Acadian Gas Pipeline Sys. v. Nunley

• Decision Date: 02 November 2011
• Docket Number: No. 46,648–CA.,46,648–CA.
• Citation: 77 So.3d 457
• Parties: ACADIAN GAS PIPELINE SYSTEM, Plaintiff–Appellee v. Pierce Dalton NUNLEY and Susan Moody Nunley, Defendant–Appellants.
• Court: Court of Appeal of Louisiana — District of US

77 So.3d 457

ACADIAN GAS PIPELINE SYSTEM, Plaintiff–Appellee

v.Pierce Dalton NUNLEY and Susan Moody Nunley, Defendant–Appellants.

No. 46,648–CA.

Court of Appeal of Louisiana, Second Circuit.

Nov. 2, 2011.

The Faircloth Law Group, by Jimmy R. Faircloth, Jr., Barbara Bell Melton, Alexandria, LA, for Appellants.

Kean Miller, LLP, Baton Rouge, LA, by Gary A. Bezet, Gregory M. Anding, Carol L. Galloway, for Appellee.

Before CARAWAY, PEATROSS and MOORE, JJ.

MOORE, J.

[2 Cir. 1] Dr. and Mrs. Pierce Nunley appeal a judgment that granted Acadian Gas Pipeline System (“Acadian”) a pipeline servitude across the Nunleys' 400–acre tract in DeSoto Parish. We affirm.

Procedural History

Acadian filed this petition on February 19, 2010, alleging that it had a certificate of transportation from the Department of Natural Resources entitling it to expropriate necessary private property under the general state expropriation laws and the power to expropriate property necessary for transporting and supplying the public with natural gas under La. R.S. 30:554 A(2) and 19:2(5). Acadian alleged it was constructing a natural gas pipeline between Napoleonville and Mansfield to meet the demands and needs of the public, and that a 42–inch pipeline would have to cross the Nunleys' 400–acre tract (“the subject tract”) in DeSoto Parish. Acadian also alleged that it had negotiated with the Nunleys in good faith but the parties could not agree as to just compensation and other terms and conditions. Acadian demanded permanent and temporary servitudes to construct and operate the pipeline, upon the payment of just compensation.

The Nunleys filed exceptions of vagueness and no cause of action, urging that Acadian alleged insufficient facts to show a public and necessary purpose, and a general denial. At trial, Dr. Nunley made clear that he took offense at Acadian's petition: nobody from Acadian had ever called him to discuss this servitude. Some months earlier one of Acadian's landmen had talked to Dr. Nunley's father-in-law, Dave Moody, about placing a pipeline on a separate, 160–acre tract owned by the Nunleys and [2 Cir. 2] Moody several miles south of the subject tract. Then, on January 20, Acadian sent Dr. Nunley a letter asking permission to survey the subject tract, and threatening legal action if he did not respond within three days. Dr. Nunley briskly replied that nobody was allowed to trespass on his property without written consent.

On February 2, Acadian again wrote Dr. Nunley, stating that it had selected the subject tract for the pipeline, explaining that a servitude was not a sale of the property, offering him a right-of-way agreement and $84,681.60 in compensation, asking for permission to survey, and stating Acadian's goal to “work with each and every landowner to reach an amicable agreement.” Dr. Nunley rebuffed this letter as well. He testified he would have been willing to talk to them about it, but he was unwilling to accept their “take it or leave it” stance. As noted, Acadian filed this suit on February 19.

In May 2010, Acadian obtained a court order allowing it to enter the subject tract to survey. Shortly before trial, Acadian filed a motion in limine to exclude any evidence of good faith negotiations, a requirement for expropriation under R.S. 19:2, on grounds that the Nunleys waived this by failing to file a dilatory exception of prematurity. The Nunleys conceded the waiver but argued that if Acadian could show a public and necessary purpose under La. Const. Art. 1, § 4, then they would use any relevant evidence to prove that Acadian selected this route “arbitrarily, capriciously or in bad faith.” ExxonMobil Pipeline Co. v. Union Pacific R. Co., 2009–1629 (La.3/16/10), 35 So.3d 192. They maintained that Acadian failed to [2 Cir. 3] consider the site selection criteria outlined in Recreation & Park Comm'n v. C & S Development Inc., 97–2652 (La.7/8/98), 714 So.2d 706, and thus the selected route was arbitrary, capricious or in bad faith.

Summary of Trial Testimony

At trial, Acadian's director of business development, Rocky Story, testified that in response to growing demand, hurricane threats in south Louisiana and the discovery of the Haynesville Shale, Acadian had decided in 2008 to install a 142–mile pipeline from Napoleonville in southeast Louisiana to Mansfield in northwest Louisiana. Acadian's senior project manager, Don May, testified that although there was no clear-cut north-south corridor, the route ultimately selected crossed the subject tract along with 436 other individual parcels of land. In DeSoto Parish, the pipe would have a diameter of 42 inches and be buried 30 inches deep, requiring a 50–foot servitude and costing $4.5 million per mile.

