Rucker Properties, L.L.C. v. Friday, 98,646.

• Decision Date: 10 April 2009
• Docket Number: No. 98,646.,98,646.
• Citation: 204 P.3d 671
• Parties: RUCKER PROPERTIES, L.L.C., a Kansas Limited Liability Company, Appellant, v. Janet S. FRIDAY and John W. Friday, et al., Appellees.
• Court: Kansas Court of Appeals

204 P.3d 671

RUCKER PROPERTIES, L.L.C., a Kansas Limited Liability Company, Appellant, v. Janet S. FRIDAY and John W. Friday, et al., Appellees.

No. 98,646.

Court of Appeals of Kansas.

April 10, 2009.

Stephen M. Kerwick and Shannon D. Wead, of Foulston Siefkin, LLP, of Wichita, for appellant.

Bryan K. Joy, of Joy Law Office P.A., of Burlington, for appellee.

Before GREENE, P.J., GREEN and LEBEN, JJ.

LEBEN, J.

Rucker Properties, L.L.C., sued Janet and John Friday and their relatives to quiet title to a tract of land in Greenwood County and to enforce a right of first refusal to buy the land. The Fridays filed a cross-claim that sought title to a disputed portion of land that they claimed they own through adverse possession. The district court held a bench trial and found in favor of the Fridays on all issues. Rucker Properties now appeals that ruling.

Rucker Properties argues that the district court erred in not enforcing the right of first refusal in the lease agreement between it and the Fridays. But the right of first refusal in this case was only implicated if the lessors under the lease—the Fridays and their family members—wanted to sell the property. Here, the transfer in question was a quitclaim deed executed as a gift by family members in favor of specific members of that family. As no sale existed, it did not trigger the right of first refusal.

Rucker Properties also argues that the district court erred in finding that the Fridays had acquired the disputed piece of land through adverse possession. But whether a party has acquired land through adverse possession is a question of fact, and substantial evidence supported the district court's conclusion that the Fridays had possessed the disputed land openly, exclusively, and continuously under a good-faith belief in ownership for more than 30 years. Rucker Properties' arguments that the district court's decision on this issue cut off the only suitable access to its property does not defeat the adverse-possession claim, and Rucker Properties made no claim in the district court for any sort of implied easement across the Fridays' land. Thus, we affirm the district court's judgment in favor of the Fridays.

The district court prepared an exceptionally thorough 18-page decision. It summarized the key evidence and its findings, and it included helpful maps and photos showing the disputed land. Because the parties are familiar with the evidence and the district court's decision set it out so clearly, we will only summarize some of the key points related to the appeal.

As referenced in the district court's opinion and the parties' exhibits, three separate tracts are at issue. Tract A is owned by Rucker Properties. Tract B is owned by the Fridays. Tract C is within the legal description for Tract A and is adjacent to Tract B. The Fridays claim that they and their predecessor owners have actually been using Tract C for so long that they have acquired actual title to it by adverse possession.

I. The District Court Did Not Err in Concluding that Rucker Properties' Right of First Refusal to Buy Tract B Had Not Been Triggered by an Intra-Family Transfer.

Rucker Properties' first argument on appeal arises out of a lease agreement between Rucker Properties and the group of family members that owned Tract B: the Fridays, Janet Friday's mother, Dorothy Whipple Davis, and Janet Friday's other siblings and their spouses. Under the lease, Rucker Properties obtained the right to use Tract B. That lease agreement also gave Rucker Properties a right of first refusal to buy Tract B if the owners decided to sell it: "If, during the period of this lease, the Lessors desire to sell the property, the Lessee shall have the first and exclusive right to purchase the property at the fair market price obtainable from any other purchaser."

While the lease was in effect, all of the other owners of Tract B except the Fridays quitclaimed their interests to the Fridays. Rucker Properties contends that this triggered its right of first refusal to purchase the property. Because this contention raises a legal issue regarding the interpretation of a written agreement, we consider the legal issue on appeal without any required deference to the district court. See McGinley v. Bank of America, N.A., 279 Kan. 426, 431, 109 P.3d 1146 (2005); Bergman v. Commerce Trust Co., 35 Kan.App.2d 301, 304, 129 P.3d 624 (2006). To the extent that any factual findings are relevant in considering this issue, however, we must accept them so long as they are supported by substantial evidence. Owen Lumber Co. v. Chartrand, 283 Kan. 911, 915-16, 157 P.3d 1109 (2007).

