Premier Golf Missouri, LLC v. Staley Land Co., LLC

• Decision Date: 31 March 2009
• Docket Number: No. WD 69341.,WD 69341.
• Parties: PREMIER GOLF MISSOURI, LLC, Respondent, v. STALEY LAND COMPANY, LLC and Staley Farms Homeowners' Association, Appellant.
• Court: Missouri Court of Appeals

282 S.W.3d 866

PREMIER GOLF MISSOURI, LLC, Respondent, v. STALEY LAND COMPANY, LLC and Staley Farms Homeowners' Association, Appellant.

No. WD 69341.

Missouri Court of Appeals, Western District.

March 31, 2009.

Ward Keith Brown, Liberty, MO, for Appellant.

Eric Chadworth Carter, Prairie Village, KS, for Respondent.

Before: LISA WHITE HARDWICK, Presiding Judge, JOSEPH M. ELLIS, Judge and JOSEPH P. DANDURAND, Judge.¹

JOSEPH M. ELLIS, Judge.

Staley Land Company, LLC and Staley Farms Homeowners' Association (together, "Appellants") appeal from a summary judgment in favor of Premier Golf Missouri, LLC ("Premier") on Premier's petition for declaratory judgment.

Premier has owned and operated a private 18-hole golf course and related amenities known as the Staley Farms Golf Course ("the Golf Club") since 2002. In March 2005, Premier sold the surrounding property to Staley Land Company, LLC ("Staley Land"), a real estate development company. The surrounding property was known as the Staley Farms residential subdivision and was run by the Staley Farms Homeowners' Association ("the Homeowners' Association"). Mark Simpson was the managing member of Staley Land and the president of the Homeowners' Association. On March 2, 2005, Staley Land and Premier entered into a Golf Course Development Agreement, under which they agreed to cooperate with each other concerning the development of the residential subdivision and the Golf Club.

The property sold to Staley Land included a clubhouse facility known as the Residents' Club, which was renamed the Sports and Rec Club after the sale ("the Clubhouse"). As part of the Development Agreement, Staley Land agreed to lease the Clubhouse to Premier for a nominal rent of $1.00 per year for a term of 99 years. Accordingly, on May 1, 2005, Staley Land and Premier executed a Triple Net Lease of the Clubhouse for operation as part of the Golf Club ("the Lease"). Premier was to maintain and operate the Clubhouse at its sole expense. Staley Land assigned the Lease to the Homeowners' Association at some point in May 2005.

On January 1, 2007, Premier and the Homeowners' Association, as successor Landlord, executed an Amendment to the Lease to allow Premier to make alterations to the Clubhouse, including creating a snack room and relocating and renovating the workout room. Premier was to complete the alterations at its sole expense and to have the alterations "substantially completed and ready for use by May 31, 2007." Premier immediately commenced construction.

On January 31, 2007, Appellants' attorney faxed a letter to Premier declaring that Premier was in default of the Lease for (1) allowing individuals who were not residents of the Staley Farm residential subdivision to become "social members" of the Golf Club and to use the Clubhouse and (2) prohibiting any food or beverages in the Clubhouse unless purchased from Premier. The letter stated that both of these actions were "contrary to the parties' intentions" and in violation of the Lease and gave Premier thirty days to cure the alleged defaults.

On February 22, 2007, Premier filed a petition for injunctive relief and declaratory judgment against Staley Land and the Homeowners' Association, followed by an amended petition. Premier asserted that it would be irreparably harmed if Appellants terminated the Lease and sought a determination that it was not in default for selling social memberships to non-residents or prohibiting outside food and beverages because the Lease did not expressly prohibit such activities. Premier alleged that it had sold social memberships to non-residents "for some time, even before the signing of the Triple Net Lease" and that nothing in the Lease restricted it from setting its own policy regarding consumption of food and beverages. Premier also made several allegations concerning the purpose and importance of the non-resident social memberships.

On March 9, 2007, Appellants' attorney sent a letter to Premier by fax and certified mail, referring to the January 31, 2007 letter and making the following "demands," as relevant to this appeal:

(1) Premier must immediately cease allowing use of the Clubhouse by individuals who were not "golf members" of the golf course or residents of the Staley Farms residential subdivision.

(2) Premier must immediately provide documentation that all contractors working on the alterations to the Clubhouse were insured and that all required permits had been obtained. The letter indicated that Premier was "already in default of the Lease" for failing to obtain building permits from the city.

