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Triple J Parking Inc. v. SCSB LLC

Court of Appeals of Utah

August 23, 2018

Triple J Parking Inc., Appellant,
v.
SCSB LLC, Appellee.

          Third District Court, Salt Lake Department The Honorable Todd M. Shaughnessy No. 160906725

          Donald L. Dalton, Attorney for Appellant

          Matthew N. Evans and Matthew M. Cannon, Attorneys for Appellee

          Judge David N. Mortensen authored this Opinion, in which Judges Michele M. Christiansen Forster and Jill M. Pohlman concurred.

          OPINION

          MORTENSEN, Judge.

         ¶1 In this case, Triple J Parking Inc. paved the property and put up a parking lot-and now it wants to recoup the improvement costs.[1] For nearly nine years, Triple J leased ground property from SCSB LLC, pursuant to a lease agreement, in order to run its park-and-ride business. During that time, Triple J made millions of dollars' worth of improvements to the property-but did not negotiate an agreement with SCSB regarding repayment or compensation for those improvements. In September 2016, the parties could not come to an agreement regarding renewal of the lease, and SCSB terminated the agreement, with the effective end date in October 2016. While the lease agreement with Triple J was still operative, SCSB negotiated a separate, future lease on the property with a new tenant, whose lease agreement would commence after Triple J's agreement had expired and after Triple J had vacated the premises. Upon questioning whether the negotiations with the new tenant violated the non-competition clause in its own lease, Triple J brought suit against SCSB, alleging that SCSB breached (1) the non-competition provision of the ground lease agreement and (2) the implied covenant of good faith and fair dealing. SCSB moved to dismiss the complaint, and the district court granted its motion. Triple J now appeals the district court's ruling. We affirm.

         BACKGROUND

         ¶2 In November 2007, Triple J entered into a ground lease agreement (the Lease Agreement) with SCSB. The leased lot (the Property) was located near the airport and provided approximately six acres to Triple J for use as a parking lot, with an optional 2.87 acres also to be used as a parking facility.

         ¶3 The initial term of the Lease Agreement was three and a half years, but the Lease Agreement further specified that upon expiration, it would continue and renew on a month-to-month basis. Additionally, the Lease Agreement contained a non-competition provision. The Lease Agreement was silent, however, on the issue of any improvements made to the Property.

         ¶4 After the Lease Agreement became effective, Triple J spent millions of dollars improving the Property and subsequently began operating a parking facility. Pursuant to the Lease Agreement, after the original term had expired in April 2011, the Lease Agreement continued on a month-to-month basis until September 2016. At that time, SCSB proposed the elimination of the non-competition provision in the lease, sparking negotiations between the two parties. During these discussions, SCSB acknowledged that it was in dialogue with a third party with respect to the sale of the Property.

         ¶5 Triple J and SCSB could not reach a satisfactory resolution regarding the non-competition provision or a further renewal. Accordingly, in September 2016, SCSB served Triple J with a Notice of Termination of Ground Lease, and Triple J vacated the Property by the end of October 2016. Triple J asserts that in September 2016, SCSB sold, or agreed to sell, the Property to a competing parking business, but it was later discussed that the new agreement may have been a three-year lease with an option to purchase.

         ¶6 Upon discovering that SCSB had leased the Property to a competitor, Triple J filed suit, asserting two claims for relief- breach of the Lease Agreement and breach of the implied covenant of good faith and fair dealing-and seeking damages in the amount it had spent on improving the Property over many years. SCSB moved to dismiss the complaint, and the district court granted its motion. Triple J now appeals.

         ISSUES AND STANDARD OF REVIEW

         ¶7 Triple J asserts that the district court incorrectly concluded that Triple J failed to allege facts demonstrating that SCSB breached the non-competition provision of the Lease Agreement by negotiating a future lease on the Property with a competing parking entity, to commence after Triple J's Lease Agreement had expired. Similarly, Triple J asserts that the district court erred in concluding that Triple J failed ...


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