RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit Rule 206
File Name: 12a0143p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
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Plaintiff-Appellee, -
THE NATURE CONSERVANCY, INC.,
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Nos. 09-5634/6070
v.
,
>
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Defendants-Appellants. -
LARRY and MARSHA K. SIMS,
N
Appeal from the United States District Court
for the Eastern District of Kentucky at Lexington.
No. 5:07-cv-112—Joseph M. Hood, District Judge.
Decided and Filed: May 21, 2012
Before: MERRITT and ROGERS, Circuit Judges; POLSTER, District Judge.*
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COUNSEL
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.
ROGERS, J., delivered the opinion of the court, in which POLSTER, D. J.,
joined. MERRITT, J. (pp. 12–17), delivered a separate dissenting opinion.
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OPINION
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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
*
The Honorable Dan Aaron Polster, United States District Judge for the Northern District of Ohio,
sitting by designation.
1
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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.
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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 re-
grading 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
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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 Conservancy by
$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.
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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.
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The Sims’s first argument that they were allowed to “enhance their agricultural
usage” of the land under Section 3.2, does not support a different conclusion. A letter
from the Sims’s attorney to James Aldrich, Director of the Nature Conservancy in
Lexington, explains how the “sinkhole created a problem for [the Sims] and they . . .
addressed that problem by filling in the hole to adjust the grading.” The Sims draw the
court’s attention to the last clause of Section 2.5, which states that the Sims must not
alter the topography of the land “except in conjunction with activities otherwise
specifically authorized herein.” Pointing to Section 3.2, which permits “commercial
agricultur[e],” the Sims assert that because farming is an “activity otherwise specifically
authorized,” they were allowed to fill the sinkhole to create more land for farming.
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. Re-grading
the land by placing 6,269 cubic yards of fill material into a depression, where the
conservation easement explicitly forbids “filling,” is not a normal precursor to farming
activities. As the district court states, “read together, [Sections] 2.5 and 3.2 clearly
contemplate alteration of the topography as a consequence of the growing of crops, but
not ‘draining; diking; filling; [or] excavating’ for the sole purpose of making farming
easier.”
Some loss in the agricultural value of the land was, moreover, likely anticipated
by the parties. The Sims received a substantial benefit from the purchase of the land
with the easement. Though the conservation easement may have arguably hindered their
ability to “enhance their agricultural usage,” the Sims only paid $60,084 for the
property, in addition to a $244,939 charitable pledge that resulted in a tax benefit. The
parties undoubtedly anticipated a substantial reduction in the economic value of the land.
The Sims’s second argument is that when Section 2.5 is read in conjunction with
Section 3.7, the reasonable extension of the permission to “dig wells” and “create ponds”
is the ability to place the excavated dirt in a sinkhole on their land. The Sims argue that
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any other reading of the two sections would be unworkable, as after digging the
permitted pond the excavated dirt would have to “mysteriously evaporate[ ]” or be
“transported off [the] premises.”
The Sims’s interpretation of the conservation easement is unreasonable, as it
would allow a Grantor to breach one provision in order to enhance their enjoyment of
another provision. While the exception in Section 2.5 may allow “ditching” to dig a well
or create a pond, two authorized activities, this does not necessarily mean that the
Grantor is also allowed to use the excavated dirt to fill an entirely separate hole or
depression on the property. Section 3.7 is silent as to what should happen with the
excavated dirt, and this silence does not create “authorization” for an activity that would
otherwise be explicitly prohibited. Though the Sims lament the difficulty of disposing
of the excavated dirt, there are doubtless ways to do so, without violating the easement.
In any event, the difficulty of disposing of the dirt does not justify ignoring the easement,
which protects the “significant natural, aesthetic, scientific and educational value[ ] of
the land.”
The Sims’s remaining contentions also fail. The Sims argue that their actions
were justified because the status of the depression as a sinkhole was undisclosed prior
to their filling in the area. However, regardless of whether the sinkhole was truly a
sinkhole or a “dip” or “depression” as originally thought, Section 2.5 prohibits any
substantial change in the topography. The Sims also stipulate that they would not have
built a $250,000 residence near the sinkhole if they knew that they could not re-grade
the land surrounding the structure. But Section 2.5 explicitly states that filling and
changing the topography is not permitted, and it was up to the Sims and their builder to
recognize the limitations of their selected location for the home. Thus, the district court
properly held that the Sims violated the terms of the agreement.
The district court moreover did not abuse its discretion in awarding the
Conservancy $77,337.50 in attorneys’ fees and over $22,000 in expenses. The
conservation easement authorized the district court to grant reasonable attorneys’ fees
and expenses. Section 5.1 states:
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All reasonable costs incurred by the Conservancy in enforcing the terms
of this Easement against Grantor, including, without limitation, costs and
expenses of suit and reasonable attorneys’ fees, and any costs of
restoration necessitated by Grantor’s violation of the terms of this
Easement shall be borne by Grantor.
