Angus Chemical Co v. Glendora Plantation Inc

Filing 147

RULING re 62 APPEAL OF MAGISTRATE JUDGE DECISION to District Judge re 56 Order on Motion to Compel filed by Glendora Plantation Inc. Signed by Judge Robert G James on 7/23/15. (crt,DickersonSld, D)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
MONROE DIVISION
ANGUS CHEMICAL COMPANY

CIVIL ACTION NO. 12-1656

VERSUS

JUDGE ROBERT G. JAMES

GLENDORA PLANTATION, INC.

MAG. JUDGE KAREN L. HAYES
RULING

Pending before the Court is the “Appeal to District Judge and Objections to Magistrate
Judge’s Memorandum Order” (“Appeal”) [Doc. No. 62] filed by Defendant and Plaintiff-inCounterclaim Glendora Plantation, Inc. (“Glendora”). For the following reasons, Glendora’s
Appeal is DENIED.
I.

FACTS, PROCEDURAL HISTORY, AND PRIOR RULINGS
Plaintiff Angus Chemical Company (“Angus”) owns an 80-acre facility in Sterlington,

Louisiana, where the plant produces nitroparaffin products. This case concerns Angus’s rights to
transport wastewater from the plant via an underground pipeline on the land belonging to
Glendora under a March 28, 1978 “Right of Way Easement Option” executed with the prior
landowners.1 On August 31, 1978, Angus’s predecessor, IMC, exercised the option which then
became the Right-of-Way Agreement.
In 2007, Angus’s 12" pipeline leaked wastewater because of cracks in the pipeline.
Instead of replacing the pipeline, Angus performed above-ground inspections of the property

1

The facts in this case were set forth in detail in the Magistrate Judge’s Order, previous
rulings of this Court, and in the opinion of the United States Court of Appeals for the Fifth
Circuit, all of which the Court incorporates by reference.

where the pipeline was buried. When the pipeline leaked again in 2010, Angus began taking steps
to replace it.
On December 11, 2011, the pipeline ruptured, which caused wastewater to spill onto
Glendora’s property. After the spill, Angus temporarily shut down the wastewater transfer pumps
and constructed an earthen dam to prevent impact to surface waters. Angus and its contractors
also took steps to remediate the effects of the spill.
On June 14, 2012, Angus filed the instant Complaint, seeking a declaratory judgment that
Angus has a valid servitude under the Right-of-Way Agreement; that it had the right to abandon
the 12" pipeline once a new pipeline was in place; that it had the right to lay the pipeline, cables,
and tracer wire; that the servitude would be fifty feet in width during construction and thirty feet
in width thereafter (fifteen feet on either side of the center line of the original pipeline); and that it
had (and continues to have) right of ingress and egress. Alternatively, Angus prayed for a
declaratory judgment that it obtained the servitude via acquisitive prescription.
Glendora filed an answer and counterclaim, arguing that Angus had no right to install
additional lines or fiber optic cables adjacent to the new pipeline, nor did it have the right to
abandon the existing pipeline. Glendora prayed for a declaratory judgment on these issues and
also sought damages for trespass, as well as damages for agricultural losses, soil degradation,
cleanup costs, and remediation as a result of the December 11, 2011 pipeline rupture and
wasterwater spill. Finally, Glendora sought an order compelling Angus to remove that portion of
the pipeline located in a different area from the drawing attached to the Option.
While the lawsuit was pending, Angus installed a new 16" pipeline on Glendora’s property
on or about August 17, 2012, along with two fiber optic cables running parallel to the 16" pipeline
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and a tracer wire located on top of the pipeline. Between October 3 and November 12, 2012,
Angus cleaned, plugged and abandoned the old 12" pipeline. Angus did not precision level the
pipeline right of way after installing the 16" pipeline.
On October 25, 2012, Glendora amended its counterclaim to allege that Angus violated the
Right-of-Way Agreement by conducting construction outside the thirty foot right of way and by
using the right of way for two pipelines. Glendora also alleged that Angus’s action constituted a
bad faith trespass. Glendora sought damages for land leveling, ditching, the substitution of lesser
quality topsoil, and road damage.
On February 5, 2013, Glendora propounded discovery requests to Angus in which it
sought discovery of the gross income, net income, and total profit, as well as daily, weekly, biweekly, monthly, and/or yearly profit and loss statements for the Sterlington facility for the time
period between Angus’s commencement of construction on the 16" pipeline through the present.
Angus objected to the discovery requests as irrelevant and not reasonably calculated to
lead to the discovery of admissible evidence.
On March 5, 2013, Glendora filed a Motion to Compel First Supplemental Discovery
Responses from Angus (“Motion to Compel”) [Doc. No. 23]. Glendora sought a court order
compelling Angus to respond to its discovery requests seeking the requested income information
and profit and loss statements. Relying on Williams Land Co., LLC v. BellSouth
Communications, Inc., Nos. Civ. A. 02-1628, Civ. A. 02-1629, 2003 WL 1733529 (E.D. La. Mar.
28, 2003), Glendora argued that it was entitled to this discovery because Angus is a bad faith
trespasser by virtue of its installation of the 16" pipeline partially outside the drawing attached to
the Option and because it abandoned, rather than removed, the original 12" pipeline. Thus, as in
3

