SARAH S. VANCE, District Judge.
Defendants Chevron U.S.A. Inc., Chevron Pipe Line Company, and Gulf Oil Corporation (collectively "Chevron") move for a more definite statement under Federal Rule of Civil Procedure 12(e) and also move to dismiss plaintiffs' claims against them.
Plaintiffs allege that they own and/or use certain property in Township 18 South, Range 15 East, Plaquemines Parish, Louisiana, in the Potash Field,
Plaintiffs sued Chevron U.S.A. Inc., Chevron Pipeline Company, Exxon Mobil Corporation, and Gulf Oil Corporation. Chevron U.S.A. Inc. is allegedly the successor in interest to Gulf Oil Corporation; Chevron Pipe Line Company, the successor in interest to Gulf Pipeline Company and Gulf Refining Company; and Exxon, the successor in interest to Humble Oil & Refining Company.
The complaint alleges that "[d]efendants knew or should have known that their day-to-day operations in the [Potash
Plaintiffs have attached to their complaint photographs of the property at issue
Plaintiffs have also attached to the complaint the Operator History of the property.
Plaintiffs filed this lawsuit on May 2, 2013 in the 25th Judicial District Court of the Parish of Plaquemines of the State of Louisiana.
Defendants removed the suit to this Court on August 16, 2013.
Rule 8(a)(2) of the Federal Rules of Civil Procedure provides that a plaintiff's complaint must contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Under Rule 8, a complaint need not provide "detailed factual allegations," but must simply provide the plaintiff's grounds for entitlement to relief. Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir.2007). A district court will grant a party's motion for a more definite statement pursuant to Rule 12(e) when the pleading at issue "is so vague or ambiguous that the party cannot reasonably prepare a response." Fed.R.Civ.P. 12(e). The motion must state the defects in the pleading and the details desired. See id.
Given the liberal pleading standard set forth in Rule 8, Rule 12(e) motions are disfavored. Mitchell v. E-Z Way Towers, Inc., 269 F.2d 126, 132 (5th Cir. 1959); Who Dat Yat Chat, LLC v. Who Dat, Inc., Civil Action Nos. 10-1333, 10-2296, 2012 WL 2087438, at *6 (E.D.La. June 8, 2012) (following Mitchell); EEOC v. Alia Corp., 842 F.Supp.2d 1243, 1250 (E.D.Cal.2012); see also 5C Charles Allen
Chevron argues that plaintiffs must provide a more definite statement because they have not sufficiently articulated "how the property became contaminated, the extent and location of any contamination, and what specific facilities were operated by Chevron that allegedly caused the contamination."
The Court finds that plaintiffs' complaint is sufficiently detailed to allow defendants to prepare a responsive pleading. In the complaint, plaintiffs have identified the property at issue by township and range, and the operational area at issue as the Potash Field. They have identified the wells operated on the property by operator and serial number. Plaintiffs allege that this property was contaminated by pollution that resulted from defendants' activities in constructing and operating oil and gas exploration and production facilities, and from defendants' storage of the resulting waste in unlined earthen pits. Plaintiffs have explained why the materials discharged on their property are harmful, and they have given specific examples of ways in which the property has been damaged.
The Court does find merit in Chevron's contention that plaintiffs' claims for punitive damages under article 2315.3 and their claims for land loss, subsidence and backfilling of canals are defective. The deficiencies in those claims, however, are more appropriately addressed below, in the Court's analysis of defendants' motion to dismiss. Accordingly, the Court denies defendants' motions for a more definite statement.
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead enough facts "to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). A claim is facially plausible when the plaintiff pleads facts that allow the court to "draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A court must accept all well-pleaded facts as true and must draw all reasonable inferences in favor of the plaintiff. Lormand v. U.S. Unwired, Inc., 565 F.3d 228, 239 (5th Cir. 2009). But the Court is not bound to accept as true legal conclusions couched as factual allegations. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
A legally sufficient complaint must establish more than a "sheer possibility" that the plaintiff's claim is true. Id. It need not contain detailed factual allegations, but it must go beyond labels, legal conclusions, or formulaic recitations of the elements of a cause of action. Id. In other words, the face of the complaint must contain enough factual matter to raise a reasonable expectation that discovery will reveal evidence of each element of the plaintiff's claim. Lormand, 565 F.3d at 257. If there are insufficient factual allegations to raise a right to relief above the speculative level, or if it is apparent from the face of the complaint that there is an insuperable bar to relief, the claim must be dismissed. Twombly, 550 U.S. at 555, 127 S.Ct. 1955.
Chevron contends that the allegations against it should be dismissed because "Chevron is not alleged to have been an operator, no Chevron pipe lines are identified, and there is no specific alleged conduct as to Chevron."
Plaintiffs are correct that Chevron has certain obligations to plaintiffs by virtue of the 1950 lease. Therefore, some of plaintiffs' claims against Chevron are potentially viable, notwithstanding the lack of allegations that Chevron engaged in actual conduct on or near plaintiffs' property. For many of plaintiffs' claims, though, the lack of allegations that Chevron engaged in any affirmative conduct on or near the property is fatal. These issues are discussed in greater detail below.
Defendants argue that plaintiffs' claims for restoration of their property are premature to the extent that the lease in question is still in effect. Defendants are correct, at least in part. Under Civil Code article 2683(3), a lessee is bound "[t]o return the thing at the end of the lease in a condition that is the same as it was when the thing was delivered to him, except for normal wear and tear." This obligation arises "only at the end of the lease." Marin v. Exxon Mobil Corp., 48 So.3d 234, 256 (La.2010). Plaintiffs have brought suit "under the mineral and surface leases and use agreements that apply to the property at issue."
