Court Opinion

ID: 9544920
Source: CourtListenerOpinion
Date Created: 2023-08-07 17:03:28.077415+00
Date Added: 2024-06-11T15:13:46.897625
License: Public Domain

SHEPARD, Justice,
dissenting:
The majority plows new ground in the law of a right of first refusal. It holds that *671a holder of a right of first refusal must be given written notice. It further holds that such notice must include information of transactions far beyond the property which is subject to the right of first refusal. I find no support for those conclusions in the law of this or any other jurisdiction. The majority sidesteps the fact that this matter was tried and following trial, lengthy and comprehensive findings of fact were entered. In my judgment those findings are supported by sufficient and competent evidence. The entire theme of the majority runs directly contrary to those findings of fact.
The facts are relatively simply stated. In connection with a prior purchase, agents for Gyurkey drafted and presented to Babler a right of first refusal for lot 13. Babler signed that document. Nowhere therein is it specified that any particular form of notice is required either by the owner or the holder of the right of first refusal. Thereafter Gyurkey offered to purchase lot 13 for $33,000. That offer was refused by Babler, presumably because the price was too low. Gyurkey himself alleges that lot 13 has a unique value because of its location immediately adjacent to other commercial establishments. Babler received an offer to purchase all of the six lots from Barovetto, et al., with the consideration therefor being the construction of a house. Babler informed the prospective purchasers of Gyurkey’s right of first refusal on lot 13, and the necessity therefor to determine the market value of lot 13 and set a price thereon. That market value was in good faith determined to be $50,000. Gyurkey was apprised of the market value of lot 13, and advised that he could exercise his right of first refusal at that price. Gyurkey acknowledges that he received such notice, but he refused to exercise his right of first refusal at that price and so advised Babler. Thereafter, Babler received another offer to purchase the six lots from a non-party to this action for the sum of $300,000.
Gyurkey brought this action seeking as relief that he be granted the right to purchase lot 13 for $30,000. Therein Gyurkey alleged that Babler and the other defendants conspired and acted in concert to “maliciously and fraudulently deprive the plaintiff of his contractual right to purchase lot 13”.
Following trial, the court specifically found and concluded that the defendants did not act so as to defraud Gyurkey of his rights of first refusal to purchase lot 13. The trial court further found “on the basis of Babler’s familiarity with the lot in question and the appreciating market value of real estate in Ketchum, Idaho” that in January of 1978 Babler had determined “that the fair market value of lot 13 was $50,-000.” Undoubtedly a part of that finding was based on and is supported by the trial court’s additional finding that there was an additional offer to Babler from Sound Development, Inc. to purchase the six lots at a price of $300,000. The trial court further found and concluded that Gyurkey had received adequate, sufficient, legal and actual notice to exercise his right of first refusal and had refused to exercise that right.
The right of first refusal is a form of option. Garmo v. Clanton, 97 Idaho 696, 551 P.2d 1332 (1976); Atchison v. City of Englewood, 193 Colo. 367, 568 P.2d 13 (1977); Myers v. Lovetinsky, 189 N.W.2d 571 (Iowa 1971). However, a right of first refusal cannot be utilized to require an owner to sell property but if an owner is willing to sell, it entitles the holder of a right of first refusal to buy the property on the terms offered to the seller by a third party. Garmo v. Clanton, supra; Atchison v. City of Englewood, supra. Unless a contract specifies the type of notice to be given to an option holder, no particular type of notice can be demanded. Vozar v. Francis, 579 P.2d 1056 (Alaska 1978); Figge v. Clark, 174 N.W.2d 432 (Iowa 1970); Killam v. Tenney, 299 Cr. 134, 366 P.2d 739 (1961); Taylor v. Hartman, 370 Pa. 146, 87 A.2d 785 (1952). Oral notice of an intent to exercise an option has been held to be sufficient. Vozar v. Francis, supra; Figge v. Clark, supra; Steele v. Northup, 259 Iowa 443, 143 N.W.2d 302 (1966); Taylor v. Hartman, supra. See also White v. Ralph, 66 Idaho 38, 154 P.2d 167 (1944). Although most of the *672authorities deal with the ability of an option holder to give the seller oral notice of his intent to exercise an option, it is clear to me that the law should cut both ways and if an option holder is entitled to give oral notice in the absence of a contract provision to the contrary, then a seller should equally be entitled to give oral notice.
