by Victoria Heldt
The Nature Conservancy v. Larry and Marsha K. Sims
(United States Sixth Circuit Court of Appeals, May 21, 2012)
In December 2001 the Sims purchased a 100-acre farm from The Nature Conservancy, Inc. (TNC) in Kentucky. The real estate agreement included an easement 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.” The easement also conveyed to the TNC a right to inspect the property annually to ensure the Sims comply with the easement. Without the easement, the property was appraised at $260,400 and with the easement it was appraised at $60,000. The Sims paid $60,084 for the property in addition to a $244,939 tax-deductible charitable gift to TNC.
The property consisted of two sections, one being a residential/agricultural area to be used for the Sims’ residence and for commercial agricultural uses. The remaining portion of the land, known as Henslow Sparrow, was to be used only for grazing livestock and producing hay. A detailed description of the condition of the property was included in the agreement. In January 2005 TNC inspected the property and found several instances of non-compliance with the easement. One such non-compliance was the fact that the Sims altered the topography on the property by excavating and re-grading a sinkhole behind their residence. This action violated Section 2.5 of the easement. The remaining instances of non-compliance were remedied by the Sims and the allegations dropped.
TNC’s expert geologist was permitted to survey the sinkhole and determine the contours of the ground before the sinkhole was filled. The district court granted summary judgment in favor of the Conservancy, determining that the Sims did indeed violate the easement. It noted that, although the Sims were allowed to make some changes to the property in relation to authorized activities, filling a sinkhole with an estimated 6,269 cubic yards of soil was not one of them. In a later judgment, the court awarded the Conservancy $77,337.50 in attorneys’ fees and $18,9902.33 in expenses. Upon examination of the hours billed to TNC, the court subsequently reduced the amount awarded to TNC by $11,774. The Sims appealed both judgments.
In regards to the violation of the easement, the Court ruled that the district court was correct in determining that the Sims were in violation. Section 2.5 of the easement states “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.” Filling the sinkhole clearly violated this condition.
The Sims argued that they are allowed to “enhance their agricultural usage” of the land under Section 3.2 of the easement and in filling the sinkhole they were improving the farming process. Furthermore, they pointed to the phrase within Section 2.5 that allowed for altering the land “in conjunction with activities otherwise specifically authorized herein” in support of their argument. They asserted that farming is an authorized activity and thus they are allowed to fill the sinkhole to improve the agricultural use. The Court rejected this argument, stating that filling is not a normal precursor to farming activities. In addition, “filling” is strictly prohibited within Section 2.5.
Next, the Sims argued that Section 3.7 gives them the right to “dig wells” and “create ponds” and they should therefore be allowed to place the excavated dirt in a sinkhole on their land. The Court dismissed this argument as unreasonable since it would allow the Sims to breach one provision of the easement in order to enjoy another. The Sims further argued that the status of the depression as a “sinkhole” was not disclosed to them before they filled. Regardless, the Court noted that “filling” is explicitly forbidden. The Sims claimed they would not have built their residence so close to the sinkhole had they known they weren’t allowed to fill it. The Court determined it was the builder’s task to recognize limitations of the property in regards to the construction of a home.
Finally, the Sims challenged the reasonableness of the amount of damages awarded to TNC. The Court noted that the district court took into account all the necessary factors in determining the amount awarded. It carefully examined the record of hours billed and the breakdown of the hours in its decision-making process. The Court determined the award to be reasonable. It affirmed the district court’s decision on both judgments.