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OLD EASEMENTS – NEW USES AND NEW USERS

Paul J. McConnell, III DeLange, Hudspeth, McConnell & Tibbets, LLP 1177 West Loop South, Suite 1700 Houston, Texas 77027

Texas Land Title Institute December 3, 2010

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Paul McConnell has practiced real estate law, emphasizing litigation and title issues, with DeLange, Hudspeth, McConnell & Tibbets, LLP and its predecessors since he got out of law school in 1973. The Firm traces its roots to Albert J. DeLange, who in 1916, began practicing law with Maco Stewart, who founded Stewart Title Company and Stewart Title Guaranty Company. The Firm has represented many title companies and title insurance agents since its inception.

A special note of thanks is due to Travis Piper, an associate with the Firm, who pulled together a number of the cases cited in this paper.

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OLD EASEMENTS- NEW USES AND NEW USERS

I. Overview:

An easement is a non-possessory interest in land that authorizes its holder to use the property only for a particular purpose. Stephen F. Austin State University v. Flynn, 228 S.W.3d 653, 658 (Tex. 2007). To determine the particular purpose for which an easement may be used, courts apply basic principles of contract construction and interpretation. Marcus Cable Assoc. v. Krohn, 90 S.W.3d 697, 700 (Tex. 2002). An easement’s express terms, interpreted according to their generally accepted meaning, delineate the purposes for which the easement holder may use the property. Marcus Cable at 701; Dewitt County Elec. Coop., Inc. v. Parks, 1 S.W.3d 96, 100 (Tex. 1999). In other words, the contracting parties’ intentions, as expressed in the grant, determine the scope of the interest conveyed. Marcus Cable, 90 S.W.3d at 700-01. Unless the easement’s language is ambiguous, courts rely solely on the written instrument to determine the parties’ intention regarding the scope of the easement. Marcus Cable, 90 S.W.3d at 700-01; Adams v. Norsworth Ranch Ltd., 975 S.W.2d 424, 427-28 (Tex. App. – Austin 1998, no pet.); Eastman Software, Inc. v. Texas Commerce Bank, N.A., 28 S.W. 3d 79, 85 (Tex. App. – Texarkana 2000, pet. denied). No rights pass to the easement holder by implication, except what is reasonably necessary to fairly enjoy the rights expressly granted. Marcus Cable, 90 S.W.3d at 701. If an easement holder uses its easement for a use other than that permitted by the easement agreement, it is a trespasser. Marcus Cable, 90 S.W. 3d at 703.

Against this fairly concrete backdrop, changing times and judicial philosophies have created an interesting patchwork of appellate decisions which will be discussed below.

II. A Few Simple Terms:

The interest of the easement grantee is referred to in the cases as the “Dominant Estate.” The interest of the grantor of the easement (the landowner) is referred to as the “Servient Estate.” An easement on or across land is referred to as an “Easement Appurtenant”.

III. The Expanding Use of Easements As A Profit Center:

Centerpoint Energy v. Bluebonnet Drive, 264 S.W. 3d 381 (Tex. App. – Houston [1

Dist.] 2008, pet. den.) – In 1926, San Jacinto Trust Company granted an easement to Houston Lighting and Power Company for a right-of-way or easement for “electric transmission distributing lines, consisting of variable numbers of wires and all necessary and desirable appurtenances (including towers or poles made of wood, metal or other materials, telephone and telegraph wires, props and guys)” over a twenty-five foot wide strip of land in Houston. Centerpoint Energy is the successor to Houston Lighting and Power Company. On the particular

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site, Centerpoint has a metal electrical tower and at least one additional wooden utility pole within the easement, which is part of a very long right-of-way that connects one Centerpoint power plant substation to another. The metal electrical tower contains both electrical lines and telephone lines, although there is no separate telephone easement on the site. In early 1998, some 70 plus years after the easement was originally granted, Centerpoint and Sprint entered into an agreement to install Sprint’s wireless telecommunication equipment and related telecommunications equipment on Centerpoint’s existing electrical towers in Houston. Centerpoint installed a triangular wireless communication center or antenna for Sprint on the top of Centerpoint’s existing tower and a 96 foot pipe running through the center of Centerpoint’s existing tower, which supports the communication center and metal radio boxes located at the base of the tower. The boxes are mounted on a foundation and surrounded by chain link fencing. Wires and cables pass from the radio boxes into the center pole to connect to the antenna.

