Opinion
NO. 2016 CA 0685
07-13-2017
TAMARA SUE MARLER AND DEAN L. MARLER v. PEGGY S. JARRELL AKA PEGGY LYNN JARRELL, CHARLES E. CARVER AND GINA H. CARVER
LESLI S. BOLNER GLEN R. GALBRAITH FRANK J. DIVITTORIO HAMMOND, LA ATTORNEYS FOR PLAINTIFFS-APPELLANTS 1 TAMARA SUE MARLER, DEAN L. MARLER SCOTT H. SLEDGE HAMMOND, LA ATTORNEY FOR DEFENDANT-APPELLEE PEGGY S. JARRELL RICK A. SINGER HAMMOND, LA ATTORNEY FOR DEFENDANTS-APPELLANTS 2 CHARLES E. CARVER, GINA H. CARVER
NOT DESIGNATED FOR PUBLICATION Appealed from the 21st Judicial District Court in and for the Parish of Tangipahoa, Louisiana
Trial Court No. 2011-0002687
Honorable Brenda Bedsole Ricks, Judge LESLI S. BOLNER
GLEN R. GALBRAITH
FRANK J. DIVITTORIO
HAMMOND, LA ATTORNEYS FOR
PLAINTIFFS-APPELLANTS 1
TAMARA SUE MARLER,
DEAN L. MARLER SCOTT H. SLEDGE
HAMMOND, LA ATTORNEY FOR
DEFENDANT-APPELLEE
PEGGY S. JARRELL RICK A. SINGER
HAMMOND, LA ATTORNEY FOR
DEFENDANTS-APPELLANTS 2
CHARLES E. CARVER,
GINA H. CARVER BEFORE: GUIDRY, PETTIGREW, McDONALD, AND HOLDRIDGE, JJ., AND CALLOWAY, J. Pro Tem. PETTIGREW, J.
Judge Curtis A. Calloway, retired, is serving as judge pro tempore by special appointment of the Louisiana Supreme Court.
This appeal arises out of a suit filed by Tamara Sue Marler and Dean L. Marler (the Marlers) against Peggy Jarrell (Jarrell) and Charles E. Carver and Gina H. Carver (the Carvers), seeking to rescind a sale of property made by Jarrell to the Carvers. The Marlers assert they had a right of first refusal to buy the property and were never offered that right. Jarrell and the Carvers each denied the existence of the right of first refusal, and the Carvers filed a third party demand against Jarrell seeking damages for breach of the warranty against eviction if the right of first refusal was found to be valid.
Following a trial on the merits, the trial court signed a judgment on November 25, 2015, in favor of the Marlers, finding the right of first refusal valid and ordering the sale between the Jarrells and the Carvers be rescinded and declared null and void. The trial court further ordered that the Marlers were entitled to specific performance and would be entitled to purchase the property at issue at the same price paid by the Carvers plus the cost of improvements made on the property by the Carvers. The trial court also ordered judgment in favor of the Carvers on their third party demand against Jarrell in the amount of the purchase price and the cost of improvements as a result of Jarrell's breach of warranty of eviction. The Marlers and the Carvers appeal.
John Jarrell was the husband of Peggy Jarrell, who died prior to suit being filed in this matter.
FACTS AND PROCEDURAL HISTORY
On December 19, 2003, a cash sale was executed between John and Peggy Jarrell and the Marlers. The property that was the subject of this sale was a 5.11-acre tract in Kentwood, Louisiana, which also included a house ("the 5.11-acre tract"). This 5.11-acre tract had been partitioned from a larger 26.60-acre tract owned by the Jarrells. Following this sale, the Jarrells remained owners of the remaining 21.49 acres adjacent to the 5.11-acre tract sold to the Marlers.
Included in the December 2003 sale document was the following notation:
As a further consideration for this sale, said Vendors do hereby grant unto Vendees the right of first refusal on the following described property, to-wit:
This statement is found at the very bottom of the first page of the sale document. The second page of the sale document is a copy of the survey plat performed for Dean Marler and the title agency and insurers associated with the sale. The plat reflects all servitudes affecting the property, flood zones, and includes legal descriptions for Tract 1 (the 21.49-acre tract retained by the Jarrells) and Tract 2 (the 5.11-acre tract purchased by the Marlers).
On June 21, 2006, a second sale was executed between the Jarrells and Tamara Marler. The property that was subject to this sale was a 2.8-acre portion of the 21.49-acre tract retained by the Jarrells. The sale documents for this 2006 sale make no reference to the right of first refusal that appeared in the 2003 sale documents. Furthermore, the 2006 sale documents do not create a right of first refusal in Mrs. Marler's favor on the then remaining 18-acre tract of land still owned by the Jarrells.
Dean Marler was working out of state at the time of this sale and was not a party to the sale.
