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St. Bernard Port, Harbor & Terminal District v. Violet Dock Port, Inc.

Court of Appeals of Louisiana, Fourth Circuit

June 12, 2018


          APPEAL FROM ST. BERNARD 34TH JUDICIAL DISTRICT COURT NO. 116-860, DIVISION "E" Honorable Jacques A. Sanborn, Judge

          James M. Garner Peter L. Hilbert, Jr. Joshua S. Force Ashley G. Coker Eric J. Blevins SHER GARNER CAHILL RICHTER KLEIN & HILBERT, L.L.C. COUNSEL FOR PLAINTIFF/APPELLANT.

          Randall A. Smith L. Tiffany Hawkins Mary Nell Bennett SMITH & FAWER, L.L.C. Val P. Exnicios LISKA EXNICIOS & NUNGESSER W. Scott Hastings LOCKE LORD, LLP Harry T. Lemmon COUNSEL FOR DEFENDANT/APPELLANT.

          (Court composed of Judge Terri F. Love, Judge Roland L. Belsome, Judge Joy Cossich Lobrano).

          Roland L. Belsome Judge.

         This appeal arises from the trial court proceedings of a quick-take expropriation of Violet Dock Port, L.L.C's ("VDP") property initiated by and for the benefit of the St. Bernard Port, Harbor & Terminal District ("the Port"). The subject property consists of approximately 75 acres of land, 22 acres of batture, 38.5 acres of upland property, and 4, 238 linear feet of frontage along the Mississippi River as well as a 4-acre parcel across La. State Hwy. 46 ("the Property").

         VDP was a privately owned industrial port facility with one mile of water frontage on the Mississippi River in St. Bernard Parish. VDP built the facility, which included five heavy-duty docks and related infrastructure. VDP's improvements were designed to berth and service ocean-going ships for the United States Navy. VDP had held contracts with the Navy for many years. The docks were also used for topside repair, and commercial vessel layberthing.

         Procedural History

         In 2007, the Port offered to purchase the Property and VDP declined. After years of failed negotiations, the Port expropriated the Property on December 22, 2010, and deposited the estimated just compensation of $16, 000, 000 into the registry of the court. In response, VDP challenged the public purpose of the expropriation. After conducting an evidentiary hearing, the trial court found that the taking served a public purpose.[1] Later, the Port filed an Amended Petition for Expropriation in which it added claims against VDP alleging damages for debris material being buried on the Property, among other things. Based on those claims, the trial court ordered that $1, 900, 000 of the $16, 000, 000 was to remain in the registry of the court. VDP withdrew the balance of the funds.

         The matter proceeded to trial to determine the value of the Property as well as the Port's claim for damages on the allegations that debris had been dumped and buried on the Property after the expropriation date. The trial court rendered its judgment finding that the value of the Property was $16, 000, 000, the trial court denied the Port's claim for damages for debris removal, and VDP was awarded judicial interest on the $1, 900, 000 in funds that had remained in the registry of the court.[2] Subsequent to the judgment being issued, both the Port and VDP filed motions to recover attorney's fees and costs. The trial court denied both parties' motions.[3] This appeal and cross-appeal followed. The appeals challenge each of the three judgments.

         Assignments of Error

         On appeal VDP maintains that the trial court erred in finding that the taking was constitutional and thereafter finding the value of the Property to be $16, 000, 000. In addition, VDP asserts that if this Court were to overturn either of those rulings by the trial court it would be statutorily eligible for attorney's fees and costs.

         The cross-appeal filed by the Port contends that the trial court erred in denying its claims for damages regarding buried debris, erred in awarding judicial interest on the $1, 900, 000 that remained in the registry of the court, erred in excluding testimony of an expert economist, and also erred in failing to award costs and attorney's fees.

         Standard of Review

         In an expropriation case, the trial court's factual determinations are subject to the manifest error standard of review, while legal determinations are reviewed de novo, and evidentiary rulings are subject to the abuse of discretion standard.[4]

         March 21, 2012 Judgment (Public Purpose)

         Through the Louisiana Constitution and state statutes, the Port is granted the express right to expropriate private property.[5] For the taking to be constitutional it must be for a public purpose and the landowner must be paid just compensation.[6]After conducting an evidentiary hearing on the issue of public purpose only, the trial court determined that the Port had established a valid public purpose for the expropriation of the Property pursuant to La. R.S. 34:1705 and 1708. More specifically, the trial court found that the "[e]xport of goods and commodities through the port is one of the basic industries of St Bernard Parish. The acquisition of the Violet terminal would be a logical extension of port services in St. Bernard." The trial court also reasoned that the contemplated construction and use of the property would bring employment to the citizens of St. Bernard Parish.

