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This appeal before the Nebraska Court of Appeals addresses whether a right of first refusal to purchase real estate remains personal in nature after the seller has decided both to sell the entire remaining property and to accept the terms and conditions specified by a potential buyer. The Court concluded that upon the concurrence of these events, the right of first refusal ripens into an option.
Jones v. Stahr, 16 Neb. App. 596 (2008)
Court of Appeals Headnotes
Specific Performance:
1. Equity: Appeal and Error. An action for specific performance sounds in equity, and on appeal, an appellate court decides factual questions de novo on the record.
2. Appeal and Error. When considering an appeal in an action for specific performance, an appellate court will resolve questions of fact and law independently of the trial court’s conclusions.
Equity:
1. Appeal and Error. In reviewing an equity action, when credible evidence is in conflict on material issues of fact, the court may consider and give weight to the fact that the trial court observed the witnesses and accepted one version of the facts over another.
Contracts:
1. Offers to Buy or Sell. A right of first refusal has no binding effect unless the offerer decides to sell.
a. Assignments. The option holder’s rights in an option supported by consideration are assignable in the absence of any words of assignability, except, of course, where the nature or terms of the option bring it within some recognized exception.
2. Real Estate: Offers to Buy or Sell. Acceptance of an offer to buy or sell real estate must be an unconditional acceptance of the offer as made; otherwise, no contract is formed; and there must be no substantial variation between the offer and the acceptance, since if such acceptance differs from the offer or is coupled with any condition that varies or adds to it, it is not an acceptance, but a counterproposition.
Date Filed and Case No.: March 25, 2008. No. A-06-572.
Court Appealed From: District Court for Lancaster County: Jeffre Cheuvront, Judge. Reversed and remanded with direction.
Attorneys for the Appeal: William G. Blake and Jason L. Scott for Daniel F. Stahr and Georgia A. Stahr, husband and wife, appellants and Larry Coffey, intervenor-appellant. Shannon R. Harner and Susan M. Napolitano for Wesley J. Jones, an individual, appellee. Darrell K. Stock for Therese Dorenbach, appellee.
Judges: Inbody, Chief Judge, and Carlson and Cassel, Judges.
Authored By: Cassel, Judge.
Summary: Therese Dorenbach entered into an agreement with Daniel F. Stahr and Georgia A. Stahr, husband and wife, for the sale of Dorenbach’s real property in Malcolm, Nebraska. The purchase agreement contained language in which the Stahrs acknowledged that Dorenbach had previously granted to Gary Aerts a right of first refusal to fifteen (15) acres adjacent to the property. However, subject to that right of first refusal held by Aerts, Dorenbach granted a subordinate right of first refusal to the Stahrs on the land retained by Dorenbach, comprising approximately one hundred twenty seven (127) acres. On April 17, 2008, the Stahrs took title to the property.
On June 14, 2005, Dorenbach listed that remaining property with a real estate broker who sent a letter to the Stahrs informing them of the listing the next day. On June 27, 2005, Wesley J. Jones timely submitted an offer to Dorenbach and Dorenbach accepted the offer on June 28. The next day, Swanson telephoned the Stahrs and provided them with a copy of Jones’ purchase offer. On the morning of June 30, the Stahrs’ agent delivered a purchase agreement, dated June 29, 2005, to Dorenbach stating that they wished to purchase the property for the same price. In the Stahrs’ agreement, they stated that they reserved the right to assign this contract to a third party prior to closing. On July 20, 2005, Dorenbach informed the Stahrs that their offer was not acceptable, given that the offer provided for the Stahrs to be able to assign the contract to a third party prior to closing. The letter also stated that Dorenbach had received a revised offer from Jones, and it told the Stahrs they had 24 hours within which to agree to or exceed the terms of Jones’ second offer. The Stahrs then notified Dorenbach that they would stand on the exercise of their right of first refusal made in response to Jones' initial offer. However, Dorenbach did not sell the property to Jones or the Stahrs, but to Gary Aerts, who exercised his right of first refusal and purchased 15 acres from Dorenbach.
