Constellation Dev., LLC v. W. Trust Co.

882 N.W.2d 238

CONSTELLATION DEVELOPMENT, LLC, Plaintiff and Appellant

v.WESTERN TRUST COMPANY, Gary G. Hoffman, Trustee, and Dabbert Custom Homes, LLC, Defendants and Appellees.

No. 20150319.

Supreme Court of North Dakota.

July 7, 2016.

Michael L. Gust (argued) and Joshua M. Feneis (appeared), Fargo, N.D., for plaintiff and appellant.

Roger J. Minch, Fargo, N.D., for defendant and appellee Gary G. Hoffman.

Brian W. Varland (argued), Mark J. Heley (on brief), Minneapolis, MN, and Seth A. Thompson (appeared), Bismarck, N.D., for defendant and appellee Dabbert Custom Homes, LLC.

SANDSTROM, Justice.

[¶ 1] Constellation Development, LLC, appeals from a judgment dismissing its claims against Western Trust Company and its trustee, Gary Hoffman (collectively “Western”), for breach of contract and equitable and promissory estoppel, and against Dabbert Custom Homes, LLC, for tortious interference with a business contract. Because we conclude the district court did not err in ruling as a matter of law Western did not breach any agreement it had with Constellation, we affirm the judgment.

I

[¶ 2] On September 30, 2013, Constellation agreed in writing to purchase about 24 acres of land in Cass County from Western, with the remaining balance to be paid on October 14, 2013. The agreement also provided:

This has changed to a three-year purchase option to run concurrently

FIRST RIGHT OF REFUSAL: The Seller will grant and give to the Buyer the First Right of Refusal for 5 years on the additional 62 acres as shown on Exhibit “B” attached to this Agreement should the Seller decide to sell any more land. The purchase price in reference to the additional land will be at $18,000.00 per acre if the Seller decides to sell additional land. If Seller decides to sell more land the Buyer will have 14 days to enter into a Purchase Agreement and 30 days to close the transaction or he will lose his First Right of Refusal.

The underlined sentence above the printed paragraph was handwritten and initialed by Hoffman and Constellation's representative.

[¶ 3] On August 26, 2014, Constellation's representative wrote a letter to Western stating: “Per the terms of our purchase agreement dated September 30, 2013—I wish to exercise my option to purchase the balance of real estate referenced in the agreement.” On September 5, 2014, Constellation agreed in writing to purchase the additional property consisting of approximately 64 acres from Western:

The Purchser [sic] will therefore pay the sum of $1,150,992.00 (this price is determined by $18,000.00 x 63.944 Acres) property is surveyed and the selling price will be: $1,150,992.00 for the 63.944 Acres; these are the following terms and conditions:

....

(1) A $2500.00 herewith is a non-refundable payment at the execution of this Agreement with the said check to be made payable to First Bank and Trust of Brookings, South Dakota who is the Seller's 1031 Exchanger. The remaining balance of $1,148,492.00 is to be paid on or before October 13, 2014.

(1a) Because this is a 1031 Exchange, the said closing shall be on or before October 13, 2014.

Constellation gave Western two different checks for $2,500, and each check was returned for insufficient funds. Constellation alleged that it offered Western a $2,500 cashier's check on October 8 or 9, 2014, but Western refused it.

[¶ 4] On October 9, 2014, Western sent Constellation a “Notice of Termination of Purchase Agreement,” which stated:

PLEASE TAKE NOTICE that Western Trust Company, through its trustee, Gary G. Hoffman, hereby terminates that certain Purchase Agreement dated September 5, 2014, a copy of which is attached, along with the check for $2,500.00 tendered by Constellation Development, LLC at the time the Purchase Agreement was signed.

The check for $2,500.00 has been returned twice for non-sufficient funds.

PLEASE TAKE NOTICE that unless Constellation Development, LLC pays Western Trust Company $1,150,992.00 in full, on or before Monday, October 13, 2014, the attached Purchase Agreement will be deemed terminated and and void by Western Trust Company, and Western Trust Company will reserve all rights for breach of the Purchase Agreement against Constellation Development, LLC, and any other responsible parties, and will proceed to mitigate its damages by, among other things, beginning efforts to sell the property described in the attached Purchase Agreement to other parties or entities.

