Brian Keith Richmond v. EBI, Inc.
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IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2009-CA-00823-COA
BRIAN KEITH RICHMOND
APPELLANT
v.
EBI, INC. AND SHIRLEY RICHMOND
DATE OF JUDGMENT:
TRIAL JUDGE:
COURT FROM WHICH APPEALED:
ATTORNEYS FOR APPELLANT:
ATTORNEYS FOR APPELLEES:
NATURE OF THE CASE:
TRIAL COURT DISPOSITION:
DISPOSITION:
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
APPELLEES
04/15/2009
HON. MITCHELL M. LUNDY JR.
DESOTO COUNTY CHANCERY COURT
PAIGE ANN MCDOWELL
CHRISTIAN T. GOELDNER
GARY P. SNYDER
JOHN DOYLE MOORE
CIVIL - WILLS, TRUSTS, AND ESTATES
DECLARATORY JUDGMENT THAT THE
DEFENDANT HAD WAIVED HIS RIGHT
OF FIRST REFUSAL REGARDING THE
SALE OF PROPERTY; PERMANENT
INJUNCTION REQUIRING THE TRANSFER
OF A ONE-HALF INTEREST IN THAT
PROPERTY; AND JUDGMENT FOR $2,950
IN DAMAGES
AFFIRMED - 02/08/2011
BEFORE MYERS, P.J., ISHEE AND ROBERTS, JJ.
ROBERTS, J., FOR THE COURT:
¶1.
Brian Keith Richmond acquired a “first right of refusal” to purchase 82.83 acres of
property in DeSoto County, Mississippi.1 Hernando Green Development, Inc. (HGD) later
offered to purchase that property. Despite months of communication volleys between Brian
and the lawyer who represented the owners of the property, Brian never agreed to meet
HGD’s offered purchase price. HGD later assigned its rights in the purchase and sale
agreement to EBI, Inc. EBI followed through with the purchase of a one-half interest in the
property. Brian then contracted for the other one-half interest at a purchase price less than
EBI’s offer.
¶2.
EBI sued Brian in the DeSoto County Chancery Court. After trial, the chancellor
awarded EBI a declaratory judgment and held that Brian had waived his right of first refusal.
The chancellor also held that EBI’s ownership of its one-half interest was free and clear of
any claim by Brian. Furthermore, conditioned on certain events on appeal that do not bear
mentioning, the chancellor ordered the owner of the other one-half interest in the property
to sell her interest to EBI. Aggrieved, Brian appeals. Finding no error, we affirm.
FACTS AND PROCEDURAL HISTORY
¶3.
Annette C. Herbert died on May 23, 1993. She had a will that was probated. Annette
left ten acres of her property (the Herbert property) to her grandson, Brian. Annette also left
approximately 83.63 acres (the subject property) in DeSoto County, Mississippi, to her two
children, James Lamar Herbert Jr. and Brian’s mother, Shirley Ann Richmond, to “share
1
Although the document that provided for Brian’s “first right of refusal” referred to
it as such, we will use the more commonly accepted description, “right of first refusal.”
2
alike.”2 However, Annette gave Brian a right of first refusal to purchase the subject property
“at the current selling price” if James or Shirley decided to sell either of their one-half
interests in the subject property.
¶4.
In August 2003, James and Coldwell Banker executed a listing agreement to sell his
interest in both the subject property and the Herbert property. Shirley executed the same
listing agreement for the purpose of selling her interest in the subject property in early
December 2003. Shortly after Shirley executed the listing agreement that James had already
entered, Shirley and James entered a purchase and sale agreement with HGD. HGD agreed
to buy both the Herbert property and the subject property for $1,021,000. The agreement
also provided for a closing date of January 20, 2004. An addendum (Addendum #1) to the
purchase and sale agreement stated that HGD’s offer was contingent upon Brian declining
to exercise his right of first refusal.
¶5.
