Lease Negotiations Involve Various Terminology and Litigation.

The plaintiff is a farming/ranching partnership consisting of brothers.  The defendant owns about 33,000 acres of farmland.  The parties entered into a cash lease in 2009 for over 10,000 acres and the lease terminated after the 2009 crop harvest, but required the defendant to  give the plaintiff a first opportunity to rent the leased premises before renting it out for the 2010 crop year.  The parties again entered into a leasing arrangement involving two leases for separate tracts totaling over 29,000 acres.  One lease said the plaintiff again had the first opportunity to rent for the next crop year, and the other lease said the plaintiff had the option to rent for the '13, '14 and '15 crop year.  In April of 2012, the defendant informed the tenant of the right of first refusal and inquired as to whether the plaintiff wanted to rent the land for the future.  The parties met in person in late July after the plaintiff said they wanted to rent on the same terms as the previous year, but the defendant wanted to raise the cash rent amount.  The plaintiff was told that a decision had to be made by August 1, 2012.  The plaintiff did agree to the higher cash rent on August 1 by calling the defendant.  The plaintiff then made financial commitments and purchases in anticipation of leasing the land.  Just over a week later, the defendant sold the land and sought a court determination that the lease to the plaintiff had not been extended and told the plaintiff to cease farming operations.  The defendant then served the plaintiff with notice to quit and vacate the property.  A third party then took possession of the land and planted winter wheat on over 12,000 acres at a cost of over $1 million.  The trial court found that the parties had an enforceable contract and that the plaintiff had exercised its option to lease the property for the '13-'15 crop years.  A second trial resulted in a finding that the plaintiff was not damaged, was not unjustly enriched by receiving the proceeds of the winter wheat crop that the third party planted, and that the defendant had unclean hands.  On appeal, the court affirmed.  Dowling Family Partnership v. Midland Farms, LLC, No. 27114, 2015 S.D. LEXIS 82 (S.D. Sup. Ct. Jun. 17, 2015).

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