Avenal v. State, Dept. of Natural Resources

• Citation: 858 So.2d 697
• Decision Date: 15 October 2003
• Docket Number: No. 2001-CA-0843.,2001-CA-0843.
• Parties: Albert J. AVENAL, Jr., et al. v. STATE of Louisiana, DEPARTMENT OF NATURAL RESOURCES.
• Court: Court of Appeal of Louisiana (US)

858 So.2d 697

Albert J. AVENAL, Jr., et al. v. STATE of Louisiana, DEPARTMENT OF NATURAL RESOURCES.

No. 2001-CA-0843.

Court of Appeal of Louisiana, Fourth Circuit.

October 15, 2003.

Rehearing Denied November 21, 2003.

Philip F. Cossich, Jr., Cossich Martin Sumich & Parsiola, Belle Chasse, LA, Les Martin, New Orleans, LA, Michael X. St. Martin, Timothy C. Ellender, Jr., St. Martin & Williams, Houma, LA, Wendell H. Gauthier, Scott Labarre, Gauthier, Downing, Labarre, Beiser & Dean, Metairie, LA, Carolyn McNabb, Carolyn McNabb & Associates, Houma, LA, for Plaintiffs/Appellants.

Richard P. Ieyoub, Attorney General, Andrew C. Wilson, Donna M. Young, David L. Carrigee, Jedd S. Malish, Special Assistant Attorneys General, Burke & Mayer, New Orleans, LA, for Defendant/Appellant.

(Court composed of Chief Judge WILLIAM H. BYRNES III, Judge JOAN BERNARD ARMSTRONG, Judge PATRICIA RIVET MURRAY, Judge TERRI F. LOVE and Judge MAX N. TOBIAS Jr.).

JOAN BERNARD ARMSTRONG, Judge.

This is a class action by oyster fishermen who contend that their leases were taken, in a constitutional sense, by the State of Louisiana Department of Natural Resources. Following a jury trial, the trial court rendered judgment in favor of the plaintiffs. The State appeals. For the reasons given below, we will modify the quantum of damages awarded as to one of the plaintiffs but otherwise affirm.

The alleged taking occurred as a result of the operation of the Caernarvon Freshwater Diversion Structure (the "CFDS") as a coastal restoration measure. The ecology of the areas where the plaintiffs' oyster leases were located was altered as a result of the freshwater diversion so as to make those areas no longer suitable for oyster production.¹

Historically, the Breton Sound Basin, where the plaintiffs' oyster leases were located, contains a mixing of freshwater from the Mississippi River and other freshwater sources with saltwater from the Gulf of Mexico. As a result, much of [the area had water of intermediate salinity. In particular, much of the area had an intermediate salinity level that is suitable for oysters. Stated in a simplified manner: The area closest to land, and thus closest to the sources of freshwater, had the lowest salinity and was not sufficiently saline for oysters. The area farthest from land, and thus closest to the Gulf of Mexico, had the highest salinity and was too saline for oysters. In between those two areas was the area of intermediate salinity that was suitable for oysters. Over time, the construction of flood-control levees on the Mississippi River reduced the flow of freshwater into Breton Sound. That reduction of freshwater flow, along with other man-made and natural changes, caused the area of intermediate salinity, suitable for oysters, to move landward. The area of higher salinity, which was not suitable for oysters, also moved landward. The reduction of the flow of freshwater and the landward movement of the area of higher salinity caused coastal erosion and loss of coastal wetlands.

The State, with assistance from the federal government, has undertaken a program of coastal restoration. With respect to Breton Sound, the coastal restoration effort requires the diversion of additional freshwater from the Mississippi River to Breton Sound. This diversion is done by means of the CFDS. This increased flow of freshwater moved the intermediate salinity area, which is suitable of oysters, outward away from the land. Areas closer to the land, which had previously had intermediate salinity, and which had been suitable for oysters, became areas of lower salinity which were no longer suitable for oysters. The area of higher salinity, which is not suitable for oysters, was moved farther from land. In sum, as a result of CFDS, some areas which had previously not been suitable for oysters became suitable for oysters and some areas which had been suitable for oysters were no longer suitable for oysters. The plaintiffs' oyster leases were in areas which were no longer suitable for oysters.²

The CFDS is a success, and has halted coastal erosion and fostered coastal restoration. However, one of the costs of these laudable achievements is that the plaintiffs' oyster leases are no longer productive to a commercially feasible extent. Variations in the flow of freshwater through CFDS, particularly reductions of the flow of freshwater, can sometimes allow temporary, sporadic production of oysters on the plaintiffs' leases. However, assuming that CFDS will be used as intended, and there is no reason to doubt that it will be, and assuming that CFDS produces the results planned, and in fact it is doing so, the plaintiffs' oyster leases can no longer be used for commercial oyster production.