James’s and Shirley’s lawyer, Joel P. Walker, sent Brian a letter notifying him of the
pending sale. Walker also requested that Brian exercise his right of first refusal or decline
to do so. Walker stated that Brian had “until December 22, 2003, to exercise your right of
first refusal to purchase the land for [the exact price that HGD agreed to pay] and show proof
2
Brian later borrowed money and secured the repayment of that loan with a Deed of
Trust on 9.2 acres of the property. Brian also borrowed money and secured the repayment
with a Deed of Trust on a house that was located on 1.5 acres, which was also part of the
land that Annette devised to him. The 9.2 acres consisted of two tracts: one with 1.77 acres
and the other containing 7.43 acres. In 2002, the Deed of Trust on the 9.2 acres was
foreclosed. Brian claimed that he bought the promissory note and foreclosed on his own
property to circumvent his obligations to the Mississippi State Tax Commission. James later
purchased the 9.2 acres from the lender. According to Brian, James was supposed to be a
straw buyer. At trial, Brian still considered James a “snake in the grass.”
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of ability to finance by a bank letter.” On December 16, 2003, Brian replied. Brian stated
that the “terms and requirements of [Walker’s] letter [were] not acceptable” and that they
were not “in compliance with the requirements” of his “first right of refusal.” Brian
informed Walker that he required the following documents to make an informed decision:
A copy of the fully executed purchase and sale agreement, fully outlining the
purchase price, terms of the sale, and all parties involved in the transaction;
and
A copy of the real estate appraisal, performed by a licensed and accredited real
estate appraiser; and
A copy of the survey of the property, performed by a licensed surveyor; and
A copy of the current flood plain map, including any and all building
restrictions; and
A copy of an environmental impact study, performed by an entity approved by
the EPA; and
A full mortgage commitment letter from a licensed, reputable lender indicating
that a mortgage covering the purchase price, including all closing costs,
prorated property taxes and insurance, less the required down payment is fully
approved.
In lieu of the above referenced mortgage commitment, a copy of the buyer’s
most recent bank statement, indicating that liquid funds in an amount equal to
or greater than the purchase price plus all associated costs, is available and will
be acceptable; and
To ensure that the purchase price and terms of the purchase and sale agreement
are not changed or altered at a later date, within 24 hours of closing as
prescribed by federal law, a copy of the HUD-1 Settlement Statement must be
made available for my review.
Three days later, Walker replied to Brian and said, “[n]one of the items you requested . . .
were furnished or requested by [HGD] and will not be furnished to you.” In response, Brian
again requested a copy of the purchase and sale agreement and proof of HGD’s ability to
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purchase. Brian also stated that he would “pursue this matter through the court” if they
continued to “find [them]selves at an impasse.”
¶6.
On December 22, 2003, Brian communicated with Walker again. Brian noted that he
had received a faxed copy of the purchase and sale agreement that he had requested. Brian
stated that he doubted the strength of HGD’s offer and that he needed James’s and Shirley’s
listing agreement, a “Buyer[’]s Letter of Credit, Addendum #1, and a “[l]egible copy of the
purchase and sales [sic] agreement.”
¶7.
On January 14, 2004, Brian sent another letter to Walker. Brian referenced a January
12th phone call in which he spoke to Walker. The exact nature of that phone call is unclear,
but Brian went on to say that he was “ready, willing, and able” to buy the subject property.
Nevertheless, Brian did not agree to meet HGD’s price. Instead, he insisted that he be
allowed to pay the “purchase price less any and all real estate fees.” The next day, Walker
responded. Walker reiterated his and Brian’s communications since early December 2003.
Walker also stated that Brian’s right of first refusal had expired. Even so, Walker informed
Brian that James and Shirley were willing to give Brian “one last chance” to buy the subject
property for the price HGD had agreed to pay. However, Walker informed Brian that he had
until 5:00 p.m. the next day to accept. Walker requested a commitment letter to purchase and
proof of Brian’s ability to purchase by a “bona fide bank letter.” Walker further stated that
Brian had until January 23, 2004, to close. Finally, Walker told Brian that Shirley had agreed
to rebate 6% of her portion of the purchase price, but James would not agree to rebate 6%
of his portion of the purchase price.
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¶8.
Brian replied the next day. Brian told Walker that he was ready to purchase, but the
deadlines were unreasonable. Brian requested a survey of the property, the listing agreement,
and the buyer’s letter of credit. Brian also reiterated that he objected to paying a real-estate
commission.
¶9.
Walker next contacted Brian on January 20, 2004. Walker told Brian that his right
of first refusal had expired. Three days later, Brian informed Walker that he intended to
“proceed with legal action.” He also repeated his offer to purchase the subject property at
a price lower than the one HGD had agreed to pay.
