Opinion ID: 6104418
Heading Depth: 2
Heading Rank: 1

Heading: Property Law (Accession)

Text: The Marys’ primary argument relies on the concepts of accession and fruits under Louisiana property law. There are two steps to their reasoning. First, the Marys claim to own by accession those parts of the Pedro Pipelines that are outside the servitude boundary. Second, when QEP used what the Marys contend is their pipeline without their permission to transport gas, it unlawfully exercised a right that belonged exclusively to the Marys; therefore, QEP must account to the Marys for the “fruits” of this unlawful use. Those fruits, they urge, are the profits QEP earned from the gas that passed through the Pedro Pipelines, because the gas would not have reached market (and, consequently, would have no value) if it had not passed through the segment of the pipeline the Marys allegedly own by accession, however short that segment may be. Louisiana law supports the first part of the Marys’ argument. disgorgement (e.g., fair rental value and non-pecuniary damages). However, we hold for essentially the reasons stated by the district court and argued by QEP that this claim and these remedies were released by the parties’ settlement and are outside the scope of the mandate in the prior appeal. We also note that the Marys’ counsel expressly disavowed at oral argument the right to demand removal of the encroaching portions of the Pedro Pipelines. The Marys also contend that the district court erred when it excluded on remand two supplemental affidavits that it had previously denied as untimely when it considered QEP’s first motion for summary judgment in this case. The Marys did not complain about that ruling in their first appeal; therefore, the Marys waived this argument. See Medical Ctr. Pharmacy v. Holder, 634 F.3d 830, 834 (5th Cir. 2011) (“[T]he waiver doctrine . . . holds that an issue that could have been but was not raised on appeal is forfeited and may not be revisited by the district court on remand.”). 6 Case: 21-30195 Document: 00516170433 Page: 7 Date Filed: 01/18/2022 No. 21-30195 Accession is introduced in Article 482 of the Civil Code, which declares that “[t]he ownership of a thing includes by accession the ownership of everything that it produces or is united with it, either naturally or artificially, in accordance with the following provisions.” 13 When a “bad faith” possessor erects a “construction” on the property of another, the landowner may elect to keep it for himself, although “he is bound to pay at his option either the current value of the materials and of the workmanship . . . or the enhanced value of the immovable.” 14 “Bad faith” in this context is implicitly defined in Article 487, which states: For purposes of accession, a possessor is in good faith when he possesses by virtue of an act translative of ownership and does not know of any defects in his ownership. He ceases to be in good faith when these defects are made known to him or an action is instituted against him by the owner for the recovery of the thing. 15 Although the Marys consented to the construction of the Pedro Pipelines on their property within the boundaries identified in the pipeline servitude, they did not consent to the installation of pipelines outside these boundaries. Because there was no servitude, contract, or other “act translative of ownership” that allowed QEP to place its pipelines outside the servitude, QEP was in “bad faith” under Article 487 once it became aware that the pipelines were outside the servitude or when the Marys brought this action. Thus, the Marys may take ownership of the out-of-bounds segments 13 La. Civ. Code art. 482. 14 La. Civ. Code art. 497. Article 497 provides other remedies to the landowner, but none of those remain available to the Marys. Supra note 12. 15 “Bad faith” is defined differently in other contexts. See, e.g., La. Civ. Code art. 487 revision cmt. (c); id. art. 1997 revision cmt. (b) & editor’s note. 7 Case: 21-30195 Document: 00516170433 Page: 8 Date Filed: 01/18/2022 No. 21-30195 of the Pedro Pipelines, subject to QEP’s claim for reimbursement for the current value of the materials and workmanship or the enhanced value of the land. 16 Turning to the second part of the Marys’ argument, their claim to QEP’s profits stems from the Civil Code articles governing the ownership of “fruits,” which are things “produced by or derived from another thing without diminution of its substance.” 