Opinion
Cause No. IP96-1311-C-M/S
March 30, 2001
I. FACTUAL PROCEDURAL BACKGROUND
The facts set forth herein are repetitive in large part of the facts recited in the Court's ruling dated February 4, 1998 regarding the Campbells' first partial motion for summary judgment. Order, Feb. 4, 1998. In 1932, Eugenia Wilson ("Wilson") granted an easement to the Gulf Pipe Line Co. ("Gulf"). See Pls.' Exh. B, Easement, at 003050 ("easement"). The easement agreement provided, in pertinent part:
[Wilson] do[es] grant and convey unto Gulf Pipe Line Company . . . the right to lay, maintain and operate a pipe line for the transportation of crude oil and its products . . .; also the right to lay, maintain and operate, adjacent to and parallel with the first, additional lines of pipe; . . . . The grantee at any time shall have the right of ingress, egress and regress over said land to and from such pipe lines and may remove the same in whole or in part.
TO HAVE AND TO HOLD the said easements unto the said Gulf Pipe Line Company of Pennsylvania, its successors and assigns, so long as any of said lines are maintained.Id. Eventually, the Campbells became owners of the piece of land that originally belonged to Wilson. See Pls.' Exh. A, Corporate Deed, Conveyance from GL Ray Farms, Inc. to James M. Campbell and Linda L. Campbell, at 003049.
James Campbell testified that he was unaware that the pipeline at issue in this case was located on the Wilson property when he and his wife purchased it. Campbell, Sr. Dep. at 12-13. However, the Campbells' son, James Campbell, Jr. ("Campbell, Jr.") testified that he and his father had been aware of the pipeline for many years prior to the Campbells' purchase of the Wilson property. Campbell, Jr. Dep. at 12-17. Moreover, Campbell, Jr. testified that all of the Campbells were aware that a section of pipeline on the subject property was exposed since the early to mid 1970s.
Prior to 1936, Gulf constructed a pipeline on the easement; an additional pipeline was added in 1936. See Pls.' Exh. O, Receipt for Add'l Line Damage, Oct. 12, 1936. Gulf changed its name to Gulf Refining Company in 1956. See Pls.' Exh. C, Certificate of Amendment, State of Del., Office of the Secretary of State, July 31, 1996. In early 1973, Williams Brothers Pipe Line Company purchased "[Gulf's] pipeline facilities, including 10- and 8-inch pipelines, pumping stations and appurtenances thereto, and storage tanks . . . together with supplies, equipment, fixtures and personal property pertaining thereto." Pls.' Exh. D, Contract, State of Okla., By Gulf Refining Co. to Williams Bros. Pipe Line Co., Feb. 7, 1973, at 1. Williams Brothers Pipe Line Company changed its name to Williams Pipe Line Company ("WPL") in 1974. Pls.' Exh. Q, Certificate of Amendment, State of Del., Office of Secretary of State, Jan. 20, 1986, at 2.
On March 8, 1973, Gulf and WPL entered into another agreement by which WPL purchased "the following described and listed easements on Schedules of Easements hereto annexed and made part thereof. TO HAVE AND TO HOLD the hereinafter listed easements unto the said William Brothers Pipeline Company, and unto its successors and assigns forever." Pls.' Exh. E, Assignment, Mar. 8, 1973. Wilson's grant was listed on page eight of the attached Schedule of Easement. Id. at 79.
On October 1, 1986, two agreements took effect between WPL and Williams Telecommunication Company ("WilTel"): (1) Agreement and Bill of Sale, Pls.' Exh. G ("WPL/WilTel Agreement"); (2) Partial Assignment of Right of Way, Pls.' Exh. H (WPL/WilTel Partial Assignment"). The WPL/WilTel Agreement provides, in part:
WHEREAS, WPL is the record owner of or successor in interest to certain rights of way, easements and amendments thereto, and permits and licenses (herein, "Rights of Way") . . .;
WHEREAS, WPL is the owner of those certain pipelines and related appurtenances (herein, the "Pipeline") described in the attached Ex. B;
* * *
WHEREAS, WPL and WilTel have entered into that certain Partial Assignment of Rights of Way, of even date herewith, in which WPL quit-claims and assigns to WilTel a portion of WPL's right, title and interest in and to the Rights of Way, to authorize and consent to WilTel's use of the Pipeline and the Rights of Way for communication purposes; . . .
* * *
. . . WPL hereby quit claims, sells, and conveys unto WilTel, its successors and assigns, all of WPL's right, title and interest in and to the Pipeline.
TO HAVE AND TO HOLD the same unto WilTel, its successors and assigns, forever.
* * *
5. Approval of Route Outside Pipeline. In the event WilTel decides, for substantial physical or economical reasons, to install its communications system outside of the Pipeline but within the Rights of Way, WilTel agrees to select a cable route as close as practicable to the Pipeline, and WilTel agrees to submit its planned cable route to WPL for WPL's prior approval, which approval shall not be unreasonably withheld.
Pls.' Exh. G, WPL/WilTel Agreement, at 1-5. In addition, the WPL/WilTel Agreement expressly excluded certain hardware and certain sections of the pipeline itself:
. . . WPL expressly excludes from this Bill of Sale all motors, control equipment, meters, meter runs, tanks, pumps and all and any other structures, equipment or facilities associated with WPL's ten-inch pipeline(s) and eight-inch pipeline identified above which exist at any pump station, tank farm or other surface site.
WPL further expressly excludes from this Bill of Sale one ten-inch diameter welded steel pipeline segment, approximately 2.25 miles in length, running from the aforesaid Dublin Station No. 259, and extending northeasterly to the railroad in the SE/4 SW/4 of Section 17, T16N, R12E, Wayne County, Indiana, and one ten-inch diameter welded steel pipeline, approximately 0.61 miles in length, situated in Section 7, T3S, R11W, Monroe County, Illinois, near Valmeyer, . . . inasmuch as these pipeline segments have been sold to a third party. . . .Id. Exh. B.
The second agreement between WPL and WilTel, the WPL/WilTel Partial Assignment, provided in pertinent part:
. . . WPL does hereby QUIT-CLAIM, TRANSFER, ASSIGN, SET OVER AND CONVEY unto WilTel, its successors and assigns, a portion of WPL's right, title and interest in and to the Rights of Way, to authorize and consent to WilTel's use of the existing pipeline(s) laid within the Rights of Way and WilTel's use of areas lying outside of said pipeline(s) but within the Rights of Way, all for the purpose of installing, operating and maintaining communications systems consisting of cables, splicing vaults, regenerators and other associated equipment. WPL expressly reserves unto itself, however, any and all rights granted by the Rights of Way for the transportation of gases, liquids, slurries, or petroleum products, including fertilizer. In addition, WPL expressly reserves unto itself all additional pipeline rights(s) and other rights permitted by the Rights of Way and not expressly assigned to WilTel hereunder. The parties agree that such reservations unto WPL shall not obligate WPL to maintain or relocate the pipeline(s).
TO HAVE AND TO HOLD unto WilTel, its successors and assigns, forever.
This Assignment is made by WPL and accepted by WilTel without any warranty of title or of uses permitted by WPL, either expressed or implied.
This Assignment is made expressly subject to all of the terms and provisions of the Rights of Way. Further, there are excepted from this Assignment any portions of the Rights of Way which have been heretofore abandoned, released, condemned, or quit-claimed, or otherwise divested by WPL or its predecessors.
