Metropolitan Park Dist. of Tacoma v. Griffith
| Decision Date | 24 July 1986 |
| Docket Number | No. 52083-6,52083-6 |
| Citation | 106 Wn.2d 425,723 P.2d 1093 |
| Court | Washington Supreme Court |
| Parties | METROPOLITAN PARK DISTRICT OF TACOMA, Respondent, v. Hal E. GRIFFITH and "Jane Doe" Griffith, husband and wife, Hal Griffith & Associates, and Great Western Pacific, Inc., Appellants. METROPOLITAN PARK DISTRICT OF TACOMA, Appellant, v. Hal E. GRIFFITH and "Jane Doe" Griffith, husband and wife, Hal Griffith & Associates, and Great Western Pacific, Inc., Respondents. |
Danielson, Harrigan, Smith & Tollefson, Arthur Harrigan, Seattle, for appellants.
Davies, Pearson, P.S., John Kouklis, Arthur Wang, Tacoma, for respondents.
This case involves two consolidated appeals. Hal E. Griffith (Griffith) appeals from a declaratory judgment determining the parties' rights under a concession agreement. He contends the trial court erred in deciding that two 10-year options to renew a concession agreement were unenforceable, and in concluding that the Metropolitan Park District of Tacoma (District) did not breach the agreement by denying his requests to serve liquor and make improvements. After Griffith filed his appeal, a fire destroyed certain facilities covered by the agreement. The District then brought motions to the trial court to cancel the concession agreement or a portion of it. The District appeals from the trial court's denial of these motions.
The Metropolitan Park District of Tacoma is a municipal corporation which provides parks and recreation in Tacoma and Pierce County. The District owns a number of parks and recreation areas, including Point Defiance Park, Wright Park, Wapato Park, Northwest Trek, a golf course, and several playgrounds and swimming pools.
Hal E. Griffith is in the restaurant and food concession business. In 1972, Griffith approached the Commissioners of the District with a proposal to develop a restaurant and other facilities at Point Defiance Park. At that time, the District had a concession agreement with another party.
By 1976, some of the facilities had seriously deteriorated, and the District advertised for proposals from other interested parties to operate the concessions. It appointed a committee of Commissioners who interviewed four applicants, including Griffith. After the full board considered the applicants, it designated Griffith as the person with whom it wished to negotiate further and appointed a committee to do so. Griffith presented a proposal to the board which included remodeling and cleaning up the Boat House Grill restaurant, substantial development of the Boat House Grill area, and ultimate development of a sit-down restaurant. As a result of these discussions, Griffith and the board contemplated future development along the lines of the proposal although no one expected that any of the development would necessarily take place. Both parties did expect that Griffith would enter into the Boat House Grill, clean it up, and begin operating it as quickly as possible so that the District would continue to realize the income generated by the Grill.
On June 13, 1977, the District and Griffith entered into a concession agreement which granted Griffith the exclusive right or concession to sell food, beverages, souvenirs, gift items and similar merchandise, and to operate vending machines or other dispensing devices on or from any park now, or during the term of this Concession Agreement or renewal thereof, owned or controlled by the District ...
except for certain park areas. It provided that: "Concessionaire shall have the right to occupy and use District's real estate and improvements thereon as may be reasonable to operate the existing and future concessions covered by this Agreement." The term of the agreement was 10 years. It also provided Griffith with options to renew "for two consecutive ten (10) year terms on the same terms and conditions." The parties specifically bargained for the provision for the options to renew. The agreement provided that, in return for the grant of the concession, Griffith would pay the District a fee based on specified percentages of his gross sales. It further provided that the District would pay for all utilities.
The agreement also contained provisions concerning additional concessions, repairs and improvements. As to additional concessions, section 5 of the agreement provided, in part:
In the event that the District shall decide that additional concessions should be opened or that "amusement" machines or devices not included in aforementioned concession categories be introduced, either by itself or through a Concessionaire, the Concessionaire shall be given the right of first refusal to install and/or operate said concessions under the terms and conditions set forth in this Agreement....
