Bischoff v. Bletz

• Decision Date: 08 February 2008
• Docket Number: No. 07-001.,07-001.
• Citation: 2008 VT 16,949 A.2d 420
• Parties: William BISCHOFF, David Bischoff and Peter Bischoff v. Donald L. BLETZ, Sr., Bruce Van Guilder and Rodney White.
• Court: Vermont Supreme Court

949 A.2d 420

2008 VT 16

William BISCHOFF, David Bischoff and Peter Bischoff v. Donald L. BLETZ, Sr., Bruce Van Guilder and Rodney White.

No. 07-001.

Supreme Court of Vermont.

February 8, 2008.

Robert P. McClallen of McClallen & Bloomer, P.C., Rutland, for Plaintiffs-Appellees.

Andrew M. Carter of Meub Associates, Inc., Rutland, for Defendant-Appellant White.

John J. Welch, Jr., Rutland, for Defendant-Appellee Bletz.

Charles D. Hickey, St. Johnsbury, for Defendant-Appellee Van Guilder.

Present: REIBER, C.J., DOOLEY, JOHNSON, SKOGLUND and BURGESS, JJ.

JOHNSON, J.

¶ 1. From the perspective of appellant Rodney White, these proceedings must seem Kafkaesque. Donald Bletz, Sr. and Bruce Van Guilder ("defendants") appear to have repeatedly ignored his deeded right of first refusal while plaintiffs were somehow able to extinguish it despite the fact that they raised no claim against White in their complaint, they were not parties to his deed, and they had constructive notice, if not actual notice, of White's superior right before exercising their own purported "first option to buy" the subject properties. As discussed below, we vacate the trial court's summary-judgment decision that declared White's right of first refusal null and void, and remand for additional proceedings.

¶ 2. The record indicates the following. In 1978, White acquired a deeded right of first refusal in land owned by defendants' predecessors in interest, Robert and Joan Van Guilder. The parties agreed that upon receipt of a bona fide offer for the subject properties (a large parcel and a smaller parcel), the Van Guilders would give White written notice of the offer and its terms. White would then have twenty days to exercise his right of first refusal by filing written notice with the town clerk's office and providing a copy of such notice to the Van Guilders. Closing would occur within sixty days of the date that White accepted the offer. The agreement stated that if White did not file "written acceptance of such offer on the same terms and conditions as the original bona fide offer" with the town clerk within the required time period, the right of first refusal would "be deemed to be null and void" and it would "be considered automatically extinguished."

¶ 3. In 2003, with no apparent notice to White, Donald Bletz, Sr., Gordon Van Guilder, and the Estate of Van Guilder agreed to sell the subject properties to Bischoff Development Company. In March 2005, these contracts were superseded by two option contracts between defendants and plaintiffs. Plaintiffs paid defendant Bletz $1266.16 for "the first option" to purchase the smaller lot, and the parties agreed that if the option were exercised, the option payments would be credited toward the $31,000 purchase price. By its terms, the option expired on May 31, 2005, although it could be extended until March 26, 2006 if written notice were provided and additional consideration payments were made.

¶ 4. Plaintiffs paid defendants $8739.84 as consideration for the "first option to buy" the larger lot, and the parties agreed that all consideration payments would be credited toward the $215,000 purchase price if the option was exercised. This option similarly expired on May 31, 2005, although it could be extended until March 26, 2006 with written notice and additional consideration payments. Both agreements provided that if the options were not exercised within the time and manner specified, they would automatically expire and no longer be of any force or effect.

¶ 5. One year later, defendants provided White with written notice of these transactions, characterizing them as "bona fide offers," rather than options to buy. White's attorney responded that the options imposed no obligation to buy on plaintiffs, and in fact, the options had already expired by their own terms. Even aside from this, the attorney noted, defendants' purported notice did not include all of the terms and conditions of any proposed sale. Under these circumstances, the attorney asserted, it was unnecessary for White to respond, although White did file a "Notice of Right of First Refusal" in the town clerk's office at the end of March 2006.

