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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Shaffer v. Bellows (9/23/2011) sp-6603

Shaffer v. Bellows (9/23/2011) sp-6603, 260 P3d 1064

        Notice: This opinion is subject to correction before publication in the PACIFIC  REPORTER. 
        Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts, 
        303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email 
        corrections@appellate.courts.state.ak.us. 

                THE SUPREME COURT OF THE STATE OF ALASKA 

BRADLEY SHAFFER,                              ) 
                                              )       Supreme Court No. S-13894 
                       Appellant,             ) 
                                              )       Superior Court No. 1SI-08-00135 CI 
        v.                                    ) 
                                              )       O P I N I O N 
KENNETH BELLOWS, RONALD D. ) 
BELLOWS, and MARLYS DEE                       )       No. 6603 - September 23, 2011 
HANSON,                                       ) 
                                              ) 
                       Appellees.             ) 
                                              ) 

               Appeal from the Superior Court of the State of Alaska, First 
               Judicial District, Sitka, David V. George, Judge. 

               Appearances:      Z. Kent Sullivan, Baxter Bruce & Sullivan 
               P.C., Juneau, for Appellant.   James W. McGowan, Sitka, for 
               Appellees. 

               Before:    Carpeneti, Chief Justice, Fabe, Winfree, Christen, 
               and Stowers, Justices. 

               CARPENETI, Chief Justice. 

I.      INTRODUCTION 

               Two men bought an island.         After a dispute, they agreed that one would 

keep the island, while the other would receive a one-time payment and an option to buy 

the island at a fixed price, adjusted for inflation, if the owner ever chose to sell it.  Years 

passed.    The   value   of the island rose, far outpacing inflation.      But the owner never 

----------------------- Page 2-----------------------

elected to sell.   Instead, he eventually conveyed the island to his sister, ostensibly as a 

gift.  The option holder sued.        The superior court held on summary judgment that the 

option remained viable, but that the gift was not improper.              The option holder appeals. 

We   affirm   the   superior   court's   interpretation   of   the   option   agreement,   but   because 

material facts are in dispute concerning contractual claims and allegations that the option 

holder's conveyance was fraudulent, we  reverse and remand the superior court's grant 

of summary judgment on those claims. 

II.     FACTS AND PROCEEDINGS 

        A.      Facts 

                In 1981, Bradley Shaffer and Kenneth Bellows purchased Ring Island, a 

4.6-acre property in Sitka.       Shaffer and Bellows each contributed $25,000 as a down 

payment.  As part of their purchase contract, Shaffer and Bellows were required to pay 

the previous owners $644 per month over approximately eight years.                    During the first 

nine months, Shaffer paid the entirety of each monthly payment.  According to Shaffer, 

he and Bellows began arguing in early 1982 about how the property should ultimately 

be used. 

                On   July   15,   1982,   Shaffer   quitclaimed   his   interest   in   the   property   to 

Bellows.      Shaffer   stated   to   the   superior   court   that   he   received,   in   exchange   for   his 

quitclaim, repayment from Bellows of the money he had already spent, and "an option 

. . . for purchase of the property."         The nature and effect of this option (the Option 

Agreement) is the subject of the current dispute. 

                The Option Agreement reads in relevant part as follows: 

                        The     Grantor,   KENNETH         BELLOWS         .  .  .  hereby 
                grants   to   BRADLEY   SHAFFER   .   .   .   the   [first]   option   to 
                purchase the [Ring Island property.] 
                        . . . . 

                                                   -2-                                             6603
 

----------------------- Page 3-----------------------

                        This option shall take effect only in [the] event that 
                Grantor elects to sell the above-described property.             In this 
                event he shall first provide BRADLEY SHAFFER with forty 
                (40) days in which to purchase the property for a sales price 
                to be determined as follows: 

                        The base sales price shall be $123,200.           This amount 
                shall be increased or decreased by the same percentage that 
                the cost of living, according to the U.S. Department of Labor, 
                Bureau of Labor Statistics evaluation of the State of Alaska, 
                increases or decreases between the date of this Agreement; 
                and the date Grantor notifies Bradley Shaffer of his intent to 
                sell   the   property.   The   base   sales   price,   adjusted   in   this 
                manner,   shall   be   the   actual   sales   price,   if   Bradley   Shaffer 
                elects to exercise this option. 