Neither Gyurkey nor the majority argue that Gyurkey’s right of first refusal on lot 13 gave or gives him the right to purchase all the property on the same terms that the buyers obtained. See Myers v. Lovetinsky, 189 N.W.2d 571 (Iowa 1971); Guaclides v. Kruse, 170 A.2d 488 (N.J.Super.App.Div. 1961). Thus the transmission of the entire offer for all the properties would not benefit Gyurkey. Nevertheless the majority holds that Babler should have transmitted the details of the entire transaction to Gyurkey. It is clear that the terms of the entire transaction are useless to Gyurkey unless it reveals that the price for lot 13 was set fraudulently or with intent to deprive him of the right of first refusal. Here, as aforesaid, the court found that there was no such fraud or intent to deny Gyurkey the opportunity to exercise his right. The court found that the price was set in good faith and represented the fair market value of lot 13. See O’Connell v. Weitzman, 168 Cal.App. 400, 336 P.2d 592 (1959).
Even assuming arguendo that Gyurkey was entitled to receive the terms of the entire transaction, it is clear that before the conveyance to the buyers took place, Gyurkey did receive a copy of the agreement. Thereafter, Gyurkey did not act to assert his right to purchase the property within the five-day period required in the contract which Gyurkey had drafted. Thus the majority holds that after notice has twice been given to a holder of a right of first refusal and the holder has twice declined to exercise the right, it still is somehow contingent on further refinements of an agreement with other parties. No support for that conclusion is cited, and' I find none. See O’Connell v. Weitzman, supra. If there had indeed been fraud and an intent to deprive Gyurkey of his right of first refusal then of course, the notice could be disregarded. See Tamura v. DeIuliis, 203 Or. 619, 281 P.2d 469 (1955).
In Garmo v. Clanton, 97 Idaho 696, 551 P.2d 1332 (1976) a unanimous court defined the rights of a holder of a right of first refusal when the owner of the subject property sought to transfer it to a third party as a part of a larger transaction. Stripped of all its irrelevancy, that decision held that the holder of the right of first refusal was entitled to notice and the opportunity to purchase the subject property at its fair market value as of the time of the contemplated transaction with the third party. In the instant case Gyurkey was given notice and the opportunity to purchase the subject property at the market value as of the time of the proposed transaction with the third parties. In my opinion, the result obtained by the majority here is in direct contradiction to Garmo and requires the overruling of Garmo.
1 believe the majority’s reliance upon Brenner v. Duncan, 318 Mich. 1, 27 N.W.2d 320 (1947) is misplaced. In Brenner the property at issue was a portion of a single 100-foot parcel. After a sale of the entire 100-foot parcel was made, the preemptive right holder was granted his right to purchase a portion of that 100-foot parcel. In Brenner there was no issue of separate pricing as exists in the instant case. The court in Brenner expressly stated, “[t]he terms of the lease imposed upon Helen E. Randall a duty, before selling to the defendants Powers, to fix a specific sum as the amount at which she was willing to sell the premises in' question [the property subject to the right of first refusal] and to afford the plaintiffs an opportunity to buy the same at such figure. Her failure to do so constituted a breach of contract....” Id., 27 N.W.2d at 322. Clearly Babler did precisely that in the instant case. Babler set a price upon the property which was subject to the right of first refusal, which was the fair market value of the property, and Gyurkey was given notice and the opportunity to purchase, which he declined to do.
In my judgment, the decisions of other courts uniformly turn on the good or bad faith of the seller in setting an acceptable price. See Myers v. Lovetinsky, 189 *673N.W.2d 571 (Iowa 1971); Smith v. Traxler, 228 S.C. 418, 90 S.E.2d 482 (1955). See also Weber Meadow-View Corp. v. Wilde, 575 P.2d 1053, 1055 (Utah 1978) where that court stated: “the decision as to both the time and the terms upon which the optionor would sell her property remains her exclusive prerogative so long as she acts in good faith and without any ulterior purpose to defeat the right of the optionee.”
The thread running through the entire majority opinion is that a rule must be fashioned which will prevent fraud and unfair dealing which has as its purpose the defeat of the right of the holder of the right of first refusal. It is enough to say that such issue was specifically alleged by Gyurkey, was the subject at trial, and the district judge, based on substantial evidence, ruled against Gyurkey on that issue.
I would affirm the judgment of the district court.
DONALDSON, J., concurs.