PRESENT: Kinser, C.J., Lemons, Goodwyn, Millette, and Mims,
JJ., and Koontz, S.J. *
FAIRFAX COUNTY REDEVELOPMENT
AND HOUSING AUTHORITY
OPINION BY
v. Record No. 092486 JUSTICE WILLIAM C. MIMS
March 4, 2011
JAMES C. RIEKSE, ET AL.
FROM THE CIRCUIT COURT OF FAIRFAX COUNTY
Dennis J. Smith, Judge
In this appeal, we consider whether the Fairfax County
Redevelopment and Housing Authority (“Fairfax”) may enforce a
right of first refusal to repurchase a parcel of real property
by demanding specific performance by the current owner’s
predecessor in title.
I. BACKGROUND AND MATERIAL PROCEEDINGS BELOW
In 1989, Fairfax granted and conveyed a parcel of real
property to Peter and Christine Tovar as tenants by the
entirety subject to certain conditions. Among those
conditions, Fairfax reserved a right of first refusal to
repurchase the property (“the ROFR”). The ROFR provided that
[i]n the event that Grantee shall die (both of
them if more than one is named as Grantee), or
in the event the Grantee shall determine to sell
this Property at any time within thirty (30)
years from the date of this Deed, then and in
either event, the said Grantor, its successors
or assigns, shall have the option to repurchase
*
Justice Koontz presided and participated in the hearing
and decision of this case prior to the effective date of his
retirement on February 1, 2011; Justice Kinser was sworn in as
Chief Justice on February 1, 2011.
the Property at the original sales price of
$74,640[, adjusted for inflation].
The deed further provided that the ROFR was to be a “covenant[]
running with the land, the burden of which covenant[ is]
assumed by Grantee as evidenced by Grantees[’] signatures
hereon and by any subsequent successor in title as provided
herein.”
The Tovars contemporaneously executed two deeds of trust
to secure the indebtedness they incurred to purchase the
parcel. In 1995, the Tovars satisfied the indebtedness secured
by those two deeds of trust and executed a third deed of trust
to secure an indebtedness of $92,400. In 1997, the Tovars
separated and Peter Tovar conveyed his entire interest in the
parcel to Christine Tovar. The indebtedness secured by the
third deed of trust subsequently was defaulted and the
substitute trustees under that deed of trust sold the parcel at
a foreclosure auction to Rajinder and Rajesh Kapani in November
2002. The Kapanis conveyed the parcel to James Riekse in May
2003. Riekse executed a deed of trust to secure an
indebtedness of $213,200.
In September 2007, Fairfax filed a complaint in the
circuit court against the Kapanis, Riekse, and trustees under
Riekse’s deed of trust alleging that the Kapanis had violated
the ROFR as a covenant running with the land and as a condition
2
subsequent. 1 Fairfax asked the court to restore title to the
Kapanis by declaring Riekse’s deed void ab initio, to declare
the parcel unencumbered by Riekse’s deed of trust, and to order
the Kapanis to convey the parcel to Fairfax under the terms of
the ROFR.
The Kapanis filed a demurrer asserting that the ROFR had
not been triggered because the express language in the Tovars’
deed stated that Fairfax had the option to repurchase the
parcel “[i]n the event that Grantee shall die . . . or in the
event the Grantee shall determine to sell,” and the Tovars had
neither died nor determined to sell the parcel. Riekse later
joined the Kapanis’ demurrer, asserting that the ROFR was not a
covenant running with the land because it did not “touch and
concern” the land, that the ROFR was enforceable only as a
condition subsequent, and that the 10-year statute of
limitations set forth in Code § 8.01-255.1 had expired.
The circuit court found that the ROFR did touch and
concern the land and thus was a valid covenant running with the
land. It also found that it could not determine on demurrer
whether Fairfax’s claims were time-barred because it could not
determine as a matter of law when the ROFR initially had been
breached. Accordingly, the court overruled the demurrer.
1
Additional claims in Fairfax’s complaint were either
abandoned or dismissed on demurrer and are not before us in
this appeal.
