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DeAtley v. Barnett5/17/2005
This is a contract dispute to enforce a first right of refusal brought by Alan and Debra DeAtley against developers Lynn and Marlene Barnett and the Barnetts' partnership, Lookout Point Partners (the Barnetts unless otherwise indicated). The Barnetts traded land and the first right of refusal for road work to be done by the DeAtleys. After the Barnetts discovered an intervening DeAtley bankruptcy , the trial court granted summary dismissal of the complaint on the Barnetts' theory that the DeAtleys' bankruptcy discharged the Barnetts' first right of refusal obligations. The judge awarded the Barnetts attorney fees under the contract relating solely to the dismissal motion. The bankruptcy and judicial estoppel vitiate the DeAtleys' claim. We affirm and grant the Barnetts and Lookout Point their attorney fees here.
FACTS
In January 1986, the Barnetts purchased around 500 acres of undeveloped land in Yakima County by real estate contract. In February 1986, the Barnetts entered into the Lookout Point partnership with John and June Cotten to develop the land.
In January 1988, the Barnetts contracted with the DeAtleys for road work on the land in exchange for 86 acres and a first right of refusal. Mr. DeAtley agreed to 'pioneer' the road and later complete it. The parties disputed if the 1988 pioneering work done was according to the contract, but agree the final road work was never completed. The contract provided in the event Mr. Barnett 'desires to sell or assign his contract with Anderson or to make any sales of property of three lots or tracts or more, that he will grant to DeAtley the first right of refusal to acquire same.' Clerks Papers (CP) at 806.
In 1990, Mr. DeAtley met with Mr. Cotten after Mr. Cotten became ill and wanted to sell his partnership interest, but Mr. DeAtley decided against it. The DeAtleys' right of first refusal was not mentioned. In early 1991, the Barnetts bought out the Cottens' partnership interest. In July 1991, George A. Lagerquist and Henry and Nova Van Baalen joined the partnership, like the Cottens, to 'own, maintain, develop, sell and otherwise deal with' the land. CP at 865.
In 1992, the DeAtleys petitioned for Chapter 7 bankruptcy relief in New Mexico, listing Mr. Barnett as a creditor for the road construction obligation. The DeAtleys did not separately list their right of first refusal as an asset. Mr. Barnett received notice of the bankruptcy, and later said he had only 'a vague recollection' of it. CP at 518. The DeAtleys discharged the Barnett obligation in the 1992 New Mexico Bankruptcy.
In May 1997, the DeAtleys sued the Barnetts, alleging the 1991 transfers violated the DeAtleys' right of first refusal. The Barnetts denied the allegations, asserting several affirmative defenses, including waiver, estoppel, laches, and failure to perform conditions precedent regarding the completion of the final road.
Just before the scheduled 2003 trial date, the DeAtleys unsuccessfully moved to amend their complaint to add specific performance. On the day of trial, after expedited briefing, the DeAtleys' successfully argued the 1991 transfers triggered the DeAtleys' right of first refusal. About this time, when deposing Mr. DeAtley's father the Barnetts learned of the New Mexico bankruptcy. Investigating, the Barnetts learned the DeAtleys discharged the underlying obligation in the New Mexico bankruptcy. Immediately, the Barnetts' requested dismissal, successfully arguing the bankruptcy vitiated the first right of refusal. The DeAtleys' motion for reconsideration, based partly on the DeAtleys' alleged transfer of the parties' contract to a wholly-owned subsidiary, Wildones, Inc., d/b/a AD3 C
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