Full Opinion

NOT FINAL UNTIL TIME EXPIRES TO FILE REHEARING MOTION AND, IF FILED, DETERMINED IN THE DISTRICT COURT OF APPEAL OF FLORIDA SECOND DISTRICT ACQUISITION TRUST COMPANY, ) LLC, ) ) Appellant, ) ) v. ) Case No. 2D18-4979 ) LAUREL PINEBROOK, LLC; REAL SUB, ) LLC; and PUBLIX SUPER MARKETS, ) INC., ) ) Appellees. ) ___________________________________) Opinion filed April 1, 2020. Appeal from the Circuit Court for Sarasota County; Andrea McHugh, Judge. Alex P. Rosenthal and Amanda Jassem Jones of Rosenthal Law Group, Weston, for Appellant. Hunter G. Norton and Steven J. Chase of Shumaker, Loop, & Kendrick, LLP, Sarasota, for Appellee Laurel Pinebrook, LLC. Kristie Hatcher-Bolin and Mark N. Miller of Gray Robinson, P.A., Lakeland, for Appellees Real Sub, LLC, and Publix Super Markets, Inc. KHOUZAM, Chief Judge. Acquisition Trust Company, LLC, appeals the final summary judgment entered in favor of Laurel Pinebrook, LLC; Real Sub, LLC; and Publix Super Markets, Inc., in this dispute over the sale of a commercial shopping plaza which was subject to a prior, recorded right of first refusal. We affirm. Laurel Pinebrook, LLC, owns a commercial shopping plaza in which Publix Super Markets, Inc., is a tenant. The recorded lease between Publix and Laurel gave Publix a right of first refusal ("ROFR") to purchase the property. Acquisition Trust entered into negotiations with Laurel to buy the property, offering to buy the property in a nonbinding letter of intent. The letter of intent set forth the purchase price as well as the key terms and conditions of the sale. Pursuant to the lease, Laurel notified Publix of the offer. While waiting for a response from Publix, Laurel and Acquisition Trust executed a contract for the sale of the plaza, subject to Publix's ROFR. The contract specifically stated: 5.6. The Purchaser's obligation to purchase the Property is conditioned on satisfaction or waiver by the Purchaser of the following conditions: .... (c) the Seller shall obtain a written waiver from Publix of its right of first refusal ("ROFR") to purchase the Property. If the conditions in this Section 5.6 are not satisfied as of the Closing Date and are not waived, the Seller may extend the Closing Date for up to fifteen (15) days to allow for correction of the matter. If the conditions in this Section 5.6 are not satisfied as of the Closing Date (as extended by the Seller), the Purchaser may terminate its obligation to complete its purchase of the Property and receive a refund of the Deposits. -2- Thereafter, Publix notified Laurel that it was exercising its ROFR "upon the same business terms and conditions contained in the letter of intent" from Acquisition Trust. Laurel informed Acquisition Trust that Publix was exercising the ROFR and the contract between Laurel and Acquisition Trust was terminated. After the deal with Acquisition Trust was terminated, Laurel and Publix continued to negotiate the terms of the sale to Publix. Laurel ultimately sold Publix the property for the same price as Acquisition Trust had offered but with different terms regarding due diligence requirements, closing conditions, closing costs, representations and warranties, and brokerage commissions. Both the Acquisition Trust Agreement and the Publix Agreement provided that the parties could make mutually agreed-upon amendments to the contracts. Publix assigned its rights under its agreement with Laurel to its affiliate, Real Sub, and Laurel conveyed the property to Real Sub. Acquisition Trust filed suit against Laurel, Publix, and Real Sub, seeking to rescind the sale to Publix and force Laurel to sell the property to Acquisition Trust. Acquisition Trust argued that Publix did not properly exercise its ROFR because Publix purchased the property under different terms and conditions than those in the Acquisition Trust contract, making Publix a "third party purchaser with knowledge" of Acquisition Trust's prior contractual right to purchase the property. Acquisition Trust characterized Laurel and Publix's negotiations following the exercise of the ROFR as not only inequitable but also fraudulent. On cross-motions for summary judgment, the court concluded that Publix had properly exercised its ROFR. Accordingly, the court reasoned, Acquisition Trust's rights under its contract with Laurel had terminated and Acquisition Trust did not have standing to challenge the contract between Laurel and -3- Publix. The court entered final summary judgment in favor of Laurel, Real Sub, and Publix. On appeal, Acquisition Trust cites to a number of cases for the proposition that the holder of the ROFR must match the third party's offer to effectively exercise its ROFR. See Int'l Christian Fellowship, Inc. v. Vinh on Prop., Inc., 954 So. 2d 1214, 1216 (Fla. 4th DCA 2007) (concluding that ROFR had not properly been exercised when lessee attempted to exercise the ROFR but made an offer with differing terms); Lehr v. Breakstone, 472 So. 2d 1333, 1335 (Fla. 3d DCA 1985) (concluding that ROFR could not be properly exercised at a price $100,000 lower than the third-party offer); Coastal Bay Golf Club, Inc. v. Holbein, 231 So. 2d 854, 858 (Fla. 3d DCA 1970) ("Since Coastal's offer required a disposition of the property by a different method and under different conditions than Adler's, it was not an unconditional acceptance of the right of first refusal and it did not match Adler's offer."). It is true that "[a] right of first refusal is a right to elect to take specified property at the same price and