Blue Ridge Bank and Trust Co. v. Trosen

• Decision Date: 09 May 2007
• Docket Number: No. WD 67024.,WD 67024.
• Citation: 221 S.W.3d 451
• Parties: BLUE RIDGE BANK AND TRUST CO., Respondent, v. Rhonda TROSEN, et al.; Respondents Randy and Nancy Hanson, Appellants.
• Court: Missouri Court of Appeals

221 S.W.3d 451

BLUE RIDGE BANK AND TRUST CO., Respondent, v. Rhonda TROSEN, et al.; Respondents Randy and Nancy Hanson, Appellants.

No. WD 67024.

Missouri Court of Appeals, Western District.

May 9, 2007.

Mark J. Bredemeier, Lee's Summit, for Appellants.

Deron A. Anliker, Overland Park, KS, for Blue Ridge Bank.

P. John Brady, Kansas City, for Rhonda Trosen et al.

Matthew A. Culp, Kansas City, for Donald and Amy Allen.

Before VICTOR C. HOWARD, C.J., ROBERT G. ULRICH and THOMAS H. NEWTON, JJ.

ROBERT G. ULRICH, Judge.

Randy and Nancy Hanson appeal the judgment decreeing that they failed to timely exercise the preemptive right, granted to them by covenant, to purchase certain real property contiguous to their residence. They claim as two points on appeal that because they properly exercised their preemptive right to purchase the property, (1) the trial court erroneously declared or applied the law and (2) the court's judgment was against the weight of the evidence. The first point is granted, the judgment is reversed, and the cause is remanded for further proceedings.

Factual Background

Lawfully recorded restrictive covenants govern all real property situated at Lake Lotawana, Jackson County, Missouri. The restrictions were first recorded in the 1940s and have been periodically extended, the last time being in 1987 for an additional twenty years. The Declaration of Restrictions (the Restrictions), inter alia, afford Lake Lotawana Association, Inc. (the Association)¹ and adjoining lot owners a preemptive right to purchase certain property as follows:

No sale, contract to sell, or conveyance of the real estate herein described shall be made or consummated without first giving at least fifteen (15) days written notice to Grantor,² and to the owners of the two side adjoining lots, of the proposed sale price and terms thereof; and thereupon the Grantor and/or either of the side adjoining lot owners shall have the first and prior right, option, and privilege during said period of fifteen (15) days to buy said real estate at the same price and upon the same terms. Such written notice shall be personally served, if service can be made on the subdivision. If any person entitled to service cannot be found on the subdivision, notice may be mailed to such person at his last address known to the Grantor. Affidavit of the person making service shall be sufficient evidence thereof.

Donald L. Allen, Sr. purchased property identified as Lot W-2 Lakeshore, Lake Lotawana, Missouri 64086 (Lot W-2) in 1977. He died testate on October 12, 2004. At the time of his death, he was the sole trustee of the Donald L. Allen Revocable Trust Agreement dated February 16, 1990, as amended (the Trust). Upon his death, Blue Ridge Bank and Trust Co. (the Bank) was appointed as his successor trustee and is currently serving as such. Rhonda Trosen Mark Trosen,³ Donald Allen, Jr., and Amy Allen⁴ (the Trust Beneficiaries) are among the beneficiaries of the Trust.

Ownership of Lot W-2 was vested in the Trust. The Trust instrument did not bequeath or devise Lot W-2 to any specific trust beneficiary. It directed the trustee to sell Lot W-2 and add the proceeds to the corpus of the Trust for the benefit of the Trust Beneficiaries. The Bank obtained a land appraisal for Lot W-2 on or about October 22, 2004. It planned to use the appraisal to assist in fulfilling its fiduciary duty to sell Lot W-2 for the highest value possible. The appraisal determined that the estimated market value of Lot W-2 was $135,000.

Randy and Nancy Hanson⁵ own Lot W-1, a side adjoining lot to Lot W-2. On February 4, 2005, after receiving the land appraisal, the Hansons offered to purchase Lot W-2 for $135,000. The offer stated it would expire at noon on February 7, 2005. The Trust Beneficiaries made an offer to the Bank on February 7, 2005, to purchase Lot W-2 for $135,500. The offer stated it would expire at noon on February 8, 2005. Following this offer by the Trust Beneficiaries, a representative from the Bank telephoned the Hansons. The representative informed Mr. Hanson that the Trust Beneficiaries were offering to buy Lot W-2 for $135,500 and asked if they wished to bid against the Trust Beneficiaries. The Hansons declined to enter into a bidding contest and/or auction, and stated that they would not offer any additional money. The Bank accepted the Trust Beneficiaries' offer on February 7, 2005.

