Jorgensen v. Ogden City Mall Co., 20000072-CA.

• Decision Date: 19 April 2001
• Docket Number: No. 20000072-CA.,20000072-CA.
• Citation: 2001 UT App 128,26 P.3d 872
• Court: Utah Court of Appeals
• Parties: KEITH JORGENSEN'S, INC., Plaintiff and Appellant, v. OGDEN CITY MALL COMPANY, a Utah limited partnership dba Ogden City Mall; Ernest W. Hahn, Inc., a California corporation; Fashion Place Associates, a Utah limited partnership dba Fashion Place Mall; D.H. Entertainment Associates, Inc., a Utah corporation; B & T Entertainment, Inc., a Utah corporation; Brad Dennis; Corwin Hair; Stanley K. Beagley; and Kenneth R. Turner, Defendants and Appellees.

26 P.3d 872

2001 UT App 128

KEITH JORGENSEN'S, INC., Plaintiff and Appellant, v. OGDEN CITY MALL COMPANY, a Utah limited partnership dba Ogden City Mall; Ernest W. Hahn, Inc., a California corporation; Fashion Place Associates, a Utah limited partnership dba Fashion Place Mall; D.H. Entertainment Associates, Inc., a Utah corporation; B & T Entertainment, Inc., a Utah corporation; Brad Dennis; Corwin Hair; Stanley K. Beagley; and Kenneth R. Turner, Defendants and Appellees.

No. 20000072-CA.

Court of Appeals of Utah.

April 19, 2001.

Evan A. Schmutz, Hill, Harrison, Johnson & Schmutz, Provo, for Appellant.

J. Randall Call and James A. Boevers, Prince, Yeates & Geldzahler, Salt Lake City, for Appellees.

Before Judges BILLINGS, DAVIS, and ORME.

OPINION

BILLINGS, Judge:

¶ 1 Keith Jorgensen's, Inc. (Jorgensen)¹ appeals the summary judgments granted to Fashion Place Mall and Ogden City Mall (Mall Defendants)² on Jorgensen's breach of lease and breach of implied covenant of good faith and fair dealing claims. In addition, Jorgensen appeals the trial court's award of attorney fees to Mall Defendants and denial of attorney fees to Jorgensen. We affirm and remand for a determination of reasonable attorney fees on appeal.

BACKGROUND

¶ 2 Jorgensen enters into agreements with licensees to operate home music entertainment stores under the Jorgensen trade name. In the early 1980s, Jorgensen entered into a license agreement with D.H. Entertainment Associates, Inc. (D.H.). Subsequently, D.H. and Jorgensen entered into a sublicense agreement with B & T Entertainment, Inc. (B & T).

¶ 3 The license agreements gave D.H. and B & T the exclusive right to use the Jorgensen name in Salt Lake, Weber, and Davis counties and retain profits from operating stores in Fashion Place Mall (Fashion Place) and Ogden City Mall (Ogden Mall). In return, the agreements required D.H. and B & T to pay Jorgensen $4,000 monthly and to fully perform the leases which Jorgensen retained in the name of the corporation.

¶ 4 D.H. operated the Fashion Place store. In July 1986, Jorgensen entered into the lease, listing Jorgensen as tenant, with Fashion Place. The lease term was five years ending June 30, 1991, and contained an option to extend if Jorgensen, as named tenant, met certain requirements including providing written notice six months but not more than a year prior to the lease's expiration. During the lease term, Jorgensen had no further contact with Fashion Place about the lease's status. Before Jorgensen's lease with Fashion Place expired, Fashion Place began lease renewal negotiations with D.H. Fashion Place and D.H. subsequently entered into a lease which listed D.H. as tenant dba Keith Jorgensen's, Inc. This lease went into effect on October 2, 1991.

¶ 5 B & T operated the Ogden Mall store. Jorgensen entered into the lease with Ogden Mall in July 1986. The lease listed Jorgensen as tenant and was for a six-year term ending June 30, 1992. During the lease term, Jorgensen had no further contact with Ogden Mall about the lease's status. On October 2, 1991, Ogden Mall and D.H., B & T's licensor, entered into a termination and surrender of lease agreement (Termination Agreement). About the same time, Ogden Mall entered into a lease with B & T for a different space in the mall. This lease went into effect on October 9, 1991.

¶ 6 In August 1994, D.H. and B & T terminated their license agreements with Jorgensen. Jorgensen then checked the status of his leases with Fashion Place and Ogden Mall and discovered the Termination Agreement and the leases Mall Defendants executed with D.H. and B & T. In response, Jorgensen brought breach of lease and breach of covenant of good faith and fair dealing claims against Mall Defendants. Jorgensen also brought conspiracy to defraud and negligence claims against Mall Defendants.³

¶ 7 The trial court granted summary judgment to Mall Defendants on the breach of lease claims because D.H. and B & T could not bind, and therefore, could not renew or extend Jorgensen's leases. The trial court also granted summary judgment to Mall Defendants on Jorgensen's breach of covenant of good faith and fair dealing claims. The court determined Mall Defendants did not proceed in a manner inconsistent with Jorgensen's justified expectations.

