K4C6R, LLC, PORTERS NECK PLANTATION, INC. and FOREST CREEK PLANTATION, INC., Plaintiffs,
JOHN A. ELMORE, II, PORTERS NECK COMPANY, INC., and FOREST CREEK VENTURES, INC., Defendants.
in the Court of Appeals 27 March 2019
by defendants from order entered 29 December 2017 by Judge
Charles H. Henry in New Hanover County No. 16 CVS 1449
Murchison, Taylor & Gibson PLLC, by Andrew K. McVey, for
Offices of G. Grady Richardson, Jr., P.C., by G. Grady
Richardson, Jr., for defendant-appellants.
Elmore, II ("Mr. Elmore"), Porters Neck Company,
Inc. ("PNC"), and Forest Creek Ventures, Inc.
("FCV") (collectively, "defendants")
appeal from an order denying their motion for summary
judgment in part, and granting it in part. For the reasons
stated herein, we affirm in part, and reverse in part.
Elmore and Mr. Lionel L. Yow, Jr. ("Mr. Yow")
formed PNC in or about 1991 to own and develop residential
real property in Porters Neck. Thereafter, Mr. Elmore and Mr.
Yow formed FCV to own and develop residential real property
in Forest Creek. Mr. Yow filed for bankruptcy in 2011. During
the administration of the bankruptcy, K4C6R, LLC
("K4C6R") successfully bid on Mr. Yow's
interest in PNC and FCV, resulting in Mr. Elmore and K4C6R
each owning fifty percent (50%) of PNC and FCV.
disputes between the two owners, the parties executed a
written contract (the "division agreement") the
intent of which was to distribute half of the real estate
assets each to Mr. Elmore and to K4C6R respectively. To that
end, the division agreement distributed fifty percent (50%)
of PNC and FCV's assets to K4C6R in exchange for its
shares of stock in the PNC and FCV companies. Porters Neck
Plantation, Inc. ("PNP") was established as
K4C6R's successor entity with respect to the properties
in Porters Neck that K4C6R received in the division, and
Forest Creek Plantation, Inc. ("FCP") was
established as K4C6R's successor entity with respect to
its properties in Forest Creek. The division agreement
contained a right of first refusal ("ROFR"), which
K4C6R, on the one hand, and PNC and FCV, on the other, each
grants the other a right of first refusal with respect to the
sale of the undeveloped Forest Creek property, to be
triggered by a bona fide third[-]party offer to purchase the
undeveloped property, provided, however, that this right of
first refusal shall apply only to cash-only sales.
about 30 September 2015, FCP received an offer to purchase
all of FCP's developed and undeveloped property
("the third-party offer" or "the offer").
Although the ROFR is only for undeveloped Forest Creek
property, the third-party offer did not allocate the amount
being offered for the undeveloped property. FCP forwarded the
offer to defendants, who inquired what portion of the offer
was allocated to undeveloped property. FCP did not provide
this information, and defendants did not waive the ROFR
rights or make an offer. Eventually, the offer expired.
May 2016, K4C6R, FCP, and PNP (collectively,
"plaintiffs") filed a complaint against defendants
seeking declaratory judgment as to the parties' rights
under the division agreement and injunctive relief, and to
recover damages for breach of contract.
answered the complaint and filed counterclaims on or about 9
September 2016. Plaintiffs answered the counterclaims on 10
November 2016. On 20 November 2016, defendants moved for
summary judgment. The matter came on for hearing before the
Honorable Charles H. Henry on 6 December 2017, in New Hanover
trial court entered an order on 29 December 2017 granting
summary judgment in part and denying it in part. Conclusion
of law 5 of the order interprets the division agreement's
ROFR as follows.
a. That the right of first refusal possessed by Porters Neck
Company Inc. and Forest Creek Ventures, Inc. is limited to
offers that contemplate the cash sale of undeveloped property
within the Forest Creek subdivision or the cash sale of
developed property and undeveloped property within the Forest
Creek subdivision where the offer delineates the amount of
the offer that pertains to the undeveloped property. This
same interpretation applies to K4C6R's right of first
refusal as well.
b. The Division Agreement requires that in order to entertain
any "cash only" offers that contemplate the sale of
any undeveloped property, the offeror must allocate the
amount being offered for the undeveloped property so a party
can decide whether to exercise its right of first refusal.
c. If presented with a cash offer to purchase undeveloped
property within the Forest Creek subdivision by a bona fide
third[-]party, Porters Neck Company Inc. and Forest Creek
Ventures, Inc. will have thirty days to exercise their right
of first refusal. This same time limitation applies to
K4C6R's right of first refusal as well.
d. There exists no right of first refusal in which the seller
finances all of the purchase price of the undeveloped land.
December 2017 order did not determine all of the claims
involved in the action. The remaining claims came on for
trial before the Honorable Anna Mills Wagoner at the 19 March
2018 civil jury term in New Hanover Superior Court. The trial
court entered an order concluding all claims in dispute
between the parties on 5 April 2018.
filed notice of appeal from the Honorable Judge Charles H.