In a landmark decision that is as uplifting for property rights advocates as it is devastating for land trusts throughout the United States, the Virginia Supreme Court on February 12 overwhelmingly ruled in favor of a small Loudoun County winery in its multi-year battle with one of the nation’s most powerful environmental groups.
By a 5-2 margin, the Virginia Supremes upheld a lower court decision that Chrysalis Vineyards’ plans to upgrade its facilities did not violate the terms of a conservation easement on the property held by Wetlands America Trust (WAT), on behalf of Ducks Unlimited (DU). The case, Wetlands America Trust, Inc. v. White Cloud Nine Ventures, L.P., was being watched closely, and its outcome will send shockwaves through the land-trust community, which is coming under increased scrutiny as a result of highly publicized transgressions against rural landowners.
Revelations that the Warrenton (VA) based Piedmont Environmental Council (PEC) had relentlessly harassed farmer Martha Boneta over a conservation easement it co-holds on her farm garnered nationwide attention and led to enactment of legislation that – for the first time anywhere in the U.S. – subjects land trusts to public accountability. Significantly, the PEC is also involved – and on the losing side — in the case just decided by the Virginia Supreme Court.
What is remarkable about the faceoff before the Virginia Supreme Court is the vast gap in size and influence between the two combatants. Wetlands America Trust is a non-profit organization that holds conservation easements across the country and provides fiduciary services to Ducks Unlimited, an environmental group with headquarters in a high-rent Washington, DC, commercial district just three blocks from the White House. By contrast, Chrysalis Vineyards is a small business in rural Loudoun County operated by another small business, White Cloud Nine.
On land leased from White Cloud Nine, Chrysalis Vineyards planned to construct a farm building housing a creamery, a bakery, and a tasting room. Plans also included constructing a small bridge and roads leading to the farm building as well as putting in a parking lot to accommodate the winery’s customers. Jennifer McCloud, Chrysalis’s manager, also planned to plant grapes and wheat on the property and to have dairy cows graze on the land. In keeping with the agricultural character of her business, the grapes would be made into wine, the wheat would serve the bakery, and the dairy cows would produce milk for the creamery.
Ducks Unlimited joins forces with the PEC
By the fall of 2010, however, the Piedmont Environmental Council expressed concerns to Ducks Unlimited that Chrysalis’s plans violated the conservation easement on the property, and DU responded by questioning McCloud about her intentions.
Convinced that her activities in no way conflicted with the terms of the easement, McCloud went ahead with the expansion of her business. For its part, WAT, acting on behalf of DU, sued White Cloud Nine, alleging 14 violations of the conservation easement.
But in a stinging rebuke to Ducks Unlimited and the PEC, the Twentieth Circuit Court of Virginia on June 19, 2015, rejected, with narrow exceptions, all 14 allegations. Handing a clear victory to Chrysalis Vineyards, Judge Burke McCahill ruled that nothing in the conservation easement prohibited a farm building on the property from housing a creamery, bakery, or tasting room. Citing case law, he also found that the bridge, roads, parking lot, and other upgrades to the property did not violate the easement.
Ducks Unlimited appealed the case to the Virginia Supreme Court, a decision it, the PEC, and a coterie of environmental groups supporting DU now no doubt regret. In upholding the lower court’s ruling, the Virginia Supreme Court expressly rejected DU’s restrictive interpretation of the conservation easement’s language, insisting instead on interpreting the easement as it is clearly written.
For example, the court dismissed DU’s/WAT’s objections to Chrysalis’s plans for the farm building, saying it found “strong support” in the easement that the structure may be used for industrial and/or commercial activities. “Notably, WAT simply ignores these authorized activities under the Easement in advocating its own restrictive construction of the term ‘farm building,’” the court said. In point after point, Virginia’s highest court similarly quashed DU’s/WAT’s objections.
