GRASSY MEADOWS
SKY RANCH Landowners Association,
Plaintiff
and Appellee,
v.
GRASSY MEADOWS AIRPORT, INC.; Sky Ranch
Development, Inc.; and Michael O. Longley,
Defendants and Appellants.
283 P.3d 511 (Utah App. 2012)
Court of Appeals of Utah.
July 6, 2012
Nathan
Whittaker, Murray, for Appellants.
Gregory N. Hoole and John D. Richards III, Salt Lake City, for Appellee.
Before Judges DAVIS, THORNE, and ROTH.
OPINION
DAVIS,
Judge:
¶
1 Grassy Meadows Airport, Inc.; Sky Ranch Development, Inc.; and Michael O.
Longley (collectively, Sky Ranch) appeal the trial court's ruling in favor of
Grassy Meadows Sky Ranch Landowners Association (the Association). We affirm in
part, reverse in part, and remand for further proceedings consistent with this
opinion.
BACKGROUND
¶
2 The Association is comprised of the lot owners of the Grassy Meadows Sky
Ranch Development located near Hurricane, Utah.[1] Many of the lot owners are
private pilots or airplane owners who were attracted to this residential
community because it is centered around a private airstrip. The airstrip is
owned by Grassy Meadows Airport and leased to the Association. The lease “grant[s]
the Association and its members, guests and invitees the exclusive right of use
of the ... [a]irport" for a ninety-nine-year term. Sky Ranch also adopted
a set of covenants, conditions, and restrictions in July 1990 (the 1990 CCRs)
that applied to Sky Ranch and the Association. The 1990 CCRs provided that Sky
Ranch could unilaterally amend the CCRs for certain enumerated purposes "until
eighty percent (80%) of the lots in the Development (including additional
phases as may be added) have been sold to purchasers" (the 80 Percent
Provision).
FN1. In an
appeal from a bench trial, we recite the facts in the light most favorable to
the trial court's determination, “granting due deference to the trial court's
resolution of factual disputes.” Armed Forces Ins. Exch. v. Harrison, 2003 UT
14, ¶ 2, 70 P.3d 35 (internal quotation marks omitted).
¶
3 In November and December 2001, Sky Ranch appeared before the Washington
County Planning Commission to request a zoning change that would allow the
construction of a fixed based operation (FBO) within the development. As
described by Sky Ranch, the plans for the FBO included an on-site residence for
the FBO operator, a large hangar to be used for aircraft maintenance, and ten
to fifteen bed-and-breakfast-style lodging units to accommodate individuals
interested in buying property at Grassy Meadows. A representative from the
Association appeared at both meetings to oppose the zoning request, which was
ultimately denied.
¶
4 By June 2002, 81.5% of the platted lots in the community had been sold,
prompting the Association to write Sky Ranch a letter notifying it that its
right to unilaterally amend the 1990 CCRs had terminated in accordance with the
80 Percent Provision. Nevertheless, in October 2002, Sky Ranch unilaterally
amended the 1990 CCRs with a new set of CCRs (the 2002 CCRs). The 2002 CCRs
contained provisions spelling out Sky Ranch's right to pursue the commercial
improvements at issue in the zoning hearings and amending the voting rights of
the different categories of lot owners, as well as several other provisions
aimed at facilitating the development of a new planned community, Copper Rock,
adjacent to the Grassy Meadows community. Michael Longley, the president of
both Grassy Meadows Airport and Sky Ranch Development, is also behind the Copper
Rock project and wanted "to open the traffic pattern and runway to
visitors" of Copper Rock.
¶
5 On March 31, 2003, several months after the CCRs were amended, the
Association received a "Notice of Termination of Lease" from Grassy
Meadows Airport alleging that the Association failed to properly maintain the
airport, to abide by the terms of the CCRs, to meet the lease's insurance
requirements, and to make lease payments on time. Despite the Association's
attempts to remedy the alleged breaches, Grassy Meadows Airport terminated the
lease on May 5, 2003.[2] Sky Ranch refused to take the payments Page 515 the Association attempted to
make under the lease after its termination. The Association subsequently
deposited those funds into an escrow account.
