978 N.W.2d 473
S.D.2022Background
- McCallum (as trustee) leased commercial property to McCoy with a written right of first refusal: tenant may buy the premises "at the same price and on the same terms" of any bona fide offer accepted by landlord.
- McCallum accepted a purchase agreement from Dakota Legends Properties (DLP) for $840,000; the contract contained common contingencies (financing, inspection, appraisal, and easement/third‑party consents) and a closing date.
- McCallum notified McCoy of the offer, later provided a redacted copy of the purchase agreement, and set short deadlines for McCoy to exercise the right and provide proof of ability to pay.
- McCoy submitted two offers that did not match DLP’s price/terms and disputed adequacy of the notice and the effect of contingencies on whether the offer was “bona fide.”
- The circuit court granted partial summary judgment for McCallum, holding DLP’s offer was bona fide, McCoy was given the opportunity to match the same price/terms but did not do so, and expunged McCoy’s lis pendens; this Court affirmed and remanded remaining claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether DLP's offer was a "bona fide" offer under the lease | DLP's inspection/financing contingencies allowed renegotiation/termination and made price indefinite, so not bona fide | Contingencies are routine; the agreement was genuine, unrenegotiated after inspection, and parties were ready to close | Offer was bona fide — contingencies did not defeat bona fides or render price indefinite |
| Whether McCoy was afforded the opportunity to purchase on the same price and terms | McCoy said notice omitted material terms, she was forced into a cash-only purchase, and she lacked adequate time to match terms | McCallum provided a copy of the purchase agreement (redacted buyer); terms were disclosed and McCoy’s offers did not match price/terms or prove ability to pay | McCoy received adequate notice and opportunity and failed to exercise the right of first refusal |
| Whether expunging the lis pendens was an abuse of discretion | Lis pendens was warranted because McCoy challenged validity of the sale/right of first refusal | Expunge was appropriate because McCoy’s right of first refusal claim failed as a matter of law | Court did not separately decide on appeal (McCoy conceded disposition follows right-of-first-refusal ruling) |
Key Cases Cited
- Citibank (S.D.), N.A. v. Hauff, 668 N.W.2d 528 (S.D. 2003) (summary judgment standard on appeal)
- Charlson v. Charlson, 892 N.W.2d 903 (S.D. 2017) (contract interpretation reviewed de novo; plain language controls)
- Laska v. Barr, 876 N.W.2d 50 (S.D. 2016) (right of first refusal ripens into enforceable option when owner accepts a third‑party offer)
- Mucci v. Brockton Bocce Club, Inc., 472 N.E.2d 966 (Mass. App. Ct. 1985) (contingent offers can still be bona fide)
- ABCDW LLC v. Banning, 388 P.3d 821 (Ariz. Ct. App. 2016) (inspection contingencies do not necessarily render price indefinite)
- Uno Rests., Inc. v. Boston Kenmore Realty Corp., 805 N.E.2d 957 (Mass. 2004) (bona fide offer requires honest and serious intent)
- Roeland v. Trucano, 214 P.3d 343 (Alaska 2009) (adequacy of notice to right‑holder measured by ability to decide whether to match)
- Dyrdal v. Golden Nuggets, Inc., 672 N.W.2d 578 (Minn. Ct. App. 2003) (a copy of the purchase agreement generally provides reasonable notice to a right‑of‑first‑refusal holder)