Constellation did not make the full payment of $1,150,992 to Western on or before October 13, 2014. On October 29, 2014, Western agreed in writing to sell Dabbert Custom Homes, LLC, the 64 acres of property at the price of $19,000 per acre. Western conveyed the property to Dabbert on December 8, 2014.

[¶ 5] Constellation sued Western, seeking damages for breach of contract and seeking to be allowed to complete the purchase of the property under theories of equitable and promissory estoppel, alleging there had been an oral extension of the September 2014 purchase agreement. Constellation also sought damages from Dabbert for tortious interference with a business contract. The district court granted summary judgment dismissing all of Constellation's claims, concluding Western did not breach the agreement with Constellation when it refused to sell it the 64 acres, and because there was no breach, Constellation could not prevail against Dabbert on the tortious interference claim. The court did not address Constellation's estoppel claims.

[¶ 6] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27–05–06. Constellation's appeal is timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. § 28–27–01.

II

[¶ 7] Constellation argues the district court erred in granting summary judgment dismissing its breach of contract claim.

[¶ 8] The standard of review for summary judgment is well-established:

Summary judgment is a procedural device for the prompt resolution of a controversy on the merits without a trial if there are no genuine issues of material fact or inferences that can reasonably be drawn from undisputed facts, or if the only issues to be resolved are questions of law. A party moving for summary judgment has the burden of showing there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. In determining whether summary judgment was appropriately granted, we must view the evidence in the light most favorable to the party opposing the motion, and that party will be given the benefit of all favorable inferences which can reasonably be drawn from the record. On appeal, this Court decides whether the information available to the district court precluded the existence of a genuine issue of material fact and entitled the moving party to judgment as a matter of law. Whether the district court properly granted summary judgment is a question of law which we review de novo on the entire record.

Hamilton v. Woll, 2012 ND 238, ¶ 9, 823 N.W.2d 754.

[¶ 9] The district court ruled that the agreements were unambiguous and that after Constellation exercised the purchase option in the September 2013 agreement, the resulting September 2014 purchase agreement required the nonrefundable $2,500 payment be made at the time of execution and the remainder be paid by October 13, 2014. Because the payments were not made, the court ruled the purchase option expired. The court further ruled Western “decide[d]” to sell the additional property when it entered into the September 5, 2014, purchase contract, which triggered the “First Right of Refusal” provision in the September 2013 purchase agreement. Because Constellation failed to close the transaction within 30 days after execution of the September 2014 purchase agreement, the court also held Constellation lost the first right of refusal under the September 2013 purchase agreement as well. Furthermore, because Western did not breach its agreement with Constellation when it failed to sell the 64 acres to Constellation, the court ruled Constellation was unable to prove an essential element of its tortious interference claim against Dabbert.

[¶ 10] Constellation argues the district court erred in ruling the September 2013 agreement was unambiguous. Constellation argues the handwritten sentence above the printed “First Right of Refusal” clause, stating, “This has changed to a three-year purchase option to run concurrently,” should be interpreted as creating a separate purchase option and a separate right of first refusal based on the language “to run concurrently.” Western and Dabbert argue the handwritten sentence, which controls over the printed part, see N.D.C.C. § 9–07–16, created only a purchase option because it replaced the right of first refusal provision based on use of the phrase, “[t]his has changed.” We need not decide whether an ambiguity was created because, even if the 2013 agreement created both a purchase option and a right of first refusal, Constellation could not prevail.

[¶ 11] In Estate of Grengs, 2015 ND 152, ¶ 27, 864 N.W.2d 424, we explained:

An option to purchase and a right of first refusal are different. An option to purchase creates in the option holder the power to compel the owner of the property to sell it at a stipulated price whether or not the owner is willing to sell. Berry–Iverson Co. of N.D., Inc. v. Johnson, 242 N.W.2d 126, 130 (N.D.1976) ; see also 77 Am. Jur. 2d Vendor and Purchaser § 27 (2015). A right of first refusal is often referred to as a preemptive right because “it allows the holder to preempt a sale to an interested third party, and requires the landowner to offer the property to the right holder on the same terms.” Northern Plains Alliance, L.L.C. v. Mitzel, 2003 ND 91, ¶ 14, 663 N.W.2d 169. We have further explained:

The holder of a right of first refusal on a piece of land only has the right to receive an offer to buy the land. Generally, it is a contractual right to preempt another because the

...