Belton Chopper 58, LLC v. North Cass Development, LLC
2016 Mo. App. LEXIS 527
Mo. Ct. App.2016Background
- In 2003 Bowes Investments and North Cass entered a Settlement Agreement and filed a Memorandum of Right of First Refusal (ROFR), granting North Cass a ROFR on Bowes’ commercial property.
- Paragraph 5 prescribed a 10-business-day notice/acceptance procedure and stated the ROFR “is ineffective upon a sale of the Property by foreclosure or other involuntary sale.”
- Paragraph 6 described termination events for the ROFR, including conveyance pursuant to the ROFR.
- Bowes mortgaged the property to Wells Fargo in 2006; Bowes defaulted and a non-judicial foreclosure trustee sold the property to Wells Fargo at a 2013 foreclosure sale.
- Wells Fargo attempted subsequent sales; prospective buyers discovered the 2003 ROFR, which stalled sales. Wells Fargo wrote North Cass in June 2014 offering the property under its latest contract and asking North Cass to waive the ROFR; North Cass did not respond.
- Wells Fargo sued for declaratory judgment quieting title; it moved for summary judgment and the trial court granted it. Belton Chopper later substituted as respondent after purchase; the court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Wells Fargo/Respondent) | Defendant's Argument (North Cass/Appellant) | Held |
|---|---|---|---|
| Whether the ROFR survived the foreclosure sale | ROFR did not survive; Paragraph 5 makes the ROFR ineffective on foreclosure so purchaser takes free of the ROFR | ROFR remained enforceable after foreclosure; "ineffective" does not mean terminated | Court held ROFR terminated by foreclosure; "ineffective" construed to mean the ROFR was extinguished upon foreclosure |
| Proper contract interpretation of the term "ineffective" | Plain, ordinary meaning yields that ROFR is not available after foreclosure; enforcing otherwise renders termination provisions meaningless | "Ineffective" is broader than "terminated," so ROFR could apply to later voluntary sales | Court interpreted contract de novo and gave words their plain meaning; holding that "ineffective" in context means terminated as to subsequent sales |
| Whether North Cass’s failure to respond to June 2014 offer amounted to waiver or expiration | Wells Fargo argued non-response meant North Cass did not exercise ROFR and sale could proceed | North Cass argued ROFR still existed or question about whether notice was required to trigger ROFR | Court noted North Cass did not dispute that the ROFR was ineffective as to the foreclosure sale; because ROFR was terminated at foreclosure, the non-response issue was moot |
| Whether ROFR was void under rule against perpetuities | Wells Fargo alternatively argued ROFR is void ab initio under RAP | North Cass maintained ROFR valid | Court did not reach this point because disposition on foreclosure clause was dispositive |
Key Cases Cited
- ITT Commercial Financial Corp. v. Mid–America Marine Supply Corp., 854 S.W.2d 371 (Mo. banc 1993) (summary judgment standard and burden on non‑movant)
- Ethridge v. TierOne Bank, 226 S.W.3d 127 (Mo. banc 2007) (contract interpretation: plain meaning governs absent ambiguity)
- Tri-Lakes Newspapers, Inc. v. Logan, 713 S.W.2d 891 (Mo. App. S.D. 1986) (reject unreasonable contract constructions when a reasonable one exists)
- Foley Co. v. Walnut Associates, 597 S.W.2d 685 (Mo. App. W.D. 1980) (prefer interpretation that gives effective meaning to all contract terms)
- Helterbrand v. Five Star Mobile Home Sales, Inc., 48 S.W.3d 649 (Mo. App. W.D. 2001) (contract interpretation reviewed de novo)
- Hensley-O'Neal v. Metropolitan National Bank, 297 S.W.3d 610 (Mo. App. S.D. 2009) (appellate affirmance may rest on any theory supported by the record)