Filatov v. Turnage, Court of Appeals No. 18CA1200

• Decision Date: 01 August 2019
• Docket Number: Court of Appeals No. 18CA1200
• Citation: 451 P.3d 1263
• Parties: Anna FILATOV, Plaintiff-Appellant, v. Mark F. TURNAGE and Natalie F. Bocock Turnage, Defendants-Appellees.
• Court: Colorado Court of Appeals

451 P.3d 1263

Anna FILATOV, Plaintiff-Appellant,

v.Mark F. TURNAGE and Natalie F. Bocock Turnage, Defendants-Appellees.

Court of Appeals No. 18CA1200

Colorado Court of Appeals, Division I.

Announced August 1, 2019

Porterfield & Associates, LLC, Wendell B. Porterfield, Jr., Vail, Colorado, for Plaintiff-Appellant

Range, LLP, Kevin C. Paul, Cynthia A. Coleman, Eric R. Jaworski, Denver, Colorado, for Defendants-Appellees

Opinion by JUDGE GROVE

¶ 1 Plaintiff, Anna Filatov, appeals the district court’s entry of summary judgment in favor of defendants, Mark F. Turnage and Natalie F. Bocock Turnage, which declared that they had timely exercised their right of first refusal to purchase a condominium unit in Vail. We reverse.

I. Background

¶ 2 Filatov entered into a contract to buy a condominium unit in Vail. Under the terms of the condominium declaration, Filatov’s purchase of the unit was subject to the Turnages’ right of first refusal.

¶ 3 The condominium declaration required a unit owner who received a bona fide offer from a prospective purchaser to give written notice and a copy of the offer to the condominium board of managers (the board). The board was, in turn, required to advise the owners of other units in the same building of the offer in accordance with the procedures outlined in the association’s bylaws. To exercise the right of first refusal, an owner needed to notify the seller in writing and make a matching down payment or deposit "during the 20 day period immediately following the delivery of the notice of the bona fide offer and copy thereof."

¶ 4 The material facts are undisputed. On November 7, 2016, the selling owners — who are not part of this appeal — properly notified the board that they had accepted an offer to purchase their unit. The next day, consistent with the procedure outlined in the association’s bylaws, the board advised the remaining condominium owners of the pending sale and their right of first refusal. The board’s notice letter stated that November 8, 2016, was "the first day of the twenty-day period in which an Owner may exercise the Right of First Refusal," and that an owner wishing to exercise the option must do so by November 27, 2016.

¶ 5 On Friday, November 25, 2016, the Turnages notified the condominium association of their intent to exercise the right of first refusal. They deposited the required earnest money the following Monday, November 28, 2016 — a day after the deadline that appeared in the board’s notice letter.

¶ 6 Filatov sued both the Turnages and the sellers, seeking a declaration that, because the Turnages deposited their earnest money after the deadline, their attempt to exercise the right of first refusal was ineffective. The sellers did not substantively participate in the district court. After a period of discovery, Filatov and the Turnages filed cross-motions for summary judgment.

¶ 7 Concluding that the Turnages had timely exercised their right of first refusal, the district court granted the Turnages’ motion for summary judgment and denied Filatov’s. The district court observed that the board advised the Turnages of Filatov’s offer on November 8. Then, citing the commonly accepted principle that, in calculations of time, the first day of a fixed period is typically excluded and the last day is included, the district court found that "[t]wenty days from November 8th ... is November 28th." Accordingly, the district court found that the Turnages’ option to purchase the property did not expire until November 28, 2016 — the date that they deposited the earnest money. Filatov appeals that ruling.

II. Analysis

¶ 8 Filatov contends that the district court erred in granting summary judgment for the Turnages because the earnest money was not timely deposited with the seller. We agree.

A. Standard of Review

¶ 9 Summary judgment is a drastic remedy, appropriate only where there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law. C.R.C.P. 56(c) ; Lombard v. Colo. Outdoor Educ. Ctr., Inc. , 187 P.3d 565, 570 (Colo. 2008). We review a summary judgment ruling de novo. Gibbons v. Ludlow , 2013 CO 49, ¶ 11, 304 P.3d 239. Similarly, interpretation of a covenant is a question of law that we review de novo. Evergreen Highlands Ass’n v. West , 73 P.3d 1, 3 (Colo. 2003).