                On May 1, 2003, Bellows's attorney communicated to Shaffer's attorney 

that Bellows might be interested in negotiating a termination of the Option Agreement. 

In a videotaped deposition in August 2009, Bellows explained that he was seeking to 

have Shaffer's option terminated because it was "a block to financing."                   On May 12, 

2003,     Shaffer's   attorney    responded     that  Shaffer   was    not  interested    in  discussing 

termination of the Option Agreement. 

                On January 30, 2006, Bellows quitclaimed the Ring Island property to his 

sister, Marlys Dee Hanson.  According to the quitclaim deed, he did so as a gift.  Bellows 

testified   that   Hanson   gave   him   no   consideration   at   the   time,   and   that   he   could   not 

remember receiving anything of great value in the years afterward, though he also noted 

elsewhere that "we share a lot of things mutually."                In   his August 2009 videotaped 

deposition, Bellows stated that he was still "not sure" whether Shaffer's option would 

be triggered if Hanson sold the land.         When asked directly - "Do you believe that . . . 

gifting the property to your sister negated the option agreement with Mr. Shaffer?" - 

Bellows responded:        "Good question.      I don't know.      It was never going to be for sale. 

It was always going to be in the family." 

                                                   -3-                                             6603
 

----------------------- Page 4-----------------------

               Shaffer has also asserted in the course of litigation that Bellows's gift of the 

property made Bellows insolvent, that neither Bellows nor Hanson noted the conveyance 

of the property to the IRS   on   their tax returns, and that Hanson had already been in 

possession of the property for years, "with substantial continuing use" by Bellows, such 

that the conveyance did not alter "the status quo of such use and possession."           Shaffer 

submitted various documents that could provide a basis for inferring that Bellows had 

taken   on   excessive   debt. During   the   August   2009   videotaped   deposition,   Bellows 

testified that his use of the property did not change after the gift, and he did not deny that 

he did not record the gift of the property on his tax returns.  Hanson testified that she had 

visited the property every two to three months in the wake of the 2006 gift, but started 

visiting the property more often from the spring of 2009. 

               In November 2007, after Shaffer learned of Bellows's 2006 quitclaim to 

Hanson, Shaffer's attorney sent Bellows a letter, asking Bellows to clarify "what your 

position is with regard to [Shaffer]'s rights pursuant to the Option Agreement."  Bellows 

did not respond. 

               Meanwhile, the Ring Island property rose in value.  At the time the Option 

Agreement      was   signed,  the  parties  assigned   it  a  fair  market  value  of  $123,200. 

According to Shaffer, by 2001 the property was worth approximately $800,000, and by 
late 2009, the property was worth approximately $890,000.1            Shaffer later asserted, in 

2009, that if he were allowed to exercise his option, he would be entitled to purchase the 

property for approximately $240,363.20. 

        1      Roughly      $215,000     of  this   appreciation    resulted   from    Bellows's 

improvements, and Shaffer told the superior court that, if he were to be granted damages, 
an "offset" in this amount would be appropriate. 

                                               -4-                                           6603 

----------------------- Page 5-----------------------

        B.      Proceedings 

                In August 2008, several months after Bellows failed to respond to Shaffer's 

query regarding the effect of Bellows's 2006 quitclaim, Shaffer filed a complaint against 

Bellows, Hanson, Bellows's brother Ronald Bellows, ALPS Federal Credit Union, and 

"all other persons or parties unknown claiming a right, title, estate, lien, or interest" in 

the Ring Island property.   The complaint contained five counts:  (1) an action against all 

defendants      for  declaratory    judgment;   (2)   an  action   against   Bellows    for  breach   of 

contract; (3) an action against Bellows for breach of the implied covenant of good faith 

and fair dealing; (4) an action against all defendants for violation of Alaska's prohibition 

against fraudulent conveyances under AS 34.40.010 and subsequent subsections; and (5) 
an action against all defendants for conspiracy to fraudulently convey property.2 

                Defendants Bellows, Hanson, and Ronald Bellows then filed a motion for 

summary       judgment.     With     regard    to  Shaffer's   action   for   declaratory    judgment, 

defendants conceded that Shaffer's option "[r]uns with the land," and thus that "the 

Option Agreement is still viable - and will be triggered if the property is ever sold." 

