Appendix — Avenal v. Louisiana

Supreme Court of Louisiana.

Albert J. AVENAL, Jr., et al.

v.

The STATE of Louisiana and The Department of Natural

Resources.

No. 2003-C-3521.

Oct. 19, 2004.

Rehearing Denied Dec. 10, 2004.

Background: Oyster fishermen brought class action against

Department of Natural Resources to recover for unconstitutional

taking of oyster leases as result of coastal restoration project that

diverted water from the Mississippi River and lowered salinity

of water over oyster leases. The 25th Judicial District Court,

Parish of Plaquemines, Division B, No. 38-266, William A. Roe,

J., rendered judgment in favor of fishermen following jury trial.

State appealed. The Court of Appeal, Armstrong, J., 858 So.2d

697, affirmed. Certiorari was granted.

Holdings: The Supreme Court, Victory, J., held that:

(1) hold harmless and indemnity clauses in oyster leases

precluded most claims;

(2) the clauses were valid and enforceable;

(3) the claims were subject to two-year prescriptive period

applicable when private property is damaged for public purposes,

not three-year prescriptive period applicable to takings; and

(4) the period began to run in year the project was completed

and accepted. ;

Reversed.

Johnson, J., concurred in result.

Weimer, J., concurred and filed opinion.

App. 1

West Headnotes

[1] Eminent Domain &~282

148k282 Most Cited Cases

Hold harmless and indemnity clauses in oyster leases precluded

oyster fishermen's claims of unconstitutional taking as result of

coastal restoration project that diverted water from the

Mississippi River and lowered salinity of water over oyster

leases; the clauses released the state from any liability to the

fishermen due to the diversion project. U.S.C.A. Const.Amend.

5; LSA-Const. Art. 1, § 4. a

[2] Navigable Waters [32

270k2 Most Cited Cases

Implementation of the Caernarvon coastal diversion project that

introduced freshwater from Mississippi River into coastal area fit

within the public trust doctrine; the public resource at issue was

state's coastline being lost at an alarming rate, the risks involved

were not just environmental, but involved health, safety, and

welfare since coastal erosion removed an important barrier

between large populations and ever-threatening hurricanes and

storms, and erosion could result in the loss of inhabited land and

businesses that rely on the coastal region as a transportation

infrastructure vital to the region's industry and commerce.

[3] Fish 7(2)

176k7(2) Most Cited Cases

Hold harmless clauses that were inserted in oyster leases as early

as 1989 to protect the state from liability for diversions of

freshwater as part of coastal restoration project were valid and

enforceable under the authority granted to the Department of

Wildlife and Fisheries (DWF) by statute permitting the Secretary

of DWF to make stipulations in the leases deemed necessary and

proper to develop the oyster industry; no further legislative

authority was needed to validate the sna d clauses.

LSA-R.S. 56:425, subd. C.

[4] Eminent Domain <=7282

148k282 Most Cited Cases

Oyster fishermen alleging damage to or destruction of oyster

leases in Breton Sound as result of Caernarvon coastal

App. 2

restoration project and its diversion of freshwater from

Mississippi River did not have valid takings or damage claims

against state due to indemnity clauses in 1995 and later leases,

even though they filed suit in 1994; the fishermen claimed taking

of their rights under the 1995 and later leases, and they claimed

that their leases were rendered permanently useless for

commercial oyster production, which necessarily included the

time period covered by these post-1995 clauses. U.S.C.A.

Const.Amend. 5; LSA-Const. Art. 1, § 4.

[5] Eminent Domain 266

148k266 Most Cited Cases

An inverse condemnation action provides a procedural remedy

to a property owner seeking compensation for land already taken

or damaged against a governmental or private entity having the

powers of eminent domain where no expropriation has

commenced. U.S.C.A. Const.Amend. 5; LSA-Const. Art. 1, § 4.

[6] Eminent Domain “266

148k266 Most Cited Cases

Inverse condemnation claims derive from the Takings Clauses

in state and federal constitutions. U.S.C.A. Const.Amend. 5:

LSA-Const. Art. 1, § 4.

[7] Eminent Domain &266

148k266 Most Cited Cases

The action for inverse condemnation is available in all cases

where there has been a taking or damaging of property where just

compensation has nct been paid, without regard to whether the

property is corporeal or incorporeal. U.S.C.A. Const.Amend. 5;

LSA-Const. Art. 1, § 4.

[8] Eminent Domain 266

148k266 Most Cited Cases

The constitutional command of Takings Clause in state

constitution is self-executing, such that the cause of action arises

whenever a state commits a taking without justly compensating

the victim. LSA-Const. Art. 1, § 4.

[9] Eminent Domain <=>288(2)

148k288(2) Most Cited Cases

Inverse condemnation claims by oyster fishermen alleging loss

App. 3

as result of coastal restoration project that diverted freshwater

from the Mississippi River and lowered salinity of water over

oyster leases were subject to two-year prescriptive period

applicable when private property is damaged for public purposes,

not three-year prescriptive period applicable to takings; the state

owned the water bottoms, waters, and oysters and never

guaranteed a commercially viable oyster lease, and the fishermen

had a claim for damage only until leases expired since renewal

leases would require fishermen to hold state harmless.

LSA-Const. Art. 1, § 4; LSA-R.S. 9:1101. 9:5624, 13:5111,

56:3, 56:423.

[10] Eminent Domain 2.1

148k2.1 Most Cited Cases

Under federal law, when the government limits the use a

property owner may make of his or her property, without itself

occupying or otherwise using the property for government

purposes, the three-part test for determining whether taking has

occurred requires court to consider (1) the character of the

governmental action, (2) the economic impact on the claimant,

and (3) particularly, the extent to which the governmental action

has interfered with distinct investment-backed expectations.

U.S.C.A. Const.Amend. 5.

[11] Eminent Domain ©~?2,25

148k2.25 Most Cited Cases

Even if coastal restoration project that diverted freshwater from

the Mississippi River and lowered salinity of water over oyster

leases entirely deprived oyster fishermen of all economically

beneficial and productive use of their property rights, they were

still not entitled to compensation as the project was a valid

exercise of the state's police power under federal law; the state

has always had the right to disperse fresh water from the

Mississippi River over saltwater marshes in order to prevent

coastal erosion, and the project was a matter of actual necessity

as it would forestall a grave threat to the lives and property of

others. U.S.C.A. Const.Amend. 5; LSA-Const. Art. 1, § 4.

[12] Statutes "223.4

361k223.4 Most Cited Cases

App. 4

_

When conflicting statutes are applicable, the one more

specifically directed to the matter applies.

[13] Eminent Domain <288(2)

148k288(2) Most Cited Cases

The purpose of two-year prescriptive period applicable when

private property is damaged for public purposes is to limit the

exposure of the state and its political subdivisions to liability in

connection with a public work to a reasonable period of time.

LSA-R.S. 9:5624.

[14] Eminent Domain &~288(2)

148k288(2) Most Cited Cases

Not every lawsuit for damages caused by a public entity or

involving a public works project falls within the purview of

two-year prescriptive period applicable when private property is

damaged for public purposes; the damage must be incurred for

public purposes. LSA-R.S. 9:5624.

[15] Eminent Domain &~288(2)

148k288(2) Most Cited Cases

Damage is incurred for public purposes, and, thus, the two-year

prescriptive period applicable when private property is damaged

for public purposes applies, when the damaging is intentional or

occurs as a necessary consequence of the public undertaking;

even unintentional damage can be inflicted for public purposes

if it is a necessary consequence of the public project. LSA-R.S.

9:5624.

[16] Limitation of Actions ©55(5)

241k55(5) Most Cited Cases

Two-year prescriptive period applicable when private property

is damaged for public purposes began to run on takings claims by

oyster fishermen in year that coastal restoration project was

completed and accepted and freshwater from Mississippi River

began lowering salinity of water over oyster beds. LSA-R.S.

9:5624. :

[17] Limitation of Actions €=55(6)

241k55(6) Most Cited Cases

Two-year prescriptive period applicable to any and all actions

when private property is damaged for public purposes is not

App. 5

a

subject to the continuing tort doctrine; thus, the period begins to

run from the moment the first damage is actually sustained.

LSA-R.S. 9:5624.

*1087 Charles C. Foti, Jr., Attorney General, Burke & Mayer,

Andrew C. Wilson, David L. Carrigee, Jedd S. Malish, Special

Assistants to Attorney General, Counsel for Applicant.

St. Martin & Williams, Michael X. St. Martin, Joseph G. Jevic,

Ill, Houma, Gauthier, Downing, Labarre, Dean & Sulzer,

Charles S. Labarre, Cossich, Belle Chasse, Sumich & Parsiola,

Ltd., Philip F. Cossich, Jr., McNabb & Associates, Carolyn A.

McNabb, Houma, Counsel for Respondent.

Freddie Pitcher Jr., Thomas B. Calvert, Metairie, Professor

Oliver A. Houck, Ruston, Panzeca & D'Angelo, Metairie,

Salvadore Panzeca, Gregory G. D'Angelo, Oats & Hudson,

William M. Hudson, III, Lafayette, Clifton O. Bingham, Jr.,

Baton Rouge, Lawrence E. Marino, Lafayette, *1088 Lawrence

A. Durante, Debra C. Edlredge, James K. McCay, I, William J.

Doran, Jr., Roland Dartez, Sherry S. Landry, City Attorney,

Deborah M. Henson, Thomas A. Robichaux, Assistant City

Attorneys, Pamela Miller Perkins, Baton Rouge, J. Michael

Lamers, Michael W. Wascomb, Waltzer & Associates, Joel

Waltzer, Harvey, Robert B. Wiygul, Liskow & Lewis, and Gene

Lagitte, S. Gene Fendler, H.S. Bartlett, New Orleans, Frederick

C. Whitrock, Baton Rouge, Donald E. Puckett, Counsel for

Amicus Curiae.

**] VICTORY, J.[FN*]

FN* Retired Judge Thomas C. Wicker, Jr., sitting as

Justice ad hoc. Associate Justice Chet D. Traylor,

recused.

In this case, oyster fishermen holding oyster leases in the Breton

Sound area claim they suffered a compensable taking under La.

Const. Art. I, § 4 as a result of the State of Louisiana's operation

App. 6

of the Caernarvon Freshwater Diversion Structure

("Caernarvon"), which altered salinity levels in the waters

covering the oyster fishermen's leases. After a review of the

record and the applicable law, we reverse the judgments of the

lower courts and hold that the vast majority of the oyster

fishermen are not entitled to compensation under La. Const. Art.

1, § 4 because their leases contain clauses holding the State

harmless from any loss or damage resulting from this coastal

diversion project. Further, we hold that the claims of the oyster

fishermen whose leases do not contain hold harmless clauses

have prescribed under La. R.S. 9:5624.

FACTS AND PROCEDURAL HISTORY

Following the flood of 1927, the United States Army Corps of

Engineers (the "Corps") expanded the Mississippi River levee

system to confine the river to prevent further major floods.

Before the levees were built, naturally occurring floods deposited

**2 millions of tons of sediments into the marshlands, which

allowed marshland and other grasses to grow; without those

nutrient-rich sediments, the plants that hold surrounding soils in

place disappear and the land turns to open water. In the last fifty

years, hundreds of square miles of wetlands along the Louisiana

coast have disappeared and scientists have estimated that

between thirty-five and forty-five square miles of coastal

wetlands are lost each year.

Another effect of the levee system was on the salinity of the

water. The coastal waters of Louisiana have historically

provided excellent conditions for oyster growth, because the

freshwater from the Mississippi River and smaller coastal

streams mix with the saltwater of the Gulf of Mexico, creating an

ideal ecosystem for oyster cultivation. By keeping fresh water

out of the wetlands that surrounded the Mississippi River in the

Breton Sound Basin, the levees unexpectedly raised the salinity

of the waters covering those wetlands and this change in salinity

fostered new oyster growth in the landward region of the basin

App. 7

that had previously been too fresh to sustain oyster growth.

However, the changes in salinity that made some previously

unproductive waters productive also ruined some oyster grounds

that had been extremely productive before the levees were

created.

These effects were recognized in the 1950s, and the state and

federal governments began planning to divert freshwater from

the Mississippi River into adjacent marshlands to address these

problems. According to a 1959 memorandum issued by the U.S.

Fish and Wildlife Service to the *1089 Corps, certain man-made

and natural causes, over time, had increased the salinity level of

the sub-delta marshlands below New Orleans, thereby adversely

affecting fish and wildlife, including oysters, waterfowl, and fur

animals. This investigation was prompted, in part, by requests

from local groups, including the oyster industry, which attended

a public hearing in **3 New Orleans on Apmil 25, 1955,

concerning the need for freshwater diversions. After finding "a

marked reduction [in oyster yield] per unit area" over time, the

U.S. Fish and Wildlife Service concluded in the 1959

memorandum that "[i]ntroduction of fresh water to reestablish

natural patterns of salinity and alluviation and increase fertility

would provide the most effective method of restoring fish and

wildlife production." The 1959 memorandum identified four

separate areas in Plaquemines Parish as freshwater diversion

sites, two of which were located on the west side of the

Mississippi, Areas No. | and 3, and two on the east side, Areas

2 and 4. The diversion structures were to be designed to benefit

both public seed grounds [FN1] and privately held water-bottom

leases obtained from the state for oyster leasing. Between 1968

and 1969, the Corps met with local interests, including the

Louisiana Department of Wildlife and Fisheries ("DWF") and the

Plaquemines Parish Commission Council, to discuss proposed

locations for the diversion structures authorized by Congress.

During Corps-sponsored public hearings held in 1968, the Corps

App. 8

proposed Caernarvon as the situs of the freshwater diversion

structure for Area No. 4 to be located on the east side of the

Mississipp1.

ENL1. Louisiana maintains considerable acreage devoted

to public seed grounds. These public seed grounds tend

to be farther offshore than the leased acreage. The public

seed grounds are open for approximately seven months

of the year (September to the following March). The

public seed grounds provide a source of seed oysters that

can be transplanted by lessees to their individual leases

for harvest at a later date; the public grounds also

contain market-sized oysters that can be harvested by

anyone and marketed directly with no transplanting

requirements.

The 1959 memorandum described the entire area covering Area

4 as "usually too fresh to support an oyster industry ..." The

memorandum stated that the pollution resulting from

Caernarvon's discharge of silt would "not be a problem in Area

No. 4 as in other areas because an oyster fishery is not present."

Thus, the 1959 memorandum confirmed that Area No. 4, where

Caernarvon would alter salinity levels in the water, coincided

with the area of Breton Sound Basin that had been shown to **4

be outside the productive oyster zone as of 1960.

During the 1970s, as land continued to erode and disappear

further and further inshore, the zone favorable for oyster growth

continued to move landward, due to saline changes. This

landward salinity movement spawned an oyster community in

the marshlands in the northwest portion of the Breton Sound

Basin, which had previously been too fresh to sustain such

growth. While creating new oyster grounds, the inland

movement of salinity had the deleterious effect of rendering

unusable large areas of previously productive oyster grounds,

including the public seed grounds. Between 1978 and 1982, the

Corps and relevant state and local agencies continued to discuss

App. 9

————— aE

the construction of a freshwater diversion structure at

Caernarvon at informal meetings. On January 21, 1982, the State

submitted a letter to the Corps, announcing its intent to

participate in the Caernarvon project, and the Corps and the

Louisiana Department of Natural Resources (the "DNR") issued

a joint public notice about the project.

*1090 In 1984, the Corps prepared an environmental impact

statement suggesting locations of large salinity concentrations

(isohalines) at three areas along the southeast Louisiana coast to

enhance fisheries and to combat coastal erosion. To create

optimal salinity regimes, the environmental impact statement

proposed the construction of three freshwater diversion

structures in the three areas: (1) the Bonnet Carre Spillway in

the Lake Ponchartrain Basin; (2) the Davis Pond Freshwater

Diversion Structure in the Barataria Basin; and (3) the

Caernarvon Freshwater Diversion Structure in the Breton Basin

near Braithwaite, Louisiana. The Caernarvon project, in

particular, was designed to abate saiiwater intrusion and marine

tidal invasion, while promoting coasta! restoration and enhancing

fisheries and wildlife in the basin. The DNR and DWF set

optimal target salinity zones in Breton Sound, which ranged from

5 parts per thousand **5 "ppt") for the northwest inland area of

the basin to 15 ppt for the lower seaward end of the basin. The

salinity zones were based upon the fact that below 5 ppt, oysters

become stressed and die, while above 15 ppt, oysters are subject

to saltwater predators and disease. The optimal salintty regime

targeting annual average isohalines in concentration between 5

ppt and 15 ppt allowed oyster propagation and cultivation to

continue in an existing zone within Breton Sound, while at the

same time fostered coastal restoration by freshening the upper

Breton Basin and allowing vegetation to return in an area where

little oyster production was occurring. The Corps’ 1984 memo

also recognized that "the zone where conditions will become too

fresh for oyster cultivation as a result of the diversion coincides

with an area that was historically (prior to 1960) too fresh and

not favorable for oyster cultivation." At a July 31, 1984, public

App. 10

i -

hearing, the President of the Louisiana Oyster Dealers and

Growers indicated his support for both the Caernarvon project

and freshwater diversion structures generally.

