ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT v. VIOLET DOCK PORT, INC., LLC St. Bernard Port, Harbor & Terminal District v. Violet Dock Port, Inc., LLC St. Bernard Port, Harbor & Terminal District v. Violet Dock Port, Inc., LLC

Supreme Court of Louisiana

FOR IMMEDIATE NEWS RELEASE NEWS RELEASE #005

FROM: CLERK OF SUPREME COURT OF LOUISIANA

The Opinions handed down on the 30th day of January, 2018, are as follows:

BY CRICHTON, J.:

2017-C -0434 ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT v. VIOLET DOCK PORT,

INC., LLC C/W ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT v.

VIOLET DOCK PORT, INC., LLC C/W ST. BERNARD PORT, HARBOR &

TERMINAL DISTRICT v. VIOLET DOCK PORT, INC., LLC (Parish of St.

Bernard)

We affirm the court of appeal’s holding that the expropriation

was constitutional. However, we reverse the court of appeal’s

holding on the amount of just compensation due to Violet under

art. I, § 4(B)(1), after finding that the trial court made a

legal error in its determination of just compensation and the

court of appeal failed to correct that error. We therefore remand

this matter to the court of appeal solely for the purpose of

fixing the amount of just compensation based on the evidence in

the record and in accordance with the principles set forth in

this opinion.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

WEIMER, J., dissents and assigns reasons.

GUIDRY, J., dissents and assigns reasons.

HUGHES, J., dissents for the reasons assigned by Weimer

and Guidry, JJ.

01/30/18

SUPREME COURT OF LOUISIANA

No. 2017-C-0434

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

CONSOLIDATED WITH

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

CONSOLIDATED WITH

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,

FOURTH CIRCUIT, PARISH OF ST. BERNARD

CRICHTON, Justice

Although the Louisiana Constitution generally restricts the government from

expropriating private property, it provides broad exceptions for public port

authorities. To Louisiana’s maritime industry, public ports are critical. Due to market

demands and increasing global competition, public ports must expand in order to

compete. The Louisiana Constitution therefore provides that the government can

expropriate property for “[p]ublic ports . . . to facilitate the transport of goods or

persons in domestic or international commerce.” La. Const. art. I, § 4(B)(2)(b)(vi).

We granted the writ in this matter to determine whether St. Bernard Port,

Harbor & Terminal District’s (the “Port”) expropriation of property owned by Violet

Dock Port, Inc., L.L.C. (“Violet”) on the Mississippi River satisfies the “public

purpose” requirement of art. I, § 4(B)(1) of the Louisiana Constitution and, further,

whether it violates the business enterprise clause of art. I, § 4(B)(6) of the Louisiana

Constitution. For the reasons that follow, we find that the record demonstrates that

the Port’s expropriation was for the public purpose “to facilitate the transport of

1

goods or persons in domestic or international commerce” and not for the

constitutionally prohibited purpose of operating Violet’s enterprise or halting

competition with a government enterprise. We therefore affirm the court of appeal

holding that the expropriation was constitutional. However, we also find the trial

court made a legal error in setting the just compensation due to Violet under art. I,

§ 4(B)(1), and further find that the court of appeal failed to correct that error. We

therefore remand this matter to the court of appeal solely for the purpose of fixing the

amount of just compensation based on the evidence in the record and in accordance

with the principles set forth in this opinion.

BACKGROUND

Maritime trade is a primary mode of transport for national and international

commerce. In the last century, the maritime industry has expanded and modernized.

This includes advancements such as containerization and other improvements that

have ushered in super tankers and mega ships. In other words, more and larger ships

now transport greater amounts of cargo. Such advancements have made public ports,

like the St. Bernard Port, a virtual necessity. To accommodate these changes, ports

must expand and adapt.1

The Port, a public cargo facility in St. Bernard Parish, 2 has consistently

experienced an increased demand for cargo handling since at least 2001. Through a

lease with a Marine Terminal Operator (“MTO”), Associated Terminals, the Port

handles several types of cargo, and has remained one of the busiest ports in the

1

See generally Brief for Lake Charles Harbor & Terminal District, Greater Baton Rouge Port

Commission, Plaquemines Port, Harbor and Terminal District, Board of Commissioners of the

Port of New Orleans, Greater Lafourche Port Commission, Madison Parish Port Commission,

Terrebonne Port Commission, Greater Krotz Springs Port Commission, the Port of South

Louisiana, the Vinton Harbor & Terminal District, West Calcasieu Port, Caddo-Bossier Parishes

Port Commission and Lake Providence Port Commission as Amici Curiae Supporting

Respondents St. Bernard Port, Harbor & Terminal District at 4-6 (collecting sources).

2

The Port is a deep-water public port and a political subdivision of the State of Louisiana. La. R.S.

9:1102.1; 34:1701, et seq. The Legislature has given the Port’s board the power to develop,

maintain, and promote the commerce and traffic of the port district within St. Bernard Parish, thus

facilitating the transport of goods in domestic and international commerce. See La. R.S. 34:1703.

2

country. For example, from 2007-2009, the Port’s cargo included 37% of all the

ferro alloys imported into the United States, 37% of the barite, 10% of the urea, and

3% of the potash. However, the Port began experiencing a shortage of space, and

its customers requested both additional space and a liquid cargo facility. Ultimately,

by 2008, the Port was operating at near capacity, and determined that if it could not

meet its customers’ demands, its operations would suffer. As a result, the Port sought

to expand in order to meet these growing needs.

To support its expansion, the Port identified approximately 75 acres of land

along the Mississippi River (the “Property”). The Port began, as early as 1985, the

arduous process of locating suitable property. Seven or eight different sites were

investigated, and factors such as having a nearby railroad and land for ingress and

egress of trucks were paramount. Compared to other sites along the river, the

Property had many of these critical attributes. The Port determined that the

Property’s relatively straight segment and deep water could handle large cargo ships

better than other sites. Further, there was enough land between the nearby levee and

the existing rail line for the Port to place a cargo facility. At other sites, the levee

was too close to the rail line, which would require the Port to relocate the rail line in

order to build a cargo facility. According to a representative from Associated

Terminals, the Port’s MTO, there was no other space in St. Bernard Parish where a

bulk terminal facility could be constructed on the river.

Violet, a limited liability company, owned the Property. At the date of the

expropriation, the Property had five berths, which were used for berthing and

mooring vessels (i.e., what a Violet representative described as a “parking lot for

ships”) and topside repairs.3 Violet also had a contract with the Military Sealift

3

In 2007, the Property consisted of four docks—three that were inspected and certified by the

Navy for layberthing military ships and one that had deteriorated. In early 2010, Violet began

constructing a fifth berth that would handle cargo. The construction of this fifth berth began in

2010, several years after Violet initially agreed to sell the Property to the Port.

3

Command, a civilian branch of the United States Navy (the “Navy”), to layberth and

service oceangoing ships. In the ten years before the expropriation, Violet’s cargo

operations were described as “negligible.”

A five-member Board of Commissioners, appointed by the Governor, makes

decisions for the Port. 4 In 2007, the Port offered $10 million to purchase the

Property, which Violet rejected. In 2008, the parties tentatively agreed to a sale of

the property for $14 million. Based on this agreement, in order to purchase and

develop the property, the Port applied for funding to the Louisiana Department of

Transportation & Development’s Port Priority Program. In 2010, the Port was

awarded a $15 million grant to acquire the Property.

The Port then had the Property reappraised and, as a result, informed Violet it

would pay the newly appraised fair market value of $16 million. Violet rejected the

Port’s offer, and instead sought $35 million. After this, negotiations failed, and the

Port initiated the expropriation proceedings.

PROCEDURAL HISTORY

The Port initiated this expropriation on December 22, 2010, under the quick-

take expropriation provisions of La. R.S. 19:141, et seq. and deposited $16 million

into the registry of the district court. According to the petition, the expropriation

was for the purpose of expanding the Port’s current port facilities to handle dry-bulk

and liquid-bulk commodities. The petition stated the construction of development of

the Property would occur in three phases and take approximately eight to ten years

to complete. During that time, the petition stated the Port intended to “enter into a

new contract with [the Navy] for its continued use of the Violet Port during Phase I

of the acquisition and development of the [Property].” The petition further stated the

expropriation would “create jobs and benefits to the citizens of St. Bernard Parish.”

