Simmons Media Grp., LLC v. Waykar, LLC

335 P.3d 885

2014 UT App 145

SIMMONS MEDIA GROUP, LLC, Plaintiff and Appellee

v.WAYKAR, LLC; Karen P. McBride; and Jamie Evans, Defendants and Appellants.

No. 20120335–CA.

Court of Appeals of Utah.

June 26, 2014.

Steve K. Gordon and Jarom B. Bangerter, Park City, for Appellants.

Troy L. Booher, Erin B. Hull, Wade R. Budge, Salt Lake City, Noella A. Sudbury, Michael L. Molen, and Beth E. Kennedy, for Appellee.

Judge J. FREDERIC VOROS JR. authored this Opinion, in which Judges JAMES Z. DAVIS and JOHN A. PEARCE concurred.

Opinion

VOROS, Judge:

¶ 1 Along the Wasatch Front, Interstate 15 is festooned with billboards. This case concerns one of them. Simmons Media Group, LLC leased the billboard site from Waykar, LLC. Simmons later sued Waykar and the other defendants (collectively, Waykar) for breach of a right of first refusal. The district court granted partial summary judgment in favor of Simmons and, after an evidentiary hearing, resolved all remaining issues in favor of Simmons. We affirm the judgment of the district court in all respects. We also award reasonable attorney fees on appeal to Simmons.

BACKGROUND

¶ 2 In 1980, Karen P. McBride acquired property (the Property) on the west side of I–15 in Utah County. When Karen¹ acquired the Property, it already hosted a billboard on the “far northern corner of the Property” under a lease with an advertising company.

¶ 3 In 1991, Wayne McBride, Karen's then-husband, renewed the original lease with the Underland Group, who managed the billboard at the time. The renewed lease describes the location of the leased property as “500 West 2000 South.” This imprecise description reflects the shorthand Wayne had used “for years to describe the Property.” Lavorn Spark, the Underland Group's representative, and Wayne signed the renewed lease. Both Wayne and Spark intended the renewed lease to govern the Property. The renewed lease contains a right of first refusal. The right is triggered when the lessor “decide[s] ... to sell the premises” and receives an offer from a third party:

In the event lessor shall decide during the term of this lease to sell the premises described herein, lessor shall give written notice to Underland Group of the terms and price offered by a third party. Underland Group shall be entitled for thirty (30) days to acquire the premises on the terms and conditions in said notice. If Underland Group does not exercise said right of purchase, the lessor shall not sell the premises on other terms for six (6) months. Thereafter, Underland Group shall have the same right as to any subsequent offer to purchase.

¶ 4 In 1996, Wayne, Karen, and Karen's father formed a company and gave it the portmanteau name Waykar, LLC. Wayne served as Waykar's president and registered agent. Karen transferred the Property to Waykar. However, in 1997 the two divorced and Wayne relinquished his interest in Waykar.

¶ 5 The following year the Underland Group assigned its lease rights to Simmons. Simmons maintained the billboard, rented it out, and sent Waykar annual rent payments per the terms of the renewed lease. Karen endorsed many of Simmons's checks on Waykar's behalf.

¶ 6 In 2002 Karen entered into a “Lease with Option to Purchase” agreement (the Lease/Option) with Jamie and Terry Evans. The Lease/Option granted the Evanses the exclusive right to purchase the Property. It also provided that any rent payments would be “credited toward the Purchase Price.” Waykar did not offer Simmons an opportunity to exercise its right of first refusal or even notify Simmons of the Lease/Option. But Simmons later learned that Terry Evans had in a public meeting claimed to own the Property. Simmons sued, alleging that Waykar had breached the right of first refusal provision. Shortly thereafter Karen and her father sold Waykar with all of its assets—including the Property—to Hopper Holdings, an entity owned by Jamie and Terry Evans. Again, Waykar did not offer Simmons an opportunity to exercise its right of first refusal or even notify Simmons of the sale.

¶ 7 After the close of discovery, Simmons moved for summary judgment. The district court granted partial summary judgment in favor of Simmons, ruling as a matter of law that the renewed lease was valid, that it governed the Property, and that Waykar had breached the right of first refusal. The district court then held an evidentiary hearing to determine the appropriate remedy. The court ruled that, had Waykar honored the right of first refusal, Simmons could have purchased the Property in 2002 for $224,480. Considering the time value of money and Simmons's lost profits, the district court determined that Simmons was entitled to purchase the property for $150,914.93. This appeal followed.

ISSUES AND STANDARDS OF REVIEW

¶ 8 First, Waykar contends that the district court erred in denying its motion to dismiss. “A ruling on a motion to dismiss presents a legal question that we review for correctness, affording no deference to the district court's decision.” Turner v. Staker & Parson Cos., 2012 UT 30, ¶ 7, 284 P.3d 600.

