Friday, November 9, 2018
Legal developments impacting rural landowners, producers and agribusinesses continue to occur. The same can be said for tax developments that impact practitioners and their client base. It’s a never-ending stream.
In today’s post, I examine just a few of the recent developments from the courts of relevance.
Debtor Can Convert Chapter 12 Case to Chapter 11
Can a Chapter 12 bankruptcy case be converted to Chapter 11? That was the issue in In re Cardwell, No. 17-50307-rlj12, 2018 Bankr. LEXIS 3089 (Bankr. N.D. Tex. Oct. 3, 2018). The debtor, an elderly widowed woman, owned three tracts of farmland that she leased out for farming purposes. The tracts served as collateral for loans taken out by her children and grandchildren. The debtor sued a bank and the spouse of a granddaughter for “improprieties on the loans and liens.” The debtor filed Chapter 12, but the bank moved to dismiss the case on the basis that the debtor was not a ‘family farmer.” The debtor then moved to convert the case to Chapter 11. The bank objected, claiming that a Chapter 12 case cannot be converted to a Chapter 11.
While the court noted that there is some authority for that proposition, the court also noted that there is no explicit statutory language that bars a Chapter 12 from being converted to a Chapter 11 and that the courts are split on the issue. Ultimately, the court concluded that 11 U.S.C. §1208(e) allowed for conversion if the proceeding was in good faith and conversion would not be inequitable or prejudicial to creditors. The court also noted that if it dismissed the debtor’s Chapter 12 case, the debtor could simply refile the matter as a Chapter 11 case. The court saw no point in requiring that procedural step as there was no explicit statutory language requiring dismissal and refiling. The court also noted that upon conversion the automatic stay would remain in place, and that the debtor would actually have a more difficult time getting her reorganization plan confirmed as part of a Chapter 11 case as compared to a Chapter 12 case.
Federal Law Preempts Kansas Train Roadway Blockage Law
Burlington Northern Santa Fe Railway (BNSF) operates trains through the town of Bazaar in Chase County, Kansas. At issue State of Kansas v. Burlington Northern Santa Fe Railway Company, No. 118,095, 2018 Kan. App. LEXIS 63 (Kan. Ct. App. Nov. 2, 2018), were two railroad crossings where the main line and the side tracks crossed county and town roads. The side track is used to change crews or let other trains by on the main line. Early one morning, the Chase County Sheriff received a call that a train was blocking both intersections. The Sheriff arrived on scene two hours later and spoke with a BNSF employee. This employee said that he was checking the train but did not state when the train would move. The Sheriff then called BNSF three times. The train remained stopped on both crossings for approximately four hours. The Sheriff issued two citations (one for each engine) under K.S.A. 66-273 for blocking the crossings for four hours and six minutes. K.S.A. 66-273 prohibits railroad companies and corporations operating a railroad in Kansas from allowing trains to stand upon any public roadway near any incorporated or unincorporated city or town in excess of 10 minutes at any one time without leaving an opening on the roadway of at least 30 feet in width. BNSF moved to dismiss the citation, but the trial court rejected the motion.
During the trial, many citizens presented evidence that they could not get to work that day, and a service technician could not reach a home that did not have hot water and was having heating problems. BNSF presented train logs for one of the engines. These logs showed that one engine was stopped in Bazaar for only 8 minutes to change crews and was not in Bazaar at 9:54 a.m. The Sheriff later conceded that he might have been mistaken about the numbers on the engines for the citations. There were no train logs for the other engine. BNSF also stated there could be other alternatives from blocking the crossings but uncoupling the middle of the train would be time consuming and unsafe.
The trial court ruled against BNSF and entered a fine of $4,200 plus court costs. On appeal, BNSF claimed that the Interstate Commerce Commission Termination Act (ICCTA) and Federal Railroad Safety Act (FRSA) preempted Kansas law, and that the evidence presented was not sufficient to prove a violation of Kansas law. The appellate court agreed, holding that the ICCTA, by its express terms contained in 49 U.S.C. 10501(b), preempted Kansas law. While the appellate court noted that the Kansas statute served an “admirable purpose,” it was too specific in that it applied only to railroad companies rather than the public at large. Also, the statute had more than a remote or incidental effect on railway transportation. As a result, the Kansas law infringed on the Surface Transportation Board’s exclusive jurisdiction to regulate the railways in the United States. The appellate court noted that the Surface Transportation Board was created by the ICCTA and given exclusive jurisdiction over the construction, acquisition, operation, abandonment, or discontinuance of railroad tracks and facilities. In addition, the appellate court noted that the Congress expressly stated that the remedies with respect to regulation of rail transportation set forth in the ICCTA are exclusive and preempt other remedies provided under federal or state law. The appellate court did not consider BNSF’s other arguments.
Groundwater Is Not a “Point Source” of Pollution Under the CWA
The defendant in Tennessee Clean Water Network v. Tennessee Valley Authority, No. 17-6155, 2018 U.S. App. LEXIS 27237 (6th Cir. Sept. 24, 2018), is a utility that burns coal to produce energy. It also produces coal ash as a byproduct. The coal ash is discharged into man-made ponds. The plaintiffs, environmental activist groups, claimed that the chemicals from the coal ash in the ponds leaked into surrounding groundwater where it was then carried to a nearby lake that was subject to regulation under the Clean Water Act (CWA). The plaintiffs claimed that the contamination of the lake without a discharge permit violated the CWA and the Resource Conservation and Recovery Act (RCRA).
The trial court had dismissed the RCRA claim, but the appellate court reversed that determination and remanded the case on that issue. On the CWA claim, the trial court ruled as a matter of law that the CWA applies to discharges of pollutants from a point source through hydrologically connected groundwater to navigable waters where the connection is "direct, immediate, and can generally be traced." The trial court held that the defendant’s facility was a point source because it "channel[s] the flow of pollutants . . . by forming a discrete, unlined concentration of coal ash," and that the Complex is also a point source because it is "a series of discernible, confined, and discrete ponds that receive wastewater, treat that wastewater, and ultimately convey it to the Cumberland River." The trial court also determined that the defendant’s facility and the ponds were hydrologically connected to the Cumberland River by groundwater. As for the defendant’s facility, the trial court held that "[f]aced with an impoundment that has leaked in the past and no evidence of any reason that it would have stopped leaking, the Court has no choice but to conclude that the [defendant’s facility] has continued to and will continue to leak coal ash waste into the Cumberland River, through rainwater vertically penetrating the Site, groundwater laterally penetrating the Site, or both." The trial court determined that the physical properties of the terrain made the area “prone to the continued development of ever newer sinkholes or other karst features." Thus, based on the contaminants flowing from the ponds, the court found defendant to be in violation of the CWA. The trial court also determined that the leakage was in violation of the defendant “removed-substances” and “sanitary-sewer” overflow provisions. The trial court ordered the defendant to "fully excavate" the coal ash in the ponds (13.8 million cubic yards in total) and relocate it to a lined facility.
On further review, the appellate court reversed. The appellate court held that the CWA does not apply to point source pollution that reaches surface water by means of groundwater movement. The appellate court rejected the plaintiffs’ assertion that mere groundwater is equivalent to a discernable point source through which pollutants travel to a CWA-regulated body of water. The appellate court noted that, to constitute a “conveyance” of groundwater governed by the CWA, the conveyance must be discernible, confined and discrete. While groundwater may constitute a conveyance, the appellate court reasoned that it is neither discernible, confined, nor discrete. Rather, the court noted that groundwater is a “diffuse” medium that “travels in all directions, guided only by the general pull of gravity.” In addition, the appellate court noted that the CWA regulates only “the discharge of pollutants ‘to navigable waters from any point source.’” In so holding, the court rejected the holdings in Hawai’i Wildlife Fund v. County of Maui, 881 F.3d 754 (9th Cir. 2018) and Upstate Forever, et al. v. Kinder Morgan Energy Partners, LP, et al., 887 F.3d 637 (4th Cir. 2018).
Cash Gifts to Pastor Constituted Taxable Income
In Felton v. Comr., T.C. Memo. 2018-168, the petitioner was the pastor of a church and the head of various church related ministries in the U.S. and abroad, got behind on his tax filings and IRS audited years 2008 and 2009. While most issues were resolved, the IRS took the position that cash and checks that parishioners put in blue envelopes were taxable income to the petitioner rather than gifts. The amounts the petitioner received in blue envelopes were $258,001 in 2008 and $234,826 in 2009. There was no question that the church was run in a businesslike manner. While the church board served in a mere advisory role, the petitioner did follow church bylaws and never overrode the board on business matters. As for contributions to the church, donated funds were allocated based on an envelope system with white envelopes used for tithes and offerings for the church. The white envelopes also included a line marked “pastoral” which would be given directly to the petitioner. The amounts in white envelopes were tracked and annual giving statements provided for those amounts.
The petitioner reported as income the amounts provided in white envelopes that were designated as “pastoral.” Amount in gold envelopes were used for special programs and retreats, and were included in a donor’s annual giving statement. Amounts in blue envelopes (which were given out when asked for) were treated as pastoral gifts and the amounts given in blue envelopes were not included in the donor’s annual giving statement and the donor did not receive any tax deduction for the gifted amounts. Likewise, the petitioner did not include the amounts given in blue envelopes in income. The IRS took the position that the amounts given by means of the blue envelopes were taxable income to the petitioner. The Tax Court agreed, noting that the petitioner was not retiring or disabled. The court also noted that the petitioner received a non-taxable parsonage allowance of $78,000 and received only $40,000 in white envelope donations. The court also upheld the imposition of a penalty because the petitioner, who self-prepared his returns, made no attempt to determine the proper tax reporting of the donations.
The developments keep rolling in. There will be more to write about in a subsequent post.
Thursday, October 18, 2018
For the Spring 2019 academic semester, Kansas State University will be offering my Agricultural Law and Economics course online. No matter where you are located, you can enroll in the course and participate in it as if you were present with the students in the on-campus classroom.
Details of next spring’s online Ag Law course – that’s the topic of today’s post.
The course provides a broad overview of many of the issues that a farmer, rancher, rural landowner, ag lender or other agribusiness will encounter on a daily basis. As a result, the course looks at contract issues for the purchase and sale of agricultural goods; the peril of oral contracts; the distinction between a lease and a contract (and why the distinction matters); and the key components of a farm lease, hunting lease, wind energy lease, oil and gas lease, and other types of common agricultural contractual matters. What are the rules surrounding ag goods purchased at auction?
Ag financing situations are also covered – what it takes to provide security to a lender when financing the purchase of personal property to be used in the farming business. In addition, the unique rules surrounding farm bankruptcy is covered, including the unique tax treatment provided to a farmer in Chapter 12 bankruptcy.
Of course, farm income tax is an important part of the course. Tax planning is perhaps the most important aspect of the farming business that every day decisions have an impact on and are influenced by. As readers of this blog know well, farm tax issues are numerous and special rules apply in many instances. The new tax law impacts many areas of farm income tax.
Real property legal issues are also prevalent and are addressed in the course. The key elements of an installment land contract are covered, as well as legal issues associated with farm leases. Various types of interests in real estate are explained – easements; licenses; profits, fee simples, remainders, etc. Like-kind exchange rules are also covered as are the special tax rules (at the state level) that apply to farm real estate. A big issue for some farmers and ranchers concerns abandoned railways, and those issues are covered in the course. What if an existing fence is not on the property line?
Farm estate and business planning is also a significant emphasis of the course. What’s the appropriate estate plan for a farm and ranch family? How should the farming business be structured? Should multiple entities be used? Why does it matter? These questions, and more, are addressed.
Agricultural cooperatives are important for the marketing of agricultural commodities. How a cooperative is structured and works and the special rules that apply are also discussed.
Because much agricultural property is out in the open, that means that personal liability rules come into play with respect to people that come onto the property or use farm property in the scope of their employment. What are the rules that apply in those situations? What about liability rules associated with genetically modified products? Ag chemicals also pose potential liability issues, as do improperly maintained fences? What about defective ag seed or purchased livestock that turns out to not live up to representations? These issues, and more, are covered in the scope of discussing civil liabilities.
Sometimes farmers and ranchers find themselves in violation of criminal laws. What are those common situations? What are the rules that apply? We will get into those issue too.
Water law is a very big issue, especially in the western two-thirds of the United States. We will survey the rules surrounding the allocation of surface water and ground water to agricultural operations.
Ag seems to always be in the midst of many environmental laws – the “Clean Water Rule” is just one of those that has been high-profile in recent years. We will talk about the environmental rules governing air, land, and water quality as they apply to farmers, ranchers and rural landowners.
Finally, we will address the federal (and state) administrative state and its rules that apply to farming operations. Not only will federal farm programs be addressed, but we will also look at other major federal regulations that apply to farmers and ranchers.
Further Information and How to Register
Information about the course is available here:
You can also find information about the text for the course at the following link (including the Table of Contents and the Index):
If you are an undergraduate student at an institution other than Kansas State, you should be able to enroll in this course and have it count as credit towards your degree at your institution. Consult with your academic advisor to see how Ag Law and Economics will transfer and align with your degree completion goals.
If you have questions, you can contact me directly, or submit your questions to the KSU Global Campus staff at the link provided above.
I hope to see you in January!
Checkout the postcard (401 KB PDF) containing more information about the course and instructor.
October 18, 2018 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Tuesday, October 16, 2018
In recent years, all states except California and Maryland have enacted Equine Activity Liability Acts designed to encourage the continued existence of equine-related activities, facilities and programs, and provide the equine industry limited protection against lawsuits. The laws vary from state-to-state, but generally require special language in written contracts and liability releases or waivers, require the posting of warning signs and attempt to educate the public about inherent risks in horse-related activities and immunities designed to limit liability. The basic idea of these laws is to provide a legal framework to incentivize horse-related activities by creating liability protection for horse owners and event operators.
Equine activity laws – that’s the topic of today’s post.
State Law Variations
The typical statute covers an “equine activity sponsor,” “equine professional,” or other person (such as an employer in an employment setting involving livestock) and specifies that such "covered" person can only be sued in tort for damages related to the knowing provision of faulty tack, failure to determine the plaintiff’s ability to safely manage a horse, or failure to post warning signs concerning dangerous latent conditions. See, e.g., Baker v. Shields, 767 N.W.2d 404 (Iowa 2009); Pinto v. Revere Saugus Riding Academy, No. 08-P-318, 2009 Mass. App. LEXIS 746 (Mass. Ct. App. Jun. 8, 2009). For example, in Germer v. Churchill Downs Management, No. 3D14-2695, 2016 Fla. App. LEXIS 13398 (Fla. Ct. Ap. Sept. 7, 2016), state law “immunized” (among other things) an equine activity sponsor from liability to a “participant” from the inherent risks of equine activities. The plaintiff, a former jockey visited a race course that the defendant managed. It was a spur-of-the-moment decision, but he was required to get a guest pass to enter the stables. He was injured by a horse in the stables and the court upheld the immunity provisions of the statute on the basis that the requirement to get a guest pass before entering the stables was sufficient protocol to amount to “organization” which made the plaintiff’s visit to the stables “an organized activity” under the statute.
While many state equine activity laws require the postage of warning signs and liability waivers, not every state does. For example, the statutes in CT, HI, ID, MT, NH, ND, UT, WA and WY require neither signage nor particular contract language.
