Case Title: Bramble v. Thomas

Citation: 396 Md. 443

Docket Number: 32/06

State: maryland

Court: Maryland Supreme Court

Date: 2007-01-08T00:00:00Z

Document:
David A. Bramble, Inc. v. Merrill F. Thomas, et ux., No. 32, Sept. Term, 2006.
REAL PROPERTY - RIGHT OF FIRST REFUSAL - TRIGGERING OFFER - GOOD
FAITH - MATCHING OFFER.
Petitioner, David A. Bramble, Inc. ("Bramble"), a Maryland corporation engaged in the
business of mining gravel and sand, is the holder of a right of first refusal in a particular
parcel of land located in Caroline County ("the Property").  The landowners, John O. Lane
and Rose T. Lane ("Lanes"), received from Respondents, Merrill F. Thomas and Nancy R.
Thomas ("Thomases"), an offer to purchase the Property.  Added by hand-written addendum
to the offer was a "no mining" clause which purported to forbid mining on the Property.
When Bramble attempted to exercise its right of first refusal, it omitted from its "matching"
offer this prohibition on mining.  After the landowners refused to convey to either the
Thomases or Bramble, the Thomases filed suit in the Circuit Court for Caroline County
seeking, inter alia, specific performance of their offer to purchase the Property.  Both the
Lanes and Bramble moved for summary judgment.  The Circuit Court declared that although
Bramble's preemptive right did not violate the rule against perpetuities, Bramble's purported
exercise of the right of first refusal was ineffectual because the exercise was not made "on
the terms of the intended sale," to wit, the omission from its exercise of the "no mining"
provision.  The Court of Special Appeals affirmed the grant of summary judgment.
A right of first refusal, or "preemptive right," is a type of option, and subject to many of the
same rules as an option agreement.  Maryland law recognizes generally that the exercise of
an option must be in exact accord with its terms.  Maryland law is ambiguous, however, as
to whether the exercise of a right of first refusal must match exactly the terms of a triggering
offer, or whether it must match only those terms material to the offer.  Other jurisdictions are
likewise split on the issue.
We need not decide the issue here, however, because there was a genuine dispute of material
fact sufficient to defeat summary judgment, i.e., whether the "no mining" provision was
added in bad faith in order to frustrate Petitioner's preemptive right in the Property.  A
property owner, for the purpose of discouraging the holder of a preemptive right in the
property from exercising its right of first refusal, may not insert into the triggering offer
terms which it knows will be repugnant to the holder.  This approach protects the equitable
property interest a holder of a preemptive right has in the property, allows a property owner
to otherwise dispose of the property as he, she, or it deems appropriate, and comports with
general notions of good faith and fair dealing followed generally in Maryland contract law.
In the present case, summary judgment was an improper means of determining the rights of
the parties.  While the "no mining" clause could have been inserted into the triggering offer
for some legitimate reason, there is evidence on the record, if believed, that the Lanes and/or
Thomases inserted the provision as a "poison pill" in order to discourage Bramble from
exercising its right.  Bramble had been mining, for sand and gravel, land adjacent to the
property for years.  Ms. Thomas was a registered real estate agent, and likely knew the
activities of the property owners in the vicinity of the property. Lastly, the hand-written
addendum by which the clause was added supports a conclusion that the "no mining"
provision was an after-the-fact method of dissuading exercise of Bramble's preemptive right.
Summary judgment in favor of Respondents, therefore, was improper.
Circuit Court for Caro line County
Case # 05-C-04-009233
IN THE COURT OF APPEALS OF
MARYLAND
No. 32
September Term, 2006
DAVID A. BRAMBLE, INC.
v.
MERRILL F. THOMAS, et ux.
Bell, C.J.
                    Raker
Wilner
Cathell
Harrell
Battaglia
Greene,
JJ.
Opinion by Harrell, J.
Filed:   January 8, 2007
The sole issue in this case concerns the propriety of the Court of Special Appeals's
affirmance of summary judgment in favor of third-party purchasers of certain real property
and against the holder of a preemptive right of first refusal as to the property.  David A.
Bramble, Inc. ("Petitioner" or "Bramble"), the holder of the right of first refusal, attempted
to exercise its preemptive right, but omitted in the purported exercise a non-price term
contained in the third-parties' triggering offer.  The Circuit Court for Caroline County, in
granting summary judgment to the third parties, declared that Bramble had not exercised
effectively its right of first refusal.  The Court of Special Appeals affirmed.  For reasons we
shall explain, we conclude that there was generated a genuine dispute as to a material fact
whether the non-price term was added to the triggering offer in bad faith.  Therefore, we
shall reverse.
I.  FACTUAL BACKGROUND
With the notable exception identified supra, the facts, material and otherwise, of this
case were otherwise largely undisputed.  John O. Lane and Rose T. Lane ("Lanes"), husband
and wife, own a 25.99 acre parcel of unimproved real property located on Cherry Lane near
Ridgely in Caroline County, Maryland (the "Property").  On 3 January 2004, Respondents
here, Merrill F. Thomas and Nancy R. Thomas ("Thomases"), entered into an Unimproved
Land Contract of Sale ("Thomas Offer") whereby the Lanes agreed to sell to the Thomases
the Property for a purchase price of $105,000.00.  Respondents tendered with the contract
a $1,000.00 earnest money deposit.  Closing was to occur on or before 16 February 2004.
The Thomas Offer contained a hand-written Addendum which provided the following:
1The Right of First Refusal was recorded among the Land Records of Caroline County
in Liber No. 249, Folio 397.
2According to a letter in this record, written by counsel for the Lanes and dated 6
(continued...)
2
1.
Nancy Thomas is a licensed Real Estate Agent in the
State of Maryland.
2.
This contract is contingent upon the release of David
Bramble's first right of refusal within 30 days of
ratification.
3.
Buyers agree that they will not mine the above referenced
property.
