In Mary v. QEP Energy Company, the U.S. Fifth Circuit held that a landowner is not entitled to a pipeline company’s profits as a consequence of a portion of a pipeline being located partially outside of a servitude. The Fifth Circuit concluded that a landowner can only recover the additional profits earned by defendant as a direct result of the encroachment, not the profits earned had the pipeline been installed entirely within the servitude. Because there was no evidence of any additional profits, the Fifth Circuit affirmed the District Court’s granting of summary judgment in favor of QEP.
QEP owned a mineral lease covering Plaintiffs’ property, but because it wanted to transport off-site gas across their property, QEP also obtained a pipeline servitude across Plaintiffs’ land. A dispute arose after the pipeline contractor “cut the corner” of the servitude when laying the pipeline, resulting in approximately 45 feet of pipeline being buried outside the designated servitude area.
On the case’s second trip to the Fifth Circuit, the court focused upon the theories of recovery articulated by the Plaintiffs. As to Plaintiffs’ claim under the Civil Code articles on accession, the court rejected Plaintiffs’ claims on two grounds: the gas produced from the wells was not a fruit but rather a product, and the gas which ran through the off-servitude portion of the pipelines was not taken from the Plaintiffs’ land, but that of their neighbor. Even if the proceeds of the gas were considered a “fruit,” the court found the proceeds were not a fruit of anything Plaintiffs owned. 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.
The court also rejected Plaintiffs’ breach of contract claims, finding no basis in the Civil Code articles on contracts for a disgorgement of profits. As to Plaintiffs’ trespass claims, the court found the same absence of any evidence of additional profits earned by QEP precluded any disgorgement remedy under trespass.
This case was handled by Paul Adkins of Liskow’s Baton Rouge office. Read the opinion here.
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