the Williams case, Glendora argued that it is entitled to this discovery because it has a viable claim
for damages for all of Angus’s profits at the Sterlington facility. See id. at *1 (citing Corbello v.
Iowa Prod., 850 So. 2d 686, 709 (La. 2003) (superseded by statute on other grounds as explained
in State v. Louisiana Land and Exploration Co., So.3d , 2013 WL 360329 (La. Jan. 30, 2013)).
On March 27, 2013, Angus filed a memorandum in opposition to the Motion to Compel.
[Doc. No. 39], as well as a Motion for Partial Summary Judgment [Doc. No. 40] which contained
overlapping arguments. In its opposition memorandum, Angus argued that it is not a bad faith
trespasser, but that, even if it were, Glendora was not entitled to the requested discovery because
Angus derives no profit from the wastewater pipeline passing through the property.
On April 8, 2013, Glendora filed a Motion for Partial Summary Judgment [Doc. No. 50].
On April 9, 2013, Glendora filed a reply memorandum in support of its Motion to Compel.
Glendora argued, again, that Angus is a bad faith trespasser. In addition to the other bases cited,
Glendora then argued that Angus’s installation of two fiber optic cables also constituted trespass.
Glendora argued that the wastewater pipeline is “directly related” to Angus’s production and
profits, and, therefore, it was entitled to the requested discovery.
On April 21, 2013, Glendora filed an opposition memorandum to Angus’s Motion for
Partial Summary Judgment. [Doc. No. 55].
On April 22, 2013, Magistrate Judge Karen L. Hayes issued a Memorandum Order [Doc.
No. 56] denying Glendora’s Motion to Compel based on her analysis of the asserted claims under
Corbello:
In Corbello . . ., the Louisiana Supreme Court held that a possessor in bad faith is
liable to the land owner for the profits generated by its operations on the premises.
. . . The court further recognized that when a lease expires, the lessee’s continued
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possession of the premises constitutes a trespass, and that once the lessee becomes
fully aware that it has no legal rights to continue to occupy the premises, the former
lessee becomes a possessor in bad faith liable for profits earned on the premises.
Corbello, supra.
[Doc. No. 56, p. 10]. Applying Corbello, Magistrate Judge Hayes found that Glendora was not
entitled to recover Angus’s profits as damages and thus is not entitled to the requested discovery.
First, she found that IMC/Angus’s construction of a portion of the original 12" pipeline outside of
the drawing attached to the Option would not constitute a bad faith trespass. The Option granted
IMC/Angus the right to construct a pipeline along a route selected by IMC/Angus, and there is no
evidence that Glendora’s predecessors in interest objected to the location. Without evidence that
IMC/Angus acted in bad faith at the time of installation or that Glendora or its predecessors
sustained any material damage as a result of the pipeline’s deviation, Magistrate Judge Hayes
found that disgorgement of profits was not an available remedy. Id. at p.11 (citing SGC Land,
LLC v. Louisiana Midstream Gas, Civ. Act. No. 10-1778, 2013 WL 1282458 (W.D. La. Mar. 28,
2013) (Hicks, J.)).
Second, Magistrate Judge Hayes found that Glendora could not recover lost profits based
on the fact that there are two pipelines on Glendora’s land. Glendora did not contest Angus’s
right to have a single wastewater pipeline operating (i.e., to replace the 12" pipeline with a larger
16" pipeline), so she found that the 12" abandoned pipeline would be “the infringing pipeline.”
[Doc. No. 56, p. 12]. However, the 12" pipeline was plugged and not in use, so it could not
generate “any income for Angus, and does not provide a basis for Glendora to recover Angus’s
profits generated by its Sterlington Plant.” Id.
Finally, Magistrate Judge Hayes found that Angus’s argument that the installation of tracer

