ANR Pipeline Company v. Davis, Brian E.

In the
United States Court of Appeals
For the Seventh Circuit
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No. 04-1465
ANR PIPELINE CO.,
Plaintiff-Appellee,
v.

62.026 ACRES OF LAND, more or less, in Rock
and Walworth Counties, Wisconsin,
Defendant.

Appeal of: BRIAN E. DAVIS and CARRIN J. DAVIS.

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Appeal from the United States District Court
for the Western District of Wisconsin.
No. 03 C 450 S—John C. Shabaz, Judge.
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SUBMITTED SEPTEMBER 28, 2004—DECIDED NOVEMBER 19, 2004
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Before POSNER, ROVNER, and WILLIAMS, Circuit Judges.
POSNER, Circuit Judge. A rarely litigated provision of the
Natural Gas Act allows a company regulated by the Federal
Energy Regulatory Commission that wishes to condemn
land for construction of facilities authorized by a certificate
of public convenience and necessity issued by the Commis-
2 No. 04-1465

sion to bring a condemnation suit in federal district court if,
but only if, “the amount claimed by the owner of the
property to be condemned exceeds $3,000.” 15 U.S.C.
717f(h). This appeal by Brian and Carrin Davis, the owners
of an 18-acre tract, presents the novel question of whether
federal jurisdiction can be defeated by the owner’s refusing
to specify the amount that he is claiming.
The certificate of public convenience and necessity author-
ized ANR Pipeline Company to build an underground
pipeline 30 inches in diameter on the Davises’ property and
also to enlarge a small “gate valve” meter that is owned by
ANR but sits on the Davises’ land. In the course of protracted
negotiations with the Davises, ANR offered them $1,205 for
the pipeline easement. They refused and ANR filed this
condemnation suit, initially limited to the pipeline. Shortly
afterwards ANR upped its offer to $4,872, broadening the
offer to encompass the enlarged gate valve as well as the
pipeline. Replying that they would accept $2,900 for the
pipeline easement but would not accept any compensation
for the land required for the enlarged gate valve because
that taking was “outside the scope of this litigation,” the
Davises moved to dismiss ANR’s suit on the ground that
the $3,000 jurisdictional minimum had not been met. ANR
then filed an amended complaint, seeking condemnation of
the land needed to enlarge the gate valve as well as of the
pipeline easement. The judge denied the Davises’ motion to
dismiss and they boycotted the remaining proceedings,
which culminated in a brief bench trial at which the Davises
did not appear and at the end of which the judge entered an
order of condemnation and awarded the Davises zero
compensation.
ANR argues that the Davises’ refusal of its offer of $4,872
shows that they are claiming more than $3,000. The argument
is imprecise. They are refusing to claim. A condemnor can-
No. 04-1465 3

not force a landowner to claim more than $3,000 any more
than the defendant who wants to remove a diversity suit to
federal court can force the plaintiff to claim more than
$75,000; if the plaintiff commits himself to seek no more
than $75,000, the petition to remove must be denied. In re
Brand Name Prescription Drugs Antitrust Litigation, 248 F.3d
668, 670-71 (7th Cir. 2001); Workman v. United Parcel Service,
Inc., 234 F.3d 998, 1000 (7th Cir. 2000). But we do not have
such a commitment here, and its absence has implications
for what the Davises are really after—what, realistically, they
are claiming. There is no suggestion that they think the
property interests that ANR is seeking have a market value
of less than $3,000—why would any landowner turn down
an offer because he thought it not too low but too high?—
and there is not the faintest hint that they are willing to
surrender those interests to ANR for that modest amount.
Whatever is motivating their obduracy isn’t an acknowledg-
ment that they are entitled to no more than $3,000 and a
rejection whether principled or irrational of a foolishly
generous offer. Even if they value the pipeline easement at
only $2,900 (which is improbable, but for the moment we’ll
assume they do), it is hardly likely that they value the land
required to enlarge the gate valve at only $100. The addi-
tional land that ANR wants for the enlarged gate valve is
65.5 feet by 38 feet, which is about 0.057 of an acre. The
original condemnation was of easements occupying 0.709 of
an acre. Assuming the Davises valued the land for the
enlarged gate valve at the same amount per square foot as
they purport to value the pipeline easement, they would
demand $233 for that land. That is more than $100 but is in
any event an underestimate because the pipeline easements
are for underground construction whereas the land for the
enlarged gate valve would be taken in fee simple.
The Davises are undoubtedly trying to force ANR to
proceed in state court, where they may be able to extract a
4 No. 04-1465

