La Mirada v. Los Angeles

Court of Appeals of California, Second District, Division Eight, No. B259672, September 9, 2015: Building and occupancy permits void after demolition in excess of permit.

In this mandamus action, demolition, building and occupancy permits issued by the City of Los Angeles were declared void because the entire structure was demolished, contrary to previously issued permits which required preservation of the façade. The city was ordered to re-do the permit process, going back to consideration of revised demolition plans.

The building which was demolished, the so-called 1924 Old Spaghetti Factory (OSF) building, was not designated a historic landmark at the national, state, or local levels but the original project plans recognized that the building had historical value. The plans which the original developer submitted for project permits and variances would preserve the façade of the OSF building and incorporate it into the project. Although the project permits and variances were issued before the recession hit in 2008, the project halted before demolition. It was revived by a new developer in 2011. That developer obtained a City demolition permit to demolish the entire building, including the façade, as recommended or justified by advice from the new developer’s engineer and architect. Thereafter, the whole building was demolished, the City issued a building permit, the developer completed the project, and the City issued occupancy permits.

La Mirada Avenue Neighborhood Association of Hollywood (La Mirada), a group of residents and residential property owners in the City of Los Angeles who advocate for residential quality of life issues in Hollywood, had unsuccessfully challenged the project permits and variances. They now challenged the issuance of the demolition, building and occupancy permits.  After exhausting administrative remedies, La Mirada sought a court order to void all those permits. The trial court largely granted La Mirada’s petition, and this appellate court affirmed the trial court.

One of the pre-demolition project permits was the City’s adopting a zone change ordinance which included a condition (“Q Condition 7″) that, “The use and development of the property shall be in substantial conformance with the plot plan submitted with the application.” That plot plan included demolition preserving the façade. Four or more years later, after the city approved the total demolition permit, when the City approved the building and occupancy permits, the City determined that its issuance of the total demolition permit was in error but despite the total demolition the project substantially conformed to the plot plan.

As a threshold matter, the City and the Developer argued that La Mirada’s claims were moot because the project was complete and the City had already required the developer to seek revisions of the relevant project approvals. The court rejected that, saying a ruling on the petition “has an important practical impact. … The voiding of these certificates and a stay on further ones pending reapproval is not a meaningless act with no practical impact. The residential building and park cannot be occupied without valid certificates of occupancy.”

The central issue was then whether the City abused its discretion in determining that the demolition permit was void but the building permits were validly issued. The court said the appropriate standard is California Code of Civil Procedure section 1094.5, subdivision (b), which “defines ‘abuse of discretion’ to include instances in which the administrative agency ‘has not proceeded in the manner required by law, the order or decision is not supported by the findings, or the findings are not supported by the evidence.’” Under that standard, the court found the City had abused its discretion because after the city zoning administrator ruled the full demolition permit did not comply with Q Condition 7, the zoning administrator determined that the later-issued building permits did substantially conform to Q Condition 7. This, the court said, is where the City’s action “does not proceed in the manner required by law” and so constitutes an abuse of discretion: the City had no discretion to issue permits that violated Q Condition 7 and the zone change ordinance.

Accordingly, the court affirmed the trial court judgment (1) directing the City to void all permits previously granted, including but not limited to demolition and building permits and certificates of occupancy, and (2) directing the City to prepare and process subsequent environmental review before permitting any more changes to the project. The court also awarded costs on appeal to La Mirada.

(Editorial note: while it seems likely the City will accept revised plans to demolish the façade, and therefore re-approve the building and occupancy permits, that may not be the end of the litigation if the rationale for the project permits and variances relied on the preservation of the façade as the basis for allowing those permits.)

Decision available at until Nov. 9, 2015, then at the California appellate courts’ Case Information Search.

The opinion in this case has not been certified for publication or ordered published for purposes of California Rules of Court rule 8.1115, which prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b).

Boston Redevelopment Authority v. National Park Service

US District Court, D. Massachusetts, Civil Action No. 14-12990-PBS, August 26, 2015: Long Wharf Pavilion in Land and Water Conservation Fund restricted area can’t become restaurant.

The dispute underlying this case is whether the Plaintiff Boston Redevelopment Authority (BRA) may convert Long Wharf Pavilion, an open-air structure built in 1988 on Long Wharf in Boston Harbor, into a restaurant. The particular issue in this summary judgment case is whether the National Park Service (NPS) may rely on a certain map (the “1980 map”) in denying the BRA permission under the Land and Water Conservation Fund (LWCF) Act to convert the Pavilion into a restaurant.

The BRA was awarded a federal LWCF grant in 1981 to plan, purchase, and develop public outdoor recreation spaces on Long Wharf. Under the LWCF Act, 54 U.S.C. § 200305(f)(3), no property acquired or developed with LWCF assistance and shown on a “project boundary map” (a “6(f) map”) as within a so-called “6(f) restricted area” may, without the approval of the Secretary of the Interior, be converted to other than public outdoor recreation use.

When asked to approve the Long Wharf conversion, NPS initially did not take notice of the 1980 Map but did consider a 1983 6(f) map and approved the project. Later, with the existence of the 1980 Map in the NPS records brought to its attention, the NPS reversed itself and denied approval of the project.

The BRA appealed the denial and sought summary judgment that NPS could not rely on the 1980 Map. The basis of the BRA motion was (1) that the NPS action violated the federal Administrative Procedure Act (APA) because relying on the 1980 Map was arbitrary and  capricious; and (2) NPS should be judicially estopped from relying on the 1980 map after initially taking the position that the Long Wharf Pavilion did not fall into the 6(f) restricted area. NPS also moved for summary judgment to uphold its decision.

The court’s analysis was necessarily heavily fact specific but within the context that, “Because the APA standard affords great deference to agency decisionmaking and because the Secretary’s action is presumed valid, judicial review, even at the summary judgment stage, is narrow.” The court concluded that the NPS could reasonably decide that the 1980 Map was the 6(f) map which established the 6(f) restricted area, and that the Long wharf Pavilion area was within that 6(f) restricted area. Despite the BRA’s assertion to the contrary, the court found there was also no evidence in the record that the 6(f) boundary was ever formally amended.

The court also rejected the BRA argument that NPS acted arbitrary and capriciously when it changed its mind, allowing the restaurant project to proceed before rejecting it. The court held it “is not the law” that NPS cannot reconsider its decisions even after discovering a mistake, writing, “It is well-established that ‘an agency, may, on its own initiative, reconsider its interim or even its final decisions, regardless of whether the applicable statute and agency regulations expressly provide for such review’ ” [citation omitted].