on the same terms and conditions as those continued in good faith offer by a third person if the owner manifests a willingness to accept the offer." Coastal Bay, 231 So. 2d at 857. "One offer to purchase matches another only if the essential terms of the offers are identical." Id. at 858. "[W]hen the holder of a right of first refusal attempts to exercise his right but adds or deletes terms and/or conditions that render the offer different than that submitted by the third party prospective purchaser, the right of first refusal has not been properly exercised." Castelli v. Castelli, 159 So. 3d 271, 274 (Fla. 4th DCA 2015). However, "a point-by-point recitation of the material terms of the third party contract" is not required; "it is sufficient that a party -4- simply announce her desire to exercise her right of first refusal." Id. And "an attempted exercise that is silent on the terms of the acceptance clothes itself in the language of the third party offer it seeks to match." Id. at 275. Here, Publix appropriately exercised its ROFR by simply notifying Laurel that it was exercising its ROFR "pursuant to the lease agreement and upon the same business terms and conditions contained in the letter of intent." Publix did not attempt to change any of the terms and conditions of the contract at this point. It was only later, after Publix had properly exercised its ROFR and the Acquisition Trust Agreement had terminated, that Publix and Laurel mutually agreed to change certain terms and conditions in their contract. None of the cases that Acquisition Trust has cited squarely address this specific factual scenario or directly answer the questions presented in this case: whether the owner and the lessee can negotiate mutually agreeable amendments to their contract after the ROFR has been properly exercised or whether the third party has standing to challenge the contract between the owner and lessee. There is one Florida case, Backus v. Smith, 364 So. 2d 786 (Fla. 1st DCA 1978), that addresses a third party's standing to challenge the exercise of a ROFR. In Backus, Mr. and Mrs. Backus entered into a contract to buy a condominium unit from Mr. and Mrs. Smith. Id. at 787. All of the owners of the condominiums in the complex were members of the condominium association, and the declaration of the condominium association provided that the association had a ROFR if any owner wanted to sell their unit. The Smiths gave the association notice, and the members of the association (which included the Smiths) voted to exercise the ROFR. Because the association had exercised its ROFR, the Smiths then terminated their contract with the Backuses. The -5- Backuses filed suit against the Smiths for specific performance and against the association for tortious interference with a contract. The circuit court entered summary judgment in favor of the defendants. Id. On appeal, the First District affirmed in part and reversed in part. The court held that summary judgment had appropriately been entered in favor of the association. Because the Backuses were not members of the association, the court concluded that they had no standing to collaterally attack the association's failure to abide by its own declaration and by-laws. However, the court reversed summary judgment in favor of the Smiths, holding that the Backuses could challenge the Smiths' refusal to convey. Id. at 788. And because the association's exercise of the ROFR was the basis for that refusal, the court found that the Backuses had "standing to challenge the propriety of the actions of the Association upon which the Smiths rely [] to raise the numerous procedural deficiencies which are revealed by the record." Id. But the court specifically noted that it was "material to the claim for specific performance that the record is subject to the construction that the Backus[es] have offered to accept from the Smiths such title as the Smiths are able to convey." Id. In other words, the Backuses had agreed to accept a title encumbered by the association's ROFR, which would have put them in contractual privity with the association. If the Backuses wished to sell the unit in the future, the association would again have a ROFR.1 Considering the unique facts of Backus and the distinction the First District drew between the claim against the 1The dissent contends that our interpretation of Backus has no basis in the First District's expressed reasoning. But our interpretation here is based on the First District's explicit statement that the fact that "the Backus[es] [had] offered to accept from the Smiths such title as the Smiths [were] able to convey" was "material to the claim for specific performance." Backus, 364 So. 2d at 788. -6- association and the claim against the Smiths, we cannot conclude that Backus created a general rule that prospective purchasers have standing to challenge the propriety of performance under contracts to which they are not a party. And the question of whether the owner and the lessee can negotiate mutually agreeable amendments to their contract after a ROFR has been properly exercised was not addressed in Backus at all. However, the circuit court looked to several cases from other jurisdictions that directly addressed the issues at hand, and we find the reasoning enunciated in these cases to be persuasive. In our view, these cases can and should be read in line with the fact-driven holding in Backus. The Supreme Court of North Dakota has held that "[w]hen parties enter into an agreement for