Opinion
CIVIL ACTION No. 01-2026-GTV.
February 8, 2002
MEMORANDUM AND ORDER
This case arises out of a lease agreement between plaintiff Kansas Pipeline Company and defendants Herbert and Vonda Landwehr. Plaintiff and its predecessors have leased a parcel of property from defendants since 1989 and used the property for various functions related to the operation of a natural gas pipeline system. Defendants attempted to terminate the lease, and plaintiff brought this condemnation action. Plaintiff asks the court to find that it has eminent domain power to condemn the property and acquire it for fair market value. In the alternative, plaintiff asks the court for declaratory judgment that the lease has not been terminated and remains in effect. Defendants have brought counterclaims for trespass and damage to the property.
The case is before the court on defendants' motion for partial summary judgment (Doc. 24) and plaintiff's motion for summary judgment (Doc. 27). For the reasons stated below, the court denies plaintiff's motion with regard to plaintiff's claim for declaratory relief and sets a conference to be conducted by a telephone conference call which will be initiated by the court on February 22, 2002 at 1:30 p.m. The court withdraws the reference of the case to U.S. Magistrate Judge James P. O'Hara.
I. FACTUAL BACKGROUND
The following facts are taken from the summary judgment record and are either uncontroverted or viewed in the light most favorable to the non-moving party's case. Immaterial facts and facts not properly supported by the record are omitted.
Plaintiff Kansas Pipeline Company and its predecessors have leased a parcel of land from defendants Herbert and Vonda Landwehr since 1989. Plaintiff is an interstate natural gas pipeline company and maintains two dehydration units on the property. Plaintiff's pipeline runs adjacent to the property and feeds into the two dehydrators through smaller pipelines embedded in the property.
The lease is a one-year lease with renewal provisions. The lease provides as follows:
This lease shall be for a term of one (1) year(s), referred to as the lease term, commencing on December 11, 1989, and ending on Dec. 11, 1990.
Lessee may extend this lease for further periods of one (1) year(s) increments by giving Lessor written notice of Lessee's intention to do so at any time within the last one year prior to the expiration of the lease term or extension thereof, under all of the terms and conditions of this lease. The consideration to be paid by Lessee for each one (1) year(s) extension shall be $900.00.
If Lessee shall hold over after the expiration of the lease terms or any extension, such tenancy shall be from month to month on all the terms, covenants, and conditions of this lease.
Plaintiff timely renewed the lease every year until December 2000. Apparently through inadvertence, plaintiff failed to notify defendants by December 11, 2000 that it intended to renew the lease. Pursuant to the lease provisions, plaintiff became a month-to-month holdover tenant. On December 19, 2000, defendants' attorney notified plaintiff by letter that plaintiff had failed to renew the lease in a timely manner. Defendants' attorney stated, "This letter is to give you notice to quit, vacate and terminate your lease thirty days from today, effective January 19, 2001."
On December 21, 2000, plaintiff's attorney notified defendants that plaintiff intended to renew the lease, and tendered a check in the amount of $900.00. Defendants' attorney replied the following day, rejecting the check on behalf of defendants. Plaintiff filed the instant lawsuit on January 16, 2001.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). Lack of a genuine issue of material fact means that the evidence is such that no reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Essentially, the inquiry is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251-52.
The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. This burden may be met by showing that there is a lack of evidence to support the nonmoving party's case.Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the moving party has properly supported its motion for summary judgment, the burden shifts to the nonmoving party to show that there is a genuine issue of material fact left for trial. Anderson, 477 U.S. at 256. "[A] party opposing a properly supported motion for summary judgment may not rest on mere allegations or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Id. Therefore, the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Id. The court must consider the record in the light most favorable to the nonmoving party. Bee v. Greaves, 744 F.2d 1387, 1396 (10th Cir. 1984).
III. DISCUSSION
Plaintiff moves for summary judgment on two alternative bases. First, plaintiff argues that it has eminent domain power under the Natural Gas Act to take the property. On this theory, plaintiff claims eminent domain power if the lease agreement with defendants has been terminated. See 15 U.S.C. § 717f(h) (stating that a holder of a certificate of public convenience and necessity may acquire necessary property by eminent domain when it cannot acquire the necessary property by contract or is unable to agree with the owner of the property on an amount of compensation). Alternatively, plaintiff argues that the lease agreement with defendants has not been terminated, and that plaintiff is entitled to declaratory judgment that the lease remains in effect. For the reasons stated below, the court concludes that defendants' attempt to terminate the lease agreement was effective; the court must determine whether plaintiff is entitled to take the property under the power of eminent domain.