Conflicting testimony was presented at trial regarding the reason for the sale of these 2.8 acres from the Jarrells' remaining 21.49-acre tract of land. Prior to the sale, the Marlers used this 2.8-acre portion as a horse pasture. Tamara Marler testified John Jarrell told her that the 5.11-acre tract they had purchased included this 2.8-acre portion, because John had pointed to a fence line as the boundary for what the Marlers would be purchasing prior to the 2003 sale. Tamara Marler testified that about a week before the second sale date, John Jarrell demanded she vacate that 2.8 acres (remove the horses, goats, and other livestock that were pastured there and stop using it) or pay him for the land within twelve hours. Tamara Marler testified that there was no survey done of the land to confirm the property boundaries prior to the 2003 sale; however, this is contradicted by the 2003 sale documents, which contain a surveyor's plat delineating the parcel of land the Marlers were purchasing. Peggy Jarrell testified, however, that Tamara Marler approached her husband, John, and asked to buy the 2.8 acres. Jarrell further testified that there was never any confusion on their part regarding the boundaries of what the Marlers had purchased in 2003.
On April 18, 2008, the Jarrells sold the remaining 18-acre tract to the Carvers for the sum of $105,000.00. Following the Carvers' purchase of this 18-acre tract, they proceeded to install water lines, utility lines, pour a slab, and construct a workshop on the slab. The Carvers also removed some trees and cared for the land. In 2011, after the Carvers had hauled in dirt to prepare an area for a slab to build a home, they received a Cease and Desist letter for any and all activity on the 18-acre tract of land they had purchased in 2008. The letter was sent by attorneys retained by the Marlers, who were seeking to enforce their right of first refusal on the 18-acre tract of land.
On August 15, 2011, the Marlers filed a Petition for Revocation/Recission/Nullity of Sale naming Jarrell and the Carvers as defendants. Jarrell and the Carvers separately answered the suit denying there was a valid right of first refusal applicable to the 18-acre tract at issue. The Carvers also filed a third party demand against Jarrell seeking return of the purchase price and reimbursement for costs of the improvements they made in the event that a right of first refusal was found to exist on the 18-acre tract.
A trial on the merits was held, with testimony presented from Tamara and Dean Marler; Peggy Jarrell; her son, Christopher Jarrell; William Woodard; and Charles and Gina Carver. After considering the evidence and testimony presented, on November 25, 2015, the trial court signed a judgment in favor of the Marlers and found they had right of first refusal on the 18-acre tract and that the Marlers were entitled to specific performance of this right. The trial court ordered recission of the sale between Jarrell and the Carvers and that the Marlers be given an opportunity to purchase the 18-acre tract of land for the price paid by the Carvers, $105,000.00, plus the $32,279.16 the Carvers spent improving the property. The trial court further ruled in favor of the Carvers on their third party demand against Jarrell and ordered Jarrell to refund to the Carvers their purchase price of $105,000.00, as well as the costs of improvements totaling $32,279.16, as a result of Jarrell's breach of the warranty against eviction.
The Marlers and the Carvers appeal citing assignments of error; however, this court finds the issue of the validity of the right of first refusal to be dispositive of the appeal. Accordingly, we pretermit review of the remaining issues raised.
The Marlers assert that the right of first refusal created in the 2003 sale documents should have allowed them an opportunity to purchase the 18-acre tract when it was put up for sale. The precise date of when the 18-acre tract was put up for sale by the Jarrells was not established at trial. Christopher Jarrell testified he thought his father put the land up for sale six or seven months after the Marlers bought the 2.8 acres in 2006. Charles Carver testified that he recalled seeing "For Sale" signs on the property in the summer 2008.
Tamara Marler testified that her family had temporarily relocated to North Carolina in conjunction with her husband's employment from "the end of" 2007 until May 2009, and became aware the Jarrells had sold the property to the Carvers when Peggy Jarrell contacted her to put in a culvert and gravel for access to her property because the new owner would not let the Marlers use the existing driveway.
During the Marlers' absence, they hired a caretaker, William Woodward, to monitor the property.
Jarrell testified that she was aware at the 2003 sale closing that the Marlers had right of first refusal over the remaining 21.49-acre tract. Jarrell admitted that at no time did she offer to sell the Marlers the 18-acre tract that remained after the 2006 sale. Jarrell further testified that she never discussed the right of first refusal with the Marlers at any time. According to Jarrell, her husband John handled all their business regarding land.
The Marlers contend that they never waived their right of first refusal created in the 2003 sale documents. Tamara Marler testified that upon her return from North Carolina in early summer 2009, she confronted Charles Carver and told them she had a right of first refusal on the property and Carver seemed unconcerned. Although Tamara Marler testified she began to investigate her legal options following her 2009 return to Louisiana, the receipts produced at trial indicated she did not pay an attorney until 2011. The Marlers initially hired an attorney, but due to health issues the attorney was experiencing, he referred them to current counsel.