Recovery for damages resulting from inherent risks associated with horses is barred, and some state statutes require the plaintiff to establish that the defendant’s conduct constituted “gross negligence,” “willful and wanton misconduct,” or “intentional wrongdoing.” For example, in Snider v. Fort Madison Rodeo Corp., No. 1-669/00-2065, 2002 Iowa App. LEXIS 327 (Iowa Ct. App. Feb. 20, 2002), the plaintiff sued a parade sponsor and a pony owner for injuries sustained in crossing the street during a parade. The court determined that the omission of a lead rope was not reckless conduct and that the plaintiff assumed the risk of crossing the street during the parade. Similarly, in Markowitz v. Bainbridge Equestrian Center, Inc., No. 2006-P-0016, 2007 Ohio App. LEXIS 1411 (Ohio Ct. App. Mar. 30, 2007), the court held that there was no evidence present that the plaintiff’s injuries sustained in the fall from a horse was a result of the defendant’s willful or wanton conduct or reckless indifference. In addition, the signed liability release form complied with statutory requirements. However, in Teles v. Big Rock Stables, L.P., 419 F. Supp. 2d 1003 (E.D. Tenn. 2006), the provision of a saddle with stirrups that could not be shortened enough to reach plaintiff’s feet which then caused the plaintiff to fall from a horse raised jury question as to whether faulty tack provided, whether the fall was the result of the inherent risk of horseback riding, and whether the defendant’s conduct was willful or grossly negligent and, thus, not covered by the signed liability release form.
What constitutes an “inherent risk” from horse riding is a fact issue in many states due to the lack of any precise definition of “inherent risk” in the particular state statute. For example, under the Texas Equine Activity Liability Act, the phrase “inherent risk of equine activity” refers to risks associated with the activity rather than simply those risks associated with innate animal behavior. See, e.g., Loftin v. Lee, No. 09-0313, 2011 Tex. LEXIS 326 (Tex. Sup. Ct. Apr. 29, 2011). The Ohio equine activities immunity statute has been held to bar recovery for an injury incurred while assisting an employer unload a horse from a trailer during a day off, because the person deliberately exposed themselves to an inherent risk associated with horses and viewed the activity as a spectator. Smith v. Landfair, No. 2011-1708, 2012 Ohio LEXIS 3095 (Ohio Sup. Ct. Dec. 6, 2012). Also, in Einhorn v. Johnson, et al., No. 50A03-1303-CT-93, 2013 Ind. App. LEXIS 495 (Ind. Ct. App. Oct. 10, 2013), the Indiana Equine Activity Act barred a negligence action after a volunteer at a county fair was injured by a horse. The plaintiff’s injuries were determined to result from the inherent risk of equine activities. Likewise, in Holcomb v. Long, No. A14A0815, 2014 Ga. App. LEXIS 726 (Ga. Ct. App. Nov. 10, 2014), the Georgia Equine Activities Act barred recovery for injuries sustained as a result of slipping saddle during horseback ride; slipping saddle inherent risk of horseback riding. See also, Fishman v. GRBR, Inc., No. DA 17-0214, 2017 Mont. LEXIS 602 (Mont. Sup. Ct. Oct. 5, 2017).
In Franciosa v. Hidden Pond Farm, Inc., No. 2017-0153 2018 N.H. LEXIS 174 (N. H. Sup. Ct. Sept. 21, 2018), the plaintiff was severely injured in a horseback riding accident. At the time of the accident, she was thirteen years old, had been riding horses for eight years, and had been taking weekly riding lessons from the defendant, an expert equestrian, for almost two years. Approximately once each seek, the plaintiff went for a “free ride”—a ride that did not involve a lesson. On those occasions the defendant was not always present, and no one was assigned to supervise the plaintiff. The day before the accident the plaintiff texted the defendant to arrange a lesson for the following day. The defendant texted the plaintiff that, although she would not be present at the farm on the following day, the plaintiff had permission to take a free ride on a horse that the plaintiff had ridden without incident on at least two occasions.
The next day after riding the horse for about 30 minutes the plaintiff fell to the ground as she tried to dismount and was seriously injured when the horse subsequently stepped on her. The plaintiff sued, and the defendant moved for summary judgment on the basis that the equine immunity provisions set forth N.H. Rev. Stat. §508:19 barred the plaintiff’s negligence claim. The plaintiff then filed a cross-motion for partial summary judgment, arguing that the plaintiff’s injuries were not caused by an “inherent risk” of horseback riding and, therefore, the defendant was not immune from liability. Alternatively, the plaintiff argued that even if the statute applied, a jury trial was necessary to resolve issues of material fact regarding the statutory exceptions in N.H. Rev. Stat. §508:19. The trial court entered summary judgment for the defendant, denied the plaintiff’s cross motion, and also denied the plaintiff’s motion for reconsideration.
On further review, the appellate court held that the statute clearly operated “to shield persons involved in an equine activity from liability for negligence claims related to a participant’s injuries resulting from the inherent risks of equine circumstances.” The appellate court also determined that it didn’t have to decide whether the defendant’s physical absence and inability to supervise the plaintiff at the time of the accident placed the accident outside of the risks inherent in equine activities, because under RSA 508:19, I(f)(5) a failure to take “corrective measures” was relevant only when the participant was negligent and that negligence can be reasonably foreseen, which was not present in the case. The court also determined that there was no evidence to support the plaintiff’s argument that the defendant’s failure to supervise the plaintiff amounted to willful or wanton disregard for the plaintiff’s safety. Consequently, the appellate court held that the trial court did not err in holding that the defendant was entitled to immunity under N.H. Rev. Stat. §508:19. As such, the decisions of the trial court were affirmed.
State Equine Activity Liability laws are designed to provide liability protection for injuries arising from horse-related activities. If you have horses or are involved in horse-related activities, it might be a good idea to determine what rules your particular state has.
Friday, September 14, 2018
A great deal of farm personal property is out in the open. From time to time, machinery and equipment may sit outside, and farm tools and supplies may also be out in the open. Of course, grazing livestock may be outside along with other farm property. Farm real estate may contain farm ponds, stock water tanks and other potential hazards. All of this raises concerns about public access to the premises and possible theft of property and potential liability issues. Similarly, livestock confinement operations have their own unique concerns about who has access to the property.
Does the posting of the property as “No Trespassing” have any legal consequence? It might. That’s the topic of today’s post.
Benefits of Posting
Criminal trespass. One potential benefit of posting property “No Trespassing” is that, in some states, what is otherwise a civil trespass can be converted to a criminal trespass. A criminal trespass gets the state involved in prosecuting the trespasser, and it might be viewed as having a greater disincentive to trespass than would a civil trespass. A civil trespass is prosecuted by the landowner personally against the alleged trespasser.
Search warrant. Another possible benefit of posting property “No Trespassing” is that it may cause a search warrant to be obtained before the property can be search for potential criminal conduct. Under the Fourth Amendment to the Constitution, unreasonable searches and seizures are prohibited absent a search warrant that is judicially-approved and supported by probable cause.
The search warrant issue and the posting of “No Trespassing” signs was the subject of a recent case from Vermont. In State v. Dupuis, 2018 VT 86 (Vt. Sup. Ct. 2018), a fish and game warden entered the defendant’s property via an adjoining property. The warden found a blind with a salt block and apples nearby. A rather precarious path through tough timber was used by the warden to avoid detection. The defendant was charged with baiting and taking big game by illegal means. At trial, the defendant and many others testified that there are “no trespassing” and “keep out” signs all around the property and on the gate to the public road. The warden stated that he did not see any of these signs. The defendant motioned to exclude the evidence because the warden never obtained a search warrant. The defendant claimed that he had a reasonable expectation of privacy throughout his property particularly because of the “No Trespassing” signs.
The trial court reasoned that the warden’s access to the property was abnormal and did not diminish the defendant’s intent to exclude people from coming onto the property. The trial court granted the defendant’s motion to suppress evidence obtained by the warden during the warrantless search. On appeal, the state Supreme Court affirmed. The State claimed that the defendant did not properly exclude the public and, therefore, did not have an expectation of privacy relating to the regulation of hunting. However, the Supreme Court held that when a landowner objectively demonstrates an intent to maintain privacy of open fields, a search warrant is required. Game wardens must obtain a search warrant, the court determined, whenever a warden seeks to enter property and gather evidence. The defendant’s posting of “No Trespassing” signs created an expectation of privacy. Accordingly, the evidenced obtained in the warrantless search was properly suppressed.
The Vermont case points out that posting property as “No Trespassing” can, indeed, have its benefits. Also, it’s important to check state law requirements for the type, size, placement and content of signs. State rules vary and they must be complied with to properly post your property. Just another thing to think about in the world of agricultural law.
Tuesday, September 4, 2018
On occasion I get a question about whether it is permissible to pick up roadkill. Often, the question is in relation to big game such as deer or bear or moose. But, other times the question may involve various types of furbearing animals such as coyotes, racoons or badgers. I don’t get too many roadkill questions involving small game. That’s probably because when small game is killed on the road, it is either not wanted or the party hitting it simply assumes that there is no question that it can be possessed.
There are many collisions involving wildlife and automobiles every year. One estimate by a major insurance company projects that one out of every 169 motorists in the U.S. will hit a deer during 2018. That’s a projected increase of three percent over 2017, with an estimated 1.3 million deer being hit.
If a wild animal is hit by a vehicle, the meat from the animal is the same as that from animal meat obtained by hunting – assuming that the animal is not diseased. So, in that instance, harvesting roadkill is a way to get free food – either for personal consumption or to donate to charity.
What are the rules and regulations governing roadkill? That’s the topic of today’s post.
Many states have rules on the books concerning roadkill. Often, the approach is for the state statutes and the regulatory body (often the state Department of Game and Fish (or something comparable)) to distinguish between "big game," "furbearing animals" and "small game." This appears to be the approach of Kansas and a few other states. Often a salvage tag (e.g., “permit”) is needed to pick up big game and turkey roadkill. This is the approach utilized in Iowa and some other states. If a salvage tag is possessed, a hunting license is not required. For furbearing animals such as opossums and coyotes that are roadkill, the typical state approach is that these animals can only be possessed during the furbearing season with a valid fur harvester license. As for small game, the typical state approach is that these roadkill animals can be possessed with a valid hunting license in-season. But variations exist from state-to-state.
An approach of several states is to allow the collection of roadkill with a valid permit. That appears to be the approach in Colorado, Georgia, Idaho, Illinois, Indiana, Maryland, New Hampshire, North Dakota, New York, Ohio, Pennsylvania and Tennessee. Other states require the party hitting wildlife and collecting the roadkill to report the incident and collection within 24 hours. Other states may limit roadkill harvesting to licensed fur dealers. In these states (and some others), the general public doesn’t have a right to collect roadkill. In Texas, roadkill-eating is not allowed (although a legislative attempt to remove the ban was attempted in 2014). South Dakota has legislatively attempted to make roadkill public property. Wyoming requires a tag be received from the game warden for possessing big game roadkill. Oregon allows drivers to get permits to recover, possess, use or transport roadkill.
Other states (such as Alabama) may limit roadkill harvesting to non-protected animals and game animals, and then only during open season. The Alaska approach is to only allow roadkill to be distributed via volunteer organizations. A special rule for black bear roadkill exists in Georgia. Illinois, in certain situations requires licenses and a habitat stamp. Massachusetts requires that roadkill be submitted for state inspection, and New Jersey limits salvaging roadkill to deer for persons with a proper permit.
In all states, federally-protected species cannot be possessed. If a question exists about the protected status of roadkill, the safest approach is to leave it alone. Criminal penalties can apply for mere possession of federally protected animals and birds. Similarly, if a vehicle does significant enough damage to wildlife that the animal’s carcass cannot be properly identified to determine if the season is open for that particular animal (in those states that tie roadkill possession to doing so in-season) the recommended conduct is to not possess the roadkill.
In the states that have considered roadkill legislation in recent years, proponents often claim that allowing licensed hunters to take (subject to legal limits) a fur-bearing animal from the roadside would be a cost-saving measure for the state. The logic is that fewer state employees would be required to clean-up dead animal carcasses. Opponents of roadkill bills tend to focus their arguments on safety-related concerns – that having persons stopped alongside the roadway to collect dead animals would constitute a safety hazard for other drivers. That’s an interesting argument inasmuch as those making this claim would also appear to be asserting that a dead animal on a roadway at night is not a safety hazard. Others simply appear to argue that collecting roadkill for human consumption is disgusting.
There is significant variation among state approaches with respect to possession of roadkill. That means that for persons interested in picking up roadkill, researching applicable state law and governing regulations in advance would be a good idea. For roadkill that is gleaned from a roadway that is used for human consumption, care should be taken in preparation and cooking. The present younger generation typically doesn’t have much experience dining on racoon (they tend to be greasy), opossum shanks and gravy, as well as squirrel. But, prepared properly, some view them as a delicacy.
To date, the USDA hasn’t issued guidelines on the proper preparation of roadkill or where roadkill fits in its food pyramid (that was revised in recent years). That’s sounds like a good project for some USDA Undersecretary for Food Safety to occupy their time with.
Thursday, August 9, 2018
A tort is a civil (as opposed to a criminal) wrong or injury, other than breach of contract, for which a court will provide a remedy in the form of an action for damages. Tort law is based heavily upon state case law. That means that different legal rules apply in different jurisdictions. In addition, in all jurisdictions, tort law changes as new cases are decided.
Tort law is concerned with substandard behavior, and its objective is to establish the nature and extent of responsibility for the consequences of tortious (wrongful) conduct. Cases involving torts,
in an agricultural context, may involve such situations as employer/employee relationships, fence and boundary disputes, crop dusting and many other similar situations.
In today’s post, I take a look at several recent ag tort cases that provide a sampling of the tort situations that can happen on a farm or ranch.
In Halderson v. N. States Power Co., No. 2017AP2176, 2018 Wisc. App. LEXIS 645 (Wisc. Ct. App. July 24, 2018), the plaintiff’s dairy cows were experiencing health problems and the plaintiff contacted a veterinarian. In turn, the veterinarian suggested that the plaintiff contact an electrician that investigates stray voltage. The electrician found that the farm had stray voltage exceeding the defendant power company’s standards of one amp. The electrician suggested that the plaintiff request a neutral isolation from the defendant to separate the primary and secondary naturals, preventing any off-farm stray voltage from affecting the livestock. The defendant did so, and the cows’ health improved substantially. The plaintiff’s sued to recover economic losses to their dairy operation and, after a 12-day jury trial, the jury awarded the plaintiff $4.5 million dollars on the plaintiff’s negligence and nuisance claims. The jury also found that the defendant acted in a “… willful, wanton, or reckless manner…” thus activating treble damages under Wisconsin Code §196.64.
The plaintiff moved for judgment on the verdict. The defendant made numerous post-trial motions - renewing their motions to dismiss and for directed verdict. In addition, the defendant moved for a new trial based on a jury instruction and the plaintiff’s attorney failing to disclose that one of the juror’s uncles had been hired by the attorney as an expert witness on another stray voltage case. The trial court granted the defendant’s motion for directed verdict on the damages issue, stating that the evidence was insufficient to conclude that the defendant had acted in the manner that the jury found. However, the trial court affirmed the jury’s negligence findings and denied the motion for a new trial. The plaintiff appealed the directed verdict on the damages issue and the defendant cross-appealed the jury verdict on the negligence findings. The appellate court affirmed, and also noted that the defendant had failed to move for a mistrial on the conflict issue.
In Reasner v. Goldsmith, No. A17-1989, 2018 Minn. App. Unpub. LEXIS 578 (Minn. Ct. App. Jul. 9, 2018). The defendant’s cattle escaped their enclosure and were involved in an automobile accident. The defendant claimed that the cattle broke through a closed pasture gate. The defendant testified that the fences were checked weekly and that the cattle had been in that particular pasture for at least a week. In addition, the defendant testified that he had been working the field between the pasture and the road that day, and the cattle were in the pasture the whole time. After returning the cattle to the pasture the defendant fixed a few wires on the gate. The defendant also noted that the cattle were uneasy, like they had been “spooked.” No photos were taken of the broken gate before the fix. There was no dispute that the cattle came though the field from the pasture. The plaintiff claimed that the defendant came to him in the hospital and apologized for leaving the gate between the pasture and the field open. There was also a statement by a passenger in the plaintiff’s vehicle claiming that he saw the cattle in the field and not in the pasture the morning before the accident.