Jones filed his complaint against the Stahrs and Dorenbach seeking declaratory judgment determining the rights and duties of the parties under the contracts. The Stahrs filed an answer, counterclaim, and cross-claim seeking to enforce their offer to purchase Dorenbach’s property. Subsequently, the Stahrs assigned any rights they had to purchase Dorenbach’s property to Larry Coffey and Coffey filed a complaint in intervention in the action. Dorenbach’s amended cross-claim and counterclaim alleges that the right of first refusal was personal to the Stahrs, and Dorenbach sought to have the Stahrs’ right of first refusal declared invalid. Trial was held and the trial court dismissed Jones from the action, stating that he lacked standing to challenge the Stahrs’ exercise of the right of first refusal. The court found in favor of Dorenbach, granting her amended cross-claim and counterclaim and stating that the Stahrs’ offer to purchase dated June 29, 2005, was an invalid exercise of the Stahrs’ right of first refusal. The court dismissed the Stahrs’ and Coffey’s claims. The Stahrs and Coffey appealed to the Nebraska Court of Appeals.
argue that the trial court erred (1) in finding that the right of first refusal granted to the Stahrs was personal and could not be assigned and in basing its decision on testimony from Dorenbach, (2) in finding that the Stahrs did not have a valid and enforceable agreement to purchase the property from Dorenbach because they inserted language into the purchase agreement reserving their right to assign their interest in the agreement prior to closing, and (3) in finding that the Stahrs’ exercise of their right of first refusal was invalid because it was a material deviation from the offer made by Jones.
Did the trial court err in finding that the right of first refusal granted to the Stahrs by Dorenbach was personal in nature and could not be assigned? The Court of appeals noted that the district court recognized that in the absence of language indicating that a right of first refusal is assignable or would pass to the grantee’s heirs, the right is personal. Here, however, the district court focused on the nature of the right of first refusal prior to Dorenbach’s decisions to sell the remaining real estate and to accept the terms of Jones’ offer. Once Dorenbach determined to sell and found Jones’ offer acceptable, the Stahrs’ right of first refusal ripened into an option contract. The Stahrs exercised the option by tendering their acceptance to Dorenbach.
Did the trial court err in finding that the Stahrs did not have a valid and enforceable agreement to purchase the property from Dorenbach because they inserted language into the purchase agreement reserving their right to assign their interest in the agreement prior to closing? As the Court had already described, there is no dispute that Dorenbach decided to sell, that she received an offer from Jones, and that she decided to accept the offer. At that time, the Stahrs’ right of first refusal ripened into an option, which they then proceeded to exercise. As such options are assignable by the option holder, and the language of the Stahrs’ acceptance, which merely reserved the right to assign, did not constitute a material variation from Jones’ offer. The district court erred in finding that the reservation of the right to assign constituted a material deviation from the terms of Jones’ offer.
Conclusion: When Dorenbach decided both to sell the real estate and to accept Jones’ offer, the Stahrs’ right of first refusal ripened into an option contract. Because option contracts are assignable by the optionee, the Stahrs’ reservation of the right to assign was not a material deviation from Jones’ offer. The district court erred in finding a material deviation. The case was remanded with direction to grant specific performance to the Stahrs. REVERSED AND REMANDED WITH DIRECTION.
Carlson, Judge, DISSENTING. Judge Carlson dissented from the majority’s opinion, given his conclusion that regardless of whether the Stahrs’ ability to purchase Dorenbach’s property is considered a right of first refusal or an “option,” there is sufficient evidence on the record to show that the Stahrs’ right, or option, to purchase Dorenbach’s property was too personal in character to permit assignment.
This appeal before the Nebraska Court of Appeals addresses whether a right of first refusal to purchase real estate remains personal in nature after the seller has decided both to sell the entire remaining property and to accept the terms and conditions specified by a potential buyer. The Court concluded that upon the concurrence of these events, the right of first refusal ripens into an option.
Jones v. Stahr, 16 Neb. App. 596 (2008)
Court of Appeals Headnotes
Specific Performance:
1. Equity: Appeal and Error. An action for specific performance sounds in equity, and on appeal, an appellate court decides factual questions de novo on the record.
2. Appeal and Error. When considering an appeal in an action for specific performance, an appellate court will resolve questions of fact and law independently of the trial court’s conclusions.
Equity:
1. Appeal and Error. In reviewing an equity action, when credible evidence is in conflict on material issues of fact, the court may consider and give weight to the fact that the trial court observed the witnesses and accepted one version of the facts over another.
Contracts:
1. Offers to Buy or Sell. A right of first refusal has no binding effect unless the offerer decides to sell.
a. Assignments. The option holder’s rights in an option supported by consideration are assignable in the absence of any words of assignability, except, of course, where the nature or terms of the option bring it within some recognized exception.
2. Real Estate: Offers to Buy or Sell. Acceptance of an offer to buy or sell real estate must be an unconditional acceptance of the offer as made; otherwise, no contract is formed; and there must be no substantial variation between the offer and the acceptance, since if such acceptance differs from the offer or is coupled with any condition that varies or adds to it, it is not an acceptance, but a counterproposition.
