Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER. 

Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 

303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email 

corrections@akcourts.us. 

THE SUPREME COURT OF THE STATE OF ALASKA 

CASTLE PROPERTIES, INC., 

Appellant, 

v. 

WASILLA LAKE CHURCH OF 

THE NAZARENE,

Appellee. 

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 ) Supreme Court No. S-15381 

Superior Court No. 3PA-11-02112 CI 

O P I N I O N 

No. 6996 – April 10, 2015 

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Appeal from the Superior Court of the State of Alaska, Third 

Judicial District, Palmer, Eric Smith, Judge. 

Appearances: Kenneth D. Albertsen, Palmer, for Appellant. 

Ronald L. Baird, Office of Ronald L. Baird, Anchorage, for 

Appellee. 

Before: Fabe, Chief Justice, Winfree, Stowers, Maassen, and 

Bolger, Justices. 

BOLGER, Justice. 

I. INTRODUCTION 

Castle Properties, Inc. held a right of first refusal on approximately 2.4 

acres of unimproved land owned by the Wasilla Lake Church of the Nazarene (Church). 

The City of Wasilla (City) offered the Church another parcel of approximately 17 acres 

in exchange for this property. Having learned of the City’s offer, Castle Properties 
 

 

 

 

 

 

 

 

 

requested a copy of the purchase and sale agreement memorializing the exchange. The 

Church, apparently unaware of the right of first refusal, denied this request. Castle 

Properties then informed the Church that it was exercising its right of first refusal and 

submitted a cash offer, which the Church rejected. 

Castle Properties filed suit, and the superior court found that Castle 

Properties received adequate notice when it obtained the city ordinance approving the 

City’s offer and that the Church acted reasonably in rejecting Castle Properties’ 

competing cash offer. We conclude that the superior court did not clearly err in finding 

that Castle Properties received adequate notice, that Castle Properties exercised its rights 

by making a competing offer, and that the Church’s response did not violate the covenant 

of good faith and fair dealing. 

II. FACTS AND PROCEEDINGS 

The property underlying this dispute is located in the Lakebrook 

Subdivision in Wasilla, near the Cottonwood Creek Mall. Castle Properties seeks to 

purchase the southern portion of Tracts 3 and 4 (Property), bounded by the PalmerWasilla Highway to the north and Cottonwood Creek to the south.1 

In 1984 the Baugh Construction and Engineering Profit Sharing Trust 

(Trust) began acquiring property in the Lakebrook Subdivision. Gary Baugh, the trustee, 

believed that if the Trust could acquire contiguous properties across Tracts 1 through 5, 

they would present “an attractive piece of real estate for a developer.” The Trust first 

acquired the southern portions of Tracts 1 and 2 and then set its sights on the southern 

portions of Tracts 3, 4, and 5. 

1 The Palmer-Wasilla Highway was relocated in the 1980s so that it laterally 

bisected Tracts 3 and 4, as well as adjacent Tracts 1, 2, and 5. References to the 

“northern” and “southern” portions of these tracts refer to the areas north and south of 

the Palmer-Wasilla Highway. 

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At this time, title to Tracts 3 and 4 was held by the “Alaska District, Church 

of the Nazarene.” But the church association that would eventually become the Wasilla 

Lake Church of the Nazarene negotiated with the Trust and executed the relevant 

transaction. Tract 5 was owned by the Church’s pastor, John Vaughn, and his wife. 

Vaughn wanted the Church to purchase the northern portion of Tract 5. And according 

to Baugh, the Trust was interested in acquiring the southern portion, contingent on the 

possibility of someday acquiring the adjacent portions of Tracts 3 and 4. 

The parties therefore crafted the following exchange. The Trust purchased 

the entirety of Tract 5 from the Vaughns for $310,000. The Trust then kept the southern 

portion for itself, but sold the northern portion to the Church, in exchange for $100,000 

and a right of first refusal to purchase the southern portions of Tracts 3 and 4 — the 

Property. The end result was as follows: the Vaughns sold Tract 5 for $310,000; the 

Church acquired the northern portion of Tract 5; and the Trust, in essence, paid $210,000 

for the southern portion of Tract 5 plus the opportunity to purchase the adjoining 

Property at some point in the future.

