Thwarted Buyer Can’t Enforce “Right of First Offer” Provision: Don Pinto Quoted in Massachusetts Lawyers Weekly

Excerpted from the January 16, 2020 issue of Massachusetts Lawyers Weekly

A Massachusetts Superior Court judge in the Business Litigation Session has ruled that when a plaintiff refused to execute a confidentiality agreement presented by the defendant in a “right of first offer,” it amounted to a rejection of the offer to purchase a property interest.

The defendant, LBV Hotel, LLC holds “an estate for years” on property in Boston on which it operates a hotel on premises owned by Headquarters Hotel, LLC. Their agreement includes a provision that if either sought to market its interest in the property, it must first offer its interest to the other party at the same price and conditions that it would offer to any third party.

When Headquarters refused to sign the confidentiality agreement included in the right of first offer, LBV withdrew its offer. Headquarters sued to enforce the right of first offer agreement arguing that the agreement didn’t require it to sign a confidentiality provision.

Since LBV would have required any potential purchaser to sign the confidentiality agreement, and since Headquarters rejected that provision and thereby rejected the right of first offer, the judge granted summary judgment for the defendant.

Pierce Atwood commercial real estate partner Donald R. Pinto, Jr. noted that he found particularly interesting “a footnote in the decision on a tangential issue unrelated to the ROFO.”

In footnote 2, the court criticized Headquarters for not properly responding to LBV’s statement of undisputed facts by stating clearly whether each alleged fact was disputed or undisputed as required in Superior Court Rule 9A. Here, Pinto noted, the judge stated that he would deem any fact Headquarters did not expressly controvert as required to by Rule 9A to be admitted.

“This serves as a warning that at least some Superior Court judges consider the procedural requirements of Rule 9A to be vitally important and will insist on strict compliance in the summary judgment context,” he said.

The complete article can be found in the January 16, 2020 issue of Massachusetts Lawyers Weekly.