Charles Carver testified that at the 2008 sale closing, no one mentioned that a right of first refusal existed on the land he was purchasing. Carver disputed that he was ever confronted by Tamara Marler regarding the right of first refusal and stated his first indication there was a problem with the land was in August 2011, when he received the Cease and Desist letter. Carver testified that Dean Marler even advised him on where to locate the slab for the workshop he built on the property so it would not be affected by flooding, advice, which Carver testified, he followed.
Both Charles and Gina Carver testified that sometime in late 2009 or 2010, Tamara Marler approached them to see if they would be interested in buying her home and acreage. The Carvers said Marler arranged for them to see her home, but they eventually declined to buy it because they planned on building a bigger home.
VALIDITY OF THE RIGHT OF FIRST REFUSAL
In its Ruling on Petition for Revocation dated October 15, 2015, the trial court noted that La. Civ. Code arts. 2627 and 2628 provide two instances in which a right of first refusal may be extinguished, neither of which involves the selling of a portion of the land to the grantee at the grantee's request. The trial court then found the Marlers' right of first refusal was not extinguished by Jarrell's sale of the 2.8-acre tract to them.
We note that in the trial court's October 15, 2015 ruling, it found the Marlers were entitled to purchase the property upon which the right was conferred at the current fair market value. On November 9, 2015, the trial court amended this ruling to address questions regarding language used in the ruling because the parties could not agree on the language for the proposed judgment. The trial court then clarified the intent of its original ruling by finding the Marlers would be allowed to purchase the property upon which the right was conferred for $105,000.00, the purchase price paid by the Carvers, plus the proven costs of improvements totaling $32,279.16. A judgment was signed in accordance with that ruling on November 25, 2015. --------
According to La. Civ. Code art. 2625, a party may agree that he will not sell a certain thing without first offering it to a certain person. The right given to the latter in such a case is a right of first refusal that may be enforced by specific performance. The grantor of a right of first refusal is conditionally bound; he need only offer the thing for sale to the promisee if he -- the promisor -- should decide to make a certain transaction. La. Civ. Code art. 2625, 1993 Revision comment (c).
The grantor of the right of first refusal may not sell to another person unless he has offered to sell the thing to the holder of the right on the same terms, or on those specified when the right was granted if the parties have so agreed. La. Civ. Code art. 2626.
The right of first refusal regarding the sale of an immovable is a contract that must be in writing. La. Civ. Code arts. 2623 and 2629. The very purpose of the writing requirement for contracts regarding immovable property is to prevent misunderstanding over the verbal terms. See Rebman v. Reed, 335 So.2d 37, 42 (La. App. 4 Cir.), writ denied, 338 So.2d 699 (La. 1976).
Generally, legal agreements have the effect of law between the parties, and as they bind themselves, they shall be held to full performance of the obligations flowing therefrom. In other words, a contract between the parties is the law between them, and the courts are obligated to give legal effect to such contracts according to the true intent of the parties. La. Civ. Code art. 2045. The intent is to be determined by the words of a contract when they are clear, unambiguous, and lead to no absurd consequences. La. Civ. Code art. 2046; Amoco Production Co. v. Fina Oil & Chemical Co., 95-1185, p. 11 (La. App. 1 Cir. 2/23/96), 670 So.2d 502, 510-511, writ denied, 96-1024 (La. 5/31/96), 673 So.2d 1037.
When the words of a contract are clear and explicit and lead to no absurd consequences, no further interpretation may be made in search of the parties' intent. La. Civ. Code. art. 2046. The rules of interpretation establish that when a clause in a contract is clear and unambiguous, the letter of the clause should not be disregarded under the pretext of pursuing its spirit. La. Civ. Code art. 2046, 1984 Revision comment (b); Amoco Production Co., 95-1185 at 11-12, 670 So.2d at 511.
In such cases, the meaning and intent of the parties to the written contract must be sought within the four corners of the instrument and cannot be explained or contradicted by parol evidence. La. Civ. Code art. 1848. Contracts, subject to interpretation from the instrument's four corners without the necessity of extrinsic evidence, are to be interpreted as a matter of law, and the use of extrinsic evidence is proper only where a contract is ambiguous after an examination of the four corners of the agreement. Amoco Production Co., 95-1185 at 12, 670 So.2d at 511.
When the terms of a written contract are susceptible to more than one interpretation, or there is uncertainty or ambiguity as to its provisions, or the intent of the parties cannot be ascertained from the language employed, parol evidence is admissible to clarify the ambiguity or show the intention of the parties. In cases in which the contract is ambiguous, the agreement shall be construed according to the intent of the parties. La. Civ. Code art. 2045. Intent is an issue of fact that is to be inferred from all the surrounding circumstances. A doubtful provision must be interpreted in light of the nature of the contract, equity, stages, the conduct of the parties before and after the formation of the contract, and other contracts of a like nature between the same parties. La. Civ. Code art. 2053; Amoco Production Co., 95-1185 at 12-13, 670 So.2d at 511.