3
The case proceeded to a bench trial. At the conclusion of
Fairfax’s evidence Riekse moved to strike asserting that
Fairfax was not entitled to the relief sought, a declaration
that his deed was void ab initio. The circuit court ruled that
Riekse’s deed was not void ab initio and consequently Fairfax
was unable as a matter of law to “get the relief it requests
under the Complaint with the case in the posture that it’s in.”
Rather, the court ruled that Fairfax’s remedy was to enforce
the ROFR as a condition subsequent by filing an action of
ejectment to effect a re-entry. Accordingly, the court granted
Riekse’s motion to strike and dismissed the case.
Upon Fairfax’s motion for reconsideration, the circuit
court reiterated that Riekse’s deed was not void ab initio and
that it therefore could not order the Kapanis to perform the
ROFR because they no longer held title to the parcel.
Consequently, the court denied the motion. We awarded Fairfax
this appeal.
II. ANALYSIS
Fairfax assigns error to the circuit court’s holdings that
it could not declare Riekse’s deed void ab initio and that
Fairfax may enforce the ROFR only as a condition subsequent by
filing an action of ejectment. The challenged rulings arise
from the circuit court’s interpretation of the Tovars’ deed,
4
which we review de novo. Beeren & Barry Invs., LLC v. AHC,
Inc., 277 Va. 32, 37, 671 S.E.2d 147, 150 (2009).
A. THE VALIDITY OF RIEKSE’S DEED
Fairfax argues that the ROFR divested the Kapanis of the
power to sell the parcel without first offering it to Fairfax.
Accordingly, the deed conveying the parcel to Riekse is void ab
initio. However, the cases Fairfax cites do not support this
proposition.
The primary case upon which Fairfax relies is Bond v.
Crawford, 193 Va. 437, 69 S.E.2d 470 (1952). There, the
Crawfords contracted to sell a parcel to the Bonds but instead
sold to the Londons. The Londons had actual knowledge of the
Bonds’ contract prior to their purchase. Id. at 443, 69 S.E.2d
at 474. The Bonds asked the circuit court to declare the
Londons’ deed void ab initio and to order the Crawfords to
perform the Bonds’ purchase contract. This Court determined
that the relief was appropriate, citing Thompson v. Thompson,
171 Va. 361, 198 S.E. 897 (1938).
In Thompson, the Court ruled that collusion between a
grantor and a grantee to convey property to allow the grantor
to escape performance of a contract rendered the resulting deed
void. Id. at 370, 198 S.E. at 900. The Court held that
[w]here a conveyance is made in order to put it
out of the power of the grantor to fulfill a
contract previously entered into with the
5
knowledge or concurrence of the grantee, the
transaction will be declared null and void, and,
if the proper parties are before the court, a
decree will be rendered compelling a conveyance
to the party rightfully entitled.
Id. at 371, 198 S.E. at 901 (quoting Am. & Eng. Ency. of Law 40
(2nd ed.)).
Fairfax concedes that Riekse did not collude with the
Kapanis to avoid their performance of the ROFR and that he did
not even have actual knowledge that the ROFR existed. Rather,
Fairfax contends only that Riekse had constructive knowledge of
the ROFR because it was contained in the Tovars’ deed, which
had been properly recorded. Consequently, Bond and Thompson
are distinguishable and the extraordinary relief of declaring
an executed deed void ab initio is not appropriate in this
case.
Fairfax also cites cases where conveyances by trustees
under deeds of trusts were declared void ab initio. 2 They are
distinguishable as well because they are predicated on the
well-settled rule that
2
Specifically, Fairfax cites Preston v. Johnson, 105 Va.
238, 53 S.E. 1 (1906), Smith v. Woodward, 122 Va. 356, 94 S.E.
916 (1918), Tabet v. Goodman, 136 Va. 526, 118 S.E. 230 (1923),
Dickerson v. McNulty, 142 Va. 559, 129 S.E. 242 (1925),
Everette v. Woodward, 162 Va. 419, 174 S.E. 864 (1934), Wills
v. Chesapeake Western Ry. Co., 178 Va. 314, 16 S.E.2d 649
(1941), Turk v. Clark, 193 Va. 744, 71 S.E.2d 172 (1952), First
Funding Corp. v. Birge, 220 Va. 326, 257 S.E.2d 861 (1979), and
Business Bank v. Beavers, 247 Va. 413, 442 S.E.2d 644 (1994).