Bluebonnet and Petro-Guard purchased the property in 2004. Shortly thereafter, they

sued Centerpoint and Sprint claiming that the use of the tower and the appurtenant structures exceeded the scope of the original easement and constituted a trespass. In addition to trespass, the Plaintiffs claimed easement abuse, unjust enrichment, tortious interference with contract, fraud and fraudulent concealment, both as to the alleged trespass and as their discovery of the trespass. The trial court held that Centerpoint and Sprint’s use of the easement exceeded the scope of the easement as a matter of law and thus constituted a trespass, holding that while an easement holder may assign or apportion rights to a third party, the third party may not exceed the rights granted by the original easement, as set forth in SouthTex 66 Pipeline Company, Ltd. v. Spor, 238 S.W. 3d 538 (Tex. App. – Houston [14 Dist.] 2007, pet. den.).

The 1st Court of Appeals reversed the trial court and held there was no trespass. In

analyzing the easement in question here, the Court followed established Texas law in resolving any doubts about the parties’ intent against the grantor, or servient estate, and adopting the interpretation least onerous to the grantee, or dominant estate, in order to confer on the grantee the greatest estate permissible under the easement. See Houston Pipeline Co. v. Dwyer, 374 S.W.2d 662, 665 (Tex. 1964); Stevens v. Galveston H. & S.A. RY. Co., 212 S.W. 639, 644 (Tex. Comm. App. – 1919); Gulfview Courts, Inc. v. Galveston County, 158 S.W.2d 872, 874 (Tex. Civ. App. – Galveston 1941, writ ref’d). The Court held that although the easement referred to only “telephone and telegraph wires” in keeping with the known technology of 1926, and did not refer to wireless telephone transmission equipment, the easement nevertheless covered technological advancements in the telephone industry so as to permit the use for wireless telephone purposes.

Conversely, in Marcus Cable Assoc. v. Krohn, 90 S.W.3d, 697 (Tex. 2002), the Texas

Supreme Court held an easement that allowed the Hill County Electric Cooperative to use property for the purpose of constructing an “electric transmission or distribution line or system”

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did not allow the attachment of wires for cable television. The original easement was granted in 1939. In 1991, Hill County Electric Cooperative entered into a “joint use agreement” with a cable television provider which later assigned its rights under the agreement to Marcus Cable. The agreement between Hill County Electric and Marcus Cable permitted Marcus Cable to “furnish television antenna service to area residents” and allowed the cable wires to be attached only “to the extent [the Cooperative] may lawfully do so”. The agreement further provided that the electric cooperative did not warrant or assure any “right-of-way privileges or easements”, and that Marcus Cable “shall be responsible for obtaining its own easements and rights-of-way.” Seven years later, the Krohns sued Marcus Cable alleging that the company did not have a valid easement and that Marcus Cable had placed its wires over their property without their knowledge and consent. The Krohns asserted a trespass claim and further alleged that Marcus Cable was negligent in failing to obtain their consent before installing the cable lines. Marcus Cable contended that it was entitled to use the poles under the Cooperative’s easement and Texas statutory law. Marcus Cable argued that easements must be interpreted to anticipate and encompass future technological developments that may not have existed when the easement was originally granted, that there was a strong public policy behind expanding the provision of cable television services, and that adding another wire to the pole did not increase the burden on the servient estate. The Texas Supreme Court rejected those arguments and held that Marcus Cable did not have a right to install and maintain the cable television lines. After remand, the trial court determined that since the scope of the easement was exceeded by Marcus Cable, Marcus Cable was guilty of a trespass, but that the Krohns’ trespass cause of action was barred by limitations, since they failed to bring suit within two years of the date that they learned about the installation of the line. Because Marcus Cable had removed the line from the Krohns’ property before the trial after remand, the claim for injunctive relief was moot. Marcus Cable Assoc. v. Krohn,90 S.W.3d, 876 (Tex.App. – Waco 2006, pet. den.)