 The document memorializing the right of first refusal stated that the 

Church “grant[ed] the . . . Trust First Right of Refusal on any future sale” of the 

Property. There is no evidence that the parties agreed to more detailed terms regarding 

the duties owed by either party pursuant to this right. The Trust recorded this document 

in 1996. In 2002 Castle Properties purchased all of the Trust’s interests in Tracts 1 

through 5 — including the right of first refusal to purchase the Property. 

As early as 2004 the Church’s board began discussing the shortcomings of 

the Church’s facilities and the need to relocate to a larger and more suitable site. The 

Church decided to sell the Property as part of this relocation strategy, and in 2010 the 

Church listed the Property for $600,000. Gary Lundgren, Castle Properties’ owner, 

submitted two cash offers for the Property through his agent, Kevin Baker. These offers 

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were made in April and July 2010 for $265,000 and $300,000, respectively. The Church 

rejected both offers, but the Church’s real estate agent, Tammy Ervin, inquired whether 

Lundgren had 20 acres of land available for an exchange instead. Baker told Ervin that 

Lundgren was not interested in a property exchange. He did not mention Castle 

Properties’ right of first refusal at this time. 

Around the same time the Church signed a non-binding letter of intent with 

the City to exchange the Property for approximately 20 acres of City land. On April 11, 

2011, a draft ordinance ratifying this exchange was introduced. The ordinance identified 

the City property to be traded (City Trade Land) and its approximate acreage. The 

accompanying staff report specifically noted the Church’s “desire to relocate onto a large 

parcel.” And attached to the ordinance was a title report with the tax-assessed value of 

the parcel encompassing the City Trade Land. 

Castle Properties was unaware of the City’s offer until April 2011, when 

Baker attended a City Council meeting where the exchange was discussed. Having 

learned of the potential conveyance to the City, Baker tried to acquire a copy of the 

Purchase and Sale Agreement (Purchase Agreement) between the City and the Church, 

but his requests were denied. Baker testified that he also attempted to set up a meeting 

with the Church but that the Church declined to participate. 

On May 18, 2011, Castle Properties recorded a document entitled “Notice 

of Exercise of First Right of Refusal.” This notice stated that, having learned of the 

City’s offer, Castle Properties was exercising its right to purchase the Property on 

“equivalent terms,” which Castle Properties deemed to be $153,000. There was 

testimony at trial suggesting that the then-current Church leaders were unaware of Castle 

Properties’ right of first refusal until this document was recorded. 

On May 27 Castle Properties’ attorney sent the Church a letter reiterating 

Castle Properties’ election to exercise its right of first refusal by purchasing the Property 

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for $153,000, noting that “[a] real estate broker has confirmed that this is the upper end 

of fair market value for the [City] Trade Land.” Castle Properties informed the Church 

that it had placed $153,000 in escrow, urged that “time [was] of the essence,” and 

requested a closing by June 7, unless “alternative arrangements” had been made. The 

Church responded with a letter informing Castle Properties that its right of first refusal 

appeared unenforceable and that unless Castle Properties could show legal authority to 

the contrary, the Church intended to close the transaction with the City on August 11. 

Castle Properties filed suit on August 9, seeking specific performance of 

its right of first refusal. Castle Properties also recorded a lis pendens on the Property. 

The Church counter-claimed, seeking a decree quieting title to the Property and a 

declaratory judgment to the same effect. 

In analyzing the duties owed under a right of first refusal, the superior court 

first noted that our decision in Roeland v. Trucano2

 provides the relevant framework. 

The court found that, under Roeland, Castle Properties received “adequate notice” of the 

City’s offer through the City ordinance outlining the proposed land exchange.3

 Next, the 

superior court noted that the City Trade Land was a “unique” offer, which served as an 

invitation to Castle Properties to submit a “commercially equivalent offer.”4 At trial, the 

Church’s expert appraiser placed the value of the City Trade Land at $250,000, and 

Castle Properties offered no rebuttal expert. Given the Church’s interest in “obtain[ing] 

an affordable parcel of land that was suitable for a new church,” the superior court found 

2 214 P.3d 343 (Alaska 2009). 