Pls.' Exh. H, WPL/WilTel Partial Assignment, at 1-2. The two WPL/WilTel agreements do not expressly require WilTel to maintain either of the pipelines. See generally id.; Pls.' Exh. G, WPL/WilTel Agreement. Furthermore, WilTel agreed to accept the pipelines in an "as is-where is" condition, "WITHOUT WARRANTY, EITHER EXPRESSED OR IMPLIED, OF MERCHANTABILITY, CONDITION, STATE OF REPAIR, OR FITNESS FOR ANY USE WHATSOEVER." Pls.' Exh. G, WPL/WilTel Agreement, at 2. The WPL/WilTel Partial Assignment was recorded in the Vigo County, Indiana land records on December 3, 1986 on Page 247, Record 34, more than six years prior to the Campbells' purchase of Wilson's property. Pls.' Exh. H, WPL/WilTel Partial Assignment, at 10.
In February 1995, WorldCom, Inc. purchased WilTel and the company was renamed WorldCom Network Services, Inc. Pls.' Exh. J, Certificate of Amendment, State of Del., Office of the Secretary of State, Mar. 21, 1995. In 1996, WorldCom sought an amendment and ratification of the WPL/WilTel Partial Assignment easements. See Pls.' Exh. K, Amendment of Right-of-Way Agreement, James Campbell and Linda Campbell, Grantors, WorldCom Network Services, Inc., Grantee, Jan. 20, 1996 ("Amendment Agreement"); see also Def.'s Resp. to Statement of Mat'l Fact ¶ 38. The Amendment Agreement states, in pertinent part:
WHEREAS, WORLDCOM . . . is the holder of an interest in that certain right-of-way granted by that certain instrument dated July 17, 1930, and recorded in Volume/Book 59, Page 396, as amended prior to the date hereof in the records of the County and State recited below, with restrictions as may be noted thereon, over, under, through and across land situated in the County of VIGO, and State of INDIANA. . . .
WHEREAS, the undersigned, herein called "Grantor", [sic] is the owner of the lands subject to the above described right-of-way, and agrees to ratify and amend said right-of-way agreements as set forth below.
. . . Grantor hereby amends said right-of-way as follows:
Said right-of-way agreement is hereby amended to grant WorldCom, its successors, assigns, licensees and lessees the perpetual right within such right-of-way to construct, install, operate, maintain, replace, repair and remove such telephone and telecommunications systems as WorldCom may from time to time require for transmission of communications for or by others. . . .
The conduits and cables will be placed in an existing pipeline. Any appurtenances not capable of being installed in the pipeline will be buried at the depth equal to the pipeline containing the telecommunications systems.
In all respects said right-of-way agreement remains unchanged except that WorldCom hereby agrees that it shall not use the pipeline located in the right-of-way for the transportation of petroleum products.
Pls.' Exh. K, Amendment Agreement. The Campbells executed the Amendment Agreement on January 20, 1996. Id.
The pipeline at issue in this case has not operated as a petroleum liquids pipeline since at least 1990. See Def.'s Resp. to Statement of Mat'l Fact ¶ 34. The parties agree that the pipeline is visibly exposed in numerous places, and all cathodic protection rectifiers have been removed or abandoned. See id. ¶ 28.
WorldCom moved to remove this suit from Vigo County Superior Court on September 12, 1996. On July 18, 1997, the Campbells moved for partial summary judgment on Count IV of the second amended complaint. In that motion the Campbells argued that there was no right of way agreement in effect in 1996 when WorldCom sought amendments to the rights of way; therefore, the amendments have no force and effect. In response to the Campbells' motion, WorldCom argued that the easement had never been abandoned or, in the alternative, even if it had been abandoned, the amendment is enforceable on its own terms.
The Court issued an order on February 5, 1998 that denied the Campbells' first partial motion for summary judgment. In making that determination, the Court found the language of the original easement grant unambiguous. Feb. 1998 Order, at 9. Further, the Court found that the easement was defeasible when the owner of the dominate estate failed to maintain the pipelines on the property. Id. In other words, to preserve the grant of the easement, the dominate estate owner needed to keep the pipelines "in a condition in which they could be operated as oil pipelines." Id. at 10. Based on the evidence before the Court at that time, a genuine issue of fact remained about the condition of the pipelines on the Campbells' property between the 1986 and January 1996. Id. at 10-12. Finally, the Court stated that "[i]f the pipelines were maintained up until the point that WorldCom obtained the easement amendment, then WorldCom had a right in the easement, had a right to obtain the amendment, and the amendment may be valid." Id. at 13. "If, on the other hand, the easement had terminated or was abandoned prior to [execution of the Amendment Agreement], that amendment may not be valid." Id. at 14. Therefore, left with questions of fact, the Court denied the Campbells' first partial motion for summary judgment.
After further discovery, the Campbells' filed the instant partial motion for summary judgment. Essentially, the Campbells seek declaratory judgment that the easement was terminated prior to January 1996 when the parties executed the Amendment Agreement because the pipeline was not maintained such that it could transport oil or petroleum products; therefore, the Amendment Agreement is void. The Campbells submitted an affidavit from Samuel Williams ("Williams"), a purported expert on the use and condition of pipelines, in support of their motion. See Pls.' Exh. F, Williams Aff. ¶¶ 1-13. WorldCom submitted an affidavit from its own expert, Marty Hersh ("Hersh"), and copies of pipeline maintenance data sheets to defend against the motion. See Def.'s Exhs. 1, Hersh Aff.; Def.'s Exh. 4, Williams Pipe Line Co., Mainline Pipe Data; Def.'s Exh. 5, Summary, Pigging Operation, June 1996. Additional factual averments made by the parties will be set forth as necessary in the discussion.
II. SUMMARY JUDGMENT STANDARD
Federal Rule of Civil Procedure 56(c) provides that summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). A genuine issue of material fact exists whenever "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). The nonmoving party bears the burden of demonstrating that such a genuine issue of material fact exists. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); Oliver v. Oshkosh Truck Corp., 96 F.3d 992, 997 (7th Cir. 1996). The mere existence of a factual dispute, by itself, is not sufficient to bar summary judgment. Only factual disputes that might affect the outcome of the suit in light of the substantive law will preclude summary judgment. Anderson, 477 U.S. at 248; JPM Inc. v. John Deere Indus. Equip. Co., 94 F.3d 270, 273 (7th Cir. 1996). The Court will consider the parties' arguments under these standards.
III. DISCUSSION
At the outset, the Court wants to clarify the claim for which the Campbells seek summary judgment. The second amended complaint reads:
WHEREFORE, Named Plaintiffs and Class Members request a judgment declaring that:
I. There was no right-of-way agreement in effect at the time of the [Amendment] Agreements;
II. Because there was no right-of-way agreement in existence at the time of the [Amendment] Agreements, the [Amendment] Agreements purporting to amend the non-existent right-of-way agreement are of no force and effect.
Second Am. Compl., at 9. In effect, the Campbells seek rescission of the Amendment Agreement.
The Campbells assert that the undisputed material facts show that the pipeline was not maintained to the extent that it could transport oil or petroleum products between 1986 and January 1996. Pls.' Mem. in Support of Mot. for Summ. J., at 2 ("Pls.' Mem. in Support"). Therefore, the determinable event occurred, terminating the easement, before the Amendment Agreement was signed. Id. at 12-15. The Campbells aver that once extinguished, the easement could not be amended, but can be reestablished only by acquisition of a new title. See id. at 15.
