Treinen v. Kollasch-Schlueter

Citations: 902 N.E.2d 998; 179 Ohio App. 3d 527; 2008 Ohio 5986Docket: No. C-070634.

Court: Ohio Court of Appeals; November 20, 2008; Ohio; State Appellate Court

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Robert and Terri Treinen and David McKnight (the Treinens) initiated legal action against Sharon Kollasch-Schlueter and Victor Lee to enforce a right of first refusal concerning four adjoining lots in Greenhills Village, Ohio. After Schlueter sold her property to Lee, the Treinens claimed breach of contract and sought specific performance. The court ruled that Schlueter had properly extended the right of first refusal to the Treinens, who failed to exercise it, leading to a judgment in favor of Schlueter and Lee.

The original agreement between William and Alice Tebben and the Treinens established a reciprocal right of first refusal on the lots, stating it would be binding on their heirs and successors and constituted a covenant running with the land. The court noted potential issues with the rule against perpetuities raised by the granting language; however, since this issue was not brought up in lower court proceedings, it was waived and did not affect the case outcome.

Prior to the sale, the Treinens testified that the right of first refusal had not been properly extended. Schlueter claimed she notified the Treinens of her intent to sell, but the Treinens did not express interest in purchasing the lots. After initially consulting an attorney, they did not contact Schlueter directly. On August 9, 2005, Schlueter informed the Treinens of the fair market value of the lots and set a deadline for their response, which they failed to meet, instead forwarding her letter to their attorney.

On August 15, 2005, Schlueter informed the Treinens that she had obtained an FHA appraisal valuing the lots at $72,000 each and that their right of first refusal would expire the following day at 5:00 p.m. To exercise this right, they needed to submit a written purchase contract by the deadline. The Treinens’ attorney questioned the appraisal's accuracy in a letter sent on the expiration date but did not express any intent to purchase the lots. Subsequently, Schlueter sold the property to Lee, prompting the Treinens and McKnight to sue, claiming a violation of their first-refusal rights.

The trial court ruled in favor of Schlueter, concluding that the right of first refusal had been extended but not exercised by the Treinens. The court affirmed the validity of the FHA appraisal. On appeal, the Treinens contested the trial court's findings, asserting that Schlueter failed to rescind the existing sale contract with Lee, did not address issues with the FHA appraisal, and did not allow adequate time for them to exercise their right.

The court found no legal basis for the Treinens' argument that the existing contract with Lee violated their first-refusal rights, stating that the contract did not impede their ability to exercise those rights if they had chosen to proceed with the purchase. The Treinens also challenged the appraisal, citing errors and asserting that the appraisal did not reflect necessary repairs. However, the court upheld the appraisal conducted by certified appraiser Jill Kinder, who maintained that the appraisal price would not change even if repairs were made. The market value indicated by Lee's purchase price exceeded the appraised value, reinforcing the court's ruling.

The appraisal met the contractual requirement by offering the property at the FHA-appraised price, which reflected the property's market value. The Treinens' claim of an inadequate appraisal was rejected, as it was determined that the offered price was favorable to them. Regarding the Treinens' objection to the 24-hour notice to make an offer, the court found it reasonable given their prior knowledge of the sale since April 2005 and multiple communications from Schlueter in August. The Treinens had ample time and opportunity to express their intent to exercise their right of first refusal but failed to do so until after the sale. Their inaction, despite receiving notice and the opportunity to respond, led the court to affirm that Schlueter fulfilled her obligations under the right of first refusal. The judgment of the trial court was upheld, with the judges concurring.