The Nature Conservancy, Inc. v. Sims

US Court of Appeals, 6th Circuit, Nos. 09-5634/6070, May 21, 2012: Filling a sinkhole violated “unambiguous” conservation easement despite reserved rights; upholds attorneys’ fee award to easement holder. A 2-1 split decision.

The Nature Conservancy (“Conservancy”) and the Sims entered into a conservation easement on land the Conservancy sold Sims. The Conservancy subsequently asserted that the Sims violated the easement in several ways. All the violations were resolved out of court except whether filling a sinkhole behind their home with soil from a pond excavated on the property was a violation of the easement. According to the lower (district) court, the Sims used about 6,269 cubic yards of fill material “to make farming easier”. The district court found that the filling was a violation of the easement, and awarded the Conservancy attorneys’ fees, costs, and expenses. The Sims appealed both judgments.

On appeal the Circuit Court found the easement to be unambiguous. The issue was how to read the purposes and prohibitions sections of the easement in conjunction with the section on the landowner’s reserved rights.

Section 1 of the easement said that “the purpose of th[e] Easement [is] to assure that the Protected Property will be retained forever substantially undisturbed in its natural condition and to prevent any use . . . that will significantly impair or interfere with the Conservation Values of the Protected Property.” Section 2.5 entitled “Topography” prohibited filling “or any change in the topography of the land in any manner except in conjunction with activities otherwise specifically authorized herein.” Among the rights reserved to the landowner, Section 3.2 of the conservation easement permits “commercial agricultur[e]”.  The Sims asserted that because farming is an “activity otherwise specifically authorized,” they were allowed to fill the sinkhole to create more land for farming. The Court wrote, “The district court correctly reasoned that while Sections 2.5 and 3.2 together permit minor alterations to the land, such as plowing, to allow for ‘growing crops, raising and selling native plants and their seeds, grazing livestock, cutting, bailing and removing hay,’ this does not justify the extensive re-grading of the sinkhole.”

The Sims also contended that a reasonable reading of Section 3.7 of the easement, allowing the owner to dig wells and create ponds, also allows them to place dirt excavated when a pond was dug in a sinkhole on their land. The Court found this unreasonable, “as it would allow a Grantor to breach one provision in order to enhance their enjoyment of another provision.”

The conservation easement also said the Conservancy would be allowed attorneys’ fees and expenses “necessitated by Grantor’s violation of the terms of this Easement”.  The district court awarded attorneys’ fees and expenses and the issue on appeal was whether the fees were reasonable.  The Circuit Court said its review of the lower court’s decision should apply an “abuse of discretion” standard, which “give[s] great deference to district courts when reviewing an attorney’s fee award.”  The Circuit Court upheld the lower court, finding no abuse of discretion. In this Circuit, the Court wrote, “the touchstone for reasonableness is simply determining whether a fee ‘is one that is adequate to attract competent counsel, but not produce windfalls to attorneys.’” The Sims argued that much of the attorneys’ time was devoted to the violations other than the one that was eventually litigated, but the Court disagreed: “Though ‘unsuccessful claims’ arguably should not count towards attorney fees, the reality of litigation is that ‘[m]uch of counsel’s time will be devoted generally to the litigation as a whole, making it difficult to divide the hours expended on a claim-by-claim basis.’”

The Court also upheld the award of the fees of a geologist hired by the Conservancy to determine the extent of the damage caused by the Sims and the cost of restoring the land to its natural state. The Court found these were reasonable expenditures to enforce the terms of the easement and the conservation easement allowed for “costs of restoration necessitated by Grantor’s violation of the terms of the Easement”.

The dissenting Judge called the sinkhole “an eyesore” next to the Sims’ home and would have found no violation.  This judge put most emphasis on the reserved right of the landowner in Section 3 of the easement to engage in all normal rights of a landowner except those expressly prohibited. He interpreted the easement to not expressly prohibit filling the sinkhole at issue and further read paragraph 2.5 to say explicitly that it allows “filling . . . in conjunction with activities otherwise specifically authorized herein,” e.g., “digging a pond” or “landscaping,” or farming.

Decision available at http://www.ca6.uscourts.gov/opinions.pdf/12a0143p-06.pdf.

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