3 See id. at 348 (“The general rule is that when an owner receives an offer to 

purchase an interest in a property burdened with a right of first refusal, the owner must 

provide adequate notice of the terms of the offer to the holder of the right.”). 

4 See id. at 349. 

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that Castle Properties’ $153,000 cash offer was not commercially equivalent to the City’s 

offer. Accordingly, the court expunged the lis pendens on the Property and quieted title 

free of any interest related to Castle Properties’ right of first refusal.5 

Castle Properties now appeals. 

III. STANDARD OF REVIEW 

“Questions regarding the adequacy of notice are questions of fact.”6 

“Under [Alaska] Civil Rule 52(a), factual findings shall not be set aside unless they are 

clearly erroneous. A finding is clearly erroneous only if the reviewing court is left with 

a ‘definite and firm conviction that a mistake has been made.’ ”7 “When reviewing 

factual findings, we view the evidence in the light most favorable to the prevailing party 

below.”8 “We review questions of law using our independent judgment and will adopt 

‘the rule of law that is most persuasive in light of precedent, reason and policy.’ ”9 

IV. DISCUSSION 

On appeal Castle Properties does not argue that the Church should have 

accepted its $153,000 cash offer. Rather, Castle Properties contends that it lacked 

5 The superior court also considered the Church’s argument that the right of 

first refusal was unenforceable. The Church offers this argument on appeal as an 

alternative basis for affirming the superior court’s decision. Because we affirm the 

superior court’s decision based on its Roeland analysis, we do not need to reach the 

Church’s unenforceability argument. 

6 Roeland, 214 P.3d at 348 (citing Jensen v. Alaska Valuation Serv., Inc., 688 

P.2d 161, 164 (Alaska 1984)). 

7 Id. at 347 (quoting Municipality of Anchorage v. Gregg, 101 P.3d 181, 186 

(Alaska 2004)). 

8 Id. 

9 Id. at 347-48 (quoting Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979)). 

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adequate information to formulate an “equivalent” offer. Accordingly, Castle Properties 

now asks to purchase the Property either for the appraised value of the City Trade Land 

($250,000) or the “Church-determined” value of the Property ($291,000). 

A. Castle Properties Received Adequate Notice Of The City’s Offer. 

Castle Properties argues that the Church failed to provide the legally 

required notice of the City’s offer to purchase the Property. In Roeland, we outlined the 

duties owed under a right of first refusal: 

The general rule is that when an owner receives an offer to 

purchase an interest in a property burdened with a right of 

first refusal, the owner must provide adequate notice of the 

terms of the offer to the holder of the right. Adequate notice 

is notice sufficient to enable the holder of the right of first 

refusal (the right-holder) to decide whether to attempt to 

match the terms. Once the seller has made reasonable 

disclosure of the material terms, the right-holder has a duty to 

[ ] further investigate any terms that he or she finds unclear. 10

We further stated that “[t]he offer’s terms must be sufficiently definite to evaluate, and 

all essential terms in the third-party offer must be communicated to the right-holder. 

Generally, this means a written copy of the offer or agreed terms should be provided.”11 

Like this dispute, Roeland involved an effort to enforce a right of first 

refusal where the competing offer was “unique.”12 There, the owners of the property 

burdened by the right received the following offer: a retailer would “purchase” 25% of 

the property by granting the owners a 25% interest in any stores he operated in the 

10 Id. at 348 (citations omitted). 

11 Id. (citations omitted). 

12 Id. at 346, 349. 

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building.13 The property owners memorialized this offer in a memorandum of 

understanding (MOU) and provided the right-holders with a copy.14 Although the rightholders “provide[d] an extensive list of details missing from the MOU,” we concluded 

that “the absence of these details [did] not leave the essential terms of the transaction 

unclear.”15 We therefore affirmed the superior court’s finding that the sellers had not 

breached the right of first refusal.16 

Here, the superior court found that Castle Properties received adequate 

notice of the City’s offer through the ordinance adopted at the Wasilla City Council 

meeting on April 25, 2011 (Ordinance). Although the Church refused to give Castle 

Properties a copy of the Purchase Agreement, the superior court concluded that the 

Ordinance was sufficient to inform Castle Properties of the offer’s “material” terms — 

namely, “what land was involved.” As the court reasoned, any provisions contained only 

in the Purchase Agreement pertained merely “to implementation and related matters.” 