Lastly, the court rejected the BRA’s assertion that the doctrine of judicial estoppel should prevent NPS from saying the Long Wharf Pavilion is in the 6(f) restricted area after previously representing to the Massachusetts Department of Environmental Protection (DEP) that it was not part of a 6(f) restricted area, which representation became part of the record before the Massachusetts Office of Appeals and Dispute Resolution and the Massachusetts Superior Court in the Mahajan v. DEP litigation (which was ultimately decided on appeal in Mahajan v. DEP, 984 N.E.2d 821 (Mass. 2013)).

Noting that “judicial estoppel is an equitable doctrine invoked by a court at its discretion” and that ” the Government may not be estopped on the same terms as any other litigant,” the court weighed the equities and found in favor of NPS. The court found NPS changed its position in good faith after realizing a mistake, and did not take “one calculated position early on in the litigation and then adroitly flip-flops to another when expedient.”  The court also said that, “judicial estoppel would not merely affect BRA and NPS. Rather, NPS is responsible for enforcing LWCF restrictions that preserve outdoor recreational spaces for the benefit of the public at large.”

The court accordingly denied the BRA’s Motion for Summary Judgment and allowed the NPS Motion.

The decision is available at The 1980 Map may be seen in an article by Matt Conti dated February 12, 2014, in the online newsletter North End

Minnick v. Commissioner of Internal Revenue (Minnick II)

US Court of Appeals Ninth Circuit, No. 13-73234, August 12, 2015: Mortgage subordination at the time of easement gift, not later, required for deduction.

The US Tax Court held in Minnick v. Commissioner (Minnick I), 2012 T.C. Memo 345, December 17, 2012,  that Treasury Regulations §1.170A-14(g)(2) requires that, for a taxpayer to take a deduction for the donation of a conservation easement, any mortgage on the property must be subordinated to the easement at the time of the donation, not afterward. Minnick appealed, but in this decision the 9th Circuit Court of Appeals affirmed the decision of the Tax Court.

In 2006, Minnick granted a conservation easement to a land trust. The land was subject to a mortgage that was not subordinated to the conservation easement until five years later.  Minnick claimed a deduction and the IRS disallowed it.  The Tax Court decided that the deduction was not allowed because the mortgage was not subordinated at the time of the grant of the conservation easement, citing its own then recent decision in Mitchell v. Commissioner, 138 T.C. 324, 332 (2012) (Mitchell I). Mitchell I was subsequently upheld by the 10th Circuit Court of appeals in Mitchell v. Commissioner, 775 F.3d 1243 (10th Cir. 2015) (Mitchell II).

Treas. Reg. § 1.170A-14(g)(2) says that when a conservation or preservation easement property is subject to a mortgage, “no deduction will be permitted . . . unless the mortgagee subordinates its rights in the property to the right of the qualified organization to enforce the conservation purposes of the gift in perpetuity.” The Regulation does not expressly say when the subordination must occur.  In the current case, the court first held that the “plain meaning” of §1.170A-14(g)(2), “strictly construed,” is that “subordination is a prerequisite to allowing a deduction,” as stated in Mitchell II.  The court went on to say that even if §1.170A-14(g)(2) were deemed ambiguous regarding when subordination is required, precedents require that courts defer to the IRS’s reasonable interpretation of its own regulations when the IRS’s interpretation is reasonable and is not “plainly erroneous or inconsistent with the regulation.” The court found that the IRS’ interpretation at issue here met this standard.

Decision available at

Bosque Canyon Ranch LP v. Commissioner

US Tax Court, T.C. Memo. 2015-130, July 14, 2015: Conservation easement deduction denied; inadequate baseline documentation; Belk violation.

Citing the precedent of the Belk II tax court memo, as affirmed by the Fourth Circuit decision in Belk III, the court denied any tax deduction for twin conservation easements that allowed for the alteration of boundaries between unrestricted house parcels and the property subject to the easements. The tax deductions were also denied because of shortcomings of the baseline reports substantiating conditions at the easement properties. Gross valuation misstatement penalties were imposed. In addition, the court ruled on the tax ramifications of the transfer of the house parcels from the limited partnership to the limited partners, but this Digest report does not discuss that aspect of the case.

Two limited partnerships, Bosque Canyon Resort LP I and Bosque Canyon Resort LP II, granted conservation easements to the North American Land Trust (NALT) on land each entity owned (the 2005 easement and the 2007 easement) and subsequently distributed to each limited partner the fee simple interest in an undeveloped five-acre parcel of property (Homesite parcels). It appears from the court’s opinion that the designated Homesite parcels were not subject to the easements but bordered on the easement land.

The easements provided that the Homesite parcel owners and the NALT could agree, without any further process, to change the boundaries between the Homesite parcels and the property subject to the easements, provided that any modification could not “in the Trust’s reasonable judgment, directly or indirectly result in any material adverse effect on any of the Conservation Purposes” and provided “[t]he area of each Homesite parcel … [could] not be increased.” Thus, land that was subject to the easements could be released from the easements and become Homesite parcels if the parties agreed.

The court said the possibility that the parties could change those boundaries violated the principle set out in Belk II and Belk III, that for an easement to be a qualified conservation contribution entitling the donor to a tax deduction, not only must the easement be enforceable in perpetuity, but also the use of the land originally subject to the easement must be restricted in perpetuity.  In other words, land swaps and other boundary changes after the grant of the easement are impermissible (i.e., impermissible without a judicial proceeding extinguishing the easement on land going out of the easement and grant of a qualified easement or amendment to existing qualified easement for land going into the easement). Accordingly, on that basis the claimed deduction was denied.

The court also agreed with the IRS that the deduction should be denied because of improprieties in the baseline documentation prepared by NALT. Treasury Regulations sec. 1.170A-14(g)(5)(i) require that “when the [easement] donor reserves rights the exercise of which may impair the conservation interests associated with the property … the donor must make available to the donee, prior to the time the donation is made, documentation sufficient to establish the condition of the property at the time of the gift.” Under the easements, the BRC easement grantors retained various rights.

For the 2005 easement, the baseline documentation included: maps, a recorded copy of the 2005 deed, photographs taken in 2004, existing conditions reports including a “Site Survey Report” dated March 2007 (15 months after the date of the easement transfer), and a signed owner acknowledgement. The 2007 Site Survey Report was completed using notes taken during an April 2004 site visit, approximately 20 months before the date of transfer. The court noted that construction and development had taken place on the property during that period.

For the 2007 easement, the 2007 baseline documentation included: maps, a recorded copy of the 2007 deed, photographs taken in November 2008 (14 months after the date of transfer of this easement), existing conditions reports including the same  2007 Site Survey Report (based on the 2004 site visit), and a “partially executed” owner acknowledgement which was signed after the date of transfer.

The court characterized these baseline reports as “unreliable, incomplete, and insufficient to establish the condition of the relevant property on the date the respective easements were granted,” and denied a deduction for the easements on this grounds as well.