¶10.
On January 27, 2004, Brian contacted Walker again. Brian also sent Walker a
purchase and sale agreement by which he offered to buy “the entire 92.83 acres” for the
agreed-upon price “less all real estate commission to any of the parties involved.” Three
days later, Walker contacted Brian and told him that James would be out of the country until
February 27th. Walker requested that Brian extend the deadline of his offer. Additionally,
Walker told Brian that he did not have a copy of the listing agreement, but he had been told
that the commission rate was 6% to be divided between the buyer’s agent and the sellers’s
agent.
¶11.
The next week, Brian again requested a copy of the listing agreement and a property
survey. Walker replied the next day and told Brian that he did not have a copy of either
document. A few days later, Walker forwarded a copy of the listing agreement to Brian. The
listing agreement confirmed Walker’s earlier statement that the commission rate was 6%.
On February 29, 2004, Brian informed Walker that his “original offer of $900,000 without
documentation of the prior information requested is still in effect until midnight” on March
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2, 2004.
¶12.
However, Walker later contacted Brian and informed him that James had rejected
Brian’s offer. One week after he had rejected Brian’s offer, James conveyed his one-half
interest in the subject property to EBI for $459,923 – the equivalent of one-half of the
agreed-upon purchase price. In April 2004, Shirley and Brian entered a purchase and sale
agreement by which she agreed to sell her one-half interest in the subject property to an
entity called Herbert Plantation, Inc. for approximately $80,000 less than the price EBI had
agreed to pay.3
¶13.
In February 2005, EBI sued Brian. EBI sought a declaratory judgment that Brian had
waived his right of first refusal to meet EBI’s purchase price. Additionally, EBI requested
that any interest James or Shirley had in the subject property be determined to be “held free
and clear of any lien, encumbrance, or cloud on title, related to the . . . first right of refusal.”
EBI later amended its complaint and requested that the chancellor order Shirley to perform
according to the purchase and sale agreement and convey her one-half interest in the subject
property to EBI for the agreed-upon purchase price. Finally, EBI sought damages for dirt
that Brian sold off of the subject property after EBI had purchased James’s one-half interest.
Brian filed an answer, a counterclaim, and a cross-claim against James. On February 11,
2009, the parties went to trial.4 After the three-day trial, the chancellor requested proposed
3
Brian was listed as the president of Herbert Plantation.
4
During the trial, Brian’s testimony indicated that he did not trust anyone involved
with the discussions. Brian testified: “I don’t believe my mother . . . she can be
manipulated.” Brian also testified that Walker, who died before the trial, was “old and he
can’t remember s—.” Brian further testified that he was “judgment proof,” and he would
“go after [his] mother hook, line, and sinker just as fast as [he would] anybody else.”
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findings of facts and conclusions of law.
¶14.
On March 23, 2009, the chancellor entered his opinion. The chancellor found that
Brian had never agreed to purchase the subject property at the agreed-upon purchase price.
Accordingly, the chancellor concluded that Brian had waived his right of first refusal. The
chancellor awarded EBI a declaratory judgment finding that Brian had waived his right of
first refusal. The chancellor also awarded EBI a permanent injunction prohibiting Brian from
raising any claim to any part of the subject property and prohibiting Brian from disrupting
or interfering with EBI’s purchase of Shirley’s one-half share of the subject property.
Additionally, the chancellor granted EBI’s request for specific performance by Shirley,
requiring that she convey title to her one-half interest in the subject property. Finally, the
chancellor awarded EBI a judgment of $2,950 to compensate EBI for dirt that Brian had
allowed W.A. Sanders to remove from the subject property after James had conveyed his
one-half interest in the subject property to EBI. Aggrieved, Brian appeals.
STANDARD OF REVIEW
¶15.
The Mississippi Supreme Court has held:
We employ a limited standard of review when reviewing the decision of a
chancellor. The findings of a chancellor will not be disturbed on review unless
the chancellor was manifestly wrong, clearly erroneous, or applied the wrong
legal standard. The standard of review employed by this Court for review of
a chancellor's decision is abuse of discretion. However, for questions of law,
the standard of review is de novo.
Creely v. Hosemann, 910 So. 2d 512, 516 (¶11) (Miss. 2005) (citation omitted).