As an initial matter, the superior court was correct to note that the Church 

had no duty to notify Castle Properties about its negotiations with the City. Under 

Roeland, the duty to provide notice arises only once “an owner receives an offer to 

purchase an interest in a property burdened with a right of first refusal.”17 Accordingly, 

13 Id. at 346. 

14 Id. 

15 Id. at 348-49. 

16 Id. 

17 Id. at 348; see also H.G. Fabric Disc., Inc. v. Pomerantz, 515 N.Y.S.2d 

823, 825 (App. Div. 1987) (holding that a conditional offer did not trigger a right of first 

refusal). 

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the Church’s duty to notify did not arise until April 25, 2011, when the Wasilla City 

Council actually approved the proposed land exchange with the Church. 

Castle Properties contends, however, that the Ordinance provided 

inadequate notice of the City’s offer. Its arguments are essentially two-fold. First, Castle 

Properties argues that the Church should have disclosed its “criteria” for suitable trade 

land. Second, Castle Properties claims that it was entitled to a copy of the Purchase 

Agreement because the Ordinance omitted certain terms of the transaction. 

With regard to the Church’s criteria for suitable trade land, the process 

Castle Properties seeks is beyond the scope of what its right of first refusal ensured. 

Citing testimony from Church members, Castle Properties alleges that the Church 

deemed 10 acres to be an acceptable size; approved a “4-mile radius” as a relocation 

range; and established criteria for “items such as city water and sewer, access, price, and 

‘not swampland.’ ” But it is not evident from the record that the Church ever 

memorialized such specific criteria for a relocation site. For instance, one Church board 

member described the process of finding a site for relocation as “very fluid,” explaining 

that “as opportunities have presented themselves, [the Church has] evaluated each one 

on its own merits.” Moreover, Castle Properties itself points out that the City Trade 

Land did not meet all of the “criteria” alluded to in the Church’s testimony. 

It is true that because the City’s offer of land was a “unique offer,” Castle 

Properties was not in a position to precisely “match the [City’s] terms.”18 But we 

expressly addressed this issue in Roeland, noting: 

Where a commercial seller has received a unique offer that a 

right-holder could not exactly duplicate, we agree with courts 

characterizing the submission of the offer to the right-holder 

as an invitation to the right-holder to submit a commercially 

18 See Roeland, 214 P.3d at 348-49. 

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equivalent offer. The right-holder may propose comparable 

terms to the original offer which are possible for him to meet 

[ ] and which would meet the seller’s commercial interests. 19

The adoption of the Ordinance therefore served as an invitation to Castle Properties to 

propose “comparable terms.” It did not obligate the Church to formulate specific criteria 

that would govern the Property’s sale.20 

Castle Properties was, however, entitled to “adequate notice” of the material 

terms of the City’s offer.21 Castle Properties argues that, “[a]t a minimum,” this required 

the Church to provide Castle Properties with a copy of the Purchase Agreement. But 

under Roeland and other relevant authority, the Church was obligated to disclose only 

the “material terms” of the City’s offer.22 Castle Properties contends that the Ordinance 

19 Id. at 349-50 (citations omitted). 

20 See id. at 350 (“[T]he 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.” (alteration in original) (quoting W. Tex. 

Transmission, LP v. Enron Corp., 907 F.2d 1554,1566 (5th Cir. 1990) (internal quotation 

marks omitted)). 