Plaintiffs correctly note that other obligations imposed on lessees under Civil Code articles 2683, 2686, 2688, and 2692 and articles 11 and 122 of the Mineral Code "continue throughout the term of the lease," such that "a lessor need not wait until the end of the lease to sue a lessee for damages to his property." Marin, 48 So.3d at 256. Thus, plaintiffs' claims against defendants under those articles are not foreclosed on the grounds that the lease has not expired. See, e.g., Hardee v. Atl. Richfield, 926 So.2d 736, 741-42 (La. Ct.App.2006).
Plaintiffs have alleged that defendants committed "fraud and misrepresentation" by hiding the pollution that their oil and gas exploration and production activities produced and by failing to inform plaintiffs of the potential harm that pollution could cause.
Defendants are correct. Under Rule 9(b), a party alleging fraud or mistake "must state with particularity the circumstances constituting fraud or mistake." The Fifth Circuit "interprets Rule 9(b) strictly, requiring a plaintiff pleading fraud `to specify the statements contended to be fraudulent, identify the speaker, state when and where the statements were made, and explain why the statements were fraudulent.'" Herrmann Holdings Ltd. v. Lucent Techs. Inc., 302 F.3d 552, 564-65 (5th Cir.2002) (quoting Nathenson v. Zonagen Inc., 267 F.3d 400, 412 (5th Cir.2001)). Allegations of fraudulent concealment are subject to the requirements of Rule 9(b). See Summerhill v. Terminix, Inc., 637 F.3d 877, 880 (8th Cir.2011); Summer v. Land & Leisure, Inc., 664 F.2d 965, 970-71 (5th Cir.1981); In re Pool Prods. Dist. Mkt. Antitrust Litig., 988 F.Supp.2d 696, 722-23, 2013 WL 6670020, at *21 (E.D.La.2013).
Plaintiffs have failed to satisfy this strict pleading standard. They allege generally that "defendants (or their representatives)" engaged in "acts of fraud and misrepresentation" including "burying, hiding or actively concealing pollution" and failing to inform plaintiffs of the deleterious consequences that could result from that pollution.
Plaintiffs contend that their allegations of concealment are adequate "because the defendants' oil and gas exploration and production activities are peculiarly within the defendants' knowledge."
Plaintiffs contend in their response that the "basis" for their concealment allegations is Louisiana Civil Code article 2688, which provides that a lessee must notify his lessor if and when the property leased is damaged or requires repair.
Plaintiffs allege that defendants' actions in polluting plaintiffs' land and failing to restore that land to its original condition constitute a breach of the express provisions of the mineral lease applicable to plaintiffs' property.
Plaintiffs also allege that defendants' actions in polluting plaintiffs' land and failing to restore that land to its original condition constitute a breach of defendants' implied obligations as lessees under the Louisiana Civil and Mineral Codes.
Plaintiffs have alleged violations of the following codal provisions concerning implied obligations of lessees: Civil Code articles 2683, 2686, 2688, and 2692, which regulate the obligations of the lessor and the lessee; Mineral Code article 11, which describes the correlative rights of landowners and owners of mineral rights; and Mineral Code article 122, which concerns a mineral lessee's obligation to act as a reasonably prudent operator.
Article 2683 provides that a lessee is bound:
The qualifier "except for normal wear and tear" is important, because "[t]he lessor may be considered to have given his assent to the `wear and tear' normally involved in exercising the rights granted." Terrebonne Parish Sch. Bd. v. Castex Energy, Inc., 893 So.2d 789, 800 (La.2005). Thus, for example, a lessor who leases his land to a lessee for purposes of drilling for oil may not recover "for damages which are inflicted without negligence upon the lessor's property in the course of necessary drilling operations." Id. at 799 (quoting Rohner v. Austrl. Oil Co., 104 So.2d 253, 255 (La.Ct. App.1958)). Absent an express provision in the mineral lease requiring the lessee to restore the property to its original condition, the lessee need restore the surface to its original condition only if "there is evidence of unreasonable or excessive use." Id. at 792.
