Illinois Central R. Co. v. Mayeux

Decision Date01 August 2002
Docket NumberNo. 01-30880.,01-30880.
Citation301 F.3d 359
PartiesILLINOIS CENTRAL RAILROAD COMPANY, Plaintiff-Appellee, v. James E. MAYEUX; et al., Defendants, James E. Mayeux and Barbara Richard Mayeux, Defendants-Appellants. James E. Mayeux and Barbara Richard Mayeux, Plaintiffs-Appellants, v. Illinois Central Railroad Company, Defendant-Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Frank S. Craig, III (argued), Ben B. Hu, Breazeale, Sachse & Wilson, Baton Rouge, LA, for Plaintiff-Appellee.

William C. Shokey (argued), Paolo J. Messina, Shockey & Associates, Baton Rouge, LA, for Defendants-Appellants.

Appeal from the United States District Court for the Middle District of Louisiana.

Before REAVLEY, SMITH and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:

Illinois Central Railroad Co. seeks to expropriate a strip of private property for the purpose of building a rail spur to a chemical storage facility on the Mississippi River. Under Louisiana law, a railroad company may expropriate private property only if it establishes a "public and necessary purpose" for the expropriation. The district court granted Illinois Central's motion for partial summary judgment on that issue, finding that the railroad established a public and necessary purpose as a matter of law. Because we find a genuine factual dispute over whether the expropriation serves a necessary purpose, we reverse and remand for further proceedings.

I. Facts and Procedural History

Illinois Central is a common carrier railroad that operates a main line through Iberville Parish, Louisiana. In connection with its business, Illinois Central seeks to construct a rail spur from its main line to a chemical storage facility that is owned and operated by a French corporation named LBC PetroUnited, Inc. ("PetroUnited").

The PetroUnited facility is situated on the banks of the Mississippi River in St. Gabriel, Louisiana, approximately one mile west of the Illinois Central main line. The facility serves dozens of chemical producers who store their chemicals at the facility until they can make arrangements to ship them elsewhere. The facility is currently accessible by barge and by truck. Illinois Central claims that making the facility rail-accessible would be advantageous for companies storing chemicals at the facility. The railroad also contends that shipping chemicals via rail is safer and more efficient than transporting them by truck or barge.

For the proposed spur to reach the PetroUnited facility, however, it must cross land belonging to the appellants, James and Barbara Mayeux. Despite the railroad's offers to purchase a servitude over the Mayeuxs' land, the Mayeuxs have been unwilling to sell.

After the Mayeuxs rejected its offers to purchase a servitude over the land, Illinois Central filed a complaint for expropriation in the Middle District of Louisiana. Illinois Central argued that, as a railroad corporation operating in Louisiana, it was entitled to expropriate a servitude over the Mayeuxs' land because the proposed spur would serve a public and necessary purpose under Louisiana law. On February 8, 2000, Illinois Central filed a motion for partial summary judgment on that issue. After hearing arguments from both sides, the district court granted the railroad's motion. On June 6, 2001, the case proceeded to a bench trial in which the district court awarded $180,429.00 to the Mayeuxs as "just compensation" for the taking. The Mayeuxs now appeal from the district court's judgment arguing that there was no right to expropriate because the proposed spur serves neither a public nor a necessary purpose.

II. Discussion
A. Standard of Review1

We review grants of summary judgment de novo.2 Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."3 An issue is material if its resolution could affect the outcome of the case.4 In deciding whether a fact issue has been created, we view the facts and the inferences to be drawn from them in the light most favorable to the nonmoving party.5 Since this diversity case involves solely questions of Louisiana expropriation law, we must apply the state law in an attempt to rule as the Louisiana Supreme Court would if presented with the same issues.6

