Mississippi River Transmission Corp. v. Tabor, 83-4569

Decision Date15 April 1985
Docket NumberNo. 83-4569,83-4569
Citation757 F.2d 662
PartiesMISSISSIPPI RIVER TRANSMISSION CORP., Plaintiff-Appellee Cross-Appellant, v. George S. TABOR and 401 Acres More or Less, Situated in Section 5 and 8, Township 19, North, Range 1 West, Lincoln Parish, Louisiana, Defendant-Appellant Cross-Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Stephen R. Burke, James M. Johnson, Minden, La., David F. Post, Farmerville, La., for defendant-appellant cross-appellee.

Burt W. Sperry, George Wear, Jr., James H. Napper, II, Monroe, La., for plaintiff-appellee cross-appellant.

Appeals from the United States District Court for the Western District of Louisiana.

Before WISDOM, RANDALL, and JOLLY, Circuit Judges.

WISDOM, Circuit Judge:

This appeal arises from a judgment ordering that the defendant's property rights in four tracts of land in Lincoln Parish, Louisiana be expropriated, in accordance with La.Rev.Stat.Ann. Secs. 19:1, 19:2, 19:2.1 (West 1979) 1 and 15 U.S.C. Sec. 717f(h) (1982), 2 for continued use by the plaintiff as a gas storage reservoir upon the plaintiff's payment to the defendant of just compensation for the rights so expropriated. On appeal, this court is asked to determine whether, under Louisiana law, 3 the defendant owned a compensable property right that required expropriation, whether the amount of compensation awarded by the district court was just compensation for the rights expropriated, and whether the defendant's cross-claim for damages for trespass and for the plaintiff's unlawful use of his property right before it was legally expropriated had prescribed. We agree with the trial judge's resolution of these issues and affirm the judgment of the district court.

I.

The parties to this litigation have stipulated to most of the pertinent facts underlying this dispute. The plaintiff, Mississippi River Transmission Corporation (MRT), is engaged in the transportation of natural gas in interstate commerce and the distribution of natural gas to the public. Since May 2, 1973, MRT has been operating a natural gas storage reservoir in an underground geological formation known as the Vaughn Sand (Eastern Reservoir) in the Cotton Valley Formation, Unionville Field, Lincoln Parish, Louisiana. 4 MRT holds a certificate of public convenience and necessity On August 8, 1972, MRT acquired an Option and Gas Storage Agreement for the East Unionville Storage Reservoir from George B. Tabor (Tabor Sr.) according to which Tabor Sr. purported to grant to MRT, upon the payment of the compensation listed in the contract, all rights in the Tabor property located in the area of the Unionville storage reservoir necessary for MRT's operation of the reservoir. 7 MRT At the time of the execution of the gas storage agreement between Tabor Sr. and MRT in 1972, Tabor Jr. owned the following interests in three of the four tracts of land included in the storage agreement:

from the Federal Power Commission 5 for the operation of the reservoir, and the Department of Conservation of the State of Louisiana has issued all of the necessary orders establishing and enabling MRT to operate the reservoir. 6 exercised its rights under the option agreement after the Department of Conservation approved the creation of the reservoir. Because of an error in a title opinion on the property, MRT failed to discover that George S. Tabor (Tabor Jr.) owned a partial interest in the property made subject to the gas storage agreement; therefore, MRT's agreement with Tabor Sr. did not contain a reference to Tabor Jr.'s interest.

(1) An undivided one-half ( 1/2 ) interest in the mineral rights in tract one, subject to an oil, gas, and mineral lease providing for a one-eighth ( 1/8 ) royalty on that portion of tract one located in the Calhoun Unit No. One created by the Louisiana Department of Conservation;

(2) An undivided one-half ( 1/2 ) interest in full ownership in tract two (including surface and mineral rights);

(3) An undivided one-half ( 1/2 ) interest in the mineral rights in tract four.

Tabor Sr. had the full ownership of tract three and he owned the remaining interest in tracts one, two, and four. On the death of Tabor Sr. in 1977 and a voluntary partition of his estate between his heirs, Tabor Jr. acquired full ownership of both the surface and mineral rights in all four tracts. Tabor Jr. became aware of the activities being conducted by MRT on the property in 1978, and negotiations for the settlement of this dispute began shortly thereafter.