The Campbells also argue that the WPL/WilTel Assignments that purport to convey an interest in the easement to WilTel were invalid as a matter of law. Pls.' Reply to Def.'s Resp. to Pls.' Mot. for Summ. J., at 2-4 ("Pls.' Reply"). Specifically, the Campbells aver that WPL could only assign the rights that it had: an easement for the purpose of "the transportation of crude oil and its products. . . ." Pls.' Exh. B, Easement, at 003050. The only interest that the WPL/WilTel Assignments conveyed was
a portion of WPL's right, title and interest in and to the Rights of Way, to authorize and consent to WilTel's use of areas lying outside of said pipeline(s) but within the Rights of Way and WilTel's use of areas lying outside of said pipeline(s) but within the Rights of Way, all for the purpose of installing, operating and maintaining communications systems consisting of cables, splicing vaults, regenerators and other associate equipment.
Pls.' Exh. H, WPL/WilTel Partial Assignment, at 1-2. The Campbells aver that there is no evidence that WPL obtained a "telecommunications right-of-way" from the Campbells or their predecessors in interest. Therefore, the Campbells conclude that WPL's attempted assignment of its rights was void. When WorldCom purchased the interests of WilTel, the Campbells argue, it purchased what in essence was a void WPL/WilTel Assignment Agreement with respect to the Campbells' property. See Pls.' Reply, at 3-4. As a stranger to the easement, the Campbells continue, WorldCom had no easement rights to amend or ratify in January 1996. Id. at 4-6
Finally, the Campbells argue that WorldCom's representation in the Amendment Agreement that it had an interest in the easement was false; therefore, either the contract should be voidable by the Campbells because of the parties' mutual mistake of fact or because WorldCom misrepresented itself as the owner of an interest in the easement. Pls.' Sur-Surreply Br. in Support of Mot. for Summ. J., at 2-4 ("Pls.' Sur-Surreply"). Summary judgment is proper, the Campbells argue, because there is no genuine issue of material fact that WorldCom did not have an interest in the easement to amend or ratify in January 1996.
In contrast, WorldCom argues that summary judgment is not proper because the Campbells have not presented evidence that the pipeline on their property was not maintained in a condition that it could transport oil or petroleum products between 1986 and January 1996. Defs.' Resp., at 4-9. Moreover, WorldCom argues that its evidence that the pipeline on the Campbells property was maintained is uncontroverted. Id. at 8-9. Therefore, the Campbells' partial motion for summary judgment should be denied. See id. at 9.
In addition, WorldCom argues that the term "maintain" in the original easement has been misconstrued by the Court. WorldCom asks the Court to reconsider its definition of "maintain" on the basis of the Campbells' expert's testimony. Id. at 9. Specifically, WorldCom urges the Court to accept a definition of "maintain"in the easement that requires only that (1) the grantee may enter upon the right-of-way and take whatever action is necessary to "maintain and operate" the pipeline, and (2) the grantee must protect the grantor's property from product spills. Id. (citing Williams Dep., at 101-02). WorldCom argues that the Court's definition would render worthless the right of the grantee to remove parts of the pipeline as it deems necessary because partial removal would terminate the easement, which was not the intent of the parties. Id. at 10.
Further, WorldCom argues that the Campbells ratified the easement when they signed the Amendment Agreement. Id. at 10-11. The Amendment Agreement expressly referenced the easement and added an amendment that, in WorldCom's view, unambigously created a new interest in WorldCom that incorporated both the original easement and the new terms. Id. at 11. Therefore, WorldCom concludes, regardless of whether the easement terminated or not, the Amendment Agreement was effective to create a new interest in WorldCom. Id. (citing Scott v. Curtis, 798 P.2d 248 (Or.Ct.App. 1990) (stating that a reference in a new agreement to a recorded, but extinguished, land record is sufficient to result in an incorporation and renewal of the terms of such record into a new agreement)).
Finally, WorldCom argues that if it had no interest in the easement and both parties believed that it did when they entered into the Amendment Agreement, such a mistake is one of law not of fact. Id. (citing Alexander v. Dowell, 669 N.E.2d 436, 440-41 (Ind.Ct.App. 1996)). Although a mutual mistake of fact may lead to rescission of a contract, a mistake of law cannot. See id. at 11-12 (citing Alexander, 669 N.E.2d at 440-41; Wedel v. American Elec. Power Serv. Corp., 681 N.E.2d 1122, 1138 (Ind.Ct.App. 1997)). Therefore, because the Amendment Agreement memorializes the parties' intent to incorporate the easement and make modifications to it, and because the Campbells had all the relevant facts related to the easement at the time they executed the Amendment Agreement, the Amendment Agreement is valid. See id. at 13. On this basis, WorldCom avers, the Campbells' motion for summary judgment should be denied. Id. at 14.
The Court will address first WorldCom's argument that the Amendment Agreement created a new easement in WorldCom.
A. THE AMENDMENT AGREEMENT AS A NEW EASEMENT GRANT
Essentially, WorldCom is arguing that regardless of its title as an "Amendment," the Amendment Agreement is a separate conveyance of an easement from the Campbells. As such, the Court should use the rules of interpretation for easements and apply them directly to the Amendment Agreement. This argument would be in accord with the Campbells' argument that the Court should rescind the Amendment Agreement either because the parties were mutually mistaken about WorldCom's interest in the original easement or because WorldCom misrepresented that it had an interest in the easement when it knew that it had no such interest. Therefore, the Court will use the Amendment Agreement as the starting point for determining the respective rights of the parties.
"The nature, extent and duration of an easement created by an express agreement or grant must be determined by the provisions of the instrument creating the easement." Erie-Haven, Inc. v. First Church of Christ, 292 N.E.2d 837, 841 (Ind.Ct.App. 1973) (citing Spencer Stone Co. v. Sedwick, 105 N.E. 525 (1914)). Under Indiana law, "[a]ll easements are limited to the purpose for which they were created, and their enjoyment cannot be extended by implication." Brown v. Heidersbach, 360 N.E.2d 614, 681 (Ind.Ct.App. 1977).
In construing easement provisions, a court needs to ascertain and give effect to the parties' intentions. See id. General rules of construction apply when interpreting such instruments. See Brown, 360 N.E.2d at 618. When the language of an easement instrument is unambiguous, the intentions of the parties must be determined only from the language of that instrument. See GTA, 358 N.E.2d at 752 (citing LG Realty Constr. Co. v. City of Indianapolis, 139 N.E.2d 580 (Ind.Ct.App. 1957)); see also Tazian v. Cline, 686 N.E.2d 95, 97 (Ind. 1997). When reading the instrument, a court should strive to give meaning to all parts of the agreement and yet consider them as a whole so as to give effect to the agreement in its entirety. See Indiana Broadcasting Corp. v. Star Stations of Ind., 388 N.E.2d 568, 571 (Ind.Ct.App. 1979); see also Tazian, 686 N.E.2d at 97; Woodruff v. Wilson Oil Co., 382 N.E.2d 1009 (Ind.Ct.App. 1978). The habendum clause, which begins with the phrase "to have and to hold" and usually follows the granting part of the premises of a deed, defines the extent of ownership of the grantee. See Tazian, 686 N.E.2d at 100 n. 9. It may "lessen, enlarge, explain, or qualify, but not totally contradict or be repugnant to the estate granted in the premises." Prior v. Quakenbush, 29 Ind. 475 (1868). See also Tazian, 686 N.E.2d at 100 n. 9.
