Carroll Electric Cooperative v. Alltel Corporation ( 2024 )

United States Court of Appeals
For the Eighth Circuit
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No. 23-2579
No. 23-2770
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Carroll Electric Cooperative Corporation
lllllllllllllllllllllPlaintiff - Appellant
v.
Alltel Corporation
lllllllllllllllllllllDefendant - Appellee
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Appeals from United States District Court
for the Western District of Arkansas - Harrison
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Submitted: April 9, 2024
Filed: October 3, 2024
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Before LOKEN, SHEPHERD, and KOBES, Circuit Judges.
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LOKEN, Circuit Judge.
In 1983, Carroll Electric Corporation (“Carroll Electric”), an Arkansas rural
electric distribution cooperative, entered into a lease agreement with the City of
Berryville, Arkansas, and constructed a telecommunications tower on the leased
property. In October 1994, Carroll Electric entered into a Tower Attachment
Sublease Agreement (“the Sublease Agreement”) that allowed Northwest Arkansas
RSA Limited Partnership (“Northwest Arkansas”) “to install, maintain, operate and
remove radio communications equipment and appurtenances on [Carroll Electric’s]
tower . . . and to construct a structure to house equipment.” The five-year Sublease
Agreement granted Northwest Arkansas the right to renew for three additional five-
year terms. Northwest Arkansas renewed three times, through October 2014. The
parties executed a Second Amendment to the Sublease Agreement on September 15,
2011, which provides in relevant part:
1. Commencing October 27, 2014 [when the third additional five-year term
would expire], the Agreement shall automatically be extended for four
(4) additional five (5) year terms unless [Northwest Arkansas]
terminates it at the end of the then current term by giving [Carroll
Electric] written notice of the intent to terminate at least six (6) months
prior to the end of the then current term.
5. The Agreement and Second Amendment contain all agreements,
promises or understandings between Sublessor and Sublessee . . . .
In 2015, with the Sublease Agreement again extended, Northwest Arkansas
was dissolved by operation of law. Alltel Corporation (“Alltel”) is now its successor-
in-interest.1 In April 2022, with the Sublease Agreement again extended, Alltel
notified Carroll Electric that it was terminating the Agreement effective October 21,
2022. On February 2, 2023, Carroll Electric filed this breach of contract action in
Arkansas state court, alleging wrongful termination. Alltel timely removed the case
to the Western District of Arkansas, invoking the district court’s diversity
jurisdiction.2 The district court3 subsequently granted Alltel’s motion to dismiss,
1
Alltel’s ultimate parent company is Verizon Communications, Inc., and Alltel
sometimes does business as “Verizon Wireless.” For clarity, we will refer to Alltel
and its predecessors as Alltel.
2
Carroll Electric is an Arkansas corporation with its principal place of business
in Arkansas. Alltel is a Delaware corporation with its principal place of business in
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concluding that the contract unambiguously gave Alltel the right to terminate. The
court also granted Alltel’s motion for a discretionary award of attorney’s fees as the
prevailing party in a breach-of-contract action. See Ark. Code Ann. § 16-22-308.
Carroll Electric appeals both rulings. We review the grant of a motion to dismiss de
novo and an award of attorney’s fees for abuse of discretion. See All-Ways Logistics
Inc. v. USA Truck, Inc., 583 F.3d 511, 520 (8th Cir. 2009) (attorney’s fees).
Applying Arkansas law, we affirm.
I. The Motion to Dismiss
To prevail on its breach of contract claim under Arkansas law, Carroll Electric
must prove that Alltel violated a contractual duty. See Smith v. Southern Farm
Bureau Cas. Ins. Co., 18 F.4th 976, 980 (8th Cir. 2021). Over the course of their
relationship, Northwest Arkansas and Carroll Electric executed five Amendments to
the Sublease Agreement. Carroll Electric bases its breach of contract claim on
Section 1 of the Second Amendment. In its motion to dismiss, Alltel argued there
was no breach of contract when it terminated the Sublease Agreement in October
2022 because Section 8(c) of the initial Sublease Agreement provides:
8. Termination. Except as otherwise provided herein, this
Sublease may be terminated, without any penalty or further liability . . .
(c) By Sublessee or Sublessor for any reasons or no reason at all upon
six (6) months advance written notice.
In response, Carroll Electric argued that termination two years before the end of “the
then current term” in October 2024 breached the Sublease Agreement because
New Jersey. Carroll Electric’s complaint alleged $118,000 in damages.
3
The Honorable Timothy L. Brooks, United States District Judge for the
Western District of Arkansas.
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Section 1 of the Second Amendment “only allowed unilateral termination at the end
of a lease term with at least six months’ notice.” At the hearing on Alltel’s motion,
both parties agreed that these two contractual provisions are unambiguous. The
issues are whether they conflict and, if so, which controls this dispute.
“When a contract is unambiguous, its construction is a question of law for the
court.” Bank of Ozarks v. Jim Wood Co. Inc., 379 S.W.3d 548, 552 (Ark. App.
2010). The district court concluded there is no conflict between Section 8(c) of the
initial Sublease Agreement and Section 1 of the Second Amendment:
Plaintiff counters that “the Second Amendment modified the
language of paragraph 8(c) and is now the language that determines the
right of the defendants to terminate the Sublease Agreement.”. . .