21 See id. at 348. 

22 See id. at 348-49 (concluding that the absence of certain “details [did] not 

leave the essential terms of the transaction unclear” (emphasis added)); see also Dyrdal 

v. Golden Nuggets, Inc., 672 N.W.2d 578, 584 (Minn. App. 2003) (“In most cases, a 

copy of the purchase agreement provides reasonable notice of a bona fide offer, even if 

the agreement does not disclose all of the terms of the sale.” (emphasis added) (citing 

Koch Indus. v. Sun Co., 918 F.2d 1203, 1212-13 (5th Cir. 1990))); but see Gyurkey v. 

Babler, 651 P.2d 928, 931 (Idaho 1982) (“[T]he holder of such a right of first refusal 

cannot be called upon to exercise or lose that right unless the entire offer is 

communicated to him in such a form as to enable him to evaluate it and make a 

decision.”) (emphasis in original)). In Gyurkey, the court also appeared skeptical about 

the accuracy of a key material term — the sales price. Id. at 932 (noting that “it is 

(continued...) 

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“omitted many relevant factors” that the Purchase Agreement contained, including the 

City Trade Land’s “actual description,” its “actual acreage,” and “closing deadlines or 

extension thereof, allocation of closing costs, joint payment of sales commissions, and 

joint payment of survey fees.” We conclude that some of these terms were adequately 

covered in the Ordinance and that the others were immaterial. 

With respect to the “actual description” of the City Trade Land, the 

Ordinance admittedly characterized it only as “a portion [of] Tax Parcel A6, Section 16, 

Township 17 North, Range 1 West Seward Meridian, Alaska.” (Emphasis added.) But 

an arrow on the map appended to the Ordinance identified the City Trade Land as that 

portion bounded by West Riley Avenue, South Center Point Drive, and the parcel’s 

boundaries. The Ordinance thus adequately expressed the “actual description” of the 

City Trade Land. Similarly, Castle Properties points out that the Ordinance omitted the 

“actual acreage” of the City Trade Land. The Ordinance indeed described the City Trade 

Land as “approximately 20 acres” when its actual acreage, according to a City 

subdivision map, was 17.33. But neither the Ordinance nor the Purchase Agreement 

identified the exact acreage of the City Trade Land, and it appears that this information 

was publicly available. 

Nor does Castle Properties explain how knowing the exact acreage of the 

City Trade Land would have helped Castle Properties better match the City’s terms. 

Castle Properties crafted its cash offer based on the assumption that the Church would 

receive “half” of a 40-acre parcel — 20 acres. Accordingly, the likely effect of knowing 

the “actual acreage” of the City Trade Land would have been a downward adjustment 

22 (...continued) 

simply impossible for a preemptive rightholder to verify the precise price . . . at which 

he is entitled to purchase the property”). 

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in Castle Properties’ valuation, and Castle Properties’ offer of $153,000 already fell 

significantly short of the Property’s appraised value. 

As for the remaining items Castle Properties mentions — closing deadlines 

and costs, payment of sales commissions, and survey fees — it was not clear error to 

characterize these as “pertain[ing] to implementation and related matters.” Castle 

Properties does not develop its argument as to why these terms were material, and there 

is no evidence that knowledge of these terms would have helped Castle Properties decide 

whether to match the City’s offer. It was therefore not clear error to find that the 

Ordinance constituted adequate notice of the City’s offer to purchase the Property. 

B.	 The Church Did Not Deprive Castle Properties Of A Reasonable 

Opportunity To Meet The City’s Offer. 

Castle Properties argues it should have been given a “reasonable time 

period” to match the City’s offer. 23 Specifically, Castle Properties contends that “time 

was not of the essence” because the Church had been working on relocation since 2004 

and no closing deadline was stated in the Purchase Agreement. The document 

memorializing Castle Properties’ right of first refusal was silent as to how long the rightholder would have to exercise, and we have held that where a contract does not specify 

a time limit for performance, a “reasonable period” may be implied.24 

23 In this portion of its brief, Castle Properties also claims that the Church 

“refused to dialogue or communicate,” “would not cooperate to enable Castle Properties 

to exercise its Right of First Refusal,” and could have purchased suitable relocation 

property with the cash value of the City Trade Land. But because these arguments are 

more closely related to the covenant of good faith and fair dealing, we address them in 

Part IV.C. 