The first issue raised on appeal by the State is the quantum of damages. The water bottoms are owned by the State and leased to the plaintiffs. The plaintiffs presented damages evidence, which was accepted by the trial court, based upon the cost that would be required to "restore" (or, more accurately, recreate in another location) suitable conditions of the water bottoms of the plaintiffs' oyster leases.

More specifically, oyster leases, to be productive, must have water bottoms covered with "cultch", which is hard material such as crushed shells, gravel, etc. laid down over the mud or sand of the water bottom. The trial court awarded damages using a formula (referred to as the "cultch currency matrix") as to the cost (installed) of cultch on a per acre basis which cost it multiplied by the number of acres covered by the plaintiffs' oyster leases. In particular, the trial court awarded damages of $21,345 per acre.

The cultch currency matrix was developed by the State, Department of Natural Resources ("DNR"), in cooperation with various private groups (oyster fishermen, the oil & gas industry, environmental organizations, etc.), state and federal agencies (Department of Wildlife and Fisheries, Army Corps of Engineers, etc.) and biologists and other scientists with interests in coastal areas containing oyster leases. The State, DNR brought representatives of all of these various interests together at an Oyster Lease Valuation Matrix Workshop in March, 1995. The list of attendees at the Workshop includes a number of the expert witnesses who testified for each side below as well as the State's trial counsel below. Thus, the State was well-represented at the Workshop from a scientific, technical and even legal standpoint.

The minutes of the Workshop reflect that numerous issues and proposals were discussed covering scientific/technical, economic/financial and other topics. There were some issues and proposals as to which the various interests represented at the Workshop were unable to agree. However, consensus developed on sufficient issues and proposals that the Workshop was able to produce the cultch currency matrix as a consensus means of valuing damages to oyster leases. The State, DNR, adopted the matrix with minor modifications.

The matrix uses the cost of cultch (installed) as the "currency" for valuing oyster leases. The layer of cultch placed on the water bottom is necessary for the growth of oysters. The cultch currency matrix looks to the cost of the cultch (installed) on a per-acre basis as the measure of value of the oyster lease. Thus, in the present case, the cultch currency matrix measures the value of the plaintiffs' leases by the cost of replacing them at another location by the placement of the necessary cultch. (Interestingly, in another coastal area affected by the State's coastal restoration efforts, Davis Pond, the State has compensated or will compensate oyster lessees based upon the cost of installed cultch which, as stated above, is the determinative factor in the cultch currency matrix.)

The State's principal objection to the use of the cultch currency matrix is that the matrix measures replacement value, rather than market value, and that the plaintiffs should be compensated based upon market value of their oyster leases as of the date they were taken by the State. After most careful consideration of the State's arguments and citations to legal authorities, we disagree with the State's contention for two general reasons.

First, the Louisiana Constitution, at Article I, Section 4, mandates that when private property is taken for public purposes, the private property owner "has the right to a trial by jury to determine compensation, and the owner shall be compensated to the full extent of his loss." (emphasis added). Under this provision of the Louisiana Constitution, an owner of property taken by the State has rights to compensation which go beyond the rights to compensation provided by the Constitution of the United States and by other state constitutions. State v. 1971 Green GMC Van, 354 So.2d 479 (La.1977); State v. Spooner, 520 So.2d 336 (La.1988); Jenkins, The Declaration of Rights, 21 Loy. L.Rev. 9 (1975). Thus, we believe that the Louisiana constitutional imperative of "full" compensation favors replacement cost, when that is greater than market value, as the measure of compensation to be applied. We note that, on some occasions when private property used for business purposes has been taken by the State, the Supreme Court has held that replacement cost, rather than market value, should be used as the measure of compensation to the private property owner. See State, Through Dept. of Highways v. Constant, 369 So.2d 699 (La.1979)

; State, Dept. of Transp. and Development v. Dietrich, 555 So.2d 1355 (La.1990).³

We also note that the Louisiana Constitution, as quoted above, specifically guarantees the right to trial by jury to determine compensation for the taking of private property for public purposes, and this makes us all the more cautious about upsetting the jury's determination of the amount of compensation in this case. The State presented evidence as to the market value of the plaintiffs' oyster...