Court Opinion

ID: 9475509
Source: CourtListenerOpinion
Date Created: 2023-08-05 05:29:29.560433+00
Date Added: 2024-06-11T17:44:45.440497
License: Public Domain

WILKINSON, Circuit Judge,
dissenting:
Unlike the majority, I cannot conclude that the language of this lease compels Chiodo to sell her property at the below market price of $40,000. The lease here is ambiguous; even courts cannot agree on the meaning of these lease provisions. Moreover, if the original parties actually intended to prevent Chiodo from selling her property for its fair market value, there are surely clear ways to say so. The majority’s transmutation of vague terms into clear ones creates a bargain that the parties did not make. That fact is all the more disturbing when one considers that the parties were not equally sophisticated, but were an oil company armed with a phalanx of attorneys and a small property owner with little or no representation. Contrary to the majority’s position, which interprets a standard lease in the light most favorable to the drafter, I would not allow the company to claim that its ambiguous language deprives a property owner of her right to sell her property for a fair market price.
I.
Under the guise of “plain language”, the majority rewards obscure draftsmanship. The fact that courts, all adopting a “plain meaning” analysis, have arrived at mutually exclusive interpretations of identical lease provisions should convince any skeptic of the lease’s ambiguity. Amoco Oil Co. v. Kraft, 89 Mich.App. 270, 280 N.W.2d 505 (1979) (plain meaning of lease allows lessor to sell property at fair market value); Amoco Oil Co. v. Snyder, 505 Pa. 214, 478 A.2d 795 (1984) and American Oil Co. v. Ross, 390 So.2d 90 (Fla.App.1980) (plain meaning does not allow lessor to sell property for more than the fixed option price). The Pennsylvania court, on which the majority relies, was itself divided on the meaning of these “plain” provisions. See Snyder, 478 A.2d at 799 (Zappaca, J., dissenting). In this case, the district court interpreted the lease in accordance with the Michigan holding and the Pennsylvania dissent. I fail to understand how the majority can conclude that the lease has a plain meaning when other courts have adopted radically different interpretations of identical language.
The lease’s ambiguity is illustrated by the ease with which the company could have drafted a clear provision. American Oil could have avoided any ambiguity simply by stating that “if the lessee does not exercise its right of first refusal, it retains the right to buy the property at the fixed-option price for the remainder of the lease.” That idea is not so difficult as to elude embodiment in the wording of a lease. Other oil companies have encountered no problem in drafting similar provisions that explicitly preserve the lessee’s fixed-price option. For example:
Any option herein granted shall be continuing and pre-emptive ... and the failure of lessee to exercise same in any one case shall not affect lessee’s right to exercise such option in other cases thereafter arising.
Texaco v. Creel, 310 N.C. 695, 314 S.E.2d 506 (1984).
Shell’s failure to exercise (its right of first refusal) shall in no way affect this lease, Shell’s rights under Article Thirteen (fixed-price purchase option), or its right to the estate herein created.
Shell Oil Co. v. Prescott, 398 F.2d 592 (6th Cir.1968) (parentheses added). When the courts have confronted lease provisions that lack this clarity, they have correctly penalized the lessee-drafter by preventing it from exercising the fixed-price option *288after a third party offer. Shell Oil v. Blumberg, 154 F.2d 251 (5th Cir.1946); M & M Oil Co. v. Finch, 7 Kan.App.2d 208, 640 P.2d 317 (1982); Bobali Corp. v. Tamapa Co., 235 Pa.Super. 1, 340 A.2d 485 (1975).
Finally, this agreement is internally ambiguous whenever, as is likely in a long-term lease, the market value of the property appreciates beyond $40,000. When a third party makes an offer, the right of first refusal provision allows Chiodo to sell the property unless Gulf matches the offer’s terms and conditions, but the fixed-price provision allows Gulf to buy the property for $40,000. The lease provides no guidance on which of these mutually exclusive provisions takes precedence in this situation. The majority exercises keen eyesight, but I fail to see the lease’s “plain meaning” in light of the different judicial interpretations, the straightforward provisions in other oil company leases, and the contradictary signals in this particular case.
