D.A. Osguthorpe Family P'ship v. ASC Utah, Inc.

• Citation: 705 F.3d 1223
• Decision Date: 15 January 2013
• Docket Number: 11–4159.,Nos. 11–4062,11–4113,s. 11–4062
• Parties: D.A. OSGUTHORPE FAMILY PARTNERSHIP, a Utah limited partnership, Plaintiff–Appellant, v. ASC UTAH, INC., a Maine corporation; Wolf Mountain Resorts, L.C., a Utah limited liability company; the Third Judicial District Court, an agency of the Judicial Branch of government of the State of Utah; and The Honorable Robert K. Hilder, in his capacity as a Judge of the Third Judicial District Court in and for the State of Utah, Defendants–Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

705 F.3d 1223

D.A. OSGUTHORPE FAMILY PARTNERSHIP, a Utah limited partnership, Plaintiff–Appellant,

v.ASC UTAH, INC., a Maine corporation; Wolf Mountain Resorts, L.C., a Utah limited liability company; the Third Judicial District Court, an agency of the Judicial Branch of government of the State of Utah; and The Honorable Robert K. Hilder, in his capacity as a Judge of the Third Judicial District Court in and for the State of Utah, Defendants–Appellees.

Nos. 11–4062, 11–4113, 11–4159.

United States Court of Appeals, Tenth Circuit.

Jan. 15, 2013.

David Scofield, Peters/Scofield, Salt Lake City, UT, for Plaintiff–Appellant.

Brent M. Johnson, Utah State Administrative Office of Courts, for Defendants–Appellees Third Judicial District Court and Judge Robert K. Hilder, Salt Lake City, UT, and John R. Lund, Snow, Christensen & Martineau, Salt Lake City, UT, for Defendant–Appellee ASC Utah (Kara L. Pettit, Snow, Christensen & Martineau, Salt Lake City, UT, Attorney for Defendants–Appellees ASC Utah, with them on the brief).

Before LUCERO, HOLLOWAY, and HARTZ, Circuit Judges.

HOLLOWAY, Circuit Judge.

INTRODUCTORY STATEMENT

Some time ago, this lawsuit began in Utah state court. Since then, the litigation has not so much developed as it has metastasized: parties have proliferated, claims have collided, and issues have become intimately entangled. Eventually, one of the frustrated suitors looked to the federal courts for relief, asking for a stay of all state-court proceedings and an order compelling arbitration of the state-court claims. The federal district court declined to do so, dismissed the case, and awarded attorney's fees to the prevailing party.

This appeal asks whether the federal district court correctly determined that, simply put, the federal court should stay out of the still-unfolding state-court controversy.¹ We conclude that the Supreme Court's Colorado River doctrine, see Colorado River Water Conservation District v. United States, 424 U.S. 800, 817–21, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), is the persuasive and controlling law in this case. We think that in this case the Colorado River doctrine wisely counsels our abstention from duplicative interference with the exceptionally protracted state proceedings present here. We AFFIRM the district court's dismissal and DISMISS AS MOOT the interlocutory appeal of the district court's order denying the motion to compel arbitration and for a stay of the state-court proceedings. In addition, we must VACATE the district court's award of attorney's fees and REMAND the matter to the district court for detailed findings of fact sufficient to afford meaningful appellate review of its award.

I. BACKGROUND

A. Factual Setting

Summit County, Utah is a place of rugged, mountainous beauty. As such, it is ripe for development for tourism and recreational pursuits. This is not without its problems. In the early 1990s, Wolf Mountain Resorts, L.C. began acquiring land around Park City, Utah with the aim of creating an all-season, “world class” resort destination.² App. at 196. In 1996, Wolf Mountain leased about 560 acres of Summit County property from the D.A. Osguthorpe Family Partnership, which owns ranchlands in Summit County. ³ The parties contemplated that the Osguthorpe parcel would be used as part of the ski resort. The planned use would involve “the installation, maintenance and operation of two ski lifts, snow making, and clearing of ski trails and such other related facilities, structures and roads as may be required.” Id. at 245.

Wolf Mountain also enlisted ASC Utah, Inc. to help in realizing its vision. In 1997, Wolf Mountain leased its property interest in the resort to ASC Utah under a 200–year “Ground Lease.” In effect, ASC Utah would undertake the development and operation of the planned resort, which was to include a ski area, golf course, condominiums, and assorted tourist accommodations. In 1998, the lease agreement between Wolf Mountain and Osguthorpe was also amended to allow ASC Utah to conduct ski-resort operations on the Osguthorpe lands.