FN2. Although
the lease was terminated, Sky Ranch has permitted the Association members to
continue using “the runway the same as always as long as [the Association]
maintains the necessary insurance coverage.”
¶
6 The Association filed suit in June 2003. Sky Ranch responded with several
counterclaims. The main issues presented at the two-day bench trial in April
2010 were (1) whether the 2002 CCRs were valid; (2) whether the Association
breached the lease and, if so, whether Sky Ranch properly terminated the lease;
and (3) whether the Association "tortiously interfered with the legitimate
business interests of [Sky Ranch] by opposing proposed zoning ordinance changes
affecting [the Association]." The trial court determined that the 2002
CCRs were "void ab initio"
because Sky Ranch had lost its ability to unilaterally amend the 1990 CCRs when
81.5% of the lots were purchased, and that the lease termination was not
justified because the Association did not materially breach the lease.
Furthermore, the trial court dismissed Sky Ranch's counterclaim for tortious
interference, stating, "[T]here [was] no basis to hold the Association
liable...." In light of these conclusions, the trial court determined that
the funds held in escrow were to "be released to Defendant Grassy Meadows
Airport ... [and] applied as rent paid in full under the Lease."
ISSUES AND STANDARDS OF REVIEW
¶
7 Sky Ranch presents four issues for appeal. First, Sky Ranch challenges the
trial court's invalidation of the 2002 CCRs, which was based on the court's
interpretation of a provision it deemed ambiguous in the 1990 CCRs. Second, Sky
Ranch contends that it was entitled to terminate the Association's lease and
that the manner in which it terminated the lease was appropriate. Third, Sky
Ranch argues that the trial court prematurely dismissed its claim for tortious
interference with business relations. Last, Sky Ranch argues that the issue of
whether the escrow monies constituted full payment of the airport lease was
never presented to the court, rendering the trial court's determination both
unjustified and based on insufficient evidence.
¶
8 We review the trial court's interpretation of the CCRs and lease, and its
determination that a provision in the CCRs was ambiguous, for correctness. See Miller v. USAA Cas. Ins. Co., 2002
UT 6, ¶ 19, 44 P.3d 663; Sharon Steel
Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127, 134 (Utah 1997). See generally Swenson v. Erickson, 2000
UT 16, ¶ 11, 998 P.2d 807 (“Restrictive covenants that run with the land and
encumber subdivision lots form a contract between subdivision property owners
as a whole and individual lot owners; therefore, interpretation of the
covenants is governed by the same rules of construction as those used to
interpret contracts."). We grant the trial court no deference when its
interpretation of an ambiguous contract term is not based on extrinsic
evidence. See Meadow Valley Contractors,
Inc. v. State Dept. of Transp., 2011 UT 35, ¶ 63, 266 P.3d 671. Next,
"[w]hether an issue was properly before the trial court presents a
question of law, which we review for correctness." Lee v. Sanders, 2002 UT App 281, ¶ 6, 55 P.3d 1127. And last,
"[f]indings of fact, whether based on oral or documentary evidence, shall
not be set aside unless clearly erroneous, and due regard shall be given to the
opportunity of the trial court to judge the credibility of the witnesses."
Utah R. Civ. P. 52(a).
ANALYSIS
I. Validity of the 2002 CCRs
¶
9 Sky Ranch challenges the trial court's determination that the 1990 CCRs were
ambiguous, arguing that the trial court improperly “focus[ed] on just one
provision of the 1990 [CCRs], rather than construing the document as a
whole." [3] Here, the provision in question, the 80 Percent Provision,
states, Page 516
Notwithstanding
anything herein contained to the contrary, until eighty percent (80%) of the
lots in the Development (including additional phases as may be added) have been
sold to purchasers, [Sky Ranch] shall have, and is hereby vested with, the
right to unilaterally amend this Declaration as may be reasonably necessary or
desirable....
The
trial court determined the 80 Percent Provision to be unclear as to “whether
the number of lots[ ] from which the 80 percent calculation would be made[ ]
includes only then-existing lots or all future lots." As a result, the
trial court concluded that the 1990 CCRs are ambiguous because the language of
the 80 Percent Provision is susceptible to two different interpretations. See generally United States Fid. & Guar.
