Franks Investment Co, L.L.C. v. Union Pacific Rail

Plaintiff-Appellant Franks Investment Co., LLC (“Franks”) appeals from the district court’s final judgment granting the motion for summary judgment filed by Defendant-Appellee Union Pacific Railroad Co. (“Union Pacific”) and dismissing Franks’s claims with prejudice. For the reasons set out below, we AFFIRM.

FACTS AND PROCEEDINGS

This action is the latest in a series of legal battles between Franks and Union Pacific over whether Franks has the right to cross Union Pacific’s train tracks on certain property in Caddo Parish originally owned by the Levy family at the turn of the 20th century. In 1902, the Levys sold a strip of land running through its tract to the Texas & Pacific Railway Company (“T & P”). The deed required T & P to “put in all necessary crossings” and “not to obstruct drainage.”. In 1913, the Levys dedicated a road across their land to Cad-do Parish, and agreed to “furnish the new posts” for this land on the condition that the Parish move a fence and “put in three crossings over ditches.”

• In 1923, the Levys and T & P completed another transaction, the deed to which is the focal point of this case (hereinafter the “1923 deed”). This transaction involved the sale of a larger and longer strip of land to T & P, and allowed the railroad company to move its tracks southwest. The 1923 deed contains the language directly at issue in this appeal. After stating the dimensions of the land, establishing the purchase price of $3,106, and granting the *1039property “unto said purchaser, its successors and assigns forever,” the deed states:

It is understood and agreed that the said Texas & Pacific Railway Company shall fence said strip of ground and shall maintain said fence at its own expense and shall provide three crossings across said strip at the points indicated on said Blue Print hereto attached and made part hereof, and the said Texas and Pacific Railway hereby binds itself, its successors and assigns, to furnish proper drainage out-lets across the land hereinabove conveyed.1

Franks now owns a portion of the Levy property adjacent to the railroad tracks. Union Pacific owns the strip of railroad property previously owned by T & P. In 2007, Union Pacific began closing the crossings. Prior to the closing of the crossings, they were apparently being used for oil and gas operations on Franks’s land. Franks is asserting a right to three separate crossings. Two of these crossings are within 10 to 12 feet of the locations shown in the blueprint attached to the 1923 deed, and one is more than 1,400 feet away from the location shown. Franks asserts that the crossings were in uneontested use for “over 70 years.” Franks concedes that there are other points of access to the property.

Franks previously brought a possessory action against Union Pacific seeking to restore its use of four railroad crossings over Union Pacific’s track.2 After an appeal to this court sitting en banc to determine whether Franks’s claims were federally preempted,3 the district court ruled, following a bench trial, that because Franks did not possess the crossings adversely to Union Pacific’s ownership, it was merely a “precarious possessor.”4 We affirmed in a short per'curiam opinion.5

Franks filed this petitory action next,6 claiming actual ownership of the rights to the three crossings referred to in the 1923 deed, rather than mere possession. Franks argued that the 1923 deed transferring the property from the Levys to T & P gave the Levys a predial servitude in the crossings. A predial servitude is “a charge on a servient estate for the benefit of a dominant estate.”7

Union Pacific moved to dismiss, asserting that the deed, by its plain language, did not create a predial servitude, and that any servitude that was conveyed via the deed was strictly personal to the Levys, *1040ending when they transferred the land. Declining to adopt the magistrate judge’s recommendation to grant the motion to dismiss, the district court denied the motion in order to develop the facts of the case. After some written discovery and depositions, Union Pacific moved for summary judgment, arguing that the language could have created a personal servitude only, and, in the alternative, that any predial servitude that the court would find should be limited in scope to agricultural use.

