Woodburn v. Rock Solid Ventures, LLC
| Decision Date | 16 June 2016 |
| Docket Number | No. 2015AP1870.,2015AP1870. |
| Parties | James D. WOODBURN, Jr. and Wm. Scott Woodburn, Plaintiffs–Appellants, v. ROCK SOLID VENTURES, LLC, Robert G. Sutter and Sutter Properties, LLC, Defendants–Respondents. |
| Court | Wisconsin Court of Appeals |
This case involves a dispute over a right of first refusal that James Woodburn, Jr., and Scott Woodburn hold on property formerly owned by Robert Sutter. The dispute arose after the Sutter property went into foreclosure and was acquired upon foreclosure sale by Sutter's nephew's company, Rock Solid Ventures. The Woodburns argue that their right of first refusal applied to the foreclosure sale and that the circuit court should have granted them equitable relief in the form of requiring Sutter and Rock Solid to allow the Woodburns to acquire the property “on the same terms and conditions” under which Rock Solid acquired the property. Sutter and Rock Solid respond that the Woodburns' right of first refusal did not apply to the foreclosure sale and that the Woodburns have not otherwise shown that they are entitled to the equitable relief they seek. We agree with Sutter and Rock Solid and, therefore, affirm.
¶ 2 This case comes to us on summary judgment. In keeping with that procedural posture, our background facts include reasonable inferences from the record that favor the Woodburns.
¶ 3 In a series of transactions in 2002 and 2006, the Woodburns' father deeded the property, which was operated as a quarry, to Sutter. Sutter, in turn, granted a right of first refusal to the Woodburns. The right of first refusal was recorded and was set forth in a two-page document that included the following pertinent language:
¶ 4 Sutter defaulted on a mortgage on the property, and, in 2011, the bank holding the mortgage commenced foreclosure proceedings.1 The Woodburns were aware of the foreclosure proceedings because the Woodburn family owned a company called Vernon Valley Farms, which was a party to those proceedings.2 The bank obtained a foreclosure judgment in the amount of $312,483.86.
¶ 5 Although the Woodburns were aware of the foreclosure proceedings, they did not attempt to intervene or otherwise take action until after the foreclosure sale. The Woodburns' explanation for this, which we take as true, is as follows: Based on the property's value, the amount owed on the mortgage, and other circumstances, the Woodburns reasonably believed that the bank would be the only bidder at the foreclosure sale. Then, because the bank would not want to keep the property, the Woodburns reasonably believed that they would be able to negotiate with the bank for a favorable purchase price, or, if the bank sought to re-sell the property to someone else, the bank, as a successor to Sutter, would be obligated to extend to the Woodburns their right of first refusal.
¶ 6 Prior to the foreclosure sale, Rock Solid obtained the bank's interest in the property for $234,083.47, and Sutter entered into an agreement with Rock Solid promising to “cooperate” in Rock Solid's efforts to enforce the foreclosure judgment and acquire the property. Rock Solid filed paperwork in the foreclosure proceedings substituting Rock Solid for the bank as the foreclosure plaintiff. However, Rock Solid's counsel failed to serve this paperwork on the other parties in those proceedings, including Vernon Valley Farms.3
¶ 7 Notably, the Woodburns did not learn that Rock Solid stepped into the shoes of the bank until after the foreclosure sale. The Woodburns would have learned of the substitution before the sale had Rock Solid not failed to notify the other parties, which would have included Vernon Valley Farms, the entity owned by Woodburn family members.
¶ 8 At the foreclosure sale, Rock Solid was the only bidder, and it acquired the property for $336,000. Subsequent to the sale, the Woodburns unsuccessfully attempted to intervene in the foreclosure proceedings.
¶ 9 The Woodburns then filed the instant action against Sutter and Rock Solid, seeking an order forcing Sutter to “offer” the property to the Woodburns and Rock Solid to “transfer title” to the property to the Woodburns “on the same terms and conditions under which Rock Solid ... acquired the property.” That is, as we understand it, the Woodburns sought an order requiring Sutter and Rock Solid to allow the Woodburns to acquire the property, apparently for $336,000. The circuit court denied this requested relief, and dismissed the Woodburns' action. The Woodburns appeal.
