Louisiana Third Circuit Decision Imposes Damages for Due Process Violation on Private Company

Liskow & Lewis
Contact

On July 15, 2020, The Third Circuit Court of Appeals issued an opinion awarding damages for a violation of due process rights against a private pipeline company.  Bayou Bridge Pipeline, LLC v. 38.00 Acres, More or Less, Located in St. Martin Parish, et al.[1] (“Bayou Bridge”) centers around the construction of a crude oil pipeline from the Clifton Ridge terminal in Lake Charles, Louisiana to a marketing hub in St. James, Louisiana.  The 38 acres relevant to this lawsuit were in St. Martin Parish and were needed for construction of the pipeline.  While Bayou Bridge Pipeline, LLC (“BBP”) identified approximately 470 heirs to the title of the property, it began construction on the Defendant Landowners’ (“Defendants” or “Landowners”) property in June 2018 prior to receiving servitude agreements from each person having ownership interest.

On July 27, 2018, Peter Aaslestad, one of the Landowners, brought suit to enjoin BBP from illegally continuing its construction on the property.  On that same date, BBP initiated expropriation proceedings against the property owners with whom an agreement could not be reached.  In answering the BBP’s expropriation petition, the Landowners alleged that the expropriation system was unconstitutional as it applied to oil pipelines.  The Landowners additionally filed exceptions of prematurity, and a reconventional demand for damage for trespass and damages for violation of their due process.

The trial court dismissed the exceptions, and at a hearing prior to trial ruled that the eminent domain scheme adequately protected due process and property rights under the State and Federal Constitutions.  Finally, after a trial on the merits, the trial court granted the expropriation and found that while BBP was entitled to a servitude to lay the pipeline, it entered onto and disturbed Defendants’ property prior to acquiring the right to do so.  The trial court awarded actual damages to each Landowner based on each owner’s undivided interest in the property.  One landowner had an interest of .0000994 and the other two owned an .0005803 interest.  Using the landowners’ fair market value, the court found damages in the maximum amount of $0.51.  The court also found timber damage in the maximum amount of $1.66, and agreed to treble the damages as requested by the Landowners to a maximum amount of $4.98.  The maximum total award, with treble damages, was $6.64.  Since BBP had tendered to each Landowner $75, the trial court awarded that amount for its interest in the expropriated property.  The trial court further awarded an additional $75 to each landowner for BBP’s trespass.

The Landowners appealed, asserting four assignments of error.  They claimed that the trial court erred in: “(1) denying their affirmative defenses, asserting that Louisiana’s granting of eminent domain to private oil pipeline companies violates U.S. and Louisiana Constitutions’ due process and property rights protections;[2] (2) failing to render judgment on certain aspects of their reconventional demands alleging violations of their property and due process rights, despite the trial court finding BBP trespassed on their property; (3) denying their dilatory exceptions of prematurity, where BBP allegedly failed to comply with statutory prerequisites for expropriation; and (4) allowing impermissible evidence of economic development and incidental benefit to the public in determining whether the expropriation served a public and necessary purpose.”[3]

The Third Circuit Court of Appeals first addressed whether it could review the adequacy of the trespass damage even though it was not raised as an assignment of error on appeal, determining it could not. The Third Circuit then went on to affirm the trial court’s ruling in all but one of the assignments, finding that the trial court erred in failing to award damages for BBP’s violation of Defendants’ due process rights separate from the award of trespass.[4]

The Third Circuit found that Louisiana’s expropriation scheme which gives private owners and operators of pipelines authority to expropriate private property for the public good was not unconstitutional, as the system does not give private parties “unfettered discretion that violates due process.”[5]  The system allows for a judicial determination of whether the taking is for “public purpose” prior to the taking.[6] However, because BBP did not follow this procedure and began construction prior to obtaining a judgment, the Court found that Defendants’ due process rights were violated, and they were entitled to additional damages beyond those for trespass.

The Third Circuit’s opinion in Bayou Bridge, which imposes damages for a due process violation upon a private company, raises multiple issues.  The first is the finding that BBP, a non-state actor, violated the Landowners’ constitutional rights.

The Third Circuit found that by taking the property before a judicial determination of public and necessary purpose, BBP violated the Defendants’ due process rights.  The Court based its assertion on Boerschig v. Trans-Pecos Pipeline, L.L.C. where the United States Court of Appeals, Fifth Circuit stated that “when private parties have the unrestrained ability to decide whether another citizen’s property rights can be restricted, any resulting deprivation happens without ‘process of law.’”[7]  However, Boeschig involved statutes which unconstitutionally  delegated power to private parties.  In contrast, the Court here expressly found that the delegation of authority to pipeline operators was constitutional.

