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On November 8, the Louisiana First Circuit Court of Appeals added to the relatively sparse body of appellate rulings in pipeline expropriation matters. In an unpublished opinion, the court affirmed that landowners whose property is expropriated must prove their entitlement to severance damages to a “legal certainty.”

Under Louisiana law, owners of expropriated property can seek just compensation for the property taken. In addition, landowners can seek “severance damages” above and beyond the value of the expropriated property when the landowner has been deprived of the full potential of future development of the property due to the taking.

In Enterprise Products Operating, LLC, v. Southwood Terminal, L.L.C., Enterprise expropriated part of a large tract of undeveloped riverfront property for an NGL pipeline. The pipeline would then cross the Mississippi River, burrowing more than 100 feet below the riverbed.

At trial, the landowner sought millions in severance damages, arguing that the pipeline’s presence beneath the batture of the property (the land between the low-water level of the river and the levee) destroyed the property’s potential future use an industrial site with a dock to provide river access. However, Enterprise presented engineering testimony that the pipeline would not interfere with any potential dock.

The jury verdict form asked whether the jury found “by a preponderance of the evidence, and without relying on speculation or mere possibility that Enterprise’s pipeline right-of-way will prevent any future purchaser of the batture property from constructing a barge dock on that property.” The jury answered “no,” and thus no severance damages were awarded.

On appeal, the landowner urged that the proper question for the jury should have been: “What amount, if any, is just compensation for the decreased value of, or severance damages to, the batture property owned by Southwood… as a result of Enterprise’s pipeline right-of-way?”

The First Circuit disagreed, affirming a two-part test for severance damages: first, the landowner must prove a diminution in value, “and only then could the jury continue on to the issue of the amount of damages.” The First Circuit also affirmed that a landowner must prove diminution in value or deprivation of the full potential for future development “with legal certainty (i.e. without relying on speculation, conjecture, mere possibility, or unsupported probability)[.]” The court recognized that although the terms “speculation” and “mere possibility” do not appear in the applicable expropriation statues, “those terms and principles are utilized throughout the controlling jurisprudence from both the Louisiana Supreme Court and this Court with respect to the landowner’s burden of proof in a claim for severance damages.”

Liskow attorneys Cheryl Kornick, Mike Cash, Kelly Becker, and Matt Simone represented Enterprise Products Operating at trial and on appeal.

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