5

wire and two fiber optic cables along the pipeline constituted a bad faith trespass was “not
well-taken.” Id. She concluded that under the Right-of-Way Agreement Angus had the right to
install both the pipeline and “‘all incidental equipment and appurtenances . . . and other necessary
and convenient installations . . .. ’” Id. (quoting [Doc. No. 7-1]). Further, even if the installations
were not permitted under the Right-of-Way Agreement, like the allegedly infringing 12" pipeline,
she found that “there is no indication, or argument, that these ancillary installations are vital to, or
directly related to Angus’s profit generating activities at the Sterlington facility.” Id.
On April 29, 2013, Angus filed an opposition memorandum to Glendora’s Motion for
Partial Summary Judgment. [Doc. No. 59].
On May 6, 2013, Glendora filed the instant Appeal of Magistrate Judge Hayes’ Order
[Doc. No. 62], which was set before the undersigned. [Doc. No. 63].
On May 28, 2013, Angus filed a memorandum in opposition to the Appeal. [Doc. No. 67].
On June 4, 2013, Glendora filed a supplemental memorandum in opposition to Angus’s
Motion for Partial Summary Judgment.
On June 5, 2013, the Court issued an order [Doc. No. 75] granting in part and denying in
part Glendora’s Motion to Continue Hearings [Doc. No. 65] on the cross-motions for partial
summary judgment until the close of discovery. The Court required the parties to file any
supplemental briefs or evidence no later than August 7, 2013, and notified them that the Court
would consider the cross-motions for partial summary judgment and the pending Appeal on
August 8, 2013. [Doc. No. 75].
On June 18, 2013, Angus filed a supplemental memorandum in support of its Motion for
Partial Summary Judgment. [Doc. No. 77].
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On August 7, 2013, Glendora filed supplemental memoranda in opposition to Angus’s
Motion for Partial Summary Judgment [Doc. No. 78] and in support of its Appeal [Doc. No. 79].
On November 20, 2013, the Court issued a Ruling and Judgment [Doc. Nos. 86 and 87]
granting Angus’s Motion for Partial Summary Judgment [Doc. No. 40] and denying Glendora’s
Motion for Partial Summary Judgment [Doc. No. 50]. The Court ruled (1) that Angus has a valid
and enforceable servitude through the property of Glendora; (2) that the Right-of-Way Agreement
created a personal servitude of rights of use; (3) that Angus had the authority under the agreement
to construct the 16" pipe and abandon the original 12" pipeline in place; and (4) that Angus had
the authority under the agreement to install fiber optic cables and tracer wires. In light of these
determinations, the Court declined to reach Glendora’s arguments regarding trespass or trespass in
bad faith.
On the same day, November 20, 2013, the Court issued an order denying the Appeal of
Magistrate Judge Hayes’ order on the Motion to Compel [Doc. No. 88].
On April 8, 2014, the parties reached a settlement on Glendora’s claim for damages arising
from the wastewater spill, but Glendora reserved its rights to appeal the Court’s November 20,
2013 Ruling and Judgment. [Doc. No. 129].
On April 30, 2014, Glendora filed a notice of appeal [Doc. No. 134] in which it gave
notice of its intent to appeal to the United States Court of Appeals for the Fifth Circuit the Court’s
orders on the cross-motions for summary judgment, Magistrate Judge Hayes’ order on the Motion
to Compel, and the Court’s order denying the Appeal of Magistrate Judge Hayes’ order.
On March 24, 2015, the Fifth Circuit issued an Opinion on the appeal. [Doc. No. 136].
The Fifth Circuit found it “undisputed” that Angus could replace the 12" pipeline with the 16"
7