The court imposed gross valuation misstatement penalties under Internal Revenue Code section 6662(h). Because the court determined the donation did not meet the requirements for a qualified conservation contribution, the actual value of each donation was zero, and any claimed deduction, regardless of how small, would trigger the gross misstatement penalty.  Under the law applicable to the 2005 easement, the grantor could assert the defense that it acted reasonably and in good faith. The court rejected that defense because of the extent of flaws in the baseline document. The court said the grantor had not made a reasonable attempt to comply with the substantiation requirement, and therefore they could not make use of this defense.  By the time of the 2007 easement, the law had changed and the reasonable cause defense was no longer available for misstatements relating to charitable contribution deductions.

Decision available at

Schaecher v. Bouffault

Supreme Court of Virginia, Record No. 141480,June 4, 2015: Accusation of conservation easement violation is not defamation in Virginia.

At issue was whether public accusations that a party violated a conservation easement is defamation in Virginia. The Plaintiffs, 3 Dog Farm, LC, and Happy Tails sought a special use permit to operate a boarding kennel of more than five canine animals. The defendant, Bouffault (a member of the County Planning Commission), sent emails and made public statements claiming that the kennel as proposed would violate conservation easements (among other allegations). Happy Tails and 3 Dog brought suit, claiming that these statements characterize them or their principal as “a lawbreaker, one without integrity, or one with disregard for the law,” or imply that Happy Tails was in violation of the law, and that defendant made these statements with the intent to defame. The trial court ruled that the statements were not defamatory and the Plaintiffs appealed.

The court reviewed Virginia law about defamation, saying that a statement is actionable under state law if it is both false and defamatory. Defamatory words are those “tend[ing] so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him.” Citing Restatement (Second) of Torts § 559 and Chapin v. Knight-Ridder, Inc., 993 F.2d 1087, 1092 (4th Cir. 1993) (applying Virginia law). An actionable false statement must have a “requisite defamatory ‘sting’ to one’s reputation, citing Air Wis. Airlines Corp. v. Hoeper, ___ U.S. ___, ___, 134 S.Ct. 852, 866 (2014). The court also cited its own decision holding that the level of harm to one’s reputation required for defamatory “sting,” is that defamatory language “tends to injure one’s reputation in the common estimation of mankind, to throw contumely, shame, or disgrace upon him, or which tends to hold him up to scorn, ridicule, or contempt, or which is calculated to render him infamous, odious, or ridiculous.” Moss v. Harwood, 102 Va. 386, 392, 46 S.E. 385 (1904).

The court then found that the potential violation of an easement “does not as a general principle carry the ‘sting’ of a reprehensible crime. The mere implication that one might be in violation of an easement, absent more — such as inflammatory language or context to suggest that the statement causes particular harm to one’s reputation — does not rise to the level of defamation. It does not so ‘harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him,’ … such as by making [Bouffault] appear odious, infamous, or ridiculous, or subjecting her to contempt, scorn, shame, or disgrace.”

The court also found that whatever innuendo might be contained in Bouffault’s statements, it does not characterize the defendant as a “law breaker” or “a person of disregard for the legal obligations pertaining to the Property.”

The court upheld the decision of the trial court. There were other issues in this matter unrelated to conservation or historic preservation easements.

Decision available at

In re: The Application of Living Word Bible Camp

Court of Appeals of Minnesota, Nos. A14-0464, 14-0481, A14-1224, A14-1225, April 6, 2015: Bible camp’s development not prohibited by conservation easement.

Two groups of realtors oppose Living Word Bible Camp’s (LWBC) plan to build a youth bible camp on a property of 283 acres, of which 84 acres is subject to a conservation easement owned by the Minnesota Land Trust. The plan calls for a cluster development on fewer than 6 acres of the property, the ability to accommodate up to 150 overnight guests, while approximately 240 acres are to remain “in a natural state.”

The conservation easement generally prohibits development and commercial use but specifically permits construction of trails for “firebreaks, walking, horseback riding, [and] cross-country skiing.”  Among various challenges, the camp’s opponents argued that a conditional-use permit (CUP) for the camp allows a commercial use by allowing the portion of the property subject to the conservation easement to be used for “trails for hiking, nature trails, cross country skiing, and other low impact non-motorized activities.” The court rejected this argument for two reasons, finding that those uses are not commercial as defined in the relevant local ordinance, and they are specifically permitted by the conservation easement. The ordinance defines “[c]ommercial use” as “the principal use of land or buildings for the sale, lease, rental, or trade of products, goods and services.” Although the conservation easement prohibits commercial development “of any kind” on easement property, it specifically allows recreational uses of the property, including establishment of trails for “firebreaks, walking, horseback riding, [and] cross-country skiing.” Accordingly, the court found, the planned uses are consistent with the conservation-easement mandates.

The decision is unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2014). It is available at

Kaufman v. Commissioner (Kaufman V)

Court of Appeals, 1st Circuit, No. 14-1863, April 24, 2015: Penalty upheld for gross valuation misstatement.

The Kaufmans’ claim of a federal income tax deduction for donating a historic preservation easement (“preservation restriction” in Massachusetts) was denied after multiple court proceedings culminating in the Tax Court finding that the value of the easement was zero and that the Kaufmans were liable for a 40% accuracy-related penalty for making a gross valuation misstatement. Kaufman v. Commissioner, 107 T.C.M. 1262, T.C. Memo 2014-52 (2014) (“Kaufman IV”). The Kaufmans appealed that decision, and now the Appeals Court affirmed the Tax Court, ruling that the Tax Court did not “clearly err” when it found the Kaufmans must pay the penalties.

The 40% accuracy-related penalty in question comes under Section 6662 of the Internal Revenue Code, imposed for a 400% or more overstatement of the value of any property claimed on a tax return (§ 6662(h)).  The Kaufmans argued that they should be excused from the penalty under the “reasonable cause exception” (§ 6664(c)). That exception requires that the taxpayer had reasonable cause, acted in good faith, based the claimed value on a qualified appraisal made by a qualified appraiser, and a good faith investigation by the taxpayer of the value of the contributed property.

Good Faith: the Tax Court found that the Kaufmans did not have reasonable cause or act in good faith in claiming the deduction and failed to make a good faith investigation; the appeals court held that these finding were not clearly erroneous.  The findings at the Tax Court included facts showing that after the Kaufmans got the appraisal, Mr. Kaufman was unequivocally assured by a representative of the grantee Trust that he did not expect the donation to decrease the value of the Kaufman residence at all. The court said this “would have put a reasonable person on notice that further investigation was required to verify the purported value of the donated easement” and, “This should have immediately raised red flags as to whether the value of the easement was zero.” Also arguing against good faith was the fact the Kaufmans had signed a letter stating that the restrictions were the same as those already in place by virtue of local zoning restrictions.