The district court noted that discovery did not produce any information bearing “on the legal 'interpretation of the 1923 deed.”8 The court cited a number of Louisiana cases finding the existence of a predial servitude in a single clause based on a presumption established under Louisiana law.9 It noted, however, that none of those cases “presented an additional clause, such as the drainage clause [in the 1923 deed], that had to be considered in interpreting the contract.”10 The drainage clause specifically binds T & P and “its successors and assigns” to furnish drainage.11 The clauses obligating T & P to provide fencing and passage contained no such language.12

According to the district court, without the drainage clause and its specific “successors and assigns” language, “[t]he general principles regarding the interpretation of servitudes suggests [sic] that the crossing clause, standing alone, would create a predial servitude.”13 But given the existence of the drainage clause, reading the right of passage as a predial servitude would “render the successors and assigns language in the drainage clause merely empty surplusage, which should be avoided.” 14 Moreover, Franks conceded below that “[t]he use of the phrase ‘successors and assigns’ in the 1923 act was either ‘bad lawyering’ or surplusage.”15 The court concluded that the language was “unambiguous,” and refused to “attempt to substitute its judgment about what the parties meant or intended.”16 It therefore granted Union Pacific’s motion for summary judgment and dismissed Franks’s claims with prejudice.17

On appeal, Franks argues that the district court erred in denying the existence of a predial servitude in the three crossings.

STANDARD OF REVIEW

This court “review[s] a district court’s, grant of summary judgment de novo,” applying the usual standards under Fed. R.CrvP. 56.18 The panel must resolve ambiguities in favor of the non-moving party.19

DISCUSSION

This ease turns on interpretation of the 1923 deed. “A document purporting to *1041create a predial servitude is interpreted in accordance with both the general rules of contract construction as well as in accordance with specific rules of construction for instruments that purport to create servitudes.” 20 We apply the law in effect in 1923, at the time the deed was confected,21 which was the Revised Civil Code of Louisiana of 1870 (hereinafter “RCC”). The RCC was amended in the 1970s, resulting in the modern Louisiana Civil Code, but both the district court and the parties agree that the same result should obtain under the law in effect in 1923 or today.22 Although Franks points to different language in the RCC compared to the current version of the Civil Code, it has not pointed to any material difference which would alter the district court’s reasoning or the result it reached. Nevertheless, because the law of 1923 is the applicable law, we primarily address the relevant provisions of the RCC, citing wherever possible the modern equivalent in the Civil Code.

I. Principles of Contract Interpretation

In 1923, as now,23 the main goal of contract interpretation under Louisiana law is determining the common intent of the parties:

Legal agreements having the effects of law upon the parties, none but the parties can abrogate or modify them. Upon this principle are established the following rules:

First — That no general or special legislative act can be so construed as to avoid or ■ modify a legal contract previously made;

Second — That courts are bound to give legal effect to all such contracts according to the true intent of all the parties; Third — That the intent is to be determined by the words of the contract, when these are clear and explicit and lead to no absurd consequences;

Fourth — That it is the common intent of the parties — that is, the intention of all — that is to be sought for; if there was a difference in this intent, there was no common consent and, consequently, no contract.24

To that end, we interpret words using their “general and popular use,”25 unless they are “[t]erms of art or technical phrases,” in which case they “are to be interpreted according to their received meaning with those who profess the art or profession to which they belong.”26 “When there is a doubt as to the true sense of the *1042words of a contract, they may be explained by referring to other words or phrases used in making the same contract.”27

“When a clause is susceptible of two interpretations, it must be understood in that in which it may have some effect, rather than in a sense which would render it nugatory.”28 “Terms, that present two meanings, must be taken in the sense most congruous to the matter of the contract.”29 “All clauses of agreements are interpreted the one by the other, giving to each the sense that results from the entire act.”30 All of these rules for interpreting contracts have modern equivalents in the Civil Code, so the district court’s use of some recent cases does not change the result.

If a court may determine the unambiguous common intent of the parties from the language of the contract under the rules set out above, the analysis ends there.31 “Under Louisiana law, a contract is ambiguous when it is uncertain as to the parties’ intentions and susceptible to more than one reasonable meaning under the circumstances and after applying established rules of construction.”32 Only when a contract is ambiguous is “extrinsic evidence ... admissible to clarify the ambiguity or to show the parties’ intent.”33

The district court concluded that the language of the 1923 deed was unambiguous and did not convey a predial servitude with respect to the three crossings; therefore, the court would not examine extrinsic evidence and would not “attempt to substitute its judgment about what the parties meant or intended.”34 In order to address the question of whether the language of the deed unambiguously conveyed a predial servitude, we must examine the nature of predial servitudes and how they are created.