On October 30, 1986, Congress authorized the funds for

construction of Caernarvon, and the State entered into a formal

cooperation agreement with the Corps on June 10, 1987. The

agreement recognized Caernarvon as one of the four sites

originally authorized by the Flood Control Act of 1965. In

anticipation of the operation of Caernarvon, in 1989, DWF

inserted a clause in its lease form, requiring that the State be

indemnified and held harmless for any claims related to coastal

restoration. [FNla]

FN 1a. This clause will be discussed in detail later in the

opinion.

Also, in response to an October 26, 1990, letter from Bill Good,

Ph.D., acting administrator of DNR's Coastal Restoration

Division and chairman of the Caernarvon **6 Interagency

Advisory Committee (the "CIAC"), [FN2] to the acting secretary

of the DWF, that oyster leases within the Caernarvon structure's

intended impact area might be adversely affected by the

freshwater diversion flow, the DWF implemented an oyster

"relay" operation. The relay, known as the Caernarvon Oyster

Transfer, allowed oyster lessees with productive oyster leases,

who obtained a relay permit and posted a $1,000.00 performance

bond, to move their oysters from the potential Caernarvon impact

area to predesignated lease sites outside the impact zone. [FN3]

Some *1091 lessees chose to participate, while others did not.

FN2. The CIAC is the advisory group of agency

representatives and stakeholders who, among other

things, determine the flow rate of Caernarvon. ©

FN3. A memo issued by Greg Laiche of the DWF on

November 7, 1990 explained that the effects Caernarvon

might have on the oyster fishermen's leases were

App. 11

unknown, but recognized that "certain fisheries resources

could be displaced." He described the relay program as

follows: In regards to assisting the state in any mitigative

damages resulting from the operation of the structure, the

Department is prepared to compensate oyster fishermen

whose oyster leases are adversely affected by the

operation of the structure, in five years, by the relocation

of oyster leases out of the area on an acre for acre basis

at that time. The lessee would have to document these

damages to obtain a lease relocation. Any such

relocations would be restricted to areas designated for

leasing in the vicinity.

LDWF, along with DHH is allowing oyster lease holders,

south of the Caernarvon Freshwater Diversion Structure

out to the Tennessee Gas Pipeline (Double pipeline) an

opportunity to relocate oysters which may be affected by

the operation of the structure.

Oysters may be relocated from December 3-7 [1990]

beginning one-half hour before sunrise and ending

one-half hour after sunset except on December 7, when

all relocation activity must cease at 12 noon.

Applications for relocation permits must be filed ten days

prior to December 3rd. The LDWF Enforcement

Division will enforce the relocation as per the attached

requirements and rules. LDWF biologist will also

monitor the relocation in an effort to estimate production

of the leases from which oysters are removed.

Construction commenced at the Caernarvon site on June 7,

1988, and was completed in February 1991. The official

Caernarvon dedication was held on April 12, 1991. Caernarvon

operates based on gravity and hydrostatic pressure from the river

and consists of five culverts equipped with gates that can be

raised or lowered to regulate the rate of flow from the river.

Caernarvon was initially tested from an **7 operational

standpoint in August 1991, but could not be operated in

accordance with its intended flow regime at that time since the

App. 12

entire Breton Sound area had been heavily impacted in early

1991 by heavy rains, resulting runoff, and the high river

conditions which had overflowed the Mississippi's east bank

directly into Breton Sound at the Bohemia Spillway. Caernarvon

became operational in September of 1991 in accordance with the

recommended flow rates, and this achieved some, but not all of

the intended effects of the project. As a result, the CIAC

eventually voted to significantly increase the flows of the

Caernarvon project in 1993, resulting in a greater freshening of

Breton Sound. While this greatly improved oyster production on

the public seed grounds, [FN4] it reduced the salinity of the

water covering the private oyster leases north of the public seed

grounds and closer to the structure, where plaintiffs’ leases are

located. In 1996, the CIAC voted to decrease the flow to the

original flow regime and has since monitored conditions,

increasing or decreasing the flow in order to keep the annual

average salinity within the Sppt target area or isohaline (area of

equal salinity concentration).

FN4. In fact, oyster productivity on the public seed

grounds increased by 300%, a fact acknowledged by

plaintiffs in brief.

On March 29, 1994, plaintiffs filed the instant class action suit

on behalf of all persons holding oyster leases on state-owned

water bottoms in Breton Sound, asserting that their oyster leases

were destroyed or damaged because of the intrusion of

freshwater from the Mississippi River by the Caernarvon project.

The plaintiffs’ oyster leases are located in Breton Sound, east of

Caernarvon and west of the public seed grounds; further east of

the public seed grounds is the.Gulf of Mexico. [FN5] There **8

are approximately 204 [FN6] *1092 oyster leases involved in

this class action. Plaintiffs asserted that the State's action of

lowering the salinity levels of the water in Breton Sound below

that necessary to support oyster cultivation "has resulted in a

permanent and substantial interference with plaintiffs' use and

enjoyment of their land amounting to a taking of an interest in

App. 13

[their] property rights without compensation in violation of

Article I, § 4 of the Louisiana Constitution ..." Plaintiffs asserted

that prior to the time Caernarvon went 9n line, the 5-15 ppt

salinity range coexisted with their leases.

FNS. On August 16, 1996, the trial court issued a

judgment certifying a class with the following definition:

All persons, corporations, or other legal entities who

have held, or who now have ownership interests in oyster

leases located in that part of Breton Sound west of the

"red line" that is, that boundary or line established by the

Louisiana Department of Wildlife ‘and Fisheries

designated in the western most limits of this State's

oyster seed grounds; south of the Mississippi River Gulf

Outlet and north of Kelly Gap.

DNR appealed and applied for writs related to both the

Reasons for Certification and the Judgment of

certification, but writs were denied.

FN6. The exact amount of oyster leases held by the

named plaintiffs in this law suit is somewhat unclear.

Plaintiffs produced the leases at trial in Exhibits 1-4,

which, according to the record in this Court, amount to

202 leases. The court of appeal and the defendants have

stated that there are 204 leases.

On April 24, 1994, plaintiffs also filed suit in the United States

Court of Federal Claims against the United States, more

particularly the Corps, which designed, financed, and built

Caernarvon, alleging the same takings theories, but under the

Fifth Amendment to the United States Constitution. The Court

of Federal Claims granted the Corps' motion for summary

judgment in August of 1995, concluding that plaintiffs had no

compensable expectancy in the continued artificially elevated

saline levels caused by the Mississippi River levee system in

historically freshwater marsh areas within Breton Sound. Avenal

v. United States 33 Fed. Cl. 778 (1995). The court of appeal

App. 14

affirmed the decision on different grounds, [FN7] holding that

the oyster lessees could not have had "reasonable.

investment-backed expectations" that their oyster leases **9

would give them rights protected from the planned freshwater

diversions authorized by the federal and state *1093

governments. Avenal v. United States, 100 F.3d 933

(Fed.Cir.1996). [FN8]

FN7. The federal circuit court ruled in Avenal as

follows:

The case before us presents a textbook example of a

situation in which the plaintiffs, in the face of established

public concerns and while governmental efforts to

address those concerns were well known, moved to take

advantage of the existing conditions for their own

economic benefit. There is nothing wrong with their

having done that; the State of Louisiana provided the

mechanism for it, and their own initiative gave them

whatever economic advantages the situation afforded. It

is hard for them to claim surprise, however, that the

pre-existing salinity conditions, created at least in part by

earlier government activity, were not left alone, but were

again tampered with to their (this time) disadvantage.

Though as entrepeneurs they are entitled to capitalize on

the opportunities afforded by government action, they

cannot here insist on a guarantee of non-interference by

government when they well know or should have known

that, in response to widely-shared public concerns,

including concerns of the oystering industry itself,

government actions were being planned and executed

that would directly affect their new economic

investments. These concerns and plans date back to the

early part of the century, and beginning in the 1950's and

1960's were actively being pursued by state and federal

agencies. They were certainly a part of the environment

in which the raising and harvesting of oysters in the

Louisiana marshes were conducted. Assuming, as we

App. 15

must, that these plaintiffs did not invest in their leases

until the 1970's, these plaintiffs, in the words of Penn

Central, cannot have had reasonable investment-backed

expectations that their oyster leases would give them

rights protected from the planned freshwater diversion

projects of the state and federal governments.

Avenal v. State, supra, 100 F.3d at 937.

FN8. Following these decisions, the DNR filed a motion

for summary judgment in this state action, alleging that

collateral estoppel barred the relitigation of the "takings"

issue already decided by the federal courts. The trial

court denied the motion, and the court of appeal agreed,

holding on rehearing that the legal standard applied in the

federal case was not the same because "the ‘distinct’

investment-backed expectations" test of Penn Central

Transp. Co. v. City of New York, 438 U.S. 104, 98 S.Ct.

2646, 57 L.Ed.2d 631 (1978), is irrelevant to the question

of whether a taking has occurred under Louisiana law.

Avenal v. State, 99-0127 (La.3/15/00), 757 So.2d 1 (on

rehearing). This Court denied writs. Avenal v. State

00-1077 (La.6/23/00), 767 So.2d 41, cert. denied, La.

Dept. of Natural Resources v. Avenal, 531 U.S. 1012,

121 S.Ct. 568, 148 L.Ed.2d 486 (2000).

On December 15, 1998 in the state court suit, plaintiffs moved

to strike all evidence, testimony, and argument regarding the

hold harmless clauses contained in the oyster lease agreements.

The DNR filed a motion for partial summary judgment seeking

the dismissal of many class members’ claims based on the

validity of the hold harmless clause inserted into every lease

agreement issued from 1989 through 1995. The DNR also

argued in its motion for summary judgment that the Coastal

Wetlands Restoration Advisory clause and the Allocation of Risk

and Liability and Indemnity clause, both of which were inserted

into every oyster lease agreement issued as of **10 1996, also

precluded the plaintiffs’ from asserting their claims for damages

App. 16

|

against the State. The trial court granted plaintiffs’ motion in

limine, excluding all evidence relating to the hold harmless

provisions contained in plaintiffs' leases. The trial court deferred

ruling on the DNR's motion for partial summary judgment as to

the validity of the hold harmless clauses until "after the jury's

findings." The DNR filed a writ application seeking review of

these rulings, which the court of appeal denied in part and

granted in part. Avenal v. State, 99-0317 (La.App. 4 Cir.

12/15/00). The court of appeal found no error in the trial court's

grant of plaintiffs' motion in limine to exclude all evidence of the

hold harmless provisions, but found that the trial court erred in

deferring to rule on the motion for summary judgment and held

that it had to either grant or deny the motion at least ten days

before trial. Jd. However, as this ruling from the court of appeal

did not come until the final day of trial when the jury returned its

verdict, the trial court never ruled on the motion for summary

judgment regarding the validity of the hold harmless clauses.

Prior to trial, plaintiffs also filed a motion in limine to exclude

all evidence and testimony regarding the biological assessments

and side-scan sonar surveys that the DNR intended to use to

prove the amount of reef on the individual plaintiffs’ oyster

leases. The trial court granted the motion. The trial court also

refused to grant DNR's motion to compel production regarding

the oyster lessees' actual income and production on their leases.

[FN9]

FEN9. The named plaintiffs produced a limited amount of

information regarding the actual amount of income

earned from the sale of oysters on their leases before and

after Caernarvon went online, but this information fell far

short of establishing the amount of damages that would

be necessary to prove actual damages in this case.

After an eight-day jury trial on the merits, the jury returned a

verdict in favor of the five class representatives, finding that "the

State has taken actions which have taken or damaged the

App. 17

[plaintiffs'] right to property". The jury determined that

$21,345.00 **11 per damaged acre [FN10] would adequately

*1094 compensate plaintiffs Duplessis, Skansi, Fox, and Fox

Oyster Company for their losses, while $1,000.00 per acre would

adequately compensate Avenal. The trial court, in accordance

with the jury's verdict, rendered judgment awarding Avenal

$826,000.00; Duplessis $5,442,975.00; Fox $20,235,060.00;

Fox Oyster Company $16,200,885.00; and Skansi

$5,571,045.00. The court awarded the remaining class members

similarly situated to Avenal and those similarly situated to the

four other class representatives their respective damages, which

included 63,000 acres of oyster leases resulting in an award of

over $1,000,000,000.00. In addition to compensatory damages,

the court awarded plaintiffs attorneys’ fees and court costs. The

trial court denied all post-trial motions. The DNR filed an

application for supervisory writs seeking review of the trial

court's denial of its motion for new trial and its refusal to abide

by the court of appeal's December 15, 2000 ruling that the trial

court either grant or deny the motion for partial summary

judgment on the hold harmless clauses at least ten days prior to

trial. The court of appeal declined to exercise its supervisory

jurisdiction, ruling that the DNR's writ **12 application should

be consolidated with its pending appeal. Avenal v. State, 01-0542

(La.App. 4 Cir. 5/22/01).

FN10. This damage award was based on a formula,

referred to as the "currency cultch matrix," which uses

the cost of cultch (installed) as the currency for valuing

oyster leases. "Cultch" is defined by Webster's

Dictionary as "material laid down on oyster grounds to

furnish point of attachment for young oysters." A layer

of cultch on the water bottom is necessary for the growth

of oysters. The currency cultch matrix looks to the costs

of the cultch (installed) on a per acre basis. In the present

case, the currency cultch matrix measured the value of

plaintiffs' leases by the cost of replacing them at another

location by the replacement of six inches of cultch on

App. 18

every inch of plaintiffs' leases, even though there was no

proof offered at trial that any of the leases ever contained

six inches of cultch. The court of appeal appears to have

justified this holding based on another coastal area

affected by a coastal diversion, Davis Pond, where the

State settled with the oyster lessees based on the currency

cultch matrix formula. However, those oyster lessees

were only compensated to the extent necessary to cover

their leases in 1 1/2 inches of cultch. Further, the

qualifying Davis Pond leases were all "active and

productive," and only qualified for evaluation under the

damage formula if they agreed to a side-scan sonar

survey using an acoustic remote-sensing device to

determine the amount of culich, reef or hard bottom in

each lease, the replacement of which was the only thing

they would be compensated. Prior to trial in this case,

the plaintiffs in this matter rejected a similar offer by the

state.

While we do not reach the issue of the exorbitant amount

of damages awarded by the lower courts in this opinion,

this Court has held that, albeit in a tort case under La.

R.S. 56:423, that an oyster lessee is not entitled to

restoration or replacement costs, as the state being the

owner of the property, and not the lessee, is the party

with the real and actual interest in restoring or rebuilding

the property. Jnabnet_v. Exxon Corp., 93-0681

(La.9/6/94), 642 So.2d 1243, 1255.

A divided five-judge panel affirmed the trial court judgment.

Avenal v. State Dept. of Natural Resources, 01-0843 (La.App. 4

Cir. 10/15/03), 858 So.2d 697. Although the plaintiffs did not

prove at trial the amount of oyster production on their leases

before and after Caernarvon, and some leaseholders admitted that

their leases had never produced oysters, the court of appeal held

that "so long as plaintiffs proved generally that their leases were

productive before [Caernarvon] came on line, and that they were

not productive after [Caernarvon] came on line, and that

App. 19

[Caernarvon] caused the loss of oyster productivity ..." the

plaintiffs were entitled to recover. /d. at 704 (emphasis added).

In addition, the court of appeal increased the award to the lead

plaintiff Avenal to over $17,000,000 because he is "a

well-established oyster fisherman," and there was no proper basis

for Avenal to be treated differently than the other plaintiffs,

despite *1095 the fact that he had acquired some of his leases at

the same time the present suit was filed. /d. at 703, n. 4.

We granted the DNR's writ application to determine whether

plaintiffs are entitled to compensation under La. Const. Art. I, §

4 as aresult of the State's operation of Caernarvon, which altered

salinity levels in the waters covering the oyster fishermen's

leases. Avenal v. State, 03-3521 (La.1/30/04), 864 So.2d 638.

[FN11]

FN11. We have received numerous amicus briefs in this

case from various parties, including, but not limited to,

the Coalition to Restore Coastal Louisiana and

Environmental Defense, the Business Council of New

Orleans & the River Region, Inc., the Louisiana

Department of Transportation and Development, the

Police Jury Association of Louisiana, Inc., Professor

Oliver Houck, the Louisiana Division of Administration,

the City of New Orleans, Louisiana Department of

Wildlife and Fisheries, the Slavik family, and the

Fishermen and Concerned Citizens Association, Inc.

**13 DISCUSSION

The Oyster Statutes

The leasing of state-owned water bottoms to private parties for

the purpose of oyster farming is governed exclusively by a

specific statutory scheme. According to this statutory scheme,

the State owns "all oysters and other shellfish and parts thereof

grown [on the State's water bottoms], either naturally or

cultivated, and all oysters in the shells after they are caught and

App. 20

taken therefrom ... except as provided in R.S. 56:4." [FN12] La.