Among the court’s rejections of various arguments made by the Kaufmans, the court said that obtaining a qualified appraisal made by a qualified appraiser does not automatically constitute a good-faith investigation.

Decision available at

SWF Real Estate LLC v. Commissioner

Tax Court, T.C. Memo. 2015-63, April 2, 2015: Tax due on partnership’s easement tax credit allocation as disguised sale.

The prime issue in this case was how the IRS should treat a limited partnership transaction involving Virginia tax credits for the donation of a conservation easement, and the valuation for federal tax purposes of that donation. Also at issue was the valuation of the conservation easement for federal income tax deduction purposes.

Virginia allows a landowner tax credits for a portion of the value of a charitable contribution of a conservation easement to a qualified donee. An owner may choose to sell some or all of the credits, particularly if the credit exceeds their tax obligation. Under federal tax law, income from the sale of credits may be treated as income on which a tax may be due. In this case, the landowner sought to avoid that federal tax by creating a somewhat complicated deal structure under which, the landowner hoped, the transfer of the credits would not be a taxable event. The tax court decided that the deal structure didn’t work to avoid the federal tax because in substance it was a sale, even if it was made to appear something else in form.

The deal structure developed as follows: In the first stage of the transaction, a tract of land that was owned by an individual, John Lewis, was conveyed to a limited liability company, SWF, which was created and wholly owned by Lewis. With the intention to contribute a conservation easement on the land to a qualified entity, Lewis engaged Conservation Solutions LLC (CS) to advise him. CS advised Lewis that the contribution would generate $3.2 million in Virginia tax credits for the LLC. As CS further advised, SWF (the company that now owned the land and would donate the easement) agreed to transfer most of the credits to an unaffiliated limited partnership called Virginia Conservation Tax Credit Fund LLLP (Virginia Conservation). Virginia Conservation, rather than buy the credits outright, became a 1% limited partner in SWF.

Typically in a limited partnership the burdens and benefits of ownership are divided among the partners, although the allocation is not always in the same proportion as the partners’ ownership percentages, and the allocation of the burdens may be different from the allocation of the benefits. In this case, although the allocation of the SWF partnership’s profits and losses were in proportion to their respective percentage interests of 1% (Virginia Conservation) and 99% (Lewis, through his corporation), the tax credits were allocated in reverse proportions, about 99% for Virginia conservation and 1% for Lewis. Under the partnership operating agreement Virginia Conservation paid $1.6 million for its 1% stake in SWF and would be entitled it to about $3 million in tax credits. Other provisions of the transaction documents effectively eliminated any transaction risk to Virginia Conservation.

After the conservation easement was contributed, SWF claimed on its tax returns that the $1.6 million received from Virginia Conservation was a “capital contribution,” i.e., not income.  The IRS disagreed and the matter went to tax court.

The tax court held that the transaction was a disguised sale pursuant to section 707(a)(2)(B) of the Internal Revenue Code. Section 707 “prevents use of the partnership provisions to render nontaxable what would in substance have been a taxable exchange if it had not been `run through’ the partnership.” Accordingly, SWF owed additional federal income tax.

On the valuation question, the IRS’s argument that the appraisal submitted by SWF with its tax return was too high was primarily presented in terms of an attack on the credibility of SWF’s appraiser. The court didn’t find that attack itself credible. At trial, competing appraisals were offered in evidence by SWF and the IRS. The appraisal SWF put into evidence was slightly lower than the appraisal it had submitted with its tax return. The court found SWF’s appraisal evidence more credible than the IRS’s, and so held that SWF was entitled to only a slightly smaller deduction than it claimed.

The decision is available at

Ranch O, LLC v. Colorado Cattlemen’s Agricultural Land Trust

Court of Appeals of Colorado, Div. 1, No. 13CA2204, February 26, 2015: Land Trust keeps conservation easement despite error naming grantor.

The Land Trust accepted and recorded a deed of conservation easement (“Conservation Deed”) from one Craig J. Walker, an individual who, as it turned out, had overlooked that he had previously granted and recorded a deed of the Conservation Deed property to an LLC of which he, Walker, was the sole manager and ninety-nine percent membership owner (the “Walker LLC”).  Neither Walker nor the Land Trust was aware of the error. Subsequently Walker, on the Walker LLC’s behalf, conveyed the land to Ranch O LLC (Rancho). Walker had told Ranch O’s principal of the Conservation Deed and the deed to Rancho gave notice of the easement in bold type and all block capital letters.

Rancho then asked a trial court for a declaratory judgment that the Conservation Deed was invalid and had no force and effect because of the error in naming Walker individually as  grantor, not Walker LLC. The trial court refused and ordered reformation of the Conservation Deed to reflect the true grantor, Walker LLC. The trial court also held that the reformation was not contrary to intent of section 38-35-109, C.R.S. 2014, the “race notice” portion of Colorado’s conveyancing law. That statute requires that unrecorded instruments about real estate are generally not valid against persons with rights in that real estate who first record an instrument creating their rights (those who win the “race” to the land records office). Walker had no problem with the trial court summary judgment, but Rancho appealed. The court of appeals upheld the trial court, ordering reformation of the Conservation Deed so the Land Trust ends up with good title to it.

Reformation of the Conservation Deed was ordered based on the finding that there had been a mutual mistake between grantor and grantee.  The court cited a Colorado Supreme Court decision stating that a mutual mistake requires that both parties must “labor under the same erroneous conception in respect to the terms and conditions of the instrument.” The court found that standard was met here. The court rejected Ranch O’s argument that reformation would prejudice it, finding that Ranch O had actual notice of the Conservation Deed and bought the property subject to it.

The court also upheld the trial court’s decision that reformation of the Conservation Deed was not contrary to the intent of the race-notice statute. The court noted that the race-notice statute makes an exception to the effect that unrecorded instruments are valid against a party if that party, like Ranch O, had notice of the unrecorded instrument prior to the acquisition of its rights.

Decision available at

Minnick v. Ennis

Idaho Supreme Court, No. 41663, 2015 Opinion No. 1, January 9, 2015: Statute of limitations on malpractice claim for lawyer’s failure to seek mortgage subordination before recording conservation easement runs from when IRS raised issue.

The Minnicks engaged the law firm Hawley Troxell as counsel for a real estate project. As part of the project the Minnicks granted a conservation easement to the Land Trust of Treasure Valley, Inc.  The Minnicks’ mortgage on the property was not subordinated to the easement at the time of record the easement (a subordination that was, in the court’s words, “expressly required by the plain language of the easement agreement as well as the applicable federal regulations”).  The Minnicks claimed large charitable deductions and tax refunds on their jointly filed tax returns for the years 2006, 2007, and 2008. The Minnicks allege Hawley Troxell knew the Minnicks wanted the easement grant to qualify as a charitable contribution for federal tax purposes. Hawley Troxell denied knowing this and said it reviewed the easement only to ensure it met local land use standards.