II. Background on Predial Servitudes

Predial servitudes (or real servitudes) were defined in the RCC as “those which *1043the owner of an estate enjoys on a neighboring estate for the benefit of his own estate. They are called predial ... servitudes, because, being established for the benefit of an estate, they are rather due to the estate than to the owner personally.”35 “A real or predial servitude is a charge laid on an estate for the use and utility of another estate belonging to another owner.” 36 The RCC also established that it was necessary for there to be two estates and for each to have a different owner,37 then stated:

It is necessary, in the third place, that the servitude have for its object the use or benefit of the estate in favor of which it is established.

But it is not necessary that this benefit exist at the time' of the contract; a mere possible convenience or remote advantage is sufficient to support a servitude. In order to render a servitude null, it is not enough that it should appear to be useless, it must be shown that at no time, and under no circumstances, can it possibly become useful to the person in whose favor it is enacted.38

One significant consequence of a predial servitude, as opposed to a merely personal obligation, is that a predial servitude “is binding on subsequent owners who acquire the servient estate without further mention of the restriction in the act conveying the servient estate.”39 Furthermore, “[o]ne of the characteristics of a servitude is, that it does not oblige the owner of the estate subject to it to do anything, but to abstain from doing a particular thing, or to permit a certain thing to be done on his estate.”40

In 1923, unlike now, the RCC classified servitudes as either urban servitudes (those established for the use of houses) or rural servitudes (those established for the use of land),41 and one of the principle rural servitudes was the servitude of passage.42 This is a distinction without a difference because the servitude is defined essentially the same now as it was under the RCC:

The right of passage, or of way, is a servitude imposed by law or by convention, and by virtue of which one has a right to pass on foot, on horseback, or in a vehicle, to drive beasts of burden or carts through the estate of another.

When this servitude results from the law, the exercise of it is confined to the wants of the person who has it.

When it is the result of a contract, its extent and the mode of using it is regu*1044lated by the contract.43

Under the RCC, as now, ■ landowners could establish predial servitudes by convention, ie., by contract.44 The RCC recognized that certain contractual obligations could be real or personal, depending on the parties’ intent, and recognized that explicit language is preferable to implication:

Servitudes being established on estates in favor of other estates, and not in favor of persons, if the grant of the right declare it to be for the benefit of another estate, there can be no doubt as to the nature of this right, even though it should not he called a servitude.45

On the other hand, if the act does not declare that the grant of a right is for the benefit of an estate but merely for the benefit of a person, the RCC provided that it might still be a predial servitude if it conveyed “a real advantage to the estate” as opposed to “personal convenience to the owner.”46 Furthermore:

If the right granted be of a nature to assure a real advantage to an estate, it is to be presumed that such right is a real servitude, although it may not be so styled.

Thus, for example, if the owner of a house contiguous to lands bordering on the high road, should stipulate for the right of passing through lands, without it being expressed that the passage is for the use of his house, it would be not the less a real servitude, for it is evident that the passage is of real utility to the house.47

However:

If, on the other hand, the concession from its nature is a matter of mere personal convenience, it is considered personal, and can not [sic] be made real but by express declaration of the parties.

Thus for example, if the owner of a house near a garden or park, should stipulate for the right of walking and gathering fruits and flowers therein, this right would be considered personal to the individual, and not a servitude in favor of the house or its owner.

