Court Opinion

ID: 4679357
Source: CourtListenerOpinion
Date Created: 2021-04-21 14:23:27.73892+00
Date Added: 2024-06-11T08:03:50.029391
License: Public Domain

2021 WI 35

                   SUPREME COURT              OF      WISCONSIN
CASE NO.:                2018AP960

COMPLETE TITLE:          Country Visions Cooperative,
                                   Plaintiff-Appellant-Cross-Respondent-
                         Petitioner,
                              v.
                         Archer-Daniels-Midland Company and United
                         Cooperative,
                                   Defendants-Respondents-Cross-
                         Appellants.

                              REVIEW OF DECISION OF THE COURT OF APPEALS
                              Reported at 392 Wis. 2d 672,946 N.W.2d 169
                                  PDC No:2020 WI App 32 - Published

OPINION FILED:           April 21, 2021
SUBMITTED ON BRIEFS:
ORAL ARGUMENT:           February 25, 2021

SOURCE OF APPEAL:
   COURT:                Circuit
   COUNTY:               Fond du Lac
   JUDGE:                Gary R. Sharpe

JUSTICES:
ZIEGLER, J., delivered the majority opinion for a unanimous
Court. ROGGENSACK, C.J., filed a concurring opinion.
NOT PARTICIPATING:

ATTORNEYS:
       For         the   plaintiff-appellant-cross-respondent-petitioner,
there       were     briefs    filed   by   David   G.    Peterson,    J.    Bushnell
Nielsen,      Bridget      M.   Hubing,     Malinda      J.   Eskra,   and   Reinhart
Boerner Van Deuren S.C., Waukesha. There was an oral argument by
J. Bushnell Nielsen.

       For the defendants-respondents-cross-appellants, there was
a brief filed by Ryan J. Walsh, Amy C. Miller, and Eimer Stahl
LLP, Madison; with whom on the brief was John C. O’Quinn, Megan
M. Wold and Kirkland & Ellis LLP, Washington, D.C.; with whom on
the brief was Michael B. Slade, Yates M. French, and Kirkland &
Ellis LLP, Chicago, Illinois. There was an oral argument by Ryan
J. Walsh.

                               2
                                                                               2021 WI 35

                                                                       NOTICE
                                                         This opinion is subject to further
                                                         editing and modification.   The final
                                                         version will appear in the bound
                                                         volume of the official reports.
No.   2018AP960
(L.C. No.   2015CV546)

STATE OF WISCONSIN                                   :            IN SUPREME COURT

Country Visions Cooperative,

                Plaintiff-Appellant-Cross-Respondent-
                Petitioner,                                                  FILED
      v.                                                                APR 21,2021
Archer-Daniels-Midland Company and United                                 Sheila T. Reiff
Cooperative,                                                           Clerk of Supreme Court

                Defendants-Respondents-Cross-
                Appellants.

ZIEGLER, J., delivered the majority opinion for a                               unanimous
Court. ROGGENSACK, C.J., filed a concurring opinion.

      REVIEW of a decision of the Court of Appeals.                       Affirmed.

      ¶1        ANNETTE KINGSLAND ZIEGLER, J.                This is a review of a

published       decision   of     the   court   of       appeals,      Country      Visions

Cooperative v. Archer-Daniels-Midland Co., 2020 WI App 32, 392

Wis. 2d 672,       946   N.W.2d 169,       affirming       in    part,     reversing       in

part,     and    remanding   with       directions       the    Fond    du    Lac    County

circuit     court's      order1    granting     Country         Visions      Cooperative

("Country Visions") specific performance of its right of first

      1   The Honorable Gary R. Sharpe presided.
                                                                           No.       2018AP960

refusal to a property that Archer-Daniels-Midland Co. ("ADM")

was attempting to sell to United Cooperative ("United").                                   This

case requires us to determine whether the circuit court properly

set the price at which Country Visions may exercise its right of

first refusal.

       ¶2      "A right of first refusal is a contractual right to be

first in line should the opportunity to purchase or lease a

property arise."            MS Real Est. Holdings, LLC v. Donald P. Fox

Fam.    Tr.,    2015       WI   49,    ¶24,    362    Wis. 2d 258,       864     N.W.2d 83.

Country Visions held a right of first refusal to a parcel of

property       with    a    grain     facility       in    Ripon,   Wisconsin         ("Ripon

Property"), which ADM owned.                   Unbeknownst to Country Visions,

ADM entered into negotiations with United to sell the Ripon

Property, along with three other parcels throughout Wisconsin.

When    Country       Visions     learned      of     these      negotiations,        Country

Visions      informed       ADM     of   its       right    of   first   refusal.           In

response, ADM and United attempted to sever the transaction into

two separate transactions.                 As part of this severance, one of
the    new    transactions        became      an    offer    from   United      to    ADM    to

purchase the Ripon Property alone for $20 million.                                    Country

Visions did not match this purchase price, and ADM and United

closed on their deal.

       ¶3      Country Visions brought this lawsuit against ADM and

United       (collectively,           "Defendants")         claiming     that        the    $20

million sale was a sham and sought specific performance of its

right of first refusal at a lower price.                         Specifically, Country
Visions claims that Defendants artificially inflated the price
                                               2
                                                                           No.    2018AP960

to    overcome      Country    Visions'        right      of   first    refusal.       The

circuit court held a bench trial and concluded that the $20

million sale of the Ripon Property was a sham.                             As such, the

circuit court determined that the price for the Ripon Property

was actually $16.6 million and granted Country Visions 15 days

to exercise its right of first refusal at that price.

       ¶4        Country    Visions     and        Defendants     cross-appealed       the

circuit court's decision to the court of appeals on a variety of

issues.          The court of appeals affirmed in part, reversed in

part,      and    remanded    the   case      to    the   circuit      court.      Country

Visions, 392 Wis. 2d 672, ¶64.                    As relevant to the issue before

us——whether the circuit court properly set the price at which

Country Visions may exercise its right of first refusal——the

court of appeals concluded that the circuit court did not err in

how     it   determined       the     appropriate         right    of     first   refusal

exercise price.            Id., ¶37.       Despite this conclusion, the court

of appeals remanded the case to the circuit court to determine

whether      the    $16.6     million      exercise       price     included      personal
property, which the right of first refusal contract excluded

from Country Visions' purchase rights.                    Id., ¶43.

       ¶5        Country Visions petitioned this court seeking to set

the   exercise       price    at    $7.7    million——the          price    that    Country

Visions' expert determined as the "fair market value" of the

Ripon Property.2            Country Visions argued that we should do so

       Neither Country Visions nor Defendants asked us to review
       2

any of the other determinations of the court of appeals.

                                              3
                                                                     No.    2018AP960

because the circuit court violated basic right of first refusal

principles when it set the exercise price based on United's

willingness to pay more than the appraised value of the Ripon

Property.    We disagree.

    ¶6      We conclude that the circuit court did not err in

considering     the   unique   synergies        that    the    Ripon       Property

provides to United when it set the exercise price higher than

the appraised value.      For rights of first refusal, a prospective

buyer may choose to offer significantly more than the appraised

value of a property, especially in the context of a package

deal.      Thus,   depending   on   the    terms   of   the    right       of   first

refusal contract and the facts of the case, a circuit court may

set an exercise price that exceeds the appraised value of the

burdened    property.       However,       we   conclude      that     remand     is

necessary to determine whether the $16.6 million exercise price

includes more than is called for in the right of first refusal

contract.     Accordingly, we affirm the court of appeals' decision

and remand to the circuit court for proceedings consistent with
this opinion.