The IRS denied the Minnicks’ deduction claim and the matter went to Tax Court. The Minnicks say they only then discovered for the first time that Hawley Troxell failed to take the actions necessary to subordinate the mortgage to the easement. (In 2011, with Hawley Troxell’s input and assistance, the bank subordinated.)

On April 3, 2012, while the Minnicks’ case was pending before the Tax Court, it decided Mitchell v. Commissioner (Mitchell I), 138 T.C. 324 (T.C. 2012). Mitchell I held that a mortgage must be subordinated prior to the grant of a conservation easement, the “the so-remote-as-to-be-negligible” exception did not apply to that requirement, and therefore (as a decision on an issue of first impression) the failure to obtain a subordination could not be cured after recording the easement.  On December 17, 2012, the Tax Court issued its decision in Minnick v. Commissioner, 2012 T.C. Memo 345, denying the Minnicks any deduction because of the untimely subordination (citing Mitchell I), and upholding penalties.

On June 7, 2012, after the Mitchell I decision but before the Minnick decision, the Minnicks, seeing they might lose in Tax Court, filed suit against Hawley Troxell for professional negligence. The Minnicks didn’t serve Hawley Troxell with the complaint until December 5, 2012.  Hawley Troxell answered the complaint with affirmative defenses including the two-year statute of limitations in Idaho Code section 5-219(4).  The trial court agreed with Hawley Troxell and dismissed the suit. On Hawley Troxell’s motion, the lower court awarded Hawley Troxell $66.00 in costs and $50,000 in fees. The Minnicks appealed.

On the appeal, the Idaho Supreme Court reversed the lower court, saying the Minnicks’ legal malpractice action against Hawley Troxell was not time-barred under Idaho Code section 5-219.

The court explained that while the Idaho statute indeed required a malpractice action to commence within two years “after the cause of action has accrued,” the cause of action in malpractice cannot accrue in Idaho until “some damage” has occurred.  The court found that “some damage” related to untimely subordination could not have been incurred and could not have begun accruing — and therefore the Minnicks’ claim against Hawley Troxell could not been brought — until the subordination issue was formally raised. It was not until June 2011 that the IRS first requested information specifically concerning subordination and it was not until October 2011 that the IRS introduced the subordinate issue in the Tax Court. The Minnick action against Hawley Troxell was filed within two years after the subordination was first raised by the IRS and therefore was not time barred.

The court reasoned that if the IRS had never raised the subordination issue, and had the Minnicks prevailed on the other issues raised, Hawley Troxell’s failure to obtain subordination could not have harmed the Minnicks and they would not have an actionable claim for legal malpractice.

The court remanded the matter to the trial court for further proceedings. Given the holding on the statute of limitations, the court also vacated the lower court’s fee award to Hawley Troxell. The court found it premature to award attorney fees on the appeal, but awarded the Minnicks appeal costs.

Decision available at

Mitchell v. Commissioner

US Court of Appeals, 10th Circuit, No. 13-9003, January 6, 2015: No deduction for conservation easement without mortgage subordination at time of grant.

This decision affirms the US Tax Court decision in Mitchell v. Commissioner, 138 T.C. 324 (2012) (Mitchell I) (of which the Tax Court rejected reconsideration in Mitchell II, T.C. Memo. 2013-204, August 29, 2013), denying a charitable contribution deduction for a conservation easement on real estate subject to a mortgage that was not subordinated to the easement at the time of the donation. Obtained a mortgage subordination after donating the conservation easement did not cure the failure to comply with Internal Revenue Code and implementing Treasury Regulations.

In 2003 Mitchell granted a conservation easement to the Montezuma Land Conservancy (the Conservancy) a conservation easement over her land that was subject to a mortgage and then claimed a federal tax deduction. In 2005, the mortgage holder agreed to subordinate the mortgage to the easement. The IRS denied Mitchell’s deduction claim, she appealed and the matter went to the Tax Court. The Tax Court agreed with the IRS. Mitchell appeal to the higher Appeals Court.

The Appeals Court found no ambiguity in the Regulation’s requirement (Treas. Regs. § 1.170A-14(g)(2)) that subordination is a prerequisite to allowing a deduction, and that even if there were some ambiguity, the IRS’s interpretation of the Regulations is reasonable, not plainly erroneous or inconsistent with the mortgage subordination provision’s plain language.

Mitchell unsuccessfully tried to assert that the “so remote as to be negligible” exception applies to the subordination requirement.  That exception (Treas. Regs. § 1.170A-14(g)(3)) is that strict compliance should not be required when the risk that the event to be avoided by noncompliance (in this case, foreclosure) is so remote as to be a negligible risk. The Court said there must be strict compliance with the subordination requirement, and the risk of foreclosure is unexceptional.

The Court distinguished its “so remote as to be negligible” holding here from other holdings including: Wachter v. Comm’r, 142 T.C. 7, Mar. 11, 2014 (improbability of event), Kaufman v. Shulman, 687 F.3d 21, 27 (1st Cir. 2012) (improbability of event), Commissioner v. Simmons, 646 F.3d 6 (D.C. Cir. 2011) (remoteness based on easement holder’s record of enforcement of easement).


Decision available at

Belk v. Commissioner (Belk III)

US Court of Appeals, Fourth Circuit, No. 13-2161, December 16, 2014: Allowing property swap disqualifies conservation easement deduction.

The court upheld the Tax Court ruling in Belk v. Commissioner, 140 T.C. No. 1 (2013) (Belk I), that a conservation easement that allows the parties to change which property is subject to the easement does not qualify for a federal tax deduction. (See also Belk II, T.C. Memo. 2013-154 (2013).) The federal tax Code allowing a deduction for donation of a conservation easement or historic preservation easement requires that the easement must be “a restriction (granted in perpetuity) on the use which may be made of the real property.” 26 U.S.C.  § 170(h)(2)(C). The Belk easement allowed the parties to amend the easement to remove land from the original defined real property and substitute other land of “equal or greater value.” The court held that a provision like the one in the Belk easement fails the perpetuity test.

The court reasoned that putting of the article “the” before “real property” in§ 170(h)(2)(C) “makes clear that a perpetual use restriction must attach to a defined parcel of real property rather than simply some or any (or interchangeable parcels of) real property.” The court, citing other provisions in that Code section, 26 U.S.C. § 170(h)(1)-(2), said the parcel in which use must be restricted in perpetuity is “the parcel” that must be contributed “to a qualified organization . . . exclusively for conservation purposes” (emphasis added). The court said that it is not enough for the restriction to be perpetual; the restriction on “the real property” (emphasis added) must be perpetual as well.

The court put forward additional objections to allowing swaps and rejected various arguments made by Belk to get the deduction.