On February 8, 2005, the Trust beneficiaries sent a letter to the Bank instructing the Bank to send a letter to the Association and the residents of Lot W-1 and Lot W-3, the side adjoining lots to Lot W-2, informing them that they would not be sent a waiver for the sale of Lot W-2. The Trust Beneficiaries directed that the language of the letter to the Association and side lot owners should state, "Per the instructions of the Lake Lotawana Association a waiver will not be required for the sale of the property located at Lot W-2, Lake Lotawana, since the property will be sold to the beneficiaries of the estate." The letter sent by the Trust Beneficiaries to the Bank further stated, "You should not include the sales price of the property."

On February 9, 2005, the Bank and the Trust Beneficiaries entered into a Residential Real Estate Sale Contract (Sale Contract), whereby the Trust Beneficiaries agreed to purchase Lot W-2 from the Bank for the agreed upon purchase price of $135,500. The Sale Contract contained the requirement that "[t]o qualify, you must be a family member." The Bank and Trust Beneficiaries set a closing date of on or before March 1, 2005.

On February 15, 2005, after executing the Sale Contract, the Bank sent the Lake Lotawana Association, Inc.'s Notice of Sale Property Waiver (Notice of Sale) to the Hansons by certified mail. This indicated the Trust Beneficiaries' intent to close on and purchase Lot W-2. The Notice of Sale failed to set forth the sale price in the area designated for that disclosure. In the area designated "terms," it stated this was a "transfer to family member."

The Hansons sent a letter to the Bank on February 23, 2005, requesting that the Bank modify the closing date to reflect the required minimum fifteen day notice as stated in the Notice of Sale. In the letter, the Hansons also provided notice to the Bank that they were exercising their option to purchase Lot W-2 pursuant to their rights under the Notice of Sale as set forth pursuant to the Restrictions. The Hansons' letter stated that they had been informed that the purchase price was $135,500. It further stated, "Please confirm the selling price and the terms agreed to by the [Trust Beneficiaries]. We need that information to meet and comply with the terms of the notice." Neither the owner of Lot W-3, the other side lot adjoining Lot W-2, nor the Association notified the Bank of their intent to exercise their preemptive right, and the fifteen day period for exercising such rights expired.

On or about March 1, 2005, counsel for the Hansons sent a letter to the Bank and the Trust Beneficiaries demanding that the Bank "cease and desist from the sale, contract to sell or conveyance of [Lot W-2] in breach of violation of the Restrictions and the Hansons' right of first refusal." In response to this letter, the Trust Beneficiaries took the position that any requirements under the Notice of Sale and Restrictions that the owners of the two side adjoining lots to a parcel of property up for sale have a preemptive right is not applicable in that the transfer at issue was to a family member; that one of the conditions to closing in the contract provides that the sale must be to a family member; and that because the Hansons are not family members, they are, therefore, unable to buy Lot W-2 "upon the same terms," as required by the Restrictions.

Under the Sale Contract, the Trust Beneficiaries were to close on Lot W-2 on March 1, 2005; the closing date was extended to March 7, 2005. The Bank did not sell Lot W-2 to the Trust Beneficiaries. The Bank did not honor the Hansons' offer to purchase Lot W-2. The ownership of Lot W-2 continues to be held in the name of the Trust, and the Bank remains the trustee of the Trust.

On March 4, 2005, the Bank filed a petition for interpleader and declaratory relief against the Trust Beneficiaries and the Hansons. The petition alleged the basic facts of this dispute, including the possible multiple exposure to liability to both parties. The petition noted the Bank's duty to sell Lot W-2 for the highest value possible and sought a judgment adjudicating the respective rights of these claimants to purchase Lot W-2. The Hansons answered, acknowledging the general basis for the interpleader action. They also asserted a counterclaim against the Bank and a cross-claim against the Trust Beneficiaries. The counterclaim sought declaratory relief and a decree of specific performance. The cross-claim sought a declaration of the Hansons' right to purchase Lot W-2. The Trust Beneficiaries answered, admitting the allegations supporting an interpleader claim. Their answer to the Hansons' cross-claim asserted, inter alia, that the Restrictions were void and unenforceable and had been waived.

A bench trial occurred on February 16, 2006. The trial court entered judgment against the Hansons' exercise of their preemptive right on May 2, 2006. The trial court held that the Hansons had failed to comply with the fifteen day notice requirement as set forth in the Restrictions in that they did not exercise their option until more than fifteen days after they received actual notice of the proposed sale. The court concluded the Hansons received actual notice of the sale in the February 7, 2005, telephone conversation with the Bank representative. The court further found that, even if the Hansons exercised their right within the fifteen day period, they had previously waived their preemptive right, and the result would be the same. It determined that the Trust...