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Spencer v. Eversource Energy Service Co.

United States District Court, D. New Hampshire

September 28, 2017

Kevin Spencer, Mark Lagasse and Lagaspence Realty, LLC
v.
Eversource Energy Service Co. Opinion No. 2017 DNH 212

          MEMORANDUM ORDER

          JOSEPH N. LAPLANTE UNITED STATES DISTRICT JUDGE

         The question presented in this case is whether the owner and lessee of an easement are required and indispensable parties to a lawsuit challenging the use of that easement. This case involves property owners' efforts to prevent construction of electric transmission lines over an easement burdening plaintiffs' property in Stark, New Hampshire, part of a 190-mile project known locally as the Northern Pass. The crux of plaintiffs' complaint is that the proposed use of the easement is unreasonable and a breach of its express terms. Invoking this court's diversity jurisdiction, 28 U.S.C. § 1332, they seek a declaratory judgment preventing the project, see 28 U.S.C. § 2201, and monetary damages.

         Before the court are plaintiff's motion to amend their complaint[1] and defendant's motion to dismiss.[2] The plaintiffs' proposed Amended Complaint updates developments within the state utility regulatory process and information regarding their potential damages.[3] The defendant's motion to dismiss posits two arguments: 1) that the court lacks subject-matter jurisdiction, Fed.R.Civ.P. 12(b)(1), because the complaint fails to satisfy the $75, 000 amount-in-controversy threshold set forth in 28 U.S.C. § 1332(a); and 2) that the plaintiffs have failed to join two necessary and indispensable parties -- the owner and lessee of the easement, Fed.R.Civ.P. 12(b)(7) and 19.

         After reviewing the parties' submissions and hearing oral argument, the court first grants plaintiff's motion to amend. The court further finds that although the Amended Complaint alleges sufficient facts (just barely) to satisfy the jurisdictional amount, it must be dismissed because the owner and lessee of the easement are both necessary and indispensable parties, their joinder would defeat the court's diversity jurisdiction, and the case cannot “in equity and good conscience” proceed without them. 28 U.S.C. § 1332(c); Fed.R.Civ.P. 19(b). The court therefore grants defendant's motion to dismiss.

         I. Background

         The individual plaintiffs, Kevin Spencer and Mark Lagasse, are each owners of plaintiff Lagaspence Realty, LLC, which, in turn, owns the Percy Lodge and Campground in Stark, NH.[4] Spencer and Lagasse are rebuilding an old boarding house to create a year-round lodge and convenience store.[5] They have spent over $600, 000 on the project.[6] The property was, at all relevant times, encumbered by a power line easement granted to Public Service Company of New Hampshire (PSNH) by plaintiffs' predecessor in title in 1946. The easement measures approximately 2950 feet by 150 feet and is presently occupied by an electric transmission line.[7] The Northern Pass lines will run above and parallel to the existing lines and will be supported by steel lattice structures anchored to concrete foundations. Unlike the present power lines on the easement, the proposed transmission lines will be visible from the plaintiffs' planned lodge.[8] Five of these structures are to be built on the easement at issue.[9]

         The easement burdening plaintiffs' land is still owned by PSNH, a New Hampshire corporation and regulated public utility.[10]In October 2015, PSNH leased the easement to Northern Pass Transmission, LLC (NPT), a New Hampshire entity established in 2010 to construct and own the proposed transmission lines.[11] NPT is a wholly-owned subsidiary of Eversource Energy Transmission Ventures, Inc., which is, in turn, a wholly-owned subsidiary of Eversource Energy, a Massachusetts holding company.[12] PSNH is also a wholly owned Eversource Energy subsidiary.[13] Defendant Eversource Energy Service Co. a Connecticut corporation, is also a wholly-owned subsidiary of Eversource Energy. It is a service company performing non-power related tasks, including the provision of administrative, accounting, engineering, financial and legal services, to other wholly-owned Eversource Energy subsidiaries, [14] such as PSNH.[15]

         II. Legal analysis

         The court, as is usually required, turns first to the jurisdictional question raised by defendant's motion. See Dynamic Image Tech., Inc. v. United States, 221 F.3d 34, 38 (1st Cir. 2000) (“As a general matter, trial courts should give Rule 12(b)(1) motions precedence.”). After resolving that question -- in plaintiff's favor -- the court will address the joinder issue.

         A. Amount-in-controversy

         Pursuant to 28 U.S.C. § 1332, federal “district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, ” and there is diversity of citizenship. 28 U.S.C. § 1332(a). The amount in controversy in an action such as this seeking declaratory relief “is the value of the right or the viability of the legal claim to be declared . . . .” CE Design Ltd. v. Am. Econ. Ins. Co., 755 F.3d 39, 43 (1st Cir. 2014). Where, as here, there are multiple plaintiffs, each must allege a claim that is in excess of $75, 000. Stewart v. Tupperware Corp., 356 F.3d 335, 337 (1st Cir. 2004). The plaintiff carries the burden to establish the jurisdictional minimum amount. Id. at 338.

