SEVERSON, Justice.
[¶ 1.] Advanced Recycling Systems, LLC initiated this breach of contract action against Southeast Properties, LP, alleging that Southeast Properties violated Advanced Recycling's right of first refusal when it sold the 8th & Railroad Center development without first offering 110 South Reid Street, a portion of the development subject to a right of first refusal, to Advanced Recycling. The trial court granted summary judgment in favor of Advanced Recycling. Southeast Properties appeals. We reverse and remand with instruction to enter a judgment consistent with this opinion.
[¶ 2.] Until 2004, Southeast Properties owned the 8th & Railroad Center development ("the development") located in downtown Sioux Falls, South Dakota. The development consists of three properties: 110 South Reid Street; 106 North Reid Street; and, 110 North Reid Street. Although each of the properties has its own address, legal description, and real estate tax statement, Southeast Properties considered
[¶ 3.] Advanced Recycling is a drop-off and processing station for waste management companies and other haulers to deposit recyclable materials such as paper products, plastics, and aluminum. Advanced Recycling sorts, bales, and ships these materials to mills or other manufacturing facilities for processing and reuse. Beginning in 1995, Advanced Recycling leased an aging, unheated building in the development known as 110 South Reid Street, as well as a small parcel of adjacent land, ("the leased premises") from Southeast Properties.
[¶ 4.] The lease gave Advanced Recycling a right of first refusal on the leased premises:
The parties agree that the right of first refusal provision was limited to the leased premises and did not apply to the development as a whole.
[¶ 5.] An addendum to the lease also gave Advanced Recycling an option to renew the lease:
Advanced Recycling exercised its option to renew the lease for an additional two years from October 1, 1998, through September 30, 2000. In September 1999, Advanced Recycling and Southeast Properties agreed to extend the lease for an additional three years, and Advanced Recycling was given the option to renew the lease for an additional three-year term at the expiration of the lease on September 30, 2003. Advanced Recycling exercised this option to renew the lease for an additional three-year
[¶ 6.] In 2004, Southeast Properties contracted to sell the development, including the leased premises, to 8th & Railroad Center, LLC. Southeast Properties entered into a commercial purchase agreement to sell the development in March 2004 and conveyed the development by warranty deed on July 15, 2004. The leased premises were not sold separately, but were sold as part of the development. Southeast Properties did not receive a separate bona fide offer for the purchase of the leased premises, and no specific value was allocated to the leased premises.
[¶ 7.] On July 23, 2004, Advanced Recycling received notice that the development had been sold.
[¶ 8.] In January 2007, Advanced Recycling initiated this breach of contract action against Southeast Properties and 8th & Railroad Center, alleging that Southeast Properties violated the right of first refusal when it sold the development to 8th & Railroad Center without first offering the leased premises to Advanced Recycling. Advanced Recycling requested specific performance or monetary damages. In June 2007, the parties stipulated to the dismissal of Advanced Recycling's claims against 8th & Railroad Center and for specific performance. The trial court entered an order to that effect in July 2007.
[¶ 9.] In November 2007, Advanced Recycling filed a motion for partial summary judgment on its breach of contract claim against Southeast Properties. Southeast Properties filed a cross-motion for summary judgment. A hearing on the motions was held in December 2007. The trial court subsequently issued a memorandum decision, granting summary judgment in favor of Advanced Recycling. The trial court rejected Southeast Properties' argument that Advanced Recycling's right of first refusal was not "triggered" because the leased premises were sold as part of a larger development. The trial court concluded that Advanced Recycling was entitled to monetary damages for the violation of the right of first refusal. After a bench trial on damages, the trial court awarded
[¶ 10.] This Court's standard of review of a grant or denial of a motion for summary judgment is well settled. "In reviewing a grant or a denial of summary judgment under SDCL 15-6-56(c), we determine whether the moving party has demonstrated the absence of any genuine issue of material fact and showed entitlement to judgment on the merits as a matter of law." Janis v. Nash Finch Co., 2010 SD 27, ¶ 6, 780 N.W.2d 497, 500 (quoting Dykstra v. Page Holding Co., 2009 SD 38, ¶ 23, 766 N.W.2d 491, 496). "The evidence must be viewed most favorably to the nonmoving party, and reasonable doubts should be resolved against the moving party." Id. (citation omitted). "The nonmoving party, however, must present specific facts showing that a genuine, material issue for trial exists." Id. (citation omitted). But in considering a trial court's grant of a motion for summary judgment, this Court "will affirm only if all legal questions have been decided correctly[.]" Gehrts v. Batteen, 2001 SD 10, ¶ 4, 620 N.W.2d 775, 777 (citing Holzer v. Dakota Speedway, Inc., 2000 SD 65, ¶ 8, 610 N.W.2d 787, 791).
[¶ 11.]