The trial court relied heavily on the defendant’s testimony, and granted summary judgment for the defendant. The court determined that the defendant neither allow the cattle to be on the road nor knew that they were on the road. Also, the court reasoned that it was unforeseeable to the defendant that the cattle would escape because of the weekly fence checks. Thus, the cattle were not running at-large and the defendant was not negligent in keeping the cattle fenced in. On appeal, the appellate court determined that there was an issue of genuine fact remaining with respect to where the cattle were before the accident and what was the cause of their escape. Thus, the trial court’s grant of summary judgment was reversed and the case remanded.
Statutory Protection for Horse-Related Injury
In James v. Young, No. 10-17-00346-CV, 2018 Tex. App. LEXIS 2406 (Tex. Ct. App. Apr. 4, 2018), the plaintiff, along with some others, offered to help at the defendant’s farm. An injury occurred to a child as a result of the defendant’s horses and the plaintiff sued, claiming negligent handling of horses. The defendant (in both the corporate capacity and individual capacity) moved for summary judgment based on no evidence, and the trial court granted the motion. The trial court granted the motions for summary judgment. The plaintiff did not appeal the grant of summary judgment for the defendant corporation, but did appeal the granting of summary judgment for the defendant individuals. The appellate court affirmed.
The plaintiff conceded that the Texas Equine Activity Limitation of Liability Act applied to the action. That Act protects owners of livestock and horses from liability from incidents stemming from the inherent risk of livestock and horses. However, the plaintiff claimed that the owner failed to make a reasonable effort to gauge the skill level of a participant to ensure safety – an exception to coverage under the Act. Since the no-evidence summary judgment motion is like a directed verdict, the burden is on the non-moving party to show genuine issue of material fact. The plaintiff never produced any evidence that the defendant failed to ask of the child’s riding ability or to prove that the lack of questioning lead to the accident directly. Thus, the appellate court affirmed the grants of summary judgment.
In Bryant v. Reams, Civil Action No. 16-cv-01638-NYW, 2018 U.S. Dist. LEXIS 99929 (D. Colo. Jun. 14, 2018), the plaintiff lost her arm when the car she was riding in collided with a dead cow on a public roadway in southwestern Colorado. She sued the defendant cow owner for negligence and the state (CO) Department of Transportation (CDOT) for failing to maintain fences along the state highway, seeking compensatory and punitive damages. The cow had been grazing with a herd of the defendant’s cattle on Bureau of Land Management (BLM) land, and the defendant alleged that the defendant did not have a license to graze cattle on BLM land but was doing so by virtue of a sublease from another rancher that did have a lease to graze cattle on the BLM land. The plaintiff claimed that the CDOT failed to maintain fences along the highway in a manner that was sufficient to bar cattle from wandering onto the road, and that the fence at issue had deteriorated and cattle had previously caused multiple accidents on the roadway. Both the CDOT and the defendant cow owner filed motions for summary judgment.
The trial court partially granted the cow owner’s motion by dismissing the claim for exemplary damages on the basis that the evidence clearly showed that the cow owner did not act in a willful and wanton manner toward the plaintiff because they never intentionally grazed cattle alongside the highway, but denied the motion with respect to negligence claim against the cow owner finding sufficient evidence regarding proximate causation to submit the issue to the jury. The trial court also denied the CDOT’s summary judgment motion on the plaintiff’s premises liability claim against the CDOT citing evidence showing that CDOT had been notified that the fence needed to be fixed.
Before the case went to trial, the CDOT and the plaintiff settled, but the other defendants moved to designate CDOT as a non-party at fault which would reduce the cow owner’s percentage of fault. At trial, the plaintiff claimed that the jury should be instructed that the CDOT could only be apportioned negligence if the CDOT had actual notice of a deficient fence. If that is true, the cow owner would have a greater percentage of fault leading to a larger damage award. The trial court held that the CDOT had an affirmative duty to maintain fences adjacent to state roads for the safety of motor vehicles irrespective of any actual notice that a fence is in need of repair. Bryant v. Reams, Civil Action No. 16-cv-01638-NYW, 2018 U.S. Dist. LEXIS 99929 (D. Colo. Jun. 14, 2018).
Wind Energy Company Creates Nuisance and Must Pay
In re Wisconsin Power and Light, Co., No. ET-6657/WS-08-573, Minn. Pub. Util. Commission (June 5, 2018) illustrates the problems that a commercial wind energy operation can present for nearby landowners. On October 20, 2009, the Minnesota Public Utilities Commission issued a large wind energy conversion system site permit to Wisconsin Power and Light Company (WPL) for the approximately 200-megawatt first phase of the Bent Tree Wind Project, located in Freeborn County, Minnesota. The project commenced commercial operation in February 2011. On August 24, 2016, the Commission issued an order requiring noise monitoring and a noise study at the project site. During the period of September 2016 through February 2018 several landowners in the vicinity filed over 20 letters regarding the health effects that they claim were caused by the project.
On September 28, 2017, the Department of Commerce Energy Environmental Review Analysis Unit (EERA) filed a post-construction noise assessment report for the project, identifying 10 hours of non-compliance with Minnesota Pollution Control Agency (MPCA) ambient noise standards during the two-week monitoring period. On February 7, 2018, EERA filed a phase-two post construction noise assessment report concluding that certain project turbines are a significant contributor to the exceedances of MPCA ambient noise standards at certain wind speeds. On February 8, 2018, WPL filed a letter informing the Commission that it would respond to the Phase 2 report at a later date and would immediately curtail three turbines that are part of the project, two of which were identified in the phase 2 report. On February 20, 2018, the landowners filed a Motion for Order to Show Cause and for Hearing, requesting that the Commission issue and Order to Show Cause why the site permit for the project should not be revoked, and requested a contested-case hearing on the matter. On April 19, 2018 WPL filed with the Commission a Notice of Confidential Settlement Agreement and Joint Recommendation and Request, under which WPL entered into a confidential settlement with each landowner, by which the parties agree to the terms of sale of their properties to WPL, execution of easements on the property, and release of all the landowners’ claims against WPL. The agreement also outlined the terms by which the agreement would be executed.
The finality of the agreement was conditioned upon the Commission making specific findings on which the parties and the Department agreed. These findings include, among others: dismissal of the landowners’ February 2018 motion and all other noise-related complaints filed in this matter; termination of the required curtailment of turbines; transfer of possession of each property to WPL; and a requirement that compliance filing be filed with commission. The Commission determined that resolving the dispute and the terms of the agreement were in the public interest and would result in a reasonable and prudent resolution of the issues raised in the landowner’s complaints. Therefore, the Commission approved the agreement with the additional requirement that upon the sale of either of the landowners’ property, WPL shall file with the Commission notification of the sale and indicate whether the property will be used as a residence. If the property is intended to be used as a residence after sale or upon lease, the permittee shall file with the Commission: notification of sale or lease; documentation of present compliance with noise standards of turbines; documentation of any written notice to the potential residence of past noise studies alleging noise standards exceedances, and if applicable, allegations of present noise standards exceedances related to the property; and any mitigation plans or other relevant information.
Tort situations can arise in a myriad of ways for farmers, ranchers and rural landowners. Think you might need an attorney sometime in the future that is well trained in these unique tort scenarios? That’s what we’re doing at Washburn Law School.
Wednesday, July 18, 2018
Next month, Washburn Law School and Kansas State University (KSU) will team up for its annual symposium on agricultural law and the business of agriculture. The event will be held in Manhattan at the Kansas Farm Bureau headquarters. The symposium will be the first day of three days of continuing education on matters involving agricultural law and economics. The other two days will be the annual Risk and Profit Conference conducted by the KSU Department of Agricultural Economics. That event will be on the KSU campus in Manhattan. The three days provide an excellent opportunity for lawyers, CPAs, farmers and ranchers, agribusiness professionals and rural landowners to obtain continuing education on matters regarding agricultural law and economics.
This year’s symposium on August 15 will feature discussion and analysis of the new tax law, the Tax Cuts and Jobs Act, and its impact on individuals and businesses engaged in agriculture; farm and ranch financial distress legal issues and the procedures involved in resolving debtor/creditor disputes, including the use of mediation and Chapter 12 bankruptcy; farm policy issues at the state and federal level (including a discussion of the status of the 2018 Farm Bill); the leasing of water rights; an update on significant legal (and tax) developments in agricultural law (both federal and state); and an hour of ethics that will test participant’s negotiation skills.
The symposium can also be attended online. For a complete description of the sessions and how to register for either in-person or online attendance, click here: http://washburnlaw.edu/practicalexperience/agriculturallaw/waltr/continuingeducation/businessofagriculture/index.html
Risk and Profit Conference
On August 16 and 17, the KSU Department of Agricultural Economics will conduct its annual Risk and Profit campus. The event will be held at the alumni center on the KSU campus, and will involve a day and a half of discussion of various topics related to the economics of the business of agriculture. One of the keynote speakers at the conference will be Ambassador Richard T. Crowder, an ag negotiator on a worldwide basis. The conference includes 22 breakout sessions on a wide range of topics, including two separate breakout sessions that I will be doing with Mark Dikeman of the KSU Farm Management Association on the new tax law. For a complete run down of the conference, click here: https://www.agmanager.info/risk-and-profit-conference
The two and one-half days of instruction is an opportunity is a great chance to gain insight into making your ag-related business more profitable from various aspects – legal, tax and economic. If you are a producer, agribusiness professional, or a professional in a service business (lawyer; tax professional; financial planner; or other related service business) you won’t want to miss these events in Manhattan. See you there, or online for Day 1.
July 18, 2018 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Friday, June 8, 2018
Wind “farms” can present land-use conflict issues for nearby landowners by creating nuisance-related issues associated with turbine noise, eyesore from flicker effects, broken blades, ice-throws, and collapsing towers, for example.
Courts have a great deal of flexibility in fashioning a remedy to deal with nuisance issues. A recent order by a public regulatory commission is an illustration of this point.
Wind Farm Nuisance Litigation
Nuisance litigation involving large-scale “wind farms” is in its early stages, but there have been a few important court decisions. A case decided by the West Virginia Supreme Court in 2007 illustrates the land-use conflict issues that wind-farms can present. In Burch, et al. v. Nedpower Mount Storm, LLC and Shell Windenergy, Inc., 220 W. Va. 443, 647 S.E.2d 879 (2007), the Court ruled that a proposed wind farm consisting of approximately 200 wind turbines in close proximity to residential property could constitute a nuisance. Seven homeowners living within a two-mile radius from the location of where the turbines were to be erected sought a permanent injunction against the construction and operation of the wind farm on the grounds that they would be negatively impacted by turbine noise, the eyesore of the flicker effect of the light atop the turbines, potential danger from broken blades, blades throwing ice, collapsing towers and a reduction in their property values. The court held that even though the state had approved the wind farm, the common-law doctrine of nuisance still applied. While the court found that the wind-farm was not a nuisance per se, the court noted that the wind-farm could become a nuisance. As such the plaintiffs’ allegations were sufficient to state a claim permitting the court to enjoin the creation of the wind farm.
In another case involving nuisance-related aspects of large-scale wind farms, the Kansas Supreme Court upheld a county ordinance banning commercial wind farms in the county. Zimmerman v. Board of County Commissioners, 218 P.3d 400 (Kan. 2009). The court determined that the county had properly followed state statutory procedures in adopting the ordinance, and that the ordinance was reasonable based on the county’s consideration of aesthetics, ecology, flora and fauna of the Flint Hills. The Court cited the numerous adverse effects of commercial wind farms including damage to the local ecology and the prairie chicken habitat (including breeding grounds, nesting and feeding areas and flight patterns) and the unsightly nature of large wind turbines. The Court also noted that commercial wind farms have a negative impact on property values, and that agricultural and nature-based tourism would also suffer.
A recent settlement order of the Minnesota Public Utilities Commission (Commission)requires a wind energy firm to buy-out two families whose health and lives were materially disaffected by a wind farm complex near Albert Lea, Minnesota. As a result, it is likely that the homes will be demolished so that the wind farm can proceed unimpeded by local landowners that might object to the operation. That’s because the order stated that if the homes remained and housed new residents, those residents could not waive the wind energy company’s duty to meet noise standards even if the homeowners were willing to live with violations of the Minnesota Pollution Control Agency’s ambient noise standard in exchange for payment or through some other agreement.
In re Wisconsin Power and Light, Co., No. ET-6657/WS-08-573, Minn. Pub. Util. Commission (Jun. 5, 2018) has a rather lengthy procedural history preceding the Commission’s order. On October 20, 2009, the Commission issued a large wind energy conversion system site permit to Wisconsin Power and Light Company (WPL) for the approximately 200-megawatt first phase of the Bent Tree Wind Project, located in Freeborn County, Minnesota. The project commenced commercial operation in February 2011. On August 24, 2016, the Commission issued an order requiring noise monitoring and a noise study at the project site. During the period of September 2016 through February 2018 several landowners in the vicinity filed over 20 letters regarding the health effects that they claim were caused by the project. On September 28, 2017, the Department of Commerce Energy Environmental Review Analysis Unit (EERA) filed a post-construction noise assessment report for the project, identifying 10 hours of non-compliance with Minnesota Pollution Control Agency (MPCA) ambient noise standards during the two-week monitoring period.
On February 7, 2018, EERA filed a phase-two post construction noise assessment report concluding that certain project turbines are a significant contributor to the exceedances of MPCA ambient noise standards at certain wind speeds. The next day, WPL filed a letter informing the Commission that it would respond to the Phase 2 report at a later date and would immediately curtail three turbines that were part of the project, two of which were identified in the phase 2 report. On February 20, 2018, the landowners filed a Motion for Order to Show Cause and for Hearing, requesting that the Commission issue an Order to Show Cause why the site permit for the project should not be revoked, and requested a contested-case hearing on the matter.
On April 19, 2018, WPL filed with the Commission a Notice of Confidential Settlement Agreement and Joint Recommendation and Request, under which WPL entered into a confidential settlement with each landowner, by which the parties agreed to the terms of sale of their properties to WPL, execution of easements on the property, and release of all the landowners’ claims against WPL. The agreement also outlined the terms by which the agreement would be executed. The finality of the agreement was conditioned upon the Commission making specific findings on which the parties and the Department agreed. These findings include, among others: dismissal of the landowners’ February 2018 motion and all other noise-related complaints filed in this matter; termination of the required curtailment of turbines; transfer of possession of each property to WPL; and a requirement that compliance filing be filed with commission. The Commission determined that resolving the dispute and the terms of the agreement were in the public interest and would result in a reasonable and prudent resolution of the issues raised in the landowner’s complaints. Therefore, the Commission approved the agreement with the additional requirement that upon the sale of either of the landowners’ property, WPL shall file with the Commission notification of the sale and indicate whether the property will be used as a residence. If the property is intended to be used as a residence after sale or upon lease, the permittee must file with the Commission several things - notification of sale or lease; documentation of present compliance with noise standards of turbines; documentation of any written notice to the potential residence of past noise studies alleging noise standards exceedances, and if applicable, allegations of present noise standards exceedances related to the property; and any mitigation plans or other relevant information.
The order issued in the Minnesota matter is not entirely unique. Several decades ago, the Arizona Supreme Court ordered a real estate developer to pay the cost of a cattle feedlot to move their feeding operations further away from the area where the developer was expanding into. Spur Industries, Inc. v. Del E. Webb Development Co., 108 Ariz. 178, 494 P.2d 700 (1972).
However, the bottom-line is that the matter in Minnesota is an illustration of what can happen to a rural area when a wind energy company initiates development in the community.
Wednesday, June 6, 2018
Much of tort law centers around the concept of negligence. The negligence system is designed to provide compensation to those who suffer personal injury or property damage. It’s also a fault-based system in most instances. When negligence is based on fault, the injured party (plaintiff) must be able to prove that their injury was the defendant’s fault. Without that proof, the defendant will not be liable. In addition, the plaintiff must prove each element of their negligent tort case by a preponderance of the evidence
Establishing fault and, as a result, liability – that’s the focus of today’s post.
For a person to be deemed legally negligent, certain conditions must exist. These conditions can be thought of as links in a chain. Each condition must be present before a finding of negligence can be obtained.
