94-1773 La.App. 4 Cir. 4/24/96, Coleman v. Chevron Pipe Line Co.

• Decision Date: 24 April 1996
• Citation: 673 So.2d 291
• Parties: 94-1773 La.App. 4 Cir
• Court: Court of Appeal of Louisiana — District of US

Page 291

673 So.2d 291

94-1773 La.App. 4 Cir. 4/24/96

Carroll Denny COLEMAN, et al. v. CHEVRON PIPE LINE COMPANY.

CHEVRON PIPE LINE COMPANY v. Bertha Coleman RILEY, et al.

CHEVRON PIPE LINE COMPANY v. Elvina Coleman WARREN, et al.

Nos. 94-CA-1773, 95-CA-0896 and 95-CA-0897.

Court of Appeal of Louisiana Fourth Circuit.

April 24, 1996.

Rehearing Denied May 31, 1996.

Mack E. Barham, Robert E. Arceneaux, Travis L. Bourgeois, Barham & Arceneaux, New Orleans, for Appellants.

M. Hampton Carver, M. Taylor Darden, Stacy Smith Brown, Carver, Darden, Koretzky, Tessier, Finn, Blossman & Areaux, New Orleans, for Appellee.

Lyman L. Jones, Jr., Law Office of Frank E. Beeson, III, New Orleans, for Appellants Bertha Coleman Riley & Royal Rapp.

Before KLEES, BYRNES and LANDRIEU, JJ.

[94-1773 La.App. 4 Cir. 1] LANDRIEU, Judge.

The actions we consider in these appeals arise out of a decision by a common carrier, Chevron Pipe Line Company (Chevron), to expropriate approximately thirteen acres of land located on the East Bank of the Mississippi River in Placquemines Parish below Pointe-a-la-Hache. Chevron maintains a pipe line terminal facility on this property which was subject to a fifty year lease granted in 1944.

The property in question, Tracts 212 and 213, was originally part of the land expropriated in 1924 by the Board of Commissioners of the Orleans Levee District (the Levee Board) for the construction of the Bohemia Spillway and was included in that area which was subsequently leased by the Levee Board in 1944 for the construction of oil pipelines and facilities. See Acts 1944, No. 73; La.Rev.Stat.Ann. 41:1262-1268 (West 1990). Shortly thereafter, Gulf Refining Company (Gulf) built the Ostrica Terminal on the land subject to its right of removal of all improvements at the termination of the lease. ¹ In the 1950's, Chevron Oil [94-1773 La.App. 4 Cir. 2] Company obtained surface leases just upriver from the Gulf facility and began developing its own facility known as the Empire Terminal. In 1984, the Louisiana State Legislature declared that the public and necessary purpose for the expropriation had ceased and, accordingly, ordered the property (subject to all leases) returned to the former owners or their successors in title ² (hereinafter referred to as the landowners). In 1985, prior to the actual return of the land to the landowners, Gulf was merged into Chevron and the two facilities were consolidated, operating as a single facility known as the Empire Terminal.

In anticipation of the expiration of the lease due to terminate on October 24, 1994, Chevron began negotiations with the landowners to purchase the property underlying its pipeline facility. Negotiations for purchases of Tracts 212 and 213 failed and, in early 1994, Chevron instituted expropriation proceedings to guarantee the uninterrupted operation of its activities as a common carrier. See La.Rev.Stat.Ann. 19:2(8) (West 1979) & La.Rev.Stat.Ann. 45:245 (West 1982). The landowners immediately filed a petition to evict Chevron, arguing that the attempt to expropriate the land constituted a flagrant, egregious, and material breach of the lease. Chevron answered the petition and excepted for no cause of action. Noting that "a billion dollar operation does not have to hang in limbo pending the renewal or not of a lease that terminates in four or five months", the trial court found no breach of the lease and granted Chevron's exception of no cause of action. The landowners appealed this decision.

[94-1773 La.App. 4 Cir. 3] While the appeal from the eviction proceedings was pending, the expropriation trial was held and judgment was rendered in favor of Chevron. Prior to the jury trial to determine the just compensation due to the landowners, Chevron filed a Motion in Limine to exclude evidence of the value of any and all improvements placed on the property by Chevron for the purpose of determining the fair market value of the expropriated property. Over the landowners objection, Chevron's motion was granted. The jury awarded the landowners of Tract 212 a total of $40,622 as just compensation for its fair market value. The landowners of Tract 213 were awarded a total of $97,813 in compensation for the fair market value of the expropriated portion and for severance damage to the remaining unexpropriated portion. The landowners also appealed this decision, challenging the expropriation as improper and the compensation as inadequate. Given the intertwined nature of the eviction and expropriation proceedings, the appeals were consolidated by order of this Court.