Generally, any doubt or uncertainty regarding the grant of an easement is resolved in favor of the grantee. Metcalf v. Houk, 644 N.E.2d 597, 600 (Ind.Ct.App. 1994) (citing Indiana Broadcasting, 388 N.E.2d at 573). However, courts in the past have held that when a grantee railroad used a pre-printed form for the easement agreement, the agreement was to be construed in the light most favorable to the grantors. Brown v. Penn Central Corp., 510 N.E.2d 641, 643 (Ind. 1987). This principle comports with the traditional principle applied in contract law that "[a]ny ambiguities in a contract are to be strictly construed against the party who employed the language and who prepared the contract." Ruff v. Charter Behavorial Health Sys. of N.W. Ind., 699 N.E.2d 1171, 1176 (Ind.Ct.App. 1998). See also Willey v. Indiana, 712 N.E.2d 434, 440 (Ind. 1999) (finding that contract law principles controlled the interpretation of a stipulation between a criminal defendant and the state).
Although WorldCom argues that the situation in this case is different than that in the railroad easement scenario, it is clear that in Indiana strict construction against the grantor is not applied when there is no evidence that the grantor drafted the deed. See Besing v. Ohio Valley Coal Co., 293 N.E.2d 510, 514 (Ind.Ct.App. 1973). In this case, the Court sees no reason to vary from the general rule for construing contracts. The Amendment Agreement was a preprinted form supplied by WorldCom, the grantee. Therefore, as with any contract, ambiguities in the easement grant will be construed against WorldCom as the draftee.
In making this point, the Court notes that application of this rule only occurs if the Court finds the conveyance ambiguous. "Where there is no ambiguity in the deed, the intention of the parties must be determined from the language of the deed alone." Windell v. Miller, 687 N.E.2d 585, 589 (Ind.Ct.App. 1997) (citing Brown v. Pennsylvania Cent. Corp., 510 N.E.2d 641, 643 (Ind. 1987)).
The Amendment Agreement is unambiguous in that it specifically identifies the Wilson easement and it specifically grants to WorldCom a perpetual right to "construct, install, operate, maintain, replace, repair and remove such telephone and telecommunications systems [within such right-of-way] as WorldCom may from time to time require for transmission of communications for or by others." Pls.' Exh. K, Amendment Agreement, at 1. WorldCom argues that by signing the Amendment Agreement the Campbells ratified the Wilson easement as well as conveyed a new, additional entitlement to WorldCom. WorldCom relies upon an Oregon case for the proposition that "reference in a new agreement to a recorded, but extinguished, land record is sufficient to result in an incorporation and renewal of the terms of such record into the new agreement." Def.'s Resp.at11 (citing Scott v. Curtis, 798 P.2d 248 (Or.Ct.App. 1990)). The Amendment Agreement here, WorldCom argues, references the recorded Wilson easement and the WPL/WilTel Assignment, therefore the terms of those agreements were not only incorporated but they were also renewed in the new agreement.
The Court agrees with WorldCom that the Amendment Agreement evidences an intent to ratify the Wilson easement and create a new entitlement in WorldCom. The language of the Amendment Agreement is unambiguous; therefore, the Court must look to the language of the Amendment Agreement to determine the intent of the parties. The Amendment Agreement clearly references the Wilson easement and expressly states that the "'Grantor' . . . agrees to ratify and amend said right-of-way agreements. . . ." Id. The plain meaning of the word "ratify" is to approve or reaffirm. Webster's Dictionary provides a similar definition: "to approve and sanction esp[ecially] formally (as the act of an agent or servant): make valid (as a treaty) or legally operative: CONFIRM." Webster's Third New Int'l Dictionary (Merriam-Webster Inc. 1981). In addition, under Indiana contract law, ratification has a specific meaning, it is either "an agreement to adopt an act performed by another for the one who agrees to adopt it" or a "confirmation of a voidable act." Haggerty v. Juday, 58 Ind. 154, 158 (1877). See also Indiana Ins. Co. v. Margotte, 718 N.E.2d 1226, 1229 (Ind.Ct.App. 1999). "When a party ratifies a contract, he cannot ratify only select provisions but must ratify the whole contract." Indiana Ins., 718 N.E.2d at 1229 (citing Public Savings Ins. Co. v. Greenwald, 118 N.E. 556, 558 (1918)). On its face then, the Amendment Agreement approves or sanctions the Wilson easement and the WPL/WilTel Assignment, in addition to making the amendment in favor of WorldCom.
The Campbells argue that the Wilson easement was extinguished when the pipeline was no longer maintained; therefore, there was nothing to ratify or amend. This argument assumes that ratification of an extinguished easement cannot be used to resurrect the old easement and create a new entitlement. Although an Indiana court has not addressed this issue, courts in other jurisdictions have addressed revival of an extinguished easement. "Generally, once an easement is extinguished, it is gone forever." Faulconer v. Williams, 964 P.2d 246, 254 (Or. 1998). Moreover, contrary to WorldCom's assertion, the mere reference to an already extinguished easement does not in itself recreate the easement. See id. (citing Breliant v. Preferred Equities Corp., 918 P.2d 314, 319 (Nev. 1996); Davis v. Henning, 462 S.E.2d 106, 108 (Va. 1995); Seebaugh v. Borruso, 632 N.Y.S.2d 800, 801 (N.Y.App.Div. 1995); Bart v. Wysocki, 558 So.2d 1326, 1329 (La.Ct.App. 1990); Smith v. Tippett, 569 A.2d 1186, 1192-93 (D.C.Ct.App. 1990); Capital Candy Co. v. Savard, 369 A.2d 1363, 1365 (Vt. 1976); McCurdy v. Wheeler, 235 F.2d 22, 23 (D.C. Cir. 1956)). In order to recreate an easement, the grantor must do so de novo and evidence to do so must appear on the face of the deed. Id. at 255 (citing Seebaugh, 632 N.Y.S.2d at 801; Bart, 558 So.2d at 1329; Riccio v. De Marco, 591 N.Y.S.2d 569, 571 (N.Y.App.Div. 1992)).
This notion seems to comport with Indiana case law on extinguishment of easements. In Indiana, upon termination an easement automatically reverts back to the grantor, or the grantor's successor in interest. See L. G. Realty Constr. Co. v. City of Indianapolis, 139 N.E.2d 580, 589-90 (Ind.Ct.App. 1957).
The Court disagrees with WorldCom's view that "reference in a new agreement to a recorded, but extinguished, land record is sufficient to result in an incorporation and renewal of the terms of such record into the new agreement." Def.'s Resp. at 11 (citing Scott v. Curtis, 798 P.2d 248 (Or.Ct.App. 1990)). In the Scott case, landowners in a subdivision sought to quiet title to property through which a purported easement ran. Scott, 798 P.2d at 250. The original easement grant was made in 1969 for property referred to as TL905. See id. The Oregon Court of Appeals held that the easement had been extinguished when TL905 was merged into a deed to Ms. Mueller in 1976. Id. Ms. Mueller transferred TL905 in 1978 to the Scotts' successor in interest. See id. at 251. The 1978 deed made the transfer of TL905 subject to agreements and stipulations in the recorded easement grant in 1969. The Oregon Court of Appeals stated that Ms. Mueller "could not revive the 1969 easement, but she was free to create a new one. She did that, albeit by reference to a contract of record which, by itself, had no legal effect." Id.