Likewise, in Etan Industries, Inc. v. Lehmann, 308 S.W.3d 489 (Tex. App. – Austin

2010, pet. filed), Bluebonnet Electric Cooperative, Inc. owned an easement across the Lehmann’s property to install and maintain an “electric transmission line or distribution line or system.” Etan entered into an agreement with Bluebonnet to allow it to attach its cable television and fiber optic lines to Bluebonnet’s poles. The Lehmanns sued for the removal of the lines. After suit was filed, Etan removed all the lines except for one line as to which it claimed a prescriptive easement, as the line had been in place for more than 10 years. The jury agreed. As to the other lines, the trial court rendered a declaratory judgment and an injunction declaring Etan had no rights in the easement and enjoining the use of the easements by Etan, and awarded attorneys fees to the Lehmanns. The Austin Court of Appeals affirmed, with one justice dissenting. The Texas Supreme Court has requested a response to the petition for review in this case, and the Texas Cable Association has submitted an amicus curiae brief.

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Lessons to be learned from the above cases:

1. Drafting does make a difference;

2. Eyeball your property on a regular basis; and

3. Don’t wait around – statues of limitations are a trespasser’s best friend.

IV. Changing Tastes, Changing Uses:

Brookshire-Katy Drainage District v. Lilly Gardens, LLC, 2010 WL3564744 (Tex.App. – Houston[1 Dist.] September 10, 2010, no pet. h.) – In 1962, Brookshire-Katy Drainage District was granted two easements, identical in language, for “a right-of-way and easement for purpose of constructing, maintaining, operating, repairing and re-constructing a drainage canal” across two tracts of land. In the easement agreement, the district was required to repair all damage to roads as a result of its use of its easement. After the drainage ditch was completed, the district installed a concrete bridge and road across the drainage canal to connect the front and back portions of the tracts on which its easement was located. Underneath the bridge in the drainage canal, the district installed two metal pipes or culverts that ran along with the route of drainage. In 2004, Lilly Gardens, LLC acquired the two tracts subject to the drainage easement. Lilly Gardens bought the tracts for use as an outdoor event venue, and intended to use the existing bridge to transport visitors from a reception facility on the front part of its property to a gazebo on the back portion of the property. Lilly Gardens affixed a bridge covering to the existing cement bridge at ground level. The bridge covering did not extend down into the drainage canal, nor did it touch the pipes or culverts under the bridge. The District sued and contended that the bridge covering interfered with its drainage plans and system and tried to prevent the bridge covering from being completed. The trial court ruled that the bridge covering did not encroach upon or interfere with the District’s easement rights, and allowed Lilly Gardens to complete the bridge covering. The First Court of Appeals held that the District had no right, under the terms of the easement, to control or prohibit construction on the roadway, and its only right with respect to the roadway was the right of ingress and egress to and from the drainage canal. The District next argued that the covering on the bridge may interfere with the maintenance of the drainage canal, but the Court held the District had provided no evidence to support that claim. The Court of Appeals thus affirmed the judgment of the trial court. This opinion has not yet been released for publication. One of the justices on the panel dissented, stating that he believed the District had produced more than a scintilla of evidence showing that the bridge covering could or may interfere with repairs.

V. Beaches: Public or Private?

On November 5, 2010, the Texas Supreme Court handed down a decision of major import to property owners along the Gulf of Mexico, a copy of which is attached. In Severance

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v. Patterson, No.09-0387, the Supreme Court, acting upon certified questions from the Fifth Circuit Court of Appeals, held that the easement in favor of the public established by the Texas Open Beaches Act is not a “rolling” easement and does not move with the vegetation line, except in the case of gradual movements caused by erosion or accretion.