Legal duty. The first condition is that of a legal duty giving rise to a standard of care. To be liable for a negligent tort, the defendant's conduct must have fallen below that of a “reasonable and prudent person” under the circumstances. A reasonable and prudent person is what a jury has in mind when they measure an individual's conduct in retrospect - after the fact, when the case is in court. The conduct of a particular tortfeasor (the one causing the tort) who is not held out as a professional is compared with the mythical standard of conduct of the reasonable and prudent person in terms of judgment, knowledge, perception, experience, skill, physical, mental and emotional characteristics as well as age and sanity. For those held out as having the knowledge, skill, experience or education of a professional, the standard of care reflects those factors.
Breach. If a legal duty exists, it is necessary to determine whether the defendant's conduct fell short of the conduct of a “reasonable and prudent person (or professional) under the circumstances.” This is called a breach, and is the second element of a negligent tort case.
Causation. Once a legal duty and breach of that duty are shown to exist, a causal connection (the third element) must be established between the defendant's act and (the fourth element) the plaintiff's injuries (whether to person or property). In other words, the resulting harm to the plaintiff must have been a reasonably foreseeable result of the defendant's conduct at the time the conduct occurred. Reasonable foreseeability is the essence of causality (also known as proximate cause).
Damages. If the plaintiff is able to establish that the defendant breached a duty that was owed to the plaintiff, the plaintiff must also prove that the breach of the duty caused damages. The damages must be more than trivial and must be proved.
A recent case involving a dairy operation from the state of Washington illustrates the importance of being able to prove damages and that those damages were causally related to the defendant’s conduct. In White River Feed Co. v. Kruse Family, LP, No. 76562-1-I, 2018 Wash. App. LEXIS 1031(Wash. Ct. App. Apr. 30, 2018), the plaintiff claimed that the defendant supplied contaminated feed that caused illness in the plaintiff’s milking cows. During April of 2013 the plaintiff fed the cows the plaintiff’s own “green-chop” as well as the defendant’s custom grain feed blend. The dry cows (i.e., cows that were not milking) and the bulls were fed only “green-chop.” The “green-chop” had been incorporated into the rations on April 17. The third grain delivery had been fed as soon as it had been delivered on the 18th. On April 19, the milking cows showed a decreased appetite and developed diarrhea. By April 22, the plaintiff’s veterinarian, had been called to examine and treat the milking cows.
The veterinarian initially diagnosed the cows with an ionophore toxicity. Further investigations, however, revealed that the cows had salmonella poisoning. Grain from the calf barn, which the plaintiff stated came from the April 18 feed delivery, tested negative for salmonella. The “green-chop” was never tested as it had all been fed to the herd. The plaintiff’s veterinarian concluded with an eighty percent probability that the milking cows had become ill from the defendant’s grain. Most of the veterinarian’s opinion was based upon the fact that the dry cows and bulls had not become ill because they had not been fed any grain. The plaintiff’s veterinarian did acknowledge, however, that the calves were fed the grain and did not become ill. However, he hypothesized that the milk in their diet kept them from eating the grain or the industry practice of feeding calves the “crumbs” from the cows limited the salmonella.
The illness caused the plaintiff loss of twenty to twenty-five head which either died or were culled and another thirty head were sold for beef due to substantial weight loss In addition to claiming damages for the loss of cows, the plaintiff reported a decrease in milk production and loss of fetuses in the infected cows. The plaintiff sued for damages from the salmonella illness, and the defendant countered with claims of breach of contract and unjust enrichment for the outstanding accounts. The defendant also requested a jury trial and moved for summary judgment based on their own veterinarian’s expert opinion. The defendant’s veterinarian stated that the data was insufficient to pinpoint salmonella from the grain as the cause of the illness. Due to the negative test results, the fact the calves or any other farms experienced the same illness, and low moisture content of the grain, the defendant’s expert believed that no expert could have arrived at the diagnosis that the plaintiff’s veterinarian did.
The trial court granted the defendant’s summary judgment motion. The plaintiff moved for reconsideration, and submitted a declaration of an opinion from another veterinarian. This declaration stated that the negative results from the test may not be representative of the entire batch of feed. The trial court denied the motion to reconsider, The appellate court affirmed. The appellate court did not give much weight to the hypothetical projections of the initial veterinarian’s diagnosis. Also, the appellate court questioned why the veterinarian ignored the negative test results for salmonella or did not test for non-feed sources of salmonella that the other expert stated could be a cause. In addition, the court found that the expert opinion was abstract evidence rather than an issue of fact that could overcome the motion for summary judgment.
Proving damages is an essential element of a negligent tort case. Even though the defendant may have owed a duty to the plaintiff, breach that duty and the breach caused the plaintiff’s damages, if those damages can’t be proven or can’t be shown to be causally related to the defendant’s conduct, the plaintiff will not prevail on the claim. In the farm and ranch setting there can be many intervening factors that may cut-off the defendant’s liability. Make sure to think through each element before bringing suit.
Thursday, May 31, 2018
Numerous states have enacted agritourism legislation designed to limit landowner liability to those persons engaging in an “agritourism activity.” Typically, such legislation protects the landowner (commonly defined as a “person who is engaged in the business of farming or ranching and provides one or more agritourism activities, whether or not for compensation”) from liability for injuries to participants or spectators associated with the inherent risks of a covered activity. There’s a lot packed into that definition, and unpacking it is not the purpose of today’s post.
What today’s post takes a brief look at is one aspect of agritourism statutes – the extent to which the statutes can be used to exempt activities from county zoning. Indeed, that was the focus of a recent court decision in North Carolina.
State agritourism statues tend to be written very broadly and can apply to such things as corn mazes, hay rides and even hunting and fishing activities. Under the Maine statute, for example, inherent risks associated with being on an active farm include hazards from the natural surface and subsurface conditions of land, vegetation, and waters; the behavior of wild and domestic animals; ordinary dangers of structures and equipment used in farming and ranching; and potential injuries caused by the participant’s or others’ failure to follow instructions given or in failing to exercise reasonable caution while engaging in activities. Maine Rev. Stat. Title 7, Part 1, Chapter 8-E, Section 251, Subsection 5.
Quite often, the state laws related to agritourism relate to financial incentives via tax credits or cost-sharing, promotion, protecting the ag real property tax classification of the property involved, or liability protection. But, to get the protection of the statute the use of the land must be for agricultural purposes. That’s particularly the case when county zoning rules are implicated – as they were in a recent North Carolina case.
In Jeffries v. Harnett County, No. COA17-729, 2018 N.C. App. LEXIS 494 (N.C. Ct. App. May 15, 2018), a property owner operated a sport hunting business on the their 12-acre parcel. The business activities included shooting ranges, 3-D archery courses, clay targets and pistol pits. Initially, the defendant raised fowl on the property for controlled hunting. Over time, however, the business evolved into a multi-function facility.
Adjacent landowners wrote to the county to inquire if the defendant was exempt from zoning as an “agritourism” business. The county zoning board responded that the ranges and controlled hunting were agritourism and, as such, were exempt from county zoning. The neighbors appealed to the County Board of Adjustment which upheld the zoning authority’s decision. Over the next several years, litigation ensued involving the issue of which activities on the land constituted agritourism that were exempt from county zoning. Ultimately, the matter came before the appellate court which determined that the various activities on the farm did not constitute “agriculture” and, therefore, were subject to county zoning. Being “agriculture” was a precondition to being an agritourism activity.
Specifically, the appellate court determined that the hunting-associated activities were not agritourism and were, therefore, not exempt from county zoning. The mere fact that the activities occurred on agricultural land was not enough for the appellate court to conclude that the hunting business qualified as agritourism. The governing statute (N.C. Gen. Stat. § 153A-340(b)(2a)), set forth the definition of agritourism, mentioning “rural activities” but it did not list hunting per se. The appellate court turned to other precedents to determine if rural activities included hunting.
Prior case law held that domestically raised animals for controlled hunting qualified as a rural activity, but that is as far as they went. The cases did not extend that rationale to other types of shooting sports. The appellate court determined that activities that are based in agriculture and the natural use of the land qualify as agritourism. Because shooting ranges did not produce anything “natural” from the land, they didn’t count. Furthermore, the part of the statute explaining the inherent risk of agritourism provided only “farming and ranching” but did not include hunting in the list of dangers. The appellate court believed it was critical that the legislature left out any mention of hunting activities in the statute. Thus, shooting ranges and other hunting sports that do not include the harvesting of animals, did not fit squarely within the statute as a rural activity or a natural activity even if operated on farm ground. That meant that county zoning applied – it wasn’t an agricultural activity and, therefore, was not agritourism.
Agritourism statutes are important to farmers, ranchers and rural landowners. They do provide liability protection to activities on farm and ranch land that can generate additional income sources to farming and ranching operations. However, the particulars of the state statue must be closely followed. Failure to conform to the statutory requirements can result in liability exposure and having the activity subjected to county zoning because it is not “agriculture.”
Thursday, May 3, 2018
Tort cases involve personal injuries or property damage. Most tort cases are based in negligence which is a fault-based system. That means that for a person to be deemed legally negligent, certain conditions must exist. These conditions can be thought of as links in a chain. Each condition must be present before a finding of negligence can be obtained. What are those links? They are duty, breach, causation and damages. The defendant must have owed the plaintiff a duty to act in a certain way; that duty was breached; and the breach of the duty caused the plaintiff’s damages.
Perhaps the trickiest of the links is the causation link. The requirement that the breach of the duty owed to the plaintiff must be causally linked to the plaintiff’s damages is the last issue to resolve in many tort cases. Tied to the concept of causality is reasonable foreseeability. Was it or should it have been reasonably foreseeable to the defendant at the time the defendant did whatever it was that the defendant did, that the defendant’s conduct would result in harm to the plaintiff?
Reasonable foreseeability - that’s the focus of today’s post.
As noted above, the resulting harm to the plaintiff must have been a reasonably foreseeable result of the defendant's conduct at the time the conduct occurred. Reasonable foreseeability is the essence of causality (also known as proximate cause). For instance, in a Colorado case that was decided by the U.S. Court of Federal Claims, a farmer claimed personal injury caused by drinking water contaminated by U.S. Army operations. The court not only questioned the existence of the farmer's personal injuries but held that the farmer failed to prove by a preponderance of the evidence (the legal standard applicable in a civil tort case) that his personal injuries and the cattle deaths were caused by the contaminated groundwater. Land v. United States, 35 Fed. Cl. 345 (1996).
Proximate cause can also be an issue (apart from negligence) with respect to coverage for an insured-against loss. In a Nebraska case, the court dealt with the proximate cause issue in determining whether an insurance policy on livestock covered damages resulting from an infectious disease transmitted by a tornado. The policy covered damage caused by windstorm, but not specifically cover damage caused by infectious disease. The court held that the proximate cause of the damage to the hogs at issue was the windstorm – without the windstorm, the hogs would not have been infected by the disease. Griess & Sons v. Farm Bureau Insurance Co., 247 Neb. 526, 528 N.W.2d 329 (1995).
The Palsgraf Case
Some things are reasonably foreseeable and other things are not; and an individual will be held liable for harm that is reasonably foreseeable or reasonably expected to result from the defendant's actions. For example, in one case a landowner was not liable for the death of a motorist that was stuck by a falling tree because eve thought the tree leaned over the road, there was no visible decay present and the landowner had no notice of a dangerous condition. Wade v. Howard., 499 S.E.2d 652 (Ga. Ct. App. 1998). This just reinforces the notion that there must be a causal connection - a causal linkage - between the defendant's action and the plaintiff's harm. On the other hand, a superseding cause is an intervening force that relieves an actor from liability for harm that the actor’s negligence was a substantial factor in producing. Thus, negligence that is too remote from the subsequent injury bars liability.”
Foreseeability may also be an issue with respect to the plaintiff. The famous case of Palsgraf v. Long Island Railroad Co., 248 N.Y. 339, 162 N.E. 99 (1928), is an example of an injury which was caused by an unbroken chain of events. The plaintiff was standing on a platform of the defendant's railroad after buying a ticket to ride one of the defendant’s trains. As the court described the facts: “[A] train stopped at the station, bound for another place. Two men ran forward to catch it. One of the men reached the platform of the car without mishap, though the train was already moving. The other man, carrying a package, jumped aboard the car, but seemed unsteady as if about to fall. A guard on the car, who had held the door open, reached forward to help him in, and another guard on the platform pushed him from behind. In this act, the package was dislodged, and fell upon the rails. It was a package of small size, about fifteen inches long, and was covered by a newspaper. In fact it contained fireworks, but there was nothing in its appearance to give notice of its contents. The fireworks when they fell exploded. The shock of the explosion threw down some scales at the other end of the platform many feet away. The scales struck the plaintiff, causing injuries for which she sues.”
Based on those facts, the court ruled that it was not foreseeable to a reasonable and prudent person that the actions which triggered the chain of events could ultimately cause injury to the plaintiff. The railroad was not legally responsible for the plaintiff’s injuries. For a modern version of Palsgraf, see Zokhrabov v. Park 963 N.E.2d 1035 (Ill. Ct. App. 2011).
Application to Agricultural Activities
It is possible that a negligent tort claim could be brought against a farmer that plants genetically modified (GM) crops if the crops cross-pollinate and contaminate a neighbor’s conventional crop. For the neighbor to prevail in court, the neighbor would have to prove that the farmer had a duty to prevent contamination, that the duty was breached (e.g., failure to select seed properly, adhere to specified buffer zones, or follow growing and harvesting procedures), and that the breach of the duty caused the neighbor’s damages, which were a reasonably foreseeable result of the farmer’s conduct. But is there a duty on the part of the farmer planting GM crops to prevent contamination when it is the convention crops that are the rarity? I don’t know the answer to that one. To date, no appellate-level court has rendered a published opinion in a negligence tort case involving genetically modified crops on that specific set of facts that I am aware of.
As noted above, the foreseeability of harm is generally a major factor that is considered in determining the existence of a duty. However, the Restatement (Third) of Torts states that the foreseeability of physical injury to a third party is not to be considered in determining whether there exists a duty to exercise reasonable care. That’s an interesting take, and at least one court has adopted the Restatement approach in holding that a landowner has a duty to exercise reasonable care to keep their premises in a manner that would not create hazards on adjoining roadways. See, e.g., Thompson v. Kaczinski, et al., 774 N.W.2d 829 (Iowa 2009), vac’g, 760 N.W.2d 211 (Iowa Ct. App. 2008). If that is the case, then there is a duty to maintain a premises. That would be of particular importance to a rural landowner.
Tuesday, May 1, 2018
Occasionally, farmers and ranchers are required to defend their livestock from harm caused by trespassing dogs. Many states have adopted statutes that permit dogs to be killed if they are caught in the act of harming domesticated animals. However, it is critical to follow the specifics of the applicable state statute allowing the killing of trespassing dogs. Failure to do so can result in a criminal charge of cruelty to animals.
Today’s post examines the issue of killing trespassing dogs.
Sample State Statutes
Here’s a sample of state “dog-kill” statutes:
Illinois (Illinois Comp. Stat. Ann. Chapter 510, Section 5, Subsection 18): “Any owner seeing his or her livestock, poultry, or equidae being injured, wounded, or killed by a dog, not accompanied by or not under the supervision of its owner, may kill such dog.”
Indiana (Indiana Code §15-20-2-2): “A person who observes a dog in the act of killing or injuring livestock may kill the dog if the person has the consent of the person in possession of the real estate on which the dog is found.”
Iowa (Iowa Code §351.26-.28): “It shall be lawful for any person, and the duty of all peace officers within their respective jurisdictions unless such jurisdiction shall have otherwise provided for the seizure and impoundment of dogs, to kill any dog for which a rabies vaccination tag is required, when the dog is not wearing a collar with rabies vaccination tag attached. It shall be lawful for any person to kill a dog, wearing a collar with a rabies vaccination tag attached, when the dog is caught in the act of chasing, maiming, or killing any domestic animal or fowl, or when such dog is attacking or attempting to bite a person. The owner of a dog shall be liable to an injured party for all damages done by the dog, when the dog is caught in the action of worrying, maiming, or killing a domestic animal.”