Rucker Properties' argument quickly runs into trouble with one of the district court's factual findings: the district court found that the Fridays' co-owners simply gifted their interests to the Fridays. Whether a transfer is a gift is a question of fact, In re Estate of Button, 17 Kan.App.2d 11, 13, 830 P.2d 1216, rev. denied 251 Kan. 938 (1992), and the district court's factual finding on this question is well supported by the evidence. The language contained in the lease provided only a right of first refusal if "the Lessors desire to sell the property." But they didn't. As the district court put it, "The difficulty with plaintiff's position is that there was no offer, no intent to sell, no seller, no buyer and no fair market price upon which the first refusal clause could operate."

The counsel for Rucker Properties contended in oral argument that the word "sell" should be broadly construed to mean "convey." But a sale is no mere conveyance—it is "[t]he transfer of property or title for a price." (Emphasis added.) Black's Law Dictionary 1364 (8th ed.2004). Although the quitclaim deed said that title was transferred "for the sum of One Dollar and other valuable consideration," the district court's factual finding that there actually was no payment stands on appeal, and no one contends that $1 would have represented "the fair market price obtainable from any other purchaser" referenced in the right-of-first-refusal lease provision.

Rucker Properties attempts to liken the facts of this case to those in Anderson v. Armour & Company, 205 Kan. 801, 473 P.2d 84 (1970). In Anderson, the defendants/lessors argued that a lease provision, which applied if "the Lessor desires to sell the premises," was not triggered because the "tract was not `sold' but rather was `traded' as an essential part of other related property." 205 Kan. at 802-03, 473 P.2d 84. The court rejected that argument, finding that the transaction "involved an exchange of properties together with cash [and that] the deed from Armour recited `bargain, sell and convey'. Further, as far as the Andersons were concerned—the 13.75 acres were effectively `sold' and placed beyond their reach—regardless of the details of the transaction. ..." 205 Kan. at 806, 473 P.2d 84.

Rucker Properties emphasizes the "placed beyond their reach" language and argues that the quitclaim deed here did the same. But Anderson is distinguishable from this case because nothing was exchanged for Tract B. It was purely a gift. Unlike in Anderson, no property or cash was given in exchange for the property, and unlike in Anderson, the property was not transferred to a third party to the lease agreement.

Both the Fridays and the district court cite Bergman. In that case, land subject to a first-refusal clause passed to the owner's estate upon his death, and the estate later transferred the property to the late owner's sister as part of a settlement among family members over who would get various assets from the estate. The plaintiff claimed that this transfer triggered his right of first refusal. The court rejected that argument and concluded that the right was not triggered unless the owner or estate specifically intended to sell and a bona fide written offer had been received. The court ruled that the transfer between the estate and the late owner's sister did not trigger the right of first refusal because there was no bona fide written offer and no evidence that the estate was willing to accept such an offer. 35 Kan. App.2d at 307-08, 129 P.3d 624.

Bergman supports our conclusion because it states that the owner of a property must form an intent to sell to trigger a right of first refusal, but it is not entirely factually analogous. Although the court did hold that the transfer between the estate and the late owner's sister did not trigger the right of first refusal, the decision was based in large part on the fact that no bona fide written offer had been received. Bergman, 35 Kan. App.2d at 307-08, 129 P.3d 624. But the right of first refusal in this case has no such requirement.

We think this issue in our case is resolved simply by saying that a transfer among co-owners without payment doesn't trigger a right of first refusal when the owner must have a "desire to sell the property" to trigger it. Other states have addressed more directly the question of whether a gift can trigger a right of first refusal that is contingent on the "sale" of a property. Those states have concluded that gifts generally do not trigger such clauses. See, e.g., Hartzheim v. Valley Land & Cattle Co., 153 Cal.App.4th 383, 392, 62 Cal.Rptr.3d 815 (2007) ("A gift of the property to third parties completely changes control but does not trigger a typical right of first refusal."); Webster v. Ocean Reef Community Ass'n, Inc., 994 So.2d 367, 370 (Fla.App.Dist.2008) ("Were we to construe `sale' or `purchase' to include Ms. Sculthorpe's transfer and her residential trust's transfer, the Association would have a right of first refusal to acquire the residence for nothing, nada, zero. We will not construe the documents to produce an absurd result."); Schroeder v. Duenke, 265 S.W.3d 843, 847 (Mo.App.2008) ("Under Missouri law, a transfer of property by gift from one family member to another does not trigger a right of first refusal."); ...