Articles 2686, 2688, and 2692 expound upon the "prudent administrator" standard set forth in article 2683. Article 2686 provides that a lessor "may obtain injunctive relief, dissolution of the lease, and any damages he may have sustained" if the lessee uses the leased property "for a purpose other than that for which it was leased or in any manner that may cause damage" to the property. Article 2688 requires the lessee to notify the lessor "without delay" when the leased property is damaged or requires repair. Finally, article 2692 provides that
Mineral Code article 11, which states the "foundational duty of parties in a case of mineral rights," Walton v. Burns, ___ So.3d ___, ___-___, 2013 WL 163739, at *9-10 (La.Ct.App. Jan. 16, 2013), provides generally that "[t]he owner of land burdened by a mineral right and the owner of a mineral right must exercise their respective rights with reasonable regard for those of the other." La.Rev.Stat. § 31:11. Article 122 of the Mineral Code defines this obligation more specifically in the context of mineral lessees:
La.Rev.Stat. § 31:122. The Louisiana Supreme Court has held that Mineral Code
The obligations imposed upon mineral lessees by the Civil and Mineral Codes are indivisible. See Sweet Lake Land & Oil Co. LLC v. Exxon Mobil Corp., No. 2:09 CV 1100, 2011 WL 5825791, at *5 (W.D.La. Nov. 16, 2011) (obligation to restore leased premises under the Civil and Mineral codes are indivisible because "[p]roperty is either restored or it is not"); Questar Exploration & Prod. Co. v. Woodard Villa, Inc., 123 So.3d 734, 738 & n. 11 (La.Ct. App.2013) (noting that mineral leases are "presumptively indivisible"); Mathews v. Goodrich Oil Co., 471 So.2d 938, 944 (La. Ct.App.1985) ("[T]he concept of the indivisible nature of mineral leases and the effects thereof ... have existed in Louisiana jurisprudence for a number of years."); Nunley v. Shell Oil Co., 76 So.2d 111, 112-13 (La.Ct.App.1954) ("[T]he Supreme Court of [Louisiana] has established the general rule that an oil and gas lease is an indivisible obligation ...."); see also La. Civ.Code art. 1815; Hunter v. Shell Oil Co., 211 La. 893, 31 So.2d 10, 13 (1947) ("The law is well settled that the lessee's obligation to drill a well is indivisible in its nature."). When an obligation is indivisible, all obligors are solidarily liable for the full performance of the obligation. La. Civ.Code art. 1818; Sweet Lake, 2011 WL 5825791, at *5. Accordingly, as alleged successors in interest to co-lessees of the property in question, Chevron and Exxon are liable to plaintiffs if any of the lessees to the property have breached their codal obligations to plaintiffs. See La.Rev.Stat. § 31:128 ("To the extent of the interest acquired, an assignee or sublessee acquires the rights and powers of the lessee and becomes responsible directly to the original lessor for performance of the lessee's obligations."); Sweet Lake, 2011 WL 5825791, at *5-7.
Plaintiffs have not alleged that defendants failed to pay any applicable rent. Accordingly, plaintiffs have no claim under La. Civ.Code art. 2683(1). Moreover, as explained above, plaintiffs' claims against defendants for restoration under La. Civ. Code art. 2683(3) are premature because plaintiffs' complaint suggests that the applicable lease is still extant.
Civil Code article 2683(2) and Mineral Code articles 11 and 122, in essence, collectively require that mineral lessees use the leased property as a "prudent administrator." See La. Land & Exploration Co., 110 So.3d at 1045-47. Plaintiffs have plausibly alleged that defendants violated this codal duty, for the following reasons.
The complaint alleges that Exxon conducted oil and gas production and exploration
The analysis of plaintiffs' article 2686 claim is similar to that of their article 2683(2) claim. Plaintiffs have plausibly alleged that Exxon used the property "in a manner that may cause damage to" it, so they have stated a viable claim against defendants for violation of their duties as lessees under article 2686.
Exxon argues that article 2688 is not applicable to this case because it was enacted in 2005, many years after the lease in question was executed. Exxon is correct. "[L]aws existing at the time a contract is entered into are incorporated into and form a part of the contract as though expressly written." Green v. New Orleans Saints, 781 So.2d 1199, 1203 (La.2000) (citing Bd. of Comm'rs of Orleans Levee Dist. v. Dep't of Natural Res., 496 So.2d 281, 294 (La.1986)). Conversely, a statute "not in effect at the time of contracting ... cannot be retroactively applied to alter the obligations of [a] contract, even though the act giving rise to the obligation occurs after the effective date of the statute." Block v. Reliance Ins. Co., 433 So.2d 1040, 1044 (La.1983) (citing La. Const. art. 1, § 23); accord State Dep't of Transp. & Dev. v. Berry, 609 So.2d 1100, 1102 (La.Ct. App.1992). Article 2688, which was enacted after the 1950 lease was executed, "cannot be retroactively applied to alter the obligations of that contract." Block, 433 So.2d at 1044. Under the law as it existed in 1950, the lessees of plaintiffs' property had no duty analogous to that imposed by article 2688, and consequently those lessees have no such duty today. Plaintiffs' claim under article 2688 thus fails.
Plaintiffs have plausibly alleged that defendants violated their duty as lessees
Plaintiffs also allege that defendants' actions in polluting plaintiffs' land and failing to restore that land to its original condition constitute a breach of defendants' implied obligations as mineral servitude holders under the Civil and Mineral Codes.
Plaintiffs have alleged violations of the following codal provisions concerning implied obligations of servitude holders: Louisiana Civil Code articles 576 and 577, which regulate personal servitudes of use; Mineral Code article 11, which describes the correlative rights of landowners and owners of mineral rights; and Mineral Code article 22, which concerns the rights and obligations of a mineral servitude owner.
Civil Code articles 576 and 577 apply to personal servitudes of use. See La. Civ. Code art. 645. Under article 576, the holder of a personal servitude "is answerable for losses resulting from his fraud, default, or neglect," and under article 577, he is also "responsible for ordinary maintenance and repairs for keeping the property subject to the [servitude] in good order."
As stated above, Mineral Code article 11 provides that "[t]he owner of land burdened by a mineral right and the owner of a mineral right must exercise their respective rights with reasonable regard for those of the other." La.Rev.Stat. § 31:11. Mineral Code article 22 defines this obligation more specifically in the context of mineral servitudes, providing that "[t]he owner of a mineral servitude ... is entitled to use only so much of the land as is reasonably necessary to conduct his operations," and "is obligated, insofar as practicable, to restore the surface to its original condition at the earliest reasonable time." La.Rev.Stat. § 31:22.