R.S. 56:3. Further, the State owns all water bottoms "bordering

on or connecting with the Gulf of Mexico within the territory or

jurisdiction of the State," and the State may not alienate these

water bottoms. La. R.S. 56:3; La. Const. art. VII, § 14 (2004):

Art. IX, § 3 (2004). However, in order to foster, cultivate, and

protect the Louisiana oyster industry, the State has statutorily

authorized the issuance of oyster leases to private parties.

FN12. La. R.S. 56:4 provides:

Nothing in this Title and particularly in Section 3 of this

Part affects in any way the authority of the Louisiana

Department of Natural Resources to lease or otherwise

administer the beds and bottoms of navigable rivers,

streams, bayous, lagoons, lakes, bays, sounds, and inlets

bordering on or connecting with the Gulf of Mexico

within the territory or jurisdiction of the state, as

established by law and regulations and promulgated

thereunder.

Accordingly, La. R.S. 41:1225 authorizes the DWF to grant

leases on state-owned water bottoms for oyster cultivation,

bedding, and harvesting, and matters relating thereto, as provided

in Subpart D of Part VII of Chapter 1 of Title 56 of the Louisiana

Revised States of 1950. La. R.S. 41:1225; La. R.S. 56:4. All

oyster leases issued on State water bottoms are governed

exclusively by this statutory scheme. La. R.S. 56:424. La. RS.

56:425 provides that the Secretary of the DWF may only lease

this State's water bottoms and natural reefs in the water bottoms

of this State to a resident, a firm composed of residents, or a

corporation domiciled in Louisiana or **14 organized under this

State's laws. The Secretary's right to grant oyster leases is

likewise contingent upon a determination that the State owns the

water bottoms to be leased, and that the lessee agrees as a matter

of contract that he will operate under Louisiana laws and

pursuant to DWF's rules and regulations. La. R.S. 56:425(A),

(B). All leases begin on the date the lease is si gned and continue

App. 21

for a fifteen-year period. La. R.S. 56:428(A). La. R.S.

56:425(C) recognizes that the Secretary may "make such

stipulations in the leases made by him as he deems necessary and

proper to develop the [oyster] industry" provided that the clauses

are consistent *1096 with the statutory provisions of Subpart D.

The property rights of an oyster lessee are defined in La. R.S.

56:423 as follows:

A. A lessee shall enjoy the exclusive use of the water bottoms

leased and of all oysters and cultch grown or placed thereon,

subject to the restrictions and regulations of this subpart.

B. (1) A lessee of oyster beds or grounds who has obtained,

recorded and marked his lease in compliance with the law shall

have the right to maintain an action for damages against any

person, partnership, corporation or other entity causing

wrongful or negligent injury or damage to the beds or grounds

under lease to such lessee.

* * *

(3) Any action for damages under this Section shall be brought

within one year of the occurrence of the wrongful or negligent

act, or within one year of the date of discovery of such act,

whichever last occurs.

In exchange for this exclusive use of state resources, a lessee

pays the State two dollars per acre for plots up to 2,500 acres

(formerly 1,000 acres). La. R.S. 56:423(A); La. R.S. 56:432

(2003); Act 449 of 2003. The leaseholder can unilaterally

terminate his lease at any time by notice or by simply ceasing

rental payments. If the DWF unilaterally terminates a lease and

takes it back to create new seed grounds, DWF must compensate

the leaseholder but only for "oysters, seed oysters, and other

**15 improvements." La. R.S. 56:434(B) (1991). La. RS.

56:428(A) also allows the State to forego giving an oyster lessee

the first right of renewal under his lease upon a determination

that the lease is not capable of supporting oyster populations.

App. 22

The Hold Harmless Clauses

[1] The vast majority of the leases in this case, except for 12

[FN13] of the approximately 204 leases alleged by the named

plaintiffs to have been "taken" by Caernarvon, contain hold

harmless clauses which legally and validly hold the State

harmless from any damages suffered by the oyster fishermen by

the operation of this coastal diversion project. As explained

below, we hold that the these oyster fishermen's takings claims

are precluded by virtue of these hold harmless clauses.

FN13. Among the leases presented by the plaintiffs in

Exhibits 1-4, 12 are dated prior to 1989 and do not

contain hold harmless clauses. However, one of these

leases, Lease No. 26236 included with the Avenal leases,

was issued to Donald Campo, Sr., and there we can find

no indication in the record that it was ever transferred to

Avenal. In any event, when we refer to the leases dated

prior to 1989, we will be referring to all 12 leases

included in Exhibits 1-4.

In 1989, when DWF became concerned that Caernarvon would

alter the salinity levels in the waters covering the oyster leases in

Breton Sound, DNR objected to the issuance of oyster leases in

Breton Sound or elsewhere in the vicinity of planned coastal

restoration projects. However, a compromise was confected by

then Chairman of the Louisiana Coastal Restoration Policy

Committee, Manual Fernandez, to allow oyster leases to issue as

long as they contained a hold harmless and indemnity clause in

favor of the state. Thus, instead of not issuing any more leases on

the basis that these leases would not be capable of supporting

oyster populations under the authority of La. R.S. 56:428(A),

DWF inserted a hold harmless clause into all leases issued after

1989, which cover 140 of the 204 leases in this case. It was only

with this clause that the oyster leases were allowed to issue,

which was solely for the benefit of the oyster *1097 industry.

This 1989 hold harmless clause stated:

App. 23

**16 This lessee hereby agrees to hold and save

the State of Louisiana, its agents or employees,

free and harmless from any claims for loss or

damages to rights arising under this lease, from

diversions of fresh water or sediment, depositing

of dredged or other materials or any other actions,

taken for the purpose of management,

preservation, enhancement, creation or

restoration of coastal wetlands, water bottoms or

related renewable resources; said damages to

include, but not to be limited to, oyster mortality,

oyster disease, damage to oyster beds or

decreased oyster production, due to siltation,

pollution or other causes.

All leases issued between 1989 and 1995 contain the same

clause while leases issued from July 1995 to the present contain

even more detailed indemnity clauses, namely the Coastal

Wetlands Restoration Advisory Clause _[FN14] and the

Allocation of Risk and **17 Liability, and Indemnity Clause.

[FN15] *1098 These clauses were inserted into the leases given

the fact that several suits had been filed as of 1995 by various

oyster leaseholders alleging damages as a result of freshwater

diversion structures (including this suit), and more were

expected. These clauses were also in accordance with

Legislative amendments in 1995 to the existing coastal

restoration statutes requiring that the State be held harmless

regarding coastal restoration in an effort to promote coastal

restoration for the good of the public. [FN16]

FN14. This clause provided:

Lessor hereby formally advises and Lessee acknowledges

the following: The State has undertaken, and intends to

undertake, a number of coastal restoration projects,

including freshwater diversion projects, within the State.

The decision to undertake these projects was based upon

App. 24

the need to conserve, restore, create, and enhance coastal

wetlands as well as dependent fish and wildlife

populations through a number of methods, including the

recreation of the historical role of the Mississippi River

system, which formerly not only nourished but also

established these wetlands prior to the construction of the

Mississippi River levee system. Inasmuch as these

wetlands continue to disappear at an alarming rate, it is

necessary to partially divert the flow of a number of the

rivers, streams, canals, bayous, and other water bodies

within the State of Louisiana, or to move dredge spoil or

conduct other coastal restoration projects to re-establish

these wetlands. As a result, it is possible, if not probable,

that these coastal restoration projects may have some

adverse effect on the waters and water bottoms, as well

as On any oysters on some of the State water bottoms

leased to oyster fishermen.

The State is obligated pursuant to Article IX, Section I of

the Louisiana constitution as well as the public trust

doctrine associated therewith, to undertake these coastal

restoration projects so as to protect Louisiana's natural

resources for the benefit of the people of the State.

Accordingly, pursuant to the Louisiana Constitution and

the public trust doctrine, the State as Lessor hereby

conveys to Lessee a limited interest in the water bottom

which is described in this lease, subject to the conditions

that: (1) this lease is subservient to the State's past,

present or future coastal restoration projects; (2) the

State's coastal restoration projects may cause adverse

effects in the area of this lease; and, (3) the State is only

issuing this lease based upon the mutual understanding of

both the State and Lessee that Lessee's property interest

conveyed by this lease shall not include any right

whatsoever to make claims against the State as a result of

freshwater diversion or any other coastal restoration

projects provided that, the State and the United States

App. 25

shall remain responsible for their own (1) acts or

omissions which are not reasonably related to the

legitimate governmental objective for which the

policy-making or discretionary power of the State and/or

the United States exists; or (2) acts or omissions which

constitute criminal, fraudulent, malicious, outrageous,

reckless, or flagrant misconduct.

FN15. This clause provides:

Lessee further acknowledges that Lessee has no intent to

pursue any claims for damages against the State of

Louisiana and/or the Wildlife and Fisheries Commission

and/or the State's departments and agencies, related to or

arising out of or resulting from coastal restoration

projects contained in an approved annual Coastal

Wetlands Restoration Plan and undertaken by the State

for the benefit of the people of Louisiana, including, but

not limited to, freshwater diversion projects. Further, in

consideration of the issuance of this lease, Lessee shall

assume all liability and risk of loss, and agrees that this

lease is subservient to all past, present or future coastal

restoration projects as described above. Lessee also

agrees to indemnify and hold the political subdivisions

wherein lies the acreage associated with this oyster lease,

and any political subdivision which has implemented or

may implement a coastal restoration project affecting this

oyster lease as well as the State of Louisiana, and/or the

United States, their officials, representatives, employees,

agencies, departments and/or commission, harmless from

and for, all loss, damage, costs and/or expense in any

way associated with this oyster lease and the oysters,

cultch, reefs and beds located therein, including any loss,

sustained by the Lessee and any affiliated persons or

entities working with or through Lessee, arising out of,

connected with, incident to, or directly or indirectly

resulting from or related to diversion of freshwater or

App. 26

sediment, depositing of dredged spoil or other material or

any other action taken pursuant to coastal restoration

projects undertaken by the State and/or the United States,

... for the benefit of the people of the State of Louisiana.

Such coastal restoration activities include, but are not

limited to, the management, preservation, enhancement,

creation or restoration of coastal wetlands, water bottoms

or dependent fish and wildlife populations. Damages

include, but are not limited to, oyster mortality, oyster

disease, damaged oyster beds or decreased oyster

production, loss of revenue and/or loss of income due to

siltation, changes in salinity, pollution or other causes,

regardless of the passive, concurrent, active or sole

negligence of the State of Louisiana and/or the United

States ..., and regardless of whether liability without

fault, strict liability, absolute liability, or liability for

inverse condemnation, liability fora "taking" in violation

of the constitutions of the United States or the State is

alleged or imposed upon the State and/or the United

States ...

FN16. That legislation reads in pertinent part:

Section 214.5 State and political subdivisions of the

State held harmless in coastal restoration; licensees

and permittees

A. Notwithstanding any other law to the contrary, the

State of Louisiana, its political subdivisions, its agents or

employees shall be held free and harmless from any

claims for loss or damages to rights arising under any

lease, permit, or license granted to any individual or other

entity for any purpose on State lands or water bottoms

from diversions of freshwater or sediment, depositing of

dredged or other materials or any other actions, taken for

the purpose of management, preservation, enhancement,

creation or restoration of coastal wetlands, water

bottoms, or related renewable resources.

- B. All departments, agencies, boards, or commissions of

App. 27

the State of Louisiana and its political subdivisions shall

include language which shall hold the State and its

political subdivisions harmless for the purposes set out in

this Section and all leases, permits, or licenses granted to

any individual or other entity after July 1, 1995.

Acts No. 936, Section 1, effective July 1, 1995. Section

2 of Act 1995, No. 936 provides as follows:

Section 2. This Act is intended to be remedial in nature

and delineates legislative intent and shall be retroactive

as it applies to any leases, permits, or licenses granted to

any individual or other entity on State lands and water

bottoms whose rights may be affected by coastal

restoration projects.

**18 All leases issued from July 1995 to present contain the

Coastal Wetlands Advisory Clause and the Allocation of Risk

and Liability and Indemnity Clause, which include 53 of the

approximately 64 leases remaining in this case.

In spite of the undisputed fact that the language of the 1989

clause is clear on its face and explicitly releases the State from

*1099 any liability to the oyster fishermen due to this diversion

project, the court of appeal found that our prior decision in

Jurisich v. Jenkins, 99-0076 (La.10/19/99), 749 So.2d 597,

dictates the conclusion that the "unilateral insertion” of the 1989

hold harmless clauses are "legally invalid." 858 So.2d at 706.

As to the post-1995 hold harmless clauses, the court of appeal

recognized a 2000 statutory amendment that purportedly

permitted the State to insert indemnity clauses into oyster leases,

2000 La. Acts No. 107, and that applied to oyster leases renewed

or extended after July 1, 1995, but did not consider the validity

of the post-1995 indemnity provisions because it found that none

of the leases at issue in this case were dated after July 1, 1995.

[FN17] These holdings are erroneous, as Jurisich does not ie)

compel the conclusion that the types of indemnity provisions in

App. 28

|

|

|

)

plaintiffs’ leases are legally invalid, and the evidence presented

clearly showed that 53 leases were renewed between 1996 and

1998 that contained the more detailed indemnity clause.

y ENT? Act No. 107, Ist Extra Session (2000) resulted in

the passage of La. R.S. 56:427.1, which contained

language nearly identical to that contained in La. R.S.

49:214.5, which required that the State be held harmless

from claims for alleged oyster mortality as a result of

coastal restoration projects and required the insertion of

an indemnity clause in all leases on State water bottoms

issued or renewed after the effective date of the statute,

Julyl, 1995. Both statutes were stated to be "remedial"

and therefore purported to have retroactive effect insofar

as leases issued before July 1, 1995. We have no reason

to rule on the retroactivity issue as we base our ruling on

other issues.

The issue. in Jurisich was whether the DWF could refuse to

renew oyster leases unless the oyster lessees agreed to the

inclusion of a "navigation and oil field activity clause," which

made the oyster leases "subservient to navigation, maintenance

of navigation, and all normal, usual and permissible mineral and

oil field activity which has been sanctioned by the State of

Louisiana through a prior existing lease, permit, or contract.”

While the State had included other clauses in the leases at issue

in that case, including the Coastal Wetlands Advisory Clause and

the Allocation of Risk and Liability and Indemnity Clause, the

Court expressly did not address the validity of these clauses. 749

So.2d at 599, 605 n. 8. Indeed, following an application for

rehearing, this Court emphasized that "its discussion of the

authority of the Secretary [of the DWF] and its ultimate holding

were restricted to the inclusion of the navigation and oil field

activity clause." Jd. at 610. Accordingly, we expressly reserved

the issue of whether that holding could be extended to other

types of indemnity clauses, including in particular, the 1996

Clauses at issue in this case.

App. 29

Jurisich recognized that the statutory laws relative to the leasing

of water bottoms for oyster production differ from the provisions

that govern ordinary conventional leases addressed in Title LX of

Book II of the Civil Code, La. C.C. arts. 2668, et seq. Jurisich,

supra at 600 (citing **20Vujnovich v. Louisiana Wildlife and

Fisheries Commission, 376 So.2d 330 (La.App. 4 Cir.1979)).

[FN18] The Court found that the discretion the DWF has to

renew an oyster lease *1100 is therefore limited by a

determination of the lease's capability of supporting oyster

populations under La. R.S. 56:428(A), and that legislative, or

statutory, authority was necessary for an expansion of that

authority. Jd. at 601. The Court found that the legislative

authority found in La. R.S. 56:425(C), which provides that "the

[DWF] may make such stipulations in the leases made by him as

he deems necessary and proper to develop the industry;

however, these stipulations must be consistent with the

provisions of this Subpart," did not grant the DWF authority to

include the navigation and oil field activity clause.

FN18. The Jurisich court explained this as follows:

Except for reconduction provided in La. Civ.Code art.

2688 (reconduction of lease of predial estate by

continued possession after expiration of the term) and

2689 (reconduction of lease of house or room by

continued possession after expiration of term), renewal

is a matter generally left to contractual negotiation. On

the other hand, oyster lease renewal is statutorily

provided and is not contingent upon a contractual

provision for its existence.

749 So.2d at 600 n. 4.

One reason for this holding was the Court's finding that the

State was obligated to give the oyster lessees the first right of

renewal of their leases under La. R.S. 56:428(A), "provided the

lease is capable of supporting oyster populations." As there was

no showing that the lessees were incapable of supporting oyster

populations, the State was found to have no right to fail to renew

App. 30

ae pe a ee ee ee ee ee eee eee

them by adding an onerous clause. This case is distinguishable

from Jurisich as the State may véry well have been able to show

that the leases would become incapable of oyster production after

Caernarvon became operational and could have refused to renew

the leases on that basis. However, as discussed above, rather

than do this, as a compromise the State inserted the hold

harmless clauses in 1989.

Another reason for the Jurisich court's holding that La. R.S.

56:425(C) did not **21 give the DWF the right to include the

navigation and oil field activity clause in the lease was that the

clause was not necessary and proper to develop the oyster

industry as it abrogated the oyster lessees' rights under La. R.S.

56:423(B)(1) to sue third parties for negligent or wrongful injury

to their leases. [FN19] Jd. at 602-03. Therefore, La. R.S.

