Attorneys from Spesia & Taylor successfully defended an energy company against claims by landowners and their counsel seeking exorbitant compensation for easement rights. In Enbridge Pipelines (Ill.) L.L.C., n/k/a Ill. Extension Pipeline Co. L.L.C. v. Kuerth et al, 2016 IL APP (4th) 150519, the landowners’ attorney and his retained expert appraiser advanced a theory under which easements voluntarily acquired (i.e. settlements with landowners) by a public utility or common carrier by pipeline along a designated route could be used as “comparable easement sales” to determine the value of a pipeline easement. They used this theory to justify a demand for millions of dollars in damages allegedly caused by an underground pipeline easement.
Spesia & Taylor retained and presented real estate appraisal experts who discredited the landowners’ theory and testified that the use of comparable sales of other easements to determine value would be improper under the Uniform Standards of Professional Appraisal Practice (“USPAP”) because they do not meet the minimum “standard[s] or criteria to qualify as . . . typical market transaction[s] involving a willing buyer under no compulsion to buy.” Trial courts in six different Illinois counties agreed, finding that “there’s no way in the world that [a pipeline company acquiring rights along its route] would be deemed to be a voluntary buyer under no compulsion to buy.” On appeal, the Fourth District Appellate Court ultimately agreed with Spesia & Taylor’ experts, concluding that the “landowners’ claims regarding the use of comparable sales of other easements to determine the value of damages … have no merit because no such marketplace exists [for pipeline easements].”
The Kuerth decision is a victory for common-carriers-by-pipeline and public utility companies who often deal with landowners and attorneys that demand exorbitant fees for pipeline and utility easements on the basis that settlements for other easements along a designated route, negotiated at substantially higher rates in an effort to avoid the time and expense of litigation, are the proper measure of compensation.