Co. v. Sandt, 854 P.2d 519, 523 (Utah 1993) (“An ambiguity in a contract
may arise (1) because of vague or ambiguous language in a particular provision
or (2) because two or more contract provisions, when read together, give rise
to different or inconsistent meanings, even though each provision is clear when
read alone." ). In light of this ambiguity, the trial court concluded that
Sky Ranch's ability to unilaterally amend the CCRs terminated in June 2002 when
81.5% of the platted lots were purchased and that, as a result, the 2002 CCRs
were “void ab initio" because
Sky Ranch did not have "the authority to amend unilaterally the [1990
CCRs]" when it issued the 2002 CCRs.
FN3. We
determine that Sky Ranch has met its marshaling burden. See generally West
Valley City v. Majestic Inv. Co., 818 P.2d 1311, 1313 (Utah Ct.App.1991) (“A
party challenging the court's interpretation of ambiguous terms of a contract
... must marshal all relevant evidence presented at trial which tends to
support the findings and demonstrate why the findings are clearly erroneous.”
(citation and emphasis omitted)).
¶
10 However, the trial court “did not base its interpretation of the [80 Percent
Provision] ... on extrinsic evidence of the parties' intent. Rather, the trial
court simply held that" the ambiguity would be construed against Sky
Ranch. See Meadow Valley, 2011 UT 35,
¶ 63, 266 P.3d 671. This course of action is unconventional because when a “contract
is ambiguous, we seek to resolve the ambiguity by looking to extrinsic evidence
of the parties' intent" and only “[i]f extrinsic evidence does not resolve
the ambiguity and uncertainty, ... will we resolve the ambiguity against the
drafter." Id. ¶ 64. Thus, “because
the trial court did not base its conclusion ... on extrinsic evidence of the
parties' intent, we give that conclusion no deference and review for
correctness." Id. ¶ 63; see also Kimball v. Campbell, 699 P.2d
714, 716 (Utah 1985) (“A contract's interpretation may be either a question of
law, determined by the words of the agreement, or a question of fact,
determined by extrinsic evidence of intent. If a trial court interprets a
contract as a matter of law, we accord its construction no particular weight,
reviewing its action under a correctness standard."). Accordingly, “[w]e
begin ... with the contract itself," see
Meadow Valley, 2011 UT 35, ¶ 64, 266 P.3d 671, looking first to its plain “language
... to determine meaning and intent," see
Glenn v. Reese, 2009 UT 80, ¶ 10, 225 P.3d 185 (citation and internal
quotation marks omitted). When reviewing the plain language of a contract, we
seek to “[h]armonize conflicting or apparently ambiguous contract language
before concluding that provisions are actually ambiguous." See Gillmor v. Macey, 2005 UT App 351, ¶
19, 121 P.3d 57. Additionally, “[e]ach contract provision is to be considered
in relation to all of the others, with a view toward giving effect to all and
ignoring none." Utah Valley Bank v.
Tanner, 636 P.2d 1060, 1061-62 (Utah 1981).
¶
11 Sky Ranch contends that the 80 Percent Provision's meaning is clear when
read in conjunction with other provisions in the 1990 CCRs, particularly the
provisions regarding annexation. Sky Ranch interprets the annexation provisions
as demonstrating “a clear intent ... that Sky Ranch ... retain the power to
amend the [CCRs] until it is finished developing" by providing Sky Ranch
with the ability to “continue to annex land to the Development ' for common
areas or for subdivisions into additional residential or commercial lots.'
" Sky Ranch acknowledges that its right to annex land is limited by the
1990 CCRs “to fifteen years, and to 150 total residential lots," and
reconciles these limitations with the 80 Percent Provision by concluding that
the 1990 CCRs provide that Sky Ranch's power to unilaterally amend would not
terminate until “it has finished developing and
80% of the lots are sold." [4] Page 517
FN4. We assume
that Sky Ranch considers the development of the Grassy Meadows community to be
complete when 150 lots, the maximum number allowed by the 1990 CCRs, are
developed.
