Sanders v. Exploration

• Decision Date: 28 April 2011
• Docket Number: No. 10-30475,10-30475
• Parties: WILLIAM HENRY SANDERS Plaintiff-Appellant v. BELLE EXPLORATION, INCORPORATED Defendant-Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

WILLIAM HENRY SANDERS Plaintiff-Appellant

v.BELLE EXPLORATION, INCORPORATED Defendant-Appellee

No. 10-30475

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

Filed: April 28, 2011

Appeal from the United States District Court

for the Western District of Louisiana

(1:07-CV-1108)

Before DAVIS, CLEMENT, and ELROD, Circuit Judges.

PER CURIAM: ^*

William Sanders appeals from the district court's entry of judgment following a bench trial in favor of Belle Exploration, Inc., ("Belle") on Sanders's Louisiana state law claims against Belle for breach of a mineral lease agreement between them. Broadly, Sanders's arguments on appeal are (1) that the district court erroneously determined the boundaries of Sanders's property subject to the lease at issue; (2) that the district court's decision was an unconstitutional taking of Sanders's property; and (3) that the district court committed an errorof law in concluding that an order of the Louisiana Commissioner of Conservation superseded certain pooling provisions in the mineral lease. We affirm.

I.

Sanders owns lands and mineral interests in Sections 25 and 30 of La Salle Parish, Louisiana. On July 1, 2000, Sanders and his wife, Bessie Otwell Sanders, along with Ricky and Dana Shirley, executed an Oil, Gas and Mineral Lease (the "Lease") in favor of Belle applicable to all of the lessors' lands and mineral interests in Sections 25 and 40 (the "Leased Lands"). Under the Lease, the lessors retained a one-fifth royalty interest in any mineral production from the Leased Lands.

In 2002, the Louisiana State Mineral Board (the "Mineral Board") passed two resolutions concerning the land at issue here. The resolutions conceded to private ownership of mineral rights in all lands above the thirty-six foot mean sea level contour in certain parcels in the vicinity of Catahoula Lake, including some of the Leased Lands.¹ At nearly the same time, the Louisiana Commissioner of Conservation (the "Commissioner") ordered the forced pooling and unitization of property including the Leased Lands, resulting in the creation of numbered sand units ("SU") 116 through 122. This case concerns SU 117 and SU 118. SU 117 includes portions of the Leased Lands adjacent to Catahoula Lake; SU 118 does not.

Under the terms of the Lease, Belle has the power to combine or pool all or part of the Leased Lands with other lands in which Belle has an interest. The Lease obligates Belle to include a minimum of twenty acres of the Leased Landsin each operating unit formed by pooling. SU 118, as created by the Commissioner, only contains approximately four acres of the Leased Lands.

Sanders filed this suit in state court and Belle removed it to federal court. As relevant on appeal, Sanders contended that (1) Belle owed him additional royalties with respect to SU 117 because Belle had improperly determined the boundary between Sanders's property and that of the State of Louisiana in and around Catahoula Lake, resulting in underrepresentation of Sanders's interest in SU 117, and (2) Belle breached the Lease by failing to pay Sanders royalties from SU 118 as though SU 118 included twenty acres of the Leased Lands.

The district court conducted a three-day bench trial and entered judgment in favor of Belle on the issues relevant to this appeal. Sanders timely appealed.

II.

"Our standard of review for bench trials is well established: findings of fact are reviewed for clear error; legal issues, de novo." Seal v. Knorpp, 957 F.2d 1230, 1234 (5th Cir. 1992). The clear error standard requires us to defer to the power of the district court to determine facts; the

standard plainly does not entitle a reviewing court to reverse the finding of the trier of fact simply because it is convinced that it would have decided the case differently.... If the district court's account of the evidence is plausible in light of the record viewed in its entirety, the court of appeals may not reverse it even though convinced that had it been sitting as the trier of fact, it would have weighed the evidence differently. Where there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous.

Anderson v. City of Bessemer City, 470 U.S. 564, 573-74 (1985). In this diversity case, we apply the substantive law of the forum state, Louisiana, "in an attempt to rule as a Louisiana court would if presented with the same issues." See Musser Davis Land Co. v. Union Pac. Res., 201 F.3d 561, 563 (5th Cir. 2000) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79-80 (1938)).

III.