Kansas (Kansas Stat. Ann. §47-646): “It shall be lawful for any person at any time to kill any dog which may be found injuring or attempting to injure any livestock as defined in K.S.A. 47-1001, and amendments thereto.” The term “livestock” is defined in K.S.A. §47-1001 as meaning and including, “cattle, bison, swine, sheep, goats, horses, mules, domesticated deer, camelids, domestic poultry, domestic waterfowl, all creatures of the ratite family that are not indigenous to this state, including, but not limited to, ostriches, emus and rheas, and any other animal as deemed necessary by the [animal health commissioner of the department of agriculture] established through rules and regulations.”
Nebraska (Neb. Rev. Stat. §54-604): “Any person [,firm or corporation] shall have the right to kill any dog found [killing, wounding, injuring, worrying, or chasing any person or persons or any sheep or other domestic animals belonging to such person, firm, or corporation] doing any damage …to any sheep or domestic animal, or if he shall have just and reasonable ground to believe that such dog has been killing, wounding, chasing or worrying such sheep or animal; and no action shall be maintained for such killing.”
As can be noted from the above-cited state statutes, they all require certain conditions to be satisfied before a trespassing dog can be killed without legal ramifications. Essentially, the statutes require that the dog be “caught in the act” of doing some specified act to covered livestock. The statutory definitions of the acts described are important, as is the definition of the livestock that are covered. That makes it critical to preserve evidence showing that the statutory requirements have been met. For example, in Grabenstein v. Sunsted, 237 Mont. 254, 772 P.2d 865 (1989), a farmer shot a neighbor’s dog that had broken into the farmer’s chicken coop and had killed all but one of the chickens when the farmer found him in the pen trying to kill that chicken and shot him. The Court held that the farmer had a common law right to kill the dog in such a situation and that the later enactment of the dog-kill statute had not removed that right. It was of no importance that the dog was of much more value at the time it was shot than was the sole remaining chicken.
Failure to maintain strict compliance with a particular state’s dog-kill statute could result in the person killing the dog being convicted of cruelty to animals. Indeed, the Oregon cruelty to animal statute has been upheld against a constitutional challenge that it was vague and overbroad. State v. Thomas, 63 P.3d 1242 (Or. Ct. App. 2003). The court held that the Tenth Amendment does not prohibit the authority of states to regulate the conduct of its citizens. As a result, the statute under which the defendant was charged with first degree animal abuse for shooting neighbor’s dog was constitutional as not prohibited by Tenth Amendment. Also, in State v. Walter, 266 Mont. 429, 880 P.2d 1346 (1994), the Montana Supreme Court held that the defendant was properly found guilty by the trial court of the misdemeanor of cruelty to animals. The court determined that there was sufficient evidence that the defendant did not shoot the dog while it was in the act of doing any of the statutorily enumerated things that would give the defendant the right to shoot the dog. Also, in Propes v. Griffith, 25 S.W.3d 544 (Mo. Ct. App. 2000) the court held the defendant liable for actual and punitive damages for killing dogs that the defendant claimed were harming his sheep. The court determined there was insufficient evidence presented that the dogs were “killing, wounding or chasing” the sheep as required by state law.
Most dog-kill statutes are only designed to protect livestock-type animals. For example, dogs are not “livestock” for purposes of the typical state statute. See, e.g., People v. Bugaiski, 224 Mich. App. 241, 568 N.W.2d 391 (1997). In addition, deer are usually not defined as “livestock.” Thus, there is no statutory protection for shooting a dog while in the act of attacking deer. See, e.g., Bueckner v. Hamel, 886 S.W.2d 368 (Tex. App. 1994). Similarly, the usually is no statutory protection under a “dog-kill” statute for the killing a dog while in the act of attacking a household pet, such as a kitten. See, e.g., McKinney v. Robbins, 319 Ark. 596, 892 S.W.2d 502 (1995).
Trespassing dogs can be a big problem for farmers and ranchers. When they are shot in the act of damaging livestock as defined by the applicable state statute, they can be shot without repercussion. However, of course, the dog owner will likely not be happy and neighborly relationships can be damaged. As always, its good to have a conversation with neighbors about dogs and livestock so that potential problems can be minimized. For many farmers and ranchers, the “shoot, shovel and shut-up” approach may seem like the best and most practical approach. But, it can lead to problems – both interpersonal and legal.
Wednesday, March 14, 2018
Most liability events that occur on a farm or ranch are judged under a standard of negligence. However, some are deemed to be so dangerous that a showing of negligence is not required to obtain a recovery. Under a strict liability approach, the defendant is liable for injuries caused by the defendant's actions, even if the defendant was not negligent in any way or did not intend to injure the plaintiff. In general, those situations reserved for resolution under a strict liability approach involve those activities that are highly dangerous. When these activities are engaged in, the defendant must be prepared to pay for all resulting consequences, regardless of the legal fault.
What are those situations that are common to the operation of a farm or ranch, or simply being a rural landowner that can lead to the application of the strict liability rule? That’s the focus of today’s post.
Application of a Strict Liability Rule
Wild animals. In general, landowners are not strictly liable for the acts of wild animals on their property. But, some courts have held that a landowner could be found negligent with regard to the indigenous wild animals that are found on the landowner’s property if the landowner knows or has reason to know of the unreasonable risk of harm posed by the animals. See, e.g., Vendrella v. Astriab Family Limited Partnership, 87 A.3d 546, 311 Conn. 301 (2014).
If an individual keeps wild animals on his or her premises, the individual will be strictly liable for any damages that the animals cause to other persons or their property. In many jurisdictions, the owner or possessor of hard-hoofed animals, such as cattle, horses and donkeys, may also be strictly liable for injuries caused by those animals, at least if known to have a vicious propensity.
Dogs and other domestic animals. Injuries or other damages caused by dogs are handled differently. The owner or possessor of a dog is normally not liable unless the owner knows the animal to be dangerous. Historically, a dog was entitled to its first bite. The dog's owner would not be liable for injuries from the dog's bite until the dog had already bitten someone. Until the dog has bitten someone, it is not known to be dangerous. In recent years, many states have passed statutes changing the common law rule and holding a dog owner (or a person who “harbors” a dog) responsible for the injuries caused by the dog. But see, Augsburger v. Homestead Mutual Insurance Company, et al., 856 N.W.2d 874, 359 Wis. 2d 385 (2014). An exception is usually made, however, for personal injuries caused by a dog if the defendant was trespassing or was committing an unlawful act at the time of the injury. Some state statutes also make a distinction on the basis of whether the dog would attack or injure someone without provocation. Also, under Restatement (Second) of Torts § 518, the owner of a domestic animal who does not know or have reason to know that the animal is more dangerous than others of its class may still be liable for negligently failing to prevent the animal from inflicting an injury. Approximately 20 states follow the Restatement approach.
Of importance to agriculture is that some state “dog-bite” statutes contain a “working dog exception.” The exception contained in the Colorado statute, for example, applies if the bite occurs while the dog is on its owner’s property or while the dog was working under the control of its owner. See, e.g., Legro v. Robinson, 369 P.3d 785, (Colo. Ct. App. 2015).
Maintaining dangerous conditions on property. Strict liability is imposed on persons responsible for activities or conditions on their property that are unreasonably dangerous and cause injury or damage to other persons or their property. For example, if a farmer or rancher decides to create a drainage ditch with explosives, and the resulting rock debris causes damages to a neighbor, the farmer will be strictly liable.
Unnatural land uses. The strict liability approach also includes most activities that are extremely dangerous. Perhaps the most frequent application of the doctrine to agriculture is in situations involving the aerial application of pesticides and other chemicals to crops. See, e.g., Pride of San Juan, Inc. v. Pratt, 548 Ariz. Adv. Rep. 20 (2009); Yancey v. Watkins, 708 S.E.2d 539, 308 Ga. App. 695 (2011). Most states utilize a strict liability rule if damage occurs. A few states purport to require a showing of negligence, but, in reality, even in these jurisdictions it may be difficult for a farmer to escape liability if damage occurs. For example, in Arkansas, violation of aerial crop spraying regulations constitutes evidence of negligence and the negligence of crop sprayers can be imputed to landowners because aerial crop spraying is viewed as an inherently dangerous activity. McCorkle Farms, Inc. v. Thompson, 84 S.W.3d 884 (Ark. Ct. App. 2003). However, the rule remains in Arkansas that the aerial application of chemicals commonly used in farming communities that are available for sale to the general public is not an ultrahazardous activity triggering application of strict liability. See, e.g., Mangrum v. Pique, et al., 359 Ark. 373, 198 S.W.3d 496 (2006).
Also, what is abnormally dangerous can depend on the circumstances and characteristics surrounding the complained-of activity. For example, in Crosstex North Texas Pipeline, L.P. v. Gardiner, 505 S.W.3d 580 (Tex. Sup. Ct. 2016), the Texas Supreme Court held that the operation of an oil and gas pipeline does not constitute an abnormally dangerous activity that would trigger the application of strict liability.
Arguably, if a farmer plants a genetically modified (GM) crop with knowledge that the crop is likely to cross-pollinate conventional crops in adjacent fields, the farmer could be held strictly liable for any resulting damages. The situation could be viewed as similar to the problem of pesticide drift. The damages in a cross-pollination case could include, among other things, loss of organic certification, costs associated with breaches of identity preserved crop contracts, and litigation costs of neighboring farmers who are sued by seed companies for “theft” of genetic intellectual property that was actually present in their fields due to wind and cross-pollination. See, e.g., Schmeiser v. Monsanto Canada, Inc.,  S.C.C. 34; Monsanto v. Trantham, 156 F.Supp. 2d 855 (W.D. Tenn. 2001); Monsanto v. McFarling, 302 F.3d 1291 (Fed. Cir. 2002); cert. den., 545 U.S. 1139 (2005). But, if the GM crop at issue had already received appropriate regulatory approval, the plaintiff could be required to prove that the GM crop was unnatural or abnormally dangerous.
While most liability events that occur on a farm ranch are judged based on a negligence standard, strict liability can apply in certain situations. In addition to those events mentioned above, certain environmental violations carry a strict liability standard of liability also. It’s helpful to know the applicable legal standard.
Friday, March 2, 2018
A significant concern for landlords is the extent of possible liability for injuries that occur on the leased premises. After all, the landlord is the owner of the leased property. Does liability follow legal ownership? If it does, that has serious implications for farm landlords, particularly because farming tends to be a hazardous occupation. Machinery, livestock, chemical application and similar farming activities and features such as farm ponds have the potential for injury.
Landlord liability for injuries occurring on leased premises, that’s the topic of today’s post.
Non-liability. In general, a landlord is not liable for injuries to third parties that occur on premises that are occupied by a tenant. For example, in Leopold v. Boone, No. 06A04-0904-CV-205, 2009 Ind. App. Unpub. LEXIS 1291 (Ind. Ct. App. Sept. 4, 2009), the plaintiff suffered a severe brain injury from a bicycle crash caused by dogs owned by the defendant’s tenant that ran from the leased property onto a public highway where the plaintiff was bicycling. The trial court judgment for the defendant was affirmed because the defendant did not owe a duty to the plaintiff. Importantly, the plaintiff failed to raise a nuisance claim at trial and was thereby precluded from raising the issue on appeal.
Exceptions. The reason for the rule of landlord non-liability is that the tenant has the possession over the leasehold premises during the tenancy and has control over what occurs on the leased property. However, there are at least six well recognized exceptions to this general rule. For example, if the landlord conceals dangerous conditions or defects that cause the third party's injury, then the landlord will be liable. Likewise, if conditions are maintained on the premises that are dangerous to persons outside of the premises, the landlord is liable for any resulting injury. A landlord will also be liable if the premises is leased for admission of the public or if the landlord retains control over part of the leased premises that the tenant is entitled to use. In addition, if the landlord makes an express covenant to repair the leased premises, but fails to do so resulting in injury, the landlord is liable. Similarly, a landlord is liable for injuries resulting from the landlord's negligence in making repairs to items located on the leased premises.
Another exception to the general rule of landlord non-liability for a tenant’s acts is if the landlord knows that the tenant is harming the property rights of adjacent landowners and does nothing to modify the tenant’s conduct or terminate the lease. In that situation, the landlord can be held liable along with the tenant. See, e.g., Tetzlaff v. Camp, et al., 715 N.W.2d 256 (Iowa 2006).
Other principles. In general, a licensee or invitee of the tenant has no greater claim against the landlord than has the tenant. Thus, a landlord's duty to not wantonly or willfully injure a trespasser is usually passed to the tenant who has control of the property. However, a landlord can be held liable where the landlord knew of defects that were likely to injure known trespassers.
A landlord is also usually not held responsible for injuries occurring on the leased premises caused by animals that belong to the tenant. With respect to dogs, it must generally be proven that the landlord had actual knowledge of the animal’s dangerous propensities. See, e.g., Seeley v. Derr, et al., No. 4:12-CV-917, 2013 U.S. Dist. LEXIS 99506 (M.D. Pa. Jul. 17, 2013); Bryant v. Putnam, 908 S.W.2d 338 (Ark. 1995).
A recent Kentucky case illustrates some of the legal principles involved when an injury occurs on leased premises. In Groves v. Woods, No. 2016-CA-001546-MR 2018 Ky. App. LEXIS 59 (Ky. Ct. App. Jan. 26, 2018), the plaintiff and her husband entered into a verbal lease with the defendant for a lease of the defendant’s property. The plaintiff claimed that the lease covered the entire property, but the defendant asserted that the lease only was for the house and abutting yard. Adjacent to the home, the defendant had a pasture and a barn where the defendant boarded a Tennessee Walking Horse. The horse spent time both in the pasture and in the barn. The defendant claimed that he informed the plaintiffs not to go near the horses and to keep their children out of the barn.
Nine days after moving in, the plaintiff and her children went for a walk to see an old graveyard. They cut through the pasture to get to the site. It was disputed whether the plaintiff and the children crossed a fence into the pasture where the horses spend time. The defendant claimed that they crossed onto the pasture, but the plaintiff claimed that they never crossed onto the pasture or traversed the fence. The plaintiff maintained that the horse was running loose, chased her, and stomped her thigh after she fell. The plaintiff filed a complaint against the defendant and the defendant counterclaimed that the plaintiff was contributorily negligent. The defendant moved for summary judgment, which the trial court granted and also denied the plaintiff’s motion to alter, amend, or vacate the summary judgment.
The plaintiff appealed. The court held that the number of lengthy depositions in the case provided no certain evidence to indicate whether the plaintiffs rented the house and the yard or the entire property. With this uncertainty and the fact that the lease was verbal the court decided to accept the assertion that the family rented the entire property. The court held that because the plaintiff testified of knowing about the horse, the defendant could not be liable for failure to warn the plaintiffs about a known latent defect. Thus, the trial court’s grant of the motion for summary judgment was appropriate. In addition, the court held that because the horse’s owner did not know or have reason to know that the horse was abnormally dangerous, the defendant would be liable for the horse’s actions only if the defendant intentionally caused the horse to do harm or was negligent in failing to prevent harm. The court held that the plaintiff did not provide proof that the horse’s owner was negligent under this standard. Thus, the district court’s decision granting summary judgment was affirmed.
While a landlord will generally not be liable for injuries that occur on leased premises, there are situations where liability could result. Understanding what those situations are, taking steps to avoid their application and making sure appropriate insurance coverage is in place will go along way to avoiding an unhappy result for a landlord.
Monday, January 1, 2018
This week I will be writing about what I view as the most significant developments in agricultural law and agricultural taxation during 2017. There were many important happenings in the courts, the IRS and with administrative agencies that have an impact on farm and ranch operations, rural landowners and agribusinesses. What I am writing about this week are those developments that will have the biggest impact nationally. Certainly, there were significant state developments, but they typically will not have the national impact of those that result from federal courts, the IRS and federal agencies.