                In a written decision in April 2010,  Superior Court Judge David V. George 

granted   summary   judgment   to   Shaffer   on   his   action   for   declaratory   judgment   and 

summary judgment to Bellows and the other defendants on all remaining counts. Shaffer 

appeals the latter decisions. 

III.    STANDARD OF REVIEW 

                We review a grant of summary judgment "de novo, affirming if the record 

presents no genuine issue of material fact and if the movant is entitled to judgment as a 

        2       ALPS would eventually reach a stipulation with Shaffer allowing for its 

dismissal   with   prejudice   from   the   case.  Shaffer   would   also   eventually   agree   to   the 
dismissal of Ronald Bellows, once it became clear that Ronald did not claim an interest 
in the Ring Island property. 

                                                  -5-                                               6603 

----------------------- Page 6-----------------------

matter of law.    All reasonable inferences are drawn in favor of the nonmovant in this 
examination."3     Under the de novo standard, we "apply[] our independent judgment to 

questions of law, adopting the rule of law most persuasive in light of precedent, reason, 
and policy."4 

IV.	    DISCUSSION 

        A.	     It Was Error To Grant Summary Judgment To Bellows And Hanson 
                On Shaffer's Fraudulent Conveyance Claims. 

                1.	     The wrong legal test was applied to the fraudulent conveyance 
                        claim. 

                Shaffer argues that the superior court erred in its legal analysis of the statute 

governing   fraudulent   conveyance   claims,   AS   34.40.010.          This   statute   provides   in 

relevant part:    "[A] conveyance . . . of an estate or interest in land . . . made with the 

intent   to   hinder,   delay,   or   defraud   creditors   or   other   persons   of   their   lawful   suits, 

damages, forfeitures, debts, or demands, . . . with the like intent, as against the persons 

so hindered, delayed, or defrauded is void." 

                The superior court relied on dicta from a footnote in Asher v. Alkan Shelter, 
LLC5    to   conclude   that   under   Alaska   law,   any   fraudulent   conveyance   requires   four 

elements:    "(1) an unlawful agreement, (2) the specific intent of each participant in the 

scheme to hinder, delay or defraud a creditor of a participant in the scheme, (3) acts taken 

in furtherance of the unlawful agreement, and (4) damages caused by those acts."  The 

        3       Smith v. Radecki, 238 P.3d 111, 114 (Alaska 2010) (quoting Beegan v. 

State, Dep't of Transp. & Pub. Facilities, 195 P.3d 134, 138 (Alaska 2008)) (internal 
quotation marks omitted). 

        4       Id. (quoting Jacob v. State, Dep't of Health & Soc. Servs., 177 P.3d 1181, 

1184 (Alaska 2008)) (internal quotation marks omitted). 

        5       212 P.3d 772, 782 n.28 (Alaska 2009) (quoting Summers v. Hagen, 852 

P.2d 1165, 1169-70 (Alaska 1993)). 

                                                  -6-	                                          6603
 

----------------------- Page 7-----------------------

footnote in Asher in turn relies on a 1993 case, Summers v. Hagen.6                   But when the four 

elements in Summers are read in the context of the facts of the case, it is clear that they 

are meant to be the elements of conspiracy to fraudulently convey, not the elements of 

fraudulent conveyance. 

