Maryland Environmental Trust v. Gaynor

RAKER, J. This case involves a conservation easement 1 upon property donated to petitioner, the Maryland Environmental Trust (MET), pursuant to Maryland Code (1974, 1996 Repl.Vol., 2001 Supp.) § 2-118 of the Real Property Article. Respondents Cathy Cook Gaynor and Kevin Gaynor initiated this action in the Circuit Court for Anne Arundel County, claiming that MET unlawfully induced them into granting a conservation easement on their land by not disclosing that MET would have accepted the easement without also requiring them to surrender their right to subdivide their property. We shall hold that respondents failed to produce clear and convincing evidence that MET committed fraud in inducing them to ⁹² donate the easement at issue in this case. Accordingly, we shall reverse the judgments of the Court of Special Appeals, Environmental Trust v. Gaynor, 140 Md.App. 433 , 780 A.2d 1193 (2001), and the Circuit Court rescinding their Deed of Conservation Easement.

I. MET is a public agency governed by a Board of Trustees and operating as part of the Department of Natural Resources. See Maryland Code (1973, 2000 Repl.Vol., 2001 Supp.) § 3-202 of the Natural Resources Article. 2 MET was created in 1974 to “conserve, improve, stimulate, and perpetuate the aesthetic, natural, health and welfare, scenic, and cultural qualities of the environment, including, but not limited to land, water, air, wildlife, scenic qualities, open spaces, buildings or any interest therein, and other appurtenances pertaining in any way to the State.” § 3-201(a). MET is empowered to “acquire and hold real and personal property, or any interest therein, of aesthetic, scenic, or cultural significance ... by lease, gift, purchase, devise, bequest, or by any other means, and conserve, improve, administer, invest, or dispose of the properties for the purposes of the Trust....” § 3-203(3). MET’s purpose “is of general benefit to the citizens of this State, and is charitable in nature,” by protecting property for the benefit of the public at large thereby preserving the natural environment and preventing sprawl development. § 3-210(a).

One way that MET accomplishes its purpose is by accepting donated conservation easements. By accepting the easement, the State undertakes to enforce the restriction in perpetuity. In 1989, respondents 3 contacted MET to inquire about donating a conservation easement on their twenty-five acre ⁹³ property. They were informed that MET normally accepts easements on property of fifty acres or larger.

Thereafter, respondents contacted several of their neighbors about donating easements simultaneously so that the aggregate acreage of the properties • donated would qualify them for conservation easements. Several neighbors expressed interest in donating conservation easements to MET. In June 1989, representatives of MET met with respondents and their neighbors. Negotiations between the parties occurred throughout the summer of 1989.

Although respondents and their neighbors explored donating conservation easements simultaneously, individual easements were required for each property, and the terms of each of those easements varied. On September 11, 1989, the properties were presented to MET’s Board of Trustees. The minutes of that board meeting state as follows: “The Board voted to accept the easements, subject to the following conditions: (1) The donors proposed dispute resolution language should be modified ...; (2) The deeds must contain a clause to state that MET may unilaterally make the 501(c) local land trust a co-grantee ...; (3) Staff should ask for a “no subdivision” provision in the Servary deed, and also in the Gaynor and Schumacher deeds. This is most important for the Servary deed.

However, the Board will accept the easements without this provision if necessary....” Respondent Kevin Gaynor testified at trial that he spoke to James Highsaw, MET’s designated representative, by telephone on September 12, 1989, that Mr. Highsaw told him about the board meeting, and that he got the impression from the conversation that MET would not accept the easements ⁹⁴ unless the property owners agreed to the subdivision restriction. He testified that Mr. Highsaw told him that the Board of Trustees “wanted” the restriction and “felt strongly” about it. He assumed that this meant that the Board required the restriction as a condition of accepting the easements. On September 15, 1989, Mr. Highsaw sent a letter to respondent Kévin Gaynor stating as follows: “Dear Kevin: As I discussed with Barbara Parker this week, our Board of Trustees agreed to accept the easement offers on the condition that the proposed dispute resolution language be changed to read discuss the matter for SO days instead of discuss referring the matter to arbitration.

The Board also advised that the deeds should contain a provision stating that MET may unilaterally make the 501(c) local land trust a co-grantee of the easements. I will have to get the exact wording to you after further discussion with a Board member. The Board requests that the owners consider adding a ‘no subdivision’ provision to the Gaynor, Schumacker/Parker, and Servary deeds to ensure that the properties remain intact under one ownership. Because of its smaller size, the Board especially recommends this provision for the Servary property.

With such a provision, the second home site on each property could not be subdivided off and sold to a new owner as a separate lot. Please report this to each property owner, and discuss this request at your September 18th meeting and get back to me. I will proceed with asking the Board of Public Works to ratify the easements at their October 4th meeting. In the meantime, I will need your response to the ‘no subdivision’ provision.” According to respondents, Mr. Highsaw never stated specifically that MET’s Board of Trustees would accept the easements without the subdivision restriction.

Mr. Highsaw testified that he had no independent recollection of his telephone conversations with respondents in 1989, but that he drafted ⁹⁵ the minutes of the September 11, 1989 meeting of MET’s Board of Trustees because that was one of his duties as the staff person in attendance. Mr. Highsaw also testified that he believed that he told respondents and the other property owners that MET’s Board of Trustees had accepted their easements without the no-subdivision provision and that this information was conveyed in his September 15, 1989 letter. One of the other property owners, Barbara Parker, testified at trial as to her understanding of Mr. Highsaw’s September 15,1989 letter. She testified that it was clear that the request for a subdivision restriction was not a requirement and that she was certain that she informed respondents and the other property owners that she and her husband would not agree to a no-subdivision provision.

No such subdivision restriction was included in the conservation easement that the Schumacher/Parker family donated to MET. In December 1997, respondents learned that their neighbors, Dale Schumacher and Barbara Parker, intended to build a second home on part of their property and that their conservation easement to MET did not include a subdivision restriction. On February 11, 2000, respondents filed a First Amended Complaint in the Circuit Court for Anne Arundel County against MET, seeking declaratory judgment for ultra vires action and raising claims of fraud in the inducement, negligent misrepresentation, and deceit, concealment, and nondisclosure. A court trial was held on March 15, 2000 in the Circuit Court for Anne Arundel County.

At the close of respondents’ case, MET moved for judgment on all counts. The court granted judgment in favor of MET on the claim for declaratory judgment for ultra vires action. In a written memorandum opinion and order, the Circuit Court found in favor of respondents on their claim for fraud and ordered rescission of the Deed of Conservation Easement, as well as all other written and oral agreements between the parties underlying the conservation easement. The Circuit Court entered judgment for ⁹⁶ MET on the claims for