24 F.4th 411
5th Cir.2022Background
- Cynthia Sue Mary and Paul’s Land Co. (the Marys) co-own ~160 acres in Bienville Parish, Louisiana and granted QEP an oil-and-gas lease and later multiple servitudes to install pipelines.
- In 2011 QEP installed two "Pedro Pipelines" to connect the Pedro Well (on adjacent land) to existing Mary Pipelines; about 31 feet of one pipe and 15 feet of the other (≈46 feet total) lay outside the 40-foot L‑shaped servitude.
- The Marys sued, seeking remedies under Louisiana property law, contract, and tort, including removal or acquisition of the encroaching segments and disgorgement of all profits QEP earned from gas transported through the Pedro Pipelines.
- The district court initially granted summary judgment for QEP; this Court reversed on a limited basis and remanded to determine the proper cause of action and whether disgorgement was appropriate.
- On remand the district court held disgorgement unavailable absent evidence of additional profits directly caused by the encroachment; the Marys produced none. The Fifth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs are entitled to disgorgement of all profits QEP earned from gas transported through the Pedro Pipelines | Mary: QEP unlawfully used Mary land (accession/trespass/contract breach) and must disgorge all profits from gas that flowed through the pipelines | QEP: Most use was authorized; disgorgement of all profits is not supported by law and plaintiffs lack evidence of additional profits from the encroachment | Disgorgement, if any, is limited to additional profits attributable to the encroachment; Mary presented no evidence, so disgorgement denied |
| Whether accession/fruits doctrine permits disgorgement of profits from gas produced offsite but transported across Mary land | Mary: Ownership-by-accession of out-of-servitude pipeline segments gives right to profits from unlawful exercise of an exclusive right (fruits) | QEP: Gas is not a "fruit" of the Marys' land and the gas originated on neighbor's land; accession does not support full disgorgement here | Accession may give the Marys ownership of the out-of-bounds segments, but disgorgement is limited to additional profits directly caused by the encroachment; no evidence of such profits |
| Whether disgorgement is an available remedy for breach of contract (servitude terms) | Mary: Breach of the servitude entitles them to disgorgement of profits from the pipelines | QEP: Louisiana contract damages measure loss to obligee and deprivation of profit, but do not mandate disgorgement of defendant's business profits | Disgorgement is not an available remedy for breach of contract under Louisiana law; damages are measured by plaintiff's loss, not mandatory disgorgement |
| Whether disgorgement can be recovered for trespass | Mary: Following Corbello and Rosenthal, trespass/bad‑faith possession permits disgorgement of profits earned from unlawful use of plaintiff's rights | QEP: Tort damages aim to restore plaintiff, not provide a windfall; disgorgement is not generally available absent proof of additional profits from unlawful use | Even if disgorgement could apply to trespass, it would be limited to additional profits caused by the encroachment; plaintiffs offered no evidence, so claim fails |
Key Cases Cited
- Rosenthal-Brown Fur Co. v. Jones-Frere Fur Co., 110 So. 630 (La. 1926) (recognized disgorgement of profits from unlawful exercise of rights on another's land)
- Corbello v. Iowa Production, 850 So.2d 686 (La. 2003) (applied disgorgement principles where bad‑faith possession of leased terminal mixed and sold products)
- Roman Catholic Archdiocese of New Orleans v. Louisiana Gas Service Co., 618 So.2d 874 (La. 1993) (discussed limits of tort damages and restorative, not punitive, nature of recovery)
- Mary v. QEP Energy Co., [citation="798 F. App'x 811"] (5th Cir. 2020) (prior panel decision remanding to identify correct cause of action and whether disgorgement is available)