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The Third Circuit recently released an unpublished opinion making clear that when a pipeline company expropriates a servitude, the servitude is “perpetual,” and a Court cannot impose a term on that servitude.  The Third Circuit also held that a landowner must prove any damages over and above the fair market value of the property, and cannot award an additional amount simply because the landowner is upset that the property is being expropriated.

Enterprise TE Products Pipeline Co., LLC (“Enterprise”) successfully negotiated with a number of landowners and established conventional servitudes, i.e. servitudes by contract, over a specific tract of land.  Enterprise filed suit against the remaining landowners seeking to exercise its right to expropriate both a temporary and a perpetual servitude under the law.  The trial court found that Enterprise satisfied its burden in both demonstrating that it had the right to expropriate and establishing, through expert testimony, the value of the servitude sought.  Nevertheless, the trial court granted a servitude with a term of ninety-nine years, as opposed to the perpetual servitude Enterprise sought.  Further, the trial court awarded compensation that was higher than that established by expert testimony at trial.  Enterprise filed an appeal to the Third Circuit as to both matters.

Earlier this month the Third Circuit issued its opinion in Enterprise’s favor.  First, the Court considered whether a servitude granted in an expropriation judgment can be subject to a term.  The Court reaffirmed the understanding that an expropriated servitude is a legal servitude, as opposed to a natural or contractual servitude.  A legal servitude is subject only to the terms and conditions in the Louisiana Civil Code, including the provisions for extinguishing a servitude (ten years of nonuse).  Therefore, the Court expressly held that an expropriated servitude cannot be subject to a term. This has been the understanding for some time with respect to expropriated servitudes.  With the Third Circuit’s opinion, this understanding is now express.

Next, the Court reaffirmed the established rule that damages awarded to expropriation defendants, over and above the value of the property, must be supported by evidence in the record.  Such a damage award cannot simply be an arbitrary award by the Court, and cannot be based on the fact that the landowners, in the words of the Third Circuit, “simply do not like it that the law allows a servitude to be expropriated.” The trial court’s award that exceeded the established value of the property, without any supporting evidence of damages, was manifestly erroneous.

The Third Circuit decision provides clear authority for these two principles that generally have been followed by Courts for decades.  Even though the Court did not designate the opinion for publication, under Article 2168 of the Louisiana Code of Civil Procedure, unpublished opinions may be cited as authority.

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