                 We summarized the correct approach to fraudulent conveyance claims in 

                                                                7 
Nerox Power Systems, Inc. v. M-B Contracting Co.  : 

                 The   prohibition   against   fraudulent   conveyances   has   been 
                 codified   in   Alaska   law.    The   intent   to   defraud   through   a 
                 conveyance   is   a   question   of   fact   usually   to   be   proved   by 
                 circumstantial   evidence.        Many   circumstantial   factors   can 
                 indicate   the   existence   of   fraud.  Badges   of   fraud   must   be 
                 viewed within the context of each particular case.[8] 

                 Typical badges of fraud include: "(1) inadequate consideration, (2) transfer 

in anticipation of a pending suit, (3) insolvency of the transferor, (4) failure to record, (5) 

transfer encompasses substantially all the transferor's property, (6) transferor retains 

possession   of   the   transferred   premises,   (7)   transfer   completely   depletes   transferor's 
assets, and (8) relationship of the parties."9 

                 Nerox, not Asher, accurately captures the elements required for a simple 

fraudulent conveyance claim under Alaska law. A fraudulent conveyance claim does not 

require plaintiffs to prove the four elements from Summers.   We thus analyze Bellows's 

fraudulent conveyance claim under the badges of fraud analysis summarized in Nerox. 

        6        852 P.2d 1165. 

        7        54 P.3d 791 (Alaska 2002). 

        8        Id. at 796 (footnotes and internal quotation marks omitted). 

        9        Gabaig v. Gabaig, 717 P.2d 835, 839 n.6 (Alaska 1986) (citing First Nat'l 

Bank of Fairbanks v. Enzler, 537 P.2d 517, 522 (Alaska 1975)). 

                                                    -7-                                               6603
 

----------------------- Page 8-----------------------

               2.	     There is a genuine issue of material fact as to whether Bellows 
                       and Hanson engaged in a fraudulent conveyance. 

               The superior court concluded in dicta that under a badges of fraud analysis, 

Shaffer raised no genuine issues of material fact regarding defendants' fraudulent intent. 

By contrast, Shaffer argues on appeal that "[t]here are many factual issues related to 

whether the transfer of the Ring Island property was a fraudulent conveyance."  Shaffer 

provides a detailed summary of evidence suggesting that the transfer displayed several 

badges of fraud. 

               In   reviewing   a   summary   judgment   determination,   we   draw   all   factual 
inferences in favor of the non-moving party.10          Alaska applies a lenient standard for 

withstanding summary judgment.11          Applying that standard to the evidence before the 

superior court, we find several genuine issues of fact that relate materially to the badges 

of fraud.  We list three examples. 

               First, there is a genuine issue of material fact as to whether the transfer was 

made for inadequate consideration, the first badge of fraud listed above.            The superior 

court treated inadequate consideration as irrelevant to the analysis of defendants' badges 

of fraud, explaining that "no consideration was ever intended" and that the transfer "was 

clearly a gift."  This appears to be either a factual inference in Bellows's favor, accepting 

the notion that he made the conveyance as a gift solely out of love and affection for 

Hanson, in which case the inference is inappropriate in the summary judgment context; 

or it is the incorrect statement that debtors can as a rule evade this badge of fraud simply 

        10     Allstate Ins. Co. v. Dooley, 243 P.3d 197, 200 (Alaska 2010) (citingLynden 

Inc. v. Walker, 30 P.3d 609, 612 (Alaska 2001)). 

        11     See, e.g.,Estate of Milos v. Quality Asphalt Paving, Inc., 145 P.3d 533, 537 

(Alaska 2006) (noting leniency of Alaska standard for finding genuine issue of material 
fact at summary judgment stage). 

                                                -8-	                                          6603
 

----------------------- Page 9-----------------------

by claiming to make gifts.  The factual issue of whether Bellows transferred the property 

for inadequate consideration is thus material to the badges of fraud analysis. 

