B&R Oil Company, Inc., Empire Petroleum Partners, LLC, and EPP-Atlas Acquisitions, LLC v. William E. Stoler, Kathlyn Stoler, Jeffrey A. Levy, and Con-Serve, Inc.
FILED
May 30 2017, 10:30 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANTS ATTORNEYS FOR APPELLEES
Tracy D. Knox John A. Conway
Brian E. Casey Paul Edgar Harold
Barnes & Thornburg LLP Stephen M. Judge
South Bend, Indiana LaDue Curran & Kuehn LLC
South Bend, Indiana
IN THE
COURT OF APPEALS OF INDIANA
B&R Oil Company, Inc., May 30, 2017
Empire Petroleum Partners, Court of Appeals Case No.
LLC, and EPP-Atlas 71A04-1603-PL-608
Acquisition, LLC, Appeal from the St. Joseph Circuit
Appellants-Defendants, Court
The Honorable Michael G.
v. Gotsch, Judge
Trial Court Cause No.
William E. Stoler, Kathlyn 71C01-1412-PL-353
Stoler, Jeffrey A. Levy, and
Con-Serve, Inc.,
Appellees-Plaintiffs.
Najam, Judge.
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Statement of the Case
[1] B&R Oil Company, Inc. (“B&R Oil”), Empire Petroleum Partners, LLC, and
EPP-Atlas Acquisitions, LLC (we refer to the LLCs collectively as “Empire”)
bring this interlocutory appeal from the trial court’s entry of summary judgment
for William E. Stoler, Kathlyn Stoler, Jeffrey A. Levy, and Con-Serve, Inc.
(collectively referred to as “the Stolers”) on the Stolers’ complaint for breach of
contract against B&R Oil. B&R Oil and Empire raise three issues for our
review, which we consolidate and restate as whether the undisputed designated
evidence demonstrates, as a matter of law, that B&R Oil breached its lease
agreements with the Stolers. As a matter of first impression in Indiana, we hold
that a lessor may not circumvent a lessee’s contractual right of first refusal to
purchase the leased premises by submitting a third-party offer to the lessee in
which the leased premises are bundled with other property. Accordingly, we
affirm the trial court’s summary judgment for the Stolers.
Facts and Procedural History1
[2] Beginning in the 1990s, the Stolers leased several parcels of real property from
B&R Oil and began to operate gas stations on those properties. The leases were
for initial three-year terms with options to renew. The Stolers regularly
renewed their leases and continually operated the gas stations since first leasing
the properties.
1
We held oral argument on April 11, 2017.
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[3] Pursuant to the lease agreements, the Stolers held rights of first refusal
(“ROFR”) that protected them against a third-party purchase of the leased
premises. Specifically, each identical ROFR stated:
The Lessor hereby agrees that Lessees shall have, during the term
of this lease, and so long as Lessees are in compliance with the
terms hereof, the right of first refusal to purchase the leased premises.
Accordingly, in the event that a bona fide offer to purchase the
leased premises is presented to Lessor, Lessor shall give Lessees
Fifteen (15) days for Lessees to make to Lessor a firm
commitment to match said offer and to seek financing for the
purchase of the property at said purchase price before Lessor sells
its interest in the leased premises to a third party. Said Fifteen
(15) day period shall commence when Lessors give to Lessee
written notice of a bona fide offer to purchase. It is further
agreed that, in the event that this right of first refusal is exercised
by Lessees, that Lessor shall extend to Lessees the same terms for
purchase that were extended to the party who originally made
the bona fide offer to purchase which triggered the terms
hereunder.
Appellants’ App. Vol. V at 46, 59 (emphases added).
[4] In 2014, B&R Oil signed a letter of intent to sell substantially all of its assets to
Empire for approximately $80,000,000. Empire’s purchase offer included the
premises leased to the Stolers, at least sixteen other parcels of real property, fuel
supply contracts for more than 100 sites, and various pieces of equipment.
Thereafter, B&R Oil notified the Stolers that it had received Empire’s third-
party offer to purchase the leased premises and, accordingly, that B&R Oil was
providing the Stolers “with a right of first refusal to purchase the Premises on
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the same terms and conditions set forth” by Empire within fifteen days of the
notices. Id. at 71, 75.