17 The default rule is that the owner of a thing owns by accession the fruits of that thing. 18 However, a good faith possessor may keep the fruits he has gathered, while “[a] possessor in bad faith is bound to restore to the owner the fruits he has gathered, or their value, subject to his claim for reimbursement of expenses.” 19 Article 487, quoted and discussed above, provides the standard for good and bad faith in this context as well. 20 As the district court observed, gas is not a fruit; it is a product. 21 Under 16 See id. art. 497. We note that there is no evidence that the Marys have reimbursed QEP as required by Article 497. QEP may retain possession until this occurs. Id. art. 529. 17 Id. art. 551. The Code categorizes fruits into two types, “natural” and “civil,” the latter being “revenues derived from a thing by operation of law or by reason of a juridical act, such as rentals, interest, and certain corporate distributions.” Id. 18 Id. art. 483. 19 Id. art. 486. 20 See Lemoine v. Downs, 125 So.3d 1115, 1119 (La. App. 3 Cir. 2012) (applying Article 487 to determine whether a possessor was in bad faith and had to return fruits of the property); John A. Lovett, Good Faith in Louisiana Property Law, 78 La. L. Rev. 1163, 1203-04 (2018). 21 La. Civ. Code art. 551 revision cmt. (c) (“Mineral substances extracted from the ground and the proceeds of mineral rights are not fruits, because their production results in depletion of the property.” (citation omitted)); Lee Hargrave, Review of Recent Developments: 1991-1992, Property, 53 La. L. Rev. 953, 953 (1993) (“Royalties and other production payments, however, are paid upon removal of oil and gas from the ground and are not fruits.” (footnote omitted)). 8 Case: 21-30195 Document: 00516170433 Page: 9 Date Filed: 01/18/2022 No. 21-30195 Article 488, a landowner may recover products taken from his land without his consent, 22 but the gas at issue here was not taken from the Mary’s land. It was produced from the Pedro Well, located on the neighbor’s land. 23 Likewise, even if the gas or its proceeds were considered a “fruit,” the Code does not support the Marys’ position that they are fruits of anything the Marys own. 24 Therefore, we see no clear path to disgorgement under the plain language of the Code. The Marys direct our attention to two Louisiana Supreme Court cases that they argue interpreted “fruits” more broadly. The first case, Rosenthal-Brown Fur Co. v. Jones-Frere Fur Co., concerned a dispute over the right to trap wild animals on a tract of land. 25 After determining that the plaintiff held exclusive trapping rights, the court addressed what damages it could recover from the defendants, who trapped on the land even after the plaintiff protested and sued for an injunction. 26 Relying on the Civil Code’s “fruit” articles, the court held that “one who 22 La. Civ. Code art. 488; 2 A.N. Yiannopoulos, Louisiana Civil Law Treatise, Property §§ 11:20, 11:39, 11:41 (5th ed. 2015) (hereinafter Property). 23 Even if the Pedro Well ultimately drained gas from the Marys’ land, Article 14 of the Mineral Code would bar the Marys from recovering the value of this gas. See La. Rev. Stat. § 31:14 (“A landowner has no right against another who causes drainage of liquid or gaseous minerals from beneath his property if the drainage results from drilling or mining operations on other lands.” (emphasis added)). 24 If, hypothetically, QEP rented the Pedro Pipelines to a third party, then the rent would clearly be a civil fruit of the pipelines, and the Marys might be entitled to some portion of that rent. See La. Civ. Code art. 551 (“Civil fruits are revenues derived from a thing . . . by reason of a juridical act, such as rentals . . . .”). But it seems a bridge too far to say that gas extracted from neighboring land and transported through the Pedro Pipeline is a “fruit” of that pipeline. 25 110 So. 630 (La. 1926). 26 Id. at 632. 9 Case: 21-30195 Document: 00516170433 Page: 10 Date Filed: 01/18/2022 No. 21-30195 unlawfully, and against the will of the owner of the land, exercises thereon rights belonging exclusively to the owner, must account to such owner for all the fruits of his unlawful exercise of that right.” 