Whether a contract is ambiguous is a question of law. When appellate review is not premised upon the trial court's factual findings, but instead is based upon an independent review and examination of the contract on its face, the manifest error standard of review does not apply. In such cases, appellate review of questions of law is simply whether the trial court was legally correct. Amoco Production Co., 95-1185 at 13, 670 So.2d at 511-512.
In the instant appeal, the issue is whether the wording of the right of first refusal contained in the 2003 sale documents is ambiguous or explicit. If the language of the right of first refusal is explicit and unambiguous, no additional evidence can be considered. Amoco Production Co., 95-1185 at 13, 670 So.2d at 512.
As described earlier, the right of first refusal provided in the 2003 sale documents provided:
As a further consideration for this sale, said Vendors do hereby grant unto Vendees the right of first refusal on the following described property, to-wit:
Following this statement, the 2003 sale documents contain the survey plat, which includes, among other things, a description of the land being purchased by the Marlers (identified by legal description on the plat and referred to on the plat as "Tract 2") and the legal description of the land being retained by the Jarrells (identified by the legal description on the plat and referred to on the plat as "Tract 1").
In reviewing these sale documents and examining the right of first refusal contained therein, it is evident the parties' intent was to create a right of first refusal on Tract 1, the 21.49-acre tract retained by the Jarrells. However, what is not contemplated by the 2003 sale documents is how a sale of any amount of land less than the entirety of the Tract 1 would affect the right of first refusal. The plain language used in the 2003 sale documents is for the right of first refusal to apply to the entirety of Tract 1. There is no reference anywhere in the 2003 sale documents that the right of first refusal extended to any lesser parcel or portion of the land, which could have easily addressed such a scenario.
As previously mentioned herein, on June 21, 2006, a second sale was executed between the Jarrells and Tamara Marler. The property that was subject to this sale was a 2.8-acre tract, which came out of the portion of the land (Tract 1, 21.49 acres) retained by the Jarrells in 2003. The sale documents for this 2006 sale make no reference to the right of first refusal that appeared in the 2003 sale, nor do the 2006 sale documents create a right of first refusal on the then remaining 18-acre tract later sold to the Carvers by the Jarrells in 2008. In fact, after the June 21, 2006 sale to the Marlers, there was no longer a Tract 1 that consisted of 21.49 acres.
The rules of construction do not authorize a perversion of the words or the exercise of inventive powers to create an ambiguity where none exists or the making of a new contract when the terms express with sufficient clearness the parties' intent. The fact that one party may create a dispute about the meaning of a contractual provision does not render the provision ambiguous. Campbell v. Melton, 2001-2578, pp. 8-9 (La. 5/14/02), 817 So.2d 69, 76.
In the present case, we do not find the language in the 2003 right of first refusal clause to be ambiguous or subject to more than one interpretation. Rather, the reservation of first refusal clearly covers the land described as "Tract 1" a 21.49-acre tract. Therefore, we find the "certain thing" contemplated by La. Civ. Code art. 2625 to be the reservation of first refusal on the 21.49-acre tract in its entirety. Given the lack of any ambiguity as to what the 2003 right of first refusal covered, the testimony of the Marlers regarding the supposed ongoing reminders to John Jarrell about their desire to purchase Tract 1 have no bearing on the plain wording of the language of the right of first refusal.
Our analysis does not end with the finding that the "certain thing" that was the subject of the right of first refusal was Tract 1 in its entirety. In the present case, we are presented with the situation in which the holder of the right of first refusal (Tamara Marler) made a subsequent purchase of a 2.8-acre portion of Tract 1 in 2006. The 2006 sale documents do not contain language by which Tamara Marler reasserted her right of first refusal over the remainder of the property owned by the Jarrells after she purchased the 2.8-acre portion of Tract 1. Under these particular circumstances we decline to create language in the agreement that would have preserved that right years after the fact when the parties had an opportunity to agree as to whether the right would continue to exist in the event Jarrell decided to sell additional portions of Tract 1. We take particular note that when the right of first refusal was created in the 2003 sale documents, the parties did not use language that would have applied to a sale of less than the entirety of Tract 1. As previously stated, the jurisprudence does not allow a court to create a contract because one party later argues that the terms are ambiguous. See Campbell, 2001-2578 at 8-9, 817 So.2d at 76. Accordingly, we find Tamara Marler's 2006 purchase of a portion of Tract 1 and failure to reassert the right of first refusal on the remaining property of Tract 1 extinguished the right of first refusal created in the 2003 sale documents.