                 Second, there is a genuine issue of material fact as to whether the transfer 
was undertaken while Bellows was in or approaching insolvency,12  the third badge of 

fraud above. The superior court recognized that there "may or may not be" evidence that 

Bellows was in financial distress.          But the superior court treated potential evidence of 

Bellows's financial status as irrelevant:           "[W]hether or not Mr. Bellows is insolvent 

doesn't seem to me to have any effect on the fraudulent intent in this transaction.  Again, 

. . . the land continues to be subject to your option in the event of a sale.              So the option 

itself has not been frustrated or diminished."            But if Bellows's insolvency could have 

resulted in the forced sale of his property, then there would be a great difference between 

the title being in Bellows's name or Hanson's.  In the former case, Shaffer might end up 

purchasing   the   property   in   a   forced   sale;   in   the   latter   case,   a   forced   sale   would   be 

unnecessary and Bellows might continue to use the property indefinitely with his sister's 

permission.      The   genuine   issue   of   fact   recognized   by   the   superior   court   regarding 

Bellows's solvency is thus material to the badges of fraud analysis. 

                 The revelation by Bellows's attorney, immediately after the superior court 

delivered   its   oral   decision,   that   "Mr.   Bellows   is   trying   to   do   some   refinancing   on 

something," and that "[i]t's verging on being a big problem for him," further underscores 

the extent to which the early termination of this case may have obscured factual matters 

regarding Bellows's solvency that are relevant to the analysis of the badges of fraud. 

        12       Black's Law Dictionary defines insolvency as "being unable to pay debts 

as they fall due."      BLACK 'S  LAW  DICTIONARY 811 (8th ed. 2004) (emphasis added). 
Despite Shaffer's use of the term "insolvency," he does not appear to assert that Bellows 
has been unable to pay a debt that has fallen due.              Rather, he seems to suggest that the 
ratio of Bellows's debts to his assets is somehow unsustainable. 

                                                    -9-                                              6603
 

----------------------- Page 10-----------------------

                Third,   there   is   a   genuine   issue   of   material   fact   as   to   whether   Bellows 

retained possession of the property, the sixth badge of fraud above.  The superior court 

appears to have weighed the facts in Bellows's   favor   on this point, concluding that 

Bellows did not retain possession because "[t]he obvious[] evidence in the record is that 

Mr. Bellows has visited the property two times within one year and may have left some 

personal   property   on   it   from   years   before."   But   as   Shaffer   notes,   some   evidence 

suggested that Bellows never resided on the property, and that he continued to use it after 

the transfer of title very much as he did before.  There is thus a genuine issue of material 

fact regarding Bellows's retained possession of the property. 

                In light of the above, we conclude that Shaffer raised genuine issues of 

material fact as to whether Bellows and Hanson engaged in a fraudulent conveyance 

under AS 34.40.010 according to the badges of fraud analysis set out in Nerox.  We thus 

reverse the superior court's dismissal on summary judgment of Shaffer's fraudulent 

conveyance claim and remand for further proceedings.   We note that on remand Shaffer 

may assert any arguments the evidence supports regarding the badges of fraud, not just 

those mentioned above. 

        B.	     It Was Error To Grant Summary Judgment Against Shaffer On His 
                Contract Claims. 

                1.	     The superior court correctly interpreted the Option Agreement. 
                We approach contract interpretation generally as a question of law.13               We 

"look to extrinsic evidence of the parties' contractual intent only if the language of the 
instrument is ambiguous."14 

        13      AAA Valley Gravel, Inc. v. Totaro , 219 P.3d 153, 160 (Alaska 2009) (citing 

Norville v. Carr-Gottstein Foods Co., 84 P.3d 996, 1004 (Alaska 2004)). 

        14      Id. (citing Williams v. Crawford, 982 P.2d 250, 253 (Alaska 1999)). 

                                                  -10-                                              6603 

----------------------- Page 11-----------------------

                In general, Shaffer argues that the Option Agreement is "a mixed-up blend 
between an option agreement and a right of first refusal."15               He states that the Option 

Agreement leaves ambiguous whether Shaffer has the "right to invoke it."   Though 

Shaffer's briefs never articulate the precise contours of this right, it is hard to see what 

he could mean other than that he claims some right to purchase the property even if 

Bellows never elects to sell it.   But the Option Agreement could hardly be more clear in 

establishing that this is not the case.      The Option Agreement states:          "This option shall 

take effect only in [the] event that Grantor elects to sell the above-described property." 
"In   the   event"   is   a   synonym   of   "[i]f   it   should   happen,"16  a   conditional   phrase   that 

contemplates the possibility of the event never coming to pass. 