56:425(C) did not provide the DWF with the needed legislative

authority to add the clause into the lease. The hold harmless

Clauses applicable in this case, on the other hand, contain

stipulations that are necessary and proper to develop the oyster

industry as a whole, as: (1) the clauses allowed oyster lessees, if

they chose to continue to lease the property in spite of the coastal

restoration efforts, to effectively risk that at some point the leases

may be productive and to reap whatever other economic gains

they could resulting from their status as lessees; (2) the clauses

allowed the Caernarvon project to proceed without fear of

economic disaster from lawsuits; (3) the Caernarvon project

greatly improved oyster production on the public seed grounds;

and (4) Caernarvon returned the area of productive oyster

producing grounds to those which existed before the levee

system began the coastal erosion process. The fact that certain

leases became unproductive does not render the clauses

unnecessary and improper for the development of the oyster

industry. Further, unlike the situation in Jurisich, where the

clause at issue was found to be invalid because it abrogated the

lessees rights to sue third parties under La. R.S. 56:423(B), in

this case, only the rights vis-a-vis the lessor and lessee are

involved and the rights granted in La. R.S. 56:423(B) have never

App. 31

been recognized by this Court as anything other than rights

granted against third parties to the leases, such as oil companies,

not against **22 the State. [FN20]

FN19. The stipulated purpose of that clause was to

protect an oil and gas company from claims against it

brought by a subsequent oyster lessee in the same area

claiming damages for oyster mortality and bed damage as

a result of ithe normal operations of the oil and gas

company.

FN20. This Court has recognized that an oyster lessee

has a valuable property night in his oyster beds, for the

loss of which he can recover against one whose fault the

loss was incurred. Butler v. Baber, 529 So.2d 374

(La.1988); Doucet v. Texas Co., 205 La. 312, 17 So.2d

340, 341 (1944). Accordingly, courts have allowed

oyster lessees to recover against third party oil companies

under La. C.C. art. 667 for damage to their oyster beds

caused by the oil companies' activities. Jnabnet v. Exxon

Corp., supra (holding that Exxon's use of property

injured neighboring oyster lessee's property and

constituted fault under Civil Code Article 2315 by

analogy to Articles 667-669 such that oyster lessee was

entitled to damages under La. R.S. 56:423(B)1 including

loss of seed oysters and loss of income from anticipated

production, but ot restoration costs). However, the

basis for the oyster lessee's recovery in these cases was

the explicit statutory nght of recovery granted in La. R.S.

56:423(B)1 which gives the oyster lessee "the right to

maintain an action for damages against any person,

partnership, corporation or other entity causing wrongful

or negligent injury or damage to the beds or grounds

under lease to such lessee." In all those cases, the

tortfeasor was a third party to the lease; no court has

ever recognized a right under this statute against the

State.

App. 32

*1101 Finally, the Court in Jurisich rejected DWF's argument

that the public trust doctrine allowed them to insert the clause

into the leases. /d. at 604-06. La. Const. art. IX, § 1 provides, in

pertinent part:

The natural resources of the state, including air

and water, and the healthful, scenic, historic,

and esthetic quality of the environment shall be

protected, conserved, and replenished insofar as

possible and consistent with the health, safety,

and welfare of the people. The legislature shall

enact laws to implement this policy.

The Jurisich court noted that this Court in Save Ourselves, Inc.

v. Louisiana Environmental Control Com'n, 452 So.2d 1 152.

1157 (La.1984), has interpreted that article as follows:

This is a rule of reasonableness which requires

an agency or official, before granting approval

of proposed action affecting the environment,

to determine that adverse environmental

impacts have been minimized or avoided as

much as possible consistently with the public

welfare. Thus, the constitution does not

establish environmental protection as an

exclusive goal, but requires a balancing process

in which environmental costs and benefits must

be given full and careful consideration along

with economic, social and other factors.

Id. at 604-605. In Jurisich, as the stipulated purpose of the

clause at issue, i.e., to protect oil and gas companies from claims

by oyster lessees was clearly not mandated by the public trust

doctrine, the Court rejected the DWF's argument in that regard.

**23 Id. Further, as the Constitution vests primary responsibility

for implementing the public trust in the State legislature, the

clause could not stand because it was contrary to state legislation.

App. 33

The Court also specifically noted that "[i]n reaching this

conclusion on the application of the public trust doctrine, we

note that our determination is made in the context of the

Secretary's duty to develop the oyster industry and is only made

relative to the inclusion of the navigation and oil field activity

clause, the only clause in the oyster lease now before us." /d. at

605 n. 8.

[2] We find that the implementation of the Caernarvon coastal

diversion project fits precisely within the public trust doctrine.

The public resource at issue is our very coastline, the loss of

which is occurring at an alarming rate. The risks involved are

not just environmental, but involve the health, safety, and

welfare of our people, as coastal erosion removes an important

barrier between large populations and ever-threatening

hurricanes and storms. Left unchecked, it will result in the loss

of the very land on which Louisianians *1102 reside and work,

not to mention the loss of businesses that rely. on the coastal

region as a transportation infrastructure vital to the region's

industry and commerce. The State simply cannot allow coastal

erosion to continue; the redistribution of existing productive

oyster beds to other areas must be tolerated under the public trust

doctrine in furtherance of this goal. See La. C.C. art. 450 and

Comment (b) (stating that navigable water bodies are "public

things that belong to the State," and that such property is

"dedicated to public use, and held as a public trust, for public

uses.")

[3][4] For all of the above reasons, the decision in Jurisich is

clearly distinguishable from the case at bar, and does not make

the hold harmless clauses inserted in 193 of the approximately

204 leases as early as 1989 legally invalid. We find that they are

legally valid and clearly enforceable under the authority granted

the DWF in La. R.S. **24_56:425(C). No further legislative

authority was needed to validate these indemnity clauses, and we

therefore have no need to delve into the possible retroactivity of

the subsequent statutes which mandate the inclusion of these

App. 34

ita

ites

clauses into oyster leases. [FN21] The claims covered by the

leases that contained the 1989 indemnity clause are invalid, for

either "takings" or damages, because these claims were filed in

1994 after these indemnity clauses were in effect. Likewise, the

plaintiffs holding leases containing the more detailed indemnity

clauses do not have valid takings or damage claims, even though

this suit was filed in 1994 and these leases are dated July 1995

and later for the following reasons. First, it is under these leases

that these plaintiffs claim their lease rights were taken by the

State, as these were the leases offered into evidence by plaintiffs

to prove their case. Second, these plaintiffs claim their leases

were rendered permanently useless for commercial oyster

production, which necessarily includes the time period covered

by these post-1995 clauses. Had these plaintiffs claimed damage

to their leases from the time Caernarvon began operation to the

time they signed new leases with the post-1995 indemnity

clauses, and had they alleged and proven specific monetary

damages during this time period, they theoretically would have

valid property damage claims. However, this was not the case

they chose to make.

FN21. Defendants filed a Peremptory Exception with

this Court arguing that legislative action taken

subsequent to the filing of this case applies to the facts of

this case. The statutes at issue are Act No. 652, (2003)

amending and reenacting La. R.S. 49:214.5, and which

requires the State to be held harmless for coastal

restoration projects (the 2003 Act re-enacted a statute

previously amended in 1995, but before the 1995

Amendment to Article 12, § 10 of the Constitution

allowing the legislature to expand the scope of the State's

sovereign immunity and allowed for retroactive effect for

that expanded sovereign immunity). On an issue

unrelated to the hold harmless clauses, defendants’

peremptory exception also cites Act No. 1295, which

resulted in the passage of a joint resolution submitting an

amendment to Article I, § 4 for popular vote. The

App. 35

Amendment allows the Legislature to place limitations of

the extent of recovery for "takings" or damages due to

coastal restoration projects. Act No. 1295 also formed

the basis for Act No. 583, enacting La. R.S. 49:213.9 to

limit the recovery for property taken or affected by

coastal restoration. This statute was to have retroactive

effect and was to become effective if the proposed

amendment to the Constitution embodied in Act No.

1295 passed, which it did in 2003.

**25 Thus, the named plaintiffs holding 192-193 of the

approximately 204 leases in this case do not have valid takings

claims because the indemnity clauses in their leases hold the

state harmless from any and all claims for loss or damage to their

rights under the leases caused by this *1103 coastal diversion

project. [FN22] However, the named plaintiffs introduced into

evidence 12 leases that are dated prior to 1989. Thus, because

these lessees’ takings claims are not precluded by virtue of any

indemnity clauses, we must continue this analysis, which is

applicable only to these remaining 12 leases.

FN22. Although the plaintiffs have asserted only

"takings" claims under Art. I, § 4 of the La. Const. and

under the Fifth Amendment of the U.S. Const., and did

not assert property damage claims against the State, both

"takings" claims and damages claims are covered by the

hold harmless clauses.

The "Takings" Analysis

[5][6][7][8] The Louisiana Constitution provides:

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.

App. 36

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.

Property shall not be taken or damaged by any

private entity authorized by law to expropriate,

except for a public and necessary purpose and

with just compensation paid to the owner; in

such proceedings, whether the purpose is public

and necessary shall be a judicial question. In

every expropriation, a party has the right to trial

by jury to determine compensation, and the

owner shall be compensated to the full extent

of his loss.... [FN23]

FN23. This Court has explained the legislative history behind

the 1974 amendment to the Constitution allowing for

‘compensation "to the full extent of his loss" in State Ti hrough

Dept. of Transp. and Development v. Chambers Inv. Ce.. Inc..

595 So.2d 598 (La.1992), as follows:

There can be little doubt that one aim of Article

I, § 4, of our state constitution in requiring that

the owner shall be compensated for property

"taken or damaged ... to the full extent of his

loss" was to assure that the State and its

subdivisions compensate owners for any taking

or damaging of their rights with respect to

things as well as for any taking or damaging of

the objects of those rights. The history of

Section 4 reveals a desire to increase the level

and scope of compensation beyond that

provided by pre-existing state law. The change

from the 1921 constitution's language ("just and

adequate compensation") to the new phrase

("compensated to the full extent of his loss")

was deliberate, prompted by a belief on the part

App. 37

of the sponsors that inadequate awards had

been provided under the prior law. L.

Hargrave, The Declaration of Rights of the

Louisiana Constitution of 1974, 35 La.L.Rev.

1, 15 (1974); cf., State, Dept. of Transp. & Dev —

v. Dietrich, 555 So.2d 1355,4358-— 59

(La.1990); State, Dept. of Highways _v.

Constant, 369 So.2d 699, 702 (La.1979) (the

purpose of the additional language in Article I

§ 4 was to compensate an owner for any loss

sustained by reason of the taking, and not

merely restricted as under the former

constitution to the market value of the property

taken and to reduction in the market value of

the remainder).

595 So.2d at 602.

**26 La. Const. art. 1, § 4. [FN24] In Chambers, we recognized

that “our constitution requires compensation even though the

State has not initiated expropriation proceedings in accordance

with the statutory scheme set up for that purpose." 595 So.2d at

602. [FN25] *1104 This "inverse condemnation" action

"provides a procedural remedy to a property owner seeking

compensation for land already taken or damaged against a

governmental or private entity having the powers of eminent

domain where no expropriation has commenced." /d. Inverse

condemnation claims derive from the Takings Clauses contained

in both the Fifth Amendment of the U.S. Constitution and Art.

1 § 4 of the Louisiana Constitution. "The action for inverse

condemnation is available in all cases where there has been a

taking or damaging of property where just compensation has not

been paid, without regard to whether the property is corporeal or

incorporeal." Jd. (Cites omitted.) The constitutional command

of Art. I, § 4 is self-executing, such that the cause of action arises

whenever a state commits a taking without justly compensating

the victim. Jd.

FN24. Act No. 1295 of 2003 added the following, which

passed as a constitutional amendment to La. Const. Art.

1, $4: "(E) Further, the legislature may place limitations

on the extent of recovery for the taking of, or loss or

damage to, property rights affected by coastal wetlands

conservation, management, preservation, enhancement,

creation, or restoration activities."

FN25. For an explanation of the differences between

expropriation and appropriation, see Wynat Development

Company v. Board of Levee Commissioners for Parish o

Orleans, 97-2121 (La.4/14/98), 710 So.2d 783.

Recognizing the abstract nature of the concept of the taking and

damaging of legal property rights, the Court in Chambers set

forth a three-prong analysis in determining whether a claimant is

entitled to eminent domain compensation. /d. at 603. In

accordance with this analysis, the court must: (1) determine if a

recognized **27 species of property right has been affected; (2)

if it is determined that property is involved, decide whether the

property has been taken or damaged in a constitutional sense;

and (3) determine whether the taking or damaging is for a public

purpose under Article I, § 4. Jd; Constance v. State Through

Dept. of Transp. and Development Office of Highways, 626

So.2d 1151, 1157 (La.1993) (using C.C. arts. 667 and 668, which

impose legal limitations on a landholder's right of ownership, to

consider whether property was taken or damaged under Art. I, §

4).

Applying this judicially created framework to their claims, the

plaintiffs claim a legal property right to their leased oyster beds,

the oysters growing on them, and the future profits derived from

those oysters. They claim that Caernarvon's changes to the

salinity level of the waters covering those beds have damaged the

beds’ ability to cultivate oysters and, thereby, permanently

deprived the harvesters of their rights to profits from oysters that

would otherwise grow on those beds. They assert that

App. 39

Caernarvon's diversion of freshwater into the waters covering

their oyster beds is in furtherance of the state purpose of

preserving coastal wetlands. Because the State's action in

furtherance of a public purpose damaged their property rights in

the oyster beds and the profits generated by the oysters that grow

upon them, they claim the State is required to compensate them

for damages to those rights.

[9] We find it unnecessary to conduct the full Chambers analysis,

which seeks to determine whether a plaintiff is entitled to

eminent domain compensation because his private property has

been taken or damaged for public use. In this case, the relevant

consideration is whether plaintiffs’ property was "taken" for a

public purpose, or whether it was "damaged" for a public

purpose. A distinction between a taking and a damaging is

necessary because of the existence of two relevant prescription

statutes, La. R.S. 13:5111 and La. RS. 9:5624. Section 5111 of

Title 13 is entitled **28 "Appropriation of property by state,

parish, municipality or agencies thereof; attorney, engineering

and appraisal fees; prescription" and provides in pertinent part:

"{ A] proceeding brought against the state of Louisiana ... or other

political subdivision ..., for compensation for the taking of

property by the defendant, other than through an expropriation

proceeding, ... shall prescribe three years from the date of such

taking.” Section 5624 of Title *1105 9 provides: "When private

property is damaged for public purposes any and all actions for

such damages are prescribed by the prescription of two years,

which shall begin to run after the completion and acceptance of

the public works." Thus, although the Louisiana Constitution

provides that just compensation shall be paid when property 1S

taken or damaged, La. R.S. 13:51 11 provides a three-year

prescriptive period for takings and La. R.S. 9:5624 provides a

two-year prescriptive period for damage. A.K. Roy, Inc. _v.

Board of Commissioners for Pontchartrain Levee District, 237

La. 541, 547-48, 111 So.2d 765, 767 (1959) (Prescriptive period

App. 40

of La. R.S. 9:5624 applies only when private property is

damaged for public purposes, but not actions for recovery of

private property taken for public purposes).

The distinction between a taking and a damage claim was made

in a case in which a holder of a predial lease invoked property

rights pursuant to the 1921 Constitution. [FN26] **29Columbia

Gulf Transmission Co. v. Hoyt, 252 La. 921, 215 So.2d 114

(1968). In that case, the Court found the lessee's rights under a

predial lease fell under the constitutional designation of "private

property" in Art. I, § 2 of the 1921 Constitution and required just

compensation to the lessee before the lease rights were damaged,

even though Louisiana codal law classified a lessee's rights as

personal rights. [FN27] However, as particularly relevant to this

case, the Court distinguished the terms "taken" and "damaged"

in Art. I, § 2. The Court stated that "property is 'taken' when the

public authority acquires the right of ownership or one of its

recognized dismemberments." 215 So.2d at 120. "Property is

considered 'damaged' when the action of the public authority

results in the diminution of the value of the property." Jd.

FN26. Both the Constitution of 1921 and the

Constitution of 1974 provided that property shall not be

taken or damaged except for public purposes. Art. I, § 2

provided that "[e]xcept 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." As stated earlier, Art. I,

§ 4, provides in pertinent part that "[p]roperty 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." The minutes from the 1973 Constitutional

Convention indicate that one change from the 1921

Constitution was that "quick takings" would be expressly

allowed under the 1974 Constitution in that the State

would not have to pay for the appropriation before it

App. 41

occurred. Records of the Louisiana Constitutional

Convention of 1973: Convention Transcripts, Vol. VI,

pp. 1234-1244. In fact, it was stated that the main

purpose of the 1974 Amendment was to allow ior

appropriations as well as expropriations.

FN27. This Court has previously found that even an

unrecorded lessee has a recognized property interest

entitled to compensation under Art. I, § 4. State Dept. of

Transp. and Development _y. Jacob, 483 So.2d_592

(La.1986); see also Lewis Blue Point Oyster Cultivation

Co. v. Briggs, 229 U.S. 82, 33 S.Ct. 679, 57 L.Ed.2d

1083 (1913) (for purposes of state law, a leasehold

interest is generally recognized as a property interest).

