Litigation Victory in Right of First Refusal Case

Our firm recently prevailed in a case on behalf of one of our long-time developer clients, in a right of first refusal case involving properties in the Short North in Columbus.  See Gordon Restaurants, Inc. v. W.S. Carlile & Sons Co., 2022-Ohio-4589.

That case involves a situation in which the tenant has a right of refusal in two adjacent buildings.  Our developer client owns the property immediately to the north, and has a 90+ year lease for parking and access on the rear of both properties.  Our client sought to purchase both properties for eventual redevelopment.

The tenant sought to obstruct the sale to our client by exercising its right of first refusal as to only one of those two properties – the smaller property that it barely used, instead of the other larger and more expensive property in which the tenant’s restaurant business actually operates.

The Court of Appeals concluded that our client is entitled to complete its purchase because the tenant failed to match the terms of our client’s offer to purchase both properties, our client’s offer was commercially reasonable under the circumstances, and there was no bad faith in the offering process or with the notice given to the tenant.

This Appellate Decision is a rare case dealing with interpretation of a right of first refusal in a commercial real estate transaction, and it shows how litigation can sometimes be essential to clearing certain issues involving real estate.