303, LLC v Born (WI)

Summary:  Unrecorded offer to purchase containing a right of first refusal that did not identify which parcel, of many the grantor owned in the same county, was the subject of the right, did not meet the requirements of the statute of frauds.

303, LLC v Born, 2011 AP 2368 (Wis. Ct. App., 2012).

Facts:  In 2003, 303, LLC purchased a fifty-acre farm and home from Walter and Alice Born, who owned approximately 128 acres in total. The written agreement included a 10-year leaseback provision to the Borns and a right of first refusal to 303, LLC on “remaining acreage.”  The Borns continued to farm the 50 acres pursuant to the leaseback provision, but no written lease was executed. Neither the warranty deed nor the closing documents memorialized the right of first refusal, nor was the ‘remaining acreage’ identified in the written offer to purchase.

In 2005, Born continued to farm, but sublet roughly 34 acres to Scott and Paulette Ditter. Later that year, the Ditters offered to purchase 28.5 acres of land still owned by Born, which was accepted, and they purchased another 8.5 acres of Born’s land on April 7, 2009. On June 10, 2009, 303, LLC sued Born for breach of contract and the Ditters, for tortious interference of the contract for disregarding 303 LLC’s right of first refusal on Born’s “remaining acreage” as well as for breach of contract for subletting 34 acres. The trial court denied 303 LLC’s right of first refusal claim because “remaining acreage” was too indefinite a description to meet the statute of frauds requirement that land be identified with reasonable certainty. Likewise, the court did not find Born in breach of the lease agreement for subletting. 303, LLC appealed the court’s granting of summary judgment on these issues.

Holding:  The court of appeals affirmed the trial court in all respects. As to the right of first refusal, the court agreed that it “remaining acreage” was insufficient for the statute of frauds because a disinterested party examining the offer to purchase could not specify with reasonable certainty what land was subject to the right of first refusal. The court properly omitted parol evidence because the written description did not contain a “link” to specifically identify the property. Parol evidence in the context of the statute of frauds does not operate to supply fatal omissions of the writing, but rather to render the writing intelligible. When a person owns more than one parcel in the same general location, the description in the document must be sufficiently definite so that a person might know to a reasonable certainty which parcel or parcels are being described. As such, 303, LLC had no right of first refusal.

The leaseback provision, which stated, “seller to rent land back for 10 years (pay taxes only) or until done farming” did not violate the statute of frauds. The court found that Alice Born was not done farming because she continued to sell cattle and hay to generated income on a portion of the leased land, which were in accordance to the lease. Born did not breach the material terms of this lease, which did not address subletting.

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By: ATG Underwriting Department | Posted on: Mon, 12/03/2012 - 3:53pm