Maryland Court of Special Appeals, No. 0228, February 14, 2012: Revised decision holds the purchased non-perpetual agricultural preservation easement at issue does not create charitable trust in Maryland, but abutter has rebuttable presumption that it has standing to bring mandamus action regarding enforcement of the easement by a state entity.
The decision issued February 14, 2012, revises elements of the charitable trust analysis in the version of the decision issued November 30, 2011, narrowing its scope. This Digest post repeats the post about the earlier decision at http://preservationlawdigest.com/2011/12/03/long-green-valley-assn-v-bellevale-farms-inc/ but notes the changes in the revised official version. Special thanks to Prof. Nancy McLaughlin for bringing the revised opinion to my attention.
The owners of Bellevale dairy farm sold an agricultural preservation easement to the State, on behalf of Maryland Agricultural Land Preservation Foundation (MALPF). MALPF is an entity of the Maryland Department of Agriculture. MD. CODE ANN., AGRIC., § 2-502. (Maryland Code sections can be searched for at http://mlis.state.md.us/mgaweb/google.aspx.) Later, MALPF, as easement holder, approved Bellevale’s proposed construction and operation of a creamery, processing facility, farm store and parking on the property. The owners of an abutting property (Yoders) and a conservation organization (Long Green Valley or LGVA) claimed the creamery, etc. violated the Easement and brought suit, asking the court to issue a writ of mandamus to compel MALPF to enforce the Easement. At the Circuit Court level, the Yoders and LGVA (Appellants) were denied standing to sue. They appealed. The Appeals Court reviewed the Appellants’ three common law bases for standing in this case — third party beneficiary, charitable trust, and special harm – rejecting the first two but accepting the third. (This report will discuss charitable trust first.)
The Appeals Court rejected the Appellants argument that the Easement created a charitable trust, enforceable by interested third parties. In doing so, the Court discussed and cited the law review articles by Nancy A. McLaughlin and W. William Weeks, In Defense of Conservation Easements: A Response to The End of Perpetuity, 9 Wyo. L. Rev. 1, 21 (2009) (“Defense”), and C. Timothy Lindstrom, Conservation Easements, Common Sense and the Charitable Trust Doctrine, 9 Wyo. L. Rev. 397, 405 (2009) (“Conservation Easements”), which lay out the terms of the national debate on this issue.
The Court laid the groundwork for its decision by reviewing applicable law on what a conservation easement is, what constitutes a charitable trust, the distinction between charitable and private trusts, three relevant leading cases in other jurisdictions, and the scholarly debate on the subject. Citing MD. CODE ANN. Real Property, § 2-118, Court agreed with Lindstrom that “conservation efforts in the form of negative easements or restrictive covenants are creatures of property law” (Conservation Easements, p. 400). In the original draft of the Opinion, the Court included the end of that quote, which was “and the doctrine of charitable trusts is not a part of that law.” It noted that under charitable trust law, termination or amendment of the trust would require a cy pres decision by a court. “In practice,” the Court wrote, “cy pres could serve as a basis for extending standing where citizens who are not parties to an easement sue to enforce the easement”.
Of the elements necessary to the creation of a charitable trust in Maryland, those in dispute in this case were manifestation of intention, and a charitable purpose.
As to the manifestation of intention, the Court noted the Easement makes no mention of “trust” or “trustee” but states that it is “the intention of the parties that the said land shall be preserved solely for agricultural use in accordance with the provisions of the Agricultural Article” of the Maryland Code. The Court then reviewed several arguments in favor of generally treating conservation easements as charitable trusts (perhaps on the theory that such arguments create an implicit but manifest intent on the part of the Easement grantor to create a charitable trust) and rejected them either generally or as to this Easement. This Easement expressly provides for modification or termination by agreement of the parties, which the Court said would not be the case if it were a charitable trust. Perhaps most decisively, the Easement in this case was not necessarily perpetual. It states that “[t]his easement shall be in perpetuity, or for so long as profitable farming is feasible on the Grantor’s land and may be released only by the Grantee as provided by Agriculture Article, Section 2-514[.]” The Court admonished that “the application of the charitable trust doctrine to a potentially nonperpetual conservation easement, such as the instant Easement Agreement, is particularly problematic, even among proponents of application generally”.
The Court also said it could not find that the Easement reflects a charitable purpose. “Not only was the MALPF program created in part for economic reasons, but the consideration paid by MALPF for the easement–$796,500–was obviously beneficial to Bellevale and the continuation of Bellevale’s farming operation so long as it was practical to do so. From the ‘settlor’s’ [Bellevale’s] viewpoint, any benefit to the public was incidental.”
In the revised Opinion, the Court wrote that, assuming without deciding that the easement in this case was a conservation easement, “we are not persuaded that the charitable trust doctrine must be applied to purchased, nonperpetual agricultural preservation easements, nor even that it should be.”[Emphasis in the Court’s decision.] The original version did not include the words “purchased nonperpetual”.
This narrowing of the Court’s analysis of the charitable trust issue is further emphasized by the paragraph that is added in the revised Opinion at the end of the discussion of that issue:
”In sum, this case involves a nonperpetual conservation easement purchased for fair market value that expressly provides that it may be terminated after twenty-five years upon satisfaction of certain conditions. We think it unnecessary to our result, and express no opinion as to how the principles generally applicable to charitable trusts would apply to expressly perpetual conservation easements conveyed in whole or in part as charitable gifts, or purchased under other statutes or provisions.”
Regarding the Appellants other two arguments on standing, the Appeals Court held that the Appellants are not third party beneficiaries of the Easement. The Court said an agricultural preservation easement is a type of contract and for a “stranger to a contract” (i.e., non-party) to sue for breach of contract he must at least show that it was intended for his direct benefit. Reviewing the language of the Easement, the Court couldn’t find anything to show the Appellants were more than incidental beneficiaries, and, as such, are not entitled to enforce the Easement Agreement. LGVA’s status as a community association gave them no special status in this regard.
The Appeals Court held that the Yoders do have standing based on their allegation of “special harm”. (To this reader, this basis of standing related to the character of this as a mandamus action and MALPF’s status as a government entity. The Court does not make this explicit, perhaps because it is obvious and well understood in Maryland.) The Court first concluded that MALPF’s approval of the Bellevale proposal for a creamery operation was a land use decision, because “land use . . . is at least one of the prime considerations” in the legislative effort to preserve agriculture and woodland. As a land use decision by MALPF, “it appears that adjoining, confronting or neighboring property owners may have standing to challenge as an illegal or ultra vires action the approval of a proposed use of land subject to a MALPF easement…. the Yoders would be considered prima facie aggrieved, and thus relieved of the burden of alleging specific harm.” The Appeals Court remanded to the circuit court, and with the Yoders considered prima facie aggrieved, the burden of denying such damage and rebutting the presumption shifts to MALPF.
The revised decision is available at http://mdcourts.gov/opinions/cosa/2012/0228s09.pdf.
Special thanks to Adam Block of Baltimore for originally bringing this decision to my attention. Adam is in his last year at the University of Maryland School of Law and is a law clerk at the Baltimore firm of Gallagher, Evelius & Jones.