Court Opinion

ID: 4422117
Source: CourtListenerOpinion
Date Created: 2019-08-01 16:02:54.427383+00
Date Added: 2024-06-11T14:23:26.550374
License: Public Domain

The summaries of the Colorado Court of Appeals published opinions
  constitute no part of the opinion of the division but have been prepared by
  the division for the convenience of the reader. The summaries may not be
    cited or relied upon as they are not the official language of the division.
  Any discrepancy between the language in the summary and in the opinion
           should be resolved in favor of the language in the opinion.

                                                                  SUMMARY
                                                               August 1, 2019

                               2019COA120

No. 18CA1200, Filatov v. Turnage — Contracts — Right of First
Refusal — Computation of Time

     A division of the court of appeals considers an issue of

contract interpretation involving a right of first refusal and

calculations of time. The division concludes that, under this

contract, the first day was excluded and the last day was included

when calculating the period for exercising the right of first refusal.

The division further concludes that where the contract provided

that the exercise period began “immediately following the delivery of

the notice,” the clock began running when the agent of the party

that held the right of first refusal received the required notice.
COLORADO COURT OF APPEALS                                         2019COA120

Court of Appeals No. 18CA1200
Eagle County District Court No. 16CV30439
Honorable Frederick W. Gannett, Judge

Anna Filatov,

Plaintiff-Appellant,

v.

Mark F. Turnage and Natalie F. Bocock Turnage,

Defendants-Appellees.

                       JUDGMENT REVERSED AND CASE
                        REMANDED WITH DIRECTIONS

                                   Division I
                           Opinion by JUDGE GROVE
                            Hawthorne, J., concurs
                         Taubman, J., specially concurs

                           Announced August 1, 2019

Porterfield & Associates, LLC, Wendell B. Porterfield, Jr., Vail, Colorado, for
Plaintiff-Appellant

Range, LLP, Kevin C. Paul, Cynthia A. Coleman, Eric R. Jaworski, Denver,
Colorado, for Defendants-Appellees
¶1    Plaintiff, Anna Filatov, appeals the district court’s entry of

 summary judgment in favor of defendants, Mark F. Turnage and

 Natalie F. Bocock Turnage, which declared that they had timely

 exercised their right of first refusal to purchase a condominium unit

 in Vail. We reverse.

                           I.    Background

¶2    Filatov entered into a contract to buy a condominium unit in

 Vail. Under the terms of the condominium declaration, Filatov’s

 purchase of the unit was subject to the Turnages’ right of first

 refusal.

¶3    The condominium declaration required a unit owner who

 received a bona fide offer from a prospective purchaser to give

 written notice and a copy of the offer to the condominium board of

 managers (the board). The board was, in turn, required to advise

 the owners of other units in the same building of the offer in

 accordance with the procedures outlined in the association’s

 bylaws. To exercise the right of first refusal, an owner needed to

 notify the seller in writing and make a matching down payment or

                                    1
 deposit “during the 20 day period immediately following the delivery

 of the notice of the bona fide offer and copy thereof.”

¶4    The material facts are undisputed. On November 7, 2016, the

 selling owners — who are not part of this appeal — properly notified

 the board that they had accepted an offer to purchase their unit.

 The next day, consistent with the procedure outlined in the

 association’s bylaws, the board advised the remaining condominium

 owners of the pending sale and their right of first refusal. The

 board’s notice letter stated that November 8, 2016, was “the first

 day of the twenty-day period in which an Owner may exercise the

 Right of First Refusal,” and that an owner wishing to exercise the

 option must do so by November 27, 2016.

¶5    On Friday, November 25, 2016, the Turnages notified the

 condominium association of their intent to exercise the right of first

 refusal. They deposited the required earnest money the following

 Monday, November 28, 2016 — a day after the deadline that

 appeared in the board’s notice letter.

¶6    Filatov sued both the Turnages and the sellers, seeking a

 declaration that, because the Turnages deposited their earnest

                                    2
 money after the deadline, their attempt to exercise the right of first

 refusal was ineffective. The sellers did not substantively participate

 in the district court. After a period of discovery, Filatov and the

 Turnages filed cross-motions for summary judgment.

¶7    Concluding that the Turnages had timely exercised their right

 of first refusal, the district court granted the Turnages’ motion for

 summary judgment and denied Filatov’s. The district court

 observed that the board advised the Turnages of Filatov’s offer on

 November 8. Then, citing the commonly accepted principle that, in

 calculations of time, the first day of a fixed period is typically

 excluded and the last day is included, the district court found that

 “[t]wenty days from November 8th . . . is November 28th.”

