Nature Conservancy, Inc. v. Sims

• Decision Date: 21 May 2012
• Docket Number: 09–6070.,Nos. 09–5634,s. 09–5634
• Citation: 680 F.3d 672
• Parties: The NATURE CONSERVANCY, INC., Plaintiff–Appellee, v. Larry and Marsha K. SIMS, Defendants–Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

680 F.3d 672

The NATURE CONSERVANCY, INC., Plaintiff–Appellee,

v.Larry and Marsha K. SIMS, Defendants–Appellants.

Nos. 09–5634, 09–6070.

United States Court of Appeals, Sixth Circuit.

May 21, 2012.

ON BRIEF:David Russell Marshall, Nicholasville, Kentucky, for Appellants. G. Thomas Barker, Ernest H. Jones II, Sturgill, Turner, Barker & Moloney, PLLC, Lexington, Kentucky, for Appellee.

Before: MERRITT and ROGERS, Circuit Judges; POLSTER, District Judge.^*

ROGERS, J., delivered the opinion of the court, in which POLSTER, D.J., joined. MERRITT, J. (pp. 680–85), delivered a separate dissenting opinion.

OPINION

ROGERS, Circuit Judge.

Larry and Marsha Sims appeal a district court order holding that the Sims violated a conservation easement that was part of a real estate purchase agreement regarding The Nature Conservancy's (“the Conservancy”) sale and the Sims's purchase of a 100.10 acre farm in Kentucky. The district court granted the Conservancy's summary judgment motion after determining that the Sims violated the easement by filling in a sinkhole and thereby substantially altering the topography of the land. In a subsequent judgment, the district court awarded the Conservancy $99,796.41 in attorneys' fees, costs, and expenses. The Sims now appeal both judgments. The district court properly ruled, however, that the Sims violated the plain language of the easement. The district court also did not abuse its discretion in awarding the Conservancy reasonable attorneys' fees and expenses.

On December 15, 2001, the Conservancy and Larry and Marsha Sims entered into a real estate purchase agreement for a 100.10 acre farm in Garrard County, Kentucky. The Conservancy sold the property—which was appraised at $260,400 without the easement and $60,000 with the easement—to the Sims for $60,084, in addition to a $244,939 charitable pledge from the Sims to the Conservancy. The Conservancy is a non-profit charity that works to protect ecologically significant land and waterways through the use of conservation easements.

The real estate purchase agreement that included the conservation easement is at the heart of this litigation. Section 1 of the easement states 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.” With the easement, the Conservancy received an annual right to enter and inspect the property to verify that the farm was being used in conformance with the standard set forth in a Conservation Documentation Report. The Conservation Documentation Report detailed the conditions of the property as it existed on December 28, 2001, when the easement was made and entered into by the parties. The report divided the property into two areas: (1) residential/agricultural property, which could be used for the Sims's personal residence as well as commercial agricultural purposes; and (2) the Henslow Sparrow Reserve Area, which was limited to grazing livestock and producing hay. The report also discussed the rare plant and animal species on the property.

In January 2005, a representative from the Conservancy inspected the property and documented several violations of the easement. These alleged violations included:

• Failure to file a livestock grazing plan (in violation of Section 3.2)

• Placement of trash in a sinkhole (in violation of Section 2.7) Excavation of trees around that same sinkhole (in violation of Section 2.10)

• Alteration of topography on the property by excavating and regrading a sinkhole behind the Sims's residence (in violation of Section 2.5) • Permitting the presence of excavated mounds of dirt on the property (in violation of Section 2.5)

• Planting a burning bush, an invasive plant species, near the residence (in violation of Section 2.11)

• Unreasonably prohibiting the Conservancy from entering the property and refusing to cooperate with the Conservancy's monitoring (in violation of Section 5.2)

Though the Sims refer to one sinkhole in their brief, and maintain that they never placed trash in this sinkhole, there were actually two sinkholes involved in the alleged violations. The Complaint describes these sinkholes as one simply “located on the Property” while the other was specifically “located in the field behind [the Sims's] personal residence.” The first sinkhole contained trash, which the Sims agreed to remove, so that the Conservancy dropped this allegation. The second sinkhole was located behind the residence, was tested for but did not contain trash, and is the subject of this litigation.

