Canyons wins round in lease battle
July 8, 2006
Third District Court Judge Bruce Lubeck has sided with American Skiing Company in another round of a court battle that could put the resort’s lease in jeopardy.
"We’re very pleased with the decision," Canyons spokesman Tim Vetter said Friday. "It’s exactly what we have hoped for and allows us to continue to move everything forward."
American Skiing leases thousands of acres in the Snyderville Basin for its resort, The Canyons, from the owners of the former Wolf Mountain Resort. Wolf Mountain managing partner Kenny Griswold attempted to evict the company from the land when he presented The Canyons with a notice of default on March 31 claiming American Skiing officials had broken the lease.
"The preliminary injunction prevents [Wolf Mountain] from taking any actions until the merits of the case can be settled in court," Vetter said about Lubeck’s ruling June 30, adding that American Skiing is seeking declaratory judgment to "confirm that we are not in default."
At issue is whether the contract was violated when officials at The Canyons worked with members of the Osguthorpe family to change the lease.
Key to the dispute are 550 acres of land at the resort Griswold subleased from the Osguthorpes described by American Skiing brass as the "heart" of The Canyons.
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"It’s tough to assemble the land in today’s world to open a ski resort from scratch," Griswold said during a telephone interview Friday. "You have to have the land — the land is key."
A "restatement of agreement" entered into by ASC and the Osguthorpes in 2001 "purports to reduce Wolf Mountain’s leasehold interest in the property to nothing more than an easement," Wolf Mountain attorney Victoria Fitlow states in court documents.
American Skiing officials improperly represented themselves as agents of Wolf Mountain during the talks, Griswold said, adding that changes made to the lease could result in a "cannibalized ski resort."
But Vetter insists Griswold’s concerns about discussions between the Osguthorpes and American Skiing were alleviated.
"We absolutely believe that we are in full compliance with our lease," Vetter said.
The Canyons, however, didn’t get permission from Wolf Mountain to amend the lease as required by the contract, Griswold countered.
With his 13-page decision Lubeck did not rule on the merits of the case, Griswold said.
Deciding instead that if Griswold terminates the lease American Skiing would experience "immediate and irreparable" harm. The move could upset creditors and negatively impact hotel bookings and ticket sales next season, Lubeck wrote.
"The Canyons is an important commercial enterprise within the Park City area that provides many benefits to the employees that work there, the owners and developers of land in and around The Canyons and to the public at large," Lubeck wrote in the preliminary injunction.
According to Lubeck’s ruling, the injunction barred Griswold from terminating the lease at The Canyons until a court decides whether the contract was violated.
"We understand it would be horrible," Griswold said, adding that American Skiing has recently offered to by his property at The Canyons. "But I don’t think American Skiing is going to be able to get out from under their enormous debt."
As American Skiing sinks nearly $70 million into improvements at The Canyons, "people who you would recognize immediately" have recently offered more than $100 million for his land, Griswold said.
Griswold operated Wolf Mountain Resort until agreeing in 1997 to lease the property to American Skiing Company for The Canyons.
"Our mission is just to protect our lease," Griswold said, adding that, Wolf Mountain is preparing to sue American Skiing to terminate the arrangement. "The primary issue is: there is a default and it has not been cured. If they follow the line of thinking that there is no default, I think they’ll have a problem."