4

La. R.S. 34:1702(A).

4

Violet thereafter removed the case to federal court and moved to dismiss the

petition for expropriation. Violet’s primary basis for alleging federal jurisdiction was

under the federal officer removal statute, 28 U.S.C. § 1442(a)(1). See St. Bernard

Port, Harbor & Terminal Dist. v. Violet Dock Port, Inc., LLC, 809 F. Supp. 2d 524,

529 (E.D. La. 2011) (Vance, C.J.) (“St Bernard Port Federal”). Because of Violet’s

contract with the Navy, Violet argued the Port’s expropriation was for an act under

color of federal law.5 Id. at 531. However, to trigger federal jurisdiction, Violet

needed to prove there was a causal nexus between the expropriation and Violet’s

federal activity with the Navy contract. Id. Chief Judge Sarah Vance rejected this

argument, finding that Violet failed to prove this nexus:

Although Violet asserts that [the Port] is, in fact, expropriating the

property primarily to take over performance of its contract with the

[Navy], that argument does not explain [the Port’s] expropriation of the

entirety of Violet’s property, as Violet’s contract with [the Navy]

implicates only one of Violet’s five berths and only a fraction of the 70

acres [the Port] seeks to expropriate. Nor has Violet submitted

anything, other than its own characterization, to suggest that acquisition

of the [Navy] property was the primary motivating cause of this 70 acre

expropriation.

Id. at 531 (footnote omitted). The federal court remanded the case to state court. Id.

at 538.

Following remand, the trial court held a hearing to consider the public purpose

of the expropriation. The trial court heard testimony, reviewed the evidence, and

evaluated the credibility of the witnesses. At the hearing, Violet again argued that

the Port’s true purpose in expropriating the Property was to take over the Navy lease.

The Port contended otherwise. According to the Executive Director of the Port: “As

far as the lease with the Navy . . . it’s an afterthought. . . . [T]hat’s certainly not one

of our goals.” Similarly, a representative from Associated Terminals, the Port’s

MTO, stated: “[T]he best news for [us] is that the Navy would leave, because we

5

Section 1442(a)(1) permits removal only when “[t]he United States or any agency thereof . . .” is

“sued in an official or individual capacity for any act under color of such office.”

5

want the use of the berth to handle cargo, and that’s the best berth, the one that

they’re [the Navy] presently tied to.” He further stated: “We’re not in the ship

berthing business. We’re in the cargo business.” In contrast, Violet’s representative

stated that in the decade before the expropriation it had handled “probably no cargo

. . . . There may have been some negligible cargo.”

After the hearing, the trial court rejected Violet’s argument that the

expropriation was for the purpose of taking the Navy lease. In granting the Port’s

petition, the trial court stated that the Port took the Property to “build and operate a

terminal to accommodate transport of liquid and solid bulk commodities into

national and international commerce to and from St. Bernard.” This judgment was

based on the trial court’s firsthand credibility determinations after hearing testimony

from various witnesses. Among these was of the Port’s Executive Director, who

testified about the Port’s need for space. According to his testimony, the Port’s cargo

tonnage in the previous ten years had grown sevenfold. Consistent with this

evidence, the trial court also stated the expropriation was a “logical extension of port

services in St. Bernard.” From this ruling, Violet applied for writs of certiorari. Both

the Fourth Circuit Court of Appeal and this Court denied Violet’s writ applications.

St. Bernard Port, Harbor & Terminal Dist. v. Violet Dock Port, Inc., LLC, 12-0417

(La. App. 4 Cir. 5/16/12); 12-1122 (La. 5/30/12), 90 So. 3d 419.

The case proceeded to a trial on valuation. The trial court found just

compensation to be $16 million. 6 At trial, the Port’s experts testified that the highest

and best use of the Property was continued layberthing plus limited aggregate

operations, valuing the Property at $16 million. Violet’s experts maintained that the

highest and best use of the Property was as a cargo facility. Violet argued that it

6

This July 31, 2015 judgment came after a trial, completed piecemeal, beginning on September

24, 2013 and concluding on November 11, 2014.

6

should be compensated between $51 million and $67 million. 7 The trial court

rejected the highest and best use and valuation opinions of Violet’s experts, citing

physical limitations that it alleged rendered the Property unsuitable for very large-

scale cargo use, including: (a) water depth at the docks; (b) proximity to school and

residential areas; (c) limited amount of uplands available for cargo; and (d)

configuration of the Property. Consequently, the trial court found just compensation

to be $16 million.

On appeal, a divided court of appeal panel affirmed. As to the Port’s petition

for expropriation, the majority stated: “Although the authority granted to the ports

of Louisiana in the expropriation of private property is exceptionally broad, it is

supported by the constitution and statutes of the State.” St. Bernard Port, Harbor &

Terminal Dist. v. Violet Dock Port, Inc., LLC, 16-96, 16-262, 16-331, p.7 (La. App.

4 Cir. 12/14/16) (“St. Bernard Port I”), 229 So. 3d 626. In affirming the trial court’s

just compensation award, the majority found the record supported the trial court’s

ruling. Id. at p.10. It further noted that ‘[w]here there are two permissible views of

the evidence, the factfinder’s choice between them cannot be manifestly erroneous

or clearly wrong.” Id. One judge dissented, finding that the expropriation was

unconstitutional. Id. at p.15 (Lobrano, J., dissenting). After Violet sought rehearing,

the court of appeal denied the request. St. Bernard Port, Harbor & Terminal Dist. v.

Violet Dock Port, Inc., LLC, 16-96, 16-262, 16-331, p. 7 (La. App. 4 Cir. 2/8/17), --

So. 3d -- (“St. Bernard Port II”), 2017 WL 526160.

This Court granted Violet’s writ application. 17-0434 (La. 5/26/17), 221 So.

3d 853.

DISCUSSION

7

To this Court, Violet argued that “just compensation” is $28,764,685.00 or $41,084,000.00,

which were values that Violet derived from testimony of the Port’s experts, having apparently

abandoned the conclusions of its own experts.

7

Authorization for expropriations by a government body—and important

limitations placed upon those authorizations—are found in both the federal and state

constitutions. See South Lafourche Levee Dist. v. Jarreau, 16-0788, 16-0904, p.8-9

(La. 3/31/17), 217 So. 3d 298, 305, cert. denied, 138 S. Ct. 381, -- U.S. -- (10/31/17).

More specifically, the Fifth Amendment of the United States Constitution, made

applicable to the states pursuant to the Fourteenth Amendment, provides: “No person

shall . . . be deprived of life, liberty or property without due process of law; nor shall

private property be taken for public use, without just compensation.” Likewise, the

Louisiana Constitution provides “[p]roperty shall not be taken or damaged by the

state or its political subdivisions except for public purposes and with just

compensation . . . .” La. Const. art. I, §4(B)(1). Therefore, under both Constitutions,

any expropriation must be for a “public purpose” and provide “just compensation.”

To review these determinations, we start with the constitutional provisions at

issue. Arrow Aviation Co., L.L.C. v. St. Martin Parish Sch. Bd. Tax Sales Dept., 16-

1132, p.4 (La. 12/6/16), 218 So. 3d 1031, 1035 (“When a constitutional provision is

plain and unambiguous and its application does not lead to absurd consequences, its

language must be given effect.”). We then review the record to determine whether

the trial court’s factual findings were manifestly erroneous. See Exxon Mobil

Pipeline Co. v. Union Pac. R. Co., 09-1629, p.12 (La. 3/16/10), 35 So. 3d 192, 200

(“Whether the expropriator’s purpose is public and necessary is a judicial

determination that will not be reversed on appeal absent manifest error.”).