larger judgment. We think they are therefore “claiming,”
within the meaning of the statute, compensation in excess of
$3,000. The case is the mirror image of cases in which
parties attempt to manufacture federal jurisdiction by ex-
aggerating their claim in order to reach a jurisdictional
minimum, as in Bowman v. Chicago & North Western Ry., 115
U.S. 611, 613-14 (1885), and Del Vecchio v. Conseco, Inc., 230
F.3d 974, 979-80 (7th Cir. 2000). The defendants are trying to
defeat the pipeline company’s right to invoke federal
jurisdiction by pretending not to claim the jurisdictional
amount, when really they are claiming more but hoping to
vindicate the claim more effectively by proceeding in state
court, or perhaps just by thwarting the federal suit in order
to induce ANR to come up with a richer offer rather than go
to the bother of suing in state court.
It is true that when the case was first filed the only offer
by ANR that the Davises had turned down was for only
$1,205, and so how can we be confident that the case was
within federal jurisdiction? And if not, the filing of the
amended complaint did not solve the problem; jurisdiction
would have been lost and so ANR would have to start over,
Grupo Dataflux v. Atlas Global Group, L.P., 124 S. Ct. 1920,
1924 (2004); Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S.
826, 830 (1989)—unless, as in Morlan v. Universal Guaranty
Life Ins. Co., 298 F.3d 609, 617 (7th Cir. 2002), and Duplan v.
Harper, 188 F.3d 1195, 1198-1200 (10th Cir. 1999), the amended
complaint were treated as if it were an original complaint,
which it would be except for the filing fee. Despite the
“black letter” rule invoked in Grupo and Newman-Green that
all jurisdictional requisites must be satisfied at the time of
initial filing, it was in Newman-Green itself that the Supreme
Court held that a want of complete diversity at the time a
suit is filed can be cured later—much later—by dropping
from the suit the party whose presence had prevented di-
versity from being complete.
No. 04-1465 5

In any event we now know that the Davises were deter-
mined to stay out of federal court even if ANR’s offer greatly
exceeded $1,205. They expressed a willingness to grant the
pipeline easement for $2,900 only when it was plain that
ANR would not pay because it would prevent ANR from
proceeding in federal court to obtain the additional property
interest that it needed. And they turned down ANR’s sub-
sequent offer of $4,872, which was well above the jurisdic-
tional minimum, because they wanted more. So we think it
has adequately been shown, as the district court determined,
that the Davises were claiming more than $3,000 from the
start.
But we do not understand the district court’s awarding
zero compensation. Without using the term “default,” the
district court treated the Davises as having defaulted; and
indeed they had. But when a defendant defaults, the next
step is to determine the relief to which the plaintiff is en-
titled. Fed. R. Civ. P. 55(b)(2); In re Catt, 368 F.3d 789, 793
(7th Cir. 2004). ANR was entitled to the property interests
it sought in exchange for paying the owners the fair market
value of the interests; it was not entitled to the interests free
of charge. True, the burden was on the Davises to show what
the fair market value was, United States ex rel. Tennessee
Valley Authority v. Powelson, 319 U.S. 266, 273 (1943); National
R.R. Passenger Corp. v. Certain Temporary Easements Above
Railroad Right of Way in Providence, Rhode Island, 357 F.3d 36,
39 (1st Cir. 2004), and they put in no evidence. But since
ANR had offered them $4,872, this figure provides a min-
imum estimate of what the property interests were worth,
and the district court should have awarded the Davises that
amount.
The judgment is affirmed in part and reversed in part, and
the case is remanded to the district court for the entry of a
judgment consistent with this opinion.
6 No. 04-1465

A true Copy:
Teste:

_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit

USCA-02-C-0072—11-19-04