The November 25, 2015 judgment of the trial court is hereby reversed in its entirety. All claims by the Marlers against the Jarrells and the Carvers are dismissed. The third party demand of the Carvers against Jarrell is also dismissed as moot. Costs associated with this appeal are assessed to plaintiffs-appellants, Tamara Sue Marler and Dean L. Marler.
REVERSED.
CALLOWAY, J., dissenting.
In reversing the trial court judgment, the majority concludes that the thing upon which the right of first refusal was granted, Tract 1, no longer existed after the 2006 sale of the 2.8-acre tract from the Jarrells to Tamara Marler. I respectfully believe this conclusion is wrong.
I would first address the Carvers' first assignment of error as to whether the right of first refusal granted in the December 19, 2003 sale document was extinguished by a subsequent sale between the same parties. A right of first refusal is an agreement by one party that he will not sell a certain thing without first offering it to a certain person. La. C.C. art. 2625. Such right may be enforced by specific performance. Id. The right of first refusal is a unilateral obligation; the grantor alone is obligated to act and the person holding the right of first refusal is not required to accept the offer, though failure to accept the offer permits the grantor to then sell the thing to a third party. 6126, L.L.C. v. Strauss, 2013-0853 (La. App. 4 Cir. 12/4/13), 131 So. 3d 92, 101-02, writ denied, 2014-0001 (La. 2/28/14), 137 So. 3d 15, citing Alain Levasseur & David Gruning, Louisiana Law of Sale and Lease: A Précis § 1.1.4 (Alain Levasseur, John Trahan, Andrea Carroll & Ronald Scalise, eds., Matthew Bender & Company, Inc., a member of the LexisNexis Group 2007).
"[T]he right of first refusal [imposes] on the grantor an obligation not to do i.e. not to sell to another before offering to sell to the grantee, rather than an obligation to do i.e. sell to the grantee first" and "is subject to two suspensive conditions": a) the grantor's intent to sell and b) the grantee's agreement to purchase "on the same terms, or on those specified when the right was granted if the parties have so agreed." Louisiana Law of Sale and Lease, supra, at 15; see also La. C.C. art. 2625. The same terms of the offer made to another person (price, modalities of payment, etc.) must be made to the holder of the right of first refusal. See Louisiana Law of Sale and Lease, supra.
The grantor of the right of first refusal may not sell to another person unless he has offered to sell the thing to the holder of the right on the same terms, or on those specified when the right was granted if the parties have so agreed. La. C.C. art. 2626.
It is undisputed that in December 2003, the Jarrells granted the Marlers a right of first refusal on Tract 1, the 21.49-acre tract retained by the Jarrells. The issue before the trial court was whether the subsequent sale of the 2.8-acre portion of Tract 1 to Tamara Marler on June 21, 2006, extinguished the right of first refusal. The remaining 18-acre tract was sold to the Carvers on April 18, 2008, for the sum of $105,000.00 without the Jarrells offering the Marlers the right of first refusal.
A right of first refusal is triggered by an offer to purchase the property upon which the grantee holds the right of first refusal. Royal Oldsmobile Co., Inc. v. Heisler Properties, LLC, 2012-608 (La. App. 5 Cir. 5/16/13), 119 So. 3d 84, 91. When the 2.8-acre tract was sold to Tamara Marler, there was never an offer to purchase the property by a third party. The Marlers were the grantees of a right of first refusal on the entire Tract 1. There was nothing to indicate that Tamara Marler's purchase of a portion of Tract 1 in 2006 extinguished that right.
The right of first refusal cannot be circumvented by purchasing other properties in addition to the leased-land in a sale transaction. "To allow such a loophole would render rights of first refusal functionally meaningless." Royal Oldsmobile Co., 119 So. 3d at 92. Furthermore, in finding that a dation en paiement (a giving in payment) triggered a right of first refusal, the court in Gorum v. Optimist Club of Glenmora, 1999-1963 (La. App. 3 Cir. 8/30/00), 771 So. 2d 690, 695, writ denied, 2000-2740 (La. 11/27/00), 775 So. 2d 451, stated that "drawing a meaningless distinction between a sale and a dation en paiement ... would allow [the defendant] to circumvent its obligation simply on the basis of semantics." The court refused to permit an interpretation that allowed the defendant to divest itself of ownership through a dation en paiement without providing the plaintiff with a right of first refusal because it would result in "an absurd and unintended consequence." Id.