Plaintiffs never allege in their complaint that Chevron held a mineral servitude on the property in question, and none of the documents attached to plaintiffs' complaint suggests that Chevron ever owned such an interest. Thus, plaintiffs cannot state a claim against Chevron under any of the codal provisions governing the obligations of servitude holders.
Plaintiffs have, however, sufficiently alleged that Exxon is liable to them under the codal provisions governing servitudes. Attached to plaintiffs' complaint is a document showing that Humble Oil was granted a mineral servitude on plaintiffs' property on February 17, 1960,
In their prayer for relief, plaintiffs request "damages for land loss, subsidence, and the cost of backfilling of canals and other excavations."
Plaintiffs have alleged that defendants committed negligence under Louisiana Civil Code article 2315, a continuing tort under Louisiana law, and a violation of § 324A of the Restatement (Second) of Torts, as interpreted by Louisiana jurisprudence. Plaintiffs also claim that defendants are liable for punitive damages for their tortious conduct under former article 2315.3 of the Civil Code. Chevron has moved to dismiss all of these claims, and Exxon has moved to dismiss plaintiffs' claims for a continuing tort and for punitive damages.
As noted above, plaintiffs concede that the complaint does not plausibly allege that Chevron engaged in any affirmative conduct on the property in question.
"Louisiana courts recognize that the same acts or omissions may constitute breaches of both general duties and contractual duties, giving rise to actions in
Huggs, 889 F.2d at 655.
Here, plaintiffs have not alleged that Chevron negligently performed its contractual obligations as a lessee to the property, because they have not alleged that Chevron operated on the property or otherwise performed any obligations at all. Instead, they have alleged that Chevron failed to perform its obligation to restore property under the Civil and Mineral Codes. That alleged breach of contract is passive, not active, and accordingly plaintiffs' tort claim against Chevron fails. See id.
Chevron and Exxon contend that plaintiffs have not adequately pled a continuing tort claim because the operating cause of the alleged injury is not continuous. They note that plaintiffs do not allege that oil and gas exploration and production operations are ongoing on their property. Indeed, any such allegation would be belied by the property's Operator History, which reflects that the last well operated on the property was plugged and abandoned nearly thirty years ago. Instead, plaintiffs allege that "[t]he pollution caused by defendants continues to migrate," and argue that "the continuing failure of defendants to remove their pollution from the property" constitutes a continuing tort.
Defendants have the better of this argument. Under Louisiana law, in order to determine whether injurious conduct constitutes a continuing tort, "the court must look to the operating cause of the injury sued upon and determine whether it is a continuous one giving rise to successive damages, or whether it is discontinuous and terminates, even though the damage persists and may progressively worsen." Marin, 48 So.3d at 253 (quoting Hogg v. Chevron USA Inc., 45 So.3d 991, 1003 (La.2010)). "A continuing tort is occasioned by unlawful acts, not the continuation of the ill effects of an original, wrongful act." Crump v. Sabine River Auth., 737 So.2d 720, 728 (La.1999). Thus, "continued migration" of pollution already
In Marin, the Louisiana Supreme Court found that "the deposit and storage of oilfield wastes into unlined pits" constituted a continuous operating cause that "terminated when the pits were closed." Id. at 255. Seizing on this language, plaintiffs argue that defendants' ongoing failure to close the pits on their property constitutes a continuing tort.
Plaintiffs' interpretation of Marin does not withstand scrutiny. In Marin, the defendant ceased using the pits and closed them at virtually the same time. See id. at 247. The court used the point of closure of the pits as a convenient marker for the point at which the tortious conduct ceased; it did not hold that merely leaving oilfield waste in pits, without more, constitutes a continuing tort. To the contrary, Marin explicitly reaffirmed that "the breach of a duty to right an initial wrong simply cannot be a continuing wrong that suspends the running of prescription, as that is the purpose of every lawsuit and the obligation of every tortfeasor." Id. at 254 (quoting Hogg, 45 So.3d at 1007). Thus, the case is most naturally read to hold that a defendant's tortious conduct continues so long as it actively deposits and stores waste on the plaintiffs' property. Once the defendant stops actively polluting the property, the tort ceases. Any subsequent inaction is not tortious, but simply a failure to remediate harm previously caused. See Sweet Lake Land & Oil Co. v. Exxon Mobil Corp., No. 2:09-CV-1100, 2011 WL 4591084, at *3 (W.D.La. Sep. 29, 2011) (adopting a similar interpretation of Marin); cf. Kling Realty, 575 F.3d at 519.
Plaintiffs do not allege that Chevron and Exxon are still actively conducting oil and gas exploration or production activities on their property, or actively depositing waste into unlined earthen pits. Accordingly, the Court finds that plaintiffs have failed to state a claim for a continuing tort.
Louisiana courts recognize the common law doctrine codified in the Restatement (Second) of Tort § 324A. That section provides that
Bujol v. Entergy Servs., Inc., 922 So.2d 1113, 1128 (La.2004) (alteration in original).
