PECORA V. BERLIN, SIGNATURE GARDENS, ET AL.
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Third District Court of Appeal
State of Florida, January Term, A.D. 2011
Opinion filed March 30, 2011.
Not final until disposition of timely filed motion for rehearing.
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No. 3D10-2983
Lower Tribunal Nos. 03-1947; 10-29260CA
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Arlene Pecora,
Appellant,
vs.
Bret Berlin, Signature Gardens, Ltd., a Florida limited partnership,
Deux Michel, Inc., a Florida corporation, Signature Grand, Ltd., a
Florida limited partnership, and Grand Partners, Inc., a Florida
corporation,
Appellees.
An Appeal from the Circuit Court for Miami-Dade County, Maria M.
Korvick, Judge.
Kirschbaum, Birnbaum, Lippman & Gregoire, and Nancy W. Gregoire (Fort
Lauderdale); Katzman, Wasserman, Bernnardini & Rubinstein and Steven M.
Katzman and Craig A. Rubinstein (Boca Raton), for appellant.
Waldman, Trigoboff, Hildebrandt, Marx & Calnan, and Glenn J. Waldman,
and William E. Calnan (Weston), for appellees.
Before WELLS, SALTER and EMAS JJ.
EMAS, J.
Arlene Pecora appeals from a final summary judgment determining that she
was not entitled to exercise a right of first refusal in the sale, by a court-appointed
receiver, of Signature Grand, a catering facility located in Broward County. We
affirm, holding that, given the nature of the sale, and the express language of the
agreement creating the right of first refusal, the trial court was correct in granting
summary judgment.
I. BACKGROUND
Jerome C. Berlin (“Mr. Berlin”) and Michael Pecora (“Mr. Pecora”) each
owned fifty percent of the shares of Deux Michel, Inc., the corporate general
partner of Signature Gardens, Ltd. (“Signature Gardens”), and fifty percent of the
shares of Grand Partners, Inc., the corporate general partner of Signature Grand,
Ltd. (“Signature Grand”). Mr. Berlin and Mr. Pecora were also limited partners in
both Signature Grand, Ltd. and Signature Gardens, Ltd. (collectively the
“Signature Entities”). When both partners died in 2003, the Berlin Estate became
owner of his fifty percent interest in the Signature Entities, and Arlene Pecora
(“Mrs. Pecora”), as the surviving spouse of Mr. Pecora, became the owner of his
fifty percent interest. In 2003, the personal representative for the Berlin Estate
commenced an adversary proceeding seeking, inter alia, appointment of a receiver
for, and dissolution of, the Signature Entities. Temporary receivers were in control
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of the Signature Entities since shortly after the deaths of Mr. Berlin and Mr.
Pecora.
a. Appointment of a Receiver
In 2008, the Berlin Estate filed a motion for appointment of a single overall
receiver for the Signature Entities, pending further proceedings in the adversary
dissolution action. Following an evidentiary hearing in January 2009, the trial
court appointed John Kozyak, Esq., as receiver for the Signature Entities. In doing
so, the trial court made specific findings in a nineteen-page order, concluding that
there existed a deadlock in the Signature Entities’ ownership and day-to-day
management and that, without the appointment of a single receiver for the
Signature Entities, there was imminent danger of damage to the businesses.
The appointment order gave the receiver
full authority to take such actions as may be necessary on
behalf of the Signature entities pursuant to this Court’s
order. The receiver shall maintain, where appropriate,
the normal course of business of the entities, including
entering into contracts; signing leases; purchasing goods;
retaining, hiring, and firing staff and employees; and
negotiating with companies and individuals whose
relationships affect assets or the enterprise of the
Receiver.
The Receiver shall further have the full authority… to
operate, consolidate, merge, sell, abandon, or otherwise
dispose of the Receivership assets;… and such other acts
as may be necessary to operate and protect the
businesses.
The Receiver shall operate the
Receivership’s business in [his] or her best business
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judgment and act in the interest of those who own or
have claims in the businesses. Where necessary, the
Receiver may petition the Court for instructions on
matters requiring judicial oversight and when the
Receiver feels direction is needed about the propriety of
certain contemplated acts.
