Landowner blocked from terminating lease with The Canyons
Termination of a lease between American Skiing Company and Wolf Mountain Resorts "would significantly reduce the value of ASC Utah’s operation at The Canyons," a document the corporation filed June 14 with the Securities and Exchange Commission states.
The owners of Wolf Mountain in western Summit County sold some of the resort’s assets with exception of the land to American Skiing Company in 1997.
ASC renamed the resort The Canyons and leased property from Wolf Mountain "with the goal of developing a major North American ski resort in Park City," court documents filed in Third District Court June 14 by attorneys for American Skiing state.
But American Skiing has violated the lease, an attorney for Wolf Mountain claims.
"[ASC] admits that it repeatedly defaulted on its obligations under the [lease,]" a court document filed June 15 on behalf of Wolf Mountain states. "[ASC] admits that it and Wolf Mountain have been engaged in negotiations for months trying to rectify the default & those negotiations ultimately failed."
According to Wolf Mountain attorney Victoria Fitlow, American Skiing Company officials violated the lease when they negotiated several years ago with members of the Osguthorpe family to amend the contract.
"They don’t have the right to amend [the lease] without prior written permission and we wouldn’t give permission if it in any way compromises our protections," Wolf Mountain owner Kenny Griswold said during a telephone interview Tuesday.
The Osguthorpes lease property they own to ASC through the Wolf Mountain contract, said Tim Vetter, a spokesman for The Canyons.
"I’m disappointed that this is the way that everybody is choosing to resolve the issues, but at the end of the day, I think it will work out fine," Vetter said. "We feel that we are 100 percent in compliance and did 100 percent what [Wolf Mountain] asked us to do,"
But 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," Fitlow states in court documents.
Wolf Mountain also rejects a "personal services contract" adopted into the lease by the Osguthorpes and American Skiing Company.
"Wolf Mountain has no knowledge of any personal services actually provided by the Osguthorpes and has no interest in receiving any such personal services," court papers state.
ASC’s attempt to resolve Wolf Mountain’s concerns through an agreement signed by the Osguthorpes could damage Griswold’s property rights, Fitlow states.
"Neither Wolf Mountain nor ASC can run the ski resort without access to this property," court papers state. "Because of its conduct, ASC Utah has defaulted on the [lease], ASC Utah has failed to cure the defaults and Wolf Mountain is entitled to terminate the [lease]."
Siding with ASC, Third District Court Judge Bruce Lubeck signed a temporary restraining order Friday that barred Wolf Mountain from terminating the contract.
"The court restrained us from serving that notice of termination," Fitlow said during a telephone interview Tuesday.
A preliminary injunction hearing is scheduled June 28 to discuss whether Griswold can terminate the lease, she added.
Wolf Mountain issued ASC a notice of default last spring that allowed the company 60 days to fix the lease violations, Fitlow said, adding that an "assignment, acknowledgement, and ratification agreement" submitted by American Skiing is unacceptable.
"When they raised the (lease) issue, we went out and resolved that issue," Vetter said. "The dispute is over whether or not the amendments to the agreement were done incorrectly. We’ve gone and tried to fix it according to the way [Wolf Mountain] asked us to fix it."
A court complaint for declaratory relief filed by ASC against Wolf Mountain asks Lubeck to rule that The Canyons is in compliance with the lease.
"We even got the Osguthorpes to consent," Vetter said, adding that the temporary restraining order is "to make sure that we are protected until a court can decide whether or not we’re right or they’re right."
Termination of the lease could impact American Skiing’s credit, next season’s marketing efforts and the company’s ability to fund capital improvements at its eight ski resorts this summer, court documents state.
"Wolf Mountain is the landlord and ASC is the lessee and they have certain rights but they’re not allowed to violate the lease in any fashion," Griswold said. "We want this ski resort to be the spectacular ski resort it promises to be and we have had high hopes that American Skiing Company would be able to get it there."
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