After the parties were unable to resolve their differences, the Conservancy filed a complaint and subsequent motion for a Preliminary Injunction to “permit [the Conservancy], and its outside consultants and experts, immediate access to the subject property, and reasonable access thereafter, to inspect and determine the complete nature and extent of [the Sims's] violations of the Conservation Easement.” In response, the Sims removed the burning bush, filed the livestock grazing plan, and removed trash from the first sinkhole. The Conservancy also dropped its request to remove the trees around the first sinkhole. Therefore, the only issue that remained for litigation was whether the Sims had violated the easement by filling a second sinkhole located behind their residence with soil from a pond excavated on the property.

As a result of a court order, the Conservancy was permitted to inspect the farm and the sinkhole behind the residence. The Conservancy conducted extensive geological core drillings, and no trash was discovered in this sinkhole. While the Sims maintained that they never placed trash in the sinkhole located behind the residence, they admitted using clay and silt from the excavated pond to level and partially fill what they described as a depression in the land. The Conservancy's geologist also conducted a study “to determine the volume of fill in the sinkhole and determine the contours of the ground surface prior to the sinkhole being filled.”

The district court granted summary judgment to the Conservancy, concluding that the Sims had violated the easement. The district court held that although the easement allowed some changes to the land's topography in conjunction with authorized activities, like plowing for commercial agriculture, the easement “specifically prohibited” the substantial alteration of filling in a sinkhole. As the court noted, the Sims “did not simply plow a field ...; they filled a sinkhole with an estimated 6,269 cubic yards of fill material so as to make farming easier.” The district court subsequently denied the Sims's motion to alter or vacate the judgment.

On subsequent motion by the Conservancy, the district court entered a judgment granting the Conservancy $77,337.50 in attorneys' fees and $18,092.33 in expenses. After examining the number of hours billed for each motion, the district court determined that the request was reasonable except for the number of hours billed for drafting the summary judgment motion and for responding to media inquiries. As a result, the district court decreased the amount awarded to the Conservancyby $11,774.00. However, the district court determined that all other litigation expenses incurred by the Conservancy, including expert fees, were reasonable, and declined “to question the way the Conservancy's attorneys staffed this case.” A few months later, the district court increased the attorneys' fees by $4,366.68 to account for expenses incurred after March 25, 2009.

The Sims now appeal the district court's grant of summary judgment and the award of attorneys' fees and expenses.

The district court correctly determined that the Sims violated the plain terms of the easement by filling in the sinkhole behind their residence. Where the language of a contract is not ambiguous, Kentucky law limits a court's analysis to the “four corners of the document.” 3D Enterprises Contracting Corp. v. Louisville & Jefferson Cnty. Metro. Sewer Dist., 174 S.W.3d 440, 448 (Ky.2005). In determining a contract's plain meaning, the court is “obligated to read the parts of the contract as a whole,” and when possible should embrace an interpretation that “promote[s] harmony between ... provisions.” L.K. Comstock & Co. v. Becon Constr. Co., 932 F.Supp. 948, 964 (E.D.Ky.1994) (citing Cook United, Inc. v. Waits, 512 S.W.2d 493, 495 (Ky.1974)).

By substantially changing the topography of the property the Sims violated the terms of the agreement. Section 1 of the easement states that “the purpose of this 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.” This purpose is reflected in the list of twelve restrictions on the use of the property, including Section 2.5 entitled “Topography”:

There shall be no ditching; draining; diking; filling; excavating; removal of topsoil, sand, gravel, rock, or other materials; or any change in the topography of the land in any manner except in conjunction with activities otherwise specifically authorized herein.

The easement thus intended to ensure that the overall appearance and topography of the protected property remain substantially unchanged. Though the Sims argue that they were allowed to fill the sinkhole because “the Conservation Easement did not forbid them to do so,” Section 2.5 obviously prohibited the Sims from placing 6,269 cubic yards of fill material in the sinkhole behind their residence. These actions were a clear violation of the plain meaning of the agreement and of the parties' intentions.

The Sims's first argument that they were allowed to “enhance their agricultural usage” of the...