Gladwill v. Ruby Pipeline, LLC, a Delaware Limited Liability Company

Filing 70

ORDER denying 62 Motion for Attorney Fees and Costs. Signed by Chief Judge Robert C. Jones on 3/11/13. (Copies have been distributed pursuant to the NEF - JC)

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UNITED STATES DISTRICT COURT

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DISTRICT OF NEVADA

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ALICE M. GLADWILL,
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Plaintiff,
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vs.
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RUBY PIPELINE, LLC,
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Defendant.
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________________________________________ )

3:11-cv-00251-RCJ-WGC
ORDER

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This case arises out of the alleged breach of an express easement via unreasonable use.

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Pending before the Court is Defendant’s Motion for Attorney’s Fees and Costs (ECF No. 62).

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For the reasons given herein, the Court denies the motion.

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I.

FACTS AND PROCEDURAL HISTORY
Plaintiff Alice M. Gladwill is the owner of a cattle ranch located in Washoe County, at

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the extreme northwest corner of Nevada. (See V. Compl. ¶ 4, Mar. 7, 2011, ECF No. 2).
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Defendant Ruby Pipeline, LLC (“Ruby”) is constructing a 42-inch natural gas pipeline from
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Wyoming to Oregon, for which it obtained an express easement across Gladwill’s land. (See id.
¶¶ 5–7). Ruby purchased a permanent 50-foot easement and a 115-foot construction easement to

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lay the pipeline across 6519.57 feet (approximately 1-1/4 miles) of Gladwill’s land. (See id. ¶ 6).

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According to the agreements, Ruby was to dig a well and ditch for water to test the

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pipeline. (See id. ¶¶ 7–9). Ruby allowed bentonite or another substance it added to the well to

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harden improperly, making the well useless and allowing water to flow freely over Gladwill’s

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property, causing damage. (Id.). Gladwill suspects that because Ruby bungled the well on her

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property, it contracted with a neighboring landowner to transport that landowner’s water over
Gladwill’s land by pipe or ditch, which transport would constitute a trespass, because such

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transport is beyond the scope of Ruby’s easements. (See id.). Ruby has also: (1) left gates open
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and improperly constructed fences, permitting Gladwill’s cattle to escape; (2) failed to impound
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the water in the permitted pipeline ditch, resulting in runoff from rain and snow that has eroded
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the topsoil that is essential to the grass Gladwill’s cattle graze upon; and (3) buried grazing land
beyond the scope of the easements with construction debris. (Id. ¶ 10). Ruby argues that it has

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bent over backwards to satisfy Gladwill, having spent upwards of $100,000 to return the land to

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its original condition, but that Gladwill simply will not be satisfied.
Gladwill filed the Verified Complaint against Ruby in state court for breach of contract,

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seeking a preliminary and permanent injunction. Ruby removed. Gladwill moved for a

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preliminary injunction. The Court set the motion for hearing and granted Gladwill’s motion to

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consolidate the hearing with a trial on the merits under Rule 65(a)(2). After the bench trial, the

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Court entered judgment in favor of Ruby. Gladwill has appealed. Ruby has asked the Court for

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an award of fees and costs.
II.

LEGAL STANDARDS

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Rule 54 requires an award of costs to a prevailing party and permits attorneys’ fees to a
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prevailing party if provided for elsewhere (by statute, rule, or contract). See Fed. R. Civ. P. 54(d).
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Local Rules 54-1 and 54-16 contain procedural and evidentiary requirements.
The relevant state statute permits reasonable attorney’s fees. See Nev. Rev. Stat.
§ 17.115(4)(d)(3). The state rules also permit such an award. See Nev. R. Civ. P. 68(f)(2).
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Although section 17.115 and Nevada Rule 68 are Erie-substantive, they can in some cases

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conflict with Federal Rule 68, which governs the penalties for rejecting offers of judgment in

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federal court. See Walsh v. Kelly, 203 F.R.D. 597, 598–600 (D. Nev. 2001) (Reed, J.) (citing

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Hanna v. Plumer, 380 U.S. 460, 471–72 (1965)). Whereas the state rule permits both attorney’s
fees and otherwise nontaxable costs against a party who obtains a judgment less favorable than

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an offer it rejected, the federal rule permits only costs. See id. at 599; Fed. R. Civ. P. 68(d) (“If
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the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the
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offeree must pay the costs incurred after the offer was made.”). Federal Rule 68 is not applicable
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on its own terms, however, where the plaintiff who rejects an offer obtains no judgment at all.
Delta Air Lines v. August, 450 U.S. 346, 352 (1981) (“In sum . . . it is clear that [Federal Rule

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68] applies only to offers made by the defendant and only to judgments obtained by the plaintiff.