[5] The Stolers responded to B&R Oil and stated their intent to exercise the ROFR
in each lease. Specifically, the Stolers informed B&R Oil that they would
match Empire’s offer “for the Premises” and requested that B&R Oil provide
additional information regarding Empire’s terms with respect to only the leased
premises. Id. at 79-80. However, B&R Oil responded and informed the Stolers
that, if they wished to exercise their ROFR, they would “be required to match
the Offer and tender $80,000,000 for the Premises and all other assets included
in the Offer.”2 Id. at 81, 83. The Stolers challenged B&R Oil’s interpretation of
the contract, stating that the attempt by B&R Oil “to force [the Stolers] to
purchase substantially all of B&R [Oil’s] assets to exercise their respective rights
of first refusal constitutes both an anticipatory repudiation of the parties’ leases
and a[] breach of those leases.” Id. at 86.
[6] On December 22, 2014, the Stolers filed their lawsuit against B&R Oil and
Empire. In their complaint, the Stolers alleged that B&R Oil had breached the
lease agreements by not allowing the Stolers to purchase the leased premises
before selling the premises to Empire. The Stolers sought monetary damages,
specific performance, and/or injunctive relief. After the trial court denied the
Stolers’ requests for a temporary restraining order and a preliminary injunction,
2
We note that, notwithstanding B&R Oil’s representations to the contrary, the record demonstrates that
Empire had determined values for the specific properties at issue in this appeal. See Appellants’ App. Vol. V
at 157.
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B&R Oil and Empire closed their transaction, and B&R Oil assigned the
Stolers’ lease agreements to Empire.
[7] Thereafter, the parties each moved for summary judgment. After a hearing, the
trial court granted partial summary judgment for the Stolers on their claim of
breach of the lease agreements. The court denied summary judgment for B&R
Oil and Empire and withheld ruling on the Stolers’ proper remedy. The trial
court certified its order for interlocutory appeal, which we accepted.
Discussion and Decision
Overview
[8] B&R Oil and Empire (hereinafter collectively referred to as “B&R Oil”) appeal
the court’s summary judgment for the Stolers. Our standard of review is clear:
We review summary judgment de novo, applying the same
standard as the trial court: “Drawing all reasonable inferences in
favor of . . . the non-moving parties, summary judgment is
appropriate ‘if the designated evidentiary matter shows that there
is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.’” Williams v.
Tharp, 914 N.E.2d 756, 761 (Ind. 2009) (quoting T.R. 56(C)). “A
fact is ‘material’ if its resolution would affect the outcome of the
case, and an issue is ‘genuine’ if a trier of fact is required to
resolve the parties’ differing accounts of the truth, or if the
undisputed material facts support conflicting reasonable
inferences.” Id. (internal citations omitted).
The initial burden is on the summary-judgment movant to
“demonstrate [ ] the absence of any genuine issue of fact as to a
determinative issue,” at which point the burden shifts to the non-
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movant to “come forward with contrary evidence” showing an
issue for the trier of fact. Id. at 761-62 (internal quotation marks
and substitution omitted). And “[a]lthough the non-moving
party has the burden on appeal of persuading us that the grant of
summary judgment was erroneous, we carefully assess the trial
court’s decision to ensure that he was not improperly denied his
day in court.” McSwane v. Bloomington Hosp. & Healthcare Sys.,
916 N.E.2d 906, 909-10 (Ind. 2009) (internal quotation marks
omitted).
Hughley v. State, 15 N.E.3d 1000, 1003 (Ind. 2014) (alterations original to
Hughley).
[9] Here, the trial court entered detailed findings of fact and conclusions thereon in
its summary judgment order. While such findings and conclusions are not
required in a summary judgment and do not alter our standard of review, they
are helpful on appeal for us to understand the reasoning of the trial court. See
Knighten v. E. Chicago Hous. Auth., 45 N.E.3d 788, 791 (Ind. 2015). We also
note that the trial court had before it cross-motions for summary judgment, but
that also does not alter our standard of review. Id.
[10] This appeal requires the interpretation of a contract. Interpretation and
construction of contract provisions are questions of law. John M. Abbott, LLC v.
Lake City Bank, 14 N.E.3d 53, 56 (Ind. Ct. App. 2014). As such, cases involving
contract interpretation are particularly appropriate for summary judgment. Id.