B. Public and Necessary Purpose

Under Louisiana Revised Statute § 19:2(2), "[a]ny domestic or foreign corporation created for the construction of railroads" may expropriate "needed" private property when the owner of the property and the corporation cannot agree upon a purchase price.7 A second provision, Louisiana Revised Statute § 45:353, allows foreign railroad companies operating in Louisiana to expropriate property needed to construct railroads and rail spurs and for other "railroad purposes."8 Both of these statutes are, however, subject to the state constitutional protections afforded to owners of private property. Article I, Section 4 of the Louisiana Constitution specifically provides that "[p]roperty shall not be taken or damaged by any private entity authorized by law to expropriate, except for a public and necessary purpose and with just compensation to the owner."9 The Louisiana Constitution also makes clear that, in a given expropriation case, whether "the purpose is public and necessary is a judicial question."10

1. Public Purpose

Whether a particular expropriation will serve a public purpose is a two-pronged inquiry.11 Under the first prong, the expropriating corporation must show that there is a public right to use the expropriated property (i.e., the right of way for the rail spur).12 This prong consists of two subparts.13 Not only must the public have the right to use the spur, but there must also exist a possibility that more than one particular user will have access to the spur.14 Under the second prong, the court considers whether the expropriation will contribute to the general welfare of the community.15

There is no question that the public will have the right to use the spur in this case. The fact that PetroUnited will initially "own" the spur16 is inapposite; Louisiana courts have held that the financing and ownership arrangement for a proposed spur has no effect on whether the spur will serve a public purpose.17 Because Illinois Central proposes to connect the spur to its main line, the spur is subject to regulation by the Louisiana Public Service Commission, and Illinois Central must use it to serve the public without discrimination.18 Thus, the first subpart is satisfied.

The second subpart concerns whether the spur will actually be available to multiple shippers. The Louisiana Supreme Court has made clear that in the context of railroad expropriation, the number of potential shippers is a key factor in establishing public purpose. In River & Rail Terminals, Inc. v. Louisiana Railway & Navigation Co., the Court held that a rail spur built to serve only one shipper was not built for a public purpose.19 The railroad company in River & Rail had built a rail spur exclusively to serve the New Orleans Refining Company in the shipment of its own products.20 Because the spur benefitted no shipper other than the one refining company, the court held that it did not serve a "public purpose."21 The holding focused on the fact that the spur exclusively served one private shipper:

The evidence clearly shows that the spur track of defendant company serves no other enterprise but the New Orleans Refining Company, and that it was constructed solely for the purpose of enabling defendant company to handle tank cars shipped out by the refinery.

There is nothing in the record to show that the public has ever used the spur track of defendant company, or that defendant company's spur track will accommodate a number of plants on the river front, and will be open to all other business enterprises, present and future, in the same vicinity.22

Although one shipper is not enough, the proposed rail spur does not have to serve a large number of shippers to serve a public purpose. In Kansas City, S. & G. Railway Co. v. Louisiana Western Railroad Co., public purpose was established by showing that a spur would reach nine private industrial plants.23 In Gumbel v. New Orleans Terminal Co., a railroad company established a public purpose by showing that the rail spur would be open to the public and that it could potentially serve three private companies already operating in the area along the spur.24 In Calcasieu & Southern Railway Co. v. Bel, the court held that public purpose was satisfied when a gravel company built a spur primarily to ship gravel from its own gravel pit.25 The court found a public purpose because some of the land along the seven-mile rail spur belonged to lumber companies that might use the spur to ship lumber.

26

The general public utility of a proposed rail spur also figures into the public purpose analysis. The Bel decision demonstrates that after River & Rail, the Louisiana Supreme Court adopted a broader view of public purpose that encompasses the general public utility of a proposed expropriation. In determining that the gravel company's rail spur served a public purpose, the Bel court considered the economic benefits that the spur would bestow upon the general public:

It was shown that ... the construction of the road will be a public advantage and will tend to enlarge the resources, increase the industrial energies, and promote the productive powers of a considerable number of the inhabitants or businesses of a section of the state, and manifestly will contribute to the general welfare and prosperity of the community in which it is located.27

The court then referred with approval to a section of Nichols on Eminent Domain discussing the nationwide trend of interpreting public purpose broadly...

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