It's tough to get it down to the ten biggest developments of the year, and I do spend considerable time sorting through the cases and rulings get to the final cut. Today’s post examines those developments that I felt were close to the top ten, but didn’t quite make the list. Later this week we will look at those that I feel were worthy of the top ten. Again, the measuring stick is the impact that the development has on the U.S. ag sector as a whole.
Almost, But Not Quite
Those developments that were the last ones on the chopping block before the final “top ten” are always the most difficult to determine. But, as I see it, here they are (in no particular order):
- Withdrawal of Proposed I.R.C. §2704 Regulations. In the fall of 2016, the Treasury Department issued proposed regulations (REG-16113-02) involving valuation issues under I.R.C. §2704. The proposed regulations would have established serious limitations on the ability to establish valuation discounts (e.g., minority interest and lack of marketability) for estate, gift and generation-skipping transfer tax purposes via estate and business planning techniques. In early December of 2016, a public hearing was held concerning the proposed regulations. However, the proposed regulations were not finalized before President Trump took office. In early October of 2017, the Treasury Department announced that it was pulling several tax regulations identified as burdensome under President Trump’s Executive Order 13789, including the proposed I.R.C. §2704 regulations. Second Report to the President on Identifying and Reducing Tax Regulatory Burdens (Oct. 4, 2017).
Note: While it is possible that the regulations could be reintroduced in the future with revisions, it is not likely that the present version will ultimately be finalized under the current Administration.
- IRS Says There Is No Exception From Filing a Partnership Return. The IRS Chief Counsel’s Office, in response to a question raised by an IRS Senior Technician Reviewer, has stated that Rev. Prov. 84-35, 1984-2 C.B. 488, does not provide an automatic exemption from the requirement to file Form 1065 (U.S. Return of Partnership Income) for partnerships with 10 or fewer partners. Instead, the IRS noted that such partnerships can be deemed to meet a reasonable cause test and are not liable for the I.R.C. §6698 penalty. IRS explained that I.R.C. §6031 requires partnerships to file Form 1065 each tax year and that failing to file is subject to penalties under I.R.C. §6698 unless the failure to file if due to reasonable cause. Neither I.R.C. §6031 nor I.R.C. §6698 contain an automatic exception to the general filing requirement of I.R.C. §6031(a) for a partnership as defined in I.R.C. §761(a). IRS noted that it cannot determine whether a partnership meets the reasonable cause criteria or qualifies for relief under Rev. Proc. 84-35 unless the partnership files Form 1065 or some other document. Reasonable cause under Rev. Proc. 84-35 is determined on a case-by-case basis and I.R.M. Section 22.214.171.124.3.1 sets forth the procedures for applying the guidance of Rev. Proc. 84-35. C.C.A. 201733013 (Jul. 12, 2017); see also Roger A. McEowen, The Small Partnership 'Exception,' Tax Notes, April 17, 2017, pp. 357-361.
- “Qualified Farmer” Definition Not Satisfied; 100 Percent Deductibility of Conservation Easement Not Allowed. A “qualified farmer” can receive a 100 percent deduction for the contribution of a permanent easement to a qualified organization in accordance with I.R.C. §170(b)(1)(E). However, to be a “qualified farmer,” the taxpayer must have gross income from the trade or business of farming that exceeds 50 percent of total gross income for the tax year. In a 2017, the U.S. Tax Court decided a case where the petitioners claimed that the proceeds from the sale of the property and the proceeds from the sale of the development rights constituted income from the trade or business of farming that got them over the 50 percent threshold. The IRS disagreed, and limited the charitable deduction to 50 percent of each petitioner’s contribution base with respect to the conservation easement. The court agreed with the IRS. The court noted that the income from the sale of the conservation easement and the sale of the land did not meet the definition of income from farming as set forth in I.R.C. §2032A(e)(5) by virtue of I.R.C. §170(b)(1)(E)(v). The court noted that the statute was clear and that neither income from the sale of land nor income from the sale of development rights was included in the list of income from farming. While the court pointed out that there was no question that the petitioners were farmers and continued to be after the conveyance of the easement, they were not “qualified farmers” for purposes of I.R.C. §170(b)(1)(E)(iv)(I). Rutkoske v. Comr., 149 T.C. No. 6 (2017).
- Corporate-Provided Meals In Leased Facility Fully Deductible. While the facts of the case have nothing to do with agriculture, the issues involved are the same ones that the IRS has been aggressively auditing with respect to farming and ranching operations – namely, that the 100 percent deduction for meals provided to corporate employees for the employer’s convenience cannot be achieved if the premises where the meals are provided is not corporate-owned. In a case involving an NHL hockey team, the corporate owner contracted with visiting city hotels where the players stayed while on road trips to provide the players and team personnel pre-game meals. The petitioner deducted the full cost of the meals, and the IRS limited the deduction in accordance with the 50 percent limitation of I.R.C. §274(n)(1). The court noted that the 50 percent limitation is inapplicable if the meals qualify as a de minimis fringe benefit and are provided in a nondiscriminatory manner. The court determined that the nondiscriminatory requirement was satisfied because all of the staff that traveled with the team were entitled to use the meal rooms. The court also determined that the de minimis rule was satisfied if the eating facility (meal rooms) was owned or leased by the petitioner, operated by the petitioner, located on or near the petitioner’s business premises, and the meals were furnished during or immediately before or after the workday. In addition, the court determined that the rules can be satisfied via contract with a third party to operate an eating facility for the petitioner’s employees. As for the business purpose requirement, the court noted that the hotels where the team stayed at while traveling for road games constituted a significant portion of the employees’ responsibilities and where the team conducted a significant portion of its business. Thus, the cost of the meals qualified as a fully deductible de minimis fringe benefit. Jacobs v. Comr., 148 T.C. No. 24 (2017).
Note: The petitioner’s victory in the case was short-lived. The tax bill enacted into law on December 22, 2017, changes the provision allowing 100 percent deductibility of employer-provided meals to 50 percent effective Jan. 1, 2018, through 2025. After 2025, no deduction is allowed.
- Settlement Reached In EPA Data-Gathering CAFO Case. In 2008, the Government Accounting Office (GAO) issued a report stating that the Environmental Protection Agency (EPA) had inconsistent and inaccurate information about confined animal feeding operations (CAFOs), and recommended that EPA compile a national inventory of CAFO’s with NPDES permits. Also, as a result of a settlement reached with environmental activist groups, the EPA agreed to propose a rule requiring all CAFOs to submit information to the EPA as to whether an operation had an NPDES permit. The information required to be submitted had to provide contact information of the owner, the location of the CAFO production area, and whether a permit had been applied for. Upon objection by industry groups, the proposed rule was withdrawn and EPA decided to collect the information from federal, state and local government sources. Subsequent litigation determined that farm groups had standing to challenge the EPA’s conduct and that the EPA action had made it much easier for activist groups to identify and target particular confined animal feeding operations (CAFOs). On March 27, 2017, the court approved a settlement agreement ending the litigation between the parties. Under the terms of the settlement, only the city, county, zip code and permit status of an operation will be released. EPA is also required to conduct training on FOIA, personal information and the Privacy Act. The underlying case is American Farm Bureau Federation v. United States Environmental Protection Agency, 836 F.3d 963 (8th Cir. 2016).
- Developments Involving State Trespass Laws Designed to Protect Livestock Facilities.
- Challenge to North Carolina law dismissed for lack of standing. The plaintiffs, numerous animal rights activist groups, brought a pre-enforcement challenge to the North Carolina Property Protection Act (Act). The Act creates a civil cause of action for a NC employer against an employee who “captures or removes” documents from the employer’s premises or records images or sound on the employer’s premises and uses the documents or recordings to breach the employee’s duty of loyalty to the employer. The plaintiffs claimed that the Act stifled their ability to investigate NC employers for illegal or unethical conduct and restricted the flow of information those investigations provide in violation of the First and Fourteenth Amendments of the U.S. Constitution and various provisions of the NC Constitution. The court dismissed the case for lack of standing. People for the Ethical Treatment of Animals v. Stein, 259 F. Supp. 3d 369 (M.D. N.C. 2017).
- Utah law deemed unconstitutional. Utah law (Code §76-6-112) (hereinafter Act) criminalizes entering private agricultural livestock facilities under false pretenses or via trespass to photograph, audiotape or videotape practices inside the facility. Anti-livestock activist groups sued on behalf of the citizen-activist claiming that the Act amounted to an unconstitutional restriction on speech in violation of the First Amendment. While the state claimed that lying, which the statute regulates, is not protected free speech, the court determined that only lying that causes “legally cognizable harm” falls outside First Amendment protection. The state also argued that the act of recording is not speech that is protected by the First Amendment. However, the court determined that the act of recording is protectable First Amendment speech. The court also concluded that the fact that the speech occurred on a private agricultural facility did not render it outside First Amendment protection. The court determined that both the lying and the recording provisions of the Act were content-based provisions subject to strict scrutiny. To survive strict scrutiny the state had to demonstrate that the restriction furthered a compelling state interest. The court determined that “the state has provided no evidence that animal and employee safety were the actual reasons for enacting the Act, nor that animal and employee safety are endangered by those targeted by the Act, nor that the Act would actually do anything to remedy those dangers to the extent that they exist”. For those reasons, the court determined that the act was unconstitutional. Animal Legal Defense Fund v. Herbert, 263 F. Supp. 3d 1193 (D. Utah 2017).
- Wyoming law struck down. In 2015, two new Wyoming laws went into effect that imposed civil and criminal liability upon any person who "[c]rosses private land to access adjacent or proximate land where he collects resource data." Wyo. Stat. §§6-3-414(c); 40-27-101(c). The appellate court, reversing the trial court, determined that because of the broad definitions provided in the statutes, the phrase "collects resource data" includes numerous activities on public lands (such as writing notes on habitat conditions, photographing wildlife, or taking water samples), so long as an individual also records the location from which the data was collected. Accordingly, the court held that the statutes regulated protected speech under the First Amendment in spite of the fact that they also governed access to private property. While trespassing is not protected by the First Amendment, the court determined that the statutes targeted the “creation” of speech by penalizing the collection or resource data. Western Watersheds Project v. Michael, 869 F.3d 1189 (10th Cir. 2017), rev’g., 196 F. Supp. 3d 1231 (D. Wyo. 2016).
- Challenge to North Carolina law dismissed for lack of standing. The plaintiffs, numerous animal rights activist groups, brought a pre-enforcement challenge to the North Carolina Property Protection Act (Act). The Act creates a civil cause of action for a NC employer against an employee who “captures or removes” documents from the employer’s premises or records images or sound on the employer’s premises and uses the documents or recordings to breach the employee’s duty of loyalty to the employer. The plaintiffs claimed that the Act stifled their ability to investigate NC employers for illegal or unethical conduct and restricted the flow of information those investigations provide in violation of the First and Fourteenth Amendments of the U.S. Constitution and various provisions of the NC Constitution. The court dismissed the case for lack of standing. People for the Ethical Treatment of Animals v. Stein, 259 F. Supp. 3d 369 (M.D. N.C. 2017).
- GIPSA Interim Final Rule on Marketing of Livestock and Poultry Delayed and Withdrawn.In the fall of 2016, the USDA sent to the Office of Management and Budget (OMB) interim final rules that provide the agency’s interpretation of certain aspects of the Packers and Stockyards Act (PSA) involving the buying and selling of livestock and poultry. The interim final rules concern Section 202 of the PSA (7 U.S.C. §§ 192 (a) and (e)) which makes it unlawful for any packer who inspects livestock, meat products or livestock products to engage in or use any unfair, unjustly discriminatory or deceptive practice or device, or engage in any course of business or do any act for the purpose or with the effect of manipulating or controlling prices or creating a monopoly in the buying, selling or dealing any article in restraint of commerce. The “effect” language of the statute would seem to eliminate any requirement that the producer show that the packer acted with the intent to control or manipulate prices. However, the federal courts have largely interpreted the provision to require a plaintiff to show an anti-competitive effect in order to have an actionable claim. Under the proposed regulations, "likelihood of competitive injury" is defined as "a reasonable basis to believe that a competitive injury is likely to occur in the market channel or marketplace.” It includes, but is not limited to, situations in which a packer, swine contractor, or live poultry dealer raises rivals' costs, improperly forecloses competition in a large share of the market through exclusive dealing, restrains competition, or represents a misuse of market power to distort competition among other packers, swine contractors, or live poultry dealers. It also includes situations “in which a packer, swine contractor, or live poultry dealer wrongfully depresses prices paid to a producer or grower below market value, or impairs a producer's or grower's ability to compete with other producers or growers or to impair a producer's or grower's ability to receive the reasonably expected full economic value from a transaction in the market channel or marketplace." According to the proposed regulations, a “competitive injury” under the PSA occurs when conduct distorts competition in the market channel or marketplace. The scope of PSA §202(a) and (b) is stated to depend on the nature and circumstances of the challenged conduct. The proposed regulations specifically note that a finding that a challenged act or practice adversely affects or is likely to affect competition is not necessary in all cases. The proposed regulations also note that a PSA violation can occur without a finding of harm or likely harm to competition, but as noted above, that is contrary to numerous court opinions that have decided the issue. On April 11, 2017, the USDA announced that it was delaying the effective date of the interim final rule for 180 days, until October 19, 2017. However, on October 18, 2017, GIPSA officially withdrew the proposed rule. Related to, but not part of, the GIPSA Interim Final Rule, a poultry grower ranking system proposed rule was not formally withdrawn.
- Syngenta Settlement. In late 2017, Syngenta publicly announced that it was settling farmers’ claims surrounding the alleged early release of Viptera and Duracade genetically modified corn. While there are numerous cases and aspects of the litigation involving Syngenta, the settlement involves what is known as the “MIR 162 Corn Litigation” and a Minnesota state court class action. The public announcement of the settlement indicated that Syngenta would pay $1.5 billion.
- IRS To Finalize Regulations on the Tax Status of LLC and LLP Members. In its 2017-2018 Priority Guidance Plan, the IRS states that it plans to finalize regulations under I.R.C. §469(h)(2) – the passive loss rules that were initially proposes in 2011. That provision creates a per se rule of non-material participation for limited partner interests in a limited partnership unless the Treasury specifies differently in regulations. Those regulations were initially issued in temporary form and became proposed regulations in 2011. Is the IRS preparing to take a move to finalize regulations taking the position that they the Tax Court refused to sanction? Only time will tell, but the issue is important for LLC and LLP members. The issue boils down to the particular provisions of a state’s LLC statute and whether there are sufficient factors under the state statute that distinguish an LLC from a limited partnership. That will be the case until IRS issues regulations dealing specifically with LLCs and similar entities. The proposed definition would make it easier for LLC members and some limited partners to satisfy the material participation requirements for passive loss purposes, consistent with the court opinions that IRS has recently lost on the issue. Specifically, the proposed regulations require that two conditions have to be satisfied for an individual to be classified as a limited partner under I.R.C. §469(h)(2): (1) the entity must be classified as a partnership for federal income tax purposes; and (2) the holder of the interest must not have management rights at any time during the entity’s tax year under local law and the entity’s governing agreement. Thus, LLC members of member-managed LLCs would be able to use all seven of the material participation tests, as would limited partners that have at least some rights to participate in managerial control or management of a partnership.