The "right of first refusal" to which Paragraph 2 of the Addendum referred was
originally granted by the Lanes to RWL Development Company ("RWL") on 20 February
1992,1 and provided, in pertinent part:
In the event John Owens Lane and Rose T. Lane, his
wife, shall receive an offer to purchase their property located in
the Second Election District of Caroline County, Maryland,
described in a deed from RWL Development Company, a
Maryland Corporation, to John Owens Lane and Rose T. Lane,
his wife, dated November 20, 1991, recorded in Liber 247, Folio
375, a Land Record Book for Caroline County, Maryland, and
decide to accept the same, they shall first offer the property to
RWL Development Company, its successors and/or assigns, for
the price and on the terms of the intended sale.
RWL Development Company, its successors and/or
assigns, shall have thirty (30) days from the date of such offer in
which to accept or reject the same.  Nothing hereinbefore
contained shall in any way delay or limit the right of any
mortgagee to foreclose under a valid mortgage or deed of trust,
in accordance with the terms of such instrument, or to accept a
deed in lieu of foreclosure from the grantors.[2]
2(...continued)
January 2004, Petitioner owns RWL Development Company.
3This Deed was recorded on 11 May 1993 among the Land Records of Caroline
County, Maryland, at Liber 252, Folio 712.
4David A. Bramble, Inc., is a corporation organized under the laws of the State of
Maryland with its principal place of business in Caroline County.  Petitioner mines sand and
gravel from a site located adjacent to the Property.
RWL conveyed to Bramble the right of first refusal as part of a larger land sale,
whereby Bramble received, in exchange for $445,000.00 and other valuable consideration,
three parcels of land located on or around Cherry Lane in Ridgely, Maryland.  One parcel is
adjacent to the Property, and the other two are located across Cherry Lane from the Property.
According to the land sale contract, dated 8 March 1993, there is a sand pit located on one
of the tracts.  This is the land from which Petitioner mines sand and gravel.   It is unclear
from the record whether Petitioner extracted natural resources from the pit before 7 May
1993.  In any event, Bramble had been mining the pit since that date.
5A clause inserted by Bramble into the Agreement read:
WHEREAS, an offer, to purchase the land described in the
aforesaid right of first refusal has been accepted by John Owens
Lane and Rose T. Lane, on [3 January 2004].  It is the intent of
this Agreement being submitted by David A. Bramble, Inc., to
(continued...)
3
(emphasis added).  On 7 May 1993, RWL Development Company conveyed by Deed3 to
Petitioner4 its right of first refusal.
Counsel for the Lanes wrote a letter to Bramble on 6 January 2004 notifying it that
the Lanes had accepted the Thomas Offer, contingent upon Bramble's release of its right of
first refusal.  Attached to the letter was a copy of the Thomas Offer, with the "no mining"
clause.  Bramble executed and delivered to the Lanes on 19 January 2004 an "Agreement of
Sale," which purported to exercise its right of first refusal ("Bramble Offer").5  Petitioner's
5(...continued)
exercise the right of first refusal, to purchase the property for the
price set forth in the order heretofore accepted by John Owens
Lane and Rose. T Lane, his wife.
4
offer matched all the terms of the Thomas Offer, except that it omitted the prohibition against
mining included in Paragraph 3 of the Thomas Offer's Addendum. 
Respondents agreed on 4 February 2004 to amend certain terms in the Thomas Offer,
increasing the purchase price to $120,000.00, with settlement to occur on 31 March 2004.
The following day, counsel for Respondents faxed to the Lanes a revised offer ("Second
Thomas Offer"), which reflected the amended price and settlement terms.  By letter dated 6
February 2004, the Lanes' attorney informed Petitioner of the new offer and requested advice
as to whether Bramble would be willing to meet the increased sale price of $120,000.00.
On 17 February 2004, counsel for Petitioner responded that, because Bramble
previously had exercised its preemptive right, a binding land sale contract had been formed.
According to counsel, "the Thomases [were] not at liberty to make additional offers nor
[were] the Lanes at liberty to accept them" in connection with the sale of the Property.  The
next day, counsel for the Lanes advised Bramble that it was the Lanes' view that the offer
tendered by Petitioner was not an effective exercise of its right of first refusal.  Specifically,
counsel informed Bramble that if it wished to exercise its preemptive right, "[it] must do so
by accepting all the terms of the offer, including the restriction that the property would not
be mined."  Because the Bramble Offer, as signed and delivered, did not mirror exactly the
5
terms of the Thomas Offer ratified by Respondents, it was neither an effective exercise of
the right of first refusal, nor a valid acceptance.  According to the Lanes, the Bramble Offer
was instead a counter-offer which the Lanes were free to accept or reject. 
Bramble agreed to revise his offer to include a prohibition against mining, and
submitted a new offer ("Second Bramble Offer") which purported to be a valid exercise of
its preemptive right.  Although the Second Bramble Offer included the "no mining"
provision, it contained the original sales price of $105,000.00.  In other words, the Second
Bramble Offer mirrored the provisions of the initial triggering Thomas Offer.  The Second
Bramble Offer was tendered on 19 February 2004, forty-four days after Bramble was first
notified of the Lanes' acceptance of the Thomas Offer.
Citing the controversy concerning the validity of Bramble's exercise of its right of first
refusal, and because of the fear of being sued by Bramble, the Lanes refused to convey the
property to either suitor.  Mr. Lane, on 7 March 2004, attempted instead to return the
$1,000.00 earnest money tendered by the Thomases with the Thomas Offer.  Respondents
answered by filing suit against both the Lanes and Petitioner in the Circuit Court for Caroline
County in order to determine and enforce their asserted rights with respect to the Property.
Respondents sought in Count I a declaratory judgment that the right of first refusal
was void because it violated the Rule against Perpetuities.  Specifically, Respondents argued,
under Ferrero Construction Co. v. Dennis Rourke Corp., 311 Md. 560, 575-76, 536 A.2d
1137, 1144-45 (1988), that because Bramble was a corporation with a theoretically perpetual
6As stated earlier, Respondents initially argued that the right of first refusal was void
under Ferrero Construction Co. v. Dennis Rourke Corp., 311 Md. 560, 536 A.2d 1137
(1988).  In Ferrero Constr. Co., this Court held that the "preemptioner" (the holder of a right
of first refusal) holds an equitable interest in the subject property which vests only when the
property owner decides to sell.  We concluded that a right of first refusal conveyed between
two corporations violated the rule against perpetuities.  Because both corporations had
theoretically an infinite existence, we reasoned that the holder's "right of first refusal was not
(continued...)