(emphasis added).
Mrs. Pecora appealed the order appointing the receiver on jurisdictional
grounds and this Court affirmed. Pecora v. Berlin, 23 So. 3d 727 (Fla. 3d DCA
2009).
b. Signature Gardens
Pursuant to its authority, the receiver listed Signature Gardens, Ltd.1 (a
catering facility located in Miami-Dade County) for sale and sought the trial
court’s approval of the listing agreement. Mrs. Pecora objected to the listing
agreement because it did not provide for a right of first refusal, a right which she
claimed she was entitled to under the Signature Gardens Distribution Agreement.2
Following a hearing at which the receiver testified that a right of first refusal
would have a chilling effect on the listing and sale of the property, the trial court
determined that Mrs. Pecora did not have a right of first refusal under the
1
Although this appeal does not involve the sale of the Signature Gardens property,
some background is necessary to place the relevant events in their proper context.
2
The Signature Gardens Distribution Agreement and the Signature Grand
Distribution Agreement contain the identical provision regarding the right of first
refusal. The right of first refusal provision is set forth in the discussion of
Signature Grand, infra.
4
circumstances and approved the listing agreement and, ultimately, the sale of the
Signature Gardens, Ltd. catering facility. That property was subsequently sold.
Mrs. Pecora did not appeal the trial court’s determination, the order approving the
listing agreement or the order approving the sale.
c. Signature Grand
Simultaneous with the marketing and sale of the Signature Gardens property,
the trial court set a final hearing on the adversary action for dissolution of the
Signature Entities. Soon thereafter, the parties agreed that the Signature Entities
should be dissolved, and an order was entered which provided in pertinent part:
The parties do not oppose a dissolution and a winding up
of the business affairs of . . . the Signature entities. The
receiver for the Signature entities, John Kozyak, Esq.,
shall continue to exercise the authority and powers
previously vested in him as the court-appointed receiver,
unless and until further order from this Court.
Notwithstanding her lack of opposition to this motion,
Arlene Pecora reserves and does not waive her objections
to venue and jurisdiction.
(emphasis added).
The receiver initiated efforts to sell the Signature Grand catering facility and
property located in Broward County. As with Signature Gardens, Mrs. Pecora
maintained that she had a right of first refusal on any sale of Signature Grand
assets pursuant to the terms of the Grand Partners, Inc. Agreement for Distribution
(“Distribution Agreement”). Mr. Berlin and Mr. Pecora created this Distribution
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Agreement to establish a procedure by which the corporation would operate in the
event of the death of one of the two partners, expressing their intent with the
following language:
WHEREAS, Berlin and Pecora believe that it is in their
best interests and that of the Corporation to make
provision for the smooth and efficient operation of the
Corporation in the event of death of either Berlin or
Pecora (upon the death of Berlin or Pecora such decedent
is hereinafter referred to as a “Decedent”)….
The Distribution Agreement thereafter made provisions for the transition and
management of the day-to-day operations, as well as the sale of the corporation
and its assets. The Distribution Agreement speaks in terms of a “Decedent” (the
partner who dies) and a “Survivor” (the partner who survives).
The Distribution Agreement provides that in the event of the death of either
Mr. Berlin or Mr. Pecora
the Survivor shall be obligated to market the
Corporation’s assets and/or shares and the assets, or
partnership interests, of the Partnership during the ten
(10) year period following the death of either of them. In
the event the Survivor has failed to consummate a sale of
the Corporation and the Partnership within three (3) years
of the date of death of a Decedent, the Personal
Representative is hereby authorized to seek and procure a
buyer for the assets and/or shares of the Corporation and
Partnership giving the Survivor the right of first refusal
on any offer received for the Decedent’s interest in the
Corporation. In the event that a buyer is procured by the
Survivor, the Personal Representative shall have a right
of first refusal with respect to such offer.
