Bramble v. Thomas

Decision Date08 January 2007
Docket NumberNo. 32, September Term, 2006.,32, September Term, 2006.
PartiesDAVID A. BRAMBLE, INC. v. Merrill F. THOMAS, et ux.
CourtCourt of Special Appeals of Maryland

R. Stewart Barroll (Cookerly & Barroll, LLC, Chestertown, on brief), for petitioner.

Stephen H. Kehoe (Ewing, Dietz, Fountain & Kehoe, P.A., Easton, on brief), for respondents.

Argued before BELL, C.J., RAKER, WILNER, CATHELL, HARRELL, BATTAGLIA and GREENE, JJ.

HARRELL, J.

The sole issue in this case concerns the propriety of the Court of Special Appeals's affirmance of summary judgment in favor of third-party purchasers of certain real property and against the holder of a preemptive right of first refusal as to the property. David A. Bramble, Inc. ("Petitioner" or "Bramble"), the holder of the right of first refusal, attempted to exercise its preemptive right, but omitted in the purported exercise a non-price term contained in the third-parties' triggering offer. The Circuit Court for Caroline County, in granting summary judgment to the third parties, declared that Bramble had not exercised effectively its right of first refusal. The Court of Special Appeals affirmed. For reasons we shall explain, we conclude that there was generated a genuine dispute as to a material fact whether the non-price term was added to the triggering offer in bad faith. Therefore, we shall reverse.

I. FACTUAL BACKGROUND

With the notable exception identified supra, the facts, material and otherwise, of this case were otherwise largely undisputed. John O. Lane and Rose T. Lane ("Lanes"), husband and wife, own a 25.99 acre parcel of unimproved real property located on Cherry Lane near Ridgely in Caroline County, Maryland (the "Property"). On 3 January 2004, Respondents here, Merrill F. Thomas and Nancy R. Thomas ("Thomases"), entered into an Unimproved Land Contract of Sale ("Thomas Offer") whereby the Lanes agreed to sell to the Thomases the Property for a purchase price of $105,000.00. Respondents tendered with the contract a $1,000.00 earnest money deposit. Closing was to occur on or before 16 February 2004. The Thomas Offer contained a hand-written Addendum which provided the following:

1. Nancy Thomas is a licensed Real Estate Agent in the State of Maryland.

2. This contract is contingent upon the release of David Bramble's first right of refusal within 30 days of ratification.

3. Buyers agree that they will not mine the above referenced property.

The "right of first refusal" to which Paragraph 2 of the Addendum referred was originally granted by the Lanes to RWL Development Company ("RWL") on 20 February 1992,1 and provided, in pertinent part:

In the event John Owens Lane and Rose T. Lane, his wife, shall receive an offer to purchase their property located in the Second Election District of Caroline County, Maryland, described in a deed from RWL Development Company, a Maryland Corporation, to John Owens Lane and Rose T. Lane, his wife, dated November 20, 1991, recorded in Liber 247, Folio 375, a Land Record Book for Caroline County, Maryland, and decide to accept the same, they shall first offer the property to RWL Development Company, its successors and/or assigns, for the price and on the terms of the intended sale.

RWL Development Company, its successors and/or assigns, shall have thirty (30) days from the date of such offer in which to accept or reject the same. Nothing hereinbefore contained shall in any way delay or limit the right of any mortgagee to foreclose under a valid mortgage or deed of trust, in accordance with the terms of such instrument, or to accept a deed in lieu of foreclosure from the grantors.2

(emphasis added). On 7 May 1993, RWL Development Company conveyed by Deed3 to Petitioner4 its right of first refusal.

Counsel for the Lanes wrote a letter to Bramble on 6 January 2004 notifying it that the Lanes had accepted the Thomas Offer, contingent upon Bramble's release of its right of first refusal. Attached to the letter was a copy of the Thomas Offer, with the "no mining" clause. Bramble executed and delivered to the Lanes on 19 January 2004 an "Agreement of Sale," which purported to exercise its right of first refusal ("Bramble Offer").5 Petitioner's offer matched all the terms of the Thomas Offer, except that it omitted the prohibition against mining included in Paragraph 3 of the Thomas Offer's Addendum.

Respondents agreed on 4 February 2004 to amend certain terms in the Thomas Offer, increasing the purchase price to $120,000.00, with settlement to occur on 31 March 2004. The following day, counsel for Respondents faxed to the Lanes a revised offer ("Second Thomas Offer"), which reflected the amended price and settlement terms. By letter dated 6 February 2004, the Lanes' attorney informed Petitioner of the new offer and requested advice as to whether Bramble would be willing to meet the increased sale price of $120,000.00.