- Fourth Circuit Develops New Test for Joint Employment Under the FLSA. The Fair Labor Standards Act of 1938 (FLSA) (29 U.S.C. §§ 201 et seq.) as originally enacted, was intended to raise the wages and shorten the working hours of the nation's workers. The FLSA is very complex, and not all of it is pertinent to agriculture and agricultural processing, but the aspect of it that concerns “joint employment” is of major relevance to agriculture. Most courts that have considered the issue have utilized an “economic realities” or “control” test to determine if one company’s workers are attributable to another employer for purposes of the FLSA. But, in a 2017 case, the U.S. Court of Appeals for the Fourth Circuit, created a new test for joint employment under the FLSA that appears to expand the definition of “joint employment” and may create a split of authority in the Circuit Courts of Appeal on the issue. The court held that the test under the FLSA for joint employment involved two steps. The first step involved a determination as to whether two or more persons or entities share or agree to allocate responsibility for, whether formally or informally, directly or indirectly, the essential terms and conditions of a worker’s employment. The second step involves a determination of whether the combined influence of the parties over the essential terms and conditions of the employment made the worker an employee rather than an independent contractor. If, under this standard, the multiple employers were not completely disassociated, a joint employment situation existed. The court also said that it was immaterial that the subcontractor and general contractor engaged in a traditional business relationship. In other words, the fact that general contractors and subcontractor typically structure their business relationship in this manner didn’t matter. The Salinas court then went on to reason that separate employment exists only where the employers are “acting entirely independent of each other and are completely disassociated with respect to” the employees. The court’s “complete disassociation” test appears that it could result in a greater likelihood that joint employment will result in the FLSA context than would be the case under the “economic realities” or “control” test. While the control issue is part of the “complete disassociation” test, joint determination in hiring or firing, the duration of the relationship between the employers, where the work is performed and responsibility over work functions are key factors that are also to be considered. Salinas v. Commercial Interiors, Inc., 848 F.3d 125 (4th Cir. 2017), rev’g, No. JFM-12-1973, 2014 U.S. Dist. LEXIS 160956 (D. Md. Nov. 17, 2014).
- Electronic Logs For Truckers. On December 18, 2017, the U.S. Department of Transportation (USDOT) Final Rule on Electronic Logging Devices (ELD) and Hours of Service (HOS) was set to go into effect. 80 Fed. Reg. 78292 (Dec.16, 2015). The final rule, which was issued in late 2015, could have a significant impact on the livestock industry and livestock haulers. The new rule will require truck drivers to use electronic logging devices instead of paper logs to track their driving hours starting December 18. The devices connect to the vehicle's engine and automatically record driving hours. The Obama Administration pushed for the change to electronic logs purportedly out of safety concerns. The Trump Administration has instructed the FMCSA (and state law enforcement officials) to delay the December 18 enforcement of the final rule by delaying out-of-service orders for ELD violations until April 1, 2018, and not count ELD violations against a carrier’s Compliance, Accountability, Safety Score. Thus, from December 18, 2017 to April 1, 2018, any truck drivers who are caught without an electronic logging device will be cited and allowed to continue driving, as long as they are in compliance with hours-of-service rules. In addition, the FMCSA has granted a 90-day waiver for all vehicles carrying agricultural commodities. Other general exceptions to the final rule exist for vehicles built before 2000, vehicles that operate under the farm exemption (a “MAP 21” covered farm vehicle; 49 C.F.R. §395.1(s)), drivers coming within the 100/150 air-mile radius short haul log exemption (49 CFR §395.1(k)), and drivers who maintain HOS logs for no more than eight days during any 30-day period. One rule that is of particular concern is an HOS requirement that restricts drive time to 11 hours. This rule change occurred in 2003 and restricts truck drivers to 11 hours of driving within a 14-hour period. Ten hours of rest is required. That is a tough rule as applied to long-haul cattle transports. Unloading and reloading cattle can be detrimental to the health of livestock.
- Dicamba Spray-Drift Issues. Spray-drift issues with respect to dicamba and the use of XtendiMax with VaporGrip (Monsanto) and Engenia (BASF) herbicides for use with Xtend Soybeans and Cotton were on the rise in 2017. , 2017Usage of dicamba has increased recently in an attempt to control weeds in fields planted with crops that are engineered to withstand it. But, Missouri (effective July 7) and Arkansas (as of June 2017) took action to ban dicamba products because of drift-related damage issues. In addition, numerous lawsuits have been filed by farmers against Monsanto, BASF and/or DuPont alleging that companies violated the law by releasing their genetically modified seeds without an accompanying herbicide and that the companies could have reasonably foreseen that seed purchasers would illegally apply off-label, older dicamba formulations, resulting in drift damage. Other lawsuits involve claims that the new herbicide products are unreasonably dangerous and have caused harm even when applicators followed all instructions provided by law. In December of 2017, the Arkansas Plant Board voted to not recommend imposing a cut-off date of April 15 for dicamba applications. Further consideration of the issue will occur in early 2018.
Monday, September 11, 2017
Every state has enacted a right-to-farm law that is designed to protect existing agricultural operations by giving farmers and ranchers who meet the legal requirements a defense in nuisance suits that are brought against them.
These laws have become more important in recent years because of increasing rural/urban land use conflicts. Today’s post takes a look at right-to-farm laws – the type of farming operations they are designed to protect and how they work
What Is “Farming”?
The general idea of a particular state's right-to-farm law is that it is unfair for a person to move to an agricultural area knowing the conditions which might be present and then ask a court to declare a neighboring farm a nuisance. Thus, the basic purpose of a right-to-farm law is to create a legal and economic climate in which farm operations can be continued. Right-to-farm laws can be an important protection for agricultural operations, but, to be protected, an agricultural operation must satisfy the law's requirements.
To be granted the protection of a statute, the activity at issue must be a farming activity. While the laws commonly apply to traditional farming activities, sometimes state provisions take a more expansive definition of “farming” to cover more than just row crop and livestock operations. For example, the Washington statute applies to “forest practices” which has been held to not be limited to logging activity, but include the growing of trees. Alpental Community Club, Inc. v. Seattle Gymnastics Society, 86 P.3d 784 (Wash Ct. App. 2004). Similarly, in Hood River County v. Mazzara, 89 P.3d 1195 (Or. Ct. App. 2004), the court held that state statutes protecting farms against nuisance actions barred a lawsuit against a farmer for noise from barking dogs because the court determined that the use of dogs to protect livestock constituted a farming practice. Also, in Vicwood Meridian Partnership, et al. v. Skagit Sand and Gravel, 98 P. 3d 1277 (Wash. Ct. App. 2004), the court held that an indoor composting facility for a mushroom farm qualified as a “farm” under state right-to-farm law. The compost was produced for use in growing mushrooms and the composting activity was held to be an agricultural activity.
Types of Statutes
Right-to-farm laws are of three basic types: (1) nuisance related; (2) restrictions on local regulations of agricultural operations; and (3) zoning related. While these categories provide a method for identifying and discussing the major features of right-to-farm laws, any particular state's right-to-farm law may contain elements of each category.
The most common type of right-to-farm law is nuisance related. This type of statute requires that an agricultural operation will be protected only if it has been in existence for a specified period of time (usually at least one year) before the change in the surrounding area that gives rise to a nuisance claim. These types of statute essentially codify the “coming to the nuisance defense,” but do not protect agricultural operations which were a nuisance from the beginning or which are negligently or improperly run. For example, if any state or federal permits are required to properly conduct the agricultural operation, they must be acquired as a prerequisite for protection under the statute.
A second type of right-to-farm statute is designed to prevent local and county governments from enacting regulations or ordinances that impose restrictions on normal agricultural practices. This type of statute is usually contained in the state's agricultural districting law. Under this type of a statute, agricultural operations are required to be located within a designated agricultural district in order to be protected from nuisance suits. However, agricultural activities, even though they may be located in an agricultural district, must be conducted in accordance with federal, state and local law or rules in order to take advantage of the statute's protections. Some courts have held that state law pre-empts local governments from making siting decision for confined animal feeding operations. See, e.g. Worth County Friends of Agriculture v. Worth County, 688 N.W.2d 257 (Iowa 2004); Adams v. State of Wisconsin Livestock Facilities String Review Bd., No. 2009AP608, 2012 Wisc. LEXIS 381 (Wisc. Sup. Ct. Jul. 11, 2012).
A third type of right-to-farm statute exempts (at least in part) agricultural uses from county zoning ordinances. The major legal issue involving this type of statute is whether a particular activity is an agricultural use or a commercial activity. In general, “agricultural use” is defined broadly. For example, the Illinois Court of Appeals has interpreted the Illinois statute such that the use of seven acres to board 19 show horses constitutes an agricultural use, Tuftee v. Kane Co., 76 Ill. App. 3d 128, 394 N.E.2d 896 (1979). The same conclusion was reached with respect to a poultry hatchery on a three-acre tract, Lake County v. Cushman, 40 Ill. App. 3d 1045, 353 N.E.2d 399 (1976). and a 60-acre tract used for the temporary storage of sewage sludge for spreading on land as fertilizer. Soil Enrichment Materials Corp. v. Zoning Board of Appeals of Grundy County, 15 Ill. App. 3d 432, 305 N.E.2d 521 (1973). The court has also held that the “rearing and raising of hogs, in any quantity, constitutes an agricultural purpose” under the statute. Knox County v. The Highlands, L.L.C., 302 Ill. App. 3d 342, 705 N.E.2d 128 (1998), aff’d, 723 N.E.2d 256 (Ill. 1999). However, the same court has held that the right-to-farm statute does not prevent the application of county zoning laws to a mobile home placed on agricultural land. People v. Husler, 34 Ill. App. 3d 977, 342 N.E.2d 401 (1975). The Iowa statute, even though essentially identical to the Illinois statute, has not been interpreted as broadly.
In some states, agricultural activities receive nuisance-type protection through zoning laws wholly separate from the protections of a right-to-farm statute. For instance, the Iowa Supreme Court, in a case predating the Iowa right-to-farm statute, held that the use of a four-acre tract as the site for two 40,000 capacity chick-growing houses was not “agricultural” but was “commercial” and not exempt from county zoning. Farmegg Products, Inc. v. Humboldt County, 190 N.W.2d 454 (Iowa 1971). In 1995, the Iowa Supreme Court followed its earlier analysis, but held that the proposed construction of a hog confinement facility was associated with an existing farming operation and was exempt from county zoning. Thompson v. Hancock County, 539 N.W.2d 181 (Iowa 1995). However, in 1996, the court overturned its previous decisions concerning the agricultural use exemption from county zoning. Kuehl v. Cass County, 555 N.W.2d 686 (Iowa 1996). The 1996 case, involved a hog confinement facility in contract production with a Pennsylvania company. The court determined that the facility was exempt from county zoning even though the proposed facility was separate from any traditional farming operation carried on by the hog farmers. As such, the case reflects an acknowledgement of the changes in present-day agricultural business structures.
What’s Not Protected
Subsequent changes. While right-to-farm laws try to assure the continuation of farming operations, they do not protect subsequent changes in a farming operation that constitute a nuisance after local development occurs nearby. For example, in Davis, et al. v. Taylor, et al., 132 P.3d 783 (Wash. Ct. App. 2006), the state’s right-to-farm law was held to be inapplicable where the increased noise caused by a farmer’s use of propane cannons and cherry guns to scare birds from a cherry orchard began after homeowners built their house and an adjoining residential neighborhood was well-established. The orchard had previously been quiet and pastoral, and the farmer’s use of cherry guns and propane cannons was held to be a nuisance. Similarly, in Trickett v. Ochs, 838 A.2d 66 (Vt. 2003), the Vermont right-to-farm statute was inapplicable where the nature of an apple farming operation changed after the plaintiffs moved into a nearby home. However, some states may allow increased agricultural activity on property that is used for agricultural use without substantial interruption if the agricultural use began before the plaintiff began using the neighboring land. See, e.g., Wis. Stat. §823.08.
Nuisances. Right-to-farm laws don’t protect nuisances. In other words, a farmer has the right to continue farming without being sued for being a nuisance (if the statutory requirements are satisfied), but if the farming operation constitutes a nuisance after conditions have changed around the operation, the statute may not protect the farming operation. For instance, in Flansburgh v. Coffey, 370 N.W.2d 127 (Neb. 1985), the plaintiffs purchased a 1.67-acre home site from the defendant in 1980. After the plaintiffs moved to the location, the defendant allowed his tenant to construct a 400-head hog facility within 100 feet of the plaintiff's land. The plaintiffs filed a nuisance action, and the defendants raised the Nebraska right-to-farm law as a defense. The court held that the right-to-farm law did not bar an action for a change in operations when a nuisance is present. If a nuisance cannot be established, a right-to-farm law can operate to bar an action when the agricultural activity on land changes in nature. For instance, in Dalzell, et al. v. Country View Family Farms, LLC, No. 1:09-cv-1567-WTL-MJD, 2012 U.S. Dist. LEXIS 130773 (S.D. Ind. Sept. 13, 2012), the land near the plaintiffs changed hands. The prior owner had conducted a row-crop operation on the property. The new owner continued to raise row crops, but then got approval for a 2800-head sow confinement facility. The defendant claimed the state (IN) right-to-farm law as a defense and sought summary judgment. The court held that state law only allows nuisance claims when “significant change” occurs and that transition from row crops to a hog confinement facility did not meet the test because both are agricultural uses. The court noted that an exception existed if the plaintiffs could prove that the hog confinement operation was being operated in a negligent manner which causes a nuisance, but the plaintiffs failed to prove that the alleged negligence was the proximate cause of the claimed nuisance. Thus, the exception did not apply and the defendant’s motion for summary judgment was granted. The court’s decision was affirmed on appeal. Dalzell, et al. v. Country View Family Farms, LLC, et al., No. 12-3339, 2013 U.S. App. LEXIS 13621 (7th Cir. Jul. 3, 2013). Similarly, in Parker v. Obert’s Legacy Dairy, LLC, No. 26A05-1209-PL-450, 2013 Ind. App. LEXIS 203 (Ind. Ct. App. Apr. 30, 2013), the defendant had expanded an existing dairy operation from 100 cows to 760 cows by building a new milking parlor and free-stall barn on a tract adjacent to the farmstead where the plaintiff’s family had farmed since the early 1800s. The plaintiff sued for nuisance and the defendant asserted the state (IN) right-to-farm statute as a defense. The court determined that the statute barred the suit. Importantly, the court determined that the expansion of the farm did not necessarily result in the loss of the statute’s protection. The expanded farm remained covered under the same Confined Animal Feeding Operation permit as the original farm. In addition, the conversion of a crop field to a dairy facility was protected by the statute because both uses simply involved different forms of agriculture. The court noted that the statute protected one farmer from suit by another farmer for nuisance if the claim involves odor and loss of property value. But, it is important to note that not all state statutes will protect a farmer from nuisance suits brought by other farmers.
The increasing interactions between non-farmers farmers in rural areas makes understanding the importance and operation of right-to-farm laws important. Do you know how your state provisions operate?
Tuesday, August 22, 2017
On September 18, Washburn School of Law will be having its second annual CLE conference in conjunction with the Agricultural Economics Department at Kansas St. University. The conference, hosted by the Kansas Farm Bureau (KFB) in Manhattan, KS, will explore the legal, economic, tax and regulatory issue confronting agriculture. This year, the conference will also be simulcast over the web.
That’s my focus today – the September 18 conference in Manhattan, for practitioners, agribusiness professionals, agricultural producers, students and others.
Financial situation. Midwest agriculture has faced another difficult year financially. After greetings by Kansas Farm Bureau General Counsel Terry Holdren, Dr. Allen Featherstone, the chair of the ag econ department at KSU will lead off the day with a thorough discussion on the farm financial situation. While his focus will largely be on Kansas, he will also take a look at nationwide trends. What are the numbers for 2017? Where is the sector headed for 2018?
Regulation and the environment. Ryan Flickner, Senior Director, Advocacy Division, at the KFB will then follow up with a discussion on Kansas regulations and environmental laws of key importance to Kansas producers and agribusinesses.
Tax – part one. I will have a session on the tax and legal issues associated with the wildfire in southwest Kansas earlier this year – handling and reporting losses, government payments, gifts and related issues. I will also delve into the big problem in certain parts of Kansas this year with wheat streak mosaic and dicamba spray drift.
Weather. Mary Knapp, the state climatologist for Kansas, will provide her insights on how weather can be understood as an aid to manage on-farm risks. Mary’s discussions are always informative and interesting.
Crop Insurance. Dr. Art Barnaby, with KSU’s ag econ department, certainly one of the nation’s leading experts on crop insurance, will address the specific situations where crop insurance does not cover crop loss. Does that include losses caused by wheat streak mosaic? What about losses from dicamba drift?