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(emphasis added).
d. Summary Judgment
The receiver, on behalf of the Signature Entities, moved for summary
judgment, requesting a determination by the trial court that Mrs. Pecora did not
have a right of first refusal on a sale of the Signature Grand facility where the
receiver was responsible for listing the property and procuring a buyer. At the
conclusion of the hearing, the trial court entered its order of summary judgment,
ruling, inter alia: that the right of first refusal under the Distribution Agreement did
not apply to a sale procured by the receiver; that Mrs. Pecora had elected to
proceed with the sale of assets through a dissolution and winding up of the
Signature Entities, rather than through the sales process set forth in the Distribution
Agreement; and that, by failing to appeal the trial court’s order finding no right of
first refusal in the sale of Signature Gardens, Mrs. Pecora waived, or was estopped
from asserting, her right of first refusal in the sale of Signature Grand. We review
the court’s ruling on a motion for summary judgment de novo. Volusia County v.
Aberdeen at Ormond Beach, L.P., 760 So. 2d 126, 130 (Fla. 2000).
II. ISSUE PRESENTED
The issue presented is whether the right of first refusal, encompassed within
the Distribution Agreement, applies to a court-supervised sale procured by a courtappointed receiver, pursuant to a statutory dissolution of the Signature Entities. We
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hold that, under the facts of this case, the trial court was correct in its determination
that the right of first refusal did not apply to a court-supervised sale procured by a
court-appointed receiver in a statutory dissolution of the Signature Entities.
III. DISCUSSION
It appears that this question is one of first impression in Florida. Neither the
parties nor this Court could find a Florida case directly addressing this specific
issue. Decisions from other jurisdictions have considered the right of first refusal
in similar circumstances, although there appears to be no case directly on point
from any other state court.
The cases from other jurisdictions which do provide guidance have focused
on two factors: the voluntary or involuntary nature of the sale, and the express
language of the agreement creating the right of first refusal.
In Huntington National Bank v. Cornelius, 914 N.Y.S. 2d 327 (N.Y. App.
Div. 2010), New York’s Third Appellate Division determined that a right of first
refusal was generally not triggered in the context of a foreclosure sale. Krieger
purchased from Cornelius a one-half interest in an historic home and the two held
the property as joint tenants. Id. at 328. As part of the transaction, the parties
agreed that “should either party purchase the entire property and within twenty
years thereafter offer it for sale, the other party has the option to purchase the
property for $800,000 . . . ” Id. Cornelius ultimately purchased Krieger’s share of
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the property and later obtained a mortgage on the property. Thereafter, Cornelius
failed to make payments and the mortgagee commenced a foreclosure action. Id.
at 329. Krieger sought a declaration that his right of first refusal was superior to
the mortgage and could be exercised at the foreclosure sale.
The Third Appellate Division looked to the language of the agreement, and
determined that the right of first refusal was not applicable because Cornelius was
not the person who offered the property for sale. Id. at 330. Rather the referee, on
behalf of the court, was the seller for purposes of the foreclosure action. The court
also determined that “the word ‘offer’, as used here, was intended to cover a
conscious and voluntary choice by the owner to make the property available for
sale. No such choice exists here, however, as foreclosure is an involuntary process
resulting in a forced sale.” Id.
In Tadros v. Middlebury Medical Center, Inc., 820 A.2d 230 (Conn. 2003),
the Connecticut Supreme Court held that a right of first refusal, reserved to the
grantor in a contract for the sale of realty, did not apply in the context of a
foreclosure sale.
The court first discussed the right of first refusal:
A right of first refusal is known more technically as a
preemptive option, as a right of preemption, or simply as
a preemption. A right of pre-emption is a right to buy
before or ahead of others; thus a pre-emptive right
contract is an agreement containing all the essential
elements of a contract, the provisions of which give to
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the prospective purchaser the right to buy upon specified
terms, but, and this is the important point, only if the
seller decides to sell.
It does not give the pre-emptioner the power to compel
an unwilling owner to sell, and therefore is
distinguishable from an ordinary option.
Thus, the purpose of a right of first refusal is not to allow
the holder to compel the property owner to sell the
property at a designated price, as may be the case with
the existence of an option.… Rather, the purpose is to
allow the holder of the right to be notified when the
owner intends to sell, or has accepted an offer, which, in
most cases, will be presumptively the fair market value
of the property, and to allow the holder to purchase the
property under identical terms.
Id. at 234-35.