It appears to the Court that the finding in Scott turned on the expression of intent to create a new easement, not just the reference to the old easement in a new grant. This reading of Scott would comport with the Oregon Supreme Court's view that referencing an old easement in a new document is not sufficient to revive one that is extinguished. Faulconer, 964 P.2d at 254-55. The Oregon Supreme Court's view is consistent with the view of courts in the District of Columbia, Louisiana, New York, Nevada, Vermont and Virginia. See McCurdy v. Wheeler, 235 F.2d 22, 23 (D.C. Cir. 1956); Smith v. Tippett, 569 A.2d 1186, 1192-93 (D.C.Ct.App. 1990); Bart v. Wysocki, 558 So.2d 1326, 1329 (La.Ct.App. 1990); Seebaugh v. Borruso, 632 N.Y.S.2d 800, 801 (N.Y.App. Div. 199 5); Breliant v. Preferred Equities Corp., 918 P.2d 314, 319 (Nev. 1996); Capital Candy Co. v. Savard, 369 A.2d 1363, 1365 (Vt. 1976); Davis v. Henning, 462 S.E.2d 106, 108 (Va. 1995). The new deed or agreement must evidence an intent to create a new easement. See Faulconer, 964 P.2d at 55. Therefore, the question in the case at bar is whether the terms of the Amendment Agreement, including the use of the term "ratifies," evidences an intent to create a new easement.
The Court finds that the Amendment Agreement does not evidence an intent to create a new easement. The Amendment Agreement merely references the Wilson easement and WorldCom's purported interest in it at the beginning of the document. Every other reference therein refers back to the original right-of-way grant. Specifically, the Amendment Agreement states in pertinent part:
. . . 'Grantor', is the owner of the lands subject to the above described right-of-way, and agrees to ratify and amend said right-of-way agreement as set forth below.
. . . Grantor hereby amends said right-of-way as follows:
Said right-of-way agreement is hereby amended to grant. . . .
* * *
In all respects said right-of-way agreement remains unchanged except that WorldCom hereby agrees that it shall not use the pipeline located in the right-of-way for the transportation of petroleum products.
Pls.' Exh. K, Am. Agreement, at 1. None of this language evidences an intent to create a new easement grant that is defined by the parameters of the old easement. The easement in the Amendment Agreement is described as one previously created that will be "ratified" or "amended" by the new contract. A case decided by the Virginia Supreme Court is instructive.
In Davis v. Henning, 462 S.E.2d 106 (Va. 1995), an easement was created in 1980 by Parco Building Corporation for the benefit of Parker. Id. at 107. Later that same year, the easement was extinguished by merger when Parker acquired the parcel over which the easement ran. The successor in interest to the Parker parcel argued that the 1980 easement was expressly granted again by a deed to Parker Road Associates in 1984. Id. The language of the 1984 deed stated in pertinent part:
This deed is made subject to . . . that certain easement of right of way granted to George J. Parker by deed of Parco Building Corporation, a Nevada Corporation, dated July 11, 1980 and duly of record in the Clerk's Office above mentioned in Deed Book 2026, at page 231.Id. (quoting Deed).
Utilizing the general rules of easement construction, the Virginia Supreme Court held that the language did not create a new easement. Id. The David court reasoned that
[t]he referenced easement is described as one previously created. This language is consistent with acknowledging an existing right which is expected from the transfer, thereby continuing an existing limitation on the grantee's fee simple ownership of the dirt road. It is inconsistent with creating or recreating a right not in existence and reserving that right for the grantor's benefit. Cf. Corbett v. Ruben, 290 S.E.2d 847, 849 (Va. 1982) ("hereby create and establish" sufficient to create easement).
Parker perhaps was unaware that the 1980 deed of easement was extinguished by merger when he acquired ownership of both the dominant and servient tracts; nevertheless, a mistaken belief cannot substitute for the requirement that the language evidence an affirmative intent to create new rights or reserve a new easement. We look to what the words express, not what the grantor may have intended to express. Browning v. Bluegrass Hardware Co., 149 S.E. 497, 498-99 (Va. 1929).Id. (emphasis in original).
The same reasoning applies to the Amendment Agreement in the case at bar. The express language of the agreement ratifies or amends a previously existing easement. In other words, the plain language of the Amendment Agreement expresses an intent to ratify and/or amend an existing burden on the Campbells' property, but the language does not express an affirmative intent to create new rights or reserve a new easement separate from the previously existing Wilson easement. Moreover, WorldCom's argument that whether the Wilson easement was extinguished or not is irrelevant because it is a question of law and questions of law will not reform the contract misses the point. If the grantor, in this case the Campbells, were mistaken as to whether the easement existed at all, there was nothing to ratify or amend. The Amendment Agreement must have created a new easement for WorldCom to have any interest in the right-of-way. Therefore, the Court finds that the language of the Amendment Agreement did not create a new, express easement in favor of WorldCom; WorldCom's easement depends upon whether the Wilson easement was extinguished or not before January1996.
B. EXTINGUISHMENT OF THE WILSON EASEMENT
The Campbells assert that the undisputed material facts show that the pipeline was not maintained to the extent that it could transport oil or petroleum products between 1986 and January 1996. Pls.' Mem. in Support, at 2. Therefore, the determinable event occurred, terminating the Wilson easement, before the Amendment Agreement was signed. Id. at 12-15. The Campbells aver that once extinguished, the Wilson easement could not be amended, but can be reestablished only by acquisition of a new title. See id. at 15.
In contrast, WorldCom argues that summary judgment is not proper because the Campbells have not presented evidence that the pipeline on their property was not maintained in a condition that it could transport oil or petroleum products between 1986 and January 1996. Defs.' Resp., at 4-9. Moreover, WorldCom argues that its own evidence that the pipeline on the Campbells property was maintained is uncontroverted. Id. at 8-9. Therefore, the Campbells' partial motion for summary judgment should be denied. See id. at 9.
In addition, WorldCom argues that the term "maintain" in the Wilson easement has been misconstrued by the Court. WorldCom asks the Court to reconsider its definition of "maintain" on the basis of the Campbells' expert's testimony. Id. at 9. Specifically, WorldCom urges the Court to accept a definition of "maintain"in the Wilson easement that requires only that (1) the grantee may enter upon the right-of-way and take whatever action is necessary to "maintain and operate" the pipeline, and (2) the grantee must protect the grantor's property from product spills. Id. (citing Williams Dep., at 101-02). WorldCom argues that the Court's definition would render worthless the right of the grantee to remove parts of the pipeline as it deems necessary because partial removal would terminate the easement, which was not the intent of the parties. Id. at 10.
