Vagts v. N. Nat. Gas Co.

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Mark Vagts, Joan Vagts, Andrew Vagts, and Vagts Dairy, LLC., Appellees, v. Northern Natural Gas Company, Appellant.

No. 23-0537

Supreme Court of Iowa

June 21, 2024

Submitted January 23, 2024

Appeal from the Iowa District Court for Fayette County, David Nelmark, Judge.

Defendant natural gas pipeline operator appeals from judgment entered on nuisance claim. Affirmed.

Brant M. Leonard (argued), Bret A. Dublinske, and Sarah A. Arbaje of Fredrikson and Byron, P.A., Des Moines, for appellant.

Scott Lawrence (argued) of Lawrence Law Office, S.C., Chilton Wisconsin, and Andrew F. Van Der Maaten of Anderson Wilmarth, Van Der Maaten, Belay, Fretheim, Gipp, Evelsizer Olson, Noble, Lynch &Zahasky, Decorah, for appellees.

McDonald, J., delivered the opinion of the court, in which Oxley, McDermott, and May, JJ., joined, and in which Christensen, C.J., and Waterman and Mansfield, JJ., joined as to part III. Mansfield, J., filed a special concurrence, in which Christensen, C.J., and Waterman, J., joined.

McDonald, Justice.

The Vagts family owns and operates a dairy farm in West Union, Iowa. Northern Natural Gas Company (NNG) operates a natural gas pipeline that runs under the Vagts' property. NNG uses a cathodic protection system, which runs an electrical current through the pipeline to prevent the corrosion of the pipeline. The Vagts alleged that stray voltage from the cathodic protection system distressed their dairy herd and caused them damages. They filed this nuisance suit against NNG. The jury returned a verdict awarding the Vagts a total of $4.75 million in damages. NNG timely filed this appeal. NNG raises two issues in this appeal. First, whether the district court erred in instructing the jury on nuisance without including negligence as an element of the claim. Second, whether the district court erred in denying NNG's motion for remittitur.

I.

In 1957, Lawrence Vagts and his brother Ewald Vagts purchased a small twenty- to thirty-cow stanchion barn in West Union to start a dairy. The Vagts family has continuously operated the dairy since its founding in 1957. Today, Vagts Dairy, LLC. is managed by Lawrence's grandson, Mark Vagts, and Mark's son, Andrew Vagts. Mark and his wife, Joan, live on a heifer farm about one mile north of the dairy. Andrew, his wife, Stephanie, and their four daughters live at the homestead on the dairy.

NNG is an interstate natural gas pipeline company that provides natural gas transmission services to utilities and other end-use customers. NNG's pipeline stretches across eleven states from Texas to Michigan and includes approximately 14,000 miles of pipeline. NNG operates its pipeline pursuant to a Federal Energy Regulatory Commission certificate of public convenience and necessity. The Federal Petroleum and Hazardous Materials Safety Administration requires pipeline companies such as NNG to use a cathodic protection system. See 49 C.F.R. § 192.455(a)(2) (2019) (providing that "each buried or submerged pipeline . . . must have a cathodic protection system"). A cathodic protection system runs a low-level electrical current through the pipeline to mitigate corrosion. The system receives electrical current through a rectifier that converts alternating current (AC) to direct current (DC). The rectifier connects the pipeline and an anode bed, which consists of a series of anodes buried in the ground. Electrical current runs through the ground between the anode bed and the rectifier to complete a circuit.

The relationship between the parties began in 1960 when the Vagts granted NNG an easement to lay its pipeline through the Vagts' property. The following year, the Vagts granted NNG a second easement to install a cathodic protection system on the Vagts' property. In 1964, NNG installed both its pipeline and an anode bed on the Vagts' property. In 2013, NNG replaced the existing, depleted anode bed with new anodes. The anode bed remained in the same location. In 2017, the Vagts substantially increased the size of their dairy operation. They increased the size of their free stall barn, extending it westward closer to NNG's pipeline and cathodic protection system, and they increased the size of their herd to approximately 500 cows.

After 2013, the Vagts began to experience difficulty with their dairy operation. The cows began to display "bizarre, abnormal behavior." They kicked off milking units, got into the manure, stood in the waterers, and drank abnormally. The cows became increasingly sick. The somatic cell count in the herd increased. Milk production declined. Milk quality declined. The cows died at an abnormally high rate. In a typical year, approximately 5% of a dairy herd might die. In the year 2022, more than 17% of the Vagts' dairy herd died. All of this resulted in excess costs, decreased revenue, and lost profits for the dairy as well as great stress and anxiety for the Vagts.