¶
12 Sky Ranch's interpretation, however, is not "reasonably supported by
the language of the contract," which precludes the trial court's finding
of ambiguity. See Ward v. Intermountain
Farmers Ass'n, 907 P.2d 264, 268 (Utah 1995); accord Daines v. Vincent, 2008 UT 51, ¶ 31, 190 P.3d 1269
(construing Ward ); see alsoid. ¶ 25 (“A contractual term or
provision is ambiguous if it is capable of more than one reasonable
interpretation because of uncertain meanings of terms, missing terms, or other
facial deficiencies." (internal quotation marks omitted)); McNeil Eng'g & Land Surveying, LLC v.
Bennett, 2011 UT App 423, ¶ 8, 268 P.3d 854 (“In determining whether a
contract is ambiguous, we ' consider any credible evidence' but will not
conclude that the contract is ambiguous unless both interpretations are '
reasonably supported by the language of the contract.' " (quoting Ward, 907 P.2d at 268)). Sky Ranch
interprets the 80 Percent Provision as indicating that its right to
unilaterally amend the CCRs terminates when 150 lots are available and 120 of
those are sold (i.e., 80% of 150). However, such an indication could have been
unambiguously made by stating an exact number rather than a percentage.
Consistent with our rules of contract construction, we will not interpret the
CCRs so as to render the contract's use of a percentage in place of an exact
number meaningless. Cf. Novell, Inc. v.
Canopy Grp., Inc., 2004 UT App 162, ¶ 27, 92 P.3d 768 (rejecting an interpretation
of a term in a contract that “would render meaningless" another term in
the contract). See generally Utah Valley
Bank, 636 P.2d at 1061-62. The use of a percentage in this provision
indicates that the threshold identified in the provision is not 120, a sum
calculable from the day the CCRs were drafted. Rather, the use of a percentage
indicates that the threshold is a figure that is related to the number of lots
available in proportion to the number of lots sold and may vary throughout Sky
Ranch's development of the community, i.e., as new phases are added before the
80% threshold is met in relation to the previous phase's number of lots
available and sold. Further, while the 80 Percent Provision envisions the
possibility that Sky Ranch may add lots through additional phases of
development, it can also be read as nonetheless requiring the percentage of
sold lots to remain below 80% to enable Sky Ranch to unilaterally amend the
1990 CCRs. This reading does not render the use of a percentage meaningless and
still permits Sky Ranch to annex property and continue developing, while also
suggesting a pace by which development and lot sales should occur and a
threshold at which Sky Ranch, as the developer, should take more of a
background role in the ongoing functioning of the community. Additionally,
several portions of the 1990 CCRs conflict with Sky Ranch's interpretation,
such as the fifteen-year limitation on Sky Ranch's “right to annex land to the
Property" and the fifteen-year limitation on Sky Ranch's voting rights.
These provisions, in addition to the 150-lot cap on development, demonstrate
the intent to establish a definite point in time when Sky Ranch would be
divested of certain rights. Yet Sky Ranch's reading of the 80 Percent Provision
suggests that it could possibly retain the ability to unilaterally amend the
1990 CCRs in perpetuity, i.e., in the event it never finishes developing and/or
80% of the lots are never sold. Thus, Sky Ranch's suggestion as to how the
annexation section could harmonize the terms of the 1990 CCRs and prevent the
trial court's finding that the CCRs were ambiguous leads us to the conclusion
that the trial court's ultimate determination to construe the 80 Percent
Provision as having terminated Sky Ranch's ability to unilaterally amend the
CCRs was correct.[5] Accordingly, although the trial court may have
inappropriately jumped to construing the 1990 CCRs against Sky Ranch as the
drafter, cf. Meadow Valley, 2011 UT
35, ¶ 63, 266 P.3d 671, its Page 518
end result - determining that the 2002 CCRs were “void ab initio" - was correct.[6]
FN5. It is well settled that an appellate court
may affirm the judgment appealed from if it is sustainable on any legal ground
or theory apparent on the record, even though such ground or theory differs
from that stated by the trial court to be the basis of its ruling or action,
and this is true even though such ground or theory is not urged or argued on
appeal by appellee, was not raised in the lower court, and was not considered
or passed on by the lower court. Dipoma
v. McPhie, 2001 UT 61, ¶ 18, 29 P.3d 1225 (emphasis and internal quotation
marks omitted).
