Laska v. Barr
2016 SD 13
S.D.2016Background
- Marlen and Patricia Laska executed a written "First Right of Refusal" with Jerry Barr, Pat Cole, and Gerrit Juffer (the Barr Partners) after prior land dealings; the dispute concerns a second agreement tied to adjacent property (Juffer 2).
- The written instrument names a fixed purchase price of $10,500 per acre, requires notice to Buyer if Seller receives a bona fide third‑party offer, and gives Buyer ten days to "exercise this right."
- The agreement states it "shall bind to the benefit of the heirs, successors, administrators, and executors" and bars assignment without Seller’s written consent; it also provides the $1 down payment on exercise and a lapse provision if Buyer fails to timely exercise.
- The Barr Partners argued the agreement created a dual right: (1) an immediate option to buy at $10,500/acre at any time and (2) a right of first refusal to match third‑party offers, surviving the parties’ deaths.
- The Laskas argued the contract was ambiguous or void for lack of definite time for performance and lack of mutual assent; the circuit court held it was an unambiguous right of first refusal terminating at the later death of Marlen or Patricia.
- The South Dakota Supreme Court found the contract ambiguous about whether it was an option, a true right of first refusal, or some hybrid, and remanded for extrinsic evidence and for consideration whether binding heirs constitutes an unreasonable restraint on alienation.
Issues
| Issue | Laska (Plaintiff) Argument | Barr Partners (Defendant) Argument | Held |
|---|---|---|---|
| Nature of the right (option vs ROFR) | The agreement is ambiguous and fails to create a clear option; should not be enforced as claimed | It creates a “dual option”: immediate purchase at $10,500/acre OR matching any third‑party offer | Ambiguous — neither pure option nor clear ROFR; remand for extrinsic evidence to determine intent |
| Ability to buy at fixed price anytime | No clear grant of an unlimited unilateral purchase right | Barr Partners may buy at $10,500/acre at any time (dual option) | Contract language does not support an unqualified right to buy “at any time”; ambiguity as to rights exists |
| Survivability / time for performance | Agreement void or uncertain because it lacks a definite term and appears perpetual | Parties clearly intended the right to be descendible and to survive deaths | Court agrees it survives the parties but remands to decide if binding heirs is an unreasonable restraint on alienation or violates related statutes |
| Use of extrinsic evidence to determine parties’ intent | Parol/extrinsic evidence appropriate because contract ambiguous | Parties’ labels and prior dealings show intended meaning; extrinsic evidence can clarify | Court finds ambiguity and remands to admit extrinsic evidence and make factual findings on intent |
Key Cases Cited
- Ziegler Furniture & Funeral Home, Inc. v. Cicmanec, 709 N.W.2d 350 (S.D. 2006) (standard for contract interpretation and definition of option)
- Kuhfeld v. Kuhfeld, 292 N.W.2d 312 (S.D. 1980) (options limited by duration; perpetual options generally invalid)
- Dowling Family P’ship v. Midland Farms, 865 N.W.2d 854 (S.D. 2015) (definition of right of first refusal vs option)
- Advanced Recycling Sys., LLC v. Se. Props. Ltd. P’ship, 787 N.W.2d 778 (S.D. 2010) (ROFR ripening into enforceable option upon third‑party offer)
- Crowley v. Texaco, Inc., 306 N.W.2d 871 (S.D. 1981) (recognition of dual option concepts)
- Gail M. Benson Living Tr. v. Physicians Office Bldg., Inc., 800 N.W.2d 340 (S.D. 2011) (necessity of extrinsic evidence when contract ambiguous)
- Vollmer v. Akerson, 688 N.W.2d 225 (S.D. 2004) (extrinsic evidence creates factual issues where contract ambiguous)
- Old Port Cove Holdings, Inc. v. Old Port Cove Condo. Ass’n One, Inc., 986 So.2d 1279 (Fla. Dist. Ct. App. 2008) (ROFRs may be fixed‑price or market‑matching in form)
- Edgar v. Hunt, 706 P.2d 120 (Mont. 1985) (reasonableness test for restraints on alienation)