6
existence, the right of first refusal might vest well beyond some life in being plus twenty one
years.  In Count II, Respondents sought specific performance of the Second Thomas Offer.
The Thomases requested further, in Count III, damages in the amount of $25,000.00, for the
anticipatory breach that occurred when the Lanes refused to convey the property.
The Lanes moved for summary judgment.  Respondents answered and filed their own
motion for summary judgment.  Neither the Lanes nor Petitioner filed a response to
Respondents' motion for summary judgment.  The parties appeared for oral argument on the
motions, represented by counsel.
The Circuit Court filed its written opinion on the motions on 23 February 2005.  The
trial judge declared first that the right of first refusal did not violate the rule against
perpetuities:
The right of first refusal granted to David A. Bramble
does not violate the Rule Against Perpetuities.  In the original
conveyance of the right to RWL Corporation, the Right was
stated to be applicable "[i]n the event John Owens and Rose T.
Lane, his wife, shall receive an offer to purchase their property."
The right thus would vest, if at all, within a life or lives in being,
i.e., when the last of the two Lanes die.  Cf. Park Station Ltd.
Partnership LLLP v. Bosse, 378 Md. 122, 135 (2003).6  
6(...continued)
limited to a term of years but was of unlimited duration."  Thus, the right could vest beyond
"a life in being plus twenty-one years," as contemplated by the Rule Against Perpetuities.
Ferrero Constr. Co., 311 Md. at 575-76 n.7, 536 A.2d  at 1144 n.7 (holding that corporations
may not be used as measuring lives for the purposes of the Rule Against Perpetuities).
In Park Station Ltd. Partnership, LLLP v. Bosse, 378 Md. 122, 835 A.2d 646 (2003),
however, this Court was called upon to decide whether a right of first refusal violated the
Rule when conveyed by an individual property owner to a limited partnership (with
potentially unlimited duration).  We held that because the right of first refusal, as drafted, did
not continue in the property owner's successors or assigns, this right could not vest beyond
the deaths of the property owners.  Park Station, 378 Md. at 135-36, 835 A.2d at 654.  The
property owner, in other words, would receive, if at all, an offer to purchase the encumbered
property on or before their death, thereby vesting in the preemptioner the opportunity to
exercise its right of first refusal within the statutory period.
In the present case, the Circuit Court determined that the right of first refusal granted
by the Lanes, as drafted, pertained only to offers received by the Lanes themselves, and did
not contemplate offers received by the Lanes' heir or assigns.  Thus, the right of first refusal
would vest on or before the death of the Lanes, a life in being at the time of the right's
creation.  Respondents do not challenge here, by cross-appeal, the Circuit Court's conclusion
that the preemptive right does not violate the Rule Against Perpetuities.  Thus, we do not
consider this issue.
7
The trial court continued, however, that the purported exercise of the right of first refusal was
ineffectual:
Although it does not violate the Rule Against
Perpetuities, Bramble's right of first refusal is void for the
following reasons.  Bramble had the option to accept the terms
of any other offer to buy the property and thereby purchase it
himself within thirty days of the offer of another.  When
Bramble learned of a contract between the Lanes and the
Thomases, he submitted a proposed contract to the Lanes that
had different terms than the contract between the Thomases and
Lanes.  Specifically, the contract between the Lanes and
Thomases stated that the "[b]uyers agree that they will not mine
the above referenced property." Bramble's first proposed
8
contract to the Lanes lacked this provision.  An acceptance with
terms that vary from those in an offer constitutes a rejection and
counter-offer.  Post v. Gillespie, 219 Md. 378 (1959).
The court, thus, granted summary judgment on Respondents' Count I claim.  It denied
summary judgment as to Counts II and III of the complaints, however, because there were
"disputes as to material facts."  The Circuit Court denied the Lanes' motion for summary
judgment.
On 24 March 2005, the Lanes and Respondents reached a settlement agreement as to
all unresolved claims in the action.  Respondents filed on 25 April 2005 a motion for
voluntary dismissal as to Counts II and III, pursuant to Maryland Rule 2-506(b), which the
Circuit Court granted with prejudice two days later.  Bramble noted a timely appeal to the
Court of Special Appeals.  
Bramble argued exclusively on appeal that the Circuit Court erred in declaring that
the corporation had not exercised effectively its right of first refusal when it failed to include
the "no mining" clause in the Bramble Offer.  The Court of Special Appeals, in an unreported
opinion, affirmed the judgment of the Circuit Court.  The intermediate appellate court
reasoned that, because the "no mining" provision was a material term in the triggering offer,
Petitioner's "matching" offer, which omitted the use restriction, was an ineffective exercise
of the corporation's right of first refusal.  Even in the absence of language indicating that the
Bramble Offer was a conditional exercise of Petitioner's right of refusal, according to the
court, the absence of the "no mining" clause rendered Bramble's alleged exercise insufficient
7The question presented in Bramble's petition was: 
When the holder of a right of first refusal on real property
attempted to exercise its right to purchase but omitted a non-
price term contained in the triggering offer, should the Court of
Special Appeals have affirmed a summary judgment, that as a
matter of law the attempted exercise failed when there was no
evidence that the omitted term was material to the sellers?