Regarding improvements, section 9 of the agreement stated in part,
Concessionaire shall submit to the District in writing any plans for alteration or improvement to or upon the premises where any of the concessions are located, prior to commencing any such alterations. All such alterations or improvements shall be approved by the District in writing before Concessionaire proceeds therewith.
The agreement authorized Griffith to deduct the cost of permanent improvements he made from the fee payable to the District, provided the District had approved their nature and cost in advance.
As for repairs, the agreement provided that Griffith would maintain equipment and trade fixtures used in the operation of the concessions, while the District would be responsible for repairing the buildings and improvements thereon where the concessions were operated. The agreement contained no provision requiring either party to rebuild in case of fire.
Griffith entered into possession of the Boat House Grill area on June 1, 1977. Its condition was worse than the parties had expected. Griffith made permanent improvements to the Grill, deducting the costs from fees due the District, as authorized in the agreement. Griffith made tenant improvements to the Grill at his expense, including furniture, fixtures and interior remodeling other than structural work. These initial improvements consisted of $70,000 in equipment and $20,000 in interior remodeling. Later, he spent an additional $10,000 on the Grill. He also invested approximately $20,000 in concession equipment in other areas of Point Defiance Park.
After Griffith took over, the Boat House Grill operated as a cafeteria-style restaurant. 1 The parties' expectations of increased rental income were not met. Griffith made numerous proposals to the Park Board to persuade it to permit consumption of alcohol and construction of a sit-down restaurant in the boathouse in order to increase revenues. The District declined to permit alcohol.
Griffith paid the rent as called for by the agreement. In the first 6 years of operating the Boat House Grill, Griffith made no profit on it. He made approximately $100,000 on his operations under the agreement as a whole during this period.
As time passed, the District became increasingly concerned that the agreement was not in its best interests. In June 1982, the District filed a complaint for declaratory judgment in superior court, asking the court to cancel the concession agreement. The complaint alleged, among other things, that the agreement was void for interfering with the District's governmental capacity, that its term was unreasonable and void for lack of consideration, that it created an unlawful monopoly and was void for lack of compliance with competitive bidding requirements. The District also alleged breach of contract by Griffith. Griffith denied the District's allegations and counterclaimed, alleging the District had breached the contract.
A judgment was entered on July 6, 1983. The trial court found that the provision on improvements in Section 9 of the agreement "does not require the District to approve plans, so it is simply an agreement to agree", and that the provision on additional concessions in section 5 of the agreement "does not require the District to decide that additional concessions should be opened, so it is also an agreement to agree." Finding of fact 20. The trial court further found:
The Agreement contains no provision which obligates the District to approve proposed improvements, and the Agreement is essentially a skeleton in that regard. There is nothing in the Agreement requiring the District to accept propositions for serving of liquor in the District parks or restaurants.
Finding of fact 35. The trial court also found that the parties had been unable to meet their objective of developing the boathouse area and that the agreement did not provide any mechanism by which the court could require the parties to take steps to do so. Finding of fact 32.
The trial court concluded that the provision on improvements in section 9 of the agreement and the provision on additional concessions in section 5 of the agreement were illusory and unenforceable. It further concluded that the remainder of the concession agreement was enforceable for its initial 10-year term, but that the agreement was "unreasonable as to duration, and the options to renew are therefore not enforceable." The court concluded that theDistrict did not breach the agreement in denying Griffith's requests to serve liquor and make improvements. The court also held:
In the event the District constructs new food facilities or other concession facilities, within any of the parks covered by the Agreement, Mr. Griffith will have the exclusive right to operate them during the term of the Agreement unless they are the types of concessions not expressly included in the Agreement, in which case Mr. Griffith will have the right of first refusal as to such concessions.
Conclusion of law 21.
Griffith appealed to the Court of Appeals, assigning error to the above findings of fact and contending the trial court erred in holding that the options to renew were unenforceable,...
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