Title: Bidache, Inc. v. Martin

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Bidache, Inc. v. Martin1995 WY 116899 P.2d 872Case Number: 94-210Decided: 07/21/1995Supreme Court of Wyoming
BIDACHE, 
INC., a Wyoming corporation,

 Appellant (Defendant/Third Party 
Plaintiff),

 v. 

Henry 
MARTIN and Johanna Miller, 

Appellees 
(Plaintiffs),

 and 

GEK 
Partnership, a Wyoming partnership; and Don Gronberg and Sue 
Gronberg,

 husband and wife, 

Appellees 
(Third Party Defendants).

Gregory 
C. Dyekman and Brandin Hay of Dray, Madison & Thomson, Cheyenne, Frank Hess, 
Jackson, for appellant.

Floyd 
R. King of King & King, Jackson, for appellees Martin and 
Miller.

William 
P. Schwartz of Ranck & Schwartz, Jackson, for appellees GEK and 
Gronbergs.

Before 
GOLDEN, C.J., and THOMAS, MACY, TAYLOR and LEHMAN, JJ.

LEHMAN, 
Justice.

[¶1]  The issue to be decided by this case 
concerns whether a right of first refusal on a commercial property was properly 
exercised. GEK Partnership, the holder of the right, was granted summary 
judgment by the trial court; and Bidache, Inc., the original offeror on the 
property, appeals.

[¶2]  We affirm.

[¶3]  Bidache raises a single issue for our 
consideration: 

Did 
the trial court err in awarding GEK specific performance of its option to 
purchase Martin and Miller's Jackson, Wy property?

GEK 
responds with:

Did 
the district court properly conclude that the undisputed material facts entitle 
GEK to summary judgment on Bidache's third-party 
complaint?

Appellees, 
Henry Martin and Johanna Miller (Martin and Miller), the owners of the disputed 
property, state the issue as:

Did 
the trial court err in granting summary judgment to GEK Partnership, Don 
Gronberg and Sue Gronberg and in denying the summary judgment of appellant, 
Bidache, Inc.?

FACTS

[¶4]      In 1986, Don and 
Sue Gronberg entered into a lease agreement with Martin and Miller covering 
certain commercial property in the town of Jackson. The lease granted the 
Gronbergs a right of first refusal:

4. 
RIGHT OF FIRST REFUSAL. Lessors [Martin and Miller] will not sell or otherwise 
dispose of the demised premises or any part thereof during the term of this 
lease or of any extension or renewal thereof until such time as Lessors shall 
have notified Lessees [the Gronbergs] in writing of the price, terms and 
conditions of any proposed sales; and Lessors agree that Lessees shall 
thereupon have the prior right to purchase the demised premises at the same 
price and upon the same terms or conditions as are contained in any bona fide 
offer. Said right may be exercised at any time within thirty (30) days after 
Lessees' receipt of such written notice of said offer. Lessees' right may be 
exercised by mailing at least two days before the date on which this option 
shall expire written notice of such exercise to Lessors by certified mail 
addressed to Lessors. Upon exercise of the option Lessees shall have a period 
of thirty (30) days thereafter before being obligated to make payment or accept 
title to the premises unless by the terms and conditions of said offer a period 
of more than thirty (30) days is specified for the closing, in which case 
Lessees shall have such longer period.

(Emphasis 
added.)

[¶5]      In October of 
1992, Bidache made an offer for the property. Martin and Miller then notified 
the Gronbergs of the offer pursuant to the right of first refusal clause in the 
lease agreement. The Gronbergs received notice of the offer on October 13, 1992. 
On November 6, 1992, the Gronbergs, in compliance with the lease, notified 
Martin and Miller, in writing, that they were exercising their right of first 
refusal. Also, sometime in December of 1992, the Gronbergs formed a partnership, 
GEK, for the purpose of purchasing the property.

[¶6]      According to the 
terms of Bidache's offer, closing was to occur on or before December 16, 1992. 
That did not happen, apparently because Martin and Miller's attorney had not 
prepared the necessary documents. The closing date was postponed until January 
14, 1993 and then again to February 5, 1993; both of those dates came and went 
without closing occurring.

[¶7]      At that time, 
Bidache asserted that Martin and Miller had to sell the property to it because 
GEK had failed to comply with the offer's requirements. Martin and Miller 
refused to close the transaction with GEK and filed a quiet title action against 
Bidache to resolve the dispute. Bidache then filed a third-party complaint 
against GEK and the Gronbergs.

[¶8]      Both Bidache and 
GEK moved for summary judgment which the district court granted in favor of GEK. 
Bidache has timely appealed.

STANDARD 
OF REVIEW

[¶9]      In reviewing a 
grant of a motion for summary judgment, we follow our familiar standard of 
review:

"Summary 
judgment is appropriate when no genuine issue of material fact exists and when 
the prevailing party is entitled to have a judgment as a matter of law." 
Sandstrom v. Sandstrom, 884 P.2d 968, 971 (Wyo. 1994). See also W.R.C.P. 56(c). 

