Court Opinion

ID: 4674079
Source: CourtListenerOpinion
Date Created: 2021-04-02 09:07:17.103012+00
Date Added: 2024-06-11T08:03:18.396183
License: Public Domain

If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
                  revision until final publication in the Michigan Appeals Reports.

                             STATE OF MICHIGAN

                             COURT OF APPEALS

CHRISTOPHER M. REDDING,                                                 UNPUBLISHED
                                                                        April 1, 2021
                Plaintiff-Appellant,

v                                                                       No. 349573
                                                                        Charlevoix Circuit Court
TINA BLODGETT, MORTGAGE ELECTRONIC                                      LC No. 18-044426-CH
REGISTRATION SYSTEMS, INC., and
NATIONSTAR MORTGAGE, LLC,

                Defendants-Appellees,

and

CHEMICAL BANK,

                Defendant.

Before: RONAYNE KRAUSE, P.J., and MARKEY and BORRELLO, JJ.

BORRELLO, J. (dissenting).

       Because the majority has rewritten the parties’ contract, and thereby violated our Supreme
Court’s directive that “the judiciary is without authority to modify unambiguous contracts or
rebalance the contractual equities struck by the contracting parties[.]” Rory v Continental Ins Co,
473 Mich 457, 461; 703 NW2d 23 (2005), I dissent.

         Contrary to the majority, I concur with plaintiff’s contention that the trial court erred by
concluding his right of first refusal had been extinguished because he did not exercise it at the time
of the sale to the Petermans. Plaintiff maintains that although declining to exercise his right of
first refusal with respect to a particular sale extinguishes his right of first refusal and option to
purchase the property as to that sale, he nevertheless continues to hold a right of first refusal with
respect to any subsequent sales of the property because the right-of-first-refusal agreement
contains language making the agreement binding on the parties’ successors and there is no
language in the agreement indicating that plaintiff’s right of first refusal is extinguished as to future

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sales if he declines to exercise it as to any particular sale. A plain and straight-forward read of the
right-of-first-refusal makes such a conclusion obvious.

        “A right of first refusal, or preemptive right, is a conditional option to purchase dependent
on the landowner’s desire to sell.” Randolph v Reisig, 272 Mich App 331, 336; 727 NW2d 388
(2006). Rights of first refusal are governed by principles of contract, In re Smith Trust, 480 Mich
19, 24; 745 NW2d 754 (2008), and are not interests in land, Randolph, 272 Mich App at 338-339.
As this Court has explained:

               An option contract does not create an interest in land. A right of first refusal
       gives the promisee fewer rights than an option contract. The promisee in an option
       contract holds the power to purchase the property at will for the specified price
       during the specified period. But the option contract does not create an interest in
       land. Conversely, the promisee in a right of first refusal agreement cannot exercise
       any right to purchase property unless the seller decides to sell to a different buyer.
       Because the right of first refusal gives the holder fewer rights than an option, we
       conclude that if the latter does not create an interest in land, neither does the former.
       Indeed, Michigan courts have generally treated similar agreements containing first-
       refusal rights as contracts, not property interests, and have relied on the contractual
       nature of the first-refusal agreement in determining that it is not limited by the
       common-law rule against perpetuities. [Randolph, 272 Mich App at 338-339
       (citations omitted).]

       The principles of contract interpretation are well established:

       In interpreting a contract, it is a court’s obligation to determine the intent of the
       parties by examining the language of the contract according to its plain and ordinary
       meaning. If the contractual language is unambiguous, courts must interpret and
       enforce the contract as written, because an unambiguous contract reflects the
       parties’ intent as a matter of law. However, if the contractual language is
       ambiguous, extrinsic evidence can be presented to determine the intent of the
       parties. [In re Smith Trust, 480 Mich at 24 (citations omitted).]

         In this case, the May 4, 2000 right-of-first-refusal agreement at issue states, “This
Agreement shall enure to the benefit of and be binding upon the parties hereto, their respective
heirs, administrators, executors, representatives, successors and/or assigns.” It is at this juncture
in their analysis where the majority begins its major re-write of the right-of-first-refusal agreement.

         The agreement does not define the term “successor.” However, a dictionary may be
consulted to determine the plain and ordinary meaning of a term that is not defined in a contract.
In re Kostin, 278 Mich App 47, 54; 748 NW2d 583 (2008). Black’s Law Dictionary defines
“successor” generally to mean “[s]omeone who succeeds to the office, rights, responsibilities, or
place of another; one who replaces or follows a predecessor.” Black’s Law Dictionary (11th ed).
Here, Blodgett is undisputedly a successor in Scott’s interest to the property at issue since the chain
of title demonstrates that title to the property passed from Scott to Charlevoix State Bank, to the
Petermans, to Blodgett.

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         Defendants argue, and the trial court concluded, that the right of first refusal was
nonetheless extinguished because plaintiff declined to exercise his right of first refusal with respect
to one particular sale, i.e., the sale to the Petermans (Blodgett’s predecessors in interest). Contrary
to the majority, I conclude there is no language in the contractual agreement to support such a
conclusion. Nothing in the right-of-first-refusal agreement indicates that is a one-time, “use it or
lose it” right. The only language in the contract that relates to this issue actually suggests that the
parties intended the opposite because the agreement states that it would be binding on the parties
and their “respective heirs, administrators, executors, representatives, successors and/or assigns.”
The trial court, like the majority, therefore err by not enforcing the contract as written. In re Smith
Trust, 480 Mich at 24. Courts “cannot read words into the plain language of a contract.” Northline
Excavating, Inc v Livingston Co, 302 Mich App 621, 628; 839 NW2d 693 (2013). The trial court
erroneously read a limitation on plaintiff’s right of refusal into the contract in the absence of any
language creating such a limitation. Id. The majority makes the same error, seemingly concluding
that regardless of the language in the contract, the right of first refusal is extinguished by operation
of law if it is not exercised upon the first bona fide sale and that the contractual agreement does
not bind a successor of Scott who obtained the property through a bona fide purchase. However,
the right of first refusal is purely contractual, and the majority’s proposed limitations on this right
does not appear anywhere in the contract.

         Moreover, defendants’ argument that such an interpretation of the agreement would result
in the right of first refusal lasting for perpetuity is misplaced. As this Court has already explained,
agreements creating a right of first refusal

       are not void, however, merely because they lack a specific time for performance.
       Rather, in the absence of a specific time, courts will construe agreements “to be for
       a reasonable period of time,” and, thus, such agreements are valid only for a
       reasonable period. There is a strong tendency to construe an option of preemption
       to be limited to the lives of the parties “unless there is clear evidence of a contrary
       intent.” [Randolph, 272 Mich App at 336-337 (citations omitted).]

        Accordingly, I would hold that the trial court’s ruling granting summary disposition in
favor of defendants was erroneous. I also would not address any of the additional arguments for
affirmance at this juncture, including that plaintiff is barred from the relief he seeks by the doctrine
of laches for waiting more than five years after Blodgett purchased the property to attempt to
enforce his right of first refusal with respect to the sale from the Petermans to Blodgett, because
these additional issues were not decided by the trial court and there accordingly is no ruling on
these issues to review. This is not to state, however, that there may be reasons that plaintiff
ultimately does not prevail in this case, but neither the reasons relied on by the trial court nor the
reasons relied on by the majority on appeal are among them. I therefore dissent from the majority’s
opinion affirming the trial court’s ruling.

                                                                /s/ Stephen L. Borrello

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