                                       4
                                                   No.   2018AP960

                     I.   FACTUAL BACKGROUND

    ¶7   This case centers on a right of first refusal contract

between Country Visions and ADM.3    The right of first refusal

contract provides as follows:

         1.   For a period of ten (10) years from the date
    hereof (the "ROF Period"), [ADM] hereby grants to
    [Country Visions] a right of first refusal to purchase
    the [Ripon Property] or applicable portion thereof,
    but only on the terms and conditions as provided in
    this Agreement. During [the] ROF Period, [ADM] shall
    not sell, convey or in any way convey or transfer any
    part [of] the [Ripon Property] without first complying
    with the provisions of this Agreement.

         2.   If at any time during the ROF Period, [ADM]
    desires to sell any part of the [Ripon Property] to a
    party . . . , pursuant to a bona fide written offer
    from a third party (the "Third Party Offer"), [ADM]
    shall first notify [Country Visions] of [ADM's] desire
    to sell the [Ripon Property] or applicable portion
    thereof (the "Offered Property") and such notice (the

    3  Country Visions and ADM were not the original parties to
this contract.    Originally, Golden Grain, LLC and Agri-Land
Co-op sold the Ripon Property to Olsen Brothers Enterprises,
LLP.   As part of this deal, Olsen Brothers Enterprises granted
to Golden Grain and Agri-Land Co-op a right of first refusal to
the Ripon Property, which is the right of first refusal contract
at issue in this case.

     After the right of first refusal contract was executed,
Olsen Brothers Enterprises sold the Ripon Property to Paul and
David Olsen individually, which did not trigger the right of
first refusal. Paul and David Olsen later filed for bankruptcy.
As part of this bankruptcy, ADM purchased the Ripon Property.

     Golden Grain and Agri-Land Co-op, through a series of
mergers and assignments, transferred their right in the right of
first refusal agreement to Country Visions.

     Consequently, ADM became the owner of the Ripon Property,
and Country Visions became the holder of the right of first
refusal to the Ripon Property.

                                5
                                                                         No.    2018AP960

      "Notice") shall be deemed an offer to sell the Offered
      Property upon the terms set forth in the Third Party
      Offer.    The Notice shall identify the bona fide
      prospective purchaser of the Offered Property in
      addition to specifying the purchase price and other
      terms and conditions of such proposed sale (such price
      and other terms being referred to as "the Third Party
      Terms") and shall be accompanied by a copy of the
      Third Party Offer.   [Country Visions] shall have the
      right and option to purchase the Offered Property on
      the Third Party Terms but only if [Country Visions]
      shall provide written notice of such election to [ADM]
      within fifteen (15) days after [Country Visions']
      receipt of the Notice. . . .
The   parties   do     not   dispute   that    the    right    of    first      refusal

contract outlines the following obligations for the exercise of

the right of first refusal:            ADM cannot sell the Ripon Property

without first offering it to Country Visions; Country Visions

has a right to purchase the Ripon Property at the third party's

purchase price; and Country Visions has 15 days to exercise the

right of first refusal and provide notice of its intent to match

the third-party offer for the Ripon Property after receiving

notice of the third party's offer.

      ¶8   In May 2015, and unbeknownst to Country Visions, ADM

started negotiations to sell its Wisconsin grain business assets

to United.      Defendants reached a tentative agreement for United

to purchase the Ripon Property and three other grain storage

facilities around Wisconsin4 from ADM for a total price of $25

million.         The     tentative      agreement       included          the     land,

improvements, and personal property of each facility; it did not

      4The   other   facilities              are     located        in     Westfield,
Auroraville, and Oshkosh.

                                         6
                                                                                    No.    2018AP960

include the inventory of grain that ADM had in storage at each

facility.

       ¶9        Sometime       in        early     October         2015,    Country         Visions

learned         of     the   proposed        sale       of    the    Ripon       Property.        On

October 8, 2015, Country Visions informed ADM that it held a

right of first refusal to the Ripon Property.                                Country Visions,

pursuant to the right of first refusal contract, requested a

copy       of    the    third-party         offer       to    purchase      so    that    it   could

determine         whether       it    wanted      to     exercise      its       right    of   first

refusal.

       ¶10       At     this    point,       Defendants         had    not       executed      their

tentative agreement.                 Upon learning of Country Visions' right of

first           refusal,       Defendants           restructured             their        tentative

agreement.             Defendants severed the tentative agreement into two

separate transactions.                     One transaction called for United to

purchase the Ripon Property from ADM, excluding all inventory

and personal property, for $20 million.                               The other transaction

called          for    United        to    purchase          from   ADM     the      other     three
properties and all personal property for $5 million and all

inventory at its market value.                          Defendants assigned such a high

value to the Ripon Property in part due to the unique synergies

the Ripon Property would provide to United's business.5

       The circuit court explained the unique synergies that the
       5

Ripon Property provided to United as follows:

       [The Ripon Property] was particularly beneficial to
       [United] because its 50 railroad car loading capacity
       in conjunction with United's second location in Ripon
       and location in Oshkosh all serviced by the same rail
                                                    7
                                                             No.    2018AP960

    ¶11    On October 13, 2015, United provided ADM with a formal

offer to purchase the Ripon Property for $20 million, triggering

ADM's obligations under the right of first refusal contract.

The next day, consistent with its contractual obligations, ADM

notified Country Visions of United's formal offer and provided

Country   Visions   with   a   copy   of   the   offer.   Country   Visions

claimed this $20 million purchase price was a sham and elected

not to meet the terms of the third-party offer.

    ¶12    On October 16, 2015, Defendants closed on the other

transaction, purchasing the other three properties and personal

property for $5 million.        In early November, after the right of

first refusal exercise period lapsed, Defendants closed on the

    line, allowed it to load 100 car trains to ship grain
    to more lucrative markets.

    In   addition,   the  proximity   of  Auroraville   and
    Westfield allowed trucking of grain to the [Ripon
    Property] for shipping, all within an operations
    system   geographically   proximate  to   the   subject
    location.

    . . . .

    [United] intended to use and does use [the Ripon
    Property] to store and ship grain and does and can
    implement 100 car trains that increase profitability
    and can reach markets not ordinarily available without
    the ability to load 100 car trains.       In addition,
    unlike an agronomy use primarily for storage and
    manufacture of livestock feed, the United operation
    loads, ships, stores for future shipping and transfers
    grain using a margin that requires larger amounts to
    be handled in order to obtain profitability.       The
    Court   does  find   synergies  with   United's  other
    facilities and with the ability to load 100 car
    trains.

                                      8
                                                                        No.   2018AP960

Ripon Property transaction, with United purchasing it for $20

million.    Country Visions brought a lawsuit against Defendants.

                            II.    PROCEDURAL POSTURE

     ¶13    On    November    11,       2015,    Country    Visions      filed    this

lawsuit    seeking,    as    relevant       to   this    appeal,    a    declaratory

judgment that it had the right to purchase the Ripon Property

for its fair market value and specific performance of the right

of first refusal contract at that fair market value.6

     ¶14     After     several          years    of     pre-trial       motions    and

decisions not relevant to this appeal, the circuit court held a

bench    trial.      During       the    bench   trial,    Country      Visions    and

Defendants supplied expert testimony as to the value of the

     6 In response, ADM moved to reopen the bankruptcy proceeding
at which it purchased the Ripon Property.      In re Olsen, 563
B.R. 899, 902 (Bankr. E.D. Wis. 2017), aff'd sub nom. Archer-
Daniels-Midland Co. v. Country Visions Coop., No. 17-cv-0313-
bhl, 2021 WL 651553 (E.D. Wis. 2021).       The bankruptcy court
agreed to reopen the proceeding and addressed the issue of
"whether a final, non-appealable order approving a real estate
sale could extinguish a right of first refusal without affording
the holder of the right formal notice and the opportunity to
object."   Id.   The bankruptcy court held that Country Visions
"was not given notice during the bankruptcy proceedings
sufficient to satisfy due process before its rights were
extinguished," so ADM did not take the Ripon Property "free and
clear of [Country Visions]' interest." Id. at 909. Therefore,
ADM is still subject to the right of first refusal despite its
purchase of the Ripon Property out of bankruptcy.