Washburn’s Rural Law Program. Prof. Shawn Leisinger, the Executive Director of the Centers for Excellence at the law school (among his other titles) will tell attendees and viewers what the law school is doing (and planning to do) with respect to repopulating rural Kansas with well-trained lawyers to represent the families and businesses of agriculture. He will also explain the law school’s vision concerning agricultural law and the keen focus that the law school has on agricultural legal issues.
Succession Planning. Dr. Gregg Hadley with the KSU ag econ department will discuss the interpersonal issues associated with transitioning the farm business from one generation to the next. While the technical tax and legal issues are important, so are the personal family relationships and how the members of the family interact with each other.
Tax – part two. I will return with a second session on tax issues. This time my focus will be on hot-button issues at both the state and national level. What are the big tax issues for agriculture at the present time? There’s always a lot to talk about for this session.
Water. Prof. Burke Griggs, another member of our “ag law team” at the law school, will share his expertise on water law with a discussion on interstate water disputes, the role of government in managing scarce water supplies, and what the relationship is between the two. What are the implications for Kansas and beyond?
Producer panel. We will close out the day with a panel consisting of ag producers from across the state. They will discuss how they use tax and legal professionals as well as agribusiness professionals in the conduct of their day-to-day business transactions.
The Symposium is a collaborative effort of Washburn law, the ag econ department at KSU and the KFB. For lawyers, CPAs and other tax professionals, application has been sought for continuing education credit. The symposium promises to be a great day to interact with others involved in agriculture, build relationships and connections and learn a bit in the process.
We hope to see you either in-person or online. For more information on the symposium and how to register, check out the following link: http://washburnlaw.edu/practicalexperience/agriculturallaw/waltr/continuingeducation/businessofagriculture/index.html
August 22, 2017 in Bankruptcy, Business Planning, Civil Liabilities, Contracts, Cooperatives, Criminal Liabilities, Environmental Law, Estate Planning, Income Tax, Insurance, Real Property, Regulatory Law, Secured Transactions, Water Law | Permalink | Comments (0)
Monday, July 31, 2017
Today's post is a deviation from my normal posting on an aspect of agricultural law and tax that you can use in your practice or business. That’s because I have a new book that is now available that you might find useful as a handbook or desk reference. Thanks to West Academic Publishing, my new book “Agricultural Law in a Nutshell,” is now available. Today’s post promotes the new book and provides you with the link to get more information on how to obtain you copy.
The Nutshell is taken from my larger textbook/casebook on agricultural law that is used in classrooms across the country. Ten of those 15 chapters are contained in the Nutshell, including some of the most requested chapters from my larger book – contracts, civil liabilities and real property. Also included are chapters on environmental law, water law and cooperatives. Bankruptcy, secured transactions, and regulatory law round out the content, along with an introductory chapter. Not included in this Nutshell are the income tax, as well as the estate and business planning topics. Those remain in my larger book, and are updated twice annually along with the other chapters found there.
The Nutshell is designed as a concise summary of the most important issues facing agricultural producers, agribusinesses and their professional advisors. Farmers, ranchers, agribusinesses, legal advisors and students will find it helpful. It’s soft cover and easy to carry.
Rural Law Program
The Nutshell is another aspect of Washburn Law School’s Rural Law Program. This summer, the Program placed numerous students as interns with law firms in western Kansas. The feedback has been tremendous and some lawyers have already requested to be on the list to get a student for next summer. Students at Washburn Law can take numerous classes dealing with agricultural issues. We are also looking forward to our upcoming Symposium with Kansas State University examining the business of agriculture and the legal and economic issues that are the major ones at this time. That conference is set for Sept. 18, and a future post will address the aspects of that upcoming event.
You can find out more information about the Nutshell by clicking here: http://washburnlaw.edu/practicalexperience/agriculturallaw/waltr/agriculturallawnutshell/index.html
Tuesday, July 11, 2017
Spray-drift issues with respect to dicamba and the use of XtendiMax with VaporGrip (Monsanto) and Engenia (BASF) herbicides for use with Xtend Soybeans and Cotton are on the rise. Usage of dicamba has increased recently in an attempt to control weeds in fields planted with crops that are engineered to withstand it. But, Missouri (effective July 7) and Arkansas (as of June) have now taken action to ban dicamba products because of drift-related damage issues.
So, what factors help determine the proper application of dicamba? In addition, if drift occurs and damage crops in an adjacent field, how should the problem be addressed? Can the matter be settled privately by the parties involved? If not, what legal standard applies in resolving the matter – negligence or strict liability?
Issues associated with dicamba drift – that’s the focus of today’s post.
Uniqueness of Dicamba
In many instances, spray drift is a straightforward matter. The typical scenario involves either applying chemicals in conditions that are unfavorable (such as high wind), or a misapplication (such as not following recommended application instructions). But, dicamba is a unique product with its own unique application protocol.
I asked an expert on chemical applications to provide me with an assist on the issues associated with the application of dicamba. Jeff Haggerty of Heinen Bros. Ag near Seneca, KS, has many years in the agricultural chemical application business and provided some helpful comments to me, and the following bullet points summarize his thoughts on the matter:
- Dicamba is a very volatile chemical and is rarely sprayed in the summer months. This is because when the temperature reaches approximately 90 degrees Fahrenheit, dicamba will vaporize such that it can be carried by wind for several miles. This can occur even days after application.
- The typical causes of spray drift are application when winds are too strong, a temperature inversion (temperature not decreasing with atmospheric height) exists or there has been a misapplication of the chemical.
- For the new dicamba soybeans, chemical manufacturers reformulated the active ingredient to minimize the chance that it would move off-target due to it volatility.
- Studies have concluded that the new formulations are safe when applied properly, but if a user mixes-in unapproved chemicals, additives or fertilizer, the safe formulations revert to the base dicamba formulation with the attendant higher likelihood of off-target drift.
- Soybeans have an inherit low tolerance to dicamba. As low as 1/20,000 of an application rate can cause a reaction. A 1/1000 of rate can cause yield loss.
- The majority of crops damaged from vapor drift may not actually result in yield loss. That’s particularly the case if drift damage occurs before flowering. However, if the drift damage occurs post-flowering the likelihood of yield loss increases. Also, studies have shown that a slight rain event can stop the volatilizing of dicamba.
- The label is the law. This is particularly true with the new chemicals used on Xtend crops. The labels are very specific with respect to additives, nozzles, boom height, and wind speed and direction.
Damage Claims – Building a Case
Negligence. For a person to be deemed legally negligent, certain conditions must exist. These conditions can be thought of as links in a chain. Each condition must be present before a finding of negligence can be obtained. The first condition is that of a legal duty giving rise to a standard of care. To be liable for a negligent tort, the defendant's conduct must have fallen below that of a “reasonable and prudent person” under the circumstances. A reasonable and prudent person is what a jury has in mind when they measure an individual's conduct in retrospect - after the fact, when the case is in court. The conduct of a particular tortfeasor (the one causing the tort) who is not held out as a professional is compared with the mythical standard of conduct of the reasonable and prudent person in terms of judgment, knowledge, perception, experience, skill, physical, mental and emotional characteristics as well as age and sanity. For those held out as having the knowledge, skill, experience or education of a professional, the standard of care reflects those factors. For example, the standard applicable to a farmer applying chemicals to crops is what a reasonably prudent farmer would have done under the circumstances, not what a reasonably prudent person would do.
If a legal duty exists, it is necessary to determine whether the defendant's conduct fell short of the conduct of a “reasonable and prudent person (or professional) under the circumstances.” This is called a breach, and is the second element of a negligent tort case.
Once a legal duty and breach of that duty are shown to exist, a causal connection (the third element) must be established between the defendant's act and (the fourth element) the plaintiff's injuries (whether to person or property). In other words, the resulting harm to the plaintiff must have been a reasonably foreseeable result of the defendant's conduct at the time the conduct occurred. Reasonable foreseeability is the essence of causality (also known as proximate cause).
For a plaintiff to prevail in a negligence-type tort case, the plaintiff bears the burden of proof to all four elements by a preponderance of the evidence (just over 50 percent).
Typical drift case. In a straightforward drift case, the four elements are typically satisfied – the defendant misapplied the chemical or did so in high winds (breach of duty to apply chemicals in a reasonable manner in accordance with industry standards/requirements) resulting in damages to another party’s crops. In addition, the plaintiff is able to pin-down where the drift came from by weather reports for the day of application combined with talking with neighbors to determine the source of the drift (causation). In many of these situations, a solution is worked out privately between the parties. In other situations, the disaffected farmer could file a complaint with the state and the state would begin an investigation which could result in a damage award or litigation.
Generally, what are contributing factors to ag chemical drift? For starters, the liquid spray solution of all herbicides can physically drift off-target. This often occurs due to misapplication including such things as applying when wind speed exceeds the recommended velocity, improper spray pressure, and not setting the nozzle height at the proper level above the canopy of the intended plant target. Clearly, not shielding sprayers and aerial application can result in an increased chance of off-site drift. Also, the possibility of drift to an unintended field can be influenced by droplet size if the appropriate nozzle is not utilized.
Dicamba drift cases. As noted above, dicamba is a different product that is more volatile than other crop chemicals. That volatility, the increased likelihood of drift over a broader geographic area, and that dicamba drift damages can occur several days after application, makes it more difficult for a plaintiff to determine the source of the drift. Thus, the causation element of the plaintiff’s tort claim can be more difficult to establish with dicamba-related damage claims. In addition, soybeans are inherently sensitive to extremely low dicamba concentrations, thus elevating the potential for damages.
Clear patterns of injury indicate physical drift which could make the causation element easier to satisfy. Wind speed at time of application, sprayer speed, sprayer boom height above the plant canopy, nozzle height, tank cleaning, sprayer set-up and whether the application occurs at night rather in the daylight, are also factors that are within the applicator’s control. Failure to follow label directions, meet common industry standards or manufacturer guidance on any of those points could point toward the breach of a duty and could also weigh on the causation element of a tort claim.
Relatedly, another factor with dicamba, as noted above, is whether it was applied on a hot day. The chemistry of dicamba has a “vapor curve” that rises with the temperature. While I have not seen that vapor curve, it would be interesting to see whether that curve has a discernibly steeper slope at a particular temperature. If so, that would indicate the point at which dicamba becomes very volatile and should not be applied. Indeed, the Banvel (brand name of dicamba) label specifically states that the chemical is not to be applied “adjacent to sensitive crops when the temperature on the day of the application is expected to exceed 85 [degrees Fahrenheit] as drift is more likely to occur.” To the extent any particular defendant can establish that application occurred when temperature on the day of application was forecast to exceed 85 degrees, the duty and breach elements of the plaintiff’s tort claim would be easier to satisfy.
Dicamba manufacturers have protocols in place to aid in the safe application of the products. Thus, in quantifiable damage cases, it is likely that an application protocol was not followed. But, establishing that breach to the satisfaction of a jury could be steep uphill climb for a plaintiff. That’s particularly the case with dicamba given its heightened volatility. As previously noted, damages could be caused by physical drift, temperature, volatility or temperature inversions. Is a particular cause tied to the defendant’s breach of a duty owed to the plaintiff?
Strict liability. Most pesticide drift cases not involving aerially-applied chemicals are handled under the negligence standard. However, a strict liability approach is sometimes utilized for aerially applied chemicals. See, e.g., Langan v. Valicopters, Inc., 567 P.2d 218 (Wash. 1977); but see Mangrum v. Pique, et al., 359 Ark. 373, 198 S.W.3d 496 (2006)(the aerial application of chemicals commonly used in farming communities that are available for sale to the general public is not an ultrahazardous activity triggering application of strict liability). In such a situation, liability results from damages to others as a result of the chemicals. It makes no difference whether the applicator followed all applicable rules for applying the chemicals and did so without negligence. The strict liability rule is harsh, and is normally reserved for ultra-hazardous activities. Do the present issues associated with dicamba drift damages warrant the application of the strict liability rule? Only time will tell whether the theory is pled in a future case and whether the court would apply it.
The dicamba drift issue is an important one in agriculture at the present time with respect to soybean and cotton crops. While the new dicamba formulations will not eliminate the problem of physical drift, proper application procedures by following label directions can go a long way to minimizing it. Likewise, drift issues can also be minimized by communication among farmers that helps determine the planting location of particular crops, their relative sensitivities to dicamba and following acceptable setbacks. But, farmers that sustain damage should quantify the economic loss, and see whether it can be determined if the source of the loss arose from a causally-connected breach of a duty.
Wednesday, June 21, 2017
One issue that I occasionally receive questions on concerns liability for animal disease. The questions can take several forms, including diseased animals of the owner as well as another person’s diseased animals that cause an infection.
Given that animal disease can result in significant economic loss, the liability question is an important one. Today’s post takes a brief look at the issue.
Trespassing or Straying Animals
If an owner of diseased animals knows of an infection and knows that it would be communicated to other animals if contracted, some states hold the owner liable for damages caused by transmission of the disease. Knowledge that the animals were infected is typically an essential element. Once the animals' owner has knowledge of the disease, the owner is under a duty to take reasonable steps to ensure that the animals do not come into contact with healthy, uninfected livestock of anyone else. Knowledge that the animals were infected is typically an essential element. Several states, by statute, require restraint of animals that are known to have an infectious or contagious disease from running at large or coming into contact with other animals. These statutes have been enacted by the major livestock producing states.
The injured party may be barred from recovering damages if the complaining party is contributorily negligent. Knowledge that animals running at large were infected coupled with the complainant's failure to attempt to prevent the infected animal from coming in contact with the complainant's own animals may preclude recovery. Moreover, allowing infected animals to remain on the complaining party's premises after being aware of their diseased condition may be a bar to damages.
Landlord's Duty Regarding Diseased Premises
Sometimes questions arise concerning a landlord's liability for diseased or contaminated premises when a tenant brings healthy animals to the premises. In most jurisdictions, the liability of the landlord depends largely upon the landlord's deceit to the tenant concerning the past presence of disease on the premises. Thus, if a tenant has healthy animals and brings those animals onto the landlord's diseased or contaminated premises and the animals become diseased themselves, it will be difficult for the tenant to recover against the landlord. Failure to disclose the diseased condition of the leased premises is usually not a basis for action. Instead, actual deceit is required. Therefore, if the tenant fails to ask whether the premises are disease or contamination free, the landlord is under no duty to disclose that fact to the tenant. However, if the tenant asks and the landlord responds less than fully or less than truthfully, actual deceit may be present and provide the tenant a basis for recovery. See, e.g., Wilcox v. Cappel, No. A-95-798, 1996 Neb. App. LEXIS 243 (Neb. Ct. App. Dec. 3, 1996).
For farm tenants that claim that the landlord’s premises caused damage to the tenant’s animals, the law is fairly clear. As a prerequisite for recovering damages against a landlord arising from defects in the leased premises, the tenant should make a thorough inspection of the property and ask questions. It is also a really good idea to reduce the lease agreement to writing and include in the lease a provision that specifies which party is liable for damages resulting from disease or contamination.
Disposal of Animal Carcasses
All states have statutory requirements that must be satisfied in order to properly dispose of a dead animal. In most states, disposal must occur within 24 hours after death. By statute, states typically acknowledge that disposal may be by burying, burning or feeding the carcass to other livestock. The option of feeding the carcass to other livestock is typically only available if the animal did not die of a contagious disease. Disposal is also usually available to a licensed rendering company. The typical state statute requires direct delivery to the point of disposal with an exception often made for stops to load additional carcasses. Vehicles used to transport the carcass of an animal typically must be lined or other measures taken to prevent any leakage of liquid, and must be disinfected after each transport.
Most states prohibit certain methods of dead animal disposal. For instance, placing the carcass of dead animal in a water course or roadway is a misdemeanor in many states. Similarly, knowingly allowing a carcass to remain in such an area is also typically a misdemeanor. But, in most jurisdictions, cattle and horse carcasses may be moved from one farm to another if they are not diseased.
Animal diseases are a natural aspect of livestock production activities. Knowing the liability issues that might arise is an important aspect of livestock risk management.