the sale of property which is expressly subject to a right of first refusal by a third party, the contract is conditional and becomes binding on the seller only if the right of first refusal is not exercised." N. Plains All., L.L.C. v. Mitzel, 663 N.W.2d 169, 172 (N.D. 2003) (first citing Houtchens v. United Bank of Colo. Springs, N.A., 797 P.2d 814, 815 (Colo. App. 1990); and then citing Harper v. Great Salt Lake Council, Inc., 976 P.2d 1213, 1217 (Utah 1999)); see also DePetrillo v. Belo Holdings, Inc., 45 A.3d 485, 493 (R.I. 2012) ("[DePetrillo]'s purchase and sale agreement with Belo expressly made [DePetrillo]'s rights to the parcel subject to Citadel's right of first refusal—DePetrillo's interest in the property was not to vest until Citadel waived its option to purchase the tower and transmission site. Citadel, instead, exercised its right of first refusal; as a result, the purchase and sale agreement between plaintiff and Belo was terminated and DePetrillo's rights to the property were extinguished."). "The moment the right of first refusal is exercised, the contract between the original buyer and seller is no longer in effect." Mitzel, 663 N.W.2d at 172. The -7- court also explained the difference between the exercise of a right of first refusal and the performance of the resulting contract: [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. Once the landowner receives and accepts an offer from a third party, the right of first refusal ripens into an option to purchase which may be exercised like any other option contract: 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 right is conditional on the owner's decision that an offer from a third party is acceptable. More specifically, the right is subject to an agreed condition precedent, typically the owner's receipt of an offer from a third party and the owner's good-faith decision to accept it. Only then can the holder of the right decide whether or not to create a contract on the same terms that the owner is willing to accept from the third party. More precisely, the occurrence of these events (owner's receipt of an offer and the good-faith decision to accept it) satisfies the condition precedent, which "triggers" the right of first refusal that "ripens" into an option. The option then can be exercised like any other option contract. .... Acceptance of an option for the sale of land within the time allowed and according to its terms converts the option into a binding executory contract of sale. Acceptance of the option, which results in a contract of purchase, and the performance of the resulting contract itself are distinct. Id. at 173-74 (citations omitted). Once a right of first refusal is exercised, the owner and the lessee are free to modify the terms of their agreement and the third party does not have standing to object. Id. at 173 (citing Harper, 976 P.2d at 1218). -8- Applying this reasoning to the instant case, once Publix properly exercised its ROFR, Acquisition Trust's rights to the property were extinguished. Therefore, Acquisition Trust does not have standing to challenge the performance of the contract between Laurel and Publix that resulted from Publix's exercise of the ROFR. Moreover, after the ROFR had been properly exercised, Publix and Laurel were free to modify their agreement. Indeed, there was a provision in both contracts stating that the parties could mutually agree to modify the terms. Laurel certainly could have held Publix to the identical terms and conditions of the Acquisition Trust Agreement but chose not to do so. Despite Acquisition Trust's allegations of impropriety, there was nothing inequitable or fraudulent in Laurel and Publix further negotiating their contract once the ROFR had been properly exercised. Accordingly, we conclude that the circuit court's reasoning was correct and that final summary judgment was properly entered in favor of Laurel, Real Sub, and Publix. The dissent's analysis fails to distinguish between the exercise of a ROFR and the performance of the resulting contract. Based on this conflation, the dissent reads into cases such as Castelli—which merely address how a ROFR must be exercised to be effective—an additional, unspoken rule that any resulting contract cannot later be amended by mutual agreement. But none of these cases explicitly or directly addresses the question of whether a contract that resulted from the effective exercise of a ROFR can later be negotiated or amended. This is the question that is the crux of this case. As explained in detail above, we are persuaded by well-reasoned opinions from other jurisdictions that once a ROFR is properly exercised, the resulting contract can be freely modified by mutual agreement of the parties and the third party -9- has no standing to object. Here, Publix appropriately exercised its ROFR when it notified Laurel that it was exercising its ROFR "pursuant to the lease agreement and upon the same business terms and conditions contained in the letter of intent." As soon as Publix properly exercised its ROFR, Acquisition Trust's rights to the property were extinguished. Thereafter, Publix and Laurel could mutually agree to amend their contract and Acquisition Trust had no standing to object. Affirmed. BADALAMENTI, J., Concurs. ATKINSON, J., Dissents with opinion. ATKINSON, Judge, Dissenting. Acquisition Trust had standing to seek specific performance of its own sales agreement with Laurel, to which Laurel's defense was that Publix had properly exercised its right of