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It therefore is simply inapplicable to this case because it was the defendant that obtained the

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judgment.” (emphasis added)). In the present case, also, the Defendant obtained the judgment.

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There being no conflict with Federal Rule 68 (because it does not apply under these

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circumstances), Nevada law on the matter controls.

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In contrast to Federal Rule 68, section 17.115 appears to permit an award of fees (and
other nontaxable costs) so long as the rejecting offeree fails to receive a more favorable
judgment, regardless of whether the rejecting offeree receives any judgment at all. See Nev. Rev.
Stat. § 17.115(4), (4)(c), and (4)(d)(3) (“[I]f a party who rejects an offer of judgment fails to

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obtain a more favorable judgment, the court . . . shall order the party to pay the taxable costs
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incurred by the party who made the offer; and . . . may order the party to pay to the party who
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made the offer . . . reasonable attorney’s fees incurred by the party who made the offer for the
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period from the date of service of the offer to the date of entry of the judgment.”). The court has

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discretion whether to award fees and nontaxable costs under section 17.115, according to the

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following factors:

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(1) whether the plaintiff’s claim was brought in good faith; (2) whether the
defendants’ offer of judgment was reasonable and in good faith in both its timing and
amount; (3) whether the plaintiff’s decision to reject the offer and proceed to trial
was grossly unreasonable or in bad faith; and (4) whether the fees sought by the
offeror are reasonable and justified in amount.

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Chavez v. Sievers, 43 P.3d 1022, 1027 (Nev. 2007) (quoting Beattie v. Thomas, 668 P.2d 268,
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274 (Nev. 1983)).
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III.

ANALYSIS

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Ruby argues that it is entitled to attorney’s fees and nontaxable costs under section 17.115
because Gladwill rejected its offer of judgment for $40,000 and won no verdict. The Court finds

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that Gladwill’s claim was brought in good faith, that Ruby’s offer of judgment for $40,000 made

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on September 4, 2012 was in good faith both as to amount and timing, and that the fees sought

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are reasonable and justified in amount. However, the Court also finds that Gladwill’s decision to

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reject the offer and proceed to trial was not grossly unreasonable or in bad faith. There was a

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legitimate dispute over the condition of the land on and near the easement such that Gladwill

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could reasonably have believed that it would cost on the order of $1000,000 or more to return the

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land to a satisfactory condition, which was and remains Ruby’s contractual duty.

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The Court notes that a legitimate disagreement remains between the parties as to the
condition of the land. Land is unique. It is not fungible like cash or consumable commodities.

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Gladwill, who was familiar with the pre- and post-easement condition of the land was convinced,
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and presumably remains convinced, that the land has not been satisfactorily restored to its prior
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condition. It is undoubtedly true that the land is not in exactly the same condition it was in
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before the easement was created. That is a natural result of a major underground easement that
requires significant digging and restoration. But the creation of such an easement cannot be
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expected to result in no changes to the land. The owner of a servient parcel receives

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compensation for the easement in exchange for some amount of inconvenience, and so long as

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the easement is used and maintained reasonably, there is no breach. The Court found that

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Gladwill had not proved by a preponderance of the evidence that Ruby had not reasonably used
and maintained the easement as granted, but this does not mean Gladwill’s rejection of the

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$40,000 offer was unreasonable where a legitimate dispute remained such that a finding in
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Galdwill’s favor could plausibly have resulted in judgment of greater amount.
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CONCLUSION
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IT IS HEREBY ORDERED that the Defendant’s Motion for Attorney’s Fees and Costs
(ECF No. 62) is DENIED.
IT IS SO ORDERED.
Dated this This 20th of March, 2013. 2013.
DATED: 11th day day of February,

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_________________________________________
ROBERT C. JONES
United States District Judge

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