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W&T Offshore, L.L.C. v. Texas Brine Corp.

Supreme Court of Louisiana

June 26, 2019

W&T OFFSHORE, L.L.C.
v.
TEXAS BRINE CORPORATION AND TEXAS BRINE COMPANY, L.L.C.

          ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIRST CIRCUIT, PARISH OF LAFOURCHE.

          PER CURIAM.

         In these consolidated applications, Texas Brine Corporation and Texas Brine Company, L.L.C. seek review of a judgment of the court of appeal which reversed the judgment of the district court insofar as it dismissed the claims of W&T Offshore, L.L.C. for trespass and damages. W&T Offshore, L.L.C. v. Texas Brine Corp., 2017-0574 (La.App. 1 Cir. 5/10/18), 250 So.3d 970, 981. We granted certiorari and received briefing and oral argument from the parties. W&T Offshore, L.L.C. v. Texas Brine Corp., 2018-0956 (La. 10/8/18), 253 So.3d 788, and 2018-0950 (La. 10/8/18), 253 So.3d 788.

         Considering the highly unique facts and unusual circumstances of this case, a majority of this court has determined the district court did not err in dismissing the trespass and damage claims asserted by W&T Offshore, L.L.C. In reaching this conclusion, we emphasize our holding is limited to the precise and narrow facts before the court and should not be interpreted expansively beyond the specific factual confines presented.

         DECREE

         The judgment of the court of appeal is reversed insofar as it held Texas Brine Corporation and Texas Brine Company, L.L.C. committed a trespass and were liable for damages. The judgment of the district court dismissing W&T Offshore, L.L.C.'s trespass and damage claims with prejudice is reinstated. In all other respects, the judgment of the court of appeal is affirmed.

          JOHNSON, Chief Justice, dissents.

          WEIMER, J., dissenting.

         For nearly two centuries, Louisiana has maintained, as a cardinal rule[1] of civilian property law, that doubt as to the existence, extent, or manner of exercise of a predial servitude should be resolved in favor of the servient estate. The Latin phrase in favorem libertatis (which can be traced back to antiquity through the laws of Spain, France, and Rome which form Louisiana's civilian legal heritage) has become enshrined as a blackletter[2] provision of the Louisiana Civil Code.[3] This bedrock civilian property law principle was not altered in 1976 with the adoption of the law of limited personal servitudes and, specifically, rights of use.[4] Nonetheless, the per curiam does not apply this fundamental civilian property law concept in the context of interpreting a right of use for "a pipeline." Because the per curiam erodes, rather than preserves, this long-held principle of the state's rich civil law heritage and has the potential to detrimentally impact the rights of landowners throughout the state, I am compelled to respectfully dissent.

         Factual Background

         In 1979, the owners of the property in question entered into a "Salt and Underground Storage Lease" agreement that granted a right of use for a pipeline in favor of the mineral lessee, Texas Brine Corporation. A pipeline was constructed on the property in 1980 and has since been used for the transportation of salt and salt brine across the property. In 1993, W&T Offshore, L.L.C., purchased an undivided interest in the property, subject to the right of use. In 2014, Texas Brine desired to construct a replacement pipeline due to the obsolescence of the original pipeline. Negotiations with the co-owners of the property ensued. W&T declined to be a party to a 2015 "Pipeline Right-of-Way" agreement that was executed in favor of Texas Brine by the other co-owners. Despite the lack of unanimity among co-owners, Texas Brine constructed a significantly larger volume replacement pipeline in a different location on the property in accordance with the 2015 right-of-way agreement with the other co-owners.

         This case addresses whether the right-of-use provision contained in the 1979 lease, which authorized the construction of "a pipeline" on a portion of the property, allows for the construction of a replacement pipeline with a larger diameter in another location on the property.

         We begin, as we must, with the words of the code.

         In reviewing the law on rights of use, civilian methodology and the Civil Code instruct that the sources of law are legislation and custom and legislation is the superior source of law. La. C.C. arts. 1 and 3. See Wede v. Niche Mktg. USA, LLC, 10-0243, p. 7 (La. 11/30/10), 52 So.3d 60, 64. Legislation, which is defined as the solemn expression of legislative will (La. C.C. art. 2), is to be interpreted according to the rules set forth in the Civil Code. La. C.C. arts. 9-13. See Wede, 10-0243 at 7, 52 So.3d at 64. Chief among those rules is the admonition in La. C.C. art. 9 that "[w]hen a law is clear and unambiguous and its application does not lead to absurd consequences, the law shall be applied as written and no further interpretation may be made in search of the intent of the legislature." Additionally, La. C.C. art. 11 instructs that "[t]he words of a law must be given their generally prevailing meaning." Further, La. C.C. art. 13 provides: "Laws on the same subject matter must be interpreted in reference to each other." Reading the various codal provisions involved and giving effect to each is the key to resolving this matter. See Wede, 10-0243 at 7, 52 So.3d at 64.

         We begin, therefore, with the words of the applicable codal provisions-La. C.C. arts. 639 through 645. Central to the resolution of this case is La. C.C. art. 642, which provides:

A right of use includes the rights contemplated or necessary to enjoyment at the time of its creation as well as rights that may later become necessary, provided that a greater burden is not imposed on the property unless otherwise stipulated in the title.