24 See, e.g., Hall v. Add-Ventures, Ltd., 695 P.2d 1081, 1089 (Alaska 1985) 

(“Where no provision is made as to time of performance, a reasonable time is implied, 

to be determined upon consideration of the subject matter of the contract, what was 

(continued...) 

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But given the course of events, we conclude that Castle Properties had 

reasonable time to exercise its right of first refusal after discovering the City’s offer at 

a City Council meeting in April 2011. The superior court found that 

[t]here is no reason why [Castle Properties] could not have 

testified at the City Council meeting in April, or sent a letter 

to the City and Church prior to that meeting that explicitly 

notified them of the existence of the right of first refusal . . . . 

Such a step undoubtedly would have had an impact on the 

Council’s deliberations, and given [Castle Properties] 

adequate time to develop an offer. 

We see no clear error in the superior court’s finding that Castle Properties itself could 

have taken steps to secure additional time. 

Rather than attempting to slow down the City’s consideration of the 

proposed land exchange, Castle Properties instead took the time to craft a formal offer 

with a deadline. Castle Properties then submitted an offer to purchase the Property for 

$153,000 and unequivocally indicated that it was exercising its right of first refusal. And 

in its letter dated May 27, 2011, Castle Properties itself urged that “time is of the 

essence” and requested a closing by June 7, 2011. Accordingly, Castle Properties 

received a reasonable opportunity to exercise its right of first refusal. 

24 (...continued) 

contemplated at the time the contact was made, and other surrounding circumstances.”); 

see also Firebaugh v. Whitehead, 559 S.E.2d 611, 616 (Va. 2002) (noting that a 

“reasonable time” is implied in the context of a right of first refusal); see also 

RESTATEMENT (THIRD) OF PROPERTY (SERVITUDES) § 4.3 cmt. c (2000) (noting that once 

a right of first refusal ripens into an option to purchase, the duration of the option is 

limited to a “reasonable time”). 

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C. The Church Did Not Breach Its Duty Of Good Faith And Fair Dealing. 

Under Alaska law, every contract has an implied covenant of good faith and 

fair dealing25 requiring “that neither party . . . do anything which will injure the right of 

the other to receive the benefits of the agreement.”26 As we noted in Roeland, 

[b]ad faith in right of first refusal transactions is not found 

where a party undertakes an act permitted by the contract, 

even if the motivations are unpleasant. Rather, it is typically 

found where the seller does not have a legitimate interest in 

the terms of the third-party offer, deliberately omits terms in 

relaying the offer to the right-holder, or does not deal at arms 

length with the third-party offeror.[27 ] 

Here, Castle Properties argues that “[e]verything . . . [the Church] did 

between 2010 and the present” was either calculated toward or had the effect of 

depriving Castle Properties of the benefit of its right of first refusal. But Castle 

Properties does not appear to argue that the Church lacked a “legitimate interest” in the 

City Trade Land or failed to deal at arms-length with the City. Instead, Castle Properties 

highlights the Church’s alleged failure “to provide notice of the offer” and its refusal “to 

provide information when requested.” 

Castle Properties also contends that the Church acted in bad faith by 

denying the validity of the right of first refusal. In response to Castle Properties’ 

“exercise” of its right of first refusal, the Church indeed expressed its opinion that the 

right was unenforceable, a position that the Church has maintained throughout this 

litigation. But Castle Properties does not further develop its argument as to why this 

25 Alaska Pac. Assurance Co. v. Collins, 794 P.2d 936, 947 (Alaska 1990). 

26 Jackson v. Am. Equity Ins. Co., 90 P.3d 136, 142 (Alaska 2004) (quoting 

Guin v. Ha, 591 P.2d 1281,1291 (Alaska 1979) (internal quotation marks omitted). 

27 214 P.3d at 351 (citations omitted). 