Public Purpose

In 2005, the United States Supreme Court decided the case Kelo v. City of

New London, 545 U.S. 469 (2005) which expressly upheld a taking for economic

development purposes. 8 Following Kelo, in 2006, voters of Louisiana approved a

8

In Kelo, the Supreme Court held that the city of New London’s proposed development plan to

revitalize an economically distressed city, including its downtown and waterfront areas, qualified

as a “public use” within the meaning of the Takings Clause of the Fifth Amendment to the United

8

constitutional amendment enumerating permissible “public purposes” for a political

subdivision to expropriate private property. As amended, art. I, § 4 provides, in

pertinent part:

Section 4. (A) Every person has the right to acquire, own, control, use,

enjoy, protect, and dispose of private property. This right is subject to

reasonable statutory restrictions and the reasonable exercise of the

police power.

(B)(1) Property shall not be taken or damaged by the state or its political

subdivisions except for public purposes and with just compensation

paid to the owner or into court for his benefit. Except as specifically

authorized by Article VI, Section 21 of this Constitution property shall

not be taken or damaged by the state or its political subdivisions: (a) for

predominant use by any private person or entity; or (b) for transfer of

ownership to any private person or entity.

(2) As used in Subparagraph (1) of this Paragraph and in Article VI,

Section 23 of this Constitution, “public purpose” shall be limited to the

following:

* * *

(b) Continuous public ownership of property dedicated to one or more

of the following objectives and uses:

* * *

(vi) Public ports and public airports to facilitate the transport of goods

or persons in domestic or international commerce.

* * *

(6) No business enterprise or any of its assets shall be taken for the

purpose of operating that enterprise or halting competition with a

government enterprise. . . .

(Emphasis added.)

In other words, the Louisiana Constitution expressly includes “public ports”

as an enumerated “public purpose.” Specifically, a public purpose is defined as

“[p]ublic ports . . to facilitate the transport of goods or persons in domestic or

international commerce.” La. Const. art. I, § 4(B)(2)(b)(vi).9

States Constitution.

9

Public ports are granted additional constitutional authorization to expropriate property for the

development of port facilities. Under art. VI, § 21(A), public ports can acquire land through

expropriation and lease that land. This permits public ports to lease the expropriated property to

9

Consistent with the authority given to public ports to expropriate property, the

trial court made a factual determination that the Port’s purpose for expropriation was

to “build and operate a terminal to accommodate transport of liquid and solid bulk

commodities into national and international commerce to and from St. Bernard.”

This purpose falls squarely within the constitutional definition of “public purpose”

for public ports. La. Const. art. I, § 4(B)(2)(b)(vi). Based on the record before us,

we cannot say that the trial court’s finding was manifestly erroneous, and we

therefore affirm the finding that this expropriation was for a public purpose. We

also find that this expropriation satisfies the broad definition of public purpose under

federal law. See Kelo, 545 U.S. at 479 (“Without exception, our cases have defined

that concept broadly, reflecting our longstanding policy of deference to legislative

judgments in this field.”).

Business Enterprise Clause

Violet also argues that, even if there was a “public purpose” here, the

expropriation violates La. Const. art. I, § 4(B)(6), known as the “business enterprise

clause.” The legislature did not change this provision as part of the 2006

amendments. La. Const. art. I, § 4(B)(6) states:

(6) No business enterprise or any of its assets shall be taken for the

purpose of operating that enterprise or halting competition with a

government enterprise. However, a municipality may expropriate a

utility within its jurisdiction.

(Emphasis added.)

The business enterprise clause requires the court to determine if the

expropriation was “for the purpose of” operating an enterprise or halting competition

with a government enterprise. On this point, the court of appeal majority held that

the trial court was not manifestly erroneous in holding that the business enterprise

another entity that physically handles the operations—a standard practice in the maritime industry.

See also La. Const. art. I, § 4(H)(1) (exempting “leases or operation agreements for port facilities”

from the general prohibition in art. I, § 4(H)(1) that prohibits the State and its political subdivisions

from selling or leasing property which has been expropriated).

10

clause does not apply here from a factual standpoint. Violet contests this holding,

contending that the Port’s expropriation was either to take Violet’s revenue stream

from the Navy lease or to halt competition with Violet’s cargo operations, which it

suggests were growing. 10

First, Violet argues that the purpose of the Port’s expropriation was to take

over Violet’s revenue stream from the Navy lease. Yet testimony at trial was that the

Navy lease was “an afterthought.” Testimony further indicated that the “best news”

for the Port’s operation would be to use the Navy berth to further expand cargo

operations. Our conclusion is buttressed by the fact that the lower courts and the

federal court rejected similar arguments. See St. Bernard Port I, 229 So. 3d at 632

(“Violet Dock argues that the real purpose for the taking was so the Port could

continue to operate its layberthing and cargo facility and obtain the Navy contracts

in violation of La. Const. art. I, § 4(B)(6). . . . We disagree.”); St. Bernard Port II,

2017 WL 526160, at *1 (on rehearing) (“[W]e found that the facts and circumstances

presented by this case simply did not satisfy the requirements of the restrictions of

La. Const. art. I, § 4(B)(6).”); St. Bernard Port Federal, 809 F. Supp. 2d at 531 (“Nor

has Violet submitted anything, other than its own characterization, to suggest that

acquisition of the [Navy] property was the primary motivating cause of this 70 acre

expropriation.”). We likewise do so here.11

Second, Violet argues that the purpose of the Port’s expropriation was to halt

competition. Though Violet argues its cargo operations were growing, the record

10

Violet also argues, as did the dissenting judge in the court of appeal, that the majority

erroneously found the business enterprise clause to be limited by La. Const. art. VI, § 21. In other

words, they claim the court of appeal erroneously held that any expropriation falling under art. VI,

§ 21 is exempted from every provision of art. I, § 4(B). But the majority never made such a holding,

instead making a factual determination regarding the purpose for the expropriation. To the extent

that the court of appeal opinion could be read otherwise, that interpretation is erroneous. See St.

Bernard Port I, 229 So. 3d at 631-32.

11

The Port’s plan to lease the Property to another entity to operate does not change our analysis.

Indeed, the Louisiana Constitution expressly anticipates such a lease. La. Const. art. VI, §

21(A)(c).

11

shows that Violet’s cargo operations were “negligible” and that it did not compete

with the Port. Instead, generally speaking, the businesses of Violet and the Port were

not comparable. Violet was in the layberthing business; the Port was in the cargo

business. The record supports the trial court’s conclusion that the Port experienced

an increasing demand for maritime cargo operations, was at capacity, and sought to

expand its cargo operations.

To review the judgment we examine the entire record, but we will not set aside

the trial court’s judgment in absence of manifest error. Rosell v. ESCO, 549 So.2d

840, 844 (La. 1989). Here, the trial court’s judgment followed an evidentiary

hearing, where the trial court examined evidence, evaluated the credibility of

multiple witnesses, and weighed the probative value of these assertions. As this

Court has stated:

It is well settled that a court of appeal may not set aside a trial court’s

or a jury’s finding of fact in the absence of “manifest error” or unless it

is “clearly wrong,” and where there is conflict in the testimony,

reasonable evaluations of credibility and reasonable inferences of fact

should not be disturbed upon review, even though the appellate court

may feel that its own evaluations and inferences are as reasonable.

Id. at 844. Based upon our consideration of the record before us, we do not find the

trial court’s judgment to be manifestly erroneous or clearly wrong. We therefore

affirm the lower court’s judgment granting the Port’s petition to expropriate.