         VDP argues that the Port's expropriation was not for a public purpose and therefore violated its constitutional protections as a private landowner. Specifically, it maintains that the trial court erred in upholding the Port's taking of the Property because the expropriation was in violation of La. Const. Art. I, §§4(B)(1), (2), (3), and (6), [7] La. R.S. 34:1708[8] and U.S. Const. amend. V.[9] VDP cites to several constitutional violations, but more specifically contends that the taking did not meet a public purpose and the Port was not authorized to expropriate the property. VDP argues that the real purpose for the taking was so the Port could continue to operate its layberthing and cargo facility and obtain the Navy contracts in violation of La Const. art. I §4(B)(6). For these reasons, VDP claims the taking was unconstitutional. We disagree.

         The State of Louisiana created the Port as a public corporation and political subdivision to regulate domestic, coastwise, and intercoastal commerce and traffic.[10] La. R.S. 34:1705[11] establishes the authority and jurisdiction of the Port, and 1708[12] provides the manner in which the Port can acquire property. The Legislature has bestowed broad discretion and authority upon the Port to support its efforts to maintain and further development of its operations.[13]

         The constitutional rights of Article I, § 4 that VDP maintain were violated, are subject to the exceptions provided in Article VI, § 21. Section 21 provides in pertinent part:

(A) Authorization. In order to (1) induce and encourage the location of or addition to industrial enterprises therein which would have economic impact upon the area and thereby the state, (2) provide for the establishment and furnishing of such industrial plant, (3) facilitate the operation of public ports, or (4) provide movable or immovable property, or both, for pollution control facilities, the legislature by law may authorize, subject to restrictions it may impose, any political subdivision, public port commission, or public port, harbor, and terminal district to:
(b)acquire, through purchase, donation, exchange, and expropriation, and improve industrial plant buildings and industrial plant equipment, machinery, furnishings, and appurtenances, including public port facilities and operations which relate to or facilitate the transportation of goods in domestic and international commerce; and
(c) sell, lease, lease-purchase, or demolish all or any part of the foregoing

La. Const. Art. VI, § 21 (emphasis added).

         The trial court was presented evidence of the Port's intention to maintain the current use of the Property initially, with a comprehensive plan to expand the facility to include a dry and liquid bulk cargo operation. In Board of Comm'rs of Port of New Orleans v. City of New Orleans, this Court acknowledged the important role that ports fulfill for the State and the local communities stating, "a healthy port generates local jobs and industry and associated local consumption."[14]This Court further recognized that the health of the Port rests with its ability to be competitive and the maintenance and development of the Port provides "a great public benefit to the people of Louisiana."[15]

         Although the authority granted to the ports of Louisiana in the expropriation of private property is exceptionally broad, it is supported by the constitution and statutes of the State. Accordingly, we do not find that the trial court was manifestly erroneous or committed legal error in determining that the Port's expropriation of the Property was for a public purpose.

         July 31, 2015 Judgment (Property Valuation/Debris Damages)

         VDP asserts that the trial court erred when it awarded only $16, 000, 000 for the Property. Additionally, the Port argues that the trial court erred by not awarding damages for the debris removal and further erred in limiting expert testimony and awarding interest on the funds that were held in the registry of the court.

         Property Valuation

         Once the trial court found that the expropriation served a public purpose, it then had to determine the valuation that would provide just compensation to the landowners. In accordance with the constitutional provisions governing expropriations, a property owner must be "compensated to the full extent of his loss"[16] Commonly in expropriation cases, just compensation is determined by the fair market value of the property.

