The co-owners of 160 acres of Louisiana property are not entitled to a share of a pipeline company’s profits even though the company’s pipelines were constructed partially outside of the location agreed to in a contract, a federal appeals court has ruled.
The Fifth Circuit Court of Appeals sided with QEP Energy Co., which entered into a servitude agreement – a contract establishing shared land uses – with Cynthia Sue Mary and Paul’s Land Co. LLC, the parties who co-own the property in Bienville Parish. The pipeline company “cut the corner” of the servitude when it laid the pipeline, causing about 45 feet of pipeline to be buried outside the designated area, according to the Jan. 18 opinion.
In siding with the pipeline company, the appeals court backed the judgment of a federal district court.
“The most QEP would have to disgorge are the additional profits it earned as a direct result of the encroachment compared to the profits it would have earned if the pipelines had been installed entirely within the servitude boundary,” the court stated. “Because the Marys have no evidence that QEP earned any such additional profits, the district court correctly determined that QEP was not responsible for disgorging its profits.”
The pipelines in question connected to a well on adjacent property not owned by the plaintiffs. The lines carried both natural gas and saltwater.
The attorney for the defendant, Paul Adkins, noted that this was the second time the Fifth Circuit dealt with this pipeline case.
“After the first Fifth Circuit remand, the district court granted summary judgment again in favor of QEP,” Adkins told the Louisiana Record in an email. “(The) plaintiff appealed again, and the Fifth Circuit … (about three weeks ago) affirmed the district court‘s grant of summary judgment. (The) plaintiff sought a rehearing in the Fifth Circuit which was denied.”
The court also rejected the plaintiffs’ breach-of-contract claims, finding no basis that the landowner would be entitled to company profits.
“Because QEP did not obtain or benefit from fruits derived from plaintiffs’ property – i.e., additional profits directly resulting from the encroachment – plaintiffs were not entitled to QEP’s profits,” Adkins said in an article on the JD Supra website.