Right of first refusal; LaRose Mkt, Inc v Sylvan Ctr, Inc

The court concluded that the trial court erred when it held that plaintiffs’ right of first refusal was not triggered by defendant-Summit’s sale of the 50-acre parcel to defendant-Dreamers and Doers. Defendant-Jarred owned Dreamers and Doers in equal part with his brother, Stephen, and friend, defendant-Kyle Sischo. “The trial court reasoned the transfer was not a ‘sale’ under LaRose because there was no bona fide, arm’s length sale, and that, while" two non-parties, Stephen and Kyle, joined in the project, "Dreamers and Doers . . . can hardly be described as ‘strangers’ to the other parties to the contract[.]” The court held that the “trial court misinterpreted the rule in LaRose. LaRose does not require a ‘sale’ to be a bona fide, arm’s length sale, only that it be ‘for value[.]’” There was “no dispute that Summit sold the property to Dreamers and Doers for $419,000. Unlike the $0 transfer from [defendants-Jarred and Sara] Spers to Summit, this transfer was certainly ‘for value[.]’” Also, there was “no dispute that ‘a significant interest in the subject property’ was transferred to another entity which ‘thereby gain[ed] substantial control over the . . . property.’” The court noted that Jarred, through Summit, owned 100% of the 50-acre plot, while Dreamers and Doers owned nothing. After the transfer, Jarred’s control of the property decreased from 100% to 33%, while Stephen and Kyle’s shares, together, increased from 0% to 67%. Thus, the only question that remained was whether the transfer was to “a stranger to the [purchase agreement.]” The trial court seemed “to have interpreted the term ‘stranger’ in the context of the buyer’s relationship to the parties themselves.” This, however, was “not the relevant inquiry. The buyer must be a stranger to the contract containing the right of first refusal, not the parties involved. The purchase agreement was between plaintiffs and the Spers. Neither Stephen, Kyle, or Dreamers and Doers as an entity were parties to this contract. Hence, the ‘significant interest’ in question— 67% control of the property—was, in fact, transferred to ‘stranger[s] to the [purchase agreement.]’ Because all four prongs are satisfied, Summit’s sale of the parcel to Dreamers and Doers triggered plaintiffs’ right of first refusal, and the trial court erred by holding otherwise.” Reversed and remanded.