Just Compensation

As noted above, the Louisiana Constitution provides that any expropriation

must be for a “public purpose” and provide “just compensation.” La. Const. art. I, §

4(B)(1). It further states: “In every expropriation or action to take property pursuant

to the provisions of this Section, . . . , the owner shall be compensated to the full

extent of his loss.” La. Const. art. I, § 4(B)(5). There is no specific formula set forth

by the Legislature to aid courts in determining the “full extent of loss.” The

Constitution states only: “ Except as otherwise provided in this Constitution, the full

12

extent of loss shall include, but not be limited to, the appraised value of the property

and all costs of relocation, inconvenience, and any other damages actually incurred

by the owner because of the expropriation.” Id. 12

La. R.S. 19:9 provides limited guidance as to how to determine the “full extent

of the loss.” It states that the basis of the assessment of value of the property to be

expropriated “shall be the value which the property possessed before the

contemplated improvement was proposed, without deducting therefrom any general

or specific benefits derived by the owner from the contemplated improvement or

work.” La. R.S. 19:9(A). See also Exxon Pipeline Co. v. Hill, 00-2535, 00-2559, p.7

(La. 5/15/01), 788 So. 2d 1154, 1159-60.13 The legislature and courts have

developed rules that accept fair market value of the property as a relevant

consideration in determining just compensation. Id. See also West Jefferson Levee

Dist. v. Coast Quality Constr. Corp., 93-1718 (La. 5/23/94), 640 So. 2d 1258, 1277,

cert. denied, 513 U.S. 1083 (1995). Fair market value, in turn, has consistently been

defined as the price a buyer is willing to pay after considering all of the uses that the

property may be put to where such uses are not speculative, remote or contrary to

law. Id. In assessing the fair market value of an expropriated property, the Court

considers the most profitable use to which the land can be put by reason of its

location, topography, and adaptability. Exxon Pipeline, 00-2535, 00-2559, p.8, 788

So. 2d at 1160. This is known as the “highest and best use” doctrine. Id.

Determining the “highest and best use” of land in expropriation cases involves

several factors, including scarcity of the land available for that use and the use to

which the property was being put at the time of the taking. Id. (setting forth various

12

For a discussion of the legal history of this provision, see Exxon Pipeline Co. v. Hill, 00-2535,

00-2559, p.6 (La. 5/15/01), 788 So. 2d 1154, 1159.

13

See also id., 00-2535, 00-2559, p.18, 788 So. 2d at 1165-66 (Knoll, J., concurring) (“Because

of the important public policies and fundamental rights involved in expropriation cases, it would

be helpful if the Legislature took action to clarify standards for valuation under La. R.S. 19:9.”).

13

factors for courts to consider). See also State, through the Dept. of Highways v.

Bitterwolf, 415 So. 2d 196, 199 (La. 1982), State, through the Dept. of Highways v.

Constant, 369 So. 2d 699, 702 (La. 1979). It is “well established” that the current

use of the property is presumed to be the highest and best use and the burden of

overcoming that presumption by proving the existence of a different highest and best

use based on a potential, future use is on the landowner. Exxon Pipeline, 00-2535,

00-2559, p.8, 788 So. 2d at 1160. Where a landowner overcomes the presumption,

the landowner is entitled to compensation based on a potential use of the property,

even though the property is not being so utilized at the time of the taking, provided

he can show it is reasonably probable the property could be put to this use in the “not

too distant future.” West Jefferson Levee Dist., 640 So. 2d at 1273.

In summary, in this case, the use to which Violet was putting the Property at

the time of the expropriation—here, layberthing—is presumed to be the Property’s

highest and best use. Violet may overcome this presumption by demonstrating, by

a preponderance of the evidence, that the property could be used in a different, more

valuable way, that the potential use is not speculative, and that it could be undertaken

in the “not too distant future.” Exxon Pipeline, 00-2535, 00-2559, p.8-9, 788 So. 2d

at 1160-61; West Jefferson Levee Dist., 640 So. 2d at 1273. Here, the trial court

found that Violet did not overcome that presumption.

Turning to the standard by which we review the trial court’s findings, in an

expropriation proceeding, the trial court’s factual determination as to the value of

the property will not be disturbed in the absence of manifest error. West Jefferson

Levee Dist., 640 So. 2d at 1277. “However, where one or more trial court legal errors

interdict the fact-finding process, the manifest error standard is no longer applicable,

and, if the record is otherwise complete, the appellate court should make its own

independent de novo review of the record and determine a preponderance of the

evidence.” Evans v. Lungrin, 97-0541 (La. 2/6/98), 708 So. 2d 731, 735. See also

14

West Jefferson Levee Dist., 640 So. 2d at 1278. Legal errors occur when a trial court

applies incorrect principles of law and those errors are prejudicial; when such a

prejudicial legal error occurs, the appellate court is required to review the record and

determine the facts de novo. Evans, 640 So. 2d at 735.

Here, we find the trial court used the incorrect standard for evaluating experts’

valuation testimony. Explaining why it accepted the Port’s expert testimony rather

than Violet’s, the court stated: “It is the opinion of this Court that it does not have

the discretion to ‘split the baby’ and arrive at a valuation somewhere in between”

the two expert opinions. This is erroneous. A trier of fact is not required to make a

binary choice and accept one side’s testimony in its entirety, but is instead

empowered to weigh strengths and weaknesses of expert testimony. To the extent

the trial court held otherwise, this is legal error. See West Jefferson Levee Dist., 640

So. 2d at 1277 (“The opinions of experts regarding valuation are advisory and are

used only to assist the court in determining the amount of compensation due in an

expropriation case.”). See also, e.g., State, Dep’t of Transp. & Dev. v. Schwegmann

Westside Expressway, Inc., 95-1261, p.6-7 (La. 3/1/96), 669 So. 2d 1172, 1176 (“[A]

trier of fact does not have to accept in toto the testimony of any one group or group

witnesses.”).14 Further, this error was prejudicial to Violet insofar as the trial court

set just compensation in the exact amount put forward by the Port’s experts.

The court of appeal compounded this error by failing to identify it and conduct

a de novo review. St. Bernard Port I, 229 So. 3d at 634-35 (noting that “we cannot

find that the trial court was manifestly erroneous or clearly wrong in its ruling that

$16,000,000 was just compensation for the property”). Instead, the court of appeal

noted the general proposition that a factfinder has “broad discretion” in determining

14

We note that this does not change the general rule that the trial court has “much discretion in

evaluating and determining the weight to be given to each expert.” West Jefferson Levee Dist., 640

So. 2d at 1277. But here, the trial court’s apparent misconception that he could not “split the baby”

was prejudicial to Violet, insofar as it limited what the trial court believed to be just compensation

due to Violet under the law.

15

weight to be given to expert testimony. Id. While this is, of course, a correct

statement of the law, it overlooks that the trial court was apparently operating under

an incorrect belief about the extent of its ability to exercise that broad discretion.

In summary, we find that the lower courts erred in the determination of just

compensation. We therefore remand this matter to the court of appeal solely for the

purpose of fixing the amount of just compensation based on the evidence in the

record and in accordance with the principles set forth in this opinion. See Gonzales

v. Xerox Corp., 320 So. 2d 163, 165 (La. 1975) (remand to appellate court, rather

than trial court, is appropriate when the appellate court has all the facts before it);

Buckbee v. United Gas Pipe Line Co., 561 So. 2d 76, 87 (La. 1990). See also Exxon

Pipeline, 00-2535, 00-2559, p.18, 788 So. 2d at 1166 (Knoll, J., concurring)

(“[V]aluation of property in expropriation cases is an open question and each case

should be judged on its own under its individual facts and circumstances. Inadequate

and inaccurate valuations run rampant and we must strive to find valuations that

serve the purpose of protecting property rights while allowing public interests to be

served.”). Although this Court, like the court of appeal, has appellate jurisdiction of

both law and fact and may perform an independent review and render judgment on

the merits, see La. Const. art. V, § 5 (C), we prefer that the court of appeal perform

the first appellate review of the entire record under the correct rule of law. Buckbee,

561 So. 2d at 87.

CONCLUSION

We affirm the court of appeal’s holding that the expropriation was

constitutional. However, we reverse the court of appeal’s holding on the amount of

just compensation due to Violet under art. I, § 4(B)(1), after finding that the trial

court made a legal error in its determination of just compensation and the court of

appeal failed to correct that error. We therefore remand this matter to the court of

16

appeal solely for the purpose of fixing the amount of just compensation based on the

evidence in the record and in accordance with the principles set forth in this opinion.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

17

01/30/18

SUPREME COURT OF LOUISIANA

NO. 2017-C-0434

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

CONSOLIDATED WITH

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

CONSOLIDATED WITH

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL

FOURTH CIRCUIT, PARISH OF ST. BERNARD

WEIMER, J., dissenting.