And because the interpretation of a contract presents a question of law, it is
reviewed de novo by this court. Jenkins v. S. Bend Cmty. Sch. Corp., 982 N.E.2d
343, 347 (Ind. Ct. App. 2013), trans. denied.
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[11] We review the contract as a whole, attempting to ascertain the parties’ intent
and making every attempt to construe the contract’s language “so as not to
render any words, phrases, or terms ineffective or meaningless.” Four Seasons
Mfg., Inc. v. 1001 Coliseum, LLC, 870 N.E.2d 494, 501 (Ind. Ct. App. 2007).
“And, in reading the terms of a contract together, we keep in mind that the
more specific terms control over any inconsistent general statements.” DLZ
Ind., LLC v. Greene Cty., 902 N.E.2d 323, 328 (Ind. Ct. App. 2009).
[12] The contracts at issue on appeal require our interpretation of right-of-first-
refusal provisions. A right of first refusal is a “valuable contractual right” in
which the right-holder may “preempt” a third-party offer for a protected
interest. Hyperbaric Oxygen Therapy Sys., Inc. v. St. Joseph Med. Ctr. of Ft. Wayne,
Inc., 683 N.E.2d 243, 248 (Ind. Ct. App. 1997) (quoting 3 Arthur Linton Corbin
& Eric Mills Holmes, Corbin on Contracts § 11.3 at 468-69 (rev. ed. 1996)),
trans. denied; Arlington State Bank v. Colvin, 545 N.E.2d 572, 578 (Ind. Ct. App.
1989), trans. denied. It is a “dormant” right “that does not entitle the holder to
take any action until receipt of a bona fide offer.” Beiger Heritage Corp. v. Estate
of Kilbey, 667 N.E.2d 184, 186 (Ind. Ct. App. 1996), trans. denied. With respect
to real property interests, once a property owner communicates a bona fide
third-party offer to the right-holder, the right of first refusal is “transmuted into
an option.” Id. “An option is a continuing offer whose duration and method of
exercise is strictly controlled by the agreement that created it.” Id.
[13] Again, the ROFR at issue in this appeal states:
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The Lessor hereby agrees that Lessees shall have, during the term
of this lease, and so long as Lessees are in compliance with the
terms hereof, the right of first refusal to purchase the leased premises.
Accordingly, in the event that a bona fide offer to purchase the
leased premises is presented to Lessor, Lessor shall give Lessees
Fifteen (15) days for Lessees to make to Lessor a firm
commitment to match said offer and to seek financing for the
purchase of the property at said purchase price before Lessor sells
its interest in the leased premises to a third party. Said Fifteen
(15) day period shall commence when Lessors give to Lessee
written notice of a bona fide offer to purchase. It is further
agreed that, in the event that this right of first refusal is exercised
by Lessees, that Lessor shall extend to Lessees the same terms for
purchase that were extended to the party who originally made
the bona fide offer to purchase which triggered the terms
hereunder.
Appellants’ App. Vol. V at 46, 59 (emphases added).
[14] On appeal, B&R Oil first argues that the $80,000,000 purchase offer did not
trigger the Stolers’ ROFR because the $80,000,000 offer was not an offer for
only the leased premises. In the alternative, B&R Oil argues that, if the offer
was an offer for the leased premises, B&R Oil complied with the ROFR when it
gave the Stolers the opportunity to match the $80,000,000 offer. We address
each argument in turn.
Whether Empire’s Offer Triggered the ROFR
[15] We first consider B&R Oil’s argument that the $80,000,000 purchase offer did
not trigger the Stolers’ ROFR. We cannot agree. According to the ROFR, the
right is triggered when there is a “bona fide offer to purchase the leased
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premises.” Id. One significant reason for a lessee to negotiate for a ROFR is to
protect the lessee from being forced into a relationship with an unknown third-
party lessor. Here, the $80,000,000 offer sought, albeit among other things, to
purchase the leased premises. And the offer, once finalized, forced the Stolers
into a relationship with an unknown third party as their new lessor. While, as
discussed below, the Empire offer was nonconforming, the offer nevertheless
included an offer to purchase the leased premises, which confronted the Stolers
with the prospect of a new lessor. Thus, we conclude that the $80,000,000 offer
triggered the ROFR and the Stolers’ option to purchase the leased premises.