Carol Severance owned a home on the west end of Galveston Island. The property, on Kennedy Drive, was originally located on the second row of houses from the Gulf. Prior erosion and events had placed the house on the first row in front of the vegetation line. The winds generated by Hurricane Rita changed the shoreline, placed the first row lot under water, and placed the Severance property seaward of the vegetation line. The State of Texas took the position that since the Severance lot was now seaward of the vegetation line, it was subject to the beach easement set forth in the Open Beaches Act, and she was therefore required to remove her house, as it interfered with the easement. Mrs. Severance then sued in federal court. The Texas Supreme Court, by a 6-2 vote (Justice Jefferson did not participate) held that the beach easement did not affect her property, since the change in the vegetation line was occasioned by a sudden event, not by gradual events. The Supreme Court therefore answered the question certified to it by the Fifth Circuit “no”. The dissent argued in favor of a hard and fast rule to avoid recurring litigation over whether the vegetation line moved due to erosion or a sudden event. A significant factor in the majority decision appeared to be the fact that the State had transferred West Galveston Island without any reservation of an easement for beach purposes.

There apparently was no such language involved with respect to Surfside Beach, just west of San Luis Pass from West Galveston Island, and the Court of Appeals held the Open Beaches Act applied fully in Brannan v. State, 2010 WL 375921 (Tex.App. – Houston [1 Dist.] February 4, 2010, no pet.h.). However, the Texas Supreme Court has requested briefing on the merits in this case.

VI. Who gets the dirt?

Two Texas cases have recently dealt with the question of who gets the dirt when a drainage easement is taken and dirt is removed from the servient estate.

In State v. Brownlow, 319 S.W.3d 649 (Tex.2010), the Texas Supreme Court held that the taking of a drainage easement did not grant the state the right to remove the dirt it dug out from the property and use it for highway construction purposes at a different site. In that case, the State obtained an easement to construct a mitigation pond upon the Brownlows’ property to collect water that would result from a highway expansion project. The State built the pond and used most of the excavated dirt for highway construction purposes in another location. The Brownlows sued the State for inverse condemnation to recover the value of the dirt the State removed. The State asserted sovereign immunity from suit in a plea to the jurisdiction, which was sustained by the trial court. The court of appeals reversed the trial court, holding that there

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was jurisdiction. The Texas Supreme Court held that the easement did not grant the State the right to use the excavated dirt for highway construction, that the Brownlows had sued the State for a taking under the Texas Constitution, and the State therefore didn’t have sovereign immunity from the suit. The judgment in the original condemnation case stated that the easement was granted to the State “for the purpose of opening, constructing, and maintaining a detention facility in, over and across the [Brownlows’ land], together with the right, at all times, of ingress, egress and regress in, over, on or across such tract of land for the purpose of making additions to, improvements on, and repairs to said detention facility or any part thereof.” The State then excavated in excess of 87,500 cubic meters of dirt from the Brownlows’ property, which it removed and used in the highway expansion project. The State argued that the judgment implicitly granted it the right to use all materials located in the easement to construct, repair and improve roadways, that was entitled to use the dirt for highway construction purposes because such uses were reasonably necessary to ensure its full enjoyment of the easement, and that it had compensated the Brownlows in full. The Texas Supreme Court held that it was incumbent upon the State to be sure that all of the property rights it needed were acquired and encompassed within the language of the judgment, citing Brunson v. State, 418 S.W.2d 504, 507 (Tex. 1967). The Supreme Court went on to hold that the use of the dirt was not necessary to allow the State to fully enjoy its easement, since the easement was granted solely for detention purposes. Because the dirt was not necessary to the purposes for which the easement was obtained, the taking of the dirt constituted an inverse condemnation for which the Brownlows were entitled to additional compensation.

To the same effect is the holding in City of Edinburg v. A.P.I. Pipe & Supply LLC, 2010 WL 3342355 (Tex.App.-Corpus Christi, August 26, 2010, no pet.h.). In that case, the City of Edinburg condemned a tract for a drainage easement. The Corpus Christi Court of Appeals, citing Brownlow (although the Court of Appeals version) held that the easement did not grant the City and Tx. DOT title to the soil that was removed and that the Plaintiffs could maintain an inverse condemnation action.

VII. Pipelines – How many lines and where?

Several Texas cases have dealt with questions concerning the use of pipeline easements and the number of lines that can be located with the easements. Generally, the outcome of these cases depends upon the language of the pipeline easement.