On 17 February 2004, counsel for Petitioner responded that, because Bramble previously had exercised its preemptive right, a binding land sale contract had been formed. According to counsel, "the Thomases [were] not at liberty to make additional offers nor [were] the Lanes at liberty to accept them" in connection with the sale of the Property. The next day, counsel for the Lanes advised Bramble that it was the Lanes' view that the offer tendered by Petitioner was not an effective exercise of its right of first refusal. Specifically, counsel informed Bramble that if it wished to exercise its preemptive right, "[it] must do so by accepting all the terms of the offer, including the restriction that the property would not be mined." Because the Bramble Offer, as signed and delivered, did not mirror exactly the terms of the Thomas Offer ratified by Respondents, it was neither an effective exercise of the right of first refusal, nor a valid acceptance. According to the Lanes, the Bramble Offer was instead a counter-offer which the Lanes were free to accept or reject.

Bramble agreed to revise his offer to include a prohibition against mining, and submitted a new offer ("Second Bramble Offer") which purported to be a valid exercise of its preemptive right. Although the Second Bramble Offer included the "no mining" provision, it contained the original sales price of $105,000.00. In other words, the Second Bramble Offer mirrored the provisions of the initial triggering Thomas Offer. The Second Bramble Offer was tendered on 19 February 2004, forty-four days after Bramble was first notified of the Lanes' acceptance of the Thomas Offer.

Citing the controversy concerning the validity of Bramble's exercise of its right of first refusal, and because of the fear of being sued by Bramble, the Lanes refused to convey the property to either suitor. Mr. Lane, on 7 March 2004, attempted instead to return the $1,000.00 earnest money tendered by the Thomases with the Thomas Offer. Respondents answered by filing suit against both the Lanes and Petitioner in the Circuit Court for Caroline County in order to determine and enforce their asserted rights with respect to the Property.

Respondents sought in Count I a declaratory judgment that the right of first refusal was void because it violated the Rule against Perpetuities. Specifically, Respondents argued, under Ferrero Construction Co. v. Dennis Rourke Corp., 311 Md. 560, 575-76, 536 A.2d 1137, 1144-45 (1988), that because Bramble was a corporation with a theoretically perpetual existence, the right of first refusal might vest well beyond some life in being plus twenty one years. In Count II, Respondents sought specific performance of the Second Thomas Offer. The Thomases requested further, in Count III, damages in the amount of $25,000.00, for the anticipatory breach that occurred when the Lanes refused to convey the property.

The Lanes moved for summary judgment. Respondents answered and filed their own motion for summary judgment. Neither the Lanes nor Petitioner filed a response to Respondents' motion for summary judgment. The parties appeared for oral argument on the motions, represented by counsel.

The Circuit Court filed its written opinion on the motions on 23 February 2005. The trial judge declared first that the right of first refusal did not violate the rule against perpetuities:

The right of first refusal granted to David A. Bramble does not violate the Rule Against Perpetuities. In the original conveyance of the right to RWL Corporation, the Right was stated to be applicable "[i]n the event John Owens and Rose T. Lane, his wife, shall receive an offer to purchase their property." The right thus would vest, if at all, within a life or lives in being, i.e., when the last of the two Lanes die. Cf. Park Station Ltd. Partnership LLLP v. Bosse, 378 Md. 122, 135, 835 A.2d 646 (2003).6

The trial court continued, however, that the purported exercise of the right of first refusal was ineffectual:

Although it does not violate the Rule Against Perpetuities, Bramble's right of first refusal is void for the following reasons. Bramble had the option to accept the terms of any other offer to buy the property and thereby purchase it himself within thirty days of the offer of another. When Bramble learned of a contract between the Lanes and the Thomases, he submitted a proposed contract to the Lanes that had different terms than the contract between the Thomases and Lanes. Specifically, the contract between the Lanes and Thomases stated that the "[b]uyers agree that they will not mine the above referenced property." Bramble's first proposed contract to the Lanes lacked this provision. An acceptance with terms that vary from those in an offer constitutes a rejection and counter-offer. Post v. Gillespie, 219 Md. 378, 149 A.2d 391 (1959).

The court, thus, granted summary judgment on Respondents' Count I claim. It denied summary judgment as to Counts II and III of the complaints, however, because there were "disputes as to material facts." The Circuit Court denied the Lanes' motion for...

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