Opinion ID: 2772691
Heading Depth: 2
Heading Rank: 3

Heading: The Conservation Easement Exchange

Text: [¶13] Spike testified that “[w]e started talking about a conservation easement and encouraging it in 2005 while I was a trustee.” Many BRT beneficiaries had indicated a desire to preserve BRT land with such an easement. In 2010, the BRT trustees reached an agreement with the Nature Conservancy to place a conservation easement on 1,020 acres of BRT land, in exchange for $1,353,200 (net after taxes and costs) and a small piece of property called the “Polo Field.” Spike was in favor of this transaction; however, he objected to a series of transactions between trustee Julia Forbes and the BRT which led up to the conservation easement transaction. [¶14] Late in the negotiations on the conservation easement, which were to be resolved by the end of 2010 due to funding restrictions, the trustees learned that the Natural Resources Conservation Service (NRCS) would require all 19 BRT beneficiaries to be assessed for financial eligibility pursuant to 7 C.F.R. § 1491 et seq. prior to approving the easement. In order to avoid the cumbersome eligibility assessment and expedite the process, the trustees determined to convey the property to one person, trustee Julia Forbes. [¶15] The idea that Julia would hold the 1,020 acres subject to the conservation easement for purposes of the transaction was fairly straightforward; however, Julia did not own sufficient shares in the BRT necessary to exchange for that amount of acreage. In order to acquire sufficient shares, Julia first exchanged 61 shares she had in the HST for 320 acres of HST land. Then, in order to acquire more BRT shares, Julia exchanged the 320 former HST acres to the BRT for 60 newly-issued BRT shares. Julia then relinquished her 210 BRT shares in exchange for 1,020 acres of BRT land. She completed the conservation easement deal as the sole owner of the 1,020 acres, and then transferred that land back to the BRT in exchange for 172 BRT shares. She also conveyed to the BRT the $1,353,200 (net after taxes and costs) that she had received for the easement. Julia still retains the Polo Field property which was also part of the easement consideration, pending resolution of this lawsuit. [¶16] The trustees did not obtain any current appraisal of the specific pieces of property exchanged in this series of transactions (other than the appraisal of the 1,020 acres for the conservation easement), instead relying on older appraisals, appraisals of other property in the area, and a 2004 market analysis. 4 D. The Petitions for Change of Place of Use of BRT Water Rights [¶17] In 2009 or 2010, the Wyoming Board of Control approached Cam and asked him to correct the discrepancies between water rights as permitted and the water as it was actually being put to beneficial use on HST and BRT lands. Significant areas of land were being irrigated where there were no water rights, and other areas for which there were water rights had not had water applied to them for many years. Prestfeldt Surveying was retained to research the water rights, means of conveyance and reliability of supply, and ultimately produced a series of maps to accompany four Petitions for Change of Place of Use. Cam testified with regard to the rearrangement of the water rights: “So really every trust benefited from this. Basically you’re taking unused water and putting it where it can be used.” [¶18] The petitions were signed by Cam as trustee of the BRT4 and as trustee of the HST. Although each petition stated that the petitioners (BRT and HST) were the owners of the lands at issue, in fact the petitions covered 36 acres owned by Cam individually, and 160 acres owned by Cam, Julia, and three other family members (the “Tracy property”). Some BRT water rights were moved to the Tracy property, in exchange for which the Tracy property rights were moved to BRT property. Some Tracy water rights were also moved to Cam’s property, which had no water rights prior to the changes in place of use. [¶19] The petitions were filed in July 2011, and granted by the Wyoming Board of Control in February 2012. These water rights changes in place of use were not reported to the beneficiaries, Cam testified, because “it was not on the radar.” [¶20] No information regarding the water rights petitions was provided to Spike in discovery. Spike learned of them from another source, and shortly thereafter, his counsel listed the four Petitions for Change of Place of Use as exhibits. The BRT trustees objected promptly and repeatedly to any discussion of the petitions, arguing that the water rights issue was an unpled claim, and that the exhibits were not identified until long after the applicable deadlines. [¶21] Although his initial complaint sought various forms of relief, by the time of trial Spike sought only the removal of the trustees. The district court found that Cam and Julia had breached their duty of loyalty and should be removed as BRT trustees. They appealed that decision. The district court made no finding as to trustees Sarah and Edith, so they continue as BRT trustees. Spike appealed that portion of the decision. 4 The other trustees had given Cam permission to sign on behalf of the Trust. 5