LEG Investments v. Boxler

Thomas and Donalee Boxler (defendants) purchased a vacation home at Lake Tahoe with Carl and Judith Bumpass. Each family owned an undivided one-half interest in the property. The Bumpasses sold their interest to Raymond and Sharon Schwerdtfeger. The Boxlers and the Schwerdtfegers entered into a tenancy-in-common agreement that gave each party a right to first refusal before the other party could sell their interest. Subsequently, LEG Investments (LEG) (plaintiff) purchased the Schwerdtfegers’ interest in the property. LEG immediately experienced problems and disputes with the Boxlers. For example, the Boxlers refused to clean the property after use and failed to contribute to landscaping and repair costs. LEG offered either to sell its interest to the Boxlers for $750,000 or to purchase the Boxlers’ interest for the same amount, but the Boxlers declined. In 2005, LEG received an offer to purchase its interest for $1.4 million, pending approval of the Boxlers as co-owners. LEG first offered the Boxlers the right to purchase LEG’s interest, but the Boxlers refused. However, the potential purchaser decided not to approve the Boxlers as co-owners and withdrew the offer. Later, LEG demanded that the Boxlers either offer the property for sale or purchase LEG’s interest. The Boxlers again refused. LEG then sued the Boxlers, seeking a partition by sale. A partition by sale is a court-ordered property sale with the proceeds being divided among the joint owners. LEG alleged that the Boxlers were difficult co-owners, and that the Boxlers made selling LEG’s interest almost impossible. The trial court determined that the inclusion of the right-of-first-refusal provision in the tenancy-in-common agreement waived LEG’s right to a partition by sale and granted summary judgment to the Boxlers. LEG then appealed to the California Court of Appeals.