The Jacob court determined that "the clear intent of the

framers of [the 1974] Constitution was to expand the

right to compensation to include not only the property

owners, but also of other persons who have legal status

to require compensation such as lessees." Id. at 594.

In Hoyt, this Court stated that beginning in 1880, in the case of

In Re Morgan R.R. & S.S. Co., 32 La. Ann. 371, and continuing,

courts have awarded lessees compensation for leases in land

expropriations, because when land subject to a lease is taken for

public use, the lease terminates. This Court noted that lease

rights, however, may be damaged other than by termination of

the lease. If the land taking is partial only, such as in the

acquisition of a servitude for passage, the taking *1106 may

damage lease rights, although the lease has not been destroyed.

We have no trouble classifying this case as a "damage" case

under Art. I, § 4 rather than a "takings" case, for numerous

reasons. It is undisputed that the state owned and continues to

own the water bottoms. La. R.S. 9:1101. The state owns the

waters. Id. The state owns the oysters. La. R.S. 56:3. Thus, the

State could not take **30 its own property. As Judge Tobias

aptly noted in dissent, "jt}he State cannot appropriate or

App. 42

inversely condemn that which it already owns." Avenal

01-0843, 858 So.2d at 740 (Tobias, dissenting).

Further, the oyster fishermen's right of exclusive use of the

water bottoms was not taken as, in spite of Caernarvon, no other

private party can use these bottoms to fish for oysters. In

addition, their exclusive right to oysters and cultch thereon was

not taken as no other private party can enter that lease and extract

oysters or cultch. The changes in salinity of the water resulting

from Caernarvon affected neither of these rights. As one court

commented, "[t]he plaintiffs retained the use of their leaseholds,

it was not the plaintiffs who were ousted by [Caernarvon], but

the oysters." Palm Beach Isles Associates v. U.S., 231 F.3d

1354, 1360 (Fed.Cir.2000) (explaining their holding in Avenal

supra, 100 F.3d 933).

Plaintiffs claim, however, that what was taken was their right

to profitably harvest oysters from these waters because the

salinity levels will prohibit this if Caernarvon is run at its full

capacity as expected. Indeed, the court of appeal agreed and

found that Caernarvon constituted a taking because it "rendered

the plaintiffs' oyster leases permanently useless for commercial

oyster production.” Avenal, supra, 858 So.2d at 706. However,

this somehow assumes that the State intended to guarantee each

lessee a commercially viable oyster lease. La. R.S. 56:423 never

mentions nor suggests that lessees are entitled to profits. Further,

the oyster statutes do not guarantee the oyster lessees with a

vested right to an optimal salinity regime in the State's own

waters, nor that the state maintain a certain salinity regime

favorable for oyster cultivation. As one commentator has stated,

"[o]ne can hardly imagine why the state would charge only two

dollars per acre if indeed the purchase of a lease automatically

conferred a right 9 $21,000 or more per acre in expected profits

upon **31 all oyster lessees who attempt to harvest oysters on

leased lands." Robert L. Rogers, III, 7; urning River Water into

Gold: Why Oyster Harvesters should not be Permitted to Cash

In On Changes in Salinity Caused by the Caernarvon Water

App. 43

Diversion Project, 22 Va. Envtr. L.J. 53, 72 (2003) (case note);

see also Louisiana Seafood Management Council v. Louisiana

Wildlife and Fisheries Com'n., 97-1367 (La.5/19/98), 715 So.2d

387. 392-92 (citing Andrus v. Allard, 444 U.S. 5 1, 66, 100 S.Ct.

318. 327, 62 LEd.2d 210 (1979) ("loss of future

profits-unaccompanied by any physical property

restriction-provides a slender reed upon which to rest a taking

claim ... [T]he interest in anticipated gains has traditionally been

viewed as less-compelling than other property-related

interests."))

Further, the court of appeal's holding that Caernarvon rendered

the plaintiffs’ oyster leases permanently useless for commercial

oyster production fails to take into account that, as to those 12

leases which did not contain indemnity clauses, they all expired

between 2000 and 2005, at which time the they would either be

renewed with the post-1995 hold harmless clause, or not renewed

at all upon a finding by the State that the leases were incapable

of supporting oyster population. At most, *1107 these plaintiffs

with pre-1989 leases possibly had a claim for property damage

up until the time these leases expired.

In addition, in this case, the class representatives testified that

they continued to exercise their right to claim damages from oil

and gas interests for drilling, surveying, dredging, and other

exploration activities conducted on their leases following the

diversion, even though the leases were unproductive for oysters.

Several of the oyster lessees also filed claims with the federal

government for the damages to their oyster leases as a result of

Hurricane Andrew. Evidence was also presented at trial that

some of the leases were still producing oysters. Thus,

Caernarvon did not **32 deprive the plaintiffs of all

economically beneficial use of their property. However, it may

have damaged their property rights in their oyster beds and the

profits generated by the oysters that grow upon them.

App. 44

(10][11] For the above reasons, the rights under the remaining

12 leases may have been "damaged" under Art. I, § 4, but they

have not been "taken." [FN28] Therefore, *1108 the **33

prescriptive period of La. R.S. 9:5624 applies to these claims.

FN28. Plaintiffs have also asserted a claim under the

Fifth Amendment of the U‘S. Constitution, which

provides that "private property [shall not] be taken for

public use, without just compensation." U.S. Const.

Amendment V; see also Tahoe-Sierra Preservation

Council, Inc. v. Tahoe Regional Planning Agency, 535

U.S..302, 307 n. 1, 122 S.Ct. 1465, 152 L.Ed.2d 517

(2002) (Fifth Amendment applies to the states as well as

the federal government).

Under federal law, when the government limits the use a

property owner may make of his or her property, without

itself occupying or otherwise using the property for

government purposes, the c'assic analytical tool for

assessing whether a taking has occurred is the three-part

test enunciated by the Supreme Court in Penn Central.

supra: the court considers the character of the

governmental action, the economic impact on the

claimant and, particularly, the extent to which the

governmental action has interfered with distinct

investment-backed expectations. 438 U.S. at 124, 98

S.Ct. at 2659. As stated in Avenal v. State. supra, 100

F.3d at 937, because the plaintiffs were well aware that

Caernarvon was being planned as early as the 1970's,

"they cannot have had reasonable investment-backed

expectations that their oyster leases would give them

rights protected from the planned freshwater diversion

projects of the state and federal governments." The

Supreme Court reaffirmed in Palazzolo v. Rhode Island

533 U.S. 606, 121 S.Ct. 2448, 150 L.Ed.2d 592 (2001),

that when state action results in a partial taking of a

claimant's property rights, the Penn Central, analysis,

including the investment-backed expectations

App. 45

requirement, is clearly applicable.

The plaintiffs claim, however, that Caernarvon deprived

them of all economically beneficial and productive use of

their property, and that therefore, the Penn Central test is

not applicable. However, if Caernarvon did entirely

deprive them of all economically beneficial and

productive use of their property rights, the plaintiffs are

still not entitled to compensation as Caerarvon was a

valid exercise of the state's police power under federal

law. Lucas v. South Carolina Coastal Council, 505 U.S.

1003, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992).

The Lucas Court reasoned that unlike a partial taking,

where the elements of Penn Central were "keenly

relevant" to the takings analysis, 505 US. at 1019 n. 8,

112 S.Ct. 2886, a regulation that prohibited all

economically beneficial use of land should be treated in

the same manner as state action which results in a

"permanent physical occupation" of the land, in which

the government has a categorical duty to compensate the

former owner. Jd. at 1028-29, 1 12 S.Ct. 2886. However,

even in this circumstance, compensation is not owed if

the state action is in accordance with a "background

principle” of the state's property law that already prohibit

the landowner from the use he claims was taken, or is

undertaken in the exercise of the state's police power. As

explained by the Lucas court, compensation is not owed

because no legally existing rights were being taken under

those circumstances.

Thus, even analogizing the operation of Caernarvon to a

regulatory taking that eliminated all economically

beneficial uses of the oyster lessees' property or a

permanent invasion of plaintiffs' leases, the plaintiffs -

would not be entitled to compensation under the Lucas

analysis for two reasons. First, the right of the state to

disperse fresh water from the Mississippi River over

saltwater marshes in order to prevent coastal erosion is

derived from a background principle of Louisiana law.

App. 46

Sassen HAS iaelonts bali NTA?

1) Reg RRMA RE Sa NI NEE eae

The concerns of the state and federal government and the

plans to divert water to alleviate these concerns date back

as early as the 1950s and 60s and were certainly a part of

the environmert in which the raising and harvesting of

oysters were conducted. The State has always had this

right and their leases were expressly made subject to this

right. More particularly, the oyster fishermen knew this

particular project was underway and that it would alter

the salinity levels in the waters covering their leases.

Secondly, the freshening of these waters in order to

prevent further coastal erosion and save Louisiana's coast

is a matter of "actual necessity" as it will "forstall [a]

grave threat to the lives and property of others." 505

U.S. at 1029, n. 16, 112 S.Ct. 2886. See also Miller v.

Schoene, 276 U.S. 272, 48 S.Ct. 246, 72 L.Ed. 568

(1928) (in which the Court rejected the claim that

Virginia state officials effected a taking by authorizing

the destruction of cedar trees which harbored pests

threatening the state's apple crop holding that "[w]hen

forced to such a choice the state does not exceed its

constitutional powers by deciding upon the destruction of

one class of property in order to save another which, in

the judgment of the legislature, is of greater value to the

public"). The plaintiffs freely admit that coastal erosion

is a serious threat that affects this State and that

Caernarvon has been successful in preventing it. See

aiso New Orleans Campaign For a Living Wage vy. City

of New Orleans, 02-0991 (La.9/4/02), 825 So.2d 1098,

1104 (defining the State's police power under Louisiana

law); Bass v. State, 34 La. Ann. 494 (1882); Bd. of

Comr's_of Orleans Levee Dist. v. Dept. of Nat'l

Resources, 496 So.2d 281, 289 (La. 1986) (on rehearing).

Prescription under La. R.S. 9:5624

[12}[13][14)[15] La. R.S. 9:5624 [FN29] provides as follows:

App. 47

FN29. It is well settled under Louisiana law that when

conflicting statutes are applicable, the one more

specifically directed to the matter applies. Estate o

Patout v. City of New Iberia, 98-0961 (La.7/7/99), 738

So.2d 544. While La. C.C. art. 3492 provides a one year

general prescriptive period for delictual actions, La. R.S.

9:5624 is directly applicable to claims for private

property damaged for public purposes.

When private property is damaged for public purposes

any and all actions for such damages are prescribed by

the prescription of two years, which shall begin to run

after the completion and acceptance of the public works.

The purpose of La. R.S. 9:5624 is to limit the exposure of the

State and its political subdivisions to liability in connection with

a public work to a reasonable period of time. Lyman v. Town of

Sunset, 500 So.2d 390 (La.1987). [FN30] This Court has **34

specified that "not every lawsuit for damages caused by a public

entity or involving a public works project falls within the

purview of R.S. 9:5624." Estate of Patout v. City of New Iberia,

98-0961 (La.7/7/99), 738 So.2d 544, 549. In order to fall under

the statute, damage must be incurred "for public purposes." Id.

Damage is incurred "for public purposes" when the damaging is

"intentional or occurs as a *1109 necessary consequence of the

public undertaking." Jd. at 553. "[E]ven unintentional damage

can be inflicted ‘for public purposes’ if it is a ‘necessary

consequence’ of the public project." /d.

FN30. La. R.S. 9:5624 was amended in 1987 by Act No.

339, § 1, it formerly read:

When private property is damaged for public purposes

any and all actions for such damages are prescribed by

the prescription of two years, which shall begin to run

when the damages are sustained.

The Court in Lyman held that the prescriptive period

begins to run when the first occurrence of damage is

App. 48

Be aah Golagesuteahe hs Besse bowled

actually sustained. 500 So.2d at 393. The Court held

that La. R.S. 9:5624 was intended to be an exception to

La. C.C. art. 3492, the general one-year prescriptive

statute for delictual actions, by allowing two years from

bringing suit when private property is damaged for public

purpose. /d. However, "while allowing an addition year

to bring suit, the statute serves to limit governmental

exposure by requiring ‘any and all actions’ must be

brought within two years after damages are sustained."

Id. at 392.

As explained by Judge Tobias in his dissent, plaintiffs’ claims

fall under La. R.S. 9:5624 because "it is undisputed that the

damages sustained by the plaintiffs to their leasehold interest, in

addition to the loss of their oyster crops and loss of anticipated

income from those oysters, were a necessary consequence of the

public work [Caernarvon] and incurred for a public purpose."

858 So.2d at 742 (Tobias, dissenting). "The construction ind

operation of the Caernarvon Freshwater Diversion Structure were

mandated by the U.S. Congress and the State of Louisiana for the

dual purposes of restoring the State's coast for hurricane and

flood protection and enhancing oyster production on the State's

public seed grounds." Jd.

[16][17] Caernarvon was completed and accepted in 1991. The

record reflects that the official dedication ceremony of

Caernarvon was held on April 12, 1991, it went online in

September of 1991, the operational flow began at leas: by

November 6, 1991, and the class representatives claimed their

damages began to occur when Caernarvon **35 began diverting

freshwater in 1991. LFN3!] Thus, all of the key dates for

prescription purposes occurred in 1991. [FN32] Pursuant to La.

R.S. 9:5624, the plaintiffs would have had to file their claim for

damages no later than November 1993, at the latest, which was

App. 49

two years from the date the project began to divert freshwater.

Because the plaintiffs’ suit was not filed until March 29, 1994,

any claims these oyster fishermen had for damages under La.

R.S. 9:5624 are prescribed. [FN33]

FN31. We reject plaintiffs' argument that any claim they

have under La. R.S. 9:5624 has not prescribed because

their leases were not really damaged until the rate of flow

was increased in 1994 from 4,000 cubic feet per second

to 8,000 cubic feet per second. This is contrary to the

class representatives’ testimony at trial, and contrary to

the position they have held all along. Further, La. R.S.

9:5624 has a strict two-year time limit, and, as we stated

in Lyman, the legislature intended to limit governmental

exposure by requiring "any and all actions" to be brought

within this time limit. Further, the time limit is not

subject to the continuing tort doctrine, as is the general

one-year prescriptive period of La. C.C. art. 3492. Estate

of Patout, supra at 549, n. 5. Even under the statute as it

existed before the 1987 amendment, prescription began

to run from the moment the first damage is actually

sustained. Lyman, supra. The time period provided by

La. RS. 9:5624 as it now reads appears to limit

governmental exposure even further, by commencing the

running of prescription upon "completion and acceptance

of the public works." Thus, the plaintiffs were required

to bring “any and all actions" for damages within two

years after completion and acceptance of Caernarvon.

FN32. While we have been unable to ascertain from the

record the exact date of "acceptance" of Caernarvon,

given the above key dates, it necessarily must have been

accepted between April and November of 1991.

FN33. Defendants filed an exception of prescription

under La. R.S. 9:5624 on September 28, 2000.

sar ile Sed

pa SE iad a a Se ay nde eet se

App. 50

CONCLUSION

The oyster fishermen are not entitled to compensation under La.

Const. Art. 1, § 4 by virtue of the operation of Caernarvon for

several reasons. First, the vast majority of the leases at issue

contained hold harmless and indemnity clauses which validly

released the State from liability as a result of this coastal

diversion project. Secondly, the property rights under the 12

leases not containing hold harmless clauses were not "taken" by

virtue of Caernarvon under Art. I, § 4. To the extent that the any

of the oyster fishermen's property rights under these remaining

12 leases *1110 were "damaged" under Art. I, § 4, these damage

claims prescribed two years from the completion and acceptance

of Caernarvon under La. R.S. 9:5624.

**36 DECREE

For the reasons expressed herein, the judgments of the lower

courts are reversed and plaintiffs’ claims are dismissed.

REVERSED.

JOHNSON, J., concurs in result.

WEIMER, J., additionally concurs with reasons.

**] WEIMER, J., concurring.

The conflict in the instant case is between the rights of

individuals and governmental actions which serve the public

good. The importance of the outcome of this conflict makes the

task of balancing these interests all the more arduous. I write to

emphasize the importance of the oyster industry and the

importance of the state's fight against coastal erosion to the

future well-being of this state. Nevertheless, while

acknowledging that individual rights must be respected and

protected and that government must be allowed to take those

App. 51

actions which prevent calamity, ultimately, as jaages, our role is

to apply the law to the facts before us.

The oyster industry has been and continues to be vital to

Louisiana's economy. As stated in A Brief History of the

Louisiana Oyster Industry:

{C]ultivation of oysters has developed over the years into a

partnership between the state and private oystermen through

the use of both public seed grounds { [FN1}} and privately

leased state water bottoms.

