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The Lodge at Westgate Park City Resort v. Westgate Resorts Ltd.

Court of Appeals of Utah

March 14, 2019

The Lodge at Westgate Park City Resort and Spa Condominium Association Inc., Appellee and Cross-appellant,
v.
Westgate Resorts Ltd. and CFI Resorts Management Inc., Appellants and Cross-appellees.

          Third District Court, Silver Summit Department The Honorable Kara Pettit No. 130500585

          Michael A. Gehret, Michael E. Marder, and Katheryn G. Saft, Attorneys for Appellants and Cross-appellees

          Ronald G. Russell, Matthew J. Ball, Phillip S. Ferguson, Rebecca L. Hill, and Stephen D. Kelson, Attorneys for Appellee and Cross-appellant

          Judge Kate Appleby authored this Opinion, in which Judges Gregory K. Orme and Diana Hagen concurred.

          OPINION

          APPLEBY, JUDGE.

         ¶1 Westgate Resorts Ltd. and CFI Resorts Management Inc. (collectively, Westgate) appeal the district court's ruling that a document outside the "Declaration of Condominium and Declaration of Covenants, Conditions and Restrictions" (the Declaration) for the condominium was enforceable under the doctrines of promissory estoppel and ratification. The Lodge at Westgate Park City Resort and Spa Condominium Association Inc. (the Association) appeals the district court's determination that the term "Common Areas and Facilities" under the Declaration is limited to the building's foundation. We affirm.

         BACKGROUND

         ¶2 Westgate is the developer of a resort in Park City, Utah. The resort includes timeshare units as well as whole ownership units. Construction of the whole ownership portion began in 2006 and is known as the Lodge at Westgate Park City Resort & Spa (the Project).

         ¶3 Westgate started selling condominium units at the Project before construction commenced. The parties do not dispute that "prospective purchasers received [a] draft [of] [the Declaration], the Purchase & Sale Agreement, the Bylaws of the Association, the Association's Articles of Incorporation, and an estimated budget for assessments for 2007."[1]

         ¶4 The Purchase & Sale Agreement informed purchasers that the Project was in a pre-construction phase, stating "the buyer acknowledges that the seller has disclosed to the buyer that a final subdivision map for the condominium has not yet been approved and recorded." The Purchase & Sale Agreement further disclosed that "the budget was only an estimate and that actual costs for the line items were subject to change." The Declaration was recorded in 2007.

         ¶5 The Project was completed in 2008. The 2009 budget was the first to be prepared for the Project in its fully operational form. The proposed 2009 budget was substantially higher than the 2007 estimated budget and the 2008 budget.[2] By this time, condominium sales had mostly come to a stop due to the collapsed national economy. Many owners were upset by the proposed 2009 budget. "More than 40 owners called and/or emailed the Resort's General Manager [(General Manager)] and members of his team . . . expressing their dissatisfaction with and rejection of the proposed budget." "The predominant sentiment of the owners was to try to work out a solution with Westgate rather than pursue litigation, although litigation was definitely an option for many of the owners." Some owners met with attorneys to explore legal alternatives. A group of owners retained counsel and threatened legal action against Westgate. The Chief Operating Officer (COO) of Westgate was aware of these threats.

         ¶6 Dissatisfaction among the owners caused General Manager to set up a "conference call with all interested owners to explore solutions to the problems created by the proposed 2009 budget." During the conference call, General Manager requested that the owners establish a group which became known as the Owners Finance Committee (the OFC). The OFC's purpose "was to work with Westgate to achieve a mutual agreement between the developer and the homeowner[s] with regards to the budget . . . start[ing] with cost allocation methodologies and continu[ing] to the HOA fee." General Manager notified COO about the OFC and of his efforts to resolve the budget concerns with the OFC. COO expressed his approval of the committee and "encouraged an on-going dialogue between Westgate and the OFC." Neither Westgate nor any of the owners objected to the formation or composition of the OFC.

         ¶7 Over the next five months, the OFC and Westgate met "essentially weekly" to work on a compromise budget and methodology. Throughout the process the OFC reported its progress to General Manager and solicited feedback from the owners. General Manager also reported the progress to Westgate's senior management (including COO). During the negotiations, the OFC requested to meet with COO to discuss various issues with the proposed 2009 budget. Before the meeting, General Manager provided COO with a summary of his meetings with the OFC, including the issues they had resolved. General Manager told COO that "he had been able to forestall a class action lawsuit by forming the OFC and working with it in good faith to resolve the budget crisis." COO met with several members of the OFC in July 2009.

         ¶8 On November 6, 2009, General Manager sent a letter to all the owners and Westgate stating that there were still some issues to be resolved. It stated that "[t]he methodology outlined in the [Budget] exhibits applies to all future budget preparation and will be the guideline on how we decide on expenses moving forward on the 2010 budget and thereafter." The letter also stated "[t]here may be some inconsistencies in various condominium documents but the [Budget] exhibits take precedent over those for the associated budget items." Around November 19, 2009, one of the members of the OFC sent an amended budget document to General Manager. He responded by email, stating it "looked great and it look[ed] like everything [was] covered as discussed."