(3) Premier must immediately provide a list of all subcontractors and suppliers for the alterations and copies of mechanic's lien waivers for all subcontractors and suppliers.

(4) Premier must immediately provide evidence that the insurance coverage required under the Lease had been in effect since May 1, 2005, and remained in effect.

The letter provided that Premier had thirty days to "comply" with each of these demands and that Appellants would terminate the Lease if Premier failed to do so.

Premier emailed a response to Appellants on March 27, 2007, attaching numerous documents in an attempt to comply with Appellants' "demands." Appellants' attorney sent another letter to Premier via fax and certified mail on March 30, 2007, indicating that the "default[s]" listed above had not been "cured" and that it considered many of the documents submitted by Premier to be insufficient to fulfill its obligations under the Lease. The letter further indicated that Appellants "agree[d] that the court's anticipated ruling on [the issue of whether the sale of social memberships to non-residents constitutes a breach of the Lease] will apply to both our earlier January 31, 2007 default letter, as well as the March 9 default letter."

On April 2, 2007, Appellants filed their answer to the petition. They denied for lack of sufficient knowledge the allegation that Premier had allowed non-residents to be social members of the Golf Club "for some time" and denied all allegations concerning the purpose and importance of allowing non-residents to become social members of the Golf Club. Appellants also stated that they "admit there is no provision in the Lease that specifically discusses the consumption of outside food at the [Clubhouse] but state[ ] that any such ban is inconsistent with the intent of the parties and is inconsistent with the interests of the members of the [Clubhouse]." They asserted that Premier failed to state a claim upon which relief could be granted and was barred from any relief due to "unclean hands, waiver and/or estoppel," without specifying why.

Appellants also filed two counterclaims, asserting that Premier was in material breach of the Development Agreement and the Lease due to failure to cure the defaults listed as stated in the January 31, March 9, and March 30, 2007 letters and that they had suffered damages as a result. Appellants alleged that the Clubhouse had always been "marketed as an exclusive club that is available only to golf members of the Golf Club and residents of the Development" and that, to their knowledge, Premier was selling social memberships only to residents prior to January 31, 2007. Appellants further alleged that Premier's failure to obtain necessary building permits "is a serious safety issue that puts all users of the Resident's Club at risk."

On April 2, 2007, the trial court entered a preliminary injunction in favor of Premier on its original petition, which concerned matters raised in the January 31, 2007 letter. A few days later, Premier moved for leave to file a second amended petition to request declaratory and injunctive relief concerning matters raised in the March 9 and March 30, 2007 letters, which the court granted. In addition to the allegations set forth above, Premier made numerous conclusory allegations concerning whether it was in default due to the items in the letters and the purpose of the relevant provisions under the Lease. Appellants denied these additional allegations in their answer.

On April 6, 2007, the court held a hearing and entered a temporary restraining order prohibiting Appellants from terminating the Lease until April 17, 2007, at 5:00 p.m. On April 17, 2007, the court extended the TRO until April 27, 2007, at 5:00 p.m.

On April 23, 2007, the court appointed a Receiver to determine whether the Clubhouse was being properly managed and maintained. The Receiver visited the Clubhouse and submitted his report on April 27, 2007, indicating that the Clubhouse was well managed and that there were no noticeable problems with the buildings.

Shortly after 5:00 p.m. on April 27, 2007, Appellants hand-delivered a "Notice of Termination" to Premier, stating that Premier remained in default after being given thirty days to cure for failing to: (1) use "qualified and insured contractors" for the alterations, (2) secure all required permits, (3) provide a list of subcontractors and suppliers, and (4) obtain insurance coverage effective from May 1, 2005, forward. Appellants initiated an unlawful detainer action against Premier on April 30, 2007, which was assigned to Division III of the Clay County Circuit Court. The declaratory judgment action remained pending in Division II.

Also on April 30, 2007, the court in the declaratory judgment action entered a preliminary injunction prohibiting Appellants from terminating the Lease "based on the alleged defaults set forth in the March 9, 2007 notice of default." The court further ordered that its previous appointment of a Receiver would remain in effect.

Premier filed a reply to Appellants' counterclaims on May 2, 2007, denying all of Appellants' allegations and setting forth numerous purported affirmative defenses. Premier claimed that Appellants were barred from asserting any breach of contract due to their "failure to honor their obligation to fund any shortfall between the...