Whether B&R Oil Breached the Lease Agreements
[16] We next turn to B&R Oil’s alternative argument on appeal, namely, that it
complied with the ROFR when it presented the Stolers with an opportunity to
match the $80,000,000 offer. We agree with the trial court that the undisputed
material facts in this case demonstrate that B&R Oil breached the lease
agreements when B&R Oil sought “to nullify the ROFR by allowing the leased
premises to be sold in conjunction with other parcels as part of a package
deal . . . .” Appellants’ App. Vol. VI at 170.
[17] On appeal, both parties contend that the other’s interpretation of the ROFR
would require that additional terms be added to the text of the ROFR. B&R
Oil contends that the Stolers’ interpretation would require this court to add the
term “exclusively” to the ROFR such that it provides for a right “to purchase
the leased premises exclusively.” See Appellants’ Br. at 44, 53. At the same
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time, the Stolers contend that B&R Oil’s interpretation would require this court
to add the phrase “along with any other offered property” to the ROFR such
that it includes a right “to purchase the leased premises along with any other
offered property.” See Appellees’ Br. at 36. In advancing these arguments, each
side contends, in effect, that its own interpretation of the ROFR must be
unambiguous because the other’s interpretation requires supplying missing
terms. But the fact that the parties disagree over the meaning of the contract
does not, in and of itself, establish an ambiguity. Claire’s Boutiques, Inc. v.
Brownsburg Station Partners LLC, 997 N.E.2d 1093, 1097 (Ind. Ct. App. 2013).
Nor may a court write a new contract for the parties or supply missing terms.
Id. at 1098. We must interpret the contract as written, not as it might have been
written.
[18] The contracts as written are unambiguous and do not require the addition of
missing terms. “Leased premises” can only mean one thing—it is the property
leased by the Stolers. When a contract is clear and unambiguous, the language
must be given its plain meaning. Van Prooyen Builders, Inc. v. Lambert, 907
N.E.2d 1032, 1035 (Ind. Ct. App. 2009). There is nothing in the text of the
ROFR that states, expressly or implicitly, that the ROFR applies to any other
property. See Ryan v. Lawyers Title Ins. Corp., 959 N.E.2d 870, 877-78 (Ind. Ct.
App. 2011) (holding that a right of first refusal did not state expressly or
implicitly that it was other than personal). And there is nothing in the text of
the ROFR that suggests or would support an inference that the ROFR either
grants a preemptive right to the Stolers—or requires the Stolers—to purchase
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any property other than “the leased premises” should they exercise their right of
first refusal. The leased premises was the only property within the
contemplation of the parties when the leases were executed.
[19] When interpreting a written contract, we attempt to determine the intent of the
parties at the time the contract was made. Id. at 875. If necessary, the text of a
disputed provision may be understood by reference to other provisions within
the four corners of the document. Claire’s Boutiques, 997 N.E.2d at 1098. Here,
not only the text of the ROFR itself but also the lease agreements as a whole
make the intent of the parties clear. Each lease agreement pertains to only a
single property described as “the leased premises.” Appellants’ App. Vol. V at
37, 52. Since the leases refer only to “the leased premises” and not to any other
property, it follows that each ROFR encompasses only one property. Whether
we consider the plain meaning of the ROFR in itself or the lease as a whole, we
cannot say that the inclusion of any property other than “the leased premises”
may reasonably have been within the contemplation of the parties at the time
the leases were executed.
[20] Accordingly, it is the Stolers’ interpretation of the ROFR that is consistent with
the lease agreements as a whole. That is, the Stolers’ interpretation of the
ROFR is the reading that reflects the intent of the parties to the lease
agreements. As such, we conclude that each ROFR means that, upon B&R
Oil’s presentation of a conforming third-party offer, the right-holder will have
the option to purchase the leased premises and only the leased premises.
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[21] Further, B&R Oil’s interpretation of the ROFR could yield an absurd result.
There were several B&R Oil leases with identical ROFR provisions. Thus, had
two or more of the lessees agreed to match the $80,000,000 Empire offer, there
would have been competing and irreconcilable options to purchase the same
properties, including options to purchase each other’s leased premises. The
ROFR of each lessee would not have been preemptive or exclusive but would
have been in direct conflict with the option rights of another lessee or lessees.
