Evan Greenwald & a. v. Richard Keating & a.

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THE SUPREME COURT OF NEW HAMPSHIRE
___________________________
Carroll
No. 2018-0479
EVAN GREENWALD & a.
v.
RICHARD KEATING & a.
Argued: April 18, 2019
Opinion Issued: June 25, 2019
Hinckley, Allen & Snyder, LLP, of Manchester (Christopher H.M. Carter
and Jamie S. Myers on the brief, and Mr. Carter orally), for the plaintiffs.
Steiner Law Office, PLLC, of Concord (R. James Steiner on the brief), and
Haughey, Philpot & Laurent, PA, of Laconia (Samantha M. Jewett orally), for
defendant Barbara Keating.
Haughey, Philpot & Laurent, PA, of Laconia (Samantha M. Jewett and
William Philpot, Jr. on the brief, and Ms. Jewett orally), for defendants Barry
and Chrysoula Uicker.
Shaheen & Gordon, P.A., of Concord (Karyn P. Forbes and Alexander W.
Campbell on the brief), and Haughey, Philpot & Laurent, PA, of Laconia
(Samantha M. Jewett orally), for defendant Ellen Mulligan.
Hage Hodes, P.A., of Manchester (Douglas J. Miller and Katherine E.
Hedges on the brief), and Haughey, Philpot & Laurent, PA, of Laconia
(Samantha M. Jewett orally), for defendant Jill Keating.
LYNN, C.J. This case concerns an agreement for the lease of certain
property in Gilford that included certain preemptive purchase rights (the
Agreement). The plaintiffs, Evan and Kelly Greenwald, have asked us to
determine the proper interpretation of the Agreement, whether it has been
breached, and who may be held liable. On cross-motions for summary
judgment, the Superior Court (Ignatius, J.) ruled in favor of the defendants,
Barbara Keating, Jill Keating, Ellen Mulligan, and Barry and Chrysoula Uicker.
We reverse and remand.
The following facts are drawn from the trial court’s summary judgment
order and from undisputed documentary evidence contained in the record. In
1996, Richard Keating1 and his daughter, Jill Keating, purchased property on
Mink Island in Gilford as joint tenants with the right of survivorship. In 1997,
a portion of the property was subdivided and sold, with Richard and Jill
retaining 2.1 acres on which Richard built a camp (the Mink Island property).
Starting in 2013, Richard and his wife Barbara (the Keatings) began renting the
Mink Island property during the summer months to help offset taxes. Barbara,
however, owned no interest in the property. On June 1, 2015, Richard
employed Roche Realty to list the Mink Island property for sale. The property
was originally listed for $849,900, but the price was increased to $899,900 on
June 15, 2015. Around the same time, the plaintiffs, who had previously
owned a house on Mink Island, began searching for island property on Lake
Winnipesaukee to rent during the summer of 2016 with an option to purchase.
The plaintiffs were aware that the Keatings were offering the Mink Island
property for rent, and Mr. Greenwald contacted Barbara to inquire about its
status. Barbara informed the Greenwalds that the Mink Island property was
available to rent for the summer of 2016 and was also listed for sale.
On August 9, 2015, the plaintiffs met the Keatings and their Roche
Realty agent, John Goodhue, at the Mink Island property. During the meeting
the Keatings agreed to: (1) lease the Mink Island property to the plaintiffs from
July 1, 2016 through August 31, 2016, at a rate of $12,000 per month; (2) take
1
Richard Keating died in February 2017.
2
the property off the market and provide the plaintiffs with preemptive rights to
purchase the property should the Keatings decide to re-list it for sale; and (3)
permit the plaintiffs to apply one month’s rent toward the purchase price. That
day, Goodhue drafted the Agreement reflecting those terms; it was signed by
the plaintiffs, as the tenant, and the Keatings, as the landlord. Paragraph 18
of the Agreement, entitled “LEASE RENEWAL AND PURCHASE OPTION,” states
as follows:
A. If property remains for lease in the summer of 2017, tenants
shall be given first option to renew lease for July 1-August 31,
at the established 2016 lease rate.
