Glass v. Van Lokeren—Conservation Easement Donors Sue Land Trust

In 1992 and 1993, Charles and Susan Glass donated two conservation easements protecting small portions of a 10-acre parcel located on the shoreline of Lake Michigan, known as Pineyrie. The donations were made to the Little Traverse Conservancy (LTC), a nonprofit organization dedicated to protecting the scenic beauty of northern Michigan.

The Glasses claimed federal charitable income tax deductions with regard to the easement donations, and the IRS challenged the deductions, claiming that the easements did not satisfy the habitat protection conservation purposes test under IRC § 170(h)(4)(A)(ii). Both the Tax Court and the 6th Circuit on appeal held for the Glasses. See Glass v. Comm'r, 471 F.3d 698 (6th Cir. 2006), aff’g Glass v. Comm'r, 124 T.C. 258 (2005).

The value of the easements, however, remained in dispute. The tax litigation had revealed that the legal descriptions in the easements inaccurately described the easements' boundaries, resulting in a substantial overstatement of their values. The Glasses and the IRS eventually agreed that the easements were not worth as much as the Glasses had claimed. Accordingly, in addition to incurring legal fees, the Glasses were ultimately liable for a substantial underpayment of federal income tax as well as interest and penalties.

In an effort to relieve some of their financial woes, the Glasses attempted to sell a portion of Pineyrie, including to their neighbor Van Lokeren, who was a member of LTC's board of directors. At the behest of Van Lokeren, LTC informed the Glasses and the listing real estate broker that the Glasses proposed division of the parcel violated the conservation easements. LTC eventually filed a lawsuit seeking reformation of the easements, asserting that the parties made a mutual mistake regarding the easements’ legal descriptions. The Glasses countered, arguing that LTC had interfered with their ability to sell Pineyrie by “threatening meritless litigation,” and that LTC’s Executive Director and others on LTC’s board engaged in

a common scheme and design constituting a conspiracy to wrongfully and tortiously interfere with an economic business interest of the Glasses, with the purpose and intent to destroy the marketability of the Glasses[’] property and/or to drive down its price in order to benefit both the LTC and a single member or members of its Board of Trustees.

The case was eventually voluntarily dismissed. Meanwhile, Pineyrie went into foreclosure and was sold at a sheriff’s sale.

The Glasses then filed suit, asserting that LTC and Van Lokeren had, among other things, engaged in unrelenting and concerted efforts to interfere with the Glasses’ attempted sale of Pineyrie. In a detailed but unpublished decision, Glass v. Van Lokeren, LC No. 09-002049-CZ (Mich. App. March 25, 2014), the Michigan Court of Appeals found no merit to any of the Glasses' asserted claims, which included conspiracy to tortiously interfere with business or economic relationships, slander of title, malicious prosecution, and abuse of process. The court also found that both LTC and Van Lokeren had legitimate reasons for questioning and objecting to the proposed division of Pineyrie due to the conservation easements.

Nancy A. McLaughlin, Robert W. Swenson Professor of Law, University of Utah S.J. Quinney College of Law