The Connecticut Supreme Court then looked to the language of the contract
creating the right, and concluded that the right of first refusal would be triggered
only if (1) the grantees “form the intention” of selling the property, and (2) the
grantees accept a bona fide offer to purchase the property. Id. at 235. The court
determined that the right of first refusal was not triggered because:
1. The court-appointed committee, and not the grantee, was the seller of the
property.
2. Because the sale was pursuant to a foreclosure, the sale was not
voluntary, and the grantor had no intention to sell the property.
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3. The committee did not accept a bona fide written offer to purchase the
property; rather the property was to be sold in accordance with a court
order to conduct a foreclosure sale.
Id.
In the case of In re Rigby’s Estate, 167 P.2d 964 (Wyo. 1946), Rigby died
intestate and the trial court appointed an administrator for the estate.
The
administrator obtained an appraisal of the estate’s real property and the court
authorized the administrator to sell the property of the estate at a public or private
sale to pay the debts and the expenses of administration and to distribute the
remaining proceeds to the heirs. Id. at 965. One of the properties was subject to a
lease.
By its terms, the lease granted the lessees “the first right option and
privilege of purchasing said lands, and any sale must be made subject to the terms
of the above described lease.” Id. The lease further provided that “the lessees were
to have the right of first refusal ‘on such terms as first party (Rigby) shall then
demand for the purchase price.’” Id. at 968.
The administrator conducted a public sale of the property and a third party
was the successful bidder. The lessees sought a declaration by the court that the
sale triggered their right of first refusal and that they were willing to purchase the
property by matching the high bid offered at the public sale. Id. at 966. The trial
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court agreed that the lessees had a right of first refusal and ordered that the
property be sold to the lessees. The Wyoming Supreme Court reversed, observing:
The administrator is vested with no title to the real estate.
His possession is for the purposes of administration. His
authority to sell is not general, but special and limited,
and can be exercised only for the purposes mentioned in
the statute. He is not an agent of the heirs; does not
derive his powers from them, and is not subject to their
control. His possession of their property and sale thereof
without their consent is in a sense hostile to their
interests.
•••
As it is clear that the administrator in selling the land for
the purposes stated in the order of sale was not acting as
the agent or with the consent of Rigby or his heirs, we
must hold that the sale was not the voluntary sale at
which Rigby intended to give the lessees the right of first
refusal. It follows that the lessees had at the sale no
preference over other bidders.
Id. at 968, 969 (citations omitted).
There are other cases which also analyze the voluntary or involuntary nature
of the sale, together with the language of the agreement or other document creating
the right, in determining whether an existing right of first refusal is triggered. See,
e.g., Royal Oldsmobile Co. v. Heisler Props. L.L.C., Case No. 10-CA-152, 2010
WL 5373913 (La. App. 5th Cir. 12/28/10) (holding United States Marshal’s
involuntary bankruptcy sale of property did not trigger right of first refusal);
Central Exec. Comm. of ODWU, Inc., v. Carbon Cnty. Tax Claim Bureau, 892
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A.2d 868 (Pa. Commw. Ct. 2006) (holding sale of property by county taxing
authority to pay delinquent taxes did not trigger right of first refusal provision
contained in deed); Benefit Realty Corp. v. City of Carrollton, 141 S.W. 3d 346
(Tex. App. 2004) (holding right of first refusal only applied to a voluntary sale and
taking of property by condemnation is involuntary; therefore, right of first refusal
not triggered); Pearson v. Schubach, 763 P. 2d 834 (Wash. Ct. App. 1988) (holding
court-ordered sale of property to satisfy judgment against lessor was involuntary
sale and did not trigger lessee’s right of first refusal since agreement required that
lessor be a “willing” seller of the property); Henderson v. Millis, 373 N.W. 2d 497
(Iowa 1985) (holding given language in agreement, right of first refusal could not
be exercised in context of a foreclosure sale); Draper v. Gochman, 400 S.W. 2d
545 (Tex. 1966) (same). 3
Applying the reasoning of the above cases to the instant case, we conclude
that the receiver’s actions in procuring a sale of the corporation’s assets, pursuant
to a receivership in a dissolution action, is more akin to a judicial or involuntary
sale than it is to a voluntary sale by one of the owners of the property. This
characterization is important, because a right of first refusal has been described as
3
We recognize that there is a minority position which holds that the right of first
refusal can be exercised in the context of a judicial or involuntary sale. See, e.g.,
Cities Serv. Oil Co. v. Estes, 155 S.E. 2d 59 (Va. 1967); Price v. Town of Ruston,
132 So. 653 (La. 1931). However, we conclude that the more well-reasoned
position is that adopted by the majority of jurisdictions addressing the issue.
