Aris Vision Institute v. Wasatch

• Decision Date: 21 July 2005
• Docket Number: No. 20040304-CA.,20040304-CA.
• Citation: 121 P.3d 24,2005 UT App 326
• Parties: ARIS VISION INSTITUTE, INC., a California corporation dba Aris Vision, Inc., Plaintiff and Appellee, v. WASATCH PROPERTY MANAGEMENT, INC., a Utah corporation; JDJ Properties, a Utah corporation; David Skalka, an individual; Brian Skalka, an individual; and Dennis Peacock, an individual, Defendants and Appellants.
• Court: Utah Supreme Court

Page 24

121 P.3d 24

2005 UT App 326

ARIS VISION INSTITUTE, INC., a California corporation dba Aris Vision, Inc., Plaintiff and Appellee, v. WASATCH PROPERTY MANAGEMENT, INC., a Utah corporation; JDJ Properties, a Utah corporation; David Skalka, an individual; Brian Skalka, an individual; and Dennis Peacock, an individual, Defendants and Appellants.

No. 20040304-CA.

Court of Appeals of Utah.

July 21, 2005.

Appeal from the Third District Court, Salt Lake Department, Leslie A. Lewis, J.

COPYRIGHT MATERIAL OMITTED

Richard D. Burbidge and Stephen B. Mitchell, Salt Lake City, for Appellants.

R. Stephen Marshall and Erik A. Olson, Durham Jones & Pinegar, Salt Lake City, for Appellee.

Before Judges BENCH, DAVIS, and ORME.

OPINION

BENCH, Associate Presiding Judge:

¶ 1 Defendants appeal a judgment in favor of Aris Vision Institute, Inc. (Aris) for forcible detainer, wrongful eviction, and conversion of personal property. We affirm.

BACKGROUND

¶ 2 Aris, a California corporation, owned and operated a laser eye surgery center (the premises) located at the Woodlands Business Park in Murray, Utah. Aris owned all the equipment and furniture (collectively, "equipment") located at the premises. Aris contracted with four doctors to perform eye surgeries on the premises using Aris's equipment and hired a manager, David Skalka. Aris leased the premises from Defendant JDJ Properties, Inc. (JDJ), pursuant to a 1995 lease agreement. Defendant Wasatch Property Management, Inc. (Wasatch), a sister company and an agent of JDJ, managed the premises and collected rents from Aris.

¶ 3 After an industry downturn, Aris made the decision to close the business and contemplated filing for bankruptcy. On January 4, 2002, Aris terminated Skalka and provided various notices to him and various vendors that it "was in the unfortunate position of having to wind down it[s] current operations and liquidate its business prior to dissolution." In early January, Aris began negotiations with the doctors and Skalka to sell the equipment and transfer the lease. During the negotiations, Skalka and the doctors continued to occupy the premises and perform surgeries using Aris's equipment.

¶ 4 Aris failed to pay the January rent of $9,556.38. Skalka notified Wasatch's building manager, Dennis Peacock, and property manager, Anita Lockhart, about Aris's intention to terminate the business and file for bankruptcy. Peacock instructed Skalka to not let anyone remove the equipment from the premises.

¶ 5 The negotiations between Aris and the doctors proved unsuccessful. On January 22, 2002, Richard Enright, an Aris manager, came to the premises to remove Aris's equipment. Upon Enright's arrival, Skalka recited Peacock's instructions that Aris was not allowed to remove the equipment and told Enright that he should speak with Peacock directly. Peacock told Enright that, by Aris's failure to pay the January rent, it had abandoned the premises and that Defendants had seized Aris's equipment. Enright tendered a check for the January rent, but Peacock refused to accept the check or to release the equipment.

¶ 6 While still in the presence of Skalka and Peacock, Enright phoned Kathleen Soto, Aris's CFO. Soto spoke with Peacock and requested that Wasatch release the equipment to Aris, offering again to pay the January rent. Peacock again refused to accept the rent or to release the equipment. Enright made one more request for the equipment. Peacock responded by instructing Enright to leave the premises and threatened "to have the police forcefully remove Enright if he ever returned again." Sometime during this visit, Enright requested a key from Skalka and Peacock, but both refused the request.

¶ 7 The next day, Aris's attorney, Erik Olson, filed this action. He also requested from John Dahlstrom, Defendants' attorney, permission to enter the premises and remove the equipment, and also tendered the January rent payment. Dahlstrom refused to release the equipment or to accept the tender of rent. Dahlstrom suggested that a "business solution" be considered by Aris and the doctors, basically suggesting that they resume their negotiations. Based on this suggestion, Aris again negotiated with the doctors and Skalka in hopes that they would assume the lease and purchase the equipment. Again the negotiations proved unsuccessful. Unknown to Aris, Wasatch and the doctors were negotiating a separate lease, where the doctors would occupy other space in Woodlands Business Park.

