Note: This post is not a substitute for legal advice and you should always consult an attorney in your area.
You probably thought that I was done harping on the lease issue now that it is after July 1. Well sadly, there are no rules that prevent me from posting on this topic again. Now that notice to terminate has potentially been given to you, how should you act? You may laugh that I would ask that question, but a recent decision out of Michigan highlights how not to act when you receive notice of termination from your landlord.
Before we look at the facts of the Anglers, LLC v. Oakridge Farms, LLC, let us take a minute to define a term: “tortious interference with a business relationship.” This occurs when a person intentionally interferes with another person’s potential business relationship. For example, your hired hand decides to take another job with a neighboring farmer. The hired hand while employed by you was an honest person and never did anything wrong. You decide to get the hired hand back, call the neighbor, and tell lies about the hired hand. This is potentially tortious interference with a business relationship.
Now to the facts of the Anglers, LLC decision. Oakridge Farms rented a number of farms from RHU D, LLC (Landlord) to grow traditional row crops. The Oakridge Farms’ leases only required 180 days’ notice to terminate the lease. Landlord decided within that time to terminate the leases and rent the farms to Anglers, LLC for vegetable production. Landlord charged a higher rent to Anglers since vegetable production depleted more minerals from the soil. Landlord notified Oakridge Farms within the required 180 days and informed them of the decision to lease the farmland out for vegetable production.
Upon learning of the decision, the Landlord and Anglers alleged that Oakridge Farms sprayed the farms with an herbicide that left a residue on the soil for a year or longer and could potentially make vegetable production impossible. Oakridge Farms claimed that only glyphosate was sprayed and no other herbicides. Neither the Landlord nor Anglers ever saw sprayers in the field but did see tracks after the fact to indicate a sprayer had been on the field. The only proof: at a meeting between Landlord and an owner of Oakridge Farms, the Oakride Farms owner stated that “vegetables would never grow there because of the herbicide he had sprayed on the farms.”
To prove tortious interference with a business relationship, the Michigan Court of Appeals pointed out that Landlord and Anglers would need to demonstrate that Oakridge Farms acted with an improper motive to interfere with Landlord and Anglers’ business relationship. Looking at the evidence, the court of appeals agreed with the trial court that Oakridge Farms had no legitimate reason to spray the fields with glyphosate because by all accounts, the fields were clear of weeds at the time of spraying. The court of appeals agreed that there was enough evidence to show that an owner of Oak Ridge Farms had made threats about applying herbicides to the property which would impact vegetable production, and had told others he was entitled to farm the properties the next year. The Michigan Court of Appeals for those reasons affirmed the almost $39,000 damages for tortious interference.
So why highlight this case? Many of you may be farming the same leased property for so long it feels like it is yours. You may be dealing with absentee landlords who have no connection with that farmland. While all this may be true, in reality that farmland is not truly yours and will always be the landlord’s. As much as we hate to admit it, landlords may decide to rent to another farmer for more money. When that happens, take a moment and consider your actions: Will you take the high road and finish out the lease term. Or will you take the low road like Oakridge Farms did? The low road may make you feel better, but can you afford a potential verdict as big as Oakridge Farm’s for scaring the new tenant off and trying to force the landlord to continue to renting to you? How strained would that landlord-tenant relationship be if you were able to scare the landlord into continuing to rent the farmland to you? These are just some of the issues to consider when dealing with a terminating lease.
To read the full opinion of the case Anglers, LLC v. Oakridge Farms, LLC, No. 309741, 2014 Westlaw 3341666, at *1 (Mich. Ct. App. July 8, 2014), click here.