Robichaux v. Boutte

Louisiana Court of Appeal
492 So. 2d 521 (1986)

ELI5:

Rule of Law:

A right of first refusal is not triggered by a communication from the property owner that includes a third-party offer but explicitly states the owner has made no determination to sell. To be effective, the owner's communication must constitute a firm offer reflecting an unequivocal intent to sell the property.

Facts:

On May 19, 1966, Verla Boutte sold a 50.83-acre tract of land to Roland Robichaux and his wife.
The deed for the sale included a 'right of first refusal' clause, granting the Robichauxs the first opportunity to purchase Boutte's adjacent residential property if she ever desired to sell it.
The clause specified that upon deciding to sell, Boutte must offer the property to the Robichauxs for an amount equal to the highest bona fide offer she received, giving them ten days to accept.
On March 15, 1979, Boutte sent a certified letter to the Robichauxs enclosing a purchase offer from her nephew, Lance Gauthier.
Boutte's letter explicitly stated, 'I have made no determination to dispose of this property.'
The Robichauxs did not respond in writing to Boutte's letter.
On March 28, 1979, thirteen days after sending the letter, Boutte sold the residential property to her nephew, Lance Gauthier.

Procedural Posture:

On March 13, 1980, Roland Robichaux filed suit in the trial court against Verla Boutte and Lance Gauthier, seeking rescission of the sale and specific performance of the right of first refusal.
The trial court dismissed the defendants' exception of no cause of action.
The plaintiffs later filed a motion for partial summary judgment on the issues of rescission and specific performance.
The trial court granted the plaintiffs' motion for partial summary judgment.
The defendants filed a motion for rehearing and peremptory exceptions of prescription and nonjoinder of indispensable parties.
The trial court granted the rehearing but upheld its original judgment in favor of the plaintiffs and dismissed the defendants' exceptions.
The defendants, Lance and Madeline Gauthier, appealed the trial court's judgment to the Court of Appeal of Louisiana, Third Circuit.

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Issue:

Does a letter from a property owner to the holder of a right of first refusal, which includes a third party's purchase offer but expressly states the owner has made no determination to sell, constitute a valid offer that triggers the holder's right to purchase?

Opinions:

Majority - Stoker, Judge

No. A communication that explicitly disclaims an intent to sell does not constitute a valid offer that triggers a right of first refusal. For the right to be triggered, the property owner must first make a determination to sell and then communicate a firm offer to the holder of the right. The court reasoned that a right of first refusal (or `pacte de preference`) is distinct from an option contract, as it does not involve a continuing offer to sell. Boutte's letter, by stating 'I have made no determination to dispose of this property,' lacked the essential element of a legal offer: the intent to be bound upon acceptance. Because no valid offer was made, the Robichauxs' right was never triggered, and their failure to respond did not constitute a waiver. Therefore, Boutte's subsequent sale to Gauthier breached the right of first refusal agreement.

Analysis:

This case clarifies the specific conditions required to activate a right of first refusal, emphasizing the owner's subjective intent as evidenced by their objective communications. The ruling establishes that merely forwarding a third-party offer is insufficient; the owner must also manifest a clear and unequivocal decision to sell. This precedent protects holders of such rights from ambiguous or manipulative notices designed to extinguish their rights without a genuine opportunity to purchase. Future disputes over rights of first refusal will heavily scrutinize the language of the owner's communication to determine if a firm offer was actually made.

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