6
a trustee in a deed of trust can only do with
the trust property what the deed either in
express terms or by necessary implication
authorizes him to do. In other words, the powers
of the person foreclosing under a mortgage or
deed of trust are limited and defined by the
instrument under which he acts, and he has only
such authority as is thus expressly conferred
upon him, together with incidental and implied
powers that are necessarily included therein.
Accordingly, the trustee or mortgagee must see
that in all material matters he keeps within his
powers, and must execute the trust in strict
compliance therewith.
Schmidt & Wilson, Inc. v. Carneal, 164 Va. 412, 415, 180 S.E.
325, 326 (1935). 3
That line of cases is inapplicable here because the
Kapanis were not trustees under a deed of trust. Rather, they
were owners of a fee simple estate, though the fee was
defeasible rather than absolute, and they had all necessary
power to convey the whole estate of which they were themselves
seised at the time of their conveyance. Consequently, the
circuit court did not err when it refused to declare Riekse’s
deed void ab initio.
B. ENFORCEMENT OF THE ROFR
3
Moreover, many of these cases declare the deed following
a trustees’ sale void because the trustee had not advertised
the sale, a requirement imposed by statute. Code § 55-59.1
(requiring notice to owner prior to sale); Former Code § 55-
59(6) (Supp. 1978) (same); Former Code § 5167 (1919); Former
Code § 2442 (1887).
7
Fairfax also argues that the circuit court erred in ruling
that it could only enforce the ROFR as a condition subsequent
by filing an action of ejectment. We disagree.
Fairfax cites Landa v. Century 21 Simmons & Co., Inc., 237
Va. 374, 377 S.E.2d 416 (1989), and Commonwealth Transportation
Commissioner v. Windsor Industries, Inc., 272 Va. 64, 630
S.E.2d 514 (2006). In Landa, an executor, Peterson, was
selling a parcel of land, a portion of which was subject to the
Landas’ right of first refusal. After learning that the estate
had received an offer from another purchaser, the Landas made
their own offer but Peterson nevertheless contracted to sell to
the other purchaser. The Landas and the other purchaser both
commenced lawsuits against the various parties and this Court
held that the circuit court was required to order Peterson and
the estate’s realty company to perform under the Landas’ right
of first refusal. Id. at 380-84, 377 S.E.2d at 419-22.
In Windsor, the Commonwealth acquired a parcel of land
from 1314 West Main Corporation in 1977 in anticipation of
building a state highway (Route 288). However, the parcel was
never used and, in 2004, VDOT proposed to sell it by sealed
bid. Windsor, 1314 West Main Corporation’s successor in
interest, sued to compel the Commonwealth to convey the parcel
to it. The circuit court determined that Code § 33.1-90(B)
required that any parcel acquired by the Commonwealth in
8
anticipation for use in a highway project be offered to its
prior owner if not so used. We affirmed, ruling that the
statute created a right of re-entry in the prior owner, and
ordered the Commonwealth to convey the parcel to Windsor.
Both Landa and Windsor are distinguishable from this case
because the parties against whom specific performance was
sought retained title to the parcel. Here, Fairfax has sought
specific performance by the Kapanis, who no longer hold title
to the parcel. Accordingly, the circuit court’s determination
that it could not order the Kapanis to perform because it was
impossible for them to offer the parcel to Fairfax was correct.
Cangiano v. LSH Bldg. Co., 271 Va. 171, 180, 623 S.E.2d 889,
895 (2006); Shepherd v. Colton, 237 Va. 537, 541, 378 S.E.2d
828, 830 (1989); Fishburne v. Ferguson, 85 Va. 321, 328, 7 S.E.
361, 364-65 (1888).
III. CONCLUSION
For the reasons set forth above, we will affirm the
judgment of the circuit court. 4
Affirmed.
4
Because we will affirm the judgment of the circuit court,
we do not reach Riekse’s assignments of cross-error challenging
its decision to overrule the demurrer regarding the validity of
the ROFR as a covenant running with the land.
9