¶ 8 In early February, Skalka and the doctors relocated within Woodlands Business Park, without supervision from Wasatch. Peacock changed the locks on the premises and did not provide notice or a key to Aris. A few days later, Aris served a writ of replevin for the equipment. Dahlstrom informed Olson that Wasatch would protest the writ of replevin and seek a large bond. Based on Wasatch's assertions, Aris agreed to postpone the hearing on its writ of replevin and to help Wasatch locate a new tenant.

¶ 9 From March to June 2002, Wasatch provided Aris limited, supervised access to the premises. Peacock would unlock the premises and then supervise the visit in order to ensure that Aris did not remove any equipment. In March, during a supervised visit, Enright inventoried the equipment and discovered that sometime after his January 22 visit, two lasers had been damaged and other equipment had been removed. The missing equipment included: a Statim autoclave worth $393.60, a Compaq laptop worth $574.98, a Hansatome microkeratome worth $14,164.68, and several sunglasses worth $985.56. During another supervised visit, Peacock gave Aris permission to remove one piece of equipment but insisted that Aris was not allowed to remove any other equipment.

¶ 10 In April, Aris and Ed Barber were in negotiations for Barber to purchase some of the equipment and assume the lease. By May, the negotiations had ended, with Barber agreeing only to the sale of the equipment. Before finalizing the sale, Olson asked Dahlstrom for his consent. Dahlstrom replied that he did not anticipate a problem but that he would need to check with Wasatch. On June 10, 2002, Olson met with Barber and Peacock at the premises to close the sale. Dahlstrom stopped the transaction because Wasatch had not yet approved the sale. A few days later, Dahlstrom informed Olson that Wasatch would approve the sale only if Wasatch received all the proceeds. Aris did not agree to Wasatch's condition.

¶ 11 Later in June, Sale Lake County posted a notice of seizure on the premises for past due property taxes. After the county posted the notice, Peacock changed the locks a second time and again did not provide notice or keys to Aris. About that same time, Soto came to Utah with the intention of breaking the locks and removing the equipment. She discovered the tax notice and went to the Salt Lake County Assessor's office and paid the past due amount. She did not remove the equipment that day because it appeared that Wasatch's employees were guarding the premises.

¶ 12 After Soto's visit, Olson informed Dahlstrom that Aris intended to proceed with the lawsuit. On June 25, 2002, Dahlstrom told Olson that Aris could remove all of its equipment and represented that Wasatch never intended to withhold the equipment. Lockhart, via email, instructed Peacock to allow Aris to remove the equipment. Peacock responded with the question, "Is this correct?" Lockhart confirmed that Aris was now entitled to remove all of its equipment. On July 2, 2002, Soto removed Aris's equipment and the sale to Barber finally took place.

¶ 13 Aris proceeded with its lawsuit, and Defendants counterclaimed for unpaid rent. During the three-day bench trial, Aris introduced a written report and expert witness testimony that the equipment had depreciated in the amount of $118,568.81 while in Wasatch's custody. Wasatch did not offer any depreciation evidence or rebuttal testimony. The district court found that Aris did not vacate or surrender the premises, but rather that Wasatch had forcefully prevented Aris from enjoying "free, unfettered access to the Premises." Additionally, the district court determined that Wasatch had seized Aris's equipment without the proper judicial process and used it as a "bargaining chip" for the unpaid rent.

¶ 14 The district court held that Defendants were liable for forcible detainer, wrongful eviction, and conversion of the equipment. The district court awarded damages for the following: depreciation in the amount of $118,568.81; missing equipment in the amount of $16,118.82; and damage to Aris's lasers in the amount of $53,000. The damages totaled $187,687.63, which the district court trebled pursuant to the forcible detainer statute. The district court additionally awarded Aris its deposit of $13,393.89, less the January rent of $9,556.38, plus costs and attorney fees. The district court dismissed Defendants' counterclaim based on its holding that Aris did not abandon the premises.

ISSUES AND STANDARDS OF REVIEW

¶ 15 First, Defendants argue that the district court erred in ruling that Aris did not abandon the premises. Utah Code section 78-36-12.3 provides a statutory presumption for abandonment. See Utah Code Ann. § 78-36-12.3 (2002). We review the district court's application of the statute to the facts of the case for abuse of discretion. See Platts v. Parents Helping Parents, 947 P.2d 658, 661 (Utah 1997). Common-law abandonment depends on the intent of the party accused of the act. See State v. Hawkins, 967 P.2d 966, 970 (Utah Ct.App.1998). The determination of intent is a question of fact, which will only be reversed if the district court's finding is clearly erroneous. See Pennington v. Allstate Ins. Co., 973 P.2d 932, 937 (Utah 1998); see also 49 Am.Jur.2d Landlord and Tenant § 250 (1995) ("[A] question of abandonment is a factual one.").

¶ 16 Second, Defendants claim that the district court erred in holding Defendants liable for forcible...