The parties could not have intended that the ROFR would permit such an
untenable collision of rights between or among the lessees.
[22] And B&R Oil’s reading of the ROFR is implausible for other reasons. Empire’s
offer was a part-cash, part-stock offer. As such, it would have been impossible
for the Stolers to offer stock and to match the terms of the offer.3 And it was
also unlikely that the parties to the lease agreements anticipated that the
purchase price for a single gas station would amount to as much as
$80,000,000. A purchase price of that magnitude would not have been within
the reasonable contemplation of the parties when they negotiated the ROFR for
“the leased premises.” We agree with the trial court that, in its operation and
effect, B&R Oil’s interpretation of the ROFR nullifies the right of first refusal.
3
Even if we were to accept B&R Oil’s interpretation of the ROFR, which we do not, we would still be
obliged to hold that B&R Oil breached the lease agreements. Empire’s offer to B&R Oil was to pay
$48,000,000 in cash and the remainder in equity ownership in Empire, along with other consideration.
Appellants’ App. Vol. V. at 108, 112. The ROFR required that B&R Oil present those terms to the Stolers,
id. at 46, 59, but B&R Oil did not do so. Instead, B&R Oil omitted the details of Empire’s payment structure
and implied to the Stolers that they were required to pay $80,000,000 in cash to exercise their rights under
each ROFR.
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The Hamlin Doctrine
[23] In addition to the legal and practical implausibility of B&R Oil’s interpretation
of the ROFR, a party to a contract that contains a ROFR may not circumvent
that provision merely by presenting to the right-holder a third-party offer that
includes other unrelated property. In Hamlin v. Steward, 622 N.E.2d 535, 540
(Ind. Ct. App. 1993), this court held that a party may not rely on the failure of a
contractual condition precedent to excuse performance where that party’s own
inaction caused the failure. The Indiana Supreme Court has agreed, concluding
that “[t]he Hamlin doctrine prevents a party from acts of contractual sabotage or
other acts in bad faith by a party that causes the failure of a condition.” Ind.
State Highway Comm’n v. Curtis, 704 N.E.2d 1015, 1019 (Ind. 1998).
[24] Under the ROFR, B&R Oil retains control over the condition precedent of a
third-party offer, and B&R Oil can satisfy that condition only by presenting an
offer to the lessees that conforms with the ROFR. Instead, here, B&R Oil
breached its obligation and caused the failure of the condition precedent when it
presented the Stolers with a nonconforming third-party offer and then used the
Stolers’ refusal to match that offer as an excuse to circumvent the ROFR and
sell the leased premises to Empire. B&R Oil caused the failure of the condition
precedent by presenting a nonconforming offer to purchase, which included
unrelated properties. In so doing, contrary to the Hamlin doctrine, B&R Oil
sabotaged the ROFR.
[25] Thus, B&R Oil may not engage in contractual sabotage by means of its own
inaction. Hamlin, 622 N.E.2d at 540. B&R Oil acted as a mere conduit
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between Empire and the Stolers. But the ROFR provisions imposed an
affirmative duty on B&R Oil either to exclude the leased properties from the
third-party offer or to allocate and attribute a portion of the purchase price to
the leased premises so that each of the right-holders could exercise their rights
under the ROFR. B&R Oil simply presented the third-party offer “as is” to the
Stolers, an offer which bundled the leased properties with other property
interests unrelated to the leased premises. B&R Oil’s failure to comply with the
ROFR and to present a conforming third-party offer was a breach of the lease
agreements.
[26] Finally, our interpretation of the ROFR provisions brings Indiana’s
jurisprudence in line with the substantial weight of authority from other
jurisdictions that have considered such issues. See Maron v. Howard, 66 Cal.