Second, the award for violation of due process rights, $10,000 to each Defendant, is an unprecedented award—never before seen in any Louisiana court.  As noted by Judge Ezell in his dissent, the cases relied upon by Defendants in seeking damages for violation of constitutional property rights actually only awarded damages for trespass. Nonetheless, the Third Circuit reasoned that damages could be recovered for the separate due process claim in addition to the trespass claim.

The Third Circuit does not provide any support for its notion that due process damages should be awarded separate from trespass damages in this manner.  In their brief, the Defendants cite the following quote from the United States Court of Appeals, Fifth Circuit case of Archbold-Garrett v. New Orleans City : “procedural due process violation is actionable and compensable without regard to any other injury.”[8]  Archbold-Garrett cites to US Supreme Court case Carey v. Piphus,[9] for this notion; however, it is clear in Carey that nominal damages for a due process violation must be awarded if actual damages cannot be proved.  Further, in Archbold-Garrett, the Fifth Circuit allowed the due process claim because it implicated broader injuries than the “just compensation” afforded under the Appellants’ takings claim.

The Louisiana Third Circuit did not rely on or distinguish the above cases.  Instead, it stated that those cases involved different claims, and that the damage award must focus on the deprivational conduct of the party who violated the Defendants’ due process rights.  Thus, the award was given in order to communicate to BBP that it did not have the unrestrained ability to take property without due process of law.  This award is analogous to a punitive damage award, which is not generally allowed in Louisiana.  Moreover, the Third Circuit did not disclose how it calculated the $10,000 award, which appears punitive in comparison to the $1 the Supreme Court allowed for violation of due process in Carey.[10] 

In contrast, the Landowners’ request for additional damages on appeal was directly linked to damages for trespass.  In their appeal brief, Defendants relied on Williams v. City of Baton Rouge, stating that they were entitled to additional damages because when a trespasser acts in bad faith, it is liable in tort for trespass and all resultant damages.[11]  Additionally, they relied on Belgarde v. City of Natchitoches, a case where damages for “humiliation, worry, and mental anguish” were awarded as compensatory damages resulting from a trespass in violation of the Constitution.[12]  In their appeal before the Louisiana Third Circuit, the Landowners did not request nominal damages for the due process violation, nor did they raise the adequacy of the trial court’s trespass damage award.  Instead, the Third Circuit on its own created a new category of damages for due process violations.

Overall, the Third Circuit’s ruling in Bayou Bridge, whether proper or improper, fails to ground its holding in Louisiana jurisprudence and is likely to cause confusion moving forward.

[1] Bayou Bridge Pipeline, LLC v. 38.00 Acres, More or Less, Located in St. Martin Parish, et al.. Additional Party Names: Barry Scott Carline, Bayou Lafourche Fresh Water Dist., Energy Transfer Partners, ‘Katherine Aaslestad, Louisiana Dep’t of Envtl. Quality, Louisiana Dep’t of Nat. Res. Office of Coastal Mgmt., Peter Aaslestad, Phillips 66 Partners, LP, State of Louisiana, Sunoco Logistics Partners, Theda Larson Wright, U.S. Corps of Engineers, 2019-565 (La. App. 3 Cir. 7/15/20).

[2] The Defendants did “not appeal the trial court’s award of compensation for the expropriation of the land.” Thus, the Third Circuit noted that “that aspect of the judgment was final.” Bayou Bridge, 2019-565, (La. App. 3 Cir. 7/15/20), 2020 WL 4001135, *2 n. 6.

[3] Bayou Bridge, 2019-565, (La. App. 3 Cir. 7/15/20), 2020 WL 4001135, *2.

[4] Id. at *16.

[5] Id. at *9 (quoting Boerschig v. Trans-Pecos Pipeline, L.L.C., 872 F.3d 701, 708 (5th Cir. 2017)).

[6] Id. at *14.

[7] Boerschig, 872 F.3d at 708.

[8] Archbold-Garrett v. New Orleans City, 893 F.3d 318, 322 (5th Cir. 2018).

[9] Carey v. Piphus, 435 U.S. 247, 266, 98 S. Ct. 1042, 1054, 55 L.Ed.2d 252, 267 (1978).

[10] Carey, 435 U.S. at 266, 98 S. Ct. at 1054, 55 L.Ed.2d 267.

[11] Landowner Defendants’ Appeal Brief at 24 (citing Williams, 98-1981 (La. 4/13/99), 731 So.2d 240, 246).

[12] Id. at 24 (quoting 156 So. 2d 132, 135-36 (La. App. 3 Cir. 1963)).

Written by:

Liskow & Lewis
Contact
more
less

Liskow & Lewis on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.