9
because Bramble, in effect, was attempting to purchase, at the same price, more rights in the
property than contained in the triggering offer.  On Bramble's petition, we issued a writ of
certiorari.  393 Md. 244, 900 A.2d 751(2006).7
II.  STANDARD OF REVIEW
Summary judgment is proper when "the motion [for summary judgment] and response
show that there is no genuine dispute as to any material fact and that the party in whose favor
judgment is entered is entitled to judgment as a matter of law.”  Md. Rule 2-501(f).  Because
a trial court decides only questions of law when considering a motion for summary judgment
under Rule 2-501(f), this Court reviews a grant of summary judgment de novo in order to
determine whether the trial court was legally correct.  Walk v. Hartford Cas., 382 Md. 1, 14,
852 A.2d 98, 105 (2004); Todd v. Mass Transit Admin., 373 Md. 149, 154, 816 A.2d 930,
933 (2003); Sadler v. Dimensions Healthcare Corp., 378 Md. 509, 533, 836 A.2d 655, 699
(2003);  Southland Corp. v. Griffith, 332 Md. 704, 712, 633 A.2d 84, 87-88 (1993).  In doing
so, we review independently the factual record in a light most favorable to the non-moving
party and construe in favor of the non-moving party any reasonable inferences which may
8Respondents made the same argument in the Court of Special Appeals.
9The basis for this argument is that the Property would be more profitable, and thus
more valuable, if mining of the land were permitted.  Because the triggering offer contained
a use restriction prohibiting mining on the Property, and Petitioner attempted to eliminate the
use restriction while maintaining the same purchase price found in the triggering offer, it was
receiving, in effect, at the same price significantly more valuable property rights.
10
be drawn from the pleadings, admissions, and affidavits.  Jurgensen v. New Phoenix Atl.
Condo. Council of Unit Owners, 380 Md. 106, 114, 843 A.2d 865, 869 (2004). 
III.  DISCUSSION
Respondents maintain8 that 
[t]he trial court properly determined that the failure of Bramble
to submit a timely offer that included a prohibition against
mining constituted a counter offer.  A reply to an offer that
differs from the suggested method of performance is a
conditional acceptance or counter offer.  Baltimore County v.
Archway Motors, 35 Md. App. 158, 163, 370 A.2d 469 (1977).
Bramble's deviation from the terms of the Thomas Offer was not
an unqualified acceptance of this offer "for the price and on the
terms of the intended sale."  As such, it did not comply and the
trial court was correct in determining that it had not properly
exercised its right of first refusal in a timely manner.
Respondents argue further that, because the prohibition against mining was a material term
of the Thomas Offer, its exclusion from the Bramble Offer improperly would have entitled
Bramble to more rights in the subject property than granted by the triggering offer.9
Petitioner counters that even if Maryland law requires exact matching of the terms of the
triggering offer when exercising a right of first refusal, neither the property owner nor the
proposed third-party purchaser may act in bad faith to discourage or frustrate the exercise of
11
the preemptive right, or include terms which they know the preemptive rightholder will not
accept.
A.  Options to Purchase and Rights of First Refusal Generally.
In order to consider properly whether Petitioner's omission of the no-mining clause
rendered ineffective the exercise of its preemptive right, it is necessary first to refresh our
recollection of the conceptual underpinnings of option contracts and rights of first refusal.
An option is a "continuing offer to sell during the duration [of the option agreement] which
on being exercised by the optionee becomes a binding and enforceable contract."  Straley v.
Osborne, 262 Md. 514, 521, 278 A.2d 64, 68 (1971) (quoting Diggs v. Siomporas, 248 Md.
677, 681, 237 A.2d 725, 727 (1968)).  It is well settled-law in Maryland that to be an
effective exercise of an option, the exercise of that option "must be unequivocal and in
accordance with the terms of the option."  Katz v. Pratt Street Realty Co., 257 Md. 103, 118,
262 A.2d 540, 547 (1970) (citing Simpers v. Clark, 239 Md. 395, 401, 211 A.2d 753 (1965));
Foard v. Snider, 205 Md. 435, 446, 109 A.2d 101, 105-06 (1954) ("Whatever the option
requires must be done.  As in the case of all offers, revocable or irrevocable, the exercise
must be unconditional and in exact accord with the terms of the option.") (emphasis added);
1 WILLISTON ON CONTRACTS § 5:18 (4th ed. 1990) ("When the optionee decides to exercise
[its] option, [it] must act unconditionally and according to the terms of the option."); see also
Post v. Gillespie, 219 Md. 378, 385-86, 149 A.2d 391, 395-96 (1959).  Indeed, Maryland
applies generally this objective rule of offer and acceptance to the formation of any contract
12
underlying the alienation of real property.  See Peoples Drug Stores, Inc. v. Fenton Realty
Corp., 191 Md. 489, 494, 62 A.2d 273, 276 (1948) ("To constitute a valid contract, the offer
of one party must be certain and definite, and the acceptance of the other party must
correspond with the offer in its entirety.  A contract, to be final, must extend to all the terms
which the parties intend to introduce, and material terms cannot be left for future
settlement.").
A right of first refusal, or "preemptive right," is a type of option, Ferrero Construction
Co., 311 Md. at 567,536 A.2d at 1140.  The purposes for which rights of first refusal are
utilized are "closely related to the purposes of [traditional] option contracts."  3 CORBIN ON
CONTRACTS § 11.3 (rev. ed. 1996).  The two types of agreements are dissimilar, however,
in terms of the legal relationships of the parties who enter them.  Id.   A right of first refusal
is an agreement between the property owner ("grantor") and a holder ("preemptioner")
whereby the receipt of an offer from a third-party purchaser to buy the subject property
"triggers" the right of first refusal which, in turn, "ripens" into an option to buy on part of the
preemptioner.  Id.; see also Straley, 262 Md. at 521-22, 278 A.2d at 68-69 (referring to a
preemptive right as a "conditional option, or first privilege of purchase"); Westpark, Inc. v.
Seaton Land Co., 225 Md. 433, 449-50, 171 A.2d 736 (1961); Iglehart v. Jenifer, 35 Md.
App. 450, 451 n.1, 371 A.2d 453 (1976) (differentiating between the legal effect of a
traditional option and an option of first refusal).  In sum, 
[preemptive] rights of the [holder] are contingent upon the
desire of the owner to sell.  [Unlike a true option] the [holder of
13
a right of first refusal] has no unqualified power to compel a sale
to him or to a third person . . . . These provisions are,
consequently, analogous to options upon a condition precedent,
and subject to many of the same rules [as an option agreement].