Plaintiffs have not alleged that Chevron "undert[ook] ... to render services" to them; indeed, as noted above, plaintiffs have not plausibly alleged that Chevron engaged in any conduct on the
Former article 2315.3 of the Louisiana Civil Code provided that, "[i]n addition to general and special damages, exemplary damages may be awarded, if it is proved that plaintiff's injuries were caused by the defendant's wanton or reckless disregard for public safety in the storage, handling, or transportation of hazardous or toxic substances." See Corbello v. Ia. Prod., 850 So.2d 686, 707 (La.2003). "Damages under 2315.3 are recoverable on a derivative basis where a plaintiff is entitled to recover tort damages." Id. The provision was in effect between 1984 and 1996, and applies to causes of action arising during that time period. See id. at 707 n. 9; Brownell Land Co. v. Apache Corp., No. Civ.A. 05-322, 2005 WL 3543772, at *6 (E.D.La. Oct. 13, 2005).
The law is clear that "in order to state a cause of action for exemplary damages, the plaintiff must plead facts which establish the[] cause of action during the effective period of article 2315.3." In re Harvey Term Litig., 872 So.2d 584, 586 (La.Ct. App.2004); accord Apache Corp., 2005 WL 3543772, at *6; see also Sweet Lake Land & Oil Co. LLC v. Exxon Mobil Corp., No. 2:09 CV 1100, 2012 WL 27475, at *2 (W.D.La. Jan. 3, 2012). Plaintiffs have failed to do so here. They have broadly alleged that defendants' conduct "egregiously violat[ed] applicable health and safety regulations and applicable field-wide orders" and "constitute[d] wanton or reckless disregard for public safety in the storage, handling or transportation of hazardous or toxic substances."
Plaintiffs' claim for a continuing trespass fails for the same reason as did their claim for a continuing tort: the alleged operating cause of the injury is not continuous, but rather terminated in the past. See Hogg, 45 So.3d at 1003-04 (because trespass is a species of tort, "[t]o determine whether a trespass is continuous, a court must engage in the same inquiry used to determine the existence of a continuing tort" and determine whether the operating cause of the injury is continuous or discontinuous); see also Marin, 48 So.3d at 253.
In plaintiffs' opposition, they appear to abandon their theory of continuing trespass. They instead argue that defendants committed a trespass by "operating
This claim cannot succeed against Chevron, because plaintiffs have not plausibly alleged that Chevron operated on the property at all. But plaintiffs have plausibly alleged a trespass against Exxon. The complaint alleges that Exxon was granted an oil and gas lease on plaintiffs property, but then violated its implied obligations under that lease by polluting and severely damaging the property. Thus, plaintiffs have plausibly alleged that Exxon operated outside the scope of the applicable lease and thereby damaged the property, which constitutes a trespass under Louisiana law. See Vermilion Parish Sch. Bd. v. BHP Billiton Petroleum (Ams.) Inc., No. Civ. A. 04-2069, 2005 WL 2406157, at *7 (W.D.La. Sep. 29, 2005); cf. Gaspard v. St. Martin Parish Sewerage Dist. # 1, 569 So.2d 1083, 1084 (La.Ct.App.1990).
Plaintiffs allege that defendants "derived substantial economic benefits" from their storage of hazardous waste on plaintiffs' property, because that storage allowed defendants "to avoid the substantial costs and expenses associated with the proper disposal of this toxic pollution and waste."
Plaintiffs cannot state a claim for civil fruits of trespass against Chevron because the Court found above that neither Chevron nor any of Chevron's predecessors in interest trespassed on plaintiffs' property. Plaintiffs do, however, have a viable trespass claim against Exxon, and so the Court must determine whether the "economic benefits" Exxon allegedly derived from its storage of oilfield wastes on plaintiffs' property constitute "fruits" within the meaning of article 486.
Civil Code article 551 defines fruits as "things that are produced by or derived from another thing without diminution of its substance," and civil fruits as "revenues derived from another thing, such as rentals, interest, and certain corporate distributions." The Louisiana Court of Appeal for the Second Circuit has held that economic benefits derived from storage of wastes on a plaintiff's property without permission are not "civil fruits" as defined in the Civil Code because nothing is "produced by or derived from the property as a result of the storage/disposal of the waste," and there are "no revenues, such as rentals, interest or a corporate distribution, derived from the property by virtue of the storage/disposal of the waste." Wagoner v. Chevron USA Inc., 55 So.3d 12, 27 (La.Ct.App.2010).
The Court finds the analysis in Wagoner persuasive. Exxon may have avoided costs by improperly storing waste on plaintiffs' property, but avoiding costs is not the same as earning revenues. Accordingly, the Court holds that plaintiffs have not stated a claim for civil fruits against Exxon.
The cases on which plaintiffs rely in arguing to the contrary are distinguishable. In Corbello, the Louisiana Supreme Court affirmed the lower court's decision to award the plaintiff the "profits earned by [the defendant] during the time [the
Finally, the court in Mongrue v. Monsanto Co., No. CIV. A. 98-2531, 1999 WL 970354 (E.D.La. Oct. 21, 1999), merely stated that the plaintiffs could recover damages to compensate them for the "depriv[ation] of the opportunity to use or lease their underground storage space" caused by the defendant's trespass. Id. at *4. The plaintiffs in Mongrue did not request that the defendant disgorge "civil fruits"; indeed, the opinion does not even mention that legal doctrine. Rather, the Mongrue plaintiffs sought reimbursement for actual damages that they suffered as a result of the defendants' trespass.
Plaintiffs also allege that defendants have violated Louisiana Civil Code article 667. They contend that defendants are strictly liable to them for damages stemming from violations of article 667 that occurred before April 16, 1996.