 Accordingly, the district court found that the Turnages’ option to

 purchase the property did not expire until November 28, 2016 —

 the date that they deposited the earnest money. Filatov appeals

 that ruling.

                                     3
                                  II.   Analysis

¶8     Filatov contends that the district court erred in granting

  summary judgment for the Turnages because the earnest money

  was not timely deposited with the seller. We agree.

                        A.        Standard of Review

¶9     Summary judgment is a drastic remedy, appropriate only

  where there are no disputed issues of material fact and the moving

  party is entitled to judgment as a matter of law. C.R.C.P. 56(c);

  Lombard v. Colo. Outdoor Educ. Ctr., Inc., 187 P.3d 565, 570 (Colo.

  2008). We review a summary judgment ruling de novo. Gibbons v.

  Ludlow, 2013 CO 49, ¶ 11. Similarly, interpretation of a covenant

  is a question of law that we review de novo. Evergreen Highlands

  Ass’n v. West, 73 P.3d 1, 3 (Colo. 2003).

                             B.     Applicable Law

¶ 10   We must follow the dictates of plain English in interpreting a

  covenant, and we will enforce as written a covenant that is clear on

  its face. See Double D Manor, Inc. v. Evergreen Meadows

  Homeowners’ Ass’n, 773 P.2d 1046, 1048 (Colo. 1989); Rossman v.

  Seasons at Tiara Rado Assocs., 943 P.2d 34, 36 (Colo. App. 1996).

  “Extraneous evidence is only admissible to prove intent where there
                                        4
  is an ambiguity in the terms of the contract,” and absent any

  ambiguity, “we will not look beyond the four corners of the

  agreement in order to determine the meaning intended by the

  parties.” USI Props. E., Inc. v. Simpson, 938 P.2d 168, 173 (Colo.

  1997). Moreover, disagreement between the parties “regarding the

  interpretation of the contract does not itself create an ambiguity in

  the contract.” Id.

¶ 11   A right of first refusal is tantamount to a preemptive option

  “because a preemptive option does not give the optionee the power

  to compel an unwilling owner to sell; it merely requires that when

  and if the owner decides to sell, he offer the property first to the

  person holding the preemptive right.” Sports Premiums, Inc. v.

  Kaemmer, 42 Colo. App. 172, 176, 595 P.2d 696, 699 (1979).

  Generally, the preemptive option creates a contractual obligation for

  the property owner to offer the subject property to the holder of a

  right of first refusal on the same terms and conditions as the third-

  party offer made to the owner. Parry v. Walker, 657 P.2d 1000,

  1002 (Colo. App. 1982); see also Stuart v. D’Ascenz, 22 P.3d 540,

  541-42 (Colo. App. 2000). A right of first refusal is strictly

                                     5
  construed, Kaiser v. Bowlen, 200 P.3d 1098, 1103 (Colo. App.

  2008), and “[s]trict compliance with the terms of the option is

  required for its exercise.” Sports Premiums, 42 Colo. App. at 176,

  595 P.2d at 699.

                                C.    Application

                           1.        Plain Language

¶ 12   The right of first refusal is established by the declaration, 1

  which, in pertinent part, provides as follows:

            If any owner of a condominium unit . . . wishes
            to sell . . . such unit and receives a bona fide
            offer therefor from a prospective purchaser
            . . . , the remaining owners of units within the
            same building shall be given written notice
            thereof, together with a true copy of such offer.
            Such notice and copy shall be given to the
            Board of Managers for all of such owners.
            Such remaining owners shall have the right to
            purchase . . . such unit upon the same terms
            and conditions as set forth in said offer

  1 The record includes only portions of the condominium declaration.
  The portions submitted by each party are formatted differently and
  contain slightly different language. For example, the declaration
  submitted by Filatov does not include the entire right of first refusal
  section and the declaration submitted by the Turnages, although
  inclusive of the entire relevant section, includes a typographical
  error: “the remaining owner [sic] of units.” We nevertheless address
  the issues raised because there is no indication that the
  declarations in the record were not the governing agreements and,
  in any event, the error identified above is immaterial to the issues
  raised.
                                         6
                provided, however, that written notice of such
                election to purchase . . . and a matching down
                payment or deposit is given to the owner
                during the 20 day period immediately following
                delivery of the notice of the bona fide offer and
                copy thereof. The method by which the Board
                of Managers shall advise the other owners of
                such bona fide offer . . . shall be provided in
                the Association’s By-Laws.