                In   addition,    another   phrase    from   the  Option    Agreement      that  Shaffer 

discusses in depth - "The base sales price, adjusted in this manner, shall be the actual 

sales price, if Bradley Shaffer elects to exercise this option" (emphasis added) - plainly 

means that if Bellows elects to sell the property and Shaffer's option is thus triggered, 

then Shaffer may purchase the property at the stated price if he chooses to do so.  The 

        15      In support of the notion that the Option Agreement is ambiguous between 

an option agreement and a right of first refusal, Shaffer quotes treatises that define these 
and related terms.   But the definitions in other sources give rise to little or no ambiguity. 
Black's Law Dictionary, for example, defines an option agreement as "esp[ecially], a 
contractual obligation to keep an offer open for a specified period, so that the offeror 
cannot revoke the offer during that period."  BLACK 'S LAW DICTIONARY 1127 (8th ed. 
2004).   The "specified period" of Shaffer's option, in these terms, would be the 40 days 
after Bellows's notification of his election to sell.          By contrast, the Option Agreement 
does not meet part of the core definition of a "right of first refusal," which is defined as 
"[a] potential buyer's contractual right to meet the terms of a third party's higher offer." 
Id. at 1350 (emphasis added).  We conclude that the agreement in question is an option 
agreement, not a right of first refusal. 

        16      WEBSTER 'S      II  NEW    RIVERSIDE     UNIVERSITY       DICTIONARY        448   (1988) 

(defining "event"). 

                                                  -11-                                             6603
 

----------------------- Page 12-----------------------

italicized phrase simply acknowledges that Shaffer is not required to buy the property 

if Bellows elects to sell, not that Shaffer has a right to exercise his option in the absence 

of Bellows's election to sell. 

                We thus affirm the superior court's determination that the terms of the 

Option   Agreement   unambiguously   give   Shaffer   a   right   to   purchase   the   Ring   Island 

property if and only if Bellows elects to sell it.       Because the Option Agreement is not 

ambiguous, the superior court did not err in declining to make further factual findings 
regarding the intent of the parties.17 

                2.	     There     is  a  genuine    issue   of  material    fact   as  to  Bellows's 
                        contractual claims. 

                Shaffer    has   presented   three   contractual   claims    in  the  course   of  this 

litigation:  breach of contract, anticipatory breach, and breach of the implied covenant 

of good faith and fair dealing.      If there is a genuine issue of material fact as to whether 

the conveyance to Hanson was a fraudulent conveyance, then a fortiori there is a genuine 

issue of material fact as to whether the conveyance was a breach of the implied covenant 

of good faith and fair dealing.  If upon further factual development it is determined that 

the conveyance involved some form of consideration, then there is also a question of 

whether the conveyance breached the explicit terms of the Option Agreement. 

                The superior court did not address the anticipatory breach theory in its 

summary judgment order.          Shaffer did not raise anticipatory breach in his complaint 

before the superior court, though he did argue it in his opposition to defendants' motion 

for summary judgment, and he raised it in this appeal.           We have on occasion chosen to 

        17      See Williams, 982 P.2d at 253 (extrinsic evidence of intent only considered 

if contract is not intrinsically clear). 

                                                 -12-	                                            6603 

----------------------- Page 13-----------------------

treat claims similarly litigated in the trial court as preserved on appeal,18 and we do so 

again here.     On remand, we direct the superior court to consider Shaffer's anticipatory 

breach theory as part of its reconsideration of Shaffer's contractual claims. 

        C.	      The     Superior      Court     Must     Determine       The    Option     Agreement's 
                 Validity. 