FNL. Learning from experience, the fishermen began

moving "seed oysters” from overcrowded reefs to areas

where salinity was more favorable, current more steady,

and food more plentiful. The oystermen gathered the

seed oysters, planted them in a favorable spot, allowed

the seed to grow into mature, market-size oysters, and

harvested the crop.

The leasing of water bottoms began in the 1850s when

oystermen leased areas from the parishes. However,

when the Louisiana Oyster Commission (predecessor to

the Louisiana Department of Wildlife and **2 Fisheries)

was formed in 1902, oystermen began leasing water

bottoms from the state.

The Louisiana oyster industry is one of the most

successful oyster fisheries in the country.

Posted by the Louisiana Department of Wildlife and Fisheries,

a i h t t p : / /

www.wifstate.la.us/apps/netgear/index.asp?cn=lawlf&pid=10

84.

Oyster farming has historically been arduous, backbreaking

work requiring a special dedication. Oyster farming is fraught

App. 52

with all the difficulties and risks farmers on land face--such as

variances in weather conditions and pests-- as well as those

peculiar to aquaculture. Louisiana has historically leased water

bottoms for a nominal value because this property had little

intrinsic value. Through hard work and dedication, many oyster

fishermen built reefs with materials referred to as cultch [FN2]

over the muddy water bottoms, turning unproductive lands into

an area producing bountiful crops of oysters. Conversion of this

previously barren »roperty into productive oyster-producing

areas has spanned generations.

FN2. See Footnote 10 of majority opinion.

In addition to the leased acreage, market oysters from

Louisiana's public seed grounds account for approximately one

third of the annual harvest. Assane *1111 Diagne and Walter R.

Keithly, Jr., The Demand for Relaying by the Louisiana Oyster

Industry (2000), at http://

oregonstate.edu/dept/IIFET/2000/abstracts/keithly.html.

Estimates indicate state oyster production creates about 10,000

jobs and generates $266 million a year in Louisiana. During

2000, Louisiana produced approximately 10.22 million pounds

of the 16.6 million pounds of oyster meat produced

nationally--representing approximately 63 percent of the total

United States oyster production. It is believed that Louisiana

now produces over 70 percent of the **3 total United States

harvest. Agriculture Marketing Resource Center at http:

//www.agmrc.org/aquaculture/oystermain.html. In sum, the

oyster industry is a valuable economic asset of Louisiana.

Oysters are a rich part of Louisiana's history, heritage, culture,

cuisine, and folklore. Louisiana oysters are prized by chefs

world-wide as a delicacy.

However, many historically productive areas are likely to be of

little value in terms of their ability to produce significant

quantities of oysters due to wetlands erosion and subsidence.

App. 53

The Demand for Relaying by the Louisiana Oyster Industry by

Assane Diagne and Walter R. Keithly, Jr., supra. Thus,

freshwater diversion, which is an integral part of coastal

restoration, [FN3] is important to the viability of *1112 the **4

oyster industry as a whole. A unique feature of this case is that

although there may be loss by individuals on private leases

caused by the freshwater diversion, losses may be offset by

oyster production on public grounds, which the evidence

established increased dramatically. Oyster productivity from the

public seed grounds increased by 300 percent, a fact

acknowledged by plaintiffs in brief.

FN3. The plight of Louisiana's coast and its wetlands

warrants national concern.

Many factors, some natural, some due to human

intervention, are converging to result in the loss of

Louisiana's wetlands and the concomitant alteration ofits

coast. Louisiana, because of its many bays and sounds,

has the longest coastline (15,000 miles) of any state and

41 percent of the nation's wetlands. Louisiana

Department of Economic Development available at

http:// www.crt.state.la.us/crt/profiles/industry.htm. The

losses are alarming and devastating.

The rate of coastal land loss in Louisiana has reached

catastrophic proportions. Within the last 50 years, land

loss rates have exceeded 40 square miles per year, and in

the 1990's the rate has been estimated to be between 25

and 35 square miles each year. This loss represents 80%

of the coastal wetland loss in the entire continental

United States.

The reasons for wetland loss are complex and vary across

the state. Since the scale of the problem was recognized

and quantified in the 1970's, much has been learned

about the factors that cause marshes to change to open

water and that result in barrier island fragmentation and

submergence. The effects of natural processes like

subsidence and storms have combined with human

App. 54

ORFs Bh het BRASS cs MC ae Bn

BM OP LMP PN RETR TRS HS TO Oe I ee toda en heath

pte 9 Sy PR ORE RES A IN

oe

actions at large and small scales to produce a system on

the verge of collapse.

System collapse threatens the continued productivity

of Louisiana's bountiful coastal ecosystems, the

economic viability of its industries, and the safety of

its residents. If recent loss rates continue into the future,

even taking into account current restoration efforts, then

by 2050 coastal Louisiana will lose more than 630,000

additional acres of coastal marshes, swamps, and islands.

The loss could be greater, especially if worst-case

scenario projections of sea-level rise are realized, but in

some places there is nothing left to lose.

Along with the loss of acreage goes the loss of the

various functions and values associated with the

wetlands: commercial harvests of fisheries, furbearers,

and alligators; recreational fishing and hunting, and

ecotourism; habitats for threatened and endangered

species; water quality improvement; navigation

corridors and port facilities; flood control, including

buffering hurricane storm surges; and the intangible

value of land settled centuries ago and passed down

through generations. The public use value of this loss

is estimated to be in excess of $37 billion by 2050, but

the losses associated with cultures and heritage are

immeasurable. (Emphasis supplied.)

Louisiana Coastal Wetlands Conservation and

Restoration Task Force and the Wetlands Conservation

and Restoration Authority.1998. Coast 2050: Toward a

sustainable Coastal Louisiana. Louisiana Department of

Natural Resources. Baton Rouge, La., Chapter 1, page 1.

(In-1998, the State of Louisiana and its Federal partners

approved a coastal restoration plan entitled Coast 2050:

Toward a Sustainable Coastal Louisiana. That

document presented strategies jointly developed by

federal, state, and local interests to address Louisiana's

massive coastal land loss problem.) Eloquently stated is

the following:

App. 55

Over a million acres have disappeared since the 1930s

and, at the present loss rate of 24 square miles a year, an

additional 500 square miles of coastal land will wash

away by 2050. Gone forever will be precious nursery

habitat for fish and shellfish; nesting and feeding

grounds for migratory waterfowl and wildlife; storm

surge protection for vulnerable coastal communities,

ports, and roads; and land that buffers oil and gas

pipelines, production platforms, and shore-based

processing facilities against storm and wave damage.

Louisiana's coastal marshes are the cradle of nearly

one-third of the total commercial fish and shellfish

harvest in the lower 48 states. Seventeen percent of the

nation's oil and twenty-five percent of its natural gas are

mined in the state's offshore waters. Louisiana's four

major ports handle more than 21 percent of U.S. foreign

waterborne trade. Calling Louisiana's coastal marshes

"a national treasure" is no exaggeration. (Emphasis

supplied.)

Postings of Rhea Gary and C.C. Lockwood, http://

www.marshmission.com/problem.cfm (2003).

Freshwater diversion became particularly important for

the oyster industry after 1927 when the Mississippi River

levee system was enhanced for navigation and flood

prevention purposes. However, the construction of

additional and larger levees prevented river water from

reaching adjacent estuaries and the oyster beds located

therein on both sides of the Mississippi River.

Consequently, these areas continued to become more

saline; the salinity killed the plant life that held the soil

together. This, in turn, accelerated erosion, which was

no longer being offset by the replenishing of land by

suspended sediment from the river. As the land eroded,

the saltwater intrusion from the Gulf of Mexico **5

continued farther inland. In response, the oyster

fishermen relocated their oyster beds farther inland away

App. 56

from encroaching saltwater predators and disease, but

closer to the sources of manmade pollution.

Avenal y. State, Department of Natural Resources, 01-0843. pp.

2-3, (La.App. 4 Cir. 10/15/03), 858 So.2d 697, 710 (dissent by

Judge Tobias).

I agree with the majority's detailed analysis of the plaintiffs’

contracts that contain hold-harmless clauses. I also agree with

the majority's discussion of prescription which applies to the

remaining leases. A_ threshold consideration regarding

prescription is a comparison of the property rights guarantee of

the United States Constitution with the property rights guarantee

of the Louisiana Constitution. The Fifth Amendment of the

United States Constitution states in pertinent part: "No person

shall be ... deprived of ... property, without due process of law;

nor shall private property be taken for public use, without just

compensation." (Emphasis supplied.) Article 1, Section 4 of the

Louisiana Constitution of 1974 states in pertinent part: "Property

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

subdivisions except for public purposes and with just

compensation.” (Emphasis supplied.)

Generally, the language of the Fifth Amendment has been given

a broad meaning, which results in a "taking" in the constitutional

sense not only when there is *1113 a substitution of ownership

but also when there is deprivation of ownership, including

damage to, depreciation in value of, and destruction of property.

29A CJS Eminent Domain § 82 at 230 (1992). Likewise, in

Louisiana, taking and damage claims are treated the same for

most purposes, and it is seldom necessary to delineate between

taking and damaging. See State, Department of Transportation

and Development v. Chambers Investment Company, Inc., 595

So.2d 598, 603 (La.1992); **6Constance v. State, Department

of Transportation and Development, Office of Highways, 626

So.2d 1151, 1156-1157 (La.1993). However, in cases where the

differences between the two discrete rights specified in the

App. 57

Louisiana Constitution--proscription of the state's taking

personal property without just compensation and proscription of

the state's damaging personal property without just

compensation--form the dispositive issue, we must give effect to

the language of the Louisiana Constitution.

The term "taken" as used in the Fifth Amendment has been

interpreted broadly to include some, but not all, damages to

private property. When federal or state government limits the

owner's use of private property, without itself occupying oF

otherwise using the property fer government purposes, the

classic analytical tool used by the federal courts for assessing

whether a taking has occurred is the three-part test enunciated in

Penn Central Transportation Co. v. New York City, 438 US.

104. 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978). [FN4] Avenal v.

United States, 100 F.3d 933, 937 (Fed.Cir.1996). The courts

consider: “the character of the governmental action, the

economic impact on the claimant and, particularly, the extent to

which the governmental action has interfered with distinct

:nvestment-backed expectations." /d. Finding that these plaintiff

oyster farmers did not have distinct investment-backed

expectations, the federal appellate court rejected the argument

that the Caernarvon Freshwater Diversion Structure

(Caernarvon) resulted in a "taking" pursuant to the Fifth

Amendment. Thus, the plaintiffs’ claims were not compensable

under the federal constitutional guarantee despite the broad

interpretation accorded the word "taking" in the federal

jurisprudence. [FN5]

FN4. See discussion of Penn Central and of plaintiffs’

claim under the Fifth Amendment of the United States

Constitution at Footnote 28 of the majority opinion.

FNS. Regarding any claims of the plaintiffs asserted

pursuant to the U.S. Const. amend. V, I believe these

claims are properly denied based on the rationale of the

federal court in Avenal, 100 F.3d 933.

App. 58

**7 In contrast, La. Const. art. 1, § 4, using both words, "taken"

and "damaged," encompasses damage claims that would not

necessarily qualify as a taking under the Fifth Amendment

Under Louisiana law, a damage claim is compensable although

it is not a taking. Although "damages" sustained as a result of

public projects are potentially compensable under the __‘siana

Constitution, not all claims that are compensable under — deral

law (because they are deemed to be "takings") are "takings"

under Louisiana law.

In sum, because the Louisiana Constitution provides for

compensation for property "taken" or "damaged," what is

considered "taken" is a narrower concept in Louisiana when

contrasted with federal law. Under federal law, interpretation of

the term "taken" is broader. Under Louisiana law, the right to

compensation is broad, but the interpretation of "taken" is

narrower than in the federal sense. It would be incongruous for

the identical governmental act for public purposes, the *1114

Caernarvon project, to meet the narrower interpretation of

"taken" called for by the Louisiana Constitution but not to meet

the broader interpretation of "taken" for Fifth Amendment

purposes. See, Avenal, 100 F.3d 933. The fourth circuit's

decision that the Caernarvon project was a taking pursuant to the

Louisiana Constitution was erroneous. Avenal, 01-0843 at 11-12.

858 So.2d at 705-706.

Thus, although the Louisiana Constitution provides that just

compensation shall be paid when property is taken or damaged,

LSA-R.S. 13:5111 provides a three-year prescriptive period for

takings and LSA-R.S. 9:5624 provides a two-year prescriptive

period for damage. [FN6] **84.K, Roy, Inc. v. Board of

Commissioners for Pontchartrain Levee District, 237 La. 541.

547-548, 111 So.2d 765, 767 (1959) (Prescriptive period of

LSA-R.S. 9:5624 applies only when private property is damaged,

but not to actions for recovery of private property taken for

public purposes. ).

App. 59

FN6, Louisiana jurisprudence has applied the two

prescriptive periods on a case by case basis, usually with

the issue being whether one of these two prescriptive

periods for eminent domain cases was applicable instead

of some other prescriptive period, such as the one-year

limitation for asserting tort claims. The two-year

prescriptive period of LSA-R.S. 9:5624 has been applied

in various factual situations. See, Lyman v. Town of

Sunset, 500 So.2d 390 (La.1987) (Land developer's suit

against town, alleging town's operation of landfill

diminished property value and marketability of

subdivision development, was subject to two-year

prescriptive period.); see also appellate court cases cited

therein, Florsheim _v. Department of Highways, 201

So.2d 155 (La.App. 2 Cir.1967) (Claim for compensation

by owner of buildings located adjacent to interstate

highway right-of-way and structurally damaged by

vibrations associated with construction of the highway

was brought within the two-year limitation.); Nuckolls v.

Louisiana State Highway Department, 337 So.2d 313

(La.App. 2 Cir.1976) (Claim of landowner whose

property was adjacent to public highway construction site

who sued for flooding caused by unauthorized alteration

of natural drainage was not timely when filed more than

two years from date of the first flooding.); Carbo v.

Hart, 459 So.2d 1228 (La.App. 1 Cir.1984), writ denied,

462 So.2d 654 (1985) (Action against city for damages

arising from flooding of plaintiffs' property which was

immediately adjacent to city limits allegedly caused by

work on a man-made drainage canal was time barred by

two-year prescriptive period.); Broussard v. Booth, 446

So.2d 974 (La.App. 3 Cir.), writ denied, 449 So.2d 1357

(1984) (Plaintiff's claim against police jury for flooding

of his property after a drainage consiruction project was

time-barred because filed more than two years after

plaintiff became aware of the flooding; police jury's

action resulted in damages to plaintiff's property and not

App. 60

a taking of the property when police jury had not

expropriated, taken possession of the property, nor

constructed any facility upon, under or over his property.)

In the instant case, suit was filed on March 29, 1994, which was

more than two years after the completion, acceptance, and initial

operation of the Caernarvon project. Suit was filed less than

three years from the date the plaintiffs contend a "taking"

occurred, when the oyster beds were "rendered permanently

non-usable" for the commercial production of oysters. See,

Avenal y. State, Department of Natural Resources, 01-0843. p.

12 (La.App. 4 Cir. 10/15/03), 858 So.2d 697, 705 ("When

property has been rendered permanently non-usable for its only

purpose, that is a taking.") Thus, the plaintiffs argue to this court

that the court of appeal was correct in rejecting the state's plea of

prescription, and the state argues that the court of appeal

confused taking and damage claims.

In Columbia Gulf Transmission Company v. Hoyt, 252 La. 921.

215 So.2d 114 (1968), this court held that a predial lease is

property within the meaning of the **9 Louisiana Constitution,

requiring just compensation to the lessee before the lease rights

were damaged. *1115Hoyt, 252 La. at_937-938, 215 So.2d at

120-121. Similarly, in Avenal, 100 F.3d at 936, the federal

appellate court acknowledged that the plaintiffs owned valuable

property rights in their leases of the water bottoms and remarked

that the question was not whether plaintiffs had a constitutionally

protected property interest, but whether that property interest was

taken by the government.

As recognized by the majority in Hoyt, the Louisiana Supreme

Court distinguished between what is considered "taken" as

opposed to what is considered "damaged." "[P]roperty is 'taken’

when the public authority acquires the right of ownership or one

of its recognized dismemberments. Property is considered

‘damaged’ when the action of the public authority results in the

diminution of the value of the property." (Citations omitted.)

App. 61

Hoyt, 252 La. at 935, 215 So.2d at 120. {FN7] Because the state

did not acquire any right of ownership, there was no taking from

a Louisiana constitutional standpoint. /d. In the instant case,

testimony at trial established many of the leases at issue were

non-productive because they fell within the seasonal closure line;

however, the leaseholders chose to retain the leases because they

derive revenue from oil and gas interests that continue to conduct

surveys, seismic activities, oil exploration, and lay pipelines on

the leaseholds. Avenal, 01-0843 at 54, 858 So.2d at 738-739

(dissent). Other testimony indicated there was some oyster

production subsequent to Caernarvon's going on line.

FN7. Hoyt was decided before the adoption of the

Louisiana Constitution of 1974. Both the Constitution of

1921 and the Constitution of 1974 provided that property

shall not be taken or damaged except for public purposes.