For instance, in Houston Pipeline Company v. Dwyer, 374 S.W.2d 662 (Tex. 1964), Houston Pipeline Company obtained a right-of-way and easement agreement in 1926 which allowed it to “lay, maintain, operate, repair and remove a Pipe Line for the transportation of gas …”. The parties struck out the words “and remove” from the granting clause and deleted a paragraph in the habendum clause which would have given Houston Pipeline Company the right to construct additional pipelines. The agreement did not contain any specifications for the size of

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the pipeline nor did it give a definite location or size of the easement. As originally constructed, the line was 18 inches in diameter, and was laid in 1926. In 1959, Houston Pipeline Company removed the old 18 inch line, re-ditched the property and installed a 30 inch pipe along the same course. During this replacement, the transportation of gas ceased for a few weeks. The Texas Supreme Court held that once the 18 inch pipe was installed in 1926, the extent of the easement rights under the 1926 easement became fixed and its location became certain and that Houston Pipeline Company was not authorized to remove the 18 inch pipe and replace it with a line that was substantially greater in size. It is interesting to compare the philosophy of the court in this case with the philosophy of the courts in Marcus Cable and Centerpoint Energy above.

In contrast, the Coastal States Crude Gathering Company, 482 S.W.2d 954 (Tex. Civ.App. – Corpus Christi 1972, writ ref’d n.r.e.) involved an easement to Sinclair which did contain the right to “lay, maintain, operate, repair, replace or remove an additional pipeline or pipelines along side of said first pipeline …”. This easement was granted in 1942. A year later, Sinclair constructed the pipeline, and some 20 years later, Coastal States acquired the pipelines and the rights under the easement. Coastal States then installed two additional pipelines in the easement. The court of appeals held that this was expressly permitted under the terms of the easement.

In Strauch v. Coastal States Crude Gathering Company, 424 S.W.2d 667 (Tex.Civ.App.- Corpus Christi 1968, writ dism’d), the court considered whether the 22 year lapse between the installation of the first line in 1943 and the installation of the second line in 1965 constituted an abandonment of the easement and held it did not.

The recent case of SouthTex 66 Pipeline Co., Ltd. v. Spoor, 238 S.W.3d 538 (Tex.App.- Houston [14 Dist] 2007, pet. den.), involved a suit by a landowners for trespass against a pipeline company. WesTTex Pipeline Company condemned a pipeline easement across the Spoors’ property. Several years later, WesTTex discontinued its use of the pipeline and leased it to SouthTex 66 Pipeline Co., Ltd. The Spoors sued SouthTex 66 Pipeline, claiming that the pipeline easement could not be partially assigned to SouthTex 66 by virtue of a lease of the line as opposed to an outright assignment. The Court held that pipeline easements are assignable in Texas and that the use by SouthTex did not impose a greater burden or different burden on the property.

Lessons to be learned from the above cases:

1. Drafting is everything.

2. Think about the future before signing an easement.

3. Remember pipeline company probably has the right of eminent domain and can take whatever interest it wants to take, provided it compensates the land owner.

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VIII. Roadway or Access Easements – Who gets to use them?

There seem to be at least five to seven cases every year involving access easements and/or private roadways. It seems that once the ownership the servient estate changes hands or different people begin to use the dominant estate, litigation spontaneously breaks out.

For instance, in Boerschig v. Southwestern Holdings, Inc., 2010 WL 3157152 (Tex.App. – El Paso, August 11, 2010, no pet.h.), a ranch owner brought an action against a neighboring resort owner, alleging trespass and violation of an express easement based on the use of roads by resort guests and the resort’s act in fencing off a portion of the road, seeking injunctive and declaratory relief as well as damages. In the early 1900’s, John A. Poole owned a ranch known as La Cinega. In 1930, the northern portion of La Cinega was sold to the McCrackens, and is now known as the McCracken Ranch. In 1950, Poole’s son purchased La Morita, a western property adjacent to La Cinega. Forty years later, SHI bought the Cibola Creek Ranch, which abutted the northwest part of the McCracken Ranch, and developed the property into a resort. In 1992, SHI bought La Morita and La Cinega and developed those properties into resorts as well. Boerschig now owns the McCracken Ranch, having acquired the ranch in 2000. In 1993, when the McCracken Ranch was owned by McClurg and Kelly, they entered into an easement agreement with SHI, which granted a 30 foot easement “for the purposes of ingress and egress, to and from McCracken Tinaga China Ranch and Cibola Creek-La Cinega Ranch, respectively, over, across, upon the New Road described in this Agreement for its full length described herein”. Boerschig sued SHI alleging, among other things, that the easement was solely for access to a ranch, and not to a resort. He contended that since the easement refers only to ranches it may only be used to access ranches, not to access commercial resorts. The Court of Appeals disagreed and held that the easement was an easement granted for the general purpose of ingress and egress.