The Court declines WorldCom's invitation to reconstrue the term "maintain" in the Wilson easement. In its February 5, 1998 Order, this Court determined that the Wilson easement was determinable upon the happening of a particular event. Order, Feb. 5, 1998, at 8-9. The Court found that
as long as any of the pipelines that were originally laid for transporting oil were maintained to the extent that they could transport oil or its products, the easement would not be defeated. Oil does not need to be running through the lines to preserve that grant; instead, the pipelines need to be kept in a condition in which they could be operated as oil pipelines.Id. at 10. The fact that the Wilson easement gave the grantee the right to remove parts of the pipeline as it deemed necessary does not necessitate a finding that to be "maintained" the pipeline need only protect the grantor's property from spills. The Court finds that removal of parts of the pipeline would not extinguish the easement so long as the parts that remain were maintained such that they could operate as oil pipelines in the future. This reading not only comports with the plain meaning of the language of the Wilson easement, it also comports with the principle laid out in GTA v. Shell Oil Co., 358 N.E.2d 750, 752 (Ind.Ct.App. 1977) (holding that mere non-use would not terminated a determinable easement, unless "clearly stated and reasonably inferred from the intention of the parties"). Therefore, the Court finds that the definition of "maintain" from its February 5, 1998 order best comports with the intent of the parties when they entered into the Wilson easement.
The Court does agree with WorldCom, however, that there remains a question of fact about whether the pipeline on the Campbells's property, specifically, was maintained during the period from 1986 to January 1996. The Campbells' expert, Williams, affirmed that there are three major components of an operable pipeline system including the buried line of pipe, the above-ground facilities, such as pumps and meter stations, and the physical surface and accessibility of the right-of-way. Williams Aff. ¶ 14. When Williams performed an on-site investigation and analysis of the pipeline, he observed that the above ground facilities had either been abandoned, removed, leased or sold to other parties. Id. ¶ 15. In addition, Williams opines that the integrity of the liquid pipeline must have been breached from corrosion because the cathodic protection rectifiers had either been removed or turned off. Id. ¶¶ 17-18. Moreover, Williams asserts that "there may be substantial amounts of internal corrosion of the pipeline because . . . it was not thoroughly cleaned when it was removed from petroleum transport service, and the water and fertilizer introduced in the line is an additional factor in considering the internal integrity of the pipeline system. . . ." Id. ¶ 19. Williams concludes that as of the date of his observations, the week of March 8, 1999, the pipeline had not been operable or functional since at least 1990. Id. ¶ 22. Finally, both Williams and the Campbells assert that because a portion of the pipeline on the Campbells' property runs through a creek bed and is exposed, the integrity of that specific piece of pipeline for transporting oil is questionable. Id. ¶ 16; Pls.' Mem. in Supp., at 13.
The Court is not persuaded that because the above-ground portions of the pipeline system have been removed, the pipeline under the Campbells' property has not been maintained such that it could transport petroleum or its products if the above-ground portions were replaced. As discussed above, removing portions of the pipeline system would not necessarily terminate the Wilson easement so long as the pipeline could still transport petroleum.
Further, even taking Williams' opinions as true, he offers little or no information about the condition of the pipeline on the Campbells' property, specifically, and he offers little or no information about the condition of the pipeline on the Campbells' property during the time period between 1986 and January 1996. The Court determined in its February 5, 1998, Order that the relevant inquiry is the maintenance of the pipeline under the Campbells' property. Order, Feb. 5, 1998, at 11 ("WorldCom contends that it maintained the pipelines because it monitored line markings, relocated and reconditioned lines, and paid property taxes. It provided the Court with documentation concerning washout pipeline repairs ordered by WorldCom's predecessors [in interest]. As the Campbells' pointed out, the repair work documented in WorldCom's exhibits do not pertain to repairs done on the pipelines under the Campbells' property. This information does not assist the Court in determining whether the pipeline on the Campbells' property were maintained for petroleum product transportation."). The Campbells themselves argued this approach in their previous motion for partial summary judgment. Therefore, Williams' testimony, factual or otherwise, about the condition of the pipeline system as a whole is irrelevant to the inquiry here: Whether the pipeline under the Campbells' property was maintained during the period from 1986 to January 1996.
In addition, WorldCom offers evidence that the pipeline on the Campbells' property was maintained. Campbell, Jr. testified that the portion of the pipeline on the Campbells' property that is exposed now, has been exposed since the early 1970s. Campbell, Jr. Dep. at 8, 13. Because the pipeline carried petroleum products until at least 1986, WorldCom asserts that the simple fact of the pipeline's exposure to the elements for a period of time cannot be definitive proof that the pipeline was not maintained. WorldCom also presents evidence that the portion of the pipeline on the Campbells' property required only three repairs during the more than fifty years of its active use. Def.'s Exh. 4, Pipe Data Book; Hersh Aff. ¶ 8. Part of the process for each repair included installation of "Green-Line tape," a corrosion-resistant coating. See Def.'s Exh. 4, Pipe Data Book; Hersh Aff. ¶ 5. Moreover, prior to installation of fiber optic cable in the pipeline on the Campbells' property, WorldCom used compressed air to push a "pig" through it to clear the pipeline of any remaining liquid or obstructions. Hersh Aff. ¶ 6. The process WorldCom used would have indicated whether the pipeline had holes, breaches or defects because the "pig" would have stopped moving through the pipe. See id. The "pig" did not stop in the pipeline on the Campbells' property during this process. See id. ¶ 7. This fact is particularly probative as the testing occurred close in time to when WorldCom and the Campbells entered into the Amendment Agreement.
Although WorldCom's evidence is not completely dispositive of the issue of whether the pipeline on the Campbells' property was maintained during the period from 1986 to January 1996, in light of the weakness of the Campbells' evidence on the subject, it is enough to survive the Campbells' motion for partial summary judgment.
C. RESCISSION OF THE AMENDMENT AGREEMENT
If the pipeline on the Campbells' property was maintained, then the Amendment Agreement may be a valid ratification and amendment of the Wilson easement. However, the Campbells also argue that partial summary judgment on reversion of title is appropriate in this case because the Amendment Agreement is voidable. It appears that the Campbells allege two theories for why rescission is appropriate in this case. First, the Campbells allege that the parties to the Amendment Agreement made a mutual mistake of fact — that WorldCom owned an interest in the easement therefore, the Court should rescind the contract. Second, the Campbells allege that WorldCom knew it did not have an interest in the easement, but misrepresented its interest to coerce the Campbells to sign the Amendment Agreement in exchange for a lesser sum. The Court will address each theory in turn.
1. Mutual Mistake
Indiana law about the effect of a mutual mistake on validity of a contract is fairly clear: mutual mistakes of law will not support an action to rescind the contract, but mutual mistakes of fact will support an action to rescind the contract. See Peterson v. First State Bank, 737 N.E.2d 1226, 1229 (Ind.Ct.App. 2000); Alexander v. Dowell, 669 N.E.2d 436, 441 (Ind.Ct.App. 1996). The Campbells argue that the parties' belief that WorldCom owned an interest in the Wilson easement in January 1996 is a question of fact. Because both parties believed at the time of contracting that WorldCom did own an interest, if in fact WorldCom did not own such an interest, rescission would be justified. The Campbells argue that WorldCom did not own an interest in the Wilson easement because the transfer from WPL to WilTel was invalid.
The Campbells also assert that WorldCom did not have an interest in the Wilson easement because it had terminated. However, the Court has analyzed that theory separately, as it must, because once an easement terminates, it is extinguished forever. It may only be recreated through a new grant. See Part III.A. The Court has found that the Amendment Agreement did not expressly grant a new easement to WorldCom.