         Although La. C.C. art. 642 has been the law since 1977, [5] courts have rarely been called on to evaluate this codal provision.

         Texas Brine argues that Article 642 displaced the general predial servitude provisions that favor an interpretation of virtually unrestricted use of the servient estate by affording a superior right to the personal servitude holder similar to the German and Greek provisions (B.G.B. § 1091 and Greek Civil Code art. 1189, respectively, quoted infra) on which Article 642 is reportedly based. See La. C.C. art. 642, 1976 Revision Comment. Although the German and Greek codal provisions favor the owners of the right of use, Texas Brine's argument overlooks the difference in the language of La. C.C. art. 642 and the Greek and German codal provisions.[6]

         Admittedly, La. C.C. art. 642 begins by extending the rights of the holder of a limited personal servitude. Its reference to "the rights contemplated or necessary to enjoyment at the time of its creation as well as rights that may later become necessary" is similar to the Greek and German provisions in which the needs of the person having the right of use are recognized. However, the "proviso clause" which follows ("provided that a greater burden is not imposed on the property") imposes a restriction and modification on the rights of the servitude holder.

         Where there is a gap in the laws on rights of use, La. C.C. art. 645, a sibling article to La. C.C. art. 642, directs:

A right of use is regulated by application of the rules governing usufruct and predial servitudes to the extent that their application is compatible with the rules governing a right of use servitude.

         Thus, the codal provisions related to predial servitudes should be consulted when evaluating rights of use. Specifically on point is La. C.C. art. 730, titled "Interpretation of servitude," which states: "Doubt as to the existence, extent, or manner of exercise of a predial servitude shall be resolved in favor of the servient estate."[7]

         One year after the enactment of the rights-of-use provisions, the legislature in 1977 La. Acts 514, § 1, effective January 1, 1978, amended and reenacted the laws on predial servitudes, reproducing the substance of La. C.C. art. 753 (1870) in La. C.C. art. 730-indicating there was no intent to change the law. See La. C.C. art. 730, 1977 Revision Comment (a).[8] In pertinent part, the 1977 Revision Comments to La. C.C. art. 730, obviously penned by the late Professor A.N. Yiannopoulos, [9] provide:

(b) It is a cardinal rule of interpretation that, in case of doubt, instruments purporting to establish predial servitudes are always interpreted in favor of the owner of the property to be affected. The rule incorporates into Louisiana law the civilian principle that any doubt as to the free use of immovable property must be resolved in favorem libertatis. See Domat, Les lois civiles dans leur ordre naturel, 1 Oeuvres de Domat 329 (ed. Remy 1828); 2 Toullier, Droit civil français 192 (1833). The Louisiana Supreme Court has repeatedly declared that "servitudes are restraints on the free disposal and use of property, and are not, on that account, entitled to be viewed with favor by the law." Parish v. Municipality No. 2, 8 La.Ann. 145, 147 (1853), cited with approval in Buras Ice Factory, Inc. v. Department of Highways, 235 La. 158, 103 So.2d 74 (1958). See also McGuffy v. Weil, 240 La. 758, 767, 125 So.2d 154, 158 (1960): "any doubt as to the interpretation of a servitude encumbering property must be resolved in favor of the property owner." The rule that the proper interpretation of an ambiguous instrument is that which least restricts the ownership of the land has been applied by Louisiana courts in a variety of contexts. See, e.g., Whitehall Oil Co. v. Heard, 197 So.2d 672 (La.App.3rd Cir.), writ refused, 250 La. 924, 199 So.2d 923 (1967) (determination of the question whether a landowner created a single servitude over contiguous tracts or a series of multiple interests).
(c) "Servitudes claimed under titles, are never sustained by implication-the title creating them must be express, as to their nature and extent, as well as to the estate to which they are due." Parish v. Municipality No. 2, 8 La.Ann. 145, 147 (1853), cited with approval in Buras Ice Factory, Inc. v. Department of Highways, 235 La. 158, 103 So.2d 74 (1958).

La. C.C. art. 730, 1977 Revision Comments (b) and (c).

         The interpretation suggested by Texas Brine, and accepted by the lower courts and affirmed by this court's per curiam as to the pipeline at issue in this case, [10] relies on the similarities between the first portion of La. C.C. art. 642 and the Greek and German codal provisions, but ignores the proviso clause. Clearly, the Louisiana Legislature did not intend for La. C.C. art. 642 to be as expansive as the German and Greek codal provisions. If the Louisiana Legislature had, there would have been no need to add the proviso clause. In summary, although Article 642, in its first part, expands the rights of the holder of a right of use by including "the rights contemplated or necessary to enjoyment at the time of creation as well as the rights that may later become necessary," the servitude holder's rights are limited by the ensuing clause "provided that a greater burden is not imposed on the property." The modifying proviso is consistent with the long recognized civilian principle in favorem libertatis embodied in La. C.C. art. 730. Clearly, La. C.C. art. 642 was not designed to completely abolish the longstanding civilian predial servitude principle in the context of limited personal servitudes to the detriment of the landowner and benefit of the servitude holder. The second clause in La. C.C. art. 642, the proviso, is followed by a recognition of the parties' freedom to contract otherwise ("unless otherwise stimulated in the title").