                                           9
                                                     No.   2018AP960

Ripon Property.7     Country Visions' expert, Mark Akers, opined

that the Ripon Property was worth $7.7 million.8      Defendants'

     7 There were several experts in this case, but the circuit
court focused on two in reaching its decision: Mark Akers for
Country Visions and Jack Friedman for Defendants.     Similarly,
the parties focused on Akers' and Friedman's testimony. Just as
the circuit court and parties did, we will focus on these two
experts.
     8 Akers reached this valuation using the cost approach and
sales comparison approaches of appraisal.    The cost approach
"seeks to measure the cost to replace the property."      Adams
Outdoor Advert., Ltd. v. City of Madison, 2006 WI 104, ¶35, 294
Wis. 2d 441, 717 N.W.2d 803.      "In the cost approach, the
appraiser analyzes the cost of the subject improvements by
comparison to the cost to develop similar improvements as
evidenced by the cost of construction of substitute properties
with the same utility as the subject property."       Appraisal
Institute, The Appraisal of Real Estate, 377 (13th ed. 2008).
Using the cost approach, Akers estimated that the value of the
Ripon Property at $7,548,000.

     "In the sales comparison approach, an opinion of market
value is developed by comparing properties similar to the
subject property that have recently sold, are listed for sale,
or are under contract (i.e., for which purchase offers and a
deposit have been recently submitted)." Id. at 297. Using the
sales comparison approach, Akers estimated the value of the
Ripon Property at $7,458,000.

     Akers then averaged the cost approach and the sales
comparison   approach   to   reach  his   opinion   of  value   at
$7.5 million.    The circuit court believed that his opinion of
value was in error based on "errors in the bin size and some
inaccuracy    about   access    and  some    criticism   regarding
comparables" and determined that $7.7 million was a more
accurate reflection of Akers' opinion of value as it was Akers'
"higher number on his margin of error."        We accept this as
Akers' opinion of value for purposes of this appeal, as both
parties do.

                               10
                                                    No.   2018AP960

expert, Jack Friedman, opined that the Ripon Property was worth

$16.6 million to United.9

     ¶15    On May 3, 2018, the circuit court issued a written

decision.     The court concluded "that the $20 million dollar

offer [for the Ripon Property] was a sham at an arbitrarily

inflated price" "for the purpose of preventing [Country Visions]

from exercising the right of first refusal."     The court also

found that

     the fair value for [United] to use in purchasing the
     [Ripon Property] was the $16.6 million dollars
     testified to by the witness the court believes was

     9 Friedman reached this valuation amount by analyzing the
value of the Ripon Property "in the context of the $25 million
United spent when purchasing four facilities from ADM in 2015."
Specifically, Friedman said that "a reasonable approach to
valuing the Ripon Property in context of this transaction is to
consider what percentage of the total $25 million value was
attributable to the Ripon Property."

     Friedman   used   the   income  capitalization   method   to
approximate the prices of the other three facilities——Westfield,
Auroraville, and Oshkosh——that were part of this deal. "In the
income   capitalization   approach,  an  appraiser   analyzes   a
property's capacity to generate future benefits and capitalizes
the income into an indication of present value."        Appraisal
Institute, supra note 8, at 445. To reach his valuation for the
facilities, Friedman looked at the grain storage capacity, rail-
loading capability, and quality of cropland near the facility to
inform his estimate of value.       Using these factors, among
others, Friedman assigned $500,000 for the Westfield facility as
salvage value only, $2 million for the Auroraville property, and
$5.9 million for the Oshkosh facility. Friedman then estimated
that the value of the Ripon Property was the remainder of the
$25 million total purchase price——$16.7 million. As the circuit
court noted in its decision, this number should have been
$16.6 million, but this error is of no consequence to our
conclusion, and we use $16.6 million as Friedman's opinion of
value.

                               11
                                                                         No.   2018AP960

       most credible in assessing valuation, Jack Friedman,
       whose credentials as an operator in the grain industry
       in Iowa and one with experience in valuing and
       acquiring grain elevator properties together with his
       own assessment of the values of the other three
       properties acquired by [United] from [ADM] made his
       opinion the most persuasive testimony.        Although
       Mr. Friedman valued the Ripon property at $16.7
       million when that figure is coupled with the other
       valuations for the remaining properties the value was
       overstated by $100,000 so the Court has reduced his
       estimate as to the Ripon property from $16.7 to $16.6
       million.

             . . . The   plaintiff    would   have    this    court
       construe fair market value to an appraiser's opinion
       based    upon   comparables,   assessed    values    and   a
       depreciated cost assessment. This Court believes that
       appraised value can also include both the income
       approach together with some inherent qualities that
       would be attributable to a specific buyer. Those type
       of   inherent    qualities   can   include    things    like
       proximity in the case of an adjoining owner, access in
       the case of a land locked parcel and synergies in a
       case like [United] and its geographical and rail line
       related enhancements to value.
Ultimately, the circuit court granted Country Visions specific

performance     to    exercise      the   right      of    first    refusal——giving

Country Visions 15 days to exercise the right of first refusal

at the $16.6 million exercise price.

       ¶16   Both    Country     Visions       and   Defendants         appealed      the

circuit court's decision on numerous grounds.                       As relevant to

our   review,   the    court   of    appeals      was     asked    to    address      "the

appropriate price at which the [right of first refusal] was to

be exercised."         Country Visions, 392 Wis. 2d 672,                     ¶31.      The

court of appeals concluded that the circuit court "did not err

in    considering     the   unique    synergies         specific        to   United    in
determining an appropriate exercise price under the equitable

                                          12
                                                                   No.    2018AP960

remedy it adopted."            Id., ¶37.        However, the court of appeals

did not specifically affirm the Ripon Property's $16.6 million

valuation    because      it    was   unclear      from   the   circuit   court's

decision whether the $16.6 million valuation included personal

property, which the court of appeals determined was excluded

from the terms of the right of first refusal contract.                        Id.,

¶38.     To remedy this lack of clarity, the court of appeals

remanded for the circuit court to "determine what portion of the

$25 million previously agreed-upon price is fairly allocable to

the real estate alone, had United made a bona fide offer for

just that property."           Id., ¶43.

       ¶17   Country Visions petitioned this court seeking to set

the    exercise   price    at     $7.7     million——the    price   that   Country

Visions' expert determined as the "fair market value" of the

Ripon Property.        Country Visions argued that we should do so

because the circuit court violated basic right of first refusal

principles when it set the exercise price based on United's

willingness to pay more than the appraised value of the Ripon
Property.    We granted review.

                          III.     STANDARD OF REVIEW

       ¶18   This case requires us to determine whether the circuit

court properly set the price at which Country Visions could

exercise its right of first refusal.                This requires us to apply

the law to the circuit court's findings of fact.

       ¶19   "We uphold a circuit court's findings of fact unless
they are clearly erroneous."               Phelps v. Physicians Ins. Co. of

                                           13
                                                                          No.    2018AP960

Wis., Inc., 2009 WI 74, ¶34, 319                     Wis. 2d 1, 768         N.W.2d 615.

"[A] finding of fact is clearly erroneous when 'it is against

the    great    weight     and   clear    preponderance       of    the     evidence.'"

Id.,     ¶39    (quoting     State   v.    Arias,      2008    WI     84,       ¶12,   311

Wis. 2d 358, 752 N.W.2d 748).             "Therefore, although evidence may

have presented competing factual inferences, the circuit court's

findings are to be sustained if they do not go 'against the

great weight and clear preponderance of the evidence.'"                                Id.

(quoting Arias, 311 Wis. 2d 358, ¶12).

       ¶20     The   application     of   the   circuit    court's        findings      of

fact to the law is a question of law.                    Id., ¶35.          "We decide

questions of law independently."               Id.

