Mary v. QEP Energy

24 F.4th 411
CourtCourt of Appeals for the Fifth Circuit
DecidedJanuary 18, 2022
Docket21-30195
StatusPublished
Cited by4 cases

This text of 24 F.4th 411 (Mary v. QEP Energy) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mary v. QEP Energy, 24 F.4th 411 (5th Cir. 2022).

Opinion

Case: 21-30195 Document: 00516170433 Page: 1 Date Filed: 01/18/2022

United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

FILED January 18, 2022 No. 21-30195 Lyle W. Cayce Clerk

Cynthia Sue Mary; Paul's Land Company, L.L.C.,

Plaintiffs—Appellants,

versus

QEP Energy Company, formerly known as Questar Exploration & Production Company,

Defendant—Appellee.

Appeal from the United States District Court for the Western District of Louisiana USDC No. 5:13-CV-2195

Before Davis, Higginson, and Engelhardt, Circuit Judges. W. Eugene Davis, Circuit Judge: This case is before us for the second time. 1 Plaintiffs are landowners who brought this action after defendant installed two pipelines on their property partially outside the boundary established in the parties’ servitude agreement. The only issue before us is whether, as a consequence of this encroachment, plaintiffs are entitled to disgorgement of all profits defendant

1 For our prior opinion, see Mary v. QEP Energy Co., 798 F. App’x 811 (5th Cir. 2020) (unpublished). Case: 21-30195 Document: 00516170433 Page: 2 Date Filed: 01/18/2022

No. 21-30195

earned from the gas that flowed through the pipelines. We conclude that the most they could recover are the additional profits defendant earned as a direct result of the encroachment, as compared to the profits it would have earned if it had installed the pipelines entirely within the servitude. Because plaintiffs have no evidence of such additional profits, we AFFIRM the district court’s summary judgment in favor of the defendant. I. BACKGROUND Plaintiffs-Appellants Cynthia Sue Mary and Paul’s Land Company, LLC (together, the “Marys”) co-own approximately 160 acres located in Bienville Parish, Louisiana. In 2006, the Marys entered into an oil and gas lease that was later assigned to Defendant-Appellee QEP Energy Company (“QEP”). The lease granted QEP the right to explore for and develop natural gas on the Marys’ property. The Marys and QEP entered into several other agreements over the following years that allowed QEP to install various works on the Marys’ property, including multiple pipelines. 2 This appeal focuses on two of those pipelines, which we refer to as the “Pedro Pipelines.” In 2011, the Marys and QEP entered into a pipeline servitude agreement that allowed QEP to install the Pedro Pipelines in a specific, defined area on the Marys’ property. The two Pedro Pipelines connected production from the Pedro Well, located on adjacent property not owned by the Marys, to a pair of pipelines QEP had previously installed on the Marys’ property (“Mary Pipelines”). 3 The Pedro Pipelines carried gas and saltwater extracted from the Pedro Well to the junction with the Mary Pipelines, which would then transport the products off the Marys’ land and to the ultimate

2 QEP paid the Marys amounts exceeding $250,000 for these subsequent agreements. 3 The Mary Pipelines are connected to the Mary Well, which is also located on the Marys’ property. QEP owns the Mary Pipelines and the Mary Well.

2 Case: 21-30195 Document: 00516170433 Page: 3 Date Filed: 01/18/2022

destination. The servitude for the Pedro Pipelines is 40 feet wide and shaped like the letter “L.” However, the Pedro Pipelines “cut the corner” of the servitude boundary such that approximately 31 feet of one pipeline and 15 feet of the other were outside the servitude. The Marys sued QEP in state court for various forms of relief arising out of the installation of the Pedro Pipelines partially outside the servitude. The Marys asserted that, pursuant to Louisiana Civil Code Article 497, they may elect either to keep the encroaching segments of the pipelines or require QEP to remove them at its expense. They also sought disgorgement of all profits QEP earned from the gas that flowed through the Pedro Pipelines or, alternatively, fair rental value for using them, plus any additional relief to which they were entitled. QEP removed the case to federal court based on diversity. It then filed a motion for partial summary judgment challenging the Marys’ claim for disgorgement of profits and right to require QEP to remove the pipelines. In 2017, the district court granted the motion on the ground that the Marys produced no evidence that QEP acted in bad faith under Civil Code Article 670, which it concluded was a necessary element of the Marys’ disgorgement and pipeline removal remedies. The parties subsequently settled the remainder of their dispute, and the Marys appealed the summary judgment. In 2020, a panel of this Court held that the district court erred when it relied on Article 670 to determine whether QEP acted in good or bad faith. The Court reversed and remanded with the following instruction: [T]he district court should determine whether QEP’s intrusion into Plaintiffs’ land sounds in trespass, in accession, or in some other provision of Louisiana law. See, e.g., Aertker v. Placid Holding Co., No. 07-473, 2012 WL 4472002, at *5–*6 (M.D. La. Sept. 27, 2012) (discussing the appropriate cause of action

3 Case: 21-30195 Document: 00516170433 Page: 4 Date Filed: 01/18/2022

for recovery of damages related to an errant pipeline). It should then apply the relevant definition of bad faith (if the applicable cause of action requires such a showing) and decide whether Plaintiffs are entitled to a disgorgement of profits. 4 On remand, the parties filed cross motions for summary judgment. The district court issued a written ruling where it considered three potential causes of action that could form the basis of a disgorgement award: accession, breach of contract, and trespass. Regarding accession, the court observed that Civil Code Article 487 requires a “bad faith” possessor “to restore to the owner the fruits he has gathered, or their value, subject to his claim for reimbursement of expenses.” However, the court determined that it did not need to decide whether QEP was a bad faith possessor, because (1) gas and other minerals extracted from the ground are not “fruits”; (2) even if natural gas or its proceeds were considered “fruits,” a landowner may only claim by accession the fruit from its own land, and the gas in the Pedro Pipelines came from the Marys’ neighbor’s land; and (3) the Marys failed to show that QEP realized any additional profit as a result of the misplaced pipelines. The district court then held that disgorgement is not a remedy for either trespass or breach of contract under Louisiana law, even if QEP was in bad faith. Finally, the district court struck several other claims and remedies, as well as a pair of supplemental affidavits from the Marys’ experts. Accordingly, the district court granted summary judgment in favor of QEP and against the Marys. The Marys timely appealed.

4 Mary, 798 F. App’x at 813-14.

4 Case: 21-30195 Document: 00516170433 Page: 5 Date Filed: 01/18/2022

II. STANDARD OF REVIEW “We review the grant of a motion for summary judgment de novo, applying the same standard as the district court.” 5 Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” 6 A fact is material if it might affect the outcome of the suit, and a factual dispute is genuine if a reasonable jury could return a verdict for the nonmoving party. 7 III. DISCUSSION Louisiana law provides the substantive rule of decision in this diversity case. 8 Thus, “our quest begins with the Civil Code of Louisiana and the definitive holdings of the Louisiana Supreme Court.” 9 If that court has not spoken on a particular issue, then we must make an “Erie guess” as to what that court would most likely decide. 10 Our task is to attempt to predict state law, not create or modify it.

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Bluebook (online)
24 F.4th 411, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mary-v-qep-energy-ca5-2022.