347 P.3d 990
Alaska2015Background
- Castle Properties held a recorded right of first refusal (ROFR) on ~2.4 acres (southern portions of Tracts 3 & 4) originally granted to Baugh Trust and later conveyed to Castle in 2002.
- In 2011 the City of Wasilla negotiated an exchange to give the Church ~17–20 acres of City land (City Trade Land) in return for the Church's Property; the City Council adopted an ordinance describing the parcel and exchange.
- Castle learned of the proposed exchange at a City Council meeting in April 2011, requested the Purchase & Sale Agreement but was denied, and recorded a Notice of Exercise of ROFR (seeking to buy for $153,000) in May 2011.
- The Church rejected Castle’s $153,000 cash offer and proceeded with the City transaction; Castle sued for specific performance and recorded a lis pendens; the Church counterclaimed to quiet title.
- The superior court, applying Roeland v. Trucano, found the City ordinance provided adequate notice of the material terms, that Castle’s $153,000 cash offer was not commercially equivalent to the City’s unique land-exchange offer, and that the Church did not breach the covenant of good faith and fair dealing.
- The Alaska Supreme Court affirmed the superior court’s judgment.
Issues
| Issue | Castle (Plaintiff) Argument | Church (Defendant) Argument | Held |
|---|---|---|---|
| Adequacy of notice of third-party offer | Church failed to provide required terms; must produce Purchase Agreement so Castle could evaluate/match | Ordinance describing parcel and transaction gave adequate notice of material terms | Ordinance provided adequate notice; no clear error in superior court finding |
| What constitutes an "equivalent" offer for a unique land-exchange | Castle’s $153,000 cash offer (based on tax assessment) was equivalent or Castle should be allowed to buy at appraised City-land value ($250,000) | Church may prefer a unique land-exchange; ROFR holder must submit commercially equivalent offer | Cash offer was not commercially equivalent to City’s unique trade; Church reasonably rejected $153,000 |
| Time to exercise ROFR / reasonable opportunity | Castle needed more time; Church should have allowed reasonable period to match exchange | Castle had opportunity (learned at Council; could have notified earlier); Castle set its own deadline and urged "time is of the essence" | Castle had a reasonable opportunity; superior court did not err in finding time was adequate |
| Breach of covenant of good faith and fair dealing | Church acted in bad faith by withholding info, denying ROFR validity, favoring trade to avoid payments, and refusing to cooperate | Church legitimately preferred a land trade, dealt at arm’s length, and—given its claimed ignorance of the recorded ROFR—did not act in bad faith | No bad faith: Church’s actions were commercially reasonable; superior court’s factual findings not clearly erroneous |
Key Cases Cited
- Roeland v. Trucano, 214 P.3d 343 (Alaska 2009) (framework for ROFR duties: seller must give adequate notice of material terms; right-holder must investigate unclear terms; unique offers invite commercially equivalent proposals)
- Jensen v. Alaska Valuation Serv., Inc., 688 P.2d 161 (Alaska 1984) (principles on notice as factual questions)
- Guin v. Ha, 591 P.2d 1281 (Alaska 1979) (standard for reviewing legal questions and covenant of good faith)
- Disotell v. Stiltner, 100 P.3d 890 (Alaska 2004) (tax assessments are unreliable as indicators of true market value)