MS Real Estate Holdings, LLC v. Donald P. Fox Family Trust
853 N.W.2d 627
Wis. Ct. App.2014Background
- In 1998, Tidy-View Dairy, Inc. entered into a right of first refusal (ROFR) with the Foxes granting purchase and lease rights to Tidy-View.
- Section 1 gives Tidy-View a first right to purchase the property on the Foxes' proposed terms, with a 15-day window to accept after written notice of an offer.
- Section 2 provides a right to lease on the same terms as the Foxes would accept from another party, with a 15-day acceptance window and a 2.2 provision stating the lease right continues through renewals unless waived by Tidy-View.
- The ROFR binds successors in interest and was issued for about $4,000; the rights were to remain in effect until extinguished by sale or waiver.
- Tidy-View began leasing in 2001; a 2011 sale or lease event prompted disputes over whether the ROFRs were indefinite and terminable after a reasonable time.
- The circuit court granted summary judgment for the Foxes, holding the ROFRs were indefinite and terminable after a reasonable time; Tidy-View appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is Section 1 (purchase ROFR) sufficiently definite or indefinite? | Tidy-View contends Section 1 is definite and terminates upon sale. | Foxes argue Section 1 is indefinite and terminable after a reasonable time. | Section 1 is sufficiently definite and terminates upon sale. |
| Does Section 2 (lease ROFR) run indefinitely with the land or terminate upon sale? | Tidy-View argues Section 2 creates perpetual rights binding successors. | Foxes contend it could burden land indefinitely unless waived. | Section 2.2 terminates upon sale or transfer to a third party; waiver interpretation limits indefiniteness. |
Key Cases Cited
- Schneider v. Schneider, 132 Wis. 2d 171 (Ct. App. 1986) (defines essential event-based definiteness for a ROFR)
- Pallange v. Mueller, 206 Wis. 109 (1931) (useful definition of contract duration tied to an event)
- Edlin v. Soderstrom, 83 Wis. 2d 58 (1978) (rights to purchase run with defined terms; contract is definite)
- Bruns v. Rennebohm Drug Stores, Inc., 151 Wis. 2d 88 (Ct. App. 1989) (reasonableness in ROFR as to price and time)
- Gray v. Stadler, 228 Wis. 596 (1938) (perpetual leases not automatically void; context matters)
- Nature Conservancy of Wis., Inc. v. Altnau, 313 Wis. 2d 382 (2008) (servitude-like ROFR analysis; intent and context matter)
- Levy v. Levy, 388 N.W.2d 170 (Wis. 1986) (contract interpretation and ambiguity standard)
- Wilber Lime Prods., Inc. v. Ahrndt, 268 Wis. 2d 650 (Ct. App. 2003) (ROFR timing and triggering event analysis)