RESTATEMENT OF PROPERTY § 413, cmt. b (1944) (emphasis added) (internal cross-
references omitted); see Straley, 262 Md. at 521-22, 278 A.2d 64 at 68-69.  Thus, despite the
differences in the legal effects of the two types of agreements, the rules relating to options
are applicable, for the most part, to rights of first refusal.
B.  Materiality of an Omitted Provision.
Respondents ask this Court to apply the objective theory of contracts followed
generally in Maryland, i.e., that in order to exercise effectively the right of first refusal,
Bramble's exercise must have been unequivocal and in accordance with the exact terms of
the triggering offer.  Katz, 257 Md. at 118, 262 A.2d at 547; Foard, 205 Md. at 446, 109
A.2d at 105-06.  There is some social and legal utility in applying, to the purported exercise
of a pre-emptive right, the requirement that the rightholder duplicate exactly the terms of the
triggering offer because it tends to avoid a situation where the preemptioner otherwise may
impede the alienability of real property.  As the U.S. Court of Appeals for the Seventh Circuit
stated, the holder of a preemptive right should not be enabled to justify its failure to match
a term in the third-party's triggering offer on the ground that the omitted non-price term is
immaterial:
[w]ithout [an exact matching requirement], the right [of first
refusal] is an impediment to the marketability of property,
because it gives the holder of the right a practical power to
10The U.S. Court of Appeals for the Fifth Circuit held further in West Texas
Transmission, L.P., v. Enron Corp., that "a purported acceptance which leaves the property
owner 'as well off' as a third party offer, but which modifies, adds to or otherwise qualifies
the terms of the offer, generally constitutes a rejection of the option and a counter-offer."
907 F.2d 1554, 1565 (5th Cir. 1990).
11In  Weber Meadow-View Corp. v. Wilde, 575 P.2d 1053, 1055 (Utah 1978), Weber
Meadow-View Corporation held a right of first refusal in real property located in Summit
County, Utah.  The property owner, Florence Wilde, received an offer to purchase the
property for $200,000, which consisted of the conveyance of a particular home stated to be
worth $48,000, and the balance paid in cash.  Weber Meadow-View Corp., 575 P.2d at 1054.
(continued...)
14
impede a sale to a third party by refusing to match the third
party's offer exactly and then arguing that the discrepancy was
immaterial.
Miller v. LeSea Broad. Corp., 87 F.3d 224, 226 (7th Cir. 1996).  Other courts likewise have
extended to the exercise of a preemptive right the mirror image rule employed in determining
whether an option was exercised effectively.  West Texas Transmission, L.P., v. Enron Corp.,
907 F.2d 1554, 1565 (5th Cir. 1990) ("Whether or not a particular contract term is material
is not the standard by which we judge whether an acceptance which rejects that term is a
valid exercise of the right of first refusal.  Like the acceptance of any other offer, the exercise
of an option, must be 'unqualified, absolute, unconditional, unequivocal, unambiguous,
positive, without reservation and according to the terms or conditions of the option.")
(citations omitted);10  Weber Meadow-View Corp. v. Wilde, 575 P.2d 1053, 1055 (Utah 1978)
(implying that when terms are added in good faith to a triggering offer, and not with the
ulterior purpose of defeating a right of first refusal in the property, the terms of the triggering
offer must be matched exactly).11 
11(...continued)
When Weber M eadow-View attempted to exercise its preemptive right, the corporation
offered $200,000, which would include any piece of real property selected by the seller, with
a value of up to $50,000.  Id.  In concluding that the corporation had not exercised effectively
its right of first refusal, the Supreme Court of Utah determined that "the terms upon which
the [property owner] would sell her property remains her exclusive prerogative so long as she
acts in good faith . . . ," even though the inclusion of unique consideration made it impossible
for the corporation to match exactly the terms of the triggering offer.  Weber Meadow-View
Corp., 575 P.2d at 1055.
15
Many jurisdictions, on the other hand, do not require a preemptioner to match
immaterial terms found in a triggering offer.  See, e.g., Prince v. Elm Inv. Co., 649 P.2d 820,
825 (Utah 1982) (quoting Brownies Creek Collieries, Inc. v. Asher Coal Mining Co., 417
S.W.2d 249, 252 (Ky. 1967) ("[I]f the holder of the right of first refusal cannot meet exactly
the terms of the conditions of the third person's offer, minor variations which obviously
constitute no substantial departure should be allowed.  And defeat of the right of refusal
should not be allowed by use of special, peculiar terms or conditions not made in good faith
. . . .") (emphasis added)); Coastal Bay Golf Club, Inc. v. Holbein, 231 So.2d 854, 858 (Fla.
Dist. Ct. App. 1970) ("One offer to purchase matches another only if the essential terms of
the offers are identical.") (emphasis added) (internal citations omitted); Northwest Television
Club, Inc. v. Gross Seattle, Inc., 634 P.2d 837, 840 (Wash. 1981) ("[A]n acceptance of an
offer must always be identical with the terms of the offer, or there is no meeting of the minds
and no contract.  A purported acceptance that changed the terms of an offer in any material
respect may operate as a counteroffer . . . .") (emphasis added); Matson v. Emory, 676 P.2d
1029, 1031, 1033 (Wash. App. 1984) (holding that the exercise of a preemptive right
12 Maryland courts have had few opportunities to address whether a preemptioner has
exercised effectively its right of first refusal when it omits or alters terms of the triggering
offer.  In Yorkridge Service Corp. v. Boring, the defendant-grantors had granted to the
plaintiff-preemptioners a right of first refusal in the subject property, which option required
the exercise to be "upon the same terms and conditions contained in such [triggering offer]."