[¶ 12.] It is essential to the resolution of this case to appreciate the difference between options and rights of first refusal. An option "gives the optionee the right to purchase the property at his election within an agreed period at a named price." Crowley v. Texaco, Inc., 306 N.W.2d 871, 873 (S.D.1981) (citing Sinclair Ref. Co. v. Allbritton, 147 Tex. 468, 218 S.W.2d 185 (1949)). See Ziegler Furniture and Funeral Home, Inc. v. Cicmanec, 2006 SD 6, ¶ 17, 709 N.W.2d 350, 355 ("An option to purchase real property may be defined as a contract by which an owner of real property agrees with another person that the latter shall have the privilege of buying the property at a specified price within a specified time, or within a reasonable time[.]") (quoting Kuhfeld v. Kuhfeld, 292 N.W.2d 312, 314 (S.D.1980)). An option contract is an irrevocable offer by the owner to sell on specified terms and creates a power of acceptance in the optionee. Straley v. Osborne, 262 Md. 514, 521, 278 A.2d 64, 68 (1971) (citing 1A Corbin, Corbin on Contracts §§ 259, 260 (1963 ed.)) (additional citations omitted). The option is exercised when the optionee accepts the irrevocable offer, and an enforceable contract of sale is created. Id.
[¶ 13.] Unlike an option, a right of first refusal "does not entitle the [holder] to compel an unwilling owner to sell." Landa v. Century 21 Simmons & Co., Inc., 237 Va. 374, 380, 377 S.E.2d 416, 419 (1989) (quoting Cities Serv. v. Estes, 208 Va. 44, 47, 155 S.E.2d 59, 62 (1967)). A right of first refusal is a conditional and presumptive right. Chapman v. Mut. Life Ins. Co. of N.Y., 800 P.2d 1147, 1150 (Wyo. 1990) (quoting Hartnett v. Jones, 629 P.2d 1357, 1362 n. 1 (Wyo.1981)). It requires the owner, when he receives a third-party offer to purchase the premises subject to the right of first refusal and manifests an intention or desire to sell on those terms, to offer the property first to the holder of the right on the same terms as the third-party offer. Id. Indeed, a right of first refusal ripens into an option contract when the owner receives the third-party offer and manifests an intention to sell on those terms. Crowley, 306 N.W.2d at 873 (citing Imperial Refs. Corp. v. Morrissey, 254
[¶ 14.] This case presents a question of first impression in South Dakota. Southeast Properties argues that the majority of courts have held that the owner of property does not violate a right of first refusal by selling a development, including leased premises subject to a right of first refusal, without first offering the leased premises to the holder of the right. Advanced Recycling asserts that the undisputed facts establish that Southeast Properties breached an enforceable contract by selling the development to 8th & Railroad Center without first offering the leased premises to Advanced Recycling.
[¶ 15.] The majority rule is consistent with the legal distinction between options and rights of first refusal. The right of first refusal is a conditional right that ripens into an enforceable option contract when the owner receives a third-party offer to purchase the property subject to the right and manifests an intention to sell on those terms. Crowley, 306 N.W.2d at 873. See Chapman, 800 P.2d at 1150. "[A]n attempt to sell the whole may not be taken as a manifestation of an intention or desire on the part of the owner to sell the smaller optioned part so as to give the [holder of the right of first refusal] the right to purchase the same." Id. at 1151 (quoting Guaclides v. Kruse, 67 N.J.Super. 348, 357, 170 A.2d 488, 493 (N.J.Super.Ct.App.Div.1961)). See Manella v. Brown Co., 537 F.Supp. 1226, 1229 (D.Mass.1982); Aden v. Estate of Walter E. Hathaway, 162 Colo. 311, 314, 427 P.2d 333, 334 (1967); Straley, 262 Md. at 523, 278 A.2d at 69; New Atl. Garden, Inc. v. Atl. Garden Realty Corp., 201 App.Div. 404, 412, 194 N.Y.S. 34, 40 (1922); Sawyer v. Firestone, 513 A.2d 36, 39 (R.I.1986); Smith v. Traxler, 228 S.C. 418, 431, 90 S.E.2d 482, 488 (1955). See also Gyurkey v. Babler, 103 Idaho 663, 667, 651 P.2d 928, 932 (1982); Myers, 189 N.W.2d at 576. If the owner has not manifested an intention to sell the leased premises apart from the whole, the right of first refusal does not ripen into an enforceable option contract to purchase the leased premises. Chapman, 800 P.2d at 1150-51. There was no evidence presented at the summary judgment hearing that Southeast Properties entertained a third-party offer to purchase the leased premises apart from the development. See supra ¶ 6. Consequently, Advanced Recycling's right of first refusal did not ripen into an enforceable option contract to purchase the leased premises. See Chapman, 800 P.2d at 1150-51.