Although Article I, section 2 of the 1921 Constitution

provided that "just and adequate compensation" was to

be paid, while Article I, section 4 of the 1974

Constitution provides that a party whose property is

expropriated "shall be compensated to the full extent of

his loss[,1" the "taken or damaged" language remained

unchanged.

**10 Lastly, as the majority notes, the state owns the water,

water bottoms, and oysters. The state cannot take from someone

that which it owns. Further, the oyster farmers still possess the

leasehold interests. Thus, rather than taking, the state damaged

[FN8] one aspect of plaintiffs’ leasehold *1116 interest;

therefore, LSA-R.S. 13:5111 which applies to a taking is

inapplicable to plaintiffs’ claims.

FN8. Although I conclude there was no taking, for the

sake of analysis, I will assume there were damages.

However, a forceful argument can be made to the effect

that if the state exercises its police power to avoid a

public calamity or in cases of imminent peril to the

App. 62

general welfare, there is no compensable taking or

damage. See, 29A CJS Eminent Domain § 8-10. p.

104-109. Here, the project was commenced, in part,

because of the requests of the oyster industry. The area

affected had not supported oysters historically until the

construction of the levee system artificially altered

salinity levels. The fresh water intrusion project, which

had been publically discussed and planned for decades

before its ultimate construction, benefitted the entire

oyster industry because the public seed grounds

blossomed, thus, limiting any potential losses suffered by |

plaintiffs. Further, relocation of the leaseholds was

offered and plaintiffs declined. The salinity level to

which the plaintiffs claim entitlement was an artificial

level, resulting from salt water intrusion due partially to

levee construction. It is this salinity level which, in part,

is adversely impacting the coast. "The destruction of

property to avert impending peril or disaster ... is an

exercise of the police power, and not a taking under the

power of eminent domain." 29A CJS § 9, pp. 108- 109.

See c’co, footnote 3, supra. The majority's discussion

concerning the public trust doctrine is consistent with the

state's police power and the following constitutional

provision, which prefaces the portions of La. Const. art.

_1_§ 4 invoked by plaintiffs in their claim for

compensation: "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." (Emphasis supplied.)

an WS

Pb BE as PO RCM er BA OE AF GP Fae tee OLD ILS ET RY Nal a PHOT RB me ww

Having written to emphasize the significance of the divergent

interests raised in this matter, I respectfully concur.

886 So.2d 1085, 34 Envtl. L. Rep. 20,122, 2003-3521 (La.

10/19/04)

App. 63

Supreme Court of Louisiana

NEWS RELEASE # 091

FOR IMMEDIATE NEWS RELEASE

FROM: CLERK OF THE SUPREME COURT OF LOUISIANA

On the 10" day of December, 2004, the following action was

taken by the Supreme Court of Louisiana in the case(s) listed

below:

REHEARING(S) DENIED:

2004-C - 3521 ALBERT J. AVENAL, JR., ET. AL. v.

THE STATE OF LOUISIANA AND

THE DEPARTMENT OF NATURAL

RESOURCES (Parish of Plaquemines)

Retired Judge Thomas C. Wicker, x,

participated for Traylor, J., recused.

App. 64

Court of Appeal of Louisiana,

Fourth Circuit.

Albert J. AVENAL, Jr., et al.

V.

STATE of Louisiana, DEPARTMENT OF NATURAL

RESOURCES.

No. 2001-CA-0843.

Oct. 15, 2003.

Rehearing Denied Nov. 21, 2003.

Writ Granted Jan. 30, 2004.

Oyster fishermen brought class action against Department of

Natural Resources, alleging constitutional taking of oyster leases

as result of coastal restoration project. The 25th Judicial District

Court, Parish of Plaquemines, No. 38-266, Division B, William

A. Roe, J., rendered judgment in favor of fishermen following

jury trial. State appealed. The Court of Appeal, Armstrong, J.,

held that: (1) replacement cost of suitable conditions of water

bottoms of oyster fishermen's oyster leases was the appropriate

measure of damages; (2) evidence supported finding that coastal

restoration project was proximate cause of mortality of oysters

on leases; (3) scientific expert testimony regarding use of side

scan sonar to determine what portion of water bottom was

covered by cultch failed to satisfy Daubert test and was

inadmissible; (4) any error in trial court's failure to excuse jurors

for cause was not reversible error; (5) three-yeai prescriptive

period for governmental takings cases, rather than two-year

prescriptive period for claims for "damage" to private property

for public purposes, applied to action; and (6) permanent loss of

commercial viability of oyster leases constituted a taking.

Affirmed as modified.

App. 65

Murray, J., concurred and assigned reasons in which Bymes,

C.J., joined.

Love, J., concurred in part, dissented in part, and assigned

reasons.

Tobias, J., dissented and assigned reasons.

West Headnotes

[1] Eminent Domain 122

148k122 Most Cited Cases

Under takings provision of the Louisiana Constitution, an owner

of property taken by the State has rights to compensation which

go beyond the rights to compensation provided by the

Constitution of the United States and by other state constitutions.

(Per opinion of Armstrong, J., with three judges concurring, and

one judge concurring in part.) U.S.C.A. Const.Amend. 5;

LSA-Const. Art. 1, § 4.

[2] Eminent Domain 131

148k131 Most Cited Cases

State constitutional imperative of "full" compensation for

governmental takings favors replacement cost, when that is

greater than market value, as the measure of compensation to be

applied. (Per opinion of Armstrong, J., with three judges

concurring.) LSA-Const. Art. 1, § 4.

[3] Eminent Domaia €=221

148k221 Most Cited Cases

[3] Eminent Domain &262(4)

148k262(4) Most Cited Cases

In takings cases, the jury as the trier of fact is afforded much

discretion and the jury's factual determinations, including its

evaluation of expert testimony, may be disturbed on appeal only

if they are clearly wrong, i.e., manifestly erroneous. (Per opinion

App. 66

of Armstrong, J., with three judges concurring.) LSA-Const. Art.

134

[4] Eminent Domain 147

148k147 Most Cited Cases

Replacement cost of suitable conditions of water bottoms of

oyster fishermen's oyster leases, rather than market value of

leases at time of taking, was the appropriate measure of damages

in fishermen's action against Department of Natural Resources,

alleging a state constitutional taking of oyster leases as result of

coastal restoration project. (Per opinion of Armstrong, J., with

three judges concurring.) LSA-Const. Art. 1, § 4.

[5] Eminent Domain 300

148k300 Most Cited Cases

[5] Evidence —571(9)

157k571(9) Most Cited Cases

Evidence supported finding that coastal restoration project of

Department of Natural Resources was proximate cause of

mortality of oysters on oyster fishermen's leases, thus supporting

determination that fisherman were entitled to compensation

under takings clause of State constitution; expert testimony and

fishermen's historical experience showed that permanent loss of

oyster productivity was attributable to coastal restoration project,

and any continuing sporadic growth of oysters was not sufficient

to make oyster leases commercially viable. (Per opinion of

Armstrong, J., with four judges concurring.) LSA-Const. Art. 1

84.

[6] Evidence 555.2

157k555.2 Most Cited Cases

Under the Daubert test for admissibility of scientific expert

testimony, the trial court must apply a multifactor test to make a

preliminary determination of the reliability of the proposed

expert testimony; if the trial court determines that the proposed

expert testimony lacks the requisite indicia of reliability, then the

App. 67

expert testimony is to be excluded. (Per opinion of Armstrong,

J., with three judges concurring, and one judge concurring in

part.)

[7] Appeal and Error €=971(2)

30k971(2) Most Cited Cases

The trial court's decision under the Daubert test as to whether to

admit or exclude from evidence proposed scientific expert

testimony is reviewed on appeal using an abuse of discretion

standard of review. (Per opinion of Armstrong, J., with three

judges concurring, and one judge concurring in part.)

[8] Evidence 557

157k557 Most Cited Cases

In oyster fishermen's takings action against Department of

Natural Resources, State failed to establish admissibility under

Daubert test of scientific expert testimony regarding use of side

scan sonar to determine what portion of oyster lease water

bottom was covered by cultch, and thus such testimony was

properly excluded; experts were experimenting with the

technique in the course of their work for the present case,

technique had not been the subject of peer-reviewed publication,

and results of side scan sonar technique were at variance with

other methods. (Per opinion of Armstrong, J., with three judges

concurring.)

[9] Eminent Domain €~262(5)

148k262(5) Most Cited Cases

In oyster fishermen's takings action against Department of

Natural Resources, any error in trial court's failure to grant State's

motion to excuse three prospective jurors for cause was not

reversible error; trial court granted eight of State's thirteen

challenges for cause as to prospective jurors, and State was able

to use three of its six peremptory challenges to remove such

jurors. (Per opinion of Armstrong, J., with three judges

concurring, and one judge concurring in part.)

App. 68

[10] Eminent Domain €288(2)

148k288(2) Most Cited Cases

Three-year prescriptive period for governmental takings cases,

rather than two-year prescriptive period for claims for "damage"

to private property for public purposes, applied to oyster

fishermen's action against Department of Natural Resources,

alleging a state constitutional taking of oyster leases as result of

coastal restoration project. (Per opinion of Armstrong, J., with

four judges concurring.) LSA-Const. Art. 1, § 4; LSA-R:S.

9:5624, 13:5111.

[11] Eminent Domain &~288(2)

148k288(2) Most Cited Cases

Two-year prescriptive period for claims for "damage" to private

property for public purposes applies only to cases in which

private property has been "damaged" but not taken by the State.

(Per opinion of Armstrong, J., with three judges concurring, and

one judge concurring in part.) LSA-Const. Art. 1, § 4; LSA-R.S.

9:5624.

[12] Eminent Domain ©~2.1

148k2.1 Most Cited Cases

(Formerly 148k2(1))

When property has been rendered permanently non-usable for its

only purpose as a result of government action, that is a taking

under State constitution's takings clause. (Per opinion of

Armstrong, J., with three judges concurring, and one judge

concurring in part.) LSA-Const. Art. 1, § 4.

[13] Eminent Domain &~2.25

148k2.25 Most Cited Cases

(Formerly 148k2(5))

[13] Eminent Domain &~2.27(2)

148k2.27(2) Most Cited Cases

(Formerly 148k2(5))

App. 69

Permanent loss of commercial viability of oyster fishermen's

oyster leases as a result of coastal restoration project of

Department of Natural Resources constituted a taking under the

State constitution's takings clause, even though State did not

physically enter onto oyster leases, restoration project was not

constructed on the oyster leases, and fishermen continued to have

legal right to use the leased premises for oyster production. (Per

opinion of Armstrong, J., with four judges concurring.)

LSA-Const. Art. 1, § 4.

[14] Parties 35.63

287k35.63 Most Cited Cases

Owner of oyster leases was not precluded from acting as class

representative in oyster fishermen's class action against

Department of Natural Resources, alleging constitutional taking

of oyster leases as result of coastal restoration project, even

though owner was not itself entitled to entire damages award;

owner owned oyster leases in the affected area, and trial court

could insure that damages would be paid to appropriate oyster

lease owners. (Per opinion of Armstrong, J., with three judges

concurring, and one judge concurring in part.)

[15] Fish 7(2)

176k7(2) Most Cited Cases

State's unilateral inclusion of onerous "indemnity clauses" in

oyster leases was legally invalid. (Per opinion of Armstrong, J.,

with three judges concurring, and one judge concurring in part.)

*699 Philip F. Cossich, Jr., Cossich Martin Sumich & Parsiola,

Belle Chasse, LA, Les Martin, New Orleans, LA, *700Michael

X. St. Martin, Timothy C. Ellender, Jr., St. Martin & Williams,

Houma, LA, Wendell H. Gauthier, Scott Labarre, Gauthier,

Downing, Labarre, Beiser & Dean, Metairie, LA, Carolyn

McNabb, Carolyn McNabb & Associates, Houma, LA, for

Plaintiffs/Appellants.

Richard P. Ieyoub, Attorney General, Andrew C. Wilson, Donna

_M. Young, David L. Carrigee, Jedd S. Malish, Special Assistant

App. 70

ere

Attomeys General, Burke & Mayer, New Orleans, LA, for

Defendant/Appellant.

(Court composed of Chief Judge WILLIAM H. BYRNES Ill,

Judge JOAN BERNARD ARMSTRONG, Judge PATRICIA

RIVET MURRAY, Judge TERRI F. LOVE and J udge MAX N.

TOBIAS Jr.).

**1 JOAN BERNARD ARMSTRONG, Judge.

This is a class action by oyster fishermen who contend that their

leases were taken, in a constitutional sense, by the State of

Louisiana Department of Natural Resources. Following a jury

trial, the trial court rendered judgment in favor of the plaintiffs.

The State appeals. For the reasons given below, we will modify

the quantum of damages awarded as to one of the plaintiffs but

otherwise affirm.

The alleged taking occurred as a result of the operation of the

Caernarvon Freshwater Diversion Structure (the "CFDS") as a

coastal restoration measure. The ecology of the areas where the

plaintiffs’ oyster leases were located was altered as a result of the

freshwater diversion so as to make those areas no longer suitable

for oyster production. [FN1]

FN1. The general background of the CFDS and the

effect of its operation upon the plaintiffs’ oyster leases is

discussed in detail in Avenal v. United States, 100 F.3d

933 (1996).

Historically, the Breton Sound Basin, where the plaintiffs’

oyster leases were located, contains a mixing of freshwater from

the Mississippi River and other freshwater sources with saltwater

from the Gulf of Mexico. As a result, much of **2 the area had

water of intermediate salinity. In particular, much of the area

had an intermediate salinity level that is suitable for oysters.

Stated in a simplified manner: The area closest to land, and thus

App. 71

closest to the sources of freshwater, had the lowest salinity and

was not sufficiently saline for oysters. The area farthest from

land, and thus closest to the Gulf of Mexico, had the highest

salinity and was too saline for oysters. In between those two

areas was the area of intermediate salinity that was suitable for

oysters. Over time, the construction of flood-control levees on

the Mississippi River reduced the flow of freshwater into Breton

Sound. That reduction of freshwater flow, along with other

man-made and natural changes, caused the area of intermediate

salinity, suitable for oysters, to move landward. The area of

higher salinity, which was not suitable for oysters, also moved

—Jandward. The reduction of the flow of freshwater and the

landward movement of the area of higher salinity caused coastal

erosion and loss of coastal wetlands.

The State, with assistance from the federal government, has

undertaken a program of coastal restoration. With respect to

Breton Sound, the coastal restoration effort requires the diversion

of additional freshwater from the Mississippi River to Breton

Sound. This diversion is done-by means of the CFDS. This

increased flow of freshwater moved the intermediate salinity

area, which is suitable of oysters, outward away from the land.

Areas closer to the land, which had previously had intermediate

salinity, and which had been suitable *701 for oysters, became

areas of lower salinity which were no longer suitable for oysters.

The area **3 of higher salinity, which is not suitable for oysters,

was moved farther from land. In sum, as a result of CFDS, some

areas which had previously not been suitable for oysters became

suitable for oysters and some areas which had been suitable for

oysters were no longer suitable for oysters. The plaintiffs' oyster

leases were in areas which were no longer suitable for oysters.

[FN2]

FN2. The plaintiffs also contend, and presented

evidence, that some oyster leases became unsuitable for

oysters because of the creation of marsh (which is a

purpose of CFDS) and the deposit of sediment. The

App. 72

plaintiffs also contend, and presented evidence, that

CFDS led to closures of oyster leases due to fecal

coliform. Fecal coliform lives longer in fresher water.

Also, increases in animal life in newly-created marshland

Cause increases in fecal coliform. Additionally, the

plaintiffs contend, and presented evidence, that the

increased freshwater flow of CFDS caused the growth of

eurasian milfoil, an aquatic plant, which made their

oyster leases inaccessible by boat.

The CFDS is a success, and has halted coastal erosion and

fostered coastal restoration. However, one of the costs of these

laudable achievements is that the plaintiffs’ oyster leases are no

longer productive to a commercially feasible extent. Variations

in the flow of freshwater through CFDS, particularly reductions

of the flow of freshwater, can sometimes allow temporary,

sporadic production of oysters on the plaintiffs’ leases. However,

assuming that CFDS will be used as intended, and there is no

reason to doubt that it will be, and assuming that CFDS produces

the results planned, and in fact it is doing so, the plaintiffs’ oyster

leases can no longer be used for commercial oyster production.

The first issue raised on appeal by the State is the quantum of

damages. The water bottoms are owned by the State and leased

to the plaintiffs. The plaintiffs presented damages evidence,

which was accepted by the trial court, based upon the cost that

would be required to "restore" (or, more accurately, recreate in

another location) suitable conditions of the water bottoms of the

plaintiffs' oyster leases. **4 More specifically, oyster leases, to

be productive, must have water bottoms covered with "cultch",

which is hard material such as crushed shells, gravel, etc. laid

down over the mud or sand of the water bottom. The trial court

awarded damages using a formula (referred to as the "cultch

currency matrix") as to the cost (installed) of cultch on a per acre

basis which cost it multiplied by the number of acres covered by

the plaintiffs’ oyster leases. In particular, the trial court awarded

damages of $21,345 per acre.

