The defendant, Marjorie Waite, appealed from an order that directed the sale of the property she owned as tenant-in-common with the plaintiff, Cathy Tuminno. Waite and Tuminno acquired the property at issue during the settlement of their mother’s estate. At the time, Tuminno and Waite signed a settlement agreement with the other named defendants that granted James Flagella and the others the option to purchase the property in the event that Waite and Tuminno, either jointly or severally, decided to sell, assign, or transfer the property to anyone other than each other. Flagella and each of the other named defendants had sixty days after being notified to purchase the property for $120,000. The settlement agreement was afterward reduced to a document executed by Tuminno and Waite, stating that they granted Flagella and the other named defendants a sixty-day option to purchase the property for $80,000 if Waite and Tuminno desired to sell the property.
The Supreme Court, Chautauqua County, determined that the agreement created an option contract, which was triggered when Tuminno initiated this action to partition and sell the property. The appellate division ruled that the settlement agreement created a right of first refusal and not an option to purchase despite the use of the word “option” in the agreement. A right of first refusal is a “dormant right that is triggered when an owner decides to sell the property to third party at an agreed-upon price.” Markan Corp. v. Plane’s Cayuga Vineyard, Inc., 24 A.D.3d 1264, 1265 (4th Dep’t 2005). In addition, the Court held that Tuminno’s action to partition the property did not trigger the right of first refusal. Instead, the right of first refusal would only be triggered by the sale of the property after a court had partitioned it.
The Court also ruled that the supreme court erroneously ordered the sale of the property without first resolving the accounting issues and adjusting any equities. Further, the Court ruled that the right to partition must, in some circumstances, yield to the equitable exception that a court will not award partition to a party in violation of his or her own agreement. In this case, a partition that results in Tuminno and Waite each having a portion of the property would defeat the right of first refusal as it applies to the entire property. In order for a court to award partition, the entire property would have to go either Waite or Tuminno. Therefore, whoever received the whole property would owe the other party owelty as compensation for the unequal division of the property. The Court therefore vacated the supreme court’s order and remanded the case.
In addition, the Court also ruled that the supreme court erred in determining that the purchase price for the property was $120,000. The Court held that the recorded document reduced the price to $80,000. Hence, the correct purchase price was $80,000 and not $120,000.
2013 WL 5496025, 2013 N.Y. Slip. Op. 06462