B. Applicable Law

¶ 10 We must follow the dictates of plain English in interpreting a covenant, and we will enforce as written a covenant that is clear on its face. See Double D Manor, Inc. v. Evergreen Meadows Homeowners’ Ass’n , 773 P.2d 1046, 1048 (Colo. 1989) ; Rossman v. Seasons at Tiara Rado Assocs. , 943 P.2d 34, 36 (Colo. App. 1996). "Extraneous evidence is only admissible to prove intent where there is an ambiguity in the terms of the contract," and absent any ambiguity, "we will not look beyond the four corners of the agreement in order to determine the meaning intended by the parties." USI Props. E., Inc. v. Simpson , 938 P.2d 168, 173 (Colo. 1997). Moreover, disagreement between the parties "regarding the interpretation of the contract does not itself create an ambiguity in the contract." Id.

¶ 11 A right of first refusal is tantamount to a preemptive option "because a preemptive option does not give the optionee the power to compel an unwilling owner to sell; it merely requires that when and if the owner decides to sell, he offer the property first to the person holding the preemptive right." Sports Premiums, Inc. v. Kaemmer , 42 Colo. App. 172, 176, 595 P.2d 696, 699 (1979). Generally, the preemptive option creates a contractual obligation for the property owner to offer the subject property to the holder of a right of first refusal on the same terms and conditions as the third-party offer made to the owner. Parry v. Walker , 657 P.2d 1000, 1002 (Colo. App. 1982) ; see also Stuart v. D’Ascenz , 22 P.3d 540, 541-42 (Colo. App. 2000). A right of first refusal is strictly construed, Kaiser v. Bowlen , 200 P.3d 1098, 1103 (Colo. App. 2008), and "[s]trict compliance with the terms of the option is required for its exercise." Sports Premiums , 42 Colo. App. at 176, 595 P.2d at 699.

C. Application

1. Plain Language

¶ 12 The right of first refusal is established by the declaration,¹ which, in pertinent part, provides as follows:

If any owner of a condominium unit ... wishes to sell ... such unit and receives a bona fide offer therefor from a prospective purchaser ..., the remaining owners of units within the same building shall be given written notice thereof, together with a true copy of such offer. Such notice and copy shall be given to the Board of Managers for all of such owners. Such remaining owners shall have the right to purchase ... such unit upon the same terms and conditions as set forth in said offer provided, however, that written notice of such election to purchase ... and a matching down payment or deposit is given to the owner during the 20 day period immediately following delivery of the notice of the bona fide offer and copy thereof. The method by which the Board of Managers shall advise the other owners of such bona fide offer ... shall be provided in the Association’s By-Laws.

¶ 13 This provision, together with the bylaws, contemplates the following course of events when a selling owner receives a bona fide offer:

• The owner provides written notice of the offer to "the remaining owners of units within the same building." The seller need not notify each owner individually, however. Rather, the notice "shall be given to the Board of Managers for all of such owners."

• Upon delivery of the notice, the board must advise the remaining owners of the offer using the procedures outlined in the association’s bylaws. The bylaws require the board to "promptly give notice to the remaining owners" by regular mail addressed to the registered addresses of the owners.

• The remaining owners have the right to purchase the unit "upon the same terms and conditions as set forth in said offer."

• To exercise the right to purchase the unit, an owner must give "written notice of such election to purchase ... and a matching down payment or deposit ... to the owner during the 20 day period immediately following delivery of the notice of the bona fide offer and copy thereof."

¶ 14 While the parties agree that these provisions are unambiguous, they disagree as to how they should be interpreted. Most importantly, they dispute which event — Filatov’s notice to the board, or the board’s advisement to the owners — triggered the start of the twenty-day clock. They also dispute whether, assuming that Filatov’s notice to the board was the triggering event, the Sunday expiration of that twenty-day deadline should have rolled over to the following Monday. We address each contention in turn.

2. The Sellers’ Notice to the Board Started the Clock

¶ 15 The parties’ core disagreement is over which event started the Turnages’ twenty-day clock. Filatov argues that the triggering event was the sellers’ notice to the board, which was sent and received on November 7, 2016. The Turnages maintain that the clock began to run, at the earliest, on November 8, when the board advised them of the pending offer. The district court agreed with the Turnages and, noting that time calculation for an identified period typically excludes the first day and includes the last day, concluded that "[t]wenty days from November 8th ... is November 28th." Thus, the district court ruled, the Turnages timely exercised the right of first refusal by depositing the earnest money on November 28, 2016.

¶ 16 Strictly construing the declaration, as we must, see Kaiser , 200 P.3d at 1103, we hold that the seller’s notice to the board, rather than the board’s letter to the remaining owners advising them of that notice, triggered the twenty-day clock. We reach this conclusion primarily because the declaration itself distinguishes the seller’s notice "to the Board of Managers for all of such owners" from the board’s advisement to...