Rptr. 70, 78 (Cal. Ct. App. 1968) (“Recognizing [the lessee’s] rights under the
agreement, [the lessors] could have allocated a portion of the total purchase
price to the [leased] parcel and thus have given the [lessee] a clear opportunity
to have exercised his right.”); Thomas & Son Transfer Line, Inc. v. Kenyon, Inc.,
574 P.2d 107, 112 (Colo. App. 1977) (“An owner of property cannot defeat a
right of refusal simply by selling the optioned property with other properties
which he may own.”), aff’d, 586 P.2d 39, 40 (Colo. 1978); Whyhopen v. Via, 404
So. 2d 851, 853 (Fla. Dist. Ct. App. 1981) (“[lessors’] argument that tenants
were required to exercise their option as to all the land listed on the contract for
sale is incorrect.”); Radio WEBS, Inc. v. Tele-Media Corp., 292 S.E.2d 712, 714-15
(Ga. 1982) (“It is manifestly clear that [the parties to the contract] contemplated
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only the sale of the assets or stock of the [business] when the right of first refusal
was negotiated. . . . [T]o find otherwise would facilitate defeat of contractual
rights of first refusal by inclusion of extraneous matters.”); Kutkowski v.
Princeville Prince Golf Course, LLC, 300 P.3d 1009, 1016 (Haw. 2013) (“[the
lessor’s argument] renders ROFR’s [sic] over smaller parcels illusory upon the
lessor’s decision to include the smaller parcel as part of a larger property sale to
a third party, which does not enforce the parties’ bargain for a ROFR.”);
Gyurkey v. Babler, 651 P.2d 928, 933 (Idaho 1982) (“[the smaller lot] could not
be sold as part of a larger parcel as long as the lot was subject to [the] right of
first refusal.”); Myers v. Lovetinsky, 189 N.W.2d 571, 575 (Iowa 1971) (“This is a
case in which landlords sell the whole farm including the demised premises to
purchasers without separately pricing the demised premises and the rest of the
farm. . . . [T]he landlord breaches the tenant’s preferential right by so doing.”);
Anderson v. Armour & Co., 473 P.2d 84, 89 (Kan. 1970) (rejecting as “completely
untenable” the lessor’s argument that “the clause in question was not breached
because” the leased premises were within “a larger tract . . . [that] was disposed
of”); Straley v. Osborne, 278 A.2d 64, 70 (Md. 1971) (“the lessor cannot act in
derogation of the lessee’s ‘first option’ rights in the leased premises . . . . [T]o
rule otherwise would be to allow a lessor to render the lessee’s bargained for
‘first option’ a nullity by merely including it in a larger tract being offered for
sale.”); Plante v. Town of Grafton, 775 N.E.2d 1254, 1258 (Mass. App. Ct. 2002)
(“a seller may not defeat a right of first refusal by confronting the optionee with
terms that include acquisition of land in addition to that covered by the right.”);
Brenner v. Duncan, 27 N.W.2d 320, 322 (Mich. 1947) (“acceptance [of the third-
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party offer] by plaintiffs was made impossible by the defendants. Defendant
[landowner] sold to [the third-party defendant] . . . the property covered by the
option together with the adjacent parcel for one stipulated price . . . . [This]
constituted a breach of contract.”); Guaclides v. Kruse, 170 A.2d 488, 495 (N.J.
Super. Ct. App. Div. 1961) (“We concur in the generally accepted view as to
the optionee’s right to an injunction to restrain a vitiating of its option by the
inclusion, in the owner’s prospective sale, of property in excess of that covered
by the option. To allow the owner of the whole to by-pass the optionee merely
by attaching additional land to the part under option would render nugatory a
substantial right which the optionee had bargained for and obtained.”); C&B
Wholesale Stationery v. S. De Bella Dresses, Inc., 349 N.Y.S.2d 751, 753 (N.Y. App.
Div. 1973) (“The lessor’s sale of the leased premises as part of the larger parcel
violated the first refusal clause of the lease.”); Stuart v. Stammen, 590 N.W.2d
224, 228 (N.D. 1999) (“When a party has a right of first refusal on specified
property, the seller cannot add additional property and make it part of the
package, thereby forcing the option holder to purchase the additional property
to exercise the option.”); Ollie v. Rainbolt, 669 P.2d 275, 281 (Okla. 1983) (“A
preemption-affected seller . . . should not be allowed to defeat or impair a
bargained-for ‘right of first refusal’ by a package-deal offer that includes
property which lies dehors the preemption obligation.”); Boyd & Mahoney v.
