Recent Opinion About Abandonment and Termination Of a Vineyard Lease

This recent unpublished opinion from California’s Fifth Appellate District is interesting for tenant grape growers and their landlords who may want to terminate a lease.  In Pyle v. Moles, et al., the court was faced with an appeal by a landlord who had rented 118 acres of grape vineyards to a tenant and lost a court battle over whether he had the right to consider the crop abandoned and sell it to Gallo when he made the determination that the tenant had abandoned the crop.

The tenant rented the vineyards for growing wine grapes or raisins, whichever the tenant saw fit.

The lease provided that the tenant would “farm said land in a farmerlike manner according to best farming methods practiced in this vicinity.”  Under its terms, the tenant would harvest and sell the crop, either as raisins or as wine grapes.  The landlord was to receive as rent, “22.5% of the proceeds of the sales of the said crop” along with payment for the cost of electricity to run the irrigation pumps.

The landlord did not see the tenant at the property and was informed that the tenant had stopped paying the person the tenant had hired to irrigate the vineyards. The landlord considered the lease terminated and sold the grapes in the vineyard to E&J Gallo Winery and didn’t tell the tenant about it.  The tenant sold the same crop to another company as a raisin crop.

The tenant had a lender who filed a UCC financing statement registering an interest in the crop.  The landlord made a written demand on the tenant for payment of the electricity, the tenant paid some money and the landlord sent a letter stating that the lease was terminated for “substandard farming practices”.  The landlord told the tenant not to come onto the vineyard anymore and when the tenant wouldn’t leave, the landlord called the sheriff to remove him.

The landlord harvested the grapes and delivered them to Gallo.  Gallo filed an interpleader action (this is a legal action where a party with money says that they’re holding it, and they know it’s someone else’s but they need a court to determine to whom it belongs – basically, “I know it isn’t mine, so Court, here it is and you can decide”) against the landlord, the tenant and the lender.  The landlord and the tenant each brought claims stating that the money was theirs.  And the trial court found for the tenant.

On appeal, the appellate court upheld the finding for the tenant stating that the evidence supported a finding that the tenant didn’t abandon the crop.  The tenant had hired someone to irrigate, and although he had not paid them, he didn’t tell them to stop performing the irrigation.  The tenant had (as in previous years) sold the crop to a raisin packer.  When the landlord demanded the electricity payment, the tenant made partial payments that the landlord accepted.  The landlord had also complained that the tenant had not adequately weeded the property and the tenant attempted to go onto the property to remedy the situation, but was prevented from doing so by the landlord.  The court found that all these actions showed that the tenant intended to continue the tenancy.

Because the tenant had not abandoned the crop, and the landlord’s efforts at cancelling the lease didn’t comply with the law (there was no offer to cure the alleged lease defaults and no legal process was initiated to effect an eviction) the grapes belonged to the tenant when the landlord harvested them and delivered them to Gallo.

This opinion reads like a story that we only have a glimpse of an it seems like there’s more to the back-story than we’re being told.  The briefs are here: the appeal brief, the response, and the reply.  The short information here shows that a landlord needs to comply with legal process for an eviction or with the terms of the lease for termination.  A tenant needs to continue some efforts under the lease to show that there’s no abandonment.