The 3rd Circuit Court gave the farm that time frame April 27 in reversing Judge Mark Jeansonne’s ruling that McCann was entitled to purchase it for $187,182 under terms of a right of first refusal agreement.
The timber is included on a tract involved in an exchange and hunting lease agreement between the parties in 1995.
The agreement provides McCann with a right of first refusal to purchase the timber “for the same price and on the same terms” as any offer by a third party triggering Martin’s desire to sell, according to the ruling.
In February 2008, Martin entered into a pre-sale agreement (purchase agreement) with Heartwood Forestland VI, L.P. (Forestland).
Martin agreed to sell, among other things, its timber rights on 140,000 acres in nine different Louisiana parishes, provided there were no defects in title or encumbrances on the areas in question.
In consideration, Forestland agreed to pay Martin the lump sum of $75 million.
One area included in the purchase agreement was the timber for which McCann had a right of first refusal.
Forestland and Martin amended the purchase agreement to exclude 456 acres and put $820,000 in escrow until McCann had the opportunity to exercise its option.
McCann, however, asserted the value was $412 an acre, as opposed to the $1,798 established by the Forestland offer. The district court agreed.
Martin argued that was not so, that each plat of land among the 140,000 acres has a different value depending on the amount and quality of the timber it contains.
The 3rd Circuit noted that “Forestland bought, in globo, an assortment of things from Martin, and agreed to pay, in globo, seventy-five million dollars.
“This does not mean that each item is worth its pro-rata share; it means that Forestland believed that the in globo items it purchased were worth the in globo price paid. Martin desired to sell its timber rights in totality; some were worth more than others but, presumably, it wanted to sell them all at one time.
“If Martin and Forestland had priced each acre (or, more reasonably, each plat), Forestland could have purchased some, but not all, of the plats. They did not do so. The obvious goal was to come up with a mutually agreeable price for the entirety of the items being sold.
“The price was reduced by $820,000 for the exclusion of the subject timber from the final sale.
“McCann would have this court ignore the offer from Forestland to Martin, the communications between Martin and McCann, the amendment, the escrow agreement between Forestland and Martin, and the write up of the final sale between Forestland and Martin, all of which indicate that the sale price agreed upon between Martin and Forestland for the subject timber was $820,000.
“Further, McCann erroneously states that Martin receives seventy-five million dollars regardless of the price for which McCann purchases the timber. This argument is without merit.
“The sale occurred nearly three years ago. The amount of $820,000 was placed in escrow. If McCann exercises its right of first refusal and purchases the property for anything less than $820,000, Martin loses the difference.
“We find nothing in the record to support a conclusion that $412 per acre is the price agreed upon by Forestland and Martin for the subject timber.
“After carefully reviewing the record, it is obvious to this court that the price offered by Forestland that triggered Martin’s desire to sell the subject timber was $820,000.
“We reverse the trial court’s finding that the price of the subject timber was $412 per acre.”
The court affirmed the district court finding that McCann has right of first refusal and that Martin intended to sell the timber and gave the farm company 30 days to make its decision.