¶ 9 Second, Waykar contends that the district court erred in granting Simmons's motion for rule 56(f) relief and staying Waykar's motion for summary judgment. “We review the grant or denial of a rule 56(f) motion using an abuse of discretion standard.” Brown v. Glover, 2000 UT 89, ¶ 29, 16 P.3d 540. The district court “should liberally consider rule 56(f) motions unless they are dilatory or lacking merit.” Id. (citation and internal quotation marks omitted).

¶ 10 Third, Waykar contends that the district court erred in granting Simmons partial summary judgment because (1) Waykar did not ratify the renewed lease, (2) the renewed lease and the right of first refusal did not apply to the Property, and (3) Waykar did not breach the right of first refusal. We review a district court's “legal conclusions and ultimate grant or denial of summary judgment for correctness, and view[ ] the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party.” Orvis v. Johnson, 2008 UT 2, ¶ 6, 177 P.3d 600 (citation and internal quotation marks omitted).

¶ 11 Fourth, Waykar contends that the district court erred in entering its order of partial summary judgment prematurely under rule 7(f) of the Utah Rules of Civil Procedure. We review an order granting summary judgment for correctness. Id. Nevertheless, a party suffers no prejudice when a district court corrects its alleged procedural error. Crossland Sav. v. Hatch, 877 P.2d 1241, 1243 n. 5 (Utah 1994).

¶ 12 Fifth, Waykar contends that the district court erred in (1) granting specific performance, (2) determining the purchase price, and (3) allowing Simmons to offset its lost profits against the purchase price. “Specific performance as a remedy will stand and will not be upset on appeal in the absence of an abuse of discretion.” Covey v. Covey, 2003 UT App 380, ¶ 18, 80 P.3d 553 (citation and internal quotation marks omitted).

¶ 13 Finally, Simmons seeks attorney fees on appeal on the ground that Waykar's briefing violates rule 24(k) of the Utah Rules of Appellate Procedure. Because this claim does not require review of any district court ruling, no standard of review applies.

ANALYSIS

I. The District Court Properly Denied Waykar's Motion to Dismiss.

¶ 14 Waykar contends that the district court erred in denying its motion to dismiss. Waykar sought dismissal on the ground that “Simmons's complaint failed to state a valid claim against Waykar for breach of the [right of first refusal].” Waykar argues that because the address on the renewed lease differs from the Property's actual location, the renewed lease does not as a matter of law govern the Property. Simmons responds that the district court properly denied Waykar's motion to dismiss because the complaint stated “a colorable claim that the renewed lease applies to the [Property] and that Waykar is equitably estopped from asserting otherwise.”

¶ 15 A district court “may dismiss an action if the complaint ‘fail[s] to state a claim upon which relief can be granted. ’ ” Osguthorpe v. Wolf Mountain Resorts, LC, 2010 UT 29, ¶ 20, 232 P.3d 999 (alteration in original) (quoting Utah R. Civ. P. 12(b)(6) ). A complaint states a claim upon which relief can be granted if it “alleges the facts and sets forth the legal basis for an available legal remedy.” Mack v. Utah State Dep't of Commerce, Div. of Sec., 2009 UT 47, ¶ 17, 221 P.3d 194. “A motion to dismiss should be granted only if, assuming the truth of the allegations in the complaint and drawing all reasonable inferences therefrom in the light most favorable to the plaintiff, it is clear that the plaintiff is not entitled to relief.” Hudgens v. Prosper, Inc., 2010 UT 68, ¶ 14, 243 P.3d 1275 (citation and internal quotation marks omitted). And “documents attached to a complaint are incorporated into the pleadings ... and are fair game for this court to consider in addition to the complaint's averments.” Oakwood Vill. LLC v. Albertsons, Inc., 2004 UT 101, ¶ 10, 104 P.3d 1226.

¶ 16 In the breach-of-contract context, a complaint states a claim upon which relief can be granted when it alleges “(1) a contract, (2) performance by the party seeking recovery, (3) breach of the contract by the other party, and (4) damages.” Bair v. Axiom Design, LLC, 2001 UT 20, ¶ 14, 20 P.3d 388.

¶ 17 Here, Simmons's amended complaint alleges that the parties entered into the renewed lease, that Simmons paid rent to Waykar under the renewed lease, that the renewed lease pertains to the Property, that the “[renewed lease] contains a right of first refusal,” and that “Evans and Waykar ... conspired to transfer the Property to Evans without giving Simmons the opportunity to purchase the Property on the same terms offered to Waykar by Evans.” Simmons also attached the renewed lease to the amended complaint. Simmons's complaint therefore alleged the elements of breach of contract. Waykar, of course, contested the...