FN6. We also agree
with the trial court's conclusion that the 2002 CCRs “did not further any of
the three limited purposes enumerated in the 1990 [CCRs] justifying unilateral
amendment.” Those purposes are
(i) to more
accurately express the intent of any provisions of the [1990 CCRs] in the light
of then existing circumstances or information; (ii) to better insure, in light
of then existing circumstances or information, workability of the arrangement
which is contemplated by the [1990 CCRs]; or (iii) to facilitate the practical,
technical, administrative or functional integration of any additional tract of
subdivision into the Development.
II. Termination of the Lease
¶
13 Sky Ranch argues that because the Association "materially breached the
terms of the Airport Lease," it was "entitled to termination of the
lease and to recover its damages incurred." Sky Ranch cites numerous
breaches by the Association relating to the Association's obligation to
maintain the airport and the facilities and components associated with the
airport, and the Association's failure to maintain liability insurance on the
airport. Sky Ranch argues that these breaches indicate that the trial court's
finding that the Association substantially complied with the lease is clearly
erroneous.
¶
14 “Substantial compliance is one of the contract law doctrines that has been
imported into lease cases." Housing
Auth. of Salt Lake City v. Delgado, 914 P.2d 1163, 1165 (Utah Ct.App.1996)
(applying the doctrine of substantial compliance to a residential lease); see also Cache Cnty. v. Beus, 1999 UT
App 134, ¶ ¶ 31, 41, 978 P.2d 1043 (acknowledging the potential application of
the substantial compliance doctrine to a "negotiated commercial lease
between sophisticated parties" ). In evaluating lease termination issues, “[w]e
observe a general policy disfavoring forfeitures. The substantial compliance
doctrine furthers that policy by allowing equity to intervene and rescue a
lessee from forfeiture of a lease when the lessee has substantially complied
with the lease in good faith." Delgado,
914 P.2d at 1165 (citation omitted). “Whether a breach is so insubstantial as
to trigger the application of [the substantial compliance doctrine] is a
question of fact." Id. A trial
court can look to the following factors for assistance in determining the
materiality of a breach:
“(a) the extent
to which the injured party will be deprived of the benefit which he reasonably
expected; (b) the extent to which the injured party can be adequately
compensated for the part of that benefit of which he will be deprived; (c) the
extent to which the party failing to perform or to offer to perform will suffer
forfeiture; (d) the likelihood that the party failing to perform or to offer to
perform will cure his failure, taking account of all the circumstances
including any reasonable assurances; [and] (e) the extent to which the behavior
of the party failing to perform or to offer to perform comports with standards
of good faith and fair dealing."
Beus, 1999 UT App 134, ¶ 37, 978 P.2d
1043 (quoting Restatement (Second) of Contracts § 241 (1981)).
¶
15 Here, the trial court considered the above factors in turn, determining that
neither Longley nor the Grassy Meadows Airport would be “deprived of any
benefit to which they are entitled under the Lease, including receiving regular
lease payments," while “the Association would suffer greatly if the lease
were terminated" because “[t]he very purpose for the Community was to have
access to a private airport." Next, the trial court found that “[t]he evidence
presented established that any alleged breaches have been cured." The
trial court noted Longley's own “admission that the Association reacted to his
Notice of Termination with ' frenzied efforts' to cure the alleged
deficiencies," which “also evinces good faith on the part of the
Association to comply with all its obligations under the Lease." The trial
court listed several repairs and improvements the Association performed on the
airport property and noted that “[a]lthough maintenance issues arose from time
to time, ... [they fell] within what would reasonably be expected as normal
wear and tear," and that otherwise, “the Airport was always in reasonably
good Page 519 working order and
condition." [7] The trial court also cited “the Association['s] ...
continued ... use [of] the Airport ... since the alleged breach occurred
without further complaint from Mr. Longley and without any accident or adverse
incident" as evidence of “[t]he Association's good faith efforts to meet
all its obligations under the Lease." Though the record contains some
evidence that does not support the trial court's determination, the record also
contains sufficient evidence that supports the ruling as not clearly erroneous.