pipeline, but found that the term “replace” in the Right-of-Way Agreement was ambiguous, and,
thus, “there is a material fact issue as to whether the Agreement requires the removal of the 12"
pipeline, and on that basis,” the Fifth Circuit concluded that the award of partial summary
judgment to Angus was improper. [Doc. No. 136, pp. 10-11]. Thus, the Fifth Circuit vacated this
Court’s grant of partial summary judgment to Angus “as to this issue.” [Doc. No. 136, p. 13].
Although not necessary since it had vacated the Court’s grant of partial summary judgment
to Angus, the Fifth Circuit went on to address Glendora’s argument that Angus is operating and/or
maintaining two pipelines in violation of the Right-of-Way Agreement. Glendora argued that this
Court had improperly rejected evidence that the 12" pipeline was intended to be used and is being
used as a “backup” to the 16" pipeline. [Doc. No. 136, p. 15]. However, the Fifth Circuit
concluded “that the terms ‘operate’ and ‘maintain’ are clear such that we need not consider this
evidence. Applying the accepted definitions of the terms ‘operate’ and ‘maintain,’” the Fifth
Circuit concluded “that, at the present time, Angus is neither operating nor maintaining two
pipelines.” [Doc. No. 136, p. 15]. The Fifth Circuit reiterated that it had found “ambiguity
concerning the term ‘replace,’” and that it was on this basis that the Court’s granting of partial
summary judgment to Angus was vacated.
Additionally, the Fifth Circuit considered and rejected Glendora’s argument that Angus
had no authority under the Right-of-Way Agreement to install fiber optic cables. The Fifth Circuit
agreed with this Court that the agreement was “sufficiently clear” that the “installation of fiber
optic cables was proper” and thus affirmed the Court’s ruling on this issue. [Doc. No. 136, p. 16].
Finally, the Fifth Circuit considered the Court’s denial of Glendora’s appeal of Magistrate
Judge Hayes’ order denying its Motion to Compel. As the Fifth Circuit correctly finds, this Court
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“did not address Glendora’s arguments about how the magistrate judge erred in denying the
motion [to compel.] Because of this and because [the Fifth Circuit was] remanding the case of the
basis of the [other] determinations,” the Fifth Circuit remanded the Motion to Compel for the
Court’s consideration. [Doc. No. 136, p. 16]. The Fifth Circuit “express[ed] no opinion as to the
motion.” Thus, in summary, the Fifth Circuit vacated the Court’s grant of partial summary
judgment to Angus, affirmed the Court’s holding that Angus had authority to install fiber optic
cables, and remanded for consideration of Glendora’s Motion to Compel and “for further
proceedings consistent with [the O]pinion.” [Doc. No. 136, pp. 16-17].
The mandate issued on April 15, 2015. [Doc. No. 136]. In light of the mandate, the Court
referred the remanded case to Magistrate Judge Hayes for a scheduling conference. The
conference was held on April 30, 2015. At that time, counsel disagreed as to the effect of the
Fifth Circuit’s opinion on Glendora’s motion to compel discovery. [Doc. No. 141]. Magistrate
Judge Hayes ordered counsel to file supplemental briefs no later than June 1, 2015. She also
ordered that a new scheduling order issue, setting a jury trial for January 11, 2016.
On June 1, 2015, Glendora and Angus filed supplemental memoranda regarding the
outstanding Appeal of the Magistrate Judge’s order on Glendora’s Motion to Compel. [Doc. Nos.
143 & 144].
The Court is now prepared to rule.
II.