                                   IV.    ANALYSIS

       ¶21     We begin our analysis with a general discussion of

rights    of    first     refusal,   paying     particular         attention      to   the

interaction between rights of first refusal and inflated values

in package deals.          We then apply that law to the facts of this
case.

                     A.   Rights of First Refusal Generally

       ¶22     "A right of first refusal is a contractual right to be

first in line should the opportunity to purchase or lease a

property arise."          MS Real Est. Holdings, 362 Wis. 2d 258, ¶24.

As we have explained, a right of first refusal is

       a right to buy before or ahead of others, thus, a pre-
       emptive right contract is an agreement containing all
       the essential elements of a contract, the provisions
       of which give to the prospective purchaser the right
       to buy upon specified terms, but, and this is the

                                          14
                                                                            No.     2018AP960

      important point, only if the seller decides to sell.
      It does not give the pre-emptioner the power to compel
      an   unwilling  owner   to  sell,   and  therefore  is
      distinguishable from an ordinary option.
Id., ¶25 (quoting Edlin v. Soderstrom, 83 Wis. 2d 58, 68, 264

N.W.2d 275 (1978)).            "Where the procedure [for exercising the

right]      is    clear      and   the    time       to     exercise       the    right     is

reasonable, a right of first refusal 'provides a possible buyer

who   is    constantly       available.'"            Id.,    ¶28    (quoting      Bruns     v.

Rennebohm Drug Stores, Inc., 151 Wis. 2d 88, 99, 442 N.W.2d 591

(Ct. App. 1989)).

      ¶23    Thus, if a property owner receives an offer, the owner

must offer the property to the right holder first in compliance

with the right of first refusal contract terms.10                           If the right

holder     accepts     the    property        owner's     offer,     the    right    holder

purchases        the   property.         If    the    right    holder       declines      the

property owner's offer, the property owner may then accept the

prospective       buyer's     offer.          Accordingly,         "[t]he   holder     of    a

right of first refusal cannot force landowners to sell or lease

their property unless they freely choose to do so.                               Even then,

       We note that generally, right of first refusal contracts
      10

provide that the right holder must purchase the property at the
same purchase price with the same terms and conditions as the
prospective buyer.    See, e.g., MS Real Est. Holdings, LLC v.
Donald P. Fox Fam. Tr., 2015 WI 49, ¶6, 362 Wis. 2d 258, 864
N.W.2d 83. As is the case with every contract, the parties to a
right of first refusal contract can set the terms of the
contract, including setting a fixed exercise price or setting
the methodology——such as "objective pricing by way of appraisal
or market index"——for calculating the exercise price.       See
David I. Walker, Rethinking Rights of First Refusal, 5 Stan.
J.L. Bus. & Fin. 1, 37-38 (1999).

                                              15
                                                                  No.    2018AP960

landowners may condition such sale or lease on terms that are

acceptable to them."       Id., ¶29.

     ¶24   These   basic    principles      of    rights   of    first   refusal

become more complicated when the burdened property is sold as

part of a package deal with other real or personal property that

is not subject to the right of first refusal.                    In addressing

package deals and rights of first refusal, jurisdictions across

the nation have adopted varying approaches.11

     ¶25   In   Wisconsin,    the   court    of    appeals      addressed    this

problem of package deals and rights of first refusal for the

first time in Wilber Lime Products, Inc. v. Ahrndt, 2003 WI

App 259, 268 Wis. 2d 650, 673 N.W.2d 339.              In Wilber Lime, the

court of appeals addressed facts similar to those now before us.

There, the property owner sold 180 acres, of which Wilber Lime

held a right of first refusal to 25 of the acres.                  Id., ¶¶2-3.

To resolve the case, the court of appeals had to determine how a

court should address a right of first refusal when a property

     11Some jurisdictions hold that the selling of a burdened
property as part of a larger package deal does not trigger the
right of first refusal but enjoins the sale of the burdened
property as part of a package deal. See Bernard Daskal, Rights
of First Refusal and the Package Deal, 22 Fordham Urb. L.J. 461,
475-79 (1995).   Other jurisdictions hold that the selling of a
burdened property as part of a package deal does trigger the
right of first refusal.    See id. at 480.   These jurisdictions
that hold that the right of first refusal is triggered disagree
as to the remedy: one jurisdiction opting for contract damages;
another jurisdiction opting for specific performance on the
entire package deal; and the majority of jurisdictions opting
for specific performance on the burdened property alone.     See
id. at 480-84.

                                       16
                                                                       No.   2018AP960

that is subject to that right of first refusal is sold as part

of a package deal.            Id., ¶8.        After surveying how different

jurisdictions     addressed      such    a    case,    the     court    of   appeals

settled on the "middle road" approach the Fourth Circuit Court

of Appeals set forth in Pantry Pride Enterprises v. Stop & Shop

Cos.,   806    F.2d   1227,   1230   (4th     Cir.    1986).      Explaining      the

Fourth Circuit's conclusions, our court of appeals stated the

following:

     [T]he [Fourth Circuit] concluded that the right of
     first refusal was triggered and that awarding specific
     performance was consistent with the parties' intent
     when they agreed to the right of first refusal.
     [Pantry Pride, 806 F.2d at 1230]. However, the court
     did not think that a simple pro rata valuation was
     fair.   Instead, the court remanded the case for an
     allocation of the fair market value of the property
     burdened by the right of first refusal. Id. at 1231.
     "Permitting the exercise of the first refusal right
     [based on the purchase price of the whole] provides
     [the holder of the right] a windfall for which it
     never bargained in the lease." Id. It would bear "no
     relation to its worth" and the holder of the right of
     first refusal would "have acquired [the property] at
     an absurdly low price and on terms never really agreed
     to between [the parties]." Id.
Wilber Lime, 268 Wis. 2d 650, ¶11.                Relying on Pantry Pride's

logic, our court of appeals held that the sale of a property

subject to a right of first refusal as part of a package deal

triggers the right of first refusal to the burdened property and

that the right holder is entitled to specific performance for

the sale of the burdened property.             Id., ¶12.

     ¶26      The court of appeals went on to recognize "like the
court in Pantry Pride, [there is] the possibility that the acres

                                         17
                                                                No.       2018AP960

being sold are not all of equal value."             Id., ¶13.   The court of

appeals then concluded:

      [T]he most equitable resolution is to determine the
      fair market value of the twenty-five acres.       This
      protects the landowner from being forced to sell the
      twenty-five acres at a price lower than its fair
      market value and therefore lower than the owner would
      accept if the twenty-five acres were sold alone.    It
      also prevents [right holder] from receiving a windfall
      of being able to purchase the land at a price lower
      than its value.     This approach best fulfills the
      intentions of the parties when they entered into the
      agreement granting [right holder] the right of first
      refusal.
Id.

      ¶27   This very passage is the basis of Country Visions'

argument    that   the   circuit    court     did    not   apply      a     proper

methodology   in   determining     the    exercise    price   for     the    Ripon

Property.     Country Visions argues that the exercise price for

the Ripon Property must be set at the "fair market value," as

determined using the three-tiered methodology of appraisals set

forth in Wis. Stat. § 70.32(1) (2019-20).12                This hierarchical

       All subsequent references to the Wisconsin Statutes are
      12

to the 2019-20 version unless otherwise indicated.