With all due respect, I find the majority opinion unfortunately eviscerates the

long, significant history the citizens of Louisiana have embodied within La. Const.

art. I, § 4(B)(6) to protect private business from takeover by the government. The

majority opinion thereby subjects business interests across Louisiana to increased risk

of government takeovers, which has the effect of thwarting private business from

initiating economic development that competes with governmental enterprises. While

agreeing that the determination of whether the St. Bernard Port, Harbor & Terminal

District (“the Port”) expropriated the property and port facilities owned by Violet

Dock Port, Inc., LLC (“Violet”) for the purpose of operating that port facility or

halting competition with the Port is, to an extent, fact-based, I find that legal errors

committed by the district court interdicted the fact-finding process, necessitating de

novo review. I additionally find that the perfunctory and, in the end, erroneous,

manifest error review compounds the legal error of the district court, exposing to

serious erosion the conscious, concerted efforts to protect private business enshrined

in our constitution. Therefore, I respectfully dissent from the majority opinion.

Historical Background

While the resolution of this case centers around the meaning and application

of a singular provision in the constitution, the historical context should be considered

in evaluating this res nova issue.

The citizens of Louisiana have long maintained, through the constitutional

provisions they ratified, that the situations in which the government can expropriate

private property are greatly limited. Providing a guarantee prominently positioned

in the second section of the Bill of Rights, the 1921 Constitution indicates: “Except

as otherwise provided in this Constitution, private property shall not be taken or

damaged except for public purposes and after just and adequate compensation is

paid.” La. Const. 1921 art. I, § 2.

With the enactment of the most recent constitution, this protection was

enhanced. Under the 1974 Constitution, expropriation requires not merely a “public

purpose,” but a “public and necessary purpose.” La. Const. 1974 art. I, § 4(B). In

addition, the amount of compensation owed is not limited to “just and adequate

compensation,” as in the 1921 Constitution, but expanded to encompass

compensation to “the full extent of [the owner’s] loss.” Id. Furthermore, in a

provision specifically directed to the issue at hand, a third protection was added. See

id.

While prohibitions against government engaging in commercial enterprise had

been enshrined in constitutions dating back over one-and-a-quarter centuries (see the

2

1879 Constitution),1 the 1974 Constitution, consistent with its intent to provide

increased protection to private interests from governmental takings, added a new

prohibition, currently found in La. Const. art. I, § 4(B)(6). This prohibition, which

I refer to as the “private business enterprise protection clause,” provides in relevant

part:

No business enterprise or any of its assets shall be taken for the purpose

of operating that enterprise or halting competition with a government

enterprise.

The clause represents “the first provision in any state constitution to prohibit

the government from seizing the means of production,” Louis Woody Jenkins, The

Declaration of Rights, 21 Loy. L. Rev. 9, 24 (1975), and evidences a clear and

unambiguous choice by the electorate to curtail government efforts to take business

property or the business itself.

With the above-detailed protections added to and enshrined in Article I, § 4,

the 1974 Constitution “goes beyond other state constitutions, including our 1921

Constitution, and the federal constitution in limiting the power of government to

regulate private property.” State v. 1971 Green GMC Van, 354 So.2d 479, 486 (La.

1977).

However, the citizens of Louisiana did not stop there, demonstrating an

adamant and emphatic determination to protect private business from government

takeover. When property rights protected by the federal constitution were seemingly

eroded by the United State Supreme Court’s ruling in Kelo v. City of New London,

Connecticut, 545 U.S. 469 (2005), the Louisiana electorate responded by enshrining

1

See, e.g., La. Const. 1879, art. 56: “Nor shall the State, nor any political corporation thereof[,]

assume the liabilities of any political[,] municipal, parochial, private[,] or other corporation or

association whatsoever; nor shall the State undertake to carry on the business of any such corporation

or association, or become a part owner therein ....”

3

additional protections in our state constitution. See 2006 La. Acts 851, § 1 (approved

September 30, 2006). These protections include a prohibition from taking property

“for predominant use by” or “transfer of ownership to any private person,” and the

inclusion of a more “limited” definition of “public purpose.” See La. Const. art. I, §

4(B)(1)(a) and (b); Id., § 4(B)(2). Furthermore, in a rejection of the core holding of

Kelo, the Louisiana electorate added the following prohibition: “Neither economic

development, enhancement of tax revenue, or any incidental benefit to the public

shall be considered in determining whether the taking or damaging of property is for

a public purpose ....” La. Const. art. I, § 4(B)(3).

As evidenced by the above, Louisiana has a long and storied history of

protecting private property interests from undue governmental interference. Nowhere

is that strong interest more evident than in the protections extended under La. Const.

art. I, § 4(B)(6), protections unique to Louisiana, but entirely consistent with the core

principles underlying Louisiana’s interest in protecting private property rights.

It is the meaning and application of La. Const. art. I, § 4(B)(6) that is ultimately

at issue in this case, an issue which is res nova in this court, but not without guidance

for its resolution. Foremost among the guiding principles is the dictate that the

starting point in interpreting constitutional provisions is the language of the provision

itself and that, when the language of a constitutional provision is clear and

unambiguous, that language must be given effect. Louisiana Department of

Agriculture and Forestry v. Sumrall, 98-1587, pp. 4-5 (La. 3/2/99), 728 So.2d

1254, 1258. In this case, no party contends that the language of Article I, § 4(B)(6)

is ambiguous or susceptible to multiple interpretations. Therefore, to evaluate the

provision, it is not necessary to look behind its clear language. However, for the

purpose of placing the constitutional provision in its historical context, it is relevant

4

to note that secondary sources confirm the clear intent behind the words of the

enactment.

As explained by Delegate Jenkins, the co-author and floor sponsor of Section

4(B)(6), the provision “was clearly intended to counter what delegates perceived as

excessive interference by government in the economy and the growing possibility that

government would attempt to take over certain business enterprises.” Jenkins, The

Declaration of Rights, 21 Loy. L. Rev. at 24.2 Given this purpose, “the provision

should be broadly interpreted to prevent both direct and indirect efforts to seize any

private industry.” Id.

Of course, as acknowledged by Delegate Jenkins and as evidenced in its

language, the prohibition contained in Section 4(B)(6) is not absolute, and certain

expropriations may have the effect of terminating a business enterprise, as, for

example, when a highway right-of-way results in the taking of property belonging to

a grocery store, causing it to go out of business. Id., 21 Loy. L. Rev. at 25. In such

cases, the purpose of the expropriation is crucial. Id. Pursuant to Section 4(B)(6),

“[a]ny effort to use the power of eminent domain to take over an existing business or

seize its assets in order to create a similar government enterprise or to put an

enterprise out of business in order to improve the competitive advantage of a

government enterprise is unconstitutional.” Id.

The Litigation

With this historical context in mind, it is appropriate to turn to the instant case

in which, using the “quick-take” provisions of La. R.S. 19:141, et seq., the Port

2

Delegate Jenkins’s assessment was echoed by another convention delegate, J. Burton Willis, who

queried: “Isn’t this a case of private enterprise against government ownership?” To which Delegate

Jenkins replied: “I think it is.” (Records of the Louisiana Constitutional Convention of 1973:

Convention Transcripts, vol. VI, 39th day, Aug. 30, 1973, 1048).

5

expropriated Violet’s privately owned port facility. Violet filed a motion to dismiss

the petition for expropriation, arguing, among other things, that the taking violated

La. Const. art. I, § 4(B)(6). Following an evidentiary hearing, the district court

denied the motion to dismiss based on a finding that the taking served a public

purpose. In a per curiam issued in connection with that ruling, the district court

reasoned:

Export of goods and commodities through the port is one of the

basic industries of St. Bernard Parish. The acquisition of the Violet

terminal would be a logical extension of port services in St. Bernard.