first refusal. Because Publix did not match the terms and conditions of Acquisition Trust's offer to Laurel, Laurel's performance obligations under the sales contract it had entered into with Acquisition Trust remained in effect. Acquisition Trust sued Laurel for performance of those obligations, to which Publix's notification of its intention to exercise its right to purchase the property on the same terms and conditions that it then abrogated was not a defense. The majority contends that "Acquisition Trust does not have standing to challenge the performance of the contract between Laurel and Publix that resulted from Publix's exercise of the [right of first refusal]." But Acquisition Trust had standing to sue on a sales contract to which it was a party and upon which Publix's agreement with Laurel to purchase the property on materially different terms had no effect. Cf. Backus - 10 - v. Smith, 364 So. 2d 786, 788 (Fla. 1st DCA 1978) (concluding third-party purchasers had "standing to challenge the propriety of the actions" of a holder of a right of first refusal, the exercise of which the sellers had asserted as a "basis of [their] refusal to convey pursuant to the terms of" a sales contract of which the third-party purchasers sought specific performance).2 In other words, lack of standing was no defense to Acquisition Trust's argument that its contract was not extinguished by Publix's contract. The majority misapplies Castelli v. Castelli, 159 So. 3d 271 (Fla. 4th DCA 2015), as support for its conclusion that the holder of a right of first refusal can effectively exercise such a right—and eliminate a third-party purchaser's rights under a sales contract—by merely announcing an intention to exercise the right of first refusal but agreeing with the seller to purchase the property on terms materially different than the third party's offer. Castelli held that "a point-by-point recitation of the material terms of the third party contract" is not required to exercise a holder's right of first refusal and that "it is sufficient that a party simply announce her desire to exercise her right of first refusal." Id. at 274. However, the court reached that conclusion based on the assumption that the holder of the right will actually honor those terms and conditions: "Since a right of first refusal inherently requires the holder of the right to accept the 2 The majority distinguishes Backus by arguing that the third-party purchasers in that case would be "in privity" with a condominium association that held a right of first refusal because the third-party purchasers "had agreed to accept title encumbered by" the right of first refusal. That rationale has no basis in the reasoning expressed by the First District's opinion. The court found that the third-party purchasers did not have standing in their claim against the association "to collaterally attack" the association's failure to abide by the declaration of condominium and by-laws to which the third-party purchasers were not a party. See Backus, 364 So. 2d at 787 (relying on the fact that the third-party purchasers were not members of the association). The claim against the sellers for specific performance of their sales contract with the third- party purchasers, "[h]owever," was "quite another matter." Id. at 788. - 11 - same terms and conditions as the third party offer, we hold that Appellant’s e-mail stating that he was exercising his right of first refusal implicitly adopted all the terms of the third party contract." Id. Castelli does not support the proposition that the holder of a right of first refusal effectively exercises its right by making a generalized announcement of that intention before supplanting the offer made by the third party with an agreement to purchase the property on materially different terms. To the contrary, "a right of first refusal has not been exercised where a party attempts to change terms or conditions so as to render the exercise different than the third party contract." Id. at 275 (emphasis added) (citing Int'l Christian Fellowship, Inc. v. Vinh on Prop., Inc., 954 So. 2d 1214, 1216 (Fla. 4th DCA 2007)). In Castelli, the court explained that a holder of a right of first refusal announcing his "desire to exercise [the] right of first refusal" had "no need to specifically quote the terms of the third party offer he was agreeing to match." Id. at 274–75. That does not, however, support the majority's contention that a holder of a right of first refusal that has announced such a desire has no obligation to actually match the terms "he was agreeing to match." The majority cites no case law, from Florida or elsewhere, to the effect that a right of first refusal is properly exercised when its holder has announced an intention to exercise but agrees with the owner to purchase the property on terms materially different than the third party's sales contract. To the contrary, [t]he law is clear that, when the holder of a right of first refusal attempts to exercise his right but adds or deletes terms and/or conditions that render the offer different than that submitted by the third party prospective purchaser, the right of first refusal has not been properly exercised. - 12 - Id. at 274 (emphasis added). Because Publix's right of first refusal was not properly exercised, Laurel's performance obligations under its sales contract with Acquisition Trust were not excused. As such, I respectfully dissent from the majority's decision to affirm the judgment of the trial court. - 13 -