Date Filed and Case No.: March 25, 2008. No. A-06-572.
Court Appealed From: District Court for Lancaster County: Jeffre Cheuvront, Judge. Reversed and remanded with direction.
Attorneys for the Appeal: William G. Blake and Jason L. Scott for Daniel F. Stahr and Georgia A. Stahr, husband and wife, appellants and Larry Coffey, intervenor-appellant. Shannon R. Harner and Susan M. Napolitano for Wesley J. Jones, an individual, appellee. Darrell K. Stock for Therese Dorenbach, appellee.
Judges: Inbody, Chief Judge, and Carlson and Cassel, Judges.
Authored By: Cassel, Judge.
Summary: Therese Dorenbach entered into an agreement with Daniel F. Stahr and Georgia A. Stahr, husband and wife, for the sale of Dorenbach’s real property in Malcolm, Nebraska. The purchase agreement contained language in which the Stahrs acknowledged that Dorenbach had previously granted to Gary Aerts a right of first refusal to fifteen (15) acres adjacent to the property. However, subject to that right of first refusal held by Aerts, Dorenbach granted a subordinate right of first refusal to the Stahrs on the land retained by Dorenbach, comprising approximately one hundred twenty seven (127) acres. On April 17, 2008, the Stahrs took title to the property.
On June 14, 2005, Dorenbach listed that remaining property with a real estate broker who sent a letter to the Stahrs informing them of the listing the next day. On June 27, 2005, Wesley J. Jones timely submitted an offer to Dorenbach and Dorenbach accepted the offer on June 28. The next day, Swanson telephoned the Stahrs and provided them with a copy of Jones’ purchase offer. On the morning of June 30, the Stahrs’ agent delivered a purchase agreement, dated June 29, 2005, to Dorenbach stating that they wished to purchase the property for the same price. In the Stahrs’ agreement, they stated that they reserved the right to assign this contract to a third party prior to closing. On July 20, 2005, Dorenbach informed the Stahrs that their offer was not acceptable, given that the offer provided for the Stahrs to be able to assign the contract to a third party prior to closing. The letter also stated that Dorenbach had received a revised offer from Jones, and it told the Stahrs they had 24 hours within which to agree to or exceed the terms of Jones’ second offer. The Stahrs then notified Dorenbach that they would stand on the exercise of their right of first refusal made in response to Jones' initial offer. However, Dorenbach did not sell the property to Jones or the Stahrs, but to Gary Aerts, who exercised his right of first refusal and purchased 15 acres from Dorenbach.
Jones filed his complaint against the Stahrs and Dorenbach seeking declaratory judgment determining the rights and duties of the parties under the contracts. The Stahrs filed an answer, counterclaim, and cross-claim seeking to enforce their offer to purchase Dorenbach’s property. Subsequently, the Stahrs assigned any rights they had to purchase Dorenbach’s property to Larry Coffey and Coffey filed a complaint in intervention in the action. Dorenbach’s amended cross-claim and counterclaim alleges that the right of first refusal was personal to the Stahrs, and Dorenbach sought to have the Stahrs’ right of first refusal declared invalid. Trial was held and the trial court dismissed Jones from the action, stating that he lacked standing to challenge the Stahrs’ exercise of the right of first refusal. The court found in favor of Dorenbach, granting her amended cross-claim and counterclaim and stating that the Stahrs’ offer to purchase dated June 29, 2005, was an invalid exercise of the Stahrs’ right of first refusal. The court dismissed the Stahrs’ and Coffey’s claims. The Stahrs and Coffey appealed to the Nebraska Court of Appeals.
argue that the trial court erred (1) in finding that the right of first refusal granted to the Stahrs was personal and could not be assigned and in basing its decision on testimony from Dorenbach, (2) in finding that the Stahrs did not have a valid and enforceable agreement to purchase the property from Dorenbach because they inserted language into the purchase agreement reserving their right to assign their interest in the agreement prior to closing, and (3) in finding that the Stahrs’ exercise of their right of first refusal was invalid because it was a material deviation from the offer made by Jones.
Did the trial court err in finding that the right of first refusal granted to the Stahrs by Dorenbach was personal in nature and could not be assigned? The Court of appeals noted that the district court recognized that in the absence of language indicating that a right of first refusal is assignable or would pass to the grantee’s heirs, the right is personal. Here, however, the district court focused on the nature of the right of first refusal prior to Dorenbach’s decisions to sell the remaining real estate and to accept the terms of Jones’ offer. Once Dorenbach determined to sell and found Jones’ offer acceptable, the Stahrs’ right of first refusal ripened into an option contract. The Stahrs exercised the option by tendering their acceptance to Dorenbach.