¶ 13       This provision, together with the bylaws, contemplates the

  following course of events when a selling owner receives a bona fide

  offer:

           • The owner provides written notice of the offer to “the

             remaining owners of units within the same building.” The

             seller need not notify each owner individually, however.

             Rather, the notice “shall be given to the Board of Managers

             for all of such owners.”

           • Upon delivery of the notice, the board must advise the

             remaining owners of the offer using the procedures outlined

             in the association’s bylaws. The bylaws require the board to

             “promptly give notice to the remaining owners” by regular

             mail addressed to the registered addresses of the owners.

                                        7
       • The remaining owners have the right to purchase the unit

          “upon the same terms and conditions as set forth in said

          offer.”

       • To exercise the right to purchase the unit, an owner must

          give “written notice of such election to purchase . . . and a

          matching down payment or deposit . . . to the owner during

          the 20 day period immediately following delivery of the

          notice of the bona fide offer and copy thereof.”

¶ 14   While the parties agree that these provisions are

  unambiguous, they disagree as to how they should be interpreted.

  Most importantly, they dispute which event — Filatov’s notice to the

  board, or the board’s advisement to the owners — triggered the

  start of the twenty-day clock. They also dispute whether, assuming

  that Filatov’s notice to the board was the triggering event, the

  Sunday expiration of that twenty-day deadline should have rolled

  over to the following Monday. We address each contention in turn.

         2.   The Sellers’ Notice to the Board Started the Clock

¶ 15   The parties’ core disagreement is over which event started the

  Turnages’ twenty-day clock. Filatov argues that the triggering event

                                     8
  was the sellers’ notice to the board, which was sent and received on

  November 7, 2016. The Turnages maintain that the clock began to

  run, at the earliest, on November 8, when the board advised them of

  the pending offer. The district court agreed with the Turnages and,

  noting that time calculation for an identified period typically

  excludes the first day and includes the last day, concluded that

  “[t]wenty days from November 8th . . . is November 28th.” Thus,

  the district court ruled, the Turnages timely exercised the right of

  first refusal by depositing the earnest money on November 28,

  2016.

¶ 16   Strictly construing the declaration, as we must, see Kaiser,
200 P.3d at 1103, we hold that the seller’s notice to the board,

  rather than the board’s letter to the remaining owners advising

  them of that notice, triggered the twenty-day clock. We reach this

  conclusion primarily because the declaration itself distinguishes the

  seller’s notice “to the Board of Managers for all of such owners”

  from the board’s advisement to the owners that it has a bona fide

  offer in hand. It does so by employing different terminology,

  “notice” and “advise,” to describe the two phases of the right of first

                                     9
  refusal process. See NFL Enters. LLC v. Comcast Cable Commc’ns,

  LLC, 851 N.Y.S.2d 551, 557 (N.Y. App. Div. 2008) (“The use of

  different terms in the same agreement strongly implies that the

  terms are to be accorded different meanings.”). Once the seller

  provides “notice” to the board, which accepts that notice “for all of

  such owners,” the board must “advise the other owners of such

  bona fide offer.” But the twenty-day clock is not tied to the board’s

  advisement to the remaining owners. Instead, the declaration

  provides that the right of first refusal must be exercised during the

  twenty-day period immediately following delivery of the notice. The

  declaration, then, is unambiguous: the period for exercising the

  right of first refusal begins “immediately following delivery” of the

  seller’s notice to the board.

¶ 17   Accordingly, the “notice” contemplated by the declaration was

  complete upon delivery by the sellers of the written notice and a

  true copy of Filatov’s offer to the board on November 7, 2016.

  Under the plain language of the declaration, as well as settled

  principles of contract interpretation, the day that the sellers

  delivered the notice to the board was excluded from the period in

                                     10
which the Turnages could exercise their right of first refusal. 2 See,

e.g., Buehner Schokbeton Co. v. Horn’s Crane Serv. Co., 500 P.2d
140, 141 (Colo. App. 1972) (not published pursuant to C.A.R. 35(f))

(“The general rule applied to the computation of time under this

type of contract provision is that the first day is excluded and the

last day is included in computing the time within which the act may

be performed.”); cf. § 2-4-108(1), C.R.S. 2018 (“In computing a

period of days, the first day is excluded and the last day is

included.”). The Turnages could, however, exercise their right of

first refusal at any point during the next twenty days, beginning on

November 8 and ending on November 27. The board’s November 8

letter to the Turnages (and all other eligible owners) accurately

reflected this, stating that “[t]he date of this letter is the first day of

the twenty-day period in which an Owner may exercise the Right of

First Refusal,” and that any eligible owner who wished to exercise

the right must do so by November 27, 2016.