         ¶9 The OFC met with General Manager on November 23, 2009, and General Manager signed each page of the finalized budget document (the 2009 Budget Methodology). The district court's findings of fact stated, "Westgate . . . and the OFC understood that the [2009 Budget Methodology] was inconsistent with the [Declaration] in many particulars. That is why [the November 6, 2009 letter] stated that the [2009 Budget Methodology] took precedence over the inconsistent provisions in the Declaration."

         ¶10 The 2009 Budget Methodology determined the Project's budgets for the next four years. During these years, Westgate never disavowed the November 6, 2009 letter and did not inform the OFC or the owners that the 2009 Budget Methodology was invalid.

         ¶11 Throughout the negotiation process up to the date the 2009 Budget Methodology was signed, "Westgate was aware that several condominium owners had consulted or were continuing to consult counsel" regarding the increased proposed budget. But once the 2009 Budget Methodology went into effect, not a single owner filed a lawsuit against Westgate. The owners relied on the 2009 Budget Methodology and, with this reliance, let the statutes of limitation lapse on their various claims. The owners also paid their retroactive assessments to Westgate for the years 2009 to 2013 in reliance on the 2009 Budget Methodology.

         ¶12 Around 2013, a fresh dispute arose between Westgate and the owners after new management took over operation of the resort. The dispute began because the budget for 2013 deviated from the 2009 Budget Methodology in a number of ways.[3] The Association filed a lawsuit against Westgate and Westgate counterclaimed. Westgate and the Association each filed cross-motions for a preliminary injunction. The court held a hearing on the motions and ordered the parties to abide by the 2009 Budget Methodology during the pendency of the litigation.

         ¶13 After a bench trial, the district court issued findings of fact and conclusions of law and ruled that the 2009 Budget Methodology was enforceable under the doctrines of promissory estoppel and ratification.[4] The parties moved to amend and clarify the findings of fact and conclusions of law, and the court amended its findings. A final judgment was entered in 2017 and each side appealed.

         ISSUES AND STANDARDS OF REVIEW

         ¶14 We address two of the issues Westgate raises on appeal.[5]First, Westgate argues the Association does not have standing to seek enforcement of the 2009 Budget Methodology because the court determined "that the owners, not the Association, relied upon Westgate's promise and ratified Westgate's conduct." "Whether a party has standing is primarily a question of law, which we review for correctness." Edwards v. Powder Mountain Water and Sewer, 2009 UT App 185, ¶ 10, 214 P.3d 120.

         ¶15 Second, it contends the facts of the case preclude the district court from enforcing the 2009 Budget Methodology under the doctrine of promissory estoppel. Promissory estoppel is a doctrine of equitable relief, which presents "mixed questions of fact and law." Richards v. Brown, 2009 UT App 315, ¶ 11, 222 P.3d 69 (quotation simplified). We therefore review the district court's factual findings for clear error and its legal conclusions for correctness. Id.

         ¶16 The Association raises three issues in its cross-appeal. First, it contends the district court erred "by interpreting the Declaration to limit the [Condominium's] common areas and facilities to [the Project's] foundation contrary to the Declaration's own provisions and the Utah Condominium Ownership Act."

         ¶17 Second, the Association contends the district court "erred by ignoring the evidence that the parties to [the 2009 Budget Methodology] intended all budget categories, including the amenities use fee, to be subject to a future increase[] clause, and by reducing damages awarded to the [Association] for excess fees charged by Westgate." "We interpret the provisions of the Declaration as we would a contract." B. Investment LC v. Anderson, 2012 UT App 24, ¶ 9, 270 P.3d 548 (quotation simplified). "The interpretation of a contract is a question of law, which we review for correctness, giving no deference to the ruling of the district court." Salt Lake City Corp. v. Big Ditch Irrigation Co., 2011 UT 33, ¶ 19, 258 P.3d 539. "Likewise, the determination of whether a contract is facially ambiguous is a question of law, which we review for correctness." McNeil Eng'g & Land Surveying, LLC v. Bennett, 2011 UT App 423, ¶ 7, 268 P.3d 854. And we "resolve questions of facial ambiguity in a contract according to the parties' intent, which is a question of fact." Id. "If the contract is ambiguous and the [district] court makes findings regarding the intent of the parties, we will not disturb those findings unless they are clearly erroneous." Allstate Enters., Inc. v. Heriford, 772 P.2d 466, 468 (Utah Ct. App. 1989).

         ¶18 Finally, the Association argues the district court "erred by declining to adopt certain features of the Association's proposed Final Judgment and Order based on a determination that [it] did not comply with Rule 58A" of the Utah Rules of Civil Procedure. "We review the [district] court's interpretation of a rule of civil procedure for ...


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