Did the trial court err in finding that the Stahrs did not have a valid and enforceable agreement to purchase the property from Dorenbach because they inserted language into the purchase agreement reserving their right to assign their interest in the agreement prior to closing? As the Court had already described, there is no dispute that Dorenbach decided to sell, that she received an offer from Jones, and that she decided to accept the offer. At that time, the Stahrs’ right of first refusal ripened into an option, which they then proceeded to exercise. As such options are assignable by the option holder, and the language of the Stahrs’ acceptance, which merely reserved the right to assign, did not constitute a material variation from Jones’ offer. The district court erred in finding that the reservation of the right to assign constituted a material deviation from the terms of Jones’ offer.
Conclusion: When Dorenbach decided both to sell the real estate and to accept Jones’ offer, the Stahrs’ right of first refusal ripened into an option contract. Because option contracts are assignable by the optionee, the Stahrs’ reservation of the right to assign was not a material deviation from Jones’ offer. The district court erred in finding a material deviation. The case was remanded with direction to grant specific performance to the Stahrs. REVERSED AND REMANDED WITH DIRECTION.
Carlson, Judge, DISSENTING. Judge Carlson dissented from the majority’s opinion, given his conclusion that regardless of whether the Stahrs’ ability to purchase Dorenbach’s property is considered a right of first refusal or an “option,” there is sufficient evidence on the record to show that the Stahrs’ right, or option, to purchase Dorenbach’s property was too personal in character to permit assignment.
This appeal before the Nebraska Court of Appeals addresses whether a right of first refusal to purchase real estate remains personal in nature after the seller has decided both to sell the entire remaining property and to accept the terms and conditions specified by a potential buyer. The Court concluded that upon the concurrence of these events, the right of first refusal ripens into an option.
Jones v. Stahr, 16 Neb. App. 596 (2008)
Court of Appeals Headnotes
Specific Performance:
1. Equity: Appeal and Error. An action for specific performance sounds in equity, and on appeal, an appellate court decides factual questions de novo on the record.
2. Appeal and Error. When considering an appeal in an action for specific performance, an appellate court will resolve questions of fact and law independently of the trial court’s conclusions.
Equity:
1. Appeal and Error. In reviewing an equity action, when credible evidence is in conflict on material issues of fact, the court may consider and give weight to the fact that the trial court observed the witnesses and accepted one version of the facts over another.
Contracts:
1. Offers to Buy or Sell. A right of first refusal has no binding effect unless the offerer decides to sell.
a. Assignments. The option holder’s rights in an option supported by consideration are assignable in the absence of any words of assignability, except, of course, where the nature or terms of the option bring it within some recognized exception.
2. Real Estate: Offers to Buy or Sell. Acceptance of an offer to buy or sell real estate must be an unconditional acceptance of the offer as made; otherwise, no contract is formed; and there must be no substantial variation between the offer and the acceptance, since if such acceptance differs from the offer or is coupled with any condition that varies or adds to it, it is not an acceptance, but a counterproposition.
Date Filed and Case No.: March 25, 2008. No. A-06-572.
Court Appealed From: District Court for Lancaster County: Jeffre Cheuvront, Judge. Reversed and remanded with direction.
Attorneys for the Appeal: William G. Blake and Jason L. Scott for Daniel F. Stahr and Georgia A. Stahr, husband and wife, appellants and Larry Coffey, intervenor-appellant. Shannon R. Harner and Susan M. Napolitano for Wesley J. Jones, an individual, appellee. Darrell K. Stock for Therese Dorenbach, appellee.
Judges: Inbody, Chief Judge, and Carlson and Cassel, Judges.
Authored By: Cassel, Judge.
Summary: Therese Dorenbach entered into an agreement with Daniel F. Stahr and Georgia A. Stahr, husband and wife, for the sale of Dorenbach’s real property in Malcolm, Nebraska. The purchase agreement contained language in which the Stahrs acknowledged that Dorenbach had previously granted to Gary Aerts a right of first refusal to fifteen (15) acres adjacent to the property. However, subject to that right of first refusal held by Aerts, Dorenbach granted a subordinate right of first refusal to the Stahrs on the land retained by Dorenbach, comprising approximately one hundred twenty seven (127) acres. On April 17, 2008, the Stahrs took title to the property.