2 Giving the term its common and ordinary meaning, “following,” in
the present context, must mean “subsequent to” delivery of the
selling owner’s notice to the board. Merriam-Webster Dictionary,
https://perma.cc/5W4Y-V9SX.

                                     11
¶ 18   Because they did not deposit their earnest money until

  Monday, November 28, the Turnages did not meet this deadline.3

  The untimeliness of their deposit, however, does not end our

  inquiry because we still must address the Turnages’ other

  arguments as to why it should be considered timely. We do so

  below.

                       3.   Adequacy of the Notice

¶ 19   The Turnages assert that a seller’s notice to the association

  should not start the twenty-day clock because the board’s

  advisement might not be sufficiently prompt, or might not come at

  all, thereby effectively shortening or perhaps even eliminating as a

  practical matter any opportunity for them to timely exercise their

  right of first refusal. Interpreting the declaration to allow for such a

  delay, the Turnages maintain, is contrary to its intent, which is “to

  3 We are not persuaded otherwise by Sports Premiums, Inc. v.
  Kaemmer, 42 Colo. App. 172, 595 P.2d 696 (Colo. App. 1979).
  While Sports Premiums involved a virtually identical right of first
  refusal appearing in a condominium declaration, the court was not
  called upon to determine whether it was the seller’s notice or the
  board’s advisement that started the clock.
                                     12
  give the unit owners an opportunity to purchase which is equal to

  that of third parties.” Parry, 657 P.2d at 1002.

¶ 20   This argument misperceives the role of the board as defined by

  the declaration — and as agreed to by the Turnages when they

  purchased their existing unit. By stating that “[s]uch notice and

  copy [of the offer] shall be given to the Board of Managers for all of

  such owners” (emphasis added), the declaration designates the

  board as the agent of those owners who are eligible to exercise a

  right of first refusal. Far from rendering superfluous the

  requirement that “the remaining owners of units within the same

  building shall be given written notice . . . of such offer,” this

  designation effectuates that mandate by creating an efficient and

  predictable process for all owners — whether they are selling or

  potentially buying those units — to follow. Indeed, employing the

  board as an agent of the owners for this limited purpose confers a

  substantial benefit on selling owners by providing a single point of

  contact for delivery of the notice. And on the other side of the coin,

  it also provides certainty for owners who are eligible to exercise the

                                     13
  right of first refusal by ensuring that the same deadline applies to

  any of them who may wish to purchase the property.

¶ 21   Notice to an agent is notice to the principal. See Brown Grain

  & Livestock, Inc. v. Union Pac. Res. Co., 878 P.2d 157, 158 (Colo.

  App. 1994); see also Restatement (Third) of Agency § 5.02 (Am. Law

  Inst. 2006). We thus reject the Turnages’ suggestion that a failure

  on the part of the board to timely advise them of a pending offer

  (which did not happen here in any event) would undermine the

  purpose of the covenant. As the declaration makes clear, the

  bylaws prescribe the method by which the board must advise the

  eligible owners that an offer has been made. To the extent that

  those owners are dissatisfied with the mechanism by which the

  board advises them of an offer that would trigger the right of first

  refusal, they are free to revise the bylaws in a way that ensures

  punctual receipt of that information. They may also enact

  provisions designed to ensure that the board, as it did here,

  promptly transmits the information utilizing the method or methods

  that the bylaws prescribe. For the purposes of this case, though,

  concerns about the adequacy of the bylaws or the board’s

                                    14
  compliance with them involve issues of internal governance that

  have no bearing on our interpretation of the plain language of the

  declaration.

        4.   The Turnages Had An Opportunity to Purchase That Was
                            Equal to Filatov’s

¶ 22   We also reject the Turnages’ suggestion that strict compliance

  with the twenty-day period for exercising the right of first refusal

  deprived them of their right to have the same opportunity to

  purchase the unit as Filatov (or any other third party). See Parry,
657 P.2d at 1002. The Turnages argue, for example, that the terms

  of Filatov’s real estate contract — which rolled deadlines falling on a

  weekend or holiday over to the next business day — should have

  applied to their deposit of the earnest money. They also suggest

  that the sellers “failed to afford the Turnages their [right of first

  refusal]” because they first learned “from the seller[s’] representative

  that they were to pay the earnest money to Land Title Guarantee

  Corporation on the morning of Saturday, November 26, 2016, when

  it was no longer possible to make the payment until Monday,

  November 28, 2016.”