“Common law principle”
“What’s important in this decision is that the Court followed the traditional standards in looking at ambiguous easements in land: When an easement in land is ambiguous, the courts should construe strictly against the party trying to enforce it,” notes Jim Burling (left), director of litigation and principal attorney for the property rights practice group at the Pacific Legal Foundation. “In other words, when there is doubt over the terms of an easement in land, that doubt will be resolved in favor of the underlying landowner and against the party (here the conservation easement owner) trying to enforce it.” Burling cited what he calls the “money quote” in the February 12 Virginia Supreme Court ruling:
Under this common law principle, consistently recognized by and applied by this court for over a century, “[v]alid covenants restricting the free use of land, although widely used, are not favored and must be strictly construed and the burden must be on the party seeking to enforce them to demonstrate that they are applicable to the acts of which he complains.” Friedberg, 218 Va. at 665,239 S.E.2d 110 (citing Riordan v. Hale, 215 Va. 638, 641, 212 S.E.2d 65, 67 (1975); Traylor v. Halloway, 206 Va. 257, 259, 142 S.E.2d 521, 522-23 (1965). Accordingly, “[s]ubstantial doubt or ambiguity is to be resolved against the restrictions and in favor of the free use of property.” Id. (citing Schwarzschild, 186 Va. at 1058, 45 S.E.2d at 155); see Stevenson v. Spivey, 132 Va. 115, 119, 110 S.E.367, 368 (1922) (restrictive covenants “will not be aided or extended by implication.”
Chrysalis Vineyards’ McCloud was thrilled over the court’s decision. “After years of firm resolve, frustration, time, and money, we have completely prevailed in the lawsuit initiated by Ducks Unlimited in their belligerent attempt to stop my farming activities… They took it all the way to the Supreme Court of Virginia, supported by these bullying ‘Big Shot’ agencies that wrote to the court in support of DU’s arrogant position.”
The “Big Shots’ McCloud referred to are the regional and national environmental groups that submitted amicus briefs to the court in support of Ducks Unlimited. They include the Piedmont Environmental Council, the Nature Conservancy, the Land Trust of Virginia, The Land Trust Alliance, the National Trust for Historic Preservation, and the Civil War Preservation Trust. Indeed, no less than Virginia Attorney General Mark Herring (D) submitted an Opinion to the state Supreme Court supporting Ducks Unlimited – all to no avail.
Dark clouds gather over the PEC
Having played a decisive role in instigating and backing Ducks Unlimited’s ill-fated suit against the small winery, the PEC continues to see its fortunes wane. And there’s more trouble brewing. On January 19, Fauquier County Circuit Court Judge Jeffery Parker refused to dismiss charges filed against realtors Phil and Patricia Thomas, who, along with the PEC, are co-defendants in a suit filed by Virginia farmer Martha Boneta.
Boneta charges that the Thomases and the PEC conspired to interfere with her business and undermine her property rights. As co-holder of a conservation easement on Boneta’s 64-acre farm in Fauquier County, the PEC has been caught – in written communications and on camera – abusing its oversight responsibilities. Indeed, the PEC’s inspections of Boneta’s farm went far beyond the narrowly circumscribed language of the conservation easement and even included demands to see her laundry, closets, and more. Watch the video at https://www.youtube.com/watch?v=_yx0_EZTno
Judge Parker’s ruling means the case can move forward to a jury trial, a prospect that neither the PEC nor the Thomases can relish. It turns out, for example, that the conservation easement Boneta signed when she bought the property in June 2006 is not the easement the PEC filed with Fauquier County. By conducting its intrusive inspections of Boneta’s farm over many years, the PEC was actually trespassing on her property, because the land trust was enforcing a conservation easement that was invalid from the start.
The Virginia Outdoors Foundation, a state agency that co-holds the conservation easement with the PEC, has determined that the document is a liability to the Commonwealth and is unenforceable. Furthermore, the PEC, which sold the farm to Boneta, advertised it as a property of historical significance, claiming that Confederate General Stonewall Jackson encamped on what is now Boneta’s farm in July 1861 on his way the First Battle of Manassas (Bull Run). As Civil War historians have attested, there is no evidence for this claim.
The Virginia Supreme Court’s ruling creates a legal precedent that will enable landowners across the country to defend themselves against land trusts planning to use conservation easements as a means to bully people like Jennifer McCloud and Martha Boneta.