The majority agrees with the Carvers that the thing upon which the right of first refusal was granted, Tract 1, no longer existed after the 2006 sale of the 2.8-acre tract from the Jarrells to Tamara Marler. As stated above, that a right of first refusal is triggered by an offer to purchase the property upon which the grantee holds the right of first refusal. Royal Oldsmobile, 119 So. 3d at 91. When the 2.8-acre tract was sold to Tamara Marler, there was never an offer to purchase the property by a third party. The Marlers were the grantees on a right of first refusal on the entire Tract 1. There was nothing to indicate in the 2006 sale that Tamara Marler extinguished that right on the entirety of Tract 1. The argument of the Carvers that the thing agreed upon by the Marlers and Jarrells no longer existed is tantamount to permitting the grantor of the right of first refusal the ability to alter the thing agreed to by selling off a smaller or larger portion thereof. My research has disclosed no Louisiana cases interpreting a right of first refusal when a partial transfer is made. However, after taking into consideration the jurisprudence cited in Royal Oldsmobile that a right of first refusal cannot be circumvented by purchasing a larger portion of the property subject to the right of first refusal and after reviewing out-of-state cases on this issue, I believe the applicable law should follow the reasoning of Whiteface Resort Holdings, LLC v. McCutchen, 52 A.D.3d 1106, 1107-08, 860 N.Y.S.2d 308, 310-11 (2008), which states:
While it is well established that an owner may not attempt to defeat a right of first refusal on a parcel by offering the property for sale only as part of a larger parcel (see e.g. South Amherst, Ltd. v. H.B. Singer, LLC, 13 A.D.3d 515, 516, 786 N.Y.S.2d 573 [2004]; K.S. & S. Rest. Corp. v. Yarbrough, 104 A.D.2d 486, 487, 479 N.Y.S.2d 235 [1984]), it is an open question whether an owner can sell a portion of a parcel encumbered by a right of first refusal when the right holder objects to a sale of anything less than the entire parcel. We note, however, that it has been repeatedly held that the sale of a portion of the encumbered property—in the absence of any objection to a partial sale—does trigger the right of first refusal with respect to that portion (see New York Tile Wholesale Corp. v. Thomas Fatato Realty Corp., 13 A.D.3d 425, 428, 787 N.Y.S.2d 341 [2004]; Colonie Motors v. Heritage Corp. of N.Y., 61 A.D.2d 1105, 1107, 403 N.Y.S.2d 574 [1978]; Sargent v. Halsey, 42 A.D.2d 375, 380-381, 348 N.Y.S.2d 160 [1973] ). As this Court explained in recognizing that the right attaches in the event of a partial sale, construing "premises" in this context to mean only the entire parcel would be unreasonable; such an interpretation would permit the grantor to "circumvent" a "right of first refusal ... by the simple device of conveying partial interests in the premises" ([Colonie Motors], 61 A.D.2d at 1107, 403 N.Y.S.2d 574).
Whiteface Resort Holdings held that property encumbered with a right of first refusal may be sold in smaller portions, but "recognized the validity of partial transfers so long as the right of first refusal is honored with each transfer." 52 A.D.3d at 1108 (emphasis added), citing Colonie Motors 61 A.D.2d at 1107, 403 N.Y.S.2d at 576. In Whiteface Resort Holdings, the grantor of the right of first refusal did offer the plaintiff the opportunity to purchase the portion of property he was selling to a third party. The plaintiff, the grantee of the right of first refusal, refused to purchase the portion and then sued the grantor claiming that his right of first refusal was denied because he was not offered the entire property. The court determined that the grantor was permitted to sell the property in smaller portions and that he had honored the right of first refusal by offering that portion to the plaintiff.
I similarly find that the Jarrells could not defeat the right of first refusal by selling portions of Tract 1 without honoring the right of first refusal on each portion. The majority permits a grantor of a right of first refusal to unilaterally alter his obligation by selling smaller portions of a tract of land encumbered with a right of first refusal, which "render[s] the rights of first refusal functionally meaningless." See Royal Oldsmobile, 119 So. 3d at 92. I believe that when the Jarrells sold the 18-acre tract to the Carvers, they continued to have the obligation to offer that remaining portion of Tract 1 to the Marlers. Nothing in the 2006 transaction extinguished the right of first refusal on the entirety of Tract 1.
I would address the Carvers' second assignment of error that the Marlers tacitly consented to the sale of the 18-acre tract to the Carvers and that the "Marlers took no action to preserve their alleged interest in this property" beginning shortly after the 2006 sale of the 2.8-acre tract. The Carvers assert that the Marlers were aware of the April 18, 2008 sale of the 18-acre tract shortly after it occurred, but did not send a Cease and Desist letter to the Carvers until August 2011. The Carvers claim that the Marlers consented to the sale since they took no action for over three years after the sale. The evidence at trial indicated that "For Sale" signs were placed on the remaining 18-acre tract and that because the Marlers lived right by this property, they were aware the Carvers purchased the 18- acre tract and made improvements to that property. The Carvers argue that once the "For Sale" signs went up, the Marlers did not intercede, thereby consenting to the sale.
