Cafe Rio v. Larkin-Gifford-Overton, 20070618.

• Citation: 2009 UT 27,207 P.3d 1235
• Decision Date: 01 May 2009
• Docket Number: No. 20070618.,20070618.
• Court: Supreme Court of Utah
• Parties: CAFÉ RIO, INC., a Utah corporation, and Michael D. Hughes, as Trustee of the Vera R. Hughes Grandchildren's Trust, Plaintiffs and Appellees, v. LARKIN-GIFFORD-OVERTON, LLC, a Utah limited liability company, Defendant and Appellant.

207 P.3d 1235

2009 UT 27

CAFÉ RIO, INC., a Utah corporation, and Michael D. Hughes, as Trustee of the Vera R. Hughes Grandchildren's Trust, Plaintiffs and Appellees, v. LARKIN-GIFFORD-OVERTON, LLC, a Utah limited liability company, Defendant and Appellant.

No. 20070618.

Supreme Court of Utah.

May 1, 2009.

Paul D. Veasy, T. Mickell Jimenez Rowe, Aaron D. Lebenta, Salt Lake City, Aaron D. Randall, St. George, for plaintiffs.

James A. Boevers, M. David Eckersley, Michael N. Zundel, Salt Lake City, Steven W. Beckstrom, St. George, for defendant.

AMENDED OPINION

DURRANT, Associate Chief Justice:

INTRODUCTION

¶ 1 In this case, we must determine the construction and parking rights of two adjacent landowners Larkin-Gifford-Overton, LLC ("LGO"), and Michael D. Hughes, Trustee of the Vera R. Hughes Grandchildren's Trust ("the Trust"), as established in the Declaration of New Easements and Covenants (the "Cross-Easement Agreement" or "Agreement") executed between the parties.¹ LGO owns Parcel 5 in a development in St. George; the Trust owns the adjacent Parcel 4.

¶ 2 In 2003, LGO filed suit against Café Rio and other defendants to determine the defendants' rights to park on LGO's Parcel 5. Café Rio is not a party to the Agreement, but is a tenant of the Hughes Building, which is owned by the Trust and located on the Trust's Parcel 4. To resolve the litigation, the parties entered into a settlement agreement (the "Settlement Agreement"), and the lawsuit was dismissed without prejudice.

¶ 3 A few months later, LGO began constructing a building on its Parcel 5. In response, the Trust and Café Rio brought suit, claiming that LGO's construction violated the terms of the Cross-Easement Agreement. The district court entered both a preliminary injunction stopping LGO's construction and a restoration order requiring LGO to restore the property to its pre-construction condition.

¶ 4 The Trust and Café Rio, and LGO, filed cross motions for summary judgment with respect to the parties' parking rights under the Cross-Easement Agreement. The court granted the Trust and Café Rio's motion, ruling that LGO "cannot construct a building on Parcel 5 without regard to the terms of the [Cross-Easement Agreement]." The court also enjoined LGO "from future violations of the parking agreements" and ruled that "LGO is judicially estopped from challenging Café Rio's [parking] rights under the Settlement Agreement." Thus, the court did not reach the question of whether the allowance of Café Rio restaurant customer parking on Parcel 5 merely because Café Rio maintained a district office on Parcel 4 constituted an overburdening of the easement. It is unclear whether the court reached LGO's claim that parking by Café Rio restaurant customers and employees on Parcel 5 was prohibited under the terms of the Cross-Easement Agreement. The court then granted attorney fees, costs, and interest on its costs to the Trust and attorney fees and costs to Café Rio.

¶ 5 LGO appeals, claiming that the district court erred in

(1) interpreting the Cross-Easement Agreement as limiting the location on which LGO could construct a building on Parcel 5 and granting summary judgment based on that conclusion;

(2) ruling that LGO is judicially estopped from challenging Café Rio's rights to park on Parcel 5; and

(3) granting attorney fees, costs, and interest to the Trust and attorney fees and costs to Café Rio.²

¶ 6 We reverse the district court's decisions and, for the reasons detailed below, hold that

(1) the Cross-Easement Agreement unambiguously allows LGO to construct a building without limitation on where that building may be placed on Parcel 5;

(2) LGO is not judicially estopped from challenging Café Rio's rights to park on Parcel 5; and

(3) the district court erred in granting attorney fees, costs, and interest to the Trust and attorney fees and costs to Café Rio. Thus, we reverse those awards.

¶ 7 Based on these holdings, we remand for the district court to determine whether LGO suffered compensable damages in connection with the preliminary injunction and the restoration order, whether parking by Café Rio restaurant customers and employees on Parcel 5 is prohibited under the terms of the Cross-Easement Agreement, and whether such parking on Parcel 5 overburdens the easement if it is allowed merely because Café Rio maintains a district office on Parcel 4. We also note that LGO is entitled to pursue attorney fees and costs related to the issue of its right to construct a building on Parcel 5.

