Case Title: Fairfax Redevelopment and Housing Authority v. Riekse

Citation: 

Docket Number: 092486

State: virginia

Court: Virginia Supreme Court

Date: 2011-03-04T00:00:00Z

Document:
PRESENT:  Kinser, C.J., Lemons, Goodwyn, Millette, and Mims, 
JJ., and Koontz, S.J.* 
 
FAIRFAX COUNTY REDEVELOPMENT 
AND HOUSING AUTHORITY 
 
 
 
 
 
 
 
 OPINION BY 
v. 
Record No. 092486 
  
    
JUSTICE WILLIAM C. MIMS 
 
 
 
 
 
 
 
     March 4, 2011 
JAMES C. RIEKSE, ET AL.  
 
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY 
Dennis J. Smith, Judge 
 
In this appeal, we consider whether the Fairfax County 
Redevelopment and Housing Authority (“Fairfax”) may enforce a 
right of first refusal to repurchase a parcel of real property 
by demanding specific performance by the current owner’s 
predecessor in title. 
I. 
BACKGROUND AND MATERIAL PROCEEDINGS BELOW 
In 1989, Fairfax granted and conveyed a parcel of real 
property to Peter and Christine Tovar as tenants by the 
entirety subject to certain conditions.  Among those 
conditions, Fairfax reserved a right of first refusal to 
repurchase the property (“the ROFR”).  The ROFR provided that 
[i]n the event that Grantee shall die (both of 
them if more than one is named as Grantee), or 
in the event the Grantee shall determine to sell 
this Property at any time within thirty (30) 
years from the date of this Deed, then and in 
either event, the said Grantor, its successors 
or assigns, shall have the option to repurchase 
                                                 
* Justice Koontz presided and participated in the hearing 
and decision of this case prior to the effective date of his 
retirement on February 1, 2011; Justice Kinser was sworn in as 
Chief Justice on February 1, 2011. 
the Property at the original sales price of 
$74,640[, adjusted for inflation]. 
 
The deed further provided that the ROFR was to be a “covenant[] 
running with the land, the burden of which covenant[ is] 
assumed by Grantee as evidenced by Grantees[’] signatures 
hereon and by any subsequent successor in title as provided 
herein.”   
The Tovars contemporaneously executed two deeds of trust 
to secure the indebtedness they incurred to purchase the 
parcel.  In 1995, the Tovars satisfied the indebtedness secured 
by those two deeds of trust and executed a third deed of trust 
to secure an indebtedness of $92,400.  In 1997, the Tovars 
separated and Peter Tovar conveyed his entire interest in the 
parcel to Christine Tovar.  The indebtedness secured by the 
third deed of trust subsequently was defaulted and the 
substitute trustees under that deed of trust sold the parcel at 
a foreclosure auction to Rajinder and Rajesh Kapani in November 
2002.  The Kapanis conveyed the parcel to James Riekse in May 
2003.  Riekse executed a deed of trust to secure an 
indebtedness of $213,200.   
In September 2007, Fairfax filed a complaint in the 
circuit court against the Kapanis, Riekse, and trustees under 
Riekse’s deed of trust alleging that the Kapanis had violated 
the ROFR as a covenant running with the land and as a condition 
 
2
subsequent.1  Fairfax asked the court to restore title to the 
Kapanis by declaring Riekse’s deed void ab initio, to declare 
the parcel unencumbered by Riekse’s deed of trust, and to order 
the Kapanis to convey the parcel to Fairfax under the terms of 
the ROFR.   
The Kapanis filed a demurrer asserting that the ROFR had 
not been triggered because the express language in the Tovars’ 
deed stated that Fairfax had the option to repurchase the 
parcel “[i]n the event that Grantee shall die . . . or in the 
event the Grantee shall determine to sell,” and the Tovars had 
neither died nor determined to sell the parcel.  Riekse later 
joined the Kapanis’ demurrer, asserting that the ROFR was not a 
covenant running with the land because it did not “touch and 
concern” the land, that the ROFR was enforceable only as a 
condition subsequent, and that the 10-year statute of 
limitations set forth in Code § 8.01-255.1 had expired.   
The circuit court found that the ROFR did touch and 
concern the land and thus was a valid covenant running with the 
land.  It also found that it could not determine on demurrer 
whether Fairfax’s claims were time-barred because it could not 
determine as a matter of law when the ROFR initially had been 
breached.  Accordingly, the court overruled the demurrer.   
                                                 
1 Additional claims in Fairfax’s complaint were either 
abandoned or dismissed on demurrer and are not before us in 
this appeal. 
 