A right of refusal is subject to liberative prescription of ten years. La. C.C. art. 2628; Burns v. Clutter, 2008-2082 (La. App. 1 Cir. 5/13/09), 15 So. 3d 251, 253-54, writ denied, 2009-1622 (La. 3/12/10), 28 So. 3d 1025. The Carvers rely on dicta from Price v. Town of Ruston, 171 La. 985, 132 So. 653 (1931), to argue that the Marlers tacitly consented to the Carvers becoming owners of the 18-acre tract of land. However, the Louisiana Supreme Court in Price held that a right of first refusal was not extinguished and the grantee did not tacitly consent to a violation of his right of first refusal when the grantee allowed property to go through a sale and re-sale to a lender. Price, 171 La. at 993, 132 So. at 656. The Carvers point to no law that permits a tacit consent to shorten a liberative prescription period.
I further note that the Marlers' awareness of the "For Sale" signs or the sale, placed no legal obligation on them. The right of first refusal is a unilateral obligation; the grantor alone is obligated to act. 6126, LLC, 131 So. 3d at 101. It is the grantor who has an obligation not to sell to another before offering the property to the grantee for the same terms. 6126, LLC, 131 So. 3d at 102. The right of first refusal was only triggered when the Carvers gave the Jarrells an offer on the 18-acre tract. See Royal Oldsmobile Co., 119 So. 3d at 91.
A suspensive condition creates enforceable obligations when an event, which is uncertain to happen, occurs. La. C.C. art. 1767. A provision in a sale, such as a right of first refusal, allowing the grantee to buy the property upon the occurrence of an uncertain event, is a suspensive condition. See Royal Oldsmobile Co., 119 So. 3d at 91, citing Murry v. Murphy, 2007-720 (La. App. 3 Cir. 11/21/07), 970 So. 2d 700, 702. The right to enforce the obligation does not arise until the fulfillment of the suspensive condition, and the obligation may not be enforced until the condition is met. See Id., citing Hampton v. Hampton, Inc., 1997-1779 (La. App. 1 Cir. 6/29/98), 713 So. 2d 1185, 1190.
I believe that the Jarrells were obligated to offer the property to the Marlers for the same price as the Carvers offered to purchase the property. The law does not place an obligation on the Marlers to act. The obligation is on the grantor not to sell to another before offering to sell to the grantee, which the Jarrells did not do. Therefore, the Jarrells breached their obligation as grantor of the right of first of refusal. The Marlers continued to maintain a valid right of first refusal on the 18-acre tract.
I would also address the Carvers' third assignment of error that the trial court erred in ordering the specific performance that the Marlers be entitled to purchase the property at issue, the 18-acre tract. The Civil Code permits specific performance of a right of first refusal. La. C.C. art. 2625. For a breach of contract granting a right of first refusal, specific performance is the appropriate remedy. Royal Oldsmobile Co., 119 So. 3d at 93, citing Price, 171 La. 985, 132 So. 653; Culp v. Eagle's Nest Church Of Monroe, 39-027 (La. App. 2 Cir. 11/19/04), 887 So. 2d 743, 748. Specific performance is the preferred remedy in Louisiana, except where "it is impossible, greatly disproportionate in cost to the actual damage caused, no longer in the creditor's interest, or of substantial negative effect upon the interests of third parties." Royal Oldsmobile Co., 119 So. 3d at 93, citing Weingarten v. Northgate, 404 So. 2d 896, 901 (La. 1981). I do not find any of the exceptions apply, and therefore, would find that the trial court did not err in ordering specific performance.
The Carvers assert that specific performance was not the appropriate remedy because the sale of the 18-acre tract had already taken place and a workshop built on the property when the Marlers sought to assert the right of first refusal. In Terrell v. Messenger, 428 So. 2d 1241, 1246-47 (La. App. 3d Cir.), writ denied, 433 So. 2d 709 (La. 1983), the court held that specific performance was the appropriate remedy despite the sale of property since the appellant had sufficient notice of a right of first refusal by virtue of the public records doctrine. In the present case, the right of first refusal was recorded in the conveyance records of the Parish of Tangipahoa on December 26, 2003.
The essence of the public records doctrine is that recordation is an essential element for the effectiveness of a right, and it is important to distinguish between effectiveness of a right against third persons and knowledge of a right by third persons. An unrecorded interest is not effective against anyone (except the parties). A recorded interest, however, is effective both against those third persons who have knowledge and those who do not have knowledge of the presence of the interest in the public records. From the standpoint of the operation of the public records doctrine, knowledge is an irrelevant consideration.London Towne Condo. Homeowner's Ass'n v. London Towne Co., 2006-401 (La. 10/17/06), 939 So. 2d 1227, 1232-33, quoting Phillips v. Parker, 483 So. 2d 972, 975-76 (La. 1986). I do not believe that the trial court abused its discretion in its choice of remedy of specific performance, especially considering the public records doctrine in this matter. See Dunham v. Dunham, 467 So. 2d 555, 565 (La. App. 1 Cir.), writs denied, 469 So. 2d 989, 990 (La. 1985) (when more than one remedy is available in a contract case, the trial court has discretion as to the choice of remedy, which is reviewable for abuse of discretion). The majority opinion permits the Carvers to ignore the public records doctrine.