                 Neither party has squarely asserted that the Option Agreement constitutes 
an unreasonable restraint on alienation and is, as a result, unenforceable.19                 Nor did the 

superior court address this issue.20 

                 We   note   that   the   Restatement   (Third)   of   Property   describes   options   to 

purchase land and rights of first refusal as "servitudes that directly restrain alienation of 
interests    in  land."21    As    such,   they   are  "invalid    if  the  restraint   is  unreasonable. 

Reasonableness is determined by weighing the utility of the restraint against the injurious 

        18       See DeNardo v. Corneloup, 163 P.3d 956, 961 (Alaska 2007) (plaintiff's 

"original   complaint   did   not   plead   ultrahazardous   activity,   but   he   discussed   it   at   the 
summary   judgment   oral   argument,   so   we   choose   to   treat   the   issue   as   preserved   for 
appeal"). 

        19       Shaffer   raised   the   issue   briefly   in   a   pretrial   memorandum,   but   only   as 

support for adopting his interpretation of the contract.                At oral argument before the 
superior court on March 12, 2010, Shaffer's attorney reiterated this argument regarding 
alienability and reformation.         Bellows's attorney responded by suggesting that if the 
Option Agreement were to be reformed, the court should consider rewriting it to expire 
after a certain amount of time.         Shaffer repeats his argument regarding alienability and 
reformation in his brief on appeal, citing to his pretrial memorandum.  Bellows and the 
other defendants make no mention of the alienability issue in their brief. 

        20       In response to Shaffer's pleading for a declaratory judgment that the Option 

Agreement   "was   a   valid   and   enforceable   agreement,"   the   superior   court   did   accept 
Bellows's and the other defendants' concession that the Option Agreement is valid and 
runs with the land. 

        21       RESTATEMENT (THIRD) OF PROPERTY : SERVITUDES  3.4 cmt. b (2000). 

                                                    -13-	                                             6603
 

----------------------- Page 14-----------------------

consequences of enforcing the restraint."22         A sister court has stated:  "It is the generally 

accepted rule that a fixed price repurchase option of unlimited duration, independent of 
the lease, is an unreasonable restraint."23      The explicit terms of the Option Agreement in 

this case appear to be of unlimited duration:           If the option indeed runs with the land, it 

will persist indefinitely until an owner elects to sell the property. The Option Agreement 

also appears to offer Shaffer a largely fixed price, adjusted only for inflation. 

                If the terms of the Option Agreement are enforceable, then owners of the 

Ring Island property will have an incentive not to sell it so long as it has a value to them 

greater than the bargain price Shaffer or his successors would be able to pay - even if 

another potential buyer would be willing to pay far more and put the island to far more 

beneficial use.  On remand, the parties may wish to address this issue, as well as the issue 

of how to reform the Option Agreement or otherwise achieve an equitable resolution if 

the Option Agreement is unenforceable. 

V.      CONCLUSION 

                We AFFIRM the superior court's interpretation of the Option Agreement. 

We REVERSE and REMAND the superior court's dismissal on summary judgment of 

Shaffer's fraudulent conveyance and contractual claims.               On remand, the parties may 

        22      Id. 

        23      Iglehart   v.   Phillips,   383   So.   2d   610,   615   (Fla.   1980)   (citing   multiple 

authorities), cited with continuing approval by Old Port Cove Holdings, Inc. v. Old Port 
Cove Condominium Ass'n One, 986 So. 2d 1279, 1288 n.4 (Fla. 2008) (holding that a 
right of first refusal of unlimited duration was not an unreasonable restraint on alienation 
where it was not for a fixed price); see also Bortolotti v. Hayden, 866 N.E.2d 882, 890- 
91 (Mass. 2007) (contrasting the minimal restraint on alienation imposed by right of first 
refusal with greater restraint imposed by "an option to purchase at a fixed price," where 
owner is not "assured of receiving market value for his property" and might be "deterred 
from improving it or offering it for sale"). 

                                                  -14-                                            6603
 

----------------------- Page 15-----------------------

address the potentially dispositive question of whether the Option Agreement is legally 

enforceable, and if it is unenforceable, the consequences of its unenforceability. 

                                          -15-                                     6603
 
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