         “[T]he sum claimed by the plaintiff controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.” Id. (quoting St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938)). A plaintiff's “‘general allegation of damages that meet the amount requirement suffices unless questioned by the opposing party or the court.'” Id. (quoting Spielman v. Genzyme Corp., 251 F.3d 1, 5 (1st Cir. 2001)). However, once the opposing party has questioned the amount, “‘the party seeking to invoke jurisdiction has the burden of alleging with sufficient particularity facts indicating that it is not a legal certainty that the claim involves less than the jurisdictional amount.'” Id. (quoting Spielman, 251 F.3d at 5). This burden may be met by amending pleadings or submitting affidavits. Dep't of Recreation & Sports of P.R. v. World Boxing Ass'n, 942 F.2d 84, 88 (1st Cir. 1991).

         Here, as previously noted, plaintiffs allege that they have spent over $600, 000 renovating their property.[16] This assertion is supported by an affidavit detailing the expenditures, [17] the accuracy of which the defendants do not dispute. The plaintiffs further claim that the proposed transmission lines will cause aesthetic damage to the property which will both harm their prospective business and diminish the property's value.[18] They seek damages “for their personal investment in money, equipment use and labor.”[19]

         While these allegations are sparse, the court, reading the complaint liberally, Murphy v. United States, 45 F.3d 520, 522 (1st Cir. 1995), is satisfied that they are sufficient to indicate “that it is not a legal certainty that the claim involves less than the jurisdictional amount” of $75, 000 to each of the plaintiffs. Stewart, 356 F.3d at 338. The Complaint could be fairly read as alleging that the bulk of plaintiffs' $600, 000 investment will be lost as a result of the aesthetic damage to their property caused by the alleged misuse of the easement. Whatever difficulty the plaintiffs might ultimately have in proving their damages “is largely irrelevant to the court's jurisdiction because the pertinent question is what is in controversy in the case, not how much the plaintiffs are ultimately likely to recover.” Amoche v. Guarantee Trust Life Ins. Co., 556 F.3d 41, 51 (1st Cir. 2009) (emphasis omitted). The court therefore denies defendant's motion as to Rule 12(b)(1).

         B. Failure to join

         As noted, plaintiffs have sued only EESC, but not PSNH, the owner/lessor of the easement, or NPT, the lessee and project proponent. Defendant argues that both PSNH and NPT are required and indispensable parties, and because neither can be joined without destroying diversity, the Complaint must be dismissed. The court agrees.

         1. Applicable legal standard

         Whether dismissal under Rule 19 is warranted is a two-part inquiry. First, the court must determine whether the party is a required party under Rule 19(a), and then whether it is an indispensable party under Rule 19(b). United States v. San Juan Bay Marina, 239 F.3d 400, 405 (1st Cir. 2001). If the party is “required” but, as here, joinder is not feasible because it would destroy diversity, Rule 19(b) then requires the court to determine, “whether in equity and good conscience, the action should proceed among the existing parties or should be dismissed.” Fed.R.Civ.P. 19(b).

         Failure to join a party under Rule 19 is a grounds for dismissal under Rule 12(b)(7). The Rule applies to “circumstances in which a lawsuit is proceeding without particular parties whose interests are central to the suit.” Picciotto v. Cont'l Cas. Co., 512 F.3d 9, 15 (1st Cir. 2008). It provides for the joinder of such “required”[20] parties when feasible. Fed.R.Civ.P. 19(a)(2). The joinder of non-diverse parties, for example, is not “feasible” under Rule 19 because joinder would undermine the court's diversity jurisdiction. In re Olympic Mills Corp., 477 F.3d 1, 8 (1st Cir. 2007). The rule ultimately provides for the dismissal of suits when the court determines that the joinder of the “required” parties is not feasible, but that they are, nonetheless, so “indispensable” that the suit must not be litigated without them. Fed.R.Civ.P. 19(b).

         Rule 19 “furthers several related policies, including the public interest in preventing multiple and repetitive litigation, the interest of the present parties in obtaining complete and effective relief in a single action, and the interest of absentees in avoiding the possible prejudicial effect of deciding the case without them.” Acton Co. of Massachusetts v. Bachman Foods, Inc., 668 F.2d 76, 78 (1st Cir. 1982). “Generally, ‘all interested parties should be joined in a declaratory judgment action whenever possible, ' in keeping with the purpose of the Declaratory Judgment Act to fully and finally adjudicate the controversy at issue.” RFF Family P'ship, LP v. Link Dev., LLC, 849 F.Supp.2d 131, 137 (D. Mass. 2012) (Gorton, J.) (quoting State Farm Mut. Auto. Ins. v. Mid- Continent Cas. Co., 518 F.2d 292, 296 (10th Cir. 1975)). “Where jurisdiction depends solely on diversity of citizenship, the absence of a non-diverse, indispensable party is not a mere procedural defect. Rather, it destroys the district court's original subject matter jurisdiction.” Picciotto, 512 F.3d at 20.

         2. Rule 19(a)

         Under Rule 19(a), a party is “required” if:

(A) in that person's absence, the court cannot accord complete relief among existing parties; or
(B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person's absence may:
(i) as a practical matter impair or impede the person's ability to protect the interest; or
(ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent ...

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