3
The case proceeded to a bench trial.  At the conclusion of 
Fairfax’s evidence Riekse moved to strike asserting that 
Fairfax was not entitled to the relief sought, a declaration 
that his deed was void ab initio.  The circuit court ruled that 
Riekse’s deed was not void ab initio and consequently Fairfax 
was unable as a matter of law to “get the relief it requests 
under the Complaint with the case in the posture that it’s in.”  
Rather, the court ruled that Fairfax’s remedy was to enforce 
the ROFR as a condition subsequent by filing an action of 
ejectment to effect a re-entry.  Accordingly, the court granted 
Riekse’s motion to strike and dismissed the case. 
Upon Fairfax’s motion for reconsideration, the circuit 
court reiterated that Riekse’s deed was not void ab initio and 
that it therefore could not order the Kapanis to perform the 
ROFR because they no longer held title to the parcel.    
Consequently, the court denied the motion.  We awarded Fairfax 
this appeal. 
II. ANALYSIS 
Fairfax assigns error to the circuit court’s holdings that 
it could not declare Riekse’s deed void ab initio and that 
Fairfax may enforce the ROFR only as a condition subsequent by 
filing an action of ejectment.  The challenged rulings arise 
from the circuit court’s interpretation of the Tovars’ deed, 
 
4
which we review de novo.  Beeren & Barry Invs., LLC v. AHC, 
Inc., 277 Va. 32, 37, 671 S.E.2d 147, 150 (2009). 
A.  THE VALIDITY OF RIEKSE’S DEED 
Fairfax argues that the ROFR divested the Kapanis of the 
power to sell the parcel without first offering it to Fairfax.  
Accordingly, the deed conveying the parcel to Riekse is void ab 
initio.  However, the cases Fairfax cites do not support this 
proposition. 
The primary case upon which Fairfax relies is Bond v. 
Crawford, 193 Va. 437, 69 S.E.2d 470 (1952).  There, the 
Crawfords contracted to sell a parcel to the Bonds but instead 
sold to the Londons.  The Londons had actual knowledge of the 
Bonds’ contract prior to their purchase.  Id. at 443, 69 S.E.2d 
at 474.  The Bonds asked the circuit court to declare the 
Londons’ deed void ab initio and to order the Crawfords to 
perform the Bonds’ purchase contract.  This Court determined 
that the relief was appropriate, citing Thompson v. Thompson, 
171 Va. 361, 198 S.E. 897 (1938). 
In Thompson, the Court ruled that collusion between a 
grantor and a grantee to convey property to allow the grantor 
to escape performance of a contract rendered the resulting deed 
void.  Id. at 370, 198 S.E. at 900.  The Court held that 
[w]here a conveyance is made in order to put it 
out of the power of the grantor to fulfill a 
contract previously entered into with the 
 
5
knowledge or concurrence of the grantee, the 
transaction will be declared null and void, and, 
if the proper parties are before the court, a 
decree will be rendered compelling a conveyance 
to the party rightfully entitled. 
 
Id. at 371, 198 S.E. at 901 (quoting Am. & Eng. Ency. of Law 40 
(2nd ed.)). 
Fairfax concedes that Riekse did not collude with the 
Kapanis to avoid their performance of the ROFR and that he did 
not even have actual knowledge that the ROFR existed.  Rather, 
Fairfax contends only that Riekse had constructive knowledge of 
the ROFR because it was contained in the Tovars’ deed, which 
had been properly recorded.  Consequently, Bond and Thompson 
are distinguishable and the extraordinary relief of declaring 
an executed deed void ab initio is not appropriate in this 
case. 
Fairfax also cites cases where conveyances by trustees 
under deeds of trusts were declared void ab initio.2  They are 
distinguishable as well because they are predicated on the 
well-settled rule that  
                                                 
2 Specifically, Fairfax cites Preston v. Johnson, 105 Va. 
238, 53 S.E. 1 (1906), Smith v. Woodward, 122 Va. 356, 94 S.E. 
916 (1918), Tabet v. Goodman, 136 Va. 526, 118 S.E. 230 (1923), 
Dickerson v. McNulty, 142 Va. 559, 129 S.E. 242 (1925), 
Everette v. Woodward, 162 Va. 419, 174 S.E. 864 (1934), Wills 
v. Chesapeake Western Ry. Co., 178 Va. 314, 16 S.E.2d 649 
(1941), Turk v. Clark, 193 Va. 744, 71 S.E.2d 172 (1952), First 
Funding Corp. v. Birge, 220 Va. 326, 257 S.E.2d 861 (1979), and 
Business Bank v. Beavers, 247 Va. 413, 442 S.E.2d 644 (1994). 
 