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position constitutes bad faith. And even if the Church’s view informed its rejection of 

Castle Properties’ offer, Castle Properties does not argue that the Church was obligated 

to accept the $153,000 that Castle Properties offered for the Property. Accordingly, 

Castle Properties has not shown that the Church’s denial of the right’s validity “injure[d] 

the right of the other to receive the benefits of the agreement.”28 

The superior court did not make a separate conclusion of law on Castle 

Properties’ good faith and fair dealing claim. But the court did find that “the members 

of the Church hierarchy had no knowledge that the right of first refusal existed” until 

May 2011, when Castle Properties recorded its “Notice of Exercise.” The court also 

credited testimony from the Church’s real estate agent that she was unaware of Castle 

Properties’ right of first refusal until “[a]round the third week of May 2011.” 

Castle Properties characterizes the Church’s asserted ignorance as “difficult 

to believe.” As Castle Properties correctly points out, the right of first refusal was 

recorded in 1996. The Church also had in its files a 2006 “Property Profile” prepared 

by a title company, which included a copy of the right of first refusal along with several 

other recorded documents. 

But as the superior court observed, the Church’s files were “a mess,” a view 

supported by the testimony of Brian Thomas, who served as the Church’s pastor from 

2005 to 2010. Thomas testified that there was not an “organized filing system” when he 

arrived, and that although Church members tried to “track down stuff as best [they] 

could,” the lack of “central record keeping . . . was a source of great frustration.” 

Moreover, three witnesses who participated in Church decision-making 

during the relevant time period testified that they were personally unaware of the right 

See Jackson, 90 P.3d at 142 (internal quotation marks omitted) (citation 

omitted). 

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28 
 

 

 

 

 

 

 

 

 

 

 

 

of first refusal until Castle Properties exercised it in May 2011. Thomas testified that he 

first learned of the right of first refusal when contacted for this litigation. Paul Hartley 

served as the Church of the Nazarene’s Alaska District superintendent from June 2010 

onward and chaired the Church’s board after Thomas resigned. Hartley testified that 

although he could not recall exactly when he learned of the right of first refusal, it was 

probably at the Church’s May 22, 2011 board meeting, and that the Church’s board had 

previously been unaware of it. Michael Messick, a Church board member serving from 

2005 through the date of the trial, similarly stated that he was unaware of Castle 

Properties’ right until the May 22, 2011 board meeting, and that it came as a “big 

surprise.” 

It is true that after learning of the proposed land exchange, Baker asked to 

meet with the Church and requested a copy of the Purchase Agreement. But Castle 

Properties does not specifically allege — and there is nothing in the record to suggest — 

that Baker actually brought the right of first refusal to the Church’s attention in making 

these inquiries. The superior court found that Castle Properties learned of the City’s 

offer in April 2011, yet “chose not to bring the right of first refusal to the attention of the 

Church or the City until the end of May” — a point that Castle Properties does not 

appear to dispute. Based on this record, we see no clear error in the superior court’s 

finding that the Church was unaware of the right of first refusal until Castle Properties 

attempted to exercise it in May 2011. And in light of the Church’s ignorance as to Castle 

Properties’ legal interest in the Property, we cannot say that the Church’s refusal to meet 

with Baker or respond to his inquiries was in bad faith. 

Castle Properties argues that, “even assuming [the Church’s] claim of 

earlier ignorance to be true, [the Church’s] actions from May 2011 onward were not 

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what a reasonable person would consider fair.”29 But in light of Castle Properties’ own 

conduct, the Church’s actions were not objectively unreasonable. Castle Properties 

unequivocally expressed that it was exercising its right of first refusal through recorded 

documents and Castle Properties’ May 27, 2011 letter to the Church. And all of these 

documents expressed Castle Properties’ intent to purchase the Property for a particular 

cash value. It was therefore reasonable for the Church to treat these communications as 

an offer to purchase the Property for $153,000. 

At oral argument before us, Castle Properties attempted to recast its May 

27 letter as an invitation for further dialogue. The letter stated: 

Although my client is determined to exercise its rights 

under the First Right of Refusal to buy the Property, it is not 

my client’s desire to hinder the Church from acquiring the 

Trade Land. We believe that a win/win solution should be 

possible in which my client acquires the Property from the 

Church, the Church acquires the Trade Land from the City of 

Wasilla, and the City of Wasilla receives fair market value for 

its sale of the Trade Land to the Church. 