  • The easement’s requirement that the removed property be replaced with property of “equal or greater value,” didn’t help because the valuation of the easement is up to the IRS, not the taxpayer, although the taxpayer is required to substantiate the value with a qualified appraisal.
  • Allowing swaps would undermine the tax regulations’ requirement of a baseline report. Treas. Reg. § 1.170A-14(g)(5)(i).
  • The only tax law provision allowing a qualified easement to be extinguished as to the property it restricts limits extinguishment to when “a subsequent unexpected change in the conditions surrounding the property that is the subject of a donation . . . make impossible or impractical the continued use of the property for conservation purposes” and “the restrictions are extinguished by judicial proceeding.” Id. § 170A-14(g)(6). The Belk swap provision was not so limited.
  • The regulatory provisions allowing the donee/holder of an easement to exchange property subject to a conservation easement is also subject to the same limited circumstance, i.e., “[w]hen a later unexpected change . . . makes impossible or impractical the continued use of the property for conservation purposes.” Treas. Reg. § 1.170A-14(c)(2). Further, this provision applies only to the donee, not the donor.
  • The decisions in Kaufman v. Shulman, 687 F.3d 21 (1st Cir. 2012) and Commissioner v. Simmons, 646 F.3d 6 (D.C. Cir. 2011) were distinguishable because those decisions were about whether the easements satisfied the requirement in Code § 170(h)(5)(A) that the conservation purpose, rather than the parcel, be protected in perpetuity.
  • Merely because the law of the state where the property is located allows for land-substitution amendment of easements doesn’t change the result. The fact that State real property law may allow an easement to govern for a period less than perpetuity is irrelevant to federal tax law deductibility.
  • The easement included a “savings clause” — that the parties could not “agree to any amendments . . . that would result in this Conservation Easement failing to qualify . . . as a qualified conservation contribution….” The court interpreted the “failing to qualify” language of this savings clause as requiring an adverse determination by either the IRS or a court for the clause to be triggered. As so interpreted, the court said the clause “provides that a future event alters the tax consequences of a conveyance, [and thereby] the savings clause imposes a condition subsequent and will not be enforced,” citing Commissioner v. Procter, 142 F.2d 824, 827-28 (4th Cir. 1944) and Estate of Christiansen v. Commissioner, 130 T.C. 1, 13 (2008), aff’d, 586 F.3d 1061 (8th Cir. 2009). An effective savings clause could not make the effectiveness of the amendment dependent on a subsequent adverse action by the IRS or court decision. That position is put forward in IRS Tech. Adv. Mem. 79-16-006 (1979).

The decision is available at

Register v. The Nature Conservancy

US Dist. Court, ED Kentucky, Civil Action No. 5:13-77-DCR, December 9, 2014: Charitable gift restricted by oral contract but claimed restriction violation goes to jury

At issue were whether a contribution to a charity was restricted, what the law required if the gift was restricted, and whether the gift was ultimately used contrary to the restriction.

Register, the donor, contributed appreciated stock to The Nature Conservancy (TNC). The trial record produced evidence about what Register and TNC personnel thought the donation was for at the time of donation and leading up to it.  Register alleged the gift of about $1 million to TNC was intended to be permanently restricted for the purchase and management of a parcel of land known as Griffith Woods. Register alleged he made the gift intending to obligate TNC to use the proceeds from a sale of Griffith Woods for management of that property if Griffith Woods were ever sold. Using the gift and other funds, TNC bought Griffith Woods and then sold it. Part of the land was sold to the University of Kentucky (which Register evidently expected) and TNC sold the rest to the Kentucky Department of Fish and Wildlife Resources (“KDFWR”), without a conservation restriction.

Among the evidence relevant to the court’s decision was that TNC placed Register’s original donation in an account classified by TNC internally as “temporarily restricted” to fund the purchase of Griffith Woods. After Griffith Woods was sold, TNC deposited the funds back into that account and then transferred money out of the account. TNC used some of the proceeds from the sale to pay-off a land debt on another project and the rest were deposited into TNC’s general operating fund. TNC admitted that no portion of Register’s gift is currently being used to benefit Griffith Woods. The court’s opinion recites much additional evidence specific to the knowledge and intent of the parties at various times.

The court first held that as a matter of law Register’s donation was restricted as a “conditional gift” and as such TNC was bound by Register’s intention when it accepted the donation. The court cited an Arizona Supreme Court decision (Dunaway v. First Presbyterian Church of Wickenburg, 442 P.2d 93, 95 (1968)) for the proposition that a charity’s acceptance of a gift creates an implied contract with a promise “agreeing to the purposes for which it is offered.” The court cited a Seventh Circuit decision (Kentucky is in the 6th Circuit) for the proposition that a promise of a gift is a promise subject to contract law.

The court found that although there was no written contract in one integrated document, the evidence supported the conclusion that the parties entered into an oral contract and Register’s donation was “restricted to Griffith Woods” as a matter of law. [Digest readers are urged to read the opinion if they are interested in the specific statements, writings and circumstances that gave rise to the court’s conclusion in this and other aspects of its decision.]

The court then turned to the “parameters and duration” of the conditions, if any, of the contract. One letter from Register to the Director of the Kentucky TNC chapter at the time included, “I’d like to make now a gift …  I would prefer that the … proceeds go toward the establishment and management of a nature preserve in the Bluegrass region, e.g. Griffith Woods. If the Griffith Woods project falls through, I trust that KNC will put to use the funds in a manner that will further help protect areas in Kentucky with unique and diverse plants and animals.” The actual transmittal letters from Register’s investment clearinghouse to TNC memorializing the transfer of stock stated “[t]his represents a gift from [Register] to the Nature Conservancy-Kentucky Chapter, Griffith Woods project” or “[t]his represents a gift from [Register] to the Kentucky Chapter Griffith Woods project.”

TNC’s arguments focused on Register’s letter’s use of “precatory language” (“prefer” and “e.g.”) and the general nature of how he wanted the gift used if the Griffith Woods “project falls through.”   The court, however, concluded that Register’s intent for the funds to be used for Griffith Woods was meant by him as a limiting restriction and created an enforceable obligation because the next sentence points out what is to happen if the Griffith Woods preference is not fulfilled. The court also found the evidence lead to the conclusion that, “At the time the donation was made, no one appeared to believe that the funds were not restricted to Griffith Woods.” Continue reading Register v. The Nature Conservancy

McClure v. Montgomery County

Court of Special Appeals of Maryland, No. 1031, September Term, 2013, December 2, 2014: Conservation easement enforceable, civil penalty for violation valid.

