The 3rd District Court judge presiding over the lawsuit between Park City Mountain Resort and its landlord, Talisker Land Holdings, LLC, on Wednesday sided with the landlord in a series of rulings that could reshape the area's ski industry.
The 82-page decision, stamped by the court midmorning, was nearly a complete triumph for Talisker Land Holdings, LLC and Vail Resorts. Judge Ryan Harris sided with the landlord and the Colorado firm that operates Canyons Resort on the most important points in the case.
Harris, critically, reaffirmed an earlier ruling that PCMR's lease of much of the terrain underlying the resort expired in 2011. He also ruled that PCMR was not denied a right of first refusal when Talisker Land Holdings, LLC reached an agreement with Vail Resorts to operate Canyons Resort. The deal could be expanded to include the disputed terrain at PCMR depending on the outcome of the case.
He allowed PCMR to continue to pursue a claim for damages based on an allegation that Talisker Land Holdings, LLC could have informed the resort that the leases expired sooner than it actually did. PCMR says it spent millions of dollars on improvements in 2011 based on its understanding that the leases were renewed. Harris did not side with PCMR on the damages claim. He agreed that the resort could press the point in court, however.
"The Court, at least as much as most members of the Summit County community, had certainly hoped that the parties to this litigation would have been able to find a way, at some point during the many months this case has been pending, to resolve the situation amicably for the good of everyone, including the community, and keep both resorts operating in something close to the usual manner. Unfortunately, such a resolution has not yet been reached, and in the absence of any such resolution, the litigation must go forward as expeditiously as possible," Harris wrote.
The ruling had been highly anticipated since two hearings in April, but it was not clear when Harris would issue the decision. He had indicated it could be longer than the 60 days he normally takes, but the actual length of time was shorter than 60 days.
PCMR paid $155,000 annually to lease approximately 3,700 acres of land, including most of the skiing terrain at the resort. The initial term ran until 1991 and an extension ended in 2011. PCMR had the option to extend the lease until 2051. The renewal was not exercised, Talisker Land Holdings, LLC claimed, prompting PCMR to bring the lawsuit in 2012.
The Talisker Land Holdings, LLC side released a prepared statement on Wednesday saying it was pleased with the ruling. The statement read, in part: "Talisker looks forward to bringing in Vail Resorts as its new tenant and operator of the terrain. pursuing this lawsuit, PCMR caused years of unnecessary uncertainty for the Park City community and its guests. It's now time for PCMR to move on and work out a realistic solution for access to the ski terrain from Park City. Talisker also looks forward to concluding the rest of the court case, including working out the amount of back rent and damages owed to Talisker by PCMR."
PCMR released a prepared statement from John Cumming, the CEO of resort owner Powdr Corp. He said PCMR and Vail Resorts must negotiate a settlement.
"We respect the Court's decision but at the end of the day it doesn't change the fact that Vail and PCMR can and must resolve this dispute. For that to happen, both parties will need to sit down at the table, negotiate in good faith, and come to a rational agreement. We are committed to doing exactly that, which is why we have made repeated offers to buy or lease the disputed property for an amount far in excess of market value. But let me be clear: we will not walk away and allow a Vail takeover," Cumming said, in part.
In a separate prepared statement, Alan Sullivan, PCMR's lead attorney, said the PCMR side will appeal the rulings and that PCMR will operate as normal for the 2014-2015 ski season.
A court date is scheduled on June 19 for Harris to consider a motion from Talisker Land Holdings, LLC asking that PCMR be found to be unlawfully occupying the land, a legal doctrine known as unlawful detainer. Harris will hear arguments about the Talisker Land Holdings, LLC side's move to evict PCMR from the terrain. A de facto eviction notice, called an order of restitution, was submitted in April for the judge to consider if he ruled in favor of Talisker Land Holdings, LLC.
Some of the notable sections in the judge's Wednesday ruling include:
- a comment about his unwillingness to create an exception to precedents that require strict compliance with the terms of a lease.
"Creation of an exception in cases involving large, complex multi-party transactions would relieve sophisticated parties -- precisely the ones who have at their disposal top-flight legal advice -- from the consequences of their own negligence in failing to adhere to their own carefully-negotiated documents, while leaving apartment lessees and small storefront businesses without a similar avenue for relief. Viewed from a long-term perspective, creation of this sort of exception, in the name of equity, would be decidedly inequitable."
- a statement about PCMR's contention that City Hall planning and zoning decisions envisioned the upper terrain at the resort and the base area to operate as one.
"As far as the Court can tell, there is no specific language anywhere in the Development Agreement, Annexation Agreement, or deed restriction that actually requires the Resort Lands to be operated in tandem with the PCMR base area. While the Court can certainly understand, from a community perspective, why such an outcome might be preferred, the Court cannot say that such an outcome is compelled by the language of any of the so-called 'regulatory' documents to which the PCMR parties refer."
- a comment about the PCMR side's spring 2011 attempt to renew the leases, which included what has been previously described in court documents as a frantic weekend. It mentions Elizabeth Paul, a former accounting department employee of PCMR parent Powdr Corp.
"If the Talisker Landlord Parties had made a waiver of their right to require written notice, and the PCMR Parties had actually relied on that waiver, then there would have been no reason for the circling of the wagons that occurred over the weekend of April 29-May 2, 2011. If this were the case, then when Elizabeth Paul discovered the language in the loan documents on April 29, and asked her superiors about it, the answer would have been something along the lines of 'don't worry about it, we don't have to do anything. Talisker made it plain that we didn't need to send a letter.' But discovery has now revealed, as a matter of undisputed fact, that this was emphatically not the answer Paul received," he wrote.
- a discussion of the timing of Talisker Land Holdings, LLC indicating to the PCMR side its belief that the leases expired.
"Under the facts here, it would at least be possible for a reasonable factfinder to conclude, from the available evidence, that the Talisker Landlord Parties acted unreasonably by failing to institute a system to track renewal of the Leases, by failing to assign such tasks to any particular employee, by failing to do anything more with the April 30/May 2 letter other than stamp it as 'received,' and generally by failing to communicate to the PCMR parties sooner (and before the PCMR parties spent money on improvements that summer) that the Talisker Landlord parties believed the Leases had expired," Harris wrote.