MRT brought this action for declaratory judgment under 28 U.S.C. Secs. 2201 & 2202 to determine whether, at the time suit was filed, the defendant, Tabor Jr., owned any compensable interest in the four tracts of land made the subject of the storage agreement between MRT and Tabor Sr. MRT filed an alternative action under La.Rev.Stat.Ann. Secs. 19:1 & 19:2 8 and 15 U.S.C. Sec. 717f(h) (1982) 9 seeking to expropriate, through the exercise of the power of eminent domain, any such interest the defendant may have upon payment of just compensation at an amount fixed by the court.

Tabor Jr. filed a counter-claim in which he sought damages, under a theory of trespass, and compensation for the lawful expropriation of his property. In its answer to Tabor Jr.'s counter-claim, MRT alleged that Tabor Jr.'s mineral interest in the subject property was extinguished by confusion in 1977, that MRT thereby acquired all rights in the property, and that Tabor Jr.'s claims for damages prescribed in 1979. MRT's complaint was later amended to add the Farmerville Bank, which held a mortgage on the defendant's property.

Before trial, Tabor Jr. dropped his damage claims for decreased value of the surface lands and for lowering of the water table in his lands. The parties stipulated to the value of any storage rights that Tabor Jr. may have had. The Farmerville Bank admitted MRT's right to acquire any necessary storage rights through the exercise of the power of eminent domain but claimed entitlement to any just compensation that might be awarded.

The district court held that Tabor Jr.'s claims for damages for the public use of his property had prescribed and that Tabor Jr. was not entitled to any damages for trespass. The court rejected MRT's contention that Tabor Jr.'s claim for compensation had also prescribed and awarded Tabor his proportionate share of the value of the recoverable reserves in the reservoir at the time of the creation of the reservoir. The court further ordered that Tabor Jr.'s interest be expropriated for continued use as a gas storage reservoir and fixed the amount of just compensation owed Tabor Jr. by MRT. The question of apportionment of the just compensation between the defendant and the Farmerville Bank was reserved for future amicable resolution or further court proceedings.

Both MRT and Tabor appeal. Tabor contends on appeal that the district court erred in its valuation of the recoverable reserves in the Vaughn Sand subject to Tabor Jr.'s mineral interest and in its refusal to award damages and attorney's fees to the defendant. MRT argues on appeal that the district court erred in holding that MRT did not already own all of the mineral rights in the subject property, therefore making expropriation unnecessary, and that Tabor Jr. was not bound to deliver his mineral rights to MRT in 1977 in accordance with the warranty clause contained in the agreement between MRT and Tabor Sr. We hold that the district court correctly resolved each of these disputed issues.

II.

MRT contends that the district court erred in declining to grant a judgment in favor of MRT declaring that Tabor Jr. had no compensable right in the property nor any actionable claims for damages that had not prescribed. The district court held that Tabor Jr. did have an interest in the property requiring expropriation. The court further held that Tabor's claims for damages incidental to MRT's taking of the property in 1973 had prescribed two years after the first occurrence of any damage after completion of the reservoir, in accordance with La.Rev.Stat.Ann. Sec. 9:5624 (West 1979), but that if Tabor had a valid claim for damages in trespass for the taking itself or for just compensation in accordance with La.Rev.Stat.Ann. Sec. 19:2.1(B) (West 1979), such claims remained actionable. On appeal, MRT reasserts its contention that all of Tabor's claims for damages and rights to compensation for his interest in the four tracts of land prescribed in 1979, two years after Tabor's mineral servitude was extinguished by confusion. Tabor contends that the court erred in declining to award him damages in tort for mental anguish, humiliation, and embarrassment.

The trial court correctly analyzed the Louisiana law on the effect of prescription on the defendant's right to claim damages and just compensation. La.Rev.Stat.Ann. Sec. 19:2.1(B) (West 1979) provides:

"All claims for property by, or for damages to the owner caused by the expropriation of property pursuant to R.S. 19:2 [providing for expropriation by the state and certain private corporations] shall be barred by the prescription of two years commencing on the date on which the Id. The prescriptive period provided by this section applies only to actions for damages and claims resulting from a legal expropriation. Greater Baton Rouge Airport District v. Hays, La.Ct.App. 1 Cir.1976, 339 So.2d 431, writ denied, 1977, 341 So.2d 403; A.K. Roy, Inc. v. Board of Commissioners, 1959, 237 La. 541, 111 So.2d 765. Therefore, the district court correctly held that Tabor's claim for compensation for the expropriation of his property rights did not begin to prescribe until the district court entered judgment legally expropriating Tabor Jr.'s rights in the four tracts of land. 10

property was actually occupied and used for the purposes of expropriation."

The district court held, however, that Tabor Jr.'s claims for trespass damages, other than those for the actual taking, and for...

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