II.
The majority’s holding deprives Chiodo of the right to sell her property for a price even close to its fair market value. Gulf claims that Chiodo bargained this right away because the lease provides that, if the lessee does not exercise its right of first refusal, “all the lease’s terms and conditions remain in full force and effect.” In its haste to avoid paying Chiodo what her property is worth, Gulf strains this innocuous provision beyond the breaking point.
Gulf’s interpretation essentially nullifies the first refusal clause because few will offer to buy the property for more than $40,000 if Gulf retains its fixed-price option. More importantly, under this interpretation, Gulf may buy the property for the lesser of $40,000 or fair market value; at most, Gulf pays the fair market price and probably pays much less. By contrast, the most that Chiodo can receive for her property is $40,000, and she runs the risk of losing money if her property appreciates beyond that figure. Thus, Gulf would turn this nebulous clause into the legal equivalent of “heads I win, tails you lose.” *
It may be, of course, that the purchase options are included “entirely for the benefit” of Gulf Oil. (See ante at p. 286). Moreover, parties do sign contracts with substantial risks and unfavorable terms. But before we impute any such intent to Chiodo, we ought at least to insist that the onerous term be clear. As contractual language becomes more general, it usually becomes less clear. The language to which Gulf points incorporates the lease terms through the most sweeping of references, when a single specific reference would have clarified the crucial point beyond cavil. Nowhere in the lease did the drafter explain the connection between the fixed price and first refusal option, and the majority’s description of the draftsmanship as “not the most felicitous” is charitable indeed.
The most reasonable interpretation of this vague language is that Gulf could buy the property for $40,000, but once a third party appears, Gulf could buy the property only on the terms and conditions of the third party offer. The “terms and conditions” clause simply means that the lessee could continue to lease the same property on the same terms after Chiodo sold the property. Indeed, the disputed provision explicitly refers to the fact that subsequent purchasers are bound by its terms. This interpretation is more realistic because it reflects a reasonable property owner’s belief that, absent a clear waiver of the right, she can sell her property for its fair market value.
*289The majority’s interpretation operates as a significant restraint on the alienation of real property. Such restraints are disfavored. Williams v. First Fed. Sav. & Loan Assoc., 651 F.2d 910, 919 (4th Cir. 1981). Nonetheless, if the original parties had specifically restricted Chiodo’s right to sell her property, their intent should be upheld. Such a clearly written contract is certainly not unconscionable. Nor should this court let Chiodo out of a bad bargain. What it has done, however, is force her into a bargain she never made.
III.
Rather than allowing Gulf to rely on the “plain meaning” of this lease, I would conclude that the lease is anything but plain and should be construed against the drafter. Nisbet v. Watson, 162 W.Va. 522, 251 S.E.2d 774, 780 (1979); Sun Lumber Co. v. Thompson Land & Coal Co., 138 W.Va. 68, 76 S.E.2d 105, 109 (1953), The flaw of the lease is that it fails to put Chiodo on notice that she was surrendering the right to sell her property for what it was worth. By upholding Gulf’s interpretation, the majority allows an oil company, through inscrutable boilerplate, to buy a lessor’s property for below market value without ever negotiating for that right. I would require the companies to draft their standard leases in language that affords to parties like Chiodo fair notice of their obligations and fair opportunity to bargain for their rights.
I would affirm the judgment of the district court.

 Gulf also claims that, if the court requires it to pay the fair market value, Gulf would be paying for its own improvements. Gulf, however, could have easily avoided this problem by an earlier exercise of its fixed-price option or by a clearly drafted contract. Gulfs other claim, that the total rental payments plus the $40,000 purchase price is a good deal for Chiodo, is simply irrelevant because the issue is not the wisdom of the bargain, but the language of the lease.