Chevron U.S.A., 614 A.2d 1191, 1194 (Pa. Super. Ct. 1992) (“Common sense
and the applicable case law of this jurisdiction require us to hold that a right of
first refusal as to the conveyance of a property cannot be defeated by including
that property in a multi-property or multi-asset transaction.”); Sawyer v.
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Firestone, 513 A.2d 36, 40 (R.I. 1986) (“We agree with the majority view that a
seller may not defeat a right of first refusal by selling the property subject to the
right as part of a larger tract.”); Navasota Res., L.P. v. First Source Tex., Inc., 249
S.W.3d 526, 535 (Tex. App. 2008) (“Virtually every authority of which we are
aware agrees that the holder of a preferential right cannot be compelled to
purchase assets beyond those included within the scope of the agreement
subject to the preferential right in order to exercise that right.”); Landa v. Century
21 Simmons & Co., 377 S.E.2d 416, 421 (Va. 1989) (holding that the option
holders were “entitled to exercise their right of first refusal” with respect to the
premises “despite the fact that [the landowner] contracted . . . to sell the
[premises] along with a separate . . . parcel”); Wilber Lime Prods., Inc. v. Ahrndt,
673 N.W.2d 339, 656-57 (Wis. Ct. App. 2003) (“the sale of the entire 180-acre
farm . . . triggered [the] right of first refusal to the twenty-five acres. . . . The
twenty-five acres were sold, albeit as part of a package deal. [The option
holder] should therefore have had the right to purchase the land.”); Chapman v.
Mut. Life Ins. Co., 800 P.2d 1147, 1151 (Wyo. 1990) (“a preemptive right may
not be defeated by a sale of the property burdened by the right as part of a larger
tract. Any other result is necessarily unacceptable because . . . [it] would render
nugatory a substantial right . . . .”). But see Crow-Spieker #23 v. Robert L. Helms
Constr. & Dev. Co., 731 P.2d 348, 350 (Nev. 1987) (holding that a ROFR was not
implicated by the sale of the protected property as part of a larger sale
agreement, though noting that the court “would not condone an attempt to
evade [the right-holder’s] contractual rights by engineering the sale of a larger
parcel”); Advanced Recycling Sys., LLC v. Se. Props. Ltd. P’ship, 787 N.W.2d 778,
Court of Appeals of Indiana | Opinion 71A04-1603-PL-608 | May 30, 2017 Page 17 of 22
785 (S.D. 2010) (holding that a third-party offer for a property protected by a
ROFR as part of a package deal with other, unrelated property does not invoke
the ROFR).
[27] In sum, the designated evidence demonstrates that there is no genuine issue of
material fact with respect to whether B&R Oil breached the lease agreements.
Although B&R Oil presented the Stolers with a third-party offer to purchase the
leased premises, B&R Oil did not present the Stolers with an exclusive option to
purchase the leased premises, and only the leased premises identified in each
lease agreement, as required by the ROFR. Thus, we affirm the trial court’s
entry of summary judgment for the Stolers.
[28] Affirmed.
May, J., concurs.
Bailey, J., dissents with separate opinion.
Court of Appeals of Indiana | Opinion 71A04-1603-PL-608 | May 30, 2017 Page 18 of 22
IN THE
COURT OF APPEALS OF INDIANA
B&R Oil Company, Inc.,
Empire Petroleum Partners, and
EPP-Atlas Acquisition, LLC
Appellants-Defendants,
v. Court of Appeals Case No.
71A04-1603-PL-608
William E. Stoler, Kathlyn
Stoler, Jeffrey A. Levy, and
Con-Serve, Inc.,
Appellees-Plaintiffs.
Bailey, Judge, dissenting.
[29] I agree with the majority that the package offer triggered the rights of first
refusal (“ROFR”). The majority next concludes, however, that B&R Oil
breached the ROFR when it gave the lessees the opportunity to match the
package offer instead of obtaining an offer specific to each leased premises.
Because I would instead conclude that B&R Oil met its obligations under the
plain language of the contract, I must dissent.