The letter then noted Baker’s prior request to meet with the Church and stated that Castle 

Properties “remain[ed] willing to cooperate in working toward a solution that ideally 

would leave everyone satisfied.” 

But Castle Properties’ letter also stated that $153,000 plus closing costs had 

been deposited with McKinley Title, advised that “time [was] of the essence in this 

matter,” and requested a closing by June 7, 2011 unless “alternative arrangements [had] 

been made.” The letter did not specifically request a meeting, further information, or 

29 The implied covenant of good faith and fair dealing requires not only 

subjective good faith, but also that both parties “act in a way that a reasonable person 

would consider fair.” Hawken Nw., Inc. v. State, Dep’t of Admin., 76 P.3d 371, 381 

(Alaska 2003). 

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more time in which to formulate an offer. Nor is there any evidence that the Church 

unreasonably rejected Castle Properties’ “win/win solution.” The Ordinance suggests 

that the City was interested in acquiring the Property to “provide parking and access” to 

a greenbelt development “located directly across Cottonwood Creek.” And in a letter 

dated July 8, 2011, the Church informed Castle Properties that “[i]t appears that the City 

of Wasilla is not interested in the cash payment you proposed in your letter.” 

Having received Castle Properties’ offer, the Church’s only remaining duty 

was to employ “commercially reasonable standards” in evaluating it. 30 Roeland’s 

requirement that sellers use “commercially reasonable standards” to evaluate unique 

competing offers is tied to the seller’s “invitation to the right-holder to submit a 

commercially equivalent offer.”31 

Castle Properties represented to the Church that its offer of $153,000 was 

“equivalent” to the City’s offer. Although Castle Properties based its offer on the land’s 

tax-assessed value, we have previously recognized that a tax assessment is “notoriously 

unreliable as a criterion of true value.”32 And Castle Properties never had the City Trade 

Land commercially appraised, which likely would have revealed that the Property was 

worth more on the open market than the tax appraisal of $153,000. Thus, Castle 

Properties should have known that its cash offer of $153,000 based on the tax-assessed 

30 See Roeland, 214 P.3d at 349-50 (stating that after a right-holder submits 

an offer, “[t]he seller then has a duty to use commercially reasonable standards to 

evaluate the two offers”). 

31 Id. 

32 Disotell v. Stiltner, 100 P.3d 890, 895 n.10 (Alaska 2004) (quoting State 

v. 45,621 Square Feet of Land, 475 P.2d 553, 557 (Alaska 1970)) (internal quotation 

marks omitted). 

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value of the City Trade Land may not have been “commercially equivalent” to the City’s 

offer. 

The Church’s expert witness testified at trial that the fair market value of 

the City Trade Land was $250,000. And notably, Castle Properties’ request for relief 

from this court asks for a judgment requiring the Church to sell the Property “for the 

appraised value of the City Land at $250,000 or for the Church-determined value of 

$291,000,” which suggests that Castle Properties does not dispute that the market value 

of the City Trade Land was at least $250,000. There was also testimony suggesting that 

$153,000 would have been inadequate for the Church to purchase suitable relocation 

land. Accordingly, the superior court could reasonably conclude that the Church’s 

rejection of Castle Properties’ offer was neither unreasonable nor in bad faith. 

Castle Properties also appears to argue that the Church acted in bad faith 

by favoring a land trade over a cash offer. Castle Properties contends this preference was 

motivated by the Church’s “desire to avoid [] or at least indefinitely defer” paying onehalf of the sale proceeds to the Ocean Park Community Church under the terms of a deed 

restriction negotiated with the Property’s original donor. But the Church had also 

encountered serious problems in finding suitable property that would meet its needs. On 

balance, the record supports the superior court’s conclusion that it was commercially 

reasonable for the Church to favor a land trade over cash payment, given the problems 

the Church had encountered in finding affordable property. 

V. CONCLUSION 

We therefore AFFIRM the superior court’s judgment. 

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