Whitеface Resort Holdings, LLC, Appellant, v Charles W. McCutchen et al., Respondents.
Supreme Court, Appellate Division, Third Departmеnt, New York
January 24, 2008
860 N.Y.S.2d 308
Mercure, J.
Appeal from an order of the Supreme Court (Dawson, J.), entered April 12, 2007 in Essex County.
This appeal requires us to consider whether an owner can sell a portion of a parcel of real estate burdened by a right of first refusal when the deed granting the right contains no express restriction on partial sales but the right holder nevertheless seeks to enjoin a sale of anything less than the entire parcel.
Defendant Charles W. McCutchen (hereinafter defendant) is the successor in interest of Brunson McCutchen and Margaret McCutchen, who were deeded a parcel of real property by the Adirondack Company in 1955. The parcel is located between property owned by plaintiff, which oрerates the Whiteface Club, and that owned by defendants Garrett Hotel Group and Lake Placid Lodge, Inc. (hereinafter collectively referred to as the Lodge), which also leased defendant‘s parcel. As relevant here, the 1955 deed granted а right of first refusal to Whiteface Inn, Inc. and its successors and assigns. Plaintiff, as successor of Whiteface Inn, Inc., commenced this aсtion to, among other things, enforce the right of first refusal after learning that the
On October 20, 2006, defendant and the Lodge formally executed a contract of sale for a portion of the parcel and, four days later, defendant sent a letter, along with a copy of thе contract, offering plaintiff the option to purchase that portion of the property on the same terms. Plaintiff refused the offer in writing, claiming that the right of first refusal prohibits the transfer of only a portion of the parcel. Thereafter, plaintiff amended its complaint to request rescission of the contract between defendant and the Lodge and for an order directing defendant to comply with the requirements of the 1955 deed. Supreme Court granted defendant‘s subsequent motion for summary judgment and dismissed the cоmplaint. Plaintiff appeals and we now affirm.
Plaintiff argues that its right of first refusal was not triggered by the sale of anything less than the entire pаrcel, that the right has not been waived by the partial sale to the Lodge, and that defendant violated the right by selling only a portion of the parcel over plaintiff‘s objection. A right of first refusal is “a restriction on the power of one party to sell without first mаking an offer of purchase to the other party upon the happening of a contingency: the owner‘s decision to sell to a third party” (LIN Broadcasting Corp. v Metromedia, Inc., 74 NY2d 54, 60 [1989]; see Morrison v Piper, 77 NY2d 165, 169-170 [1990]). That is, the right “merely provides that before an owner sells, it will first give the other party a chance to buy” and, thus, “[w]hen . . . the selling party has fully complied with its obligations under the first refusal clause by not selling without first making the required offer, the nonselling party has received the bargained-for performance” (LIN Broadcasting Corp. v Metromedia, Inc., 74 NY2d at 60, 62; see Cipriano v Glen Cove Lodge #1458, B.P.O.E., 1 NY3d 53, 61 [2003]; Krieger v Cornelius, 259 AD2d 10, 11-12 [1999]).
While it is well established that an owner may not attempt to defeat a right of first refusal оn a parcel by offering the property for sale only as part of a larger parcel (see e.g. South Amherst, Ltd. v H.B. Singer, LLC, 13 AD3d 515, 516 [2004]; K.S. & S. Rest. Corp. v Yarbrough, 104 AD2d 486, 487 [1984]), it is an open question whether an owner can sell a portion of a parcel encumbered by a right of first refusal when the right
Plaintiff‘s right of first refusal is set forth in the 1955 deed as follows:
“Grantees agree that Whiteface Inn, Inc., its successors and assigns, shall have the first оption to purchase the demised [sic] premises, on the same terms and conditions as any other prospective bona fide purchaser, and agree not to sell or convey said premises without first giving Whiteface Inn, Inc., its successors and assigns, [60] days’ written nоtice of their intention to sell or convey.”
Notably, there is no express limitation in the 1955 deed on the sale of only a portiоn of the premises. Although plaintiff urges us to imply a term requiring that the property may be conveyed only in its entirety, this Court has recognizеd the validity of partial transfers so long as the right of first refusal is honored with each transfer and expressly deemed unreasonable the construction of the word “premises” as meaning the entire parcel, as noted above (see Colonie Motors v Heritage Corp. of N.Y., 61 AD2d at 1107).
Moreover, “restraints on the free alienation of land . . . tend to prevent full utilization of the land, which is contrary to the best interests of society. Since such covenants are to be construed strictly even if expressly stated, it follows that a court should not recognize the existence of an implied limitation upon [alienation] unless the situation is such that the failure to do so would be to deprive a pаrty of the benefit of [the] bargain” (Rowe v Great Atl. & Pac. Tea Co., 46 NY2d 62, 69 [1978] [citation omitted]; see generally Metropolitan Transp. Auth. v Bruken Realty Corp., 67 NY2d 156, 161, 167 [1986]). There is no indication that plaintiff was deprived of the benefit of the bargain herein; rather, in the absence of any prohibition on the sale of a part of the property, we conclude that plaintiff received thе bargained-for performance when defendant notified it of the
Plaintiff‘s remaining argument is not properly before us.
Cardona, P.J., Rose, Malone Jr. and Kavanagh, JJ., concur.
Ordered that the order is affirmed, with one bill of costs.