     "Tier 1" of this three-tiered methodology requires the
appraiser to examine a "recent arm's-length sale" of the subject
property. Metro. Assocs. v. City of Milwaukee, 2018 WI 4, ¶32,
379 Wis. 2d 141, 905 N.W.2d 784. "If there is no recent sale of
the subject property, the appraiser moves to tier 2, examining
recent, arm's-length sales of reasonably comparable properties
(the 'sales comparison approach')." Id., ¶33. "When both tier
1 and tier 2 are unavailable, an assessor moves to tier 3."
Id., ¶34. For tier 3, an assessor:

      may consider all the factors collectively which have a
      bearing on value of the property in order to determine
      its fair market value.    These factors include cost,
                                     18
                                                                                No.    2018AP960

methodology        is    applicable          in        cases    involving      taxation      and

eminent     domain,          where    the    need        for     uniform     application      is

essential.     See Wis. Stat. § 70.32(1); Metro. Assocs. v. City of

Milwaukee,    2018        WI 4,       ¶31,       379     Wis. 2d 141,         905    N.W.2d 784

(applying    the        methodology         to    taxation        cases);      Adams    Outdoor

Advert.,     Ltd.       v.    City    of     Madison,           2006    WI    104,    ¶47,   294

Wis. 2d 441,       717       N.W.2d 803          (same    to     eminent      domain   cases);

State ex rel. Levine v. Bd. of Rev. of Vill. of Fox Point, 191

Wis. 2d 363,        372,       528     N.W.2d 424              (1995)    (explaining         that

§ 70.32(1) "seeks to ensure a uniform method of taxation by

requiring assessors to assess real estate at its fair market

value,     using    the       'best    information'              that   the    assessor      can

practicably obtain").                However, the goal of the circuit court

when setting the exercise price for a right of first refusal is

not to determine the fair market value of the burdened property.

Rather, the circuit court must determine the actual price that

the prospective third-party buyer would have offered for the

burdened property, based on the terms of the contract and facts
of   the   case     (we       will    refer        to     this    actual      price    as    the

      depreciation, replacement value, income, industrial
      conditions, location and occupancy, sales of like
      property, book value, amount of insurance carried,
      value asserted in a prospectus and appraisals produced
      by the owner.   Both the income approach, which seeks
      to capture the amount of income the property will
      generate over its useful life, and the cost approach,
      which seeks to measure the cost to replace the
      property, fit under the umbrella of tier 3 analysis.

Id. (cleaned up).

                                                  19
                                                              No.    2018AP960

"prospective offer price").         See Wilber Lime, 268 Wis. 2d 650,

¶13 ("This approach best fulfills the intentions of the parties

when    they    entered    into     the    agreement . . . .").          This

prospective offer price, contrary to Country Visions' argument,

need not equal the appraised value nor the fair market value.

See Pantry Pride, 806 F.2d at 1231-32; In re Adelphia Commc'ns

Corp., 368 B.R. 348, 357-58 (Bankr. S.D.N.Y. 2007).                   As the

court in Adelphia explained,

       The price paid by [the prospective third-party buyer]
       apparently exceeded fair market value, but it was
       their right to pay greater than market value.      The
       valuation expert for the [right holder] conceded as
       much.    It makes no difference that the [property]
       might be worth more to [the prospective third-party
       buyer] than to other potential buyers because of
       synergies and economies of scale that [the prospective
       third-party buyer] could bring to bear.     It appears
       that [the prospective third-party buyer] was willing
       to pay more for the [property] than other potential
       offerors would have paid. But that is exactly why one
       could not simply rely on what the "fair market value"
       of the [property] might be to those other potential
       buyers.    It is the offer made by [the prospective
       third-party buyer] that must be matched by the [right
       holder].
Adelphia, 368 B.R. at 357-58.             Indeed, the prospective offer

price   may    be   significantly   higher   than   either   the    appraised

value or the fair market value of the burdened property.                    A

prospective buyer may be willing to pay significantly more than

the appraised value because the property gives the prospective

                                     20
                                                                   No.   2018AP960

buyer greater utility than a different buyer.13                This is perhaps

even more true when a potential buyer is purchasing the burdened

property    in   a   package    deal   where   the   value    of   the   burdened

property increases for the potential buyer because of synergies

or relationships between the properties that are a part of the

package deal.        See, e.g., Adelphia, 368 B.R. at 357 ("It makes

no difference that the Consortium Systems might be worth more to

Time    Warner   than   to     other   potential     buyers   because     of   the

synergies and economies of scale that Time Warner could bring to

bear."); In re Albion Disposal, Inc., 152 B.R. 794, 802 (Bankr.

W.D.N.Y. 1993) ("The value of the OSL land if sold alone is far

less than the value of the OSL lands if combined with the Smith

lands in a 'package deal.'" (footnote omitted)); see also It's

My Party, Inc. v. Live Nation, Inc., 811 F.3d 676, 688 (4th Cir.

2016) ("The real loss would be the productive synergies created

when sellers package complementary products.").                    Consequently,

we reject Country Visions' contention that the prospective offer

price must equal the appraised or fair market value.14

       See, e.g., Ben Krumholz, Packers' Development Potential
       13

Moves Across Lombardi Ave with Funeral Home Site Purchase,
Fox 11   News   (July   1,   2020),      https://fox11online.com/
news/local/green-bay/packers-development-potential-moves-across-
lombardi-ave-with-funeral-home-site-purchase   (explaining   that
the Green Bay Packers paid three times the assessed value for
two parcels to support its Titletown District development).

       To the extent that Wilber Lime says that the circuit
       14

court in that case was to determine the fair market value on
remand, we interpret that as requiring the circuit court to
determine the prospective offer price.

                                        21
                                                                            No.     2018AP960

    ¶28     This general discussion of rights of first refusal and

package    deals    elucidates           certain      key     principles          that     are

applicable to the case before us.                First, the sale of a property

that is subject to a right of first refusal as part of a package

deal triggers the right of first refusal.                            Wilber Lime, 268

Wis. 2d 650, ¶12.            Second, a circuit court must break up the

package   deal     and      allow    a   right   of      first      refusal       holder    to

exercise that right on only the burdened property.                            Id.     Third,

the circuit court must look to the contract to determine how to

calculate the exercise price for the right of first refusal.                                MS

Real Estate, 362 Wis. 2d 258, ¶¶24-29.                      Fourth, if the right of

first refusal contract provides that the right holder must match

the purchase price and terms and conditions of the prospective

buyer's    offer,      as     is    generally      the      case,     the     court       must

determine the prospective offer price——the actual price that the

prospective      third-party         buyer      would       have     offered        for    the

burdened property based on the terms of the contract and facts

of the case.        See Wilber Lime, 268 Wis. 2d 650, ¶13; Pantry
Pride,    806   F.2d     at    1231-32;      Adelphia,        368    B.R.     at     357-58.

Finally, the circuit court may grant specific performance to the

right holder to exercise the right of first refusal to purchase

the burdened property at the exercise price.                          See Wilber Lime,

268 Wis. 2d 650, ¶13.

                                    B.   Application

    ¶29     With these principles in mind, we turn to the facts of

the dispute between Country Visions and Defendants.                               The right
of first refusal contract between Country Visions and ADM was a
                                           22
                                                                      No.     2018AP960

typical right of first refusal contract, providing that Country

Visions has the right to purchase the Ripon Property at the

"purchase price and other terms and conditions" that a third

party offered.

      ¶30    When ADM and United entered an agreement to sell the

Ripon Property, the offer triggered Country Visions' right of

first refusal.        The circuit court found that "the $20 million

offer was a sham at an arbitrarily inflated price" and, instead,

used the $25 million package deal price to determine an accurate

exercise price.

      ¶31    The circuit court then set the exercise price at $16.6

million     and   granted   to    Country      Visions    specific    performance.

Country Visions argues that this number is far greater than the

appraised value of the property——$7.7 million——meaning we should

replace the circuit court's exercise price of $16.6 million with

the appraised value.         As we described above, a prospective buyer

may choose to offer significantly more than the appraised value

of a property, especially in the context of a package deal.
This case typifies such a transaction.                  The circuit court found

that the "synergies in a case like [United] and its geographical

and rail line [serve as] enhancements to value."                          Because of

these   unique      synergies     that   the    Ripon     Property    provided      to

United, the circuit court determined that the prospective offer

price   that      United   offered     for    the   Ripon   Property        was   $16.6

million.     Accordingly, we reject Country Visions' request to set

the exercise price in this case at the $7.7 million amount that
its   expert      determined     was   the    appraised     value    of     the   Ripon
                                         23
                                                                        No.     2018AP960

Property.15      Furthermore, we conclude that the circuit court did

not   err   in   considering      the     unique    synergies        that     the   Ripon

Property     provides     to    United    when     it    set   the   exercise       price

higher than the appraised value.

