Knott v. Racicot

812 N.E.2d 1207 (2004)

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Nature of the Case

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Facts

Louis Racicot (decedent) owned the Linwood Mill, a commercial property. The Maiden Merchant International Incorporated entered into a written lease with Linwood Mill Realty, Inc. for office space in the property. The decedent signed the lease as president of Linwood Mill Realty, Inc., and Deborah Kay Neumann (D1) signed as chair, chief executive officer, and founder of Maiden Merchant. Neither Maiden Merchant nor D1 ever paid rent for the leased space. D1 provided services to the decedent without payment, including negotiating with other tenants, running errands, and permitting the decedent to use her telephone and facsimile machine. The decedent and D1 executed a one-line document purporting to give D1 a right of first refusal to purchase the property (first right of first refusal). The Worcester County registry of deeds refused to record it. The decedent and D1 then asked an attorney to prepare a right of first refusal in a form the registry would record. The pre-printed portion of the attorney prepared (done by software) right of first refusal recited that it was executed 'under seal' and 'for good and valuable consideration, the receipt whereof is hereby acknowledged.' The decedent agreed not to sell the property prior to January 1, 2004, to a third party without first notifying D1 of the third party's acceptable bona fide offer to purchase, and offering D1 the opportunity to purchase the property on the terms recited in the bona fide offer. D1 was required to purchase the property within ninety days of notifying the decedent of her intention to do so. This document was signed by the decedent and D1 and notarized, was filed in the Worcester County registry of deeds and recorded. The decedent received an acceptable bona fide offer from Riverdale Mills Corporation, owned and controlled by P, to purchase the property for $350,000. The decedent notified D1 of the offer on January 18, 2001, 'in accordance with' the second right of first refusal. Two days later P and the decedent entered into a purchase and sale agreement. It referenced D1's right of first refusal and appended the second right of first refusal as an exhibit. The agreement was amended to provide that the decedent would grant P a mortgage on the property if P advanced certain funds to prevent foreclosure and made certain property repairs. P paid approximately $174,000 in taxes and expenses for the property. D1 then hand-delivered written notice to the decedent's attorney that she intended to exercise her right of first refusal pursuant to the terms of P's offer. On January 30, 2001, the decedent died. P commenced a civil action against the decedent's estate for specific performance of the purchase and sale agreement. Joan Racicot (D), the decedent's widow and executrix, moved to add D1 as a party defendant. D1 filed a verified cross-claim and counterclaim for specific performance of the right of first refusal, and P asserted as an affirmative defense that the right was void for want of consideration. The judge did not address whether D1 gave actual consideration for the right, stating that 'consideration is presumed in an agreement under seal. He ordered the estate to convey the property to D1 pursuant to the right of first refusal. P appealed.