Court of Appeals of Indiana | Opinion 71A04-1603-PL-608 | May 30, 2017 Page 19 of 22
[30] When the language of a contract is unambiguous, we are to “give effect to the
parties’ intentions as expressed in the four corners of the instrument. Clear,
plain, and unambiguous terms are conclusive of that intent. This court will not
construe clear and unambiguous provisions, nor will we add provisions not
agreed upon by the parties.” Hyperbaric Oxygen Therapy Sys., Inc. v. St. Joseph
Med. Ctr. of Ft. Wayne, Inc., 683 N.E.2d 243, 247-48 (Ind. Ct. App. 1997), trans.
denied. (internal quotation marks and citation omitted); see also Ryan v. TCI
Architects/Engineers/Contractors, Inc., No. 49S02-1704-CT-253, slip op. at 6 (Ind.
Apr. 26, 2017) (“In interpreting a contract, we ascertain the intent of the parties
at the time the contract was made, as disclosed by the language used to express
the parties’ rights and duties.”).
[31] Here, the plain language of the contract dictates precisely what must happen
when B&R Oil receives a triggering offer: “Lessor shall give Lessees Fifteen
(15) days for Lessees to make to lessor a firm commitment to match said offer
and to seek financing for the purchase of the property at said purchase price before
Lessor sells its interest in the leased premises to a third party.” Appellant’s
App. Vol. V at 46, 59 (emphases added). B&R Oil notified the lessees that it
received a package offer, and the lessees declined to make a package purchase. 4
Thus, applying the negotiated contract language—and only those agreed-to
4
The majority notes that even if it accepted B&R Oil’s interpretation of the ROFR, it would conclude that
B&R Oil was in breach because it did not communicate the precise terms of the triggering offer. I see no
breach, however, because the lessees rejected the opportunity to make a package purchase and none has
contended that it would have made such a purchase.
Court of Appeals of Indiana | Opinion 71A04-1603-PL-608 | May 30, 2017 Page 20 of 22
terms—I would conclude that B&R Oil did not breach the ROFR, and is
therefore entitled to summary judgment.
[32] In reaching an opposite conclusion, the majority characterizes B&R Oil’s
actions as contractual sabotage because B&R failed to “present[] an offer to the
lessees that conforms with the ROFR.” Slip op. at 13. But the contract does
not define conforming or non-conforming offers, nor does it restrict the ROFR
from applying to any offer that B&R Oil intended to accept. Rather, the
defined right is the opportunity to match a third-party offer. Had the parties
wished to restrict B&R Oil from passing through package offers, they could
have readily done so.
[33] The majority also expresses concern about what might have happened if, under
B&R Oil’s interpretation, more than one lessee had wished to match the
package deal. I would not, however, forecast “an untenable collision of rights,”
slip op. at 12, but instead a predictable result. That is, a right of first refusal
applies only where the seller intends to accept the third-party offer. See Hay v.
Hay, 885 N.E.2d 21, 24 (Ind. Ct. App. 2008) (“A right of first refusal is a
potential buyer’s contractual right to meet the terms of a third party’s offer if the
seller intends to accept that offer.”) (internal quotation marks omitted). Had
more than one party wished to make the package purchase, then I suspect that
B&R Oil would have intended to accept the highest offer. See also “Right of
First Refusal,” Black’s Law Dictionary (10th ed. 2014) (defining the right as
“[a] potential buyer’s contractual right to meet the terms of a third party’s
higher offer”). Indeed, no language in the ROFR prevents continued
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negotiations, and nothing about B&R Oil’s interpretation necessarily yields a
result more peculiar than that of any “seller’s market,” in which a seller seeks
the best-possible deal while multiple parties jockey for the same property.
[34] It should also be noted that the lessees’ rights were not nullified by the Empire
sale, but instead remained unchanged. That is, when Empire purchased the
properties from B&R Oil, the leases stood in full force, obligating Empire to
comply with the ROFR for the entire term of each lease. Thus, should Empire
wish to sell either property—individually or otherwise—Empire must do what
B&R Oil has done, and give the lessees the opportunity to match a triggering
offer, which is all that the ROFR contemplates.
[35] Ultimately, I do not see a matter of first impression, but instead an ordinary
matter of contract interpretation. Thus, I would apply Indiana’s approach to
contract interpretation, which is both clear and predictable, even when the
consequences of doing so might seem unfair: we treat bargained-for language as
the parties’ intent. Applying that unambiguous language here, I would reverse
and remand for entry of summary judgment in favor of B&R Oil and Empire.
[36] I therefore respectfully dissent.
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