The port would acquire heavy duty docks and forty two hundred (4200

LF) linear feet of Mississippi River frontage available for immediate

use. Thirty eight (38) acres of presently undeveloped uplands would be

available for cargo storage. The contemplated construction and use of

the property would bring needed revenues into the community which is

still recovering from the effects of the 2005 hurricanes and provide

needed employment to its citizens. The predominant use for the

property would be by the public, not for use by, or for transfer of

ownership to any private person or entity. The Court is apprised that the

expropriation will not affect the use by MSC [“Military Sealift

Command”] for its vessels should MSC elect to continue that use.

Standard of Review

The majority opinion maintains that the district court’s per curiam represents

a determination “that the business-enterprise clause does not apply here from a

factual standpoint” and, thus, the district court’s ruling is subject to manifest error

review. St. Bernard Port, Harbor & Terminal District v. Violet Dock Port, Inc.,

L.L.C., 17-0434, slip op. at 10, 12 (La. 1/30/18) (emphasis in original). I respectfully

disagree, believing that a more careful analysis in light of the historical context or “a

deeper look at the [district] court’s reasons for ruling ... reveals an error in [the] legal

analysis, requiring this court to conduct a de novo review of the record.” See Bridges

v. Nelson Indus. Steam Co., 15-1439, p. 4 (La. 5/3/16), 190 So.3d 276, 279.

6

Even a cursory review of the district court’s per curiam reveals that it contains

no factual findings or legal determination regarding the primary reason cited by

Violet for its contention that the taking is unconstitutional–that it violates La. Const.

art. I, § 4(B)(6)’s prohibition against the taking of a business enterprise or any of its

assets for the purpose of operating that enterprise or halting competition. Indeed the

per curiam makes no mention of the private business enterprise protection clause or

any factual findings relating thereto. Instead, the per curiam focuses solely on

considerations prompted by Section 4(B)(1); i.e., whether the taking is for the

predominant use or transfer of ownership to any private entity.3 Furthermore, it

focuses on economic factors–needed revenues and employment–that are expressly

prohibited from consideration in determining public purpose by Section 4(B)(3).4

“The manifest error standard of review assumes that the trier of fact applied the

correct law in arriving at its conclusion.” Winfield v. Dih, 01-1357, p. 8 (La.App.

4 Cir. 4/24/02), 816 So.2d 942, 948. That assumption is not warranted in this case

where the district court’s reasons reflect that the court’s decision was guided by

principles that are either irrelevant to the question of whether the taking violated the

private business enterprise protection clause, i.e., whether the taking is for the

3

La. Const. art. I, § 4(B)(1) provides:

Property shall not be taken or damaged by the state or its political

subdivisions except for public purposes and with just compensation paid to the owner

or into the court for his benefit. Except as specifically authorized by Article VI,

Section 21 of this Constitution property shall not be taken or damaged by the state

or its political subdivisions: (a) for predominant use by any private person or entity;

or (b) for transfer of ownership to any private person or entity.

4

La. Const. art. I, § 4(B)(3) provides:

Neither economic development, enhancement of tax revenue, or any

incidental benefit to the public shall be considered in determining whether the taking

or damaging or property is for a public purpose pursuant to Subparagraph (1) of this

Paragraph or Article VI, Section 23 of this Constitution.

7

predominant use or transfer of ownership to a private entity;5 or expressly prohibited

from consideration in connection therewith; i.e., whether port expansion will add

revenues and jobs to the local community. Because, as was the case in Bridges, the

district court’s reasons focus on factors which are irrelevant to the question presented

and (in the instance of economic benefits) prohibited from consideration by the

constitution itself, an error in the court’s legal analysis is exposed, requiring de novo

review. See Bridges, 15-1439 at 4, 190 So.3d at 279.6

By focusing on La. Const. art. I, § 4(B)(1), and its admonition that, except as

specifically authorized by La. Const. art. VI, § 21, no property shall be taken for

predominant use or transfer of ownership to any private entity, the district court

elevated the general language of that provision over the specific language of Article

I, § 4(B)(6), making no findings with respect to the central issue presented

here–whether the taking violates the private business enterprise protection clause.

The majority opinion, I believe, falls into similar error. In focusing on the provisions

of Article I, § 4(B)(2)(vi), which define a “public purpose” to include expropriation

by public ports to facilitate the transport of goods in commerce, the majority opinion

elevates this broad general expropriatory authority over the specific qualifying

limitation embodied in Section 4(B)(6), in effect untethering the Port’s taking

authority from the limitation of the private business enterprise protection clause.

5

The majority opinion, in footnote 9, specifically acknowledges the irrelevance of this consideration

in the case before this court, pointing out that the prohibition of La. Const. art. I, § 4(B)(1) against

taking or damaging property for predominant use by any private person or entity is subject to the

exception found in Article VI, § 21(A), which permits public ports to acquire land through

expropriation and lease that land to a private entity for management of the operations. St. Bernard

Port, slip op. at 9 n.9.

6

In essence, the situation presented here is akin to an improper jury instruction: the district court’s

per curiam reflects that it improperly instructed itself as to the applicable legal principles,

interdicting the fact-finding process and necessitating de novo review. See, e.g., Picou v. Ferrara,

483 So.2d 915, 918 (La. 1986).

8

However, Section 4(B)(6) is a limitation on the “public purpose” definition of Section

4(B)(2)(vi), and it specifically counsels that the taking of a business enterprise for the

purpose of operating or halting competition with that enterprise is not a legitimate

“public purpose.”

As Delegate Jenkins’ comments indicate, the purpose of the expropriation is

crucial to the determination of whether there is an unconstitutional taking within the

meaning of Section 4(B)(6). In assessing whether the taking is for a purpose

consistent with the constitutional strictures of this provision, certain principles of

interpretation apply. Because “expropriation proceedings are in derogation of the

right of individuals to own property, the law governing these proceedings must be

strictly construed against the expropriating authority.” State v. Estate of Davis, 572

So.2d 39, 42 (La. 1990). This strict construction against the expropriating authority

is consonant with the broad interpretation of Section 4(B)(6) urged by Delegate

Jenkins, given that Section 4(B)(6) has as its similar aim the protection of private

business enterprise against excessive government interference. In addition, “every

clause in a written constitution is presumed to have been inserted for some useful

purpose, and courts should avoid a construction which would render any portion of

the constitution meaningless.” Succession of Lauga, 624 So.2d 1156, 1166 (La.

1993).

In this case, to the extent it can be argued that the district court made a factual

finding with respect to the “purpose” for the expropriation, it appears the court simply

accepted at face value the Port’s stated reason for expropriating Violet’s property

without considering the effect of that taking.7 Such an analysis is constitutionally

7

The per curiam declares: “The St. Bernard Port’s stated reason for expropriation was to build and

operate a terminal to accommodate transport of liquid and solid bulk commodities into national and

international commerce to and from St. Bernard.”

9

deficient, as the myopic focus on the Port’s stated reason for the expropriation

without any examination of the effect of the taking would allow the Port, or any

expropriating authority, virtually unfettered authority to expropriate property as long

as it professed an ostensible proper motive for the taking. This would be true even

if the stated purpose also had the effect of enabling the expropriating authority to take

over and operate a private enterprise, or halt private competition, rendering Section

4(B)(6) meaningless.

It is precisely this type of analysis of Section 4(B)(6) that Delegate Jenkins

cautioned against when he offered as an example of a taking prohibited by Section

4(B)(6), the expropriation of apartments or rental homes for the purpose of

constructing public housing. See Jenkins, The Declaration of Rights, 21 Loy. L. Rev.

at 25. The parallels to that example are evident in this case. Here, pointing to La.

Const. art. I, § 4(B)(2)(b)(vi), which defines “public purpose” to include continuous

public ownership of property by public ports “to facilitate the transport of goods ...

in domestic or international commerce,” the Port seeks to expropriate for the stated

purpose of enhancing and expanding its role as a market participant in the port

service industry, property belonging to a private participant (Violet) in the same

industry. However, this type of taking runs squarely afoul of Section 4(B)(6) and the

protection of private enterprise from fear of governmental takeover that this

constitutional provision was intended to promote.

