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Old McDonald had a tasting room

July 16, 2014 | Land Trust Alliance | Washington, D.C.

A judge in Virginia had to rule on what exactly counted as a “farm building” when the land trust, the easement holder, and the landowner, could not agree over the size, location and scope of an agricultural mixed use building on conserved land.  In all, the Court addressed 14 violations plus counterclaims.

The court determined just what constitutes agriculture in Loudon County, Virginia in Wetlands America Trust, Inc. v. White Cloud Nine Ventures, LLC, Civil Case Number 78462, June 19, 2014. Interpretation of the undefined term “farm building” and more generally, what constitutes agriculture in the locality were pivotal issues in the case.  The landowner asserted that any building on a farm, was a “farm building” and therefore, their construction of the creamery, wine tasting room and retail store was consistent with the easement. Wetlands America Trust (WAT) disagreed. The Court opined that residential uses are specifically not included in the definition of agriculture.

But the Court also allowed the mixed use structures to remain, requiring that there be a clear nexus between the products being sold in the building and the agriculture taking place on the property. Specifically, he opined that the sale of wine, cheese or bread made on the farm would be permitted, but associated sales of merchandise such as t-shirts and corkscrews would be a step too far as would weddings, concerts and classes most likely go beyond the prohibition on more than de minimis commercial recreation.

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While the parties agreed that the easement permitted a winery and creamery, the dispute centered around scope, scale and outside products, and location due to another provision restricting construction to within 400 feet from the road that effectively eliminated all but one remote impractical building site. Additionally a dispute over a 200 foot wide buffer from a small creek that prohibited all construction arose late in the proceedings. The parties unsuccessfully attempted to negotiate a resolution.

After the landowner purchased the conserved property and, according to deposition statements, after consultations with land trust staff who assured the landowner that the mixed use building should be fine and that the 400 foot restriction on building did not apply to this particular parcel, they began to construct roads, a bridge and a large building for a wine tasting room, retail store, creamery and bakery using agricultural products from the property and from other local farms plus other merchandise.

The Court carefully considered the stated purpose of the conservation easement, the background explanatory clauses and also scrutinized the baseline documentation report in reaching its conclusions. The Court then balanced those clear statements with the permitted rights, saying “Even though the purpose of this Easement as outlined above must be recognized, it is equally important to keep in mind that the Easement does allow permitted agricultural "pursuits," agricultural "activities," and industrial or commercial agricultural activities, as well as other uses and activities. Permitted buildings, structures, utilities, and roads are permitted.”

The Court also focused on language from the inconsistent uses paragraph of the easement: “The Grantor has the right to engage in any and all acts or uses not expressly prohibited herein that are not inconsistent with the Purpose of this Easement. Any use not reserved in Section III which is inconsistent with the Purpose of this Easement or which materially threaten the Purpose of this Easement is prohibited.” In fact the Court meticulously walked through every disputed section of the easement and rendered an opinion specifically about each generally construing the easement against the drafter and easement holder and in favor of the landowner on nine of the 14 claimed violations.

On the only measurable standard regarding the farm building, the Court stated: “It does not appear that there is a clear definition in the industry as to the term ground area. There is no doubt that White Cloud used its architect creatively to achieve a foundation designed at just under 4,500 square feet. This is the area on the ground. By the use of cantilevering and the addition of decks supported by piers, White Cloud has created additional areas above the ground area. This certainly could have been contemplated and addressed in the Easement, but it was not.”

Virginia, and other states, debated the definition of agriculture in the conservation context especially as the economy pushes farmers to expand their business. The Virginia General Assembly passed legislation (SB 51, which is now enacted as § 15.2-2288.6 of the Code of Virginia, not yet online) earlier this year addressing what activities are permitted under agricultural zoning. This reduces local control of regulations on-farm activities. Courts may increasingly look to state and local codes as a guide when trying to define ambiguous, or perceived ambiguous, terms in conservation easements. Terms which are not clearly and unambiguously defined, in the conservation easement by reference to an off record document (which may pose admissibility challenges) or with an embedded definition (which may pose later administration difficulties) are likely to be construed broadly in favor of the landowner in the future.

From a stewardship perspective, this case also points to the need for very clear, coordinated, and memorialized communication with landowners. Interestingly, the Court found that the landowner did not prove that the conflicting statements from the land trust constituted laches, waiver or estoppel but nonetheless effectively barred application of the 400 foot building zone restriction.

Land trusts can also be very careful to articulate what is not permitted and reserve the ultimate discretion to determine consistency with conservation purposes.  At least in Virginia, the presumption for negative easements in gross is that a landowner may do with her land what she will. United States v. Blackman, 270 Va. 68, 76, 613 S.E.2d 442, 446 (2005) stated that: “Negative easements, also known as servitudes, do not bestow upon the owner of the dominant tract the right to travel physically upon the servient tract, which is the feature common to all affirmative easements, but only the legal right to object to a use of the servient tract by its owner inconsistent with the terms of the easement. In this sense, negative easements have been described as consisting solely of "a veto power." Prospect Dev. Co. v. Bershader, 258 Va. 75, 89, 515 S.E.2d 291, 299 (1999).”

A Pennsylvania court cited Blackman in a conservation easement condemnation case as well so this may be a widely held principle presumably affected also by each state’s conservation easement enabling act. See, Ephrata Area School Dist. v. County of Lancaster, 886 A.2d 1169, 204 Ed. Law Rep. 323 ,(2005)  Source: Heather Richards, Steve Small, Lee Stephens, Laurel Florio

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