Therefore, we affirm the trial court's ruling that the lease should not have
been terminated because the Association substantially complied with the lease's
terms.[8]
FN7. We note
that although the lease is intended to be a “ ‘triple-net lease’ ” in terms of
exempting Sky Ranch from any taxes, insurance, or maintenance obligations under
the lease, it also provides that “normal wear and tear [is] excepted” from the
Association's maintenance obligations. We view this seeming contradiction as
requiring the Association to remedy normal wear and tear but excepting the
normal wear and tear that occurred under the facts and circumstances of this
case from constituting a material breach.
FN8.
Additionally, the trial court determined that Longley and Grassy Meadows
Airport did not comply with the notice requirements of the lease when they
sought to terminate the lease, which rendered the termination ineffective, and
that they were “equitably estopped from seeking termination as a remedy for any
minor breach that may have occurred” because Association members “relied on”
Longley's representation that they would have exclusive access to a private
airstrip when they purchased their lots. Because of the manner in which we
resolved the lease termination issue, we do not address these additional
arguments.
III. Tortious Interference
¶
16 Sky Ranch next contends that it was not given the opportunity to present
evidence on its tortious interference counterclaim. The tortious interference
claim is based on the argument that the Association agreed to the development
of the FBO, thereby prohibiting it from opposing Sky Ranch's request for the
zoning change necessary to permit that development. In other words, Sky Ranch
alleges that the Association effectively contracted away its right to petition
the government in a manner that would “interfere with the development of the
FBO." [9] Sky Ranch's trial brief references the airport lease, the 1990
CCRs, a set of Association meeting minutes, and an agreement titled the “FBO
Agreement" as allegedly demonstrating the Association's awareness of, and
assent to, the development of the FBO. Sky Ranch's third amended counterclaim
also references the Association's Articles of Incorporation for support,
quoting the articles as stating, “No substantial part of the activities of the
corporation shall consist of carrying on propaganda or otherwise trying to
influence legislation." (Internal quotation marks omitted.)
FN9. Sky Ranch's
trial brief also alludes to “other efforts by [Sky Ranch] to develop [Grassy
Meadows that] have been thwarted by the Association” but does not provide any
details about those “other efforts.”
¶
17 Based on the record before us, we determine that it is impossible to know
one way or another whether Sky Ranch's tortious interference claim was properly
dismissed by the trial court in the manner that occurred here.[10] At trial,
the parties and trial court Page 520
seemingly agreed that more time was needed because they “didn't get to the part
of the case on the tortious interference" and because “[t]here ha[d]n't
been evidence on this point." At the close of the second day of trial, Sky
Ranch declined the Association's suggestion that Sky Ranch “make a proffer as
to ... [the] evidence they want to put on for tortious interference,"
preferring to present its arguments and evidence during an additional day of
trial, as initially planned. We can only speculate what that evidence would
have been and what weight it would have carried in proving Sky Ranch's claim;
Sky Ranch's pretrial disclosures included a list of forty-five potential
witnesses and 172 potential documents or exhibits. During the two days of trial
that did occur, Sky Ranch called only four witnesses and the trial court
admitted only forty-four documents and exhibits into evidence between the
parties. Of the five documents referenced in the trial brief and counterclaim,
only three were admitted at trial (the 1990 CCRs, the airport lease, and the
meeting minutes); one was never addressed (the Association's Articles of
Incorporation); and the other was withdrawn at the request of Sky Ranch (the
FBO Agreement).