EVICTION PROCEEDINGS

The right to expropriate is given to private owners and operators of pipelines for the transmission or transportation as a common carrier of petroleum, petroleum products and petroleum by-products. La.Rev.Stat.Ann. 19:2(8) (West 1979); La.Rev.Stat.Ann. 45:251 (West 1982). On appeal from the denial of their petition to evict, however, the landowners argue that where the expropriating authority is also the lessee of the property, the institution of expropriation proceedings constitutes a breach of the lease such that the lessor is entitled to immediate eviction. ³ They contend that the act of expropriation is contrary to the lessee's obligations to (1) preserve the property during the term of the lease and [94-1773 La.App. 4 Cir. 4] 2) the obligation to surrender possession at the termination of the lease. The landowners reason that instituting expropriation proceedings during the term of the lease is a flagrant violation of the rules governing lessee/lessor relations because "[n]ot only does the lessee ignore the lessor's interest entirely and thus acts for his own selfish, rather than their mutual, advantage, but the lessee tramples upon the obligation to surrender possession by attempting to change the character of its possession from that of precarious possessor to that of an owner."

The landowners's arguments are contrary to the rationale underlying expropriation. La.Rev.Stat.Ann. 9:3176 (West Supp.1995) ⁴ provides as follows:

The first law of society being that the general interest shall be preferred to that of individuals, every individual who possesses under the protection of the laws any particular property, is tacitly subjected to the obligation of yielding it to the community, wherever it becomes necessary for the general use.

Thus, societal needs override the individual (whether as lessee or lessor) possession of property. As such, the power to expropriate which is vested in private corporations serving a public purpose such as Chevron cannot be limited by lease nor can it be contracted away. See Tennessee Gas Transmission Co. v. Violet Trapping Co., 200 So.2d 428, 433 (La. 4th Cir.), writ refused, 251 La. 65, 203 So.2d 86 (La.1967). Accordingly, we find no error in the trial court's judgment sustaining Chevron's exception of no cause of action.

EXPROPRIATION PROCEEDINGS

The landowners do not dispute that Chevron is a common carrier pipeline vested with the power to expropriate. However, appellants Rapp and Riley question whether Chevron negotiated in good faith and all the landowners question the finding that a public need was served by this taking.

[94-1773 La.App. 4 Cir. 5] Good Faith Negotiations

Negotiation is a prerequisite to filing suit for expropriation. La.Rev.Stat. 19:2; see Faustina Pipe Line v. Levert-St. John, 463 So.2d 964, 967 (La. 3rd Cir.), writ denied, 466 So.2d 1301 (citation omitted) (the requirement is met when the expropriating authority makes a good faith attempt to acquire the property by conventional agreement).

On appeal, appellants Rapp and Riley argue that Chevron failed to negotiate in good faith prior to institution of expropriation proceedings. However, Rapp and Riley failed to answer Chevron's suit within fifteen days as required by La.Rev.Stat.Ann. 19:6 (West 1979) and, accordingly, waived all defenses to the suit except claims for just compensation and damages. See La.Rev.Stat.Ann. 19:7 (West 1979). Moreover, all the landowners (including Rapp and Riley) stipulated that Chevron had contacted them directly or through a representative and made at least one offer to purchase and lease their interests in the property. Accordingly, we do not consider this issue.

Necessity of Expropriation

The landowners challenge the necessity of the expropriation, arguing that because Chevron's rights under the lease agreement were identical to those that they sought to expropriate, i.e. the right to possession of Tract 212 and 213, Chevron could prove no need prior to the expiration of the lease. They assert that "the landowner has the absolute right to force concessions from the expropriator should the expropriator 'need' rights before a judgment of expropriation can be obtained." Alternatively, the landowners contend that Chevron failed to establish the requisite "necessary purpose", see 1974 La. Const. art. 1, § 4 (West Supp.1996), for the particular part of the terminal based on Tracts 212 and 213. They contend that the facility should have been divided for purposes of expropriation, thereby rendering Chevron liable upon reversion of the property to the landowners [94-1773 La.App. 4 Cir. 6] for the removal of the rusting storage tanks and for the restoration of the property to its original condition. The landowners argue that Chevron did not establish a need for that portion of the facility which was originally constructed in the 1940's (the old Ostrica terminal) and which they claim was only expropriated as a "good business practice" to hold the land in reserve should a future public need arise.

In challenges to the necessity of a taking, the landowner must prove that the legislatively authorized expropriator exercised "its large discretion" arbitrarily, capriciously, or in bad faith. Red River Waterway Com'n v. Fredericks, 566 So.2d 79, 83 (La.1990) (citations omitted). Whether the expropriator's purpose is public and necessary is a...