The following year, ASC Utah, Wolf Mountain, Osguthorpe, and Summit County (along with numerous other parties not involved in this case) memorialized their development plans in a document entitled “Amended and Restated Development Agreement for the Canyons Specially Planned Area, Snyderville Basin, Summit County, Utah.” The Development Agreement called for the construction of an eighteen-hole golf course, for which Summit County property owners—including Osguthorpe—agreed to grant the tracts of land necessary for the golf course's completion. The parties further agreed to give high priority to the golf course's development. The Development Agreement contained an arbitration provision, and it also permitted Summit County to declare the parties to be in default if certain conditions were not timely met.

B. The State–Court Litigation

Soon enough, things began to sour between ASC Utah and Wolf Mountain. The proposed golf-course development stalled, and in May of 2006 Summit County declared Wolf Mountain to have defaulted under the Development Agreement. Litigation rapidly ensued. In June of 2006, ASC Utah sued Wolf Mountain for various alleged breaches of the Ground Lease and Development Agreement. The lawsuit was brought in Summit County, Utah, district court, which sits in Utah's Third Judicial District. Wolf Mountain promptly countersued, and the state district court consolidated the ASC Utah and Wolf Mountain suits. At around the same time—in August of 2006—Osguthorpe brought a state-court action against Wolf Mountain, alleging breaches of their 1996 lease agreement. Osguthorpe initially filed its suit in Salt Lake County, but the Salt Lake County district court transferred the case to the neighboring Summit County court, where Osguthorpe also brought a separate action against ASC Utah in 2007. Over Osguthorpe's protests, the Summit County district court consolidated Osguthorpe's suits into the extant ASC Utah–Wolf Mountain litigation in August of 2008.

The next year saw two significant new developments in the ongoing litigation. First, Wolf Mountain sought the court's leave to add new parties to the suit. Upon the denial of its request, Wolf Mountain filed a demand for arbitration under the Development Agreement, along with a motion to compel arbitration. Although the litigation had proceeded in Summit County district court for the previous three years, this marked the first time that any party had invoked a purported right to arbitrate the dispute under the Development Agreement.

The Summit County district court denied Wolf Mountain's motion to compel arbitration, and Wolf Mountain appealed. In a published opinion, the Utah Supreme Court upheld the state trial court's decision, holding that Wolf Mountain had waived its right to arbitrate by actively and substantially participating in the litigation for years before ever asserting a contractual right of arbitration. See ASC Utah, Inc. v. Wolf Mountain Resorts, L.C., 245 P.3d 184, 194 (Utah 2010) (“Wolf Mountain clearly had the intent to pursue matters through litigation rather than to seek arbitration.”). While acknowledging the importance of the contractual right of arbitration, the Utah Supreme Court explained that

Utah public policy favors arbitration agreements only insofar as they provide a speedy and inexpensive means of adjudicating disputes, and reduce strain on judicial resources. In this case, enforcing the arbitration agreement would undercut both policy rationales: arbitration at this point would be neither a speedy and inexpensive way to adjudicate this dispute, nor a means of reducing strain on judicial resources. Public policy is better served by finding waiver where a party has participated in litigation to a point inconsistent with an intent to arbitrate, when such participation causes prejudice to the other party.

Id. at 197.

Also in 2009, Summit County declared that Osguthorpe had defaulted under the Development Agreement by failing to set aside the portion of its property needed for building the golf course. Because the issuance of the default notice gave rise to additional claims and defenses under the Development Agreement that had not previously been available to Osguthorpe, the Summit County district court reopened the pleadings to allow Osguthorpe to assert supplemental claims. On July 19, 2010, Osguthorpe brought new claims against both ASC Utah and Wolf Mountain under the Development Agreement. On September 20, 2010—during the pendency of Wolf Mountain's appeal of the Summit County district court's denial of its motion to compel arbitration—Osguthorpe filed a “Motion to Compel Arbitration and to Stay All Claims in This Action Bearing on or Relating in Any Way to Any Alleged Default Under the [Development] Agreement” in state court. Osguthorpe argued that the arbitration clause in the Development Agreement required the arbitration of all claims and issues arising under the Development Agreement—not only those between Osguthorpe, ASC Utah, and Wolf Mountain, but also those that had been litigated solely between ASC Utah and Wolf Mountain.

The Utah Supreme Court issued its mandate in ASC Utah, Inc. v. Wolf Mountain Resorts, L.C. on November 19, 2010. The Honorable Robert K. Hilder, a Utah state-court judge and a defendant-appellee in this case, denied Osguthorpe's motion to compel arbitration, inter alia, the next day. In denying the motion, Judge Hilder noted that Osguthorpe was “situated differently from Wolf [Mountain] for several reasons, but not so differently that [it] can compel arbitration of any claims or defenses in this consolidated action.” App. at 136 (emphasis omitted). This was because “the policies underlying arbitration have been so violated in this case that arbitration is not an option open to any party.” Id. That said, Judge Hilder also recognized that Osguthorpe's supplemental claims arising under the...