But the right becomes real and is a predial servitude, if the person stipulating for the servitude, acquires it as owner of the house, and for himself, his heirs and assigns.48

*1045As a backstop, the RCC provided: “Servitudes which tend to affect the free use of property, in case of doubt as to their extent or the manner of using them, are always interpreted in favor of the owner of the property to be affected.”49

Louisiana courts have also long recognized that parties to a contract may choose to create neither a predial servitude nor personal servitude but rather a personal obligation, i.e., an agreement that focuses on the duty of an obligor rather than a benefit either to an estate (predial servitude) or to a person (personal servitude), and which does not bind the obligor’s suecessors-in-interest. In 1911, the Louisiana Supreme Court quoted with approval French civil law commentary to that effect:

In case of doubt as to the nature of the service that has been stipulated, it is for the courts to decide, finally, whether the parties have intended to establish a real servitude or a personal servitude, or a simple right of obligation. The terms of the act of agreement should furnish the principal element of the decision.50

The Louisiana Third Circuit later noted that the characterization of a clause as either a predial servitudé, personal servitude, or personal obligation is a question of law determined by the ordinary principles of contract interpretation set out above:

When contracting parties do not specify the kind of right they intended to create, the question may arise whether they intended to create a predial servitude, a personal servitude; or merely a personal obligation. This question is resolved in Louisiana by applying Civil Code articles 754-58, the rules of interpretation used to ascertain the kinds of rights created by juridical acts lacking express designation.51

In short, under the RCC, parties to a contract may remove all doubt by expressly declaring a predial servitude, and if they do not, the interpretation depends on the nature of the right granted or obligation required under the language of the contract. As the statutes set out above illustrate, the language of the contract must control the interpretation, and the parties would do well to make explicit their intention to create or not create a predial servitude. Case law bears out this focus on the language of the contract, both under the RCC and the current Civil Code. See, e.g., Burgas v. Stoutz, 174 La. 586, 591, 141 So. 67 (1932) (noting that language in a deed granting use of a driveway to “the purchaser, its successors and assigns” would have created a predial servitude); Buckhorn Ranch, L.L.C. v. Holt, 2008-1509 p. 2 (La.App. 3 Cir. 5/6/09), 10 So.3d 367, 369, writ denied, 2009-1263 (La.9/18/09), 17 So.3d 977 (creating a predial servitude with the phrase “these servitudes shall be predial servitudes”).

Nevertheless, both the RCC and the current Civil' Code create a presumption in *1046favor of predial servitudes when the right confers an advantage to an estate.52 Louisiana courts have applied the presumption to infer the creation of predial servitudes in a number of instances. In Burgas v. Stoutz, for example, the Supreme Court of Louisiana found that a provision granting the use of a driveway on lot B to the owners of lot A was “of real utility” to lot A because it gave lot A “more free space either for building or for flowers, or for a garden, and making the property more desirable and valuable,” and therefore created a predial servitude.53

Even in some cases where language in an act of sale specifically names one of the parties to the act as the beneficiary of the servitude, Louisiana courts have found a predial servitude rather than a personal servitude. In McLure,54 the Court of Appeal held that an act of sale that stated “the vendee herein agrees to allow the vendor an outlet to Highway No. 165 and over and across the property herein purchased” created a predial servitude despite the use of the term “vendor,” which could potentially have been interpreted to confer a right only to the seller. In Whitney Nat. Bank of New Orleans v. Poydras Ctr. Associates,55 the court found that the language “[s]aid Metropolitan Bank to have the right to use the aforesaid common alley” did not thwart the creation of a predial servitude because it “matters not that the language of the Act was couched in personal terms, for the right created was a real advantage to the dominant estate and the reservation of the right to build was likewise a real advantage to the servient estate.”56 Thus, there is no question that although it is better for contracting parties to be explicit regarding their intention to create a predial or personal servitude, courts will not hesitate to apply the predial servitude presumption in appropriate circumstances.

III. Interpretation of the 1923 Deed

We turn now to the relevant language in the 1923 deed:

It is understood and agreed that [1] the said Texas & Pacific Railway Company shall fence said strip of ground and shall maintain said fence at its own expense and shall provide three crossings across said strip at the points indicated on said Blue Print hereto attached and made part hereof, and [2] the said Texas & Pacific Railway hereby binds itself, its successors and assigns, to furnish proper drainage out-lets across the land hereinabove conveyed.57

For convenience and consistency with the district court opinion, we will refer to clause [1] as the “crossings clause,” and to clause [2] as the “drainage clause.”

