300 P.3d 1009
Haw.2013Background
- Half-acre parcel on Anini Road, Kauai, is part of an undivided 1,040-acre Master Parcel owned by Princeville Corporation (later Princeville Prince Golf Course, LLC, as successor).
- Kutkowski leased the half-acre via a 1984 Agricultural Lease and later a 1998 License Agreement that included a right of first refusal (ROFR) to purchase the premises.
- License Agreement defined the premises as the half-acre parcel; it allowed 60 days to accept or counter, with a 120-day window before public sale and automatic month-to-month tenancy afterward.
- Master Parcel sale to PPGC commenced in 2004; Princeville proposed eliminating Kutkowski’s ROFR and Kutkowski made an offer of $250,000, which was rejected; sale closed March 17, 2005; PPGC assumed the license and Kutkowski’s claim.
- Circuit court held ROFR survived holdover period and that sale of the Master Parcel did not trigger the ROFR; ICA affirmed, adopting majority rule that sale of the larger parcel does not trigger ROFR over the smaller parcel.
- This court adopts the minority rule, holding that the sale of the Master Parcel did trigger the ROFR over the half-acre and that specific performance is the appropriate remedy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does ROFR survive holdover period? | Kutkowski contends ROFR persists into holdover. | PPGC contends ROFR ends with term and holdover not triggering remedies. | ROFR survives into holdover. |
| Does sale of Master Parcel trigger ROFR over half-acre? | Sale of larger tract constitutes sale of smaller parcel; ROFR should be exercised. | ROFR limited to premises; sale of master parcel does not trigger for half-acre. | ROFR triggered by Master Parcel sale; must offer premises to Kutkowski. |
| What remedy is appropriate for triggering ROFR? | Specific performance to compel sale of half-acre to Kutkowski. | Remedies like injunction or reconveyance may be appropriate; but not specific performance in some views. | Specific performance appropriate; PPGC must offer the half-acre to Kutkowski. |
| Is performance of ROFR legally possible given zoning/subdivision constraints? | ROFR terms can be satisfied through carve-out/variance possibilities; performance not legally impossible. | Subdivision ordinance makes performance legally impossible. | Performance not legally impossible; terms and conditions could be carved to allow sale. |
Key Cases Cited
- Aden v. Estate of Hathaway, 427 P.2d 333 (Colo. 1967) (majority rule: sale of whole does not imply sale of smaller part)
- Guaclides v. Kruse, 170 A.2d 488 (N.J. Super. Ct. App. Div. 1961) (sale of whole cannot be used to compel sale of the smaller part; supports majority view)
- Berry-Iverson Co. v. Johnson, 242 N.W.2d 126 (N.D. 1976) (minority rule: sale of larger parcel may indicate intent to sell smaller parcel)
- Wilber Lime Prods., Inc. v. Ahrndt, 673 N.W.2d 343 (Wis. Ct. App. 2003) (minority rule applying to ROFR over a portion of larger tract)
- Pantry Pride Enters., Inc. v. Stop & Shop Cos., 806 F.2d 1227 (4th Cir. 1986) (remedies for ROFR issues vary; some cases permit price determination; others allow specific performance)