The court first addresses the issue of whether the lease agreement was terminated at the time plaintiff attempted to renew the lease. Under Kansas law, if the lease had not expired, the court could recognize a late attempt at renewal as effective. See, e.g., Fleming Cos. v. Equitable Life Ins. Co. of Iowa, 818 P.2d 813, 822 (Kan.Ct.App. 1991) (affirming the district court's decision to equitably enforce the renewal of a lease when the renewal attempt was made seven months before the termination of the lease but the lease specified that notification of renewal should be given one year before the termination of the lease). However, if the lease had already expired when plaintiff attempted to renew, Kansas law does not support enforcing the renewal attempt. See, e.g., Duffy v. Casady, 28 P.3d 1040, 1042 (Kan.Ct.App. 2001) (holding that equitable relief was not available when a party attempted to renew a lease after the term of the lease had expired).
Plaintiff argues that defendants did not have the right to terminate the lease under the agreement. There are no provisions in the agreement giving defendants the right to terminate the lease. However, at the time defendants gave notice of termination, the parties were operating under a month-to-month lease. "In general, a tenancy from month to month is terminable by either party, ordinarily by giving notice . . . ." 51C C.J.S. Landlord Tenant § 149 (1968). Consistent with this general rule of law, Kan. Stat. Ann. § 58-2504 provides, "Thirty days' notice in writing is necessary to be given by either party before he or she can terminate a tenancy at will, or from one period to another of three months or less . . . ." The court therefore holds that defendants had the right to terminate the month-to-month lease upon proper notice.
The Kansas Supreme Court has held that a lease is terminated on the date one party gives notice of termination to the other. Estefan v. Hawks, 204 P.2d 780, 784 (Kan. 1949). In Estfan, the defendant (Hawks) leased property from the plaintiffs (the Estefans). Id. at 780-81. The lease included a provision under which the Estefans could terminate the lease upon sixty days notice. Id. at 781. The lease also included a provision under which Hawks could elect to purchase the property by giving notice thirty days prior to the expiration of the lease. Id. Two years before the lease was to expire, the Estefans sent the following notice to Hawks: "[T]he undersigned . . . hereby notify you that they hereby terminate said lease in accordance with the provisions therein contained, and you are hereby notified to vacate said premises at the expiration of sixty days from this date." Id. at 782. Forty-five days later, Hawks notified the Estefans that he intended to exercise his option to purchase the property. Id. The court held that the lease was terminated the day the Estefans sent the notice to Hawks, not sixty days later. Id. at 784. The lease therefore was already terminated at the time Hawks attempted to exercise his option to purchase, and the option was no longer available to Hawks. Id. Under Estefan, defendants in the instant case effectively terminated the lease on December 19, 2000, when they gave plaintiff notice of termination. Plaintiff's attempt to exercise its option to renew on December 21, 2000 was ineffective, because the renewal option terminated with the termination of the lease two days earlier. There was no longer a valid contract between the parties. Accordingly, the court denies plaintiff's motion for summary judgment with regard to its claim for declaratory relief.
Because there is no longer a valid contract between the parties, the court next must consider plaintiff's claim that it is entitled to take the property under the power of eminent domain. Before ruling on plaintiff's eminent domain claim, the court intends to conduct a telephone conference on February 22, 2002 at 1:30 p.m. to discuss the remaining pending motions in this case, and the necessity for further briefing.
IT IS, THEREFORE, BY THE COURT ORDERED that plaintiff's motion for summary judgment (Doc. 27) is denied with regard to plaintiff's claim for declaratory relief.
IT IS FURTHER ORDERED that a conference to be conducted by telephone conference call which will be initiated by the court is set for February 22, 2002 at 1:30 p.m. to discuss the remaining pending motions in this case, and the necessity for further briefing.
IT IS FURTHER ORDERED that the reference of this case to U.S. Magistrate Judge James P. O'Hara is withdrawn.
Copies of this order shall be transmitted to counsel of record.
IT IS SO ORDERED.
Dated at Kansas City, Kansas, this ___ day of February 2002.
____________________________ G. Thomas VanBebber United States Senior District Judge