for
many years. Should the owners have had to spend
money on maintenance, just to preserve their easements?
What good would that have done anyone? The owners did
not intend to abandon the easements; they foresaw the
possibility that demand for transportation of oil by pipe-
line would someday justify placing the pipeline (or a
replacement) into service, but there was no economic

-- 7 of 9 --

8 Nos. 10-2268, 10-2305, 10-2313, 10-2850
justification for keeping the pipeline in operating condi-
tion until then.
The defendants will not acknowledge the difference
between a right of property (ownership) and a right
merely of use. A property right confers on its owner
among other benefits an option not to develop or exploit
his property immediately or continuously—often a valu-
able option, as where land is bought with the expectation
that economic conditions will warrant its development
as a residential subdivision ten years hence, or land
containing oil shale is bought with the intention of ex-
tracting oil at some future time when oil prices will
justify the expense of extraction. An investor who
believes that development would be premature may be
willing to pay more for the property than someone
who wants to develop it immediately, and it would be
a mistake to burden far-sighted investment by condi-
tioning ownership on use. American Land Holdings of
Indiana, LLC v. Jobe, 604 F.3d 451, 458 (7th Cir. 2010);
Douglas A. Kysar, “Law, Environment, and Vision,” 97
Nw. U. L. Rev. 675, 698-99 (2003); Robert C. Ellickson,
“Property in Land,” 102 Yale L.J. 1315, 1368-69 (1993).
One can imagine a reading of the word “pipeline” in the
easement that would equate it not to the pipe itself but to
the pipeline in the sense of a route for transporting oil,
just as one might speak of an “air corridor” between
New York and Chicago even if no airlines were
operating between those cities. Maintaining the pipe-
line would then just mean preserving the option to use
the easements for future transportation of oil, even if the

-- 8 of 9 --

Nos. 10-2268, 10-2305, 10-2313, 10-2850 9
existing pipeline crumbled to dust. But one of the phrases
we quoted from the conveyances that created the ease-
ments—“such pipe lines or other structures” (emphasis
added)—implies that the word “pipe lines” refers to the
physical pipeline, not the easements. On this reading, the
dismantlement of the pipe would have terminated the
easements. Cf. Chicago & Eastern Ill. R.R. v. Clapp, 66 N.E.
223, 225 (Ill. 1903); Schnabel v. County of DuPage, 428
N.E.2d 671, 679 (Ill. App. 1981). Yet even this reading
would not defeat Enbridge’s claim. The successive
owners of the original 10-inch pipeline maintained it at
a level at which it could have been put back into service
with additional expenditures to clear out the rust
and replace broken parts. That minimal maintenance,
preserving the option of a future use not just of the ease-
ments but of the existing physical pipeline, was enough
to establish that the owners maintained the pipeline
within any meaning that could reasonably be assigned
to the easements and had no intention of abandoning it,
for if they had intended to do so they wouldn’t have
spent even a penny on maintenance.
The district courts had jurisdiction and the easements
have not been forfeited. The judgments are therefore
AFFIRMED.
1-24-11

-- 9 of 9 --