The parties agree that the issue on appeal is whether the fees were reasonable, and that
to determine this question the court should apply an abuse of discretion standard. Perotti
v. Seiter, 935 F.2d 761, 763 (6th Cir. 1991) (stating standard). In general, this court
“give[s] great deference to district courts when reviewing an attorney’s fee award.”
Moulton v. U.S. Steel Corp., 581 F.3d 344, 352 (6th Cir. 2009). This is “appropriate in
view of the district court’s superior understanding of the litigation and the desirability
of avoiding frequent appellate review of what essentially are factual matters.” Hensley
v. Eckerhart, 461 U.S. 424, 437 (1983).
The Sims rely on the twelve factors for determining the reasonableness of
statutory attorneys’ fees in discrimination cases outlined by this court in Paschal v.
Flagstar Bank, 297 F.3d 431 (6th Cir. 2002). The factors are:
(1) the time and labor required; (2) the novelty and difficulty of the
questions; (3) the skill requisite to perform the legal service properly;
(4) the preclusion of other employment by the attorney due to acceptance
of the case; (5) the customary fee; (6) whether the fee is fixed or
contingent; (7) time limitations imposed by the client or the
circumstances; (8) the amount involved and the results obtained; (9) the
experience, reputation, and ability of the attorneys; (10) the
“undesirability” of the case; (11) the nature and length of the professional
relationship with the client; and (12) awards in similar cases.
Id. at 435 (citations omitted). Assuming the applicability of these factors to contractual
fee-shifting provisions, the district court carefully considered the majority of these issues
and thus did not abuse its discretion in deciding upon a reasonable award for the
Conservancy. This Circuit does not require that the district court apply the Paschal
factors, id. at 435; rather, 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.” Id. at 434 (citations and ellipses omitted). As the fees in this
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case ensured competent counsel but do not appear to have overcompensated the
Conservancy’s attorneys, the district court did not abuse its discretion in determining the
award.
With regard to difficulty, implicating both the “time and labor required” as well
as the “novelty” of the case, id. at 435, the Sims argue that because there was only a
“single issue” litigated, the time and effort spent by the Conservancy’s attorneys was
unreasonable and the attorneys should not have been compensated. Both parties debate
who ultimately prevailed on a number of claims in this case. However, regardless of
who actually “won” the settled claims that were not litigated, the district court correctly
concluded that “the Conservancy obtained the vast majority of the relief it sought,”
including prevailing on its summary judgment motion. Of the alleged violations, all but
one—the trees near a different sinkhole—were resolved in a manner that was favorable
to the Conservancy. 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.” Hensley, 461 U.S. at 435. Because this case “involve[d] a
common core of facts” and is “based on related legal theories,” id., and the Conservancy
achieved its desired result on the majority of the alleged violations, the district court did
not abuse its discretion when it considered the overall efforts of the Conservancy’s
attorneys in this litigation.
As for the amount of time the Conservancy’s attorneys spent on the case, the
district court carefully examined the hours billed, breaking down all of the hours by
motion. After reviewing the billing records, the district court decreased the amount
awarded to the Conservancy by $11,774.00. First, the district court found that 66 hours
for drafting the summary judgment motion was “unreasonable,” and limited that number
to 10 hours. The district court then determined that because the “outcome of th[e]
litigation did not depend . . . on the responses to media inquiries,” these hours should not
count towards the total. In addition, the district court specifically discussed the value of
various uses of the attorneys’ time, including inspections of the property, legal research,
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and responding to audit inquiries. With this detailed analysis, the district court did not
abuse its discretion in determining how many hours should count towards the assessment
of reasonable attorneys’ fees.
Describing the work of the Conservancy’s lawyers as a “duplication of efforts,”
the Sims argue that one attorney could have litigated the case for the Conservancy and
thus the award was excessive. However, it was reasonable for the district court not “to
question the way the Conservancy’s attorneys staffed this case,” especially since it is
“quite customary, and in fact more economical, for an associate level attorney to handle
simple matters such as this while being advised by more seasoned attorneys.” As one
lower level associate billed over four times more than all of the partners on this case
combined, there is no reason to question the district court’s determination on this issue.
Regarding the importance of the case itself, though the Sims argue that there is
nothing about this case that makes it rare or exceptional, they provide little evidence to
undermine the assertion that this was a critical case for the Conservancy. It is easy to
see how a non-profit organization like the Conservancy, which fulfills its mission
through easements like the one in this case, would have considered the legal
interpretation of the language in the easement to be an important issue.
Similarly, the Sims provide nothing, and there is nothing in the record, to
discredit the Conservancy’s assertion that its counsel received no compensation and took
this case on a contingency fee basis. The Supreme Court has held that an attorney fee
request should “not result in a second major litigation,” Hensley, 461 U.S. at 437;
therefore, it was reasonable for the district court to deny the Sims’s request for an
evidentiary hearing to determine if a favorable fee arrangement existed between the
Conservancy and its counsel, allegedly resulting in a windfall for its attorneys.
The Sims also argue, without any case citations, that the district court should
have considered the Sims’s ability to pay in light of their position as “farmers who earn
their subsistence from agricultural pursuits.” Moreover, there is nothing in the record
to suggest that the Sims could not afford the fee determined by the district court.