38 Md. App. 624, 625, 382 A.2d 343, 343 (1978).  The property owners received an offer to
purchase the property for the sum of $224,000 and, shortly thereafter, gave notice to the
preemptioners of the triggering offer.  When the corporate option holder attempted to
exercise its right of first refusal, it reduced the purchase price by the amount of the brokerage
commission to be paid by the property owner.  Yorkridge Service Corp., 38 Md. App. at 625-
26, 382 A.2d at 344.  The rationale behind this reduction was that, by exercising its right of
refusal, the sale was beyond the scope of the brokerage agreement such that the property
owner would not be obligated to pay the brokerage commission.  Yorkridge Service Corp.,
38 Md. App. at 626, 382 A.2d at 344.  The Court of Special Appeals, relying on Katz v. Pratt
Street Realty Co., 257 Md. 103, 262 A.2d 540 (1970), held that the preemptioner had not
exercised validly its right of first refusal because the exercise did not contain the same terms
as the triggering offer.  The intermediate appellate court did not determine, however, whether
an exercise of the rightholder's option must match exactly, or rather match only the material
terms of the triggering offer.  Because the purchase price is an essential term of any land sale
contract, see, e.g., Vary v. Parkwood Homes, Inc., 199 Md. 411, 417, 86 A.2d 727, 730
(1952), any modification of the price term necessarily would be a material alteration of the
triggering offer. Thus, the result likely would have been the same under either the mirror
(continued...)
16
constitutes a counter-offer, not an acceptance, when the offer differs materially from the
triggering offer) (emphasis added); John D. Stump & Assoc., Inc. v. Cunningham Mem'l
Park, Inc., 419 S.E.2d 699, 705 (W. Va. 1992) ("[W]here the acceptance of a pre-emptive
rightholder varies materially from the terms of the third party's offer, it is viewed as a
rejection of the seller's offer and terminates the option right.") (emphasis added).  
Existing Maryland law is not particularly instructive regarding the protocols for the
proper exercise of a right of refusal, especially in light of the rather unique factual
circumstances of this case.12  The Court of Special Appeals, however, quoting Coastal Bay
12(...continued)
image rule or materiality scrutiny.  The present case does not present such a clear-cut
situation.
17
Golf Club, Inc. and Matson, in its unreported opinion in the present case held that "[i]f the
preemptioner wishes to exercise his rights, his offer must not vary materially from the offer
received by the landowner." (emphasis in original).  Reported Maryland cases, at least in
passing, have commented upon the contents of the purported exercise of a right of first
refusal.  In Ferrero Construction Co., for example, while outlining the factual background
of the case, the Court stated that the preemptioner "submitted a contract that in its essential
terms conformed to the third party's offer."  311 Md. at 563, 536 A.2d at 1138 (emphasis
added).  The primary dispute in Ferrero Construction Co., however, involved not the
contents of the preemptioner's exercise of its right of first refusal, but rather whether the
preemptive right violated the Rule Against Perpetuities.  Thus, while Maryland requires
generally the literal matching of terms in cases involving the formation of binding contracts,
the cases focusing specifically on rights of first refusal are ambiguous at best in this regard.
C.  Good Faith Requirement.
We need not decide, in the posture of the present case, whether a holder of a right of
first refusal must match literally all the terms in the triggering offer in order to exercise its
right because there is generated on this record a genuine dispute of material fact as to
whether the Lanes and the Thomases (or one of them) inserted, in bad faith, the "no mining"
18
clause as a "poison pill" in order to discourage or frustrate Bramble from exercising its right
of first refusal.  
In considering whether Petitioner exercised effectively its right of first refusal, there
are several countervailing interests to be considered.  On one hand, there is a significant
interest in promoting the free alienability and marketability of land.  A person or entity
generally should have primary control over the disposition of property he, she, or it owns.
West Texas Transmission, L.P.,  907 F.2d at 1563 (holding that when a property owner
receives an offer to purchase a piece of property encumbered by a preemptive right, "the
owner of [the] property subject to a right of first refusal remains master of the conditions
under which he will relinquish his interest . . . ."); Coastal Bay Golf Club, Inc., 231 So.2d at
858 ("One who owns property has a right to dispose of that property in any lawful way he
chooses."); Matson, 676 P.2d at 1033 (holding that in the context of a preemptive right, "the
property owner should retain primary control over disposition of the property"); see also
Selig v. State Highway Admin., 383 Md. 655, 861 A.2d 610 (2004) (applying the Rule
Against Perpetuities to a right of refusal, because such a right poses a restraint on the free
alienation of property when improperly executed) (quoting Ferrero Constr. Co., 311 Md. at
573-74, 536 A.2d at 1142-43).
On the other hand, we must consider the fact that Petitioner acquired, at the time RWL
conveyed its preemptive right in the Property, an equitable property interest in the Property.
Ayres v. Townsend, 324 Md. 666, 674-75, 598 A.2d 470, 474 (1991) ("[A preemptive right]
13 The cases upon which we rely impose expressly this duty of good faith upon the
property owner.  We could find no cases which require explicitly a third-party purchaser to
exercise good faith in negotiating a triggering contract for the sale of the property.  In some
(continued...)
19
is an interest in property, and not merely a contractual right, whereby the preemptioner
acquires an equitable right in the property, which vests only when the property owner decides
to sell."); Westpark, Inc., 225 Md. at 449-50, 171 A.2d at 743.  When the Lanes granted
initially the right of first refusal to RWL, the preemptive right was the product of a
bargained-for exchange voluntarily entered by the Lanes.  As such, 
one who enters into a contract must cooperate in good faith to
carry out the intention the parties had in mind when it was made;
and that he should not be permitted to engage in any subterfuge
or devious means to prevent the other party from performing,
and then use that as an excuse for failing to keep his own
commitment.  
Weber Meadow-View Corp., 575 P.2d at 1055.
With that in mind, even jurisdictions which require a preemptioner to match exactly
the terms of a triggering offer (i.e., a lack of materiality of the omitted terms is no defense)
recognize the following three exceptions to that rule: (1) the property owner may waive exact
matching, either through actions or express waiver; (2) proper names need not be matched
because to hold otherwise would require the preemptioner to change its name in order to
exercise the first option of purchase; and (3) the property owner, for the purpose of
discouraging the holder of the preemptive right from exercising its right of first refusal, may
not insert into the triggering offer terms which its knows will be repugnant to the holder.13
13(...continued)
cases, there have been arguments made that the third-party, for its own conduct in this regard,
should be liable for intentional interference with the preemptioner's right of first refusal.  See,
e.g, Prince v. Elm Inv. Co., 649 P.2d 820, 821 (Utah 1982). 