LAW AND ANALYSIS
A.

Standard of Review

Although the Fifth Circuit referred to this remand as a reconsideration of Glendora’s
Motion to Compel, that motion was considered and ruled on by Magistrate Judge Hayes. The
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Fifth Circuit noted that this Court had not addressed Glendora’s arguments regarding Magistrate
Judge Hayes’ alleged errors. Procedurally, the Appeal of that Order is now what is before the
Court.
An motion to compel is a non-dispositive pre-trial matter. Under 28 U.S.C. §
636(b)(1)(A) and Rule 72(a), the Court reviews a magistrate judge’s rulings on non-dispositive
matters only to determine whether they are clearly erroneous or contrary to law.
B.

Discovery of Angus’s Profits

Under Rule 26(b), a party “may obtain discovery of any nonprivileged matter that is
relevant to any party’s claim or defense . . . Relevant information need not be admissible at trial if
the discovery appears reasonably calculated to lead to the discovery of admissible evidence.”
FED. R. CIV. P. 26(b)(1). See FED. R. CIV. P. 33 & 34 (permitting the service of interrogatories and
requests for production, respectively, for information and/or documents from another party within
the scope of Rule 26(b)). A party moving to compel discovery may move for relief under Rule
37(a)(3)(B).
In this case, Glendora moved for an order compelling Angus to produce the requested
profit and loss information and documents on the basis that it can recover these damages if it
prevails on its claim of bad faith trespassing. Applying Corbello, Magistrate Judge Hayes denied
Glendora’s motion because she found that (1) IMC/Angus’s construction of a portion of the
original 12" pipeline outside of the drawing attached to the Option would not constitute a bad
faith trespass, (2) Glendora could not recover lost profits based on the abandonment of the 12"
pipeline when that pipeline was plugged and not in use and could not generate any income for
Angus, and (3) Angus’s installation of tracer wire and two fiber optic cables did not constitute a
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bad faith trespass and these appurtenances were not apparently “vital to, or directly related to
Angus’s profit generating activities at the Sterlington facility.” [Doc. No. 56, pp. 11-12].
In its supplemental memorandum, Glendora argues that Magistrate Judge Hayes stated in
her Order that if the Court resolved the issues in its favor or if the Court “otherwise determines
that genuine issues of material fact preclude summary disposition in favor of Angus then, of
course, the requested discovery will be deemed relevant and subject to production without further
ado.” [Doc. No. 56, p. 13 n.10; Doc. No. 143, pp. 1-2 (quoting same)]. Because the Fifth Circuit
has now reversed the Court’s grant of partial summary judgment to Angus and found genuine
issues of material fact for trial whether the 12" pipeline had to be removed under the Right-ofWay Agreement, Glendora contends that it is now entitled to the requested discovery. Glendora
recounts the alleged facts leading up to Angus’s construction installation of the 16" pipeline and
failure to remove the 12" pipeline, arguing that these facts constitute evidence that Angus’s
trespass was in bad faith.
Angus also filed a supplemental memorandum. Angus argues that the footnote cited by
Glendora is inapplicable because Magistrate Judge Hayes spoke to actions by this Court, and this
Court “has never resolved issues of ‘bad faith’ trespass in favor of Glendora nor did the District
Court deny summary disposition to [Angus].” [Doc. No. 144, p. 3]. Likewise, Angus points out
that the Fifth Circuit’s Opinion “makes no mention of the phrase ‘bad faith trespass.’” Id. at p. 4.
Angus argues further that the Fifth Circuit’s Opinion has no effect on Magistrate Judge Hayes’
Order denying the Motion to Compel. Specifically, Angus contends that the Fifth Circuit found
only that there is ambiguity in the Right-of-Way Agreement precluding summary judgment on
whether Angus’s right to “replace” a pipeline includes a corresponding duty to remove the old
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pipeline. This ruling, according to Angus, does not affect Magistrate Judge Hayes’ determination
that only the 16" pipeline is being used to transport substances, that the alleged “‘infringing’” 12"
pipeline is plugged and not in use, the 12" pipeline is not generating income for Angus, and, thus,
this pipeline “‘does not provide a basis for Glendora to recover Angus’s profits generated by its
Sterlington plant.’” Id. at pp. 6-7 (quoting [Doc. No. 56, p. 12]).
The Fifth Circuit remanded Glendora’s Motion to Compel to allow this Court to conduct a
substantive review of Magistrate Judge Hayes’ Order, but expressed no opinion as to whether the
Appeal should be granted or denied. To conduct its substantive review, the Court compared the
Fifth Circuit’s Opinion to Magistrate Judge Hayes’ analysis in the Order denying the Motion to
Compel. In its Opinion, the Fifth Circuit found that it was “undisputed that the 16" pipeline could
replace the 12" pipeline.” [Doc. No. 136, p. 12]. Therefore, the only “ambiguity in the [Right-ofWay] Agreement” that presents a jury question is “whether the right to ‘replace’ a pipeline
includes an obligation to remove the older pipeline that is being replaced.” [Doc. No. 136, pp. 1213]. The Fifth Circuit was clear that “Angus is neither operating nor maintaining two pipelines”
under “the accepted definitions of the terms ‘operate’ and ‘maintain’” merely because there is a
capped off and abandoned pipeline in the right of way. [Doc. No. 136, p. 15]. Consistent with the
Fifth Circuit’s Opinion, Magistrate Judge Hayes denied the Motion to Compel, in part, because
the 12" pipeline was capped off and not in use, could not generate “any income for Angus, and
does not provide a basis for Glendora to recover Angus’s profits generated by its Sterlington
Plant.” [Doc. No. 56, p. 12].
Having reviewed the Fifth Circuit’s Opinion and the parties’ supplemental memoranda,
the Court finds that Magistrate Judge Hayes’ Order is neither contrary to law nor clearly
12