B. In the event that Landlord intends to re-list property for sale,
Landlord agrees to give tenant first option to purchase property
prior to or after conclusion of the lease, and prior to property
being listed on MLS. If a sale price is agreed upon during or
after the term of this lease, landlord agrees to apply one
month’s rent, as specified in this lease, toward the purchase
price of the property. It is agreed that any sale shall be
managed by John Goodhue, realtor, as listing agent.
C. In the event that tenant does not exercise the first option to
purchase property under 18B, and the property is listed for sale
on MLS, but tenant maintains an interest in the future
purchase of the property as presented in writing by the tenant
to the landlord, landlord agrees to offer tenant legal right of first
refusal to purchase the property. Tenant shall have 4 business
days upon presentation of another signed purchase and sales
agreement to respond in writing, either exercising or waiving
their right to first refusal.
The Agreement contains an integration clause, stating that it constitutes the
entire contract and that any prior understandings or representations preceding
its signing are superseded by its terms. The Agreement further states that it
can be modified only by a writing signed by the plaintiffs and the Keatings.
Jill’s ownership interest in the property was not disclosed to the plaintiffs.2
Richard later informed Jill of the Agreement with the plaintiffs.
During the summer of 2015, the Uickers were also looking to purchase
an island camp property on Lake Winnipesaukee. They hoped to sell their
property on Cow Island in Tuftonboro and purchase property closer to their
2In the summary judgment proceedings giving rise to this appeal, Jill Keating did not assert that
because she, as an owner of the property, did not execute the Agreement, it was therefore not
enforceable against her. Accordingly, for purposes of this appeal, we assume, as did the trial
court, that the Agreement is enforceable against her.
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residence in Gilford. Prior to May 2016, the Uickers told Mulligan, who is Mr.
Uicker’s sister and a real estate broker, that they were looking to purchase
property on Lake Winnipesauke. Mulligan was aware that the Keatings might
consider selling the Mink Island property, and shared this information with Mr.
Uicker.
Around mid-May 2016, Mulligan spoke with Barbara about the Mink
Island property. Mulligan explained that she was calling on behalf of her
brother and wanted to set up a time for the Uickers to visit the property.
Although Barbara told Mulligan that she and Richard were unsure about
selling the Mink Island property, she agreed to the visit, which occurred on or
about May 16, 2016. During their visit, Richard mentioned to Mr. Uicker the
purchase rights of the plaintiffs contained in the Agreement. In a June 1, 2016
e-mail to the Keatings, Mr. Uicker requested a copy of the Agreement so that he
could discuss it with a title company and formulate a procedure to avoid legal
trouble. The e-mail also thanked the Keatings for working with the Uickers
and working out a deal to purchase the Mink Island property.
On July 1, 2016, the plaintiffs arrived at the Mink Island property to
begin their lease term. At this time, the Keatings informed the plaintiffs that
they did not intend to sell the property because they wanted to keep it in the
family. In a text to Barbara on July 19, 2016, the plaintiffs again expressed
their interest in purchasing the property, asking if the Keatings would be
interested in selling the back half of the property to reduce the tax burden on
the children. Barbara, however, declined the offer.
In September 2016, the Uickers offered $750,000 to purchase the Mink
Island property, which the Keatings and Jill accepted. While Mr. Uicker
believed that paragraph 18B had not been triggered because the Keatings had
not listed the Mink Island property for sale, he informed Mulligan of the
purchase and expressed concern over the Agreement. A local real estate
attorney was employed to review the Agreement; he explained that the right of
first refusal was ambiguous but likely required that the Keatings list the Mink
Island property for sale before the plaintiffs had any rights. During a meeting
on September 6, 2016, the attorney discussed with the Keatings the possibility
of providing the plaintiffs with a copy of a signed purchase and sale agreement
for the Mink Island property from the Uickers and giving them four days’ notice
to match its terms. However, Richard emphatically declared that he would not
sell the Mink Island property to the plaintiffs. When discussion arose about
the possibility of a lawsuit, Richard explained that he was not concerned and
said “let him sue me.”