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The Sims also contest the $14,500 fee awarded to the Conservancy to pay for a
geologist and the $2,927.41 paid by the Conservancy for the Preliminary Injunction
bond. Because these were reasonable expenditures “incurred by the Conservancy [to]
enforc[e] the terms of th[e] Easement,” the district court did not abuse its discretion in
including these expenses in the award owed to the Conservancy.
The Sims claim that the “real purpose for which the Conservancy retained a
geologist was to conduct core drillings and otherwise excavate the depression/sinkhole
. . . to locate garbage and trash which the Conservancy erroneously alleged had been
placed in that area by the Sims.” But the Conservancy did not contend that trash was put
in the sinkhole in question, as explained above. In any event, even if this were part of
the reason, the report submitted by the Conservancy’s geologist explicitly states that:
The objective of the evaluation was to determine the volume of fill in the
sinkhole and determine the contours of the ground surface prior to the
sinkhole being filled. Third Rock has also prepared cost estimates for
restoration that include the removal of fill from the sinkhole and a
vegetative planting plan.
The terms of the conservation easement allow for “costs of restoration necessitated by
Grantor’s violation of the terms of the Easement”; therefore, it was reasonable for the
Conservancy to hire an expert to determine the extent of the damage caused by the Sims
and the cost of restoring the land to its natural state.
Finally, because the Preliminary Injunction bond posted by the Conservancy was
a “reasonable cost[ ] incurred by the Conservancy” as part of its litigation efforts to
enforce the easement, the district court did not abuse its discretion by requiring the Sims
to reimburse the Conservancy $2,927.41 for the bond.
The judgments of the district court are affirmed.
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DISSENT
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MERRITT, Circuit Judge, dissenting. My colleagues have overlooked and make
no reference to or analysis of Section 3 of the easement agreement between the parties.
(See Appendix attached.) This section allows the owner to engage in all normal rights
of a landowner except those “expressly prohibited.” The agreement does not expressly
prohibit filling the sinkhole at issue.
The sinkhole at issue was next to the defendant’s home at his farm. It was an
unsightly hole in the ground, a few feet deep, according to the pictures in the record,
with half dead trees and brush growing out of it. Due to the irregular terrain, it could not
be mowed, farmed, landscaped or used for a garden or anything else. It is an eyesore.
In paragraph 3.0 of the environmental agreement entitled “Grantor’s Reserved
Rights,” the landowner (referred to as the “Grantor”) — quote — “reserves for Grantor,
Grantor’s Heirs, Successors and Assigns, all rights as owners of the Protected Property
to use the Protected Property for all purposes that are not expressly prohibited herein.”
(Emphasis added.) The easement agreement between the Nature Conservancy and the
landowner then says: “Without limiting the generality of the foregoing, the following
rights are expressly reserved” to the landowner. Those “reserved” rights are then listed
in eight paragraphs which include (1) “commercial agricultural purposes,” which are
broadly defined; (2) in the large area around the house, the installation of “fences,
driveways, paths,” new “landscaping,” and other new features like “flower or vegetable
gardens for personal enjoyment;” and (3) “dig wells or create ponds.” The final
paragraph in the list then states that the landowner shall not be obligated “to maintain
[the] Protected Property in the condition in which it exists on the date of the
Conservation Easement.”
The only provision my colleagues can point to restricting the filling of the
sinkhole adjacent to the home does not mention anything about sinkholes and contains
a broadly expressed exception allowing “filling” or “change in the topography . . . in
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conjunction with activities otherwise specifically authorized herein,” an obvious
reference to the long list of activities on the land in Section 3 reserved to the landowner.
The full paragraph that my colleagues rely on states:
2.5 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.
(Emphasis added.) Literally speaking, the paragraph on its face when parsed allows
“filling . . . in conjunction with activities otherwise specifically authorized herein,” e.g.,
“digging a pond” or “landscaping,” or farming, etc.
My main point simply is that there is nothing in the agreement that forbids filling
the sinkhole. What is clear, if anything, is the language of paragraph 3 that states that
the landowner retains “all rights” that are not “expressly prohibited herein” and the
language of paragraph 3.8 that the landowner does not have to “maintain the property”
just as it was at the time of the contract.
Beyond that, the record here does not reflect that the sinkhole-filling is harming
or affecting anyone except the owners. The fill from the pond is used for improving and
beautifying the property. I would, therefore, reverse the district court’s decision that
orders the landowner to now remove all of the fill in the sinkhole and then to pay to the
Nature Conservancy a $100,000 judgment. The environmental agreement itself
preserves the landowner’s liberty to use his property “for all purposes that are not
expressly prohibited,” including filling this sinkhole, which is not expressly prohibited.
I would preserve this valuable choice or liberty handed down from the common law
rather than preserving the sinkhole. No one in this case has attempted to show or
describe what possible value the sinkhole has for purposes of historic and environmental
preservation.
Attached to this opinion as an Appendix is the portion of the contract between
the parties that contains the operative provisions to be interpreted in this case.
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