                                      15
¶ 23   We are not persuaded by these arguments. With respect to

  the contract, the Turnages were not a party, were not in privity with

  the buyer or sellers, and were not third-party beneficiaries. And

  surely, if the shoe were on the other foot, and the purchase and sale

  agreement purported to shorten the twenty-day period for exercising

  the right of first refusal, the Turnages would not argue that Filatov’s

  contract should be read as derogating the rights afforded to them by

  the condominium declaration.

¶ 24   The Turnages’ attempt to attribute their noncompliance with

  the deadline to the sellers’ representative is equally unavailing.

  Simply put, strict compliance with the terms of the right of first

  refusal was incumbent on the party who intended to exercise that

  right. Nothing in the record suggests that either Filatov or the

  sellers (who are in any event not a party to this appeal) are in any

  way at fault for the Turnages’ untimely deposit of the earnest

  money.

                                    16
                            III.   Conclusion

¶ 25   We reverse the district court’s order granting summary

  judgment for the Turnages, and remand with instructions to enter

  judgment in Filatov’s favor.

       JUDGE HAWTHORNE concurs.

       JUDGE TAUBMAN specially concurs.

                                    17
       JUDGE TAUBMAN, specially concurring.

¶ 26   I agree with the majority that the twenty-day period for

  defendants, Mark F. Turnage and Natalie F. Bocock Turnage, to

  exercise their right of first refusal began with the date of the sellers’

  notice to the board of condominium managers that they had

  accepted an offer to purchase their condominium. Under the

  circumstances presented here, I also agree with the majority and

  plaintiff, Anna Filatov, that the Turnages did not timely exercise

  that right.

¶ 27   I write separately to emphasize my view that the Turnages’

  exercise of their right of first refusal was untimely because the

  board promptly sent notice of the sellers’ intent to sell their

  condominium, as was required by the bylaws. As I explain below, a

  significant delay by the board in sending notice to the condominium

  owners would not only violate the bylaws but would render invalid

  the board’s notice to condominium members of their right of first

  refusal.

¶ 28   As the majority explains, the condominium declaration here

  requires the condominium board, on receipt of a notice that a

                                     18
  condominium owner has received a bona fide offer of intent to

  purchase, to notify all other owners of the offer utilizing the

  procedures set forth in the association’s bylaws. The bylaws, in

  turn, provide that the condominium board must then “promptly

  give notice to the remaining owners in the manner provided for

  notice of meetings . . . .”

¶ 29   Here, the sellers’ notice to the board was sent and received on

  November 7, 2016. The following day, November 8, the board sent

  the notice to the condominium owners. Indeed, the Turnages

  acknowledge that the sellers’ contract was emailed to the

  condominium managers on a Monday evening and mailed to the

  other condominium owners the next day. Thus, there can be no

  question that the board promptly sent the notice to the other

  condominium owners.

¶ 30   As noted, the condominium declaration affords other

  condominium owners a twenty-day period to provide a written

  notice of exercise of an owner’s election to purchase and a matching

  down payment or deposit to the selling owner. The longer the

                                     19
  condominium board delays in providing notice, the less time

  prospective buyers have to exercise their right of first refusal.

¶ 31   As a division of our court has held, “[c]ontracts should be

  construed to give effect to the intent of the parties. The intent of

  the parties should be determined from the entire contract, and

  effect must be given to every provision if possible.” Lawrence St.

  Partners, Ltd. v. Lawrence St. Venturers, 786 P.2d 508, 510 (Colo.

  App. 1989).

¶ 32   It seems clear that the reason for the twenty-day period in the

  declaration is to provide condominium owners a reasonable period

  to assess whether the selling price of a condominium unit is

  reasonable, and, if so, to enable interested condominium owners to

  determine whether they have — or could obtain — funds for a down

  payment or deposit and to otherwise obtain financing, if necessary,

  for purchase of that condominium. If the condominium board

  delays four or five days, for example, in sending other condominium

  owners notice of a receipt of an offer to purchase, the other

  condominium owners may have insufficient times to accomplish

  these tasks.

                                     20
¶ 33   Because the condominium board promptly sent notice to the

  other condominium owners, I need not determine the precise period

  in which I would consider notice sent by the board to be a violation

  of the bylaws and of the declaration. Accordingly, with this

  understanding, I concur with the majority’s opinion.

                                   21