Before the 1996 amendments to the Civil Code, article 667 provided as follows: "Although a proprietor may do with his estate what he please, still he can not make any work on it, which may deprive his neighbor of the liberty of enjoying his own, or which may be the cause of any damage to him." Louisiana courts interpreted article 667 to impose strict liability — that is, liability without fault — on defendants for damage caused by an activity deemed "ultrahazardous." Bartlett v. Browning-Ferris Indus., Chem. Servs., Inc., 683 So.2d 1319, 1321 (La.Ct.App.1996).
In 1996, the legislature "amended article 667 to require a showing of negligence in any claim for damages under article 667 other than those caused by `pile driving' or `blasting with explosives.'" Vekic v. Wood Energy Corp., No. Civ.A. 03-1906, 2004 WL 2367732, at *4 (E.D.La. Oct. 20, 2004); accord Yokum v. 615 Bourbon Street, L.L.C., 977 So.2d 859, 874 (La.2008). Article 667 now provides as follows:
The Court finds that plaintiffs have not plausibly alleged that Chevron violated the duties imposed by article 667. As noted above, plaintiffs have not alleged that Chevron engaged in any "work" on the property in question, much less "work" that could be considered unlawful under either the former or current version of article 667. Moreover, plaintiffs' claim against Exxon for continuing nuisance under article 667 fails for the same reason as their continuing tort claims. See Hogg, 45 So.3d at 1003 (equating the concepts of continuing tort, continuing trespass, and continuing nuisance). The facts alleged in the complaint do not plausibly suggest that there is an ongoing nuisance causing harm to plaintiffs' property.
The Court proceeds to consider Exxon's liability to plaintiffs for violations of article 667 that occurred in the past.
The seminal case interpreting former article 667 in the context of entities holding co-existing rights to the same piece of property is Inabnet v. Exxon Corp., 642 So.2d 1243 (La.1994). The Inabnet court noted that article 667 "place[d] limitations on the rights of owners by setting out principles of responsibility applying the doctrine of sic utere tuum ut alienum non laedas, which requires an owner to use his property in such a manner as not to injure another." Id. at 1250-51 (citing 4 A.N. Yiannapoulos, Louisiana Civil Law Treatise, Predial Servitudes §§ 25, 33 (1983)). More specifically, this codal provision "prohibit[ed] uses which cause damage to neighbors or deprive them of the enjoyment of their property." Inabnet, 642 So.2d at 1251.
Conduct by a "neighbor" that violated the duties imposed by former article 667 could "give rise to delictual liability, without negligence, as a species of fault within the meaning of La. Civ.Code art. 2315." Id. at 1251; see also Turner v. Murphy Oil USA, Inc., 234 F.R.D. 597, 608 (E.D.La.2006) ("A violation of Louisiana Civil Code article 667 constitutes fault within the meaning of Louisiana Civil Code article 2315."). The Louisiana Supreme Court consistently held that individuals holding co-existing rights in the same piece of property could "be neighbors within the contemplation of Article 667." Inabnet, 642 So.2d at 1252 (citing Butler v. Baber, 529 So.2d 374 (La.1988)); see also Magnolia Coal Terminal v. Phillips Oil Co., 576 So.2d 475, 484 (La.1991); Butler, 529 So.2d at 381. But,
Inabnet, 642 So.2d at 1252. These "pertinent considerations" included
Inabnet provides a helpful example of this principle. There, the Court determined that the defendant, Exxon, which held a surface lease in property in which plaintiff had acquired an oyster lease, was not liable to the plaintiff under article 667 for the plaintiff's inability to produce oysters. The Court explained that Exxon had acquired a right to install and operate a tank battery on the property ten years before the plaintiff acquired his oyster lease. Id. at 1253. Thus, the nature of Exxon's right "precluded oyster production on the same property and made [the property] unavailable for plaintiff's use under his lease." Id. at 1253.
Applying the foregoing principles to this case, the Court finds that (1) plaintiffs have stated a delictual claim against Exxon under article 2315 for a violation of the duties imposed by former article 667, but (2) strict liability, as traditionally understood, is not the appropriate standard for that claim.
Plaintiffs have stated a delictual claim based on former article 667 against Exxon arising out of the "work" Exxon allegedly performed on their land. Cf. Yokum, 977 So.2d at 875 ("[T]he `work' to which Article 667 refers includes not only constructions but also activities that may cause damage."). The complaint alleges that Exxon's conduct "deprive[d] [plaintiffs] of the liberty of enjoying" their land by causing damage to it and also violated certain implied obligations owed by mineral lessees under Louisiana statutory law. Accordingly, plaintiffs have also plausibly alleged that Exxon has breached its duty under former article 667 to refrain from damaging its neighbors. See Magnolia Coal, 576 So.2d at 484 (mineral lessees liable to lessor under article 667 for "exercis[ing] their contractual rights as mineral lessees with an unreasonable disregard for the damage" thereby inflicted on the land).
