United States District Court, E.D. Kentucky, Central Division, Lexington
MEMORANDUM OPINION AND ORDER
DANNY C. REEVES, District Judge.
This matter is pending for consideration of Defendant The Nature Conservancy's ("TNC") motion for summary judgment on all claims and Plaintiff Layton Register's motion for partial summary judgment on his claims of breach of contract and unjust enrichment. [Record Nos. 76, 78] Register made an inter vivos charitable donation of one million dollars to TNC in 2002. He alleges that he intended the funds to be permanently restricted for the purchase and management of a parcel of land in Harrison County, Kentucky known as Griffith Woods. TNC combined an internal loan with Register's donation to purchase the property in late 2002 for approximately two million dollars.
TNC then sold the property. The first tract was sold to the University of Kentucky in 2004, a sale which had been contemplated, at least in theory, at the time of Register's donation. TNC sold the remaining tract to the Kentucky Department of Fish and Wildlife Resources ("KDFWR") in 2011. Rather than using the funds received from the sales for management of Griffith Woods, as Register alleges he intended, TNC used the proceeds for other projects. Register brought this action against TNC for: (i) breach of contract; (ii) unjust enrichment; (iii) fraud in the inducement; (iv) constructive fraud; and (v) imposition of a constructive trust over the donated funds.
For the reasons discussed below, summary judgment will be granted, in part, and denied, in part. More specifically, Register's claims of unjust enrichment, fraudulent inducement, and constructive fraud will be dismissed, but the parties' motions for summary judgment on the breach of contract claim will be denied. While Register made a restricted donation to TNC and TNC is bound to abide by that restriction or return the donation, factual issues remain regarding the specific terms of the restriction and whether TNC has complied with those restrictions.
Register, a long-time supporter of conservation efforts in the region, developed a relationship with TNC in 1987. He supported the organization's efforts with financial donations and "sweat equity" by physically assisting with certain projects. [Record No. 78-4, p. 2] Register was given the volunteer of the year award, attended regular events and served as a Trustee for the Kentucky Chapter of TNC. [Record Nos. 78-5, pp. 14-15; 78-6, pp. 6-7] Register made over three hundred monetary donations to TNC, totaling $1, 061, 846. [Record No. 78-2, p. 1]
Jim Aldrich, the Director of the Kentucky TNC chapter at the time of Register's donation, identified the 735 acre farm in Harrison County known as Griffith Woods as "the best and most [intact] example of a bur oak, blue ash savannah in the inner Bluegrass." [Record Nos. 78-6, pp. 14; 78-7] In TNC's real estate abstract, the subject property was described as follows:
The Licking River Conservation Area Design has identified the 735-acre Hamilton et al. tract as a top acquisition priority. The tract contains approximately 170 acres of old growth savanna woodlands, and another 200 acres of younger woodlands with excellent restoration potential. Native ground vegetation (including several patches of running buffalo clover, a globally threatened species) has survived on the tract. The remainder of the tract is used for agricultural purposes, including grazing, haying and row crops. The tract includes several seasonal streams as well as a permanent stream along its western boundary. This tract represents the best opportunity to protect and restore a remnant of the Bluegrass Savanna.
[Record No. 78-8, p. 1] Discussions with Griffith Wood's owners regarding conservation options spanned several years. During this time, Julian Campbell, Ph.D., a biologist and employee of TNC, took Register and other supporters to visit the property. [Record No. 78-5, pp. 8-9] As time progressed, Register told TNC that he wished to focus his efforts with the organization on preserving and managing Griffith Woods. [Record No. 78-10]
Dr. Campbell indicated in his notes that Register indicated his willingness to donate funds towards the purchase of the land in February 2002.
Layton has pledged verbally to contribute the approximate sale price of his 120 acre farm on Bryantsville Road in Bourbon Co [H]e expects to raise about $1-1.2 million (his purchase price 2-3 years ago was ca. 850K?). Upon advice of his financial planners, he will give us the equivalent value in appreciated stocks, rather than the farm itself.
Layton's gift is to help with acquisition and management of the ca. 745 acres Silver Lake Farm, which contains the ca. 360 acres designed as the Griffith Woods restoration site. The total sale price for the site may be about 2-2.5 million, but it is likely that TNC would retain only 25-50% of the farm after reselling portions to partnering agencies and perhaps conservation buyers.
Should some of Layton's gift be freed up after satisfactory resales, he is willing to have this put toward endowment for stewardship at the site. He is also very interested in being actively involved with the farm as a volunteer in the management program, and possibly as a conservation buyer (might there be tax/ethical issues to handle carefully...?). As well as restoring the woodland, he is particularly interested in the plan to develop a native wood plant nursery on the farm. [We have been scheming and dreaming about a nursery with several people, including Doug Hines, who might take early retirement from NRCS to work on it.]
[Record No. 78-9, p. 2] (brackets in original). Dr. Campbell testified that he intended these notes to memorialize Register's intent with respect to his donation and any funds that were liquidated after the contemplated sale of the property. [Record No. 78-5, p. 9-10]
On May 13, 2002, Register wrote a letter to Aldrich, the State Director of TNC, stating:
I pledge to the Kentucky Chapter of The Nature Conservancy a stock gift equal to the amount of $1, 000, 000.00 that is to be used for land acquisition. My first preference is for the purchase being negotiated for Griffith Woods. If The Nature Conservancy is unsuccessful in its pursuant of Griffith Woods, the same amount will be made available for another site to be determined.
[Record Nos. 76-19, pp. 2-3; 76-20, p. 2] There was a cover letter with this note, which stated "Jim, Julian wanted a pledge statement for my stock gift. Is this okay (see enclosed)? Or did you want me to sign off on something that you have prepared? If so, just send it to me. Thanks, Layton." [Record No. 78-11, p. 1] Aldrich acknowledged Register's pledge on June 13, 2002, by stating "[o]n behalf of the Trustees and staff of the Kentucky Chapter of The Nature Conservancy, thank you for your very generous pledge of $1, 000, 000.00 (one million dollars) for land acquisition, preferably, Griffith Woods." [Record No. 76-22, p. 2 (emphasis in original)]
At the time of Register's gift, TNC and the University of Kentucky ("UK") were considering a partnership in the Griffith Woods project. Register recalled that TNC was "hoping" that UK would be a partner, but the partnership had not been finalized. [Record No. 76-19, p. 8] UK sought funding from the Kentucky Heritage Land Conservation Fund ("KHLCF") to acquire part of Griffith Woods as part of the partnership with TNC. [Record No. 76-19, pp. 18-19] In support of UK's application, Register wrote a letter to KHLCF confirming his commitment and that he had "pledged financially to help the Conservancy acquire the whole farm as a first step to protecting this site from development and ensuring proper management." [Record No. 76-23, p. 2] Register further indicated that he was "intending to become the owner of the remainder of the farm that [UK] does not acquire, but the Conservancy will retain a conservation easement." [Record No. 76-23, p. 2] Register further indicated that he would "be glad" to "work with [UK] and others to restore the native vegetation ...