The case concerns the validity and enforceability of a forest conservation easement (“FCE”) on a subdivision lot purchased by Appellant McClure and the authority of a County board to issue a corrective order and impose penalties for violation of the FCE. As a condition for approval of the subdivision the Montgomery County Planning Board (the “Planning Board”) of the Maryland-National Capital Park and Planning Commission (“MNCPPC”) had imposed a requirement for grant and recording of the FCE on the subdivision developer who sold the lot to McClure.

While the FCE was never formally granted as a separate instrument, nor delineated on the subdivision plan of record, a Conservation Easement Agreement (the “Agreement”), which described and located the FCE in detail, had been recorded before McClure bought his lot. When McClure bought his lot, his deed made no reference to the FCE or the Agreement.

In the course of building a house and associated work, McClure altered the lot in was prohibited by the FCE as described in the Agreement. The MNCPPC issued a notice of violation and the Planning Board imposed civil penalties and ordered McClure to take corrective actions.

The court found that under Maryland statutes, McClure actually knew of the FCE and had constructive knowledge of it (was responsible for knowing, even if he didn’t have actual knowledge) and therefore the FCE was binding on him. The evidence showed actual knowledge because McClure signed various closing documents that referred to the FCE. He had constructive knowledge because the Agreement was recorded in the appropriate land records, where it could readily be found, and it specified in detail the boundaries of the FCE; this amounted to substantial evidence of the existence of an FCE on McClure’s lot. The question remained of whether, regardless of McClure’s knowledge, the FCE was valid without recording of a separate FCE instrument. The court held the failure of the County and developer to record a separate FCE instrument did not affect its validity, and the description of the FCE in the recorded Agreement was effectively the recording of the FCE.

The court also held, contrary to McClure’s position, that the Board has authority to enforce a conservation easement which was not recorded by deed. At issue was interpretation of the Montgomery County Forest Conservation Law (“MCFCL”), Montgomery Cnty., Md., Code §§ 22A-1 et seq. (2004). McClure argued that the MCFCL required that the FCE should have been noted on a re-platted subdivision to indicate its existence and without such replatting the Board could not enforce the FCE. The court rejected that reading of the MCFCL. Next, the court held that the MCFCL did not require an FCE to be stated in a deed restriction for the Board to enforce it, but rather a deed restriction is merely one of several methods by which a forest conservation plan may be “advanced.” Lastly the court held that under the MCFCL an agreement or restriction, such as an easement, that is “closely connected” with a forest conservation plan can lead to penalties for its violation. Because the court had found that a forest conservation plan existed for McClure’s lot, the court held that the Board had authority to issue a corrective order and impose civil penalties for violation of the MCFCL.

The court ordered McClure to pay the County’s court costs.

Decision available at


Mass.  Appeals Court, 13-P-1050, November 10, 2014: Agricultural buy-local organization exempt from real estate tax.

On appeal from the state’s Appellate Tax Board, the court held that Community Involved In Sustaining Agriculture (CISA) is entitled to exemption from local property tax on land it owns and occupies for its programs. At issue was whether the dominant purpose of CISA’s work “is for the public good and the work done for its members is but the means adopted for this purpose” — which would qualify it as a charitable organization entitled to exemption — or if any benefit derived by the public is incidental.

The court found that the facts establish that CISA’s programs benefit an indefinite number of people, many of whom are not members. Quoting a ruling by the state’s highest court that, “Whatever aids agriculture helps to advance the health and prosperity of the Commonwealth,” the court listed CISA activities of general public benefit: it “distributes a free annual ‘locally grown farm products guide’ to nearly 50,000 households, and helps vulnerable populations such as the elderly, low income citizens, school children, and urban residents receive fresh local food that they would otherwise struggle to access. By increasing food security and developing sustainable local farming, CISA engages in charitable activities that benefit the general public. Moreover, CISA is traditionally charitable because its programs lessen the burdens of many government agencies ‘interested in food systems, nutrition, public health, agriculture, and local farmers.’” The court also noted that CISA does not restrict membership and its members are diverse and come from different segments of society.

The decision, available currently at, is a summary decision by a three-judge panel that may be cited for its persuasive value but not as binding precedent. The decision will eventually be available at

Markus v. Brohl

Colorado Court of Appeals, 3rd Div., No. 13CA1656, October 23, 2014: Colorado’s 4-year limitation on challenging a claimed conservation easement tax credit runs from when the credit is first claimed.

Colorado taxpayers may claim a state income tax credit, which may be carried forward for up to twenty years, for donating a qualifying conservation easement to a governmental entity or charitable organization. § 39-22-522(2), (5), & (7), C.R.S. 2014. The applicable general statute of limitations provides that “the assessment of any tax, penalties, and interest shall be made within one year after the expiration of the time provided for assessing a deficiency in federal income tax. . . .” § 39-21-107(2), C.R.S. 2014. The time for assessing a deficiency in federal income tax is three years, 26 U.S.C. § 6501(a) (2012.  Thus, the Colorado limitations period is four years.

The Colorado Department of Revenue and several taxpayers fund their way into court in a dispute over how long the DOR could challenge the validity and value of the CE tax credits: in each of up to 20 years year in which the credit is claimed, or only within four years from the first time the credits are claimed? What triggers the commencement of the four-year limitations period?

The court held that the Department of Revenue must determine the value and validity of a claimed conservation easement tax credit within four years from when the credit is first claimed.

Decision available at


Chabad Lubavitch of Litchfield County, Inc. V. Litchfield Historic District Commission

US Court of Appeals, 2nd Circuit, Nos. 12-1057-cv (Lead), 12-1495-cv (Con), September 19, 2014: Certificate of historical appropriateness subject to RLUIPA; current property interest not needed to bring RLUIPA claim; multiple factors must go into discriminatory intent inquiry.

RLUIPA is the federal Religious Land Use and Institutionalized Persons Act, 42 U.S.C. § 2000cc et seq. Litchfield’s Historic District Commission (“HDC”) denied an application by the religious organization Chabad Lubavitch of Litchfield County, Inc. (“Chabad”) for a certificate of appropriateness to alter a building in Litchfield’s historic district. The Chabad and its Rabbi Joseph Eisenbach (“Eisenbach”) challenged the decision in federal district court, claiming violation of RLUIPA and abridgement of constitutional rights.

The thrust of their claims was that the HDC action violated RLUIPA’s substantial burden provision, which says that a government can’t impose or implement a land use regulation in a manner that imposes a substantial burden on religious exercise unless the imposition of the burden meets certain tests. A prerequisite of showing a substantial burden is that it “is imposed in the implementation of a … regulation … under which a government makes … individualized assessments of the proposed uses for the property involved.” Id. § 2000cc(a)(2).

The district court barred the Chabad’s claim under RLUIPA’s substantial burden provision, saying that because the Connecticut law under which the HDC’s approval was required (Conn. General Statutes § 7-147a et seq) applies to any entity (with some exceptions) seeking to modify a property in a historic district, it is a neutral law of general applicability and thus could not, as a matter of law, impose a substantial burden on the Chabad’s religious exercise. The district court also held that Eisenbach lacked standing under RLUIPA. Chabad and Eisenberg appealed.