But, even assuming that Exxon's alleged conduct constitutes "ultrahazardous activity" within the meaning of the pre-1996 jurisprudence regarding former article 667, traditional strict liability is not the standard applicable to that conduct. Inabnet made clear that, when a court is faced with claims under former article 667 between entities with co-existing rights to the same piece of property, the court must consider more than whether one co-owner engaged in conduct on the property that caused the other co-owner to suffer damage. The Inabnet Court was explicit on this point: It held that an earlier decision "hinging liability of a mineral lessee to an oyster lessee of the same property on proof of causation and damages" was too simplistic, insofar as it failed to take into account other essential considerations,
Inabnet, 642 So.2d at 1252. Accordingly, no liability can be imposed under former
Clearly, plaintiffs do not have a claim for strict liability under article 667 for damages incurred after 1996, because they have not alleged that defendants engaged in pile driving or blasting with explosives. See Yokum, 977 So.2d at 874 (noting that the 1996 amendments to article 667 "shift[ed] the absolute liability standard to a negligence standard" for all activities except pile driving and blasting with explosives). Instead, plaintiffs must show that Exxon's actions were negligent. See id. But, as noted above, see supra Section III.B.5.b, plaintiffs have plausibly alleged that Exxon negligently conducted oil and gas exploration and production activities on plaintiff's land and improperly stored the resulting waste, thereby causing harm to the property. Accordingly, plaintiffs' claim for damages against Exxon for post-1996 violations of current article 667 may go forward.
In summary, plaintiffs have plausibly alleged a delictual claim against Exxon, but not Chevron, for violating the duties imposed by article 667. In order ultimately to prevail on that claim, plaintiffs must show fault according to the principles set forth in Inabnet (for conduct occurring before 1996) or negligence (for conduct occurring after 1996).
Plaintiffs have brought claims under Civil Code articles 2317 and 2322, which concern premises liability. Article 2317 provides that "[w]e are responsible, not only for the damage occasioned by our own act, but for that which is caused by the act of persons for whom we are answerable, or of the things which we have in our custody." Before 1996, custodians were strictly liable under Louisiana law for injuries caused by things in their custody. Accordingly, to recover under article 2317, a plaintiff had to establish only three elements: "(1) the thing causing his damage was in the custody of the defendant; (2) the thing had a `defect' or a condition creating an unreasonable risk of harm; and (3) the defective condition caused plaintiff's injuries." Hebert v. Sw. La. Elec. Membership Corp., 667 So.2d 1148, 1157 (La.Ct.App.1995) (citing Oster v. Dep't of Transp. & Dev., 582 So.2d 1285 (La.1991)). In 1996, the Louisiana legislature amended the Civil Code to impose a negligence standard. Coulter v. Texaco Inc., 117 F.3d 909, 913 & n. 8 (5th Cir. 1997). Today, in order to prevail on a custodial liability claim under article 2317, a plaintiff must prove a fourth element as well: that "the defendant knew or should have known of the defect" that caused the plaintiff's injuries. Cormier v. Dolgencorp, Inc., 136 Fed.Appx. 627, 627-28 (5th Cir.2005) (citing La. Civ.Code. arts. 2317, 2317.1).
Article 2322 applies specifically to buildings, and provides as follows:
A plaintiff must plead the following elements to state a claim under article 2322:
Plaintiffs allege that "[a]t all pertinent times hereto, defendants had garde of the facilities and equipment that caused the pollution described herein."
Louisiana Civil Code article 2298 is Louisiana's unjust enrichment statute. It provides as follows:
La. Civ.Code art. 2298. Louisiana courts have interpreted the provision to require a five-part showing in order to recover:
Richard v. Wal-Mart Stores, Inc., 559 F.3d 341, 346 (5th Cir.2009) (quoting Minyard v. Curtis Prods., Inc., 251 La. 624, 205 So.2d 422, 432 (1968)).
Plaintiffs rightfully concede that their claim for unjust enrichment is not viable because they have available remedies at law. "[U]njust enrichment is a remedy of `last resort' and is only available to fill a gap in the law." Port of S. La. v. Tri-Parish Indus., Inc., 927 F.Supp.2d 332, 341 (E.D.La.2013). Thus, if a plaintiff pleads a legal cause of action in his complaint, he may not also assert a claim for unjust enrichment, because the latter is precluded by the availability of the former. Id. (citing Walters v. MedSouth Record Mgmt., LLC, 38 So.3d 245, 246 (La.2010); Gallant Invs. Ltd. v. Ill. Cent. R.R. Co., 7 So.3d 12, 18 (La.Ct.App.2009)). Accordingly, the Court dismisses plaintiffs' claims for unjust enrichment.
Courts should "freely give leave" to amend "when justice so requires." Fed.
For the foregoing reasons, the Court DENIES defendants' motions for a more definite statement, GRANTS IN PART and DENIES IN PART Chevron's motion to dismiss, and GRANTS IN PART and DENIES IN PART Exxon's motion to dismiss. The Court dismisses without prejudice all of plaintiffs' claims against Chevron except their claims under Civil Code articles 2683(2), 2686, and 2692, and Mineral Code articles 11 and 122. The Court dismisses without prejudice the following claims against Exxon:
Plaintiffs will be allowed twenty-one (21) days from the date of this order to amend their complaint. Failure to timely amend the complaint will result in dismissal of the foregoing claims with prejudice.
Defendant Exxon Mobil Corporation moves the Court to reconsider a portion of its April 1, 2014 Order and Reasons granting in part and denying in part defendants' motions to dismiss.
Plaintiffs filed this lawsuit in Louisiana state court on May 2, 2013, alleging that defendants engaged in oil and gas exploration and production activities that caused severe damage to property that plaintiffs own in Placquemines Parish.
