Court Of Appeal Reverses Judgment Against GMSR’s Clients And Orders Full Enforcement Of Their Property Purchase Rights

In 1957, GMSR’s clients, the Claremont Colleges, sold campus land to the Claremont School of Theology (CST). CST agreed that if it ever wanted to sell the land or ceased using it, the Colleges could buy it back for the original sale price, plus some limited adjustments.

Decades later, CST decided to relocate its campus. It sued to invalidate the Colleges’ repurchase right and openly marketed the land. The Colleges demanded enforcement of the repurchase right by its terms. The trial court agreed with CST’s argument that enforcing the repurchase right would work a forfeiture, because the land’s market value substantially exceeds the price the parties had specified in 1957. The court entirely rewrote the repurchase right into a right of first refusal, ordering that if CST found a third party buyer, the Colleges would have to match that party’s proposed price in order to buy back the land.

In a unanimous published opinion, the Court of Appeal reversed. It held that the repurchase right is an enforceable equitable servitude and that the trial court erred in invoking the forfeiture doctrine based solely on the land’s increased market value. It therefore directed the trial court to enter judgment enforcing the Colleges’ repurchase right by its terms.

Court of Appeal Opinion – View Document