A 
genuine issue of material fact exists when a disputed fact, if proved, would 
have the effect of establishing or refuting an essential element of the cause of 
action or defense asserted by the parties. The party moving for summary judgment 
bears the initial burden of establishing a prima facie case for a summary 
judgment. If the movant carries this burden, the party opposing the summary 
judgment must come forward with specific facts to demonstrate that a genuine 
issue of material fact does exist.

Thunder 
Hawk By and Through Jensen v. Union Pacific Railroad Company, 844 P.2d 1045, 
1047 (Wyo. 1992) (citation omitted). We examine the record from the vantage 
point most favorable to the party who opposed the motion, and we give that party 
the benefit of all favorable inferences which may fairly be drawn from the 
record. Kilmer v. Citicorp Mortgage, Inc., 860 P.2d 1165, 1167 (Wyo. 1993). We 
evaluate the propriety of a summary judgment by employing the same standards and 
by using the same materials as were employed and used by the lower court. 
Thunder Hawk By and Through Jensen, 844 P.2d  at 1047.

Adkins 
v. Lawson, 892 P.2d 128, 130 (Wyo. 1995). We will affirm a grant of summary 
judgment if it can be sustained on any legal ground appearing in the record. 
Moncrief v. Louisiana Land & Exploration Co., 861 P.2d 516, 523 (Wyo. 1993) 
(quoting Deisch v. Jay, 790 P.2d 1273, 1278 (Wyo. 1990)).

DISCUSSION

[¶10]   Bidache, relying on the requirement 
in the right of first refusal that GEK had the right to purchase the property 
"at the same price and upon the same terms or conditions" as were contained in 
its offer, contends that GEK's failure to close by December 16, 1992 terminated 
the right of first refusal. Arguing that strict compliance is required, Bidache 
alleges that GEK went beyond the terms of the offer by agreeing to close at a 
later date. From that Bidache concludes GEK no longer had a valid contract with 
Martin and Miller; instead, Bidache did based on its 
offer.

[¶11]   A right of first refusal, sometimes 
known as a presumptive right, "gives a privilege to purchase on a condition 
precedent which is the formulated desire of the owner to sell, and frequently 
the holder of the right must purchase at a price established by negotiations 
with a third party." Chapman v. Mutual Life Ins. of Co., 800 P.2d 1147, 1150 
(Wyo. 1990) (quoting Hartnett v. Jones, 629 P.2d 1357, 1362 n. 1 (Wyo. 1981)). 
Once the condition precedent - the owner's intent to sell - is met, the right of 
first refusal ripens into an option and, of course, the law relating to options 
contracts applies. Chapman, 800 P.2d  at 1150 (citing Myers v. Lovetinsky, 189 N.W.2d 571, 576 (Iowa 1971)).

[¶12]  "An option to purchase property is a 
contract wherein the owner, in return for a valuable consideration, agrees with 
another person that the latter shall have the privilege of buying property 
within a specified time on terms and conditions expressed in the option." 
Crockett v. Lowther, 549 P.2d 303, 308 (Wyo. 1976).

"[O]ptions 
are to be strictly construed and where the option is to be exercised within a 
stated time and in a particular manner, that must be done exactly as prescribed 
unless, perhaps, there is some intervening circumstance which the law recognizes 
as one of the impossibilities which make failure of compliance an exception to 
the rule."

Crockett, 
549 P.2d  at 310 (quoting Covey v. Covey's Little America, Inc., 378 P.2d 506, 
517 (Wyo. 1963)); see also Smith v. Hevro Realty Corp., 199 Conn. 330, 507 A.2d 980 (1986) (where right of first refusal required compliance with terms of 
offer; failure to do so renders option invalid).

[¶13]   The district court found that GEK's 
failure to close was excused because it was due to circumstances beyond its 
control; i.e., the failure of Martin and Miller's attorney to timely prepare the 
necessary documentation. We need not decide if that circumstance was such to 
justify noncompliance, since we conclude that GEK did, in fact, comply with the 
terms of the offer.

[¶14]   The right of first refusal required 
GEK to purchase the property at the price and upon the same terms and conditions 
as were contained in Bidache's offer. That offer provided that closing was to 
occur "on November 10, 1992, or as otherwise mutually agreed between the 
parties * * *." (Emphasis added.) The agreement between GEK and Martin and 
Miller to extend closing was clearly within the terms authorized by Bidache's 
offer.

[¶15]   Bidache counters that the agreement 
to extend the closing was ineffective under this clause because Bidache did not 
so agree. Bidache's argument is premised upon its belief that it was, somehow, a 
party to the contract between Martin and Miller and GEK. This ignores basic 
contract law. Bidache's offer to purchase the property never became a legally 
binding contract. So long as GEK held a valid right of first refusal, acceptance 
of Bidache's offer was dependant on a condition precedent - GEK failing to 
exercise its right. Once GEK exercised that right, a contract was created 
between it and Martin and Miller. Bidache was not, and never became, a party to 
that contract. When the right of first refusal was exercised, Bidache's offer 
remained just that - an offer. If GEK had failed to properly exercise its 
option, then Bidache would have had a contract with Martin and Miller. See 
Smith, 507 A.2d  at 987.

CONCLUSION

[¶16]  GEK's right of first refusal required it 
to comply with all terms and conditions of Bidache's offer; it did so, 
therefore, summary judgment in its favor was appropriate.

[¶17]  Affirmed.