In contrast, WorldCom argues that the parties' belief that it owned an interest in the easement in January 1996 is a question of law; therefore, the Campbells' attempt to rescind the contract under a theory of mutual mistake is improper. WorldCom relies on Alexander v. Dowell, 669 N.E.2d 436 (Ind.Ct.App. 1996), for the proposition that "[w]hen two parties execute a contract related to the purchase of an interest in real property and the parties are mistaken as to one of the party's interest in that property, the mistake or misunderstanding is one of law, not fact." Def.'s Resp., at 11 (citing Alexander, 669 N.E.2d at 440-41; Wedel v. American Elec. Power Serv. Corp., 681 N.E.2d 1122, 1138 (Ind.Ct.App. 1997)). Therefore, WorldCom concludes, whether or not it actually owned an interest in the easement does not affect the validity of the Amendment Agreement.
If WorldCom's statement is true that the effect of the parties' mutual mistake as to one party's interest in the property under a contract does not provide a basis for rescission, it appears that an inquiry about whether it actually owned an interest in the property in January 1996 is irrelevant to the question of the Amendment Agreement's validity. Before the Court can assess the parties' argument, it must determine if WorldCom correctly stated the holding of Alexander v. Dowell.
In Alexander, a buyer sought specific performance of a real estate sales contract from a seller. Alexander, 669 N.E.2d at 438. The buyer could not get financing to make the purchase because there was a recorded memorandum of contract on the title. See id. Although the buyer worked with the seller and the party who held the memorandum (the "memorandum party") to clear the title, none of his efforts bore fruit. See id. In the meantime, litigation between the seller and the memorandum party ensued to quiet the title to the real estate. See id. During that litigation, a court determined that the seller did not have title to the real estate at all, merely and equitable mortgage. See id. After six years of litigation, the property was sold to the seller at a sheriff's sale. See id.
Soon after the seller obtained clear title, she moved for summary judgment against the buyer asserting that she was not required to perform because the buyer could not obtain financing, the cloud on the title prevented her from providing the buyer with perfect title and specific performance would be inequitable and unreasonable. See id. The trial court granted the seller's motion for summary judgment. See id. at 439. The trial court reasoned that the real estate contract was subject to two conditions precedent, the buyer's ability to obtain financing, and the seller's ability to deliver clear title. Neither condition was satisfied. See id. Moreover, the parties had a mutual misunderstanding about the seller's ownership of the property. See id. Therefore, the trial court reasoned, specific performance would be inequitable and unreasonable after such a long period of time. See id. at 438-39.
The Indiana Court of Appeals disagreed. The Alexander court held that summary judgment was improper for two reasons. First, "what constitutes a reasonable time under the circumstances is a question of fact." Id. at 440 (citing Bond v. Peabody Coal Co., 450 N.E.2d 542, 549 (Ind.Ct.App. 1983)). The court reasoned that "[a]s a matter of law, the absence of clear title does not affect the validity of a purchase agreement." Id. at 440 (citing 91 C.J.S. Vendor Purchaser §§ 21(a) (b) (1955)). Moreover, under ordinary circumstances, "it is the duty of the vendor prior to the time of the conveyance to remove any existing encumbrances." Id. at 441 (citing 92 C.J.S. Vendor Purchaser § 289). Therefore, there was a valid contract.
Second, a party may only rely upon a mistake of fact to avoid a contract. See id. In the Alexander case, the seller's mistake in thinking that she held title to the real estate was one of law, not of fact. Id. at 441. The Alexander court reasoned, "That it took the courts six years to determine the respective interests of the [memorandum party] and the [seller] in the subject real estate makes it abundantly clear that the [seller's] 'mistake' in thinking [she] held title to the property was one of law." Id.
Clearly the court in Alexander was convinced that questions about a vendor's interest in property would not have an effect on the validity of a contract. At least one other case that WorldCom points to seems to support this position. In Wedel v. American Elec. Power Serv. Corp., 681 N.E.2d 1122 (Ind.Ct.App. 1997), a contract between a mining company and a landowner/vendor provided, in part, that the landowner/vendor would receive a royalty interest in the coal mined within a certain acreage that was not acquired by the mining company. Id. at 1128, 1135. The Indiana Court of Appeals held that this particular royalty interest was nonvested and void under the rule against perpetuities. Id. at 1135. The landowner/vendor argued that the court should reform the contract because the parties were mutually mistaken at the time they entered the contract that the contract clause at issue was enforceable. See id. at 1138. The Wedel court refused to reform the contract, stating that the landowner/vendor had the burden of showing both the mutual mistake and that the instrument did not reflect the parties' true intentions. Id. The landowner/vendor admitted that the contract reflected his true intentions. Further, the mistake the landowner/vendor pointed to, the validity of the future interest clause, was a mistake of law. See id. "'[A] long line of Indiana authority has held that reformation may only be had for mistake of fact. It is not available for a mistake of law.'" Id. (quoting Geirhart v. Consolidated Rail Corp.-Conrail, 656 N.E.2d 285, 287 (Ind.Ct.App. 1995), trans. denied). Apparently, then, even a mistake about the extent of a party's interest in property is not a question of fact, but one of law.
WorldCom argues that even the question of whether the Wilson easement terminated before the parties entered the Amendment Agreement is a question of law about its interest in the property; therefore, such a mistake would not reform the contract. However, the Court finds there to be a significant difference between the principle enunciated in the Alexander case about the transfer of title and the situation at bar. In this case, the relevant property right is an easement. Therefore, in this case the law of easements applies. As the Court discussed in the previous section, under the law of easements, once and easement terminates, it is gone forever and may only be recreated through a new grant. WorldCom has offered no citations to relevant case law that would support a variance from the law of easements when looking at the termination of that property right in this case.
The Court notes that authority in other states have found that a mistake about the parties' respective legal rights in light of the rules of law, is really a mixed question of law and fact. See 92 C.J.S. Vendor Purchaser § 48 (citing Glasgow v. Greenfield, 657 S.W.2d 578 (Ark. 1983); Vickerson v. Frey, 224 P.2d 126 (Cal. 1st Dist. Ct. 1950); Eisenbeis v. Shillington, 159 S.W.2d 641 (Mo. 1941); Clark v. Carter, 136 S.W. 310 (1911); Emery v. Emery, 75 S.W.2d 725 (Tex.Civ.App. Ct. 1934)). Those jurisdiction treat such issues as questions of fact that would support rescission or reformation of a contract. See id. However, the Court has found no authority in Indiana that would treat a question about the parties' respective rights to land under a contract as a mixed question of law and fact or a question of fact. Nor have the Campbells pointed the Court to contrary authority in any jurisdiction. Therefore, the Court finds that a mistake about the actual interest in property of a contract, under Indiana law, is a mistake of law, not of fact; mutual mistakes of law will not provide grounds for rescission or reformation of a contract.
Applying the rule enunciated in Wedel to the facts of this case, the Campbells must show that the Amendment Agreement does not reflect their true intentions and that there was a mutual mistake of fact for summary judgment to be appropriate. The Campbells assert that in 1996, WorldCom sought an amendment to what WorldCom believed was an existing easement. The Campbells signed the Amendment Agreement on January 20, 1996. The Campbells assert that WorldCom did not have any interest in the easement in January 1996 because the WPL/WilTel Partial Assignment was invalid. Therefore, the Campbells argue that when they signed the agreement, they were under the mistaken impression that WorldCom had an interest in the easement, which it did not have.