      ¶32    However, while the circuit court did not err in how it

reached its conclusion, it is unclear in the circuit court's

decision whether the court correctly valued only the portion of

the package deal that was subject to the right of first refusal.

This lack of clarity arises because the circuit court used the

package deal to set the exercise price, and that package deal

included the land, improvements, and personal property of each

of the four facilities.           Country Visions' right of first refusal

was   for     the    real      property    at      the    Ripon      Property       only.

Consequently, the package deal should be broken up, removing the

other three facilities and all personal property, and Country

Visions     should   be     permitted     to    exercise       its   right     of   first

refusal on only the real property at the Ripon Property.                              See

Wilber Lime, 268 Wis. 2d 650, ¶12.                 While it is clear that the
circuit court removed the other three facilities, it is unclear

from the record whether the circuit court removed the personal

      15This case involved sophisticated commercial actors.  If
Country Visions had wished for the right of first refusal
contract to require that the exercise price be set at the
appraised value of the Ripon Property, it could have contracted
to do so.   See Walker, supra note 10, at 37-38 (explaining the
different methods a right of first refusal can set the exercise
price).

                                          24
                                                                    No.    2018AP960

property when it determined that the actual value of the Ripon

Property was $16.6 million.

     ¶33     Accordingly, we conclude that remand is necessary to

determine whether the $16.6 million exercise price included more

property than what the right of first refusal contract covers.

On remand, the circuit court should create a record such that

the exercise price is comprised of the real property at the

Ripon Property only.      Finally, the circuit court may then grant

specific performance to Country Visions at that exercise price.

We   leave    to   the   circuit    court's     discretion      how       best   to

accomplish these directions on remand.

                               V.   CONCLUSION

     ¶34     We conclude that the circuit court did not err in

considering     the   unique    synergies      that    the    Ripon       Property

provides to United when it set the exercise price higher than

the appraised value.      For rights of first refusal, a prospective

buyer may choose to offer significantly more than the appraised
value of a property, especially in the context of a package

deal.      Thus,   depending   on   the   terms   of   the    right       of   first

refusal contract and the facts of the case, a circuit court may

set an exercise price that exceeds the appraised value of the

burdened     property.     However,       we   conclude      that     remand     is

necessary to determine whether the $16.6 million exercise price

includes more than is called for in the right of first refusal

contract.     Accordingly, we affirm the court of appeals' decision

                                     25
                                                                No.   2018AP960

and remand to the circuit court for proceedings consistent with

this opinion.

    By   the    Court.—The   decision   of   the   court   of     appeals   is

affirmed.

                                   26
                                                                     No.   2018AP960.pdr

      ¶35    PATIENCE       DRAKE     ROGGENSACK,     C.J.        (concurring).          We

review a right of first refusal (ROFR) that is held by Country

Visions Cooperative.          The ROFR burdens the Ripon Property, which

was owned by Archer-Daniels-Midland (ADM).                        The Ripon Property

was   part   of   a    package       sale   to    United    Cooperative     that    also

included     three     other        properties,      Oshkosh,       Auroraville         and

Westfield, all of which were owned by ADM.

      ¶36    We are asked to determine whether the price for the

Ripon Property under the ROFR is controlled by an appraisal

purporting to define the Ripon Property's fair market value or

whether the price is affected by the price that United assigned

to the Ripon Property in its package offer.                     I conclude that the

ROFR's terms, which do not mention fair market value, control.

The ROFR grants a right to purchase by matching "the purchase

price and other terms and conditions of such proposed sale" made

by a bona fide purchaser in a written offer.1                         Therefore, the

terms Country Visions must match, i.e., the exercise price, in

order to purchase the Ripon Property are United's terms if they
comprise a bona fide offer.                 However, an opinion on the fair

market value of the Ripon Property may provide some guidance

about whether the price United alleges that it paid for the

Ripon     Property    in    its   package        purchase   was    bona    fide    or    an

artificial     price       created    to    defeat    Country      Visions'   purchase

under the ROFR.            In re Adelphia Commc'ns Corp., 368 B.R. 348,

356-57 (Bnkr. S.D.N.Y. 2007) (explaining that when the offeror

      1   R. 826:2.

                                             1
                                                             No.   2018AP960.pdr

and the seller have set a good faith price for an asset sold as

part of a group, that price should control).

     ¶37    The majority opinion concludes that the $16.6 million

exercise    price   for   the   Ripon    Property    that   was    set   by   the

circuit    court    should   be      reviewed   to   determine     whether    it

included personal property that was sold with the real estate

under the Asset Purchase Agreement (APA).2             For the reasons set

forth below, I agree and therefore, I respectfully concur and

join the majority opinion.

                                I.    BACKGROUND

     ¶38    The majority opinion capably sets out the background

underlying this controversy.            Therefore, I describe here only

that which is necessary to understand my writing below.

     ¶39    Country Visions brought this lawsuit to enforce its

ROFR to purchase the Ripon Property that ADM sold to United as

part of a $25 million package sale of four properties, which

included both real estate and personal property.3                  The circuit

court held a lengthy bench trial.4

     2   Majority op., ¶6.
     3 Although the Ripon Property was subject to an allegedly
separate offer to purchase for $20 million, with the remaining
three properties selling for $5 million, the sales were inter-
dependent. As counsel for United said, "We need to be sure they
are tied. I know there must be a bit of a trust factor but we
need to do the 2 together."       On review, there is no real
challenge to the Ripon Property being part of a package sale.
     4 Circuit Court Judge Gary R. Sharpe of Fond du Lac County
did outstanding judicial work in addressing the many, many
factual and legal issues presented by this very complicated
case.

                                        2
                                                                      No.    2018AP960.pdr

       ¶40        The circuit court found that United had valued the

property it purchased from ADM in various ways.                             For example,

United and ADM allocated the $25 million purchase price as $14

million for personal property, leaving $11 million for all four

parcels       of    real   estate.5     United's         executive,    David        Cramer,

assigned          $20   million   of   the       purchase    price    to      the     Ripon

Property.6         And, United booked the cost of the Ripon Property at

$8.725 million.7

       ¶41        Country Visions and United provided experts to opine

on the actual price for the Ripon Property's part of the $25

million package sale.             Country Visions presented Mark Akers who

appraised the property as having a fair market value of $7.5

million.8         The circuit court found that his approach to valuation

was "insufficient in determining value in a sale to United."9

       ¶42        The circuit court found that United "intended to use

and does use [the Racine Property] to store and ship grain and

does        and     can    implement    100        car     trains     that      increase

profitability."10          The court also found that the Ripon Property

       Findings of Fact, ¶8.
       5                        Some of the "Findings of Fact"
actually are conclusions of law, and some of the listings after
the heading "Conclusions of Law" are findings of fact. However,
to assist a reader who is referring to the record, I use the
labels of the circuit court.
       6    Id., ¶14.
       7    Id., ¶22.
       8    Id., ¶23.
       9    Id., ¶25.
       10   Id.