In essence, Franks argues that the crossings clause creates a predial servitude because it was established to provide a benefit to the property owned by the Levys. Therefore, Franks argues, it is presumed to be a predial servitude under the RCC provisions and case law discussed above. The district court, citing much of the case law discussed above, agreed with Franks that the cases “are persuasive that the crossings clause, standing alone, would *1047create a predial servitude.”58 However, the Court continued, “the parties have not drawn the court’s attention to a case that presented an additional clause, such as the drainage clause, that had to be considered in interpreting the contract. For that reason, the caselaw [sic] is of less assistance than usual.”59

We agree with the district court’s assessment. If the crossings clause stood alone in the 1923 deed, then Franks likely would be correct that it would be subject to the predial servitude presumption. It does not stand alone, however. It is in the same sentence as the drainage clause, and we must interpret both provisions which satisfies “both the general rules of contract construction as well as in accordance with specific rules of construction for instruments that purport to create servitudes.”60 As the district court explained (and we agree):

The court must, however, keep in mind the provisions of the Civil Code that (1) each provision in a contract must be interpreted in light of the other provisions so that each is given the meaning suggested by the contract as a whole and (2) doubt as to the existence of a predial servitude shall be resolved in favor of the servient estate. The court must also, if possible, give practical effect to all parts of the contract, so as to avoid neutralizing or ignoring any of them or treating them as surplusage.61

The problem for Franks is that Franks is trying to establish a predial servitude by presumption because the crossings clause does not expressly create a predial servitude, but the parties to the 1923 deed showed that they knew how to establish a predial servitude expressly in the drainage clause — not just in part of the same deed but in the very same sentence. Specifically, whereas the crossings clause binds only Texas '& Pacific Railway Company to maintain fences and provide crossings (which does not necessarily establish a predial servitude), the drainage clause binds not only Texas & Pacific Railway Company but “itself, its successors and assigns,” which is sufficient to create an express predial servitude.62

The parties knew how to create an express servitude by adding the “successors and assigns” language but added that language only to the drainage clause, limiting the obligations in the crossings clause to “Texas & Pacific Railway Company” only. As the district court reasoned:

If the parties intended all of the obligations to be predial in nature, they could have easily applied the successors and assigns language to the entire sentence. They did not. Instead, they specifically made one obligation (drainage) binding on successors and assigns, and did not impose that requirement on two other obligations (fencing and crossings). The most reasonable interpretation in accordance with Louisiana law is that the obligations are to be treated differently.63

* * *

*1048The most faithful application of these [interpretation] principles to the language of the 1923 deed, as a whole, results in a determination that the crossings clause did not give rise to a predial servitude. This court should not, ninety years .after the formation of the contract, interfere with the unambiguous language and attempt to substitute its judgment about what the parties meant or intended.64

We agree. Although Franks puts forward a number of arguments on appeal, none of them offers a convincing explanation for why the parties included the “successors and assigns” language in the drainage clause but not the crossings clause, if they intended both clauses to establish predial servitudes. Nor has Franks pointed to any material difference between the RCC provisions applicable in 1923 versus the Civil Code provisions applicable today and on which the district court relied. Indeed, as the parallel citations in this opinion show, virtually every relevant RCC article has a modern equivalent in the Civil Code, and the cases cited by the district court and herein do not depend on any of amendments for their reasoning or results.

In short, under the law applicable to the interpretation of the 1923 deed, we conclude that the contract is unambiguous. It does not establish a predial servitude with respect to Texas & Pacific Railway .Company’s obligation to provide three crossings across what was then its property. Rather, it is merely a personal obligation which does not bind Texas & Pacific Railway Company’s successors-in-interest.

CONCLUSION

For the reasons set out above, we AFFIRM.