Mr. May also testified that Acadian had traced an initial route based on a “desktop” study using aerial photos and topographic maps. The initial route would have bypassed the subject tract, running some 7,000 feet to the east. However, his men physically inspected that route and performed two flyovers; they discovered some wetland areas, extensive timber growth, an auto junkyard and two sharp crossings under I–49, all of which posed serious “constructability” issues. They therefore did another flyover and noticed two existing overhead electric powerlines running north-to-south over the subject tract. Mr. May ordered another ground-level survey and flyover, and decided that following the existing electrical servitude posed [2 Cir. 4] less risk of environmental impact and required only one Interstate crossing. He also testified that the company made adjustments to the new route to keep greater distance from a house, the Mansfield Battlefield site and a working coal mine, but the new route was still 1 1/2 miles shorter than the initial route.

Mr. May conceded that he considered only two routes, the initial route that bypassed the subject tract, and the selected route that bisected it; he did not consider 10 or 12 alternate routes, as this would take too much time. On cross-examination, he admitted that aside from the flyovers and the physical observations of his men on the ground, all his work had been “desktop,” generating no daily logs, papers or reports reflecting environmental or other assessments.

Dr. Nunley testified that his first communication from Acadian regarding the subject tract was a letter on January 20, 2010; Acadian had followed up with a letter on February 2, requesting a permanent 50–foot servitude and a temporary (for construction) 60–foot servitude for a total of $84,681.60. Dr. Nunley testified that he wanted to know more about the servitude before he granted it, and he was really just confused by Acadian's conduct. He maintained that if Acadian would “work out an appropriate agreement” and not just present a “take it or leave it” offer, he would grant the servitude. He firmly stated he did not want a natural gas pipeline under his “pristine” farmland, but would agree to it if Acadian would take out a mineral lease on the subject tract.

[2 Cir. 5] Dr. Nunley presented the testimony of an expert in civil engineering, Frank Willis. Although he had never designed or selected the route for a natural gas transmission pipeline, he testified that it was impossible to select such a route strictly by desktop work and a helicopter flyover. Based on the lack of documentation—no photos, field notes, cost estimates, interviews with landowners—he felt that Acadian did not consider the appropriate factors. He suggested that Acadian picked the route first, and then weighed the factors. On cross-examination, he agreed that the 42–inch pipeline was necessary and would not state that the initial route was preferable. However, he insisted that failure to maintain the data used was engineering malpractice.

Action of the District Court

In a written ruling, the district court cited Acadian's expropriation authority under R.S. 30:554 A(2) and 19:2(5) and summarized the facts. The court found that Acadian, in its haste to acquire servitudes for its pipeline, had indeed failed to negotiate, but the Nunleys waived the issue by not filing an exception of prematurity. The court also found a public and necessary purpose for the pipeline, justifying expropriation under La. Const. Art. 1, § 4. The issue was therefore whether Acadian abused its discretion in selecting the route by acting “in bad faith or so capriciously or arbitrarily that its action was without an adequate determining principle or was unreasoned.” Red River Waterway Comm'n v. Fredericks, 566 So.2d 79 (La.1990); United States v. Carmack, 329 U.S. 230, 67 S.Ct. 252, 91 L.Ed. 209 (1946). An expropriator should consider “the availability of alternate sites, costs, [2 Cir. 6] environmental factors, long-range planning, and safety considerations.” Recreation & Park Comm'n v. C & S Development, supra. The court found, however, that “once removed from the duty to negotiate, a pipeline company has virtually unassailable discretion.” The court agreed with the Nunleys that Acadian failed to preserve and produce “data such as designs, photographs, field notes, and constructability studies,” but recognized that the supreme court has recently approved the use of testimonial evidence of the site selection process instead of documentation. ExxonMobil Pipeline Co. v. Union Pacific R. Co., supra.¹ The court reluctantly found that Mr. May's testimony satisfied the requisite criteria. Finally, the court noted that Acadian was not required to consider the landowner's convenience. La. R.S. 19:2; Louisiana Power & Light v. Caldwell, 360 So.2d 848 (La.1978). The court therefore granted Acadian's request for expropriation, rendering judgment to that effect and ordering Acadian to pay just compensation of $84,681.60.

Synopsis of Arguments

The Nunleys have appealed, raising two assignments of error. First they contend the court erred in its application of the legal standard to Acadian's expropriation of private property....