         Texas Brine contends that it had the right to construct a larger replacement pipeline under the 1979 agreement and under La. C.C. art. 642. Accordingly, the agreement between the parties should be evaluated, applying blackletter law, and the cardinal rule of interpretation in favor of the owner of the property to be affected to determine if the agreement afforded Texas Brine the right to construct replacement pipelines in the future.

         Analysis of the Applicable Provisions in the Agreement

         The 1979 lease agreement was for a term of "ten (10) years (the 'primary term') from the date entered into and so long thereafter as salt or salt brine are produced from" the leased property. The provision in the lease agreement that creates the right of use in question provides:

Lessee shall have the right to construct, operate and maintain a pipeline for the transportation of brine over and across additional property of Lessor comprising the North one-half (½) of Section 64 and all of Section 59, Township 15 South, Range 15 East, Parish of LaFourche, Louisiana, on such portion of the property as designated by Lessee and as approved by Lessor, such approval not to be unreasonably withheld. Lessee shall pay an additional consideration of ONE HUNDRED AND NO/100 ($100.00) DOLLARS per rod for such pipeline right-of-way. [Emphasis added.]

         The agreement does not indicate the anticipated life span of the pipeline or the estimated term for production of salt or salt brine, nor does it directly address larger replacement pipelines.

         The rules of contract interpretation dictate that intent is determined by the words of a contract. See La. C.C. art. 2046 ("When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent.").

         Applying the literal language, the clear and explicit words of the agreement contemplated construction of "a pipeline." The words of the agreement specify a single pipeline, not multiple pipelines. With the construction of a larger replacement pipeline on the landowner's property, where there was previously "a pipeline," there are now "two pipelines." The fact that only one of the pipelines is actually being used to transport brine over and across the landowner's property does not detract from the fact that there are now two pipelines on the property. Two pipelines are twice the number and twice the burden on the property authorized by the agreement. The right-of-use provision in the lease agreement is simplistically clear and explicit-only "a pipeline" is contemplated.

         Nonetheless, in the absence of a limitation on the size or specification of the location of the pipeline, Texas Brine argues, and the courts have agreed, that Texas Brine has broad rights under the 1979 right-of-use provision to determine the size and placement of the pipeline. However, the right-of-use provision directs that the pipeline is to be located on a "portion" of the specified area.[11] Again, a single portion of the property is to be burdened with a pipeline, not various portions of the property burdened with numerous pipelines. Clearly, the right-of-use provision does not make the entirety of the specified area available to Texas Brine for placement of the original pipeline and, thereafter, subject the property to construction of replacement pipelines desired by Texas Brine in the future. Upon the placement of the original pipeline in 1980 (based on Texas Brine's designation and the landowner's consent) the exact location and the extent and width of Texas Brine's servitude was made certain, limiting the servitude to the smaller area actually needed for the construction of the single, original pipeline.[12] See J.C. Trahan Drilling Contractor, Inc. v. Younger, 169 So.2d 15, 18 (La.App. 2 Cir. 1964); Dickson v. Arkansas Louisiana Gas Co., 193 So. 246, 249 (La.App. 2 Cir. 1939). The facts establish that Texas Brine's pipeline servitude was 9, 000 feet long and 14 inches in diameter, with the right of ingress and egress for the purpose of operations under the lease.

         Other language in the right-of-use provision corroborates that "a pipeline" was meant to be one pipeline. The agreement establishes the right to "construct, operate and maintain a pipeline for the transportation of brine." "Maintain" is "to keep in an existing state (as of repair, efficiency, or validity): preserve from failure or decline (~ machinery)." Webster's Ninth New Collegiate Dictionary 718 (1988). The New Oxford American Dictionary 1030 (2001) defines "maintain" as "keep (a building, machine, or road) in good condition or in working order by checking or repairing it regularly." Constructing the new larger, replacement pipeline in a completely different location is not consistent with an agreement that bestowed the right to "maintain a pipeline."

         The appellate court correctly recognizes that "the 1979 lease does not include specific language regarding the replacement of the original pipeline" due to obsolescence.[13]W & T Offshore, L.L.C. v. Texas Brine Corp., 17-0574, 17-0575, p. 14 (La.App. 1 Cir. 5/10/18), 250 So.3d 970, 979. However, the language in the right-of-use provision of the lease agreement is "clear and explicit" as to the rights granted to Texas Brine. Pursuant to the right-of-use provision, Texas Brine's rights were limited to "the right to construct, operate and maintain a pipeline for the transportation of brine." Any uncertainty as to the extent and manner of Texas Brine's 1979 right of use was made certain by the construction of the original pipeline.[14] Pursuant to the express language in the right-of-use provision, Texas Brine did not have authority to construct a replacement pipeline, much less a larger replacement pipeline in another location. A contrary interpretation of the 1979 right-of-use agreement would result in the sustaining of a servitude claimed under title by implication, which is not ...


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