In its ruling on defendants' motions to dismiss, the Court held that plaintiffs had plausibly alleged that Exxon violated its implied obligations as a servitude holder under articles 576 and 577 of the Louisiana
Exxon styled its motion as a "motion for reconsideration" of that portion of the Court's April 1 order denying Exxon's motion to dismiss plaintiffs' claims under Mineral Code articles 11 and 22. Exxon seeks relief under Federal Rule of Civil Procedure 59(e), which provides that a party may file a "motion to alter or amend a judgment ... no later than 28 days after the entry of judgment." But an order denying a motion to dismiss is not a "judgment" within the meaning of the Federal Rules. Carter v. Coody, 297 Fed.Appx. 317, 319 (5th Cir.2008) ("An order denying a motion to dismiss or for summary judgment is not a final order or judgment."); see also Fed.R.Civ.P. 54(a) (defining "judgment" as "includ[ing] a decree and any order from which an appeal lies"); Black's Law Dictionary 918 (9th ed.2009) (defining "judgment" as "[a] court's final determination of the rights and obligations of the parties in a case"). Accordingly, Rule 59 is not applicable here. The Court will consider Exxon's motion pursuant to Rule 60, under which the court may relieve a party from an "order." See Broadway v. Norris, 193 F.3d 987, 989 (8th Cir.1999) (motion styled as a motion for reconsideration must be considered under Rule 60, not Rule 59, if it is "directed [not] to a final judgment, but rather to a nonfinal order").
Under Rule 60, the Court may relieve a party from a "final judgment, order, or proceeding" for one of the following reasons:
Fed.R.Civ.P. 60(b). In deciding a Rule 60(b) motion, the Court must "balance the principle of finality of a judgment with the interest of the court in seeing that justice is done in light of all the facts." Hesling v. CSX Transp., Inc., 396 F.3d 632, 638 (5th Cir.2005). The Fifth Circuit has cautioned that relief under Rule 60(b) is an "extraordinary remedy," because the "desire for a judicial process that is predictable mandates caution in reopening judgments." In re Pettle, 410 F.3d 189, 191 (5th Cir.2005) (quoting Carter v. Fenner,
In support of its motion for reconsideration, Exxon contends that the 1960 servitude agreement is not a mineral servitude, and hence that plaintiffs cannot state a claim under either article 11 or article 22 of the Mineral Code based on that agreement. Exxon did not raise this argument in its initial motion to dismiss or in its reply to plaintiff's opposition to that motion. In its original motion to dismiss, Exxon simply adopted the arguments set forth by Chevron.
Nonetheless, under Fifth Circuit law interpreting Rule 60(b), the Court may entertain a motion for reconsideration containing new arguments if it determines that those arguments have merit. See Oliver v. Home Indem. Co., 470 F.2d 329, 330-31 (5th Cir.1972); see also Santa Fe Snyder Corp. v. Norton, 385 F.3d 884, 887 (5th Cir.2004) (noting that a court may grant a motion for reconsideration under Rule 60(b)(1) if the Court's original order contains a "mistake"); Barrier v. Beaver, 712 F.2d 231, 233-35 (6th Cir.1983); Wright, et al., supra, § 2858.1. More specifically, a district court may grant relief under Rule 60(b)(1) if the aggrieved party raises a new point of law that "is determinative on the question before" the Court. Barrier, 712 F.2d at 235. Such an approach is justified because it "prevent[s] the unnecessary wasting of energies by... courts and litigants." Oliver, 470 F.2d at 330-31. Here, for the reasons that follow, the Court concludes that Exxon's arguments are correct. Accordingly, in the interest of judicial efficiency, it will exercise its discretion to consider them and to grant relief under Rule 60(b)(1).
The 1960 servitude agreement grants Humble Oil
The agreement further provides that
Article 21 of the Louisiana Mineral Code defines a mineral servitude as "the right of enjoyment of land belonging to another for the purpose of exploring for and producing minerals and reducing them to possession and ownership." La.Rev.Stat. § 31:21. The 1960 agreement does not grant to Humble Oil the right to "explor[e] for and produc[e] minerals and reduc[e] them to possession and ownership"; to the contrary, it explicitly states that the grantee has no ownership interest in the minerals of plaintiffs' property. Accordingly, the 1960 agreement is not a "mineral servitude" within the meaning of the Louisiana Mineral Code.
Article 11 of the Mineral Code imposes obligations only on owners of "mineral rights." "The basic mineral rights that may be created by a landowner are the mineral servitude, the mineral royalty, and the mineral lease." La.Rev.Stat. § 31:16. As explained above, the 1960 agreement is not a mineral servitude. Nor is it a mineral royalty ("the right to participate in production of minerals from land owned by another or land subject to a mineral servitude owned by another," La. Rev Stat. § 31:80), or a mineral lease ("a contract by which the lessee is granted the right to explore for and produce minerals," La. Rev Stat. § 31:114). Instead, the agreement merely granted Humble Oil the right to erect facilities on plaintiffs' property that would allow it to transport certain minerals over the property.
Plaintiffs do not appear to dispute either Exxon's premise — that the 1960 agreement does not convey a mineral right — or its conclusion — that neither article 11 nor article 22 applies to this case by virtue of the 1960 agreement. Instead, plaintiffs merely point out that the 1960 agreement is a personal servitude of use (if not a mineral servitude) and that articles 576 and 577 of the Louisiana Civil Code impose certain obligations on the holders of personal servitudes. But this argument is beside the point. The Court has already held that plaintiffs plausibly alleged that defendants violated their obligations as servitude holders under articles 576 and 577,
In sum, the Court revises its April 1 Order in one narrow respect: the Court holds that plaintiffs have not plausibly alleged that Exxon violated the implied obligations of mineral servitude holders set forth in Louisiana Mineral Code articles 11 and 22.