On September 9, 2016, the Uickers entered into a purchase and sale
agreement with Richard and Jill. Jill also executed a power of attorney for
Richard to act on her behalf regarding the Mink Island property. The power of
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attorney was notarized by Mulligan. The parties closed on the Mink Island
property on September 14 or 15.
When the plaintiffs learned of the sale of the Mink Island property to the
Uickers, they filed suit: (1) requesting specific performance against the Uickers
to recover the property; (2) seeking damages for breach of contract and breach
of the implied covenant of good faith and fair dealing against Barbara, Richard,
and Jill;3 and (3) seeking damages against Mulligan for tortious interference
with contractual relations and violation of the Consumer Protection Act. On
cross-motions for summary judgment,4 the court ruled in favor of the
defendants. This appeal followed.
When reviewing a trial court’s ruling on cross-motions for summary
judgment, we “consider the evidence in the light most favorable to each party in
its capacity as the nonmoving party and, if no genuine issue of material fact
exists, we determine whether the moving party is entitled to judgment as a
matter of law.” Conant v. O’Meara, 167 N.H. 644, 648 (2015) (quotation
omitted). “If our review of that evidence discloses no genuine issue of material
fact and if the moving party is entitled to judgment as a matter of law, then we
will affirm the grant of summary judgment.” Id. (quotation omitted). “We
review the trial court’s application of the law to the facts de novo.” Id.
(quotation omitted).
Central to the trial court’s decision was the interpretation of the
Agreement — specifically paragraphs 18B and 18C. In the trial court’s view,
the Agreement unambiguously required that Richard and Jill intend to list the
Mink Island property for sale, not merely intend to sell it, before the plaintiffs’
rights under paragraph 18B were triggered. The court also concluded that
paragraph 18B was unenforceable because it did not include an essential term:
the purchase price. As for the right of first refusal under paragraph 18C, the
trial court concluded that this provision was triggered only if the Keatings
accepted an offer to purchase made by a third party after the Keatings had
listed the property for sale. Thus, the trial court ruled that no breach occurred
because the triggering condition — listing the property for sale — was never
met.
3Although not originally named as a defendant in the plaintiffs’ lawsuit, Jill Keating was later
added as a defendant on the breach of contract and breach of the implied covenant of good faith
and fair dealing claims.
4
The trial court noted that Barbara and Richard did not file an answer, but instead simply moved
for summary judgment. It is unclear from the record whether the other defendants followed this
same procedural avenue to litigate the claims against them. Because the record provided to us
does not reflect that the trial court raised any questions as to the propriety of failing to file an
answer, we likewise have no occasion to consider this matter on appeal.
5
Like any contract, we interpret the Agreement in accordance with the
general rules and principles of contract law. See LaPonsie v. Kumorek, 122
N.H. 1021, 1022 (1982). “The interpretation of a contract, including whether a
contract term is ambiguous, is ultimately a question of law for this court to
decide.” Birch Broad. v. Capitol Broad. Corp., 161 N.H. 192, 196 (2010). “The
language of a contract is ambiguous if the parties to the contract could
reasonably disagree as to the meaning of that language.” Id. (quotation
omitted). We review the trial court’s interpretation of the Agreement de novo.
See id.
The trial court determined that the language used in paragraph 18B
created a condition precedent that was triggered only if the Keatings intended
to list the property for sale. Conditions precedent are not favored in the law,
and we will not construe contracts to include them unless required by the plain
language of the agreement in question. See Holden Eng’g and Surveying v.
Pembroke Rd. Realty Trust, 137 N.H. 393, 396 (1993). “As a rule of thumb,
provisions which commence with words such as ‘if,’ ‘on condition that,’ ‘subject
to’ and ‘provided’ create conditions precedent.” Id. (quotation omitted).
Although we agree with the trial court that the phrase “[i]n the event that” as
used in paragraph 18B created a condition precedent, we do not agree that the
paragraph unambiguously means that the triggering event comes into play only
if the Keatings intended not merely to sell the property, but to sell it in a
particular way — by listing it for sale to the public generally.