14Jurisdictions which consider the materiality of omitted or altered terms analyze also
the motive behind insertion of specific contract provisions into the triggering offer.  See
Brownies Creek Collieries, Inc. v. Asher, 417 S.W.2d 249, 252 (1967) ("[D]efeat of the right
of first refusal should not be allowed by use of special, peculiar terms or conditions not made
in good faith."); Matson, 676 P.2d at 1031 ("The right [of first refusal] is a valuable contract
right which should not be rendered illusory by imposing requirements that are impossible to
meet."); Coastal Bay Golf Club, Inc. v. Holbein, 231 So.2d 854, 857 (Fla. Dist. Ct. App.
1970) ("A right of first refusal is a right to elect to take specified property at the same price
and on the same terms and conditions as those continued in good faith offer by a third person
. . . .") (emphasis added).
20
Miller, 87 F.3d at 227-28.  In other words, the property owner, and possibly the third-party
purchaser, must not be allowed to add in bad faith terms to the triggering offer which are
intended to nullify the right of first refusal.  West Texas Transmission, L.P.,  907 F.2d at1563
(holding that "the owner of property subject to a right of first refusal remains master of the
conditions under which he will relinquish his interest, as long as those conditions are
commercially reasonable, imposed in good faith, and not specifically designed to defeat the
preemptive rights.") (citations omitted); Weber Meadow-View Corp., 575 P.2d at 1055 (Utah
1978) ("[T]he decision as to . . . the terms of upon which the optioner would sell her property
remains her exclusive prerogative so long as she acts in good faith and without any ulterior
purpose to defeat the right of the optionee.").14 
Even the cases upon which Respondents rely impose a duty of good faith in forming
a triggering offer.  Respondents rely specifically on Oregon RSA No. 6, Inc. v. Castle Rock
21
Cellular of Oregon L.P., 76 F.3d 1003, 1007 (9th Cir. 1996) for the proposition that "[u]nder
Oregon law, an acceptance of an offer must be 'positive, unconditional, unequivocal, and
unambiguous'."  The U.S. Court of Appeals for the Ninth Circuit indeed interpreted Oregon
law to require a definite response in order effectively to form a contract.  The Ninth Circuit,
however, concluded ultimately that "there is an implied covenant of good faith and fair
dealing" in every contract formed under Oregon law, and that the grantor of the preemptive
right had violated this covenant through its actions.  Specifically, the court held that "[t]o
permit the transfer of a shell company as a way around the first refusal provisions was 'an
artifice intended to thwart plaintiff's legitimate contractual expectation.'" Thus, even in states
which require positive, unconditional, and unequivocal acceptance, there is an implied
covenant that a party will act in good faith not to defeat improperly a bargained-for
preemptive right.
Finally, and most importantly, our case law supports the imposition of an implied duty
on the part of the property owner and third-party purchaser to act in good faith.  In Straley
v. Osborne, we addressed whether a lessee, who held a first option to purchase leased land,
was able to set aside the sale of the premises to a third-party after the lessee failed to make
any attempt to exercise its right.  The property owner sold to Straley a junkyard business, and
on the same day, leased to Straley the premises upon which the business was located.
Straley, 262 Md. at 515, 278 A.2d at 65.  The junkyard was located on approximately seven
15The property owner maintained other business interests, including a used-car
dealership, Cadillac Jack Enterprises, Inc., which was located on the other three acres of the
ten-acre lot.  Straley v. Osborne, 262 M d. 514, 516, 278 A.2d 64, 66 (1971).
16 Straley was allegedly informed of the proposed sale several times.  Each time, he
refused to exercise the option, claiming that the purchase price was too high.  See generally
Straley, 262 Md. at 517-21, 278 A.2d at 66-68.
22
acres of a ten-acre tract owned by the property owner.15  Included in the lease agreement was
a "first option of purchase" whereby Straley would have the first option of buying the
property should the property owner decide to sell. Straley, 262 Md. at 516, 278 A.2d at 66.
 After some time, the property owner's used car business began to fail, and he listed for sale
the entire ten-acre tract in order to raise money.  Osborne, a third-party purchaser, made an
offer to buy the entire ten-acre piece of land.  The owner's real estate agent contacted Straley
soon thereafter, informing the preemptioner that he now had the opportunity to exercise his
right of first refusal.  Straley, 262 Md. at 517-18, 278 A.2d at 66-67.  Straley failed to
exercise timely his preemptive right,16 but subsequently brought suit in order to set aside the
sale of the property to Osborne.
Even though we ultimately concluded that Straley had failed to exercise effectively
his right of first refusal, we reasoned that "the [property owner-lessor] cannot act in
derogation of the [holder-lessee's] 'first option' rights in the leased premises."  Straley, 262
Md. at 524, 278 A.2d at 70.  Specifically, the Court considered carefully the circumstances
of the case in order to ensure that the lessor would not be able to "render the lessee's
bargained for 'first option' a nullity by merely including it in a larger tract being offered for
23
sale."  Despite the preemptive rightholder's equitable interest in the property, his inaction
after being notified of the sale rendered ineffective his after-the-fact attempt to exercise the
first option of purchase.
We believe that imposing upon the property owner and third-party purchaser an
implied duty of good faith and fair dealing strikes the proper balance.  A good faith
requirement preserves a property owner's right to dispose of property as he, she, or it deems
appropriate, thus maintaining marketability of the property.   This approach protects, at the
same time, the equitable property interest that the preemptioner holds in the encumbered
property.  Imposing this duty of good faith on the parties comports additionally with the laws
of offer and acceptance followed generally in Maryland.  Port East Transfer, Inc. v. Liberty
Mut. Ins. Co., 330 Md. 376, 385, 624 A.2d 520, 524 (1993) ("Even when the parties are silent
on the issue, the law will impose an implied promise of good faith."); Am. Trading & Prod.