FN10. We
recognize that the Noerr-Pennington Doctrine relied on by the trial court may
ultimately apply, defeating Sky Ranch's tortious interference claim. See Anderson Dev. Co. v. Tobias, 2005 UT
36, ¶ ¶ 25-28, 116 P.3d 323 (explaining that the Noerr-Pennington Doctrine “protect[s]
political activity against tort claims as well as antitrust claims," and
rejecting the plaintiff's tortious interference claim based on the defendant's “efforts
to derail [the plaintiff's] zoning change application, which was before the
City Council" ). However, in order to reach that conclusion, the trial
court needed to determine whether the Association waived its constitutional
right to petition the zoning board in a valid contract or otherwise. See generally Mood For A Day, Inc. v. Salt
Lake Cnty., 953 F.Supp. 1252, 1268 (D.Utah 1995) (“To find waiver, a fact
finder must determine that plaintiff voluntarily and knowingly waived its
constitutional rights." ); Barnard
v. Wassermann, 855 P.2d 243, 247 (Utah 1993) (“[A]lthough courts indulge a
presumption against waiver of constitutional rights, the presumption is
rebuttable. Waiver is deemed to occur when the totality of the circumstances
indicates an intentional abandonment or relinquishment of a known
constitutional right." (citation omitted)). Because the admissibility of
the FBO Agreement was never ruled on, and because Sky Ranch had possibly
several other documents and witnesses to present in support of this point, we
cannot determine whether Sky Ranch would have succeeded in proving that the
Association waived its constitutional rights or whether the trial court's
application of the Noerr-Pennington Doctrine was ultimately correct.
¶
18 In sum, there were dozens of potential witnesses, exhibits, and documents
that were not presented to the court that may have supported Sky Ranch's
tortious interference claim. Sky Ranch simply did not have an opportunity to
present its evidence on this counterclaim. Accordingly, we remand to the trial
court for the narrow purpose of hearing the evidence Sky Ranch intended to
present in support of its tortious interference claim. The trial court's
determinations as to the 1990 CCRs and breach of the airport lease remain unchanged,
as indicated above.
IV. Escrow
¶
19 Last, Sky Ranch argues that “[t]he trial court erred in making any ruling as
to the sufficiency of the amount of money held in escrow, as it was not
properly before the court." " A trial court's findings should fit
within the framework of the petition as originally drawn, or as amended and
should be supported by the evidence presented," although “a trial court
may infer an amendment to the pleadings if the issue is tried by the [p]arties'
express or implied consent." Lee v.
Sanders, 2002 UT App 281, ¶ 7, 55 P.3d 1127 (internal quotation marks
omitted). A court can determine that implied consent was given “where one party
raises an issue material to the other party's case or where evidence is
introduced without objection, [and] where it appear[s] that the parties
understood the evidence [was] to be aimed at the unpleaded issue." Id. (alterations in original) (internal
quotation marks omitted). However, “[a] trial court may not base its decision
on an issue that was tried inadvertently." Archuleta v. Hughes, 969 P.2d 409, 413 (Utah 1998) (internal
quotation marks omitted).
¶
20 Here, the airport lease issue unavoidably involves the sub-issue of what to
do with the monies held in escrow. Therefore, we disagree with Sky Ranch that
the issue was not properly before the trial court. Where the trial court did
err, however, was in concluding that the amount in escrow constituted the
amount of rent actually due, when the amount due under the lease was to be
determined “on an annual basis based on the Published National Consumer Price
Index for Southwestern Utah" and no evidence was presented as to such.
Accordingly, we reverse the trial court's determination that the amount held in
escrow constituted the amount due and remand for further proceedings during
which the trial court can hear the evidence necessary to determine the amount
due under the lease from the date of the Association's last accepted lease
payment through the time at which the trial court resolves this matter. [11]
FN11. The trial
court's judgment states, “If an appeal is taken, the monies will continue to be
held in escrow and [the Association] will continue to make lease payments to
the Court pending final resolution of this issue.”
CONCLUSION
¶
21 We affirm the trial court's determination that the 2002 CCRs were invalid
because Sky Ranch's ability to unilaterally amend the 1990 CCRs terminated when
80% of the lots Page 521 then
available in the community sold. We also affirm the trial court's determination
that the Association did not materially breach the terms of the airport lease.
We reverse the trial court's dismissal of Sky Ranch's tortious interference
claim and its determination that the monies held in escrow constituted the full
amount of rent due under the lease, and remand for further proceedings on those
two matters in accordance with this opinion.
¶
22 WE CONCUR: WILLIAM A. THORNE JR., and
STEPHEN L. ROTH, Judges.