I would also address the Carvers' fourth assignment of error that if specific performance is upheld, they are entitled to additional damages, such as for acquisition of the property, including closing costs, appraisal fees, and interest; property taxes paid; loss of use and enjoyment; and mental anguish.
A trial court's finding of fact may not be reversed absent manifest error or unless it is clearly wrong. Stobart v. State, through Dep't of Transp. and Dev., 617 So. 2d 880, 882 (La. 1993). "The [trial court's] determination of the amount, if any, of an award of damages ... is a finding of fact." Ryan v. Zurich Am. Ins. Co., 2007-2312 (La. 7/1/08), 988 So. 2d 214, 219. The reviewing court must do more than simply review the record for some evidence which supports or controverts the trial court's findings, it must instead "review the record in its entirety to determine whether the trial court's finding was clearly wrong or manifestly erroneous." Stobart, 617 So. 2d at 882. The issue to be resolved on review is whether the fact finder's conclusion was a reasonable one, not whether it was right or wrong. Id.
The Carvers submitted into evidence various receipts for the construction of the shop on the 18-acre tract as Carver Exhibit 1. The trial court awarded the Carvers the cost of the improvements, $32,279.16, which is the amount of Carver Exhibit 1. The only other exhibits introduced by the Carvers were Carver Exhibit 2, a business card, and Carver Exhibit 3, the cease and desist letter from the Marlers. The only other evidence was the testimony of Mr. Carver that he paid an attorney $1986.00 in closing costs and $400.00 he paid an appraiser when he purchased the 18-acre tract. There is no evidence in the record as to property taxes, loss of use and enjoyment, or mental anguish. I would find that the trial court's conclusion as to the damages owed the Carvers was a reasonable one based on the record. Although the trial court failed to award damages for the attorney closing costs and the appraiser, as there are no invoices in the record with regard to these amounts of damages, I cannot say it was unreasonable for the trial court to not award these amounts. As there was no evidence as to any other amounts claimed by the Carvers, I believe the trial court's assessment of damages was reasonable.
I would also address the Marlers' claim that the trial court erred in requiring them to pay more than the pay more than the $105,000.00 purchase price for the 18-acre tract and that the trial court erred in failing to require Peggy Jarrell to reimburse the Carvers for the improvements, made to the property, $32,279.16, since she is the one who breached the warranty of eviction. I agree with the Marlers that Peggy Jarrell is liable for the amount of improvements made by the Carvers, since she breached the warranty of eviction.
The seller warrants the buyer against eviction, which is the buyer's loss of the whole or part of the thing sold because of a third person's right that existed at the time of the sale. La. C.C. art. 2500. A buyer who avails himself of the warranty against eviction may recover from the seller the price he paid, the value of any fruits he had to return to the third person who evicted him, and also other damages sustained because of eviction. La. C.C. art. 2506. A seller liable for eviction must reimburse the buyer for the cost of useful improvements to the thing made by the buyer. If the seller knew at the time of the sale that the thing belonged to a third person, he must reimburse the buyer for the cost of all improvements. La. C.C. art. 2509.
I agree with the Marlers that when the trial court ordered them to be offered the 18-acre tract for the $105,000.00 plus the cost of improvements of $32,279.16, the trial court shifted the liability of the cost of improvements from Peggy Jarrell, the seller, to the Marlers. Peggy Jarrell breached the warranty against eviction to the Carvers and is liable for that breach, not the Marlers.
I believe the trial court is correct in finding that the Marlers are entitled to specific performance by declaring the sale to the Carvers to be null and void and ordering the sale to the Marlers to take place. However, I believe the trial court erred in ordering the Marlers to pay any sum to the Carvers. Instead the Marlers should pay the purchase price to Peggy Jarrell, who in turn, would be liable to refund the same amount to the Carvers in addition to the costs of the improvements to the 18-acre tract proven at trial. Peggy Jarrell should be required to reimburse the Carvers for the improvements made to the property, since she is the one who breached the warranty of eviction. I believe this court should affirm the trial court's judgment as to the validity of the right of first refusal; declare the sale of the 18-acre tract to the Carvers null and void; permit the Marlers to purchase the 18-acre tract for the $105,000.00; and have Peggy Jarrell reimburse the Carvers for the cost of improvements of $32,279.16.