Relying on Roy v. George W. Greene, Inc., 533 N.E.2d 1323 (Mass. 1989),
the trial court concluded that “the option to purchase [under paragraph 18B]
cannot be triggered by the Keatings’ intent to sell because the Keatings must
have an acceptable offer to intend to sell the property.” But Roy dealt with a
right of first refusal. See Roy, 533 N.E.2d at 1324. A third party offer is
necessary to trigger a right of first refusal because it “‘refer[s] to a right that
arises only after the owner has received an enforceable offer to buy.’” LeBaron
v. Wight, 156 N.H. 583, 585 (2007) (quoting Roy, 533 N.E.2d at 1325). Here, it
is paragraph 18C, not paragraph 18B, that explicitly deals with the right of
first refusal. As the trial court explained in its order, the “first option to
purchase” in paragraph 18B “does not provide a traditional right of first
refusal.” Thus, the trial court’s subsequent application of right of first refusal
principles to the language used in paragraph 18B to conclude that a seller can
only have the intent to sell when there is a third party purchaser was error.
Although the language in paragraph 18B does not create a right of first
refusal, it clearly was intended to create some precondition to its becoming
operative. Other jurisdictions considering similar provisions have noted that
they generally are intended to create “preemptive purchase rights,” which give
“the grantee the first opportunity to purchase the property if the landowner
decides to sell.” Bill Signs Trucking, LLC v. Signs Family Limited Partnership,
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157 Cal. App. 4th 1515, 1522 (Ct. App. 2007). These preemptive purchase
rights take “one of two forms, a right of first refusal or a right of first offer.” Id.
at 1523 (quotations omitted); see SKI, Ltd. v. Mountainside Properties, Inc.,
114 A.3d 1169, 1174 (Vt. 2015); Kelly v. Ammex Tax and Duty Free Shops
West, 256 P.3d 1255, 1258 (Wash. Ct. App. 2011). Although both forms
“require, as a condition to the right being triggered, that the owner decide to
sell,” SKI, Ltd., 114 A.3d at 1175, they are distinct in that “[w]hile a right of
first refusal is triggered when the owner receives an offer from a third party and
decides to sell, a right of first offer is triggered when the owner decides to offer
the property for sale without first receiving an offer from a third party,”
Constellation Development v. Western Trust, 882 N.W.2d 238, 243 (N.D. 2016).
Thus, for a right of first offer, when the seller initially decides to sell the
property, the seller must either allow the grantee to “make an offer for the
purchase of the property before” the property is sold to a third party, John C.
Murray, Options and Related Rights with Respect to Real Estate: An Update,
47 Real Prop. Tr. & Est. L.J. 63, 76 (2012), or directly “make an offer to the
grantee of the right of first offer,” Bill Signs Trucking, LLC, 157 Cal. App. 4th at
1523; see Murray, supra at 76 (noting that the grantee “can also protect
himself by requiring that the owner . . . offer the property to him before the
owner can offer the property to a third party”). Thereafter, “the landowner is
free to sell the property to third parties.” Kelly, 256 P.3d at 1258; see Murray,
supra at 76. Although the trial court recognized these distinctions, it applied
right of first refusal principles to conclude that an “intent to sell” only occurs
when there is “an acceptable offer” from a third party. This conclusion was
erroneous because, for a right of first offer, the triggering point is the decision
to sell generally and not whether a third party has made an offer. SKI, Ltd.,
114 A.3d at 1174-75; Constellation Development, 882 N.W.2d at 243.
It is evident from the language of the agreement that the parties intended
paragraph 18B to be a right of first offer. The question that remains, however,
is whether this provision simply required that the Keatings intend to sell the
property, or that they intend to list the property for sale publicly. The
defendants argue that pursuant to the plain language of paragraphs 18B and
18C, only the Keatings’ intent to sell the Mink Island property by listing it for
public sale triggers the Greenwalds’ rights under paragraph 18B. The
plaintiffs, however, assert that paragraph 18B requires only that the Keatings
intend to sell the Mink Island property, and that the references to “re-list” or
“listed” in paragraphs 18B and 18C merely describe the procedure by which
sellers would typically demonstrate their intent to sell.