                                             3
                                                                          No.   2018AP960.pdr

had    "synergies             with   United's   other       facilities     and    with   the

ability to load 100 car trains."11

       ¶43    United           presented   testimony        from   Jack    Friedman,     who

opined that the Ripon Property had a value of $16.7 million to

United.       Due to what the circuit court characterized as a math

error, the court concluded that the Ripon Property accounted for

$16.6 million of the $25 million United paid to ADM based on

Mr. Friedman's testimony.12

       ¶44    The circuit court also made a number of "Conclusions

of    Law,"       most    of     which    we   were   not    asked   to    review.       One

conclusion for which we accepted review is whether "the fair

value for United Cooperative to use in purchasing the subject

parcel was the $16.6 million dollars testified to by [] Jack

Friedman."13         The circuit court concluded that Country Visions

was    entitled          to    specific    performance       against      United    at   the

exercise price of $16.6 million.14

       ¶45    The court of appeals concluded that the ROFR required

a bona fide offer, but not necessarily an offer based on the
fair market value derived through the three tiered methodology

employed in taxation and eminent domain valuations.                                 Country

Visions Coop. v. Archer-Daniels-Midland Co. and United Coop.,

2020 WI App 32, ¶33, 392 Wis. 2d 672, 946 N.W.2d 169.                             The court

       11   Id.
       12   Id., ¶26.
       13   Conclusions of Law, ¶5.
       14   Id., ¶10.

                                                4
                                                                     No.    2018AP960.pdr

reasoned that because County Visions' right to purchase arose

under a ROFR, courts are "more interested in discerning the most

likely   arms-length     purchase      price   pertaining          to     this   buyer."

Id.,   ¶34   (emphasis   in    original).          The    court      of    appeals    was

concerned     with   whether     the     circuit         court's        $16.6    million

exercise price included the "business assets [] set forth in the

APA"   because    "nowhere     does    it   appear       that     Friedman——and        by

extension the trial court——took into account the value of the

personal     property    at    all."        Id.,     ¶¶39,      40        (emphasis   in

original).

                               II.     DISCUSSION

                          A.   Standard of Review

       ¶46   On review, we affirm the circuit court's findings of

fact unless they are clearly erroneous.                    Phelps v. Physicians

Ins. Co. of Wis., Inc., 2009 WI 74, ¶34, 319 Wis. 2d 1, 768

N.W.2d 615.      In the case before us, once the historic facts are

determined we compare them to the requirements of the ROFR.

This presents a question of law that we independently decide,
while benefitting from discussions in previous court decisions.

Id., ¶35.

                                        5
                                                                      No.   2018AP960.pdr

                           B.   ROFR General Principles

      ¶47       It has been said that a ROFR is "simply a fancy name

for   a   small     bundle      of   contract       terms."      Walker,     David        I.,

Rethinking Rights of First Refusal, 5 Stan. J.L. Bus. & Fin. 1,

5 (1999).         As we have explained, a ROFR creates contractual

rights, the terms for which are stated in the document granting

the rights.        Edlin v. Soderstrom, 83 Wis. 2d 58, 68, 264 N.W.2d

275 (1978) (noting that such a contract may give a prospective

purchaser the right to buy if the seller decides to sell).                                  A

ROFR also imposes a duty on the owner of such property to offer

to the holder of the ROFR the opportunity to purchase at terms

another has offered, which terms the owner is willing to accept.

Wilber Lime Prods., Inc. v. Ahrndt, 2003 WI App 259, ¶8, 268

Wis. 2d 650, 673 N.W.2d 339.

      ¶48       When a ROFR burdens property that the owner has chosen

to sell together with other properties, sorting out the exercise

price     for     the    property     to     which    the     ROFR   applies        can   be

complicated.           This is especially so when the ROFR contains no
yardstick, such as appraised value or fair market value,                                   by

which to measure the terms of an offer that the owner says it is

willing     to    accept    for      an    entire    package.        Daskal,    Bernard,

Rights of First Refusal and the Package Deal, 22 Fordham Urb.

L.J., 461, 465 (1995) (explaining that where no criteria are

stated for the exercise of the ROFR, the third party's terms

provide relevant criteria).                 However, "allocations of price to

elements     of    a    package      may   readily    be    manipulated        to    defeat
contractual rights of first refusal."                       Pantry Pride Enters.,

                                              6
                                                                     No.   2018AP960.pdr

Inc. v. Stop & Shop Cos., Inc., 806 F.2d 1227, 1231-32 (4th Cir.

1986) (emphasis in original).

      ¶49   Courts have examined various methods by which to value

the   exercise    price    for    ROFRs    that      burden    one   property     in   a

package     sale.         As     with     general      contract       interpretation

principles, some courts attempt to determine the intent of the

parties to the ROFR.           See Gleason v. Norwest Mortg., Inc., 243

F.3d 130, 142 (3d Cir. 2001) (reviewing prior dealings between

the parties).       Some courts have held that in the absence of bad

faith or another basis for a change in the allocated price,

proportionate pricing controls.                See Adelphia Commc'ns, 368 B.R.

at 356-58.       Other courts have said that when the ROFR contains

price terms, the owner must honor those terms if it wished to

sell.     See Foster v. Bullard, 554 S.W.2d 66, 67 (Tex. Civ. App.

1977).

                          C.   Country Visions' ROFR

      ¶50   Country    Visions'         ROFR    is    set     out    in    a   document

recorded at the Fond du Lac Register of Deeds.                            It states in
relevant part:

      [T]he Grantor has agreed to grant to the Grantee a
      right of first refusal to purchase the Property but
      only   upon   the  terms   and   conditions   set   forth
      herein. . . . For a period of ten (10) years from the
      date hereof (the "ROF Period"), the Grantor hereby
      grants to the Grantee a right of first refusal to
      purchase    the   Property    or    applicable    portion
      thereof . . . .

      If at any time during the ROF Period, the Grantor
      desires     to     sell    any    part    of     the
      Property . . . pursuant to a bona fide written offer
      from a third party (the "Third Party Offer"), the
      Grantor shall first notify the Grantee of the

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                                                             No.   2018AP960.pdr

    Grantor's desire to sell . . . .     The Grantee shall
    have the right and option to purchase the Offered
    Property on the Third Party Terms but only if the
    Grantee shall provide written notice of such election
    to the Grantor within fifteen (15) days after the
    Grantee's receipt of the Notice.[15]
As with any written document under which a party is asserting

rights, we begin with the terms of the document.                   Solowicz v.

Forward Geneva Nat.l, LLC, 2010 WI 20, ¶13, 323 Wis. 2d 556, 780

N.W.2d 111.       Having reviewed the entire ROFR, the dispositive

provisions of which are set forth above, I conclude that there

is nothing in the ROFR that provides any type of measurement by

which    to   gage   whether   the   price   at   which   United   asserts   it

purchased the Ripon Property is the actual price or whether it

is a price manipulated to defeat Country Visions' contractual

rights.

    ¶51       In addition, Wisconsin has had limited appellate cases

that address property subject to a ROFR that is being sold with

other properties for a package price.             Wilber Lime did so.        It

arose in the context of the sale of a 180-acre farm in which 25

acres were subject to a ROFR.          Wilber Lime, 268 Wis. 2d 650, ¶1.

The court of appeals was concerned that determining the exercise

price for the 25 acres by dividing the purchase price by 180 and

then multiplying the quotient by 25 assumed that each acre had

the same value when that may not be true.            Id., ¶11.      Therefore,

the court rejected proportionate pricing that other courts have

used.    See Adelphia Commc'ns, 368 B.R. at 356-58.

    15    R. 826:2.

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                                                                     No.    2018AP960.pdr

       ¶52    As it structured how the actual price for the 25 acres

should be determined, the court concluded that it was equitable

"to determine the fair market value" of the twenty-five acres

that were subject to the ROFR.                  Wilber Lime, 268 Wis. 2d 650,

¶13.    Wilber Lime explained that the fair market value "protects

the landowner from being forced to sell the twenty-five acres at

a price lower than its fair market value and . . . [i]t also

prevents Wilber Lime from receiving a windfall of being able to

purchase the land at a price lower than its value."                        Id.