Corp. v. United States, 172 F. Supp. 165, 167 (D. Md. 1959) ("[T]here is 'an implied
provision of every contract . . . that neither party to the contract will do anything to prevent
performance thereof by the other party . . . .") (applying Maryland law) (quoting George A.
Fuller Co. v. United States, 69 F. Supp. 409, 411 (Ct. Cl. 1947)).  We conclude, therefore,
that the "'terms upon which the [property owner] would sell her property remains her
prerogative so long as she acts in good faith.'"  Matson, 676 P.2d at 1032 (quoting Weber
Meadow-View Corp., 575 P.2d at 1055 ("[T]he decision as to . . . the terms upon which the
24
[owner] would sell her property remains her exclusive prerogative so long as she acts in good
faith and without any ulterior purpose to defeat the right of the [preemptioner].")).
C.  Application
Good faith ordinarily is a question of fact for summary judgment purposes.  Rite Aid
Corp. v. Hagley, 374 Md. 665, 684, 824 A.2d 107, 119 (2003). As such, "questions involving
determinations of good faith which involve intent and motive 'ordinarily' are not resolvable
on a motion for summary judgment." Rite Aid Corp., 374 Md. at 684, 824 A.2d at 119; Gross
v. Sussex, Inc., 332 Md. 247, 256, 630 A.2d 1156, 1160 (1993) ("[S]ummary judgment is
inappropriate when intent and motive are critical to the proof of a case.") (citing Poller v.
Columbia Broad. Sys., Inc., 368 U.S. 464, 473, 82 S. Ct. 486, 491, 7 L. Ed. 2d 458, 464
(1962)); Goldstein v. Miles, 159 Md. App. 403, 446-47, 859 A.2d 313, 338 (2004).  Even
cases involving good faith, motive, or intent may be resolved on summary judgment,
however, if there are no material disputes as to the facts of the case.  Rite Aid Corp., 374 Md.
at 685, 824 A.2d at 119 (quoting Gross, 332 Md. at 257, 630 A.2d at 1161).
Based on the record here, we conclude that summary judgment was an improper
means of determining the rights of the parties.  While the "no mining" clause could have been
inserted in the Thomas Offer for some legitimate reason, there is evidence in the record, if
believed, that the Lanes and/or the Thomases inserted the prohibition on mining as a "poison
pill" in order to discourage Bramble from exercising its right of first refusal.  It was well-
documented at all court levels that Bramble was mining, for sand and gravel, land adjacent
17As indicated on the Addendum, Mrs. Thomas was a licensed real estate agent in the
area.  Thus, an inference could be drawn reasonably that she was aware of the uses to which
neighboring landowners put parcels of land adjacent to the Property.
18 At oral argument, disparate views were advanced as to who added the "no mining"
provision to the Thomas Offer.  Counsel for Petitioner claimed that the prohibition was
added by the Thomases.  Counsel's premise was that the Respondents, by virtue of Mrs.
Thomas being a real estate agent in the area, knew of neighboring uses, and that the
Thomases insisted on the clause to frustrate Bramble's right of first refusal.
Counsel for the Lanes, on the other hand, argued that because the provision was added
in the addendum, the mining restriction was material to the sellers.  In other words, counsel's
argument could be understood to mean that the Lanes insisted on the "no mining" provision.
25
to the Property since at least 7 May 1993.  Thus, at the time the triggering offer was made,
it could have been apparent to both the Lanes and the Thomases17 that Petitioner intended to
use the Property for the purposes of mining.  A "no mining" clause would defeat that purpose
of Petitioner's desire to own the Property, thereby frustrating Petitioner's bargained-for
equitable interest in the Property.  Respondents argue, and the intermediate appellate court
agreed, that the inclusion of the use restriction in a hand-written addendum, for the purposes
of analyzing the materiality of the omitted term, indicates the importance of the provision to
the sellers.  The manner in which the provision was added, i.e., by a hand-written addendum
attached to the contract of sale, may support an inference that the "no mining" clause was an
after-the-fact method of frustrating Bramble's preemptive right by including a term or
condition which the parties knew Petitioner would not accept.18
We agree with Respondents that the Lanes were free to structure the sale of their
property in any way they saw fit; however, the Lanes and the Thomases were obliged to
26
comport with notions of good faith and fair dealing with regard to Bramble's preemptive right
in setting the terms of the sale.  If an aggrieved holder of a right of first refusal satisfies a
court that the property owner's and/or third-party's actions are arbitrary or performed in bad
faith, the owner of the property encumbered by the preemptive right must articulate a
"reasonable justification" for its actions.  Prince, 649 P.2d at 825.  Whether a specific term
or condition is commercially reasonable, i.e., inserted in good faith, is a case-by-case
determination, and must be resolved by examining the circumstances peculiar to the case.
Id.  Thus, if Bramble is able to establish that the Lanes and/or the Thomases inserted, in bad
faith, into the triggering offer the "no mining" provision in order to defeat the purpose of
Bramble's desire to own the Property, the burden will shift.  It will then be incumbent upon
the Lanes and/or the Thomases to articulate a reasonable justification for imposing such a use
restriction upon the Property.  If they are unable to produce an adequate justification for the
"no mining" clause, Bramble should be permitted to exercise its preemptive right without
satisfying literally the added term of the triggering offer. 
JUDGMENT OF THE COURT OF SPECIAL
APPEALS REVERSED.  CASE REMANDED
TO THAT COURT WITH DIRECTIONS TO
REVERSE THE JUDGMENT OF THE
CIRCUIT 
COUR T 
FOR 
C AROL INE
COUNTY AND TO REMAND THE CASE TO
THE CIRCUIT COURT FOR FURTHER
PROCEEDINGS CONSISTENT WITH THIS
OPINION.  COSTS IN THIS COURT AND
THE COURT OF SPECIAL APPEALS TO BE
PAID BY THE RESPONDENTS.