The Court finds that Section 8(c) of the Agreement is
unambiguous . . . . Likewise, the Second Amendment is unambiguous:
the Agreement was extended for four additional lease terms, and the
renewal of those terms was changed from opt-in renewal -- as in the
original Agreement -- to opt-out renewal [i]f Defendant did not want the
Agreement to renew for an additional term . . . . The termination
language in the Second Amendment refers only to whether the lease
term is automatically extended at the end of the current term, and
nothing in the plain text of the Second Amendment purports to alter how
the parties may terminate the Agreement under Section 8(c). The two
provisions are unambiguous and do not conflict with one another.
Carroll Electric argues on appeal that “the termination clauses are not
reconcilable and cannot be read in harmony because retaining the § 8(c) right to
terminate for any cause renders the newly limited termination clause in the Second
Amendment meaningless.” Because the Second Amendment came later, Carroll
Electric argues, it controls.
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It is well established that “[a] construction which neutralizes any provision of
a contract should never be adopted if the contract can be construed to give effect to
all provisions.” Continental Cas. Co. v. Davidson, 463 S.W.2d 652, 655 (Ark. 1971).
Here, we agree with the district court that the two provisions are not in conflict. They
can -- and must -- be reconciled so that each is given effect. As the district court
explained, Section 8(c) deals with contract termination; Section 1 of the Second
Amendment deals with contract renewal. These are related but distinct contract
terms. The clause in Section 1 of the Second Amendment on which Carroll Electric
relies -- “unless Sublessee terminates . . . at the end of the then current term by giving
Sublessor written notice . . . at least six (6) months prior to the end of the then current
term” -- modified how the sublessee, now Alltel, can renew the Sublease Agreement
for another five years. If neither party exercises its § 8(c) right to terminate earlier in
the current term, Section 1 (an “opt out” provision) makes renewal automatic,
whereas the original Agreement required the sublessee to “opt in” if it elected to
renew. Giving effect to the plain meaning of each provision, they are not
irreconcilable.
Carroll Electric urges us to focus on one specific clause in § 1 of the Second
Amendment. But “[t]he object is to ascertain the intention of the parties, not from
particular words or phrases, but from the entire context” of the Sublease Agreement.
Blyme, Inc. v. Ivy, 241 S.W.3d 229, 236 (Ark. 2006) (quotation omitted). The district
court’s interpretation properly gave effect to all provisions of the unambiguous
Sublease Agreement, including § 8(c). We agree the two provisions are reconcilable.
Carroll Electric’s complaint fails to state a plausible breach of contract claim. Cf.
Rock Dental Ark. PLLC v. Cincinnati Ins. Co., 40 F.4th 868, 870 (8th Cir. 2022).
II. The Motion for Attorney’s Fees
After the district court granted the motion to dismiss, Alltel moved for
attorney’s fees and costs under Arkansas Code § 16-22-308, which provides that, in
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an action for breach of contract, “the prevailing party may be allowed a reasonable
attorney’s fee to be assessed by the court and collected as costs.” Federal courts
sitting in diversity apply state law when considering a motion for attorney’s fees. All-
Ways, 583 F.3d at 520. Alltel requested $19,795 in fees and $402 in costs. Carroll
Electric opposed the motion, arguing the court should deny the motion and disputing
Alltel’s specific billings. The district court granted the motion. It awarded $402 in
costs and $11,841.50 in attorney’s fees, discounting both the number of hours and the
hourly rates billed by Alltel’s counsel.
In Chrisco v. Sun Industries Inc., the Supreme Court of Arkansas construed the
word “may” in § 16-22-308 as “permissive and discretional” and identified factors
to be considered in determining the amount of attorney’s fees to be awarded:
the experience and ability of the attorney, the time and labor required to
perform the legal service properly, the amount involved in the case and
the results obtained, the novelty and difficulty of the issues involved, the
fee customarily charged in the locality for similar legal services, whether
the fee is fixed or contingent, the time limitations imposed upon the
client or by the circumstances, and the likelihood, if apparent to the
client, that the acceptance of the particular employment will preclude
other employment by the lawyer.
800 S.W.2d 717, 718-19 (Ark. 1990), quoted in All-Ways, 583 F.3d at 520-21. “We
usually recognize the superior perspective of the trial judge in assessing the
applicable factors.” Id. at 719.
In ruling on Alltel’s motion, the district court found that Alltel was entitled to
reasonable fees for the removed case and that Alltel’s counsel performed well, but the
case was “relatively straightforward” and counsel billed “somewhat more than was
necessary.” The court awarded roughly sixty-percent of the fee requested. On
appeal, Carroll Electric argues that the court “should have exercised its discretion to
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deny an award of attorney fees,” arguing that Carroll Electric pursued its claim in
good faith, paid its own litigation expenses, both parties are sophisticated and solvent,
and the case was dismissed at an early stage.
We conclude the district court’s award of attorney’s fees was well within its
substantial discretion. The court considered the Chrisco factors, highlighted salient
facts, and substantially reduced the amount sought by Alltel based on reasonableness
factors identified by Carroll Electric in opposition. As we affirm the district court’s
grant of Alltel’s motion to dismiss, Alltel remains a prevailing party entitled to a
discretionary award of its reasonable attorney’s fees.
The judgment of the district court is affirmed.
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