77 N.E.3d 823
Ind. Ct. App.2017Background
- The Stolers leased multiple gas-station parcels from B&R Oil under long-renewed leases that included identical rights of first refusal (ROFR) to purchase “the leased premises.”
- In 2014 B&R Oil signed a letter of intent to sell substantially all assets to Empire in an $80,000,000 package deal that included the Stolers’ leased premises plus many other properties and assets.
- B&R Oil notified the Stolers of Empire’s offer and gave them 15 days to match; the Stolers attempted to exercise the ROFR to buy only their leased premises.
- B&R Oil insisted that matching required tendering the full $80,000,000 package price (and implied it required cash), not a price allocated to each leased parcel.
- The Stolers sued for breach of the leases; the trial court granted summary judgment for the Stolers on breach, and the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Stolers) | Defendant's Argument (B&R Oil/Empire) | Held |
|---|---|---|---|
| Did Empire’s package offer trigger the ROFR? | The package included an offer to buy the leased premises, so it triggered the ROFR. | The offer was for a bundled set of assets, not an offer for only the leased premises, so it did not trigger the ROFR. | Triggered: package offer that included the leased premises did invoke the ROFR. |
| Did B&R Oil comply with the ROFR by giving Stolers 15 days to match the $80M package? | No — the ROFR required the opportunity to match an offer to purchase the leased premises only; presenting a bundled, nonconforming offer nullifies the ROFR. | Yes — the ROFR required only that lessees be allowed to match the presented offer; B&R satisfied that by passing through Empire’s package offer. | Breach: presenting the unallocated package offer and insisting on matching the whole package breached the ROFR. |
| May a lessor evade a ROFR by packaging the subject property with other assets? | No — a seller cannot defeat a ROFR by bundling the optioned property with unrelated assets; seller must allocate price or offer the parcel separately. | Seller argues contract text does not prohibit passing through package offers. | Seller may not circumvent ROFR by bundling; Hamlin doctrine bars self-caused failure of condition. |
| Were the leases ambiguous such that extrinsic evidence or added terms are required? | The ROFR is unambiguous: “leased premises” means only the parcel described in each lease. | The plain language allows matching of whatever offer the lessor intends to accept (including package offers); court should not add terms. | Unambiguous: court gives plain meaning to “leased premises”; no addition of terms; favors Stolers. |
Key Cases Cited
- Hamlin v. Steward, 622 N.E.2d 535 (Ind. Ct. App. 1993) (party cannot cause failure of a condition precedent and rely on that failure to avoid performance)
- Ind. State Highway Comm’n v. Curtis, 704 N.E.2d 1015 (Ind. 1998) (endorsing Hamlin doctrine; bars contractual sabotage or bad-faith acts causing condition failure)
- Maron v. Howard, 258 Cal.App.2d 473 (Cal. Ct. App. 1968) (seller should allocate price or otherwise permit exercise of ROFR rather than defeating it by packaging)
- Plante v. Town of Grafton, 775 N.E.2d 1254 (Mass. App. Ct. 2002) (seller may not defeat ROFR by requiring purchase of additional land as condition to exercise)