6
a trustee in a deed of trust can only do with 
the trust property what the deed either in 
express terms or by necessary implication 
authorizes him to do. In other words, the powers 
of the person foreclosing under a mortgage or 
deed of trust are limited and defined by the 
instrument under which he acts, and he has only 
such authority as is thus expressly conferred 
upon him, together with incidental and implied 
powers that are necessarily included therein. 
Accordingly, the trustee or mortgagee must see 
that in all material matters he keeps within his 
powers, and must execute the trust in strict 
compliance therewith. 
 
Schmidt & Wilson, Inc. v. Carneal, 164 Va. 412, 415, 180 S.E. 
325, 326 (1935).3 
That line of cases is inapplicable here because the 
Kapanis were not trustees under a deed of trust.  Rather, they 
were owners of a fee simple estate, though the fee was 
defeasible rather than absolute, and they had all necessary 
power to convey the whole estate of which they were themselves 
seised at the time of their conveyance.  Consequently, the 
circuit court did not err when it refused to declare Riekse’s 
deed void ab initio.  
B.  ENFORCEMENT OF THE ROFR 
                                                 
3 Moreover, many of these cases declare the deed following 
a trustees’ sale void because the trustee had not advertised 
the sale, a requirement imposed by statute.  Code § 55-59.1 
(requiring notice to owner prior to sale); Former Code § 55-
59(6) (Supp. 1978) (same); Former Code § 5167 (1919); Former 
Code § 2442 (1887). 
 
7
Fairfax also argues that the circuit court erred in ruling 
that it could only enforce the ROFR as a condition subsequent 
by filing an action of ejectment.  We disagree. 
Fairfax cites Landa v. Century 21 Simmons & Co., Inc., 237 
Va. 374, 377 S.E.2d 416 (1989), and Commonwealth Transportation 
Commissioner v. Windsor Industries, Inc., 272 Va. 64, 630 
S.E.2d 514 (2006).  In Landa, an executor, Peterson, was 
selling a parcel of land, a portion of which was subject to the 
Landas’ right of first refusal.  After learning that the estate 
had received an offer from another purchaser, the Landas made 
their own offer but Peterson nevertheless contracted to sell to 
the other purchaser.  The Landas and the other purchaser both 
commenced lawsuits against the various parties and this Court 
held that the circuit court was required to order Peterson and 
the estate’s realty company to perform under the Landas’ right 
of first refusal.  Id. at 380-84, 377 S.E.2d at 419-22. 
In Windsor, the Commonwealth acquired a parcel of land 
from 1314 West Main Corporation in 1977 in anticipation of 
building a state highway (Route 288).  However, the parcel was 
never used and, in 2004, VDOT proposed to sell it by sealed 
bid.  Windsor, 1314 West Main Corporation’s successor in 
interest, sued to compel the Commonwealth to convey the parcel 
to it.  The circuit court determined that Code § 33.1-90(B) 
required that any parcel acquired by the Commonwealth in 
 
8
anticipation for use in a highway project be offered to its 
prior owner if not so used.  We affirmed, ruling that the 
statute created a right of re-entry in the prior owner, and 
ordered the Commonwealth to convey the parcel to Windsor. 
Both Landa and Windsor are distinguishable from this case 
because the parties against whom specific performance was 
sought retained title to the parcel.  Here, Fairfax has sought 
specific performance by the Kapanis, who no longer hold title 
to the parcel.  Accordingly, the circuit court’s determination 
that it could not order the Kapanis to perform because it was 
impossible for them to offer the parcel to Fairfax was correct.  
Cangiano v. LSH Bldg. Co., 271 Va. 171, 180, 623 S.E.2d 889, 
895 (2006); Shepherd v. Colton, 237 Va. 537, 541, 378 S.E.2d 
828, 830 (1989); Fishburne v. Ferguson, 85 Va. 321, 328, 7 S.E. 
361, 364-65 (1888). 
III.  CONCLUSION 
For the reasons set forth above, we will affirm the 
judgment of the circuit court.4 
Affirmed. 
                                                 
4 Because we will affirm the judgment of the circuit court, 
we do not reach Riekse’s assignments of cross-error challenging 
its decision to overrule the demurrer regarding the validity of 
the ROFR as a covenant running with the land. 
 
9