On June 14, 2005, Dorenbach listed that remaining property with a real estate broker who sent a letter to the Stahrs informing them of the listing the next day. On June 27, 2005, Wesley J. Jones timely submitted an offer to Dorenbach and Dorenbach accepted the offer on June 28. The next day, Swanson telephoned the Stahrs and provided them with a copy of Jones’ purchase offer. On the morning of June 30, the Stahrs’ agent delivered a purchase agreement, dated June 29, 2005, to Dorenbach stating that they wished to purchase the property for the same price. In the Stahrs’ agreement, they stated that they reserved the right to assign this contract to a third party prior to closing. On July 20, 2005, Dorenbach informed the Stahrs that their offer was not acceptable, given that the offer provided for the Stahrs to be able to assign the contract to a third party prior to closing. The letter also stated that Dorenbach had received a revised offer from Jones, and it told the Stahrs they had 24 hours within which to agree to or exceed the terms of Jones’ second offer. The Stahrs then notified Dorenbach that they would stand on the exercise of their right of first refusal made in response to Jones' initial offer. However, Dorenbach did not sell the property to Jones or the Stahrs, but to Gary Aerts, who exercised his right of first refusal and purchased 15 acres from Dorenbach.
Jones filed his complaint against the Stahrs and Dorenbach seeking declaratory judgment determining the rights and duties of the parties under the contracts. The Stahrs filed an answer, counterclaim, and cross-claim seeking to enforce their offer to purchase Dorenbach’s property. Subsequently, the Stahrs assigned any rights they had to purchase Dorenbach’s property to Larry Coffey and Coffey filed a complaint in intervention in the action. Dorenbach’s amended cross-claim and counterclaim alleges that the right of first refusal was personal to the Stahrs, and Dorenbach sought to have the Stahrs’ right of first refusal declared invalid. Trial was held and the trial court dismissed Jones from the action, stating that he lacked standing to challenge the Stahrs’ exercise of the right of first refusal. The court found in favor of Dorenbach, granting her amended cross-claim and counterclaim and stating that the Stahrs’ offer to purchase dated June 29, 2005, was an invalid exercise of the Stahrs’ right of first refusal. The court dismissed the Stahrs’ and Coffey’s claims. The Stahrs and Coffey appealed to the Nebraska Court of Appeals.
argue that the trial court erred (1) in finding that the right of first refusal granted to the Stahrs was personal and could not be assigned and in basing its decision on testimony from Dorenbach, (2) in finding that the Stahrs did not have a valid and enforceable agreement to purchase the property from Dorenbach because they inserted language into the purchase agreement reserving their right to assign their interest in the agreement prior to closing, and (3) in finding that the Stahrs’ exercise of their right of first refusal was invalid because it was a material deviation from the offer made by Jones.
Did the trial court err in finding that the right of first refusal granted to the Stahrs by Dorenbach was personal in nature and could not be assigned? The Court of appeals noted that the district court recognized that in the absence of language indicating that a right of first refusal is assignable or would pass to the grantee’s heirs, the right is personal. Here, however, the district court focused on the nature of the right of first refusal prior to Dorenbach’s decisions to sell the remaining real estate and to accept the terms of Jones’ offer. Once Dorenbach determined to sell and found Jones’ offer acceptable, the Stahrs’ right of first refusal ripened into an option contract. The Stahrs exercised the option by tendering their acceptance to Dorenbach.
Did the trial court err in finding that the Stahrs did not have a valid and enforceable agreement to purchase the property from Dorenbach because they inserted language into the purchase agreement reserving their right to assign their interest in the agreement prior to closing? As the Court had already described, there is no dispute that Dorenbach decided to sell, that she received an offer from Jones, and that she decided to accept the offer. At that time, the Stahrs’ right of first refusal ripened into an option, which they then proceeded to exercise. As such options are assignable by the option holder, and the language of the Stahrs’ acceptance, which merely reserved the right to assign, did not constitute a material variation from Jones’ offer. The district court erred in finding that the reservation of the right to assign constituted a material deviation from the terms of Jones’ offer.
Conclusion: When Dorenbach decided both to sell the real estate and to accept Jones’ offer, the Stahrs’ right of first refusal ripened into an option contract. Because option contracts are assignable by the optionee, the Stahrs’ reservation of the right to assign was not a material deviation from Jones’ offer. The district court erred in finding a material deviation. The case was remanded with direction to grant specific performance to the Stahrs. REVERSED AND REMANDED WITH DIRECTION.
Carlson, Judge, DISSENTING. Judge Carlson dissented from the majority’s opinion, given his conclusion that regardless of whether the Stahrs’ ability to purchase Dorenbach’s property is considered a right of first refusal or an “option,” there is sufficient evidence on the record to show that the Stahrs’ right, or option, to purchase Dorenbach’s property was too personal in character to permit assignment.