Undeniably, public ports have been granted expropriation powers under the

constitution to facilitate the transport of goods in commerce. Unquestionably, public

ports are significant economic engines, that work to support trade, enable Louisiana’s

energy and agricultural industries to further enhance the economy, and provide

employment and business opportunities to local, regional, and the state’s economies.

10

However, private enterprise does likewise. Ports are granted substantial authority to

operate, but ports cannot take over an on-going private business to operate that

business or to end competition. In Section 4(B)(6), the people of this state have made

a conscious decision to limit governmental interference with private enterprise, and

that limitation must be respected. Moreover, it can only be respected (and

effectuated) by an examination not only of the stated reasons for expropriation, but

of the effect of that taking as well.

De novo review

The ultimate question presented in this case is one that is directed by the

language of Section 4(B)(6): whether Violet’s business enterprise or any of its assets

was taken by the Port for the purpose of operating that enterprise or halting

competition with the Port enterprises. At the hearing on the motion to dismiss, Violet

contended that the Port’s taking runs afoul of both prongs of Section 4(B)(6).

According to Violet, the Port took its property for the purpose of operating its

layberthing enterprise and also for the purpose of operating its docks for bulk cargo

in the future (a venture in which Violet had engaged and into which it was

expanding), thereby halting competition from Violet. The testimony and evidence on

this point was extensive, with both sides presenting opposing views and conflicting

testimony. Nevertheless, at the conclusion of the process, certain facts were

undisputed.

Violet owned one mile of the ten miles of river-front property within the Port’s

jurisdiction on which it had constructed a facility consisting of five docks and related

infrastructure. For decades, Violet had contracted with the United States Military

Sealift Command (“the Navy”) to layberth and service ocean-going Navy ships.

11

While layberthing for Navy (and some commercial) vessels was Violet’s primary

operation, it did perform some repair and cargo operations at its docks.

In 2006, due to a growing demand for cargo services, the Port found itself

operating at capacity and in need of expansion. The Port identified Violet’s property

as being best suited for its expansion needs and contacted Violet to discuss

purchasing its property. In 2007, the parties tentatively agreed on a purchase price.

To facilitate the purchase, the Port applied for funding through the Louisiana

Department of Transportation and Development’s Port Priority Program. A Port

Priority Application (“PPA”) was submitted in 2008 seeking the maximum grant of

$15 million to purchase the property. In its application, the Port represented that the

Violet property was best and ideally suited for the transfer and storage of dry and

liquid bulk commodities, and that development of the property for this purpose would

take place in three phases. In a letter submitted in connection with the application,

the Port identified the Navy contract and represented to DOTD that “the [P]ort will

derive from this proposed project a lease with the Navy/MARAD in the approximate

amount of $550,000 per year for Navy/MARAD ships occupying the berths,” that it

will “continue to compete for these MARAD/Navy contracts,” and that “the annual

net revenue from the Navy contracts at the Violet site has averaged $550,000 [and]

[f]uture contracts are expected to be in that same ... range.” In essence, the Port

represented that the Navy contract could be figured in to DOTD’s required rate of

return for funding the project. Based on the Port’s representations, DOTD awarded

it the requested funding.

Ultimately, the negotiations for the sale of the property were unsuccessful. In

the interim, however, Violet continued to operate and commenced efforts to expand

its own cargo operations at its facility, obtaining permits to allow more cargo

12

operations and constructing a new berth for cargo use. Violet also entered into an

option agreement with Vulcan Materials for lease of the new berth and ten adjoining

acres to transload and store aggregate bulk cargo.8

In December 2010, the Port filed its petition for expropriation. In that petition,

the Port averred that the property was necessary and suitable for bulk cargo

operations. It described the plans for the Violet facility as taking place in three

phases. The petition identifies the Navy contract and avers that during Phase I of the

development, “[t]he St. Bernard Port intends to enter into a new contract with the

Military Sealift Command for its continued use of the Violet Port.”

Violet filed a motion to dismiss the expropriation proceeding, challenging its

public purpose. At the hearing on the motion, the Port offered testimony that Violet’s

property was the only property in the area suitable for handling large-scale bulk cargo

operations. It offered its Port Priority submissions and testimony related thereto. The

Port acknowledged that it intended to take over the Navy contract and continue to

service the Navy ships on the property for at least 8 to10 years, although it contended

that the contract was an “afterthought” and “not one of our goals.” The Port

reiterated its three-phase plan for development of the Violet facility, but

acknowledged that Phase I, the only phase that was actually funded, was simply to

acquire the property and enable Associated Terminals, its Marine Terminal Operator,

to occupy and use the site for stevedoring operations.

The district court denied Violet’s motion to dismiss the expropriation

proceeding, and the case moved to the just compensation trial. By the time of this

trial, the Port had contracted with the Navy for continued layberthing at the former

Violet site. Ironically, it contended, and the district court found, that the highest and

8

The option expired without being exercised by Vulcan.

13

best use of the property was not for large-scale cargo operations, as the Port had

previously contended when taking the property, but that the highest and best use of

the property was layberthing coupled with a limited intermodal container

terminal–essentially, a continued use of the property as it was being used by Violet.

Whether viewed at the granular level (focusing on the scope of Violet’s

layberthing and cargo operations) or at a broader level (focusing on the role of both

the Port and Violet as operators of riverfront port facilities), it appears from the

foregoing undisputed facts that the Port’s taking in this case is unconstitutional within

the meaning of La. Const. art. I, § 4(B)(6). The facts establish that the Port obtained

$15 million from the state to facilitate the purchase of Violet’s property and that it

planned to take and use Violet’s assets and existing customer revenue (the Navy

contract) as interim financing to fund the expansion of cargo operations. The facts

likewise establish that while Violet’s cargo operations were “negligible,” they were

not non-existent, and Violet was making its own efforts to expand into the cargo

handling arena, in competition with the Port. The PPA, the petition for expropriation,

and the testimony at trial all establish that the Port intended to enter into a contract

with the Navy for its continued use of the Violet port during Phase I of its port

development plan. Thus, while the Port maintains that it was and is not in the

layberthing business, the facts disclose that layberthing the Navy ships was an

integral part of its plan, it effectuated that plan, and it is still performing layberthing

services today, which include the Navy contract.

When a governmental entity takes and uses private business property or assets

to generate revenue in ways similar to a private enterprises’s prior operations, or

when a governmental entity necessarily will use the property or assets as part of its

own business plans, that taking is one “for the purpose of operating that enterprise”

14

within the meaning of Section 4(B)(6). Furthermore, when the taking will necessarily

allow a governmental entity to increase its market share and prevent a growing or

potential competitor from entering into the market or expanding its business, the

taking is for the purpose of “halting competition with a government enterprise.”

Under the facts in this case, reviewed de novo, the district court erred in

denying Violet’s motion to dismiss the petition for expropriation, as that taking is

unconstitutional under Section 4(B)(6).

Manifest Error Review

As indicated, ports are extremely important economic engines for the state; this

fact is undeniable. However, the people of this State have made a conscious,

concerted commitment, at every opportunity (particularly when Section 4(B)(6) was

adopted in 1974 and again in 2006 when further restrictions were imposed post-

Kelo), to protect private ownership against government takeover of the means of

private production. It is this longstanding, fundamental constitutional principle that

is at stake in this case. Furthermore, while I remain convinced that de novo review

is warranted due to the errors in the district court’s legal analysis, even should the

manifest error rule be applied to the factual findings (that the district court clearly did

not make), I would find any “factual” determination that the taking in this case was

not for the purpose of operating Violet’s port facility or eliminating competition from

Violet is manifestly erroneous.

Certainly, under the manifest error rule, where there are two permissible views

of the evidence, the factfinder’s choice between them cannot be manifestly erroneous.

Rosell v. ESCO, 549 So.2d 840, 844 (La. 1989). However, where documents or

objective evidence so contradict a witness’s story, or the story itself if so internally

inconsistent or implausible on its face that a reasonable factfinder would not credit

15

the witness’s story, a reviewing court may well find manifest error. Id. at 844-45.

