One-Way Attorney Fee Conservation Easement Clauses
Mesa Land Trust in Colorado has successfully managed three major legal cases in the last three years (see coverage of this issue from the July 2009 Alliance eNews). Mesa Land Trust staff and board carefully evaluate these cases after they are concluded for improvements they can make to their already strong systems and sound thinking. One drafting point that they observed is that having the “one-way attorney fee” clause in the enforcement section is imperative, rather than the reciprocal attorney fee clause that is used in traditional commercial transactions.
Rob Bleiburg, executive director, emphasizes the importance of requiring the one-way legal fees clause in the enforcement section of all conservation easements. “Don’t give up on that,” he says. “It is critical; land trusts must insist on having that clause despite landowner or attorney objections.” That clause helped bring one easement challenger to the table faster, and its absence in two older conservation easements has proved to be a considerable expense.
Example of one-way fee clause for enforcement section of conservation easement:
All reasonable costs incurred by Holder in enforcing this Easement, including without limitation, costs and expenses of suit and reasonable attorneys’ fees, and any costs of restoration necessitated by violation of this Easement, shall be borne by Grantors.
Two Examples of Modifications to the above if Pressed by Landowners or Their Attorney:
;provided however, that if Grantors ultimately prevail in a judicial enforcement action, each party shall bear its own costs.
;provided however, that if Grantors ultimately prevail in a judicial enforcement action, and the court determines that Holder has initiated litigation without reasonable cause or in bad faith, then the Holder shall reimburse Grantors for any reasonable costs of defending such action, including court costs and reasonable attorneys' fees.
In some states, statutes dictate the attorney fee reimbursement in litigation. Be sure to discuss this point with your land trust attorney when reviewing and updating your conservation easement template.
Definition of attorney fees clauses
All conservation easements should include the explicit right to recover all costs of enforcement including attorney’s fees from the landowner for any easement violation including third party trespass. If your state law does not require reciprocal attorney fees, then negotiate for the landowner to bear all of the land trust’s enforcement costs.
Litigation can often result in legal fees that exceed the damages sought and awarded. The possibility that a land trust could be required to pay substantial costs if they lose is a significant deterrent to upholding conservation easements and protecting land the land trust owns. Where a land trust fails to uphold conservation permanence because of the potential for an adverse costs order, the public also loses because issues of public importance are not heard, and associated legal issues are not resolved.
The fear of responsibility for the adverse party’s attorney fees may chill land trust resolve to defend and enforce conservation easements. When drafting the enforcement clause of a conservation easement, the land trust has several options available to it. States take a variety of approaches to attorney fees, so as a first step, land trusts should discuss the issue with experienced local counsel in the relevant jurisdiction. The alternatives set forth below represent some of the most common attorney fee clauses and issues that should be considered when negotiating with a landowner’s attorney.
Reciprocal attorney fees
Many commercial contracts typically provide that, in a lawsuit to enforce that contract, attorney fees and costs shall be awarded to the prevailing party. For the reasons articulated above, a reciprocal fees clause should not be a part of a conservation easement. The land trust should look at the local jurisdiction’s treatment of such clauses before developing the easement template and enforcement policy. North Carolina, for example, does not award attorney fees to the non-breaching party except in the narrow instance where there is specific statutory authorization. In California, a prevailing party is generally entitled to attorney fees if the contract contains a one-way fees clause (discussed below), even if it is not the party specified. Thus, understanding local law on the subject is key to drafting an appropriate, reasoned response to a reciprocal fees clause and preventing a stalemate.
One way attorney fees
A one-way fees clause provides that all costs the land trust in any enforcement action, whether the land trust prevails or not, will be borne by the landowner. To convince the landowner that a one-way clause is mutually beneficial, the land trust should make sure the landowner fully understands the land trust’s obligations to the landowner. Conservation easement holders must monitor the use of land, provide easement information to new landowners, review and approve activities on the designated land, enforce restrictions through legal measures, and maintain all records applicable to the easement. But the land trust would not expend resources to monitor an easement or pursue remedies for non-compliance if the threat of an adverse party attorney fees award existed.
Limited fee clauses
These clauses, as in the two examples above, are one-way clauses with a limited carve out or exception. One example has the exception only if the land trust acted in bad faith. The other has each party bearing its own costs only if the land trust loses. Either may be useful in a case where a landowner attorney won’t agree to the full one-way recommended clause. The limited fees clause can give landowners comfort the land trust will not act frivolously or in bad faith. These provisions typically make it an explicit requirement that a court find the land trust acted without reasonable cause or in bad faith before the land trust can be required to pay the landowner’s attorney fees. The land trust should draft such a provision so that, even if the court finds the land trust acted in bad faith, ordering the land trust to cover the landowner’s attorney fees is discretionary, not required.
American Rule (No Clause)
In the absence of a contractual clause, statute, or court rule, each party generally bears its own fees in litigation. This is known as the “American Rule.” For land trusts, the advantage of not including an attorney fees clause is that landowners may incur significant legal fees and costs to litigate an enforcement action, even if they ultimately prevail. Realizing this may incline landowners to settle conservation easement disputes rather than fight. This is particularly true in cases where the potential gain from a lawsuit is less than the potential liability created by the legal process.
CAUTION: Before they remain silent, however, land trusts must be sure (i) the particular jurisdiction follows the American Rule (Alaska, for example, does not), and (ii) that no express statute or court rule to the contrary exists which would supersede the American Rule in the particular jurisdiction.
Annual conservation easement template review
This discussion points to the need for both competent legal counsel for the land trust as well as an annual review and refinement of the land trust conservation easement template to address new developments as well as refine existing language.