27 Furthermore, the “fruits” in that instance were the “profits [the defendants] derived from the unlawful exercise of a right which belonged exclusively to plaintiff;” i.e., “the illgotten gains of their unlawful act, done to the manifest prejudice of plaintiff’s right.” 28 Thus, while the wild animals were not themselves fruits of the land, 29 the profits the defendants earned from selling the animal furs were fruits that could be disgorged if the defendants were in bad faith. 30 In the second case, Corbello v. Iowa Production, the plaintiffs leased part of their land to Shell Oil Company so it could construct and operate an oil terminal. 31 Oil from various sources and of different weight and grade were transported to the terminal where they were mixed together in order to obtain a higher price. 32 Shell continued to operate the terminal after the lease expired, and the plaintiffs eventually sued to evict Shell and recover damages. 33 Citing Rosenthal, the court held that Shell had to disgorge the profits it earned from the operations at the oil terminal during the time it was 27 Id. (emphasis added) (citing, inter alia, La. Civ. Code art. 501 (1870) (current version at La. Civ. Code art. 485)). 28 Id. at 633. 29 See id. at 632 (“It is quite true that one does not own the wild animals which stray into his field, and, accordingly, he cannot claim such animals from another merely because they may have been killed or captured on his land.” (citing La. Civ. Code art. 3415 (1870) (recodified at La. Civ. Code art. 3413)). 30 Id. at 633 (citing La. Civ. Code art. 501 (1870) (recodified at La. Civ. Code 487)); see also Property § 2:28 n.1, supra (“Trapping royalties are fruits.”). 31 850 So.2d 686, 691 (La. 2003), superseded in part by statute, La. Rev. Stat. § 30:2015.1. 32 Corbello v. Iowa Prod., 806 So. 2d 32, 42 (La. App. 3 Cir. 2001). 33 Corbello, 850 So. 2d at 691, 708-09. 10 Case: 21-30195 Document: 00516170433 Page: 11 Date Filed: 01/18/2022 No. 21-30195 a bad faith possessor. 34 We assume without deciding that Rosenthal and Corbello would allow recovery of profits from gas produced from neighboring property and transported via pipeline over the Marys’ land under Louisiana property, contract, or tort law. We nevertheless conclude that the Marys cannot recover under the facts of this case. Disgorgement in this circumstance is limited to the additional profits QEP earned, if any, as a direct result of installing the Pedro Pipelines partly outside the servitude boundary, as compared to the profits QEP would have earned if it had installed the pipelines entirely within the servitude. In Rosenthal and Corbello, the court awarded the plaintiffs all of the profits the defendants earned from their activity on the plaintiffs’ land while in bad faith, because all of that activity was prohibited. Here, however, most of QEP’s activity on the Marys’ land is authorized—the two Pedro Pipelines deviated from the servitude for a total of approximately 46 feet, while approximately 8,000 feet of pipelines used to carry this gas and saltwater over the Marys’ land were within the servitudes. 35 It does not follow, then, that QEP must disgorge all of its profits from this gas, because not all of QEP’s activity was unauthorized. It is only the additional profits QEP earned as a result of its encroachment that could be properly considered “the ill-gotten gains of [the defendant’s] unlawful act, done to the manifest prejudice of plaintiff’s right.” 36 We note that this interpretation appears to align with the view expressed in a recent update to the Louisiana Civil Law Treatise, which commented on the district 34 Id. at 709. 35 The two Pedro Pipelines connected to the two Mary Pipelines, each of which then runs for roughly 4,000 feet before exiting the Marys’ property. ROA.647. QEP owned the Mary Pipelines, and those pipelines are within their respective servitude. 36 Rosenthal, 110 So. at 633. 11 Case: 21-30195 Document: 00516170433 Page: 12 Date Filed: 01/18/2022 No. 21-30195 court’s decision in this case. 37 The Marys admitted at oral argument that they have no evidence that QEP earned any additional profit on account of the minor deviation of the Pedro Pipelines beyond the servitude boundary. 38 Therefore, the Marys are not entitled to disgorgement under an accession theory.