Indeed, while deference should be accorded to the factfinder, because appellate courts

have a constitutional duty to review both law and facts, they have the right and

obligation to determine whether a district court judgment is clearly wrong based on

the evidence. See Ambrose v. New Orleans Police Dept. Ambulance Service, 93-

3099, p. 8 (La. 7/5/94), 639 So.2d 216, 221. This concept is particularly applicable

when this court evaluates a res nova constitutional issue.

In this case, the uncontradicted objective evidence demonstrates the pretextual

nature of the Port’s subjective contention that the taking was not for the purpose of

assuming Violet’s layberthing operations with the Navy, and that layberthing

operations were an “afterthought.” This objective evidence–in a nutshell–is found

in the Port’s PPA submitted to DOTD (in which it represented that the Navy contract

could be figured into DOTD’s required rate of return for extending funding to the

Port), in the petition for expropriation (in which the Port avers that it “intends to enter

into a new contract with the Military Sealift Command for its continued use of the

Violet Port”), and in the fact that the Port, after the quick-taking, entered into a

contract with the Navy and continues to this date to perform the same layberthing

operations once conducted by Violet.9

The same analysis holds true for the Port’s contention that the taking was not

for the purpose of eliminating competition from Violet because Violet’s cargo

operations were “negligible” and the Port was not in the “layberthing” business and

thus did not compete with Violet. The objective facts demonstrate that while the Port

contends the expropriation was motivated solely by its need to expand its cargo

9

Testimony by Port officials that the Navy could “just sail away” proved incorrect. The Navy has

not sailed away in the seven years since the expropriation occurred, and the Port still receives the

income Violet previously enjoyed.

16

operations, and that the Violet property was the only property suitable for expansion

and creation of a liquid cargo facility, once the taking was effected and valuation was

at issue, the Port “flipped the script” and argued that the highest and best use of the

property was not for large-scale cargo operations, as it had previously contended, but

for layberthing coupled with a limited intermodal container terminal–essentially, a

continued use of the property exactly as it was being used by Violet. The subjective

contention that the taking was not for the purpose of taking over Violet’s business

enterprise is belied by the objective reality of what has occurred.

The facts, as acknowledged in the majority opinion,10 establish that while

Violet had historically not been engaged in large-scale cargo operations, Violet was

actively expanding into that area, having constructed a new berth that would handle

cargo and having entered into an option contract with Vulcan Materials for lease of

the new berth and ten adjoining acres to transload and store bulk cargo. In other

words, the facts establish that while Violet had not been an active competitor for bulk

cargo in the past, it had–like the Port–recognized and acted on the expanding market

need for bulk cargo operations, bringing it into competition with the Port, a

competition which was effectively “nipped in the bud” and eliminated through the

taking.11 Again, the subjective contentions of the Port are contradicted by the

objective reality of what has occurred.

The majority opinion, in finding no manifest error in the district court judgment

denying the motion to dismiss the expropriation, relies heavily on the federal district

court judgment remanding this case to state court following its removal to federal

court. St. Bernard Port, Harbor, & Terminal Dist. v. Violet Dock Port Inc., LLC,

10

See St. Bernard Port, slip op. at 3 n.3.

11

The language of the constitution does not address the level or degree of competition.

17

809 F.Supp.2d 524 (E.D. La. 2011). It quotes from the federal ruling, which found

that Violet submitted nothing, “other than its own characterization, to suggest that

acquisition of the [Navy] property was the primary motivating cause of this 70 acre

expropriation.” See St. Bernard Port, slip op. at 5 (emphasis supplied) (quoting St.

Bernart Port, 809 F.Supp.2d at 531). This quote suggests–apart from factual

disputes–a legal interpretation of Section 4(B)(6) that is at odds with its plain

language. In other words, the federal district court seems to advocate for a

“substantial factor” or “primary purpose” test for interpreting the mandate of Section

4(B)(6). Such an approach is fraught with danger, as a port would always have the

option to take over private property as long as it professed a “primary” purpose of

expanding commerce, even if its purpose also had the effect of eliminating private

competition. Such an interpretation would render La. Const. art. I, § 4(B)(6) largely

meaningless. Regardless, ultimately, this court is the final arbiter of the meaning of

this state’s constitution, an obligation which we should not yield on a res nova issue.

At issue in this case is the decision of the people, as evidenced through the

constitution, to protect private enterprise from governmental overreach. I would

caution, therefore, against an approach that focuses myopically on the details of the

respective “operations” of what are, at their core, both commercial ports in

determining whether there is a violation of Section 4(B)(6). Such an approach runs

the proverbial risk that one will lose sight of the forest for the trees and, in the

process, render the protections of Section 4(B)(6) meaningless.

While I sympathize with sentiments that this case should be limited to its facts,

one cannot ignore the legal ramifications that arise from application of those facts.

Will the Port (or another public port) next argue that it can expropriate a private port

engaged in liquid cargo storage operations because the Port does not currently engage

18

in liquid cargo storage operations and, thus, does not “compete” with a port engaged

in such? Will it be able to argue that its “primary” purpose is not to assume the liquid

cargo operations, but to expand its bulk cargo operations at that location? Any

parsing here ignores what actually, objectively occurred. The Port took the Violet

property and assumed its operations while ending competition, violating both the

letter and spirit of Section 4(B)(6).

Ultimately, on the facts of this case, the result of the majority opinion is not

what was contemplated by the citizens of Louisiana when they demonstrated in the

constitution a consistent and concerted effort to safeguard private entities from

takeover by the government.

The people of Louisiana repeatedly made judgments that shield private

business from the government’s entry into the marketplace by taking over an ongoing

business or ending competition. The people of Louisiana effectively provided a

safeguard for private ownership and for the means of production in the fundamental

law of this state. The Port is not without a remedy. If the government wants to enter

the marketplace and take over an ongoing business, it must act like any other

business; it must purchase the ongoing business at a mutually agreeable price. The

constitution is clear–the government cannot simply take a private business to operate

the business or to end competition.

For these reasons, I respectfully dissent.

19

01/30/18

SUPREME COURT OF LOUISIANA

No. 2017-C-0434

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

CONSOLIDATED WITH

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

CONSOLIDATED WITH

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,

FOURTH CIRCUIT, PARISH OF ST. BERNARD

GUIDRY, J., dissents and assigns reasons.

I respectfully dissent from the majority holding today that the St. Bernard

Port’s taking of Violet Dock Port’s private property was a constitutionally

authorized expropriation under the facts in the record before us. Although the St.

Bernard Port is granted broad powers under La. Const. art. VI, § 21, an important

limitation on those powers is set forth in La. Const. art. I, §4, specifically La. Const.

art. 4(B)(6). That article provides as follows: “No business enterprise or any of its

assets shall be taken for the purpose of operating that enterprise or halting

competition with a government enterprise….” It is a well-established legal principle

that because “expropriation proceedings derogate from the right of individuals to

own property, the law governing these proceedings is strictly construed against the

expropriating authority.” State v. Estate of Davis, 572 So.2d 39, 42 (La. 1990). I

disagree with the majority’s conclusion there was no manifest error in the trial

court’s determination that Violet Dock Port’s business enterprise or any of its assets

1

were taken by the Port for the purpose of operating that enterprise or halting

competition with Port enterprises. The Port’s own expropriation plan was premised

on taking Violet Port Dock’s assets and operating its existing lay berthing business

and nascent cargo handling activities to generate funds to finance a future dry and

liquid bulk cargo facility. Accordingly, I would reverse the judgment of the trial

court.

2

01/30/18

SUPREME COURT OF LOUISIANA

No. 2017-C-0434

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

CONSOLIDATED WITH

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

CONSOLIDATED WITH

ST. BERNARD PORT, HARBOR & TERMINAL DISTRICT

VERSUS VIOLET DOCK PORT, INC., LLC

ON WRIT OF CERTIORARI TO THE COURT OF APPEAL,

FOURTH CIRCUIT, PARISH OF ST. BERNARD

Hughes, J., dissents for the reasons assigned by Weimer and Guidry, JJ.

1