Given our general skepticism towards conditions precedent, Holden
Eng’g and Surveying, 137 N.H. at 396, as well as our reluctance to construe
contract provisions that grant one party discretion in performance in a manner
so as to “deprive another party of a substantial proportion of the agreement’s
value,” Centronics Corp. v. Genicom Corp., 132 N.H. 133, 143 (1989), we
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conclude that both interpretations are plausible in light of all the
circumstances, Birch Broad., 161 N.H. at 196. On the one hand, the terms of
paragraphs 18B and 18C could be read to mean that re-listing the Mink Island
property for sale was simply the ministerial act by which the Keatings’ intent to
sell would be expressed. On the other hand, the provisions could be
understood to impose a substantive limitation on the type of intent that the
Keatings must have before the Greenwalds’ right of first offer is triggered — not
merely an intent to sell, but an intent to sell to the public by listing the
property through MLS. The trial court never considered the former
interpretation because it rejected outright the plaintiffs’ position that the
Keatings’ intent to sell, without the need for an offer from a third party,
triggered the plaintiffs’ rights under paragraph 18B.
Because the meaning of the Agreement is ambiguous concerning whether
listing the property was intended to be ministerial or substantive, the trial
court erred in resolving this issue on summary judgment. Instead, remand is
necessary for the court to consider the parties’ intent in light of the totality of
the circumstances surrounding the Agreement’s creation. See Behrens v. S.P.
Constr. Co., 153 N.H. 498, 504 (2006) (noting that a trial court may consider
parol evidence in interpreting ambiguous terms). Moreover, because the trial
court’s interpretation necessarily informed its decisions as to whether the
Agreement was breached, and whether the plaintiffs were entitled to specific
performance from the Uickers, we reverse those rulings as well.
Nor do we agree that paragraph 18B is otherwise unenforceable because
it fails to include a purchase price. As explained above, paragraph 18B gives
the plaintiffs a right of first offer — the right to “make an offer for purchase of
the property before” it is sold to a third party. See Murray, supra at 76. To be
valid, the law requires only that the Agreement contain all essential elements of
a contract. MS Real Estate v. Donald P. Fox Fam. Trust, 864 N.W.2d 83, 91
(Wis. 2015) (quotation omitted). Like all contracts, an agreement containing a
preemptive right must be supported by consideration or its equivalent, Allison
v. Agribank, FCB, 949 S.W.2d 182, 188 (Mo. Ct. App. 1997), but it need not
include the “ultimate sale price,” SKI Ltd., 114 A.3d at 1176. Thus, the court
erred in concluding that paragraph 18B was unenforceable because it lacked
an essential term.
Lastly, we agree with the plaintiffs that the trial court erred in summarily
concluding that Barbara could not be held liable under the Agreement because
she held no ownership interest in the Mink Island property and could not
otherwise be chargeable as an agent of Jill. On this issue, the trial court ruled
that even if Barbara was considered an agent of Jill, agents can only be held
liable to third parties for their torts. But, as the plaintiffs point out, this is only
part of the rules governing agent liability. Indeed, it is well settled that “[a]n
agent purporting to act upon his own account, but in fact making a contract on
8
account of an undisclosed principal, is a party to the contract.” Restatement
(Second) of Agency § 322, at 72 (1958); accord O’Connor v. Hancock, 135 N.H.
251, 252 (1992). Perhaps recognizing this error, Barbara argues that she
cannot be held liable because neither Jill nor Richard were held liable by the
trial court. Given that we are reversing the trial court on its interpretation of
the Agreement, it necessarily follows that this argument fails. Because we are
reversing the trial court’s ruling on this issue, we need not address the
plaintiffs’ argument that Barbara should be equitably estopped from
disclaiming any interest in the property.
To the extent that this opinion does not address issues raised in the
plaintiffs’ notice of appeal that were not briefed, we deem them waived. See
Town of Londonderry v. Mesiti Dev., 168 N.H. 377, 379-80 (2015).
Reversed and remanded.
HICKS, BASSETT, HANTZ MARCONI, and DONOVAN, JJ., concurred.
9