BACKGROUND

¶ 8 LGO owns Parcel 5, one of six contiguous parcels of real property in a development north of St. George Boulevard in St. George. The Trust owns the adjacent Parcel 4 and the Hughes Building on that parcel. Prior to February 2000, LGO had only one access point for vehicular traffic off of St. George Boulevard for Parcel 5; that access point was located about one-half block away. LGO contacted the Trust to inquire about obtaining an access easement across Parcel 4. As a result of their negotiations, the owners of all six parcels entered into the Cross-Easement Agreement.

¶ 9 The Agreement establishes common areas of open space in the center of the six parcels. These common areas are defined as, in part, "all of the areas of the Parcels ... designed for use as approaches, exits, entrances, and all parking lots, ... however expressly excluding all buildings (and any building(s) constructed on Parcels 5 and 6 in the future)."

¶ 10 The Agreement also grants each parcel owner the right to an "unobstructed view of any of the Parcels," and it provides a "nonexclusive easement for the parking of motor vehicles ... for the customers, invitees and employees of all business and occupants of the buildings constructed on ... any of the Parcels."³

¶ 11 Café Rio leases space for its district office in the Hughes Building, which is owned by the Trust and located on Parcel 4. Café Rio also owns and operates a Café Rio Mexican Grill restaurant that is near, but not located on, any of the six parcels that are subject to the Cross-Easement Agreement. Nevertheless, Café Rio's restaurant customers and employees began parking on LGO's Parcel 5. In response, in April 2003, LGO brought suit against Café Rio and other defendants (the "2003 litigation"), claiming that Café Rio's restaurant customers and employees had no rights to park on Parcel 5 because the Café Rio restaurant was not a party to the Cross-Easement Agreement, is not located on any parcel of the property that is subject to the Cross-Easement Agreement, and therefore is "not ... entitled to benefit from the [parking easement]" that is established in the Cross-Easement Agreement. LGO further argued that allowing Café Rio restaurant customers and employees to park on Parcel 5 merely because Café Rio maintained a district office on Parcel 4 "unreasonabl[y] increase[d] the burden" on the easement. LGO then asserted claims for trespass, waste, and private nuisance, and sought a preliminary and permanent injunction.

¶ 12 The parties resolved the litigation by executing the Settlement Agreement. The court then entered an order of dismissal without prejudice, approving the Settlement Agreement.

¶ 13 Under the terms of the Settlement Agreement, the parties agreed that "[t]he parking of motor vehicles within the `designated paved parking spaces' [on Parcel 5] shall be non-exclusive between the Parties, or their customers, employees, and/or invitees (on a first come, first serve basis), as provided in the [Cross-Easement Agreement]." LGO agreed not to tow any of Café Rio's customers' and employees' cars that were parked according to these terms. LGO and Café Rio also, however, expressly reserved their rights to litigate the terms of the Cross-Easement Agreement.

¶ 14 In April 2004, LGO began constructing a two-story, 10,000 square foot building on the parking lot of Parcel 5. The Trust, Café Rio, and another parcel owner, Flood Street, initiated suit, claiming that LGO's building constituted an "obstruction" that was explicitly prohibited by the Cross-Easement Agreement and seeking injunctive relief and damages.

¶ 15 Plaintiffs sought and were granted a preliminary injunction to stop LGO's construction of the new building. LGO answered and brought four counterclaims, seeking declaratory relief that it could construct a building in any location of its choice on Parcel 5. LGO also asserted claims that it had raised in the 2003 litigation, again challenging Café Rio's restaurant customers' and employees' rights to park on Parcel 5.

¶ 16 In August 2004, the Trust, Café Rio, and Flood Street moved the district court to order LGO to restore the common area. Following a hearing, the court ordered LGO to do so. The court did not, however, resolve the issue of the parties' parking rights.

¶ 17 The parties then conducted discovery on their respective parking rights and filed cross-motions for partial summary judgment. The district court granted summary judgment for the Trust and Café Rio and denied summary judgment for LGO, ruling that (1) the Cross-Easement Agreement was "clear and unambiguous" with regard to the parking and construction rights of the parties;⁴ (2) LGO breached the Agreement by interfering with the Trust's and Café Rio's parking rights; (3) LGO was judicially estopped from challenging Café Rio's parking rights; (4) LGO was enjoined from future violations of the [Cross-Easement] Agreement; and (5) LGO could "not construct a building on Parcel 5 without regard to the terms of the [Cross-Easement] Agreement."

¶ 18 The Trust and Café Rio sought attorney fees and costs under the Cross-Easement Agreement.⁵ The district court awarded the Trust and Café Rio attorney fees and costs; it also awarded the Trust 18% interest on its costs and expenses. The court entered final judgment in June 2007.

¶ 19 LGO timely appealed, claiming that the district court erred in

(1) interpreting the Cross-Easement...