In response, WorldCom asserts that the WPL/WilTel Partial Assignment was duly recorded in the Vigo county land records on December 3, 1986 on Page 247, Record 34, which was more than six years prior to the Campbells' purchase of the property. See Pls.' Exh. H, WPL/WilTel Partial Assignment, at 10; Pls.' Exh. A, Corporate Deed, From GL Ray Farms, Inc. to James M. Campbell Linda L. Campbell, Mar. 12, 1993. The WPL/WilTel Partial Assignment specifically identifies that WilTel was obtaining the assignment for the purpose of using the pipeline as a conduit for fiber optic cable. Pls.' Exh. H, WPL/WilTel Partial Assignment, at 1-2. In addition, the Campbells testified that they obtained a title opinion prior to purchasing the property, even though they have been unable to locate it. Campbell, Sr. Dep., at 17.
WorldCom provided thirty-eight statements of additional material fact to which the Campbells did not provide a response. Pursuant to the guidelines found in Southern District of Indiana Local Rule 56.1, "[t]he Court will . . . assume for purpose of deciding the motion that any facts asserted by [WorldCom] are true to the extent they are supported by the depositions, discovery responses, affidavits or other admissible evidence." Loc.R. 56.1(g).
Furthermore, the Amendment Agreement grants WorldCom
the perpetual right within such right-of-way to construct, install, operate, maintain, replace, repair and remove such telephone and telecommunications systems as WorldCom may from time to time require for transmission of communications for or by others. Such telecommunications systems shall consist of underground conduits and cables and other appurtenances, together with rights of ingress and egress over and across the lands of Grantor to and from the land above described.
Pls.' Exh. K, Amendment Agreement, at 1. The Campbells' testified that they read the Amendment Agreement and agreed to its terms before signing it. Id. at 23.
WorldCom argues that summary judgment is inappropriate because, at the very least, there is a question of fact about whether the Campbells intended to enter into the Amendment Agreement as it was written, including incorporation of the original easement grant with the modification set out above. But in any event, according to Indiana law, whether WorldCom owned an interest in the original easement grant is a question of law, which defeats the second element of the Campbells' prima facie case for rescission or reformation of the Amendment Agreement.
The Court agrees with WorldCom. The evidence that the Campbells read the Amendment Agreement and agreed to its terms before signing it is uncontroverted. In effect, this evidence confirms that the Campbells intended to be bound by the terms of the Amendment Agreement thereby negating the first element of a prima facie case for rescission. In addition, Indiana case law regarding the effect of a mutual mistake about the ownership rights in property of a party to a contract conveying that property is a mistake of law that will not support an action for rescission. The Campbells have not provided any law to the contrary. In light of these findings, the Court concludes that the Campbells' partial motion for summary judgment on reversion of title on this theory must also fail.
2. Misrepresentation
The Campbells' partial motion for summary judgment also raises the issue of misrepresentation. The Campbells assert that in January 1996 when WorldCom approached the Campbells with the Amendment Agreement, WorldCom knew it did not have an interest in the original easement. Apparently, the Campbells rely on the fact that WorldCom sought their express consent to use the easement for telecommunication purposes as evidence of WorldCom's knowledge because they offer no other evidence that WorldCom knew it did not have an interest in the property. The Campbells argue that they relied on WorldCom's misrepresentation when they signed the Amendment Agreement. Had they known that WorldCom did not own an interest in the easement in January 1996, the Campbells assert that they would not have accepted the Amendment Agreement as it was offered. The Campbells argue that WorldCom did not have an interest in the easement in January 1996 because the WPL/WilTel Partial Assignment was not a valid transfer of a partial interest in the easement.
WorldCom asserts that there was no misrepresentation because it did own an interest in an existing easement. WorldCom argues that the WPL/WilTel Partial Assignment and the WPL/WilTel Sale Agreement, taken together, imply that WorldCom had a responsibility to maintain the pipeline. Further, the facts show that the pipeline on the Campbells property was maintained such that it could transport oil or petroleum products before January 1996. Therefore, WorldCom asserts, its partial interest in the easement existed when the Campbells signed the Amendment Agreement. There was no misrepresentation of any kind. Because there is an issue of material fact, WorldCom asserts, the Campbells' partial motion for summary judgment should be denied.
In general a unilateral mistake about the law applicable to a contract will not be grounds for rescission. See Johnston v. Johnston, 184 N.E.2d 651, 653 (Ind.Ct.App. 1962) ("Nor will a mistake as to the law, of itself, be sufficient ground on which to set aside" a contract.); American Mut. Life Ins. Co. v. Mead, 79 N.E. 526, 528-29 (Ind.Ct.App. 1906) ("[T]he fundamental maxim [is], 'Ignorance of the law will not excuse,'. . . ."). However, in the making of a contract "if one of the parties knowingly or fraudulently misrepresents the law or the facts, and thereby gains an unfair advantage over the victim of the misrepresentation, such contract may be set aside." Johnston, 184 N.E.2d at 653. See also Peterson, 737 N.E.2d at 1229 ("Reformation is appropriate only in limited circumstances: (1) where there is a mutual mistake such that the written instrument does not reflect what the parties truly intended; and (2) where there has been a mistake on the part of one party accompanied by fraud or inequitable conduct by the other party.") (citing Urban Hotel Mgmt. Corp. v. Main Wash. Joint Venture, 494 N.E.2d 334, 337 (Ind.Ct.App. 1986)). In other words,
"where the mistake was induced or encouraged by the misrepresentations of the other party to the transaction, and the plaintiff, through misapprehension or mistake of the law, assumes obligations, or gives up a private right of property, upon grounds upon which he would not have acted but for such misapprehension, a court . . . may grant relief, if under the general circumstances of the case, it is satisfied that the party benefited [sic] by the mistake cannot, in conscience, retain the benefit or advantage so acquired."American Mut. Life Ins., 79 N.E. at 529 (quoting Bales v. Hunt, 77 Ind. 355 (1881)) (other citations omitted).
In the case at bar, the Campbells merely aver that WorldCom fraudulently represented that it had an interest in the Wilson easement. The only fact they allege supporting this theory is that WorldCom approached them for a ratification and amendment to the Wilson easement such that WorldCom would have an express right to lay telecommunications wire and other necessary equipment on the Campbells' property. This fact is not enough to support a motion for partial summary judgment on this issue. Moreover, WorldCom supports its argument that it believed that it did have an interest in the Wilson easement with the plain language of the WPL/WilTel Agreement, the WPL/WilTel Assignment and affidavits. See Pls.' Exh. G, WPL/WilTel Agreement; Pls.' Exh. H, WPL/WilTel Assignment; Shaw Aff. ¶¶ 3-6. WorldCom's evidence is clearly enough to rebut the inference the Campbells are trying to invoke.
The Court finds that the Campbells' partial motion for summary judgment on this basis should also be denied.
IV. CONCLUSION
For the foregoing reasons, the Court DENIES the plaintiffs', the Campbells', partial motion for summary judgment on reversion of title.
IT IS SO ORDERED.
ORDER ON PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT — REVERSION OF TITLE
This case is now before the Court on certain plaintiffs', James Campbell's and Linda Campbell's (the "Campbells'"), motion for partial summary judgment on Count IV of the second amended complaint against defendant, WorldCom Network Services, Inc. ("WorldCom"). In Count IV, the Campbells seek a declaratory judgment that there was no right of way agreement in effect at the time WorldCom sought amendments to such right of way agreement; therefore the amendments have no force and effect. The issues have been fully briefed and are ripe for a ruling. For the reasons discussed herein, the Court DENIES the Campbell's partial motion for summary judgment.