¶ 6. On April 7, 2006, plaintiffs notified defendants that they were exercising their options under the March 2005 agreements as modified by an "Extension of Option Agreement."^* Defendants relayed these offers to White on April 11, and included two purchase and sale agreements signed by plaintiffs but not defendants. The agreement for the smaller lot indicated a purchase price of $31,000, with $3798.48 to be applied to the purchase price at closing (the same amount as the consideration paid for the option and two extensions), and a balance of $27,201.52 to be paid at closing. The purchase price for the larger lot was $215,000, which reflected a $26,219.52 payment to be applied to the purchase price at closing (the same value as the consideration paid for the option and two extensions), and a balance of $188,780.48 to be paid at closing.

¶ 7. On April 20, White's attorney sought immediate clarification from defendants regarding the actual purchase price for these lots given that plaintiffs appeared to be receiving credit at closing for their option payments. It does not appear that defendants responded to this request. On April 28, White provided written notice that he intended to exercise his right of first refusal and he agreed to pay identical terms for both parcels, subject to confirmation of the specific terms of the offer and the actual amount of consideration that would be due from plaintiffs at closing.

¶ 8. Defendants apparently intended to go forward with the sale to White, but before any closing could occur, plaintiffs filed a complaint against defendants, raising claims of breach of contract, breach of warranty, misrepresentation, and negligence. Plaintiffs asserted that defendants were prepared to convey the subject properties to White, and they believed that White should not be allowed to purchase this property because he had not agreed to pay the same price as plaintiffs. Plaintiffs did not name White as a defendant, nor did they raise any claims against him. Instead, plaintiffs sought $129,800 in compensatory damages from defendants for sums expended in reliance upon defendants' representations, an order restraining and enjoining defendants from conveying the properties to White, and "such other relief as is just." They did not seek specific performance of their option contracts with defendants.

¶ 9. Several days later, the court granted plaintiffs' requests for an ex parte temporary restraining order (TRO) and an ex parte writ of attachment. The court later granted plaintiffs' request to convert the TRO into a preliminary injunction, finding that no party would be prejudiced by its issuance and it would preserve the status quo pending service of the pleadings on White and completion of the case. Shortly thereafter, White's real-estate attorney wrote to defendants, indicating his understanding that there was a preliminary injunction in place until further order of the court that prevented defendants from selling the property to White. The attorney reiterated White's readiness and willingness to purchase the property upon identical terms as those offered by plaintiffs, noting that White had arranged financing and the funds were available via wire transfer upon two days' notice after all parties were ready to close.

¶ 10. In late June, White was joined as a necessary party under Rule 19(a) of the Vermont Rules of Civil Procedure at defendants' request, but he was never served with an amended complaint raising a claim against him or naming him as a party. Approximately three weeks later, White entered a pro se notice of appearance as well as a pro se answer to the order joining him as a necessary party. Ten days later, and notwithstanding the fact that they had raised no claim against White, plaintiffs moved for partial summary judgment against him. In their motion, plaintiffs challenged White's right of first refusal, asserting that the right was inadequately described in White's 1978 deed, void for vagueness, ambiguous, and null and void. Defendants did not join in this motion, although they indicated that they did not oppose it.

¶ 11. White did not directly respond to the motion for summary judgment. Instead, on August 21, he filed an answer to plaintiffs' complaint, admitting and denying various allegations, and apparently attempting to raise claims against defendants and plaintiffs for breach of contract and interference with his contractual rights. White filed another document on August 25, asking the court to lift the preliminary injunction and allow him to purchase the land in question pursuant to his right of first refusal. Plaintiffs opposed White's motion and renewed their motion for summary judgment.

¶ 12. The court denied White's request to lift the injunction, and on October 4, it issued an order granting plaintiffs' motion for partial summary judgment. The court stated that "as the case has developed," plaintiffs were now arguing that White's right of first refusal was invalid, or if it was valid, it was not properly exercised, and it was on these two "claims" that plaintiffs now moved for summary judgment. The court concluded that White had not validly exercised his right of first refusal because he had not accepted the offers made by plaintiffs on identical terms. The court also found that White lacked the necessary funds to close on the property within sixty days of the notice of exercise of his right of first refusal, as required by his deed, because his attorney had indicated in a June 28 letter that he would need two days' notice to wire the necessary funds, which would be either one or two days too late. The court thus concluded that White's right of first refusal had been extinguished by its own terms and, as a matter of law, it was of no...