North Dakota case illustrates the peril in attempting to terminate farm leases for “cause”

February 6, 2007 | Roger McEowen

 

The plaintiff in this case was a farm tenant that leased 1,300 acres of farm land under a written cash lease for five years. The lease provided for termination if the tenant’s failed to farm the land “in a good and farmer-like manner.”  The lease was renewed for another five years, but a disagreement as to the tenant’s farming practice ended with the landlord telling the tenant that the lease was terminated because of the poor farming practices and that a new tenant would be farming the land immediately. The tenant sued on the basis that the termination was unreasonable and sought to enforce the lease or be awarded damages. The landlord argued that the termination was justified because the plaintiff had not farmed the land in a good and farmer-like manner as specified in the lease. The trial court ruled that the termination was not reasonable and awarded the tenant over $300,000 in damages for lost profits and the cost of tilling the land. The landlord appealed, arguing that the trial court failed to apply the doctrine of avoidable consequences because the tenant failed to continue farming the land during the controversy so as to minimize the losses. The trial court had found that the plaintiff had tried to find substitute land to rent, but none was available in the area. The landlord had retracted the lease termination during the case and argued that the tenant could have continued to farm the original land in mitigation of the losses. The court held that a retraction made after a lawsuit had been filed was not effective to raise the issue of mitigation of damages. Hanson v. Boeder, No. 20060114, 2007 N.D. LEXIS 20 (N.D. Sup. Ct.Feb. 6, 2007).