Chabad’s claims:

The court overruled the lower court on the applicability of the substantial burden rules to this case. It said the HDC decision under Connecticut’s statutory scheme was clearly the type of “individualized assessment” RLUIPA was meant to address. The court said the factors that may be considered to determine whether a substantial burden is imposed include whether the law is neutral and generally applicable, arbitrariness of a denial, whether the denial was conditional, and if so, whether the condition was itself a substantial burden, and whether the plaintiff had “ready alternatives.” The court remanded to the district court to determine whether the HDC denial in fact imposed a substantial burden on the Chabad’s religious exercise.

On the Chabad’s RLUIPA discrimination claim, the court held that unlike the substantial burden provision, evidence of discriminatory intent is required to establish a claim. The court found that when the district court had looked only for evidence that other comparable religious institutions had been similarly treated by the HDC, it had not looked at enough factors to properly determine intent. The court (Second Circuit Appeals) had not previously interpreted the nondiscrimination provision. The court remanded the Chabad’s discrimination claim to the district court for further consideration.

Eisenbach’s Standing:

The district court had dismissed Eisenbach’s claim saying he lacked standing under RLUIPA because he did not hold some property interest that he attempted to use and which was threatened by the conduct of the HDC.

The court distinguished the determination of whether Eisenbach has a cause of action under a statute from a federal court’s jurisdiction to hear the claim. Eisenbach’s standing to pursue his RLUIPA claims, the court said, turns on whether his allegations place him in the class of plaintiffs that RLUIPA protects. The court found the HDC’s denial of the Chabad’s application and the conditions it imposed on any renewed application deprived Eisenbach of the ability to live in the facilities as proposed, even though he didn’t currently live there. That circumstance, the court held, is an alleged injury that may be redressed by relief from the district court. The court vacated the district court’s holding that Rabbi Eisenbach lacked standing under RLUIPA and remand it for determination whether he has stated a claim.

Decision available at and

In Re Dekoning

US Bankruptcy Court, ED California Fresno Div., No. 13-16634-13-13, August 27, 2014: Conservation easement may not diminish market value of debtor’s residence in bankruptcy.

In this bankruptcy matter, the Debtor, Dekoning, sought to have the court accept a fair market value of his residence low enough so a mortgage holder would be deemed an unsecured creditor. The residence’s land was in part subject to a conservation easement which imposes restrictions on the access and use of property on both sides of a creek and on an “intermittent drainage” which cross the property. There was no expert appraisal or objective testimony about the effect of the conservation easement on the fair market value of the property. As part of the somewhat informal valuation of the premises, Dekoning asserted the conservation easement reduced the property’s value.. The court concluded, because Dekoning was once fined $10,000 for driving a tractor on the conservation easement, that he had a “grudge” against the easement holder over its enforcement of the easement and his negative opinion about the conservation easement was based on subjective factors.

The court rejected Dekoning’s valuation of the property for a variety of reasons, including the court’s statement that, “The Conservation Easement may be a source of aggravation to the Debtor, based on his personal experience and goals for the Property, but that does not mean that another buyer, with the same information the Debtors had, would not view the Easement as an asset to be enjoyed.”

Decision available at Decision may eventually also be available at (search under Judge Lee’s opinions).

Sierra Club v. Jewell

US Court of Appeals, DC Circuit, No. 12-5383, August 26, 2014: Non-property owner advocates have standing re. National Register listing.

This case involves efforts to obtain listing in the National Register of Historic Places for Blair Mountain Battlefield, the site of “the largest armed labor conflict in our nation’s history.”  The Battlefield was listed in 2009 only to be removed within days; the Keeper of The Register determined that the wishes of coal mining companies that own property in the area “had not been accurately captured in the nomination process.”  A coalition of several citizen groups (the “Coalition”) sued in federal district court challenging the Battlefield’s removal from the Register. They asserted that the delisting created a real risk that surface coal mining would alter the Battlefield in ways that would not happen if the site were listed. The district court granted summary judgment against the Coalition, holding that they lack standing. The Coalition appealed and the appeals court granted the Coalition standing, overturning the district court decision.

The majority decision on appeal held the Coalition had standing, based on the three components of standing: injury in fact, causation, or redressability. A dissenting judge would have denied standing.

Injury in fact: the Coalition had to show that the asserted injury to its members is concrete and particularized, and is also actual or imminent. The court cited Supreme Court decisions recognizing that harm to “the mere esthetic interests of the plaintiff … will suffice” to establish a concrete and particularized injury.  The court held that the Coalition members did not have to show they had a right to enter the property to meet this standard. The court said that Coalition members who merely view and enjoy the Battlefield’s aesthetic features, or who observe it for purposes of studying and appreciating its history, would suffer a concrete and particularized injury from the conduct of surface mining on the Battlefield: “They possess interests in observing the landscape from surrounding areas, for instance, or in enjoying the Battlefield while on public roads.”

As to whether the asserted injuries qualify as “imminent” the court said it was necessary to show a “substantial probability of injury” to establish imminent injury.  The court found the Coalition had made that showing because it was undisputed that coal companies have mined in the vicinity of the Battlefield under permits that encompass the Battlefield, and although the permits have existed for over ten years without any mining, the coal companies themselves had said they would eventually mine in the Battlefield under the permits.

Causation and redressability: The court said the standard of proof requires the Coalition to show that its injury is “fairly traceable” to the delisting of the Battlefield, and that “it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” This, the court said, depends on the extent to which inclusion in the Register would protect the Battlefield from surface mining. The court held that a West Virginia regulation affords enough additional protections to places listed in the Register for the coalition to satisfy this standard. The regulation says that “all adverse impacts [from surface mining] must be minimized” for sites included in the Register. W. Va. Code R. § 38-2-3-17.c.  The Coalition only need to persuade the court that it’s interpretation of the “minimization requirement” was “non-frivolous.”

One of the three judges on the panel dissented, saying that the federal courts should have no jurisdiction over this action because the “injury in fact” requirement for standing requires a legally protected interest. In the dissenting judge’s opinion, the coalition members’ interest in viewing the property of others is not a legally protected interest.

Decision available at$file/12-5383-1509259.pdf.



North Carolina Court of Appeals, No. COA13-1447, August 19, 2014: property not wholly and exclusively used for educational or scientific purposes subject to property taxes

The court accepted findings of substantial retail and commercial activity on the property, including profit from retail sales in excess of one million dollars. Accordingly, it held that the property was not “wholly and exclusively” used for educational and scientific purposes, as required under North Carolina statute to be eligible for a property tax exemption.

Decision available at