ANALYSIS
¶16.
Brian argues that his right of first refusal was never triggered. According to Brian,
8
HGD’s offer was invalid because it was not from a properly identified third party. Brian also
argues that EBI was not a valid purchaser because it was not an “approved assignee.”
However, Brian did not raise those arguments during the trial. “Failure to raise an issue in
a trial court causes operation of a procedural bar on appeal.” Birrages v. Illinois Cent. R.R.
Co., 950 So. 2d 188, 194 (¶18) (Miss. Ct. App. 2006). Consequently, Brian is procedurally
barred from raising those arguments on appeal.
¶17.
“A ‘right of first refusal’ is a conditional option empowering its holder with a
preferential right to purchase property on the same terms offered by or to a bona fide
purchaser.” 77 Am. Jur. 2d Vendor and Purchaser § 34 (2007). “The right of first refusal
necessarily requires that the holder be bound by the exact price set and offered by the third
party because without such a rule the holder could impede the marketability of the property.
77 Am. Jur. 2d Vendor and Purchaser § 35 (2007). In December 2003, Walker gave Brian
notice that James and Shirley had received an offer to purchase the subject property. It was
then Brian’s obligation to either exercise his option to meet the offer by purchasing the
subject property at the “current selling price” – the amount that HGD had offered – or elect
not to purchase the subject property at HGD’s price. “[I]t is incumbent upon an optionee to
exercise the option in the manner provided in the contract, and unless such requirements are
waived, his failure to do so, or his attempt to exercise it in another manner, does not operate
to form a binding contract of sale.” Graham v. Anderson, 397 So. 2d 71, 72 (Miss. 1981)
(citing Robinson v. Martel Enters., Inc., 337 So. 2d 698 (Miss. 1976)).
¶18.
“Where nothing in the option limits the way notice of exercise of the option is to be
conveyed, anything that amounts to manifestation of the optionee’s determination to accept
9
is sufficient.” 77 Am. Jur. 2d Vendor and Purchaser § 42 (2007). Nothing in Annette’s will
referenced the manner in which Brian must accept. Written notice certainly would have
qualified as acceptance. “[W]ritten notice to the seller of intent of the option holder to
exercise an option has the effect of an acceptance, converting the option into an enforceable
bilateral contract.” Creely, 910 So. 2d at 519 (¶29). During the volleys of communication
that transpired, Brian never indicated that he intended to meet the offered purchase price.
Instead, he attempted to negotiate a more favorable deal at a lower price. Acceptance of an
option to buy real property must be absolute and unconditional without modifying the initial
terms or imposing new terms. 77 Am. Jur. 2d Vendor and Purchaser § 43 (2007). The
following circumstances will result in a finding that an optionee has declined to exercise his
or her option:
If the optionee attaches conditions to his . . . acceptance or notice of his . . .
election to buy which are not warranted by the terms of the option, such a
response amounts to a rejection of the option unless the acceptance is in the
first instance unconditional, and the additional term is a mere request for a
departure from the terms of the option as to the time and place of completing
the transaction . . . .
Id. Despite numerous opportunities to meet the offered purchase price over the course of the
next few months, Brian never did so. Instead, he offered substantially less than the offered
purchase price. “[A]ttempts to prepare an acceptable deed and to negotiate missing or
unclear terms” do not necessarily rise to the level of counteroffers. Creely, 910 So. 2d at 521
(¶37). Nevertheless, adamant refusal to meet the offered purchase price and protracted
attempts to secure a significantly lower purchase price amount to Brian’s failure to exercise
his rights according to the terms of the right of first refusal.
10
¶19.
Furthermore, Brian’s waiver was not required to be in writing. Although modification
of an agreement that falls under the statute of frauds must be in writing, a waiver is not
required to be in writing. Canizaro v. Mobile Commc’ns Corp. of Am., 655 So. 2d 25, 30
(Miss. 1995). We, therefore, find no merit to Brian’s argument on appeal.
¶20. THE JUDGMENT OF THE DESOTO COUNTY CHANCERY COURT IS
AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLANT.
KING, C.J., LEE AND MYERS, P.JJ., IRVING, GRIFFIS, BARNES, ISHEE,
CARLTON AND MAXWELL, JJ., CONCUR.
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