¶ 8 In January 1998, Mall Defendants filed counterclaims against Jorgensen.⁴ The occupancy counterclaims asserted Jorgensen breached the leases because he subleased to D.H. and B & T without Mall Defendants' consent. The indemnity counterclaims asserted the leases required Jorgensen to indemnify Mall Defendants for claims related to the leases. Jorgensen prevailed on the occupancy counterclaims, and Mall Defendants prevailed on the indemnity counterclaims.

¶ 9 The trial court ordered Jorgensen to pay Mall Defendants' attorney fees on the negligence, breach of lease, and conspiracy to defraud claims. The trial court also denied Jorgensen's attorney fees on the occupancy counterclaims because Jorgensen failed to properly allocate fees and because the fees were unreasonable. Jorgensen appeals the trial court's grant of Mall Defendants' motions for summary judgment, the court's award of attorney fees to Mall Defendants, and denial of attorney fees to Jorgensen.

ISSUES AND STANDARDS OF REVIEW

¶ 10 In deciding whether the trial court properly granted summary judgment to Mall Defendants on Jorgensen's breach of lease and covenant of good faith and fair dealing claims:

"[W]e view the facts and all reasonable inferences drawn therefrom in the light most favorable to the nonmoving party." We grant no deference to the trial court in determining whether disputed issues of material fact exist or whether the moving party is entitled to judgment as a matter of law.

Little Caesar Enters., Inc. v. Bell Canyon Shopping Ctr., L.C., 2000 UT App 291, ¶ 10, 13 P.3d 600 (internal citation omitted). We also "`review the trial court's interpretation of [a contract] for correctness, according no deference to the court's conclusions of law.'" Id. (alteration in original) (quoting Peirce v. Peirce, 2000 UT 7, ¶ 18, 994 P.2d 193).

¶ 11 The trial court's decision to award attorney fees to Mall Defendants and deny fees to Jorgensen are questions of law which we review for correctness. See Dejavue, Inc. v. U.S. Energy Corp., 1999 UT App 355, ¶ 8, 993 P.2d 222. A trial court also has "`broad discretion in determining what constitutes a reasonable fee, and we will consider that determination against an abuse-of-discretion standard.'" Id. (quoting Dixie State Bank v. Bracken, 764 P.2d 985, 991 (Utah 1988)). "[T]he standard of review on appeal of [the amount of] a trial court's award of attorney fees is patent error or clear abuse of discretion." Valcarce v. Fitzgerald, 961 P.2d 305, 316 (Utah 1998) (citations and internal quotations omitted).

ANALYSIS

I. Breach of Lease Claims

¶ 12 Jorgensen argues the trial court erred in concluding there were no genuine issues of material fact on his breach of lease claims.

A. The Fashion Place Lease

¶ 13 Jorgensen first argues the trial court erred in concluding as a matter of law that his lease with Fashion Place expired, and D.H. did not renew or extend Jorgensen's lease. The license agreement provides:

Licensee agrees that in the event its business is to be located at a site where Jorgensen presently has or shall obtain a leasehold interest as a tenant, then Licensee shall, upon entry of such premises and throughout the term of this Agreement, timely pay all rents and other amounts due under such lease agreement, and fully perform said lease on behalf of the Lessee therein.

The agreement also provides:

Nothing in this Agreement shall be construed as creating a relationship of principal and agent, employer and employee, franchisor and franchisee, or master and servant.... Licensee is an independent contractor and shall be deemed an independent contractor at all times with respect to the performance of its obligations hereunder. Licensee shall have no express or implied right or authority to assume or create any obligation on behalf of Jorgensen or to hold itself out as Jorgensen's principal, agent, employer, employee, franchisor, franchisee, master or servant.

(Emphasis added.)

¶ 14 The trial court initially found an ambiguity in the license agreement.⁵ However, we conclude the license agreement unambiguously provides that D.H. had no authority to bind Jorgensen either in writing or by conduct. Therefore, we conclude D.H. did not renew or extend Jorgensen's lease during negotiations with Fashion Place representatives.

¶ 15 In addition to arguing D.H. renewed Jorgensen's lease in negotiations with Fashion Place representatives, Jorgensen argues his lease was renewed by D.H. holding over. However, to conclude D.H. could bind Jorgensen to a new lease term by holding over would be inconsistent with the license agreement. Furthermore, a holdover tenancy will not renew a lease when the parties intended to negotiate a new lease. See Heral v. Smith, 33 Ark.App. 143, 803 S.W.2d 938, 940 (1991) (refusing to overturn trial court's finding parties intended month-to-month tenancy where evidence demonstrated parties unsuccessfully attempted to renegotiate lease and did not intend to enter into year-to-year tenancy); Donnelly Adver. Corp. of Md. v. Flaccomio, 216 Md. 113, 140 A.2d 165, 169 (1958) (holding landlord is entitled to treat tenant as holding over for another year unless landlord has consented to month-to-month tenancy or parties were engaged in negotiations to renew lease when term ended).

¶ 16 Significantly, in the present case, Fashion Place and D.H. negotiated a new lease which was effective October 2, 1991. Viewing the facts in a light most favorable to Jorgensen, the parties did not intend any holdover to renew Jorgensen's lease. Therefore, we conclude as a matter of law any holdover by D.H. did not renew Jorgensen's lease.

¶ 17 Jorgensen additionally argues h...