¶ 10 As explained above, Sutter obtained the property at issue from the Woodburns' father, subject to the right of first refusal giving the Woodburns an opportunity to obtain the property according to the terms set forth in the right of first refusal document. The extent of this contractual right lies at the heart of our analysis.
¶ 11 It is hard to understand all of the Woodburns' various arguments. Generally, the Woodburns contend that Sutter's and Rock Solid's actions during the course of the foreclosure proceedings we describe above improperly interfered with the Woodburns' right of first refusal. The Woodburns argue that they are entitled to an equitable remedy they characterize as “specific performance.” As explained, however, the “specific performance” they seek, according to their complaint allegations, is an order requiring Sutter and Rock Solid to effectively allow the Woodburns to acquire the property.
¶ 12 We reject all of the Woodburns' arguments. Our discussion begins with two related observations. The point of these observations is to explain that many of the Woodburns' arguments fall short because those arguments fail to come to grips with the need to show an invasion of a protected legal right, such as a contract right. We make these observations, and then address and reject what we conclude is the only potentially viable argument that the Woodburns make, namely, the argument that Sutter, with the assistance of Rock Solid, breached the Woodburns' right of first refusal.
¶ 13 First, although they make several arguments based in general concepts of equity, the Woodburns fail to adequately connect these arguments to any underlying cognizable legal claim that seeks to vindicate a legally protected right. Equitable relief is granted “in response to an invasion of a legally protected right.” See State v. Jason J.C., 216 Wis.2d 12, 18, 573 N.W.2d 564 (Ct.App.1997). Not every injustice is actionable. See Breier v. E .C., 130 Wis.2d 376, 389, 387 N.W.2d 72 (1986).
¶ 14 The Woodburns rely on Ash Park, LLC v. Alexander & Bishop, Ltd., 2010 WI 44, 324 Wis.2d 703, 783 N.W.2d 294, which discusses a circuit court's discretionary power to grant the equitable remedy of specific performance depending on the “facts and equities of the individual case.” See id., ¶ 38; see also id., ¶¶ 32, 35–37, 39, 41–46, 72–74. But what the Woodburns' reliance on Ash Park fails to take into account is that the court's entire discussion of specific performance in Ash Park was in the context of deciding whether specific performance was the proper remedy once a breach of contract was already established. See id., ¶¶ 1–2. Here, as discussed further below, the Woodburns show no breach of contract, that is, no breach of their right of first refusal. And, the Woodburns do not adequately identify any other underlying invasion of a legally protected right. For example, to the extent that the Woodburns make arguments based on their lost opportunity to negotiate with the bank for a favorable price after the foreclosure sale, or their lost opportunity to bid on the property at the sale, the Woodburns fail to persuasively explain how these lost opportunities tie into any underlying legal claim or legally protected right that Sutter or Rock Solid violated.
¶ 15 Second, to the extent that the Woodburns' arguments are based on Rock Solid's failure to serve all parties with notice that Rock Solid stepped into the shoes of the bank in the foreclosure proceedings, the Woodburns appear to be relying on statutory or due process rights belonging to Vernon Valley Farms. As explained in the background section, the Woodburns learned of the foreclosure proceedings because the Woodburn family owned a company called Vernon Valley Farms, which was a party to the foreclosure proceedings. The Woodburns complain that Rock Solid's subsequent failure to serve Vernon Valley Farms prevented the Woodburns from learning that the Woodburns' plan to obtain the property from the bank would not work. But Vernon Valley Farms is not a party here, and the Woodburns fail to support the proposition that the Woodburns are entitled to relief based on any right to notice held by Vernon Valley Farms.
¶ 16 We turn now to what we conclude is the Woodburns' only potentially viable argument: that Sutter breached the Woodburns' contractual right of first refusal. We note that, despite some statements in their briefing, the Woodburns may agree that the success of their action depends on such a breach. Toward the end of their reply brief, the Woodburns seemingly concede that their success depends on whether their contractual right of first refusal applied to the foreclosure sale. In the following passage from that brief, the Woodburns effectively say that a necessary...
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CitiMortgage, Inc. v. Comini, 1284 WDA 2017
...of the agreement creating the right, in determining that an existing ROFR was not triggered.3 See Woodburn v. Rock Solid Ventures, LLC , 370 Wis.2d 789, 882 N.W.2d 872 (App. 2016) (reviewing the language of the agreement creating the right, the court held that the ROFR did not apply to a fo......