         When making a fair market value determination in an expropriation case, the highest and best use of the property must be established. Several factors are considered in a highest and best use analysis including:

Market demand, proximity to areas already developed in a compatible manner with the intended use, economic development in the area, specific plans of business and individuals, including action already taken to develop the land for that use, scarcity of the land available for that use, negotiations with buyers interested in the property taken for a particular use, absence of offers to buy the property made by the buyers who put it to the use urged, and the use to which the property was being put at the time of the taking.[17]

         Additionally, the presumption is that the use at the time of expropriation is the highest and best use. However, that presumption can be overcome if the landowner proves that the property could realistically be used in a more valuable way in the not too distant future.[18]

         The trial court's reasons for judgment outlined the evidence relied upon to determine the appropriate value to place on the Property, starting with the ongoing negotiations between the Port and VDP. The first offer made by the Port in 2007 was for $10, 000, 000, which was based on an appraisal that was performed on behalf of the Port and with VDP's approval. VDP rejected that offer and eventually countered with $14, 000, 000, and the Port accepted that price. There were some issues on VDP's conditions and terms which prevented the Port from moving forward. Then in 2010, after another appraisal was performed, the Port offered $16, 000, 000, and VDP countered with $35, 000, 000.

         At trial several expert opinions were presented regarding the value of the Property. VDP's experts valued the property from $51, 000, 000 to $67, 437, 449, [19]while both of the Port's appraisers arrived at a market value of $16, 000, 000. Generally, fair market value is considered the price a buyer is willing to pay based on all likely uses of the property, but those uses cannot be "speculative, remote or contrary to law."[20] In assessing the experts' opinions and reports, the trial court noted that VDP's experts' analysis proved to be „questionable, " "flawed, " and at times "inaccurate." When evaluating expert opinions, the fact finder has broad discretion in determining the effect and weight to be given expert testimony.[21]The fact finder can either accept or reject any or all of an opinion expressed by an expert.[22]

         In further evaluation of the evidence presented, the trial court considered the physical constraints of the Property.[23] Taking into account the condition of the Property at the time of the expropriation and the possible uses that were realistic in the "not too distant future, " the Port's appraisers testified that their appraisals took into account the highest and best use of the Property as being a layberthing facility, with some topside repair, and limited cargo operations. The trial court concluded that the Port's experts presented a solid analysis based on credible facts and presumptions.

         The appropriate review of the trial court's factual findings in civil cases is the manifest error-clearly wrong standard.[24] On appeal, it is this Court's function to review the record in its entirety to see if the trial court's factual conclusions were reasonable.[25] If the record supports the factual determinations, this Court cannot reverse those findings merely because we would have found differently.[26]Where there are two permissible views of the evidence, the factfinder's choice between them cannot be manifestly erroneous or clearly wrong.[27] Thus, upon a thorough review of this record, we cannot find that the trial court was manifestly erroneous or clearly wrong in its ruling that $16, 000, 000 was just compensation for the Property.

         Exclusion of Expert Economist's Testimony

         In this assignment, the Port seeks to have this Court overrule the trial court's decision to exclude Dr. Timothy Ryan's expert opinion, regarding the market value of VDP's business and earnings. Evidentiary rulings by the trial court are reviewed under an abuse of discretion standard.[28]

         In ruling to limit the testimony, the trial court referred to an earlier ruling made in the case where it was determined that Dr. Ryan, an economist, could not testify as to the valuations and appraisals of the Property. The record indicates that Dr. Ryan's testimony was to be limited to his area of expertise which did not include evaluating the value of businesses or real estate. Therefore, we do not find that trial court abused its discretion in limiting the testimony.

         Damages for Debris Removal

         The Port sought damages for the removal of what was characterized as debris under La. C.C. art. 2315.

         The record contains substantial testimony and photographic evidence regarding the fill on the Property. VDP did not dispute the fact that fill had been spread throughout the property dating back to the 1980s. Donald Dieudonne, the corporate representative for VDP, testified that VDP had been receiving fill for decades and using it to raise some of the lower areas of the Property. He claimed that after the expropriation the practice of receiving fill continued until the Port objected in June of 2012. Mr. Dieudonne's testimony was that once the Port objected VDP did not authorize any further fill to be deposited.

         Mr. Dieudonne's statements were not directly contradicted. A review of the testimony and evidence presented, failed to establish with any certainty the quantity of fill that was deposited after the expropriation or that VDP continued to authorize such activity after the Port objected. ...

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