First Circuit Rules in Favor of Trust for Public Land in Failed Conservation Attempt

In Kunelius v. Town of Stow, handed down today, the First Circuit sided with conservationists who tried and failed to save a large tract of certified "forest land" (as defined by Massachusetts law) in Stow, Massachusetts from development as a "co-housing" facility.

The tale is long and sordid, but essentially comes down to this. Although she knew that the Town had a right of first refusal (ROFR) for any negotiated sale of her property (that she had gotten certified as "forest land" in return for tax concessions), the property owner negotiated a contract with a cohousing developer from Washington state with a liquidated damages provision of $19,000. The Town, spurred by local activists who organized to oppose the sale and development, exercised its ROFR. The Town, in turn, acted in light of a promise by the Trust for Public Land to take assignment of the purchase and payment responsibilities. And the Trust for Public Land relied on possible town funding, fundraising, and some state preservation funds. But once the Trust took assignment, all the monies dried up, due to politics, bad luck, and some self-destructive fundraising techniques. The Trust wanted out, and expected only to pay $19,000. Meanwhile, the property owner no longer had the option of selling to the original developer, who had since found a site elsewhere. So she tried to hold the Trust to the entire purchase price.

The facts of the case made the Trust and its local representative look pretty darn bad. And the panel didn't have much sympathy for it, based on the opinion's tone. The property owner, in essence, made the public policy argument (in the panel's words) that "granting municipalities and nonprofits added leverage to disrupt transactions involving certified land" by allowing them to neatly take the position of the original developer in the assignment, and with it any favorable terms "would tilt the statutory structure too far toward the municipality and would therefore reduce the number of landowners willing to participate in the [forest certification] scheme." Nonetheless, the panel concluded that the liquidated damages provision was binding on the property owner--that she had to settle for the lower amount. This was only fair, they noted, because she knew all along that she was negotiating with the developer in the shadow of the Town's ROFR. Therefore, "[s]he may well have been able to negotiate terms that would have better protected her in the event that less reliable counterparties, such as the Town and the Trust, would become parties to this transaction."

So the Trust for Public Land escapes with little liability but a fair amount of egg on its face. The instant property owner will probably only be able to sell the land to someone willing to commit to keep it just the way it is now. And in the future, property owners participating in Massachusetts state conservation programs would do well to omit any liquidated damages provisions they don't really want to live with.