On appeal, Sanders asserts three grounds of error with respect to two operating units, SU 117 and SU 118. First, Sanders contends that the boundary between his and the State of Louisiana's interest in SU 117 should be determined by reference to a survey he ordered in 2001 (the "Tooke Survey"), whereas the district court agreed with Belle that the proper reference is a survey conducted under the auspices of the Louisiana Department of Public Works in 1942 (the "Heard and Daigre Survey"). Second, Sanders argues that the district court's decision to rely on the Heard and Daigre Survey was an unconstitutional taking of his property in SU 117. Third, Sanders takes the position that Belle's payment of royalties in proportion to the actual acreage of the Leased Lands included in SU 118, a compulsory unit created by the Commission that included fewer than twenty acres of the leased lands, breached Belle's obligation under the Lease to include twenty acres of the Leased Lands in any pooled unit.

A. SU 117

1. D etermination of Boundary

The dispute between the parties over the extent of Sanders's interest in SU 117 stems from Louisiana law governing the ownership of land surrounding a navigable lake.² "[T]he State of Louisiana upon its admission to the Union acquired title to all lands within its boundaries below the ordinary high-water mark of navigable bodies of water.... As to lakes, the State has never ceded, and still holds, the land below the ordinary high-water mark." State v. Placid Oil Co., 300 So. 2d 154, 172 (La. 1974). The State has also determined by statute not to recognize any right to alluvion or dereliction on the shores of lakes.³ LA. CIV. CODE ANN. art. 500 (2010); see also Placid Oil, 300 So. 2d at173 ("As to lakes, the adjacent landowners have no alluvial rights."). The effect of these rules on this case is that the State of Louisiana holds title to all land that was below the ordinary high-water mark of Catahoula Lake in 1812, when Louisiana joined the Union, and Sanders holds title to the land above that mark. See Sanders v. State, 973 So. 2d 879, 883 (La. Ct. App. 2007) ("No one disputes that it is the ordinary high water level as it existed in 1812 in Catahoula Lake that determines the extent of the State's ownership.").

The parties are further in agreement that the ordinary high water level of Catahoula Lake in 1812 is thirty-six feet above mean sea level ("MSL"). They disagree, however, about how to fix that point, relying on two different surveys. Belle points to the 1942 Heard and Daigre Survey and Sanders points to the 2001 Tooke Survey. The Heard and Daigre Survey represented the State's effort to assess where the high water mark of Catahoula Lake would have been in 1812, but it appears to have been conducted as a meander survey. A meander survey determines the approximate location of the lake and plots the sinuosities of the shoreline, but generally does not set the boundary between private and public ownership unless expressly provided for in a conveyance. Sanders, 973 So. 2d at 884. The Tooke Survey locates the true thirty-six foot MSL contour line, but only as it lay in 2001. The competing surveys were placed in evidence before the district court, which ultimately agreed with Belle that the Heard and Daigre Survey more properly established the boundary line between the State's and Sanders's land than the Tooke Survey.

The district court offered two independent bases for its decision: first, the Louisiana Third Circuit Court of Appeal's decision in a related case, ⁴ and, second, the court's independent assessment of the evidence introduced at trial. Rather than wade into the state law question of the preclusive effect of Sanders, we examine the second basis for the district court's decision and conclude that Sanders is unable to show that the district court's reliance on the Heard and Daigre Survey was clearly erroneous.

Sanders and Belle agree that the ultimate question put to the district court required the district court to locate the thirty-six foot MSL contour line as it existed in 1812. The district court was faced with two imperfect pieces of evidence on the question: the thirty-six foot MSL contour line as it existed in 2001, reflected in the Tooke Survey, and the thirty-six foot MSL meander line as the State's surveyors concluded it probably existed in 1812, reflected in the 1942 Heard and Daigre Survey. Sanders may be correct that the Heard and D aigre S urvey did not definitively establish the proper boundary because it is a meander line. See, e.g., Bd. of Comm'rs v. Rathborne Land Co., 868 So. 2d 928, 931 (La. Ct. App. 2004) ("In general, meanders are not to be treated as boundaries...."). However, a contour survey conducted 189 years after the fact, as the Tooke Survey was, also does not establish definitively where those contours lay in 1812. Both surveys were relevant and probative evidence, ⁵ but neither was conclusive evidence. After a full trial, the district court determinedthat the Heard and Daigre Survey line was likely more accurate. We are unwilling to hold that Sanders has demonstrated that the district court's choice between two proposed boundaries meets the high standard of clear error. See Anderson, 470 U.S. at 574.

2. Judicial Taking

Sanders also argues that the district court's decision to treat the Heard and Daigre Survey as establishing the proper boundary was an unconstitutional taking...