[¶ 16.] Furthermore, the creation of a contract requires an offer by one party and an acceptance by the other. Standard Cas. Co. v. Boyd, 75 S.D. 617, 622, 71 N.W.2d 450, 453 (1955). "The general rule is that an acceptance must not change, add to, or qualify the terms of the offer" if there is to be a contract. Rossum v. Wick, 74 S.D. 554, 557, 56 N.W.2d 770, 771 (1953) (citations omitted). "An acceptance must be absolute and unqualified[.]" SDCL 53-7-3. "A reply to an offer, though purporting to accept it, which adds qualifications or requires performance of conditions, is not an acceptance, but is a counteroffer." Rossum, 74 S.D. at 557, 56 N.W.2d at 771 (citations omitted).
[¶ 17.] This basic principle of contract law applies to the present case.
[¶ 18.] The right of first refusal required Southeast Properties to offer Advanced Recycling the leased premises on the same terms as any third-party offer. See supra ¶ 4. Yet there was no evidence of an offer to purchase the leased premises separate from the development. See supra ¶ 6. The offer by 8th & Railroad Center to purchase the development in its entirety did not enlarge Advanced Recycling's right of first refusal. See Atl. Ref. Co. v. Wyo. Nat'l Bank of Wilkes-Barre, et al., 356 Pa. 226, 232, 51 A.2d 719, 722-23 (1947) (citing New Atl. Garden, 201 App. Div. at 412, 194 N.Y.S. at 40). Because Advanced Recycling could only accept an offer to purchase the leased premises, its acceptance necessarily would have changed, added to, or qualified the terms of the offer to purchase the development. See Rossum, 74 S.D. at 557, 56 N.W.2d at 771. Not only did Advanced Recycling's right of first refusal fail to ripen into an enforceable option contract, but there was no valid offer open for Advanced Recycling's acceptance, and thus no enforceable contract of sale created in its favor. See Atl. Ref. Co., 356 Pa. at 234, 51 A.2d at 724. For these reasons, Southeast Properties did not violate the right of first refusal or breach an enforceable contract when it sold the development without first offering the leased premises to Advanced Recycling.
[¶ 19.] Nevertheless, Advanced Recycling argues that if Southeast Properties meant for the right of first refusal to apply only to a sale of the leased premises apart from the development, it could have so provided. Advanced Recycling contends that this Court should construe the right of first refusal provision against Southeast Properties, the drafter of the lease. This Court has said that "[a]mbiguities arising in a contract should be interpreted and construed against the scrivener." Campion v. Parkview Apts., 1999 SD 10, ¶ 34, 588 N.W.2d 897, 904 (quoting Prod. Credit Ass'n of the Midlands v. Wynne, 474 N.W.2d 735, 740 (SD.1991) (quoting Forester v. Weber, 298 N.W.2d 96, 97 (S.D.1980))). "This is a rule of construction to be applied against one who drafted an ambiguous contract." Id. (quoting Prod. Credit Ass'n, 474 N.W.2d at 740). "Ambiguity is a question of law for a court to determine." Canyon Lake Park, LLC v. Loftus Dental, PC, 2005 SD 82, ¶ 18, 700 N.W.2d 729, 734 (citing Baker v. Wilburn, 456 N.W.2d 304, 306 (S.D.1990)). In the present case, the meaning of the lease is unmistakably clear, and we decline to construe it against Southeast Properties.
[¶ 20.]
[¶ 21.] Advanced Recycling argues that Southeast Properties' violation of the right of first refusal resulted in substantial damages, entitling Advanced Recycling to an award of monetary damages. The trial court, relying on Anderson v. Armour & Co., 205 Kan. 801, 473 P.2d 84 (1970), awarded Advanced Recycling $484,542.36. But Anderson is contrary to the great weight of authority and disregards the legal distinction between options
[¶ 22.]
[¶ 23.] Southeast Properties argues that the trial court's calculation of monetary damages was clearly erroneous. Because we conclude that Advanced Recycling was not entitled to monetary damages, we need not address this issue.
[¶ 24.] Reversed and remanded with instruction to enter judgment consistent with this opinion.
[¶ 25.] GILBERTSON, Chief Justice, and ZINTER, Justice, and THORSTENSON, Circuit Court Judge, concur.
[¶ 26.] KONENKAMP, Justice, concurs in result.
[¶ 27.] THORSTENSON, Circuit Court Judge, sitting for MEIERHENRY, Justice, disqualified.
KONENKAMP, Justice (concurring in result).
[¶ 28.] Not wanting to endorse prematurely the law and rationale the Court adopts in this case, I concur in result. It is sufficient to say, as the Court does in the end, that when Advanced Recycling's lease expired, "its right of first refusal expired with it." Advanced Recycling knew more than two years before the lease expired that the development had been