       ¶53    Although Wilber Lime's directive to determine the fair

market value of the 25 acres subject to the ROFR is an equitable

solution given the context in which the court's decision was

made, it has very limited, if any, relevance to the commercial

package sale of which the Ripon Property was a part.                        This is so

because of the very different contexts in which Wilber Lime and

Country Visions arise.

       ¶54    For    example,      in   Wilber    Lime,      the    court    sought      to

determine an equitable exercise price for 25 acres of farmland
that was part of a 180-acre farmland purchase.                             In the case

before us, four commercial properties were purchased as part of

a package.          All have revenue generating potentials, but those

potentials vary considerably.               Some are on a rail line and some

are    not;   some    were    in    good    repair    and    some    were    not.        In

addition,     United's       purchase      of   the   four    properties         gives   it

control of grain storage and shipping in an area west of Lake

Winnebago in which United had been only a participant prior to

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                                                               No.    2018AP960.pdr

the purchase.        This control factor likely affected the price

United was willing to pay.

      ¶55    Furthermore,    it    is    without     question        that   United

purchased the Ripon Property to generate revenue.16                     There is

nothing in Wilber Lime that indicates that revenue generation

was   part   of   the   motivation      for   the   purchase     of    25   acres.

Because the ROFR grants Country Visions the right to match the

purchase     price   and   other   terms      and   conditions       that   United

actually paid, but grants no right to a cap or ceiling price set

by the fair market value, I conclude that it is United's actual

price paid for the Ripon Property that controls Country Visions

exercise price.

      ¶56    On remand, the central question is whether United's

expert included personal property acquired under the APA when he

asserted that the actual price for the Ripon Property was $16.6

million.     This question can be addressed on remand in at least

two ways.

      ¶57    First, personal property belonging to all four parcels
of real estate should be identified and valued.                      The exercise

       Friedman discussed EBITDA (Earnings Before Interest Taxes
      16

Depreciation and Amortization), which is gross revenue achieved
before paying the costs of doing business, in the context of
evaluating the potential purchase of property.     R.630:155-57.
EBITDA is a metric used in measuring strength of performance for
an on-going business.    Hon. Christopher S. Sontchi, Valuation
Methodologies: A Judge's View, 20 Am. Bankr. Inst. L. Rev. 1,
11 (2012).    EBITDA differs significantly from the NOI (Net
Operating Income), another metric used to measure the strength
of a business.    The NOI focuses on the income generated by a
business after the costs of doing business have been addressed.
Regency W. Apartments LLC v. City of Racine, 2016 WI 99, ¶9, 372
Wis. 2d 282, 888 N.W.2d 611.

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                                                                          No.       2018AP960.pdr

price for the Ripon Property cannot include personal property

because the ROFR affords Country Visions no right or obligation

to purchase personal property.                  Pantry Pride, 806 F.2d at 1229.

       ¶58    Second, Friedman testified to both the value of the

Ripon Property as a standalone parcel (the value without "taking

into consideration any synergies from anything around it")17 and

its value to United.            Both values must be carefully reviewed.

       ¶59    It was Friedman's opinion that "the Ripon Property has

high strategic value to United because it is centrally located

within United's grain facility network and located on the same

rail    line       as   three      of      United's      other      large          rail-loading

facilities."18          He   used       two    valuation       methods    for        the     Ripon

Property.

       ¶60    In    part     of      his      trial     testimony,       he        started     his

valuation with the $25 million package purchase price.                                  He then

deducted $500,000 for the value of Westfield and $2,000,000 for

Auroraville.19          This      left     $22,500,000         to   be   divided        between

Oshkosh and Ripon.           He said that he divided that number based on
the    percentage       of     the      total        volume    handled        by     these     two

properties, with 26% ($5,850,000) attributed to Oshkosh and 74%

($16,650,000) attributed to Ripon.20                          However, in his written

report he attributed "52% of the total volume handled in the

       17   R. 630:155.
       18   R. 773:12, Expert Report of Jack Friedman.
       19   R. 630:163-65.
       20   R. 630:166.

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                                                                     No.    2018AP960.pdr

last full year that ADM owned those facilities" to Ripon.21                             He

did not mention personal property that also was purchased under

the APA.22

     ¶61     Friedman also calculated a stand alone value for the

Ripon Property by using 16 cents EBITDA-per bushel times the 5.2

million bushel capacity of Ripon, which results in an annual

EBITDA of $832,000.          He then multiplied the annual EBITDA by 10,

yielding     a   standalone    value      for    the    Ripon     Property       of   $8.3

million.23        This   valuation     is       based    solely     on     the   revenue

generating       potential    of   the      Ripon       Property     and    Friedman's

opinion that a multiple of 10 is reasonable for a grain business

such as the Ripon Property.

     ¶62     Friedman also opined that United achieved a 6 to 10

cent per bushel "margin gain" by using rail shipping with 100-

car trains.       This is in addition to the usual per bushel revenue

generation.24        Therefore,      if     Friedman       had     stayed     with     the

$832,000 annual EBITDA he calculated for the Ripon Property and

added a 6 to 10 cent per bushel margin gain onto Ripon's volume

     21   R. 773:19.
     22If 52% of the $25,000,000 package price were assigned to
the Ripon Property, Ripon would have a value of $13,000,000, and
if 52% were applied to what remained of the package price after
Friedman's deductions for Westfield and Auroraville, Ripon would
have a value of $11,700,000.      Simply stated, Friedman is a
skillful witness and his opinion that $16.6 million is the
actual price United paid for the Ripon Property is based on his
choice of percentages that he applied to the package purchase
price.
     23   R. 630:155-57.
     24   R. 630:141.

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                                                                     No.   2018AP960.pdr

of    5,200,000,       the   adjusted    annual      EBITDA     that     includes   the

margin      gain   would     be    $1,144,00025      to    1,352,000.26      If    those

adjusted      annual       EBITDAs    for     the    Ripon      Property    are     then

multiplied by 10, the multiple Friedman testified was used in

assessing potential grain business purchases, the actual price

for    the     Ripon     property     would     be        between   $11,440,000      and

$13,520,000.

       ¶63    Friedman       was     asked    similar        questions     on     cross-

examination that related to United doing only twelve 100-car

trains in 2016.27            He was asked, based on United's actual 2016

production, if margin gains of 2.83 to 4.8 and were added to

Ripon's standalone value of $8.3 million, the range of prices

for Ripon would be between $11.13 million and $13.1 million.28

       ¶64    Friedman agreed with opposing counsel's valuation if

actual 2016 performance were used.29                  However, Friedman objected

to the valuation because United had plans to move 22 million

bushels      of    grain     each    year,     which       he   believed    it    could

accomplish.30

       25   5,200,000 x .06 = 312,000 + $832,000 = $1,144,000.
       26   5,200,000 x .10 = 520,000 + 832,000 = $1,352,000.
       27   R. 630:211-215.

       The above two examples are based on revenue production.
       28

Therefore, they may have value to the circuit court when this
matter is remanded to determine whether personal property was
included in the $16.6 million price that the circuit court found
as the price United paid for the Ripon Property.
       29   R. 630:215.

       There are approximately 400,000 bushels of grain in a
       30

100-car train.   R. 773:12.    Therefore, to ship 22 million
                              13
                                                            No.    2018AP960.pdr

     ¶65    I   agree   with    the   majority    opinion   that    on   remand

additional briefing or testimony may be necessary.31

                               III.   CONCLUSION

     ¶66    The majority opinion and the court of appeals both

concluded that the $16.6 million exercise price for the Ripon

Property that was set by the circuit court should be reviewed to

determine whether it included personal property that was sold

with the real estate under the APA.              For the reasons set forth

above, I agree and therefore, I respectfully concur and join the

majority opinion.

bushels of grain each year, United would have to ship 55, 100-
car trains per year, rather than the 12 it shipped in 2016.
     31   Majority op., ¶33.

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    No.   2018AP960.pdr

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