October 22, 2014

TX Supreme Court Won’t Hear Pipeline Case

Cash award for loss of property value due to pipeline allowed to stand
By Jennifer Hiller, Fuel Fix, Feb. 24, 2013

A McMullen County family that has battled a pipeline company since 2009 continued to prevail in court last week.

The Texas Supreme Court denied LaSalle Pipeline LP’s request to review a $605,000 jury award, granted when jurors agreed with the landowner that the rest of the ranch — not simply the portion the pipeline itself traverses — would be devalued by the presence of a pipeline.

Pipeline attorneys have been watching the case since a San Antonio appellate court upheld the jury award.

The case created a precedent for ensuring that pipeline firms pay something for the diminished value of the so-called “remainder” property that isn’t taken under an easement. And it caused pipeline companies to offer more money for easements.

“It was a controversial decision at the time. Landowners don’t have a lot of alternatives or remedies,” said San Antonio attorney Corbin Snow, who represented the Donnell family at trial. “This case did raise the bar.”

LaSalle Pipeline LP — which has the right of eminent domain — laid a 16-inch, 52-mile pipeline that crossed two tracts of McMullen County land owned by Donnell Lands LP, a family partnership.

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The Donnells have lived in McMullen County, about 80 miles southwest of San Antonio, since the 1870s, and James Donnell Jr. runs the family’s ranching business. He said in trial said the fact that the pipeline cut through the middle of the property and that the pipeline company could do what it wanted with the easement would be a factor in any future sale.

“It’s a black mark on my deed,” Donnell said in court. “It’s there for eternity from now on.”

Prior to the trial, a special judge-ordered commission had assessed $226,055 in damages against LaSalle for the easement.

An appraiser hired by Donnell Lands and Donnell testified that the property value loss, including about 4.4 miles of permanent easement and the remainder damages, was about $900,000.

But the appraiser for LaSalle said there was no objective, comparable sales data in the county to show pipelines hurt sales prices, and that there was no damage to the remainder.

A McMullen County jury found LaSalle liable for about $19,000 in workspace easements, $34,500 for the permanent easements and about $605,000 for the loss in value of the remainder tracts.

LaSalle appealed, a San Antonio appellate court knocked down the award by $12,000, and LaSalle appealed again, saying the award was based on “speculative mathematical gymnastics” and that some of the jurors were biased in favor of the Donnells because they’re a local family.

The pipeline company said in court filings that the appellate decision “will eviscerate the ability of entities with the power of eminent domain to undertake public projects with any certainty as to the costs involved.”

The Houston-based attorney for LaSalle Pipeline couldn’t be reached for comment.

The industry also has been watching a Beaumont-area case, Texas Rice Land Partners Ltd. and Mike Latta v. Denbury Green Pipeline-Texas LLC. A Texas Supreme Court opinion in August 2011 in that case made clear that landowners can challenge in court over whether a pipeline is a “common carrier” — one that also moves product for other companies — or is a private line, which wouldn’t have eminent domain rights to take private property.