The Virginia Business Litigation Blog
The sale of wine on vineyard premises is an integral part of the winery agricultural business. So says the Virginia Supreme Court which has just reversed a Circuit Court decision that forced a Fauquier County vineyard to shut its doors.
Charles and Lori Marterella bought a parcel of land in Bellevue Farms, a Fauquier County subdivision, with the intention of starting a winery. As land purchasers, they agreed to abide by the applicable subdivision covenants. Among these were Article II, Section I, which states “[all] tracts … shall be exclusively used for residential, agricultural, and recreational purposes,” and Article III, Section 3, which states “[n]o commercial enterprises may be undertaken on the property, which, in the [Site] Committee’s opinion, is in conflict with the goals of these Covenants.”
The Site Committee was established to rule on certain property uses of the landowners. In 1994, it created an informal handbook that stated, among other things: “Agriculture is the only commercial activity expressly permitted under the covenants. Any other work whether as a self-employed person or as an employee that causes external change to your property or leads to regular visits by customers, suppliers, business associates, or others is not acceptable. If you wish to engage in 
non-agricultural business activity, the Committee will rule on its acceptability and the Board would then approve or disapprove your request.”
With a vineyard already operating nearby, and the statement in the handbook, the Marterellas started their winery, believing it was within the rules. But neighbors complained. The Bellevue Landowners’ Council, Inc. (BLOC) sought an injunction precluding the retail sale of wine on the Marterellas’ property, claiming the sales constituted a commercial activity. BLOC did not challenge the growing or bottling of the wine.
The Marterellas argued that wine production is an agricultural enterprise and the on-site retail sale of wine is an integral and essential aspect of the economic viability of that enterprise. The handbook, they concluded, therefore expressly permitted them to sell wine on the premises. They also pointed to the nearby winery to support their assertion that such operations were permitted. That winery had obtained approval and was subject to limits as to how much it could produce.
At trial, the jury returned a verdict in favor of the Marterellas, but the trial judge set the verdict aside and ruled in favor of BLOC. The Virginia Supreme Court restored the jury’s decision, paving the way for the Marterellas to re-open.
The wine industry has blossomed in Virginia in the past decade and this ruling will likely push the number of wineries in the Commonwealth even higher. Wine country tours, on-site wine tastings, demonstrations, and sales bring dollars and jobs to Virginia while preserving open land in agriculture.