Declaratory Judgment – Construction of Settlement Agreement – Conservation Easement

Cahaba Riverkeeper, Inc., et al. v. Water Works Bd. of Birmingham, [Ms. 1200645, Feb. 25, 2022] __ So. 3d __ (Ala. 2022). The Court (Mendheim, J.; Bolin, Shaw, Wise, Sellers, and Stewart, JJ., concur; Parker, C.J., and Mitchell, J., concur specially; Bryan, J., concurs in the result) reverses the Jefferson Circuit Court’s dismissal of a declaratory judgment action filed by Cahaba Riverkeeper, Inc., Cahaba River Society, David Butler, and Bradford McLane (“the conservation parties”) against the Water Works Board of the City of Birmingham (“the Board”) and the State of Alabama, on the relation of Alabama Attorney General Steve Marshall.

The action involved the construction of settlement agreement entered between the Board and a former attorney general. The conservation parties sought a declaratory judgment that the Conservation Easement Agreement (“CEA”) did not establish a valid conservation easement that fulfilled the requirements of paragraph 7 of the settlement agreement. Ms. *15.

The Court first explains the standard of review:

“‘The lack of a justiciable controversy may be raised by either a motion to dismiss or a motion for a summary judgment. Smith, [293 Ala. at 649,] 309 So. 2d at 427. See also Rule 12, Ala. R. Civ. P.; Rule 56, Ala. R. Civ. P. However, a motion to dismiss is rarely appropriate in a declaratory-judgment action. Wallace v. Burleson, 361 So. 2d 554, 555 (Ala. 1978). If there is a justiciable controversy at the commencement of the declaratory-judgment action, the motion to dismiss should be overruled and a declaration of rights made only after an answer has been submitted and evidence has been presented. Anonymous, 472 So. 2d at 641. However, if there is not a justiciable controversy, a motion to dismiss for failure to state a claim should be granted. Curjel v. Ash, 263 Ala. 585, 83 So. 2d 293, 296 (1955).’” Harper v. Brown, Stagner, Richardson, Inc., 873 So. 2d 220, 223 (Ala. 2003).”

Ms. *18, quoting Muhammad v. Ford, 986 So. 2d 1158, 1161-62 (Ala. 2007).

In their motion to dismiss, the Board and Attorney General Marshall relied primarily on paragraph 7 of the settlement agreement authorizing the attorney general to approve the conservation easement. They argued that paragraph 7 applied to the exclusion of the more general paragraph 6 authorizing ratepayers to enforce the settlement agreement. Ms. *22. The Court rejects this argument and holds

The problem with this argument, as the conservation parties observe, is that a more specific provision in a contract is prioritized over a more general provision only if a genuine conflict exists between the two provisions. “All the provisions of the contract must be construed together so as to give harmonious operation to each of them, so far as their language will reasonably permit.” City of Fairhope v. Town of Daphne, 282 Ala. 51, 58, 208 So. 2d 917, 924 (1968). See also Homes of Legend, Inc. v. McCollough, 776 So. 2d 741, 746 (Ala. 2000) (“Under th[e] established rules of contract construction, where there is a choice between a valid construction and an invalid construction the court has a duty to accept the construction that will uphold, rather than destroy, the contract and that will give effect and meaning to all of its terms.”). Paragraph 6 and paragraph 7 of the settlement agreement do not, by their terms, or in reading the settlement agreement as a whole, contradict one another. Both provisions grant a third-party right of enforcement on behalf of ratepayers, a right that would not otherwise exist absent an express intent to provide it because ratepayers were not parties to the settlement agreement.

Ms. **23-24.

The Court also holds on the merits that “under § 35-18-1 [Ala. Code 1975], the Board, as the owner of the system property, cannot simultaneously possess a ‘conservation easement’ on that property, yet it appears that the Board is the holder of the property interest created by the CEA. Therefore, the conservation parties have stated a viable claim asserting that the CEA did not fulfill the requirement of paragraph 7 of the settlement agreement ‘to place a conservation easement on the System’s real estate.’ The circuit court’s judgment finding otherwise is due to be reversed.”

Ms. *36.

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