erroneous. Even assuming arguendo that Glendora has a valid delictual cause of action for bad
faith trespass, rather than a claim that is solely in contractu,2 Magistrate Judge Hayes’ conclusion
that the abandoned pipeline cannot generate income for Angus is not clearly erroneous, and her
conclusion that Glendora has no basis to recover Angus’s profits is not contrary to law. Angus
simply did not and does not profit from the alleged unlawful failure to remove the 12" pipeline.
Cf. Williams, 2003 WL 1733529 at *2 (plaintiff was entitled to “discovery of [bad faith
possessor/trespasser’s] profits from its operations on [plaintiff’s] land”) (emphasis added).3
III.

CONCLUSION
For the foregoing reasons, Glendora’s Appeal [Doc. No. 62] is DENIED, and Magistrate

Judge Hayes’ Order [Doc. No. 56] is AFFIRMED.
MONROE, LOUISIANA, this 23rd day of July, 2015.

2

The Court is aware that Angus has filed a Motion for Partial Summary Judgment [Doc.
No. 145] in which it argues, in part, that its alleged breach of the Right-of-Way Agreement does
not render it a trespasser or bad faith possessor on Glendora’s property. The Court will consider
those arguments once the motion is fully briefed. The Court does not reach this argument in its
ruling on Glendora’s Appeal.
3

Although Glendora cites Williams for support, the Court finds that it, like Corbello,
actually supports Magistrate Judge Hayes’ findings. In both cases, the plaintiff could recover
damages based on the defendant’s profits from its “operations on the premises.” 2003 WL
1733529 at *2; Corbello, 806 So.2d at 39. In this case, there is a valid 16" pipeline operating and
transporting wastewater away from the Sterlington plant. Even if the transportation of
wastewater via this pipeline arguably allows Angus to profit from operations on Glendora’s land
(and that is disputed by Angus), the cut off and capped 12" pipeline is not in operation on
Glendora’s land, and Angus cannot profit from that pipeline.
13