App. 73

The cultch currency matrix was developed by the State,

Department of Natural Resources ("DNR"), in cooperation with

various private groups (oyster fishermen, the oil & gas industry,

environmental organizations, etc.), state and federal agencies

(Department of Wildlife and Fisheries, Army Corps of

Engineers, etc.) and biologists and other scientists with interests

in coastal areas containing oyster leases. The State, DNR

brought representatives of all of these various interests together

at an Oyster Lease Valuation Matrix Workshop in March, 1995.

The list of attendees at the Workshop includes a number of the

expert witnesses who testified for each side below as well as the

State's trial counsel below. Thus, the State was well-represented

at the Workshop from a scientific, technical and even legal

standpoint.

The minutes of the Workshop reflect that numerous issues and

proposals were discussed covering scientific/technical,

economic/financial and other topics. There were some issues and

proposals as to *702 which the various interests represented at

the Workshop were unable to agree. However, consensus

developed on **5 sufficient issues and proposals that the

Workshop was able to produce the cultch currency matrix as a

consensus means of valuing damages to oyster leases. The State,

DNR, adopted the matrix with minor modifications.

The matrix uses the cost of cultch (installed) as the "currency"

for valuing oyster leases. The layer of cultch placed on the water

bottom is necessary for the growth of oysters. The cultch

currency matrix looks to the cost of the cultch (installed) on a

per-acre basis as the measure of value of the oyster lease. Thus,

in the present case, the cultch currency matrix measures the value

of the plaintiffs’ leases by the cost of replacing them at another

location by the placement of the necessary cultch. (Interestingly

in another coastal area affected by the State's coastal restoration

efforts, Davis Pond, the State has compensated or will

compensate oyster lessees based upon the cost of installed cultch

App. 74

which, as stated above, is the determinative factor in the cultch

currency matrix.)

The State's principal objection to the use of the cultch currency

matrix is that the matrix measures replacement value, rather than

market value, and that the plaintiffs should be compensated

based upon market value of their oyster leases as of the date they

were taken by the State. After most careful consideration of the

State's arguments and citations to legal authorities, we disagree

with the State's contention for two general reasons.

[1}[2] First, the Louisiana Constitution, at Article I. Section 4,

mandates that when private property is taken for public purposes,

the private property owner "has the right to a trial by jury to

determine compensation, and the owner shall be **6

compensated to the full extent of his loss." (emphasis added).

Under this provision of the Louisiana Constitution, an owner of

property taken by the State has rights to compensation which go

beyond the rights to compensation provided by the Constitution

of the United States and by other state constitutions. State

v.197] Green GMC Van, 354 So.2d 479 (La.1977): State v.

Spooner, 520 So.2d 336 (La.1988): Jenkins, The Declaration of

Rights, 21 Loy. L.Rev. 9 (1975). Thus, we believe that the

Louisiana constitutional imperative of "full" compensation

favors replacement cost, when that is greater than market value,

as the measure of compensation to be applied. We note that, on

some occasions when private property used for business

purposes has been taken by the State, the Supreme Court has

held that replacement cost, rather than market value, should be

used as the measure of compensation to the private property

owner. See State, Through Dept. of Highways v. Constant. 369

So.2d 699 (La.1979); State, Dept. of T ransp. and Development

v. Dietrich, 555 So.2d 1355 (La.1990). [FN3]

FN3. The State cites Inabnet v. Exxon Corp., 93-0681

(La.9/6/94), 642 So.2d 1243. However, Jnabnet was a

tort case between private parties rather than a public

App. 75

takings case implicating Article 1, Section 4 of the

Louisiana Constitution. In some cases, the compensation

constitutionally required in a takings case is greater than

would be the damages awarded in a tort case with the

same facts. See Packard's Western Store, Inc. v. State,

Dept. of Transp. and Development, 618 So.2d 1166

(La.App. 2 Cir. 5/5/93), writ denied, 629 So.2d 345

(La.1993).

[3][4] We also note that the Louisiana Constitution, as quoted

above, specifically guarantees the right to trial by jury to

_ determine compensation for the taking of private property for

public purposes, and this makes us all the more cautious about

*703 upsetting the jury's determination of the amount of

compensation in this case. The State presented evidence as to

the market value of the plaintiffs’ oyster leases, including most

particularly the expert testimony of economist Walter Keithly,

but **7 the jury was obviously unpersuaded by the State's

evidence as to value. It is well-established in takings cases both

that the jury as the trier of fact is afforded much discretion and

that the jury's factual determinations (including its evaluation of

expert testimony) may be disturbed on appeal only if they are

clearly wrong-manifestly erroneous. See, e.g., State Through

Dept. of Transp. and Development v. Estate of Davis, 572 So.2d

39 (La.1990); State, Dept. of Transp. and Development v. Pipes,

489 So.2d 293 (La.App. 4th Cir.), writ denied, 492 So.2d 1219

(La.1986). Based upon the constitutional protection of the jury's

determination, as well as the just-cited caselaw, we cannot say

that the jury clearly erred in selecting the replacement cost as the

measure of compensation in this case.

Our second general reason for disagreeing with the State's

contention that market value should be used to determine

compensation, rather than the replacement value of the plaintiffs’

leases as determined by use of the cultch currency matrix, lies in

policy considerations of consistency of treatment in the

determination of compensation for the taking of oyster leases.

App. 76

The State sponsored the creation of the cultch currency matrix as

a means of determining the amount of compensation for the

effective loss of oyster leases by man-made impacts. The State,

DNR adopted the cultch currency matrix for use by the

quasi-governmental Oyster Lease Damage Evaluation Board and

that body makes determinations of compensation to oyster

fisherman using the matrix. The State, DNR was the lead author

of the cultch currency matrix. We note that the State has applied

the cultch currency matrix in other situations. Therefore, we

believe that the cultch currency **8 matrix appears to be the best

means available to best achieve consistent compensation for the

taking of oyster leases. Accordingly, we find that it was

appropriate and consistent to apply the cultch currency matrix in

the present case. [FN4]

EN4. The jury awarded one of the class representative

plaintiffs, Albert J. Avenal, only $1,000 per acre of

oyster leases taken. Perhaps the jury treated Mr. Avenal

differently because he acquired some (but by no means

all) of his leases just as the present action was being

filed. However, there is no evidence that Mr. Avenal, a

well-established oyster fisherman, who had entered into

prior such oyster lease transactions, was in any way in

bad faith. Thus, there was no proper basis for Mr.

Avenal to be treated any differently than the other

plaintiffs. Consequently, we will modify the judgment so

that Mr. Avenal receives the same compensation per acre

as the other plaintiffs.

[5] The State's next argument on appeal is that the plaintiffs did

not prove that CFDS was the proximate cause of oyster mortality

on the plaintiffs’ oyster leases. In particular, the State argues that

there are multiple sources of freshwater in Breton Sound and that

these sources of freshwater also killed oysters. Also, the State

argues that, even after CFDS came on line, there have been

oysters produced in Breton Sound.

App. 77

However, the testimony of the various expert witnesses (both

the plaintiffs expert witnesses and the State's own expert

witnesses), as well as the plaintiffs’ own testimony as to their

actual historical experience with oyster leases in Breton Sound,

shows that the permanent loss of oyster productivity is

attributable to CFDS. Although oyster mortality can be caused by

a "freshet," a sudden large infusion of freshwater caused by

heavy rains, the oyster mortality so caused is transitory and

followed *704 by renewed oyster growth. Also, although the

evidence shows that there was some oyster production in Breton

Sound after CFDS came on line, it appears that this was sporadic

oyster growth that occurred when the flow of freshwater through

CFDS was temporarily reduced. However, this sporadic oyster

**9 growth was not sufficient to make the plaintiffs’ oyster leases

commercially viable. Moreover, it is apparent that, when CFDS

is used at its planned capacity, and there is no reason to doubt

that it will be, as opposed to the curtailed flow which allowed

sporadic oyster production, the plaintiffs’ oyster leases are

rendered unsuitable for oysters.

Lastly on this "proximate cause" point, the State argues that the

plaintiffs have not proven with specificity the amount of

production from their leases prior to CFDS coming on line.

However, so long as the plaintiffs proved generally that their

leases were productive before CFDS came on line, and that they

were not productive after CFDS came on line, and that CFDS

caused the loss of oyster productivity, proximate cause has been

proven.

The State next argues that the plaintiff class was improperly

certified. However, this court's prior upholding of the class

certification became final when the Supreme Court denied the

State's writ application in Avenal v. State, Dept. of Natural

Resources, 97-2747 (La.1/16/98), 706 So.2d 979. Thus, we

cannot address this issue further.

App. 78

re ee

[6] The State's next argument on appeal is that the trial court

erred by excluding from evidence certain proposed expert

testimony for the State which was based upon the use of side

scan sonar. The Louisiana Supreme Court, in State v. Foret. 628

So.2d 1116 (La.1993), adopted the United States Supreme

Court's decision in Daubert vy. Merrell Dow Pharmaceuticals,

Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), as

to the admissibility of scientific experi testimony. The trial court

must apply a multifactor test to make a preliminary

determination of the reliability of the proposed expert testimony.

If the trial court determines that the proposed expert **10

testimony lacks the requisite indicia of reliability, then the expert

testimony is to be excluded. An evidentiary hearing, out of the

presence of the jury, can be useful to the trial court's

determination and that procedure was utilized in the present case.

The two State proposed expert witnesses both testified as to their

side scan sonar technique as applied to the plaintiffs’ oyster

leases.

[7}[8] The trial court's decision as to whether to admit or

exclude from evidence the proposed expert testimony is

reviewed on appeal using an abuse of discretion standard of

review. Collins y. State, ex rel Louisiana Health Care

Authority, 99-2307 (La.App. 4 Cir. 7/12/00). 774 So.2d 167, writ

denied, 2000-2633 (La.11/17/00). 775 So.2d 439: Mitchell vy.

Uniroyal Goodrich Tire Co., 95-0403 (La.App. 4 Cir. 12/28/95),

666 So.2d 727, writ denied, 96- 0260 (La.3/15/96). 669 So.2d

421. The testimony at the Foret/Daubert hearing showed that,

while the use of side scan sonar itself is well-established, the

application of that technology to the determination of what

portion of any oyster lease water bottom is covered by cultch is

still very much a work-in-progress. indeed, the State's experts

were experimenting with the technique in the course of their

work for the present case. The specific type of study undertaken

in the present case has been done seldom, if ever, before. The

specific technique employed has not been the subject of

peer-reviewed publication. There is no generally-recognized rate

App. 79

CC

of error with the technique employed in the present case. This is

not to say that *705 the State proffered "junk science", or that the

State's experts were anything other than reputable scientists, but

it is clear that the technique employed here is not mature

scientifically. There was also evidence from "ground-truth”, i.e.,

actually feeling the water bottoms with poles, that was at

variance with the side scan sonar data. **11 Under the

circumstances, we cannot say that the trial court abused its

discretion in excluding the side scan sonar evidence.

[9] The State's next argument on appeal is that the tral court

erred by not granting three of the State's challenges for cause to

prospective jurors, thus causing the State to use three of its six

peremptory challenges to exclude those three jurors. Even if the

trial court erred as to those three challenges for cause (and we

make no finding that the trial court did so err), we do not believe

that such would be grounds for reversal. The trial court granted

eight of the State's thirteen challenges for cause as to prospective

jurors. A reason for allowing the parties peremptory challenges

is that reasonable minds can differ as to whether a particular

prospective juror should be excluded for cause and to mitigate

any harm that might otherwise be caused by a trial court's

erroneously failing to strike for cause a prospective juror. The

fact that, after striking eight jurors for cause at the State's

instance, the trial court failed to strike three others, so that the

State had to use three of its six peremptory challenges, does not

appear to us to be likely to have caused any substantial prejudice

to the State. In any case, the trial court has discretion to manage

the selection of the jury, e.g., Carter v. Baham, 95-2126

4Ci / and a review of the

record of the jury selection as a whole does not reveal an abuse

of discretion.

The State's next argument on appeal is that

some of the plaintiffs’ claims are prescribed under La. RS.

9:5624 because that statute provides a two-year prescriptive

period for claims for “damage” to private property for public

App. 80

purposes and the plaintiffs did not file suit until two and a half

years after CFDS came on line. However, the statute relied upon

by the State has no application to the present case. Specifically,

La. R.S. 9:5624 applies only to cases in which private property

**12 has been "damaged" but not taken by the State. Greater

B tv. 9 So.2d 4 ; ._ Ist

Cir.1976). See also A.K. Roy, Inc. vy. Board of Com'rs for

Pontchartrain Levee Dist., 237 La. 541, 111 So.2d 765 (1959):

P. v. m ighwi 4 4

Cir.1980); Schneider v. Jefferson Parish, 216 So.2d 604

(La.App. 4th Cir.1969). Nor is there any doubt that this is a

“takings” case under La. R.S. 13:5111 which has a three-year

prescriptive period. In fact, two prior published decisions of this

court have held that this is a takings case. See Avenal v. State,

99-0127 (La.App. 4 Cir. 03/3/99), 757 So.2d 1; Avenal v. State

4 Cir. 11/

668 So.2d 1150. Factually, the key point as to why this is a

"takings" case is that the plaintiffs’ oyster leases have, under the

normal full-flow operation of CFDS necessary to achieve its

purposes, been rendered commercially non-viable as oyster

leases and, because CFDS will be operated at its normal full flow

on a permanent basis, the loss of commercial viability of the

plaintiffs’ oyster leases is permanent. When property has been

rendered permanently non-usable for its only purpose, that is a

taking. The facts that the State did not physically enter onto the

plaintiffs’ oyster leases, and that the CFDS was not constructed

on the plaintiffs’ oyster leases, are of no moment. *706 Nor is it

of any significance that the plaintiffs continue to have the legal

right to use the leased premises for oyster production. What is

dispositive is that the State rendered the plaintiffs’ oyster leases

permanently useless for commercial oyster production.

[14] The State next argues that one of the class representative

plaintiffs, Fox Oyster Company, was improperly awarded

damages for leases which it managed but did not own. However,

this is a class action, and Fox Oyster Company is one of the five

Class representatives. While all of the damages awarded must go

App. 81

to the **13 actual owners of the oyster leases, that does not

prevent Fox Oyster Company (which, in fact, does itself own

many leases in the affected area) from serving as a class

representative. The trial court can insure that damages are paid

only to actual oyster lease owners.

The State also argues that the jury erred in its determination of

the number of acres of oyster leases owned by each of the class

representatives. The parties disputed these facts and presented

evidence as to them. We do not believe that the jury was clearly

wrong/manifestly erroneous in this regard. Therefore, we may

not disturb the jury's determination. See West Jefferson Levee

Dist. v. Coast Quality Const. Corp., 93-1718 (La.5/23/94), 640

So.2d 1258; LeJeune v. Union Pacific _R.R., 97-1843

(La.4/14/98), 712 So.2d 491; Lewis y. State, Through Dept. of

rans. elopment, 94-2370 (La.4/21/95), 654 So.2d 311.

[15] Lastly, the State argues that it is relieved of liability

because the State inserted into the plaintiffs’ oyster leases, when

those leases were renewed, certain "indemnity clauses". The

Supreme Court held in Jurisich v. Jenkins, 99-0076

(La.10/19/99), 749 So.2d 597, that such unilateral insertion by

the State of onerous clauses in oyster leases is legally invalid.

The State argues that the legislature amended the oyster lease

statutes to allow the State to unilaterally insert onerous clauses

upon the renewal of oyster leases. See 2000 La. Acts No. 107.

However, without deciding whether that statute permits the

indemnity clauses at issue, we note that the statutory amendment

applies only to oyster leases renewed or extended after July 1,

1995. Id. The list of oyster leases offered by the State does not

include leases dated after July 1, 1995. Therefore, the statutory

amendment does not apply and, under the Supreme Court's

Jurisich, decision the indemnity clauses at issue are invalid.

**14 For the foregoing reasons, the judgment the trial court is

modified as to plaintiff Avenal and is otherwise affirmed.

App. 82

AFFIRMED AS MODIFIED.

BYRNES, C.J., concurs in the reasons assigned by MURRAY,

J.

LOVE, J., respectfully concurs in part and dissents in part.

TOBIAS, J., dissents and assigns reasons.

**1 MURRAY, J., concurs with reasons.

I write separately to further elaborate on the evidentiary support

for the jury's damage award.

At trial, the plaintiffs introduced the testimony of two experts,

Michael Voisin and Noel Brodtmann, Jr., who opined that the

cultch currency matrix is the best method to calculate damages

to an oyster lease. [FN1] Mr. Voisin, an oyster farming expert,

*707 explained that the matrix was originally developed in

March 1996 for the Oyster Lease Damage Evaluation Board

("OLDEB") as a uniform system of compensating oyster lease

holders for damages to their lease due to mineral (oil and gas)

activities. It values oyster leases by determining the cost to

replace lost or damaged leases. It does so by placing a value on

the lease that varies depending on the type of lease substrate

(foundation), i.e., reef, shell, hard mud, or soft mud.

FN1. "Cultch" is a hard material made up of crushed

shells and limestone that is used to build a substrate

(foundation) on muddy water bottoms of a lease. Cultch

is essential

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