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a right to elect to take specified property at the same
price and on the same terms and conditions as those
contained in a good faith offer by a third person if the
owner manifests a willingness to accept the offer. The
right of first refusal ripens into an option once an owner
manifests a willingness to accept a good faith offer.
Old Port Cove Holdings, Inc., v. Old Port Cove Condo. Ass’n One, 986 So. 2d
1279, 1285 (Fla. 2008) (citing Pearson v. Fulton, 497 So. 2d 898, 900 (Fla. 2d
DCA 1986) (emphasis added).
Thus the right of first refusal generally presumes a voluntary sale by an
owner who manifests a willingness to accept an offer from a third party. By
contrast, we are confronted here with a sale that is not truly voluntary; perhaps
more significantly, it is not a sale in which the buyer is procured by the owner.
Rather, it is a sale procured by a court-appointed receiver and is made under the
supervision and authority of, and under terms prescribed by, the trial court.
As discussed earlier, the express purpose of the Distribution Agreement was
“to make provision for the smooth and efficient operation of the Corporation in the
event of death of either [Mr.] Berlin or [Mr.] Pecora….” (emphasis added). The
Distribution Agreement and, more specifically, the right of first refusal, did not
envision the tragic situation which occurred here: both partners died on the same
day, within hours of each other, resulting in an eventual deadlock over the
management of the corporate affairs, a dissolution action, and an appointment of a
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receiver to manage and sell the corporate assets. Rather, the right of first refusal
contemplated by its terms that:
1. There would be a deceased partner and a surviving partner.
2. Upon the deceased partner’s death, the surviving partner would be
obligated to market and attempt to sell, the assets of the corporation.
3. If the surviving partner did not sell the corporation and partnership within
three years, the personal representative of the deceased partner was
authorized to procure a buyer.
4. In the event the deceased partner’s personal representative procured a
buyer, the surviving partner would have a right of first refusal on any
offer received for the deceased partner’s interest in the corporation.
5. In the event the surviving partner procured a buyer, the deceased
partner’s personal representative would have a right of first refusal on
any offer received for the deceased partner’s interest in the corporation.
Where, as here, it is the court-appointed receiver who procures a buyer,
neither Mr. Berlin nor Mr. Pecora (nor their estates, heirs or personal
representatives) is the “procuring” party as required by the terms of the
Distribution Agreement.4
4
If the Distribution Agreement were construed to permit the exercise of a right of
first refusal to any offer procured by a receiver, both parties would be entitled to
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IV. CONCLUSION
The plain language of the Distribution Agreement compels a conclusion that
the right of first refusal does not apply in a dissolution action where the courtappointed receiver is procuring the sale of the corporate assets. The receiver, not
the survivor or the personal representative, is the procuring party, and the
receiver’s actions are taken under the supervision, and with the approval, of the
trial court. Had the parties to the Distribution Agreement intended for the right of
first refusal to apply in the context of a corporate dissolution, or where a third party
was procuring a buyer, the Distribution Agreement could have so provided. See,
e.g., Roof Depot, Inc. v. Ohman, 638 N.W. 2d 782 (Minn. Ct. App. 2002) (holding
transfer restriction granted right of first refusal in event of voluntary or involuntary
transfer of stock); Guice v. Sentinel Tech., Inc., 689 N.E.2d 355 (Ill. App. Ct.
1997) (same).
We conclude that, under these circumstances and in light of the language of
the Distribution Agreement, the trial court correctly determined that Mrs. Pecora
could not exercise a right of first refusal. The trial court properly granted summary
judgment.
Affirmed.
assert this right. This would beg the question: Who would have the “first” right of
first refusal?
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