The Vagts engaged a number of people to diagnose and remedy the situation. They consulted with farm operators, nutritionists, veterinarians, and equipment manufacturers. None could explain the bizarre behaviors, sickness, and death. After exhausting other possibilities, the Vagts decided to test their farm for stray voltage, which can be "catastrophic to a dairy farm." Schlader v. Interstate Power Co., 591 N.W.2d 10, 12 (Iowa 1999) (quoting Larson v. Williams Elec. Co-op., Inc., 534 N.W.2d 1, 1 n.1 (N.D. 1995)). The Vagts hired Lawrence Neubauer to test for stray voltage on their farm. Neubauer detected electrical currents in the ground, primarily DC current.

The Vagts subsequently contacted the Allamakee-Clayton Electric Cooperative, Inc. (ACEC) regarding the stray voltage. ACEC tested the site and reported stray electrical current. ACEC subsequently contacted NNG. Representatives of NNG visited Vagts Dairy and detected stray voltage. NNG believed that the detected voltage fell below the level of concern established in the "Redbook" and the Iowa Stray Voltage Guide. The Redbook is published by the United States Department of Agriculture and is cited by the Iowa Stray Voltage Guide. Nonetheless, in late October 2020, NNG shut down the rectifier nearest to the Vagts' free-stall barn. However, NNG added anode beds to the cathodic protection system and increased the electrical energy applied to each of the anode beds.

In March 2021, the Vagts filed this suit against NNG and ACEC. Counts 1 and 2 asserted claims of nuisance and negligence, respectively, against NNG. Count 3 asserted a claim of negligence against ACEC. Count 4 asserted a claim of abatement against NNG and ACEC. In October 2022, the Vagts dismissed their negligence action against NNG. Soon after, in November 2022, the Vagts dismissed with prejudice their negligence action against ACEC.

The matter came on for trial in January 2023. The Vagts submitted proposed jury instructions to the district court. The Vagts proposed marshaling instruction for its nuisance claim provided that:

Plaintiffs, Mark Vagts, Joan Vagts, Andrew Vagts and Vagts Dairy, LLC, claim the Defendant, [NNG], created a nuisance by stray voltage introduced on their farm.

Nuisance is explained to you in another instruction. The Vagts must prove all of the following propositions:

1. [NNG] created a nuisance on [the] Vagts' farm.

2. The nuisance was a proximate cause of damages to [the] Vagts.

3. The invasion was unreasonable.

4. The degree of harm was significant.

5. The amount of damage.

In a written statement regarding the plaintiffs' proposed jury instructions, NNG stated that it "agree[d] to the Proposed Jury Instructions" with two exceptions. First, NNG objected to an instruction regarding permanent nuisance damages. The Vagts' claim for permanent nuisance was ultimately settled during trial, and NNG's objection on this point is immaterial to the resolution of this appeal. Second, NNG objected to the marshaling instruction. It argued the "Plaintiffs should be required to prove negligence in order to recover under a nuisance theory." In NNG's view, negligence is an element of nuisance, and "comparative fault principles therefore apply." NNG proposed the following instruction:

Required Elements of Nuisance. To sustain a claim of nuisance in this case, plaintiffs must prove all of the following:

1. A private nuisance existed....

2. The invasion or interference resulted in significant harm....

3. Defendant was negligent. A person is negligent when it fails to exercise ordinary care. Ordinary care is the care that a reasonable person would use in similar circumstances. A person is not using ordinary care and is negligent, if the person, without intending to do harm, does something or fails to do something that a reasonable person would recognize as creating an unreasonable risk of invading or interfering with another's use or enjoyment of property.

4. Defendant's negligence caused the private nuisance. This does not mean that defendant's negligence was "the cause" but rather "a cause" because a private nuisance may have more than one cause. Someone's negligence caused the private nuisance if it was a substantial factor in producing the nuisance....

5. The nature and extent of plaintiffs' damage.

If Plaint1iffs have failed to prove these propositions, Plaintiffs are not entitled to recover damages on the theory of nuisance. If Plaintiffs have proven both of these propositions, Plaintiff[s] [are] entitled to damages in some amount from Defendant.

The district court held that negligence was not an element of the nuisance claim. The district court instructed the jury in accord with the Vagts' proposed jury instructions and disallowed evidence relating to a comparative fault defense. The district court submitted the following instruction defining nuisance.

A "nuisance" is

...