Reaves v. Lindsay, 2010 WL 2991092 (Tex.App. – Houston [1 Dist], July 29, 2010, no pet.h.) is another of those cases involving the never-ending fight over whether the owner of the servient estate can install gates and/or cattle guards in an access easement. The tracts in question in this suit were part of a larger tract of land in Austin County owned by Everett Luhn, abutting F.M. Road 2502. In 2000, Luhn sold the portion of the property now owned by the Lindsays, and included in the sale an easement from the Lindsays’ property to F.M. 2502. Luhn then sold the remainder of its property to a third party, who then sold a portion of that property to the Reaves’s in 2005. The Reaves’s property includes the portion burned by the easement in favor of the Lindsays. The Lindsays’ property is fenced with a gate providing access to the easement. In 2006, the Reaves’s sought to fence their property including either installing a gate or cattle guard where the easement abuts FM 2502 and installing a gate to the side of any cattle guard to allow passage for horses and pedestrians. The purpose of the fence and proposed gates and cattle guards was to allow the Reaves’s raise cattle on their property. The Lindsays’s protested both options, insisted that the easement entitled them access to FM 2502 without any gates or cattle

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guards, and brought suit for injunctive relief. The Reaves brought a counterclaim seeking a declaratory judgment to establish the right to install gates and cattle guards along the easement. Both parties filed motions for summary judgment, and the trial court granted the Lindsays’s motion and denied the Reaves’ motion, ruling that the easement must be free of gates or cattle guards. The Reaves appealed. On appeal, the First Court of Appeals, analyzed the language of the easement agreement, noting that the agreement does not specifically address the use of gates or cattle guards. The Court of Appeals held that there was a fact question as to whether the use by the dominate estate is as little burdensome as possible on the servient estate was a fact issue, and that more development of the record was required. The court therefore remanded the case.

In Martin v. Cockrell, 2010 WL 2777824 (Tex.App. – Amarillo, July 14, 2010, no pet.h.) two neighbors (the Jones and the Ingrums) had a “friendly neighborly permission” arrangement whereby the neighbors “just did what they did” using one another’s pasture road to get to adjacent highways. This arrangement continued for some 60 years, until 2000, when Alice Ingrum Gray inherited the Ingrum property and Stephen Martin purchased the Jones property. In 2002, Martin gave Gray County (where the property lies) permission to use the pasture road to haule caliche dug from a pit on the Ingrum property via a “gentlemen’s agreement”, not a formal easement. This ultimately led to a lawsuit regarding whether the Ingrum family had an easement across the Martin property. The jury found that there was an equitable easement, and the trial court entered judgment based upon the jury’s verdict. The Court of Appeals reversed the judgment establishing an easement.

In Tice v. Hunt, 2010 WL 10948602 (Tex.App. – Eastland, May 13, 2010, no pet.h.), the Eastland Court of Appeals held that permission by a landowner to his neighbor to move a private road did not represent the grant of an easement, as there was no representation that an easement existed, but was merely an accommodation to a neighbor.w

In Ferrara v. Moore, 318 S.W.3d 487 (Tex.App. – Texarkana 2010, no pet.) the court discussed yet another attempt to interfere with an easement. Brian Hayes owned an 11 acre tract in Cass County, which he subdivided into 5 lots. The deed to each of those five lots contained an easement for “non-exclusive right-of-way for purposes of ingress and egress between a public road and the tract conveyed.” In 2005, Joseph Ferrara purchased one of the tracts, then installed a fence and gate around the easement in February 2006. He was, of course, sued by his neighbors, and the trial court entered a permanent injunction requiring him to remove the gates from the easement so his neighbors could obtain access to their properties. The Court of Appeals affirmed.