Gas Pipeline Outside the Easement Did Not Result in Damages

The Fifth Circuit recently denied a landowner damages in their suit against a pipeline company. In Mary v. QEP Energy Co., No. 21-30195 (5th Cir. 2022) the Louisiana landowner had given the pipeline company an easement on their property. The easement had a right angle turn in it. Hard to imagine why the pipeline company agreed to this since pipelines really can’t be installed at right angles. At any rate, when the pipeline was laid, it “cut the corner” at the right angle and was laid partially outside the easement. 31 feet of one pipeline and 15 feet of the other were outside the easement.

The landowner sued for removal of the encroaching pipelines and disgorgement of all profits the pipeline company made from the gas that flowed through the pipeline. The Fifth Circuit held that the landowner could request removal of the pipelines or claim ownership of the portion of the pipelines outside the easement, subject to the pipeline company’s right to receive reimbursement for the current value of the materials and labor or the enhanced value of the land. However, regarding disgorgement of profits, the Court held that “Disgorgement in this circumstance is limited to the additional profits QEP earned, if any, as a direct result of installing the … (p)ipelines partly outside the servitude boundary, as compared to the profits QEP would have earned if it had installed the pipelines entirely within the servitude. ” The Court refused to hold that the landowner was entitled to all profits from gas flowing through the pipelines. Since the landowner did not offer any evidence of additional, incremental, profit due to the misplaced pipelines, the landowner’s claim for disgorgement was denied.

 

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